The New York herald., 1921-12-03
FINANCIAL NEWS
AND COMMENT
Foreign Exchanges Snap Back
Merger Market Created
by Steel Reports.

The reversal OF foreign exchange quo
tations. which occurred yesterday, was
inherent in the technical position of the
market and therefore caused no surprise
or any unsettlement of securities Much
of the power In Thursdays advance
clearly had been induced by short cover
ing operations, and when the most press
| ing OF such purchases were complsted
prices eased back. Sterling closed at
4.04la. decline OF 2al cents, and francs
and marks lost about half of the preced-
ing sessions advance. One reason ap-
parently why the upturn OF the ex-
changes was not pursued further by
buyers for the long account lay in the
absence Of new information about the
proposed international conference, but
would be learned about 1t In the next
few days.
|. In stocks there was an oldtime merger
market. shares of so called independent
steel companies, notably Lackawanna,
Midvale and Republic Iron and Steel.
being in strong and we'll sustained de-
mand from the start of business. Gains
among them ran from 2ss to points.
Sufficient information has come forward
to show that the combination of several
concerns has progressed beyond the con-
versational stage, and Spectators have
been quick to take advantage of the
programme. The advantages OF large
production units are made plain In the
history of the United States Steel Cor
poration and in the success, as far as
costs reduction and profits are concerned,
| of the oil line petroleum companies.
Probably the basis of current merger
plans is the certainty that when inter-
national trade becomes active again the
markets will be secured by manufacture
ers who can keep their costs low and
can support their sales campaigns with
large tonnages. The question of imme-
date moment is whether or not the
values of shares of companies involved
bear q ratio high enough to book values
to permit of a consolidation soon. 1t is
on the theory that prices are so low that
such speculative buying as yesterdays
Is hastened.
Other steel shares than those expected
10 figure in a merger were bid up
ward and there were some rather spec
tacular swings in the oil group. New
high records for the year in some cases
and for the present movement in others
| were recorded by railroad equipment
issues and copper stocks. The rails,
| however, were inclined toward reac-
| ton. The action OF the rail share mar
ket this week has been impossible Of
explanation as the reports Of October
earnings. the readjustment of certain
working rules and the extensive sale Of
equipment securities held by the Gov
ernment have been factors Of encour-
agement for the carriers.
| Call money stood at per cent for
all loans. The bond market slowed
down and prices were slightly softer
than the day before. That market is
not without evidence that speculation
has reached such a scale as to make
possible some broad and sudden price
| movements soon. But the underlying
investment demand remains strong and
bankers are preparing for several size
able offerings.
Grain prices were very steady and
business was light Cotton quotations
rallied smartly after an early decline,
expectation of a substantial reduction
in this weeks visible supply being the
chief influence in the upward turn.