Evening star., 1932-05-15
INVESTMENT BOND
LIST IS DEPRESSED
Sharp Losses of Week Re-
duce Averages to 1s-Year
Record Low.
Special Dispatch to The Star.


NEW YORK, May 14.-To any stu
dent of the present market for corpora
ton bonds, especially those of the rail-
roads, the conclusion is inescapable
that the market is approaching sit
uation not unlike that of 1893, when
many American railroads were in the
hands Of receivers, or that OF 1857,
when economic chaos for q time ruled
the day. This week the average price
of a representative group of carrier de-
scriptions dropped to level for which
there Is no parallel since 1875. An IN
dex of 40 representative bonds-ratl-
road. utility and industrial-now stands
at its lowest level in more than 10
years.
The Reconstruction Finance Corpora
ton, which was set up to rescue the
weaker railroads, has outlined its pol
icy of encouraging the roads to reor-
ganize and so reduce fixed charges,
rather than obtaining additional loans
and thus increasing the capital debt
load at time when earnings are great
ly reduced. 1t is obvious that bond
holders who have seen the securltles
they purchased from 1927 to 1880 at or
near par depreciate to around 10 cents
on the dollar will be willing to consider
reorganization plans that will protect
their interest. The consent OF such
holders to reorganization and the sub
stitution of income-sharing bonds or
preferred stocks will permit the OBJ
jectives ordinarily associated with re-
ceivership to be reached without resort
to the actual proceeding.
Nevertheless, fear Of receivershipS or
of denominations Is ruling the position
of the railroad bond market today.
How else account for the persistent
LIQUIDATION of bonds at merely nom
inal prices? High-grade carrier bonds
have sagged with the rest, even though
there is not the same volume OF liqui-
dation in them. Industrial and utility
| issues have enjoyed little support.
Beyond a few municipals there was
little new financing this week. The
| total amounted to SIS 100000, against
| sl4,477 900 in the previous week and
| $50, est, 900 in the same 1881 week.
| Municipals continued to command good
prices and prime issues moved quickly.
| No change is likely in this situation
until there Is a great deal more public
confidence in corporation bonds and
! considerably less fear of greatly in
! creased income taxes.
The reduction of the Bank Of Eng
land rate from 8 to 21a per cent placed
| it below the rediscount rate of the
| Federal Reserve Bank of New York,
but an adjustment here Is confidently
expected next week The lower rate in
! London emphasized the already cheap
money market prevailing there and
British treasury notes sold for less than
] per cent yield basis for the first
! time since England left the gold stand
| ard There was considerable activity
| in British dollar bonds here and they
| advanced to new high levels.
Australian bonds advanced sharply
on the drastic action taken by the gov
ernor of New South Wales in removing
i the Radical premier from Office and
! calling upon the leader Of the Con-
servative opposition to form a govern
| ment, thus insuring the furtherance Of
the commonwealth's reorganization
| plans.
In general, however, the foreign list
has subsidized into comparative inaction.
| The market awaits the outcome Of the
| crisis at home and the decisions Of the
| Lausanne and other European confer
ences of the next few weeks in order
| to obtain a clearer picture of the fu-
! ture.
| (Copyright, 1897