Evening star., 1924-08-03
MOVES ARE VITAL
IN LIBERTY BONDS
Next Treasury Financing
Made Easier by Past Weeks
New High Levels.
BANKS ACTIVE BUYERS
Attempt to Sell German Loan Here
Would Be Test for Amer.
ican Investors.
BANKS ACTIVE BUYERS
BY GEORGE T. HUGHES.

BY GEORGE T. HUGHES.
Special Dispatch to The Star
NEW YORK, August THE invest
ment markets continue strong. The re-
action SO long expected and so con-
fidently predicted by professional traders
has not yet appeared.
Last week in this dispatch it was sug-
traders that the then current quotations
for Government bonds had discounted
the money situation might be premature.
Developments this week have proved the
accuracy of this view. Every active Lib
erty issue and the Treasury 4As made
this week a new high price for all time.
1t is true that this buying did not come
from individual investors. but rather
represented purchases by banks still
hard pressed to find employment for
idle funds.
Probably some Of it came from West
ern and Northwestern institutions which
had been put in an easier position
through the liquidation of agriculture!
loans, made possible by rising grain
prices and consequent improvement in
the financial condition of the farmer.
u. ,. FINANCING Made Easy.
The present high levels for Govern
ment bonds will make easier the accom-
plishment of Treasury financing next
month, approximating $3.50, ,000, 900. 1t is
now believed that the Government will
be able to refund its September maturi-
ties by a new issue bearing per cent
coupons and running six months. If so,
this would be a new low record for Gov
eminent borrowing since before the
World War. 1t all emphasizes the al
most unprecedented ease in the money
| market. AS to money rates also, new
records were made this week. On We'd
nesday at least two loans aggregating
81 900. 900 each were made for a period
of eight months at 3L per cent, when
previously the lowest rate for long
term borrowing had been 3 Z per cent
Toward the close of the week there was
some withdrawal of offers of March
accommodation at this rate. but no sign
of any change in the trend.
There is a difference of opinion as to
how far easy money has been an in
fluence in bringing about the advance
in stocks and in speculative bonds.
There is no dispute that it is the money
factor which has been the moving cause
in the rise of high grade investment is
sues That being the case the future OF
this class of security depends upon the
future of money. There are some who
expect that the demand normal to the
crop-moving season will bring about a
stiffening in the rate, and will so re-
duce bank surpluses as to affect interest
charges. This, however, is not the uni
yersal view.
Money to Remain Cheap.
AS long as Europe continues to pay
it's bill to America in gold present con-
ditions must prevail. 1t is possible that
the disparity between the New York and
the London money markets, disparity
entirely unknown until very recently.
may bring about withdrawal of funds ,
from this side to secure the larger re-
turn abroad. but any such movement
will surely be reflected in the exchanges.
Those interested should watch quota
tionS for sterling.
Outside of Government bonds, the
week has been notable for now
high average price for forty repre-
sentative domestic issues. as well as
for ten foreign government obliga-
tions. Domestic bonds were governed
by the same influences that affected
Liberties The market for foreign
bonds was helped by confidence in
eventual acceptance of the Dawes
plan by the allied governments. Prob
ably the attraction of the extremely
high yield obtainable on foreign
bonds was also too strong to be re-
sisted. A week ago the foreign bond
market was still suffering from the
unfavorable impression created BY
the slump in Brazilians following the
insurrectionary outbreak. That hay-
having recovered, in part. at least.
the market has resumed its upward
course.
German Loan Real Test.
The real test as to whether there
has been a change in the attitude OF
the American investor toward foreign
securities will come when the at
tempt is made to market a German
loan.
The theory is that the average
American investor is excessively
timid about loaning money outside
the territorial limits of his own
country. If that is true with regard
to the obligations of our associates
in the great war it ought to be still
more true with regard to Germany.
Incidentally it is doubtful wheher
any large bond Offering ever had so
much bad advance publicity. The
cable dispatches have been filled with
accounts Of the insistence of Ameri-
con bankers upon safeguards neces-
sary before they would consent even
to attempt to sell a German bond
issue in America.
The danger of political action ad-
verse to the interests of the bond
holders has been emphasized over
surprising after all this talk if in
vestors were a little shy. On the
other hand, compared with German
resources and German ability to pay.
the amount proposed TO De loaned is
absurdly small
PROFIT in French Bonds.
AS a matter of fact, few American
investors in foreign securities in the
past ten years have suffered any
losses, provided they were content to
hold on. The cases of Russia and
Mexico are exceptions. Even those
who bought French bonds. the dollar
issues. that is. at the original offer
ing price have had their per cent or
thereabouts ever since and have now
profit on the principal, assuming
they have retained their holdings all
through the ups and downs of the
rIyo