Evening star., 1931-04-12
Special Dispatch TO The Star.


NEW YORK, April 1.-THE tempta-
ton to force the investment market
proved too much for underwriting
market is suffering from another case
OF acute indigestion.
Measured by the averages the decline
in prices has not been great except in
one group, that of the junior railroad
bonds. But once more the market has
seen the spectacle Of augustly sponsored
issues dropping l to 2l2 points when
underwriting syndicateS were dissolved.
Once more dealers shelves are loaded to
the limit with new securities for which
there can be found no ready market.
Once more holders of outstanding bonds
have had TO watch the values OF their
holdings depreciate. The lesson OF
March, 1880, was not we'll learned.
New Offerings Heavy.
In the past week a total OF s294,373,-
900 in new bonds were offered 10 the
public. compared with Sl14.710, 900 in
the previous week and Sl32,ll1. 900 in
the same week of 1880. While this
weeks offerings were generally of a
sound grade of security, they were not
up to the standard desired by market
that has driven short term paper to
unprecedented values. that yielded
nearly S35, 100000 to the State OF New
York at a cost of $40 per cent, that
oversubscrib2d Mr.. Melons $275, 900, 900
offering Of Ia per cent certificates and
is ready and eager to oversubScribe
other such issues at comparable rates.
The market soothsayers profess to see
abundant signs OF the financial robin
that heralds the return of the Spring
Of prosperity, but the investment mar
ketS reaction 20 events has proved the
weather somewhat chilly.
The recently offered New York Cen
trail 4i2s dropped 2i3 points when the
syndicate's firm bid was removed. The
PENNSYLVANIA 4l4S lest over a point.
Boston & Maine 43is dropped to a dis
count Other new offerings performed
similarly. 1t was. in truth, cheering to
see the initial discounts narrowed by
subsequent buying, but the heavy vol
ume of cash purchases at this stage was
ample proof that the bonds have har-
bored a short interest. It is not likely,
as A result that April will see anything
like the huge total OF new financing
offered in March. The markets back
log of new bonds has been considerably
reduced but it is safe to say that with
things as they are 1t will be much
larger before suitable conditions for its
dissipation eventuate.
Railroad Earnings.
The belief that March railroad earn
ings will show an uninterrupted decline
and indicate the possibility Of further
removals from the legal list, and addi-
tional defaults in interest or sinking
fund payments, played havoc with the
junior carrier list. This group is now
below its worst levels cf 1880, espe-
cially those bonds which two years ago
enjoyed a brief period OH the legal list
but we're later removed. There was not
much volume in this selling, but there
were few buyers Of secondary and ter
tiary rail obligations at any price
The other feature Of the week was
the quick dip and recovery of Brazilian
issues. The presence of Sir Otto Me
meyer in Brazil has been noted for
some weeks, but last week reports ema-
mated from London that Sir Otto would
recommend a moratorium on sinking
fund payments by Brazil, its states and
cities. On first perusal of this the mar
ket took fright, and the entire Brazilian
list gave way sharply. Second thought,
however. showed that many have faith
in Brazil to fulfill all her obligations
eventually, and nearly all of the lost
ground was retraced. Other South
Americans moved down and up with the
Brazilian list. but it was merely . SYM
pathetic moV.
Generally peas4ns, the rest of the