The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-08-01
FINANCIAL NEWS
AND COMMENT
Markets Technical Position
Improves as Banks Call
in Loans
MORE ACTIVE ISSUES OFF
Stocks Move Irregularly, Then
Turn Sharply Downward
as Money Rises.
MORE ACTIVE ISSUES OFF

The technical position Of the market
In the New York Stock Exchange I'M
proved yesterday as the result OF the
calling Of loans by the banks and the
demands for more margin by brokerage
houses, the stringent money situation,
with call funds as high as 20 per cent,
demonstrating the low state of the credit
supply for Stock Exchange purposes.
Tho break in prices ranged from to
points in the more active stocks, which
was a smaller range of declines than
those who knew the real situation had
anticipated. Under the circumstances
the market gave a good account OF IT
self. The extraordinary rate for call
mosey was ascribed to the calling of
loans by J. p. Morgan & Co., but their
call for cash was a moderate one, aver
aging 100000 a day for three days.
The Federal Reserve Bank withdrew
SIS, 900, 900 of Government deposits, but
that Is a smaller amount than they have
been In the habit of withdrawing. Only
a minor portion of the shrinlSage in the
call money supply, therefore, can be
traced to preparation for to-day's inter-
est. dividend and maturity disburse-
ments, which include the $4,000. 900
Canadian Government notes and $780,
100000 American Foreign Securities
notes. The fact is that the cumulative
effect Of the diversion of credit to the
Interior for agriculture, crop-moving and
Industrial expansion has caused n shrink
age in the credit available for Stock
Exchange purposes and barring n tenn
porary relaxation. following the August
disbursements. tho money situation
may become tighter as the peak OF the
seasonal demands approaches.
Thu outlook for fha navt R,,. - IT.
weeks has caused officials of the Stock
Exchange and representatives of the
Clearing House to confer on plans to
reorganize the method of loaning money
on call and 1t is expected that an en-
tirely new method, which will include
teh ALLEGATION OF available funds in times
Of money scarcity, will be adopted. The
point to be watched is not SO much the
surplus reserve OF the New York Clear
Ing House banks as the ratio of the Fed
eral Reserve Banks total reserves to net
deposits and Federal Reserve note la
bilities combined. Last week this de-
clined from sos per cent to 502 per
cent. Judging by the chart of last
years secord. a steady decline for some
weeks In this ratio is to be anticipated
and II is natural for the executives of
the Federal Reserve Board to see to II
that minimum amount of credit Is
squandered in speculation whether in
stocks, cotton, or oil lands. The ratio
of the twelve Federal Reserve banks
combined is the barometer Of the credit
situation and brokers will do well tc
heed the position regarding speculation
already announced by the Federal Re
serve Board
Price movements In stocks CORE
sponded closely to the course Of the
call money market, which began to rise
when 1t was found that the time loans
which matured yesterday and will ma
ture to-day were not being renewed.
At the lowest rate for money for the day
the stock market moved irregularly with
even a momentary recovery in some of
the speculative Industrial issues, but the
tone of the market turned sharply down.
ward when money reached 10 per cent.
and the realizing sales were accelerated
as the rate jumped per cent. at a
time. 1t could not be said at any
time that the break was a serious one,
the well-established industrials remain
ing fairly steady and the railway stocks
remaining reasonably firm, all things
considered. The bulk of the selling APP
peared to be professional and while there
was no real alarm about money, the in
vestment and speculative attitude toward
stock commitments appeared to be a
sober one.
The foreign exchange market moved
irregularly, sterling about holding its
own and francs rising about three CEN
times. partly on account OF the psyche
logical effect OF the proposal to sell six ty
and ninety-day French Treasury bills
| and partly on account of the completion
Of preparations to meet the American
Foreign Security Corporations notes out
of tho credit extended to the French
Government by the United States Treas
ury. Cotton was weak and disposed to
be heavy while awaiting to-day's con-
dition report. Corn was weak and oats
were easier. Tho weekly statement OF
the Bank OF England reflected a mod
crate improvement, the proportion of re.
servo to liabilities rising to 2040 per
cent. against 1857 per cent last week
Government loans fell of $4,000 900