New-York tribune., 1920-12-27

from spectators who could no longer
maintain their position or from busi
ness men needing cash for their COM
mercial commitments. The New York
Stock Exchange, being the most liquid
market in the country, naturally had
resulting from the need for cash. On
the following day the blow of the sell
ers was countered, but the rally was
unsubstantial On Thursday the really
striking technical rally came as shorts
covered and so-called bargain hunters
laced their orders The week closed
quietly, with the net losses for the
week small. The average of thirty in
dustrial stocks at the close of trading
on Friday was 69.63, compared with
1850 last Saturday and 6767 on Tues
day. The average Of twenty rails rose
from GLIB last Saturday to CLIO on
Friday, against 1926 on Tuesday.
Between Christmas and New Years
even the bulls see little chance of much
Of gain in security prices. The best
they look forward to is period of
dullness.
Borrowers in the call money market
last week found it comparatively easy
to cover their needs at 7 per cent. This
is the same rate that has obtained for
several weeks; in fact, call money has
not risen above that figure this month,
with all the shifting of funds incl
dental to the tax payments and other
large government operations involving
the turnover of hundreds of millions
of dollars since December /. The Fed
eral Reserve Bank Of New York, in its
statement at the close of business last
week, indicated that funds which moved
out to the interior from this center to
meet tax needs and crop p-moving gTpur-
poses have begun to flow back. The
local institution showed a substantial
gain in gold in the Washington set
tlement fund, which represented trans
fers to its account from Reserve banks
in other districts. New York Clearing
House banks reduced their loans by ap-
proximately $36,0OO,O00 last week.
How liquidation is being forced in
certain parts Of the interior is indi-
Gated by letter sent out the middle
of this month b. the Federal Reserve
Bank of Dallas to member banks in
that district. 1t says: 'In bringing
about readjustment we coYSider it in
dispensably necessary and matter Of
first Importance that all banks shall
limit their loans to producing busi
nesses and enterprises, absolutely de-
clining all merely speculative loans and
reducing to minimum loans of an
investment nature. 1t appears equally
essential that all banks having redis-
counts or owing borrowed money should
Immediately take effective steps to Sc
cure liquidation, for, although we are
in the midst and nearing the end of
the period when our seasonal lquda-
tion normally takes place, we are now
carrying an unduly large amount of
rediscounts and loans for our member
banks, many of whose lines show little
or no dimunition from the maximum
amount reached during the summer
Bearing this in mind and also the fact
that within short while the banks
will bd called. on for funds for crop
planting and for other seasonal needs,
it seems proper to suggest to the banks
that, before making commitments for
the new year they should give careful
attention TO the above suggestions as
we'll as consideration to their ability
within their own resources to take care
of any and all loans made without re-
sorting to excessive borrowing from
the Federal Reserve Bank"
The foreign exchanges have main
tanned a fair degree of strength during
the last week. The better demand for
sterling is attributed to the covering
Of end-of-the- needs. Exchange
bankers see nothing in the immediate
future that will make for sustained
t.b, -.