Evening star., 1935-01-01
HOLDERS Of BONDS
BENEFITED IN "a
Appreciation Of 1875 Per-
Cent in Value Is Noted
in Securities.
BY AARON M. JONES.
(Cambridee Associates Stafi.l


Most people-particularly investors
and business men-if asked to COM
ment on the year 1884, would prob
ably characterize it as only "so-and-so,"
with actual progress and accomplish
ment pretty disappointing when re-
viewed in the light of the hopes and
forecasts of IL months ago. Mr.. Aver
age Bondholder, however, can look
back over the past year with con-
siderable satisfaction, noting that his
investments have increased some l2.5
per cent in value and have continued
to pay him a very good return on his
money during a twelvemonth period
which netted his neighbor, Mr.. Aver.
age Stockholder, only fractional appre.
citation, a very small income return, and
plentiful crop of headaches and
dashed hopes.
The familiar story Of the plodding
tortoise winning out against the swift
but erratic hare finds a close parallel
in the 1884 chronicle of the security,
markets. Quite undismayed by al
Superabundance of imitation" propa-
ganda at various times during theI
year, bonds pushed persistently andj
fractionally forward day by day. hesi-I
tating only for brief period in Midi
summer, to win the 1884 pennant ind
unspectacular yet indisputable FASH
ion from a disappointing and laggard
stock market.
Of to Fast Start.
Tracing the path Of bonds we see
that, spurred by signs of reviving
business and an unprecedented Gov
ernment spending program, bonds
raced away for a fast start during
the month of January, 1884, climb
ing rapidly to their July, 1888, high
levels in sensational fashion. Like
the legendary hare, the stock mar
ket in this phase of the advance far
outdistanced the slower bonds, but
was soon chasing backward while
senior securities pushed grimly ahead
supported by the pressure Of idle
money and sustained corporate busi-
ness and earnings. During this first
lap OF the race, the New Deal crack
down" on the air transport companies
and the stock exchange regulation
program put very effective damper
on enthusiasm for speculative COM
mon stocks, but hardly hampered the
shopping around for purchases of in
come and bargain minded bond buyers
anxious to put their dollars to work
at 5, s and per cent returns instead
of drawing ridiculously low rates Of
interest on bank deposits or Govern
ment bonds. AS a result the bond
line had pushed up into new high
territory by April, while stocks were
already painting weakly behind.
The months Of May, June and july
still found the bond market holding
firmly in sidewise movement, while
junior issues were being subjected to
two sharp waves of selling. At the
July, 1884, low points the bond market
stood 8.5 per cent above January levels,
whereas the stock line had reached
8.5 per cent under its starting point.
1t was especially during this trying
period that the bondholder had great
reason to congratulate himself in his
choice Of commitments. In the stock
division q miniature bear market was
in progress, with the drought OBJ
scuring the future of farm purchasing
power and with adverse political de-
velopments daily chiseling away at
common stock prices.
Weakened in July.
Beginning in July the bond market
began to weaken a little from its long,
sustained efforts of the previous half
year. The President hurriedly signed
the railroad pension bill increasing
railroad costs and the Frazier-Lemke
act impairing the value of contracts,
and both of these measures depressed
the bond market. Intensification Of
the drought and the Austrian crisis
threatening new European war
brought on further selling-with even
the United States Government join
ing in the downward movement. The
Presidents Green Bay speech prom
ising further progress in SocialiZation,
coincident with the naturalization Of
silver proclamation as a further in
flatlonary gesture. gave the bond in
vestors little comfort albeit they lost
less than most stockholders. Despite
strong Treasury support, the market
for United States Governments turned
weak on inf1ationary possibilities,
larger Government deficits and un-
certainty over how the large refinanc-
ing program of the Federal Govern
ment at mid-September would be
handled. Through all this hard going,
however, the bond averages yielded
only half of their advance from the
January level.
From mid-September to the close
of the year both bonds and stocks
gained their second wind" and
pushed steadily forward under the
stimulus of seasonal Fall improve
ment, increasing reStleSsness of idle
money and the apparent rapproche-
ment between the administration and
the banking and business leaders. De-
spite their strong finish, stocks were
unable to close up the long lead estab-
lished by bonds, ending the year just
about where they began. BondS
showed net gain of around 12.5 per
cent.
Looking ahead into the new year.
one hesitates to forecast that bondsl
will again AIRY away the laurel of
superior performance, for to do sol
would be to anticipate in effect thet
establishment of a bear trend in the
stock market. However, the prospect
of better things in 1895 for the stock
holder should be more than pleasing
to the holders of many a medium-
grade and speculative bond which,
given improving business conditions
and rising earnings, will undoubtedly
show an appreciation during the
coming year fully comparable to that
which may be expected on the average
NJ 4 a