| Show P BIG PROGRAM OF I REFUNDING LOAN fLOAN BY li U. U S S. S r LOOMS Treasury Expected to Turn Short Term Securities Into Long Term lerm By Br C. C D. D WATKINS I Associated Press Irus Staff StArr Writer I i WASHINGTON Dec 20 20 Refund ling ing g of oc billions of oC doll dollars rs in ou j I ing fag treasury securities in the near t future appears possible to financial experts following Secretary Mills Mills' statement before the house ways and means means committee that such an operation opera- opera lion tion on is desirable At the same time the experts regard regard re re- ret re-i t gard it as almost mandatory that the F government fund some of its immense im im- mense short term obligations into long I term temi bonds A refunding operation ton on cn the outstanding Liberty Liberty Lib Lib- erty bonds would give the government government government govern govern- ment a vehicle in which to carry along long some of its short term debt debton debton on on the same terms r The situation situation at present is that th the governments government's short term obligations obligations obliga obliga- U ns have reached the largest amount in it its history exclusive I of If the day 90 treasury bills with Mills has raised which Secretary r needed cash In addition there are of fourth 4 4 1 per cent Liberty loan bonds which mature in inI I 1938 and are callable next year and o of first 4 4 1 Liberties now s f callable Also there are arc outstanding 1392 of first Liberties bearing 3 31 2 2 1 7 per per cent interest and about I i of of 4 per cent converted bonds Experts who look for lor the govern govern- government ment merit some of its sh short rt term paper point to its size as being too unwieldy to continue to carry carryon on the books even at the low rate of interest now being paid on the later issues With of fourth 4 4 1 i liberty bonds maturing in 1938 and callable callable in iri 1933 and with of If first 4 4 4 1 Liberty bonds now call call- callable able Secretary Mills sold said a a refunding refunding re re- funding issue is desirable providing the bonds offered do not carry an interest rate rale in excess of that which the high credit of the United States calls for Ion This was one of the reasons which caused him to call caU on congress for lor fora lora a balanced budget The success of such an operation he said would be greatly facilitated by a balanced budget EXPERTS SILENT Financial exper experts do not venture a prediction as to what rate of interest interest interest in in- terest might be necessary to float loat a large issue of refunding securities as has been successfully carried out in England They point out that the fourth Liberties now brought a 3 2 1 per cent return to maturity and their oc off the record guess is that any large refunding issue would have to carry between 3 per cent and 4 per cent interest but they add much depends upon money market conditions at the time the issue is offered Dr Mills Mills' statement however was taken to indicate indicate indicate in in- he expected the government to set low rates for tor the issue That Secretary Mills himself regards re gards Bards the funding of the short term securities as desirable was seen in his statement before the committee last week The market believes the funding of short term debt into long term bonds to be inevitable he said The uncertainty as to the time and terms of this operation added to the uncertainty uncertainty uncertainty un un- un- un certainty as to when the budget willbe will willbe willbe be balanced and the government retire retire retire re re- re- re tire from the market as a borrower of additional funds are disturbing and unsettling factors The secretary expressed the belief belief belief be be- lief that the funding operation would have a favorable action upon the whole credit structure and create one of ol the essentials of business recovery Recent short term bonds have sold for less than 3 per cent and if it the government could refund the outstanding out outstanding standing Liberty bonds at present easy money ra rates say at a 1 per cent reduction in interest it would save approximately in in in- terest |
