Evening star., 1922-12-30
BY GEORGE r. HUGHES.

the investment udfhSI sAlio oH "uASA
the trend Of quotations depends pre-.
sent both points of contrast and
points OF similarity with those pre-
vailinS a year ago. Nineteen twenty
two opened with money rates declin'
ing and bonds advancing. - IT closed
with money rates stabilized ant
bonds, while firm and showing some
tendency toward higher levels. giving
no indication of a renewal OF tho rap
Id advance which marked the frs'
half OF the year and reached its eli.
max about midsummer.
For a time early in the year III.
bond market r.valed the stock marke'
in speculative activity. The rise be
gan in May, 1920. long before there
were any signs o: business reviva
and continued .rregularly Throughout
1921 and at an accelerated rate FOL
more than half Of 1929. Whatever thu
future may have In store II does mo-
seem likely that this movement VII
continue except In very small wa!
This Is not to predict any oeciine;; !!
10 merely TO say that the outlook !!
that investment securities VIII ot
maintained around present levels.
Capital Put Into Securities.
The rise !n the bond market besar
While business was still in the depth:
Of depression. AS has been invariably
the case, capital which was not need
ed In commerce sought employment
in the highest grade OF securities
bonds as to which there was no Ques.
ton about payment OF interest ane
vanced quotations and the improve.
ment spread to the second grade anc
then to the semi-speculative issues.
Finally interest centered in stocks
instead OF bonds Meanwhile as busi.
ness slowly revived the demand fol
funds became stronger and banks
which had Invested their surplus
money In securities offered them 70,
sale Prices declined corresponding
Iy, but the level at the end OF the
year was lar above that at the be
ginning and this pressure on the
market from selling by institutions
had largely abated.
reached par aster their long decline
and even sold a point or a point and
a half above par in July. only to fall
below that point again IN OCTOBER
after the government had issued It's
refund!ng loan.
Effect OF Bonus Agitation.
Fluctuations in nbertys were cue
therefore, 10. only to the changes N
the money market, but to the opera
tions OF the government. Another
factor which Influenced prices more
or less was the persistent agitation
in favor of q so-cAlled bonus for vet
erans Of the world war. In this re-
spect the situation at the opening OIL
1928 ia not very different from that
Of wear ago. Both houses OK Con-
Eress passed the bonus bill. Presi-
dent Harding vetoed II, and me ,,.d AZ,
tempt to pass Il over his veto fai,eo
in the Senate. But advocates OF this
Legislation gathered new courage
from the result of the election ano
assert they intend 70 p:ess their ad-
vantage al the ::e1t session OF 5he
national legislative oocies. ~, tHe i1or
erty bond market therefore st!N races
The prospect OF competition II some
form Of government security issued
70 -ecompense the former soldiers.
Railroad Securities Gain.
Railroad securities advanced W'tf
,,,e 1ast OF the bond market FOR the
fi-.. half OF the year reachiaB 1hel!
Nig., points in July ana Angus, ant
then receGing with subsequent re-
coyery which still left them ABOVE t..e
nr,ces prevailing last January. 5tere
700 however, other considerations
,han the current rates for money In
fiuenced the market. First came the
strike with Its disastrous erect OF
earnings. then came the election over
turn which enormously aooeo 70 ehe
power and prestige OF those repre-.
sentatives OF the agricultural IVES
who Insist on lower rates on products
Of the farm. They also demand tine
repeal Of the transportation act, or q
least Of that clause which appears &c
guarantee to the railroads a fair re-
tuln on their invested capital.
Whether the agricultural bloc sue.
ceeds or does not succeed In its
efro-ts. its activities cannot be helpful
to railroad securities. Stocks OF
course suffer the most, bus bonds are
not exempt. Even II the recon-.
mendations of President Harding pre-
vail and the Interstate Commercs
Commission Is entrusted with the
authority to Az both rates and wages
Il will be but a short step further tc
government ownership and operation
Movement Of Foreign Bonds
Tie movement of foreign bonds dur.
ing the year just closing has beer
one of striking contrasts. The posi-.
tion Of Great Britain as evidenced bJ
the course OF sterling exchange II
greatly improved and, next to tina,
Of Canada. the credit OF the United
KINGDOM in our markets is higher
than Of any other foreign country.
IL Is ul1lCICAt AZ VIC N1SS ~
France. French bonds at the close OF
the year are. II anything. lower thar
at its beginning. They reached their
high prices IN .iarch and April ano
then fiuc,uated with the news from
abroad o. to the outcome OF the repa-
rattons tangie. They reached their
low point n November and carried
with them st that time the obllga-
tons Of Belgium. About the same
period American investors developed
a sudden timid!tv about South Amer.
tcan bonds. notably those OF Brasil
It was not until support from power
full interests came into the market
that confidence was in a measure re-
stored.
Outlook Still Encouraging.
Even now the outlook Of placing
foreign obligations in this marae'
under any advantageous terms to the
borrower Is not encouraging.
It is also to be noted that Londor
bankers are actively competing FOL
European business in the way o.
government and municipal loans snt
that the British investor. perhaps be.
cause of his greater familiarity witt
conditions outside his own country
Is much more courageous than the
American. Brazilian bonds. for In
stance, are better taken in Londor
than in New York. and the same i:
true to a greater or lesser degree Of
French securities.
II the coming :ear should witness &
settling of the reparations problem
on q reasonable basis and a definite
understanding could be reached as te
the international debt. a tremendou,
impetus would be impaired to the
market for foreign bonds which are
now selling to give returns thai
would have beea regarded as fantastic
in 1918.
Investment Fashiens Change
One Of the most interesting devel
opr,ents of the year may be found II
the changing fashions in investments
For many years there were only TIVE
classes Of bonds in which there wal