New-York tribune., 1920-01-15
Industrial Stocks
Break Sharply as
Liquidation Grows
Extraordinary Statement by
Chicago Banker Fails to
Cause Rally; Money Sit
nation Blamed for Break

Discouraged by the persistent fail
ure of the stock market to respond
to favorable news and by the un-
promising outlook in the money mar
ket, some important commission houses
yeste erday advised their customers to
sell stocks. Liquidation originating in
this way proceeded steadily through
out the session on the Stock Exchange,
and, while it was not in large volume.
the. demand was even thinner, and as
La result prices worked substantially
lower. Professional operations on the
short side were also of fairly large
proportions.
While the decline in stock prices
was general the oil stocks suffered
most, perhaps because the speculation
IN them has been tremendously over
done. Mexican Petroleum, Transcon-
tinental Oil, Texas Company and Mid
die States Oil suffered losses ranging
from 6ls to 10A points The high
priced industrial specialties also broke
badly.
There was, however, nothing par
tlcularly disturbing in the action Of
the market as a whole, for the de-
hrmed up and thereafter fuctuated
within narrow limits until the final
gong sounded. Some brokers said
they, detected signs of good buying"
at the days low levels, and asserted
that during the recent break stocks
mad been going into strong hands
Ihey were inclined to believe that
there was something in the remarkable
sIayement attributed to John J. Mitch
en-, chairman Of the Illinois Trust and
merchants Loan and Trust Company of
Nnicago, to the effect that "Easterners
apparently are engaged in the lucra
tive business of shaking stocks ont of
the pockets Of the public and locking
tnem IN their own strong boxes" by the
slmpie expedient of manipu]atinT tbe
money market
>. AS market factor the statement was
disappointing. Many traders thought
II might cause rally, but this failed
10 materialize. 1t was ridiculed in
most responsible quarters, however,
especially when it was learned that it
originated in Stock Exchange house.
bankers pointed to the recent state
ments OF the local Federal Reserve in
ssitutlon as affording ample refutation
ol sucn charge, and this was the view
generally accepted around the Street.
One banker asserted that the COM
merclal demand for funds has been ex-
tfaordlnary, while tens of millions of
dollars of credit have been. tied up as
a result of strikes. He told of one
case in which business man had
bought million dollars worth of raw
material, only to have his plant tied
up the next week, thus making it
necessary for his bank to carry large
part of the burden for an indefinite
period. Another banker pointed to the
heavy loss of gold as an important
factor in the shortage of funds for
spec culation. In practice, one dollar of
gold is stretched into $13 of credit.
and the amount lost by this country
during the last eight or ten months
would, on this basis, serve as a basis
for nearly $4,000, 100000 of credit.
Money yesterday renewed at per
cent, but only comparatively small
part of the demand was supplied at
that figure and the rate was run up
to 15 per cent in the afternoon. The
report that the Federal Reserve Bank
has another increase in rediscount
rates under consideration was an i'm
portant factor in the money market.
The bond market was less active
with price changes small.