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Federal Reserve Bank To Buy
U.S. Bonds to Help Market
MAIL TRIBUNE, MctforJ, Oregon, Monday, July l, f
By ELMER C. WALZER
TJ&I Financial Editor
Treasury opens its books
today for a refunding opera
tion involving $16,300,000,000
And the
New York
. Federal Re
serve Bank is
.-fi i i
tjt in me iiminei
xu i t h nracti-
cally unlimit
ed resources
to keep the
govern ment
bonds strong
enough to
stand the shock of the offer
ing. It is only a refunding
deal, but the market is shaky.
It got into a mess on Friday
and the Federal Reserve Bank
of New York indicated that it
would purchase long-term as
well as short-term govern
ment securities to stabilize
the market.
The government needs a
3
Elmer Walzer
strong market because it has
a lot of real financing to do.
Within three weeks it will
seek some $3 billion in new
money.
Deficit
In October, there'll be still
more new money sought be
cause the treaury ia running
a deficit this fiscal year end
ing next June. 30 of at least
$10 billion.
This $10 billion could be
swelled greatly if the Middle
East situation develops into
another Korea. Getting the
new money out of investors
is the big problem just now
with inflation the watchword
and people more stock than
bond minded.
Even refunding Is difficult,
according to the experts.
Hence the treasury elected to
make its new issue for re
funding and the one for the
$3 billion new money one
year issues. The refunding
Wheat Destroyed
In Pendleton Area
Pendleton (UPD Another
wheat fire Saturday after
noon struck the harrassed
wheat and barley ranching
area northwest of Pendleton.
Some 70 acres of standing
wheat were destroyed on the
Ernest French in the Stage
Gulch area
The fire was the first to
result in injury to a fire fight
er in the current rash of
blazes. Tractor driver Harley
Sallee was burned about the
face and arms when a wind
change whipped flames over
the tractor as he was attempt
ing to get a fire line around
the blaze.
Allowable Timber
Cut Upped by O&C
Portland (UPD The Bureau
of Land Management an
nounced Sunday that the an
nual allowable cut of timber
on Oregon and California rail
road grant lands in Western
Oregon has been increased by
77.1 million board feet.
The increase, which boosts
the cut to 769,300,000 M board
feet, was based on recently-
Franklin Pangborn,
Actor, Succumbs
Santa Monica, Calif. (UPD
Character actor Franklin
Pangborn, a veteran of more
than 21 years before movie
and television cameras, died
Sunday at St. Johns hospital.
Pangborn, 59, underwent
surgery for a chronic intes
tinal ailment Saturday. His
illness had forced curtailment
of his professional appear
ances in recent months.
The veteran actor, a bluster
ing, confused room clerk,
floorwalker, o r indignant
passerby in most of his por
trayals, was a native of New
ark, N. J., and a veteran of
World War One when he
served as a Corporal, was
wounded and gassed. .
Funeral services will be
conducted Wednesday at For
est Lawn.
completed new inventories,
the Bureau said.
The new allowable cut "is
the presently estimated capac
ity of the lands to produce
timber crops," according to
Virgil T. Heath, Oregon State
BLM supervisor. Three units,
Suislaw, South Umpqua and
Josephine, account for the
total current increase.
will involve certificates bear
ing 15i per cent interest.
In one more year 'this
means the government will
have to refund the more than
$16 billion this financing in
volves now. But that's only a
tiny drop in the big govern
ment bond puddle. First Na
tional City Bank of New
York sums up that situation
as follows:
Bonds Mature I
Out of the total U.S. debt
of $277 billion, no less than
$120 billion" of public issues
including $52 billion of sav
ings bonds are due or payable
within one year and all but
$58 billion within five years.
"The accumulation results
from failure to act energeti
cally to lengthen maturities
earlier in the post-war period.
"Since July 30, 1946, the
treasury has issued, apart
from treasury bill offerings,
no less than $488 billion of
marketable securities."
The treasury had a bad
time in its June financing
when it tried to issue a few
long term bonds. It had to
bale out the speculators by
buying back 5600 million of
the issues it had sold. That
operation apparently gave the
treasury a profit, the specula
tors a loss, and unsettled the
market.
Needed a Rest
The treasury in announcing
its financing admitted,, the
market was congested and
needed a rest.
However, treasury officials
said they would renew their
efforts later to stretch out the
debt into longer term issues.
Meantime, studies are being
made to divert government is
sues away from commercial
banks to the hands of invest
ors which would include in
stitutions, pension funds, in
surance companies, and sav
ings banks.
Selling governments to
commercial banks is seen as
highly inflationary in that the
process involves possible
monetization of the debt, a
process often compared to the
German operations before the
mark evaporated in wild in
flation. In our current inflation,
the tendency is to steer away
from the fixed income obli
gations and dive into the
stock market.
j : 1
j m h ' '
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