The Washington times., 1911-03-26

were 50 limited and so highly profes
sional that no Importance was attache,
to price changes. Nearly one-half o
the meager transactions were confinet
to the Three Guardsmen," as broker
now designate Steel common. Reading
and Union Pacific. Dealings in thes
three issues have been the mainsta!
Of the market for months past and the!
served the purpose OF keeping a sparl
Of life in Wall Street during the inter
val under review.
With the great majority OF stocks
listed on the Exchange a few hundred
shares only appeared on the tape eacl
day, and many of the transactions haC
the appearance of being put through
| by the specialists. merely to make quo
| tations and give the issues a gOoC
! status as collateral in loans. The wide
| divergence between bid and askeC
| prices. which prevail with many Of
the inactive properties, and the tota
absence of bid" quotations for very
| many such Issues, indicate that the
market is very narrow indeed. In fact
numerous specialties cannot be sold eX'
| cept at marked concessions in price.
bOnQ DedllnSS contracting.
What was of greater significance than
| the intensified dulness in stocks was
| the noticeable contraction in bond deal
ings. The only explanation for this,
| aside from the general uncertainty
which clouds the future, is that very
heavy offerings of short-term notes and
the rumors of many large impending
note issues has rendered personal in
vestors timid in addition to injuring
sales of bonds, so far as institutions
are concerned. The personal investor
naturally associates temporary borrow
ing by corporations at high interest
rates with monetary stringency or pc
RODS of financial disturbance, when such
forms of financing are usually resorted
to by corporations.
On this occasion, as is well known or
should be, the railroad and industrial
companies have taken to short-term
notes, chiefly because they do not be-
leve in the permanency OF the higher
interest rates at present demanded by
individual investors. Rather than bring
out a long term bond of high character
to sell upon a "a per cent or even a
higher interest basis, which is necessary
In order to effect quick sales, the cor
porations prefer to borrow for from one
to three years. paying stiff price for
their money. BY so doing they hope to
avoid costly permanent financing. and
avoid also depressing their outstanding
funded issues.
Activity in Short Term Notes.
short-term notes are selling we'll with
bankers: and. in fact, they show about
the only vitality that one detects in
Wall Street; but, naturally, institutions
on finding that corporations are more
disposed to engage in temporary than
in permanent borrowing-on hearing the
reports of heavy impending issues-are
holding aIoof from bonds in order to
secure the higher interest rate from
notes. Bankers look upon such trans
actions moro in the light of a loan than
an investment, and they favor the ope-
ration also in consequence of the
ready marketability of notes.
1t is estimated that fully $50, 900, 900 in
notes have been issued thus far this
year, for, in addition to the large
publicly announced, there have
been very many quiet sales of smaller
some of which will never be
known until the companies make their
annual reports. Notes are selling on an
interest basis all the way from to
per cent, dependent upon the credit of
the issuing companies. That such should
be the case in a money market where
call loans rule at per cent and six
money is offering at to 81 per
cent, is without precedent in recent
years, and within the memory of the
present generation Of Wall Street bank
ers none recall a like situation.
Rates for Investment Capital.
Although the explanation for the out
known in bond and investment circles it |
Ia difficult to break down financial ira
and at the present time 1t is i'm |
possible for many old-time bond men to |
forget that in the past, notes were is |
sued only when all other forms OF finan- |
cling had failed. In consequence. many |
Of the larger distributing houses are |
timid when 1t comes to taking on bonds |
unless they can secure them at very at |
tractive prices. Some of them believe |
or profess to believe that the corpora
tions in the end will have to come to |
the higher interest rates for permanent
financing, and that the short term note
Is but a temporary eXpedient which de-
ermines nothing except that institutions
1t this time are anxious to employ their
money at high interest rates.
These men point out that municipal
Is now effected at a rate fully
per cent to / per cent higher than it
was eight or Ten years ago, and they
hold that If such is the case with the
higher form Of secur1ty-the municipal
oond-that railway and Industrial cor
oorations will have to come to the
higher basis, eventually. This question
If the worth of capital for permanent
Investment is of great importance TO
bankers, and interest in the discussion
s heightened by the approaching expert
nent of the Governn ent with a $50,090,-
100 per cent Panama canal issue, the
irst installment of the $290000, 900 loan
Every one is looking for the success of
he first block of Panama bonds, but with
he subsequent lots there may be a
question, for 8 per cent is very low for
Investment capital, and lacking the cir
:ulation privilege, the bonds will not
rave as broad a market and therefore
Ire not as attractive as other Govern
nent bonds.
Restraining Influences.
So far as one is able to determine such
matters the intensified dullness of the
financial district is the result of no new
Wall street on Wednesday
,rofessed deep concern over the hurry
all sent out from the War Department
It Washington to the Chicago recruiting
,fficers for the enlistment of men in
arge numbers. seeking thereby to work
l