The New York herald., 1921-01-11
FINANCIAL COMMENT
Stocks Advance as Call Loan
Rate Falls-FOreign EX-
change Rates Rise.

A reduction of the call loan rate from
to per cent. for the first time since
a temporary easement in the third week
of December occurred yesterday as the
stock and foreign exchange markets
were rising rapidly. 1t was not sur
prising, therefore. that the advance
should have been continued with force
until the close OF business; nor was 1t
strange that cotton and grain future
quotations should have displayed a
strong tone throughout the day, for 1t
has been clear for some time that specu-
lative sentiment apparent in one mar
ket this year has been common to all
The foreign exchanges supplied the out
standing feature OF the days market
events, bulge of 9A cents in sterling
to 372A for sight drafts carrying the
quotation to the highest point reached
since the first week of August of last
year. AT the days best rate sterling
showed a recovery of q cents to the
pound since November l. That so
marked a gain in exchange on London
has resulted from something more eff
fective than the retirement of short
contracts may safely be said. even in
these days of drastic fluctuations. 1t
appears as though the dominant influ-
ence of the last ten days has been
belief that a substantial reduction of
bank loans was in the making on this
side of the water, with a consequent
reflection in rates for money and credit.
But 1t is not altogether certain that
these processes will show themselves
rapidly in the next few days, or in the
ensuing few weeks, for that matter.
There Is still a great mass of credit
CONCEALED in slow moving inventories.
in grain and in foreign trade commit
ments. and speed in liquidation is to
be doubted in the light of what has
gone on during the last four months.
What bankers are striving for. what
Reserve Bank officials are urging, Is
steady and lasting contraction of
loans and currency, in which satisfac-
tory progress was reported last week
in a reduction of $4,000 900 in loans by
the Reserve system, together with a fall
of nearly s75O0OOOo in outstanding Fed
eral Reserve notes.
The strength of stocks yesterday was
by no means uniform. dozen or so of
Industrial shares advancing to more
than points, while elsewhere the rise
extended from large fractions to about
2 points. 1t looked as though the short
interest in Baldwin Locomotive, Cru
chile Steel, Mexican Petroleum. -Stude-
baker, United States Rubber and sew
time of it. Great Northern preferred
Northern Pacific and Southern Pacific
were strong. but some of the other rails
lost little ground. In the cotton mar
ket there were gains extending upward
to $5 a bale, and while the movement.
as has been said, was part and parcel
OF the general market improvement,
there was evidently considerable new
buying. helped by reported widening of
the demand for textiles, as merchants
undertook TO replace stocks Ted out in
the last two or three weeks Wheat
advanced to 8 cents at Chicago.
A quick oversubscription of $30O0O.-
900 of Northwestern Bell Telephone
Company twenty year bonds on a basis
to yield 7.s0 per cent. denoted the strong
underlying tone of the investment mar
ket. While Liberty bonds reacted un-
der realizing sales. this movement was
not Indicative of a changed attitude of
investors, inasmuch as last weeks ad-
vance of l to points had attracted
profit taking by spectators who
grasped the tendency in this market n
fortnight ago. 1t is expected that con-
siderable new financing viii be pressing
forward in the near future. the amount
and variety dependent upon the actual
ota IN Of ha