Evening star., 1926-11-14
BONDS co HIGHER
IN WEEKS TRADING
Three Treasury Issues Sell
at Highest Prices In
Their History.
BY GEORGE T. HUGHES.


NEW YORK. November 13.-Three
United States Treasury bonds sold
Thursday on the New York Stock Elk.
change at the highest prices in their
history. This. together with active
buying Of Liberty bonds at advancing
quotations, but still below the record;
strength in high-grade corporate
bonds, both railroad and utilities, al.
though with activity not so pro-
nounced as in the Government group,
;lnu a resumption of the advance in
foreign issues, under the leadership Of
Japanese obligations, were outstand-
Ing developments Of the week In. tho
investment market.
Evidence of increasing ease in
money was the influence back Of all
these movements. Call and time loans
were fractionally lower, but the most
significant change was the decline In
the rate for bankers acceptances.
More than anything else this reflected
falling off i'm demand money for COM
1nercial purposes compared with the
supply. The weekly statements Of the
Federal Reserve Banks told the same
story. There was q sharp decline In
the holdings Of discounted bills and a
rise in the reserve ratio for the sys-
1ein as whole from 1878 per cent the
week before to "a per cent, and for
the New York bank from SOL per cent
TO S4.5 per cent. Each Of these ratios
Is higher than at the corresponding
period a year ago.
Sinking Fund an Aid.
The advance in the United States
Government list has been helped
along by the slowly decreasing supply
brought about by the operations OF
tbs Treasury sinking funds. Predio-
lions are made that the time. Is fast
approaching when new Government
financing can be done on 3h per
rent basis. AS matter of fact, the
Treasury 3%s, the Government bond
of lowest coupon rate except the tax
exempt 31l5s, and Of longest term, is
now selling to yield only little bet
ter than 3ia per cent. The buying
shat caused the rise this week was, of
course, done by financial institutions.
Individual investors demand q higher
return than Government obligations
give, but the movement was all the
more impressive on this account, be-
cause 1t originated with those banking
sources that are best informed on
money conditions.
What could happen to reverse this
downward trend In money rates,
which is the fundamental cause of the
prevailing strength In the bond mar
ket? It could hardly be business OK.
pansion on any large scale. There is
no indication Of anything Of the sort
now. Indeed, the trend is in the op.
posite direction. Reversal might come
about by a flood of new financing too
great for the market to absorb, but
there is no sign of this either. New
hond offerings this week totaled $79..
mn nd ia1r
without disturbing the price level of
seasoned securities. Still, there is q
limit to even this markets capacity
along this line, and 1t is possible that
II might be reached suddenly. Then
there is always a chance that spec |
ulative movement might get under |
way In stocks with greatly increased |
money requirements. Probably the |
Federal Reserve authorities could put |
a curb on any excess here if it should |
develop.
Japanese Bonds Feature.
In the foreign group it was Japa- |
fese bonds that made the most con- |
spicuouS gains. The explanation tha. !
found acceptance was that the Japa. |
nese were buying dollar bonds now |
that the yen is back to approximate |
parity. because not only Is the yield |
better than can be procured at home, |
but the dollar bonds are exempt from |
taxation. Probably this was true in |
part. 1t has happened frequently |
that buying orders from abroad have |
put up the price in this market Of the |
bonds of the country from which the |
order comes.
1t Is not necessary, however to look |
Tar for reason for strength in Japa.
nese. or in any other foreign bond. |
The same influences that were back
OF the rise in domestic securities were
largely responsible for the improve.
nlent in foreign obligations. Investors
willing to take a little more risk If |
the compensation is large enough in !
their opinion are always to be found.
returning to the domestic situa-
uoh' striking incident of the week |
was the premature announcement |
that Standard Oil of New Jersey
would float a $200, 900 900 bond issue. |
the proceeds to be used to retire the
preferred stock. Immediately the re-
port got abroad. subscriptions poured
in from all over the country. showing |
how easy 1t is to market desirabl new
offerings these days.
Exactly what arrangement Stand. |
ard Oil Of New Jersey will make for
letirinS its preferred, II it does re.
IRE IL. are not known, but the pro.
posal to substitute bonds with a fixed |
charge for preferred stock, which.
theoretically. at least, is a contingent
charge on earnings, testifies not alone !
TO abundance of investment capital
but to confidence in the industrial out.
look on the part of the directors of |
the corporation undertaking such a |
refunding operation.