View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

M O N T H L Y R E V IE W
of Credit and Business Conditions
______________________________S e c o n d

Federal Reserve Aqent
M on ey

M ark et

F e d e r a l

The past few weeks have been a period of readjust­
ment in the credit situation following the severe decline
in security prices which reached its lowest point on
November 13.
The weekly reports made by the New York City banks
of their loans to brokers and dealers in securities, both
for their own account and the account of their customers,
have shown a continuous decline since the middle of
October which has brought the totals of these loans from
$6,801,000,000 on October 16 to $3,450,000,000 on
November 27. It appears from these figures that the
amount of money borrowed by brokers and dealers for
the purpose of carrying securities has been cut prac­
tically in half in a period of six weeks.
These figures taken alone, however, might give a
misleading impression as to the changes in the total
volume of security loans for the country as a whole.
For a very large amount of loans against securities is
made, not through brokerage houses, but by banks di­
rectly to their customers, and the available evidence
indicates that in this period bank loans upon securities
made directly to customers have increased rather than
decreased and hence the total security loans of the re­
porting member banks have shown no net decrease from
October 16, despite some reduction in bank loans to




D i s t r i c t _____________________________

Federal Reserve Bank, New York

in N o v e m b e r

M ILLIO NS OF DOLLARS

R e s e r v e

December 1.1929

brokers.
The liquidation has been almost wholly in
loans by lenders other than banks. The figures which
are available to show these changes are given in the
following table.
(In millions of dollars)
Loans to brokers and dealers in securities placed by
New York City Banks for—
Date
Own account
Oct. 16
23
30
Nov. 6
13
20
27

1 Out-of-town
banks

1,095
1,077
2,069
1,520
1,156
853
831

1,831
1,733
1,005
963
812
704
638

Others

Total

2Total loans
on securities
by Reporting
Member
Banks

3,875
3,823
2,464
2,399
2,204
2,031
1,982

6,801
6,634
5,538
4,882
4,172
3,587
3,450

7,875
7,920
9,179
8,746
8,369
7,991
7,889

‘ Probably includes considerable amounts of loans made by out-of-town banks in
behalf of their customers.
2These banks represent about half of the resources of all commercial bar];s iu th
United States; figures include all of brokers loans shown in first column and par
of loans shown in second column.

A s indicated in last month’s Review, one of the first
movements of funds in connection with the stock market
liquidation was a rapid withdrawal of funds from the
market by lenders other than New York City banks. In
order to prevent a serious money stringency accompany­
ing the decline in security prices, these banks found it
necessary at this stage to increase largely their security
loans both to brokers and to their private customers. As
MILLIONS OF DOLLARS

in New York City and Elsew
here Throughout the United States

MONTHLY REVIEW, DECEMBER 1, 1929

90
BILLIONS OF DOLLARS

&rHER AC1COUNTS

/
j
y V v -s r - f \

/-'\

F F ACCOlfNT OF
O*
C O RRESPOrslD
EN
T
ba n k :

Y

A v ^
A
r W
A V
OWN A 'COUNT
C

L

V A - 1V
V v y

V

’ \v.
\

1 1 .. t .1 _ _ J... .1—
I___ L—
, i. ...J.
1928
1929
Loans to Brokers and Dealers in Securities Placed by New Y ork City
Banks for Own Account, for O ut-of-Town Banks,
and for Other Lenders
i

i

___ ___ —

the liquidation in security prices continued, however,
the release of funds was sufficient not only to meet fur­
ther withdrawals of funds by these other lenders but to
enable the banks as well to reduce their loans to brokers
and dealers to a more normal level.
A s the demands for security loans have decreased,
and as the cumulative effect of increases in open market
holdings of Government securities by the Reserve Banks
has been felt, money conditions have grown easier.
These factors making for easier money were more than
sufficient to offset the effect of a substantial gold export
movement, and the month-end and holiday demand for
currency which made itself felt in the last few days of
November. The changes in money rates in the past two
months are shown in the accompanying table.
Money Rates at New York
Nov. 30,
1928
Stock Exchange call loans.................
Stock Exchange 90 day loans...........
Prime commercial paper....................
Bills— 90 day unindorsed...................
Customers’ rates on commercial 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..........

Sept. 30,
1929

Oct. 31,
1929

Nov. 29,
1929

*6M -10
7
BH-Y2
4HI
15.48

*8-10
9-9 H
QK
5H
16.07

*6
6
6 -6 ^
4H
f6 .0 7

*4M
4H
5-5 X
3 ^ -V s
f5 .7 3

3.97
4 .05

3.41
3.13

6

6

4H

5 y8

5

4

4.20
4.20
5

4.6 2
4.63

* Range for preceding week
t Average rate of leading banks at middle of month

A s in the case of loans to brokers, the statistics of
money rates in the New York money market might well
give a misleading impression as to the changes in credit
conditions throughout the country as a whole.
The
rapid easing in the money position in the past two
months was at first to an unusual degree confined to New
York City. For causes which are not wholly ascertain­
able but which probably include calls for margin when
stock prices were declining, and more recently invest­
ments by out-of-town buyers, the tendency for funds to
flow toward New York was so considerable that the
surplus funds which appeared in the money market did
not at first easily find their way to other parts of the
country.
During the major part of the month of November the




New York City banks after liquidating almost all of
their indebtedness to the Federal Reserve Bank of New
York, held reserves considerably in excess of the require­
ments. A s usual, when their reserves are excessive, the
banks were ready to sell or lend these excesses to other
banks on a day-to-day basis, and the rates at which such
sales were made indicate the extent to which surplus
funds were available. On a number of days during the
month of November these surplus funds, quoted in the
market as Federal funds, were sold at rates as low as
1 % or 2 per cent. Under these circumstances, a number
of out-of-town banks borrowed these funds from the
New York banks on a day-to-day basis, and used them
to reduce their indebtedness at their Reserve Banks. In
this way the amount of surplus funds in New York was
gradually reduced toward the end of the month and the
quotation for Federal funds rose to 4 % per cent.
The diagrams on the preceding page illustrate how re­
cent easing tendencies have been localized in New York.
The extent to which banks find it necessary to resort to
the Reserve Banks to supplement their own supplies of
funds is one of the best indexes of credit conditions. The
charts indicate that whereas the New York City banks
have reduced their indebtedness at the Reserve Bank
from about $300,000,000 early in August to around
$50,000,000 throughout most of November, the banks in
other districts have made no corresponding reduction.
As surplus funds in any single center ordinarily distrib­
ute themselves more rapidly throughout the country
the relative illiquidity of funds during this period was
somewhat unusual and appears to have been due to such
temporary causes as the large movement of funds in
connection with security market activity and some hesi­
tation in the employment of funds. A t the very end of
November an increase in bank borrowing, particularly in
New York City, reflected the temporary demand for
currency over the Thanksgiving holiday and the end
of the month.
Effective November 15 the discount rate of the Federal
Reserve Bank of New York, which had been reduced
from 6 to 5 per cent on November 1, was reduced y 2 per
cent further to 4 % . Reductions from 5 to 4y2 per cent
during November were made also by the Federal Reserve
Banks of Boston and Chicago.
B ill M arket
During the first three weeks of November the invest­
ment demand for bills continued in good volume, though
purchasing was not as heavy as in the latter part of
October. The demand, which included not only substan­
tial foreign orders but also buying by domestic banks
and corporations, was materially in excess of the new
bills which came into the market. Reflecting this situa­
tion the dealers continued to lower their rates, so that
by the 21st of the month 30 to 90 day unendorsed bills
were being offered at a range of 3 % - % per cent, or about
% per cent below the level of the opening of the month
and iy 4 per cent below the figure quoted before rate
reductions began in October.
Longer bills showed
corresponding decreases; the 4 months maturity
reached an offering level of 3 % -4 per cent, and 5 and 6
months bills 4 -4 % per cent. These are the lowest rates
quoted for bankers bills since May 1928.

FEDERAL RESERVE AGENT AT NEW YORK

In the final week of November, the supply of bills
coming on the market increased substantially, especially
during the last few days of the month, and was con­
siderably in excess of the somewhat reduced demand.
During this period, dealers’ portfolios of bills about
doubled, as compared with the low level prevailing in
the third week of the month.
Reflecting the large demand for bills from other
sources, offerings of bills to the Reserve Banks during
November were insufficient to replace maturities, so that
the Reserve System’s portfolio of bills showed a continu­
ous decline, and on November 27 was $122,000,000 below
the high point of October 23, compared with an increase
of $81,000,000 during the same period of 1928.
Com

m e r c ia l

P

aper

M

M IO S O DOLLARS
ILL N F

arket

During November there was an excellent investment
demand for commercial paper. Paper dealers reported,
in addition to good sales in the Middle and Southwest,
and in New England, that New York City bank buying
for out-of-town correspondents was in larger volume
than in some time, and that some buying was done by
New York banks for their own account.
The improved demand and the general easing of
money rates were reflected in a substantial decline in
open market commercial paper rates. Whereas at the
opening of the month the prevailing level for prime
names was 5 % -6 per cent, by the end of November the
bulk of the paper was being sold at 5-5 % per cent,
though some paper was also moving at 5 % per cent.
This is the lowest rate level since July 1928. A s offering
rates were reduced, dealers quoted lower rates to bor­
rowers in order to obtain paper to meet the increased
demand.
In October the first material increase in a number of
months occurred in outstandings of commercial paper.
The amount outstanding through 23 dealers at the end
of that month was 8 per cent larger than a month earlier,
but, at $286,000,000, remained 32 per cent smaller than
a year ago.
S e c u r ity M a r k e ts

Following a temporary upturn during the last two
days of October, the stock market resumed its downward
course until November 13. Closing prices for that day
were in general about 45 per cent below the highest
points and at approximately the same levels as in
March 1928, when the unprecedented price advances of
the past two years may be said to have begun.
During the ten days after November 13, there was a
marked recovery of prices which amounted on the aver­
age to more than one-fourth of the previous decline.
This advance was followed by irregular movements dur­
ing the closing week of the month, which resulted in a
small net decline, and at the end of the month the gen­
eral level of stock prices was still 34 per cent below the
high points, though 18 per cent above the lowest point
reached on the recession.
Considerable strength was evident in bond prices dur­
ing the second half of November, and, in the case of
United States Government issues, throughout the
month. Under the influence of easing money conditions,




P IC A E A E
R E VRG

91

Price Movements of U . S. Government, Foreign, and Domestic
Corporation Bonds, and Volume of Bond Trading on the
New York Stock Exchange

an average of the prices of the eight Government bond
issues now outstanding rose nearly 2 points, following a
similar advance in October, and reached a new high level
for the year, about 1 point above that of January. Dom­
estic corporation bond issues, which in October showed
signs of beginning a definite advance, but which were
under pressure while the stock market was declining,
moved rapidly forward in the second half of November,
and quotations of representative issues were about the
highest of the past half year. A n average of 40 repre­
sentative foreign bonds had a larger setback in the first
part of November than domestic corporate issues, due in
large measure to acute weakness in Brazilian bonds; in
the second half of the month, however, there was a sub­
stantial recovery.
N ew

F in a n c in g

Final figures for the month of October indicate con­
siderable curtailment of domestic corporate security
issues following the unprecedented total for September.
The October volume of new domestic corporate financing
at $675,000,000, exclusive of refunding issues, was
$525,000,000 less than September flotations, due to a
drop of nearly $600,000,000 in stock issues, chiefly of
investment trusts and trading companies.
New bond
offerings at $235,000,000 were the largest since May.
Compared with a year ago, the October 1929 total was
$120,000,000 larger, with about one-third of the increase
in bond issues and the balance in stock flotations. Bond
and note financing by municipalities and States likewise
increased from September to October and was somewhat
larger than last year. October foreign financing in this
country was more than twice as heavy as in the previous
month, but continued below the level of 1928.
In November, unfavorable conditions in the security
markets were reflected in a further decline in the
amount of new securities offered. A number of States
and municipalities took advantage of the easier money
conditions to float bond and note issues, though the total
amount involved was less than half the municipal
financing of the previous month. There was a virtual

MONTHLY REVIEW, DECEMBER 1, 1929

92

cessation of stock issues, not only of investment trusts
and financial trading and holding companies, but also
of industrial, public utility, and other types of com­
panies. In addition, a number of concerns, whose stock­
holders 9 rights to subscribe to additional stock became
payable during November, deferred the payment dates
to December or into the new year. The month’s total,
both for domestic and foreign issues, will probably
prove to be the smallest since at least August 1928, when
summer dullness, a congestion of new issues, and the
development of tight money conditions were important
factors in the curtailment of security flotations.
G o ld

M ovem en t

The month of November showed a net loss of gold to
this country of more than $26,000,000. Most of the loss
was through foreign exchange transactions, the first net
loss of that character in any month since June 1928.
Exports amounted to about $30,000,000, of which $14,500.000 was shipped to France, $10,002,000 to Switzer­
land, and $5,010,000 to Poland.
The receipt of $1,800.000 from Argentina accounted for the bulk of the
imports. There was a net decrease of $1,000,000 in gold
earmarked for foreign account, which, together with the
net exports, reduced the net gain to the country for the
calendar year to $202,000,000.
France continued to draw gold from England during
November but to a smaller degree than in the preceding
months. The November withdrawals from England were
more than offset by arrivals of gold at the Bank of
England from Argentina, South Africa, and New Zea­
land. Argentina continued to lose gold also to Berlin
and Paris.
The rapid change in this country from an import to
an export movement of gold is in some respects com­
parable to the change which took place in 1927. From
January through August 1927, there were net imports
of $146,800,000 of gold; then a reversal set in and from
September through December, exports totaled $140,700,000.
This change accompanied a rapid easing of
money rates in this country relative to rates abroad.
F o r e ig n E x c h a n g e

After continuing their October strength until midNovember, the European exchanges eased off until the
22nd when they recovered their earlier firmness. Ster­
ling maintained its strength throughout the month,
dropping below $ 4 .8 7 % only on the 18th and 20th, and
was quoted around $4.87 1 5 /1 6 as the month closed.
French francs ruled above $0.0394 until November 4
after which they declined gradually to $0.0393% on the
20th,but on the 25th they had recovered to $0.0393 15 /1 6 ,
or slightly higher than the calculated outgoing gold
point.
Reichsmarks were subject to somewhat wider
fluctuations; they sold at $0.23921 on the 1st, fell to a
/4
low of $0.2389% on the 18th, and rose to around $0.2394
on the 29th. Belgas declined from $0.1399% on the 2nd
to $0.1398 on November 19th, and again on the 22nd,
but subsequently rose to $0.1399% , which is above the
theoretical gold export point. Dutch guilders early in
the month were strong at $0.4037% , fell on the 18th to
$0.4031% , and improved later to better than $0.4036.




Swiss francs, contrary to the general tendency, gained
steadily from a low of $0.19351 on November 7 to
/4
$0.1941% on the 29th, the highest in recent years. Lire
were irregular and declined to about $0.0523% after
recording a new high since May 4 ($0.0524 1 /1 6 ) on
November 2.
Scandinavian currencies continued the strength they
gained towards the end of October, with Swedish crowns
in the lead at $0.2691 on the 29th, and Danish and Nor­
wegian crowns closing the month firmly around $0.2680.
The Spanish peseta continued the decline begun on
October 14 and weakened steadily to $0.1373 on Novem­
ber 26.
Though traders in the Japanese yen had largely dis­
counted the news, the announcement of a stabilization
credit and of the date of resumption of free gold move­
ments carried this exchange above $0.49 on November
20 and 21, a movement which was followed by a reac­
tion to $0.4886 on the 26th. Both Canadian dollars and
Argentine pesos were weak during November.
The
former ruled at a discount of $0.02 and over from
November 12 to 18, and sold at around $0.99 near the
month-end. The peso fluctuated weakly around $0.94.
C e n tra l B a n k

R a te

C hanges

During the month of November, ten European central
banks reduced their official rate of discount; of these,
two banks— those of Holland and Danzig— effected two
successive reductions.
The first revision of rates fol­
lowed the announcement of a reduction of one-half per
cent to 6 per cent in the Bank of England rate on Octo­
ber 31, and the lowering of the New York bank rate
from 6 to 5 per cent effective November 1. On Novem­
ber 1 the Netherlands Bank, which has increased its
gold and foreign exchange holdings $16,700,000 since
the end of June, bringing its gold ratio to nearly 54 per
cent, lowered its rate by one-half per cent to 5 per cent.
The earlier rate had been in force since March 25. On
the next day, November 2, the Reichsbank rate, which
had stood at 7 % per cent since April 25, was lowered
to 7 per cent. The Reichsbank has acquired $84,000,000
in fresh reserves since the end of Ju n e; its reserve ratio
is about 63 per cent, and its currency is firm on all the
foreign exchange markets.
The withdrawal of funds
from stock exchange employment in Berlin was one
cause which contributed to easier money in that center
and brought about a readjustment of both private and
official rates.
On the 2nd also the Bank of Danzig
lowered its rate from 6 % to 6 per cent. On the 4th the
National Bank of Hungary, whose rate had stood at 8
per cent since April 24, effected a half per cent reduc­
tion to 7 % per cent. This bank also has made a small
gain in reserves since the middle of the year.
The
drain upon its foreign assets in the past has been
towards New York and Berlin, where an easier position
is now present.
A second series of rate reductions began towards the
middle of November. On the 14th the National Bank of
Belgium, where a 5 per cent rate had ruled since August
1, lowered its rate to 4 % per cent. This bank has added
over $21,000,000 to its reserves since the end of June
and had at last report a reserve ratio of 57.7 per cent.

FEDERAL RESERVE AGENT AT NEW YO R K

Here too a stock exchange slump released funds for use
in the Brussels money market proper. Coincident with
the reduction of one-half per cent in New York on
November 15, the Warsaw rate was lowered by the Bank
of Poland from 9 to 8 % per cent. The Polish central
bank is in a strong position (reserve ratio 61.4 per cent
on November 1 0 ) ; internal credit conditions are reported
easier than at any time since last autum n; and the for­
eign trade of the country has shown successive export
balances since July. A second reduction of one-half per
cent to 4 % per cent was effected by the Netherlands
Bank on November 16.
On the 21st, the Bank of England again lowered its
rate one-half per cent to 5 % per cent. Its bullion hold­
ings are £3,300,000 greater than at the time of the
October 31 reduction; its banking reserve is greater by
£7,500,000 and the reserve proportion has risen from
30.1 to 35.8 per cent. This change in bank rate was
followed on the 22nd by a lowering of the Bank of Nor­
way rate to 5 % per cent from the 6 per cent rate estab­
lished on September 27.
On the 23rd the Austrian
National Bank moved its rate downward from 8 % to 8
per cent, the earlier rate having been in force since Sep­
tember 2 8 ; and the Bank of Danzig effected a second
half per cent reduction to 6 per cent. On the 26th the
National Bank of Rumania rate was reduced from 9 %
per cent, where it had stood since May 14, to 9 per cent.
Satisfactory export sales of the last wheat crop have
brought additional foreign assets into the central bank
and increased its reserve ratio to over 47 per cent at last
report.
The Bank of the Republic of Colombia raised its rate
by one per cent to 9 per cent on November 20, following
an outflow of gold to New York in October and a conse­
quent tightening of money at Bogota.
The Reserve
Bank of Peru moved its rate up from 7 to 8 per cent on
the 13th, and back again to 7 per cent on the 23rd of
November.
B u ild in g

October building contracts awarded in the 37 States
east of the Rockies were about the same as in September,
but were 25 per cent smaller than in October 1928, a
slightly larger year-to-year decrease than occurred in
September.
Residential contracts, although somewhat
above the low level of September, were still 43 per cent
below the volume of October 1928, and public works and
utility projects declined further to a figure 43 per cent
below a year ago; other principal classes of non-residential work, however, compared favorably with last year’s
volume. The accompanying diagram shows the recent
trend of building contracts, both for residential work
and for non-residential projects.
The total value of building contracts awarded during
the first 10 months of this year has been 12 per cent
smaller than in the corresponding period of 1928, and
during the first three weeks of November there has been
a decline from last year’s level of more than one-third
in the daily average amount of contracts awarded.
In the New York and Northern New Jersey district,
contracts awarded during October, though 25 per cent
above the previous month, were 46 per cent smaller than




93

the total of October 1928. Residential contracts contin­
ued well below last year’s level, and commercial building
was smaller, but the largest decline was in public works
and utility projects. Construction of this type was less
than one-quarter that of October 1928, which was, how­
ever, a month when a particularly large volume of pub­
lic construction was contracted for.
B u s in e s s P r o fits

Earnings reports of 220 industrial and mercantile
companies show net profits for the third quarter 17 per
cent larger than those of the corresponding quarter of
1928, a considerably smaller increase over a year ago
than was reported in the preceding six months, when
the increase averaged well over 30 per cent. In 1928 the
trend of corporate profits was slightly upward from the
second to the third quarter, accompanying a rising level
of business activity, whereas this year profits were smaller
in the third quarter than in the second. The decline of
third quarter net profits this year corresponded closely
with the movement in 1927 and considerably exceeded
the seasonal reduction that took place in 1926.
Entering largely into the less favorable showing of
the third quarter was a drop of 17 per cent below last
year’s level in the net profits of automobile manufac­
turing companies, which at the end of the half year
were somewhat ahead of 1928. Aside from this and a
small decline in net earnings of building supply com­
panies, however, all other groups of concerns had larger
profits than a year ago.
For the completed nine months of the year ended
with September, net profits of these same 220 companies
aggregated 2 6 % per cent more than the figure for the
corresponding three quarters of 1928, and 5 1 % per cent
more than in the same period of 1927. The only decline
as compared with 1928 was one of 3 per cent in the
profits of the motor car companies.
Telephone company net profits in the third quarter
were 10 per cent higher than a year ago, and for the
completed nine months showed an increase of 8 per cent.

94

MONTHLY REVIEW, DECEMBER 1, 1929

Earnings of other public utility companies were approxi­
mately 17 per cent above last year, slightly less than the
increase for the first six months. Net operating income
of Class I railroads increased somewhat less between
the second and third quarters than was the case in 1928,
but exceeded by a small amount the figure for the third
quarter of 1926, which was the previous high point of
railroad earnings for recent years. So far in 1929, net
operating income of the railroads has been 17 per cent
larger than 1928, and 8 per cent above the high nine
months figure of 1926.
(Net profits in millions of dollars)
Third quarter
Corporation groups

1928
Motors............................... . .................
Motor parts and accessories
(exclusive of tires).........................
Oil....................................... ...................
Steel............ ..........................................
Railroad equipment..........................
Food and food products................. ._
Machine and machine manufacturing
Copper..................................................
Coal and coke.....................................
Other mining and smelting.............
Chemicals. . . .......................................
Building supplies................................
Tobacco................................................
Amusement.. . ....................................
Electrical equipment.........................
Miscellaneous......................................
Total 16 groups.
Telephone (net operating income) .
Other public utilities.........................
Total public utilities.
Class I railroads (net operating
income)........................................

Nine months

No.

12
16
25

13
53
49
3
32

1929

1927

1928

1929

255

311

302

20

32
103
129
9
93
32

41
132
250

108

12

5
27
18
7

6
12
10
11

12
9

1
8

18

13
57

86

4
40
13
13

2
12
21
8

71
119
13
89
27

12
6

17
41
19
7
14
47

22
3
21

6

20
53

25
63

110

48
17
7
18
54
140

220

395

459

867

1039

95

59
192

173
561

188
623

4
4

45

8
3
5

3

10

66*

224

193

251

290*

734

180

358

397

810

811

12

108
40
37

6

35
59

20
8

1316
203*
732
935*
960

1928

The trend of industry in general continued in October
to be downward, and a majority of this bank’s indexes
showed declines from September, after allowance for
the usual seasonal changes. Comparisons with a year
ago were less favorable than in recent months, and, after
allowance for the usual growth of industry, a majority
of the lines shown in the following table were lower
than a year previous.
This tendency is illustrated in the accompanying
diagram, which compares the recent trend of activity in
several of the leading industries with that of the preTHOUSANDS OF CARS

1929

Oct.

Aug.

Sept.

Oct.

112
120
101
94
99
112
89
106
121
100
94
103
116
123
105
101

129
134
99
101
109
120
83
121
112
96
104
110
109
124
107
111

122r
134
99
95
102
116
88
116
115r
107
101
121
lOlr
118
102
103

118
115
103
91p
116
115p
88
115
115
103
92
100
107
113

102
95
103
104
114
91
105
103
142
104
114

99
99
102
104
79
91
106
123
93
122
110

108
90
71
103
102
86
107
113
89
112
lOlr

101
86
89

Producers’ Goods
Cotton consumption....................................
Woolen mill activity....................................
Silk consumption..........................................
Bituminous coal............................................
Copper, U. S. mines....................................

P r o d u c tio n




(Adjusted for seasonal variations and usual year-to-year growth)

27
71
168

* Partly estimated

MILLIONS OF TONS

vious two years. Production of steel ingots in Octo­
ber did not show the usual seasonal increase, and
output of automobiles was down more than usual.
Copper production showed about the usual seasonal
increase, but as in the case of both steel and automo­
biles was substantially under the levels of last spring
and was also lower than a year ago. Other declines, after
seasonal allowance, were shown in production of pig
iron, lead, zinc, petroleum, coke, and wheat flour, in
deliveries of tin, in slaughterings of live stock, and in
wool mill activity.
Consumption of raw cotton increased more than usual
in October, and compared favorably with the levels of
the previous two years, but prospects of a curtailment
of mill activity were reported in November.
Other
increases after seasonal allowance occurred in mill con­
sumption of raw silk, in mining of anthracite coal, in
sugar meltings, and in production of newsprint paper.
Output of steel declined considerably in November,
whereas usually there is only a small decrease, and
the output of automobiles was reported to have been
much curtailed. Average daily production of coal and
of petroleum also was lower than in October.

Tin deliveries.................................................
Leather, sole..................................................
Paper, total....................................................
Consumers' Goods
Live stock slaughtered................................
Wheat flour....................................................
Sugar meltings, U. S. ports.......................
Gasoline..........................................................
Anthracite coal.............................................
Paper, newsprint..........................................
Tobacco products.........................................
Boots and shoes............................................
Automobile, passenger................................
Automobile, truck........................................
p Preliminary
THOUSANDS OF BALES

r Revised
THOUSANDS OF TONS

111
90
107
114p
91p
93
110

FEDERAL RESERVE AGENT AT NEW YORK

Indexes of Business Activity

95

PER CENT

Car loadings both of merchandise and miscellaneous
and of bulk freight declined in October, when usually
there is little change or perhaps a slight increase, and
showed less than the usual year-to-year growth over
a year previous. Retail distribution of goods also was
lower than in September, after seasonal allowance, but
the foreign trade of this country was higher.
(Adjusted for seasonal variations and usual year-to-year growth)
1929

1928
Oct.
Primary Distribution
Car loadings, merchandise and misc. r ...
Car loadings, other......................................
Exports...........................................................
Imports...........................................................
Panama Canal traffic..................................
Wholesale trade............................................
Distribution to Consumer
Department store sales, 2nd Dist.............
Chain grocery sales......................................
Other chain store sales................................
Mail order sales............................................
Life insurance paid for................................
Advertising.....................................................
General Business Activity
Bank debits, outside of N. Y . City.........
Bank debits, New York City. ..................
Velocity of bank deposits, outside N. Y .
City............................. ...............................
Velocity of bank deposits, N. Y . C ity .. .
Shares sold on N. Y . Stock Exchange. . .
Postal receipts...............................................
Electric power............... ................................
Employment in the United States r ........
Business failures...........................................
Building contracts, 36 States....................
New corporations formed in N. Y . State
Real estate transfers................................
General price level...................................
Composite index of wages.....................
Cost of living............................................
p Preliminary

Aug.

Sept.

Oct.

lOOr
97
105

lOlr
97

98r
92
lOOp
124p

89

92
107

lOOr
96
97
116
84
103

94
99

99
96
103
139

104
92
103
134

99

103

100

106
164

117
195

116
203

116
218

117
188
389

135
228
404
87

137
244
540

181
228
173

111

101
105
98
95

100
122

101

111

109
lOOr
115
136
126
84

110

103r
109
96
113
78

135
242
426
81
108
103r
99
99
107
76

177
224
172

182
227
174

183
229r
173

88

105

93
99
119
99

86

102r
103
92
108
73

r Revised

E m p lo y m e n t a n d W a g e s

The number of workers employed in representative
New York State factories increased less than usual in
October. Instead of showing the customary increase of
about 4 V per cent from July to October, factory employ­
2
ment this year increased only 2.8 per cent. It was
reported that the failure of employment to increase as
much as usual in October was due largely to a decline
instead of the usual rather substantial increase in the
metal industries. The largest losses were in the iron and
steel and automobile groups. The level of factory em­
ployment in the State still remained relatively high,
however, as the accompanying diagram shows.
The
number of workers employed in October was the largest
for any October since 1926, and, excepting only the
period from May to September of this year, the season­
ally adjusted index was also the highest since 1926.
Figures for the country as a whole give similar indica­
tions; there was a decline in October, after seasonal
adjustment, but except for the period from April to
September, the index was the highest since 1926.
Additional indication of somewhat less satisfactory
employment conditions is afforded by the rate of volun­
tary labor turnover. This rate declined in September,
instead of showing the usual substantial seasonal in­




crease, and continued to decline in October, reaching a
lower level than a year ago. This indicates that employ­
ees did not find the usual increase in employment oppor­
tunities this autumn, and that conditions for changing
their employment were less favorable than they were a
year previous. The ratio between orders for workers
and applications for employment at New York State
employment bureaus has also compared less favorably
with a year previous in recent weeks.
The total amount of factory payrolls in New York
State declined slightly in October, when usually there is
a seasonal increase, and average weekly earnings of fac­
tory operatives also showed a decline. Average weekly
earnings of factory office workers, which are calculated
once a year by the State Department of Labor, were
$36.94 in October, compared with $36.37 a year previous,
thus continuing the gradual rise of recent years. This
latest figure shows an increase of 93 per cent over 1914,
an increase well in excess of the rise in the cost of living,
but considerably less than the percentage increase in
earnings of factory operatives.
F o r e ig n

T rade

Both imports and exports of merchandise during
October showed more than the usual seasonal increases
over the previous month.
Exports,
valued
at
$530,000,000, were $20,000,000 smaller than a year ago,
however, while imports, valued at $392,000,000, were
$37,000,000 larger.
Crude foodstuffs, chiefly grains, were the only export
products less in value than in September. The failure of
grain exports to show the usual increase for this period
is partially explained by the comparatively early crop
movement this year.
The value of grain products
shipped in October 1929 was less than half that of a
year ago, but due to heavy shipments early in the season,
the value for the four months ended October 1929 was
about 21 per cent under that for the corresponding
period in 1928. Shipments abroad of finished and partly
finished manufactures continued to show gains over a
year ago, but the value of other groups of exports de­
clined.

MONTHLY REVIEW, DECEMBER 1, 1929

96

A ll groups of imports showed increases over the pre­
vious month, and all except manufactured foodstuffs,
mainly sugar, showed considerable increases over a year
ago. Quantity receipts of coffee, crude rubber, and raw
silk were greater than either in the previous month or
in October 1928.
The quantity of raw silk imported
slightly exceeded the previous record of two months ago.

Net sales
percentage change
Oct. 1929
compared with
Oct. 1928

Stock on hand
percentage change
Oct. 31, 1929
compared with
Oct. 31, 1928

+ 2 2 .6
+ 13.1
+ 1 2 .7
+ 1 2 .2
+ 9 .7
+ 9 .0
+ 7 .7
+ 7 .3
+ 7 .2
+ 7.1
+ 6 .0
+ 5 .7
+ 5 .6
+ 3 .7
+ 0 .8
— 9 .2
— 12.9
— 35.2
— 3 .0

— 6 .4
— 1.0
+ 5.1
— 4 .8
— 6.1
+ 1.1
+ 0 .9
+ 3 .2
+ 6 .2
+ 5 .9
+ 1 4 .6
— 3 .0
— 7.1
+ 2 .2
— 0 .2
— 9 .4
— 15.4
+ 5 .4
— 2 .7

Women’s and Misses’ ready-to-wear
Toys and sporting goods...................
Women’s ready-to-wear accessories
Men’s and Boys’ wear.......................

D e p a r tm e n t S to re T r a d e

A preliminary inquiry concerning November busi­
ness in a number of the large New York City stores
indicated that sales during the first half of the month
averaged about 6 per cent smaller than a year previous.
The decline was reported to be in luxury lines; sales of
other types of merchandise were reported to be continu­
ing in about the usual volume. Specific reports as to
certain luxury lines such as jewelry and diamonds indi­
cate that even in these lines sales were in some cases
better than a year ago.
The October reports of leading department stores in
this district showed an unusually large increase in sales
over a year ago, especially in New York, where there
was an increase of 8 per cent, the largest since August
1927.
Substantial increases in October were reported also in
Southern New York State, the Hudson River Valley
District, the Capital District, and the Westchester Dis­
trict. Rochester and Bridgeport reported slightly more
than the usual increases, but Buffalo, Syracuse, and
Northern New York State department stores continued
to report decreases in sales as compared with a year
previous. The reporting apparel stores continued to
show a substantial increase in sales over last year.
Stocks of merchandise showed a substantial increase
during October in preparation for the holiday trade,
but were only 1 per cent higher than a year ago at the
end of the month. Collections on charge accounts out­
standing were slightly lower than in October 1928, but
preliminary indications were that collections in Novem­
ber were somewhat better than last year.
The apparel departments were prominent among those

Locality

showing the largest increase in sales in October, as the
following table shows.

Percentage
change
October 1929
compared with
October 1928

Linens and handkerchiefs.................
Books and stationery.........................
Luggage and other leather goods. .
Home furnishings................................
Men’s furnishings...............................
Toilet articles and drugs...................
Cotton goods.......................................
Silverware and jewelry.....................
Woolen goods......................................
Silks and velvets................................
Musical instruments and radio. . . .
Miscellaneous......................................

W h o le s a le T r a d e

October sales of reporting wholesale firms in this dis­
trict showed substantial seasonal increases in most lines,
and were larger than a year previous in a majority of
cases. The average increase over October 1928 was not
large, however, as sales in that month were of unusual
volume. Sales of groceries, stationery, and paper con­
tinued the increases over last year which have been
reported for a number of months, and sales of drugs,
shoes, and jewelry also were higher than in October
1928. Quantity sales of silk goods reported by the Silk
Association showed a substantial increase over last year,
and orders reported by the National Machine Tool
Builders’ Association were 13 per cent above the large
volume of October 1928. Sales of m en’s clothing and
diamonds, however, showed decreases of 11 and 20 per
cent, respectively, compared with last year.
Stocks of groceries and drugs continued to be larger
than last year, while a decline was reported in the stocks
of cotton goods, silk goods, shoes, hardware, and dia­
monds and jewelry. Collections averaged a little slower
than last year, but there were considerable differences
in various lines.

Per cent of
accounts
outstanding
September 30
collected in
October
Commodity

Net
sales

Stock
on hand
end of
month

1928

52.9
4 3.2
42.9
33.8
48 .5

42.4

Net
sales

1929

56.3
4 5.0
47.1
36.7
46.0

Percentage
change
October 1929
compared with
September 1929

42'.7

Stock
end of
month

Percentage
change
October 1929
compared with
October 1928

Net
sales

Stock
end of
month

Per cent of
accounts
outstanding
September 30
^collected
in October

1928

1929

77.9
3 9.0

76.1
39.3

4 6.2
54.2
4 4.8
48.1

48‘0
.
49.9
37.9
49.7

New York...........................................................
Buffalo
............................................................
Rochester............................................................
Syracuse
.......................................................
Newark ..............................................................
Bridgeport.............................. ...........................
Elsewhere............................................................
Northern New York State.........................
Central New York State............................
Southern New York State.........................
Hudson River Valley District...................
Capital District.............................................
Westchester District....................................

+ 8.1
— 2 .7
+ 4 .5
— 6 .0
+ 2 .4
+ 4 .4
+ 6 .0
— 19.1
+ 0 .4
+ 6 .7
+ 5 .9
+ 1 5 .3
+ 5 .4

+
—
+
+
—
+
+

All department stores..................................

+ 6 .2

+

1-1

51.1

49.4

Weighted Average.. .

Apparel stores...............................................

+ 7 .4

+ 2 .7

48.7

4 9.7

* Quantity not value. Reported by Silk Association of America
** Reported by the National Machine Tool Builders’ Association




1-7
2 .5
7 .7
7 .7
4 .2
2 .3
4 .3

Men’s clothing..............
Cotton goods.................

Machine tools**...........

+ 1 5 .2
— 21.1
+ 1 9 .6
+ 1.6*
— 10.4
+ 3 2 .7
+ 2 1 .8
+ 3 3 .8
+ 1 9 .6
+ 1 0 .8
— 14.9
+ 3 1 .6
+ 6 .9

+ 2 .0
+ 6 .4
— 11.0
+ 0 .6
— Y .S
— ‘ 3 .3
+ 1 .8* 1 + 1 3 .0 * — 0 .6 *
+ 4 .1
— 23.5
— 6 .4
+ 8 .8
+ 2 9 .0
— 3 .2
0
— 10.6
— 4 .7
+ 1 3 .4
+ 1 3 .4
+ 5 .0
— 19.9 J 13.3 |
—
)— 1 2
+ 1.4
1
+ 1 6 .4

+

1-2

4 6 ’.4
62.9
23.4
54.0

5 2.4
71.2
) 27.4
J
53.5

FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, DECEMBER 1, 1929
Business Conditions in the United States
(Summarized by the Federal Reserve Board)
NDUSTRIAL production declined further in October, and there was also a
decrease in factory employment. As compared with a year ago, industrial
activity continued to be at a higher level, and distribution of commodities to
the consumer was sustained. Bank credit outstanding increased rapidly in the
latter part of October, when security prices declined abruptly and there was a
large liquidation of brokers loans by nonbanking lenders. In the first three
weeks of November further liquidation of brokers loans was reflected in a
reduction of security loans of member banks. Money rates declined throughout
the period.

I

P

Index Number of Production of Manufactures and
Minerals Combined, Adjusted for Seasonal Vari­
ations (1 9 23 -2 5 average = 100 per cent)

D

Index Numbers of Factory Employment and Pay­
rolls, W ithout Adjustment for Seasonal Vari­
ations (1923 -1 9 2 5 average = 100)
MILLIONS OF DOLLARS

MILLIONS OF DOLLARS

r o d u c t io n

Production in basic industries, which had declined for several months from
the high level reached in midsummer, showed a further reduction in October.
The Board’s index of industrial production decreased from 121 in September
to 117 in October, a level to be compared with 114 in October of last year.
The decline in production reflected chiefly further decreases in output of
steel and automobiles. Daily average output of shoes, leather, and flour also
declined, while production of cotton and wool textiles increased. Preliminary
reports for the first half of November indicate further reduction in output of
steel and automobiles, and a decrease in cotton textiles.
Total output of minerals showed little change. Production of coal increased,
and copper output was somewhat larger, while daily output of crude petroleum
declined slightly for the month of October and was further curtailed in
November.
Volume of construction, as measured by building contracts awarded, changed
little between September and October and declined in the early part of
November.
is t r ib u t io n

Shipments of freight by rail decreased slightly in October and the first two
weeks in November, on an average daily basis. Department store sales con­
tinued as in other recent months to be approximately 3 per cent larger than
a year ago.
W

h o le s a le

P

r ic e s

The general level of wholesale prices showed little change during the first
three weeks of October, but in the last week of the month declined considerably.
The decline reflected chiefly price reductions of commodities with organized
exchanges, which were influenced by the course of security prices. During the
first three weeks of November prices for most of these commodities recovered
from their lowest levels. Certain prices, particularly those of petroleum, iron
and steel, and coal, showed little change during the period.
B

Reserve Bank Credit (Monthly averages of daily
figures for 12 Federal Reserve Banks; latest
figures are averages of first 21 days in
November)

1925

1926

1927

1928

1929

Money Rates in the New York Market (November
rates are averages for first 20 days)




a n k

Cr

e d it

Following the growth of $1,200,000,000 in security loans by New York City
banks during the week ended October 30, when loans to brokers by out-of-town
banks and nonbanking lenders were withdrawn in even larger volume, there
was a liquidation of these loans, accompanying the decline in brokers loans
during the first three weeks of November. All other loans increased and there
was also a growth in the banks' investments.
Reserve Bank credit, after increasing by $310,000,000 in the last week of
October, declined by about $120,000,000 in the following three weeks. On
November 20 discounts for member banks were about $100,000,000 larger than
four weeks earlier, and holdings of United States securities were $190,000,000
larger, while the banks’ portfolio of acceptances declined by $100,000,000.
Money rates in New York declined rapidly during October and the first
three weeks in November. Open-market rates on prime commercial paper
declined from 6% per cent on October 22 to 5y2-5% per cent on November 20;
during the same period rates on 90-day bankers acceptances declined from 5%
per cent to 3% per cent; rates on call loans were 6 per cent during most of
this period, but declined to 5 per cent in the third week of November. Rates
on time loans also declined.
The discount rate of the Federal Eeserve Bank of New York was lowered
from 6 to 5 per cent, effective November 1, and to 4% per cent, effective
November 15, and the discount rates of the Federal Reserve Banks of Boston
and Chicago were lowered from 5 to 4 ^ per cent effective November 21 and
November 23.