Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-09
FOREIGNERS BUYING
AMERICAN STOCKS
Heavy Purchases of Bonds
Also Made Recently in
New York Market.
BY CHARLES F. sPEARE.

Special Dispatch to The Star.
NEW YORK, May e.-International
bankers believe that the recent tendency
downward in European exchanges Is
due to the continued heavy purchase
of American securities and the shift
ing of funds here, principally by Lon
don, to take advantage of the higher
money rates prevailing In New York
than in the open English market.
The statements yesterday of both
the Bank of France and the Bank OF
England did not reveal the effect OF
the transfer of gold from London to
Paris that followed the reduction in
the rediscount rates of both institutions
last Thursday. The Bank of England
had slight increase in its bullion
holdings, which resulted from the re-
ceipt Of gold from Australia in larger
amount than that shipped to Paris. In
spite of the supposed gain in gold by
the French institution the gold item in
its latest statement is exactly the same
as that of a week ago.
Dollar Bond Purchases.
Not only has Europe been buying
American stocks, but there has been q
considerable repurchase of foreign dol
lar bonds in countries of their origin.
This has been made profitable, owing
to the declining interest rates abroad
and the lower return on the better
class of home securities in contrast
with yields ranging from per cent to
above z per cent on the loans listed in
New York. Until foreign financing
took new squirt this Spring the abb
| sorption by Europe of dollar loans and
the retirement of some of the old
| issues, notably those of Scandinavian
countries more than offset the total of
new loans.
The steady whiting away at rates
| of interest in the New York money
| market and the reduction in the redis-
count rates, with other Federal reserve
| districts likely to follow the cut of the
| Boston bank late Wednesday to 31z
per cent, are again stimulating the de-
mand for high-grade bonds and pre-
| ferred stocks. A new factor in this is
the inquiry developing among local
and out-of-town institutions. which are
buying bonds and notes on a larger
scale than at any time since the early
part OF 1928. They are to some ex-
| call rates at per cent and rates on
time deposits around the same figure
the only profitable outlet for their sur
| plus funds Is in American corporation
issues or those of foreign governments
and foreign corporations.
| April Bond Issues.
| Figures Just compiled of the April
bond issues indicate that last month
| the aggregate was about 1854, 0O0, 900.
| an increase of $43,000,000 over March
! and more than double the amount in
April, 1929. Gain was in tax-exempt
! foreign and industrial issues. with
| heavy decreases in public utility and
railroad financing. As an indication of
the effect of cheap money on promoting
new undertakings, there appeared to-
| day larger number of issues than at
any time since the end of April.
| Some repression of new loans is EVIL
dent, due to the desire of the banking
syndicate which will bring out the
American portion Of the $300,000,0 900
reparations loan within the next
| month. 1t is desirable that the mar
ket at the time this loan is offered be
not only strong, but cleared up of over
hanging issues. No attempt has yet
been made to create definite inter-
est in the loan through the usual
method of marking up other loans to
| basis comparable with that at which
| this loan is to be sold. AS a matter of
fact representatives of the different
governments that will participate in the
loan have not yet agreed as to the
coupon rate and price 1t is expected,
however, that with the return to this
country shortly of Thomas w. Lamont
OF j. P. Morgan q Co. there will be a
meeting of the principal members Of
the American syndicate and a fairly
definite idea will be arrived at In Wall
Street as to the final terms,
(Copyriaht, 1907