Evening star., 1924-03-16
THREE BIC EVENTS
IN FINANCE WORLD
Rally in Francs, Dividend by
Southern and Treasury
Financing Reviewed.
FREIGHT TRAFFIC HEAVY
I. c. C. Requires Giving of New
Bond Issue to Highest Bidder.
Money Easy.
FREIGHT TRAFFIC HEAVY
BY GEORGE It. HUGHES.

BY GEORGE It. HUGHES.
Special Dispatch to The Star.
NEW YORK, March 15.-From An
investment standpoint, the week has
been notable for three developments.
First was the establishing in Amer
lea of a credit on behalf Of the Bank
of France the immediate purpose of
which was to support franc exchange.
The second was the declaration by
the directors of the Southern railway
of a dividend on the common stock,
and the third was the large oversub-
seription of the United States Treas
ury's offering of certificates of in
debtedness on a 4 per cent basis.
While the granting of the credit
to France was of immediate effect
only upon the exchanges, 1t has
vital bearing on the investment sit
dence in the restoration Of French
! finances to solid foundation and SO
improves the market for French Sc
curitieS whether payable in francs
puted that the disfavor with which
the American investor has regarded
all foreign securities, or at least all
European securities, had its Origin!
In large measure IN ulSlrust ot
France.
French Bonds Pu1zlins.
With the reparations problem ap-
parently insoluble and the Frencts
government making up budget deh-
citS by continued borrowing from us
own people, it was natural that there
should be hesitation about the buy
ing of all French securities and thai
this hesitation would affect sympa-
theticaliy the market quotations for
other European obligations. In no
other way is it possible to explain the
foreign bonds at present market
prices.
been selling in this market to yield
anywhere from SA to 8 = per cent.
the higher return on obligations o.
French municipalities and provinces
The direct obligations of the republic
demand a better price, partly on
the theory that the credit OF the ma
tion as whole is higher than that
of any part and partly because
large sinking fund was available to
support the French government dol
lar bonds. 1t is true that there was
no such weakness in the French bonds
as there was in the French exchanges,
but they did have some sympathetic
decline. Now if it proves to be the
case that confidence Is restored IN
French securities, the benefit ought
and so make foreign financing once
more possible in this country.
Railroad stocks Improve.
The placing of Southern railwaE
common stock on an annual per
cent basis is likewise important, not
only to the holders of Southern rail-
way securities, but to those interested
in railroad stocks in general, as well
as in the more speculative railroad
bonds. 1t can hardly be supposed
that the Southern railway board
would have taken the action they did
unless they believed the railway stu
alton in general to have an improving
outlook. Here, too, it is likely that
the confidence born of this action VIII
extend throughout the railway list,
except, of course, in those instances
where for local reasons the railways
have had hard going.
1t is interesting to note that in his
comment upon the dividend deciara-
! tion the president of the Southern
railway expressed the hope that the
| stock on a dividend basis would at
! tract investors in the territory served
| by the company. Railroad executives
distribution of their shares Such
distribution is a kind of insurance
against political attack. This prin-
| cipIe has been acted upon to their
| great profit by the managers OF the
public utility corporations. If the
| railroads had been able to take
similar course the recent history
might have been quite different.
! Tramc Situation Good.
One other point should not be over
| looked in considering the railroad
situation. That is the record car
March 1, a new high record for the
season in the loading of revenue
| freight was established. The total
for the week was 945,049 cars. ex-
! ceeding by a. considerable margin the
/ loading record for any one week in
any January. February or March. 1t
| is reasonable to expect that these
| loadings will eventually be trans
! lated into earnings increases. al
| though January statements were dis
i appointing in this respect The Feb
| ruary statements. the first of which
! are due about the Goth or 25th of
| the month, are awaited with great
| interest.
! AS to the offering of Treasury GER
! tif1cates. Wall street was not pre-
! pared for a per cent rate. 1t had
| anticipated the coupon would be IL
! per cent. Nevertheless, the Offering
! was so per cent over-SubScribed- This
! is testimony convincing and conclu-
sive to the ease in the money market.
The same story is told by the weekly
| statement of the federal reserve
| banks. The report made public this
week showed a gain in gold reserves
1 Oh more tnan SlS,OUU,uUO, "nlle the,
reserve ratio remained practically at
| the high point. In the face of these
| figures, any substantial reaction in
| the market price of investment Sc
! curities seems improbable in the
| highest degree.
L. C. C. Springs Surprise.
! Meanwhile, investment bankers
/; have an important problem in the
| ruling of the Interstate Commerce
. Commission on the application of the
! Chicago Union Station Company to
sell their new bond issue. The COM
! mission makes it a condition, in ap-
! proving this application, that the
| bonds be sold to the highest bidder
after public advertisement for public
| bids. While the ruling was not en-
| forced in this particular case, the
| establishment of the principle is of
the utmost Importance in the market
| ing of new securities.