'^ ^^-^/^ WEEKLY MARKET REVIEW AND FARM OUTLOOK 



^: By G. L. Jordan ^ ^ 



'S|\ Professor, Agricultural Economics ^ ^ 



} University of Illinois ^V^ / ^ 



, ' College of Agriculture j' ;. ^'•^ ^z^^ O 



(Prepared October 9) -' ^-'<^«^ 





vr-. V. 





Ttie Treasury of the United States will issue new securities 

 in the amount of I.5 billion dollars October 20, to bear 2i per cent 

 interest and to run from 26 to 3I yesu^s. Of this amount, 1.2 billion < 

 dollars will be offered to the public; the rest involves an exchange \ 

 of maturing obligations and a 100 million dollar reserve for government -: 



I 



investment accounts. Similar issues will be forthcoming from time to \ 



t 

 .J 



time. We have already appropriated 7 billion dollars for lease- lend -i 



purposes and have now under consideration almost another 6 billion j 



dollars in addition to many times that amount appropriated for defense. 



The significant part about this announcement is that it is offered to 



the public. It is expected that practically all of it will be subscribed 1 



by institutional investors including banks and insurance companies. The , 



■i 



small individual investor has been subscribing to ..defense savings bonds — 



li billion dollars in k months. To the extent that insurance companies : 



■■■I 



buy these government obligations there are no inflationary implications. : 

 Insurance companies have to invest only the amount of money which we . 1 

 save and turn over to them as premiums. Our original saving reduces our ■■^■ 

 spending power and merely transfers" it to some one else by way of the ] 

 insurance company route. J 



Presumably a very large fraction of this 1.2 billion dollars 

 will be. subscribed by the banks. To that extent it will be inflationary. 

 When banks loan money to the government through the purchase of govern- ■ 

 ment securities, no bank depositor has less to spend, but the govern- 

 ment has more to spend, so the total buying power of the nation is i 

 thereby increased. A matter of a billion dollars or so would not be 



