Evening star., 1935-01-27
IDLEFUNDS PUSH
|NVESTMENTSUP
AS STOCKS DRIFT
Eleven Treasury Loans Hit
Highest Levels Since
They Were Issued.
HUGE INFLOW OF GOLD
TO INTENSITY SITUATION
Supreme Court Decision Expected
to Lift Uncertainties Now
Holding Back Equities.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, January 26.-Tht
sluggish and dropping disposition OF
speculative markets is in sharp con-
trast with the buoyancy Of investment
securities.
Common stocks have made no prog
ress SO far this year. On the other
hand, nearly all high-grade bonds are
at an average equal to or better than
that of last Summer. Eleven United
States Treasury obligations, direct and
guaranteed, have this week reached
the best prices since they were issued.
The State of New York sold $40, ,000,-
900 of five-month notes on a g OF l
maturing in eight months, at re-
turn to the purchasing institution OF
5s of per cent.
The best of the corporation mort
cages are at figures that provoke hold
ers into taking a profit and then
seeking reinveStment on better terms,
even if at less security. One indus
trial 5 per cent preferred stock is
quoted at premium of II points over
par, or at what year ago would
have been considered a proper return
for a first mortgage bond.
This all re-emphasizes the condition
of a money market gorged with funds
that continue to pile up, with little
outlet in the normal channel Of new
security issues and with small demand
from commercial enterprises. A new
factor is the inflow of gold, which may
reach record proportions this month.
Stocks Likely to Benefit.
Just what to do with this expand
ing volume of credit is the pressing
problem of the capitalist 1t is net
worth his while to employ it in time
loans, there are few opportunities in
the commercial paper market, and
short-term Treasury bills yield only a
nominal amount. The eventual effect
Of low earning power of money will be
a spread of investment demand into
securities of lesser quality than those
on which capital has been concentrat-
ing for nearly a year. In England,
where the same situation prevails, the
small earning power of money has
driven a considerable section Of the
buying public into stocks.
AS market influence the impend-
ing decision of the United States Su-
preme Court in the gold contract
cases has been slight.
The nervousness of the previouS
week has disappeared. Wall Street
now looks for an opinion by the court
February 4. 1t is still the belief
among legal students Of constitutional
questions that the court will hold the
owner of a Liberty Bond entitled to
payment in dollars at the rate existing
prior to January 81, 1884. The in
crease in the Government debt caused
by such a decision has come to be
accepted by bankers as not unbear-
able. though a few weeks ago they
grumbled a good deal over the pros
pect of similar expansion in the ma
tional deficit.
AS to the courts probable stand in
the matter of gold bonds of corpora
tionS, opinion varies. 1t would not be
surprising if this differed materially
from that dealing with the Govern
ment debt
The settlement of the gold cases Is
expected to lift some of the weight
now pressing on the stock market and
to produce a clearer atmosphere in
those business circles that are always
moved to action or disposed to post
pone commitments as Wall Street
takes a positive stand on some ques-
ton or finds difficulty in making up
its mind. 1t should also have a bear
ing on foreign exchanges which have
been unsettled by the implications of
a. decision affecting gold payments.
Industry Maintains Gains.
A perusal of the gauges of indus
trial activity this week indicates only
a slight check to the momentum
which has carried the business index
up nearly Is points since the low point
was established for 1884 at the end Of
october. This measuring rod is now
at the highest point since last May
and may be compared with September.
1888.
The factors making for this ad-
vance include a rise in the iron and
steel trades operations to Sis per
cent of capacity, the best since last
April Associated with it are the es-
timated production in the current
quarter of 100000 automobiles,
against 100000 last year and 1,o46,6S9
in 1880; the 9.4 per cent increase in
electric power production, Of which
the most significant gain Is in the
industrial sections Of the East, and
substantial gains in bank clearings in
oonh IF fba 10 EadaroI Dnearva dis
trictS.
Although retail business is irregular
and January's increase over the COR
responding month in 1884 may be only
half as large as estimated, the re-
ports from nearly all parts Of the
country suggest that pay rolls are in
creasing and that the public Is putting
its money into circulation. From
Cleveland it is reported that the steel
mills are paying out more to labor
than since 1880, which duplicates the
situation in Detroit. The tire manu-
facturers have just announced o S per
cent wage increase. Retail sales in
Chicago, Minneapolis and Dallas this
month are from 10 to IS per cent
over year ago. More construction
work is in sight in the Richmond and
Atlanta districts than in the North.
Related to this aspect of business is
the expansion in demand for cement,
which was 20 per cent greater In 1884
than in 1888 and is expected to hold
this year at about the 1884 level.
Copyright. 1885. by the North American
Newspaper Alliance. Inc.)