Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-11
INVESTMENT BOND
MARKET IMPROVES
Public Sentiment Revived by
Rapid Advance in De-
benture Prices.
Special Dispatch to The Star.

OpeCldI DlSpRLCn 10 ne SLar.
NEW YORK, October Io.-The in
vestment market turned this week from
the prospect Of utter chaos to the cheer
full and inspiring spectacle of rising
prices. The vitality of the advance car
ried public sentiment with it. The bond
market touched its low level Monday,
but by the end of the week had recov-
cred an average of points, one of the
largest advances made in single week
since the start of the bear market. It
brought an appreciation of So 1000, 900 600
in bond values in the week.
President Hoover'S plan to set up a
$500, 100000 revolving fund for the pur-
pose Of releasing frozen bank assets was
the motive power behind the improve
ment. Other important factors included
the steadying of foreign exchange rates,
which put a check on exchange gam
bling and relieved the markets of the
oppressive burden of speculative selling
on this account and the prospect that
the Forthcoming Hoover-Laval discus
sionS may result in some reciprocal
agreement regarding war debts and dis
armament.
Bank Rate Change.
With these matters in mind, the mar
Ket was able to ignore the uncertainty
engendered by the election campaign in
England, the instability Of the German
situation as result of a cabinet shift.
a 60-day moratorium declared by Brazil
and the fact that few signs of improve
ment in domestic trade were in EVIL
dence.
When the New York Federal Reserve
Bank raised its rediScount rate to 2l9
per cent. the change was Immediately
rejected in lower quotations for United
States Government securities, high
grade municipals, railroad equipments
and other forms of readily cashabIe
paper that ordinarily move solely with
money rates.
But Wall Street was inclined to greet
the apparent end of the cheap-money
era with a sigh of relief. The attempt
to bring about broad improvement in
the bond market by the artifce of
keeping money rates at low levels had
run long course without arriving any,
where.
1t is true that the turn in the money
market probably put damper on Sec
rotary Melons hopes of refunding any
part OF the fourth Liberty loan in 1893.
ThlS was shown by the drop in the
market quotations for this loan down
to a $40 per cent yield basis, where
1t formerly had ranked virtually as a
short term security.
The decline in Government issues had
an even greater significance. Govern
ment bond dealers had been saying for
months that once junior bonds and the
stock market gave evidence of a turn
there would be selling of Governments
by those who last year took shelter in
their safety and tax-eXempt provisions.
The proceeds of their sales were turned
into second and third grade rail bonds,
junior industrials, semi-speculative util-
tiles and other bonds that had been
heavily depressed. Second-grade rail
bonds like Missouri-Pacific SIS, Erie SIS
and Allegheny IS recovered S to Is
points from their lows Industrials
such as Dodge Brothers IS and Texas
Corporation SIS ranged from 5 to 6
points above their lows. Utility bonds
improved as sharply.
Rail Issues Helped.
Railroad issues. in addition, were
helped by the probability of favorable
decision on freight rates and by the
unofficial, but effective, measures taken
to protect savings banks from the ne
ceSsity Of having to take large losses
on bonds driven far out of line in the
previous weeks insensate market.
During the week new bond offerings
dropped to a single issue Of $4,000, 900
Federal intermediate Credit Bank
bonds. Its successful f1otation drew at
tention to the advance in these and
Federal Land Bank bonds The total
compared with $23,812,000 last week
and $119,739.000 in the same 1880 week.
Copyright, 1917