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MONTHLY REVIEW of Credit and Business Conditions S e c o n d F e d e r a l Money Market in July A t the close o f July money rates were distinctly higher than at the beginning o f the month. Rates fo r commer cial paper and bankers acceptances and yields o f Govern ment securities were from a quarter to a half o f one per cent higher than in the latter part of June and at least one per cent higher than at this time last year. Bank rates to commercial customers, however, showed only moderate advances. A comparison of rates is shown in the follow ing table: Money Rates at^New York July 30, 1927 June 29, 1928 July 31, 1928 *3M-4 *6 Vl- 7 y2 4 -4 ^ 5H-Vs 4% -5 * 5 ^ -6 6 5H f4.47 f4.84 4 Vs f5.09 2.78 3.19 3.99 4.03 4.28 4.32 3H 4 4M 5 3M 4 4X ♦Prevailing rate for preceding week t Average rate of leading banks at middle of month mLIOmofJDOLLARS Growth o f Total Loans and Investments o f All Reporting Member Banks, 1925 to 1928. D is t r ic t Federal Reserve Bank, New York Federal Reserve Agent Call money.............................................. Time money-90 day............................... Prime commercial paper........................ Bills-90 day unindorsed......................... Customers’ rates on commercial loans. . Treasury certificates and notes Maturing December 15...................... Maturing March 15........................... Federal Reserve Bank of New York rediscount rate.................................... Federal Reserve Bank of New York buying rate for 90 day bills............... R e s e r v e August 1, 1928 W hile increases during the course o f the month of one-half o f one per cent in discount rates o f seven o f the Federal Reserve Banks have been an influence in the direction o f higher rates, firmer money conditions are a logical outcome o f the banking situation. Specific ally, higher rates have reflected an increasingly vigorous effort by the banks o f the country to correct an over loaned position. Principally because o f gold exports o f over $500,000,000 since last autumn, and in smaller degree because o f Federal Reserve sales of securities and increases in the volume o f credit, the banks have found it necessary to borrow increasingly large amounts from the Reserve Banks to maintain the minimum reserves required by law. A n inspection o f the bal ance sheets o f the banks shows an increasing dis crepancy between their deposits and their loans and investments. Decreases in deposits in recent months have not been compensated fu lly by decreases in loans and investments, and the banks have been making up the difference by borrow ing from the Federal Reserve Banks. B y the end o f June this borrow ing mounted to over one billion dollars and has since remained near that BILLIONSo fDOLLARS Changes in Loan s an d In v e s tm e n ts of A ll B a n k s. 1927 and 1928. R e p o rtin g M em ber MONTHLY REVIEW, AUGUST 1, 1928 58 figure. This is the largest amount o f member bank bor row ing since 1921. Conservative bankers are not content to continue long in a position where they can balance their books only by borrow ing money. W hile funds from the Reserve Banks are available to meet seasonal and unusual needs, it is not regarded as sound banking fo r a bank to be continuously dependent upon the use o f such funds. In conform ity with these principles and in anticipation o f autumn credit and currency requirements many mem ber banks have in recent weeks begun to take steps to repay the Reserve Banks. Total loans and investments o f reporting member banks have shown no increase since May, with the exception of a temporary rise to meet holiday and month-end requirements at the begin ning o f July. Since M ay there has in fact been a gradual decrease in bank loans on stocks and bonds, and in July banks began to decrease their investment accounts. The reduction in loans and investments has been more marked in New Y ork City than elsewhere. The accom panying diagrams show the changes in the volume and character o f bank credit in use as reported by member banks in principal centers having about 40 per cent o f the banking resources o f the country. Since a year ago the total loans and investments o f these banks have increased nearly one and three-quarter billion dol lars, a larger increase than in any year since 1924 (when gold im ports were h eavy), and much larger than is re quired by the usual growth in the cou n try’s business. Much o f this increase took place during a time when the banks were losing deposits and reserves through the export o f gold. The analysis of the credit increase, shown in the second diagram, indicates that it took the form s principally o f loans on stocks and bonds and invest ments, although there was some increase in “ other loans, ’ ’ the bulk o f which is presumably fo r commercial use. The diagram shows that recent reductions have been in loans on stocks and bonds and in investments rather than in commercial loans. New Y ork banks decreased their call loans correspond ingly and repaid the Reserve Bank 86 m illion dollars. This rapid shift of funds into the call market, continuing fo r several days thereafter, appears to have been largely responsible fo r the reduction in the call rate. There was no considerable flow o f funds into New Y ork on July 3rd. D uring most o f the month the call rate fluctuated between 5 and 6 per cent and in the latter half of the month 5y2 per cent was the most frequent rate, a somewhat lower level than the general credit situa tion would seem to ju stify. The second half o f July, however, is ordinarily a time when funds flow toward New Y ork. Other factors were some reduction in the demand fo r call money and some flow o f funds into the market from corporations and individuals with tem porarily idle funds awaiting later employment in business or awaiting investment. B il l M a r k e t Investment demand by foreign account im proved dur ing July, but was slightly less than the supply o f bills, while domestic account buying was very light. There were two increases in open market rates which raised quotations for the various maturities of bills from to % o f one per cent above the rates prevailing at the open ing o f the month to the highest levels since October 1921. The first upw ard revision occurred around the time when discount rate increases were made effective by several Reserve Banks, and this change carried the offering rate fo r 90 day unindorsed bills to 4 % per cent. Towards the end o f the month, there was some decline in the demand and the dealers were faced with the beginning o f a seasonal increase in offerings o f new bills; so that rates fo r all maturities were raised % per cent further, making the 90 day quotation 4 % per cent. D ealers’ portfolios o f bills were about the same at the end o f the month as at the beginning. Call M oney M arket C o m m e r c ia l P a p e r M a r k e t A fluctuation in call money rates unusual fo r recent years occurred in J u ly when the rate fo r new loans reached 10 per cent on M onday July 2 and dropped to 5 per cent on the follow ing day. The 10 per cent rate on July 2 was not difficult to explain in view o f the usual tendency fo r rates to rise sharply at the end of June and beginning o f J uly because o f the combination o f a large demand fo r funds fo r “ window dressing7’ fo r June 30 statements o f banks and corporations, large currency withdrawals fo r the July 4th holiday, and the accumulation o f corporation deposits in preparation for dividend disbursements. The stringency was accentuated this year b y corporation withdrawals o f funds from the call market and the reluctance o f banks to take over such loans because o f their already heavy borrow ing from the Reserve Banks. The demand fo r funds on Monday did, however, lead to heavy borrow ing and the loans o f the Federal Reserve Bank o f New Y ork increased 63 million dollars on that day. On Tuesday out-of-town banks and others who had built up their deposits in New Y ork on M onday withdrew about 90 million dollars and placed it in the call market, while Rates fo r prime commercial paper continued to harden during July. A t the beginning o f the month dealers’ offerings were made at 4 % and 5 per cent, but as the result o f the successive marking up o f rates, the range by the end o f the month became 5 to 5 % per cent. The effective rate at which the m ajor proportion o f the sales was made in the latter part o f the month was 5^4 per cent, which is the highest quotation fo r open market paper since October 1923. Dealers again re ported a rather slack demand fo r paper on the part o f the banks throughout the country, and at the same time supplies o f paper on hand remained limited. A t the present level o f rates it was reported that many bor rowers preferred to borrow directly from their banks rather than through the open market. Some confirma tion o f this tendency may be found in the relatively high level o f unsecured loans o f reporting banks. On June 30 the amount o f commercial paper outstanding through 24 dealers had declined 7 per cent from the previous month to $503,000,000, the smallest figure in at least 10 years, and 13 per cent below the outstandings o f a year ago. FEDERAL RESERVE DOLLARS DOLLARS F o r e ig n Exch an ge DOLLARS R a te s at N ew Y o rk , Show n in Discount Rates Abroad There were two changes in central bank discount rates during July. On July 17 the National Bank of Austria advanced its rate to 6 % per cent from 6 per cent, at which level it had been maintained since January 28, 1928. The official rate of the Imperial Bank of India was on July 19 reduced 1 per cent further from 6 per cent to 5 per cent, follow ing a reduction from 7 per cent to 6 per cent in J un e; these reductions apparently rep resent simply the usual seasonal changes. Gold Movement The net loss o f gold during July was the smallest for any month since the gold outflow began last September. H eavy shipments continued, but consisted largely o f gold that had been previously taken from the gold stock of this country and held under earmark fo r foreign account. Most of the foreign exchanges were closer to the gold im port points than to the gold export points during July, and, in fact, some gold was received from Canada on exchange transactions which approxim ately offset special purchases o f gold by foreigners in this market during the month. The principal gold movements during July included the export to France o f about $61,500,000 of gold pre viously earmarked, exports o f $4,000,000 to Italy and $3,000,000 to Brazil, and imports totaling $8,000,000 from Canada. The official figures on gold movements during July w ill also include the export of $3,000,000 GAIN OR LOSS OF GOLD (In millions of dollars) Month Net increase in earmarkings (—) Net Exports* (— ) or releases from or Imports ( + ) earmark (+ ) — 11 — 9 — 53 — 68 — 9 — 25 — 40 — 8 — — — — 1928 January........................ February................ March........................... April............................. May.............................. June.............................. July............................... — — — — — — — + 4* + + — + + 6 3 36 46 26 30 611 — 8 — 8 — 59 — 45 — 108 — 50 — 3t + 74J —504 J 14 11 95 91 82 80 641 — 578t *=Incliiding export of gold previously earmarked. R e la t io n 59 DOLLARS to P a r a n d to G o ld E x p o r t a n d Im p o r t P o in t s . to Poland, which was previously reported as shipped in June. Earm arking transactions during the month in cluded the release o f $61,500,000 from earmark for ship ment, and new earmarking o f $500,000. Foreign Exchange Nearly all o f the foreign exchange rates at New Y ork declined rapidly in July, and, whereas many o f the exchanges were considerably above par in May— some close to their gold export points— several o f the leading exchanges fell below par by the latter part o f July. The decline may be attributed partly to the usual seasonal tendencies, but the unusual rapidity o f the decline ap pears to have been due to the relatively high level o f money rates in this market which has attracted funds here from other markets. Sterling declined steadily and reached the lowest point since early last A u gu st; French and Swiss francs also went to a discount; and Belgian, Dutch, German, and Norwegian exchanges declined substantially from the fairly high levels that prevailed until recent weeks. The Canadian dollar declined shortly after the middle o f July to the lowest point since M arch 1926, but sub sequently recovered rapidly and at the end o f the month was above par. The Argentine peso also declined rapidly to a level below that which prevailed at this time last year. The Brazilian milreis, however, was relatively firm. In the F ar East, the yen was depressed, and the rupee continued its downward trend. Cable rates Net gain or loss 1927 September.................... October......................... November.................... December..................... Total, 11 months... . AT NEW YORK t—Preliminary. 20 34 93 76 Country Austria......................................... Belgium........................................ England.......... *............................ France.......................................... Germany...................................... Italy............................................. Netherlands................................. Norway........................................ Switzerland.................................. Canada......................................... Argentina..................................... Brazil............................................ India............................................. Japan.......................................... Hong Kong, dollar...................... Shanghai, tael............................. July 30, 1927 June 30, 1928 July 30, 1928 .1405 .1390 4.8557 .0391 .2378 .0544 .4007 .2582 .1926 .9987 .9661 .1182 .3610 .4714 .4893 .6220 .1407 .1397 4.8766 .0393 .2390 .0526 .4029 .2677 .1928 .9976 .9673 .1195 .3631 .4649 .5033 .6592 .1409 .1392 4.8576 .0391 .2388 .0523 .4021 .2670 .1925 1.0004 .9602 .1194 .3620 .4532 .5005 .6534 MONTHLY REVIEW, AUGUST 1, 1928 60 S a v in g s B ank New Financing D e p o s its F or several years this bank has received monthly re ports on the deposits of 15 representative savings banks in New Y ork City and 15 elsewhere in the district. In general, the growth o f deposits in the banks outside of New Y ork City has been only slightly more rapid than would have been the case if the deposits o f 1918 had been left without additions or withdrawals but with in terest com pounded at 4 per cent sem i-annually; the growth in New Y ork City has been somewhat more rapid. In view o f the reported withdrawal o f savings de posits to finance speculation in stocks it is interesting to note that the increase in the deposits of the 15 report ing banks outside o f New Y ork City during the past year has been somewhat larger than in either o f the two previous years. In New Y ork City the increase has been slightly smaller than last year, but about the same as the average fo r the past two years. mUONSe/DOLLARS 2000 MILLIONSJlOLLARS 1800 1600 1400 D e p o s i t s in 1 5 R e p r e s e n t a t i v e S a v i n g s B a n k s i n N e w Y o r k C i t y a n d 15 E ls e w h e r e in th e S e c o n d F e d e r a l R e s e r v e D is t r ic t . Total security offerings during the first half o f 1928 amounted to $5,700,000,000, as com pared with $5,300,000,000 in the first half o f 1927 and $4,100,000,000 in the first half o f 1926. The increase over last year was wholly due to an increase o f about $400,000,000 in re funding issues. A s between domestic and foreign issues, domestic offerings (exclusive o f refunding issues) de creased more than $200,000,000 from the first half o f 1927, while foreign borrowings increased by about an equivalent amount. There was a notable change in the character o f new domestic corporate offerings in that long term bond issues decreased approxim ately $460,000,000, largely during May and June, while stock offer ings increased about $350,000,000. State and municipal issues were about $100,000,000 smaller than a year ago. Prelim inary figures fo r July show a pronounced de crease in new financing, much greater than the usual seasonal decrease. The J uly total appears in fa ct to be only about one-fourth as large as the June total, and approxim ately half as large as the total o f July last year. A ll principal classes o f domestic issues were in smaller volume than in the previous month or a year ago. The largest reduction was in public utility financ ing. There was also a substantial decrease in foreign loans com pared with June, and a moderate decline com pared with a year ago. The decrease in new financing in July may be ascribed to the very heavy offerings o f the first half o f the year made during a period when gold was being exported and interest rates were rising, and to the generally over loaned position o f the banks o f the country which has recently made them sellers rather than buyers o f secu rities. It has been difficult to distribute new issues and funds to carry them have been obtainable only at rela tively high rates. Security Markets Foreign Trade Stock prices fluctuated irregularly during July, and the daily turnover o f stocks during the greater part of the month was between 1 and 2 million shares, or about half the average volume during May. Toward the close o f July, average prices o f industrial shares were several points below the highest levels o f early June, but were considerably above the low levels reached in the June reaction. R ailroad stocks were nearer their recent low points than the highest levels of the year. B ond prices advanced slightly shortly after the first o f July in response to demand fo r bonds in reinvestment o f dividend and interest disbursements, but the advance was not long sustained. D uring the rest of the month prices o f corporation bonds declined and the total de cline fo r the month, about one point, was about the same as in each of the previous two months. C orpora tion bond averages are now at the lowest levels since November 1926, and more than 3 % points below the highest levels of the current year. United States Gov ernment long term obligations during the month sold down to the lowest levels o f the y ea r; Treasury bonds showed net losses fo r the period averaging nearly 3 points, while in the case o f Liberty issues losses aver aged about % o f a point. Both exports and imports o f merchandise showed sea sonal declines in June. Exports, valued at $390,000,000, were $32,000,000 smaller than in May, but were larger than in June o f any o f the past seven years. Imports, valued at $317,000,000, showed a decline o f $38,000,000 from the May total, and a similar decline from the total fo r June o f last year. F or the year ended June 30, 1928 the total foreign trade o f the United States was slightly smaller than in the preceding y e a r ; both exports and imports were some what smaller. E xports totaled $4,878,000,000 and im ports totaled $4,148,000,000, leaving a favorable balance o f trade o f about $730,000,000, a slightly larger amount than in the previous year. E xports o f cotton showed a further seasonal decline in June and were somewhat smaller in volume than a year previous, although, due to higher prices, the value was larger than in June 1927. The total amount o f cotton shipped abroad during the fiscal year was approxim ately 30 per cent smaller than in the previous year, but the total value was only about 5 per cent less. Grain exports also declined in June and were smaller than a year a g o ; the total value o f grain shipments during the past twelve months was slightly less than in the previous year. FEDERAL RESERVE AGENT AT NEW YORK Quantity im ports o f raw silk were smaller in June than in May but were larger than in June 1927, and the total fo r the fiscal year showed a slight increase over the preceding year. Rubber imports continued to decline, and the total during the past twelve months was about 3 per cent smaller in quantity than in the previous year and considerably smaller in value, due to the substantial decline in prices. 61 PERCENT. Indexes of Business Activity This bank’s indexes o f various types of business ac tivity showed no consistent change in June. Retail trade, especially mail order trade, was more active than in May, after allowance for the usual seasonal changes, and showed a substantial increase compared with a year ago. Car loadings, adjusted fo r seasonal variations, declined somewhat follow ing a gradual increase in the months just preceding, and were smaller than in June 1927. Wholesale trade and foreign trade also declined. June indexes, in which allowance is made fo r year-toyear growth, fo r the usual seasonal variations, and where necessary fo r price changes, are compared in the follow ing table with indexes fo r other recent months and a year ago. (Computed trend of past years=100 per cent) 1927 1928 June Apr. May 106 97 99 118 91 99 104 95 87 98 89 93 105 96 104 105 84 100 101 91 102p 98 p 80 93 101 109 100 106 112 99 97 103 98 100 106 97 96 102 98 110 110 95 103 104 102 123 111 95 June Primary Distribution Car loadings, merchandise & misc.......... Car loadings, other................................... Exports...................................................... Imports...................................................... Panama Canal traffic................................ Wholesale trade......................................... Distribution to Consumer Department store sales, 2nd Dist............ Chain grocery sales................................... Other chain store sales............................. Mail order sales......................................... Life insurance paid for............................. Advertising................................................. General Business Activity Bank debits, outside of N. Y. City . . . . Bank debits, New York City................... Velocity of bank deposits, outside of New York City.............................. Velocity of bank deposits, N. Y. City.. . Shares sokl on N. Y. Stock Exchange. . . Postal receipts........................................... Electric power........................................... Employment in the United States.......... Business failures........................................ Building contracts, 36 States................... New corporations formed in N. Y. State Real estate transfers..................... ........... 107 129 112 162 111 167 114 167 106 128 185 95 107 100 115 141 123 96 116 164 306 87 104 96 102 133 110 89 117 169 307 92 119 177 239 89 ’96 113 144 121r 82 97 121 138 127 General price level..................................... Composite index of wages........................ 171 221 175 221 177 222 176 223 p=Preliminary r=Revised Commodity Prices A fter reaching in M ay the highest level since 1926, the wholesale price index of the United States Bureau o f Labor Statistics reacted a point in June. Increases in prices of agricultural commodities and their products largely accounted fo r the substantial advance from March to May, but there were also increases in certain other commodities, particularly building materials, fo l low ing almost continuous declines since the autumn o f 1926. The decline in June was entirely accounted fo r by lower agricultural prices, as in general there was a further slight increase in other prices. U n it e d S ta te s B u re a u of Lab o r S t a t is t ic s G e n e r a l In d e x W h o le s a le P r ic e s and Fe d e ra l R e se rv e Bank of N ew Y o r k W e e k l y I n d e x o f B a s i c C o m m o d it y P r i c e s , (1 9 1 3 = 1 0 0 p er c e n t). of This bank’s index o f basic com m odity prices has also been influenced largely by fluctuations in agricultural products. A substantial decline in May and the early part o f June from the high point reached at the end of A p ril was due largely to declines in wheat and corn prices, reflecting im proved crop prospects. A fte r this, sharp increases in the prices of hogs, steers, and cotton brought the index in the first week of July to a new high level fo r the year, but subsequently renewed declines in wheat and cotton have lowered the index somewhat. Crops Current reports by the United States Department of A griculture indicate that an increase in total crop acre age this year may be more than offset by lower yields per acre, although much depends upon weather condi tions between now and harvest. Smaller production than in 1927 is indicated by the J u ly 1 reports fo r corn, wheat, rye, and hay, while an increase is forecast in oats, barley, and tobacco. The advance in farm prices over 1927 has been larger than the probable decline in production, and conse quently the income o f the farm ing community appears likely to show a further increase this year. A ccord in g to an estimate by the Standard Statistics Company, the indicated total value o f nine m ajor crops is about 5 per cent above a year ago. This season’s crops, indicated by J uly 1 forecasts, are compared in the follow in g table with actual yields last year and the average crops o f the past five years. (In millions) Crop Corn, bushels........................................... All wheat, bushels................................... Oats, bushels........................................... Barley, bushels........................................ Potatoes, white, bushels......................... Tobacco, pounds..................................... Hay, tame, tons...................................... Apples, total, bushels............................. 1923-1927 Average Harvest 1927 Harvest Indicated by Condition July 1, 1928 2,752 808 1,348 209 384 1,336 93.1 183 2,774 873 1,184 264 407 1,196 106.5 123 2,736 800 1,320 303 444 1,312 84.4 178 62 MONTHLY REVIEW, AUGUST 1, 1928 P r o d u c tio n A fte r remaining for four months at practically a constant level, except fo r seasonal fluctuations, a com posite index of production in leading industries declined somewhat in June. The output o f p ig iron and steel ingots decreased more than usual, and there were also declines, after allowance for usual seasonal changes, in petroleum and coal productions. Cotton consumption fell to a level 23 per cent below that of a year ago, and this bank’s index was lower than at any time since July 1926; woolen mill activity and mill consumption o f silk also were smaller than in May. The output o f passenger automobiles did not decline as much as usual, but the production o f trucks was sharply reduced. Out o f twenty-six of this ban k’s production indexes now available, seventeen declined in June, and nine advanced. D uring July employment at Detroit increased further to a new high level fo r the year, indicating that the automobile industry as yet is not showing the usual tendency toward a seasonal decline. There has been some increase in the production of bituminous coal and of crude petroleum, but steel mill operations have been reduced slightly from the June level, and production of cotton goods, lumber, and anthracite coal have shown further declines. (Computed trend of past years— 100 per cent) 1927 1928 June April May 108 98 116 98 89 110 118 81 102 96 99 105 98 88 107 133 103 97 107 114 89 110 83 98 107 83 103 98 99 92 94 105 113 113 106 95r 110 113 97 125 85 115 108 82 HOr 95p 101 93 92 87 112r 125 113 99 105 107 108 87 99 112 90 100 96 95 97 97 104 105 107 117 102 91 96 91 102 80 87 131 141 107 77 95 111 88 105 101 88r 109 118 87 100 101 109 82 103 152 148 109 67 96 114 96 June Producers' Goods Pig iron...................................................... Steel ingots................................................. Cotton consumption................................. Cotton movement..................................... Woolen mill activity*............................... Silk consumption*..................................... Petroleum.................................................. Bituminous coal........................................ Coke........................................................... Lumber. . : ................................................. Copper, U. S. mines................................. Lead............................................................ Zinc............................................................ Tin deliveries............................................. Leather, sole.............................................. Cement....................................................... Paper, total................................................ Wood pulp................................................. *=Seasonal variation not allowed for io3 90p 97 104 113 130 Building contracts reported to the F. W . Dodge Cor poration during June showed a small decline from the large volume o f May but were larger than in June o f any previous year. The increase over June 1927 was about 3 per cent fo r all districts combined. D uring July the average daily volume o f contracts reported was slightly larger than a year ago. F or the com pleted half year there was an increase o f 8 per cent over the corresponding six months o f 1927 and o f 9 per cent over the corresponding period in 1926 fo r all districts combined. In the New Y ork and North ern New Jersey district the increase was 9 per cent com pared with last year and about 4 per cent compared with 1926. A n increase in residential building contracts has been the most important element in the larger vol ume o f construction work this year. There has also been a considerable increase in contracts fo r public works and utilities and in industrial building, and some increase in educational building. Commercial and miscellaneous projects, however, have been somewhat smaller than in 1927. The follow ing table shows the volume o f construction contracts awarded in the 37 states as a whole and in this district during the first half o f 1928, and the change com pared with the corresponding period last year. (In millions of dollars) Total 37 States p=Preliminary ios 96 122 125 98 99 94 112 76 Public Works and Utilities....... 95 75 *72 92 i02p i29 85 r=Revised Employment and Wages Contrary to the usual seasonal tendency, factory em ploym ent increased slightly in June, and this ban k’s index, in which allowance is made for the usual seasonal variations, reached the highest level since last October. There was also an expansion in out-of-door activities, such as building, farm ing, and road work. Building Class Consumers' Goods Hogs slaughtered....................................... Cattle slaughtered..................................... Sheep slaughtered..................................... Calves slaughtered.................................... Farm produce shipped............................. Wheat receipts........................................... Corn receipts............................................. Wheat flour................................................ Sugar meltings, U. S. ports...................... Gasoline...................................................... Anthracite coal.......................................... Paper, newsprint....................................... Printing activity....................................... Tobacco products........................ ............. Boots and shoes......................................... Tires.............................................. Automobile, passenger.............................. Automobile, truck..................................... 107 104 88 79 83p 109 104p 78 103p A measure of the improvement in employment condi tions is to be found in the ratio o f orders fo r workers to applications fo r employment at New Y ork State Em ploym ent Offices, which has increased sharply since F eb ruary, and during the past month has averaged only slightly below the level o f a year ago. A verage weekly earnings o f factory workers also have shown an improvement in New Y ork State, and in May and June reached new high levels fo r those m onths; farm wages, however, are reported as somewhat below the level o f a year ago. Change January compared with to June Jan.-June 1928 1927 New York and Northern New Jersey January to June 1928 Change compared with Jan.-June 1927 1,531 641 468 307 201 297 + 223 + 44 — 35 + 66 + 13 — 54 527 122 150 30 41 64 + 104 — 7 — 10 — 5 + 9 — 11 3,445 + 257 934 + 80 Wholesale Trade June sales o f reporting wholesale dealers in this dis trict were 7 per cent smaller than in June 1927. This was the largest decline from the sales of a year previous fo r any month since last October. Unusually large de clines were reported in sales o f shoes, silk goods, jew elry, and jobbers sales o f cotton goods, and declines, follow ing increases in May, were also reported by hardware and m en’s clothing dealers. Sales o f w om en’s clothing re mained smaller than last year. A n unusually large in crease occurred in diamond sales, however, machine tool FEDERAL RESERVE AGENT AT NEW YORK orders remained much larger than last year, and drug sales continued to show a considerable increase. F or the first half o f the year, wholesale trade in this district averaged about the same as last year. The prin cipal increases were in sales of machine tools and drugs, and the principal declines in w om en’s clothing. A ma jority of other lines showed small declines. Collections were irregular in June, but in general averaged somewhat slower than a year ago. Percentage Change June 1928 compared with June 1927 Per cent of Charge Accounts Outstanding May 31 collected in June Percentage Change in Net Sales Commodity Net Sales Groceries....................... Men’s clothing............. Women’s dresses.......... Women’s coats and suits Cotton goods—Jobbers Cotton goods — Com mission ...................... Silk goods..................... Shoes............................. Drugs............................ Hardware..................... Machine tools**.......... Stationery..................... Paper............................ Diamonds..................... Jewelry......................... Stock end of Month June 1928 from May 1928 First Six Months 1928 from 1927 + 2.7 — 31.4 —32.9 —48.1 + 1-2 + 2.2 — 1.4 — 0.4 —20.9 — 10.5 — 2.5 — 2.3 — 2.9 — 12.1 +13.1 — 1.1 +58.4 — 1.3 + 2.2 — 1.7 + 0.4 — 1.8 1927 1928 72.6 52.5 70.7 44.3 33!6 34.3 — 19.8 +18.9* 52.3 — 19.3 — 11.1 41.5 +15.6 + 6.4 48.5 — 4.8 56.3 +13.7 +54.8 + 0.2 78.0 0 61.6 +44.4 J25.3 — 8.1 } + 8.5 53.4 41.9 43.5 54.1 75. i 73.1 J24.6 — 10.7 + 3.4 — 8.7 — 2.7 + 4.4 — 12.1 — 7.3 +36.7 +17.7 55.2 53.1 — 12.4 — 4.5 — 11.8 —28.9 — 15.9 — 10.9 — 3.3 — 4.5 — 19.6 Weighted Average.. . — 7.0 ♦Quantity not value. Reported by the Silk Association of America ♦♦Reported by the National Machine Tool Builders’ Association C h a in S t o r e S a le s Sales of reporting chain store systems in June con tinued substantially larger than a year ago,— on a daily basis the increase was even larger than in May. Chain grocery business was not as good as in other recent months, but shoe sales showed an unusually large in crease, and substantial increases were reported also by variety and ten cent stores. F or the first six months of the year total sales fo r all reporting chains were nearly 10 per cent larger than a year ago. The largest increase was in the sales of variety stores, and substantial gains were reported also by grocery, ten cent, and shoe chains. In several lines the increases in sales during May and June were well above the average increase for the first half of the year. Percentage Change June 1928 compared with June 1927 Type of Store Number of Stores Percentage Change First Six Months 1928 compared with 1927 Total Sales Sales per Store Total Sales Sales per Store Grocery................................ Ten cent............................... Drug. ................................... Tobacco.............................. Shoe..................................... Variety..................... ........... Candy.................................. + 1.4 + 8.6 + 2.4 + 3.0 + 9.7 +17.7 +15.5 + 6.9 +12.4 + 2.4 — 1.4 +24.5 +23.9 + 4.9 + 5.4 + 3.6 0 — 4.3 +13.4 + 5.3 — 9.2 +13.5 + 9.2 + 2.9 — 4.9 + 8.7 +19.4 + 0.4 +11.7 + 0.3 0 — 6.3 — 0.9 0 — 9.3 Total................................ + 4.8 +11.6 + 6.4 + 9.8 + 5.0 63 D e p a rtm e n t S tore T r a d e Department store sales continued in June to show moderate increases over last year in most sections of this district. The average increase over June 1927 fo r all reporting stores was close t o . 3 per cent. The largest increases were reported from Newark and Bridgeport. A pparel store sales continued to show a fairly large increase over last year, and sales o f leading mail order houses showed a large increase. Due to rather poor business in the early months o f the year, total sales o f reporting department stores fo r the first six months o f 1928 were less than 1 per cent larger than in the corresponding period o f 1927, the smallest increase in several years. Stocks o f merchandise on hand were slightly smaller than last year, and the rate o f stock turnover showed a further slight increase. Locality Percentage Change June 1928 compared with June 1927 Net Sales + — + + + + + Northern N. Y. State — Central N. Y. State. + Southern N. Y. State + Hudson River Valley District................. + Capital District........ — Westchester District. + 2.2 1.6 2.4 1.6 8.0 5.3 1.3 1.4 0.2 4.3 Stock on hand end of month + + — — — — — 0.2 0.8 1.1 2.5 0.1 9.1 3.7 Per cent of Percentage Change Charge Accounts First Six Months Outstanding 1928 May 31 compared with Collected in 1927 June Net Sales + — — — + — + + — — 0.9 1.5 0.3 1.6 2.9 2.4 1.5 0.6 1.4 3.2 Average Stock on hand — + + — + — — 1.7 3.2 0.4 3.2 0.6 6.2 4.5 1927 1928 51.2 49.9 39.9 51.5 54.7 42.0 47.4 48‘.2 37] 2 38'.7 + 3.8 + 3.5 + 8.2 4.7 3.6 4.6 All department stores.. + 2.8 — 0.4 + 0.9 — 1.4 48.8 49.7 Apparel stores.............. Mail order houses........ + 8.4 +22.9 + 3.1 + 9.0 + 8.4 + 5.2 48.0 49.3 Departments selling vacation goods were among those showing the largest increases in sales compared with June 1927. Comparisons of June sales and stocks fo r the principal departments follow. Net Sales Stock on Hand Percentage Change Percentage Change June 1928 June 30, 1928 compared with compared with June 1927 June 30, 1927 Musical instruments and radio.............. Books and stationery.............................. Toys and sporting goods............... .. Luggage and other leather goods........... Women’s ready-to-wear accessories....... Men’s and boys’ wear............................. Toilet articles and drugs......................... Home furnishings.................................... Linens and handkerchiefs....................... Men’s furnishings.................................... Women’s and Misses’ ready-to-wear___ Silverware and jewelry............................ Silks and velvets...................................... Woolen goods........................................... Miscellaneous........................................... + 26.7 +21.3 +15.2 + 0.8 + 5.4 + 5.0 + 4.9 + 3.9 + 3.6 + 2.9 + 2.5 + 2.1 + 1.6 + 0.4 — 0.1 — 2.2 — 13.2 — 24.9 — 4.3 — 26.1 +13.6 + 9.2 + 9.3 — 9.3 + 3.8 + 4.6 + 5.5 + 7.0 + 2.3 + 7.7 — 0.7 — 8.8 + 1.2 — 2.0 + 2.7 + 5.6 — 8.9 — 3.7 64 MONTHLY REVIEW, AUGUST 1, 1928 PERCZNT Business C onditions in the U nited States (Summarized by the Federal Reserve Board) NDUSTRIAL production and the distribution of commodities in June were in smaller volume than in May and the general level of wholesale prices, following a sharp advance in April and May, also declined. Member bank credit was in record volume early in July and indebtedness at the Reserve Banks was larger than at any time in the past six years. I P r o d u c t io n In d e x N u m b e r s o f P r o d u c t io n o f M a n u f a c t u r e s a n d M in e r a ls , A d ju s t e d fo r S e a s o n a l V a r i a t io n s ( 1 9 2 3 - 2 5 a v e r a g e = 1 0 0 p e r c e n t ) . PERCENT Activity of manufacturing industries declined slightly in June, and there was a decrease of about 6 per cent in the output of minerals owing to declines in the production of coal. The manufacture of iron and steel decreased in June by somewhat more than the usual seasonal amount, but there are indi cations that there were no further declines in July and the industry was somewhat more active than a year ago. Production of flour and activity of cotton and wool mills also declined in June. Automobile production showed considerably less than the usual seasonal decline in June, and weekly employ ment figures for Detroit indicate that operations of automobile plants were well maintained during the first three weeks of July. The manufacture of agricultural implements and machine tools continued in June at the high level reached last spring. Production of lumber, copper, and shoes, and activity of silk mills increased in June. Contracts awarded for new building continued large in June and total awards for the first half of the year exceeded those for any previous corre sponding period. There were increases over last year in contracts for resi dential, industrial, public, and educational building. Awards during the first three weeks in July were in somewhat smaller volume than for the correspond ing period of last year. The July estimates of the Department of Agriculture indicate a yield of wheat of 800,000,000 bushels, a decrease of 8 per cent from the harvested yield of 1927, and a yield of corn of 2,736,000,000 bushels, a reduction of 2 per cent. The production of oats, barley, white potatoes, and tobacco is expected to be larger than last year. The acreage of cotton in cultivation on July 1 was estimated at 46,695,000 acres, an increase of 11 per cent as compared with that of a year ago. T rade P r ic e s o f F a r m P r o d u c t s a n d o f N o n - A g r ic u lt u r a l C o m m o d it i e s . (1 9 2 6 a v e ra g e = 100 p er c e n t). BlLLlOmo/.'DOLLARS Merchandise distribution at retail and wholesale was seasonally smaller in June than in May. Sales of department stores declined by about the usual seasonal amount, while the declines in sales of chain stores were smaller. Sales of wholesale firms in most lines of trade showed a more than usual seasonal decline. Compared with a year ago sales of department stores and chain stores were larger and those of wholesale firms were smaller. Stocks of wholesale firms were in about the same volume at the end of June as a year ago and those of department stores were smaller. Freight car loadings for practically all classes of commodities declined in June and continued in smaller volume than a year ago. During the first two weeks of July, however, owing to increases in loadings of grains and miscellaneous commodities, total loadings were larger than in the correspond ing period of 1927 but continued below the high level of 1926. P r ic e s R e se rv e Bank C r e d it : M o n th ly A v e ra g e s of D a ily F ig u r e s fo r 12 F e d e r a l R e s e r v e B a n k s ( L a t e s t f ig u r e s a r e a v e r a g e s o f f ir s t 2 3 d a y s in J u l y ) . KATE e>......... £ COMMERCIAL P'APER 4 Tp 1L / W F.R.B. RATE / U P ACCEPTAlWFS Vw u 5 , 1924 1925 1S26 1927 1928 W eekly Rates in the New York M oney Market. The general level of wholesale commodity prices declined in June and the Bureau of Labor Statistics index, which had advanced from 96 per cent of the 1926 average in March, the low point for the year, to 98.6 per cent in May, declined in June to 97.6 per cent. The decline in the all-commodities index reflected decreases in those groups which had advanced most rapidly in previous months— farm products, foods, and hides and leather products. Prices of livestock and meats, which are included in these groups, however, showed further advances in June, and there was also an increase in the prices of building materials, while prices of silk and rayon, fertilizer materials, house furnishings, and automobile tires declined. During the first three weeks in July there were declines in the prices of wheat and cotton, and advances in those of cattle anti hogs. B a n k C r e d it Member bank crcdit, after rising to a record volume early in July, declined somewhat during the two following weeks and on July 18 total loans and investments of reporting banks in leading cities were about $160,000,000 smaller than four weeks earlier. The decrease was largely the result of reduc tion by about $125,000,000 in the banks’ investment holdings, but reflected also a decline in the volume of loans on securities following a temporary increase over the mid-year. Contrary to the usual seasonal trend, loans largely for commercial purposes were in record volume during the period. Member bank borrowing at the Reserve Banks showed a decline following the mid-year settlement period, but the volume on July 25, at slightly more than $1,000,000,000, was somewhat larger than five weeks earlier. Holdings of acceptances and United States securities declined during the period. In July there were further advances in open market rates for commercial paper and bills, and discount rates at seven of the Federal Reserve Banks were raised from 4 ^ to 5 per cent.
@FedFRASER