Evening star., 1925-02-22
BOND PRICES HOLD
FIRM DURING WEEK
Money Outlook Confused.
Trade News Good-CriticaI
Times in France.
BY GEORGE II. HUGHES.

BY GEORGE T. HUGHES.
Special Dispatch to The Star
NEW YORK, February 2I-What-
ever the future of bond prices may
be, and as to that there Is great va
rlety of opinion, the market holds re-
markabiy frm., For long time now
the experts have been saying that
quotations for strictly first grade in
Vestment securities were high enough
and that any change must be toward
lower levels, hut so far there has
, been nothing in the course of the
market to justify these predictions.
Railroad mortgages of the first rank
are slightly below the highest points
reached last year, but the loss Is so
senall as to carry no significance and
the price trend of securities just be-
low the highest grade is still distinct
ly upward.
Money Rates Confusing.
The future of money rates is just as
confusing as that of bonds. Theoreti-
cally continued exports of gold and
the demand for expanding business
ought to result in higher money rates.
In the latter part of the week, there
Was a slight stiffening in the quoted
rates for five and six months funds.
Up to the middle of the week and for
long time prior thereto, loans were
obtainable for this period at per
cent, but, as the week closed, lenders
have raised their asking rate to AZ
per cent.
On the other hand, it was reported
on reliable authority that offers of as
much as $1,000,000 had been made for
IL months at per cent, which would
look as If this lender, at least. did not
expect anv great change in the money
supply. The position of the Federal
Reserve Banks, for all practical pur-
poses, is as strong today as 1t was a
year ago. The reserve ratio this week
was no per cent, compared with 81.4
per cent on February 90, 1924, de-
cline of no Importance.
Heavy Volume of Trade.
1t is hardly necessary to mention
call money, because that rate is gov
erned by day-to-day fluctuations in sup
ply and demand. and yet it is not with
out interest to note that this market,
too, has been easier this week than in
a long time
Turning to the business situation,
the evidence is no easier to interpret.
Carloadings are at the highest point
ever recorded for this season Bank
clearings tell the same story of a large
volume of trade. The steel industry
is operating at an extraordinary high
rate, considering the increased ca
pacity. On the other hand, foreign
Iron is being imported in increasing
quantities and the domestic pig-iron
market is dull. Moreover. there is a
feeling of doubt as to whether present
steel prices are to be maintained.
The textile situation is unsatisfac-
tory, to say the least. Motor car man
ufacturers are proceeding cautiously,
hut the outlook here is distinctly good.
Great expectations are founded upon
the increased buying power of the ag-
ricultural regions. Summing up, the
favorable factors far outweigh the un-
favorable, including among the favor
able features the abundance of credit.
Foreign Bonds Steady.
Foreign bonds as group have
heen steady all the week. New for
eign offerings have gone very we'll
notwithstanding the doubt with
which most individual issues have
been greeted by the dealers. In the
eyes of the investor the current high
returns have fully compensated for
the risks. The case of French bonds
b. q special one. Cabled dispatches,
alleging a loss of confidence in their
selves, brought some selling CT
French dollar bonds on this side, but
there was support from important
banking interests and a moderate
rally in quotations.
No confirmation is obtainable here
of the report from the other side
that a new French loan has been
promised by American bankers, once
the French budget is balanced. 1t is
nj ErranPh
loan could be floated on any reason
able terms now, with the new French
rs selling in the open market nearly
four points below the offering price.
Critical Year for France.
At this distance the solution of the
French financial problem looks
almost impossible. If the French
once lose confidence in themselves 1t
Will be impossible. The battle of the
franc is now being fought on the
home soil of France. 1t is no longer
a matter of outside spectators for
the decline selling francs short and
being ''pinched' when the BARK OF
France comes to the rescue. Added
to all these uncertainties is the dis
trust in French politics which is felt
by most outside observers. Under
the circumstances the wonder Is that
French securities meet with as much
favor as they do.
There is no doubt that this is the
critical year for French finance, nor
is there any doubt that If this crisis
is successfully passed French Sc
curities will rebound upward in brisk
fashion. In that event those who now
exhibit their faith in France will be
richly rewarded.
Speculation Overdone.
A good deal has been heard this
week about the consolidation of cleo
trfc light and power companies into
"superpower systems Much spec
ulation has been based on the ad-
vantages expected to accrue to Sc
curity holders from these combinations.
some of these advantages will un-
doubtedly materialize. but 1t is very
easy to oYerestimate them. There
are some indications that the specula-
tion along this line is being oyerdone.
This applies, however, more to the
common stock than either to the
bonds or preferred shares.
Copyright, 1921
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