The New York herald., 1921-01-16
FINANCIAL NEWS
AND COMMENT
Stock Trading Narrows-Bank
Statement Shows Effect of
Loan Reductions.

Trading in stocks yesterday was con-
centrated In list on the Stock Exchange
which was much smaller than anything
seen before in the last four months. The
reason for an abrupt contraction in
the number of different shares dealt In
was not explained by any new event of
market import. but it was in keeping
with the tendency developed in the three
preceding days after a great deal Of
short covering had been completed and
business, to this extent robbed of
an important factor for activity. The
course of prices was generally upward,
although much irregularity was In evil
dence at the close. Railroad equipment
issues were in good demand and miscel-
laneous manufacturing shares In some
cases advanced between / point and 2
points. In view of the gloomy picture
Of railroad finances presented on Friday
before the House Committee on Inter-
state Commerce, 1t was interesting to
note that rail stocks were more firm
than heavy yesterday. Reading contlnu-
ing the. rise of the preceding session.
while numerous medium priced stocks
gained good sized fractions. Inasmuch
as the plight of the carriers in respect
to ready cash is one that can be relieved
by Government action. it Is not strange
that the stock market should not be
acutely concerned over the situation.
The weeks bank statements were
highly Illuminating of the movement
which has been gathering force during tho
last fortnight to retire loans ard Reserve
Bank circulation. The changes reported
by the New York Reserve Bank are
worth some detail In discussion. Redis-
counts OF notes based on Government
war paper were reduced $40,440.000,
commercial bill rediscounts declined $780,
250,Oo0 and the banks purchases OF mer-
camille paper in the open market lowered
the total as compared with that OF the
week before by s15,730o00. The ag-
gregate of Government bond rediscounts
reported by the bank. $393,522.220. was
less than it was in any week Of 1920 and
1919. The total of rediscounts Of COM
mercieH paper. s413.051.s7s. was s45.-
100000 less than 1t was in the week Of
December Is and with the exception OF
that week it was lower than at any time
since the week of October s. 1920.
Through those declines total earning as
sets were carried down to S969, ,760. 900,
falling below the $1,000. 100000 level for
the first time in exactly year. Out
standing Federal Reserve notes declined
S39,500. 900 during last week. and the
resultant total Of $500. o.121.0 900 remaining
was the smallest since the week of Feb
ruary of last year. The gold reserve
receded ss.5O0.o0o during the week and
total reserve declined s5,550,000,
rather Insignificant change as affecting
the ratio of cash to deposit and note LA
bilities, for besides the heavy fall of cir
cuiation net deposits contracted to the
extent OF S35.650, ,000 The reserve ratio
was carried forward from 39 per cent.
to 40.6.
The Clearing House bank statement
showed fail of ss7,600,0 900 In loans and
in contrast with n sharp expansion in the.
week before demand deposits declined
SAT. 7.304, 900. This was undoubtedly con-
nected with the paying off Of loans at
the central bank and in consequence of
reduction Of s17.Soo.o00 in reserve
carried with the Reserve Bank the asso-
ciated banks reported recession Of
s11.20o,00o in reserves. bringing about a
deficit Of $4,000. 900. Under the system
of banking as conducted since the Re-
serve Bank began to operate deficit of
member bank reserves is less significant
than 1t used to be. The great fact OF
the weeks reports was the marked de-
cline of the general loan account