The Washington herald., 1921-06-17
AGGRESSIVE SHORT
SELLING PREVAILS
ON STOCK CHANGE
Tobacco Stocks Are Sc
lected as Fresh Object
Of Attack.
MEX. PETE. BREAKS
Establishes New Low at 1903;
The Entire List Weakens
Sympathetically.

NEW YORK, June 16.-Aggressive
short selling continued on the STOCK
Exchange with the tobacco STOCKS
selected as fresh objects OF attack.
Another sharp break occurred. now
ever in Mexican Petroleum, the
price dropping TO another new low
OF 1o3, for a loss of IL points. The
whole list weakened sympathetical-
". and toward the close active In
dustrials shaved losses running
from 1 TO points. Rails were frac-
tionally lower. Call money ruled at
5s per cent throughout.
Foreign Exchange.
Activity among the foreign ex-
changes furnished two-sided story.
the FIRST comprising a sharp run-up
on the basis of a marked absence
of dollar buying in London, and the
second consisting of an equally
sharp break coincident with the re-
ceipt Of private reports concerning
unsatisfactory ballotlng in the Brit
ish miners referendum. During the
first phase sterling moved up "a
cents to S3-s2, although the amount
of business transacted was not
great. the demand for dollars In
London being reported the smallest
in two years Francs meanwhile
gained 81 points at S.2S cents, and
lire were up points at 5.li cents.
Money situation.
Further contraction is shown by
this weeks Bank Of England state
ment, although the proportion of re-
serve. which increased by slightly
more than 1 per cent and now
stands at 1874 per cent. is still be-
low the higher figures which have
been recorded this year. Circuia-
ton is decreased by f7ss.00O. and an
approximately equal amount has
its liabilities are less by about f5,-
900. 900. The discount rate is MAIN
tanned at So per cent undoubtedly
as result of continuation of the
British coal strike. With feeling
less optimistic regarding the out
come OF the miners balloting. It 10
interesting to speculate on what
the bank Ii likely to do IL the deci-
sion Is adverse to a settlement and
indicates a further indefinite pro-
longation OF the strike. From one
point of view it might be argued
that the Withholding of a reduction
is losing much of it's efficacy as =
force tending to hasten a settle
ment- while the danger of a specu-
lative outburst as a result of lower
rate seems much more remote than
a month or so ago. The governors
will. Furthermore, probably find the
pressure for s per cent rate re-
doubled as a result Of the Iowa
rate at New York. On the other
hand, any diversion of credit Z"
speculative activities in advance Of
a strike settlement would be a most
unfortunate occurrence.
New York Reserve Rate.
Adoption of a per cent rate by
the New York Reserve Bank mean
while Is IN accord with the reserve
boards policy of attempting TO has
ten the arrival of cheaper money.
and probably would have occurred
at an earlier date il it had not boer
for the desire ~ nrOc~o' ~autio'-s1v
The open-market rate for CONNER
cial paper. uDWeNrt =, IL , q. 80
corresponding reduction TODAY. ann
ii is just as well to guard against
too great optimism concerning tho
effect Of reduced reserve rates upon
the open market quotations. All
along the market rates have been
above the reserve bank rates, all
though the reverse Is the normal re-
lation between a central bank and
its subordinate institutions. When
credit becomes really plentiful in
proportion to demand the private
banks will then be in a mood TO
offer lower rates. In any event.
the idea that the reserve banks are
responsible for the high price Of
money and that relief from the lat
ter condition may be had easily
through the reserve board is based
on a misconception of the situation.
The Bank of Franco statement Is
notable for another substantial re-
payment by the government. this
weeks reduction in the amount ad-
vanced by the bank being 900. 900. 900
francs. Altogether the government
has now paid of l-500. 900. 900
francs since the end Of last
year. Circulation shows further
reduction this week of 10000. 900
francs.