The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-10-10
U. S. TO REDUCE
HIGH INTEREST
ON WAR ISSUE
Government May Act to
Save Millions for
Taxpayers.
BY RICHARD L. GRIDLEY
United Press staff Correspondent

WASHINGTON, Oct. 10-Con-
version of at least another billion
dollars of the governments high
interest debt into lower-intereSt-
bearing securities, with savings of
millions of dollars to taxpayers, is
likely to occur next week.
The expensive debt issue is the
Fourth Liberty loan Al per cent,
originally sold Oct. "a, 1918, in the
final efforts of the United States to
help win the World war.
Of the original issue of $685., 927,-
100, the largest security issue ever
sold in the United States, only
SO. 1852. 564,0 will remain outstand-
ing Oct. IS. Some $1.875, 900, 900 of
the Az per cent bonds were con-
verted into per cent bonds last
spring, and the treasury now is
completing the exchange of an adj
ditional $1,250,000,000 of bonds into
81 per cent bonds and 2i2 per cent
notes. A total of $958,000,000 had
been exchanged to last night.
Issues Are Callable
When the operation is completed,
it is contemplated that some $1,000
100000 of the Fourth Liberties will
still be outstanding on Oct. Is.
These are callable on six months
notice and Oct. Is will be the last
day in which to call them for re-
demption on April Is, next.
On the past two calls the treas
ury has offered exchange issues of
the maturing issues as an alternate
to accepting cash. Because of the
high prices at which government
bonds are selling, it generally has
been profitable for the holders to
accept new securities even at a low
err interest rate than to take cash.
Of the Fourth Liberties already
called up to Oct. Is, are those bear
ing serial numbers ending in the
digits l, 2, 8, and 0. Still outStand-
ing are those ending in the digits
3, 4, 5, 6 and 7. If some of these
are called for redemption for April
IS, next, they probably will be drawn
by lot next week.
Bond dealers and government Of
f1cials reported good market" for
government securities after their
sinking spell of the past few weeks.
If this improvement continues, it is
regarded as almost certain that an
other batch of Liberties, probably
more than billion dollars, will be
called for redemption and then ex-
changed into new obligations prior
to April Is. Secretary of Treasury
Morgenthau said last night the gov
ernment's decision would be reached
by Monday.
Interest Rates High
Handsome savings in interest
charges have been effected by the
treasury in refunding of half of the
original issue of Fourth Liberties
The exchange into per cent bonds
of the first batch last spring saved
some $18OOO,0O0 annually in inter
est charges and the current re-
funding of the second batch, it is
estimated, would save the govern
ment $15,000,00O annually. If the
remaining Fourths can be refunded
on these terms, total annual saw
ing of $66,O0O,000 in interest costs
would be effected by the treasury.
Calling of another group of the
Fourths next week, it was pointed
out, might give new reinsurance to
the government security market, as
it might indicate the treasury de-
partments confidence in its ability
to maintain a strong government
security market up to April Is next,
when it would become necessary to
take up the called bonds with new
securities.