Evening star., 1925-04-19
NEW ISSUES FIND
READY ABSORPT|O
Easy Money Rates Leading
Reason for Advances in
Bond Quotations.
BY GEORGE T. HUGHES.

Special Dispatch TO The Star.
NEW YORK, April 1S.-Investment
demand this week has shown itself,
not only in ready absorption of at
tractive new issues, but in the slow
and steady price appreciation for sea-
Soned securities, especially those of
high grade.
New high records for the year have
been established in more than one of
the Liberty maturities and in the
Treasury As and AZ IS. One or two of
the high grade so-called Savings bank
railroad mortgages" have equaled
their best previous levels this wear,
and. there has been good inquiry for
middle and second grade bonds giving
a higher yield. Taking all classes to-
Sether, investment and speculative,
the average is below the high point
of February, but still we'll above any
thing recorded in the last six years
During air the time that the stock
market was breaking in the readjust-
inent of month ago, bonds yielded
only slightly and it looks now as
though even that loss would be made
up shortly.
Money Is Chief Factor.
For this steadiness in investment
securities the commonly accepted ex-
PLANTATION is the ease in money and
this is doubtless largely responsible.
Time funds were obtainable this week
Tor as long as six months at per
cent, and the Offering rate of Az per
cent in effect few weeks ago has
completely disappeared. The Federal
Reserve Bank statement maintains
its. strong showing, Notwithstanding
the gradual loss of gold and smaller
purchases by the banks of acceptances
in the open market When the di-
nf he N,V-lr
this week the meeting was not pre-
ceded by rumors of an increase in the
fed1scount rate.
New Incentive Possible.
1t cannot be denied that the natural
sequence to these evidences of abun-
dant credit would be a firm bond
market. There is, however, another
factor which may enter into the sit
uation over the longer period and that
IS decline in prices for commodities.
If the general price level Is trending
downward and there is some indica-
ton that it is, such a condition would
increase the purchasing power of in
come from fixed rate securities and so
give another incentive to the accumu-
lation of investment bonds. This in
fiuence makes itself felt very grad
ually and probably ii is the minor
factor in the strength of the bond
market. But it might easily become
much more effective if the commodity
price average should continue to de-
cline. 1t is too early to say whether
this price trend is to be kept up over
any long period, but the subject is
one that well deserves the attention
not only of investors, but of business
men.
More Efficiency Needed.
MornhaY,tc nd 80 s,o
this country have been accustomed
for so long to associate prosperity
with rising prices that the idea of
having to conduct their operations
when the tendency is in the other di-
fection may dismay them. Yet busi-
ness can be done, and done profita-
bly,, during a pereiod of falling prices,
only it must be done more efficiently.
However that may be, as far as the
investment market goes, there is moth
ing to indicate a reversal in its pres
ent strength.
What has been said so far applies
TO securities which have been tested
by time. The situation as to new
capital offerings is not SO clear. In
some cases new bond and stock issues
have been put out at prices which in
the judgment of many bankers were
higher than conservative investment
banking warranted.
Bad Effect of Breaks.
Repeatedly in recent months it has
been announced that a new offering
was heavily oversubscribed and the
price in the open market has gone to
a premium, only after few days to
fall back, losing all the gains. AS
long as the syndicate agreement was
in force, the security would be sup
ported at the original quotation, but
when the syndicate was dissolved and
the stocks or bonds, as the case might
be, were left to take care of them
selves, there was a sharp break of
benefit to no one except those daring
spectators who had ventured going
"short."
This always has an unfortunate eff
feet on an investor who bought in
good faith for permanent holding.
Perhaps there is no way by which this
anti-clirnax can be avoided altogether,
but a periodical recurrence of in
stances of this kind Is extremely dis
concerting. Excessive commissions
paid to dealers is one of the causes of
this trouble. That. at least, is a mat
Ter- that could he remedied