Evening star., 1931-12-08
AMPLE COVERAGE OF NEW u
LOAN ANTICIPATED IN STREET
Oversubscriptions of Treasury Offerings
by Banks and Corporations Have
Been Rule in Recent Years.

quent decline tn both of these issues to
an average discount from par of 10 per
cent, removed long-term bond issue
from consideration. There had, how
ever, been Recommendation Of a five-
year note with a coupon rate of 31h
per cent, which, 1t was felt, would at
tract some public subscription, inasmuch
as many Of the commercial and savings
banks throughout the country have re-
duced their rate of interest on savings
accounts TO 31a per cent or lower.
It Is not improbable that during 1922
the Government will have to 60 to the
country with long-term bond issue and
perhaps at q rate of 4 per cent or better.
Many persons believe that if the Domin-
Ion OF Canada could obtain subscrip-
tions OF more than 5000 900, 900 from
her private investors alone, as she did
last month, 1t should be possible for the
United States Government to float
billion dollar loan Independent of sub
scriptions from the banks. In spite of
the loss OF national wealth and the re-
duction in personal income, there is
today an investing power among the
american people at least equivalent to
that which they possessed during the
war, when In the last of the Liberty
loans they subscribed for nearly s6,5oo,-
100000 Of the fourth Ans.
The decision to issue snort-term notes
at this time was predicated somewhat
on its aid to the general bond market,
for the competition between this market
and long-term Government loan, saw
at per cent or better, would have been
serious matter. The expectation is
tnat In another six months conditions
VIII be more settled and that the infiu-
ences which have been depreciating all
types OF fixed interest-bearing securities
will be under control. The fact that all
OF the Treasury issues carrying coupons
OF less than 4 per cent are still selling
at substantial discount under par. and
that the First Liberty 31ss are also at a
discount, has entered into the choice of
the present medium for immediate Gov
eminent financing,
Character OF Issues.
The largest of the three issues an
nounced yesterday is for 5000 600, 600
and represents the 3H per cent one
year note. The smallest Is the six
month certificate, which amounts to
$3oo,0Oo, 600 at 234 per cent. The nine
month certificates of indebtedness are
to be offered up to s4o0 900 OOo, with
the interest rate the average ON that of
the other two issues.
During the past five years Treasury
financing has had to accommodate itself,
nrst, TO period of extremely high in
terest rates, which compelled short-tern
borrowing at rates that nearly approxi-
mated the maximum during the war.
then an interval of year and a half
when money rates were abnermalIv low
and Treasury bills were sold at less than
Y OF l per cent, with the third era the
one now facing the Government and in
which it II dealing with a readjustment
IN Federal Reserve rediscount rates since
the September long-term bond issue ana
with unparalleled conditions in the mar,
ket for corporation bonds. During this
period there have been not a few mis-
calculations of the trend of the maney
market by Treasury ofiicials and loss
or opportunity in 1890 to prepare the
ground for reducing some OF the long
term, high -interest-bearing Government
debt.
fcopyrisht, 1887