View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

MONTHLY REVIEW
O f Credit and Business Conditions

FEDERAL
V o lu m e

29

RESERVE
JULY

BANK

OF

NEW

YORK

1 94 7

No. 7

MONEY MARKET IN JUNE
The money market was subject to some pressure in the
first week of June, but was easier thereafter until the closing
days of the month. Increases in required reserves and in cur­
rency in circulation, Treasury redemptions of maturing certifi­
cates held by the Reserve Banks, and other transactions caused
a sizable drain on reserves early in the month, and demands
from member banks for Federal Reserve credit were heavy.
Trading in immediately available reserve funds ("Federal
Funds” ) was commonly at 7s per cent during the first ten
/
days of the month, and occasionally there was some trading
at slightly higher rates. The reserve position of member banks
was eased materially around the middle of the month, however,
when large Treasury disbursements, including quarterly inter­
est payments on the public debt of about 700 million dollars,
provided the banks with substantial amounts of funds, and
permitted the retirement of a considerable amount of Federal
Reserve credit. Income tax collections caused a gradual drain
of reserves from the banks during the latter half of the month,
which was increased on June 26 by a Treasury withdrawal
from War Loan deposit accounts for the retirement of 200
million dollars of Treasury bills, most of which were held by
the Reserve Banks. The banks’ losses of reserves through these
operations were largely offset, however, by Government dis­
bursements and by persistent and substantial payments from
foreign accounts in this market, partly financed by the sale of
gold shipped from abroad or released from foreign holdings
here. Late in the month, however, renewed recourse to Federal
Reserve credit was necessary.
Treasury debt redemption operations during the past month
included the cash retirement of 1 billion of a 2.8 billion dollar

tion of such deposits from reserve requirements, six months
after the Presidents proclamation of December 31, 1946 of
the end of hostilities of World War II, will have no great

effect on the member bank reserve positions.
As shown in the accompanying chart, the volume of War
Loan accounts has been drawn down rapidly in the last year
and one half, chiefly in connection with the Treasury’s heavy
public debt retirement operations. These withdrawals have
brought the total down from somewhat more than 24 billion
dollars early in 1946 to less than three quarters of a billion
on June 18, 1947. Since the Victory Loan drive, the major
source of additions to War Loan deposits, which have recently
been running at the rate of 400 to 500 million dollars a month,
has been from sales of Savings bonds and notes. Further with­
drawals, therefore, will necessarily be on a limited scale.
G o v e r n m e n t S e c u r ity M a r k e t

Prices of Treasury bonds receded during the past month,
the December 2 Vis of 1967-72 (the Victory Loan issue) fall­
ing to a new low for the year at 102% on June 23, down
9 /1 6 of a point since the end of May and almost % of a
point from the 1947 high. The decline in Treasury bond
U. S. Government W ar Loan Deposits, 1946-47*
B IL L IO N S
OF D O L L A R S

28 ------------ -------------------------- -------------------------- --------------------------

issue of certificates of indebtedness maturing June 1, as well
as the 200 million dollars of the Treasury bill issue maturing
June 26. To cover these requirements and to meet other Gov­
ernment expenditures, the Treasury withdrew 1.5 billion dol­
lars from its War Loan deposit balances early in the month
and close to 200 million on June 26. As a result of these with­

8

-

4

drawals and additional credits, it is estimated that War Loan
deposits will decline to about 800 million dollars by the end
of the month, and another call of 300 million dollars is to be
paid on July 1. Thus the termination on June 30 of the exemp­




n~- l - i

1 1 1 ! __ 1_ 1 _i j__ 1..J...I,,... 1____1 _gU__ I
_ _ ,—
_
_
1946

* Wednesday dates; latest figure is June 18, 1947.
Source: U. S. Treasury Department.

1947

f

66

MONTHLY REVIEW, JULY 1947

prices affected bank eligible as well as ineligible bonds,
although the drop in prices of the long term ineligible issues
was considerably greater.
the close of the month.

A minor recovery occurred toward

The decrease in prices started around the middle of May,
but the major part of the decline occurred during June. The
Treasury announced net sales of 339 million dollars of Gov­
ernment securities for its investment and other accounts dur­
ing May, and the Federal Reserve Banks also sold 18 million
dollars of bonds in that month (and another 8 million in the
first statement week of June). Although these transactions
had little effect on Treasury bond prices during May, publica­
tion of the figures on Treasury sales in May and data in the
daily Treasury statements which were interpreted in the market
as indicating further substantial sales of bonds in June appar­
ently had greater effect on the Treasury bond market during

York City banks, which at the peak accounted for less than
40 per cent of the business loans of all the weekly reporting
banks.
The falling off in loans in out-of-town centers appears to
have been no more than seasonal. In New York City, however,
only part of the decline can be attributed to seasonal influ­
ences— to some extent, it has been the result of repayments
of bank loans by corporations out of the proceeds of sales of
new securities. In some small part, it may also have reflected
the efforts of retail and other business organizations to reduce
their inventories.
All other major types of loans rose at the weekly reporting
banks. This increase more than offset the decline in commer­
cial credits, so that in the four weeks ended June 18, total
loans rose 178 million dollars to 16,981 million. Loans to

some unsettlement in June, the market for certificates of in­
debtedness, particularly for the shorter maturities, evidenced

brokers and dealers on Government and on other securities
fluctuated widely, rising sharply in the week ended June 4
in connection with dealer operations related to the June 1
Treasury certificates and the flotation of new security issues
of corporations and municipalities, and falling thereafter. On
balance there was a sizable net gain in the period under
review, most of which occurred in dealer borrowings from the
New York City reporting banks. Real estate loans rose slightly
and all other loans, largely to consumers, also advanced, chiefly

some firmness in price (decline in yield) after the early part
of. the month. Yields on short maturity certificates were com­
paratively high in the first part of June because of selling by

among out-of-town banks.
Government security holdings of the weekly reporting mem­
ber banks were reduced sharply in the first week of June, only

banks in need of reserves, and also by business corporations
raising funds to meet tax payments and by a few institutional
investors. After the announcement by the Treasury that it

partly as a result of redemptions of June 1 certificates, but
increased in the two following weeks when the banks had
more funds at their disposal. The gain in the latter period
came chiefly in Treasury bill holdings and to a lesser extent in
certificates, reflecting the temporary investment of additional
reserve funds. In the week ended June 25, however, the banks
sold a considerable amount of Treasury bills to the Reserve
Banks as a result of renewed pressure on their reserve positions.
Treasury bond holdings rose 124 million dollars during the
four weeks ended June 18 to 27,316 million, a new high for
the year, but holdings of Treasury notes were reduced by 171
million dollars. For the period as a whole, there was a net

the past month. The greater resistance to price decline shown
by Treasury bonds which the banks are eligible to hold was
attributed to continued demand from banks seeking to main­
tain their earnings by acquiring the longer term securities,
and to the more limited offerings of such bonds.
While the Government bond market was experiencing

would replace the entire certificate issue maturing July 1,
1947 with a similar issue expiring a year later, there was sub­
stantial trading in the maturing issue (and later in the new
certificate on a when-issued basis). The easing of the money
market around the middle of the month was accompanied by
a considerable demand for the short maturities especially.
Consequently, yields on near maturities declined during the
month, while yields on the longer certificates remained un­
changed or rose slightly.
M e m b e r B a n k C r ed it

Total commercial, industrial, and agricultural loans of the

decline of 314 million dollars in weekly reporting member
banks’ certificate portfolios which reflected largely the first-ofmonth redemptions.

weekly reporting member banks in 101 cities continued to
decline seasonally during the past month; in the four weeks
ended June 18 the reduction amounted to 106 million dollars.

U N IT E D STATES F O R E IG N T R A D E SINCE
THE W A R

Business loans of the New York City banks declined in each

United States export trade figures in recent months have

of these weeks, but rose slightly in the week ended June 25.
In the reporting banks in 100 other centers, commercial loans

reached unexpectedly high levels in the face of continued slug­
gishness of imports, with the result that the trade-balance fig­

part of the decrease in the next two. From the peak reached

ures, in conjunction with the dwindling of foreign countries’
gold and dollar reserves and of their unutilized dollar credits,

on April 2, business borrowing from the weekly reporting

have given rise to growing fears of a world-wide dollar

banks fell more than 500 million dollars to 10,633 million
on June 18. Two thirds of this decline occurred at the New

month. Exports in the first quarter of 1947 averaged 384 per

declined in the first two weeks and then made up a sizable




shortage. May exports were the largest for any peacetime

FEDERAL RESERVE BANK OF NEW YORK

cent above the 1936-38 level; only a part of this increase was
accounted for by higher prices, the expansion in physical vol­
ume being double the price rise.1
Imports during the first quarter were the largest since 1920,
and exceeded the 1936-38 average by 127 per cent. Their
consistently upward trend since the war is mainly due, how­
ever, to the rise in prices, which now average double those
of 1936-38. Physical volume since V-J Day has not been
greatly above prewar, nor has it tended to expand in recent
months.
The postwar increase in our exports has been widely dis­
tributed, former belligerents and former neutrals alike vying
for our products. The absence of any significant expansion in
aggregate import volume, notwithstanding the sharp increases
in shipments from Latin America, Canada, and other countries
little touched by the war, reflects the extent to which a large
part of the former belligerent countries of Europe and Asia,

67

even after the lapse of a year and a half, have been unable to
restore anything approaching their prewar exports.
The aggregate United States export figures include so-called
"noncommercial” exports— now chiefly UN RRA and private
relief shipments, but dominated during the war by lend-lease.
These "noncommercial” exports, although much under the
earlier postwar months, were still averaging 74 million dollars
a month in the first quarter of 1947, or more than 6 per cent
of total exports. Since such shipments do not call for payment,
their elimination from the trade data is necessary for any
analysis of balance-of-payments trends. In the accompany­
ing tables and charts they have therefore been deducted from
the respective export totals in order to show the "commercial”
exports and export surpluses, and thus measure more accurately
the drain on the dollar resources of other countries.
Even on such a "commercial” basis, the United States export

surplus with the world averaged 653 million dollars a month
1 Export and import value, price, and volumeindexes in January- during the first three months of this year, or the equivalent
March 1947, according to Department of Commerce data, averaged
of more than 7,800 million dollars annually. This is 82 per
as follows (1 9 3 6 -3 8 = 1 0 0 ):
Exports
Imports
cent more than in the preceding quarter, and more than sixteen
Total value...............................
Average prices........................
Physical volume......................

484
181
267

227
202
112

times the 1936-38 average. It is true that a part of the
increase represents exports financed by long term credits

United States Postwar Foreign Trade by Areas
(Monthly averages)
NONCOMMERCIAL

COMMERCIAL EXPORTS

1936’3 8

4™ 1 2 n03 r 0 4th 1 2nd 3 R 4 TH
st
st
t>
QUARTER
1946
1947

1945

1 93 6’30

4™ 1 2 nd 3 R04™ 1 2 nd 3 rd4 th
st
st
QUARTER
1 94 6
194 7

1945

19 3 6 *3 8

4 th 1 2 nd3 rd4™ 1 2 nd 3rd 4 th
st
st
QUARTER
194 6
1 94 7

1945

Source: Computed by the Federal Reserve Bank of New York from reports of U. S. Department of Commerce.




1936 ’38

4™ 1st 2 N03 rd4th , s t 2 * 0 3 * 0
QUARTER
194 6
1947

1945

4TH

68

MONTHLY REVIEW, JULY 1947

extended by this country, of which the British and French loans
are outstanding examples, but even allowing for such creditfinanced shipments the rate of drain on dollar assets is unpre­
cedented. Widespread reports of increasing foreign-exchange
stringency raise doubts as to how long it can be maintained
on such a scale.
Considerable differences exist between the various regions.
The current difficulties of the British in restoring their export

171 million dollars, the total surplus for the first four months
of 1947 being at the annual rate of over 1,800 million dollars.
Although nearly half our exports to Italy continue to be
private relief and UN RRA shipments, that country too was
able last year to rebuild her own sales to the United States to
United States Postwar Foreign Trade With Continental Europe
(Monthly averages in millions of dollars; exports include
re-exports; imports comprise general imports;
data subject to revision)

trade are reflected in their sales to this country. United States
imports from the United Kingdom during the first quarter of
1947, although the largest since the war, were only moderately
above prewar levels in dollar value, and lagged considerably
in terms of volume, partly because of the coal crisis. Our own
exports to the United Kingdom are running well above pre­
war, both in value and in physical volume. The combination
of sharp increases in price and in volume has lifted the United
States export surplus with Britain to a rate in January-April
of nearly 1,100 million dollars a year, with the consequence
that the British loan is being used up much more rapidly than
had been expected.
United States exports to Continental Europe are currently
running far above prewar levels. Even on a "commercial”
basis first-quarter shipments were more than four and a half
times the 1936-38 average, only part of the increase being
accounted for by higher prices. Total imports from the Con­
tinent remain only moderately above prewar even in dollar
value; in terms of physical volume (allowing for the rise in
prices) they, like those from Britain, undoubtedly show a con­
siderable falling off. The insatiable hunger of the Continent
for American goods and its inability to restore its own exports
as a means of payment for them— both, of course, the product
of the war-wrought devastation— are reflected in a United
States "commercial” export surplus to that area averaging 237
million dollars a month in January-March, against a monthly
average of only 16 millions before the war. The current figure
is the equivalent of more than 2,800 million dollars a year,
without counting an additional 700 million dollars in relief
shipments.
Our trade with the liberated countries of Western Europe
(France, Belgium, Luxembourg, the Netherlands, Denmark,
and Norway) is now almost wholly on a "commercial” basis.
Reconstruction needs continue to keep United States exports
far above prewar levels. Sales by these countries to the United
States recovered steadily during 1946, with the increasing
restoration of production.

The setback that marked the first

quarter of 1947 seems to have been due in part to the severe
winter, and to some extent to the shutting off of supplies
from the Dutch East Indies which the Netherlands have been
largely reselling to us; in any event, the April figures show
recovery, although not to the levels of the second half of
1946.

Despite the April recovery, however, the United States

export surplus with the area for that month rose further to




United States exports
Area

“Commer­
“Commer­ United
cial”
cial”
States
trade
only*
imports balance**

Total

“Noncom­
mercial” *

Western liberated Europe J
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

28.3
91.6
119.9
122.2
90.3
111.0
160.9

9.2
7.1
1.5
1.0
0.8
1.1

28.3
82.4
112.8
120.7
89.3
110.2
159.8

16.2
6.9
9.7
13.3
17.9
19.0
12.8

+ 12.1
+ 75.5
+103.1
+107.4
+ 71.4
+ 91.2
+147.0

Italy
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

5.4
20.6
35.7
34.5
30.9
22.4
44.9

—
14.1b
24.6b
24.6b
17.5b
10.4b
21.8

5.4
6.5
11.1
9.9
13.4
12.0
23.1

3.6
0.8
0.7
8.8
5.9
7.5
4.0

+ 1.8
+ 5.7
+ 10.4
+ 1.1
+ 7.5
+ 4.5
+ 19.1

U. S. S. R.f
1936-38............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

4.3
37.6
38.2
36.3
31.1
13.7
15.9

—
11.3
16.6
17.0
13.3
3.9
5.6

4.3
26.3
21.6
19.3
17.8
9.8
10.3

2.3
1.6
10.3
8.7
6.1
8.3
3.7

Germany and Austria
1936-38.............................
1945October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

9.5
0.3
1.7
12.1
17.3
11.6
16.9

—
a
1.3
7.2
7.1
4.5
7.0

9.5
0.3
0.4
4.9
10.2
7.1
9.9

6.9
a
a
1.0
a
0.5
0.4

+ 2.6
+ 0.3
+ 0.4
+ 3.9
+ 10.2
+ 6.6
+ 9.5

Other Eastern Europeft
1936-38.............................
1945 October-December..
1946 January-March.......
April-June...............
July-September.......
October-December..
1947 January-March.......

5.5
59.1
70.6
56.1
48.7
26.6
44.3

—
58.7
68.6
51.4
40.9
16.5
20.4

5.5
0.4
2.0
4.7
7.8
10.1
23.9

7.4
0.9
2.3
6.3
4.1
8.7
7.9

— 1.9
— 0.5
— 0.3
— 1.6
+ 3.7
+ 1.4
+ 16.0

Sweden and Switzerland
1936-38.............................
1945 October-December..
1946 January-March.......
April-June...............
July-September.......
October-December..
1947 January-March.......

5.6
15.1
20.3
25.3
23.5
35.6
47.2

—
0.4
0.4
0.3
0.1
0.2
0.1

5.6
14.7
19.9
25.0
23.4
35.4
47.1

6.2
21.7
13.4
11.2
11.2
12.7
12.2

—
—
+
+
+
+
+

0.6
7.0
6.9
13.8
12.2
22.7
34.9

Spain and Portugal
1936-38.............................
1945October-December..
1946 January-March.......
April-June...............
July-September.......
October-December..
1947 January-March.......

2.1
5.5
7.3
10.4
8.9
7.7
10.4

—

1.7
6.8
6.8
6.4
5.8
4.9
5.0

+
—
+
+
+
+
+

0.4
1.3
0.5
4.0
3.1
2.8
5.3

a
a
a
a
a
0.1

2.1
5.5
7.3
10.4
8.9
7.7
10.3

+
+
+
+
+
+
+

2.0
24.7
11.3
10.6
11.7
1.5
6.6

* “ Noncommercial” exports comprise, and “ commercial” exports exclude,
UNRRA and private relief exports, as well as such lend-lease exports as are not
to be paid for.
** Excluding “noncommercial” exports; (+ ) = export surplus; (— ) = import
surplus.
t France, Belgium, Luxembourg, the Netherlands, Denmark, and Norway.
f Including Estonia, Latvia, and Lithuania.
tt Finland, Poland-Danzig, Czechoslovakia, Hungary, Rumania, Bulgaria, Yugo­
slavia, Albania, and Greece.
a Less than $50,000.
b Italy: “noncommercial” , in addition to private relief and UNRRA, includes
nonpay lend-lease, plus “ commercial” lend-lease exports for the account of the
British forces (the latter are “ commercial” so far as the U. S.-British trade
balance is concerned, but “ noncommercial” in regard to U. S. trade with Italy).
S o u r c e : Computed by the Federal Reserve Bank of New York from reports of
U. S. Department of Commerce

FEDERAL RESERVE BANK OF NEW YORK

close to prewar levels, in volume as well as value. The sharp
drop of imports from Italy during the first quarter of 1947
reflects the Italian power shortage last winter, and to some
extent the export-curbing rise in Italian prices; this decline
was partly responsible in turn for the sudden rise in the United
States " commercial” export surplus with Italy, which in the
first quarter of 1947 was at the high rate of about 230 million
dollars a year.
In Eastern Europe, United States trade has remained on an
essentially noncommercial basis. UNRRA and private relief
shipments have continued to comprise a considerable part of
our total exports, and much of the remainder is equally non­
commercial in fact. Our "commercial” exports to Russia in part
represent goods financed by long term credits under the 1945
lend-lease agreement. Our trade with Germany includes cotton
supplied by the United States Government for manufacture
into textiles by German mills.2 Only a part of Eastern Europe
is able to supply any goods at all in return; progress toward
anything resembling "normal” trade with the United States
seems to be largely confined to Czechoslovakia.
Our trade with the former neturals of Europe has of course
differed from that with the rest of the Continent, in that their
reconstruction needs have been minor, although Switzerland
and Sweden in particular have been actively making good the
shortages caused by the war. Imports from these countries
also have increased, but not so much as exports, with the result
that the trade balance has moved increasingly against them.
Trade with Canada is on a far more normal basis than with
Britain. Nevertheless, although imports from Canada have
increased sharply over prewar figures, our exports to that
country have risen much more. The United States export sur­
plus is currently at the rate of more than 900 million dollars
a year, compared with an average of only 109 million in
1936-38.
Similar developments have marked our trade with the Latin
American republics, with which our 1936-38 trade balance
was "passive” by an average 58 million dollars annually. Since
the war the trade balance has shown an increasing export sur­
plus, reaching in the first quarter of 1947 the equivalent
of over 1,600 million dollars a year.
As to the rest of the world, our trade with other British
countries (i.e., excepting Canada and the United Kingdom)
shows a somewhat better balance, due in part to the revival of
rubber shipments from Malaya, although a United States export
surplus of 34 million dollars a month with these countries in
January-March suggests that they too may not avoid difficulty.
United States trade with the remaining countries of the world,
of which the Philippines, China, and the Dutch East Indies
2 The United States foodstuffs and other essential materials financed
by U. S. War Department appropriations do not appear in the trade
statistics.




69

account for about half, has shown a heavy export surplus since
V-J Day. This is in sharp contrast to the import surplus
that was usual before the war, and reflects heavy reconstruc­
tion purchases from the United States and the inability of
some of the countries to restore their sales to us to the former
level.
United States Postwar Foreign Trade With Major Areas
(Monthly averages in millions of dollars; exports include
re-exports; imports comprise general imports;
data subject to revision)
United States exports
Area

“Commer­
“Commer­ United
cial”
cial”
States
trade
only*
imports balance**

Total

“ Noncom­
mercial” *

World
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

247
610
761
828
784
874
1198

—
100
130
122
89
46
74

247
510
631
706
695
828
1124

207
321
365
397
412
470
471

+ 40
+189
+266
+309
+283
+358
+653

Continental Europe
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

61
230
294
297
251
229
342

—
93
117
101
80
37
59

61
137
177
196
171
192
283

45
39
44
56
51
62
46

+ 16
+ 98
+133
+140
+120
+130
+237

United Kingdom
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

42
50
76
65
70
74
111

—
a
a
a
a
a
a

42
50
76
65
70
74
111

15
7
11
14
13
14
16

+
+
+
+
+
+
+

27
43
65
51
57
60
95

Canada
1936-38.............................
1945 October-December..
1946 January-March.......
April-June...............
July-September.......
October-December..
1947 January-March.......

38
94
89
108
130
154
158

—
a
a
a
a
a
a

38
94
89
108
130
154
158

29
76
62
69
76
87
81

+
+
+
+
+
+
+

9
18
27
39
54
67
77

Other Britishf
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

25
47
52
62
60
75
126

—
1
a
a
1
2
a

25
46
52
62
59
73
126

31
55
74
60
75
75
92

— 6
— 9
— 22
+ 2
— 16
— 2
+ 34

Latin American Republics
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

40
122
144
166
163
227
310

—
a
a
a
a
a
a

40
122
144
166
163
227
310

45
117
137
148
142
159
176

— 5
+ 5
+ 7
+ 18
+ 21
+ 68
+134

Rest of World tt
1936-38.............................
1945 October-December..
1946 January-March.......
April-June................
July-September.......
October-December..
1947 January-March.......

41
69
106
130
111
115
152

—
6
14
20
9
8
16

41
63
92
110
102
107
136

43
28
38
50
56
72
59

—

+
+
+
+
+
+

2
35
54
60
46
35
77

* “ Noncommercial” exports comprise, and “commercial” exports exclude,
UNRRA and private relief exports, as well as such lend-lease exports as are
not to be paid for.
** Excluding “noncommercial” exports; (+ ) = export surplus; (— ) = import
surplus.
t Including Eire and India, but not Egypt.
f t Comprises non-British Asia, Africa, and Oceania, and colonial possessions in
Latin America other than British and United States.
a Less than $500,000.
N o t e : Areas do not ad d up to world total because of inclusion of British European
possessions (Gibralter, Malta, Gozo, and Cyprus) both in Continental Europe
an d in other British.
S o u r c e : Computed by the Federal Reserve Bank of New York from reports of
the U. S. Department of Commerce.

MONTHLY REVIEW, JULY 1947

70

E X P O R T CR ED IT IN F O R M A T IO N ON
L A T IN A M E R IC A N COUNTRIES
In the interest of adding to the export credit information
now available, with particular reference to the Latin American
countries, this bank has inaugurated a new series of reports.
Under this plan twelve New York City banks, those having a

time as more monthly reports become available, thus making
it possible to study trends that may develop. The reports
should reflect any slowing down of payments by particular
countries, and will significantly high-light changes in the vol­
ume of collections outstanding and in the amount of out­
standing confirmed letters of credit.

this bank the number of collections they have made in each

The present report covers the experience of the reporting
banks regarding collections paid during May, and also shows

Latin American country, together with a schedule showing the

the amounts both of their collections and of the confirmed

substantial foreign business, have agreed to report monthly to

promptness of payments. These collections represent payments

letters of credit outstanding on May 29, 1947. The figures

for goods exported to these countries on a draft collection basis,

indicate that about two thirds of the number of collections

either on sight or on time, but do not include exports covered

paid by Latin American countries through these banks during

by letters of credit or liquidated in other ways. The prompt­

May were prompt; about one fifth of the payments were at

ness of payment is measured by a time schedule shown in the
first column below, which shows the normal collection time

least 30 days slow, while slightly more than 3 per cent were

for each country.

This list has been prepared by this bank

over 90 days slow. A relatively wide spread in the degree of
promptness among

the various countries was indicated;

from information supplied by several of the reporting banks
and will be subject to periodic revision.

prompt payments ranged from 86 per cent in Cuba and
Panama to 27 per cent in Costa Rica. Half or more of the

In addition, the banks will report the dollar volume of cur­

number of collections paid by Argentina, Bolivia, Chile, Para­

rently outstanding collections and the dollar volume of their

guay, and Uruguay were slow, while about one third of the

confirmed letters of credit outstanding for each country.
It is believed that these reports will be useful in providing
American exporters and bankers with additional information

collections paid by Costa Rica were over 90 days slow. It

on credit conditions in Latin America that will help to pre­
sent a clearer picture of the situation there. While the plan
has been under discussion for some time, the need for and
usefulness of the information has recently increased, since
current data now seem to indicate that collections in some of
the Latin American countries are not as prompt as in the
period immediately following the war.
The value of this series of reports should increase with

should be noted, however, that for some countries a low
degree of promptness may be the result, not so much of credit
or exchange conditions, as of the currently prevailing port
congestion. For this reason among others, no definitive con­
clusions can be based upon the present figures until a trend
has been established in future reports. The figures given rep­
resent the picture that emerges from the composite table;
individual reporting banks seem to have had rather widely
varying experience in a number of countries.
Total collections of the reporting banks outstanding at the

Collections Paid, Collections Outstanding, and Confirmed Letters of Credit Outstanding May 29, 1947
as Reported to Federal Reserve Bank of New York by 12 New York City Banks
Outstanding May 29, 1947

Country

Prompt
payment

Collections paid during May; per cent of number of items
30 days
slow

60 days
slow

90 days
slow

44.7
50.0
61.0
48.6
64.8
27.4
86.5
76.8
60.6
73.0
81.5
58.8
74.3
79.0
86.5
39.3
59.5
53.4
49.4
66.5
69.2
57.8

25.3
27.2
24.4
20.7
16.4
7.2
10.5
17.5
25.7
19.2
16.4
24.2
15.8
14.1

16.3
16.7
8.5
15.5
8.9
8.4
2.3
3.7
9.2
5.0
1.5

9.4
4.3
3.5
7.8
4.3
24.9
0.5
1.0
1.3
1.4
0.6
2.4

65.7

19.9

Prompt
Argentina................
Bolivia.....................
Brazil.......................
Chile.........................
Colombia.................
Costa Rica..............
Cuba...................... ..
Dominican Republic
Ecuador....................
Guatemala...............
Haiti.........................
Honduras.................
Mexico.....................
Nicaragua................
Panama....................
Paraguay.................
Peru..........................
Salvador..................
Uruguay...................
Venezuela................
British Guiana........
Dutch Guiana.........
French Guiana........
All countries............




months
months
weeks
months
weeks
months
weeks
month
weeks
weeks
month
month
month
weeks
month
2 H months
2 months
month
months
weeks
weeks
weeks
weeks

10.2

25.0
16.3
33.6
31.8
20.4
25.3
40.6

11.0
5.9
4.7
2.5
14.3
8.5
4.2
9.0

1.8

4.4

0.6
0.5
14.3
5.2
3.7
4.8
2.9
1.1

7.6

3.4

8.0
1.6

Letters of
Collections credit confirm
ed
Over 90 days (In thousands (In thousands
slow
of dollars)
of dollars)
4.3
1.8
2.6
7.4
5.6
32.1
0.2

1.0

3.2
1.4

3.6
2.2
1.6
0.3
7.1
10.5
5.1
5.0
2.2

3.4

11,880
1,722
44,927
5,509
8,104
2,176
4,791
250
1,779
282
138
432
4,957
236
1,209
372
4,121
236
649
6,024
96
201
5
100,096

154,083
5,323
39,302
11,823
22,284
343
12,003
345
3,871
592
259
535
31,288
359
3,788
1,381
1,798
1,389
12,339
23,379
472
326,956

71

FEDERAL RESERVE BANK OF NEW YORK

end of the month in all Latin American countries amounted
to 100 million dollars, while confirmed letters of credit out­
standing totaled nearly 327 million. The reports indicate that
certain countries, notably Argentina, Mexico, and Uruguay,
finance a relatively large proportion of their imports through
the reporting banks on a letter of credit basis, while in the
case of other countries, notably Brazil, draft collections are
more common.
A similar report, in the form of a press release, will be
made available by this bank each month, as early as prac­
ticable. In addition, this banks Monthly Review from time
to time will discuss any trends that may develop.

RECENT PRICE TRENDS
One year ago, on June 30, 1946, price controls lapsed and
were only partly restored a month later; by mid-November

Price Changes in Selected Basic Commodities
at Primary Markets, 1946-47
Postwar peak
Commodity

Percentage change

June 24,
1947 June 29, Peak to
1946 June 24,
Price
price in
1947
Date attained in dollars dollars to peak
’47
’47
’47
’46
’47
’46
’47

.320
.278
.412
.400
.255
.325
39.000

.320
.118
.238
.184
.232
.280
35.000

+256
+223
+188
+186
+124
+110
+108

0
— 58
— 42
— 54
— 9
— 14
— 10

Feb. 25, ’47
Mar. 4, ’47
Coffee (lb.)......................... Oct. 21, ’46
Steers (cwt.)..................... Oct. 1 6 ,’46
May 12, ’47
Oct. 10, ’46
July 15, ’46

29.625
.150
.284
30.250
.226
.885
2.280

24.625
.150
.255
25.625
.214
.640
2.218

+
+
+
+
+
+
+

99
83
80
78
59
58
57

— 17
0
— 10
— 15
— 5
—28
— 3

2.932
.800
.062
.110
1.680
.389
.258

2.215
.800
.062
.110
1.510
.371
.140

+
+
+
+
+
+
+

57
54
48
26
26
25
15

— 24
0
0
0
— 10
— 5
—46

Cocoa beans (lb.)..............
Tallow (lb.).......................
Cottonseed oil (lb.)...........
Lard (lb.)...........................
Print cloth (yd.)................
Hides (lb.).........................
Steel scrap (ton)................

June 18,
Mar. 20,
Mar. 13,
Oct. 25,
Feb. 21,
Nov. 7,
Mar. 13,

May
Apr.
Apr.
Jan.
Wool tops (lb.).................. Dec.
Oct.
Jan.
Tin (lb.).............................

28, ’47
2 , ’47
1, ’47
2, ’47
16, ’46
2, ’46
23, ’47

decontrol was practically complete. This year of partly con­
trolled and uncontrolled price movements has been character­
ized by a sharp and prolonged rise in prices, followed by a
slight temporary decline at the turn of the year and a subse­

Source:

U.

S.

Bureau of Labor Statistics.

although in some lines they have continued to increase. Prices
of farm products, foods, and hides and leather products had

quent further increase. In the past few months prices have
been leveling off somewhat below the peak reached in March.

dropped about 5 per cent by May, but they have since increased

At the start of this year it appeared that a gradual down­
ward readjustment of prices was under way, principally in

steadily since its April peak, while prices for housefurnishings

farm products and foods. February and March, however, were
marked by a new upward movement of prices, which brought
the over-all index of wholesale prices to the highest point
since 1920. The gains were general, all major groups of
commodities sharing in the advance, but farm, food, and
building materials prices led the rise with average increases
of more than 10 per cent above early January levels. The
increase in farm and food prices was widely attributed to
large Government purchases of grain for export occasioned
by poor European crops.

somewhat.

The index of chemical products has declined

have been rising steadily since decontrol. Building materials
have shown the greatest price rise of any major commodity
group since the first of the year; although latest figures (June
21) are slightly below the April peak, they are about 13 per
cent higher than in the week ended January 4.
The extent of the increases in spot market prices of certain
basic commodities since controls were removed is shown in
the accompanying table. The great majority of the commodi­
ties included have declined in price from their postwar peak.
In general, the ones showing the most spectacular price
advances have also experienced the greatest reaction, while

Early in the spring, rising prices gave impetus to widespread
comment by Government officials and businessmen, especially
retailers, who declared that prices were too high and should
be reduced. This campaign for a lower level of prices met
with varying responses. In some cases there were communitywide drives to bring prices down; in many instances the
widely-advertised markdowns were only a temporary measure

those whose price increases were more moderate have proved
more stable, although there are exceptions on both extremes.
In only one instance— rubber— is the current price below that
prevailing when O.P.A. lapsed a year ago. For two commodi­
ties, print cloth and cocoa, prices are still more than double

by retailers to eliminate the less desirable or excessive por­

near their peak levels. Sugar, which is the only commodity in

tions of their inventories.

the ceilings prevailing last June. Metals, which are generally
in the category of administered prices, have remained at or

Reductions at the manufacturers’

the table still subject to price control, is likewise at its ceiling.

level were scattered and generally of minor importance.

Trends in grain prices have been diverse. Corn prices have

While the price decline on both wholesale and retail levels

risen rapidly in recent weeks, as unfavorable weather has

following the price reduction campaign has been very slight,

delayed planting the new crop and reduced prospective har­

there is the possibility, nevertheless, that it helped to forestall

vests.

a round of price increases following the second round of wage

nearly 40 per cent to a point nearly equaling the peak set

increases this spring.

soon after decontrol.

Between May 1 and June 20, cash corn prices rose
Spring wheat prices were also main­

Following the peaks reached in March or early April, prices

tained at a high level by weather factors. Winter wheat prices,

in the aggregate have declined slightly and then leveled off,

however, dropped sharply as harvesting began of the new




72

MONTHLY REVIEW, JULY 1947

crop, estimated to be of record-breaking proportions. Spot
prices at Kansas City dropped almost one fourth in less than
a month, bringing the price of wheat below that of corn for

New York State Employment in Principal
Nonagricultural Industries
1
----------- r

the first time since October 1946. Livestock prices have been
moving up again recently, and even greater advances have
taken place in meat prices at the retail level.

DURABLE GOODS M A N U F A C T U R IN G
1943
4 T H Q U.19 4 5
A P R IL 1 0 4 7
NONDURABLE

GOODS M A N U F A C T U R IN G

Many commodities are still comparatively scarce and have
not faced the adjustment necessitated by a buyers' market.

C O N S T R U C T IO N

i
t

I

Some, like lumber and wheat, are only now beginning to feel

X

{

the effects of an abundant supply. An indication of the atti­
T R A N S P O R T A T IO N A N D P U B L IC U T I L I T I E S *

tude of professional traders toward the future trend of com­
modity prices is furnished by quotations of futures prices.
Prices for future delivery of agricultural commodities have

W H O L E S A L E TR A O E

been consistently selling at a discount from spot prices, and the
discount tends to widen for longer term deliveries. The Depart­
ment of Agriculture has reported that lower farm prices are
in prospect by the end of the year, but declines in this area will

R E T A IL TR A D E

I
*
*
*
1
f
t
I
I

t

&// /// ^
/

be limited to some extent by the support prices established

F IN A N C E ,IN S U R A N C E ,A N D R E A L E S T A T E

!

for major commodities. Winter wheat prices, for instance, are
now only about 10 per cent above the support level for the 1947
crop. Sharp general declines in prices of manufactured goods

i

!

F E D E R A L * S T A T E , A NO L O C A L G O V E R N M E N T

I
*
I
1
I
t
I
I
I
I
*1
\

I

in the short run are considered unlikely, mainly because of
the downward inelasticity of wage rates in a highly unionized
industrial economy— a factor not so important in 1920-21.
While individual commodity prices which got out of line may
drop to lower levels, it is thought that the tendency of the over­
all price level is more likely to be one of gradual adjustment
than of violent fluctuation. In many cases the adjustment, which
is already under way, is taking the form of improved quality
at stable prices, or of increased production of lower priced
lines of merchandise the quality of which is not proportion­
ately lower, and hence is not reflected in price indexes.

SECOND D IST R IC T E M P L O Y M E N T
IN T H E T R A N S IT IO N PERIOD
The postwar redistribution of employment appears to have
been virtually completed by the spring of 1947, and total non­
agricultural employment in the Second Federal Reserve District
was greater than at the peak of the war effort in 1943. Recon­
version in manufacturing was largely completed by mid-1946,
but nearly a year later, factory employment had not yet regained
its high wartime level. Increased employment in other lines of

0

200

400

600
600
40 0 0
T H O U S A N D S OF W O R K E R S

4200

440&

* For transportation and public utilities, latest available figure is March
1947 ; for Federal, State, and local government, February 1947.
Source: New York State Department of Labor.

ment is well below the wartime peaks. Late in 1943, the
manufacture of ships, planes, automobiles and trucks, and
other types of transportation equipment employed over
300,000 persons in New York State. This working force
was reduced more than 70 per cent by the end of 1945,
and as of May 1947 the number of workers was still less
than 100,000.
The electrical machinery industry in May
employed only about two thirds of its wartime maximum
and iron and steel about four fifths. However, manufacturers
of other types of machinery and of nonferrous metal products
employed more workers this spring than in 1943.
Nondurable goods manufacturing showed only a slight drop
in the reconversion period and by the end of 1946 employment
in these lines had exceeded the wartime peak.

In large part

this has been due to the dominance of the New York City
apparel industry in this category. Apparel firms needed prac­

work, particularly trade, construction, and public utilities,

tically no reconversion when the war ended and production

however, had more than offset the lower level of factory

and employment were maintained at high levels. In April and

employment.

May, however, there were large lay-offs of apparel workers,

In New York State, as in other major industrial areas of

indicating a return of the prewar seasonal patterns.

Before

the country, the drop in employment from 1943 to the last

the war, the apparel industry was characterized by sharp sea­

quarter of 1945, when reconversion of war industries was

sonal changes in employment, but in recent years the high

at its height, occurred chiefly in durable goods manufacturing.

level of demand and the relative scarcity of goods enabled

Since then, many of the industries in this group have once

manufacturers to spread production and employment more

again expanded their working forces, but in most cases employ­

evenly throughout the year. In the sellers* market during and




73

FEDERAL RESERVE BANK OF NEW YORK

immediately after the war, retailers were usually obliged to
order their needs for the full season well in advance, but in
recent months they have reverted to the prewar practice of
placing initial orders for only part of their probable require­
ments for the next season and later reordering those lines which
sell well. As a result, apparel employment declined sharply
between March and May. But as the fall style season pro­
gressed, employment has recovered and can be expected to

TABLE II
Changes in Factory Employment in the Principal Second District
Industrial Areas, 1939-April 1947
Percentage change
Industrial area
1939 to
war peak
+174
+140
Albany-Schenectady-

gain further in July.
The decline in the number of manufacturing workers from

Utica-Rome.....................

the wartime peak to the reconversion period in New York
State was partly offset by increased employment in wholesale
and retail trade, transportation, public utilities, and banking,
as shown in Table I. Except in the case of interstate railroads,
these industries have also continued to gain in the postwar
period. Construction employment, which had declined sharply
in the latter part of the war period, rose rapidly after V-E Day
and in April 1947 was about two-thirds greater than two years
earlier. Federal Government employment in New York State
(including arsenal and shipyard workers) dropped from a
wartime peak of over 300,000 in 1944 to 187,000 early in
1947. This reduction has been partly offset by the expansion
in State and local government employment, which has risen
gradually in the past two years, after remaining fairly stable
during the war.
The postwar experience of the several industrial areas in
the Second District has varied widely. In up-State New York,

Changes in New York State Nonagricultural Employment
1943-April 1947

+43
+22

244
151

+139
+130
+125
+100
+ 70
+ 63
+ 52
+ 47

— 38
— 57
—40
— 31
—43
— 19
— 30
— 39

+
_

8
i*
+29*
+24
+24
+16
+27*
+ 5*

160
98*
173*
171
120
154
134*
95*

+ 44
+ 38
+ 37

— 22
— 22
— 23

+14
+ 2
+20*

127
110
126*

+ 26
+ 25

— 20
— 21

+16
+ 3*

117
102*

* January 1947, latest date available for U. S. Bureau of Labor Statistics data
on factory employment by metropolitan areas.
S o u r c e : New York State Department of Labor and U. S. Bureau of Labor
Statistics.

factory employment in April was more than 40 per cent above
the 1939 level, indicating that most industrial areas had
retained or recovered a sizable share of their wartime expan­
sion. Many communities have benefited from new industries
established during the war, and in some cases reconverted
war plants are providing sizable employment. The extent of
the gains made between 1939 and the month of greatest war­
time factory employment in each Second District industrial

age for the fourth quarter of 1945 ) and the subsequent recov­
ery. Elmira showed the greatest percentage gains in employ­

Percentage change

Industry

Thousands
of workers
April 1947

1943 to
fourth
quarter
1945

Manufacturing...............................
Durable goods............................
Nondurable goods......................

1,870
673
1,197

— 18
— 36
— 5

11
164

— 7

+15

+ 7

Construction...................................

— 6

+41

+33

545
125
267

+ 8
+ 7
+10

+12
— 6
+18

+20
0
+30

Fourth
quarter
1945 to
1943 to
April 1947 April 1947
+ 8
+16
+ 4

— 12
— 25
— 2

153

+ 6

+18

+25

Trade..............................................
Retail..........................................
Wholesale....................................

1,123
732
391

+ 8
+ 7
+10

+10
+ 8
+14

+19
+16
+25

Finance...........................................
Banking.......................................
Insurance....................................
Real estate..................................

363
115
108
140

—
+
—
—

2
8
2
8

+ 5
+ 1
+19

~ 1

+ 3
+ 9
+17
— 9

Government#.................................
Federal........................................
State............................................
Local...........................................

586
187
59
340

—
—
+
—

5
9
4
3

— 9
— 29
+12
+ 5

— 13
— 35
+17
+ 1

* March 1947 latest month available for this group.
# February 1947 latest month available for this group.
S o u r c e : New York State Department of Labor.




Kingston-NewburghPoughkeepsie..............
New York City...............
Yonkers...........................
Binghamton-EndicottJohnson City...............
Jersey City.....................

— 38
— 49

area is shown in Table II, together with the decline from the
wartime high to the early postwar reconversion period (aver­

TABLE I

Transportation and public utilities*
Interstate railroads....................
Other transportation..................
Communications and other pub­
lic utilities...............................

Employment
Fourth
War peak to
index
fourth
quarter 1945 April 1947
quarter 1945 to April 1947 (1939 = 100)

ment and payrolls during the war, and in April 1947 was
furnishing employment to nearly 2l i times as many factory
/
workers as in 1939. The Buffalo, Albany-Schenectady-Troy,
and Syracuse industrial areas all more than doubled their
factory employment and quadrupled their payrolls during the
war; in recent months these areas, and also Rochester, have
been employing 50 to 75 per cent more workers than in 1939.
New York City, where small consumers’ good industries
account for the bulk of manufacturing employment, did not
share in the war production boom to the same extent as most
other areas in the District, and hence there was relatively little
expansion in employment.

This year the number of factory

workers was running about 15 per cent above the 1939 level
until April, when the effects of the seasonal contraction in the
apparel industry began to be felt.
In the States of New Jersey and Connecticut much the same
trends in nonagricultural employment as in New York State
have prevailed. The number of factory workers in New Jersey
durable goods industries declined by 250,000 or 43 per cent
between the 1943 peak and the end of 1945; in the subse­

MONTHLY REVIEW, JULY 1947

74

quent year and a half only about one seventh of this loss has
been recovered. Nondurable goods factories, on the other
hand, have maintained employment at a level exceeding their
wartime peak since August 1946. In Connecticut, factory

Changes in May Stocks, Sales, and Ratios of Stocks to Sales by
Departments at Second District Department Stores
Percentage
change,
1946-47

Department

employment was one-third lower at the end of 1945 than in
1943, but half of this decline had been regained by April 1947.
The principal manufacturing centers of Northern New
Jersey have shown little permanent gain from wartime indus­
trial expansion. The number of factory workers in Paterson
(where employment more than doubled during the war),
Newark, and Jersey City had reverted to approximately the
1939 level by the end of 1945 and has not gained appreciably
since that time. In Elizabeth, however, factory employment
rose steadily in 1946 to a level about one-third above the 1939
average. By the beginning of 1947, employment in Bridge­
port, Connecticut, factories had recovered to nearly three
quarters of the wartime peak, but a downward tendency has
been evident in recent months.
On the whole, factory employment in the Second Federal
Reserve District did not decline as sharply with the end of
the war as in the rest of the country, largely because of the
greater importance in this Districts industries of consumers’
nondurable goods. For similar reasons the gains after the
reconversion period were less striking in this area. And with
increasing amounts of automobiles and other durable goods
competing for the consumer’s dollar, this District’s economy
may become increasingly vulnerable to fluctuations in con­
sumer expenditures for nondurable goods. The return of the
prewar seasonal pattern in the apparel industry, with the
resultant temporary lay-off of as many as 80,000 workers in
New York City alone, is an indication of this trend.

May 31
stocks
Total#......................................................
Major household appliances..................
Men’s clothing........................................
Sheets, pillow cases................................
Musical instruments...............................
Domestic floor coverings.......................

May
sales

1935-39

1946

1947

8

3.1

2.4

2.6

+143
+ 19
+ 22
+ 5
+ 2
— 5
+ 9
+ 3
— 35
+ 19
— 5
— 1
— 4
+ 1
+ U
+ 17
+ 6
+ 5
+ 10
— 6
+ 5
— 3
+ 12
+ 17
— 9
+ 19
— 6
0
+ 15
+ 2
+ 27
+ 10
— 3
— 11

2.8
4.6
3.0
3.1
5.1
3.6
4.4
8.1
4.4
3.4
2.8
5.2
3.0
1.6
1.8
2.3
4.2
4.0
2.5
5.9
1.0
2.5
3.3
2.0
5.0
2.6
2.4
1.2
0.7
1.8
1.4
1.9
5.1
11.9

0.9
1.3
1.1
2.1
1.8
2.2
2.2
2.8
4.9
2.7
1.9
2.8
3.1
1.1
1.0
1.6
2.5
2.6
2.1
2.9
1.3
2.9
2.7
2.3
4.1
3.3
3.4
1.3
1.1
2.4
2.6
2.8
4.3
9.6

1.8
2.6
2.0
4.4
3.3
3.6
3.2
4.1
11.1
3.4
2.8
3.8
4.2
1.3
1.1
1.7
2.9
2.9
2.0
3.2
1.2
2.9
2.3
1.8
4.3
2.6
3.2
1.1
0.9
1.9
1.6
2.0
3.4
7.4

+ 15

+382
+133
+ 125
+122
+ 86
+ 57
Women’s shoes....................................... + 57
China, glassware..................................... + 48
Wines, liquors......................................... + 48
Men’s furnishings................................... + 48
Yard goods.............................................. + 37
Linens, towels......................................... + 31
Sporting goods, cameras........................ + 31
Aprons, housedresses............................. + 23
+ 22
+ 22
Blankets, spreads................................... + 21
Draperies, upholstery............................. + 19
Corsets, brassieres.................................. + 6
+ 4
+ 1
— 3
Luggage................................................... — 3
— 6
Lamps, shades........................................ — 6
— 7
Toilet articles, drug sundries................. — 11
Women’s coats, suits............................. — 12
— 15
— 16
Neckwear, scarfs..................................... — 22
Blouses, skirts, sportswear..................... — 23
— 23
— 31

Ratio of May
stocks to
sales*

+

* Number of months’ supply at the May rate of sales.
# Based on sales and stocks data of Second District stores reporting by depart­
mental classifications; includes departments not shown separately.

of controls under Regulation W on December 1, 1946.
Recently a number of stores in the metropolitan area have
advertised their credit facilities, stressing the elimination of

the same month of 1946. The steady rise of the seasonally
adjusted index of sales which began in March continued,
although at a slower rate. Total sales during the first five

Government controls, and a few large stores have reinstated
or inaugurated revolving credit plans.
Although the value of department store stocks at the end
of May was about 17 per cent greater than on the same date
of the preceding year, receipts of merchandise by the stores
were almost 12 per cent below receipts during May 1946.
The seasonally adjusted index of stocks continued to decline,
and at the end of May was 11 per cent below the peak reached

months of 1947 increased 9 per cent compared with the same

at the end of February of this year.

period of 1946.
Since the early part of 1946, credit sales have been increas­

clearance sales of women’s clothing and accessories at sub­

D E P A R T M E N T STORE T R AD E
Sales of department stores in the Second Federal Reserve
District during June are estimated at about 6 per cent above

Inventories were further reduced during May by numerous

ing faster than cash sales. During May, cash sales were only

stantial markdowns.

about 5 per cent above the year-ago level, while charge account

whereas normally summer clearance sales begin after July 4th.

and instalment sales were 16 and 37 per cent greater, respec­

Nearly all women’s wear departments registered a higher dollar

tively.

Although charge account sales represent only about

volume of sales than during May 1946, and the percentage

one quarter of total sales, they accounted for more than half

gain of all women’s wear departments combined exceeded

of the year-to-year gain in sales during the first five months

the gain of the entire store for the first time since September

These sales have continued in June

of this year. Similarly, instalment sales, which represent only

1945 (except October 1946, when sales in other departments

5 per cent of the total, accounted for 23 per cent of the gain,

were more radically affected by the parcel delivery strike).

whereas cash sales, which are about 70 per cent of the total,

The clearance sales also resulted in a better balance of women’s

accounted for only 24 per cent of the total dollar increase

wear stocks. In the coats and suits, dresses, sportswear, and fur

in sales. Charge account sales were stimulated by the removal

departments, where sales had not held up to last year’s levels,




FEDERAL RESERVE BANK OF NEW YORK

stocks were substantially reduced, but in the lingerie and shoe
departments, stocks were kept high because of favorable sales.
The ratio of end-of-month stocks to sales during the month

75

declined in May below last year’s ratio in all women’s wear
departments except hosiery, shoes, lingerie, and aprons and

and May of 1946 postwar supplies of many kinds of home­
furnishings were on the market in large quantities and sales
increased very rapidly. In the furniture, housewares, and lamps
and shades departments, however, the dollar volume of sales
has declined in the last few months, in spite of, or perhaps

housedresses; all these items were in short supply last year. In
the women’s dresses, sportswear, millinery, neckwear, and hand­

because of, substantial price increases in those departments
since last year. Sales of major appliances, domestic floor cov­

bag departments the stock-sales ratio at the end of May, though
lower than last year, still exceeded the 1935-39 average ratio.

erings, china and glassware, and sheets and pillow cases con­
tinue high, and these items are still in relatively short supply.

In the coats and suits department, the ratio was slightly lower

Musical instrument sales, including phonograph records, also

than either that of a year ago or the 1935-39 average. Trade
sources indicate that in recent years buying techniques and
transportation arrangements in this area have improved to such

exceed last year’s dollar volume, but supplies appear adequate.
Some of the merchandise classifications that have shown
consistent declines in sales in recent months may be character­

an extent that somewhat lower stock-sales ratios are likely to
prevail in the future.

oriental rugs, and toys and games, with declines ranging from

Sales of men’s clothing and furnishings continue strong.
The ratio of stocks to sales in the clothing department, though

40 to 15 per cent for the period February through May, com­
pared with a year ago; jewelry, toilet articles, and books and

much higher than last year when acute shortages existed, is

magazine sales have also been declining for several months.

ized as “luxury” goods. Leading the list are wines and liquors,

still below the 1935-39 average. The ratio for men’s furnish­

The value of outstanding orders of Second District depart­

ings rose sharply above last year’s figure and equaled the

ment stores again declined during May, and at the end of

1935-39 average.

the month were 65 per cent below a year ago. This is the
lowest level since January 1943. The ratio of orders out­
standing to sales, at 0.9, is the lowest for the month since 1940.

It is not surprising that the year-to-year increase in home­
furnishings sales should slacken at this time, since by April
Department and Apparel Store Sales and Stocks, Second Federal
Reserve District, Percentage Change from the Preceding Year

Indexes of Business
Net sales
Locality
May 1947

Stocks on
Jan. through
hand
May 1947 May 31, 1947

Department stores, Second District....

+11

+ 9

+ 8
+ 6
+ 4
+15
+24
+25
+26
+24
+ 15
+ 16
+10
+ 18
+14
+ 18
+20
+30
+20
+ 15
+35
+ 18
+17
+17
+ 18

+ 9
+ 7
+ 6
+11
+12
+12
+15
+10
+11
+12
+ 9
+ 14
+ 9
+ 10
+16
+19
+16
+ 11
+17
+11
+10
+12
+ 13

+15
+ 6
+ 5
+28
+ 18
+17
+26
+27
+23
+23
+22
+16
+18
+10
+15
+35
+32
+36
+31
+33
+23
+29

Apparel stores (chiefly New York City).

— 1

— 3

+12

May

+17

New York City...................................
Northern New Jersey.........................
Newark............................................
Westchester County...........................
Fairfield County.................................
Bridgeport.......................................
Lower Hudson River Valley..............
Poughkeepsie...................................
Upper Hudson River Valley..............
Albany.............................................
Schenectady.....................................
Central New York State...................
Mohawk River Valley....................
Utica............................................
Syracuse...........................................
Northern New York State.................
Southern New York State.................
Binghamton.....................................
Elmira..............................................
Western New York State..................
Buffalo.............................................
Niagara Falls...................................
Rochester.........................................

1947

1946
Index

Industrial production*, 1935-39 = 100........

159r

March
190

April

May

186

186p

(Board of Governors, Federal Reserve
System)

189

227

224

224p

142r

216

200p

194p

Sales of all retail stores*, 1935-39 = 100.......

237

278

274

Factory employment
United States, 1939 = 100#.......................

140

154

153

151p

124

133

130

127p

254

314

310

Electric power output*, 1935-39 = 100.......
(Federal Reserve Bank of Nerw York)

Ton-miles of railway freight*, 1935-39 = 100
(Federal Reserve Bank of New York)
(Department of Commerce)

(Bureau of Labor Statistics)

New York State, 1935-39 = 100...............
(New York State Department of Labor)

Factory payrolls
United States, 1939 = 100#.......................
(Bureau of Labor Statistics)

New York State, 1935-39 = 100...............

245

286

271

240

265

264p

158

170

171 p

132

156

156

156p

92
79

85
93

82
88

80
88

271p

(New York State Department of Labor)

Income payments*, 1935-39 = 100..............
(Department of Commerce)

Composite index of wages and salaries*!
1939 = 100..................................................
(Federal Reserve Bank of New York)

Consumers’ prices, 1935-39 = 100................

Indexes of Department Store Sales and Stocks
Second Federal Reserve District
( 1 9 3 5 -3 9 averages; 100 per cent)
1946

(Bureau of Labor Statistics)

Velocity of demand deposits*, 1935-39 = 100
(.Federal Reserve Bank of Neiv York)

New York City..........................................
Outside New York City...........................

1947

Item
May

March

April

May

Sales (average daily), unadjusted................
Sales (average daily), seasonally adjusted..

214
228

229
229

223
235

237
253

Stocks, unadjusted........................................
Stocks, seasonally adjusted..........................

192
189

241
242

233
230

224
221




* Adjusted for seasonal variation.
p Preliminary.
r Revised.
# Series revised beginning January 1945.
X A special monthly release tabulating the complete set of 15 indexes of hourly
and weekly earnings computed by this bank will be sent upon request. A gen­
eral discussion of the new indexes appeared in the November 1946 issue of this
Review. Tabulations of the monthly indexes, 1938 to date, and description of
component series, sources, and weights may be procured from the Research
Department, Federal Reserve Bank of New York. A mimeographed article dis­
cussing some of the technical problems involved is also available on request.

76

MONTHLY REVIEW, JULY 1947
INDUSTRIAL PRODUCTION

National Summary of Business Conditions
(Summarized by the Board of Governors of the Federal Reserve System June 27, 1947)
/""'\UTPUT and employment at factories showed further slight declines in May,

although
^
employment in the economy as a whole increased seasonally. Value of retail trade in May
and the early part of June was at earlier record levels. The general index of wholesale prices
advanced slightly after the early part of May, with widely varying changes for individual
commodities.
In d u s t r i a l P r o d u c t i o n

Federal Reserve indexes.
Monthly figures;
latest shown are for May.
DEPARTMENT STORE SALES AND STOCKS

Production of manufactured goods showed a further slight decline in May, while output of
minerals increased considerably, and the Board’s preliminary seasonally adjusted index of indus­
trial production was maintained at the April rate of 186 per cent of the 1935-39 average.
Activity in durable goods industries in May was somewhat below the April rate, reflecting
small decreases in most lines. Steel production increased, however, and was at the highest level
since May 1945. Activity at electrical machinery plants declined somewhat further in May, and
output of passenger cars and trucks was curtailed about 10 per cent, mainly because of a shortage
of steel sheets. Automobile production increased in the first three weeks of June but remained
below the April rate. Nonferrous metal fabricating activity declined somewhat further in May;
and output of most building materials continued to show a smaller increase than is usual at
this season.
Production of nondurable goods, as measured by the Board’s index, continued to decline in
May. Output at cotton and most wool textile mills declined further. Cotton consumption in May
was about 10 per cent below the peak rate reached last November and apparel wool consumption
has been reduced by a larger amount. Output at wool carpet and rayon fabric mills, on the other
hand, increased in that period. Production of most manufactured food products declined some­
what in May after allowance for usual seasonal changes. Activity in rubber products industries
continued to be curtailed. Output of paperboard, however, rose to a new record rate, which was
84 per cent above the 1935-39 average. Production of most other nondurable goods showed
little change or declined slightly.
Output of minerals rose 7 per cent in May, reflecting a substantial gain in fuels production
to the highest rate on record. Output of coal advanced sharply after declining in April because'
of work stoppages early in that month, and output of crude petroleum advanced further to a
new peak rate.
Em p l o y m e n t

Federal Reserve indexes. Monthly figures; latest
figure shown for sales Is M ay, latest for
stocks is April.

Manufacturing employment continued to decline somewhat in May, owing mainly to produc­
tion curtailments in various industries, while employment in most other types of nonagricultural
establishments increased somewhat. The number of persons unemployed in May declined to
about 2 million from a level of about 2.4 million during the first four months of this year.
Co n s t r u c t io n

WHOLESALE PRICES

Construction contract awards, according to the F. W . Dodge Corporation, were 12 per cent
larger in May than in April, owing chiefly to a sharp rise in public awards. Value of awards for
commercial and industrial buildings showed little change. Awards for private residential con­
struction declined further in value; the number of dwelling units, however, showed little change,
with an increase in apartments and a decrease in single-family dwellings built for sale or rent.
D

is t r ib u t io n

Department store sales increased in May and the Board’s seasonally adjusted index rose from
a level of about 275 in March and April to 290 per cent of the 1935-39 average, equaling the
all-time high reached in August 1946. Sales in the first two weeks of June continued at the
high May level.
Retail sales at most other types of stores also increased in May and were at about the same
levels as those prevailing during the first quarter of the year, after allowance for seasonal changes.
Loadings of railroad revenue freight increased in May and the first half of June, reflecting
larger shipments of coal and ore. Shipments of manufactured goods, after allowance for seasonal
changes, declined somewhat further.
Bureau of Labor Statistics* indexes. Weekly
figures; latest shown are for week
ended June 21.
LOANS AT MEMBER BANKS IN LEADING CITIES

C o m m o d i t y P r ic e s

The general level of wholesale prices increased slightly from the beginning of May to the
third week of June, reflecting chiefly increases in prices of cotton, corn, catde, and beef. Prices
of wheat, flour, and vegetable oils declined further.
Crude rubber prices dropped from 25 cents per pound to 14 cents, which is 3 cents lower
than the price prevailing at the outbreak of war in 1939- Prices of various other industrial
materials showed further declines but some items like hides, coke, and steel scrap increased.
Prices of automobile tires and soap were reduced, while prices of most other manufactured goods
continued to show little change.
T r e a s u r y Fi n a n c e

Excludes loans to banks. Wednesday figures;
latest shown are for June 18.




and

B a n k C r e d it

During May and the first three weeks of June reserve funds were supplied by a substantial
gold inflow and by a decline in foreign deposits at Reserve Banks. As a result member bank
reserve balances increased and Reserve Bank holdings of Government securities declined further.
Treasury debt retirement continued in May and June with redemption for cash of a part of
certain bill issues and one billion dollars of certificates maturing June 1.
Holdings of Government securities at member banks in leading cities declined somewhat
in May and the early part of June. Commercial and industrial loans continued to decline, while
real estate and consumer loans increased moderately.
Treasury War Loan deposits at commercial banks were reduced to about one-half billion
dollars as a result of withdrawals for debt retirement. Deposits of businesses and individuals
increased further in May and June, reflecting in part cash redemption of certificates held by
these groups.