Evening star., 1935-06-30
MONEY LOG JAM
BELIEVED At END
New Financing Still Small
Compared With Tota!
Refunding Activity.
BY FRANK III. MACMILLEN,
Associated Press Financial Writer.

NEW YORK, June 29-As the half
way mark is passed in the 1885 eco
nomic race, business and financial
circles look back on an exciting and
dificult course which. on the whole,
has been negotiated with considerable
success, they believe.
Many obstacles have been met and
apparently surmounted, including the
adjustments to such varied outside
influences as the Supreme Courts gold
clause and N. r. A. decisions: soaring
and later declining silver prices as the
Governments metal buying program
led SPECTATORS in that market to over
reach themselves; and financial
crisis in France.
Easy Money" Big Factor.
Behind and above all these infiu-
ences, however, some of the best in
formed observers of economic affairs
see one important development which,
in its long-term significance. they felt,
outweighed all others. When the cur
rent chapter of business and financial
history is finally written. these au-
thorities feel, the chapter heading will
be Easy Money"
Early in the year Joseph P. Ken
nedy, head of the S. E. c., proclaimed
the breaking up of the financial log
jam" Developments since that time
have tended to bear out his prediction,
experts believe. Refunding has gone
ON apace. with securities issues near
the $1,000. 100000 mark in the first
half of the year.
New money. as distinguished from
refinancing, has not come out in
quantity as yet, although minor por-
tions of some of the refunding issues
have gone into plant renovation or
expansion.
Interest Rates Lower.
Meanwhile the trend of interest rates
continued steadily lower. Many short
term Government issues have virtually
reached the 'no-yield" basis. The
call money rate, for many months
pegged at l per cent, finally collapsed
in mid-April and has since run at "a
of / per cent. Highest grade bonds
have advanced. Bank reserves have
piled up until the figure finally crossed
the IS ,000, 900 900 mark. about half of
which is in excess of legal require
ments, both figures peaks for the entire
history Of the Federal Reserve system.
Stock prices, which moved narrowly
lower in the first two months Of the
year in quiet trading which awaited
the gold decision of the Supreme
Court, finally gave ground substan-
TALLY to hit their lows in March. The
bottom, as measured by the Associated
Press average of so issues was 34.5.
The invalidation of the Federal rail
pension law in early April. however,
appeared to help turn the tide, al
though mild improvement had been
under way from mid-March.
Setbacks Few.
Interruptions to the rise were few
and mostly of minor proportions sub
sequently. The pressure Of investment
funds caused q consistent bidding-up
of equities, especially those paying
dividends, but issues providing no in
come were carried along in the upward
trend,
The Supreme Court ruling which
ended the N. r. A. code structure ap-
peared to inaugurate new wave Of
buying once its implications had been
absorbed by the trading fraternity.
As the second half Of the year ap-
proached, the market, measured by
the Associated Press combined average.
was at q new peak for the year around
10 points above its March nadir.
Business as q whole was generally
conceded to be in q more satisfactory
state than at the same time in 1884.
The Spring rise this year was vigorous
in most lines and especially in auto
mobile manufacturing and in retail
trade. Heavy industries were laggard,
however. with steel production well
under 1884.