Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-04-02
B|L[|0NF|NANC|NG
PLAN IS STUDIED
Treasury Prepares to Retire
Fourth Liberty Loan
Bonds April IS.
BY the Associated Press.


Springtime brings a billion dollar
financing job to the Treasury. Sec
rotary Morgenthau, back today from
an Easter vacation, studied plans
made by expert assistants for re-
firing on April Is billion dollars
worth of fourth liberty loan bonds
which have been called.
What his advisers recommended
was kept secret, but recently slack
ened spending made it doubtful that
the Treasury would seek to increase
its present huge cash balance. Nor
was there a hint Of any but orthdox
borrowing methoGs.
Two Billion Ready Cash.
Excluding the s2,810,00O 900 pro-
fit on dollar devaluation, the Trea-
sury still has more than $4,000, 600
900 Of ready cash.
Further, its action in holding March
financing strictly to an exchange of
SHOO,OVS.VOo Al lhothklllCo gave CNi-
dence Of no great need for additional
funds in the immediate future.
On the basis of recovery spending
in February and March, the $4,000
100000 cash balance would easily
provide for April, May and June
spending.
Administration leaders foresee a
rapid advance in public works spend
ing as the weather improves. But
they concede that with $4,000. 900. 900
spent for recovery in nine months Of
the fiscal year. the budget estimate
of more than 100000 900 for these
purposes will not be reached by
June 80.
These considerations made some
officials consider it unwise to borrow
in excess of the April maturity and
needlessly increase interest costs on
the public debt.
Money Is Cheap.
Another factor in the borrowing
program is the extreme cheapness
of money obtained in 90-day bills
which are sold to highest bidders.
On the last issue, only .08 per cent
was paid for a three-month loan OF
S5O,0OO,0 900 and only 10 for a six
month loan of the same amount.
With such cheap money available
for sudden requirements. some Treas
ury experts believe the path of Gov
eminent economy has turned away
from a major long-term borrowing.
When the conversion offer for the
called Liberties was made last Oc-
tober. Wall Street bond circles were
inclined to expect that substantially
all of the called Liberties would be
converted, but shortly thereafter the
plan of manipulating the gold value
of the dollar was announced, and
holders of gilt-edged investment bonds
became nervous. United States Gov
eminent issues declined rather sharp
ly for a few days.
See Favorable Conditions.
After the dollar was devalued to
59.O6 per cent of its old parity, and
the policy of making frequent changes
in the gold price abandoned, invest
ment confidence was quickly restored,
and bond prices generally had brisk
advance.
Passage last week of the inde-
pendent Office bill over the Presidents
veto, has brought little fresh talk in
Wall Street of inflationary moves. but
the consensus has been that this ac-
ton was of more political than none
tary significance, since many hard
money members of Congress voted to
override the Presidents veto.
Provided nothing happens to upset
present calculations, bond quarters
believe that with short-term money
rates around record lows, the Spring
and Summer should see the most ia
vorable conditions for Treasury financ-
ing approximating those of the Sum-
mer of 1881. when 3 per cent long
term issue was sold, the lowest coupon
in years,