The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1920-04-19
GOVERNMENT WILL
SOON STOP BUYING
Of LIBERTY BONDS
Secretary Houston Makes an
Important Announcement in
This Connection

Washington. April 17.-Government
purchase OF Liberty bonds in the open
market, except through operation of
the sinking fund, will stop July l, Sec
retary Houston announced tonight. A
"benehcial effect" on the market was
expected to result, he said. Other Of
ficials said the market in government
securities had already begun to right
itself, and that bond quotations here
after might be expected to trend up
ward
Mr.. Houston explained that in con-
tinuing the purchase Of bonds under
the five per cent bond purshase fund
the government was increasing its
floating debt while decreasing its
funded debt. He said that current re-
quirements of the government were
such. if the purchase OF bonds were to
continue. the Treasury would have to
issue more certificates Of indebted
ness with which to buy them.
Why Enacted.
The five per cent bond purchasing
arrangement was planned by con-
greSs to expire automatically one year
after the termination of war, but the
Secretary OF the Treasury was en-
powered TO decide when it had served
the purchase of stabilizing the bond
narket-the underlying reason for its
original enactment into law.
Mr.. -Houston's decision, however,
was based largely on the fact that on
July l the 1-2 per cent sinking fund,
provided in the Victory loan act, be-
comes operative. He said it was not
his intention to treat the two funds
as cumulative, but to end one with
the beginning Of the other. The ap-
proximate amount, set aside by the
treasury for use in the period between
now and July l will be taken over by
the war finance corporation which will
n:ake all purchase of bonds for which
funds are available until the expira-
ton 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
purchasers; large industrial and
other corporations who have been
under pressure to find funds to finance
their current expenditure. He added
that this had come when it had been
necessary for measures to be invoked
which would control credit and make
bank loans difficult and expensive.
Discount 2 to Z Per Cent.
No announcement was made regard
ing the amount Of bonds retired
through the five per cent purchase
funds. All bonds bought were obtain
ed by the Treasury at discount rang
ing from to per cent, thus saving
the government both the interest for
the life of the bonds as we'll as the
difference between their par value and
the market quotation.
81 believe that the time has come, "
Mr.. Houston said, when 'he d'sap-
pearance OF the government from the
market, except as an occasional pu>-
chaser, will have a beneficial effect
upon the market for the bonds and
notes, both by reducing the Tre asEry's
current borrowings on Treasury GER
tifcates of Indebtedness and stimulat-
ing the interest Of investment bankers
and the public in the market for
Liberty and Victory securities. This
offers an unique opportunity to in
vestors, large and small, the quota
tions for the bonds being extremely at
tractive to investing institutions as
well as private investors