Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-01-30
By ROGER W. BABSON.

EABSON PARK, Fla, January 80.
I0oney conditions at the moment are
somewhat easier This is evidenced
ny the call rate for money in New
York. On the other hand. this is not
Mighty significant as interest rates are
usually somewhat lower after the turn
of the year. However, as business
"orkS farther into the present period
OF expansion. gradual tirming up
In rates should be expected due to a
greater demand for money with which
to finance trade. Rates should aver
"ge higher during 1926 than during
1925
Study shows that money rates al
ways stiffen as we enter a period of
expansion, and we certainly are in
Such period at the present time.
This Is confirmed by the controllers
reports and the reports of the Federal
Reserve Banks. All of these show
that loans have been steadily increas-
Ing during the past year although,
unfortunately. spectators in Wall
St'~et have received the greatest bene-
nj from these loans.
The reason for this is that when
anks loan to Wall Street they can
X, heir money at any time. whereas
WIN vans TO business men and farm
ers cannot. The bankers cannot
lie bih II for following this policy
of prete. ing to loan on Wall Street.
hut il * unfortunate. No statistics
are aVailah 70 show what is being
loaned tC til ultimate consumer on
account of ins-aiment purcha ses: but
This figure is exceedingly large and is
probably increasing rapidly.
Stock Market Loans Far Reaching.
When banks want their money from
Wall Street brokers' these bankers are
compelled TO call upon their customers
for the needed funds. II these Gus
toners have sufficient cash in the
hanks to pay up the brokers without
'ellinS the stocks upon which they are
borrowing. this is very fine: but usual
" the man who buys stocks on margin
cannot Pay for them in full and is
obliged to sell when the brokers want
more margin. This selling causes a
decline in stock prices. When stock
prices fall. buyers become panic
stricken and prices go even lower
Hence. readers should keep in mind
the definite relation between the
money market and the stock market.
Another significant straw. which
shows the way the wind is blowing. is
the large amount of stock offerings
we now see in the daily papers. These
stocks, which are being offered for
sale may be perfectly good: but such
offerings usually indicate that either
the owners are selling out: or fearful
Of being bothered by the banks. these
corporations are changing their bank
loans into stock issues. Doubtless
this is wise course for the corpora
tons TO pursue. but investors should
keep this in mind when purchasing
stocks at this time. | believe in pub
lie offerings; but | like to see them
scattered through the year rattle;
than punched together at one time.
Good Corporation Bonds Scarce.
Notwithstanding the I2"-e amount
OF stock issues offered. there has been
A. relatively small number of good
corporation bonds recently offered
Moreover, in the case OF many uffer.
inGS one notices 1T the top of the
advertisement: These bonds have all
been sold and this advertisement is
inserted only as a matter of record"
This scarcity of good corporal ton
bonds is due both TO the large demand
from banks for good bonds wnen COM
mercial paper rates are low. a. they
have been for the pest year: and also