Evening star., 1933-10-12
TREASURY READY
WITH BOND ISSUE
12-Year Bonds, to Amount
of $500, 900, 900, Will Be
Sold on Monday.
BY the Associated Press.

BY the Associated Press.
Treasury financing on q $4,000 ,o00,-
900 scale today was the administration
program for raising ready cash and re-
funding $1,s75,oO0,O00 of the fourth
Liberty loan issue.
A new issue Of 12-year bonds, paying
~ per cent the first year and 3A
thereafter, provided the means Of ac-
complishing the operation.
The exact amount of the issue was
undetermined, but s5o0,0o0,00o worth
will be sold for cash at 1011a. Sub
scriptions open Monday.
Other portions of the bonds will be
exchanged for fourth Liberty bonds,
which aggregate s6,268, ,094.15o and bear
~ per cent interest.
All owners Of fourth Liberties may
take advantage OF the exchange offer.
but Treasury officials hardly expect
those whose bonds were not called to
do so. The important distinction be-
tween the called and uncalled securities,
1t was explained, is that the former will
cease to bear interest next April Is.
Lots Drawn by Acheson.
Just which bonds were to be called
was determined late yesterday by draw
ing numbers from q bowl. Ten enve-
lopes rolled into tightly wrapped pellets
were placed in the receptacle. Acting
Secretary Acheson, with little formality,
extracted three of them. Their contents
included q figure and . letter Identify
ing the bonds called.
These are bonds bearing the letter A
with serial number ending in the digit
!, the letter j and the dnal digit 9, K
and 0. All unlettered bonds with serial
numbers ending In 10. and o were
called. The unlettered bonds were the
temporary bonds first issued. quantity
OF which never was exchanged for per-
manent bonds.
Interest rates and the cash sale price
Of the new bonds were determined In Q
manner calculated to prove least dis
turbing to the bond market. The last
Government issue, with interest at 3l4
per cent, is currently quoted at 101 and
q fraction. The fourth Liberties have
been selling for 103 and q fraction.
With the new bonds to be sold at
1912 and drawing AZ per cent the
first year and Sl4 subsequently, off,
cials placed the cash price at a level
close to the market value Of the previous
issue and allowed the market q wear
in which to adjust itself to the differ
ence In the yield between the Lber-
ties and the bonds replacing them.
Would Suffer Interest Cut.
Holders Of uncalled bonds were not
expected to exchange them, for the rea-
sent q financial loss. Instead Of the
~ per cent return they have been re-
ceiving, and which in the case OF un-
called bonds will continue, they would
receive but 81 per cent from the new
issue after the first year.
The decision to refund q portion of
the fourth Liberties came as a surprise
to many in Washington. officials pre-
viously had indicated that no such move
was in contemplation. They estimated
that the Government must borrow from
six to eight billion dollars in addition,
and 1t was argued that to refnance the
fourth Liberties would place too severe
q strain upon the capital market.
On the other hand, it was pointed out
that the last issue was well oversub-
scribed. The final decision was q COM
promise between officials, intended to
get the vast projects of refinancing the
fourth Liberties in progress without
placing the full strain Of a 5000 ,0O0, 600
operation upon the market.
Will Be Dated October IS,
The new bonds will be dated October
is. which falls on Sunday. The Treas
ury will begin receiving subscriptions
the following day and will reserve the
right to close the books at any time It
should so decide.
Coincident with the announcement,
Secretary Woodin issued q statement
saying:
The present bond issue will provide
the Treasury with about $500 ,000, 900 Of
cash funds to meet current needs. The
primary importance of the operation
lies. however, in the fact that It con-
st1tutes the commencement Of the re-
funding OF more than six and q quarter
billion OF bonds which, unless previously
called. would mature in 1898, when
$500, 0,000, 900 Of Treasury notes also ma
ture.
THE exchange of the new bonds for
a substantial portion of the outstanding
IA per cent Liberty bonds will not only
affect q material reduction in the an
nual interest chGr-e on the public debt,
but will improve the structure of the
debt by reducing the volume of near
term maturities."
Treasury officials estimated that the
saving on interest charges by substi-
tuting the new bonds for the old would
be approximately $18, 8,750,000 after the
first year. Interest charges on the new
issue will total $21 ,250, 900 for the first
year and $3.50, 900 thereafter,