The New York herald., 1921-09-22
FINANCIAL NEWS
AND COMMENT
New York Reserve Bank Redis-
count Cut to ) 1-2-Stock
Market Confused.

The rapid reduction OF Federal Re-
serve rediscounts and the huge accumu-
iation of reserves since tho rediscount
rate was lowered from per cent. TO 5h
per cent. on July 81 bore fruit yesterday
IN another cut of the rate TO 5 per cent.
by the New York Reserve Bank. That
action was forecast BY the actual ten
dency OF bank position in recent weeks.
but is none the less important for the
financial markets on that account. What
the new rate shows is that easy condi-
ton OF money and credit. not the small
est reason for which is the slow demand
for them In business. is reaching toward
the situation which existed in the early
days of the reserve system before abb
normal war demands and resultant in
fiuences sent credit costs up all over the
world. From July 81 TO the middle of
last week the aggregate OF rediscounts
Goans) carried by the New York bank
for member institutions receded more
than "a per cent. and in the same period
the total of the twelve Reserve banks
declined no less than IS per cent That
process is continuing, the rapid market
ing of crops helping this year to liqui-
date old loans instead of piling I'D new
ones during the harvesting months.
1t Is probable that some of the other
Reserve banks besides the one in New
York also will cut their rates soon. The
department of the money market to be
watched for new developments is COM
mercial paper. which has not yet been
able to get much below per cent. for
bills OF the highest class. 1t might seem
rather odd that on the day when the
reserve rate was reduced call loans Sc
cured by collateral should display a
stronger tendency than before. Yester-
days rise from Az to 5 n per cent was
an event that has had. however, counter
parts a few days after other tax pay
nents and seemingly represented moth
ing more than a temporary contraction
of interior bank deposits in New York,
with consequent lessening of loan Of
ferings.
The stock markets movements de-
noted somewhat confused state OF
speculation and abrupt changes of the
price front in cotton dealings told their
own story of rapid alteration OF trad
ing positions as well as the steady
pressure OF offerings from the South.
The most positive movement In any of
the markets was In grain. in which
weakness was pronounced in wheat,
the future options of which expert
enced declines Of IA to 1-2 cents a
bushel. Cotton advanced with vigor
in the first hour. then turned reac-
tionary and declined sharply near the
close OF business. The factor disturb
4 Ing commodity prices and likely to do
so for considerable time is the per-
sistence of sales from farms and stor-
age centres. 1t is not clear yet that
the rate OF liquidation. especially OF
cotton. will find an adequate demand
at least, demand sufficient TO absorb
offerings without concessions of prices.
| There were some rather curious
troleum rejecting a degree of pressure
that was explainable only through
concerted effort TO get its price down.
| While industrial issues moved of. their
changes were fractional for the most
part and the entire list recovered from
its lowest levels before the end OF the
day The bond market was broad and
strong. For railroad bonds and stocks
there was encouraging information in
the August report OF the Union Pacific
receipts were 100000 greater than
they were in July-although lower
than they were in August. 1920-but
also for the reason that it's operating
expenses were nearly % per cent.
lower than they were in August. 1920.
The Improvement Of steel buying.
recorded in the weekly reviews. is fol-
lowing lines reported a fortnight ago.
Light products In seasonal use are in
better demand and prices arc tending
higher but there is slight improve
ment over midsummer figures in the
output OF heavy materials. The state
| OF the foreign demand is disclosed in
the records Of the Iron Age that the
exports last month were only about
! one-sixth as large as they were a year
earlier.
German exchange receded TO a new
\ low price Of .90h cents to the mark.
but sterling was firm and Far Eastern
~