Full text of Economic Policy Review (Federal Reserve Bank of New York) : December 20, 1919

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R eport

on

S e c o n d
F rom

B u s in e s s

F e d e r a l

th e
to

R e s e r v e

F ed eral R eserve
th e

F ederal

N ew Y ork

,

C o n d itio n s
D i s t r i c t

A g en t at N ew

R eserve

Y o rk

B oard

D ecem ber 20, 1 9 1 9

T h e b a n k in g p ro b le m s of th e co m -

c re d it a t a tim e w h e n th e v o lu m e o f c re d it sh ould be

in g y e a r w i ll ce n te r la r g e ly a ro u n d
th e g r e a t ly e x p a n d e d v o lu m e of b a n k
c re d it w h ic h th e w a r re q u ire d a n d w ith w h ic h th e

su b sid in g .
T h e r e are tw o e ffe c tiv e ch e c k s to su ch e x p a n sio n ;
one, th e h igh e r c o st o f go o d s w h ic h , w h e n su p p ly
a n d d e m a n d b eco m e m o re n e a r ly b a la n c e d , w ill d e ­
crease c o n su m p tio n ; a n d th e o th er, th e h igh er co st

C r e d it

and

B a n k in g

su b sid en ce of w a r fin a n c in g le a v e s us.

T o e sta b lish

som e co n tro l o v e r it a n d to p re v e n t in so fa r as p r a c ­
tic a b le its d iv e rsio n in to u n d esira b le u ses in ste a d of
to re d u ctio n of b a n k d e b ts, is a ta s k re q u irin g o f th e
b a n k e rs of th e c o u n tr y n o t o n ly a n u n d e rsta n d in g of
th e situ a tio n b u t a c tio n of a m o st d isin terested so rt.
F o r th e lon ger th is v o lu m e of c re d it rem ain s in use in
excess of o u r re q u irem en ts fo r p ro d u cin g a n d d is­
tr ib u tin g go o d s a n d c a r r y in g on th e u su al bu sin ess
o f th e c o u n tr y , th e lo n ger w ill be d e la y e d a re tu rn
to m o re n o rm a l b u sin ess a n d p rice co n d itio n s.
T h e a d d itio n a l c re d it c re a te d b y th e F e d e r a l
R e s e r v e B a n k d u rin g th e w a r w a s su p p lied a t ra te s
w h ich o f n e c e ssity co n fo rm e d to th e T r e a s u r y ’ s
p o lic y of b o rro w in g a t lo w ra te s of in terest.
D u r in g
th e w a r w h en in d u stria l e xp a n sio n w a s clo se ly c o n ­
tro lled b y G o v e r n m e n t re g u la tio n , th e use o f th e
cre d it resou rces o f th e F e d e r a l R e s e r v e B a n k w a s
con fin ed la r g e ly to p u rp o ses n e c e s sa ry to c a r r y on
th e w a r a n d m a in ta in th e c iv ilia n p o p u la tio n . B u t
w ith th e re m o v a l of su ch re g u la tio n a n d co n tro l
a n d u n d er th e stim u lu s of ch e a p cre d it a n d a n a p ­
p a r e n t ly lim itless d e m a n d fo r go o d s, in d u stria l
exp a n sio n h as p ro gre ssed b y leap s a n d b o u n d s, a c ­
c o m p a n ied b y sp e c u la tiv e a c t i v i t y in all k in d s of
p ro p e rty .
T h is exp a n sio n k eep s u p a p re ssu re fo r
LO A N S, D ISC O U N T S
Date

October 31
November 7
November 14
November 21
November 28
December 5
December 12
December 19

ra te s of th e F e d e r a l R e s e r v e B a n k sh o uld b e a n e f­
f e c tiv e influence u p o n th e c o st of cred it. T h e y h a v e
b een raised tw ic e , on N o v e m b e r 3 a n d D e c e m b e r 1 1 ,
b u t h a v e n ev e rth e le ss been clo se ly re la te d to th e
c e rtific a te ra te p o lic y o f th e T r e a s u r y . T h e y h a v e ,
h o w e v e r, g iv e n cle a r in d ica tio n to th e m em b er
b a n k s of th e

d e sira b ility in th e ir o w n in te re st, of

e x te n d in g c re d it w ith in cre a sin g re s tra in t a n d c ir­
c u m sp e ctio n a n d of a d d re ssin g th e m se lv e s to th e
g r a d u a l re d u ctio n o f th e ir d e b ts to th e F e d e r a l R e ­
se r v e B a n k .
D u r in g th e m o n th th e lo an s of th e N e w Y o r k
b a n k s h a v e in a g g r e g a te d eclin ed .
S in c e O cto b e r
3 1 , th e loan s, d isco u n ts a n d in v e stm e n ts of th e 1 1 2
re p o rtin g b a n k s of th is d istric t h a v e d eclin ed a b o u t
$ 3 2 2 ,0 0 0 ,0 0 0 , of w h ic h a lm o st th e en tire a m o u n t is
a cc o u n te d fo r b y th e d ecrease o f th e 7 1 re p o rtin g
b a n k s in N e w Y o r k C i t y .
T h e fo llo w in g ta b le sh o w s
th e cou rse o f th e re d u c tio n , a n d in d ica te s t h a t a t
th e v e r y end of th e p erio d th e lo a n s o f th e b a n k s
a g a in m o v e d u p w a rd .
AND

IN V E S T M E N T S

(In Millions)
71 Reporting Banks
112 Reporting Banks
2nd Fed. Res. District
New York City

$5,789
5,744
5,570
5,487
5,468
5,374
5,394
5,474

W h ile loan s of b a n k s in th e N e w Y o r k d is tric t d e clin ed $ 3 2 2 ,0 0 0 ,0 0 0 , b a n k s e lsew h ere in cre a sed th e ir




of c re d it w h ic h w ill m a k e it less p ro fita b le fo r b a n k s
to b o rro w a n d th u s red u ce th e s u p p ly of c re d it a v a il­
a b le to th e m fo r fu rth e r e x p a n d in g th e ir lo a n s. T h e

$6,397
6,353
6,181
6,097
6,078
5,987
5,994
6,075

794 Reporting Banks
All Districts

$15,598
15,627
15,422
15,471
15,461
15,452
15,459
15,615

lo an s b y $ 3 3 9 ,0 0 0 ,0 0 0 , th e r e b y s lig h tly m o re th a n
o ffse ttin g th e re d u c tio n m a d e in th is d istric t.

REPORT ON BUSINESS CONDITIONS
T h e r e are o th er e v id e n ce s o f re a c tio n fro m th e
p ro g re ssiv e exp a n sio n of O cto b e r.
T h e r e h a s been a

th e lo w e st p o in t sin ce O cto b e r 2 3 .
h o w e v e r, p r o v e d to be tr a n s ito r y .

m a rk e d fa llin g off in th e a m o u n t of n e w secu rities o f ­
fered fo r sale, a n d m a n u fa c tu re r s a n d m e rc h a n ts are

C a ll m o n e y w a s e asier in th e la s t t h ir t y d a y s th a n
fo r som e tim e p a s t, th o u g h th e re n e w a l ra te h a s n o t

n o w u n w illin g to m a k e c o n tra c ts a t p re se n t p rices

go n e b e lo w 6 p e r c e n t.

on th e old b a s is ; in d eed it is re p o rte d to us t h a t w h ere
su ch c o n tra c ts fo r m e rly c o v e re d a p erio d of six

on N o v e m b e r 2 0 th e d eclin e w a s ra p id to 7 p e r c e n t,
a n d th e n to 6 p e r c e n t., risin g a g a in on D e c e m b e r 9

m o n th s t h e y a re n o w g e n e ra lly lim ited to h a lf
t h a t tim e .
T h u s th e te n d e n c y in a tim e o f r a p id ly
e x p a n d in g c re d it fo r d ealers a n d p ro d u ce rs to c o n ­
t r a c t a h e a d fo r c o n s ta n tly lo n ger p erio d s h a s been
m o d e ra te d .
T h e m o v e m e n t o f th e d isco u n ts a t th e F e d e r a l
R e s e r v e B a n k o f N e w Y o r k in th e p a s t t h ir t y d a y s
h a s b een c o m p lic a te d , p a r tic u la r ly in th e m o n th of
D e c e m b e r , b y th e o p e ra tio n s o f G o v e r n m e n t fin a n ce.
O n nin e d a y s th e to ta l ea rn in g in v e stm e n ts w ere
m o re th a n $ 1,0 0 0 ,0 0 0 ,0 0 0 .
S in ce th e m id d le of
N o v e m b e r G o v e r n m e n t d ep o sits h a v e been w it h ­
d r a w n w ith fa ir r e g u la r ity .
T h e s e d e p o sits, c re a te d
c h ie fly b y th e sale on S e p te m b e r 1 5 of ce rtific a te s of
in d eb ted n ess, re su lte d , w h e n th e G o v e r n m e n t calle d
fo r th e fu n d s, n o t o n ly in a m o m e n ta ry rise in ra te s
on th e S t o c k E x c h a n g e m o n e y m a r k e t b u t in th e
lo an s a n d d isco u n ts o f th e F e d e r a l R e s e r v e B a n k . I n
o th er w o rd s, th e d ep o sits re su ltin g fro m th e sale of
c ertificates are u s u a lly c re a te d b y m a k in g en tries on
th e b o o k s of th e b a n k s sh o w in g cre d its to th e a c c o u n t
o f th e U n ite d S t a t e s a n d it is n o t u n til th e G o v e r n ­
m e n t d e m a n d s th e d ep o sits so e sta b lish e d t h a t th e
b a n k h a s to fin d fu n d s w ith w h ic h to p a y . U s u a lly
reco u rse is to th e F e d e r a l R e s e r v e B a n k , w h e re th e
p u rch a se d c e rtifica te s or o th e r b o n d s are p u t u p
as s e c u rity fo r lo an s, w h ic h are g r a d u a lly re d u ce d
as th e G o v e r n m e n t d isb u rses th e fu n d s a n d som e
p o rtio n o f th e m re tu rn s to th e b a n k s in th e fo rm of
c o m m e rc ia l d ep o sits.
T h e m a x im u m fo r th e e a rn in g in v e stm e n ts of th is
b a n k , $ 1 ,0 7 2 ,0 0 0 ,0 0 0 , w a s re a ch e d on D e c e m b e r 1 5 ,
a n d w a s a ttr ib u ta b le to a n o th e r cau se .
about
of

$ 2 5 0 ,0 0 0 ,0 0 0

in d eb ted n ess

t h a t su m

w as

p a id

w h ic h

th e n

o u t fo r

to

7 p e r cen t,

la te ra l a n d
d u stria l.

tr ic t.

ce n t, to

p e r c e n t, on a ll

in ­

I t is re p o rte d b y th e b a n k s t h a t th e m a jo r

m e n t fo r c o tto n a n d to b a c c o .
T h e r a te is n o w on a
6 p er cen t, b a sis, as c o m p a re d w ith 5 3 ^ p e r c e n t, to

5 % p e r c e n t, in m id -N o v e m b e r . T h e ra te s a t w h ic h
th e F e d e r a l R e s e r v e B a n k p u rch a se s b a n k e rs a c ­
c e p ta n ce s w e re in cre a se d 3^± of 1 p e r ce n t, on N o v e m ­
ber 2 8 .
T h e n e w ra te s ra n g e u p fro m th e fo llo w ­
in g m in im u m s fo r b e st k n o w n n a m e s : 4 % p e r c e n t,
fo r en d o rsed 9 0 - d a y b ills; 4 % p e r ce n t, fo r 6 0 -d a y
b ills a n d 4)^> p e r ce n t, fo r 3 0 - d a y b ills. T h is a c tio n
w a s ta k e n to p la c e th is b a n k ’ s p u rch a se ra te s m o re
in a cc o rd w ith th e h ig h e r ra te s n o w p r e v a ilin g in th e
o p en m a r k e t, w h e re ra te s fo r u n e n d o rsed b ills a re
yi to 34: o i l p e r ce n t, h igh er.
W h ile b a n k cle a rin g s sh o w a d eclin e fro m th e h igh
le v e ls of O c to b e r a n d e a r ly N o v e m b e r , t h e y a re
n e v e rth e le ss f a r a h e a d of co rre sp o n d in g p erio d s of
la s t y e a r .
T h is d eclin e is th e reflectio n of d e cre a se d
a c t i v i t y on th e sto c k e x c h a n g e .
T h e fo llo w in g g iv e s
th e to ta ls o f e a ch w e e k of th e p e r io d :
Week Ended

November 26
December 3
December 10
December 17

of

in co m e a n d excess p ro fits ta x e s , w h ic h o n ly p a r tia lly

S to c k

o ffset th e d isb u rse m e n ts.

M ark et

sh a rp

7 per

7
73^

p a r t of th e p a p e r p u r c h a s e d fo r a c c o u n ts o u tsid e of
N e w Y o r k h as b een fo r S o u th e rn b a n k s w h ere fu n d s
h a v e m o v e d fro m N e w Y o r k in g r e a t v o lu m e in p a y ­

A g a in s t

T h e re su lt w a s a

a n d on D e c e m b e r 1 5 , w h e n in co m e t a x

T h e m a r k e t fo r co m m e rcia l p a p e r h a s c o n tin u e d
du ll w ith v e r y little d e m a n d fro m b a n k s in th is d is ­

c e rtifica te s

m a tu re d .

F r o m a ra te of 1 0 p e r c e n t,

p a y m e n ts w e re d u e, to 1 5 p e r c e n t.
S u b s e q u e n tly ,
fo r th e rea so n s m en tio n e d a b o v e , th e ra te d eclin ed
to 6 p e r ce n t.
T im e m o n e y h a s been s c a r c e a n d
tra n sa c tio n s w e re fe w a n d fo r lim ite d p erio d s. R a t e s
a re n o m in a lly 6 p e r ce n t, to
p e r c e n t, on m ix e d co l­

O n th a t d a y

w e re re c e ip ts of a b o u t $ 1 2 8 ,0 0 0 ,0 0 0

T h is d eclin e,

New York City

$5,364,902,000
5,046,831,000
5,068,752,000
5,784,012,000

Other
(6 Cities)

$131,678,000
141,499,000
134,614,000
160,970,000

T h e liq u id a tio n of sto c k s w h ic h

a c o rre sp o n d in g in crea se in th e c re d it m o m e n ta rily
a v a ila b le in th e b a n k s.
S u b s e q u e n t in co m e t a x

fo llo w ed th e e x tra o rd in a r y m o n e y
co n d itio n s o f e a r ly N o v e m b e r h a s
been c o n tin u e d , w ith a fa ir d eg ree o f c o n siste n c y
th r o u g h o u t th e p a s t t h ir t y d a y s .
T h is liq u id a tio n

re c e ip ts, tra n sfe rs b y th e T r e a s u r y fro m o th e r d is ­

p ro ce ed e d w ith o u t sh a rp b re a k s in th e m a r k e t a n d

tr ic ts a n d p a y m e n ts of lo a n s b y th e b a n k s o u t of th e

w ith lessened p u b lic p a rtic ip a tio n , as is c u s to m a r y

rise in th e

e a rn in g in v e stm e n ts of th is b a n k

and

p ro ceed s of ce rtific a te s of in d e b te d n e ss red ee m e d ,

in

re d u ce d r a p id ly th e e a rn in g in v e s tm e n ts of th is b a n k ,

d e m a n d s u p o n c re d it a p p e a r to h a v e su b sid ed co n ­
sid e ra b ly .

u n til on D e c e m b e r 1 9 t h e y re a c h e d $ 9 3 6 ,0 0 0 ,0 0 0 ,




a

d e c lin in g

m a rk e t.

The

fo rm e r

e xtra v a g an t

FEDERAL RESERVE AGENT AT NEW YORK
D a i l y sales fell off m a te r ia lly .
I n th e th ir d w e e k
of N o v e m b e r th e a v e r a g e w a s 1 , 1 4 5 , 0 0 0 sh a res a
d a y ; in th e fo u rth w e e k 9 8 0 ,0 0 0 ; in th e first w e e k of
D e c e m b e r 9 3 6 ,0 0 0 ; in th e seco n d w e e k 9 3 8 ,8 0 0 a n d
in th e th ir d w e e k fell to 8 6 7 ,2 0 0 sh a res a d a y .
A
p a r tia l r e c o v e r y of p ric e s w h ic h to o k p la c e e a r ly in
D e c e m b e r w a s m o st p ro n o u n ce d in th e h ig h ly
s p e c u la tiv e issues, w h ile sh a re s w h ic h a r e c o m m o n ly
re g a rd e d as in v e s t m e n t sto c k s re m a in e d c o m p a r a ­
t iv e ly d u ll.
T h e m a r k e t h a s b een fa ir ly re sp o n siv e to n e w s
d e v e lo p m e n ts. F o r in s ta n ce , th e te rm in a tio n of th e
b itu m in o u s m in e rs’ strik e a n d th e a n n o u n ce m e n t of
th e A t t o r n e y G e n e ra l t h a t h e w o u ld n o t a p p e a l th e
So u th e rn P a c ific oil la n d c a se ca u se d a rise in p a r ­
tic u la r sto c k s a n d le n t a m o m e n ta ry s tre n g th to th e

e n la rg e th e ir c a p ita l.
N e v e rth e le s s , it is re p o rte d
to u s t h a t th e a p p lic a tio n s are still so n u m ero u s t h a t
th e b e s t b o n d h o u ses are a b le to co n sid er o n ly a sm all
p ro p o rtio n o f th e m a n d in th e a g g r e g a te t h e y a re
m u c h b e y o n d th e p o w e r o f th e m a r k e t to a b so rb .
D u b io u s
Issu es

T h e c re a tio n o f a g r e a t b o d y of
n e w c a p ita lis ts th ro u g h th e sale of
L i b e r t y lo an s a n d b e ca u se of th e

g e n e ra lly h ig h e r le v e l o f w a g e s h a s en co u ra g e d th e
sin iste r a c t i v i t y of p ro m o te rs a n d salesm en w h o are
t r y in g to flo a t sto c k s o f th e m o st d u b io u s c h a ra c te r.
B a s e d u p o n th e a n sw e rs to in q u iries m a d e fro m f ift y
b a n k s o u tsid e o f N e w Y o r k C i t y , a n d u p o n o th er
e v id e n ce w ith in th e M e tr o p o lita n d istric t, it a p p e a rs
t h a t th is m o v e m e n t is g e n e ra l in th e la rg e r cities of
th e d istric t, p a r tic u la r ly N e w Y o r k , B u ffa lo , R o c h e s ­

rest of th e list.
T h e a n n o u n ce m e n t o f th e fra c tio n a l
in crease in ra te s b y th is b a n k on D e c e m b e r 1 1 w a s

te r, S y r a c u s e , U t i c a a n d B in g h a m to n , b u t w ith v a r y ­
in g in te n sity .
I t a p p e a rs t h a t som e of th e p ro m o ters

fo llo w ed b y a d a y of h ig h c all m o n e y ra te s a n d a c t iv e

are m en w h o se bu sin ess reco rd s do n o t sta n d s c ru tin y ,
e ith e r fro m th e s ta n d p o in t of su ccess or p erso n a l

liq u id a tio n .

in te g r ity ,a n d som e of th e m h a v e in tim e s p a s t been
T h e liq u id a tio n w h ic h d e v e lo p e d

B on d M ark et
and

N ew

F in a n c in g

in sto c k s w a s fa r m o re p ro n o u n ce d
in th e b o n d m a r k e t.
I t m a n ife ste d
itse lf te n t a t iv e ly in th e th ird w e e k

of N o v e m b e r a n d b e c a m e h e a v y d u rin g th e n e x t
tw o w e e k s; a lth o u g h th r e e -q u a rte r s of th e tr a n s a c ­
tion s w e re in U n ite d S t a t e s b o n d s, th e p rice s o f w h ic h
fell, th e d eclin es in th e p ric e s of c o rp o ra tio n b o n d s

fo u n d g u ilt y of crim e.
A p o ssib le in d ic a tio n of th e e x te n t to w h ic h n ew
c a p ita l is so u g h t a p p e a rs in th e to ta l of n e w in co r­
p o ra tio n s.
D o u b tle s s o n ly a fra c tio n o f th e to ta l is
in te n d e d fo r im m e d ia te issue, d e p e n d in g p rim a rily
u p o n th e c a p a c it y of th e p u b lic to b u y ; a n d m a n y

a b o u t th re e -q u a rte rs of a p o in t; in d u stria l b o n d s one
a n d o n e-h a lf p o in ts ; p u b lic u tilitie s tw o a n d oneq u a rte r p o in ts a n d ra ilro a d b o n d s a b o u t th re e p o in ts.
B o n d s o th e r th a n G o v e r n m e n t issues w h ic h w e re

of th e m are, of co u rse, of th e h ig h e st c h a r a c te r .
N e v e rth e le s s , th e to ta l is n o te w o r th y .
In N o v e m ­
b e r n e w in c o rp o ra tio n s in th e E a s t e r n S t a t e s
a m o u n te d to $ 1 , 3 4 1 , 0 0 0 , 0 0 0 a n d in O cto b e r $ 2 , 3 6 3 , 0 0 0 ,0 0 0 , as co m p a re d w ith $ 1 3 1 ,0 0 0 , 0 0 0 in N o v e m ­
b e r a y e a r a go . T h e m o n th ly a v e r a g e fo r 1 9 1 9 u p to
th is tim e is $ 1 ,0 5 4 ,0 0 0 ,0 0 0 , w h ic h is n e a r ly se v e n

m o st h e a v ily sold w e re th o se of ra ilro a d a n d stre e t ra il­
w a y co m p a n ies w h o se re co rd s o f e a rn in g s are p o o r,
a n d of o th er c o rp o ra tio n s w h o se b o n d s a re re g a rd e d
a s h ig h g r a d e b u t b e c a u se of th e ir p rice s h a v e th e
sm a lle st y ie ld s.
I n sp ite o f som e e x ce p tio n s th e
b o n d m a rk e t as a w h o le fell to th e lo w e st p rice le v e l
re a ch e d since 1 8 9 6 .
T h e e ffe c t o f th e d eclin e on
L i b e r t y bo n ds w a s to p la c e th e T h ir d 4 J ^ p e r ce n t,
a n d th e V ic t o r y 4 % p e r c e n t, issues on a b e tte r th a n

tim es th e m o n th ly a v e r a g e sh o w n b y th e fiv e y e a r s
p rio r to th e w a r .
M o s t of th e n e w in co rp o ra tio n s
a re of oil, sh ip p in g a n d c h e m ic a l co m p a n ies a n d c o n ­
cern s e n g a g e d in th e m a n u fa c tu re o f a rticle s, th e
c u rre n t p rice s o f w h ic h a re h ig h a n d th e m a rg in s of
p ro fit on th e p re se n t b a sis e x c e p tio n a lly go o d .
In
m a n y cases th e ch a n ce s of re tu rn fo r th e in v e sto r are
lim ite d to th e m a in te n a n c e of th e p re se n t p ric e le v e l.
T h e m o st re c e n t p re c e d e n ts fo r th is v a s t g r o w th o f

5 p e r cen t, b a sis.

n e w en te rp rise s a re to b e fo u n d in th e U n ite d S t a t e s

w ere h e a v ie r.
F r o m th e m id d le o f N o v e m b e r to th e
m iddle of D e c e m b e r , U n ite d S t a t e s b o n d s fell off

in 19 0 0 a n d ju s t p rio r to th e liq u id a tio n o f 1 8 7 3 , a n d
T h e h igh p ric e of m o n e y in N o v e m b e r ca u se d a

in G r e a t B r it a in p rio r to th e liq u id a tio n of

18 6 6 .

m a rk e d re d u ctio n in th e a g g r e g a te of n e w issues b y

A t no o th e r tim e s in m o d ern in d u s tr y h a s th e fo r m a ­

d o m estic c o rp o ratio n s.
T h e to ta l fo r t h a t m o n th
w a s $ 2 5 3 ,0 0 0 ,0 0 0 , as c o m p a re d w ith $ 3 9 0 ,0 0 0 ,0 0 0 in

tio n of n e w c o m p a n ie s ta k e n p la c e on so la rg e a scale.

O cto b er a n d $9 0 ,0 0 0 ,0 0 0 in N o v e m b e r a y e a r a go .

The

o p e ra tio n s o f d ea lers in p o o r or w o rth le ss

tim e b ein g a t le a st of th e h ig h tid e o f o fferin gs to

sto ck s are p a r tic u la r ly seriou s a t a tim e o f g r e a t
e x p a n sio n su ch as th e p re se n t, n o t o n ly b e c a u se of

b o n d houses b y co rp o ra tio n s w h ic h a re a n xio u s to

th e w a s te of c a p ita l in v o lv e d , b u t b e c a u se fra u d u le n t

T h is fa llin g off seem s to re g iste r th e p a ssin g fo r th e




REPORT ON BUSINESS CONDITIONS
issu es a re lo st sig h t of in th e g en e ra l o u tp o u rin g .
R e p o r t s fro m th e b a n k s in c e rta in p a r ts of th e d is­
t r ic t in d ic a te t h a t a la r g e a m o u n t of L i b e r t y b o n d s
h a v e b een secu re d in e x c h a n g e b y p ro m o te rs,
w h o p ro m ise q u ic k a n d rich re tu rn s in p la c e of th e
in te re st c a rrie d b y th e b o n d s.
M a n y sales fo r cash
a re re p o rte d also , p a r tic u la r ly to w a g e e arn ers.
An
e stim a te of th e a m o u n t o f d u b io u s issues on sale,
secu red fro m a so u rce sp e cia lizin g in su ch m a tte r s ,
p u ts th e to ta l a t “ h u n d red s of m illio n s.55
A s u su a l, th e v ic tim s of su ch tr a n sa c tio n s are th o se
w h o a re in th e w o rs t p o sitio n fro m k n o w le d g e or
e xp erien ce to m e asu re th e w o rth o f secu rities.
M e th o d s o f sale in clu d e n o t o n ly n e w s p a p e r a d v e r ­
tise m e n ts a n d offers th ro u g h th e m ails, b u t so lic ita ­
tio n b y a h ig h ly o rg an ize d co rp s of c a n v a sse rs.
In
a n u m b e r of cases th e n a m e of th e F e d e r a l R e s e r v e
B a n k is re p o rte d to h a v e b een u sed fo r th e p u rp o se
of c o n v in c in g p ro s p e c tiv e p u rch a se rs of th e v a lu e of
th e sto c k o ffered. U s u a lly th e a rg u m e n t h a s been
t h a t th e b a n k w h o se sto c k th e c a n v a s s e r is sellin g
w ill b e c o m e a m e m b e r o f th e F e d e r a l R e s e r v e s y s ­
te m , or t h a t th e p a p e r to b e h a n d le d b y th e n e w ly

th is p u b lic se rv ic e fa r th e r b y g iv in g a d v ic e to all
in q u irers, w h e th e r th e y a re cu sto m e rs or n o t.
M any
b a n k e rs are a lr e a d y d o in g w o rk of t h a t so rt.

The

F o r e ig n

re m a rk a b le

d eclin e

of

th e

c h ie f E u r o p e a n e x c h a n g e s in th e tw o

E xchan ge

w e e k s b e tw e e n N o v e m b e r 2 9 a n d
D e c e m b e r 1 3 is, o f co u rse fu n d a ­
m e n ta lly a ttr ib u ta b le to th e excess
of our e x p o rts to th e co u n trie s w h o se e x c h a n g e s w ere
m o st a ffe c te d o v e r o u r im p o rts fro m th e m .
The
and

F o r e ig n

T rade

d eclin e does n o t in d ica te so le ly t h a t th e m o n th of
N o v e m b e r w a s r a d ic a lly d iffe re n t fro m th e p re c e d in g
m o n th s w h e n th e d eclin es w e re less p ro n o u n ce d ; it
reflects ra th e r th e c u m u la tiv e e ffe c t o f tr a d e b a l­
an ces w h ic h h a v e b een ru n n in g in o u r f a v o r fo r m a n y
m o n th s, a n d th e re su lts of sp e cu la tio n in th e fo reign
e x c h a n g e m a rk e t.
I n c o n sid e rin g fo re ig n e x c h a n g e s a t th is tim e one
sh o u ld re alize th e w h o lly a b n o rm a l co n d itio n s n o w
p re v a ilin g , n o t o n ly in th e tr a d e b a la n ce s w h ic h h a v e
b een p iled u p in f a v o r of th e U n ite d S t a t e s — a c o n d i­

C e r ta in cases of a p p a r e n tly fra u d u le n t in te n t h a v e

tio n a g g r a v a te d b y th e in a b ility of m o st E u r o p e a n
co u n trie s to settle a d v e rse b a la n ce s in g o ld — b u t the
la r g e ly s p e c u la tiv e c h a r a c te r of th e fo re ig n e x c h a n g e
m a r k e t itse lf.
E x p o r te r s a re sellin g e x c h a n g e a s fa r
a h e a d as D e c e m b e r of 1 9 2 0 , a n d im p o rte rs are b u y in g
e x c h a n g e th ro u g h as e x te n d e d a p erio d . T h e se ttle ­
m e n t of c u rre n t ite m s is n o t co n tin u o u s as it w a s
b efo re th e w a r a n d th e e n tra n c e of th is h ig h ly sp e cu ­
la t iv e b u y in g a n d sellin g h a s th e e ffe c t o f p ro d u cin g

a lr e a d y b een b r o u g h t to th e a tte n tio n of th e F e d e r a l
or lo c a l p ro se c u to rs, b u t in th e p a s t m o st p ro s e c u ­
tio n s h a v e su cceed ed o n ly w h e n th e fra u d h a s been
co m p le te d a n d th e in v e s to r h a s lo st his m o n e y .
It
is, th erefo re, esse n tia l t h a t in d iv id u a ls b u y o n ly
a fte r seek in g a d v ic e fro m tru ste d b a n k e rs or o th ers
w h o a re eq u ip p e d w ith so u n d in fo rm a tio n a n d go o d
sense on fin a n c ia l m a tte r s .
I n a n u m b e r of p r o g ­
re ssiv e c o m m u n itie s th e n e w sp a p e rs n o t o n ly refu se

v io le n t m o v e m e n ts of q u o ta tio n s.
T h e r e a p p e a rs
to h a v e been g e n e ra l fa it h on th e p a r t of those w h o
h a d e x c h a n g e to sell t h a t ste rlin g w o u ld no t fa ll
b e lo w $ 4 .0 0 , a b elief w h ic h w a s sh a re d b y p u rch a se rs
of exchange.
C o n s e q u e n tly ste rlin g exch a n g e w a s
b o u g h t a t or a b o v e t h a t ra te fo r m o n th s in a d v a n c e
a n d sellin g w a s w ith h e ld , w ith th e re s u lt th a t w h e n
th e ra te d id g o b e lo w t h a t p o in t a n a c c u m u la tio n of
bills a n d c h e ck s w a s th r o w n u p o n th e m a rk e t a n d

o rg an ize d “ fin a n ce c o r p o r a t io n 55 w ill be d isco u n te d
b y th e F e d e r a l R e s e r v e B a n k .
S u c h sta te m e n ts
sh o u ld b e sifte d w ith th e g r e a te s t care, b u t u s u a lly
th e m a n a p p ro a c h e d b y th e c a n v a s s e r is in no p o si­
tio n to k n o w th e lim ita tio n s se t b y la w , b o th on
F e d e r a l R e s e r v e m e m b e rsh ip a n d d isc o u n ts.

to

ta k e

d u b io u s

fin a n c ia l

a d v e rtis in g ,

but

have

u n d e rta k e n to w a r n th e ir re a d ers a g a in s t u n s c r u p u ­
lo u s v e n d o rs o f sto c k s.

O fficers of b a n k s c a n c a r r y

F O R E IG N

Week Ended

E ngland................................................................
France.....................................................................
Italy.........................................................................
Spam........................................................................
Argentina................................................................
Hong Kong............................................................
China (Shanghai).................................................
Japan.......................................................................




a c c o r d in g ly a p re c ip ita te d eclin e o ccu rred .

E X C H A N G E

NOVEMBER 29
High Low
High

O th e r

E u r o p e a n e x ch a n g e s a c te d sim ila r ly , as a p p ea rs in
th e fo llo w in g ta b le :

R A T E S

DECEMBER 6
Low
High

4.06% 3.99^
3.99%
9.54 9.84
9.86
11.82 v
12.28
12.34
19.95
19.60
19.80
43.15
43.125
43.25
106.00
100.00
103.00
160.00
150.00
150.00
50.50
50.S1M
50.50

3.84%

10.75
12.77
19.65
43.25
101.75
150.00
50.50

DECEMBER 13
DECEMBER 20
Low
High
Low

3.85J4
10.92
12.94
19.90
43.15
101.00
165.00
50.50

3.65)4
11.87
13.60
19.50
43.15
100.50
159.00
50.50

3.90M
10.03
12.52
19.55
43.15
101.00
165.00
51.50

3.71J4
11.35
13.22
18.70
43.125
99.00
164.00
50.50

FEDERAL RESERVE AGENT AT NEW YORK
T h e b r e a k in ste rlin g h a d its c o u n te r p a r t th o u g h
in less d eg ree, in e x c h a n g e on C a n a d a , w h ic h on
D e c e m b e r 1 1 w a s q u o te d a t a d isc o u n t of 1 1 p e r c e n t.
S in c e t h a t tim e it h a s m a d e a p a r tia l r e c o v e r y , th e
re su lt no d o u b t of a s u b s ta n tia l sh ip m e n t o f g o ld to
th is c o u n tr y .

T h e n e c e s s i t i e s of E u r o p e th u s f a r h a v e c o m p li­
c a te d th e w o rk in g o f th e eco n o m ic la w t h a t a d v e rs e
e x c h a n g e s e n c o u ra g e e x p o rts a n d lim it im p o rts on
th e p a r t of th e c o u n trie s a g a in s t w h ic h th e a d v e rs e
ra te s ru n .
O u r im p o rts fro m th e U n ite d K in g d o m
h a v e in cre a sed fro m $ 1 2 ,8 0 0 ,0 0 0 in F e b r u a r y to
$ 4 1 ,7 0 0 ,0 0 0 in O c to b e r; fro m F r a n c e $ 5 ,0 0 0 ,0 0 0 in

T h e e ffe c t o f th is lo n g c o n tin u e d u p h e a v a l in th e
e x c h a n g e m a r k e t is m o re a p p a re n t in o u r im p o rts

F e b r u a r y to $ 1 4 ,0 0 0 ,0 0 0 in O c to b e r; fro m I t a l y
$ 1 ,8 0 0 ,0 0 0 to $ 7 ,2 0 0 ,0 0 0 ; fro m C a n a d a $ 3 7 ,0 0 0 ,0 0 0

t h a n in th e m o v e m e n t o f go o d s a w a y fro m th is c o u n ­

to $ 5 4 ,8 0 0 ,0 0 0 .
N o d o u b t a la rg e p a r t of th e in ­
c re a se in im p o rts fro m E u r o p e a n c o u n tries as b e ­
tw e e n th o se tw o m o n th s is a ttr ib u ta b le to th e g r e a te r

try .

E u r o p e still a p p e a rs to be d e p e n d e n t u p o n u s,

n o t o n ly fo r a g r e a t p a r t of th e r a w m a te ria ls re q u ire d
fo r h er re h a b ilita tio n a n d fo r th e p u rp o se of k e e p in g
h er p eo ple fro m s ta r v in g , b u t fo r fin ish ed m a n u fa c ­
tu re s.
I n f a c t , th e re p o rts of th e D e p a r t m e n t of
C o m m e rc e in d ic a te t h a t th e v o lu m e o f fin ish ed
p ro d u c ts c o m p a re d to th e to ta l of e x p o rts is f a r
g r e a te r th is y e a r th a n in th e y e a r b e fo re th e w a r.
T h u s in 1 9 1 3 c ru d e m a te ria ls fo r use in m a n u fa c tu r ­
in g w ere 3 1 ^ p e r c e n t, o f th e to ta l.
I n O cto b e r of
th is y e a r th e c o rre sp o n d in g p e rc e n ta g e w a s 1 9 a n d
in S e p te m b e r 1 5 .
M a n u fa c tu r e s r e a d y fo r c o n su m p ­

a m o u n t o f a v a ila b le sh ip p in g ; n e v e rth e le ss th e a d ­
v a n c e h a s b ee n c o n tin u o u s th ro u g h th e su m m er u p
to O cto b e r, w h e n a d e clin e is o b se rv e d in th e p re ­
v io u s m o n th fo r im p o rts fro m F r a n c e a n d I t a l y .
E x p o r t s , on th e o th e r h a n d , sh o w a d e clin e ; th o se to
F r a n c e fro m $ 9 3 ,0 0 0 ,0 0 0 to $ 6 7 ,0 0 5 ,0 0 0 ; to I t a l y
fro m $ 3 8 ,0 0 0 ,0 0 0 to $ 3 1 ,0 0 9 ,0 0 0 ; w h ile to G r e a t
B r it a in

th e y

a re n e a r ly id e n tic a l a t $ 1 6 5 ,0 0 0 ,0 0 0

w it h , h o w e v e r, a sh a rp in cre a se in J u l y a n d A u g u s t .

tio n on th e o th e r h a n d w e re 3 2 p e r c e n t, o f th e to ta l
in 1 9 1 3 , a n d in O cto b e r of th is y e a r w e re 3 8 p e r c e n t,
a n d in S e p te m b e r a b o u t 3 5 p e r c e n t. I n 1 9 1 3 fo o d ­
stu ffs p a r t l y or w h o lly m a n u fa c tu re d w e re 1 3 p e r

of co u rse, th e tr a d e b a la n c e s un less c o rre c te d b y th e

cen t, of th e to ta l, w h e re a s in S e p te m b e r a n d O cto b e r

m e n t of c re d its.

o f th is y e a r t h e y w e re 2 2 p e r c e n t, a n d in J u l y 2 8
p e r c e n t.
T h u s it a p p e a rs t h a t o u r e x p o rts u p a t
le a s t to th e la te fa ll w e re still in te n d e d v e r y la r g e ly
fo r im m e d ia te u se, a n d w h ile e x p o rta tio n of f u lly
m a n u fa c tu re d a rticle s to S o u t h A m e r ic a a n d th e

th e w h o le t h a t fa v o r a b le tr a d e b a la n ce s w ith E u r o p e

O rie n t m a y h a v e a c c o u n te d in so m e degree fo r th is
s h ift fro m b e fo re -th e -w a r exp erien ce, n e v e rth e le ss it
is sa fe to d e d u ce t h a t o u r e x p o rts w e re re q u ired fo r

T h e m o v e m e n t o f th e e x c h a n g e s p rim a r ily fo llo w s,
sh ip m e n t of g o ld or se cu ritie s, or b y th e e sta b lish ­
T h e ta b le g iv e n b e lo w sh o w s on

h a v e d e cre a se d , b u t fo r th e te n m o n th s a re tre m e n d ­
o u sly in excess o f th e c o rre sp o n d in g p e rio d of 1 9 1 3 .
I t a p p e a rs a lso t h a t o u r a d v e rs e b a la n c e w ith C h in a
is m o re th a n th re e tim e s w h a t it w a s in 1 9 1 3 ; w ith
J a p a n is so m e w h a t le ss; w ith B r a z il a b o u t d o u b le ;
w h ile w ith A r g e n t in a it is a lm o st e q u iv a le n t to w h a t
o u r fa v o r a b le b a la n c e w a s in th e e a rlier y e a r .

th e s a tis fa c tio n of E u r o p e ’ s im m e d ia te n eed s

TRA D E BALANCES
(000 Omitted)
February

France.
Germany.
Canada...........................................................
Argentine.......................................................
Brazil..............................................................
*Excess of imports over exports.

$153,046
87,970
36,382
*1,296
10,411
3,028
4,969
6,380

July

$181,874
42,744
22,278
2,136
*11,704
*28,565
17,440
*2,364
*16,271

T h e sum m ary reports for foreign tra d e in N ovem ber

secu red on D e c e m b e r 2 0 fro m th e D e p a r t m e n t

August

$180,010
44,370
21,834
11,438
*4,995
*9,966
23,117
*5,578
*13,195

September

October

$118,960
35,732
21,416
7,250
*3,224
*27,100
35,337
*24,764
*25,944

$123,247
53,451
24,647
18,506
*12,103
*23,598
13,099
*9,899
*11,893

10
Months
1919

$1,648,390
670,099
325,279
47,505
*34,479
*26,387
194,217
*24,330
*83,376

10
Months
1913

$238,123
7,123
17,480
118,975
*10,842
*30,299
339,075
28,374
41,342

a t $ 7 4 0 ,0 0 0 ,0 0 0 , th e h ig h e st sin ce la s t J u n e , w h e n th e
ma
ax
x im
im u
um
m ot
of $9*u
$ 9 2 0 ,u
,0 u
0u
0 ,u
,0 u
0u
0 w
tta in
d ..
Im p o r ts ,
m
wa
a ss a
a xta
me
eu
$ 4 2 9 ,0 0 0 ,0 0 0
o n ly $ 6 0 0 0 0 0 0

show th a t b o th im ports and exports valued a t
were
less
rose m aterially in th a t m onth. T o ta l exports stood th a n th e to ta l for S eptem ber, th e h,ghest ever




REPORT ON BUSINESS CONDITIONS
rea ch ed .
T h e b a la n c e o f tr a d e in o u r fa v o r , n e a r ly
$ 3 1 2 ,0 0 0 ,0 0 0 , w a s la r g e r th a n in th e tw o p r e v io u s

one-

p rice s a little m o re c lo s e ly th a n h ith e rto .
I n one
in sta n c e it is re p o rte d t h a t th e d e m a n d fo r g o o d s
o f th e h ig h e st p ric e h a s fa lle n o ff so m e w h a t.
C ash
p u rch a se s a re still la r g e a n d a n in crea se o f b u y in g b y
o u t-o f-to w n p u r c h a se rs is o b se rv e d .

T h e m o n th of N o v e m b e r w a s one

I n B u ffa lo it is re p o rte d to u s t h a t th e v o lu m e of
sales h a s been m u c h in e xce ss of la s t y e a r a n d t h a t

m o n th s.
S h ip m e n ts o f c o tto n , re p o rte d to b e th e
la r g e s t on re co rd , a m o u n te d to 9 2 4 ,0 0 0 b a le s, v a lu e d
a t $ 1 8 1 , 3 0 0 ,0 0 0 , a n d a cc o u n te d
q u a r te r o f th e to ta l e x p o rts.
W h o le s a le

fo r

n e a r ly

of v e r y g e n e ra l a d v a n c e s in c o m ­

p e o p le w h o se in co m es fo r m e rly w e re lim ite d are n o w

m o d ity p rice s.
B r a d s t r e e t ’ s in d e x
n u m b e r on D e c e m b e r 1 w a s 2 0 . 1 7 5 6 a s c o m p a re d
w ith 1 9 .9 0 2 6 a m o n th p re v io u s, a n d w ith 2 0 .0 0 1 7

p u r c h a s in g je w e lr y a n d o th e r e x p e n siv e a rtic le s o f
lu x u r y to a m u c h g r e a te r e x te n t th a n h e re to fo re .

o n A u g u s t 1 , w h e n th e p re v io u s h ig h re c o rd o f 1 9 1 9

M e r c a n tile

w a s e sta b lish e d .
w as 19 .0 15 1 .

a lm o st a ll lines o f m e rc h a n d ise
h a v e re s u lte d in g e n era l sh o rte n in g
of c re d its.
W h ile it a p p e a r s, fo r th e p re se n t a t
le a st, t h a t p ro d u c tio n is f a r sh o rt of th e d e m a n d ,

P r ic e s

O n D e c e m b e r 1 , 1 9 1 8 th e n u m b e r

T e x tile s p ro v isio n s a n d iron a n d steel a cc o u n te d
fo r th e la r g e r p a r t of th e rise d u rin g N o v e m b e r ; b u t
te n o u t o f th irte e n g ro u p s of co m m o d ities sh o w ed
a d v a n c e s , a n d a m o n g th e in d iv id u a l co m m o d ities 4 6
o u t of 1 0 6 rose.
B r a d s t r e e t ’ s a v e r a g e o f fo o d p rice s
d id n o t, h o w e v e r, m a k e a n e w h ig h re co rd .
On
D e c e m b e r 1 it w a s 5 . 1 8 a g a in s t 4 .9 7 e a r ly in N o ­
v e m b e r a n d 5 .0 4 th e firs t of D e c e m b e r , 1 9 1 8 .
The
h ig h reco rd of th e p re se n t y e a r w a s 5 . 3 0 a t th e end
of Ju ly .

I n co n sid erin g th e c u rre n t h ig h p rice s a t

w h o lesale fo r c o m m o d itie s it sh o u ld b e n o ted t h a t in
th e a v e r a g e or t y p ic a l y e a r p rio r to th e w a r w h o lesale
p rice s in th is c o u n tr y re a ch e d th e ir h ig h e st le v e l
a ro u n d th e end o f N o v e m b e r a n d th e n d eclin ed .
R e ta il

I n q u ir y

fro m

te n

C r e d its

The

h ig h

p ric e s

now

p r e v a ilin g

in

c a u tio u s m a n u fa c tu re r s a re d isin clin ed to c o m m it
th e m se lv e s in th e ir b u sin ess d e a lin g s to a c o n tin u a n c e
o f p ric e s a t th e p re se n t le v e l o v e r a lo n g p erio d .
I n a lm o st a ll lin es, w h a t is k n o w n te c h n ic a lly as
a se lle r’s m a r k e t e x is ts ; t h a t is, th e seller is free to
se le ct th o se w ith w h o m h e w ill d e a l. A llo t m e n t of
go o d s is g e n e ra l a n d in th e w o o len tr a d e th e a llo t­
m e n ts h a v e fa lle n in c e r ta in case s as lo w as 2 5 p e r
c e n t, of la s t y e a r ’ s re q u ire m e n ts.
T h is p o w e r o f th e
d e a le r to ch o o se th o se to w h o m h e w ill sell g o o d s
fro m a la rg e n u m b e r of a p p lic a n ts is re g a r d e d a s o f
itse lf in su ra n c e a g a in s t c a n c e lla tio n o f o rd ers sh o u ld
th e d e m a n d s u d d e n ly su b sid e a n d p ric e s fa ll.

d e p a rtm e n t

sto re s in G r e a te r N e w Y o r k sh o w s
t h a t th e sales u p to th e m id d le o f
D e c e m b e r a s c o m p a re d w ith th e co rre sp o n d in g
p erio d of 1 9 1 8 in cre a sed on th e a v e r a g e 4 0 p e r ce n t,
in th e to ta l v a lu e o f sales, a n d 1 9 p er c e n t, in th e
n u m b e r of u n its sold.
So m e o f th e m e rc h a n ts e x ­
p ressed d isa p p o in tm e n t in th e size o f C h ris tm a s b u y ­
in g , w h ic h m a y b e a ttr ib u te d to e x p e c ta tio n s b a se d
on th e im m en se sales, b o th re la tiv e a n d a b so lu te ,
fo r th e m o n th of O cto b e r. I t a p p e a rs also t h a t th e

M o s t m a n u fa c tu re r s a n d d istrib u to rs o f d r y go o d s,
te x tile s, h a r d w a r e , b o o ts a n d sh oes a n d sim ila r m e r­
c h a n d ise , a re so ld u p a s f a r a h e a d a s t h e y w ill ta k e
o rd ers.
M o s t c o n tr a c ts a re p la c e d a t p re se n t p ric e
le v e ls, th o u g h in a fe w case s th e stip u la tio n h a s been
fo r th e fix a tio n of p ric e s a t th e d a te o f d e liv e r y , or
th e m a k in g o f a p ric e n o w , w ith d e liv e r y a t th e c o n ­
v e n ie n ce o f th e seller. S o m e o f th e la r g e s t m a n u fa c ­
tu re rs a n d d istrib u to rs re p o r t t h a t th e ir c o n tr a c ts ,
b a se d u p o n p re se n t p ric e s, ru n o n ly a b o u t h a lf as

re p re ssiv e m easu re s called fo r b y th e sh o rta g e of coal

f a r in to th e fu tu re as in n o rm a l tim e s ; th u s m a n u ­

T rade

a ffe c te d sales in th is p erio d .

N e v e r th e le s s th e p re s­

e n t h o lid a y seaso n is th e h e a v ie s t in th e exp e rie n ce
o f N e w Y o r k sto res.
C e r ta in o f th e sto res re p o rt t h a t th e sales o f u til­

fa c tu re rs a n d d istrib u to rs w h o h a v e been

in

th e

h a b it o f c o n tr a c tin g fo r six m o n th s a h e a d a t fixed
p ric e s a re n o w

c o m m ittin g th e m se lv e s th r o u g h

a

p e rio d o f o n ly th re e m o n th s.
I n b rief, b o th sellers
a n d b u y e r s a im to w a r d a q u ic k tu rn o v e r .

ities h a v e fa lle n off m o re th a n th e sales of lu xu ries.
T h is is e x p la in e d n o t o n ly b e ca u se o f th e n a tu re of
h o lid a y p u rc h a sin g , b u t b e ca u se of th e in clin a tio n
referred to la s t m o n th of b u y in g e x p e n siv e a rticle s
re g a rd le ss of th e ir in h ere n t v a lu e .

D e m a n d fo r h igh

C o lle c tio n s

The

C r e d it

C le a r in g

H o u se

re -

p o rts, b a se d on tr a n s a c tio n s b e ­
tw e e n w h o lesalers a n d re ta ile rs in ­
v o lv in g a b o u t $ 10 0 ,0 0 0 ,0 0 0 , in th e c u rr e n t p erio d
and

F a ilu r e s

p ric e d go o d s is g e n e ra lly re p o rte d , b u t a t th e sam e

w ere s lig h tly b e tte r th a n in th e p re c e d in g fo u r w eek s,

tim e it a p p e a rs t h a t p u rch a se rs a re in clin ed to w a tc h

a n d c o n sid e ra b ly b e tte r th a n a y e a r a g o .




O n th e

FEDERAL RESERVE AGENT AT NEW YORK
o th er h a n d , th e v o lu m e o f in d e b te d n e ss in crea sed
an d w a s a b o u t th e sa m e as fo r th e co rre sp o n d in g
season la s t y e a r .

99

F a ilu re s in th is d is tr ic t d u rin g N o v e m b e r w ere
as a g a in s t

101

la s t y e a r .

Th ere w as

re d u ctio n in th e liab ilitie s in v o lv e d fro m
in N o v e m b e r ,

1918,

to

$1,548,918

a

slig h t

$1,674,791

th is y e a r .

w a s re p o rte d in Y o u n g s t o w n a n d o th er cen ters.
P ric e s of p ig iron , steel b illets a n d ra ils rose m o re
r a p id ly th a n d u rin g th e steel strik e .
O rd ers fo r
steel are b e in g a c c e p te d c o n d itio n a lly , or declin ed
a lto g e th e r ; a n d it m a y b e som e w e ek s b e fo re th e steel
m a r k e t re c o v e rs fro m th e c u m u la tiv e e ffe ct of th e
tw o strik es.

F o r th e

c o u n tr y as a w h o le th e re w ere fe w e r failu res la s t

C o tto n

m o n th th a n in a n y N o v e m b e r sin ce D u n ’s reco rd s

th e first th ree w eek s of D e c e m b e r in d ica te a m a ­

d e n ta l to th e liq u id a tio n of m id N o v e m b e r w a s re v e rse d la te in th e
m o n th , a n d on D e c e m b e r
th e p ric e o f f o r t y cen ts
a p o u n d fo r sp o t d e liv e r y w a s rea ch e d .
T h is p ric e

te ria l d ecrease
p erio d in

excee d e d t h a t re a c h e d in O cto b e r a n d is th e h ig h e st
fo r a c e n tu ry , s a v e th e C iv il W a r p erio d , w h e n p rices

1894,

b e g a n in
w ith th e sm a lle st lia b ilitie s fo r a n y
N o v e m b e r in fifteen y e a rs .
P r e lim in a r y figu res fo r

1918.

in

o v e r th e co rre sp o n d in g

T h e r e is no le t u p in th e d e m a n d

C lo th in g ,
D ry

failu re s

f ° r h ig h g r a d e w e a rin g a p p a re l.

G ood s

On

co n t r a r y , th e d e m a n d h as b r o a d ­
ened a n d g a rm e n ts a re a sk e d fo r in
a w id e r v a r ie t y of fa b ric s .
N o p ro m ise of relief in

and

T e x tile s

T h e d eclin e of c o tto n p rice s in ci-

M ark et

5

w e re sta te d in d e p re cia te d c u rr e n c y .
W it h th e issu ­
a n c e of th e G o v e r n m e n t cro p re p o rt, w h ic h set a n
e s tim a te

of

325.000

th e

cro p

11,030,000
1

at

b a le s,

about

b ales a b o v e th e O cto b e r
e stim a te , th e
p ric e on th e N e w Y o r k m a r k e t declin ed to a p o in t
n o t fa r a b o v e w h a t it w a s in m id -N o v e m b e r

clo th in g p rices is h eld o u t fo r th e n e a r fu tu re .
D o m e s tic c o tto n co n su m p tio n in N o v e m b e r w a s

B o t h jo b b e rs a n d m a n u fa c tu re r s of h o sie ry an d
k n it go o d s a re e x tre m e ly b u s y . B u y i n g h as in crea se d
d u rin g th e la s t tw o w e ek s o w in g to th e fe a r of still
h ig h e r p rices a n d b e c a u se sto c k s a re lo w a t a tim e
w h en p ro d u ctio n is still b e lo w n o rm a l.
L e a d in g p ro d u ce rs of w oolen s a n d w o rste d s are
m a k in g p la n s to a llo t th e ir p ro d u c ts fo r th e fa ll
seaso n as th e y d id fo r th e co m in g sp rin g.

490,698 b a les a g a in s t 555,344 th e p re v io u s m o n th ,
a n d 455,611 in N o v e m b e r , 1918.
I t w a s lo w , h o w ­
e v e r, as co m p a re d w ith som e p re v io u s N o v e m b e r s ,
a n d th e co m p a riso n s w ith th e

1918

figu res a re m is­

le a d in g b eca u se of th e a b n o rm a l c u rta ilm e n t of c o n ­
su m p tio n d u rin g th e la t te r h a lf of la s t y e a r .
E x p o rts
in b o th S e p te m b e r a n d O cto b e r w e re b e lo w th o se of
th e p re v io u s y e a r .
F o r th e la tte r m o n th th e y w e re

1920

352,231 b ales a g a in s t 386,995

W h e re a u tu m n p rice s h a v e b een m en tio n ed th e y are

tw o y e a r s ago .
I n N o v e m b e r , h o w e v e r, th e e x p o rts
a m o u n te d to
b a le s, w h ic h is th e m a x im u m
sh ip m e n t fo r a n y sin gle m o n th .
E n g la n d , a cc o rd in g

up

50

to

75

cen ts a y a r d o v e r sp rin g p rices.

C o t­

to n go o d s h a v e been a c t iv e a n d h a v e m a in ta in e d or
e v e n exceed ed th e p re v a ilin g h igh p ric e le v els.
Iro n

T h e co a l strik e h a s h a d a m ore

and

d istu rb in g e ffe ct u p o n th e iron a n d
steel tr a d e th a n d id th e steel strik e.
F o r th e tw o m o n th s ju s t p rio r to th e la t te r our a v e r ­
a g e m o n th ly p ro d u ctio n of p ig iron w a s
to n s, fro m w h ic h it fell to
in O cto b e r a n d
re c o v e re d to
to n s in N o v e m b e r .
F o r th e
w h o le p e rio d of th e steel strik e th e c o n se q u e n t loss of
S te e l

1,863,558

2,392,350

iron

p ro d u ctio n

w as

a p p a r e n tly

about

2,586,000

1,2 0 0 ,0 0 0

to th e D e p a r t m e n t of C o m m e rc e ta b u la tio n , to o k
b a le s a n d F r a n c e
bales.

521.000

120,311

B u ild in g c o n tra c ts a w a rd e d in
N
o
v e m b e r in N e w Y o r k a n d N o r t h ­
O p e r a tio n s
ern N e w J e r s e y , a cc o rd in g to F . W .
D o d g e C o m p a n y , a m o u n te d to
or
less th a n fo r O cto b e r.
T h e n o te w o r th y
p o in t is n o t th e d ecrea se, b u t ra th e r its sm alln ess.
A t th is seaso n of th e y e a r , b e c a u se o f th e co m in g of
B u ild in g

$50,636,000

585,000

tio n to g e th e r w ith th e re la tiv e m o v e m e n ts of iron

O cto b e r

a n d steel p rices in d ica te t h a t p ig iron w a s a ffe c te d

w h e re a s th is tim e it w a s o n ly

steel.

The

e m b a rra ssm e n t

$2,-

cold w e a th e r, c o n tr a c t a w a rd s n o r m a lly sh o w a m u c h
la r g e r declin e.

th a n

530,565

924,000

to n s ; a n d th e un filled to n n a g e of th e S te e l C o r p o r a ­

m ore

a y e a r ago, and

to

I n th e t y p ic a l y e a r th e d eclin e fro m

N ovem ber

is

11 3 ^

about

5.1

per

c e n t.,

p e r cen t.

re s u ltin g

fro m th e co a l strik e a n d th e r e s tric tiv e o rders of th e

T h e to ta l v o lu m e of b u ild in g in th is d is tric t fo r

F u e l A d m in is tra tio n in d ica te d in th e o p e ra tio n of

th e y e a r th u s fa r is v e r y m u c h a b o v e n o rm a l in co st,

iron

a n d so m e w h a t a b o v e in floor sp a ce.

and

steel p la n ts

e a r ly in D e c e m b e r.

w a s p a r tic u la r ly

n o tice a b le

T h e sh o rta g e of co k e b e c a m e

a c u te b y D e c e m b e r 8, a n d c u rta ilm e n t of p ro d u ctio n




e lev e n m o n th s to D e c e m b e r

1

a g a in s t a p re v io u s h ig h re co rd of

T h e a w a rd s fo r

$503,729,000
$316,014,000; a n d

w ere

REPORT ON BUSINESS CONDITIONS

R e sid e n tia l b u ild in g co n tin u es on a la rg e scale in

in d u s tr y , is a ttr ib u te d to th e se ttle m e n t o f la b o r
tro u b le s. A b o u t h a lf th e steel w o rk e rs o u t on strik e

th is d is tr ic t; 3 4 p e r ce n t, of th e a w a rd s fo r N o v e m b e r

in O cto b e r h a d re tu rn e d a t th e tim e of th e N o v e m ­

c a m e in t h a t cla ssifica tio n , w h ic h in clu d e s n o t o n ly

b er re p o rts.

th e h ig h e st reco rd b efo re th e w a r w a s $ 2 3 5 ,6 9 4 ,5 0 0 .

T h e p r in te r s ’ strik e, w h ic h w a s s lo w ly

d e ta c h e d d w e llin g s, b u t a p a r tm e n t h o uses, h o tels,

d isso lv in g a m o n th a go , c a m e to a n en d w it h a n in ­

g a ra g e s a n d sta b le s.
T h u s th e co n tin u e d rise in
p rices of b u ild in g m a te ria ls h a s n o t y e t red u ce d th e

crea se of $ 6 .0 0
a w ee k .
A m o n g th o se w h o h a v e
g e n e ra lly re tu rn e d to th e ir fa c to rie s or p la n ts a re

e x te n t o f b u ild in g o p e ra tio n s b e lo w n o rm a l.

s h ip y a rd iron w o rk e rs, silk g lo v e m a k e rs, o p e ra tiv e s
on m e n ’ s fu rn ish in g s a n d in la u n d rie s, a n d c ig a r

A n e m p h a tic
im p ro v e m e n t in
la b o r co n d itio n s h a s ta k e n p la c e in

L abor

th is d istric t.
T h e re p o rt of th e N e w Y o r k S t a t e
In d u s tria l C o m m issio n for th e m o n th of N o v e m b e r
sh o w s a n in crease of 3 p e r ce n t, in th e to ta l n u m b e r of
w o rk e rs e m p lo y e d in 1 ,5 6 0 re p re se n ta tiv e m a n u fa c ­
tu rin g esta b lish m e n ts. A m a te ria l p a r t of th is in ­
crease, w h ic h is re p o rte d in n e a r ly e v e r y d iv isio n of

m a k e rs.
T h e c u m u la tiv e e ffe c t o f th e steel a n d co al
strik es w a s fe lt in th e a u to m o b ile g ro u p , w h e re th e
sh o rta g e of m a te ria l forced th e la y in g off o f a n u m b e r
of w o rk e rs.

A d ecrea se is re p o rte d in th e n u m b e r of

w o rk e rs e n g a g e d in th e c o tto n go o d s m ills, th e re s u lt
of a n e xten sio n to a n o th e r lo c a lit y of th e la b o r
tro u b le s in t h a t in d u s tr y .
P ro h ib itio n h a s re su lte d
in a co n tin u in g declin e in th e e m p lo y e e s of b re w e rie s.

T h is re p o rt is p re p a re d m o n th ly fo r th e F e d e r a l R e s e r v e B o a r d .

C o p ie s a re issu ed fo r th e in fo rm a tio n

of m e m b e r b a n k s a n d th o se w h o h a v e c o n trib u te d to w a r d its p re p a ra tio n .

A d d itio n a l cop ies m a y b e

o b ta in e d b y a d d re ssin g
FED ER AL R ESER VE

AGENT,

F ed eral R e se rv e B a n k of N e w Y o r k .
1 5 N a ssa u Street, N e w Y o rk .