The New York herald., 1921-04-03
FINANCIAL NEWS
AND COMMENT
Stocks Appear Weak-Posi-
ti0n of Reserve Bank I'M
proves During Week.

The week in the stock market came
TO a close with the familiar tactics of
Spectators for the fall Of prices much
in evidence. While business was light
and transactions meant nothing except
traders efforts for profits. there was
dustrial issues to give the list weak
appearance at the end of yesterdays
dealings. Declines of IA TO more than
points were forced in American Beet
one OF two other issues. The rails re-
flected little of the developments pend
ing over wages and freight rates, which
was not surprising because, despite
movements now on to bring employers
and employees closer together. it is
patent 10 any one who follows the day
to day news that no definite procedure
has been decided on TO meet current
pressing problems
Foreign exchanges were steady and
dull. sterling standing firm, undisturbed
by the new strike of coal miners. 1t is
perhaps not altogether sound to judge
European conditions through the move
ments Of the exchanges, as normal
financial operations and the movements
of trade have become completely dis
torted in contrast with prewar condi-
! tions. but the manner in which the for
eign rates have stood up during recent
Il .s.1rr. tN,r0 e.
fleet something of confidence that under
| lying factors in the international mar
kets are better than they seem on the
surface.
The Federal Reserve bank statement
for the week was really a remarkable
document. Frequently in the last two
years the fortnight following a tax pay
ment date has seen a heavy expansion
of borrowing by member institutions
and consequent recession OF the re-
serve ratio. Last week quite the con-
trary thing occurred. Due in large part
to an expansion Of more than $35,600,-
600 in gold reserve-refiecting recent
heavy imports--and to a fall of s22,-
$500 in outstanding Federal reserve
notes, as well as a decline of s51, ,654, 900
| in deposits. the ratio of cash to deposit
and circulation liabilities gained full
l11a per cent. to 52.4 per cent. There
was no figure as high as the latter at
any time In 1920. In fact. one had to
refer back to days before war financ-
ing became great to find an equivalent
ratio. 1t was nearly 10 per cent. higher
than it was at the beginning Of April,
1920.
| The rapidity with which the interior
banks reduced their obligations in New
York during the week was disclosed in
gain Of nearly Ss4.000,0o0 in gold re-
serve by the local bank. Member banks
were able TO cut down rediscounts at
the local reserve bank to the extent Of
s41, ,545, 900 on paper secured by Govern
ment bonds and sso,2oo.ooo on notes
secured by commercial bills. The aggre-
gate reduction of such loans in New
York. S71.700.0Oo. was almost equal to
the reduction by the entire system.
which amounted 10 3tAsVVVrVVV. Ahs
New York banks Federal reserve note
circulation increased $2.70O.o 900 and its
deposits were only s3,s6s,ooo less than
they we're in the preceding week, but
the tremendous expansion Of reserves
resulted In the rise OF the reserve ratio
6ls per cent. to 5s.7 per cent. II the
old way OF figuring reserve. using net
instead of gross deposits, had been ad-
hered to, the expansion would have been
larger.
The bank statements indicated SO pre-
cipitate change in strength that the
money market ought TO feel this week
their effect through lower rates. The
cash ratio OF the reserve system and OF
the New York Reserve Bank in particu-
lar has risen to a point where a firmer
basis than before will be supplied for
reflections over a possible reduction Of
rediscount rates in the near future
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