Evening star., 1938-03-25


ment, a man who
served as Under
secretary of the Treasury, thinks would |
have to be stated if the Government
told all the truth when it offers Gov
ernment bonds nowadays.
The suggested prospectus was
written by Arthur A. Ballantine, who,
1t will be recalled, was one of the
few officials of the preceding admins
tration who served through the fate
full hundred days Of the bank holiday
OF 1888 and assisted the Roosevelt
administration through that turbulent
period Mr. Ballantine's experience
In the Treasury entities his statements
10 considerable weight, and he is con-
scious, too of the great responsibility
that ought to prevail with respect to
the borrowing of the peoples money |
without reminding the lenders of the |
material facts. 1t is. incidentally, a |
violation of the 1884 law for a private |
company to offer to sell its bonds with |
out publishing a voluminous prospec |
tus giving every material fact. OmiS- |
sion of any material fact makes the |
company and directors liable to severe |
punishment. 1t is no defense to say
that the lender could collect the in |
formation here and there if he chose |
The law requires that the prospectus |
\ahould tell all in one place. Here |
| therefore. is Mr.. Ballantine's idea of
what a Government prospectus would
look like if the Treasury told in a
prospectus all of the truth to the
prospective buyer of Government
bonds:
Revenues of the borrower for its
current fiscal year were last officially
estimated at more than billion dol
lars less than anticipated expenditures
Increased Twice.
"The official estimate of the prospec-
tive deficiency has been twice in
creased and, under present conditions.
requires further upward revision.
The actual deficiency in the rev.
enues Of the borrower for its previous
fiscal year was more than twice as
great as the present official estimate
for this year Deficiencies for that
gate over 20 billions.
These deficiencies have been met
through borrowing.
The borrower has special facilities
for floating loans and a free hand to
AXE care of its obligations in the
market.
In addition TO borrowing for cur
rent expenditures. the borrower has
guaranteed many obligations, now
being largely increased, and some of
hese guarantees already appear as
source of loss.
Considering both the direct and the
Indirect debt the borrower has. under
he present management, doubled its
Indebtedness
Through authorized financial pro-
kedure the borrower is using for cur
Fent expenditures the proceeds of large
ums collected in part from customers
Il small means to protect them against
uture contingencies of old age and
Unemployment.
The borrower has in its list of
ssets certain large items. These are
omewhat difficult to get at because
II the borrowers complicated financial
tructure, but much the greater part |
re not susceptible of realization. |
Realizations as made have been de- |
oted to meeting current expenditures. |
The borrower has greatly increased |
= revenues-in fact, current revenues |
re triple what they were some five
aer tn, of yr1n 4o.,
payments on incomes for 1887, how |
'ver. revenues now show marked signs |
pf future decrease.
Well Ahead Of Revenues.
Expenditures of the borrower, while |
changing in classification, have kept |
up to totals well ahead of the revenues |
Expenditures are estimated to be on |
continuing basis of seven billion
year and show signs of increasing
while revenues are on the basis of six
billions and show signs of decreasing,
leaving q prospective deficit for next
year already estimated at about
billion.
The borrower operates in q very
fruitful territory and has monopoly
power to fix what its customers must
pay to 1t. There is, however, a wide
spread belief on the part of its Gus
toners that that power is being used
in such way as to tend to lessen and
dry up the ability of the customer to
continue to pay"
Very few private firms would think
they had any chance of selling their
bonds If they made statements like
The above about their company's finan-
eial condition. Yet precisely because
she people have had such unqualified
faith in Government securities over
period of years, the Treasury goes
on borrowing, believing that the sup
ply of borrowed funds is inexhaustible.
If the public insisted on the same
standards from the Treasury as from