Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1922-06-18
PROFIT TAKING IS REAL
EXPLANATION OF BREAK
Money Is Likely to Be Cheap
for the Rest Of the
Summer.
USE OF CAPITAL INCREASING
Condition OF the Money Market IL
Well Reflected In Federal Reserve
! HANK Statement, Says Financial
j Expert.
USE OF CAPITAL INCREASING
Ky Walter j.. Brown.

written TOT the CNlttI .Nc"s.
NEW YORK, June l7.--Aftcr prac-
7 ically ten months o! steady upward
movement the first serious reaction
the stock market occurred on
Monday. II has been followed since
~ an Irregular recovery and numc!-
lous sinking spells. but, nevertheless.
agivinR indication that II was trying
10 get back on it's feet. Those who
3got, caught at the top as well AZ
iosc who are naturally pcss!ulstic
believe they Saw In this reaction the
Ind of the bull movement. Those
Who have been able To take n calmcr
lew realize that il has been but a
->pral accompaniment OF bull
i ''"n"e' anu !" ''''' was '0"s over
4 IL speaks well for conditions gen
rally that the movement should
ave been go lorg SUSTAINED without
rfaction ana indicates that there
ias' been excellent groundwork that
3vould require something OF an up-
icayai TO bring about "a change in
fundamental conditions. There has
con no such uphcaval and there is
othiur like II in sight. The real
-planation OF tho break in prices
Is eo be found in the profit taking
8'rior TO the summer dul!ness by
al
= go,and subsequently FOR long pull
M who now propose 10 req their
cwards. y, the same time there has
cen closing out OF weak margin
cc6unts elnce the adoption Of tho
ule by the stock Exchange. whereby
4chn accounts OF members VIII be
aLefully scrutlnIzcd. AZ soon as the
i"rbot can resume its upward course
VIII he In an even stronger posi-
: ION than it was before.
None, Likely to Be Cheap.
Il Those who Insist that the bull
iovemcnt has come TO an end VIII
nd 1t necessary to argue away
4Smc rather stubborn facts, the most
knporiant OF which is the easy con-
tion OF the money market Cali
= loncy during the week has been
- own as low as 3-t per cent. when
Il virtually wen, begging. The rate
as hardened since then. largely be-
II aure of the fiscal requirements of
Y ne government for the June Is III
anclnE IN the redemption OF Treas
ry certificates aud victory 3 - per
Bent notes. which were called AN of
Mat date and also because OF the in
Jne TAX payments due on June Is.
ctnaiiy this. Of course. involves only
transfer Of funds from hank 10
a'nk and during The few days re-
= uir.cd for that purpose the call
ioney rate would naturally be at
ectcd. This. therefore, represented
8iertly temporary condition and
1cre is nothing 10 do with the money
g inrxct iteelf
Money is likely to he cheap for
ie rest OF tho summer. at least.
lille crop moving viii begin shortly
VIII be late in August or early
cptcmbcr before the requirement OF
J1tH for this purpose viii be par
cnlarly noticeable. The use OF cap
al. for commercial purposes Is in
8rcIsing as n result OF the business
H"covcry. but not aG yet To AN en-
int that can have any serious cf-
sct upon rates. There is a tendency
H. the part OF some OF the Interior
,deral reserve banks TO reduce The
Ucdiscount rate from 4l-2 TO per
cnt, but the desire seems To be to al
" the Eastern banks to take the
litGativc.
p The Bank of England, having al
aady reduced its rate TO Sl-2 per
fnt. the assumption would be that
ur banks would follow. as this is
sudily tho case. when the present
,diS count rate OF 4l-2 per cent was
Established, our banks took the lead,
Ut largely as the result Of political
ressurc. There is considerable mis-
Conception ms to the real effect OF
reduction in the rediscount rate
I'll the Federal reserve banks