Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-08-04
RAILROADS START
AFRESH RALLY
General Covering Of Shorts Re-
fIected Psychological Effect
Of Easier Money Rate

New York, Aug. 4.-The psychoIogi-
cal effect Of the per cent call loan
rate found reflection in a further sub
stantial recovery in market values in
today's stock exchange. The improve.
ment was made the more striking be-
cause it was accomplished in the teeth
of powerful underlying reactionary
current. weak opening and a very
decidedly UNPLEASANT, IL not disturbing,
foreign situation.
Technical conditions or influences un-
questionably played a potent part in
forcing n reversal Of the market trend,
but at the same time the movement was
sufficiently impressive to demonstrate
quite conclusively there is at least q
point in which the rcactionary party
must take into consideration the CON
structive fundamental conditions on the
one hand, and the other. that the So
called powers be are not going to
sit idly and see security values ruth
lessly destroyed by any bear party, no
matter how powerful or large are its
numbers.
Such a rebound, however, was logical
and a natural sequence of the reckless
smashing tactics Of the reactionists in
the recent preceding sessions. Evidences
OF an oversold condition were conspicu-
ously patent even during the weaker
periods of the market yesterday, but
the untenable position of the short in
terest was not fully disclosed until the
call rate Unexpectedly and without
warning was reduced to 6 per cent.
The anomaly Of a 8 per cent call rate
following an 8 per cent renewal rate
when there is no surplus reserve, only
naturally caused immeasurable un-
easiness among the shorts, who wisely
interpreted this unexpected development
to indicate quite plainly that first actual
steps had been taken by the influential
financial interests to support the
market.
Every sensible reasoning observer. of
course. recognizes this apparent easing
of call money rate was more artificial
than real, and the time is not yet op-
perfume to even consider the possibility
of any extended upward swing in the
market. Yet, on the other hand. IL was
made quite plain that, while there must
be meager funds for market accommo-
dations. still there is sufficient amount
of loose money under control Of the
powers to- be to be quickly shifted in
such cases of emergency as encountered
yesterday afternoon. when the market
was making rapid strides toward ap-
nroaching semidemoralized condi-
ton.
Whatever plans had been made to
continue the recovery were for brief
time rudely upset this morning. when
the further sharp break in sterling on
the unfavorable foreign situation in
duced renewed liquidation and free
short selling. This combined pressure
for a time counteracted supporting or
ders and the favorable effect of yes
terday's remarkable relaxation in the
call loaning rate.
While the whole market gave ground
for a time yet it was evident the same
strong support was in force which
quickly checked the drives. Readjust-
ment of the speculative position caused
the railroad shares made the best show
ing. This followed wider compre-
hension Of the Importance of the state
ments that the advance rates will go
into effect by August 26. This means
that the great bulk of the last half
years business will pay the higher
charges both on freight and passengers.
essentially changing the entire railroad
situation.
Union Pacific. Northern Pacific,
Northwestern, Reading and various
low priced shares scored advances of l
to pig points. Industrials responded
to violent short covering. Cnfavorable
foreign news and comment regarding
business conditions in the steel trade
and other industries lost their influence
in face of the confident buying of rail
road issues. which suggested a change
in speculation sympathy. Prices made
further upward progress in the early
afternoon on a slaCkening volume of
business. Steels, equipments and oils
advanced notably.