The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
(The article on the last page deals with the Constancy of Reserve Bank Credit)
MONTHLY REVIEW
of Credit and Business Conditions
S e c o n d
Federal Reserve A gen t
F e d e r a l
R e s e r v e
Federal R eserve Bank, New Y ork
Business Conditions in the United States
RODUCTION of basic commodities and factory
employment decreased in November. Distribution
of merchandise by wholesalers and retailers was
somewhat less active and wholesale prices showed a slight
further recession.
P
P r o d u c t io n
Production in basic industries decreased about 2 per
cent, in November. The decline was due chiefly to re
duced production of iron and steel and smaller sugar
meltings. The Federal Reserve Board’s new index of
factory employment, which is shown by the accompany
ing chart, also declined due to lessened activity at iron
and steel plants and large seasonal reductions at clothing
establishments. The volume of employment is now 2 per
cent, smaller than in the spring but 3 per cent, larger
than a year ago. Contract awards for new building
were smaller in November than in October in all report
ing districts except New York but were 20 per cent,
larger than a year ago.
Final estimates by the Department of Agriculture
show larger yields of corn, oats, tobacco, and cotton than
in 1922, and smaller yields of wheat, hay, and potatoes.
The total value of agricultural production at December 1
prices was 12 per cent, larger than in 1922. Each of the
ten principal crops except wheat showed an increase in
value.
PERCENT.
Production in Basic Industries—Combination of 22 Individual
Series Corrected for Seasonal Variation (1919 Average nr
100 Per Cent.)
D is tr ic t
January 1, 1924
T rade
Railroad freight shipments in November showed about
the usual seasonal decline from October but were in
heavier volume as compared with previous years. Whole
sale trade was 13 per cent, less in November than in
October, which is more than the usual decrease at this
season, but sales continued to be slightly larger than a
year ago. Sales of hardware, drugs, and meat were larger
than in November 1922, while sales of shoes were smaller.
Retail business was smaller than in October in most lines.
Sales of mail order houses declined more than sales of
department stores but were 11 per cent, larger than a
year ago.
P r ic e s
The Bureau of Labor Statistics index of wholesale
prices declined in November to a point 4 per cent, lower
than last spring and about 3 per cent, lower than a year
ago. The chief reductions occurred in prices of animal
products, fuel, and house furnishings. Prices of clothing
and crops, on the other hand, increased and the latter
group averaged higher than in any month since 1920.
During the first half of December, prices of sheep, beef,
sugar, cotton, silk, and rubber declined while quotations
on crude oil, wheat, and wool were slightly higher.
B a n k C r e d it
The total volume of credit extended by member banks
in leading cities showed but little change between the
p erc en t ;
Index of Wholesale Prices, U. S. Bureau of Labor Statistics
(1913 average = 100 Per Cent.)
MONTHLY REVIEW, JANUARY 1, 1924
BILLIO NS
OF DOLLARS
PF.R C E N T .
Index of Employment in Manufacturing Industries
(1919 Average = 100 Per Cent.)
Bank Credit— 800 Member Banks in Leading Cities
middle of November and the middle of December. A
seasonal reduction in commercial and agricultural loans
in most districts was accompanied by increased loans on
securities with the result that total loans remained prac
tically constant.
During the same period borrowings at the Federal Re
serve Banks were also practically unchanged. Holdings
of acceptances increased somewhat partly in connection
with the financing of cotton exports. The increased de
mand for currency for holiday trade was reflected in
both a moderate expansion in Federal Reserve note cir
culation and a reduction in gold certificates held by the
Reserve Banks.
Rates of commercial paper sold in the open market
continued to show an easier tendency as indicated by
increased sales at 4 % per cent, particularly in interior
districts. The December issues of one year 41,4 per cent,
and six months 4 per cent. Treasury Certificates com
pared with 4 % per cent, on a six months issue sold in
September were largely oversubscribed.
of gold and gold certificates within the district for use as
currency.
Total loans and investments of the reporting member
banks in this district showed comparatively little change
in the latter part of November and first part of Decem
ber. Loans on stocks and bonds increased slightly,
accompanying considerable activity and higher prices
in the security markets.
Banking Conditions, Second District
The chief financial operations of the first three weeks
of December centered about the collection of income
taxes and payments by the Government on December 15
of maturing certificates and interest on outstanding
issues. On the same date, the British Government also
paid in Liberty bonds to the Federal Reserve Bank for
account of the Treasury $92,000,000, covering the second
instalment of interest and amortization on its debt to
this Government.
Prior to the 15th there was a substantial increase in
the total earning assets of the Federal Reserve Bank
of New York. In the following week, however, this
increase was canceled, although, due partly to rapid
handling of income tax checks and to the demands of
holiday trade, earning assets failed to show as marked
a decline as is usual at quarterly tax periods. A decline
in the gold reserves of the New York Reserve Bank
during the month, notwithstanding large gold imports,
reflected loss of funds to other districts and withdrawals
Money Rates
Seasonal factors such as loss of funds to the interior
and year end adjustments contributed to a slightly
firmer tone in the money market during the first three
weeks of December. This was reflected in somewhat
firmer rates for Government short term securities.
Commercial paper rates, on the other hand, continued
to display a slightly easier tendency and, while 5 per
cent, was the prevailing rate in New York City, a
considerable volume of paper was reported sold in the
interior at 4 % per cent., and in a few exceptional cases
transactions were reported at 4 % per cent. Following
a small increase in October the outstanding paper of 26
dealers declined slightly in November to $797,000,000.
Demand for bills was somewhat less active, due in
part to decrease in foreign money employed in the dis
count market. As the supply of bills continued large,
owing chiefly to continued heavy drawings on cotton
exports, dealers’ portfolios remained comparatively
large. Rates for maturities up to 120 days were firm
at 4Yg to 41/4 per cent, on purchases by the dealers,
and 4 to 4Ys Per cent* on sales by them.
The new offerings of approximately $300,000,000
Treasury certificates, dated December 15, and bearing
4 per cent, interest for six months and
per cent,
for one year, compared with a six months issue sold in
September at 4 % per cent., were heavily oversub
scribed with the longer maturity in greater demand.
Stock Exchange time money held unchanged at 5 to
5Y± per cent. Call money ranged close to 4 % per cent.,
except for a brief period early in the month, when
seasonal loss of funds to the interior was reflected by
a rise to 5 per cent.
FEDERAL RESERVE AGENT AT NEW YORK
Security Markets
Foreign Trade
The stock market was active during December and by
the latter part of the month prices of active industrial
issues had recovered about half the decline that took
place during the spring and summer. The advance in
railroad issues was checked early in the month following
a dividend reduction by a leading railroad.
Exports of merchandise from the United States in
creased $3,000,000 in November to $404,000,000, and were
the largest since February 1921, while imports decreased
$16,000,000 to $292,000,000. In consequence, the export
balance rose to $112,000,000 and with the exception of
September, was the largest since October 1921.
Cotton exports continued heavy during November and
the first part of December.
Total shipments from
August 1, the beginning of the cotton marketing year,
to December 20, were 16 per cent, larger in quantity
than last year and about 40 per cent, larger in value,
reflecting substantially higher cotton prices.
The reduction in imports during November was due
in part to decreased receipts of raw silk, rubber, and
coffee, following increases in October.
Liberty and high grade corporation bonds continued
generally steady at about the levels reached during the
recovery of October and early November.
Mexican
issues declined accompanying reports of revolutionary
activities in that country and French issues reacted
somewhat with declines in exchange, but other foreign
issues in most cases showed little change.
The volume of new issues offered in the market de
creased in the first part of December but increased
towards the end of the month in anticipation of the Janu
ary reinvestment demand. A proposed offering to stock
holders of between $26,000,000 and $31,500,000 common
stock by a leading eastern railway is the first notable in
stance of railway common stock financing in recent years.
Foreign Exchange
Sterling exchange was steadier during the first three
weeks of December than in November, despite continued
heavy exports of cotton from the United States, and on
December 20 was quoted at $4.36, or 10 cents above
the November low point. French francs declined from
5.42 on December 1 to 5.02 cents on December 22, the
lowest point ever reached. Italian exchange showed
little change, but Belgian rates were somewhat lower.
Dutch, Swiss, and Scandinavian exchanges retained
the greater part of their recoveries from the early
November declines. Polish marks continued to reach
new low points, but German marks were steadier. Aus
trian crowns remained at about the levels maintained
since the beginning of the stabilization program.
Chief changes in other rates included a further de
cline in Japanese exchange to nearly two cents under
the levels prevailing at the first of November, possibly
reflecting purchases of reconstruction materials. Cana
dian exchange at 97.38 cents reached the lowest point
since July. Argentine and Brazilian rates, on the other
hand, were firmer.
Prices
There was a further recession from 153 to 152 during
November in the Department of Labor’s monthly average
of wholesale prices, due mainly to declines in house
furnishings, fuel and lighting, and miscellaneous articles,
and to a smaller extent to declines in metals and build
ing materials. Farm products, cloths and clothing, and
chemicals showed small advances.
After a rise over the first of December that was due
largely to advances in cotton and pig iron, this bank’s
index of 20 basic commodities tended downward and by
the middle of the month stood at approximately the
November average. Crude oil was advanced in some
fields for the first time since February, and there was a
further rise in pig iron, lead, coal, and wool, but these
increases were more than offset by a reaction of over
2 cents in cottDn and continued declines in corn, lumber,
and rubber.
Cement prices remained generally un
changed at the lower levels established in November.
The following diagram shows the course of this bank’s
American 20 basic commodity index and compares with
it the movement of an index of 20 basic British com
modities which rose rapidly in November, reflecting
lower exchange rates and higher cotton prices. Similar
tendencies were indicated by a rise of 5 per cent, in
November in the Economist’s index to the highest point
in two years.
PER CENT.
Gold Movement
Imports of gold in November were $39,757,000, or
about $10,000,000 more than in October and the largest
for any month this year except May. Of the total
amount $33,600,000 came from England.
Exports
amounted to $747,000 and were chiefly to Mexico, British
India, and Canada. For the eleven months since Jan
uary net gold imports totaled $262,206,000, compared
with $214,565,000 in the corresponding period of 1922.
During the first part of December the gold import
movement continued heavy.
Price Indexes of 20 Basic Commodities in the United States
and England (1913 — 100 Per Cent.)
MONTHLY REVIEW, JANUARY 1, 1924
4
Factory Employment
Wages
Decreased employment in the clothing industry, and
smaller declines in the food products, railway equipment,
and iron and steel industries caused a decline of more
than 1 per cent, in total factory employment in New
York State during the month ended November 15. For
the United States as a whole there was a decline of about
1 per cent., according to a new employment index pre
pared by the Federal Reserve Board.
Because of the diversity of industries in New York
State, the monthly employment statistics of this State
have been commonly regarded as a fairly reliable index
of factory employment throughout the country. Com
parison of the New York figures with the Federal Reserve
Board’s employment index seems to substantiate fully
this theory, as indicated by the diagrams in the lower
half of this page which show an extraordinary degree of
correlation in most of the industrial groups. Data for
NewYork State are obtained from the State Department
of Labor, while the index of the Federal Reserve Board
is computed, as explained in detail in the December
1923, issue of the Federal Reserve Bulletin, from ma
terial collected by various State Bureaus and by the
United States Department of Labor.
In general the diagrams show also the tendency for
employment to vary least in industries most directly
related to the consumer, such as foods and food products,
and to fluctuate most in industries which supply ma
terials for further use in industry, such as metals and
metal products. In the lumber and lumber products in
dustries, which supply the building industry, employ
ment throughout the country has risen above 1920 levels,
but for all industries combined the number of workers
has generally remained below 1920 notwithstanding the
large increase in production since that time.
The average hiring rate for unskilled male labor in
the Second District, computed quarterly by this bank
from reports from representative employers, continued
in December at about the high level reached in June,
following a continuous advance since 1922 which
brought the rate to within 8 per cent, of the maximum
level of 1920.
Average weekly earnings of office workers in New
York State factories, reported once a year by the State
Department of Labor, increased 4.4 per cent, during the
year ended October to $32.56, a wage slightly higher
than any previously reached.
Earnings of factory
operatives rose 8 per cent, during the same period to
$27.73 but remained slightly under the maximum levels
of 1920.
w
PERCENT
1
FACTORY' OPERATl VES
V
N; Y.3
£00
COST
OF
u v ir i
U.S.
150
/
VERAGEE ARNINS-S
FACTORY OPFICE WOR HERS
N.1r.s
100
50
Changes in Average Weekly Earnings of Factory Operatives
and Factory Office Workers in New York State and the Cost of
Living in the U. S. (1914 = 100 Per Cent.)
r/***
I
V*
J J*
META LS &
PRODjUCTS
1919
192.0
192.1
\9ZZ
1923
1919
1920
192.1
192.1
192.3
Factory Employment in the United States and New York State by Industries. Indexes of Federal Reserve Board
and of New York State Department of Labor (1919
100 Per Cent.)
1
AVERAGE EARNINGJ. o f
FEDERAL RESERVE AGENT AT NEW YORK
The foregoing diagram shows the relative advances
since 1914 in earnings of the two types of workers and
compares these with an index of the cost of living in
the United States, prepared from figures published by
the United States Department of Labor and the Massa
chusetts Commission on the Necessaries of Life. While
office workers’ earnings increased more slowly than the
cost of living, this disparity was largely eliminated by
the decline of living costs since 1920. The real wage
of factory operatives in terms of purchasing power was
considerably increased.
Indexes of Business Activity
This Bank’s indexes of distribution and general busi
ness activity for November showed more decreases than
increases as compared with October. Among the more
notable decreases were those in wholesale trade and
retail trade. Building permits and railway loadings of
merchandise and miscellaneous freight showed relatively
small losses. In most groups, notwithstanding declines,
the volume of trade was shown to remain relatively large,
as compared with the computed trend of past years.
The following shows this Bank’s available indexes for
November in percentages of the computed trend, allow
ance being made for seasonal variation.
Production
(Computed trend of past years = 100 Per cent.)
Decreases in the production of pig iron, steel ingots,
wheat flour, and in the mining of both anthracite and
bituminous coal caused a decline of about 2 per cent,
during November in the weighted index of production
maintained by the Federal Reserve Board.
Production of pig iron declined 8 per cent, and steel
ingots 12 per cent, to the lowest totals since the fall of
last year, while unfilled orders on the books of the
United States Steel Corporation at the end of November
showed a further decline of 304,000 tons. There has
been a decrease in the average daily production of crude
oil, beginning in October and continuing through the
first two weeks of December.
Production of automobiles continued large for this
season of the year. Cotton consumption was also rela
tively heavy in November, as shown by a total of 531,631
bales, or only 10,000 bales less than in October.
Following are this Bank’s available indexes of pro
duction for November, expressed as percentages of the
computed trend of past years, with allowance made for
seasonal variation.
(Computed trend of past years = 100 Per cent.)
1922
Producers' Goods
Pig iron .............................................................
Steel ingots.......................................................
Bituminous coa l..............................................
Copper, U. S. m in e........................................
Leather, sole....................................................
Tin deliveries...................................................
Petroleum .........................................................
Cotton consum ption......................................
W oolen mill a ctivity*....................................
Z in c*..................................................................
C em ent.............................................................
Consumers' Goods
Anthracite co a l...............................................
W heat flour.....................................................
Cattle slaughtered..........................................
Calves slaughtered.........................................
Sheep slaughtered..........................................
Hogs slaughtered............................................
Sugar meltings, U. S. p orts.........................
Paper, to ta l.....................................................
T obacco consum ption....................................
Gasoline............................................................
Automobile, all................................................
Automobile, passenger..................................
Automobile, truck..........................................
Automobile, tires............................................
Boots and shoes........................................
* Seasonal variation not allowed for.
p Preliminary.
1923
Nov. July
Aug.
92
102
100
86
100
110
116
106
105
75
136
121
105
106
102
105
84
142
83
104
75
135
99
111
96
137
74
108
147
114
93
107
132
138
109
135
100
100
122
105
123
86
135
70
84
88
110
151
162
109
95
89
Sept. Oct.
N ov.
110
107
105
111
106
99
146
89
98
73
130
102
99
99
102
90
80
144
88
100
68
136
98
101
99
106
91
98
142
94
102
73
135
90
90
94
107p
92 p
150
104
] 16
109
145
79
149
74
93
89
108
145
157
98
121
90
35
109
98
118
76
146
102
85
89
107
140
149
104
107
90
95
90
104
95
100
146
77
139
137
ii6
90p
93
107
159
i6 ip
171 170p
113 124 p
126
97
89 p
1923
A v e n g e for
Sept.
Oct.
Nov.
Cereal exports....................................................
110
121
106
83
126
119
103
106
100
95
94
86
107
101
116
85
106
58
105
108
103
84p
101p
42
Distribution to Consumer
Department store sales, Second District. . .
Chain store sales...............................................
Mail order sales.................................................
New life insurance written.............................
Amusem ent receipts........................................
Magazine advertising......................................
Newspaper advertising....................................
98
100
102
103
101
93
96
97
96
91
112
84
96
90
100
97
100
113
104
98
92
96
97
85
113
General Business Activity
Bank debits, N. Y . C it y .................................
Electric p ow er...................................................
Postal receipts...................................................
Building perm its...............................................
Business failures................................................
Employment, N .Y . State factories..............
106
110
103
149
103
104
93
108
97
127
88
101
92
112
101
159
111
103
Mar. Apr. M ay
Primary Distribution
Car loadings, mdse, and misc........................
Car loadings, other...........................................
Wholesale trade, Second D istrict.................
‘ 98
93
100
i02
153
113
101
p Preliminary.
Building
Contracts for building construction awarded in 27
northeastern States were smaller in November than in
October but were 19 per cent, higher than in November
last year, according to the F. W . Dodge Corporation.
Decreases from the October figures occurred in all dis
tricts except New York State and northern New Jersey,
MILLIONS o f
OF OO LLAR5
’ 96
*77
148
Value of Building Contracts Awarded in New York State and
Northern New Jersey and in all other Northeastern States,
in first 11 months of the years 1919 to 1923
6
MONTHLY REVIEW, JANUARY 1, 1924
where there was an increase of 13 per cent, to the largest
amount ever reported.
The diagram on page 5 comparing by months the
value of contract awards in the New York area with
awards in the remaining northeastern States shows that
the decline in building permits recorded in this district
after March found little reflection in the contract fig
ures. For the eleven months of this year, total contracts
for this district show an increase of 15 per cent, over
the corresponding period of last year, whereas for all
other reporting districts there was a decrease of less
than 1 per cent.
Residential building continued to account for a large
part of the total awards. The following table shows the
particularly high percentage of residential construction
to total building in this district in the first eleven months
of this year.
Per cent. Residential to Total Building— First Eleven Months of Year
New York State and Northern New JerseyAll other reporting districts............................
1920
1921
1922
1923
22
22
56
29
51
34
60
38
The prices of building materials declined slightly in
November, but building wages averaged somewhat
higher. As a result, the cost of construction index com
puted by this bank remained unchanged at 193 per cent,
of the 1913 cost and about 4 per cent, below the May
high point for the year.
Advertising
Statistics for the greater part of the year as to adver
tising in newspapers and leading magazines indicate a
volume fairly close to the computed trend (or normal),
as shown by the following diagram. Advertising in news
papers tended to decrease somewhat during the latter
part of the year, partly due to the pressmen’s strike in
September, whereas advertising in magazines tended
slightly upward in continuation of the recovery of the
previous year. In general the fluctuations in newspaper
advertising since 1919 have been less than those of ad
vertising in magazines.
The figures for newspaper
advertising are based upon the amount of advertising
lineage in 109 newspapers published in 23 cities and re
ported by the Editor and Publisher and the New York
Evening Post, while the figures for advertising in maga
zines are those compiled by Printers Ink. The figures
are corrected by this bank for seasonal variation and the
trend of year to year growth.
Wholesale Trade
Smaller sales of women’s clothing, shoes, and silk and
cotton goods, caused a decline during November in sales
of 164 wholesale dealers in eleven principal lines in this
district, and the weighted index of wholesale trade for
the month, computed by this bank, was 2 per cent, below
that of November last year. This is the first time since
July 1922 that the index has shown a decline compared
with the same month of the previous year.
The decrease of 2 per cent, in sales shown in November
may be compared with an increase of 11 per cent, in
October, and of 6 per cent, in September. In the cases
of women’s apparel and cotton goods, the decreases in
sales followed unusually large sales in October.
The chief increases in sales during November as com
pared with sales in November 1922 occurred in stationery
and in hardware, which continued to reflect active build
ing operations. Jewelry and machine tools showed
smaller increases and groceries, drugs, and men’s cloth
ing were little changed.
As compared with October, November sales showed
decreases in all lines except stationery. These losses
were partly seasonal in character, but were larger than
usual, and the weighted index of this bank declined 24
per cent, between the two months, whereas the usual de
cline at this period of the year is 18 per cent. Detailed
figures are shown in the following table.
percent.
Per cent.
Change
in Sales,
October to
Novem ber
1923
Dollar Value of November Sales
(Novem ber 1922 = 100 Per cent.)
Comm odity
Stationery...........................
Machine tools....................
(a) M en’s .......................
(b) W om en’s dresses.. .
(c) W om en’s coats and
(a) Cotton goods..........
(6) Silk goods . ............
Advertising in Newspapers and Magazines Compared with the
Computed Trend. Seasonal Variation Allowed For
T otal (w eighted)...........
1919
1920
1921
1922
1923
119
113
176
272
126
92
168
88
111
69
135
111
126
190
109
79
77
74
73
74
95
82
84
38
86
88
112
82
100
60
100
100
100
100
100
100
100
100
100
100
115
112
109
105
102
101
96
96
100
91
+
—
—
—
—
—
—
—
—
—
-6.4
8 .3
4 .0
12.7
4 .6
26.1
17.7
4 4.8
41.8
46.0
77
125
108
143
166
76
66
73
58
45
79
83
88
77
53
100
100
100
100
100
94
91
96
87
87
—
—
—
—
—
47.4
21.5
25.3
17.6
19.1
116
90
85
100
98
— 23.9
FEDERAL RESERVE AGENT AT NEW YORK
Department Store Business
December sales by department stores in the Second
District, estimated on a basis of the business done prior
to December 20, by 17 of the largest stores in New York
and adjacent cities, were about 6 per cent, larger than
those of December last year. This is a smaller increase
than was shown by October and November sales.
Merchants reported particularly heavy sales of toys,
radio equipment, jewelry, talking machines, and holi
day gift articles, while sales of pianos and household
furnishings were also large. Sales of apparel, furs, and
shoes, however, were retarded by unusually mild
weather.
Total sales for the year 1923, with December sales
partly estimated, exceeded those of 1922 by 7.7 per
cent., or not far from the normal rate of growth from
year to year, which is computed to be about 8 per cent.
The sales were 10.2 per cent, larger than in 1921 and
5.6 per cent, above those of 1920, a year of exceptionally
high prices and heretofore the year of largest depart
ment store sales.
During the early part of 1923 sales increased some
what more rapidly than stocks of goods on hand,
whereas during the latter part of the year the reverse
was true. The average increase in stocks for the entire
year was about 7 per cent., due in part to higher prices
and in part to extensive additions to some of the stores.
In 1923 stocks turned 3.9 times as compared with 3.8
times in 1922, the same rate in 1921, and 3.3 in 1920.
The following diagram shows the fluctuations in sales
and stocks held by department stores during the past
5 years. The light lines show the actual figures and the
heavy lines the same figures adjusted for normal
seasonal changes. December 31 stocks are not given, but
December sales have been estimated.
PER CENT
7
in October. The following table shows the percentage
change in the major departments.
M en ’s and boys’ wear...................................................................................
H osiery..............................................................................................................
C otton good s...................................................................................................
W om en’s and misses’ ready-to-wear..........................................................
W oolen good s..................................................................................................
Furniture..........................................................................................................
House furnishings...........................................................................................
W om en’s and misses’ ready-to-wear accessories.....................................
Shoes..................................................................................................................
Miscellaneous..................................................................................................
Detailed figures of November sales and stocks as of
December 1 for department stores in the different cities
of this district, as compared with figures of previous
years, are shown in the following table.
Net Sales During November
(N ov. 1922 = 100 Per cent.)
All dept, stores. . .
New Y o r k .........
Buffalo...............
R ochester...........
B ridgeport.........
Elsewhere..........
Apparel stores..
Mailorder houses
Stock on Hand December 1
(Dec. 1, 1922 = 100 Per cent.)
1919
1920 1921
1922
1923
1919
1920 1921
1922
1923
90
92
84
82
89
101
105
92
84
133
101
101
104
96
105
109
110
101
100
113
100
100
100
100
100
100
100
100
100
100
107
109
98
108
112
108
102
102
103
110
98
98
98
101
122
126
100
96
83
109
107
110
108
134
143
105
110
99
99
99
103
94
102
101
97
109
96
100
100
100
100
100
100
100
100
100
110
110
102
107
115
110
100
111
114
93
93
96
88
97
97
91
94
89
74
Chain Store Sales
Sales by all types of chain stores were larger in
November than in November a year ago, due in some
cases to increases in the number of stores, though candy
and soda, ten cent, and tobacco stores also showed
increases in sales per store.
Prices, as reported by shoe stores, showed little change.
The average price per pair in November this year was
$3.84, compared with $3.86 in November 1922.
Detailed figures on sales are shown in the following
table.
N ov.
1922
N ov.
1923
1919
1920
1921
1922
Per cent.
Change
in Sales,
per Store
N ov. 1922
to
1923 Nov. 1923
435
100
1,779
14,905
281
284
2,742
546
119
1,867
18,270
324
324
2,698
56
78
75
70
91
106
91
81
94
84
87
96
112
105
81
89
86
84
95
96
98
100
100
100
100
100
100
100
125
120
116
113
108
107
105
— 0 .2
+ 1.1
+ 1 0 .7
— 7 .6
— 6 .6
— 6.1
+ 7.1
20,526
24,148
73
88
86
100
114
— 3 .0
Number of
Stores
D olllar V alue op S ales
(N ovember 1922=100Per cent.)
T ype of Store
A pparel...................
Candy and soda . .
Ten ce n t...............
D ru g .......................
T o b a cco .................
Sales and Stocks of Department Stores in the Second District.
December Sales Estimated. (Average Sales in 1919
— 100 Per Cent.)
Final reports on department store sales for November
indicated an increase of 7 per cent, over the previous
November as compared with a gain of 10 per cent, shown
+15.2
+ 6.8
+ 6.5
+ 6.4
+ 5.0
+ 4.1
+ 3.7
+ 2.2
-{- 1.3
— 6.1
+12.3
Index of the Monthly Review
F o r the convenience o f readers o f the R eview , an
index o f contents fo r 1923 has been prepared and may
be received by addressing the Federal R eserve A g en t,
Federal R eserve Bank, New York.
C o n s t a n c y o f R e s e r v e B a n k C r e d it
(E xcerpt from an editorial in The Federal Reserve Bulletin, January 1924)
T the Federal Reserve Banks discounts increased rap
idly during the year, but there was a corresponding
decline in open market holdings, with the result that
total earning assets remained relatively stable. In fact, as
shown by the chart, relative stability in the total volume, with
changes in the composition, has been the principal character
istic of Federal Reserve Bank assets during the past two
years. During these two years the country steadily used from
$1,000,000,000 to $1,200,000,000 of Reserve Bank credit. In
view of this relatively constant demand, the years 1922 and
1923 afford an opportunity of observing the effect of changes
in the volume of open market holdings upon the volume of
member bank discounts. This changing relationship was com
mented on in the May and July issues of the Bulletin, and it
now seems appropriate, at the close of the year, to make a
more complete review of the relation between the two ele
ments of Federal Reserve credit policy—rediscount operations
and open market operations.
A
MILLIONS OF DOLLARS
MILLIONS OF DOLLARS
E arn in g A s s e ts o f A ll Federal R eserv e B anks
In the early part of 1922 the Reserve Banks purchased a
considerable volume of short term Government securities in
the open market, partly for the purpose of obtaining earn
ings, while in 1923 they greatly reduced their holdings of these
securities. In the absence of change in the aggregate demand
for Reserve Bank credit, the increases in open market pur
chases during 1922 were offset by a corresponding decline in
the volume of discounts, and in 1923 the reduction in securi
ties was accompanied by a substantially equivalent increase
in discounts.
In 1922 when the Reserve Banks bought securities the funds
which they paid to the sellers found their way into member
banks and permitted these banks to repay an equal amount
of their rediscounts. The aggregate amount of Reserve Bank
credit in use was not increased or even materially changed;
a certain amount of member bank “rediscounts” were merely
thus converted into “securities.” But the effect on the mem
ber banks, particularly in the large centers, was to add to
their loanable funds or to enable them to reduce their indebt
edness at the Reserve Banks. Under such conditions banks
are likely to lend more fully to their customers and others..
In 1923, on the other hand, when the Reserve Banks re
duced their security holdings, they withdrew from the market
an equivalent amount of funds. Following the withdrawal,
the market borrowed substantially the same amount from
the banks; and the banks, in turn, rediscounted substantially
the same amount at the Reserve Banks, so that there was no
material change in the total volume of Federal Reserve Bank
credit in use.
O
M
P
The volume of open market holdings with which the Reserve
Banks entered the year 1923 put them in possession of an
admirable instrument for testing the degree of dependence of
pen
arket
o l ic y
the credit structure upon Federal Reserve Bank accommoda
tion and for placing the initiative upon member banks to
determine the volume of Reserve Bank credit required to meet
the needs of business and industry. For in rediscount oper
ations the initiative is taken by the member banks, which
borrow from the Reserve Banks at the established discount
rate, while in open market operations the initiative may be
taken by the Reserve Banks, which buy or sell short term
securities in the market largely at their own volition and at
market rates. The fact that the reduction of open market
holdings during 1923 was accompanied by an amount of dis
counting by member banks approximately equal to the volume
of funds withdrawn from the market by Federal Reserve
Banks indicated that the total volume of Reserve Bank credit
outstanding was not in excess of requirements.
Federal Reserve credit policy during the year has been
reflected chiefly in open market operations. As the aggregate
demand of the country for Reserve Bank credit may be met
either through rediscount or open market operations, the
Federal Reserve Board felt that these two methods of extend
ing credit should be brought into harmony. The Board, there
fore, in April 1923, appointed a committee of officers of
Reserve Banks to act in conjunction with the Board in effect
ing a more complete co-ordination of all open market opera
tions of the Reserve Banks, both on their own account and
in the execution of orders in Government securities for the
Treasury as fiscal agents of the Government.
At the time the committee was appointed, the Federal
Reserve Board adopted the principle:
“That the time, manner, character, and volume of open
market investments purchased by the Federal Reserve
Banks be governed with primary regard to the accommo
dation of commerce and business and to the effect of
such purchases or sales on the general credit situation.”
As the Act provides that discount rates shall be fixed “with
a view of accommodating commerce and business,” the adop
tion of this principle definitely established open market pol
icies on the same basis as discount policies. Open market
operations provide a cushion of credit between the direct
borrowings of member banks and the money market, and have
facilitated the flow of credit into and out of the Reserve Banks,
in such a way as to exercise a steadying influence in the
market and to reduce the tendency toward periodical tight
ness of money formerly felt by business in the spring and
by agriculture in the autumn. Indeed, open market opera
tions, particularly sales of securities, have proved to be a
valuable adjunct to discount policy. The minor influence
which sales of securities by Reserve Banks exert may, at
times, avoid the necessity for resorting to the major influence
of a change in discount rates.
Discount rate changes in 1923 were fewer than in any other
year in the history of the System. Advances in discount rates
from 4 per cent, to 4% per cent, at the Federal Reserve Banks
of Boston, New York and San Francisco were made early in
the year, and since that time the level of rates has been the
same at all the Reserve Banks. With the growth of discounts,
however, which accompanied the reduction in the holdings of
Government securities, the influence of existing discount rates
was extended to a larger proportion of the total Federal
Reserve Bank credit in use, and the cost of obtaining Reserve
Bank credit was borne more directly by member banks.
Changes in discount rates made with a view of influencing
the demand for rediscount accommodation from Federal Re
serve Banks are better understood by the general public than
open market operations. The experience of the past year,
however, shows that changes in the volume of securities held
by the Reserve Banks, when such changes are well timed, are
capable of exerting an important and useful influence on credit
conditions. The weekly statement of condition of the Federal
Reserve Banks shows the amount and composition of open
market holdings and makes it possible for the public to follow
these changes from week to week.
@FedFRASER