Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-06-15
The HdSkin Letter % 1 : 2s:s=
REFUNDING GOVERNMENT BONDS.
Washington, D. C., June Eth

Washington, D. c., June 1.-THE
next twelve months will bring the
United States treasury the most diff
ficult financing job it has yet had to
handle. In that brief period the treas
ury must fund approximately $780,
100000 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 fin
ancing job for the reason that the ma
ton is at peace and the war patriotism
which stimulated the Liberty loan
drives between 1917 and 1919 is abb
sent. 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 pro-
blem. 1t must be done by a handful Of
Woodworking officials and clerks in the
treasury department.
Slightly more than half Of the vast
sum is needed to q outstanding notes
Of the Victory Liberty loan. It will be
recalled that this, the last of the big
war loans, was a short term loan of
but 0 years and that the four years
will be up mex 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 dollars.
The task will be accomplished, not
by paying off the whole amount in fact
but by a shifting of credits and credit
ors. A substantial portion will be paid
off outright but some of this indebted
ness will be met with new borrowings,
IN many cases from the 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
So,OOO, OOO,O 600 to be paid in the next
year. If all or a large portion of the
present holders of the maturing secur-
tiles 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 treas
ury will borrow some new money to
pay this huge debt, the transaction is
in effect the same. A total debt of
S5,0O0,OO 600 must be met in one way
or another.
The problem is especially delicate
just now because the government can
not afford to pay so high a rate OF
interest as it did during the war. 1t
must induce holders of securities
which o pay Az per cent or more
to accept new securitie sipaying only
4 per cent or Az per INT. If the
treasury begins bidding fbntically for
funds, the interest rate viii 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 mar.
ket.
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 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 wal 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 mar.
ket as a trader and make the best
deal it can.
A review of the public financing