The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1921-11-22
LOOK FOR EARLY
REDEMPTION OF
VICTORY NOTES
Bankers Point to Steady
Reduction in Terms
For Money.
WOULD AID MARKET
About s4,O0O,OOO,O0O in Lib
ertys Are Callable by
June Is, 1922.

Victory notes amounting in round
numbers to $4,000. 900. 900 are call
abit at the option of the govern
ment ON or after June Is, 1922. upon
not less than four months notice.
These notes mature May 20. 1923.
Not many months ago they were
the source of a good deal of un-
easiness in government circles. 1t
was said that this issue was not
sold in a competitive market, but
by an appeal to patriotism, and
interest rate should have been
higher.
In this opinion all responsible
snanciers concurred. And in sup
port of the contention II was point
ed out that even the Pennsylvania
Railroad had to pay per cent for
money, and only strong roads could
borrow in the open market at any
thing except ruinous rates.
New Era in Financt.
However, bankers believe that a
new era in finance is developing.
In the past year the New York Fed
trail Reserve Sank has reduced it's
discount rate five times, and fur
Their reductions are expected before
June Is. Assuming that such re-
auctions actually materialize, bank
ers are of the opinion that the
Treasury Department will have no
difficulty in refunding Victorys into
rev nOtes bearing a rate not ex-
Ceeding the present rate. and in all
probability 1t will be possible to re-
fund them into a lower rate.
These issues are now approx
mately > points above the record
low. and yield at present quotations
a little less than per cent for the
As =. and just under 4 per cent for
the 32i s.
Interest Rates Downward.
These figures, standing alone. do
not suggest q materially lower rate,
but an important change is develop
ing IN the investment market. Dur
ing the war and the year follow
inE. money rates advanced sensa-
tionally. Investors wanted short
tern naturities, confident that later
they could get a better rate for
their funds. This is all changed
now Shrewd investors know that
the course of interest rates is down
ward. AMI they DO not want nearby
ma TURTLES Longer issues are
souErt. and on these more distant
msturiJics the WELD is lower. II
is because of this change that the
Fourth Al 5 are selling on yield
basis 81 ~ per cont. Quotation
for this issue has advanced about i
paints from the record low, and
dealers are predicting premium
for this and all other Libertys with
year, or earlier.
Il is aCretd among bankers that
the various Liberty issues may sell
on - per cent basis within a year
or less That being true, bankers
think the Treasury Department may
call the EictOrys for redemption be-
foOe maturity and refund them into
an issue bearing a lower coupon
rate.
Easier Rates Abroad.
a short while ago the assertion
frequently was made that the Eu-
ropean demand for funds would keep
our interest rates high for sew
eral years. But rates for short
term loans are easier in London
than in New York, and a number OF
the continental countries report
easing of rates. Switzerland, for
instance. has lower rates for de-
mand money than We have. and
there is a perceptible easing in
France.
If the Treasury can refund Vic
torys into an issue bearing one-half
Of ! per cent less than present rate
ii viii mean a saving of s2O.0OO,O 900
interest 1t is known that the ad-
ministration is anxious to make a
good showing in the matter of ex-
penditure and in taking all unnec-
essary burden off the taxpayer. In
view of this. bankers think it /.
entirely possible that Secretary Mel
Ion may call in the Victorys June
Is for redemption. At any rate. the
situation is being closely watched.
Calling Of the Victorys would act
as powerful stimulus on the whole
investment market.