The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-31
FINANCIAL NEWS
AND COMMENT
Sharp Break in Tire and Rub
Der Shares and Drop in Ster-
ling Feature Markets.
MASS STRENGTH IN RAILS
Reserve Ratio Improves as
Result Of Borrowings From
Other Banks.
MASS STRENGTH IN RAILS

A further sharp break In the tire and
rubber stocks, coupled with another de-
cline in sterling exchange. furnished
the principal Incidents of Importance in
yesterdays financial markets. The
weakness in exchange. while 1t was an
Interesting episode I'm so far as It re-
Elected trade conditions, had no effect
whatever on security values. The de-
cline such as occurred was due entirely
TO special considerations. In the case
of the tire and rubber stocks II was due
to the cut In prices announced on Fri
day. and which had not been fully ap-
preciated on that day because of the
belief that the general market had been
heavily oversold. This belief concerning
the general list continued In so far as
most stocks were concerned, but where
news developments tending to favor
lower prices came to light, as In the rub
Der group, traders had no difficulty
whatever In bringing out new liquida-
ton.
There was, however, verySlittle change
In the news considerations over night.
The belief was still general that the
bank statements. which were issued
after the closing, would be very poor
indeed, and this naturally held specula-
ton in check. AS it turned out, the
bank statements were actually favor
Of the statements did not show any ma
terial Improvement In the situation for
the reason that the Improvement In re-
serve ratios was due solely to shifting
OF funds and not to curtaflment of
credit, which Is the only way IN which
permanent Improvement can come about
In the banking situation. The weekly
trade reviews were unfavorable and nat
urally carried some weight with COM
. Cd hsNtse fy-oI L..A -.
nificant that no fresh outburst OF selling
occurred in The standard issues.
AS on the preceding day. whatever
strength prevailed was in the railroad
stocks. Southern Pacific, which gave
such a good account of itself on Friday,
was again taken in hand by the traders
and moved upward but all attempts to
revive interest in other rails, because
OF the strength of Southern Pacific,
failed completely. Royal Dutch fur
nished about the only other incident of
Importance outside of the rubber shares.
That stock was weak again. with SELL
ing generally credited to foreign sources
The Mexican stocks. however, did not
give IS good an account of themselves
as might have been expected in view of
the news. The statements In the morn
ing papers concerning the possible rec
gether with the favorable forecasts Of
Mexican PetTpleums earnings under or
binary circumstances would have pro-
duced an active market in these shares.
About all It did yesterday was to hold
these stocks steady. and even at that
Mexican Petroleum eased off in the last
hour.
Taking all the facts into considera-
ton. the Federal Reserve Bank of New
York neither improved it's reserve po
sition nor impaired it. notwithstanding
the rise from 3S.6 per cent. to 39.1 per
cent. in the ratio OF total reserves TO
deposit and note liabilities combined,
and the rise from S6.7 per cent. to 27.9
per cent. IN the ratio OF reserves to net
deposits after deducting per cent. gold
reserves against Federal Reserve notes
in circulation. In order TO make the APP
parent gain. the local Reserve Bank
had to borrow s23000.000 from other
Reserve banks on rediscounts. increas-
ing the total amount OF such borrowings
to $4S000.000 The effect of the fresh
borrowing was to increase gold holdings
/ $50, 0O0. 600 accounting fully for the in
| crease In reserve ratios The member
banks again increased their borrowings
I from the local Reserve Bank, the
/ amount last week increasing more thar
[ $4,000 000 This Increased the reserve
account of member banks s2S.500,000
! accounting in turn for the Improvement
1 in surplus reserve shown by the Clear
/ ing House statement. The surplus Of
/ the Clearing House banks was approxi
| mately $4,000. 900 in contrast to deficit
| OF $4,000 600 week ago. United
/ States Government deposits at the be
| ginning Of business yesterday amounted
/ to s26, $40. 900 and. with the expecta
4 ton OF Government Withdrawals tni'
week. there will have 70 be a fresh Is
/ she OF certificates of Indebtedness b.
the Government. A feature Of the Clear
| ing House statement was the continual
I ton OF the contraction OF loans, tn
amount last week being s61,74s,0O0.