New-York tribune., 1920-02-04
Stocks Tumble
AS Liquidation
Hits the Market
Heavy Short Selling Adds
to Momentum of Decline:
Amount of Speculative
Funds Fixed, Is Report

The November smash which marked
the elimination of the great bull specu-
lation OF 1919 was reproduced on IL
miniature scale yesterday when wave
of liquidation swept over the stock mar
ket and broke prices from point or
two to nearly is points. Not single
active issue in the list escaped the ef-
fects of the heavy selling
From the very beginning of trading
the market was under pressure and
there were no indications when the gong
sounded the closing of the days business
that the liquidatng movement had fully
spent its force. Prices closed at about
the lowest levels reached, with the ten
dcncy still downward
Commission houses which up to yes
terday had maintained a conservatively
bullish attitude or, at worst a neutral
one, began advising their customers to
get out from under even before the
market opened. They were the more
ready to do this when they found that
it was impossible to procure time funds.
Brokers bid as much as 10 per cent-thc
highest rate Of which there is record
for time funds, but the banks firmly re-
fused to accommodate them. Customers
were not slow in taking the advice to
sell, more especially as the general un-
certainty was increased by topping for
eign exchange rates, and it was this
selling that started the downward move
ment.
Those who had been working for lower
prices were quick to take advantage
of the situation, and the decline was
soon accelerated by heavy short selling
The raiding tactics which have been en-
ployed with such signal success during
the last month were again i'll evidence
This time, however, the bears did not
have to feel out the market for weak
spots, for nearly the whole list was
susceptible to pressure. 1t was plain,
however, that real liquidation and not
short selling was primarily the cause
of the decline
Money on call opened and renewed
figure all day. In view of the fact
that the market was sliding, the banks
were not disposed to put further pres
sure and for that reason rates did not
advance in the afternoon, as was COM
monty expected. In we'll informed
quarters it was stated that the amount
OF money available for Stock Exchange
uses had been fixed and that no ex-
pansion would be allowed unless a
crisis should develop. Inasmuch as the
market already was employing its full
/ allotment, brokers were inclined to re-
gard this news as bearish. arguing that
any substantial increase in bull specu-
lation would be impossible under such
circums tances. On the other hand
they asserted that after liquidation has
reduced borrowings somewhat there
would be substantial grounds for re-
covery. especially as it is understood
that there will be no further contrac-
/ ton in the amount.
The slump in foreign exchange rates
was an unsettling factor Of consider
able Importance. The decline in the
last few days has been so drastic that
spectators who hitherto have taken
an optimistic position have begun to
be concerned. 1t is realized that such
great premiums on the dollar in terms
of foreign money mean further slump
in export trade and it is feared that
this, in turn, will react on domestic
prosperity
The selling Of Liberty Bonds con-
tinued in large volume, with prices
establishing new lows For the first
time since they were issued one Of the
Liberty issues sold below 80.