The New York herald., 1921-08-27
FINANCIAL NEWS
AND COMMENT
Stocks Rally as Shorts Cover
All Around-Call Money
Drops to 5 Per Cent.

/ II was necessary to examine merely
the technical situation of the market
itself yesterday to find a reason for
pronounced strength of speculative is
sues. Probably the. exceptionally large
increase OF 2.2 per cent. in the New
York Reserve Banks ratio OF cash to
deposit and note liabilities in the week
ended with Wednesday and the upturn
of the consolidated bank ratio to the
highest point in three and half years
We're supporting factors. A renewal
rate OF 5 per cent. for call loans-the
lowest since August 2-also encouraged
speculative buyers of shares and another
sharp bulge in the cotton market stimu-
lated sentiment. But the overshadow-
ing influence behind the recovery was
the fact that the short interest began to
find itself in an uncomfortable position.
OF prices 10 pressure on Thursday and
by the unusually large number of
stocks which commanded premiums
from borrowers. Buying was fairly ac-
tive in the morning. with a lull there
after until the last hour, and then a final
flare up OF purchases which left many
issues to points higher than they
were on Thursday.
The days movement might be de-
scribed as entirely self-contained, as
there were practically no outside events
OF nature to shape quotations. The
Improvement of the bank position, al
though emphasized in the weeks figures
was continuation OF betterment which
had been going on for several months
and, therefore, could be considered more
a supplementary force behind sentiment
than primary one. There were, how
ever. several important railroad state
naents on July earnings to bolster up the
excellent impression given by the reports
OF the Pennsylvania, Southern Pacific.
Norfolk and Western and other lines.
As short covering supplied most of
the market activity single days busl-
ness does not give a basis for Judging
the outlook. So vigorous a recovery as
214 points in American Locomotive Az
in American Woolen. 2s IN Baldwin
Locomotive. SZ in Crucible Steel, in
Mexican Petroleum and 2% in Northern
Pacific, does. however. suggest that
stocks were IN rather scanty supply, and
1t is likely that 1t will be through re-
luctant offerings rather than a sudden
expansion of the volume of buying that
progress in industry will have its first
sound expression.
Although the demands of crop gather
| ing have not been reflected In the POSI-
tion OF Eastern Reserve banks figures
show that reserve institutions in the
agricultural territory are drawing on
other banks to strengthen their reserves.
The Atlanta. the Minneapolis and the
Dallas Reserve banks increased their re-
discounts with those in Boston. New
York and Cleveland. The total Of all
interbank borrowings increased SIS, ,200.-
900 to s67,6Oo.0oO. the highest figure
since February. The rapid movement OF
grain to market indicates that once the
peak Of autumn requirements from the
banks be passed the liquidation OF loans
viii proceed again. 1t was interesting
to note in a despatch from Kansas City
that so per cent. Of Kansas wheat has
been gathered in contrast to about 20
per cent. at the corresponding time of
last year. Wheat futures were slightly
lower yesterday than the day before.
Tho bulge OF cotton quotations brought
prices at the best levels to points 3is
cents a pound more than July's lowest
prices. There was reaction In the
afternoon. but the market was about 35
points up at the close. The connection
which q sustained Improvement Of cotton
! prices has with industry and the banks
OF the South Is obvious. but the estimated
1900, 900 bales Of last years product in
the worlds warehouses hardly suggests
q. runaway market.