Evening star., 1925-05-31
INVESTORS SHIFT
TO NEW ISSUES
Foreign Bonds and Utility
Preferred Stocks Gaining
Rapidly IN Favor.
BY GEORGE T. HUGHES.

BY GEORGE T. HUGHES.
Special Dispatch to The Star.
NEW YORK, May 30.-The invest
ment demand remains as strong al
ever, but the direction in which il
shows itself is slowly shifting. Witt
high grade bonds at their present level
legal for savings bank investments
on less than a 3 per cent basis, the
United States Government obligations
higher than at any time since the
Summer of 1924, il is but natural &c
expect that possibilities of furtheI
price appreciation in securities or TINS
class are unlimited. and so there is a
very evident turning to obligations not
quite so secure, perhaps, but safe
enough for all practical purposes or
which a higher yield may be obtained
Once the bond market has reached a
certain average this is an mvarIable
phenomenon.
Two Favored Classes.
The two classes which seem to be
coming into greater favor now are
hrst. foreign securities, and second
public utility preferred stocks. AS tc
the. former, the average quotation
shows slow but constant advance. 1t
is now approaching TO the high point
OF 1922. At present 6 per cent is no
longer obtainable on obligations of the
nations of northern Europe neutral in
the late war
States and municipalities which
hoated loans in this market during
the high money periods of 1920 and
1921 are taking advantage of the re-
demption clauses in their contracts
and redeeming or preparing to redeem
their outstanding high coupon rate
bonds and replace them with 0i2 and
q nor lot or-l- tod
at premium.
There has been no corresponding
improvement in the loans of the cen
tral European powers and of those
newborn countries established by the
treaty of Versailles. although finan-
cial and economic conditions in this
part of the world are on the mend
Political doubts are still unresolved.
South American Issues Up.
Instead, those who are willing
I -otake some speculative risk
have been satisfying their needs in
the South American field. The mar
ket for the obligations Of the coun.
tries situated in the southern part of
this hemisphere is better today than
for a year back.
The most interesting development ir
the foreign news of the week has beer
the suggestion cabled from Paris that
the French finance minister was plan
ming the stabilization of the franc At
one-quarter of its pre-Vvar gold value
So far this has been only discussion
but something of this kind would be
strictly logical. 1T would. of course
bear hard upon the holders of French
internal bonds. principally the French
themselves, but it would simply
amount TO official recognition of ar
accomplished fact. The reaction OF
French bondholders to this proposal
remains TO be seen, but the chances
are that even they would prefer sta
bility TO the prevailing uncertainty.
However that may be, the effect
upon the outstanding French dollar
bonds 50 largely held in this country
would be favorable. It would near
that France was setting her inter
nal obligations at % cents on the dol
lar, but paying her external debts ir
full, all this on the assumption that
the war debt of the French to the
United States is also settled on d sat,
isfactory basis.
Trend Toward Utilities.
The other direction toward which in,
vestment inquiry seems to be moving
is that of the preferred stocks of the
prosperous utilities. AS every one
knows, the comon stocks of these
companies have scared to unprecedent
ed heights and speculation has rur
wild, in some cases present values
being entirely disregarded in pursuit
of future possibilities. All this time the
preferred stocks have been neglected
because they had no speculative at
J traction and because the conservative
investors would buy nothing but
bonds. This condition is in the way OF
being corrected if market indications
may be trusted.
The nominal quotation for preferred
stocks of electric light and power com
panieS. and reference is here made
mostly to the unlisted and outside
market, is still very low but it is get
ting more difficult to buy actual stock
at the offered price. There is no diff
fculty about selling, but any attempt
TO buy large quantities eXhauSts the
supply.
Move Is Gradual.
Probably there is still plenty of time
for genuine investors to increase their
holdings in this field, for movements
of this kind proceed very gradually
Still, it canot be indefinitely true
that 6la and per cent can be secured
with greater relative safety in utility
preferred stocks than in any other
form of investment
"A Sooo uedl VI IiIeLeSC 10 ldneH II
the prospective investigation by the
Interstate Commerce Commission OF
the st. Paul receivership, but it is
doubtful whether any new facts viii
be brought out. The reasons for thf
st. Paul's troubles are all on the sur
face. The receivers this week stated
the case in much the same language
as the directors did earlier in the
year.
In both explanations stress was. put
upon motor car competition. This sub
tect was eXhauStively discussed by
Secretary of Agriculture Jardine be
fore the Midwest transportation con
ference. The Secretary'S conclusion
was that as far as motor trucks were
concerned competition with the rail
roads would never be serious e8Cep
for the short hauls.