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THE oversubscription of the twin Treasury offers for September seems significant to the press as another evidence of the plentifulness of investment funds and of the success of the Government in putting its indebtedness on a lower interest basis with consequent ultimate saving to the taxpayer.

Two offerings were made, it will be remembered, both dating from September 15, one of $250,000,000, in 3 per cent. certificates due in six months, and the other an offering of $250,000,000 of three to five-year 3 1/2 per cent. notes for cash, plus enough to cover any second Liberty 4 1/4s offered for exchange. Incidentally, all the Second Liberty Bonds are called for redemption on November 15. The oversubscription of the 3 per cent. certificates, of which the Government could have disposed of twice as many as it did, does not seem so surprizing to the New York Times. True, this was the lowest rate on any government loan since June, 1925. But money rates are now very low, and there is a great demand for these certificates for the temporary employment of surplus funds:

The near maturity of the certificates insures a virtually unchanged value in the market; money can be recalled from them at any moment, and the rate is better than can be obtained from deposit in a bank. When the large surplus profits reported by industrial corporations in the past two or three years are considered, the over-subscription of the 3 per cents is not remarkable.

More surprize will be caused, perhaps, by the still larger oversubscription of that part of the new five-year 3 1/2 per cent. loan which the Treasury offered for cash. The 3 1/2s were mainly designed to induce conversion of the $1,198,000,000 Second Liberty 4 1/2 per cents still outstanding, and which had been called for next November, but $250,000,000 of them "or there-abouts" were offered to cash subscribers. The interest in the result of that subscription was due to prevalent uncertainty whether all the remaining "Second Libertys" would accept the conversion offer. The announcement by the Treasury showed that the $250,000,000 had been three times oversubscribed, the tenders aggregating $1,093,697,000.

The result has important bearing also on the problems of future government financing, which will require offers of new government securities next year, for subscription or conversion, approaching $2,000,000,000. Its reflection of the underlying condition of the American money and investment market is obvious.

The cash application for the new 3 1/2 per cents represents, with one exception, the largest oversubscription to any government obligation floated during or since the war. The exception was the $200,000,000 of thirty-year 4 per cents offered for cash in December, 1924, when $1,460,530,000 was tendered. In the case of that subscription, open-market money-rates were lower than they are to-day and the interest rate of the loan itself higher than now by one-half of 1 per cent. In the record of United States obligations offered before the Great War, only two resulted in a parallel oversubscription—the 3 per cent. Spanish War loan of 1898, in which $200,000,000 was asked and more than $1,500,000,000 applied for, and the 4 per cent. loan of January, 1896, of which $100,000,000 was offered for the purpose of building up the Treasury's gold reserve and of which subscribers asked for $568,000,000.

Source: The Literary Digest for October 1, 1927