The Last Liberties

Secretary Mellon rounded off his long program of Liberty Loan refinancings like a golfer who, having made par or better at almost all previous holes, encounters trouble at the final hole and has to accept a large figure to complete an otherwise happy scorecard.

The Secretary's trouble was not serious. It was only that heavy stock market speculation, and increased exporting of gold from the U. S., had stiffened the U. S. money market and kept it stiff. The Third Liberty Loan was to mature on Sept. 15 and a considerable portion of it had been left to be taken care of by the Treasury's September operations. Secretary Mellon had to decide what interest rate he must offer to ensure the success of these operations. He delayed decision, hoping for a "break" that would make the playing easier.

The "break" did not come. The Treasury had to announce last week that it would pay 4 1/2% on an issue of nine-month notes, for which the last of the Third Liberties might be exchanged. In past years, money conditions had allowed Secretary Mellon to retire some $3,900,000,000 worth of Second and Third Liberties, all bearing 4 1/4%, at rates ranging from 3 7/8% down to 2 1/4%. Not since early in 1923 had he been obliged to offer 4 1/2%.*

The remnant of Third Liberties which the notes were issued to meet was some $970,000,000. Secretary Mellon's dislike of the high-rate situation was reflected in the small amount of the new issue. Only $525,000,000 were authorized, whereas $600,000,000 or more had been confidently predicted by Wall Street. The balance of the Treasury's September bill, which with interest on the public debt will amount to some $1,040,000,000, must be met by September income tax receipts.

*In 1921, a peak for short-term notes was touched, at 6%.