. Annual report of the Secretary of the Treasury on the state of the finances for the year ... unduly largerepercussions on the structure of interest rates. This would tend to interferewith orderly marketing of corporate and municipal bonds. Moreover, theemergence of a larger amount of highly liquid, short-term Government debt thanthe economy requires could create inflationary pressures. Excessive liquidity inthe economy and frequent and large Treasury operations in the market can un-duly complicate the flexible administration of Federal Reserve credit policiesessential to sustainable growth.
. Annual report of the Secretary of the Treasury on the state of the finances for the year ... unduly largerepercussions on the structure of interest rates. This would tend to interferewith orderly marketing of corporate and municipal bonds. Moreover, theemergence of a larger amount of highly liquid, short-term Government debt thanthe economy requires could create inflationary pressures. Excessive liquidity inthe economy and frequent and large Treasury operations in the market can un-duly complicate the flexible administration of Federal Reserve credit policiesessential to sustainable growth. A balanced maturity structure of the debt,therefore, can make a major contribution toward sound financial policy by re-ducing the frequency, size, and adverse consequences of Treasury financings, byhelping to forestall potential inflationary pressures, and by enabling monetarypolicy to function more effectively. EXHIBITSChart A 309 ^MATURITY DISTRIBUTION OFTHE MARKETABLE DEBTl1946,1953, 1959 and I960 $Bil. 75 50 25 Within I Year^ 60/c 80 80 10% I to 5 Years 24i4 33 6l/2 73 5 Years and Over. 1946 53 59 60 December June !946 53 59 60 ^ December June 1946 53 59 60 December June Partially lax-exempt bonds to earliest call date ^Including savings notesC. THE PROBLEM OF RETAINING THE TREASURYS CUSTOMERS 13. The constant shortening of the debt also has very practical consequencesfor the Treasury, since it has made it difficult to retain as customers many long-term investors who once were buyers of Treasury bonds. Long-term investorswho have found their holdings of Government securities moving nearer to ma-turity have had a tendency to dispose of them and to turn to other types of long-term investments. As a result, the Treasury has found that it has lost customersas the passage of time has eroded the long-term characteristics of Governmentbonds. The securities that were once long-term but which have become short-term have passed into the hands of commercial banks, nonfinancial corpora
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