Wall Street's Panic That Wasn't

A sudden default rattles an already edgy market

U.S. Treasury securities are regarded by moneymen as excellent investments. After all, those bonds, notes and bills are issued by the American Government. But for a brief and unnerving period last week, the business of buying and selling them gave Wall Street jitters aplenty. The problem was not the creditworthiness of the U.S., but rather the solvency of a tiny and little-known Wall Street securities firm, Drysdale Government Securities Inc.

The Federal Reserve controls the U.S. money supply by buying and selling bonds and notes in...

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