The Ypsilanti daily press. (Ypsilanti, Mich.) 1928-1962, 1944-02-12

likewise, been restricted. In addi-
ton to the difficulties in obtaining
priorities. taxpayers have insisted
that municipal spending be kept at
a minimum. As a result many
cities and states have built up sub
stantial reserves, cut their indebt-
edness and improved their general
fiscal position.
Institutional demand for NUM-
cipals has fallen off sharply due
to the greater atractiyene of
government bonds To Offset this
there has been an increase in the
purchase of municipals by indiyi-
dual investors. Higher tax rates
have forced many wealthy inyes-
tors into these bonds. Banks have
also been increased buyers Of
municipals. Lack OF new munich
pal issues. plus demand for bonds
OF this type, has resulted in very
high prices. There has been some
recession since last October. but
they are still 30 high except in a
few special instances.
Railroad Bonds
While 1913 was an excellent
year for the railroads. the final
figures will show some reduction
in the percentage OF traffic gains
over 1912. Higher taxes and wages
in 1943 will also. in many instan-
ces, result in a reduction in net
earnings when the final figures are
in for the past year. This down
ward trend will be further reflected
in 1914. Railroad debt. however.
is being reduced and working CAPT
tai is rising. Hence, the financial
positions of most roads are being
strengthened.
Rail bonds have been very popu-
lar. Investors have made money
out Of them. This is particularly
true of the second grades and the
obligations OF roads in receiver
ship. Many institutional holders
of rail bonds sold out at the wrong
time and have since zone back into
the rail market Investors who
are seeking higher returns in rail
bonds. comparable in security 70
industrial and utility issues, may
buy first mortgage issues .-espe.
cially those of the recognized
roads. Avoid the incomes at this
time. These should sell for much
less during the railroad slump
which will sometime follow World
War IL.
Industrial Issues
As in the case OF the railroads.
industrial activity made new highs
in 1913. With the peak Of war
production passed, with enormous
taxes and labor loads, with re-nego-
tiation costs and with the problems
of re.conve-sion. industry will be
loaded with burdens this year.
Yields on top grade industrial is
sues are lower than on comparable
railroad bonds Prices have con-
tinued generally toward higher
levels. For institutional and large
individual buyers. governments
may now be a better bet than the
best grade industrials.
This year will witness continued
heavy calling of corporate issues,
which will further reduce the sup
ply OF industrial bonds. This will
force investors into preferred
stocks and second grade bond is
sues. A careful analysis OF indivi-
dual companies and special situa-
tons should govern purchases in
this latter group. Venture CAPT
tai, willing to take an average
business risk. may be more sue
cessful in the postwar period OF
industrial development than con-
sentative low risk and low yield
ca lital investments.
UtiIity Bonds
Along with railroad and indus
trial activity electric power pro-
duction has shown tremendous
gains and now stands at an all
time high. Net earnings OF the
utilities have not increased much
for the industry as whole be-
cause Of high taxes and operating
costs. However, the industry is in
a strong financial position and
should remain so. In the matter
Of debts, many companies have had
a good house cleaning. Many OF
their obligations have been re-fln-
anced over long term periods at
low interest rates.
Medium grade utility issues offer
for investment.
Electric power viii continue to be
in heavy demand. In fact, this
year may show an increase OF 80
over 1913. OF all the bond groups,
utility issues may be the most at
tractive. Careful selection OF
companies from geographical
point of view is necessary. Good
management will also be a factor
in their future prices.
Conclusion
The individual investor should
first seek to maintain a proper
balance between fixed and secure
income securities such as bonds
and the equity securities such as
preferred and common stocks.