The Washington herald., 1920-08-29
Unusual Strength Displayed BY
Bond Market During Past Week

Decidedly firmer quotations were
recorded in the bond market during
the past week, particularly in the
rail list where there developed an
unusual demand which carried
prices up from two to three points
in such issues as Frisco incomes,
Rock Island bonds, Baltimore &
Ohio, Chesapeake & Ohio, Seaboard
Air Line, etc. 1t was said that buy
ing emanated from all sections of
the country, the investment demand
from the Middle West having been
better than for two or three years.
Obviously this situation has been
brought about to a considerable eX-
tent by the slowing down in bust
ness which has released funds here
tCfOre employed in commercial en-
terprises- The Federal Reserve
Bank At Chicago, in a resume of the
general situation in the Seventh
Federal Reserve district, which in
Cludes the Middle West, states that
THE really bright feature on the
horizon at the moment to the better
ment which had been displayed in
the demand for securities for in
yestment, particularly long term is
sues. This is looked upon in the
trade as an evidence of a revival of
a real investment demand, as a few
months ago the West and Middle
! West were reported as having been
| selling securities in considerab BILE
volume because of the difficulty in
| obtaining accommodation from banks
to conduct business. The effort on
the part of the banks at that time,
/ however, was to bring about a cur
| tailment of the speculative and
| prOfiteering mania which seemed to
have a hold on the entire country
and it is evident that their efforts
I have been crowned with an appre-
/ Ciable degree of success, and salts
| faction is expressed in banking cir
Cles over the outcome of the credit
restriction action. Bankers say we
are now in the midst of real liquida-
| tion of commodities and CONNER
cial interests are at last reducing
! their tremendously large inventories
with the result that there is taking
| place a release of large amounts of
1 capital which eventually will bring
about more normal interest rates
| for funds.
Money always is an important ele-
ment in connection with the securi-
| ties markets, and prominent bank
| ers say there has not yet been suf-
! ficient liquidation of commodities TO
| permit the assumption that there
wilt be any immediate pronounced
| bulIish demonstration in the securi-
/ ties markets. This applies particu-
/ larly to the stock market which re-
4 Gently has displayed signs of marked
/ ativity and strength, the average
/ gain of stocks throughout the list
| having been from five to ten points,
/ the larger advances taking place in
| indUstrials. During the past two or
l three days, however, money rates
| have stiffened and there has been a
| receding tendency in stock market
| quotations, but the bond market has
| held remarkably firm with a grow
/ ing inquiry for the rails. There is
| not enough available money in the
| opinion of bankers to permit financ-
/ ing a big bull movement, but it is
/ regarded as likely that there will be
a continued good demand for high
\ grade securities. Bond men say that
| even though money rates should be-
| come easier there probably will be
sufficient new financing to fully abb
/ sorb all funds available for this