New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-08-04
vi arket Rallies
On Vague Runors;
Better Tone Felt
Upturn Near Chose of
Trading Helps Situation;
Money Declines to 6 Per
Cent; Exchange Lower


its rally yesterday in the course of
days fluctuations. But yesterday the
squirt came toward the close instead
of at the opening, and therefore the
net results at the end Of the day were
more favorable to those in quest Of
firm security prices.
The turn yesterday came In the last
hour Of trading. 1t followed decline
in the rate on call loans to per cent
and was accompanied by several vague
rumors. If substantial news Of a con-
structive character such as the rail-
road rate decision could not put prices
up, some operators apparently believed
that fairy tales would.
The rumors related to the tightness
OF money and the Russian situation.
gable had been received announcing
the fall of the present regime in
Russia, but there was nothing In the
! news to lend reality to this. )
Another report was to the effect that
the Federal Reserve Board was about
to reduce the reserve requirements Of
the regional banks from 40 to 80 per
cent. Responsible bankers Immediately
discredited the story on the ground
that it implied a complete reversal of
the policy of the board in respect to
defation. 1t probably originated from
John SHELTON Williams's observation in
his statement last week that, if the
Reserve Board reduced the reserve re-
Qulrement 10 per cent, it would re-
lease $2,500,000,000 Of new credit to
American business. Under the reserve
act the board has the right to
waive the present reserve requirement,
but if the banks fall below the re-
CURED reserve against notes outstand-
ing there is q fixed penalty, whereas
there is none for banks that fall be-
low the requirement against deposits.
To reopen the foodgates of imitation
would check the movement of falling
prices and perhaps counteract what
ever has been accomplished in the
way of readjustment, and for this
reason bankers were disinclined to pay
any attention to the report.
Whatever the effect of the rumors
may have been on operators during
the white heat of trading, it was OBJ
vious that the drop in call rtes stimu-
lated active short covering. The in
dustrials started to recover first, but
then the rails leaped forward and took
the lead, many of them reaching the
peaks touched on Monday before the
lcdCliOH. RdIltOdQ UOHQS. WnlCn nave
been firm since the rate decision was
announced, sagged with stocks toward
midday, but rose again in the last
minutes Of trading. The high grade
railroad bonds we're particularly af-
fected by tho impulse to rise
Before the late recovery in the
security market, the trend of prices
was exceedingly irregular. Rises and
dips followed one another without
much relation to the trend of events
in the outer world. Some stocks
/ spurted from two to three points in
the morning, and then lost their gain
early in the afternoon. In the early
afternoon break, lows for the day were
established which carried some stocks
below the levels attained on the pre-
vious day.
In the news from Poland, observers
found little ground for optimism. Boil
shevlk troops were reported to be ad-
vancing, and hope of a quick solution
was fading. Another unsettling factor
was the decision of the directors of
the American Cotton Oil Company to
pass its dividend. This action crystal
ilzed the uneasiness Of traders oc-
casioned by the belief that the coun-
try was now in the midst of an ex-
tensive recession in business.
Sterling exchange closed at 1858,
on VA cents, ana the continental eX-
changes were once more weaker. The
easincss has been in part attributed
to the warfare in Poland, but a cable
from Paris yesterday said that the
weakness was caused by the buying of
dollars by the French Finance Minister
IN connection with Frances half of
the Alnglo-French maturity. This may
lave been an influence, but the preva-
fence of grain bills on the market and
the tangled continental situation are
undoubtedly also moving factors.
the speculative view that further
trouble in Europe would increase the
demand for wheat, caused a sharp rise
n the wheat market yesterday. March
contracts closed at 1921, UP 17h
cents, and December at $3.50, up Is Y
cents. Corn was likewise firm, but
cotton declined one cent to the pound