The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1930-01-04
BOND MARKET
SHOWS LOWER
TREND IN 1928
Traders to Replace Funds
Taken by Heavy Margin
Calls From Brokers.
BY OTTO E. STURM.

ANA--' = OAsAAs Ofh4A. AAN Wv
standing development on the bond
market during 1929 was the renewal,
late in the year, of investment in
tereSt in bonds and the turning
point in the long downward trend
of prices for fixed interest bearing
securities.
The old axioms about the safety
of bonds were forgotten as the
speculative fever spread and $780,
00-Share days became commonplace
on the stock market.
With stock prices advancing
steadily over the aforementioned
period and the end of the big bull
movement apparently never to come
in sight, the popular desire to get
rich quick by specializing in stocks
placed the conservative policy of
purchasing bonds more and more
into the background, and conse-
quently prices for representative is
sues on the bond market showed a
steady downward course for more
than year.
The decline in bond values for
the first nine months of 1929 is illus
trated by study of the Dow-Jones
average Of forty representative bonds
listed on the New York Stock Elk
change.
Then came the first results OF the
imitation in stock value and a sharp
break in the share market was fol-
lowed by slump in call money
rates. A brisk rally took place in
the average that carried the figure
up from the years low to $3.50. near
the end of October.
The average took another slump
in the first half of November as the
result of heavy liquidation of bonds
on the part of traders trying to re-
place funds being eaten up by the
heavy margin calls from stock bro
kers around the 18th of the month
the figure had sagged back to $500
Public Takes Advice
Stimulus was provided this i'm
provement by the accelerated pace
of trading. which indicated that the
investing public was beginning to
take the advice given by various
economic authorities earlier in the
year that bonds we're attractively
priced for buying at the levels to
which they had been depressed by
the protracted downward movement.
Furthermore, accumulation of
fixed interest bearing securities was
stimulated by the drop in call money
rates to the lowest levels in more
than a year and the many corpora
tons during the boom period in
stocks had placed huge sums in the
demand loan.
While the prospects of the sea-
brought temporary halt to the re-
newal accumulation and advance in
bonds, the situation at the end of
the year was highly favorable and
the bond market enters the new
year with the value of sound fixed
interest issues again firmly estab-
lished and with every prospect OF
climbing to higher levels in 1880.
United States government Sc
curities and the list OF high-grada
and legal investment issues in the
railroad, industrial and public
utility categories which had been
the most lethargic during the period
when the stock market dominated
the financial spotlight we're the
first to respond to the changed state
of affairs late in the year.
The government issues, carried to
new lows during the first half G.
the year as result of the str
gency in credit, quickly respon
to the precipitate easement in |.
money situation and advances to
new high peaks we're scored by such
issues as Fourth Liberty AIS, Lib
erty 312s, First Liberty AIS and
several of the treasury certificates
Railroad Bonds Higher
The highest grade railroad bonds
came to the fore in the late up
swing, due principally to the strong
position these issues we're placed in
by the favorable earnings of the
leading carriers in the first half of
the year.
High spots in the group included
st. Louis-San Francisco AIS, Atchi-
son general IS, Missouri Pacific is
sues, Missouri Kansas-Texa IS, New
York Central, New Haven, Balti-
more e. Ohio and Chesapeake &
Ohio issues.
The long-neglected high grade in
dustrials and utilities came to life
during November and a steady ad-
vance was entered into by such is
sues as Bethlehem Steel IS, Stand
ard Oil of New Jersey IS. National |
Dairy Products SIS, Consolidated
Gas SIS, Philadelphia Company |
SIS. Brooklyn Union Gas IS and New
York Edison issues.
Convertible bonds had their in |
ming in the first half of the year |
when the advantages to be derived |
from investment in the share priv
ileges were enhanced by the rising
stock market.
The outstanding issues of the
share privileges for strength and |
activity were the convertible COM
American Telephone
AIS, and International Telephone
AIS, both with attractive stock
conversion features.
Trading in the foreign obliga-
tons during 1929 was comparative
ly moderate in volume, but renewed
was stimulated by final set
Element of the irksome question of
German reparations.
South American loans were ir-
regular and, near the end of the
year, were heavily depressed by the
closing of the gold exchange Office
at Buenos Aires, a development