Evening star., 1933-08-27
RAIL EQUIPMENTS
! l. POINT 10 REVIVAL
Action on Bond Market Held
Significant Gauge for.
- Entire List.
BY BYRON SELLER.

Special Dispatch to The Star.
NEW YORK, August 26-Strength
and increasing activity in railway
equipment obligations this week, along
with the generally brisk demand for
short-term. hiah-grade securities. were
hailed with satisfaction both in the Sc
curity market and the equipment in
dustry
Marketwise betterment in equipment
trust certificates is regarded significant
ly because an upturn in such issues usu
ally presages general bond market
advance. Tradewise firmer equipment
quotations are believed to portend pur-
chases by railroads of high-grade credit,
which. IN view of the present limited
supply of car trust certificates. would
have no difficulty in publicly disposing
{ Of such bonds.
Buyers of equipments usually are the
bsst informed individual and institu-
tiona1 investors Seeking safe and
readily marketable securities. these in
Vestors generally are in the forefront in
sensing changing investment market
factors, such as money rates and COM
modify trends.
Quotations on high-grade equipments
are calculated on an income yield or
percentage basis. e., at a price repre-
SentJng income return instead of dol
lar figures, a method necessitated be-
cause Of serial maturities and varying
coupon rates on different issues of the
same railroad system-such as Penn
E sylvania Railway, Reading Co.. Vir-
Etnian Railway and Union Pacific.
/. Their yields from 1926 to the present
indicate their forecasting abilities in
, regard to general changes in investment
I trends.
j. Yields Cut in 1926.
:. Income yields Of guilt-edged equip
s words their market values hardened.
! nearly month before corporate bond
averages pointed higher. In the next
year as early as April equipments
pointed upward and reached their pin
nacle early in December. At the outset
OF 1928 equipments headed downward.
They steadily receded through August.
rallied slightly and then tapered until
October, 1929. their recovery again ante
dating general bond market improve
ment.
Equipment yields lessened continu-
ously from the beginning Of 1880 until
November, when prices reacted, only to
st1ffen from the start Of 1881 through
September. Peak yields, and conversely
minimum market values in 1892, were
reached early in August. while the bot
tom OF the general bond market was
not scraped until November last. In
the first few days of last February
equipments braced, but this rally was
Snufted out by the banking HOLIDAYS in
March. In that month and in April
they registered yields as high as S per
cent. Thereafter they steadily bettered
until today the highest grade yield only
S.75 to 4 per cent
Naturally, during the banking trou-
pies institutional buyers, who needed
large cash reserves constantly, took only
very snort term equipments, while in
oivldual purchasers, fearing the safety
OF banks and noting cheapness of the
issues, bought more freely than Gus
tomarlly. The present general upward
Dond trend did not start until April
~. the rally succeeding the Exchange
closing being quickly erased.
Total Greatly Reduced.
Outstanding railway equipment OBJ
legations of $530,0O0, 900 contrast with
1nghtly less than s1,O0O.O00.O 900 in
1925. OF the latter amount s346 $50
700 represented purchases for the di-
rector general of railroads on January
is, 1920, under "the reimbursement for
motive power and equipment act" by
which roads bought from the Govern
ment equipment it had purchased dur
ing wartime control. Only $40 900 600
OF these 346,556.750 Government"
equipments remain in the hands of the
PUBLIC today, the rest having been
ser1ally retired.
(Copyright. 1933.1