Evening star., 1933-07-30
NFLAT|0NARY AIMS
APT TO CLASH WITH
FEDERAL FINANCING
Treasury Must Seek Sum
Estimated as High as
Ten Billions.
FLOTATION is PROBLEM
AS DOLLAR DECLINES
Only Recourse, if Market Falters,
Is Expected to Be Powers Under
Thomas Amendment.
BY GEORGE T. HUGHES.

special OlSpatcn TO The star.
NEW YORK. July 29-The Roose-
welt administration has two problems
on its hands which seem to require con-
Trajectory treatment. One is to hold up
the general price level, which can only
be done by keeping to the infiationary
course, and the other is to carry out a
refinancing program Of magnitude un-
precedented in peace time.
The total of bonds that the Treasury
must float this fiscal year has been es-
timated as high as 10 billions of dol
lars, including. of course, refunding
operations. The question Is whether
the market could take any large pro-
portion of that amount with the dollar
steadily declining in gold value. If it
should falter, the only recourse would
be to invoke the open market powers
of the Federal Reserve under the
Thomas amendment.
Medium Term Likely.
Some decision must be reached in
connection with the Government offer
ing scheduled for August is. There has
been talk of attempting to sell long
term bond issue, but the chances are q
compromise will be reached with one Of
medium term, say 10 years Yields on
outstanding long term Treasury issues
range from 1856 to 306 per cent. The
market for these is none too strong,
either Short term obligations are
wanted. Treasury notes yield anywhere
from a minus quantity to 81 per cent,
the latter for the 1888 maturity. Treas
ury bills on a discount basis are quoted
from 0.40 per cent bid to 0.15 per cent
asked The banks are the buyers Of all
this short-dated debt.
High-grade investment bonds con-
tinue to sell on low yield bases. To IT,
lustrate, Duquesne Light 42s are
quoted to return only little over 4
per cent. New York Gas. Electric
Light. Heat g. Power purchase money
IS give less than 4 per cent at the
market Standard Oil Of New Jersey
SIS Weld Az per cent to the nearest
call date Philadelphia Electric first
Is yield only trifle over 4 per cent.
These quotations would argue for a
strong investment demand, but dealings
are in too small volume to make the
test conclusive.
It has been the rule Of late for the
stock market to ignore fluctuations In
the exchanges It has been weak when
the dollar was declining and strong
when it was advancing, apparently un-
Influenced by the degree OF imitation
registered in terms of sterling or the
European gold currencies.
Stocks Turn Sensitive.
That rule was broken, however, on
Friday when stocks again displayed
sensitiveness to the rapid and erratic
changes in the gold value Of the dollar.
That may have been because commodl-
ties were affected, notably cotton, or 1t
may have been a return to condltlonS
existing before the speculation for the
rise in equities gained such great head
way. A..
II would be interesting to see just
what the market response would be II
business developments were the only
factor that went into the making OF
prices. but that is not to be expected
powaGavs. The nearest approach to 1t
would be in the event that the admins
tration should decide that depreciation
of the unit Of currency had gone 1ar
enough for the present. There was Just
such a report in circulation during
fridays trading, but 1t was uncon-
For the year ended June 30 Consoh-
dated Gas earned $3.50 a share on the
common stock. The stock, se!nng
around 54, is priced almost Is times
earnings. Considering the dimculties
the public utilities face, with the popu-
lar demand for lower rates on one s1oe
and the Government urging higher
wages and shorter hours for employees
on the other, this is generous appraisal
of earning power: .-
AS a matter Of fact, stocks at their
present levels have discounted good
deal of trade recovery. A Dow-Jones
compilation shows that IS industrial
issues listed on the Stock Exchange az
their peak prices for 1888 were quoted
at about 8lz times their average net
earnings for the i've years ended IN
1929. Any such criticism OF the price
level, of course, leaves out Of account
imitation influences.
United States Gold Output Drops.
There are only two stocks loaning at
premium, both Of them low priced,
Baldwin Locomotive and Colorado Fuel
& Iron The rest Of the list loans nat,
which is not significant Of any borrow
ing demand, with call money at per
cent. The short interest in the present
market is believed to be negligible.
Gold production in the United States
is declining. Output in June was 1872
600 ounces compared with 1885, 900
ounces in May and 1890 in June,
1882 American mines, with no chance
of obtaining the world price for their
product, have little incentive to step
up operations.
(Copyright. 1933)