Evening star., 1934-09-09
j. S. BONDS EASE,
PRIME CORPORATES
RELATNELYF|RM
Distinction Taken as Sign
That Fiscal Policy Is
at Crossroads.
BY BYRON SELLER.
Special Dispatch to The Star,


NEW YORK, September "a dis
tinction between Government and
corporate credit was tacitly drawn
by the bond market this week.
Usually when obligations of the
National Government have fallen,
they have led the way for decline
in all high-grade issues In the peri
odical imitation scares this generally
has been the case. But this week
gilt-edged corporate obligations have
held relatively firm in the face of
pronounced weakness in Govern
mentS.
The meaning of this apparently is
that the Governments fiscal policy
is at the crossroads. It is not so
much that the Treasury is faced with
some important financing to be an
nounced next Monday as that num-
Der of troublesome things are coming
home to roost.
For instance, there was the resig-
nation of Budget Director Lewis w.
Douglas, followed by the report that
the resignation of w. r. Stark, chief
Treasury economist, had been sub
mitted to the Secretary. These de-
fections from the New Deal ranks
mark the dwindling almost to the
zero point of whatever conservative
influence there remained to check
the merry round of Government
spending.
More Dissension Appears.
Additional evidence of diSSenSion
has cropped out in squabbles over N.
R. A. direction, and reports of hot
water in other quarters. The textile
strike has also its repercussions, along
with prominently displayed dis
patches from Washington predicting
largely increased relief expenditures
next Winter. Moreover, the wisdom,
or lack of it, in monetary moves
which are resulting in exports of gold
for the purpose of gathering in the
worlds willing offerings of the quasi
precious metal, silver, is still a mat
ter for wide discussion, intensified by
erratic fluctuations in the foreign ex-
changes.
All these considerations have come
to a head this week in the market for
Government bonds, which has for
some time been none too sure of
itself. The net result was rather
broad declines, with many new lows.
Most disconcerting of all was the de-
cline in Treasury per cents below
par, for before silver naturalization
set off liquidation it had been the
general belief that the Government
could sell per cent bonds to handle
its requirements. That hope has now
gone glimmering.
The Treasury is faced with the
necessity of meeting maturities of
S525, 100000 in certificates September
Is, and of redeeming 81 200, 100000 of
called Liberty 4l4s October IS. This
weeks Federal Reserve Board condi-
ton statement shows that member
banks already are holding some
S6,627 100000 Of Government securi-
ties, out Of total investments of
SO, 100000. To what extent the
banks investment funds have been
going into Governments is shown by
the fact that while the gain in total
investments in the last year has been
81, 1892, 900, 900, the gain in Government
bond holdings has accounted for
$1,496, ,000,0 900 of this addition to bank
portfolios.
Bankers Shun Increase.
Naturally bankers are not anxious
to add to the kitty" any more than
they have too, and they are particu-
larly averse to taking on a further
large load of long term bonds, in view
of the monetary uncertainty. But so
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