San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-01-01
BY GEORGE T. HUGHES.


Special Correspondent OF The San An'onlo
Light
Copyright, 1929, by Tho San Antonio Light.
New York, Jan. ]. - As the gear
closes the conditions which face the
! investment market and on which the
| trend of quotations depends present
| both points of contrast and points oil
similarity with those prevailing
year ago. Nineteen twenty-five open
| ed with money rates declining and
bonds advancing. 1t closed with money
rates stabilized and bonds, while urn
and showing some tendency toward
higher levels. giving no indication OF
| a renewal of the rapid advance which
marked the first half of the year and
reached its climax about midsummer
! For a time early in the year the
bond market rivaled the stock market
in speculative activity. The rise began
in MAY. 1920. long before there were
any signs of tuEireSs revival and
continued irregularly throughout 1921
| than half of 1922. Whatever the
seem likely that this movement will
| continue except in a very small way.
| This is not to predict any decline.
/ II IL W lAdN tHt VhAlONA
| is that investment securities will be
maintained around present levels.
| Capital Converted Into Securities.
The rise in the bond market began
while business was still in the depths
of depression. As has been invariably
I the case capital which was not needed
in commerce sought employment in
| the highest grade of securities, bonds
1 c IN which fhnra nnaSfinp
| about payment of interest and divi-
dends. This demand naturally adj
! vanced quotations and the improve
| ment spread to the second grade and
then to the semi-speculative issues.
Finally interest conferred in stocks
instead Of bonds. Meanwhile as bust
| ness slowly revived the demand TOR
funds became stronger and banks
which had invested their surplus
money in securities offered them for
sale. Prices declined correspondiugly.
but the level at the end of the year
| was far above that at the beginning
and this pressure on the market from
selling by institutions had largely
It was in 1922 that Liberty PONDS
reached par after their long decline
and even sold a point or point AMI
a half above par in July only TO fall
! below that point again in October
after the government had issued It's
refunding losn.
Effect Of Bonus Agitation.
! Fluctuations in Libertys were dac
| therefore not only TO the changes in
the money market but TO the opera
| tons of the government. Another
\ factor which influenced prices more or
less was the persistent agitation in
favor of so-called bonus for veterans
! of the world war. In this rpSncc. the
situation at the opening of 1923 is not
very different from that of year
ago. Both houses of Congress passed
the bonus bill. President Harding
vetoed it and the attempt 70 pass it
over his veto failed in the Senate. But
advocates of this legislation yathered
new courage from the result of the
election and assert they intend to press
their advantage at the next session Of
the national legislative bodies. The
Liberty bond market therefore still
faces the prospect of competition in
some form Of government securitv is
sued TO recCmpense the former sol
diers.
Railroad Securities Gain.
Railroad securities advanced with the
| rest of the bond market for til, first
half of the year reaching their hiyh
points in July and August and then
| reeeding with n subsequent recovery
which still left them above the D, ices
prevailing last January. Here too.
however, other considerations than the
current rates for money influenced the
market. First came the strike with
Its disastrous effect on earnings. then
| came the election ovcr-turn which
enormously added to the power and
prestige of those representatives of the
agricultural west who insist on lower
rates on products of the farm, They
also demand the repeal Of the Trans
portation Act, or at least of that
clause which appears TO guarantee 10
the railroads fair return OH thCr
invested capital.
whether the agricultural bloc svc-
ceeds or does not succeed in its cffor :
It's activities cannot be helpful 70 Iail-
road securities. Stocks of course sIIf-
Ter the most but bonds are not ey-
empt. Even if the recommendations of
PRESIDENT Harding prevail ami the H.
terState Commerce Commission is en-
trusted with ,the authority TO fix
Dotn rates and wages. it will be but
q. short step further 10 government
ownership and operation.
Movement Of Foreign Bonds.
The movement OF foreign bonds dur
ing the year just closing has been one
of striking contrasts. The position of
Great Britain as evidenced BY the
course of sterling exchange is greatly
improved. and next TO that of Canada.
the credit Of the United Kingdom in
our markets isl higher than of any
other foreign centry.
1t is far different in the case of
France. French bonds at the close of
the year are If anything lower than
at its beginning. They reached their
nigh prices in March and April and
then fluctuated with the news from
abroad as to the outcome of the repara-
tons tanglc. They reached their low
point In November and carried with
mem at the time the obligations of
Belgium. About The same period
american investors developed a sudden
tlmldIty about South American bonds,
notably those of Brazil. 1t was not
untll support from powerful interests
came into the market that confidence
was IN measure restored.
Outlook Still Discouraging.
Even now the outlook of placing
foreign obligations in this market under
any advantageous terms to the borrower
is not encouraging.