New-York tribune., 1919-11-06
Stocks Yield
AS Money Scars
To 20 Per Cent
Market Opens Strong, but
Advance Is Not Held:
Monetary Situation Now
Is Far From Satisfactory


In the early trading yesterday specu.
lators apparently urdcrestmated the
Importance Of the Federal Reserve
in rediscount rates. The market opened
with prices we'll above the closing quo
tations of Monday, and under the i'm
petus Of heavy buying many stocks
were rushed up to new peaks for the
movement, which meant, in not few
cases. new high records. but renewal
rate of 10 per cent for call loans served
to remind traders that the money where
with to buy stocks was scarce and ex-
penslvc. and speculative enthusiasm
waned.
It was noticeable that even the volatile
specialties, which have been the most
popular counters, were lacking. the re-
sponslvencss to news, rurnor and manip-
ulatlon that they have displayed so
frequently Of late. Stude baker, for eX-
ample, made what many observers re
garded as decidedly unfavorable re
sponse to the action Of the directors
IN putting the stock on per cent
basis and declaring an extra dividend
sufficient TO bring the total payments
tor this year up to that rate. In the
excited market of week or ten days
ago such action almost certainly would
have been followed by & very sharp ad-
vance. But yesterday this issue at its
| highest was less than point above
Mondays close, and AZ the end of the
day 1t showed a net loss Of Az points.
IN varylng degree the performance of
tins stock was typical Of most Of the
list.
After the early advance the market
became irregular and without definite
trend until well into the afternoon,
when the rate for demand loans jumped
TO Is per cent. At this point prices
began to ease off. and when little
later money went 10 90 per cent, the
highest rate reached this year during
trading hours, the reaction gained i'm
petus that carried nearly the entire
list down to substantially lower level.
AT the close, the losses in the more
prominent issues averaged we'll over q
point
Railroad stocks had a brief period OF
activity, but soon subsidized into dull
ness.
Wall Street is beginning 10 appreciate
the fact that the money situation is
likely 10 be All extremely important. If
not the controlling, influence on the
stock market for d considerable period.
1t is true that in a market such as
has been going on for the last few
weeks, n which wide and violent swings
were the rule rather than the eX-
ceptlon, the rates for money were not
sically of major importance. The
spcculator in such issues as Republic
Steel, Baldwin Locomotive and Ameri-
/ can Car and Foundry and many others
careG little whether money was 6 or
l. per cent, since the day-to-day move
ments in the market were big enough
to- make the cost OF funds. even al the
nlgn points, minor consideration
but Juat the same the high rates were
and are an expression of a serious con-
dltion. The banks have been under an
unusual credit strain for some time
tor the supply Of credit is not 20 large
when 1t is considered that prices have
doubied-and recent labor troubles have
made tnat strain more acute. The long
shoremen's strike, for example. has
tied up hundreds OF millions OF dollars
o. goods II. transit, and has thereby
added greatly to the congestion Of
credits The steel strike has had a
similar effect by tieing up work; and
the coal strike carries threat of even
worse congestion. Added 70 this is an
enormous volume Of credit on goods
carried III warehouses for shipment to
Europe, held up b. the inability of our
european customers to pay Tor them.
Under these circumstance the banks
have been resorting to redscoun.inp
with the Federal Reserve Banks TO an
unprecedented extent. To the extent
'hat TINS was necessary 10 care foY
ordinary commercial requirements. the
banks could not be criticized. But il
Is evident that the Reserve Board ad-
heres to the position it took during the
war, namely, that speculation is not
essential and that expansion in loans
tor speculative purposes should be dis
cOuraged.
The number OF stocks traded in YES.
tercay was 81, compared with 2ss or
Mopday