The Washington herald., 1921-08-04
BANKERSBULLEH
ONLIBERTY BONDS
WITHMONEY CHEAP
Shrewd Investors Have
Been Accumulating Is
sues Recently.
EXPECT ADVANCE
Liberty Slump Laid to Tight
ness Of the Money
Market.

NEW YORK. Aug. 3.-Dealers are
kmore bullish on Liberty bonds than
for many > month$ shrewd inves-
tors have been quietly accumulat-
hing all issues for several weeks, be-
|eause of the-many favorable develop
ments which have been overlooked
lby the rank and fle.
The Soldiers Bonus Bill cannot be
passed in the near future and many
bankers do not believe it will ever
be passed They feel that import
lant development seems to have re-
|ceived too little attention
n Another point of almost equal
|signihcance is the easier money rates.
DCalI money now loans around
AZ and So. which compares vita
|S6 year ago.
4 leading dealer says:
There has been heavy buying in
Ithe past few days, which represents
normal reinvestment demand forthis
| |time of year. Easier money has
also diverted funds to the Liberty
bond market. Many bankers. hav-
| ing surplus funds. prefer investing
in Liberties to lending money on call
at present rates. Even people who
3expect to need funds in a few days
are. TO limited extent. buying gov
ernment obligations, knowing such
isecurities can be quickly disposed
of for cash and with a probability
of selling at a profit. Investors. in
fact. are beginning to show a little
more courage.
Expect Cheaper Money.
II expect to see call money even
cheaper than IL is now. and IL Is a
|matter of common knowledge that
Quotations for Liberties have shown
= decided tendency to fuctuate
with call money. rates. II specula-
tors are able to borrow money at
l3%, and IL would not surprise me
Ito see the rate even lower, it will
be profitable to borrow and buy
again
Practically every financial stu
|>dent knows that the reason Liberty
bonds experienced such a dishear-
tening slump was tight money. This
worked two ways. First, many
holders being unable to borrow
money threw their Liberty bonds
on the market for what they would
Abring. in order to save other securi-
gties. This distress selling how
ever, has now been entirely COM
pleted and the market has nothing
further to fear from It. The sec
ond cause was that the market value
of money was abnormally high ana
the decline in quotations for gilt
redge securities merely reflected the
unusual demand for cash. But with
the gold stock now at the highest
figure on record. and the steady con-
traction OF loans, the supply of mo-
ney has become so large that rates
have been forced down to a point
where higher quotations for high
grade bonds seem inevitable.
Many investors were deferred
from buying Liberties through fear
that the Bonus Bill would be pass
ed. In fact. high officials in Wash
ington predicted six weeks ago that
passage of the bill was inevitable,
but. thanks to President Harding's
II has been killed. at least until the
X~ONheAS Soh Sditly pay Ine DILL
Steady Accommodation.
Bankers and bond dealers believe
that steady accumulation of Liber-
ties Is now under way. The mar
ket has been decidedly strong for
the past ten days, but the advance
has not been as great as some bank
ers had expected.
One banker says two dealers had
sold all their Liberties, believing
that the bonus bill would be pass
I'd. When il was definitely known
that the President would oppose the
bill these dealers sold Liberties
khort on the stock exchange to de-
press quotations. while buying
Everything possible in the outside
market These two dealers have
uffered heavy losses. il is said. but
ave about succeeded in replenish-
ing their supply of bonds, and are
kOuy Opfimiaffc