The Birmingham age-herald., 1924-08-08

we'll seasoned issues. HIS IS QuILe uil' derstandable, seeing that in order to attract buyers, it usually necessary to fix the price below the level at which similar securities have. reached after becoming widely known and quoted New issues, in other words, have to be sold, whereas old issues have already been sold.
 In these days when new offerings are coming along rapidly, this subject is worthy of consideration. The records show that since January 1, investors have been called upon to absorb no less than $1,045, 100000 new bonds, S165, 100000 new notes and $50,000,- 900 new stock. Of this total, $1,50,- 100000 represented new capital, only about $200,000,000 representing refund ing. One bond authority who does his own thinking, Franklin Fischer, fur nishes. the following sensible analysis of the subject:
 "A good many people pride them selves on never even considering the purchase of a newly issued scurity. Ask one of these people why he feels as he does and almost invariably he will tell you that he wants nothing that isn't seasoned The chanC-s are that new issues cost money to bring out, he will tell you, and that that cost has got to be added to the marLet price and ab- sorbed by the investor. Don't these new things always sell off eventually by the amount of the underwriters s commission? he will say-and then more than likely point out one or more specific instances where just that hap pened.
 'Now it is perfectly true that too often has the investor bought a new bond from a second rate house only to see it sell off several points as soon as the distribution was ac~ )mplished. Even first grade houses occasionally . have that disagreeable experience with their issues during a period of falling bond prices.
 But to assert that such a thing is the rule, particularly where the house and the issue are first grade, is sim ply to confess complete ignorance of the bond market facts and figures. To the mind of any bond man who knows his business, there comes at once the name of .any number of new bonds put out during the last three years that never, for one moment, sold below theil tissue price and are at present quoted z anywhere from to l5 points higher.
 Good will in investment banking, as in any other business, is q firms most valuable asset. Let an idea get around among a firms customers that its new offerings are likely D e,ll below rather than above the original price of issue, and the ability of that firm to de busi- ness soon enough comes to an end.
 "Where then, and by whom is the very considerable cost of selling a new issue of bonds absorbed? Who, in other words, pays the freigh.?
 "The borrower, in this case, just like the borrower in every other case The borrower-in other words, the cor poration that puts out the new bonds has lost and the selling expenses and the underwriters profit.
 Where a new issue is being offered the price to the public is apt to be be low rathr than above the price war ranted by open market conditions When you've got goods to sell, you've got to price them right.
 Again, when a first class house sell' its clients a new bond, it puts itseli squarely behind th.t issue.
 "Also-and this is a very important thing-the man who buys bonds of fered by a reputable house can fee that the banker not only continues tC stand behind the boLds after he hal sold them, but will also consider it hi: duty to keep his clients informed as tC any developments affecting the value of their investment. To the buyer oi such a bond, in othr words, there i' at all times available an nnfailint source of information, of real informa tion, the kind that the banker himsel demands, (and get) previous to hii pfrchase of the issue"
 / You will tfus see that the investor keeps his eyes wide open dOe'
 neglect announcemnts of new is
 Jf either bonds or stocks any moro
 the alret manufacturer of cloth
 would dream of sticking severel!
 old patterns and scorning to examine
 w styles.