The New York herald., 1921-07-01
FINANCIAL NEWS
AND COMMENT
Mexican Petroleum Leads Fall
of Oil Stocks on Proposed
TaX-Rails Up.

! The outstanding features OF the stock
market yesterday were the sharp de-
clines Of shares of oil companies prop
critics OF which are outside the United
States and the undisturbed advance OF
railroad shares coincident with great
unsettlemcnt among petroleum issues.
It did not escape notice that the general
run of industrial stocks, although de-
pressed early in the day, recovered
rather easily later and recorded frac-
tional changes In the main at the close
of business. A deduction to be made
from the days dealings was that the
short interest in rails found no increase
Of offerings as a result of heavy de-
clines of Mexican Petroleum, Pan Amer
lean Petroleum and Transport and Cen
era Asphalt, and were led to bid for
what they needed. The gains of a
point to more than 2si points by Atchi-
son. Baltimore and Ohio, Rock Island,
Great Northern preferred. Northern Pa
cifc. Southern Railway and Union Pa
cifc was a. continuation of the swing
begun early in the week, but seemed to
be refective of a greater confidence In
the railway toutlook than had been seen
before.
There was.no doubt about the factor
which helped Mexican Petroleum and
the other oil stocks lower. The un-
expected inclusion of tax Of 25 to 35
l,a al fr,1n it,
the proposed new tariff measure brought
out substantial offerings OF the stock
Immediately at the start of trading. The
net declines in the shares mentioned
pressure was heaviest recessions ex-
tended upward 3 to IA points. the latter
in Mexican Petroleum. The market
realized that should the impost be made
it exceedingly difficult to compete with
domestic oil at current prices. especially
as latest advices from Mexico City indi-
Gated that the recent increase Of 25 per
cent on exports of petroleum is to stand.
The stock market. however. took an
extreme view of the situation, as is its
wont. The tariff bill Is certain to be
discussed broadly, and interests with
capital invested in petroleum properties
in Mexico. South America and elsewhere
abroad are not likely to hold back pro-
tests against the contemplated tax. The
economic value Of the Mexican inpost
has not been demonstrated in regard to
it's function as a source of revenue to
the Government or as a handicap on
operations of American oil companies.
If taxes were sure to be as much of
burden on corporations which market
or expect to market much of their pro-
duction In the United States, as the
stocks seemed to indicate. there might
have been brisk advance Of domestic
oil corporation shares yesterday, but
they moved indifferently, showing from
one angle that the somewhat sluggish
state OF consumption was also factor
in the market situation Of stocks.
Processes now familiar were revealed
in the weekly Federal Reserve state
wents. the consolidated report of the
twelve banks showing a gain of $5.4oo,-
600 in total reserve, fall OF $11,500, 900 |
in gross deposits and a decline Of
s4.S4o.oo0 IN outstanding reserve notes. |
The strengthening of the New York
Banks position was again striking. the
ratio of cash to deposit and note liabili- |
ties advancing from 6S.9 per cent. to |
TOT per cent, a growth OF more than |
$23 200. 900 in gold reserve being mainly |
responsible for the RISE The gold cover |
Of circulating notes is now s106.70 for |
every 500 of paper after providing for |
IS per cent OF gold against deposits. |
The statement suggests another reduc- |
ton Of rediscount rates In New York |
before long. or, at least, an easing ten
dency of money. The call loan rate yes
terday remained at per cent
The foreign exchanges continued to
work lower, sterling losing y cent TO the
pound. but the foreign exchange business |
was dull and no signs of untoward in
fuences were seen.