Gratifying & Ungratifying

The U.S. Treasury last week was "gratified" at the public rush to buy the $3.5 billion worth of short-term securities (TIME, Oct. 6) it floated to raise cash. Largely because of their generous yields, the issues were oversubscribed by more than 100%, and the Treasury was forced to allot securities to buyers.

This heavy oversubscription indicated that the Treasury may have put too high an interest rate on the securities. It could take little comfort in what the new offerings did to old Treasury bonds, which were already in trouble. Eleven of the longer-dated issues touched new 1958 lows, and the Government's recent bond issues dropped by as much as two points for the week.

Treasury had hoped that the high yields would check the slide and stabilize the market. If they do not, Government bonds will be in for more trouble when the Government goes to the market again in November or December with another $3 billion offering.

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