Evening star. [volume] (Washington, D.C.) 1854-1972, 1922-04-12
new CERTIFICATES
! ARE SURE OF SALE
Bankers Surprised, But Pre-.
dict Advance-ShouId
Stimulate Libertys.
BY L. A. FLEMING.


Secretary Mellon certainly took the
financial world by surprise last night
when he announced an issue of six
months Treasury certificates to bear
81. per cent interest,"
Few. If any, of the banking fra
ternity considered such action prob
able. per cent being the general
estimate of the financing expected for
the 18th inst.
That the rate was reduced to 3is
per cent is notice to the rest of the
United States that the Secretary of
the Treasury sees nothing in the Sit
uation as to money to warrant any
other belief than that low rates and
an abundant supply are to continue
for some time to come.
In its influence. the action of Secre-
tary Mellon is of. the greatest i'm
portance.
1t should and probably will give
impetus to the bond market, and
especially to the high-srade, high
out the entire bond list.
All liberty bonds should at once
score above par and higher prices, in
all probability. will prevail for vari-
Gus issues of certificates and notes.
AS to the ga S themselves. bankers
hold that the issue will be overSuh-
scribed and that within short time
they will be selling at premium.
Practically all issues of Treasury
certificates are selling below a 3A per
cent basis at this time June maturity
A per cents are selling on basis
of sos; the 512s on a basis of 3.02.
while later maturities vary from 3.21
to 3.4S, with all under 81 per cent.
1t is generally believed that the
Secretary of the Treasury was also
making real test of the market for
government securities, with view to
further long-term financing.
Bankers were rather surprised at
the high rate of the last note issue.
Ia per cent. and predict that there
Will be no further opportunities for
investing in this short-term paper of
the government except at materially
lower rates-perhaps 4 per cent, per-
haps lower.
For corporations desiring temporary
employment of funds, the new certifi-
Gates are tax free. The new revenue
act imposed only normal tax on cor
porations- The 3ls per cent certifi-
Gates are free of normal tax.
There is every indication that loan
rates will remain low for many days.
1t certainly cannot be called an EVIL
dence OF prosperity from the stand
point of business activity for II
money were being used freely in trade
and commerce the supply for invest
ment in low-rate securities would not
be as plentiful.
May Cause Refundfng.
The low prevailing rates are more
or less likely to bring thoughts of
refunding operations to corporation
heads. Recent issues of to per
cent bonds. with callab BILE privileges
while frequently used at the time of
issue as an added inducement to the
purchaser, may prove 10 be a detri-
ment. as corporations are very liable
to undertake refunding operations at
lower rates. -. $50 .--
If a change from one rate of inter-
est to another is made the investor
does not have to make an accounting
of the difference in price resulting
from the trade until he sells the
bonds taken in exchange or until
they are paid off.
With the steadily. falling money
rates taxes by time of maturity may
be lower than they are now. 70
The Treasury but recently paid on
Treasury certificates issued at so
and 6 per cent interest and will not
certificates until August l. 1922. while
50 per cent notes issued June Is.
1921. will not mature until June Is,
1924. the rate being 5A..
The credit of the government is no
better, but the currency of the realm
is in larger unemployed-ih-b business
supply. with much of it owned by
cautious investors. to whom safety
with lower interest is the great con-
sideration. 49,
Local Issues Active.
There were quite a number of
recorded on todays ses-
sion of the local stock exchange. with
the bonds Of the public utilities and
shares of the same corpora tons
attention. ~
AS a rule prices were strong. The
Potomac general mortgage and re-
funding IS showed a recession, but
the sales were limited to two $500
although no large amount of
the issue could have been acquired at
the price.
The general 6s were finn at ssN:-
while Capital Traction IS advanced
to 9512 Railway As sold at ssh and
50. and Gas SIS at 92A.
Stocks were firm at 55 to SAX for
Washington Gas, SO for Railway COM
mon, 50 for the preferred, and 95A to
951s for Capital Traction.
Class Elects Officers.
After the lecture before the ele-
men CLASS OIL Cne w washington
Chapter, American Institute of Bank
ing. the class met and for the first
time in the history of the institute
elected class officers. as follows:
]. F. Hillyard, president; Miss Lois
A. White. vice president; Florence
l. Senge. secretary, and Clarence F.
SchatZ, treasurer.
These young people are all active
Junior bank officials connected with
the National Bank of Washington,
Federal National and Lincoln Ma
tional banks. e