Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-22
ECONOMY PROGRAM
FOR U. S. EXPECTED
Decision to Retire More Than
Billion of Public Debt In
dicates Retrenchment.

congress has been provided with a
pair OF hsh-hook pockets, but IL A
oouotrul whether 1t realizes IL MS vet.
Inc latest move Of the Treasury .Da-
parument In announcing that q billion
an0 quarter dollars of the public debt
wn De called for redemption next
March has left Congress In q position
Wnere ~ can put It's hands into ies
pockets, but cannot take them Out
at least, not with any large volume Of
the public funds in its grasp.
There Is no restriction on the anaounh
OF the public debt that the Treasury
department can retire within reason.
But IL that money Is not in the cofferN
Congress cannot well appropriate n.
consequently, campaign Of economy
Is strictly within the possibilities Of en-
forcement.
Income Tax Rate.
OF course, one thing that can be done
is TO increase the income tax rate. Thia
would bring in funds which could ~
appropriated, but whether it would -
regarded as q wise political maneuvoR
is another question which Congress
must answer for itself
Senator Reed Of Pennsylvania has de-
clared that such tax increase is in-
evitable. There Is general impression
among the banking fraternity that AnS
drew Mellon, Secretary Of the Treasury,
and his departmental associates do MOI
agree with him. They feel that the I'M
vestors Of America can be counted on 70
absorb the refunding issues without
difficulty. These refunding issues win
be long-term stuff" and will not be-
confined to the billion and q quartsR
in bonds called for March. The offer.
ingS at that time probably win total Q
billion and half
The reaction to this policy OF tine
Treasury has been somewhat varied
but q goodly portion Of the banking
fraternity is strongly In favor of Is
In the flrst place, they feel that such
an Offering by the Government would
stabilize the investment security mar
ket as nothing else could. Naturally.
the Treasury anticipates financing this
refunding operation at lesser rate ct
interest than that portion Of the debt
called now involves, but the new Offer
ings will be longtime securities ana
will clear the way for the shorter ma.
turity issues of the industrial and COM
mercial companies.
Trend Already Apparent.
1t Is obvious that Treasury DEPART
ment officials expect q fairly sound In
yestment position In March or they
would hesitate to "hit" the market with
an Offering of such size, despite the
heavy oversubscriptions of recent Gov
eminent issues. If the bond market
Is sound, 1t is q corollary that the stock
market will also have found ITSELF"
since bargain hunters are not likely
to overlook an opportunity such as this
offering would disclose
The trend has already made itself
apparent in some lines. Leaders in the
insurance world, who control the heavi-
est buying Of securities of any individ-
ual class, forecast a trend toward pre-
lerred stocks. especially those convertible
into common at advantageous rates,
whereas the tendency heretofore in this
line has been to bonds. In the cases
where this move has not gone so far
there is noticeable preference for de-
bentures convertible into stock. Bank
ers recognize these as encouraging in
dications.
tcopyrisht, ls3O)