The New York herald., 1921-02-27
FINANCIAL NEWS
AND COMMENT
Stock Markets Strong Tone Is
Continued-Reserve Sys-
tem's Ration Recedes.

/ The retirement Of contracts on the
business in stocks in consequence the
strong tone of Fridays dealings was con-
| tinued. Recoveries among the active
! Industrial issues ran from good sized
fractions to points. The only weak
| spot OF consequence was Reading, which,
presumably. came in for professional
attention after several days of inaction
and yielded easily because of light de-
mand The feature of last weeks mar
ket all along was the dearth of support
whenever efforts were made by the ag-
gressive speculative element to offer
| particular shares down. In the case of
Reading the lack Of public buying might
be attributed to the recently announced
scheme of segregation which left the
actual application of the plan decidedly
hazy in the minds of holders OF the
shares and of possible purchasers.
The news that President Wilson had
ing it incumbent upon the Treasury to
meet part of the $780, 200, 900 bill due
the railroads, was not received during
the market period. Nevertheless. it had
been believed that the measure would
be made law as soon as the Secretary
OF the Treasury and the Interstate Com
mercc Commission had filed approval
OF 1t with the President, and for that
reason the railway shares had not been
| expected to register market enthusiasm
| by rising sharply. That the carriers,
some OF them at least. will be aided
materially by the receipt of much needed
cash is plain enough in the light of
comment from railroad and banking
quarters. Furthermore, the improve
ment of railway treasures will enable
| the recipients of cash to liquidate bills
! for supplies, coal, &c. which promises
| to play its part in retiring bank loans.
| The question arises whether or not the
Government will be able to meet the bur-
den of the railroad payment without re-
course to the investment market through
new issue OF Treasury certificates. In
i a
of funds flowing into the Treasury from
excess profits and income taxes, but the
Treasury's working balance may not be
| improved sufficiently from these receipts
to provide for regular expenses and the
new outlay.
| The foreign exchanges lost little
ground. with the exception of sterling,
which displayed a firm front throughout
same level as on Friday. Cotton was
weak again. The spot price dipped un-
der the twelve cent level, evidently re-
necting liquidation as holders prepared
particular application to the agricultural
communities.
The combined statement of the Federal
Reserve system, issued in New York dur
ing the afternoon, showed that the pre-
eeding weeks improvement of position
had been too rapid to be maintained. An
expansion OF borrowings by member
banks was not surprising because of this
weeks operations, including arrange
ments for the tax date at midmonth. The
gold reserve gained *7.651,oOo which
was at the expense of the New York
bank, whose reserve in gold declined
I 12,500, 900. and total reserve increased
$4,000. 900. The joint report disclosed an
expansion of's21. $40. 900 in redlscounts,
compared with a contraction OF more
than SAL 900. 900 the week before; net de-
posits expanded s26.47s.o00, and a gain
Of ,14,262,OOO in Federal reserve note
circulation was reported. The week be-
fore these notes declined about $13.0o0.-
900. The product Of these material in
creases of deposits and circulation and
the rather moderate gain of reserve was
a decline from 50.3 per cent to 1919 per
cent in the ratio of cash to noie and de-
posit liabilities. The local banks ratio
declined IL per cent. to 40.5 per cent