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R

e p

o

r t

S e c o n d

o n

B

u s in e s s

F e d e r a l

C

o n d i t i o n s

R e s e r v e

D i s t r i c t

F r o m th e F e d e r a l R e s e r v e A g e n t at N e w Y o r k
to

th e

F ed era l R eserve

N ew Y o rk

,

F ebruary 20, 1920

B u s in e s s
C u rren ts

In th e p a st th irty d a ys th ere has
been a co n tin u a tion o f th e a cu te
d em a n d fo r m o n e y , sh ow n in a
fu rth er rise in interest rates. T h e rem ark a ble d e ­
m a n d for g o o d s has con tin u ed and c o m m o d ity prices
h av e risen to th e h igh est levels ever k n ow n . A t th e
sam e tim e there h a v e b een e v id en t a slow in g u p o f
th e ra p id p a ce o f th e last six m on th s, a g row in g b e ­
lief th a t a rea ction fro m these h igh levels w as in
store, and a d isp osition to red u ce com m itm en ts.
Shares on th e s to ck m a rk et h a v e p ersisten tly d e ­
clin ed and a fu rth er co n tr a c tio n in th e v o lu m e o f
trad in g as com p a red w ith recen t m on th s has ta k en
p la ce. T h ere has b een e v id en ce also o f w an in g
sp ecu la tion in com m od ities. A fu rth er and sensa­
tio n a l fall in foreign exchan ges b ro u g h t a lm ost all
th e p rin cip a l q u ota tion s to n ew lo w levels, fro m
w h ich th e y h a v e som ew h a t recov ered .
O n th e oth er h an d th ere w as a n o ta b le increase in
th e b o o k in g o f steel orders and a p ro n o u n ce d b u o y ­
a n cy in th e steel m a rk et.
T h e tota ls o f n ew in c o r­
p o ra tion s also sh ow ed an increase o v e r th ose o f th e
tw o p reviou s m on th s a nd w ere n o t m u ch b e lo w fth e
O c to b e r m a x im u m ; b u t o n ly a fra ctio n o f th e s to ck
a u th orized is in ten d ed fo r im m ed ia te issue.
T h e e ffect o f th e increase in th e
F ederal R eserv e B a n k d iscou n t rates,
a n n ou n ced on J an u ary 21, is e v i­
d e n t in a gen erally con serv a tiv e a ttitu d e o f ban k s
and business m en tow a rd indu strial exp an sion a t
this tim e, and in a su bstan tial liq u id a tion o f sp ecu ­
la tiv e com m itm en ts. D u rin g th e last th irty d ays
there has been a grad u al red u ction in b a n k loan s
C r e d it a n d

B a n k in g

B oard

in this d istrict, m ore th a n tw o -th ird s o f w h ich has
b een in th e d eclin e o f loan s secu red b y stock s and
b on d s. Since last O c to b e r , w hen b a n k loan s in
this d istrict w ere a t th eir h igh est p o in t, th e y h a v e
d eclin ed nin e p er cen t.
T h e co n tr a c tio n o f b a n k cre d it w h ich has taken
p la ce in this d istrict, p a rticu la rly in N e w Y o r k
C ity , has n o t h ad its co u n te rp a rt in th e co u n tr y as
a w h ole. In th e fo u r w eeks en d ed F e b ru a ry 13,
th e 71 b an k s in N e w Y o r k C ity w h ich re p o rt w eek ly
t o th e F ed eral R e se r v e B o a r d red u ced th eir loan s
$178,000,000. T h e 733 re p o rtin g ban k s elsew here
in th e U n ited S tates, h o w e v e r, increased th eir loan s
in th e sam e fo u r w eek s’ p e rio d $67,000,000, th e re b y
p a rtia lly offsettin g th e decrease m a de in N e w Y o r k
C ity . T h e re d u ctio n o f loan s on stock s and b o n d s,
in so fa r as a n y has b een m a de, has taken p la ce in
this d istrict. T h u s, w hile N e w Y o r k C ity ban k s
w ere red u cin g su ch loan s $130,000,000, ban k s else­
w here k e p t th em on th e a verage a lm ost sta tio n a ry
at th e level o f a m o n th a go.
B a n k d eposits in this d istrict d e clin ed ra p id ly ,
con tin u in g th e m o v e m e n t, unusual fo r this tim e o f
yea r, w h ich was o b se rv e d a m o n th ago. T h e d e ­
p osits o f N e w Y o r k C ity b an k s d ecreased fro m
J an u ary 16 to F e b ru a ry 13 $275,000,000. O f this
$136,000,000 was in a single item o f G o v e rn m e n t
d ep osits, w h ich h a v e b een w ith d raw n ra p id ly d u rin g
th e p eriod . E lsew h ere in th e co u n tr y , d esp ite th e
increase in loan s, d ep osits h a v e d eclin ed $ 116,000,000.

T h e fo llo w in g ta b le g iv es th e im p o r ta n t figu res:

L O A N S , E T C ., A N D D E P O S I T S
(In Millions)
71 Reporting Banks
804 Reporting Banks
in New York City
All Districts*
Total
Total
Total
Total
Deposits
Loans and
Loans and
Deposits
Date
Investments
Investments
$5,017
$5,341
$15,715
$14,209
February 13, 1920
5,065
14,178
5,424
15,814
February 6, 1920
5,117
5,479
15,844
14,258
January 30, 1920
5,147
5,486
15,866
14,326
January 23, 1920
5,292
5,519
15,826
14,600
January 16, 1920
5,850 (highest)
5,397
13,699
' 15,476
October 10, 1919
5,153
4,763
13,637
12,071
January 3, 1919
*The number of reporting banks throughout the country increased from 757 on January 3, 1919, to 804 on February 6, 1920. In the same
time the reporting banks in this district increased from 65 to 71,




REPORT ON BUSINESS CONDITIONS
T h e evid en ces o f co n tr a c tio n in d ica ted a b o v e are
n o t reflected in th e rep orts o f th e F ed era l R e se rv e
B an k s. O n th e co n tra ry , m em b er b an k s h a v e
m a terially increased th eir d em an d s on th e cen tral
institu tion s, n o t o n ly in this d istrict b u t elsew here.
T h e to ta l earn in g assets o f th e F ed era l R e se rv e
B a n k o f N e w Y o r k on F e b ru a ry 20 w ere $ 1,1 00 ,0 00 ,000, n o t m u ch b e lo w th e m a xim u m fo r this b a n k
rea ch ed ea rly in J an u ary w hen th e T rea su ry requ ired
special a cco m m o d a tio n . In a d d itio n t o th e loan s
o u tsta n d in g o n F e b ru a ry 20, h ow ev er, sh ou ld b e
con sid ered $48,100,000 o f p a p er w h ich this b a n k
h a d red iscou n ted w ith oth er F ed era l R e se rv e B an k s
a nd carried as a con tin g e n t lia b ility . T h e a ggre­
ga te, $ 1,148,100,000, is th e
largest v o lu m e o f loans
thus fa r fo r this b a n k .
T h e w ith draw al fro m th e
b an k s o f G o v e rn m e n t d e­
p osits, u n til th e y are n ow
a t a m in im u m , a ccou n ts
t o a con sid era b le d egree
fo r th e increase in loan s.
T h e g o ld reserves o f th e
F ed era l R e se rv e B a n k o f
N e w Y o r k d eclin ed fro m
$ 572,000,000 on J an u ary
16 to $527,000,000 on F e b ­
ruary 20. T h is red u ction ,
w h ich has p rogressed w ith
fair con sisten cy since m id ­
sum m er, reflects n o t o n ly
th e losses o f g o ld t o th e
in terior o f th e co u n tr y
b u t th e v e r y m aterial
w ith draw als fo r exp ort.
Since J an u ary 16 g o ld
has b een w ith d raw n fro m this b a n k fo r e x p o rt,
ch iefly to S ou th A m erica , in th e a m ou n t o f $47,121,000, and $10,000,000 has b een rece iv e d fro m
C an a da .
T h e n et loss o f $37,121,000 a cco u n ts
largely fo r th e d eclin e o f $45,000,000 in g o ld reserves
since a m o n th a go. I n th e sam e p eriod th e loss o f
g o ld in th e en tire system , in clu d in g N e w Y o r k ,

th e usual seasonal rise b eg a n , b u t a t a som e w h a t
a cce n tu a te d

p a ce.

Since

J an u ary

w h en

New York City
$5,412,377
4,616,856
5,427,761
4,918,894
4,075,180

th e

F ed era l R e se rv e n otes in circu la tio n h a v e increased
$62,000,000, u n til o n F e b ru a ry 20 th e y a m o u n te d
t o $817,400,000, o n ly $10 ,00 0 ,00 0 b e lo w th e h igh
p o in t fo r 1919. A sid e fro m th e p ra ctica lly u n iversal
e m p lo y m e n t o f la b o r a t h ig h w ages, th e cu rren t
p rice scales and o th er fu n d a m e n ta l fa c to r s w h ich
p ro d u ce a d em an d fo r cu rre n cy , a t least $10,000,000
o f F ed era l R e se rv e n o te s o f this d is trict h a v e b een
sen t t o
C u b a , w h ere
U n ite d States cu rre n cy
is legal ten d er, fo r use in
m o v in g th e sugar cro p .
The

e ffe ct

of

th e s e

m o v e m e n ts has b een

re­

fle cte d in th e reserve p e r­
cen ta g e o f
this b a n k ,
w h ich fell fr o m 41.4 on
J an u ary 16 to 37.1 on
F e b ru a ry 20 a n d in th a t
of th e
sy stem
as
a
w h ole w h ich d eclin ed in
th e
sam e p e rio d fro m
45.1 t o 42.7, th e lo w e st
p o in t y e t rea ch ed .
The
a c co m p a n y in g

d i a gra m

d e p icts th e co n tin u e d rise
in d iscou n ts m a d e and
a cce p ta n ce s h eld , and th e
ea rly
increase in g o ld
reserve and th eir su bsequ en t d eclin e.
B a n k clearings in N e w Y o r k C ity fo r J an u ary
w ere $ 23,209,000,000 or close t o th e h igh figu re fo r
D ecem ber.

F r o m J an u ary, 1919, th e increase w as

a b o u t 28 p er cen t, and th e sam e increase w as sh ow n
in clearings ou tsid e N e w Y o r k .

T h e to ta ls fo r ea ch

(000 Omitted)

Week Ending
January 21
January 28
February 4
February 11
February 18

15,

circu la tio n sto o d a t th e lo w p o in t th u s fa r in 1920,

w eek o f th e cu rren t p e rio d w ere as fo llo w s :

has b een $74,000,000.




A fte r th e ra p id fall in this b a n k ’ s F ed era l R e se r v e
n o te circu la tio n w h ich t o o k p la ce a fter th e h o lid a y s ,

Six Cities Outside
New York City
$151,143
137,658
151,951
172,130
133,471

Total
Entire District
$5,563,520
4,754,514
5,579,712
5,091,024
4,208,651

FEDERAL RESERVE AGENT AT NEW YORK
M oney
R a tes

T h e co n d itio n s w h ich p reva iled
*n th e 'jtn o n e y m a rk e t d u rin g th e
p reced in g m o n th w ere co n tin u e d
in to th e p eriod ju s t p a s t w ith increasin g acuteness.
H ig h rates fo r ca ll a n d tim e m o n e y , a nd th e in a b ility
o f b ill dealers a n d com m ercia l p a p er d istrib u tin g
houses t o a ttra ct a n y w id e d em a n d d esp ite a d v a n ce d
offerin g rates, w ere in sharp co n tra st w ith th e state o f
th ings n orm a lly existen t a t this season. G o v e rn ­
m en t w ith draw als fro m th e b an k s in u n u su ally large
am ou n ts w ere a cco m p a n ie d b y flu ctu a tion s in call
m o n e y q u ota tion s ran gin g as h igh as 25 p er cen t,
w ith renew als fo r a con sid era b le p a rt o f th e p e rio d
q u o te d b etw een 10 a nd 17 p er cen t. T h e re d e m p ­
tion o f a m a tu rin g issue o f certifica tes o f in d e b te d ­
ness ea rly in F e b ru a ry a fford ed n o a p p a ren t relief
to th e m o n e y m ark et. T im e loan s con tin u e d p r a c ­
tica lly u n ob ta in a b le, th ou g h borrow ers b id 9 ^ an d
10 p er cen t, fo r m o n e y o n indu strial collateral.
L a tte rly , th e situ a tion has b e co m e easier, largely
as a result o f th e liq u id a tio n w h ich has o ccu rre d
in th e s to ck m a rk et, a nd call loan s w ere m a d e and
ren ew ed a t 6 p er c e n t.; b u t tim e m o n e y con tin u es
scarce w ith rates n o m in a lly a t 8
a nd 9 p er cen t.
C om m ercia l p a p er rates h a v e con tin u e d on th e
u p w ard tren d , a nd p rim e n am es are offered a t 6J^
and 6 % p er cen t., w ith a sm all p ro p o rtio n o f sales
re p orted a t 7 p er cen t. N e w Y o r k ban k s co n tin u e
p ra ctica lly o u t o f th e m a rk et, and th e sca ttered d is­
trib u tion ou tsid e has b een insu fficient t o a b sorb th e
v olu m e o f p ap er w h ich is b ein g offered t o th e dealers.
T h e b ill m a rk et a t this cen ter con tin u es in a ctiv e , and
sales o u t o f to w n are o n ly in lim ited a m ou n ts. D e a l­
ers early in th e p e rio d a d v a n ce d th eir rates t o 5 j^
to 5 % fo r p rim e m em b er bills, w hile th e m in im u m
p urch ase rates o f th e F ed era l R e se rv e B a n k ru led
fro m 534 to 53^ p er cen t.
T h e S tock
M a rk et

H e a v y -^ liq u id a tion has b een in
progress on th e s to ck exch an ge, and
m a n y large d eclines h a v e b een re­
co rd e d . T h e d eclin e in s to ck prices w h ich h ad
p roceed ed in an o rd erly m a n n er since th e b e g in ­
n in g o f th e y ea r in a m a rk et ch a ra cterized gen erally
b y p rofession a l op era tion s w as ra p id ly accelera ted
d urin g th e p a st th irty d ays, and stock s a t tim es w ere
pressed u p on th e m a rk et in a m an ner a p p a re n tly
regardless o f p rice. T h e increased ten sion in th e
m o n e y situ ation , and co n d itio n s b ord erin g u p o n
d em ora liza tion in th e foreig n exch an ges, w ere in
p a r t respon sible fo r th e d eclin e; a n d in a d d itio n to
d o m e stic selling there w ere evid en ces o f a co n sid e ra ­
ble v o lu m e o f liq u id a tion fo r foreig n a cco u n t, w h ich




ap p eared p a rticu la rly a m o n g th e b e tte r class o f rail
sto ck s. A v e ra g e o f d a ily sales fo r a con sid erab le
tim e w ell e x ceed ed th e m illion m ark. R e c e n tly ,
th e m a rk et has d isp la y e d a steadier to n e . S om e o f
th e m ore sp e cu la tiv e issues h a v e sh ow n losses fro m
th e h igh p o in t o f last N o v e m b e r , ru n n in g t o 40 p er
cen t, o r m ore. A rep resen ta tiv e list o f 20 industrials
d eclin e d fro m 119 o n N o v e m b e r 3 t o 79 on F e b ru ­
a ry 5, an avera ge o f 34 p er ce n t. - R a ils h a v e h eld a t
a b o u t th e re co rd lo w levels estab lish ed in D e ce m b e r,
a lth o u g h th ere w as a s p a sm o d ic r e c o v e r y in th e last
week. R a ilr o a d issues a vera ge a b o u t 10 p o in ts (or
1 2 ^ p er ce n t.) b e lo w a y ea r a g o , w h ile industrials
are still a b o u t th e sam e d egree a b o v e F e b ru a ry o f
1919. F a llin g p rices w ere a tte n d e d b y decreasin g
sales, th e to ta l o f J a n u a ry tran saction s o n th e N e w
Y o r k S to c k E x ch a n g e rea ch in g .19,600,000 shares.
T h is w as a d eclin e o f 4,60 0,00 0 shares as co m p a re d
with^the a b o v e tra d in g o f D e c e m b e r b u t 8 ,000,000
shares a b o v e J a n u a ry o f 1919.

The B ond
M a rk et

T h e gen eral level o f b o n d p rices has
fu rth er d e clin ed since th e re p o rt in
J a n u a ry a n d th e avera ge o f 40 listed
issues rea ch ed th e lo w e st lev el o n re co rd on F e b ru a ry
13, b ein g 7.82 p o in ts b e lo w th e avera ge a t th e
b e g in n in g o f 1919. Sales fro m J an u ary 1 t o d a te
aggregate a p p ro x im a te ly $578,000,000, w h ich is
a b o u t 28 p er ce n t, greater th a n d u rin g th e c o r ­
resp on d in g p e rio d o f 1919, b u t sales h a v e n o t b een
as h e a v y as d u rin g D e c e m b e r .
L ib e r ty b o n d s w ere u n der h e a v y pressure d u rin g
th e last w eek in J a n u a ry a n d th e first w eek in F e b ru ­
a ry, w h en th e m o n e y m a rk et was exp erien cin g th e
greatest strain o f th e y e a r a n d fo re ig n exch an ges h a d
d e v e lo p e d extrem e w eakness. A fte r rea ch in g th eir
lo w e st p rice le v e l d u rin g th e first w eek in F e b ru ­
a ry, a d eclin e o f a b o u t 2 Y 2 p o in ts sin ce th e first o f
J an u ary, L ib e r ty s h a v e h eld so m e w h a t firm er, in
s y m p a th y w ith easier m o n e y a n d firm er foreign
exch an ges, w hile o th e r b o n d s h a v e co n tin u e d to
d eclin e.
A t th e close o f J a n u a ry, S ta te a n d m u n icip a l b o n d s
w ere selling a t p ra ctica lly th e lo w e st p rices rea ch ed
a t a n y tim e d u rin g th e w ar p e rio d .
Sales o f such
securities d u rin g J a n u a ry a m o u n te d to $68,000,000
as again st $ 81 ,000,000 in D e ce m b e r.
In crea sed a c tiv it y in th e selling o f foreign secu ri­
ties is re p o rte d , b o t h w ith resp ect t o A m e rica n secu ri­
ties fo rm e rly h eld a b ro a d , a n d issues o f foreign g o v ­
ern m en ts, m u n icip a lities a n d co rp o ra tio n s.

REPORT ON BUSINESS CONDITIONS
N ew F ren ch
B o th th e F ren ch a nd B elg ia n
a n d B e l g i a n G o v e r n m e n ts ja r e offerin g in this
Issu es
m a rk et th rou g h b an k in g houses a cting as a gen ts, th eir new intern al 5
p er cen t, p rem iu m loans. T h ese b o n d s p resen t u n usual features in G ov ern m en ta l securities. T h e y
are red eem a ble in sem i-annual draw in gs a t 150 p er
cen t., i.e ., 750 fra n cs fo r each 500 fra n c b o n d . A t
th e cu rren t ra te o f exch an ge these securities offer an
extrem ely h igh ra te o f interest to purchasers in this
co u n tr y , still fu rth er t o b e in creased, in va ria b le
am ou n ts, b y th e p eriod ica l red em p tion a t a 50 p er
cen t, p rem iu m o v e r th e n om in a l a m ou n t o f th e b o n d ,

F O R E IG N

F o r e ig n
E xchan ge

T h e first w eek o f th e p e rio d
sh ow ed th e m o st co m p le te d e m o ra liza tio n o f th e e xch a n ge m a rk e t
k n o w n in this gen eration . Sterlin g fell t o a re co rd
figure o f 3 .1 8 , F re n ch fran cs w en t t o 15.15, a n d
Ita lia n lire t o 19.72. T h e re was later a con sid era b le
re c o v e r y , e sp ecia lly in sterling, w h ich rose on F e b ru a ry 13th t o $3.43, a to ta l ga in o f 25 p oin ts. T h ere
was likew ise a reversal in th e m o v e m e n t o f Japanese
exch an ges w h ich h a v e in gen eral b een fa v o r a b le to
th a t co u n tr y , b u t h a v e this m o n th fallen b e lo w th e
p o in t o f n orm a l p a rity . T h e re w as co n cu rre n tly
a fu rth er fa ll in C an a dian ex ch a n g e ; o u r d oP a r rose
t o a p rem iu m o f as h igh as 1 7 j^ p er cen t. T h e d rift
o f th e p rin cip a l rates is sh ow n in th e fo llo w in g t a b l e :

EXCHANGE

Week Ending

RATES

JANUARY 24
JANUARY 31
High
Low High
Low
England................................................ 3.68^
3.59^ 3.0034
3.49M
France..................................................
11.60
12.10
13.32
13.42
Italy.....................................................
13.72
14.19
14.68
15.67
Spain....................................................
18.95
18.55
18.70
18.25
Argentina.............................................
43.25
43.12j^
43.25
43.12}^
Hong Kong...........................................
97.50
94.50
99.00
94.50
China (Shanghai).................................. 160.00
158.00
163.00
156.00
Japan...................................................
49.75
49.75
49.75
48.00
T h e G o ld
' I n th e m ain th e fa ll in E u ro p e a n
P r e m iu m
exch an ges, w h ich has, o f cou rse,
a n (j
b een general, a n d n o t con fin ed t o
t\
;
i
relations w ith th e U n ited S tates,
e p r e c ia e
represents largely an en d e a v o r t o
C u r r e n c ie s
a d ju st ou r cu rren cy and th a t o f
oth er n ation s t o th e in flated and corresp o n d in g ly
d e p recia ted curren cies o f E u rop e. T h is is rev ealed
b y th e rise in th e g o ld p rem iu m in L o n d o n step b y
step w ith th e fall in sterling. T h ere n orm a lly exists
b etw een all cou n tries w h ich h a v e ex ten d e d tra d e
w ith ea ch oth er, a certain b a la n ce b etw een th e p rice
level, th e state o f cu rren cy and th e ra te o f exch an ge,
T h u s, fo r exam p le, in G rea t B rita in , p rices since th e
w ar b eg a n h a v e risen a t least on e-th ird m ore th a n
in th e U n ited S tates, w h ich ro u g h ly corresp on d s to
th e fall in exch a n ge and th e a m ou n t o f th e p re v a ilin g g o ld p rem ium . In term s o f g o ld th en , th e general
p rice b a la n ce b etw een th e tw o cou n tries rem ains in
a b o u t th e sam e corresp on d en ce as b efore . M o r e o v er, th e a ctu a l q u a n tity o f A m erica n p ro d u cts serio u sly a ffected b y p resen t exch an ge rates is rela tiv e ly
sm all. S o fa r as th e great p ro p o rtio n o f ou r e x p o rts
is con cern ed , th e y m u st b e ta k en a t th e p rices o b ta in a b le, fo rc in g a corresp on d in g p rice in th e d ep re ciated cu rrencies o f E u rop e. T h e re is a p re v a le n t
idea th a t th e p o st-w a r needs o f E u ro p e h a v e en orm o u sly increased ou r exp orts t o th a t con tin e n t, and
th a t it is this w h ich has crea ted th e p resen t d istu rb -




FEBRUARY 7
FEBRUARY 14
High
Low
High
3.49)4
3-18
3.43
13.44
15.15
'13.92
16.08
19.72
17.62
17.9517.00
, I 17.60
43.12^
43.00
, 43.25
99.50
97.00
106.25
163.00
161.00
167.00
48.75
48.00
48.62j^

Low
3.35M
14.55
18.77
17.45
43.12}^
102.00
159.00
48.25

in g situ a tio n . T h is has little ju s tifica tio n in fa c t
O n th e w h ole, w ith G erm a n y , A u stria and R u ssia
o u t o f th e m a rk et, th e p ro p o rtio n o f o u r e xp orts to
E u ro p e has n o t sen sibly ch a n ged . I t w as 60 p er
cen t, in 1913. I t was 63 p er cen t, last yea r. T h a t o f
E n g la n d , F ra n ce a n d It a ly has som ew h a t a u g m en ted ,
b u t even h ere th e gain is re la tiv e ly sm all. T h e se re­
la tion s are cle a rly b ro u g h t o u t in th e d ia gra m s o n th e
n ex t p age.
E n g la n d ’ s
M u c h has b een said as t o th e
T rade
h ig h ly u n fa v o ra b le state o f E n g la n d ’ s trad e and b alan ces.
Y et a
rev iew o f her exp orts fo r th e y e a r show s an u n b rok en
rise, m o n th b y m o n th , t o re co rd figu res; and a co r resp o n d in g decrease in her a dverse b alan ces. F o r
1919 th is b a la n ce w as 669 m illion s sterlin g ; b u t a
large p a rt o f im p o rts w as fo r re sto ck in g , n o w a p p a re n tly w ell a d v a n ce d . J a n u a ry ’ s figures sh ow ed a
m a rk ed im p ro v e m e n t. E x p o rts w ere a h u n d red
p er cen t, o v e r eith er 1918 or 1917, a n d a t th e ra te
o f six b illion s o f o u r m o n e y fo r th e y e a r; w hile, ev e n
w ith h e a v y c o t to n ta k in gs, im p orts w ere u p less
th a n 50 p er cen t, o v e r th ose years. S u ch a gain ,
co n tin u e d , w o u ld so o n g iv e G rea t B rita in an e x p o rt
b a la n ce in her fa v o r , a th in g she has n o t h a d in lo n g
years. T o this is t o b e a d d ed th e e stim a ted h a lf
b illio n sterling o f so -ca lle d “ in v isib le e x p o rts ,”
sh ip pin g ch arges a n d in terest; w h ich v e r y co n sid era b ly exceeds th e in terest o n her fo re ig n b o rrow in gs.

FEDERAL RESERVE AGENT AT NEW YORK

Our Import Dollar, 1914

Our Import Dollar, 1919

Our Export Dollar, 1914

Our Export Dollar, 1919

C a n a d ia n
T rade

O ur fin ancial and
F o r e ig n
The
co n tin u e d
e co n o m ic r e l a t i o n s
T rade
and u n p reced en ted
w ith C an a d a h av e
fall in exch an ge has
b ro u g h t ren ew ed a pp reh en sion o f
rea ch ed a p o in t m eritin g serious
a sharp co n tr a c tio n in o u r la rg e
a tte n tion . C an a dian exch an ge has
v o lu m e o f foreign tra d e , w ith a
fallen t o a d iscou n t o f 15 p er cen t,
or m ore, w h ich , w ith C a n a d a ’s
co n se q u e n t d istu rb a n ce o f the
p rice level a b o u t th e sam e as ou r
gen eral business o f th e co u n try .
ow n , is eq u iv a len t to a corre­
I t sh ou ld b e rem em bered , h o w ­
s p o n d in g t a r iff o n A m e r ic a n
ever, th a t, o u r foreign trad e, even
a t th e p resen t large v o lu m e , has
g o o d s.
C an a da w as, b e fo re th e
war, n ex t t o E n g la n d , ou r largest
n o th in g lik e th e im p o rta n ce w h ich
single cu stom er. O u r tra d e th ere
foreign trad e possesses, fo r exa m is still larger th an th e w h ole o f
P^e ’ *n a c o u n try lik e E n gla n d .
Principal Exports of 1919 in
In th e latter, in n orm a l tim es
ou r trad e w ith A sia, and h alf
Percentages
again as great as th a t w ith all
fo re ig n business p ro b a b ly exceeds
S ou th A m erica .
C an a d a has p rosp ered a lm o st
a q u a rter o f th e entire trad e o f th e n ation . In this
as m u ch fro m th e w ar as this co u n tr y . In spite o f
co u n tr y it ca n h a rd ly exceed 8 or 10 p er ce n t.;
th e d ecreased p ro d u ctio n o f its farm s its ex p o rts fo r
m o s t estim ates are, in d eed , co n sid e ra b ly low er th an
th e last th ree years h a v e fa r ex ceed ed its im p o rts
this. N o r has th e a ctu a l exp an sion d u rin g the
w ar p e rio d b een a n y th in g lik e as large as is p o p ­
a n d reversed th e u n fa v ora b le b a la n ce o f fo rm e r years.




REPORT ON BUSINESS CONDITIONS
u la rly su pp osed .
In p h y sica l v o lu m e it p r o b a b ly
d oes n o t m u ch exceed 40 p er cen t, fo r exp orts,
and v e ry little fo r im p o rts ; a llow in g fo r fiv e years o f
n orm al tra d e g ro w th , th e p resen t p ro p o rtio n s m ea s­
ured in ton s, bales and b arrels, are less th a n on eq u a rter greater th a n b e fo re th e w ar. In o th e r w ords,
if it w as 7 or 8 p er cen t, th en , it is n o t m u ch o v e r 10
p er cen t. n ow .
M o r e o v e r , ou r exp orts h a v e b een largely o f indispensables, co m m o d itie s in w h ich this c o u n tr y has
rela tiv ely sm all co m p e titio n . O ur p rin cip a l e x p o rt
staple is still c o t to n and even here, a lth ou g h m ea s­
ured in dollars th e a m o u n t is v e r y large, th e a ctu a l
v o lu m e o f sh ipm en ts in th e last tw e lv e m on th s has
b een b e lo w p re-w a r years. E n g la n d ’ s co tto n in d u stry
seem s rem a rk a b ly p rosp erou s, b u t G e r m a n y ’s textile
m ills, fo rm e rly ou r secon d largest b u y ers, are n o t y e t
fu n ctio n in g t o a n y con sid era b le exten t. T h e re has
been an en orm ou s exp an sion in ou r sh ipm en ts of
m ea t and oth er fo o d p r o d u c ts ; and this has been
larger in th e last y ea r th a n in a n y y ea r o f th e war.
T h is was o b v io u s ly a b n orm a l and rep resen ted a c o n ­
siderable stock in g u p o f d ep leted supplies. O n F e b ­
ru ary 16 th e m ea t p a ck e rs ’ in stitu te issued a b u lletin
statin g th a t m ea t exp orts h ad p ra ctica lly ceased, th a t
E n g la n d has n ow large supplies on h an d . T h e sam e
was true o f oth er neutral cou n tries, and sales to G er­
m a n y u n der existin g con d ition s w ere n o t feasible.
O n th e oth er h a n d , th e exp an sion in ou r foreign sh ip­
m ents o f iron and steel m a n u fa ctu res has b een a lm ost
as great as th a t o f th e m ea t tra d e ; and on latest
reports this show s n o signs o f d im in u tio n ; q u ite the
reverse. C o p p e r sh ipm en ts rem ain rem a rk a b ly low ,
and m u st in e v ita b ly exp a n d w ith th e rev iv a l o f in d u s­
tr y in E u rop e. H ere, G erm a n y was fo rm e rly ou r
largest cu stom er and it is n o w b u y in g v e ry little.
E sp ecia lly n ota b le is th e rela tive d eclin e in ou r im ­
p orts fro m E u ro p e and th e great exp an sion o f th ose
from South A m e rica and A sia w ith rela tiv ely little
expansion in ou r exp orts to these cou n tries.
In
oth er w ords, w e h a v e b een selling h ea v ily t o E u ro p e
and b u y in g fro m E u ro p e rela tiv ely little. T h e re­
verse has b een true o f ou r trad e to S ou th A m erica
and to th e O rien t.
F o r th e m o n th o f J an u ary, 1920, th e su m m ary
figures o f th e D e p a r tm e n t o f C o m m e rce sh ow im p orts
a m ou n tin g to $474,000,000, ex ceed ed on ly in S ep ­
tem b er and N o v e m b e r o f 1919. E x p o rts fo r J a n u ­
a ry a m ou n ted to $730,000,000, and these were
greater in d olla r va lu e th a n in a ny p rev io u s m o n th
e x ce p t Jun e and N o v e m b e r o f 1919. In th e o p in io n
o f exp orters th e F e b ru a ry figures fo r exp orts will n o t
reach a n y such to ta l, th e result o f th e d istu rb a n ce
in th e foreign exch an ge m a rk et. T h e b a la n ce o f




cu rren t orders, p a rticu la rly fo r luxuries, d eclin ed
fro m 10 to 25 p er cen t.
W a n in g

C arefu l in q u iry a m on g m erch an ts

S p e c u la tio n

an d th e w arehouses in d ica tes th a t
m a n y o f th e large sp e cu la tiv e ly h eld
m erch an d ise stock s su ch as c o t to n g o o d s, raw silks,
leath er a n d th e lik e, w h ich h a v e b een ru m o re d or
re p o rte d in re ce n t m o n th s h a v e t o a co n sid e ra b le
d egree b een liq u id a te d . A p o ssib le e x c e p tio n is
th a t o f raw silk o f w h ich th e v o lu m e in th e w arehouses
m u ch exceeds th e n orm a l. H ig h m o n e y , fa llin g e x ­
ch an ges, d eclin in g s to ck and grain m a rk ets, h a v e all
c o m b in e d to in d u ce a gen eral co n s e rv a tis m ; and
there is a feelin g th a t th e h e a d lo n g p rice a d va n ces o f
last yea r h a v e ca rried valu es to an in flated level
fro m w h ich som e re a ctio n is in e v ita b le .
C o n se ­
q u e n tly th e d isp o sitio n a m o n g ca u tiou s m erch an ts
has b een t o re d u ce stock s o f g o o d s o n h a n d t o
a m ou n ts su fficien t t o co v e r n ear needs o n ly , w hile
on th e selling side, greater d iscrim in a tion is b e in g
exercised in th e ch o ice o f cu stom ers a n d th e a c c e p t­
an ce o f orders fo r fu tu re d e liv e ry . R e p o r ts fro m
th e W e s t and S ou th , h o w e v e r, in d ica te th a t this fe e l­
ing is less p re v a le n t in th o se section s th a n here.
C o m m o d ity
P r ic e s

N e w record s in th e p rice levels
alike o f this co u n tr y a n d o f E n g la n d
w ere establish ed again fo r F e b ru ­
ary 1. D u n ’ s in d e x n u m b e r o f w h olesale c o m m o d it y
q u o ta tio n s rea ch ed 253.7, a rise o f 15 p er cen t, o v e r
F e b ru a ry o f a y ea r a go, w h ile B ra d s tre e t’ s n u m b er
record s an even larger a d v a n ce , rea ch in g 20.86, a
gain o f 18.3 p er cen t. Still m ore n o ta b le was the
a d v a n ce o f prices in E n g la n d w here th e E c o n o m is t’ s
in d ex rea ch ed 7,768 a t th e en d o f J a n u a ry, a gain o f
a b o u t 33 p er cen t, o v e r a y ea r a go. T h is con tin u e d
liftin g o f th e p rice levels a ppears t o b e w o rld w ide
in ch a ra cter. I t has b een as k e e n ly fe lt in A sia o r
in E g y p t as, fo r exa m p le, in th e n eu tral cou n tries
im m e d ia te ly a d ja ce n t to th e th ea tre o f w ar. T h a t
it sh ou ld still g o o n m ore th a n a yea r a fte r th e war,
and in d eed m ore th a n a y ea r a fter d e m o b iliz a tio n
h ad a ctiv e ly b e g u n , o b v io u s ly suggests th a t th e
im m ed ia te req u isition s o f th e w ar, fo r m en , m aterials
and m o n e y w ere n o t th e sole fa cto rs a t w o r k ; and
since th e A rm istice it is e v id e n t th a t on e o f th e im ­
p o rta n t influences in m a n y cou n tries has b e e n th e
co n tin u e d d ilu tio n o f th e m o n e y sto ck . T h is has
b een esp ecia lly e v id e n t in cou n tries lik e G erm a n y ,
w here th e n o te increase has a m o u n te d t o m ore th an
50 p er cen t, in th e la st fifteen m on th s. I t has been
less e v id e n t in cou n tries lik e E n g la n d , a n d still less
in th e U n ite d States.

FEDERAL RESERVE AGENT AT NEW YORK
F a ilu r e s

D u n ’ s sta tem en t o f failures fo r
this F ed era l R e se rv e D is tr ic t fo r
Jan u ary sh ow ed to ta l liabilities o f b u t $1,212,644
as com p a red w ith $3,258,200 fo r J a n u a ry ,1919. T h e
n u m ber o f failures rep orted d eclin ed fro m 134 to
103. F o r th e co u n tr y at large th e J an u ary failures
were n o t o n ly b elow th e low record o f D e c e m b e r b u t
were th e sm allest o f a n y J an u ary on record .

C o tto n
M a rk et

In th e earlier p a rt o f th e m o n th
there w as a p ro n o u n ce d recession
fro m th e high p rice levels w h ich
h av e been p reva ilin g , fo llo w e d b y a m a rk ed re co v e ry .
E x p o rts and m ill takin gs co n tin u e d in large v o lu m e ,
alike fo r J an u ary and fo r th e six m on th s en din g
J an u ary 31. T o t a l exp orts expressed in bales w ere
larger b y h alf th a n in th e corresp on d in g m on th s
last year. D o m e s tic m ill co n s u m p tio n in J an u ary
was th e largest o f a n y m o n th since 1917 and th e
rep orted n u m b er o f a ctiv e spindles establish ed a new
h igh record . E x p o rts are n o w a p p roa ch in g p re ­
w ar levels, even w ith G erm a n y o u t o f th e m ark et.
B u t as a m p le stock s are rep orted fro m E n g la n d , this
high foreign d em a n d m a y som ew h a t decrease.
In d ia ’s c o t to n cro p this y ea r is fa r a b o v e th e a verage,
and a b o u t 40 p er cen t, greater th a n last year. T h is
increase com p en sa tes som ew h a t fo r th e sh ort cro p
in this co u n try . T h e p rev a ilin g h igh p rices fo r c o t ­
to n g o o d s h a v e p ro d u ce d an ex cited sp ecu la tion in
c o t to n c o m p a n y shares in E n g la n d and th e d em a n d
fo r c o t to n m a k in g m a ch in ery fro m B elg iu m , J ap an
and oth er cou n tries is h e a v y .

Iro n and
S te e l

A n u n a b a ted d em a n d , alike d o m estic a n d foreig n , is re p o rte d in th e
iron trades, w ith a corresp o n d in g
te n d e n cy to even higher prices. Steel in g o t p r o ­
d u ctio n w as rep orted as sligh tly u n d er th a t o f J a n u ­
ary a y ea r a go, b u t th e te n d e n cy is u p w a rd rath er
th a n d ow n w a rd , as is ev id en ced in th e unfilled orders
o f th e U n ited States Steel C o rp o ra tio n . T h e se in ­
creased m ore th a n a m illion ton s in J an u ary, w h ich ,
fo llo w in g a gain o f 1,137,030 ton s in D e c e m b e r , g a v e
a to ta l increase b e y o n d th a t o f a n y tw o m o n th s ’
p eriod . T h e to ta l orders on th e b o o k s on F e b ru a ry 1
w ere th e h ig h est since th e w ar p e a k o f A u g u st, 1917.
A lth o u g h th e m ills are rep orted as ru n n ing o n ly at
a b o u t 80 p er cen t, ca p a c ity , this is d u e ch iefly to
p h y sica l con d ition s. B essem er p ig is q u o te d as high
as $43 p er ton and steel b illets a t P itts b u rg h a t $53.
E x p o rts o f iron and steel m a n u fa ctu res fo r 1919 e x ­
ceed ed a billion dollars.




B u ild in g
O p e r a tio n s

P ro sp e cts fo r h e a v y b u ild in g o p e ra tion s are sh ow n in th e rep orts
o f co n te m p la te d p ro je c ts g iv e n b y
th e F . W . D o d g e C o m p a n y , w h ich fo r J an u ary
to ta le d $ 112,209,100 fo r th e d istrict and o v e r h alf
a b illio n fo r th e states n o rth o f th e O h io and east o f
th e M issou ri R iv e r. A c tu a l co n tra cts a w arded in
J an u ary to ta le d $ 79 ,57 0 ,00 0, w h ich was m a n y tim es
th a t o f a n y p re v io u s yea r, and a cco rd in g to th e
D o d g e co m p u ta tio n s , eq u a l to th e sum o f all J an u ary
co n tra cts since th e b e g in n in g o f th e w ar. C o n tra cts
fo r th e n orth ea st se ctio n o f th e co u n tr y to ta le d
$ 235,000,000, w h ich again w as equ al to m u ch m ore
th a n th e p re ce d in g tw o years. B u ild in g perm its
in 131 cities, as re p o rte d t o B ra d s tre e t’ s, to ta le d
$112,742,973, n early fiv e tim es th a t o f a yea r ago,
and n early equ al t o th e h igh level establish ed in
D e ce m b e r. In d u stria l b u ild in g co n tin u e d to p re ­
d o m in a te , a lth ou g h th e a m ou n ts fo r residen tial and
business b u ild in gs w ere large.

I m m ig r a tio n

W h ile a tu rn in th e tid e o f E u ro p ean im m ig ra tion is re p o rte d to be
in p ro s p e c t, n o h e a v y increase as
co m p a re d w ith a y ea r a g o has y e t ta k en p la ce . B y
far th e larger p a rt o f th e n ew arrivals are fro m Ita ly
and rep orts fro m th a t c o u n tr y are th a t th e p ro s ­
p e ctiv e im m ig ra tion fro m th ere this yea r will b e
h e a v y ; b u t th e a p p lica tion s fo r passports are b ein g
m ore ca refu lly scru tin ized th a n b e fo re and fo r th e
m o s t p a rt th e arrivals represen t a return o f th ose
w h o h ad go n e b a c k t o th eir n a tiv e cou n tries d u rin g
th e w ar. T h e arrivals and d epartu res b y m on th s
f o ll o w :

Immigrant Aliens
9,432
July.............................
August.........................
9,430
September....................
20,577
October........................
24,641
November....................
17,557
December.....................
84,529
January........................
25,057
Total.....................

L abor

141,223

Emigrant Aliens
July.............................
August.........................
September....................
October........................

25,354
32,901
29,746
25,300

Total..................... 113,301

R e p o r ts t o th e N e w Y o r k S tate
In d u stria l C om m ission sh ow ed th a t
th e n u m ber o f w orkers e m p lo y e d in th e fa cto rie s in
Jan u ary m a in ta in ed th e rate o f th e gain sh ow ed b o th
b y D e c e m b e r and N o v e m b e r. N o ta b le ch an ges o v e r
th e p re ce d in g m o n th w ere, h o w e v e r, few . T h e steel

REPORT ON BUSINESS CONDITIONS
p la n ts rep orted fu rth er increase in th e n u m b e r o f
m en e m p lo y e d ; there w as a 37 p er cen t, increase in
the n u m ber o f p ia n o w orkers, due t o th e w an in g o f

a strike. T h e o n ly n o ta b le decrease w as 14 p er
cen t, in th e n u m b e r e m p lo y e d in th e p r o d u c tio n o f
bevera ges fro m D e c e m b e r t o J an u ary.

T h i s r e p o r t is p r e p a r e d m o n t h l y f o r t h 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 is s u e d f o r t h e
i n f o r m a t io n o f m e m b e r b a n k s a n d t h o s e w h o h a v e c o n t r ib u t e d t o w a r d its p r e p a r a t io n .
A d d it io n a l
c o p i e s m a y b e o b t a i n e d b y a d d r e s s in g
FEDERAL

RESERVE

AGENT,

F ed eral R eserve B a n k o f N ew Y o rk .
15 N a s s a u S t r e e t , N e w Y o r k .