The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-12-12
FINANCIAL NEWS
AND COMMENT
Severe Declines in Stock Mar
ket-Pr0minent Issues
Drop 2 to 5 Points.

The severe declines OF stocks yester-
day. running from to 4 and 5 points
among prominent issues, could be ex-
planned under two general heads. In the
first place, the passing of the Fisk Rub
Der Company's common stock dividend
and suspended action on dividends of
several other corporations reacted I'M
favorabiy upon speculative sentiment
and undoubtedly promoted a fresh flow
OF short sales. In this process It was
noted that. while several Of the manu-
featuring company shares were pressed
downward with force approaching vio-
lence. there was also persistent selling
of such railroad issues as St Paul COM
mon and preferred. New York Central.
Northern Pacific, Norfolk and Western.
the Reading stocks and Union Pacific.
This group left Off with net declines
which reached upward from large frac-
tons to points. The professional short
sellers made the most of their opportunI-
ties throughout all OF last week. ard ovi-
IDENTIFY supplied SO substantial a part Of
the pressure against prices that the ct
tention of the New York Stock Exchange
authorities was directed toward the
source Of particularly heavy sales. But
the attitude of the Exchange has teen
always TO maintain the complete freedom
OF the market. and It is hardly to lie ex-
pected that the fact OF widespread I'M
favorable factors In business and senti-
ment will move the governors to check
sales for the short account
The second influence working for
lower security prices was the imminence
of the tax payment date. entailing the
necessity of owners OF stocks to get cash.
That selling for this purpose has been
really important factor in recent markets
can hardly be ques'ioned. The attitude
Of the Treasury Department toward fill
payment of the last income and excess
profits tax instalment very likely has ie-
moved the last hope of extension which
some taxpayers had been nursing. The
state OF bank loans and credit has ma ie
II imperative for would-be borrowers to
lessen their expectation of loans over
December Is, and .he only result. pos
sible has been the liquidation Of securi-
ties. Cotton did very little yesterday,
and firm tone of grain prices was no
more than might have been expected
after the declines If preceding days.
The functioning OF the Federal Re-
serve system at time OF periodic stress
was set forth as clearly in the Reserve
Banks statement for the week as in the
second week of September. In order to
distribute the load the Reserve Bank ap-
portioned among other reserve institu-
tons some s3o.oo0,OOO of Treasury GER
tifcates carried by member banks in the
New York district, and this followed the
distribution OF s2o,ooo,ooo OF paper in
the week before. The transfer of Gov
eminent securities enabled the member
banks to reduce their rediscounts of war
bonds and certificates by approximately
ST.. 100000 at the Reserve Bank, and
OlhtI IcQiSGOunlo NtAo cut OOWH HlOTc
than s26.00o,00o. The bank gained SAL
700, 900 in gold. chiefly through the intra-
bank settlement fund. Net deposits were
about $500. 900 lower than in the week
before and Federal Reserve note circula-
ton declined 100000. The product
was an advance of the ratio of cash to
deposit and note liabilities from 37.s per
cent. to 1911 per cent
The banks associated in the New York
Clearing House reflected in their state
ment the extensive shifting of funds
which always precedes a Government
settlement day. The average figures.
showing day to day movements, indi-
Gated that large Withdrawals had oc-
CURED, demand deposits declining s34,-
$4,000. while time deposits receded more
than s13.5oo. 900. But through the sale
Of Treasury certificates and other trans
actions the banks were able to expand
their position before the week end. and
the actual statement showed an increase
of $4,000. 900 in demand deposits and
time deposits expanded s11.213.Ooo. COM
pared with those OF the preceding week.