Evening star., 1924-09-21
TREND IN MONEY
AMAzESEXPERTS
Predictions Upset as Rate
Goes Lower During Week
in Wall Street.
OFFERINGS AT ! PER CENT
Present Record Low Levels May
Last Two Years-Heavy
Buying in Bonds.
OFFERINGS AT ! PER CENT
By GEORGE IT. HUGHES.

By GEORGE r. HUGHES.
Special Dispatch to The Star
NEW YORK, September 20.-In all
the market movements of the week
the one consistent performer has been
money. Again all the prophets have
been confounded and instead of a.
hardening of rates as many predicted,
and as might reasonably be expected
at this season, judging from the eX-
perience of the past, the trend has
been in the opposite direction. IL
has gone so far that conservative
financial publications, whose business
it is to record technical conditions,
have started their daily reports this
week with phrases like these, New
York cannot absorb its idle funds"
"There is no demand for money" and
variations to the same effect
Rate Even Touches L Per Cent.
To specify, while the rate for call
loans on the stock exchange has re-
mained unchanged nominally at .
per cent, funds have been obtainable
in the outside market at 112 and o.
one day it was even reported that of
fers of accommodation at l per cent
went unheeded. 1t is the same story
in the market for time money. Loans
for 60 days can be had at 2ia per
cent, for so days at "a per cent,
which is a drop of Il per cent from
the level prevailing last week, and
credit up to six months is quoted at
3 per cent bid and 8 1s per cent ask ed.
For the longer term these are the
lowest rates in eight years. or since
before the United States entered the
World War
So far the facts admit of no diff
ference of opinion. They are mat
ters of record. But when it comes
to forecasting the future there is
room for great Varience in views. 1t
is commonly held that within a rea-
Sonable time, say six months as a
maximum, demands of business COM
bined with the marketing of foreign
loans in this country and the with
drawal of balances now held here on
European account, will make such an
impression on the present money sur
plus that interest rates will turn
definitely upward
Rate May Last Two Years.
There are, however. many shrewd
judges of money conditions who do
not subscribe to this ma jority opin-
ion and these dissenters number not
d few of the best-informed bankers.
member of an international bank
ing house, whose name is a synonym
for financial strength on two conti-
nents. in private conversation gave it
as his own expectation that the out
look was for a continuance of the
present ease in money for the next
two years.
1t should be clearly understood that
those who predict d continuance Of
prevailing conditions do not mean 10
imply that they expect business de-
preston. The point is that it is ex-
cessive supply rather than limited de-
mand which is the principal cause of
the present phenomenal state of af-
fairs. 1t is admitted that during the
last six months there was been a
reaction in industry, pronounced in
certain lines. Nevertheless bank
clearinES for the principal large CEN
ters of population show increases
over the same period of a year ago,
and car loadings, while under tho
totals established in 1928, exceed fig
ureS for 1922.
Business Revival Real.
More significant, loadings of mis-
cellaneous freight for the week end
ing September 6, the latest for which
a report is available, were the largest
of any Labor day week on record.
The volume of business being done
is very large, but it makes no demand
on the money supply that shows in
interest rates. Probably it Will take
still larger commercial demand be-
fore the slack is taken up.
The deduction from all this. as far
as 1t concerns the investment mar
ket, is very plain. If money cannot
be used in business it must go into
fixed interest bearing securities. That
is what the Federal banks have been
doing with their funds, and that
is what commercial banks and the
financial institutions will have to do
sooner or later. AS a matter OF fact,
the bond market of the week has
shown the effects of just this kind OF
bank buying.
Heavy Buying of Bonds.
There has been slow, but steady
absorption of high grade securities
and a consequent hardening in price.
And yet price advances have been
relatively small and the averages are
still below the high of the year re-
corded in late July. At no time this
year has the high point of 1922 been
equaled. Bonds are still tagging be-
hind money. This is true throughout
practically the entire list, middle and
second grade as well as high grade.
1t is fair to assume that this spread
must eventually be narrowed
The situation in foreign securities
is very interesting. All the reports
from abroad tell of progress toward
financial and economic stability, and
American bankers are extending
credit and making short-time loans
to European governments.
Foreign Issues Absorbed.
New foreign bond issues, far as
they are offered to the public. have
been well absorbed. Seasoned for
eign bonds, dollar issues, traded in
on the New York Stock Exchange
have not been affected by all this.
70 SpiX q
high returns in comparison with the
risk.
In fact, the yield is so high that
the new German loan will have Sc
we're competition unless it is very
attractively priced.