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MONTHLY REVIEW O f Credit and Business Conditions F E D E R A L V ol. R E S E R V E 25 B A N K O F N E W Y O R K D E C E M B E R 1, 1 9 4 3 M O N E Y M A R K E T IN No. 12 N O V E M B E R During November excess reserves of all member banks in the $70,000,000 through gold and foreign account operations. country ranged between $1,000,000,000 and $1,100,000,000, In the adjustment of their reserve positions, the New York the level that prevailed during the latter part of July and the City banks sold Treasury bills to the Federal Reserve Bank, early part of August, 1943 and was reached again toward the end of October. Excess reserves rose on September 15 to a reduced their holdings of other classes of Government securi ties, and at times borrowed moderate amounts of funds from the Reserve Bank. temporary peak of $2,050,000,000, as heavy sales of Govern ment securities during the Third War Loan drive transferred R e v ie w deposits from private accounts, against which reserves are required, to War Loan deposit accounts against which reserves Between October 27 and N o serve balances with the Federal Pa s t T w e l v e M o n t h s Over the past year the Federal Reserve Banks have added, through net purchases of Government securities, about are not now required. vember 24 member bank re of $5,500,000,000 to the supply Excess Reserves of Member Banks, by Classes* of member bank reserve funds. BILLIONS OFDOLLARS Three general factors have de Reserve Banks were drawn down by $636,000,000 as a re sult of net currency shipments to the banks, for use in meeting customers' requirements for payroll and other purposes; at the same time reserve require ments were enlarged by about $ 4 2 0 ,0 0 0 ,0 0 0 , principally through the process of recon version of deposits from the War Loan accounts to private accounts. The losses of reserve funds and the increases in re jN EW in jj mj| |||m heavy losses of member bank reserve funds, principally as a TO TAL result of the continuing rapid growth in currency circulation; YORK ic a g c A iS E R V E M enlarged member bank reserve , requirements resulting from Government security purchases *C I T I E S ' /v y j 3UNTRY by the banks and the deriva tive expansion in privately held bank deposits; and the degree BANKS < 19 42 1943 * Monthly averages of daily figures. estimated. serve requirements were met by sales of Government securities, principally bills and certificates of indebtedness, to the Federal Reserve Banks. termined the magnitude of the increase in the Reserve Banks’ Government security portfolios: The Government security portfolios of the Reserve Banks increased $1,073,000,000 between October to which member banks have Data for November, 1943 partly drawn upon their excess re serves. The growth in currency circulation over the past year, ex ceeding $5,000,000,000, has been the dominant factor draw ing down member bank reserve balances. An additional loss 27 and November 24, and on the latter date exceeded of $1,150,000,000 has resulted from an accumulation of funds $10,000,000,000 for the first time. A $90,000,000 reduction in out-of-town bank balances by foreign central banks and governments in the United held in New York City during November was roughly offset decline in the gold stock of this country and part in a States. Part of this loss has been reflected in a $660,000,000 by a continued moderate inflow of commercial and financial $490,000,000 increase in foreign account deposits with the funds to the city. Federal Reserve Banks. During the month, however, the central The only considerable offset to these reserve city banks of New York lost about $440,000,000 factors cutting into member bank reserve balances, aside from reserve the Government security purchases of the Federal Reserve funds through Treasury transactions and about MONTHLY REVIEW, DECEMBER 1, 1943 90 Banks, has been a $720,000,000 enlargement of outstanding Treasury currency (chiefly as a result of the putting into circulation, in December and the early part of this year, of securities dropped $203,000,000 further. The total volume of commercial, industrial, and agricultural loans showed only a slight increase during the five weeks ended November 24, roughly $600,000,000 Federal Reserve bank notes and the in contrast to the sharp rise which had occurred between Sep transfer of liability against these notes to the Treasury; these tember 8 and October 20. notes will be retired from circulation as they wear out). For the banks in the 100 cities outside New York, loans for purchasing or carrying securities during the Third War Loan drive did not expand as much as in New York, and the decline following the drive has been much less pronounced. Com mercial, industrial, and agricultural loans continued to rise, but the increase of $42,000,000 was only about one fifth as great as in the preceding five weeks’ period. Reporting banks in New York City, between October 20 and November 24, reduced their holdings of Treasury bills by $325,000,000 and certificates of indebtedness by $92,000,000. Treasury bond portfolios of New York City banks were decreased by $214,000,000, which was the years first con siderable decline as a result of market sales. These banks also sold a moderate volume of Treasury notes, guaranteed obliga tions, and other securities. Outside New York City the weekly reporting banks in 100 leading cities also reduced their holdings of Government securities during the five weeks’ period. The principal con traction occurred in Treasury bill portfolios, which declined $646,000,000 between October 20 and November 24; net sales of certificates of indebtedness, Treasury notes, and guaranteed obligations were relatively small. The demand by these banks for Treasury bonds, on the other hand, continued strong, and holdings were increased by $167,000,000. The increase in reserve requirements— despite the exemp tion from the requirements of $13,000,000,000 on deposit in the War Loan accounts at the present time— has amounted to about $1,100,000,000 over the year. Meanwhile excess re serves of all member banks have dropped from a daily average of $2,360,000,000 in November* 1942, to somewhat less than $1,100,000,000 in November of this year. Contraction of the excess reserves of the central reserve city banks of New York and Chicago were principally re sponsible for the over-all reduction of excess reserves during 1941 and 1942. By the end of February of this year, how ever, the central reserve city banks had virtually exhausted their surplus reserves, and the excess reserves of all member banks, by and large, had become the excess reserves of the member banks in the reserve city and "country” bank classifi cations. The decline from $1,700,000,000 in February to somewhat less than $1,100,000,000 in November has been principally accounted for by a contraction in excess reserve holdings of reserve city banks. These holdings of reserve city banks were of about the same magnitude as those of the "country” banks in January and February, but they have since declined to less than half the level then prevailing. The country banks’ excess reserves, on the other hand, have con tinued to fluctuate around a general range of $800,000,000 to $900,000,000. As a matter of fact, the excess reserves of the "country” banks have shown no pronounced change since the latter half of 1940, when aggregate excess reserves of the other classes of member banks were reaching extreme peaks. In both New York City and the 100 other centers, the decline in loans and investments between October 20 and November 24 was reflected in a decrease in total deposits. Government deposits in the 101 cities were reduced $3,600,000,000 as the Treasury began to spend the funds accumulated in its War Loan account deposits during the drive. Adjusted demand deposits (principally deposits of individuals and business con cerns) rose $1,835,000,000. Changes in Holdings of Government Securities by the W eekly Reporting Member Banks (In millions of dollars) M E M B E R B A N K CR ED IT Total loans and investments of the weekly reporting member banks in 101 leading cities declined $2,015,000,000 between October 20 and November 24, following an expansion of Week ended $6,800,000,000 associated with the Third War Loan drive and 1943 the sale of Government securities to commercial banks im mediately after the drive. The volume of total loans outstanding contracted sharply, with the greater part of the decrease occurring in New York City banks. Most of the decline in New York reflected the further repayment of loans for purchasing or carrying securi drives. The decrease in loans to brokers and dealers for carry ing Government securities amounted to $132,000,000; such loans on November 24 totaled $749,000,000, compared with the Notes Bonds Guaranteed Total New York City 6 Oct. ............... Oct. 13............... Oct. 2 0 ............... Oct. 2 7 ............... — 37 +177 +235 — 65 — 5 — 42 +365* — 45 Nov. — 133 — 18 +159 — 268 — — 58 — 14 + 47 3 ............... Nov. 17............... Nov. 24............... 22 Oct. 13............... Oct. ............... Oct. 27 ............... 20 Nov. 3 ............... Nov. 10............... Nov. 17............... Nov. 2 4 ............... 0 6 + — 4 — 17 + 17 + +254* — 34 — — 23 — 16 — + — 13 — — — — + + — — 19 6 11 22 39 44 24 73 + 22 0 1 — + 163 +849 — 184 1 1 21 — 209 — 125 3 +111 — 326 100 Other Cities 1943 ties, which had been built up to a higher level during the Third War Loan drive than in either of the two preceding Certificates Bills —112 +197 + 60 — 189 + + + 18 — — 13 — 27 — 7 — — — 15 1 88 —210 — 22 + 4 — 163 8 3 0 + 54 + 32 + 546* + + 15 12 8 + 76 + +534* + 16 88 + + + + 39 30 29 53 + 1 0 + 27 + 320 +1135 — 171 9 — 47 — 214 + 14 — 154 — 5 — 14 — + — 0 2 2 peak of $1,073,000,000 on October 6 and with $457,000,000 on August 25. Loans to others for purchasing or carrying * Reflects the allotment to commercial banks of new issues of % Per cent certifi cates of indebtedness and pe cent Treasury bonds on October 15. 2 FEDERAL RESERVE BANK OF NEW YORK E X P A N S IO N IN B A N K H O L D IN G S The money supply of the United States— defined as the total of deposits with the banks1 and currency in circulation— has virtually doubled since the outbreak of the war in 1939; it now approaches $120,000,000,000 in comparison with the prewar level of $60,000,000,000. The highest point reached during the latter part of the decade of the 20s was about O F 91 G O V E R N M E N T S E C U R IT IE S the profit from the premiums commanded by the new issues after the closing of the books for the receipt of subscriptions. During the first ten months of this year, we estimate that commercial banks increased their holdings of Government securities (other $19,500,000,000. than Treasury bills) Net by approximately market purchases came to about $55,000,000,000. $8,000,000,000, and allotments of new offerings to about The dominant factor in the wartime expansion of the money supply has been, as is well known, Government security pur $13,500,000,000; redemptions of maturing issues, or issues called for payment prior to maturity, amounted to approxi chases by banks. mately $2,000,000,000. The commercial banks of the country ex panded their holdings from $15,700,000,000 on June 30, 1939 B a n k H o l d in g s of T r e a s u r y B il l s to more than $62,500,000,000 at the end of November of this year. In the same period, meeting the bulk of the increased Generally speaking, market transactions have played a minor need by the banks for additional reserve^funds through Govern part in the changes in Treasury bill holdings by banks over the past year. Banks acquire additional bills mainly by purchases ment security purchases, the Federal Reserve Banks enlarged their holdings from $2,551,000,000 to about $10,400,000,000. Leaving aside Treasury bills for the moment, the commercial of the new weekly issues, or repurchases of bills previously sold to the Reserve Bank at the established Ys per cent buying rate. banks have acquired their additional Government security Holdings are reduced by redemptions of maturing bills and holdings from two sources: allotments made to them on sub scriptions which they have entered to new security offerings sales to the Reserve Banks under repurchase option. holdings have shown irregular fluctuations from day to day eligible for bank purchases, and net purchases of already out and week to week, reflecting the use by the banks of changes in their holdings of these securities in the adjustment of their The bill standing Government securities in the open market. Up to the end of 1942 allotments of new security offerings to banks reserve positions. were the primary source of the increase in bank holdings of 1943, bank portfolios of Treasury bills showed a pronounced but irregular rise from $1,050,000,000 at the beginning of Government securities. As a matter of fact, the banks at times tended to lighten holdings acquired on allotments, through sales to Federal Reserve Banks and other investors, and, for the year 1942 as a whole, market sales somewhat exceeded market purchases. During 1942 and the first five months of 1942 to $7,025,000,000 at the end of May, 1943; since the end of June a moderate net contraction of banks’ holdings of bills has occurred. Changes in Commercial Bank Holdings of U. S. Government Securities* With the successful conclusion of the First War Loan drive and with an increased disposition on the part of banks to employ their reserve funds more fully, a definite tendency for banks to add to their Government security holdings through market purchases appeared in January of this year. The de mand was especially strong and persistent for bonds— both the partially tax-exempt issues and the taxable issues eligible for bank purchase— but certificates of indebtedness, and to some extent notes and guaranteed obligations, were also added to bank portfolios through market purchases. These securities were acquired in part from Federal Reserve Banks and from Government security dealers who received allotments in the War Loan drives, but to an even larger extent from insurance companies, savings banks, and other investors who employed this means of adding to their capacities to purchase Govern ment securities in the Second and Third War Loan drives. Some part of the Government securities purchased by the banks appears to have been supplied as a result of the practice of " fr e e -r id in g In other words, speculators have obtained allot ments of Government securities and later resold them to obtain 1 collection. * Estimated by Federal Reserve Bank of New York. Exclusive of interbank deposits and less cash items in process of not included; October, 1943 preliminary. f Government securities other than Treasury bills, Federal Reserve Banks 92 MONTHLY REVIEW, DECEMBER 1, 1943 W A R F IN A N C IN G Fo u r t h W ar L o a n D r ive During November net public borrowing of the Treasury On November 22, Secretary Morgenthau announced that the consisted of funds received from the sale of Savings bonds and goal for the Fourth War Loan drive, which will cover the notes. period January 18 to February 15, had been set at $14,000,- The only market offering during the month involved the exchange of certificates maturing December 1 for a new 000,000. one-year certificate issue. Large scale financing will be resumed will be placed on the quota of $5,500,000,000 for individuals. in January, with the opening of the Fourth War Loan drive to During the period from January 18 to February 1, only sales raise at least $14,000,000,000. to individuals will be reported by the Treasury. Although sub The major emphasis throughout the drive, however, Throughout the present year, sales of Savings bonds in scriptions will be accepted from other nonbanking investors periods excluding the War Loan drives have regularly main during this period, reports of sales to this group will not be tained a rate of $800,000,000 to $900,000,000 monthly, except made until February 1. for a peak of $1,240,000,000 in January when limit purchases and Savings notes received at the Federal Reserve Banks or of Series F and G bonds and investment of accumulated funds the Treasury between January 1 and February 29 will be in Series E bonds swelled the total. credited to the drive. The high level of sales outside the drives has been due in large part to sales under payroll savings plans, which have been maintained at about The securities to be offered will consist of: Series E Savings bonds $420,000,000 monthly since April. Nearly 27,000,000 per sons are participating in these plans and contributing on the average about 9 per cent of their salaries or wages. All subscriptions for Savings bonds Series F and G Savings bonds Series C Savings notes In addi 2 V2 per cent bonds of 1965-70 tion, regular purchases are being made by individuals outside 2Va per cent bonds of 1956-59 the payroll savings plans. % per cent certificates of indebtedness During the past twelve months, which include the three War Loan drives, net sales of Savings bonds (after allowing With the exception of the 2Va per cent bonds, these securities for redemptions) totaled slightly more than $12,500,000,000, are similar to those offered in the Second and Third War Loan compared with about $8,500,000,000 in the previous twelve drives. months' period starting with our entry into the war. The bulk permitted to make limited investments against their time de Another innovation is that commercial banks will be of the increase occurred in net sales of Series E bonds, which posits in the 2 Va and 2 Vz per cent bonds under a formula to be amounted to more than $9,000,000,000, compared with slightly announced later. less than $5,500,000,000 in the preceding period. Except for this limited investment, commer Sales of cial banks will not be permitted to own the 2 Va per cent bonds Series F and G bonds ($3,500,000,000) were only slightly until September 15, 1946 and the 2 Vi per cent bonds until larger than those in the earlier period ($3,000,000,000). In the Second Federal Reserve District, sales of Series E bonds by agencies other than post offices have been relatively February 1, 1944. The Treasury has requested that trading in these issues not start until after the close of the drive on stable in non-drive months, amounting to about $80,000,000 to $90,000,000 monthly, with the exception of January, 1943 when sales totaled $112,000,000. Second District sales of Series F and G bonds in months outside the drives have fluctu ated somewhat more irregularly than Series E bonds, declining in the months immediately preceding and following the most recent War Loan drive. Series E sales in this District usually February 1, 1954. All three of the market issues will be dated February 15. As in previous drives, the request is made that all subscrip tions by corporations and firms be entered and paid for through the banking institutions where funds are located, so as to pre vent disturbance to the money market. The Treasury is also requesting the cooperation of all banking institutions in de clining to make speculative loans for the purchase of Govern account for about 13 per cent of the national total; and sales ment securities. of Series F and G bonds, for about 20 per cent. Government securities are encouraged provided such loans are Loans to facilitate permanent investment in Sales of Tax and Savings notes outside the War Loan drives made in accord with the joint statement issued by the National have consistently approximated $450,000,000 monthly this and State Bank Supervisory Authorities on November 23,1942. year, except in August, the month prior to the Third War Loan drive, when sales amounted to only $214,000,000. Allow SE C U R IT Y M A R K E TS ing for heavy redemptions in payment of taxes, net sales in the During November, the Government security market was calendar year 1943 will probably not exceed $2,500,000,000, characterized by firmness in issues maturing or callable within compared with slightly more than $3,900,000,000 in 1942. about four years, and small price declines in intermediate and Gross sales in the Second District in the non-drive months long term bonds, particularly tax-exempt bonds. Trading was generally account for one third of the national total, but are most active in the various certificate of indebtedness issues a somewhat smaller proportion during the War Loan drives. and the new 2 per cent Treasury bonds of 1951-53. Selling of FED ERAL RESERVE B A N K OF NEW Y O R K Standard and Poor’ s Price Index o f 9 0 Stocks 93 tries reached new peaks in volume of output. Steel mill opera tions exceeded 100 per cent of calculated capacity throughout October, and production averaged 251,200 net tons daily, com pared with the previous month’s daily average of 249,600 tons. Output of crude petroleum continued to increase despite serious shortages of manpower in the industry and a decline in the rate of development of new wells. Contrary to the usual (1926average = 100per cent) PER CENT seasonal movement, electric power production was higher in October than in September. Coal mining was affected by work stoppages, which began about the middle of October; by November 1, virtually all the mines were shut down. Production of bituminous coal was reduced from a daily average of 2,017,000 net tons in Septem ber to 1,875,000 net tons in October. Increased output in war industries was reflected in the War Production Boards index of munitions, which registered the the 2 per cent bonds appears to have originated principally largest percentage gain of any month since July. The greatest expansion took place in production of ammunition, aircraft, with speculative subscribers; these securities were absorbed by and communication and electronic equipment; only one major banks and by other investors shifting from tax-exempt inter munitions group showed a decline— the combat and motor vehicles group. mediate and long term bonds. The average yield on long term tax-exempt bonds advanced from 1.82 per cent at the begin The value of contracts awarded for all major types of con ning of the month to 1.86 per cent on November 17, and re struction was slightly higher in October than in September, but mained steady thereafter. Long term taxable bond yields, considerably lower than in October, 1942. For the first ten on the other hand, advanced only from 2.31 to 2.33 per cent. months of this year contracts were almost 59 per cent below Increased activity on the New York Stock Exchange during those of the corresponding months a year ago. Nonresidential building experienced the most severe declines because of the November was accompanied by a decline in stock prices simi lar to that which occurred in July. The November decline took place during the first half of the month, reflecting favorable war news and rumors of an early peace with Germany. The curtailment of factory construction as the war expansion pro gram approached its conclusion. October as usual was a month of heavy freight traffic for the largest daily decrease, 3 per cent, occurred on November 8 railroads. when the volume of trading on the Stock Exchange exceeded feed shortage in the South and Northeast. 2,300,000 shares. Grain was shipped from the Northwest to meet a Car loadings of By November 17, prices were at the lowest level since early last spring. Following a brief recovery, stock 1942 1943 prices declined further and at the month end Standard and Poor’s index of 90 stocks was about 13 per cent below the July, 1943 high point. The greatest percentage declines since Oct. Aug. Sept. Oct. Indexes of Production and Trade * (100 = estimated long term trend) Index of Production and Trade................. 123 126 125p 126p Production................................................. 131 133 133p 133p Producers’ goods— total..................... Producers’ durable goods............... Producers’ nondurable goods........ 168 202 128 166 195 133 166 p 194 p 133 p Consumers’ goods— total................... Consumers’ durable goods............. Consumers’ nondurable goods. . . . 86 37 103 89 26 110 166p 195p 133p S?\ 87 p 2 5p 108 p 89p 25p 110p Durable goods— total.......................... Nondurable goods— total................... 154 113 145 119 145p 119p 144p 120p Primary distribution............................... Distribution to consumer....................... Miscellaneous services............................ 139 91 143 161 84 177 157p 81p 175p 158p 84 p 173p Cost of Living, Bureau of Labor Statistics (100 = 1935-39 average).......................... : 119 123 124 124 p cent on November 24. Wage Rates (100 = 1926 average)................................... 144 154 157p PRODUCTION AND TRADE Velocity of Demand Deposits* (100 = 1935-39 average) New York City............................................. Outside New York City.............................. 60 81 68 77 88 94 July have occurred in railroad issues. Prices of corporation bonds also fell during November, with the decline most marked among the higher grade bonds, par ticularly the industrials. Moody’s index of Aaa bond yields reached its highest point since last June, as the index rose from 2.69 per cent on October 30 to 2.73 per cent in late November. The index of Baa bond yields stood at 3.84 per cent at the end of November compared with 3.82 per cent a month earlier. Municipal bond yields also rose during November. From a record low of 1.86 per cent on the third, Standard and Poor’s index of municipal bond yields increased steadily to 1.95 per Total industrial production changed only slightly between September and October in spite of the fact that several indus * Adjusted for seasonal variation. p Preliminary. 74 81 94 M O N T H L Y R E V IE W , D E C E M B E R 1, 1943 livestock increased sharply as the seasonal movement of cattle and hogs to eastern markets got under way. A marked expansion occurred in retail trade as a result of the emphasis this year on early Christmas shopping. Depart Percentage Changes in F a ctory E m p lo ym en t and P a yrolls, N ew Y o rk S tate* as large a gain was evident for sales of variety chains. Mail order house sales failed to show a substantially larger than seasonal advance. EMPLOYMENT AND PAYROLLS Total employment in New York State factories in October Oct. 1942 to Oct. 1943 Sept. 1943 to Oct. 1943 Oct. 1942 to Oct. 1943 + 2 .6 + 1 .5 + 6 .3 + 3 6 .3 + 6 .6 + 1.1 + 2 3 .0 + 5 2 .8 Albany-Schenectady-Troy............. + 1 .0 + 0 .6 — 0.1 — 0.7 — 2 .7 — 3.2 + + + + — + 5.8 5.6 5.9 7 .8 2 .5 2 .2 + 1 .8 + 2 .1 + 1.1 + 2 .2 + 1.9 + 0 .8 + 2 3 .4 + 2 4 .9 + 1 6 .5 + 1 8 .5 + 1 1 .6 + 7 .6 New York State............................... — 0.1 + 5.9 + 1.6 + 2 0 .7 ment store sales, after adjustment for seasonal changes, in creased 6 per cent between September and October; and nearly Payrolls Employment Industrial area Kingston-Newburgh-Poughkeepsie Binghamton-EndicottJohnsonCity................................ New York C ity................................. Sept. 1943 to Oct. 1943 * Data of New York State Department of Labor. Figures cover wage earners only. was a little lower than in September, chiefly because of seasonal declines in canneries and in some branches of the apparel industry. As shown in the accompanying table, advances in New York City and in the Upstate areas of Poughkeepsie, Syracuse, and Binghamton were more than offset by declines in Albany, Utica, Rochester, and Buffalo. A large part of the The total number of persons employed in the United States is estimated, by the Department of Commerce, at 51,900,000 for October; the number unemployed declined to a new low of 700,000 persons. Labor shortages became increasingly im portant, and the number of acute shortage areas, as classified by increase in New York City was due to expansion in the ship the War Manpower Commission, was increased from 71 to 77. building and communication equipment industries; likewise, To relieve the labor shortage, one million more women work the increase in the three Upstate areas reflected further gains in ers will be needed according to estimates of the Commission. employment at war plants. Factory payrolls for the State con tinued, during October, the advance that has been practically was rapid, and further increases have occurred this year. uninterrupted since 1940. the first ten months of 1943, women comprised 30.6 per cent For the entire country, employment in manufacturing indus tries as a whole increased a little, with most of the durable and nondurable goods industries showing improvement; in During 1942 the increase in the number of women employed In of the total number of persons employed, compared with 25.9 per cent for the corresponding period a year ago. To meet the unprecedented manpower demands of the war, new sources of labor have been utilized. These sources include fact, the only major decline occurred in the food group, reflecting the seasonal decline in the canning industry. women, young persons of school age, and men heretofore con Employment in the United States, by Age Groups and Sex* Changes that have occurred, during the past two years, in the sidered too old to continue in or return to employment. numbers of workers, by age groups and sex, are indicated on the accompanying chart.1 The number of men employed declined from 38,900,000 in July, 1941 to 37,200,000 in July, 1943, while the number of women rose from 12,000,000 to 17,100,000. All age groups showed a rise in the number of women employed, with the greatest percentage increases occurring in the 14-19 and 45-54 age groups. For men, the groups that showed increases were those for ages 45 and over; employment in the two groups 2 5 -3 4 most affected by military service— the 20-24 and the 25-34 3 5 -4 4 groups— declined considerably. The various changes resulted in a shift in the order of rank of the different groups. 4 5 -5 4 In July, 1941, the 25-34 age group ranked first, so far as the number employed was concerned, whereas in July, 1943, the 35-44 age group held first place. The 20-24 age group dropped from fourth to sixth place in the two-year interval. 0 3 MILLIONS OF PERSONS * From Bureau of the Census, U . S. Department of Commerce, The Labor Force Bulletin, June 17, 1943, pp. 11, 12, and September 30, 1943, pp. 11, 12. 1 July comparisons are shown on the chart since the latest month for which data by age groups are available is July, 1943. The proportion of men and women showed no change between July and October, 1943, and it may be assumed that the age distribution, also, would show little variation. FED ERAL RESERVE B A N K OF NEW Y O R K DEPARTMENT STORE TRADE During the first three weeks of November, department store sales in this District were 13 per cent greater than in the corresponding 1942 period. On the basis of the three Indexes of Sales and o f Stocks on H and for Apparel Stores and for W o m e n ’ s and M en ’ s C lothing D epartm en ts of D epartm ent Stores, Second Federal R eserve D istrict* PER CENT PER CENT 250 SALES weeks’ figures, department store sales for the month of Novem ber are estimated to have been approximately 10 per cent higher than in October, after allowance for the usual seasonal increase. f 100 / V Early Christmas shopping probably accounted for at least part of il / AP PARFI ORE! ¥ The adjusted index was the second highest on record, being exceeded only in February of this year. 95 UJ 7 K ..... A D E f 3 A R T M EN T <»T O R E S J the unusual increase in November. STO CKS Sales of womens wear have continued to play an important D E P A R T M E :n t s'f o r e :5 250 / v 3* part in the maintenance of a high level in total department store trade. A Approximately two fifths of total department store sales in the first ten months of this year were in the womens and misses’ wear group. / Among the individual de partments within the group, both the infants’ wear, and the neckwear and scarf departments showed increases of about 30 per cent; sales of coats and suits, dresses, sportswear, APP/^ R E L O 1U R E S J J 1941 200 150 100 1942 1943 * Compiled by Federal Reserve Bank of New York. For sales, monthly average sales in 1941 = 100 per cent; for stocks on hand, January 31, 1941 = 100 per cent. Data for stocks of department stores unavailable for February, March, and May, 1941. Plotted on ratio scale to show proportionate changes. lingerie, furs, gloves, and handbags rose approximately 20 per addition to those in the women’s wear group, which showed cent; and millinery sales advanced more than 10 per cent. No substantial increases over a year ago include jewelry, luggage, and yard goods. appreciable gains for the year were reported for shoes, hosiery, or corsets and brassieres. Sales of men’s wear departments, Department store stocks at the close of October increased which represented approximately one tenth of total sales, were less than seasonally for the second consecutive month. only slightly greater than a year ago. adjusted index was 6 per cent below this year’s high point Other departments, in D epartm en t and Apparel Store Sales and Stocks, Second Federal R eserve D istrict, P ercentage Change from th e Preceding Year Net sales Locality Oct. 1943 Stocks on hand Jan. through Oct. 31, 1943 Oct. 1943 Department stores, Second District.. . . New York C ity...................................... Northern New Jersey........................... Newark................................................ Westchester and Fairfield Counties. . Bridgeport.......................................... Lower Hudson River Valley............... Poughkeepsie..................................... Upper Hudson River Valley............... Albany................................................. Schenectady....................................... Central New York State..................... Mohawk River Valley...................... Utica................................................ Syracuse.............................................. Northern New York State.................. Southern New York State................... Binghamton....................................... Elmira.................................................. Western New York State.................... Buffalo................................................. Niagara Falls..................................... Rochester............................................ + 1 + 2 — 4 — 4 — 10 — 14 + 3 + 4 — 9 — 9 — 8 + 8 + 3 +10 +10 — 7 + 1 + 6 — 6 — 1 — 2 +1 2 + 2 + 5 + 7 — 2 — 2 — 3 — 6 + 5 + 7 — 2 — 5 + 3 + 11 +11 + 12 + 10 + 2 +10 +1 5 —- 3 + 9 + 10 +28 + 6 — — 7 — 2 — 3 — 14 Apparel stores (chiefly New York City) +15 +20 + 4 — 17 — 20 -2 2 — 24 — 15 — 18 0 — — 1 — + 2 — 8 — 17 — — 2 — + 2 The reached on August 31, but 20 per cent above the low figure of last April. Compared with the all-time high for July, 1942, stocks were down 30 per cent. Among the individual depart ments, changes in stocks have varied widely during the past year. With the principal exceptions of jewelry and wines and liquors, the increases in inventory have been concentrated in the women’s ready-to-wear departments. Sharp declines have occurred in men’s wear, home furnishings, sporting goods, luggage, and toilet articles. As indicated in the accompanying chart, sales and stocks of apparel stores follow closely the fluctuations of the combined sales of women’s and men’s wear departments in department stores. In the case of sales, the apparel stores so far this year have made the better showing; their sales were 20 per cent above the first ten months of 1942 and 34 per cent above 1941. Corresponding figures for women’s and men’s wear in depart ment stores were 13 per cent and 24 per cent, respectively. Stocks in apparel stores last year did not increase so sharply as department store stocks of women’s and men’s wear; and Indexes of D epartm ent Store Sales and Stocks, Second Federal R eserve D istrict ( 1 9 2 3 -2 5 average = 1 0 0 ) 1942 1943 Item Oct. Aug. Sept. Oct. Sales (average daily), unadjusted................. Sales (average daily), seasonally adjusted. . 130 115 95 126 126r 118 137 121 Stocks, unadjusted.......................................... Stocks, seasonally adjusted............................ 160r 148r 123 127 128 123 131 119 r Revised. the decline that began toward the close of 1942 was not so great. After July of this year apparel store stocks increased sharply and they reached a new high level at the end of Octo ber; department store stocks of women’s and men’s wear, although showing a substantial increase between July and October, were 8 per cent below their peak reached in Septem ber, 1942. In both apparel and department stores, stocks on hand at the close of October represented approximately 3 months’ supply at the current rate of sales. 96 MONTHLY REVIEW, DECEMBER 1, 1943 FURNITURE STORE TRADE Sales of reporting furniture stores in the Second Federal Indexes of Sales and of Stocks on Hand for Furniture Stores and for Homefurnishing Departments of Department Stores, Second Federal Reserve District* PERCENT PERCENT Reserve District during October were 3 per cent below the corresponding month last year and 11 per cent below October, 1941. For the first ten months of this year, changes from 1942 for the five largest cities of the District ranged from an increase of 6 per cent for New York City to a decline of 18 per cent for Newark. (See accompanying table.) For the District as a whole, sales were unchanged from those in January-October, 1942. Department store sales of homefurnishings, in contrast, de clined 6 per cent between the first ten months of 1942 and of 1943. When comparisons are made with the corresponding period of 1941, however, department store sales made the better showing (a decline of 6 per cent, compared with a de crease of 11 per cent for furniture stores). The seasonal pat terns of sales for the two groups of stores are somewhat different. As indicated on the accompanying chart, October was the peak month in both 1941 and 1942 for homefurnish ing sales of department stores, whereas furniture store sales were the greatest in December of both years. For department stores, sales of the individual departments within the homefurnishing group during the first ten months of this year have varied from an increase of about 10 per cent over the similar 1942 period to a decline of 65 per cent. The 10 per cent increase was shown in sales of draperies, curtains and upholstery fabrics, floor coverings and rugs, pictures and Furniture Store Sales, Stocks, Receivables, and Collections Second Federal Reserve District 1941 1942 1943 * C om p iled by F ederal R eserve B an k o f N e w Y o r k . F or sales, m on th ly avera ge sales in 1941 = 100 per c e n t; fo r stocks on h an d , J an u ary 31 , 1941 = 100 per cent. D ata fo r stocks o f departm ent stores u navailable fo r F 'ebru ary, M a r c h , and M a y , 1941. P lotted on ratio scale to show proportionate chan ges. mirrors, and lamps. China and glassware sales, on the other hand, decreased a little; sales of furniture, beds, and mattresses declined about 5 per cent; housewares (pots, pans, toasters, etc.), 10 per cent; musical instruments, 25 per cent; and major electric appliances about 65 per cent. Furniture store stocks at the close of October were 36 per cent below the high point reached on July 31, 1942, and stocks of homefurnishing departments were 46 per cent below their 1942 high level. In the first half of 1942, furniture store stocks did not increase so rapidly as stocks of homefurnishings P ercentage change from the preceding year Stocks on hand N e t sales L o c ality O c t. 1943 Jan.-Oct. 1943 O ct. + 6 — 14 — 18 — 3 — 14 — 3 + 2 4- 9 — 18 — 22 — 3 — 7 — 1 — 32 — 34 — 46 W e ste rn N e w Y o r k S t a t e ............... B u f f a l o .................................................. R o ch e ste r ............................................. 4 — 12 — 18 -f 6 — 26 — 17 — 14 — 15 — 27 — 27 — 20 — 24 — 15 T o ta l outside N e w Y o r k C ity — 16 Total Second District,.......... — 3 N e w Y o r k C i t y .............................. N orthern N e w J er se y ........................ N e w a r k ................................................. W e stch e ste r-F air f ie ld ....................... H u d son R iver V a l i e v ........................ Cftntrn.1 Nf»w Y o r k S ta tfi................. Svracusfi .......................... N orth ern N e w Y o r k S t a t e ............. Southern N « w York S tatft............. Elmira........................... + T o ta l D istrict A ccou nts receiv able C ollec tions O c t. 1943 31, 1943 — 13 — 22 — 29 + 5 — 27 — 26 — 20 36 — 41 — 41 — 34 — 39 — 24 — 26 — 35 — 31 — 12 — 34 — 29 — 28 — 42 — 42 — 42 — 30 — 28 — 32 — 8 — 34 — 32 — 23 0 — 32 — 28 — 17 __ — 29 — N e w Y o r k C ity — 21 — 21 — 24 — 27 — 15 O utside N e w Y o r k C ity Ite m O c t. 1943 O c t. O c t. O c t. O c t. 1942 1942 1943 1942 1943 83.0 83.0 82.5 83.5 84.0 81.7 O c t. C redit sales as per cent of total sales.................. Stock s on h and , end of m on th , as ratio to m o n th ’s s a le s ................ C ollections, exclusive of dow n p aym e n ts, as per cent of receiv ables, first of m o n t h . in department stores, and their subsequent decline has not been so great. Stocks of furniture stores are now at the level pre vailing during the first six months of 1941, and they represent about 3 i/2 months’ supply at the current rate of sales. During 1941 and the first four months of 1942, furniture stores in this District reported that about 88 per cent of their sales were made on credit. Reflecting principally increased individual incomes and consumer credit regulations, this per centage declined to 80 at the close of last December. The proportion increased to 84l/ i per cent in April of this year, and averaged close to 83 per cent in the following six months. Accounts receivable, which showed very little change from month to month during 1941, declined at a fairly steady rate from December, 1941 through August of this year; the decline amounted to more than 50 per cent. Receivables in Septem ber remained unchanged from the August figure, but during October an increase of 2Vi per cent occurred. Collections in October against accounts outstanding at the close of the pre ceding month amounted to 15 per cent. The collection ratio began to move upward at the close of 1941, when 10 per cent 5 .0 3 .5 5 .0 3 .3 5 .0 4 .0 1 4 .1 15.1 13.4 1 4 .4 15.6 16.6 of accounts receivable were being collected, and the advance continued through May of this year; since then no significant change has appeared. FEDERAL RESERVE BANK OF NEW YORK MONTHLY REVIEW, DECEMBER 1, 1943 General Business and Financial Conditions in the United States (Summarized by the Board of Governors of the Federal Reserve System) I NDUSTRIAL November. activity was maintained in record volume in October and the early part of Value of department store sales continued at an exceptionally high level. I n d u s t r ia l Pr o d u c t io n Index of Physical Volume of Industrial Produc tion, Adjusted for Seasonal Variation (1935-39 av erage= 100 per cent) Indexes of Value of Department Store Sales and Stocks, Adjusted for Seasonal Variation (1923-25 average=100' per cent) The total volume of industrial production continued to increase slightly in October and the Board’s seasonally adjusted index was at 245 per cent of the 1935-39 average, as compared with 240 in July and 227 in January. War production in the machinery and transportation equipment industries showed a further rise, reflecting largely a new high level of production of aircraft, aircraft engines, and parts. The total number of planes accepted during the month was 8,362, or 11 per cent more than the average in the third quarter. Deliveries of cargo vessels from merchant shipyards continued at an annual rate of 20,000.000 deadweight tons. Steel mills operated during October at the highest monthly rate during the war period. Production of nonferrous metals also continued to rise. Announcement of per mission to use aluminum in additional types of war products and some essential industrial products followed rapidly increasing output of this metal. Lumber production declined somewhat more than usual at this season and the prospective supply situation remains critical notwithstanding reduced demand for lumber for building purposes. Output of stone, clay, and glass products as a whole showed little change and was at about the level of a year ago. Cement production in October was down 40 per cent from last year but production of other stone, clay, and glass products, like glass containers and asbestos and abrasive products, was considerably higher than last year. Output of most nondurable goods showed little change from September to October. Food manufacturing as a whole continued in large volume, allowing for seasonal changes, although butter and cheese production declined. Output of butter was 11 per cent below last year in October and declined further in the early part of November. Meatpacking, however, was at an exceptionally high level in October and continued to increase sharply in the first three weeks of November. There was also a rise in production of wheat flour and other manufactured foods in October. Output of textile and leather products remained at the somewhat reduced rate of recent months, while production of rubber products and industrial chemicals increased. Coal production declined 6 per cent in October and dropped sharply further during the first week of November, but increased in the middle of November. The value of construction contracts awarded in October, according to reports of the F. W . Dodge Corporation, continued at the low level of other recent months. Total awards this year have been 60 per cent smaller than in the corresponding period of 1942, when they were at the highest level of the war period. D is t r ib u t io n -/-V 120 120 MO I10 Department store sales in October and the first half of November were 10 per cent larger in dollar volume than in the same period last year, and, allowing for seasonal changes, sales were somewhat higher than in the third quarter of this year. Total con sumer expenditures for commodities and services in the third quarter were at about the peak level prevailing in the first half of this year and were substantially larger than a year ago. Carloadings of railway freight in October were slightly less than in September, reflect ing chiefly declines in shipments of coal and ore. Loadings of grain increased sharply to a level 20 per cent greater than in October, 1942, and livestock shipments were the highest in recent years. C o m m o d it y Prices 1938 1939 1942 1943 Indexes of the Cost of Living as Compiled by Bureau of Labor Statistics (1935-39 average = 100 per cent) Member Bank Reserves and Related Items (Latest figures are for November 17) Grain prices advanced in the early part of November, while prices of livestock declined as livestock marketings expanded sharply. Prices of certain industrial raw materials, such as cotton, wool, and nonferrous metal scrap, have also declined somewhat since the middle of October reflecting larger supplies and uncertainties as to the extent of demands for these materials in war production. The total cost of living which had declined 1.4 per cent during the summer, according to the Bureau of Labor Statistics, rose 0.8 per cent from mid-August to mid-October. There were increases in prices of food, clothing, and a number of miscellaneous items. Ba n k Credit The average level of excess reserves at all member banks was around 1.1 billion dollars in mid-November reflecting some decline from the comparable October period. During the four weeks ended November 17 reserve funds were supplied to member banks by an increase of over 900 million dollars in the Government security portfolio of the Reserve Banks; increased holdings consisted largely of bills purchased under option and in part of certificates. The effect of these security purchases on excess reserves was more than offset, however, by a currency demand of 540 million dollars and a continued increase in required reserves as Treasury disbursements transferred funds from reserve-exempt war loan accounts to private deposits. Following substantial bank purchases of special Treasury offerings in mid-October, Government security holdings at reporting member banks in 101 leading cities declined somewhat over the following month. The principal decrease was in holdings of bills at banks outside New York. Commercial loans, while decreasing during the past two weeks, showed a net gain for the four week period, while loans on securities, which rose to a high level during the Third War Loan Drive, declined substantially.