The New York herald., 1921-05-13
FINANCIAL NEWS
AND COMMENT
Stocks React Sharply Again,
While Foreign Exchanges
Touch New Highs.

\ Another sharp reaction Of stocks CO.
1 incident with the advance OF British
I and Continental exchanges to new high
/ records for the year showed yesterday
\ that Germany's acceptance of repara-
\ tion terms was not at all uniform in
effect on the markets. The reason was
that stocks remained under the rather
depressing Influence of current news
and gossip from some of the industries
while dealings in the exchanges had
the stimulating factor behind them of
relief in European centres over the Ger
man decision. That the effect of
changed financial sentiment overseas
hinged on the reparations will find later
reflection in the American security mar
lSet is inherent in the situation. But
one needs only to read the dispatches
received from London. Paris and Berlin
In the last two days to see that much
still remains 10 be done in working
out terms of payment, methods of mar
keting bonds representing instalments
of Germanys obligations and in making
sure OF interest on such paper before
/: is offered to buyers.
Sterling exchange rose close to the
81 level for sight drafts and the upturn
Of francs and marks continued with the
vigor of the preceding day. At the same
time Greek exchange rallied with con-
siderable strength and Scandinavian
rates went higher than they did on
Wednesday. Doubtless purely specula-
tive buying was an integral part of the
days business and suggests that there
may be reactions. At the same time
confidence that the exchanges had
broken away from their recently uncer-
tain and frequently weak tendencies
was expressed in local banking circles
and in Washington. Outside of the
reparation situation it seems clear
now that the great gold movement of
a decline of American exports, is bear
ing extensively on exchange rates. A
significant feature of the April foreign
trade figures was that while the excess
OF exports. amounting to ss5.o00,0 900,
was the smallest by large margin for
any month since August the net gold
imports were sol 900 900. The deduc-
ton is that foreign countries not only
paid cash for all the merchandise re-
ceived from us over and above the por-
ton offset by goods sent here but also
applied small amount against past
debts.
In connection with the foreign trade
situation an event of more than passing
interest was the announcement that the
Reserve Board had made six months
bankers acceptances issued in import
and export transactions eligible for pur-
chase by reserve banks. which makes
possible the extension of longer credit
to purchasers of goods than was per-
nitted by the limitation of reserve bank
discounts to short bills.
There was persistent pressure against
motor accessory shares, with weakness
among rails in the afternoon. Declines
ran from a point to points. but while
the more active issues were retreating
there was sufficient upbidding of sew
eral petroleum and miscellaneous shares
to show that a little buying found Offer
lngs of those stocks rather light
Call money lent at per cent through
out the day The weekly Reserve Bank
statements showed that the New York
institution had been drawn on TO
strengthen the system elsewhere. which
may have had some force in stiffening
money rates here this week. While the
gold reserve of the local bank declined
SCI, ,649, ,000 that of the twelve banks ex-
panded more than s20.0oo.00O. Redis-
counts in New York increased s25. 693.-
900 and tota. bin holdings Increased
about 10000. 900. but the aggregate of
bills held by the system declined more
than s4s.5Oo,0Oo. The product of the
movements. including decline OF s23.-
soc. 900 in circulating reserve notes. was
an increase of the systems reserve ra-
ito from 55.3 per cent. TO 500 per cent.
while the New York ratio declined from
55.5 per cent to 53.s per cent.