The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-09-20
GOVERNMENT BORROWING.

GOVERNMENT BORROWING.
Secretary of the Treasury Houston
announced on September an offer of
$400, 900, 900 Of new certificates of in
debtedness to meet current fiscal re-
october Is and to provide for refund
ing certificates maturing on Septem-
Der 5 and October IS. The new is
sue is in two series. dated September
Is. one series bearing So per cent
interest and maturing March 5, 1921,
while the second series will mature
September Is, 1921, and bear interest
at the rate of 6 per cent.
In a letter to the banks asking for
their support of this issue, the secre-
tary says that during the first two
months. July and August. of the cur
rent fiscal year, ordinary government
disbursements exceeded receipts by
$125,767,191.13. the deficit being due
chiefly to actual cash payments, ap-
proximating $4,000, 900. made nee
essary by the provisions of the trans
portation act in connection with the
return of the railroads to private con-
troll He adds that according to the
latest estimates, payments on account
of the railroads will probably continue
on a large scale during the balance
of the present calendar year. Not
withstanding the net current deficit
during the first two months and these
extra ordinary payments on account of
the railroads, it is expected that the
first quarter of the fiscal year ending
September 30. 1920. will show a sur
plus.
The gross debt of the government
on August 81, 1920, on the basis of
daily treasury statements, amounted
to s24, as against $24,-
29 .s21. 467.O7 at the close of the fiscal
year ended June 80, 1920. an increase
Of s25.S5O. S5s.72. The floating debt
on August 81 amounted to s2.571,201.-
900, as against Sass, 552,5O0 on June
80. 1920.
The existing state of the government
finances indicates that, the treasury
will not be in a position to take up
early maturing bond issues. Victory
notes to the amount of $4,000, 1000, 900
will fall due in 1923; also, the first
issues of the War Savings stamps It
looks as tho congress must provide a
refunding plan for them. Then will
be the opportunity to make provision
also for the rest of the national war
debt.
H. N. Lawrie. an economist OF
Washington. declares that some S.
700, 100000 of war bonds are lying idle
in the banks of the country. They
represent bonds placed upon the mar
ket and not actually sold to investors
but which the banks were forced to
absorb. Mr.. Lawrie estimates that
the retention of so large a volume OF
undigested war paper in the banks is
consuming so per cent of the normal
potential banking resources of the
country. He contends that the rea-
son why the bonds have not been
taken up by the public is that they
carry an interest rate that is not COM
petitive with other investments IN the
bond market. and that has caused the
decline of their market prices. Sound
economics and common sense bust
ness" declares Mr.. Lawrie, demand
that the evil be rectified at the earliest
opportunity"
| As a means to that end, Mr.. Lawrie
recommends the early refunding OF
the war debt into bonds exchangeabIe
for those now held. He asserts that
| financial experts are of the belief that
the interest rate of the nev: issue would
not greatly exceed per cent. and that
they should be spread over a period
OF fifty years. If that was done, says
/ he. war bonds would be on a competi-
tive basis with other issues, the huge
amount now held by the banks would
be moved. and the industry of the en-
tire country would feel the benefit OF
the tremendous increase in banking
resources.
There Is no doubt that the govern.
ment would not have been able tc
market a large amount of its wal
bonds at the rate of interest they bore
except thru its appeals to the patriot.
ism of the people. It is not fair tha
they should continue to suffer finan-
cially for discharging their duty Il
their country. Some sort OF refund.
ing program seems necessary also il
order to obviate an increase in taxes
which already are higher than the.
should be.
The Y.tas& .Soti-t;o- $500 5s-- ~,