Evening star., 1935-04-15
MORGENTHAU SEES.
BUSINESS BOOSTED
Federal Refinancing Activi-
ties Credited for Break
ing "Log Jam."
By the Associated Press.

By the Associated Press.
Crediting Government reflnancing
activities with having broken tne
financial log JAM" Secretary OF the
Treasury Morgenthau last night pre-
dicted substantial business benefits.
Speaking on the radio, he quoted fig
ures to show that business interests
had followed the Government lead to
refund nine times as much OF It's obli-
cations In March of this year as 1t did
in the same month in 1884.
Secretary Morgenthau's address was
coincident with an announcement by
him calling for redemption on Oc-
tober Is of $1,25O, ,00O,000 of Fourth
Liberty 4A per cent bonds. They are
the last of the Liberty loan bonds
to be retired.
Remnant of Gold Clause.
The redemption call leaves only
about So 800, 100000 of securities out
standing which contain the disputed
gold clause" These include approx
imately $780, 100000 of bonds and
the remainder in notes.
Since the decision that abrogation
of the gold clause in Government Sc
curities was unconstitutional, one aim
of refunding apparently has been to
retire bonds bearing the gold payment
provision.
Asserting that the Government ear
1y in 1894 had taken the lead In re-
financing high interest Indebtedness,
Morgenthau stressed the Importance
of cheap money" as an aid to better
conditions generally. He said the
average interest rate on all Govern
ment securities is now 2.86 per cent.
When we began our reflnanclng
early in 1884 We faced peculiar sit
uation," he said; there was plenty OF
money, and presumably 1t ought to
have been cheap, but it wasn't. The
bond market was stagnant and prices
we're low. Scarcely any refundlng
was going on. There was log jam in
the capital market.
The Federal Government took the
initiative by refunding the first S. 5,000,-
100000 of high-rate Liberty bonds into
lower rate and longer bonds. In the
Is months between January 3, 1884,
and April 3, 1885, the average price of
representative municipal bonds rose "a
per cent. High-grade railroad bonds
rose 144 per cent. Public utilities
rose 12.1 per cent. Industrial bonds
rose 14.7 per cent. These increases in
the market value of bonds reflect the
decrease in the cost of money"
Interest Burden Lower.
He argued that the $500, 600. .000-a-
year interest which the Government
pays on its present Indebtedness is less
than was paid to carry the national
debt in 1925. when the debt was
smaller by S8.000000,000.
Morgenthau expressed belief that
the Governments expenditures during
the two years ending June 30, 1885.
will fall 100000 900 short of Presi-
dents Roosevelt's original estimates.
The Secretary argued that these ex-
penditures were mot loss or waste"
but that the Government had acquired
values for them. He itemized loans Of
S1,700,000.000 made by the r. F. c..
P. w. A. and various other govern
mental agencies; $1,000 100000 for
Boulder Dam, rivers and harbors, the
T. v. A., subsistence homesteads and
roads; while the remaining $3,400,-
100000. he said. was expended for di-
rect relief. including s600,000, 900 for
the Civilian Conservation Corps.
Repayments to Be Made.
From the loans of S1,700,000. 900
We may expect repayments in sub
stantial amount which will 60 to re-
duce the public debt" he said. The
200,000,000 for public works is in
vested in dams. roads, buildings and
other permanent improvements. These
two items account for nearly half of
the deficit"
He said also that the estimate con-
tanned in the Presidents budget mes
sage, anticipating a gross public debt
Of $4,000, 100000 on June 30, 1886,
probably would not materialize. Tax
receipts, which he said we're $145,-
100000 in excess of estimates during
the first nine months of the present
fiscal year. and the fact that the work
relief program is scarcely started" at
present, were some of the reasons
given for this assertion.