The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1920-02-04
SHORT SELLERS
REAP HARVEST
Efforts to Bring Out Long
Stock Successful as
Market Slumps.
MARGIN CALLS HEAVY
Demand Sterling Goes
6 Lower and Feeling Not
Cheerful.

New York, Feb. a-Stocks broke
badly today. on unconhrmed runners
that the local Federal Reserve Bank
Of New York would increase its re-
discount rate on commercial paper to
~ per cent. Other important factors
which helped bring about the sharp
break in quoted market values was =
call money rate of Il per cent and an
unusually precipitant drop in foreign
exchange to the lowest levels in his
tory. Another unfavorable influence
was the decline in the prices of Lib
erty and Victory Bonds to new low
records. Offerings of securities were
made throughout the session at the
expense Of prices. Business was on
a heavy scale. the volume of transac-
tions being in excess of .OOO, 900 shares.
the heaviest turnover in weeks.
Notwithstanding an overnight break
in sterling exchange of 4 cents to the
pound the undertone at the OPENING
was fairly 1teady. some stocks show
ing fractional gains. but the general
tendency being downward. Shortly
after the opening Dame Rumor be-
came busy and circulated reports thar
the Federal Reserve Bank proposed
marking up the discount rate again.
Inasmuch as rumors in the past
relative to the action of the Federal
Reserve Bank directors have eventual
ly materialized more than usual Gre
dence was placed in the stories heard
in the commission houses throughout
the day. The downward movement
was accelerated by the continued
drop to new low records in foreign
exchange. Offerings continued up to
the close OF business, final prices be
ing about the lowest of the session.
The weak undertone which prevailed
at the close leads brokers to look for
further depression at the opening to-
morrow.
extended may be realized from the
fact that General Motors closed
with a net loss of twelve points,
Crucible Steel slightly more than
seven, and Mexican Petroleum six
and one-haIf points. other issues
lost from two to five points. The
only consolation the holders of
stocks could find was in the state
ment that the decline had ap-
parently improved the technical
position. This. however. furnishes
little source of satisfaction to those
spectators who will be in receipt
of the margin calls that went
broadcast tonight from the COM
mission and wire houses
American Wooden came in for
considerable attention with a drop
Of eleven points, closing at the bot
tom price. Attention was directed
to this issue by dispatches from
Washington which stated that the
Department of Justice and repre-
sentatives of wooden goods manu-
facturers had come to an agree
ment relative to reducing prices
for the products of the latter.
Ideal bankers have persisted re-
Gently that there had been considera-
bic credit used in speculation in wool
en- goods.
Those bears who have steadily
maintained that stocks should de-
clI e because ou- e$poTI.; u 81 Il
certainly continue tc shrink with
foreign exchange declining daily
" nov INV NOnSlu-
cradle encouragement out of re-
ports that some banking institu-
tions Were refusing to discount
ste-ling Hills. Large Institutions,
however. were discounting bills
throughout the day and Sa! that
only small and unimportant . llers
would take such an action which
would be considered highly unfav-
orable and might influence a COL
lapse in the foreign exchange mar
ket IL allowed by large institu-
lions that are steadily in the mar
ket. 1t was pointed out that the
refusal of the payment OF dollars
on sterling drafts to an American
exporter would tie up the export
er's credit and thus have a tend
ency to restrict exports.
Bankers said the withdrawal of
s17.100.00O of gold coin from the
local sub-treasury today would
tend to curtail credit and some talk
was heard of suggesting that gold
exports be licensed. Most bankers
however. believe gold should be
permitted to go to those countries
where 1t would he dearer for
American business interests to pay
their obligations il they had to
use exchange.
Owners of securities are hoping
that money rates will ease off. but
general opinion is for high rates
for some time