The New York herald., 1921-11-04
FINANCIAL NEWS
AND COMMENT
Broader and Stronger Market
in Bonds Reflects Drop of
RediscOunt Rates.

1t required only the news that the
Bank OF EDgiands rate of discount had
been reduced from 51a per cent. to per
cent. yesterday TO emphasize the world
wide movement OF credit toward lower
costs and to stimulate buying OF bonds
in New York TO the most active scale OF
the year to date. In fact, IL the periodic
Income tax selling" OF Liberty bonds
were left out OF consideration one would
have TO search back to prewar records
to discover day of heavier and broader
dealings in bonds Price advances OF
point and more resulted In many
issues. both industrial and railroad. and
the strength and activity was so fully
maintained until the close Of business
that that market quite overshadowed the
stock market. At the same time, shares
OF oil, steel and public utility companies
were decidedly strong. and several spe-
cialties gained as much as points. 4
feature of trading was a brisk covering
movement in sugar stocks, reflection
OF suggestions from producing quarters
that efforts to curtail production in Cuba
for next year were meeting with success.
The breadth of the bond market raised
the interesting question or whether or
not speculation had turned to funded
securities with much force behind 1t,
In these days of rather sparse and I'm
frequent dividends on Industrial common
stOcISz as -np,Aarad Vr;ft, tboaa ne yno,,,
years, real attraction lies behind bond
price possibilities, especially as tho prob
ability OF rising quotations has been we'll
advertised in the action OF reserve re-
discount rates since June. But the back
bone OF the market during all OF this
year has been not speculation but the
belief among investors that such large
returns as we're obtainabie on paper OF
the flrst grade were certain to be sue
ceeded by smaller returns as money con-
ditions worked back to normal. That
belief, supnlementing the need Of cor
porations with cash reserves to keep idle
capital at work while business is dull.
has tended to keep the market rather
bare of supplies during the last three
months. The fact that call money went
from Az per cent. to u per cent. yes
terday afternoon intimated that the de-
r1.and for accommodation to carry Sc
curities had been larger than would
have been entailed in stock market deal
ings alone.
per cont. rise IN the Bank OF
England's ratio Of reserve to liabilities
during the last week was by no means a
reason for the discount cut as a 15.3 per
cent. ratio is far below the normal figure
for this season. There is O Relationship
between money rates Of the great lend
ing banks on both sides of the water and
the downward movement in the reserve
system, on Wednesday had its bearing
upon the British Banks action Just as
it did last June. This weeks report OF
the reserve banks shows reserve ratio
OF II per cent, new high record IN
the after war period. the slight rise from
the preceding weeks figure being ac-
counted for primarily by a gain of
s14.000.00 in gold reserve. Deposits
increased less than s2.Ooo.oOo and re-
serve bank note circulation was about
stationary.
Sufficient railroad reports FOR Sep
teinber have appeared to show that tho
carriers net revenue as q whole ran
about 1914 per cent. ahead OF results
in September. 1920. accomplished. in the
cases Of 1873 roads. through the offset
supplied by 26 per cent. contraction OF
operating expenses against u decline of
19is per cent. In gross receipts. As
grain shipments were pushed ahead
much faster in September this year than
they were q year earlier and general
freight 10 not yet taking up the slack
likely to occur In shipments from farms
In the remainder OF the autumn It Is
problenlaticai what the carriers will
show in earnings. Wheat and corn
went to new low records, the former get
ting down TO 90 cents a bushel In the
r