Evening star., 1932-05-01
INVESTMENT BOND
MARKET WEAKENS
Lowest Average Price in II
Years Recorded Dur
ing Week.
Special Dispatch to The Star.


NEW YORK, April 30.-The invest
ment market declined to a record low
level for the depression-the lowest in
II years, as matter of fact-during
the past week. Trading was not par
ticularly active and some encourage
ment could still be gained from the
fact that there was nothing to indicate
any large volume of liquidation. The
markets decline was due to the with
drawal of bids by those who had been
supporting it, and, to a lesser extent,
to short selling
The refusal to buy bonds at a time
when the Federal Reserves easy credit
policy seemed certain, eventually, to
send bond prices broadly higher, was
dictated not only by developments at
Washington. but by first quarter earn
ingS reports and-in the case of the
railroadS-by heavy bond maturities and
interest payments due May l.
Rail Loan ApprovaIs.
Until almost the end of the week
there were grave doubts as to where
some of the carriers would get the funds
with which to meet Mondays interest
payments and equipment trust matur-
tiles. Then the Interstate Commerce
Commission approved a batch of small
loans which, with those already granted,
brought assurance that the payments
would be met. Some of the heavier
charges to be cared for Monday include:
Chicago & Northwestern $6,012,837,
Missouri-Pacif1c 50, ,991 ,210, Illinois Cen
tral 3,447 500, Southern Railway ST.
635. .250, and Chicago, Rock Island &
Pacific S859,500
But 1t was in the announcement
granting a loan to still another road,
the ST. Louis-San Francisco, that there
was found a clue to the future course
of the Interstate Commerce Commission
and the Reconstruction Finance Corpo-
ration in granting loans to railroads.
Since it will undoubtably apply to all
other credits made available by govern
mental relief agencies, this statement
assumes paramount Importance.
The commission approved a further
loan Of $1,800,000 to the Frisco for
three years. 1t was issued for the
purpose of paying delinquent taxes and
meeting equipment trust maturities.
The authorization carried with it the
condition that before any advances are
made, the applicant must "agree to
submit for our approval prior to July
l, 1892, plan which will result in a
reduction of fixed charges of the ap-
plicant company" The commission
stated: I'VE do not believe that this
carrier can operate successfully with
out reduction in its fixed charges.
We believe that the road is over
capitalized" The road was enjoined
from using the loan for any other pur-
pose than that designated and it was
called upon to pledge S3,679,000 of its
6 per cent consolidated mortgage
bonds of 1886 as security.
This is tantamount to laying down
the law not only to the Frisco, but to
all roads that cannot cover their fixed
charges in 1882 on the basis of their
first quarter reports. There will be
many in the list.
United States Government bonds
either advanced or held steady during
the week. The Federal Reserve report
ed the purchase of S113,0OO,0 900 in
Governments. That the member
banks have not helped themselves to
the additional credit thus made avail
able was due to universal anxiety over
the failure of Congress to effect the
economies proposed by President
Hoover
Municipals continued their advance
The higher grade issues reached new
highs and there was even some in
quiry for second-grade municipals
But the market is still highly discrim-
inatory.
Unexpectedly high coupon rates for