Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-23
INVESTMENT MART
UNDER June Low
Sharp Depreciation of Rail-
road Bonds Is Feature
of Week.
Special Dispatch to IN. star.

Special Dispatch to The Star.
NEW YORK, August 22.-The invest
ment market this week. as measured by
the price averages, dropped under It's
June low. Standard Statistics index
Of 80 representative issues fell below
the June figure Of ga, which compares
with the high Of the year Of 9s.7.
Since a few high-grade issues that
command scarcity premiums and q few
industria1s that have shown consider
able steadineSs are included in this In
dex, the sharp depreciation in railroad
bonds can be yisualized. SO far as the
domestic market Is. concerned, virtually
the whole story OF the weeks decline is
told when the railroad situation has
been reviewed.
Railroad bonds, measured by the
same index, closed the week around
92-5, q new low. A week ago the same
index was 04.9, two weeks ago o5.8,
three weeks ago 9S2 and q month ago
9S.8 At the high of the year, in jan
uary. 1t stood at 1851 In 1880 the high
was 1923; in 1929 1t was LOG; in 1928
II was l0g.5; In 1927 the figure was
1895, and in 1925 it stood at l04. In
fact, one must go back to the closing
days Of the lS2O-1e2I depression to get
comparable prices for railroad bonds.
$9,777,l5s,173 Market Value.
The New York Stock Exchanges
compilation Of all listed railroad bonds
at the beginning Of 1891 showed them
to have market value of 50, TIT, l59, I73.
At the beginning Of this month this
total had been reduced to So. 543. 0o6, :
GOT. a drop Of $233, l60,476. Since Au-
gust l Standard Statistics index shows
q drop. Of 81 points in the value of
railroad bonds. Applying this gauge to
the Stock Exchanges compilation, the
market value of all listed bonds fell
TO 50. o27, AS, 644. This is q shrinkage
Of $849, 70o, 1913 since the list of the year
and an average decline of about 10 per
cent Of the total investment in listed
railroad mortgages.
The high point reached by railroad d
mortgages in recent years was at the
beginning Of 1923. when the value Of all
listed railroad bonds-figured as above
was SIC, 767. 045, $50. Since that time,
then. there has been wiped out 81, S39, :
SOS. 72S in market value Of carrier mort
cages. Add this 70 an estimated depre-
citation of $500, 900 900 in railroad
stocks since the high of 1929 and you
get loss OF close to $500, 900 900 in
the market price of the American In
vestments in railroads.
High Grade Bonds Down.
Even some OF the higher rated rail-
roads, such as the Atchison, Northern
Pacific, Baltimore 81 Ohio and Great
Northern. during the week saw their
underlying mortgages depreciate from
to per cent in market value. Bonds
long regarded IS high grade and held
by every savings bank in the country
sold down.
Naturally, with such a shrinkage the
market looked for an adequate expIana-
ton. Bank failures in Toledo could ac-
count, certinly, for some OF the liQuida-
/, ton, which, In turn. might generate
other selling through the fear Of fur
tller bank failures. In addition, WASH
ington advices seemed to indicate that
the railroads could hope for little except
a compromise on tl1ir application for n
IS per cent increase in freight rates.
AL Of this, however. was hardly suf-
ncient reason for liquidRftng bonds to
levels below what they would return
under . receiyership. The market was
panieky. IT was bare Of bids for any
except the most. conservative Of carrier
bonds. and there were ranged well be-
low the market In most cases Many
absurd rlnlors we're In the air.
still there were some Who had the
courage 70 aevocate the purchase Of
sound railroad bonds It certainly is
apparent that many OF them are at
bargain prices and that they ere IN an
oversold condition.