Evening star., 1925-11-22
INSURANCE FIRMS
BEST BOND BUYERS.
Materially Higher Money
Rates Not Expected-Many
New Issues Forecast.
BY GEORGE I. HUGHES.
al Dispatch to The Star.


NEW YORK, November 21-All
through this weeks turmoil in the
stock market, with its violent ad
EanceS and its equally violent declines
bonds have been steady. At times
trading fell off and quotations We're
shaded, but there was no real liquida
dation, and when attempts were made
10 buy large blocks the offers would
be Withdrawn.
OF course the situation in the bond
market bears no resemblance to that
m stocks. The only speculation in
bonds has involved Il few of the high
yielding railroad issues, but even this
has been very moderate. The bonds
'of the seasoned, dividend-pay roads
are of such high investment rating
that they respond only to changes in
the money RATES, and that very grad
nally. There was. therefore, no weak
technical position" as there was in
stock. which required correction. On
the other hand, interest of the pro
ieSsional traders has been so absorb
ed in stocks that they had little time
Tor bonds, and so the market has been
lett to take care Of itself.
Trading Bond Buyers.
The fact is that the chief buy
erS of investment bonds just now are
the financial institutions, principally
the insurance companies. They are
always in the market more or less,
but they are shrewd buyers and not
likely TO bid up prices on themselves.
What they have been looking for this
week is the underlying seasoned rail
road mortgages, selling on AS to
a. per cent basis. and these in any
large volume simply have not been
offered
The only development which could
bring securities of this grade out of
strong boxes would he an unmistak-
able upturn in money, promising to
be something more than a temporary
affair. Despite all the talk about the
advances of the discount rates of the
various Federal Reserve Banks, the
investment market is not convinced
that materially higher money is in
prospect.
New Financing Vital.
Far more important to the future
Of the bond market is the amount of
new financing. This, rather than
money, is the immediate threat to the
maintenance of quotations around
present levels. and even this applies
more TO securities with high return
'than to those in the so-called gilt
edge class. All the Summer and the
early Autumn new bond offerings
have been comparatively small, but
the probabilities are for q large in
crease shortly. The new S100. 900 900
Italian loan. which was so heavily
oversubscribed Friday, is undoubted-
ly the fOrerunner Of other new for
eign offerings, which in the aggregate
will reach a large total. 1t takes
time TO effect a permanent placing of
-hpSp
they are being carried in loans from
the banks they are n drag upon the
market as a whole This is subject
to which the conservative investment
Interests are giving close attention.
st. Paul Move Vital.
Next to the italian loan oversub-
scription the announcement of the St.
Paul modified reorganization plan was
the week s most interesting topic of
discussion. 1t was generally agreed
that the new plan was a victory for
the bondholders in that they not only
obtain 20 per cent of their holdings
in fixed interest-bearing mortgage
bonds, Sut because the adjustment
bonds which they take for the addi-
tfonal so per cent are convertible into
stock. Under the original plan the
objection was that the holders of the
bOlluS ilON III ueIdulI were given new
securities, which in effect were only
a little better than stock, but with
out the advantages that accrue to
stockholders if the st. Paul regains
Its old-time prosperity.
Earnings Best Since 1917.
Taking the Northwestern railroads
as a group, earnings are the best since
1917, a fact which Wall Street has
been slow to realize. Generally the
first intimation of a turn for the
/, better in an industry which has been
depressed or in commodity in which
there has been overproduction is
seen in the securities markets. This
usually occurs long before the oper-
Rting heads of the industry or the
trade that deals in the commodity
have regained confidence, but in this
Instance the reverse has been true. 1t
f. violating no confidence to say that
at least one president of a North
western railroad has written a per-
Sonal friend in Wall street in most
cheerful terms as to the business pros
pect in the region served by his road.
Copyright. 1920