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MONTHLY REVIEW o f C r e d it a n d B u s in e s s C o n d it io n s Second Federal Reserve District Federal Reserve A gen t Federal R eserve Bank, New York M o n e y M a r k e t in N o v e m b e r The principal development in the money market dur ing the past month has been a substantial loss of gold, following smaller losses in September and October. Ship ments of $33,000,000 of gold to Brazil were made during the month; a seasonal rise in Canadian exchange was followed by shipments of $20,000,000 to Canada; and the amount of gold earmarked at the Federal Reserve Bank of New York for foreign account was increased by $40,000,000. Including these movements the net with drawals from the monetary gold stock of this country during the past three months have been the heaviest since the early part of 1925. Consequently, the large im port movement which occurred in the first four months of 1927 has been more than offset, and, as is shown in the diagram below, the gold stock of the United States at the end of November is smaller than at the beginning of the year, and it is also smaller than at the end of 1924 when the flood of gold to this country was first checked. Changes in these gold holdings reflect chiefly gold im ports, exports, and earmarking transactions, as domestic production is largely consumed in the arts and industry. The detail of principal changes since 1924 is given later in this Review. Mainly as a result of this loss of gold, additional Re serve Bank credit has been needed by member banks to maintain their reserves at the required level, and the total amount of Federal Reserve credit in use, that is total bills and securities, has been larger than in the corresponding month of 1926 for the first time this year. B I L L I O N S of D O L L A R S Changes in the Monetary Gold Stock o f the United States in 1927, Compared with 1926. Decem ber 1, 1927 Each autumn an additional amount of Reserve Bank credit is called into use in response to seasonal demands, but the increase this year has been accelerated by the outflow of gold, as the second diagram shows. The normal effect of a considerable loss of gold, and consequent recourse to the Reserve Banks for credit to replace the loss, is a tightening of the money market and an advance in money rates. Such a tightening has not occurred in recent months largely because of the manner in which the additional Reserve Bank credit has been supplied. It has been supplied mainly by in creases in holdings of bankers acceptances and Govern ment securities rather than increases in member bank borrowing. Consequently, the money market has re mained moderately easy notwithstanding the outflow of gold; money rates at the end of November were about the same as at the end of October, and continued to be well below those of a year ago. M oney Rates at New York Nov. 29, 1926 Oct. 31, 1927 Nov. 29, 1927 Call m on ey................................................. Time m oney— 90 d a y ............................... Prime commercial paper......................... Bills— 90 day unendorsed....................... Treasury certificates and notes Maturing December 15....................... Maturing March 15.............................. Federal Reserve Bank of New York rediscount ra te ....................................... Federal Reserve Bank of New York buying rate for 90 day b ills............... *4 K - o M 4 ^8-4 % 4M 3M *3 4M 4 334 *3K> 4 4 3 lA 3 .15 3 .10 2.52 3.01 2.20 3.1 0 4 3H 3 Jo 3% 3H 3H * = Prevailing rate for preceding week B I L L I O N S of D O L L A R S T otal Bi33s and S ecu rities o f A ll F ederal R ese rv e B anks in 1927, C om pared w ith 1926. M O N T H L Y R E V I E W , D E C E M B E R 1, 1927 90 R e d e m p tio n o f S econ d L ib e r ty L oan B onds One of the influences toward easy money in the sec ond half of November was Treasury operations in con nection with the redemption of Second Liberty Loan bonds. As these bonds were presented for redemption on and following November 15 the Treasury secured a part of the funds required by selling to the Reserve Banks one day special certificates of indebtedness, pend ing the call of funds from depositary banks. This opera tion brought about a temporary increase in Reserve Bank holdings of Government securities and put funds into the market which more than offset losses to the market from gold exports. Advances to the Treasury in this form amounted to $164,500,000 on November 16 and $80,500,000 on November 23. The redemption of bonds was carried forward at a rapid rate. Notwithstanding the fact that most of the bonds of larger denominations had been previously ex changed for other Government securities or sold to the Treasury, more than two-thirds of the $730,000,000 of these bonds outstanding on November 14 were presented for redemption during the following week. On November 28 about $160,000,000 of the bonds still remained out standing. M em ber. B a n k C r e d it Aside from the call of amounts remaining with deposi tary banks on November 14 and temporary advances from the Reserve Banks, the funds needed for the re demption of Liberty bonds were provided by the Treas ury sale on November 15 of about $400,000,000 of 3% per cent Treasury certificates. A considerable part of this issue was purchased by member banks and conse quently investments of reporting banks in the larger cities increased 250 million dollars to a new high level. At the same time, the reinvestment of funds received by former holders of Second Liberty Loan bonds was re flected in a strong market for corporation securities, and loans to security brokers by reporting banks advanced nearly 140 million dollars and were at a new high level on November 23. Commercial loans have shown little net change during the past month, but, as the result of the large increases in investments and security loans, the total loans and investments of all reporting banks throughout the country exceeded any previous figures. Most of the increase in the amount of loans to brokers was provided by New York City banks for their own account. Their investments showed an increase of nearly 100 million dollars, largely as the result of purchases of the new Treasury issue, and consequently the total loans and investments of banks in this district also ad vanced to a new high level. B il l M arket There was a substantial increase in the amount of bills offered to the market in November, reflecting several large syndicate drawings to cover the financing of to bacco and cotton. Due to local bank buying as well as heavy foreign buying, however, the investment demand for bills was very active and considerably exceeded new drawings coming into the market, and consequently dealers7portfolios were reduced by more than 25 per cent from the large amounts reported at the beginning of the 90 day maturity was offered throughout the month at 314 per cent. C o m m e r c ia l P aper M arket For the third consecutive month, the amount of com mercial paper outstanding through the open market, as reported by 26 dealers, has shown an increase. At $611,000,000, outstandings at the end of October were 3 per cent larger than a year ago, the first increase over the corresponding month of the previous year since January 1925. The increase recently reflects chiefly bor rowings by a limited number of large concerns rather than a general increase in the use of the open market by companies in a position to finance their short term credit requirements in this manner. The bank investment de mand for paper continued to absorb readily the amounts of new paper offered by dealers during November. While some sales were reported at 3 % per cent, the prevailing level for the usual grade of prime names remained 4 per cent. Share of the U n ite d S tates in G o ld , B a n k D e p o sits, and Currency In view of the frequent discussions of the large ac cumulation of gold in this country, figures recently pub lished by the Economic and Financial Section of the League of Nations are of interest, showing the amount of bank deposits and paper currency circulation— the principal liabilities against which gold reserves are required. It appears that out of a total of about $8,800,000,000 of gold in the treasuries and central banks of 35 coun tries at the end of 1925, nearly $4,000,000,000 or 45 per cent was held in this country, as shown in the accom panying diagram. These figures include data for all of the principal countries of the world except China and Russia. Figures for bank deposits in these same coun tries, when converted to dollars at the exchange rates then current, indicate that this proportion of gold is smaller than this country’s proportion of the bank de posits of the world. The total amount of bank deposits in the 35 countries was nearly 84 billion dollars, of which 52 biilions, or 62 per cent, was in the banks of the United States. The great inflow of gold to the United States between 1915 and 1924 more than doubled the gold holdings of this country, but at the end of 1925 the proportion of gold holdings to total bank deposits was less than 8 per cent, as compared with an average of 15 per cent in the rest of the world. Great Britain and Switzerland had somewhat lower ratios of central gold holdings to deposits than the United States, but most other countries had considerably higher ratios. GOLD HOLDINGS BANK DEPOSITS NOTE CIRCULATION 91 FEDERAL RESERVE AGENT AT NEW YORK Approaching the problem from another point of view, the ratio of gold holdings to paper money in circulation is considerably higher for the United States than the average for other countries, since the currency circula tion of the United States is small relative to the amount of bank deposits, due to the much more common use of checks in this country than in most others. As the dia gram shows, the United States has about 28 per cent of the total currency circulation of the 35 countries, as compared with 45 per cent of the total gold holdings. The ratio of gold reserves to combined bank deposits and note circulation is below the average for other countries, however. BILLIONS 6fDOLLARS G old M o v e m e n t During the first 28 days of November gold exports at New York amounted to $54,400,000, while imports totaled less than $500,000. The exports included shipments of $33,000,000 to Brazil and $20,000,000 to Canada. In addition to exports of gold, there was an increase of $40,000,000 in gold held under earmark by the Federal Reserve Bank of New York for foreign account. There was thus a total loss to the country’s gold stock from November 1 to 28 of nearly $94,000,000. Exports and earmarking of gold in the past three months have more than offset gold imports and releases from earmarking in the early months of this year, and the country’s stock of monetary gold shows a net loss for the year to date. It may also be noted that since the end of 1924 gains and losses of gold have been almost equal, and with the inclusion of the most recent movements the country’s total gold stock is now somewhat smaller than in late 1924. The gold stock is shown for the end of each month since 1914 in the accompanying diagram. The plateau of the past three years when wTe have been making large private loans abroad bears some resem blance to the plateau in 1917, 1918, and 1919 when the United States Government was lending to the countries associated with us in the war. Gains and losses of gold through exports and imports and through earmarking are given for the past four years in the following table. Heretofore changes in ear markings have not been reported separately, but have G a in or L o ss to S tock o f G old in th e U nited S tates, R ep orted b y the T re a su ry D epartm ent. been included for the most part in Treasury computa tions of the gold stock published each month. They are given here in detail in view of the size of such transac tions in recent months. There were practically no ear marking operations between the conclusion of the war and 1924. Changes in gold stock are not completely accounted for by exports, imports, and changes in ear markings, since some small amount of domestic gold production goes into monetary use. This past year there was also an unusual transaction in the purchase and later sale of 62 million dollars of gold abroad. C h anges in C en tra l B a n k R a te s On November 16 the National Bank of Belgium re duced its discount rate from 5 per cent to 4y 2 per cent, the lowest Belgian rate since January 1923. This places the discount rate of the Belgian bank on the same level as that of the Bank of England and de Nederlandsche Bank. The Bank of Finland on November 26 reduced its discount rate from 6 % per cent to 6 per cent, the third reduction this year. G old S tock (In millions of dollars) 1925 1924 Through Imports or Exports January........................ Februarj'...................... March........................... April............................. M av............................. June.............................. July.............................. August......................... September................... October........................ November.................... December.................... Total......................... Through Earmark ing Total 45 35 33 44 40 25 18 16 2 16 13 29 — ' '2 + + + + + + + + — __ + — +258 — 42 +216 + + + + + + + + + + + — — ’ *2 — 1 + 1 + 2 — 2 — 8 — 13 — 17 45 35 31 43 41 27 16 s 11 1 13 31 Through Imports or Exports Total 68 47 18 13 2 2 6 3 3 23 14 1 — 1 — 1 — 7 + 15 + 13 + 5 — 4 + 8 + 1 + 3 + 2 — 4 — — — + + + + + — + — — — 134 + 30 — 104 — — — — — — + + — + — + *November figures preliminary; 1927 totals are for first eleven months. Through Earmark ing 1926 69 48 25 2 11 3 2 11 2 26 12 3 Through Imports or Exports + + + — — + + — — + + + 16 21 39 5 6 16 15 18 7 8 9 10 + 98 Through Earmark ing 1927 Total Through Imports or Exports Through Earmark ing Total 12 10 16 5 6 15 19 1 9 8 1 u + 44 + 20 + 11 + 12 + 32 + 13 + 9 + 6 — 11 — 9 — 154* + 20 + 3 — 2 — 1 — 95 — 1 — ’ *8 + 1 + + + — — + + + — + + + — * *2 — 9 — 25 — 40* + + + + — + + + — — — — 25 + 73 + 73* — 152* — 79* — 4 — 11 — 23 —' 1 + 4 + 19 — 2 64 23 9 11 63 12 9 4 20 34 94* MONTHLY REVIEW, DECEMBER 1, 1927 92 1927i ^020 .^00Q 19Z6 .3980' 3VL- AUe. 5EP. OCT NOV. DEC. B ritish , Germ an, and D u tch JUL AUG. 5EP- E xch an ge R ates T h e F oreign E xch anges The European exchanges generally continued strong during November. Sterling at $4.8759 reached another post-war high figure, while the belga at 13.96 cents reached the highest quotation since it was established as the Belgian foreign exchange unit last year. Dutch guilders and Norwegian kroner also moved into higher ground. Eeichsmarks were easier during the first half of November but showed renewed strength in the latter part of the month, and Swedish rates strengthened slightly toward the close of November. French, Italian, Swiss, and Danish exchanges showed little change, but pesetas at 16.60 cents were weaker than at any time since last February. A seasonal advance in Canadian exchange carried the rate to the export point at $1.0016 on November 7, and gold shipments totaling $20,000,000 were made to Can ada during the month. The yen after declining gradually to 45.50 cents at the middle of the month, the lowest point since March 1926, later was somewhat firmer. The Chinese exchanges advanced accompanying a rise in silver prices, and the rupee rose slightly to 36.44. F oreign T rad e Merchandise exports in October showed a large in crease over September, due chiefly to seasonal shipments of cotton, and the total value, $490,000,000, was $35,000,000 larger than a year ago. October imports were valued at $356,000,000, an amount slightly larger than in September, but $21,000,000 smaller than in October 1926. A seasonal increase of $56,000,000 in the value of raw cotton exports accounted for most of the October increase in export trade. The quantity of cotton shipped abroad in October continued to be nearly 20 per cent smaller than last year, but due to the higher prices this year the value was $10,000,000 larger than in October 1926. Grain exports were somewhat smaller than in September, but were about 75 per cent larger in value than in October of last year. Our export trade in meat and meat prod ucts continued to decline. Imports of silk and rubber were slightly smaller than OCT NOV PEC. at N ew Y o r k in H O L IL A N D 1 JU L AUG-- SEP. NOV. OCT. DEC. 1927, C om pared w ith 1926. in September, but coffee imports showed a large increase. The quantity of these commodities imported in October was larger in each case than in October 1926. Business Profits Net earnings of 17.1 industrial and mercantile com panies for which reports are now available averaged nearly 10 per cent smaller in the third quarter of 1927 than in the corresponding period of 1926. As in the second quarter, the principal decline was in the profits of oil companies, reflecting the continued large produc tion and low prices of petroleum products. Steel com panies also had considerably smaller net earnings than in the third quarter of last year, but as the following table shows, their profits for the first nine months of the year, though smaller than in 1926, were larger than in 1925. In the motor industry, General Motors again reported larger profits than a year ago, while 13 other motor companies as a group, not including Ford, showed profits about the same as last year. Declines in third quarter profits were reported by motor accessory, machinery, mining and smelting, and building supply companies. The principal increases, both for the third quarter and (Net Profits in millions of dollars) Group No. of Corpora tions Third Quarter Nine Months 1926 1927 1925 1926 1927 M o to rs................................ General Motors....................... Other Motors................... M otor Accessories............ O il......................................... S teel....................................... F ood & F ood Products.............. Machine & Machine M fg ............ M ining and S m eltin g.. ............... Chem ical................................. Building Supplies.......................... Miscellaneous............................... 14 1 13 12 21 13 20 13 23 7 9 39 83 56 27 6 37 47 28 6 15 12 6 33 92 65 27 4 14 30 31 5 13 14 5 38 202 88 20 77 103 71 19 35 23 17 66 255 158 97 20 91 133 85 18 43 31 18 90 277 194 83 15 45 110 90 17 42 37 17 94 T otal 10 groups......................... 171 273 246 633 784 744 Other Public U tilities................... 80 10 52 10 55 11 136 34 155 36 173 36 114 Total Public Utilities............... 90 62 66 170 191 209 Class I R ailroads........................... 183 393 336 799 891 808 FEDERAL RESERVE AGENT AT NEW YORK for the first nine months of the year, were reported by food products and chemical companies. Net earnings of telephone and other public utility companies continued to expand, but the net operating income of Class I railroads failed to show the usual seasonal rise in the third quarter, and remained smaller than in 1926. Security M a rk e ts A strong market for securities accompanied the retire ment of Second Liberty Loan bonds in November. The short-term Government securities sold by the Treasury to provide part of the funds needed for redemptions were purchased largely by banks, and there was evidence that many of the holders of the Liberty bonds sought other types of securities for the reinvestment of their funds. The volume of trading in stocks increased considerably around the middle of the month, and prices more than regained the October losses, so that the Standard Sta tistics Company index of 228 stocks reached a new high level on November 19. Industrial price averages rose about 10’ points from the low points early in the month and were higher than ever before, and railroad shares recovered more than half of the October decline. The bond market also showed increased activity and strength around November 15. Apparently reflecting a strong investment demand, not fully satisfied by offer ings of new bond issues, price averages of corporation bonds advanced over % point further to the highest levels in at least fifteen years. United States Treasury post-war bond issues also advanced more than % point to the highest prices since issuance. Foreign bonds showed no consistent change with the exception of Ger man issues, which declined about 3 points on the average and sold towards the end of November at the lowest prices of the year. The accompanying diagram shows the present yields on high grade corporation bonds and common stocks, and indicates that notwithstanding increased dividend disbursements in recent years, the average yield on com mon stocks is now close to the lowest level in many years. 93 P roduction A majority of this bank’s indexes of production de clined from September to October, after allowance is made for the usual seasonal changes, and were lower also than in October 1926. Production of iron and steel was the smallest for the month of October since 1924, and the total automobile output was the smallest in any month this year. The number of passenger vehicles pro duced was about half the output of October 1925, and motor truck production, though somewhat larger than in September was smaller than in October of either 1925 or 1926. Reduced activity was indicated also by the indexes of mill consumption of cotton and silk, and of the produc tion of cement, lumber, leather, shoes, tires, and tobacco products. Woolen mill activity showed a further slight increase, and anthracite coal mining showed somewhat more than the usual increase over September, although the October output remained considerably smaller than a year previous. (Com puted trend of past years = 100 per cent) 1927 1926 Oct. Aug. Sept. Oct. Ill 107 104 109 98 118 114 101 98 103 126 104 93 118 99 96 82 96 112 101 119 97 115 89 136 94 111 105 96 94 83 98 96 102 117 97 116 95 134 93 109 128 92 84 82 98 96 104 102 101 100 87 144 95 100 105 95 105 110 110 106 100 118 112 112 110 108 90 106 111 96 87 103 118 98 98 102 98 104r 121r 100 102 109 74 97 81 99 94 110 91 107 117 98 100 100 94 103 113 94 91 93r 82 91 88 102 85 111 91 104 108 94 Producers' Goods Steel ingots................................................ Bituminous co a l............................................ Copper, U .S . m ines.................................... Tin deliveries............................................. Z in c.................................................................. Gas and fuel o il............................................ Cotton consum ption.................................... W oolen mill a ctiv ity *............................. Leather, sole.................................................. Silk consum ption................................. Consumers' Goods Cattle slaughtered........................................ Calves slaughtered................................... Sheep slaughtered......................................... Hogs slaughtered.......................................... Sugar meltings, U. S. p orts....................... Wheat flour.................................................... C igars............................................................. Cigarettes....................................................... Tobacco and snuff....................................... Paper, t o ta l.................................................... Boots and shoes............................................ Anthracite co a l............................................. Automobile, a ll............................................. Automobile, passenger................................ Automobile, tru ck........................................ *=Seasonal variation not allowed for p = Preliminary io 5 97 p 125 86p 103 112 97p 87 io o p 101 74 70 92 r= R evised E m p lo y m e n t and W a g e s 1916 1917 1918 1919 1920 1911 19Z2 19Z3 19Z4 1925 192G 19Z7 Average Yield on 33 Dividend Paying Common Stocks and on 60 High Grade Corporation Bonds. (Standard Statistics Company figures; November 1927 estimated.) The State Department of Labor reports that instead of showing a further seasonal increase, the number of workers employed in the factories of New York State in October remained at practically the same level as in September. For the country as a whole, the United States Department of Labor reports a decline of % of 1 per cent. More workers were employed in industries making holiday goods, but the usual seasonal curtail ment occurred in the building materials industries, and the apparel trades did not show the usual fall expansion, apparently reflecting the rather unsatisfactory retail trade due to unseasonably warm weather in October. 94 MONTHLY REVIEW, DECEMBER 1, 1927 The State Employment Service reports, however, that there have been some indications of a belated seasonal expansion in November. The rate of voluntary labor turnover reported by the Metropolitan Life Insurance Company declined in Octo ber to the lowest point since last winter, and the ratio of orders for workers to applications for employment at State Employment Offices declined sharply. Both the labor turnover rate and the labor demand ratio remained considerably lower than a year previous. Some unem ployment among the lower grades of unskilled workers and inexperienced office help is reported by employment agencies, but skilled workers and the higher classes of unskilled labor are reported to be well employed, although with the present low rate of turnover it is difficult to secure employment for those who may be out of work. the unseasonably warm weather in October, but mail order sales continued to show an increase over last year. Foreign trade also showed slightly less than the usual Fall increase. The indication of business and financial activity given by bank debits was more favorable than most of the other indexes: debits in 140 cities outside New York City were 6 per cent larger than in October 1926. Debits in New York City also remained large, as did the volume of stock trading. In the following table this bank’s indexes of business activity are given in percentages of the computed trend, with allowance for seasonal variations, and, where neces sary, for price changes. (Com puted trend of past years=100 per cent) 1927 1926 Oct. PJER CENT. Primary Distribution Car loadings, merchandise and m isc,. , . Car loadings, other...................................... Panama Canal traffic.................................. Distribution to Consumer Department store sales, 2nd D ist............ Chain store sales.......................................... Mail order sales............................................ Life insurance paid f o r ................................ Real estate transfers.................................... Magazine advertising.................................. Newspaper advertising................................ General Business[Activity Bank debits, outside of N. Y . C it y ......... Bank debits, New Y ork C it y .................... Bank debits, 2nd Dist. excl. N. Y . C ity . V elocity of bank deposits, outside of N. Y . C it y ................................................. V elocity of bank deposits, N. Y . C i t y ... Shares sold on N. Y. Stock E xch an ge*.. Postal receipts............................................... Electric p ow er............................................... E mployment in the United S tates........... Business failures........................................... Building perm its.......................................... New corporations formed in N. Y . State. A verage Earnings o f Factory O ffice W orkers and^ Factory Opera tives, Compared with the Cost o f Living. A calculation which is made for October of each year by the New York State Department of Labor indicates a further increase of approximately V/2 per cent during the past year in the average earnings of factory office workers. Although readjustments of the salaries of clerical help occur much more slowly than changes in the wages of factory operatives, the gradual advance in office workers’ earnings during recent years, together with some decline in the cost of living during the past two years, has resulted in an increasing purchasing power of office workers as a class. In dexes of Business A c tiv ity A slightly smaller distribution of goods in October is indicated by a rather general decline in this bank’s in dexes of business activity. Car loadings of merchandise and miscellaneous freight failed to show the usual sea sonal increase and were smaller than in the two previous years, and loadings of other freight were the smallest for the month of October since 1922, due primarily to reduced loadings of coal and ore. Department store trade apparently was retarded by General price le v e l....................................... Composite wage index.................................. * = Seasonal variation not allowed for 110 109 92 125r 97 Aug. Sept. Oct. 103 97 105 123r 97 105 96 100 114r 96 103 92 97 114 101 103 108 101 110 101 103 111 108 1 101 121 113 98 104 102 108 105 110 111 94 100 102 100 108 102 106 89 95 102 113 122 108 112 146 102 118 151 111 117 136 112 105 113 189 98 107 103 102 169 122 104 145 234 98 105 100 107 129 113 109 153 235 93 105 99 101 119 112 110 144 228 90 186 221 184 221 184 222 184 222 ’ 98 102 114 r= R evised B u ild in g Building contract awards in the New York and Northern New Jersey district, after falling below 1926 in the previous two months, rose in October to the sec ond highest monthly total this year, and were larger than in any previous October, according to the F. W . Dodge Corporation’s reports. There was a notable in crease in residential contracts, which were the largest since May 1926; public works and utilities projects were the largest since June, due to the inclusion of a $20,000,000 bridge contract; and other principal classes of con struction work also showed increases. As a result of the October increase, contracts for the first ten months of the year reached a total only slightly smaller than for the corresponding period of 1926, and materially larger than in any other recent year, as the accompanying diagram shows. The unusual volume of public works and utilities projects, which has included large bridge and subway contracts, has nearly offset de clines of 11 and 15 per cent respectively in residential, and industrial and commercial building. FEDERAL RESERVE AGENT AT NEW YORK 95 Comparisons of sales and stocks in the principal de partments with those of October 1926 are shown in the following table. Sales of women’s and children’s shoes appear to have been very good, but sales of women’s clothing, men’s and boys’ clothing, and cotton and woolen goods were much smaller than a year ago. Net Sales Percentage Change October 1927 from October 1926 Stock on Hand Percentage Change October 31, 1927 from October 31, 1926 + 1 7 .3 + 1 5 .5 + 9 .2 + 3 .4 + 3 .4 + 2 .9 + 2.4 + 2.1 + 1 .3 — 0 .9 — 0 .9 — 4 .6 — 5 .9 — 7 .0 — 9 .6 — 15.1 — 16.9 — 23.0 — 2.1 — 4 .0 + 6 .6 — 0 .7 + 1 8 .7 — 5 .5 — 7 .2 + 2 .3 + 3.1 + 3 .4 — 7 .8 — 32.7 — 3 .0 — 1 .7 + 4 .1 + 0 .1 — 6 .9 + 4 .0 — 10.3 — 7 .8 T oys and sporting g o o d s.......................... Books and stationery................................ Luggage and other leather go o d s........... Toilet articles and drugs.......................... Silks and velvets......................................... Home furnishings....................................... 1923. 1924 1925 1926 192,7 Building Contracts Awarded in the New York State and Northern New Jersey District, First Ten M onths of Each Year, 1923 to 1927. (In millions o f dollars) D e p a r tm e n t Store T ra d e Sales of leading department stores in this district in October were 4 per cent smaller than in October 1926, the largest decline from a year previous for any month in more than three years. The reduced volume of business was attributed by store executives to unseasonably warm weather. The largest declines were in the apparel de partments, and sales of reporting apparel stores showed an even larger decline compared with a year ago. As a result of the somewhat unsatisfactory business in October, and the consequent failure to move stocks as rapidly as anticipated, outstanding orders for mer chandise were reduced, and at the end of October were smaller than a year previous. This in turn checked the seasonal expansion in factory activity in certain lines, as noted on a preceding page. Although stocks at the end of October were not large, the smaller sales than a year previous resulted in a some what lower rate of stock turnover than in October 1926. Collections, however, continued to exceed those of a year ago. Percentage Change October 1927 from O ctober 1926 Stock on hand end of month — 5 .2 + 3 .2 — 7 .4 — 2 .0 — 6 .0 + 1 8 .0 — 1.9 — 17.8 + 1 5 .7 — 11.2 — 1.1 — 4 .3 + 1.4 — 0 .3 — 2 .9 — 9 .8 — 10.4 + 9 .0 — 8 .5 — 4 .6 A ll Department Stores................... — 4 .3 — 0 .6 49.5 47.5 Apparel stores.................................. Mail order houses............................ — 7 .0 + 3 .5 + 4 .3 4 9 .3 4 5.9 New Y o r k .......................................... B uffalo................................................ R ochester........................................... Syracuse............................................. Newark............................................... B ridgeport......................................... Elsewhere.......................................... Northern New Y ork S tate........ Central New York S ta te........... Southern New York S tate........ Hudson River Valley D is tr ic t.. Capital D istrict........................... W estchester D istrict................... 1927 1926 52.9 4 2 .2 4 4.0 4 9.2 53.1 4 5.3 48! i 42 .‘ 8 35^9 1 W h o le sa le T ra d e Sales in all reporting lines of wholesale trade except drugs, paper, and jewelry w^ere smaller in October than a year previous, and the average decline for all lines was 11 per cent. The apparel trades were among those showing the largest reductions, and machine tool and diamond sales continued to be much smaller than a year ago. Grocery and hardware sales showed larger declines than in September, and textile sales remained smaller than in October 1926. Stocks of merchandise carried by wholesalers were smaller at the end of October than a year previous in most lines except shoes, and, in that case, the large in crease is partly due to very small stocks a year ago. Collections showed no consistent change, but averaged slightly low7er than in October 1926. Percentage Change Percentage Change October 1927 October 1927 from from September 1927 October 1926 Per cent of Charge Accounts Outstanding September 30 Collected in October Net Sales Locality Linens and handkerchiefs......................... Silverware and jew elry.............................. Musical instruments and ra d io............... Furniture...................................................... W om en’s ready-to-wear accessories. . . . Men’s furnishings....................................... W om en’s and Misses’ ready-to-w’e a r. . . Cotton go o d s............................................... M en’s and B oys’ w ea r.............................. W oolen goods.............................................. Miscellaneous.............................................. Com m odity Net Sales Stock end of month + 6.0 + 6.6 M en’s clothing.............. —28.1 Womien’s dresses........... — 34.2 W om en’s coats a*nd suits + 0.3 C otton goods — Jobbers — 5.7 C otton goods — Com- 38 !o Machine to o ls * ............. Jewelry........................... W eighted A v e ra g e ... — ‘s ^ Per cent of Accounts Outstanding September 30 Collected in October Net Sales Stock end of m onth — 7.8 — 5.8 —35.8 — 18.2 — 7.0 — 8.4 77.9 35.1 63.8 78 .9 36 .9 73..1 — 4 .2 43.3 41. 3 48A 1927 1926 — 15.7 — 3.7 — 31.0 + ‘ 2!5 +19.3 — 12.2 + 2.4 + 0.8 +25.6 + 9.3 + 8.2 + 1.4 + 18.0 }— 0.4 — 2.9 — 2.7 —11.0 + 54 ! i + 3.3 — 12.3 — 6.2 — 13.4 —31.7 — 14.9 + 1.8 — 26.4 + 4.9 } + 3.4 } 51.3 42.0 45.3 47[,5 47. 3 43. 8 47. 9 69! 3 68.7 26.5 70. 3 67. 6 0 24‘ — 6.8 — 11.4 54.4 *= R eported by the National Machine T ool Builders’ Association } 55. 7 96 MONTHLY REVIEW, DECEMBER 1, 1927 Business Conditions in the United States (S u m m a r iz e d b y 'th e F e d e r a l R e s e rv e B o a r d ) I NDUSTRY and trade were less active in October than in the preceding month and were in smaller volume than a year ago. The general level of wholesale commodity prices showed a further slight advance. P r o d u c t io n Index Numbers of Production of Manufactures and Min erals, Adjusted for Seasonal Variations. (1923-25 average — 100 per cent.) Production of manufactures declined in October, contrary to the usual seasonal tendency, while the output of minerals remained in practically the same volume as in September. In October and November, activity of iron and steel mills and of automobile plants was smaller than at any previous period of the year. There were also decreases during October in cotton consumption and in the production of building materials, crude petroleum, and boots and shoes. The output of bituminous coal and the number of hogs and cattle slaughtered increased by less than the usual seasonal amount. Production of flour, copper, and anthracite coal showed increases in October. Building contracts awarded increased considerably owing to unusually large awards in New York and Chicago in the last week of the month. The increases were largest in contracts for residential and commercial buildings. Unusually favorable weather during October in agricultural states resulted in increased yield for late fall crops. The indicated production of corn, according to the November crop report of the Department of Agriculture, was placed at 2,753,000,000 bushels, an increase of 150,000,000 bushels over the estimate of the previous month and 106,000,000 bushels over the yield a year a£o. Larger yields, as compared with the previous month’s estimates were also indicated for cotton, tobacco, and potatoes. T rade Wholesale Price Index of United States Bureau of Labor Statistics (1913 average rzz 100 per cent.) Trade at wholesale and retail showed less than the usual seasonal increase in October. Compared with October a year ago wholesale trade in all leading lines, except meats and drugs, was smaller. Department store sales were approximately 3 per cent smaller than in October 1926, while those of mail order houses and chain stores were somewhat larger. Inventories of merchan dise carried by wholesale firms were smaller in all reporting lines at the end of the month than in September. Compared with a year ago, stocks were smaller in all lines except drugs. Stocks of department stores increased in October in anticipation of the growth in sales that usually occurs in November and December, but at the end of the month they were no larger than a year ago. Freight car loadings declined in October and the first part of November, and were smaller than in the corresponding period of last year for all classes of freight except grain and grain products. P r ic e s Monthly Averages o f W eekly Figures for Member Banks in 101 Leading Cities. (Latest figures are averages for three weekly report dates in November.) Wholesale commodity prices increased slightly in October, continuing the advance which began early in the summer, and the Bureau of Labor Statistics index for October was higher than for any previous month of this year. The advance in the average for all commodities from September to October re flected increases in the prices of livestock, meats, and dairy products. Prices of corn, cotton, coal, metals, paint materials, and automobile tires, on the other hand, declined. During the first three weeks in November there were increases in the prices of grains, cattle, copper, hides, and rubber, and decreases in hogs, cotton, silk, coal, petroleum, and iron and steel. B ank Cr e d it Total loans and investments of member banks in leading cities increased by nearly $300,000,000 during the latter part of October and the first half of November, and on November 16 were the highest ever reported. Invest ments increased by more than $200,000,000, reflecting in large part putfchases of Treasury certificates issued on November 15, and loans on securities increased by about $125,000,000. Loans chiefly for commercial and agricul tural purposes declined during the period from the seasonal peak reached early in October. There was a continued increase in the demand for Reserve Bank credit between October 19 and November 23, arising chiefly out of further exports of gold. Discounts from member banks declined somewhat, while acceptances and'5holdings of United States Government securities increased. Reserve Bank Credit: M onthly Averages of Daily Figures for 12 Federal Reserve Banks. (Latest figures are averages o f first 23 days in N ovember.) Conditions in the money market remained moderately easy in November. Call loan rates remained at the level reached in the latter part of October, and rates on prime commercial paper and bankers acceptances were unchanged.
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