NOT SUBSCRIBED

Taranaki Daily News, 31 August 1935, Page 7

NOT SUBSCRIBED

AMERICAN BOND ISSUE FIRST TIME IN HISTORY NO FEAR OF THE RESULTS NATION’S CREDIT INTACT By Telegraph—Press Assn.—Copyright Rec. 8.30 p.m. Washington, Aug. 29. The Treasury to-day suffered the'unusual experience of having security issues fall short of subscription. A total of £20,000,000 in Federal farm mortgage bonds offering at auction at a yield of about 1.5 per cent, interest attracted only £17,000,000 in tenders. Officials explained that the failure of' investors to respond was because of the present weakened condition of the bond market and the .fact that the interest was low. They said they were disappointed but were not worried over the future financial programme which requires heavy borrowing to meet “new deal 1 * relief expenses. , - ' The first failure of a Government Bond offering in the Treasury’s history struck a sharp note in the capital, but drew quick assertions that Federal credit Was not impaired. Both the Treasury and the majority of spokesmen for the commercial banking structure joined in maintaining that the Government’s borrowing power remained undamaged, but on other points they diverged. ' Mr. Morgenthau conceded that th® situation was not so good, but he ascribed no reason for the response of only £17,000,000 to an offering of £20,000,000 for four years fully guaranteed bonds. Mr. Morgenthau was emphatifl in declaring that the auction system of bidding was not responsible for the failure.

Dealers and banks are equally emphatic it was. They declared they could not gain enough picfit to make it worth while to bid. One usually well informed private banking quarter thought the failure indicated that saturation point might have been reached in the Government bond market, but little alarm was expressed.