Evening star., 1936-04-12
More Than $4O0,O00,O 900
Bonds 0versubScribed as
Funds Seek Outlet.
BUYERS LIKELY TO FACE
DEARER MONEY PERIOD
Present Premiums May Be Re-
placed by Substantial Discounts,
Observer Points Out.
BY CHARLES F. SPEARE.


NEW YORK. April lin the first
10 days Of April the average of the
stock market advanced twice as much
as during the month of March. The
remarkable feature of the performance
is that it followed a year of rising
prices resulting in a so per cent in
crease in the averages.
This week over 100000, 900 of
corporation and tax-free bonds were
offered to the public and universally
oversubscribed, in spite of the fact
that there was nothing attractive in
any of them from the standpoint OF
the buyers return, though mostly ali
were of high quality.
Half dozen United States Treas
ury loans sold at the best prices since
they were issued. The others were
close to their March 26 high record
with the long-term bonds an average
of 20 points above their 1882 lows.
Nothing calamitous in domestic af-
fairs or threatening on the European
political horizon appears to check the
constant flow of money into securities.
The period of abandon seems to have
been reached when those with funds
on which little or nothing is being
earned turn to the stock market OF
the bond list for an outlet and an in
come.
Selectivity Apparent.
Fortunately, there is what Wal
Street describes as "selectivity" in the
purchase of stocks and "discrimina.
ton" in the selection of bonds.
Both classes of securities may be toe
high to warrant level approximating
that current. Among the recent
corporation issues was a public utility
bond on slightly over a per cent
basis, a State loan offered to return
l per cent, and a railroad note OF
decidedly second-grade rating taker
at an average under 3 per cent.
Again it is we'll to emphasize the
fact that, while the corporations in
refunding bonds on the lowest inter-
est basis ever known are improving
their credit, the buyers of their new
issues face a period of dearer money
when present premiums will be re-
placed with considerable discounts.
On smaller and less dangerous
scale, the conditions in the investmen,
market resemble those in the stock
market In 1929.
IaKlng the stock market by itself
1t will be found that its strength is
based on the safe foundation of re-
covering business. 1t may be over
doing the fact of expanding produc-
tion and rising net profits and divi-
dends and overdiscounting the mo-
mentum of trade predicted for the re-
mainder of 1896.
Imitation Fears Fade.
At least, it has a solid substance
1t Is not now, nor has it been to any
great extent, Influenced by the factor
OF imitation. That threat is disap-
pearing.
Except for the hysterical manifesto
on imitation recently issued by Roger
Babson. who recommends the pur-
chase of farm and a COW, where one
may be sustained on milk and spir-
itual emotions and escape his pre-
dicted reign of terror. in which Gov
ernment bonds, insurance policies and
savings bank accounts will be con-
sidered speculative, there has been fol-
months little reputable acceptance oi
the imitation theory.
1t is so strange that all of the wise
investors Of the world should be fill
ing their portfolios with American
Government bonds and American cor
poration issues, sensitive to soft
money" if it were true that the threat
of extreme credit imitation or cur
rency imitation was keeping them
awake nights
Trade Shows Big Recovery.
The measurements of the business
recovery are in some industries ex-
ceeding and in others approaching
those OF the pre-depression days. The
most sensational expansion is that in
the automotive trade. In the March
quarter General Motors sales were the
largest since 1929, while, for the
month of March, they outnumbered
any year since 1928.
The output of iron and steel this
week rose to sc per cent of capacity.
or the best in nearly six years. Last
month the gross turnover of the
Montgomery Ward Co. was the great
est for the month in the history of
this concern. Electric power output
for the week of April 4 rose nearly 13
per cent over the same period in 1885.
Bank clearings outside of New York
this week were 25.5 per cent above a
year ago, with an average gain of 80
per cent in the five cities of Omaha,
Dallas, San Francisco, Portland, Greg,
and Seattle, which were not affected
by those conditions which sent up
Pittsburgh's bank exchanges IS per
cent.
Psychology Changes.
While a certain amount of the cur
rent improvement, such as in iron
and steel, power production and rail-
road car loadings, reflects the release
of shipments embargoed by the floods,
the chief element in it is the change
in the psychology of manufacturers,
power and transportation interests,
jobbers and distributors, most of whom
have no abandoned their defeatist
attitude and are going out after new
business. The striking thing in con-
nection with it is that the up-surge
in trade comedies with the more gen.
eral sentiment that President Roose-
welt will be reelected.
This makes the movement more au-
thentic and separates it from artifi-
cial influences. The frequent COM
ment in business circles, and especially
in the heavy industries, is that there
will be rising volume of orders