The New York herald., 1921-06-03
FINANCIAL NEWS
AND COMMENT
Call Money Suddenly Jumps to
8 Per Cent.-Stocks, Bonds
and Exchanges React.

The financial markets turned yester-
day from considering railroad and indus
trial problems and devoted attention to
the rather unexpected rise of call money
to s per cent, the highest rats since
February 3. and to a paucity OF offer
ings OF funds for fixed period collateral
loans. That the money situation had
effect in causing reaction OF stocks was
evident in brokerage Office comment. but
the influence OF stiff rates was more pro-
nounced IN the bond market and foreign
exchanges The sale of more than &c.,
10000 Of Libertys and victorys and a
total turnover in excess OF $4,000, 900
In all bonds on the New York Stock Ex-
change. a new high record for this year.
showed that unusual influences were at
work. Sterling exchange turned about
from Wednesdays advance, receding
more than 2h cents at the days lowest
point. and most other European rates
lost ground
| Operations surrounding interest and
dividend payments on June 1 continued
! to affect money. but the weekly state
ments OF the Reserve System and the
New York Reserve Bank disclosed larger
influences than those centred on needs
of corporations. Instead OF further re-
duction OF loans and currency contrac-
ton, the System reported an expansion
OF more than s5s, 900 in rediscounts.
/ s,,~ e., t.>
cess of s27.0O0,oo0. The twelve banks
disclosed the first increase of Reserve
notes since the last week OF February.
Deposits increased s14.40o.000 In the
900 h-cold reserve in New York. mainly
through the gold settlement fund. helped
to carry the reserve ratio from ISL per
cent. to CO.'S per cent. the relation be-
poslts of the System was such as to
cause recession from SIG per cent.
to 57.4 per cent. In the ratio. The move
ments OF the week seemed to indicate
that demands for funds from agricul-
tural regions had overcome the previous
tendency of loan Liquidation. The Bank
CT Englands statement also showed a
decline OF It's reserve ratio. due to the
weeks interest payments. which caused
growth in loans on Government paper
of more than aso.ooo.ooo
The money market promises to be In
teresting for considerable time. Prob
ably much Of yesterdays selling OF Lib
ertys was caused by the Reserve Banks
ruling that on and after July 1 those
issues are to be considered the same as
other bonds in regard to loans, the mar
ket value instead of par being the basis
for borrowing. AS Libertys are selling at
the readjustment will mean a decided
shrinkage in the borrowing power of
that class OF paper and the banks may
be expected to put other collateral in
place OF it. But Libertys. especially the
s1as, are in strong competition with
other high grade investments carrying
tax exemption privileges. which has force
In market results. The point to be de-
cided about the Reserve Bank mandate
is whether or not loans will actually bc
reduced
The bearish element made capital Of
the tight money situation and Of un-
favorable Industrial news. driving sharp
ly against such stocks as American SUI
gar and Refining, Baldwin Locomotive,
United States Industrial Alcohol and
others, declines extending from ~ to
points. The rail share list was unsteady
at times, but. on the whole. gave good
account OF itself The stock market was
almost entirely professional and reflected
little besides trading manoeuvres.
| A condition Of sc per cent as OF May
20 was SO closely in line with prelirn-
mary private reports on cotton that the
market did not move far from the limits
set in the last few days. Wheat. on the
other hand, continued to rise vigorously,
gain of 3Z cents a bushel carrying
the July option to s1.40N. Export buy
ing on a broad scale was distinct fac
tor in the days business.