New-York tribune., 1916-07-14
Higher London Bank Rate
Divides Interest with
Stocks.
INDUSTRIAL SHARES
AGAIN SELL LOWER
Advance In Bank of England's
Rate a Recognition Of Higher
Money Here.


eerned itself chiefly yesterday with the
continued exhibition OF weakness by
the industrial specialties, which again
declined sharply. the principal topic of
discussion in banking circles was sup
piled by the action of the Bank of Eng
land in advancing its minimum rate OF
discount from 10 6 per cent This i'm
portant development, marking, as II
does, the first change in the rate since
August 8. 1914, after the initial effects
of the war panic had passed, although
something Of a surprise on this side,
was nevertheless generally accepted as
a recognition on the part of the Eng
lish banking community OF the changed
conditions IN the local money market.
London has been watching closely the
trend OF events in this market for sew
eral weeks Of late and the current hrm-
ness Of rates has been largely instru-
mental in forcing up money rates on
the other side. The necessity of main
tanning interest rates in London on n
par with New York has been due to
the fact that American banks have been
carrying large balances with London
banks Tor months past in order TO
take advantage of the more profitable
rates prevailing there as compared with
the local market. Consequently Lon
don has realized the need of meeting the
rise on this side il these balances are
10 be retained.
An aspect Of the situation that did
not pass unnoticed here was the appar-
ent confidence on the part OF the Lon
don financial authorities that higher
money rates have come TO stay for
some time in this market. Had they
believed the rise here only temporary
furry with rapid turn to condition
Of ease il is considered unlikely that
any change in the bank rates would
have been made at this time. fester-
days action by the bank was preceded
a few weeks ago by an advance IN the
open market discounts in London at
time when the first evidence Of frmer
rates was appearing here. AT that time
il was quite apparent that the Engllsh
bankers were bent on meeting the ad-
vance in rates in New York in hopes
Of retaining American and other for
eign banking balances that otherwise
might he withdrawn.
The stock market yesterday started
out quite vigorously with some sub
lost its strength, and subsequently
found itself again in control of the pro-
fessional traders, who have success
fully been operating for the decline for
a week or more. Incidentally, their
efforts yesterday were again assisted
by fresh liquidation. The drive against
the list centred for time in the motor
stocks and rubber shares, with losses
of 2 to points in such issues as Stude-
baker, Willys-Overland, Goodrich Rub
ber. Maxwell Motors and Chandler
Motors. Curiously enough, WHY'S
Overland, on which the directors had
increased the dividend and voted an
extra stock disbursement the day be-
fore. was one of the weakest, with
decline Of points. The war shares
bore a part of the selling pressure, with
losses of TO 3 points common. Cru
chile Steel dropped to 66h2, where 1t
showed loss of more than points:
Bethlehem Steel fell more than ~
points, recovering part OF the loss
and ending only 8h points lower
United States Steel left of a fraction
lower after an early advance OF 50, fol-
lowed by a break to S3h. Railway
shares as general rule displayed
better tone than the specialties, but
were nevertheless ilOic VI iSSo iA'NbN -
lar. ,
Some large changes were noted in the
Bank Of England's return, including a
drop of s73,O00,OO0 in loans and re-
duction of 55,500,000 in general de-
posits. A loss Of s4,600000 in gold was
reported. The Bank of France, on the
other hand, reported an increase of ST.
100000 Another arrival of S3,OOO,OOo
in gold from Ottawa was announced,
making s9,000,000 so far this week:
Official announcement of the details OF
the 500 100000 new 3 per cent col
lateral loan arranged by the French
Government with local bankers came
after the close of the market. Money
rates continued fairly easy, compared
with recently preceding days, with re-
newals at per cent. While most loans
we're made at per cent, the rate
dropped as low as 8 per cent. Foreign
exchanges were quiet, with weakness in
marks, which fell to 72ss cents for
four, a feature.