Evening star., 1922-10-01
BONDS REACTED ON
HEAVY LIQUIDATION
Declines Aided by Near
East News and Also
Profit Taking.
BY BRYON SELLER.

NEW YORK, September 3o.-Reac-
ton ruled in the investment market
this week. There were exceptions
here and there, but the tendency was
downward. Opinion as to the gov
erning influence was not uniform.
Neither was there any agreement az
to tho probable duration. AS to the
cause, the obvious things was to
ascribe prevalent weakness to con-
Germ over the disturbed conditions
abroad.
These were admittedly serious
enough. The fluctuations in sterling
exchange were proof of that. But
not all the authorities held that the
foreign situation was primarily re-
sponsible. A large contingent put
the emphasis on money market con-
ditions. Some were even more spe.
cific, saying that uncertainty about
new government financing was the
chief factor.
Say Reaction Temporary.
AS to duration. those who held that
the current news was the develop
ment to which prices were responsive
porary and that when the news be-
came more favorable quotations
would advance again. Those who
put the stress on the course OF the
money market were not willing TO
admit that there had not been indi-
cations Of a change more funda-
mental in it's effect.
whatever the relation of cause and
effect may have been, the fact Is tnat
the weakness shown In market prices
for bonds. both high grade and spec
ulative, coincided with the publication
Of dispatches describing the extent
of The crisis in Europe. This may
have been, OF course, only coinci-
dence, or 1t may have been that un-
easiness about foreign affairs merely
accelerated a movement which had
already gained considerable impetus.
In support Of the latter theory, it can
be pointed out that quotations Tor
both high-grade and second grade
railroad bonds have been declining
very slightly but very steadily for
over a month.
Utility Bonds Strong.
The market for public utility is.
sues has been much stronger and
while industrial bonds are lower on
an average than q month ago, the
loss is not so great as with the ralis.
1t is. of course. not possible TO
trace sources OF the seillns when
depressed quotations throughout the
week.
good deal Of liquidation came from
banks which have been carrying IN.
vestment securities purchased a.
much lower levels.
For that there might be two ex-
planations-one, that moOey was
needed in increasing quantities TOR
strictly commercial purposes, ana tne
other that the sellers believed that
present at least. In either case me
resnlt would be the same, for the
moment at any rate.
AS far as the business outlook was
concerned. no change was indicated
Except for possible congestion on the
railroads, domestic conditions were all
favorable and it was widely held that
even the most serious outcome in
Europe could not permanently retard
business revival in America Virtually
all lines Of industry report improve
ment.
Treasury officials were quoted as fore
casting. better prices for wheat. Ger |
tainly anything that will contribute
toward increased buying power on the
part of the agricultural population will
be helpful to general prosperity.
second-Grade Bonds.
Whatever may be thought about
whether or not the very highest grade
of investment securities have reached
price levels warranted by the future
Of money rates. it cannot be doubted
that there Is room for Improvement IN
the second-g grade obligations. those
which are responsive to the financial
condition and business prospects Of the
debtor corporation. Increasing railroad
earnings. due to the expected heavy
traffic Of the last quarter of the year,
ought to be very helpful in this direc-
ton. The question here. Of course, is
how far SPECTATORS have discounted
this improvement.
Conservative Investments.
Meanwhile those who still felt un-
certain as to the future turned to the
short term and callable bonds as a
refuge. The high coupon rate obi ga
ton with it's large current return is
very attractive to this class OF con-
servative investors.
Their purchases were distinctly a
steadying influence in the bond mar
ket all the week.
While the change of appreciation in
principal which proved SO powerful
an incentive in the eager buying Of
long term bonds the past twelve
months is entirely lacking in this
kind Of a security, it is equally true
that there is little chance Of deprecia-
tion.
Copyright, 1922. by The starl
American Brass has issued a new
price schedule, providing for advances