Evening star., 1914-09-27
Investors Seeking Best Secu-
rites Show Growing
Confidence.
EXTENDED APPROVAL IS
HELP TO BOND SALES
Passing Of Cheap Money Likely to
Be Sequel Of European War.
Exchanges Near Reopening.
BY W. s. COUSINS.

BY W. s. COUSINS.
NEW YORK, September 26.-Those
who profess to be able to read the
signs Of the times with reasonable ac-
curacy report their ability to discern
several important developments which
contain a promise of highly favorable
influence upon the business and dnan-
cial situation. The very rapid absorp-
tion and marked oversubscription OF
the latest offering of New York city
securities proves beyond any doubt that
there is at the present time tremen-
dous investment demand, provided the
yield and the character Of the securt-
ties are made sufficiently attractive to
investors. True, the city issues were
short-term obligations running from
one to three years. and the rate OF in
| come to investors, per cent net. Is
not often obtained in a security Of this
class, but the attractive character Of
the offering does not initiate against
| the, main fact that investors have
| boundless resources and are as anxioua
to invest their money as they ever
were.
There has been shown to be an in
vestment demand over the entire
aged and developed. and the proper cul-
| tivatton of which will contribute great
ly to the restoration of normal condi-
tions and to the growing prosperity Of
the country.
An interesting side light on the Eu-
ropean war, as affecting investment
markets, is that its sequel will be an
end, Tor some years to come, OF the
former low rates of interest, not only
in Europe, but In the United States as
well. At the conclusion of peace every
one Of the various countries composing
the commonwealth of Europe, includ-
ing both the great nations and the
smaller states, must pay rates OF in
for centuries. The experience of the
present crisis has forced upon the at
tention of the world the inadeQuacy Of
the gold supply by comparison with
course of another year or two the diff
ferent nations will be bidding with
one another for gold, and this competi-
tion will cause the yellow metal to
occupied.
Cheap Money Thing Of the Past.
But this is only half the story. New
York city, in the past decade, has been
able to sell its bonds at from 3 to 4
per cent. This rate will not be secured
again for generation. What is known
as cheap money is a thing Of the past.
and will continue to be so for an in
definite period. Whatever amounts
the city of New York or any other
American municipality borrows here
after the borrower will pay interest on
of reducing the tendency to contract
debts. When q great city pays per
cent on bond issue It will not offer
those bonds on a slight provocation,
H,,A k<S rAt 0l0 4baA
current income wherever. this Ia pos
sible.
Today a lower rate than per cent
is not mentioned in any quarter. It
have anything to do with this advance
in interest rates. Bankers are merely
the agents of the owners of money,
and this Is merely an application Of the
demand for money when there is an
insufficient supply means q raising OF
the rate Of interest. In one respect
the high rate of interest may prove to
a stop to Wholesale bond issues for
long terms which have characterized
the policy of most American cities for
the past generation. Evidently the
things besides the map of Europe. It
is bound to revolutionize the financial
policy of nations as well as cities, and
to affect fundamentally the economic
civilized world.
An important step in the general re.
sumption of security trading was taken
last Saturday, when the special COM
bankers approved the proposition for
free trading in unlisted bonds of every
description. This permits Investment
houses to offer securities at prices that
would effect sales and that they could
send out their statesmen once more.
Freer Trading in Bonds.
Heretofore the committee represent
ing the investment bankers has prac-
tically limited its approval OF sales to
those made at the closing prices Of
June 80. Houses have not been allowed
to send out their statesmen and all
trades. have been subject to the ap-
proval OF the committee. Bond houses
have been unable to solicit trade and
have been obliged to confine whatever
dealings they made to strictly over
customers. Consequently they have
been able to do only limited business.
The ruling made by the committee Of
seven on future trading In bonds spec
ifies that dealers shall be free to sell
unlisted bonds owned by them to in
vestors. No apparent restriction is
placed upon their sale as to price or
any other qualification. In the matter
of unlisted bonds not owned by deal
ers, 1t is recommended that all such
trades be laid before the committee of
seven, while in the matter of listed
bonds it is advised that all such pro-
posed trades be laid before the stock
exchange committee Of five.
The freer trading in bonds will do
much to bring about a return to a nor
NAL basis in the investment market. It
will also mean that many loans now
outstanding will be taken up. owing to
the ability of investment houses or in
dividuals to secure cash in practically
open market for the securities in which
they had invested their funds. The rul-
ing of the committee will also near re-
employment to many bond statesmen,