Evening star., 1926-10-24
INVESTMENT BONDS
UNDERTONE IS FIRM
Numerous Small Advances
Are Recorded in Week on /
New York Exchange.
BY BYRON SELLER.


NEW YORK, October 23-Undis
turbed by the rapid fluctuations in
stocks and unaffected by the pessi
mistic sentiment as to speculative sc
curities, investment bonds maintained
firm tone throughout the week
There were numerous small advances
no one of them sufficient to attract no
tice perhaps, but taken AS whole
indicative Of growing confidence in
the immediate future of fixed interest
rate-hearing obligations.
il has been a long time since sc
much favor was shown toward sea
soned bonds as compared with new Of.
ferings. Some OF the old-line, first
mortgage railroad issues. selling on a
less than ) per cent basis, as we'll as
utility descriptions Of Tx same rank.
were more actively dealt in than at
any time hitherto this month. Many
dealers were skeptical as to the per
manence Of this condition, pointing TO
the large volume Of new financing
scheduled for the near future. New
offerings this week totaled over $lO9,-
900 600, compared with S20,81S,0 900 last
week and $52,247 900 in the CORE
spending week a year ago. The total
last week was ahnormally small, but
this weeks amount. coupled win
what is expected before November !.
will make heavy dema nds upon avail
able investment capital. How the
market will meet this test remains TO
be seen. bit ur to date there was no
sign Of concern in quotations.
No Anxiety About Money.
In any case there is no anxiety
about money. Not only have rates on
dsv.to-dav funds for stock market use
weakened. but the weekly statement
Of the Federal Reserve Banks showed
q stronger position The reserve ra-
ito for the system as whole rose
point from 1871 per cent to 74.l per
cent during the week, and that for
the New York bank advanced from
7S.9 to S5.4 per cent. where it was
2l5 points above the figure OF the
corresponding week in 1929.
The drastic decline in the stock mar
ke, with the accompanying drop in
brokers borrowings, has set Tree
funds in that quarter more thah SUI
ficient to compensate Tor the IN
creas sed requirements on commenciat
.ccount In fact, the season OF
heaviest demand by business interests
IS passinC with remarkably little lnhu-
PncG
conoparatively easy money VIII RUE
for the balance of the year. lncl
dentally. it is interesting TO note thal
for the first nine months of 1875 lhe
excess of gold imports over exporlS
uas about $71 100000. Europe may
need. and need badly, share oi our
excessive gold supply. but the Tue - >.
NOT turning that way, nor uoes II
seem likely to GO so
Railroads Are Stronger.
Meanwhile the railroads
.,rengthening their positions nnah-
cially, most of them retaining Id.
cart of their gains in gross income
70 add to net and So increasing the
eo,,itv hack of their capital obliga-
tions This has been a more lmpof-
,ant factor in stocks than in bonds.
but. Of course. growing prosperity I'M
nroves the standing Of the bonds Also.
case In point is that of the 81.
I.ouis.San Francisco. The Junior hond
OF this road is the income 6s OF l"oo.
an which interest is payable only II
earned Up to very recenttH une
bonds have been dealt in nat on
the New York Stock Excha nge-that
is to say. the purchaser has not Nd"
to nav the interest accrued up to the
rule with bonds on which payments
are contingent. hut it was set ASIDE
where there was no reasonable doubt
ahout their continuity. Now the
earnings Of the St. LouisSan Fran
cisco have displayed such STABILITY
that the income bonds have been put
upon land Interest" basis just as are
other bonds upon which payments are
a fixed charge.
Reports BEING Watched.
The September railroad reports just
coming out are being carefully
watched to see whether the improve
ment which was almost universal in
August is kept up. There is A large
SPECULATIVE as we'll as investment in
terest in this subject.
Progress in another quarter has
gone on steadily without attracting
so much attention. The most casual
examination of current public utility
statements will show consistent inn
provement in both gross and net in
come surpa ssing for the industry AS
n whole the results achieved by the
railroads, remarkable as the latter
are.
Almost without exception every
electric light and power income state
mont Is an improvement upon that
of the same company year ago, and
this IS true of operating and holding
companies alike. Undoubtedly the
capital structure of some of these
utility holding compa MES is open to
criticism. hut. however that may be.
40 one can deny that the steady addi-
tions 10 surplus are putting these
compa nies In position where they
can successfully Withstand a period
10 ar ~