The Washington herald., 1921-12-15
new BOND ISSUES
STRONG; GENERAL
LIST SLOWING UP
H e avy Reinvestment
Market Anticipated
In January.
MONEY GOES LOWER
Drop From z to Az Per Cent
In Rediscount Rate
Since May.
MONEY GOES LOWER

NEW YORK, Dec. 14.-Although
the demand for new issues contin-
ues undated. as demonstrated by
subscriptions sggregating over
s25o.ooo.ooo for the s1s.ooo.ooo Ore
gon Short Line notation, percepti-
BILE slackening has occurred in the
general bond market during the
past ten days. Bond men say this
Is natural, in view of the extensive
nature OF the recent rise and tho
tremendous activity which accom-
PANIED il. Many observers feel the
period up to the close of the year
will be characterized by gradually
lessening inquiry for bonds until
the "reinvestment market" starts
next month.
Many investors have anticipated
the maturity of some of their hold
ings to take advantage of the at
tractive Yields offered by many
Wound issues, believing that the
rapid decline in the cost of money
might cause an upward revision in
prices before the maturing obliga-
tons were paid. But despite this
feature OF the market over the past
month. investment experts believe
that the reinvestment period next
year will be marked by almost I'M
psralleled activity.
In the first place. the money mar
ket Is making rapid strides toward
lower levels. After holding at I
per cent from June l, 1920, the re-
discount rate OF the local Federal
Reserve Bank was cut to 6Is per
cent on May 5. 1921. Three other
cuts followed in rapid succession
this year. Finally, the rate fell to
az per cent on November 2, and
bankers anticipate still further re-
duction early next year.
Small Buyer. Numerous.
Moreover. the name of the small
bond buyer now is legion. Success
sive notations of Liberty and Vic
tory issues during the war so edu-
Gated the public to the advantage
OF bond buying that the list of po-
tential investors has been greatly
increased. Houses which formerly
paid little attention to the small
investor, concentrating on the bush
ness of persons able to buy in lots
of fifty to a hundred bonds. are
now catering to the trade of the
purchaser VI ollC u hNC pOAAho- ~
a result, the unit OF bond buying
has suffered an appreciable shrink
age during the past two years.
Interest this week will be focused
on the sale OF s55.oO0.O00 ffty-year
AZ per cent bonds OF New York
City, bids for which will be opened
at noon tomorrow. In view of the
great appreciation which has &C.
CURED recently in similar obliga.
lions OF New York City. bond mer
are extremely anxious to learn or
what basis this issue will be offered
Since November Is the "A New
York City bonds. due 1867. which
offered the nearest analogy to the
Forthcoming offering. owing to their
interest rate and date of maturity
have risen from s6i2 to a high OF
1902 Other New York City issues
have gone up in proportion. This
extraordinary gain obviously alters
the whole situation with regard tc
the yield on the new Issue, ant
most experts now incline to the
view that the offering will bt
brought out on a basis to yield
40 to $50 per cent
Hope for Tax Exemption.
IN u dCCOuuI lOE lnt
factors which resulted in this sud.
den appreciation in the New York
municipal issues, competent observ.
ers give FIRST place to the move t.
abolish tax exempt securities. While
an amendment to the Constitution
would be necessary to achieve this
object, and considerable delay mus
occur before any movement Of thi:
character could be consummated
wealthy bond buyers evidently took
into consideration the possibilities
involved in the Presidents recon-.
mendation.
II the exemption feature is elimi-
mated by law, bond men believe il
cannot be made applicable to issues
now outstanding. They feel that
the immunity of outstanding New
York City issues from all forms OF
tsxation-Federal, State, and city
has made them especially attractive
to wealthy investors