Evening star., 1934-04-15
BONDS CONTINUE
ADVANCE DESPITE
INITIATION MOVES
Establish Still Higher Peaks
and Eclipse Interest in
Stock Market.
HUGE RESERVES SEEK .
INVESTMENT OUTLET
Offset Possibility of More Direct
Currency Action-Preferred
Shares Also Up.
BY CHARLES F. SPEARE.

f. SIEAhE,
Special Dispatch to The Star.
NEW YORK, April 14.-The bond
market again this week overshadowed
the stock market in establishing new
high prices for scores of interest
bearing obligations, in spite of radical
movements in Congress by advocates
OF silver and the use of currency for
balllng out holders of farm mortgages.
The impact of excess bank reserves
on the investment market continues
to Offset the possible effect of infla-
ton OF more direct type than has
so far been experienced. In the nor
NAL progress of securities responding
to low money rates, the best issues
advance first. After they have reached
level where their return is too low
to attract the investor, secondary is
sues are sought. An interesting phase
of this cycle is the present demand
for industrial and railroad preferred
stocks, most of which were able to
span the depression without disturb
ance to their dividend rates. ..r.
This all supports the argument that
those with money to invest are more
concerned with income than with cap
ital appreciation. There is little evi-
dence today that institutions or pri-
vate individuals are following the
course they marked out a year ago
of liquidating their bonds, including
Governments and underlying corpora
ton liens, and replacing them with
common stocks.
Where Prophets Erred.
The argument a year ago was that
imitation would cut deeply into the
market value of Treasury issues, as
well as that of the primest railroad
and public utility mortgages, and that
the wise ones were those who would
have the smallest proportion Of such
securities in their portfolios when de-
valuation occurred This has been
found to be an error of Judgment.
Government loans are higher than
ever; good corporation bonds have ap-
preached the price average of l90l-02.
The difficulty today is one of sup
ply rather than of demand. The only
threat to Treasury issues is the tech
nical one of liquidation by the banks
when recovery has reached the point
where business needs accommodation
from them and is willing to pay
satisfactory price for it. When this
happy condition arrives, Government
credit, like all good credit. will be
benefited, the supply of Government
loans will slacken, and an approach
to a balanced national budget VIII
have been made.
Exchange Bill Altered.
Wall Street has been encouraged
this week by the ability of its repre-
sentatiyes to modify some OF the more
radical. features Of the stock eX-
change bill. This is passing through
the usual course of measures that are
drawn in haste and would punish the
innocent as well as the guilty. Com
mon sense generally determines their
destiny. 1t has been a good expert
ence for Wall Street to go up against
public opinion and discover where It
stands in the estimation of this pub
lie. 1t will learn that all required OF
it is fair play in speculation and that
this can be directed as well from
within as from without. -i-
The proposal by Senator Glass to
place authority for management OF
the markets in the hands OF a new
commission, rather than the Federal
Trade or Federal Reserve Boards, is
proper. The less the banks have to
do with stock exchange policies, the
better for them and for their share
holders. When bank employees become
so deeply involved in margined COM
mitments that it is necessary to ad-
vance them large sums, to the jeop-
ardy of depositors. in order to keep
them from nervous proStration, 1t Is
well to legislate them out of the
reach of temptation.
The conditions which Charles Z.
Mitchell described were not confined
to his bank. They have cruelty al
fected the lives of thousands of enl-
ployeS of institutions in every large
city of the country. The same is
true of those working for corpora
tions whose stocks in 1928-29 were
"touted" from inner circles. Many
clerks and junior officers will be using
their savings for the next 10 years
paying down loans against securities
bought at the top of the bull market
and, not infrequently, from their en-
ployers.
Wide Gains in Trade.
The tide of business moves little
stronger each week. Measurements Of
trade may now be made in COMPARE
son with those last year, when the
effects of the moratorium were weal-
ing off, Consequently, they are a
more accurate index of recovery than
those of the last month.
Two of the largest industries Of the
country, General Electric and West
inghouse Electric, show increases, re.
spectively, of so per cent and 81 per
cent in their orders for the March
quarter. Those of General Electric
were the largest for the period since
1881. The output Of automobiles in
March was three times larger than a
year ago. For the three months to
March 81, 1t represented tie produce
ton of 539, 1913 cars against 292,l76 in
1888. In April number of the fac
tories are at capacity figures. The
Federal Reserve Board reports that
retail sales in 511 stores in 255 cities
last month were A per cent more
in dollar value than in March last
year, with an increase Of q per cent
for the March quarter. .o.
Continuing the contrast between
present conditions and those a year
ago, we find that the bookings Of
iron and steel products for the second
quarter Of this year are so per cent
over those in the first quarter of 1888
and that steel production is now close
to so per cent of capacity. p
What is true of the industrial world
is duplicated in the fields of trans
portation and electric power. Those