Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-01
DECLINES IN BOND
VALUES CONTINUE
Average Prices Drop Steadily
During Week-Month's
Dealings Small.
Special Dispatch to The Star.

NEW YORK, August 31.-Each day
for the past week average price of
the domestic bond market has dropped
a little lower than in the previous SEES
sion. This average has been affected
mainly by the decline in some few
inactive issues, for the prominent rail-
road and public utility mortgages have
not moved a point from the level OF
month ago and seem to be pretty
! we'll sold out.
The foreign bond average still holds
slightly above the previous low reached
about the middle of June. The fact
that it has not defined into new low
ground is due to the composition of
this list which is made up of high-grade
obligations of the stronger foreign bor-
rowerS AS a matter OF record there
have been more severe declines in the
newer European and South and Central
American government and municipal
obligations this Summer than at any
time since dollar loans became popular
in the United States.
August Lean Month.
August has been a lean month for
houses that have tried to conflne them
selves to old investment standards.
Some of them have had good trade
in covertiableS and this has helped
them to carry their overhead expenses.
The hopelessness of the bond situation
has led more than one dealer to revise
his business policy and to throw all of
his resources into creating a market
among his clients for common stock.
In the midst of the furore over the
investment trusts and their participa-
ton in the market for securities, little
is heard about their buying of bonds.
Such buying is confined entirely to con-
vertibleS.
There probably has not been good
sized block of straight mortgage bonds
sold to an investment trust all Summer.
On the other hand, some of them have
been getting out of their bond holdings
IN order to use the proceeds of bond
sales for additional purchases Of public
utility or railroad stocks. Unfortunately
there are some trusts that bought free
ly of second and third grade foreign
dollar bonds in 1927 and in the early
part Of 1928, when they were tempted
by the high income return on these
securities, on which they have today a
very substantial paper loss.
This weeks offerings of new securities
have been limited to few stock issues
and to some small offerings of municipal
bonds. Most of the new financing in
sight is in the form of stocks or in
obligations convertible into stocks. The
prospect of a number of large industrial
and public utility "split-ups" in the
near future, involving the use of ad-
ditional capital by shareholders to take
up their rights" is probably factor
in limiting the amount Of new offer
ings.
Money Rates.
The outlook for money rates during
the Autumn is unfavorable to bond
prices. This is indicated in the steady
liquidation by the banks of their in
vestments, which are off approximately
SIPS. 100000 since the end of May, 1928.
Institutions such as insurance COM
panies have been buying real estate
mortgages and preferred stocks to some
extent because of the larger income that
both give as compared with bonds Real
estate securities whic hhave been issued
on quite generous scale during the
past two years by Wall Street houses
are very largely in frozen" state, with
markets for them about as difficult to
negotiate as in the poorer foreign gov
eminent credits.
Some effects on the investment sit
uation temporarily may be produced
one way or the other by the terms of
the September Is offering of the Gov
eminent in connection with maturing
Az and AZ per cent certificates of
Indebtedness m Ge0fenoher 15