The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-06-14


| The next II months will bring the
United States treasury the most
difficult financing job 1t has yet had
to handle. In that brief period tho
! treasury must fund approximately
| SIS, OO0, 0OO, 900 in Indebtedness. In
other words, the United States gov
eminent 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 volun-
teer workers TO help handle the
problem 1t must be done by a
handful of hardworking officials
and clerks in the treasury depart
ment.
Slightly more than half of the
vast sum is needed to pay outstand-
ing notes of the Victory 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 treasury
certificates of Indebtedness and
war savings certificates to an
amount which will make up a total
of approximately five billion dol
lars.
The task will be accomplished,
not by paying off the whole amount
in fact but by a shifting of credits
and creditors A substantial por-
ton will be paid off outright but
some of this Indebtedness will be
met with new borrowings. in many
cases from the same persons.
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 S.
900, 100000 to be paid in the next
year. If all or 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 thu
treasury will borrow some new
money to pay this huge debt, the
transaction is in effect the same.
A total debt of $1,000 900 900 must
be met in one way or another.
The problem is especially delicata
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 securi-
ties which now pay AZ per cent or
more to accept new securities pay
ing only 4 per cent or Al per cent.
If the treasury begins bidding fran
ticaIIy for funds, the interest rate
will rise and taxes will 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
SO as 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 activ-
tiles and this brings a demand for
new money. Private industries
usually are willing to pay higher
interest rates than the government
cares to pay and therefore there
will be a tendency for these private
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 a trader and make the
best deal it can.
A review of the public financing
situation shows that much progress