New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-07-27
Credit Stringency
Held Responsible
For Market Break
Bear Traders Start Selling
Movement i'm Afternoon
and Whole Industrial List
Yields; Money at 10 PC.

Wall Streets professional traders ap-
parently proceeded with their opera
tons yesterday on the theory that if
stocks wouldn't go up they ought to
go down. With little or no buy
ing power in the market and with
tight credit situation working in their
favor, the professional element made
vigorous drive against the list. Lack
ing the sustaining force of buying
power, the market offered at best only
slight resistance to the selling pres
sure, with the result that in the late
afternoon stocks gave way on all sides.
1t was in many respects the weakest
market in more than month. Stocks
displayed no resilcncy, and once the
decline got under way it gained in
creasing momentum from the catching
of innumerable stop-loss orders.
Stocks acted sluggishly throughout
Ihe early trading, as was the case last
Week, and by their refusal to respond
to the more favorable European out
look invited short selling operations.
ever, that the market began to feel the
full effects of the selling from this
quarter. Then when Steel common
dropped under 80 and without rallying
broke again, this time below the
previous low of the year, 1913, made on
the Hay break, all of the leading in
dustrials yielded sharply. And those
issues which have been favorites with
the speculative pools declined most
vigorously. Some of the late selling
represented liquidation of long specu-
lative accounts by traders who had
finally given up hopes of a recovery
u. II l..
character may be looked for to-day.
How much further the decline will go
depends to large extent upon develop
ments in the credit situation, and if
money rates should ease up an active
demand for stocks for short covering
purposes would likely develop.
One did not have to look beyond the
credit stringency to find the cause of
the markets sudden turn for the worse.
Tie Saturday statement of the New
York Clearing House had disclosed an
uncomfortable position, with reserves
falling short Of legal requirements by
$4,000, 900 This brought about some
calling Of loans by the banks yester-
day. Outstanding call loans renewed
at 8 per cent, hut in the afternoon the
rate on new borrowings jumped to 10
per cent. The consolidated statement
of the Federal Reserve Bank system at
the end of last week made favorable
exhibit, but the Street paid little at
tention to that 1t Was more interested
in the local situation.
To-day the banks must meet govern
ment Withdrawals aggregating $8,000,-
600, not large amount in these times,
but large enough under present condi-
tions of credit strain to be an i'm
portant temporary influence The best
No., Ii, Il l.,
for undue apprehension regarding the
ability of the banks to meet current
and impending demands for credit.
But the head OF one OF the largest
banks in the country made it clear yes
terday that nothing in the situation
warrants an expectation of easy credit
or low rates. Credit will be available
for essential needs, but there is no sur
plus for other uses.
As is oftcntimes the case the special
weakness in stocks gave rise to the
circulation of rumors regarding un-
favorable industrial developments. One
uncontrmed report told of the closing
of a large automobile plant in the Mid
die West. No attention was paid to the
fact that to-day the United States Steel
Corporation will issue its earnings
statement covering operations in the
June quarter. A good showing is looked
for.
The weakness in stocks yesterday
was not confined to any particular
groups. Certain volatile specialties,
however, gave way more prccipitately
than more seasoned shares. Railway
equipments were especially hard hit,
with Baldwin Locomotive and American
Locomotive leading on the break. Endi-
colt Johnson lost points, Houston
Oil rs, Mexican Petroleum 91a, Pan
American Petroleum 6.$s, Replogle Steel
A, Stromberg Carburetor 71s, Vanadium
Gig, Studebaker 81 and Crucible Steel
l2. Steel common, at SS$4, was off
PA points from its high of 81 and it
closed at S91s, with a net loss of 2
points.
The movement toward lower prices
extended to the commodity markets,
sharp declines occurring in both cot
ton and wheat. Comparatively small
changes took place in the foreign ex-
change market, which reflected a
steadier tone as q result Of the better
E'nrnreaO reyys