The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-01-02
new FINANCING
HALF THAT OF
PREVIOUS YEAR
Bulk of 1891 Offerings
Utility and Municipal
Bonds.
BY OTTO E. STURM
United Press Financial Writer

NEW 4O1bkA, 0du. 1.-GO11J11lu6Q
business depression and weakness in
security prices reduced the volume
of new financing placed on the
market during 1881 to 1920, 49,, 781,
less than half the total of $685.
OPT ,686.
AS in 1890, the bulk of the years
bond offerings consisted of public
utility and state and municipal OBJ
legations. In fact, these claSsifica-
tons contributed $2,251 ,200,4 of
the years total. Stock issues vir-
tually were nil.
With business sinking, indutrial
borrowers played a minor role in the
bond market. The real estate sit.
uation awaited the operation of
corrective factors. Rails were of ne
cessity compelled to limit borrow
ingS.
Foreign governments and corpora
tons practically were barred from
this market, thus leaving only the
municipal and public utility divisions
as the chief source of new bond
issues. At the end of the year this
condition promised to remain for
some time.
New Offerings Restricted
A growing tendency to restrict
new offerings to those of the high
est grade was in evidence during
1881, rejecting the more conserv-
alive attitude of an investing pub
lie that had witnessed the values of
its holdings shrink steadily since
1929.
A particularly sharp drop in new
financing took place during October,
when offerings registered a new low
since the war, totaling only $4,000
000. This compared with $421 ,469,-
1872 in October, 1880. In some weeks
of 1881 there was an absence of any
new hotations.
Every month of the year showed
a marked decrease in new financ-
ing as compared with the CORE
spending month of 1880. Condi-
lions that acted as deterrent to
the flotation of new securities be-
came accentuated as the year pro-
crossed.
Rates Move Upward
Chief among these were suspen-
sions of the gold standard by
Great Britain and other countries,
heavy exports of gold, persistent
selling of bonds and lack of any
signs of improvement in world
business conditions.
The largest issue of the year in
this group was a $1OO,OO0,OOO flota-
ton by the city of New York in
March, which, incidentally, was
the biggest piece of long-term
financing ever done by the city.
The city also did a considerable
amount of Short-term financing
at record low rates.
Most of the railroad financing
done in 1881 was placed on the
market in the first few months
of the year, as the serious financial
plight of the carriers later made
it increasingly difficult for the
4OdN1O w 41OdG 4OdAAO. W44C11 I1lCy
did negotiate bond issues it was
at high rates.
Aside from Canadian f1otations,
foreign financing was almost ex-
tinct during 1881 and opinion at
the end of the year was that it
would be some time before foreign
loans could be f1oated in this mar
ket again.
u. S. Notes Popular
A Canadian f1otation of $250,000,-
600 in May was the largest foreign
government hotation in this market
since the war.
Credit conditions enabled the
treasury to finance most of it's needs
through issuance of Short-term GER
tificates during 1881. These proved
very popular with the country's
banks, and were negotiated at rec
ord low rates. Some long-term GER
tificates were issued, which were
heavily oversubscribed.
The treasury Dec. Is financing
program of more than billion dol
lars was one of the largest in the
country's peace-time history. This
also was we'll taken.
The following table shows new
offerings, by groups, for the year
1881 compared with 1880:
Group 1881 1880