Word: bondmarket
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There are few critics of another co-operative banking enterprise, American Securities Investing Corp. ("the bond pool"), formed by J. P. Morgan & Co. and other banks to purchase sound but depreciated bonds for profit (TIME. June 13). Its formation marked the turn in the bondmarket. Officered by Morgan Partners Thomas William Lament and George Whitney as president and board chairman, A. S. I. C. has called for only $10,000,000 of its subscribed $100,000,000. Even on that sum Wall Street thinks it must have rolled up a fat profit. A boiling bond- market last week brought...
...assets is in loans, discounts and investments. Whether these are good loans, good notes, or how much the bond account has depreciated, only the officers & directors know. Only a few institutions publish the due date and amount of each loan, list their bond holdings. Since the collapse of the bondmarket Comptroller Pole has allowed bankers to carry bonds at "intrinsic value," an arbitrary figure arranged between the bank and Federal examiners, and most certainly above market price. And nearly all banks indulge in "window dressing" by calling loans and selling bonds to build up cash just before the "close...
Last week was not so dark but the picture was parallel. Gold withdrawals continued, came to $152,000,000 in ten days. Foreign exchanges remained above the point where it was profitable to export gold. Stocks were all at new lows, the bondmarket dropping in a manner terrifying to bankers, insurance companies and all investors. Then overnight there came a change in the domestic if not the international picture. Bonds soared and the stockmarket churned upwards after twelve weeks of almost steady declines...
Motivation of the change was the prospect of a balanced Federal Budget. New York banks, previously aloof from the bondmarket because of fears regarding Congress (TIME, June 6), made good their promise that a balanced Budget would send resources sweeping into the investment market. Suddenly formed and announced was an American Securities In- vesting Corp. into the coffers of which 20 Manhattan banks poured...
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