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MONTHLY REVIEW of Credit and Business Conditions Second Federal Reserve D is t r ic t Federal ReserveAgent________ Federal ReserveBank, NewYork____________ December 1, 1931 suchas acceptances andTreasurybills andcertificates. Money Market inNovember This demandwasincreasedatthemiddleof November, Amarkedchangeinthebankingsituationhasoccurred w hentheNewYorkClearingHousebanksdiscontinued during the past month. The extraordinary outflowof the practice of arranging brokers loans for customers goldhasbeenfollowedbyarenewedgainof gold. The other than correspondent banks and thus released demandforcurrencyhasbeengreatlyreduceduntil, in approximately$160,000,000 of funds for otheremploy recent weeksit hasbeenof lessthantheusual seasonal ment. The effects of these various developments on proportions. Bank failures have diminishedconsider moneyratesarereflectedinthefollowingtable. ably innumber. Liquidationof bankcredit has con tinued, but has beenless rapidthaninOctober. The easier conditionof the money market, resulting from thesevariouschangesinthesituation, hasbeenreflected inafairly general, thoughmoderate, decline inopen market moneyrates. The gradual decline in the leading European ex changes that beganinthelatter part of October con tinuedinNovember, sothat neartheendof themonth most of these exchanges that are still convertible into goldwereclosertothegoldimport pointsatNewYork thantothegoldexport points. Therewererathersub stantial receipts of goldfromthe Far East andsmall amounts fromLatinAmerican countries and Canada, andapart of thegoldwhichhadbeenearmarkedfor The discontinuance of the placing of brokers loans foreign account in preceding months was released for non-banking lenders largely eliminated a type of during November. The result was anincrease of ap anwhichmadedifficulttheexerciseofbankingcontrol proximately$129,000,000inthemonetarygoldstockof lo overtheflowoffundsintothesecuritymarketsin1929, thiscountryduringNovember. As anet result of gold a importsinthefirsteightmonthsoftheyear,heavylosses ndinvolvedaseverestrainonthebankswhenalarge in September and October, and the gains in recent weeks, thecountry’sgoldstockshows adeclinefor the yeartodateof about $174,000,000. During November currency withdrawals fromthe banksappeartohavebeenlimitedtothoserequiredfor the ordinary week-end and month-end payrolls, and othernormal needs. Infact, astheaccompanyingdia gramindicates, the amount of currency outstanding, afteradjustmentfortheusual seasonal fluctuations, has declinedgraduallyfor fiveconsecutiveweeks. During theremainderof theyearademandfor at least $200,000,000 of additional currencyfor theholidaytradeis normallytobeexpected. For the countryas awhole banksuspensions inNovember were reducedto about one-thirdthenumberclosedinOctober. Thecessationof thewithdrawal of domesticdeposits andforeignfunds fromthebanks was followedbyan active demand for highgrade short-terminvestments M on ey Rates at New York N ov. 28, 1930 Oct. 30, 1931 N ov. 30, 1931 Stock Exchange call loa n s....................... Stock Exchange 90 day loa n s................. Prime commercial p a p er.......................... Bills— 90 day unindorsed......................... Customers’ rates on commercial loa n s.. Treasury securities Maturing March 15 (yield )................. Maturing September 15 (y ie ld )......... Federal Reserve Bank of New Y ork re discount ra te ........................................... Federal Reserve Bank of New Y ork buying rate for 90 day indorsed bills 2 *2-2 H 2 % -3 IV s t3 .7 3 *3 M -4 3 M -4 M 3H f 3 .67 2H *3-3 X 3 H -4 3 t4 .5 0 1.19 1.53 2.32 2 .2 7 1.99 2 .4 0 2^ 3H 3X t2 3H m vs * Nominal t Average rate of leading banks at middle of month % 1-75 days— 1 per cent 1-45 days— 3 per cent MILLIONS OF DOLLARS MONTHLY REVIEW, DECEMBER 1, 1931 90 volume of these loans had to be replaced by bank loans near the end of that year. The replacement of the com paratively small volume of such loans that remained on November 16 involved a moderate expansion oi the security loans of the New York banks for their own account, which was largely obscured by the continued decline in the total volume of brokers loans, and in other forms of bank credit. The general tendency in recent weeks has been toward a continued, though less rapid, liquidation of bank credit. In the three weeks ended November 18, the total loans and investments of reporting member banks declined $219,000,000, as compared with a decline of $886,000,000 during October. Approximately two-thirds of the November reduction was in the investments of these banks, and the remainder in loans other ^ than security loans. As in the previous month the decline in the deposits of these banks, amounting to $359,000,000, was larger than the decline in loans and investments. The November decline in deposits, like that in loans and investments, was at a considerably less rapid rate than in October, when the deposits of reporting banks declined more than $1,400,000,000. Altogether, the available reports indicate a total shrink age in bank credit of around $5,500,000,000 since 1929, and an accompanying shrinkage in bank deposits of nearly $7,000,000,000. In actual amount these figures represent by far the largest liquidation of bank credit and bank deposits which has ever occurred in this coun try and, in proportion to the amount outstanding, the largest shrinkage since 1893. B il l M a r k et During the first part of November, the investment demand for bills increased steadily, both from domestic and foreign sources, and as offerings of bills to the discount market were in limited volume, the dealers were unable to fill all of their orders. Reflecting this condidition, open market offering rates were reduced on November 6 and 9, and again on November 13, so that dealers’ offering rates became established at levels % per cent below those prevailing at the end of October in the case of unendorsed bills up to 90 day maturity, % per cent lower for 4 month bills, and % per cent lower for the 5 and 6 month bills. Bid rates for bills up to 90 days were reduced % per cent, with the result that the spread between bid and asked rates returned from % per cent to % per cent, while bid rates for the longer bills were reduced by the same amount as offering rates, leaving a % per cent spread. Despite the lowering of the rate structure of the bill market, the investment demand continued unsatisfied, however, as dealers were unable to purchase a sufficient volume of bills. Shortly after the middle of the month the investment demand for bills was increased still fur ther for a time in connection with the reinvestment of funds which had previously been employed by non banking institutions in the call loan market. In the last week of the month, however, the situation in the bill market changed somewhat. Demand for bills M IL L IO N S OF D O L L A R S Volume of Bankers Acceptances Outstanding; 1931 Compared with Previous Three Years declined substantially, and a few banks began to offer bills to the discount market. The dealers responded promptly by raising bid and offering rates for bills up to 90 day maturity by % per cent on November 25. Their portfolios which were quite small during the early part of November remained at a low level for the balance of the month. Due to the active investment demand, virtually no bills were offered to the Reserve Banks for System account. Reserve Bank bill holdings, which reached a peak of $769,000,000 for the weekly reporting date of October 21, were reduced $289,000,000 to $480,000,000, chiefly by maturities, during the period ended Novem ber 25. On November 20, the buying rate of the New York Reserve Bank for bills maturing in 1 to 45 days was lowered to 3 per cent, with the rate for longer bills up to 90 days unchanged at 3 % per cent, and on Novem ber 27 the rate at which bills are purchased from dealers under resale agreement was reduced to 3 per cent. The total volume of bills outstanding was increased $43,000,000 in October to $1,040,000,000, following a steady decline since November 1930. As the accompany ing diagram indicates, however, the September to Octo ber advance this year was considerably less than has occurred during the same month of other recent years. An increase in acceptances arising from domestic ware house credits more than accounted for the increase in total outstandings of bills. Export bills showed little sea sonal expansion and the volume of acceptances based on goods shipped between or stored in foreign countries continued to decline. C o m m e r c ia l P aper M a r k et Bank investment demand for open market paper was rather inactive with a somewhat marked concentration of inquiry coming from banks in the Boston and St. Louis districts. Due to the limited demand and also to the continued small volume of new paper coming into the dealers’ lists, the volume of business transacted in the open market was of small proportions. Early in Novem 91 FEDERAL RESERVE AGENT AT NEW YO R K ber, the prevailing range for prime commercial paper in the open market became established at 4 -4 % per cent. Around the middle of the month, however, following a slightly easier tendency in some other branches of the money market, the prevailing selling quotations were reduced to a range of 3% -4 per cent. The smallness of the current supply of paper is indi cated by the dealers’ reports to this bank of their paper outstanding which on October 31 showed a total of $210,000,000. This total is 15 per cent less than the amount outstanding a month earlier, and 57 per cent below the October 1930 figure. with the decline in the silver market. Canadian dollars weakened somewhat during November. Closing Cable Rates at New Y ork (In dollars) Exchange on F oreign E x ch a n g e Though irregular and featured by gains in some cur rencies, the foreign exchange list on the whole weak ened during November. Sterling, in particular, after strengthening from its late October recession to $3.81% on November 9, began a new decline which was acceler ated in the last week of the month, carrying the pound to $3.5250 on the 28th. French francs, belgas, and guild ers approached their gold import points to New York in the second half of November, and Swiss francs, though remaining above par, were down several points from the month’s opening. The marked recession in the four principal European exchanges which followed the Octo ber rise is shown in the accompanying diagram. Reichs marks moved contrary to the general tendency among Europeans and rose from $0.2358 on November 2 to $0.2378 on the 28th. An upward tendency also appeared in the South American currencies; Argentine pesos rose from $0.5333 on the 2nd of November to $0.6211 on the 11th, receding to $0.5882 on the 28th; Uruguayan pesos commenced the month at $0.4300 and closed it at about $0.4525, while Brazilian milreis held fairly steady in the neighborhood of $0.0625. Japanese yen also improved their position in Novem ber, rising from $0.4915 to $0.4963, the latter rate being above the gold export point from Japan. The silver currencies strengthened in the middle of the month as the price of silver rose but fell back again DO LLARS DOLLARS Par Nov. 29, 1930 Oct. 31, 1931 Nov. 28, 1931 $ .1407 .1390 .2680 4.8665 .0392 .2382 .4020 .0526 .2680 .1930 .2680 .1930 $ .1409 .1395 .2675 4.8553 .0393 .2384 .4024 .0524 .2674 .1122 .2684 .1936 $ .1395 .1393 .2180 3.8300 .0393 .2365 .4029 .0516 .2140 .0888 .2240 .1949 $ .1415 .1388 .1932 3.5250 .0391 .2378 .4015 .0516 .1910 .0843 .1941 .1939 1.0000 .9648 .1196 1.0342 1.0016 .7813 * .7875 .8988 .5319 .0625 .4050 .8675 .5882 .0625 .4525 .4985 .3650 .4963 .3597 .3819 .4895 .2925 .3250 .4963 .2680 .3313 * N ot quoted G o ld M o v e m e n t The gold movement was reversed abruptly at the end of October and during the month of November the monetary gold stock of the United States was increased about $129,000,000, due principally to imports of $76,000,000 from Japan at San Francisco and a net decrease of $28,300,000 in gold held under earmark for foreign account. In addition, $6,100,000 of gold was received from Canada, $4,800,000 from India, and $300,000 from England at the Port of New York; also $1,500,000 from China and $1,100,000 from Australia at San Francisco. Exports totaled about $4,400,000 of which $3,000,000 went to Turkey, $700,000 to Peru, and $250,000 to Switzerland. The November gain of gold reduced the net decline in this country’s gold stock for the year to date to about $174,000,000. A total of £785,000 South African gold arrived in the London market during November, of which £365,000 was taken for the continent, £180,000 for the United States, and the balance for the trade at varying prices. DO LLARS DO LLARS 92 MONTHLY REVIEW, DECEMBER 1, 1931 Central Bank Rate Changes On November 5 the Bank of Japan, which has been undergoing a drain of gold almost uninterruptedly for nearly two years, raised its rate from 16 rin to 18 rin per day per 100 yen, the percental equivalent being an increase from 5.84 to 6.57 per cent per annum. On the 13th, the South African Keserve Bank rate was raised from 5 to 6 per cent, the lower rate having been in force since March 13, 1931. The Austrian National Bank lowered its discount rate from 10 to 8 per cent on the 13th; the 10 per cent rate had been effective since July 23, 1931. On the 24th, the Bank of Danzig rate was reduced to 5 per cent from the 6 per cent level obtaining since September 1 of this year. PlJBLIC UTILITIES u \ L ^ V l N C >USTRIALS\ RAILROADS j* \ La (1926AVERA<3E*ioo) v N e w F in a n cin g Offerings of new securities other than United States Government issues continued in small volume during November, though the total for the month was somewhat larger than for October. Bond flotations included a railroad issue for the first time since the middle of September, and there were a few moderate sized public utility issues, which had been virtually suspended in October. State and municipal financing also aggregated somewhat more than in the preceding month. There continued to be an absence of foreign bond offerings in this market. Five issues of United States Treasury bills were put out during November, in the aggregate amount of $372,000,000; these issues were largely to replace five issues totaling $320,000,000 that matured during the month. Final figures for October give a total of $45,000,000 of new securities floated during that month. This amount, which is the smallest for any month since the war, was only about one-tenth of the October 1930 total. S ecu rity M a r k e ts The general movement of stock prices continued upward during the first few days of November, but sub sequently the trend was almost continuously downward. In the 16 trading sessions between November 10 and November 28 there were only two days on which the general level of share prices closed higher than on the previous day. As a result the prices of late November were on the average only slightly above the early Octo ber lows, whereas in the early part of November the net recovery from the October lows had amounted to 31 per cent. As the accompanying diagram indicates, the railroad stocks were the weakest class during the latter part of November, declining several points beneath the October low and reaching new low levels for many years. Industrial and public utility stocks also declined con siderably, but in general remained somewhat above their October low points, although there were numerous excep tions in individual stocks. As in the greater part of October, trading on the New York Stock Exchange remained comparatively light. The average daily stock turnover for the whole month was somewhat less than 2 million shares, and on most days did not exceed 1 % million shares. i, —i---- 1. ... .. 1... ! -.11928 1929 1 I 1930 I . i, . i . .i.... 1931 Price Movements of Industrial, Railroad, and Public Utility Stocks (Standard Statistics Company weekly price indexes) Bond prices continued to show rather wide movements in November. Substantial recoveries in domestic cor poration bonds occurred during the first ten days of the month, but subsequently declines of 3 to 6 points in the various price averages and indexes reduced these indi cators to new lows for a number of years. Foreign dollar bonds likewise advanced somewhat in the first part of November, and, despite a subsequent decline, remained above the lowest point reached in early October, accord ing to a price average of 40 representative foreign issues. The partial recovery that took place in United States Government obligations during the second half of Octo ber was extended somewhat further in the first few days of November. For the remainder of the month, United States Government obligations showed a declining ten dency, losing in all about 1 % points, but the average price of the eleven Liberty Loan and Treasury bond issues now outstanding was about 1 % points higher near the end of November than at the lowest point reached in October. B u siness P rofits Third quarter earnings statements of 278 industrial and mercantile concerns show that these companies had net profits 62 per cent smaller than in the corresponding quarter of last year, and 82 per cent less than in 1929. The comparisons for the third quarter are somewhat less favorable than those for the preceding quarters of this year. Only one of the twenty groups of companies shown in the following table— the clothing and textiles group— reported larger net profits than in 1930, and in this case the increase was slight and was from a low level. Among the groups of companies showing the more favorable comparisons of net earnings with those of previous years were the food and food products, chemi cal, paper, and tobacco companies. Net profits of 15 automobile companies, including the General Motors Cor poration but not the Ford Company, were 38 per cent FEDERAL RESERVE AGENT A T NEW Y O R K smaller than a year ago, and 85 per cent less than in 1929. Among the other groups of industrial and mer cantile concerns, declines ranged upward from these figures; in fact, the steel, copper, machinery, and coal and coke groups showed deficits. The oil companies, while showing a large decline from last year, were able in the third quarter to report some net profits, whereas in the first half of the year large deficits occurred. The third quarter of the year normally represents the period of most active operations for the oil companies, but the low level of oil and gasoline prices this year undoubtedly increased the difficulty of showing profits. Aggregate net profits of the same 278 companies for the first nine months of 1931 were 55 per cent smaller than in 1930 and 72 per cent below 1929. Of the prin cipal groups of industries, the copper and oil companies had deficits for the nine months as a whole. Net operating income of Class I railroads, both for the third quarter and for the first nine months, was more than one-third smaller than in 1930 and more than onehalf smaller than in 1929. Third quarter income of these roads was the smallest for any year since 1920 when a deficit was reported, and the total for the first nine months was the smallest since 1921. Telephone company net operating income for the first nine months was a little more than 3 per cent larger than in 1930, and about 1 % per cent larger than in 1929. Net earn ings of other public utilities during the first nine months declined 12 per cent below 1930 and were 17 per cent less than in 1929, but these represent quite moderate decreases in comparison with the drop in industrial and mercantile profits. (N e t profits in millions of dollars) Corporation Group N um ber of com pa nies Th ird quarter Nine months 1929 1930 1931 1929 1930 1931 Clothing and textiles............... Food and food products......... C hem ical..................................... Paper........................................... Tobacco...................................... Autom obile................................ Printing and publishing.......... M ining and smelting (excl. copper, coal and coke). . . . Electrical equipm ent............... Office equipm ent....................... Railroad equipment................. O il................................................. Building supplies...................... Automobile parts and acces sories (excl. tire s )................. M otion picture.......................... M achinery.................................. Steel............................................. Copper......................................... Coal and coke............................ Miscellaneous............................ 8 30 14 6 7 15 6 2 49 22 5 4 94 7 0 40 17 4 2 23 5 1 32 12 3 2 14 3 2 130 60 12 10 332 23 2 122 52 13 6 147 22 0 106 37 10 5 108 13 12 9 7 6 24 9 13 27 7 10 75 9 5 17 4 9 40 2 3 10 1 2 6 0 39 77 22 25 169 18 21 56 15 26 112 7 11 30 4 5 — 20 0 29 7 17 15 6 7 44 17 12 12 84 10 1 47 5 4 5 32 1 0 27 0 0 — 1 — 17 — 2 — 1 23 58 35 35 241 28 4 140 27 29 23 140 7 2 85 10 13 3 11 — 3 0 68 T o ta l........................................ 278 507 242 91 1,460 914 411 Telephone (net operating incom e)............................... 103 67 64 67 206 202 209 Other public utilities (net earnings)............................. 63 83 71 59 261 249 218 To tal public u tilities........... 166 150 135 126 467 451 427 Class I railroads _ (net operating incom e). . . . 171 400 283 167 963 659 408 — Deficit 93 E m p lo y m e n t and W a g e s A further downward movement was apparent in fac tory employment and payrolls between the middle of September and the middle of October. Factory employ ment in New York State, contrary to the usual seasonal tendency, declined 3 per cent, the largest month to month drop so far this year. For the country as a whole, factory employment declined 4 per cent, and the seasonally adjusted index of the Federal Reserve Board reached a new low level since at least 1919, the first year for which the index is available. Factory payrolls in New York State showed a drop of 6 per cent, and a decline of 4 per cent was shown for the United States as a whole. Average weekly earnings in New York State factories declined further in October to the lowest figure since 1922. As is shown in the accompanying diagram, the decline in average earnings since the peak of September 1929 has now reached a magnitude equal that of the decline from 1920 to 1922. These reductions in average earnings reflect the combined effects of wage rate reduc tions and part time employment. The annual computation of average weekly earnings of factory office employees made by the New York State Department of Labor showed the first decline that has been reported since 1922. The average for October 1931 was $35.49, the lowest level since 1926 and about 5 per cent lower than last year’s figure of $37.48. Average weekly earnings of factory operatives and office em ployees together declined 10 per cent during the year. As compared with the pre-war average, the net per centage rise in office workers’ earnings still falls short of the net advance in operatives’ earnings, but the dis crepancy has been narrowed during the past two years. The New York State Department of Labor has recently made public a census of unemployment covering more than 15,000 usually employed persons of both sexes in Buffalo. According to this census, 23 per cent of those able and willing to work were without employment during the first week of November, and 21 per cent were employed on a part time basis. For men only the pro portion of total unemployment in November 1931 was 94 MONTHLY REVIEW, DECEMBER 1, 1931 24 per cent, as compared with 17 per cent in November 1930 and 6 per cent in November 1929. Of the men who were able and willing to work but unable to find jobs, 43 per cent had been without employment for at least a year. F oreign T r a d e During October merchandise exports from this coun try were valued at $205,000,000, an amount which showed a percentage gain from the previous month about equal to the usual seasonal increase. Imports, however, valued at $169,000,000, were substantially the same as in September, whereas there is usually an increase between these two months. In comparison with October 1930, the value of exports was reduced by 37 per cent and imports by 32 per cent. The year-to-year decline in exports was somewhat smaller than in other recent months, while the reduction in imports was larger. Exports of partly and wholly finished manufactures and all types of imports registered heavier losses from a year ago than in September. Exports of crude materials and of crude and manufactured foodstuffs, however, showed smaller percentage reductions than in the previ ous month. October raw cotton exports were equal in volume to those of a year ago, but, owing to the decline in cotton prices through this period, the value of the shipments was 38 per cent smaller. Cotton shipments to Great Britain compared more favorably with a year previous than in several months, and shipments to the Far East were in substantially larger volume than in either of the two previous years. The volume of imports of raw silk was somewhat larger than in October 1930 while receipts of crude rubber were slightly smaller. C o m m o d ity Prices Large fluctuations occurred in the prices of certain individual commodities during November, and on the whole prices were somewhat firmer in the early part of the month, but renewed declines in the latter part can celed most of the earlier gains, and a few commodities reached new low levels. The widest fluctuations were in silver and wheat prices, which are shown in the accom panying diagram. Silver, after ranging between 29 and 30 cents during most of October, rose sharply to the highest level of the year at 37% cents an ounce in the first half of November, but thereafter reverted to its October level. The cash price of wheat also advanced further to a new high for the year in the early part of the month, the Number 1 Northern grade at Minneapolis touching 83% cents a bushel, but by the end of the month had returned to 70% cents, the lowest price since the third week of October. This quotation remained 13Y2 cents above the summer low, but the futures quota tions declined by a larger amount than the cash quota tions to a level within about 7 % cents of the October lows. An average of crude petroleum quotations continued to advance in the first half of November, reaching the highest level since March, and remained steady during the remainder of the month. The price of scrap steel has held fairly steady since June, and similar stability has prevailed in finished steel and, more recently, in pig iron and some of the non-ferrous metals. Copper, how ever, declined to the lowest figure on record and lead prices showed a small net loss for the month. Hog prices fell to the lowest level in many years, rubber reached a new all-time low, cotton reacted following last month’s sharp advance, and corn prices lost most of the gain made in October and the first half of November. Prices of hides rose moderately from the low levels of October. P ro d u ctio n Operations in the steel industry averaged slightly higher in November than in October, contrary to the usual seasonal movement, but the tendency was down ward in the latter part of the month. Production of crude petroleum, reflecting a resumption in the East Texas fields, was larger than at any time since August. Output of bituminous coal and production of cotton goods were not greatly changed from the October levels. ^ In October, the general tendency of industrial produc tion continued to be slightly downward, after seasonal allowance, and the seasonally adjusted index of the Federal Reserve Board reached a new low point since 1922. Output of pig iron and steel ingots was further reduced to the lowest level since 1921. Production of passenger automobiles dropped about 50 per cent, and output of motor trucks was also sharply reduced. 6L i J F M A M J J A S O N J F M A M J J A S O N Movements of Wheat, Silver, i J F M i 1 a) A M J J A S O Steel, and Petroleum Prices N 50lri i i J F M i i A M p i J J A S O N FEDERAL RESERVE AGENT AT NEW Y O R K 95 Declines contrary to the nsnal seasonal tendency occurred in wool mill activity and in mill consumption of raw cotton, and a more than seasonal decline took place in production of boots and shoes. In the output of fuels, large increases occurred in crude petroleum and in anthracite coal, while bituminous coal increased by a little less than the usual seasonal amount. building contracts was 30 per cent less than in 1930. The value of residential building was reduced 23 per cent, but the amount of new residential floor space covered by contracts was only 13 per cent smaller, indicating that some part of the decline in the figures for the value of building has been due to a decrease in building con struction costs. (Adjusted for seasonal variations and usual year-to-year growth) In Metropolitan New York and vicinity, the total value of contracts awarded since the first of the year stood 20 per cent below last year at the end of October. Public works and utilities were 17 per cent smaller, and other non-residential work was 35 per cent less, while the value of residential contracts was slightly larger. Residential building in terms of new floor space con tracted for was 2 2% per cent larger than last year. This increase in residential building has reflected principally the erection of 1 and 2 family houses. 1931 1930 Metals Zinc.................................................................. T in deliveries............................................... .. Automobiles Passenger cars................................................ M otor trucks.................................................. Fuels Bituminous coal............................................. Anthracite coal........ ...................................... Coke................................................................. Petroleum, crude........................................... Petroleum products...................................... 71 69 77 82 71 113 43 48 54 58 38 76 41 43 54p 57 38 70 38 40 31 66 40 59 29 54 15p 37p 88 106 80 86 85 76 66 57 75 80 73 71 55 72 78 71p 93p 55 82p 70 66 113 98 88 78 78 99 77 92 105 97 79 84 94 86 74 62 96 84 86p 72 p 96 91 92 98 91 92 74 88 99 84 80 87 99 84 74 83 94 61 61 84 89 84 80 83 58 45 78 80 78 75 77 51 43 79 86 77 p 77 p Foods and Tobacco Products Live stock slaughtered................................ W heat flo ur.................................................... Sugar meltings, U. S. p o rts ....................... Tobacco products......................................... Miscellaneous Cem ent............................................................ T ire s ................................................................. Lu m b er............................................................ Printing a c tiv ity ............................................ Paper, newsprint........................................... Paper, other than newsprint...................... Wood p u lp ...................................................... Oct. Aug. Textiles and Leather Products Cotton consumption..................................... Wool m ill a c tiv ity ........................................ Silk consumption........................................... Leather, sole................................................... Leather, upper............................................... Boots and shoes............................................. Sept. Oct. 58 37 78 68 In d ex es o f B u siness A c t iv it y Car loadings of merchandise and miscellaneous freight, which are considered to be a good indicator of changes in general business conditions, declined somewhat less than seasonally during the first half of November, and department store trade in the New York Metropolitan area during the same period showed the smallest decline from sales in the corresponding period of 1930 in a number of months. Conditions in the latter part of the month, however, were less favorable for the distribution of goods. During October, the distribution of goods and general business activity showed a further decline, after seasonal adjustment. Car loadings, both of merchandise and 40 84 (Adjusted for seasonal variations and usuaFyear-to-year growth) 1930 p Preliminary B u ild in g The value of building and engineering contracts awarded in 37 States during October was 28 per cent smaller than a year ago, reflecting, according to the F. W . Dodge Corporation report, a decrease of 42 per cent in residential building and also a decrease of 27 per cent in public works and utility projects and one of 17 per cent in other non-residential contracts. As compared with September, residential contracts were increased less than seasonally, and non-residential con tracts for the month as a whole showed about the usual seasonal reduction, despite the influence of the large “ Radio City” contracts, while public works and utility projects were reduced somewhat less than in the same period of other recent years. Preliminary figures indicate that the course of build ing operations continued downward during November. For the first three weeks of the month, the daily average of contracts awarded was down more than seasonally from the October level, with reductions reported in all of the major groups of construction. F o r th e first te n m on th s o f 1931, th e to ta l v a lu e o f 1931 Oct. Aug. Sept. 84 80 75 95 86 90 72 64 58 74 58 89 67 62 56 76 56 85 67 63 56p 70p 55 80 100 89 89 94 85 86 56 89 91 90 82 74 85 48 85 88 86 77 74 84 45 92 82 84 72 72 76 71 Oct. Primary Distribution Car loadings, merchandise and misc........ Car loadings, oth er....................................... Waterways traffic .......................................... Wholesale tra d e ............................................. Distribution to Consumer Departm ent store sales, 2nd D is t............. Chain grocery sales....................................... Other chain store sales................................ M a il order house sales................................. Advertising..................................................... Gasoline consumption.................................. Automobile registrations............................. 3 5p General Business Activity Bank debits, outside of New Y ork C ity . Bank debits, New Y ork C ity ..................... Velocity of bank deposits, outside of New York C it y ................................................... Velocity of bank deposits, New Y ork C ity Shares sold on N . Y . Stock Exchange. . . Life insurance paid fo r ................................ Postal receipts................................................ Electric power................................................ Employment in the U nited States........... Business failures............................................ Building contracts........................................ New corporations formed in N . Y . State Real estate transfers.................................... 91 90 81 67 79 77 100 115 161 91 91 91 84 105 68 90 61 86 77 76 90 81 82 76 104 49 95 52 85 84 141 88 82 83 p 74 108 56 86 72 113 50p 88 General price le v e l*...................................... Composite index of wages*........................ Cost of liv in g *............................................... 163 221 163 149 214 148 147 213 148 145 208 146 p Preliminary * 1913 average=100 88 80 115 90 79 96 MONTHLY REVIEW, DECEMBER 1, 1931 miscellaneous freight and of bulk commodities, were little changed from the previous month, after seasonal adjustment, and merchandise exports showed about the usual seasonal expansion. Declines occurred in mer chandise imports and in the indexes of bank debits, wholesale trade, chain store sales, mail order house sales, advertising, and automobile registrations; and the num ber of business failures increased to the highest level ever recorded for October. Department store sales, however, increased more than usually in October, and new corporations formed in New York State also in creased somewhat more than seasonally. D e p a r tm e n t Store T ra d e Sales of the reporting department stores in this dis trict during October averaged 9.4 per cent smaller than in October 1930, the smallest decline to be shown since July. The declines reported by stores in Newark, South ern New York State, the Capital District, and West chester County were smaller than the average, and the October sales in Buffalo, Rochester, and the Hudson Valley District, though substantially smaller than a year ago, were not as far below as in September. In Syracuse, Bridgeport, and Northern New York State, however, department store sales during October showed larger decreases from last year than in September, as did also the sales of the leading apparel stores in the district. For the first half of November, sales of the reporting department stores in the Metropolitan area were 4.8 per cent smaller than in the comparable period of last year, the smallest decrease to be reported in the mid-month report since June, but weather conditions were less favorable to the distribution of seasonable merchandise after the middle of the month. Stocks of merchandise on hand at the end of October, valued at retail prices, continued to be considerably below the previous year. The percentage of outstanding charge accounts collected during October, however, was only slightly smaller than in the same period in 1930. Percentage change from a year ago Locality N et sales Per cent of accounts outstanding September 30, collected in October Jan. to Oct. Stock on hand end of month 1930 1931 — 9 .4 Buffalo............................................... — 13.4 Rochester.......................................... — 13.7 Syracuse............................................. — 14.1 N ew ark .............................................. — 6 .2 Bridgeport D is trict......................... — 15.3 Elsewhere........................................... — 10.1 Northern New Y ork State. . . . — 25.3 Southern New Y o rk State........ — 8 .0 Hudson River Valley D is tric t.. — 13.9 Capital D is trict............................ — 7 .9 Westchester D is trict................... — 8 .9 — 8 .0 — 10.6 — 8 .4 — 10.2 — 6 .2 — 11.1 — 9 .2 — 13.9 — 8 .9 — 11.1 — 14.8 — 9 .4 — 21.0 — 11.1 4 7.6 4 0.9 4 4.6 3 1.4 4 3.3 4 1.8 4 0.8 4 7.8 44.1 4 8.6 28.3 4 1.2 3 8.7 3 7.8 — 9 .4 — 8 .0 Oct. A ll department stores............ Apparel stores.......................... — 19.4 — 10.7 — 13.0 — 19.4 Toilet articles and drugs....................... Toys and sporting goods....................... Books and stationery............................ Home furnishings.................................... Cotton goods.......................................... Woolen goods........................................... Luggage and other leather goods. . . . Women’s ready-to-wear accessories... M en’s furnishings................................... 4 4.8 46.1 4 4 .2 4 1.8 + 3 .7 + — 2.1 2 .4 — — 2 .9 5 .1 — 5 .5 — — 5 .6 5 .8 Stock on hand percentage change October 3 1 , 1 9 3 1 compared with October 3 1 . 1 9 3 0 — 2 .9 — 1 3 .8 — 1 6 .8 — 1 0 .5 — 1 0 .7 + 6 .6 — 1 0 .8 — 2 7 .6 — 2 1 .0 — 1 0 .1 — — — — M en’s and Boys’ w ear........................... Women’s and Misses’ ready-to-wear.. Linens and handkerchiefs..................... Silverware and je w e lry .......................... Musical instruments and rad io........... Silks and velvets................................. Miscellaneous........................................... 1 1 1 1 1 2 3 4 .0 .6 .5 .1 — 1 6 .0 — 1 0 .5 — 1 5 .5 — 1 8 .2 — 2 0 .9 — — — — — — — 1 4 .4 — 1 4 .4 — 1 4 .6 — 1 8 .0 — 1 8 .2 1 0 .6 4 .5 5 .2 0 .5 9 .3 7 .9 2 2 2 2 W h o le sa le T r a d e The total October sales of the reporting wholesale firms in this district averaged 22 per cent smaller than a year ago, or about the same decline as in the two previous months. Sales of drugs, groceries, and men’s clothing showed the smallest decreases, with the excep tion of silk goods, sales of which are reported in yardage rather than value by the Silk Association of America. In the case of silk goods the October decline was the first since May. Decreases in sales of more than 20 per cent continued to be reported by wholesale hardware, cotton goods, and paper dealers. Stationery wholesalers re ported the largest decline from the previous year since October 1930, and shoe sales showed the largest decrease in more than a year. Sales of jewelry and diamonds continued to be far below the previous year, and machine tool orders, reported by the National Machine Tool Builders Association, remained less than half the volume of a year ago. Stocks of merchandise on hand at the end of the month showed sizable decreases from a year ago in all reporting lines, with the exception of drugs. Collections in October of this year were somewhat slower than in 1930. Commodity October sales and stocks in the principal departments are compared with those of a year previous in the fol lowing table: N et sales percentage change October 1 9 3 1 compared with October 1 9 3 0 Percentage change October 1931 compared with September 1931 N et sales M en’s clothing............... Cotton goods.................. Machine too ls**............. Paper................................ Weighted average. . . + 1 2 .5 — 31.7 + 1 6 .1 — 1 9 .2 * — 21.3 + 2 0 .7 + 1 9 .5 — 2 0.5 + 3 .4 + 1 3 .7 + 2 0 .6 + 10.2 — 2 .8 Stock end of month — 2 .1 — + — + — 5 .8 7 .6 * 4 .1 9 .6 7 .2 — 4 .7 — 6 .5 Percentage change October 1931 compared w ith October 1930 N et sales Stock end of month Per cent of accounts outstanding September 30 ecollected in October 1930 1931 — 18.7 — 2 0.7 — 16.6 — 2 7.7 — 24.9 — 1 1 .5 * — 1 2.2 * — 32.1 — 18.9 — 13.5 + 1 7 .0 — 2 0.8 — 9 .9 — 5 0.6 — 2 6.0 — 21.4 — 4 6.4 — 4 0.6 } — 37.3 — 39.0 81.1 3 8.0 37.4 4 6.7 52.8 40.6 48.3 8 1.2 3 3.7 3 6.4 5 4.4 3 9 .8 3 1 .2 45.1 6 4.8 5 7.0 21.9 67 .3 4 6.9 } 19.0 — 2 2.3 5 3.6 5 0.9 * Quantity not value. Reported by Silk Association of America ** Reported by the National Machine Tool Builders Association FED ERAL RESERVE BAN K OF NEW YO RK MONTHLY F2VIEW, DECEMBER 1, 1931 B u sin e ss C o n d itio n s in th e U n ite d S ta te s (Summarized by the Federal Reserve Board) RODUCTION and employment in manufacturing industries declined further in October, while output of minerals increased more than is usual at this season. There was a considerable decrease in the demand for Reserve Bank credit after the middle of October, reflecting a reduction in member bank reserve balances and, in November, an inflow of gold, largely from Japan. Conditions in the money market became somewhat easier. P P r o d u c t io n a n d Index Number of Production of Manufactures and Minerals Combined, Adjusted for Seasonal Variations (1923-25 average = 100 per cent) Federal Reserve Board’s Index of Factory Em ployment with Adjustment for Seasonal Varia tions (1923-25 average = IOOper cent) E mployment Total output of manufactures and minerals, as measured by the Board’s seasonally adjusted index of industrial production, declined from 76 per cent of the 1923*1925 average in September to 74 per cent in October. Output of steel remained unchanged at 28 per cent of capacity in October, although it usually shows an increase for that month; in the first half of November activity at steel mills increased somewhat. Automobile production declined sharply in October; production of shoes and woolens decreased and cotton mill activity showed little change, although an increase is usual at this season. Output of bituminous coal increased seasonally, and there were large increases in the output of anthracite and petroleum. Volume of factory employment declined substantially from the middle of September to the middle of October. At woolen mills where an increase in employment is usual at this season, there was a large decrease. In the auto mobile and shoe industries reductions in employment were considerably larger than usual, while in the canning industry the decline was wholly of a seasonal character. In the silk goods and hosiery industries employment increased by more than the usual seasonal amount. The November cotton crop estimate of the Department of Agriculture was 16,903,000 bales, 600,000 bales larger than the October estimate and 3,000,000 bales larger than last year in spite of a reduction in acreage. Data on the value of building contracts awarded in the period between September 1 and November 15, as reported by the F. W. Dodge Corporation, showed a continuation of the downward movement. In this period value of contracts was 29 per cent smaller than in the corresponding period of 1930, reflecting smaller volume of construction and somewhat lower building costs. D is t r ib u t io n 9 1 1 A.LL OTHER Ijca n s / A Total volume of freight-car loadings remained unchanged in October, while loadings of merchandise decreased. Department store sales increased by somewhat more than the usual seasonal amount. ....... .. ! A . / LOANS C)N SECURITIES r v \ ^J W h o l e s a l e P r ic e s \ - V 6 ^ - J VESTMENTS s c L ......... 1927 1928 !L _ , ____ 1929 1930 1931 Monthly Averages of Weekly Figures for^ Re porting Member Banks in Leading Cities (Latest figures are averages of first three weeks of November) 1927 1928 1929 1930 1931 Money Rates in the New York Market (November rates are averages for the first 21 days) The general level of wholesale prices declined from 69.1 per cent of the 1926 average in September to 68.4 per cent in October, according to the Bureau of Labor Statistics. Prices of grains, cotton, and silver, after showing a rapid rise beginning early in October, declined considerably, but in the third week of November were still above their October low points; prices of hides and petro leum were also higher in the middle of November than in early October. During this period the prices of livestock and meats declined rapidly, reflecting in part developments of a seasonal character. Bank C r e d it Reserve Bank credit, which had increased rapidly between the middle of September and the third week of October, declined by $265,000,000 during the following four weeks. This decline reflected a large reduction in member bank and other balances at the Reserve Banks and also an inflow of gold, chiefly from Japan. Demand for currency, which had been on a large scale during September and the first three weeks of October, showed relatively small fluctua tions after that time and in the second week of November declined by some what more than the seasonal amount. Loans and investments of member banks in leading cities continued to decline during recent weeks, and on November 18 the total volume was $500,000,000 smaller than five weeks earlier. This decrease reflected substantial reductions in loans on securities and in other loans, as well as in the banks’ holdings of investments. At the same time deposits of these banks also declined with a consequent reduction in the reserve balances which they were required to hold with the Reserve Banks. Money rates in the open market, wliich had advanced sharply during October, declined somewhat early in November. Rates on prime commercial paper declined from a range of 4-4% per cent to a range of 3 %-4 per cent, and rates on bankers acceptances from 3 ^ to 2% per cent.