Evening star., 1925-12-26
BY the Associated Press.

| ioW VI american capltal INTO IOrelgI
and domestic investments, comprising
loans for governments, municipalitie:
and corporate enterprises. reached un
precedented proportions in 1925
| While accurate compilations are moi
yet available. preliminary estimate:
| Indicate that the total of capital fIota
| tiOns eciipsed last years record o
slightly more than $4,000, 100000
| For the second time in history
| American investors poured more thar
a billion dollars into foreign loans
| during the year, edualing, II not sur
passing. the 1924 record OF approx
mately 81, zoo, 600 900. Productive enter
! prises claimed about $3.50, 900 .0g8 o1
the total. the gain in this type OF
business offsetting moderate decline
| in government borrowings.
America commanding position as
| lender to the world also was strikinGly
| revealed by the establishment of huge
private credits to help in the stabili
Zation of foreign currencies. Forti
fled by the possession OF enormous
| gold stocks. American bankers SET
aside $500 900 900 for the protection
Of Great Britain's return to the gold
standard and advanced many millions
additional to insure the stability OF
| the Belgian and Italian currencies
preparatory to their re-establishment
| on a gold basis.
Peak Reached Last Spring.
Activities in the field of new financ-
| ing overshadowed in interest the deal
| ings In the bond market, which failed
| to equal those of 1924 in breadth and
volume Prices, however. were main
tanned on a higher level throughout
the year. The upward movement.
which was in full swing as last year
drew to a close. was carried over in
1925. reaching its peak in the Spring.
Thereafter a gradual tightening of
money rates caused the pace of trad
ing to slacken and prices eased off
several points from the top. although
still holding several points above quo
tations of year ago.
Several factors contributed to the
markets s loss of animation. For one
thing, bond trading lacked the i'm
petus which 1t derived in 1924 from
three reductions In the New York
Federal Reserve rediscount rate. The
only change made this year was an
advance from to 312 per cent in
February, and its effect was seen
shortly afterward in the downward
trend of bond prices. Toward the
| close of the year the market lahored
York bank would follow the other
j Federal Reserve institutions in estab-
! fishing a per cent rate.
Speculation Unequaled.
No less potent than the bank raj .
| situation was the tendency Of sur
| plus funds TO seek an outlet in the
| more speculative field of stock trad
! ing. The call loan reservoir was
| filled with idle money. most of which
was sent here for placement by in
terror banks. The higher discount
| rates nut into effect by banks out
! side New York in the Fall attracted
some of il home. but not until il
| had been utilized as one Of the fac
| tors to carry speculat ton in stocks
| 10 unparalleled heights. These spec :
/ tacular opera tions. coupled with the
+! STEADY flow of new offerings inviting
| Investment. acted as q Counter-at- =
traction to the bond market.
Although many substantial gains
we're recorded during the year. the
market lacked the wide price move
mentS which featured the recovery
of many speculative bonds in the
preceding year. Ob1igat tions of one
Southern railroad, which. carried
! unique warrants to purchase stock
in a Florida land company. scared
almost 100 points before they were
retired. and few convertible rail
| and oil bonds moved up 20 to 90
| points in the wake of advancing
| prices for these companies shares.
Sharpest Break i'm Prices.
The only sharp break in prices
| took place in the bonds of the Chi
caco. Milwaukee and st. Paul Rail-
way when financial disaster overlook
| this Northwestern system. Overbur
| dened with funded debt of some
| 100000, 900 and facing maturities Of
| $50.000.0OO. the road was forced into
| receivership in March and its secu-
rites plunged to record low levels.
Recoveries followed the drafting and
| subsequent modification of Il reor-
| ganization plan. providing for q
| drastic scaling down of fixed interest
charges and foreshadowing an arly
restoration of the road to a sound
| financial footing.
The st. Paul receivership threw
more than S230,OOO,0 600 of bonds into
default, but the amount Of industrial
| issues unable to pay interest was re
duced from $124,000.0o0 to about
500, 100000 during the year More
than 0.000 900 were lifted from de
fault. while s35 900 900 were added 10
the list.
Conditions Improve Abroad.
The broader demand for foreign Sc.
curities in 1925, embracing both listed
bonds and new issues. reflected the
great progress made in the economic
recovery of the world, particularly of
European nations. Two of the Scar
dina Wan countries-Norwaya and Den.
mark-so improved their financial
structures that they were able to re
fund large loans at substa ntially lower
interest rates.
Unofficial embargoes On foreign
loans both in this country and Great
Britain eXerted considerable infiu
ence on the size and character OF
1925 borrowings. Early in the year
the United States Government closed
the door to European nations which
| had not yet funded their war debts
| This excluded France as a borrower
| in this market, but Italy, Belgium
and Czechoslovakia were readily &C
! commodated with loans and credits
| after having made arrangements to
settle their obligations to the Govern
| ment.
| A new policy regarding the regula
| ton of foreign loans also took shape
| through the cooperation of the Wash
| ington administration and interna
| tional bankers in denying financia
| assistance to foreign monopolies
| which might otherwise have obtained
| American funds to main high prices
| against American consumers. Pro
[ posed loans of $25 900 900 to the Ger
| man potash syndicate and $S5 900, ,00t
| to the Sac Paulo coffee industry were
| rejected on this account. ..
While the American investment
| market lost considerable business
| through these restrictions, it was en-
abled to attract new borrowers wher
Great Britain placed ban on for