Evening star., 1938-09-08
j. s. SEEKSL0AN
Of 700 MILLION

New Securities Offered to
Refund 433 Mi|!ion
Worth of Notes.
BY the Associated Press.
The Treasury has asked the Nations
investors to lend it $7o0,000,00o In
new money" to help pay for the ad-
ministration's spending program and
to build up a huge temporary cash
reserve.
At the same time, Secretary Nor
genthau offered new securities to re-
fund $433, 100000 worth of notes ma
turing December is, bringing the total
of the financial operation to $1,l33.-
460, 900.
Treasury officials said they antici-
pated little difficulty in borrowing the
money because the banks alone have
So 900, 100000 Of idle funds available
4oA 14lN CSllIlCllIS anu lOdl.
The proceeds of the financing and
OF quarterly income tax payments. due
next week, will give the Treasury a
cash working balance of about 50 $780,
00O000-one of the largest in history
and five times what is considered nee
essary in normal times.
War Scare Denied a Factor.
With this much cash on hand, the
Treasury would be able to go for many
months without new borrowing if an
emergency upse. the money markets
There was no Official indication,
however, that this had been a factor
In the decision on the fiscal program
On the contrary, Secretary Nor
genthau denied fatty that the size
OF the borrowing was influenced by
the possibility of a European war
an event which might paralyze capi-
tai markets temporarily.
In Treasury circles it was suggested
that the reason was desire to take
advantage Of currently low interest
rates in the money market.
This explanation was bulwarked
by the fact the interest rates on the
IL to IA year ~ per cent bonds and
"A years Ia per cent notes offered
by the Secretary are as low as ever
offered before.
Retail Pickup Reported.
Proponents Of the cheap money"
explanation pointed out that since
business appears to be on the up
grade, private enterprises might soon
be competing with the Treasury for
capital in the money markets and
interest rates might rise.
Secretary of Commerce Roper said
yesterday that reports from various
segments Of trade, industry and COM
merce indicate that the steady proc
esses of recovery. which had been ef-
fectiVe since about mid June, are
continuing"
He added that, although it was diff
ficult to judge trends in between the
summer and fall seasons. retail trade
already has shown a fall-type pickup
since Labor Day.
Secretary Morgenthau said, mean
while, the international monetary
stabilization machinery of the tri-
partite agreement was working
smoothly" despite European tension.
AS far as financial matters are con-
cerned, the Secretary added, the re-
ports from Europe are satisfactory.
The tri-partite agreement adopted
by the United States, Great Britain
and France in September, 1896.
pledged the three countries to work
comparatively to keep the exchange
value of their currencies stable.
The banking situation faced by the
Treasury in its borrowing was de-
scribed by the Federal Reserve Board
as one in which 'at the present time
the country's volume of deposits is
near the all-time peak reached at
the end of 1896, while the turnover
of these deposits is at the slowest
rate on record"
Debt Total Unprecedented.
Individuals and business men, the
board explained, have about SAT-
500,000,000 on deposit, but so far this
year have made comparatively little
use Of their liquid funds. For in
stance, in New York City, where the
volume Of checks cashed is normally
80 times the average of deposits, the
recent turnover has been only 25lz
times and the average turnover of
the preceding three years was 80
times. In 100 other leading cities,
where the normal turnover is So times,
the recent rate has been only 1912
and the rate Of the previous three
years was % times.
The Treasury borrowing will send
the direct Federal debt to the un-
precedented total of $4,000, ,OOO, 900,
or .0OO,0oOoo0 more than it was
at its postwar low on December 81.
1880.
The huge program of spending for
relief. public works and national de-
tense authorized BY the last Congress
is expected to run the Treasury
$4,000, 100000 in the red in the fiscal
year ending June 80, 1899. BY that
time the Federal debt is due to be
up to new peak of more than
$4,000, 100000. The deficit from July
l to September 2, alone, was s7os,-
367,006, due principally to higher
w. P. A. expenditures.
Secretary Morgenthau said at today's
press conference that the new securi-
ties offering had been well received"
in financial rirc1oc