Why the U.S. Treasury Began Auctioning Treasury Bills in 1929

[...]This article examines the U.S. Treasury’s decision tointroduce a new financial instrument—Treasury bills—in1929. We show that Treasury officials were willing to committhe resources required to introduce the new security in orderto mitigate several flaws in the structure of Treasury financingoperations, such as:• New debt offerings were chronically oversubscribed. Relianceon fixed-price subscription offerings of new debt duringthe 1920s resulted in chronic oversubscriptions, a clearindication that the offerings were persistently underpriced.• The schedule for new debt sales resulted in negative “carry”on Treasury cash balances at commercial banks. TheTreasury sold new debt only four times a year—on tax.[...]