Evening star., 1934-01-13
BONDS STRENGTH
IS HOPEFUL SIGN
Quiet Inquiry for Higher
Grades Held Especially
Reassuring.
BY GEORGE T. HUGHES.

Special Dispatch TO The Star.
NEW YORK, January 13 (NAN.A).
H-Wan street does not know quite
what significance to attach to the sus-
tained strength In bonds, always ex-
cepting, of course, the obligations OF
the Government. 1t does not fit in
with an inf1ationary Interpretation OF
events, although it does not necessarily
contradict that explanation.
The interest in speculative bonds is
akin to that in similar stocks, but the
quiet inquiry for bonds of investment
grade is something different. AS mat
ter of fact, the whole bond market
has been creeping ahead with only
minor interruptions since late in No
vember On or about November %
the decline which started in July cul-
minated, and the price curve ever since
has been upward The market was eX-
ceptionally strong Thursday, with rail-
way, utility and industrial issues all
participating.
Nor is the buying confined to dealers
and in-and-out traders, as is so often
the case at the start of an upturn.
Bonds are being taken out of the
Street, some of them by the financial
institutions and some of them by out
of town individual investors. That sort
of accumulation is more permanent
than the professional variety. Bonds so
bought do not come back on the mar
ket for a point or two OF profit.
Capital Stand Cited.
Apparently inspired dispatches from
Washington, crediting the President
with indorsing the position of the In
terstate Commerce Commission with
regard to the adviSability OF sinking
efoh
bonds, was a help to that section of
the market. The same is true of the
utilities, toward which the adminls-
tration attitude Is understood to be
more kindly.
The Yields on both classes are much
more attractive than those offered by
the corresponding stocks, so that there
is a sound basis for price improvement
providing that reasonable stability in
the dollar is achieved.
On the latter point developments
have been reaSsuring. Measured by the
French franc, the gold value of the dol
lar has varied less than a cent since
the first of the year. The range has
been so narrow as to suggest that the
market was under official control, but
of that there is no evidence.
Reports persist that when legal sta
the 6O-cert level or 10 cents above the
minimum to which the unit could be
devalued under the Thomas amend
ment. At any rate, the bond market
does not seem to fear for the future Of
the dollar
Foreigns Also Strong.
The strength in foreign bonds is just
as pronounced as that in domestic is
sues The Australians are a good Illus
tration. They are all selling higher
than at any time in 1888, and the
obligations of the city of Brisbane are
10 points above any quotation seen
last year. Other foreign issues have
been equally well bought. In the case
of bonds which are dealt in both in
New York and in London, the New
York price has been drawing closer to
the level abroad.
The johnson bill Just passed by the
Senate will not affect foreign bonds
already outstanding in this country.
1t only prohibits the purchase or sale
of bonds issued after the passage of
the act if the government concerned
is in default on its debts to the United
States. 1t prohibits new loans If the
default is on obligations due this Gov
ernment, due any citizen of the United
States or any corporation organized in
the United States. That is pretty in
elusive. but the aim, Of course, Is to
penalize France.
(Copyright, 1894 by North American News
paper Alliance. 1ncD