Evening star., 1922-06-15
STOCKS ARE WEAK
! UNDER PRESSURE
BY STUART p. WEST.

NEW YORK. June 15.-The decline
today on the stock exchange could
not be set down to any outside cause.
1t was simply what the street COM
monty calls tire secondary reaction,
namely. the settling back of prices
which ordinarily occurs after tire hrst
or primary reaction has eliminated
In sharp upward .recoi
The technical explanation is that
the short interest covered it's com
mitments in the rallies of Tuesday
and Wednesday, and that along with
the withdrawal of this element of
the supper. neither outside buyers
nor tie larger financial and invest
ment interests were willing to follow
prices up. Consequently there was
nothing to sustain the advancing
tendencies. and professional traders.
working on the short side were quick
TO see their opportunity.
The important incident of the day
was the reduction Of the Bank of
England rate from the per cent III
which ii was fixed two months ago.
to 31.. This action was surprise. :
II was apparently designed, as 9th
or reductions during the last SIN
months have been. To help along Brit
sh trade revival But at all events.
II bears witness to the most relaxed
condition in the London money mar
ket since 1914, when the bank rate
stood at 3 per cent.
Under normal conditions. such Il
difference now exists between
English and American discounts
would precipitate Il transfer of capi
tai from London to New York to get
the advantage of the higher return
on lendable funds. In the OLD times
this would have meant falling eX-
change rates and importations of
gold. But with the international eN-
changes still we'll away from a nor
NAL basis. no such effort is probable.
Sterling today not only failed 10 go
down. but went higher on the Eng
liSh bank reduction. evidently inter
preting the incident as fresh p"pot
of the Improvement in British finances
generally.
Weakness Is General.
The weakness in stocks was very
general. affecting all groups pretty
much alike. 4 special reason for the
selling of the oils appeared in the
latest figures of gasoline supply.
showing that in spite of the increase
of the last few months. consumption
had not Yet overtaken production and
that reserve stocks at the close OF
II is ra ather amusing to consider
these results in the light of Wall
street predictions of two months ago.
that the summer would see some
thing like a famine; in the gasoline
supply.
Motor shares started the day with
an attempt To continue their ad-
vance of Wednesday, hut they quick
ly yielded with the rest. In the later
dealings Studebaker. the Maxwell is
In MI lN.
newly listed Hudson motors yielded
quite as sharply as did the oils. the
equipments and the SteelS.
a new high record in Liberty 3'.s
was the main incident Of the day in
the bond market Mexican govern
ment issues were again in some de-
ntand. anticipating Il favorable set
tlement of the debt question
French francs retained Wedues-
days recovery. but that was about
all. The Bank of France statement
for the week showed that mote. is
sues had been cut down again. al
though only to a slight extent The
Bank of Engiand'S percentage Of re-
serves to liabilities returned to the
high of the year. 1880.
Oil shares Weak.
There were two well defined rea-
sons for the special weakness in the
otf stocks. One was that during the
first decline in the market. which be
gan a fortnight ago and culmina ed
temporarily on Monday. the oil shares
had come down less than any other
group. taking the difference between
their. prices in March and their high
of May as the standard of compari-
son. The other was that the latest
figures of the bureau of mines showed
May had been another month 6r un-
surpassed gasoline production and
that despite increase in consumption
the reserves on hand had kept on
mounting so that they reached an
other new high record at the close
of the period.