Arizona republican., 1922-06-15
Ry Frederic j. Haskin

WASHINGTON, June IA. - The
next II months will bring the United
States treasury the most difficult fl
nancing job it has yet had to handle.
In that brief period the treasury
must fund approximately $5,000,000-
600 in Indebtedness. 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 pa
triotism which stimulated the Liberty
loan drives between 1917 and 1919 is
absent. The financing must be done
in a cool business way. There viii
be no brass bands, no flaming Liberty
loan posters and no groups of volun
teer workers to help handle the prob
lem. 1t must be done by a handful
of hard working officials and clerks
in the treasury department.
Slightly more than half of the vast
sum is needed to pay outstanding
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. Be-
fore that time the treasury must also
meet treasury certificates of indebt-
edness and war savings certificates
to an amount which will make up a
total of approximately $4,000, 100000.
The task will be accomplished, not
by paying off the whole amount in
fact but by shifting of credits and
creditors. A substantial portion VIII
be paid off outright but some of this
Indebtedness will be met with new
a
same persons. Thus, a man holds
$4,000 in Victory 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 $5,000,-
600, 900 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 re-
deem 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 $5.000,0 100000 must be
The problem is especially delicate
just now because the government
cannot afford to pay so high rate
of interest as it did during the war.
1t must induce holders of securities
which now pay AZ per cent or more
to accept new securities paying only
per cent or 4 u per cent. If the
treasury begins bidding frantically
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 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 boom.
Industries are reviving their activi-
ties and this brings o 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 gov
ernment. There is no war pressure
now to bring to bear on the citizen
to induce him to forego private prof
it's 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
has been made since the arnistice in
pairing down the public debt. The
peak of the debt was reached on
Aug. 81, 1919, when 1t stood at $26,-
596,00O,000 which is equivalent to
$3.50 for every man, woman and child
In the United States. On March 81,
1922, the last date on which a govern
ment financial statement was issued,
the debt stood at S23,145, 900, 600. or
S3,451,0000 900 less than the peak.
That means that every person in the
United States has paid off S34 of his
Indebtedness incurred on account OF
the war. Everyone still owes 1921.
Many persons who owned Liberty
bonds have felt some resentment
against the government in the last
two years because of the deprecated
market value of these securities. At
tacks have been made on the treas
ury, 1t being claimed that it was un-
fair for the government to sell bonds
to the public and permit them to de-
preciate in value. A more careful
examination of the merits of the sit
uation 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