No Offering

Since the War the Treasury has arranged its financing in this fashion:

It had (left over from the War) a considerable volume of short-term debts--notes that matured in 12 months or earlier. These were issued to fall due on the 15th of March, June, September or December--the same dates that income tax payments are made. When one of these dates came around, the Treasury would pay off some debts out of its surplus and pay off the rest by issuing new short-term certificates or long-term notes. This has been a regular procedure.

On June 15, just passed, there were $333,723,000 of such short-term certificates falling due. The banking world prepared itself to take the usual offering, perhaps $100,000,000 or $200,000,000 of Government securities.

But the unexpected happened. Secretary Mellon announced that the Government would offer no securities for sale. It had enough money in pocket and would simply pay off the debts that fell due and not create any new ones.

How was the Treasury able to do so? It was explained that a drive by the Internal Revenue Bureau had brought in an unexpected $100,000,000 of back taxes, that customs receipts were $20,000,000 ahead of expectations and that income taxes were expected to furnish $80,000,000 more than was anticipated earlier in the year--in all receipts were increased $200,000,000.

The retirement of $333,000,000 on June 15, without issuing any new securities, should make the public debt retirement for the fiscal year about $900,000,000.

But the Treasury's big financial problem lies ahead. It has the usual debts maturing in future months, $415,000,000 in September, $356,000,000 in December and $668,000,000 in March (1927). The big future operation is the refunding of $2,568,000,000 of the third Liberty Loan bonds, which fall due all together in September, 1928. Some of the third Liberties will undoubtedly be bought up in the market before that date.*

Everything the Treasury can do in the meantime to extinguish its short-term debt will make easier the big operation it must face 27 months from now.