New Britain herald., 1929-08-09
BANK RATE RAISE BRINGS MAD SLUMP
Spectators Scurry From Mar
 ket-Sales About 100000


 New York. Aug. 9 (P-The fed eral reserves latest thrust at sa- curities speculation-an increase from 5 to per cent in the New York bank rate-brought about one of the sharpest reactions today in the history of the New York stock exchange. Prices of leading stocks broke to nearly 30 points in the public's mad scramble to get out of the market, with indications that the days sales would run around 1000, 900 shares.
 The increase in the rate. which Coincided with a gain of S60,000,000 in federal reserve brokers loans to a new high record above $6,000,- O00,00O, caught Wall street com- pletely by surprise, While the re- cent action of the market, with spectacular advances in many Of the public utility and high priced industrial stocks, had drawn. warn lngS from conservative and bankers and commission houses. but few traders were prepared for such a sweeping decline.
 There had been a rather general feeling in the financial district that an increase in the federal reserve rate, previously characterized as the last resort" of the Federal Re- serve board by Chairman Young, would be preceded by a higher rate by the Bank of England, which has suffered a serious decline in its gold reserves as a result of heavy ship ments to France. Consequently, when the London rate was announce ed as unchanged yesterday, no in- crease was looked for here
 Blocks of 5000 to 25.000 shares changed hands at frequent intervals in the early trading, with initial de- Clines in most issues ranging from to 15 points. AS soon as the first furry of selling had subsided, d brisk rally developed which sent several stocks l to 10 points above
 
 ing quickly dried up, however, and fresh wave of liquidation swept over the market at midday which carried |. s. Steel common, Vest lnghouse, AtChison and many other industrial and railroad leaders be- low their opening quotations.
 This secondary reaction" under mined speculative confidenceas sev- cral of the large commission houses had advised their customers that the opening quotations probably would remain as the lows of the day, if not for some time to come.
 The higher federal reserve rate brought no immediate change in the credit situation although it was gen. erally believed that the sharp de- hation in security values would grad ually edse the stringent monetary conditions. Call money renewed un- changed at s per cent with time money rates firm around 3 per cent. No immediate change was made in the open market rate on bankers acceptanccs as a result of the action of several federal reserve banks in reducing their buying rate for bills from IA to IS per cent.
 Directors of the Kansas City and Philadelphia Federal Reserve banks made no change in rediscount rates. No announcement was forthcoming from the Chicago Federal Reserve tJipnptnrs oIt f timated that authority for an in crease to per cent might be given by the Federal Reserve board after the close. Previous requests of New York and Chicago banks for a high CT rediscount rate have been re- fused.
 Auburn Auto suffered the largest decline, breaking 26 F points. Gen. oral Electric dropped 16, Interna- tlonal Silver 15 F. American Tele- puhone 15 and Atchison, Westing- house Electric, American X Foreign Power, Allied Chemical, American Can, American Power X Light. and North American Co. fell 10 to IS points. Nearly two score others. in cluding Packard Motors National Cash Register, Consolidated Gas, American Tobacco issues, Montgom- cry Ward, American International and New York Central sold to 10 points lower. |. s. Steel common opened at PIG. rallied above 2l7 and then fell back to 2l4 for q loss of nearly points.