Evening star., 1922-07-23
BY 1. A. FLEMING.

Bond values are nowhere near theif
high levels Immediately following
the 1907 recovery from panic. neither
as a general. rule nor specifically
Liberty issues came out first in 1917
and the last issue in 1918.
The digestion of the heretofore un-
heard-of issue Of these securities
$17.3S5,273,000, has taken the entire
time between their issue and date,
with stronger holdings at this time
than ever before.
In the days of war prosperity great
corporations, patriotically. and some
few perhaps selfishly, taking advan-
tage of the exemption provisions. ac-
quired many millions OF dollars
worth as an investment and also
for the employment of working
capital.
They held on to them down, through
their depreciation, as small investors
whose patriotism had not ebbed. but
whose needs had not lessened. threw
their bonds overheard, and probably
intended to hold for just such a mar
ket as we have today to liQuidate on.
But their desires were forced TO
yield to the demands of necessity,
when the era of defiation hit mer-
chants, manufacturers and the STOCK
market as well.
tions disposed very largely Of their
libertys. Then came the second era
of investment, led largely by the
banks of the country in employing
their funds during the longest era
of cheap money that has been known
in years.
Predictions are made that libertys
are likely to go to 1O5 or theSeabouts.
unless an unlocked for demand for
money develops.
Hundreds of Millions.
Millions on millions of dollars
worth of bonds. hundreds Of millions
have been marketed during the last
two years. Printing presses have
been run overtime. and they have COW
cred every conceivable security in the
industrial and railroad line and real
estate and building operations as
well.
1t has come to the time when great
enterprises are contemplated--with
other peoples money as the basis for
the foundation and fact, and this is
one reason why the closest scrutiny
should be given to bonds, no less than
to every kind and description of al
legged security of the market. or Of
fered as especially by attractive
statesmen.
There are plenty of good bonds to
go around, but the layman is poorly
equipped to differentiate. and the
banker is supposed to have the in
terest of his client at heart. Therefore
consult the banker first. not last.
Redeemable, CallabIe.
|, For long time it was considered the
part of wisdom to give two dates in
connection with bond issues. one the
date when redeemabie and the other
the date when they might be called, at
price usually several points above the
fotation figure.
In very many cases the latter feature
was an added selling card. but there
was no chance of bonds being called
unless there was a big drop in the
money market. where they might be re-
funded at very material savings to
the issuing corporation.
Now. however. the ''callable at"
is a distinct handicap to bonds. as long
and the fact that they may be refunded
and their life shortened detracts from
value.
Bankers consider tina: this low money
market will continue indefinitely. Scars
on the business records of merchants
and manufacturers from the heavy
stocks .hat were sold as best they might
be have barely healed. and while there
may be firmer money on the crop move
Eent, one can see ready resources on
hand for this and all other demands
Washington Gas 5s 11O.
1t is within the memory of the street
when Washington Gas IS were selling at
ITO and only kept from going higher be-
cause of the optional retirement at 40;
when Capital Traction Is were selling
far above par and all other local bonds
on like basis.
The highest priced bonds on the
funding and improvement Is of the Po-
tomac Electric Company. They are
quoted about 1o7A to 1919. At 1o7
they pay sos per cent. A per cent
bond. taxable in the District. pays but
~ per cent, which almost drives some
investors to making special deposits
with banks and thereby insuring their
cash and obtaining a fair rate of inter-
est on time funds.
After all, secured collateral loans.
where the collateral is Immediately
salable.e paying 6 per cent net to the
banlr-is the best kind of a loan today
for the bank. as the borrower. If the
collateral be subject to the income tax,
must pay for 1t.
In New York such collateral COM
mands to 4 per cent interest; here in
Washington few, II any, loans are made
below per cent.
All Of which means that today's bond
prices may soon look cheap.
What Are Deposits Worth.
This is and has been an interest
ing question in Washington for many
days. The answer must vary, accord
ing to the character Of the depostors,
whether they are simply permitting e
banks to do their bookkeeping and