The New York herald., 1920-11-07
FINANCIAL NEWS
AND COMMENT
Extreme Weakness of Stocks
Continues-Emphasized
by Heavy Liquidation.
AVERAGES AT NEW Low
Bank Statement Disappointing
to Wall Street After Tight
Money Market.
AVERAGES AT NEW Low

The extreme weakness which devel-
oped In stocks IN the last half OF Fri
days trading was continued throughout
yesterdays short session. being empha-
| sized again by very heavy LIQUIDATION.
notably IN steeis equipments, motors
and marines. Although industrials were
subjected co the most severe selling, rails
did not escape altogether. Traders in
the rails stin had very handsome profits
to their credit az result OF the last
upward movement. and rather than risk
those profits IN a market that did not
show the slightest sign of railying power
rails were dumped overheard along with
the rest. II was altogether the worst
session OF the week In so far as the
selling was concerned. and, as on pre-
ceding days, declines IN stocks coincided
with weakness in exchange, In cotton
and In the grain markets.
The decline was undoubtedly accel-
Grated a good deal by weakness of ex-
change, but in the main the underlying
influences In back of the selling were
slump In business activity, with accom-
panying declines in earnings and cuts
Of dividends. That certain stocks had
reached levels at which they ordinarily
would be considered very attractive In
vestments from the long distance point
OF view did not make the slightest differ
ence. as there was no evidence OF buying
power whatever to sustain them. They
slumped along with the rest OF the
market, and. what is more, where the
declines were due entirely TO short COW
ering there was no disposition to buy
back such short stock Usually traders
/ an-~s. n ~ y
days rather than take chances with the
news over the week end, but there was
no indication Of this yesterday. Stocks
! closed virtually at the bottom, which In
the case Of the average of the twenty
leading Industrial issues meant an apso-
Lutte new low record for the year.
After tho initial break had run It's
course there was 4 disposition TO rally
| stocks. but that movement had no
sooner gotten under way than q 1resn
outburst OF liquidation greeted stocks.
At no time did Steel common, for in
stance. have the strength TO rally more
than half a point The average CON-
mission house followers waited for IN
dicati Of at least a point rally IN
this issue and when Il failed to
materialize gold stocks again. The re-
suit was that nearly all leading Issues
closed at the very bottom. Steers low
was S5M, which equalled It's low OF
last month. and was only about two
points above the absolute low OF the
year. The same thing was true OF
Baldwin, which closed at practically
It's low, OF the motor and the shipping
shares Atlantic Gulf and West Indies,
which Is having trouble with Its Mexican
OIL properties, was an especially weak
feature and along with this selling came
another wave of liquidation OF the
other Mexican oils, notably Pan-Ameri-
can and Mexican Petroleum. The
weakest stock OF the railroad group
was Southern Pacific.
The bank statements were very dis
appointing after the weel, that has been
experienced In the money market and
gave little hope of easier money for
| the present at least. The Clearing
House statement not only disclosed q
deficit In reserve, but there was also
decline In reserve ratios of the Fed
eral Reserve Bank. The ratio of total
reserves to deposit and Federal Reserve
note liabilities dropped from 39.1 per
cent. 20 S6.6 per cent. and the ratio Of
reserves OF net deposits after deducting
40 per cent for gold reserves against
Federal Reserve notes outstanding fell
from 37.e per cent. TO 36.6 per cent
| Although potn statements We're very
poor, the deficit shown in the Clearing
House statement was probably moro
discouraging than the decline IN ratios
because usually II has meant 4 further
decline in the stock market. Only H.
one instance during the current year
has this theory been upset Equally an
discouraging as the bank statements
was the continued decline IN the ex-
change market. Sterling exchange made
new low record below s3.40, and Con-
tinental exchanges continued their
slump. several of them reaching new
low records for all time.