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MONTHLY REVIEW of Credit and Business Conditions S e c o n d F e d e r a l Federal Reserve Agent M on ey E x p a n s io n The course of money rates during March reflected a continued demand for funds to finance security trans actions at a time when commercial requirements for funds were approaching their spring peak. The volume of brokers loans rose to new high levels during the month and although the additional supply continued to be furnished for the most part by lenders other than domestic banks, increasingly high call loan rates were required to attract sufficient amounts. In the first week of March, a substantial increase in brokers’ borrowings, coincident with the loss of funds to New York which frequently occurs in inter-district set tlements early in the month, caused an advance in the call loan rate to 12 per cent. In the second week, a return flow of funds together with a temporary gain of funds to the market due to Government redemptions of maturing securities in excess of tax collections- caused a decline to 6 and 7 per cent. Subsequently as income taxes were collected rates advanced to 9 and 10 per cent, and, in the final week month-end demands and transfers to other districts following a renewed increase in brokers’ borrowings to new high levels caused an ad vance to 20 per cent, the highest call loan rate since February 1920. Commercial rates continued to move to higher levels. A n insufficient investment demand to absorb the supply of new paper at the rates prevailing at the beginning of the month, and the difficulty experienced by dealers in obtaining the funds with which to carry their portfolios, were reflected in a net increase in rates on bankers acceptances of *4 per cent. There was also a gradual upward revision of commercial paper rates, the net effect of which was a general advance of *4 Per cent. Rates charged on commercial loans directly to customers by leading New York City banks were also advanced !/4 per cent in several instances. The net changes in the various money rates during the month and during the past year are shown below. Money Rates at New York Mar. 30, 1928 Feb. 28, 1929 Mar. 28, 1929 *4H ~ 5 4 -4 ^ 3% t 4 .3 1 3 .2 4 *6J^-10 7H * 8 -2 0 **8H 5 3^ -6 5X f 5 .50 t 5 .6 0 4 .4 5 4 .6 7 4 .8 9 4 .8 8 4 5 5 3/4 5Vs 5y2 H 5Prmroilinrr i»ofo t Average rate of leading banks at middle of month ** Nominal quotation D is tr ic t Federal Reserve Bank, New York M a r k e t in M a r c h Call m oney....................................................... Time money— 90 d a y ................................. Prime commercial paper............................ Bills— 90 day unindorsed.......................... Customers’ rates on commercial loans. . Treasury certificates and notes Maturing June 1 5 ..................................... Maturing September 1 5 ......................... Federal Reserve Bank of New York rediscount rate........................................... Federal Reserve Bank of New York buying rate for 90 day bills.................. R e s e r v e April 1 , 1929 of T im e D e po sit s H alted Accompanying the rapid increase in brokers loans for “ others/ 9 the accumulation of time deposits in weekly reporting member banks, which had been proceeding steadily and rapidly for several years, has ceased en tirely for nearly a year. The diagram below shows that time deposits in these banks are now the smallest since the end of April last year and that the recent trend has been slightly downward. W hile the precise source of funds placed in the call loan market by “ other lenders ’ 9 is not known, it appears not unlikely that the high rates offered for call loans during the past year have attracted funds that would otherwise have been placed in time deposits in member banks. The tendency in the security holdings of reporting banks has been somewhat similar to that of time de posits. There was some liquidation during the latter half of last year, and investments of banks in this dis trict and elsewhere have shown a renewed decline dur ing the past two months until subscriptions to the new issue of Treasury certificates on March 15 caused a tem porary rise in security holdings. On March 20 the in vestments of reporting banks in the Second District were 58 million dollars smaller than a year previous, and in other districts were 119 million smaller. Hold ings of U. S. Government securities were somewhat larger than a year ago, while holdings of other securi ties were considerably smaller. This absence of increase in bank investments has been an important adverse in fluence upon the bond market. BILUONSofnOlLARS MONTHLY REVIEW, APRIL 1, 1929 26 Loans on securities made by banks in this district have shown irregular fluctuations but little net change since the liquidation of temporary year-end borrowings in the first half of January, but security loans of report ing banks in other districts have shown a gradual but steady increase and are now more than 250 million dol lars larger than at the beginning of the year. The increase has been principally in direct loans to cus tomers and very little in loans to brokers. C o m m ercial C redit R e q u ir e m e n t s A n active demand for short-term credit to finance agriculture and business has been reflected during the past two months in a substantial increase in the loans other than security loans made by reporting member banks to their customers. The increase since the end of January has amounted to 226 million dollars, an in crease nearly as large as that which occurred in the corresponding period last year and considerably larger than that of previous years. Banks in the Second Dis trict increased loans of this type 190 million dollars between January 30 and March 20, and smaller in creases occurred in most of the other districts. During March, bill maturities from the Reserve Sys tem ’s portfolio exceeded new purchases by about $120,000,000, following a somewhat smaller reduction in February, and at the end of March the System’s port folio of purchased bills was over $135,000,000 smaller than a year ago. The American Acceptance Council survey of the vol ume of dollar acceptances outstanding in this country shows that the total on February 28 was $1,228,000,000, a decrease of $51,000,000 from the figure for the end of January. Notwithstanding this decrease, the volume was $172,000,000 higher than a year ago. C o m m erc ia l P a pe r M a r k et Open market commercial paper rates advanced fu r ther during March from a range of 5 % - 5 % per cent at the beginning of the month to 5 % -6 per cent at the close. The offering of the higher rates for prime ma terial, which became general shortly after the middle of the month, resulted, however, in no appreciable increase in the bank investment demand for paper. In view of the limited interest evidenced in dealers’ offerings by the banks throughout the country, leading commercial paper houses were not anxious to acquire additional supplies of new paper from industrial and mercantile concerns. Reports received by this bank from 23 commercial paper firms indicate that the outstandings of paper in creased 1 per cent further during February, and at the end of that month totaled $411,000,000. A s compared with a year ago, the amount of financing being trans acted through the commercial paper market is 2 7 % per cent smaller. C e n tra l B a n k R a te Loans Other than Security Loans o f W eekly Reporting Member Banks in 1929, Compared with 1928 and 1927 B ill M a rk et The supply of new bills offered to the market in creased substantially in March and during the first three weeks of the month was considerably in excess of the investment demand. Reflecting this situation, the dealers’ portfolios of bills mounted somewhat above the low levels at the end of February. On March 21, deal ers’ bid and offered rates were advanced % per cent, and on March 25, a further % per cent. A t 5 % per cent for unendorsed 90 day bills and at correspondingly increased rates for other maturities, the buying demand for bills increased to such an extent that on March 27 the dealers’ rates were lowered by % per cent, thereby canceling the increase instituted two days before. Dealers’ portfolios toward the end of the month again were down to a relatively low figure which compared closely with their holdings a month earlier. C hanges Since the discount rate of the Federal Reserve Bank of New York was last raised on July 13, 1928, sixteen central banks have changed their official rates, twelve revising them upward and four downward. In the latter category are Bulgaria and Greece, which were en couraged to take this step by the success of their respec tive stabilization programs, Germany, where funds had for some time been abundant, and Chile where the cen tral bank discount business was being transferred from the trading community to the member banks. The cen tral banks which have increased their rates in this period are: Austria, England, Finland, Hungary, Italy, the Netherlands, Spain, and Sweden, in Europe; India and Java, in the Far E a st; and Colombia and Peru, in South America. There is no doubt that in every case the reason for the increased rate can be traced directly or indirectly to the influence of higher money rates in New York, especially the high call loan rates. During the month just ended, central bank rates were increased as follow s: Bank of Italy, from 6 to 7 per cent on March 14, the last prior change having been an increase of % per cent on January 7, 1929. The new rate is the result of stringency in the money market following upon a neces sary contraction in circulation and deposits, due to the gradual reduction of the bank’s reserve assets. The Netherlands Bank rate went up 1 per cent to 5 % per cent on March 25, the earlier rate having been in force FEDERAL RESERVE AGENT AT NEW YORK since October 13, 1927. The statements of this bank have recently shown a heavy increase in the bill port folio, and a loss of foreign assets consequent upon the pressure upon guilder exchange in New York and Lon don. The Reserve Bank of Peru increased its rate, which had been 6 per cent since May 17, 1928, to 7 per cent on March 6 ; and the Bank of the Republic of Colombia raised its rate to 8 per cent on March 18 from 7 per cent, where it had stood since May 15, 1924. F o r e ig n E x c h a n g e The general weakness of the foreign exchanges in March was strikingly illustrated by the course of the exchanges of two countries whose central banks raised their discount rates a full point during the month. On March 1 the Dutch guilder was quoted at $.4005, fifteen points below par, around which level it was maintained until the announcement of the increased bank rate on March 25, when it rose to $.4009, and relapsed the next day to $.4007, where it stood at the close of the month. The rise in the Bank of Italy rate failed in even greater degree to improve their exchange: the lira opened at $.0523 2 3 /3 2 , fell away to 9 /3 2 on March 9, rose to 5 9 /6 4 upon the announcement of the rate rise on the 14th, and slid off to $.0523 2 1 /6 4 towards the end of the month. Gold shipments also were made in certain cases with out being followed by material strengthening of the exchanges. The reichsmark started the month at $.2372 4 3 /6 4 ; it was down to $.2372 1 /3 2 on March 8, recovered somewhat on the announcement of the shipments of gold to New York, fell after the arrival of the gold, and reached a new low at $.23711/2 at the close of the month. The Argentine peso was another exchange which was not advanced by the shipment of gold : despite two arrivals, one on March 14 and another on the 27th, it failed to recover the loss of 12 points sustained between the first and the 13th of the month. The Canadian dollar, 1 7 /3 2 off at the beginning of March, dropped to a discount of 5 7 /6 4 on the 14th and fluctuated widely, closing the month at 3 1 /6 4 off. The Spanish peseta, which has been subject to abnormal in fluences, touched a new low for this year at $.1465 on March 8 ; it later rose 44 points on March 14-15, slumped again, and recovered to $.1514. The pound sterling in March was dull and steady. It opened the month at $4.85^4, fell on the 9th to $4.85 7 /1 6 , and closed the month at $4.85 1 5 /6 4 . French francs were steady, firming slightly toward the end of the month, which is usual as the French banks gener ally bring home some of their foreign balances at such times. W ith the exception of the continued weakness of the Japanese yen, which fell off some 50 points by the 6th and recovered 30 points to $.4458 on March 29, the other exchanges require no special mention. G o ld M ovem en t The effects of high money rates in New York and consequent weakness in the foreign exchanges were re flected in a continued inflow of gold during March. Two shipments from Germany aggregating $16,486,000, two from Argentina totaling $4,500,000, and one from 27 Canada of $1,500,000 made up the bulk of United States imports of gold in March, and exports were negligible. Preliminary totals for the month a re: imports $23,000,000; exports, $1,000,000; net decrease in ear markings, $7,500,000; net gain to the country, $29,500,000. The net gain of gold since January 1 is calculated at $37,500,000. N ew F in a n c in g Total domestic new security issues in February were slightly smaller than in the previous month, but were about one-third larger than in February 1928, according to a compilation of the Commercial and Financial Chronicle. Excluding refunding issues, the increase over a year ago amounted to about 60 per cent; munic ipal and State financing was much smaller than last year, while domestic corporate issues were virtually twice as large. Notwithstanding the large offerings of new securities in recent months, it appears that domestic mercantile and industrial corporations have been receiv ing comparatively small amounts of new working capital from the proceeds of these issues. A n analysis made by the Standard Statistics Com pany indicates that out of a total volume of over $2,500,000,000 of new securities issued during the first two months of this year, the net amount of new capital paid into the treasuries of commercial and industrial cor porations in this country from the proceeds was less than one-fifth of that amount— about $493,000,000. The large remainder in these months included a wide variety of issues; securities of investment trusts and holding companies, the proceeds of which were to be used for the purchase of other securities; securities issued to refund maturing securities of the same type, or to re place securities of another type (for instance, common stocks issued to replace b on d s); securities issued to re place bank loans, sometimes with the result of substitut ing non-interest-bearing stocks for interest-bearing in debtedness; securities issued in exchange for previously existing securities, in cases of mergers and consolida tions; stocks of banks, insurance companies, and other financial organizations. For comparative purposes a similar study of security issues in the first two months of 1925 was made. The results indicated that out of a total of $900,000,000 of new issues in that period, $543,000,000 represented actual new capital for commercial and industrial pur poses. A n important factor in the large increase in other issues between the two periods was an increase from $132,000,000 in January and February 1925 to $1,282,000,000 in the same months of 1929 in the amount of new issues floated by investment trusts, holding and financial operating companies, and banks and insurance companies. These figures indicate that the proportion of the proceeds of new issues used to promote financial operations has increased greatly, while the proportion used to finance industry and trade directly has been much reduced. This bank’s compilation of new foreign issues floated in this market during February indicates a slight in crease over January, but a volume less than half that floated in February 1928. 28 MONTHLY REVIEW, APRIL 1, 1929 B u s i n e s s P r o f it s Reports of earnings of 574 industrial and mercantile concerns show that net profits of these companies in 1928 totaled 24 per cent more than in 1927, and 15 per cent more than in 1926, the previous high year of in dustrial profits. These figures are perhaps somewhat more favorable than would be shown by a more complete tabulation. The 574 companies included constitute, of course, only a small fraction of all industrial establish ments in the country and in the past the returns from all companies have presented a less favorable situation than have the returns from the companies included in these compilations. The course of industrial profits during 1928 appears to have differed somewhat from that of the two previous years, when in each year the peak was reached in the second quarter, and was followed by sharp declines in the third and fourth quarters. In 1928, third quarter earnings were slightly above those of the second quarter and profits in the final quarter showed much less reduc tion from those of the preceding quarter than in 1926 or 1927. A n important part of the very large gain in 1928 profits over the previous year was due to recoveries that occurred in the profits of a limited number of groups, including the oil companies, whose 1928 profits were nearly twice as large as in the previous year but ap proximately the same as in 1926; the steel and motor accessories industries; the meat packing concerns, which virtually recovered the ground lost in 1927; and the copper companies, which doubled their net earnings from 1927 to 1928, following a moderate decline in 1927. Similar recoveries were also reported by the machine and machine manufacturing, metal and mining (exclu sive of coal and copper), and paper groups. The build ing supplies and coal companies showed some improve ment in 1928, but failed to regain the 1926 level. Important groups that showed a further expansion of net profits from 1927 to 1928, following an increase in 1927 from the preceding year, were the motor concerns, a number of the food and food products companies, and the tobacco, printing and publishing, amusement, cloth ing, chemical and drug, electrical equipment, radio, shipping, and stores groups. The rubber companies showed a large reduction in net profits from 1927 to 1928, and leather and shoe, silk, and miscellaneous tex tile concerns likewise reported declines, following in creases in the previous year. The only important type of company to have a continued decline through the two years was the railroad equipment group. Net operating income of telephone and other public utility companies continued to increase in 1928, and at a faster rate than in 1927. Net operating income of Class I railroads was 10 per cent larger than in 1927, but remained smaller than in 1926. (Net profits in thousands of dollars') Num ber Corporation Groups 1925 M OTO RS 1926 1927 1928 1926 1927 1928 Li] 1926 1927 1928 1926 1927 1926 162,452 35,860 194,525 327,834 37,080 59,389 43,212 11,489 7,421 18,695 116,842 102,253 30,078 8,007 29,037 26,600 5,149 5,770 20,473 236,019 27,478 371,472 371,207 61,554 19,046 46,455 15,830 8,801 31,079 131,203 106,455 26,748 10,256 33,274 37,616 7,479 4,220 15,351 Miscellaneous industries. . . 24 13 11 35 21 8 5 7 6 37 31 68 61,094 8,506 24,191 46,508 69,880 41,028 4,036 12,683 3,224 108,360 110,464 145,325 67,247 14,222 39,952 56,441 86,001 42,306 8,349 16,000 4,209 111,188 122,581 178,149 58,451 700 35,368 53,358 95,542 42,766 10,779 15,974 4,370 94,160 140,341 193,464 73,948 6,838 71,508 58,765 114,503 50,611 23,398 16,841 4,834 98,889 146,304 243,920 Total 31 groups.................. 574 1,940,008 2,153,116 1,987,439 2,471,902 94 95 186,778 * 212,225 715,153 227,566 775,177 252,244 868,703 Motoraccessories (exel. tires) Bakery products..................... Dairy products....................... Confectioners........................... M eat packing.......................... Other misc. food products. Leather and shoes.................. Printing and publishing... . Am usem ent.............................. S ilk ............................................... Other misc. textiles.............. Metal and mining (excl. coal and copper)......................... C o a l............................................. Machine and machine mfg.. Chemical and drugs.............. Electrical equipment............ R adio.......................................... Building supplies.................... Telephone (net operating inOther public utilities............ Total public utilities. . . . 189 927,378 1,002,743 1,120,947 Total 33 groups............. 763 3,080,494 2,990,182 3,592,849 1,253,004 1,085,142 1,193,134 Class I R. R. (net operating 184 1,138,632 METALS 6 M INING- LEATHER & SHOE5 C H E M IC A L S BUILDING' SUPPLIES STORES 1926 1927 1926 1926 1927 1928 & DRUGS 1926 1927 1928 TO B A C C O ZXCL. COAL a COPPER 1926 1927 1928 1926 1927 1928 1926 1927 1928 .ALL INDUSTRIALS TELEPHONE 1926 1927 1928 1926 1927 1928 TOOD PRODUCTS 11 1926 1927 1928 214,618 45,502 369,740 293,934 41,099 38,129 40,240 10,965 8,863 31,373 114,252 98,302 23,187 8,439 27,157 23,965 4,822 5,445 6,439 FO O D & OILS 1927 160,302 23,322 347,058 243,502 48,200 88,789 39,556 9,870 9,912 35,363 98,475 91,077 24,962 8,195 26,780 22,255 5,139 6,613 15,339 RUBBER STEEL 1926 28 15 46 19 29 14 7 6 8 6 31 15 13 8 11 10 6 8 28 Steel companies...................... R. R. equipment.................... O ils............................................... OTHER COPPER. 1926 1927 19ZQ CLASS I " U T IL IT IE S f a il -r o a d S 1926 1927 1928 1926 1927 1928 Annual Net Profits of Industrial, Mercantile, and Public Utility Corporations, and Net Operating Income of Class I Railroads in 1928, Compared with 1927 and 1926 (1926 = 100 per cent) FEDERAL RESERVE AGENT AT NEW YORK 29 S e c u r ity M a r k e t s E m p lo y m e n t a n d W a g e s Stock prices drifted irregularly during the first part of March, but, around the middle of the month, repre sentative industrial stock averages again rose to new high levels. Shortly after the 15th, the market showed a downward tendency, which culminated in a sharp break in stock prices in the last week of the month. From the lowest levels reached on this reaction there was a substantial recovery, but at the end of the month the general average of stocks and the industrial average re mained about 2 and 3 per cent, respectively, below the mid-March levels. Average prices of railroad and public utility stocks at the end of the month were 6 ^ 2 and 4 % per cent, respectively, below their highest levels reached in late January and early February. The turnover on the New York Stock Exchange on one day rose to over 8 million shares, a new high figure, and for the month averaged about 4.8 million shares daily, a considerably heavier volume of sales than in February. Buying interest in bonds continued limited in March, and, except for a slight rally around the middle of the month, prices declined further. Domestic corporation bond prices dropped about one point further on the average, and reached the lowest level since April 1926. The current decline in bond prices which began in the spring of last year and which has been in progress ever since, with the exception of a period of partial recovery from August to November of last year, has accompanied progressively firmer money conditions. Factory employment both in New York State and in the country as a whole increased more than usual in February, and this bank’s index, adjusted for the usual seasonal variations, equaled that of last August, which was the highest since September 1927. In New York State the increase in the number of factory workers employed was the largest February increase since 1922. The increase may be attributed partly to the early oc currence of Easter this year and partly to further im provement in the metals industries. A s is shown in the accompanying diagram, the num ber of employees in New York State factories has in creased substantially from last year’s low levels; pay rolls also have shown a considerable increase, and reached the highest level since March 1927. The larger increase in payrolls than in the number of workers employed reflects a renewed increase in individual earn ings, which have shown a general upward tendency for several years, and in February were only slightly below the record established in December 1928. TER CENT F o r e ig n T r a d e Exports of merchandise showed less than the usual seasonal decline in February, while imports showed a slight increase. Exports, valued at $444,000,000, were larger than in the corresponding month of any year since 1921; imports, valued at $371,000,000, were larger than in February of any year since 1926. Exports of finished manufactures as a whole con tinued to show large gains— about 37 per cent over February of last year. A ll other groups of exports, except crude materials, also increased. Grain shipments abroad were larger, both in volume and in value, than a year ago, although seasonally less than in January. The value of the exports of total petroleum products also showed a considerable gain over February 1928. Compared with a year ago, the volume of exports of raw cotton was somewhat smaller, but the volume of cotton manufactures was larger, and, as a result, there was a slight increase in the total value of the exports of cotton and its finished products. Increases over a year ago in the value of imports were general among the principal groups. The largest dollar gain, however, was in the imports of crude materials. The volume of crude rubber receipts surpassed the pre vious monthly high record in January, and was more than double the rather small volume of a year ago, but the lower price of rubber this year partly offset the effect of the increase in quantity. Raw silk was imported in smaller volume than in January or in February a year ago. B u ild in g Building contracts in the New York and Northern New Jersey district declined further in February and were only a little more than half as large as a year ago. The reduction from February 1928 was the result pri marily of a curtailment of residential building activities, including a reduction in hotel contracts to a very small amount and a decline of nearly one-half in apartment house contracts. For 37 States east of the Rockies the F . W . Dodge report indicates that the total volume of building and engineering contracts awarded during February was 22 per cent smaller than in February 1928, following a de cline of 4 per cent in January, and the weekly reports have indicated a daily average of building contracts during the first three weeks of March about one-fifth smaller than a year ago. The February decline was due chiefly to large reductions in the New York and Chicago districts, and was attributed principally to a large reduction in speculative residential building. 30 MONTHLY REVIEW, APRIL 1, 1929 Residential building contracts in February were 46 per cent below the unusually large volume of a year ago, and were also somewhat smaller than in the correspond ing month of the previous four years. Contracts for public works and utilities were close to the February 1928 volume, and all the other principal classes of non residential construction were larger than a year ago. Tendencies in March were much the same, residential building contracts remaining smaller than a year ago. C o m m o d it y P r ic e s The Bureau of Labor Statistics all commodity whole sale price index declined in February to the level of November and December, which was about midway be tween the 1926 average and the low level of the spring months of 1927. The February decline was almost en tirely accounted for by renewed weakness in live stock, meats, and hides. Among other commodities, declines in fuels, farm products, and some of the textiles were nearly balanced by continued advances in metals and building materials, and an upturn in grains. The metals group reached the highest level since March 1925. A s is shown in the accompanying diagram, the recent wide fluctuations of live stock and their products, in cluding hides, and leather and leather products, have been a major factor in the movement of the general commodity price index. The 1928 high point of Sep tember and the subsequent decline in the Bureau of Labor Statistics index were almost, if not entirely, a result of the sharp advances and declines in live stock and their products. Metals, fuels, and building mate rials have shown the most consistent advances during the past y ear; a rather steady downward trend in these groups from the close of 1926 to January 1928 was followed by a gradual but steady upward movement until in December 1928 they averaged 4 points above the level of January 1928, though they remained more than 7 points below the 1926 average. Since December, however, declines in fuels have offset increases in metals and building materials, so that the upward movement in the combined index for these groups has not con tinued. In March tendencies in commodity prices have continued to be highly irregular. PER CENT / \l i v e S t o c k & P r o d u c t s P r o d u c tio n Productive activity in leading industries showed prac tically no change in February from the high level of January, after adjustment is made for the usual sea sonal changes. Average daily production of pig iron increased to the highest level for any February except ing 1925, and after seasonal and growth allowance was the largest for any month since May 1926. Average daily production of steel ingots reached a new high record not only for February but for any month, and after seasonal and growth allowance was the largest since December 1925. Average daily production of bi tuminous coal increased, whereas usually there is a decline, and anthracite coal increased slightly. Total petroleum production reached a new high level for the month of February. Production of passenger automobiles increased fu r ther to a new high level, about 1.7 per cent above the previous record of last August, but output of motor trucks increased less than is usual in February. Cotton consumption, after seasonal and growth allow ance, increased to the highest level since November 1927, but silk consumption declined somewhat from the high level of January. Declines were also shown, after sea sonal allowance, in production of newsprint paper, lum ber, cement, and tobacco products, and in animal slaughterings. According to current trade reports, it appears that, in spite of some irregularity, productive activity as a whole continued at a high level in March. The steel mills con tinued to operate at close to capacity, and it seems to be practically assured that total March production will break all previous monthly records. Production of auto mobiles and of copper also appears to have been in un usually large volume, and output of lumber showed a seasonal expansion. (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1928 Pig iron................................................................. Steel ingots.......................................................... Cotton consumption........................................ Woolen mill activity*..................................... Silk consumption*............................................ Petroleum............................................................ Bituminous coal................................................ Tin deliveries...................................................... Leather, sole....................................................... Paper, to ta l......................................................... A i t c y n m o d c b iz s rta i5 & Me te r ic d s 1928 x ___ 1929 U. S. Bureau o f Labor Statistics W holesale Commodity Price Index and Group Indexes for Commodities W hich Have M ost Largely Affected the Composite Recently (1926 = 100 per cent) Dec. Jan. Feb. 105 115 104 88 124 115 86 100 103 104 107 94r 88 112 114 109 109 113 118 94 93 112 113 89 109 83r 122 98 89r 114 104 126 102 99r 113 113 106 96 127 116 92 112 89 120r 105 83 r 141 104 136 108 109 116 122 107 95p 109 118p 99 110 79 130 126 100 114 98 105 115 76 99 85 95 104 107 103 126 128 92 103 75 99 85 97 93. 135 103 92 89 110 105 84 118 102 82 106 91 108 87 109 103 113 101 106 91 115 117 96 129 171r 164 96 85 103 77 103 103 90 lllr 100 102 106 Consumers' Goods \ 1927 Feb. Producers’ Goods Copper, U .S . M in es....................................... L S 1929 Hogs slaughtered.............................................. Cattle slaughtered............................................ Sheep slaughtered............................................. Calves slaughtered......................................... Farm produce shipped................................. W heat flour......................................................... Sugar meltings, U. S ports........................ Gasoline................................................................ Anthracite coal.................................................. Paper, newsprint............................................... Printing activity............................................... Tobacco products............................................. Boots and shoes................................................. Automobile, passenger.................................... Automobile, truck............................................ * Seasonal variation not allowed for pPreliminary r Revised 107 86 107 93 p 175 155 31 FEDERAL RESERVE AGENT AT NEW YORK In d e x e s o f B u s in e s s A c t i v i t y It appears that both primary distribution and retail trade increased in February after allowing for the usual seasonal changes. February indexes of business activity are compared with those of recent months and a year ago in the following table. pared with sales in February 1928 were reported also in sales of groceries, m en’s clothing, cotton goods, silk goods, hardware, and stationery. Stocks of groceries, silk goods, and drugs continued to show an increase over last year, while stocks in most other lines showed decreases. Collections averaged some what slower than in February 1928, only three groups showing an increase. (Computed trend of past years=100 per cent; adjusted for seasonal variations) D e p a r tm e n t S to re T r a d e 1929 1928 Feb. Dec. Jan. Feb. 104 96 90 107 102 102 98 91 89 106 86 98 101 98 99 114 95 104 103 104 105p 117p 97 100 102 89 100 98 101 93 108 113 103 93 96 96 92 96 106 95 101 Bank debits, outside of N . Y . C it y .......... Bank debits, New York C it y ...................... Velocity of bank deposits, outside of New York C it y ............................................. Velocity of bank deposits, New Y ork City Shares sold on N . Y . Stock Exchange.. . . Postal receipts.................................................... Electric power.................................................... Employment in the United S tates............ Business failures................................................ Building contracts, 36 States....................... New corporations formed in N . Y S ta te. 102 135 115 183 108 185 112 187 104 138 196 95 107 96 114 151 127 121 201 330 89 103r 98 96 111 112 121 202 442 85 106 98 102 123 120 125 210 313 87 General price level........................................... Composite index of w ages............................. Cost of livin g...................................................... 173 221 170 178 226 171 179 224 172 179 225 170 Primary Distribution Car loadings, merchandise and misc......... Car loadings, other.......................................... Exports.................................................................. Im ports................................................................. Panama Canal traffic...................................... Wholsesale trade............................................... lOOp Distribution to Consumer Department store sales, 2nd D ist.............. Chain grocery sales.......................................... Other chain store sales................................... Mail order sales................................................. Life insurance paid fo r ................................... Advertising.......................................................... 99 102 104 98 General Business Activity V Preliminary 99 102 108 119 Leading department stores in this district reported only a slight increase in total sales in February as com pared with a year ago, due to one less selling day this year, but their average daily sales showed an increase of about 5 per cent. Newark and Bridgeport showed the largest increases, while New York City showed little change, and the Northern New York State, Hudson River Valley, and Westchester divisions reported sub stantial declines. The Capital District showed an in crease in department store sales for the first time since last July. Stocks of merchandise on hand at the end of February were slightly larger than a year previous. The per centage of outstanding charge accounts collected during the month was about the same as in February 1928. Locality N et Sales r Revised W h o le s a le T r a d e The average February sales of reporting wholesale firms in this district were only slightly higher than a year ago, due partly to one less business day than in February 1928. Increases continued to be reported in sales of drugs, paper, machine tools, and shoes; the in crease in the shoe sales was one of the largest in recent years. Jewelry sales, following decreases for nine con secutive months, showed a substantial increase over a year ago, while the sales of diamonds showed a small decline for the first time in four months. Decreases com- February 1929 compared with January 1929 Per cent of Accounts Outstanding January 31 Collected in February Percentage Change W* February 1929 compared with February 1928 New Y o rk ................................................................. Buffalo....................................................................... Rochester.................................................................. Syracuse.................................................................... Groceries........................... M en’s clothing......... .. Cotton goods— Jobbers. Silk goods*....................... Shoes................................... D rugs.................................. Hardware.......................... Machine to ols**............. Stationery......................... Paper................................... D iam onds.......................... Jewelry............................... — 1 2 .7 + 5 4 .2 + 2 4 .3 — 9 .4 + 1 3 .4 — 2 2 .7 — 2 .6 + 1 5 .1 — 9 .8 — 4 .0 — 2 6 .0 + 2 9 .8 Stock end of month N et Sales Stock end of month — 0 .2 + + — + + + — 7 .8 + 1 5 .5r — 1 7 .3 + 2 1 .6 — 9 .7 j- — 4 .1 — 11.1 — 7 .8 ’ 6 .9 4 . 6r — 3 .1 4 .8 + 1 7 .4 + 9 .7 7 .4 3 .1 — 9 .9 + 6 7 .4 — 5 .8 + 3 .2 — 3 .5 1 .5 + 7 .0 1928 4 .6 j— 5 .3 ) 1929 7 0 .5 4 0 .7 6 5 .8 4 1 .4 ’ 4 8 .3 3 4 .8 4 4 .9 4 1 .7 * '4 3 ‘ 2 2 9 .3 3 9 .0 3 7 .4 7 4 .9 6 6 .3 * *76 A 6 4 .4 2 5 .2 j + 0 .9 Weighted A v e ra g e .. + 7 .8 5 0 .9 | * Quantity not value. Reported by Silk Association of America * * Reported by the National Machine Tool Builders’ Association r Revised 2 6 .2 4 7 .8 Stock on hand end of month 1928 1929 + — + + + — — 1 .8 1 .1 0 .8 4 .3 6 .4 1 .4 1 .4 5 3 .9 5 0 .0 4 0 .3 5 4 .6 4 8 .3 3 9 .3 47*4 4 6 .7 3 4 '.i 38*4 Bridgeport................................................................ Elsewhere.................................................................. Northern New York S ta te ............................ Central New York State................................ Southern New York S ta te............................ Hudson River Valley D istrict..................... Capital District................................................. Westchester D istrict........................................ — 0 .4 — 2 .5 — 4 .5 — 1 .4 + 1 1 .8 + 5 .9 — 4 .2 — 1 3 .6 — 5 .4 — 3 .7 — 9 .8 + 1 .5 — 7 .7 All department stores...................................... + 0 .8 + 2 .0 4 9 .5 4 9 .8 Apparel stores......................................................... + 2 .6 — 6 .7 4 7 .7 4 4 .9 Comparisons of sales and stocks in February with those of last year are given in the following table. Commodity N et Sales Per cent of Accounts Outstanding January 31 Collected in February Percentage Change February 1929 compared with February 1928 Musical instruments and radio............. Toys and sporting goods.......................... W om en’s and Misses’ ready-to-wear. . Cotton goods................................................ W om en’s ready-to-wear accessories . . Luggage and other leather g o o d s .. . . M en’s furnishings........................................ Linens and handkerchiefs........................ Books and stationery................................ Home furnishings........................................ Toilet articles and drugs.......................... M en’s and B oys’ w ear.............................. Silverware and jewelry............................. Silks and velvets......................................... W oolen goods............................................... Miscellaneous............................................... N et Sales Percentage Change February 1929 compared with February 1928 Stock on Hand Percentage Change February 28, 1929 compared with February 29, 1928 + 2 6 .0 + 1 4 .9 + 8 .4 + 7 .2 + 6 .0 + 3 .6 + 3 .5 + 3 .5 + 2 .9 + 1 .9 + 1 .4 + 1 .0 — 2 .1 — 3 .2 — 4 .8 — 6 .1 — 6 .3 — 2 5 .8 — 1 0.5 — 3 3 .8 — 4 .4 — 4 .2 + 1 2 .5 — 2 .3 — 1 .7 + 7 .5 + 6 .6 — 6 .5 — 0 .3 — 4 .9 + 1 7 .9 + 0 .9 + 8 .0 + 8 .4 — 6 .4 — 6 .5 — 2 2 .3 — 8 .0 32 MONTHLY REVIEW, APRIL 1, 1929 Business C on ditions in the U n ited States (Summarized by the Federal Reserve Board) NDUSTRY and trade continued active in February and the first part of March and there was a growth in the volume of bank loans. Borrowing at Reserve Banks increased during the period and money rates advanced further. I P r o d u c t io n Production continued at a high rate throughout February and the first half of March and was substantially above a year ago. Automobile output was at a record rate in February, and there was also an unusually high daily average production of copper and iron and steel. Large output in the iron and steel industry reflected demands from manufacturers of automobiles, machine tools, and agricultural implements, and from railroad companies. Preliminary reports for the first half of March indicate further expansion in automobile and iron and steel production. During February the daily average output of coal and crude petroleum also increased, and production o f cotton and wool textiles continued large, while silk output declined somewhat from the unusually high level of January. There was also some decline from January in the production of lumber and cement, and in the output o f meat packing companies. The high rate of activity in manufacturing during February was reflected in a larger than seasonal increase in factory employment and payrolls, both of which were considerably above the level of February 1928. Building activity declined further in February, and the value of contracts awarded was over 20 per cent smaller than a year ago. Residential building contracts showed the largest decline in comparison with February 1928, while those for public works and utilities were only slightly smaller in value, and commercial and industrial building awards increased. During the first half of March there was some seasonal increase in total building awards, but they continued to be substantially below a year ago. Index Number of Production of Manufactures and Minerals Combined, Adjusted for Seasonal Variations (1 9 23 -2 5 average = 100 per cent) D is t r ib u t io n 1925 1926 1927 1928 1929 Federal Reserve Board’ s Indexes of Building Con tracts Awarded, Based on Reports of the F. W . Dodge Corporation (1 9 23 -2 5 aver age — 100 per cent) MILLIONS OF DOLLARS MILLIONS OF DOLLARS 2000 RESEFIVE BANK CREDIT JJ \ Total A [ \ 5 Discounts foi Member Bank / r / r' \-ZdO / | Acceptances 1926 P r ic e s U.S. Securitie: V /W - yy 1925 1927 ^ ZIO 1928 192S Reserve Bank Credit: Monthly Averages of Daily Figures for 12 Federal Reserve Banks (L at est Figures are Averages of First 21 days of March) PEHCENT 7 PERCENT _ _______ j- .— MONEY :_______ lRATES INN_____ EWYORK f q jr - U 1 m m m mCommittow/Paperffcz? -- fleserw,BankDiscount --- Accepft mcsJtate | 1------t . HWD 1926 1927 1928 1929 Money Rates in the New York Market In February shipments o f commodities by rail increased more than is usual for the season, reflecting larger loadings of coal and coke and mis cellaneous freight, which includes automobiles. During the first two weeks of March, freight-car loadings continued to increase. Sales of wholesale firms were generally smaller in February than a year ago. In comparison with January, sales o f dry goods, shoes, and furniture increased seasonally, while sales o f groceries and hardware were smaller. Department stores reported about the same daily volume of sales in February as in the preceding month, and larger sales than a year ago. 7 The general level of wholesale prices declined slightly in February, and was approximately the same as a year ago. The decline from January reflected primarily decreases in the prices o f hides and leather, livestock, and meats, and small declines in the prices o f wool, cotton, and woolen goods. The influence o f these declines on the general average was partly offset by increases in the prices of copper, lead, iron and steel, rubber, and grain. During the first two weeks o f March, prices o f wool and petroleum con tinued to decline, and rubber prices receded somewhat after a marked rise in February, while leather prices declined sharply. Prices of copper rose further and there were small increases in prices of hides, raw cotton, and certain grades o f lumber. B ank C r e d it Between the middle of February and the middle o f March there was a rapid growth of loans at member banks in leading cities. The increase was in loans chiefly for commercial purposes, wThich on March 13 were more than $200,000,000 larger than four weeks earlier. Investments of the reporting banks declined further during the period. Total volume o f Reserve Bank credit declined somewhat between Febru ary 20 and March 20, reflecting for the most part some further gold imports from abroad. Member bank borrowing at Federal Reserve Banks was nearly $80,000,000 larger on March 20 than four weeks earlier, while acceptances showed a further decline of about $120,000,000 during the period. Security holdings showed relatively little change. Money rates continued to advance. Rates on 4-6 month commercial paper rose from 5 y2 -5 % to 5% *6 per cent and rates on 90 day bankers acceptances increased from 5 to 5 % per cent on February 13 to 5 ^ per cent on March 21. Open market rates for collateral loans also increased.
@FedFRASER