Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-12-01
BIC DEMAND SEEN
FOR NEW u. S. BILLS
0versubsCription Predicted
When Issue Is Offered in
Near Future.
BY ]. c. ROYLE.

Bankers affiliated with the Federal
Reserve Board and officials of the
Treasury Department anticipate the
largest oversubscription the depart
ment has ever known of the offering OF
short-term Government bills to be made
shortly. The very form Of the offering
is counted on to make it particularly
attractive
These bills will be non-interest bear
ing and will be sold on discount basis.
This simply means that the holders of
these short-term Government securities
will receive their interest in advance
The amount of discount at which the
bills will be sold remains to be an
nounced, but it is likely that it will fol-
low the general interest trends now
making themselves felt in financial
circles.
Plan Explained.
The way the plan works is exceed
ingly simple. If an investor purchases
bill for 81 900 and the discount Is 4
per cent the purchaser pays $3.50 for
the bill. When the bill comes due, the
Government pays back to him $1,000.
In other words, he has collected $40 in
terest in advance. Similar offerings
have frequently been made in Great
Britain and other countries, but this is
the first time the plan has been put in
operation in financing short-term needs
Of the United States Government.
The total volume of bills to be offered
has not been made public. The Treas
ury Department has simply said notice
OF offerings would be made from time
to time" In financial circles it is be-
lleved the offerings will not be less than
5O,000,000. There is also a distinct
impression in outside financial circles
that these short term bills will be fol-
lowed some time during the Spring or
summer by considerable amount of
Iong-term Government financing.
Many factors have united to create
the impression that the oversubscrip-
ton OF the short-term issues will be ex.
ceedingly large. Many firms and in
div1duals who have had funds engaged
In the call money market and who have
WltnoraWn them owing to unsettlement
III the securities market will be attracted
TO the Government bills as providing a
most satisfactory depository for the sur
plus cash, until they need it for bust
ness purposes or expansions or until the
general tone Of the stock and bond mar.
KetS mas recovered. Meantime the funds
would be available on a moments notice
ana Woulo De secure and returning an
Other Investors.
Other purchasers are likely to be
garnered from the ranks of those WIN
Wlthdrew their funds from the stock
market before their entire past urof1ts
we're endangered and now have cash on
nand. These men are of a type not
Ilkely 70 put their funds back into stocks
ana bonds, while any period of uncer-
tainty exists and the new bills offer
them safe and profitable place for
FUNDS temporarily not needed.
another class Of customers will be
recruited from those who put their
FUNDS in the speculative markets. suf-
Iereo severe losses and are determined
20 take no further speculative chances.
1nere were thousands of spectators
VINO allowed their accounts at their
brokers' to be wiped out rather than
put up more margins at time when
they felt the bottom of the decline had
not been reached. These operators in
the market did not have their available
| capital exhausted and are counted on
70 take a considerable portion of the
Government Offering.
The section of the public which die
not venture into Wall Street. and is
! now glad it did not, includes big class
OF investors who prefer Government
securities to any others, even those
which offer high rates of interest II
Is with these buyers that the possibility
OF long term Government financing In
the Summer becomes a factor. They
feel that at that time they can place
their funds in long term securities-and
| until that time, the short term bills
Will provide a safe resting place for the
| money. Buying by trusts and estates
with this idea in view is expected tc
be Of large proportions.
Tax Free Feature.
A factor tending to popularize tte
short term bills is their freedom from
all except estate ard inheritance taxes
| The investment bankers welcome the
! offering, feeling it will open auspiciously
in new campaign of investment offer.
ings Of various kinds designed to NEE
conditions which have changed as &
result OF the recent speculative
upheayals.
Copyright, 1920