The First Billion

With a "meager" $566,000,000 Treasury balance disappearing at the rate of $30,000,000 a day, Secretary Morgenthau spent 45 minutes talking with President Roosevelt at the White House. Next day, to U. S. investors the Government offered $1,000,000,000 in short term securities: $500,000,000 of 2 1/2%. Treasury Notes maturing in 13 1/2 months, $500,000,000 of 1 1/2% Certificates maturing in 7 1/2 months. It was the biggest piece of new financing ever attempted by the Treasury in time of peace, but it represented only one sixth of the new money which the Treasury expects to borrow before June 30.

Mindful of last autumn's fiasco with the 4th Liberty Loan redemption (TIME, Oct. 23) the Treasury could afford to take no chances. The interest rate offered was liberal. The maximum maturity of only 58 weeks was calculated to draw out money that was afraid to take long term risks. The offer was well calculated. By nightfall the subscription books were closed. Banks (which had nearly $1,000,000,000 of excess reserves) and other big buyers had nominally offered to take $3,415,000,000 of the 13 1/2 month notes. $1,355,000,000 of the 7 1/2 month certificates.

This 5-to-1 oversubscription of a big Treasury loan was the last big job of Secretary Morgenthau's assistant, Earle Bailie, who had had to resign because of his Wall Street connections. Next day Mr. Bailie complacently packed his bags to leave Washington. Marriner Stoddard Eccles, big Mormon banker of Ogden, Utah arrived four days later as a special Treasury assistant, bringing his Leftwing-ish ideas of debt cancellation and high income and inheritance taxes. Secretary Morgenthau, asked what Mr. Eccles' job would be, replied, "I don't know yet." Asked what man would succeed Mr. Bailie, he replied: "I am looking for one every day."

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