New-York tribune., 1920-01-27
Stock Prices Rise
On the Lifting of
Selling Pressure
Short Covering Most I'M
portant Factor i'm Causing
Upward Movement: In
creased Buying Reported

Three weeks Of almost continuing
hammerlng of stock prices left the
market in such an oversold condition
Yesterday that even highly unfavor-
able bank statement and mounting
rates for call money failed to hold the
market fully in check Convinced bv
the stubbornness by witch the market
mad resisted the attacks of those seek
ing 10 depress prices, that the bottom
rad peen reached, temporarily at least.
! spectators bought stocks freely. When
1T was seen that prices moved upward
I easily under a relatively light demand.
me shorts. IN some of the stocks which
had been the centers of the bear drive
against prices, began to cover.
<-4he covering movement, while the
most important factor in the market.
was by no means extensive, nor were
purchases for long accounts Of very
SUBSTANTIAL volume. That is clearly
SHOWN by the small turnover. The
notable tact was that selling pressure
was absent for the first time in fort
night. Failure of the Supreme Court
to render decision in the stock div
dend tax case, which for weeks has been
the SIGNAL for heavy selling each Mon
day afternoon, failed to bring out am
important increase in offerings.
Perhaps the most significant feature
OF the day was that some commission
houses reported a fair amount Of out
sioe business. The public had held aloof
or weeks and the fact that there were
signs OF a revival Of buying from this
source led some brokers who had been
exceedingly pessimistc to switch
around and advise the purchase of
stocks. ~
Enthusiasm was restrained by the
upward tendency Of money. After open-
ing and renewing at per cent. the
call loan rate advanced to 10 per cent
rs the advance took place the demand
ior stocks tell Off, and at the end profit
taxing caused slight recession from the
days high levels
he rel ativeIy weak position Of the
New York Federal Reserve Bank and
kec funds are really attributable 10
me Tact that New York is being called
upon TO carry very large share of a
burden which should fall in equal nro-
portions upon all of the Federal Re-
serve banks. Selling of Liberty bonds
mas been o extraordinary large volume
and as New York provides the only
great market for government securi-
1les' the selling centers here. Busi-
'tN ~ III every SectIOn OF the United
states had been disposing of their
bonds owing to the growing scarcity Of
money for commercial uses. Rather
tAan pay excessively high rates for
money or so without altogether. many
thousands of them decided to take the
government bonds which rcposed in
lhelr strong boxes and throw them on
the market. These bonds found their
way to New York, and the result is
mat the resources of the local Federal
Reserve institutions have been strained
TO carry bonds which ought to be car
red by the other banks That ac
counts to a very large extent for the
TACT that the New York bank has been
steadily losing gold that its redis-
counts based on government securities
ave increased while its commercial
discounts have decreased, and that it's
ratio of net deposit and Federal Re-
serve note liabilities combined is down
io 39.5 per cent. against an average for
I hc twelve banks of AIS per cent. |
lntN the selling Of Liberty bonds and
Victory notes eases up no material i'm
provemont in the New York banking
position can be looked for, unless the
Federal Reserve Board should take
some action TO rcdistributc the burden
more eGuitably.