The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-12-05
Trends
Acumen Displayed
by Treasury in
Financing.
BY VINCENT S. LYONS
Times Financial Editor

WHAIEEEE else may be said
y Of the Roosevelt Admins
tration's conduct of financial and
monetary affairs. it must be ad-
mitted, even by the severest critics,
that 1t has handled its ventures
into the new capital market with
an amazing acumen. If there Is
any doubt of this it should nave
been dispelled by yesterdays an
nouncement of the results of the
Treasury's latest Offering of $780,
100000 of new bonds and notes.
Confronted with the task of
meeting on Dec. Is the 1892. 600. 900
maturing 2it per cent certificates
OF Indebtedness and, at the same
time, of acquiring additional funds
Tor relief needs during the winter
the Treasury Department, under
Henry Morgenthau Jr., on Monday
disclosed the terms of a gigantic
81 100000 financing operation
TO take care of these problems.
The terms of this huge program
were as follows: The cash needed
Tor winter relief was to be pro-
cured through the sale of $3.50 900.
600 Of Is 10 18-year 3Is per cent
bonds, maturing Dec. Is, 1852. but
callable after Dec. Is, 1949, and
S450,000000 of Ia per cent 49,
month notes while the maturing
S992-00O,000 of pa per cent certif-
icates of Indebtedness was proposed
TO be met by offering holders of
such obligations outstanding rs
per cent 18-month notes and 21s
per cent 4lz-year notes.
LOW astutely the Treasury
l. Il gagged the market can be
seen by delving into the aner points
of the operation. The new securi-
ties as well as those offered IN ex-
change for the maturing certif1-
Gates were so neatly paced in the
matter of interest rates and ma
turies that the successful conclu-
sion of the financing arrangement
virtually was assured before formal
offering.
The IS 70 18-year bonds bearing
interest at the rate of 31s per cent
were an ideal investment for insur-
ance companies and other institu-
tional sources, which have been
hard pressed seeking an outlet for
their surplus funds. The rs per
cent 18-month bills ostenSibly were
designed to appeal directly to the
banking institutions of the coun-
try. which like to keep their funds
in short and intermediate term Sc
curities.
Therefore. when these two offer
ings, amounting to 5000, 100000,
were greeted with S5,4OO 100000 of
subscriptions on the same day
of their formal sale little sur
prise was shown by students of the
United States Government bond
market. In other quarters I'M
feigned citation was displayed over
the fact that the Treasury could
sell almost a billion dollars of new
securities in single day.
q
RooKs have not been closed as
- yet on the exchange offering
in connection with the Dec. Is ma
turity of certificates. but this is
as expected. The bulk of this
issue is held by banking institu-
tions and there is no question but
that the swap will be made, for
after all rendering of the securities
for cash would only give the banks
more non-working funds. Banks
usually take their time about COM
plotting the exchange.
Critics of the Administrations
financing tactics scoff at the sue
cess which has marked the Treas
ury's trips into the investment
market with the assertion that the
government bond market repre-
sents about the only outlet for in
vestment funds at this time. and
that the public debt has risen to a
fresh peak of $4,000, 100000.
This view, however. fails to take
into consideration the fact that in
the process of piling up this record
debt. the Treasury has effected
drastic savings for years to come
through refunding operations
which pared the interest rates on
currently outstanding issues. Then.
too, a large part of this debt has
been incurred because the Govern
ment has made varied expenditures
in an endeavor to foster business
revival-and much of this will be
returned in due course.