Evening star. [volume] (Washington, D.C.) 1854-1972, 1924-02-24
new BOND|SSUES
WEAKEN OLD ONES
Slight Downward Tendency
Noted as Late FIotations
Total S8O0,O00,OO0.
MARKET GETTING CL0GGED
Reoessions Offered to Boost Sales.
Tax Legislation Is Eagerly
Awaited.
Nv GEORGE Il. HUGHES,


NEW YORK. February 23.-Th. in
. vcstment market has shown a sligLt
tendency downward this week So fal,
s,s prices Of old bonds are concerned.
That tendency is ascribable to Il
twofoid cause. For one thing. the
Folume OF new financing 50 far this
Year has been very large. Starting at
u moderate pace, the market for new
securities generally expanded until
n. the last few weeks il has been
inovinG at Il high rate of speed. 1t i
'-Stimateu in Investment banking
quarters that the new capital tlota-
lions since January ] nave reached Il
total OF approximately $S00,noh.000.
That is an enormous volume, and
Enquestionahly has taken up Il great
deal of the slack created by January
.uterest. and dividend disbursements.
which proyerbiaily make the first
Few weeks or each year the bonanza
season for underwriters OF new Sc
''urity issues. The new funds avail
able for investment have been large
~ utilized.
New Issues Attractive.
Another reason for the apparent
hesitation OF investors To buy sea
$Vned bonds is the attractive rates
e interest offered on the large vol
Hme Of now issues. which give them
IN advantage in the competition with
old bonds. While seasoned securities
lave advanced substantially, never
theleSS the list still carries good
many bonds selling at attractive
prices. Unless new issues are offered
on u basis to invite investment in
comparison with the market for out
standing bonds. underwriters would
experience more difficulty III dis
trihuttug their wares than they have.
The new bonds continue To go well.
as witness the large oversubscription
OF the Japanese loan and the prt-
Vate sale this week of an issue Of
2o,e6O.000 Chicago. Burlington and
quincy first and refundinG bonds, on
:, Oil per cent basis without even
the fornality OF d public offering:
bonds is becoming little clogged.
Realizing that fact, dealers having
blocks of bonds on their shelves are
competing with each other with the
result that some Of them are makinG
slight concessions in prices. ON the
stock exchange, moreover, 1T has been
;lpparent for several days that IN
vestors are unwilling to follow prices
OF seasoned bonds UP. The gains are
restricted solely to speculative ana
semi speculative bonds.
Money Rates Stihen.
Anent the indications that the peak
of the advance has been reached IN
the case of high-grade old bondss
conditions in the money market must
be taken into consideration: me
money market has not changed much
in the last thirty days. The supply
OF funds, while not SO ample as 1t
was prior to the great outpourtng or
now capital issues recently witnessed,
IS yet very large. as evidenced by
the fact that the huge Japanese loan
vas oyersubscribed between 60 and
a per cent. However. an almost I'M
lyerceptible stiffening of money rates
has been observable. The rate for
prime names on commerclai paper
cent Is the discount rate on an IN.
reaSing volume of loans. BTokerS
time loans are slightly firmer at IA
per cent. The rate on bankers &C
ceptances has been advanced signify
In the last couple of weeks.
The slight tendency OF money rates
TO rise is seasonal one. The down
ward trend in figures representing
bill holdings of the federal reserve
banks, which was such marked
Characteristic OF the credit market
Tor many weeks, has been check co.
Rodiscounts ut federal reserve banks
reached the lowest level OF the move
ment and. incidentally, the lowest ley 81
~ any tune since October 70, 1912
IN Lht 9Th of this month, when they
stood at SiS7,0oo,o0e.
Bank Rate Discussed.
That same date. total earning assets
OF the twelve federal reserve banks
were at the lowest point since 1917
But on February u, or one week
later. tn. rediS:ounts had Increased
70 $4,000 900. 4 further expansion
OF rediscounts representing tncreas-
ing commercial demand may be ca
pected.
Much discussion has been heard OF
The possibility of Il reduction in the
federal reserve bank rate. 1t was
wen expected in some quarters that
=. cut would be made this week.
However,, none was announced,
should the discount rate be main
tanned 1t would tend to confirm in
vestors. in tho theory that investment
returns are sufficiently high, par
ticularly il, as now appears likely,
the tax bill sponsored by Secretary
Mellon fails Of pa ssage in Congress.
Tx Action Awaited.
= Inves tors will be unwilling to
forage any further return from taxa
: bic Investments if Congress refuses
10 reduce the surtaX rate to u maxi
mum OF % per cent. as recommended
ny Mr.. Mellon.
Fhe House on u test vote. fixes the
maximum surtax at ~ per cent.
sesefsfch Is not much better than the
So per cent surtaX rate in the
preeent law, which admittedly has
had the evil result OF driving wealth
! ffa 8 non-tazahle investments, to the
afsadvautage of industrial and rail-
,frEId bonds.
S,ld0RI n COTTON CROP