The sun., 1916-12-05
Call Loan Rates Jump to Is
Per Cent. and Stock Mar
kct Prices Fall.
INDUSTRIALS WORST HIT
FURRY Is Looked Upon as
Temporary, With Money Am
pie for Legitimate Needs.

. houtC
statement shows the lowest excess re.
serve holdings in the local banks since
the inauguration Of the Federal reserve
system. there appears to be an annie
supply Of none In the country for all
legitimate needs and no reason for the
idea that yesterdays furry In call loan
rates. which sent stock market values
lower, reflects any elemental weakness
In the banking situation in this country.
The banks evidently became uneasy over
the relatively poor showing in the
weekly bank statement. In certain
speculative quarters this uneasiness was
characterized as artificial. while II was
said that the sudden advance in call
funds In he Stock Exchange to 10 per
cent. and subsequently TO Is per cent.
was wholly due to efforts 10 bring about
cheaper prices for securities.
II was apparent, however. that higher
rates for call money which accompa-
MED an advance In time loan quotations
were based upon real factors which never
theless may have been stretched for eff
feet upon the stock market. And the
advance In rates brought more closely
to mind that irrespective Of the ugges-
ton the situation was artificial, there no
longer was the pressure of funds In the
market which up to twotweeks e made
II impossible to mark Quotations to Rd-
vanoed levels.
The position OF money has changed
materially In recent weeks. with tho de.
mand catching UP with the supply. but
that there Ia to be a long period Of sus-
tained stiff quotations In the loan mar
ket Ia nnf thnttOht l{Lalx. For sha anea,,
that heavy imports OF gold are In pros
poet. while better rates are attracting
funds from the interior.
Announce ment was made yesterday
that $4,000. 900 gold would he shipped
from Canada to this country, and 1t was
assumed In banking circles hat Great
Britain would send substantial further
amounts of the metal here. bctn 20 pre-
vent disturbance in our money market
and to maintain exchange at or near
the level OF s4.16 the pound sterling. at
which II has been 'pegged' fr go man.
months. Great Britain is very mitch in
terested In seeing easy morey conditions
In our market. and II IL generally be-
lieved that In the course OF the next two
weeks the surplus Tese,ve holdings Of
the Clearing House oSnks vii! de
strengthened to n substantial extent both
through international ard domestic OPP
erations.
Boiled down to facts. there was moth
ing surprising about the advance in
money. or nothing peculiar in the fact
that the workings OF the Federal reserve
system failed to prevent a rise In call
loan quotations. The reserve system has
not been developed to assist stock mar
ket Spectators and the reserve banks do
not lend against the ordinary stock mar
ket collateral. Some banks. however.
la taken advantage of the lending
power OF the system by having the com
| mercial paper rediscounted and using the
proceeds in the higher call money mar
ket.
Accumulation Of over Sunday buying
orders in commission houses was ef-
fective in carrying the general list OF
stocks to n better range In the early
dealings IN the Stock Exchange. al
though the decline following the advance
in money did not run into large figures
or bring out serious liquidation. Money
was offered in round amount NJ relt-
lively low rates By uptown institutions,
while the Wall street banks We're de-
manding an excessive price, the effect of
which soon was reflected In a drop from
a high OF Is per cent. to s per cent. the
latter the closing level and IA nrmer
tone In price movements for stocks IN
the final operations< Re6djustment OF
loans through the advance in money and
the accompanying decline in stocks left
' the general position Of the securities
market In a much stronger technical
situation than could be reported at the
close of last week.
Weakness In stock was confined In
great part to the industrial, against
which the banks Disseminated in the
matter of loans. So far as the rails
were concerned discrimination appeared
to be in their favor. In the best part OF
the day the rails were strong. buying no,
only being based upon the vast improve.
ment In the rail transportation business
as shown in current earnings, but upon
the expectation also that President VII.
son In his message to- Congress to-day
would urge legislation OF a constructive
sort as affecting the American railroad
industry.
Declines In the rails from the higN
prices were not in proportion to those
in the industrials. while in the latte,
group there was a sharp recovery In
some OF, the railway equipment shares
in the final dealings, especially In Ameri.
can Car and Foundry. which had the
benefit OF the declaration OF an extra
dividend OF ! per cent.
Sterling exchange was FRACTIONAL,
lower because OF money market condi.
lions here. while German marks moved
to n new low level for the war period
Operators who may be watching IN,
course of German exchange certainl,
viii fnd in the mark rate no encourage.
ment for an carly ending Of the war.