The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVIEW of Credit and Business Conditions ____________________________ S e c o n d Federal Eeserve Agent F e d e r a l D i s t r i c t ____________________________ Federal Eeserve Bank, New York M o n e y M a r k e t in N o v e m b e r A fter declining in the three preceding months to com paratively small proportions, gold movements again be came a factor of some consequence in the money market during November. The November movements were the largest since July and resulted in a net loss of 19 million dollars. A total of about 27 m illion dollars o f gold was received during the first 21 days o f November, which brought the total receipts since the im port move ment began in September to 42 m illion dollars. Of this amount 3 7% million came from England and 4 % million from Argentina. In the latter part of the month the leading foreign exchanges became somewhat firmer and were above the levels at which gold shipments to this country would yield a profit. Consequently, no further shipments o f any size to the United States were reported after the 15th o f the month. A reversal o f the gold movement occurred after November 21, when the first gold exports o f the season to Canada were made, and when a substan tial amount of gold was earmarked for foreign account. These new movements took a total of about 47 million dollars from the gold stock o f the country, and more than offset, in the money market, the gold im port move ment earlier in the month. A s the accom panying diagram shows, the im port o f gold this autumn was small in comparison with the large outflow o f the past year. Follow ing the renewed outflow in the latter part of November, the monetary gold stock of this country at the present time is less than 15 million dollars larger than at the end o f June, and is about 485 million smaller than at the end of May 1927. Money rates were slightly easier in November partly because o f gold imports during the first three weeks of the month, and partly because of a somewhat smaller de mand fo r additional Reserve Bank credit than is usual at this time o f year, and further increases in the acceptance holdings o f the Reserve Banks, due to the large volume o f bills outstanding and the generally high level o f inter est rates. A s a consequence, member banks were enabled to repay a part o f their borrowings from the Reserve Banks, and were in a position to lend a little more freely. A n increasing proportion o f commercial paper was sold in the open market at 5 ^ per cent, as compared with a prevailing rate o f 5 % per cent in O ctober; ac ceptance rates remained steady. Y ields on short-term Government securities declined about y2 per cent, in some cases to under 4 per cent in the third week o f November, but later advanced somewhat. A pparently reflecting a continued strong demand fo r additional loans, rates on security loans showed no material change R e s e r v e December 1,1928 from those o f October and the tendency at the end o f the month was toward higher levels. The follow ing table compares money rates near the end o f November with those o f a month previous and a year ago. Money Rates at New York Nov. 30, 1927 Call money............................... Time money—90 day.............. Prime commercial paper........ Bills—90 day unindorsed........ Customers’ rates on commer cial loans............................. Treasury certificates and notes Maturing March 15............ Maturing June 15................ Federal Reserve Bank of New York rediscount rate.......... Federal Reserve Bank of New York buying rate for 90 day bills....................................... *3H -4H 4K 4 Oct. 31, 1928 *6-8 7 5H Nov. 28, 1928 * 6 ^ -9 7 5 H -M 4M 3H 4H t4.28 t5.47 f5.47 3.10 3.17 4.63 4.44 4.30 4.20 3M 5 5 3K m * Prevailing rate for preceding week # t Average rate of leading banks at middle of month C hanges in M e m b e r B a n k C r e d it The strong demand fo r security loans continued to be the dominant factor in changes in member bank credit. M onetary Gold Stock o f the United States, End of Each Month since December 1926 (N ovem ber 1928 estim ated). 90 MONTHLY REVIEW, DECEMBER 1, 1928 BILLIONSo/DOLLARS an increase o f 156 million during October. Demand for bills, principally by foreign investors, was rather well sustained, and dealers’ portfolios at the end o f Novem ber were smaller than a month earlier. Open market rates fo r bills were unchanged; the offered rate on the 90-day m aturity has been steady at 4 y2 per cent for the past three months. C o m m e r c ia l P a p e r M a r k e t Loans to B r o k e r s a n d D e a le r s In S e c u r it ie s P la c e d b y N e w C it y B a n k s fo r O w n A c c o u n t, fo r o u t-o f-to w n C o rr e sp o n d e n t B a n k s , a n d fo r O th e r s . Y o rk Loans to brokers and dealers in securities made by New Y ork City banks for their own account increased further during the past month, and on November 21 were 300 million dollars larger than in the latter part o f August, but remained slightly below the highest point o f last May. The total loans and investments o f these banks have also remained somewhat below the M ay levels, as their investments have been reduced about 100 million dollars since that month, and loans other than those secured by stocks and bonds have shown practically no net change. Outside o f New Y ork the tendency appears to have been similar. Loans to brokers and dealers in securities placed by New Y ork banks fo r out-of-town correspondent banks increased approxim ately 200 million dollars from the latter part of A ugust to November 21 and are larger than in May. This figure includes, however, not only loans fo r account of both member and non-member outof-tow n banks, but also loans placed by those banks for the account o f their customers. The total loans and investments o f reporting member banks in principal cities other than New Y ork showed no such liquidation during the summer as did New Y ork member banks and the subsequent expansion has carried them to new high levels. As the accom panying diagram shows, funds from sources other than the New Y ork banks and their cor respondent banks have continued to play an important part in the financing o f the security markets and are now larger than ever before. These loans have considerably more than doubled during the past year and are now over three-fourths as large as the combined loans made by New Y ork banks fo r their own account and fo r out-oftown banks. B il l M a r k e t A lthough the supply o f new bills during November was considerably less than the unusually large volume created in October, offerings to the market nevertheless continued rather heavy, as is usual at this season o f the year. Reflecting the smaller increase in the supply than in October, offerings o f bills to the Reserve Banks also were smaller, and the bill holdings o f the System in creased only 44 m illion up to November 21, as against The bank investment demand fo r commercial paper was reported active throughout November. Open mar ket rates fo r prime names eased slightly, and the selling range became 5^4-5y 2 per cent, the lowest level since m id-August. There continued to be a dearth o f new paper com ing into dealers’ portfolios from commercial and industrial concerns, A t the end o f October, the amount o f commercial paper outstanding through 24 leading dealers was down to $427,000,000, or 30 per cent less than the outstandings a year ago. The decline from the end o f September to the end o f October was less than 1 per cent, h ow ever; this is the smallest month-to-month decrease since A pril, when a small increase occurred. C e n tra l B a n k R a te C h an ges Follow ing a one-half per cent rise on August 7, the Bank o f Finland raised its discount rate on November 15, again by one-half per cent, to 7 per cent. Recent economic trends which might have led to this decision are: an adverse trade balance, a considerable expansion o f central and commercial bank credit, and a contraction o f more than 50 per cent in the volume o f the B an k ’s foreign assets. On the same day a rise in the discount rate o f the Im perial Bank o f India from 5 to 6 per cent became effective. Last year this bank raised its rate from 5 to 6 per cent on December 8 and again to 7 per cent on December 22. Such changes are attributable to the seasonal movement o f Indian exports, which commonly bring about an extension o f credit through the winter period. F o r e ig n E x c h a n g e The foreign exchanges in the latter part o f November appear to reflect some relaxation in the autumn demand fo r payments to Am erica as well as slightly lower money rates in New Y ork. Probably as a result o f these in fluences a number o f exchanges were perceptibly firmer here during the second half o f the month. Chief atten tion was again concentrated upon sterling, not because of any radical movement, but because of the suscepti bility of London to gold withdrawals. F airly consistent weakness in the first two weeks brought the pound sterling down to the season’s low level at $4.84% on the 14th and permitted an inflow o f gold from E ngland in November amounting to $25,000,000. Reacting upward, sterling crossed $4.85 on the 22nd and reached $ 4 .8 5 ^ on the 27th, making gold shipments unprofitable. In the last days o f the month the reichsmark moved upw ard to $0.2384, or two points above par. The Dutch guilder, quoted at $0.4010 on the 5th, firmed to $0.4018 on the 28th. The fluctuations o f the Spanish peseta, which moved through a range o f thirty points in October, were very slight in November, this exchange FEDERAL RESERVE AGENT AT NEW YO R K 91 British, German, Dutch, and Canadian Exchanges at New York in the Autumn of 1928, Compared with 1926 and 1927. holding steadily at $0.1612 during the second half of the month. Slight gains were made by the Swiss and Nor wegian exchanges, and various European currencies were reported in steady demand in the last week of the month. Canadian exchange rose to a premium on Novem ber 19 for the first time since September, the usual seasonal appreciation of this exchange having hitherto been adversely affected by the attraction of New York money rates. However, exports of Canadian grain are reported to have been very heavy recently and probably account for the sudden shift in the Canadian rate from a discount to a premium. The Argentine peso continued its upward trend, rising eleven points in the month to $0.9586. It is now above the gold export point for New York. The Japanese yen slipped back from a high of $0.4670 on November 1 to $0.4587 on the 28th, or approximately its position in mid-October. Cable Rates Country November 30, 1927 A ustria............................. Belgium ........................... England........................... France.............................. Germ any......................... Ita ly .................................. Netherlands................... N orw ay............................ Switzerland.................... Canada............................ Argentina........................ B razil................................ India................................. Japan................................ Hong Kong, dollar. . . Shanghai, ta e l............... G o ld $ .1410 .1397 4 .8 7 7 9 .0393 .2388 .0543 .4040 .2658 .1928 1 .0009 .9718 .1192 .3656 .4577 .5011 .6386 October 31, 1928 $ .1406 .1390 4 .8 4 8 5 .0391 .2382 .0524 .4010 .2665 .1924 .9996 .9574 .1196 .3649 .4656 .5005 .6416 Novem ber 28, 192$ $ .1406 .1390 4.8 5 1 7 .0391 .2384 .0524 .4018 .2666 .1927 1.0 0 1 5 .9583 .1194 .3640 .4587 .4999 .6405 M ovem en t A substantial gold import movement during the first three weeks of November wTas followed by a reversal of the movement in the latter part of the month, and the net result of imports, exports, and earmarkings during the first 28 days of November shows a loss of gold to this country amounting, according to preliminary calcula tions, to $19,000,000. As reported above, the weakening of sterling made it profitable for American buyers to import approximately $25,000,000 from London. The last of these purchases was made in London on Novem ber 13. A shipment of $2,500,000 received from the Argentine closed the movement from that country. W ith the rather abrupt rise of Canadian exchange on the 19th, an efflux of gold began which took $22,000,000 to Canada between November 21 and 28. A new earmarking move ment also developed in the latter part of the month, which caused a net increase of $25,000,000 in the amount of gold held under earmark for foreign account. F o r e ig n T r a d e Exports of merchandise in October, valued at $555,000,000, were the largest for any month since Janu ary 1921. A ll groups of exports were seasonally larger than in September, and all, except crude foodstuffs, showed considerable gains over a year ago. The largest increase over September occurred in the autumn exports of crude materials, chiefly raw cotton; the largest in crease over last year was in exports of finished manu factures, especially automobiles. Grain shipments abroad were larger than in recent months, but remained smaller than last year, due no doubt partly to heavy grain production this year in Canada, and also in Europe. Imports, valued at $357,000,000, showed more than the usual seasonal increase over September but remained practically the same as in October 1927. Compared with September there were increases in all groups of imports, the largest of which was an increase of about 19 per cent in finished manufactures. Increases over last year in the value of imports of manufactured goods and semi manufactures were offset by declines in imports of crude materials and foodstuffs. The quantity of crude rubber imported during October was somewhat smaller than in September, but was substantially larger than in October 1927; however, the increase in quantity con tinued to be more than offset by the lower level of rubber prices. Raw silk imports were slightly larger in volume than in September but were somewhat smaller than in October 1927; silk prices were higher than in either the previous month or a year ago. S e c u r ity M a r k e ts The stock market was strong during most of Novem ber, and sales were much larger than in any previous month. On several days the volume exceeded 6 million shares, and on most full trading sessions after Election 92 MONTHLY REVIEW, DECEMBER 1, 1928 jyilLllONSo/UOLl ARS 1916 1917 1910 1919 1920 1921 1922 1923 1924 1925 1926 1927 1926, Average Yield on 33 Dividend Paying Industrial Common Stocks Compared with Yield on 15 High Grade Industrial Bonds. (Source: Standard Statistics Co.) New Day the turnover was above 5 million shares. Prac tically all groups of stocks showed some net gain for the month, and in a number of individual issues the advances were very large. Representative averages of industrial stocks advanced 18 points or more to new high levels, public utilities stocks advanced substantially above the previous high levels of May, and railroad stocks, which had shown little movement in recent months, advanced to higher levels than ever before. A s the accompanying diagram indicates, the recent advances in industrial common stocks have reduced the average yield on these shares to the lowest level in many years. Meanwhile, yields on industrial bonds have ad vanced somewhat in recent months; so that stock yields are now considerably below the yields on high grade bonds. On only two occasions since the beginning of the war has such a situation prevailed— in late 1925 and early 1926, and again early this year— and in these instances stock yields remained below bond yields for only a short period. The trend of domestic corporation bond prices con tinued slightly upward during the first part of Novem ber, but subsequently prices receded a little and by the end of the month were at levels little different from those at the end of October. For the month as a whole, average prices fluctuated at levels about l 1/^ points above the extreme August low and about 2 % points below the January high levels of the year. Price movements of foreign bonds were relatively small. There was a further advance in long-term United States Government issues, and current prices averaged about 1 % points above the mid-summer low levels. Security Issues in 1928 Compared with 1927; Domestic Corporation Issues, and State, Municipal, and Farm Loan Issues (Refunding Issues Excluded). (Source: Commercial & Financial Chronicle) of the recent months has compared favorably with a year ago. W hile firmer money conditions have made the sale of bonds more difficult, the strength in stocks has been favorable to the sale of new stock issues, and an in crease in this method of financing has more than offset the decline in bonds. Offerings of State, municipal, and farm loan bonds in the period from A p ril to October have been in somewhat smaller volume than a year ago, and foreign financing during the past four months has been much curtailed. The total of new securities offered publicly in Novem ber appears to have been in about the same volume as a year ago. The number and relative importance of stock issues increased further during the month— in one week of the period stock offerings exceeded the amount of new bonds offered. Due principally to $55,000,000 of New York City issues, the total volume of State, municipal, and farm loan issues was larger than a year ago, for the first time in some months. The New York City issues of corporate stock and bonds were sold at an interest cost to the city of 4.2002 per cent, the highest rate paid by this city since December 1921. Offerings of foreign securities were only about one-half as large as in November of last year, but present indications are that the total amount of security offer ings by domestic corporations, including refunding is sues, will prove to have been about the same as a year ago. E m p lo y m e n t a n d N ew F in a n c in g Final figures on security flotations during October showed a decline of more than 20 per cent compared with a year ago. H a lf of the decline, however, was due to a much smaller volume of refunding issues than in October 1927, and a considerable part of the remainder was due to a reduction in offerings of foreign securities in this market. A s the accompanying diagram indicates, the amount of new capital obtained by domestic corpora tions in October was larger than last year, and in most W ages Factory employment showed a further seasonal in crease in October. In New York State, employment remained slightly smaller than a year ago, but has shown a much larger increase from the beginning of the year than is usual. In the country as a whole the number of factory workers employed was larger than in the preced ing year for the first time since September 1926. The ratio between workers called for and registrations for employment at New York State Employment Offices showed a seasonal decline in October and November, but remained slightly above the level of a year ago. 93 FEDERAL RESERVE AGENT AT NEW Y ORK Employment in iron and steel mills of New York State increased further above the 1927 level, and in the ma chinery and electrical equipment industry exceeded that of a year ago for the first time in many months. In the textile industries, employment in the woolen and worsted and silk mills has increased above the levels of either 1926 or 1927, but employment in the cotton and knit goods mills remains well below the levels of the past two years. There has been a seasonal decline in employment in building material industries since September, and the usual seasonal curtailment has occurred in out-of-door activities. remained somewhat smaller than in 1926. The accom panying diagram compares the course of industrial, public utility, and railroad earnings during the past three years. (Net profits in millions of dollars) Third Quarter Corporation Groups 1927 1928 1926 1927 1928 81 4 21 33 4 36 3 7 15 7 6 2 6 5 52 101 11 43 49 3 38 3 10 17 218 25 129 143 16 6 2 14 8 66 6 27 33 21 14 6 19 20 130 248 18 61 119 13 103 8 23 Other mining and smelting............. Miscellaneous..................................... 11 15 24 14 5 25 5 16 9 13 7 7 5 12 42 20 IS 7 19 13 141 300 28 77 130 9 109 7 27 43 21 17 4 33 22 179 Total 15 groups............................. 210 282 380 905 852 1,006 Other public utilities........................ 87 95 55 r 61* ^155 170 1188 % 515 " 173 561 189* 618 Total public utilities..................... 182 225 249* 670 734 807* Class I railroads................................ 185 337 358 891 810 820 Motor accessories.............................. Oil......................................................... Railroad equipment.......................... Food and food products.................. B u s in e s s P r o fits Machine and machine mfg.............. Third quarter net earnings of 210 industrial and mercantile concerns showed an increase of 3 6 % per cent over the corresponding quarter of last year, which, however, was a period in which corporation earnings had shown some decline from those of the previous year. These tabulations frequently exaggerate the increase in corporation profits, due to the fact that statements that are issued early tend to include a large proportion of reports which make favorable showings. However, it is noteworthy that third quarter earnings of these com panies showed an increase over second quarter earnings, whereas in recent years, earnings have usually shown a declining tendency in the third quarter. The largest percentage increases over last year were reported by the motor accessories companies, which tripled their profits, and the oil and copper companies, the profits of which were more than double those of a year ago. Other groups showing substantially larger profits were the steel, machine and machine manufactur ing, automobile, mining and smelting (other than coal), and miscellaneous companies. A ll other groups also reported at least small increases with the exception of the railroad equipment, coal, and amusement companies. Net profits of these 210 companies for the first nine months of this year have been 18 per cent larger than in the corresponding period of 1927, and about 11 per cent larger than in 1926. Telephone and other public utility companies continued to report net earnings around 10 per cent larger than a year ago, both for the third quarter and for the completed nine months. Net operat ing income of the principal railroads increased in the third quarter to a larger figure than a year ago, but mWON5qfJX}lUR3 NinefMoaths Number Building supplies............................... 9 9S 39 * Partly estimated B u ild in g Awards of building and engineering contracts in the New York and Northern New Jersey district continued to increase in October; the total for the month was 21 per cent larger than for September and 12 per cent larger than for October 1927, according to the F . W . Dodge Corporation report. The increases over a month earlier and a year ago were due almost entirely to larger contracts for public works and utilities, which included a $43,000,000 water supply project and an $8,000,000 subway contract in New York City. Contracts for com mercial buildings also showed an increase over the pre vious month and a year ago, but residential contracts, while in slightly larger volume than in September, were 18 per cent smaller than a year ago. During the first ten months of this year the total vol ume of building contracts awarded in the 37 reporting states has been 7 per cent larger than a year ago. Dur ing the first three weeks of November, however, a reduc- MILLIONSqfDOLlARS Quarterly Profits of 105 Industrial Corporations, and 182 Public Utility Corporations, and N et Operating* Income of 185 Class I Railroads in 1928 Compared with 1926 and 1927. 94 MONTHLY REVIEW, DECEMBER 1, 1928 tion in the daily average of contracts, as compared with the corresponding period of 1927, indicated a consider ably lower level of building operations. I n d e x e s o f B u s in e s s P r o d u c tio n Productive activity continued in October at a high level. Output of passenger automobiles and trucks declined about 4 per cent from September, but was 82 per cent above the level of a year ago. Steel ingot production established a new high record, and pig iron production was the largest for any October excepting the war years of 1916 and 1918. Production of coal and of coke increased more than usual, and copper established a new post-war high record. Mill consumption of silk declined from the high level of September, but woolen mill activity and consumption of cotton increased sharply; cotton consumption was larger than a year ago for the first time since last November, and wool activity was the highest since December 1926. In November, productive activity was generally at a lower level, but the decline appears to have been no larger than is usual for that month. A c tiv ity Domestic retail trade increased less than usual in October following the large volume of September, but foreign trade increased more than usual. Average daily car loadings of merchandise and miscellaneous freight declined slightly; loadings of bulk freight showed about the usual seasonal increase. A n extremely large volume of financial activity is reflected in the establishment of a new high record for sales of stocks on the New York Stock Exchange, and a new high record for October for bank debits in New York City. The velocity of bank deposits also was very high. This bank’s indexes of business activity, in which allowance has been made for year-to-year growth, for the usual seasonal variations, and where necessary for price changes, are shown below. (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1927 1928 f(Com puted trend of past years=100 per cent; adjusted for seasonal variations) 1927 Oct. Aug. Sept. Oct. 92 84 105 97 112 117 82 95 95 99 98 104 96 103 125 98 94 105 114 94 81 117 110 79 100 88r 109 98 104 114 120 134 105r 107 105 119 90 87 118 110 83r 101 78 114 105r 102 105 111 132 100 99 110 118 104 98p 109 109p 88 106 81p 121 99 101 101 116 123 85 91 102 88 94 91 111 100 101 87 103 102 100 98 69 95 90 91 108 80 102 95 95 104 90 88 108r 116 119r 125 155 131 92 88 108 75 89 85 115 106 90 83 108 105 102 134 145 133r 105 81 119 81 99 95 124 1928 Producers1 Goods Oct. Aug. Sept. 103 92 97 114 101 93 102 93 100 110 89 101 104 97 94 102 85 95 103 97 105p 109p 94r 105 108 102 lOlr 100 93r 103 97 137 94r 97 106r 104 109 132 lOlr 96 94 101 101 115p 98 95 Pig iron................................................................. Steel ingots................................................. Cotton consumption........................................ W oolen mill activity*..................................... Silk consumption*............................................ Petroleum............................................................ Bituminous coal................................................ C oke....................................................................... Lum ber................................................................. Copper, U. S. m ines........................................ Lead........................................................................ Zinc........................................................................ Tin deliveries...................................................... Leather, sole....................................................... C em ent................................................................. Paper, total......................................................... W ood pu lp........................................................... Oct. Primary Distribution Car loadings, merchandise and misc........ Car loadings, other.......................................... Exports................................................................. Imports................................................................. Panama Canal traffic..................................... Wholesale trade................................................ Distribution to Consumer Department store sales, 2nd D i s t .r ......... Chain grocery sales.......................................... Other chain store sales................................... M ail order sales................................................. Life insurance paid forr.................................. Advertising.......................................................... Consumers' Goods Hogs slaughtered.............................................. Cattle slaughtered............................................ Sheep slaughtered............................................ Calves slaughtered........................................... Farm produce shipped................................... W heat flour......................................................... Sugar meltings, U. S. ports.......................... Gasoline................................................................ Anthracite coal.................................................. Newsprint............................................................ Printing activity............................................... Tobacco products............................................. Boots and shoes................................................. Tires....................................................................... Automobile, passenger.................................... Automobile, truck............................................ General Business Activity Bank debits, outside of New York C ity. Bank debits, New York C it y ..................... Velocity of bank deposits, outside of New York C ity ........................................................ Velocity of bank deposits, New York City Shares sold, 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 106 136 104 149 111 165 106 164 110 144 204 90 104 98 102 139 112 113 166 293 90 109r 99 115 110 108 120 190 398 84 107 98 104 142 100 117 188 389 88 General price level........................................... Composite index of wages............................ Cost of living...................................................... 173 222 169 176 223 172 178 224 173 177 224 172 p Preliminary 98 115 136 126 * Seasonal variation not allowed for r Revised Thousands ofCars ‘Th ou san d sojB a le s 1928 '750 /P 1926 300 \ & >6 \ \ 200 192/ 100 STEEi IN G O T S ..1— .1 J F M A f ' i J J A 5 0 N D 'y / JJ 1927 80 1926 )£\ r Revised 90r ■r 400 \ 600 v m s /- L ^ \ \ AUTOr IQ B ILE PRODlX T IO N i i..i / i... i.. J F M A n J 'J A 5 O N D 70 ! 450 V i9 2 Q me 60 C O I TON 3001 JMPTIONI C O N 31i i i. J F M A M J a 192 1927 \\ i1. -i„ , r J A 5 0 N D 50 V — ..i.i iti~. — i— i J F M A M J PETROILEUM P R O D U CTION j .. J A S O N D Production of Steel, Passenger Automobiles, andPetroleum, and Mill Consumption of Cotton in 1928 Compared with 1926 and 1927. ii3 102p 141p 124 138 Trillions o f B ’o h i 500 p Preliminary iis 91 95 FEDERAL RESERVE AGENT AT NEW YORK W h o le s a le T r a d e D e p a r tm e n t S to re T r a d e October reports on wholesale trade in this district showed a larger average increase over a year previous than in any other month in the past three years. One more selling day than in October 1927 accounted for a minor part of the increase. Substantial increases in the clothing trades, which have reported smaller sales than a year ago in most of the recent months, were an im portant factor, and more active trade was reported also in a number of other lines. Commission house sales of cotton goods showed the largest increase over a year previous in more than a year, and jobbers’ sales showed a small increase. The grocery, drug, stationery, and diamond trades reported larger sales than a year ago, following decreases *in September, and the shoe, hardware, and jewelry trades showed smaller decreases than in September. Machine tool sales continued in more than double the volume of a year ago. Total sales of reporting department stores in this district were more than 4 per cent larger in October than a year ago, about the same increase as in September. However, the average daily rate of sales was only slightly larger than last year in October, as compared with an increase of about 9 per cent in September. Newark stores reported a substantially higher daily rate of sales than in October 1927, but most of the other localities in the district showed little if any increase. Apparel stores continued to report much larger sales than a year previous. Comm odity Percentage Change October 1928 compared with September 1928 Net Sales Stock end of month + 1 8 .4 + 6 .7 + 2 2 .2 + 4 7 .0 + 2 .8 + 1.9 Groceries........................ M en’s clothing.............. W om en’s dresses.. . . . . W om en’s coats and suits Cotton goods— Jobbers C otton goods — Com mission ....................... Silk goods....................... Shoes............................... D rugs.............................. Hardware....................... Machine tools** ........... Stationery...................... P aper.............................. Diam onds....................... Jewelry............................ + 1 8 .4 — 9 .7 — 8 .7 + 2 3 .6 + 6 .6 — 3 .4 — 7 .3 — 9 .2 + 2 5 .3 + 1 4 .5 + 7 .1 + 2 2 .1 + 1 8 .3 + 1 9 .5 + 4 5 .5 + 1 3 ,0 + 5*.4* — 4 .2 — 0 .5 + 0 .8 — 7 .5 + 4 .1 — 2 .7 + 1-4 + 1 1 3 .0 + 8 .8 + 6 .9 + 1 3 .7 } + 4 .4 — 4 .1 W eighted Average.. . + 7 .2 + 1 5 .0 — 6.i Per cent of Accounts Outstanding September 30, Collected in October Percentage Change October 1928 compared with October 1927 Net Sales Stock end of month 1928 7 7.7 3 4.8 78.5 38.1 — 5 .6 32.2 3 5 ’.6 + 17 '.6 * — 16.8 + 1 7 .0 + 4 .6 4 9.0 4 9 .0 46.9 4 8.0 4 6.2 48.9 4 4.8 4 8.8 6 9.3 68.1 1 22.1 6 8 ’.i 63.1 } 23.4 5 2.4 53.1 + 3 .4 2 .4 Percentage Change October 1928 com pared with October 1927 Locality 1927 }+ Stocks of merchandise showed a moderate increase during the month in preparation for the holiday trade, but were no larger at the end of October than a year previous. Consequently, the rate of stock turnover re mained slightly larger than a year ago. Collections against charge accounts were at about the same rate as in October 1927. Net Sales Stock on hand end of month Per cent of Accounts Outstanding September 30 Collected in O ctober 1927 1928 New Y o r k ........................................................... B uffalo................................................................ R ochester........................................................... Syracuse.............................................................. Newark................................................................ B ridgeport.......................................................... Elsewhere................... ........................................ Northern New Y ork S tate......................... Central New York S tate............................ Southern New York State.......................... Hudson River Valley D istrict................... Capital D istrict............................................ W estchester D istrict.................................... + 4 .4 — 1 .0 + 1.7 + 5 .3 + 1 2 .9 + 2 .2 — 0 .8 + 1 5 .3 — 9 .3 + 3 .3 — 4 .7 — 1 .3 + 1.4 + 1 .3 — 3 .0 — 2 .1 + 2 .4 + 0 .8 — 11.3 — 10.6 53.4 4 3.0 4 4.0 53.7 4 4.4 4 7.1 4 6.6 4 6.3 3 8 ‘.7 4 0.5 All department stores...................................... + 4 .8 — 0 .2 4 9.6 49.9 Apparel stores................................................... + 1 4 .2 + 2 .0 4 8.8 48.3 * Quantity not value. Reported b y Silk Association of America. ** Reported b y the National Machine Tool Builders’ Association. Substantial increases compared with October 1927 . were reported in sales of musical instruments and radio C h a in S to r e S a le s receivers, shoes— especially women’s— furniture and home furnishings, and women’s apparel, and there were Chain grocery systems in this district reported sub moderate increases in various other departments. stantial increases over October 1927 in total sales and in average sales per store. Ten cent, tobacco, shoe, and variety chains all showed smaller increases in total sales Net Sales Stock on Hand Percentage*Change Percentage Change in October than in September, however, and after allow October 1928 October 31, 1928 compared with compared with ance for the larger number of stores operated, all types October 1927 October 31, 1927 other than grocery chains showed smaller sales per store than a year ago. Musical instruments and ra d io ............... + 6 9 .4 — 36.7 Percentage Change O ctober 1928 com pared with O ctober 1927 Home furnishings........................................ Books and stationery................................. W omen’s ready-to-wear accessories........ T yp e of Store Num ber of Stores T otal Sales Sales per Store G rocery........................................................ Ten cen t...................................................... D rug............................................................. T o b a cco ....................................................... S hoe.............................................................. V ariety......................................................... C an d y........................................................... + 0 .3 + 9 .4 + 7 .9 + 5 .0 + 9 .1 + 1 8 .0 + 1 6 .0 + 1 3 .8 + 5 .4 + 2 .6 — 3 .3 + 4 .2 + 1 5 .8 + 1.9 + 1 3 .4 — 3 .6 — 5 .0 — 8 .0 — 4 .5 — 1.8 — 12.2 T o ta l......................................................... + 5 .3 + 8 .3 + 2 .9 Luggage and other leather goods............ W om en’s and Misses’ ready-to-w ear.. . . Cotton goods................................................ M en’s furnishings........................................ Toilet articles and drugs........................... Linens and handkerchiefs.......................... Toys and sporting goods........................... Silverware and jew elry.............................. M en’s and B oys’ wear............................... W oolen good s............................................... Silks and velv ets......................................... Miscellaneous............................................... + 1 6 .4 + 1 2 .6 + 1 1 .9 + 1 0 .8 + 9 .8 + 9 .3 + 7 .7 + 7 .6 + 7 .6 + 7 .5 + 6 .9 + 6 .7 + 3 .9 + 0 .8 — 2 .6 — 5 .9 — 7 .5 + 7 .9 + 1 8 .2 + 9 .8 + 6 .7 — 4 .1 + 1.6 + 4 .6 — 5 .6 + 3 .8 — 2 .8 — 6 .8 + 1 3 .6 — 0 .9 + 9 .9 — 9 .1 + 7 .1 — 10.3 — 6 .0 — 6 .4 96 MONTHLY REVIEW, DECEMBER 1, 1928 PERCENT B usiness C o n d itio n s in th e U n ite d States (Summarized by the Federal Reserve Board) TND USTRY continued active in October and the distribution o f commodities * was in large volume. Wholesale commodity prices declined sharply owing chiefly to decreases in the prices o f farm products. Member bank credit in use increased in October and November, while Reserve Bank credit outstanding showed little change. Conditions in the money market were somewhat easier. P r o d u c t io n Index N u m b ers .of Production o f M an u factu res and M in erals, A d ju ste d for Seasonal V a ria tions ( 1 9 2 3 - 2 5 average = 100 per c e n t ). PERC EN T W h o le sa le Price Index o f U nited S tates B ureau o f Labor S ta tistic s ( 1 9 2 6 average = 1 0 0 per c e n t ). Industrial production continued in October at the high level o f September and considerably above the level o f a year ago. Output o f minerals increased over September, while the production o f manufactures declined slightly. Fac tory employment and payrolls increased to the highest level since early in 1927. The production o f pig iron was particularly large in October and the first half o f November, and the output o f steel continued in record volume. Automobile production declined considerably in October after exceptional activity in September, and showed further reduction in November, as is usual at this season. Activity increased in October in meat-packing and in the textile industries, with the exception o f silk. Copper mining and smelting continued at a high level, and the output o f coal and petroleum increased by more than the usual seasonal amount, while the production o f zinc declined. There was also a decline in the output o f lumber and building materials. Building contracts awarded continued to increase in October and were larger than in that month o f any previous year, but declined sharply during the first two weeks o f November. The increase in October was due principally to large contracts for engineering and industrial projects. The November cotton crop estimate o f the Department o f Agriculture was slightly larger than the October estimate and indicated a yield o f 14,133,000 bales, 1,178,000 more than the production o f 1927. Ginnings o f the current crop prior to November 14 totaled 11,320,302 bales, compared with 10,894,912 in the similar period of a year ago. Indicated yields o f wheat, corn, oats, potatoes, and tobacco were larger than the 1927 crops, while esti mates of hay, rye, and flaxseed were smaller. T rade Department store sales in October were in about the same volume as in the same period in the preceding year, but showed somewhat less than the seasonal increase from the high level o f September. Inventories o f these stores increased during the month, but continued smaller than a year ago. The volume o f distribution at wholesale was larger than in September and showed a substantial gain over October 1927. Freight car loadings continued larger in October and November than a year ago, reflecting chiefly large load ings o f miscellaneous freight. P r ic e s M o n th ly A v e ra g e s o f W e e k ly F igu res for M em ber B an ks in 101 Leading Cities (L a t e s t F igu res are A v era g es for 3 W e e k ly Report D a tes in N o v e m b e r ). B 1LL10 N 5 o f D O LLA R S Wholesale commodity prices declined in October after a continuous in crease for three months, and the Bureau o f Labor Statistics index for October, at 97.8 per cent o f the 1926 average, was over 2 per cent below that for September. This decline reflected chiefly large decreases in prices o f farm and food products and hides and leather. Prices o f industrial commodities increased slightly, with small gains recorded in metals, building materials, and chemicals and drugs. The principal increases occurred in prices o f iron and steel, copper, and raw silk. During the first three weeks o f November prices o f cotton, pig iron, copper, and petroleum increased, and prices o f most farm and food products, except corn, pork, and sugar, recovered somewhat after the October decline. B a n k C r e d it R eserv e B an k C red it: M o n th ly A v e ra g e s o f D aily F igu res for 1 2 Federal R eserve B anks ( L a t e s t F igu res are A v e r a g e s o f first 2 3 da ys o f N o v e m b e r ). Between October 24 and November 21 there was a considerable increase in loans and investments o f member banks in leading cities, but at the end o f this period the total was still below the large volume outstanding* at the middle o f the year. Loans chiefly for commercial purposes remained at a high level during the period and loans on securities showed further growth, reflecting a marked increase in the volume o f loans to brokers and dealers in securities. Investments showed further decline. During the four weeks ended November 21 there was little change in the volume o f Reserve Bank credit in use. Reserve Bank holdings o f acceptances increased further and discounts for member banks declined. During the last week o f October and the first three weeks o f Novembe conditions in the money market were somewhat easier; the rate on four t six months commercial paper declined from a level o f 5 l/2 per cent to a rangt o f from 5 % to 5% per cent, and rates on call and time loans in the open market also declined slightly.
@FedFRASER