Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-07
STOCK PRICES DROP
ON CREDIT WARNING
Of RESERVE BANK
! Raise in British Discount
Rate Also Depresses Many
Leading Issues.
RECOVERY Is STARTED
BY BARGAIN HUNTERS
Losses Outweigh Gains, However.
Volume of Trading Is
Enormous.
Nv the Associated Press.

BY the Associated Press
/ NEW YORK, February 7.-Specula-
ton for the advance on the New York
Stock Exchange received terrific jolt
today when the market was confronted
with two distinctly bearish develop
ments-a Federal Reserve Board warn
ing against the excessive use of specu-
lative credit and rise of per cent in
the Bank of England discount rate.
Prices of most Of the active issues
broke 50 to SIT share at the open
ing as thousands of small spectators
scrambled to get out of the market, but
strong buying support was quickly sup
piled and a brisk rally was under way
by early afternoon, a few of the re-
coveries running from So to $13 share.
Trading was in enormous volume, to-
tai sales crossing the $500, ,000-share
mark before noon.
Selling Is General.
!. Blocks of 5000 and 10000 shares were
dumped into the market at rapid inter-
walls, and the market could not absorb
them except at substantial concessions
in quoted values. Several pools, which
had been organized in recent weeks in
expectations that the imports of British
gold would ease the credit situation and
j facilitate their operations, either threw
their holdings overheard, or temporarily
withdrew from the market until the SELL
Ing storm had blown over.
The midday rally was influenced by
the lowering OF the call money renewal
rate from to per cent, and it was
stimulated by the usual purchases of
bargain hunters" who have learned
from experience that a rebound in
varlably occurs after a sharp opening
! break, making quick turn" possible.
The rise in the Bank of England rate
resulted in a"sharp advance in sterling
exchange, lifting it well above the gold
J import" point, and making further with
draWals OF British gold unlikely for the
, time being.
The sharpest breaks came In the hiph-
priced rails and industrials, for which
there Is ordinarily thin market. Gem
eral Electric broke SIT share, Wright
Aeronautical SIG, Radio and Adams Ex-
press $14. du Pont $l3, American a.
Foreign Power and Westinghouse Elec-
tric $ll, Simmons Co. $40 and United
States Industrial Alcohol, Canadian
Pacific, Columbia Carbon, Curtiss Aero
, plane, Union Pacific, Allied Chemical.
Nash Motors and National Cash Regis
ter sold down So to $3.50.
Recovery Started.
/ On the recovery General Electric
rallied from $232 to $244, and Wright.
Warner Brothers Pictures, Westinghouse
Electric, du Pont, Simmons, Victor Talk
ing Machine and International Combus-
ton snapped back SIS to 81.
Today'S reaction was the first serious
setback that the market has encoun-
tered since the early part of last De-
cember, when three-day selling move
ment wiped out billions of dollars in
quoted values. The December break
was followed by a fresh outburst of
bullish enthusiasm, which carried the
general average of prices to the high
est levels in history.
Prices broke 50 to SIT a share at the
opening in the flood of selling set in mo-
tion by the two unfavorable overnight
developments. Blocks of 5000 to 90
600 shares changed hands at frequent
intervals.
The Federal Reserve warning was not
entirely unexpected, as it was known
around Wall street yesterday that a
statement would be issued by the board
after the close of the market. This
brought heavy selling into the market
early yesterday afternoon, but recov-
cry took place before the close on the
publication on the financial tickers of
predictions that the statement would be
less bearish than generally anticipated.
These predictions proved to be far from
the mark.
Funds May Be Withdrawn.
The rise in the Bank of England rate
to level above the rediscount rates
prevailing in this country caused general
surprise. It's immediate effect will be
to check the flow of gold from England
to New York, which had been counted
on here to ease credit conditions, and
may result in a withdrawal of British
funds from New York. Sterling ex-
change advanced nearly "a of cent at
the opening, placing it well above the
gold import" point.
General Electro broke SIT share to
1921, which compares with the years
high of S262.37hz. Case Threshing
dropped SIS share, Johns -Manville,
Sll; Simmons Co., $40, and American
Can, Chrysler, Warner Bros. Pictures,
International Combustion, United States
Steel, st. Joseph Lead, Greene Cananea
Copper Bethlehem Steel, International
Telephone, Union Carbide and Chesa-
peake g. Ohio fell back SIS to So share.
The following table shows some of
the large transactions in the early trad
ing: