Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-07
INVESTMENT DROP
LOWEST SINCE 25
Sharp Decrease During Week
Laid to Reserve Banks
Heavy Buying.

NEW YORK, December 6.-Judged
by the averages, the investment market
during the past week dropped to the low
est level since 1925. This decline came
at a time when the member banks OF
the Federal Reserve System were al
legedly making heavy purchases OF
bonds.
Since February the account for the
Reserve System has increased close to
81 900, 000, 900. But this is not as 1t
seems at all, because in common with
all investing institutions at the present
time the Federal Reserve Banks have
confined their buying to short-term
high-grade securities such as United
States Government bills, the nearer
maturitieS of prime municipal obliga-
tons, early dated rail equipments and
highly selected group of corporate
short-term paper; and such issues are
not reflected in the averages at all.
Money Rates Remain Low.
Money rates remained at the bottom
and the supply of money available made
it apparent that they will remain low
well into 1881.
The index of 80 domestic bonds as
compiled by Standard Statistics repre-
sents a typical cross section of the in
vestment market, excluding municipals
and Governments. This figure wound
I'D the week at 90, the lowest point
reached since this index was first COM
piled, which means that the general
level of the market is lower than it has
been since 1925 or before. The chief
reason for this is the sharp slump in
industrial bonds, in which group there
have been many casualties. Ten indus
trial bonds ended the week at 1913 as
against 1911 last week and lower than
the minimum figure for 1926, 1927,
1928 and 1929.
Those much maligned bonds of the
railroads, which have suffered severely
all year from the steady stream Of poor
earnings reports, stand today at 1908,
1922 week ago. To equal the present
figure, one must go back to october,
1929, when heavy forced liquidation
drove all types Of bonds out of line with
the market. Public utilities put on a
much better performance this week.
They actually advanced a little, as
shown by the index Of 10 typical is
sues, the figure now being 99.2. against
o9.1 last week. Nevertheless they are
within lilo Of point of their low
level Of the year registered in May.
Selling Of Rail Bonds.
The weeks heavy selling of railroad
securities came on Thursday and FRI
day and was attributable to poor earn
ings reports together with the necessity
of selling bonds to raise cash either for
the purpose of buying stocks or of sup
porting margin accounts. In the in
dustrial list there were a few new de-
velopments, such as the default of Ken
lucky Fuel Gas first 612s of 1924
and of Consolidated Textile Corpora
ton first convertible IS of 1941. Public
utility bonds acted well, the companies
responsible for them showing a sta
bility of income that is one of the
bright features Of the current situa-
ton.
In the new capital market there was
Q total of $50, 44O, 900 of new bond Of
fertngs, compared with $46,874, 900 last
week and $3.50. 900 in the compare
bic, 1929, week. However, apart from
the municipalS and short-term high
grade stuff, the market showed lessened
ability to absorb these Rotations, and
dealers shelves, although they had
been virtually bare at the beginning of
the week, still had some of the new
offerings left as the week ended. Of
fertngS In prospect aggregate a large
sum, but unless there is some radical
change in the situation shortly they
may not be brought out before the turn
Of the year.
One of the offerings successfully
hoated was 100000 Of Federal in
termediate credit bank per cent de-
bentures. These mature in 6, 9, 10, IL
and IL months. So great is the demand
for short-term stuff that the early ma
turtles were priced to yield ATS per
cent, while the longer dated debentures
were sold at par. Another example of the
cheapneSs of short-term money was the
fact that the early maturities of a Ca
madam Pacific equipment issue were
quickly sold at prices to yield only 3
per cent.
Negotiations with q view to a loan
for Italy in this market, which we're
rumored last week, were denied not
only by Secretary Stimson, but by deal
ers in Italian securities. But it is now
reported that a credit of $4,000. 900 to
S5O,0OOy000 has been arranged for Santo
Domingo. Chile placed $40 900 900 Of
one-year 5A per cent Treasury bills in
London. The proposed offering of q
81 ,000, 600, 900 prosperity" loan, as sug-
gested recently to Congress, was not
taken seriously by the Street. Munich
pal bonds projected for the remainder
Of December amount to slightly less
than $4,000. 900.
Foreign List.
The foreign market, on the whole,
had q fairly good week. A bullish analy-
sis by q well known American econ
onist resulted in strength in German
securities, especially the Young plan
loan Then again, the failure of ex-
pected defaults in December l interest
and sinking fund payments to eventu-
ate resulted in a broad advance of
many dollar bonds that had been sell
ing out of line. Argentina effected a
substantial saving by sending its in
tereSt and sinking fund money in gold,
taking advantage of current exchange.
The situation in France caused some
nervousness. and French issues showed
monetary heaviness, but this was cor
rected when the London market failed
to take seriously the fall Of Andre Tar
deus cabinet. Australian bonds were
strong all week.
Despite the poor performance Of the
bond market. dealers are far from be-
ing downhearted and look for great
things from the increased circulation
of money during the Christmas season
and the large amount of funds that
will be seeking reinvestment at the
year erd. Some of them have been
making judicious purchases of market
able securities with the idea that this
reinvestment inquiry viii give them a
stable profit.