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(T h e article on the last page describes the replacing o f worn currency through the R eserve Banks) MONTHLY REVIEW Of Credit and Business Conditions In By th e th e Federal S e c o n d Reserve F e d e r a l Agent, R e s e r v e Federal D is tr ic t Reserve Bank, New York New York, August 1,1922 $3,421,000,000 in the last nineteen months, their invest Credit Conditions T H E volume of investments held by the banks, both in New York City and in other principal cities of the country, has been increasing for sev eral months and is in contrast with the volume of com mercial loans of the same banks, which has been decreas ing ever since the maximum of expansion was reached in the autumn of 1920. These divergent movements are usual at times such as the present, and have been ob served in previous periods of recovery from business inaction, as for instance in 1879, in 1893-4, and in 1907-8. It will be recalled that, in the early stages of the re cent period of commercial liquidation, funds released from employment were used by the banks to reduce and in many cases ultimately to extinguish their indebted ness to the Reserve Banks. New York City member banks, for example, which on November 5, 1920 were borrowing $890,000,000 from the New York Reserve Bank, on May 31, 1922 were borrowing less than $6,000,000. A s the banks progressively reduced this debt, their investments in United States Government securities tended to increase, and by the end of last year were ris ing more rapidly, at a rate which has been maintained with little interruption since. In the early spring of ments during the same period rose about $1,000,000,000, of which about $300,000,000 was in other than Gov ernment securities; and while the commercial loans of member banks in New York City declined $1,565,000,000 their investments rose over $500,000,000, of which over $70,000,000 was in other than Government se curities. The decline in commercial loans began in October 1920, some four months after commodity prices began to fall, and has already continued six months after commodity prices began again to rise. Just as the fall in prices required increased borrowing on the part of many business men, so the rise in prices has permitted the continued liquidation of loans in spite of the greater business activity which has been developing concur rently. The increase in the volume of investments held by the banks arises largely from the obvious tendency of bank funds, pending a recurrence of commercial de mand, to seek employment elsewhere. It is reported to 1922 their holdings of other fixed-term investments, in cluding corporate bonds and stocks, also began to increase. The diagrams on this page compare the downward movement of commercial loans with the upward move ment of investments held by member banks in princi pal cities throughout the country including New York City, and in New York City alone. The lines showing investments reflect holdings both of United States Gov ernment and other securities. While the commercial loans of such banks throughout the country declined Changes in Commercial Loans and Total Investments of Reporting Member Banks in the United States and in New York City 2 M ONTHLY this bank that at this time investment buying of bonds is concentrated chiefly on either the long or the very short maturities. Presumably the banks, in order to conserve their power to meet the needs of their cus tomers as they develop, are taking the shorter ma turities. Such fluctuations in money rates as have taken place in the past month have been closely related to the flow of funds in or out of this district. A t this season of the year the main movement is away from New York, registering the rising need for funds in the agricultural sections of the country. Aside, however, from rates for Stock Exchange call money, which have tended to reflect hour to hour movements, there have been few changes in money rates from a month ago, and at the close of the month the rates in the open market are nearly the same as in June. Bill Market A period of slack demand for bankers bills when money rates were firm early in July was followed by more active trading after money conditions eased near the middle of the month. Dealers' offering rates were maintained during July at the 3 per cent, level estab lished in June except for a few days shortly after the middle of the month when several dealers quoted 2 % per cent, on the shorter maturities. Bid rates ranged from 3 1 4 to 3 per cent, but the prevailing rate was 3 % per cent. Acceptances drawn to finance the importation of raw sugar were again most numerous of the month’s offer ings of import bills and those drawn against coffee and silk were next in importance. Of export bills those financing the movement of cotton were in largest volume. MILLIONS OF DOLLARS R E V IE W Commercial Paper There was no further decline in the prevailing rate for commercial paper during the first three weeks of July, but evidence of a downward tendency was con tained in a wider acceptance of the 4 per cent, rate, and the sale of a small amount of exceptionally prime paper for the first time this year at 3 % per cent. Paper of slower moving character continued to be quoted at 4*4, and in some cases, at 4 y2 per cent. As a rule, dealers reported a good demand in New York City, though buying was centered to a considerable extent in a few institutions. The most notable change occurred in the outside market where there was evidence of a broadening demand at prevailing rates. This was in contrast with conditions a month ago when the reduc tion of rates to 4 per cent, was almost entirely the re flection of buying by the New York institutions. The supply of prime paper appears to have shown a real increase during July, and this fact has helped to in crease distribution. The accompanying diagram of outstanding commer cial paper at monthly intervals indicates a resumption during June of the increase which, up to May, has been in progress since the first of the year. Stock Market Money Rates Between June 20 and July 20, call money rates ranged from 2 % to 5 y 2 per cent., as in the preceding thirty days. Except for a period over the first of July, when the usual half year financial settlements caused relative firmness, rate fluctuations reflected little more than the movement of funds in and out of this district. Rates at 5 and 5 y2 per cent., as at the end of June and early in July, resulted in heavy offerings of call money locally and from out of town, and a decline in the rate by mid month to 2 % per cent. A t this level, lenders withdrew their funds for employment elsewhere, and there was a reaction again to 5 per cent. Early in July, time money rates were advanced by % to a range of 4 1 4 to 4 y 2 per cent., and business became quiet. Accompanying the later ease in call money, rates were again lowered to 3 % to 4^4 per cent. Stock Market After the sharp reaction in stock prices during the first part of June, trading became comparatively quiet. Transactions, which had averaged considerably more than a million shares daily since early in April, dropped off to an average of about 650,000 shares in the latter part of June and in July. Prices, however, gradually recovered from the June low points, and by the third week of July both railroad and industrial stock price averages had established new high levels for the year, notwithstanding many unsettling factors in current for eign and domestic news. Commercial Paper Outstanding— Twenty-seven Dealers Totai stock transactions during June were 24,000,000 shares, about 5,000,000 less than in May. Trading con tinued restricted during July. 3 FEDERAL RESERVE AGENT AT NEW YORK COLLARS a group, showed fu rth er losses between m id-Jun e and m id -Ju ly , and especial weakness w as m anifest at times in F ren ch and B elgian issues. Results of economic and political developments abroad, weakness in some of the exchanges, and an incomplete distribution of a number of new issues were depressing factors. Total transactions in bonds other than United States Governm ent securities on the N ew Y o rk Stock E xch an ge du ring Ju n e w ere $209,000,000, the smallest since F e b ru a ry and $78,000,000 less than the total fo r A p ril, the month of most active trad in g this year. U n ite d Prices of 10 High Grade Railroad Bonds and of 50 Representative Stocks, and Sales of Stocks Each Week on the New York Stock Exchange B ond M arket H igh grade, un derlyin g bonds of A m erican railroads became m arket leaders in a recovery in bond prices in the latter p art of Ju n e, and b y J u l y 20, an average of ten such issues had risen 3 % points from the Ju n e low point to the highest levels since 1 9 1 7 . B y these advances, investment yields in some cases were reduced to ap pro xi m ately 4 y± per cent. H igh grade public u tility and industrial bonds shared to some extent in this strength, but the movement in these groups w as less regular and some issues were slow in regain ing prices reached in previous months. The changes in several different bond groups, as shown b y W a ll Street Jo u rn a l averages, were as follow s: 10 high grade rails................ 10 second grade rails........... 10 public utilities.................. 10 industrials.......................... 40 bonds............................ June Lowest Price 87.45 (June 1) 85.21 (June 19) 87.22 (June 19) 94.26 (June 19) 88.60 (June 19) Price July 20 Advance 91.24 3.79 87.06 1.85 88.12 .90 1.14 95.40 1.85 90.45 B u o ya n cy in the high grade railroad group w as the result o f fu rth er ease in the money m arket, a more dis crim inating demand on the p a rt o f buyers, and a short age of new issues of the prim e character attractive to the most conservative class of investors. A fu rth er in fluence w as a certain amount of foreign bu yin g in this market. Domestic State, county, and m unicipal bonds were quiet and somewhat lower ea rly in J u l y , ap p are n tly due to h eavy offerings in recent months. Fo reig n issues, as S ta te s G overn m ent S e c u r it ie s A s a fu rth er im portant step in its program for dealing w ith the m aturities of the short dated debt, the T rea su ry on J u l y 26 announced that approxim ately half, or nearly $1,000,000,000, of the outstanding V ic to ry 4 % per cent, notes were called for redemption on December 1 5 , 19 2 2 . The notes called for redemption bear the distinguishing letters “ A , B , C, D , E ” or “ F ” prefixed to their serial numbers and can thus be re ad ily distinguished from the notes not affected b y the call. Concurrently, as p a rt of the refun din g program , the T re a su ry offered its sixth issue of notes, in the amount of $300,000,000 or thereabouts, w ith provision for additional allotments up to a limited amount in exchange for V ic to ry notes. The new notes, dated A u g u st 1 and m aturing Septem ber 1 5 , 19 26 , bear interest at 4 *4 per cent., compared w ith a rate of 4 % per cent, fo r 3 y 2 years on the preceding issue offered in Ju n e. There w as a general advance in L ib e rty bond prices about the middle of J u ly , and all active issues rose to new high levels fo r the year. The 3 ^ s , and first, second, and fourth 4i/4s reached or exceeded 1 0 1 . Th is movement followed a gradual rise du ring M a y and Ju n e which re flected a grow ing tendency fo r banks and other holders of tem porarily idle funds to em ploy their accum ulating supplies in the L ib e rty bond m arket. A t the high prices of the month, investment yields on active issues ranged from 3 .3 8 per cent, on the 3 ^ s to approxim ately 4.05 per cent, on most of the 4 14 per cent, issues. Ju n e trad in g in L ib e rty and V ic to ry issues involving $126,00 0,00 0 was the smallest since F e b ru a ry , and 4 1 per cent, sm aller than in Ju n e last year. The reduction reflects in p a rt a decrease in the floating su p p ly of bonds, due to purchases b y investors, and in p a rt the redemption and refun ding of V ic to ry notes into notes not traded in on the Stock Exch ange. Offering rates fo r T re a su ry certificates and notes in the open m arket have shown little change in general level for several months. The average fo r the first three weeks of J u l y ranged from 3.0 4 per cent, on one to three m onths’ m aturities to 3.60 per cent, on ten to twelve m onths’ m aturities, and 4 . 1 1 per cent, on three-year notes. V ic to ry 4 % notes, at 100.98, equalled the high est price reached previously in M arch. N e w F in a n c in g A f t e r a quiet period at the end of Ju n e , offering of new issues was resumed in moderate volume in J u l y . 4 MONTHLY REVIEW F e w issues of more than moderate size, however, were •sold except to provide funds for calling and refun ding bonds of higher interest rate. Dem and continued active fo r conservatively priced, high grade issues, but b u yin g of more speculative issues for ra p id turnover was checked b y the price declines occurring in M a y and Ju n e. A s a rule, distributors of serial issues found more read y sale fo r nearest and most distant m aturities than fo r those of interm ediate dates. The yield basis of prim e offerings ranged from about 5 14 to 5y 2 per cent. W h ile this rate was higher than on some issues in recent months, it was due rather to a desire on the p a rt of dealers to move their issues more p rom p tly than to an y firm er tendency of interest rates. O ffering rates on prim e State and m unicipal securities were 4 to 4 14 per cent., while near m aturities of some issues were quoted under 4 per cent. F o reig n offerings in the first three weeks of J u l y to taled $34,725,0 0 0 . R eaction ary tendencies in out standing issues, some of which were not completely distributed, tended to restrict new business. J u l y is sues were large enough, however, to brin g the total of foreign issues since the first of the y ea r to $ 7 13 ,2 7 6 ,9 0 0 , sligh tly more than total sales of such issues in the whole of 1 9 2 1 . Ju n e offerings of new securities on the N ew Y o rk m arket amounted to $628,000,000 which included $35 0 ,000,000 domestic corporation issues, $154,0 00,0 00 do m estic State, county, and m unicipal issues, $119 ,0 0 0 ,0 0 0 foreign offerings, and a smaller amount of land bank se curities. The domestic State, county, and m unicipal total was the largest since December, and for the six months ended Ju n e , their total of $713,0 0 0 ,0 0 0 w as the largest ever reported fo r a corresponding period. Ju n e domestic corporation issues fell below those of M ay, but w ere otherwise the largest for an y month this year. F o r e i g n F i n a n c i n g in N e w Y o r k a n d L o n d o n B oth in the U nited States and in the U nited K in g dom the volume of financing done fo r other countries has shown a large, and on the whole, steady increase du ring the past y e a r and a half. In fact in each m arket sales of foreign issues in the first h a lf of this y e a r p ra c tica lly equal sales fo r the whole of 1 9 2 1 . The follow ing table shows b y h a lf years since the beginning of 1 9 2 1 the totals of foreign issues sold in the two countries. F ig u re s given represent p a r value o f securities offered. Those fo r the U nited K ingdom are totals of issues re ported w eekly b y the Econom ist. Period Sales in N. Y. 1st half, 1921.................................... $291,654,000 2nd half, 1921.................................. 403.550.000 1st half, 1922.................................... 678.552.000 Total........................................... $1,373,756,000 Sales in London $238,010,000 229.810.000 481.191.000 $949,011,000 The extent of financing in the London m arket is note w o rth y in view of the fact th at in the last 1 8 months E n g la n d has exported $56,80 5,0 00 net gold and silver, and has had an im port trade balance in merchandise of $ 1,4 17 ,3 6 7 ,0 0 0 , whereas the U nited States has in the same period received net im ports of gold and silver amounting to $79 4 ,6 15,0 0 0 , and has had a net export balance of merchandise valued at $2,376,607,0 00 . Com parison of the sources of foreign cap ital flota tions in the two countries shows that, broadly speaking, the United States has been engaged in financing chiefly N orth and South A m erica and Eu rope, while the U nited K ingdom has been occupied chiefly w ith A sia and A u stralasia, and to a lesser extent w ith E u ro p e and A fr ic a . The direction of financing in the case of E n g la n d is largely determined b y the location of her colonies. In the N ew Y o rk market, C anada not only has led all other countries with respect to volume of issues sold here, but has led even such large continental divisions as South A m erica and Europe. The accom panying table shows com paratively the sources of issues sold in the last eighteen months in N ew Y o rk and London. A b ou t 88 per cent, of all foreign offerings in N ew Y o rk originated in the A m ericas or in Eu rop e, whereas over 68 per cent, of all foreign offerings in London were of A sia , A u s tra lasia, and A fric a . Country Amount Offered in New York % of Total Canada and N ew fd... $397,742,859 29.0 Rest of No. America.. 82.225.000 6.0 South America............ 334,272,466 24.3 Europe, Eastern......... 50.850.000 3.7 Europe, Western........ *345,807,800 25.2 Dutch East Indies, Philippine & Hawaii 137,600,000 10.0 Asia, Continental. . . . Africa.............................. Australasia.................... 25,258,000 1.8 Total...................... $1,373,756,125 100.0 Amount Offered in London % of Total $3,920,516 0.4 56,650,961 6.0 8.5 80,437,629 21,961,375 2.3 136.228.674 14.3 23,681,526 2.5 267.234.674 28.2 100,519,605 10.6 258,375,834 27.2 $949,010,794 100.0 *($50,000,000 refunding.) O f issues sold in the U nited Kingdom , $ 5 9 8 ,6 16 ,9 36 or 63 per cent., represented borrowing b y B ritish pos sessions, chiefly A u stralasia, A fr ic a n possessions, and India and Ceylon. F o r e ig n E xchange Germ an m arks sold at less than 1 / 5 o f a cent on J u l y 8 a fter a series of declines which w ere accom panied b y general unsettlement of rates on other centers in Continental Eu ro p e. H e a v y selling o f m arks w as as cribed p a rtly to uneasiness over the financial position of the Germ an governm ent and p a rtly to preparations b y that governm ent fo r the paym ent o f the reparations instalm ent due J u l y 1 5 . D u rin g the latter p a rt of the month m ark exchange w as sligh tly firmer. E x ch a n ge rates on F ra n ce and B elgium in the first week of J u l y reached the lowest levels since last D e cember but later in the month recovered somewhat. Sterling, however, w as firm in a m oderately active m ar ket. London exchange w as in demand b y F ren ch , B e l gian, and Ita lia n interests fo r the paym ent of obliga tions m aturing in London and fo r the usual m id-year interest paym ents. FEDERAL RESERVE AGENT AT NEW YORK The diagram on this page brings up to date a com parison of the movement o f exchange rates on fou r E u ropean countries since restrictions were removed in 19 19 . Th is diagram shows the seasonal decline which usu ally occurs in J u l y and succeeding months as a result of bu ying of A m erican cotton and grain. In recent years, however, the effect of such seasonal operations, form erly well recognized, has been m erged w ith the effects of unsettled political and economic conditions. PAR -5 0 % /•" FRA N C E A / -7 5 % \ ITALY GERMANY -100% 19 IQ 19 2 ,0 19 2J 19 2,2 . Depreciation of Foreign Exchange Rates from Par Value Country England............................... France.................................. Ita ly ...................................... Germany.............................. Belgium................................ Holland................................ Switzerland......................... Spain..................................... Sweden (Stockholm ). . . . Argentina............................ Brazil.................................... Japan (Yokohama)......... China (Hong K ong). . . . China (Shanghai)............ India..................................... Canada................................ Bar Silver in New York. July 20 Last 4.4519 .0839 .0459 .0020 .0794 .3882 .1918 .1555 .2595 .3595 .1348 .4778 .5813 .7738 .2906 .9903 .7000 Change from June 20 + .0069 -.0 0 3 3 -.0 0 3 2 -.0 0 1 2 -.0 0 3 8 + .0032 + .0030 0 + .0048 + .0041 - .0 0 1 5 -.0 0 1 2 + .0025 -.0 1 2 5 -.0 0 0 7 - .0 0 0 3 -.0 0 6 3 Per Cent. Depreciation from Par 8.5 56.5 76.2 99.2 58.9 3.4 .6 19.4 3.2 15.3 58.4 4.2 * * 40.3 1.0 * Silver Exchange Basis. F o r e ig n T rade Ju n e foreign trade figures reported b y the D e p a rt ment of Commerce were at the highest levels of the year. E x p o rts, valued at $334,000,000, w ere $26,000,000 more than in M ay, and the largest since October. Im ports, valued at $260,000,000, while only $6,000,000 more than those of M ay, were the largest since December 19 20 . Reports as to new orders du ring J u l y from houses handling a general assortment of commodities indi 5 cated a continued gradual trade expansion. A s in several months past, oriental markets du ring J u l y pro vided exceptions to the grow th in activity, due to politi cal disturbance in C hina and recent economic unsettle ment in Ja p a n . Steel products, in particular, continued to be affected b y quiet conditions in these markets, and notw ithstanding more general bu yin g elsewhere, steel export orders have been sm aller than they were early in the year. South A m erica and A u stra lia are now al most un ifo rm ly reported better markets for a v a riety of goods. Eu ro p ean demand fo r wheat has continued rather slow, and much of the b u yin g has been of hand-to-mouth character, though around the middle of J u ly , F ra n ce and Ita ly bought somewhat more liberally fo r deferred delivery. I t is understood that there is alread y con siderable wheat under contract fo r summer and fa ll shipment. D ue chiefly to Germ an buying, the export copper m arket was active until about the middle of J u l y , when a lull appeared. The accom panying diagram gives little evidence of decisive change in the trade balance of the United States d u rin g recent months. W h ile im ports have been in creasing rather steadily since last summer, there recently has been an increase in exports, so that the export balance has increased rather than decreased. In Great B ritain , on the other hand, a decrease in exports and rise in im ports fo r several months have tended to widen the im port balance. mULions OF POLLARS 1919 1920 1921 1922, United States and British Exports and Imports. (Pounds Con verted to Dollars at Current Rates of ^Exchange) G o ld M o v e m e n t D ue chiefly to some resum ption of gold imports from E n glan d , total gold im ports d u rin g Ju n e rose somewhat above those of A p r il and M a y to $12,9 6 9,0 0 0 . The movement, aside from these two months, was, however, the smallest since F e b ru a ry 19 20 . W o r ld C o m m o d ity P r ic e s The increase in wholesale prices w hich has been going fo rw a rd for some months in this country, En glan d, and F ran ce, has spread du ring the past month to I ta ly and Ja p a n . The increase appears to reflect more active busi MONTHLY REVIEW 6 ness in all of these countries. In the cases of E n glan d and F ran ce, the percentage of trade union members un employed has recently been diminished, and p ig iron production has been considerably increased. E x a c tly the same tendencies have been noticeable in Germ any, in which continued price inflation accompanies the depreci ation of the m ark. In N o rw ay, on the other hand, a con tinued decline in wholesale prices, resulting from the lateness of the period of inflation in that country, has been accompanied b y increased unemployment. The accom panying diagram shows the movement of prices in fou r countries. F o r the U nited States and E n g la n d the index figures used are those prepared b y the Fed eral Reserve B o ard fo r purposes of international comparison. The following table shows the latest a vail able figures for all those countries which publish price indices. (1913 average = 100 Unless Otherwise Noted) Latest Quotation Country United States: 20 basic commoditiesi. Dept, of Labor.............. Dun’s ................................ Bradstreet’s .................... Great Britain: Econom ist....................... Statist............................... 20 basic commodities*. France................................... Ita ly ....................................... Japan..................................... Canada.................................. Sweden*................................. Australia3.............................. Norway4................................ Germany &............................. Denmark**............................. Holland................................. Peru....................................... 139 (July 22) 150 (June av.) 144 (July 1) 131 (July 1) P er (}ent . C eIANGE D uring April + + + + 0 .2 0 .7 1.2 1.5 M ay + + + + 5..4 3..5 1 1 1..7 June + + + + 1.8 1.4 2.2 1.7 0.3 + 1..9 + 0 .4 + 1.1 + 0..5 + 0.1 + 0 .2 + 3 .3 + 1.4 + 2 .0 + 1 .0 + 2.6 0 .6 + 2.6 1.2 1.5 1 .6 + 1.5 0 .2 + 0 .5 0.8 0 .6 + 0 .6 + 1.4 + 4 .7 0 .4 2 .1 1.7 + 1 1 .4 + 3 .6 + 17.2 0 .6 + 1 .1 1.9 + 3 .8 -1.6 0 .5 i iComputed by this bank, sjuly 1, 1913-June 30, 1914 = 100. 3July 1914 = 100. ^December 3 1 ,1913-June 30, 1914 = 100. sMiddle of 1914 = 100. 6July 1912-June 1914 = 100. D o m e s tic 163 (July 1) 159 (July 1) 140 (July 22) 325 (July 1) 537 (July 1) 197 (June av.) 166 (June 15) 164 (May 15) 155 (May av.) 230 (July 1) 7802 (July 1) 179 (June 1) 165 (June 1) 186 (M ay 15) W h o le s a le — — — — — — Value of Index Commodity Group — — — — — — P r ic e s D u rin g most of the six months from Ja n u a r y to Ju n e, prices of farm products and food advanced stead ily, and there were sharp increases in fuel and lighting, metals, and building materials. In the case of the three other groups in the D epartm ent of L ab o r index, chemi cals and drugs, house furnishings, and miscellaneous, the Recent changes are shown in (1913 average=100) — L a rg e ly as a result of increased coal prices due to the strike and an advance in the cost of building m aterials, the D epartm ent of L ab o r index o f wholesale prices fo r Ju n e was 2 points or 1.4 per cent, higher than the M a y figure. The price advance which began in Ja n u a r y has amounted altogether to nearly 9 per cent. movement w as downw ard. the following table. Farm products................... Cloths and clothing.......... Fuel and lighting............... M etals................................... Building materials............ Chemicals and drugs. . . . House furnishing goods .. Miscellaneous..................... All groups................... June 1921 114 137 172 191 133 163 133 196 125 142 Jan. 1922 122 131 176 195 112 157 124 178 117 138 May 1922 132 138 175 216 119 160 122 176 116 148 June 1922 131 140 179 225 120 167 122 176 114 150 Per Cent.Change May to June - 0 .8 + 1-4 + 2.3 + 4.2 + 0.8 + 4.4 0 0 - 1.7 + 1.4 Jan.to June 1922 + 7.4 + 6.9 + 1.7 + 15.4 + 7.1 + 6.4 - 1.6 - 1.1 - 2.6 + 8.7 The relation between the movement of prices of farm products and the movement of prices of products other than those of the farm is illustrated in the following diagram draw n from figures computed b y the D ep a rt ment of A gricu ltu re. The h eavy line shows the D ep a rt ment of L ab o r index of wholesale prices exclusive of prices o f farm products and foods, while the light line shows the prices received at the farm for ten p rin cip al crops. The relationship between these two lines at the present time m ay be expressed in another w a y b y sa y ing that the purchasing power of farm products in terms of other commodities at wholesale is about 28 per cent, less than in 1 9 1 3 . Th is purchasing power is, however, larger than in December 1 9 2 1 , when it was 38 per cent, less than in 1 9 1 3 . 7 FEDERAL RESERVE AGENT AT NEW YORK rates in this district with this b a n k ’s index of the prices of tw en ty basic commodities. These basic m aterials are among the first to show price changes; sim ilarly the w ages of unskilled laborers are among the first to move up w ard or downward. P rices of ra w m aterials and the w ages of common labor are m oreover v e ry large elements in the cost of m an y industrial operations, and changes shown b y the diagram indicate changes in im portant basic costs of m anufacture. 1917 1918 1919 19X 0 192.1 192.2. Prices at the Farm of Ten Principal Crops Compared with Prices of All Commodities in the Department of Labor Index Except Farm Products and Food. (1913 Average=100 per cent.) C ost o f L iv in g The cost of livin g index for a w ork ingm an’s fam ily p repared b y the N ational Ind u strial Conference B o ard does not yet reflect in a n y large degree the advance in wholesale prices of the past six months. The figure 1 5 5 .4 for Ju n e 1 5 is only three-tenths of one per cent, higher than that for M a y 1 5 , an increase due to somewhat higher prices of food. A slight reduction in clothing costs is indicated and other items of the budget rem ain unchanged. A q uarterly computation of the cost of livin g made b y the D epartm ent of Lab o r fo r 3 1 cities throughout the U nited States shows increases in the cost of livin g be tween M arch and Ju n e in 1 3 cities, decreases in 1 7 , and no change in one. F o r N ew Y o rk C ity , increases in food and housing are largely offset b y decreases in the cost of clothing, furn iture, and miscellaneous items. A s a net result the total index shows an increase of about 1 per cent., and is now 7 1 per cent, above the Decem ber 1 9 1 4 , level. W ages The average h iring rate fo r representative types of common or unskilled male labor in this district advanced from 3 5 .7 cents an hour in A p r il to 36.9 cents in J u l y , according to the index m aintained b y this bank. I t is now 66 per cent, above the 1 9 1 4 level. M an y large employers reported increases of 3 to 5 cents an hour during the past three months. A number of firms which have not increased w ages reported that the labor turnover was large, and others reported that to retain workers it w as frequen tly necessary to increase the rates of p a y as soon as n ew ly hired employees became accustomed to their work. These conditions result from an increased demand fo r workers in construction opera tions and industrial plants. The following diagram compares the trend of w age 1916 1917 1918 1919 1920 19*1 \9ZZ Wages of Common Labor Compared with Prices of Basic Com modities. (1913 Average=100 per cent.) Changes du rin g the past month in wages of skilled, organized workers have been irregu lar. In some in dustries, in which there has developed a shortage of skilled artisans, notably in the building trades, there have been a few instances of increases in rates. In other industries there have been fu rth er reductions and the resulting tendency has been to bring the relationship between w ages of various types of workers somewhat nearer to that which existed p rio r to the w ar. A v e ra g e w eekly earnings of fa c to ry workers, as re ported b y the N ew Y o rk State D epartm ent of Labor, increased 1 .3 per cent, from $ 2 4 .5 9 in M a y to $ 2 4 .9 1 in Ju n e , due p rin cip a lly to longer w orking hours in those industries which are now most active. Fo llo w in g the reduction of wages ordered b y the R a il road Lab o r Board, several hundred thousand railroad employees, large ly shop workers, struck on J u l y 1 and are still on strike as this report is prepared. E ffo rts to adju st the differences between the coal operators and miners have not yet been successful and about 600,000 men are now on strike in the various coal m ining regions. The N ew E n g la n d cotton mill owners and em ployees have been unable to reach an agreement and m any of the workers are still idle, although recent re ports indicate that the workers are returning to the mills in increasing numbers. The Buffalo trolley service has been interrupted b y labor troubles and several large shoe factories in Rochester are closed as a result of a strike there. MONTHLY REVIEW 8 A n agreement of im portance w as entered into in J u l y between the w om en’s clothing m anufacturers and g a r ment w o rk ers’ unions in N ew Y o rk C ity. This provides fo r a continuation of the 44-hour week and a w eekly w age scale. The rates of p a y w ill be fixed at a later date b y an im partial commission. S a v in g s B ank D e p o s its R eportin g savings banks in the Second Fe d e ral R e serve D istrict show an increase of 2.5 per cent, in aggre gate deposits in the month ended J u l y 10 , chiefly as a result of the crediting o f interest on J u l y 1. Deposits of reporting banks in N ew Y o rk C ity in most cases made gains sligh tly larger than the amounts credited as inter est. R eportin g banks in other cities, however, showed in general such narrow gains as to indicate that without interest paym ents aggregate deposits would have de clined. E m p lo y m e n t U nem ploym ent continued to decrease du rin g the past month both in N ew Y o rk State and in the U nited States as a whole. Idleness through industrial disputes was offset b y increased a ctiv ity in agriculture, and in indus tria l and m ercantile establishments. The N ew Y o rk State D epartm ent of La b o r reported an increase of 2 p er cent, in Ju n e in the num ber of persons employed in the factories of the State, and the U nited States E m p lo y ment Service reported a gain of 3 .2 per cent, in the num ber employed in industries in 65 leading cities through out the country. The follow ing diagram shows the trend of em ploy ment in factories in N ew Y o rk State since 1 9 1 8 , and PM. c ENT. shows as well the fluctuations in total w age paym ents. Su ch paym ents reflect not only changes in average rate of p ay, but also changes in employment. F o r both lines the trend has been steadily u p w ard fo r the past few months. The outstanding increase in employment d u r ing Ju n e occurred in m etal and m achinery industries, especially in railroad equipment and rep air shops and in plants m an ufactu rin g locomotives. Reports from employment agencies indicate a grow ing scarcity of unskilled workers. On the other hand, there still are more applicants than positions in the clerical and most of the skilled occupations. Stead y im provem ent in employment conditions in re cent months has been instrum ental in lessening the num ber of cases calling fo r charitable assistance. The C h a r ity O rganization So ciety of N ew Y o rk C ity reports 1 4 per cent, few er cases under its care than there were a yea r ago. Th is percentage decline is exactly the same as that reported b y the N ew Y o rk M erchants A ssocia tion for the total number of unemployed in N ew Y o rk C ity . The Association estimated the number of un employed in Ju n e this y e a r at 295,000 as com pared with 343,000 in October 1 9 2 1 , the first estimate made. Im m ig r a tio n In the fiscal y ea r ended Ju n e 30, there were 2 4 3 ,9 5 3 im m igrants adm itted to the U nited States under the terms of the law passed a little more than a y e a r ago, lim iting the number pf admissions each y e a r to 3 per cent, of the foreign-born residents of each nationality. Adm issions constituted 68.3 per cent, of the number p er mitted to enter under the term s of the law. The coun tries of central and southern E u ro p e large ly filled their quotas while those of northern E u ro p e sent much less than their allotment. The following table shows the total number admitted, as compared w ith the quotas for a number of the p rin ci pal countries, and shows also in a parallel column the number adm itted in the preceding fiscal year. Country Hungary.................. Greece...................... Poland..................... Ita ly ......................... Rum ania................. Czecho-Slovakia.. Russia...................... France..................... Austria..................... United Kingdom.. N orw ay................... Sweden..................... Germany................. All Other................ Total.................... Admitted Admitted July 1, 1921 Per cent, July 1, 1920 Legal to of Quota to Quota June 30, 1922 Admitted June 30, 1921 5,638 6,035 7,702 107.0 3,294 3,447 28,502 104.6 25,827 26,129 101.2 95,089 42,057 100.2 42,149 222,260 7,419 7,429 100.1 25,817 14,282 14,248 99.8 40,884 34,284 28,908 84.3 6,398 5,729 4,343 75.8 9,552 64.4 7,451 4,797 4,947 77,342 55.2 42,670 79,577 12,202 5,941 48.7 7,423 20,042 8,766 43.7 9,171 68,059 19,053 28.0 6,803 33,369 30,038 90.0 261,103 356,995 243,953 68.3 805,228 FEDERAL RESERVE AGENT AT NEW YORK *,erc£nt 150 1919 1918 19 ZZ 1921 19 20 J ' / s7 — J A 79 PI e iiION1 PPLODUClrioiM i ! 1 i 1 i i1 K sJi.s ISO 4r ' sf 120 Jr ■ (Normal Production=100 Per Cent.) f 0 \ T X LUIMBER -C: utI I i i 10* / \ r\ iir 150 )Q J* / 50 0 Production figures fo r Ju n e show in general a contin ued gradual gain. In the case of eight of the eighteen commodities listed in the table below the latest available figures show production above normal. A heavier rate of output of iron and steel in Ju n e arises from increased demands fo r m any kinds of iron and steel products, especially fo r those connected w ith the m anufacture and rep air of railroad equipment and those involved in the m anufacture of automobiles. Autom obile production fo r Ju n e set a new high figure. L a rg e r cotton consumption reflects the gradual re sumption of more active operations in N ew E n glan d mills, which were p a rtia lly crippled b y strikes in A p r il and M ay. P ra ctica lly no anthracite coal has been mined for three months, but the production of bituminous from non-union mines w as grad u ally increased up to the be ginning of Ju ly . Since that time p relim inary reports indicate that inadequate car facilities have acted as a deterrent to fu rth er expansion in operations. The re duced su p p ly of coal in tu rn began in J u l y to affect the operations of the iron and steel industry. A n un usually h eavy demand fo r sugar for domestic use and export has been influential in keeping sugar meltings in excess of the normal amount. Total meltings fo r the h alf year, Ja n u a r y to Ju n e , amount to about 3,000,000 tons and more than 450,000 tons have been exported. The follow ing table shows current production as per centages of estimated normal production. In the calcu lation of normal production allowance has been made both fo r ye a r to y e a r growth and seasonal variation. V \ CEMENJT F»R0lDUCiTioiN 1 i1 1 1 1 ▼ Production of Basic Commodities nc^i woIOD |IPUL I |IP PIfcocI)UC' I I I!' Commodity Anthracite coal mined.............. Bituminous coal m ined............ Pig iron production................... Steel ingot production.............. Copper production, m ine. . . . Tin deliveries............................... Crude petroleum production. . Portland cement production. . Wheat flour production........... Meat slaughtered........................ Sugar meltings............................ Wool consumption*.................. Cotton consumption................. Lumber production................... Wood pulp production............. Tobacco consumption.............. Paper (total) production*.. .. Gasoline production.................. Jan. 78 64 55 50 22 85 108 97 85 89 140 111 91 78 85 80 86 93 Feb. 99 82 57 58 33 58 111 82 105 98 129 115 92 83 90 77 85 89 • Mar. 105 89 65 71 46 103 111 104 114 112 142 128 91 93 100 83 100 97 Apr. 0.3p 34 p 67 74 59 100 109 111 95 96 124 95 80 75 92 79 89 95 May June 0.4p 1.0 p 41® 43 p 73 79 81 82 68 74 92 90 nip 119 i20 100 104 108 146 135 88 92 96 104 108 91 100 * Seasonal variation not allowed for. —Preliminary. 150 p 91 TOE&ACCO CO vJ5LIMPflOF4 ‘ I I i I 191ft 1919 19£0 1921 1922 Monthly Production in Basic Industries. (Normal Production=100 per cent.) Allowance has been Made for Seasonal Variation and Year to Year Growth C o m m o d ity S to c k s o n H a n d The p rin cip al changes du rin g Ju n e in commodity stocks fo r w hich figures are available were reductions in the available stocks of sugar, coffee, wheat, cotton, and P ortlan d cement. In all of these cases, w ith the possible exception of coffee, the low er stocks are a reflection of h eavy consumption in the past few months. Coffee stocks 10 MONTHLY REVIEW rem ain at a low figure larg e ly as the result of restricted imports. Wholesale Trade Stocks of flour have recently increased somewhat, while the available su p p ly of tin, lead, p aper and p aper pulp rem ains substantially above normal. The follow ing table shows index figures fo r stocks on hand on the first d a y of the month expressed as p er centages of normal. In the calculation of normal stocks allowance has been made fo r y e a r to y ea r growth and fo r seasonal variations. The dollar value of Ju n e sales of 1 2 2 wholesale dealers in this district w as about the same as in Ju n e of last year. This is the th ird month this year that sales have been p ra ctica lly equal to those of the corresponding month of 1 9 2 1 . The value of sales during the first h a lf of the present y e a r w as 2 per cent, below sales fo r J a n u a r y to Ju n e 1 9 2 1 . The figures are given b y commodities in the table at the bottom of this page, in which 1 9 2 1 fig ures are taken as 10 0 per cent, and sales in other years shown as percentages of 1 9 2 1 figures. Both for the month o f Ju n e and fo r the h a lf yea r period, sales of diamonds show the largest gain, but these were influenced b y a v e ry large increase in business b y one of the reporting firms. In both periods je w e lry sales show a decrease. In Ju n e fo r the first time since the fall of 19 20 , sales of machine tools were larger than in the corresponding month of the preceding year, reflecting increased a ctiv ity in industrial plants. The larger volume of building is apparent in the sales of hardw are dealers, which in creased 1 2 per cent, over those of Ju n e 1 9 2 1 . Sales of drugs have been consistently above those of last year. G rocery dealers report an increase of 7 per cent, in Ju n e sales, the largest gain recorded this year, and probably due, in a measure, to somewhat higher prices. Ju n e sales of clothing, both m en’s and w om en’s, were somewhat behind those of last Ju n e , but m an ufactu rers inform us that orders are beginning to be placed in larger volume as the period of active b u yin g approaches. Shoe sales, which show a loss of 1 8 per cent., were ad versely affected b y a strike in several Rochester factories, the sales of which were greatly reduced. (Normal Stocks=100 Per Cent.) Commodity Feb. 1 Sugar, cane, Atlantic Ports... Coffee, visible supply.............. Wheat, visible supply............. Flour in chief centers........... Cotton........................................ Tin, world visible supply . .. Lead, bonded............................. Cement, Portland..................... Paper pulp................................. Paper.......................................... 57 77 83 98 93 155 154 119 101 130 i Mar. Apr. May June July 1 1 1 1 1 88 81 85 91 93 158 198 114 102 135 124 66 78 85 94 145 201 109 112 142 89 58 83 89 91 165 189 116 122 140 70 64 95 96 87 153 203 105 133 140 63 60 77 103 85 171 93 v p— Preliminary. V o lu m e o f B u ild in g B u ild in g contract aw ards in the twenty-seven north eastern States in Ju n e , reported b y the F . W . Dodge Co., were about 5 per cent, under the total fo r M ay, which w as the largest yet reported. The decline was due chiefly to a fallin g off in the volume of new construction in the P ittsb u rgh district and in N ew Y o rk C ity. Con tracts aw arded du ring Ju n e in N ew Y o rk State and Northern N ew Je r s e y w ere 10 per cent, under the M a y total, reflecting almost entirely reduced operations in N ew Y o rk C ity . D e p a r tm e n t S to re T r a d e In Ju n e fo r the th ird successive month, sales b y de partm ent and apparel stores in this district exceeded those of the same month last year. The increase was 1 W h o le s a le T r a d e N um ber o f F ir m s R e p o r t in g C o m m o d it y 7 4 11 6 42 22 14 8 6 8 6 10 122 D ia m o n d s ......................................... M a c h in e T o o l s ............................... H a r d w a r e .......................................... D r u g s ................................................... G r o c e r ie s ............................................ C lo t h in g ............................................. ( a ) W o m e n ’s ............................... ( b ) M e n ’s ..................................... S t a t io n e r y ......................................... D r y G o o d s ....................................... J e w e lr y ............................................... S h o e s .................................................... T o t a l ( w e ig h t e d ) ..................... M o n t h l y Sa l e s ( I n P e rc e n ta g e s ) 30 i 1 I June June June June M ay* 1919 1920 1921 1922 1922 1919 1920 1921 1922 475 390 129 99 131 103 139 90 113 116 205 137 124 166 393 165 115 182 126 103 135 165 145 193 95 153 100 100 100 100 100 100 100 100 100 100 100 157 94 114 108 99 114 109 117 106 88 91 91 100 406 260 118 103 123 106 102 109 96 87 192 132 108 315 305 147 118 157 144 118 165 129 142 239 175 148 100 100 100 100 100 100 100 100 100 100 100 100 100 139 58 96 111 98 107 91 121 88 94 89 89 98 i * Expressed in percentages of sales in May 1921. Sa l e s J a n . 1 t o J u n e ( I n P e rc e n ta g e s ) 100 345 119 112 110 107 93 98 91 93 88 85 82 99 11 FEDERAL RESERVE AGENT AT NEW YORK per cent., but this is considered b y merchants to indicate better trade conditions as the weather d u rin g the month w as not conducive to large sales. In N ew Y o rk C ity there were 19 days of rain in Ju n e . Sales were better in N ew Y o rk C ity than elsewhere in the district and most of the larger stores in u p -State cities reported minor declines in the value of sales. D epartm ent store sales have im proved steadily since the first of the year and total sales du ring the first six months of 19 2 2 were, in spite of price changes, only 2 per cent, below those of the first six months of 1 9 2 1 . Sales b y the 64 stores that report to this bank were as fo llo w s: 1921 M a y ................................................................ J u n e ................................................................ J a n u a ry -J u n e (in c lu s iv e )...................... $ 3 1,69 4,00 0 31,631 ,000 183,377,000 1922 $3 2,83 2,00 0 31 ,946 ,000 179,553,000 The average amount of each transaction, as reported b y stores that m aintain such records, was $ 1 . 9 1 in Ju n e 1 9 2 1 , and $ 1.8 6 in Ju n e of this year, a decline of 2.6 per cent. The number of transactions, as reported b y these stores, increased 4 per cent, this year. The following diagram compares the sales of dep art ment stores during the first six months of the present y ear w ith sales of last year. I t also compares the value of stocks carried b y reporting stores. In each case a v e r age m onthly sales du ring 1 9 1 9 are taken as 10 0 per cent, and the diagram shows the relation between the sales and stock on hand. Sales b y mail order houses were 10 per cent, larger than last Ju n e, a somewhat less favorable report than that made du ring M a y when the increase was 1 8 per cent. Detailed sales figures are shown in the following table in percentages. M o n th ly Sale s June A ll D e p t. S to r e s .. N ew Y o r k . . . . B u f fa lo .............. N e w a r k ............. R o c h e s t e r ......... S y ra cu s e ........... B r id g e p o r t .. . . E lse w h e re ......... A p p a r e l S t o r e s ... M a il O rd. H ou ses 1919 1920 1921 1922 1919 1920 1921 1922 84 86 82 78 70 83 91 82 83 118 107 110 103 105 98 110 116 104 102 137 100 100 100 100 100 100 100 100 100 100 101 102 99 96 95 98 93 101 105 110 79 81 77 76 70 78 84 80 77 113 105 109 97 103 93 103 112 101 92 152 100 100 100 100 100 100 100 100 100 100 98 99 91 98 94 93 90 99 99 99 The value of the stock held b y the reporting stores on J u l y 1 , at the retail price, w as $100,000,000, an increase of 1 per cent, over that held on the same date last year. A small increase in the value of stock during the first six months of this year, coupled with sligh tly sm aller sales, has resulted in a somewhat slower turnover of stock. The annual rate du ring the first h a lf of the pres ent y ea r has been 3.5 times, as compared w ith 3 .7 times last year. Stores that sell apparel exclusively have a much more ra p id rate of stock turnover, and du ring the first h a lf of the y e a r turned over their stock at the rate of five times a year. Detailed figures fo r different localities are shown in the follow ing table in percentages. S to c k on H an d J u ly 1 A n n u a l R a t e of Stock T u r n o v e r ( F ir s t H a l f o f Y e a r ) (Retail Price) A ll D e p t. S to r e s .. New York. . . . Buffalo.............. Newark............ Rochester......... Syracuse........... Bridgeport. . . . Elsewhere........ Apparel Stores... C h a in Sales and Stocks on Hand of Representative Department Stores in the Second District. (Average Sales in 1919=100 per cent.) Sales J a n . 1 to J u n e 30 1919 1920 1921 1922 1919 1920 1921 1922 79 79 85 84 84 82 83 76 66 120 120 114 135 145 127 119 101 111 100 100 100 100 100 100 100 100 100 101 102 96 100 98 85 101 99 111 3 .7 3 .8 2 .9 3 .5 3 .0 2 .8 3 .0 2 .2 6 .5 3 .2 3 .3 2 .6 2 .8 2 .3 2 .5 2 .9 2 .1 4 .6 3 .7 3 .7 3 .0 3 .6 3 .1 2 .9 3 .1 2 .3 5 .7 3 .5 3 .5 2 .9 3 .5 3 .3 3 .1 2 .7 2 .1 5 .0 S t o r e s S a le s Sales b y all chain store systems that report to this bank increased 1 2 per cent, in Ju n e , as compared with last Ju n e. The chief increase, am ounting to 2 1 per cent., was shown b y gro cery firms, due to the opening of new stores. Sales p er store show a decline of 7 per cent. Shoe stores reported sales 7 per cent, less than in Ju n e 1 9 2 1 , due to lower prices now prevailing. The total number of pairs o f shoes sold b y these firms in creased about 1 per cent. The average price per p a ir declined 7 .2 per cent, from $ 3 .8 7 in Ju n e 1 9 2 1 , to $ 3 .5 9 in Ju n e 19 2 2 . R e p la c in g W o rn C u rren cy H E R E is at present about $4,500,000,000 of cu r ren cy in circulation in the U nited States. W hile T T h ro u gh th e R eserve worn currency is eliminated. B an k s A l l Fe d e ral Reserve notes' a considerable p a rt of it at an y given moment fit fo r circulation issued b y Reserve B an ks other than the one handling them are shipped im m ediately to the is in the safes of individuals, business concerns, or banks, respective issuing banks, inasmuch as no Reserve B an k yet much of it is in people’s pockets or in process of is perm itted under the law to p a y out notes of another passing from hand to hand, and so is subject to wear. I n this country paper money, which form s about four- F ed eral Reserve B an k. Notes of other typ es which are fifths of our whole su p p ly of currency, is gen erally p re fit for use are held in the vaults until needed, and all notes which are unfit fo r fu rth er circulation are can ferred above coin because of its lightness and conve celed and shipped to W ashington for redemption. nience, I ssu e B u t paper money w ears out ra p id ly and has to be replaced frequen tly. The life of a $ 5 note, for exam ple, is on the average about ten months, and in N ew Y o rk C ity is about two months less than the aver age, owing m ainly to the more rap id rate at which it circulates- Th is same tendency is seen in the higher rate at which bank deposits tu rn over in N ew Y o rk C ity than in other p arts of the country. Th e work of keeping the p aper currency in good con dition is done v e ry la rg e ly b y the F e d e ral Reserve Banks, which in the course of their d aily business handle all form s of cu rren cy and coin, elim inating that which is unfit fo r fu rth er circulation. Th is service is a large item in their annual costs of operation. L a st year, for instance, the su p p ly of cu rren cy and coin caused an expenditure at the F ed eral Reserve B an k of N ew Y o rk amounting to about $2,875,000 , of which somewhat more than one-third represented the cost of p rin tin g new F e d e ra l Reserve of N ew M oney C u rren cy is supplied to banks, both member and non member, in amounts and denominations as they desire. Sin ce much cu rren cy fit for fu rth e r circulation is re turned to the Reserve Banks, all shipments of currency cannot be made in new money, the su p p ly of which is apportioned to the banks according to the volume of their business. A member bank draw s curren cy from the F e d e ral Reserve B an k in ju st the same w a y that an individual draw s cu rren cy from his own bank, and such w ithd raw als are charged to its deposit account. The bank which is not a member of the F e d eral Reserve system usu ally p a ys fo r a shipment of cu rren cy either b y check or b y sending in unfit currency. A t the N ew Y o rk Reserve B an k a su p p ly of approxim ately $50 0 ,000,000 in paper curren cy is kept on hand fo r use when needed, and about as much more curren cy is available in W ashington. curren cy to replace w orn notes in T h e V olum e circulation and to increase supplies unissued and on of M oney H andled The process of replacem ent o rdin arily works in about this w a y : W hen a man has a worn-out bill— whether it be a F ed eral Reserve note, a F e d e ral Reserve B an k note, a legal tender note, a silver or gold certificate, or a N ational bank note— he takes it to his bank and re ceives in return fo r it a note fit for circu la tio n ; or, if he wishes, obtains credit fo r it in his deposit account. B an ks which are members of the F ed eral Reserve sys The volume of curren cy handled each y ea r b y the F e d e ral R eserve B an ks reaches in aggregate a v e ry large figure. In 1 9 2 1 all tw elve F e d e ral Reserve B an ks re ceived from member and non-member banks $7,750 ,0 00,000 in paper m oney and coin. P aym ents to banks amounted to $6,490,000,000, and as a net result more than $1,000,000,000 in p aper money and coin was re tired from circulation, illu strating the lessened demand on the p a rt of the public for hand-to-hand currency. The share of this work handled in 1 9 2 1 b y the N ew Y o rk tem o rdin arily do not keep more currency on hand than Reserve B an k w ill appear in the follo w in g: hand. T h e P rocess of R eplacem ent they are likely to need for the day-to-day use of their customers. A cco rd in gly, shipments of currency are con stan tly passing between member banks and their F e d eral Reserve Banks, and notes unfit for fu rth er circula tion are u su ally sent along w ith shipments of currency, which for the time being m ay be in excess of require ments. Su ch a shipment the F e d e ra l Reserve B an k A b ou t 687,000,000 individual notes were counted. A b ou t 166,000,000 notes aggregatin g $771,0 0 0 ,0 0 0 were canceled. There were 17 5 ,0 0 0 different shipments of cu r ren cy and coin to and from out-of-town banks. In c a rry in g fo rw a rd these operations the F e d e ra l R e serve B an ks now do much w ork which the Government places to the credit of the transm itting member bank form erly in its deposit account fo r use as the member bank de perform ed through the Subtreasuries. On A non-member bank m ay also ship notes directly M a y 29, 19 20 , an A c t of Congress w as approved pro vidin g fo r the discontinuance of the Su b treasu ry system, to the F e d e ra l Reserve B an k, receiving paym ent b y which w as established in 18 4 6 , and the tran sfer of its d raft, or b y deposit to its account in its correspondent currency functions to the F e d e ral Reserve Banks. bank, or in currency as is described below. though this tra n sfe r of functions brought about some sires. A l C u rren cy received b y the F e d e ral Reserve B an ks in increase in the cost of ca rry in g on the cu rren cy opera these w a ys is first counted and is then sorted according tions of the Reserve Banks, the total cost of m aintain to denomination and kind, and m utilated and bad ly ing the co u n try ’s curren cy w as substantially reduced.
@FedFRASER