New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-07-19
DECLINE IN CITY BONDS
Enforced Liquidation by a Heavy
Holder Responsible.
MAIN WEAKNESS IN 4HS
Controller Does Not Expect New
Issue Soon-Recent Legis-
lation a Help.

sharp decline occurred Yesterday IN
the price of New York City a. per cent
bonds and the temporary certificates for
the new Issue of AS. due primarily 10 EN-
forced liquidation by heavy nold1r. The
old AS the $50 100000 issue Of March. 1910
for which the city realized an average
price of 10l.2S and the high figure touched
by which on the Stock Exchange this year
was 1oS, on May l3 sold on Monday as
high as 1925 and yesterday IS low az
1929
The new AS. the 100000 issue put out
last January, the average return 10 The
city being 1OoN04. made their high record Of
1o4Is on June II. They sold on Monday w
to lo4ls and closed at 1885. and yesterday
dipped as low as 1925, closing At 1O3ls. The
trading in this issue on the New York
Stock Exchange is in the temporary cerufi-
Gates, the city authorities having insisted
that the new bonds be engraved by the
New York Bank Note Company, the low
est bidder and the Stock Exchange man
agement having declined to list the issue
If the bonds should be engraved by that
corporation
-FOUR Per Cents Also Declined.
While the principal trading was in the
~ per cent issues. the sales Of certificates
amounting to $4,000 par value and Of the
old bonds to $4,000 the per cent issues
also declined. but to a smaller eX;'n'. and
on light trailing, while the AIS OF 1851
closed unchanged at 1OS1s.
When the weakness Of the AZ per cents
became apparent. il was at first reported
to be due to alleged plans OF the city to
bring out another issue at an early date.
hut it was soon found that no new issue
was imminent and that the break reflected
liquidation Of the extensive holdings OF
dealer whose operations for the rise mad
been conducted on a much larger scale
than was warranted by his ability ~ fur
nish margin.
Before the city sale. I'm Jauary. large
short interest, estimated as high as $l5,op'-
U0. had been created In the bonds 'Wheh
issued" and when the bids were opened
and 1t seemed likely that the bid or
syndicate for "all or none would be sue
cessful there was active covering OF shorts
on the belief that the syndicate would exact
a high price from operators who should
come to II for bonds with which TO settle
their short contracts Although the syndi-
cate offer failed of acceptance the bonds
continued to advance on their investment
merits, and the various Grady bills within
the last two or three months. widely eX-
tending the possible market for them, gave
a strong impetus 10 the price.
The dealer mentioned, convinced that the
bonds would move to a much higher lever
than they have yet attained, bought heavily
Of them. his aggregate commitments being
probably s5.000000 and rumored 10 be
81. 900. 600. and his purchases. of course
acting as a factor in advancing the market
quotations. In his operations he had dealt
with several banks. pledging one block OF
bonds with one bank and using the proceeds
to obtain more bonds. with which he Sc
cured loan from another bank. IL was
only a day or two ago that any or the
banks concerned became aware that he was
dealing with any other institution. ana
when the facts developed the banks called
upon him for additional margin, which in
his already overextended condition he was
unable to furnish
The banks thereupon began to call the
dealers loans. for their own protection, and
the knowledge of the fact caused the de-
cline in price on the Stock Exchange. The
liquidation of the loans, il is understood,
was conducted outside the Stock Exchange,
at figures based upon the prices made on
the Exchange and said to have been about
one point under those prices.
Controller Explains Stock Budget.
Controller Prendergast said yesterday the