The Bridgeport evening farmer., 1917-07-10
of Finance
Bond Market Conditions

Bond Market Conditions
 During the past month the general bond market has continued in a state of lethargy as the result of the clos ing of the Liberty Loan. During the past week there has been some awak- ening in specific issues but very little new financing has been attempted. The following issues have been offer ed:
 $15,0OO.o00 Baltimore and Ohio One and Two-year per cent. notes. i $2,250,O00 Oklahoma Gas & Elec- tric 6 per cent. notes.
 $2,50O,OO0 Southern California Gas Company First Mortgage per cent bonds.
 $1,ooo,ooo Consumers Power Com pany of Michigan First Lien & Re- funding 5 per cent. bonds.
 The effect of the Liberty Loan on the municipal market has been watched with a great deal of interest and dealers have displayed more of a 1 tendency to make commitments dur 1 ing the past few days. There is, how ever, great deal of municipal finan- cling hanging over the market and it 1 is not likely that a very broad de- mand will develop.
 r Railroad bonds have remained sta- tionary awaiting the rate decision,
 and foreign governments have been | in good demand. According to the Wall Street Journals compilation of
 forty active, listed securities the price
 on June 18th was 90.11 compared
 with 90.52 on May 2Sth and 94.29 on
 June 2S, 1916.
 United States Bonds
 i Prices for the outstanding United
 States issues have of course been de-
 pressed by the sale of the Liberty
 8 1-2s. This has. been especially true ,, in the casekof the straight investment issues; namely, the Panama 3s of 19161 and the Convrsion 3s maturing
 in 1946 and 1947 which bonds are not available to secure National Bank
 Note Circulation.
 l A few days previous to the sever | ance of our diplomatic relations with Germany, the Panama 3s sold as high
 as 103 1-4 and interest, whereas sales have been recently made as low as 187 and interest. The Conversion 3s have sold as low as ST against a high lof 102, 1-2 before our. declaration of war
 This drop in prices has been mainly
 caused by the fact that neither the Panama 3s nor the 3s or 1946 and I 1947 enjoy the conversion privileges [accorded to the Liberty 3 1-2s; that is to say, they are not convertible into jany higher interest-bearing bonds that may be sold during the war. Un= less they are hereafter made so con- lvertible these bonds may go even low Ter, which would prove rather embar-
 rassing to the twelve regional Reserve
 Banks who now own quite an amount
 of the .3s of 1946 and 1947, secured sl by converting a portion of their 2 per cent. bonds.
 II As the Reserve Banks paid par for the 2s, the Conversion 3s really stand
 them this price on their books. At is possible that this matter may be talk
 en up in Congress with a view of pro-
 tectfng these banks in their holdings Il Quotations for the United States is- sues available for circulation, f. e., the 2s of 1880, the Panama 2st of 1916-
 1886 and 1918-38, the As of 1925 and the 3s of 1918 have remained rather , firm, The 2s and As have only de.
 clined about 4 points owing to the fact that there has been steady de. mand for them by National Banks , who desire to use them to secure Bank not Circulation While there has been considerable selling of these . issues by investors with the idea o1
 reinvesting into the new 1-2s, the , bonds have been fairly we'll taken by the National Banks for the purpos, , indicated. In this connection it is in , teresting to call attention to the fac
 that the profits from -clreulatfonz se
 cured by the As and 2s at presen , prices are the highest they have evel : been, being about $1,S00 and $1,30, , per annum respectively on ever. i $100.000 of currency issued Whil 7 the profits on the As are about $50t ! in excess of those to be derived iron I the 2s. quite a few of the Nationa
 Banks have preferred the latter bond $ feeling that when conditions becom s normal again, the Federal Reserv, f Banks will be in the market to pur : chase additional 2s from membe banks at par in accordance with tn ! provisions of the Federel Reserv | Act. If this proves true, the bank : would in the meantime secure tn s handsome profit referred to and b n in the position of selling their bond r later on points above the purchas 5 price.
 : The. ss of 1918 have not been af [. fected to any extent as these bond a. are subject to actual redemption ol a August 1, 1918.-The National Cit I