Evening star., 1925-03-22
HIGHER MONEY NOW
|SHELD UNLIKELY
Demand for Business Needs
Shows Let-Up-More Funds
Go Into Securities.
BY GEORGE T. HUGHES.

Special Dispatch to The Star.
NEW YORK. March 21.-The one
thing that stands out in the investment
situation at the end of the week is that
indications OF higher money have disap-
peared
This Is the story told by the weekly
statement of the Federal Reserve banks.
which showed at once a decrease in re-
discounts and an increase in holdings of
short-term United States Government
obligations. In other words, the de-
mand for money for business purposes
Is smaller than It was a week ago, and
surpluses are again going into securt-
ties
This state OF affairs may, Of course,
dhange as the Spring advances, but for
the present at least there Is no pres
sure upon the bond market from sales
oy banks and financial institutions. Any
extended forecast depends upon the view
taken Of the industrial outlook, and as
70 that opinions differ. It is apparent
however, that no boom is in sight II
needs only a casual study Of pig iron
and steel conditions to show the correct
ness Of that conclusion.
Gold Concern Disappears.
Nor Is there any more concern dis
played over the gold movement There
are some additional shipments to Ger
many, and total gold reserves Of the
banks show a small but not significant
decrease. Time money rates are quota
oly unchanged, but there is not rnucf,
demand for the longer maturities, and
call FUNDS have been down to 3 per cent
curing the week. this being the first
elme IL had gone so low in a month.
me inference from all this Is not that
ponds are in for any substantial rise.
out rather that prices are likely to be
1airiy stable for some time The aver
age price OF domestic issues is now we'll
below the high OF a month ago, but still
ABOVE any point reached in the preced-
ing SIX years. This does not apply to
1oreign bonds, which are governed by
al enurely different set Of influences.
st. Paul Is Special Case.
The general bond market Of the week
mas rejected the break in stocks, follow
ing The similar break in grain and to a
iess extent the impression created BY
.ne 81. Paul receivership. Probably the
latter was the minor factor simply be-
cause 1t had been so long antictpated
FINANCIAL commentators have pointed
out again and again that the case OF the
oI fauI was a special one and was not
IN any sense representative Of the rail-
roaa situation as a whole The trou-
Dies or this particular carrier are pri-
fnar1ly due to the extension of facilities
70 a region which had not yet grown up
10 them. The one thing the ST. Paul
neeoed, and still needs, Is more traffic.
Nevertheless. there were at leas.
Two points in the st. Paul episode
Which have a bearing on the outlook
Tor other railroads, and one of these
IS the disastrous competition of the
Panama Canal. This competition is
1elt by all transcontinental lines.
The st. Paul was simply not as well
able TO hold out as the rest
Investment Views Change,
Between roads OF equal financial
strength, investment choice Is veer-
Ing toward those systems which run
north and south, and away from
those which run east and west, on
account OF this very Panama Canal
competition.
Motor car competition is the other
point In which there is a resemblance
between the case OF the St Paul and
that of other railroads. In round
numbers, passenger earnings of the
st. Paul, which were $31.o00.0oO In
1920, had fallen to 21,750.o0o in 1924
an enormous loss expressed IN per
centage and in great part due to the
business taken away from the rail-
road by the automobile.
OtneE rOdOS nave Aa0 the same
experience, but have been able to
Offset reduced passenger rates earn
ings by increased freight earnings.
1t may be that this form of compe-
tition has reached It's maximum in
most parts of the country, but the
subject is one that deserves attention
from all interested in railway Sc
curities.
Freight Traffic Heavy.
AS far as the general railroad
situation Is concerned, security hold
ers have no cause for anxiety as long
as carloadings hold up as they are
doing at present. For the week end
ing March z, the latest for which
figures are available, loadings ex-
ceeded all previous records for this
time of year. In fact, for the first
10 weeks Of 1926 the railroads of
the United States have handled the
greatest volume of freight ever car
ried by them in any corresponding
period.
Foreign obligations have been
comparatively neglected this week
One or two new foreign offerings
have gone very we'll and the general
list has been steady, noticeably so in
the case of the German and the
Japanese bonds. Since the latest
French dollar loan was brought out
last year there has been a striking
reversal in the relative market ap-
praisal of French and German securi-
ties.
Each foated a per cent loan IN
the United States and about at the
same time, but, whereas the Offering
price of the French bond was two
points above that Of the German, the
latter is now selling more than five
points higher than the French issue.
The market for the Japanese obli-
cations. 1t is also interesting to note,
is no longer disturbed over the politi-
cal relations between the United