Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-17
INVESTMENT BOND
DEMAND CONTINUES
Short-Term Issues Exempt
From Taxation Command
High Prices.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, August 16.-When the
investment market runs along-as 1t
has done for hte past week-at the
same general level, under small volume
of trading in listed bonds with high
grade issues at their best prices in
years and with hardly any day-to-day
fluctuation of market factors such as
time money rates and foreign ex-
changes, an analysis of the situation
becomes recital of oft reiterated facts.
Nevertheless the present market pre-
SentS certain features OF interest. For
one thing the volume of new bond issues
has declined and during the past week
two major concerns effected large new
financing by means of stock distribution.
While this probably reflects the hesi-
fancy of even the strongest companies to
add to their funded debt and fixed
charges at time when business is in
depressed condition, it has also served
to reveal the enormous amount of money
that is in the market for short and
long term investment.
Short Term issues.
Last Falls stock decline was the start
ing signal for a steady increase of saving
that has piled up backlog of idle cash
larger than any in the previous history
of this country or any other country.
This has resulted in almost unprece-
dented high prices for the priced
short-term bond which is exempt from
State and Federal taxes. This week the
City of Boston sold 100000 of bonds
at cost of 2.10 per cent plus So
premium, record for this market. AT
the same time the Treasury disposed of
$120, 900, 900 of three-month bills at a
cost of 90 per cent or an annual dis
count basis, just slightly more costly to
the Government than its previous bill
Offering.
These prices paid by investors for
Short-term employment for their money
are a direct result of the falling off in
new bond flotationS. During the past
week the total was only $50, 767 ,O0O
against $70940, 900 the previous week
and $34, 1922 900 in the same 1929 week.
In other words there were not so many
bonds offered all week as there were
being put out every day IL. April and
May, when new offerings caused glut.
In such circumstances savings banks
with funds unemployed must turn to
what they can get in the way of bonds
legal for their portfolios The large
amount sought both by them and by
insurance companies have cleaned UP
the legal market and established scar
| city values for long list of municipals,
railroad equipment notes, prime rail-
road mortgages, high-grade public util-
ity mortgages and collateral trust bonds.
Corporation Buying.
In this market, which is chiefly con-
| Quoted over the counter, there has been
keen competition and constantly higher
| prices for weeks, with attendant activ-
| ity. And in the high-grade section of
| listed bonds there has been q similar
| condition.
At the same time, there is much less
| demand for bonds yielding above per
| cent, which are not legal for savings
| banks or insurance companies, which
many individual investors will not have
| in their safety deposit vaults just now.
| and which have been largely bought by
| corporations with surplus funds. Even
| these have held their levels fairly well
and in the case of the high yielding for
| eign credits there has been foreign buy
| ing to keep them higher.
The result is that Standard Statistics
| index of 80 bonds based on the 1926
average adjusted to 100-has kept with
| in lilo point of 1907 all week.
| One of the significant phases of the
| current money market is that these is
much more money available for real
estate mortgages than was the case
| four or five months ago. 1t was con-
| sidered a radical move a few weeks ago
! when one of the larger concerns first
broke the 5l2 per cent rate that had pre-
vailed for months and placed mortgages
| at per cent. But now most large
firms are providing funds at the S per
| cent rate and the tendency is definitely
| toward cheaper carrying charges in
real properties.