Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-10-26

that desirable issues of all types were
being sought was, no doubt, an added
incentive to the investment banking
houses to enter more largely than be-
fore into the field of real estate finance.
CIassed as Merchant.
Now as to recent changes. Bigger
real estate deals, larger real estate is
sues, the advent of the investment
banker. So far so good, but how about
the change in types of securities Of
fered, and why the loss in popularity
of the real estate bond? The answer
is that the investment banker is pri-
marily merchant. He buys money
from the public and reSells it at a
profit. Like every merchant, he is
much concerned as to the quality and
type of his merchandise. He must Of
fer his trade something that is attrac-
tive; or, in other words, his securities
must meet the demands of his market.
And-this leads to the second great
cause of the changed conditions in the
present money market.
This cause was entirely accidental
to anything connected with the real
estate business. It seems to have been
pure coincidence, but one of great
moment to real estate financing. In
cidentally, it has worked a very con-
siderable hardship during the past year
or more to many projected operations,
but it appears certain that out of it
will come some developments of great
and lasting benefit. We refer to the
great "bull' stock movement and the
collapse of the investment bond mar
Almost overnight in July, a year
ago, bonds of all types, including real
estate bonds, became a drug on the
market. Banking houses suddenly re-
fused to consider bond issues of any
kind, and negotiations already under
way were, in many cases, placed quietly
on the shelf, where they are still col
lecting dust. What happened? Plenty.
Practically the entire bond investing
and pitched their tents on the stock
market lot. And they are still there.
UnIoads Shelves.
The investment banker, being a wise
merchant, and sensing that his GUS
toners no longer wished to buy the
wares that he was displaying, quickly
unloaded his shelves, stored his goods,
and replaced them with a new and
more up-to-date line. Common stocks,
preferred stocks, convertible bonds and
debentures, issues with stock warrants,
and other similar offerings were the
order of the day. When the realtor-
promoter approached his banker for
financing he was advised that it could
only be considered If it had a specula-
tive "kick" in it-said kick being some
device whereby the investor could be
offered not only adequate security for
his money, but some chance at profits
of the enterprise as well.
Here apparently was an obstacle OF
size, for the usual real estate bond
issues contained no thrills except 6 per
cent and safety. But as matters turned
out, this difficulty proved to be an OPP
portunity in disguise. Although trained
for years to think along the lines OF
straight mortgage financing, it did not
take the intelligent realtor long to real
iZe that participation by the public in
the profits of his operation meant that
he simply was trading a creditor for a
partner, with the possibility of building
cial resources, that would last long and
pay well-the public as well as the
realtor.
| In order to ascertain more definitely
! in just what manner the causes men
toned had actually affected the real
estate money market of the past year,
a study was made Of the leading real
estate issues offered to the public dur
ing that period. Fifty issues were Sc
lected, comprising practically all OF the
important offerings since July 1, 1928,
and constituting an excellent croSs-sec-
| ton OF the financing OF the past few
| months. Securities in amounts OF
81 100000 or more were chosen, because
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