The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-10-28
FINANCIAL NEWS
AND COMMENT
Rail Shares Gain on Encourag-
ing News From Chicago
Marks Recedc.

The stock market appeared to find
considerable comfort yesterday in the
meagre news which came from the rail-
road conference at Chicago. and In con-
sequence there was a rather rapid re-
tlrement OF the short interest in the
afternoon. Short covering purchases
carried many railroad shares upward a
half point TO more than a point and
there was a parallel movement among
steel stocks. The rise of the petroleum
group was evidently a continuation of
the swing which got under way three
weeks ago and had an especial demon
stration in shares of companies having
producing property OF great extent and
important refineries in California. The
strength of Pacific OIL. Standard of Cali
emulation under influences which did
not get beyond the rumor stage during
the day.
The action OF the rails illustrated the
way IN which speculation Just now IS
affected by things of immediate mo-
ment. paying slight attention to uncer.
tain factors Of considerable Importance
AS the Street interpreted dispatches
from Chicago. the strike would be called
off through agreement OF the union lead
ers not TO act provided that the rail-
roads did not insist on an early cut Of
wages, supplementary to the reduction
of IL per cent in July. The news fnti-
mated, Furthermore, that railway ex-
ecutlves had agreed to follow the pre-
scribed form as laid down by the trans
portation act of 1920 to apply to the
United States Railroad Labor Board for
reduction and to wait for ruling by
the feeling that there would be no
strike. The rise in no way had a bear
ing on the freight rate situation, which,
by and large. IS the real point Of first
Importance as the power of rate making
is In the hands Of the Interstate Com
merce Commission and all the evidence
I points toward extensive rate reductions
soon irrespective Of the decisions on the
wage question by the interested parties.
In fact several new rate cuts are to be
applied next month.
1t is said however. that the railroads
are not doing as badly in respect to net
| income as had been expected in many
| quarters few months ago. While
gross revenue in September was much
below the receipts of a year before. the
| control of expense 2ccounts--assisted by
the July wage reduction-had the effect
OF leaving net operating income higher
than It was in September. 1920, in the
cases of most of the lines that have re-
ported The Lehigh Valley was a shin
ing example, with the largest net rev.
enue for the month in many years, and
the New York Central, Baltimore and
| Ohio and others scored moderate in
enues of last year. Nevertheless, the
fact that savings have been made very
largely through neglect of maintenance
remains. and there is limit to that sort
OF thing.
The Federal Reserve report for the
week showed that the system had gained
| s13,500.000 in gold reserve. while circu-
lating Reserve notes were reduced
| s32, 00oo 900. But there was considerable
expansion OF bill holdings and gross de-
| poslts. which tended to check the rise OF
! the ratio of cash to note and deposit liza
bilities. The ratio went from 1908 per
cent. TO 7os per cent The rapidity with
which circulation is being retired indi-
Gates that currency is being released In
the interior and is not being absorbed by
the needs of business. The total OF
| S2,A0S,77e.0 900 is the smallest since Sep.
| TENDER 81. 1918. The local Reserve
Bank lost a little gold in the week. and
as rediscounts and deposits expanded
| the reserve ratio receded slightly. II
was interesting to note in the Reichs-
| bank statement for the week ended or
| October 20 that the outstanding mark
currency declined slightly after many
weeks OF enormous expansion. German
! exchange receded to .55 cent n mark