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MONTHLY REVIEW o f C r e d i t a S e c o n d n d B u s i n e s s F e d e r a l R e s e r v e F ed era l E eserve B a n k, N ew Y o rk M o n e y M a r k e t in M a r c h The security markets, which during the past few years have become the most im portant element in the New Y o rk money market, reflected an abrupt reversal in sentiment during M arch. Rising optimism was in dicated during the early part of the month by a strong advance in prices of securities of all types, from Gov ernment bonds down to speculative corporate bonds and stocks, but this optimism was suddenly chilled around the middle of the m onth by developments in central E urope. A general decline in security prices followed, and, except in Government bonds which showed excep tional resistance to adverse influences, only partial re coveries in bond prices occurred b y the end o f the m on th; stock prices declined to new lows fo r the year. A similar change o f sentiment was reflected also in the foreign exchange market and in gold movements. In the early part of M arch the foreign exchange market was quiet, the principal European exchanges moderately firm, and the flow of gold to the U nited States was at a less rapid pace than in previous weeks. The renewed tension in E urope which was induced by the dismem berment of Czecho-Slovakia and by subsequent develop ments in central E urope, was reflected in a renewed flow of capital to the United States, with resulting pressure on European exchanges, and an accelerated gold flow to this country. In the early part o f March, stock prices rose strongly, lower grade bonds reached the highest levels since M ay, 1937, and with the prospect o f continued large supplies o f fu n ds available fo r investment, prices o f Treasury bonds and the highest grade corporation bonds advanced to new high levels. A rou n d the middle o f the month, however, there was evidence o f a renewed attitude o f doubt and caution, apparently induced by fears concerning the outcome o f events in Europe, augmented by lessened optimism concerning do mestic developments. Stock prices fell rapidly, indus trial stocks to levels nearly as low as those reached near the end of January, and, with that exception, the lowest since the European crisis o f last September. A renewed decline at the month end carried industrial stocks to new lows fo r the year. B ond prices, even fo r the lower grade issues, showed com paratively small losses, how ever, and remained substantially above the levels reached in September. A n im p o r ta n t fa c to r in the rela tiv e stre n g th o f b o n d C o n d i t i o n s D is t r ic t A p r il 1, 1939 prices undoubtedly was the huge volume of idle money available fo r investment, and the prospect fo r further additions to excess bank reserves, as a result of Treasury purchases of the large amounts of incoming gold and other Treasury expenditures from balances held with the Reserve Banks. This prospect was enhanced when the Treasury announced that it would lim it its financing on M arch 15 to the refunding of $1,294,000,000 o f Treasury notes that were to have m atured on June 15, 1939. This announcement directed attention again to the strong cash position of the Treasury, despite the high level o f Government expenditures. Large Treasury balances were created during the past year by the re lease of gold from the inactive account ( “ sterilized’ 9 gold) and by Treasury borrowing in advance o f require ments, and these balances have been supplemented since the beginning of 1939 by substantial sales of U nited States savings bonds and o f the securities o f Govern ment agencies, the proceeds o f which were deposited in Treasury accounts. On M arch 1 the Treasury had more than $1,150,000,000 on deposit in Federal Reserve Banks, about $900,000,000 in other banks designated as deposi tories fo r Government fu n ds, and approxim ately $550,000,000 o f free gold in the T r e a su r y ,, a total of about $2,600,000,000. The decision o f the Treasury to omit cash offering of securities on M arch 15, gave assurance not only that P R IC E Movements of Stock and Bond Prices (Standard Statistics Company index of 90 stocks and Moody’s Investors Service average prices of Aaa and Baa corporate bonds) M ON THLY REVIEW, APRIL 1, 1939 26 there would be no increase at this time in the supply of Government securities in the market, but also that the volume of bank reserves would be little affected by Treasury transactions on the M arch 15 tax date, and would probably be increased still further during coming months by disbursements of some of the funds now held by the Treasury. A p p aren tly in response to this prospect, together with a need fo r additional earnings due to the low rates of income now obtained on earning assets and the unfavor able prospect for a material increase in the volume of loans in the near future, the large New Y o rk C ity banks embarked upon unusually heavy buying of Treasury bonds in the market during the past month. Changes in holdings o f direct obligations of the Government by the weekly reporting New Y o rk C ity banks between M arch 1 and M arch 29 are shown in the follow ing table. (In millions of dollars) M ar. 1, 1939 M ar. 29, 1939 Change Treasury bills.................................................. Treasury notes............................................... Treasury bonds............................................... 108 889 1,616 68 742 1,981 — 40 — 147 +365 T o ta l.......................................................... 2,613 2,791 +178 A s these figures show, there was a shift from Treasury notes to Treasury bonds, incident to the refunding opera tion o f M arch 15, but quite aside from this shift, there was a substantial increase in holdings of Treasury bonds. Reports from member banks in 100 other cities through out the country showed an increase in holdings of Treas ury bonds during M arch which was less than the reduc tion in their holdings of Treasury notes. The net reduction in total Government security holdings in these cities was caused by sales of notes m aturing on June 15, 1939 to Government security dealers in advance of the exchange of the notes fo r new securities on M arch 15. The effect of Treasury transactions on the reserve po sition o f member banks in the M arch tax period was un usually small, not only because no Government securities were sold to raise new money, but also because income tax collections were considerably smaller than a year previous, reflecting the reduction in business volume and the much greater reduction in business profits in 1938. Income tax collections in March, 1939 are estimated at approxim ately $500,000,000 as compared with about $725,000,000 in M arch, 1938. In the week ended M arch 22 excess reserves o f all member banks declined only $80,000,000, and fo r N ew Y o rk C ity banks showed a small increase. In the follow ing week the rise in excess reserves was resumed, and for the six-week period ended M arch 29 there was a net increase of $350,000,000, as income tax collections and other Government revenue receipts were more than offset by Government disburse ments, together with the accelerated inflow of funds from abroad. M e m b e r B a n k C r e d it T o ta l lo an s a n d in vestm en ts o f w eek ly re p o rtin g m e m b er b an k s c on tin u ed to increase in M a r c h , chiefly as a resu lt o f the ex p a n sio n o f G o v ern m e n t sec u rity h old in g s Money Rates in New York Mar. 31, 1938 Feb. 28, 1939 M ar. 30, 1939 Stock Exchange call loans.......................... Stock Exchange 90 day loans................... Prime commercial paper— 4-6 m onth.. Bills— 90 day unindorsed........................... Customers’ rate on commercial loans (Average rate of leading banks at middle of m onth )................................. Average yield on Treasury notes (3-5 Average rate on Treasury bonds (more than 12 years to maturity or call date) Average rate on latest Treasury bill sale 90-91 day issue.......................................... Federal Reserve Bank of New York re discount rate............................................... Federal Reserve Bank of New York buying rate for 90 day indorsed bills. 1 *1K H-l % 1 1 *1H Vi-Vs % *1M y2-% A 7 1 .5 8 1 .6 3 1.6 3 1 .0 4 0 .5 7 fO. 48 2 .2 9 2 .6 9 2 .3 9 0 .0 8 7 0 .0 0 4 1 1 X t 1 3^ * Nominal. t Change of + 0 .0 5 in average yield due to dropping of 1 H per cent Treasury notes of March 15, 1942 from the average as the issue matures within 3 years. t Average price slightly below par. of the New Y o rk City banks, previously commented upon. Commercial loans showed some further increase of a seasonal character, but the increase from the low point reached early in February was considerably less than in a number of previous years. Loans to security brok ers and dealers increased substantially in the first week of M arch, presum ably reflecting the financing of Gov ernment security dealers’ transactions in connection with the Government refunding operation, but these tem por ary borrowings were repaid in the two follow ing weeks. Since the low point fo r 1938 was reached in the sec ond week o f Ju ly, the total loans and investments of all weekly reporting member banks have increased by nearly $1,300,000,000. There has been no net increase in the total volume of loans during this period, all of the ex pansion being in investments — approxim ately threefourths of it in holdings of direct obligations of the Government and of Government guaranteed securities, and one-fourth in other investments, chiefly in State and m unicipal securities and obligations o f Government agencies whose securities are not fu lly guaranteed by the Government. Security loans have increased moderately, but commercial loans, despite the recent gradual increase, remain lower than at the middle of last year, and other loans also have shown some shrinkage in volume. G o v e r n m e n t S e c u r it ie s On M arch 2, the Treasury announced that in exchange fo r Treasury notes m aturing June 15, 1939, it would issue on M arch 15 additional amounts of three issues of outstanding securities— namely, the 1 % per cent notes due December, 1943, the 2 1/? per cent bonds of 1950-52, and the 2 % per cent bonds of 1960-65. On M arch 6 the Treasury announced the prices at which the exchanges would be m a d e : 101 for the notes, 1 0 2 % fo r the shorter term bonds, and 1 0 2 % fo r the long term bonds. V ir tu ally all o f the June notes were exchanged fo r the new notes or bonds, a large proportion fo r the long term bonds, fo r which a strong preference was indicated. Throughout the first h alf of M arch, the market prices of outstanding Treasury bonds continued to advance, follow ing a strong rise at the end of February when it was first announced that the M arch 15 Treasury financ ing program would consist entirely of an exchange opera FEDERAL RESERVE BAN K OF N EW YO R K tion. D u rin g this period the average price of Treasury bonds of more than 12 year term to call date or m aturity rose approxim ately % of a point to a new high level. The unsettlement in other security markets around the middle of the month arising from the European situation spread to the Government security market fo r a few days, and between M arch 14 and 18 the average price o f Treasury bonds over 12 year term declined y 2 point. A t these levels, however, the active demand fo r Treasury bonds on the part o f commercial and savings banks and insurance companies again made itself fe lt and fo r the remainder of the m onth the movement of Treasury bond prices was toward higher levels. N ot only was the m id month decline canceled, but the rise was sufficient to carry the average price o f Treasury bonds to a new high level on March 30. F o r the m onth as a whole, the aver age yield on Treasury bonds o f more than 12 year term declined 0.10 per cent to 2.29 per cent. Interest in Treasury notes tended as the month pro gressed to be diverted to other sections of the Government security market because of the relatively restricted sup ply and because m any of the outstanding note issues were selling at a premium above a no-yield basis. F o r 3 to 5 year maturities, the average yield declined further to approxim ately % o f 1 per cent near the end of March. Treasury bill financing during M arch included the sale of five weekly issues of 91 day bills, each in the approxim ate amount o f $100,000,000, to replace similar maturities. There have been demands for Treasury bills fo r a number of special purposes during the past month, with the consequence that the issues wTere sold at prices ranging from slightly below par to slightly above par. In all cases the average price realized was only slightly below par, and consequently the yield on these issues was exceedingly small. B il l s and C o m m e r c ia l P a p e r Trading in bankers acceptances remained inactive dur ing March, owing, as in previous months, to the meager amounts o f acceptances released by accepting banks and bankers fo r distribution in the open market. D ea lers’ bid and offered quotations held at previously reported levels. In February, as is usually the case, the volume o f bankers acceptances outstanding declined somewhat, owing chiefly to a contraction in the volume o f domestic warehouse credits. A s compared with a year ago F eb ruary outstandings were down $59,000,000, reflecting p ri m arily decreases in domestic warehouse credits and ex port bills. (Millions of dollars) Type of acceptance Feb. 28, 1938 Jan. 31, 1939 Feb. 28, 1939 I m p o r t .............................................................. Export................................................................ Domestic shipment....................................... Domestic warehouse credit....................... Dollar exchange.............................................. Based on goods stored in or shipped be tween foreign countries.......................... 96 78 8 62 2 88 57 11 42 2 87 57 10 38 2 61 55 54 T o t a l ........................................................ 307 255 248 The commercial paper market likewise continued dull in M arch. B rokers’ newly acquired notes remained in sm all volume as contrasted w ith a continued broad 27 demand. Bates again were reported to be at a range of % - % per cent fo r average grade prime fo u r to six months ’ material. A t the end o f February paper out standing through commercial paper houses amounted to $195,300,000, or approxim ately the same figure as at the end o f January. The February, 1939 outstandings, however, were 33 per cent smaller than a year ago. S e c u r ity M a r k e ts D u rin g the first ten days of M arch some fu rth er re covery in stock prices occurred, although the general average of prices remained about 5 per cent below the early November, 1938, high. In the ensuing part of the month, however, the disturbing events in E urope were accompanied by sizable declines in stock prices in New York, as well as in security markets abroad. D em and fo r liquidity on the part o f foreigners appears to have been a factor in the decline in stock prices in this market and in increased turnover on the Stock E xchange, which on several days rose to a volume of between 1 and 1 y 2 m illion shares. Between M arch 10 and M arch 22, the general average o f stock prices declined about 10 per cent, but remained slightly above the low which was reached toward the end of January when apprehension over the E uropean situation was also more acute and domestic business activity was showing some signs of hesitancy. A fte r M arch 22, stock prices fluctuated irregularly at levels only slightly above the m on th ’s lows in quiet trading until the end o f the month when prices dipped to a new low fo r the year. Domestic corporation bond prices were also affected by the events abroad, and during the middle part of the month generally tended lower. The highest grade issues, those rated A a a by M o o d y ’s Investors Service, tem po rarily eased about 1 % points on the average, and medium grade issues declined about 1 % points. Both classes of bonds, however, remained above the levels reached on the dip tow ard the end o f January— by a considerable amount in the case of B aa bonds— and some recovery occurred after M arch 22. A verage prices of A a a bonds near the end o f M arch were about one point below the recent high levels and B aa bonds were about 1 y 2 points below. A side from the large declines which oc curred in prices o f Czecho-Slovakian dollar bonds during the past month, other European issues generally showed moderate to sizable declines. South A m erican bonds, on the other hand, were firmer during M arch. N e w F in a n c in g Corporate security offerings during M arch fo r the p u r pose of raising funds to finance new plant, equipment, and working capital totaled about $20,000,000. Such issues were about $10,000,000 in January, and $15,000,000 in February. Thus fo r the third month in succession new capital issues were fa r below the m onthly average of about $70,000,000 floated during 1938. The largest amounts o f new capital obtained through security issues in M arch were fo r the National Distillers Products Cor poration and the Lockheed A ir c ra ft Corporation, the latter by an issue of common stock. Issues of $65',000,000 fo r refunding purposes brought the m o n th ’s corporate flotations total to about 28 M ONTHLY REVIEW, APRIL 1, 1939 $85,000,000. Classed among the refunding issues were $27,000,000 of railroad obligations sold to investment bankers by the Reconstruction Finance Corporation. R efu ndin g operations were also carried out by the N a tional D istillers Products Corporation, the Northern States Power C om pany, and the Com m unity Public Service Com pany. The few corporate offerings that were made during M arch were well received, despite the fa ct that several were not o f the highest grade. Interest costs to bor rowers continued at low levels. Issues now in registration with the Securities and Exchange Commission indicate that a considerable increase in flotations is in prospect fo r A p r il. Large issues are expected to be offered both fo r new capital and fo r refu n din g purposes, and the total is likely to equal the average o f 1938 fo r the first time this year. A w ards o f new m unicipal bond issues in M arch were also in small volume, at about $30,000,000. I n addition, offering was made o f $73,444,000 serial bonds o f the M etropolitan W a te r D istrict o f Southern California. B anks and investment dealers purchased these bonds from the Reconstruction Finance Corporation and reoffered them at prices to yield from 2.70 to 3.60 per cent depending upon m aturity. Y ield s on outstanding m unicipal bonds were reported to be the lowest in m any years. B u s i n e s s P r o f it s I n the fourth quarter o f 1938 the attainm ent o f large scale output b y the automobile factories, and further increases in general business activity, resulted in the sharpest rise in quarterly net profits since 1928. Reces sion in general business activity in the first h alf o f 1938 had resulted in a low level o f business profits during that p eriod; and in the third quarter o f the year, despite some recovery in business volumes, total net profits o f industrial companies remained at a low level, a situation attributable in part to the fa ct that the third quarter marks the seasonal low point o f automobile production. F o r the fou rth quarter, net profits o f a group o f 333 A U T O M O B IL E S , & PA RTS B U IL D IN G S U P P L IE S 100 E L E C T R IC A L E Q U IP M E N T industrial and mercantile companies, whose figures are available on a quarterly basis, were 7 % per cent larger than in the corresponding period o f 1937, in contrast with the large declines which occurred earlier in 1938. The increase in net profits in the final three months o f 1938 occurred chiefly in companies producing durable goods. N et profits o f automobile companies, in the aggre gate, reached a total fo r the final quarter which was approxim ately fou r times the low net profits o f the first nine months. R ailroad equipment companies and steel companies had fou rth quarter profits which somewhat exceeded the aggregate deficits sustained in the initial nine months, and perm itted these companies to show small net profits fo r the year as a whole. N et profits of electrical equipment and chemical companies also increased substantially in the fou rth quarter of 1938. Total net profits o f 831 industrial and mercantile com panies fo r the whole year 1938, however, were only about one h alf as large as in 1937, as the accom panying diagram indicates. O f the individual companies tabulated, 26 per cent reported net losses in 1938, as against only 10 per cent in 1937. In the aggregate, profits o f com panies producing durable goods showed a decline from 1937 to 1938 which was approxim ately twice as large as the aggregate decline reported by groups o f companies in the consum ers9 nondurable goods and service lines. N et profits of companies producing steel, railroad equip ment, furniture and floor coverings, brick and clay prod ucts, heating and plum bing equipment, and automobile parts and accessories, amounted to only a small fraction o f the 1937 profits. Profits o f the aviation company group, however, more than doubled between 1937 and 1938 to reach a new high level. A m o n g the food and food products group, profits o f companies m anufacturing bakery products, beverages, and miscellaneous food prod ucts increased over the previous y e a r ’s level, while profits o f meat packing companies, largely as a result o f lower retail prices received fo r meat products, showed a marked decline. I n the retail trade group, food stores increased aggregate net profits while other retail stores showed declines o f varying degree. STEEL M A C H IN E R Y 8. T O O L S M IN IN G 1929 ’32 ’37 ’38 1929 ’32 ’37 ’38 1929 ’32 ’37 ’38 TO BA CC O ALL IN D U S T R IA L S 123 CLASS I R A IL R O A D S 100 P R O F IT D E F IC IT 12 1929 *32 *37 ’38 C H E M IC A L S & DRUGS 100 96 1929 *32 ’37 ’38 1929 ’32 *37 *38 FO O D & FO O D P R O D U C T S PETRO LEUM 100 100 98 R E T A IL TR AD E 100 100 108 100 1929 *32 ’37 ’38 U T IL I T I E S EX C E P T T E L . C O S . too 72 73 P R O F IT D E F IC IT 1929 ’32 ’37 ’38 1929*32 ’37 ’38 1929 *32 ’37 ’38 1929 *32 *37 ’38 1929 *32 *37 *38 1929 *32 *37 ’38 192$ ’32 ’37 ’38 Annual Net Profits or Deficits of 831 Industrial and Mercantile Concerns, Class I Railroads, and 82 Public Utility Companies Other Than Telephone Companies During 1929, 1932, 1937, and 1938 (1929 = 100 per cent) FEDERAL RESERVE B AN K OF N EW YO R K N et income o f Class I railroads recovered further in the fourth quarter o f 1938 to $54,000,000, but because o f the large deficit which accumulated in the first six months of 1938, there was a net deficit o f $123,000,000 fo r the year as a whole, which compares with a net profit of $99,000,000 in 1937 and of $166,000,000 in 1936. Net operating income of 91 large telephone companies declined 7.5 per cent from 1937 to 1938, and the net income of 82 other public utilities declined 10.7 per cent. (Net profits in millions of dollars) Corporation Group Advertising, printing and pub lishing ............................................... Agricultural equipment.................. Automobiles....................................... Automobile parts and accessories (excl. tires)..................................... Aviation............................................... Building materials and supplies: Brick and clay products............ C em ent............................................ Heating and plumbing.............. Paints and varnishes.................. Other building materials........... Chemicals and drugs....................... Containers (metal and glass). . . . Electrical equipment....................... Food and food products: Bakery products........................... Beverages........................................ Confectionery................................ Meat packing................................ Other food products................... Household equipment: Electrical goods............................ Furniture and floor covering.. Other household supplies......... Leather and shoes............................ Machinery and tools....................... Mining: C oal................................................... Copper.............................................. G old................................................... Other mining................................. Motion pictures and amusements Office equipment.............................. Paper and paper products............ Petroleum............................................ Railroad equipment......................... Retail trade: Chain stores................................... Department and apparel stores Food stores..................................... Mail order houses........................ Restaurants................................... Other retail stores....................... Rubber and tires.............................. Shipping and shipbuilding............ Steel....................................................... Textiles: Clothing and apparel.................. Silk and rayon.............................. Other textiles................................. Tobacco................................................ Miscellaneous..................................... No. of Cos. — Deficit. 1934 1937 1938 0 .7 1 8 .8 8 1 .9 — 3 1 .3 3 2 7 .2 — 2 8 .7 5 .2 — 5 .9 8 9 .9 1 0 .4 7 4 .3 2 5 4 .8 7 .4 3 8 .0 104.1 48 10 9 3 .0 — 2 2 .0 4 .1 — 1 .3 1 7 .5 0 .3 5 8 .3 5 .8 5 .6 1 2 .2 9 9 17 6 25 43 6 35 1 3 .9 1 1 .8 4 2 .6 1 6 .2 5 5 .8 197.2 4 1 .6 171.3 — 4 .7 — 6 .1 — 19 .4 2 .9 — 1 2 .9 7 1 .7 2 1 .6 — 2 2 .3 1 .0 1 .2 4 .9 6 .7 1 3 .3 115.5 4 1 .5 2 0 .8 5 .1 7 .0 2 7 .0 9 .2 5 8 .9 188.7 4 1 .1 129.1 0 .9 4 .2 2 .2 4 .7 2 5 .8 1 14.2 2 8 .3 5 3 .9 10 8 12 13 29 2 5 .9 4 8 .4 1 2 .8 1 9 .7 14.4 2 8 .0 3 8 .7 — 3 .1 7 7 .8 152.1 1 8.3 2 7 .6 1 7 .2 2 9 .0 8 4 .9 2 0 .9 3 6 .2 1 9.0 2 3 .4 7 9 .1 2 2 .9 3 7 .0 1 7 .2 2 .8 8 0 .5 13 9 15 13 76 1 4.1 — 5 .4 1 6 .4 — 9 .7 8 .3 3 9 .9 3 .2 2 1 .0 7 5 .5 — 3 1 .0 3 .5 3 .0 2 2 .3 11.2 9 .0 9 .3 1 3.9 3 2 .0 1 1.4 6 8 .2 2 .9 1 .2 2 6 .7 5 .6 2 2 .9 15 7 14 14 12 12 26 40 18 1 2 .5 4 1 .2 2 1 .5 52 .3 5 5 .8 4 5 .8 2 0 .1 166.0 6 3 .4 — 2 .7 — 9 .7 1 4.3 — 7 .4 — 1 5 .5 — 0 .6 — 4 .5 4 .3 — 1 4 .9 8 .9 1 3 .5 3 0 .8 2 7 .0 2 1 .3 17 .2 11 .8 2 8 .4 1.1 4 .1 3 5 .7 3 7 .0 7 9 .6 4 7 .4 3 8 .3 2 1 .8 162.1 4 6 .9 — 3 .8 2 1 .1 2 9 .8 4 4 .3 3 0 .8 2 1 .3 1 1 .2 7 3 .1 1 .2 10 21 13 3 5 10 10 11 33 6 5 .6 37 .1 3 1 .3 4 5 .2 4 .8 8 .2 3 4 .1 1 1 .8 3 6 9 .2 5 1 .5 3 4 .3 2 3 .5 — 9 .0 1 7 .7 2 0 .1 2 6 .9 — 8 .6 0 .2 — 0 .3 3 .1 — 5 .5 1 1 .3 — 1 2 .5 — 5 .3 — 3 .1 -1 3 9 .4 — 1 4 .6 62 .1 2 6 .2 10.4 5 2 .6 0 .8 6 .3 2 6 .8 — 1 .8 2 1 2 .7 5 0 .9 2 3 .4 11 .9 4 4 .6 — 0 .8 2 .5 2 2 .6 — 0 .6 1 .6 27 9 14 16 47 3 .5 2 2 .5 — 1 0 .0 6 .0 0 6 .0 3 .2 — 1 6 .6 — 7 .0 8 0 .2 10 5 .0 1 13.8 1 3 .5 6 1 .0 — 3 .8 7 .5 8 .3 — 0 .4 8 8 .0 2 8 .8 4 .8 3 .7 — 9 .8 8 3 .9 1 5 .8 91 0 .1 2,18 4 .3 1,104.7 8 9 6 .8 - 1 5 0 .6 — 2 9 .4 9 8 .7 — 12 2 .9 Total, 46 groups....................... 831 Other public utilities, net income 1932 16 9 13 Class I Railroads, net incom e.. . . 141 Telephone companies, net operat ing income....................................... 1929 91 82 2 ,8 1 2 .8 — 3 7 .6 * 4 1 3 .2 190.9 191.1 2 2 6 .8 2 0 9 .8 2 9 9 .3 2 5 0 .9 3 0 0 .1 2 6 7 .9 * N ot available. F o r e ig n E x c h a n g e s Renewed tension in E urope during the second h alf o f M arch gave rise to heavy sales o f the principal E u ro pean currencies against dollars, and in the aggregate the movement of capital to this country reached the highest levels recorded for any two-week period since October, 1938. The German occupation o f Bohem ia and M oravia on M arch 14 and 15, the occupation of M em el on M arch 23, the German economic agreement with 29 Rumania, and German press attacks against P oland pro vided the background fo r the European tension. In addition, Premier M u ssolin i’s speeches at the end of the month relative to Italian demands on France, gave rise to further prospect of continuing crises in E urope. The heavy demand fo r dollars during the month was concentrated in the period follow ing M arch 13. On that date sterling had reached a quotation of $4.69 3 /1 6 from $ 4 .6 8 % at the end of February, and at no point in the ensuing flight of capital to N ew Y o rk did the rate go below $ 4 .6 8 % . Sim ilarly, rates fo r the French franc, the belga, and the D utch guilder were confined within a narrow range by means of official supporting opera tions. The Swiss franc, however, was allowed to decline from a quotation of $ 0 .2 2 7 5 % on M arch 10 to a low of $ 0 .2 2 4 6 % on M arch 22, closing the month even lower at $0.2243. The Canadian dollar showed strength in the early part of the month, rising from a discount of % per cent on F ebruary 28 to a discount of 3 /1 6 per cent on M arch 11, but weakened thereafter to as low as % per cent and closed the month at a discount of approxim ately % per cent. A fte r the German occupation of Bohemia and Moravia, the flight of capital fro m Europe developed slowly to reach a peak on M arch 17 and again on M arch 20. Su p port fo r sterling was rendered not only by the British authorities in the exchange market, but also by heavy private gold engagements in London for shipment to and sale in New Y ork, such gold being provided partly by sales by hoarders, who feared that in the event of war in Europe they would be unable to obtain insurance and shipping facilities to move their bullion, and partly by the British authorities. The D utch guilder and the Swiss franc were under severe pressure during this period, as refugee money le ft H ollan d and Switzerland in fear o f German aggression against these contiguous countries. Sales of belgas took place not only in response to developments in central Europe, but also because o f the continued inability o f any Belgian political leader to form a new Government and the consequent disso lution of Parliam ent pending new elections on A p r il 2. E xceptional strength was shown by the French franc through M arch 14, as French capital returned to Paris from London, A m sterdam , Brussels, and Switzerland, and French losses of capital during the latter period were comparatively insignificant. Dem and fo r dollars during M arch was m anifest not only in spot purchases, but also in widening discounts on forw ard quotations fo r the principal European currencies. In addition, widespread demand fo r U nited States currency devel oped in Europe and resulted in a premium on such currency over dollar exchange and in substantial ship ments of U nited States currency to Europe from New Y ork. Despite the general demand fo r dollars in Europe foreign sales of A m erican securities in the New Y o rk market occurred in relatively heavy volume at the middle of the month but subsided near the m onth en d ; similar sales had been made during the period of tension at the end of January prior to H it le r ’s speech on January 30 and during the weeks of September preceding the M unich settlement. Such foreign liquidation of Am erican as well as foreign securities in times o f recent political tension 30 MON THLY REVIEW , APRIL 1, 1939 appears to be associated with the desire of residents abroad for liquidity in the event of war. Latin A m erican and F a r Eastern exchanges fluctuated narrowly during the month. G o ld M o v e m e n t s The accentuation o f political tension in E urope led to an accelerated flow of capital and o f gold to the United States in M arch. In addition to the large amounts of gold actually received in this country during the month, further large amounts were reported to be en route here as the month closed, representing heavy engagements abroad in the latter part o f the month. The gold stock of the United States appears to have increased approxim ately $385,000,000 during M arch, reaching a new high well above the $15,000,000,000 level. The rise in the gold stock during the past month was the largest since last September when the gain was $624,000,000. Included in the M arch increase was $195,500,000, of gold, received through commercial banks or other sources, that was sold to the Treasury on arrival, and a large additional amount of gold received through trans actions not currently reported. There was a net decrease of $10,800,000 in the amount of gold held under earmark in this country for foreign central banks, which at the end of M arch totaled approxim ately $650,000,000. M ost of the reported gold imports were received at New Y o r k ; they came principally from E ngland in the amount of $151,400,000, from B elgium in the amount of $10,200,000, Canada $ 6,200,000, H olland $3,500,000, India $3,300,000, Switzerland $2,800,000, Colombia $1,100,000, France $800,000, and smaller amounts from several other countries. On the W e st Coast, $11,500,000 was received from Japan, $4,000,000 from A ustralia, and $700,000 from China. B u ild in g D u rin g F ebruary construction contracts in the 37 States covered by the F . W . Dodge Corporation were awarded at a daily rate 5 per cent below the January average, thereby continuing in smaller degree the de crease from the comparatively heavy volume of contracts in December. The decline from January to February was due principally to a decrease in heavy engineering aw ards; moderate increases occurred in several other types of construction, especially in residential building. Compared with a year ago, total construction contracts increased 85 per cent, all of the leading categories of construction participating in the advance. In the New Y o rk and Northern New Jersey area the daily rate of construction contract awards during F eb ruary showed a decline from the previous m onth amount ing to 29 per cent, a considerably larger reduction than fo r the country generally. H eav y engineering projects decreased 70 per cent from January to February, while building contracts declined only 7 per cent, a substantial increase in residential construction partially offsetting decreases in other types of building. Total construction awards, however, were more than double the exception ally small volume of February, 1938. F o r the first three weeks of M arch, construction con tract awards in 37 States increased 6 per cent over the February ra te ; a gain of 21 per cent in residential building was offset in large part by a substantial decline in public works and utilities. Compared with the cor responding period in 1938, all the m ajor types of con struction continued to show increases, the largest of which was 62 per cent fo r residential building. Significant differences between the building situation in the Second Federal Reserve D istrict and in the rest of the country are indicated by comparisons of residen tial building contracts and real estate foreclosures in these areas. To the extent that real estate mortgages are foreclosed the amount o f property pressing on the market is increased and this constitutes a considerable deterrent to the building o f new houses. A s one part of the accom panying diagram indicates, non-farm fore closures since 1932 in the Second Federal H om e Loan D istrict (State totals fo r New Y o rk and New Jersey) have been consistently higher relative to the 1926 level than foreclosures in other districts. The peak o f fore closures was reached considerably later and at a much higher level in this district than in the rest o f the country, and an increase occurred here last year which had no counterpart in other parts of the country taken as a whole. The restraining effect of higher foreclosure rates on building activity is illustrated in the other part of the diagram , in which it is shown that residential building during recent years has made considerably less recovery in this D istrict than elsewhere. In February of this year foreclosures in the second district, although equal to only about one-half the number in the middle of 1935, were still over three times the 1926 m onthly average. Meanwhile, the volume of building in this area was equal to only about one-third of the 1926 average, although in the fa ll of 1938 the amount of residential building contracts was tem porarily raised to a higher level, partly due to U nited States H ou sin g A u th o rity projects. In other districts foreclosures have declined almost continuously since 1932, to a current level only slightly above the 1926 base period, and residential build ing in these districts has risen much more than in this District. PERCENT PERCENT Real Estate Foreclosures Compared with Residential Building Contracts (Federal Home Loan Bank Board data for non-farm foreclosures; F. W. Dodge Corporation data for residential building contracts; 3 month moving averages of data on 1926 base) 31 FEDERAL RESERVE BANK. OF NEW YO R K E m p lo y m e n t a n d P a y r o lls Follow ing a substantial seasonal reduction in Janu ary, employment in nonagricultural industries in the United States increased slightly in February, and ap proxim ately 100,000 more workers were employed than at this time last year, according to the Secretary of Labor. A n increase in factory em ployment was par tially offset by a net reduction in the number of work ers engaged in other nonagricultural pursuits. Factory em ployment increased about l 1/^ per cent from m id-January to m id-February, but the advance was somewhat less than is usual fo r February. The resulting decline in the seasonally adjusted index of factory em ployment represented the first reduction since June, 1938. Gains in factory employment were quite general, and durable and nondurable goods industries shared about equally in the advance. The largest in creases during the month were seasonal additions to working forces at plants m anufacturing m e n ’s and w om en’s clothing. Compared with February, 1938 fa c tory em ployment was 3 per cent higher. Factory payrolls increased 2 % per cent in February, considerably less than usual at this time of the year, but were 11 per cent higher than in Feb ruary a year ago. In New Y o rk State, on the other hand, February gains in both factory em ployment and payrolls were slightly larger than usual fo r this season. A d ju sted indexes of factory em ployment and payrolls accordingly continued to advance, although the employment index rose at a somewhat slower rate than in the three pre ceding months. B oth indexes reached the highest lev els since November, 1937, but remained well below the peaks reached in that year. Practically all of the m ajor industries shared in the February increase in em ploy m en t; seasonal advances in clothing and m illinery were particularly pronounced. P r o d u c tio n a n d T r a d e Prelim inary evidence indicates that there was little change in the general level of business activity in M arch, after consideration of seasonal factors. Gains in m anu facturing failed to reach the usual seasonal proportions in some lines, but the volume of merchandise distribution apparently compared favorably with February. Steel m ill operations were maintained around 55 to 56 per cent of capacity during M arch, or only slightly above the average fo r F e b ru a ry ; ordinarily there is a rather pronounced advance. Autom obile assemblies were stepped up moderately from week to week during M arch, but although running about two-thirds ahead of a year ago, the February-M arch rise was somewhat smaller than in most other years. How ever, reports indicated that cotton m ill activity was well maintained, despite a shrink age in the volume of new business booked in the latter part of the m o n th ; shipments of freight by railway showed little change from the February level after ad justm ent fo r seasonal influences; and electric power generation and bituminous coal production were reduced only about as usual. I n the fo u r weeks ended M arch 25 department store sales in this D istrict were nearly 3 per cent higher than in the corresponding 1938 period, the most favorable year-to-year comparison in a number o f months. W h ile the improvement in year-to-year comparisons in this case was contributed to by the declining tendency in sales last year, and by the some what earlier date of E aster this year than last, the rate o f sales appears to have increased more than seasonally between F ebruary and March. In February there was a further moderate recession in business activity, after allowance fo r the usual sea sonal factors. The rate o f steel ingot production in creased less than in most other years, automobile assem blies were lower than in January, and operations at meat packing plants declined more than usual. A bout the customary seasonal changes occurred in a number of industries, including those producing cotton textiles, shoes, tobacco products, and electric power. Bituminous coal production continued at approxim ately the January rate, in contrast with the moderate decline experienced in many past years, and cement output increased. The dollar value of machine tool orders advanced further in February. E xcept fo r a tem porary lull last fa ll, machine tool orders have been increasing sharply since M ay, 1938, (Adjusted for seasonal variations, for estimated long term trend, and where necessary for price changes) 1938 1939 Feb. Dec. Jan. Feb. 39 70 46 72 65r 92 85 46 73 55 95 82 87 80 95 83 87 79 88 93 71 101 135 119 87 95 69 86 84 82 77 88 91p 57 94 104 116p 84 87 67 80?) 79 85 80p 88 p 91 p 63 95 106p 114p 78 87 90 67 93 75 93 74 92p 74 p 25 40 47 48 38 112 69 67 74 64 90 64 81 79 80 73 79 75 71 71 79 71 79 64 83 78 100 89 87 58r 87 81 114 100 95 77 86 76 111 97 91 82 85 76 112p 93 94 79 p 62 66 61 60 36 44 36 35 154 148 155 148 155 147 154 p 146 111 111 111 lllp Industrial Production Passenger cars.................................................... Motor truck s..................................................... Bituminous coal................................................. Crude petroleum .............................................. Electric power.................................................... Cotton consumption........................................ W ool consumption r ........................................ M eat packing...................................................... Tobacco products.............................................. Employment Employment, manufacturing, U. S , ......... Employee hours, manufacturing, U . S . . . . Construction Residential building contracts..................... Nonresidential building and engineering contracts.......................................................... Primary Distribution Car loadings, merchandise and misc......... Car loadings, other.......................................... Distribution to Consumer Department store sales, U. S....................... Department store sales, 2nd D istrict.. . . Chain grocery sales.......................................... Other chain store sales................................... Mail order house sales.................................... New passenger car registrations................. Velocity of Deposits f Velocity of demand deposits outside New York City (1919-25 average=100 per Velocity of demand deposits, New York City (1919-25 average=100 per cent) Prices and Wagesf General price level (1913 average=100 per cen t).......................................................... Cost of living (1913 average=100 per cent) Composite index of wages (1926 average = 1 0 0 per cent).............................................. p'Preliminary. r Revised. t Not adjusted for trend. 32 and in F ebruary September, 1937. M ON THLY REVIEW, APRIL 1, 1939 reached the highest level since C o m m o d i t y P r ic e s A fte r a period of firmness in the early part of March, prices in leading wholesale commodity markets evidenced some tendency to decline as the m onth progressed. One of the largest declines occurred in the average price o f hogs which fell 66 cents at Chicago to $7.17 a hundredweight, or to about the level prevailing around the m iddle of January. Rubber reached a new high since last Novem ber on M arch 4, but subsequently de clined about 1 cent to 1 5 % cents a pound on M arch 22, accom panying speculative liquidation in fu tu res; the price moved irregularly during the remainder of the month. Spot quotations fo r cotton receded moderately, and wheat prices tended slightly lower. Rather wide fluctuations continued to be shown in raw silk prices during the month. A fte r reaching $ 2 .3 3 % a pound on M arch 2, the highest point since October, 1935, silk declined to close the month at $ 2 .2 2 % , or near the level prevailing at the end of February. Quotations fo r raw sugar were advanced slightly in response to a pros pective downward revision in quotas fo r the various producing areas fo r 1939. A m o n g the metals, some price advances occurred dur ing M arch. The price of lead was increased 10 points on M arch 9 to 4.85 cents a pound, thus restoring the level which prevailed prior to February 16. This ad vance reflected higher prices in the London market and also an improvement in domestic demand for lead. A s sociated with a curtailment of export quotas, the price o f tin rose 50 points to 46.75 cents a pound, later receding to 46.50 cents. Scrap steel prices were advanced 1 2 % cents a ton at Pittsburgh, but finished steel prices were reaffirmed fo r the second quarter. finished m anufactures were somewhat smaller in value than a year previous, and receipts of m anufactured food stuffs were reduced by about one fourth, while other m ajor types of imports registered increases ranging from 2 per cent fo r crude foodstuffs to 15 per cent fo r semi m anufactured products. I n the category of semimanu factures, large gains compared with F ebruary, 1938 oc curred in receipts of unset diamonds, nickel, and lum ber products. D e p a r tm e n t S to re T r a d e Total sales of the reporting department stores in this D istrict during the fou r weeks ended M arch 25 were nearly 3 per cent higher than in the corresponding 1938 period, the most favorable year-to-year comparison in a number of months. W h ile the improvem ent in yearto-year comparisons was contributed to by the declining tendency in sales last year, and by the somewhat earlier date of Easter this year than last, the rate of sales appears to have increased more than seasonally between February and M arch. F o r the m onth of February, total sales of the report ing department stores in this D istrict were about 5 per cent lower than last year, a smaller decline than in January. In most localities, department store sales showed more favorable year-to-year comparisons than in the previous month. Total sales of the leading apparel stores in this D istrict were 5 % per cent lower than last year, also a smaller reduction than in January. Percentage change February, 1939 compared with February, 1938 Locality F o r e ig n T r a d e D u rin g February merchandise exports from the United States showed a slight increase to $219,000,000, while imports, valued at $158,000,000, were substantially smaller than in January. Compared with February, 1938, however, exports showed a decline of 17 per cent, while imports were down only 3 per cent in value and were fractionally larger in quantity, according to calcu lations by the United States D epartm ent of Commerce. The $61,000,000 export balance in February, although representing an increase over the January excess of ex ports, was smaller than in any other m onth since A u gust, 1937. A m o n g the m ajor export groups, shipments of crude foodstuffs and crude materials showed the largest yearto-year declines in F e b r u a r y ; in the case of crude food stuffs the decrease amounted to more than 50 per cent, and in crude materials to about 25 per cent. O n the other hand, shipments of wholly and partly finished m anufactures showed relatively small declines from February, 1938, and an increase of 13 per cent occurred in exports of m anufactured foodstuffs, chiefly wheat flour, meat products> and canned fru its. A m o n g the imports, New York and Brooklyn.................................... Northern New Jersey.......................................... Northern New York State............................ Southern New York S tate............................ Central New York State................................ Hudson River Valley D istrict..................... Westchester and Stamford............................ Niagara F a lls...................................................... Net sales — — — — — + — — — — — — + 5 .9 3 .8 2 .3 2 .7 4 .0 0 .2 4 .2 16 .8 4 .8 1 .7 6 .2 4 .6 0 .2 Per cent of accounts outstanding January 31 collected in February Stock on hand end of month 1938 1939 — — — — — + — 4 6 .5 4 2 .5 5 5 .5 3 6 .5 4 0 .9 3 7 .5 3 0 .0 4 6 .0 4 2 .0 5 4 .0 3 7 .3 3 8 .4 3 5 .8 3 0 .6 9 .0 6 ,1 1 1 .5 3 .4 5 .0 8 .5 0 .1 All department stores................................. — 5 .1 — 7 .7 4 4 .2 4 3 .1 Apparel stores................................................ — 5 .5 + 3 9 .4 3 9 .2 1 .3 Department Store Sales and Stocks, Second Federal Reserve District (1923-25 average = 100) 1939 1938 Jan. Feb. Sales, unadjusted................................................... Sales, seasonally adjusted.................................. 74 91 164 92 68 86 71 86 Stocks, unadjusted................................................ Stocks, seasonally adjusted............................... 78r 83r 74 75 68 75 72 77 Feb. r Revised. Dec. FEDERAL RESERVE BANK OF NEW YORK M ONTHLY REVIEW , APRIL 1, 1939 B u s in e s s C o n d it io n s in th e U n ite d S ta te s (S u m m a rized b y the B o a r d o f G ov ern ors o f th e F e d e r a l E eserv e S y ste m ) IN F e b r u a r y in d u s tria l a c t iv it y c o n tin u ed a t the J a n u a ry ra te, w ith o u t sh ow in g the usual rise, an d r e ta il tra d e in crea sed less th a n sea son a lly . I n th e first th ree w eeks o f M a rch , h ow ever, in d u s tr ia l a c t iv it y an d tra d e sh ow ed seasonal in creases. C om m od ity p ric e s con tin u ed to sh ow litt le ch an g e. P roduction Index of Physical Volume of Industrial Pro duction, Adjusted for Seasonal Variation (1923-25 average = 100 per cent) PER CENT V olu m e o f in d u s tria l p ro d u c tio n w as a t a b ou t th e sam e ra te in F e b r u a r y as in th e tw o p rev iou s m onths, a lth o u g h u su a lly th ere is an in crease, an d the B o a r d ’ s sea son a lly a d ju s te d in d e x d eclin ed fu r th e r to 98 p e r ce n t o f the 19 23-1925 a v era g e. I n the steel in d u s tr y a c t iv it y d id n o t sh ew th e u su al seasonal ad v an ce. P i g iron p ro d u c tio n in creased , b u t n ew ord ers f o r steel w ere in lim ite d v olu m e an d in g o t p ro d u c tio n rem a in ed a t a b o u t 54 p e r ce n t o f c a p a c ity th r ou g h ou t the m on th . T h ere w as som e d eclin e in a u tom ob ile assem b lies, fo llo w in g a p e rio d o f co n sid e ra b le in crea se. O u tp u t o f lu m ber an d p la te g la ss con tin u ed to d ecrease in F e b r u a r y , w h ile cem en t p ro d u c tio n , w h ich h a d b een cu rta ile d in J a n u a ry , in crea sed co n sid e ra b ly . I n the first th ree w eeks o f M a rch steel p r o d u c tio n in crea sed t o a b o u t 56 p e r cen t o f c a p a c ity an d a u to m o b ile ou tp u t w as also in som ew hat la r g e r v olu m e. T e x tile p ro d u c tio n in F e b r u a r y w as a t a b o u t th e sam e ra te as in J a n u a ry . A t co tto n and w o olen m ills a c t iv it y in crea sed som ew h a t b u t a t silk m ills there w as a m arked d eclin e. O u tp u t o f shoes an d t o b a c c o p ro d u cts con tin u ed a t h ig h levels. I n the m ea t p a c k in g in d u s try a c t iv it y d eclin ed fu rth e r an d th ere w as also a d ecrease in a c t iv it y a t su g a r refineries. B itu m in ou s co a l p ro d u c tio n w as m a in ta in ed in F e b r u a r y , an d cru d e p e tr o leu m ou tp u t lik ew ise co n tin u e d in su b sta n tia l volum e. A n th r a c ite ou tp u t d e clin ed in F e b r u a r y , an d in M a rch w as red u ced fu rth e r as m in e ow n ers and w ork ers a g re e d on a cu rta ilm en t p ro g ra m . Index of Number of Factory Workers Employed, Adjusted for Seasonal Variation (1923-25 average = 100 per cent) V a lu e o f c o n str u c tio n c o n tra cts aw a rd ed d eclin ed in F e b r u a r y , a c c o r d in g t o F . W . D o d g e C orp o ra tio n fig u res, o w in g p r in c ip a lly to a fu r th e r d ecrease in aw a rd s f o r p u b lic ly fin an ced w ork . C on tracts f o r p riv a te ly fin an ced resi d en tia l b u ild in g in crea sed fu rth e r, w h ile a w a rd s f o r p riv a te n on resid en tia l b u ild in g rem a in ed a t th e lo w le v e l o f oth er recen t m onths. E m pl o y m e n t F a c to r y em p loy m en t an d p a y ro lls in crea sed som ew hat less th an is usual b etw een th e m id d le o f J a n u a ry an d th e m id d le o f F e b r u a r y . C hanges in n o n m a n u fa c tu r in g lin es w ere la r g e ly o f a season al n a tu re. D istribu tion D ep a rtm en t sto re sales w ere in a b o u t the sam e v olu m e in J a n u a ry , a lth ou g h som e in crease is u sual, an d sales a t v a r ie ty less th an season ally , w h ile m a il ord er sales ro se b y s lig h tly season al am oun t. I n th e ea rly p a r t o f M a rch d ep a rtm en t store F e b r u a r y as in stores in crea sed m ore th a n the sales in creased . F r e ig h t car lo a d in g s d eclin e d som ew h a t fr o m J a n u a ry to F e b r u a r y , r e fle ct in g f o r th e m ost p a r t red u ced sh ipm en ts o f g ra in s, fo r e s t p rod u cts, an d m iscel lan eou s fr e ig h t . Com m odity P rices Value of Construction Contracts Awarded (Three month moving averages of F. W . Dodge Corporation data for 37 States, adjusted for seasonal variation) W h o le sa le c o m m o d ity p ric e s w ere g e n e r a lly m a in ta in ed w ith litt le ch a n g e d u r in g F e b r u a r y an d the first three w eeks o f M a rch . A s is u su al a t th is season p rice s o f liv e sto c k an d m eats in crea sed w h ile d a ir y p ro d u cts d eclin ed . S ilk p ric e s a d v a n ced c o n sid e r a b ly in th is p e rio d . I n th e ea rly p a r t o f M a rch cu rren t p rices o f p ig iro n an d o f sem ifinish ed an d fin ished steel w ere reaffirm ed f o r the secon d qu arter o f th is y ea r. B a n k Credit PER CENT 1—v<\/r r— S ; TREASURY BO>NDS Yt:ars &o\ *\ I RESERVE BANK * DISCOUNT RATE A'I 'v J r w v . tJ ....... l RtASUR\' NOTES” | 3-5 YlEARS ^ yREASURY BILLS l\ lI . NEWISiSUES 1934 1935 1936 1937 M oney R ates \ A 1938 M oney Rates In New Y ork City In v estm en ts in U n ite d S ta tes G ov ern m en t o b lig a tio n s b y N ew Y o r k C ity ba n k s in crea sed c o n sid e r a b ly in F e b r u a r y an d the first h a lf o f M arch . I n th is p e r io d m em ber ba n k s red u ced th eir h o ld in g s o f T rea su ry n otes an d in crea sed th eir b on d s , r e fle c tin g in p a r t ex ch a n ges o f n otes f o r n ew b o n d issu es on M a rch 15. E x ce s s reserves o f m em ber b a n k s con tin u ed som ew hat b e lo w the h ig h lev e l o f $3,600 ,000 ,000 reach ed a t the end o f J a n u a ry , flu ctu a tin g la r g e ly in a cco rd a n ce w ith ch a n g es in T re a su ry b a la n ces at the F e d e r a l R eserv e B an k s. '-v. 1939 A v e ra g e y ie ld s on U n ited S ta tes G overn m en t secu rities d eclin ed to new r e co r d lo w levels fr o m F e b r u a r y 27 to M a rch 10, fo llo w in g the a n n ou n cem en t b y the T re a su ry th a t n o cash w ou ld b e raised in the M a rch fin a n cin g . Y ie ld s rose s lig h tly a ft e r th e m id d le o f M a rch a c c o m p a n y in g ren ew ed ten sion in E u ro p e . N e w issues o f 91 d a y T re a su ry b ills c o n tin u ed t o sell on p r a c t ic a lly a n o -y ie ld ba sis d u r in g M a rch . O ther op en m ark et rates c o n tin u ed u n ch a n ged .
@FedFRASER