Evening star., 1932-01-24
INVESTMENT BOND
MARKET IMPROVES
Prices Show SteadineSs Dur
ing Week Despite Dis
couraging Factors.
Special Dispatch to The Star.

| 5pCSAal IispabCl W 1ue SlAr.
NEW YORK, January 23.-The ir-
vestment market this week showed a
steadiness in the face of number of
| discouraging factors that was indica-
tive of great potential strength and
desire to advance. Price levels. as
matter of fact, were little changed
from a week ago as many gains were
erased by selling that developed on
Friday because of further delay of the
decision of the Chicago Rail Wage Con-
ference, the apparent abandonment of
the Lausanne Reparations and War
Debts Conference and the untavorable
aspect Of December, 1881, earnings re-
ports.
I There was one outstanding high
light during the week. That was the
rush to subscribe to New York City's
Offering Of 100,o00000 of per cent
bonds-the highest coupon that the
Metropolis has had afix to any of
its corporate stock ~se 1914. But
even in the worst of-4honey markets,
chances for large speculative profits
occur and this was so calculated by
the most astute traders in the street.
They knew that with any degree of
improvement in the money market
New York City's bonds might well go
to 4 per cent yield basis. This would
mean a 9-point profit for those who
bought the bonds around par. AS q
result, on the first day of public of
| fering the bonds, which were issued
to mature in 1885, 1885 and 1887, went
to about point premium.
Lack of Bids.
This was definitely encouraging to a
municipal bond market that has seen
| the finest of city and State obliga-
! tions selling on 6 per cent basis,
| that has seen issue after issue OF ordl-
narily sound municipal bonds go with
| out a bid and that is now seeing bank
J ing syndicates forcibly trimming civic
| expenditures by the simple eXpedient
of withholding banking accommodation
| until the trimming Is done.
Since New York's case is typical OF
| the whole country, it is worthwhile tc
review it briefly here. The city mas 9
debt of about s1,750, 900 900. In 1900
it spent sso,778,972, and it has increased
| its budget appropriations year by year
until 1t is expected to spend over $780,
| 600 600 in 1882. The city's debt has
| grown at the rate of s70,000,0Oo a yeal
| for the last five years. This debt Is
ali in the form of long-term bonds anc
s208 600 900 of 1t Is in four-year bond!
! issued for rapid transit financing
When the city wishes to build any kline
| of public improvement, 1t issues bonG
| for the purpose and sells them to
banking syndicate, which, in turn, sell!
them to the public. The power to Dor
row is fixed by the State constitution
as in most States-at 10 per cent O.
the assessment valution OF the taxapl'
| property of the city, with certain eH'
emptions. At the end of 1881 the CITY
| credit margin was put at s294' 'ooo,ooo.
In addition to this the city is nearl!
ALWAYS in the market for short-tern
| loans. running from few days TO
whole year. At the first of the year tn,
CITY treasury is down pretty low, and
with taxes due only on May l and NO
yernber l, the city must borrow to carr.
on business. This short-term borrow
ing runs into large sums. In 1881 NeV
York City borrowed s22s, ,050,OOO In TIM
manner.
Delinquency Increases.
This year, however, tax delinquenc.
has increased, owing to the depression
The estimate of what the taxes vii
bring in has been increased by tn
city government, but analysts declar
]
enue as in 1881.
AS consequence, when the city
needing to borrow about $4,000, 600
went to its bankers, it was told TO par
the budget down a great many million
before any loans would be forthcoming
The city administration protested
Mayor Walker appealed vainly to Wash
ington. Finally, a drastic economy pro
gram was adopted The city's needs wer
cut down to sl00,o00,000 from $4,000,
000
This is typical on a grand scale, o
what is occurring all over the Unltei
States. Small towns in New Jersey i
Illinois, in California, in the South, Il
the Midwest and in conservative Ne'
England all have difficulties of this sort
What were they expected to do Whe
their State constitutions prohibited Dor
rowing at higher than 6 per cent rat
and New York City, enjoying the best c
credit ratings had to pay that amount
/, Local banks, overburdened with mu
nicipal paper that they could not reds
, count profitably,. called their loans II
The municipalities, turning the year-en
, with virtually empty civic Golfers, coul
! not pay. The loans had to be renewed.
! few bond issues here and there wei
! sold privately or over the city treasurer
| counter, but money raised in this fash
. ion did not aggregate s50,00o,000 fc
. the whole country during Novembe
n December and January to date.
4 But now the market has taken hop
: again, II is true that shortly 1t will has
e to absorb the heavy financing incidents
/ to the Reconstruction Finance Corpors
tson and twill have to md = SOC. 900