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February ^, 19^9 Pratidsat «uad Cha-iraac* of the Saard the ttlOMll l $ # fit c* i s a «usw&ry of sossa of the points smde in our MKfWnwti«n of 000 of the tables. - iia^ rely, Mrf a I COPY UNITED STATES GOVEHNMENT SECURITIES OUTSTANDING 1/ (By types of issues - par value - in billions of dollars) Type of issue Marketable securities: Treasury bills Certificates and notes Bonds: Bank eligible %/ Due or callable in: Less than 5 years 5 years and over Bank restricted Total marKetci/ble securities aonmarketabi.e securities: Savings bonds Savings notes Special issues to Uovernment agencies and trust funds Other, including noninterest bearing and international securities Dec. 31 Dec. 31 1946 1948 17.0 40.1 Dec.31,1949 Dec.31.1952 49 74 55 69.9 37.4 32.5 47.3 14.7 41 14 10 49.6 49.6 50 36 176.7 157.5 154 139 49.8 5.7 55.1 4.6 63 6 24.6 H.7 57 5 35 43 2.7 4.0 95.4 100 115 25^.9 -54 Total nonmarketable securities Total, all securities 12.2) 33.7) Estimated 2/ 25V.5 1? 1/ Includes ail securities isoued or guaranteed by tne U.&, uovernment. 2/ assuming no further change in total public debt, an increase in nonmarketable debt with corresponding retirement of maturing marketable debt and refunding of other maturing issues with certificates or notes. 'jj Includes Treasury bonds and minor amounts of other bonds. •January 31 > 1^49- COPY February 1, 1949 Arguments for offering by Treasury of 1-3/8 per cent 13-tfiorith or Ik-month securities in excnange for maturing securities. 1. In view of necessity for continued support of 2-1/k per cent long-term rate, money market flexibility can be obtained only through fluctuations in short-term rates. The present one-year 1-1/-4 per cent rate is too low to permit any flexibility. In the absence of fluctuations in short-term interest rates, the only remaining instrument of monetary policy is the cumbersome process of varying reserve requirements. 2. Mth the large volume of maturing issues carrying higher coupons that must be refunded in tne next few years, exchanges into 1-1/4 Pe** cent securities would mean a substantial reduction in bank earnings. 3. BanKS wouia be induced t o seeK other more profitable investments. 4. This would cause a decline in interest rates on larger securities and on loans. 5. "Playing the pattern of rates", which has already been resumed, would be further encouraged. Short securities would be sold to the federal Reserve and, since the System does not n^ve an adequate supply of longer-term eligible bonds to sell as an offset to these purchases, new reserves would be created. 6. The Treasury might have increased difficulties in its refunding operations. 7. Refunding into medium-term issues ($-9 years), with present supported rate structure, would establish a new low coupon rate for such issues that might nave to be supported indefinitely. This would prevent any future rise in rates. Alternatively, the new issues might decline below par and become "sour".
@FedFRASER