The Bozeman courier. (Bozeman, Mont.) 1919-1954, 1925-09-23
LITTLE Change In
BOND
Market Rather Dull, But Steady
and General Tone Good;
Plenty Of Capital

Bond prices have changed very lit
tie during the recent weeks. The bond
market on the whole has been rather
dull in contrast to the activity dis
played in the stock market. Beyond
a slight seasonal firming Of short
term money rates and a decline in the
volume Of new offerings Of securities
there appeared no outstanding factors
of Importance affecting the bond mar
ket last month. The hardening Of
shoFt-term money rates, however, was
less than usually takes place in Aug
ust.
The volume Of new security offer
ings during the month was relatively
small compared with the amounts
brought cut earlier in the year. This
fact has had a favorable effect on
the tone of the market, since the sup
ply Of capital seeking investment
does not appear to have diminished,
states the current issue Of the Guar
anty Survey, published by the Guar
anty Trust company Of New York.
The small number Of new issues has
permitted the market to digest pre-
vious offerings, the Survey says, and
in consequence has reduced somewhat
the floating supply Of securities in
the hands of dealers.
Selection Of Investments.
The proper selection Of bonds for
investment is an important problem
at the moment for those individuals
and families who for many yeaus
have had their capital employed in
closely held corporations and recently
have sold their business to others.
Approximately o~ne-fOurth Of the new
capital issues offered in the first six
months Of the year consisted Of Sc
curities that represented public par
ticipatiOn in the ownership Of cor
poratiOns formerly the property Of
small groups Of people. The former
owners thereby were placed in pos
session Of a large amount of liquid
funds for investment and these have
been finding their way into the bond
market.
The large amount of financing &C
cOmplished by means of junior bonds
and preferred and common stocks un-
der the favorable market conditions
of late has measurably improved the
investment portion of many prioH
corporate bonds.
Underlying public utility and indus
trial mortgages especially have beer
strengthened to a degree that few
realize who do not carefully analyzC
the position Of a security, The In
PRODUCTION Of larger equities behind
the senior bonds, thereby placing a6.
diOnal capital at the disposal of 3
corporation, generally means increas
ed earning power for that concern
if it is well managed, yet often tn,
market price of it's senior bonds i
slow to reflect their improved posi-
ton.
Improved Position Of Bonds.
Many other corporations that hav
not needed additional capital hav
shown increasing earning power wit
the gradual readjustment of thos
major economic dislOcatiOns cause
by the war. Eventually larger carr
ing power will affect the prices Of
corporations bonds, and the fal
sighted investor tries to discover hOs
that are selling out Of line with othe
bonds backed by similar eamin
power.
It is in such periods as the presen
on the other hand, when the finances
outlook appears so generally favO-
able that some securities, particular
ommOn stocks, are likely to becom
Overvalued in the market. The ear,
full investor, to whom safety Of pri
cipal and constancy Of income are Il
chief considerations, in such a ma
ket usually seeks out good bonds
not tOO-distant maturity. This ]
does in order to assure the retentit
of such gains as his investments No,
have made in market valuation.
The steadiness Of commercial mo
ey rates at home, combined with
noticeable easing Of rates on shol
term bank bills in London and the !
duction Of the Bank Of England d
count rate, evidences the adequa
Of the supply Of capital for busine
purposes. If these conditions cont
ne to dominate the financial marke
1t is natural to suppose that bo
prices may have reached a level frC
which they should vary in but min
degree. Conditions then seem favI
able for the placing Of funds ava
able for investment in carefully
secbed bonds.