The Birmingham age-herald., 1921-06-19
ADMINISTRATION IS. TRYING ID BRING. LIBERTIES ID PAR
Cabinet Considers Refuding Plans Past Week to Place Nation on Sound and
 Continuous Policy
By HARDEN COLFAX Special Correspondent of Hhe Age Herald Copyright, 1921, by The -HeraldD

Washington, June 1S.- (SpecialD- The administration, through vast re- funding plans considered by the cab met this week. apparently is trying to make good it's promise to bring Liberty bonds back to par and to place the finances of the nation on d sound and continuous policy the need of which has been manifest to Presl- dent Harding and Secretary Mellon for some time past.
 study of the governments bal ance sheet shows that within the next two years the government will have to pay out more than seven and one half billion dollars in maturing se- curities; that 1t holds at the present time approximately ten billion dollars of various kinds of memorandum notes given by the allies to cover loans extended during the war; that Interest on these foreign loans is ac- cumulatng to the credit of the United States at the rate of more than a million dollars day, but that much of it is not being paid and has not been paid, and that expenses of the United States government during the next two years will slightly exceed the governments estimated revenue during that period
 National Finance
 It Is out of this situation that the administration is attempting to evolve a sound and stable plan of national finance that will do away with the present method of borrowing from hand to mouth on certificates due few months from dating in order that
 I Iu fra ocII can be met.
 As an instance of the necessity for such a plan, the governments finan- cial transactions for the present week may be cited Since last Sunday the treasury has collected more than q" billion dollars, partly through the June Is installment of income and profits taxes and partly through the issuance of one-year certificates and three-year notes. Out of the billion dollars collected, however. the treas ury parted promptly with more than 600 millions to meet interest payne ents on Liberty bonds, retire outstanding certificates due June 15. and to take care of other various items of ex- pense. The balance will be utilized. to some extent. in retiring additional short-term certificates when they be- come due within the next 50 days
 There remains, net, out of the bill lion dollars collected this week, vir- tually nothing to apply on reduction of the national debt And the in- terest rate which the government has to pay on it's notes and certifi- cates noweis higher than the highest paid on the liberty loan issues.
 Nations Programme
 How Secretary Mellon will organ jze the nations financial programme so that the present system will be- bettered has been revealed in part to members of the ways and means committed So far as the seven and one-half billion dollars worth of se- curities maturing within the next two years are concerned, MT. Mellon hopes to distribute their payment, through a process of refunding by three to five year notes, through the next seven years At that rate the pressing debt could be retired at the rate of half billion dollars a year, and wiped out in the seven-year pe- riod.
 The seven-year period is different with respect to foreign loans. Sec retary Mellon is attempting to have these obligations to the United States, represened largely by memo randum notes, put into more sati3- factory shape. Possibly special bonds of foreign governments will be ac- cepted by the American government; and In turn these foreign bonds might be placed gradually on the in vestment market here, thus making them available for private purchas- CTS and relieving the American gov ernment of its present burden of carrying them. To make them at tractive, however, to investors here. it is thought they would have to carry an interest rate much higher than the interest rates paid on the various liberty loans--the rates which now apply to the foreign obligations.
 All of this, of course, depends on Congress. What Congress has done thus far this session, so far as rev enue Legislation is concerned IS nothing. The proposed revenue bill has not as yet been introduced. That bill Is an integral part of any H. nancial programme which the gov ernment may undertake to perform. It seems almost certain that months of discussion will follow the intro duction of the bill, so that its pas sage before October. at the earliest, is regarded as doubtful.