Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-22
STOCKS ARE WEAK
AFTER SHARP DROP
Rediscount Rate Problem Has
Bearish Effect on Spec
uIative Element.
BY STANLEY w. PRENOSIL,
Associated Press Financial Editor.

NEW YORK, May 22.-Acute weak
ness developed in todays stock market
as a result OF the Federal Reserve
councils statement that it favored an
increase from to per cent in redis-
count rates. Prices sold off sharply at
the opening, rallied before midday
under the leadership Of the oils on the
announcement that President Hoover
had called a conference of Western
governors to act on oil conservation
plans and then turned weak again in
the early afternoon. Extreme declines
of to Is points were distributed over
broad list of railroad and industrial
shares.
Despite the prospect Of higher redis-
count rates this week. there was no
change in monetary rates. Call money
renewed unchanged at per cent, with
a fair supply of funds available at that
level. There was no change in time
money or commercial paper rates, al
though they are now quoted at the
highest levels in years.
Money In Good Supply.
Call money was in good supply and
after renewing at per cent dropped
TO 6 in the early afternoon.
Trading slackened and the market
showed more stability after the call
loan rate was reduced to per cent
Radio mounted to above 95, and Case
Threshing Machine recovered points,
put the rally was not general. Fresh
selling occurred later in the motor ard
accessory shares, Goodyear's loss run
ming to 8 points, while Auburn was
down 2, to 1854. The closing vas weak
Heavy selling took place at the OPEN
ing and prices developed an extremely
reactionary tone. Many of the leading
industrials and rails were pressed for
sale, with the result that opening quo
tations fell l to nearly points below
yesterdays final quotations. WeSting-
house Electric dropped 424, New York
Central 3l4, Radio 3h and Chrysler,
Columbia Graphophone, Chesapeake
Corporation and several others dropped
2 points or more.
The early selling was inspired by the
action OF the Federal Reserve Council
in recommending that the Federal Re-
serve Board grant permission to all
Federal Reserve banks desiring to in
crease their recent rates from to per
cent. Wall Street understands that the
New York and Chicago banks already
had applied for permission, which until
now has been withheld by the board.
While many brokers took the attitude
that they would like to see the rate
raised ana the uncertainty removed, tne
prospect of sitter money apparently
frightened a number of small specula-
tors, and led to a resumption of bear"
selling by professional operators.
Early liquidation was not unusually
heavy in volume, few blocks over 5000
shares changing hands. One of the
largest was a block of $4,000 shares
Of General Motors at 1894, of 13s, and
duplicating the low record for the year
established yesterday.
Rails, which have been in fairly brisk
demand since the St. Louis & OFallon
decision was announced last Monday,
fell back with the rest of the list
Texas & Pacific dropped 61a points and
Missouri Pacific common. Delaware &
Hudson, Chesapeake & Ohio, Erie and
ST. Louis Southwestern fell back 2 to
nearly 4 points.
Other Early Losses.
General Electric and Auburn Auto
each dropped 7 points Packard Motors.
s; United Aircraft, Az; International
Telephone, Az: Curtiss, 4. and Mont
gomery-Ward. National Cash Register,
Kennecott, Anaconda. Commonwealth
Power. Air Reduction, Chile Copper
and Wright Aeronautical all dropped
3 points or more.