Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1921-05-06
BUSINESS SITUATION IN
] U. S. BECOM|NGNORMAL
Fresh Outburst OF buying Causes
Active Day on Stock
Market.
RAILROADS ARE LEADERS
Also Very Strong.
Many Securities Make New High
;, Record for Year w Result OF
Purchasing FURRY.
RAILROADS ARE LEADERs

NEW ionK. Il May S"' 5.@Gnco more
the outside public has shown itself
buy stocks. For the past ten days or
two weeks the public has been
steadily picking up stocks pay after
still bearish on tthe general outlook
received wire inquiries from custom
ers In the South and West: What
shall we buy?', The usual reply was:
~. YOU buy you do no at your own
fisk" Then. ignoring this advice.
a., wire would be sent; TEL
kfsincc two weeks ago today tie. price
trend has been Enthusiastically upward
and. as has been pointed out In this
correspondence. the interest or tho
outside public has been steadily in
crcasinE. To-day there was Il fresh
outburst Of buying which resulted in
another million share day, with many
stocks making new high records for
the year.
steel stocks strong.
While the rails were leaders. In
We're verv stronr. '"S So s'' wcr" The
motors. although thc stocks In this
class had setback around noon when
II was announced that the Lee Tire
Company had reduced prices.
All Of the big news todaY was de-
cidcdly favorable. t'irs, In the list In
the matter OF Importance comes the
unexpected cut In the rcdlscount rate
OF the Federal reserve bank here.
This was generally understood TO he
n definite sign OF easier money. The
New York bank Is the recognized
leader. For that institution to lower
It's discount rate was understood TO
mean other Federal reserve banks
would reduce their rates: that the
facturcr and merchant would d" low
cred: that the demand for invest
ment securities would be improved.
In brief. il was generally accepted as
tho most constructive news OF inany
"a long day. meaning that at last the
breaks were 10 be taken of f"r
legitimate borrowers in the business
rinnnrini situation n-strr.
Secretary Mellon nddcd this con
tribution TO the days good news:
far better than the trade situation.
Knowing that the poor trade s';ua-
ton had its origin In tight none,
the average man with money and the
Inclination to buy stocks argued mat
II the financial situation was AZ
right Improvement In trade would
quickly follow.
This attitude on the par, Of the
average man with idle capital and the
inclination TO buy was reflected III
the bond market az well as III the
the bond market Was very active ana
very broad.
Mex, TO the cut in the New York
rcdiscount rate WAS the cables from
abroad on the German situation. the
Resignation OF the Cabinet at Berlin
Was understood 10 be step In meet
ing the reparation demands OF the
allies.
from Washington, and Chicago that
lcaderp OF railway labor had prac-
duction in railway wages. the an
nouncemcnt TO he made this month;
That such II move would be followed
by n reduction in ireight rates Wac
IN kpp Grnnte1.
European Conl Statement Helps.
Next came the news that large cx-
Ahad begun This will ind more en-
Enjoyment for Idle frelBht cars.
Next came the announcement tna'
for the ten days ending Aprn ~
g'regated no less than 3iS.la9'goo'
lirhis gold came in from so many az
fcrent directions and In soch on
fcrent forms that at,th" time no hc.
curate account was kept. According
10 toduy's news. Sli,l6i.000 was from
France: s1l.6IS.0o0 from Sweden; ~
Ils,oo0 from the United kinsaom; f2 o6
from Denmark This gold has not
only strengthened our 'oank reserves.
but IL has brought foreign exchange
back nearer 10 normal. or where Tor
eign countries will show more OF an
INCLINATION to buy in our markets.
Both call and time money were
easier today.
reductions in loans were Important
factors in the cut from TO 6 IL per
cent On commercial paper discount
rates by the Federal reserve bank
There. the falling on in domestic and
8forcign trade also played an impor-
tant part. Iron production has al
ways been accepted as barometer
OF general trade conditions. For the
month OF April. the daily production
fell to 39.7fa tons. the smallest since
July OF 1908.
Foreign BANKS Cut Rates.
Similar conditions. however, exist
elsewhere IL today's cables are cor
(rectly analysed The National Bank
Of Denmark has just cut Its rate
Rishank OF sweden made the second
cut within week. FIRST from IL TO
7. and now from 10 l-2.
But as far as this country is con-
ccrned, the head OF our banking sys-
tom is OF the belief that the worst is
over. In "a message to the 1000 del
(egates to the eighth annual convcn-
ton Of the National Foreign Trade
trade. Governor Harding said:
There Is now no danger OF any
general financial trouble In this coun-
courage and confidence. There is no
advantage In forcing liquidation FUR
I thsr; y, Many ny. men men have have, Ianidated
encouraged to build themselves up.
We arc reaching every day safer
basis upon which to do business. The
problems before us are all solvahic."
When the New York Federal Re-
serve Bank increased Its rediscount
rate on commercial paper from to
per. cent on June /. 1890. its reserve
Ratio was down TO 41.S. 1t Is now
55.a, an increase OF - per cent in ten
months. This recovery reflects exc
tensive liquidation. Our bank is the
only one now having r. 6 20 per cent
rate. Atlanta, Chicago, Dallas and
minneapolis, because OF their relative
~ low reserve ratios. are 4 Boston,
philadelphia. Cleveland, Richmond, st.
Louis Kansas City. and San Francis
co, 6.
Continued cold weather and heavy
rains In crop sections. are beginning
20 cause some concern in bonding cir
cles here.