Evening star., 1932-09-01
TREASURY FINANCE
PLAN IS DUE SOON
Wall Street Expects FIotation
of Billion Dollars in Gov
ernment Bonds.
BY CLAUDE A. JAEGER,
Associated Press Financial Editor.


NEW YORK, September IA major
financing operation by the United
States Treasury, perhaps involving as
much as $1,000, 1000, 900, is currently
topic of absorbing interest in Wall
Street.
The Treasury has more than $780,
100000 in short-term obligations ma
turing on September IS. and at the
same time is expected to raise addi-
tional funds for the Reconstruction FL
nance Corporation and for other pur-
poses. Wall Street expects, therefore,
that new Treasury obligations aggre-
eating close to $1,000, ,000,0 900 may be
placed upon the market.
The market for United States Gov
ernment securities of the medium to
longer-term maturity has recently un-
dergone marked improvement, in con-
traSt to the prediction a few months
ago for certificates falling due within
only a few months. During the past
year the Treasury has relied heavily
upon this short-term form of financing,
which has resulted in piling up of
large volume of short-term debt.
Short-Term Issues.
The markets preference for these
short-term issues was easy to under
stand some months back, when the bud
get was wholly unbalanced, and there
was no telling what demands the Gov
eminent might make upon the money
market. At that time banks, which are
the chief investors in United States
Governments, were wary of loading up
with longer term securities, feeling that
the demand upon the money market
might become such that interest rates
would advance substantially, and mar
ket values Of these longer maturity
bonds in consequence sag well under
par. They preferred issues due to ma
ture, and be paid of at par, within a
few months, thus avoiding the risk of
having to sell their investments at
loss, should they need the funds before
maturity
But banking quarters have grown less
apprehensiVe on that score, and the
tendency now is to believe that cheap
money-meaning relatively low interest
rates-is a worldwide situation which
is likely to endure for some time.
Furthermore, the market for certain
low-coupon Treasury issues has been
substantially bolstered by the act of
the last Congress making them eligible
as packing for national bank note cir
culation.
There is some difference of opinion
as to whether the Treasury will at
tempt to raise most Of the amount
needed September Is through an issue
OF longer or medium term notes. but
the tendency among dealers at present
IS to look for substantial portion of
the financing in fve-year notes. prob
ably to be tax exempt, and bearing
a rate of interest between 3A and 315
per cent. This expectation is based
largely upon the fact that the Treas
ury has no important maturity in 1887
and it has been its practice to stagger
Its maturities fairly systematically.
some dealers expect that part of the
financing due next month may take the
form OF orle-year maturity, since the
treasury has no important maturity
in the latter par of 1888.
May Defer Refunding.
There has been considerable con-
lecture in Wall Street as to whether
the Government would elect to retire
the $536000, 900 of first Liberty az
per cent bonds. which became callable
on three months notice this year If
1t Is desired to retire them on Deem
Der Is notice would presumably be
given with the announcement for the
September IS financing.
The tendency in Wall Street is now
10 expect tnat a refund1ng operation of
this sort may be deferred. For one
thing, it is pointed out in some quar-
terS, the Government might be able to
do so at greater saving if it waits
until its budget is more positively bal
anced than it is now. Wall Street re-
CARDS the present budget as balanced
more in theory than in fact
Next year, the Liberty fourth AIS,
outstanding in the huge amount of
more than $4,000, 900, 900, become call
able, so in the event the Governments
finances are put into impregnable con-
dition in the meantime, it is possible
that it may be able to effect huge
conversion at a substantial saving in
interest next year although conjecture
at this time is obviously premature.
The issues maturing September Is
next are 1898. 000,0 900 in per cent and
$314,000,000 in rs per cent certifi-
Gates.