Evening star. [volume] (Washington, D.C.) 1854-1972, 1925-12-20
BONDS HOLDF|RM
ON 1876 APPROACH
Present Trend of Money
Rates Appears Upward.
France Needs Outside Aid.
BY GEORGE L. HUGHES.

BE GEORGE L. HUGHES.
Special Dispatch to The star.
NEW YORK. December 19.-only
at intervals has there been any sign
This week of anticipating the Janu
any reinvestment demand. Actual
investors appear confident that they
VIII be able to ill their requirements
when the time comes at approximate
" the prevailing prices. and the in
diCationS at this writing are that this
view is correct notwithstanding the
large sums which will become avail
able when interest and dividends are
d!sbursed on the first of the year.
Even the traders who ordinarily &C
emulate blocks of securities toward
tho end of the year. with this poten-
flal demand in mind, are not anxious
Ia take q position now. In other
words. speculative interest in the
bond market is ut low ebb.
Values Very Steady.
That being the case. it would be
natural 10 expect some yielding of
prices, but nothing of the kind has
taken place. The market has held
surprisingly firm, and gives every
evidence of being in u thoroughly
sound condition. Whatever the I'M
favorable developments are, they are
ignored. For instance, no attention
Is paid to the gradual hardening Of
money rates, nor have the warnings
against transportation in real estate
made such impression outside the
trades directly affected.
Although there has been no change
In time money, the charge for daY-to-
day accommodations at the close of
this week, 5l2 per cent, was the high
al the month, and the weekly state
d., Il
shows the reserve ratio and total gold
holdings at the lowest of the year.
That the immediate trend for money
IS upward cannot he denied; the only
difference OF opinion is how long it
Will continue and how far il will go
The fact remains that the bond
r1drket is not nervous about money.
-tS to real estate. a check upon the
extension of credit to new construc-
ton would operate to make that much
more to be employed in securities.
France Needs United States Aid.
In foreign affairs, the French stu
alton has been the center of interest.
The franc tunbled to a new low for
the year early in the week and then
recovered spectaculaTly at the end.
French dollar bonds weakened slightly
and then rallied about as much. They
proved far more indifferent to the
SNrationS of the frame than might
have been expected. In fact, the sur
prising thing was not hat they should
give way in the face of all the pessim-
ism about France, but that they
held as we'll as they did. The eXpla-
nation doubtless is that the only saliva
ton for France is outside aid. which
must come from America, and there
would be no possibility of enlisting
that s,fl If +hara should no flaf aI,lt
on French external obligations, no
matter what happens to the internal
debt
Finance minister follows finance
minister, each with a new presCrip-
ton. but all agreed on one point, that
they must reach some agreement with
the United States on he war debt in
order that a new loan may be eX-
tended.
Comparison Of the French situation
with that IN Germany during the col
lapse of the mark is not apropos in one
particular. Germany had no external
debts. She canceled her internal obi
cations by the simple process of cur
renCy imitation. and when she was
ready tn stabilize her money on d
new basis she applied for and obtained
an International loan.
May Follow German Way.
Eventually France will have to take
the same step, but that will be i'm
possible il there should he outstand-
ing external obligations such as a
French dollar loan in default 1t is
this line of reasoning which makes
probable some arrangement about the
war debt and improbable in the eX-
IRENE any default on the dollar loans.
There has been a let-up in foreign
mo moi inc Ii.
viii come with the new year. Some of
The recent new issues have not vet
been permanently placed and the mar
ket is glad of a respite. The State De
partment still reserves the privilege OF
passing upon new extensions OF credit
to foreign governments or foreign en-
torprlSeS. It does not assume any re-
sponstbilitY to the banker or the in.
weston, when it finds no objection to a
loan. as Il matter of public policy. 1t
does hold the position that accommO-
ddtIon should not be extended to gov
crnmentS which have not refunded
their war debts, nor to enterprises
which have Il monopoly in products
America must import, and would use
he borrowed funds to maintain mo-
nopolistic prices.
Problem for Bankers.
What the investor has to keep in
ItiII IL lildt tIlt Slll'lIe tact 1n3t the
American Government has not OBJ
iccted to a certain foreign loan does
not of itself make that loan safe and
profitable.
The StIte Department for example.
has put no obstacle in the way of the
loan To the various German munich
palitieS There is nothing in these
loans that should bc considered an
faGonistic to tn" administration
policies ON tn" other hand. Secretary
Kellogg i'll a public address this week
called the attention of bankers to
ono technical difficulty about these
German loans and that is the posi-
bility that it may not De easy TO obtain
the exchange for payment of inter
est and principal. This, however, is Il
problem for the bankers to solve and
not one with which the State Depart
Inent deals. 1t is also one about which
individual investors should make up
their own minds.