The sun., 1919-06-17
FINANCIAL NEWS
AND COMMENT
Reaction in Stock Market Is
Continued, With Declines
More Pronounced.
TREND DEFINITELY DOWN
Money Goes to Is Per Cent,
the Highest Rate Since tho
1915 Peace Panic.
TREND DEFINITELY DOWN

The reaction which has been under
way in the stock market since last Tues
day continued undated yesterday, the
declines being even more pronounced II
anything than heretofore. There was
somewhat OF a rally at the outset In
continuation Of the movement which was
In progress on Saturday and various
other attempts were made during the
session to bring about recoveries. But
tho trend was definitely downward
throughout the best part Of the day and,
In spite Of the fact that good buying
was In evidence again on a scale down.
the majority of standard steels and rail-
road shares closed heavy around this
lowest prices for the day. II might
have been supposed that the large
amount Of Investment buying and bar
gain hunting, which came into the mar
ket with the final break at the closing,
would have had a tendency to check
temporarily the downward trend in the
standard steels and rails. But such was
not the case for the reason that the
movement had gained too much momen-
tum to be halted by any ordinary buy
ing movement
The whole thing was again due to
technical and money conditions and not
| to any change in the underlying sit
uation which has been in back of the
rising prices during all Of the last three
months These conditions remain a.
they have been all along. a source of
satisfaction to the brokerage community
in general But this was another mat
ter yesterday. Money loaned again
above 10 per cent. and there was nat
urally certain amount OF real con-
Germ over the deficit shown In the re-
serve item In the bank statement last
Saturday. although close analysis Of this
would have disclosed that this deficit
had no Significance whatever 30 far as
the money situation was concerned
The fact Of the matter Is that Il costs
the banks money to maintain a reserve
and II would not be surprising IL the
large bank reserve Is not done away
with altogether hereafter in so far as
the money situation was concerned, Il
appeared pretty certain last night at
the close as though the stock market
had gone through the worst in spite Of
the fact that the closing rate for call
money was just as high as ever. The
tax payments have now been completed
and 1t should be only a matter Of hours
before the money is again flowing back
into normal channels.
Just as has been the case all along. the
declines were most severe in the indus
trial group. where the impression pre-
walls that tho banks are discriminating
for the reason that the rate on all in
dustrial loans some days ago advanced
more sharply than did the rate on mixed
collateral loans. Nothing, however, is
further from the truth, the reason
that the industrial issues have gone
down more sharply than most others is
because they were stocks which had ex-
perienced the most pronounced advances
in the recent forward movement The
fact OF the matter Is that there has been
no discrimination at all with respect to
the stock market The banks were called
upon at the end Of last week to finance
the payment OF taxes in addition to the
heavy burden that was being carried In
financing the advancing stock market
and there was not enough money to go
all around Therefore It was only a
matter OF justice that the money should
come from the speculative markets in
stead of from other sources The de-
clines yesterday were orderly. as has
been the case all along. and the breaks
were accomplished with entire absence of
panic. although in the case of a few is
sues. such as American Hide and Leather
preferred. American Ice. General Mo
tors, Studebaker and others, the losses
ran as high as 10 points or more.
The highest rate yesterday for call
money was Is per cent. which Is the
highest money has lonad for many
years DdCh Win inc single exception OF
the peace panic in 1915, when the rate
went up to Is per cent by a mistake.
There was no easing at the closing and
for this reason the impression prevailed
that money would be firm again to-day.
but such is not the opinion of bankers
whose opinions on such subjects are
usually regarded as important It IL
believed that by tho opening of bust
ness to-day that money will again Be
returning to normal channels and that,
In short the worst Of the money strin-
gency was gone through during the lat
ter half of yesterdays selling. Indeed
1t is the opinion OF some bankers that
money will again be losning At below the
616h per cent levels before the close of
the current week. The foreign exchange
market was steadier and stronger. Al
though sterling cid little during tho day,
francs and lire continued to show i'm
provement. Other rates were about I'M
changed from the preceding days clos