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MONTHLY REVIEW of Credit and Business Conditions S e c o n d M a r k e t in R e s e r v e Federal Reserve Bank, New York Federal Reserve Agent M on ey F e d e r a l M a y A most interesting feature of the money market dur ing the month of May was a decline in the call loan rate from a very firm position in the first half of the month to a comparatively easy position in the second half of the month, without any accompanying basic change in the credit position which appeared fully to justify the change. A fter the third week of the month the renewal rate was 6 per cent for 6 successive days, the lowest renewal rate which has been touched since early in February, and money was reported as available out side of the Exchange at rates even lower than 6 per cent. This relatively low call rate was reached despite the fact that there was no considerable gain of funds to the banks of the country from gold imports or any other quarter, and the total borrowings of member banks at the Reserve Banks remained in excess of $900,000,000. Moreover, other money rates remained firm with the exception of a slight easing in time money in the last day or two of the month. The average rate charged by leading New York City banks for com mercial loans to customers continued to move gradually upward towards the legal maximum of 6 per cent, while rates on commercial paper in the open market and on bankers acceptances showed no material change. The general level of money rates is shown in the following table. D is tr ic t June 1 , 1929 Similarly, the borrowings of New York City banks may be taken as an index, though not a direct increase, of the supply of funds available to the call loan market. The New York banks are relatively less important as lenders in the call loan market than in the past. A t present the loans to brokers and dealers by New York City banks total less than $775,000,000, or less than onesixth of the total loans to brokers and dealers, whereas as recently as two years ago New York City bank loans have been as high as one-third of the total. Neverthe less, New York City banks continue to be so closely con cerned with the movement of funds into and out of the call loan market that the amount of the borrowings of these banks at the Reserve Bank constitutes a very fair index of the supply of funds to the call market. The explanation is to be found not so much in the amounts of funds that the New York City banks h^ye available to invest for their own account in the market, but in the fact that transfers of funds to and from this Federal Reserve District for the purpose ~f employment in or withdrawal from the call loan market affect directly the reserves of the New York City banks. I f a bank or business house in Chicago sends $1,000,000 to New York for employment in the call market, one of the consequences is a transfer of reserves from the ac count of a Chicago bank at the Federal Reserve Bank M ILLIO NS OF DOLLARS M oney Rates at New York M ay 31, 1928 Apr. 30, 1929 M ay 29, 1929 Stock Exchange call loans.......................... Stock Exchange 90 day loans................... Prime commercial paper............................. Bills— 90 day unindorsed .......................... Customers’ rates on commercial loans.. Treasury certificates Maturing December 1 5 .......................... Federal Reserve Bank of New York rediscount rate........................................... Federal Reserve Bank of New York buying rate for 90 day bills................. * 5 K -6 K 5H 4 M -H 4 -4 % f 4 .53 3'.89 4 * 8 -1 6 t 5 .7 3 *6 8H 6 5K t 5 .7 8 4 .9 4 4 .9 2 5 .1 0 5 .0 7 8J4 6 5H 5 5 5X 5H * Range for preceding week t Average rate of leading banks at middle of month The accompanying diagram shows the two factors which ordinarily are the principal influences upon call money rates. They are representative of the two aspects of the call money market, demand and supply. The amount of brokers loans outstanding at any time may be taken as representative of the demand. W hen brokers loans are rising the demand for such loans is increasing and additional funds are being called fo r ; and con versely, when the volume of loans is decreasing funds are being released and the demand is decreasing. Movement o f Call Loan Rates Compared with Fluctuations in Borrowings o f New York City Banks from Federal Reserve Bank and in Total Brokers Loans Placed by Reporting New Y ork City Member Banks. MONTHLY REVIEW, JUNE 1, 1929 42 of Chicago to the account of a New York bank at the Federal Reserve Bank of New York, and thus $1,000,000 becomes available for some New York bank to reduce its indebtedness at the Reserve Bank. Thus the amount of borrowing of the New York City banks reflects di rectly and immediately transfers of funds to and from the New York district. There is also a more direct con nection between the New York City banks and the call market in that in all periods of acute stringency due to withdrawals of funds by other lenders, the New York banks find themselves called upon by their broker cus tomers to supply funds. It is for these reasons that the position of the New York City banks may be taken as an index of the supply of funds to the call market. The accompanying chart shows that the movement of call money rates is closely related to changes in the position of the New York City banks and to changes in the demand for loans as indi cated by the movement of the total volume of loans. In the second half of May low rates in the call market may be ascribed to a lessened demand for brokers loans due to a decline of $275,000,000 in the volume, and to a large flow of funds from other districts to New York City, which is reflected in a decline of the borrowings at the New York City banks from around $200,000,000 to between $100,000,000 and $150,000,000. It is difficult to explain fully this flow of funds from other districts. It does not reflect any general easing of the situation, for it was accompanied by in creases in the borrowings of banks in other districts at the Reserve Banks. M e m b e r B a n k C r e d it The security loans of reporting member banks have been reduced further during the past month, and the total loans and investments of these banks have declined slightly below the volume of a year previous for the first time in several years. A s the accompanying diagram indicates, however, it is desirable in making comparisons with a year previous to note that May 1928 marked the culmination of a period of unusually rapid expansion of credit which carried the total loans and investments of reporting banks to a level more than 9 per cent above a year previous. The following table shows the changes in the loans and investments of the reporting banks compared with a year ago, and with two years ago. (In millions of dollars) Loans: On securities.................................... All other............................................ Investments: U .S . G ov’t securities................... Other securities............................... T o ta l............................................... M ay 29, 1928 M ay 29, 1929 M ay 25, 1927 M ay 29, 1928 6,003 8,636 7,097 8,857 7,102 9,100 + 1 ,0 9 9 + 464 + + 5 243 2,640 3,020 2,994 3,212 2,897 2,902 + — 257 118 — — 97 310 20,298 22,160 22,001 + 1,703 — 159 The table shows that the growth in the principal types of member bank credit over the two-year period has been very uneven; security loans, notwithstanding the de cline in the past two months, remain over 18 per cent larger than in May 1927; other loans, largely commer cial, have increased only about 5 per cent; U. S. security 191^ 1 J I F I M 1 A M I 1 J 1 J A I S 1 I O ___I N D Total Loans and Investm ents o f A ll Reporting Member Banks. holdings have increased about 10 per cent, due to large purchases in 1 927; and other security holdings have shown a small net reduction, due to substantial sales during the past year. B rokers L oans for “ Others” During the recent period of contraction in member bank loans, the volume of funds loaned to brokers and dealers in securities by other lenders has increased to new high levels. The changes in brokers loans during the past two years are reviewed in the following table. (In millions of dollars) Change from M ay 25, 1927 Total Brokers Loans as reported by N . Y . City banks: For own account............................ For out-of-town correspondents For others......................................... Borrowings of Stock Exchange members from private bankers and others*...................................... 932 1,173 860 M a y 29, 1928 1,219 1,608 1,642 M ay 29, 1929 773 1,540 2,975 M ay 25, 1927 M a y 29, 1928 — 159 + 367 + 2,115 — 446 — 68 + 1,333 476 662 1,194 + 3,441 5,131 6,482 + .3 ,0 4 1 718 + 532 + 1,351 ♦April 30 of each year Chang e from M ay 25, 1927 B IL L IO N S O F D O L L A R S 2 3 i--------------------------- From these figures it is evident that brokers’ borrow ings have practically doubled during the period in which member bank loans and investments have increased less than 9 per cent. Further, it is apparent that most of the brokers loans have come from sources other than member banks; in fact, the actual increase in loans from the funds of New York banks and their correspondent banks is probably smaller than that shown above, as the indi cated loans placed for out-of-town banks probably include a considerable proportion of loans for customers of those banks. C o m m e r c ia l P a p e r M a r k e t The volume of open market commercial paper out standing through 23 firms declined 9 per cent further during April, and, at $351,000,000 on the 30th, was 38^2 Per cent smaller than the amount outstanding a 43 FEDERAL RESERVE AGENT AT NEW YORK year ago. During May, there was little indication of an increase in the amount of new paper coming into the market. High borrowing costs to the user of the open market and the difficulty experienced by the dealers in disposing of paper to investors have resulted in a continued curtailment of this form of business financing. Dealers’ quoted offering rates for the usual grade of prime paper generally remained at 6 per cent but there were some sales of the paper of smaller con cerns reported at 6*4 per cent, on bids from the banks. B il l M a r k e t The amount of dollar acceptances outstanding in this market declined $94,000,000 further during April, but remained $40,000,000 larger than on A pril 30, 1928. The reduction during the first four months of this year totaled $173,000,000, or 13Y2 per cent, whereas there were much smaller decreases in three of the previous four years, and a moderate increase in the fourth. Early in May, there was an advance of about Ys per cent in open market bill rates, which brought the rates back to levels approximately the same as those prevail ing before the temporary reduction of the latter part of April. For the balance of the month, unendorsed bills up to 4 months maturity were offered at 5 Y2 Per cent, and 5 and 6 months bills at 5 % -5 % per cent. A t these levels, investment demand was about equal to the supply of bills. average of stocks had declined toward the end of the month by about 7 per cent. The net declines for the period were most pronounced in the industrial issues, which generally receded somewhat below the previous low levels of the year reached on the February reaction. Public utility stocks continued to advance during the first half of the month, but in the latter half showed a decline from their highest level about one-half as large as that in industrial shares; the railroad stocks strength ened temporarily, following the decision of the Supreme Court in the O ’Fallon case, and subsequently showed only a small net decline. The turnover of stocks on the Exchange was somewhat heavier than in April, but did not approach that of the extremely active markets of March. Bond prices again turned downward in May following a temporary recovery in April. Domestic corporate bond averages generally receded over IYl points, more than canceling the A pril recovery, and consequently reached new low levels since early in 1926. A n average of 40 foreign bond issues likewise lost more than the % point rise during April, and an average of the prices of the eight United States Government bond issues now out standing declined about 2 1/4 points from the highest prices reached on the A p ril recovery to a level approxi mately as low as that of mid-March, but subsequently recovered about Y2 point. G o ld N e w F in a n c in g New security issues by domestic corporations were somewhat smaller in April than in the preceding month, but were about $125,000,000 larger than in A pril 1928. A considerable part of this increase over last year was accounted for by a larger amount of issues by invest ment trusts, and other financial and holding companies. Stock issues by domestic companies were again much heavier than a year ago, with the increase largely con centrated in common stock flotations. Financing by domestic municipalities and States continued in smaller amount than a year ago. Foreign financing was in very small volume in April, and the total amount of funds raised in this country, including flotations of domestic corporations for employ ment in foreign countries, has been about $200,000,000, or 45 per cent, smaller in the first four months of this year than in the corresponding period of 1928. In May, the larger domestic corporate flotations con tinued to take the form chiefly of stock issues. Prelim inary figures indicate that the total was somewhat larger than in April, but smaller than a year ago. S e c u r ity M a r k e ts Stock prices during the first few days of May con tinued the upward movement of the latter part of April, with the result that price averages, representative of the market as a whole, again reached slightly higher levels than ever before. Thereafter, however, the broad trend of the market turned irregularly downward; substantial reactions on a number of days were followed by lesser recoveries. From the level of early May the general M ovem en t The only gold movements worthy of note during May were the receipt of $15,683,000 in two shipments from Germany, and $4,000,000 in four lots from Argentina. Other imports were negligible, as were exports of gold. In addition there was a further gain of $16,000,000 to this country’s gold stock through the release of gold which had been held under earmark for foreign account. According to a preliminary calculation, the gold move ment during May was as follows: Imports, $20,196,000; exports, $201,000; net decrease in gold earmarked for foreign account, $16,127,000; net gain to country, $36,122,000. The net gain in the first five months of the present year was $147,814,000, as against a net loss in January-May 1928 of $229,105,000. C e n tra l B a n k R a te C hanges The National Bank of Rumania raised its rediscount rate twice during May, first from 6 to 8 per cent on the 3d and again to 9 Y2 Per cent on the 14th. The 6 per cent rate had been in force since September 1920. These increases follow upon the stabilization of the leu in February of the present year. Until these increases were made, the official rate was out of line with private rates ruling at Bucharest. On A pril 27 the ratio of total reserves (gold and foreign exchange) to notes and demand liabilities at the central bank was 42.1 per cent, the gold ratio alone being 32.6 per cent. The statutory minima are 35 per cent total cover and 25 per cent gold cover. Gold held on A pril 27 was equivalent to $51,700,000; exchange was $15,100,000, and total cover was $66,800,000. Liabilities covered by these reserves totaled $158,600,000. On M ay 9 the Imperial Bank of India reduced its 44 MONTHLY REVIEW, JUNE 1, 1929 rediscount rate from 7 to 6 per cent, after a reduction from 8 to 7 per cent in April. The successful weathering of the winter monsoon, and the end of the credit demand stimulated by the export season, made possible these rate reductions. Last year the seasonal lowering to 6 per cent was not effected until June 21. M IL L IO N S O F D O L L A R 'S F o r e ig n E x c h a n g e The exchanges watched with most interest during May were the pound sterling and the reichsmark. A move ment of funds from London to New York was reported in the early part of the month, stimulated by the recur rence of high call money rates in this market. Sterling weakened after May 10, and dropped from the level of $4 .8 5 % , around which it had hovered during the previ ous month, to a new low of $4.84 1 3 /1 6 on the 23d. It was last reported at $4.84 3 1 /3 2 , which is about the gold import point from London to New York. The reichsmark was quiet and weak in the vicinity of $.2371 until the 15th, when it rose to $.2376. Follow ing this, it moved to $ .2378% on the 20th, $.2380 on the 23d, and then to a new high of $.2385 in the course of trading on the 28th. A simultaneous firming in London to 20.35 reichsmarks to the pound sterling from a low of 20.47 reichsmarks (20.43 being parity with the pound), gave rise to a report that Germany might be in a position to take gold in London. In contrast with the general firmness which they dis played in April, most of the other European exchanges were weak during May. The Dutch guilder opened the month at $.4021, and declined to a low of $.4017 on the 23d, but closed the month well above its A pril average of $ .4 014% . Other European exchanges which fell off slightly during May were the Danish and Nor wegian crowns, the Italian lira, and the Swiss franc. The Spanish peseta continued its decline, dropping in the course of the month from $.1431 on the 1st to $.1416 on the 28th. Canadian exchange showed no tendency to recover and fluctuated only slightly around a discount of % per cent. The Argentine peso and the Brazilian milreis moved in a relatively wide range during the month, the former closing below the A pril average of $ .9 560% and the latter with a loss of four points at $.1188. The Far Eastern exchanges continued weak: Japan slid off 43 points to $.4452 and the rupee was down from $.3628 to $.3617. F o r e ig n T r a d e Exports of merchandise, valued at $427,000,000 in April, showed more than the usual seasonal decline from the high figure of March, but continued to compare favorably with the corresponding month of previous years. Imports, valued at $409,000,000, showed a con siderable increase over the previous month, contrary to the usual tendency, and were also larger than in April of any year since 1920. Shipments abroad of raw cotton and grains were sea sonally less than in March, and together were valued at less than the shipments made last year. The value of the exports of refined petroleum products also declined from the previous month, but showed an increase over Growth in Exports o f Finished Manufactures Compared with A ll Other Exports. a year ago. Quantity receipts of raw silk and crude rubber were 30 and 45 per cent, respectively, larger than in A pril 1928. Since 1922, there has been a gradual change in the composition of our exports, as the accompanying dia gram shows. A steady gain in the value of exports of ‘ 1 finished manufactures ’ ’ has occurred, while, except for wide seasonal fluctuations, the value of exports of all other products has remained practically constant. The group of finished manufactures consists chiefly of auto mobiles, gasoline, and machinery. Exports of these prod ucts in the early months of 1929 have considerably ex ceeded those of the corresponding period in any recent year. Important elements in other exports are cotton, tobacco, raw and manufactured food products, lumber, and metals, the total of which is strongly dominated in its seasonal movements by shipments of farm products. B u ild in g A sharp rise in building contracts during A p ril car ried the total awarded in the 37 States from which re ports are received by the F . W . Dodge Corporation to a level practically as high as a year ago, following sub stantial declines during the preceding months of 1929. There were large increases over March in contracts for residential buildings and for public works and utilities, but the only type of construction to show an increase over April 1928 was public works and utilities. The increase in this group was 30 per cent. The recovery in A p ril does not appear to have con tinued in M a y; there was a drop of about 22 per cent from a year ago in the daily average amount of contracts awarded during the first 24 days of the month. A s a result of the large contract volume of April, the decline from a year ago for the period from January 1 to April 30 was reduced to 11 per cent. The accompany ing diagram of building contracts awarded during the first four months of each of the past five years indicates that the total this year was the smallest since 1925, due principally to the 27 per cent decline in residential con- FEDERAL RESERVE AGENT AT NEW YORK 2*060 269 ALL OTHER CO M M ERCIAL A N D IN D U STR IA L 273 593 2,127 addition, losses charged off on loans and discounts and on securities increased in 1928; consequently, the ratio of net profits to gross earnings was smaller than in 1927. 2,003 316 Business Profits |504| 388 r 300 PU BLIC W O R K S AND U T IL IT IE S 256 898 849 1926 1927 RESID ENTIA L 1925 1928 1929 Building Contracts Awarded During the First Four Months o f Each Year, Classified by Type o f Construction (In millions of dollars). tracts from the high level of last year. Public works and utilities contracts were 3 per cent smaller than in the corresponding period of 1928, but were larger than in any previous year. Commercial and industrial build ing contracts combined were 16 per cent above the first four months of 1928, and were the largest since 1926. B ank E a r n i n g s a n d E x p e n s e s in 1928 This bank's annual study of operating ratios of repre sentative member banks in this district, which has just been completed for the year 1928, shows some interesting changes compared with other recent years*. Gross earn ings of these banks expressed as percentages of total available funds were the highest in recent years, but the ratio of net earnings was approximately the same as in the previous six years. The increase in gross earnings was due partly to a slightly higher average ratio of loans and investments to total available funds, and partly to a somewhat higher rate of return on loans and investments, especially in the large New York City banks, which adjust their lending rates to money market conditions more rapidly than do country banks. The average rate charged by a number of representative New York City banks on loans to customers advanced from 4.38 per cent in December 1927 to 5.50 per cent in December 1928, whereas rates charged on customers loans by banks outside of New York, especially in the smaller localities, have shown but little increase. The proportion of gross earnings derived from the sale of securities was reduced in 1928, accompanying a declining bond market, but mis cellaneous income increased somewhat. A rise in expense ratios offset the increase in gross earnings, however, so that the ratio of net earnings to total available funds was no larger in 1928 than in 1927 or in several preceding years. The principal increases in the ratios of expenses to gross earnings were in interest paid on deposits, due to a continued increase in the pro portion of time deposits, and in interest paid on bor rowed money, due to the increased indebtedness of mem ber banks at the Reserve Bank during the past year. In * Circular No. 914 containing these ratios for the selected banks, grouped according to size and according to the proportion of time deposits, will be mailed on request. 45 Reflecting the high level of business activity during the first quarter of this year, net earnings of 235 indus trial and mercantile companies were 33 per cent larger than in the corresponding period of 1928, and were 42 per cent larger than in the first quarter of 1927, accord ing to a compilation made by this bank. The concerns making quarterly statements, which are included in this tabulation, comprise only a small proportion of all cor porations in this country, and while it is probable that the returns for all companies, if available, would present a less favorable condition than do the reports for the limited number of corporations, it is still evident that the first quarter of 1929 was a period of unusually large corporate profits. The copper and steel companies showed the largest increases in net profits over a year ago; the former re ported net earnings two and one-half times as large, and the latter more than double the profits of the first quarter of 1928. These large increases were followed closely by the reported earnings of the oil concerns, and of the motor parts and accessories companies, but in the case of the oil companies the increase represented chiefly a recovery from the small earnings of a year ago. A num ber of other groups showed net profits from 10 to 50 per cent higher than a year ago. The only types of com panies making less favorable showings in the first quarter of 1929 than a year ago were the building sup plies companies, and the leather and shoe concerns, the latter probably reflecting the effects of the decline in hide prices. The increase in earnings of telephone and other public utility companies was about twice as large as occurred in the first quarter of 1928. Net operating income of Class I railroads was 19 per cent larger than a year ago, and 15 per cent above that of the first quarter of 1927. (N et profits in thousands of dollars) First quarter Number 1927 1928 1929 16 16 75,121 6,580 94,736 6,775 98,948 12,816 24 15 31 17 Miscellaneous....................................... .6 12 11 11 5 6 4 5 6 43 21,727 44,911 32,338 9,630 6,770 3,186 6,835 12,996 4,592 5,502 9,032 1,994 703 1,042 44,707 12,081 36,276 33,662 9,656 8,684 1,383 7,032 14,729 3,936 5,371 11,393 1,701 1,471 678 57,159 23,524 73,835 38,075 12,586 21,724 2,329 11,892 19,269 3,381 6,004 14,315 1,965 D ef. 1,375 1,053 68,839 Corporation groups (excl. tires) Oil.............................................................. Food and food products................... Machine and machine m fg.............. Coal and c o k e ...................................... Other mining and smelting............. Building supplies................................. Railroad equipment............................ Leather and shoe................................. Total 17 groups............................... 235 287,666 306,723 409,180 Telephone (net operating incom e). Other Public Utilities........................ 88 95 58,700 206,100 62,700 226,100 69,600 263,000 Total Public U tilities.................... 183 264,800 288,800 332,600 Class I Railroads................................. (Net operating income) 183 225,500 217,400 259,500 46 MONTHLY REVIEW, JUNE 1, 1929 C o m m o d i t y P ric e s In recent weeks there have been rather severe declines in the prices of several commodities. The most pro nounced weakness has been in wheat prices which, ap parently due to a large carry-over and good prospects for the new crop, have declined to around 95 cents a bushel, as compared with $1.25 near the end of February. Cotton has declined sharply since March from above 21 cents to below 19 cents, and there have been substantial declines also in wool and other farm products. Livestock prices, however, have remained moderately high. Among the non-agricultural commodities, price move ments have been mixed. There have been reactions in the non-ferrous metals which in March had reached the highest levels since 1920. The largest decline has been in copper, which, after advancing from around 14 cents a year ago to 24 cents last March, has subsequently declined slightly below 18 cents; zinc and lead prices also have lost part of their recent advance. The most consistent strength has been in prices of pig iron and finished steel. Crude petroleum, following a decline in January, was advanced sharply in the latter part of May to the highest level since early in 1927. This bank’s index of basic commodity prices, which is strongly influenced by the movement of the few com modities which have recently fluctuated most widely, declined steadily during the nine successive weeks ended May 18. A s the accompanying diagram shows, however, a more inclusive index such as that of the United States Bureau of Labor Statistics, which com prises a large number of finished products as well as basic commodities, declined only slightly in A pril and in general has been relatively stable since last autumn. PER C E N T seasonal increase, but production of passenger cars showed less than the usual increase. The average daily rate of pig iron production reached a level that has been exceeded only in May and June 1923. Produc tion of steel ingots declined less than usual from the record level of March, and our index, which is adjusted for seasonal variations and for year-to-year growth, reached the highest level since 1918. In spite of this large output, however, new orders kept pace with ship ments, and consequently production has been maintained close to peak levels in May. Production of copper in creased further to a volume about one-third larger than a year ago, and our index advanced to the highest level since 1918. Increases occurred also in our indexes of mill consumption of cotton and of silk, and in produc tion of lumber, cement, and a majority of other prod ucts. Output of coal, after seasonal allowance, recov ered the major part of the large loss sustained in the preceding month, but production of petroleum was curtailed further. (Computed trend of past yea rs* 100 per cent; adjusted for seasonal variations) 1928 Apr. 1929 Feb. M ar. Apr. Producers' Goods Pig iron................................................................. Steel ingots.......................................................... Cotton consumption........................................ Woolen mill activity*......... . ......................... Silk consumption*............................................ Bituminous coal................................................. Copper, U. S. m ines........................................ Lead........................................................................ Zinc......................................................................... Tin deliveries...................................................... Leather, sole........................................................ Cem ent.................................................................. Paper, total.......................................................... W ood pu lp........................................................... 107 114 89 83 98 107 83 103 98 99 92 101 105 113 113 106 95 116 122 107 95 109 119 99 110 81r 130 91 111 100 102 106 108 108r 120 121r 102 95 113 112 79 114 84 127r 99r 94 114 94 100 105 102 122 129 106 99p 130 109p 90 118 93 p 132 109 99 123 101 110 96 91 102 80 87 107 77 95 111 88 101 88 109 103r 87 96 85 103 77 103 103 90 102 107 86 107 97 r 130 138r 155 89 89 104 79 98 98 91 100 73 86 104 96 120 146r 136 102 96 124 79 113 109 91 Consumers' Goods Hogs slaughtered.............................................. Cattle slaughtered............................................ Sheep slaughtered............................................. Calves slaughtered............................................ Farm produce shipped................................... W heat flour.......................................................... Sugar meltings, U. S. ports.......................... Anthracite coal................................................... Paper, newsprint............................................... Tobacco products.............................................. Boots and shoes................................................. Automobile, passenger r ................................. Automobile, truck............................................ * Seasonal variation not allowed for p Preliminary 100 87 120 9 6p 133p 137r 147 r Revised I n d e x e s o f B u s in e s s A c t i v i t y The United States Bureau o f Labor Statistics Index of W holesale Prices said Federal Reserve Bank of New Y ork Basic Commodity Price Index P r o d u c tio n Productive activity in leading industries increased to new high levels in April. Automobile output for the third successive month was larger than ever be fo re; in the case of motor trucks the increase over the March figure was considerably larger than the usual Business activity, in spite of some irregularity, con tinued at a high level in April. Merchandise and mis cellaneous car loadings increased more than usual, and this bank’s index reached the highest level since June 1927; other car loadings also increased, whereas usually there is an 11 per cent decline from March. Exports declined more than usual, but imports, instead of show ing the decline which generally occurs, increased, and this bank’s index rose sharply. Department store sales declined somewhat from the high level of March, partly due to unfavorable weather conditions, and partly to the early date of Easter this year, but remained above the level of a year ago. In 140 centers outside of New York City, bank debits declined more than usual from March to April. FEDERAL RESERVE AGENT AT NEW YORK (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1929 1928 Apr. Feb. Mar. Apr. 104 95 87 98 89 93 103 104 105 117 91 100 103 87 110 110 90 101 106 102 lOOp 123p 91 104 99 102 98 96 99 97 101 103 99 102 104 98 107 96 102 106 107 99 101 94 94 119 102 97 112 162 112 187 113 194 109 170 125 210 313 87 106 99 102 108 119 128 216 338 84 106 100 101 91 109 121 195 304 85 Building contracts, 36 States....................... New corporations formed in N . Y . State 116 164 306 87 104 96 102 133 110 General price level............................................ Composite index of wages............................. Cost of living...................................................... 175 221 169 179 225 170 180 227 171 179 226 171 Primary Distribution Car loadings, merchandise and misc......... Car loadings, other........................................... E xports.................................................................. Panama Canal traffic...................................... Wholesale trade................................................. Distribution to Consumer Department store sales, 2nd D ist............... Chain grocery sales.......................................... Other chain store sales................................... Mail order sales. ............................................ Life insurance paid fo r .................................... Advertising.......................................................... General Business Activity Bank debits, outside of N . Y . C ity ........... Bank debits, New York C ity ......... . ........... Velocity of bank deposits, outside of New York C it y ......................................... Velocity of bank deposits, New York City Shares sold on N . Y . Stock Exchange. . . Postal receipts.................................................... Electric power..................................................... Employment in the United States............ 101 112 121 112 47 and increases of varying amount in stocks of cotton goods, silk goods, and drugs. D e p a r t m e n t S to r e T r a d e Following the substantial increase reported in March, the average daily sales of leading department stores in this district in A pril showed practically no change from a year ago, although, due to one more selling day than in April 1928, total sales for the month were about 4 per cent larger. The decline from the March volume apparently was due partly to the fact that Easter busi ness was done in March this year, and partly to unfavor able weather conditions in April. The New York City and Newark stores reported moderately large increases in their total sales, but the majority of the remaining localities showed decreases. Following increases from a year ago in each month since August, the sales of the apparel stores showed a slight decline in April. The percentage of outstanding charge accounts col lected during the month was slightly lower than a year previous for the first time since August. Per cent of accounts outstanding March 31 collected in April Percentage change April 1929 compared with April 1928 p Preliminary Locality W h o le s a le T r a d e Although there were seasonal declines in several lines from March to April, wholesale trade in this district in general continued in substantial volume and was con siderably larger than in A pril 1928. One more selling day in April this year than last was a factor in the in crease, but after adjustment to a comparable basis there were substantial increases over a year ago in sales of m en’s clothing, cotton goods, shoes, hardware, paper and general stationery, and diamonds. Mill sales of silk goods showed an unusually large increase, and sales of machine tool manufacturers continued much larger than a year ago. Stocks of merchandise held by dealers at the end of April showed no consistent change compared with a year ago; considerable decreases were reported in stocks of groceries, shoes, hardware, and jewelry and diamonds, Percentage change April 1929 compared with March 1929 Percentage change April 1929 compared with April 1928 Per cent of accounts outstanding March 31 collected in April Net sales + — + + + — — — — — + — — 5 .8 1 .5 1 .1 0 .1 5 .6 1 .3 5 .3 1 4.1 1 1 .7 3 .7 3 .9 4 .6 13 .5 All department stores..................................... + 4 .3 Apparel stores.................................................... — 0 .9 New Y o rk ................................................................. Syracuse.................................................................... Newark...................................................................... Bridgeport................................................................ Elsewhere.................................................................. Northern New York S ta te............................ Central New York S ta te ............................... Southern New York S ta te............................ Hudson River Valley D ist............................. Capital District................................................. Westchester D istrict........................................ Groceries............................ M en’s clothing................ Cotton goods................... Silk goods*........................ Shoes................................... D rugs.................................. Hardware.......................... Machine tools**.............. Stationery.......................... Paper................................... D iam onds.......................... Jewelry............................... Weighted A v erage.. . Stock end of month + 4 .5 + — 3 6 .9 — 3 .8 + — 1 6 .0 * — — 2 9 .1 + + 0 .8 + + 1 7 .3 + — 4 .4 — 5 .3 + 0 .2 + 9 .8 — 1 1 .6 } + — 9 .4 5 .8 oli 3 .2 * 3 .5 3 .3 1 .0 9 .6 N et sales Stock end of month 1928 + 3 .9 — 1 0 .7 7 3 .9 + 1 4 .8 3 3 .8 + 1 0 .4 + Y .6 + 3 1 . 2 * + 6 .7 * ' ’ 45*.i — 1 4.1 4 4 .7 + 1 1 .3 5 3 .4 — 1 .8 + 2 6 .9 + 7 .2 — 9 .2 4 5 .4 + 4 4 .0 + 9 .0 6 7 .0 6 5 .4 + 1 2 .6 + 2 8 .9 } — 1 0 .6 } 2 6 .9 — 4 .2 + 1 2 .4 5 1 .8 ♦Quantity not value. Reported by Silk Association of America ♦♦Reported by the National Machine Tool Builders’ Association 1929 7 7 .2 3 6 .7 “ 4 6 ’. 3 4 5 .2 4 9 .3 4 7 .6 ‘ *741i 6 8 .4 } 2 7 .3 5 3 .8 1928 1929 + — + + + + — 1.1 2 .2 3 .6 7 .5 6 .1 5 .0 5 .6 5 2 .8 5 1 .3 4 1 .6 3 4 .2 4 5 .7 5 0 .7 5 2 .1 4 3 .1 3 7 .3 4 6 .2 “ 3 2 .2 “ 35! 7 + 1 .4 4 8 .8 4 8 .1 — 5 .4 4 8 .3 5 5 .2 Musical instruments, furniture, and home furnishings were prominent among the departments which showed the principal increases in April. Comparisons of sales and stocks in major departments with those of a year ago are given in the following table. Net sales percentage change April 1929 compared with April 1928 Commodity N et sales Stock on hand end of month Musical instruments and radio............ Cotton goods................................................ Home furnishings....................................... Linens and handkerchiefs....................... Toilet articles and drugs......................... W om en’s and Misses’ ready-to-wear.. Silverware and jew elry............................. Toys and sporting goods......................... Books and stationery................................ W om en’s ready-to-wear accessories.. . M en’s furnishings....................................... Silks and velvets......................................... Luggage and other leather goods......... M en’s and Boys’ wear.............................. Woolen goods............................................... Miscellaneous............................................... + 3 1 9 .4 + 23 .1 + 1 6 .9 + 1 4 .9 + 1 1 .4 + 8 .2 + 4 .1 + 3 .8 + 1 .9 + 1 .8 + 1 .2 + 0 .3 — 2 .1 — 5 .0 — 5 .2 — 5 .5 — 1 8 .0 — 1 8 .2 — 2 .5 Stock on percentage April 30, compared April 30* + + + + + + + + — — + + — hand change 1929 with 1928 8 .3 2 .0 3 .8 5 .9 6 .2 4 .4 5 .5 8 .6 6 .9 4 .4 1 .6 8 .3 7 .0 1 .9 8 .8 3 .6 1 .7 1 4 .3 4 .4 48 M ONTHLY REVIEW, JUNE 1, 1929 Business C on ditions in the U n ited States (Summarized by the Federal Reserve Board) N D U STRIAL activity continued at a high level in April, and the volume o f factory employment and payrolls increased further. Loans and invest ments o f member banks in leading cities continued to decline between the middle o f April and the middle o f May, and were at that time at approxi mately the same level as a year ago. I P r o d u c t io n Industrial activity increased in April to the highest level on record. The iron and steel and automobile industries continued exceptionally active during April. Activity in copper refining, lumber, cement, silk and wool textiles, and the meat-packing industry increased, and production o f cotton textiles showed a less than seasonal reduction. Factory employment and payrolls increased, contrary to the seasonal trend. Output o f mines was also larger in April. Copper and anthracite coal pro duction increased and the seasonal decline in output o f bituminous coal was smaller than usual. Petroleum production declined slightly. Preliminary reports for the first half o f May indicate a continued high rate o f operation in the iron and steel industry. Output o f lumber and bituminous coal was somewhat larger during the first part o f May than at the end o f April. Building contracts awarded during the month o f April increased sharply and for the first time in five months approximated the total for the corre sponding month in the preceding year. The increase was not continued, how ever, in the first part o f May wThen awards averaged 20 per cent below the same period in May 1928. During April most classes o f building showed seasonal increases over March, the largest being in contracts for residential building and public works and utilities. Index Number o f Production o f Manufactures and Minerals Combined, Adjusted for Sea sonal Variations (1923-25 average = 100 per cen t). D is t r ib u t io n o f Labor Statistics (1926 average = 100 per ce n t). MILLIONS 2000 or DOLLARS MILLIONS OF DOLLARS 2000 Total | Shipments o f commodities by rail increased during April and were the largest for this month in any recent year. The increase from March reflected larger loadings o f miscellaneous freight, lumber, livestock, and ore. During the first half o f May shipments o f freight continued to increase. Sales at wholesale declined seasonally in April, except in the case of gro cery and hardware firms. In comparison with April 1928 all lines of trade reporting to the Federal Reserve System showed increases. Department store sales were also smaller in April than in March, but continued above the level of a year ago. P r ic e s 1925 1926 1927 1928 1929 Reserve Bank Credit: M onthly Averages o f Daily Figures for 12 Federal Reserve Banks (Latest figures are averages o f first 22 days o f M ay) PERCENT PER CENT 7 7 Wholesale commodity prices averaged slightly lower in April than in March, according to the index o f the United States Bureau o f Labor Sta tistics, reflecting primarily declines in prices of farm products and their manufactures. Prices o f mineral and forest products and their manufactures, on the average, showed little change. There were increases in the prices o f iron and steel, and sharp declines in copper, lead, and tin. Seasonal declines occurred in prices o f coal and coke, while gasoline prices advanced. Prices o f farm products and their manufactures averaged lower in April than in March. Prices o f grain, especially wheat, moved downward more sharply and wool and cotton continued to decline. Livestock and meat prices continued the upward movement o f the previous month, but at a slower rate; hides averaged slightly higher in price, and leather somewhat lower. Among imported raw materials, rubber, sugar, and coffee showed marked price reces sions. Early in May cattle, hides, and wheat prices declined sharply and the price o f rubber increased. B a n k Cr e d it r r ‘ \l— /F ~ 1 / I n Commer y r ^1? : . —. fteserva, — Acceph -----I. 19Z5 T926 /<? 'ffcfe 1927 1928 1929 Money Rates in the New York Market. (M ay rates are averages for first 24 days) ■ During the four weeks ended May 15 loans and investments o f member banks in leading cities showed a decrease o f nearly $200,000,000, largely in loans on securities together with some further decline in investments. All other loans, chiefly for commercial and agricultural purposes, remained un changed at a relatively high level. There was a further reduction in the average volume o f Reserve Bank credit outstanding between the weeks ended April 24 and May 22, owing largely to additions to the country’s monetary stock o f gold. The decline was in dis counts for member banks; holdings o f acceptances and o f United States securities showed practically no change. Open-market rates for commercial paper remained unchanged as did rates on prime bankers acceptances, except for a temporary decline at the end of April and a recovery in the first week in May. In the first three weeks of May rates on collateral loans averaged considerably higher than in April.