Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-16
BOND ISSUES LESS
IN AGE OF STOCKS.
Funded Debt Obligations Are
Still in Demand Despite
Equity Craze.
BY I. A. FLEMING.

CEldl ana raur0aQ corporations OF the
Nation has been going on for the last
two years so gradually that It's exist
ence has but recently impressed itself
upon the street and the banking fra
ternity. Reference Is made to the prac-
tical elimination from the commercial
paper market Of our largest corpora
tons, the lessening number of COM
mercial paper brokers visiting bank
after bank presenting list of the
paper they had for sale, usually the
very best grade of credit security,
always considered next to Governments
and collateral.
Big corporations have found that the
market win take practically all the
common stock they are required to issue
to finance their immediate needs, aided
by their accumulation of surplus from
the important growth in business that
has developed in recent years. Paper
calls for repayment at named matur-
ity. plus interest. Common stock does
| not Of necessity require dividends. al
| though It's position In the market Is al
ways helped by their payment, nor is
there any date named for the maturity
of these shares.
Few Bond Issues Coming Out.
Bond issues, like commercial paper,
mature and at different rate of in
terest. They are also an evidence of
corporate debt. Therefore there Is q
disposition to substitute common shares
for bonds also by the larger corpora
lions.
Enlargement of stock market opera
lions, a demand from the general public
on a gigantic scale for stocks for more
than two years at advancing prices was
the chief factor in bringing about the
~ M .
alton.
Some Of the larger banks have con-
tributed to the situation by refusal to
buy paper, usually referred to as bills, y
preferring to cut out the brokers in
both bills and acceptances and act
directly.
Brokers complain further that the
larger banks fill orders of correspond
ents for acceptances that would other
wise be filled from their portfolios.
The Federal Reserve System, practi-
have reduced their holdings Of bills
and increased acceptances and Gov
eminent securities, thus Strengthening
their position.
Will Still Be Bills.
Bills will still be offered and pur-
chased by banks either direct or from
brokers. There are many close cor
uorations without market for their stock
issues and they will have to follow old
methods to raise needed cash.
Merchants paper will be presented
to their bankers for discount when
funds are needed, but it is also true that
the borrowings of merchants have been
greatly lessened by the policy followed
after the debacle Of 1919, 1920 and
1921, marked largely by the buyers
strike and enforced liquidation Of three
stocks, one on the shelves. being rapidly
disposed of at high prices, another ar
irving and the third ordered for future
delivery.
Are Rediscountable.
Bills and Government securitie;
(bonds, certificates and notes. form
the basis of rediscounts with Fedora
Reserve Banks. Collateral loans are
not acceptable with reserve institutions
but are generally welcomed by bank;
when readily marketable.
The broad market for the employ.
ment Of secondary reserves on call or
Wall Street may have had something tc
do with lessening of the demand fol
bills. There the rate Is usually much
higher, of late, than on bills, which
Tor years have been highly favored in
the matter of interest charged.
Foreign banks have invested over
| $500, 000, 900 in the United States In &C.
ceptances and aided in moving $780,
! 1000 In bills since the first Of the
, year and this has been great aic
| to brokers.
Good to Shareholders.
AS indicated week ago, the Capital
Traction Co., has declared the regular
~ per cent for the second quarter
/ Of the year, preferring to continue tc
| dip into the surplus rather than cause
dismay to many whose funds are In
vested in its shares
In all probability the question of a
reduction in rate was discussed and
the decision was made in the hope that
before the october payment arrives
there may be an adjustment in fares, to
| which the company claims 1t Is fully
entitled.
The personnel of the Utility Com
| mission Is an unknown quantity in SO
| far as its views on street car rates are
| concerned. There Is sure to be numer-
Gus objections, but owing to the fact
| that the courts have sustained the right
| Of corporations serving the public to a
fair return on physical valuation, the
chances seem to favor the utility.
What Corporation Owns Gas?
As suggested last week, the corpora
| ton known as New York Interests, "
represented by Mr.. Pierson, has decided
to accept the proposition advanced
about the close of last year and acquire
control Of the Washington Gas Co, one
of the Oldest utilities, one showing
| steady increase In sales and in strong
position to seek higher rates.
| 1t may be that all shares will be pur-
4L lat hxy In.
terests, although there is no indication
to warrant this theory.
The capital stock OF the Washington
Gas Co. Is $4,000, 900, but on the basis
| of $125 a share, the price paid for In
siders' stock, the actual value of all
shares total $1s,25o, 900.
Par value OF the shares Is now $40
and Congress has refused all consider
alton to pleas for the right to issue new
stock.
Includes Georgetown Gas Co.
During Howard Resides term as
president of the company Georgetown
Gas Co. was absorbed by the Washing
ton Gas Co. after considerable effort
on the part Of few of the latter COM
pany's ofiicials to block the transaction,
but through the aid of some leading
bankers Mr.. Reside won out in the
contest. The two companies have a
practical monopoly of the fuel gas bust
ness OF the city, which is constantly in
creasing, despite competition with the
Potomac Electric Co.
Bankers who ought to have an idea
In the matter admit ignorance as to the
real hacker of MIR. Pierson. There has
not been hint as to his principal, al
though one or two have wondered
whether the North American Co., now
debating the policy of the Washington
a n ntYia ffe