Evening star., 1925-08-30
JUNIOR RAIL BONDS
IMPROVE STANDING
Prices Expected to Remain
Fairly Steady in Face of
Any Money Drain.
BY GEORGE t. HUGHES.


NEW YORK, August 29.-Taking
the market as a whole, investment
securities have maintained during the
week just closed the Improvement of
the week before. Ira ding has been
very quiet, but there has been no
pressure to sell and a fairly good
inquiry from financial institutions.
The backbone of the demand IS from
the insurance compa MES and the saw
ings banks. who are careful buyers
and never bid up prices on themselves.
Still IT may he said that no concern
has been shown over the future OF
money rates such as was in evidence
earlier in the Summer. The feeling
is that bond prices will remain rea-
sonably steady even if there is
larger drain upon the money supply
for commercial purposes.
Debt Settlements Nearer.
The news that might be expected TO
influence the market has related most
" TO foreign affairs. Most important
was the tentative agreement between
France and Great Britain for the
funding of the war debt of the former
10 the latter. About this there We're
varying opinions. The first reaction
was better feeling toward French
securities manifested in the market
doubts disappeared and quotations fell
off slightly.
The fact that the generous treat;
ment which Great Britain offered to
France was contingent upon similar
concessions by the United States
caused some hesitation. Probably the
view of the majority was that the
problem of the international war debts
was at last in the way of being solved
Il l,,t .. ~ - ,Io fx,.
new foreign financing in this country.
New Foreign Loans Likely.
1t is the general understanding that
once satisfactory agreement has
been made with the United States on
this debt question new loans for the
accounts of the countries concerned
will be asked of. American investors.
The Washington authorities, who
have frowned on anything of this
kind prior to the debt negotiations,
will. ii is expected. be favorable. and
certainly the bankers are ready 10 eX-
tend the desired accommodation.
Moreover. a better market for foreign
bonds as a class will pretty surely
follow.
Now it cannot be denied that. with
the burden of payment on account Of
international government obligations
iSculIlfll, new Iuli'lS iittSl bS StAili t'i
and that the United States is the
only place to find them.
Credit Standing to Rise.
1t may also be granted that the
standing of our foreign debtors will
he raised when they have agreed to
discharge their obliSa tons incurred
during the war and Just afterward
All these considerations. however. will
not relieve the individual investor
from the risk involved Agreement TO
pay is not the same thing as paying
and both France and Italy. to say
| nothing OF Belgium. have a long way
to so before they establish themsely es
/ upon n firm foundation financially.
Interesting in this connection is the
intimation from abroad that Germany
must have additional accommodation
( if she is to meet the requirements of
the Dawes plan. Both German munici.
pslities and German industries are
handicapped by the current high
money rates. Up to the present re-
lief has been found mostly in short
term credits in London and New York.
| Attempts will he made to substitute
| for this kind of accommodation long
term loans and with the bar still up
against capital export from England.
! the only source left is America
| Turning to the home field the rail.
/ ways have beep making series of
! remarkably good earnings statements
| this week. Gratifying increases in
gross income have been accompa MED
| by still more pleasing additions TO
! net. There have been exceptions. but
! they have been due TO causes which
! do not affect the industry as a whole.
/ A good deal of this Improvement has
| been DISCOUNTED in both the stock and
! bond market. but not all. Particularly
! is this true of the junior bonds of
/ roads which a few years ago were on
/ the verge of financial difficulties
There has been a striking recovery
! in New England. where high terminal
| costs and motor truck competition are
| so great handicap. The strides that
! the Southern roads have been making
| are matters of common KNOWLEDGE In
| the Northwest the outlook is not so
| clear, but 1t is certainly no worse.
j. c. c. Decision Awaited.
The situation depends upon the re-
suit of the application for high rates
| and upon what is done about the sug-
| gestion of the st. Paul receivers for
| a pooling of the increa sed earnings
| received from these higher rates. The
! other railroads are against the St.
! Paul plan. What the Interstate Com
merce Commission will do cannot be
predicted. but intense interest is taken
in the hearing scheduled for the
/ Sth OF next month