New-York tribune., 1921-04-05
Stocks Lower
Despite Signs
OF Easy Money
Improved Federal Reserve
Report Fails to Stimulate
Buying; Drop i'll Call
Loan Rate Causes Rally

In spite Of the marked Improvement
in the position Of the Federal Reserve
banks as revealed in the weekly state
ments, SPECTATORS yesterday showed
little inclination to accumulate stocks.
This failure to respond to the stimulus
Of an Improvement in tho fundamental
credit situation is based partly on an,
understanding that the creeping up of
the ratio of reserves is far removed
from tho factors making for cheaper
call funds in the immediate future.
AT the loan desk at the Stock EX-
change call money was available for
renewals at 6la per cent, as was the
case last week. and the rental charge
later fell TO f per cent. In the outside
market some loans were arranged at
{, " and knowledge Of this in the after
noon sentimentally affected buyers and
sellers of stocks. and many losses were
etiaced. The average price Of indus
tial and railroad stocks at the close,
nevertheless. WAS lower than, at the
final sale on Saturday.
A large share of the troubles Of the
business community originated from
the effort Of banking authorities to
correct the state of imitation which
arose during the war and subsequently,
CVthticH WINS u NoitSCibUS pOllCV, &uu
although in many authoritative quar-
ters considered essential, pinched
many factors in - commercial world.
And this fundamental adjustment was
reflected in the stock market. To the
extent that uneasiness was caused by
the attempt to escape from the evil
status of imitation the weekly story Of
reduction of discounts of the Reserve
banks and q gain in the ratio OF re-
[ t., N1o4o ~ ,c
Fundamentally reassuring.
Yet, in spite of this condition, the
rate for call loans Is exceptionally
high for this time Of year The rea-
son for this is that. as credit deAation
slowly comes the member banks Gre
tailcrs of credit keep reducing their
Indebtedness at the Reserve banks
wholesalers Of credit). Thus, even
though the loan position of member
banks improves. they do not change
their policy and lend abundantly, but
instead pay off their own debts. More
over, though the bet,erment in the
credit situation is continuous the rate
is slow compared with the velocity with
which commodity prices have fallen,
and this condition is explained by the
prevalence of frozen loans. w. P. G.
Harding, governor of the Federal Re-
serve Board, spoke cheerfully about the
manner in which the credit situation
was working itself out, and the news of
his address. too. was behind the cover
/ ing movement in the afternoon which
caused stock prices to rise above the
low levels Of the morning, when pro-
fessional selling depressed them,
largely because it was reported that the
Steel Corporation planned a downward
revision of prices and wages. This re-
port lacked confirma ton. but if true
might we'll be bullishly interpreted,
provided the adjustment would be ac-
ceptable to labor. break in the pres
ent deadlock in the steel market would
be favorable, rather than unfavorable.
Yet Steel common fell below so for
the first time in weeks
Another depressing influence was the
easinesss in the forei sn exchange mar
ket, where the break IN sterling was
associated with the British miners
strike. Cotton slumped slightly and
grain prices closed irregularly.