Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-03-20
FINANCING BY j. S.
FEATURE IN BONDS
Easy Money Contributes to
Spirit of Confidence in
investment Circles.
Special Dispatch to The Star.

NEW YORK. March l9.-Govern-
ment financing continued the govern
ing influence in the bond market this
were Easy money contributed to the
spirit of confidence which pervaded
investment circles. All three of the
Treasury bond issues registered new
high record prices, as they led the
Government list In a fresh rise on
a large turnover Corporation bonds
were in demand also.
The differential between prices of
corporation securities of the better
grades, which are most nearly COM
parable with Government bonds and
prices of the latter. has widened as
o. result of the sharp rise in Govern
ment securities the previous week.
The corporation bonds looked more
attractive in comparison, and were
bought, although the high levels and
low income basis on which they al
ready were selling naturally We're
obstacles to any extended rise. On
the advance many bonds of high
grade either equaled or excelled their
best prices since the war.
Liquidation Heavy.
The market in Liberty second ANS
was active and interesting. Liquida-
ton was exceedingly heavy, with the
result that the premium at which
the bonds had been selling was
shaded. The main source of selling
was holders who do not care To IN
vest in the new tive-year 312 per
cent notes offered in exchange for
the second 4A per cent bonds. The
holders of that class include savings
banks and trust funds. Savings
banks desire higher return than 312
per cent and also prefer longer
term bond. 1t is estimated that the
savings banks of New York State
alone own about $500, 900, 900 of Sec
ond Liberty 4l4 per cent bonds. They \
are selling their bonds and reinvest-
Ing the proceeds in municipal and to
some extent corporation bonds.
Liberty second 4As thrown on the
market We're we'll absorbed. The notes
into which they are convertible are
attractive to commercial banks and
10 corporations because no other
equally short term Government Secur-
tiles are available at a price to yield
3n per cent. The closest approXima-
ton Is found in the fourth Liberty
AZ s, which are callable at par in 1888
Figured as a maturity in six years
they are quoted on a 312 per cent
basis
Conversions Over Billion.
Conversions of second Liberty A IS,
according to latest estimates, have
been somewhat in excess of 81 ,000.-
600 900, leaving about 81 600 900 900
yet unexchanged The time limit for
exchanges has been extended to
March %, and may be advanced
further if the Treasury Department
regards Ii as advisable. However, Ii
cannot be extended beyond May Is.
The low income basis on which Gov
eminent, long-term bonds are selling
reflects partly the gradual extinguish-
ment of the public debt and partly the
belief that money rates will be easy
for long time TO come. If the Treas
ury should call and redeem for cash
$500, 900. 900 of second Liberty Az per
cent bonds next November, that |!
would mean that the available supply |
of Government securities had been |
permanently curtailed 10 that extent
Easy money is another considera-
ton of Importance. Call funds this |
past week loaned at 81 per cent on
the stock exchange. That was the |
lowest rate quoted on the board since |
last June. Time money also had an |
easier undertone. 1t Ia evident that |
the credit market is in a very com
Portable position. At the same time
II also may be true that the extreme
ly low rates the last few days did not
give a true picture of the money mar
ket. They were due to the large cash
disbursements by the Treasury on
March IS. which put lot of money
into the market. against which there
was no important offset at the mo-
ment.
Bank Rate Unchanged.
Another week has passed without
bringing the much talked Of cut in the
Federal Reserve Bank rate. Washing.
ton hints that no cut is coming. The
present policy seems TO be TO main.
IAN discount rates at an even per
cent in all II Federal reserve districts.
The current downward movement
in commodity prices tends TO lower in
teres.s rates. II is automatic that cost
OF capital follows rather closely the
fluctuations of commodity prices. In
view of that fact il is significant that
the index number of the Bureau of
Labor in Washington is still in a
downward trend Ii stood at 1864 at
the end of February, the lowest per.
centage of the year. and 9 points un-
der the number at the end Of Febru.
airy. 1926.
New financing the week just ended,
outside Of Government operations,
was in the smallest volume of the
year. Only about $50, 900 900 of new is.
sues were offered for public subscrip-
llon. Oll financing was larger than
any other class. 1t is expected that
the issues sold this past week. one Of
SIS, 900 900 Skelly Oil debentures. sold
on 5.68 per cent basis, and another
of S5.000.000 White Eagle OIL deben-
lures, offered on a Y per cent basis,
will prove fOrerunners of a substan-
tial amount Of new financing by oil
companies made necessary by the
large oVerproduction of petroleum.
CHICAGO STOCK EXCHANGE.