Evening star., 1932-02-28
GOVERNMENT BOND
BUYING INCREASES
U. S. List Features Trading
of Week, With Sharply
Rising Trend.
Special Dispatch to The Star.

NEW YORK, February 27.-While
the average level of the list of corpo-
ration bonds still fingers a shade under
its January high, United States Gov
ernment long-term bonds have recov-
cred more than half of the ground lost
in the terrific liquidation of 1881 and
are at new 1882 tops in virtually every
case. With such leadership and a rec
ord Of II successive days of q rising
trend, the immediate prospects of the
bond market are considered better today
than they have been for many months.
The surface factor in the weeks
sharp advances, of course, was found in
the cutting of the rediscount rate of
the New York Federal Reserve Bank
from 3l2 to per cent. This followed
closely similar reductions by the Cen
trail Banks of England, Sweden and
other European countries. 1t indicated
basic trend toward cheap money
market which cannot be entirely as
cribed to the emergency measures taken
by President Hoover and his cabinet
to check defation.
AS a matter of fact, II the only in
fuences in this direction were those
resulting from administrative action at
Washington, there is little doubt but
that the market would have adopted
waiting attitude-having in mind the
failure of artificial stimulants in the
cotton and wheat markets in the past
two years.
1t can further be deduced, from the
movements of the bond list, that there
is a sound basis for the present upturn
other than the prospects that the Re
construction Finance Corporation and
the Glass-S -Steagall banking bill will aid
finance and industry. The very situa-
tions with which these mildly intia-
tionarv measures we're Instituted to cope
have been the slowest to respond. rail-
road bonds maturing this year, and
which, if not met, would precipltate the
roads concerned into rece1vershlps, nave
not had any large degree OF improve
ment.
The one exception to this Is the Cot
ton Belt road whose consolidation mott
gage per cent bonds. jumped about Z
points on Friday following an announce
ment that the road had applied TO the
Interstate Commerce Commission 1o[
authority to issue nearly $4,000, 900 OF
general and refunding mortgage bonoS
in order to pledge them as collateral
with the Reconstruction Finance Cor
poration, to which the carrier has ap-
plied for a loan sufficient to take care
of the June l maturity of the $40, ,757,-
75O Consolidated As. But the Cotton
Belt has, in addition to the expected
Federal aid, the probability OF Its &C
uuisition by the Southern Pacific as
cogent reason why its bonds should be
selling closer to an investment OASIS.
The municipal market, while 1t pro-
gressed somewhat because OF its IN
clination to follow Government bonds,
was still not much better. A great deal
more trimming of budgets and expen-
sive refunding of issues optimistically
placed to pay for the eXtravagances OF
the years of prosperity will have to be
done all over the United States before
municipal bonds will again assume
their former favor in the eyes OF in
vestors.
The foreign list was singularly color
less. Japanese bonds dropped daily to
new lows as yen exchange gave ground
rapidly before Japan'S increasing ad-
verse trade balance.
The German chancellor announced
that Germany would take care of all
private debts during 1882, and after
that if at all able, and German bonds
stiffened somewhat. South Americans
firmed with commodities, but the only
real advance in the foreign list was in
Great Britains foreign obligations,
which ran up to new highs on the re-
covery as sterling quotations improved
in the face Of heavy Withdrawals by the
Bank of France.
Canadian affairs continued TO show
Improvement, chiefly in the matter Of
foreign t<ad& figures, with the promise