Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-06-17

w twelve months will bring the United
States Treasury the most difficult fl
nancing job it has yet had to handle. In
other words, the United States Government
must pay the equivalent of $50 to every man,
woman, and child in the United States.
This is the Governments biggest financing
job for the reason that the nation is at peace
and the war patriotism which stimulated the
Liberty Loan drives between 1917 and 1919
is absent. The financing must be done in a
cool business way. There will be no brass
bands, no flaming Liberty Loan posters and no
groups of volunteer workers to help handle
the problem 1t must be done by handful
of Woodworking officials and clerks in the
Treasury Department.
Slightly more than half Of the vast sum is
needed to pay outstanding notes of the Vic
tory Liberty Loan. 1t will be recalled that
this, the last of the big war loans, was a
short term loan of but four years and that
the four years will be up next May Before
that time, the Treasury must also meet Treas
ury Certificates of Indebtedness and War Saw
ngS Certificates to an amount which will
make up total of approximately five billion
dollars.
The task will be accomplished not by pay
ing off the whole amount in fact, but by
shifting of credits and creditors A. SubStan-
tial portion will be paid off outright but some
of this indebtedness will be met with new
borrowings, in many cases from the same
persons Thus, man holds. $4,000 in Vic
tory Notes. This year the Treasury will pay
him in cash or will give him new notes or
bonds for an equal amount. He may take
part payment in cash and part in new bonds.
The same method will be pursued in retiring
the whole $50oo,ooo,ooO to be paid in the
next year. If all or a large portion of the
present holders of the maturing securities want
cash, then other purchasers must be found
for the new securities in order to provide the
money to redeem the old ones.
But even considering that the Treasury will
borrow some new money to pay this huge
debt, the transaction is in effect the same. A
total debt of S5,ooo,oOoooo must be met in
one way or another.
The problem is especially delicate just now
because the Government cannot afford to pay
so high a rate of interest as it did during
the war. 1t must induce holders of securities
which now pay ga per cent or more to
accept new securities paying only per cent
or IA per cent. If the Treasury begins
bidding franticaly for funds the interest rate
will rise and taxes viii have to be raised to
meet the high interest charges. Therefore, the
financing must be done smoothly and over as
long a series of months as possible seas to
create the least possible disturbance in the
money market
Business Demands Capital
Another important fact is that the country
is on the edge of a BOOM Industries are
reviving their activities and this brings a de-
mand for new money. Private industries uSu-
ally are willing to pay higher interest rates
than the Government cares to pay and there
fore there will be tendency for these pri-
vate companies to bid the money away from
the Government. There is no war pressure
now to bring to bear on the citizen to induce
him to forego private profits and put his
money in Government bonds. The Treasury
must go into the money market as trader
and make the best deal it can.
review of the public financing situation
shows that such progress has been made since
the ArmiStice in pairing Down the public debt
The peak of the debt was reached on August
81, 1919, when it stood at $26,596o 100000 which
is equivalent to S265 for every man, woman
and child in the United States. On March 81,
! 1922, the last date on which a Government
financial statement was issued the debt stood
at $23,1 900 or $3451 100000 less than the
peak. That means that every person in the
United States has paid off $34 of his indebted
ness incurred on account of the war. Every
one still owes 1881.
/ Many persons who owned Liberty bonds have
felt some resentment against the Government
in the last two years because of the depre-
ciated market value of these securities. At
tacks have been made on the Treasury it
being claimed that it was unfair for the Gov
eminent to sell bonds to the public and per-
nit them to deprecate in value. more care
full examination of the merits of the situation
will reveal that this complaint is not well
founded.
Why Bonds Deprecated
In a bargain made between the Government
and the bond-buyer-a bargain which was made
to win the war-the bond-buyer and not the