The New York herald. [volume] (New York, N.Y.) 1920-1924, 1922-05-13
FINANCIAL NEWS
AND COMMENT
Steel Merger Acts as Tonic to
Stock Market-Steel
Issues Soar.

The stock market found in the unex-
merger powerful influence to check I'M
settling factors which had been shap-
ing prices for a fortnight. and heavy
dealings caused yesterday rapid re-
treat of the short interest in many d.
rections. The steel stocks naturally oc-
cupied the center of the stage with
gains of 2 to more than IL points. but
buying broadened out persstently after
the first half hour of business and at the
end of the session there were many
advances of more than a point among
industrials. The speculative commu-
nifty always is impressed by dramatic
developments. The latest merger. by
itself. reflects producers desire to di-
costs and intensity selling campaigns
more than the certainty of large bust
ness and good profits in the near future.
Mergers of themselves will not increase
business. but buyers OF stocks were
content yesterday to make use of the
excitement of the moment and in con-
sequence the short interest found the
going exceedingly rough.
The effort to guess the terms which
Lackawanna shares would enjoy in ex-
former up to points more than Thurs
days final quotation In the opening sale
and points more were added later. So
sharp movement suggested that large
blocks had been accumulated In advance
Of the merger news and that made 1t all
the more difficult for the shorts to ex-
tricate themselves. The many rumors
of additional consultations which filled
the brokerage Offices were natural ac-
compartments of the big event and the
feryor of speculation was abated in no
way by Senator La Follette's successful
effort to have the Senate investigate,
the proposed consultations. With the
United States Steel Corporations ex-
perience with the Sherman law as
precedent the financial community is
not easily depressed by legislative in
quiries.
The strength of stocks edged over into
the bond market, special demonstrations
being made by Lackawanna Steel 5s.
which advanced Q points. and several
agricultural company issues. Although
most of the gains were fractional, the
slight movement was noticeable against
the background Of featureless bond mar
ket business since mid April. The easy
money situation probably helped funded
securities as much as did the buoyancy
of stocks, as Federal Reserve figures for
the week showed pretty clearly that with
May 1 transactions out Of the way lqui-
dation of member bank loans was pro-
crossing again. The reserve banks hold
more than $4,000, 900, 900 OF god, new
high record. established in the last week.
The conversion of many millions of bank
loans to corporations into bond issues
during the last six months, a process
still going on briskly is acting to trans
fer large part of the loan burden to the
public. That fact should not be lost
sight OF when explanations are sought
for the contraction of loans and currency
at the same time that business demands
for funds are increasing. Call money
loans were renewed at 3M per cent, the
lowest figure in several weeks, and the
afternoon rate was u per cent.
The foreign exchanges sagged slightly,
but made no noteworthy response to
news that France in effect had broken
off further political discussions with
Russia in Genoa. Wheat quotations
quieted down as compared with Thurs
days stirring market and cotton left off
with only slight changes.