Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-12-19

erty bond issues and the $2.500.000.0 900
Treasury certificates. perhaps little
less. are vital matters of the day, and
in the opinion of local bankers should
be cared for by Congress in the near
future.
Financially, the country will not be
. in a position to retire the maturing
issues of the former, and bankers be-
1ieve it is time to stop the continual
borrowing and renewing of loans by
the government through the use of
the certificates, to the disturbance of
the financial situation and the divert
ing of such large sums Of money
from usual business channels.
The Federal Reserve Board during
the current year has forced the liQui-
dalton of millions and millions of
dollars. hundreds of millions, through
the advancing Of rates and the urge
of def1ation in every line of business
in the nation, but all Of the time the
government has been expanding its
debt through the hand-to-mouth
method of making both ends meet
through the issuance of Treasury GER
tihcates. until billions Of dollars are
now frozen in," to use a term
emanating from the reserve board, and
should be debated.
The effect of $2,5Oo, 00o, 900 released
from government use to the channels
OF business would be marvellous, and
the sooner the better.
Refunding of the liberty issues
would give chance to holders to re-
coup in part on their losses and
would give the nation q chance to
recoup its financial position, without
forest burden. Indeed. it seems prob
able that there might be a material
saving in that respect
The big drop in commodity prices,
and more than that the big let-up in
industrial activity. has increased the
supply OF funds in banks and tenn
porarily unemployed in other than in
Treasury certificates.
A matter of s1.764.ss6,15o Of the
various liberty and victory issues
have been purchased by the govern
ment in the open market at a saving
OF $S7,000,000 to itself, the loss being
borne by the public, in many cases
by the original purchasers. About
been acquired by use of the sinking
fund and through the purchase Of
these issues with proceeds of repay
ment by foreign governments Of
various obligations.
Can Get the Money.
Conversion with local bankers gives
the impression that a tax-free bond
issue at a Az per cent rate would be
salable, but that a taxable issue, as
all the present libertys now are ex-
cept the SIS, could not be floated
under per cent.
cent, some So per cent interest. SO
that either tax free or otherwise
there would be a big saving here.
while the bulk Of the libertys carry
Az per cent interest.
But 1t is not a question Of economy,
however. 1t is a question of policy
tinted with a strain of Justice to at
least some Of the buyers of govern
ment bonds during the nations stress;
policy more than anything else. how
ever. passing on the burden to future
Fl. generations and relieving the fmme-
date strain on the Treasury.
The government has heavy needs,
and temporary financing should not
take the place Of permanent.
The suggestion to make the lib
4 ertys the security for a like amount
OF cash would be considered rather
serions Imitation, and just the reverse
been trying to preventive func-
fioning OF liberty bonds as cash.
Seeking Investment.
We have seen during the past six
months the ayidity with (which high
rate issues of corporation bonds and
bonds and notes generally of other
governments and OF rail and indus
trial corporations have been sub
scribed to the extent of the Offering.
frequently In an hour or two.
There seems to be a great amount of
money seeking safe placement. But a
1.-THE Of the millions released through
dividend and interest payments and
acquired in business has been REIN
vested. hence the big demand from
the public for Treasury certificafes
However, there has been small en-
couragement, indeed. to level-headed
men with capital to place 1t in securi-
ties other than the high rate issues
Of bonds and notes for the last nine
months N
The New York stock market has
split wide open. values are not con-
sldered, earnings are secondary. while
holders have been forced to liauidate
eneIr stocks by smash after smash
along the line and the establishment
OF lows deemed next to Impossible
Few months ago.
There are thousands of investors
Sun hanging on and expecting to get
OUT on the rally, but this market is
not IKE any that Wall street has ever
known-may ever know again.
BUT the lowering of the high cost
OF nvlng accomplished by the long
sustained strike of the consumers has
eiso iessened materially the amount
OF money needed to do business, while
THIS has been accumulated by the re-
duced purchases of the merchant ana
the greatly lessened demands for
May Have Paid Too High Rate.
Some local bankers claim that Sec
relary houston misjudged his market
In the latest offering Of Treasure
ceftihcates. insisting that at 5E ner
cent rate for the entire issue it would
nave been as easily fioated as the 5E
ana per cent issues WERE
me oVersubscription to the larpe
amount OF certificates. $5o0.ooo, 900.
would seem to confirm this belief
Dankers also expect to hold the
the new year. as there is no probabilo
ny OF any immediate heavy drafts ~
the Treasury during the few rema;n
ing days of 1920.
Foreign Finance COruor.tf.,
The Wall Street Journal has this "a
say OF the possibilities of the new
Edge bank in formation, with Holm
McHugh chairman Of the oreaniza-
ton committee:
The proposed 800. ooo. 900 Edge law
Dank may be a factor in the cal,
money market, for a time at least
The law specifically provides that
each corporation organized under the
act shall have power ito borrow and
to lend money
BEFORE the proposed $780, 900 900
bank opens for business $4,000 900
must be paid In. According to bank
ers. there will be no immediate need
FOR this money in foreign trade: not,
OF course. because of any lack OF
demand for accommodations, but be-
cause it will require some time to
investigate applications etc
1T 10 practically certain, therefore
that the bank will have a large
amount of money on hand that tenn
porarily 1t will have no use for. The
most logical employment for this