Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-02
INVESTMENT BOND
MARKET STRONGER
Various Issues Make Better
Resistance to Selling
Pressure.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, August with domes-
tic bonds at q new low level for the
year-though not yet down to their
worst level of 1930-the investment
market this week gave better resistance
to bearish factors than it has since the
1929 crash. There Is one conclusion to
be drawn from this-that some indus
tries are actually pulling around the
corner and have shown an improve
ment in earnings. At least there are
enough of them to keep Standard Sta
tistics' index of 80 representative domes-
tic obligations a full 2 points above
their 1880 low.
This may be poor comfort. especially
when 1t is remembered that the foreign
dollar list is in worse case than last
year and showing little tendency to re-
cover, but it at least is something to
point to in appraising the outlook for
the market.
ShOrt-Term Paper.
During the week the return to higher
yield securities which developed earlier
in July came to an end and there was
once more a sharp demand for high
grade short-term paper Of a readily
caShable nature. This was evidenced in
the sale Of $4,000, 900 of 90-day Treas
ury bills at an annual bank discount
basis Of 81 per cent, in unprecedented
high prices for Short-term municipalS
and by an almost greedy digestion of
short-term public utility paper at high
prices.
In this way banks, insurance COM
panieS and other investing institutions
sought to anchor the drifting portfolio
barge against the drag Of pesSimistic
liquidation. Those who included second
and third grade railroad bonds in their
portfolios two years ago, when these
securities were not only rated higher,
but in some cases were admitted to the
list Of bonds legal for savings banks and
trust funds, realize now their folly in
diScarding safety for the doubtful COM
pensation of high yield. Many bonds
that two years ago were considered legal
sold this week for as low as so and so
cents on the dollar.
Many railroad bonds, still carried at
high prices, will undoubtedly be removed
from the legal list, as earnings have
not come up to the minimum Of ~
times fixed charges set in New York
State. Even such august names as New
York Central, Baltimore & Ohio and
Nickel Plate are mentioned in this con-
nection. However, q ray Of hope Is in
jected here in the probability that the
rigidity OF the qualifications will be
suspended for time, as was done 10
years ago. But those who sold Nickel
Plate common down 10 points on
single sale this week, because of omis-
sion Of the dividend, insist that no
suspension period will solve the prob
lem Of the Nationwide frozen invest
ment In rail securities.
Public Utility Bonds.
There has been decided drift to
public utility bonds, and it is evident
to any student Of the bond market that
these have now replaced rails as the
solideSt type Of corporate investment.
The railroad mortgages stu revered as
At for widows and orphans" are now
only q handfll-Atchison generals,
Norfolk & Western IS, Union Pacific
first As and the like. Buyers now are
turning to utilities such as American
Telephone IS and Utah Power & Light
IS. Moody's Investors Service this week
showed that 225 public utility compa-
MES in 1890 earned their fixed charges
1852 times, against $50 in 1929 and
$50 in 1928.
At the same time it should be mem
toned here that certain industrial
bonds, among them United States Rub
Der SIS, Goodyear IS, st. Joseph Lead
512s, Pathe Exchange IS, Dodge Broth
ers IS and Lorillard 51aS-aI bonds Of
the so-called junior class-have held
flrm throughout the recent liquidation.
tCcDyTisht. 1888 = -