New-York tribune., 1921-01-21
Stocks React
After Rally in
Broader Market
Heavy Selling in Last Hour
Offsets Advances From
Pool Operations; Foreign
Exchanges Move Higher

Pursuers after higher security prices
overreached themselves yesterday, and
in the final hour Of trading 3 multi
tude of selling orders, accompanied by
| spurt In Call money rates from to
2 per cent, caused sharp recesslons,
ana IN many instances net losses for
the day. On the rise the scope Of the
market broadened.
The vaciliations Of quotations re-
sponded, not to developments in the
real world of business and politics, but
chiefly to internal factors arising from
the technique of the marketpiace The
rapid upbldding Of stocks commonly
considered specia.ities was obviously
puimotored by pools, whose operations
IN the last few days led many broker
age houses to warn their customers to
prepare them mselves for a reaction.
There has been no indication yet
that the credit situation has reached
the stage where an unrestrained bull
movement In stocks is feasible. True
enough, in theory the decline of about
40 per cent from the peak in commodity
prices means that business on the new
duced credit rations, and as frozen
loans are thawed out by q resumption
Of trade activities where depression
has prevailed, credit will be set free.
Already this process Of easing is under
way, as the lower rates-compared with
those of the peak Of months of last
year-of funds for commercial and
speculative purposes indicate. How
ever, the banks are not ready to trans
fer funds released by their commercial
customers for call loans against Stock
Exchange collsterai Instead. wherever
feasible, member banks who arc still
heavy borrowers at the Federal Re-
serve Bank are endesvoring to reduce
their indebtedness. This tends to
shrink the total volume Of credit in
existence, and Is one of tho principal
factors that keeps money rates up at
current levels. The spurt to per cent
also represents the effect Of heavy
withdrawals by out-of-town banks and
by the Treasury: Around 2 o'clock yes
terday some $6,000,000 in excess Of the
available supply of call funds was in
demand on the floor of the exchange,
as the rise in quotations kept adding to
the cost Of carrying stocks. The jump
ing Of the rate from to per cent
brought out the additional money. and
the needs Of brokers were taken care
Of.
In the commodity markets there was
marked irregularity. Wheat prices lost
from 81 cents to cents, declining
n'OAS cloH ~ Cc4CS Uubncl from IueS-
days quotations. The precipitate break
vas associated with the report that
there would be an early settlement of
the Argentine surtax. Foreign selling
pressure was again exerted ip the cot
ton buying, but domestic trade buying
offset this, and quotations closed 7 to
Is points higher
The foreign exchanges continued to
rally Sterling and francs touched the
highest peaks attained thus far in the
present upward surge. Demand ster-
ling climbed up to $3.7sh. but fell
back at the closs to $3.77, retaining a
gain Of ~ cents. The rate on ex-
change on Paris closed at e.53 cents,
compared with e.45 on Wednesday, The
approach of the time when a Bin Of
separations must be handed to Ger.
many Is recognized by dealers as a fac.
,nr contributing to the Rise Of tho Ola
s wDrld curriences and, by the samS
the dollar. Ps'"1um On
me upward movement Of bonds CON-
smea s,mued; di,n and several Of the Liberty is-
the present rally. 80 -o'