Word: humphrey
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Dates: during 1950-1959
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...goods and an excess of money. The soft spots in the economy are expected to prevent major wage increases from spreading through the entire economy, as in the past, just as the ample supply of goods is expected to check overall price boosts. Last week outgoing Treasury Secretary George Humphrey told the Byrd committee probing Administration fiscal policies that the Administration's tight-money policies have begun to pinch off the new inflation and that increases in the cost of living will soon stop. Wholesale prices have leveled off, he said, and this will soon show up in stabilized...
Even the new inflation might have been checked, said Humphrey, if the Federal Reserve Board had earlier tightened credit more drastically, thus pinched off plant expansion and full employment. But he also agreed with the growing body of economists who think that the cost of doing this might be greater than the price of bearing inflation for a while, since the new inflation is a natural result of the economy's continuing prosperity. They feel that severe cures would hurt even more than the malady itself. Says Harvard Economist Sumner Slichter, who predicts a controlled inflation...
...trouble is that from the start, Secretary Humphrey's Treasury failed to match the prices other borrowers were willing to pay for money. When the Treasury sold its first longterm, 30-year issue in 1953, it pegged the interest rate at a below-market 3¼% an average 3¾% for corporate issues; the bonds soon became known as "Humphrey's Dumpties," dropped far below par, and still sell at 93.26. A 40-year issue at 3% in 1955 has tumbled to 87.24. The result, says Humphrey, is that "we must therefore sell mostly short-term securities, which...
...years, the problem will get worse unless something is done soon. Many bankers argue that the Treasury should have moved much faster to keep U.S. Government securities rates in line with the overall money market. By hiking rates a fraction at a time, always too little too late, Secretary Humphrey has, in effect, guaranteed the failure of long-term issues. He has also increased the margin between Government and corporate bonds instead of narrowing it. On a straight interest basis, Government bonds paid as much as 2.37½^% in 1952 v. an average 3.42% for corporate issues; today, the highest...
...major stumbling blocks to all such ideas-one that Secretary Humphrey is well aware of-is that by boosting the U.S. Government's borrowing costs, the Treasury lays itself open to angry criticism from Congress for helping to nudge up all rates. But the U.S. financial community is convinced that Robert B. Anderson Jr., the incoming Secretary, will have to try some bold experiments if he is to finally clear up the mess...