Evening star., 1932-09-05
BY F. H. RICHARDSON.
Special Dispatch to The Star.

while the New York Curb Exchange
bond trading broke all existing records.
And so 1t was with the price advances.
In the early days of the advance it was
considered sufficient for the averages to
creep up tenth of a point day. To-
wards the end of August it was not sur
prising to see the averages climb Is
times that amount in a day.
No group of domestic bonds-save
United States Government issues-was
exempt from the forward movement.
| The market value of corporation bonds
listed on the New York Stock Exchange
moved up from $9,575, ,879, 754 to nearly
$13,000,00 100000. The market value of
all utility bonds on the exchange appre-
ciated from $3D5l ,575 1862 to about So
500,000,000. Railroad bonds, in June
worth only $4953, 100000, were ap-
praised at $7656,235 900. Petroleum
company bonds advanced from $574,-
100000 to $680,00O,O00, food industry
issues from $184, 100000 to s235, 900, 600,
electrical manufacturers bonds from
$40 100000 to $63 1000 900, chemical
company obligations from SIS, ,4a3 900 to
$72000,000. finance corporation bonds
from $109, 100000 to $123,0OOCO and
automobile concern debentures from
s47, 100000 to s58000.00o.
Market Value Gains.
Figures are not available for the
| large total OF utility bonds listed on
the New York Curb Exchange or for
the huge amount of bonds not listed
| anywhere, such as municipal, railroad
equipment and real estate bonds. and
the obligations of hundreds of corpora
tions. But their aggregate market
value generally estimated ON the basis
OF about 100000 100000 par value
mas certainly appreciated along with
listed bonds.
| AS was to be expected the greatest
advances were in bonds that had had
the largest declines. In some Junior
railroad and industrial descriptions
| there was an appreciation of 300 and
400 per cent. In the upper stratas,
however, the cream of the seasoned
investment issues ranged up from S
to 10 points in the 60 days of the
advance and the great body of bonds,
which belong neither to the ultra
conservative class usually associated
with mutual savings banks and the
portfolios OF widows and orphans, nor
10 the mighty volatile group which fur
plshes the trading mediums of the
speculator, advanced from is to 40
| points.
In many ways 1t was a demonstra-
tion that the drastic declines in March,
April and May had gone beyond rea-
| son. The exact opposite in market
| conditions prevailed. Where bonds were
without bids in the bear market of
four months ago. in this months
| scramble investors found themselves
reaching far above last sale prices to
| secure bargains" In many issues
there were no offerings at any price.
orf Nf tE1
| from the public, all through the ad-
vance. Week by week the condition
statements Of the Federal Reserve
member banks showed no increase in
bond holdings. Near the month end,
when certain business indiceS plainly
indicated the upturn for which every
one had been waiting, the banks came
into the market and bought large
! amounts of the better grade issues. In
fact, they rushed into the market pell
nell just after the Reconstruction
Finance Corporation, in coming quickly
TO the rescue of Baltimore bank, had
| given convincing proof of its deteImi-
| natlon 10 prevent any more important
| bank failures.
Back to Investment Levels.
As the advance proceeded groups of
bonds were carried back to investment
Levels. The yields on prime issues like
Atch1son general As at 90, American
Telephone SIS at 101!a and Standard
Oil OF New Jersey SIS at 103 were low
enough to warrant the assumption that
these types Of bonds had reached levels
i from which no important extension of
the advance could be expected.
But other bonds were obviously still
in price range offering probabilities
OF heavy appreciation once the business
recovery becomes an accomplished thing
For instance, New York Central Abs
and IS, on which the interest is reason
ably secure, were selling around an 8
| per cent yield basis when the roads
common stock, which neither earns nor
pays any dividend, was selling at 49,
The same condition existed in hundreds
| of cases. On the other hand, 1t was
| plain that third quarter earnings re-
| ports would reveal the prices of still
other speculative bonds had been car
ried above reasonable levels.
The outlook for bonds was good as
! the month closed. Commodity prices
| had shown considerable recovery
| from their depression lows. There were
signs in plenty of improved business
conditions. And the banks that for
three years have confined their pur-
chases to low yield Treasury notes and
| bills were back in the bond market
with keen appetite for reasonably Sc
cure bonds offering yields Of Az to 6
bper cent. The fact that stocks had
risen with bonds had added value to
bonds that were secured by collateral
and had give many investment trusts
their first opportunity in over a year
! to dispose of low-grade securities at
prices high enough to enable them to
purchase sounder issues without accept
ing great losses. thus consolidating the
! gains in the prices of their own stocks
and bonds.
Credit Conditions.
During all this time the easy credit
conditions that were established through
the efforts of the Federal Reserve Board
were maintained. United States Gov
ernment bonds clung to the high levels
established earlier in the recovery OF
the markets and while the Federal Re-
srve banks had permitted their Govern
ment bond buying program to lapse
! there was assurance that the banks
would not undermine market conditions
by attempting to liquidate their large
holdings. The banks will accept cash
at maturity for their short-term Gov
ernments and supply longterm issues
as they are demanded, thus reducing
their load of Government issues with
out placing pressure on the market.
Reports were current near the month
end that the Treasury would shortly
announce large issue Of long-term
bonds to refund part Of the overheavy
floating debt. They resulted in depress-
ing outstanding issues narrowly, but the
market does not look for Change in the
administration policy that might. cause
heaviness in the markets before the
elections this Fall
There was a general tendency In the
financial district to ignore the results
of the Ottawa conference of the British
nations as market factors. Great
Britain's action in granting virtual free
trade to her colonies on products origi-