The Washington herald., 1910-09-04
BOND MARKET Is
In BETTER SHAPE
Crop Situation Proves to Be
a Steadying Force.
UNFAvORABLE FACTORS EXIST
Bankers and business Men Con-
WINGED that Financial Outlook Is
on Substantial Bnsis-They Expect
No Serious stringency Due to Nov
ing Crops TO Market

New York. Sept 3-The results Of the
corrective movement inaugurated in eco
nomic and financial conditions early in
the present year. and steadily persisted
in during the spring and early summer
months, became apparent during the
month OF August.
This was shown not so much In any
actual Improvement in the security mar
kets as I'm a change for the better in
many OF the determining factors which
must in the last analysis produce IA
vorable effect
Some Of these factors were a wheat
crop larger than was expected, IN view
OF the unfavorable climatic conditions
during the period Of growth. a corn crop
OF better than average volume, and the
probable removal Of the widespread ap-
prehension of monetary stringency dur
ing the late fall All these forces as
sisted in changing the outlook from pes
Eimism to one Of cOnservatively hopeful
tenor
UnfavOrnbIe Factors Exist.
1t is admitted that a number OF unfa-
vorable factors stu remain, which. II
uncOrrected. may Offset to a large extent
the improvement already noted. Among
these are a decidedly uufavorable trade
balance. brought about by 3 falling Off
in exports. especially in cereals. IN the
face Of greatly increased imports: a re-
cession In general business and industrial
activity. the further postpOnement of the
railroad rate question, the possibility Of
adverse decision by the United States
Supreme Court and political uncertainty
OF a pronounced type. To what extent
these unsettling factors may retard a
healthy Improvement In general condi-
lions is not as yet evident but any or
all OF them are of sufficient Importance
TO precipitate at any time a situation
that would defer further betterment for
some months.
Notwithstanding this, there is IN the
minds Of many financlers and business
men In the country a~settled belief that
with the adjustment already effected in
monetary conditions and the improved
situation with regard to the crops the
foundation for soUnder economic condi-
tons has already been laid.
The monetary situation has resolved It
self into discussion Of the extent and
duration Of the crop movement demand
for money from the Western institutions.
The movement began 20 assume consid-
cradle proportions about the middle OF the
month, but because OF the strong POSI-
tion OF the New York clearing house
banks at no time was any considerable
apprehension shown as to the possibility
Of stringency when the movement reaches
!ts apex.
Banks I'm Good Condition.
1t was conclusively proved that the
measures taken earlier In the year by
the local banks 10 strengthen their re-
serves were sufficiently effective to enable
them TO withstand the seasonabIe move
ment OF funds with little or no difficulty.
The lowering Of rates on time money for
January and later maturities from TO
~ and even ~ per cent clearly indicated
the change In conditions. Il was also be-
neved that the farmers as a rule this year
would market their crops much earlier
than usual. which would still further tend
TO ease the strain on the central reserve
banks. In other words. with the slIrnlus
reserves OF the New York banks approx |
mating S50OOO,0O0, there is small proba- |
bility Of even temporary stringencv
during the latter part Of November or
the first part or December such as at one
time was generally predicted
The effect OF this Improvement IN the
money market has been shown more mar
ucularly in the changed sentiment to- |
ward high grade bonds. The buving /
movement in these bonds has not as vet
reached any large proportions. as stock 4
exchange transactions were 1896. 40. 500 for
the first eight months OF 1910. as com
pared with S934.l42.70O for the same period 4
Of 1909. indicating a decrease of 1897 g72.
200 for the eight months. but there were |
strong indications OF absorption by large |
banking interests OF many Of the more /
active securities. The sale by the Colo
RADIO and Southern Railway Company of
100000 refunding and extension AIS 70
two New York banking houses. and the
successful sale and subsequent distrfbu-
ton Of a large block OF New York State
canal As, were two Illuminating Incidents
rejecting the material change in the
viewpoint OF the parties identified with
the transactions.
Bond Prices Improve.
In connection with this situation r
is becoming evident that the intrinsic
value Of many high grade bonds has been
improved during the last few years.
While tho attention OF the investing pub-
lie has been directed 10 junior securities
yielding a larger rate of income the
security back of the underlying bonds
has been steadily increasing, with the re-
suit that In spite Of railroad rate re-
auctions in the face OF Increased on
Grazing costs, and the consequent nos
sibility Of reduced dividend disburse-
ments. the position OF the high grade
securities has not been adversely affected
and the margin Of safety in no way
lessened.
II Is usually the case that after q PRO
longed depression and. liquidation in the
security market. the first demand CEN
tiers upon the issues yielding from 4 IN
~ per cent The floating supply Of Sc
curities OF this type is not. as a rule so
large and Of necessity subsequent pur-
chases must be diverted to issues Of
Junior lien, but relatively higher income
yield.
Rumors Of the formation of syndicates
for the purpose Of acquiring big blocks
OF high-grade issues have been current
and holders Of these bonds have in most
instances, steadily refused 70 consider ,
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