Cheapest Money

How very cheap money has become in the U. S. was demonstrated last week by Secretary of the Treasury Mellon in announcing what interest rates the U. S. would pay on its mid-December borrowings. On a $150,000,000 issue of six-month Treasury certificates, Secretary Mellon offered only 1 1/4%--an all-time record low. On a twelve-month issue of the same kind for $250,000,000 the rate will be 1 7/8%. The last similar issues carried 2 3/8% and 2 7/8% rates. At the height of the speculative boom in 1929 the Treasury had to pay 5%. These new borrowings will be used to retire short-term obligations yielding ,3%.

Within three years some seven billion dollars worth of Liberty Loans at rates as high as 4 1/2% will become callable. Secretary Mellon in his annual report hinted at a major long-term refinancing operation at lower interest rates when he asked Congress to amend the Liberty-Loan Act so as to authorize him to issue eight billions in new bonds.

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