Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-03
SPTURNS IN BOND
PRICES PREDICTED
Market Is Expected to Come
Back as Stock Values
Are Stabilized.
Special Dispatch to The star.

FpeClsF DlSphtCh 70 Inc SURF
NEW YORK, November 2.-The bond
market after three weeks of steady
progress, dropped this week to a new
low average for the year in the great
est wave of selling the investment mar
ket has seen since 1927. Two important
factors contributed to this-important
because while one was coupled with the
necessity of raising funds with which
to save marginal stock accounts from
being wiped out, the other was an earn
est of the faith of American investors
in their own prosperity.
Apart from these bonds carrying a
convertible privilege-for, of course,
their movements were at all times
linked with the stock market and could
be only considered as a part of the
liquidation that was taking place there
every section of the list moved down.
ward. This move was heralded by the
foreign dollar bonds on wednesday,
when gains made in South and Central
American, German, Italian and Japa-
nese issues during the first weeks OF Oc-
tobef were Cancelled and many of these
descriptions made new low prices for
the year.
=. Selling to Protect Accounts.
The evidence was plain that day that
not only were American investors SELL
ling them, but also foreigners, who,
after buying back their own commit
ments for some time, had to sell to
Drotect their speculative interests.
Plainly, too, large portion of the
selling came from savings banks to pro-
vide funds for the heavy Withdrawals
of deposits and from life insurance COM
panies needing funds to supply the
many loans requested on policies.
This money, of course, went into the
stock market as well.
In the afternoon of Wednesday the
lowering tendency spread all through
the bond list, and railroad, public utll-
ity and industrial descriptions all were
affected
Then it was that the holders of bonds
proved their faith in American busi-
ness. because the selling trend was un-
mistakably caused by the crashing of
bonds for the purpose of buying stocks
at the new low levels created by the
stock market collapse. Little of this
came from abroad, as the comparative
quiet in the foreign list on Thursday
showed.
The change In the character of the
Acnd market was further indicated
when New York City, which had, for
the first time in many months, proposed
to sell $50, 900 of long-term 412 per
cents, indefinitely postponed the offer
ing.
Recession Believed Temporary.
The recession 4 md prices, how
ever, is believed be merely tempo
rary, as the conditions which contrib
uted to the rise during the first weeks
of october still exist--lower money rates,
q scarcity of new issues and high yields.
Another condition, the poor opportuni-
ties in the stock market has been
swept away, but many investors who
were badly hurt in the crash of the
stocks will keep hands on the specu-
lative markets for some time to come.
So traders and others freely predict
healthy upturn in bonds when the
temporary stock market depression has
been corrected. The reduction in the
rediscount rate of the Federal Reserve
Bank and the enormous reduction In
brokers loans VIII aid this in sill easier
money.
Bonds, too as with stocks on Tues
day, Wednesday and Thursday, are now
at bargain prices. The average yield of
a group OF Second-claSS bonds which
had dropped from approximately $50
per cent In September to per cent q
week ago is now back at the higher
figures.