| Show THE DAILY NEW V YORK F FINANCIAL I N A N C I A L W WHIRLIGIG WHIRL H I R L GIG GIGi i Written for The Telegram by JAMES McMULLIN 0 NEW YORK The fORK The 1 Maine alne election election elec elec- i tion gave the New Deal a break but n not t financially The voters' voters indorsement of free government gov spending chilled bankers to the marrow and laid a very damp blanket on the treasury's conversion operations Until the Maine results were announced announced an an- applications to exchange the called Fourth Liberties for the new notes were drifting in at a a slow but steady pace It was bound to be slow because the called bonds are arc so widely held Then the political political po po- po bombshell bombshell- burst and government government government govern govern- ment securities of all aU types skidded sharply This in turn killed of off all appetite for the new issues and countless bondholders who had planned to convert changed their minds and decided to wait to be paid off in cash This reaction was was' by no means confined to banks nor even to the financial district Theres There's evidence that innumerable individual investors investors investors in in- and such institutions as hos hospitals and philanthropic funds got the jitters too Demand for the year four notes has dwindled to a trickle trickle insurance insurance companies and savings banks still show some interest Interest in terest in them and them and demand for the 12 10 year car bonds Is as thin as a wasps wasp's waist N I e The point is ig that the tile conversion offerings offering's sudden udden loss of appeal was not due t to inherent defects in the nc new issues themselves but to the external influence of weakness in other federal obligations What caused that weakness An abrupt outburst t of selling Thus the key question becomes who sold and wh why You couldn't prove deliberate rat sabotage e from New anti Deal sources in a th thousand usand years Yet its it's a fact that financial sources were surprised and bitterly disappointed disappointed dis dis- dis appointed by Mai Maine's Maines es e's radicalism Jt tg il a at tor 0 cash cach in lieu of exchanged securities ties may be bc embarrassing to the treasury and is certain to hurt its prestige Plenty of New Yorkers have objection no to that Wall Vall WallStreet WallStreet Street is in a frame of mind where a small ripple is enough to start a selling wave wave and and there are hints hints' in informed quarters that the ripple wasn't wholly spontaneous Certainly a lot a of the sales come from strong financial sources This would tie in with the anti anti- New Deal technique o of using economIc economic economic eco eco- weapons when political artillery misfires 5 5 5 This new development drops a anew anew anew new load on Mr neck neck heavy heavy but not unbearable The treasury will have to fork out outa a lot more cash than it expected to retire the called bonds In theory this means either less dou dough h for F FE E R A P W VI A F R C and other spending and lending agencies agen agen- I cies des or fresh borrowing before winter win win- I I ter The former implies enforced economy the latter higher interest rates on additional offerings Either would be O. O K with financial lead lead- ers But its it's possible the treasury may find an alternative out For Instance instance instance in in- stance theres there's the almost forgotten Thomas amendment authorizing the issuance of oC three billion dollars in paper money to retire government government government govern govern- ment bonds The yell for this solution solUtion so lution will b be audible in Timbuctoo when the catch on Or Or- again the treasury might find it worth orth while to wade into the open market and md push up the prices of oC its securities That would make the new issue more attractive and md mi might ht induce some of oC the the b bondholders bondholders bond bond- nd- nd holders who now want cash to alter their views It would be expensive siv sive but perhaps less so than letting letting letting let let- ting things slide Some Sorpe New Yorkers doubt the wisdom of or trying to force the treasury into the corner They figure such tactics will only intensify the demand for complete government government- control of at credit But their voices are drowned in the current Wall Street gloat S S W to The old guards guard's smashing victory over the Macy forces in their fir t treal real thc choice skirmish the choice of a convention convention convention con con- site will site will have a marked effect on on th the state campaign For one thing it may induce Jim Wadsworth to run for for governor after alter all The old guard feels he heis heis heis is by l far r ther their strongest candidate and party big shots have been working overtime to persuade him to reconsider his decision to stay in in congress Their persistent pressure has borne fruit Insiders report Wadsworth is now willing to be bedr dr drafted provided the conservative wing of of the party conclusively demonstrates that its it's running the show He wants to be sure he wont won't be knifed by the liberal ele ment The first step In the demonstration dem dem- was quite convincing Wadworth's main object is to remain remain re reo re- re main in the public eye for the next two years He wouldn't mind running lunning for governor if he were wel sure of election Those who are arc urging him to do so play up a au authenticated au- au underground defections from Lehman in Democratic ranks But he still hasn't made up his mind definitely Theres There's always always' Maine to be considered Mac Macy supporters were were amazed at their leaders leader's weak showing His boom bocim bo m for Seabury cost him more than han they had realized It unified the Mills and md Hilles factions of of the opposition which Opposition which hadn't been on speaking terms since 28 S S Theres There's a lot of talk in Republican b- b lican inner innel circles of publisher Frank Gannett for senator Hes He's Hesby Hesby Hesby by no means an organization man and has supported a number of new deal policies but its it's felt feU the fact th that t hes he's a liberal and a dry would w win n votes voles for lor the mc party which Wadsworth might otherwise other other- wise vise alienate Copyright McClure N Syndicate |
