Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-31
MARKET SHAKEN
BY HEAVY SALES DURING MONTH
Bond Averages Driven to Lowest Point
Since 192l-Foreign Situation Was
Chief Cause.

doubted the efficacy of an increase as
a measure to restore the roads to q
paying basis The confidence of execu-
tives of other forms Of transportation
that business would be driven their way
was not calculated to help the market
for railroad securities.
Another factor entering into the sit
uation was the absence of any proposal
to suspend for time the rigtdity OF
the regulations governing the qualifica-
tions OF rail bonds for inclusion on the
New York State list of investments
legal for savings banks and trust funds
A bond like the Atchison general per
cent is included in the portfolio OF near
ly every savings bank in the country,
and enjoys therefore firmer market.
That particular bond is not in question
just now because the AtchiSon will GER
tainly earn more than the required one
and one-half times fixed charges this
year But many other issues of class l
roads are in the doubtful list. including
obligations of the Baltimore & Ohio.
New York Central, Pennsylvania and
Boston g. Maine.
The immediate result of all this was
a market almost devoid Of bids for rail-
road bonds. At the same time there
was q steady tone in industrial issues
and of course, with the demand for
prime investments heavier than ever,
there was volume buying in prime utili-
ties, municipals. short-term paper of
a readily cashable nature and long
term United States Government bonds.
All of this latter group advanced
slightly. The Treasury disposed of
blocks of 90-day bills at prices ranging
from an annual yield basis of 40 to SO
per cent, which reflected a record de-
mand for these short-term securities.
Detroit Issue.
The discriminating nature Of the in
veStment demand, however. was ap-
parent in the comparatively low price
received by the City of Detroit for $780,
tionS have ruled high in past years, but
the city has recently been burdened by
a large floating loan structure, and in
vestors have adjusted their appraisal of
its obligations accordingly. Railroad
bonds were almost impossible to put out
and the 500 Line had to offer q 5-per
cent-yield basis on SIC. 600, 900 of one
year notes, even though the issue is
backed by deposit of $l2.500, 900 of 5Ia
per cent mortgage bonds on which the
interest is guaranteed by the Canadian
Pacific Railway.
Total new bonds issued during the
InOLlIu dHlOuLlIcQ W only SlUO,0SC,UUU
against 1858. 755 900 in July and $685.
796,033 in August, 1890. Over 0,000,-
900 of Augustus total consisted of mu-
nicipals. It was the smallest total for
any month this year, and was signifi-
cant of the current market in that
only bonds Of unquestioned high merit
were issued.
For the first eight months of 1881
to date bond offerings have amounted
to $3,l20. 196,760. compared with $4.-
664, O84,9l4 in the same period of 1880.
Domestic Bonds.
So far as domestic bonds are con-
cerned, it is evident that considerable
readjuStment of the economic scene is
necessary before any broad improve
ment may be realized. Quite a few
railroad. bonds. are selling at levels
that cast considerable doubt on in
tereSt payments. Receiverships or con-
solicitations of a few of the small roads
are inevitable, in Wall Streets opinion,
and until these situations are cleared
away, a decision on the freight rate
increase is given, and there is some
check in the decline of rail earnings,
little change in the situation is looked
for. Wall Street does not doubt, how
ever. that the railroads - with more
efficient management today than ever
before-will adjust themselves to new
conditions and demonstrate the vitality
Of an industry IN which the American
people have an investment of over
$21 ,00O, 0OO, 0OO
(Copyrisbt 1oalS