Evening star. [volume] (Washington, D.C.) 1854-1972, 1924-02-03
SURPLUS OF FUNDS
REDUCING RETURNS
Competition Is Lowering
Rates at Market as Feb
ruary Begins.
GOLD CAUSING ALARM
Bonds Higher-Falling Off in Note
Circulation-High Marks in
U. S. Loans.
By GEORGE T. HUGHES.

Special Dispatch TO The Star.
NEW YORK, February 2.-The com.
petition of funds seeking investmen,
is steadily lowering the return OBJ
tainable at the market. This Is the
outstanding fact in the investmen,
situation at the beginning Of the
second month of the year.
The' advance in the price of sea.
soned securities is neither rapid MOI
spectacular nor yet uniform. but tn,
trend is unmistakaSle. IT could hard.
~ be otherwise with money cnndi.
ions what they arr The federal re.
serve statement this week showed lii,
highest reserve ratio since 1917. Al
Inc same time there is I; falling of
IN note circulation. Whether the In I.
Ter is the result of a smaller demant
from business or whether the surpius
1uhos are so large that there is les.
neeo OF calling upon the resources OF
the central banking system is of nc
consequence as far as result is con.
cerned.
Advances Not Uniform.
This rise in the quotation for sount
bonds and high-grade preferred
stocks is not uniform in that the frs,
savings banks have participate(
therein to small degree. Outsia,
TINS grade. however, there are prac.
ticdny no exceptions. All United
states government loans have beer
very t'<one all the week. And new
hlsh recortS for thi" fear. and some.
ZINES aboro ne bet of a year ago
nave been reached for'certain maturi.
ties, notably the Treasury Ias, which
now sell we'll above par. Here tbf
and institutions when must nav
some profitable USE FOR surplus funds
ana at the same rime can take moth.
ing but readily marketable securi, ieS
or the highest quality.
individual inve StorS are steadily ali.
sorDinS the available supply of obli.
cations on which the Weld is from
a - to per cent. Any mortgage.
secured issue selling to give tins re
turn ana the obligation of Il fnau-
orally strong corporation is in attiv,
demand.
Speculative Bonds Higher
Even where there is SOM. sns.ula.
tive risk there have been i-rcrulo,
advances in quotations. Bonds of Ger.
tain railroads now operating prnft
ably, but the Improvement il, IN,
status Of which mas been comDar;i.
lively recent. are cases in point TIL,
same is true Of some traction securi.
&Scriped in part at least To changed
conditions in the outlook tor III,
corporations concerned, but it Is NOR,
probable that the underlying influence
ID the same as IN the case OF tn,
purely investment: securities The one
naturally follows UPON the other.
The Blesen combination is not al
ordinary one. w nca HIuuey has aCCu-
mulated after II long period Of de
preston ii first makes Itself let IN
sts q. ri
grade. lin such tIlnc$ INVESTOR, seek
safety above eve Iytn!ng ,IS.. The
buying for account Of German capl-
talists OIL the old line savings bank
bonds during the middle of last year
illustrates this condition. But cir
cumstances in our own country are
entirely different. There has been nC
depression. The reaction in trade last
summer was comparatively unini-
portant. The outlooi, the coming year
is good. The week ) car loading fig
ureS testify to that.
Excess Gold Causes Alarm.
At the same time there is this Sreat
surplus capital seeking employment
How then can the conclusion be eS-
capped that the fundant rtal factor is
our enormous -eAceSS supply vi gold
If this diagnosis is correct the Sit
uation Is not without its danger
Dispatches from Washing ton during
the week indicate that the subject Is
being considered with concern IN Off
cial circles. The foreign war debt is
approximately $1l.906.000.U00. Ii this
is ever to be liquidated in whole or
in even any large part it must mean
adding to the already Overwhelming
stock of gold in this country. 1t is
true that except tor Great Britain
and one or two OF the small European
powers our foreign debtors show no
great interest in taking up the matter
~ ,naf In. lniy ,l,l ip-., l,itf j..
equally true that the position OF the
United States is that these debts Iruat
be paid. Meanwhile the import and
export statistics make 1t extremely
improbable that we shall be obliged
10 export gold on this account Tor It
long time. The whole problem il;
complex and difficult in the extreme.
Wall Streets Steel Views.
The action of the directors Of the
United States Steel Corporation in
doubling the extra dividend Oh the
common stock this week was, OF
course, very gratifying to holders OF
steel stock. Wall street now is say
ing that steel common is per
cent stock. This may be Il little pre-
vious, but there is a widespread feel
ing that directors of large and pros
porous corporations must sooner or
later adopt a policy of more liberal
ity towards holders of their common
stock, who take all the risks of adj
verse business conditions i'll return
for a share in business prosperity.
otherwise there is no incentive to the
purchase of common stock. The an
swer that the prosperity of the cor
poration is reflected in the selling
price of it's shares is not sufficient
At least it is not sufficient in the
case of the better investment stocks.
The proof is found in the railway
list and particularly in the selling
price of Atchison, a per cent divi-
dend payer, compared with the sell
ing price Of the starGard Z per cent
issues, and Atchison is probably the
equal, If not the superior. in earning
power of the entire group.