U.S. TREASURY BOND ISSUES

Press, Volume XCIX, Issue 29102, 14 January 1960, Page 14

U.S. TREASURY BOND ISSUES

Legal Ceiling On Interest “Archaic” (N.Z. Press Association—Copyright) WASHINGTON, January 12 President Eisenhower today renewed his appeal to Congress to remove the legal ceiling on the interest rate the Treasury may pay on medium and longterm bond issues. In a brief message to Congress released by the White House. President Eisenhower described the ceiling as “archaic.” Under law, the Treasury is barred from paying from more than 4J per cent, interest on issues of five years’ duration or longer. President Eisenhower last year also asked Congress to raise the interest rate on Treasury longterm securities, but Congress failed to act. The Treasury contends that the 4J per cent, ceiling prevents Government longterm bonds from competing with other securities drawing higher yields. The Treasury argues that this forces the Government to sell short-term securities, which have no interest ceiling, in order to obtain money. Democrats in Congress have refused to act on President Eisenhower’s appeal in the past, contending that World War II was financed at much lower interest rates and there was no reason to raise the ceiling.