Evening star., 1925-02-15
STEADY ADVANCES
IN BOND MARKET
More Conservatism Noted in
Dealings in RaiIs-NeW
Utility Problems.
ny GEORGE r. HUGHES.
Special Dispatch to The star.


NEW YORK, February 14-The
strength in the bond market continues
TO confound the experts. Gold is still
moving out, and the effect is seen in
the Federal Reserve Bank statements.
Money is a. shade higher, not alone
call funds on the exchange. but time
accommodation as well, and yet there
is no reflection of this in the bond
market. The appetite for investment
issues remains unappeased.
1t has been suggested that COM
parison should now be made, not with
prices over the past 10 years, but
with levels prevailing prior to 1914
and the World War. 1t is true that
bond prices have been much higher
than they are today, but that was
before the income tax complicated
calculations.
steady Advances Made.
1t does not seem that Government
securities or the very highest grade
of railroad obligations could advance
much fartehr under present circum-
stances, but the fact is that quota
tions show no sign of weakening, and
there is a steady creeping up of prices
for the middle and second grade is
sues. The spread between the two
classes is progressively narrowing.
This goes on regardless of what may
happen in speculative stocks or the
extremely speculative bonds
More attention has been paid to the
railroad situation this week than in
some time. Not so much is heard
about the benefits to accrue to hold
ers of railroad securities from con-
solidations. Rather the strength in
railroad bonds has been based on
their intrinsic merit, which is, of
course, a very healthy condition. One
reason for the lessened emphasis upon
the merger developments is the fact
that the greatest combination of them
: all, namely, the Nickel Plate project,
is still to be passed upon by the In
terstate Commerce Commission.
More Conservatism Noted.
That body did approve the Missouri
Pacific acquisition of the New Or
leans, Texas and Mexico, albeit with
criticism of the banking methods, but
it has still to express its opinion upon
the larger combination.
Meanwhile the matter has been
brought up in Congress together with
, symptoms of a revival of Legislative
interest in corporate mergers, gener-
ally, in both the railroad and utility
field. 1t has served to remind the
speculative and investing public alike
of conditions prior to the election
All this has brought about a degree
of conservatism which has been miss
ing in discussions of these matters in
recent months.
Another uncertainty which must be
cleared up before the railroad situ-
alton, as a whole. can be considered
satisfactory is that involved in the
refunding of the st. Paurs approach
ing maturities. The New Haven has
successfully arranged it's own affairs
about which at one time, although
that was several years ago, there was
as much doubt as there is about the
st. Paul now.
Problems in Utility Field.
In the public utility field there are
also unsolved problems which make
for caution on the part of investors.
The outlook for the utilities, always
excepting the fractions, has been so
bright in the past year or so, and
the securities Of these companies have
made such a ready response to the
improvement, that a speculative fol-
lowing has been attracted and there
are some signs that the advance in
the quotations for utility obligations
has been overdone. This would not
be very important to any one ex-
cept spectators if it had not led to
a feeling of overconfidence among
investors.
The electric light and power in
dustry is in an extremely favorable po-
sition, but it has not reached the
point where discrimination is not
necessary among securities. The fact
is that the constant demands made
.upon these utilities for increased
service have made necessary enor-
nous additions on capital account.
Bonds, debentures and preferred
stocks have been sold in large guam
cities. In many cases, earning ca
pacity has not increased commensu-
rate with this increased capitaliza-
ton.