The New York herald., 1921-01-24
FINANCIAL NEWS
AND COMMENT
1921 Bids Fair to Be Year Of
Investment Activity-Money
Rates Tend to Ease.
BOND DEMAND INCREASES
Foreign Exchanges Rise
Stock Market Has Period Of
Quiet and Realizing.
BY WILLIAM w. CRAIG.


All the indications are that the cur
rent year Will be one OF great invest
ments in securities. Not only in the
United States, but also in England and
France. the tendency toward easier
money rates has been reflected for
considerable time In a spreading demand
for bonds and short term paper. chiefly
Of governments national and municipal.
The market now is appraislng Liberty
bonds and Victory notes two to three
points higher than 1t did in the last
week Of December. The latest offering
Of Treasury certificates was oversub
scrlbed more than 100 per cent, and
eager bidders received reduced allot-
rnents. The last week saw some $33.-
100000 municipal Issues taken by syndi-
Gates and distributed with remarkable
ease. To-day a 100000 loan OF the
kingdom OF Belgium Is to be offered
here. Last Thursday the British Treas
ury closed unexpectedly early the sub
scription list for a per cent. loan OF
els. 100000. and London financial des-
patches have noted that. despite the
unfavorable position OF sterling ex-
change. funds are going overseas from
New York to find investment in short
British paper. These events point to-
ward significant changes In the world
money market. The same force that
has been lifting the foreign exchanges
so rapidly that sterling stands 20 cents
to the pound higher than on December
81 and &C cents above the lowest point
of last tutumn. while francs have ad-
vanced nearly one cent each since jan
uary l. is stimulating investments. The
release of funds long tied up In goods.
the reduction in the use of cash and
credit caused by declining industry. the
liquidation of crops and the fall OF prices
In many directions and in most coun-
tries are all playing their part in the
present situation.
Tendency of Investment Market.
AS money gradually grows easier there
is likely to be a change in the character
of new investments. The tendency is
already clear In the municipal bond
market, in which offerings OF relatively
short maturities. which a year ago
were IN especial demand. are moving
now more slowly than are long term
bonds of equal security and as we'll
favored in tax exemptions. That Is be-
cause buyers desire to retain the current
yields long into the future when interest
return may be no more than 3H or
per cent, in contrast to $40 to 9 per
cent. rnat may be obtained now.
But no one may predict that the de-
mand for bonds will continue to gather
force from one week to another without
periods of dulness and reaction. The
money market is more relaxed than II
was a month ago, but the situation Of
business. industry and prices Is not yet
what 1t should be II a sustained decline
Of money rates were to be expected.
Bank loans have been retired rapidly
since January /, yet the maintenance OF
commercial paper discount rates persist
emily at III to s per cent, rates which
held firmly during the last three months
OF 1920. prove that the mercantile sltua-
ton Is by no means easy. Information
from some Industrial centres shows that
occasionally borrowers who have re-
duced loans as inventories we're dis
posed OF returned again as borrowers
when collections became slow on other
sales. In the local money market last
week there was ample evidence that
fall of the call loan rate from per
cent. TO 5 per cent. drove away a supply
Of offerings which could Sc employed
better in short dated paper or In the
retirement of higher priced rediscounts
at reserve banks. The rate went back
to per cent. and then to per cent.
n decidedly firm tone being In evil
dence AZ the higher levels