Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-04
j. S. FINANCING DUE
IN next FEW DAYS
Mellon Expected to Announce
Form Of New Treas.
ury Loan.
BY CHARLES r. sPEARE.

Special Dispatch to The Star.
NEW YORK, December 4.-within
the next few days Secretary OF the
Treasury. Mellon is expected to an
nounce the form in which $5s5 ,OO0, 900
Is, Is to be refunded. It is expected
that the proposed issue viii be approx
imately $500 100000. There are wide
differences Of opinion among dealers in
Government securities as to the prob
able maturity date of the new loan.
Obviously it will be longer than three
months, as the Treasury would not care
to embarrass itself with additional re-
funding on March is. when IL will be
compelled to deal with over $1,100,-
100000 of 3l2 per cent Treasury notes
called for redemption on that date.
Therefore the shortest likely maturity
is six months. There are those who ad-
vocate one-year note, believing that
this would be popular with the banks
and corporations that supply the great
est demand for short-term Government
obligations.
Refinancing March Notes.
With the December Is maturity taken
care OF, the next important problem
which the Treasury officials will have to
meet Is that of the refinancing of the
312 per cent March notes. The situa-
ton has developed considerable agita-
ton In favor Of long-term Govern
ment loan.
financing has been done through the
medium Of short-term securities. This
has been made necessary by conditions
in the credit market. and latterly it
has been influenced by the abnormal
demand on the part of banks and cor
porations for Government paper Of
short-date character. It Is felt, however,
by students Of Government financing
that the Treasury Department should
take advantage Of the existing low in
terest rates and also Of the fact that
there is q comparatively small amount
Of longtime Government paper out
standing which does not command a
high premium and is therefore unde-
Sirable to many investors to issue 3
per cent loan with 80 to 40 year ma
turity to which subscription might be
made at par.
Yield Basis Lower.
The United States Liberty ais.
which are fully tax exempt, are cur
rently quoted below a "a per, cent
yield Basis. Under the Liberty bond act,
foreign governments were permitted to
make payments to the United States In
oDngaIlOnS OF this country when these
obligations were purchased below par.
Consequently. up to this year. they
were able to retire their debt in this way
and had made payments In the form OF
United States obligations amounting, to
over 81 loo, 900 900 at the end Of the
fiscal year, June 30, 1880. Owing to the
premiums on Treasury issues that have
grown out Of the strong demand for all
Government paper, they are compelled
this year to pay in cash.
It Is being suggested that holders Of
the ~ per cent Treasury notes matur-
ing in March be permitted to subscribe
to 80 or 40 year per cent Govern
ment loan at par rather than be asked
to accept another short-term issue at
rate possible l per cent below that
which they are now receiving. 1t is
suggeSed also that the 3 per cent long
term loan be made fully tax exempt.
The British government is now nego-
tiating large refunding operation In
which a per cent war loan Is to be
replaced by per cent long term issue.
This program has been developed out Of
the easy money conditions, which British
f1nancierS realize cannot continue In
definitely. France has also taken lib
eral advantage Of the existing low
money rates to cut down her debt serv-
Ice by refunding 5 and 6 per cent war
loans for those carrying q much lower
coupon rate.