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M ONTHLY
R E V IE W
of Credit and Business Conditions
S e c o n d
Federal Reserve A gen t
F e d e r a l
R e s e r v e
D is tr ic t
Federal R eserve Bank, New York
A u gu st 1, 1934
4% per cent, and $35,000,000 of Edison Electric
IlluminatingCompanyof Boston3yearnotes, yielding
Theflotationof newsecurityissuesotherthandirect 3per cent. Oneof thepurposes of theBaltimore and
obligations of the United States Government has been OhioissueistoretireindebtednesstotheReconstruction
increasingduringthepast fewmonths, andinJulythe Finance Corporation. Therailroadissues, as has been
volumereachedthelargest monthlytotal sincethefirst thecaseformanyyears, w
T
eresubjecttoapproval bythe
part of 1931. Theaccompanyingdiagrammeasuresthe Interstate Commerce Commission, but not the Federal
extent of theresumptionof borrowingthroughthecap TradeCommission. Thepublicutilityissuewasfloated
ital market whichhas occurredthus far. Despite this afteritsregistrationwiththeFederal TradeCommission
considerable increase, thevolume of securityissues re hadbecome effectiveandwas thefirst issue subject to
mainslimitedincomparisonwiththeflotations during such registration which has been offered since the
theperiodof 1925-1930.
Securities Act of 1933 was amended.
For the first half of this year, the volume of new IntheStateandmunicipal financing'field, thesaleof
securityissuestotaled$1,007,000,000, exclusiveof direct $72,000,000ofsecuritiesbytheCityofNe^Yorkwasan
obligations of the United States Government. This importantstepinreducinginterestchargesonoutstand
amount is morethantwice the flotations inthe corre ingdebt. TheaveragecosttotheCityon$60,000,000of
spondingperiodof 1933 but is considerably less than 1-15yearserial bondswasaround3.80percent andon
halfthetotal forthefirstsixmonthsof 1931. Refunding $12,000,000of short termcorporatestocknotes V/gper
issuesof all kindsaggregatedover$400,000,000whichis cent. The proceeds of this salewill beusedtoretire
a larger volume than in any of the past four years securities bearing higher coupons. Inadditionto the
except1931. Issuesfortheraisingofnewcapitaltotaled interestsaving, thisrefundingwillallowtheCitytoissue
nearly $600,000,000,; of which State, municipal, and
600!------------------------------------------------------------------- -——
farmloanissues accountedfor about $500,000,000.
A considerable resumption of private capital issues
has characterizedprevious recoveries of business from 500
depressions. Inthe1920-1922period, forexample, new
security issues increasedconsiderablyinadvance of a
B
riseincommercial loansof thebanks. Afterdepression,
400
theprimaryneeds for funds appear tobefor meeting
maturingobligations, andfor improvement andexpan
sionof plantandequipment. Thesearelongtermneeds
normallyfinancedbysecurityissuesratherthanbyshort 300
termcommercialaccommodation. Increasesthatoccurin
commercial loans duringtheearlystages of arecovery
tendtobeoffsetintheaggregatebycontinuingliquida 200
tionof oldloans. As indicatedabove, most of thecor
porateissues sofar offeredhavebeeninthenature of
refundingoperationstocoverrequirementswhichupto
this time have beenprovidedfor by the banks or the
Reconstruction Finance Corporation or by extensions
grantedbysecurityholders.
O! __________
^AmongtheJulycorporatesecurityofferings, theprin
cipal issues were $50,000,000 Pennsylvania Railroad
long^termbonds, yielding 4.37 per cent, $50,000,000
Baltimore and Ohio Railroad 5 year notes, yielding
M o n e y M a r k e t in July
MILLIONS
OF DOLLARS
rrrri CORPORATE ISSUES
L -iJ
_ _
■
new
c a p it a l
STATE, MUNICIPAL, &
FARM LOAN ISSUES
—
N EW C A P IT A L
-
ALL REFUNDING
ISSUES
1925J
1930’31 ’32
AV. AV. AV.
F
M AM
1934
O ffe r in g s o f N e w
D o m e s tic
S e c u r it y
Is s u e s ,
E x c lu s iv e
o f D ir e c t
O b lig a t io n s o f th e U n it e d S t a t e s G o v e r n m e n t ( C o m m e r c ia l a n d
F in a n c ia l
C h r o n ic le
f ig u r e s
w ith o u t
in v e stm e n t
tru st
is s u e s ; J u l y e s t im a t e d fr o m w e e k ly d a t a )
MONTHLY REVIEW, AUGUST 1, 1934
58
new corporate stock in payment of contract and land
purchase liabilities.
On July 23 the Secretary of the Treasury, on behalf
of the Federal Farm Mortgage Corporation, offered
$100,000,000 of 3 per cent Federal Farm Mortgage Cor
poration bonds maturing in 1944-49. These bonds were
sold to the highest bidders at an average price of 100.559
and an average yield of 2.92 per cent to the earliest call
date. The Corporation on receipt of the funds on
August 1 is to use the greater part of the proceeds to
repay advances by the Reconstruction Finance Corpora
tion to the Federal Land Banks and to return deposits
of public moneys made in these banks by the Treasury.
Toward the end of the month, the offering and distri
bution of new security issues were retarded by declines
in the prices of outstanding securities.
E x c e s s R e se r v e s
Currency requirements for the June month end and
Independence Day holiday amounting to about $100,000,000 and some increase in Treasury cash and deposits
at the Reserve Banks resulted in a reduction in the ex
cess reserves of all member banks to about $1,600,000,000
in the opening days of July. In the succeeding weeks,
a decline in currency circulation to its seasonal low
point and a large excess of Treasury disbursements over
receipts caused excess reserves to rise to a new high
figure of around $1,900,000,000.
In New York City, surplus bank reserves dropped
from around $575,000,000 at the end of June to $425,000,000 in the first week of July; one of the principal
losses of funds resulted from the repurchase by several
New York City institutions of the capital notes which
they had previously sold to the Reconstruction Finance
Corporation, and other losses occurred through holiday
currency requirements and Treasury transactions. A
substantial inflow of funds to New York from other parts
of the country soon developed, however, which together
with continued gold imports had the effect of raising
excess reserves of the City banks to the neighborhood of
$600,000,000 toward the end of July. With the exception
of yields on short term Government securities which
declined slightly further, there was no change during
July in short term money rates in the New York market,
MoneyfRates atJNew^York
July 31, 1933 June 29, 1934 July 31, 1934
Stock Exchange call loans............
Stock Exchange 90 day loans. . . .
Prime commercial paper— 4 to 6 months
Bills—90 day unindorsed.....................
Customers’ rates on commercial loans.
Treasury securities
Maturing December (yield)............
Maturing March (yield)..................
Maturing December 1935 (yield). . .
Average rate on latest Treasury bill sales
91 day issue.......................................
182 day issue.......................................
Federal Reserve Bank of New York re
discount rate.......................................
Federal Reserve Bank of New York
buying rate for 90 day indorsed bills
* Nominal
1
*1%-1 X
ix
X
*M-1
H-i
Vs-H
*K -l
H-i
H-H
f3.24
f2.13
f2.10
0.08
0.40
No yield
No yield
0.28
No yield
No yield
0.22
0*.07
6 ’. 09
IX
IX
X
X
0.37
2X
1
t Average rate of leading banks at middle of month
which continued at unusually low levels as the accom
panying table indicates.
M e m b e r B a n k C r e d it
The total loans and investments of weekly reporting
member banks in principal cities showed a moderate
net increase during the five week period ended July 25,
following a large rise during the preceding month.
United States Government security holdings advanced
$89,000,000 further, and there was a rise of $93,000,000
in other security holdings, but the effect of these increases
was offset to a considerable extent by declines in security
loans and in other loans. In New York City, total mem
ber bank credit outstanding showed no material net
change, as a reduction in loans, especially in security
loans in the last two weeks of the period, was nearly as
large as the increases which occurred in Government
and miscellaneous security holdings.
Net demand deposits both in all reporting banks and
in New York City recovered the loss sustained around
the middle of June through Treasury transactions. Time
deposits tended lower in New York, but were slightly
higher for the country as a whole, while Government
deposits were reduced by recent withdrawals of part of
the proceeds of Government security issues.
B djL M a r k e t
The amount of business transacted in the discount
market during July continued in much the same small
volume as for a number of months past. In the closing
days of June offerings of bills to the market had in
creased slightly, due to sales by banks in connection with
the mid-year statements, but immediately after the turn
of the month bank investment demand quickly absorbed
these bills. Throughout the remainder of July the small
amounts of bills that came into the market moved out
into investors ’ portfolios and the amount of bills in deal
ers 7 lists remained at a minimum. Rates continued to be
quoted by the dealers only upon application, but it was
indicated that most of the trading again was done at a
buying rate of 3/16 per cent and a selling rate of Ys
per cent.
The volume of bankers acceptances outstanding at the
end of June reached $534,000,000 as a result of a drop
of 6 per cent during that month, the fifth consecu
tive monthly decline.
The amount outstanding was
$237,000,000 smaller than at the end of January and
$153,000,000 smaller than in June 1933. The decline in
outstandings has been the largest in domestic warehouse
credits and, secondly, in bills based on export transac
tions. Aside from the small demand for commercial
accommodation of any kind, the decline in the use of
bankers acceptances has been attributed to some extent
to the offering of rates on direct commercial loans which
are lower than the costs of acceptance credits, including
commissions and discount charges. A t the end of June
90 per cent of the bills then outstanding were held by
the accepting banks and bankers, leaving only about
$50,000,000 of bills available for other investors.
59
FEDERAL RESERVE AGENT AT NEW YORK
C o m m e r c ia l P a p e r M a r k e t
Drawings of new eommereial paper showed a con
siderable increase during the first part of July and
moderate additions continued to occur until late in the
month when there was some slowing down in the rate at
which paper was being created. For the month as a
whole, the amount of new paper drawn represented a
continuation of the increase which occurred in June
when the volume of paper outstanding rose 7 per cent to
$151,000,000, the largest amount since November 1931.
The July drawings included a diversified list of com
mercial and industrial borrowers located in various
parts of the country. This paper moved quickly from
the dealers into investors’ portfolios, as the active bank
investment demand that has prevailed in recent months
continued throughout most of July.
Somewhat greater importance in the rate structure
was attained by the % per cent quotation for prime four
to six month paper around the middle of the month, but
the movement was not sufficiently marked to cause a
general lowering of the prevailing rates. Toward the
close of the month, the range of dealers’ offering rates
was % - l per cent with the lower rate pertaining prin
cipally to four month maturities and the higher rate to
five and six month maturities.
L o an s to In d u stry
Early in July, announcement was made of the mem
bership of the industrial advisory committee for the
Second Federal Reserve District, which is to consider
applications for loans by the Reserve Bank for the pur
pose of providing established industrial and commercial
businesses with working capital, under the terms of the
amendment to the Federal Reserve Act enacted on June
19. The committee consists of Mr. John B. Clark, presi
dent of the Clark Thread Company, Newark; Mr. John
A. Hartford, president of the Great Atlantic and Pacific
Tea Company, New York; Mr. Albert A. Hopeman of the
A. W . Hopeman & Sons Company, Rochester; Mr.
Charles R. Palmer, president of Cluett, Peabody & Com
pany, Troy; and Mr. William H. Pouch, president of the
Concrete Steel Company, New York. Mr. Pouch subse
quently was elected chairman of the committee and Mr.
Hartford, vice-chairman.
A moderate number of formal applications for this
type of loan were filed with the Federal Reserve Bank of
New York during July, but in addition there were a
large number of inquiries concerning the possibilities of
obtaining loans under this section of the Federal
Reserve Act.
Security M a rk e ts
Stock prices tended to advance in a continued small
volume of trading during the early part of July, reach
ing a point some 7 per cent above the lowest quotations
touched in May and June. After the middle of July,
however, stock prices declined, at first moderately, but
toward the end of the month the decline was very sharp,
accompanying reports of widespread crop damage in
flicted by the drought and reports of the disturbances in
Austria. This recession, which was accompanied by a
PRICE INDEX
J
F
M
A
PR IC E INDEX
M
J
J
A
S O
N
D
J
F
M
A
M
J
J
A
5
0
N
D
M ovem e n ts o f Stock and B ond Prices (Standard S ta tistic s C om pany
indexes o f 4 2 1 stock s and 6 0 bon ds)
considerable increase in turnover for a few days, resulted
in a drop of 16 per cent in the general level of stock
prices to the lowest level since May 1933. The public
utility price averages, as a result of the decline, reached
a new low since July 1932. In the closing days of July,
the market steadied, and trading volume diminished, but
only one-fifth of the decline in prices was recovered.
Movements in the bond market were similar to those
in the stock market with the lower grade corporation
issues, especially, tending to fluctuate with share prices.
For the month as a whole, the bond averages composed
largely of less high grade issues showed net declines of
around 2 points with individual issues dropping much
more, and the high grade bond averages registered reces
sions of about 1 point. United States Treasury bonds
advanced % of a point further in the first part of the
month, but subsequent declines left prices showing a net
decrease of Ys point from the end of June. Foreign dol
lar bonds quoted in this market showed no material
change until the latter part of the month when a repre
sentative price average dropped 1 % points to the lowest
level since January, reflecting general weakness in the
foreign list.
In connection with the recurrent declines that have
occurred in stock prices during the past three months,
the accompanying diagram indicates that the current
level of share prices is about 29 per cent below the high
est point reached on the advance which terminated in
July 1933. In contrast to the materially lower level of
share prices now than a year ago, corporation bond prices
are higher than in July 1933. The bond average shown
in the diagram is typical of high grade issues, which
have been advancing steadily since the beginning of this
year and which are now nearly 10 per cent higher than
a year ago, but even those bond averages that are com
posed of a large proportion of medium and lower grade
issues show some advance over July 1933.
G o ld M o v e m e n t
During July gold imports at New York amounted to
about $46,000,000, representing a moderate decline from
the June total. The principal amounts received were
$23,700,000 from England, $8,200,000 from Canada,
60
M O N T H L Y R E V I E W , A U G U S T 1, 1934
$8,400,000 from India, $3,300,00 from France, and
$2,000,000 from Mexico. Imports of gold on the Pacific
Coast amounted to $2,200,000, representing shipments
from China. In addition, $2,100,000 of gold previously
earmarked at this bank for foreign account was released,
and receipts of scrap gold by the mints and assay offices
and purchases of newly mined domestic gold each aver
aged at least $2,000,000 a week. As a result of these ac
quisitions of gold, the monetary gold stock of the United
States rose about $75,000,000 further during July to a
new high figure of about $7,930,000,000.
C entral B a n k R a te C hanges
On July 1 the Bank of Java lowered its discount rate
from 4 % to 4 per cent, the higher rate having been in
effect since August 16, 1933. The National Bank of
Yugoslavia on July 16 reduced its discount rate to 6Vo
per cent from the 7 per cent rate which had been estab
lished on February 9, 1934; the rate on advances also
was lowered to 7 % per cent from 8 per cent.
Foreign E xch an g e
Trading in the principal foreign exchanges was com
paratively quiet during the first two weeks of July with
some currencies gaining in value and others declining.
During the second half of the month greater activity
was evident in certain sections of the list, and three of
the gold currencies were quoted for at least part of the
time below their estimated gold import points to the
United States, The only shipments of gold, however,
came from France.
After reaching its high closing rate for the month at
$5.06% on July 3, sterling declined to $5.03% on the 9th
and remained in the vicinity of $5.04 until late in the
month when the rate was as low as $5.03^2. French
francs, which fluctuated around $0.0659% through July
14, rose to $0.0660% on the 16th, but this was followed by
an abrupt decline to the month’s low of $0.0658% on
July 20, a rate below the estimated gold import point.
Subsequent quotations were higher but the franc re
mained below the gold point. Belgas were weaker than in
June and sold consistently below the estimated incoming
gold point and guilders, which moved irregularly down
ward from a peak of $0.6790 on July 3, were the third
currency to drop below the gold import point when they
closed at $0.6760 on the 21st.
Swiss francs were stronger than in June and regis
tered a small net gain for the month of July after touch
ing their parity of $0.3267 on the 16th. Reichsmarks
fluctuated with considerable irregularity between a low
of $0.3833 on July 6 and a peak of $0.3925 on the 19th,
most of this gain being lost before the end of the month.
Lire moved more narrowly than for several months
past at a level slightly below their June average of
$0.0860%.
Japanese yen, the Scandinavian currencies, and the
Argentine peso moved in close conjunction with sterling
and showed in the main a similar measure of steadiness.
The Brazilian milreis did not deviate at all from a closing
rate of $0.0850 and the Canadian dollar pursued an al
most unwavering upward course. The Chinese currencies
showed a small net loss during July in common with the
price of silver.
Closing Cable Rates at New York
Exchange on
Belgium ................................
England................................
France...................................
H olland.................................
Italy.......................................
Spain......................................
Switzerland..........................
Canada..................................
Argentina.............................
B razil.....................................
Ind ia......................................
Shanghai..............................
Par of
Exchange
$ .2354
.4537
8 .2 3 9 7
.0663
.4033
.6806
.0891
.4537
.3267
.4537
.3267
July 31, 1933 June 30, 1934 July 30, 193$ .1885
.2010
4 .4 8 0 0
.05280
.3222
.5440
.0709
.2252
.1128
.2315
.2610
$ .2335
.2256
5 .0 4 5 0
.06595
.3861
.6778
.0856
.2536
.1366
.2603
.3250
$ .2345
.2251
5 .0 3 7 5
.06591
.3865
.6760
.0857
.2533
.1366
.2599
.3261
1.6931
.7187
.2026
1.7511
.9300
.3413
.0829
.6000
1.0100
.3363
.0850
.8000
1.0169
.3358
.0850
.8000
.8440
.6180
.2770
.3380
.2850
.2990
.3800
.3431
.2991
.3796
.3381
F oreign T ra d e
Total merchandise exports from the United States
during June amounted to $171,000,000, and general im
ports totaled $136,000,000. Exports were considerably
larger than in May, contrary to seasonal tendency, while
imports showed about the average decline for this time
of year. The value of exports was 42 per cent larger
than in June 1933, while imports gained only 11 per
cent, the smallest increase in a year.
Compared with a year ago, shipments of raw cotton
from the United States to all of the major importing
countries except Canada and the Far Eastern countries
showed declines both in volume and value; the total
quantity exported was reduced 25 per cent and the value
was slightly less. Imports of raw silk were about onethird smaller in quantity and 40 per cent less in value
than in June 1933. In contrast to the reduced foreign
trade in textiles, the value of automobiles and accessories
shipped abroad was nearly three times the small value
of a year ago, and the value of imports of rubber in
creased almost six times. The quantity of rubber im
ports was more than twice the June 1933 volume.
For the fiscal year ended June 30, exports totaled
somewhat over $2,000,000,000 and imports $1,700,000,000.
These totals represent increases over the small figures
for the preceding twelve month period of 42 per cent
in exports and 47 per cent in imports. Available statis
tics covering the quantity of commodities in foreign
trade during the past fiscal year show a gain of 59 per
cent in imports of crude rubber and a decrease of 13
per cent in receipts of raw silk. Exports of raw cotton
were also slightly less than in the year ended June 30,
1933, with the largest reductions occurring in shipments
to European countries, notably Germany and Belgium.
Japan imported 20 per cent more of American cotton
than in the previous fiscal year.
C o m m o d ity Prices
Prices of important farm commodities rose substan
tially during July, owing chiefly to reports of serious
crop damage caused by insufficient rainfall and intense
heat. Sharp advances in cotton and in wheat, corn, and
other grains followed the release of the July 1 Govern
ment crop reports and were stimulated by indications
of further crop damage in July.
FED ER AL RESERVE AG EN T A T N E W Y O R K
61
The price of cotton rose 1 % cents to 13.35 cents a at 75.1 per cent of the 1926 average in the third week
pound for spot delivery, and despite the subsequent of July as compared with 74.8 per cent in the last week
loss of a small part of this advance, cotton prices in of June.
July were generally at the highest level in four years,
as the accompanying diagram indicates. The rise in E m p lo y m e n t and P ayrolls
cotton prices was due in part to an indicated decrease
Employment at factories in the United States declined
of over 30 per cent in cultivated acreage under the reduc somewhat more than seasonally from the middle of May
tion program of the Agricultural Adjustment Adminis to the middle of June, the Federal Reserve Board ad
tration, and in part to reports of subnormal rainfall in justed index showing a decrease of 1.3 per cent. Reduc
tions in employment appeared in manufacturing indus
the western part of the cotton belt.
Wheat advanced 16% cents to $1.12 a bushel for tries producing both durable and non-durable goods,
the cash price of Number 1 Northern grade. The level but were slightly more pronounced in the non-durable
group owing largely to a marked recession in the tex
of wheat quotations established in July was somewhat
tile industry. Systematic curtailment at cotton mills
below the temporary peak of the summer of 1933, but
as a measure to avoid overproduction was responsible in
with that exception was the highest since 1930. A total considerable part for the decreased employment in the
domestic wheat crop of 484,000,000 bushels was forecast textile group. Substantial declines were also reported
in the July 1 Government report, as compared with a in the number of factory workers in the shoe and lumber
short harvest of 528,000,000 bushels last year and average industries.
production of 886,000,000 bushels in 1927-31. A short
In spite of a decline in farm employment in drought
wheat crop for the world as a whole is also indicated by stricken areas there was a small seasonal increase during
available estimates, with a marked decline in the indi June in the number of farm workers employed for the
cated European harvest and some reduction in the country as a whole. Little change was shown in employ
Australian and Argentine production. The prices of corn ment in wholesale and retail trade, in private building
and other grains also rose considerably, accompanying operations, or on the railroads.
reports of serious crop damage. Following a sharp ad
According to Government reports, the number of
vance in the previous month hog quotations fluctuated workers directly employed on projects financed by the
irregularly but showed little net change during July, Public Works Administration was increased by about
while cattle and hide prices moved somewhat lower.
100.000 from May to June, and approximately 50,000
Price reductions were announced by the principal steel were added to other Federal emergency payrolls. About
manufacturers early in July. As the diagram shows, 1.800.000 workers in all had employment in June on
these reductions tended to offset in part the sharp ad the various projects financed by extraordinary Federal
vances made in April, but the present level of steel expenditures. The estimate of the American Federation
prices is considerably higher than in 1932 or in 1933. of Labor places the total number of persons without
Silk declined 9 cents further to the lowest price on employment of any sort in June at about 8,500,000.
record at $1.07% a pound. In general, however, the
As measured by the index of the Bureau of Labor
prices of basic commodities other than domestic farm Statistics, factory payrolls declined 3.1 per cent from
products showed comparatively little change during July, May to June which is estimated to represent a reduction
and despite the large advances in the prices of principal of $4,000,000 in the weekly wages of factory workers.
agricultural commodities the widely inclusive index of The income of factory workers as a group is much higher,
wholesale commodity prices computed by the Bureau however, than* in the early months of 1933 even when
of Labor Statistics advanced only 0.3 of a point, standing allowance is made for the increase in living costs during
CENTS
CENTS
DOLLARS
CENTS
PER POUND
PER CWT.
PERPOUND
PERBUSHEL
Movements of Prices of Important Commodities (Monthly averages)
MONTHLY REVIEW, AUGUST 1, 1934
62
the intervening period, and the real earnings of em
ployed factory workers have recovered virtually to pre
depression levels.
In d exes of B u siness^A ctivity
For the first half of July, there was some indication
that general business activity showed a slight recession.
Owing in part to a marked falling off in steel shipments,
a decline occurred in the volume of merchandise and
miscellaneous railroad freight, which had previously re
mained quite stable apart from seasonal fluctuations for
a number of months. As a result, this bank’s adjusted
index of these two classifications of freight traffic re
ceded to the lowest level since last December. The move
ment of bulk commodities by rail showed no advance
from the June level although the beginning of harvesting
operations is usually reflected in some increase in this
type of freight traffic in July. No definite reports on
the volume of retail trade for the country as a whole are
as yet available. In the New York Metropolitan area,
sales of department stores showed a smaller than seasonal
decline for the first half of the month, but labor dis
turbances on the Pacific coast and intense heat in much
of the farming region undoubtedly tended to restrict
business in these sections. Retail sales of automobiles,
however, were reported to have held up in comparatively
large volume for this time of year.
Divergent movements were shown during June by the
various business indexes computed by this bank, but the
level of business activity appears to have remained about
the same as; in the previous month. Among the principal
measures of activity, the largest increase occurred in
retail sales of passenger automobiles. Although automo
bile buying usually reaches a seasonal peak in May, and
falls off rather sharply thereafter, June sales this year
were fully maintained at the previous month’s level
owing chiefly to price reductions announced early in the
month by most of the principal manufacturers. As the
accompanying diagram shows, the volume of sales in
June, after seasonal adjustment, was the highest in three
years and was more than double the extremely low vol
ume of March 1933. Increases occurred also in the
Daily Average Retail Sales of New Passenger Automobiles (Adjusted
for seasonal variation)
volume of check payments and in sales of chain stores
other than grocery chains. Railroad freight traffic con
tinued at the level of the previous two months. Declines
were reported, however, in sales of department stores
and mail order houses., and business failures were more
numerous than in the previous month.
(Adjusted for seasonal -variations, for usual year to year growth,
and where necessary for price changes)
1934
1933
June
April
58
55
47
64
55
100
May
June
60
60
59
58
70
86
60
60
51p
62p
67
94
60
61
56p
63p
70
79
79r
75
71r
54r
81
45
72
73
66r
73r
71r
61r
68
51p
75
74
68r
75r
72r
63r
74
48p
72
69
68r
78r
67r
60r
62
58
66
56
62
47r
64
47
78
77
72
73
Shares sold on N. Y. Stock Exchange. . .
Life insurance paid for.............................
Employment in the United States r........
Business failures........................................
Building contracts....................................
New corporations formed in N. Y. State
Real estate transfers.................................
62
310
67
68r
77
19
85
47
63
64
74r
83r
46
22
60
47
51
54
72r
84r
42
23
57
53
41
69
82r
47
20
General price level*................. .................
Composite index of wages*......................
Cost of living*......................... .................
128
173
128
137
184
136r
136
183
136r
137p
183p
136
Primary Distribution
Car loadings, merchandise and misc.......
Car loadings, other...................................
Waterways traffic......................................
Wholesale trade.........................................
Distribution to Consumer
Department store sales,U. S.....................
Department store sales, 2nd Dist............
Chain grocery sales r ................................
Other chain store sales.............................
Mail order house sales r ...........................
Advertising r .............................................
Gasoline consumption...............................
Passenger automobile registrations.........
General Business Activity
Bank debits, outside New York City.. . .
Bank debits, New York City..................
Velocity of demand deposits, outside
New York City.....................................
Velocity of demand deposits, New York
p Preliminary
r Revised
88
56p
* 1913 average=100
P r o d u c tio n
Apart from a sharp decline in the output of steel, no
considerable change in the level of basic industrial
activity, other than seasonal, is indicated by the avail
able weekly data for July. Operations in the steel in
dustry, which usually reach a spring peak not later than
May, were maintained this year until the final week of
June but subsequently declined sharply. The average
rate of operations in July was less than 30 per cent of
capacity as compared with a June rate of 53 per cent.
The exceptional magnitude of the decline was due in
part to the drawing down of inventories accumulated
by industrial consumers during the second quarter. In
addition there was some evidence of a recession in the
demand for steel in connection with publicly financed
construction and railroad equipment projects. AutomoT
bile production, however, was reported to have shown
a smaller than seasonal recession, and although enforced
curtailment of cotton mill operations was continued the
seasonal low point in this industry is usually reached
in July. The production of electric power showed little
change either before or after seasonal adjustment.
During June the average level of basic industrial out
put showed some recession, and the Federal Reserve
Board seasonally adjusted index of production of min-
FEDERAL RESERVE AGENT AT NEW YORK
erals and manufactures declined 2 points to 84 per
cent of the 1923-25 average. The principal decline
occurred in the textile industry, owing largely to en
forced curtailment of operations at cotton mills to permit
a reduction of accumulated inventories. Declines were
reported also in the output of shoes, coal, lumber, and
non-ferrous metals. These losses were not fully offset
by recessions of considerably less than seasonal propor
tions in the steel and automobile industries.
63
M IL L IO N S
OF D O L L A R S
7.5
p u b l ic
/"
5.0
(Adjusted for seasonal variations and usual year to year growth)
June
April
May
June
49
61r
47
56
53
55
64
38
46
85
59
73
50
48
44
67
53
93
47
79
56p
69
71
52
81
71
69
76
85
63
71
75
85
69
71
72p
68
67
67p
66p
82
85
62
76p
112p
64
76p
56
103p
104
87
72
81
110
107
81
87
83
45
48
70
37
46
77
39
75
30
Metals
Pig iron............
Steel ingots
Lead.................
Zinc..................
Tin deliveries. .
Automobiles
Passenger cars.
Motor trucks. .
Fuels
Bituminous coal. . . .
Anthracite coal.......
Coke........................
Petroleum, crude. . .
Petroleum products.
Electric power........
Textiles and Leather Products
Cotton consumption..........
Wool mill activity..............
Silk consumption...............
Rayon deliveries................
Shoes...................................
Foods and Tobacco Products
Livestock slaughtered. . . .
Wheat flour.......................
Sugar deliveries................
Tobacco products............
66
120
133
150
123
110
98
77
65
76
113
68
56
56
66
\
.........-
1
1
1932
1
-
PRVVATE
W
i
I
1 933
I
]
I
1934
I
A v e ra g e D aily V a lu e o f B uildin g and E n gineerin g C ontracts Pu blicly
and P riva tely Financed ( F . W . D odge Corporation data for 3 7
S ta te s ; J u ly data are for first ha lf o f th e m on th )
72p
78p
73p
thirds of all contracts, as compared with 37 per cent
in 1933 and 50 per cent in 1932. Privately financed con
tracts this year were slightly larger than in 1933 but
remained smaller than in 1932.
During the first half of July, awards of construction
contracts increased considerably, whereas a seasonal de
cline usually occurs at this time. The rise reflected an
increase in privately financed non-residential construc
tion, while publicly financed construction declined to the
lowest level since last August. The average daily amounts
of contracts awarded in the first half of July are also
shown in the diagram.
D e p a rtm e n t Store T ra d e
Miscellaneous
43
79
42
59
72
19
Cement................
Tires....................
Lumber........
Printing activity.
Newsprint paper.
Machine tools . . .
p Preliminary
2.5
1934
1933
86
37
64
74
40
66
34
r Revised
B u ilding
The total of building and engineering contracts
awarded declined about 5 per cent from May to June,
despite an unseasonal rise in residential contracts, and
this bank’s index which is adjusted for seasonal varia
tion, long time growth, and estimated price changes
receded from 23 to 20 per cent of the trend of past
years as compared with a recent high of 54 per cent
reached last December. The principal element in the
June decline was a recession in privately financed com
mercial building, following the temporary advance in
May. Contracts for publicly financed construction which
include chiefly Public Works Administration projects
increased slightly, as the accompanying diagram indi
cates, while privately financed construction in the aggre
gate declined.
For the first half of 1934, the total of building and
engineering contracts awarded in 37 States, as reported
by the F. W . Dodge Corporation, was nearly twice as
large as the total for the corresponding period of 1933
and 28 per cent larger than for the first half of 1932.
Publicly financed construction was between three and
four times as large as a year ago, and constituted two-
During the first half of July, total sales of the report
ing department stores in the Metropolitan area of New
York were 4 per cent higher than in the corresponding
period a year ago, and excluding sales of liquor from
this year’s figures, the increase amounted to 2 per cent.
Somewhat less than the usual seasonal recession appears
to have occurred between June and the first half of
July, following a counter-seasonal decline between May
and June.
For the month of June, total sales of the reporting
department stores in this district were approximately
3 y 2 per cent higher than last year, a smaller percentage
increase than in the previous month. A rise of 2 per
cent was indicated after exclusion of sales of liquor
from this year ’s figures. The largest percentage increases
in sales were shown by the Bridgeport, Southern New
York State, and Hudson River Valley District stores.
The other districts also showed increases which were
larger than that indicated for the Metropolitan area of
New York, with the exception of the Capital district
wThere sales were smaller than a year ago. For the first
half of 1933, total department store sales in this district
were 9y 2 per cent ahead of the corresponding period
last year. Apparel store sales in June were 7 per cent
larger than a year ago and the total for the first six
months of this year was 15 per cent larger.
Stocks of merchandise on hand at the end of June,
while remaining 11 per cent higher than the year pre
vious, showed a smaller year to year increase than in
64
M O N T H L Y R E V I E W , A U G U S T 1, 1934
the preceding10 months. Bothdepartment stores and diamondandjewelryfirmscontinuedlowerthanayear
apparel stores continuedtoreport ahigherrateof col ago. Collectionscontinuedtoaveragehigherthanlastyear.
lectionsthanayear ago.
Percentage change from
a year ago
Locality
Net sales
Jan.
to June
June
New Y o r k ..........................................
Buffalo.................................................
Rochester............................................
Syracuse..............................................
Northern New Jersey...................
Bridgeport..........................................
Elsewhere............................................
Northern New York State. . .
Southern New York State. . .
Hudson River Valiev District
Capital D istrict..........................
Westchester D istrict.................
+ 2 .9
+ 7 .6
+ 5 .2
+ 4 .7
+ 3 .0
+ 1 6 .4
+ 5 .8
+ 5 .0
+ 9 .6
+ 1 2 .9
+ 1 2 .7
+ 9 .3
+ 6.1
+ 1 8 .8
+11.2
+ 10.8
+11.1
— 6 .4
+ 7 .0
Stock
on hand
end of
month
+ 1 1 .7
+ 5 .7
+ 6.8
— 0.2
+ 1 6 .9
+ 3 .5
+ 2.8
Per cent of
accounts
outstanding
M ay 31
collected in
June
1933
1934
4 5 .7
4 1 .0
4 2 .7
2 5 .6
3 8 .6
3 5 .3
3 0 .0
5 0 .3
4 5 .6
4 6 .7
3 6 .4
4 3 .1
3 9 .6
3 1 .5
+ 2 .7
+ 1 4 .2
+ 9 .4
+ 1 1 .5
All department stores..........
+
3 .6
+
9 .5
+ 1 0 .9
Apparel stores.........................
+
7 .2
+ 1 5 .2
+ 3 2 .2
Commodity
N et
sales
Groceries......................................
M en’s clothing..........................
Cotton goods..............................
Silk goods....................................
Shoes.............................................
D rugs............................................
Hardware.....................................
Stationery...................................
Paper............................................
D iam onds....................................
Jewelry.........................................
Weighted average...........
4 3 .1
Percentage
change
June 1934
compared with
June 1933
+ 1 2 .1
— 1 7 .0
Per cent of
charge accounts
outstanding
M ay 31
collected in
June
Stock
end of
month
1933
1934
8 3 .6
4 0 .7
3 6 .0
7 3 .9
4 4 .8
2 3 .4
4 4 .3
5 2 .7
4 0 .2
9 5 .1
3 9 .9
3 9 .7
6 1 .0
4 2 .7
2 2 .2
4 8 .0
5 5 .4
4 8 .1
{ 2 4 .6
{ 2 8 .8
5 4 .5
5 7 .0
+ 2 2 .1
— 12.7
— 5 0 .6 *
— 3 0 .0
— 4 .7
+ 2 .4
+ 11 .6
+ 0 .4
— 1 7.1
+ 3 .5
+
9 .7 *
+ 2 5 .0
+ 2 2 .9
— 1 4 .9
— 1 0.1
— 4 .4
Percentage
change
in
net sales
First six
mos. 1934
from 1933
+ 2 7 .9
+ 3 3 .9
+ 2 0 .9
— 2 3 .4 *
+ 5 .8
+ 1 2 .2
+ 1 4 .2
+ 2 4 .8
+ 2 6 .3
+ 2 0 .1
+ 8 5 .4
+ 2 5 .4
4 3 .7
* Quantity figures reported by the National Federation of Textiles, Incorpo
rated, successor to the Silk Association of America, Incorporated; not
included in weighted average for total wholesale trade.
Men’s furnishings................................
Hosiery.................................................
Men’s and Boys’ wear........................
Shoes.....................................................
Woolen goods.......................................
Women’s r^ndy-t.-i-w^ar accessories.. .
Silks and vrlve1s ........................................
Tov*. ,m'! sooiiine; go'»ds....................
Pr.oka ?'<’ siaii 'neiy..........................
Cotton
v i s .....................................................
Li'ivrrv*' and oilier leather goods. . . .
T'ul't at tides and drugs....................
Wo»non^ and Misses’ ready-to-wear..
lion.c fin ni.-l'iti^s................................
Silvers an' and jewelry.......................
Linens ••.)(! handkerchiefs...................
Music0! in>iru!"enfs and radio..........
J'\itni(\-T° ...........................................
Miscellaneous. .............................
Net sales
percentage change
June 1934
compared with
June 1933
Stock on hand
percentage change
June 30, 1934
compared with
June 30, 1933
+ 1 0 .9
+ 8 .9
+ 8 .7
+ 1 5 .0
+ 8.1
+ 6.6
+ 5 .6
+ 3 .2
+ 3 .1
+ 3 .0
2.1
—
—
—
—
—
—
2 .9
3 .7
3 .9
5 .3
6 .3
7 .5
—12.0
— 1 4.3
+ 5 .3
+10.6
+ 1 7 .5
+ 1 7.6
— 7 .2
+ 6 .7
— 0 .5
+ 1 1 .9
+ 3 .7
+ 4 .6
+ 1 .9
+ 1 4 .0
+ 1 3 .1
+ 7 .3
+ 8 .7
+ 12.6
+ 5 .1
+ 3 2 .7
+ 1 .9
W h olesale T ra d e
During June total sales of the reporting wholesale
firms inthis district averaged4per cent belowayear
ago, thefirst decrease since April 1933, owing largely
tothefact thatyeartoyearcomparisonsarenowbeing
made withaperiod inwhichwholesale trade showed
substantialrecovery. Theshoe, cottongoods, men’scloth
ing, and diamond firms reported sizable decreases in
salesfromayearago, andsalesof silkgoods, reported
onayardagebasis bytheNational Federationof Tex
tiles, wereonlyhalfof the1933volume. Thehardware,
paper, drug, and jewelry concerns showed moderate
changesinsalesfromayearago, andinnocasewasthe
comparisonas favorable as inpreceding months. The
stationery andgroceryfirms, however, reportedrather
substantial gainsinsalesoverlastyear, althoughinthe
case of grocery concerns, the exclusionof liquor sales
fromthe 1934 figure reduces theincrease to about %
per cent. For thefirst 6months of 1934, sales of the
reportingwholesale firms averaged25 per cent higher
thaninthecorrespondingperiodof 1933.
Substantial gains over ayear agoinstocks of mer
chandise onhandwereagainreportedbythe grocery,
drug, andhardwareconcerns, whilestocks heldbythe
C hain Store T ra d e
Total Junesalesof thereportingchainstoresystems
were approximately 9V2per cent higher than ayear
ago, asomewhat smaller increase thanoccurredinthe
previousmonth. Salesof thecandychainsagainshowed
asubstantial gainoverayearago, whichaftermaking
allowance for one more Saturday this year than last
was about thesameaslast month’sincrease. Tencent
andvarietychainstoresales alsocontinuedwell above
ayearago, butineachcasethepercentageincreasew
T
as
not quiteaslargeasinMay. Salesof chaindrugstores
were only1per cent higherthanayear ago, theleast
favorablecomparisoninfourmonths, andsalesofgrocery
andshoechainsweresmallerthanayearagofollowing
increasesinMay. Forthefirsthalf of 1934, total chain
store sales were 13 per cent higher thaninthe corre
spondingperiodof 1933.
BetweenJuneayearagoandthisyearthedrugand
shoechains reducedconsiderablythe number of stores
operated; salesperstoreof thesetypesof chainsshowed
averyfavorablecomparisonwithsales inJune of last
year, whichwas not indicatedby thefigures for total
sales. Candy chains reported amoderate gain inthe
number of units operatedinJune1934 comparedwith
ayearago, andsalesperstoreincreasedlessthantotal
sales. For all reportinglines, theincreaseover ayear
ago in sales per store was slightly larger than the
increaseintotal sales.
Percentage change June 1934
compared with June 1933
Type of store
Percentage
Jan.-June
compared
Jan.-June
change
1934
with
1933
Number
of
stores
Total
sales
Sales
per
store
Total
sales
Sales
per
store
D rug........................................................
Shoe........................................................
Variety...................................................
C andy.....................................................
— 1 0 .8
— 2 2 .3
— 0 .4
+ 6 .0
— 2 .7
+ 1 4 .4
+ 1 .1
— 2 .5
+ 1 4 .4
+ 2 5 .4
— 1 .3
+ 1 4 .6
+ 1 3 .3
+ 2 5 .5
+ 1 4 .9
+ 1 8 .3
+ 3 .1
+ 1 6 .3
— 0 .4
+ 8 .5
+ 2 1 .6
+ 1 5 .0
+ 4 .6
+ 1 6 .7
+ 2 2 .6
+ 3 7 .3
+ 2 1 .9
+ 4 .8
T o ta l..............................................
— 2 .2
+
+ 1 1 .9
+ 1 3 .2
+ 1 6 .1
!
9 .4
FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, AUGUST 1, 1934
Business Conditions in the United States
(Summarized by the Federal Reserve Board)
I N DUSTRIAL
production, which had increased during each o f the six months
from December to May, declined in June by somewhat more than the usual
seasonal amount. Factory employment and payrolls also showed decreases
which were partly o f a seasonal nature. The general level o f wholesale com
modity prices advanced during June and showed little change during the first
three weeks o f July.
P r o d u c t io n
and M inerals Com bined, A d ju s te d for Sea
sonal Variation ( 1 9 2 3 - 2 5 a v e r a g e s
1 0 0 per cen t)
and
E m ployment
Volume o f industrial output, as measured by the B oard’s seasonally ad
justed index, decreased from 86 per cent o f the 1923-25 average in May to
84 per cent in June, reflecting chiefly a sharp reduction in activity at cotton
textile mills. Production at lumber mills and at coal mines also showed a
decline. In the steel and automobile industries activity decreased in June by
an amount somewhat smaller than is usual at this season. Maintenance of
activity at steel mills in June reflected in part the accumulation o f stocks by
consumers, according to trade reports, and at the beginning of July output
of steel showed a sharp decline.
Employment at factories decreased somewhat between the middle o f May
and the middle o f June, reflecting reductions in working forces in industries
producing textile fabrics, wearing apparel, leather products, automobiles, and
lumber, offset in part by increases in employment at steel mills and at meat
packing establishments.
Value o f construction contracts awarded, which had shown little change
during May and June, showed an increase in the first half o f July, according
to the F. W. Dodge Corporation.
for Seasonal V ariation ( 1 9 2 3 - 2 5 a v e r a g e s
1 0 0 per cen t)
PER CENT
>
Department o f Agriculture estimates, based on July 1 conditions, indi
cated a wheat crop o f 484,000,000 bushels, compared with an average of
886,000,000 bushels for the five years 1927-1931, and a corn crop o f 2,113,000,000 bushels, compared with the five year average o f 2,516,000,000 bushels.
Crops o f other grains, hay, and tobacco were also estimated to be considerably
smaller than usual. The acreage o f cotton under cultivation was estimated
at 28,000,000 acres, about 2,000,000 less than the acreage harvested last season.
In the first three weeks of July drought conditions prevailed over wide areas,
particularly in the southwest.
D is t r ib u t io n
rv ^ t
The number of freight cars loaded per working day showed a further
slight increase in June followed by a decline in the first half o f July. Sales by
department stores decreased in June by more than the estimated seasonal
amount.
30D5
on
ioH£ W
V
r& *
>
FARM PIRODUCTS1 v
'
1929
t930
1931
1932
1933
1934
Group Price Indexes o f the B ureau o f Labor
S tatistics ( 1 9 2 6 ave ra g e= 1 0 0 per cen t)
W h o l e s a l e C o m m o d it y P r ic e s
Wholesale prices o f farm products and foods generally advanced during
June while other commodities as a group showed a slight decline. H og prices
increased considerably in the middle o f the month while wheat declined
throughout the month. In the middle o f July wheat prices advanced rapidly
to levels above those reached at the end o f May, and there was a considerable
advance in cotton, while lumber prices declined and finished steel prices were
reduced somewhat from the advanced quotations previously announced.
Bank
Cr e d it
Between June 13 and July 18 member bank reserves increased to a new
high level o f nearly $4,000,000,000, about $1,850,000,000 in excess o f legal
requirements. The growth reflected chiefly a further increase in the monetary
gold stock. A seasonal increase in demand for currency over the July 4th
holiday period was followed by an approximately equal seasonal return flow
during the succeeding two weeks. The volume o f Reserve Bank credit out
standing showed little change.
At reporting member banks there was a growth o f U. S. Government
deposits during the five week period, reflecting chiefly the purchase in June
of new issues o f Government securities by the banks. Bankers7 balances also
increased but deposits o f individuals, firms, and corporations have shown little
change. Loans declined somewhat, reflecting a decrease in loans to customers,
while loans to brokers showed an increase.
Wednesday Figures for Reporting Member
Banks (Latest figures are for July 18)
Money rates remained practically unchanged at the low levels prevailing
in June.
@FedFRASER