Evening star., 1925-08-02
DOMESTIC BONDS
MOVE DOWNWARD
Talk of Higher Money Chief
Cause-Funds Drawn Into
Stock Market.
BY GEORGE T. HUGHES.

BY GEORGE T. HUGHES.
Special Dispatch to The Star.
NEW YORK, July 31.--While trad
ing has been very slow, the trend OF
the investment market this week has
been downward in domestic issues.
Foreign securities have been a shade
higher, but they are more responsive
10 speculative sentiment. For the gen.
eral sagging, the prospect of higher
money remains the most plausible eX-
PLANTATION, but the absorption of in
terest in speculative stocks has had
an adverse effect as well.
AS far as money goes, the signif1-
cant thing is not the weekly state.
ment of the Federal Reserve Banks,
which reveal an extraordinarily
strong position, but the hardening of
time money The bank statement
showed outstanding note circulation
ct the lowest figure since May "a,
1918, and the ratio of reserves the
highest percentage of the year.
Money In Keen Demand.
All this, however. was without eff.
feet against the indications that i'm
proving business in the Fail would
make larger demands upon credit. AT
the close of the week. siX-month
money was in keen demand at Az
that the investment market paid the
most attention.
The fact that the banks foresee a
greater demand for business money is
favorable development in the in
dustrial outlook. In preparation for
this demand they have been reducing
their holdings in bonds and the result
has been a slight decline in the aver
age price, but there is no reason why
this should disturb the individual in
vestor who is concerned about the Sc
Curity of his holdings.
Improvement in business will have
no adverse effect upon second grade
bonds or other securities which are
responsive to trade conditions.
Fewer Foreign Loans Seen.
On the contrary It will help them.
Some of the recently offered loans
which were brought out at high
prices when money was not quite
so firm as it is today have not gone
very well, but that. too, is a matter of
small moment except to traders and
spectators. Probably additional new
offerings will be made at prices to
correspond with the new money level.
There are indications of some let-up
in the flood of foreign financing. Bank
ers are inclined to look a little more
q closely INTO lIle pun pOScS lOL "IliSll
the borrower desires the loan. Along
this line it was reported this week that
they regarded with disfavor All ap-
plication by the Brazilian government
for new loan to support the coffee
market.
There are only few commodities
for which the United States is en-
tirely dependent on outside sources.
but II is not proposed to finance price
i, - obi at "a
expense of American consumers.
There has been too much agitation
over the spectacular rise in rubber
to allow that.
Paris Market Improves.
On the other hand, seasoned foreign
loans have been fairly steady, al
though close watch is being kept upon
developments on the other side, as for
example, the friction between Poland
and Germany. AS a rule the foreign
exchange market is regarded as a
barometer.
Another point to which close at
tention is directed is the progress or
lack of progress in the funding Of the
European war debts to the United
States Generally speaking, the ma
tion which has arranged to meet its
obligations in this respect is regarded
as better risk than one that has
not.
The Paris market for French inter
nal loans has reflected increasing con-
fdence in the success of the finance
ministry's plan, but there has been no
corresponding Improvement for quo
tations for French dollar issues on this
side. That awaits action by France
on her war debt to this country. and
there is not too much optimism about
SQtiCfQPt0rV
ment being made.
There has been some complaint of
the holders of the German old mark
bonds issued by municipalities as to
the new dollar loans being floated in
this country by the same cities. These
protests are not likely to have much
weight either in Germany or with the
American investment bankers who
are bringing out the new German
bonds.
Domestic Situation.
Returning to the domestic situation,
the news touching on the railroads is
very satisfactory. Carloadings crossed
the million mark for the first time
this year in the week ended July 1S,
which is the latest available. Earn
ingS. both gross and net, now being
reported for June are highly favorable.
With only two or three exceptions
every one of the larger roads reports
greater net income for this June
than for the same month last year.
Barring a long continued coal strike
the railroads should have as satisfac-
tory a year in 1925 as at any time
since they were returned to private
operation.
Southern and Southwestern roads
are conspicuously prosperous-the st.
Louis-San Francisco and Missouri,
Kansas and Texas, to take only two
examples, both of them reorganized
roads with theoretically poor capital
structure. The territory they serve
has made such rapid progress and op-
Grafton has been so efficient that the
handicap imposed has been overcome.
Spectators have not overlooked op-
portunities in this quarter.