New-York tribune., 1921-11-04
Bonds Continue
To Lead Rise
In Securities
Stocks Develop Better Tone,
but Fail to Keep Pace
as Result of Bank Rate
Cut; Market Is Broader

| Although the general tone Of stocks
| was much improved at the exchange
yesterday and prices in the main closed
above the levels Of the preceding ses-
sion. the chief response Of the financial
markets to the fresh lowering OF the
Federal Resvee discount rates WAS a
| striking demonstration Of strength in
the bond market. where the movement
Of recovery, which had been most pro-
nounced on Wednesday in anticipation
Of this development, gathered increas-
ing momentum.
Trading in bonds was on a broader
and more active scale than the day be-
fore and many new high prices were
established, with all descriptions Join
Ing In the rise. United States Govern
ment war bonds were particularly note
worthy IN their response to improving
money market conditions. The Victory
Az per cent bonds sold in an odd lot
transaction at par, while round lot
brought 1922 at the peak of the days
upswing. All Of the more active Lib
erty issues, with the exception Of tax
exempt 3Ms, sold at the highest prices
Oh the year.
The Tribune's averages Of prices
affords an interesting picture Of what
happened to bond prices as q whole.
Ten representative rail bonds rose from
1926 to 77.70 in the average. ten in
| dustrials from 82.08 to 82.S1 and five
utilities from 1852 to 1859. Rail
bonds in the average for the second sue
cesive day touched new high point for
the year. In less than a week rail
bonds in the average have advanced
nearly 2 points.
Trading in stocks was somewhat less
active despite the fact that the tend
ency was upward. Gains Of q point or
moro in the active industrials were
common. Mexican Petroleum lived up
to Its reputation as fast-moving, ex-
| vance Of points to 107as. 1t was
! obvious that q nervous bear party in
this issue was making hasty retreat
following the announcement that the
Stock Exchange authorities, after in
vestigating the position Of the stock,
had found no evidence Of any con-
certed effort to corner the issue. Steel
shares were among the strong points
In the days market, while the rails,
coppers and chain store and merchan-
dizing company issues also stood out
prominently.
Wall Street naturally placed con-
structive Interpretation upon the whole
sale lowering of discount rates by the
Federal Reserve banks. The pro-
nounced improvement in the position
of the Federal Reserve system in re-
1 cent months that has made possible a
reduction in the bank rates Is we'll re-
| flected in the current weeks return for
the system. 1t shows that the ratio Of
| reserves to deposits and Federal Re-
serve note liabilities combined, at II
per cent stands at the highest point in
more than three years. Gold reserves
Of the system have risen this last weeA
to $2,800,257, 900. A week ago the sys-
tenn held gold reserves of s2,786 ,2ss, 900:
A year ago the system carried total
gold reserves Of barely in excess Of
| $4,000, 100000. Thus in twelve months
its gold reserves have increased ap-
proximately $800,000,0O0. And while
| this great influx of metal has been
| taking place member banks, by reason
| Of the liquidation Of the accounts of
their customers, have in turn been re-
firing their indebtedness at the Re-
serve banks. At the close of the business
week ended on Wednesday the Federal
| Reserve system revealed discounts Of
bills secured by United States govern
menu ODl1RaIlOnS Oh ?4oO,OU1, ,OUU, CON-
pared with s461 ,8S6,000 week ago and
S1,215,1 900 year ago. Discounts Of
commercial paper for member banks
dropped from $846, $4,000 to $806,929,-
600 during the past week, and are now
just about half what they were year
ago. The tendency of the London mar
ket to follow the lead of New York was
seen yesterday in the reduction by the
Bank of England of its minimum rate
Of discount from 51a to s per cent.
Call loans opened and renewed at
per cent, and after dropping to AZ per
cent rates hardened to 51s at the close.
AS result of the drop in the discount
rate the rates on prime bankers ac-
ceptances were reduced yesterday h all
along the line.
In the foreign exchanges sterling
and francs displayed strength, while
German marks tumbled further, this
time declining to .46h of cent.
The outstanding development in the
commodity markets was the fall in the
price of wheat below the 81 bushel
mark. December contracts touched 80
cents at Chicago. Wheat prices have
not much further to decline to get
back to the pre-war prices Of 1914.