Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-08
Special Dispatch to The Star.


NEW YORK, February THE in
vestment markets inability to discern
anything definite as to what Washing
ton will do with the soldiers bonus
plan, so far as it relates to the proposal
to cash certificates to the face value OF
So, 500, 00O, 900 was the only curb on an
otherwise strong and buoyant list this
week.
AS, during the previous week, United
States Government long term bonds led
the decline. so this week they led the
advance. These and other prime obliga-
lions recovered all but a small part of
demand made itself felt in foreign
dollar credits. Were it not for the now
fading threat of q huge Government
bond issue to cash the bonus certificates,
the market might have advanced to a
new peak for the year. AS it was,
Standard Statistics index of 80 bonds
ended the week about point above its
low and a similar amount beneath its
high for the year.
New Financing Declines.
The possibility of the bonus plan
being adopted was exaggerated both
ways. The market declined in trepida-
ton at the mere mention of the
scheme but recovered the loss quite
easily when more mature consideration
made it apparent that there was small
likelihood Of anything but compromise
plan being passed by Congress.
The previous weeks decline was more
than SUFFICIENT to dry up the now Of
new capital issues, which amounted to
only $2l,325,000 in the week, against
$201, 064.0 the previous week and
$50, $4,000 during the like 1880 week.
A significant thing in connection with
new financing so far this year has been
the large preponderance of high-grade
securities. This was shown in the
average yield, at offering prices, of new
bonds, which was 4.85 per cent, against
SAL per cent late In 1880 and 5.23 per
cent early In 1890. This was interpreted
as lone Of the most encouraging factors
in the present situation" by Lawrence
Stern q Co. Of Chicago.
However, while the market for long
term bonds was advancing, there was
no let-up in the tremendous demand
for high-grade short-term paper. The
latest phase of this market started
with the selling by the Treasury of
$50, 100000 ninety-day bills at an an
nual yield basis of 95 per cent, the
lowest cost of Government borrowing
in the history of the country. Near
maturities of other Treasury bills and
certificates promptly advanced until
their yields went as low as rs per cent
per annum.
Investment Dilemma.
Such fanciful prices revealed the di-
lemma of conservative investing cor
porations in keeping their funds In safe
depositaries and has occasioned much
comment in Wall street as to how far
the movement might 60. There have
been frequent declines In the accept
ance rate since the turn of the year,
and time rates have dropped to their
lowest point in 40 years, This situation
was somewhat eased, however, by the
flight Of American funds to London,
where money rates have been lifted by
the Bank Of Eng)and's open-market
attempt to put q stop to the English
bullion export to France.
Since stable amount of new bond
offerings are still awaiting q favorable
all signs indicate that 1t
Is or Is about to be here-it is likely
that q large amount Of surplus money
viii md its way into prime issues and
serve as q check TO the downward