New-York tribune., 1920-06-02
Bear Traders
Sell Stocks on
Bank Rate Rise
Market Is Under Pressure
and Prices Yield on All
Sides i'll Quiet Session;
Money at 10 Per Cent

Bear traders held the upper hand in
the stock market yesterday, and prices
fell back on the news of the sharp ad-
vance in the discount rate of the Fed
eral Reserve Bank of New York. Still,
all things considered, stocks gave
pretty good account of themselves and
bulishly inclined traders saw in the
action of securities cause for cheerful
ness.
The market slumped off at the open
ing in a rather swift decline, as was
to be expected, when considerable SELL
ing came in from traders who in
terpreted the unexpected discount rate
change as an extremely bearsh de-
velopment. But after half an hour of
decline the volume of selling slackcned
and the pressure lifted, with the result
that the market became exceedingly
quiet around midday. In the afternoon
an advance in the rate on call loans to
ing, but it did not make much OF an
impression beyond otfsetting such in
vcstment buying as appeared. The
biggest part of the selling througout
the session came from the professional
traders, who worked hard on the short
side. Stocks closed anywhere from
to points lower Dealings were
slightly in excess of half million
shares, testifying to the apathy of
iarge part of the market following.
Naturally, the marking up Of the
Reserve Bank rate from to I per cent
on commercial paper discounts oc-
casioned concern in stock market
circles. While the announcement, which
Was made after the close on Saturday,
came more or less out of clear sky
since the Street had come to believe
that the bank had decided to put off
such action at this time, it did not
bring the outpouring of speculative Of
tcrings that would certainly have fol-
lowed similar step fortnight ago.
The stock market has been we'll
liquidated during the drastic cleaning
out process of recent weeks-the call
loan account is said to have been re-
duced at least s75,0o0,0oo during the
last three weeks of May as the result
Of liquidation of speculative accounts
and the discount rate development
afforded good test. 1t was held by
most market observers that tho bank
action until after the momentum of the
recent selling wave had spent it's force.
People who might on first thought have
rushed to dump stocks on the news had
it been handled otherwise, had plenty
of time to think the matter over be-
tween Saturday and Tuesday. All that
happened yesterday was that few
nervous and timid holders of stocks
sold out early, while the professional
bears put forth strenuous efforts to
start general selling movement, with
out much success.
Further liquidation must be looked
for, as matter of course, if money
rates continue at the high levels quoted
yesterday. However, to many market
experts stocks seem to have reached
point of resistance where it will take
great deal to push them far on the
downward side. At the same time it
must also be kept in mind that credit
conditions are still unpropitious for q
resumption OF active specula tion for
the rise. 1t looks as if on the face Of
things quiet market is to be expected
Tor some time yet.
rate rise is that it was a step taken
10 bring the bank rate more in line
with the open market rate. CONNER
cial borrowers have been paying 71a
per cent and more for some time past
The bank rate heretofore has been 6
per cent. Now the two have been
brought together. 1t is believed that in
the long run it will prove salutary in
all directions and prove beneficial to
the more essential industries. 1t ought
to check expansion of banking credits,
and that is what it is aimed at. 1t
does not appear that Wall Street need
worry about its credit supply, since
that has already been greatly reduced.
An unfavorable bank statement on
Saturday, government Withdrawals,
large June l payments through the
banks, together with the effect of the
rise. in the discount rate Of the central
banks, all contributed toward pushing
the call money rate up to 10 per cent
Renewals were made at 6 per cent. In
the foreign exchange market rates on
all of the principal European centers
displayed strength. Sterling exchange
moved up more than 4 cents to the
pound.
New investment issues continue to
come into the market. Yesterday the
bankers arranged for an offering of
S10,000,000 Of Union Pacific Railroad 7
per cent equipment trusts running
from four to fifteen years. The Offering
of the new $50,OOO,OOO twenty -fve-year
sinking fund T - per cent Relpian oov