The New York herald., 1922-10-10
FINANCIAL NEWS
AND COMMENT
Effervescent, Rising Market
Dispels Fears About Effect
of New U. s. Financing.

Fears that the new Government
financing might bring about a sharp
reaction in the stock market by reason
of the high coupon rate on the long term
bonds disappeared almost Immediately
after yesterdays opening, which was one
of the most active and one OF the
strongest seen in long time. In the
first hour the turnover in the stock mar
gains were recorded. The indication of
tighter money market than generally
was believed to prevail was ignored in
so far as stocks were concerned.
In the bond market. however. the new
Government issue was reflected in a
moderately lower level for Liberty bonds,
while others were allowed to drift with
out great deal of interest. Total trans
actions in the bond market were large
but Libertys and traction bonds, in
which there was displayed O. great deal
Of interest, composed the bulk of the
dealings. Heavy demand developed for
the new Az offered by Secretary Mel
Ion. for aside from the attractive coupon
rate they are not callable for twenty-five
years, and they furnish the longest term
investment in United States Government
obligations now available.
What the new Government financing
means to industrial and railroad cor
porations is something which Is causing
a great deal of interest. For time the
bond market was booming and a number
of issues were sold at very high prices
Some municipal bonds were put out at
per cent. and even lower. Secretary
Melons announcement puts another face
on the situation now.
There are scores of corporations which
are contemplating new financing pro-
gram. Notable among these are railroad
companies that are greatly in need o.
new equipment and have no ready cash
with which to meet their needs. The
question then becomes one of the position
of the bond market-has it reached its
peak? That is what strong efforts are
now being made to determine. Certain
it is that expanding business has alb
sorbed some of the big surplus of funds
which made money SO easy during the
last few months. Bank clearings, en-
ployment conditions. outstanding cireula-
tion. &C., all point to the same condition.
In the stock market yesterday move
ments were mixed. but the advances
scored by some of the high priced
securities Of companies that have tre-
mendous surpluses were nothing short Of
sensational. Bidding for stocks Of that
type was very active and gains ran as
high as II points in the active issues.
Atlantic Refining, one of the Standard
Oil group was feature Of the day with
an advance of 155 points on a very
small turnover of stock. The conviction
is growing in the financial community
that these companies are preparing to
declare big stock dividends and other
wise distribute their huge surpluses in
order to forestall heavy taxes on undis-
tributed earnings which it is felt will
be imposed by Congress next year.
Heavy calling of loans during the day
created a sharp money stringency in the
afternoon and the call rate was bid up
to per cent. before sufficient funds wer<.
attracted to the Stock Exchange to meet
requirements. This is a more or less
temporary condition, however. and it IS
not believed that the rate will be held
at such high level for any length of
tipe.
Publication of the reorganization plan
for the Interborough Rapid Transit Com
pany had the effect of putting Inter-
borough Consolidated stock down TO
practically nothing. while traction bonds
and Manhattan Elevated stock advanced.
Under the plan Interborough Consoli-
dated is to be wiped out. and heavy
selling of the common stock carried 1t
down to the smallest fraction quoted on
the exchanges. The preferred stock
also was under extreme pressure.
Foreign exchange rates moved mar
rowly. most of them shading somewh t
from Saturdays figures News from
abroad in connection with the Turkish
impasse was lacking in significance. and
the movements in exchange rates were
largely the result OF commercial opera
tions. German marks made another new
low. under four hundredths of cent.