The Price of Money, 1946-1969: An Analytical Study of United States and Foreign Interest Rates.

The present volume is intended to serve two purposes. The primary purpose is to chronicle the history of the greatest bear market in bond-market history, from 1946 (a time when the lowest yields of modern history were recorded) to 1969 (when unprecedentedly high levels of rates were reached). "A history of interest rates should not fail to be dramatic," wrote Homer in his earlier volume, and the present history lives up to this standard. The book is interestingly written and it is especially useful for a valuable appendix containing time series of a variety of bond yields collected by Homer, Johannesen, and their associates of the investment firm of Salomon Brothers and Hutzler. These series are far superior to alternative yield series currently available. They are constructed from over-the-counter quotations (where most bond trading actually occurs) rather than from bid prices on the organized exchanges (where quotations are often nominal rather than real). Moreover, the series are far more homogeneous with respect to quality, bond coupons, call provisions, and special features, than those of Moody's Investors Service, which are usually used by economists in empirical work. Most importantly, the authors have compiled time series of new-issue yields. These series are far more responsive to bond-market conditions than existing time series of yields of "seasoned" issues, and the Homer-Johannesen data would appear to have many uses by economists in empirical work on interest rates and corporate investment behavior. The second purpose of the book is to analyze and account for the interrelationships among the different types of yields. Homer and Johannesen study the relationship between the yields of many different debt instruments of the same maturity. There are discussions of historical yield spreads between utility bonds, industrials, and governments; new issues and seasoned bonds; low-coupon and high-coupon issues; tax exempts and governments; high-quality ... [ABSTRACT FROM AUTHOR]