Evening star., 1924-03-23
Sudden Drop in Money Rate
Feature of Financial World
Effect on Investment Market Immediate
and Pronounced-Enormous Surplus
of Gold Regarded as Factor.

for their excess funds. The upward
movement, however, was not con-.
fined to government securities. There
was eager inquiry for high-gr
railroad and industrial bonds. Quo
tationS advanced only fraCtionalfy in
this group, but the trend was unmis-
taxable. Here, too, banks and fl
nancial institutions were reported to
be active on the buying side Some
bankers We're quoted expressing
the belief that the upturn in in:est-
ment securities was much more than
a temporary affair.
There is undoubtedly room for i'm
provement in market price of high
grade investment bonds regardless of
the dayto-day fluctuations in money.
The high point for this year was
reached late in January under a be-
lated reinvestment demand. Present
high While it is very difficult to
trace. it is probably true that some
buying for foreign account was re-
sponSible for the best prices not only
this year but last. This applies only
to bonds of the highest grade. There
is no indication of any such foreign
buying at this time. one of the char
acteristics of this week market was
that bonds which benefited most
were not those of the very highest
grade yielding around AZ to AZ per
cent, but rather those giving re-
turn Of a. to - per cent. Such bonds
az New York Central 5S and Southern
Railway Consolidated 5s are illustra-
tions. Securities even trifle lower
in quality We're likewise in demand.
In every case. however, purchasers
demanded an obligation the quality
of which could not be affected by any
reasonable fluctuations in the trade
position.
In the speculative market a sharp
line was drawn between railroads ard
utilities on the one side and indus
trials on the other. Favorable earn
ingS statements, together with talk
Of mergers and increases in dividends.
$ tr! ulated speculative enthusiasm to-
ward the rails. The general eXpecta-
tiOn was that the February monthly
staternents you'd reveal in improvements
tion about which there seemed to be
doubt was the northwest. Stocks of
the carriers operating III this part
of the country We're depressed. On
the other hand, bonds OF the same
carriers were stronger. The negotia-
ItionS. for a lease OF the Norfolk
and Western by the Pennsylvania and
speculation as to the term all aided
in arousing interest in railroad Sc
curitieS.
AS to the utilities. the feature was
the activity and interest among un-
listed stocks and bonds. More and
more the market for these securities
is broadening out This is one result
of the customer-ownership campaign
so vigorously carried on in many
parts of the country. Earnings of
electric light and power companies
show steady and gratifying increases,
both in gross and net.sThey have the
advantages over the railroads on an
average of better treatment by utility
commissions. So far there has been
no campaign to reduce rates compa-
rable with hte outcry in Congress
against the railroads. The demand for
III vNo
and bounds. In this Connection the an
nouncement this week of the forma-
tion of superpower group by ten
electric power producing companies
operating rather than for financial
purposes, but it's promoters expect it
to work out to the benefit of security
holders.