Evening star., 1924-07-06
HUNGARIAN LOAN
SURPRISE OF WEEK
League of Nations Is Called
Factor in Successful Plac-
ing of Issue.
GREAT CHANGE IN YEAR
Vast Amount of Money Still
Awaiting Employment, Lat
est Reports Say.
GREAT CHANGE IN YEAR
BY GEORGE r. HUGHES.

Special Dispatch to The Star.
NEW YORK, July 5.-Notwith-
standing the slight reaction in quota
tions, the investment market has con-
tinued firm this week with the de-
parently unsatisfied.
The average price has been just
a trif1e below the top of last week.
but this is a perfectly natural de-
Velopment in view of the sweeping
advance over the half year. Taking
forty listed bonds as typical of the
market, the low was recorded on the
first business day of the year. Janu-
AIRY >, and the high was made on June
2S. Activity has fallen off somewhat.
but this is doubtless temporary.
ReinyeStment Demand Light.
The rcinvestment demand which
tradition fixes for the first of July
has not been in evidence. partly be-
cause it had been anticipated last
week and partly because investors
chases over a longer period. There is.
however. vast amount of money still
awaiting employment and the best
opinion is that it will make its weight
felt in the very near future.
The most interesting development
of the week was the apparently sue
cessful placing of the new Hungarian
loan. This was an operation which
would have been impossible year
ago when sentiment toward foreign
government securities was much less
favorable than it is today. The prog
ress made since the Austrian issue
was marketed. thirteen month ago
is very striking. These Austrian bonds
were put out with the several guar
antees of the stronger European
powers and probably they could not
have been sold without this iEdorse-
ment.
There is no such guarantee on the
Hungarian offering. Here the reliance
is upon the provisions for control OF
Hungarian finances under the aus
pices of the league of nations or
upon the optimism generated by the
success in the rehabilitation of AUS
tria as pointing to a similar success
in the case of Hungary, 1t is all
rega rded encouraging for the much
talked about, but still rather vague,
German loan.
FOREIGN Loans Look Better.
This reawakening of interest on the
part of American investors in foreign
securities may be attributed to two
considerations. First. the genera
outlook is that progress has been
made toward the re-establishment or
normal conditions. Enormous diff
culties remain to be conquered, out
at least beginning has been MADE.
The second and perhaps the more I'M
portant factor has been the decline IN
our own money market. bringing the
rates down to a point where the re-
turn on foreign bonds looks so large
as to more than counterbalance the
timidity with which these securitles
have been regarded in the American
market.
So it has come about that there has
been a steady absorption OF the noat-
ing supply of the older outstanding
foreign obligations, and. in some cases
new high records for this year have
been established. One of these rec
ords was made in French Republic rs,
and is typical. French government
finances are still very much involved,
but the disposition of the new Frencn
government to come to an agree
ment with Germany on the repara-
tions problem and the attractive re.
turn the bonds offer have proved
stronger incentives to lnVeStment
than doubts, as to the French SOL
vency have been a deterrent.
Railroads Not Alarmed.
Much the same thing has been hap
pening in railroad securities. Here
the unfavorable features have been.
first, political. and. second, the ran
ing off in traffic. At this writing, no
how the campaign will develop as It
affects the carriers. Radicals In all
parties are insistent upon down.
ward revision for freight rates and
there is always the specter of govern
ment ownership to terrify, but the
market ignores all this just as 1t
ignores the smaller net operating in
come in the earnings statements. Now
markets have an uncanny way of
forecasting the future in matters OF
this kind 1t is an old saying of
spectators that market discounts
everything that it can forsee. and to
a degree it applies to investment as
we'll as to speculation. On this
theory there is little to fear either
from political interference or from the
business outlook.
Confidence in the future of the rail-
roads is Likewise evidenced in the
consolidation plans now being worked
out. The most ambitious of these is
the Nickle Plate scheme, involving. as
it is reported, the Erie and the Pere
Marquette as well as the Chesapeake
and Ohio. already controlled. The
final plan of the Interstate Commerce
Commission for railroad consoiida-
tion is awaited with great interest.