The New York herald., 1922-06-16
FINANCIAL NEWS
AND COMMENT
Fresh Weakness Grips Stocks
Discount Rates Fall in
London and Bombay.

Financial attention yesterday was
of weakness in stocks and commodities
and. an unexpected. although not sur
prising, bit of evidence that money
rates were sufficiently easy in London
and Bombay to permit reduction OF
discount rates OF the two important
bank rate cuts the one ordered by the
Bank OF Bombay was. perhaps. the
moue significant. as 1t recorded relax
alton in a quarter of the world where
Che undoing of initiation had been
of Far Eastern goods markets late in
1920. The Bank of England had been
in position for several weeks to lower
Its rate from to 3I5 per cent owing to.
the fact that money in the open mar
ket was so plentiful as to permit short
dated loan funds to go begging at 3
per cent. The Bank of Bombay, accord
ing to late dispatches. reduced it's rate
from to 6 per cent. several days ago.
With the Bank of England rate a full
Banks rediscount rate in New York
difference now exists which is not likely
to maintain for very long. Besides
recognizing the current plethora of
money In the British center the English
bank acted in the reduction of April IA
from 412 to 4 per cent. and in yester-
days cut with an eye to its effect upon
trade and the distribution of new capital
issues. both of which factors are too
important to the American market to
allow permanent wide gap to hold
between rates of discount of the banks.
The reaction of stocks which began
after a firm first hour was not quite
so sharp as on Monday. but it was
large enough. nevertheless, to carry
many issues lower than Mondays mini
mum prices. Again the selling seemed
to have no connection with outside mat
ters; on the contrary. a call loan rate
of 31a per cent. amid the days Govern
ment transactions betokened a decid-
edly easy money position, which. by the
way. was made easier by the days
liquidation Of stocks. The rather pessi-
mistic outlook for shipping voiced by
the head of the International Mercan-
tile Marine Company to the companys
shareowners on Wednesday influenced
point reaction In the preferred
stocks. and that probably did something
toward the unsettlement of the entire
list. But the breadth and rapidity Of
the selling, involving practically all
classes of shares. suggested rather
plainly that the speculative account had
been dotted with new stop loss orders
after Mondays break and these were
caught in volume. Many oil. steel,
automobile and manufacturing spe-
cialty issues fell points or more and
number of rails receded a point. The
net reaction of 5 to 10 points which has
occurred among speculative favorites
since the top prices Of May were re-
corded has corrected some of the ex-
travagant results of the spring specu-
lation.
Cotton fell rapidly for time. but
20 point rally In the late afternoon left
the several options no more than s to
IL points lower than the day before.
The setback in wheat amounted to 1%
to 2 cents a bushel. Bonds continued
the even tenor Of their way, two Of the
Liberty group reaching new high prices
for this year while most others were
steady. Rapid fluctuations of Mexican
Government bonds left them lower than
the day before.
The drafting OF more than $35 900 900
gold away from the New York Federal
Reserve Bank to other reserve institu-
tions was the principal factor in caus-
ing the ratio Of cash to notes and de-
posits to recede from $50 to S4.4 per
cent. in New York. The system as a
whole disclosed few important changes
in its weekly statement, the reserve
ratio being practically unchanged. This
showed pretty clearly that the June
10 transactions either balanced one an
other or were financed with ease