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MONTHLY REVIEW o f C r e d it a n d B u s in e s s C o n d it io n s Second Federal Reserve District Federal Reserve Agent Federal Reserve Bankf New York Business Conditions in the United States RODU CTION o f basic commodities declined in June but employment was maintained at last m onth’s high level, freight shipments were exceptionally large, and the volume o f wholesale and retail trade con tinued heavy. Wholesale prices showed a further decrease. P P ro ductio n The Federal Reserve index o f production in basic industries, which makes allowance fo r seasonal varia tion, was 4 per cent, lower in June than in May, and stood at about the level of the late winter. M ill con sumption o f cotton, steel ingot output, and sugar meltings showed particularly large reductions. The value of permits fo r new buildings and o f contracts awarded declined in June more than is usual at that season. The Department o f A griculture forecasts, on the basis of July 1 condition, a large increase in the cotton crop, a slight reduction in the corn crop, a winter wheat crop of about the same size as last year, and a spring wheat crop which will possibly be about 40,000,000 bushels below 1922. The number of factory employees at work in June in the country as a whole was about as large as in May, though a reduction is reported by New England estab lishments. The proportion o f factories reporting full time operations decreased and consequently average earnings per employee were smaller. W age advances ______ PERCENT, August 1, 1923 continued-to be reported in June, but they were not nearly so numerous as in A p ril or May. T rade Distribution o f commodities as measured by railroad freight shipments, was active throughout June. The number o f cars loaded exceeded one million in eacn o f fou r successive weeks, and in the week ended June 30 was the largest on record. The volume o f wholesale and retail trade in June was about the same as in May and continued to be sub stantially larger than in 1922. Sales o f groceries and dry goods were much larger in June and this increase was reflected in an advance o f 4 per cent, in the Federal Reserve B o a rd ’s index o f wholesale trade. This index, which makes no allowance for seasonal changes, was 9 per cent, above the June 1922 level. Department store and mail order sales were smaller, as is usual at this season, while sales o f reporting chain stores were at about the same high level as in May. Stocks o f mer chandise at department stores were reduced about 6 per cent. W holesale P rices The decline in com modity prices, which began late in A pril, continued during June and the first two weeks of July. The index o f the Bureau o f Labor Statistics for June was 2 per cent, less than for May. The largest decline, amounting to 4 per cent., occurred in the prices o f building materials, and decreases were shown also fo r all the other commodity groups, except house <9ERCENT. PRODUCTI 3N BASIC INDUS rRIES 1Q1Q AVERAGE 1-------------------------- 1 Production in Basic Industries— Combination of 22 Individual Series Corrected for Seasonal Variation (1919 Average = 100 Per cent) Index of Wholesale Prices, U. S. Bureau of Labor Statistics (1913 Average = 100 Per cent) MONTHLY REVIEW, AUGUST I, 1923 2 BILLIONS OF DOLLARS BILLIONS O F DOLLARS Bank Credit— 800 Member Banks in Leading Cities Bank Credit— All Federal Reserve Banks furnishings which remained unchanged. D uring the first half o f July, price declines were shown fo r wheat, sugar, petroleum, and lead, while the prices o f corn and hides advanced. The continued smaller volumq o f ’t rading in the security markets and slightly quieter wholesale buying in some lines resulted in a further slight decrease in the rate o f turnover of bank deposits in New Y ork City. The follow ing table shows the1 rate o f turnover o f deposits in four cities after allowance has been made for seasonal changes. B a n k C redits Banking developments between the middle o f June and the m iddle o f J u ly largely reflected the payment o f income taxes on June 15, dividend and interest pay ments at the turn o f the half year, the demand for additional currency fo r the J uly 4 holiday, and return flow o f currency after that date. A t the end o f the period the volume o f member bank and Federal Reserve Bank credit in use was approximately at the same level as a month earlier. A t the Federal Reserve Banks the amount o f discounts for member banks on J u ly 18 was about $100,000,000 larger than on June 13, but this increase was practically balanced by a decline in hold ings o f acceptances and Government securities. D uring the month o f June gold and gold certificates in circulation increased by over $40,000,000 and this increase is reflected in a decline o f gold held by the Federal Reserve Banks. Money rates were slightly firmer, as is usual at this season o f the year. Banking Conditions, Second District Requirements fo r funds in connection with July 1 financial operations, falling more heavily upon New Y ork banks than upon banks in other sections, caused a larger expansion o f member bank loans in this district than in other parts of the country. In this district, as fo r the country as a whole, loans were reduced in the later weeks of July substantially to the levels o f June. Loans of the Federal Reserve Bank o f New Y ork to member banks increased $121,000,000 between June 20 and July 3. In the follow ing two weeks, a reduction of $74,000,000 left a moderate net advance fo r the period which reflected partly a movement o f funds from this center to the interior. Combined holdings o f purchased bills and United States Government issues were sub stantially unchanged. (Annual rate of turnover) City New York............................................ Chicago................................................ Boston................................................. Jan. Feb. Mar. Apr. May June 78 45 34 24 85 50 38 26 88 47 39 26 87 47 40 29 81 45 36 27 81 46 36 27 Money Market Money rates became slightly firmer in July than in June, in accordance with the usual seasonal tendency, reflecting a movement o f funds from New Y ork to the interior. The minimum, selling rate fo r prime commercial paper rose from 4 % and 5 to 5 per cent., while less high grade paper continued to be sold generally at 5% per cent. Purchases were chiefly by banks outside o f New York City, and dealers’ reports showed a slight decrease in the volume o f paper outstanding, to $867,000,000. In the bill market, some congestion was caused by high call money rates prevailing around the first o f the month and dealers’ portfolios were increased con siderably. B id and offering rates, however, remained firm at 4*4 and 4:}£ per cent, respectively fo r maturi ties o f 31 to 90 days, and by the middle o f the month portfolios were restored to more normal proportions. There was practically no change in the rates at which Government certificates and notes were offered. Stock Exchange call money rose to 6 per cent, around the first o f July, and though rates later eased somewhat they remained generally firmer than in May and the early part o f June. Time loans on stock market col lateral, which had been 4 % to 5 per cent, in June, rose to 5 and 5% per cent, by the first o f July and main tained these rates later in the month. FEDERAL RESERVE AGENT AT NEW YORK 3 Security Markets Value of German Mark Circulation The stock market became inactive during July. Transactions on several days fell considerably below 500,000 shares, and prices continued to move irregularly near the low levels reached at the end of June. Towards the end o f the month prices advanced somewhat. Trading in bonds was quiet, but prices became slightly firmer. Foreign issues advanced despite weakness in exchange rates. Due largely to general dullness in out standing bonds, offerings of new securities decreased to approximately the lowrest of the year, and dealers were occupied chiefly in distributing unsold portions of the large offerings made during June when the total o f new issues amounted to $425,000,000, the largest in any month since January. As shown in the follow ing diagram, the volume of new foreign issues sold in this market during the past six months has continued much below the large totals placed here in 1921 and early 1922. Foreign financing in London, on the other hand, increased during the past six months and exceeded issues placed in New Y ork fo r the first time since the war. A factor in this change has been lower money rates in London than in this market. Since the first o f January this year the face value o f the total note circulation in Germany has been in creased from 1,300 billion marks to 25,000 billion marks, or nearly 20 times. The present outstanding circu lation may be compared with about 32 billion marks at the close o f the war. In spite o f this increase in the volume o f paper money Germany is suffering from a continuously more serious currency shortage, and the reason may be found in the fact, which appears to be in accordance with economic law, that the depreciation in the value o f the mark has discounted the future and the mark has lost value faster than new issues could be printed. A s a conse quence, the value o f the total mark circulation, both in exchange fo r dollars and in domestic purchasing power, which goes closely with exchange value, has de clined continuously. In January 1919, the dollar value o f the total mark circulation at the current rate o f ex change (about 12 cents) was just less than $4,000,000,000 and at the present time the total value o f outstand ing circulation is less than $100,000,000. In 1919 the value o f mark circulation in exchange was seven times the $539,000,000 gold holdings o f the Eeichsbank, while at the present time the value o f the circulation is smaller than the gold reserve in the Eeichsbank o f $171,000,000. A note circulation worth less than $100,000,000 is clearly inadequate for carrying on the business o f a great nation. The decline in the value in dollars o f the total cir culation o f marks is shown in the follow ing diagram. 669 NEW YORK LONDON 45£ 404 BILLIONS OF DOLLARS 191 JAN- to JUNE 1921 JULY to JAN.-ro DEC. JUNE t 19ZZ \Z JULy-ro DEC. I JAN. to JU N E 19Z3 Par Value of Foreign Capital Issues Offered in New York and London by Six Months’ Periods in Millions of Dollars. (Pounds Converted at Current Rates of Exchange) Foreign Exchange On July 5, sterling dropped below $4,55 fo r the first time this year, but rallied later to $4.59 as money rates in London became firmer follow ing an advance in the Bank o f England discount rate from 3 to 4 per cent. Belgian and Italian exchanges declined to new low points for the year, and French francs reached practi cally the low point touched just after the entrance of troops into the Euhr. German marks declined an addi tional 58 per cent, since the middle o f June to over 396,000 to the dollar. O f four exchanges quoted at, or within 1 per cent, of, par at various times since December 1, only Swedish kronor maintained that position J u ly 20. Value in Dollars at Current Rates of Exchange of the Total Amount of German Paper Marks in Circulation Gold Movement Im ports o f gold during Juno were $19,434,000 and exports were $549,000. The excess o f imports was $18,885,000, compared with an excess in May amounting to $45,332,000. F or the year ended June 30, total gold imports were $284,090,000 and exports were $49,022,000, and the im port excess was $235,068,000, as compared with $440,973,000 during the year ended June 30, 1922. The follow ing table shows the net receipts o f gold from, principal countries during the past two years. Imports 4 MONTHLY REVIEW, AUGUST 1, 192S from France, Sweden, and Denmark h a v e been much reduced, but imports from the United Kingdom , Ger many, and the Netherlands have increased. 3921-1922 1922-1923 United Kingdom............ . Germany........................... France............................. Netherlands..................... Canada............................ Colombia......................... Denmark......................... Sweden............................ Other.......................... $124,654,463 19,924,893 129,650,473 4,186,976 17,136,059 9,251,464 18,924,110 52,573,285 64,671,268 $141,571,186 26,918,284 19,731,027 15,938,122 12,062,876 4,769,769 1,115,469 1,329,788 11,631,054 Total........................... $440,972,991 $235,067,575 Country Cereal Exports The diagram below illustrates the volume of domestic exports o f principal cereals from the United States since 1900, by Government fiscal years ended June 30. A v e r age annual exports o f such cereals in the years 19151922 were approximately 70 per cent, larger than the pre-war volume. Although such exports decreased 100,000,000 bushels in 1923 they were still 65 per cent, above the pre-war average. Cereal exports in the year ended June 30, 1923, were 8 per cent, o f the crop harvested in 1922, which compares with 10 per cent, in 1922, 9 per cent, in 1921, and an average o f 7.7 per cent, fo r the years 1915-1920. m il l io n s OF BUSHELS Foreign Trade June exports o f merchandise, including re exports, were valued at $320,054,000 and were little changed from those o f several months previous. There was a decline in imports, however, from $372,545,000 in May to $320,257,000 in June and the excess o f imports, which amounted to $55,896,000 in May, was reduced to $203,000 in June. In eight months o f the year ended June 30 ex ports exceeded im ports; the largest excesses occurred in October and November and amounted to $95,000,000 and $88,000,000, respectively. Imports exceeded exports by $39,000,000 to $57,000,000 in March, A pril, and May. F or the year as a whole the excess o f exports was but $175,000,000, the smallest fo r any fiscal year since 1896, when the excess o f exports was $103,000,000. The diagram at the foot o f this page shows the trade balance of the United States during the past 53 years. The columns above the zero line show favorable bal ances, while the columns below this line show unfav orable balances. In only 7 o f the past 53 years has the balance been unfavorable. The last unfavorable balance was in 1893, when it amounted to $19,000,000. Domestic Exports of Cereals from the United States in Years Ended June 30. Cereals Included are Barley, Corn, Rye, Oats, Wheat, and Wheat Flour Commodity Prices The index o f wholesale prices prepared by the D epart ment o f Labor declined 2 per cent, in June to a point 53 per cent, above the 1913 average. The decline was due largely to lower prices o f building materials, metals, chemicals, and fuel and lighting. O f the nine groups o f BILLIONS O F DO LLAR S 4-1 EXPO R T B A LA N C E ■ I I i f IM P O R T m 1875 ■ ■ Mill I BALANCE • 1885 1890 1895 1900 1905 1910 Foreign Trade Balance of the United States (Merchandise Only) .1915 1920 3 FEDERAL RESERVE AGENT AT NEW Y0R3C commodities which comprise this index, eight 'show price recessions ?nd one, household furnishings, re mained unchanged. The latest decline brings this index to the same level as in September 1922. A ll o f the com modity groups making up the index are at present higher than last September, however, with the single exception o f the fuel and lighting group, which was high at that time because o f the coal strike and has since declined 24 per eent. The decline in prices o f basic commodities has recently been greater than the decline in manufactured and semi manufactured articles. The Department o f Labor index which includes articles o f all types is now 4 per cent, below its highest point which was reached in A pril, while the index o f 20 basic commodities prepared by this bank is 8 per cent, below the highest point reached in March. This index has declined 7 per cent, between June 1 and July 21. Retail prices have moved more slowly and the cost o f living index number, maintained by the National Industrial Conference Board, has shown no appreciable decline. Between M ay 15 and June 15 this index remained practically unchanged, as an increase in food prices offset a decline o f about 3 per cent, in the prices o f clothing. Wholesale prices declined generally throughout the world during M ay and June, except in those countries where the volume o f currency in circulation was in creased considerably during the period. Employment and Wages Lessened production in June was accompanied by a reduction o f about 1 per cent, in the number o f workers employed in New Y ork State factories, as reported by the New Y ork State Department o f Labor. Confirma tion o f this tendency is foun d in reports from employ ment agencies throughout the State o f some increase in the number o f persons seeking factory employment. There continues to be a shortage, however, o f factory workers, building artisans and laborers, and farm laborers. Average weekly earnings in representative factories in New Y ork State, were $27.84 in June, or 21 cents higher than in May. Earnings were higher in all in dustries except those in which seasonal inactivity re duced working time, and the average was only about 4 per cent, below the maximum of October 1920. W age increases in industrial establishments through out the United States, as reported by the National In dustrial Conference Board, totaled 137 in the month ended J u ly 14 compared with 287 in June and 201 in May. Production in Basic Industries Production indexes computed by this bank show de creases during June in ten industries and advances in only two, the copper and automobile industries. The indexes fo r anthracite coal and petroleum, remained unchanged. The principal decreases were in iron and steel, cotton consumption, and sugar meltings. The declines in production, in many cases, accom pany lower prices, smaller advance orders, and some accumulation o f stocks. The aggregate o f production o f bituminous coal fo r the first six months o f the calendar year was 273,000,000 tons as com pared with an average o f 228,000,000 tons for the five years, 1919 to 1923. D uring the second quarter o f the year reserve stocks increased about 5,000,000 tons. Production o f crude petroleum in June was larger than the estimated consumption and stocks were in creased by about 6,000,000 barrels. Production in the first six months o f the year has been more than 25 per cent, greater than in the first half o f 1922. Since A pril 1 the average price o f ten m ajor crude oils has declined 24 per cent. Unfilled orders on the books o f the United States Steel Corporation on June 30 were announced as 595,000 tons less than on May 31, and the reduction since March 31 has been 1,000,000 tons. There have also been decreases in the outstanding orders for structural steel as reported by the Structural Steel Society. Domestic mill consumption o f cotton during June was 542,000 bales compared with 621,000 bales in May. A number o f the New England mills announced the curtailment o f operations to three days a week. Silk mills have also been less active than in previous months. June production o f passenger automobiles was 336,000 cars, a decline o f 14,000 cars from May, while the truck output o f 40,500 represents a decline o f 2,500 from the preceding month, according to reports from 90 passenger car and 80 truck manufacturers to the D epart ment o f Commerce. These decreases are less than are usual at this season and this bank’s index advanced accordingly. The follow ing table shows indexes o f production com puted by this bank in percentages o f estimated normal production. Allowance has been made fo r seasonal variations and year to year growth. ( Estimated Normal = 100 Per cent.) 1923 1920 1921 June June Mar. Apr. May June Pig iron........................................................... Bituminous coal............................................ Anthracite coal.............................................. Copper, U. S. mine....................................... Tin deliveries................................................. Petroleum........................................................ Cotton consumption....................................... Wool mill activity*........................................ Sugar meltings, U. S. ports........................... Wood pulp.................................................. Lumber.......................................................... Tobacco consumption.................................... Gasoline.......................................................... Leather, sole................................................... Automobile production................................. * Seasonal variation not allowed for. inary. r Revised. 111 118 115 96 94 122 105 105 97 96 110 108 121 122 95 104 97 105 88 102 38 37 85 90 16 29 106 85 99 104 105 81 67 72 84 92 100 94 39 87 110 114 105 112 90 110 127 107 118 122 119 132 100 f 136 91 146 121 85 106 135 114 115 117 102 89 132 134 101 120 110 116 122 102 109 119 89 134 115 82 103 142 1! t Not reported for March. 124 122 114 98 95 114 139 108 118 113 120 118 120 114 125 93 133 108 83 96 150 122 114 109 98 97p 92 139 96 i07 79 128 75 93 159 pPrelim- Building Construction There was a further decrease in June in the value o f building permits granted in 158 principal cities although the value o f permits issued in New Y ork City was larger than the much reduced M ay figure. The principal de 9 MONTHLY REVIEW, AUGUST 1, im creases were in the Central States, The volume o f con tract awards, which tends to follow the granting o f permits by some weeks, has begun to reflect the decline o f previous months in building permits. B uilding con tracts awarded in 36 Eastern States in June were 14 per cent, less than in May and were less than in June 1922. F or the first six months o f the year contract awards were 9 per cent, larger than the high figures of the first half o f 1922. The largest increase over last year was in industrial construction. This bank’s index, which compares building permits granted with the amount normally to be expected, de clined from 22 per cent, above the estimated normal in M ay to 14 per cent, above in June. In com puting this index, allowance has been made for changes in the cost o f construction, fo r seasonal variation, and fo r year to year growth o f the industry. Building wages were slightly higher in June than in May, but the cost o f building materials was somewhat lower, so that the net result was a slight reduction in the cost o f building. This bank’s index fo r M ay stood at 201 per cent, o f the 1913 average cost and fo r June at 198 per cent. Wholesale Trade D e p a rtm e n t D ollar Sales, Jan . to June Inclusive (In percentages) Sales in June b y departm ent stores in this district were 11 per cent, larger than in June 1922. This in crease is in a measure accounted fo r by the usual growth in department store business which amounts to about 8 per cent, a year, together with some increase in prices. The average sales check increased about 10 per cent, from $2.43 last year to $2.68 this year. P art o f this increase is ascribed by merchants to higher prises and part to the selection by customers o f a somewhat better quality o f merchandise. Twenty-three o f the largest stores reported sales by groups o f departments. The percentage change in sales in each m ajor classification is shown below. Sales o f clothing and furniture were particularly good. Sales o f cotton, woolen and silk goods, while above those o f last year, did not show such large advances as was the case in Mav. Perrcent. Increase in vf Sales June 8,1922 to June 1923 21.4 20.6 17.7 13.1 12.3 11.8 10.0 9.4 6.7 5,3 19; 3 Women’s and Misses’ Ready to Wear Accessories................ House Furnishings.......................................................... D uring the first six months o f the current year sales were 8.1 per cent, above those o f the same period last year and about 1 per cent, above those o f the first half o f 1920, when retail prices reached their maximum. Sales by principal mail order houses during June were 26 per cent, above those of last June. Sales were larger than those fo r any previous June and were 2 per cent, above sales in June 1920 when prices were close to their highest point. Stocks held by department stores on J u ly 1, com puted at the selling price, were 5 per cent, above those held one year ago, and as sales have increased to a greater extent, the turnover o f stock is more rapid. Between June 1 and J uly 1 stocks declined about 7 per cent, as is usual at this time o f the year. Detailed figures are shown, in the follow ing table. D ollar Sales D uring June (In percentages) N et Sales D uring June (In percentages) Commodity 1919 1920 1921 1922 1923 1919 1920 1921 1922 1923 Stationery............ Drugs................... Groceries.............. 446 195 281 104 92 112 123 92 149 108 93 126 ,524 258 218 133 136 130 153 150 198 146 105 161 172 114 69 99 83 110 107 106 113 113 89 102 100 100 100 100 100 100 100 100 100 100 100 100 313 149 137 126 129 124 126 121 118 117 113 113 328 242 138 125 99 142 116 131 166 121 90 123 330 228 48 123 149 105 148 164 116 176 101 170 84 118 29 106 110 102 90 113 122 107 91 93 100 100 100 100 100 100 100 100 100 100 100 100 210 13S 54 117 114 119 119 138 111 130 106 106 Total (weighted) 113 151 102 100 120 126 155 101 100 116 B u sin e ss Men’s and Bovs’ Wear................ ........................................... Women’s and Misses’ Ready to W^ear.................................... The index of wholesale trade prepared by this bank from reports o f representative dealers in ten lines shows a decrease in sales o f about 3 per cent, between May and June. In this index allowance is made fo r seasonal vari ation, price changes, and year to year growth, The latest decrease follows successive decreases in March, A pril, and May, and brings the index to 100 which is the estimated normal. Sales o f machine tools, jew elry, dry goods, and sta tionery show the largest increases as compared with June last year, while sales o f diamonds decreased to slightly more than half the sales in June a year ago. A comparison between the dollar value o f sales in the first six months o f this year with that in the correspond ing period of preceding years shows that the dollar value o f sales in all reporting lines was 20 per cent, larger than in the first six months of 1922, but was 20 per cent, smaller than in the first six months o f 1920. The change from 1920 sales may be largely accounted fo r by the decrease in prices o f the articles sold. The follow ing table compares June sales with those of other years and sales in the first six months o f this year with those o f preceding yea rs. Machine Tools. .. Jewelry................ Diamonds............ Clothing............. (A) Men’s........ (B) Women’s... Hardware............ Dry Goods.......... S to re Stock, Retail Value, July 1 (In percentages) 1919 1920 1921 1922 1923 1919 1920 1921 1922 . 1923 All Dept. Stores. . 82 83 83 81 73 85 97 Bridgeport........... Elsewhere in 2nd 81 District............ Apparel Stores. . . 79 107 Mail Order Houses 106 107 105 109 102 112 124 99 98 101 104 105 102 107 100 100 100 100 100 100 100 111 109 113 125 111 118 117 78 78 89 85 86 97 83 119 118 119 136 148 150 118 99 99 105 100 102 118 99 100 100 100 100 100 100 100 105 105 104 115 86 104 103 103 97 124 99 95 91 100 100 100 109 111 126 77 60 ** 102 100 ** 102 90 ** 100 100 ** 102 111 ** FEDERAL RESERVE AGENT AT NEW YORK ? Advertising Crop Conditions The volume of advertising in newspapers and magazines has long been regarded as an approximate measure o f changes in the volume o f business activity. The accom panying diagram shows changes in the amount o f advertising lineage in 109 newspapers pub lished in 23 cities and in leading magazines since 1919, as compiled by the E ditor and Publisher and by Printers Ink and corrected by this bank fo r seasonal variation and the trend o f year to year growth. Current adver tising is close to estimated normal, though still below the high figures o f 1919 and 1920, which were probably affected by the desire o f advertisers to reduce excess profits taxes through large expenditures fo r publicity. In the five years shown in the diagram newspaper advertising has fluctuated much less than magazine advertising. The composite condition o f all crops on July 1 was 3.6 per cent, below the ten-year average condition at this season and the indicated production was 3 per cent, lower than last y e a r’s final crop, according to reports o f the Department o f Agriculture. The prospective cotton crop is estimated at 15 per cent, larger than in 1922, due mainly to an increase in acreage. Principal estimated decreases in output are in hay, wheat, and potatoes. The follow ing table compares the J uly fore casts o f yields this year with the final estimates fo r the 1922 and 1921 crops, and with a five-year average. (In millions) Crop PERCENT. Wheat. . . . Cotton___ Hay.......... Tobacco... Potatoes... Apples. . . . Advertising in Newspapers and Magazines Compared with Es timated Normal, Allowance Is Made for Seasonal Variation and Year to Year Growth Indexes of Business Activity Unit Bushel Bushel Bushel Bales Short ton Pound Bushel Bushel 1916-1920 Average 1921 1922 1923 July forecast 2,831 799 1,413 12 85 1,378 462 179 3,069 815 1,078 8 82 1,070 460 99 2,891 862 1,201 10 113 1,325 561 201 2,877 821 1,284 11 99 1,425 476 189 The farm value o f the principal crops this year is cal culated by the Department o f A griculture, on the basis o f J uly 1 prices and crop estimates, at approxim ately $7,400,000,000, or about $1,000,000,000 more than the amount realized by producers from 1922 crops and $2,600,000,000 more than from 1921 crops. The diagram below compares the approximate returns o f the 1921 and 1922 crops with the present estimated values o f the 1923 crops. The increase in value as com pared with 1922 is due chiefly to a 24 cent increase in the price o f corn and a larger prospective yield and slightly higher price o f cotton. The follow ing table brings together in summary form the index numbers o f business activity which this bank has computed. In each case the figures are expressed as percentages o f the long time trend, or normal, as shown by the data fo r past years. Allowance has been made fo r seasonal fluctuations and, when necessary, fo r price changes. 7*14- (100 Per Cent. =»Normal) 1922 1923 June Jan. Car Loadings....................................... Wholesale Trade................................. Postal Receipts.................................... Building Permits................................. Exports................................................. Imports................................................. Electric Power..................................... Newspaper Advertising...................... Magazine Advertising......................... Business Failures................................ p—Preliminary. 97 96 103 142 102 105 103 96 79 131 109 114 104 155 74 110 113 107 89 98 Feb. Mar. Apr. May June I ll 119 102 170 79 105 115 110 89 88 112 111 105 182 83 125 115 110 90 103 119 105 99 144 82 122 115 110 94 103 118 103 104 122 83 130 117 110 90 102 113 100 102 114 91 121p 95 101 1921 19 22 192,3 Estimated Value of Principal 1923 Crops at July 1 Prices Com pared with Dec. 1 Value of Crops Harvested in 1921 and 1922, (In Millions of Dollar*) T o th e R ead ers o f T H IS bank recently sent to all those who receive the Review directly and not through member banks, an inquiry as to whether they wished to have the send ing o f the Review continued. Supplementing this inquiry was a request fo r suggestions from the readers of the Review. In reply a number o f interesting questions was raised concerning the policy o f the publication and the methods used in its preparation. It therefore seems appropriate to make some statement of the policy o f the Review and to deal specifically with some o f the ques tions raised. B revity It has been the purpose o f the Review to provide a reliable summary o f business and finance in as con densed form as is consistent with a reasonable degree o f comprehensiveness. It is believed that most o f those who receive the Review can give it only a limited amount o f attention, and desire a summary o f business and financial conditions reduced to the briefest possible form. In pursuance o f this policy the Review was re duced in size from a 12 page to an 8 page publication in January this year. This space limitation involves a careful selection o f subjects as well as succinct treatment o f the matter which is covered. It means that commodity markets cannot be treated in detail, except as they assume un usual importance. It means a type o f presentation which perhaps requires closer attention on the part o f the reader than a more discursive treatment. It means the exclusion of large tabulations. N ational S umm ary To aid the reader in securing a general view o f the business situation there was added to the Review about six months ago a brief summary o f business conditions in the United States. This summary is prepared join tly by the Federal Reserve Board and the Federal Reserve Banks, It aims to bring together in one article the outstanding events during the month in business and finance. The same summary is published in the M onthly Reviews o f all twelve o f the Federal Reserve Banks, and is also published by the Federal Reserve Board in the Federal Reserve Bulletin. P rophecy The requirements of business make it necessary that many business men form in advance some estimate o f what future conditions are likely to be, and readers o f the Review have frequently requested the publication o f a forecast o f future business conditions. The first difficulty in the way o f attempting such a forecast lies in the uncertainty of the future. Knowledge o f the causes o f economic and social events is as yet so limited, and the determining factors are so numerous and so subject to change, that prophecies o f the busi ness future can be no more than estimates. It has been the aim o f the Review to publish no statement, the truth o f which cannot be demonstrated beyond reason able doubt. Statements regarding the future cannot have any such degree o f certainty, and any statement o f opinion or even implication as to the future course of business is therefore avoided. I nterpretative S tatistics W hile it has not been considered wise to attempt any forecast o f business conditions it is the p olicy o f the Review to interpret the meaning o f current events a* fu lly as can be done with assurance; to reveal causes th e M o n th ly R e v ie w and tendencies as well as to record facts. To this end statistical methods have been used in an attempt to reduce the mass o f figures which are currently avail able in business and finance to more comprehensible form. F o r example, the meaning o f data fo r the production of any commodity becomes clear only when we have con sidered the production figures fo r previous years, and at the same time have made allowance fo r the usual seasonal changes, and for the usual growth that takes place from year to year in keeping with the growth of population. F o r these reasons the figures which are published currently fo r the production o f p ig iron, steel, petroleum, etc., have little meaning fo r the aver age man because he has not the detailed knowledge to enable him to ju dge the current production figures in the light o f all the necessary qualifications. It is possi ble, however, by recognized statistical processes to make the necessary allowances before figures are presented to the reader. The reader is thus given a simple com parison between actual production and the production which might reasonably be expected in view o f all the circumstances, or what may be called “ estimated normal p rodu ction .” From time to time there are published in the Review the results o f long and often com plicated statistical studies. Such, fo r example, are the indexes o f produ c tion and other aspects o f business expressed in terms o f normal, which are published currently. Because o f the limitations o f space it is not possible to give currently in the Review a fu ll explanation o f the methods by which the results reported are reached. But fo r any who are interested it is the p olicy o f the Review to make available further details concerning any computations which are published. Such detailed studies have been published in several cases in the Journal o f the Amer ican Statistical Association. F o r example, the June issue o f that magazine contains a fu ll discussion o f a study o f the velocity o f bank deposits, which has been reported currently in the Review. Copies o f the article are available fo r distribution in limited quantities. S pecial A rticles A number o f readers have urged the continued pub lication o f special articles dealing with various phases o f the operations o f the Federal Reserve System, and similar economic studies. Several such studies are now in preparation and will be published from time to time. T ime of P ublication The Review goes to the printer to be set up about the 25th o f the month. That appears at present to be the earliest date when reasonably complete statistics can be secured covering the preceding calendar month. Data concerning production, transportation, employ ment, prices, wages, etc. are received from thousands o f business houses either directly or in summary from Government bureaus, trade associations, etc. The mass o f data can only be assembled as the individual busi ness houses are able to complete their own statistics fo r the month. It is impossible to obtain some o f these figures until just before the Review actually goes to press a few days before the end o f the month. A publication appearing earlier would be less complete and less reliable. Speed has always been a m ajor aim in the publication o f the Review, but it is regarded as lew important than aeow aty.
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