The New York herald., 1921-06-07
FINANCIAL NEWS
AND COMMENT
Stock Market Suffers Severe
ReactiOn-Exchange Weak,
Sterling Off z 1-2.

The selling OF stocks which brought
substantial recession in all departments
yesterday had aspects OF broader par
ticipation than could be credited to pro-
fessional operations for the fall. Al
though there We're occasional periods of
recovery, the tendency was markedly
downward throughout the session and at
times declines approached the violent
STAGE Undoubtedly the course OF stock
market prices was affected somewhat by
a slump of the foreign exchanges. but
the comment OF brokerage offices indi-
Gated more liquidation OF speculative
and investment accounts than had been
recorded In any day OF last week. Net
losses of 2 to more than points were
disclosed in final quotations. such issues
as American Sugar Baltimore and Ohio,
Norfolk and Western, Northern Pacific,
Reading, Union Pacific United Fruit
and United States Rubber figuring In
the list. Several speculative favorites
fell further than the maximum men
toned and the weakest tone was shown
in fnsl transactions. In bonds there
was degree Of unsettlement. several
foreign issues evidently losing ground
the bond department as a whole was
fairly steady.
A market like yesterdays has been
seen on numerous occasions IN the past
near the end OF declining movement,
but II was difficult to ascribe the usual
qualities TO the days dealings, even
though the reaction had progressed suffi-
cientiy far in a month to warrant hopes
OF a rally because the rails turned weak
rather suddenly. Heretofore, since the
middle OF May railroad stocks had made
much better performance than the in
dustrials, standing up so well, in fact,
against the decline elsewhere that the
Street had begun to look for beneficial
results of the pending wage reductions
In speculation. The market acted as
though a sizable volume Of stock which
had been taken on by traders at higher
figures was let go by weary holders who
had begun to lose hope of an early up
turn. The impression prevailed also In
brokerage circles that the prevailing
stiff tone of money rates had brought
recurrence Of liquidation of securities by
stocks OF goods which were difficult to
market. The latter explanation, accord
ing to retrospective view of last weeks
business, was applied to some of the sell
ing Of Liberty bonds during the week.
Call money was at ia per cent. Time
funds were reported available in meagre
quantities at z per cent, and firm
market was looked for at least until
after Government transactions at mid
month were completed.
Brokers who predicted an erratic for
eign exchange market when Germany
began to accumulate dollar balances at
New York three weeks ago had reason
to believe their forecast entirely justified
In the fall of about 7h cents In sterling
yesterday and In weakness of practi-
cally all Continental rates. The fall was
sensational, more than 8 cents to the
pound being written off Of last Satur-
days quotation In the opening transac-
tion. 1t was probable that several fac
tors entered into the trading situation,
among them being belief in banking
circles that further conversion of other
exchanges into dollars would be made
by the German Government against the
reparatious notes which mature before
September 1 and also the fact that tight
money here was tending to check spec
ulation for the rise. In considering the
exchanges 1t should be borne in mind
that cotton and grain will move out
from American ports In increasing
quantity from July l onward, which
usually In other years has entailed ad-
vance sales of exchange against pend
ing exports of those products. The Anal
rate of 3.771s for sterling wiped out all
the advance recorded since January %.