Evening star., 1923-12-23
FUNDS ABUNDANT
FOR COMING YEAR
Money Situation Favorable
as Wall Street Plans for
January Re-Investing.
TAX MOVES IMPORTANT
Secretary MELONS Views on Bonus
Studied Closely-New Is
sues Popular.
BY GEORGE T.. HUGHES,

Special Dispatch to The Star
NEW YORK. December 22-In the
lull which precedes the holidays and
the development of the traditional
January re-investment demand Wall
street this week has been taking
stock of the fundamental factors on
which the future of the market de-
pends.
Most important of these factors is
the money situation. AS to this there
can be no two opinions. Money and
credit are in abundant supply and
the outlook is for no immediate
change. Rates for time money at one
time during the week fell below 5
per cent for the shorter maturities,
although this was exceptional and
the prevailing quotation has been
from to 54 per cent With the
continued heavy influx of gold, TO
which reference has repeatedly been
made In these dispatches. it seems
reasonable to expect that funds both
for speculation and for business will
be more than sufficient.
Gold Imitation Feared.
There are still many economists
VINO predict gold imitation, eventually
leading to higher commodity prices.
They argue that the temptation to
in business as well as in commodities
VIII prove irresistible. That is
theory the truth or falsity of which
only the future can reveal. The pol
Icy of the Federal Reserve Board
seems to be to do everything possible
TO prevent this sort of imitation, but
how far it can go in this direction
is problematical
The second factor on which stress
is laid is confidence, and by this is
included confidence not only in rea-
sonable business prosperity. but con-
fdence in the political situation The
dispatches from Washington have
been eagerly scanned for the latest
developments in relation to the fate
OF Secretary Melons proposal for
reduced taxation and the effort to
enact the so-called adjusted compen-
sation bill. otherwise the bonus.
Streets Views on Bonus.
OF equal interest has been the strug-
OF the interstate commerce committee
The Secretary of the Treasury says that
10 grant the bonus would mean to de-
press the quotations for outstanding
government loans and to make refund
ing problems more difficult In this
view Wall street comedies. So far the
market for liberty bonds has been un-
disturbed: In fact, it was weaker at
the close of the week after Congress
adjourned and the bonus project had
than IT was when the outlook was from
the Wall street standpoint more un-
favorable.
AS to tax revision it is almost uni
versally admitted that reduction of the
higher Surtaxes would free capital now
| taking refuge in tax exempt securities
for productive enterprise. AS il stands
| today the investor who has an income
of $4,000 annually gets about the same
/ return from municipal bonds yielding
4la per cent as from taxable issues
yielding per cent Naturally he gives
| the preference to the tax-exempt Sc
| curity. as this has the additional ad-
! vantage of avoiding a certain amount
| of annoyance in making out tax re-
| turns.
Market Marking Time.
The securing of a constitutional
amendment taking away from states
and municipalities the right to issue
taX-eXempt securities is considered too
slow a process and too uncertain OF
success to be of any Importance for the
present. In any event such an amend
ment would not cover tax-exempt bonds
now outstanding. A substantial cut in
| income taxes, however, such as Secre-
! tary Mellon recommends. ought TO have
| an immediate effect upon the market.
Here, too, as in the case of the liberties
and bonus, the market seems TO be
marking time.
Neither municipals nor industrials
have been perceptibly affected by
/ these considerations. This does not
/ make Wall streets interest in the
solution of these problems any less
intense and their final disposition one
way or the other is sure to have a
vital bearing on the investment po-
sition.
Coming to the railroads, the
chances of successful attack on the
transportation act seem slender, but
there is enough doubt about the mat
ter to prevent any upward movement
| in railroad securities. At least that is
the general reason assigned in Wall
street for the lethargy in railroad
stocks.
Good Demand for Stock.
However dull the market for rail-
road shares may be there is no hesi-
| tation about attractive new offerings
| in other fields even when 1t is stock
and not bonds. The instance of the
quick sale this week of 100000 shares
| of the preferred stock of the new
American and Foreign Power Com
| pany organized by General Electric
interest is to the point. Even the fact
that part of the business of the new
company is to be in foreign fields did
not deter investors. Just why utili-
| ties should be in so much more favor
than railroads as mediums for invest
ment no one has yet satisfactorily ex-
| planned.
(Copyright.)