New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-04-06
Easier Money
Cue for Buying;
Stocks Higher
Improvement in Federal Re-
serve System Reflected in
Drop i'm Call Rate to
Lowest in Four Months

Spectators took their cue yesterday
from the action Of money rates AL
though on Monday the charges for
speculative credit failed to decline in
response to the marked improvement
Revealed at the close of last week in
the condition of the Federal Reserve
Bank of New York and that of the
whole system. there was a reflection
of the changing situation yesterday.
The call money market on the Stock
Exchange is regulated market, not
free one. But an unofficial place
for borrowing one-day funds has
sprung on the outside and there are
here no barriers. AS a matter of fact,
the disparity of rates indoors and out
In favor of the free market is so
striking that most of the money lend
ing, it was reported, was done in the
unofficial mart, where funds were
available at 4'a per cent. The in
tfuence of this fall on the rates at the
money desk at the exchange could not
be resisted yesterday, and the official
January 20 dropped to per cent.
Later the rental charge on speculative
credit fell to 5ls per cent, the lowest
level attained since November 90 last
The present system Of call loans on
the Stock Exchange was devised to
protect brokers against bidding up
rates against themselves, and was de-
signed for Use during period of high
money. Many brokers are wondering
whether the new element OF a falling
tendency does not make it advisable
TO change the system. The subject at
least deserves special study by the au-
thorities to see whether revision of
the procedure is necessary.
In view of the steady improvement
of the reserve position of the central
banks as a result of gain in gold
and a reduction Of discounts, it is
not difficult to explain the easing of
remarkable that call money rates re-
manned at such unprecedented heights
for this season, in spite of the funda-
mental changes OF the banking situa-
ton. especially since sentiment plays
so large a part in the quotations.
Credit would be much more abundant
than it is for the would-be borrower
if the member banks were not handi-
capped, on the one hand, with frozen
loans, and determined, or the other, to
reduce their own borrowings at the
Federal Reserve banks. The easing
went deeper yesterday than call funds;
the rate on acceptances fell from e
to Il per cent, and the call money
rate against acceptances receded from
6 to 51a per cent.
AS a result of the adjustments in
the money market security prices were
firm throughout the session, although
activity failed to expand. The buying
was largely professional. coming mainly
from shorts seeking to cover their
commitments. Traders also acquired
long stock in limited amounts. The
oils, steels, motors and specialties were
conspicuous in the upturn. The rails
were heavy at first, but later We're
carried moderately upward by the mo-
mentum.
Cotton was frmer. but wheat prices
sagged. July contracts sold at the
lowest prices thus far quoted on
weather reports disappointing to those
in quest of higher prices.
Foreign exchanges were firm, and the
gain in sterling was attributable in
part to the cabied report that Britain
was providing in its new budget for
interest payments to the United States
Treasury. Less than half the period OF
three years of breathing spell. during
which interest has been deferred, has
passed.