Bonds Praised

Andrew William Mellon last week advised investors to purchase bonds rather than stocks. Reason: the bond market is "not particularly good"; many a bond is low in price, high in interest. Some stocks. he said, were too high to be good investments and it was easier to pick out a good bond than a good stock.

Mr. Mellon's homily on what every investor knows had an immediately bullish effect on stocks rather than bonds. Reason: low money rates make bonds attractive; but low money rates also make it easier to borrow money with which to speculate in stocks. The Mellon statement was taken to mean that money rates would not fly too high, which is about the only fear in the hearts of current bulls. Roy A. Young, Governor of the Federal Reserve Board, said that though the Federal Reserve system might "be compelled in the end to resort to higher rediscount rates," it should first "use every other effort" to reduce inflation.

Paul Clay, statistician, said that stocks will slump from 15% to 25% before Labor Day.