Evening star., 1925-07-12
TALK WIDESPREAD
Of HIGHER MONEY
Situation, However, Appears
Against Rise-Week Sees
No Real Weakness.
BY GEORGE T. HUGHES.

DN
Special Dispatch to The Star.
NEV YORK, July 1.-THE develop
ment of Importance in the invest
ment market of the week was the
gaining ground of a belief in higher
money in banking and bond trading
circles OF tangible facts to support
this opinion there was notable lack
Certainly nothing of the kind could
be deduced from the weekly statement
of the Federal Reserve banks show
ing as they did a drop in rediscounts
and a rise in the reserve ratio. There
may have been a slight hardening in
the time money market, but 1t was
very slight. Call money went above
4 per cent at the close of the week,
but the call money market is subject
to such wide fluctuations as to be of
little use as a guide for longer
periods. Nevertheless expectation of
an increased charge for credit accom-
modation was widespread.
No Real Weakness Noted.
Probably it was this uncertainty
about money which caused the sudden
outbreak of selling in Government
bonds in the latter half of the week.
The report of a resignation by the
Secretary of the Treasury, which was
given as reason for this selling, is
hardly convincing.
There was no real weakness any
where, but some of the new issues,
principally foreign, which have not
been permanently placed. were offered
over the counter in trading between
IL a. rhcf1 1Ynfi ip1
from syndicate prices. More doubt
was expressed about this class OF
securities than about any other.
Probably a. little conservation in this
quarter is needed. In the end it may
prove fortunate to have a let.up in
the pace set by these foreign loans
for a time at least.
AS far as the general market was
concerned, there was an increase of
offerings at prevailing prices, but
holders were not inclined to sacri-
fce.
Worry Over China.
In the search for unfavorable con
ditions abroad a good deal of emphasis
was put on the Chinese situation. 1t
may seem far fetched to drag in
China as a disturbing element in the
American investment market when
there are SO many other problems
facing world politicians, but the mys-
terry which envelopes Chinese affairs
was not liked. Now that American
investors have so much at stake. a
crisis or fear of a crisis in any quar-
ter of the world does not pass un-
noticed.
Nor was there any particular optim-
ism as to French finances. The ex-
pertinent of the French financial min
lister with an internal loan guaranteed
against depreciation in the franc is
being closely followed. and while
French dollar bonds dealt in on this
side We're little changed fresh buy
Ing was held IN abeyanCe pending the
outcome. Under the cirCumstan noes
talk about a new French loan ap-
pears premature.
On the other hand. no concern was
exhibited over developments in Ger
many. The dispute over the revalu-
alton of the German mark bonds was
only Of academic interest on this side.
British Large Investors.
AS bearing on investment condi
tfons in Great Britain the figures of
holdings of United States Steel COM
mon stock had an unusual interest
On March 81, 1925, over 100000 Brit
ish investors We're stockholders of
record in United States Steel On
June 80 this number had dropped to
below $1,000. Between June, 1924
and March, 1925. there was practically
no change in the number of British
investors in the premier Industrial cor
poration of America. It is a little
hard to understand why there should
have been such a sudden drop in the
past three months as statistics reveal
The suggestion that the selling was
due to the effort to sustain sterling
exchange at parity does not sound
reasonable.
In view of this liquidation by the
British it is all the more remarkable
that investment holdings of steel com
mon in America actually increased
during the quarter, domestic buying
more than counteracting the selling
from the other side. This. too. took
place while the market price of the
stock was sagging, being another illus
tration of the fact that investment
holdings of Steel common increase as
the price goes down.
Copyright. 1929