The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1937-06-03
i. ). PLANNING
TO OFFER NEW
SECURITIES
international News Service


The Federal Government again
turned to the nations money
marts today to replenish its
dwindling cash reserves.
Secretary of the Treasury Nor.
ward, and r. Samuel Luckett,
genthau announced he would
issue notes designed to raise
$500 900, 900 new money ana pay
off $300,000,000 in maturing oo'
legations.
The new financing operation was
necesSitated principally by the Ad-
ministration's expensive gold pur-
chasing program, which has tied
up more than $757,000,000 OF the
TreaSury's cash since December "a
and has reduced the Federal work
ing balance to its lowest level
since 1888.
Despite a 70 per cent rise in
March income tax receipts, the
heavy inflow Of gold coupled with
increase in general Federal OUTLAWS
has forced the Treasury to OPP
crate on a slender cash margin
for O number of weeks.
Abandons Policy
To carry the expenditure load,
the Administration abandoned its
long-standing policy of maintain
ing one billion dollars ready cash
available for a war emergency. In
addition, the Treasury increased
its weekly short-term borrowing
by fifty million dollars for the
past six weeks.
Under the current gold steriliza.
ton program, the Government
borroWS money to pay for The
metal instead Of simply issuing
fresh currency. This method was
adopted in December to prevent
an. injurious inflationary move
ment through expansion Of the
nations bank reserves.
Although the Treasury expects
between $50O,000,000 and $685.
100000 in second quarter income
tax payments later this month,
failure of other revenues to reach
preliminary estimates makes the
new borrowing program necessary
at this time.
so-called "wind-fall" levieS
against AAA professors, estimated
to yield $s2,000,O00 before the
fiscal year June 80, so far have
produced but $3,671,00 Litiga-
ton over these taxes is expected
to hold up collection Of the bulk
Of these taxes for a considerable
period.
Security Taxes Lag
Social Security taxes also have
Jagged behind earlier forecasts,
only $1e9 600, 900 having been col
lected to the end Of May.
Failure of receipts to measure up
to expectations was blamed by
Administration officials on re-
Gently discovered tax avoidance
schemes developed by many rich
individuals. Fiscal authorities
contend the Government has been
deprived of between 5000, 900, 900
and $40O 100000 in revenue
through tax evasion during the
present fiscal year.
Decision to issue notes, accord
ing to informed financial opinion,
was based on the recent unstable
conditions in the Government
bond market. The Treasury. it
is felt, is extremely reluctant to
issue long-term bonds at this time.
While Morgenthau did not divulge
the maturity of the new issue, it
is not believed they would run
more than five years. Recent
bond offerings have borne maturi-
ties Of as long as 20 years.
ParleyS Pave Way
Frequent conferences between
Morgenthau and the Federal Re.
serve Board paved the way for the
new offering. When Government
bond quotations fell sahrply this
spring, the Federal Reserve open
market committee supported Fed
eral bond prices by continued pur-
chaSeS.
The $780, 100000 raises the
amount Of cash borrowed during
the current fiscal year to $2,5OO,.
100000. In addition, the Govern.
ment has refinanced approx
mately $1,787, 200, 900 maturing OBJ
legations.