Evening star., 1925-04-26
NEW BOND RECORDS
MADE DURING WEEK
Power Issues Held to Be in
Good Position-High-G Grade
Rails Active.
BY GEORGE T. HUGHES.
! Disnatch tO The Star

SPcFioL- Dtspdttu W itif Ctdi
NEW YORK, April 25.-There has
been no mistaking the steady up
ward trend in bonds this week The
movement was most pronounced in
the very high grade issues, such as
are legal investments for savings
banks, but il was not confined to this
group. middle and second grade obli-
cations participating in the advance.
A part of the buying was doubtless
due to the efforts of dealers and pro =
fessional traders TO take advantage
of the trend, but ii was not all from
this source. Banking and institu-
tional demand was prominent, indi-
eating, apparently, confidence in the
long range outlook, for bonds of this
type are responsive far more to
fundamental conditions than specu-
lative securities.
New High Records.
Some of these high grade bonds
made new. high records this week,
not only for this year, but for 1924
a s well, and the average now stands
the high point. Early in the week
there was the same sort of buying
in United States Government obliga-
tions. also with new high records in
some instances
The gains here were not so sig
nificant as far as Liberties are con-
cerned, because this is faVorite
means for banks to employ tempo
rarlly surplus funds. A better lndi-
cation of investment sentiment was
the strength in the Treasury AIS and
the Treasury As. The former do not
mature until 1947 and the latter not
until 1914, making them more de-
strable for permanent holding than
the shorter term Liberties.
Main Point at Issue
The vital question about all this is
whether the advance this week is
going to be held over any long
period and about this. of course,
there are varying opinions, but a
good many of the best informed au-
thorities advance the theory that
bonds with minor fluctuations are
initiating long upward swing. For
this belief two reasons are advanced
first, the money situation, as has
repeatedly been emphasized, and, sec
ond. the downward trend in COM
modify prices.
AS to this second point the indica-
t1ons so far are meager, but there
is nothing improbable in the idea 1t
will be remembered that prices began
their long advance in 1895, culminat-
ing in 1920 and 1921, since which
time the trend has been in the op-
posite direction. The war was not re-
sponsible for originating this COM
modify. price advance. 1t simply ac-
centuated it. The advance began
long before the war.
Tax Situation Also Vital
One other influence may be men,
toned in connection with the strength
in bonds. and that is the prospect of
substantial tax reductions next year.
One of the reasons why investment
bonds do not sell at high figures of
two decades ago is the high surtaxes
which have forced investors of large
wealth into taX-eXempt securities,
mainly municipals.
If there is to be cut in these sur
taxes, it cannot but increase the
demand for bonds, The market may
be looking. ahead to some develop
ment of this kind. So far. however,
there has been no let-up in the in
quiry for tax-eXempt securities, of
which supply in recent weeks has
been hardly equal to demand.
The Bond Outlook. :
AS has been stated, it was the high
grade railroad issues which were most
in favor this week. The best of
these bonds show a. return of only
$50 to Ats per cent. This is not
especially attractive, and so shrewd
investors who are not bound by the
restrictions applying to savings banks
and to trust funds have been turn
ing to the utilities. High-grade first
mortgage electric light and power
bonds are obtainable on a 5 per cent
basis, and there is no reason why
they should not be exactly as sound
as railroad issues of the same grade.
In some respects the outlook for the
utilities is much better than for the
railroads.
zee, copyright, 1880