New-York tribune., 1919-12-16
Liquidation Again
Causes a Decline
In Stock Market
Foreign Selling Also a Fac.
tor; Money Renews at
9 Per Cent, but Rates
Drop Later +.

Further liquidation of speculative
holdings, plus some selling for for
eign account, caused a rather sharp
break in stock prices yesterday. The
Presidents stand on the treaty ap-
parently caused some uncertainty, but
it was not important enough as a mar
ket factor to outweigh the improve
ment in foreign exchange rates. Con-
sequently, after an irregular opening,
with prices fractionally lower than
Saturdays closing quotations, the list
as q whole became firm, and for a
time it seemed that the advance which
got under way last week might carry
further. But when call money opened
and renewed at 9 per cent, the highest
rate touched since November 90, when
spectators threw stocks on the market
in substantial volume. Prices immedi-
ately weakened.
The decline was accelerated later
when the Supreme Court failed to hand
down decision in the stock dividend
tax case. A good many traders had
bought the stocks that might be helped
by favorable decision, and when it
was announced that no further deci-
these holdings were dumped on the
market The decision sustaining war
time prohibition caused a sharp break
in United States Food Products, and
although this was the only issue di-
rectly concerned its weakness added
to the prevailing gloom, and so stimu-
lated selling.
Later. when money got down to 6
per cent, part Of the earlier losses
were recovered, but at the close most
stocks showed losses. The more active
the industrials, but few of the less
prominent ones scored small gains.
There were indications of quiet accu-
mutation Of the rails, according to we'll
informed brokers. 1t 10 said that these
stocks have been passing into strong
hands and that the floating supply has
decreased considerably within the last
fortnight.
The acute money shortage which
many had predicted failed to material
ize, although the high renewal rate
caused many traders to expect another
sharp upturn in rates during the af-
ternoon: Apparently, however, the
preparations for yesterdays heavy
payments had been pretty we'll COM
pleted last week and as a result there
was not as much shifting of loans as
had been looked for. The high renewal
rate probably was established by the
banks as a means of temporarily check
ing loan expansion and did not neces-
sarily indicate an actual shortage of
funds. Bankers intimated yesterday
afternoon that money might be com
paratively easy for a time, although
they say there is nothing in sight to
give hope of any important relaxation
of the control which is being exer-
cised over speculation. The ratio of
total reserves to the net deposit and
Federal Reserve note liabilities of the
twelve Federal Reserve Banks was 46
per cent on Friday, against Alb per
cent the week before. In the same period
the ratio of the New York bank dropped
from 42.4 to Alb per cent.
The general trend of bond prices was
lower, but local traction issues ad-
vanced sensationally on a report that
plans for municipal ownership were un-
der serious consideration. Bond sales
last week smashed all records, the total
turnover being $149,915,00O par value,
to which dealings in United States gov
ernment bonds contributed $114,128O0O.