Evening star., 1932-05-22
INVESTMENT BONDS
DROP DURING WEEK
New Record Low Mark Is
Registered in Steady
Liquidation.
Special Dispatch to The Star.

opeCldl DlSpaICH 10 Inc SlaE
NEW YORK, May 21.-In spite of
another governmental move to bolster
the falling markets. the investment list
dropped to new record low during the
past week.
No existing index Of prices Is thor
oughly reliable over long period, but
apparently no parallel for the present
level of bond prices has existed in any
year since the early 1870's. Certainly
neither the panic of 1907 nor the mar
ket slides of 1920-21 and of 1929 had
the depression effect on seasoned in
vestment issues and the more specula-
tive second grade railroad and indus
trial bonds that 1881 and 1882 have had.
Since March 10. this year, Standard
Statistics index of 60 representative is
sues has declined 172 points to its
present level just above so. Since the
peak of the 1880 bond market, the same
index has dropped Al average points.
Translated into terms of the total mar
ket value of bonds traded on the New
York Stock Exchange, this means
! depreciation of nearly $4,000, 900. 900
since March and more than twice that
amount since the 1880 high.
The market responded only briefly to
the announcement this week that
committee of IL bankers and Industrial
lists had been formed at the instance
of the Government to aid the Federal
Reserve Boards credit-easing policy.
The market opened strong on this news
Friday, but almost Immediately prices
of United States Government bonds
broke and before the day was out the
general list had reached new low for
the bear market.
Treasury and Liberty bonds, as
matter of fact, have now declined 4 to
points from their recent highs. Most
of this drop occurred just as soon as
the Federal Reserve gave the slightest
sign of letdown in its weekly pur-
chases of Government bonds. One week
the Reserve report showed 500, ZOO, 900
bought by the banks and the market
for Governments held firm. The next
week the banks purchases aggregated
only $8l 10000 and Governments re-
ceded l to points, in spite of an an
nouncement by the Federal Reserve
Board that its policy had not been
changed.
1t is not hard to understand the sit
uation. Although the Government is
still borrowing money at record low
rates for 90 days, it could not in the
present market raise the long-term
money it needs, in order to bridge the
dCAAIib 6dP, III oiy AAhS SAAS Aoo~o
currently prevailing for Treasury and
Liberty bonds. And the markets tech
nical position is unfavorable, since
banks for months now unable to find
secure employment for their surplus
reserves. are well supplied with Gov
ernments and hence unwilling to take
the losses that will surely ensue when
the new Treasury financing program
eventually brings Government bonds
down in price.
Meanwhile the new issues market
continued at about the same pace, with
Sl7,236,000 of new municipal bonds put
out, against $15.3o2 900 in the previous
week and $87 1894, 900 in the same 1881
week Municipals at present are trav-
cling entirely alone Their tax-exempt
feature has brought them into favor,
even though municipalities the country
over are still having hard time to
make ends meet.
The situation looked no better in
Europe this week. with hopes for
favorable result from the coming Lau-
same reparations conference fading rap
idly and with admissions from the Gen.
trail European countries that, failing
immediate aid, moratoriums will be the
order of the day. Consequently there
was pressure on German government
issues all week and the bonds of the
Eastern European countries declined
steadily.
(Copyright, 1s32)