Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-21
ADVANCE NOTED
IN BOND MARKET
Easy Money Remains Chief
Support of Stocks-InVeSt-
ment Securities Strong.
BY GEORGE T. HUGHES.
al Dispatch TO The Star.

| Special Dispatch TO The Star.
NEW YORK, August 20.--Whatever
uncertainty obtains with regard to
the financial future concerns specula-
tive and not investment securities.
The bond market has been distinctly
strong all the week and the Dow
Jones averages are at the highest of
all time. The reaction of June has
been made up and the general advance
resumed.
The pressure of capital seeking en-
ployment is just as strong as ever.
Although this Is the season when
money normally hardens. nothing of
the kind has happened this year. Time
money and commercial paper are at
their extreme lows and call money,
that is to say. funds used in carrying
stocks on margin, Is at the lowest
since Midsummer in 1926.
This is the background against
which any forecast of the stock market
| must be set. Easy money remains it's
chief support and is likely to do so,
as far as any one can see, for a long
time to come.
Money Not Only Factor.
Money, however. Is only one factor
in the stock market. The other is
the condition of general business and
about that it is not possible to speak
so confidently. The usual Summer
lull has been prolonged this year,
notably in such important lines as
steel, while there are some indications
of a let-up in car loadings. To a GER
tain extent stocks have this week
been balancing easy money against
a none too certain trade prospect.
The verdict has been favorable. 1t
was only little over a week ago that
stocks had the most drastic reaction
Of the year. The break that had been
so long predicted came with violence.
| AS always happens, such a severe de-
cline was followed by a brisk rally.
Extreme weakness in a market which
had been strong so long would have
invited support under any conditions
and that Is what occurred this year
The sequel. however. has been diff
ferent from what generally takes
| place. AS a rule this support stock,
| bought when the market was at the
extreme low, is for sale again after
the equilibrium has been restored and
SO brings about what is called the
no secondary reaction this time.
Stocks sold off at the close of this
week but not to the extent that would
have been expected.
Buoyancy In Midweek.
And In midweek there was a buoy.
ancy about the list that COMPOUNDED
the professional prophes. OF course,
1t is possible that the secondary re-
action has simply been postponed.
There are 80 many more spectators
for the decline than there used to be
that 1t is unsafe to rely upon prece.
dent. However that may be. the mar
ket has plainly indicated confidence in
the maintenance of reasonable pros
| perity for the leaders in nearly all
motor car, steel and retail merchan--
dising lines especially. Perhaps it is
safe to say that the market Is more
confident than business executives
themselves.
OF vital importance is the COM
modify price situation. The long de.
cline. running since early In 1925, has
made operations difficult for many
producers. 1t has helped the railroads
and the utilities, but it has been hard
on those who have raw materials to
sell. The exact effect as to any particu.
lar industry is matter for separate
examination, but any change in the
trend would be reflected in the general
security market. AS far as this
weeks results go, the compilation by
Dun's Review shows 81 declines out
Of total of SO changes. So that here,
too, there is nothing as yet that would
change the condition which has oper-
ated to bring stocks to their present
position.
Drop in New Financing.
Another favorable development has
been the falling off in new financing.
This is partly seasonal, but not entire.
ly SO. New bond issues for the week
have totaled $43 SAC, 900, against SAT-.
81 900 in the preceding week and sat-.
900 in the same week of 1926.
This, too, comes at time when con-
fidence has been restored by the re.
covery in the market for those new is.
sues which clogged it last June and
when the demand for desirable bonds
exceeds the supply. Government bonds
have done better and the way is clear
for next months Treasury financing.
Also for the first time in a long period
the very high-grade savings bank rail-
road mortgages have been in demand.
The reason that this has not made
more difference in the quoted price Is
simply because large blocks were not
to be had
Looking abroad, testimony as to the
Improvement in French finances comes
in the shape of a report that the
French SIS will be refunded by a loan
bearing lower interest rate. In the
present condition of the market there
is no doubt that this could be done,
and it is not believed that the Wash
ington authorities would object. A re-
funding operation would be on a diff
ferent basis from a new loan.