Evening star., 1934-03-11
BONDS ESTABLISH
MANYNEW HIGHS
UNSTEADY CLIMB
Small Size of Treasury FL
nancing Cited With Easy
Money Rates.
RUSH FOR BANKERS
ACCEPTANCES FOLLOWS
Huge Excess Reserves and Active
Demand at London Also Spur
Investments.
Special Dispatch to The Star.

cent certificates due March is, adds
nothing to the debt total. It is true
the new four-year Treasury 3 per
cent notes offered In exchange, Lift
per year interest charges, but the
maturing certificates were for only
six months and the new issue Is for
four years. The new notes are in
line, on an interest basis, with SINH
lar outstanding issues.
The first reaction to this Treasury
financing was a rush for bankers
acceptances, which caused dealers to
mark down their yields or, viewed
from another angle, mark up their
prices, since these securities, in point
OF safety, rank next to United States
Government bonds.
Although March Is always is re-
garded as an opportunity to seek
new funds. the fact that the Treasury
did not try to do so at this time
should have occasioned no surprise,
in view of its large cash balance.
This amounts to $4,874, 900, 900, Of
which $3.50, ,000, 900 was derived from
the profits on the revalued seized"
Federal Reserve System gold.
Spending Below Estimates.
Furthermore, Government spending
this year to date has run below eS-
Inmates indicated in President Roose-
velt's budget message. Along with
this fact, also, must be considered
the April Is financing. On that date
the $1,000, 100000 Of called fourth
Liberty ANS become payable In cash.
The Treasury already has made
plans for caring for this maturity.
It would seem, from the present
Treasury surplus and the smaller than
estimated rate Of spending, that the
April Is operation will be easy.
Easier money prices, felt chiefly In
the choicest loans for six months or
less. reflect the heavy gold inflow,
the small withdrawal Of Federal funds
in banks and the almost negligible
lending activity of banks. The slight
extension Of bank credit Is ascribed
to the banks inability to obtain true
pictures Of prospective borrowers.
Corporations, to make good showing,
marked up their inventories literally
at the last year end. Banks, remem-
bering 1929, will not accept these
mark-up values as basis for loans.
Bond buying has been stimulated
by the piling up Of excess bank re-
serves to record figures, one Of the
causes for lower money rates, along
with the huge cash accumulations In
insurance companies and corpora
tions. It has been accelerated by the
active markets for couponed issues in
London, where gilt-edged securities
1902. London bond bidding was re-
flected here In the better grade OF
foreign government loans. which
climbed to record high levels in the
last few days.
Insurance Buyers Active.
Life insurance companies have
steadily increased their bond pur-
chases this year. This is natural in
view of the slight buying a year ago,
when they were making loans on poll
cies and premium notes. At the same
time policies were being Cancelled. A
representative life insurance group,
% companies, in the week ended
February "a, bought $31 ,212,875 Of
securities against $18, 1877 in the
same 1888 week. Their purchases
from January to February "a to-
tailed $209, 1894, ,981 against $62, 1922 ,453
in that same period Of last year.
The lack of new issues has also
been a factor in the rise Of out
standing bonds. If the New York
Central convertibles and American
Water Works issues be excepted,
about the only important new issues
this year have been municipals.
State and municipal borrowing in
February was $73,663, 1881 and in
January $158, 8,494, 1896, making the
two-month total $232,l57,777 against
$50, 1881 ,103 In the same 1888 period.
This municipal borrowing total is the
largest for any similar two-month
period since 1928. However, $l45,-
521,O11 of P. W. A. and R. F. C.
loans are included in this total.
Prime rails were the only group in
the domestic corporate bond list this
week to record new high for the
year. In point of gain, however, they
were outdistanced almost twice by
the industrial averages, which were
helped by the good earning state
ments appearing since the turn Of
the month. Second-grade rails were
of q minute fraction as q result of
the Federal Trade Commissions re-
port on the Van Sweringen situation.
Public utilities were up about one
fourth point.
Utilities Under Fire.
The rise in the utilities came after
st. Paul voters rejected municipal
ownership Of an electric plant and
the P. w. A. refused loan to Newark
for that purpose. Taken as q group,
however, the power and light issues
continue to lag behind other domes-
tic bonds in the year to date.
Utilities remain under fire of legis-
lative attacks, both Federal and
State. The average bond buyer,
whether speculator or investor, favors
rails over utilities because the Gov
eminent virtually will have to pay in
.terest on carrier obligations and has
no such intentions 20 far - utin-
ties are concerned.
toooyuagtsA 1oOA.I "