Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-04-18
TREASURY'S BOND
BUYING IN MARKET
TO CEASE JULY |
Secretary Houston Expects
Beneficial Effect on Lib
erty Securities.

Government purchase of liberty
bonds in the open market. except
| through operation Of the sinking
fund. will stop July 1. Secretary
| Houston announced last night. A
! beneficial effect" on the market was
expected to result he said. Other
officials said the market in govern
ment securities had already begun to
right itself. and that bond quotations
\ hereafter might be expected to trend
upward.
Mr.. Houston explained that in con-
tinuing the purchase Of bonds under
| the government was increasing its
j floating debt while decreasing it's
funded debt. He said that current
| requirements Of the government were
such that. II the purchase Of bonds
were to continue. the Treasury would
have to issue more certificates OF
Indebtedness with which to buy
them.
! Provisfons Of Law.
The per cent bond-purchasing ar
! rangement was planned by Congress
to expire automatically one year after
tho termination of the war. but the
Secretary Of the Treasury was en-
powered to decide when it had served
the purpose Of stabilizing the bond
market-the underlying reason for
It's original enactment into law.
| Mr.. Houston's decision. however.
was based largely on the fact that
on July / the 2h per cent sinking
fund. provided in the victory loan
act, becomes operative. He said 1t
was not his intention to treat the
two funds as cumulative. but to end
one with the beginning of the other.
| The approximate amount set aside
by the Treasury for use in the period
between now and July ] will be
taken over by the War Finance Cor
poration, which will make all pur-
chases Of bonds for which funds are
available until the expiration date.
Hereafter such purchases as the
| Treasury may make for the bond pur-
chase fund will be occasional and not
habitual." Mr.. Houston said.
The low levels to which bonds have
! fallen were attributed by Mr.. Houston
to forced liquidation by heavy bond pur-
| chasers-Large industrial and other cor
porations which have been under pres
sure to find funds to finance their cur
rent expenditures. He added that this
| had come when 1t had been necessary
! for measures to be invoked which would
control credit and make bank loans both
difficult and expensive.
Obtained at Discount.
No announcement was made regard
ing the amount of bonds retired through
the per cent purchase fund. All bonds
s., bought were obtained by the Treasury
at a discount ranging from to Z per
| cent. thus saving the government both
the interest for the life Of the bonds
as well as the difference between their
par value and the market quotation.
II believe that tho time has come"
! Mr.. Houston said, when the disappear
| ance of the government from the
market. except as an occasional pur-
chaser, will have beneficial effect upon
the market for the bonds and notes.
| both by reducing the Treasury's cur
| rent borrowings on Treasury certih-
Gates of Indebtedness and stimulating
the interest Of Investment bankers and
tho public in the market for liberty and
victory securities. This offers unique
opportunity to investors, largo and
small, the quotations for the bonds be-
ing extremely attractive to investing
institutions as well as private invest
ors.'