Easier Money?

Is tight money finally beginning to ease? Last week the fact that the Treasury's twelve-year bond issue was oversubscribed nine times was a clear sign to some Wall Streeters that it is. To the surprise of the Treasury, there were $4.6 billion worth of takers for the $500 million in long-term bonds, with the result that large investors had to be rationed to 10% of their requests. Only three months ago former Treasury Secretary George Humphrey told the Senate Finance Committee that he doubted whether the Government could sell a long-term bond. Having done so, and at a price in line with the market, Humphrey's successor, Robert B. Anderson, has begun his term with conspicuous success.

Nevertheless, Carroll M. Shanks, president of Prudential Life Insurance Co., said that there must be no relaxation of present monetary controls. He told the Economic Club of Detroit: "Under present circumstances controls must be applied more steadfastly and for a longer period" in order to shake some of the "superconfidence" out of the boom. Such anti-inflation measures involved a calculated "risk of producing some unemployment and possibly even plunging us into a recession. [But] we must be willing to accept short periods of price rise in order to ensure high employment and also short periods of temporary rise in unemployment in order to ensure stable prices.

"After over a year of substantial price rise, I believe we are justified in maintaining a tight money policy, even at the expense of causing some decline in profits."

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