Evening star., 1932-08-21
INVESTMENT BOND
PRICES HAVE RISEN
17AVERAGE POINTS
Gain in Quoted Values Is One
of Greatest in Market
History.
Special Dispatch to The Star.

NEW YORK, August 20.-The ad-
vance of the bond market has now
reached point, both as to price appre-
citation and the duration of the upturn,
where it can without exaggeration be
called one of the greatest recoveries in
the history of this or any other market.
From the low of last June, the mar
ket has advanced II average points
which represents an appreciation Of
roughly s17,000,000 900 in the value Of
listed and unlisted bonds in the United
States. In percentage the rise has
amounted to about 35 per cent of the
market value of bonds at their lows.
Compared to the 100, 200 and even
300 per cent appreciation in some stocks
during the same period, the upturn in
bonds may seem conservative. But 1t
is that very deduction that adds most
to the attractiveness of the recovery
and provides the best ammunition for
a further advance. Bonds which pay
interest are still undervalued after SIS
DAYS OF a rising market, while stocks
most of which do not now pay dividends
have anticipated business improve
ment which is not yet fully evident.
The greatest average advance has
been in railroad bonds. 1t amounted to
ST. average points this week and 6.4
In the preceding week. There has been
no basic change in the position OF the
railroads Just as three months ago,
they face fundamental difficulties such
as over-capitaliZation and motor truck
competition. They have even added to
the former handicap in recent weeks by
large borrowings from the Reconstruc-
tion Finance Corporation. Secretary OF
the Treasury Ogden L. Mills this week
revealed that 43 railroads have bor-
rowed $3.50, 1000 900 and that hundreds
of applications have yet to be con-
sidered.
The reason for buying rail bonds,
however, is a sound one. The railroads
are still the great common carriers, and
anv Improvement in business is bound
to benefit them. Wheat may fall to q
new low price, but if the crop Is Of
record size. the railroads will benefit in
increased freight traffic. And Wall
Street is looking for higher rather than
lower prices for wheat.
Wall Streets belief in its own judg-
ment was testified by the heavy pur-
! chases this week of industrial bonds
! bonds of companies that may be ex-
pected to benefit directly from any
! improvement in commodity prices. Rub
ber companies. oil companies, companies
CedllIlR Ill IIltJdS, OCh0iiSc, iOONo OAiSoS
and others saw their bonds range up
| 10 to IS points in the week.
The improvement IN public conf
! dence was shown not only by this up
| surge of speculative bonds, but also by
the continued advance Of high-grade
bonds. Issues that yield 4 to AZ per
cent do not ordinarily find favor when
! there is a bull market in stocks or
| speculative bonds. That they have
! progressed steadily throughout the past
| 10 weeks is an indication Of the back
log of investment demand that two and
half years of declining market had
| left.
Foreign dollar bonds have not ad-
vanced to any appreciable extent. 1t
was too much to ask, perhaps, IN the
! face of the great economic and po-
litical uncertainties in Europe and the
! Far East and the actual rebelllons
raging IA South American countries.
! But these bonds have been encourag-
ingly firm in the presence Of news that
18 months or years ago would have
caused a precipitate decline.
Copyright, 1922