New-York tribune., 1919-11-12
Stocks Slump
Again as Money
Rates Advance
Liquidation and Short Sell
ing Hit Market When De-
mand Loans Soar to rs
Per Cent

! With money for speculation lending
and renewing at the highest rates ir
nearly twelve years, liquidation anc
short selling developed in large vol
ume yesterday and caused further re-
cessions in stock prices. Announce.
ment that the coal strike had been
called off was regarded in Wall Street
as the most favorable event in weeks
and brought in enough buying to force
prices substantially higher at the opcn.
| ing. But the recovery was transient
tor even the strike news was over.
shadowed by the acute money situa.
tion.
Within few minutes after the re.
newal rate for demand loans had been
fixed at ii per cent most OF the early
gains had been wiped out by wave
of selling. At this point some buying
largely, it appeared, covering by
shorts-came into the market and a
brief recovery set in. But as money
continued to soar, selling broke out
afresh and practically the whole list
dropped to new low levels for the
movement. Toward the close brokers
were forced to pay 2o per cent for ac-
commodation and as a result the de-
1here was a slight recovery the last
-ew minutes of trading, prices were
close to the bottom at the end The
market was so congested with selling
orders that the ticker continued to
print quotations for seventeen minutes
after the gong sounded the end of
trading.
Throughout the session the Street
vs. IL 'ea With 'mcrs that the bank
ing authorities were planning .urther
o'.-oss~ s..e.Vn ~ rcuuce speculative
Borrowings. The ono which received
most attention was to the effect that
another increase in the Federal Re
serve Banks discount rates would be
announced this week. The fact that
Governor Harding of the Federal Re-
scrvc board was in this city conferring g
with bankers was regarded as high J
significant. All that Mr.. Hard ng wou d
say was that no further action was
nten.p.a,cu ana ln~v lnc sl.uaulon
appeared to be we'll in hand
well informed BANKERS asserted,
however, that there was no possibility
that the banks would permit any cx-
pansion of loans for speculative uses,
,-uu mat IN ali probability the amount
outstanding, which is very large, would
be reduced gradually. One banker,
whose institution is among the largest
lenders Of cali money, said the reduc-
Mon probably would be accomplished
automatically by maintaining very
nigh rates. This, he pointed out,
would lead to liquidation and so cut
GOWN the loan account.
IN tner mp in exchange rates to
new low records emphasizes the ser-
ouoncSS o. ,nc c1Vu.t Si.uaJlon. Inc
BANKS must not only meet an unprcce-
dented demand for credit for CONNER
cial uses in this country, but they are
called upon to provide substantial
amounts Tor financing export trade.
Obviously they cannot continue to pro-
de 1rNds Tor large-scale speculation
in stocks and commodities and take
~-.,~ v. .ssp.v.ai requirements as we'll
without overstraining the credit posi-
t.on and causing further imitation that
might prove disastrous in the end
" hile yesterdays decline was gen
eral, it was noticeable that the stocks
which have been leaders in the bull
speculation were hardest hit. Ameri
can Tobacco was OFT l4A points, zen
eral Motors 81 IS, Mexican 1etroieum 6
and American Linseed 7a4 The decline
ol Linseed was attributed to disap
pointmcnt over the ACTION Of the di-
rectors in declaring a quarterly divi-
dend of only q per cent. AT least
vwice this percentage had been COM
monty expected,