Evening star., 1932-10-01

TREASURY BALANCE
AT LARGE FIGURE
Proposed New Bond Issue Is
Expected to Be for
20 Years.
Special Dispatch to The Star.


NEW YORK, October IA test Is
expected soon to be made Of the ability
of the Government bond market to
absorb a long-term issue. As most of
the financing in behalf Of the Treas
ury in the last few years has been
in short-term Treasury notes and GER
tificates of Indebtedness, though with
a gradual lengthening Of the maturity
recently to a five-year term, there is
no precedent for the degree to which
institutions and corporations, as we'll
as private investors, will look with favor
on long-term bond.
The latest Treasury statement pub
lished shows that the Treasury bal
ance Is in the neighborhod Of $3.50 ,000,-
600. This amount is greatly in excess
of the balances in the second half of
the last fiscal year. It provides con-
siderable leeway for financing necessary
requirements. Consequently no special
strain on the Treasury need occur when
the time comes for paying of the $780,
OO0, 900 of 3hs per cent Treasury certifi-
Gates which fall due on october Is.
2O-Year Issue Rumored.
1t is believed the proposed issue of
long-term bonds may be limited to
$3.50 900 900 and that the life of the
issue may be 20 years. In 1922 Treas
ury 414s were sold with due date
In 1852. These are now quoted at a
premium over par Of about 834 points
In 1924 an issue of over 81 900 900 '0OC
Of Treasury As was offered, maturing
in 1854. These are today quoted at
1O434 Two years later Treasury 3a.
were brought out, maturing in 1856
They are now selling at premium
slightly above 2A points.
In 1927. 1923 and 1881 three issues
Of Treasury 3ass were offered, Of which
two mature in 1943 and the third ir
1947. All are now above par. Also ir
1881 there were issues Of 3ls per cent
and 8 per cent Treasures one due in
I949 and the other in 1855. The one
was today quoted at discount Of Ia
points and the other at points. AL
Of these bonds may be called from
to 10 years prior to their absolute
due date.
The reception given to a new issu,
Of long-term bonds by the public woult
probably determine the policy of tn,
Treasury toward refunding the frs
Liberty 4Ls. callable after June Is O
this year, but which 1t was indicated
on September Is, will not be disturbed
this year. The amount Of this issue i!
$3.50, ,491 $50. If they are to be callee
next June notice to this effect must gC
out by March IS, or shortly after tn,
presidential Inauguration date. Thi!
would make 1t one of the earliest maiol
rY1~. H.
istration might then be in power. 1t ii
will be taken on the fourth Liberty
4l4S, which are callable after October
Is, 1888, and mature in the same month
of 1898.
There has been an insistent demand
for long time that an effort be made
to induce private investors to purchase
long-term Government bonds. To-day
large percentage of all Government
issues are In the portfolios of the bank!
and Of corporations that maintain q
liquid position through holdings o
short-term Government securities. Tht
American public holds a smaller amount
per capita Of its national loans thar
any other important government in tn,
world. The difficulty In developing ar
interest among investors in American
Government loans is the small rate Of
interest which these have paid, and. ir
the case of recent emissions. theil
short-term character, which involves
frequent exchanges of maturing issues
New Issues Few.
The Government bond market lately
has been persistently strong, with prac.
tically all members Of it selling at the
highest prices Of the year. This re.
fleets not only general ease Of money
rates, but the lack of new corporation
issues Of a character that would bt
attractive to conservative investors. II
has always been believed that Just a,
soon as the corporation market open.
up and provides satisfactory outlet fol
carefully managed investment funds, tn.
supplies OF Government bonds comins
from institutions now heavily invested
in them would react against prices anc
make future financing of a short-tern
character more difficult and so compe
more long-term bonds. in which the
general public might participate.
(copyrisht, 1922