Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-04-16
RESISTANCE TO ADVANCE GROWS
AS STOCK PRICES CONTINUE RISE
Speculative Shares In Greatest Danger
Plethora of Cheap Money Promises
Steadiness In Investment Securities.

| For this purpose 10 railroad bonds
/ have been selected. None of them
has been affected In the 25.year period
| by reorga nizations or any permanent
| ly unfavorable conditions of earnings.
These bonds In 1901 and 1902 sold at
an average about Is points above
| this weeks In this group were
Atchison general A. which were sell
ing at 105A, with the common stock
below so and paying a small dividend.
Then there were the Baltimore q
Ohio first As at los, and Baltimore &
Ohio common without dividends;
Southern Pacific-Central Pacific col
lateral As at 104 and no dividend on
Southern Pacific; also Union Pacific
As at 107A, with Union Pacific com
mon having just begun dividends at
per cent. compared with 10 per cent
at present.
In 1901 United States Government
4s of 1925 were slightly under 140,
There were circulation privileges to
banks holding them, which added to
their market value. The main factor
was that of easy money. The United
States Treasury IS of 1854, which have
about the same period to run as did
the United States As in 1901, are
quoted at 1Osik.
Influence of Cheap Money.
In the Spring of 1901 call money
ruled around 2 per cent and in the
Summer and early Autumn months 1t
was as low as ] and IN per cent.
Six months loans averaged about
312 per cent as against Al at present.
The bond market remained strong I'M
til the latter part of 1902, when money
rates began to harden and entered
upon a period OF prolonged disturbance
and frequent deficiency In local bank
ing reserves.
1t lis doubtful If we shall see the ex-
tremely low money rates Of a quarter
Of a century ago repeated. That they
win fall well below their present level,
however, is the best opinion available
in banking and investment circles, 1t
is obvious, however, that the purchas-
ing power of the individual American
bond buyer ig much greater today than
1t was in 1901 and that the absolute
values OF American corporation securi-
ties are very much in excess OF that
year. In addition the basis of our
credit is stock Of gold equal to half
of the visible supply of the world.
1t Is therefore not unlikely that we
shall see Government and municipal
tax exempt bonds selling between
az and 3A per cent basis: legal and
OIHcA Al4okkEaSGS
below per cent basis: public utility
legal bonds at per cent or under and
the entire group Of 900 or more
foreign government and corporation
issues well up to their call prices and
In fact considerably limited as to
future appreciation by the inhibitions
Of redemption which shrewd finance
ministers in Europe and South Amer
lea nominated in the bond.
Business Conditions Unsettled.
The business situation during the
past week has been somewhat color
less Probably the main changes have
been adverse. They suggest hesita-
ton rather than permanent setback.
The country is between seasons. In
q fortnight the future OF trade for the
remainder Of the Spring and Summer
months will be clearer.
Certainly the developments in Eu-
rope have been most encouraging
France and Italy, two countries which
recovered most slowly from the war.
are now correcting their currency
problems very rapidly. The financial
Improvement in Italy in the past IL
months and the present eagerness OF
American bankers to lend to Italy and
her corporations is one of the most
striking incidents of financial history
since the war.