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March 23, 19^0
The Secretary announced yesterday that after April 1 Savings
bonds "will be sold only to individualsj either a single individual,
two individuals as co-owners, or an individual with another individual
named as beneficiary* While this is a step in the direction of reducing
the volume of sales to large holders, it does not go far enough* Below
are some preliminary comments upon the effect of the action*
1* The reduction in sales will occur mainly in January, February,
and March of 19^*1 because the ineligible purchasers will have largely filled
their requirements for 19li0 by the end of this month*
2# The amount of the reduction in net sales for the year from
April 1, 19^0 to March 30,19^1 will probably be not more than $350,000,000 out of the prospective total of perhaps $1,200,000,000 which would
have been realized had there been no change in the regulation*
3ยป We may expect a rush from the future ineligible purchasers
to get under the April 1 dead line, so that the increased sales for the
rest of this month will probably be sufficient to offset any loss during
the remaining three months of the current fiscal year* Consequently, our
estimate of the Treasury1 s cash balance as of the end of June 19^0 should
not be materially affected by the new regulation*
l. Other reasons for not expecting so large a reduction in the
net sales of Savings bonds as might be indicated by the new regulation are
that the ineligible groups will be someishat less willing to redeem their
present holdings if they can no longer purchase new bonds* There may also
be some shift of new purchases to individuals -which would otherwise go to
partnerships, trustees, or guardians.
5* Now that this regulation has been adopted, if sales continue
in relatively large volume during the next few months, the question of
reducing the maximum amount -which individuals are permitted to purchase
might well be raised again*