Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-10-31
PRICE Of MONEY
IS TUMBL| IN
UNITED STATES
Every Drop Means Millions
to the People, As 1t En-
hanCes the Value of Each
Liberty Bond.
BY HARDEN COLFAX.
Especial Dispatch TO Morning J0urnap
Copyright 1921 by Albuquerque JournaD

/
| Copyright 1921 by Albuquerque journal
Washington, Oct. S0.--The price
of money is tumbling. There was
/ time when an announcement o.
this sort meant nothing to tht
mass of the people-it was but g
sign that the men of Wall street
, would have more and cheaper
funds to play with. But each time
money takes a drop now it means
millions of dollars to the plain
people of the United States, for
falling money carries with it an
enhancement of the value of each
Liberty bond issued by the govern
means further that the govern
ment is enabled to borrow money
at lower rates and retire short
time securities issued at much
higher rates.
The easing up OF money last
week enabled the treasury to lower
interest rates l per cent on new
issue of certificates.
The new issue OF treasury cer-
llLlbhLNa anu oilC YOU ll'kNo 10 pPNA'
to public subscription until next
Tuesday. The amount of the issue
is 5000, 100000. The interest rates
are 4 IA and 1-2 per cent, ac-
cording to whether short or n
longer obligation is purchased. Six
months ago the same sort Of obl;-
CATION was offered to the public
at interest rates of 5, IA and
1-2, dependent upon maturity of
the obligation. The cut in six
weeks time, therefore, is l per
cent.
Interest Rate Is Low.
incidentally the interest rate is
the lowest offered since the Lib
erty loans were floated. 1t Is %
per cent lower than the highest
rate the government had to pay on
borrowed money, which was 6 per
cent. in December, 1920. And the
public is rushing in a miniature
stampede to take the new certifi-
Gates. They win be heavily over
subscribed, according to all indi-
cations today, three days before
the subscription books are closed,
One per cent sounds small but
as a saving it is about the biggest
thing washington has witnessed
in financial way since before
the war. If the saving of ! per
cent were applied in the interest
rate which the government has to
pay on its floating debt alone, It
would mean a lessening in thu
high cost of government of more
than $24,000,000 q year for the
floating debt appointments Of
$2,230, 100000.
Rates Here to Stay.
From the response to the secre-
tary's offerings of securities 1t Is
apparent that the lower rates are
here to stay and that for long
time to come no government Is
sue of certificates of short time
notes will bear more than 4 1-2 per
cent. AS most of the floating debt
is to be retired within compara-
lively short time by flotation Of
other issues whose proceeds will
be utilized to pay off the maturing
obligations, the saving of l per
cent will become q reality on the
entire floating debt within a Year
or eighteen months.
Mr.. Melons Shrewd financial
sense in cutting the interest rate
will mean inevitably in the judg-
ment OF officials here. a further
sharp rise in Liberty bonds now
upward bound toward par, and In
it is thought. presages
still lower rediscount rates-and
cheaper money-at the federal re-
serve banks. 1t also means, finan-
cial experts assert, a rise to new
high levels of gilt edge bonds 9th
er than securities issued by the
government.
Deposits Increase,
Circumstances which made II
possible for Mr. Mellon to execute
his stroke of economy at this time
q rise in the federal re-
serve ratio of more than 70 per
cent, more than half as much
again as 1t was slightly more than
a year ago. and a big increase in
the amount of money which the
(Conffnued IN IIaye Two