Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-16
TREASURY REFUND
MOVE IS DUE SOON
Bonus Proposals Come at
Time When Other 0bIigs-
tons Impend.
Special Dispatch to The star.

special Dispatch to The Star.
NEW YORK. February l6.-The
level OF the SIX most active United
State Government long-term bonds
stands exactly halfway between the
high and low prices Of 1891. The peak
price OF the six, on the average, was
reached early in January and was
los 1882. The low point was touched
just after the threat of a $500 900 900
Government bond issue to cash veterans
compensation certificates arose about O
fortnight ago and was 1O4 S-32. This
morning the average was los 1882.
1t is obvious that no great price
movement has taken place on the whole
and at today'S figure the Government
bond list compares favorably with its
1880 high and with the best levels
obtaining at any time since 1927-l92S.
| The fact Of the matter Is that the COM
plete removal of any threat of a large
issue to take care Of the soldiers bonus
certificates would result in new high
prices for all these issues.
Sane View Is Taken.
AS 1t stands, though there was a
hurry OF nervousness at first, the mar
ket has taken a conservative and sane
view OF what the eventual consequences
OF such an issue might be- It has not
taken too literally either the dire pre-
dictions Of the Treasury Department or
the optimism of those who would cash
| the certificates Immediately at their
l945 value of So, 500, 900 900.
1t Is apparent that the market must
absorb some amount of new Govern
ment financing and, according to indi-
| cations from Washington, this will be
IN the neighborhood Of $500, 000, 900 to
500 ,o0O, 600. The Treasury holds In the
adjusted service certificate funds about
S772 000, Of which $21 .00O, 900 must
| be reserved for death claims this year.
But the remaining $751; 900 900 Is not
| In cash. It Is held In the United States
Governments own obligations, which
! would have to be sold in order to raise
the necessary funds. So that If there
must be a new issue of about S700. O0O.-
600 and the Government must sell an
additional $75l 100000 of bonds now In
the fund. the market must provide
close to $l,50o, 900 900 for this pss1pScc
alone.
Under ordinary circumstances this
would be accomplished without great
difficulty. And even now no one seri-
| ously doubts the markets ability to
| digest this amount with some read
| Justment of prices. But unfortunately
the proposal comes at an awkward time
for the Treasury. A deficit of $780,
| 600, 900 must be absorbed. Public works
will take 5000 ,0O0. 900, against only
! s275, 900, 900 in 1928. The Treasury
has short-term debt of $4,000, 000, 900
outstanding, which is considered too
large. On March Is, S1.109,0 00, 900 of
obligations mature. The necessity of
getting these out Of way becomes
evident when it is realized that ss,201,-
100000 of first and fourth Liberty loans
are callable in 1882 and 1888 A large
part Of this amount carries AZ per cent
coupons, and Secretary Mellon has
pointed out that, irrespective of the de-
STABILITY Of reducing the coupon rates.
Refunding Plans.
Refunding operations must be started
at the call dates, as it is unthinkable that
the entire outstanding amount of fourth
| Liberty bonds, $6.268, 900 900, be per-
mitted to run to maturity and then re-
! tired in single year, 1888.
Bond dealers have every sympathy
| for the Treasury's predicament, and
| none wants to see any wide price recess
sions in outstanding governments But
1t is pertinent to point out that one Of
the crying needs of the bond dealers
for some months has been long-term
Government bond to satisfy the acute
investment demand for such an issue.
AS for the prospect of any drastic
declines, it is sufficient to point out
| that both France and Great Britain
would be glad to buy United States
Government long-term bonds at par
or under. Debt repayment agreements
provide for the acceptance of United
States Government bonds at their face
i value.
(Copyright. 1871