Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-01-03
BONDS CLOSE 1925
ON SOUND BASIS
Some New Issues Must Yet
Be OigeSted-High- Grade
Lines in Demand.
By GEORGE Il. HUGHES.

Special Dispatch 10 The Star.
NEW YORK, January 2.-The year
1925 in the investment market closed
with an unexpectedly sudden develop
ment of interest in bonds of grade
just below the best. Current quota
tions for all classes We're only n small
fraction below the high reached in De
Cember
The week was differentiated from
other year end periods in that there
was little or no antlClpatory buying
OF bonds by dealers in preparation Tor
the expected influx of January funds.
In fact, speculative interest in bonds
was at q very low ebb. The buying or
The last few days came from real IN
Vestors, mostly financial institutions
with funds they were forced to EN-
ploy. In other words the market was
in a thoroughly sound CONDITION.
The only question that might De
made was in the case OF certain new
issues, a good many OF them iorelsh'
which have yet To be digested.
Huge Interest Payments.
Few realize the enormous amounts
paid out in interest and dividends on
The first of the new wear \ compila-
ton made by one authority puts the
total this wear at over $500, 00U.OOO, an
increase of about $50 100000 over tle
amount disburSed in January year
ago. Not all OF this is relnNested IN
securities, but n great deal OF II IS
and the aggregate forms the pack-
bone of the support for the pohd mar
ket.
Apparently tightening of money
rates has been without effect, even
on prices for securities ordinarily re
sDonsiye to changes in prevailing IN
Yerest charges. The gradual tall IN
the reserve ratio of the tederal ne
serve Banks and the high rates asked
for day to day accommodation on inc
Stock Exchange were onset py the
relatively low quotation on time loans
which were obtainabIe up 10 SIX
months at . per cent, ana by the
keeping down of the discount rate OF
The New York bank 10 3l2 per cent.
Most authorities We're of the OPINION
that a period of easier money was
probable in the early weeks or 1870,
hut in any case il is the record OF pre-
Nious money cycles that the hlgh
prices for bonds were reached a con-
siderable period after money had turn
ed definitely upward.
Bonds Ignore Stock Moves.
Except for convertible issues and,
of course, speculation obllgatlons, the
bond market moved during the week
independently of stocks. There was
only an occasional reflection OF the
active bidding up Of the seasoned ran
way dividend paying stocks IN thelr
corresponding bonds. Even IN the
speculative railway descriptions more
discrimination was dlSpIdEeu III pohuS
than In stocks.
On the other hand, demand for con-
yertible issues is hard to satisfy.
Large profits have been made in this
kind of security during the past year,
both in rails and in utilities. Some
of them were comparative newcomers
in the market and others were intro
duced 10 the investing public many
years before the war. Simply as Illus
tration, the International Telephone
and Telegraph 5l2s may be taken IN
tie first group, and Chesapeake and
Ohio convertible 5s in the second.
Then there was always the example
~ the gains accruing to buyers OF
bonds which carried options to pur-
chase stocks, or even. in some IN
stances. ownership of the stocks
themselves. A new Offering which
carries any privilege of this descrip-
ton always is quickly oversubscribed.
Investment bankers have not been
slow to take advantage of this situa-
ton.
French Bonds In Lhmelight.
In the foreign list attention is still
concentrated on French bonds. AT
one time during the week there was
quite a setback in all the French
dollar bonds, but still not to the low
of the year, which was reached in
the early Spring. The way these
French bonds have held up against
all the discouraging developments in
French finance has been one of the
features OF the market of the year.
Taking the direct obligations OF the
French republic, the decline in the
quotation between January and De
cember 81, 1925. was only from about
l TO points, while during that time
The French franc dropped from about
J.42 to SO cents.
OF course, the bonds as an external
Dan are not directly affected by
fluctuations in exchange, but they
might reasonably nave been expected
20 show q larger sympathetic loss.
Doubtless they have been helped by
the sustained strength elsewhere in
the foreign group, in which there has
been a substantial gain in the aV-
praCe OF the, wear