The New York herald. [volume] (New York, N.Y.) 1920-1924, 1921-07-22
FINANCIAL NEWS
AND COMMENT
While Stocks Drift Bonds Gain
in Dull Market-Bank Of
England's Rate Cut.


drift about. bonds gave an immediate
response to the reduction of rediscount
rates by four reserve banks on Wednes-
day. The impression of widening credit
ease, which has basic application to
the prices OF fixed investments. was
strengthened by the Bank of England's
action in lowering its rate of minimum
discount from per cent. to 51a per
cent. putting 1t on the level of the
eastern reserve institutions and the
San Francisco Reserve Bank. Liberty
bonds gained In some cases more than
quarter of point and the average price
of thirty issues dealt In on the New
York Stock Exchange were nearly a
OF business than they were on the day
before. Such prominent issues as Great
Northern rs, Pennsylvania 6lss, North
ern Pacific As and New York Central
debenture IS moved forward under fair
ly large buying.
Inasmuch as an advance of the bond
market under sustained purchases has
been frequently in the past the fore
runner OF higher quotations for stocks,
the increased interest in bonds attracted
attention in speculative quarters. But
the stock market itself showed the same
shifting of professional position that has
been the dominant factor In trading dur
ing all of this month. The turnover was
a. lie
see in a single hours activity. 1t was
the smallest market of the year. Rail-
road stocks were generally firm, evident
" anticipating an arrangement favor
able to the carriers in the plan which
President Harding Is to announce in re-
gard to measures for putting them in
funds. Oil issues were unsteady and
fractional declines of numerous manu-
featuring company stocks made the list
irregular at the close.
Considering the weeks recession of
central bank discount rates in this
country and England in relation to the
known condition of trade, it is evident
that a slack demand for credit is a
cause OI II. he bTlllSH Ddnk . IdllO
of cash reserve to liabilities, now 11.40
per cent. is decidedly low; hence it is
evident that the authorities acted with
full confidence that borrowings. with
tiles, would not be likely soon to grow
sufficiently to make q rate increase
necessary. On this side certain corpo-
rations. the working capital of which
on call. The commercial paper rate,
however. became only slightly easier
yesterday, and although reports indicate
a rather slow demand for funds in iner-
camille lines the fact that great deal
Of credit remains in old loans and is
being liquidated rather slowly reacts
against a marked fall Of the commercial
bill rate at this time.
Call loans were renewed at 51s per
cent, in contrast to per cent. on the
day before, and transactions were re-
ported outside the Stock Exchange at
lower rates The machinery for dis
tributing new investment securities
seems. according to reports from bond
houses. to be in excellent shape to handle
offerings. The closing of the 500. 000.-
900 French Government bond issue,
which had been open for more than six
weeks, indicated that the improved de-
mand of the last few days had absorbed
some slow moving ends of recent offer
ings. 1t would not be surprising. pro-
vided that money conditions continue
satisfactory and the investment demand
expands, IL a sizeable flow of financing
develops shortly, although no large
undertakings are under discussion.
The foreign exchanges gained a little
ground, sterling rising " cent. Marks
and francs were slightly higher than
they were on the preceding day, and
tho Canadian rate moved in favor Of
Montreal on the announcement that the
s15. 100000 Government maturity of
next month would be met from balances
here.