Evening star., 1926-09-19
INTEREST CENTERS
ONFORE|CN BONDS
Domestic List Maintains
Practically Dead Level
of Prices.
BY BYRON SELLER.
Special Dispatch to The Star.

NEW YORK. September 1s.-1n-
vestment activity this week has oeen
confined for the most part to foreign
obligations. Domestic fixed interest
rate bearing securities have maintain
Cd practically a dead level of prices.
There has been a slight shading OF
quotations in response to indications
Of higher money, but 1t was very
slight not enough to establish trend.
There seems to be no doubt that for
the present demand for funds for bust
ness purposes is going to increase and
that money rates will work moderately
higher.
The fact. then, that bonds have been
80 stable has a significance as yet not
generally recognized. The inference
is that no disturbance of current
values in high-grade securities is to
be looked for and that investors are
convinced that once the seasonal de-
mand for funds is past money will
become easier again and bonds re-
sumo the slow upward movement
which has been in effect since the
World War.
Short. Time Fluctuations.
OF course this is long look ahead.
Traders are not interested in what
will happen next January or next
year. They are concerned only with
the short-time fluctuations. Such bond
buyers are holding off and this makes
for the current dullness in transac-
tions. On the other hand, genuine
investors, those whose chief aim Is
to keep their funds employed. are
not willing to sacrifice their holdings,
and so from the offering as we'll as
from the buying side business Is slow.
The probability is that the bondholder
n nf
prices is perfectly correct in not
troubling himself about the current
minor price changes.
All this refers to seasoned bonds.
The case with new issues is little
different. Here the market has begun
to discriminate rather sharply. There
is no longer the eager demand of the
late Spring and early Summer for
the lowest yielding of these new offer
tngs. Unless it is an exceptional in
stance, any new investment priced
to return the buyer less than per
cent Is not easy to sell.
Price Dropped a Point.
The price of one utility issue in
this class brought out on a lower
than per cent basis was actually
dropped a point by the bankers them
selves when they discovered the situ-
alton. Doubtless this is temporary
condition and eventually utilities will
be able to finance themselves on just
as favorable terms as the railroads
of equal strength. but for the present
investment sentiment has not been
educated quite up to that point.
While domestic bonds have been
forces, foreign dollar loans have been
active and strong and many of them
have been making new high prices
for the year and few the best prices
since they were put upon the market.
This has been the real feature of the
day-to-d day transactions.
Two causes have been operating to
bring this about. One of them was
the high yields all these foreign
bonds offer. returns which are no
longer possible in the domestic list
The other is the growing belief that
affairs abroad are on the mend. This
belief may not be we'll founded but
that is not the point. The investor
Is more confident about the outlook
even for those countries the depre-
ciated currencies of which have been
the great financial problem of Europe.
French bonds, for instance. have
sold this week higher than at any
been no corresponding Improvement
in French finances nor in the French
franc. 1t is more change in the
state of mind of the investors.
Japanese Bonds High.
anese bonds. For months these have
dragged along the market with
minimum of price range. This
week. however. they. too, were
bid up to new high price. In
the case of Japan the factor that held
the market for the bonds back was
doubt not about financial stability,
but about political relations. That,
too. has been put in the background.
giving another illustration of a
changed mental attitude on the part
Of the investor.
Coming to German bonds. the best
illustration of the favor with which
these obligations are now received is
in the reception accorded to the new
state of Prussia issue offered this
week. The price at which this latest
German obligation was marketed was
on a basis to return the buyer less
than on any other new German oHer-
ing since the war. OF course, the
German government IS, the interna-
tional loan designed 10 put the Dawes
plan into operation, sell now to re-
turn the investor less than he is al
lowed on these new Prussian bonds
but the German IS have advanced
from 90 to los, which is the prevail
ing quotation, a gain of 1s points.
They probably would sell higher were
II not for the fact that the call price
is also 105.
Ali this does not alter the fact that
II is easier to distribute German
bond in the American market today
than at any time since financing Tor
German governmental divisions and
Industries was resumed here after the