Nogales international., 1935-05-04
Breaking Of The Financial Log-Jam

country's paralyzed banking system and ample pro-
vision for insurance Of banking deposits the Treasury
began refundng the huge war debt. There was stag
nation in the bond market prices of gt-edge sec1r-
tiles were very low Private refinancng was dead; 1t
was not even being discussed. Under such seemingly
dolaful conditions the Federal government began
what critics of the administration declared was
"haZardous' and "precariouS move; it took the III
iative of calling the first five billion OF high rate
Liberty Loan bonds for conversion six months later
inl longer term and lower rate bonds.
There was thus demonstrated what most fair
minded persons have for some time recognized
predominant trait of the President. He simply knew
more about the "receptivty of the bond market, and
also Of human nature, than did those gentlemen who
had controlled it. He met senstiveness with sense
And the cumulative result has made history in world
finance and Of type that reflects favorably upon
the country well upon its government. For eX-
ample:
During March, 1884, the total volume of all COR
porate refunding amounted to only S1250O,OO0 with
no lowering Of interest. During March, 1895, corpor
ate refundng exceeded SIP 000, nine times as
much, with average decrease Of h per cent in IN
terest rates. In the Is months between january 3,
1884 and April 3, 1885, the average price OF repre-
sentative municipal bonds rose "a per cent industrial
bonds had increased AT per cent high grade rail
road bonds went up 1d.4 per cent; bonds OF public
utility operating companes-as distinguished from
those of holding c0npanleS--r0Se l22 per cent. Inc
augmented value Of bonds proof Of the decreased
cost of money and the consequence was that when the
Treasury issued the new long securities to re-
place the highrate Liberty bonds last summer, the
lowered interest rate saves the government $6500O,
600 annually.
The latest CALL issued April Is, 1885, os1 the re-
manning So, 100000 Of Liberty Loan bonds for re-
demption October Is next will effect additional
annual saving in interest charges Of at least S35 O0C
600 and very likely more. They draw IA per cent
and it is worthy of note and also pride to most Amer
leans that consequence of staying persistently
the job with steadfast for the public in
terest, the average interest rate for all government
securities outstanding is only 2.86 per cent.
Instead Of being ''precari0us move', financial
writers have heaped praise upon these fiscal ransac
tons, not only for the saving OF more than $l0OOO0
600 year in carrying the war debt but for the gen
eral lowering Of interest rates resulting directly from
what these commentators admit was the govern
ments timely example ."The Treasury" summarizes
The New York Times, "has managed with great skill
a refunding operation so vast to deserve the de-
scription of high adventure"
In marked contrast with the policy Of the Chan
celor of the Exchequer in prohibiting the issuance
OF all types of stock or bonds during the six months
period Of conversion of the British debts to low
err interest rate in this country there was need for
appeals to patriotism such characterized Our own
Liberty Loan campaigns. Here, Secretary Morgen-
thau remarked in his recent broadcast on the state
Of the nations finances these huge transactions were
handled so easily and in such commonplace manner
that many people undoubtedly have been unaware
Of their nature signif;cance On the contrary the
Roosevelt Administration has eXerted constant eff
fort to encourage, by example in nnumerable i'll
stances the flow Of capital into private enterprises
concidenta with governmental financing.
And there has been more cheering message
than the Secretarys assurance that the financial log
jam has at last been broken
~ ~1.x4
Professional reformers profess to do us good,
but fail to add "and plenty"
Another paradox is that although brevity is the
soul of wit most Senators are funny.
Americansm: Establishing dancing schools for
the hungry at government expense
The lady who insists on telling about her opera
ton has sister who has just seen swell show.