Evening star., 1922-11-19
HESITATION SHOWN
IN BOND MARKET.
Prices of Domestic Issues
Not Expected to Change
Much at Present.
BY BYRON SELLER.

Special Dispatch to The Star.
NEW YORK, November 1S.-The col
lapse and subsequent recovery in quo
tations for foreign bonds, notably those
of France, Brazil and Czechoslovakia
featured, the weeks bond market. New
low records were made by obligations
of all three governments. The recovery
was almost as sharp as the decline,
which apparently was based not on any
change IN the financial status OF the
debtor nations or even on any political
development abroad. 1t was rather the
cumulative effect Of the steady depfecia-
ton in market price OF these securities
which has been in progress the last
eight months.
Speculation may have some influence.
but the chief cause seemed to be genu-
Inc liquidation from timid holders. The
factors which brought about the re-
covery are not so easy to interpret. I'm
doubtedly there was a certain amount
OF support from interests which would
have been adversely affected by con-
tinuation Of the decline.
How far this support will be perma-
nently effective Cannot be predicted now.
Few Changes Abroad.
Conditions abroad have not materially
changed. The French budget, taken as
whole, is fantasticaiiy unbalanced.
The outlook for payments from Ger
many either In cash or III kind is just as
doubtful as ever. 1t would be very un-
safe to make any predictions about the
outcome Of the troubles in the near east.
but surely there has been no more reason
for concern this week than last. And,
however difficult the French financial
problem may appear, 1t must always be
remembered that her external debt is
only small proportion Of the total and
that interest payments and sinking fund
requirements are being promptly met
on all French loans
No responsible banker can be found
willing to express an opinion that
there is any doubt about the con-
tinuance of these payments, both for
interest and sinking fund. Czecho-
slovakia maintains her conservative
nnanciai policy, an oasis of con-
Doubtless there is some speculative
risk attached to the obligations of
such a young republic but If there
be chance Tor loss there is also
chance for gain.
Weak Bonds Disturb Others.
All this is important in its effect on
the whole investment market. Per
sistent declines in French bonds, for
instance, cannot but have a disturb
ing effect on other securities. The
European situation Is always men
the long-range business prospects IN
the United States are unfavorable.
The steadying influence which came
into the market for foreign bonds
the latter part Of the week, therefore,
was very welcome.
indications are that prices for
domestic investments are approx
i'm a al CT a frr hn
Securities so well protected by earn
ings as not to be affected by any
thing but the current charge for
money vary only slightly in price
from day to day. Those the price of
which changes with the business
prospects of the debtor corporation
continue very Irregular.
To a less degree. the same. condi-
tions govern the bond and the stock
market. Both markets show evil
dences of doubt and hesitation. =
October Earnings Vital. =.
The railroads still report a record
business. But it is not at all certain
that the October earnings statements,
the first of which are due next week.
will reflect profits corresponding to
the business. There are still strike
expenses to be met, nor can the rail-
roads in the long run be more pros
porous than the country as a whole
The public utilities report increasing
profits. but some day, and perhaps
soon, there will be increasing costs
The farmers condition has improved.
especially that of the cotton producer,
but further improvement must come
to wheat and live stock raisers if the
balance between farm prices and city
wages is to be restored
The most cheerful reading for the
optimists is the automobile produc-
tion statistics. October'S turnout of
cars and trucks was at the rate Of
nearly three millions annually; this at
a season when production is expected
to fall off. The value of the annual
production of the automotive indus
try is estimated at the. astonishing
total of s2.s65 ,00O,0 Prosperity in
an industry of such magnitude cannot
be ignored when the general business
outlook is under consideration.
Politics "Bear'' Fnctor. :. -.
There remains always the disturb
ing factor of politics. There is sure
to be good deal of talk about serious
radical experiments coming out of
Washington during the coming win
ter. Probably most of it will end in
talk. But 1t all helps to unsettle the
confidence on which business is built,
And yet the Amer rican people can be
trusted eventually to decide even alb
Stract economic questions correctly.
Copyright. 1927