New-York tribune., 1916-07-17
Higher Money Compels a
Further Adjustment
of Prices.
RISE IN CALL RATE
IMPORTANT FACTOR
London Directly Affected by the
Developments Here-Gold
Imports Continue.

Severe declines in the industrial spe-
cialtes which brought a more or less
sympathetic reaction in the railway
shares. although much less extensive,
characterized the trading in stocks IN
Wall Street last week. At the same
time money rates. which had been tend
inc gradually but none the less steadily
inward since the fore part OF June,
hardened sharply, and the financial
community found itself compelled to
pay the highest rates for dayto-day
funds since the fall of 1914. How far
the stiffening of money was responsible
for the weeks unsettlement and sus-
tanned decline in the securities market
it is difficult to say with any degree of
certainty. Nevertheless, II may be as
sumed that basis for the persistent and
successful drives of the professional
traders was probably to be found in the
hardening tendency of money. which in
turn forced holders of stocks, discour-
aged by the failure of the market to
show signs of recovery, to offer their
holdings at considerable concessions.
Specialties the Weakest.
While the market enjoyed decline
that extended to practically every issue,
there were some stocks that were far
weaker than others and that took much
larger losses. This was particularly
true Of some of the war stocks and
issues of special description, such, for
instance. as the motor shares. Profes-
Sional bear attacks launched time and
time again at the more prominent OF
the industrial group sent prices down
abruptly. and stocks which in the re-
cent past have been noted for their
manipulation at the hands of pools and
ciloues Jared very badly indeed.
single example and probably the most
spectacular. was United States Indus
trial Alcohol. After selling as high as
1902 in April, compared with 10 IN
January, 1914, before the speculation
in the war stocks got under way, the
stock dropped under par last week, reg
istering a loss for the period of about
80 points and net decline from It's
high record of 73 points. Here was the
puncture of the boom in a stock that
/ had been advanced Systematically on
Iumors of big war orders and huge
earnings and talk of a capital readjust-
ment. This issue is one of many in the
non-dividend paying class that have
mounted on the crest of the specula-
tive wave. only TO fall precipltately
with the subsistence Of the boom. Spe-
cialties like Crucble Steel, Baldwin
. I ord nf tho motor
shares. while not so weak as Industrial
Alcohol, nevertheless reacted quite
sharply at times, and by their action
indicated their fall from favor with
the traders. In the case of the war
stocks there was repetition of the
talk Of cessation of war orders, which
no doubt contributed to their further
decline.
Higher Money Rates.
The highest rate for call money since
November, 1914, was established on the
first day of the week, after the bank
statement of the preceding Saturday
had disclosed a sharp fall in the bank
SURPRISES Money on call on the eX-
change loaned at 6 per cent for brief
period on that day, and while the ten
dency the remaining portion Of the
week was toward a lower level-gettlng
down to 2is per cent on Friday the
effects Of the higher loaning rate were
discernible in many quarters. For one
thing and this probably had as much
to do with the decline in the stock
market as any other single factor the
banks called loans on a heavier scale
/ than in long time past. Moreover
discrimination against industrial shares
carried in bank loans became more
/ widespread. and the process of shift
/ ING of loans that was the inevitable
/ consequence could not help but affect
adversely the old line issues as well as
/ the volatile specialtes. Toward the
/ end of the week there was some evil
dence of the covering of short con-
tracts. which resulted in substantial
recovcries on Friday, but which by no
means made up the earlier declines, and
/ the average Of the leading industrials
left of about points from the close of
the preceding week and about 6 points
under the years high average
Higher Range Not Expected
While the furry that carried the
call money rate TO per cent was
hardly expected, conservative observ-
ers of matters financial had looked
for a higher range for several weeks.
( Bankers had predicted since spring
that the era Of abnormally easy money
had passed They based their predlc-
tions on the rapid progress of the in
dustrial eXpans on during the last
wear and a half, which had steadily
rc6uced banking surpluses and tended
. towatd infla ion. On top Of this were
other factors. among them the large
voume of foreign financing in this
market and the huge influx of for
oicn held American securities. lmpor-
tation Of more than S500,000,000 in
gol. during the war period, while It
has helped 20 increase our credit IA
cilities, has nevertheless been insult
fcient 10 meet the added burden, and
the surplus of capital in the Ameri-
can market has been gradually abb
soibed. The drain on banking funds
is indicated in the dwndling sur
pluses Of the New York banks, which
at the beginning of last week stood
but slightly above $4,000 900. com
pared with a high water mark Of S224,-
100000 in September 1915.
London Follows New York Lead.
Rise in money in this market has
brought a response IN London, where
the Bank Of England found IT necessary
last week TO raise the discount rate
from 20 6 per cent. the first change
since the first week of the war. Wall
Street was deeply interested in the
development for more reasons than
one and looked upon II as one more
Indication of New York's control over
The worlds financial markets. The
rokav bv tho hank " Of