Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-12
TREASURY OBTAINS
RECORD LOW RATE
Bankers Now Anxious to
Loan Large Sums to U. S.
Government.
epeeial plspatch % The star.

Epeclal Dispatch TO Inc star.
NEW YORK, July 12.-Thanks to
the abundance of funds seeking invest
ment in these days of slack business,
the United States Treasury is cur
rently borrowing money on the most
favorable basis since the war.
A record high price of 996T2 average
has been bid for the forthcoming issue
of Treasury non-interest bearing bills
which will be dated July Ia. At that
price they will cost the Government
only 1Is per cent.
The last previosu piece of financing
done by the Treasury took the form OF
certificates of Indebtedness sold last
month, when the Government paid 2ts
per cent for it's loan. That loan, how
ever, will run longer than the new
issue Of Treasury bills, which Will
mature in two months and therefore
are comparable with bankers bills In
the open market SiXty-day bankers
acceptances are discounting at 2 TO l1s
per cent or Just shade under the price
paid by the Government for 60-day
money.
Lower Money Pictured.
The downward trend of money is &C
curately measured by the rates at which
successive issues of Treasury bills have
been discounted The first offering
made since the Treasury was author
lied by Congress last year to sell Sc
curities below par was one of 100000
900. issued last December. 1t was sold
on a discount basis of 3A per cent.
The second issue was made in February,
consisting of $50 ,108,0 900 bills discounted
at 8. 30 per cent third issue of ssh
$4,000 was made in April on a dis
count basis of 2.93 per cent and that
was followed by $104.600,000 Treasury
bills in May discounted at 2.54 per cent
1t is apparent, therefore, that the
Treasury is receiving the full benefit OF
the cheap money now ruling.
The method of borrowing money
through issue of non-interest bearing
bills sold at discount, which for many
years has been the British governments
favorite method of financing short
term requirements, is growing in popu-
1arity here.
The issue Just announced has re-
eeived greater response from money
lenders than any of the other Treas
ury bill issues. Secretary Mellon an
rounces that subscriptions aggregated
1928, 1868, 900, or more than six times
the amount offered. Despite the heavy
oversubscription, the Government, it is
officially stated, will accept tenders for
but $S0.920,000.
Tax Exemption Factor.
Probably one reason for the fact
that subscriptions for the present offer
ing ran far higher than any other
was the added tax-exempt privilege of
Treasury bills extended by Congress
In its recent session, presumably as a
result of complaints of bankers against
the more limited exemption provision
attaching formerly to bills. The new
legislation specifically exempts from tax
any capital gain from sale of bills in
addition to exemption of interest. The
only exceptions to such exemption are
estate or inheritance taxes. Much COM
plant had been made by bankers be-
cause the bills heretofore were not free
from capital-gain tax.
The Treasury bills find Judgment in
the hands of private money lenders
hands in a greater extent than certifi-
Gates of Indebtedness, which are a
favorite instrument among banks
Banks prefer the certificates because
subscribers to the latter entail no i'm
mediate cash outlay, but take the form
of credits by banks for account of the
Government. Treasury bills are sold
for cash only.
In the present state of uncertainty
in business, private bankers and in
dividuals are eager to lend money to
the Government for short periods. A
point of interest with regard to this
issue is whether any public Offering
will be made. The extremely low dis
count rate would appear to preclude
such resale
tcopyright, 1900