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MONTHLY REVIEW of Credit and Business Conditions S e c o n d Federal Reserve Agent F e d e r a l R e s e r v e Federal Reserve Bank, New York Business Conditions in the United States RO D U C TIO N o f basic commodities in November continued in about the same volume as the month before, and the general level of prices remained unchanged. A ctivity o f wholesale and retail trade was below the record level of October, but larger than in November of last year. P D is t r ic t ____________________ January 1, 1926 Final estimates by the Department o f A griculture in 1925 indicate that the acreage o f all crops harvested was slightly larger than in 1924, but that the aggregate production o f crops was in about the same volume. Yields of cotton, corn, and tobacco were considerably larger than last year, while the production o f wheat, oats, potatoes, and hay was smaller. T rade P r o d u c t io n Output of basic industries included in the Federal Reserve B oard's index of production was at about the same rate in November as in October, but owing to a smaller number of working days the index declined by about 1 per cent. Increases occurred in average daily production o f p ig iron, steel ingots, copper, and bitum inous coal, and in the consumption o f cotton, while the production of flour, sugar, and meat products declined. Automobile production in November was seasonally less than in October, but continued large fo r this time o f the year. Employm ent and payrolls in m anufacturing in dustries showed small increases in November as com pared with October. Em ploym ent and workm en's earn ings increased in the machinery industries, while in food products and tobacco and in the clothing industry there were seasonal declines. B uilding contracts awarded were smaller in November than in October, but were large when compared with the volume for November o f previous years. PER CENT Sales in leading lines o f wholesale trade showed the usual decline in November from the seasonally high levels in October, but continued larger than in the corre sponding month o f any o f the past five years. Total volume o f trade at department stores and mail order houses was smaller than in October, owing largely to the smaller number o f business days in November. Com pared with earlier years, however, department store sales were the largest on record fo r November and sales at mail order houses were the largest fo r that month in the past six years. Merchandise stocks at department stores showed considerably more than the usual increase in November and were 4 per cent larger than in Novem ber o f last year. Distribution o f commodities by rail roads during November reached new high levels fo r the month. Movements o f merchandise and miscellaneous commodities, coal, and coke were larger, while those o f livestock, grain, and forest products were somewhat smaller than in November o f the two preceding years. PERCENT. 1 1 156 W HOLESALE PRICES 1913*100 1 1922 Index o f 22 Basic Commodities Corrected for Seasonal Variation (1919 = 100 Per cent. Latest figure N ovember) .1 9 2 3 192* 1925 Index of U. S. Bureau of Labor Statistics (1913 = 100 Per cent, base adopted by Bureau. Latest figure Novem ber) MONTHLY REVIEW, JANUARY 1, 1926 2 B L N ODLAS I I S rO R LO L 1922 1923 1924 1925 Member Bank Credit Weekly figures for Member Banks in 101 Leading Cities. (Latest figures December 16) Reserve Bank Credit: Weekly figures for 12 Federal Reserve Banks (Latest figures December 23) M on ey M ark et P r ic e s Wholesale prices, according to the index of the Bureau o f Labor Statistics, remained the same in November as in October. Prices of livestock, meats, and cotton goods declined, but these decreases were offset in the general averages by advances in the prices of grains, fuel, lum ber, and rubber. In the first three weeks of December prices of wheat, flour, and hardwood lumber were slightly higher than in November, while quotations on cattle, cotton, coke, copper, and hides were lower. B ank C r e d it A t member banks in leading cities the volume of credit outstanding on December 9 was near the high level reached early in November. Loans fo r commercial and agricultural purposes declined somewhat during the period, and there was also a decrease in the banks’ security holdings; continued growth of loans on securi ties, however, was sufficient to offset these reductions and the total of loans and investments remained prac tically unchanged. A t the Reserve Banks the seasonal demand fo r cur rency and credit resulted in an increase of total bills and securities in December to the highest level in nearly four years. This increase in Reserve Bank credit in use has been in the form of discounts for member banks, as the volume of purchased bills held changed but little between the middle o f November and the middle of D e cember, and holdings of United States securities also remained constant, except fo r a temporary increase con nected with Treasury financing on December 15. Money in circulation increased by $71,000,000 between Novem ber 1 and December 1 and the continued demand for cur rency in December was reflected at the Reserve Banks both in increased Federal Reserve note circulation and in a decline in cash reserves. The principal developments affecting the money mar ket in this district during December were the currency requirements of the holiday retail trade, preparations for the first-of-the-year disbursements, and the usual Treasury operations over the quarterly tax period. R e flecting chiefly the first two influences call money rose to 5 per cent fo r most o f the month and during the last few days touched 6 per cent, while the total earning assets of the New Y ork Reserve Bank averaged substan tially above the levels of November. Government operations throughout the country dur ing the month included the redemption o f about $480,000,000 certificates and notes, paym ent of ap proximately $78,000,000 interest on the public debt, sale of approximately $450,000,000 new 3 % per cent certificates, and collection of the fourth instalment of income taxes. In addition, the British Government paid $92,310,000 in United States securities to this Govern ment in discharge o f interest and principal instalments due on its debt, and small cash payments were made by Czecho-Slovakia, Belgium, Finland, Poland, H ungary, and Lithuania. A s customary at tax payment periods the funds dis bursed in this district by the Treasury on the 15th greatly exceeded collections here and necessitated the usual temporary advance by the Reserve Bank pending the collection of tax checks and transfer o f funds from other districts. Owing, however, to the fact that excess supplies of funds were partially absorbed by a reduc tion in other form s of Reserve Bank assets call money rates eased only to 4 % per cent, and later reverted to 5 and 6 per cent as tax checks were collected, funds were withdrawn to other districts, and currency require ments continued. W ith few exceptions, other money rates were gener ally steady in December. Over-the-counter rates of rep resentative New Y ork City banks averaged somewhat higher and open market commercial paper appeared slightly firmer, though rates for prime names continued FEDERAL RESERVE AGENT AT NEW Y O R K to be quoted generally at Per cent. Owing chiefly to low rates offered borrowers by banks, sup plies of paper were reported as continuing small as in November when outstandings of 26 dealers declined 3 per cent to $666,000,000, a new low point since Decem ber 1921. In the bill market firm conditions were manifest by a continued high level of dealers' portfolios but rates remained unchanged at 3 % per cent on deal ers' purchases of 90-day bills and 3 % per cent on their sales. Time loans on stock market collateral were also steady during the month at 4 % to 5 per cent. The accom panying diagram com paring the present level of money rates with the trend over the past two years indicates a steady upward tendency since the low levels of 1924. That advances have been chiefly in stock market rates accom panying unusual stock market ac tivity is shown by the rise in call loan renewals from 2 per cent to 5 and 6 per cent in contrast with increases of only about 1^2 Per cent in commercial paper and bills. RATE. 3 smaller than in previous months, but brought the year's total of all foreign issues to date to $1,283,000,000, com pared with $1,251,000,000 in 1924. The follow ing table compares by geographical divisions all types of foreign issues, including refunding loans sold in this market in 1924 and 1925. In the case of the large volume of E uro pean securities in 1925, about one-third were of German origin. (In millions of dollars) 1924 1925 Europe............................................................................................. Canada............................................................................................ Latin America................................................................................ Asia and Australia......................................................................... 587 238 235 191 668 244 223 148 Total........................................................................................... 1,251 1,283 Foreign Exchange A fter falling to $4.8406 on December 1 sterling ex change recovered and in the latter part o f the month was quoted around $4.84% . French francs at 3.58 cents about the middle of the month reached a new low point for the present decline. Belgian francs, on the other hand, continued stabilized at slightly over 4 % cents, and the lira was steady at about 4.03 cents. Swedish and Swiss rates rose above par, and Danish and Norwegian exchanges were steady at about the levels held since the advance was checked in September. Under the influence of an im proving trade balance Jap anese yen rose to 4 3% cents, the highest since March 1924. Polish exchange, on the other hand, continued weak, and Canadian exchange declined to a small discount. Agreement to Purchase Belgian Bills Open Market Rates for Commercial Paper, Bankers Acceptances and Stock Exchange Call Loans by W eeks (Latest figures week ended December 26) Security Markets A fter the sharp decline in stock prices of November the stock market showed a firmer tendency in Decem ber, though with trading somewhat diminished in vol ume. Railroad stocks, which had declined but slightly, were particularly strong and reached new high levels since 1917, while industrial issues regained most of the November loss. In the bond market, corporation securities continued firmer, and price averages generally reached or ex ceeded the high levels fo r recent years touched in June and July. U. S. Government issues were steady, as was true o f most foreign issues, except French and Polish bonds, which declined accom panying weakness in ex change. New security offerings increased during December to the largest total in recent months, due chiefly to heavier borrow ing by states and municipalities, an issue of $35,000,000 Federal Land Bank bonds, and more exten sive railway financing. Foreign offerings aggregating $81,000,000 during the first 28 days of the month were As an aid to the plans which are in progress fo r im proving the monetary position o f Belgium, the Federal Reserve Bank of New Y ork in association with other Federal Reserve Banks has indicated its readiness to cooperate with the Belgian bank of issue, the Banque Nationale de Belgique, if desired, by purchasing prime Belgian commercial bills. It is understood that offers o f cooperation have also been made by the Bank of England and other European banks of issue. Gold Movement Follow ing heavy movements in October and November gold exports and imports at New Y ork during the first 28 days of December were relatively small. The shipment o f $2,000,000 to Argentina and of $1,900,000 to the Straits Settlements accounted for the greater part o f the exports, while imports, according to prelim inary figures, were even smaller. F or November the final figures for the country showed exports o f $24,400,000, of which $20,000,000 went to Canada. As imports amounted to $10,500,000, including $3,000,000 from Japan, $2,900,000 from Canada, and $2,600,000 from England, there was a net gold loss fo r the month of $13,900,000. This com pared with a net import balance fo r October of $22,700,000. 4 M ON THLY REVIEW, JANUARY 1, 1926 Foreign Trade Im ports of merchandise valued at $378,000,000 in November were slightly larger than in October and $82,000,000 above those o f November last year. E x ports, on the other hand, valued at $448,000,000, were $43,000,000 below those o f October, and $46,000,000 smaller than a year ago. Figures thus far available on individual commodities indicated that cotton exports declined over $36,000,000 in November from the high total o f October and were $25,000,000 below those o f November 1924, while ship ments of grains and grain products fell $45,000,000 below a year ago. Im ports o f crude rubber and o f raw silk continued to be very heavy, and were close to the highest levels ever attained. 3 300 ------------------— 3 ------------------------ IO O --------------------) — ------------------) -----------------------f INI ©13 DOLLARS -f --------------------- >-------------------— : ' 5AV INGS & \ |)THER T IM E D E P O S IT S IN '' ) ---------- to ta l ALL.UiAjPTKS -IN1hOO,OOC 1 ,0 0 0 t u a l / 2 .0 £ b u i :LDIWr $ LOAfi A5SO CIATIONS'AS$J r r s ^ ^ mi MOO,0 0 0 , 0 0 0 + . --------- ACTUAL // / [N 1913 D0LLA t j IN 1913 DOLLARS / ■ / / Growth of Savings A n increase o f 2 billion dollars, or 9 per cent, in the volume o f savings deposits of this country was reported by the Savings Bank Division o f the Am erican Bankers Association fo r the year ended June 30, 1925. This carried forw ard a rate of growth which has been re markably uniform during the past twenty-five years, despite fluctuations in business conditions, extent o f em ploym ent, wage and salary rates, and cost o f living, which ordinarily might be expected to affect the growth o f savings. W hile these changes in conditions appear to have had little effect on the growth of savings deposits, they have had an important influence on the significance o f sav ings deposits. A dollar on deposit today is very d if ferent from a dollar on deposit a few years ago, largely because of changes in the cost o f living. Between 1913 and 1920 the cost o f living more than doubled, which means that in 1920 a dollar in savings deposits would buy only about 50 per cent as much as a dollar in 1913. A t the present time the cost o f living is approxim ately 75 per cent above 1913, so that the present dollar in sav ings deposits has only about 57 per cent o f the pur chasing power o f the 1913 dollar. In an effort to estimate approxim ately the actual pur chasing power of savings at different periods this bank has taken savings and time deposits of all banks, and assets o f building and loan and life insurance companies and reduced them as nearly as possible to 1913 dollars. The actual and adjusted figures are shown in the ac com panying diagram. W hile savings may take other forms not so readily measurable, such as investment in securities (particularly in the period when Liberty bonds were being bough t), nevertheless the figures given illustrate in a rough sort of way fo r the available data the difference between nominal and real savings, par ticularly in the past ten years. A further noteworthy indication of the figures is the rather general correspondence shown between the gen eral trend of growth of real savings and of business as represented by figures fo r bank clearings outside o f New York, which have also been adjusted to make allow ance fo r changes in prices. / ........ X / rU AL / ____ ___ s “ ‘ — : SCALE FOR CLEARINGS IN BILLION j ~ I CL EAR1NG5 IN 1 9 )3 DOLLARS o u t s id e / 1900 - LIFE INSURA I1 *<CE. N P A N I E S 'A S t SETS IN # 1 ,0 0 0 ,0 0 0 ,0 OO i 1905 1910 1915 1920 1925 Growth of Various Forms of Personal Savings, Actual and in 1913 Dollars Employment and Wages W hile there was a seasonal slackening o f outdoor work in this district in November and early December, the volume o f factory employment showed a further increase notwithstanding that small reductions fre quently occur at this season. A pproxim ately 8,500 work ers were added to payrolls, which brought the total number reported by the New Y ork State Department o f Labor as employed in the middle o f November to 6 per cent above the summer low point and 3y% per cent over last year. No important wage changes were reported in the dis trict during the month, but demands o f the New Y ork City building trades unions fo r an advance from $10.50 to $12.00 a day at the end o f this year were submitted to arbitration. Owing to fuller employment, however, average weekly earnings o f factory workers reported by the State Department o f Labor advanced slightly to $28.67. A s shown by the diagram on page 5, earn ings are now close to the 1920 high level, while living costs, despite a moderate rise in the past year, are still considerably below this level. Factory office salaries, which advanced much more slowly than wages or the cost o f living as com puted by the United States Department o f Labor up to 1920, continued to rise during the past year to the highest level yet reached. FEDERAL RESERVE AGENT A T NEW Y O R K Due partly to the stoppage o f anthracite mining, bituminous coal production rose further in November to 10 per cent above the com puted trend, and early in December reached highest levels since 1920. Output of beehive coke was likewise heavy and much above the levels o f last year. Cotton consumption in November, amounting to 543,000 bales, held close to the October figure, contrary to the usual seasonal tendency, with the result that this ban k ’s index rose further to 95 per cent o f the computed trend, the highest since last A pril. The index of woolen mill activity likewise increased, and silk consumption remained at high levels. In the automobile industry, production o f passenger cars and trucks fell below the high October figures, but remained unusually large for this season. Changes in Average W eekly Earnings of Factory Operatives and Factory Office Workers in New York State and the Cost of Living in the United States. (1914 =r 100 Per cent.) Production The expansion of industrial activity in progress since mid-summer continued in many lines in November. The daily rate of iron and steel production increased 3 and 8 per cent, and unfilled orders of the Steel Cor poration rose 470,000 tons to a level 1,100,000 tons above the summer low point. D uring December 3 addi tional furnaces were put in blast and steel operations indicated a total output fo r the year in excess of 44,000,000 tons, compared with 43,600,000, the previous high level reached in 1917. (Computed trend of past years =100 per cent) 1924 1925 Nov. Sept. Oct. Nov. 76 90 89 107 124 97 118 100 87 98 123 101 81 102 84 105 100 103 105 110 124 100 85 88 131 106 71 122 89 104 106 104 101 113 119 103 91 94 126 llOr 79 136 89 110 IlOp 105 118 111 104 108 96 110 112 90 101 69 93 118 125 107 96 92 82 110 112 104 102 107 94 113 141 100 105 80 108 130 134 114 85 105 ** 126 117 163 109 117 95 102 122 95 115 71 106 132 116 118 87 99r ** 169 179 128 Indexes of Business Activity Trade and business activity was generally maintained at a high level in November, though gains were not as marked in all cases as in October. E xcept in New Y ork City indexes of bank debits declined, and indexes o f re tail trade were also below the high levels of October. F or New Y ork City alone the index o f bank debits showed an increase. November railway traffic was like wise heavier than usual and in the first weeks of Decem ber exceeded a m illion cars fo r the first time in any December, due chiefly to heavy loadings o f manufac tured products and higher figures on coal and grain. The follow ing table gives this ban k ’s indexes of busi ness activity in percentages o f the com puted trend, after allowing fo r seasonal variation and, where neces sary, fo r estimated price changes. ________________ (Computed trend of past years=100 per cent) Producers' Goods Pig iron...................................................... Steel ingots................................................ Bituminous coal....................................... Copper, U. S. mines................................. Tin deliveries............................................ Zinc............................................. ... Petroleum.................................................. Gas and fuel oil......................................... Cotton consumption................................. Woolen Mill activity*............................ Cement...................................................... Lumber...................................................... Leather, sole.............................................. Silk consumption*.................................... Consumers' Goods Cattle slaughtered.................................... Calves slaughtered................................... Sheep slaughtered..................................... Hogs slaughtered...................................... Sugar meltings, U. S. ports..................... Wheat flour............................................... Cigars........................................................ Cigarettes.................................................. Tobacco, manufactured........................... Gasoline..................................................... Tires........................................................... Newsprint.................................................. Paper, total............................................... Boots and shoes........................................ Anthracite coal......................................... Automobile, all......................................... Automobile, passenger............................. Automobile, truck.................................... *=Seasona1 variation not allowed for. p=Preliminary r=Revised **= Strike 95 97p 122 105p i2i 93 104 89 85 99 83 105 71 96 iio 90 89p ** 182 175 130 _______ 1925 1924 Nov. Sept. Oct. Nov. 105 103 95 102 101 119 106 106 96 90 95 118 89 93 103 94 93 95 118 48 85 106 104 91 86v 120p 101 104 111 107 103 99 96 102 94 116 122 112 105 95 106 99 128 116 113p 106 100 99 99 116 112 i09 102 104 117 100 110 122 105 112 121 110 111 125 107 94 106 99 122 102 123 103 125 238 94 100 96 102 136 210 103 110 100 97 160 307 104 113 100 97 178 279 99 Primary Distribution Car loadings, merchandise and misc...... Car loadings, other................................... Wholesale trade, Second District........... Exports...................................................... Imports...................................................... Grain exports............................................ Panama Canal traffic............................... Distribution to Consumer Department store sales, Second Dist.. . . Chain store sales....................................... Mail order sales........................................ Life insurance paid for............................. Real estate transfers................................. Magazine advertising............................... Newspaper advertising............................ General Business Activity Bank debits, outside of New York City. Bank debits, New York City.................. Bank debits, 2nd Dist. excl. N. Y. C.. . . Velocity of bank deposits, outside of New York City..................................... Velocity of bank deposits, N .Y . C .... Shares sold on New York Stock Ex change*.............................................. Postal receipts.......................................... Electric power....................................... Employment, N. Y. State factories....... Business failures....................................... Building permits....................................... *=Seasonal variation not allowed for f>=Preliminary ioo 102 166p MONTHLY REVIEW, JANUARY 1, 1926 6 Building New building undertakings in November showed a seasonal decline from October, but were approximately 25 per cent larger than in November a year ago, ac cording to the F. W . Dodge Corporation's reports of contracts awarded and S. W . Straus & C o.'s figures of permits issued. F or the year to date both records in dicate a volume of construction already far in excess of the whole of last year, with the probability that final figures for the year will reach if not considerably ex ceed six billion dollars. Contrary to the situation at the beginning o f the year building continues to expand rapidly in New Y ork City. Since mid-year contracts in this city have been running much above 1924 and in November a gain of 53 per cent brought the total for the eleven months in this city 9 per cent above the corresponding period of 1924. W hile this increase here contributed very largely to the high figures for the country, it is noteworthy that substantial gains continued to be reported in some other sections, including New England, the southeastern states, and the central west. In the Pittsburgh, northwestern, and middle A tlantic states, on the other hand, November contracts fell below last year. The follow ing diagram shows the widespread charac ter of building increases during the past year, and in dicates also the character o f .the construction. Residen tial building continues to lead all other types and in November amounted to 52 per cent of the total, com pared with 50 in November a year ago. 5,311 5,311 4:151 4,151 at Chicago was 50 cents lower than a year ago, while spot cotton in New Y ork at 19.15 cents reached the low est price since A p ril 1922. Later in the month, how ever, there was some recovery in prices and wheat reached new high levels fo r the season. The accom panying diagram shows through December 19 the movement of this bank's weekly index o f A m eri can prices, together with changes in an index for British prices, which during the past year has declined steadily to the lowest point since 1922. PERCENT. 175 v 'H 150 V 100 \ J NFBMR PWJN U A&E O -N/-DOA-FBM-ARM JNUAGE OT O-D A- E- /K-ARYU J L USP C O EJN E- A P- A U- L U-SP C- V E T R Y JN C 19.24 1925 Price Indexes of 20 Basic Commodities in the United States and in England. 1913 := 100 Per cent. (Latest figures December 19) D uring November this bank's index o f the general price level, including rents and wages, as well as whole sale and retail prices, remained unchanged from October at 187 per cent of the 1913 level, com pared with 182 per cent in November 1924. 3,691 BSO OT N Wholesale Trade P BICUIL UL T : (T f* O K Y WR S N WY R E OK PHILADELPHIA BUSINESS & COMMERCIAL M NAOIS INEP L so. eastern 1-92.3 1924 19£5 ill 192.3 1924 192o By Districts By Types of Construction Value of Building Contracts awarded in ^36 States during first eleven months of Three Years (Figures in millions of dollars) Commodity Prices A t 158 per cent o f the 1913 average the Department o f Labor's wholesale price average for November was unchanged from October, and 2 points lower than at the beginning of the year. D uring the first three weeks of December this bank's weekly index of 20 basic commodities declined to the lowest point in more than a year, due largely to a decline in wool and to losses in corn and cotton follow ing larger crop estimates. A t 73 cents on December 19, cash corn Sales o f nearly 200 wholesale dealers in this district showed a seasonal decline o f about 24 per cent from October to November, but were slightly larger than a year ago. Machine tool sales exceeded those of any November since 1920, and sales o f silk goods and diamonds were the largest for the month since 1919. Substantial gains were reported also in jew elry, stationery, shoes, and hardware, and smaller gains in paper and job bers' cotton goods. Due, however, to the failure of grocery sales to in crease, and to decreases in sales of m en's and women's clothing, drugs, and commission house cotton goods, the weighted index o f trade in this district was only 1 per cent above last year. Stocks of silk goods showed a further large increase notwithstanding the heavy sales, and stocks o f shoes and o f jew elry and diamonds were also larger than a year ago. Stocks o f cotton goods and hardware, on the other hand, continued relatively small, and grocery stocks declined below last y e a r’s level. 7 FEDERAL RESERVE AGENT AT NEW Y O R K Net Sales Percentage Change Stock on Hand Net Sales Percentage Change Percentage Change November 30, 1925 November 1925 from from November 30, 1924 November 1924 Stock at end of month Percentage Change Commodity Nov. 1925 Nov. 1925 Nov. 1925 Nov. 1925 from from from from Oct. 1925 Nov. 1924 Oct. 1925 Nov. 1924' Groceries............................. Men’s clothing..................... Women s dresses.................. Women’s coats and suits... Cotton-Joboers.................... Cotton-Commission houses. Silk goods............................. Shoes..................................... Drugs................................... Hardware............................. Machine tools...................... Stationery............................ Paper.................................... Diamonds............................ Jewelry................................. Weighted Average. 4 —4 4 — + 0.3 — 9.4 — 23.2 — 22.7 — 60 — 62 —25 —1 1 — 5 —18 — 27 —12 + 2.8 — 16 + 3 — 9.5 +32.2 + 13.2 — 3.4 + 5.8 +33.1 + 10.9 + 3.6 +30.8 + 13.7 — 24.2 + + — + + + — 4.6 6.9 3.2 2.3 2.5 5.1 1.7 5.9 — i6.2 — 9.5 +18.7* +46! 7* +34.3 + 0.1 — 11.4 Elsewhere................................................. Northern New York State................. Central New York State.................... Southern New York State................. Hudson River Valley District............ Capital District................................... Westchester District........................... All department stores............................. + 9.8 + 6.0 — 1.7 + 1-4 — 8.3 + 8.5 + 2.7 + 0.7 — 13.3 + 0.1 — 1.0 + 6.7 — 4.0 + 8.8 + 4.9 + 3.8 Apparel stores.......................................... Mail order houses................................... + 2.1 + 10.0 — 1.4 New York................................................. Buffalo...................................................... Rochester................................................. Syracuse................................................... + 0.8 —1 2 ■+ 4.7 \ + 8.5 * Stock at first of month— quantity not value. Chain Store Sales Follow ing unusually heavy sales in October, chain store business showed smaller increases in November. The average increase in total sales was 12 per cent, due largely to the opening of new stores. Sales per store averaged 7 per cent smaller than a year ago, whereas in October they were 4 per cent larger. D rug stores showed the largest gain over November o f last year, both in total sales and sales per store, and sales o f ten cent stores also recorded a substantial in crease. In the cases of grocery, variety, and candy stores, actual sales, while larger than last year, failed to keep pace with the opening of new stores, and in tobacco and shoe stores, sales fell below last year. Stocks of merchandise in November increased 4 per cent over a year ago, a slightly smaller increase than occurred in sales. Due apparently to the high ratio of sales to stocks in recent months, outstanding orders of the stores for merchandise showed a much smaller de cline during the month than is usual at that time of year, as the accom panying diagram shows. PERCENT. Percentage Change November 1925 from November 1924 Type of Store Number of Stores Total Sales Sales per Store Drug........................................................ Grocery................................................... Ten Cent................................................. Variety.................................................... Candy...................................................... Tobacco................................................... Shoe......................................................... +11.0 +23.1 + 6.2 +16.1 + 15.8 +14.0 +16.7 +17.3 +15.7 +10.7 + 6.2 + 3.5 — 1.2 — 6.1 + 5.7 — 6.0 + 4.3 — 8.5 — 10.7 — 13.3 — 19.5 Total.................................................... +20.3 + 11.7 — 7.1 Outstanding Orders of Department Stores in the Second District (1924 average = 100 Per cent.) Sales of musical instruments and radio sets in N ovem ber continued to show the largest gains over last year. Substantially larger sales were reported also in fu rn i ture and home furnishings, and in articles more or less of luxury character, such as toys and sporting goods, toilet articles and drugs, silks and velvets, and silver ware and jewelry. Department Store Trade Prelim inary reports from leading department stores in New York, Brooklyn, and Newark on holiday trade from December 1 to 24 inclusive, indicate a gain o f 8 per cent over December 1924, the previous high mark fo r department store business. Total sales for the year ap pear to have shown an increase of 5 % per cent over last year, compared with gains o f 4 y2 per cent in 1924 and 8 per cent in 1923. The December increase is reported to have been rather generally distributed throughout the various departments. In November, department store sales averaged 5 per cent larger than a year previous, follow ing the unusually large increase o f 15 per cent in October. A pparel store sales, which in October were 20 per cent ahead of that month in 1924, showed an increase of 2 per cent. Net Sales Stock on Hand Percentage Change Percentage Change November 1925 November 30, 1925 from from November 1924 November 30, 1924 Musical instruments and radio............ Toys and sporting goods...................... Furniture............................................... Toilet articles and drugs...................... Linens and handkerchiefs..................... Silverware and j ewelry......................... Books and stationery............................ Luggage and other leather goods........ Silks and velvets................................... Shoes...................................................... Home furnishings.................................. Hosiery................................................... Men’s furnishings.................................. Cotton goods......................................... Women’s and Misses’ ready-to-wear. . Women’s ready-to-wear accessories. . . Men’s and Boys’ wear.......................... Woolen goods......................................... Miscellaneous......................................... +54.0 +22.7 +16.4 +16.2 +14.5 +11.5 + 11.0 +10.9 +10.9 + 8.1 + 7.2 + 7.1 + 6.4 + 3.8 + 1.8 — 0.4 — 5.3 - 18.5 + 5.1 — 10.6 + 5.8 + 9.8 + 4.9 — 2.9 + 1.4 +12 .7 + 4.3 — 10.2 + 1.8 — 1.4 + 12.5 + 4.5 + 12.7 — 4.0 + 0.5 + 6.0 +11.6 — 5.1 S e le c tio n and D u tie s o f F ed eral R eserve H E taking of office at the beginning of the New Year by a number of new Federal Reserve Bank directors makes it appropriate to review the method by which directors of the Reserve Banks are chosen, the type of men who serve, and their powers and duties. T M ethod S e l e c t io n op Each o f the 12 Federal Reserve Banks has a board o f nine directors which is responsible, under the general supervision of the Federal Reserve Board in W ashing ton, fo r the policy and administration of the bank. O f the nine directors, six are elected by the member banks and three are appointed by the Federal Reserve Board. O f the six elected by member banks three may be bank ers, and the other three must be actively engaged in commerce, agriculture, or industry in the district, and while serving as Reserve Bank directors may not serve as directors or officers of any other bank. O f the three directors appointed by the Federal Reserve Board, one acts as chairman of the board, a man of banking experi ence, and devotes his entire time to the Federal Reserve Bank, carrying in addition the title and duties of F ed eral Reserve Agent. The other two appointed by the Federal Reserve Board must have no other banking con nection while serving as directors. Hence they are usually business men. B u s in e s s M en in M the a j o r it y Thus, of the nine directors of each Reserve Bank, five are ordinarily business men, three are active bankers (frequently with business interests in addition), and one is chairman and Federal Reserve Agent. Directors hold office for three years and may be reappointed or reelected. O f the present 108 directors of the 12 Reserve Banks, 12 are the chairmen of the board and 36 are active bankers. The remaining 60, constituting the m ajority, have the follow ing occupations: 19 14 4 4 2 3 3 2 2 2 1 1 1 1 1 manufacturers merchants farmers lumbermen insurance investment bankers retired business men publishers lawyers railroads cattleman contractor public utilities mining savings bank officer In each of the 12 Federal Reserve districts it is men with this wide range of interests and fam iliar with con ditions in the district who are responsible fo r the man agement o f the Reserve Bank. B ank The directors of the Federal Reserve Bank o f New Y o r k are the fo llo w in g : D ir e c t o r s o f N ew Y ork E lecte d b y m em b er ba n k s Jackson E. Reynolds, New York City, President, F irst National Bank. Robert H. Treman, Ithaca, N. Y., President, The Tompkins County National Bank. Delmer Runkle, Hoosick Falls, N. Y., President, Peoples National Bank. Owen D. Young, New York City, Chairman, General Electric Company. Theodore F. Whitmarsh, New York City, President, Francis H. Leggett & Company. Samuel W. Reyburn, New York City, President, Lord & Taylor. B an k D ir e c to r s A p p o in te d b y F ed era l R eserv e B o a rd Pierre Jay, New York City, C h a irm a n . W. L. Saunders, Plainfield, N. J., D e p u t y C h a ir m a n , Chairman, Ingersoll-Rand Company. Clarence M. W oolley, New York City, Chairman, American Radiator Company. O f these directors Mr. Reynolds, just elected by the member banks, is serving his first term. Mr. Y ou n g has been reelected after three years o f service, and Mr. Jay has been reappointed by the Federal Reserve B oard after 11 years o f service. In addition to the directors o f the 12 Reserve Banks each o f the 23 branches has a board o f seven directors, residents o f the branch territory, o f whom 4 are ap pointed by the Federal Reserve Bank o f the district and 3 by the Federal Reserve Board. The directors o f branches have a range o f occupations and interests similar to that indicated above fo r the directors o f the banks. Their jurisdiction in credit matters is lim ited to passing upon loans to member banks in the territory served by the branch. In the New Y ork district there is only one branch, that at Buffalo. The follow ing are its directors: A p p o i n t e d b y F e d e r a l E e s e r v e B a n k o f N e w YorTc Harry T. Ramsdell, Chairman, M frs. and Traders Trust Co., Buffalo. E llio tt C. McDougal, President, Marine Trust Company, Buffalo. F rank W. Crandall, President, National Bank of Westfield, Westfield. N. Y. W alter W. Schneckenburger, M a n a g in g D ir e c to r . A p p o in te d b y F ed era l E eser v e B oa rd James H. McNulty, C h a ir m a n , President, P ra tt & Lambert, Inc., Buffalo, N. Y. A rthur H ough, President, W iard Plow Company, Batavia, N. Y. John A. Kloepfer, President, Liberty Bank of Buffalo. L ocal and N a t io n a l I n terest The Board of Directors o f each Reserve Bank appoints its officers and is responsible fo r its policy and man agement, subject to the general supervision of the F ed eral Reserve Board. A certain coordination is neces sary between the 12 Reserve Banks in important matters of policy. The law therefore provides that decisions o f any Reserve Bank as to changes in the discount rate must be approved by the Federal Reserve Board. Trans actions in bankers acceptances and short Government securities in the open market are coordinated through a committee of Reserve Bank officers appointed by the Federal Reserve B oard and acting under the approval and authority o f the directors of those Reserve Banks which may from time to time participate in such trans actions. Under the terms o f the Federal Reserve A ct and cu r rent procedure, the management o f the Federal R e serve System is so designed as to bring to bear upon any important question o f policy both local and national points o f view, together with the opinions o f men o f many different occupations and interests.
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