The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-12-05
FINANCIAL NEWS
AND COMMENT
Recovery in Stock Market Con-
tinues and Mexicans Make
Notable Gains.
SPECIALTIES IN ADVANCE
Federal Bank Statement Dis
closes Unexpected Drop in
Reserve Ratios.
SPECIALTIES IN ADVANCE

The recovery which was under way in
Fridays session made further notable
progress yesterday, particularly in the
Mexican group. The advance in those
stocks amo united to virtual rout of the
short interest. which had been selling
stocks during all OF last week on the
theory that the rise was nothing more
than technical recovery to be followed
by another decline. Whether or not the
fore permanent Improvement begins, the
advance in many directions yesterday
was sufficient to influence the bear trad
ers into covering stocks which had the
The result was series of very spectac-
ular advances in stocks Of the Mexican
type and the specialties, but moderate
Improvement also was recorded in other
speculative issues. AS a matter of fact
the rise was very general In all direc-
tons with the exception of the rails,
which were inclined to hold back.
As on the preceding day there was no
provement 1t was case entirely of the
markets having been oversold, the prin-
cipal buying coming from virtually the
same traders who put it down a week or
so ago. Indeed, IL the market had had
to depend upon the news. it would have
made a very different showing than 1t
did, because to all outward appear
ances, at least, conditions had not made
the slightest improvement. Further
outs of commodities in various lines
were announced and along with them
came Indications of dividend cuts in
many Industrial concerns. But the mar
ket. having demonstrated to the salts
faction of Wall Street that prices could
not go down without first eliminating
the short interest, paid no attention TO
signs which seemed obvious enough to
those who study real underlying con-
ditions.
Various rumors to account of the
vigorous rise in the Mexican shares
were afioat again. but their advances
were mainly the result OF short covering
as it was In the rest of the market. The
only difference was that the floating sup
ply here made the Mexicans subject to
wider fluctuations than were some other
issues. But there was no exception to
the improvement so far as the Industrial
group was concerned The steels adj
vanced along with the oils, and so did
the equipments, motors. specialties, &c.
The only exception to the rule occurred
in the rails. the leaders of which were
inclined to hold back. pending definite
leadership. An attempt was made to
run Reading up again in order to start
a movement in the other rails, but 1t
failed in the same manner that it did
on Friday.
An unexpected decline in reserve
ratios disclosed by the Reserve Banks
weekly statement was due to heavy Dor
rowing by member banks and a large
loss Of gold through the settlement fund
The ratio Of reserves to net deposits,
after deducting 40 per cent. gold re-
serves against reserve notes in circu-
lation, dropped from 41s per cent. to 35
per cent. and the ratio of total reserves
to deposit and note liabilities combined
dropped from 4O.s per cent to s7.s per
cent. The net increase in member bank
borrowings was approximately $50, OO0,-
900. The net loss in gold reserve was
nearly s36.OOo.O0o. There was a con-
traction Of notes in circulation amount
ing to 100000. The continuance of
the rapid process of deflation was re-
Elected in the Clearing House bank state
ment, showing a contraction in loans of
s25,000,000 and shrinkage in deposits
Of s53,o0o.o0o. Required reserve was
reduced by the drop in deposits and
borrowing from the Reserve Bank
n.