Evening star. [volume] (Washington, D.C.) 1854-1972, 1959-08-26

He said there would De very
serious implications" II Con-
gress failed to act and warned
Of imitation and possibly other
dangerous consequences II the
ceiling is not lifted to give the
Treasury more leeway in man
aging the $3.50 billion debt.
Doubtful Of Action
The legislation was given an
unceremonious burial in the
House Ways and Means Com
mittee last week by o 14-11
vote, and key lawmakers were
doubtful the Presidents pro-
posals would be revived In the
adjournment rush Of this ses-
sion Of Congress.
Speaker Rayburn said today
he So VINO chance Of congress
sional action this year on the
Presidents request for author
ity to remove the AIS per cent
interest rate ceiling on long
term Government bonds.
He told reporters there might
be a very slight prospect Of
action on a bill authorizing re-
moval of the interest ceiling on
Series E and H savings bonds.
But he declared that 1t was ex-
tremely doubtful that even this
matter will be reached" by
the House or Senate before
Congress adjourns.
One lawmaker emphasized q
position taken by many in Con-
gress who are opposed to the
Presidents request by saying
that the Treasury has no long
term issues coming due until
late next year. He indicated
the request would be considered
after Congress returns for its
second session starting in jan
uary.
Calls Argument Ridiculous
A Treasury spokesman de-
scribed this reason for no &C
ton at this session on the
lifting Of interest rates on long
term bonds as ridiculous" He
added: you put out long-term
financing whenever you can"
The spokesman said that the
Treasury faces the need for
cash funding of between So and
81 billion in the rest Of the cur
rent calendar year before the
tax-paying period early In 1860.
He also emphasized that
Treasury refunding in the next
IL months will amount to 81
staggering $85 billion.
The Treasury's position is
that the Government Is in an
unfair position in competing in
the money markets under the
present limitation on the inter-
est rate. Financing notes and
bonds for less than i've years
at the higher interest rates that
are permitted, in the admins
'tration's view, will contribute
to the supply Of money-that Isl
imitation. SAzs
Cites Imitation Peril
The President emphasized the
inflationary aspects in his news
conference comment and in the
special message he sent to Con-
gress.
At his news conference the
President appeared to be ap-
pealing over the heads Of Con-
gress for wide public support
for his request. At one point
he said:
st want to ask all Of you
and everybody else that has
given any thought to this prob
lem of debt management toll
understand and to do your best
to make others understand the
very serious implications Of
failure to act"
For one thing, he emphasized
that 40 million persons own
savings bonds-the e and III
series. He said it is completely
unfair" that the income they
receive from their bonds is
completely out of line with
what the market today will
give for bonds Of equal security
and validity"
Cites Foreign implications
In his news conference and
in his message the President
emphasized the Importance
abroad of responsible manage
ment of the public debt. If
Congress fails to enact the
legislation, the President said
in his message, responsible
people at home and abroad can
only conclude that we have not
yet determined to manage our
financial affairs as soundly as
we should"
The President said his pro-
posal was not for legislation toI
increase interest rates and that
his administration is not in
favor of high interest rates, but
he emphasized that it was
Impractical" to prohibit the
Treasury from paying the
market price for long-term
money.
AS for the savings bonds, the
President told Congress the
Treasury, once the ceiling is
removed, will Immediately raise
the rate from 1926 per cent to
3.75 per cent on all newly
issued E and II bonds if held
to maturity.
Two officials Urge Action
The Presidents news con-
ference comments and his mes
sage were only one part Of the
administrations drive to obtain
enactment Of legislation.
Raymond j. Saulnier, chair
man of the Presidents Council
Of Economic Advisers, empha-