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MONTHLY REVIEW o Ce it a dB s e s Cn itio s f r d n uin s o d n S e c o n d F e d e r a l R e s e r v e D is tr ic t Federal Reserve Bank, New York M o n e y M a r k e t in M a r c h During the past month there has been a further mod erate rise in short term money rates, but the change in interest rates that attracted considerably more attention was the further rise in yields on long term high grade bonds, which has been fully as great as the average ad vance in short term money rates during the past two months. Ordinarily long term interest rates are much more sluggish than short term rates, and in general move within a much narrower range. As the accompanying diagram indicates, the increase in yields on United States Government bonds and on the highest grade corporation bonds during the past two months shows some similarity to other movements in bond yields that have occurred during the past few years. The moderate rise in short term money rates that has occurred during the past few months probably reflects more accurately than bond yields the extent of the change in the money market situation. There is still a large volume of excess reserves in member banks, but the distribution of the remaining excess is somewhat uneven and has led to some shifting of earning assets between banks, and to some extent from banks to other investors. Partly in reflection of this situation, and partly in response to changes in other money rates, bill dealers raised their buying and selling rates on bankers acceptances twice during March, so that the current rates are now about the same as those prevailing early in 1934. This rise in open market bill rates has placed the rates for unindorsed bills slightly above the rates at which this bank will purchase indorsed bills, so that it is now possible for banks or bill dealers in need of funds to obtain such funds without penalty by selling bills to the Reserve Banks. This relationship of open market and Reserve Bank bill rates, therefore, tends to have a stabilizing effect on the money market. Yields obtainable on Treasury bills also rose during March to about the levels prevailing at the beginning of 1934, and open market commercial paper rates advanced slightly during the month. The average rate charged by the large New York City banks on direct loans to customers, however, remained unchanged. The recent rise in yields on long term bonds is shown in perspective in the diagram. Under the pressure of an extraordinarily large volume of funds seeking invest ment and aided by business recovery, bond yields had previously declined with only comparatively minor inter April 1,1937 ruptions for about five years, although during the last three years short term rates remained practically unchanged. Even after the rise of the past two months, long term interest rates are still the lowest in many years, with the exception of the period since the autumn of 1935 or the early months of 1936. Short term inter est rates also are still considerably lower than at any time in the 30 years preceding the depression. M a r . 31, 1936 Feb. 27, 1937 M a r . 30, 1937 Stock Exchange call loans.......................... Stock Exchange 90 d ay lo an s................... P rim e com m ercial paper— 4 to m onths B ills— 90 d ay unindorsed ........................... Custom ers’ rates on com m ercial loans (A verage rate of leading banks a t m id dle of m o n th )................................. T reas u ry securities: M a tu rin g Septem ber (y ie ld )................ M a tu rin g F e b ru a ry 1938 ( y ie ld ) . . . . A verage yield on T reas u ry notes (1-5 y e a rs )............................................................. A verage yield on T re a s u ry bonds (m ore th a n 5 years to earliest call d a t e ) . . . . A verage ra te on late st T reas u ry b ill sales 273 d ay issue.................................... F ed eral Reserve B a n k of N e w Y o r k re discount r a t e ............................................... F ed eral Reserve B a n k of N e w Y o rk b u y ing ra te for 90 day indorsed b ills . . . . 6 1 *1 X X ys 1 1 *1 X X *1 X 5 /1 6 9 /1 6 1 .7 1 1 .7 1 1 .7 1 N o yield N o yield 0.21 0 .0 8 0 .5 2 0.68 1.00 fl.2 9 2 .3 8 2.21 2 .5 6 0 .1 3 0 .3 9 0 .6 4 1H 1H 1H Vi X * N o m in a l f Change of + 0 .0 8 fro m previous yields due to the dropping of the 3 per cent T reas u ry note issue of M a rc h 15, 1938 fro m the average as i t m atures w ith in one year. PER CENT 1929 1930 1931 1932 1933 1934 1935 1936 1937 O ffering R ate on N in e ty D a y B ankers A cceptan ces and A v era g e Y ield s on T reasu ry and H ig h Grade Corporation B onds (M o o d y ’ s In ve sto rs Service data for A a a corporate bonds and Federal R eserve B an k o f N ew Y o r k average yield on T rea su ry bonds over 5 years* term to call date or m a tu rity ) 26 MONTHLY REVIEW, APRIL 1, 1937 E xcess R eserves The volume of excess reserves held by member banks has fluctuated widely during the past month, especially in the New York City banks. At the end of February, despite substantial withdrawals of funds by out of town banks, the principal New York City banks had about $800,000,000 of excess reserves. The March 1 increase in reserve requirements, together with some further outflow of funds to other parts of the country, reduced the amount to about $435,000,000, and a further reduc tion to about $350,000,000 occurred in the next few days, largely as a result of the usual first of the month settle ments, including the collection of interest and dividend checks drawn on the New York banks. In the remainder of the month excess reserves in New York fluctuated between about $335,000,000 and $470,000,000, reflecting Government collections and disbursements and move ments of funds between New York and other parts of the country. In the latter part of March, following some further reduction during the course of the month, the total balances of out of town banks in the principal New York City member banks were below $1,700,000,000, a reduction of approximately $200,000,000 from a month previous, and of about $475,000,000 from the high point of last November. For the country as a whole, excess reserves of member banks were reduced from about $2,100,000,000 near the end of February, to a little over $1,300,000,000 early in March, but a moderate increase followed, and on March 17 the amount rose to approximately $1,450,000,000, due to a temporary excess of Treasury disbursements over receipts. In the following week excess reserves declined again to $1,270,000,000, largely as a result of Treasury operations including further income tax collections and a withdrawal of funds from Government depositaries; Government deposits in the Reserve Banks, which had been reduced on March 17 to about $87,000,000, rose on March 24 to $279,000,000. Toward the end of the month excess reserves were equal to about 15 to 20 per cent of required reserves in the large New York City mem ber banks, and averaged about 35 per cent for all other member banks. last year, but is probably attributable in part to the substantial reduction in the excess reserves of the New York banks, which has resulted partly from increased reserve requirements and partly from the heavy with drawals of out of town bank funds referred to above. The loans of these banks, however, have shown a renewed increase in recent weeks. Security loans in creased $76,000,000 in the four weeks ended March 24, probably reflecting, at least in part, borrowings by Gov ernment security dealers in connection with the March Treasury financing. All other loans, including chiefly borrowing by business organizations, increased $91,000,000 to a level slightly above the high point of last Decem ber and $400,000,000 above a year ago. B ills and Commercial P aper Bill dealers advanced their quotations for bankers acceptances on March 18 and again on March 23. The increases in rates for the month were 3/16 per cent in the case of 30 day bills, about % per cent for 3, 4, 5, and 6 month bills, and 5/16 per cent for 60 day bills. The current offering rate of 9/16 per cent for 90 day unindorsed acceptances compares with the low of Ys per cent from October 1934 to July 1936, and with a buying rate at the Federal Reserve Bank of New York of per cent for 90 day indorsed bills, a rate which has been maintained without change since October 1933. After the second increase in market rates, a small amount of bills was sold by an acceptance dealer to the New York Reserve Bank. The higher rates for bills accelerated the investment demand for acceptances and retarded the movement of bills into the market. The volume of bills outstanding increased $14,000,000 further during February to $401,000,000, the highest level since April 1935. The February increase was the sixth consecutive monthly increase, and the first increase over January in a decade. A rise in the amount of import bills outstanding to the highest figure since December 1931 accounted for the contraseasonal advance in total bills outstanding. (M illio n s of dollars) T y p e of acceptance M ember B ank Credit H oldings of United States Government securities by the weekly reporting New York City member banks declined $240,000,000 further in the four weeks ended March 24, reflecting largely the redemption of Treasury bills maturing on March 16 to 18, which had been held by the New York City banks in large volume. The Gov ernment security holdings of these banks have shown a generally diminishing volume since the beginning of last July and are now about $800,000,000, or 20 per cent, below the high point, and $250,000,000 below the volume of a year ago. This reduction may be attributed partly to the reduced offerings of additional Government securi ties and the increased demand for such securities on the part of other investing institutions since the middle of Dom estic sh ipm ent....................................... D om estic warehouse c r e d it....................... D o lla r exchange.............................................. Based on goods stored in or shipped between foreign co u n tries..................... T o t a l............................................ Feb. 1936 Jan. 1937 Feb. 1937 114 94 9 72 141 83 16 158 85 77 77 377 387 401 2 8 6 68 2 11 6 8 2 A gradual upward tendency in commercial paper rates continued in evidence during March, and by the last week of the month the rate for average grade prime four to six month commercial paper had become estab lished at 1 per cent, as compared with % per cent pre viously. Dealers’ acquisitions of new paper continued to increase during March and again represented bor rowings by a diversified list of business enterprises. FEDERAL RESERVE BANK OF NEW YO R K Except for a short period immediately before the rate rise, bank investment demand for business notes was such that the new paper currently acquired by dealers for resale moved quickly into investment portfolios. At the end of February commercial paper houses reported a total of approximately $268,000,000 of paper outstanding, an increase of about 10 per cent over January and of 52 per cent over the total a year ago. The increase between January and February, which has been exceeded by only one other February increase since the inception of the reports, followed advances of approximately 13 per cent each in December and January, and raised the amount of paper outstanding to the highest level since August 1931. Government Securities In March, for the first time since the summer of 1935, a substantial recession in Goverment bond prices oc curred. Ever since the high point was reached in the first part of December, Treasury bond prices had been gradually receding, but the extent of the decline through February— about % of a point— was moderate as com pared with the decline that occurred in the first three weeks of March, which averaged 3 % points. The total drop from the December high to the March low thus amounted to approximately 4 % points, and the average yield on Treasury bonds of more than five years’ term to call date or maturity advanced from 2.10 per cent to 2.58 per cent. Yields on United States Treasury notes rose somewhat further during March. The extent of the March rise was somewhat less than in Treasury bond yields, follow ing a more rapid rise in note yields between December and February. Toward the end of March, the average yield on Treasury notes of one to five year maturity stood at 1.29 per cent as compared with the November 1936 low of 0.61 per cent. There was also a continued rise in the rates at which weekly issues of Treasury bills were awarded. In the case of sales of 273 day bills the rate on the issue dated March 24 was 0.71 per cent, which compares with 0.39 per cent on the last issue of Febru ary, and a low of 0.08 per cent last November. On the 273 day issue dated Marcli 31 the average rate was slightly lower at 0.64 per cent. Treasury financing operations on the March quarterly tax date were limited to the issuance of $484,000,000 of 2 y 2 per cent Treasury bonds of 1949-53 (additional bonds of the issue originally sold last December) in ex change for 3 per cent Treasury notes maturing April 15, 1937. About 96% per cent of the April 15 notes outstanding were exchanged, substantially the same pro portion as on other recent exchange offerings, and con sequently only $19,000,000 of April 15 notes remain to be redeemed on the maturity date. No new cash was raised by Treasury security financing on March 15, and Treasury bill financing in March resulted in a temporary net reduction of $50,000,000 in the volume of outstanding 2 7 bills. On March 16, 17, and 18, a total of $300,000,000 of Treasury bills matured and were retired out of income tax receipts by the Treasury, but on March 3 the Treas ury began to issue each week $50,000,000 more Treasury bills than matured, thereby offsetting $250,000,000 of the bill maturities on March 16-18. Assuming the con tinuance of the issue of an additional $50,000,000 of bills in the first week of April, a total of $300,000,000 of Treasury bill maturities will again have been arranged to fall in the next tax period— just following June 15— to offset income tax collections. Security M a rk e ts Coincident with the decline in Government bond prices, quotations for corporate and municipal fixed interest securities receded considerably during the first three weeks of March. Price averages including various grades of domestic corporation bonds declined more than 2 points during this period, following earlier recessions of 1 to 2 points from the January highs which marked the highest levels for many years. Both the best grade and lower grade bonds were subject to price weakness in March, and both classes have declined considerably from their January highs. Expressed on a yield basis, Aaa corporation bonds declined from a low yield of 3.07 per cent in January to a yield of 3.39 per cent on March 23, and Baa bonds receded from a 4.46 per cent basis to a 4.81 per cent yield, according to data computed by Moody’s Investors Service. The higher yields reached are about the same as prevailed in the early part of 1936. Meanwhile, the yield on high grade municipal bonds, as compiled by Standard Statistics Company, rose further in the first three weeks of March to 2.79 per cent, as compared with about 2.62 per cent at the end of Feb ruary, and a low of 2.29 per cent in the first week of January. The level reached in March in this case also was the highest since the opening months of 1936. Stock prices continued to rise during the first ten days of March, in contrast to the decline in bond prices, and as a result the general level of share prices reached a new high since October 1930. During this first part of March, both industrial and railroad shares advanced, while the public utilities showed relatively little change. Between the 11th and 22nd of March, however, there was a sizable recession in stock prices, and despite some subsequent upturn, coincident with the recovery in bond prices, the general average of stock prices toward the close of the month was about 2 per cent lower than at the beginning of the month; the railroad stocks were the only major group to show a net advance for the month. N e w F inancing A considerable shrinkage in the volume of new secur ity flotations occurred during March accompanying the development of uncertain market conditions. It was re ported that the offering of a number of issues had been postponed, or registration statements with the Securities 28 M ONTHLY REVIEW, APRIL 1, 1937 and Exchange Commission withdrawn, because of mar ket conditions. The total of new bond issues reported to be so held up was about $160,000,000, so that a 4‘ back log’ ’ of new issues was built up for offering when con ditions in the bond market are more favorable. The total of new issues offered in March amounted to approximately $315,000,000 excluding $69,000,000 of Conversion Office for German Foreign Debt bonds issued in exchange for past due coupons on certain German securities. This compares with more than $600,000,000 of issues in February and $775,000,000 in March 1936. The most important issue of the month, both because of its size and the particular time that it reached the offer ing stage, was the $130,000,000 Philadelphia Electric Company 3 % per cent 30 year refunding bond issue. This issue was offered on March 11 at a price of 102%, giving a yield to maturity of 3.37 per cent. Prices of outstanding bonds had declined in the previous part of March and declined further after March 11, so that the distribution of this large issue tended to be somewhat slow, but nevertheless within two weeks after the original offering it appears that the issue was fully absorbed, although apparently in part at some concession from the price at which it was offered by the underwriting syn dicate. Also included in the March total of new financing was an issue of $15,000,000 State of New York 3 per cent grade crossing elimination bonds, maturing in from 1 to 50 years, which were awarded by the State at an inter est cost of 2.96 per cent and immediately reoffered in the market at prices to yield from 1 to 3 per cent, accord ing to maturity. The 10 year maturity in the public offering of bonds was priced to yield 2.40 per cent, which compares with a 1.50 per cent yield on 10 year New York State bonds included in a sale of last September. Dis tribution of the March issue of bonds was reported to have progressed rapidly. sulted in a small outflow of funds in 1936, reversing the 1935 inflow. A marked change took place in the balance of payments on current account between 1936 and 1935, a net deficit of $132,000,000 in 1936 replacing a net surplus of $208,000,000 in 1935. Merchandise exports increased in value by nearly 8 per cent, while imports increased by approximately 18 per cent, reducing the export surplus in merchandise trade from $236,000,000 to $34,000,000. The increases in sales of American products abroad were recorded entirely among semimanufactured and manu factured goods, sales of raw materials and foods declin ing slightly from $742,000,000 in 1935 to $726,000,000 in 1936. The rise in the value of imports, however, was more evenly spread among the various classes of com modities entering that trade, raw materials rising 26 per cent, semimanufactured goods 20 per cent, manufac tured foodstuffs 20 per cent, manufactured goods 15 per cent, and crude foodstuffs 8 per cent. Recovery in the United States also resulted in a sub stantial increase in the expenditures of American tourists abroad, and in a small rise in remittances of immigrants to relatives in foreign countries. No change was recorded in net interest and dividend receipts from abroad, the rise in profits on American capital abroad being offset by higher rates of return paid to foreign owners of increas ing amounts of American securities. Payments for net silver imports fell to $180,000,000 in 1936 from $336,000,000 in 1935, and when these payments are added to the deficit on current account, the aggregate net payments to be made to foreign countries for trade in commodities and services other than gold amounted in 1936 to $312,000,000 as opposed to $128,000,000 in 1935. The estimated balance of payments is shown in the following table for 1935 and 1936. N e t figures in m illions of dollars ( + indicates am ounts p a y a b le b y foreigners to U . S., and — indicates am ounts p ayable b y U . S. to foreigners on specified transactions) B a lan ce o f P a y m e n ts o f th e U n ite d States 1935 The net import of capital into the United States in 1936 amounted to $1,141,000,000 as compared with $1,536,000,000 in 1935, according to preliminary estimates of the balance of payments of the United States recently issued by the Department of Commerce. Accompany ing this inflow of capital, the recorded movement of gold into the country amounted to $1,030,000,000, after adjust ment for reported earmarking operations, which may be compared with a gold inflow of $1,739,000,000 in 1935. The character of the capital import movement to the United States changed markedly in 1936. Whereas in 1935 transactions in short term banking funds had ac counted for $970,000,000, or 63 per cent of the total, in 1936 American banks’ and bankers’ net liabilities to foreigners rose by $404,000,000, or 35 per cent of the total capital inflow. The inflow of capital through secur ity operations was much heavier in 1936 than in the previous year, amounting to $792,000,000, or 69 per cent of the total reported inward movement of capital, as compared with $462,000,000, or 30 per cent, in 1935. Other reported capital transactions, consisting of trans actions reported by exporters, importers, industrial and commercial concerns, and by Government agencies, re I. C u rre n t Account M erchand ise tr a d e ..................................................... T o u ris t exp enditures................................................. Im m ig ra n t rem ittances and ch a ritab le con tri butions..................................................................... Incom e fro m foreign in v e s tm e n ts ....................... O th e r cu rren t ite m s ................................................... 1936 236 292 + — 34 373 — + + 115 375 4 — + — 138 375 30 Balance on curren t a c c o u n t.............. II. + — -j- 208 — 132 C a p ita l Account Sh ort te rm ban king fu n d s ...................................... Security transactions................................................ C u rren cy shipm ents and receip ts........................ O th e r reported cap ital m ovem en ts..................... + + — + 970 462 + + + — 404 792 B alance on cap ital account................ 1 105 20 75 + 1 ,5 3 6 + 1 ,1 4 1 III. S ilv e r............................................................................... — — IV. G old shipm ents and e a rm a rk in g s ............................ — 1,739 — 1,030 V. E rro rs and omissions..................................................... + + 336 331 180 201 G o ld M o v e m e n t The inflow of gold into the United States continued during March in somewhat larger volume than in the previous month. Imports affecting the monetary gold stock totaled $101,100,000, of which $76,600,000 from England, $5,400,000 from Egypt, $4,200,000 from Can ada, $3,700,000 from India, $1,200,000 from Bolivia, 29 FEDERAL RESERVE B A N K OF N EW Y O R K $1,100,000 from Belgium, and $700,000 from Australia were received at New York, and $5,700,000 from Japan, $2,100,000 from Australia, and $300,000 from China arrived on the West Coast. Part of the gold received from England proved to be of Russian origin. These imports, supplemented by receipts from other sources, including domestic newly mined and scrap gold, and by the release of approximately $200,000 from foreign account earmarkings, resulted in an increase of about $140,000,000 in the monetary gold stock of this country during the month. The Treasury’s daily state ment of March 27 shows $318,400,000 of “ inactive gold” held in the general fund. Business Profits Accompanying continued recovery in the volume of production and trade and some advance in commodity prices, profits of 727 industrial and mercantile compan ies in 1936 rose 50 per cent over the 1935 level, or virtu ally the same percentage gain as occurred between 1934 and 1935. The net profits of these companies rose 26 per cent above the 1930 total, but remained 26 per cent below the 1929 figure. The number of individual com panies reporting net losses in 1936 amounted to 7.6 per cent of the total tabulated, as against 15.7 per cent of the total in 1935. All except 4 of the 37 groups of industrial and mer cantile companies shown in the accompanying table had larger profits in 1936 than in the previous year, and in several instances the percentage increases were very large. Prominent among the groups reporting increases were the aviation, heating and plumbing, railroad equip ment, chain restaurant, tire and rubber, shipping, and steel companies. The Class I railroads, following deficits sustained in each year from 1932 to 1935, earned a moderate amount in excess of interest and other fixed charges in 1936. This amount, however, was only about one-third as large as in 1930 and one-fifth of the 1929 net income. Net income of 62 public utility companies other than telephone com panies rose 10 per cent in 1936, but remained 28 per cent below the 1930 total and 30 per cent less than in 1929. AUTOMOBI LES & PARTS BUILDING EQUIPMENT 100 10 0 ELECTRICAL EQUIPMENT 10 0 (Net profits in millions of dollars) C o rp o ra tio n G ro up A g ric u ltu ra l im p lem en ts................ A u to m o b ile s ........................................ A u to m o b ile parts and accessories (excl. tires) ................................... B a k e ry p ro d u c ts ............................... B u ild in g equ ipm ent and supplies. C hem icals and drugs....................... C lo th in g and a p p a r e l...................... C o al and coke..................................... C o n fe ctio n e ry..................................... C o ntainers— m e ta l and glass Copper and copper p ro d u c ts . . . . E le c tric a l eq u ip m en t....................... Food products— misc....................... H e a tin g and p lu m b in g ................... H ousehold eq u ip m en t and sup- 1935 1936 4 13 4 2 .4 3 2 9 .8 2 4 .8 1 7 3 .3 — 1 4 .8 — 3 3 .5 1 8 .1 2 0 0 .3 3 0 .5 3 1 4 .2 43 9 4 .2 1 .3 5 3 .8 1 9 .6 6 9 .2 2 0 6 .4 3 6 .1 — 9 .0 4 5 .9 1 9 .3 3 6 .3 15 9 .1 5 .9 5 .0 2 5 .8 4 0 .2 — 1 8 .6 — 2 .3 2 8 .7 4 8 .8 1 .5 2 0 .7 2 5 .2 2 4 .8 1 5 5 .3 4 .1 3 .1 1 6 .9 4 2 .6 1 4 .0 5 6 .5 8 4 .2 6 0 .0 4 .1 2 6 .9 3 0 .9 4 5 .9 2 0 5 .5 5 .9 10 10 6 36 32 9 12 11 7 10 1929 11.2 L e a th e r and shoes............................ M a c h in e ry and tools........................ M e a t p ac kin g ..................................... M e ta ls and m in in g (excl. copper, coal and c o k e )............................... M o tio n p ic tu re s ................................. Office e q u ip m e n t............................... O il and p e tro le u m ............................ Paper and pap er p ro d u c ts ............ P rin tin g and p u b lis h in g ................. R a ilro a d e q u ip m en t......................... R estaurants— c h a in ......................... R u b b er and tir e s .............................. S ilk and hosiery................................. Stores— m dse...................................... T ex tiles— m is c ................................... 12 1 0 .4 2 7 .2 4 2 .7 3 7 .1 16 7 .1 1 6 3 .6 4 1 .2 30 7 9 .9 31 36 1930 — 3 .3 — 3 .9 — 2 5 .8 — 0 .3 3 7 .9 7 .2 2 4 .6 5 4 .9 7 .3 4 7 .2 — 0 .9 — 1 9 .2 8 3 .1 1 0 8 .1 9 .7 2 9 .7 1 0 5 .7 9 .3 1 6 .7 1 9 .7 — 0.1 25 5 1 0 8 .2 1 3 .1 4 5 .2 1 5 7 .3 1 3 .0 3 8 .9 5 8 .5 9 .9 4 .9 2 5 .3 5 7 .2 1 1 .7 2 9 .0 6 8 .4 11 36 18 16 17 5 6 6 6 16 32 33 21 20 76 T o ta l 37 gro u p s....................... 727 10.1 1 0 .7 3 7 8 .7 1 4 4 .5 6 .9 7 8 .9 1 0 9 .1 1.0 6.2 3 2 .4 4 6 .8 7 .4 4 .2 — 1 6 .3 4 .7 0.2 0.2 2.0 2.8 — 1 7 8 .7 — 1 4 6 .2 8 7 .4 14 .1 — 1 4 .6 — 8 7 .8 8 4 .8 6 7 .4 — 11.0 6.0 2 3 .1 6 1 .7 8.0 1.8 0.2 0 .5 10.8 1.2 1 4 .2 — — 8.8 5 9 .6 6 6 .5 6.0 144 8 9 6 .8 5 2 3 .9 — 1 5 0 .6 P u b lic u tilitie s , except tele phone companies, net incom e 62 3 1 7 .8 3 0 7 .0 2 3 7 .3 — 1 .4 1 6 9 .9 2 0 2 .4 2 2 1 .5 — Deficit F oreign E x ch an ges Although the downward revaluation of the French franc at the end of September 1936 was followed for a time by a moderate movement of funds to Paris from foreign financial centers, this return movement appar ently was halted about the middle of October, and during succeeding months the French franc was under persist METALS & MINING 10 0 STEEL C L A SS I RAILROADS 10 0 ’36 PR OFIT ’35 1929 ’3 2 ’3 5 An nu al N e t Profits or D eficits o f 7 2 7 Industrial and M ercantile C oncerns, C lass I R ailroads, and 6 2 Pu blic U tility C om panies O th er T h an Telephone Com panies D u rin g 1 9 2 9 , 1 9 3 2 , 1 9 3 5 , and 1 9 3 6 ( 1 9 2 9 = 1 0 0 per cen t) 0.6 1.2 2 9 .6 5 .1 4 .5 1 4 3 .5 1 5 2 .4 1 7 .9 6 3 .4 9 6 .2 2 ,6 8 0 .8 1 ,5 6 3 .9 — 4 8 .0 1 ,3 1 1 .2 1 ,9 7 0 .1 Class I R ailroads, net incom e. . '36 1929 ’3 2 2.1 4 .4 4 9 .1 1 1 8 .2 12 1929 '3 2 ’3 5 2 2 .5 2.1 0.2 11.8 — 3 .6 7 .1 — 1 5 .8 — 0 .9 — — 1 8 .1 110.8 10.1 P R O F IT DE FIC IT 2.8 1 7 .3 4 2 .6 2 7 .5 9 9 .1 — 2 1 .5 8 9 .4 — 1 7 .0 6 7 .9 2 .7 — 12.8 — 1 8 .7 7 2 .9 — 4 .8 — 6 .5 1 4 .3 9 5 .9 1 4 8 .8 1 5 .3 49 11 6 1932 22.0 2.8 — 8.8 4 3 .1 — 2 .4 3 4 .5 M iscellaneous..................................... MACHINERY & TOOLS 100 No. of Cos. 30 MONTHLY REVIEW, APRIL 1, 1937 PER C E N T ent pressure, the stability of exchange rates being maintained only through supporting operations under taken by the French exchange authorities. In this respect developments in France were in contrast to the experience of both Holland and Switzerland, where substantial return movements of capital extending over a period of several months followed a lowering of the gold values of their currencies. The pressure against the franc culminated on March 5, when it was reported that the proceeds of the £40,000,000 credit extended to the French railways by the London market at the end of January had been largely utilized in supporting French exchange. On that day the franc, which had closed at $0.0464% on March 4, dropped to a low of $0.0452. Following a meeting of the French cabinet, a new program designed to end the critical fiscal and exchange situations was announced. This program included provision for (1) the establishment of facilities by which French holders of gold could dispose of their holdings at the world price and without disclosing their identity, (2) the flotation in the Paris market of a national defense loan carrying an exchange guarantee, stipulated in dollars and sterling and payable at prevail ing rates in either French or Swiss francs, (3) curtail ment of certain projected Government expenditures, and (4) the appointment of a committee of experts to administer the stabilization fund. The announcement of this program and the French Government’s success in marketing the new defense loan brought about a reversal of the direction of the move ment of capital. In response to the return movement of funds, the franc-dollar rate rose gradually from its low of $0.0452 on March 5 to about $0.0459%, where it seems to have been held by the French authorities through purchases of sterling and dollars against sales of francs. Apart from a slight reaction during the period of most severe pressure against French exchange, the pounddollar rate was generally steady during March in the neighborhood of $4.88%. The guilder also weakened moderately during the early part of March but recovered thereafter. On the other hand, both the belga and the Swiss franc showed a firm tendency during the first few days of the month, but both currencies subsequently reacted moderately and showed little net change for March as a whole. E m p lo y m e n t and P ayrolls In accordance with the customary seasonal tendency employment and payrolls in representative New York State factories advanced from the middle of January to the middle of February, although the rate of increase in the case of employment was slightly less than in some previous years. The gain in the number of workers was general, nearly all of the major industrial groups sharing in the advance. In anticipation of an early Easter trade, clothing manufacturers employed many additional work ers, and there were also pronounced employment gains in the textile and chemical industries. For the United States as a whole, the employment of approximately 215,000 additional workers was reported in the manufacturing and nonmanufacturing industries surveyed by the Department of Labor, representing a recovery of about 30 per cent of the reduction in the preceding month. The February increase was concen- A v era g e H ourly E arnings in U nited S ta te s Factories (B a sed N ational Industrial C onference B oard and B ureau of Labor S tatistics d a ta ; 1 9 2 6 — 1 0 0 per cen t) on trated almost entirely in the manufacturing industries and the seasonally adjusted index of factory employment computed by the Board of Governors of the Federal Reserve System advanced approximately 1 per cent to the highest level since December 1929. An important feature of the employment situation in recent months has been the more rapid increase in pay rolls than in employment, owing to the combined effect of increased working hours and of wage rate increases by many manufacturers. The accompanying diagram shows the movement since 1929 of an index of hourly wage rates in manufacturing industries. Wage rates were slow in responding to the decline in industrial production and employment following 1929, and it was not until the final quarter of 1931 that the downward movement became pronounced. Average wage rates fell 16 per cent from October 1931 to October 1932 and subse quently showed a further gradual decline. This tendency extended through the second quarter of 1933, when the volume of production and employment was rising rapidly, and then, under the impetus of the N.R.A., wage rates moved upward, sharply at first and then more moder ately. The rising tendency extended into 1935, and after reaching a point 3 per cent above the 1929 average the index followed a level course through the first ten months of 1936. Since October, however, there have been wide spread wage advances and the index has moved up five points more and is now 8 per cent above the 1929 average. Since February, the last month shown on the diagram, there have been important additional increases. P rodu ction During March the general level of industrial activity continued the upward tendency which was resumed dur ing February, although output was restricted in some lines by labor difficulties. Steel production extended the rise that has prevailed with only minor interruptions since last July; at the end of the month steel mills were operating at about 90 per cent of capacity, and actual output was close to the highest point previously recorded, in the late spring of 1929. Unfilled orders were reported as unusually large, owing to the efforts of consumers to seek protection against future shortages. Cotton mills also maintained a high rate of activity during March. In the early part of the month it was reported that in FEDERAL RESERVE BANK OF NEW Y O R K coming orders were considerably in excess of production, and although new business later decreased, mills still car ried substantial backlogs of unfilled orders on their books. Bituminous coal mining increased further in the first three weeks of March, and during the same period electric power output, instead of declining as in most other years, maintained the February rate. On the other hand, automobile assemblies, which generally rise at this time of the year, were restricted by strikes taking effect on March 8, and labor difficulties handicapped produc tion in some other industrial fields as well. In February the general level of industrial activity increased more than at this time in most other years, with the result that the index of industrial production of the Board of Governors of the Federal Eeserve Sys tem, adjusted for usual seasonal variations, rose two points to 116 per cent of the 1923-25 average. The high point of the index for the recovery period, attained in December, was 121. Automobile assemblies gained fol lowing settlement of the General Motors strike on Feb ruary 11, bituminous coal output expanded, and the rate of steel production was higher, although in the absence of a preceding year end slackening the increase in steel output was not as large as in many past years. Average daily consumption of cotton by textile mills, already at the highest level on record, advanced seasonally in Feb ruary. (A djusted fo r seasonal variatio n s and usual year to year grow th) 1936 Feb. Metals P ig ir o n ................................................................. Steel........................................................................ L e a d ........................................................................ 61 65 51 6 6 Automobiles Passenger cars.................................................... M o to r tru c k s ...................................................... 72 107 Dec. Jan. Feb. 110 112 112 103 110 116 62 71 95 119 principal cities, retail trade throughout the country con tinued to expand during the first part of the month, as a result of Easter buying, and wholesale trade appeared to have been active. For the first three weeks of March shipments of merchandise and miscellaneous freight over the railroads showed somewhat more than the usual expansion, and car loadings of bulk commodities were little changed, although there is ordinarily a decline at this time of year. In February, as the accompanying table indicates, most indicators of general business activity and the distribution of goods showed some recession. (A djusted for seasonal variations, for usual year to year grow th, _____________________ and where necessary for price changes)_____________________ 1936 Feb. P rim a ry D istrib u tion C a r loadings, merchandise and misc. C a r loadings, o th e r ........................................... 101 56 71 102p D e p a rtm e n t store sales, U . S....................... D e p a rtm e n t store sales, 2nd D i s t .............. C h ain grocery sales.......................................... O th e r chain store sales................................... M a il order house sales.................................... A d v e rtis in g .......................................................... N e w passenger car reg istra tio n s................. Gasoline consum ption r ................................... Textiles and Leather Products W o o l consum ption............................................ S ilk m ill a c t iv it y ............................................... R a y o n deliv eries *.............................................. 88 8 6 116 53 106 109r Foods and Tobacco Products M e a t p a c k in g ...................................................... W h e a t flo u r.......................................................... Tobacco products.............................................. 76 92 88 87 73 94 90 94 138 121 6 6 124 109 140 117 141 135p p 108 128p 87 81 93 82 84 98 74 69 83 83p 158 102 83 107 112 6 8 98p 59p 94p 94p 112 66 Miscellaneous C e m e n t.................................................................. T ire s ........................................................................ N e w s p rin t p a p e r ............................................... M ach in e tools...................................................... p P re lim in a ry r Revised 40 67 79 105 81 143 82 245 200 * F o r q u a rter ended In dexes o f Business A c tiv ity During the first half of March department store sales in the Metropolitan area of New York were well above the corresponding period a year ago, but showed slightly less than the usual increase over the February level after allowance is made for the concentration of pre-Easter buying in March this year, and other seasonal factors. According to the Department of Commerce survey of 36 Feb. 84 85 67 78 r 78 69 104 80 79 90 90 69 98 89 89 102 88 8 6 6 6 80 80 73 89 77 69 79 82 100 63 42 74 50 42 42 69 72 71 69 48 67 44 75 p N e w life insurance sales................................. F a c to ry em ploym ent, U n ite d S tates ......... N e w corporations form ed in N . Y . S ta te r B u ild in g contracts, residentia l..................... B u ild in g contracts, o th e r ............................... G eneral price le v e l* .......................................... Com posite index of w a g e s *........................... Cost of liv in g * .................................................... 68 8 8 68 21 85 124 103 r Revised 6 8 96 88 77 120p 68p 61 74 34 59 100 151 190 142 159 198 144 161 199 145 * 1913 average = 92 85 79 93p 97 100 lllp 99r 89 91 91 96 Jan. 42 p P re lim in a ry 93 115 85 85 Dec. General Business A c tiv ity Fuels B itum ino us coal................................................. A n th ra c ite coal................................................... Petroleum , c ru d e ............................................... Petroleum products r ........................................ E le c tric p o w e r.................................................... 6 6 81 64 89 1937 D istrib u tion to Consumer B a n k debits, outside N e w Y o rk C i t y . . . . B a n k debits, N e w Y o rk C i t y . ..................... V e lo c ity of dem and deposits, outside N e w Y o rk C i t y ........................................................ V e lo c ity of dem and deposits, N e w Y o rk 1937 119 65 85 31 75 51 76 68p 44 73 p lO lp 72 39 65 161p 200p 145p 100; not adjusted for trend. B u ild in g Total building and engineering contracts awarded in the New York and Northern New Jersey area declined approximately 7 per cent in February, but on an average daily basis the rate at which contracts were placed was slightly higher than in January, although not to the extent that is usually expected at this time of the year. Residential building showed a decline of nearly 30 per cent in the average daily rate of contract awards, as com pared with January, when the amount was greatly increased by contracts for publicly financed housing projects. In contrast to the decline in residential build ing, nonresidential work registered a substantial contra seasonal advance. Total contracts were 75 per cent higher than in February 1936, when the volume of con tracts was especially affected by inclement weather. Con tracts for residential building and heavy engineering projects in February were more than twice as large as in the corresponding month last year; contracts for public utility work, alone, were nearly six times as large as in February of last year, the increase being wholly due to the awarding of further contracts for subway construction in New York City. For the 37 States covered by the F. W . Dodge Corpo- 32 M ONTHLY REVIEW, APRIL 1, 1937 ration report, contracts awarded in February declined to a greater extent than did the total for the New York and Northern New Jersey territory. The decline, amount ing to 23 per cent, was accounted for by smaller contract figures reported for each of the major building classifica tions. Compared with February of last year, however, total contracts showed an increase of 33 per cent; resi dential construction, which more than doubled, recorded the most pronounced gain. Privately financed projects constituted 63 per cent of the total of all construction work awarded in February, a proportion that has been equaled only once since the summer of 1933. year to year increase was slightly smaller than in January. Department store stocks of merchandise on hand, at retail valuation, were 20.7 per cent higher than last year, the largest year to year increase since April 1934; large increases in stocks were reported in most of the depart ments. Collections were slightly lower this year than last in the department stores and also in apparel stores, fol lowing ahigher rate of collections in January. Percentage change F e b ru a ry 1937 com pared w ith F e b ru a ry 1936 P e r cent of accounts outstanding Jan u ary 31 collected in F e b ru a ry C o m m o d ity Prices Marked advances in the quotations for both ferrous and nonferrous metals were an important factor in the continued upward movement in general indexes of whole sale commodity prices during March. During the first three weeks of the month the comprehensive Bureau of Labor Statistics index of 784 quotations rose about 2 per cent further, the metals group of this index increasing about 4 per cent to the highest level since early in 1930. The accompanying table shows the recent high points for several individual metal prices, compared with the de pression low and previous high points. Most of the quo tations have reached levels two or three times the 1932-33 low, and in several cases are above the 1929 highs. All these metals except tin, however, are considerably below the highs established in 1920. Spot Price Scrap steel, P itts b u rg h (dollars a t o n ) ...................................................... P ig iro n , composite price (dollars a t o n ) ...................................................... Finished steel composite price (cents a lb .) ....................................... Zinc, E . St. Louis (cents a l b . ) . . . . L ead, N . Y . (cents a l b . ) ................. T in , straits, N . Y . (cents a l b .) . . . Copper, dom estic electrolytic, N . Y . (cents a l b .) ................................ 1920 H ig h 1929 H ig h 193 2-3 3 L ow R ecent H ig h 2 9 .0 0 1 9 .7 5 8 .2 5 2 3 .7 5 4 7 .8 3 5 1 8 .7 1 1 3 .5 6 2 3 .2 5 4 .2 2 7 9 .5 0 9 .5 0 6 5 .0 0 2 .3 1 7 6 .8 0 8 .2 5 5 0 .3 7 5 1 .8 6 7 2 .3 0 2 .6 5 1 8 .3 5 2 .6 0 5 7 .5 0 7 .7 7 5 6 7 .0 0 1 9 .5 0 2 3 .8 7 5 4 .8 7 5 1 7 .0 0 Gains also occurred in several other actively traded commodities in March. During the course of the month, spot cotton rose about 1 % cents further to 15^4 cents a pound, the highest price in seven years. Crude rubber, increasing 5 cents to 27 cents a pound, and cash corn, rising 15% cents to $1.26% a bushel, also reached their highest levels in a number of years. Prices of silk, sugar, and livestock likewise showed net gains, but closed the month slightly below their March highs. L o c a lity Net sales N e w Y o r k ................................................................. B u ffa lo ........................................................................ R ochester.................................................................. S yracuse.................................................................... N o rth e rn N e w Jers e y ..........................! .............. B rid g e p o rt................................................................. Elsew here.................................................................. N o rth e rn N e w Y o rk S ta te ............................ Southern N e w Y o rk S t a t e ............................ C e n tra l N e w Y o rk S ta te ................................ Hudson R iv e r V a lle y D is t r ic t ..................... C a p ita l D is t r ic t ................................................. W estchester and S ta m fo rd ............................ N ia g a ra F a lls ...................................................... 8.0 0.8 1936 1937 + 2 2 .9 + 1 8 .7 + 1 8 .0 + 1 3 .8 + + 5 .9 — 1 .4 4 5 .0 4 7 .2 4 6 .2 3 6 .8 4 1 .1 3 8 .9 3 1 .4 4 3 .9 4 6 .7 4 6 .0 3 8 .4 4 0 .7 3 8 .6 3 1 .1 20.6 2.8 A ll d ep artm en t stores................................. + 7 .0 + 2 0 .7 A p p a re l stores................................................. + 5 .4 + 2.8 4 3 .3 4 2 .6 4 2 .3 4 1 .1 W h o le sa le T ra d e Total February sales of reporting wholesale firms aver aged 17.9 per cent higher than last year, a larger increase than in January. Sales of the shoe concerns, and yardage sales of silk goods reported by the National Federation of Textiles, recorded the most substantial gains over a year previous since July 1933. The cotton goods firms registered the largest year to year increase since Septem ber 1935, and the diamond concerns the largest increase in a year. Sales of grocery, men’s clothing, and paper firms also showed larger increases than in January, and sales of the stationery concerns were reduced by a smaller percentage than in the previous month. On the other hand, hardware firms registered a smaller increase in sales than in the two preceding months, and the jewelry concerns recorded an increase which was considerably less than in most months of the previous year. Percentage change F e b ru a ry 1937 com pared w ith Fe b ru a ry 1936 D e p a r tm e n t Store T ra d e During the first half of March, total sales of the report ing department stores in the Metropolitan area of New York were 7.8 per cent higher than in the corresponding period a year ago, but somewhat less than the usual sea sonal advance from the February level appears to have occurred. In February total sales of the reporting department stores in this district were 7 per cent larger than last year, and after allowing for differences in the number of shopping days between this year and last, the increase in average daily sales was about 11 per cent, a larger gain than in the preceding two months. Sales of the leading apparel stores in this district were approximately 5 % per cent higher than last year, and even on a daily basis the + 5 .6 + 1 3 .6 + 6 .4 + 5 .7 + 1 5 .0 + + + 0 .4 + 4 .9 + 5 .8 + 4 .0 + — 1 3 .1 — 2 .3 Stock on hand end of m onth C o m m o d ity G roceries.......................... M e n ’s c lo th in g .............. C o tto n goods.................. R a yo n and silk goods. Shoes................................. H a rd w a r e ........................ S ta tio n e ry ....................... P a p e r ................................. D ia m o n d s ........................ J ew elry............................. W eig h ted a v e ra g e . Net sales + 7 .2 + 8 .2 + 2 3 .4 + 4 9 .7 * + 6 5 .0 + 1 5 .4 — 0 .6 + 1 7 .9 + 5 3 .1 + 1 3 .9 + 1 7 .9 Stock end of m onth + 1 3 .0 + 3 8 ’. 9 + i 2 .7 + 7 2 .4 P e r cent of accounts outstanding Jan u ary 31 collected in F e b ru a ry 1936 8 .9 6 49 .8 1937 .0 .1 .1 .6 .8 .8 37 .7 55 .4 25 35 56 .7 53 87 48 38 53 .7 28 33 56 .3 58. 5 5 .6 5 5 .4 .8 .2 .1 22.6 } 23 .5 * Quantity figures reported by the National Federation of Textiles, Incorporated, not included in weighted average for total wholesale trade. FED ERAL RESERVE BANK OF NEW YORK MONTHLY REVIEW, APRIL 1, 1937 Business Conditions in the United States ( S u m m a r iz e d b y th e B o a r d o f G o v e rn o rs o f th e F e d e r a l R e s e rv e S y s te m ) V O L U M E o f p r o d u c t i o n , e m p l o y m e n t , a n d t r a d e in c r e a s e d m o r e t h a n s e a s o n a l l y i n F e b r u a r y a n d w h o le s a le p r ic e s o f i n d u s t r i a l c o m m o d it ie s c o n t i n u e d to a d v a n c e . Production and Employment T h e B o a r d ’ s i n d e x o f i n d u s t r i a l p r o d u c t i o n , w h ic h m a k e s a l lo w a n c e f o r c h a n g e s i n th e n u m b e r o f w o r k in g d a y s a n d f o r u s u a l s e a s o n a l v a r ia t io n s , w a s 1 1 6 p e r c e n t o f th e 1 9 2 3 -1 9 2 5 a v e ra g e i n F e b r u a r y as c o m p a re d w it h 1 1 4 in J a n u a r y a n d a n a v e ra g e o f 1 1 5 i n th e la s t q u a r t e r o f 1 9 3 6 . A t s te e l m ills Index N um ber of Production of M an u factu res and M inerals Com bined, A d ju ste d for Seasonal V ariation ( 1 9 2 3 - 2 5 average — 1 0 0 per cen t) a c t i v i t y c o n t i n u e d t o in c r e a s e i n F e b r u a r y a n d t h e f i r s t t h r e e w e e k s o f M a r c h a n d , a l t h o u g h t h e g r o w t h w a s s o m e w h a t le s s t h a n s e a s o n a l, o u t p u t c u r r e n t l y is a t a b o u t th e p e a k le v e l re a c h e d i n t h e s u m m e r o f 1 9 2 9 . A u to m o b ile p r o d u c tio n , w h i l e f l u c t u a t i n g c o n s id e r a b ly w i t h s t r ik e s a t i m p o r t a n t p l a n t s , h a s b e e n l a r g e r f o r th e y e a r to d a te t h a n i n t h e c o rr e s p o n d in g p e r io d la s t y e a r . O u tp u t o f p la t e g la s s i n F e b r u a r y s h o w e d a s h a r p r is e f r o m t h e l o w l e v e l o f t h e t w o p r e c e d in g m o n t h s w h e n s t r ik e s c u r t a i l e d p r o d u c t i o n . A t t e x t i l e m i l l s a n d sh o e f a c t o r i e s a c t i v i t y c o n t i n u e d a t a h i g h l e v e l , w h i l e o u t p u t a t m e a t p a c k i n g e s t a b lis h m e n t s d e c lin e d s o m e w h a t f u r t h e r . M i n e r a l p r o d u c t i o n in c r e a s e d , r e f l e c t i n g c h i e f ly g r e a t e r o u t p u t o f c o a l a n d a f u r t h e r r is e i n c r u d e p e t r o l e u m p r o d u c t i o n . V a l u e o f c o n s t r u c t i o n c o n t r a c t s a w a r d e d t h is y e a r , a c c o r d in g t o t h e F . W . D o d g e C o r p o r a t i o n , h a s b e e n c o n s id e r a b ly l a r g e r t h a n a y e a r a g o , r e f l e c t i n g a n in c r e a s e d v o lu m e o f p r i v a t e r e s i d e n t i a l b u i l d i n g a n d o t h e r t y p e s o f p r i v a t e c o n s t r u c t i o n , w h i l e t h e v o lu m e o f p u b l i c l y f in a n c e d w o r k h a s b e e n s m a l le r . F a c t o r y e m p l o y m e n t a n d p a y r o l l s i n c r e a s e d f r o m t h e m id d le o f J a n u a r y t o th e m id d le o f F e b r u a r y b y m o re t h a n th e u s u a l s e a s o n a l a m o u n t. T h e n u m b e r e m p lo y e d i n t h e m a c h i n e r y i n d u s t r ie s in c r e a s e d c o n s id e r a b ly a n d t h e r e w e r e s m a l le r in c r e a s e s a t a u t o m o b i l e a n d p l a t e g la s s f a c t o r i e s . I n th e n o n d u r a b le g o o d s i n d u s t r ie s as a g r o u p t h e r e w a s a s e a s o n a l r is e i n e m p l o y m e n t . Distribution W h o lesa le Price Index o f U nited S tates B ureau of Labor S ta tistic s ( 1 9 2 6 average = 1 0 0 per cen t) BILLIONS OF DOLLARS 8f D e p a r t m e n t s t o r e s a le s i n c r e a s e d f r o m J a n u a r y to F e b r u a r y a n d th e B o a r d ’ s s e a s o n a lly a d j u s t e d i n d e x a d v a n c e d f r o m 9 3 t o 9 5 p e r c e n t o f t h e 1 9 2 3 1 9 2 5 a v e r a g e . S a le s a t v a r i e t y s to r e s a ls o in c r e a s e d m o r e t h a n s e a s o n a lly , w h i l e m a i l o r d e r s a le s , l a r g e l y i n r u r a l a r e a s , s h o w e d le s s e x p a n s io n t h a n is u s u a l a t t h is t i m e o f y e a r . T o t a l f r e i g h t c a r l o a d i n g s in c r e a s e d i n F e b r u a r y a n d t h e f i r s t h a l f o f M a r c h , o w in g i n p a r t t o s e a s o n a l in flu e n c e s . Commodity Prices of T h e g e n e r a l l e v e l o f w h o le s a le c o m m o d i t y p r i c e s a d v a n c e d f r o m t h e m i d d l e F e b r u a r y to th e t h ir d w e e k o f M a r c h , r e f le c tin g p r i n c ip a ll y f u r t h e r s u b s t a n t i a l in c r e a s e s i n t h e p r ic e s o f i n d u s t r i a l m a t e r i a l s . P r i c e s o f i r o n a n d s te e l, n o n f e r r o u s m e t a ls , l u m b e r , c o t t o n , r u b b e r , a n d h id e s a d v a n c e d c o n s id e r a b l y a n d t h e r e w e r e a ls o in c r e a s e s i n t h e p r ic e s o f c o t t o n g o o d s , p a p e r , a n d f u r n i t u r e . W h e a t p r ic e s h a v e a d v a n c e d i n r e c e n t w e e k s f o l l o w i n g a d e c lin e i n th e l a t t e r p a r t o f F e b r u a r y . Bank C redit 1932 1933 1934 1935 1936 1937 M em ber B ank R eserve B alances (L a te s t F igu res are for M arch 2 4 ) O n M a r c h 1 , w h e n th e f ir s t h a l f o f th e re c e n t in c re a s e in re s e rv e r e q u ir e m e n t s w e n t i n t o e f f e c t , exc e s s r e s e r v e s o f m e m b e r b a n k s d e c lin e d f r o m $ 2 , 1 0 0 , 0 0 0 ,0 0 0 t o a b o u t $ 1 , 3 0 0 , 0 0 0 , 0 0 0 . I n t h e n e x t t h r e e w e e k s , w h ic h i n c lu d e d t h e M a r c h t a x c o lle c t i o n p e r i o d , exc e s s r e s e r v e s s h o w e d m o d e r a t e f lu c t u a t i o n s a r o u n d t h e n e w l e v e l . I n c o n n e c t io n w i t h t h e i n c r e a s e i n r e s e r v e r e q u i r e m e n t s t h e r e w e r e s o m e w i t h d r a w a l s o f b a n k e r s ’ b a la n c e s f r o m c i t y b a n k s b u t p r a c t i c a l l y n o b o r r o w in g b y m e m b e r b a n k s f r o m th e R e s e rv e B a n k s . H o l d i n g s o f U n i t e d S t a t e s G o v e r n m e n t o b l i g a t io n s a t r e p o r t i n g m e m b e r b a n k s i n l e a d i n g c i t i e s d e c li n e d b y $ 2 8 0 ,0 0 0 ,0 0 0 i n t h e f o u r w e e k s e n d e d M a r c h 1 7 , a p a r t o f t h e d e c li n e r e f l e c t i n g l a r g e m a t u r i t i e s o f T r e a s u r y b i l l s . C o m m e r c i a l lo a n s i n c r e a s e d f u r t h e r a t r e p o r t i n g b a n k s a n d o n M a r c h 1 7 w e r e a b o v e A la s t y e a r ’s h ig h le v e l re a c h e d o n D e c e m b e r 3 0 . s e c u r it ie s in c r e a s e d s h a r p ly . U v LL' ; ^ V. *\ Money Rates K :SERVE BAtM DISCOUhJT RATE —: f \_ J / — ..... ....... P " " i i ^COMMERCIAL PAPER RATE ----------------'^ACCEPTANCE RATE M on ey R ates in the N ew Y o rk M ark et (M arch rates are averages for the first 2 7 d a y s) L o a n s t o b r o k e r s a n d d e a le r s i n S in c e th e ad v an ced fro m b e g in n in g 5 /1 6 ro s e f r o m a f la t % of M a rc h th e ra te on 90 day b a n k e rs a c c e p ta n c e s o f 1 p e r c e n t to 9 / 1 6 o f 1 p e r c e n t a n d c o m m e r c ia l p a p e r p e r c e n t t o a r a n g e o f b e t w e e n % a n d 1 p e r c e n t. B o n d y i e ld s , w h ic h u n t i l r e c e n t l y h a d b e e n n e a r re a c h e d la s t D e c e m b e r, a d v a n c e d b y b e tw e e n % a n d 2 4 w e r e a t a b o u t t h e le v e ls p r e v a i l i n g e a r l y i n 1 9 3 6 . th e e x tr e m e lo w p o in t p e r cen t an d on M a rc h
