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Show RAILWAY BONDS j SHOW WEAKNESS Investors Hesitate Before J Accepting Anything But Strongest Issues. By BYRON SEIJOER Special Correspondent of The Stand -ard-Kxamlner. (Copyright. 1922. by The Standard-Examiner.) Standard-Examiner.) NE7W YORK, Dec 9 Secretary of the Treasury Mellon's assurance 1 that additional taxes will not bo 'necessary and his announcement of the government's plan for meeting the end of he year requirements were helpful Influence ln the bond market this week The market moved mov-ed through a very narrow range all ,weok, but ln the main quotations 1 were higher. I It Is generally admitted that the treasury department has shown great skill in Its refunding operations opera-tions so far. In consequence, government gov-ernment bonds wore firm, although dealings were not on a large ecalo. ; The fact that there has been no great amount of new offerings also haw served to maintain prices of outstanding out-standing Ibsuos Desirable bonds tr yield flvo to fio and a half per cent aro roported scarce TO RXX)RD LOSS1S. ; On tn other side of the picture there have been salee of the obligations obliga-tions ot some weaker issues. The commonly accepted explanation In Wall street that these Bales were for 1 the purpose of recording losses on account of the income tax. This explanation ex-planation stems logical. The effect on sentiment, however, was unfavorable. unfav-orable. it was disturbing, for instance, to BOe the general mortgage bonds of the St. Paul road offered at a eac-rltlcc. eac-rltlcc. for no matter how great thO difficulties at present, the security back of thes- issues cannot be doubted Probably the disfavor futo which railroad stocks have fallen was also a factor in the decline of railroad rail-road bonds. afuch of th.- Investment Invest-ment situation depends on the condition con-dition of tfio railroads. That condition condi-tion may he summarized as follows I Traffic continues ln record-breaking proportions Although car loadings load-ings for the last wook ln November show a decrease. from October's high the heavy traffic Is holding ui this autumn longer than ever before Despite tnls. However, the consequent larg. ,;roFS earnings th net Is lower than for the corresriondine period a year ago .bowing the cumulative, ef- ! feet of the slock. Many roads which early In the summer expected to show substantial surpluses lor their common stock have bad to revise their expectations. in some Instances, Instead of resuming re-suming dividends, there win be, from present Indications, a dipping Into surpluses to meet fixed charges There are sou..- notable exceptions to these unfavorable results. The south and east have fared better than the northwest. Railroad rates arc admittedly very high. Pressure ln favor of a reduction is being brought to bear on congress principally prin-cipally from the agricultural interests. There Is no prospect of any reduction reduc-tion ln costs In fact, wag j n ,n.-system ,n.-system were raised this week So one has had the hardihood to suggest sug-gest that railroad labor accept any lower compensation KEPT IN I M l RTAtN 1 If then, net earnings ar to be increased or even maintained there must be an increase tn traffic. Thin can only come from general business busi-ness Improvement and how far such Improvement will go appears very uncertain. lt Is claimed, in some quarters that a reduction In rates would stimulate traffic to such an extent that not earnings would be increased but neither tnc railroad executes nor the Interstate Commerce commission, seen, to be Inclined to accept the explanation Meanwhile all the Interested parties par-ties aro kept In a state of uncertainty uncer-tainty as to the Intentions .' the legislators. President Harding's ad-OOOCy ad-OOOCy Ol the transfer of the railroad rail-road labor board's functions to the interstate Commerce commission, la generally approved. But with one government body iiing both wages and rates lt Is B very short step to government operation The result Is that Investors hesitate hesi-tate before purchasing the obligation obliga-tion of any railroad unable to operate oper-ate successfully under the most adverse ad-verse conditions. TA 1 I MPT 1SS1 I V Aside from the railroad situation the chief interest In th week as far as the investment community was concern, i 1 ntered In the discussion dis-cussion of th tax-exempt security Secretary Mellon announced himself In favor of the proposed constitutional constitu-tional amendment to prohibit further fur-ther issues of tax-exempt bonds. In this he has the support of most of the progressive element. Opposition from states and municipalities munici-palities which have been able to borrow money at very' low rates under un-der present conditions li to be expected. ex-pected. It may come from another source as well. The bonds of the land lanks, both the Federal banks and the Joint Stock banks, are tax-exempt tax-exempt andtheoretlcally at bast ihic enables the farmer to borrow longtime long-time mortgage money n easier terms. Whether the representatives of the farmer or congress will be ready to give up this advantage la a question. MAY ADVANCE SHARPLY. It Should be pointed out thut tin r, Is a sharp distinction between the fodoral land banks and the joint stock land banks The former are co-operative Institutions owned and operated for the benefit of the borrower. bor-rower. The latter are private Institutions Insti-tutions operated for private profit. Because of the cumbersome process necessary to amend the constitution a long tlma must elapse before action ac-tion Is taken, but lt would not bo surprising to see a great lncrens- ln the demand for these tax-exempt securities and particularly for the bonds of the federal land banks very soon now If the supply of tax-exempt tax-exempt securities Is to be limited whllo the demand Increases, the inevitable in-evitable result would be the rlnr In tho market price of these securities. CHICAGO FUTURES. CHICAGO. Dec. 9. The closinr futures fu-tures ranged as follows: Open High Low Closo Whent Dec. Jtt.101 1 22 4 1.10 1 12 Mav 1.17 1.204 117 1.S0U July 108 109 108 Vi 1094 Corn Dec. 70c; 72 70 .72 May 69 714 6? .71 July 60 7A 69 70 Oats Dec . 45' 44 4S May 484 -44. .43 .444 July 40 .41 .40 .41 Pork Blank Lard Jan 10.07 10.10 1 0 0ft 10.06 May 10.20 10.30 10 20 10 2H jn pn May I R -7 9 7n |