Evening star., 1921-07-21
MONEY IS EASIER;
STOCKS ERRAT|C
BY STUART p. WEST.

NEW YORK, July 21.;-In todays
market there was a highly interest
ing test Of the relative importance Of
financial and comme rcial conditions.
as influencing the current price move
ment.
Reduction Of the federal reserve dis
count ratio to 5h per cent in the New
York. Boston. Philadelphia and San
Francisco districts has been clearly
forcshadowed by the steady increase
week by week in the reserve ratios.
made after the close OF business last
night had not been altogether expect
ed. nor had the further lowering Of
the Bank of England rate, which
promptly followed this morning.
The statements given out by the
tion with the late reductions were the
most emphatic of any SO far, on the
subject of the Improvement in the
country's financial situation.
The action Of the English bank. de-
spite the fact that its reserve ratio
of 11a per cent is still extremely
low. was quite a striking testimony
to the passing Of the worlds credit
strain.
There was no question about the
bank rates upon the investment mar
ket. 1t was a day Of increased ac-
tivity and very pronounced strength
in the bond trading. Bond prices.
which have been inclined to hesitate
since the first Of the week. moved for
new high prices for the year recorded.
In the Money Market.
In the money market the conse-
Quences were also at once apparent.
The call loan renewals dropped from
s to S ~ per cent, although the mar
ket had to provide $1l 900. 900 to meet
a special government draft.
There was no Immediate change In
time money conditions, but the drift in
the commercial paper market was plain
ly downward with some transact ctions for
high-grade names recorded as low as
per cent, where the recent quotations
had been 6H.
A per cent level for the member
banks is about the right proportion to
the 5h per cent at the federal reserve
institutions. for there must be at least
one-haH per cent difference In order to
make it worth while for the former to
discount paper and in turn borrow from
the. federal reserve.
Trade Situation, Not Money.
The action of the stock market again
demonstrated that outside Of investment
figures the main interest lies in the
trade situation and not the money stu
alton. In cases where particular indus
tTlcS are OH lno menu anu OuIlOOk 1OT
earnings favorable, stocks were well
supported today.
But in cases where business has not
improved or where earnings are not
good, there was no response whatever
to the banking developments.
Steel shares were under pressure. not
so much because OF poor showing of
Republic Iron and Steel for the second
quarter. but because Of the Indications
that official steel schedules will have to
be cut again.
1t was denied that the fire in the
Mexican oil country was at all serious.
but this did. not prevent further selling
Of Mexican Petroleum, Pan-American
and Royal Dutch.
Pullman Company.
Pullman directors took the expected
action today by declaring the regular
dividend. No statement was given out
regarding earnings or business pros
poets. The impression IL that the divi-
dend was not fully earned during the
quarter, but that the board felt war
ranted in drawing upon surplus in
order to maintain the record for divi-
tdend payments, which has never been
broken since the organization of the
company. -
In the last balance sheet the profit
and loss surplus was reported as $23,-
878iD00. as against $5,671 900 in 1914.
Pullman lis therefore another case
where undivided profits Of the war
period are now being used. reasonably
enough, to tide over the present alb
normal state Of depression.