Evening star., 1924-08-24
BANKS BIG SELLERS
I Of LIBERTY BONDS
Apparently Believe Period Of
/ Tighter Money Rates Is
Approaching.
UTILITIES HOLD STRONG
Trading Rail Issues Based More
on Merger Talk Than on
Actual Earnings.
UTILITIES HOLD STRONG
by GEORGE r. HUGHES.

BY GEORGE r. HUGHES.
Special Dispatch to The Star.
NEW YORK, August 23.-The week
has witnessed a lull- in the invest
been stationary or slightly lower. In
Libertys there has been a good deal
of selling by banks and to some ex-
tent by traders, apparently on the
theory that a Tightening up in money
rates is at hand.
Quotations for Government loans
have been carried down below any
prevailing week ago. To a less ex-
tent the same phenomenon has been
seen in the market for the high
grade rails and industrials. How
much farther this movement will go
is a matter upon which opinion is
divided. On the one hand those who
believe that present prices for high
grade securities are at the peak say
that the ease in money has been fully
discounted in quotations and that
with the demand of the business
world increasing. and the normal
seasonal requirements, interest rates
must advance.
Declare Rise Not Ended.
On the other hand those who say
that all this is temporary and that
ultimately the upward movement in
investment bonds will be resumed,
point to the continued inflow of gold,
even though that inflow is in smaller
volume. This week. however, the ad-
herents of the theory that the top
has been reached in LibertyS and
other gilt-edged investments have
had the better of the argument.
PksEes for second grade and more
speculative bonds have also reacted
during the past six days, although
the reason is quite different. This
tendency has been particularly
noticeable in the foreign group.
q Quotations for French bonds. for in
stance, which were bid up to record
highs when it appeared that agree
ment on the Dawes plan was reason
ably assured, have fallen back this
week partly on profit taking, and
partly on more sober reflection upon
the actuality of the French financial
position.
Recovery Must BE Slow.
1t is beginning to be realized that
even with the Dawes plan in working
order, the reconstruction of Europe
has Just begun and that the French,
as well as the Germans, have a long
road to travel before complete finan-
cial sofvency shall have been re-
established. Confidence Is not lack
ing In the final result, but the opin-
ion prevails that progress will be
slow and that risk in some measure
still pertains to investment in Europ-
can obligations unless they be those
of Great Britain. Switzerland or
some of the Northern nations, neutral
in the great war.
This brings up the always inter-
esting discussion of the German loan.
dispatches from the other side affirm
that the Berlin government believes
per cent would be enough for them
to pay. The bankers are not likely
to subscribe to this view. Admitting
that the 500, 900. which is ex-
pected to be Americas proportion of
the new Offering, represents a very
small drain upon German resources,
the fact that SO many other more sea-
soned foreign securities are obtain
able to yield anywhere from 7z to
S1s per cent will force giving investors
some comparable return on this new
loan.
Gold Reserves Decline.
As to our money situation, the act
uaI changes this week have been un-
important. The statement OF the Fed
eral Reserve Bank shows that. Gold
reserves have declined somewhat,
but there has also been decrease in
discounted bills and the reserve ratio
for the system as whole remains
unchanged. The indications of frmer
money are confined to a small de-
crease in supply available on call, but
with no change in the rate, and to an
increase in the yield on bankers ac-
ceptances.
The weeks fluctuations in the ex-
changes do not. encourage the view
that there has been any further shift
ing of balance from New York to
London. The average quotation for
40 domestic bonds is down about a
point from the high of July 25 last.
The tendency has been downward all
the week.
Utilities Are Leaders.
In the investment market generally,
preference is still given to the pub
lie utilities. These corporations con-
tinue to make favorable income state
msnts and the yield on their bonds
is little better than that obtainable on
railroad obligations of like grade. This
is partly due to the fact that New York,
New Jersey and a few other States still
hold to the theory that utilities, no mat
ter of how high class, are not suit
able investments for savings banks.
The individual investor benefits in
that he Is hampered by no such re-
striction.
The public relations Of these COM
panies are constantly being improved
by the extension Of the customer
ownership idea. The success of the
American Telephone and Telegraph
Company in placing its new Offering
of stock is a striking illustration
of the progress that has been made
along this line. In addition to the
investment interest speculative
Imagination has been stimulated by
the spectacular advance in the COM
mon stocks of some of the holding
companies for electric lights and
power subsidiaries. 80
Railroad Bonds React.
The railroad bond market has been
more or less reactionary: Trading
in this section during the past month
or so has been conducted more with
regard to possible combinations than
with an eye to present earning pow
er. The point has not been reached
where the monthly earnings reports
are being scanned more closely. The
July statements have just begun to
appear. Next week will throw more
light on the progress the carriers
have made in holding down expenses
to compensate for decreased gross.
Copyright, 1924, by Consolidated Press.)
COTTON CLOSES WEEK =
At SLIGHT DECLINES
by the Associated Press.
NM