The New York herald., 1921-02-18
FINANCIAL NEWS
AND COMMENT
Sterling Exchange and Stocks
Decline Under Pr0fes-
siOnal Sales.

A reacuonary tone in the stock mar
ket and the foreign exchanges yester-
day could be attributed TO several In
iuences. but il was doubtful whether
anything had more force than technical
considerations connected with the recent
advances In ten days sterling rates had
moved forward nearly s cents TO the
pound, the movement being clearly the
product of a paucity of offerings OF real
bills more than it was a demand from
sources other than speculative. A rise
of this character. i'll present conditions
of international trade and with money
rates yielding less easily than was ex-
pected fortnight ago, is not altogether
wholesome and is vulnerable to quick
reversals when speculative profits are
taken. Yesterday the signal for selling
came in news dispatches which quoted
the British Chancellor OF the EXchequer
as saying that his Government must
take measures for meeting interest on
the American debt in the next financial
year
The natural Interpretation OF this was
that Britain would accumulate exchange
in New York TO pay interest on the de-
nand loans held by the United States
this situation for some time past had
pointed not toward the payment of in
terest but toward the funding of such
payments for three years, perhaps
der severe pressure. which Increased as
the day advanced. The transfer OF
funds from London to New York en-
tails the sale OF sterling bills, and the
forcstall the effect of British Treasury
sales later The sight sterling rate de-
clined cents to S.ssl4 and weakness
here impelled practically all the other
European exchanges downward. The an
nouncement of the British financial an-
thority brings forward sharply the ques-
ton whether or not there are 10 be
negotiations looking to the funding o.
has been much discussion in the worlds
financial centres.
The stock market was spotted by nu-
merous weak spots. which appeared
after Steel common had reached Q. new
high point for the movement at 50. As
on Wednesday. contemplation of income
statements for 1920. together with
thoughts about some yet to appear, were
excellent material for the bears. The
omission Of the Armour Leather Com
pany's common stock dividend drew at
tention to the situation OF other leather
concerns. with the result that the Cen
trail Leather issues were driven lower.
Some of the Chemical company shares
broke down. but il was noticeable again
that. outside OF late decline OF Steel,
the stocks OF steel producing corpora
lions we're fairly steady. Had 1t not
i been for gains here and there among the
/ specialties the list would have borne a
! weak appearance at the close as II was
/ the market was highly unsettled with
/ irregular price changes.
| Call money went back to : per cent,
and while there were sizeable offerings
/ at per cent. off the Stock Exchange
some disappointment was felt in mar
I ket circles because the easier condition
I of Wednesday was not maintained.
What was more significant than call
money movement was news that renew
4 ais of ninety day loans had been made
4 a; : per cent for the first time this
year. But the rate was fractonaily
higher than this for fresh borrowings of
fixed period funds. AS the next week
or more Is likely 10 be devoted in in
vestment banking circles to the complete
distribution OF the large output of new
securities of the last three weeks. while
new offerings arc light. the chances are
that money supplies will feel the effect
of a flow toward New York in exchange
for bonds and notes. An Interesting
transaction in the offing entails the
probable offering Of about $lO.OO0,O0o
bonds of the State OF Sac Paulo. Brazil.
Jointly with an issue OF the same paper
i'm sterling in London and gullders in
Amsterdam.