Evening star., 1925-06-07
AMOUNT OF BOND
BUYING AMAZING
Capacity of Public to Absorb
New Issues Is Held
Most Remarkable.
by GEORGE T. HUGHES.
o,al nisn,.ol, - rho 60

snecial Dispatch to The Star.
NEW YORK, June 6.-Bonds have
been strong again this week. although
with a little more irregularlty than in
the closing days of May.
The average has now advanced so
high that minor reactions are to be
expected from time to time, but as
long as money remains so abundant
and there is no excess of new offer
ineS any ma ior decline is unlikely.
The strength has been especially evil
dent in the longer maturitieS of Gov
ernment issues, and both the Treas
ury 4l4 IS and Treasury 4s have made
new high records for the year, and
the latter for all time.
Activity has been on d diminished
scale in the high grade railroad bonds
and in such utilities as the insurance
companies are in the habit of buying,
but this has been due to the lack Of
supply rather than to any smaller de-
mand. The fact is that large blocks
of desirable issues suitable for the
funds of financial institutions are not
coming into the market.
Buying Power Anna zing.
The capacity of the investing pub
lie To absorb bonds is the outstanding
ma nclaI phenomenon of the times. A
compilation made by q well known
authority shows that new bond offer
lnss during the first five months of
1925 tOtaled only 81 50O. 900 less than
even 81 900 .000. 900. The average for
the five months is consequently al
most S40O 600 900 Il month. Probably
all this vast amount has not been com
pletely digested. but it is safe to say
that the most of the new issues have
been unusually well placed
The proof of this is the constant
inquiry for new offerings Which all
the investment bankers, report and
winch has resulted in turning TO
seasoned descriptions with a conse-
Quent advance in price
Foreign Group Popular.
This inquiry has shown itself in
various fields. but in none more pro
nouncedly than in the foreign sroup
where numerous individual issues have
made sharp advances. a good deal of
this buying was for the account of
dealers who expect to turn over their
temporary holdings at a profit. 1t
seems reasonable to believe that thev
VIII not be disappointed. Demand has
Deen Selective because of the great
olHerenceS in the financial position of
the various countries represented.
French bonds have Jagged behind
as was natural in view of the extreme
"edhHeSs III franc exchange. and
some of the more recently brought out
foreign issues have not gained cor.
respondinSly with the rest. but in the
main the trend has been upward. The
case of the German IS is N notable IL.
lustration. These bonds this week
made a new high record since they
were hrst issued and the Austrian IS
have done the same. This argues CON
hdence on the part Of bond buyers
that financial and economic conditions
In Europe as whole are on the
mend. no matter what difficulties NAV
De faced by any particular country.
Reasons for Buying.
The Austrian IS, because of their
several guarantees by other Euro
pean powers. are fairly typical of
sentiment toward foreign investments.
ana the German Is are in something
nke the same class. 1t may be said
that in per cent money market
the better than 7-per-cent WELD on
theSe foreign bonds is sufficient eX-
pIanatlon for the buying, and that is
OF course, partly true but they would
not be bought if the buyers did not
believe that the security was imDroy
Ing as we'll
AT home the interesting develop-
ment was the publication of the ST.
SPNpr4I
respects II was unique. In the first
place. II the plan goes through, IL will
De the quickest reorganization on rec
ord. Receivers were appointed on
March Is and the reorga MIA ton plan
was published on June g. Doubtless
the work of the bankers was made
easier because of the fact that the
fate of the st. Paul was long fore
seen and that tentative reorganization
plans had been drawn up by many
OF the parties in interest
Other Vital Factors.
In the second place the proposed as
sessment on the stockholders was un-
usually heavy compared with the re-
organizations of past years In still
another particular the plan is unusual.
in that in return for this heavy as
sessment the stockholders receive in
pa ri a bond which carries lien prior
10 that of the new securities to be
given To the old bondholders 1t is
this latter provision which has caused
the most criticism in bond circles and
which may he made the object of at
tack when the case comes before the
interstate Commerce Commission for
approval.
Already there have been reports of
opposition. although based on differ
ent grounds.
Charges of miSmana cement of the
st. Pauls affairs are not credited in
well informed circles. The troubles
curately described in the statement
made public when the receivership
was announced.
pioh