The New York herald., 1921-06-08
FINANCIAL NEWS
AND COMMENT
Stocks Rally Sharply as Money
Eases-Sterling Exchange
Receivers 4 3-4 Cents.

The force OF Mondays heavy selling of
stocks carried over into the session of
yesterday bringing severe declines dur
/ ING the morning. Several industrial
shares sold down to new lows for this
/ year 1t was evident before noon, how
/ ever, that liquidation from speculative
accounts whose margins had been I'M
paired OF late was an important factor
and once these forced sales had been
completed the market experienced a
vigorous rally. The power of the re-
covery, in fact, was sufficient to carry
several active issues to 4 points up
ward from the days minimum levels and
at the close of business net gains out
numbered declines. Stocks which had
been depressed the furthest in the last
week, including American Sugar, Cruel
BILE Steel, Royal Dutch, Studebaker and
United States Rubber. were leaders of
the rally. The deduction from this was
that short covering operations had been
expedited under the cover of the morn
ing's recession and had a sharp effect in
the rise after the initial pressure had
been lifted Rails were less active than
! industrials and their share in the upturn
was less than was seen elsewhere.
The fall of prices and immediate re-
covery were suggestive of influences
which frequently mark the approach of
the end Of a bear swing. The rally.
however, was not accompanied by any
really constructive developments of a
sort to affect market movements, outside
of the easement OF call money late in
the day from ~ per cent to per cent.
The impression continued to prevail in
some quarters that additional sales of
securities might occur on a fairly broad
scale before the day for payment of the
next instalment OF income taxes. If past
of that class of liquidation will be gov
erned by the condition of the money
market in the meantime.
A notable event OF the day was late
$500, 100000 Of Treasury notes for sub
scription. their maturities being year
and three years. This is the initial step
by the Secretary OF the Treasury to
spread out the maturities of Government
obligations, but from the point Of view
of the money and credit markets the
most significant item was the 5% per
cent. interest on the three year notes.
In establishing that relatively high rate
for a moderately long term loan the
Treasury authorities took recognition of
the prevailing cost of credit, with the
inference also that the cost Is not likely
to recede far during the period when
the Victory notes. which mature in 1922
and 1923. must be cared for.
Another Sl4,300, coo was depbsited in
the Federal Reserve Bank for the ac-
count of the Preparations Commission.
which may or may not have had con-
nection with recovery of Az cents In
sterling and a strong upturn OF other
European rates. French francs ad-
vanced nearly a quarter cent each to
S.12h and Belgian francs about as far.
fluctuations of the exchanges In the last
two days have been caused primarily by
the conversion of German balances
abroad into dollar balances In New
York It seems that further operations
might be put through with more delib-
Grafton. Erratic movements of ex
change are highly disconcerting to mer-
chants in the export fields none the less
SO in other countries than in the United
States.
Wheat and cotton rallied after early
declines. but In the case of the former
the quotations left off about where they
were on the day before. II is the season
for numerous private estimates of crop
condition. and one on winter wheat yes
terday. which estimated the probab,e
yield at 55s,ooo.O0o bushels, FASTENED
some short covering OF speculative com
mitments. That figure was considered
rather low in the light OF Government
predictions