The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-21
FINANCIAL NEWS
AND COMMENT
Stock Market Rallies Substan-
TALLY for First Time in
Two Weeks.
FEELING LESS DEPRESSED
Reserve Ratio Of Local Federal
Bank Rises to 40 Per
Cent. for Week.

For the first time in a fortnight or
more a substantial rally Developed dur
ing the last half hour of yesterdays
trading in the New York Stock Elk
change. For ninety minutes there had
been continuation of bear selling and
liquidation. but the volume of sales was
diminished and despite the fact that
many stocks made new lows, a more
cheerful and confident sentiment per-
vaded the Street. Rumors of impend-
ing disaster were less prevalent and
the ammunition of the bears appeared
to be about exhausted. Nevertheless
the consensus of opinion was that the
Improvement in market values was due
to evening OF commitments and profit
taking by those who had been short Of
the market. There is abundance Of
expert banking and shrewd brokerage
opinion to the effect that liquidation has
ceased and that the extreme lows have
been due quite as much to the momen-
tum of the downward trend as to the
malicious rumors and unfounded bear
propaganda which have prevailed with
out adequate opposition.
No authority was willing to predict
that stocks were actually on bottom
but the consensus of opinion was that
market values had dragged on bot
tom and more than discounted the con-
mercial failures to be anticipated In
December and January. A year ago at
the top of the bullish momentum stocks
went way above actual values and the
Federal Reserve Boards decision to
bring about defation turned the market.
Reversing the process, the momentum of
the downward trend has gone too far.
Nevertheless the point that positive
pear before the market can be turned
Is made. Such financial news had not
arrived at the close Of business yester-
day. but it was apparent that scale and
investment buying coupled with profit
taking by the shorts had arrived in
sufficient volume to cause at least
temporary rally. Net losses in the ac-
tive list could be counted on the fingers
Of one hand. while net gains were spread
around all Departments of stocks.
That the easier money rates OF the
last few days were not a flash in the
pan was indicated by the bank state
ments. which were the most encourage
ing since the arrival of the peak of
the credit strain. The Clearing House
banks reported a decline of S19.735,SOO
In surplus. but It was eclipsed by the
fact that they paid off ss0.000.000 Of
their borrowings on rediscounts from
the Federal Reserve Bank. To have ac-
complished such reduction of obliga-
lions in the face of a shrinkage of
$32,244.oO0 in their demand deposits and
Of s1,111,000 in their time deposits was
considered particularly favorable from a
market point OF view. The banks were
aided somewhat by a contraction in
loans of Sit, 900
The most favorable development in
the banking position. however, was the
rise in reserve ratios to 40 per cent. for
the Federal Reserve Bank, despite the
repayment OF s2S,25O.o00 of the ssS, Oo0,-
600 borrowed on rediscounts from other
institutions. The ratio Of total reserves
TO deposit and Federal Reserve note liza
bilities combined rose from 1873 per
cent. to 40 per cent, and the ratio Of
reserves to net deposits, after deducting
40 per cent. for gold reserves against
Federal Reserve notes in circulation.
rose from 1872 per cent. to 40 per cent
That gain in the reserve position was
| due I'm large measure to the reduction
in borrowings OF member banks from
/ the local Reserve Bank, but there was
also an inflow OF funds from other re-
serve districts, indicated by a gain IN
gold through the settlement fund,
amounting to s15.5OoOO and the re-
payment of all but s14,750.000 of the
borrowings from other reserve banks
on rediscounts, a relative Improvement
I OF 3O.0OO.00O. The contraction in re-
serve notes in circulation also contin-
ued. the decline for the week in the New
York district amounting TO $4,000, 900.