Full text of Economic Policy Review (Federal Reserve Bank of New York) : February 1, 1935

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

MONTHLY REVIEW
of Credit and Business Conditions
S e c o n d
Federal Reserve Agent

F e d e ra l

D is tric t

Federal Reserve Bank, New York

Money Market in January

T h e seaso nal re tire m e n t of c u rre n c y th a t h a d been
called in to use fo r th e seaso n al b u sin e ss a c tiv itie s of th e
a u tu m n a n d fo r th e h o lid a y tr a d e co m bined w ith G ov­
e rn m e n t d isb u rse m e n ts a n d a new g o ld inflow to ra ise
m em b er b a n k reserv es m o re th a n $500,000,000 in J a n u a r y
to a lev el f a r above a n y re a c h e d in p re v io u s y ears. A s
th e a c co m p an y in g d ia g ra m show s, th e to ta l vo lu m e of
m em b er b a n k reserv es fo r th e c o u n try as a w hole n e a r
th e en d of J a n u a r y w as n e a rly do u b le th e volu m e in 1929.
A p p ro x im a te ly h a lf of th e in c re a se o c c u rre d a t N ew
Y o rk , d u e la rg e ly to a h e a v y inflow of fu n d s fro m o th e r
d is tric ts , w h ich a p p a re n tly reflecte d in p a r t a m o v em en t
of co m m ercial fu n d s a n d in p a r t a f u r th e r ac c u m u la tio n
in N ew Y o rk of id le fu n d s of b a n k s in o th e r p a r ts of th e
c o u n try .
A lth o u g h th e r a p id g ro w th of b a n k d e p o sits since th e
a u tu m n of 1933 h as in v o lv ed th e a b so rp tio n of a p p ro x i­
m a te ly $500,000,000 th ro u g h in c re a se d re serv e re q u ire ­
m en ts, excess reserv es of m em b er b a n k s rose to a new h ig h
level of ab o u t $2,200,000,000 in th e la tte r p a r t of J a n ­
u a ry , over a n d above re q u ire d reserv es of som ew hat over
$2,300,000,000. I n N ew Y o rk C ity alone, excess reserv es
n e a r th e en d of J a n u a r y ra n g e d fro m $700,000,000 to
$835,000,000, in a d d itio n to re q u ire d reserv es of som e­
w h a t over $900,000,000. F o r a ll o th e r m em b er b a n k s th e
p re s e n t volum e of reserv es is a p p ro x im a te ly d ou ble leg al
re q u ire m e n ts. T h e b asis is th e re fo re p re s e n t in excess
b a n k reserv es fo r a tre m e n d o u s ex p a n sio n of b a n k c re d it
a n d b a n k d ep o sits.
T h e n e t r e tu r n flow of c u rre n c y to th e R eserv e B an k s
b etw een D ecem b er 26 a n d J a n u a r y 23 a m o u n te d to
$281,000,000, a n d w as th u s th e la rg e st sin g le fa c to r in th e
J a n u a r y in c re ase in m e m b er b a n k reserv es. T he volum e
of c u rre n c y o u ts ta n d in g on J a n u a r y 23, w h ich p re s u m ­
a b ly w as a p p ro x im a te ly th e low est p o in t of th e season,
re m a in e d a b o u t $56,000,000 h ig h e r th a n on J u ly 25, ju s t
b e fo re th e a u tu m n in c re ase b eg an . T h is in crease, how ­
ever, p ro b a b ly reflects o n ly a p a r t of th e a c tu a l e x p a n ­
sion in th e a m o u n t of c u rre n c y in ac tiv e use d u rin g th e
p a s t six m o n th s, as a g ra d u a l m o v em en t of c u rre n c y o u t
of h o a rd s a c c u m u la te d d u rin g th e b a n k in g difficulties of
1933 a n d p re v io u s y e a rs a p p e a rs to h a v e co n tin u e d
d u rin g re c e n t m o n th s. A m o v em en t of th is k in d h a s
been reflected in c o n tin u e d s tra g g lin g re c e ip ts b y th is
b a n k a n d o th e r R eserv e B a n k s of old ty p e g old ce rtifi­
cates a n d of la rg e d e n o m in a tio n b ills o f o th e r k in d s.
A n o th e r im p o rta n t fa c to r in th e J a n u a r y in c re ase in
m em b er b a n k reserv es w as la rg e G o v ern m e n t d isb u rse ­




R e se rv e

February 1, 1935

m e n ts o f d e p o sits in F e d e ra l R eserv e B a n k s a n d fre e
gold in th e T re a s u ry th a t w ere a c c u m u la te d in D ecem ber.
N e t d isb u rse m e n ts by th e G o v ern m e n t betw een D ecem b er
26 a n d J a n u a r y 23 a m o u n te d to $186,000,000, an d
ac co u n ted fo r m o re th a n o n e -th ird of th e in c re ase in
m em b er b a n k reserv es d u rin g th a t p e rio d . I n N ew Y o rk ,
how ever, G o v ern m e n t d isb u rse m e n ts w ere m o re th a n
offset b y rece ip ts, so th a t th e re w as no g a in to m em ber
b a n k reserv es fro m th is source. B y J a n u a r y 23, T re a ­
s u ry b alan ces in th e R eserv e B a n k s h a d b een re d u c e d to
co m p a ra tiv e ly low levels, a n d s u b s ta n tia l w ith d ra w a ls
of fu n d s fro m G o v ern m e n t d e p o sita rie s w ere m ad e to
c o u n te rb a la n c e G o v ern m e n t e x p e n d itu re s d u rin g th e
re m a in d e r of th e m o n th .
T he new inflow o f go ld fro m a b ro a d re s u lte d in p a r t
fro m u n s e ttle m e n t of th e fo re ig n ex ch an g es p e n d in g
decisio n by th e U n ite d S ta te s S u p re m e C o u rt u p o n th e
‘6g o ld clause ’ ’ cases w h ich w ere a rg u e d b e fo re th e C o u rt
e a rly in J a n u a ry . T h e in c re ase in th e go ld stock of th is
c o u n try d u rin g J a n u a r y w as close to $150,000,000,
b rin g in g th e to ta l in c re ase d u rin g th e p a s t y e a r, ex­
clu sive o f th e in c re ase d u e to re v a lu a tio n of m o n e ta ry
gold p re v io u sly h eld, to a p p ro x im a te ly $1,500,000,000.
M oney R ates

T he p rin c ip a l reflectio n in th e m on ey m a rk e t of th e
la rg e in c re ase in excess m em b er b a n k reserv es d u rin g
th e p a s t m o n th h a s b een a f u r th e r declin e in y ie ld s on
lo n g te rm G o v ern m e n t bon ds, on o th e r h ig h g ra d e se c u ri­
ties, an d , to som e e x te n t, on lo w er g ra d e bond^. T he
av erag e y ie ld on lo n g te rm G o v ern m e n t b o n d s n e a r th e

10

MONTHLY REVIEW, FEBRUARY 1, 1935

e n d of J a n u a r y w as ab o u t 2.65 p e r cent, as co m p ared
w ith a b o u t 2.85 p e r ce n t n e a r th e e n d o f D ecem ber.
S h o rt te rm m on ey ra te s a re show n in th e fo llo w in g tab le.

b an k s, w h ich a re now m u c h fe w e r th a n five y e a rs ago,
a re s till w ell below th e levels of y e a rs p r io r to 1932.
B ill M arket

I n th e clo sing d a y s of D ecem ber, th e d isc o u n t houses
w ere ab le to a c q u ire a few bills, b u t th ese s u p p lie s w ere
Jan. 31, 1934 Dec. 31, 1934 Jan. 31, 1935
q u ic k ly e x h a u ste d in th e first few d a y s of J a n u a r y , in
Stock Exchange call loans..........................
1
1
1
Stock Exchange 90 day loans...................
*1-1X
sa tis fa c tio n of th e in v e stm e n t d e m a n d w h ich u su a lly
* x -i
*X-1
Prime commercial paper— 4 to 6 months
1 M -1 X
X- 1
X
d evelop s im m e d iate ly a f te r th e t u r n of th e y e a r. G en ­
Bills— 90 day unindorsed............................
X
Vs
X
Customers’ rates on commercial loans..
f 2 .4 6
t l . 961t l .7 5
e ra lly q u ie t c o n d itio n s p re v a ile d in th e b ill m a rk e t
Treasury securities
Maturing June (yield)............................
0 .2 5
N o yield
N o yield
th
ro u g h o u t th e b alan ce of th e m o n th . D e a le rs w ere
Maturing December (yield).................
1 .6 7
N o yield
N o yield
Maturing April 1936 (yield)................
u n a b le, as in p rev io u s m o n th s, to a c q u ire b ills in a n y ­
0 .3 6
0 .0 8
Average rate on latest Treasury bill sales
th in g like th e volu m e re q u ire d to m eet th e p o te n tia l
91 day issue...............................................
1 .7 2
182 day issue...............................................
o ’ i4
o lio
in v e stm e n t d e m an d , a n d th e ir p o rtfo lio s re m a in e d a t
Federal Reserve Bank of New York re­
discount ra te ...............................................
a m in im u m . N o ch an g e o c c u rre d in op en m a rk e t ra te s
2
IX
IX
Federal Reserve Bank of New York
w h ich c o n tin u e d to be q u o te d b y th e d e a le rs o nly u p o n
buying rate for 90 day indorsed bills
X
X
X
a p p lic a tio n .
* Nominal f Average rate of leading banks at middle of month r Revised
A t th e en d of D ecem ber, th e volu m e o f b a n k e rs b ills
o u ts ta n d in g am o u n te d to $543,000,000, a d eclin e of
M ember B a n k Credit
$18,000,000 fro m th e en d of N o v em b er a n d of $221,000,T h e to ta l lo a n s a n d in v e stm e n ts of w eekly re p o rtin g 000 fro m D ecem b er 1933. T he o u ts ta n d in g v olu m e of
m e m b er b a n k s th ro u g h o u t th e c o u n try show ed no e x p o rt a n d dom estic w areh o u se b ills a n d also of a c c e p t­
m a te ria l ch an g e d u rin g th e p a s t m o n th , a lth o u g h th e re an ces b ased on goods sto re d in o r s h ip p e d b etw een f o r ­
w ere ch an g es of m o d e ra te a m o u n t in th e d iffe re n t com ­ eig n c o u n trie s all re a c h e d th e sm allest a m o u n t fo r
m u n itie s a n d in th e v a rio u s ty p e s of e a rn in g assets. I n D ecem ber of a n y re c e n t y e a r. A c c e p tin g b a n k s an d
N ew Y o rk C ity th e to ta l lo an s a n d in v e stm e n ts o f th e b a n k e rs co n tin u e d to h o ld a p p ro x im a te ly 92 p e r c e n t of
r e p o rtin g m em b er b a n k s show ed a n in c re ase of $130,000,- all b ills o u ts ta n d in g in D ecem ber.
000, th e la rg e s t fa c to r in w h ich w as a n in c re ase of
C ommercial P aper M arket
$93,000,000 in U n ite d S ta te s G o v ern m e n t secu rities,
S ales of co m m ercial p a p e r a t % p e r ce n t in c re a se d
S u p p lem e n ted b y a n in c re ase of $31,000,000 in o th e r
se c u ritie s a n d a sm all in c re ase in lo an s on secu rities. d u rin g J a n u a r y to a p o in t w h ere th e p re v a ilin g r a te
O th e r lo an s, la rg e ly co m m ercial, show ed o n ly a sm all n e t f o r a v e ra g e g ra d e p rim e n am es of fo u r to six m o n th
re d u c tio n fo llo w in g m o re s u b s ta n tia l seaso n al declines in m a tu rity becam e e stab lish e d a t th a t level. T h e % p e r cent
th e tw o p re c e d in g m o n th s, a n d th e v olu m e of su ch loans q u o ta tio n re p re s e n ts a new low ra te fo r o p e n m a rk e t
re m a in e d a b o u t $75,000,000 h ig h e r th a n a t th e seasonal co m m ercial p a p e r. T h e a c tiv e b a n k in v e stm e n t in q u iry
low p o in t of J u ly 1934. I n o th e r re p o rtin g b a n k s fo r co m m ercial p a p e r th a t h as b een in ev id en ce fo r som e
th ro u g h o u t th e c o u n try , to ta l lo a n s a n d in v e stm e n ts tim e p a s t c o n tin u e d d u rin g J a n u a ry , b u t th is d em an d
d e clin ed a b o u t $150,000,000 b etw een D ecem b er 26 a n d re m a in e d la rg e ly u n filled , ow ing to th e in a b ility of
J a n u a r y 23, d u e to re d u c tio n s of $49,000,000 in G o v ern ­ d e a le rs to secu re a d e q u a te q u a n titie s o f n ew p a p e r.
m e n t secu ritie s, $32,000,000 in o th e r secu ritie s, $40,000,- D u rin g th e la tte r p a r t o f th e m o n th m o d e ra te am o u n ts
of co n su m er fin an ce c o m p an y p a p e r e n te re d th e o pen
000 in s e c u rity loans, a n d $28,000,000 in o th e r loans.
N e t d e m a n d d e p o sits o f th e re p o rtin g b a n k s show ed a m a rk e t, a n d w ere re a d ily ab so rb e d a t 1 p e r cen t, p r in ­
f u r th e r in c re ase of $365,000,000 d u rin g th e fo u r w eek c ip a lly b y b a n k s in th e M id d le W est.
A t th e en d of D ecem b er re p o rtin g co m m ercial p a p e r
p e rio d a n d re a c h e d a n ew h ig h lev el fo r sev era l y e a rs
p a st, d u e to th e sam e fa c to rs th a t cau sed th e e x p an sio n houses h a d o u ts ta n d in g a to ta l of $166,000,000 of p a p e r.
in m e m b er b a n k rese rv e s d u rin g th e m o n th . T im e T h is a m o u n t w as 7 p e r c e n t below th e N o v em b er fig u re,
d e p o sits show ed a n e t in c re ase of $63,000,000, fo llo w in g b u t 53 p e r c e n t above th e D ecem b er 1933 volum e.
a m o d e ra te re d u c tio n in th e w eeks p re c e d in g th e h o lid a y
tra d e . A la rg e p a r t o f th e in c re ase in n e t d e m a n d d ep o sits Security Markets
B o n d p ric e s w ere r a th e r co n siste n tly firm in J a n u a r y
o c c u rre d a t N ew Y o rk , refle c tin g th e h e av y tr a n s f e r m ove­
m e n t o f co m m ercial a n d b a n k in g fu n d s to N ew Y o rk e x cep t fo r a te m p o ra ry recessio n d u r in g th e p e rio d of
fro m o th e r lo calities, a n d th e n e t d e m a n d d e p o sits of th e a few d a y s p rio r to th e 1 5 th of th e m o n th , as th e accom ­
p rin c ip a l N ew Y o rk C ity b a n k s re a c h e d lev els th a t h av e p a n y in g d ia g ra m in d ic ates. Y ie ld s on G o v ern m e n t an d
n e v e r b e fo re b een e q u aled ex cep t in one o r tw o w eeks o th e r h ig h g ra d e bo n d s rea c h e d n ew low levels fo r m a n y
a t th e tim e o f th e b re a k in th e s e c u rity m a rk e ts in th e y e ars, a n d th e av erag e y ie ld on m e d iu m g ra d e co rp o ra te
a u tu m n of 1929. D e m a n d d e p o sits in r e p o rtin g b a n k s in issues d ro p p e d slig h tly below th e level th a t p re v a ile d
o th e r p rin c ip a l cities show ed o n ly a sm all in c re ase in f o r a w h ile d u rin g th e secon d q u a rte r o f 1934 a n d w as
J a n u a ry , b u t re m a in e d a ro u n d th e h ig h e st levels ev er th e low est since 1930.
I n th e G o v ern m e n t b o n d m a rk e t, p ric e s o f a ll T re a s u ry
a tta in e d . C u rre n t d a ta a re n o t av a ila b le on th e d e p o sits
o f b a n k s o u tsid e o f th e p rin c ip a l cities, b u t d a ta u p to a n d L ib e rty L o a n issu es ad v a n c e d th ro u g h J a n u a r y 10,
la s t N o v em b er in d ic a te d th a t in th e “ c o u n tr y ’’ b a n k s b u t in th e n e x t tw o d a y s a p re fe re n c e d ev elo p ed fo r issues
also th e re h a s b een a la rg e in c re ase in d e p o sits since th e flo ated p r io r to J u n e 5, 1933 w h ich sp e c ify p a y m e n t in
m id d le o f 1933, a lth o u g h a g g re g a te d e p o sits o f su ch g o ld a t m a tu rity , a n d c o n c u rre n t w eak n ess o c c u rre d in




Money)Rates atJNewlYork

FEDERAL RESERVE AGENT AT NEW YORK

11

C re d it B a n k d e b e n tu re s, o f w h ich $30,000,000 re p la c e d
m a tu rin g o b lig atio n s, a n d $10,000,000 of em erg en cy
re lie f b o n d s of th e S ta te o f N ew J e rs e y , w h ile m ost of
th e re m a in d e r co n sisted o f a n u m b e r of sm all S ta te an d
m u n ic ip a l issues. I n a d d itio n , th e S ta te of N ew Y o rk
sold $60,000,000 of re v e n u e a n tic ip a tio n n o tes to a g ro u p
of b a n k in g in s titu tio n s, b u t no g e n e ra l p u b lic offering
b y th e su ccessfu l b id d e rs fo llo w ed th is sale b y th e S ta te .
D u rin g J a n u a ry , a n n o u n c e m e n t w as m ad e b y th e
S e c u ritie s a n d E x c h a n g e C om m ission of rev isio n s in th e
fo rm to be u sed b y seasoned c o rp o ra tio n s in s u p p ly in g
th e in fo rm a tio n re q u ire d b y th e C om m ission in co n n ectio n
w ith th e re g is tra tio n o f n ew s e c u rity issues w ith th e
C om m ission. T h e p u rp o se of th ese rev isio n s is to
e lim in a te as f a r as possible b u rd e n s on co n cern s th a t
d e sire to u n d e rta k e n ew c a p ita l fin an cin g . A c c o rd in g to
Average Yield on Various Groups of Bonds (Moody’s Investors
th
e s ta te m e n t of th e C om m ission, ‘ ‘ E v e ry effo rt h as been
Service average yields for Aaa and Baa corporate bonds, and
m ad e to p ro v id e a fo rm w h ich, w h ile m e e tin g th e s tric t
Federal Reserve Bank of New York average yield on Treasury
bonds; scale inverted to show movement of prices)
re q u ire m e n ts of th e s ta tu te , n e v e rth e le ss offers no serio us
th e m o re re c e n t issu es w h ich do n o t c o n ta in th e gold difficu lty to th e w e ll-in te n tio n e d c o rp o ra tio n . ’ ’ A s a
clause. A s a re s u lt a s p re a d in p ric e s in fa v o r of issu es re s u lt of th e ch an g es in th e p re s c rib e d in fo rm a tio n , th e
c o n ta in in g th e g old clau se d evelop ed, w h ich, how ever, C om m ission believes “ th a t ev ery possible fa c ility a n d
w as m a te ria lly re d u c e d w ith in th e n e x t tw o w eeks. E v en en c o u ra g e m e n t is b e in g g iv e n b y th is fo rm to esta b ­
th ro u g h th is te m p o ra ry flu rry in th e m a rk e t, th e do m i­ lish ed co m pan ies d e sirin g to ra ise new c a p ita l in th e
n a n t te n d e n c y in G o v ern m e n t b o n d p ric e s w as u p w a rd , fin an c ial m a rk e ts , ’ ’ a n d th a t “ re p u ta b le co m pan ies no
a n d fo r th e m o n th as a w hole q u o ta tio n s fo r L ib e rty lo n g e r h av e a n y ju s tific a tio n f o r h e sita tin g to u n d e r­
L o a n issu es re g is te re d a n e t a d v an c e of a b o u t *4 p o in t, ta k e new issues u n d e r th e S e c u ritie s A c t.” T h e action
a n d th e av erag e p ric e of T re a s u ry b o n d s rose 1 % p o in ts, of th e S e c u ritie s a n d E x c h a n g e C om m ission h a s been
so th a t th e av erag e y ie ld on th ese issu es d e clin ed as low co n sid ered b y th e m a rk e t as a c o n stru c tiv e step , a n d
as 2.63 p e r cen t, as c o m p a re d w ith a p re v io u s low p o in t a p p a re n tly is ex p ecte d to fa c ilita te b o n d re fu n d in g a n d
th e sale of new issu es on a la rg e r scale.
fo r re c e n t y e a rs of 2.70 p e r ce n t in J u ly 1934.
A su m m a ry of o fferin g s o f n ew d om estic secu ritie s,
D a ily p ric e a v erag es of do m estic c o rp o ra tio n bon ds
g a in e d over one p o in t in th e firs t te n d a y s of J a n u a ry , o th e r th a n U n ite d S ta te s G o v e rn m e n t d ire c t a n d g u a r­
a n d th e n lo st m ore th a n h a lf of th is ad v an c e w ith in th e a n te e d o b lig atio n s d u rin g th e y e a r 1934, in d ic a te s som e
n e x t f o u r o r five d ay s. S u b se q u e n tly th e u p w a rd m ove­ in c re ase in s e c u rity flo tatio n s, la rg e ly in th e field of
m e n t w as resu m ed a n d c o n tin u e d u n til th e la s t few d ay s S ta te a n d m u n ic ip a l fin an c in g . A s th e acco m p an y in g
of th e m o n th , so th a t d om estic c o rp o ra te b o n d av erag es d ia g ra m show s, h ow ever, to ta l offerin g s o f a b o u t $1,830,show ed n e t ad v an ces fo r th e m o n th ra n g in g fro m % to 000,000, a lth o u g h la rg e r th a n in 1933 o r 1932, re m a in e d
1 p o in t. T he ad v an c e in c o rp o ra te b o n d p rice s d u rin g sm all in co m p ariso n w ith o th e r re c e n t y e ars. R e fu n d in g
J a n u a r y a n d th e p re c e d in g few m o n th s h a s b een ra th e r issu es of all ty p e s, a m o u n tin g to $760,000,000, acco u n ted
g e n eral, e x te n d in g to a ll g ro u p s a n d g ra d e s of b on ds fo r $480,000,000 of th e in c re ase in to ta l issu es betw een
ex cep t m e d iu m a n d lo w er g ra d e r a ilro a d b o n d s w hich 1933 a n d 1934, a n d new fin an c in g o f S ta te s, m u n icip a lire m a in below th e q u o ta tio n s re a c h e d d u rin g th e first
h a lf of 1934. F o re ig n d o lla r b o n d s also show ed a n u p ­
w a rd te n d e n c y d u rin g J a n u a r y .
I n c o n tra s t to th e g a in in b o n d p rice s, q u o ta tio n s fo r
stocks re g is te re d a n e t d eclin e of a b o u t 4 p e r c e n t fo r
J a n u a ry . D u rin g th e first w eek o f th e m o n th p ric e s held
ste a d y a ro u n d th e levels re a c h e d in th e clo sing d a y s of
D ecem ber, b u t b e tw ee n J a n u a r y 7 a n d 15 a declin e
o c c u rre d a n d in th e su b se q u e n t p a r t of th e m o n th
ir re g u la r m o v em ents p re v a ile d .
(NCORPORATE
ew capital)
New Financing

P u b lic offerin g s of new se c u ritie s w ere in sm aller
volum e d u rin g J a n u a r y th a n in th e fin al th re e m o n th s
of 1934. T he a g g re g a te a m o u n t of issues offered fo r
p u b lic s u b s c rip tio n a p p e a rs to h a v e b een less th a n $100,000,000, c o m p ared w ith a n av e ra g e of ab o u t $160,000,000
in th e c lo s in g m o n th s o f la s t y e a r. V irtu a lly non e of th e
J a n u a r y fin a n c in g re p re s e n te d c o rp o ra te issues, th e p r in ­
c ip a l issu es b e in g $36,000,000 of F e d e ra l In te rm e d ia te




STATE,
MUNICIPAL,
FARM
LOAN
(NEW CAPITAL)
REFUNDING

1925 1926 1927 1928 1929 1930 1931 1932 1933 1934

Offerings of Domestic Securities in 1934 Compared with Preceding
Years (Commercial and Financial Chronicle data— investment
trust issues excluded; in millions of dollars)

12

MONTHLY REVIEW, FEBRUARY 1, 1935

ties, a n d fa r m c re d it bodies w hose issu es a re n o t g u a r ­
a n te e d b y th e G o v ern m en t, a g g re g a tin g $910,000,000,
a c c o u n te d f o r $370,000,000 of th e in c re ase in th e to ta l.
N ew c a p ita l issu es of dom estic c o rp o ra tio n s show ed no
in c re a se in th e ag g re g a te , re m a in in g a t $160,000,000 in
1934 w h ich is th e sm allest fig u re fo r m a n y y e a rs, b u t
re fu n d in g issu es b y c o rp o ra tio n s in c re a se d slig h tly .
Foreign Exchange

D u rin g th e e a rly d a y s o f J a n u a r y th e fo re ig n ex­
ch an g e s w e re m o d e ra te ly s tro n g a g a in s t th e d o lla r a n d
sev era l o f th e g o ld c u rre n c ie s e q u aled o r ex ceed ed p a rity
fo r th e firs t tim e in over tw o m o n th s. A d e c lin in g te n d ­
en cy d ev elo p ed b e fo re th e close of th e firs t w eek, how ­
ev er, a n d a f te r th e m id d le of th e m o n th th e re w as
p ro n o u n c e d w eakness th ro u g h o u t th e list, c u lm in a tin g in
a p re c ip ita te d eclin e w h ich c a rrie d th e g o ld c u rre n c ie s
to th e ir low est q u o ta tio n s since F e b ru a r y 1934. A lth o u g h
th e lo w est clo sing ra te s fo r th e m o n th w ere re c o rd e d fo r
th e m o st p a r t on S a tu rd a y , J a n u a r y 26, th e g re a te st
w eak ness, ta k in g th e m a rk e t as a w hole, o c c u rre d d u rin g
th e co u rse of tr a d in g on th e 28th .
T h e F re n c h f ra n c a f te r risin g to $0.066 4% on J a n u a r y
2 d e clin ed f a ir ly s te a d ily to $0.065 6% on th e 16th , a level
m a te ria lly below th e g o ld im p o rt p o in t. T e m p o ra ry
reco v ery to $ 0 .065 8% on th e 1 9 th w as fo llo w ed b y a
s h a rp d ro p a f te r th e 2 3 rd to a clo sing ra te of $0.0651 on
J a n u a r y 26, th e low est fo r th e m o n th , b u t a f te r th e 2 8 th
a m o d e ra te u p tu r n o c cu rred . B elgas, g u ild e rs, a n d Sw iss
fra n c s fo llo w ed m u c h th e sam e co u rse as th e F re n c h
c u rre n c y . A lth o u g h s u b s ta n tia l g o ld sh ip m e n ts fro m
F ra n c e a n d H o lla n d w ere m ad e, th e fre ed o m of th e
m o v em en t w as in h ib ite d b y d o u b ts co n c e rn in g th e o u t­
com e o f th e ‘ ‘ g o ld c la u s e ’ ’ cases b e fo re th e U n ite d S ta te s
S u p re m e C o u rt, a n d th e declin e in th e ex ch an g es p ro ­
ceeded f u r th e r th a n wTo u ld h av e been th e case if g o ld h a d
m ov ed fre e ly . T h e a c co m p an y in g d ia g ra m show s th e
a d v an c e in d o lla rs a g a in s t th e F re n c h fra n c d u rin g J a n ­
u a ry , a n d also th e e x te n t of th e go ld im p o rts a t N ew
Y o rk fro m a ll sources.
S te rlin g o p en ed th e m o n th a t $4.94 b u t im m e d iate ly
b e g a n a n ir re g u la r decline, w h ich c a rrie d it to $4.87 on
th e 15 th . A f te r a reco v ery to $4.89 on th e 2 3 rd , ren e w ed
w eak n ess c a rrie d th e p o u n d d o w n to a clo sin g r a te of
$4.86 o n th e 26 th , fro m w h ich it rose to $4 .8 7 % on th e
30 th . T h e S c a n d in a v ia n cu rre n c ie s, th e J a p a n e s e y en ,
a n d th e official r a te fo r th e A rg e n tin e peso p a ra lle le d th e
co u rse o f s te rlin g , b u t th e fre e A rg e n tin e r a te re m a in e d
f a ir ly ste a d y , w ith a s lig h tly firm er te n d e n c y to w a rd s
th e en d of th e m o n th . T h e official ra te fo r th e B ra z ilia n
m ilre is m ov ed u p fro m $0.0819 on D ecem b er 31 to
$0.0846 on J a n u a r y 2 a n d h e ld close to th is level u n til
th e m id d le of th e m o n th , w h en a te m p o ra ry su sp en sio n
o f official ex ch an g e p a y m e n ts o c c u rre d ; th e re a f te r th e
r a te d e clin ed to $0.0830 on th e 26 th . T h e fre e r a te fo r
th e m ilre is w as s te a d y d u rin g th e first h a lf of th e m o n th
b u t e x tre m e ly ir re g u la r a f te r su sp en sio n of ex ch an g e
p a y m e n ts.
C a n a d ia n d o lla rs d e clin ed fro m $1.01 on J a n u a r y 2
to $0.99 1 3 /1 6 on th e 26 th . T h e silv e r c u rre n c ie s, m ov ing
c o n tra ry to th e g e n e ra l tre n d , re g is te re d n e t g a in s fo r
th e m o n th .




OF DOLLARS

GOLD IMPORTS

50

a1

25

II i I
25L

JUL

1

1

GOLD EXPORTS
SEP J_________
OCT L NOV

AUG

DEC

1934

JAN
1935

F lu ctu ation s of D ollar E xch an ge M easured in T e rm s of the French
Franc and Gold M ovem en ts at N ew Y o rk (L a te s t exchange
quotation is for January 3 0 and latest gold data are for
week ended January 3 0 )
Closing Cable Rates at New York

Exchange on

France...................................
H olland.................................

Par of
Exchange
$ .2354
.4537
8 .2 3 9 7
.0663
.4033
.6806
.0891
.4537
.3267
.4537
.3267

C anada.................................

Jan. 31, 1934 Dec. 31, 1934 Jan. 30, 1935
$ .2225
.2235
4 .9 9 0 0
.06280
.3795
.6415
.0838
.2515
.1290
.2580
.3100

$ .2352
.2207
4 .9 4 2 5
.06618
.4032
.6782
.0857
.2485
.1373
.2550
.3250

$ .2318
.2177
4 .8 7 1 3
.06549
.3991
.6721
.0847
.2449
.1358
.2513
.3215

1.6931
.7187
.2026
1.7511

.9919
.3327
.0850
.7800

1 .0075
.3294
.0819
.8000

.9994
.3248
.0835
.8000

.8440
.6180

.2970
.3770
.3400

.2880
.3725
.3475

.2840
.3685
.3625

Gold Movement

T h e inflow of g o ld in to th e U n ite d S ta te s w h ich h a d
show n sig n s o f te rm in a tin g in th e firs t p a r t o f J a n u a r y
w as re su m e d in la rg e vo lu m e d u rin g th e secon d h a lf of
th e m o n th , a n d fo r th e m o n th as a w h ole im p o rts to ta le d
a b o u t $130,000,000. T h is to ta l in c lu d e d re c e ip ts of
$65,600,000 fro m E n g la n d , $22,200,000 fro m In d ia ,
$12,300,000 fro m F ra n c e , $11,600,000 fro m C an ad a,
$11,400,000 fro m H o lla n d , $3,900,000 fro m M exico,
$2,100,000 fro m C olom bia, a n d $1,500,000 fro m C h in a.
I n th e th re e m o n th p e rio d since N o v em b er 1 a p p ro x i­
m a te ly $335,000,000 of go ld h a s b een im p o rte d in to th e
U n ite d S tate s.
T h e m o n e ta ry g o ld stock o f th e U n ite d S ta te s w as also
in c re a se d in J a n u a r y b y th e n e t relea se of $800,000 of
g o ld p re v io u sly e a rm a rk e d fo r fo re ig n a c c o u n t a t th is
b an k , a n d b y th e re c e ip t a t th e m in ts a n d a ssay offices of
n e w ly m in e d d o m estic g o ld a n d sc ra p g o ld a v e ra g in g
a b o u t $2,000,000 a n d $1,200,000 a w eek, re sp ec tiv ely . In
all, th e d o lla r v a lu e of th e m o n e ta ry g o ld stock rose
a p p ro x im a te ly $150,000,000 in J a n u a r y to a new h ig h
level. I n a d d itio n to th e re c e ip ts lis te d above, $1,700,000

FEDERAL RESERVE AGENT AT NEW YORK

13

of g o ld w as im p o rte d fro m E c u a d o r a n d e a rm a rk e d on
a rriv a l, a n d w as th e re fo re w ith o u t effect on th e go ld
stock.

v elo p ed b etw een 1930 a n d 1933, h a s b een v ir tu a lly elim ­
in a te d , as th e ac c o m p a n y in g d ia g ra m in d ic ates. B etw e en
J a n u a r y 1934 a n d J a n u a r y 1935, th e fa rm p ro d u c ts
g
ro u p of th e B u re a u of L a b o r S ta tis tic s in d e x h a s show n
Central Bank Rate Changes
a n e t ad v an c e of 33 p e r ce n t a n d w h olesale p rice s of
E ffectiv e F e b ru a r y 1 th e d isc o u n t ra te of th e N a tio n a l foods have rise n 24 p e r cen t, w h ile p rice s of o th er
B a n k of Y u g o slav ia h a s b een lo w ered fro m 6 % to 5 com m odities as a g ro u p h av e re m a in e d re la tiv e ly stead y .
p e r cen t, w h ich a p p e a rs to be th e low est ra te in th e C o n seq u en tly , b o th a g ric u ltu r a l a n d n o n a g ric u ltu ra ]
h is to ry of th e b a n k .
p ro d u c ts now show a b o u t th e sam e n e t declin e in com ­
p a ris o n w ith th e 1926 level.

Commodity Prices

A f te r risin g so m ew h at in th e firs t wTeek of J a n u a ry ,
p ric e s o f a n u m b e r of im p o rta n t a g ric u ltu r a l p ro d u c ts
tu r n e d d o w n w a rd a n d show ed n e t losses fo r th e m o n th
as a w hole. T he cash q u o ta tio n fo r co rn , a f te r risin g to
98 ce n ts a b u sh e l on J a n u a r y 9, d ro p p e d to 8 8 % cen ts
on J a n u a r y 16, a n d rece d ed s lig h tly f u r th e r la te r in th e
m o n th to show a n e t loss of 5 % cen ts since th e en d of
D ecem ber. C ash w h e a t d e clin ed 5 % cen ts b etw een J a n ­
u a ry 10 a n d J a n u a r y 15, a n d co tto n lost 35 p o in ts a ro u n d
th is tim e w ith no su b se q u e n t n e t reco v ery . S u g a r a n d
ru b b e r likew ise show ed declines in J a n u a ry , d u e in p a r t
to p ric e recessions a ro u n d th e m id d le of th e m o n th .
L iv esto ck p rices, d e sp ite som e d eclin e a t m id m o n th ,
show ed n e t g a in s fo r J a n u a r y as a w hole. T he a v erag e
p ric e o f steers a d v a n c e d $1.79 f u r th e r to $10.67 a h u n ­
d re d w e ig h t, th e h ig h e st since J a n u a r y 1931, a n d th e
av e ra g e p ric e of hogs d u rin g th e secon d h a lf of th e m o n th
to u c h ed $7.97 a h u n d re d w e ig h t, th e h ig h e st since M arch
1931, b u t su b se q u e n tly rece d ed som ew hat.
A m o n g o th e r basic co m m odities, th e p ric e o f ra w silk
re a c h e d $1 .50:|/2 a p o u n d on J a n u a r y 22, th e h ig h e st
p ric e since la s t F e b ru a ry , b u t su b se q u e n tly re a c te d som e­
w h at. S c ra p steel a d v a n c e d 25 cen ts f u r th e r in th e first
h a lf of J a n u a r y to $13.50 a to n a t P itts b u rg h , a new h igh
since M ay, b u t in th e la s t w eek of th e m o n th th e re w as a
re d u c tio n w h ich ca n celed th e e a rlie r ad v an ce. L ittle n e t
ch an g e o c c u rre d in th e n o n fe rro u s m etals, a lth o u g h reces­
sions in th e secon d h a lf of th e m o n th g e n e ra lly o u t­
w eig h ed e a rlie r ad v an ces.
A s a re s u lt o f th e g e n e ra lly ris in g te n d e n c y o f fa rm
p ric e s d u rin g th e p a s t y e a r, th e d is p a rity b etw een p ric e s
of a g ric u ltu r a l a n d n o n a g ric u ltu ra l p ro d u c ts, w h ich de-

1

/

v,

<1

PER CENT
'

J

bC\

)■
■-------)

*

... ot HER
COMMiODITIES^
,

*

;V

\

V

>

V
-T * 1
FOODS
u t v .

E m p lo y m e n t a t fa c to rie s in N ew Y o rk S ta te in c re ased
c o n tra -sea so n ally fro m th e m id d le of N o vem b er to th e
m id d le of D ecem ber. T h e g a in s in th e n u m b e r of w o rk ers
re p o rte d b y th e S ta te D e p a rtm e n t of L a b o r w ere m ost
p ro n o u n c e d in th e te x tile a n d m e tal a n d m a c h in e ry
in d u strie s w h ile m o d e ra te in creases o c c u rre d in sev eral
o th e r m a n u fa c tu rin g lines. S easo n al re d u c tio n s, how ever,
becam e effective in th e clo th in g a n d fo o d g ro u p s. T he
u p w a rd te n d e n c y in D ecem b er w as a p p a re n t n o t only
in em p lo y m en t, b u t also in to ta l w age p a y m e n ts and
in p e r c a p ita e a rn in g s, b o th of w h ich rose b y m ore th a n
th e av erag e seaso n al p ro p o rtio n s. T he g a in in th e
seaso n ally a d ju s te d in d e x of p e r c a p ita e a rn in g s w as
th e la rg e st th a t h as o c c u rre d since A p ril, a n d th e in d e x
reac h ed a level 5 p e r ce n t above th a t of D ecem ber 1933.
E m p lo y m e n t a n d p a y ro lls in th e c o u n try as a w hole
in c re a se d co n sid e ra b ly fro m N o v em b er to D ecem ber,
b o th b efo re a n d a f te r a d ju s tm e n t fo r u s u a l seaso n al
ch anges. T he n e t g a in in th e n u m b e r of w o rk ers em ­
p lo y ed w as a b o u t 340,000, a n d th e rise in w eekly p a y ­
ro lls a m o u n te d to $10,800,000 ac c o rd in g to th e U n ite d
S ta te s D e p a rtm e n t o f L a b o r. T he ad v an ces w ere f a irly
g e n e ra l am o n g th e v a rio u s em p lo y m e n t g ro u p s. E m p lo y ­
m e n t in th e d u ra b le goods in d u strie s , w h ich g e n e ra lly
declin es a t th is tim e of y e a r, rose 3.4 p e r cent, a n d th e
n u m b e r of w o rk ers in r e ta il esta b lish m e n ts in c re ased
s h a rp ly to tak e care of th e h o lid a y tra d e .
D u rin g th e y e a r 1934, th e a v erag e n u m b e r of p e rso n s
em p lo y ed in m a n u fa c tu rin g in d u s trie s in th e U n ite d
S ta te s w as 14 p e r c e n t la rg e r th a n in th e p re c e d in g
y e a r, fo llo w in g a g a in of 8 p e r ce n t fro m 1932 to 1933.
T he n u m b e r of fa c to ry w o rk e rs em p lo y ed re m a in e d 14
p e r ce n t less th a n th e a v erag e fo r 1930, a n d 25 p e r c e n t
below th e 1929 av erag e, how ever.
T he n u m b e r of w o rk ers on p ro je c ts fin an ced b y F e d ­
e ra l em erg en cy o u tla y s show ed a sm all in c re ase fro m
N o vem b er to D ecem ber, la rg e ly as a re s u lt of th e em p lo y ­
m e n t o f 150,000 a d d itio n a l w o rk ers b y th e F e d e ra l
E m e rg e n c y R e lie f A d m in is tra tio n . T h e n u m b e r em ­
p lo y ed on P u b lic W o rk s A d m in is tra tio n p ro je c ts
d e clin ed 85,000, a n d th e n u m b e r of p e rso n s w o rk in g on
b u ild in g a n d m a in ta in in g S ta te ro a d s w as re d u c e d
50,000 as a re s u lt of w e a th e r co n d itio n s.

V

)
)

r

Employment and Payrolls

111
1929

FARM \ S\\
PRODUCT$v
1 _1_ v / , i
11930
1..1 . 119311 1 1 11932
1933

Production

i i i I
1934 1935

Indexes of Wholesale Prices of Farm Products, Foods, and Other
Commodities (Bureau of Labor Statistics data;
1926 average = 100 per cent)




D u rin g J a n u a r y f u r th e r g a in s w ere m ad e in im p o rta n t
b ra n c h e s of in d u s tr ia l p ro d u c tio n , c o n tin u in g th e
u p w a rd m o v em en t s ta rte d in O ctober. S tee l p ro d u c tio n
in c re a se d b y a p p ro x im a te ly o n e -th ird ov er D ecem b er,
a n d th e o p e ra tin g ra tio a t th e en d of th e m o n th w as in

14

MONTHLY REVIEW, FEBRUARY 1, 1935

excess of 50 p e r ce n t o f c a p a c ity a g a in s t a D ecem ber
a v erag e o f 35 p e r cen t. T h e d e m a n d fo r steel w as
d e riv e d p rin c ip a lly fro m th e au to m o b ile in d u s try , b u t
in c re a se d o rd e rs cam e also fro m c o n ta in e r, a g ric u ltu ra l
im p le m en t, a n d m iscellan eo u s m a n u fa c tu rin g in d u strie s .
T h e au to m o b ile co m p an ies ra is e d th e ir o p e ra tin g sch ed ­
u le s s h a rp ly in J a n u a ry , a n d it w as re p o rte d th a t o u tp u t
w as th e la rg e s t fo r a n y J a n u a r y since 1930. T h e re w ere
also m o d e ra te in c re ases over D ecem b er in c o tto n m ill
a c tiv ity a n d in b itu m in o u s coal p ro d u c tio n .
T h e J a n u a ry p ro d u c tio n g a in s o c c u rre d a t a tim e w h en
th e g e n e ra l d ire c tio n of in d u s tr ia l a c tiv ity te n d s to be
u p w a rd , a n d it is n o t c le a r now how m u c h th ese g a in s in
th e a g g re g a te ex ceed ed th e u s u a l seaso n al p ro p o rtio n s.
I n D ecem ber, on th e o th e r h a n d , th e in c re ases in p ro d u c ­
tio n o c c u rre d in m a n y in sta n c e s w h en th e seaso n al co urse
u s u a lly is d o w n w a rd . C o n seq u en tly , w h ile th e u n a d ju s te d
in d e x o f th e F e d e ra l E eserv e B o a rd rose fro m 74 p e r c e n t
of th e 1923-25 a v erag e in N o vem b er to 78 in D ecem ber,
th e in d e x a d ju s te d fo r u s u a l seaso n al v a ria tio n s rose
fro m 74 to 86 p e r ce n t. D a ily av erag e steel p ro d u c tio n
in c re a se d 27 p e r c e n t b etw een N o vem b er a n d D ecem ber,
c o n tra ry to th e u s u a l seaso n al m ov em ent, a n d sh a rp
c o n tra -sea so n al g a in s w ere also re p o rte d in w ool a n d silk
m ill p ro d u c tio n , a n d in a n th ra c ite coal o u tp u t. I n th e
au to m o b ile in d u s tr y m a n u fa c tu re of new m odels b e g an
e a rly a n d in c re a se d ra p id ly . T he D ecem b er o u tp u t
am o u n te d to 183,000 u n its a g a in s t 78,000 in N ovem ber.
N ew b u sin ess o b ta in e d b y m ach in e tool m a n u fa c tu re rs
rose in D ecem b er to th e h ig h e st lev el of th e y e a r ; p ro ­
d u c tio n of shoes a n d of le a th e r w as u n se a so n a lly m a in ­
ta in e d ; a n d m a n u fa c tu re o f tobacco p ro d u c ts a n d of
w h e a t flo u r d e creased less th a n u su a lly . O p e ra tio n s a t
m e a t p a c k in g p la n ts on th e w hole show ed o n ly a
seaso n al ch ange.
(Adjusted for seasonal variations and usual year to year growth)
1933

Metals

Dec.

Oct.

Nov.

Dec.

42 r
52 r
59
60 r

30r
34r
47
62r

32r
41r
46
67r

37r
56 r
51
66r

22
74

32r
76

23
64

50p
130p

65
75
68
62
65

65
61
67
65
63

67
71
65
66
62 p

65
75
42
103
91

82
66
67
74
81

78
73
55
100
89

95
82
87
80

123
80
75
78

113
85
73
82

30
75
36
76
65

39
56
32
71
37

43
76
30
69
46

Automobiles
M otor trucks......................................................

1934

Fuels
Bituminous coal.................................................
Anthracite coal...................................................
Petroleum, crude...............................................
Petroleum products.........................................
Electric power....................................................

69 p
82p
67 p
63 p

Building

D u rin g D ecem ber, th e v a lu e of b u ild in g a n d e n g in e e r­
in g c o n tra c ts re p o rte d b y th e F . W . D o d g e C o rp o ra tio n
fo r 37 S ta te s show ed a d ecline of 17 p e r c e n t fro m th e
p rev io u s m o n th ’s level w h ich is so m ew h at in excess of
th e u s u a l seaso n al decline, a n d as a co nsequen ce th is
b a n k ’s a d ju s te d in d e x of c o n stru c tio n v olu m e w as r e ­
d u c ed to 22 p e r c e n t of th e lo n g te rm tr e n d fro m 26
p e r c e n t in N o vem ber. P u b lic w o rk s a n d u tility con­
tra c ts d e clin ed s lig h tly m o re th a n seaso n ally , a n d o th e r
n o n -re sid e n tia l a n d re s id e n tia l c o n tra c ts d ro p p e d s u b ­
s ta n tia lly m ore th a n is u s u a l a t th is tim e of y e a r. T o ta l
c o n tra c ts w ere 55 p e r ce n t less th a n in D ecem b er 1933,
th e la rg e st recession b e in g in th e a m o u n t o f p u b lic
w o rk s p ro je c ts, w h ich re a c h e d a h ig h p o in t a t th e en d
of 1933.
T h e e x te n t of th e reco v ery in c o n stru c tio n a c tiv ity
d u rin g th e y e a r 1934 as a w hole is in d ic a te d in th e
a c co m p an y in g d ia g ra m w h ich show s c o n tra c ts a w a rd e d
in th e te r r ito r y p ra c tic a lly co term in o u s w ith th e S econd
F e d e ra l E eserv e D is tric t a n d also c o n tra c ts fo r a ll S ta te s
co vered b y th e D o dge re p o rt. I n th e case of th e N ew
Y o rk a n d N o rth e rn N ew J e rs e y te rr ito r y , to ta l c o n tra c ts
in 1934 w ere a b o u t 6 p e r c e n t la rg e r th a n in 1933 a n d
o nly a trifle in excess of th e 1932 fig u re. P u b lic w o rk s
a n d u tility p ro je c ts a n d also re s id e n tia l b u ild in g w ere
in s lig h tly sm aller v olu m e th a n in 1933 w h ile o th e r n o n ­
re s id e n tia l b u ild in g w as som ew hat la rg e r, reflectin g in ­
creases in c o n stru c tio n of e d u c a tio n a l a n d office b u ild ­
ings, p a r tly offset b y declines in fa c to ry a n d h o s p ita l
co n stru c tio n .
F o r th e 37 S ta te s fro m w h ich re p o rts a re av ailab le ,
c o n tra c ts in 1934 a g g re g a te d 23 p e r c e n t m o re th a n in
1933, a n d 14 p e r c e n t m ore th a n in 1932. P u b lic w o rk s
a n d u tility c o n tra c ts w ere 25 p e r c e n t la rg e r th a n in
1933, a n d o th e r n o n -re sid e n tia l c o n stru c tio n in c re ased
34 p e r cent, d u e p rin c ip a lly to a rise in c o n tra c ts fo r
e d u c a tio n a l a n d co m m ercial b u ild in g . C o n tra c ts fo r re s i­
d e n tia l w o rk c o n tin u e d in th e sam e a m o u n t as in 1933,
a n d w ere 11 p e r c e n t sm a lle r th a n in 1932. I n th e
ag g re g a te , all of th e in c re ase in th e c o n tra c t volu m e
over 1933 w as in p u b lic ly fin an c ed co n stru c tio n , w h ich
NEW YORKNEW
STATE
&
TOTAL 37 STATES
NORTHERN
JERSEY

RESIDENTIAL 5

RESIDENTIAL

Textiles and Leather Products
Cotton consumption........................................
W ool mill activity............................................
Silk consumption..............................................
Rayon deliveries................................................

78
99p
62
105p

OTHER
NON-RESIDENTIAL

OTHER
NON-RESIDENTIAL

Foods and Tobacco Products
M eat packing......................................................
W heat flour.........................................................
Refined sugar deliveries.................................
Tobacco products.............................................

113
88
89

Miscellaneous

Newsprint paper................................................
Machine tools.....................................................

p

Preliminary

r




Revised

37
89p
32
76p
59

PUBLIC
WORKS
& UTILITIES

Mil
1932 1933 1934

PUBLIC
WORKS
& UTILITIES
1932 1933 1934

Building and Engineering Contracts Awarded in New York State and
Northern New Jersey, and in 37 States Covered by F. W . Dodge
Corporation Report (Data for 1933 and 1934 shown relative
to 1932 as base year)

FEDERAL RESERVE AGENT AT NEW YORK

15

rose fro m $683,000,000 in 1933 to $975,000,000 in 1934, in c re ases a f te r seaso n al a d ju s tm e n t o c c u rre d d u rin g
w h ile p riv a te ly fin an ced c o n tra c ts to ta le d $568,000,000, D ecem b er in th e in d e x es of r a ilro a d fre ig h t c a r lo a d in g s
as co m p a re d w ith $573,000,000 in 1933 a n d $583,000,000 a n d th e volu m e of ch eck tra n s a c tio n s , w h ile th e in d ex es
in 1932.
of life in su ra n c e sales a n d a d v e rtis in g w ere v irtu a lly
D u rin g th e firs t th re e w eeks of J a n u a ry , a n in crease u n c h a n g e d fro m th e N o v em b er levels. M ore th a n th e
in th e ra te of b u ild in g a n d e n g in e e rin g c o n tra c t a w a rd s u s u a l seasonal decrease w as show n in sales of new p a ssen ­
w as re p o rte d . T h is w as p a rtic u la r ly th e case in re si­ g e r au tom obiles fo llo w in g an in c re ase in N ovem ber.
d e n tia l c o n tra c ts w h ich, in s te a d of th e u s u a l seasonal
decline, show ed a n in c re ase of m o re th a n 50 p e r ce n t over Foreign Trade
th e d a ily av erag e fo r D ecem ber, a n d w ere also la rg e r
D u rin g D ecem b er th is c o u n tr y ’s m e rc h a n d ise ex p o rts
th a n in J a n u a r y 1934. N o n -re sid e n tia l c o n tra c ts o th e r a n d im p o rts show ed so m ew h at m ore th a n th e cu sto m ary
th a n p u b lic w o rk s a n d u tility p ro je c ts also re g is te re d a seaso n al recession fro m th e p re v io u s m o n th . E x p o rts
sizable co n tra -sea so n al ad v an ce.
show ed th e firs t re d u c tio n fro m a y e a r p rev io u s since
M
ay 1933, th e D ecem b er to ta l of $171,000,000 b ein g 11
Indexes of Business Activity
p e r c e n t below a y e a r ago. Im p o rts , a t $132,000,000, w ere
D a ta in d ic a tiv e of th e d is trib u tio n of goods show ed a p p ro x im a te ly e q u al to th e ir D ecem b er 1933 v alu e.
ir re g u la r ch an g es d u rin g th e firs t h a lf o f J a n u a ry . T he L a rg e d ecreases in th e v a lu e of sh ip m e n ts a b ro a d of ra w
m o v em en t of m iscellan eo u s a n d less th a n c a rlo a d fre ig h t co tto n a n d u n m a n u fa c tu re d tobacco ac co u n ted fo r n e a rly
over th e ra ilro a d s in c re a se d in c o n tra s t to a u s u a l sea­ a ll of th e d eclin e in to ta l m e rc h a n d ise ex p o rts. C o tto n
so n al re d u c tio n , a n d sales of new p a sse n g e r au to m o b iles e x p o rts w ere o n ly a little ov er 60 p e r ce n t o f th e volu m e
w ere re p o rte d to h av e e x p a n d e d m o re th a n seasonally. of a y e a r ago, a n d tobacco e x p o rts w ere c u t in h a lf.
O n th e o th e r h a n d , d e p a rtm e n t sto re sales in th e M e tro ­ S u b s ta n tia l re d u c tio n s in a n u m b e r of o th e r ty p e s of
p o lita n a re a of N ew Y o rk d id n o t m a in ta in th e in crease e x p o rts w ere a b o u t offset b y la rg e g a in s in e x p o rts of
w h o lly a n d p a r tly m a n u fa c tu re d m e ta l p ro d u c ts a n d of
over a y e a r p rev io u s th a t o c c u rre d in D ecem ber.
I n D ecem ber, in c re ases o f m o re th a n th e u s u a l seasonal au tom obiles. A m o n g th e im p o rts, likew ise, m o st of th e
p ro p o rtio n s o c c u rre d in sev eral lin e s of r e ta il tra d e fo r le a d in g p ro d u c ts, n o ta b ly silk a n d w ool, c o p p er a n d tin .
w h ich d a ta a re c u rr e n tly av ailab le. S easo n ally a d ju s te d w ere receiv ed in sm a lle r vo lu m e a n d v a lu e th a n in
in d ex es of d e p a rtm e n t sto re a n d c h ain sto re sales rose D ecem b er 1933.
A s th e a c co m p an y in g d ia g ra m show s, th e d o lla r v alu e
to h ig h e r levels th a n in th e p re c e d in g few m o n th s, an d
th e in d e x of m a il o rd e r hou se sales re m a in e d a t ab o u t of e x p o rts w as la rg e r in 1934 th a n in 1933 u n til D ecem ­
th e sam e level as in N o vem b er. S ales in m o st lines w ere ber, a lth o u g h th e m a rg in n a rro w e d in th e la tte r h a lf of
co n sid erab ly la rg e r in D ecem b er 1934 th a n in D ecem ber th e y e a r. Im p o rts w ere above 1933 fo r th e firs t six
1933, th e in c re ase in d e p a rtm e n t sto re sales a m o u n tin g m o n th s, b u t te n d e d to fa ll below 1933 in th e la tte r p a r t
to 11 p e r ce n t fo r th e e n tire c o u n try , w ith la rg e r g ain s of th e y e ar. F o r th e c a le n d a r y e a r 1934, th e v a lu e of
e x p o rts a g g re g a te d $2,133,000,000, a n in c re ase of 27 p e r
in a g ric u ltu ra l areas.
A m o n g th e m ore g e n e ra l in d ex es o f b u sin ess a c tiv ity , c e n t over 1933. Im p o rts , a m o u n tin g to $1,655,000,000,
show ed a n in c re ase of 14 p e r ce n t o ver th e p re c e d in g
(Adjusted for seasonal variations, for usual year to year growth,
y
e a r ’s to ta l. T h e re s u ltin g fa v o ra b le tr a d e b a lan ce of
and where necessary for price changes)
$478,000,000 w as th e la rg e s t since 1930. T h e U n ite d
1934
1933
S ta te s D e p a rtm e n t o f C om m erce e stim ates a n in c re ase
o f 10 p e r ce n t o ver 1933 in th e q u a n tity o f goods ex­
Oct.
Dec.
N ov.
Dec.
p o rte d , a n d no ch an g e in th e vo lu m e of im p o rts, a f te r
Primary Distribution
allo w in g fo r ch an g es in th e p ric e s of th e a rtic le s e n te r­
55
56
59
58
Car loadings, merchandise and misc.........
54
54
62
in g in to o u r fo re ig n tra d e .
58
Car loadings, other..........................................
55
47
47
44
p
Exports.................................................................
MILLIONS
MILLIONS
64
64
51
58 p
Im ports.................................................................
OF DOLLARS
OF DOLLARS
99
86
88
99
Wholesale trade.................................................
Distribution to Consumer
Department store sales, U. S.......................
Department store sales, 2nd D ist..............
Chain grocery sales..........................................
Other chain store sales...................................
Mail order house sales....................................
Advertising..........................................................
New passenger car registrations.................
Gasoline consumption.....................................

70
72
71
80
68
56
36
69

71
72
63
77
70
58
50
75

70r
71
63
79
75
60
55
77

75
73
63
84
74
60
45p

58
42

57
38

57
38

62p
45 p

General Business Activity
Bank debits, outside New York C it y .. . .
Bank debits, New York C it y ......................
Velocity of demand deposits, outside New
York C it y ........................................................
Velocity of demand deposits, New York
C it y ....................................................................
New life insurance sales.................................
Factory employment, United States.........
Business failures................................................
Building contracts............................................
New corporations formed, N . Y . S t a t e ..
Real estate transfers........................................

72

63

64

71

50
55
76
47
54
63
54

41
61
78
47
25
58
50

40
60
78
43
26
60

47
59
80 p
39
22
52

General price level* ..........................................
Composite index of w ages*...........................
Cost of livin g*....................................................

132
177
135

139
180
139

140
181
139

140p
181p
138

p Preliminary

r Revised




* 1913 average=100

Foreign Merchandise Trade of the United States,
1934 Compared with 1933

MONTHLY REVIEW, FEBRUARY 1, 1935

16

I n th e case of ex p o rts, a la rg e g a in fo r th e y e a r 1934
w as m a d e b y th e sem i-finished a n d fin ish ed m a n u fa c ­
tu re s . E x p o rts of au to m o b iles m o re th a n d o u b led in
n u m b e r a n d in v a lu e c o m p ared w ith 1933. A b o u t th e
sam e q u a n tity of A m e ric a n tobacco w as so ld a b ro a d as
in 1933, b u t th e v a lu e in c re a se d 50 p e r cen t. T h e re w as
som e in c re ase over 1933 in e x p o rts of g ra in p ro d u c ts
d u rin g th e firs t h a lf of th e y e ar, b u t fo llo w in g th e d ev el­
o p m e n t of d ro u g h t co n d itio n s, th ese e x p o rts fe ll a g a in to
v e ry low levels. E x p o rts of ra w c o tto n fro m th is co u n ­
t r y w ere re d u c e d 30 p e r ce n t in volum e, to th e sm allest
a m o u n t since 1923. A m o n g th e im p o rts, c ru d e a n d m a n ­
u f a c tu r e d fo o d s tu ffs (in c lu d in g b e v erag e s) show ed a
la rg e r in c re a se o ver 1933 th a n a n y o th e r m a jo r div isio n ,
27 p e r cent. Q u a n tity re c e ip ts of c ru d e ru b b e r a n d co p­
p e r g a in e d 10 a n d 39 p e r cent, re sp ec tiv ely , a n d th e
in c re ase in th e ir v alu es, d u e to a rise in th e ir p rices,
w as s u b s ta n tia lly g re a te r. Im p o rts of ra w silk a n d of tin ,
how ever, w ere sm a lle r in v olu m e a n d v a lu e th a n in 1933,
w h ile coffee im p o rts w ere sm aller in q u a n tity b u t som e­
w h a t la rg e r in v alu e.
Wholesale Trade

T o ta l D ecem b er sales of th e re p o rtin g w h olesale firm s
in th is d is tric t a v e ra g e d n e a rly 16 p e r c e n t h ig h e r th a n
in th e p re v io u s y e a r, a som ew hat la rg e r in c re ase th a n in
N o v em b er. T he m ost s u b s ta n tia l in c re ases in sales in
a n u m b e r of m o n th s w ere re c o rd e d b y th e m e n ’s clo th in g ,
co tto n goods, d ru g , a n d s ta tio n e ry co n cern s. S izable a d ­
v an ces w ere re p o rte d also b y th e h a rd w a re , shoe,
d ia m o n d , a n d je w e lry firm s, a lth o u g h fo r each of these
g ro u p s a la rg e r p e rc e n ta g e in c re ase h a d o c c u rre d in
O c to b er o r N o vem b er. S ales of silk goods, re p o rte d on
a y a rd a g e basis b y th e N a tio n a l F e d e ra tio n of T extiles,
w ere c o n sid erab ly a h e a d of th e p re v io u s y e a r fo r th e
th ir d co n secu tiv e m o n th , a n d sales of th e p a p e r con­
ce rn s show ed som e ad v an ce. T he re p o rtin g g ro ce ry firm s,
c o n tra ry to th e fa v o ra b le co m p ariso n s re p o rte d in each
p re c e d in g m o n th since A p ril 1933, show ed to ta l D ecem ­
b e r sales s lig h tly below th e level of th e p re v io u s y e a r,
ow in g e n tire ly to th e fa c t th a t less liq u o r w as sold in
D ecem b er 1934 th a n in D ecem b er 193 3; ex clusive of
liq u o r sales th e re w as a n in c re ase in g ro ce ry sales in
Percentage
change
December 1934
compared with
December 1933
Commodity
N et
sales

M en’s clothing
.....................
Cotton goods
..............
Silk goods
...............................
Shoes
..........................
D ru gs............................................
Hardware
............................
Stationery
.......................
Paper
..............................
Diamonds
...............................
eighted a v e r a g e .........

— 0 .3 *
+ 3 1 .4
+ 1 1 .8
+ 1 7 .8 +
+ 3 6 .6
+ 1 2 .4
+ 1 4 .4
+ 7 .5
+ 4 .4
+ 2 6 .1
+ 1 4 .1
+ 1 5 .7

Stock
end of
month
+ 1 8 .1
— 12.4+
+ 1 5 .2
+ 1 9 .9
+ 9 .8
— 0 .5

Per cent of
accounts
outstanding
November 30
collected in
December

1933

1934

1 01.6
4 2 .0
4 1 .0
6 5 .0

8 9 .9
4 9 .4
4 7 .9
7 5 .3

2 3 .3
4 4 .0
4 6 .0
4 7 .9
I> ^
OQ
0 .0Q
6 0 .7

2 7 .2
4 8 .4
5 7 .9
5 1 .8
I> OQ .o
A
6 1 .9

Department Store Trade

D u rin g th e first h a lf of J a n u a r y , to ta l sales of th e
re p o rtin g d e p a rtm e n t sto res in th e M e tro p o lita n a re a of
N ew Y o rk w ere a b o u t 1 p e r ce n t below th e lev el o f th e
c o rre sp o n d in g p e rio d of th e p re v io u s y e a r, fo llo w in g
m o d e ra te in c re ases in th e p re v io u s th re e m o n th s. O n
th e basis of th ese d a ta fo r th e first p a r t of J a n u a r y , it
a p p e a rs th a t th e D ecem ber in c re ase in re ta il tr a d e h a s
n o t been m a in ta in e d .
F o r th e m o n th of D ecem ber, to ta l sales of th e r e p o r t­
in g d e p a rtm e n t sto res in th e S econd F e d e ra l E ese rv e
D is tric t w ere a little over 6 p e r c e n t h ig h e r th a n in
D ecem b er 1933, w h ich is a p p ro x im a te ly th e sam e in ­
crease as in N o vem b er, b u t in 1934 as w ell as in 1933,
D ecem ber w as a b e tte r m o n th th a n N o v em b er fo r r e ta il
tra d e , a f te r allo w ance fo r th e u s u a l seaso n al in crease.
D e p a rtm e n t sto res in th e N o rth e rn N ew J e rs e y sectio n
re p o rte d th e la rg e st g a in in sales o ver th e p re v io u s y e a r
since la s t M arch , a n d re p o rtin g sto res in E o c h e ste r,
S y rac u se, B rid g e p o rt, S o u th e rn N ew Y o rk S ta te , H u d so n
E iv e r V a lley D is tric t, a n d th e C a p ita l D is tric t show ed
la rg e r ad v an ces th a n in th e p re v io u s 5 to 7 m o n th s.
T he in c re ases in sales re p o rte d b y th e N ew Y o rk C ity
a n d B uffalo d e p a rtm e n t sto res w ere so m ew h at sm a lle r
th a n those show n in N o vem b er, a n d th e re p o rtin g sto res
in th e N o rth e rn N ew Y o rk S ta te a re a a n d in W e stc h e ste r
a n d S ta m fo rd show ed sales s lig h tly below th e lev el of
D ecem ber 1933. S ales of r e p o rtin g a p p a re l sto res in
th is d is tric t w ere 7 % P e r c e n t h ig h e r th a n in D ecem b er
1933, a la rg e r ad v an c e th a n in N ovem ber.
F o r th e y e a r 1934, to ta l sales of th e re p o rtin g d e p a r t­
m e n t sto res in th is d is tric t w ere alm o st 6 % p e r cen t
h ig h e r th a n th e y e a r 1933, c o m p ared w ith a d eclin e
of a p p ro x im a te ly th e sam e a m o u n t fro m 1932 to 1933.
A p p a re l sto re sales w ere n e a rly 11 p e r c e n t la rg e r th a n
in 1933, fo llo w in g a declin e of 4 p e r c e n t b etw een 1932
a n d 1933.

Percentage
change
net sales
Year 1934
compared
with
Year 1933
+ 2 0 .6 * *
+ 1 9 .5
+ 6 .4
— 14.0+
— 0 .1
+ 7 .4
+ 1 0 .8
+ 1 2 .7
+ 1 3 .1
+ 9 .4
+ 2 8 .8
+ 1 4 .8

* Percentage change exclusive of liquor + 8 .2 .
* * Percentage change exclusive of liquor + 8 .2 .
f Quantity figures reported by the National Federation of Textiles, Incor­
porated, not included in weighted average for total wholesale trade.




D ecem b er w h ich w as slig h tly la rg e r th a n th a t of
N ovem ber.
F o r th e y e a r 1934, to ta l sales of th e re p o rtin g w h ole­
sale firm s in th is d is tric t a v e ra g e d alm o st 15 p e r cen t
h ig h e r th a n fo r th e y e a r 1933, c o m p a re d w ith a n in ­
crease of a little over 6 % p e r ce n t fro m 1932 to 1933,
a n d a d eclin e of alm o st 25 p e r ce n t fro m 1931 to 1932.

Percentage change from
a year ago

N et isales

Locality

Dec

Northern New Jersey.......................
Northern New York State. . . .
Southern New York State.........
Hudson River Valley D istrict..
Capital D istrict.............................
Westchester and Stamford.........

+ 5 .3
+ 8 .9
+ 6 .1
+ 3 .6
+ 9 .3
+ 1 2 .4
+ 7 .2
— 0 .4
+ 8 .9
+ 4 .3
+ 1 3 .7
— 0 .6

Per cent of
accounts
outstanding
November 30
collec'ted in
Dece mber

Stock
on hand
end of
month

1933

1934

+ 6 .6
+ 8 .3
+ 7 .7
+ 3 .7
+ 4 .5
+ 1 1 .0
+ 6 .8
+ 0 .3
+ 8 .8
+ 4 .6
+ 7 .9

+
—
—
—
—
+
—

0 .8
8 .5
5 .4
1 4 .3
4 .6
4 .0
8 .2

4 6 .1
4 2 .3
4 4 .6
3 3 .6
3 7 .7
3 5 .4
2 9 .9

4 7 .1
4 8 .1
4 6 .0
3 6 .7
4 2 .5
3 8 .5
3 2 .3

Jan.
to Dec.

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

+

6 .2

+

6 .4

—

1 .2

4 2 .3

4 4 .8

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

+

7 .5

+ 1 0 .7

+

8 .4

4 4 .3

4 4 .7

FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, FEBRUARY 1, 1935

B u sin ess C o n d itio n s in th e U n ite d S ta te s
(Summarized by the Federal Reserve Board)

IN

December the Federal Reserve Board’s seasonally adjusted indexes of
industrial production and factory employment increased sharply. Wholesale
prices of farm products and foods showed a considerable advance in the latter
part of the month and in the early part of January, while prices of other
commodities as a group showed little change.
P r o d u c t io n

Index Number of Production of Manufactures
and Minerals Combined, Adjusted for Seasoned
Variation (1923-25 average=:100 per cent)

Index Numbers of Factory Employment and
Payrolls, Without Adjustment for Seasonal
Variation (1923-25 averages 100 per cent)

and

E

mploym ent

Output of basic industrial products increased in December, when it usually
declines, and the Federal Reserve Board’s index, which makes allowance for
the usual seasonal variations, increased from 74 per cent of the 1923-25 average
in November to 86 per cent in December. Activity at steel mills increased,
contrary to the usual seasonal tendency, and output at automobile factories
rose rapidly. In both of these industries there were further sharp increases in
activity in the first three weeks of January. At woolen mills and silk mills
activity increased in December, contrary to seasonal tendency, and at cotton
mills and tobacco factories it declined by less than the usual seasonal amount.
Output of petroleum increased somewhat in December and the first half of
January.
Factory employment increased between the middle of November and the
middle of December, contrary to seasonal tendency, and there was a considerable
growth in factory payrolls. Substantial increases were reported for the auto­
mobile, textile, shoe, and tire industries, while in the meatpacking industry
there was a further decline from recent high levels. Employment in retail
trade showed an increase largely of a seasonal character.
Value of construction contracts awarded, as reported by the F. W. Dodge
Corporation, showed a decline in December, partly seasonal in nature, followed
by an increase in the first half of January. For the fourth quarter as a whole
the value of contracts for privately financed projects was about the same as
in the corresponding period of 1933, while the volume of publicly financed
projects was considerably smaller than last year.
D is t r ib u t io n

Volume of freight car loadings declined less in December than is usual
at that season. Sales of merchandise by department stores showed an increase
of more than the estimated seasonal amount and were approximately 11 per
cent larger than in the corresponding month a year earlier.
C o m m o d i t y P r ic e s

1929

1930

1931

1932

1933

1934

Value of Construction Contracts Awarded (Three
month moving averages of F. W . Dodge Cor­
poration data for 37 Eastern States, ad­
justed for seasonal variation)

Indexes of Daily Average Value of Department
Store Sales (1923-25 averages 100 per cent)




The general level of wholesale commodity prices, as measured by the
index of the Bureau of Labor Statistics, advanced considerably during the
latter part of December and the early part of January, reflecting chiefly
marked increases in the prices of farm products and foods. Scrap steel prices
also increased. In the third week of January prices of grains, cotton, hides,
and rubber showed a decline from the level of the preceding week. Currently
■wholesale prices are 9 per cent higher than a year ago, reflecting an increase
of 30 per cent for farm products, an increase of 24 per cent for foods, and
little change for other commodities.
Retail prices of foods, as reported by the Bureau of Labor Statistics,
increased considerably in the latter part of December, following three months
of gradual decline.
B a n k C r e d it

During the six weeks ended January 23 seasonal return flow of currency
from circulation, further imports of gold, and disbursement by the Treasury
of funds previously held as cash or on deposit with the Reserve Banks were
reflected in a growth of member bank balances with the Reserve Banks to
$4,500,000,000, the highest figure on record and in an increase of their excess
reserves to the high level of $2,160,000,000.
Loans and investments of reporting member banks in leading cities in­
creased by $350,000,000 in the 5 weeks ended January 16. Holdings of United
States Government obligations rose $420,000,000 and an increase was shown
also in holdings of obligations guaranteed by the Government and in other
security holdings, while loans declined by $130,000,000.
Commercial paper rates, which had been reported at a range of % -l per
cent since June, declined to a general level of % per cent early in January.
Other short term open market money rates showed little change, while yields
on long term United States Treasury bonds declined from 3 to 2% per cent.
In December and January discount rates were lowered from 3 to 21/6 per
cent at the Federal Reserve Banks of Richmond, Minneapolis, Kansas City, and
Dallas, and from 2
to 2 per cent at Philadelphia, Chicago, and St. Louis.
At the Federal Reserve Bank of Atlanta the discount rate was lowered to 2%
per cent in December and to 2 per cent in January.