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M O N TH LY REVIEW
O f Credit and Business Conditions
F E D E R A L
R E S E R V E
26
V o l.
B A N K
JANUARY
M O N E Y
1,
M A R K E T IN
Despite the seasonal peak of demand for currency and large
movements of funds, related chiefly to quarterly income tax
collections and other Government receipts and expenditures,
the money market remained on an even keel during December.
In the Government security market price changes, moderate
in extent, reflected year-end portfolio adjustments and prepa
O F
N E W
Y O R K
1 944
No. 1
D EC EM B ER
rarily to $1,240,000,000 as member bank reserve positions
were eased, chiefly by heavy Treasury expenditures on the
fifteenth for meeting quarterly interest payments and the
redemption of maturing Treasury notes.
In addition the collection of checks and other documents
payable in various parts of the country, through the collection
rations of investors for the Fourth War Loan drive opening
January 18.
facilities of the Federal Reserve System, was slowed by seasonal
During December the reserve positions of member banks
for collection items according to a time schedule regardless of
the time actually required to make the collections, some banks
were credited with the proceeds of checks before the banks
were chiefly influenced by the enlarged currency circulation,
Treasury operations (which alternately drew upon and added
to bank reserve funds), a temporary rise to a new record peak
in Federal Reserve "float”, and increased reserve requirements.
congestion of the mails.
As the Reserve Banks give credit
on which the checks were drawn had the checks charged
against them. This excess of credits to banks over actual
collections, known as Federal Reserve "float”, is usually of
The combined effect of these forces made it necessary for New
York City and other banks to take frequent action to adjust
their reserve positions, which was reflected in a large increase
in Federal Reserve Banks’ holdings of Government securities,
of December by an amount more than sufficient to offset the
demand for currency and the increase in member bank reserve
and to some extent in borrowings by the banks from the Fed
requirements in that week. The same thing, occurred in the
eral Reserve Banks. Even then there were substantial weekto-week fluctuations in total excess reserves of all member
banks.
In the statement week ended December 8, member bank
reserve balances were drawn down by a substantial excess of
Treasury receipts over expenditures as well as by increased
currency circulation, and at the same time reserve requirements
showed a considerable rise. Despite $569,000,000 net pur
chases of Government securities by the Reserve Banks during
the week, and a rise of $55,000,000 to a temporary peak of
$108,000,000 (the highest since December 1933) in member
bank borrowings from the Federal Reserve Banks, excess re
serves
of
all
was made in eliminating the pre-Christmas lag in collections
have dropped below $1,000,000,000 since October 1937. Dur
of checks.
ing the following statement week, excess reserves rose tempo
$1,130,000,000 on December 29.
*
F O U R T H
$180,000,000
During the final statement week of the month, ended
December 29, the Treasury drew down its deposits with the
Federal Reserve Banks and reserve requirements declined,
more than offsetting the further losses of reserve balances from
the final increase of the year in currency circulation and a
contraction in outstanding Federal Reserve float as a beginning
t
declined
Bank purchases of an additional $538,000,000 of Govern
ment securities.
to
'f y o a
banks
third week of the month, as the Christmas peak in the mails
occurred. Nevertheless, total member bank excess reserves
dropped back to the previous low point of $920,000,000,
owing to unusually large net receipts by the Treasury which
were offset to a considerable extent, but not fully, by Reserve
$920,000,000, the first report date on which excess reserves
DO
member
substantial proportions but it increased in the second week
PART — B U Y
W A R
L O A N
D R IV E
Excess reserves of all member banks amounted to
WAR
O P E N S
BON DS
J A N U A R Y
18
*
MONTHLY REVIEW, JANUARY 1, 1944
2
The net increase in currency circulation during December,
due largely to Christmas shopping and holiday requirements,
was about $550,000,000 as compared with an average rate of
W ar Loan Deposits in Special Depositaries for Account of Sales of
Government Securities, and Credits to and
Withdrawals from Such Accounts*
BILLIONS
OF DOLLARS
increase of $410,000,000 during the first eleven months of the
year. The December increase was substantially less than
might have been expected in view of the strong upward trend
in currency circulation which has persisted for many months,
on which was superimposed the seasonal peak of Christmas
demand.
Possible explanations offered for the relatively
moderate demand for currency (in view of recent trends) are
earlier Christmas shopping this year, and some use of outstand
ing currency to pay income taxes.
The further growth in reserve requirements during Decem
ber— about $225,000,000— was smaller than in November and
a number of other months earlier in the year, reflecting a
diminished need for calls on the War Loan Deposit accounts
and consequently a diminished rate of conversion of such
deposits (which are exempt from reserve requirements) into
private deposit accounts (against which reserve requirements
apply).
T r e a s u r y O p e r a t io n s D u r in g D e c e m b e r
* Compiled from data of U. S. Treasury Department.
During the early part of December, the Treasury built up
War Loan account deposits showed a net reduction of
its deposits with the Federal Reserve Banks by temporarily
about $3,000,000,000 during December in comparison with
$4,510,000,000 during November, the smaller decline in De
cember reflecting the effect of quarterly tax collections. The
accelerating its withdrawals from the War Loan accounts on
the books of the commercial banks, and on December 8 Treas
ury deposits with the Reserve Banks reached $686,000,000,
$411,000,000 above the level of December 1. These funds,
together with $924,000,000 drawn from the War Loan ac
counts and other receipts during the following week, were
employed to meet a $421,000,000 maturity of lVs per cent
Treasury notes on December 15, and around $300,000,000
quarterly payments of interest on the public debt due at the
same time, as well as current expenditures for war and other
purposes. After meeting these expenditures, the Treasury still
had $379,000,000 on deposit with the Reserve Banks at the
close of business December 15. This marked the first quarterly
tax period since March 1942 that the Treasury has not utilized
temporary borrowing on special certificates of indebtedness
from the Federal Reserve Banks to moderate the effects of its
operations on the reserve position of the banks.
In March
of this year such temporary borrowing reached a maximum of
estimated balance at the end of December, $9,800,000,000,
presumably will be reduced somewhat further up to the point
when the Fourth War Loan drive, scheduled to open Janu
ary 18, reaches full momentum. Sales of securities under the
Fourth drive, of course, will result in large new credits to the
War Loan accounts in the banks, against which the Treasury
can draw in subsequent months.
Total quarterly income tax collections during December
are estimated at $4,300,000,000, of which about $1,100,000,000
were met by turning in Savings ("tax” ) notes. Of the
total quarterly income tax collections during December,
$875,000,000 were collected in the Second Federal Reserve
District. As in previous quarterly tax months, the propor
tion of Savings notes used in meeting the tax liabilities was
somewhat greater in this District than in the country as a whole,
28 per cent compared with 25 per cent.
$1,302,000,000, in June $805,000,000, and in September
R eserve P o s it io n
of the
N
ew
Y o r k Ba n k s
$424,000,000.
During the week ended December 22, the Treasury had
As in the case of all member banks, the central reserve
unexpectedly large net receipts, from heavy quarterly income
New York City banks experienced alternate gains and losses
tax collections, supplemented by $439,000,000 withdrawals
of reserve funds through Treasury operations during December,
from War Loan accounts and other receipts, which together
were substantially greater than Government expenditures, with
although for the month as a whole these banks gained a mod
erate volume of reserves through this channel.
On the
the result that Treasury deposits with the Federal Reserve
other hand, there was a net outflow of about $500,000,000
Banks rose $588,000,000 to $967,000,000.
commercial and financial funds from New York City to
During the final
statement week of the month, ended December 29, no with
other parts of the country in December, and enlarged cur
drawals from War Loan accounts in the banks were made and
rency circulation absorbed somewhat in excess of $100,000,000
Treasury deposits with the Reserve Banks were drawn down to
of reserve funds.
$764,000,000.
by net sales of Treasury bills and certificates of indebtedness
These losses of reserves were largely met
3
FEDERAL RESERVE BANK OF NEW YORK
to the Federal Reserve Bank, although a number of the New
York banks borrowed temporarily from the Reserve Bank to
meet deficiencies in their reserve balances. Borrowings from
the Reserve Bank by the New York City institutions rose
from $9,000,000 on December 1 to $77,000,000 on the 8th,
dropped to $15,000,000 on the 22nd, and increased again to
considerable importance. Market sales of bonds, notes, and
other obligations were relatively small in the four weeks ended
December 22; a decline of $79,000,000 in holdings of Treas
ury notes resulted mainly from the redemption on December
15 of maturing notes. In the 100 cities outside New York,
the reporting member banks reduced their holdings of Gov
$56,000,000 on the 29th.
Ten banks in the city borrowed
ernment securities by $711,000,000 between November 24
from the Reserve Bank at one time or another during the
month. In the Second District outside New York City, rela
tively small amounts were borrowed during the course of
and December 22; three fourths of the decline was accounted
for by a net reduction in Treasury bill portfolios. Sales of
certificates of indebtedness were somewhat smaller than in
December by 74 member institutions.
New York City, and purchases of Treasury bonds continued.
M E M B E R B A N K C R ED IT
Total loans of the New York City banks declined
$155,000,000 between November 24 and December 22, re
flecting principally a further contraction of loans for purchas
For the most part the principal changes in member bank
credit during the four-week period, November 24 to Decem
ing or carrying securities. Loans to banks rose to $111,000,000
ber 22, reflected continuations of movements which had been
on December 15, the highest level since December 1938;
in evidence since the middle of October. On October 20 total
loans and investments of the weekly reporting member banks
the following week, however, brought a slight decline.
reached a new high level, as a result of market purchases of
Government securities by the member banks, expansion of
loans to nonbanking investors for purchasing Government
securities during the Third War Loan drive, and purchases
of new issues of Government securities offered directly to
commercial banks after the drive. Since that date the prin
cipal changes in bank credit have been (1 ) a reduction in
holdings of Treasury bills and certificates of indebtedness in
order to offset losses of reserves and rising reserve require
There
were indications that these loans represented largely day-today lending of reserves between New York City banks; bor
rowings reported by the same group of banks also showed a
considerable increase in the same period. Loans for com
mercial, industrial, and agricultural purposes showed only a
small rise during the four-week period.
Member banks in 100 other centers reported a net con
traction of $115,000,000 in the volume of outstanding loans;
as in New York City, most of the decrease was accounted
for by a decline in loans for purchasing or carrying securities.
repaid funds borrowed during the drive, and ( 3 ) a decline in
There was a small increase in loans for commercial, industrial,
and agricultural purposes, but all other types of loans declined
during the period.
the level of total deposits and a shift of deposits from War
In both New York City and the 100 other cities, the con
ments, (2 ) a contraction in the volume of loans for purchas
ing or carrying Government securities, as dealers and others
Loan accounts of the Government to private accounts of
individuals and corporations.
Between November 24 and December 22 the reporting
member banks in New York City reduced their holdings of
Government securities by $497,000,000. Most of this decline
was accounted for by the sale of certificates of indebtedness
and Treasury bills. Last June, when New York City banks
reduced their Government security portfolios considerably in
order to offset losses of reserve balances, they relied chiefly
on the sale of Treasury bills. During the recent period, how
ever, the sale of certificates of indebtedness also assumed
Changes in Holdings of U. S. Government Securities
by Federal Reserve Banks, Direct and Guaranteed
(In millions of dollars)
Week ended
Bills
Certificates
Notes
Bonds
Total
1943
3 ...............
10...............
17 ...............
2 4 ...............
+154
+278
-1 1 1
+452
+ 20
+103
+ 77
+ 72
—
—
+ 11
+
8
+
1
+
3
+ 185
+ 389
- 33
+ 532
Dec. 1 ...............
Dec. 8 ...............
Dec. 15...............
Dec. 2 2 ...............
Dec. 2 9 ...............
+
2
+375
- 73
+426
- 81
+ 66
+176
+101
+ 87
+134
+
3
+ 13
+
4
+ 25
+ 10
+ 83
+ 569
2
+ 538
+ 63
Nov.
Nov.
Nov.
Nov.
+
5
+ 12
+
5
- 34
—
traction in total loans and investments was reflected in a de
cline of total deposits. The Treasury withdrew $2,782,000,000
from its deposits with these banks during the four-week period,
November 24 to December 22, and other deposits rose only
$1,195,000,000.
Changes in Holdings of U. S. Government Securities
by the Weekly Reporting Member Banks
(In millions of dollars)
Week ended
Bills
Certificates
Nov. 10...............
Nov. 17...............
Nov. 2 4 ...............
-1 3 3
- 18
+159
-2 6 8
- 22
- 58
- 14
+ 47
+
-
16
6
11
13
-
+112
-1 5 7
+
3
-1 2 1
-
28
28
73
77
-
Dec. 15 ...............
Dec. 22 ...............
4
0
56
19
1943
Nov. 3 ...............
Nov. 10...............
Nov. 17...............
Nov. 2 4 ...............
- 88
-2 1 0
+
4
-1 6 3
+ 18
- 22
- 13
- 27
-
7
12
8
15
+
+
+
+
Dec. 1 ...............
Dec. 8 ...............
Dec. 15...............
Dec. 2 2 ...............
-1 0 3
-2 0 7
+ 58
-2 9 6
+
-
-
5
26
35
14
Notes
Bonds
Guaranteed
Total
39
44
24
73
+
1
+
1
- 21
- 19
-2 0 9
-1 2 5
+111
-3 2 6
6
- 28
- 10
+ 12
- 15
- 20
+ 12
+
6
+ 59
-2 3 3
-1 2 4
-1 9 9
39
30
29
53
4-
9
0
2
2
- 47
-2 1 4
+ 14
-1 5 4
+
2
+ 26
+ 40
3
+
+
-
1
1
12
5
- 95
-2 8 5
+ 23
-3 5 4
New York City
1943
-
100 Other Cities
10
79
28
36
MONTHLY REVIEW, JANUARY 1, 1944
4
F O U R TH W A R L O A N D R IVE
The Fourth War Loan drive covering the period January 18February 15 will aim at raising at least $14,000,000,000 from
investors other than commercial banks. This goal compares
with one of $15,000,000,000 set for the September drive,
which was oversubscribed by more than $3,300,000,000.
While the over-all goal is $1,000,000,000 less than in the
September drive, the goal for individuals has been raised
from $5,000,000,000 to $5,500,000,000. The major effort
will be directed toward increasing sales to individuals and
the State War Finance committees conducting the drive are
being strengthened and expanded in an effort to reach as many
individual investors as possible.
In keeping with this effort
is the Treasury’s decision to announce, through January 31,
only sales to individuals, although subscriptions from others
will be accepted during this period. New York State’s goal for
sales to individuals during the Fourth drive is $911,000,000,
compared with the Third drive quota of $796,000,000 and
actual sales of $850,000,000.
The Department of Commerce has estimated that net savings
of individuals, i.e., income remaining after personal taxes and
expenditures for consumer goods and services, will amount to
about $36,000,000,000 for the calendar year 1943. Currently,
the rate of accumulation of savings is probably even greater.
After allowing for the amount that would normally go into
insurance and other forms of savings, a large sum still remains
in the form of currency and demand deposits which might be
used to bid up prices on the limited amount of goods produced
for civilian consumption. It is desirable to have a substan
tial portion of such savings invested in war bonds, in which
form they would be less likely to be used in ways that would
foster inflationary tendencies.
The securities of the Fourth drive, like those of the preced
ing drives, are designed to appeal to various types of investors.
Except for the 2 Va per cent bond of limited marketability,
which replaces the 2 per cent and 1 % per cent fully market
able bonds of earlier drives, the securities are of the same
types as those offered in the preceding campaigns. Savings
bonds Series E, F, and G are designed primarily for indi
of the Board of Governors of the Federal Reserve System,
may subscribe to any or all of the four bonds up to 10 per
cent of its savings deposits as of the last call date, or in the
amount of $200,000, whichever is less.
However, banks may
not hold more than $100,000 of Series F and G Savings bonds
(Series 1944) combined. It is expected that the major por
tion of the securities acquired by commercial banks under
this program will go to banks outside the large centers.
All
subscriptions by commercial banks will be considered outside
the $14,000,000,000 goal set for the drive.
The Treasury again stresses the importance of entering sub
scriptions through the banks where funds are located in order
to avoid unnecessary transfers of funds.
Such transfers of
funds involve disturbances to the money market and con
siderable extra work, while they serve no purpose that the
system of allocation does not cover adequately. Credits for
sales during the drive will be given to any county or counties
requested by the subscriber at the time of subscription.
Insur
ance company subscriptions, however, will be credited only to
that county in which the head office is situated. In the absence
of a specific request, credit generally will be given to the
counties indicated by the addresses on the subscription form.
The Treasury also requests commercial banks not to pur
chase the certificates and the market not to trade in any of
the marketable issues until after termination of the drive on
February 15. In an attempt to discourage "free riding”, that is,
purchases by speculators who hope to resell the securities at
a profit after the subscription books on a new issue are closed,
banks are asked to refrain from making loans to finance specu
lative subscriptions. Loans for the purpose of purchasing
Government securities for permanent investment, however, are
approved, provided they are on a short term or amortization
basis.
N E W SE C U R IT Y ISSUES
The volume of domestic corporate new security issues in
1943 about equaled the 1942 total of $1,037,000,000. Issues
in each of the two years, however, were well below those in
any year in the 1935-41 period, when annual totals exceeded
$2,000,000,000. An increase between 1942 and 1943 in offer
viduals; Treasury savings notes and % per cent certificates
ings for refunding purposes was offset by a decrease in issues
of indebtedness due February 1, 1945 have the strongest
to raise new capital.
appeal for corporations and others desiring to invest funds
While the volume of new corporation security offerings was
on a short term basis; and the 2 V per cent bonds of 1956-59
and 2 Vi per cent bonds of 1965-70 supply an investment
approximately the same in 1943 and 1942, a rising tendency
medium for mutual savings banks, insurance companies, and
tendency of the preceding year.
other large investors interested in long term bonds and rela
indicates, the monthly average of new financing by the last
tively high coupon rates.
Although commercial banks will be excluded from the Janu
quarter of 1943 was at the highest rate in two years. The 1943
ary drive as they were in September, those banks accepting
approximately $650,000,000 and accounted for nearly two
time deposits will be permitted to enter limited subscrip
thirds of the year’s total; securities issued for new capital
tions for Savings bonds of Series F and G, and
purposes declined to about the 1939 total of $383,000,000.
a
and
21/2
per cent bonds.
2 V a
per cent
prevailed during 1943 in comparison with the contracting
As the accompanying chart
volume of issues offered for refunding purposes amounted to
The Treasury has announced that
New municipal offerings in the past year continued the
any bank holding savings deposits, as defined in Regulation Q
decline which has been in progress since 1940 and were the
FEDERAL RESERVE BANK OF NEW YORK
Monthly Average Volume of Domestic Corporate Security Issues
for Refunding and for New Capital*
M IL L IO N S
OF DO LLARS
5
Moody’s index of Baa bond yields declined from 3.84 per cent
at the end of November to 3.80 per cent at the end of the
year, while the index of yields on Aaa corporate bonds showed
little net change. In the early part of December, yields on
municipal bonds, as measured by Standard and Poor’s index,
continued the rise begun in November, and on December 8 the
index reached 2.02 per cent, the highest level since July 7.
Declines in the next three weeks, however, lowered the average
to 1.98 per cent on December 29.
W H O L E SA LE C O M M O D IT Y PRICES
After three years of almost uninterrupted advance, the
Bureau of Labor Statistics index of wholesale commodity
prices declined slightly in June and July 1943 and thereafter
has shown little change from month to month. As indicated
1937 1938 1939 1940 1941
YEAR
1*t
2 nd 3™
4™
ist
2 nd 3RD 4 ™
QUARTER
QUARTER
1942
1943
* Data from Commercial & Financial Chronicle; figures for December in
the fourth quarter of 1943 estimated by Federal Reserve Bank of New York.
lowest of any year in the period for which the record is avail
able (1919 to date). The decrease between 1942 and 1943
reflected a drop of about 50 per cent in security issues for new
capital purposes, to a level below $200,000,000; municipal
in the accompanying chart, the decline resulted from decreases
in the indexes for farm products and foods.
For both these groups the indexes rose rapidly after the
first quarter of 1941, since many items in each group were
not subject to the governmental regulations that controlled
wholesale prices of industrial commodities. In June of the
refunding operations, on the other hand, increased.
past year, governmental orders were issued for reductions in
the maximum prices on meats, to be accomplished by means
of subsidy payments to processors. The lower prices of meats,
SEC U R IT Y M AR K E TS
together with seasonal decreases in the prices of fresh fruits
and vegetables, were reflected in the downward movement of
The Government security market during December was
marked by portfolio adjustments for year-end statement and
tax purposes, and in anticipation of the Fourth War Loan.
At the same time, banks continued to make net sales of
the price indexes for both farm products and foods.
Raw
cotton prices dropped gradually during the second half of
the year.
Prices of industrial commodities, that is commodities other
Treasury bills and certificates of indebtedness to meet increased
than farm products and foods, advanced a little in each month
reserve requirements and to replenish reserve funds lost through
of 1943, but the net increase for the year— as in 1942— was
enlarged currency circulation and adverse clearings balances.
Bills and certificates sold by the banks were largely absorbed
very small. Between August 1939 and December 1943, prices
of industrial commodities rose 22 per cent, food prices 58 per
cent, and prices of farm products 99 per cent.
by the Federal Reserve Banks. Selling of other classes of Gov
ernment securities was predominantly in the partially taxexempt bonds of short and medium term maturities, while
fully taxable short and medium term bonds, and notes, were
in moderate demand. There was also some demand for short
Indexes of Wholesale Commodity Prices*
(1926 averages 100 per cent)
PER C E N T
term certificates, presumably as temporary mediums of invest
ment by nonbanking investors pending the start of the Fourth
War Loan drive. Most of the partially tax-exempt Treasury
bonds maturing or callable within the next five years showed
net advances in yield of 0.02 to 0.04 per cent; on the other
hand, yields on taxable bonds maturing or callable up to eight
years generally declined about 0.03 per cent. On long term
bonds yields were little changed during December.
Stock prices during December recovered well over one-third
of the loss occurring in the July-November decline.
Railroad,
industrial, and utility stocks all shared in the upturn, and
Standard and Poor’s price index of 90 combined stocks ad
vanced 6 per cent.
Increases in prices of domestic corporate bonds were con
fined largely to the medium and lower grade railroad issues.
* Data of U. S. Bureau of Labor Statistics; December 1943 estimated from
weekly figures.
t Other than farm products and foods.
MONTHLY REVIEW, JANUARY 1, 1944
6
EMPLOYMENT AND PAYROLLS
Factory employment in New York State (as measured by
facturing consumers’ nondurable goods were offset by increases
in war industries, particularly in shipbuilding.
the index of the State Department of Labor), after increasing
sharply between mid-1940 and the end of 1942, changed very
to rise last year, despite the tendency for employment to be
Factory payrolls in New York State as a whole continued
fluctuations in total factory employment, however, conceal
diverse movements among the various industries and among
come comparatively stable. In November 1943 (the latest
month for which data are available) the State Labor Depart
ment’s index of payrolls was 20 per cent above that in Novem
the several industrial areas of the State.
ber 1942.
little from month to month during most of 1943.
The narrow
The accompanying chart shows clearly the changes that
took place during 1943 in New York City and in industrial
areas of Upstate New York. Factories manufacturing war
materials in the Syracuse district continued to add to their
The greatest increase occurred in the Syracuse area,
but marked advances took place also in New York City, the
Poughkeepsie area, and the Binghamton district.
PR O D U CTIO N A N D T R A D E
numbers of workers, and employment in that area advanced
Preliminary data for December indicate moderate recessions
at a rate which was about half that in the final quarter of
in some lines of activity from the high levels of October
1942. In the Poughkeepsie area, also, expansion in war indus
tries resulted in some further increase of total factory employ
ment. Employment in the Rochester and Binghamton districts
and November.
tended to advance during the year, although the changes that
several companies, following expiration of union contracts.
Output of crude petroleum was slightly smaller than in Novem
ber, and carloadings of railway freight in the first three weeks
occurred were relatively small.
Areas in which fairly definite downturns took place included
Buffalo and Albany, the two districts that had made the
greatest percentage gains in employment between 1939 and
1942. In Buffalo the high month for employment was July;
the losses that occurred thereafter reflected decreases at iron
A decline in steel production reflected both
cutbacks in programs of some industries manufacturing war
materials and a brief suspension of work by employees of
of December declined about 5 per cent. On the other hand,
with the settlement in November of the wage dispute in the
coal industry, output of bituminous coal rose substantially and
year resulted from lowered employment in the metals, machin
remained at a high level in the weeks ended December 4
and 11. Seasonally corrected electric power production has
changed little from week to week, and final December figures
will probably be about the same as those for November.
ery, and textile industries. Decreases in these industries also
brought a decline, after the middle of the year, in employment
Early in December the War Production Board announced
that goals for total war output in 1944 would be 17 per cent
in the Utica district.
Employment in New York City in 1943 fluctuated less
above 1943 production. Cutbacks are scheduled for some indus
tries, notably in small arms ammunition and the construction
widely than in earlier years. Declines at establishments manu
of war plants, but these changes will be more than offset by
and steel plants and at transportation equipment factories.
In Albany, the decline which began in the first half of the
Indexes of Factory Employment and Payrolls iii Selected Industrial Areas in New York State*
(1935-39 averagers lOO per cent)
1939
1940
1941
*1942
1943
1939
1940
1941
1942
1943
* Data of New York State Department of Labor.
1939
1940
1941
1942
1943
1939
1940
Plotted on ratio scale to show proportionate changes.
1941
1942
1943
FEDERAL RESERVE BANK OF NEW YORK
the large increases planned in output of trucks, aircraft, and
artillery ammunition. To attain the 1944 goal, industry must
operate at a rate only slightly higher than that prevailing dur
Steel Merchant Ships Over 2,000 Gross Tons
Completed by U. S. Shipyards*
M IL L IO N S OF
D E A D W E IG H T TO N S
2 Of--------------------
ing the fourth quarter of 1943.
Production in 1943 for two of the major war industries
attained record levels. Steel production has been estimated at
89,000,000 net tons for the year.
Although not greatly above
the output of 1942, it was 44 per cent above that of 1929 and
nearly 80 per cent larger than in 1917.
A notable achievement during 1943 was the completion of
1
steel merchant ships at American shipyards. Nearly 18,000,000
deadweight tons were produced, more than double the amount
for 1942 and three and one half times greater than the tonnage
for 1919.
(See accompanying chart.)
Production an d T rade in N ovember
The volume of industrial production, adjusted for seasonal
variation, in November differed little from that in October,
despite declines in the output of some industries. Work stop
pages in the coal mines at the beginning of the month resulted
in curtailed output of bituminous and anthracite coal and, to
a lesser extent, in restricted coke production. The rate of opera
tions at steel mills, which had exceeded 100 per cent throughout
October, averaged 98.4 per cent in November, and daily aver
1914 ’ 1© *18 ’ 20 *22 *24 ’ 26 *28 *30 ’ 32 *34 , *36 *38 *40 '42
*
Data from M arine Engineering and Shipping R ev ie w ; figures for 1943
estimated by Federal Reserve Bank of New York on basis of data for first
eleven months.
age production dropped below the high level of October. A
decline occurred also in the dollar volume of construction con
tracts awarded. The War Production Boards index of muni
tions, however, indicates that several important war industries
showed substantial increases in output. Gains of 6 per cent in
both the aircraft and the communication equipment industries,
highest level yet attained (665 per cent of the November 1941
average). In several consumers’ nondurable goods industries,
activity expanded sharply during November, and pronounced
gains for the month occurred in retail trade, chiefly as a result
of the early Christmas shopping.
together with an advance of 4 per cent in shipbuilding and of
3 per cent in the manufacture of guns, brought the index to the
FU R N ITU R E STORE T R A D E
Furniture store sales in the Second Federal Reserve District
1942
1943
during November were 2 per cent higher than in October and
Nov.
Nov.
Sept.
Oct.
Indexes o f Production and Trade*
(100 = estimated long term trend)
Index of Production and Trade.................
125
124
126p
127p
Production.................................................
134
132
133p
134p
Producers’ goods— total......................
Producers’ durable goods...............
Producers’ nondurable goods........
171
206
131
107
195
135
167p
196p
134p
166p
196p
133p
Consumers’ goods— total...................
Consumers’ durable goods.............
Consumers’ nondurable goods. . . .
88
38
105
87
25
107
87 p
25p
107p
89p
25p
IlOp
Durable goods— total..........................
Nondurable goods— total...................
157
116
145
119
146p
118p
146p
119p
Primary distribution................................
Distribution to consumer.....................
Miscellaneous services............................
141
93
153
157
81
172
158p
84p
170p
156p
88p
174p
Cost of Living, Bureau of Labor Statistics
(100 = 1935-39 average).............................
120
124
124
124p
Wage Rates
(100 = 1926 average)..................... ............
145
157
157p
Velocity o f Demand Deposits*
(100 = 1935-39 average)
New York C ity.............................................
Outside New York City..............................
♦Adjusted for seasonal variation.
10 per cent above November 1942, but 4 per cent lower than
in November 1941. For the year through November, sales
were 1 per cent above those in the corresponding 1942 period
but 10 per cent below January-November 1941. New York
Citys sales for the first eleven months of 1943 were 7 per cent
greater than a year earlier; this record was the best of any of
the five largest cities covered by the survey. Syracuse was next
in line with a gain of 2 per cent; Rochester reported no change;
a decline of 6 per cent was shown for Buffalo; while Newark
sales were down 18 per cent.
Furniture store stocks declined during November for the
third consecutive month. At the November rate of sales, stocks
at the close of the month represented 3.3 months’ supply, com
pared with 5.3 months’ supply one year earlier.
Although accounts receivable have increased slightly since
62
82
88
94
p Preliminary.
74
81
70
76
the close of August, they were on November 30 more than 50
per cent below those at the end of December 1941, the month
when the fairly steady decline which lasted through August
MONTHLY REVIEW, JANUARY 1, 1944
8
Furniture Store Sales, Stocks, Receivables, and Collections
Second Federal Reserve District
further advance of about 10 per cent occurred in 1943. Syracuse,
Rochester, and New York City likewise reported improvement
Percentage change from the preceding year
Locality
Accounts
receiv
able
Collec
tions
Nov. 30, 1943
Nov. 1943
Stocks
on
hand
Net sales
Jan.-Nov.
Nov. 1943
1943
in each of the four years, but for none of these three cities
has the increase for the entire period been so great as that for
Buffalo.
Sales in Bridgeport, which had shown the largest
increase (57 per cent) from 1939 to 1942, declined about 5
per cent in 1943. Newark sales in 1943 dropped slightly below
New York C ity.............
Northern New Jersey ..
Newark.......................
W estchester-Fairfield. .
Hudson River Valley. .
Central New York State.............
Syracuse .......................
Northern New York State..........
Southern New York State...........
Elmira.........................
Western New York State............
Buffalo..........................
Rochester...................
+14
+ 7
-2 0
+18
- 4
- 2
0
- 2
-1 3
-1 3
+ 2
- 1
+ 8
+ 7
-1 2
-1 8
- 2
-1 3
- 3
+ 2
+ 8
-1 8
-2 1
- 3
- 6
0
Total outside New York City
+ 3
-
Total Second District...........
9
+1°
-3 0
-3 8
-4 9
—
—
-2 9
—
-3 7
-3 8
-3 8
-3 0
-3 1
-2 6
-2 4
-3 2
-2 9
-1 2
-3 5
-2 9
-2 8
-4 1
-3 9
-3 9
-2 8
-2 6
-3 0
0
-1 3
-2 4
+12
-2 0
-1 7
-1 1
—
-3 1
-3 1
-1 4
-1 2
-1 3
7
-3 3
-3 0
-1 5
+ 1
-3 1
-2 6
-
Total District
New York City
Nov.
1942
Nov.
1943
Nov.
1942
Nov.
1943
82.6
82.7
83.3
83.7
5
Outside
New York City
Item
Credit sales as per cent
of total sales...............
Stocks on hand, end of
month, as ratio to
month’s sales.............
Collections, exclusive of
down payments, as
per cent of receiv
ables, first of month. .
,
i
Nov.
1942
Nov.
1943
80.9
80.1
those in 1942, and the gain since 1939 has been less than that
for any one of the other major cities in the District.
R e v is io n
of
In d e x e s
of
D e p a r t m e n t St o r e Sa l e s
Se c o n d F e d e r a l R eserve D is t r ic t
The indexes of department store sales for the Second Federal
Reserve District have been revised from 1919 to date, in
accordance with a national program of the Federal Reserve
System. The revised figures reflect primarily the inclusion of
additional stores and recomputed seasonal adjustment factors,
and they are expressed as percentages of average daily sales in
1935-39, the base period now used for many national and
regional business indexes. Monthly indexes for the entire
period covered may be secured from this bank upon request.
Work is now in progress on the revision of the index of depart
5 .3
3 .3
5.2
3 .2
5 .5
3 .6
13.0
15.3
12.6
14.6
14.1
17.1
ment store stocks for the Second Federal Reserve District, and
the revised figures will be made available in the near future.
Department and Apparel Store Sales and Stocks, Second Federal Reserve
District, Percentage Change from the Preceding Year
Net sales
1943 set in. Collections in November against accounts out
Locality
standing at the close of October amounted to 15 per cent.
Nov. 1943
D E P A R T M E N T STORE TR A D E
trict during December, judging from sales for the four weeks
ended December 25, about equaled the record high volume for
December reached in 1942. In November, gift buying was
reported to have been unusually active, and sales figures for
that month, attaining a new high for November, were 17 per
Westchester and Fairfield Counties.
Bridgeport.........................................
Lower Hudson River Valley.............
Poughkeepsie....................................
Upper Hudson River Valley.............
cent above those in November 1942. That somewhat more than
the usual amount of early Christmas shopping took place in
total compared with 61 per cent for December 1942 and a
Syracuse ............................................
Northern New York State................
Southern New York State.................
Binghamton......................................
Elmira................................................
Western New York State..................
Buffalo...............................................
Niagara Falls....................................
Rochester..........................................
+ 17
+20
+10
+ 11
+ 9
+ 6
+24
+29
+ 8
+ 9
+ 7
+2 5
+23
+3 0
+2 7
+11
+2 0
+23
+13
+15
+18
+17
+13
range of 60 to 62 per cent for the nineteen years, 1924 through
Apparel stores (chiefly New York City)
+30
Department store sales in the Second Federal Reserve Dis
November 1943 is indicated by the fact that December of 1943
accounted for 57 per cent of the combined two months’ sales
Department stores, Second District. . .
New York C ity ....................................
Northern New Jersey.........................
Schenectady......................................
Central New York State...................
Mohawk River Valley....................
Stocks on
hand
Jan. through Nov. 30, 1943
Nov. 1943
+ 8
- 1
0
- 2
- 5
+ 7
+ 9
- 1
- 4
+ 4
+12
+13
+14
+12
+ 3
+11
+1 5
- 1
+10
+ 11
+ 27
+ 7
-1 3
-1 5
-1 8
-2 0
- 8
-1 1
- 2
—
- 4
—
- 3
- 7
-1 8
—
- 1
—
0
—
—
- 7
- 5
- 1
-1 1
+21
+ 7
+ 7
1942. When November and December are considered together,
however, the combined sales for the two months attained a new
Indexes of Department Store Sales and Stocks,
Second Federal Reserve District
peak for the Christmas trade. Christmas sales appear to have
1942
been greatest in the higher priced lines, with the luxury items
were the highest of any year on record and 34 per cent above
those in 1939, a substantial part of the increase in the fouryear period resulting from price advances.
For the six major cities in the Second District, changes since
1943
Item
showing substantial gains. Sales in the Second District in 1943
Nov.
Sept.
Oct.
Nov.
1935-89 average = 100
Sales (average daily), unadjusted*
Sales (average daily), seasonally adjusted*
161
132
140
131
156
136
181
148
1923-25 average = 100
Stocks, unadjusted
Stocks, seasonally adjusted
152r
135r
128
123
131
119
132
115
1939 have varied markedly. Buffalo has shown the greatest
increase; sales rose 52 per cent between 1939 and 1942, and a
* Indexes revised from 1919 to date; available upon request,
r Revised.
FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, JANUARY 1, 1944
General Business and Financial Conditions in the United States
(Summarized by the Board of Governors of the Federal Reserve System)
TNDUSTRIAL activity was maintained at a high level in November and the early part of
December. Value of retail sales during the Christmas buying season has been larger than
last year's record sales.
In d u s t r ia l Pr o d u c t io n
Index of Physical Volume of Industrial Production,
Adjusted for Seasonal Variation, 1935-39
Average = 1GO Per Cent. (Groups shown
are expressed in terms of points
in the total index.)
Income Payments to Individuals, Based on De
partment of Commerce Estimates. W ages
and Salaries Include Military Pay.
Monthly Figures Raised to
Annual Rates.
Industrial production in November was at 247 per cent of the 1935-39 average, the
same as in October and 2 points higher than in September according to the Board’s seasonally
adjusted index. Further increases in munitions production in November were offset in the
total index by smaller output of coal and steel.
The reduction in steel output from the high October rate was small and reflected partly
a decline in war orders for some types of steel products. Activity in the machinery and
transportation equipment industries continued to rise in November. The Board’s machinery
index, which had been stable from April to August, advanced 5 per cent in the past 3 months
as a result of increases in output of electrical equipment and other machinery, which includes
aircraft engines.
Total output of nondurable goods in November continued at the level of recent months.
Activity in woolen mills showed little change as increased production of civilian fabrics,
resulting from the lifting of restrictions on the use of wool, offset reduced output of military
fabrics. Production of manufactured food products continued at a high level. Federally
inspected meat production in November was one-fourth larger than a year ago. Newsprint
consumption in November declined to a level 15 per cent below the same month last year.
Output in the rubber products and petroleum refining industries continued to increase.
Coal production increased sharply in the latter part of November, but for the month
as a whole bituminous coal output was down 9 per cent from October and anthracite 19 per
cent. In the early part of December output of bituminous coal was at the highest rate in
many years.
D is t r ib u t io n
Notwithstanding a reduced selection of merchandise, department store sales in November
were about 10 per cent greater than the large volume of sales in November 1942, and in the
first three weeks of December sales were about the same as a year ago. Value of department
store stocks at the end of October was reported to be 9 per cent smaller than a year ago and
it is estimated that, contrary to the usual seasonal movement, stocks declined in November.
Freight carloadings were maintained in large volume in November and in the first half of
December. Loadings of coal during the four weeks ended December 11 were at the highest
rate in many years, following a sharp drop in the first half of November. Shipments of grain
and livestock were in unusually large volume for this time of year.
C o m m o d it y Prices
Grain prices continued to advance from mid-November to mid-December and reached
levels more than one-fourth higher than a year ago. Wholesale prices of other farm and
food products showed little change, while prices of various industrial commodities, including
coal, were increased somewhat.
The cost of living, which had increased 0.4 per cent in October, declined 0.2 per cent
in November, according to the Bureau of Labor Statistics index.
Member Bank Reserves and Related Items.
(Latest figures are for December 15.)
LLIO
N
Sofdollars
■j
.V
j
DEM
ANDDEPOSITS
(AD
JU
STED
)
ri
U.S. GOVTSECURITIES
/
LOANS
US.GQVTDEPOSITS
1939
1940
1941
1942
\n !
^}\
1943
Member Banks in Leading Cities. Demand De
posits (Adjusted) Exclude U. S. Government
and Interbank Deposits and Collection
Items. Government Securities Include
Direct and Guaranteed Issues. (Lat
est figures are for December 15.)
B a n k C redit
Excess reserves at all member banks fluctuated around one billion dollars in November
and December, maintaining an average level slightly below that which prevailed during the
previous month. During the five weeks ended December 22, reserve funds were absorbed
by a preholiday rise in money in circulation of about 800 million dollars, and required
reserves continued to increase as Treasury expenditures transferred funds from Government
accounts to private deposits. Needed reserves were supplied to member banks through an
increase of 1.7 billion dollars in Government security holdings at the Reserve Banks.
Additions to Treasury bill holdings accounted for the larger part of the increase, but certificate
holdings also rose substantially.
During November and the first half of December, loans and investments at reporting
member banks in 101 leading cities declined by around 2 Vi billion dollars, after increasing
by 6V4 billion in September and October. Holdings of all types of Government securities
decreased. Bill holdings, mainly because of sales to the Reserve Banks, showed the largest
decline. Loans for purchasing or carrying securities continued to decline over the period.
@FedFRASER