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MONTHLY REVIEW o f C r e d it a n d B u s in e s s C o n d it io n s Second Federal Reserve District Federal Reserve A g en t Federal R eserve Bank, New Y ork M o n e y M a r k e t in D ecem b e r O R E IG N exchange rates rose further in the first half of December, in several cases to levels which made it profitable to export gold from the United States. Consequently, the outflow of gold became even more widespread than in November. The seasonal move ment to Canada was followed by a return flow late in December, however, and earmarking transactions have been small, so that the net loss of gold for the month of December has not been as large as in November, when the withdrawals from the gold stock of this country were the largest reported since 1919. For the first 30 days of December, net exports of gold amounted to 67 million dollars, which brings the total loss of gold, including earmarking transactions since the first of September, to about 220 millions. During the past four months actual shipments of gold from New York have been made to 13 countries, not including F January 1 ,1928 several countries to which net exports have been rela tively small. A few of these shipments represented the transfer of proceeds of loans floated in this country, notably the Brazilian shipments and part of the Argen tine shipments; many of them were wholly exchange transactions, which with the exception of the Canadian movement, cannot be attributed to seasonal settlements. The map below shows the wide distribution of gold shipments during the past four months. E f f e c t o f T r e a s u r y O p era tio n s During a considerable part of the past month Treasury operations have tended to offset the effect of gold ship ments. The retirement of Second Liberty Loan bonds proceeded more rapidly than was anticipated, and, by the first of December, most of the deposits in Govern ment depositaries had been withdrawn, so that it was necessary to issue special certificates of indebtedness to the Reserve Banks to obtain funds needed for subsequent Destinations o f Principal Gold Exports from New York, September to December 1927. MONTHLY REVIEW, JANUARY 1, 1928 the remaining Treasury overdraft was repaid in full. To replace the funds which had been supplied indirectly through Treasury disbursements since early in the month, member banks borrowed more heavily from the Reserve Banks thereafter to maintain the necessary reserve balances. Seasonal currency requirements also were an impor tant factor in the money market in December. The in crease in currency circulation in the four weeks ended December 21 amounted to 170 millions, as the accom panying diagram shows. The withdrawal of this cur rency caused somewhat firmer money early in December, and, together with the excess of Treasury collections over disbursements after the 15th, was responsible for a fur ther tightening in the latter part of the month. The following table indicates that the principal advance over November has been in call loan rates, and that the gen eral level of rates remains lower than a year ago. M oney Rates at New York W eekly Estimates o f Currency in Circulation in the United States. Dec. 30, 1926 N ov. 30, 1927 Dec. 30, 1927 redemptions. Since these Treasury disbursements were not offset by corresponding withdrawals or collections from commercial banks, the effect was to put about 50 million dollars of Federal Reserve funds into the market from the 6th to the 14th of December. On the 15th, the quarterly tax date, there was the usual excess of redemptions and interest payments over collections, although fourth quarter tax collections were supplemented by the payment by foreign governments of 96 million dollars on war debts. As a result, the Treasury drew more heavily on the Reserve Banks for a few days, and a temporary surplus of funds was cre ated in the New York money market. Reserves of lead ing New York banks were somewhat below requirements at the opening of business on the 15th, however, and the excess of funds, after making up this deficit, was largely offset by a reduction in borrowings from the Federal Reserve Bank and by the purchase by New York mem ber banks of participations totaling 30 million dollars in the special certificate of indebtedness issued by the Treasury to cover the overdraft with the Reserve Bank. As the actual collection of income tax checks proceeded, the amount of the special certificate was steadily reduced, participations were terminated, and on December 20 BIILIONS ofDOLLARS 6.4] 8.8 192*5 6.0 8.4 1926^* 7 / S ao m J F M A M J J A 5 0 N 1926 4 ZH m SH 3K 3X E x p a n s io n in M em b er B a n k C r e d it BILLIONSo f DOLLAR^ 1927 f ✓ J // s \ ......... y 1925 2.1 5*Z * F M A M J J A S O N D INVkf>TMENT,5 1 1 i 4.8 J F M A M J J A S O N D 2.0 RESERSJ£ BAUWCES Alt!f.R.Ban*Ls J F M A M J J A S O N D Loans and Investments o f Reporting Member Banks, and Reserve Balances o f all Member Banks with the Federal Reserve Banks, 1927 compared with 1925 and 1926. J 1926 2.2 / LOAF" IS O N S E C U P U T IE S 4.8 me / V 15 5.2 D C o n tin u e d \ / / / ✓ COMME RCfAU LO } ^NS .... ... i 3 .2 4 3 .2 5 192 7 \ * 7.6 3 .1 0 3 .1 7 2.3 5.6 i 3 .01 3.01 3M A further increase in member bank investments ac companied the Treasury refunding operations of Decem ber 15. A new issue of about 262 million dollars of 3*4 per cent one-year certificates was sold, partly replacing 336 million dollars of maturing 4 % per cent notes issued in January 1923. It appears that a large part of the new issue was purchased by commercial banks, whereas the maturing issue with its higher interest rate had been more widely held. Consequently, total investments of reporting banks in December reached a new high level, as is shown by one of the diagrams below. The increase over December 1926 was about 15 per cent, more than half of which was in holdings of Government securities. Accompanying the high level of bank investments ^ "X ........... * 5 -5 H 4X 4 3X 6.41 19 2 // *334-4 4^ 4 ZX * — P revailin g ra te for preceding week. BILLIONS o f DOLLAR^ BILLIONSo f DOLLARS 9.2 *534-6 Tim e m oney— 90 d a y .............................. Prime commercial paper......................... Bills— 90 day unendorsed....................... Treasury certificates and notes Maturing March 15............................. Maturing June 1 5 ................................ Federal Reserve Bank o f New Y ork rediscount rate...................................... Federal Reserve Bank of New Y ork buying rate for 90 day b ills............... FEDERAL RESERVE AGENT AT NEW YORK and of security prices, loans on securities made by re porting banks also increased further in December, and were larger than ever before. Commercial loans, how ever, showed a seasonal decline, and, reflecting the lower level of activity in some lines of business in the latter part of this year, were slightly smaller than in December 1926. The rapid expansion of bank investments and security loans during the past year has been reflected in deposits, and consequently in the reserve balances which member banks are required to keep with the Reserve Banks. The average amount of member bank reserve balances in December was about 180 million dollars larger than a year ago. This large increase in reserve requirements, together with the net loss of about 150 millions of gold during the past year, has been partly offset by a reduc tion of nearly 100 millions in the amount of currency in circulation, but, for the remainder, additional Reserve Bank credit has been required. Total discounts and bill and security holdings of all Reserve Banks in December averaged about 130 millions higher than in December 1926, and were the highest since 1921. As noted above, a part of this additional Reserve Bank credit was sup plied indirectly through advances to the Treasury up to the 20th of December, but, with the elimination of these advances, member banks borrowed heavily from the Reserve Banks. Bills discounted by all Reserve Banks on December 28 amounted to $609,000,000 and for the Federal Reserve Bank of New York to $263,000,000. The borrowing was more largely concentrated in New York than last year. B il l M a r k et Throughout the month of December the investment demand for bills was very active, due principally to heavy foreign orders centering around the middle of the month. Notwithstanding the fact that the volume of new bills offered to the market continued large, dealers’ sales exceeded their purchases, and their portfolios were reduced sharply following a temporary rise caused by a considerable increase in offerings during the last few days of November. Ninety day bills continued to be offered at 3*4 per cent, the level which has prevailed since the middle of October, and rates for other maturi ties were also unchanged. C o m m e r c ia l P aper M a r k et There was a slight seasonal reduction during Novem ber in the amount of open market commercial paper outstanding through 26 dealers. Outstandings of $605,000,000 at the end of the month showed an increase of 7 per cent over the figure a year ago, however, the largest increase in at least three years. In December, the rather limited supplies of new paper which came into dealers’ lists as the end of the year approached were generally disposed of quickly to investing institutions outside of New York City. The major part of the transactions in prime names continued to be at 4 per cent, but in view of the relative scarcity of good paper, a tendency for an increased amount of select names to move at 3 % per cent was noted. R etu rn of I t a ly to G old B asis The Italian Government on December 22 announced the establishment of its currency on a gold exchange 3 basis and the legal revaluation of the lira in terms of gold. According to this announcement the fine gold con tent of the lira is fixed by law at 0.0791911 grammes which makes the gold value of the lira 5.26315 cents or approximately 19 to the dollar and 92.46 to the pound sterling. Furthermore, it was announced that it is here after compulsory for the Banca d ’Italia to convert on demand at its central office in Rome its own notes into gold coin or foreign currencies of countries on a gold basis and that the Banca d ’Italia must retain gold or foreign gold currency reserves amounting to at least 40 per cent of the total of outstanding note circulation and all other demand commitments. In accordance with the practice followed in other European countries when returning to a gold basis and to ensure the maintenance of monetary stability, the Banca d ’Italia entered into a credit arrangement with the principal central banks for $75,000,000 or its equiva lent. A separate credit was arranged by the Banca d ’Italia with certain private bankers aggregating about $50,000,000 or its equivalent. The participation of the Federal Reserve Banks in the former credit arrangement was announced by this bank as follows : “ The Federal Reserve Bank of New York, in associa tion with other Federal Reserve Banks, has agreed, if desired, to purchase from the Banca d ’Italia up to a total of $30,000,000 of prime commercial bills. The agreement of the Federal Reserve Bank of New York was made in cooperation with other banks of issue as a part of the credit arrangements aggregating in all $75,000,000, or its equivalent, which the banks of issue have entered into with the Banca d ’Italia in furtherance of the plans which have been completed for stabilizing the Italian currency on a gold exchange basis.” C h an ges in C en tra l B a n k R a te s The only changes in discount rates during December were the seasonal advances at the Imperial Bank of India from 5 to 6 per cent effective December 8, and to 7 per cent effective December 22, and the reduction at the Bank of France from 5 to 4 per cent, effective Decem ber 29. During 1927 central bank rates remained unchanged in Denmark (5 per cent), Hungary (6 per cent), Italy (7 per cent), Spain (5 per cent), and Switzerland (3 % per cent). Rates are now higher than at the beginning of the year in Germany, India, Netherlands, and Nor way, but lower in other countries, as shown below: Rates Reduced Poland Austria Finland Japan Czecho-Slovakia Belgium England France Sweden New York Rates Increased Germany India Norway Netherlands January 1 December 30 W 7 7X 6.57 sy2 7 5 6H 4H 4 6 5 .4 8 5 4H 4H 4 4 3H 6 5 m 8 7 7 5 4X 4 MONTHLY REVIEW, JANUARY 1, 1928 G A IN O R LOSS TO GOLD STOCK (In millions of dollars) F o r e ig n E x c h a n g e The outstanding event of the month was the revalua tion of the lira in gold at the rate of 19 to the dollar, or a little over 5.26 cents, effective December 22. The lira reached its lowest point, 3.16 cents, in July 1926, recovered to 4 cents in October, reached 5 cents in April 1927, and has held at approximately 5.40 cents since last May. Legal stabilization has therefore been effected at a level slightly under the rates prevailing for the last eight months. A ll the leading European exchanges were strong dur ing the month. Sterling demand rates rose to $4.88 1/16 and cables to $4.88 7/16, and two shipments of gold were made to London during the month. The advance of Dutch guilders to 40.45 cents and of Swedish kronor to 27.02 cents was likewise accompanied by the export of gold from New York. Swiss, German, and Danish cur rencies were above par, and French and Norwegian quo tations were strong. The Argentine peso showed little change from the November level, but Brazilian rates rose slightly above 12 cents for the first time this year. Following the final export of gold to Canada on December 1, the Canadian dollar went to a discount and reached the im port point late in the month when a part of the gold exported in November and December was returned to this country. The rupee at 36.63 cents reached its highest point since February 1926. The yen grew stronger toward the close of the month, being quoted at 46.59, and Chinese rates were generally slightly higher than in November. Through. Im ports or Exports M onth January....................................................... February..................................................... M a rch .......................................................... A pril.......................................... M a y.................................. ......................... June............................................................ J u ly ............................................................ A ugust....................................................... September................................................. O ctober...................................................... N ovem ber................................................... +44 +20 + 11 + 12 +32 + 13 + 9 + 6 — 11 — 9 — 33 — 67* + 7* Through Earmarking +20 + 3 — 2 — 1 — 95 — 1 — 2 — 9 — 25 — 40 — 6* — 158* T otal +64 +23 + 9 + 11 — 63 + 12 + 9 + 4 — 20 — 34 — 93 —73* — 151* * “ Preliminary For the year there has been a gain of about $7,000,000 through imports, which has been more than offset by an increase of about $158,000,000 in earmarkings, so that there has been a net loss of about $151,000,000 of gold through these transactions. The principal net move ments of gold between the United States and other coun tries during 1927 are summarized below. N et Im ports from N et Exports to Great B ritain. ..................... $31,000,000 C anada............. ..................... 33,500,000 Australia. . , ..................... 22,000,000 ..................... 11,000,000 C h ile .................. Netherlands . ..................... E cu a d o r........... ..................... 7,000,000 2,000,000 $62,000,000 34.000.000 14.000.000 5.000.000 China and H ongkong........ 4.000.000 2.000.000 Brit. M alaya........................ 3.000.000 3.000.000 2.000.000 1,000,000 . 1,000,000 G o ld M o v e m e n t Security M a r k e ts The outflow of gold continued during December, the export at New York during the first 30 days of the month amounting to $76,000,000, while imports were slightly less than $9,000,000. The principal destinations of the outgoing metal were Argentina $29,85P,000; France $10,000,000; England $8,545,000; the Nether lands $8,000,000; Poland $5,000,000; Canada $4,000,000; India $2,375,000; Belgium $2,200,000; Uruguay $2,000,000; Venezuela $1,150,000; and Sweden $1,027,000. With the exception of shipments to Poland and Belgium, most of these exports represented exchange transactions. The imports included $8,500,000 of gold which returned from Canada in the last few days of the month when the discount on Canadian funds in creased to the import point. During the same period gold held under earmark at the Federal Reserve Bank of New York increased $6,000,000, notwithstanding the release of some earmarked gold for export, so that the net loss was slightly less than $73,000,000. Final reports for the country for November show exports of $55,300,000 and imports of $2,100,000, mak ing a net export of $53,200,000, which with an increase of $40,000,000 in earmarkings, brought the total loss of gold for the month to $93,200,000. Changes in the country’s stock of gold during the year through export and import movements and changes in earmarkings are given below. The stock market continued active throughout Decem ber, and for a week following the December 15 Treasury financing, trading was exceptionally heavy, with an average daily turnover on the Exchange of more than 2,800,000 shares. After a slight reaction early in the month, the trend of industrial stock prices was upward, and representative price averages rose slightly above the highest points reached in November. Some further recovery occurred in railroad stocks early in the month, but aftei4 the announcement of a railroad valuation case decision, rail shares fluctuated irregularly at levels slightly below the early December prices. The bond market reflected a continued large invest ment demand, and prices in general showed a high de gree of stability. Corporation bond averages early in December rose slightly above the highest levels of No vember and for the remainder of the month were prac tically stationary. Among the foreign issues, Argen tinian and Uruguayan issues were strong, and German issues partly recovered from the November decline, but the foreign list in general showed no consistent change. The four United States Treasury long-term bond issues reached new high levels early in the month, but, with Liberty Loan bonds, declined somewhat subsequently. The amount of securities issued in December for new capital and refunding purposes was about as large as in the record month of October and was much larger FEDERAL RESERVE AGENT AT NEW YORK than in December 1926. Financing by public utility companies, which had been heavy in most of the previous months this year, was of unusual volume in December, due to a number of large issues. Railroad offerings were the heaviest since August, but issues of other classes generally were not large; in fact, foreign offerings were the smallest for any month since September. Domestic issues, both new capital and refunding, for the year have been in the neighborhood of $8,000,000,000, an increase of about $2,000,000,000 over the offer ings during 1926. Foreign flotations have totaled $1,750,000,000, an amount about $400,000,000 larger than in 1926. Foreign T ra d e Both exports and imports of merchandise in Novem ber showed declines when compared either with the pre vious month, or with November 1926. The estimated value of November exports was about 4 per cent smaller than last year, and the value of imports was nearly 8 per cent smaller. For the first eleven months of the year, exports have exceeded imports by over 600 mil lion dollars, a favorable merchandise balance more than twice as large as in the corresponding period last year. Cotton exports in November were nearly one-third smaller than last year, but the higher prices this year brought the total value to an amount only slightly smaller than in November 1926. Grain exports con tinued to be considerably larger than last year. The quantity of coffee imported during November was some what larger than a year previous, rubber importations were about the same, but raw silk imports were more than one-third smaller. P rod u ction and T ra d e in 192 7 Notwithstanding the much reduced level of activity in important industries such as iron and steel, automo biles, and coal mining during the latter part of the year, it appears probable that the whole volume of production and trade in 1927 will show at least a small increase over 1926. Preliminary 1927 figures for all of the principal series of industrial and business data have been assembled, after adding estimates for December, and in some cases for November, to the figures for the first ten or eleven months of the year. An unweighted average of these 115 series indicates an increase over 1926 of 2y 2 per cent in the total volume of business, or somewhat less than the usual year-to-year growth. The following comparison of the 1927 estimate with similar estimates for previous years indicates, that as a result of the decline in the latter half of the year, this year’s growth in production and trade has been smaller than in five of the last six years. 1920 over 1919 + 6 per cent 1921 over 1920 — 14 “ " 1922 over 1921 + 1 6 “ 1923 over 1922 + 1 2 “ “ 1924 over 1923 — 2 “ “ 1925 over 1924 + 6 “ “ 1926 over 1925 + 5 “ “ 1927 over 1926 + 2y2 “ “ The following tabulation indicates a high degree of irregularity among individual lines of production and trade and even among the principal groups. The out standing increase over 1926 has been in financial trans actions. The distribution of merchandise also has been larger than last year, with the largest increase in chain store sales. In the later months increases in mail order business also have been substantial, but the increase for the year in department store sales is the smallest in several years. Manufactures and crop production have exceeded those of 1926 by small margins, but the minerals and metals group, and building materials and construction show small decreases. Production of food products and tobacco on the average shows no change from last year. The following table shows only the more important series : Per cent Change 1927from 1926 Manufactures Sole leather....................... +18 Cottonseed oil, refined... -j- 14 Cotton consumption. . . . + 13 Silk consum ption............. -j- 8 B oots and shoes............... + 7 Tires.................................... + 6 Radiators........................... + 4 Automobiles, trucks........ — 8 Malleable castings........... — 13 Automobiles, passenger.. — 23 Locom otives...................... — 36 Group A verage............. + 2 Minerals and Metals Petroleum .......................... Gasoline.............................. Anthracite coal................. Z in c ..................................... C op per................................ Steel sheets........................ Pig iro n .............................. Steel in gots........................ Bituminous co a l............... Group A verage............. Crops R y e ...................................... B arley................................. H a y .................................... Potatoes, white................. W h e a t ................................ C o rn .................................... G rap es................................ R ic e ..................................... O ats..................................... T o b a cco .............................. C o tto n ................................ Peaches, tota l.................... Anples, to ta l..................... Group A verage............. +19 +11 — 3 — 4 — 5 — 6 — 7 — 8 — 8 — 2 +44 +44 +29 +13 + 5 + 3 + 2 — 4 — 4 — 5 — 29 — 35 — 50 + 3 Foods and Tobacco B u tter................................. +13 Cigarettes........................... + 9 Hogs slaughtered............. + 7 L a rd .................................... + l Cigars..........................................0 Per cent Change 1927 from 1026 Wheat flo u r.. . . Sugar m eltings......... Cattle slaughtered. . Cheese........................ Group Average. . . — 5 —6 — 18 0 Building Materials and Construction Cem ent............................... ....+ 4 Face b rick ..............................+ 3 Building con tracts...............+ 1 Building perm its.............. ....— 12 L um ber.............................. ....— 14 Group Average.................— 2 Trade Grocery chain store sales. Other chain store sales... Department store sales. . Mail order sales............... Mdse, e x p o r ts .................. Real estate transfers. . . . Wholesale tra d e............... Mdse, im p o r ts ................. Group A verage............. Financial Cotton futures.................. Corporate financing......... Stock sales, N. Y . E x .. . . Bond sales.......................... Grain future sales............ Group A verage............. General Bank debits, N. Y . C ity .. Electric power................... Business failures............... B ’k debits, outside N .Y . C. Postal receipts.................. Life insurance sales......... New corporations, N. Y . S. Carloadings, m dse. & m isc. Em ploym ent (U .S .)......... Newspaper advertising... Carloadings, oth er........... Group Average............. Average of 115 ite m s .. . . . . +22 + 11 +51 +30 +26 +12 +22 — 9 +15 + 7 + 6 + 5 + 3 + 2 + 1 _ 0 4 — 4 —6 + 2 2 .5 V a lu e o f 1 92 7 C rop s The value of all important crops is about $635,000,000 greater in 1927 than in 1926, an increase of over 8 per cent, according to estimates made by the Department of Agriculture on the basis of revised production esti mates and December 1 farm prices. The greater part of the increase is in the value of the cotton and corn crops. Excluding the corn crop, a large part of which is not sold for cash, but is fed to livestock, the increase in value of other crops is about $350,000,000, or 6 per cent. The accompanying diagram, which compares 1927 crop yields and values with those of 1926, shows that although this year’s cotton crop is 29 per cent smaller, MONTHLY REVIEW, JANUARY 1, 1928 I92G~JOO% COTTON V A TS CORN ALL WHEAT BARLEY BAY POTATOES APPLES ORANGES TOBACCO which is operating at a lower level than last year, and some branches of the apparel industries, which have been affected by unsatisfactory fall retail trade. The average weekly earnings of factory operatives declined somewhat in November and were 2 per cent lower than a year ago, probably due to reduced working hours. Reflecting the decline in employment, together with the slight reduction in individual earnings, total factory wage payments were 8 per cent smaller than last year. In view of the fact that the cost of living is estimated to have decreased nearly 2 per cent during the past year, it would appear that the purchasing power of the individual factory worker who has retained his employment is slightly larger than a year ago, but that the purchasing power of factory workers as a group has declined noticeably below that of a year ago. ■ I PRODUCTION 1 3 CROP VALUE Size and Value o f 1927 Crops compared with 1926. its value on the basis of December 1 prices is 28 per cent greater. In several other cases a reduction in yield has resulted in an increase in the total value of a crop, or an increase in output has resultled in a smaller crop value. Barley, which shows a large increase in both the size and the value of the crop is the principal exception. Corn prices also have been higher this year, notwith standing a slight increase in the yield; so that the total value of the crop is considerably larger. Kansas, Ne braska, and South Dakota have had the largest increases in yields of corn, and consequently have benefited most largely from the high value of the crop. Business and banking conditions in these states are reported to have shown considerable improvement as a result. A ll prin cipal cotton growing states had much smaller crops this year than last, but the reductions in the yield were not so large as the average in Alabama and Texas, and these states apparently have had considerably larger income from the cotton crop in 1927 than in 1926. E m p lo y m e n t and W a g e s A decrease of 2 per cent in the number of workers employed in factories occurred in November, both in New York State and in the country as a whole, accord ing to reports issued by the State and Federal Labor Departments, and this bank’s index of factory employ ment, in which adjustment is made for the usual seasonal variation, declined to the lowest point since July 1922. The decrease from November of last year was 5 per cent in New York State and nearly 6 per cent in the country as a whole. This would indicate that in the factories covered by the reports of the United States Bureau of Labor Statistics, which number nearly 11,000 and em ploy more than one-third of all factory workers in the country, nearly 190,000 workers had been laid off within the past year. The reduction in employment from a year ago has been chiefly in the so-called heavy industries— those mak ing “ producers’ goods” such as machinery, railroad equipment and other vehicles, and building materials— rather than in industries making goods for individual consumption. Exceptions are the jewelry industry, P rod u ction November production in a majority of leading indus tries showed further declines, after allowance for the usual seasonal changes. Iron and steel production was the smallest in three years, and automobile production was the smallest since February 1922. Trade reports indicate buying of iron and steel products for delivery in the first quarter of 1928 in sufficient volume to require increased production in that period, however, and De troit employment reports show a level of activity that is usually accompanied by a much larger output of cars than that of November. In the following indexes, allowance is made for sea sonal variations and year-to-year growth. (Computed trend of past years =* 100 per cent) 1926 1927 (» Nov. Sept. 108 103 117 114 110 116 118 103 102 102 123 99 101 129 96 94 83 98 96 103 117 97 116 95 134 93 109 128 92 84 82 99r 96 104 117 99 105 97 125 98 103 112 106 107 102 85 126 99 106 106 98 105 103 113 112 100 109 103 104 97 97 81 99 94 110 91 107 117 98 100 100 94 103 114 94 91 93 82 91 88 102 85 111 91 104 108 94 100 98r 87 99 100 101 74 69r 95r Oct. Nov. Producers' Goods Bituminous coal....................................... Copper, U. S. mines................................ Tin deliveries........................................... Zino.......................................................... Petroleum................................................. Gas and fuel oil....................................... Cotton consumption............................... Woolen mill activity*.............................. Lumber.................................................... Leather, sole............................................ Silk consumption*................................... 88 84 78 102 99 100 i0 8 94 v 120 108p 110 117 Consumers' Goods Cattle slaughtered................................... Calves slaughtered.................................. Sheep slaughtered................................... Hogs slaughtered..................................... Sugar meltings, U. S. ports...................... Wheat flour.............................................. Tobaoco and snuff................................... Paper, total.............................................. Boots and shoes....................................... Anthracite coal........................................ Automobile, all........................................ Automobile, passenger............................ Automobile, truck................................... * —Seasonal variation not allowed for p = Preliminary r = Revised 97 95 104 85 103 98 100 114 100 i03p 93 ' 96p 102 54 50 70 FEDERAL RESERVE AGENT AT NEW YORK 7 In d e x e s o f B u s in e s s A c t i v it y A further slight decline in general business activity was indicated by a number of this bank’s indexes for November which are shown in the following table. Car loadings, both of merchandise and of bulk freight, de clined further; foreign trade was smaller; business failures were somewhat more numerous. The volume of bank debits continued considerably larger than a year ago, however, and retail trade showed some improve ment, following the slow business of October. Percentage Change N ovem ber 1927 from Novem ber 1926 Locality 1927 N ov. N ov. Sept. Oct. Primary Distribution Car loadings, merchandise and m isc.. .. Car loadings, oth er..................................... E xp orts......................................................... Im ports......................................................... Panama Canal traffic................................ 108 111 96 127 95 105 96 100 114 96 103 92 95 114 101 100 86 90|» 113? Distribution to Consumer & Department store sales, 2nd D ist........... ft Chain store sales......................................... Mail order sales........................................... Life insurance paid f o r .............................. Real estate transfers.................................. W Magazine advertising................................ II Newspaper advertising.............................. 102 105 102 117 102 105 108 108 105 110 111 94 100 102 100 108 102 106 89 95 102 108P i03p 106 94 96 101 106 112 102 118 151 111 117 136 112 115 137 106 99 115 146 98 105 102 105 137 112 109 153 235 93 106 99 101 119 112 110 144 228 90 103 98 102 114 106 135 231 94 220 222 222 f General Business Activity Bank debits, outside of N. Y . C ity Bank debits, New Y ork C ity .................. Bank debits, 2nd Dist. excl. N. Y . C ity . Velocity of bank deposits, outside of N. Y . C ity ................................................ Velocity of bank deposits, N. Y . C ity. . Shares sold on N . Y . Stock Exchange*. Postal receipts............................................. Electric p ow er............................................. Em ploym ent in the United States......... Business failures.......................................... Building perm its......................................... New corporations formed in N. Y . State. Composite index of wages. ' 97P 106 140 116 220 * —Seasonal variation not allowed for p —Preliminary D e p a r tm e n t Store T ra d e Retail trade in this district showed a considerable im provement in November following the October decline, and the holiday trade in December was about 3 % per cent larger than last year, according to preliminary re ports covering the first 24 days of the month. As the bulk of December business is done in this period, this advance calculation will probably be fairly close to the final figure for the month. Assuming a 3 % per cent increase for the whole month of December, the total sales of reporting stores for the year will have been 2 per cent larger than in 1926. This increase, however, is the smallest for any year since 1922. Sales of leading apparel stores, which in October showed a larger decline than did sales of department stores, in November showed a correspondingly larger increase. Mail order sales also showed a substantial increase in November. Stocks of merchandise in department stores remained generally smaller than last year; consequently the rate of stock turnover was higher than in November 1926. Collections also showed a considerable increase over last year. Stock on hand end o f m onth N et Sales 1927 1926 5 1.4 5 5.0 4 3 .8 47.9 5 2.5 44.1 + 3 .5 — 2 .2 — 3 .2 + 4 .2 + 9 .4 — 3 .9 + 3 .6 — 2 .1 + 11.9 — 2 .2 — 0 .4 + 12.8 + 1.1 — 1 .4 — 2 .6 — 8 .3 — 10.8 — 4 .4 — 7 .4 — 3 .4 A ll department stores................... + 3 .7 — 2 .7 50.1 4 7.2 Apparel sto r e s ................................ M ail order houses.......................... + + 8 .4 2 .4 + 4 9.9 4 5.6 (Computed trend of past years = 100 per cent) 1926 Per cent of Charge Accounts Outstanding October 31 Collected in November Northern New Y ork S ta te .. . . Central New Y ork S tate.......... Southern New Y ork S ta te . . . . Hudson R iver Valley D istrict. Capital D istrict.......................... W estchester D istrict................. 2 .8 4 8.6 4 5.8 4 3 .2 i i .7 The largest increases in sales compared with last year were in holiday goods, such as books and stationery and toys and sporting goods, and in apparel departments, which in October made a rather unfavorable showing. W h o le sa le T ra d e Sales of reporting wholesale dealers in this district re mained smaller than a year ago in a majority of lines, but the declines were less than in October, and in several instances appeared to represent lower prices, rather than a reduction in the actual quantity of goods sold. The average decrease from November of last year in dollar sales was 4 per cent, as compared with reductions of 11 per cent in October and 8 per cent in September. Stocks of groceries, drugs, and hardware remained smaller than last year. Stocks of cotton goods and diamonds and jewelry were somewhat larger, however, and shoe stocks continued to be much larger than in 1926. Com m odity Percentage Change Novem ber 1927 from October 1927 Net Sales Groceries........................ — 0 .4 M en’s clothing.............. — 4 0.5 W om en’s dresses........... — 3 0.5 W om en’s coats and suits — 51.5 C otton goods— Jobbers — 11.5 C otton goods— Com mission ....................... + 8 .6 — 1 .4 Shoes............................... — 9 .1 D rugs.............................. — 2 7.2 Hardware..................... — 6 .1 Machine tools*............. + 0 .6 Stationery...................... + 18.6 Paper............................... — 5 .8 Diam onds....................... + 8 .8 Jewelry........................... + 3 .7 Weighted a verage.. . — 16.4 Stock end of m onth + 7 .2 — 8 .8 — 1 .6 — 6 .1 — 3 .7 } — 3 .8 Per cent of Accounts Outstanding October 31 Collected in Novem ber Percentage Change Novem ber 1927 from Novem ber 1926 N et Sales — — — + — 4 .2 3 .6 9 .4 2 .4 6 .5 + 10.2 — 1.9 — 15.0 — 0 .5 — 4 .4 — 23.2 + 3 .7 + 1.9 + 15.4 — 10.9 — 4 .1 Stock end of M onth 1927 1926 — 9 .3 7 4.9 33.4 73.6 34.9 + 11.9 4 6.4 4 0.8 + 4 4 .9 — 11.2 — 13.7 50.3 4 8 .8 4 8 .0 46.1 4 9.2 4 5.6 4 0.3 46.1 ’ ’ 8 2 .0 6 3 .0 7 2.9 6 6.2 }+ 6 .7 } 28.7 5 2.8 * = Reported by the National Machine Tool Builders’ Association. } 24.4 51.1 8 MONTHLY REVIEW, JANUARY 1, 1928 Business Conditions in the United States (Summarized by the Federal Eeserve Board) INDUSTRIAL activity and freight carloadings declined further in November, while retail trade showed more than the usual seasonal increase. The general level of wholesale commodity prices after advancing for four months remained practically unchanged in October and November. P r o d u c t io n Index Numbers o f Production o f Manufactures and Minerals, Adjusted for Seasonal Variations. (1923-25 average ~ 100 per cent.) Output of manufactures and minerals was reduced in November, and the combined index of production, after adjustments for customary seasonal varia tions, fell below the 1923-1925 average for the first time since 1924. The largest decline was in the output of automobiles owing largely to preparation for production of new models. Iron and steel production has also declined further and in November was the lowest since 1924. In December, however, inquiries for iron and steel increased. Textile mill activity was slightly cur tailed in November but continued at a higher level than in previous years. There were decreases in the production of coal, building materials, and leather and shoes. Building contract awards showed seasonal declines in November and the first two weeks of December and were slightly smaller than in the corresponding period of last year. The total value of about fifty crops in 1927 is estimated by the Department of Agriculture at $8,430,000,000, an increase of $635,000,000 over 1926. The greatest increases in value were shown for cotton, corn, barley, and oats, while the largest decrease for any individual crop was shown for potatoes. The physical quantity of production of the seventeen principal crops was about 2 per cent less than last year but 3 per cent above the average of the last ten years. Wholesale Price Index o f United States Bureau of Labor Statistics. (1913 average = 100 per cent.) BJLU0U3 o f DOLLARS T rade Retail trade increased slightly more than is usual in November. Compared with a year ago, retail trade of department stores, mail order houses, and chain stores was larger, while wholesale trade continued in slightly smaller volume in nearly all reporting lines. Freight carloadings declined during November and in the early part of December were smaller than in the corre sponding period for the past four years. There were large decreases in loadings of all classes of commodities. P r ic e s M onthly Averages o f W eekly Figures for Member Banks in 101 Leading Cities. (Latest figures are aver ages for three weekly report dates in December.) The general level of wholesale commodity prices, as measured by the index of the Bureau of Labor Statistics, after a continuous advance sinee early in the summer, remained at practically the same level in November as in October. Changes were relatively small in all groups, increases occurring in foods, and hides and leather, and decreases in farm products, textiles, fuels, and building materials. In the first two weeks of December prices of wheat, cattle, hogs, cotton, pig iron, and softwood lumber declined, while those of silk, woolen goods, hides, and sole leather advanced. B a n k C r e d it Between the middle of November and the middle of December total loans and investments of member banks in leading cities showed a considerable increase, reflecting continued growth in the volume of loans on securities and in the banks’ investment holdings. In the same period loans chiefly for com mercial purposes, which reached a seasonal peak in October, showed a further slight decline. At Federal Reserve Banks the seasonal increase in currency requirements and the continued demand for gold for export during the four weeks ended December 21 were reflected in a growth in member bank borrowing. At the end of this period the total volume of Reserve Bank credit in use was larger than on any other date in the past six years. Reserve Bank Credit: M onthly Averages o f Daily Figures for 12 Federal Reserve Banks. (Latest figures are averages of first 21 days in December.) Somewhat firmer conditions in the money market in December were reflected in increased rates on call money. Rates on prime commercial paper and bankers acceptances remained unchanged during the month.
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