Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-20
BROKER LOAN RISE
AROUSES INTEREST
Market Held More SpecuIa-
tive Than of Investment
Tone as Figures Climb.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, April l9.-With all OF
the stock exchanges of the country
closed today, those who cannot separate
their thoughts from Wall Street affairs
even during holiday centered them on
the Federal Reserve statement pub
lished after the closing of the market
on Thursday, showing another large in
crease in brokers' loans, and theorized
over the possible effect of this on
speculative sentiment when trading Is
resumed on Monday morning.
With the latest expansion Of $780,
100000 in loans, which represented the
larger accommodations granted by New
York and out-of-town banks, as well
as substantial increase for the &C
count of Others" the total gain in such
loans from the low point of January %
amounts to $783 100000 This means
that about one-fifth of the total reduc-
ton from the high level of october 2
has been recovered.
Yields Become Lower.
Between the high point of loans last
Autumn and the date when def1ation
was apparently completed there was a
drop of 3,463, 900, 900, or 81 per cent.
It is a striking fact that the percentage
OF decrease in loans almost exactly
conceded with the percentage of aver
groups of stocks which establish the
trend of the market,
During the period when the public
was buying securities for cash on a
large scale loans steadily decreased.
That era Is now believed to have passed,
for stocks have advanced into a price
area where the investor is not attracted
to them as he was previously by the
relatively low market valuations and
the return available on stocks pur-
chased.
Many Issues StiH UnsOld.
Consequently, the interest has been
more of a speculative than of an in
vestYnent character, with borrowing to
carry out stock market commitments and
with 1t higher bank loans. Another factor
Is that of the enlargement of the offer
ings of new securities. At first these
were we'll placed and did not cause any
great increase in bank borrowings
demand for them, with many of the
issues that came out toward the end
Of March still in the hands of the
underwriters, who are undoubtedly car
rying them on bank loans and thereby
increasing the total of so-called brokers'
loans.
In contrast with the expansion in
these loans Is the continued low figure
of bills discounted at the Federal Re
serve. Such bills decreased again this
week and are close to the low figure
of the year. Compared with the high
points reached by bills discounted on
July 10, 1929 there has been a reduc-
ton Of $940,000,000, or IS per cent.
With one exception, that of 1925, such
hills are at the lowest since 1918.
Reserve Holdings Grow.
The Federal Reserve this week shows
holdings of Government securities of
$535,3s3,000. A year ago its portfolio
of Government bonds, Treasury notes
and certificates was $161 ,429, 900. About
IS per cent of the Governments held
are Of q short-term character.
The present reserve ratio of the IL
Federal Reserve banks Is 80.4, as against
1873 the same peril last year. That of
the Federal Reserve 6ank of New York,
however, Is 1853, compared with S0.4 a
year ago.
(Copyright, Ie30)