The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-05-06
FINANCIAL NEWS
AND COMMENT
Expected Rail Situation Devel-
opments Give Impetus to
Stock Market.

moving factor in yesterdays de
cidedly vigorous and broad dealings IN
stocks was the relaxing Of the redis-
count rate OF the Reserve Bank IN New
York but II was probable that the
greater influence behind rising prices
was expectation OF developments in the
field OF railroad labor and earnings.
Railroad stocks entirely overshadowed
industrial issues In the advance. gains
Of a point to ~ points being recorded
BY list which included Baltimore and
Ohio, Canadian Pacific, ST Paul common
and preferred, Rock Island New
York Central. Reading. Southern Pa
cific and Union Pacific. Both dividend
paying shares and those whose prospects
for divldands are remote shared IN the
days improvements and the scale OF
| transactions indicated that public buy
ing as well as speculative accumulation
was active
What the markets ara now looking
forward to particularly IS decisions by
/ the Railroad Labor Board on railroad
wage contentious. The abrogation Of
\ the national agreements suggested. per-
haps. moro comprehensive rulings BY
/ the board on basic wages than win APP
pear al one time; but the size OF the
reduction by the Steel Corporation and
1 the manner OF its acceptance by EN-
4 ployees affected has made the financial
community confident that the trend Of
I labor's return is too definitely estab-
| llshed to pass by the railroads. The
earnings OF the railways are not at all
satisfactory; the stock market prepa red
/ for this situation in the decline Of JAM
uary and February, and such an upturn
as that OF yesterday suggests that pur-
chasers are looking forward to the time
\ when lower costs and gradually improv-
/ ing traffic will make income accounts
\ look different
4 a significant item connected with the
decline Of the rediscount rate for notes
secured by commercial paper in the New
4 York district Is contained in comment
| from Treasury officials. The cut is viewed
Il
I will be followed by similar action by
| other reserve banks, facilitating financ-
ing incident to the spring season. In
dustry and trade are at present not
active seekers for loans: there is op-
portunlty for stimulation in these fields,
which is not likely to be labelled as new
imitation. But the managers OF the re-
serve banks feel that expansion OF bor-
rowing for commercial purposes is likely
to be gradual and the continued accre-
ton to gold reserves stands as an offset
to prospective increases of rediscounts,
and at the same time the signs point
toward further reductions, OF old loans
as stocks of goods and farm products
move to market.
The position OF the Federal Reserve
system was strengthened in the last
week again. The ratio OF cash to circu-
lation and deposit liabilities advanced
from So per cent. to $50 per cent. The
gain in gold reserve was SIS. 7S9, 900 and
total reserve expanded more than S12,-
| 100000. The increase OF deposits.
! slightly in excess OF 100000, was
counterbalanced partly by decline Of
| s1.500.O00 In circulating Federal Reserve
notes. while outstanding Federal Reserve
Bank notes receded s2,390,000. Reds
counts were about $22, 500. 900 larger than
they were in the preceding week, and
| s7,100.000 OF them was accounted for by
| operations OF the New York bank. That
institution Increased its loans to other
reserve banks on Government paper from
| $1o.U0o,o 900 10 $14,S56.s50 at the same
time that commercial paper rediscounts
increased s22.O0o.OOo The New York
banks reserve ratio remained at 551a
per cent, the figure established a week
ago.
Wheat prices advanced strongly in
huepced blythe movement of stocks The
foreign exchanges were steady. Call
Fmoney stood at 6h per cent