New-York tribune., 1919-06-04
Stocks Slump as
Call Money Rate
Scars to lip. C..
Industrial Shares Break SEN
sationally Under Wave
of Heavy Selling in the
Last Hour of Trading

Stock market prices, doomed to new
heights during four months of intense
speculation, broke precipitately yester-
day following a severe squeeze in
money rates in Wall Street. where the
interest rate on call loans with which
brokers finance dealings in stocks
scared to / per cent.
The decline came in the closing hour
after a day of wild gyrations. Stocks
that had been the strongest on the
spectacular advance of Monday and
other recent sessions were the weakest
on the decline. Prices fairly melted
away under deuge of selling by weak
and timid holders, and when the gong
sounded the close the more volatile
industrial stocks showed net losses
ranging from 2 to II points.
Average OF $40 Points
The average price Of thirty indus
trial stocks, including the more repre-
sentative issues, closed at 1O5.2O,
decline of $40 points from the close
of Monday, which at 10S.6O had estab-
lished a new high record for the stock
market
Bankers denied that there had been
any concerted action on their part to
force a decline, but in brokerage
houses the opinion was held that the
advance in the rate for call money
which precipitated the swift drop in
prices was a part of a plan to halt
the rising tide Of speculation. For
more than week past some Wall
upturn in the stock market was as
suming dangerous proportions and that
reaction was in order to correct an
unhealthy condition. Added to this
was the warning issued by the Federal
Reserve Board at Washington on Mon
day that steps should be taken to
check the unwarranted speculation in
securities.
Call money at l / per cent for loans
secured by industrial stocks compared
with high of 10 per cent the day be-
fore and a recent average rate of
around per cent 1t was estimated
that about $5,0OO0O0 was loaned on the
exchange at II per cent. Around 3
o'clock when the rate shot up to the
Il per cent level announcement was
made that the National City Bank was
offering about $5000OC0 at 6 per cent
This served temporarily to check the
rising money rates, but as soon as the
City Banks offerings were taken by
brokers, the rate scared again to the
high point.
Spectacular Declines
The fall in prices of several Of the
more prominent industrial stocks was
extremely sensational. Studebaker
Corporation stock, which had advanced
l65s points on Mondays upward whirl,
tumbled from 1233l to 105 and closed
with a net loss of IT'S points at LOT.
Mexican Petroleum common, another
peace boom industrial, after selling at
a new high record of POS. dropped to
lS8 and closed 1919 points off at
1912 American Woolen, after a
spectacular climb early in the day to
l3O fell back to 40 and closed at
11214, up IL net.
Common stock of the United States
Steel Corporation, after selling at
7s, dropped to 1865 and closed at
1O71s, off 25s. Crucible Steel common
lost points net, American 1nterna-
tional Corporation, 6s4 American Lo-
comotive, Az (; American Beet Sugar, A;
Maxwell Motors second preferred, 8;
Pierce Arrow, 4ls; Railway Steel
Springs, 6; United States Rubber, AS.
Practically all of the other industrial
and railway issues were / to 3 points
lower.
Record Trading
Trading on the exchange was the
heaviest since the bull market started
early in February, dealings exceeding
the two million share mark Dealings
were in such great volume in the final
hour when the decline occurred that
the stock tickers which record the
transactions as they are executed on
the floor of the exchange were many
minutes behind the market For fully
twenty-five minutes after the close at
3 o'clock the tickers were still printing
the transactions.
Whether there will be further cur
tailmont of stock market credit bank
ers would not say yesterday afternoon.
1t was stated in some quarters that
the unusually high call money rate of
l per cent would probably draw funds
to New York from the interior banks
in order to take advantage of the big
return offered on loanable funds