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F e d e r a l

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R e s e r v e

o n d i t i o n s
D i s t r i c t

F r o m th e F e d e ra l R e s e r v e A g e n t at N e w Y o r k
to

th e

F ed eral R eserve

N ew Y o rk

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B oard

A p r il 3 0 , 1 9 2 0

w e realize th a t in a n oth er fe w w eeks sou thern h ar­
A rev iew o f th e first fo u r m on th s
vests w ill b egin and th a t in a n oth er fo u r m on th s
1920 in d icates v e r y little progress
tow a rd s a red u ction o f either c o m ­
w e shall b e in th e au tu m n p eriod , w hen trad e and
m o d ity prices or cred it volu m e. T h e b est th a t
cr o p m o v in g d e m a n d an increased v o lu m e o f
cre d it, it is im p o rta n t th a t b o th bankers and b u si­
ca n b e said is th a t th e rate o f increase in b o th
has been slow ed
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fe ctiv e a c t i o n
tio n in th e F e d ­
th rou g h cre d it m a y n o t b e u n derestim a ted .
eral R eserv e S ystem , th e reserves o f w h ich w ere
43.7 p er cen t on J an u ary 2 a n d 43 p er ce n t o n A p ril
GOODS
23. A yea r a g o th e reserves w ere 52.7 p er cen t.
G en erally spea k in g th ere is n o im p ro v e m e n t in th e
su p p ly o f g o o d s m easu red b y th e d e m a n d ; th e u p ­
NECESSITY OF IMPROVING CONDITIONS
w a rd m o v e m e n t o f th e p rice in d ex show s this. C o m ­
In spite, th en , o f th e su bstan tia l increase in
p a red w ith p re-w a r stan d ards, th e p ro d u ctio n o f
rates fo r b o th sh ort and lo n g cre d it w h ich f o l­
m o s t g o o d s has n o t in crea sed m a terially , whereas th e
lo w e d th e J an u ary increase in F ed era l R e se rv e
desire a n d th e a b ility t o con su m e g o o d s h a v e in ­
B a n k rates, n o general im p rov em en t in eith er p rice
creased gre a tly .
T h is is d u e in large p a rt t o th e
o r cred it exp an sion has since been effected. W h en
T h e C r e d it
S itu a tio n




\
VA

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n

2

REPORT ON BUSINESS CONDITIONS

increased m argin o v e r bare liv in g costs w h ich w ar
con d ition s b ro u g h t to so m a n y o f ou r w orkers,
indu strial and agricultu ral, and w h ich in v a ry in g
degrees th e y still retain. O ur d o m e stic d em a n d fo r
g o o d s is a u g m en ted b y an insisten t d em a n d fro m
E u ro p e , w h ose industrial d isorgan iza tion has been
m a d e still m ore d ifficu lt b y th e elim in ation , fo r the
tim e bein g, o f R u ssia, G erm a n y and A u stria , as
intern ation al p rod u cers a n d d istribu tors.
LABOR
T h ese d em a n d s fro m d o m e stic a n d fo re ig n c o n ­
sum ers press u p o n ou r p ro d u ctiv e ca p a c ity a t a
tim e w h en it is a t a rela tiv ely lo w p o in t, d u e :
(1)
T o a tra n sp orta tion service, b y land and
w ater, w h ich strikes and p h y sica l d ep recia tion h ave
reducedJFar b e lo w its n orm a l efficien cy.
(2) T o th e p resen t inefficien cy o f la b o r; p a rtly a
resu lt o f w orld -w id e restlessness follow in g th e war
a n d p a rtly a result o f h igher w ages, a ctu al a n d rel­
a tiv e, w h ich h a v e n o tice a b ly lessened th e in cen tiv e
t o w ork.
(3) T o an a lm ost co m p le te cessation o f im m i­
gration , ou r n et ga in since J u ly , 1914, b ein g a b o u t
550.000, w hile n orm a lly w e sh ould h a v e gain ed
3.500.000.
U n d er p resen t d em an d s, la b o r in efficien cy and
la b o r sh orta ge are th e o u tsta n d in g p h y sica l ele­
m en ts in m a in ta in in g ou r exp a n d ed p o sitio n . I f
th e p resent su p p ly o f w orkers w ou ld w ork h ard and
stead ily w e cou ld largely a u gm en t ou r o u tp u t o f
necessities fo r foreign and d om estic co n su m p tio n .
I f a great tid e o f im m ig ra tion sh ould again set in a
p ow erfu l stim ulus w ou ld b e giv en to b e tte r la b or
efficien cy. I f m a n u fa ctu rers a n d m erch an ts co u ld
install su ch la b o r sa v in g m a ch in ery or e ffe ct su ch
b etter org a n iza tion o f th eir sh ops a n d stores as
w ou ld red u ce th e n u m b er o f w orkers, th e y w o u ld
m a k e a real co n tr ib u tio n tow a rd s th e solu tion o f
o u r d ifficu lties.
T w o n o ta b le d ocu m en ts dealin g w ith th e situ a­
tion h a v e b een m a d e p u b lic since th e last R e p o r t
was p u b lish ed :
th e D ecla ra tion o f th e S u p rem e
C ou n cil o f th e P ea ce C on feren ce on T h e E c o n o m ic
C on d ition s o f th e W o rld , d a ted M a r c h 8, and th e
rep ort o f th e C h a m b er o f C om m erce o f th e S tate
o f N e w Y o r k o n In fla tio n and H ig h P rices, d a te d
A p ril 2. B o th , w hile su ggesting rem edies, re c o g ­
n ize th e d ifficu lty o f d ealin g w ith a situ a tion in
w h ich p ro d u ctio n and con s u m p tio n are o u t o f b a l­
a nce, th e form er speaks o f " t h e ga p w h ich m u st fo r




som e years exist b etw een th e d e m a n d fo r a n d th e su p ­
p ly o f essential c o m m o d itie s .5 T h e latter, a fte r re­
5
ferrin g to th e va riou s rem edies to b e u n d e rta k e n ,
says “ A s lo n g as h u n dreds o f m illion s liv e in v o l­
u n ta ry or en fo rce d idleness th e w o r ld ’ s sh orta ge in
g o o d s , w ith its c o n c o m ita n t rising p rices, c a n n o t
b e b ro k e n . E a ch o f these processes is an essential
step to w a rd re co v e ry . F o r th e p resen t, h ow e v e r,
th e w o rld m u st tig h ten its b e lt if th ere is t o b e
en ou gh fo r all. T h a t b e lt is a stricter co n tro l o f
c r e d it.”
CREDIT
M a n y fa cto rs h a v e co n tr ib u te d tow a rd s th e la ck
o f b a la n ce b etw een p r o d u ctio n a n d co n s u m p tio n
and th e p rice a n d cre d it exp an sion fro m w h ich , in
c o m m o n w ith all th e w orld , w e are n o w su fferin g,
an d m a n y d ifferen t steps m u st co n s e q u e n tly b e
ta k en t o b rin g ou r u n b a la n ced e c o n o m ic life b a c k t o
an equ ilib riu m . W h a te v e r th ese n ecessary steps
m a y b e and b y w h a tev er o th e r g ro u p s, g o v e rn m e n ta l
o r p riv a te , th e y m a y b e u n d erta k en , it is e v id e n t th a t
th e F ed era l R e se rv e B an k s a n d ea ch on e o f th e 30,000
b an k s o f th e co u n tr y h a v e a special d u t y a n d re­
sp o n sib ility to w a rd s p resen t co n d itio n s th a t th e y
ca n n o t n eglect. T h is d u ty , as th e C h a m b er o f
C o m m e rce p o in ts o u t, is “ a stricter co n tro l o f c r e d it.”

THE BANKER’ S RESPONSIBILITY
T h e ban k ers as a g rou p are th e m o s t p o te n t sin ­
gle influen ce in th e in d u strial life o f th e c o u n tr y .
T h e y ca rry on th eir w ork w ith su bstan tia l u n ifo r m ­
ity in e v e ry c ity and to w n , to u ch in g e v e r y business
a c tiv ity . R e ly in g on th e resou rces o f th e F ed era l
R e se rv e B an k s th e y p a trio tica lly u n d e r to o k th e
im m en se cre d it exp an sion w h ich w ar fin a n cin g re­
quired. In so d o in g th e y set in m o tio n forces w h ich
are still con tin u in g to a ggra va te th e la ck o f b a la n ce
b etw een su p p ly a n d d em a n d and w h ich m u st n o w
b e b ro u g h t u n der co n tro l. T h e existen ce o f th e
F ed era l R e se rv e S ystem d oes n o t relieve a single
b an k er, w h eth er m em b er o r n o n -m e m b e r, fr o m his
in d ivid u a l resp on sib ility t o d o his share in ch e ck in g
fu rth er exp an sion b y exercisin g a stricter co n tr o l
o f th e cre d it he creates; fo r e x ce p t in its lim ite d
o p en m a rk et purchases o f ban k ers a cce p ta n ce s th e
F ed era l R e se rv e S ystem d oes n o t a ct d ire ctly on th e
v o lu m e o f cre d it b u t acts o n ly in d ire ctly , th ro u g h
th e ban k s, on w h o m th e p rim a ry resp o n sib ility
rests.
WHAT CAN THE BANKER DO?
W h a t can th e b a n k e r d o a m o n g his o w n cu s to m ­
ers to exercise “ a stricter co n tr o l o f c r e d it? ”
I t is

FEDERAL RESERVE AGENT AT NEW YORK
difficu lt to generalize, fo r ea ch b a n k and each o f its
borrow ers m u st b e con sid ered in d iv id u a lly , w hile
each b orrow er is a p t to b e co n v in ce d th a t his case
differs fro m th a t o f others and is w h olly m eritoriou s.
T h e fo llo w in g suggestions seem su fficien tly general
to co v e r m a n y ca s e s :
C lea rly, th e p resen t is n o t an a p p rop ria te tim e
t o exten d business m erely fo r th e sake o f increased
v o lu m e or p rofits. T h is applies n o t o n ly t o p r o ­
ducers a n d d istrib u tors, b u t t o b an k ers as w ell,
fo r th e p resen t op p ortu n ities to ta k e on new b o r ­
ro w in g a cco u n ts and t o re-loa n b o rro w e d m o n e y
at a p rofit, are te m p tin g t o m a n y . N o r is it a tim e fo r
p u b lic or p riv a te im p rov em en ts n o t a b solu tely n e c­
essary fo r h ealth and efficien cy. W ith a sh ortage
o f g o o d s a n d la b o r, th e n ecessity o f con serv in g b o th
is as grea t as it was d u rin g th e w ar, and requires
an even h igh er degree o f self restrain t on th e p a rt
o f b an k ers, p rod u cers, d istrib u tors and con su m ers,
since G ov ern m en ta l con trols n o lon g er exist. A c ­
co r d in g ly the m ore clea rly th e b a n k er k eeps in m in d
th e con serv a tion o f la b o r and g o o d s fo r necessary
p urposes as th e o b je c t o f his co n tr o l th e m ore clear
w ill b e his cou rse in exercisin g su ch co n tro l.
M a k in g n ew loan s fo r p u rp oses w h ich will n o t
fu rth er p ro d u ctio n or d istrib u tion o f necessary
g o o d s creates fresh dem an d s on la b o r a t a tim e w hen
there is n o t en ou gh la b or t o m eet pressing needs.
R e d u c tio n o f existin g loan s fo r sim ilar p urposes ten ds
t o red u ce dem an ds on la b or. L oa n s fo r th e p u rp ose
o f specu la tin g in com m od ities, securities and real
estate, a b sorb cred it required fo r n ecessary p r o d u c ­
tio n and ten d to increase th e co s t o f livin g. L o a n s
fo r th e p u rp ose o f ca rry in g stock s o f luxuries and
e xp en sive grades o f g o o d s or stim u la tin g th eir p r o ­
d u c tio n m erely increase th e te m p ta tio n t o e x tra v a ­
g a n t liv in g ; w hile loan s to in d ivid u als to pu rch ase
su ch articles seem w h olly in d efen sib le.
H o w e v e r m u ch presen t dem an d s m a y seem to
ju s tify exten sions or d ev elop m en ts, a n y p ro d u ce r
or d istrib u tor seeking a d d ition a l cred it fo r such
purposes sh ou ld b e u rged t o m a ke ev ery effort t o
use his presen t p la n t and eq u ip m en t to its u tm o s t
ca p a city , and b y installing la b or-sa v in g d evices,
or b y n ig h t w ork , if p ra ctica b le, to g e t larger p r o ­
d u ctio n w ith ou t extensions. H is a tten tion sh ould
b e ca lled t o th e th ou san d s o f idle fa ctories a n d th e
m illion s o f idle w orkers in E u ro p e , to th e ce rta in ty
th a t a fte r a p eriod th eir idleness w ill cease, and
t o th e red u ction o f dem an d s fo r A m erica n g o o d s
w h ich will fo llo w such a resu m p tion a b roa d .
If




3

extensions are ju d g e d necessary, th e y sh ou ld b e
fin a n ced as fa r as p ra ctica b le , th rou g h co n se rv a ­
tio n o f p rofits. T h e n ecessity fo r savin g is as in ­
cu m b e n t on business as o n th e in d ivid u al.
F r o m th e p o in t o f v ie w o f th e s a fe ty o f his in sti­
tu tio n th e b an k er w ill n a tu ra lly b e co m e m ore carefu l
in gran tin g cre d it t o cu stom ers w h ose ca p ita l has n o t
been in creased p ro p o rtio n a te ly w ith th e increased
liabilities o f th e p resen t d a y , and w h o are n o t set­
tin g aside am ple reserves again st d ep reciation .
T h e p a y m e n t o f d e b ts is a d irect m eans o f stren gth ­
ening cred it and lessening th e d em an d fo r la b o r and
g o o d s. I t ca n n o t b e t o o o fte n o b served th a t
th o u g h a d ollar w ill b u y o n ly 50 cen ts w orth o f
g o o d s, it w ill still p a y 100 cen ts o f d e b t. In 1896,
d eb tors com p la in e d th a t th e y h ad t o p a y in a d ollar
w h ose b u y in g p o w e r w as greater th an w hen th e
d e b t was co n tra cte d . T h e reverse is n o w true.
I t is th e d e b to r ’s o p p o r tu n ity , and ban kers m a y
w ell m a k e th e m o s t o f it w ith th eir b orrow ers, and
u rge th e m fo r th eir o w n a d v a n ta g e to g e t a lon g w ith
as little b o rro w e d m o n e y as p ossible.
T h e desira bility o f savin g b y p a y in g d eb ts leads
d ire ctly to th e larger a n d all im p o rta n t q u e stio n o f
sav in g t o red u ce ou r p resen t excessive and e x tra v a ­
g a n t co n su m p tio n , w h ich is such a large elem en t in
cau sin g th e u n d e r -p ro d u ctio n o f necessities. T h e
b an k ers, b y exa m p le, b y influen ce, a n d b y offerin g
e v e ry in d u ce m e n t a n d fa c ility to th eir co m m u n itie s
fo r sy ste m a tic savin g, ca n d o m u ch t o fo ste r m o re
sensible spen din g, tow a rd s w h ich th ere are in d ica ­
tion s th a t th e p u b lic m in d is b e co m in g m ore fa v o r ­
a b ly inclin ed.
D u rin g A p ril and M a y m a n y o f th e d o lla r-a -w e e k
plans o f p u rch a sin g V ic to r y n otes w ill b e co m p le te d .
T h is w ill suggest to b an k ers and e m p loy ers th e im ­
p o rta n ce o f in a u gu ra tin g n ew p a rtia l p a y m e n t plans
fo r p u rch a sin g G o v e rn m e n t securities a t th e p resen t
lo w p rices, in ord er th a t th e w e e k ly a m ou n ts w h ich
h a v e th u s fa r b een sy ste m a tica lly saved m a y n o t
n o w b e as reg u la rly spen t.
GRADUAL DEFLATION THE OBJECTIVE
T h e fo re g o in g suggestions are v e r y general and
m erely rehearse fam iliar th ings, y e t th e y w ill bear
re p e titio n a t a tim e w h en it is th e ban k ers w h o
are p rim a rily called u p o n t o deal w ith a situ ation
w h ich is n o t o n ly co u n tr y -w id e b u t w o rld -w id e ;
b y far th e m o s t d ifficu lt e co n o m ic situ a tion th e
m o d e rn w orld has e v e r fa ce d . T h e n ew tu rn u p ­

REPORT ON BUSINESS CONDITIONS

4

w ard in cre d it and prices, a fter th e h a lt o f
F e b ru a ry , is an u n m ista k ab le sign to e v e ry b a n k ­
er, w h eth er or n o t his in stitu tion is itself a
b orrow er, th a t th e n ecessity is here fo r h im to
ta k e a m ore firm and d eterm in ed stan d to p re v e n t
fu rth er exp an sion and to inau gu rate a grad u al and
ord e rly re d u ctio n o f cred it. A d ifficu lt p ro g ra m m e ,
it is clear, a nd on e requ irin g even m ore d iscretion ,
cou ra g e a n d p u b lic spirit th an th e ban k ers m a n i­
fested so n o ta b ly d urin g th e w a r; a p rog ra m m e w h ich
requires th e co o p e r a tio n o f p rod u cers, d istrib u tors
a n d con su m ers fo r its su ccess; b u t a p ro g ra m m e
w h ich ,n everth eless, is essential n o t o n ly t o ou r stea d y
ind u strial p rogress b u t to ou r entire social and e c o ­
n o m ic w ell-bein g, and failu re to u n dertak e it is alm ost
certa in t o lead t o a b ru p t and u n h a p p y con seq u en ces.
T h e R ecen t
L oan
E x p a n s io n

In spite o f th e universal pressure
f ° r b a n k cred it th e b an k s o f this
d istrict and o f th e co u n tr y rep ort
*
co m p a ra tiv e ly slight changes in the
v o lu m e o f loan s fro m a m on th ago. T h e re d u ctio n
in th e loa n a ccou n ts o f N e w Y o r k C ity b an k s w h ich
co n tin u ed w ith a reason able m easure o f ' steadiness
fro m last fall to th e early p a rt o f M a rc h , and th e
increase in b a n k loan s elsew here in th e co u n try
w h ich was p ra ctica lly con tin u ou s th rou g h th e sam e
p eriod , h a v e b o th b een arrested. T h ro u g h a lon g
term o f years p rior t o th e w ar th e a verage o f A p ril
loan a ccou n ts o f N e w Y o r k C learin g H o u se B an k s
sh ow ed a slight fallin g off fro m M a rc h figures. T h is
d eclin e has n o t occu rred in th e cu rren t m o n th in
th e loan s o f th e ban k s, b u t it has its reflection ,
n evertheless, in th e loan s o f th e F ed era l R ese rv e
B a n k o f N e w Y o r k , w h ich has reversed its p o sitio n
as a b orrow er fro m oth er F ed eral R ese rv e B an k s,
and is n ow a lend er to them .
B u t fo r th e co u n tr y a t large there has been,
w ith in th e last 12 m on th s, an extra ord in a ry increase
in th e b a n k loan s o f the cou n try , a t a rate far a b o v e
a n y fo r w h ich w e h av e reliable figures in ou r b a n k ­
ing h istory.
T h e b est com p a ra tiv e in d ex o f ou r b an k in g c o n ­
d ition s is th e rep orts o f th e n ation al ban k s. In the
last 30 years th e a verage y e a rly g row th o f their
loan s has b een 6.4 p er cen t., and fo r all ban k s,
in clu d in g n ation a l ban k s, 7.0 p er cen t.
T h e h ighest rate o f g row th in a p re-w ar year,
was 15.2 p er cen t., in 1899. In th e first three years
o f th e w ar, th e y ea rly rate o f increase was as fo l­
lo w s:
From 1914 to 1915 3.5 per cent.
“ 1915 to 1916 15.3 per cent.
* 1916 to 1917 14.8 per cent.




In th e 19 m on th s w hen w e w ere a t w ar, th e e x ­
p an sion o f n ation al b a n k loan s was 16 p e r cen t. I n
th e sam e 19 m on th s, c o m m o d ity p rices, B u rea u o f
L a b o r in d ex, increased 20 p er cen t.
F r o m th e call M a r c h 5, last year, t o F e b ru a ry
28 this year, n ation al b a n k loan s e x p a n d e d b y
$2,303,000,000 or 24 p er cen t.
T h is w as tw o and
on e h alf tim es th e rate o f g ro w th d u rin g ou r p a rtic­
ip a tio n in th e w ar, w ith all th e trem en d ou s G o v e rn ­
m e n t loa n issues and n early fo u r tim es th e avera ge
ye a rly rate o f th e last 30 years, in clu d in g th e fo u r
w ar years. A s th e n a tio n a l b a n k loan s are a b o u t
45 p er cen t, o f th e to ta l loan s o f all b an k s, this
m eans an exp an sion fo r th e entire co u n tr y o f a b o u t
$5,200,000,000, a sum th a t m ig h t w ell h a v e b een
con sidered in cred ib le if it h ad b een p re d icte d a
y ea r a go.
In co r ro b o ra tio n o f this figure, it m a y b e n o te d
th a t fro m A p ril 9 o f last y e a r t o A p ril 9 o f this y ea r
th e loan s o f th e 800 re p o rtin g b an k s o f th e F ed eral
R e se rv e S ystem also in crea sed 24 p er ce n t., w hile
th e loan s o f th e tw e lv e F ed era l R e se rv e B an k s
increased 22 p er cen t.
In th e sam e p e rio d , fro m M a r c h o f last y e a r to
M a rc h o f this yea r, c o m m o d ity p rices rose 26 p e r
cen t. S u ch a rise in th e p rice lev el has n ever b e e n
k n o w n in this co u n tr y in p ea ce tim es, a n d w as
exceed ed d u rin g o n ly on e w ar yea r, th a t is, in 1916.
T h is rise w as in th e fa ce o f th e fa c t th a t in th e
ca len d a r yea r o f 1919 th e F ed era l R e se rv e B o a r d ’s
indices sh ow a d eclin e in th e a ctu a l, o r p h y sica l,
v o lu m e o f trad e, as co m p a re d w ith 1918, o f 11 p e r
c e n t.; and a d eclin e in th e in d ex o f p ro d u ctio n o f
25 b a sic co m m o d itie s, p rep ared b y this b a n k , o f
a b o u t 4 p er cen t.
T h is en orm ou s lo a n exp an sion w as v e r y u n e v e n ly
d iv id e d as b etw een N e w Y o r k C ity a n d th e rest
o f th e co u n try . F o r th e 800 re p o rtin g b an k s, th e
co m p a riso n s to o d as fo llo w s :
May 9, 1919
April 9, 1920
Increase

New York City
4.146.000.000
4.781.000.000
16%

Rest of Country
7,296,000,000
9,445,700,000
29.5%

T h e exp an sion o f th e F ed era l R e se r v e B a n k s in
th e sam e p e rio d w as as fo llo w s :

May 9, 1919
April 9, 1920
Increase

New York City
806,000,000
932,000,000
15.6%

Rest of Country
1.344.000.000
1.896.000.000
41.1%

FEDERAL RESERVE AGENT AT NEW YORK
I t w ill thus b e seen th a t th e p a rt ta k en b y this
F ederal R eserv e D is trict in th e y e a r ’s loa n exp an sion
was sm all as com p a red w ith th a t o f th e rest o f th e
co u n try .

T h e aggregate figures fo r rep ortin g m em b er
ban k s, co m p a ra b le w ith oth ers p re v io u sly p u b lish ed
in this rep ort, are as fo llo w s :

LOANS

A N D D E P O S IT S
(In Millions)
73 Reporting Banks
811 Reporting Banks
AH Districts
in New York City*
Total
Total
Total
Total
Loans and
Deposits
Deposits
Loans and
Investments
Investments
5,209
5,456
April 16
5,084
15,834
14,276
5,340
April
9
5,150
15,811
14,306
5,365
April
2
15,793
4,969
14,133
5,312
March 26
5,018
15,831
14,312
5,288
March 19
15,476
5,397
5,850 (highest)
13,699
OctoberlO, 1919
4,872
14,346
5,292
12,554
April 18, 1919
*The number of reporting banks throughout the country increased from 757 on January 3, 1919, to 811 on April 9, 1920.
time the reporting banks in this district increased from 65 to 72.
T h e g o ld reserves o f th e F ed eral R e se r v e B a n k o f
N e w Y o r k o n A p ril 16 w ere $549,353,000 as c o m ­
p a red w ith $ 477,378,000 on M a r c h 19. Its cir­
cu la tion o f F ed era l R eserv e n otes has b een red u ced
sligh tly fro m $837,700,000 M a rc h 19 t o $835,738,000
o n A p ril 16. I n th e ea rly p a rt o f A p ril, h o w e v e r,
th e circu la tion rose to th e h igh est p o in t ev er reach ed ,
$ 850,182,000 on A p ril 5, an in cid en t t o a ctiv e
E a ster tra d e a n d tra vel.
T h e b a n k clearings w ere as fo llo w s :

Week Ending
March 24
March 31
April 7
April 14

(000 OMITTED)
Six Cities
Outside New
New York City York City
4,897,299
143,103
5,060,233
136,376
4,370,408
164,578
4,885,191
151,160

Entire
District
5,040,402
5,196,609
4,534,986
5,036,351

T h e G o ld
M o v e m e n ts

T o A p ril 20 th e to ta l o f g o ld
im p orts fro m E n g la n d sin ce M a r c h
20 to ta le d a b o u t $51,050,000. T h is
su m red u ced th e n et exp orts o f g o ld fro m this
c o u n tr y since J an u ary 1 t o a b o u t $64,000,000, and
th e n et exp orts since Jun e 10 o f last year, w hen
th e e x p o rt m o v e m e n t b egan , t o a b o u t $390,000,000,
T h is le ft th e n et a m ou n t o f im p orts since A u g u st 1.
1914, a t a b o u t $715,000,000. F u rth er exp orts o f
a b o u t $17,000,000 t o A rg en tin a are rep orted as
im pen d in g.
M oney
R a tes
o f slack en in g.

M o n e y rates con tin u e high , refleeting a h e a v y a n d general d em a n d
fo r cred it w h ich has show n n o sign
B orrow ers, b o th corp o ra te a n d in ­




In the same

d iv id u a l, h o w e v e r, a cce p te d th e cu rren t high c o s t
o f m o n e y , as is in d ica te d b y th e large offerings
o f h ig h -y ie ld stan d ard securities d u rin g th e p a st
m o n th and th e b ro a d e r m a rk et fo r com m ercia l
p a p er a n d a cce p ta n ce s.
G o v e rn m e n t d isbu rse­
m en ts co n sid e ra b ly in excess o f co lle ctio n s in this
d istrict w ere in stru m en tal in k eep in g s to ck e x ­
ch a n ge loan rates som ew h a t b e lo w th e avera ge
o f recen t m on th s, and call m o n e y renew als d u rin g
th e first th ree w eeks eased fro m 9 t o 6 p er cen t.
B u t th e n a rrow m a rgin o f th e m o n e y su p p ly
was in d ica te d b y th e sharp a d v a n ce in rates w h ich
a cco m p a n ie d m o d e ra te w ith draw als o f G o v e r n ­
m e n t d eposits fro m th e b an k s or a n y unusual s to ck
m a rk et a ctiv ity . O n su ch occa sion s, 10 t o 15 p er
cen t, w as q u o te d fo r n ew loan s, a n d in th e final
w eek o f th e p e rio d th e renew al ra te rose t o 10 p er
cen t. G o ld im p o rta tio n s, p a r tly offset b y e x p orts,
h a v e h ad n o a p p a re n t e ffe ct u p o n m o n e y rates.
T im e m o n e y , b o th in v o lu m e o f loan s and rates,
rem ain ed p ra ctica lly u n ch a n g ed th rou g h m o st o f
th e p e rio d ; b u t a te m p o ra ry easing o f th e m a rk et
ea rly in A p ril resu lted in th e co n tra ctio n o f a few
loan s a t 8 p er cen t, on m ixed collateral and 8 ^
p er cen t, o n all indu strial. R a te s h a v e since re­
tu rn ed t o th e basis o f a m o n th a go, n a m ely , 8 t o
9 p er ce n t.
D e m a n d fo r bills, w h ich has slo w ly b ro a d e n e d
since th e rate rose t o 6 p er ce n t., b e ca m e v e r y brisk
in th e first w eeks o f A p ril, d ep letin g dealers’ p o r t ­
fo lio s. T h o u g h savin gs a n d co u n tr y b an k s w ere
still th e p rin cip a l b u y ers, purch ases b y in d ivid u als,
co rp o ra tio n s, and insurance com p a n ies w ere re p o rte d

6

REPORT ON BUSINESS CONDITIONS

as increasin g, and a foreign b a n k en tered th e m a rk et
fo r a con sid erab le a m ou n t o f bills. F o r th e first
tim e in this co u n tr y , a gen u ine a cce p ta n ce m a rk et
app eared to b e d ev elop in g . P rim e N e w Y o r k p a p er
sh aded to 5 % p er cen t., b u t d em an d fell o ff sh arply
a t this rate and th ou g h dealers are again offerin g
a t 6 p er cen t., d istrib u tion has b een som ew h a t slow
in regainin g its form er v olu m e. T h e m in im u m b u y ­
ing rate o f th e F ed era l R e se rv e B a n k co n tin u e d at
5}/2 t o 5^4 Per cen t, fo r en dorsed bills.
C o m m e r­
cial p a p er, th ou g h less a ctiv e th a n bills, m o v e d in
m od era te v olu m e, largely to th e sm aller b an k s in
agricu ltu ral d istricts. P ra c tica lly all dealings w ere
a t 7 p er cen t., w ith occa sion a l sales a t 6 % and
P er cen t., a cco rd in g to n am es and m atu rities.
T h e offerin g ra te on F ren ch T rea su ry bills in this
m a rk et w as raised fro m 6 to 6 ^ p er ce n t, d u rin g
th e cu rren t p eriod , b u t B ritish T rea su ry bills c o n ­
tin u ed on a 6 p er cen t, basis.
T h e S tock
M a rk et

In d u stria l stock s, on th e avera ge,
h a v e con tin u ed th e rise w h ich started
last m o n th , b u t ra ilroad shares h a v e
d eclin ed .
T h o u g h th ere is con tin u a l e v id e n ce o f
stea d y a ccu m u la tion b y th e sm all in v estor, sp e cu ­
la tiv e m a n ip u la tion w as m ore th a n u sually p ro m in e n t
d u rin g th e cu rren t th irty d a y s and a cco u n te d fo r th e
greater p a rt o f th e m a rk e t’ s intense a c tiv ity on se v e r­
al occa sion s.
A tte n tio n a t tim es cen tered a lm ost
e xclu siv ely in a sm all g rou p o f h ig h -p rice d in d u s­
trial issues, w h ich flu ctu a ted in a m an n er g rea tly
o u t of p ro p o rtio n w ith th e rest o f th e list.
T h e m a rk et gen erally has b een p a rticu la rly sen sitive
to va riation s in the m o n e y su p p ly . P e rio d s o f
sca rcity and high rates w ere a cco m p a n ie d b y
irregu larity in s to ck p rices and a red u ce d v o lu m e
o f sales. E asier m o n e y furn ished th e basis fo r re ­
n ew ed a ctiv ity a t a d v a n cin g p rices, u n til th e u p b id d in g m o v e m e n t w as in tu rn ch eck ed b y h a rd en ­
ing rates d ue p a rtly t o th e m a rk e t’ s ow n a b so rp tio n
o f th e sm all su p p ortin g v o lu m e o f cred it. A t th e
close o f th e p eriod th e in d u strial crisis in J ap an ,
tog eth er w ith oth er u n settlin g influences, soften ed
th e m a rk et, and a sharp recession d e v e lo p e d .
W h ile m a n y o f th e so-ca lled stan d ard indu strial
stock s are a t p ra ctica lly th e sam e level as on M a rc h
20, th e w id e gains o f a few sp ecia lly a ffe cte d classes
raised th e avera ge p rice 6 p oin ts to 130, w h ich is
a p p ro x im a te ly 9 p oin ts b e lo w th e p ea k o f th e rise
cu lm in a tin g last N o v e m b e r. A n a vera ge o f 25
railroad stock s, w h ich rose a p p ro x im a te ly 10 p o in ts
d u rin g F eb ru a ry and M a rc h , has again tu rn ed
d ow n w a rd , losin g close to 3 ^ p oin ts in th e last fo u r




w eeks. T h e re h a v e b een in d ica tio n s o f fu rth er
selling o f fore ig n -h e ld A m erica n securities, w h ich
p r o b a b ly a cco u n ts in p a rt fo r recessions a m o n g
th e h ig h -g ra d e ra ilroad stock s. M a r c h tra d in g
w as on a h e a v y scale, to ta lin g 28,700,000 shares,
a figure fo r this m o n th o n ly tw ice ex ceed ed in th e h is­
to r y o f th e m a rk et. Sales w ere a p p ro x im a te ly
6,000,000 in excess o f th e F e b ru a ry to ta l, a n d larger
th an a n y p re v io u s m o n th sin ce N o v e m b e r , w hen
th e to ta l was 30,0 00 ,0 00 .
B o n d M a rk et
R e sp o n s iv e to th e con tin u e d p res­
and N ew
sure f ° r m o n e y , and th e large v o lu m e
F in a n c in g

n ew fin a n cin g
h igh y ie ld s, th e
general level o f b o n d prices has d e clin ­
ed co n tin u o u sly d u rin g th e p ast th irty d ays. T h e loss
w as greater th a n th e rise n o te d a m o n th a go. T h e
a vera ge o f 40 listed issues d eclin ed a p p ro x im a te ly
p o in ts t o a n ew lo w le v e l rea ch ed on A p ril 16,
w h ich w as 1 p o in t b e lo w th a t o f th e se co n d w eek
in F e b ru a ry . T h is a vera ge is m ore th a n 4 p o in ts
b e lo w th e h igh level fo r th e yea r, in th e se co n d w eek
in Jan u ary. W h ile all classes o f b o n d s h a v e b een
u n d er pressure, rails w ere th e h ea v iest o f th e va riou s
grou p s, d u e in p a rt t o n ew fin a n cin g p ro sp e cts, and
in p a rt t o u n ce rta in ty as t o h o w th e In te rsta te
C o m m e rce C om m ission will a dm in ister th e new
p ow ers v e ste d in it b y th e R a ilw a y B ill.
P rices o f L ib e r ty b o n d s m o v e d u p w a rd u n til th e
first w eek in A p ril, w h en , fo llo w in g th e a n n o u n ce ­
m en t o f h igh er rates fo r n ew issues o f stan d ard
co r p o ra tio n n otes a n d G o v e rn m e n t certifica tes,
a n d in co m m o n w ith o th e r b o n d p rices, th e y d e ­
clin ed ra th er a b r u p tly u n d er h e a v y liq u id a tin g
sales. N e w lo w levels w ere re a ch e d b y all issues,
a n d o n A p ril 19 th e avera ge w as a p p ro x im a te ly
2 p o in ts b e lo w th e level o n M a r c h 20, a n d m ore
th a n 4J/2 p o in ts lo w e r th a n a t th e first o f th e yea r.
T h is d eclin e in L ib e r ty b o n d s has e x cite d som e a p ­
preh en sion a n d feelin g, b u t it is to b e n o te d th a t
th e d eclin e in th ese has b een p ra ctica lly th e sam e
as th e gen eral d eclin e in b o n d p rices, a n d b o th are
sim p ly th e reflection o f th e co n tin u e d h igh rates fo r
m o n e y a n d th e v e r y h e a v y pressure fo r cred its.
B o n d sales fo r M a r c h to ta le d $ 30 6,2 0 9,0 00 ,
w h ich is a re co rd fo r th a t m o n th a n d slig h tly a b o v e
th e sales fo r F e b ru a ry . O f this a m o u n t, L ib e r ty
issues a ggrega ted $219,405,000 a gain st $227,194,000
th e p re v io u s m o n th . Sales o f J ap an ese G o v e r n ­
m en t b o n d s w ere n ea rly d o u b le th o se o f th e p reviou s
m o n th , a n d tra d in g in F re n ch , B ritish , and C an a dian
c ity a n d G o v e rn m e n t loan s w as slig h tly g re a te r in

FEDERAL RESERVE AGENT AT NEW YORK

7

o f h e a v y selling o f F re n ch a n d Ita lia n bills
in L o n d o n , w here th e m a rk e t w as seriou sly c o n ­
gested . B u t b a c k o f this im m e d ia te cau se was
th e larger fa c t th a t F ra n ce and Ita ly h a v e n o t been
able as y e t t o p u t th eir fin ancial hou ses in ord er.
G ov e rn m e n ta l exp en ditu res co n tin u e a t an en orm ou s
rate. T h e F re n ch b u d g e t fo r th e cu rren t y ea r is
far b e y o n d a n y w a r-yea r exp en d itu re, resu ltin g in
fu rth er deficits a n d co m p e llin g h e a v y exp an sion o f
th e n o te issue. E x p o rts fro m b o th F ra n ce and
I ta ly h a v e b een ste a d ily increasin g b u t are still
b e lo w p re-w ar levels a n d still le a v e a large a dverse
b alan ce. T h e result has b een a fu rth er d e p recia tion
in th e p u rch a sin g p o w e r o f th eir cu rren cies, as is
sh ow n b y th e co n tin u e d rise in the p rice levels.
T h e c o m m o d ity in d ex o f F ra n ce rose fro m 332 in
A p ril, 1919, t o 520 in F e b ru a ry , 1920, and in
Ita ly th e rise was fro m

v o lu m e th a n d u rin g F eb ru a ry . Sales o f d o m e stic
co r p o ra tio n b o n d s w ere o n ly $56,502,000, or 18 p er
cen t, o f th e tota l. T ra d in g thus far in A p ril has been
in sligh tly h eavier v olu m e, a m ou n tin g to $75,216,850
fo r th e w eek e n d ed A p ril 10, and $90,080,000 fo r
th e w eek en d ed A p ril 17.
N e w co rp o ra te fin a ncin g d urin g M a rc h a g g re g a t­
ed $275,771,000, as com p a re d w ith $202,528,000 fo r
F e b ru a ry a nd th e h igh record o f $391,000,000 in
O cto b e r. R a ilr o a d issues a m ou n ted t o $ 44 ,191,000,
or 16 p er cen t, o f th e to ta l, and it is estim ated th a t
30 p er cen t, o f th e n ew issues w ere u sed to p a y o ff
m a tu rin g ob liga tion s. F o r th e first q u a rter o f th e
yea r, n ew ca p ita l issues w ere 40 p er cen t, greater
th an in th e first q u a rter o f 1919. A c c o r d in g to
estim ates, A p ril m atu rities will aggregate $30,000,000
again st $59,000,000 in
0
M a rch .

330 in A p ril, 1919, t o

/
In A p ril th ere has
b een an increase in the
v o lu m e o f n ew securi­
ties offered, a m ou n tin g
to $139,000,000 during
th e w eek en ded A p ril
10, a n d $75,471,000
d u rin g th e w eek en d ed
A p ril 17. A large p er­
cen ta ge o f th e form er
a m ou n t was rails. U n ­
usual interest has b een
m a n ifested in th e h igh
rates offered b y th e
n ew issues, w h ich w ere
q u ick ly taken . R a te s
w ere a rou n d 7 p er
cen t, fo r h ig h -grad e
securities, a n d this has
b een reflected in th e
gen eral recessions o f
b o n d p rices.
F o r e ig n

C o *^ M O O/TV

c

ch asin g

/
o -■ ■■—
■ »■ —
■
■

0

w holesale m a rk ets fell

/3
*
S/a

c o n s id e r a b ly

m ore

th an on e -th ird in on e
y ea r. T h is is a lm ost

...........

as grea t as a n y th in g
th a t t o o k p la ce in th e
w ar, and

90*^
pn
r

cu rre n cy situ a tio n

____6

3 ... .... . ■

A

cou n tries.

ta b le .
N e verth eless,
this d eclin e is greater

7

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/

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requires

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er
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w h olesale

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in d ex a t 250, it n o w

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th an th e re la tiv e cu r­
re n cy d e p re cia tio n in
these cou n tries. W ith
our

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corresp on d in g fall in
exch an ge was in e v i­

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these

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v iv id ly re­

veals th e g rea t
m ora liza tion
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p o w e r o f the

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r

In

o th e r w ord s, th e p u r­

( /9/? - / o o )

T h e m ost

E xchan ge n 0 t a b l e
e v e n t in
th e exch an ges o f th e
last fo u r w eeks has
b een th e fu rth er and
h e a v y fall in F ren ch
a nd Ita lia n exch an ge,
w hile sterling has s tood
firm .
T h is was th e
r e s u lt, it a p p e a r s ,

P

455 in D e ce m b e r.

6

\

•
\s

\

N

MM*
/9 # o

th e

e q u iv a ­

len t o f $500 and $600
in F ren ch and Ita lia n
m o n e y re sp e ctiv e ly t o
p u rch a se $250 w orth
o f A m e rica n g o o d s .
T h is w o u ld corresp on d
to a d e p re cia tio n o f
a b o u t 60 p er ce n t.,

8

REPORT ON BUSINESS CONDITIONS

m easu red in g o ld , w hereas th e exch an ge rate fell
to a rou n d 70 p er cen t.

WEEK ENDED
England.....................
France........................
Ita ly ...........................
Spain..........................
Argentina...................
China (Hong K o n g ).
China (Shanghai).. .
Japan..........................

F O R E IG N E X C H A N G E R A T E S
MARCH 27
APRIL 3
APRIL 10
High
Low
High
High
Low
Low
3.96
3.84
3.75
4.06%
3.97M
3.9634
13.98
14.91
14.40
15.06
14.37
16.24
19.42
20.72
20.17
20.56
20.52
25.00
17.75
17.25
17.60
17.35
17.95
17.75
43.375
43.18
43.15
43.15
43.20
43.18
99.00
95.00
100.50
99.00
98.00
96.50
146.00
139.00
146.00
146.00
147.50
137.50
47.00
47.00
48.00
47.00
48.50
47.50

M a rch
E x p orts

T o t a l exp orts fo r M a r c h reach ed
th e re cord -b rea k in g figure o f 820
m illion s, b y fa r th e largest fo r this
m o n th ev e r record ed , and o n ly exceed ed b y th e e x ­
tra ord in a ry figures o f last June. T h is carries th e
to ta l e x p o rts fo r th e first q ua rter o f th e y e a r to 2188
m illion s. T h is was a b o v e ev en th e h igh level es­
ta b lish ed in th e th ree m on th s o f N o v e m b e r , D e c e m ­
b e r a n d J a n u a ry last. I t will b e seen th a t o u r e x ­
p o r t tra d e has th us fa r q u ite fa iled to realize th e
dire p red iction s th a t w ere so freely offered last
yea r, as th e su p p osed con seq u en ces o f th e fall in
exch an ge.
Im p o rts w ere also a t a re co rd -b re a k in g figure,
g o o d s free fro m d u ty to ta lin g 326 m illion s and
d u tia b le g o o d s 198 m illions, or a to ta l o f 524 m illion s.
E v e n w hen this is red u ced t o th e p rice level o f
1913-14, it still rem ains, in v o lu m e , th e h ea v iest
im p orts o f a n y m o n th record ed .
E n g la n d ’ s
T rad e

E n g la n d ’s foreign trad e con tin u es
to sh ow a stea d y exp an sion , even
w ith th e h e a v y increase in prices
elim in ated . F o r th e first q u a rter o f th e p resen t
yea r, exp orts w ere 112 p er cen t, o v e r th e first
q u a rter o f la st yea r, w hile im p orts in m o n e y valu es
increased o n ly 52 p er cen t. T h e a vera ge rise in
c o m m o d ity p rices in th e sam e p e rio d was 36 p er
ce n t., so th a t im p orts h a v e n o t in creased en o rm o u sly
w hile exp orts h a v e sh ow n a rem ark a ble gain.
N everth eless, th e a dverse b a la n ce rem ains v e r y
h e a v y . I t w as £ 2 0 0 ,0 0 0 ,0 0 0 in th e first q u a rter
o f 1919, a n d £ 2 1 8 ,0 0 0 ,0 0 0 this yea r, w h ich latter,
h ow ev er, w o u ld corresp on d , a t th e sam e lev el o f
prices as la st yea r, t o o n ly a b o u t £ 1 5 0 ,0 0 0 ,0 0 0 .
T h e situ a tion , h ow ev er, show s a ste a d y a m eliora ­
tion , m o n th b y m o n th , and sh ou ld so con tin u e, as
E n glish exp orts in a ctu a l v o lu m e are still a p p a re n tly
b e lo w th e level o f 1913. A llo w in g fo r 7 years o f
n orm a l indu strial exp an sion , w h ich w as n o t in ter­
ru p ted th rou g h th e w ar to a n y th in g lik e th e degree




R a te s d u rin g th e cu rren t p e rio d w ere as fo llo w s :

APRIL 17
High
Low
S.92M
3.9734
15.86
17.15
22.10
26.63
17.60
17.40
43.125
43.18
94.00
93.00
130.50
128.00
48.75
48.75

th a t p o p u la r im a g in a tion p ic tu re d it,
d u ctio n is still fa r b e lo w th e n o rm a l
this sh ou ld b e tru e n ea rly a y e a r a n d
h ostilities h a d ceased is e v id e n ce o f th e
tio n w ro u g h t b y existin g co n d itio n s.

B ritish p r o ­
line. T h a t
a h a lf a fte r
d e m o ra liz a ­

E n g lis h
R a n k R a te

T h e increase o f th e B a n k o f
E n g la n d d is co u n t ra te t o 7 p er
cen t, brings it t o th e h igh est p o in t
since th e ea rly m on th s o f th e w ar, a n d w ith
this e x ce p tio n t o th e h igh est p o in t sin ce th e p a n ic
o f 1907. In N o v e m b e r o f th a t y e a r, w h en th is
c o u n tr y d rew h e a v ily o n E n g la n d fo r g o ld , th e ra te
was in creased t o 7 p er cen t, a n d rem ain ed th ere
u n til th e ea rly p a rt o f J an u ary, 1908. E x c e p t fo r
th ose tw o in stan ces th e E n glish ra te has n o t rea ch ed
th e p resen t lev e l since ou r p a n ic o f 1873, w h en th e
ra te rose t o 9 p e r cen t. I t is rem a rk a b le th a t
th ro u g h o u t all th e trou b les fo llo w in g th e B a rin g
crash, a n d cu lm in a tin g in o u r p a n ic o f 1893, th e
E n glish ra te d id n o t rise a b o v e 6 p e r ce n t. T h e se
fa cts ta k e n in co n n e c tio n w ith th e rise in th e F ren ch
b a n k ra te referred t o b e lo w , su fficien tly d isclose
th e p resen t w o rld -w id e d e m a n d fo r m o n e y .
C o n d itio n s
in F ra n ce

T h e increase o f th e B a n k o f
F ra n ce d is co u n t ra te t o 6 p e r ce n t.
raises this ra te t o th e h ig h est level
it has rea ch ed since 1873. In th a t y e a r a ra te o f 7
p er cen t, w as m a in ta in ed fo r 12 d a y s, a n d a 6 p er
cen t, ra te fo r 32 d a y s. P r io r t o th e d istu rb a n ces
d u e t o th e F ra n co -P ru ssia n W a r th e ra te rea ch ed
8 p er cen t, in 1864, in th e trou b les p re ce d in g the*
E n glish crash in 1866; b u t in this p a n ic th e F r e n ch
b a n k rate w en t n o h igh er th a n 5 p er ce n t. A ra te
exceed in g 6 p er cen t, w as general in th e p a n ic y e a r
o f 1857, w h en th e figu re re a ch e d 9 p e r ce n t.
T h r o u g h o u t th e p resen t w ar th e h ig h est ra te was
53^ p er cen t.
T h e p resen t increase is a p p a re n tly in lin e w ith
th e a n n o u n ce m e n t m a d e in th e A n n u a l R e p o r t o f

FEDERAL RESERVE AGENT AT NEW YORK
th e B a n k o f F ra n ce, recen tly issued, o f a d efin ite
a greem en t w ith th e G o v e rn m e n t th a t a lim it o f 27
m illiards o f fra n cs has b een set u p on th e b a n k ’ s
ad va n ces t o th e G o v e rn m e n t, and th a t this is to b e
red u ced t o 24 m illiards b y cu rren t loan s. T h is has
been a cce p te d t o m ean th a t F ra n ce has fin a lly
d ecla red its in ten tion to stop furth er in flation ,
w ith th e a tten d a n t disastrous rise in p rices. S ince
th e ou tb rea k o f th e w ar th e n o te circu la tio n has
g ro w n fro m u n der 6 b illion s to a b o v e 38 b illion
fra n cs, o v e r six tim es. E v e n since th e a rm istice it
has increased m ore th an on e-th ird . T h e result
has b een a v io le n t a d v a n ce in p rices, w h ich has
been esp ecia lly severe, in th e last few m on th s and
is n ow 50 p er cen t, o v e r on e y ea r a go. T h e p rice
in d ex fo r M a r c h 1 was 5 2 0 , and h e a v y increases
w ere re p o rte d in th e cu rren t m on th . T h is m eans
th a t th e p u rch a sin g p o w e r o f th e fra n c is n o w less
th a n o n e-fifth w h a t it w as in 1914.
In spite o f th e rem ark a ble indu strial re c o v e r y
th a t F ra n ce has m a de since th e a rm istice, its p r o ­
d u ctio n , lik e th a t o f m o s t cou n tries, is still b e lo w
n orm a l. C oa l p ro d u ctio n p er ca p ita , fo r exa m p le, b y
F ren ch m iners is estim ated t o h a v e d eclin ed fro m
2156 p ou n d s d a ily in 1913 t o 1760 p ou n d s in 1919.
T h o u g h th e adverse b a la n ce o f tra d e con tin u es to b e
h e a v y , th e a ctu a l v o lu m e o f im p orts has b een d e ­
clinin g, w hile exp orts fo r J a n u a ry and F e b ru a ry
w ere, in m o n e y va lu e, 185 p er cen t, o v e r th ose o f a
y e a r a go, w h ich im plies an increase o f n early o n e h a lf in a ctu a l volu m e.
T h e Japanese
A serious fin ancial crisis appears
C r is is
to h a v e d e v e lo p e d in J ap an , resu lt­
ing in a v io le n t fall in stock s and in
c o m m o d ity prices. T h e m o s t serious d eclin e a p ­
pears t o h a v e b een in silk, w h ich is rep orted to h a v e
fallen fro m th e h igh p o in t o f a ro u n d $2500 a b a le
t o a b o u t $1800 p er bale. T h e h ig h p o in t o f silk in
N e w Y o r k , rea ch ed in F eb ru a ry , was reco rd e d at
sligh tly m ore th a n $18 p er p o u n d , th o u g h sales w ere
re p orted as h igh as $ 2 3 .5 0 p er p o u n d , a n d b y A p ril
20 th e p rice h a d d eclin ed to $ 1 2 .5 0 p er p o u n d .
Several J apan ese s to c k exchan ges w ere closed and
som e large failures w ere rep orted . A ll th is is th e
m ore rem ark a ble b eca u se J a p a n ’ s cu rre n cy and
fin ancial p osition is a p p a ren tly o f th e h igh est.
T h ere has been d u rin g th e w ar th e sam e rem ark a ble
exp an sion o f th e cu rren cy in J a p a n as in oth e r c o m ­
m ercial n ation s, a m ou n tin g fro m J u ly , 1914, to th e
close o f last y ea r t o 280 p er cen t. B u t a t th e sam e
tim e J ap an a b sorb ed large qu an tities o f g o ld , and
th e h old ings o f th e B a n k o f J a p a n rose fro m a rou n d




9

110 m illion s o f dollars t o a b o u t 477 m illion s last
D e c e m b e r 31, o r an increase o f 327 p er ce n t. T h e
presen t reserve o f g o ld again st n otes in circu la tio n
w as, th erefore, in th e n e ig h b o r h o o d o f 60 p er cen t,
a n d th e reserve a gain st n otes a n d d ep osits 35 p er
cen t. O n M a rc h 31 it w as 38 p er cen t.
T h e tre ­
m en d ou s rise in p rices in J ap an w h ich in F e b ru a ry
w ere 213 p er cen t, o v e r 1913, a n d still h igh er in
M a rch , w as, th erefore, n o t p a p er in flation b u t p re ­
cisely as in th e U n ite d States, a g o ld exp an sion . T h e
B a n k o f J ap an has large g o ld d e p o sits in th e U n ite d
S ta tes and in G rea t B rita in , b u t its fin ancial situ a ­
tio n w as so stron g as n o t t o occa sio n a n y large g o ld
im p orts.
R e ta il T r a d e

C o o l w eath er and u n settled c o n ­
d ition s d u rin g A p ril h a v e cu rtailed
retail b u y in g , b u t in M a r c h a c tiv ity w as m a teria lly
greater th a n in F e b ru a ry . T h e in crea sed M a r c h
sales w ere d u e la rg e ly t o th e w arm w ea th er, w h ich
stim u lated th e sale o f season able m erch an d ise,
an d also t o th e p re -E a ste r sales o f d ry g o o d s and
clo th in g . D e p a r tm e n t stores in this d istrict re p o rt
th a t th e va lu e o f th eir sales d u rin g M a r c h a vera ged
54 p er cen t, greater th a n fo r th e corre sp o n d in g
m o n th la st year. T h e va lu e o f retail stock s averages
co n sid e ra b ly m o re th a n 50 p er cen t, greater th a n
fo r M a rc h , 1919, a n d has increased an avera ge
o f 15 p er cen t, o v e r F e b ru a ry , 1920. W h ile th ere
w ere sligh t d eclin es in som e fo o d p rices d u rin g M a r c h
th ese w ere offset b y a d v a n ce s in oth er lines. D u r in g
A p ril u n settled co n d itio n s, p a rticu la rly th e strike
o f railw ay e m p loy ees, sen t som e fo o d p rices u p again ,
esp ecia lly th ose fo r fresh veg eta b les a n d m eats.
T h e u n sa tisfa cto ry o u tlo o k fo r this y e a r ’ s cro p
has fo rc e d u p th e p rices on c o t to n g o o d s . A lth o u g h
n o m a rk ed w h olesale p rice recessions h a v e o ccu rre d ,
retailers d e la y m a k in g co m m itm e n ts fa r ahead
in th e h o p e th a t th e y m a y e n jo y th e b en efit o f
possib le declines. C u stom ers a p p ear t o b e m a k in g
th eir p urch ases w ith a closer s c r u t i n y o f valu es, and
retailers, n o ta b ly in th e sh oe a n d clo th in g trades,
sh ow a d isp o sitio n t o resist a n y a d v a n ce s in th e
prices ch a rg ed th em .
C o m m o d it y
P r ic e s

T h e u p w a rd m o v e m e n t o f p rices
arrested in M a rc h , co n tin u e d in
A p ril, as is sh ow n on th e a c c o m p a n y ­
ing ch a rt. T h e in d ex o f 12 b a sic co m m o d itie s m a in ­
ta in ed b y this b a n k , fr o m stan d ard p rice q u o ta ­
tion s, rose fro m 1 0 4 .6 on M a r c h 1 t o 1 0 7 .0 on
A p ril 1, a n d on A p ril 15 sto o d a t 1 0 9 .9 . O f th e
12 item s, c o tto n , w h ea t, corn , sugar, co p p e r, p ig
iron , lu m b er and p e tro le u m shared in th e rise

10

REPORT ON BUSINESS CONDITIONS

fro m M a r c h 1 t o A p ril 15, w hile h ides a n d ru b b e r
d eclin ed sligh tly and h ogs and lead rem ain ed th e
sam e. T h e fu rth er rise o f this b a sic in d e x th ro u g h
th e m o n th o f A p ril ind ica tes th a t th e p e a k o f general
prices has n o t y e t been reach ed . F o r M a rc h , th e
B u rea u o f L a b o r In d e x rose fro m 249 t o 253, and
D u n ’s fro m 253 t o 2 5 7 .9 , w h ile B ra d s tr e e t’s s to o d
still. B ra d stre e t’ s fo o d in d ex rose fr o m 4 .8 4 on
M a r c h 4 to 5.13
on A p ril 15. E n g ­
l is h p r i c e s c o n ­
tin u ed also t o rise,
th e E c o n o m is t in ­
d ex rea ch in g th e
r e c o r d fig u r e o f
8352, again st 5708
in A p ril o f a yea r
a go, an a d v a n ce
o f 47 p er cen t, as
co m p a re d , fo r ex­
am ple, w ith an
increase o f 26 p er
cen t, in th e B u ­
rea u o f L a b o r
ind ex of this
co u n tr y , and o f
21 p er cen t, in ou r
12 b a sic c o m m o d ­
ity in d ex fo r th e
sam e p eriod . T h e F ren ch official in d ex n u m ber
sh ow ed an oth er rem ark a ble rise fo r th e m o n th o f
F eb ru a ry , and a co n tin u a tio n o f this rise was
in d ica ted b y th e cou rse o f prices in M a rc h , th o u g h
th e figu re is n o t y e t a va ila b le in this co u n try . T h e
sam e w as true in J a p a n and C an ada.
I t will thus
b e seen th a t th e p rice level is still rising all o v e r th e
w orld .

p ro d u ce d in th e U n ite d States in 1918, sh ow an
increase o f 431,675 gross ton s in M a r c h o v e r F e b ­
ru ary. T h e p ig iron m a rk et is dull, b u t p rices are
firm . Steel p rices a d v a n ce d d u rin g th e m o n th ,
b o th h ere a n d in L o n d o n . B essem er b illets are
q u o te d a t $65 t o $70, op en h earth a t $70 t o $75,
and sh eet b a rs a t $80 to $90 a t P ittsb u rg h .
T h e e x p o rt d em a n d fo r finished steel is larger
th a n th e su p p ly .
S o u th A m e rica
a n d J a p a n a re
s t il l b u y i n g in
u n u s u a lly la r g e
q u a n tit ie s , a n d
s h ip b u ild in g a c­
tiv ity in G rea t
B ritain is increas­
in g h er n e e d s .
L e a d in g p r o d u c ­
ers q u o te co p p e r
a t 193^2 cen ts fo r
s p o t a n d s e co n d quarter ship­
m en ts, b u t in q u irie s a r e l a c k i n g .
T h e sluggish A m ­
erican m a rk et has
in flu en ced L o n ­
d o n , w here p rices
ea rly in A p ril h ad b een som ew h a t firm er. Z in c,
lead and tin m ark ets are in a ctiv e on a cco u n t o f th e
strike.
P rices, especia lly fo r lead , are som ew h a t
low er th a n a m o n th ago. T h e in d ex figu re fo r th e
m etal g ro u p in D u n ’ s list on A p ril 1, w as 30.72, as
co m p a re d wT
ith 30.40 on M a r c h 1, and w as a t th e
h igh est p o in t sin ce O c to b e r 1, 1917.
C otton

Iron and
M e ta ls

T h e strike o f trainm en ca m e ju st as
th e p ro d u ctio n o f iron and steel was
recov erin g ra p id ly fro m several adverse
fa ctors, and w hen the d em an d , esp ecia lly fo r stru ct­
ural steel, w as stron g. T h e in d u stry w as so se­
riou sly a ffected b y em b argoes, w h ich p re v e n te d the
m o v e m e n t o f m aterials and fu el, th a t m a n y p lan ts
w ere fo rc e d t o sh ut d ow n . T ra n s p o rta tio n and
p ro d u ctio n h a v e n ow som ew h a t im p ro v e d , b u t
are still b e lo w th e levels o f M a rc h . A cc o rd in g to
th e Ir o n A g e, th e a ggregate o u tp u t o f p ig iron in
M a r c h exceed ed 3,375,000 ton s. T h e d a ily a verage
p ro d u ctio n was a b o u t 6,000 ton s greater th a n in
F eb ru a ry , and a t th e h igh est p o in t since th e end
o f 1918. R e lia b le d a ta fo r com p a n ies w h ich m a n u ­
fa ctu red m ore th an 80 p er cen t, o f th e steel in gots




P ersisten t rep orts o f la b o r s h o rt­
age, seed sh ortage, b a d w ea th er and
d am a ge d o n e b y th e p in k b o ll-w o rm , h a v e sen t th e
prices o f c o t t o n to n ew h igh levels d u rin g th e first
h alf o f A p ril. S p o t c o tto n this m o n th w en t a b o v e 43
cents. C o tto n co n su m p tio n d u rin g M a r c h a m ou n ted
to 575,704 bales as co m p a re d w ith 516,594 bales in
F e b ru a ry and 433,485 in M a r c h last year. T h e d o m e s­
tic m ill co n s u m p tio n fro m A u g u st 1 t o A p r il 1
was 4,236,000 bales again st 3,817,000 fo r th e c o r ­
resp on d in g p e rio d last year. C o tto n o n h a n d w ith
con su m ers on M a r c h 31, increased a b o u t 3 95,000
bales o v e r la st yea r, w hile c o t t o n in p u b lic w a re­
houses and a t com presses d ecreased 1,082,910 bales.
Im p o rts d u rin g M a r c h w ere 1 33,727 bales co m p a re d
w ith 15,561 bales a y ea r a go. E x p o rts w ere 794,460
bales d u rin g th e sam e m o n th co m p a re d w ith 504,239

11

FEDERAL RESERVE AGENT AT NEW YORK
a yea r a go. A c tiv e spindles in M a r c h increased
m ore th a n 2 ,000,000 o v e r M a rc h , 1919. T h e
reflection o f h igh c o t to n p rices on th e w holesale
prices o f c o t to n g o o d s is sh ow n in an ex tra ct fro m
Raw
Cotton
Price at
N. Y.
Print cloths, 27 in. 64 x 60..............
Shirtings, 3 yd. 48 x 48....................
Drills, 37 in. 3.95 yd..........................
Sateens, 37}^ in. 64 x 72, 5.25..........
Combed lawns, 40 in. 84 x 80, 10.50.,

JO

13
X i
c
s
©
«©•

Prices
Dec.
1914
2 7/16
5 1/4
4
4 3/8
7 1/4

11 1/4
20
17 1/2
17
28

T h e va lu e o f con tra cts fo r b u ild in g
op era tion s in this d istrict, aw arded
d u rin g M a rc h , w as n early d o u b le
th e va lu e o f th ose a w arded in F eb ru a ry , a cco rd in g
t o figures co m p ile d b y th e F . W . D o d g e C o m p a n y .
F igures fo r th e first q u a rter o f 1920 sh ow th a t th e
co n tra cts aw arded a m ou n ted t o $ 18 2,568,000,—
n early equal to th e to ta l va lu e o f th ose a w arded
du rin g th e sam e q ua rter d u rin g th e p a st fo u r years,
w h ich was $193,396,000. P r o je c ts co n te m p la te d
in M a rc h a m ou n ted to $86,406,350, w h ich is a
d ecrease o f a b o u t $8,000,000 fro m th e tota l rep orted
fo r F eb ru a ry . T h ere was a con sid era b le increase
in th e n u m b er o f residen tial p ro je c ts d u rin g M a rc h ,
b o th in this d istrict a n d in th e states n orth o f th e O h io
and east o f th e M issou ri rivers. In th e la tter
area con tra cts fo r all classes o f b u ild in g aw arded
fro m J an u ary 1 t o M a r c h 1, 1920, a m ou n te d to
$452,511,000, and fro m J an u ary 1, t o A p ril 1, 1920,
to $780,408,000, w h ich was n early th ree tim es th e
va lu e o f con tra cts aw arded d urin g th e sam e q u a rter
last year.
T h e u n fa v ora b le situ a tion , w h ich has been a g ­
g ra v a te d b y th e recen t strikes o f m en in tran s­
p o rta tio n service, h old s fo rth little h o p e fo r m a rk ed
im p rov em en t in th e n ear fu tu re. T h e increasin g
a n d a ctiv e interest o f large corp o ra tio n s in th e p ro p e r
h ou sin g o f th eir em p loy ees, tog eth er w ith th e
fo rm a tio n o f loca l b u ild in g a ssociation s, is, h o w e v e r,
an en cou ra g in g recen t d e v e lo p m e n t. A strike o f
b rick la y ers in N e w Y o r k C ity w h ich h ad b een in
p rogress since J a n u a ry w as settled w hen th e m en
a greed t o return to w ork o n M a r c h 30, p e n d in g
th e a rb itra tion o f their d em an d s.
A sharp rise in th e n u m b e r and
a m ou n t o f com m ercia l failures in
this F ed era l R e se rv e d istrict in M a rc h , as co m p a re d
to a m o n th a go and a y ea r a go, is sh ow n in sta tis­
tics co m p ile d b y R . G . D u n & C o m p a n y . T h e
n u m b er o f failures rep orted , increased 64 o v e r F e b ­




prices
Jan.
22
1919

Raw
Cotton
Price at
N. Y.

Max.
Govt.
Price
1918

B u ild in g
O p e ra tio n s

F a ilu r e s

a co m p ila tio n m a d e fo r th e D a ily N e w s R e c o r d
co m p a rin g recen t valu es w ith th e m a xim u m p rices
fixed b y th e G o v e rn m e n t in 1918 and th e q u o ­
ta tion s o f D e c e m b e r , 1914:

©
c$

0
3
O
<q
MS

re­

8
16 3/4
15
13
20

Raw
Cotton
Price at
N. Y.

O
pH
oi

8

Prices
Jan.
22

1920
15 1/2
29
25
33
42 1/2

ru a ry , 1920, and 37 o v e r M a rc h last yea r, w hile
liabilities increased $ 5,150,906 and $2,180,220 re­
s p e ctiv e ly .
F o r th e first tim e in several m on th s
failures in this d is trict increased o v e r last year.
T h is is a m a rk ed co n tra s t t o figures fo r th e co u n tr y
as a w h ole, w h ich sh ow a decrease.
B usiness m o r ­
ta lity in this d istrict fo r th e first q u a rter o f 1919
a n d 1920 is sh ow n in th e fo llo w in g ta b le :
NUMBER
1920
1919
103
134
75
102
139
102
. .317

338

LIABILITIES
1920
1919
$1,212,644
$3,258,200
r 1,062,322
2,686,546
6,213,228
4,033,008
$8,488,194

$9,977,754

P rio r t o th e w ar th e races w h ich
im m ig ra ted t o th e U n ite d States in
th e greatest nu m bers w ere, in th e
o rd er o f their im p o rta n ce , Ita lia n , H e b re w , P olish ,
G erm an , S can d in avia n , E n glish and Irish , w h o,
m a ke u p m ore th a n tw o th ird s o f th e 15,000,000
im m igran ts w h o ca m e t o this co u n tr y since 1898.
M o s t o f ou r im m igra n ts n o w are Ita lia n s, in great
p a rt reservists w h o are return in g fro m service in
th e Ita lia n a rm y , w ith s o m e S can d in avia n s, Irish ,
a n d E n glish . H e b re w a n d P o lish im m ig ra tion has
been cu rtailed b y co n d itio n s in R u ssia and P o la n d ,
a nd b y ou r strict p a ssp o rt regu lation s. G erm an
im m ig ra tion is cu t o ff b y ou r w a r-tim e regu lation s,
still in fo rce . O th er causes restrictin g im m ig ra tion
are th e recen t p o litica l and social re v o lu tio n s
a b roa d , w h ich h a v e offered a dva n ta ges to th e p o o re r
classes and h a v e giv e n p o litica l a u to n o m y t o m a n y
races. C an a da , w ith oth er B ritish C olon ies, and
S ou th A m e rica , are offerin g special in d u cem en ts t o
im m igran ts and thus a ttra ctin g som e o f th em a w ay
fro m this co u n tr y . G re a t B rita in is seeking t o
d ire ct em igran ts t o her colon ies. Ita ly has recen tly
in v estiga ted co n d itio n s in th e cou n tries w here her
em igran ts settle, a n d has d e cid e d th a t F ra n ce offers
th e b est a d va n ta ges. N a tu ra lly , her fu tu re p o lic y
1

REPORT ON BUSINESS CONDITIONS

12

w ill b e t o seek t o send her em igran ts t o th a t co u n tr y ,
a lth ou gh n u m bers o f th em are n ow g o in g t o S ou th
A m erica . P r o h ib itio n in this co u n tr y a n d th e high
co s t o f ocea n tra n sp orta tion , d u e t o d ep recia ted
foreig n exch an ge, are also said t o b e causes cu rtailin g
im m ig ra tion .
A rriv als a n d departu res
m on th s w ere as fo llo w s :

October
November
December
January
February
March

du rin g

Immigrant Aliens
24,641
17,557
34,529
25,057
22,086
29,098
152,968

E m p lo y m e n t

th e

p a st

six

Emigrant Aliens
25,300
36,459
21,996
25,051
24,379
18,714
151,899

D u rin g th e first tw o w eeks o f
A p ril, th e strike o f ra ilroad e m ­
p loy ees so d isorg an ized tra n sp orta tion th a t m a n y
firm s w ere co m p e lle d t o lim it th eir a ctivities, w ith
a co n seq u en t increase in u n em p loy m en t. O f 445
rep orts fro m fa ctories, in answ er to a q u e ry b y th e
S ta te In d u stria l C om m ission o f N e w Y o r k , 152 say
p r o d u ctio n w as cu rtailed b y th e strike, 199 th a t
p ro d u ctio n w as n o t a ffected , a n d 94 v o ic e n o op in ion .
In th e 152 fa ctories a ffected , th e n u m b e r o f e m ­
p loy ees decreased fro m 28,922, on M a r c h 15, t o 27,821
o n A p ril 15; in th e 94 fa ctories v o icin g n o o p in io n ,
it d ecreased fro m 14,181 t o 13,378, w h ile in th e 199

fa cto rie s n o t a ffe cte d it increased fro m 28,300 t o
28,700. T h e re is ev id e n ce th a t th e crest o f th e
tro u b le has b een p ast, b u t th e resu ltin g a ccu m u ­
la tio n o f g o o d s a n d m aterials a t p ro d u ctio n p o in ts
and term in a ls w ill d e la y th e return t o n orm a l c o n ­
dition s. H o w e v e r , this co n g e stio n o f ya rd s and
w arehouses w ill te m p o ra rily increase th e d em an d
fo r certa in classes o f la b or. A 3 p er cen t, increase
in th e a m o u n t o f e m p lo y m e n t in N e w Y o r k fa cto rie s
in M a r c h o v e r F e b ru a ry is sh ow n in th e p relim in ary
re p o rt o f th e S ta te In d u stria l C om m ission . T h is
increase w as p a r tly seasonal a n d p a r tly d u e to
an im p ro v e m e n t in th e deliveries o f fu el and raw
m aterials t o fa ctories, w h ich en ab led th e m a t th a t
tim e t o increase th eir w ork in g forces. D a ta c o m ­
p iled b y th e C om m ission sh ow an average w eek ly
earn in g in M a r c h o f $27.87 fa r all fa c to r y w orkers
in N e w Y o r k , an increase o f 5 p er ce n t, o v e r F e b ­
ru a ry , 1920, o f 26 p e r cen t, o v e r M a r c h la st yea r,
a n d o f 120 p er cen t, since M a rc h , 1915. S everal
m in o r strikes h a v e re ce n tly b e e n settled in this d is­
trict, n o ta b ly a strike o f b rick la y ers, in progress
since Jan u ary, and a strike o f fo o d han dlers, w h ich
lasted o n ly a d a y . Strikes o f e le v a to r o p era tors
an d coa stw ise lon g sh orem en sh ow signs o f b rea k in g
u p , b u t a strik e o f m ach inists is in p ro s p e c t
The
p u b lic a ttitu d e to w a rd strikes, b eca u se o f th e in ­
co n v e n ie n ce a n d loss resu ltin g fro m th em , is in
this d istrict as elsew here on e o f increasin g irrita tion .
D u r in g th e strike o f ra ilroad w ork ers m a n y v o l ­
unteers m a n n ed trains, th e re b y m a k in g it p o ssib le
fo r th e railroads t o m o v e trains in to N e w Y o r k .

T h is re p o rt is p r e p a r e d jn o n th ly fo r th e F ed era l R e se rv e B o a r d . C op ies are issued fo r th e in fo rm a tio n
o f m em b er b an k s and th ose w h o h a v e co n trib u te d to w a rd s its p re p a ra tio n . A d d itio n a l co p ie s m a y be
o b ta in e d b y addressin g
FED ERAL RESERVE AGEN T,
F ed era l R e se rv e B a n k o f N e w Y o r k .
15 N assa u S treet, N ew ^ Y ork .