Evening star., 1914-10-07
IMPROVEMENT IN BONDS
AFANORAbLE FEATURE
London and American Investors Are
Selecting Desirable Early
Maturity Issues.
Direct Financing Under New Bank.
ing Act-Need of Rehabili-
tating the Railroads.
BY I. A. FLEMING,

BY I. A. FLEMING.
An encouraging sign Of the times is
evidenced by the steady increase in
the demand for good bonds, short term
notes and municipal issues. Only a
short time ago the bond business was
just as depressed as the market for
stock shares, but from day to day there
has been an increase until the daily
volume is decided factor for the re-
lief of the situation.
The conservative investor with sur
plus funds finds interest desirable in
preference to inroads on principal.
This improved bond business has not
extended very largely to Washington.
but is largely obtained by New York
houses, yet it is also a fact that some
local issues have changed hands.
It may sound strangely at variance
with the apparent dread of foreign
liquidation of American securities, but
it is a fact that English investors have
acquired large blocks of Pennsylvania
bonds and other issues as well. A Phil
adelphia broker has placed $250,000
Pennsylvania Railroad Company con-
vertible 3hs at 97A, which the Lon
doners think good bargain. In all,
about $500,000 Of other issues have
been placed abroad within the last few
days.
While we are far from a restoration
to normal conditions in the security
world. the initial signs of betterment
are worthy of mention and may presage
increased transactions, especially In
short maturity issues.
"Put Value Under the Railroads."
The Bache Review, issued by J. s.
Bache & Co. of New York city. released
for publication today, is almost entire
ly devoted to the Importance Of the re-
opening of the stock exchange and the
making Of market for securities.
The chief remedy is to be found, in
the opinion of the Bache house, in the
rehabilitation of the railroads of the
country-putting value under the
But the barrier to reopening the ex-
change" say Bache & Co.. 'is the men
ace of great mass of foreign sales
threatening to engulf it. And this situa- Ia.
the fact that a very large part of Amer
ican securities is discredited by the dis
astrous situation which has been
brought upon the railroads. II the rail-
ample surpluses. insuring permanent
dividends and easy payment Of fixed
charges. the whole situation would be
the most attractive in the world, be-
cause they would be the issues of high
ly profitable companies located In the
only great country in the world at peace.
Such situation would advance prices
materially for these securities and
would reduce by hundreds, and prob
ably thousands, Of millions the amounts
exchange. Every present holder. abroad
who was not forced to sell would be
eager to hold such investments. liable to
advance. These European holders are
Gel %
tions. They would at once realize that
our securities on this new basis would
be the last things to part with. as they
would be far safer in the present situa
ton than money in hand over there
could possibly be. or than the securities
of any other country.
The Remedy.
How, then, can the situation be pro-
duced? The power is absolutely in the
hands of the interstate commerce COM
mission. They have restricted the earn
fng powers Of the railroads, especially
since 1910, until today the roads, largely
by reason Of inadequate charges. are
many of them in the hands Of receivers,
others are facing bankruptcy. and only
a few OF them are making a successful
showing.
"As business proposition the railroads
are not making money, and have not been
for long time.
They have been compelled to default
within the last few months on obliga-
tions equal to half the national debt
Net operating income Of all the rail-
roads declined in one year to June 30,
1914, 12O millions. and no relief is in
sight.
There is only one way to save the
situation. and this is by liberal increase
in rates.
This can be done promptly and will be
amply effectual at once if the increase
Is large enough.
This situation is realized by Congress
and by the President, and the latter has
recently, in strong letter. called the at
tention of the country to the facts"