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MONTHLY REVIEW o f C r e d it a n d B u s in e s s C o n d it io n s Second Federal Reserve District Federal E eserve A g en t M o n e y M a r k e t in M a r c h ONEY rates continued to rise gradually in March. One factor was a renewed gold export movement, which in the first 28 days of March amounted to 92 million dollars, more than one-third of which, how ever, represented gold that had been taken out of the gold stock of this country previously through earmark ing transactions. The other principal factor was an expansion of bank loans. As a result of these influences, open market money rates at the end of March were slightly higher than a month previous or at the end of March last year. M M oney Rates at New York Mar. 30, 1927 Feb. 28, 1928 Mar. 30, 1928 Call m on ey................................................. Tim e money— 90 d a y .............................. Prime commercial paper......................... Bills— 90 day unindorsed....................... Treasury certificates and notes Maturing June 15................................. Maturing December 15....................... Federal Reserve Bank of New York— rediscount ra te...................................... Federal Reserve Bank of New Y ork— buying rate for 90 day b ills ............... 4 -4 H 3H 4 3K * 4 ^ -5 4% 4 -4 M 3M 3.31 3.36 3.30 3.28 3.24 3.33 4 4 4 3H 3M 3H *4 H *4M ♦Prevailing rate for preceding week An important element in the March credit expansion was a substantial seasonal increase in commercial loans. MILLIONS o f DOLLARS ) April 1, 1928 Federal R eserve Bank, New Y ork The increase since the beginning of February, as the first diagram below indicates, has been much larger than last year, apparently reflecting increasing industrial activity; in fact, the increase in commercial loans this year has been larger than in the corresponding period of any year since 1923. On March 21, these loans were 160 million dollars larger than at the same time in 1927. This increase follows a period during which commercial loans were little, if any, above the preceding year. The second diagram indicates that the financing of trade through acceptances also is considerably higher than a year ago. A large part of the increased amount of outstanding acceptances is being carried by foreign funds invested in this market and thus does not appear in the loans and investments of domestic banks. Reports by the American Acceptance Council indicate that a con siderable part of the increase in outstandings represents the financing of goods stored in or shipped between foreign countries or of American goods exported to for eign countries. A somewhat smaller part of the increase during the year represents the financing through the bill market of import trade and the domestic storage of goods. L oans o n S e c u r it ie s Loans of reporting member banks, secured by stocks and bonds, showed some increase in March, accompany ing an unusually large volume of trading in securities and an advance in stock prices to new high levels. The MILLIONS o f HOLLARS ----- 1 ------------------------- "*1 9 2 8 192.8 JT 880 0 80 0 w . 1 9 2 .7 ■,1 9 2 7 8400 8000 400 COMMERCI AL LOANS Reporting,MemberBanks A . 1 1 1' , , 1 A m o tm t o f BILLS Ol IT5TAND1NC I i ----- 1------1- Commercial Loans of Weekly Reporting1 Member Banks. o , ' J , F 1 __.i M A M . , J 1--------- 1-----_ J J A --------- i S O N — » B Outstanding Bankers Acceptances Reported by the American Acceptance Council. 26 MONTHLY REVIEW, APRIL 1, 1928 amount of these loans outstanding on March 21, though below the first of the year levels, was 700 million dollars, or 12 per cent, larger than a year previous. The entire reduction since the first of the year has been in the loans of New York City banks; security loans of reporting banks outside of New York on March 21 equaled the highest level previously reached. In addition, loans to brokers and dealers in securities placed by New York reporting banks for interests other than banks have increased 360 million since the beginning of January and are about 450 million larger than a year ago. T re a s u ry T a x P e rio d O p e r a t io n s Large disbursements and collections were made by the Reserve Banks for the Treasury around the March 15 tax period, without material effect on the money market. Redemptions of maturing certificates amounted to 514 million dollars, of which approximately 400 million were redeemed in New York; income tax collections in this district up to March 28 totaled 170 million dollars; and interest payments here were about 35 million. The sub stantial excess of disbursements over collections was covered in the usual manner by day-to-day special Treasury certificates of indebtedness issued to the Fed eral Reserve Bank of New York, which were gradually reduced, and within a week entirely paid off by income tax collections here and the transfer from other dis tricts of funds obtained through tax collections. The excess of Treasury payments over collections in this district was temporarily prevented from creating a surplus of funds in the money market by the sale for one day of a $115,000,000 participation in the Treasury special certificate of indebtedness, and by deferring for a few days purchases of securities to replace securities matured or sold on March 15 from the holdings of the Federal Reserve System. Within a week after the 15th, tax collections in this district and the withdrawal of funds from New York to replace tax collections in other districts had proceeded in sufficient volume to absorb the surplus funds. B ill G o ld M o v e m e n t The outflow of gold during March exceeded that of any previous month in the history of the country; slightly over $93,000,000 was exported through the Port of New York alone. Of this amount, however, $35,800,000 was gold previously earmarked and so the net loss of funds to the money market from this cause was slightly over $56,600,000, which is substantially less than the net loss in either November or December of last year. Exports to Argentina continued during March; the movement to Brazil was renewed; a large transfer of earmarked gold was made to France; there was a substantial flow of gold to Germany; and smaller shipments went to Italy, Poland, and England. The import movement at New York was negligible, comprising chiefly miscellaneous small receipts from Latin American countries. Final reports for the entire country for February showed exports amounting to $25,776,000 and imports of $14,686,000, resulting in a net export of $11,090,000. This amount was partly offset by the release of $3,000,000 of earmarked gold; so that the net loss for the month was $8,090,000, as compared with a net loss of $8,270,000 in January. Since the beginning of the export movement last Sep tember the United States has lost $300,000,000 net of gold through export movements and earmarkings. Onethird of the exported metal, $113,000,000, has gone to Argentina, in addition to substantial amounts shipped to that country from London and South Africa. France and Brazil together have taken one-half of the re mainder. The Canadian movement during this period has resulted in a net inflow of over $30,000,000. (In thousands of dollars) U N IT E D S T A T E S M a r k e t The supply of new bills offered to the market was maintained in large volume in March and was slightly in excess of the amount of buying orders received by the dealers. The investment demand, while fairly steady, was of moderate proportions and took the form chiefly of buying for foreign account. These conditions re sulted in an increase in open market portfolios, which by the end of the month were the largest since early in January. Market rates for bills were unchanged during most of the month, but were advanced % to ^ near the end of the month, and the 90 day maturity was offered at 3 % per cent. C o m m e r c ia l P a p e r M a rk e t Commercial paper rates advanced somewhat in March, and prime names were generally sold at a range of 4 to 4 % per cent. The investment demand continued moderately active until after the middle of the month when dealers reported a lack of inquiry. Notwith standing the reduced volume of sales, dealers’ lists of paper remained quite moderate, reflecting the small amounts of new borrowing by users of the open market. This condition is similar to that of February, when outstandings through 25 dealers declined 1 % per cent to $567,000,000 at the end of the month, an amount nearly 2 per cent smaller than a year ago, following increases over the previous year in each of the preced ing four months. Source or Destination September 1, 1927 to February 29, 1928 Imports Argentina................... A ustralia.................... B elgium ...................... B ra zil.......................... British In d ia ............. British M a la ya ......... C anada....................... China and H ong Kong E cu a d or...................... F rance........................ G erm any.................... I ta ly ............................ Java and M a d u ra .. M e x ico........................ Netherlands............... P ola n d ........................ R ussia......................... Sweden........................ United K in g d o m .. . . Uruguay................... .. Venezuela................... All other..................... T o ta l....................... Earmarked Account. T o ta l....................... P O R T OF NEW YORK* Exports Imports Exports 93,140 19,700 9,746 56,797 1,646 36 * 5 616 2,674 5,200 32 11 Im ports Exports 112,840 9*746 4,200 44,810 4,301 1,286 25,348 5,018 8*504 56,797 25,666 315 l ‘, 43i 3,405 12,055 5,000 TOTAL* Septem ber 1 , 1927 to M arch 1— 28, 1928 March 28, 1928 *i30 35,799 21,156 3,000 131 371 1,646 36 * ‘ *5 616 2,804 3*666 4,206 53,314 4,301 1,286 25,348 5,018 60,799 21,471 3.000 1,562 3,776 12,055 8 .0 0 0 5 ,2 6 6 1*027 8,548 32 1 ,6 2 6 11 8 ,0 0 0 1,027 9,568 8 ,0 0 0 *238 3,552 3,100 134 ” 72 445 *4io 3 io 3,997 3,510 134 80,553 246,118 647 93,091 81,200 339,209 26,700t 100,7011 38,799f 107,253 346,819 39,446 3f000t 65,4991 96,091 146,699 103,701* 442,910 ♦Preliminary. tGoldj released from earmark. {A dditional gold earmarked. FEDERAL RESERVE AGENT AT NEW YOM i? Foreign Exchange Rates at New Y ork in 1928, Compared with 1927 (H eavy line represents 1928 figures; light line represents 1927 figures). The foregoing table sets forth by countries the principal gold movements since September 1, 1927, together with the totals of earmarking transactions. Although the import of about $5,000,000 from Russia last month is included in the report of gold movements, it has not been added to the gold stock of the cbuntry through purchase by the Assay Office or the Reserve Bank. Foreign E xch a n g e Sterling exchange continued strong during March, and a shipment of $1,000,000 of gold was made to Eng land on March 21. German marks at 23.92 cents again reached the high point of December. The Scandinavian exchanges were likewise stronger, Swedish and Danish rates rising above par and Norwegian quotations ad vancing to 26.71 cents, as compared with an average of 26.61 cents during February. Dutch guilders advanced to 40.25 cents and Swiss francs to 19.27 cents. French, Italian, and Belgian rates showed little change, but the Spanish peseta continued to decline, falling as low as 16.75 cents. In the Far East, rates on Hong Kong and Calcutta showed little change during the greater part of March from the previous month, but the Japanese yen made a notable advance from 46.73 cents at the close of Feb ruary to 47.82 cents on March 27, the highest point since the reaction caused by the banking crisis last May. The Canadian dollar went to a premium on March 14 for the first time since December 2. South American rates continued strong throughout the month. The Argentine peso was quoted at 42.65 to 42.67 cents and the Brazilian milreis at 12.04 to 12.07 cents, the latter being the highest rate since December 1926. The above diagram indicates the strength of foreign exchanges compared with last year. D is c o u n t R ate> A b ro a d Two reductions in the discount rates of central banks were made during March. On the 5th, the Bank of Italy lowered its rate to 6 % per cent from the 7 per cent rate which had been in effect since June 1925. A rate of 5 % per cent was adopted by the Bank of Norway on March 27, following an increase from 5 to 6 per cent on February 2. Security M a r k e ts — — --------------------An exceptionally active and strong stock market de veloped in March, following the irregular decline of January and February. The turnover for the month was the largest on record, with trading on a number of days close to or above 4,000,000 shares. The entire in dustrial list moved irregularly higher throughout the period, and, toward the end of the month, representative price averages were up 11 to 24 points from the lowest points of February to higher levels than were ever before attained. Railroad stocks also shared in the advance with an average gain of about 8 points from the February lows, but remained several points below the high levels of the autumn of 1927. Corporation bonds were fairly steady in March; prices eased slightly further early in the month, but a subse quent recovery occurred which carried average prices close to the highest points of the previous two months. Foreign bonds as a class were firm, and a substantial proportion of the active issues sold at the highest prices of the year. Liberty Loan issues showed net declines for the month, while Treasury long-term bonds ad vanced; near the end of the month the Government list as a whole was about % point below the highest levels of the year. Following a reduction in the volume of new financing during the first two months of the year, securities offer ings in March increased to the largest volume since December, and were considerably larger than in March 1927. The increase was primarily due to the flotation of a number of large issues, including principally $100,000,000 of St. Louis-San Francisco Railway Co. 4 ^ per cent bonds, and $52,000,000 of City of New York 4 per cent corporate stock. Both of these issues were for the purpose of refunding outstanding obligations. There were also two large foreign issues during the month; one a consolidation loan of $30,000,000 of the Kingdom of Norway; the other the major part of a $35,000,000 Republic of Colombia loan. For the first three months of this year, refunding issues have been in considerably larger volume than in the corresponding period last year, but the volume of new capital issues appears to have been somewhat smaller. 28 MONTHLY REVIEW, APRIL 1, 1928 F o r e i g n 'T r a d e Merchandise exports showed a seasonal decline in Feb ruary and the total valuation of 373 million dollars was about the same as a year ago. Imports, valued at 353 million dollars, showed an increase of 15 million over January, contrary to the usual seasonal movement, and an increase of 42 million over February 1927. The quantity of cotton shipped abroad continued to decline seasonally in February and was almost 400,000 bales less than last year, and, notwithstanding the higher prices this year, the total value appears to have been somewhat smaller. Grain exports also were con siderably smaller than in the previous month, or in Feb ruary of last year. Exports of passenger automobiles increased considerably in number and value over January and over a year ago. The increase in merchandise imports compared with last year appears to have been chiefly in receipts of raw silk and coffee. The quantity of both of these com modities received in February was nearly one-third larger than last year, and the value also was larger. Imports of crude rubber were larger in quantity but smaller in value than in February 1927. B u ild in g Due chiefly to a 34 per cent increase in the New York and Northern New Jersey District, awards of building contracts in the territory east of the Rockies during February were 18 per cent larger than a year ago, and were in fact larger than for any February in the past. The total reported by the F. W . Dodge Corporation for 37 states was 9 per cent larger in February than in January, whereas some decline frequently occurs at this season of the year, and this bank’s index of construction contracts advanced to the highest level since December 1926, as the accompanying diagram shows. PERCENT. above the trend of past years, probably due in part to the high per capita income in this country during recent years, which has left a larger margin of purchasing power, after provision for the necessities of life, than in any previous period. The principal development in February was a large increase in residential building; residential contracts awarded in this district were nearly twice as large as in February of last year, and the total for 37 states was 47 per cent larger, following an increase in January over last year of 15 per cent. Reports received by S. W . Straus & Company of building permits in about 550 cities and towns showed an increase of 7 per cent over February 1927, which also reflected chiefly the increase in residential building in this district. Excluding plans filed in New York City, the total for the remaining localities throughout the country shows a decline of 9 per cent. In dexes o f Business A c tiv ity No consistent evidence as to the tendency of general business for February is given by this bank’s indexes of business activity. The domestic movement of mer chandise and heavy freight, and the foreign trade of this country showed increases, after allowance for the usual seasonal variations, and retail trade was more active than in January. Life insurance sales also in creased substantially, and there was a considerable rise in our index of new incorporations. The indexes of bank debits, both in New York City and elsewhere throughout the country, declined, however, and busi ness failures were more numerous than in January, after seasonal adjustment. This bank’s indexes, in which allowance is made for seasonal variations, year-to-year growth, and price changes, are shown below for February, together with comparative figures for the two months preceding and a year ago. (Computed trend of past years=100 per cent) 1927 Feb. Dec. Jan. Feb. Panama Canal traffic.................................. Wholesale trade............................................ 110 107 94 101 94 99 95 86 78 104 88 96 102 93 85 102 85 100 104 96 90p 108p 102 102 Distribution to Consumer Departm ent store sales, 2nd D ist............ Chain groceries sales................................... Other chain store sales............................... M ail order sales........................................ Life insurance paid fo r ................................ A dvertising.................................................... 104 98 106 99 110 104 108 104 107 119 107 97 99 101 98 96 98 87 104 103 102 98 113 98 107 124 106 138 107 142 102 135 108 134 189 98 103 100 107 136 116 102 104 136 228 98 102 95 108 138 116 95 109 140 234 88 101 95 108 140 117 93 104 138 196 95 170 221 174 223 173 221 173 221 Primary Distribution Car loadings, merchandise and m isc....... Car loadings, other...................................... Index o f Building Contracts Computed by the Federal Reserve Bank o f New York, Adjusted for Seasonal Variations and Changes in the Cost o f Construction. This index shows the level of current building relative to the long-term trend of building computed for a period of more than 30 years, after adjustment for changes in the cost of construction. It indicates that the volume of building during most of the past six years has been 1928 General Business Activity Bank debits, outside of N. Y . C it y ......... Bank debits, New Y ork C it y ................... V elocity of bank deposits outside of N. Y . C it y ...................................... .. Velocity of bank deposits, N. Y . C it y ... Shares sold on N. Y . Stock Exchange .. Postal receipts............................................... Electric pow er............................................... Em ploym ent in the United States........... Business failures........................................... Building contracts....................................... New corporations form ed in N . Y . State Heal estate transfers.................................... General price le v e l....................................... C omposite index of wages.......................... ^Preliminary *96 114 151 127 101 29 FEDERAL RESERVE AGENT AT NEW YORK P r o d u c tio n Commodity Prices Productive activity in leading industries showed a further increase in February from the low levels that prevailed at the close of last year. The output of both pig iron and steel ingots continued to increase, and our indexes, after allowance for the usual seasonal varia tions, made substantial advances. Autom obile produc tion also increased further, and our combined index of the production of both passenger cars and trucks reached the highest level since September 1926. Lum ber pro duction showed a further increase of more than seasonal proportions, and remained considerably above the level o f last y e a r ; and the index of bitum inous coal output reached the highest point since A p r il 1927, the begin ning of the strike. There is evidence, moreover, that the advance was not confined to these few im portant indus tries, fo r of the 28 production indexes now available 23 increased while only 5 declined. The tendency of this b a n k ’s weekly index o f basic commodity prices was gradually downward in February fo r the fourth consecutive month. A further slight de cline occurred early in M arch and at 138.6 on March 10, the index was 5 % per cent below the 1927 high point of 146.6 reached on October 8, but remained nearly 8 per cent above the lowest point of last year. In the subsequent two weeks there was a moderate recovery. The general index of wholesale prices com puted by the Bureau of Labor Statistics showed prac tically no change in February follow ing a moderate decline from October to J anuary. In the four months from October to F ebruary the principal declines in prices were in food products, textile products, fuel, and chemicals and drugs. Prices of metals and of hides and leather advanced somewhat dur ing this period, and farm products showed no general change, although there were wide fluctuations in a few commodities, especially cotton. The upward tendency in our basic price index recently has been due chiefly to a moderate rise in raw cotton and smaller increases in grain prices. In March, steel m ill operations have remained at the high level of February, and em ployment at Detroit has continued the expansion that has been in progress since the first of the year. Current reports indicate that the production of petroleum, lumber, and bituminous coal is holding at about the recent levels, but that the pro duction of anthracite coal has shown a slight decline, and that cotton m ill activity has been curtailed further. In general, it appears that, except in the automobile industry, productive activity in M arch did not increase as rapidly as in J anuary and February. PER CENT This b a n k ’s indexes, in which allowance is made for year-to-year growth and fo r the usual seasonal varia tions, are shown below. ( C o m p u t e d tr e n d o f p a s t y e a rs = 1 0 0 p e r c e n t) 1928 1927 Feb. Dec. Jan. Feb. 108 111 108 124 92 121 125 117 102 98 108 108 98 94 108 99 106 106 91 94 97 66 90 115 114 79 93 98 97 100 102 75 104 129 101 99r 95 101 94 67 89 131 111 84 99 98 97 100 90 90 97 141r 100 99 105 115 104 65 88p 76 106 111 105 103 96 78 94 92 106 92 104 104 100 97 107 119 116 89 87 103 100 93 77 110 99 119 99 84 94 102 101 91 99 54 86 103 89 108 95 101 108 103 101 108r 93 84 89 105 105 92 111 104r 89r Producers* Goods P i g i r o n ........................................................... S t e e l i n g o t s .................................................... C o t t o n c o n s u m p t i o n .................................... C o t t o n m o v e m e n t ...................................... W o o l e n m i l l a c t i v i t y * ................................. S i l k c o n s u m p t i o n * ....................................... P e t r o l e u m ...................................................... B i t u m i n o u s c o a l ........................................... C o k e ................................................................ L u m b e r ........................................................... C o p p e r , U . S . m i n e s .................................... L e a d ................................................................ Z i n c .................................................................. T i n d e l i v e r i e s ................................................ L e a t h e r , s o l e ................................................. C e m e n t ........................................................... P a p e r , t o t a l ................................................... W o o d p u l p ..................................................... *8 6 100 104p 104 108 93 88 113 114 IlO p 108p Consumers ' Goods H o g s s l a u g h t e r e d ......................................... C a t t l e s l a u g h t e r e d ....................................... S h e e p s l a u g h t e r e d ........................................ C a l v e s s l a u g h t e r e d ....................................... F a r m p r o d u c e s h i p p e d ................................ W h e a t r e c e i p t s .............................................. C o r n r e c e i p t s ................................................. W h e a t f l o u r ................................................... S u g a r m e l t i n g s , U . S . p o r t s ....................... G a s o l i n e .......................................................... A n t h r a c i t e c o a l ............................................. N e w s p r i n t ...................................................... P r i n t i n g a c t i v i t y .......................................... T o b a c c o p r o d u c t s ......................................... B o o t s a n d s h o e s ............................................ T i r e s ................................................................ A u t o m o b i l e , p a s s e n g e r ................................ A u t o m o b i l e , t r u c k ........................................ ♦Seasonal variation not allowed for ^Preliminary rRevised 126 100 114 98 iih 76 *8 5 95 io 7 lO lp i2 8 92 19£4 1925 19£6 19£7 1928 U n it e d S ta te s B u re a u of Labor S t a t is t ic s G e n e ra l In d e x W h o le s a le P r i c e s a n d F e d e r a l R e s e r v e B a n k o f N e w Y o r k W e e k l y I n d e x o f B a s i c C o m m o d it y P r i c e s (1 9 1 3 = 1 0 0 p er c e n t). of Employment and Wages A ft e r rem aining fo r two months at the lowest levels in several years factory em ploym ent in the entire country increased 1.7 per cent in February, a slightly larger increase than is usual in that month. Our index, in which allowance is made fo r seasonal variations, showed an advance fo r the first time since last June. In New Y o rk State, factory em ployment increased 1 per cent from the low level of January. There were increases in the steel, automobile, railway equipment and other metal industries, and in clothing and textiles, which more than offset seasonal declines, principally in the building materials industries. Factory em ployment remained lower than a year ago in a m ajority of indus tries, however, and the total was about 6 per cent lower. The ratio of orders fo r workers to applications for em ployment at N ew Y o rk State em ployment offices has shown an advance o f something more than seasonal pro 30 MONTHLY REVIEW, APRIL 1, 1928 portions since the early part o f February, but remains considerably lower than a year ago. The State E m ploym ent Service reports that there is still a consider able amount o f unem ploym ent, which continues to be principally among unskilled workers, and seems to be larger in New Y o rk C ity than in the remainder of the state. The building trades have not taken as m any workers as was expected, but there are indications that this line is now showing a seasonal upswing. A sub stantial improvem ent in the em ploym ent o f skilled laborers recently, particularly in some of the industrial cities upstate, is reported. C o m m o d it y P e rc e n ta g e Change F e b ru a ry 1928 c o m p a re d w ith Ja n u a ry 1928 Net S a le s G r o c e r i e s ........................ M e n ’s c l o t h i n g .............. W o m e n ’s d r e s s e s ........... W o m e n ’s c o a t s a n d s u i t s C o tto n go o d s— Jo b b e rs C o tto n go o d s— C o m - . — + + + + 6 1 4 4 3 .0 7 .3 9 .7 3 .6 1 .3 Sto ck end of m o n th — 0 .7 + 2 *.i P e rce n tage Change F e b ru a ry 1928 c o m p a re d w ith F e b ru a ry 1927 Net S a le s + 3 .6 + 3 .9 — 1 1 .2 — 5 .2 + 7 .6 Sto ck e nd of m on th P e r cent of A cco u n ts O u t s t a n d in g J a n u a r y 31, C o lle c t e d in F e b ru a ry 1927 1928 8 .1 6 8 .5 4 5 .1 7 1 .3 3 9 .2 +1516 3 0 ‘. 4 3 i ‘. 5 — — + 2 .8 2 .0 2 .9 4 7 .3 3 6 .3 4 6 .9 3 9 .0 4 8 .3 3 5 .0 4 4 .9 4 1 .8 7 7 .2 7 0 .6 7 4 .5 6 6 .0 } - r.s 2 5 .2 2 7 .6 5 0 .3 4 9 .9 — S i l k g o o d s ....................... S h o e s ............................... D r u g s .............................. H a r d w a r e ....................... M a c h i n e t o o l s * * ........... S t a t i o n e r y ...................... P a p e r ............................... D i a m o n d s ....................... J e w e l r y ........................... + 9 .4 + 0 .2 + 5 .3 — 9 .6 + 9 .4 — 7 .8 + 2 .4 — 2 .3 — 2 2 .4 + 1 6 .8 Wholesale Trade W e i g h t e d a v e r a g e ......... + 1 7 .9 Total February sales of reporting wholesale houses in this district showed a small increase over a year ago, but after allowance fo r the extra business day this year, the average daily volume of business appears to have been slightly smaller. The largest increase over last year again was in sales of machine tools, which in the past two months have been the largest in several years, as the accom panying diagram shows. ♦ Q u a n t it y n o t v a lu e . R e p o r t e d b y t h e S i l k A s s o c ia t io n o f A m e r ic a . * * R e p o r t e d b y t h e N a t io n a l M a c h i n e T o o l B u i ld e r s ’ A s s o c ia t io n . The expansion in the total of factory wage paym ents from January to F ebruary was slightly smaller than the increase in the num ber em ployed in New Y o rk State, but fo r the country as a whole the increase in total wage paym ents was substantial. — + + + }+ 4 .9 * 6 .4 0 .3 6 .9 i '. i + + — + + + — + — + 3 .9 0 .9 1 5 .5 1 0 .4 0 .3 4 0 .4 3 .2 9 .9 1 1 .7 1 .0 + 1 .2 Department Store Trade F ebruary sales of leading department stores in this district averaged 4.6 per cent larger than a year ago, apparently due largely to an extra selling day this year. The daily rate of sales was approxim ately the same as in February 1927, whereas January sales were 3 per cent smaller than last year. A p p a re l stores sales showed an unusually large increase, and m ail order houses re ported somewhat larger increases than in January. Increases in the rate of stock turnover and in the rate o f collections, compared with F ebruary 1927, appear to have been due largely to the extra business day this year. P e rc e n ta ge Change F e b ru a ry 1928 c o m p a re d w ith F e b ru a ry 1927 L o c a lit y Net S a le s 1922 M a c h in e 1923 Tool O rd e rs 1924 1925 1926 1927 R e p o rt e d b y th e N a t io n a l B u ild e r s * A s s o c ia t io n . 1928 M a c h in e Moderate increases were reported also in sales of gro ceries, m e n ’s clothing, cotton goods, drugs, and paper. Sales of w om en’s clothing showed a substantial seasonal increase over January, but remained smaller than last y e a r ; sales of shoes and diamonds also were consider ably smaller. Silk goods, jew elry, and hardware sales were close to those o f a year ago. Shoe stocks, which had been running substantially larger than a year previous, showed less than the usual seasonal increase in February, and at the end of the month were slightly smaller than a year ago. Grocery stocks were considerably smaller than in February 1927, but stocks held by cotton goods jobbers were substan tially larger. R o c h e s t e r ........................................................... Tool N o r t h e r n N e w Y o r k S t a t e ........................ C e n t r a l N e w Y o r k S t a t e ............................ S o u t h e r n N e w Y o r k S t a t e ......................... H u d s o n R i v e r V a l l e y D i s t r i c t ................... C a p i t a l D i s t r i c t ............................................ W e s t c h e s t e r D i s t r i c t .................................... + 5 .2 + 1 .2 — 3 .6 + 2 .8 + 6 .5 — 8 .5 + 5 .1 + 9 .7 + 1 3 .3 — 2 .3 + 7 .3 + 2 .3 + 1 8 .8 Sto ck on hand end of m o n th — + + + + — — P e r cent of C h a rge A cco u nts O u t s t a n d in g J a n u a r y 31, C o lle c t e d i n F e b ru a ry 1927 1928 1 .5 4 .8 3 .1 1 .3 1 .8 6 .5 8 .1 4 4 .7 4 9 .3 3 7 .3 4 9 .6 4 9 .4 4 0 .2 4 5 .6 4 5 ’. 0 3 0 *.7 ai’.o A l l d e p a r t m e n t s t o r e s ...................................... + 4 .6 — 1 .0 4 3 .8 4 6 .7 A p p a r e l s t o r e s ................................................... M a i l o r d e r h o u s e s ............................................. + 1 4 .6 + 7 .4 + 9 .3 4 3 .4 4 8 .0 The largest increases in department store sales, com pared with last year, were in books and stationery, sporting goods, shoes, and toilet articles and drugs. Sales of w om en’s apparel, furniture, and home furnish ings also showed moderate gains, but sales of m e n ’s wear and silk goods were slightly smaller than a year ago. 31 FEDERAL RESERVE AGENT AT NEW YORK N e t S a le s P e rc e n ta ge C h a n g e F e b ru a ry 1928 c o m p a re d w ith F e b ru a ry 1927 B o o k s a n d s t a t i o n e r y .............................. T o y s a n d s p o r t i n g g o o d s ........................ S h o e s ............................................................ T o i l e t a r t i c l e s a n d d r u g s ........................ W o m e n ’s a n d M i s s e s ’ r e a d y - t o - w e a r . . C o t t o n g o o d s ............................................. H o m e f u r n i s h i n g s ..................................... M e n ’s f u r n i s h i n g s ..................................... H o s i e r y ....................................................... F u r n i t u r e .................................................... W o m e n ’s r e a d y - t o - w e a r a c c e s s o r i e s . . . W o o l e n g o o d s ............................................ L u g g a g e a n d o t h e r l e a t h e r g o o d s ......... S i l v e r w a r e a n d j e w e l r y ............................ L i n e n s a n d h a n d k e r c h i e f s ....................... M e n ’s a n d B o y s ’ w e a r ............................ S i l k s a n d v e l v e t s ...................................... M u s i c a l i n s t r u m e n t s a n d r a d i o ............. M i s c e l l a n e o u s ............................................ Stock on H a n d P e rc e n ta g e C h a n g e F e b r u a r y 29, 192 8 c o m p a re d w ith F e b r u a r y 28, 192 7 — 2.2 — 1.2 + 1 6 .1 + 1 3 .8 +11.0 +10.6 + + + + + + + 4.9 — 1.7 — 1.0 — 2.2 7 .4 5 .6 5 .3 4 .9 3 .7 3 .2 + 3.7 + 3.9 + 7.4 + 1.1 + 2.1 + 2.0 + + 1 .9 0 .7 — — 1 .3 3 .2 — 5.7 — 14.0 —23.8 — 1.1 + 2.0 + 8.2 — 0.2 — 7.6 — 36.4 — 4.3 —22.0 — 2.0 does not publish statements o f earnings. In other lines o f business, however, there were equally substantial increases; clothing and textile companies reported net profits almost twice as large as in 1 9 2 6 ; leather and shoe concerns had an exceptionally good y e a r ; rubber companies reported profits 50 per cent larger than in 1 9 2 6 ; and earnings of chemical and drug companies, stores, and miscellaneous companies were all above the totals fo r 1926. E arnings of telephone companies continued to show a steady increase, and other public utilities reported even larger increases. Class I railroads, on the other hand, reported net operating income about 12 per cent smaller in 1927 than in 1926 and slightly smaller than in 1925, reflecting largely the reduction in traffic. Net earnings o f a number of im portant groups of companies fo r the past three years are shown in the diagram below in percentages of the 1926 earnings. Business Profits in 1927 ( N e t p r o f it s i n t h o u s a n d s o f d o lla r s ) Earnings reports of 381 industrial and mercantile concerns now available indicate that net profits of these companies in 1927 averaged about 8 per cent smaller than in 1926, but were larger than in any other recent year. The reduction in industrial profits from the 1926 level was due prim arily to declines in a few large indus tries, especially oil and steel. I f these two groups be excluded from the tabulation, the net profits of all other m anufacturing and commercial companies would show some increase in 1927 over the previous year. Profits in the oil industry were reduced by nearly one-half in 1927, reflecting lower prices, and steel com pany profits declined by about 25 per cent. There were also smaller reductions in railroad equipment, motor accessories, metal and m ining, and building supply com pan ies; and the coal companies had a very poor year, owing to the strike. The automobile industry as a whole showed slightly larger profits in 1927, but when the very large earnings o f the General M otors Corporation are subtracted from this group, the rem aining companies show a reduction of 24 per cent from the 1926 figure. This figure is exclusive of the F o rd Com pany, which C o r p o r a tio n G ro u p s S t e e l c o m p a n i e s ................. R . R . e q u i p m e n t ............... N um ber 1924 1925 1927 1926 26 12 31 22 1 3 7 ,9 1 8 2 7 ,8 4 8 1 5 3 ,6 0 0 1 3 5 ,5 9 9 1 7 0 ,7 5 9 1 8 ,0 1 3 26 7 ,1 6 4 2 6 0 ,1 8 2 2 1 7 ,3 1 3 4 0 ,5 6 7 2 8 7 ,6 2 1 2 9 9 ,4 8 1 1 6 3 ,0 1 0 3 1 ,5 1 8 1 5 0 ,3 4 2 3 1 4 ,9 7 7 18 11 39 16 9 9 6 24 19 19 11 18 14 19 58 3 1 ,8 7 2 4 3 ,7 5 5 1 5 5 ,8 7 6 9 0 ,1 2 8 1 9 ,8 7 8 1 1 ,4 3 1 6 ,6 9 1 5 ,7 4 4 8 3 ,3 8 7 4 7 ,6 5 0 723 2 5 ,8 5 5 5 0 ,1 7 1 5 8 ,8 2 4 1 3 7 ,0 8 8 4 1 ,1 0 2 8 3 ,0 9 8 1 6 0 ,9 9 1 1 0 0 ,1 4 9 2 2 ,5 9 3 11 ,4 3 9 7 ,8 7 5 2 1 ,1 8 1 10 5 ,1 8 6 6 7 ,0 1 9 2 ,6 9 2 3 6 ,4 8 9 5 6 ,5 4 2 6 4 ,2 6 2 1 7 5 ,5 4 8 3 6 ,6 4 7 3 7 ,6 3 9 1 7 5 ,1 1 2 10 8 ,5 6 2 1 9 ,1 0 3 1 1 ,3 9 5 1 1 ,0 6 9 1 2 ,5 7 4 10 9 ,5 4 2 8 3 ,3 1 4 5 ,7 2 9 4 5 ,1 2 9 6 9 ,0 3 9 6 4 ,4 6 1 1 8 7 ,9 0 3 2 9 ,5 5 4 5 6 ,5 9 7 1 6 7 ,5 3 0 11 2 ,6 6 6 2 9 ,7 4 0 1 1 ,3 1 7 ~ 9 ,5 7 8 2 3 ,7 5 4 1 2 6 ,3 5 3 7 0 ,4 7 5 29 4 5 ,0 7 9 7 5 ,7 3 5 55 ,1 2 4 2 0 6 ,5 1 2 T o t a l 1 9 g r o u p s ............. 381 1 ,2 2 4 ,0 3 8 1,6 7 2 ,2 8 4 1 ,8 2 2 ,2 0 0 1 ,6 7 9 ,8 9 0 O t h e r p u b l i c u t i l i t i e s ........ 78 51 1 5 0 ,7 0 8 1 8 1 ,0 1 5 1 8 6 ,4 2 6 2 1 5 ,0 5 8 21 2 ,2 2 5 2 5 0 ,7 5 4 22 6 ,3 8 3 28 6 ,4 3 6 M o t o r a c c e s s o r i e s ( e x c l. R u b b e r ................................. F o o d a n d fo o d p r o d u c t s . . T o b a c c o ............................... L e a t h e r a n d s h o e s ............. A m u s e m e n t ......................... C l o t h i n g a n d t e x t i l e s ........ S t o r e s .................................... M e t a l s a n d m i n i n g ............ C o a l ...................................... M a c h in e & m ach. m fg .... C h e m i c a l s a n d d r u g s ........ B u i l d i n g s u p p l i e s ............... M is c e lla n e o u s in d u s t r ie s . . T o t a l p u b lic u t ilit ie s . . . 129 3 3 1 ,7 2 3 4 0 1 ,4 8 4 4 6 2 ,9 7 9 5 1 2 ,8 1 9 T o t a l 2 1 g r o u p s ......... 510 1 ,5 5 5 ,7 6 1 2 ,0 7 3 ,7 6 8 2 ,2 8 5 ,1 7 9 2 ,1 9 2 ,7 0 9 C l a s s I R . R ........................ 183 9 8 7 ,1 3 3 1 ,1 3 6 ,9 7 3 1 ,2 3 3 ,0 0 3 1 ,0 8 5 ,3 4 2 LEATHER & SHOES ■RUBBER. 1925 1926 1927 1925 1926 1927 1925 1926 192.7 1925 1926. 1927 1925 1926 1927 1925 1926 1927 1925 1926 1927 METALS 8 MINING CHEMICALS & DRUGS BUILDING SUPPLIES STORES TELEPHONE OTHER UTILITIES RAILROADS ioo| 1925 1926 1927 ^ K o o | io o | H ^ K ^ | io o | 1925 1926 1927 A nnual N et P r o f it s CLASS I of 1925 1926 1927 In d u s t r ia l, 1925 1926 1927 1925 1926 1927 M e r c a n t ile , a n d P u b lic U t i l i t y C o r p o r a t io n s , R a ilr o a d s , in P e r c e n t a g e s o f 1 9 2 6 . and N et 1925 1926 1927 O p e r a tin g In c o m e 1925 1926 192.7 of C la s s I 32 MONTHLY REVIEW, APRIL 1, 1928 PERCENT Business C onditions in the U nited States (Summarized by the Federal Reserve Board) RODUCTION and distribution of commodities increased further in Feb ruary, while wholesale commodity prices remained practically unchanged. Commercial loans of member banks showed a larger increase in February and the first half of March than at the same season in other recent years. P P r o d u c t io n In d e x N u m b e r s o f P r o d u c t io n o f M a n u f a c t u r e s a n d M in e r a ls , A d ju s t e d fo r S e a s o n a l V a r i a t io n s (1 9 2 3 - 2 5 a v e r a g e = 1 0 0 p e r c e n t ) . PERCENT. Production of manufactures in February, as indicated by the Federal Re serve Board ’ a index, increased 3 per cent over January and was 2 per cent larger than a year ago, while production of minerals declined slightly and continued to be substantially smaller than last year. Factory employment and payrolls showed a seasonal increase in February but continued at a lower level than a year ago. Output of iron and steel, automobiles, and agricultural machinery has increased considerably since the first of the year. Daily average production of steel ingots in February was larger than in any other month since last March, and current reports indicate that output was sus tained in the first three weeks in March. Production of nonferrous metals also increased in February. Activity in the textile industries has shown little change since the first of the year. Production of bituminous coal and crude petroleum, which decreased in February, increased slightly in the first half of March. Building contracts awarded were larger in February than in the corresponding month of any previous year, reflecting chiefly a large volume of awards for residential construction in the New York and Chicago Districts. Contracts let in the first two weeks of March were in approximately the same volume as in the corresponding period of last year. T rade of Labor S t a t is t ic s (1 9 2 6 100 p e r c e n t). Sales of wholesale firms in leading lines increased in February and were slightly larger than a year ago, while sales of department stores, after allow ance for the customary seasonal changes, were in about the same volume as in January and somewhat smaller than a year ago. Stocks of merchandise carried both by wholesale firms and by department stores showed a seasonal increase in February. a verag e = Freight car loadings have shown somewhat more than the usual seasonal increase since the beginning of the year, but have continued to be in smaller volume than in the corresponding period of last year, owing chiefly to much smaller shipments of coal. Loadings of merchandise in less than carload lots and of miscellaneous commodities have been less than in the corresponding period of the last two years, while loadings of livestock and grain products have been larger. P r ic e s M o n th ly A v e ra g e s o f W e e k ly F ig u r e s fo r M e m b e r B a n k s in 101 L e a d in g C i t ie s ( L a t e s t f ig u r e s a r e a v e r a g e s fo r t h r e e w e e k ly r e p o r t d a t e s in M a r c h ) . oormutciJ.PAPER f/~\_ r H ""A / W i ___ “V \ vnr • \fZJLR.8AIL.-------- H *ACJCEPTANrCE.r -b B ank 1_ The volume of Reserve Bank credit outstanding increased somewhat from February to March, chiefly in consequence of increased borrowings by member banks, which in part reflected further withdrawals of gold for export. 1925 1926 1927 1928 Weekly Rates in the New York Money Market. C r e d it From the middle of February to the middle of March the loans and invest ments of member banks in leading cities increased by $200,000,000, reflecting a growth in the banks’ commercial loans. The banks’ loans on securities and investments showed little change for the period. J 1924 The general level of wholesale commodity prices, as indicated by the Bureau of Labor Statistics index, remained practically unchanged in February at approximately 96 per cent of the 1926 average. There were decreases in the prices of cotton, sugar, nonferrous metals, chemicals, and rubber, as well as a seasonal decline in dairy products. Increases occurred in prices of grains, metals, hides and leather products, and steel. In the first two weeks in March, prices of grains, hogs, and cotton advanced, while those of cattle and rubber showed further declines. During the four weeks ended March 21 conditions in the money market were firmer; the rate on prime commercial paper increased from 4 to 4-4^4 per cent and there were advances in time rates on security loans.