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MONTHLY REVIEW of Credit and Business Conditions S e c o n d F e d e r a l Money Market in M ay The gradual tightening o f the New Y ork money mar ket, which has been in progress since last autumn, has during the past month become more apparent, and open market money rates have advanced to the highest levels fo r this time o f year since 1923. The follow ing table reviews the changes that have taken place in money rates during the past month and since last November. Money Rates at New York *6 5H 4 Vr-% 4-4 y8 f4.53 3.89 4H 4 April 27, 1928 Nov. 29, 1927 + 1 + M + Ys + +1H + Y% + % +2H +.06 +.06 + .25 + .72 + H + H + 1 + X * Prevailing rate for preceding week t Average rate of leading banks at middle of month The table shows that the advance in rates has been in keeping with the nature o f credit expansion in recent months, which has been largely concentrated in security toans. Since last November the charge on loans to security brokers has advanced from 3 % per cent to 6 per June 1, 1928 cent on demand loans, and from 4 per cent to 5 % per cent on time loans. D uring the same period the rise in open market rates on commercial paper and accept ances has been less than 1 per cent, and average rates charged on direct loans to customers fo r commercial purposes by even the large New Y ork City banks have risen only fractionally. Interest rates on business loans made by banks in smaller localities have probably changed even less. C auses Change since May 29, 1928 Call Loan Rates and Volume of D is t r ic t Federal Reserve Bank, New York Federal Reserve Agent Call money............................................. Time money—90 day............................ Prime commercial paper....................... Bills—90 day unindorsed...................... Customers’ rates on commercial loans. Treasury issues maturing in 6-8 months Federal Reserve Bank of New York rediscount rate................................... Federal Reserve Bank of New York minimum buying rate for 90 day bills R e s e r v e Member Bank Borrowing of H ig h e r M o n e y R ates The causes o f this advance in money rates are to be foun d in the changes in credit conditions that have forced member banks to depend more and more heavily upon borrowings from the Reserve Banks to maintain their reserves at the required level, and in the discount rates member banks pay on borrowings. These changes have been taking effect gradually fo r the past six months. Gold exports and earmarkings in the latter part of 1927, and substantial sales o f securities by the Reserve Banks in January took about 300 million dollars of reserve funds from member banks, but this loss was largely offset by the heavy return flow o f holiday cu r rency from circulation in January. Since that month, however, there has been no such offsetting factor and losses o f funds to the market have been reflected in increases in member bank borrow ing at the Reserve Banks. from All Federal Reserve Banks in 1928, Compared with 1926 and 1927, MONTHLY REVIEW, JUNE 1, 1928 42 The combined statement of all Federal Reserve Banks fo r May 23 showed discounts fo r member banks amount ing to 847 million dollars, an increase of 462 million since January 25. The principal factors in this increase were a continued loss of gold through exports and ear markings, amounting to over 200 million dollars, and a further reduction of more than 200 million in the Govern ment security holdings of the Reserve Banks. Notwithstanding this loss of reserves, weekly report ing banks, which represent in resources about two-thirds o f all jnember banks, expanded their loans and invest ments by about one billion dollars during this period. In order to extend this additional credit, member banks were forced to borrow from the Reserve Banks amounts sufficient, not only to cover the reserve funds withdrawn from them, but also to provide fo r the further increase in their required reserves. A s their indebtedness in creased, the rates at which member banks were willing to make loans were successively advanced; the rise in call loan rates has roughly paralleled the rise in member bank borrowings. This close relationship between money rates and the extent to which member banks are depend ent on the Federal Reserve Banks is illustrated in the diagram on the preceding page. The continuance o f the increase in member bank loans and in their indebtedness at the Reserve Banks during the past month has been accompanied by further ad vances in Reserve Bank discount rates. Follow ing advances in seven other districts, the discount rate of the Federal Reserve Bank of New Y ork was raised from 4 to 4V2 per cent on May 18. This is the first year since 1920 in which the discount rate of this bank has been advanced twice within a period o f a few months, and the 4 % per cent rate now in effect is the highest since early 1924. M em ber B ank C r e d it in M ay Loans and investments o f weekly reporting banks, both in this district and elsewhere increased further at the beginning of May. A s the follow ing table shows, about 60 per cent of the billion dollar increase during the three months from February 21 to May 16 was in this district. (In millions of dollars) February 21 April 25 May 16 Second D i s t r i c t ......... Other D is t r ic ts ........... 8,159 13,416 8,606 13,732 8,752 13,839 Total ................... 21,575 22,338 22,591 The greater part of the increase has been in loans on stocks and bonds, and these loans continued to rise until the middle of May, reaching a level nearly 600 million higher than in the latter part of February. Loans to security brokers placed by New Y ork City banks fo r their own account and for correspondent banks increased less than 400 m illion since February, but loans to brokers placed fo r interests other than banks (the iden tity o f which is not definitely known) showed an addi tional increase of over 400 m illion; so that, as the accom panying diagram shows, the total increase in brokers’ loans in a little over two months was nearly 800 million dollars. In addition there was a less rapid but substantial increase in the estimated volume o f security loans made directly by banks to their customers. L o a n s t o B r o k e r s a n d D e a l e r s in S e c u r i t i e s P l a c e d b y N e w Y o r k C i t y R e p o rt in g B a n k s , a n d E s t im a t e d L o a n s D ir e c t ly to C u s to m e rs b y A l l R e p o rtin g M e m b e r B a n k s . Other loans o f reporting banks, which are assumed to be largely fo r commercial purposes, both in this district and elsewhere, declined somewhat in May, but remained substantially larger than in the early part o f this year or than in M ay o f last year. Investments showed no important change. B il l M a r k e t Investment demand fo r bills was active throughout May, due largely to foreign account orders. A s a result, dealers’ portfolios were reduced somewhat, notwith standing the appearance in the market o f a continued large volume o f new bills. Follow ing an increase in the Reserve B an k ’s buying rates on M ay 18 open market rates were also advanced. The 30 day maturities showed the largest increase, rising % per cent to 4 per cent. Longer maturities were raised % to % per cent, and at the end o f May, ninety day unindorsed bills were being offered at a range o f 4-4y$ per cent, the highest since March 1924. The volume o f bills outstanding at the end o f A p ril was only slightly below the record amount re ported fo r March, and remained $260,000,000 larger than in A p ril 1927. C o m m e r c ia l P a p e r M a r k e t The commercial paper market remained quiet during May. Not only was the bank inquiry fo r investment purposes rather light, but dealers had difficulty in secur ing additional amounts o f new paper from open market borrowers. The scarcity o f prime names was a contin uation o f the condition in earlier months o f the y ea r; the amount o f paper outstanding through 25 dealers has varied little during the first fou r months o f the year, and on A p ril 30 was about 4 % per cent smaller than a year ago. Rates fo r prime paper continued to harden, and by the end of M a y sales were fairly evenly divided between 4 % and 4^4 per cent paper. FEDERAL RESERVE AGENT AT NEW YORK G o ld M o v e m e n t 43 W LU O N S ofJJO L L A R S The net export o f gold was substantially smaller dur ing May than during March and A pril, but amounted to $82,500,000, and as gold earmarked during the month exceeded releases from earmark by $26,000,000, the net reduction in the cou n try’s stock o f gold during May amounted to $108,500,000, an amount considerably above even the previous record figure of last November. E x ports during the month totaled $83,000,000, while im ports amounted to only $500,000; new earmarkings totaled $69,000,000, but $43,000,000 was released from earmark and shipped. The follow ing table shows the principal destinations o f gold exports since September 1 : (In thousands of dollars) Sept. 1, 1927 to May 31, 1928* Argentina............ Brazil................... France.................. Germany.............. Italy. . . . ............ United Kingdom. Uruguay.............. 129,790 54,994 175,001 27,140 16,000 31,068 11,000 *May figures preliminary, covering Port of New York only. The monthly changes in the cou n try’s stock o f gold in consequence o f exports, imports, and earmarking transactions since the first o f September are indicated b elow : Gain or Loss of Gold through Exports and Earmarkings (In millions of dollars) Month Through Net Exports Through Earmarking Total 1927 September........................................... October................................................ November........................................... December............................................ — 11 — 9 — 53 — 68 — 9 — 25 — 40 — 8 — — — — 1928 January............................................... February............................................. March........................................ .. April..................................................... May..................................................... — — — — — 14 11 95 91 83* + 6 + 3 + 36 + 46 — 26* — 8 — 8 — 59 — 45 — 109* — 135* — 17* — 452* Total, 9 months.............................. 20 34 93 76 Q u a r t e r ly P r o f it s o f 1 0 5 I n d u s t r ia l C o r p o r a t io n s a n d N e t O p e r a t in g In c o m e o f C l a s s I R a ilr o a d s . in profits were reported also by mining and smelting, food and food products, machine and machine m anufac turing, chemical, and amusement companies. The mis cellaneous group o f companies showed a large increase, half o f which represented the increase o f D u Pont de Nemours. A heavy decline continued to be reported in the profits o f the oil com panies; first quarter earnings were less than one-third as large as in 1927, apparently reflecting the continuation o f conditions which developed in the industry during 1927. Profits o f steel companies showed a reduction o f about 18 per cen t; a reduction was re ported by the United States Steel Corporation as well as the independent concerns. Other groups to report a lower net return this year were the tobacco, and building supply companies. Telephone and other public utility companies con tinued to expand their earnings, though the increase this year was not as large as that reported a year ago. Net operating income o f the principal railroads was the smallest fo r the first quarter o f any year since 1925, accom panying the reduction in freight traffic. *Preliminary (Net Profits in thousands of dollars) Business Profits First quarter earnings reports o f 210 industrial and mercantile companies indicated net profits about 4 per cent larger than fo r the corresponding periods of 1927 and 1926, a smaller increase than was indicated by earlier calculations based on a smaller number o f com panies. If, however, the large increase in the earnings of General Motors and the related increase in the earn ings of D u Pont de Nemours be excluded from the tabu lation, the net profits o f the remaining companies would show a decline o f 6 % per cent from 1927, and o f 11 per cent from 1926. The motor group had the largest increase over 1927. Aside from a 32 per cent increase in the profits of General Motors Corporation, net earnings o f 15 other companies (exclusive o f Ford, for which figures are not available) were 10 per cent above last year. Increases 1926 1927 First Quarter First Quarter First Quarter Miscellaneous........................................ 16 16 21 16 26 16 24 10 10 5 6 44 76,100 8,826 27,222 47,760 27,370 8,813 14,753 11,089 5,187 1,515 7,389 32,949 77,778 6,515 25,587 45,680 29,259 8,645 15,041 11,850 4,964 2,099 8,525 32,732 97,230 6,680 7,509 37,231 30,875 9,261 15,981 13,132 3,820 1,709 10,360 45,015 Total 12 groups................................. 210 268,973 268,675 278,803 Other Public Utilities........................... 83 17 50,500 20,400 58,600 24,500 Corporation Groups Motor accessories.................................. Oil........................................................... Food and food products....................... Machine and machine mfg................... Mining and smelting............................ Building supplies................................... dumber Total Public Utilities....................... 100 70,900 83,100 Class I Railroads................................. 186 224,000 226,000 *Partly estimated 1928 62,200* 27,300 89,500* 217,000 MONTHLY REVIEW, JUNE 1, 1928 44 MillionsofDollars F o r e ig n E x c h a n g e Sterling tended to advance gradually during May, despite the further advance in money rates in the New Y ork market, and near the end of the month was higher than a month previous. Follow ing the re-establishment o f the gold standard in Norway on May first, the krona rose gradually until parity was reached on the 14th. Dutch exchange was likewise strong, cable rates advancing to 40.37 cents, and German reichsmarks advanced to the highest level o f the year. Spanish pesetas continued to fluctuate irregularly, but on an average were slightly lower than in A pril. Other European exchanges showed little varia tion in M ay from the levels reached in the previous month. Canadian funds went to a discount, somewhat earlier than last year, Argentine rates were slightly stronger, and Brazilian quotations were unchanged. In the F ar Eastern exchanges, the rupee showed little change, the yen weakened soon after the beginning o f the month, but Chinese rates were strong. A s the follow ing table shows, nearly all o f the prin cipal exchanges are substantially higher than a year ago, notwithstanding the relatively high level of money rates in the New Y ork market at the present time. Cable rates Country Belgium................................................................... England................................................................... France...................................................................... Germany. .......................................................... Netherlands............................................................ Norway.................................................................... Switzerland.............................................................. Canada.................................................................... Argentina .............................................................. Japan....................................................................... Hong Kong, dollar................................................. Shanghai, tael......................................................... May 31, 1927 May 28, 1928 .1389 4.8574 .0392 .2370 .0550 .4004 .2596 .1924 1.0006 .9627 .1183 .3626 .4621 .4923 .6296 .1395 4.8834 .0394 .2395 .0527 .4037 .2679 .1927 .9984 .9716 .1203 .3659 .4655 .5154 .6836 Foreign Trade Both exports and imports of merchandise in A p ril showed somewhat more than the usual seasonal declines from March, as the accom panying diagrams show, and were also smaller than last year, despite higher prices in several commodities that are important in our foreign trade. Exports, valued at $368,000,000, were $47,000,000 smaller than last year, and imports, at $345,000,000 were $31,000,000 sm aller; both were the smallest fo r any A p ril since 1924. M any o f the leading commodities contributed to the A p ril decline in exports. Shipments abroad o f raw cotton decreased about 40 per cent in volume, and $11,000,000 in actual value from a year ago. Total grain exports were only about half as large in quantity, and were $17,000,000 less in value. Declines occurred also in the exports o f coal, cotton manufactures, and automobiles, the last two follow ing increases in the first three months of 1928. Quantity receipts of raw silk and crude rubber de clined from the com paratively high figures of March, and Mltion3<JIhlfor3 500 50 0 ; IMP 0 R T 5 450 ;z6 1j •/ 'aeA '27 . j __ 1__ V 300 r vV j r M o n t h ly a \ /" */ l\ s V\/ \ a 350 V \ 7 / j \\ •£6\/ r 1 1 _ _1_1_ .. r.. 1 _1_1_ _J__ L—__ __ __ 3 0 0 J_1 J FMAMJ J A S 0 N D s 0 n d. m a n j j a Im p o rts S t a t e s in \ 400 \ ........ 35 0 rj \ <26A \ \j h 450 (i \ 400 EXPORTS a n d E x p o r t s o f M e r c h a n d is e o f t h e 1 9 2 8 , C o m p a re d w it h 1 9 2 7 a n d 1 9 2 6 . U n it e d were 21 and 24 per cent, respectively, below last year. These reductions in volume, accom panying a slight de crease in the price o f silk and a decrease o f over 50 per cent in the price o f rubber, largely account fo r the loss in the value o f imports. Security Markets Stock prices continued to advance during the first half o f M ay and representative averages o f industrial and railroad shares again advanced to new high levels. A succession o f days with a turnover o f well over four million shares on the New Y ork Stock Exchange, and the distribution o f trading among a large number of issues, indicated a widespread participation in the market. A round the middle o f the month, however, the market became hesitant and the averages declined from 5 to 9 points. In the last week o f the month there was a partial recovery from this decline, but movements o f individual stocks were very irregular and the volume o f trading was considerably reduced. In the bond market there was a further gradual but persistent decline in prices. United States Government bonds reached the lowest levels o f the y ea r; domestic corporate bond averages likewise declined to new low points fo r the yea r; and foreign issues were somewhat lower. Present levels o f stock and bond prices, relative to those o f a month ago, and to those o f May o f last year, are shown in the follow ing table. Change Change Current from from quotations month ago year ago 197 31 228 40 7 10 Industrial stocks........................................ Railroad stocks........................................... Industrial and rail stocks......................... Domestic corporation bonds..................... U. S. Government bonds........................... Foreign Government bonds...................... 242 166 220 98.2 1043$ 106.4 + 3 points +66 points +13 " —2 “ +2 “ +50 -% “ +7 /s —U “ —U --- V2 +H New Financing A lthough security offerings in M ay were somewhat smaller than the unusually heavy volume floated in A pril, and were also slightly smaller than in M ay o f last year, the total nevertheless was o f substantial size. FEDERAL RESERVE AGENT AT NEW YORK The principal reduction from A p ril was in domestic public utility issues. F oreign borrowings, on the other hand, continued to increase; the principal issues were $50,000,000 of Commonwealth of Australia bonds, priced to yield 5 per cen t; $30,000,000 German Central Bank for A griculture bonds, yielding 6.62 per cen t; $20,000,000 Mortgage Bank of Chile bonds, priced at 6.30 per ce n t; a $17,500,000 German Consolidated M unicipal loan, yielding 6.50 per ce n t; a $15,000,000 City of Berlin loan on a 6.38 per cent yield basis; and $10,000,000 General Electric Company of Germany bonds, yielding 6.50 per cent. Although foreign loans floated in this market, have been fairly numerous during the first fou r months o f this year, the total of issues which represent only the secur ing of new capital funds in this country, eliminating all offerings o f a refunding nature, has been $96,000,000 smaller than in the corresponding period o f last year. The decrease has been in Canadian, Latin American, and Asiatic and Oceanic borrow ings; European borrowers have secured about $90,000,000 more of new capital than in the corresponding period of last year. Building Construction contracts reported by the F. W . Dodge Corporation fo r the 37 states East o f the Rockies were larger than fo r any previous month. There was an increase o f 9 per cent over the March total, and o f 6 per cent over A p ril o f last year. The most important element in the large total fo r A p ril was a substantial increase in industrial building, a good part of which was in the Middle A tlantic district. Residential building also was somewhat larger than a year ago, but the volume of other types of building showed little change. Total building contracts awarded during the first fou r months of this year were 6 per cent larger than a year ago, and fo r the first 25 days o f M ay an even larger increase over the corresponding period o f last year was indicated. The A p ril report for the New Y ork and Northern New Jersey district was not as favorable as fo r the country as a w hole; contracts awarded were slightly smaller than in March and were 8 per cent below a year ago, due prim arily to a drop in residential work which in the preceding months o f this year had been heavier than during the corresponding period o f 1927. F or the first fou r months of the year, however, building in this district was 6 per cent larger than a year ago, the same increase as fo r all districts combined. Employment and Wages F actory employment in the country as a whole de clined slightly less than usual in A pril, and our index, in which allowance is made fo r seasonal variations, showed a small advance from the low level o f March. As in each previous month fo r a year and a half, how ever, employment remained below the level of the corre sponding month of the preceding year. In New Y ork State, there was a reduction of about 1 per cent. The State Employm ent Service reports, however, that this seasonal decline in factories was accompanied by increases in outdoor activities. There was a marked expansion of employment in building, and in farm and 45 PER CENT road work. The supply o f farm labor is larger relative to the demand than in a number o f years, and wages are lower than a year ago. Although the largest volume o f unemployment con tinues among the unskilled workers, employment oppor tunities fo r this type o f labor have shown a pronouneed increase in recent weeks; the work, however, is largely o f a casual nature. There is still reported to be some unemployment among the semi-skilled, but very little among the highly skilled workers. In general, it may be said that the situation has shown substantial im prove ment. Indication o f this is foun d in the ratio o f orders fo r workers to applications fo r employment at State em ploy ment offices, which is shown in the accom panying dia gram. This ratio has shown a rapid and fairly steady increase from the low point o f m id-February, and on M ay 12 was the highest since last October, and was nearer the corresponding week o f the preceding year than at any time since A p ril 1927. Another evidence o f improvement is to be foun d in the rate o f voluntary labor turnover, which showed an increase in A pril, after allowance is made fo r the usual seasonal variations. This indicates that workers are not holding quite so closely to their jobs as was the case during the immedi ately preceding months. Indexes of Business Activity Car loadings o f both bulk freight and merchandise and miscellaneous freight increased slightly in A pril, after seasonal allowance, but remained below the levels o f a year a g o ; in fact, they have been smaller than last year in every week o f this year, and have exceeded the corresponding week o f 1926 only twice. Foreign trade showed a decline o f more than the usual seasonal propor tions in A pril, both in exports and imports. There were increases in mail order sales and in advertising, after allowance fo r seasonal variations, but department store sales were practically unchanged, and life insurance sales declined. Financial activity continued at high levels, and this MONTHLY REVIEW, JUNE 1, 1928 46 bank’s indexes of stock trading and bank debits in New Y ork City advanced to new high points. Business fa il ures showed more than the usual seasonal decline, but new incorporations also were less numerous than in March. A djustm ent is made in the follow ing indexes fo r sea sonal variations, year-to-year growth, and, where neces sary, for price changes. (Computed trend of past years = 100 per cent) 1927 1928 Apr. Feb. Mar. 109 105 104 115 104 96 90 107 103 92 97 104 96 Apr. Primary Distribution Car loadings, merchandise and misc... Car loadings, other............................... Exports.................................................. Imports.................................................. Panama Canal traffic........................... Wholesale trade.................................... 102 102 104 95 87p 100p (Computed trend of past years =100 per cent) Distribution to Consumer 100 Department store sales, 2nd Dist....... Chain grocery sales............................... Other chain store sales......................... Mail order sales.................................... Life insurance paid for......................... Advertising............................................ 104 103 102 114 101 104 103 102 98 113 97 102 100 97 111 1927 98 106 97 95 Bank debits, outside of N. Y. City. .. Bank debits, New York City. . . . . . . . Velocity of bank deposits, outside of New York City........... ......................... Velocity of bank deposits, New York City........................................................ Shares sold on N. Y. Stock Exchange.. . Postal receipts.........'................................. Electric power........................................... Employment in the United States.......... Business failures....................................... Building contracts, 36 States.................. New corporations formed in N. Y. State Real estate transfers............................ 109 127 102 135 107 159 112 107 104 111 115 134 195 97 106 138 196 95 107 96 114 151 127 162 281 90 104 95 115 125 115 92 164 306 87 *General price level.............................. *Composite index of wages................. 169 173 174 223 Apr. 100 111 128 114 96 220 101 221 162 Pig iron...................................................... Steel ingots............................................... Cotton consumption................................. Cotton movement..................................... Woolen mill activity*............................... Silk consumption*.................................... Petroleum.................................................. Bituminous coal....................................... 102 133 110 96 Copper, U. S. mines................................. Lead........................................................... Zinc............................................................ Tin deliveries..................................... Leather, sole............................................. 175 Paper, total............................................... Wood pulp................................................. 221 Feb. Mar. Apr. Hogs slaughtered...................................... Cattle slaughtered.................................... Sheep slaughtered..................................... Calves slaughtered................................... Farm produce shipped................................ Productive activity in leading industries continued irregular in A pril, and in general remained at about the level of a year ago. The average daily production o f steel ingots increased 3 per cent and established a new high record fo r all time, in spite of a slight decline in activity in the latter part o f the month. Average daily production of automobiles also increased, and remained above the level o f a year ago. Production o f coke and of anthracite coal increased, after seasonal allowance, but there were declines in bituminous coal and in petro. 115 111 106 136 87 122 117 88 108 94 102 114 94 104 113 122 106 102 105 115 104 65 88 124 115 86 100 103 104 107 93 88 112 114 109r 109r 104 109 95 89 86 140 109 87 100 101 96 100 93 114 109 106 107 101 107 114 89 110 83p 98 107p 83 103 96 98 92 94 105 113 113 107p 96p 95 110 108 88 112 99 77 108 94 98 108 98 101 106 95 118 118 92 126 100 114 98 105 107 116 115 76 99 85 95 104 107 103 126 128 92 128 94 106 83 95 134 158 103 88 97 76 91 103 105 100 116 132 87r 96 91 102 80 Consumers' Goods *1913 average - 100 per cent. Production T iillio n s o f Tons 1928 100 Producers' Goods General Business Activity p Preliminary. leum, the latter apparently indicating successful efforts to restrict output, follow ing the over-production o f the past year. There was also a substantial lessening of activity in the textile industries; mill consumption o f silk reached the lowest level since May 1926, and cotton consumption declined further. There is evidence that the irregularity in industrial activity o f March and A p ril continued into May. E m ploym ent in the Detroit automobile center increased further, coal output showed a seasonal expansion, and the production o f cotton goods was reported as slightly above that o f A p r il; on the other hand, there were declines in steel mill activity, and in petroleum produc tion. This ban k ’s indexes, in which allowance is made fo r year-to-year growth, and the usual seasonal variations, are shown below. T housands of Cars Wheat receipts.......................................... Corn receipts............................................. Wheat flour............................................... Sugar meltings, U. S. ports..................... Gasoline..................................................... Anthracite coal......................................... Newsprint................................................. Printing activity....................................... Tobacco products..................................... Boots and shoes........................................ Tires.......................................................... Automobile, passenger............................. Automobile, truck.................................... * Seasonal variation not allowed for. iii 88 ioi 88p lis 87 r Revised. TrillionsofBbh Thousands o f B ales ' 500 p Preliminary, 107 77 90r 900 400 ^ \\ 1926 300 !6 \ /\ ,/ 750 / ft \ '19A 2,7 \ \ 200 1,00 J F M A M J J A 3 0 N D AUTOIs10BILE PRODl I.. .X iJCTION i..i J F M . A M J 70 \ / V19& .., ,/l92() .... ./‘*1926 450 60 \ f i ,j__ J A 5 0 N D P r o d u c t io n o f S t e e l I n g o t s , P a s s e n g e r A u t o m o b ile s , a n d P e t r o le u m , a n d 1927 h GOO 1921 \\ 192/ STEEl INGOT5 i i 1927 \ 300 COTTON CONSlJM LP I TIONJ PETROILEUM PRODUCTION i i i— J F M A M J J A S O N D M i l l C o n s u m p t io n of C o tto n in 1928 J F M A M J J A S ' O N D C o m p a re d w it h 1927 and 1926. FEDERAL RESERVE AGENT AT NEW YORK 47 D e p a r tm e n t S to re T r a d e Chain Store Sales Total sales of reporting department stores in this dis trict in A p ril showed an unusually large decline from those of a year ago, due at least in part to the fact that there was one less business day in A p ril this year, and in part to the fact that a larger proportion of the Easter business this year was done in March. A fte r taking these facts into account, however, the volume of business in A p ril does not appear to have been large, and fo r the first fou r months of the year, total sales were slightly smaller than in the corresponding period o f last year. Leading apparel stores in the district have made a more favorable sh ow in g; their sales in A p ril were 3 per cent larger than last year, and for the first fou r months o f the year 8 per cent larger. Stocks of merchandise on hand in department stores remained slightly smaller than last year, but, owing to the substantial decline in sales, the rate of stock turn over was lower than in A p ril 1927. F or the January to A p ril period the turnover was about the same as last year. The rate of collections on charge accounts during A p ril was the same as last year, notwithstanding the one less business day. F or the first time in several years, the total sales of reporting chain store systems in A p ril showed practi cally no increase over the previous year. Grocery chains, which seem to be little affected by general trade conditions, were the only type to show an increase; all others reported declines of varying amount, even those which have considerably increased the number o f units operated during the past year. The declines in sales per store were even larger. Part o f the decline was due to the fact that there was one less selling day in A p ril this year, but after allow ance fo r this, the daily rate o f sales com pared less favor ably with that o f a year ago than at any time in a con siderable number o f months. A partial explanation may probably be foun d in the earlier Easter this year, as the result o f which a larger part of the Easter buying was done in March. Percentage Change April 1928 compared with April 1927 Type of Store Number of Stores Total Sales Sales per Store + 2.0 + 9.0 + 3.1 + 1.3 + 9.6 +17.7 + 9.9 +14.1 — 0.2 — 2.8 — 11.8 — 14.8 — 2.9 — 9.4 +11.8 — 8.5 — 5.8 — 12.9 —22.3 — 17.6 — 17.5 + 4.6 + 0.1 — 4.3 Grocery. . ............................................ Ten cent.............................................. Tobacco............................................... Percentage Change April 1928 com pared with April 1927 Locality Stock on hand end of month Net Sales 1.4 3.6 1.0 5.7 2.0 6.7 2.8 Per cent of Charge Accounts Outstand ing March 31 Col lected in April 1927 1928 50.4 55.9 39.6 51.3 52.5 41.2 47 .*4 45 .‘ 6 36.6 34.4 New York....................................... Buffalo............................................. Rochester........................................ Syracuse.......................................... Newark........................................... Bridgeport....................................... Elsewhere........................................ Northern New York State........ Central New York State........... Southern New York State......... Hudson River Valley District . Capital District.......................... Westchester District.................. — 6.7 — 7.0 — 9.1 — 12.0 — 7.3 — 13.0 — 9.0 — 9.3 — 10.2 — 12.1 — 5.5 — 9.7 — 5.1 — + + — + — — All department stores.................... — 7.3 — 0.9 48.4 48.4 Apparel stores................................ Mail order houses........................... + 3.1 — 1.0 +10.2 48.4 48.1 Only a few departments showed larger sales than in A p ril 1927; all the apparel departments were among those showing reductions. Net Sales Percentage Change April 1928 compared with April 1927 Cotton goods................................... Books and stationery...................... Furniture.......................................... Luggage and other leather goods. . Toys and sporting goods................ Musical instruments and radio. . . . Men’s furnishings............................ Toilet articles and drugs................ Linens and handkerchiefs............... Shoes................................................. Women’s ready-to-wear accessories Home furnishings............................ Women’s and Misses’ ready-to-wear Silverware and jewelry................... Hosiery............................................. Silks and velvets............................. Men’s and Boys’ wear.................... Woolen goods................................... Miscellaneous................................... + 7.2 + 5.0 + 2.2 + 1.8 + 1.7 — 1.4 — 2.1 — 2.7 — 2.9 — 3.2 — 4.4 — 4.4 — 7.9 — 10.6 — 13.3 — 17.4 — 19.9 —21.9 — 14.1 Stock on Hand Percentage Change April 30, 1928 compared w th April 30, 1927 — 9.9 — 0.8 — 0.6 — 16.0 + 0.3 — 21.4 — 12.3 + 0.7 — 12.8 + 12.5 — 2.1 — 0.6 + 0.3 + 3.8 — 5.1 — 3.4 — 0.2 — 14.7 — 8.4 Variety...................................... ......... Candy................................................. Wholesale Trade Reports from wholesale dealers indicated that A p ril business was highly irregular in the various lines. H ard ware sales showed the largest increase over a year previ ous in nearly three years, notwithstanding the fact that A p ril was a shorter business month this year, due to the inclusion o f five Sundays. D rug sales also showed an unusually large increase, and orders fo r machine tools, reported by the Machine Tool B u ilders’ Association, continued far above those o f last year. Shoe sales declined sharply, however, and fairly large reductions, partly accounted fo r by the short month, were reported in sales o f stationery, cotton goods, m en ’s and w om en’s clothing, and diamonds. Commodity Percentage Change April 1928 compared with March 1928 Stock Net end of Sales month Percentage Change April 1928 compared with April 1927 Stock Net end of Sales month Per cent of Accounts Outstanding March 31 collected in April 1927 1928 — 0.2 74.2 36.3 74.4 33.8 — 4 .7 31 A 30.5 47.2 49.9 48.7 46.6 45. i 46.0 53.4 43.0 77.8 66.4 25.8 67 *.o 65.4 ) 29.4 Weighted Average.. . — 19.4 — 5.2 52.1 ♦Reported by the National Machine Tool Builders’ Association. 50.9 Groceries...................... Men’s clothing............. Women’s dresses.......... Women’s coats and suits.......................... Cotton goods—Jobbers Cotton goods— Com mission ...................... Silk goods..................... Shoes............................. Drugs............................ Hardware............... Machine tools*............ Stationery.................... Paper............................ Diamonds..................... Jewelry......................... — 6.3 — 43.0 — 16.5 — 50.1 — 14.9 — 8.7 — 3 .9 — 25.6 — 27.2 — 36.2 — + 3.1 — +26.0 — + 0.1 —21.2 — 6.2 — 3.0 — 7.7 } + 2.2 2.8 4.1 8.0 — 1.0 — 12.3 —24.8 — 16.0 — 6.4 — 10.0 + 1.2 — 32.1 — 3 1 +16.5 + 18.3 + 8.6 +10.1 +76.1 — 8.4 — 2.7 —22.4 + 3.7 } + 7.3 ) * 48 MONTHLY REVIEW, JUNE 1, 1928 TERCENT Business C onditions in the U n ited States (Summarized by the Federal Reserve Board) \ J OLUME of industrial production continued large during April, reflecting * chiefly increased output in metal industries, while activity in industries producing food and clothing decreased. Wholesale and retail trade also de clined. The general level of wholesale commodity prices increased in April reflecting advances in farm products. There were large exports of gold in April and May, member bank loans and their borrowings at the Reserve Banks continued to increase, and money rates showed further advances. P r o d u c t io n In d e x N u m b e r o f P r o d u c t io n o f M a n u f a c t u r e s a n d M in e r a ls , A d ju s t e d fo r S e a s o n a l V a r i a t io n s (1 9 2 3 - 2 5 a v e r a g e = 1 0 0 p e r c e n t ) . PERCENT Production of manufactures remained in about the same volume in April as in March, while output of minerals declined slightly, owing chiefly to a de crease in production of bituminous coal. Daily average output of iron and steel, copper, and zinc, increased in April, but since the first of May there has been some curtailment, in steel-mill activity. Automobile production was maintained in large volume during April and according to preliminary reports also during the first half of May. Textile mill activity, output of boots and shoes, and meat production showed substantial declines during April. Volume of factory employment declined slightly, reflecting chiefly decreases in the food, leather, and textile industries. Building contracts awarded in April exceeded those for any previous month, and awards during the first three weeks of May continued in unusually large volume. Trade of W h o le s a le P r i c e In d e x U n it e d S t a t e s B u r e a u o f L a b o r S t a t is t ic s (1 9 2 6 a v e ra g e = 100 per c e n t). B ILLIO N S of.'DOLLARS Sales by department stores and by wholesale firms in most lines of trade declined in April and were in smaller volume than a year ago. Average daily sales of department stores, after allowance is made for the earlier date of Easter and the usual seasonal changes, were smaller in April than in March and were also smaller than in April a year ago. This decrease was due largely to unfavorable weather conditions. Stocks of department stores, after adjust ment for seasonal changes, were in about the same volume as in March and slightly smaller than a year ago. Freight car loadings showed an increase between the beginning of April and the middle of May, but continued smaller than a year ago for most classes of commodities. P r ic e s R e s e rv e B a n k C r e d it: M o n th ly A v e ra g e s o f D a ily F ig u r e s fo r 1 2 F e d e r a l R e s e r v e B a n k s ( L a t e s t fig u re s a r e a v e ra g e s o f f i r s t 2 3 d a y s in M a y ) . The general level of wholesale commodity prices, as indicated by the index of the Bureau of Labor Statistics, increased from 96 per cent of the 1926 average in March to 97.4 per cent in April. This increase reflected sharp advances in the prices of grains, cotton, livestock, and hide and leather prod ucts. Rubber prices continued to decline, and most of the other groups of commodities showed little change. During the first three weeks of May there were decreases in the prices of grains, flour, sheep, and hogs, and increases in copper, zinc, and rubber. Bank C r e d it At member banks, loans largely for commercial and industrial purposes, following a rapid increase during February and March, have shown little change since the early part of April. Loans on securities continued to in crease and total loans and investments of reporting member banks in the middle of May were larger than at any previous time. The outward movement of gold continued in May, the decline in monetary gold stock during the four weeks ended May 23 being nearly $90,000,000. This loss of gold, together with further sales of United States securities by the Reserve Banks, was reflected in an increase of nearly $140,000,000 in mem ber bank borrowing at the Reserve Banks. There were further advances in open-market money rates during May, and discount rates at the Federal Reserve Banks of New York, Philadelphia, Cleve land, Atlanta, and Dallas were raised from 4 to 4% per cent.
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