The New York herald., 1921-03-13
FINANCIAL NEWS
AND COMMENT
Active Stocks Rally-Bank
Statements Reflect Income
Tax Preparations.

The continued decline OF stocks in the
first hour OF business yesterday was
enough practically 10 level out average
prices with those reached in the great
fall or last December A number Of
railroad and Industrial issues went
substantially lower than the minimum
quotations or 1920. Hit the early reac-
ton was succeeded BY brisk short
covering movement which, before the
close. lifted the active shares from
point to about points above the final
prices of Friday. This was an entirely
conventional development, for the
weeks heavy decline had offered tempt
ing profits TO speculators who sold
stocks short in advance or the railroad
wage Developments News that the
Erie Railroad had revised its wage
programme, going back to q six day
week instead of one of five days and
postponing action in respect to common
labor, was factor In speeding up Pur-
chases OF the rail- stocks, but the
chances are that rally would have oc-
Cured anyway. The professional trad
ing group has had every reason to be
confident OF its position for more than
two months, but prudence dictates
cautious course at q time when pro-
longed market declines have gone q
long way IN discounttng unfavorable
factors OF industry and transportation.
Stocks most prominent in the upturn
we're Atchison, Great Northern pre-
ferred, Mexican Petroleum, Southern
Pacific, Union Pacific and United
States Rubber.
Sterling was firm AND other Euro
pean exchanges, while somewhat irreg-
ular. displayed no real change OF posi-
ton.
The Federal Reserve system last week
showed the effect OF preparations for
the pending income and excess profits
tax payments. as well as ordinary mid
month financial operations. Member
banks applied rather literally for loans
through rediscounts OF war bonds and
mercantile bills. with the result that all
sorts of rediscounts expanded nearly
s27.00o.soo. compared with those of the
preceding week. That change aided in
swelling net deposits sharply, the ag-
gregate at the week end being S6S.392,-
600 larger than it was on March 5.
Consequently, while there was growth
OF s24.S00,Ooo in gold reserve and Of
more than s22,00o,000 in total reserve
and a decline of S36,770.000 In Federal
Reserve note circulation. the gain in
deposits prevented material advance
to deposit and note liabilities moved up
from sos per cent. TO sos per cent. At
the New York Reserve Bank borrow
4 ings by members increased $50, 900, 900
from those of the preceding week. net
deposits expanded s4S.600 900 and ag-
gregate reserve was no more than s9,-
$40, 900 larger for the week. Thus. while
circulating reserve notes declined s10.-
100000. the enlarged deposits were too
great an offset and the cash ratio TO de-
posts and circulation receded from 422
per cent. to 41.S per cent. The growth
Of rediscounts was reflected in an in
crease OF s26.934.oO0 in member bank
reserve credits at the Federal Bank.
Those movements of loans, notes and
cash were quite in keeping with the
needs Of the season. In another week
or fortnight at the most the Reserve
banks should display again the results
Of defiation which have been so much
in evidence all OF this year