Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-25
SECURITIES BUYERS
TURNING TO BONDS
Change in Market Sentiment
Indicated by improved In
vestment Demand.
BY PRESTON S. KRECKER.
Special Dispatch to The Star.


NEW YORK, August 25.-An ap-
parently Unsuitable demand for high
grade bonds in the last week suggS SITS
that perhaps the market for investments
has been launched on its long-expected
rise. Not a day passed during that
period without seeing several prime rail-
road or public utility issues register new
high-record quotations for the year.
Moreover the average price of repre-
sentative bonds was advanced to the
highest level in nearly two years.
The buying of gilt-edged corporation
bonds has been the distinguishing fea-
ture of the bond market this year. 1t
reflects complete reaction from the
perverted Investment habits of the
previous year. 1t would seem that in
vestorS now want to be doubly sure
of their principal and income, whereas
last year they were more concerned
with turnover profits sought through
in-and-out operations in. the market.
The reversion to pure types of bonds
has been attended by an almost COM
plete subsistence Of interest in con-
vertible and other stock privilege issues.
The convertible bond last year con-
tributed far the largest percentage Of
dealings in listed bonds, whereas this
year little attention is paid to it.
Gambling Spirit Fades.
The switch away from speculative
issues to straight investments is one
more indication of the passing of the
so-called new era" financial theories
and the return to old-fashioned ideas
regarding financing. In other words the
gambling spirit, which a year ago had
infected even the bond market, has
faded out.
The decline in the volume of new
financing presumably has had some
thing to do with the strength of the
market for seasoned issues Volume
this month has been less than $780,
100000, a total often exceeded in one
active week. The fact Is there is
diminished demand for new capital,
owing to the slump in general business.
Statistics on new issues for the first
seven months of the year show that the
decline in financing done for account
of domestic corporations has been very
marked this year. During the seven
months under review, the total volume
of stocks and bonds issued to meet new
capital requirements of American COM
panies was So 688, 600, 900, it is estimated.
That compares with a total of $4,973,-
100000 during the corresponding seven
months of last year. The decrease
amounted to IS per cent.
for new capital on the part of American
companies, the total volume of new
| financing done for the first seven
months of this year was only IA per
| cent less than that done the first seven
months of last year, when all records
| for capital issues were broken
The respective totals were $5,423,-
000,0 900 this year, against $6,32l, 000,-
| 600 In the Seven-month period OF 1929.
/ FfIr-~ ANAA Il k11tg ~
| date the second highest for the period
on record. 1t was IL per cent greater
| than the $4,632, 900, 900 issued in the
| first seven months of 1928 and about
! the same per cent above the 81 GIG, 000,.
900 issued in the 1927 period.
Foreign Borrowers.
The fact that, despite the decrease
/ of 26 per cent in domestic capital
needs, the total volume of new issues
has this year been only IA per cent
less than for the 1929 period is ex-
| planned by recourse of foreign Dor.
rowers to the American market in
| greater numbers than year ago. The
| total amount of foreign borrowing to
the end of July was $838 600 600 this
year, against $500, 900 900 in the corr
responding 1929 period. The increase
| was about 40 per cent. There is no
doubt but that the heavier borrowing
by foreign governments and corpora
lions this year is ascribable to the
lower interest rates exacted by lenders
this year, compared with last.
State and municipal borrowing also
has picked up as result of the more
favorable terms obtainable for money.
An estimated total of $3.50, 600, 900 OF
municipal bonds was sold in the first
seven months of the year contrasted
with STAT 900 for the corresponds
ing 1929 period. BY way of contrast,
new financing by investment trusts has
almost completely disappeared from the
market.