Evening star., 1932-03-13
INVESTMENT BOND
MARKET SELLS OFF
Junior Railroad List Records
Sharpest Losses After
Recent Gains.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, March 12.-After ad
vancing about 11a average points-th'
latest phase Of an advance that ha.
carried bonds a full 10 points abovt
their December lows-the investment
market experienced an expected reac.
ton as the week ended. The decline.
were chiefly in the junior railroad list
where 1t has become increasingly evi.
dent that some situations exist thai
even the powerful Reconstruction
Finance Corporation may have difficulty
in setting right.
The law providing for the Finance
Corporation outlines quite definitely
that loans made to carriers or Other
companies must be backed by suitable
collateral, and it is doubtful in some
cases that the collateral is available
Wall Street has become convinced after
a full month of an advancing bond
market that the administration ir
Washington will not allow any further
railroad defaults, but it is not easy tc
see just how this can be done IN some
cases.
U. 8. Issues at New High.
There is nothing in business activity
carloadings and other factors bearing
on the carriers position to indicate that
any turn for the better in gross in
comes Is in sight. However, that Is
merely a somber spot in picture that
Is otherwise brighter. United States
Government bonds now stand at new
high levels for the recovery and the ag-
gregate value of bonds, as measured by
Standard Statistics index, Is some ST.
600, 100000 above the total at the 1881
low
With most Liberties and Treasures
selling around a 3.75 per cent yield
basis it was apparent that the Treasury
correctly gauged the market when II
announced its March financing in the
form of $900,000,o00 in 31s per cent
7-month and 334 per cent 12-month
bills. These were oversubscribed nearly
four times and were selling at Is to 4
point premium.
The municipal and equipment trust
market responded to the strength in
high-grade bonds. New York City is
sues were quoted around a 5A per cent
basis, against per cent only a few
weeks ago. Some State bonds showed
substantial improvement, Pennsylvania
Railroad equipment we're bid for around
SIS per cent basis and other equip
ments improved.
The imminence of the German cleo
tions caused quite furry in German
bonds. Emphatic declarations by con-
servative candidates that Germany
would honor and pay every private obli-
CATION, no matter what the outcome of
the reparations conference, served to
send Young plan 512s, Dawes Repara-
tlons rs and other German bonds sharp
ly higher. Later in the week Presi-
dent Won Hindenburg's expressed fears
OF radical victory caused some profit
taking and much of the earlier advance
was lost.
Gains in Sterling.
The sharp rise of sterling after the
Bank of England had ceased selling it
was a spectacular feature of the money
market. But it declined rapidly after
the reduction of the Bank of England
rate and 1t became apparent from the
speech of Chancellor Neville Chamber
lain that no present attempt to run
sterling back up to its old par was
contemplated British 5l2s dropped
about two points under the top they
established earlier In the week.
The Sino-Japanese War ceased to be
market factor and Japanese bonds
were steady. Australian issues con-
tinued their improvement, based on re-
vision of Australia's emergency tariff.
Canadian exchange jumped to a new
high for the recovery in sympathy with
the rise Of sterling and because Can
ada's favorable trade balance is still
growing. This was beneficial to all
Canadian bonds. An issue of Saskatche-
wan bonds was oversubscribed.
Bond offerings here were only $11,-
232 900, against SAC, 500, 900 last week
and e262 SIS 600 IN the same week Of
1881. 10
tCepyrisht, 1e32J q