Evening star., 1941-12-15
Government Bonds
Steady in Face Of
War Outbreak
Performance Very Good
Considering Gravity
Of Weeks News
BY FRANK MacMILLEN.

NEW YORK, Dec. IS wide
World The market for United
States Government bonds, tradi-
tionally the most sensitive of all
financial barometers in period of
national crisis, came through this
week of war declarations with an
impressively steady performance.
One of the principal authorities
on the market for the Federal is
sues said he regarded the way the
price picture had shaped up as
gratifying" and added that, con-
sidering the gravity of the news, the
performance was even better than
might have been expected"
More than $50 1000 100000 of Amer
ica's money is tied up in the bonds
and notes of its Federal Government
and the record of the week which
brought hostilities with Japan, Ger
many and Italy seemed to most Wall
Street men a real score in the eco
nomic tally of this gigantic world
struggle for power.
Some Support Necessary.
True. United States Government
bond prices felt the hammer-blow OF
the surprise japanese attack and
even some official support of prices
by the Treasury was undertaken on
Tuesday and Wednesday of last
week, the second and third days
of the war.
But, Government bond dealers re-
ported, this support buying was in
finitesimal in comparison with the
huge total Governments in the
hands of the public and, as the week
closed, prices were on the uptrend.
Primarily responsible for the
steady behavior of the key securities
market. it was reported, was the
decision of the big institutional
holders, commercial and savings
banks, insurance companies and the
like, not to toss their portfolios on
the market.
Three Factors Important.
In this decision, Wall Street men
said, three factors were predomi-
nant.
/. Institutional investment lists
already hold $4,000 100000 or up
ward of the Federal Governments
loans. To sell would be to break
down the value of this huge in
veStment.
2. The general feeling Of conf
dence that the war can be won and
the debt structure preserved with
out major dislocation.
3. Widespread recognition that
centralized CONT OILS, especially in the
Treasury and the Federal Reserve
System. exist to a greater degree
than ever before and appear strong
enough to keep the Government
market in hand, almost regardless
OF international developments.
New Issue Down.
Principal difficulty which devel-
oped in the market after the shock
OF war was in the new taxable 2la
per cent bonds due in 1970-72. which
got down to par-S1 900 per bond
off about IL points-s15 per bond
from their best price before the war
broke out.
This issue still was what Wall
Street calls ''undigested. A good
many individuals and institutions
had bought it at par in anticipation
of the free ride" to higher prices
which seemed sure and which did
occur.
1t was IN this issue that the Treas
ury centered its support. buying, it
was understood. only when the price
threatened to slip below the $1,000
mark.
Elsewhere in the list governments
OF only the longest maturities
showed comparable declines in
quoted values as a result of the war
nervousness and most of them still
were well above par when the turn
around came at the close of the
week.