The New York herald., 1922-10-17
FINANCIAL NEWS
4 AND COMMENT
Liberty Bonds Sold in Heavy
Volume-Stock Traders
Buy Rail Shares.

Heavy selling OF Liberty bonds which
carried all issues except the first 3Hs
the first ANS and the Victory notes
under par. was the outstanding feature
of yesterdays markets. This may have
| seemed surprising in face OF the tre-
mendous oversubscrlption to the new
"A per cent. Government issue. but bond
men who have been carefully watching
the market for fortnight or more were
not a bit astonished. AS a matter OF
fact they have been looking for some
such break in the bond market for some
time.
Three or four weeks ago the question
was raised as to whether or not the bond
market had reached it's peak for the
moment. To-day it seems to be a greater
question than ever. The demands of ex-
panding business and industry upon the
surplus money of the nation have been
heavy and promise to be infinitely
heavier. Withdrawals by interior insti-
tutions to meet the requirements of their
customers have pulled balances in New
York down sharply and there has been
nothing yet to indicate that the drain
is ended. This has caused wider use
of the rediscount privilege and at the
same time circulation of the Federal Re-
serve System has expanded materially.
The largest holders of bonds, par
ticularly Liberty bonds were banks and
banking institutions and corporations.
They all had large surplus OF money
when Liberty bonds at the low prices of
year ago were exceedingly attractive.
To-day the banks are being called upon
to supply their clients with money u
take care of vastly increased business
and the corporations themselves, finding
their business growing, need more money
to handle the expansion. Then the SELL
ing of these bonds at handsome profits
TO meet the new needs would be a logical
thing.
That money will become extremely
scarce and rates inordinately high are
quite unlikely. What is probable, how
! ever. is that the big supply Of money
available during many months at a com.
paratively low rate has dwindled to the
point where 1t will be necessary to bid
for accommodation rather than to wait
for its offering. The tremendous over.
subscription to the new Government
issue does not by any means suggest
that money is as easy as ever. A Az
per cent. long term United States Gov
ernment bond was bound to prove
mighty attractive. and a big over
subscription was foregone conclusion
Besides. there is very large elemen;
of exchange OF Victory notes for the
new bonds in the new operation.
In the stock market there was a dis
| tinct drift of speculative enthusiasm
into the railroad shares. Advances
were not spectacular. but the buying
all through yesterdays session was per
sistent and effective. Brig. Gen
Dawes's assertion on Friday that new
taxation probably would have to be re
sorted to in order to provide sufficien
revenues for the Government was on,
Of the factors in switching speculative
enthusiasm from the industrials to tn
rails.
Whatever may be done In the way O
taxation. It Is not likely that furthe
burden will be placed on the carriers
and any taxing Of corporations will fal
more heavily on industrial concerns
The Dawes speech likewise was respon
sible for n revival of interest in th
stock dividend story and there was SOM
substantial buying OF stocks of thos
companies which are expected to talk
such action.
Call money became tight toward th
close of the session and advanced from
y to per cent This was the resul
OF general calling of loans in prepara
ton for large Government Withdrawals
Both the cotton and grain market
were irregular, closing prices beinl
slightly below the last quotations Of
Saturday.