Evening star., 1926-09-26
BOND PRICES SAG
IN WEEKS TRADING
Improvement in Inquiry Noted
in Latter Part OF
the Period.
BY BYRON SELLER.

NEW YORK. September 24.-Bond
prices this week have continued to
sag. Just at the close there was some
Improvements. not so much in quota
ton as in inquiry.
Probably the day to day huctua'
tions are of little Importance as in
dicative of a trend. Early in Septem-
ber the average price of domestic
Issues made a new high since the
World War. and while this average is
a shade lower now the change is so
small AS 10 be negligible SO far as
the individual investor is concerned.
n Is the traders who are troubled by
the pause in the advance. which has
been going on with only minor inter
ruptions for so long a period. They
see little opportunity for profits and
90 the volume OF business falls off
and the market drifts along.
The future of investment securities
II bound mp with that Of the money
market In this respect the develop
n1ents Of the week were encouraging.
Call money renewed yesterday at D
per cent after holding AT 5i2 per cent
most of the week. The Federal Re
serve statement showed higher re-
serve ratios for both the system as
whole and for the New York bank.
More important i'm the eyes of specu-
lators was the action Of the New York
bank in making no change In its re
discount rate. which continues TO
stand at per cent. Time money
ruled steady around ) per cent for the
bulE of the business.
II is doubtful. however. whether
the feeling of relief prevalent yester-
day and today will continue. There
10 going to he talk about higher re-
discount rates for a long time to come.
and while it is true that the Federal
Reserve statement WAS more favor
able this week than last. the change
represents rather the completion Of
operations incident to the mdmonth
financing than to any fundamental
alteration in the demand for money.
Few experienced bankers believe there
Ia going to be any return to the low
money rates of last Summer for quite
q while.
Center on High Yields.
II. then. investment securities are
70 maintain practically A dead level
OF prices-and no one predicts any
substantial ecession-market inter
est will center around the higher
yielding domestic bonds. principally
railroads, foreign issues and new Of,
ferings.
Taking up these three groups in
order, the speculative railroad bonds
with one or two EXCEPTIONS have
heen well supported, Earnings state
ments for August now being pub
llshed are almost uniformly good
There is less concern about automo
bile competition. Passenger traffic ~,
day coaches still fails off. hut Full
man riders increase and freight is he
Ing moved in record totals. While RE
primary effect has been seen in rail
road stocks. railroad bonds have been
inf1uenced favorahl also. Nor is it
now 50 sure that future railroad
financing viii he done with stock tn
as great an extent AS anticipated
The Illinois Central sold a bond issue
recently when 1t could lust AS we'll az
Tar as the market is concerned. sold
stock
In the foreign list thara has been
good deal Of NC fit.tal,in~ after tho
rise OF last week In some - see prices
have Welded somewhat. hu' for the
most part the earlier gains have been
held. There is still room for great
Improvement in foreign bonds. not
only Of the high Welding type such
as French. Belgian and Italian. but in
the Scandinavian countries The lin.
tting factor is the prices at which
these various issues are redeemah BILE.
On that account il is advisable for
the buyer who looks to capital ap,ire-
citation more than to currency income
10 take the lower coupon bonds in
preference to those of higher rates
New Financing Light
New financing is not in especially
large volume. There is no pressure
upon the market of undistributed new
offerings. This is all the more re.
marka BILE because of the low yield
bases on which some of the new do.
nestic bonds have been sold 1t GER
tainly speaks well for the underlying
strength of the investment dema nd.
The most interesting individual Of
ferfng this week was that for the
Seinnens Electric group in Germany.
Incidentally it was one of the largest
pieces Of new foreign financing in a
long time. The unique feature was
the provision for paying hondholders
additional interest contingent upon
the amount by which the cash divided
on the stocks of the compa MES con-
cerned shall have exceeded fixed
percentage.
Other German loans marketed in
America have carried profit partici-
pating provisions in the shape of war
rants for the purchase of stock which
have proved very attractive. 1t looks
now as though the American investor.
was in the way of becoming not only
a, creditor but A partner in German
industry to a greater extent than ap
peared possible year or two ago.