The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-05-05
FINANCIAL NEWS
AND COMMENT
Fall of Rediscount Rate Points
Way to Easier Credit
Stocks Advance.

Events shaping the return OF business
and credit to a normal situation are
coming rapidly these days. The reduc-
ton Of the commercial paper rediscount
rate from to y per cent. by the New
York Reserve Bank yesterday indicated
that something of the same force Is
working in the credit field that was ex-
emplified in the case of industry on
Tuesday by the 20 per cent. wage cut by
the Steel Corporation. The reserve
banks action came earlier than many
bankers had expected the reduction--of
the same extent as that by the Bank OF
England last WEEKS an earnest of the
easing position of loans and also a re-
lection of the decidedly moderate de-
mand at the moment for accommodation
for new commercial undertakings The
possibility of the lower rediscount figure
leading to immediate imitation is de-
cidedly remote. even though the cheapen-
ing OF credit costs occurs in the midst
of the greatest accumulation OF gold by
the United States, with the exception
of the period In 1916 when the allied
nations were sending all the metal here
that they could rake together. The New
York and the Boston reserve banks thus
far stand alone in the retreat from the
redjsccunt rate which held throughout
last summer and winter. 1t is conceiv-
able that the Philadelphia and Cleve-
land banks may follow along, as the re-
serve ratio of the former in its last
weekly report stood at 54S per cent.
and the latter at 81 per cent, against
55.5 per cent. In New York and 7l.9
per cent In Boston.
The stock market yesterday had no
intimation of the pending Reserve Bank
action. but factor promoting the up
ward movement of stocks was supplied
by the reduction OF steel company
wages. While there were fairly sharp
attacks on some industrials causing re-
actions of point and more at times.
\ the tendency was forward, with the steel
shares leading most of the time. Steel
common reached a now high level for
the year at S5s, Cruclble Steel adj
vanced more than a point and most
other independent issues were marked
UP. The influence OF the decline Of
wages probably was more sentimental
than of practical Importance. especially
when viewed in terms of current mill
operations. The Iron Are noted In it's
weekly survey that the cut would repre-
sent saving OF 50 a ton If the mills
were working full, whereas the price re-
ducttons of last month removed 81 to
IS ton from quotations.
The wider aspect Of the Steel Cor
poration's decision on wages Is. how
ever, Of more significance to the mar
Aets than 1t is to its own profits Rail-
road stocks moved upward yesterday
and we're evidently stimulated by the
example which the largest single en-
ployer OF labor has set for other en-
ployers who are striving TO lower wages
The decision of the railroad labor
board on wages of common labor IA
( that ruling Is made and there Is a
clearer insight than Is now possible into
the German separations situation It is
certain that business can begin to visua-
LIE its prospects during the second half
OF the year. The current Industrial
promise Is not altogether pleasing: the
record Of mil operation OF steel con-
Germs suggests that April earnings were
rnunh foyxar than thosa If Mor,h .x.kfoL