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M ONTHLY

R E V IE W

of Credit and Business Conditions
S e c o n d
Federal E eserve A gen t

F e d e r a l

Federal E eserve Bank, New York

M o n e y M a r k e t in M a r c h
A further large increase in member bank reserves
occurred during the past month, due chiefly to the con­
tinued inflow of gold from other countries and to Gov­
ernment expenditures of funds previously accumulated
in the Treasury. The reserve balances of all member
banks in the Federal Reserve Banks rose from an
average of slightly below $3,000,000,000 in the last
week of February to above $3,450,000,000 at the
middle of March, and thereafter remained in excess of
$3,400,000,000. The reserves which member banks are
required by law to maintain against their deposits are
estimated to amount in the aggregate to less than
$2,000,000,000. Consequently, member banks have had
excess reserves varying from around $1,000,000,000 in
the last week of February to above $1,400,000,000 dur­
ing the latter half of March, an excess of 50 to 70
per cent.
At New York, where the incoming gold was received,
excess member bank reserves rose from practically
nothing at one time in the third week of February to a
new high level of more than $400,000,000 during most of
March, an, excess of more than 50 per cent over reserve
requirements. In Chicago, excess member bank reserves
were around $200,000,000 in the latter part of March, or
more than 100 per cent of their required reserves, and in
all other member banks throughout the country excess
reserves rose to around $800,000,000, indicating an aver­
age excess of about 75 per cent. These widely distributed
excess reserves are unprecedented in volume and con­
stitute a basis for a very large potential expansion of
bank credit and of bank deposits.
During March the addition to the monetary gold stock
of the United States, which resulted chiefly from gold
imports from other countries, amounted to approximately
$250,000,000, bringing the total increase since the begin­
ning of February to about $660,000,000. This is the
equivalent of about $390,000,000 at the former valua­
tion of gold in this country, and is an amount sufficient
to raise the gold stock of the United States, measured by
weight rather than by dollar value, to the highest amount
ever reached in any year except 1931. The dollar value
of the gold stock at the end of March, reflecting the
effects of revaluation as well as the recent gold inflow,
was more than 60 per cent above the high point of 1931,
and was more than double the highest figure ever reached
prior to 1922.
A ft e r the first week of M arch the gold inflow dim m -




R e s e r v e

D is tr ic t
A p ril 1, 1934

ished in volume, but still continued in moderate amount
to the end of the month, and some further imports are
scheduled for the coming weeks. All of the incoming gold
has been purchased by the United States Assay Office,
and payment has been made in checks drawn on the
Treasury’s deposit account in the Federal Reserve Bank
of New York. When the gold bullion checks are pre­
sented for payment by member banks, the proceeds are
credited tcx their reserve accounts. In order to maintain
its deposit balance, the Treasury has made deposits in
the gold certificate account of the Reserve Bank in Wash­
ington in exchange for equivalent credits to the Treas­
ury’s account in the New York Reserve Bank. Thus the
gold inflow has substantially increased the reserves both
of the Federal Reserve Bank and of member banks.
In addition, the Treasury during the past month has
used a substantial amount of previously accumulated
free gold for the purpose of meeting current Government
expenditures. Prior to March the Treasury had accumu­
lated approximately $300,000,000 of free gold, in addition
to the proceeds of the revaluation of other gold previously
held by the Treasury and the Reserve Banks.
This
$300,000,000 included gold purchased by the Reconstruc­
tion Finance Corporation and the Treasury at home and
abroad during recent months, and also gold which had
been released gradually over several months by the retire­
ment of gold certificates which were sent in to the Treas-

Excess Reserves Held by New York City and Other Member
Banks (Figures for banks outside New York partly estimated)

26

MONTHLY REVIEW, APRIL 1, 1934

nry for redemption. The use of a considerable amount of
this gold made it unnecessary for the Treasury to draw
on its balances in depositary banks to meet Government
expenditures during the early part of March, and like
gold imports, had the effect of strengthening further the
reserve position of the Federal Reserve Banks, and of
increasing further the excess reserves of member banks.
In the latter part of March the collection of first
quarter income tax payments on 1933 income caused
temporary withdrawals of funds from the commercial
banks, but the effect of these tax collections was soon off­
set by Government expenditures. Near the end of March
the Treasury resumed withdrawals of funds from its
large balances in depositary banks in order to meet Gov­
ernment disbursements.
M

oney

R ates

Reflecting the further large accumulation of excess
reserves in New York and elsewhere, rates for open mar­
ket loans, and yields on short term investments in the
New York money market declined still further in March.
Short term Government securities especially were in
heavy demand, and yields on securities maturing within
6 months declined almost to the vanishing point. Rates
for bankers acceptances showed an accompanying reduc­
tion from y 2 per cent to
per cent for 90 day unin­
dorsed bills, which compares with a quotation of 2 per
cent a year ago. Rates on prime open market commerical
paper of 4 to 6 month maturity were also reduced
per
cent to 1 and l 1 per cent at the end of March, which
/^
compared with quotations of 2 % to 3*4 per cent a year
ago. In general, short term money rates at the end of
March were at the lowest levels on record.
Money^Rates at New York
Mar. 31, 1933 Feb. 28, 1934 Mar. 29, 1934
Stock Exchange call loans.....................
Stock Exchange 90 day loans...............
Prime commercial paper—4 to 6 month
Bills—90 day unindorsed.......................
Customers’ rates on commercial loans..
Treasury securities
Maturing June (yield).......................
Maturing September (yield)..............
Maturing December (yield)..............
Average rate on latest Treasury bill
sales—91 day issue.............................
182 day issue.............................
Federal Reserve Bank of New York re­
discount rate.......................................
Federal Reserve Bank of New York
buying rate for 90 day indorsed bills
* Nominal

3
2
2M-3M
2
f 4 .79

1
* x -l

1M-1M
K
f2.25r

1

*H-1
l-l X

M
t2.31

No yield
0.83
0.75

0.03
0.45
0.62

No yield
No yield
0.11

1.72

0.57
0.62

0.08
0.19

3X

IX
X

IX
X

2

f Average rate of leading banks at middle of month

M em ber B a n k

r Revised

C r e d it

The volume of member bank credit on the whole showed
comparatively little change during the four weeks ended
March 21, as some reduction in the last week of February
was followed by a gradual increase during March. In
the principal New York City banks, total loans and in­
vestments showed a net increase of about $100,000,000,
due to a further increase of nearly $165,000,000 in the
Government security holdings of the reporting banks
which carried such holdings to a new high level, despite
the fact that there was no net increase during the month
in the volume of Government securities outstanding.
Other security holdings showed an increase of approxi­




mately $90,000,000 for the four week period, which
probably represented in part funds advanced to the City
of New York, and in part investments in Reconstruction
Finance Corporation notes of the proceeds of new capital
obtained from the Corporation. Security loans showed a
net reduction of $82,000,000, and other loans declined
$70,000,000. The decline in the latter group of loans
probably represented in part the repayment of temporary
loans made in February against gold which was in
process of being imported to the United States from
other countries.
For all other weekly reporting member banks through­
out the country there was a decline of $78,000,000 in total
loans and investments during the four weeks ended
March 21. The Government security holdings of these
banks showed a reduction of about $100,000,000, follow­
ing a very large increase in the preceding month, but
there was a small increase in other investments and prac­
tically no change in the volume of loans, either in loans
on securities or in other loans.
The net demand deposits of the reporting member
banks showed a further increase of $477,000,000 to a new
high level since 1931. Nearly $370,000,000 of this in­
crease was in New York City and included an increase of
about $195,000,000 in the balances of out-of-town banks
with their New York City correspondents. There was
also an increase in other deposit accounts, however, which
amounted to about $175,000,000 in New York and
$108,000,000 in the 90 other cities covered by the weekly
reports.
B il l M

arket

Following a continued strong investment demand for
bills during the first week of March and a decline in
yields on short term Government securities, bill dealers
reduced their rates by ^ per cent on March 8. The
offering rate became ^ per cent for maturities up to
90 days, % per cent for 4 month bills, and % per cent
for 5 and 6 month bills; these rates are as low as have
ever been quoted in the American bill market. The
reduction in rates had little effect on the supply of new
bills coming into the market or on the investment de­
mand, and consequently dealers’ portfolios remained
small. Throughout the month, accepting and discount­
ing banks were disposed to withhold bills from the
market in view of their strong reserve position, and at
the same time they were anxious to make additional in­
vestments in bills. The turnover of bills in the market
represented largely purchases and sales by banks for the
purpose of maintaining diversification in their holdings.
Federal Reserve bill holdings declined about $30,000,000
further in March as a result of maturities.
The total volume of bankers bills outstanding at the
end of February was $750,000,000, as compared with
$771,000,000 at the end of January and $704,000,000 in
February 1933. The decline from January to February
was the result of a decrease in the volume of export bills,
which had shown a sizable increase in January, and a
decline in domestic warehouse bills, offset in part by a
rise in import bills and bills based on goods stored in or
shipped between foreign countries. Despite the February
decline in bills outstanding, the volume of bills held by
the accepting institutions increased $14,000,000 further

FEDERAL RESERVE AGENT AT NEW YORK

to $581,000,000, or 77% per cent of the amount out­
standing.
C o m m e r c ia l P ap e r M

arket

The prevailing rate for open market commercial paper
showed a gradually declining tendency during March,
coincident with ease in other divisions of the money
market. The month began with prime names of 4-6
month maturity offered at 1 % and 1 % per cent, but
shortly afterward sales at the lower rate increased and
the 1 % per cent rate was dropped from the prevailing
range. Around mid-month, there was a further decline
to a range of 1-1% per cent which is a new low level for
this type of borrowing. Some high grade paper of 90 day
maturity was sold in the second half of the month at
% per cent. With bank reserves largely in excess of the
required amounts, investment demand for commercial
paper on the part of the banks continued very active
during March, and dealers generally reported insufficient
supplies of new paper to fill orders.
A t the close of February, there was $117,000,000 of
commercial paper outstanding, according to reports of
dealers. This amount was 8 per cent larger than the
volume a month earlier and 39 per cent in excess of the
February 1933 amount.

the guilder began to rise toward the end of the second
week, but Swiss francs failed to gain until the 20th when
all three exchanges showed movements similar to those
of the French currency. The reichsmark, after moving
irregularly upward during the first three weeks of
March, fell suddenly from $0.3970 to $0.3954 between
the 17th and 19th, but subsequently rose temporarily to
$0.3986 and closed on the 28th at $0.3963. Lire, though
somewhat more irregular, fluctuated in manner similar
to the French franc, while the Scandinavian currencies
tended to follow sterling.
The yen fluctuated irregularly between $0.2998 and
$0.3020 without any well defined trend.
Canadian
exchange made a small net gain for the month.
Closing cable rates at New York

Exchange on
Denmark............................
France................................
Germany...........................
Norway..............................
Spain..................................
Sweden..............................

Par of
Exchange
$ .2354
.4537
8.2397
.0663
.4033
.6806
.0891
.4537
.3267
.4537
.3267

Foreign E xch ange
Foreign exchange quotations were steadier during
March than in any month since March 1933. Sterling
exchange, as the accompanying diagram shows, rose
irregularly throughout most of the month, but the range
of fluctuation was relatively narrow, the daily closing
rates varying during the month between a low of $5.06%
and a high of $5.12%. The French franc, whose recent
course also appears in the diagram, remained practically
unchanged from the end of February through March 19
when the closing quotation was $0.0658. A sharp upward
movement then carried French exchange to $0.0660%
on the 21st, or somewhat above the estimated gold im­
port point to the United States, but an equally sudden
reaction brought the rate down to $0.0657% on the 24th,
and that level was approximately maintained for the
rest of the month.
Of the other principal gold currencies, the belga and

D aily Q uotations for the Pound Sterling and the French F ranc
at N ew Y o rk (L a te s t rates are for M arch 2 8 )




27

Mar. 31, 1933 Feb. 28, 1934 Mar. 29, 1934
$ .1395
.1531
3.4225
.03928
.2385
.4035
.0513
.1755
.0845
.1815
.1931

$ .2330
.2267
5.0650
.06575
.3960
.6718
.0857
.2550
.1357
.2615
.3225

$ .2333
.2290
5.1288
.06570
.3963
.6727
.0859
.2575
.1363
.2646
.3225

1.6931
.7187
.2026
1.7511

.8275
.2539
.0762
.4775

.9938
.3377
.0863
.7900

1.0000
.3420
.0865
.7900

.8440
.6180

Argentina..........................
Brazil.................................
Uruguay............................

.2138
.2580
.2901

.2995
.3825
.3506

.3020
.3875
.3456

* March 31, 1933 quotation for tael; 1934 quotations for new yuan dollar
created April 6, 1933, with silver content 71.5 per cent of tael.

G o ld M o v e m e n t
Gold imports into the United States continued during
March, though at a slower rate than in February.
Nevertheless, by the end of March, imports of gold at
New York by commercial and private banks for sale to
the Treasury since the first of February had reached
approximately $610,000,000, of which about $229,000,000 was purchased by the New York Assay Office
in March and $381,000,000 in February.
The commercial and private bank imports at New
York during March were composed of $150,000,000 from
England, $31,700,000 from France, $13,700,000 from
Holland, $12,500,000 from India, $10,700,000 from
Canada, $5,300,000 from Switzerland, and $4,700,000
from Mexico. The effect of these shipments on the
monetary gold stock of the United States was supple­
mented by releases of $1,650,000 of gold previously
earmarked for foreign banks at the Federal Reserve
Bank of New York. During March, there were also
imports of $28,000,000 of gold from France which were
without effect on the monetary gold stock since this
represented gold previously acquired abroad and
included in the gold stock, and there was an import of
$2,500,000 from Colombia which was immediately
earmarked.
During February and March, the monetary gold stock
of this country has risen about $660,000,000, reflecting,
in addition to the import and release from earmark
transactions at New York, some gold imports from the

28

MONTHLY REVIEW, APRIL 1, 1934

Orient on the Pacific Coast, return of United States
gold coin from domestic holders, and the addition of
newly mined and scrap gold.
Security M a rk e ts
Neither bonds nor stocks showed important changes
during March in the general level of prices. Trading in
bonds was moderately large, but in the stock market the
turnover remained small, averaging about 1,300,000
shares daily.
United States Government bonds were the strongest
section of the bond market. In the first week of March,
Treasury bonds advanced about % point, and after the
March 8 announcement that the Treasury’s March 15
financing would be limited to an issue offered in exchange
for the maturing issue, Government bond prices ad­
vanced further. Treasury bonds showed an additional
advance of 1 point through March 19, or a total gain of
i y 2 points from the end of February, and Liberty Loan
issues rose further for an aggregate gain of % of a
point. As a result of this advance together with the
increases of previous months, average prices of Govern­
ment bonds by March 19 had recovered virtually all of
the ground lost in the sharp decline of last November,
and the average yield on long term Treasury bonds was
very close to the previous low point reached just before
the middle of 1931. After March 19 some irregularity
developed, but Government bond prices closed the month
only Ys point below the high point.
Domestic corporation bonds advanced further during
the first half of March, and the currently available bond
averages rose about 2 points to new high levels since
before the September 1931 collapse of bond prices.
Subsequently, these bond averages lost about 1 point
but in the last week of the month a slightly firmer
tendency again was apparent. Although the prices of high
grade bonds have risen to levels which compare favorably
with those prevailing in the 1928-1930 period, many
issues, especially medium grade bonds, still have a con­
siderable distance to advance before the 1928-1930 level
is fully restored. Foreign dollar bonds did not do as
well as domestic issues in March, for a moderate advance
early in the month was followed by substantial declines
which reduced average prices somewhat below those of
the end of February.
In the stock market, no consistent tendency was evi­
dent, but as a result of irregular changes from day to
day, the general level of prices at the close of the month
was slightly lower than at the end of February. The
recent level of about 84 for the Standard Statistics Com­
pany daily index of 90 stocks compares with 94 at the
conclusion of the January advance in prices and with 80
at the opening of the year.
N e w F inancing
The total of new securities publicly offered during
March showed a slight increase over the amounts in
immediately preceding months, but the volume still re­
mained small. The principal offerings of the month were
a $30,000,000 serial bond issue of the Commonwealth of
Pennsylvania, which was sold at prices to yield 3.045 to
3.134 per cent, depending upon maturity; a $25,000,000




issue of short term Federal Intermediate Credit Bank
debentures; and a $15,000,000 issue of American Water
Works and Electric Company bonds, the registration of
which was reported last month. A number of small
State and Municipal offerings made up the balance of
March security flotations.
United States Treasury financing during March was
of comparatively limited volume, and no new funds were
raised by the operations, as the Treasury has not been in
the market for additional funds in March for the first
month since last October. A new issue of 3 per cent
Treasury notes maturing in 1938 was put out on March 15
in the amount of $455,000,000 to replace a maturity of
$460,000,000 of certificates of indebtedness which ma­
tured on March 15. The amount of the new issue was
limited to the amount of maturing certificates tendered
for exchange. Likewise, new Treasury bill issues of
$300,000,000 replaced maturities of the same amount.
One-half of the bills sold were of 3 month maturities
and half were of 6 month maturities. The average rate
for the shorter bills declined from 0.57 per cent on the
last issue in February to 0.08 per cent on the March 28
issue, and the rate on the 6 month bills declined from
0.62 per cent on the last February issue to 0.19 per cent
on the last March issue. In both cases, the rates for the
March 28 issues constituted new low levels for these
types of securities.
C o m m o d ity Prices
The average level of wholesale commodity prices
showed a small rise during the early part of March,
but receded slightly later in the month, so that the
widely inclusive commodity price index of the Bureau of
Labor Statistics showed almost no net change during
the four weeks ended March 24. The small advance and
the subsequent recession during March in the index
chiefly reflected the movements in prices of actively
traded raw commodities. Prices of manufactured and
industrial products were generally stable during this
period.
During the first half of March the price of rubber
advanced 1 % cents to 11% cents a pound, the highest
level in almost four years, but subsequently lost a part
of this rise. Grain prices also rose in the early part of
the month and later receded, showing little net change
for March as a whole. Cotton and silver remained near
their recent highs until about the middle of the month
and thereafter showed small recessions. Scrap steel,
following an advance of $3.25 in the previous three
months, declined 50 cents to $14.25 a ton at Pittsburgh
during March, when the expansion of operations in the
steel industry was checked. Raw sugar declined 35
points to 2.95 cents a pound, as compared with a Feb­
ruary high of 3.42 cents, and silk showed a moderate
downward tendency during the month.
C orporation E arnings in 1 9 3 3
Due largely to increased profits in the automobile
industry, aggregate net earnings of industrial corpora­
tions do not appear to have showT the usual seasonal
n
decline during the last quarter of 1933, and as a conse­
quence the trend of corporate profits was upward

29

FEDERAL RESERVE AGENT AT NEW YORK

throughout the year. For 1933 as a whole, earnings
reports of 743 industrial and mercantile companies
which have been published to date indicate net profits
of $673,000,000, as compared with virtually no profit
for these same companies in 1932 and with profits of
$753,000,000 in 1931. Aggregate profits, however,
remained small in comparison with 1929 or even 1930,
as is indicated in the accompanying diagram which also
shows the yearly changes that have occurred in the
earnings of a number of the more important groups of
companies relative to their position in 1929.
Of the 35 groups of companies shown in the table,
12 had profits in 1933 following deficits in 1932, 8
showed increased profits, and 10 showed smaller deficits,
while only 5 groups earned smaller profits in 1933 than
in 1932, and in these cases the reductions were not
marked, except for the tobacco companies whose profits
had been maintained remarkably well until last year.
Analysis of the 743 individual companies shows that
64 per cent reported at least some net profit in 1933,
as against only 44 per cent in 1932. One-half of all the
companies either had profits in 1933 following deficits
in 1932, or reduced the amount of their deficits, and
28 per cent of all companies increased their profits
from 1932 to 1933. Of the remaining 22 per cent of the
companies, 16 per cent had reductions in the 1932 level
of profits, some developing deficits, and 6 per cent
reported larger deficits than in 1932.
Net operating income of the Class I railroads, also
shown in the diagram, increased about 45 per cent from
1932 to 1933. Consequently, in 1933 the railroads as a
group approximately covered their interest payments
and other fixed charges out of earnings, whereas in 1932
they earned only 80 per cent of their fixed charges.
Net operating income of telephone companies and net
earnings of other public utility companies underwent
further moderate reductions in 1933, but nevertheless
these companies did not show as large a shrinkage in
earnings from the 1929 level as did industrial corpora­
tions and railroads.
B IL IN
U D G
SPL S
U P IE

A T MB E
U O O IL
10
0

"11” i l|
(
:,T

1
1
’ 31

8 H 1
4

’ 3 2 ’ 33

1929

f3 0

’ 31

’ 32

1931

1932

29.0
26.9
83.7
163.6
23.4
4.5

12.2
21.6
65.4
87.2
— 8.1
2.1

0.2
— 2.1
12.8
— 34.1
— 9.0
— 0.7

8.2
21.9
83.7
85.5
20.6
1.5

23
12
22
16
14
8
9
12

45.6
11 2
— 3.0
3.8
— 2.0
—20.6
2 4
12.5

25 2
11.1
— 2.7
3.0
— 2.3
— 18.7
— 2 1
— 7.3

11.8
4.8
— 17.8
— 3.2
— 2.5
— 16.9
— 8.3
— 18.9

43.2
15.8
22.4
3.2
2.3
7.4
1.8
3.4

Bakery products...........................
Oil..................................................
Tobacco.........................................
Printing and publishing...............
Aviation.........................................
Heating and plumbing.................
Building supplies..........................
Steel...............................................
Machinery.....................................
Electrical equipment....................
Agricultural implements..............
Railroad equipment.....................
Coal and coke...............................
Realty............................................
Miscellaneous...............................

47
6
31
44
10
5
11
42
21
11
8
11
37
30
40
26
6
19
17
7
105

26.1
24.8
172 3
170.1
25.9
21.6
49.4
137.9
121.3
30.5
1.2
12.2
35.7
174.3
39.9
99.4
26.2
50.4
16.4
7 7
168.4

5.5 — 18.0
— 2 1 — 23.6
80.5
134.5
99.0
142.1
14.3
22.8
15.6
21.0
30.3
40.7
38.5
—46.4
118.6
123.5
5.9
18.0
1.3 — 3.0
0.4 — 9.7
— 5.5 — 28.8
— 11.9 — 147.4
— 5.4 —25.6
49.4 — 14.6
— 6.0 — 17.5
— 4.3 — 17.3
1.3 — 16.9
3 0 — 3 2
24.3
84.2

3.2
2.3
111 .4
109.3
15.0
15.4
29.1
29.2
71.8
3.0
— 0.1
— 1.9
— 9.7
— 63.1
— 11.0
— 7.4
— 9.8
— 11.1
— 11.6
— 2.4
90.5

Automobiles..................................
Meat packing...............................
Shipping.........................................
Mining and smelting (excl. coal,
coke, and copper).....................
Leather and shoes.........................
Miscellaneous textiles..................
Silk................................................
Clothing........................................
Copper...........................................
Automobile parts and accessories
(excl. tires)................................
Motion picture.............................
Chemicals and drugs....................
Miscellaneous food products........
Confectionery...............................

1933

Total 35 groups.....................

743

1,792.7

752.7

17.5

673.0

Telephone (net operating income)
Other public utilities (net earnings)

103
67

270.7
400.9

273.1
372.9

191.6
301.2

183.7
279.3

Total public utilities.............

170

671.6

646.0

492.8

463.0

Class I Railroads (net operating
income)......................................

150

868.9

525.6

326.3

474.3

— Deficit

B alance o f P a y m e n ts of the U n ite d States
A preliminary estimate of this country’s balance of
payments for 1933 has recently been issued by the
Department of Commerce. According to this estimate,
the United States surplus of receipts on current
account increased moderately in 1933, being placed at
$193,000,000 as against $131,000,000 in 1932 and

SEL
TE

O
IL

8
40

’ 33

FO &
OD
FO POUT
OD RDCS

C E IC L
HM A
& DU
RG

1930

11
18
35
12
9
8

Office equipment...........................
Household equipment..................

Ii
42

1929 ’ 3 0

No. of
Cos.

Corporation group

MT L
EAS
& M IN
IN G

M C IN R
AH EY
IO
O

IO
O

(Net profits in millions of dollars)

1929 ’ 3 0

’ 31

’3 2

’ 33

SOE
T RS

1929 ’ 3 0

’31

’ 32

’33

1929 ’ 3 0

’ 31

’32

*33

ALL
IN U T IA S
DSR L

TBCO
OAC

1929 ’ 3 0

’ 31

*32 *33

CLASS I
R
AILR A S
OD

PR O FIT

1929 *30

*31

’ 32

An n u al N e t




*33

Profits

1929 *30

*31

'3 2

*33

1929 ’ 3 0

’31

’3 2

’33

1929 *30 ’ 31

’32

*33

1929 ’3 0

’ 31

0 .4 I
*32 *33

1 2 ’30 *1 ’32 ’33
99
3

or D eficits o f Industrial and M ercantile Concerns, and N e t O perating Incom e o f C lass I R ailroads
in 1 9 3 3 , Compared w ith P revious Four Y e a rs ( 1 9 2 9 = 1 0 0 per cen t)

30

MONTHLY REVIEW, APRIL 1, 1934

$160,000,000 in 1931. This increase is attributable to a
pronounced falling off in expenditures of American
tourists abroad, in remittances of immigrants to foreign
countries, and in payments to foreigners for other
services. These reductions in payments made abroad,
which were probably due at least in part to the depre­
ciation of dollar exchange, were not fully counter­
balanced by continued declines in this country’s favor­
able balance of merchandise trade, in war debt receipts,
and in income from private investments abroad.
As in the previous two years the movement of long
term capital was inward during 1933. Virtually no
new foreign issues were underwritten in this market,
while sinking fund and redemption payments on out­
standing foreign issues, although diminished from the
previous year’s level because of defaults, caused some
reduction in the long term debt of foreign countries to
the United States. In addition, there was a substantial
repatriation of German, British, and other foreign dollar
securities during 1933, stimulated no doubt by the
discount on dollar exchange following this country’s
departure from the gold standard in April.
A heavy outward movement of short term funds,
estimated at $509,000,000, occurred in 1933 partly dur­
ing the development of the banking crisis early in the
year, and partly during the period following the suspen­
sion of gold payments by the United States in April,
when the dollar depreciated in value in terms of foreign
currencies. The magnitude of this movement is not fully
reflected in the estimate given above, because this figure
represents the net outflow after deducting a substantial
inward movement of funds which resulted from the
large repayments of German credits effected in 1933.
During February and March the outward movement
of short term funds was reflected in gold withdrawals,
but following the suspension of gold payments the
dollar funds which became available to foreigners were
utilized by them in repatriating foreign dollar securities,
repaying credits, and meeting the surplus of payments
due to the United States on current transactions.
The following table shows the net amounts due the
United States by foreign countries or due foreign coun­
tries by the United States on account of various types
of transactions.

P rodu ction

N et figures in millions of dollars
( + represents cash claims against foreigners; — represents cash claims against U.S.)
1932
I. Current Account
Merchandise.............................................................................
Tourist expenditures............................................................
Immigrant remittances and charitable contributions
Income from foreign investments...................................
W ar debt receipts.................................................................
Other current item s..............................................................

1933

+247
— 375
— 163
+393
+ 99
— 70

+152
— 220
— 107
+367
+ 20
— 19

In March the average level of basic industrial opera­
tions was higher than in the previous month, but a
slackening of the upward tendency was reported in some
of the principal manufacturing lines in the latter part
of the month. Although the output of the steel, auto­
mobile, and cotton textile industries for March as a
whole appears to have increased considerably from Feb­
ruary, even after seasonal adjustment, weekly estimates
of activity in these industries indicated an interruption
of the upward movement in the second half of the
month. Thus, for example, the operating ratio in the
steel industry rose from a February average of 43 per
cent of capacity to about 50 per cent early in March,
but remained at or slightly below this level during the
remainder of the month. The output of coal and electric
power in the first half of March did not show the usual
seasonal recessions, probably owing in part to the un­
usually cold weather in that period.
In February, the seasonally adjusted index of indus­
trial production computed by the Federal Reserve Board
rose 3 points to 81 per cent of the 1923-1925 average,
following increases of equal magnitude in the previous
two months. The index for February was about midway
between the July 1933 high point and the low point
reached in the summer of 1932.
(Adjusted for seasonal variations and usual year to year growth)

1933

1934

Feb.

Dec.

Jan.

Feb.

Tin deliveries......................................................

18
26
35
39
45

41
52
59
58
45

41
45
56
58
42

41
53
54
59

Automobiles
Passenger cars....................................................
Motor trucks......................................................

25
29

21
74

36
94

50p
83p

Fuels
Bituminous coal.................................................
Anthracite coal..................................................
C ok e.......................................................................
Petroleum, crude..............................................
Petroleum products..........................................
Electric power....................................................

66
77
39
69
64
64

65
75
56
68
62
65

67
103
55
69
65
64p

113p
60
68p

Textiles and Leather Products
Cotton consumption........................................
W ool mill activity............................................
Silk consumption..............................................
Shoes......................................................................
Rayon deliveries...............................................

77
86
55
92
74

65
75
42
91
103

77r
90
60
102p
99

82p
89p

Foods and Tobacco Products
Livestock slaughtered.....................................
Wheat flour..........................................................
Sugar deliveries.................................................
Tobacco products.............................................

88
88
80
77

95
82
87
80

103
92
77
88

95
91
88p
85

37
39
23
60
66

30
75
34
66
76

42

55

38
63
73r

33

Metals

77 p

65p

60

Miscellaneous

Printing activity...............................................
Newsprint paper...............................................
p Preliminary

T o ta l................................................................................

+131
— 451
+217

— 509
+137

T o ta l................................................................................

— 234

— 372

III. Gold shipments and earmarkings.......................................

— 11

+232

+114

— 53

72

Revised

+193

II. Capital Account
Short term capital m ovem ent..........................................
Long term capital m ovem ent...........................................

r

IV

Errors and om issions..............................................................




E m p lo y m e n t and P ayrolls
During the period from the middle of January to the
middle of February about 375,000 workers were returned
to employment in manufacturing industries in the
United States, and the weekly earnings of factory work­
ers increased $13,500,000, according to Department of

FEDERAL RESERVE AGENT AT NEW YORK
P R CEN
E
T

31

siderably more than could be expected from seasonal
influences, including the early date of Easter.
During February, no consistent tendency was dis­
cernible in this bank’s indexes of distribution and busi­
ness activity.
(Adjusted for seasonal variations, for usual year to year growth,
and where necessary for price changes)
1934

1933
Feb.

Dec.

Jan.

51
55
41
48
45
81

59
58
60
62
60
99

61
60
52
55
70
93

67
75
61
73
68
51
68
31

70
72
52
73
61
56
69
36

70
70
50
80
70
54
83
27p

44p

59
59

58
42

57
43

60p
49

Feb.

Primary Distribution

Car loadings, merchandise and misc........
Car loadings, other...................................
Waterways traffic......................................
Wholesale trade.........................................

60
68
55p
53p
96

Distribution to Consumer
Seasonally A d ju ste d Indexes of F a ctory E m p loym ent and P ayrolls
in the U n ited S ta tes ( 1 9 2 3 - 2 5 a v e r a g e = 1 0 0 per cen t)

Labor estimates. These gains greatly exceeded the usual
January to February increases, and as a result the
seasonally adjusted indexes of factory employment and
payrolls recovered sharply to about the same level as
last September. This level, as the accompanying diagram
indicates, is the highest that has been reached since the
summer of 1931.
The January to February rise in
factory employment and payrolls was associated with
the expansion of manufacturing activity in that period,
and increases in general were most pronounced in indus­
tries such as automobiles and textiles which had the
greatest advances in output. Further substantial gains
in factory working forces and wage payments during
March were tentatively indicated by trade union reports
to the American Federation of Labor.
Employment in out of door activities was adversely
affected during February by the unusually severe
weather in many sections of the country. The number
of workers engaged on private building projects is esti­
mated to have shown a decline of about 50,000, and the
demand for farm labor remained small. In addition, the
staffs of retail establishments were slightly reduced in
accordance with the seasonal tendency.
The decline in private employment in all non-manu­
facturing activities offset only a small part of the in­
crease in factory employment, and private employment
as a whole showed an increase of about 350,000 in Feb­
ruary, according to an estimate of the American Feder­
ation of Labor. The number of workers provided with
relief jobs by the Civil Works Administration was sub­
stantially reduced, however, from a peak of over
4,000,000 at the middle of January to 2,900,000 in the
last week of February.
In d exes of Business A c tiv ity
A t least the usual seasonal expansion in the general
level of trade and business activity during the first half
of March is indicated by the limited data now available.
Railway loadings of merchandise and miscellaneous
freight showed about the customary seasonal increase,
while retail trade reports indicated some improvement.
Department store sales in the New York Metropolitan
area increased from the previous month’s level by con­




Department store sales, U. S...................
Department store sales, 2nd Dist............
Chain grocery sales...................................
Other chain store sales.............................
Mail order house sales..............................
Advertising................................................
Gasoline consumption...............................
Passenger automobile registrations.........
General Business Activity

68p
69
49
76
72

Bank debits, outside New York City.. . .
Bank debits, New York City...................
Velocity of demand deposits, outside New
York City..............................................
Velocity of demand deposits, New York
City........................................................
Shares sold on N. Y. Stock Exchange. . .
Life insurance paid for.............................
Employment in the United States..........
Business failures........................................
Building contracts.....................................
New corporations formed in N. Y. State
Real estate transfers.................................

72

72

72

72

51
53
75
61
100
17
81
58

50
86
67
73
47
54
63
54

53
133
73
73
42
47
65
50

59
150
68
76
43
28
56

General price level*...................................
Composite index of wages*......................
Cost of living*...........................................

124
172
128

132
177
135

134p
180p
136

135p
180p
138

p Preliminary

* 1913 average = 100

B u ild in g
During the first three weeks of March, there was a
large rise in building and engineering contract awards,
following the sharp recession in February. Contracts
for public works and utility projects, for other non­
residential construction, and for residential work as
well, all increased much more than seasonally. As a
result, contracts for this part of March were nearly 50
per cent larger than for the whole of February, and the
average daily amount was above the January level.
The February total of building and engineering con­
tracts for 37 States amounted to about one-half of the
January volume, but remained more than 80 per cent
larger than a year previous. The decline from January
was attributed entirely to curtailment of the rate of con­
tract awards by public agencies, chiefly the Public Works
Administration and the Civil Works Administration;
publicly financed building contracts dropped from
$157,000,000 in January to $65,000,000 in February,
while privately financed building rose slightly from
$29,000,000 to $31,000,000. Due to the drop in publicly
financed projects, this bank’s index of building contracts
declined to 28 per cent of the computed trend of past
years, as compared with the recent high point of 54 in
December, but the increase reported for the first part of
March will go a long way in raising the index toward the
level which prevailed in December.

32

MONTHLY REVIEW, APRIL 1, 1934

F o r e ig n T r a d e

The value of this country’s foreign merchandise trade
in February showed less than the usual seasonal decline
from the preceding month. Total exports were valued
at $163,000,000 and general imports at $133,000,000,
the largest February totals since 1931, but neverthe­
less only about one-third the corresponding values in
1929. Both exports and imports showed increases in
dollar value of about 60 per cent over the low figures
of a year ago. The gain in exports was the largest
in recent months, but the gain in imports was not quite
as large as the unusual increases reported in July and
August of last year.
Exports during February of crude foodstuffs, chiefly
grains, were about one-third larger in volume than the
small exports of a year ago, and more than twice as
large in value. Exports of semi-manufactures, largely
refined copper and iron and steel products, showed an
increase of 85 per cent in value over February 1933,
and exports of crude materials, among which raw cotton
is the leading item, increased 70 per cent in value. The
recent rise in foreign demand for American cotton was
especially notable in the cases of Japan and the United
Kingdom; February shipments to these countries showed
increases in quantity of 51 and 14 per cent, respectively,
over a year ago.
Among the imports (currently analyzed on the basis
of consumption and not strictly comparable with a year
ago), crude materials have had a larger increase in value
than any other major group— somewhat over 75 per
cent. Receipts of crude rubber and raw silk, leading
items in this class of imports, increased 64 and 28 per
cent, respectively, in volume.
D e p a r tm e n t Store T ra d e
During the first half of March, total sales of depart­
ment stores in the Metropolitan area of New York were
36 per cent larger than in the corresponding period last
year, and even excluding liquor sales the increase
amounted to 33 per cent. This substantial advance is
accounted for in part by the banking holiday in March
1933, but nevertheless indicates a more than seasonal
increase in retail trade during the past month. Compared
with the corresponding period of 1932 sales this year,
exclusive of liquor sales, were about 2 per cent smaller,
and compared with the same period in 1931 this year’s
sales were 23 per cent less.
Total February sales of the reporting department
stores in this district were about G1 Per cent higher than
/^
a year ago, a slightly less favorable comparison on an
average daily basis than in the previous month. Exclud­
ing liquor sales, the increase over a year ago amounted
to approximately 4 per cent. Sizable advances in sales
were reported by the Buffalo and Northern New York
State department stores; the increase in sales of the
Buffalo stores was the largest since August 1933, and for
the Northern New York State department stores the
increase was the largest since October 1928, due partly
to an unusually large decline in sales in that section in
February 1933. The increases in sales of the Rochester
and Southern New York State department stores, on an
average daily basis, were of about the same proportions




as in the previous month, and total sales of the New York
City, Syracuse, and Bridgeport department stores were
well above those of a year ago, although on an average
daily basis, the increases were not as large as in the
preceding month. For the remaining localities compari­
sons with a year ago were less favorable than in January.
Sales of the leading apparel stores in this district showed
a sizable increase for the third consecutive month.
Percentage^change
from a year ago
Locality
Net
New York...................................
Buffalo........................................
Rochester...................................
Syracuse.....................................
Newark.......................................
Bridgeport..................................
Elsewhere...................................
Northern New York State...
Southern New York State, . .
Hudson River Valley District
Capital District......................
All department stores........
Apparel stores....................

-}- 7.0
+17.2
9.0
6.4

+ 1.8

+ 9.4
+ 5.4
+13.8
+13.2
— 2.9
+ 6.4

+ 6.6
+12.2

Stock
on hand
end of
month

Per cent of
II accounts
; outstanding
January 31
collected in
February
1933

1934

+ 3.4
+ 23.0
+ 7.0
+ 0.4

40.2
37.4
41.1
24.1
37.6
28.1
26.3

42.9
36.4
43.3
28.7
37.4
31.2
24.8

+22.0

37.7

39.4

+38.7

37.4

39.6

+26.6
+ 7.8

+ 10.1

W h olesale T ra d e
During February, total dollar sales of the reporting
wholesale firms in this district averaged 45 per cent
above the low level of a year ago, the largest increase
since last August. Sales of the jewelry concerns showed
the greatest percentage increase ever reported to this
bank, owing in part to the exceptionally low level of sales
in February 1933. Sales of wholesale grocery firms were
50 per cent higher than last year, and even excluding
liquor sales, the increase amounted to 30 per cent, the
largest advance since last summer. In a number of other
lines also, including shoes, paper, cotton goods, men’s
clothing, and diamonds, the increases over a year ago
were the most substantial since last summer. The com­
parisons for sales of drugs and silk goods were slightly
more favorable this month than last, but the increases
shown by the stationery and hardware firms were not
as large as those reported last month.

Commodity

Percentage
change
February 1934
compared with
February 1933

Net
sales

Stock
end of
month

Groceries........................................................ +50.3
+66.7
Men’s clothing.............................................. +42.5
Cotton goods................................................. +48.3
Silk goods...................................................... — 3.7* — 29.0*
Shoes.............................................................. +56.0
Drugs............................................................. + 4.1
+ 2.8
Hardware....................................................... +20.5
+33.9
Stationery...................................................... +15.2
Paper.............................................................. + 28.3
Diamonds...................................................... + 51.9
— 13.9
Jewelry........................................................... +182.3 —26.7 }
Weighted average..................................

+45.0

Per cent of
accounts
outstanding
January 31
collected in
February

1933

1934

73.7
29.4
30.7
56.0
29.4
22.4
36.2
51.8
40.2
19.4

87.4
43.7
34.0
53.9
29.2
22.4
32.4
49.4
46.0
} 34.6

44.8

52.2

* Quantity figures reported by the National Federation of Textiles, Incor­
porated, successor to the Silk Association of America Incorporated; not
included in weighted average for total wholesale trade.

FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, APRIL 1, 1934
PR C N
E ET

Business Conditions in the United States
(Summarized by the Federal Reserve Board)
o f industrial activity increased in February for the third consecu­
tive month and there was a considerable growth in factory employment
and payrolls. Wholesale commodity prices, after advancing for two months,
showed little change between the middle o f February and the middle o f March.

V

olum e

P r o d u c t io n

and M inerals Com bined, A d ju ste d for Sea­
son al V a ria tion ( 1 9 2 3 - 2 5 averagers
1 0 0 per cen t)

Index N u m b ers o f F a cto ry E m p lo ym en t and
P a y ro lls, W ith o u t A d ju s tm e n t for Seasonal
Variation ( 1 9 2 3 - 2 5 average = 1 0 0 per ce n t)

and

E

m ploym ent

Output o f manufactures and minerals, as measured by the B oard’s sea­
sonally adjusted index o f industrial production, increased from 78 per cent o f
the 1923-1925 average in January to 81 per cent in February. The advance
reflected chiefly increases o f considerably more than the usual seasonal amount
in the output o f steel and automobiles, while activity at meat-packing estab­
lishments declined. Activity at textile mills, which in January had increased
from the low level prevailing at the end o f the year, showed a further mod­
erate increase in February, partly o f seasonal character. In the first week
o f March steel production showed a further increase and in the following
two weeks remained unchanged.
Factory employment and payrolls increased substantially between the
middle o f January and the middle o f February to a level higher, on a
seasonally adjusted basis, than at any other time since the summer o f 1931.
Working forces on railroads also showed an increase, while at mines there
was little change in the volume o f employment. The number on the payrolls
o f the Civil Works Administration declined from about 4,000,000 in January
to about 2,900,000 in the week ended March) 1. A t automobile factories there
was a large increase in the number o f employed to approximately the level
prevailing four years ago. Substantial increases were reported also for the
textile, clothing, shoe, and tobacco industries.
Value o f construction contracts awarded, as reported by the F. W. Dodge
Corporation, showed a decline in February, followed by an increase in the
first half o f March. The total volume indicated for the first quarter is
somewhat smaller than in the last quarter o f 1933 but considerably larger
than in the first quarters o f 1932 and 1933.
D is t r ib u t io n

Freight traffic increased seasonally during February and the early part
o f March. Dollar volume o f department store sales on a daily average basis
showed little change in February.
D ollar E xc h an g e

The foreign exchange value o f the dollar in relation to gold currencies
declined in the second week o f February to within 2 per cent o f its new
parity and in the latter part o f February and the first three weeks o f March
showed a further slight decline.
C o m m o d i t y P r ic e s

W h o le sa le P rice Index o f U n ited S ta tes B ureau
o f L abor S ta tistic s ( 1 9 2 6 a v e r a g e s
1 0 0 per cen t)

Wednesday Figures for Reporting Member Banks
(Latest figures are for March 14)




Wholesale prices o f commodities showed little change from the middle
o f February to the middle o f March, after a considerable increase earlier in
the year. The index o f the Bureau o f Labor Statistics for the week ended
March 17 was at 73.7 per cent o f the 1926 average, compared with 73.8 per
cent the week before and 72.4 per cent at the end o f January.
B a n k C r e d it

Between the middle of February and the third week o f March imports
o f gold from abroad resulted in a growth o f about $550,000,000 in the
country’s monetary gold stock. Funds arising from these imports o f gold
and from expenditure by the Treasury o f about $140,000,000 o f its cash and
deposits with the Federal Reserve Banks were for the most part added to
the reserves o f member banks, which consequently increased by $600,000,000
during the four week period. At the close o f the period member bank reserves
were nearly $1,500,000,000 in excess o f legal requirements.
Total deposits o f reporting member banks increased by about $1,000,000,000 between the middle o f February and the middle o f March, reflecting
the imports of gold, purchases by the banks o f United States Government and
other securities, and a growth o f bankers’ balances.
During March money rates in the open market declined further. Rates
on 90 day bankers acceptances were reduced from y per cent to % per
%
cent, and rates on prime commercial paper were reduced by *4 per cent to
a range o f 1-1 % per cent. Yields on United States Government securities
also declined considerably. On March 16, the Federal Reserve Bank o f Minne­
apolis reduced its discount rate from 3 ^ to 3 per cent.