Evening star. [volume] (Washington, D.C.) 1854-1972, 1924-12-28
BONDS NEGLECTED
AS STOCKS CLIMB
Recent Foreign Offerings Sold
at Premiums Have Been
Sagging for Week.
LESS DAWES PLAN TALK
Railroad Liens in Limelight, While
Bus Plan Appears to Be
Spreading.
LESS DAWES PLAN TALK
BY GEORGE Il. HUGHES.

BY GEORGE Il. HUGHES.
Special Dispatch to The Star.
NEW YORK, December 27-In the
strictly investment market this year
closes with period of Quietnem.
There are several reasons for thka.
but the most important is that atten-
ton is centered on speculative Sc
curfties. With the stock markef
making new high records from day
to day, it is difficult to arouse en-
thusiasm for bonds unless they offer
some possibility of capital apprecia-
ton. The same is true to a less ex-
tent of the investment preferred
stocks The result is that in many
instances higher income may be
obtained from these investment Sc
curities than from the speculations-
that is, at present dividend rates
The buying of the industrial stocks
has proceeded on the theory that
period of business prosperity is at
hand and that dividends are to be
increased and other advantages are
to accrue to shareholders. With
these potential profits in stocks so
dazzling, fixed rate interest return
ing obligations are neglected. This
is an opportunity for conservative
investors which they viii do well not
to overlook.
Money Rates Vital.
Another condition which has OPP
Grated to discourage bond invest
ment is the apparent hardening III
the money market Quotations for
time funds are now substantially
above those prevailing in Mid
summer. Call money has advanced
quite sharply within the last month.
Then, too, gold has begun TO go out
in small lots, principally to Germany.
Probably the Germans intend to
withdraw the entire proceeds of the
$40, 600 loan. All this has op
Grated to persuade bond traders that
a period of higher money is ap-
preaching. Many bankers, howevcr,
Go not take this view.
They point out that the amount OF
gold going out is Insignificant com
pared with our total supply. They
say that after the first of the year.
when interest in dividend disburse-
ments is available for reinvestment.
rates will ease off again and there
will be renewed activity in bonds.
AS it stands now the insurance com
panies, which in normal times are
one of the main supports of the bond
market are not doing any investing.
They are preparing their annual
statements and are not likely to be
come purchasers of securities IN
quantities again until after January
/. Then large sums will be avail
able from this source.
Recent Issues Sagging.
The market action of recently Of
! fered new foreign bonds has like
wise been discoura ging to traders
Even those issues which were heavily
oversubscribed and which at once
went to substantial premiums have
been sagging this past week. Syndi-
cate support operates to prevent the
price from falling below the offer
ing figure, but the premiums have
declined and in some cases disap-
peared entirely. Examples are French
Is, Belgian IS, Greek Is and the Ger
man Is. French bonds have been
noticeably heavy, even the seasoned is
sues The cable dispatches report
increasing friction between France
and Germany and the note OF conf
dence in the working of the Dawes
plan is not so prominent as 1t was
a month or two ago. The French ad-
mission that a long time must elapse
before France is able to begin pay
ments on her war debt to the United
States has again drawn attention to
French finances. This, too, is doubt
less temporary state, but ii serves
to explain the hesitation in the for
eign bond market.
Rail Bonds i'm LimelIght.
The railroad situation has come
into a good deal of discussion this
week Announcement of the purpose
of the Boston and Maine to abandon
900 miles of track has brought UP
the subject Of motor truck and motor
car competition. Until this latest de
velopment it had been thought that
loh% inr in
railroad construction sufficient To
overbalance abandonments. If the
Boston and Maine plan is carried out
that idea will have to be given up
This is a matter which calls for the
serious consideration of railway
bondholders. When a branch line is
abandoned because of motor compe-
tition bonds secured on the branch re-
main an obligation Of the parent
company, but drop sharply in invest
ment rating.
Little Cause for Alarm
As far as the general railroad out
look Is concerned, as long as traffic
continues to make new high records
there is no cause for pessimism, but
railroads can hardly hope to escape
the effects Of the slow revolution q
transportation motive power, Whlcl
is the real cause of the troubles oS
the JrdCIlOn II may "
that this motor competition is now
at its height. Certainly the high
ways will not accommodate many
more vehicles. It is absurd to believe
that the motor car will ever take the
place of the railroad freight car
Trolley cars will still be essential
utilities in large centers of popula-
ton. Profits of both, however, may
be severely cut down.
Banks Plan Gratifying.
In one respect the year ends en-
tirely satisfactorily-that is, in the
matter of public returns of the rail-
roads, the utilities and the large cor
porations generally. There is no dis
position to hamper the carriers by
ill-conoeived legislation. The utili-
ties have enlisted large numbers of
their customers and employees as Sc
curity holders. Many Of the large
corporations are doing the same.
The plan OF the National City Bank,
announced this week, to sell &c cts
employees shares in the hank mucn
under the market price is - case in
point. An era of good feeling like
this makes to the advantage of all
security holders.