Evening star., 1925-08-23
REVISED INTEREST
IN BONDS SHOWN
Market Buoyed by Big Res
ervoir of Funds Available
for Investment.
Special Dispatch TO The Star.

Special Dispatch TO The Star.
NEW YORK. August PA better
feeling was evident in the investment
market at the close of the week than
at any time so far this month.
Activity this week was still on a
small scale, but there was no pres
sure to sell. even from the banks.
The fact is that there is still an i'm
mense reservoir of funds available
for investment and this tends to sup
port prices whenever they give signs
OF yielding.
Money Enough for Needs.
Early in the Summer. 1t looked as
though money would harden substanti-
ally, but expectations along this line
have been realized only to a very
moderate degree. The reserve ratio of
the Federal Reserve Banks as a whole
is practically unchanged on the week,
while that for the New York bank is
more than 21a points above what 1t
was a week ago and less than point
below where it was a year ago.
London adviCeS early in the week
had 1t that the Bank of England rate
would be cut from the present Az per
cent to a 4 per cent level. This did
not happen, but apparently there is
still a belief that when change does
come. 1t Will be downward and not up
"dTU IL IIldI OplIllOn 10 well IOulIuSu'
no upward revision of our own rate is
In sight for 1t is the common under
standing that some spread will be
maintained between the British and
American discount charges, otherwise
the funds would flow back from Lon
don to New York, making more diff
ficult holding sterling exchange to It's
gold parity.
New Offerings Absorbed.
New offerings, which have not been
in particularly large volume, have
been we'll absorbed. The $4,000, 900
International Telephone x Telegraph
debentures, which was the most i'm
portant new issue of the week, was
a conspicuous success. Probably the
large oversubscription was due to the
attractive conversion privilege the
bonds carried, but, even making al
lowanceS for that feature, it exercised
a stimulating effect upon the whole
market. 1t pointed also to a favor
able attitude on the part of the in
vestment public toward the utilities,
an attitude which was a little more
cautious, perhaps, than it was before
the warning of a prominent Middle
West operator against reckless specu-
lation in these securities, but was still
ready to give the preference to this
class of investment. The president of
the leading utility of Baltimore added
his word of warning this week against
extravagant speculation in utility
stocks. The more of this sort of coun-
sci. however, the better for utility Sc
curtties from the investment stand
point
In foreign bonds the weeks improve
ment has been greater than in do
mestic securities. In fact, the aver
age for foreign dollar bonds dealt in
on the New York Stock Exchange is
not only higher on the week, but on
the month and the full year to date.
The development of most Importance
in this connection was, of course, the
conclusion of negotiations for the
funding of the Belgian war debt to
the United States. Announcement
that this had been accomplished was
reflected at once in the market for
Belgian securities. French bonds, too,
have been higher.
Once the French and Italian debts
to this country have been funded the
way ought to be clear for considera-
ton of these foreign securities on
their merits. If the international war
debts are to be acknowledged and
regular payments made thereon, 1t is
unreasonable to suppose that the loans
privately fioated will not be honored.
There remains the doubt about the
debtors, but 1t does not appear likely
that there will be any default any
where along the line.
Financing Is Retarded.
A good deal of foreign financing has
been held back pending the clearing
up of this international debt situation.
American bankers will be responsible
for the placing of the bulk of these
new offerings unless the London ban
against foreign loans is raised. Gen
orally this kind of business is very
profitable for the banker, and it may
be profitable for the investor, but the
fact that the general foreign situation
looks brighter does not imply that
there is no risk to be taken or that
discrimination is not necessary. The
record to date Is good. People who
bought French Republic bonds in 1920
and 1921 have had a high rate of in
terest all this time and can sell their
holdings in the open market for more
than they originally paid. Those who
purchased more recently have not
Jared so well as yet. Any investor
temperamentally inclined to worry
about market fluctuations ought to
take foreign bonds only in small lots.