Evening star., 1921-05-23
LIST FIRM EARLY,
BUT WEAK LATER
Sterling Exchange and Its
NEUTRALITY-SUSPICIOUS. Are
the Weak Point.
BY STUART r. WEST.

NEW YORK, May GA very sharp
recession in the foreign exchange
market and continued irresularity in
stocks We're the leading incidents in
the financial situation today. To some
extent the drop of ever > cents in
the pound in sterling and the almost
equally abrupt fall in continental
bills was 4 reflection of uncertainty
in view of the latest news from
Silesia. Reports that the Germans
with some English cooperation. were
fighting the Poles did not give the
impression OF things going AS smooth
ly toward a settlement as had been
counted upon in financial circles las:
week. But the main explanation for
the downward turn in the exchanges
obviously lay in the operations pre-
paratory to the first payment on Ger
man reparations. As this payment
is to be in dollars according to the
latest decision. it has become an OBJ
ject to convert into dollars the cur
rencies Of the other countries inter
csted in the big transaction.
In other words, the value of the
American dollar abroad finds itself
suddenly raised because of its being
fNed upon as the medium for con-
ducting the transfer of German bal
ances to the allied capitals from all
over the world.
sharp Advances.
The stock market started in eau
tiouSly. There was some renewal OF
selling in a few special issues. but
this was quickly offest by the buying
in other quarters, especially in Mex
lean Petroleum and the tobacco
stocks. Steel common was bid up over
a point, with remarkable activity, and
the suggestion in this and other cases,
o
stocks around current prices was
pretty small. caused some uneasiness
among spectators for the decline.
For a brief space around midday
there was quite a lively demand for
covering purposes. with the result of
| a quick upward turn of a point to two
points in the active speculative issues.
This was checked in the afternoon.
however. by the development of fresh
! weakness in the motor issues. The
break in Pierce Arrow preferred to a
| new low level for the year and to a
level which was scarcely consistent
| with confidence in the Z per cent divi-
! dend was particularly disturbing.
! The common stock was equally
weak. and General Motors common
| anticipating the passing of its divi-
dend. was heavily sold. The decline
finally extended to Studebaker and
| the other members of the group.
! TObaccOa Strong.
| Retail Stores and Tobacco Products
| were the leaders on the bull side in
! the market today. 1t was the initia
| tive shown in them which did more
than anything else to turn the mar
ket generally, when it started upward
! in the early trading. The cigarette
fbusiness is better than it was last
year, and this accounts for the
strength in the shares of companies
which get their revenue from the
manufacture and sale OF cigarettes
Under these conditions the siX-dollar
cash dividend on Retail Stores is
made to look quite safe.
| In the case of Tobacco Product:
there are one or two deals. the nature
OF which has been already outlined
They have not been completed, and
as those on the inside frankly say
| they may or may not go through
But Tobacco Products is being bulled
less on this possibility of deals than
upon it's earnings position. which is
much better than it has been at any
time since last summer. While the
, cigarette business. is gcing up hill
| the outlook for the cigar trade is
more dubious. The demand has fallen
off and prices, it is regarded as like
ly, will have to come down.