Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-04
INVESTMENT BOND
MARKET IMPROVES
List Climbs About Half Way
Back to March Peak
During Week.
Special Dispatch to The star.


NEW YORK, May 3.-With the low
est Federal Reserve Bank rediscount
rate in six years in force and a conse-
quent lowering Of time money rate
90-day bills-dropped to below 324 per
cent for the first time in yeafs-the in
vestment market came out OF its gloom
during the latter half Of the week.
There were two or three almost
vigorous sessions with prices rising sub
stantially from the low levels to which
they had been driven by the COMPETE
ton OF a flood Of new offerings. AS q
matter Of fact, the list climbed about
half way back to the high levels eStab-
lished in March.
True, the total Of new offerings in
the week was larger than that OF the
compared with $165, 100000, but the
stimulus of the cheaper money rate
could no longer be ignored. And since
the market had declined to the point
where bonds could compete with the
call money market, there was great
deal of buying by banking houses, In
Surance companies, estates, and to
greater degree than has been the case
since March, by the public.
syndicates Dissolved.
The stock markets slump also helped
the rival of the bond market. Another
factor was the dissolution during the
week Of o number Of outstanding syndi-
Gates and the clearing up Of large
amount Of unsold railroad issues,
notably those put out in March and
early April. A few Of these syndicates
were broken up by force OF circum-
stances, In that the market dragged so
far below the offering level Of their no
tations that they could no longer az
ford to peg" the price. An instance
of this was the case Of the Erie Ran.
road, 5 per cent Of 1878 Of $50,000,0 900
were nut out in mid-April. The offer
ing price was 95Iz, but in the past few
days the companion issue Of outstand-
ing IS had dropped to "a and the
syndicate could no longer afford to keep
on holding up the market price OF
the new bonds. So It dissolved, the
event being signalled on the market by
o 1h-point drop In new bonds.
Through this period foreign dollar
bonds have been fairly steady, some OF
them kept so by grooming" incidental
to new or intended loans. This depart
ment received excellent help from the
lowering of the Bank Of Englands rate
to per cent and that Of the Bank
of France to az per cent. Both the
lowest rates in years.
Undoubtedly the cheaper money
policy thus announced by the large
European central banks Is partly by
way Of preparation for the first $780,
00O, 900 installment Of German repara-
lions bond and partly reflects the desire
to favor the investment and business
interests Of their respective countries.
New Flota4ions.
The future Of the New York invest
ment market, therefore, rests on the
amount Of new dotations. Even such
favorable circumstances as those e.sr-
rently obtaining can be Offset II the
flood of new offerings Is too large. The
German reparations bonds are not ex-
pected to involve much difficulty In dis
than the 500, O00, 900 that has been
tentatively set aside for this market.
But the success Of the issue, when
effected, Is sure to be the herald of
large number Of foreign loans, many of
which have been purpoSeiy postponed
to make way for the reparations
Offering.
The recent cleaning up Of odds and
ends In the bond market has reduced
the supply of tax exempt issues to a
point where 1t Is estimated to be less
lively small amount and 1t has placed
what is equivalent to scarcity value
on certain prime municipal and Gov
eminent bonds. However new offerings
approaching the $l00,0o0,000 mark are
scheduled to be brought out in the
municipal market in May, and these
should take care of the demand.
Meanwhile, municipal bonds have ad-
vanced with the rest until they are
back almost to their high point Of a
month ago, when the yield ranged from
$50 to 4.40 per cent.
foSnN