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MONTHLY REVIEW
O f Credit and Business Conditions
FEDERAL
V o lu m e
29
RESERVE
BANK
APRIL
OF
NEW
YORK
1947
No. 4
MONEY MARKET IN MARCH
Through the redemption of a substantial volume of ma
turing certificates and notes and payments of interest on the
public debt, the Treasury returned to the banks during the
past month a large portion of the funds it had accumulated
with the Reserve Banks, primarily out of tax receipts, in
earlier weeks of the year. These payments substantially ex
ceeded tax collections in March and the money market con
sequently was greatly eased. Thus Treasury operations, which
in the first two months of the year caused a persistent drain
on the reserves of the banks, had the reverse effect in March,
at least until the latter part of the month. In the first three
weeks of the month the banks relinquished a substantial vol
ume of Federal Reserve credit, by purchasing Government
securities directly or indirectly from the Reserve Banks. In
effecting this retirement of Federal Reserve credit, the banks
were aided by a decline in their reserve requirements, by
payments from foreign and other deposits with the Reserve
Banks, and by receipt of the proceeds of an increase in the
monetary gold stock. There was also, of course, a reduction
in the volume of Federal Reserve credit in use, as a result of
the redemption of Federal Reserve Bank holdings of matur
ing Treasury securities.
Member bank reserve positions were considerably eased on
the first day of the month when the Treasury paid off, in cash,
1 billion of a 3.1 billion dollar issue of maturing certificates.
At the middle of the month an entire issue of 1.9 billion dol
lars of IVa per cent Treasury notes was redeemed. As a result
of these redemptions, together with payments of interest on
the public debt in excess of 400 million dollars, Treasury de
posits with the Reserve Banks dropped 965 million dollars in
the week ended March 5 and 716 million in the week ended
March 19— the latter despite large income tax collections and
Treasury withdrawals of about 700 million dollars from War
Loan deposits in the banks. Member banks were quick to
utilize the funds placed at their disposal and made heavy pur
chases of Treasury bills from the Federal Reserve Banks, ac
quired more moderate amounts of Treasury certificates in the
open market (most of which were furnished by the Reserve
System), and reduced their indebtedness to the Reserve Banks.
In the intervening week (ended March 12) there was little
net change in the volume of Federal Reserve credit outstand
ing. For member banks in the aggregate, gains of reserve
funds from some transactions were approximately counter
balanced by losses from others. But for individual banks and
groups of banks the gains and losses did not balance, so that
some banks were in need of reserves and sold substantial
amounts of Treasury bills to the Federal Reserve Banks, while
others purchased considerable amounts of certificates in the
open market, most of which came indirectly from Federal
Reserve holdings
Tax collections were heavy in the latter part of the month
and, as Government disbursements were not unusually large
after the public debt operations at the middle of the month,
funds accumulated rapidly in the Treasury’s deposit accounts
with the Reserve Banks. In the week ended March 26, these
deposits again rose above IV2 billion dollars. Despite a drop
in reserve requirements resulting from the heavy tax pay
ments, a reduction in currency circulation, and net gains of
funds from gold and foreign account operations, member
banks experienced heavy losses of funds on balance in that
week, and adjusted their reserve positions through sales of
short term Treasury securities to the Reserve Banks and in
the open market, and through increased borrowings.
Treasury Deposits with Federal Reserve Banks*
B IL L IO N S
OF D O L L A R S
1947
* W ednesday dates; latest figure is for M arch 26.
30
MONTHLY REVIEW, APRIL 1947
In view of the renewed accumulation of funds in its deposit
accounts and the improved budgetary outlook for the current
fiscal year, the Treasury announced that it would redeem 11/2
billion dollars of maturing certificates on April 1. Although
a moderate withdrawal from War Loan deposit accounts is to
be made on that date, the net effect of the Treasury’s opera
tions again will be to return to the banks a substantial portion
of the reserves w'hich they have lost recently as a result of tax
collections. Thereafter, Treasury receipts and disbursements
are expected to be in closer balance, so that the week-to-week
swings in reserve positions of the member banks due to
Treasury transactions should be narrowed considerably.
New York City banks felt the effects of Treasury disburse
ments in connection with debt retirement operations in the
first and third weeks of March to a greater extent than other
banks. As usual, large amounts of the redeemed Treasury
securities were concentrated in the New York money market,
but the transfers of business and banking funds out of New
York to other parts of the country, which are usually associated
with such debt transactions, were much less pronounced than
on many occasions in the past. In fact, there was no net out
flow of funds to other parts of the country in connection with
the redemption of the maturing certificates on March 1.
Throughout most of the month, the metropolitan banks had the
benefit of substantial payments out of foreign deposit accounts
at the Reserve Banks. In the final week of that period, how
ever, the New York City banks sustained rather large losses of
reserves through heavy income tax collections and related
transfers of funds to other parts of the country. Consequently,
they found it necessary to resell to the Reserve Banks substan
tial amounts of the Treasury bills they had purchased earlier in
the month.
B u sin e ss L o a n s
The expansion of commercial, industrial, and agricultural
loans at weekly reporting member banks was accelerated in
the first quarter of 1947. In the four weeks ended March 19,
business loans at those banks rose 429 million dollars, as com
pared with about 200 million dollars or less in each of the
preceding three periods of like duration. Business borrowing
from the reporting banks since the end of December increased
826 million dollars, an increase of distinctly greater than sea
sonal proportions.
The growth of business loans in this period was par
ticularly rapid among the New York City reporting member
banks. In fact, the rate of growth at the City banks was half
again as rapid as in the period from May through December last
year when the largest part of the 1946 expansion of business
loans occurred. In contrast, weekly reporting banks in the 100
other cities showed a distinct slowing down (by about one
third) in the rate of gain in their outstanding business loans.
The factors behind the expansion of business borrowing
from the banks last year was discussed at some length in the
November 1946 and previous issues of this Review. They in
cluded the increased volume of business in many industries,
heavy expenditures for reconversion and capital expansion,
higher wages and material costs, heavy strike expenses and
increased operating costs resulting from material shortages
and recurrent production bottlenecks, the expansion of in
ventories, the rise in book credit extended by business to cus
tomers, and the increase in retail charge account sales and
instalment credit granted by retailers.
The more recent expansion of loans may be associated in
part with the renewed rise in prices, as inventories acquired
at lower prices have had to be replaced at higher values, neces
sitating increased financing. A great variety of industries has
been represented in the extensions of bank credit in recent
months. To a large extent, however, the current increase
in outstanding business loans apparently reflects a decline in
the rate of repayment of loans rather than a rise in the volume
of new borrowing. Some confirmation of this tendency is
given by the reports of the volume of new business loans
(including renewals) at 10 leading cities during March 1-15;
these reports showed little change from the December 1-15
volume. The decline in the rate of repayment may reflect
the large proportion of term loans made in 1945 and early
1946, on which, because of their longer maturity, repayments
are much smaller in relation to the outstanding volume than
on short term loans.
IN TE R E ST RA TE S CH ARGED ON BUSINESS LOANS
B Y M EM BER BANKS IN TH E SECOND D IS T R IC T 1
The interest rate charged on each loan reported was a part
of the information supplied by the member banks in this Dis
trict who participated in the recent survey of commercial and
industrial loans outstanding on November 20, 1946. From
these reports it is possible to estimate the average interest
rates charged on all business loans made by banks of various
size, as well as the average rates paid by the different types of
borrowers. These data indicate that, in general, interest rates
charged by member banks varied considerably between loans
(and borrowers) of different size and, partly for that reason,
between banks of different size. Rates were also influenced to
a lesser extent by the business of the borrower and the maturity
of the loan. Average rates charged by the larger banks were
generally lower than the rates charged by the smaller banks,
chiefly because much of their business is with large borrowers
with high credit ratings, although their rates tend to be some
what lower for borrowers of comparable size. This is particu
1 This is the third of a series of articles covering the results of
a survey of commercial loans of member banks in this District. The
first article appeared in the February 1947 Review and the second in
the March 1947 Review.
31
FEDERAL RESERVE BANK OF NEW YORK
larly true in the 14 New York City banks with total deposits
of more than 500 million dollars, whose average rates were the
lowest of any group of banks.
The interest rate pattern in the District ranged from slightly
less than 1 per cent to 6 per cent, but the average rate charged
on all business loans by all member banks was 2.3 per cent,
owing to the substantial dollar volume of large loans made at
less than 2 per cent by the 14 largest New York City banks.
Exclusive of these banks the average rate was 3.4 per cent.
About half of the estimated 114,323 business loans outstanding
on the survey date carried interest rates of 5 per cent or more,
while only 4 per cent of the number were made at less than
2 per cent. As Chart I indicates, 10 per cent of the loans of
the largest banks were made at rates under 2 per cent, and
about 57 per cent carried rates below 4 per cent. The propor
tion of higher-rate loans increased steadily as the size of bank
diminished until, in the smallest banks, 98 per cent of the
loans were made at rates of 4 per cent or more and more than
half were at 6 per cent.
The lower average interest rates reported by larger banks
do not necessarily imply that small banks would charge a higher
rate on any given loan. The differences in the results appear
to be largely traceable to differences in the character of their
commercial lending. Average rates at the larger banks were
lower, at least in part, because more of the loans made by these
banks were large, and were made to large concerns with a
nation-wide scope and high credit rating. Thus the costs of
appraising the applications and servicing the loans, relative to
Chart I
Interest Rates Charged on Business Loans by Second District
Member Banks of Various Size— Percentage
Distribution of Number of Loans*
INTER ES T RATE
PER C E N T PER A N N U M
PER C E N T
Chart II
Interest Rates Charged on Business Loans by Second District
Member Banks of Various Size— Percentage
Distribution of Loans by Dollar Volume*
I N TE RE ST RATE
P ER C E N T PER A N N U M
DEP OSIT
SIZE
OVER
500
PE R CENT
100500
10100
M ILLIO N S
OF
2 10
UNDER
2
DOLLARS
* Data derived from survey of commercial and industrial loans outstanding
on Novem ber 20, 1946.
the amounts involved, tend to be considerably lower at the
large banks, and the risks also are less. The available data do
not permit study of all separate factors influencing the level of
interest rates at banks of various size, but such factors as com
petition among big banks for business loans of the highest
grade are undoubtedly of considerable importance.
Measured by dollar volume, there was a much greater con
centration of loans at the lower rates, as Chart II indicates.
Nearly half of the estimated 4,615 million dollars of commercial
and industrial loans outstanding on November 20, 1946 at all
member banks in this District were made at less than 2 per
cent. Of this amount about 91 per cent were in the 14 largest
New York City banks; these banks loaned some 5o per cent
T a b le I
Average Interest Rates Charged on Commercial and Industrial Loans
Outstanding on November 20, 1946 at All Member Banks in the
Second District* by Size of Banks and Business of Borrowers
(Per cent per annum)
]Business o f borrowe]r
Bank size groups
(Measured by total
deposits)
DEPOSIT
SIZE
OVER
500
100500
10100
M ILLIO NS
2 10
UNDER
2
M anu
facturing W hole
sale
and
mining
trade
Retail
trade
Other
Over $500 m illion............................
2 .0
2 .0
2 .3
3 .0
2 .3
$100 to $500 million.......................
2 .6
2 .7
2 .5
3 .2
2 .4
$10 to $100 million.........................
3 .9
4 .0
3 .9
4 .0
2 .7
$2 to $10 million.............................
4 .6
4 .7
4 .3
4 .1
3 .4
Under $2 million.............................
5 .1
5 .6
4 .7
4 .4
4 .0
2 .3 f
2 .2
2 .3
3.1
2 .3
Total, all banks...................
OF D O L L A R S
* Data derived from survey of commercial and industrial loans outstanding
on N ovem ber 20, 1946.
All
bor
rowers
* Estimated on basis of loans reported in survey; includes real estate loans for
commercial purposes,
t Includes a small amount of loans not classified b y business of borrower.
32
MONTHLY REVIEW, APRIL 1947
of their dollar volume at interest rates between 1.1 and 1.9
per cent. In fact, 87 per cent of the dollar volume of all busi
ness loans handled by the largest New York City banks were
made at less than 3 per cent. On the other hand, nearly all
of the loans made by the smallest banks, those with deposits
under 2 million dollars, were made at 4 per cent or higher rates.
Table I shows the average rate charged by size of banks and
business of borrowers. It indicates that the largest (New York
City) banks received an average of 2 per cent on all business
loans, while successively higher rates were obtained as the size
of banks diminished, the smallest banks receiving an average
of 5.1 per cent. Loans to borrowers engaged in manufacturing
and mining showed the widest variation in rates, ranging from
an average of 2 per cent at the largest banks to 5.6 per cent
at the smallest banks. The spread between the average rates
to retailers was the narrowest of the major business groups—
less than IV2 per cent— the largest New York City banks
averaging 3 per cent and the smallest banks averaging 4.4 per
cent. The average rates to wholesalers ranged from 2.3 per
cent to 4.7 per cent at the different groups of banks. At
all banks sales finance companies were consistently low-rate
borrowers.
These differences between banks of various size in interest
rates charged on loans undoubtedly are explained in large
measure by differences in the size of loan, which, of course,
is closely related to the size of the business of the borrower.
Table II shows the average interest rates by size and business
of borrowers. It indicates that businesses with assets exceed
ing 5 million dollars paid on the average 1.8 per cent for their
loans. The average rate increased with each succeeding reduc
tion in the size of borrowers, and the average for all banks
reached a maximum of 4.5 per cent for borrowers with assets
of less .than 50 thousand dollars. W ith minor variations a
similar rate pattern was evident in each of the major business
Table II
Average Interest Rates Charged on Commercial and Industrial Loans
Outstanding on November 20, 1946 at All Member Banks in the
Second District* by Asset Size and Business of Borrowers
(Per cent per annum)
13usiness o f borrowe:r
M anu
facturing W hole
sale
and
mining
trade
Size of borrower
(Measured by total
assets)
All
bor
rowers
Over $5,000,000...............................
1.8
1.9
1.6
2 .0
1 .8
$750,000 to $5,000,000...................
2 .6
2 .6
2 .3
2 .6
2 .9
$250,000 to $750,000......................
3 .3
3 .2
3 .3
3 .6
3 .4
$50,000 to $250,000........................
3 .9
3 .9
3 .8
4 .1
3 .8
Under $50,000..................................
4 .5
4 .4
4 .5
4 .6
4 .5
2 .3 f
2 .2
2 .3
3 .1
2 .3
Total, all borrowers...........
Retail
trade
Other
* Estimated on basis of loans reported in survey; includes real estate loans for
commercial purposes,
f Includes a small amount of loans not classified b y asset size and business of
borrower.
groups. The largest wholesalers borrowed at the lowest aver
age rate (1.6 per cent), which may be explained in part by
their large proportion of short term loans.
As shown in Table III, the difference between rates charged
on short term loans and the rates charged on longer term loans
was quite small— the average rate charged on all business loans
maturing in 1 year or less was 2.1 per cent, compared with
an average of 2.5 per cent on all loans maturing over 1 year.
A spread of at least 2 /5 of 1 per cent between loans with
maturities under and over 1 year existed for borrowers of all
sized groups. At some groups of banks, however, the average
rates on term loans were actually lower than on loans maturing
in less than 1 year. This may be explained by such factors as
differences in the credit ratings of the borrowers. A more
complete breakdown of average rates based on varying maturi
ties over 1 year revealed no definite rate pattern related to
length of maturity.
Table III
Average Interest Rates Charged on Commercial and Industrial Loans Maturing under and over One Year
Outstanding on November 20, 1946 at All Member Banks in the Second District*
by Size of Borrower and Size of Bank
(Per cent per annum)
Loans maturing ini year or less
^
Loans maturing over 1 year
Banks with total deposits, in millions
Size of borrower
(Measured by total assets)
All
member
banks
Under
$2
$2
to
$10
$10
to
$100
$100
to
$500
Banks with total deposits, in millions
Over
$500
All
member
banks
Under
$2
$2
to
$10
$10
to
$100
$100
to
$500
Over
$500
Over $5,000,000.....................................................
1.6
-
-
2.1
2.2
1.6
2.0
-
-
1.7
1.7
2.0
$750,000 to $5,000,000..........................................
2.4
-
2.6
3.4
3.1
2.3
2.8
-
3.9
3.2
2.7
2.9
$250,000 to $750,000.............................................
3.1
-
3.7
4.2
3.6
3.0
3.5
5.1
4.4
3.7
3.3
3.6
$50,000 to $250,000...............................................
3.6
4.3
4.4
4.2
4.1
3.5
4.1
5.3
4.3
4.2
3.9
3.8
Under $50,000.......................................................
4.3
4.7
4.7
4.4
4.3
4.1
4.7
5.3
5.1
4.6
4.2
3.8
2 .It
4.6
4.5
4.1
2.6
2.0
2.5f
5.3
4.6
3.9
2.7
2.1
Total, all borrowers....................................
* Estimated on basis of loans reported in survey; includes real estate loans for commercial purposes,
t Includes a small amount of loans not classified by asset size of borrower.
33
FEDERAL RESERVE BANK OF NEW YORK
NEW YORK STATE INDUSTRIAL BANKS
In the last eight or ten years the type of business transacted
by industrial banks in New York State has undergone a funda
mental change. Originally these institutions were organized
to accept savings deposits and to make small ($100 to $5,000),
amortized loans to individuals. The experience of the indus
trial banks with the small instalment loan proved its soundness
and profitability; and in the early 1930’s, when the demand for
business accommodation fell off sharply, a number of commer
cial banks entered the consumer loan field in search of addi
tional earnings. These commercial banks were in a position
to offer borrowers lower interest rates than industrial banks,
which obtained funds chiefly from interest-bearing time ac
counts or investment certificates. It soon became obvious that
industrial banks could survive this competition only by expand
ing the scope of their operations. The New York State bank
ing law was accordingly amended in 1937 to permit industrial
banks to accept demand deposits against which checks could be
drawn. At the same time, other changes in the State banking
law were made which authorized industrial banks to engage
in almost every type of activity permitted to commercial banks.
Today the lines of demarcation between the two sorts of insti
tutions have almost disappeared. The services offered to the
public by the industrial banks now include almost all of those
offered by commercial banks of comparable size.
At the present time only 14 industrial banks, with deposits
ranging from less than 1 million to 64 million dollars and
aggregating a little over 150 million dollars, operate in the
State, compared with over 900 commercial banks which have
deposits totaling more than 30 billion dollars. In recent years,
however, the volume of business of industrial banks, with the
notable exceptions of their consumer loans and time deposits,
has been growing at a much more rapid rate than that of com
mercial banks. Today in some localities these institutions com
pete actively with commercial banks.
Relatively early in their history the industrial banks found
that the demand for small loans was not sufficient to employ
all their deposits. They began to purchase limited amounts
Percentage Increases in Selected Balance Sheet Items of New
York State Industrial Banks and All Member Banks
in the Second District, December 1939-46
Item
Industrial All member
banks
banks
97
87
Commercial and industrial loans..............................................
843
128
U. S. Government securities......................................................
1,827
220
197
86
1,123
105
86
124
75
40
Demand deposits of individuals, partnerships, and corTime deposits of individuals, partnerships, and corporations
Source: New York State Department of Banking and Board of Governors of
the Federal Reserve System.
Total Loans Outstanding of New York State Industrial Banks
by Type of Loan, December 31, 1939-46
M I L L IONS
OF D O L L A R S
1 1 0 i ---------------
1939
S ource:
1943
1945
1946
New Y ork State Department of Banking.
of retail automobile or other similar paper and to make, in
addition to small loans, certain types of loans which were out
side the usual field of commercial banking operations because
o f their longer maturity or their unconventional collateral pro
visions, such as loans against trust funds. The industrial banks
were able to extend such accommodation because of the rela
tive stability of their time deposits. However, until shortly
before the war their operations were restricted for the most
part to "consumer banking.”
In the seven years from the end of 1939 to the end of 1946,
total loans outstanding of New York industrial banks nearly
doubled, rising from 49 to 96 million dollars.1 The most
significant part of this increase was the rise in commercial
and industrial loans. At the end of 1939 credits extended
to commercial enterprises accounted for only 8 per cent, or
approximately 4 million dollars, of the total volume of loans
on the books of the industrial banks; at the end of 1946 they
accounted for over a third of those banks’ loan portfolios. This
rate of expansion, as the accompanying table indicates, was
nearly seven times as great as that which occurred during the
same period in the business loans of commercial banks which
are members of the Federal Reserve System in the Second or
New York District. The accompanying chart, also, shows
clearly the steady progress which the industrial banks have been
able to make along this line. Notwithstanding this progress,
the volume of commercial and industrial loans made by indus
trial banks accounted at the end o f 1946 for only a negligible
proportion of such loans outstanding in this State.
1 It is a common practice among industrial banks simultaneously
with the granting of a loan to have the borrower open an hypothecated
account in which he agrees to deposit a stated amount at regular
intervals during the life of the loan. When the loan matures, the
funds accumulated in the hypothecated account are used to pay it off.
The amounts so accumulated have been deducted in arriving at the
loan and deposit figures used in this article.
34
MONTHLY REVIEW, APRIL 1947
Industrial banks’ real estate loans have been small through
out most of their history. However, the amount of residential
real estate mortgages held by these banks increased sharply
during 1946 and is continuing to grow.
Consumer loans still account for the greater part of the
credits extended by the New York industrial banks; but because
of the relatively high interest rate which these institutions
charge, such loans have not been expanding as rapidly as either
the other types of loans made by the same institutions or the
consumer loans of the commercial banks. During 1946 the
increase in the dollar volume of industrial banks’ consumer
loans outstanding was only 37 per cent compared with 65 per
cent for member banks in this District. The industrial banks
hope to improve their competitive position in the consumer
loan field once their demand deposits have increased sufficiently
to enable them to reduce loan rates. A considerably larger
proportion of the consumer loans made by industrial banks
are instalment credits than is true in the case of the commer
cial banks, but the latter are currently putting increasing
emphasis on instalment credits.
The rapid growth of deposits at industrial banks during the
war years, when the demand for consumer credit was curtailed,
resulted in increased holdings of Government securities, which
rose from less than 3 million dollars at the end of 1939 to a
peak of over 77 million dollars at the end of 1945. This
is a relatively much greater increase than occurred in the hold
ings of member banks in this District. During 1946 because
the industrial banks were able to expand their loan portfolios
more rapidly than the commercial banks, they sold a somewhat
larger proportion of their Government obligations than did the
member commercial banks. As the result of both sales and
redemptions, the industrial banks’ holdings of Government
securities declined to about 50 million dollars at the end of
last December.
The most striking indication of the change that has taken
place in the operations of New York industrial banks is the
increase in their private demand deposits. At the end of 1939
demand deposits of individuals, partnerships, and corporations,
at 5 million dollars, were equal to only 10 per cent of their
total deposits. By obtaining new accounts and expanding
loans, industrial banks in the succeeding years increased their
private demand deposits to approximately 63 million dollars
at the end of 1946, or to 41 per cent of their total deposits.
Time deposits of the industrial banks, on the other hand,
failed to keep pace with the growth in savings accounts in the
commercial banks during the war, and recently their rate of
growth has fallen behind that of the New York savings banks
as well. This slower progress may be partially explained by
the fact that the interest rates paid by the industrial banks do
not average much over 1 per cent. W hile this is fairly close
to the rate paid by the commercial banks, it is below that paid
by most other savings institutions in the State. In spite of
the sharp increase in their demand liabilities, the proportion
of time deposits to total deposits still is higher for the indus
trial banks than for most commercial banks in this District;
at the end of last December, the proportion was 55 per cent.
The earnings record of the industrial banks has paralleled
that o f the member banks, although the ratio of net profits to
average capital accounts was somewhat higher for industrial
than commercial banks in the early years of the war, when the
industrial banks held a higher proportion of their earning
assets in loans than the commercial banks. In 1945 the ratio
of net profits to capital accounts averaged 11.5 and 11.6 per
cent, for the industrial and member banks, respectively. Indus
trial banks, however, are required by law to maintain a ratio
between their capital accounts and net demand deposits of at
least 1 to 10.2 (Commercial banks may be under pressure
from supervisory agencies to maintain adequate capital funds,
but they are under no legal compulsion to maintain a fixed
capital-deposit ratio.) In 1946 the industrial banks had to
sell a relatively substantial volume of capital notes and stock
to bring the total of capital accounts up to the required level
and their rate of profits for the year, therefore, will probably
show some decline when the figures become available. The
industrial banks, like the commercial banks, have followed
conservative dividend policies, retaining the greater part of
their earnings to strengthen their capital structures.
2 Total deposits and unpaid dividends less net amount due from
banks and cash items in the process of collection.
CHECK R O U TIN G SYM BOL P R O G R A M
During the past year or so, substantial progress has been
made in the introduction among member and other par clear
ance banks of the check routing symbol. This symbol or code
is a three or four digit number imprinted on bank checks for
the purpose of identifying the Federal Reserve Bank or branch
at which checks on given banks are receivable for collection—
that is, the Reserve Bank head or branch office in the territory
in which the commercial bank is located. A detailed descrip
tion and discussion of this device for facilitating the sorting,
collecting, and clearing of checks between Federal Reserve Dis
tricts appeared in the July 1946 issue of the Review.
A growing number of banks, and of businesses and indi
viduals who have their own checks printed, have had the new
symbol imprinted on their checks, so that a considerable
increase in the circulation of checks with the symbols took
place during 1946. A survey at the end of 1946 indicated that
84 per cent of all par clearance banks in the country had some
checks in circulation bearing the routing symbol in the
approved location on the check, as against 50 per cent shown
in a survey made in February 1946. In the Second District,
97 V2 per cent of the banks showed some checks in use bearing
FEDERAL RESERVE BANK OF NEW YORK
the routing symbol at the end of 1946. In actual volume,
however, the proportion of checks carrying the new symbol
was much smaller, owing to the fact that many banks and
35
depositors are using up supplies of checks printed before the
new symbols were adopted.
as necessary conditions for the expansion of international trade.
Each member country further recognizes its responsibility for
fulfilling such conditions by measures appropriate to its politi
cal and economic institutions and consistent with other objec
tives of the ITO. Members agree to assist in the economic
Widespread adoption of the new symbol both by the banks
development of backward countries, which in turn agree to
and by customers using custom-made checks is essential to
limit new protective measures to those authorized by the charter
realize the full economy of time and money made possible
or approved by the Organization.
under the new plan.
Reduction in sorting time, in sorting
All members undertake to negotiate most-favored-nation
errors and misrouting, and thus in the length of time required
tariff reductions, which shall operate automatically to reduce
to collect checks, with consequent reduction in operating costs
and improvement of service to bank depositors, should be the
existing margins of tariff preference. Quantitative restrictions
are barred, subject to numerous exceptions to meet special cir
eventual outcome of the general use of the new symbol.
cumstances such as balance of payments difficulties.
Restric
tions imposed under such authorized exceptions may not be
LIBERALIZATION OF WORLD
TRADE POLICIES
discriminatory, however, unless so required in order to support
exchange controls permitted by the International Monetary
In December 1945 the State Department issued its Proposals
Fund, or intergovernmental commodity agreements and other
for Expansion of World Trade and Employment, recommend
restrictive arrangements authorized by the ITO.
ing establishment by the United Nations of an International
sidies are prohibited after a transitional period of three years,
Export sub
Trade Organization and suggesting detailed rules of trade
although subsidization of output for domestic consumption is
policy for incorporation into its charter.1
subject to no more than consultation (in the event of damage
Acting upon this
recommendation, the Economic and Social Council of the
to other members).
United Nations appointed shortly thereafter a Preparatory
determine their purchases or sales solely by "commercial con
State trading enterprises are required to
Committee of experts, comprising representatives of the United
States, United Kingdom, U.S.S.R., and fifteen other countries,
siderations” and to negotiate reductions of margins between the
foreign and domestic prices of commodities traded by them.
to draft such a charter for presentation to a prospective Inter
Emergency provisions permit members to withdraw concessions
national Conference on Trade and Employment. This Prepara
that prove damaging, and with ITO approval, to withdraw con
tory Committee, from which Russian representation had been
cessions to any member which fails to observe its charter obliga
meanwhile withdrawn, convened in London on October 15,
tions.
1946, accepting as a basis for its discussions a second State
ing nations maintaining complete trading monopolies to agree
Department document, A Suggested Charter for an Interna
tional Trade Organization, which was presented by the Amer
meeting of the Preparatory Committee, together with other
ican delegation.
provisions regulating trading relations with nonmembers of
Wide agreement was reached by the Preparatory Committee
upon all of the major policy issues involved in the Suggested
Charter, with the exception of those arising out of State trad
the ITO.)
Members agree to take appropriate action to eliminate busi
ness practices (e.g., cartel arrangements) that, after investiga
ing monopolies and relations with nonmembers of the ITO.
The eight chapters of the ITO charter recommendations of the
international trade.
Preparatory Committee may be summarized as follows:
The purpose of the ITO is to provide machinery for inter
national collaboration in reducing trade barriers and discrimina
vene intergovernmental commodity conferences for regulation
of certain primary commodity markets when there is a failure
or threatened failure of natural economic forces to produce a
satisfactory equilibrium. In all such agreements, consuming
tion in international trade and in encouraging general economic
development.
All countries which are represented at the pro
posed International Conference on Trade and Employment and
which accept the charter by a certain date will become original
members.
Subject to the approval of the Organization, mem
(Consideration of Suggested Charter proposals requir
to minimum import levels has been postponed to the next
tion by the ITO, are proved to have a restrictive effect upon
The Organization is empowered to con
countries are to have a voice equal to that of the producing
countries.
The principal organs of the ITO are to be a Conference; an
Interim Tariff Committee; an Executive Board; Commissions
bership will be subsequently extended to other nations accept
on Commercial Policy, Business Practices, and Commodity
ing the charter.
Agreements; and a Secretariat.
Full employment and rising effective demand are recognized
#
#
*
#
#
A second meeting of the Preparatory Committee at Geneva
l
The Proposals were summarized and discussed in the January 1946
in April 1947 will seek not only full agreement upon a com
issue of this Review.
36
MONTHLY REVIEW, APRIL 1947
plete charter text but also immediate, concerted negotiation
of tariff reductions by all the governments represented on the
Preparatory Committee.
W A R A N D P O ST W A R D EVELO PM EN TS IN SECOND
D IST R IC T D E P A R T M E N T STORE SALES
The initiative in scheduling such
The pent-up demand for consumer goods, especially hard
multilateral tariff negotiations for the Geneva meeting was pro
goods, which resulted from wartime shortages is still the
vided by the State Department, which in December 1946 for
mally invited most of the nations represented on the Prepara
key factor in the continued high level of department store
tory Committee to enter into such negotiations. If the Geneva
hopes to incorporate into a General Trade and Tariff Agree
wear, now contribute less than normally1 to the volume of
department store sales in this District. This article presents
an analysis of department store sales in the Second District
ment, setting forth the new tariff schedules, the bulk of the
commercial policy recommendations of the London meeting
partmental data on stocks and sales recently completed by this
tariff negotiations prove successful, the Preparatory Committee
regarding preferences, quantitative restrictions, etc., as well as
provision for an Interim Tariff Committee to administer the
agreement until the ITO becomes effective. A definite date for
the contemplated International Conference on Trade and
Employment has not yet been fixed.
For the guidance of American representatives at the forth
sales.
Soft goods departments, with the exception of men’s
since the outbreak of the war in Europe, based on new de
bank.2 The comparisons made in the following discussion are
all based upon changes in the dollar volume of sales and stocks
and should be viewed in the light of the price movements
which have occurred in the past seven years.
Table I
Changes in February Stocks and Ratios of Stocks to Sales by Departments
at Second District Department Stores, 1939-47*
coming Geneva meeting, the State Department has sought a
Percentag;e change
in stocks
Februia,ry 28
full expression of both public and Congressional opinion
regarding appropriate tariff concessions as well as the desir
ability of the ITO charter itself. Thus, in January 1946 public
Department
hearings on possible trade concessions were undertaken by the
Committee on Reciprocity Information,2 while in late February
and early March informal hearings on the projected ITO charter
were also held.
A degree of opposition which developed in Congress to the
continuation of Presidential authority to negotiate tariff reduc
tions appears to have moderated considerably following the
issuance of an executive order by the President on February 25,
1947, introducing several procedural changes in the reciprocal
trade agreements program. One such change is that all future
reciprocal trade agreements must contain broad escape clauses
of the type included in the Mexican Agreement, which permits
suspension of tariff concessions damaging to the domestic econ
omy. The executive order furthermore authorizes the Tariff
Commission to investigate the operation of any trade agree
ment considered damaging to domestic industry, and to recom
mend such modifications as may be necessary.
On March 6, 1947 President Truman appealed for full sup
port of Administration efforts to carry the Geneva tariff nego
tiations to a successful conclusion. Failure to do so, he warned,
would seriously jeopardize not only international acceptance
of the ITO and effective operation of the International Bank
and Fund but also threaten the entire structure of cooperation
Major household appliances.
Musical instruments...........
Men’s clothing.....................
Sheets, pillow cases.............
Men’s furnishings................
Linens, towels.....................
Blankets, spreads................
China, glassware.................
Aprons, housedresses..........
Wines, liquors.....................
Women’s shoes....................
Domestic floor coverings. . .
Luggage...............................
Draperies, upholstery.........
Corsets, brassieres...............
Toys, games.........................
Lamps, shades.....................
Women’s coats, suits..........
Infants’ wear.......................
Groceries, meat...................
Toilet articles......................
Juniors’ and girls’ wear. .. .
Blouses, sportswear.............
Neckwear, scarfs.................
Rati o of Februjiry
stocks to salesi #
1946
to
1947
1939
to
1947
1939
1946
+583
+208
+164
+139
+117
+115
+111
+ 96
+ 92
+ 91
+ 88
+ 83
+ 77
+ 74
+ 73
+ 69
+ 63
+ 62
+ 53
+ 46
+ 44
+ 40
+ 31
+ 29
+ 25
+ 24
+ 23
+ 20
+ 19
+ 13
+ 13
+ 12
+ 11
+ 6
+ 5
0
— 1
— 6
— 18
+ 60
+452
+ 47
+ 70
+137
+150
+205
+169
+ 157
+156
+ 25
+ 94
+206
+403
+ 83
+ 37
+133
+225
+132
+119
+175
+345
+254
+ 112
+153
+282
+105
+284
+147
+273
+113
+204
+165
+360
+334
+171
+124
+260
+105
2.8
2.8
5.2
3.5
4.3
5.2
5.3
2.8
3.3
2.9
6.7
6.6
2.0
4.2
6.1
5.6
1.8
5.4
6.2
6.2
2.9
1.5
3.3
6.1
4.5
1.9
5.2
3.3
3.1
1.0
2.3
2.4
2.7
2.6
2.2
3.1
5.9
1.9
2.9
0.4
1.8
1.9
0.9
2.1
2.4
2.7
1.7
2.6
1.4
2.7
3.5
1.6
3.9
3.1
2.3
1.5
5.5
2.8
3.5
2.2
1.8
3.4
4.6
4.0
2.2
4.3
3.7
1.5
1.9
3.2
3.1
3.0
3.8
3.5
3.7
4.3
2.3
3.2
1947
1.0
3.3
3.5
2.1
4.1
5.5
5.2
2.9
4.2
2.6
4.3
6.7
2.8
13.5
5.1
3.3
2.6
8.1
4.0
4.5
2.9
2.6
4.1
5.8
5.2
3.2
5.1
3.8
2.0
2.2
3.9
3.2
2.8
4.2
3.7
2.7
4.7
2.2
2.2
* February 1947 preliminary.
# Number of months’ supply at the February rate of sales.
1 Whenever reference is made in this article to the normal or base
period, the 1935-39 average is meant.
2 The analysis is based on new sales and stocks indexes for 55 depart
ments compiled annually beginning in 1925 and monthly from 1935
to date. These and supplementary tabulations of: (1 ) annual rate of
2 The Committee for Reciprocity Information was established in stock turnover, 1925-46; (2 ) annual receipts of merchandise, 1925-46;
1934 to receive opinions and information from interested parties on
(3 ) distribution by departments of sales and stocks for selected years;
and (4 ) estimated dollar volume of sales and stocks in the 1935-39
existing or proposed trade agreements. Its membership includes repre
base period may be obtained upon request from the Research Depart
sentatives of the Departments of State, Commerce, Agriculture, Treas
ment, Federal Reserve Bank of New York.
ury, War, and Navy and of the Tariff Commission.
among the United Nations.
37
FEDERAL RESERVE BANK OF NEW YORK
Chart I
Ratio of February Stocks to Sales by Departments at Second District
Department Stores, 1945-47 Compared with 1939*
(Number of months’ supply at the February rate of sales)
RATIO
7I
MEN’ S
CL O TH IN G
YARD
GOODS
-------------------------
r a t io
7
1939
M 5*46M 7
w rM >e
FU R N ISH IN G S
W O M EN ’ S
C O A T S A SUITS
SH E ETS &
P IL L O W C A S E S
D R A P E R IE S &
UPHOLSTERY
1939
<939 ’ 4 5 *46 ’ 4 7
> 45*46*47
WOMEN’ S
D O M E ST IC
FLO O R C O V E R IN G S
<939
’45 *46’ 47
FU RN ITU RE
1939
’ 4 5 ’ 46 ’ 4 7
H O U SE W A R E S
1939
’ 4 5 ’46 ’ 47
M U SICAL
IN STRU M EN TS
1939
’ 4 5 ’ 4 6 ’ 47
M A JO R
HOU SEHOLD
A P P L IA N C E S
1939 > 4 5 ’ 4 6 ’ 4 7
* Stocks as of February 28 each year; February 1947 preliminary.
Two thirds of the 8 per cent increase which Second District
department store sales showed in February 1947 over Feb
ruary 1946 took place in 5 major departments which in 1939
accounted for only one sixth of the average store’s total sales.
In three of these departments— major appliances, domestic
floor coverings, and mens clothing— consumers’ demand still
exceeds the supply available, although stocks of these items
have increased substantially during the past year. Table I
shows that in these three departments the dollar value of
stocks at the close of February had increased much less over the
February 1939 level than in most other departments. In the
other two departments— furniture and musical instruments—
stocks have increased sharply in spite of the high level of sales,
and the ratio of stocks to sales is above that in 1939Sales of two women’s wear departments— coats and suits
and dresses— which normally account for about 10 per cent of
department stores’ volume, declined in February compared
with a year ago. Increases in the sales of these departments
during the war period had contributed substantially to the gain
in total store volume. The dollar volume of stocks in these
departments is now substantially higher than in 1939.
Current trends in department store sales by type of mer
chandise are to a large degree influenced by the pattern of the
flow of goods to consumers and by the price developments that
have taken place during the past few years. Table II shows the
variations in sales increases during the seven years from the
start of World War II to the end of the first year of reconver
sion (September 1939— August 1946) and the changes in the
subsequent six months.
Homefurnishings sales expanded
sharply in the first two-year period ended August 1941. Nor
mally this group accounts for less than one quarter of the
stores’ total volume, but in the 1939-41 period it contributed
35 per cent to the total gain in sales. Percentage increases were
greatest in major appliances, floor coverings, and furniture.
During the following four years, however, these departments
experienced the greatest wartime shortages, and the group
increase accounted for less than 10 per cent of the total sales
gain. The draperies and upholstery department was the only
one in the homefurnishings group to experience a sizable sales
increase in this four-year period. During the first year of
reconversion, housewares came on the market rather quickly
and were followed by a limited supply of radios, major appli
ances, and furniture. The homefurnishings group as a whole
contributed 35 per cent to the total increase in sales during this
year. The proportion has steadily increased during subsequent
months and reached 65 per cent in February.
Men’s wear sales normally account for 8 per cent of the
total department store sales volume. As millions of men
joined the Armed Forces, this group contributed only 6 per
cent to the total increase from August 1941 to August 1945.
In the following year, sales of both men’s clothing and men’s
furnishings rose sharply, and the group contributed 12 per
cent to the average store’s increase. By February the propor
tion increased to 20 per cent.
In contrast, women’s wear
sales, which usually average 40 per cent of total store volume,
accounted for 60 per cent of the gain from 1941 to 1945 as
earnings of women increased sharply and thousands of addi
tional women were drawn into employment. In 1946 this
proportion dropped sharply, and by February it was about
15 per cent of the total increase. Among the individual depart
ments included in women’s wear, changes in sales experience
varied widely. From 1941 to 1945, exceptionally large increases
were experienced in infants’ wear, juniors’ and girls’ wear,
sportswear, neckwear, and lingerie. Gains reported for hosiery,
MONTHLY REVIEW, APRIL 1947
33
Table II
Changes in Department Store Sales by Departments,
Second Federal Reserve District, 1939-47
Percentage change
1939
to
1941
1941
to
1945
1945
to
1946
1939
to
1946
Six
months
ended
February
1946
to
1947#
+16
+ 40
+ 27
+ 106
+ 19
+14
+ 7
+13
+ 8
+12
+86
+11
0
+ 4
+ 6
+23
+ 1
+11
+ 6
+12
+ 65
+ 67
+ 98
+ 99
+ 46
— 10
+115
+ 35
+ 41
+ 39
+ 20
+ 53
+ 91
+ 70
+113
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
24
25
21
22
23
22
19
18
23
31
4
8
10
25
12
+ 132
+ 123
+171
+ 160
+100
+105
+184
+ 58
+ 80
+ 93
+ 54
+ 68
+ 132
+ 126
+ 166
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+12
+ 9
+ 6
+ 12
+ 21
+ 66
+ 40
+ 44
+ 17
+ 77
+ 90
+ 105
+ 32
+ 21
+ U
+23
+31
+12
+16
+18
+16
+48
+23
+
+
+
+
+
+
—
—
+ 44
+ 44
+ 26
+ 37
+ 29
+ 69
+672
+209
+ 98
+ 94
+119
+104
+ 84
+ 132
+ 71
+125
+ 11
+ 37
+ 16
+ 7
+ 10
+ 20
+264
+157
— 2
+19
+29
+22
+11
+ 7
+17
+27
+16
+10
+ 1
+18
+ 4
+43
+118
+ 33
+ 7
+ .27
+ 46
+ 22
+ 82
+ 17
+ 59
+ 30
+ 36
+ 84
+ 46
+ 73
17
34
43
42
27
12
17
70
22
66
41
30
11
6
+150
+112
+ 96
+119
+105
+ 47
+150
+154
+127
+138
+ 94
+182
+ 69
+132
+
+
+
+
+
Year ended August
Department
Total*...................................
Women's and misses' wear . .
Coats, suits..........................
Dresses.................................
Juniors’ and girls’ wear
Blouses, sportswear.............
Aprons, housedresses..........
Furs......................................
Neckwear, scarfs.................
Millinery..............................
Handbags.............................
Shoes....................................
Hosiery.................................
Gloves..................................
Lingerie................................
Corsets, brassieres...............
Infants’ wear.......................
Men's and boys' Wear
Men’s clothing.....................
Men’s furnishings...............
Boys’ wear...........................
Homefurnishings
Furniture.............................
Domestic floor coverings. . .
Draperies, upholstery.........
Lamps, shades.....................
China, glassware.................
Housewares.........................
Major household appliances.
Musical instruments...........
U
3
55
28
20
19
85
41
All other
Yard goods..........................
Linens, towels.....................
Sheets, pillow cases.............
Blankets, spreads................
Notions.................................
Toilet articles......................
Jewelry.................................
Silverware............................
Stationery............................
Luggage................................
Toys, games.........................
Groceries, meats..................
Restaurant, bakery.............
Wines, liquors.....................
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
—
9
1
7
3
9
19
8
10
15
19
31
4
16
19
15
After September 1945 their contribution to sales increases de
clined, and in February they contributed nothing to the increase
of 8 per cent in total sales. Among these miscellaneous depart
ments diverse movements took place. Toilet articles and drugs,
which in the prewar period accounted for almost 5 per cent of
the total business of department stores, experienced the smallest
increase for any department during the seven-year period. Dur
ing January and February of this year, sales were substantially
below the corresponding 1946 period. Declines in sales of
jewelry and of groceries and meats have also been experienced
during the past few months, while purchases of wines and
Chart II
Estimated Dollar Volume of Second District Department Store
Sales and Stocks by Major Departmental Groups, 1927-46*
M IL L IO N S
OF D O L L A R S
17
18
39
13
21
0
6
38
3
31
22
2
9
24
* Includes departments not shown separately.
# February 1947 preliminary.
shoes, millinery, and handbags during this period were con
siderably below the average. In general these departments were
particularly affected by materials shortages. Fur sales in 1945
were actually below the 1941 volume. During the year of recon
version, hosiery continued in short supply, but during the past
few months this item has become plentiful, the pent-up demand
apparently having been satisfied. Immediately following the
end of rationing, sales of shoes expanded sharply, and substan
tial increases in this department have continued to be reported
during the past six months. Stocks of millinery and handbags
remain more than adequate for consumers’ needs. Price cutting
in furs during the past few months resulted in sharp sales gains,
and stocks at the close of February were almost 20 per cent
below the year-earlier level.
All departments other than those included in the three major
groups discussed above account normally for 25 per cent of
department store sales in this District. They accounted for a
corresponding share of the increase during the six war years.
* Monthly sales and end-of-month stocks are averages of fiscal years ending
January 31 of the following year. District totals estimated from group of
stores reporting sales and stocks by departmental classifications. Plotted on
ratio scale to show proportionate changes.
39
FEDERAL RESERVE BANK OF NEW YORK
liquors have been sharply lower following a small drop during
the first year of reconversion. Sales of yard goods were excep
tionally high during the war years, and the volume continued
heavy, accompanied by considerably larger stocks. Sales of
sheets and pillow cases were sharply curtailed during the war
period because of inadequate supply. This department is cur
rently experiencing one of the largest sales increases, and de
mand continues strong.
Although the dollar volume of total store stocks during 1946
was at an all-time high, merchandise turnover, at 5.0, was the
fastest on record. It compares with a stock turnover rate of
4.7 in 1939. The accompanying Chart II shows that from 1927
to 1942 the dollar volume of homefurnishings stocks exceeded
that of women’s wear. Since 1942 the unprecedented dollar
volume of total store inventories has been almost entirely due
to the higher level of women’s wear stocks. This type of
merchandise, however, normally turns over more rapidly than
either homefurnishings or men’s wear. In 1946 the main
women’s ready-to-wear lines were comparatively slow moving
departments.
D E P A R TM E N T STORE TR A D E
March sales of department stores in the Second Federal
Reserve District are estimated to have been more than 10
per cent greater than in March 1946. When adjustment is made
Department and Apparel Store Sales and Stocks, Second Federal Reserve
District, Percentage Change from the Preceding Year
for seasonal variation, including the earlier date of Easter this
year, the gain in sales compared with last year is somewhat
smaller, although the seasonally adjusted index of sales rose
from February to March. Increased sales in the furniture,
major appliances, musical instruments, men’s clothing, and yard
goods departments are mainly responsible for the gain over a
year ago. Sales of women’s apparel compared unfavorably
with sales of similar goods in March 1946, which were high
as a result, in part, of abnormally warm weather.
The value of inventories of Second District department
stores at the end of February was 49 per cent greater than on
the same date a year ago. At that time, it is true, stocks were
relatively low; merchants were clearing their shelves of war
time goods, the flow of postwar products into the market was
still slow, and sales of postwar merchandise were taking place
as rapidly as goods reached the counter. Nevertheless, the
seasonally adjusted index of stocks for February is ar an alltime high and exceeds the previous peak, reached at the end
of December, by 5 per cent. The ratio of stocks on hand at
the end of February 1947 to sales during that month was 3.7,
a figure slightly higher than the last prewar February ratios
(1940 and 1941) and considerably higher than the ratio of a
year ago (2 .7).
Outstanding orders placed by department stores continued
to decline during February and at the end of the month were
the lowest since May 1944. The ratio of outstanding orders
to sales, at 2.2 for February, however, was still greater than in
1940 and 1941.
Net sales
Locality
Feb. 1947
Indexes of Business
Stocks on
Jan. through
hand
Feb. 1947 Feb. 28, 1947
Department stores, Second District----
+ 8
+13
+49
New York City...................................
Northern New Jersey.........................
Newark............................................
Westchester and Fairfield Counties..
Bridgeport.......................................
Lower Hudson River Valley..............
Poughkeepsie...................................
Upper Hudson River Valley..............
Albany.............................................
Schenectady.....................................
Central New York State...................
Mohawk River Valley....................
Utica............................................
Syracuse...........................................
Northern New York State.................
Southern New York State.................
Binghamton.....................................
Elmira..............................................
Western New York State..................
Buffalo.............................................
Niagara Falls...................................
Rochester.........................................
+ 9
+ 2
0
+ 9
+10
+14
+10
+13
+13
+12
+17
+ 5
+ 4
+22
+ 8
+13
+ 6
+15
+ 7
+ 2
+15
+14
+14
+ 8
+ 6
+18
+17
+15
+13
+13
+11
+15
+21
+11
+10
+25
+14
+18
+14
+15
+10
+ 7
+17
+15
+48
+35
+39
+60
+43
+55
+54
+58
+63
+50
+60
+40
+31
+71
+61
+63
+58
+58
+56
+44
+66
Apparel stores (chiefly New York City).
— 5
+ 2
+57
Industrial production*, 1935-39 = 100........
Feb.
Dec.
Jan.
Feb.
152
182r
188
188p
185
213r
220
224p
188
194
200p
208p
(Board of Governors, Federal Reserve
System)
Electric power output*, 1935-39 = 100.......
(Federal Reserve Bank of New York)
Ton-miles of railway freight*, 1935-39 = 100
(Federal Reserve Bank of New York)
Sales of all retail stores*, 1935-39 = 100. ..
243
270
276p
277p
122
150
150
151p
112
131
132
133p
(Department of Commerce)
Factory employment
United States, 1939 = 100........................
(Bureau of Labor Statistics)
New York State, 1935-39 = 100...............
(New York State Dept. of Labor)
Factory payrolls
United States, 1939 = 100.........................
211
300
300p
New York State, 1935-39 = 100...............
206
273
281
232
262
264
150
167
168p
130
153
153
153p
90
79
84
83
84
88
86
90
(Bureau of Labor Statistics)
283p
(New York State Dept, of Labor)
Income payments*, 1935-39 = 100..............
(Department of Commerce)
Composite index of wages and salaries*#
1939 = 100..................................................
Indexes of Department Store Sales and Stocks
Second Federal Reserve District
(1935-39 average— 100 per cent)
1947
1946
Index
(Federal Reserve Bank of New York)
Consumers’ prices, 1935-39 = 100................
(Bureau of Labor Statistics)
1946
Velocity of demand deposits*, 1935-39 = 100
1947
(Federal Reserve Bank of New York)
Item
Feb.
Dec.
Jan.
Feb.
Sales (average daily), unadjusted...............
Sales (average daily), seasonally adjusted*.
174
207
392
232
182r
228
188
224
Stocks, unadjusted........................................
Stocks, seasonally adjusted*........................
155r
167
213
238
206r
234r
231
249
r Revised.
* Seasonal adjustment factors for 1938-16 revised; available upon request.
New York City........................................
Outside New York City...........................
* Adjusted for seasonal variation.
p Preliminary.
r Revised.
# A special monthly release tabulating the complete set of 15 indexes of hourly
and weekly earnings computed by this bank will be sent upon request. A gen
eral discussion of the new indexes appeared in the November 1946 issue of this
Review. Tabulations of the monthly indexes, 1938 to date, and description of
component series, sources, and weights may be procured from the Research
Department, Federal Reserve Bank of New York. A mimeographed article
discussing some of the technical problems involved is also available on request.
40
MONTHLY REVIEW, APRIL 1947
National Summary of Business Conditions
INDUSTRIAL PRODUCTION
(Summarized by the Board of Governors of the Federal Reserve System, March 27, 1947)
output and employment were maintained in February and the early part of March
at the record peacetime levels reached in January. Value of department store sales has con
tinued at a seasonally adjusted rate close to the level prevailing since early last summer. W hole
sale commodity prices have advanced further.
JNDUSTRIAL
I n d u s t r i a l Pr o d u c t i o n
Federal Reserve index. Monthly figures, latest
figure shown is for February.
CONSTRUCTION CONTRACTS AWARDED
Industrial production, as measured by the Board’s seasonally adjusted index, was maintained
in February at the January rate of 188 per cent of the 1935-39 average.
Output of durable manufactures was slightly above the January rate, owing mainly to
increased activity in the automobile industry and to a somewhat greater than seasonal gain in
production of lumber and other building materials. The number of automobiles and trucks
assembled reached a new postwar peak which was about the same as the 1941 average.
The Board’s index of steel production showed a slight gain in February as a 9 per cent
increase in output at electric furnaces more than offset a 2 per cent decline in production at
open hearth furnaces. In March scheduled operations continued to advance, reaching a new
postwar high of 97 per cent of capacity in the last week of the month.
Output of manufactured food products declined somewhat in February, after allowance for
the usual seasonal changes, owing largely to a reduction in the processing of fruits and vegetables.
Activity showed little change at textile mills, and also in industries producing chemicals, rubber
products, and most other nondurable manufactures.
Minerals production was maintained at the January rate, as a 6 per cent decline in coal
output was offset in the total by increased production of crude petroleum and metals.
Co n s t r u c t io n
F. W . Dodge Corporation data for 37 Eastern States.
Nonresidential includes awards for buildings
and public works and utilities. Monthly
figures, latest shown are for February.
Value of construction contracts awarded in February was about the same as in December,
according to the F. W . Dodge Corporation. Awards in January had been about one-fourth
higher, owing mainly to several large public and private projects. Value of awards for private
nonresidential construction continued to show little change from the reduced levels reached in
November. The maximum amount of this general type of activity permitted under Federal
orders was raised substantially on January 10.
D
WHOLESALE PRICES
j /
.i V l
FAF;m products ft
)
1
tA
.
JfS*.I -" ' .
''V
.
...
1it
m l
f i l
{f
| ALL COMMODITIES! J
_/\FOOOS
1
f
T
jr
frf
1
1939
5
1 1 ______________
OTHER CC
iS
C o m m o d i t y P r ic e s
I
1940
1941
1942
1943
1944
1945
1946
1947
Bureau of Labor Statistics* indexes. Weekly figures,
latest shown are for week ended March IS.
Wholesale commodity prices continued to rise during February and the first half of March.
The Bureau of Labor Statistics* index of wholesale prices at 149 (1 9 2 6 = 1 0 0 ) was one-third
above the level of last June. There were sharp increases to a new high level of 184 in the index
for farm products and the average of prices of commodities other than farm products continued
to rise.
MEMBER BANKS IN LEADING CITIES
Demand deposits (adjusted) exclude U. S. Govern
ment and interbank deposits and collection items.
Government securities include direct and guar
anteed issues. Wednesday figures, latest
shown are for March 12.
is t r ib u t io n
Department store sales in February and the first half of March showed about the usual sea
sonal advance and the Board’s adjusted index of sales during the first quarter of the year is
likely to be at about the same average level as during the fourth quarter of last year, when the
index was close to 270 per cent of the 1935-39 average. Value of department store stocks
showed a greater than seasonal increase in February and the preliminary adjusted stocks index
reached a level of 280 per cent of the 1935-39 average.
Shipments of coal and most other classes of revenue freight declined somewhat in February,
owing in part to severe weather conditions, and then advanced during the first two weeks of
March. Loadings of forest products, however, were considerably above the January rate through
out this period.
Ba n k
C r e d it
Deposits of businesses and individuals at commercial banks declined sharply and Treasury
deposits at Federal Reserve Banks increased in February as a result of large tax payments. This
shift of funds to Treasury accounts at the Reserve Banks put a drain on member bank reserves,
which was offset in part by a decline in required reserves and in part by an increase in Reserve
Bank holdings of Government securities. In the first half of March, however, when Treasury
deposits at the Reserve Banks were drawn down in connection with cash retirement of about
3 billion dollars of maturing securities, member bank reserve positions were eased considerably
and Reserve Bank holdings of Government securities declined sharply. Completion of the United
States payment to the International Monetary Fund in February resulted in a decline in the total
monetary gold stock of the Treasury and in offsetting changes in other Treasury and Federal
Reserve accounts without affecting member bank reserve balances.
Commercial and industrial loans increased further at banks in leading cities. Real estate
loans rose moderately. Holdings of Government securities were reduced further in February
through sales to maintain reserve position and were increased somewhat early in March as pur
chases of Treasury bills and certificates were larger than the amount of retired issues held by
these banks.
@FedFRASER