The Washington times., 1922-07-31
BANKS ACTIVE IN
BUYING HIGH
GRADE BONDS
Volume Of Investments Held
by Banks Show Big
Increase.
BY MUNRoE ROBERTS.


Copyright. Is23. by Cosmopolitan News
service.)
NEW YORK, July 31.-A feature
Of the bond market which has been
Of more than usual prominence In
the last few days has been the ac'
tivity Of the banking institutions In
the purchase Of prime securities in
the open market. While this Is, OF
course. beneficial to the investment
market as such, II Is not indicative OF
desirable conditions in finance and
business. The functions Of the COM
rnercial banking institutions are to
finance business and not to employ
their funds In interest. bearing Be.
curities or their clerks in coupon
clipping.
The Federal Reserve Bank reports
that the volume of investments held
by the banks, both In New York city
and In other principal cities Of the
country, has been increasing for
several months, and is In contrast
with the volume Of commercial loans
of the same banks. which has been
decreasing ever since the maximum
Of expansion was reached In the
autumn Of 1920. These divergent
movements are usual at times such
as the present. and have been OBJ
served In previous periods OF re-
covery from business inaction. as
for instance, In 1894 and 1907-0S.
In the early stages of the recent
period OF commercial liquidation.
funds released from employment
were used by the banks to reduce
and In many cases ultimately to ex-
tinguish their Indebtedness to the
reserve banks. New York city mem.
Der banks. for example. which on No
vember s. 1920. were borrowing
3ss0. 900, 900 from the New York re-
serve bank, on May 81, 1922, were
borrowing less than $4,000. 900.
As the banks progressively reduce
their debt, their investments in the
United States Government securities
tended to increase. and by the end
Of last year were rising more rap
idly, at q rate which has been main
tained with little interruption since.
In the early spring Of 1922 their
holdings Of other fixed.term invest
ments. including corporate bonds and
stocks. also began to increase.
Richard Sutro, chairman Of the
reor rEanization committee represent.
ing the Z per cent accumulative ad'
justment mortgage gold bonds Of the
Denver and Rio Grande Railroad
Company. has issued letter to
holders Of these bonds stating that
the committee believes that the posi-.
ton Of the bondholders has been
greatly strengthened by the appoint
ment Of a receiver for the Denver
and Rio Grande Railroad Company
through the efforts Of the committee
and urging all adjustment bondhold.
ers TO Immediately deposit their bonds
tional Bank, New York. the deposi-
tory, in order to further defend the
interests Of the adjustment bonds.
Ten new bond issues comprise the
offerings for today. The aggregate
amount Of these offerings Is $12.-
| 900, 900 and the largest items are
made up Of public utilities issues,
which amount to $500, 900, The
principal offerings are as follows:
$500 900 Toledo Traction Light and
Power Company three'year per
cent secured gold notes at sS and
Interest. to yield 6& per cent;
s2.1oo,oo0 Kansas City Joint Stock
Land Bank Of Kansas City. Mo,
per cent farm loan bonds dated
May 1, 1922. and due May 1. 1852;
| 81, 900, 900 Central Indiana Power
Company per cent three.year col
lateral gold notes at 80 and inter
est to yield 7.3s per cent: these
notes are convertible at 1ol and &C
crued interest into preferred per
cent cumulative stock Of the com.
psny at s6 and accrued dividend;
Se62, 300 Seaboard Air Line railway
6 per cent equipment gold notes
dated January Is, 1920. and matur'
ing $4,000 annually from January
Is, 1898, to 1888. TO yield SIS; $24s,.
900 City OF Railway, N. j., ~ per
cent coupon gold notes, due seri.
ally from 1928 to 1852, inclusive. to