The Waterbury Democrat., 1941-01-09
Limit On Debt Now Forecast
 At 75 Billions
Treasury Also Expected to
 End Tax-Exempts, Sell l War Saving Stamps
BIZ GEORGE E. REEDY, JR. Limited Press Stan Correspondent

BIZ GEORGE E. REEDY, R.
 Limited Press Stan COrrespOndent)
 Washington, Jan. g. = (UP) =
 The treasury came close to ex-
 hausting its legal borrowing power
 in l94O in financial operations
 highlighted by the first issue of
 wholly taxable securities in gov-
 ernment history.
 Borrowing operations for the
 year, which brought in $1,100,0 ,000,-
 GOO in new money, and expendt-
 lures sent the national debt to
 approximately $44,200, 900, 900, or
 $500, ,OOO, 900 from the legal limit for
 non-defense expenditures. An ad-
 Gitional margin of $4,000, ,0Q0, ,0a0,
 however, was provided in June for
 defense finances by congress.
 Secretary of the Treasury Henry
 Morgenthau, IT,, announced a De-
 cember financing of $500, 0,000, 900
 in wholly taxable three-fourths per
 cent five-year notes. The issue was
 unprecedented in that the pro-
 ceeds of the offering were specific
 ally earmarked for national de-
 Sense.
 Further issues of such securities
 were forecast as Morgenthau am
 nounced he would ask congress for
 authority to issue wholly taxable
 bonds as well as notes. He ex- plained that he desired to "con-
 tribute to national unity" by re-
 quiring government investors to
 pay their share of the national de-
 fense through taxes on their bonds.
 He indicated a drive would be
 launched similar to the liberty
 loan" drives of the World War in
 which the government would seek to sell bonds in small denomina- tions to finance the rearmament program. Present law forbids the sale of government securities in denominations of less than $25. Following developments were in-
 dicated to be certain in next years financial operations:
 1. The treasury will ask congress to raise the debt limit to at least l $65, ,OO0 100000 and possibly $751; GOO, 100000 without any partition between defense and non-defense expenditures.
 3. At the same time, the treas tlry will request legislative author tty to issue wholly taxable bonds, exercising its own discretion as to their size and amount.
 3. Some sort of a stamp plan" may be inaugurated to collect 25- cent pieces throughout the nation for the national defense. During the World War, such stamps were sold and pasted in books of $5 denominations, to demonstrate the patriotism of the buyer.
 An intense treasury drive for these objectives was indicated by Morrenthau's use of the term
 'slacRer money" to describe in- come from tax exempt bonds. He added that he would be willing to have the wholly taxable features of treasury securities made man. datory although he preferred dis cretion for trading purposes with states and local governments. Only two of the years financial operations represented new money to the LfeaSuTy-lne OIIlcT tIlICC 10 sues constituting refunding. The December issue was not accompan- jed by refunding nor was the July offering of $6S1 900 900 two and one quarter per cent bonds, to mature within IA to l6 years.
 The offerings for the year con- tinued the seven-year trend of de- clining interest rates on the na- tional debt, attributed to easier money" conditions. The estimated rate i. October was 21z per cent oto 3 1-3 per cent at the | Ss.
 ,cfe Uo.oOo,ooo in new money borrowed this year was more than balanced by estimated direct de- fense expenditures of $l,50O, ,0o0,- 900 and indirect expenditures run ming into the millions. Treasury experts point out that since these expenditures will not reach their peka for two years, raise in the %aIk limit cannot ha aynidnd