Evening star., 1925-12-13
NEW BOND ISSUES
IN GOOD DEMAND
Threatened Congestion Has
Now Passed as Investors
Speed Up Purchases.
BY GEORGE T. HUGHES.
special Dispatch TO The star.

Special Dispatch to The star
NEW YORK. December l2.-Prices
Tor seasoned investments have moved
over only small range during the
past week, but the market for new
offerings has improved substantially
The congestion which threatened
becauSe of the large number of fresh
foreign loans has disappeared and for
elgn issues, as we'll as some of the
more attractive domestic financing
nave gone very well. The investment
appetite for sound public utility obli-
cations is still keen and there was
heaVy oNerSNbsCription OF certain new
n1erlnES of this description. Indus
trials have not been in such good de
mand and there has been Compare
tiVeiy little railroad financing, but all
In all the market is closing the old
year in good shape.
Southern'S Action Vital.
From an investment standpoint, the
event of the week was the raising OF
the dividend on Southern Railway
common stock from ) 10 per cent.
This means not only that the stock
holders in this particular road are to
be rewarded with Il larger share in
the Company'S prosperity, but that
another mile post has been passed on
the road toward enabling railroads to
supply capital requirements by enlist
Ing more partners instead of acquiring
more creditors through the issue OF
bonds and notes.
Nothing could he more salutary
than this development. For years
railway capitalization has been i'll
balanced between bonds and stocks.
and the situation has been getting
worse instead of better in the past
decade. Ii 1914 the ratio of funded
Fll -,l x A
cent In 1924 it had advanced to 57.2
per cent. The figures are based on
official reports TO the Interstate Com
merCe Commission.
Payment for Long Wait.
1t was useless to expect any i'm
provement a 5 long as earnings did not
warrant dividends comparable TO those
paid by industrial organizations, risk
considered. Fortunately, that handi-
cap is being slowly overcome. Car
tuadlngS have been running at record
rates most of the half year just passed
ana the outlook for 1926 is bright.
Similarly net operating income has
been making 4 good showing, the in
crease Ior the first ten months ot
l92J over the same period Il year ago
amounting to 1873 per cent.
Now, if ever. is the time for the
stockholders to be compensated for
their long wait. In past years diTeC-
tors have hesitated about increasing
dividends, even when earnings war
ranted it, because they feared adverse
political criticism. This motive Is no
longer controlling. The subject is Of
Interest to the bond buyer and the
bond holder as We'll as to the stock
holder. because enhancement in mar
ket price. which follows establishment
OF railroad stock on a sound divi-
dend paying basis. puts a larger equi-
~ behind the bond.
French Bonds in Limelight.
In the foreign field the interesting
thing has been the action of French
dollar bonds. Naturally enough. they
weakened with the slump in French
francs at the end of the week, but, all
things considered, they held surpris-
ingIy well. The franc sold this week
at the lowest of the year, but the low
for French bonds was reached in
April, when the franc was almost a
cent and a half higher than it was
this week
French dollar bonds were the weak
est directly after the fall of the Her
riot ministry, when it was revealed
that French note circulation had eX-
ceeded the legal limit without the fact
appearing in the statement of the
DdUh OI IdllCb. L his Sttllltu To prove
more of a shock to holders of French
bonds than the progressive imitation
OF French currency, which has been
going on all the year. Al one time
this week French republic SIS We're
higher than at any time since Gail
p. lau& gave up the attempt to save the
situation. They lost all this gain and
more later, when the big drop in the
franc came, but. as has been said
they We're still we'll above the extreme
low.
Outlook Is Unchanged.
There is little change in the outlook
for high Fl ade investment bonds The
weekly statement of Federal Reserve
h5 nks showed the reserve ratio at the
lowest for the year. and the same
was true Of gold holdings. On the
other hand, the directors of the New
York bank are satisfied TO leave their
discount rate at 312 per cent. Incl
dentallv the reserve ratio of the New
York Bank are satisfied to leave their
as a whole, is almost 4 points above
what Ii was a year ago, showing that
the situation in this one district is
still relatively very strong.
Call money has ranged around per
cent. which is the high, as far as re-
-rewals are concerned. in recent
months. Time money. which is more
important in estimating the future,
has remained unchanged. The best
opinion is that demand will fall off
after the turn of the year and, if so
there is no reason for expecting anv
weakening in the market price OF
high grade bonds
[ roo.