Evening star., 1939-12-31
Bond Values Return
To High Marks Of
First Of Year
War Of Nerves Spreads
To Investments, With
Many Risks Foced
By AARON M. JONES,
Cambridge Associates Writer.

Both high-grade bonds and lower
grade credit obligations ended the
year 1899 at almost exactly the
same level as they began it, but
senior securities hardly reflected in
their action the "bliSsful certainty
of the 3 per cents" which we tend
to associate with the quiet, steady
markets of other days.
AS might have been expected in
a world where the war of nerves
had become the overs -shadoWing
background of all mems thinking,
the bond market reflected in its
action the vague uneasiness, the
fears, at moments, the very terror
of those caught in a .maelstrom of
unmeasurable worldwide forces.
Three war scares in January, April
and August sent lower grade
equity" bonds plummetting close
to their 1888 depression lows. Alter
mating periods of recovery reflected
the relief that imminent war had,
for the moment, been avoided.
Finally the business recovery,
initiated by hopes of war boom,
provided the background for rally
in medium grade and speculative
obligations, carrying them back to
the levels of early 1889.
In the first seven months OF
1899 prime corporate obligations and
United States Treasury bonds proved
relatively immune to war scareS.
Indeed, during this period, refund
ings of corporations, and particular
ly utilities, continued at an accele-
rated pace. Utility bonds which had
sold below so in 1923 and which
were rated as medium-grade bonds
at best, were called and replaced
by lower coupon issues at fairly long
maturities. Only at the actual out
break of hostilities in early Septem-
ber was the equanimity of the aver
age high-grade bondholder really
put to the test.
War Causes Collapse.
Not since the early spring of 1887
was there such precipitous collapse
of high-grade bond prices as oc-
Cured in the month of September
Declines of IL and even Is points
were fairly common in the 3l2 per
cent long term issues of grade "a
companies. With support coming in
to the United States Treasury bond
market and with actual warfare
developing on much more re-
stricted scale than had been antici-
pated, high-grade bonds at the end
of the year had recovered SUBJ
stantial part of their September
reaction.
AS the average bond investor
checks over his books for 1899, the
figures will show that he netted nc
serious losses and perhaps showed a
modest profit from the years be-
ginning to the years end. Never
theless, his experience in 1899 was
certainly not calming influence as
he nervously surveys the uncertain
ties in the months ahead. Ten years
ago, a bond-some companys. some
nations, or some municipality s
promise to pay $1,000 at a certain
time, duly secured by mortgage and
credit standing-was associated with
safety of capital and fair income
Speculation in Bonds.
If the bond buyers of the "gooo
old days" could be truly called in
vestors, leaving to others the profits
o,d ,ieLc occocjated with Snecllla l.
tive ventures, then certainly the
bond buyer of today is, at least, by
comparison. a speculator by neces'
sity or choice. Certainly the bond
holder of today must, consciously
or unconsciously, speculate upor
either the trend of interest rates OF
upon the earning power of relatively
marginal companies and industries
! whose credit standings fluctuate al