Evening star. [volume] (Washington, D.C.) 1854-1972, 1925-02-08
BONDS HOLD FIRM
=. NEAR BEST LEVELS
Present Average Highest in
Recent YearS-GoId Ex-
ports SIacken.
BY GEORGE II. HUGHES.
specikl Dispatch to The Star.

epecih Dlspatcn TO Inc star.
NEW YORK, February Bonds
hold firm around the best prices, not
only for 1915 to date, but for all of
1924 and the year before that. Here
and there an individual issue is lower.
but taking the list as whole and
including all grades, the average is
at the high point of recent years. In
fact, this past week the strength of
the bond market has been the sub
ject of surprised comment throughout
the Wall Street district.
Most dealers and many investors
came to the conclusion some time ago
that bold prices were at the peak, and
that the prudent thing to do was to
sell long term issues and reinveSt in
the short maturities. Perhaps this
view was and is corsGct, but there
is nothing to subStantiate it ~ the
course of quotations so far. Much
has been made of the gold export
movement as forecasting higher
money and so unfavorably affecting
the price of bonds.
Gold Exports SIacken.
But this week the gold export tide
has slackened and the matter for the
moment is not given so much i'm
portance. The truth of the situation
is that We have been importing gold
on balance for so long a time that
we can lose a good deal of our sur
plus stock before there is any visible
effect in the money market. 1t must
also be remembered that these eX-
ports of gold do not represent a So
called unfavorable balance of trade;
that is. the gold exports are not going
out to pay for an excess of imports
of goods, but rather they are the re-
suit of our enormous loans to Eu-
rope and, to a less degree, of the re-
turn of capital, to the other side,
which had taken refuge here during
a period of the greatest uncertainty
as to the future OF European finances.
Loans Considered Assets.
AS was recently pointed out by
the New York Federal Reserve Bank,
these European loans are assets and
as they increase in volume so do the
returns in the form of interest. 1t is
very hard for most people to visualize
the change in Americas position,
since the war, from d debtor to a
creditor nation and yet. without
grasping this fundamental fact, it is
Impossible accurately to comprehend
the present situation. AS for the re-
turn of capital to Europe, there is
limit to the amount involved and
conditions over there are not yet so
stabilized that this movement may
Sterling exchange is approaching
par, but has not yet arrived at that
point, nor has Great Britain re-es-
tablished free gold market. Sweden,
whose exchange is on a parity with
the dollar, has found that her posi-
ton is not without difficulty, while
the great majority of the other
states of Europe have been unable to
follow her example. French francs
are still greatly depressed and the
French finances are not greatly i'm
proved.
Trade Expansion Slow.
The other factor which, in the
ordinary course of events, would
bring about higher money, is bust
ness expansion, and this is going
ahead very slowly. The weekly state
ment of the Federal Reserve Bank
shows an increase of rediscounts over
the preceding week, but the total is
still far below the corresponding
period in 1924. Railway traffic keeps
up at a very high rate, but there is
. lull in pig iron buying, which may
or may not be significant. In any
case there is no boom, which is a
matter for congratulation rather than
the opposite. The conclusion is that
the investors who are selling their
DonuS IN the expectation of high
money, caused either by the outflow
of gold or increased business activity,
may be making no mistake in the
long run, but that they are probably
premature.
Rigid Rules Gratifying.
In view of the new foreign financ-
ing under negotiation, the action of
the stock exchange this week in es-
tablishing a standard set of require
mentS which must be met before new
foreign bonds are listed, is crafty
Ing. These foreign issues have now
become so numerous and are so read
lily sold that the need of some pre-
cautions for the protection of the in
weston is apparent. The open market
quotation is not a safe guide and
while the circulars of the underwrit-
ers give a great deal of information,
it is not uniform for all offerings
OF course, no one needs advice about
q British loan and the facts about
France are matters of common knowl-
edge, but the case is not so simple
for some of the newly established
governments of Central and South
western Europe and for some of the
less we'll known countries of South
America.
Copyright, 1921