The sun., 1919-06-04
FINANCIAL NEWS
AND COMMENT
Market Has Violent Reaction
After Sharp Advance at
the Outset.
CALL MONEY IL PER CENT,
Recent Wall Street Favorites
Suffer Severest Declines in
Final Period.

II there persisted In the mind Of spec
uiative Wall Street any doubt as to the
intention of the banks to make good
their threat against excessive specula-
ton, 1t must have been pretty generally
dissipated by what happened in the
STOCK market yesterday. After n rum
away bull market in stocks for more
than three hours, resulting in increasing
pubic participation. the speculative po-
sition in Wall Street was suddenly re-
versed. and without any exciting cause
In the way OF news. except for the rise in
cali money. some Of the issues which
nave been booming most broke violently
and In the late dealings the market was
In state Of feverish disturbance. al
though disorderly movements were con-
fined to a comparatively few stocks. The
commotion hardly came as a surprise to
reflective observers, who have consid-
cred the extravaganza of the specula-
tion on Monday and again yesterday, and
II was not altogether obvious either that
tho last hour was anything more than
desirable correction of the excessive
furry in the process of an expanding
market.
At any rate one thing was certain, and
that was that the banks do not intend
to be partners any longer in any such
speculation as has been carried on in
Wall Street for-the last few days. II
goes without saying that there are still
| sufficient reasons for advances In many
departments, but It Is also equally clear
that the pace at which speculation has
| been carried In the last week is not only
harmful to the market itself. but in the
end may result in the very same condi-
ton which was brought about in 1915
by the surge of public participation in
| the market The advance in the rate OF
call money was. of course, the principal
factor In bringing about the decline, but
| 1t was not the only one by any means
| Those who have been watching the &C
ton of the general list for the last week
or more have long since been convinced
OF the topheaviness of the market and
its suscepti bility to unfavorable news de-
velopments. But this was rather aside
from the main consideration yesterday
The main thing was that the banks had
given warning through the money mar.
ket and. moreover. that there Is little
doubt that II the advance Is to be con-
| tinued, speculative Wall Street will have
| to take into account Immediately greatly
increased money rates for some time t
come. at least until the July interest
payments shall have been completed.
The most extensive breaks in the mar.
ket occurred. of course. In those issuei
| IN WHICH inc ADVANCE mas peSn most VlO'
lent. The stocks in this class included
for the most part such issues as Stude.
baker. Royal Dutch. American Wooden
Baldwin Locomotive, General Motor
Mexican Petroleum and. in fact, all Is
sues in which interest in Wall Street
has been centred OF late. Those Issue.
had been bid up violently again In thu
| early part of the day and the manner
In which they declined in the final perioe
indicated clearly that the professional!
had at last succeeded in reaching tn,
stop loss orders. The decline in tn,
rest of the list was not as severe as &
might have been. but It nevertheless hat
the effect of bringing about a substan
tian amount Of stock at considerable re
cessions. Steel went OF more than
points, as did most of the standard raili
of the type of Southern Pacific. tn,
most disturbing thing about thes'
issues. however. was that their principa
weakness came right at the close of thu
market, a circumstance which suggested
that the movement had not been com
pleted by any means.
The highest rate reported for cal
money was IL per cent This compared
with rate of 10 per cent at the clos
OF business on the preceding day. whici
was the first indication Wall Street hat
increasing speculation. 1t Is altogethe
unlikely that the banks intended t
bring about any such condition In tn
money market as existed for severa
hours yesterday. nor Is II certain tina
there was even a concerted movement
on the part OF the banks themselves 4
apply brakes on the speculative marke,
Although It was necessary, the paym-n
of the instalment on the Liberty Loal
yesterday would in itself have accounte
for the tightness Of money. This wa
the payment which many of the larg
subscribers Of Victory notes expected t
make to take up their bonds and It In
volved a considerable strain upon tn
banks. AS matter of fact II wa
learned after the closing that NOR
money had been paid to the Government
yesterday than in the case of any of tn
corresponding loans on similar install
ments The foreign exchange marke
was weak. notwithstanding the an
nouncement of a s50.000.000 gold ship
ment to this country.