Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-09
COLLAPSE
ON STOCK MARKET
Reserve Rate Increase Has
Devastating Effect on
Quoted Values.
TRANSACTIONS ON THE NEW YORK STOCK EXCHANGE 7PRU
BY STANLEY w. PRENOSIL.
Associate Press Financial Ed,tov

NEW YORK, August s.-The Federal
reserves latest thrust at securities
SpecuIatlon-an increase from s to 6
per cent IN the New York Bank rate
Drought about one of the sharpest re-
actions today in the history of the New
YORK STOCK Exchange. Prices of leading
stocks broke to nearly 80 points in
me puolic'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 CO.
1ncloed with the gain of sec, 900 900 in
Federal Reserve brokers loans to a new
high record above 100000 900 caught
Wall Street completely by surprise
While the recent action Of the market,
with spectacular advances in many of
the public utility and high-priced in
duStrial stocks. had drawn warnings
from conservative bankers and com
mission houses, but few traders were
prepared for such sweeping decline.
Bank Of England Watched.
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 Reserve Board
by Chairman Young, would be preceded
by higher rate by the Bank of Eng
land, which has suffered serious de-
cline In its gold reserves as result of
heavy shipments to France. Conse-
quently, when the London rate was an
nounced as unchanged yesterday, no
increase was looked for here.
The secondary reaction" undermined
speculative confidence as several of the
large commission houses had advised
their customers that the opening QUO
tations 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
orally believed that the sharp def1ation
in security values would gradually ease
the stringent monetary conditions.
Call money renewed unchanged at
per cent. with time money rates firm
around per cent. No immediate
change was made in the open market
rate on bankers acceptances as a result
OF the action of several Federal Reserve
banks in reducing their buying rate for
Oils from 5l4 to 5ls per cent.
Breaks at Opening.
The market broke sharply at the
opening in response to the increase TO
per cent from 5 in the New York
Federal Reserve rediscount rate West
inghouse Electric dropped more than
points and Kennecott Copper, Union
Carbide common. New Haven. United
Gas Improvement and Columbia
Graphophone slumped from to more
than points. Pennsylvania Railroad
and New York Central each lost about
3 points.
The recent bull favorites among the
utilities and related stocks broke wide
open. American Telephone broke Is
points, General Electric a. American
& Foreign Power nearly IS and Amer
lean Water Works and Standard Gas Sz
Electric more than 9. Consolidated Gas
lost Az points.
Auburn Auto tumbled 26l2 points. and
such issues as United States Steel,
Bethlehem. American Can, Interna-
tional Telephone, Warner Bros, Mont
gomery-Ward and Missouri, Kansas &
Texas lost to points. Allegheny
Corporation dropped more than points
in transaction of $4,000 shares and
Radio and General Motors sagged 3 and
3as, with blocks of 10000 shares chang
ing hands.
Eally Spends Force.
The rally continued during the early
forenoon, but appeared to spend its
force midday. American Telephone,
which sold off Is points, rallied 81
from the bottom, and American g. For
elgn Power and Packard Motor regained
about points of their losses. Recov-
cries OF l to 3 points were fairly gen.
eral, save in isolated instances, such
as Macy, which sold off points. Call
money renewed at per cent.