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MONTHLY REVIEW of Credit and Business Conditions S e c o n d F e d e r a l R e s e r v e D is t r ic t F ed era l R eserv e B a n k , N ew Y o rk D e c e m b e r 1 ,1 9 4 2 Money Market in November than commercial banks— individuals, trust funds, cor porations, insurance companies, savings institutions, pub W a r finance and banking were keyed to the expanded lic bodies, etc.— to the m axim um possible extent. There war effort in November, with the announcement by the are no restrictions upon the amounts of the new securities Secretary of the Treasury of a drive fo r the sale of which m ay be purchased by these classes of investors dur $9,000,000,000 o f Government war obligations, during ing the periods fo r which the subscription books are kept December. open. The widest possible participation by individuals and and This amount, together with tax revenues receipts during January from the sale of T ax organizations of all kinds is sought. I t is by m axim um Savings notes, W a r Savings bonds, and Treasury bills, purchases of Government securities out of current income will serve to cover Government expenditures fo r both and December financing o f war expenditures can be held at a minim um and January. Consequently, no further accumulated funds that the necessity fo r bank large-scale Treasury financing w ill be necessary until and the attendant danger of an excessive expansion in February. bank deposits and in the aggregate money supply can Three issues o f new securities are being offered under be avoided. I t is in the common interest of all to see 2 y 2 per cent bonds m aturing that funds spent by the Government in the prosecution in 1968 and callable on and after December 15, 1963 (not of the war represent fu n ds previously drawn out of the the December p rogram : ten pool of consumer spending power and do years) ; 1 % per cent bonds due in 1 9 4 8 ; not involve net additions to it, especially and % in view o f the diminishing supplies of available to commercial banks fo r per cent one-year certificates of A s in the case of the two goods available to consumers because of previous lim ited “ t a p ” offerings of 2 y 2 the diversion of productive facilities and indebtedness. per cent bonds, in M ay and A u gu st, sub supplies to war purposes. scription their savings and investing them in Gov books will be open on these issues fo r extended periods so fa r as non ernment banking investors only V ictory Fund are concerned. Committees, with The securities, make a B y increasing consumers personal can contribution not to the war effort, and reduce the danger of their large groups of volunteer workers drawn inflationary pressure on prices, but at the largely from the securities and banking same time make financial provision for fields, will carry on an intensive sales themselves and their dependents against campaign on all three offerings, as well the day of readjustm ent to peace-time con as Savings bonds of Series F and G, and ditions. Reduced spending now will pro T a x Savings notes o f Series A and C. vide money to spend when the war is over Thus they will be able to offer a well diver and a larger volume of consumer goods is sified assortment of Government securi again available. W h ile the sales campaign will be aimed ties, to meet various needs of various types prim arily at obtaining subscriptions from of investors. P rim ary emphasis is placed upon the investors other than commercial banks, sale of war obligations to investors other the banks also are being called upon to FO R V IC T O R Y ★ B uy U n it e d S t a t e s W a r S a v i n g s B o n d s a n d S t a m p s 90 MONTHLY REVIEW , DECEMBER 1, 1942 play their part. The Secretary o f the Treasury has an the securities issued in December can be lim ited to the nounced that offerings of the 1 % per cent bonds and the amounts the banks are readily prepared to make, and % per cent certificates of indebtedness, in the amount of these funds, together with Treasury receipts from quar $2,000,000,000 each, will be made to commercial banks as terly income tax collections, undoubtedly will be paid a part of the December program. out rapidly by the Government. In the case of bank Treasury withdrawals subscriptions, the books will be kept open only fo r a brief of deposits credited to W a r Loan accounts in paym ent period, and subscriptions in excess of $100,000 w ill be fo r securities sold in December w ill be made only as the allotted on a pro rata basis. In addition to making p a y funds are needed to meet Government disbursements. ments for their own subscriptions, the banks will also Moreover, have to be prepared to meet the paym ents drawn on Reserve System fo r meeting any tem porary periods of them fo r subscriptions by their customers. strain upon bank reserves that m ay occur during the W h ile the means are available through the Federal payments w ill be spread out to some extent during the course o f the month. month of December, and the banks will not be called upon banks have excess reserves which m ay be drawn against, A side from the fact that many to meet paym ents for the entire $9,000,000,000 or more of the System has been contributing heavily to the mainte securities on a single date, the operation is of such m agni nance o f bank reserves through open market operations, tude that it will be necessary fo r the banks to consider and in addition the Reserve Banks stand ready to assist carefully the methods by which they are to make the p a y member banks in meeting any needs fo r reserves which ments. On November 20 this bank issued a circular to m ay arise, by purchasing Treasury bills at a fixed rate all banks in the D istrict calling their attention to the and by making advances to them at low rates o f interest. advantages of qualifying as special depositaries of the F Government, so that they w ill be able to make paym ents for their own subscriptions and for those of their cus in a n c in g of W E ar x p e n d it u r e s in N ovem ber D u rin g Novem ber there was an absence of m ajor new tomers by crediting a “ W a r Loan D eposit A cc o u n t’ ’ on security offerings by the Government. their books to whatever extent seems necessary or desir made available through revenue receipts, the T rea su ry ’s able, instead of making cash paym ents in fu ll. heavy cash requirements were largely met by withdrawals B eyond funds from W a r Loan deposit accounts, by receipts from cur U se of W ar L o a n D e p o s it A ccounts Use o f the book credit method of paym ent fo r new issues of Government securities provides an effective mechanism fo r smoothing the im pact of Government financial operations upon the banks. rent sales o f W a r Savings bonds and T ax Savings notes, by net receipts from weekly Treasury bill offerings, and by the net proceeds o f the Treasury certificate sale on Novem ber 2. To the extent that The G overnm ent’s W a r Loan deposits in the banks, the book credit method of paym ent is utilized— in con which nection either with customers’ subscriptions or subscrip $3,800,000,000 during the third week o f October, as a had been built up to a level in excess of tions for banks’ own portfolio— bank reserves are not result o f book credit paym ents on the Treasury note and immediately affected by paym ents for new Government bond issues sold during October, amounted to approxi security issues. m ately $3,400,000,000 at the beginning o f November. The A s the calls fo r repaym ent of the W a r Loan deposits are issued, banks tend to lose reserve % funds, but, inasmuch as the calls are made to provide had been offered late in October, yielded the Treasury, per cent one-year certificates o f indebtedness, which the Government with money to meet expenses, there is on November 2, $530,000,000 in excess o f the amount a compensating needed to pay off the m aturing issue of % per cent certifi volume deposited with banks. of Government checks being I t is true that W a r Loan account cates. Thus, the necessity fo r issuing calls against the withdrawals and receipts of Government checks m ay not W a r Loan account deposits was obviated during the first balance up closely in the case o f particular banking insti few days of the month. tutions, but fo r the banks taken as a whole, except when ber 23, however, withdrawals from W a r Loan deposit Between Novem ber 5 and Novem Treasury deposits with the Federal Reserve Banks are accounts provided the m ajor part of the T rea su ry ’s cash tem porarily increasing or decreasing, the return flow of requirem ents; calls fo r repaym ent reached an aggregate funds to the banks from the Treasury is equal to the of $2,125,000,000. flow of funds to the Treasury. bills, in the amount o f $500 ,000 ,00 0 each, provided an B y making adequate use of this procedure, the banks The fo u r weekly offerings of Treasury aggregate of $600 ,000 ,00 0 above the amounts needed to can prevent the concentration o f two m onths’ Treasury pay off m aturing issues. financing in one from causing any unusual disturbances notes supplemented these sources o f Treasury receipts, to their reserve positions. especially toward the end o f the month. Im m ediate cash paym ents fo r Sales o f Savings bonds and Tax FEDERAL RESERVE BAN K OF N EW YO R K M em ber B a n k E xcess R 91 Money Rates in New York eserves Nov. 29, 1941 Oct. 31, 1942 Nov. 28, 1942 Between October 21 and November 25, excess reserves of all member banks showed a net increase, and in central reserve N ew Y o rk C ity banks were maintained in sub stantial volume. The outflow of funds from New Y o rk to other parts of the country, in considerably diminished volume as compared with the previous month, was more than counterbalanced by further heavy Reserve Bank purchases of Government securities, and excess reserves at these banks amounted to $550 ,000 ,00 0 on November 25 as compared with $520,000,000 on October 21. all member banks, excess reserves advanced For from $2,350,000,000 on October 21 to $2,520,000,000 on N o vember 25. The increase in currency circulation through out the country amounted to $650,000,000 over the five Stock Exchange call loans.................... Stock Exchange 90 day loans.............. Prime commercial paper— 4 to 6 months Bills— 90 day unindorsed..................... Average yield on taxable Treasury notes (3-5 years).......................................... Average yield on tax exempt Treasury bonds (not callable within 12 years). Average yield on taxable Treasurybonds (not callable within 12 years).......... Average rate on latest Treasury bill sale 91 day issue....................................... Reserve Bank discount rates: On advances to member banks se cured by Government obligations callable or maturing in one year 1 1 *1H X Vfe 1 *1K H-% T /6 0.94 1.28 1.28 1.92 2.05 2.09 2.24 2.33 2.36 0.267 0.373 0.370 X X On other advances to member banks secured by Government obliga tions, and on rediscounts.............. Reserve Bank bujdng rate for 90 day indorsed bills...................................... 1 1 1 X X X * Nominal. weeks, drawing down member bank reserve balances the $600,000,000 increase in total bills outstanding. correspondingly, and reserve requirements fo r all mem setting these increases, New Y o rk C ity banks reduced Off These factors tending their holdings of Treasury notes by $245,000,000, and to reduce excess reserves were, however, more than com over the same period sold $83,000,000 of Treasury bonds. ber banks advanced $270,000,000. pensated fo r by a reduction in Treasury deposits with In addition, there was a sharp decline of $101,000,000 in the Federal Reserve Banks and by Reserve Bank pu r their holdings o f other securities, chiefly m unicipal and chases of Government securities. local housing authority obligations. Government security Outside New York, holdings of the twelve Federal Reserve Banks showed a reporting member banks added $311,000,000 to their net increase of $618,000,000 over the five weeks, through holdings of Government securities; their portfolios of enlarged holdings of Treasury notes, bonds, and certifi certificates o f indebtedness rose by cates o f indebtedness. Treasury bills by $151,000,000. On the other hand, Treasury bill holdings were reduced by $104,000,000, principally as a $218,000,000 and On the other hand, hold ings o f Treasury notes and bonds declined $28,000,000 result of resales to banks o f bills which had been pu r and $33,000,000, respectively. chased from them by the Reserve Banks under resale $31,000,000. Other securities declined D u rin g the fo u r weeks, October 21 to November 18, agreements. total loans of the New Y o rk C ity banks were reduced by $101,000,000. There was a net contraction of $39,000,000 Member Bank Credit in the volume o f commercial, industrial, and agricultural Compared with other recent periods, the $191,000,000 increase in total loans and investments of the weekly reporting member banks in 101 cities during the four weeks ended Novem ber 18 was relatively small. This was due prim arily to the fact that during the period the Treasury raised only $1,100,000,000 of new money through the sale of public marketable issues and, as a result, member banks added relatively fewer Government securities to their investment portfolios than had been the case in most recent months. In the 100 cities outside New Y o rk total loans and investments o f the reporting member banks rose $212,000,000, while in New Y o rk C ity they declined $21,000,000. In New Y o rk C ity holdings o f Government securities of the weekly reporting member banks rose $181,000,000. This was accounted fo r by an increase o f $166,000,000 in certificates o f indebtedness, comprising prim arily pu r loans and of $47,000,000 in loans to security brokers and dealers. In the 100 cities outside New Y o rk the reduction in loans amounted to $68,000,000. The largest declines were $19,000,000 in commercial, industrial, and agricul tural loans and $25,000,000 in the “ all oth er” loan classi fication which includes consumer credit. U . S. Government deposits at the reporting member banks, which had been built up $1,979,000,000 to $3,103,000,000 during the preceding fou r w eeks’ period, were sharply reduced during the fou r weeks ended N o vember 18. In N ew Y o rk C ity such deposits declined $714,000,000, and in the 100 other cities $689,000,000. D u rin g the same period adjusted demand deposits rose $485,000,000 in New Y o rk C ity and $782 ,000 ,00 0 in the 100 other cities. War Financing chases o f the Novem ber 2 issue, and a $346,000,000 in In contrast to the fou r to six billion dollar totals o f crease in Treasury bills, which amounted to over h alf other recent months, net public borrowings of the Treas M ONTHLY REVIEW , DECEMBER 1, 1942 92 u ry in November amounted to only about $2,600,000,000. than 21,000,000 workers participating in these payroll Government expenditures were met to a large extent by allotment plans. drawing down balances accumulated from securities sold program, discussed earlier in this Review, the W a r Sav during October. The distribution of November borrow A s a part o f the December financing ings staff will intensify its drive during the coming month to add more workers to those already covered. ing was as fo llo w s: A bo u t $600,000,000 in “ new m o n ey ” was raised from $700,000,00 0— W a r Savings bonds (estimated) the sale o f Treasury bills during Novem ber as new 800.000.000— T ax Savings notes (estimated net receipts) issues o f $500,000,000 weekly replaced maturities of 600.000.000— Treasury bills (net receipts) $350,000,000. 530.000.000— % per cent certificates of indebted ness (net) at about $800,000,000 fo r the month, as compared with slightly over $920,000,000 in each of the two preceding I t was estimated, on the basis of the D a ily Treasury Statement fo r November 27, that the Treasury received somewhat more than $700,000,000 from the sale of W a r Savings bonds during N ovem ber; this compared with a quota fo r the month o f $800,000,000 and with sales for October reported at $814,000,000. In the Second Federal Reserve D istrict, an estimated $110,000,000 of W a r Sav ings bonds were sold during November by agencies other than post offices; during the previous month these sales totaled $125,000,000. Decreased sales, other than under the payroll deduction plan, of the Series E bonds appar ently accounted fo r the m ajor part of this month-to- months and about $400,000,000 m onthly during M ayA u gu st. E xcept during the quarterly tax months, these sales have usually been offset to only a relatively small degree b y redemptions in paym ent of taxes or fo r cash. The 7/g Per cent certificates of indebtedness due N o vember 1, 1943 were offered in the amount o f approxi m ately $2,000,000,000 on October 26, but paym ent was not made until the date of issue on Novem ber 2. the $2,035,000,000 raised from this financing, Of about $1,500,000,000 provided fo r the redem ption on N ovem ber 2 o f m aturing y 2 per cent certificates. Subscrip tions to the new issue totaled $3,105,000,000, o f which $1,616,000,000 were entered in the Second Federal R e month decline in the D istrict total. Irregular fluctuations from one m onth to another in sales of W a r Savings bonds principally reflect changes in the volume o f sales on single subscriptions. Sales o f T a x Savings notes are estimated These fluctuations conceal a remarkably steady rise in the amounts sold under the payroll deduction plan. As shown in the accom panying diagram, the m onthly total of deductions from salaries and wages fo r the purchase of W a r Savings bonds had increased from $5,000,000 last December to $287,000,000 in October. The October figure represented nearly 8 per cent of the pa y of the more serve District. A s in the case of the Treasury bond and note issues offered on October 8, subscriptions from all subscribers other than banks which accept dem and de posits (totaling $667 ,000 ,00 0) were allotted in fu ll. scriptions o f $25,000 or less from Sub commercial banks (am ounting to $ 64,000,000 ) were also allotted in fu ll, while the remaining bank subscriptions were allotted on a 55 per cent basis. Allotm ents in the Second Federal R e serve D istrict ($ 1 ,0 9 6 ,0 0 0 ,0 0 0 ) amounted to 54 per cent of the total fo r the country as compared with 40 per cent on the September certificate issue. MILLIONS OFOOLLARS Security Markets D u rin g most o f November, as in other recent months, the Government security market on the whole was characterized by general price steadiness and light trad ing activity. Substantial purchases of Government se curities b y the Federal Reserve Banks again contributed to the stability o f prices. U p to the time o f the an nouncement on Novem ber 20 o f the T rea su ry ’s December financing program , prices o f practically no movement. Treasury bonds showed Thereafter some decline oc curred in the premiums on the longer term Treasury bonds (callable in 1952 or la te r ), affected by the forth 194-1 1942 Aggregate Dollar Amount Deducted for Purchases of War SaTixvgs Bonds Under Payroll Savings Plans, as Reported by U. S. Treasury coming issue o f 2 y 2 per cent bonds o f 1963-68. The shorter term Treasury bonds and Treasury notes re mained fa irly steady throughout the month. Y ield s on FEDERAL RESERVE B AN K OF N EW YO R K 93 the fou r issues of certificates of indebtedness now out standing tended downwards as the month progressed; the average rate at which new Treasury bill offerings were sold continued slightly below the % per cent bu y ing rate of the Federal Reserve Banks. M unicipal bond prices, which had been rising steadily since early this year, leveled off in November. The aver age yield on prime municipal bonds computed by Stand ard and P o o r’s Corporation held steady at 2.20 per cent between October 21 and November 25. Prices of high grade domestic corporation bonds were generally little changed in November, follow ing a slight firming tend ency in October. The rise in stock prices which started last M a y con tinued on through November 9, when prices, as meas ured by the Standard and P o o r’s index of 90 stocks, reached the highest point since October, 1941. This high point in prices was accompanied by the heaviest turn over for any day this year. Index of Production and Trade in the United States (Federal Reserve Bank of New York index expressed as a percentage of estimated Ion? term trend and adjusted for seasonal variation) F ro m this high level stock prices drifted gradually lower during the rest of N ovem ber and, at the end o f the month, their general level repairs; nevertheless, the mills operated at nearly fu ll rated capacity. Electric power production appears to was slightly lower than that at the end of October. have reached a new record level in November, the daily New Security Issues the month averaged about the same as in October, while output of crude petroleum during the first three weeks of the m ining o f bituminous coal appears to have fallen off Corporate and municipal new security financing de clined still further during Novem ber to about $34,000,000, a new low level fo r recent years. Corporate issues amounted to only $12,000,000, as compared with the low previous average of $58,000,000 fo r July-O ctober. A s in the preceding month, only a negligible amount of funds was raised fo r new capital purposes during November. M unicipal awards aggregated about $22,000,000. The bulk of the corporate total was accounted fo r by the private sale to institutional investors of $11,000,000 Champion Paper and Fibre Com pany first mortgage 3 % per cent bonds due in 1957. The largest municipal slightly. A fte r reaching their fa ll peak in October, load ings of railw ay freight declined somewhat in the early weeks o f November. E a r ly in Novem ber the W a r Production B oard an nounced a new plan— known as the Controlled Materials Plan— designed to control the flow of critical materials into war production. The present priority system, includ ing the Production Requirements Plan, w ill be gradually replaced. The first materials to be allotted under the new plan are steel, copper, and aluminum. PERCENT offering was that of $4,258,000 C ity o f Detroit refunding bonds, m aturing serially from 1944 to 1956, priced to yield from 0.75 to 2.10 per cent. Tem porary financing, not included in the above totals, amounted to $62,000,000. The $55,500,000 Federal Inter mediate Credit B ank 0.70 and 0.80 per cent consolidated debentures, m aturing in June and September, 1943, comprised the bulk of this total. Production and Trade Judging from prelim inary data, industrial activity in November appears to have at least maintained the record level reached in October. W e ek ly estimates o f steel pro duction indicate that there was some reduction from the record tonnage produced in the preceding month, pre sum ably owing to the closing down of some furnaces fo r Indexes of Production of Transportation Equipment and Machinery, Adjusted for Seasonal Variation (Board of Governors of the Federal Reserve System data; 1935-39 average=100 per cent) M ONTHLY REVIEW, DECEMBER 1, 1942 94 P r o d u c t io n and T rade O in processing plants. ctober On the whole, m anufacturing work D u rin g October the m onthly index of production and ing forces were 1 % per cent larger than in September. trade computed at this bank rose one point to a record Factory payrolls in the State rose 3y 2 per cent in the high of 121 per cent of estimated long term trend, as is same period. indicated on an accom panying chart. during the month by shipyards and plants m anufactur The index stood Large numbers o f workers were hired Industrial ing aircraft, tanks, and electrical goods, but employment production moved into new high ground in October, and in most consumers’ goods plants was unchanged or some retail trade in general was slightly above the September what lower than in September. level, when seasonal factors are considered. 1941, factory em ployment was eleven points above the level a year earlier. E videncing the mounting production of war goods, the Compared with October, 6y 2 per cent higher, while payrolls were 31 per cent greater, reflecting a rise of component index of output of producers’ durable goods 2 2 y 2 per cent in average weekly earnings during the advanced seven points further in October. The continued year. rise in this index has been due very largely to the increas A s the accom panying diagram shows, Upstate New ing activity of the m achinery and transportation equip Y o rk has benefited much more from the defense pro ment industries in which the production of war goods is gram and war production than has New Y o rk so h ighly centered. The rapid advances which these A lthough the em ployment gains in the U pstate region industrial grouj)s have made since the inauguration of have tended to taper off in the past year, during October City. working forces there were 8 per cent larger than a year 1941 1942 October August Sept. previous, while in New Y o rk C ity the year-to-year gain October was only 3 y 2 per cent. The various Upstate industrial areas are for the most part well fitted to do war work, Indexes of Production and Trade* (100 = estimated long term trend) Index of Production and Trade............... 110 120 120p 121p but N ew Y o rk C ity is handicapped by the predominance Production............................................. 116 128 128p 130p o f consum ers’ nondurable goods production, by Producers' goods— total.................... Producers’ durable goods.............. Producers’ nondurable goods........ Consumers’ goods— total.................. Consumers’ durable goods............ Consumers’ nondurable goods. . . . 160 191 126 128 138 118 88 39 104 103 95 105 162p 194p 126p 87p 36p 103p 166p 201p 126p 86p 37p 102p Durable goods— total........................ Nondurable goods— total.................. 125 111 146 113 148p 113p 153p 112p Primary distribution............................. Distribution to consumer..................... Miscellaneous services.......................... 116 94 103 135 91 129 137p 89p 128p 139p 90p 129p 109 118 118 119 Cost of Living, Bureau of Labor Statistics (100 —1935-39 average)............................ the city. O ut o f 27,200 New Y o rk C ity factories listed by the 1939 Census o f M anufactures, 26,400 or 97 per cent employed fewer than 100 persons, and 46 per cent employed not more than five workers. (100 = 1926 average)................................. 126 140 142p cent o f the total volume of war orders awarded up to A u gu st, 1942, although in 1939 it produced over 7 per cent of the n ation ’s manufactures. A t the present time 69 90 71 87 69 85 p Preliminary. on production of civilian goods are seriously affecting the c ity ’s industries. Velocity of Demand Deposits* (100 = 1935-39 average) New York City......................................... Outside New York City........................... A s a result of these factors, New Y o rk C ity received only about 2 per material shortages and restrictions Wage Rates high costs, and by the relatively small size of most plants in A ccording to the U nited States E m ploym ent Service, 60 81 PERCENT * Adjusted for seasonal variation. the National defense program in the summer of 1940 are shown on an accom panying chart. D u rin g October the output of producers’ nondurable goods, and o f con sum ers’ goods— both durable and nondurable— was m aintained at approxim ately the September level. In retail trade, sales by department stores, m ail order houses, and variety chain store systems, after allowance for seasonal factors, were somewhat higher in October than in September, whereas grocery chain store sales declined slightly. Employment and Payrolls D u rin g October continued increases in em ployment at New Y o rk State factories producing war goods more than offset seasonal layoffs by canneries and other food Factory Employment in New York City and Upstate New York, Without Adjustment for Seasonal Variation (1935-39 average=100 per cent) 95 FEDERAL RESERVE B A N K OP N EW YO R K New Y o rk C ity now has approxim ately 200,000 unem Percentage change 1942 Year of production compared with 1942 record Production output Production 1941 of major (through in Production 1941) crops* record year ployed— a decided contrast to most other industrial areas where labor shortages either are imminent or already exist. In the U nited States as a whole, the number of persons at work in October was estimated by the Bureau o f the Census at 52,400,000, the same as in September, but a gain of 2,200,000 from October, 1941. The year-to-year increase was about evenly divided between agricultural and nonagricultural pursuits. U nem ploym ent declined Cotton (1,000 bales of 500 lbs.) Tobacco (1,000,000 lbs.)......... Potatoes (1,000,000 bu.).......... Oats (1,000,000 bu.)................ Wheat (1,000,000 bu.)............ Corn (1,000,000 bu.)................ Sugar beets (1,000 tons).......... Hay, tame (1,000,000 tons). . . Peanuts (1,000,000 lbs.).......... Soybeans (1,000,000 bu.)........ 13,329 1,436 380 1,370 984 3,185 12,784 92 2,811 210 1937 1939 1928 1920 1915 1920 1940 1940 1940 1941 +24.1 +13.9 + 6.1 +16.5 + 4.0 +19.2 +24.0 +12.2 +90.3 +96.3 -2 9 .6 -2 3 .4 - 9.5 - 5.1 - 2.5 + 3.7 + 4.0 + 8.2 +60.6 +96.3 further to an estimated 1,600,000 persons, the lowest level in recent years. Despite large withdrawals fo r the ♦Preliminary estimates based on conditions as of November 1; U. S. De partment of Agriculture. armed forces, the total labor force has remained at ap proxim ately the year earlier level through the entrance into the labor force of m any housewives, students, and others not norm ally or form erly employed. I t is interest ing to note that although the number o f men in the total labor force was 1,400,000 less than in October, 1941, this decrease was almost entirely offset by the increasing this y e a r ’s crop o f soybeans and peanuts, the production of which has been stim ulated sharply as sources of vege table oils, is nearly twice as large as in 1941. The average living costs o f wage earners and lower salaried workers in urban centers rose 1 per cent further between September 15 and October 15, according to the B ureau o f Labor Statistics index. This increase was due number o f women workers. largely to advances in retail food prices which occurred late in September and early in October, prior to the action Commodity Prices of the Office of Price A dm inistration bringing under W holesale commodity prices were relatively stable control an additional 30 per cent of fam ily food ex during November, although the B ureau of Labor Sta penditures. tistics comprehensive weekly index of prices went up September 1 advanced only fractionally between m id- slightly. This increase reflected advances in the prices of September and mid-October, while those placed under some agricultural products, particularly corn, certain control on October 5, as well as the remaining items not Retail prices o f foods under control before permitted upward adjustm ents in price ceilings, and under regulation, increased nearly 6 per cent in this higher prices on tobacco products and alcohol, due to the period. addition to prevailing quotations of new Federal excise taxes. Prices for wool and hogs tended to show declines for the month. In response to the heavy seasonal market ings of this y e a r ’s record pig crop, hog quotations reached the lowest levels since March. Building In New Y o rk and Northern New Jersey the volume o f contracts awarded fo r factory construction during the first ten months o f the year was almost one-fifth greater Based on conditions as of November 1, the Departm ent of A griculture confirmed its earlier estimates of a record output this year fo r agriculture as a whole. I t was indi than fo r the whole o f 1941, according to the reports of MILLIONS OFOOLLARS cated that the 1942 production o f corn, hay, fru its, com mercial vegetables, oilseed, sugar crops, livestock, poultry, milk, and eggs would be unprecedented. The 1942 cotton crop was placed at 13,329,000 bales, based on conditions as of November 1. This estimate, while 2,585,000 bales larger than last y e a r ’s harvest, is about 700,000 less than the forecast of two months earlier, owing among other factors to excessive rain fall and labor shortage. The accom panying table shows the Federal Crop Reporting B o a r d ’s estimates of the 1942 output o f ten m ajor crops which in 1940 were the source of about 60 per cent of the cash agricultural income from all crops. The production of five of the ten crops is expected to be at record levels this year, wThile increases over the 1941 levels are indicated fo r all of the items. The estimate o f Annual Value of Construction Contract Awards in New York State and Northern New Jersey (F. W . Dodge Corporation data) M ONTHLY REVIEW, DECEMBER 1, 1942 96 D u rin g the last two September level to reach 115 per cent of the 1923-25 years the volume of contracts awarded fo r such purposes average, and were only slightly below the relatively high the F . W . Dodge Corporation. has reached record levels as a direct result of the war level of September, 1941. construction program. A s the accom panying chart shows, three weeks of November, indicate that sales in this Estim ates based on the first the increase during these years represents the m ajor month rose by about the usual seasonal amount over the plant expansion undertaken in this area during the October average. This b a n k ’s seasonally adjusted indexes period from 1925 to 1942. In fact, the 1941 total and of department store sales and stocks are shown on the the estimated total fo r 1942 are about equal to the total accom panying chart from 1939 through October, 1942. volume of factory building contracts awarded during the Stocks on hand, which evidenced a fa irly steady gain fourteen year period from 1927 through 1940. from 1939 through M ay, 1941, rose rapidly to a record Roughly three quarters of such contracts awarded during 1941 high level in Ju ly, 1942, but in each month since they and the first ten months of 1942 were Government con have shown a decline. tracts fo r war plant construction. however, is still 67 per cent above M ay, 1941. The index fo r October, 1942, The movement of contract awards fo r residential build Large year-to-year gains in sales during October were ing in this area presents a strikingly different picture. made in practically all localities in this D istrict, and for A lth ou gh the volume of such contracts increased some the first ten months of this year, total sales of the report what after 1934, it never approached the record level of ing department stores in the Second Federal Reserve the twenties and since 1939 it has fallen off almost 50 D istrict were 7 per cent higher than in the correspond per cent. ing ten months of 1941. D u rin g 1942 the volume of awards fo r private pri Figures received from a lim ited number of depart m arily to restrictions on nonessential building and the ment stores in this District indicate that at the end of shortage of certain building materials. The volume of October outstanding orders fo r merchandise purchased awards fo r public residential building, though consider by the stores, to be delivered to them at a later date, were residential building has declined sharply owing ably higher than in 1941, has not been large enough to about 8 per cent below October, 1941, but were slightly offset the fa ll in private building. higher than in either A u gu st or September, 1942. A ll o f the decline in residential building during 1942 has occurred in the Percentage changes from a year earlier Metropolitan New Y o rk and Northern New Jersey area. In contrast, the volume o f contracts fo r such projects Department stores Net Sales awarded in Upstate New Y o rk during the first ten months October, 1942 o f 1942 was two-thirds greater than in the corresponding Stock on hand, Jan.through October 31, October, 1942 1942 period of 1941. New York City..................................... Northern New Jersey........................... Department Store Trade Total department store sales in this D istrict during October showed more than the usual advance over the PERCENT +18 + 8 +12 +20 +21 +15 +17 + 8 - 1 +22 +38 +17 +13 +17 +15 +10 +18 +21 +48 +13 + 6 + 4 + 6 +12 +14 + 4 + 7 - 1 - 8 +12 +25 + 8 - 4 + 9 + 6 H12 -12 -13 1-36 + 9 All department stores................ +16 + 7 +22 Apparel stores............................ +16 + 6 + 8 Westchester and Fairfield Counties. . . Bridgeport......................................... Lower Hudson River Valley................ Poughkeepsie..................................... Upper Hudson River Valley................ Central New York State...................... Mohawk River Valley...................... Northern New York State................... Southern New York State.................... Binghamton....................................... Western New York State..................... Niagara Falls..................................... +26 +19 +21 +10 + 11 + 1 - 3 — +11 +36 + 4 +15 — +17 +18 +11 +16 Indexes of Department Store Sales and Stocks, Second Federal Reserve Distriot (1923-25 average = 100) 1941 Indexes of Sales and Stocks of Reporting Department Stores in the Second Federal Reserve District, Adjusted for Seasonal Variation (1923-25 average=100 per cent) 1942 October August Sept. October Sales (average daily), unadjusted............... Sales (average daily), seasonally adjusted.. 112 99r 93 123 120 112 130 115 Stocks, unadjusted........................................ Stocks, seasonally adjusted r . .................... 128 116 162 165 161 156 158 145 r Revised. FEDERAL RESERVE B AN K OF N E W YORK M O N THLY REVIEW , DECEMBER 1, 1942 General Business and Financial Conditions in the United States (S u m m arized b y th e B o ard of G overnors o f th e F e d eral R eserve S ystem ) I N D U S T R IA L o u tp u t expanded fu rth e r in O ctober a n d th e first h a lf of N ovem ber. R e ta il foo d prices continu ed to advance w hile prices of other com m odities generally show ed little change. D istrib u tio n o f com m odities to consum ers w as m ain tain e d in larg e volum e. P r o d u c t io n Index of Physical Volume of Industrial Produc tion, Adjusted for Seasonal Variation (193539 average=100 per cent) In d u s tria l p ro d u ctio n continu ed to advance in O ctober an d th e B o a rd ’s seasonally a d ju ste d index rose 3 p o in ts to 188 p er cent of th e 1935-1939 average. G ains in arm am en t p ro d u ctio n accounted fo r m ost of th e increase, a n d it is estim a te d th a t c u rre n tly well over 50 p e r cent of to ta l in d u stria l o u tp u t is fo r w ar purposes. I n lines p ro d u cin g du rab le m an u fa ctu re s, a p p ro x im ately 80 p er cent of o u tp u t now consists of p ro d u cts essen tial to the w ar effort. S teel o u tp u t reached a new h ig h level in O ctober as p ro d u ctio n expanded to 100 per cent of ra te d capacity . I n th e first h a lf of N ovem ber o u tp u t declined slig h tly to aroun d 99 p e r cent, reflectin g some shutdow ns fo r fu rn ac e re p a irs, according to tra d e rep o rts. A c tiv ity in in d u stries pro d u cin g no ndu rab le goods declined less th a n seasonally in O ctober. P ro d u c tio n of foods, especially cann ing , w as un usually larg e fo r th is tim e of y e ar an d o u tp u t of tex tiles continu ed a t a h ig h level. M ineral pro duction , w hich usually increases in O ctober, declined slig h tly th is y e ar ow ing chiefly to a decrease in coal p ro d u c tio n w hich h ad been m ain tain e d in larg e volum e th ro u g h o u t th e sum m er. V alue of co n stru ctio n c o n trac ts aw ard ed in O ctober increased som ew hat over th a t o f S eptem ber, according to re p o rts of th e F . W . D odge C o rporation. P u b licly financed p ro je c ts continu ed to account fo r over 90 p e r cent of to ta l aw ards. T he D e p artm en t o f Com m erce estim ates th a t, in th e th ird q u a rte r of 1942, expendi tu re s fo r new co n struction am o unted to 4.2 billio n do llars, of w hich 3.5 billion cam e fro m pu blic fu n d s. F o r th e first nine m onths o f th is y e ar th e correspon din g figures w ere 10.2 an d 7.7 billio n dollars. C o nstruction o f m ilita ry an d naval fa cilities a n d of in d u stria l b u ild in g s accounted fo r th e b u lk o f th e expenditu res. D Stocks, Adjusted for Seasonal Variation (1923-25 average = 100 per cent) is t r ib u t io n D e p artm en t store sales increased in O ctober a n d th e B o a rd ’s seasonally a d ju ste d index rose to 129 p e r cent of th e 1923-1925 av erag e as com pared w ith 123 in S eptem ber an d 130 in A u g u st. In th e first h a lf of N ovem ber sales in creased fu rth e r an d w ere 17 per cent la rg e r th a n in th e correspon din g p erio d la s t y ear, reflectin g in p a rt price advances of a b o u t 10 p e r cent. R a ilro a d shipm ents o f fre ig h t w ere m ain tain e d in larg e volum e d u rin g O ctober a n d declined seasonally in th e first h a lf o f N ovem ber. Co m m o d it y P r ic e s R e ta il foo d prices continu ed to a d v a n c e ' sh a rp ly fro m th e m iddle of S eptem ber to th e m iddle of O ctober an d fu rth e r increases are in d ica te d in N ovem ber. P rice s of m ost other goods an d services increased slig h tly in th is perio d. I n th e e arly p a rt o f O ctober m axim um price controls w ere estab lished fo r a nu m b er o f a d d itio n a l foods. M axim um p rice levels fo r m any o th er foo d p ro d u cts have been raised , how ever, an d th e Office o f P ric e A d m in istra tio n re p o rts on th e basis of a recen t survey th a t in num erous instances sellers a re n o t com plying fu lly w ith th e re g u latio n s now in effect. B U. S. Bureau of Labor Statistics Indexes of the Cost of Living (1935-39 average= 100 per cent) U Wednesday Figures of Estimated Excess Re serves of All Member Banks (Latest figures are for November 11) an k C r e d it E xcess reserves of m em ber banks w ere 2.5 billio n do llars in th e m iddle of N ovem ber, a som ew hat h ig h er level th a n generally p rev ailed in th e p reced in g fo u r m onths. A t N ew Y ork C ity b anks excess reserves am ounted to a b o u t 500 m illion dollars. A d d itio n s to m em ber b an k reserve balances d u rin g th e fo u r w eeks ended N ovem ber 18 w ere th e n e t re su lt of a n increase of 500 m illion do llars in R eserve B an k holdings of G overnm ent ob ligatio ns, w hich ap p ro x im ately covered th e continu ed heavy currency d rain , a n d a decrease of 200 m illion in T rea su ry balances a t th e R eserve B anks. H oldings of G overnm ent securities by re p o rtin g b an k s in 101 cities increased by 1.9 billio n dollars to 24 billio n d u rin g the fo u r w eeks ended N ovem ber 11. A lm ost h a lf of th e increase occurred a t N ew Y ork C ity banks. T here w ere su b sta n tial increases in hold in g s of T rea su ry notes, bonds, an d certificates, an d a sm aller increase in T reasu ry bills, w hile holdings of g u ara n tee d ob ligatio ns declined. T hese changes reflected new offer in g s an d re tirem e n ts by th e T rea su ry d u rin g th e perio d. C om m ercial an d in d u stria l loans a t re p o rtin g m em ber b an k s in lead in g cities increased som ew hat d u rin g th e first tw o w eeks of N ovem ber. B rokers loans in N ew Y ork C ity increased aro u n d G overnm ent financing dates, b u t sub sequ en tly declined. n it e d S t a t e s G o v e r n m e n t S e c u r it y P r ic e s P rice s o f U n ite d S ta te s G overnm ent securities w ere ste ad y in th e fo u r weeks ended N ovem ber 18. L ong term tax a b le bonds yielded 2.32 p e r cent, an d 3 m onth T reasu ry bills sold a t a y ield of 0.37 p e r cent.
@FedFRASER