Evening star., 1924-11-04
INVESTORS MONEY
LOOKING FOR WORK
Great Store of Idle Funds
Makes 1t Hard to Keep
Cash Useful.
BY HARDEN COLFAX.

Not within a generation has it been
so hard for the American investor to
put an honest dollar TO work in Sc
Gurity at fair interest rates. The
latest report OF the Federal Reserve
Board discloses an idle bank credit
in national banks alone amounting to
more than $50, ,oo0. 000 900. and other
agencies advise that Notwithstanding
the recent plethora of bond offerings.
opportunity for good investment of
idle dollars has not been so unfavor-
able for upward OF 30 years.
s3.O43. .OO0. 900 In Reserve.
The II federal reserve banks. ac
cording to the boards statement.
have gold reserves totaling s3,043.-
100000. In contrast with that noun
tain of gold. the banks combined
statement shows that only S222,565,
coo of the sum is at work in the
form of loans. This is "A shrinkase
of nearly I5 per cent. or more than
s6S0,000000 within year. Only 1
per cent of the gold reserve is want
ed at the present time as loans.
Three years ago more than 40 per
cent was outstanding in that form.
Placing an investors money in
sound securities has become a prime
problem within the past few months
and promises to become a still great
er problem in the near future. Not
that the money mark cts are stag
nant. for hond sales on the New
York Stock Exchange during the first
nine months of 1924 exceeded such
sales during the entire year 1923. but
tho fact remains that uilt-edge Sc
CuritieS arc not coming OH the market
in anything like the volume required
to meet surplus American. capital.
DecIirc in Rates.
The decline of interest rates within
the year tells the story of the lack OF
Investment opportunity. On prime.
two name commercial paper, maturing
in from co to 90 davs the interest
rate averaged ass per cent last Jan
Uary. BY May the interest rate had
declined to 4.33 per cent and by Oc-
thber it was down to an average of
3.13 per cent. Mixed collateral loans
at the New York stock Exchange
showed a still further decline falling
from as per cent in January to 2.Sl
per cent October 1.
In other words, interest rates on
Silt-edge commercial paper have been
cut almost in two within ten months.
As expected, the falling interest
offering OF bond issues. especially
those originating abroad. The par
value of bond sales on the New York
Stock Exchange during 1928 was 81
IJ4, 900 900. During the first nine
months of 1924, the par value OF such
offerings was s2,756,200.00o During
July and August of this year sales
were double what they were during
the same months last year. If the
present ratio is maintained until the
end of the year, 1924 will establish
a new high record, exceeding the 81
600 100000 of 1922 in par value sales
of bonds on that exchange.
Low interest rates have spurred
the States and cities to borrow money
on a scale seldom equaled in the past.
and these offerings have been snapped
up like crumbs by hungry investors.
Between January and September. in
elusive, States and cities had floated
long term bonds aggregatng Sl.13..
10000. as compared with total of
Sill. 10000 during the entire year
of 1928. Within five years municipal
long-term borrowings have jumped
more than 100 per cent.
The current year will easily estab-
lish a new record in this respect. ex-
cecding by many millions the previ-
Gus high borrowing mark of $l,3S3,-
376, 1000. established in 1921.
Enormous Sums in stocks.
Short term borrowings of munich
palities have responded to the same
squirt. the total for the first nine
months of 1924 being s552, $4,000, as
compared With s4s7.440,o00 during the
year 1923. The record of this class
of borrowings also was established d
in 1927 at e2,040.000. 1t may be
equaled in 1924.
One of the results of almost too
much money has been the boosting
of stock prices. Investors have been
forced against their inclinations into
buying stocks where they wanted
bonds. Stock prices consequently
have risen in numerous cases until
they stand at the present time almost
at the record high level of November,
1919. At that time the aggregate
value of the 233 leading stocks on
the New York exchange was sl3,610,-
100000. 1t declined to s4,363.000.00
during the depression of 1921. Now
that aggregate value is back again
to within s6S2, ,00c.0 900 of the 1919
figure.
Copyright, 1874