Evening star., 1932-02-16
FOES Of BOARDING
PLAN BOND SALES
Government Expected to
Keep Money on Deposit
to Bolster Banks.
BY DAVID LAWRENCE.

Administration officials have practi-
cally decided o ma plan Of short-term
financing which is expected not only to
bring boarded money back into circu-
lation, but to swell bank deposits gen.
orally.
II the Government keeps considerable
sums on deposit in the various banks
Of the country, as is now contemplated,
this would be construed by the public to
mean that their Government has conf
dence In the banks generally. Details OF
the plan have not been announced, but
it is understood that, first Of all, there
will be series Of issues Of short
certificates which will be marketed
through the banks, Federal and State.
The interest rate IS expected to be at
tractive in relation to market cond1-
tionS.
VIII Extend Period.
The Treasury has from time to time
left the proceeds Of its financing on
deposit with the banks until the money
is used up by governmental expenses.
Now 1t Is contemplated to leave much
Of the deposits for long periods Of time
as the Treasury conducts major oper-
ations in the financing Of Government
Indebtedness. Even some of the restric-
tionS as to the kind of collateral re-
uuired to secure Government deposits
may be equalized so the banks will not
tie up too much Of their own portfolio
securities behind Government deposits.
This step in itself probably will be well
coined by the banks, as it will increase
their liquidity.
Published reports today that the
Treasury Is considering the issuance OF
Treasury certificates in $50 denomina-
tions are in line with the general
financing can be conducted by WIDEN
ing the participation of the banks in
the Government program. Thus last
December the major part OF the Gov
ernment borrowings was absorbed by
three of the largest banking institu-
tions in New York, and it has been
apparent that there is often a differ
ence of opinion between the larger
banks and the Treasury on the interest
rates the Government bonds should
carry.
Like Wholesale Banks.
1Il6 larger UdIlhS, III cl1SCt, OcCOlilC
wholesalers, since they must dispose
Of such large quantities to other banks
as we'll as to the public. Under the
new plan the Treasury will be setting
I'D a wider distributing system and will
make it attractive to the banks to
participate in the financing and distri-
button, since the proceeds will be kept
on deposit for a longer period than
heretofore.
Practically the same plan was used
during the war, and 1t Is believed no
additional authority from Congress is
necessary to carry out the objective.
Supplements Plan.
In many respects the plan is supple
mentary to the measure now being con-
sidered in Congress. which the House
of Representatives passed Monday by
an overwhelming vote. The whole re-
construction program of the Govern
ment is being rounded out with the
idea that boarding will stop when con-
fidence in the banks has been built up
and when it is apparent that Govern
ment credit is rising.
The most difficult step ahead Is the
balancing Of the budget. When the
present measures for Government
financing and development Of the Re-
construction Finance Corporation an