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MONTHLY REVIEW o f C r e d it a n d S e c o n d Federal Reserve Agent B u s in e s s F e d e r a l D i s t r i c t Federal Reserve Bank, New York Money Market inMay Open market money rates declined in May to levels even lower than those reached temporarily in March, in several instances to the lowest levels since the latter part of 1924 or early 1925, and there were evidences of a somewhat more plentiful supply of funds. The ten dency toward easier money conditions was apparent before the reduction in the rediscount rate of the FedM oney Rates at New Y ork M ay 31, 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 Sept. 15 (yield ). . . Maturing Dec. 15 (yield ). . . . Federal Reserve Bank of New York rediscount rate............... Federal Reserve Bank of New York buying rate for 90 day bills.............................................. *6.00 8H 6 5X April 30, 1930 * 3 ^ -4 4 3 ^ -4 2m f5 .7 8 M ay 29, 1930 *3.00 3X t r 4 14.39 5 .0 6 5 .0 2 3 .0 2 3.19 2.0 0 2.4 2 5 3X 3 5X 3 2X m onth; April average revised Amount of Money in Circulation in the United States (weekly aver ages of daily figures ending with Saturday— computed by the Federal Reserve Board) R e s e r v e C o n d itio n s eral Reserve Bank of New York from 3 ^ to 3 per cent on May 2, and was accelerated after that event. The causes of the May decline in money rates were not of as temporary a character as that which caused the low rates during the March tax period. Two of the most important factors, which are illustrated in the charts below, were a renewed decline in the amount of currency in circulation and a continued inflow of gold. A s the first diagram indicates, nearly $60,000,000 of currency has been retired from circulation since the middle of April, leaving the volume outstanding $200,000,000 smaller than a year ago. The average per capita amount of currency in circulation at the end of A pril was reported by the United States Treasury Department to have been the smallest since the W ar. The decline in the use of currency during recent months has probably been due to the combined influence of at least three factors. One of these— the tendency to use checks drawn against demand deposits in place of currency— is not a recent dev^opment, but has been operative for a number of years. Other factors which probably have been more largely responsible for the unseasonable decline of the M onetary Gold Stock o f the United States (weekly averages o f daily figures ending with Saturday— computed by the Federal Reserve Board) 42 MONTHLY REVIEW, JUNE 1, 1930 MILLIONS OF DOLLARS past few months are reduced payrolls, accompanying the recent low level of industrial activity, and lower com modity prices. Gold imports also have contributed to the ease in the money market during recent weeks. In the last few days of A p ril and the first three weeks of May a total of more than $60,000,000 of gold was received from abroad, chiefly from South America and Japan. This brought the total net inflow of gold since the beginning of the year to over $200,000,000, so that the gold stock of this country reached in May the highest level since the autumn of 1927. Through a gradual but fairly steady transfer move ment, some of the surplus funds which accumulated in banks in other districts as the result of the retirement of currency from circulation or gold imports, came to New York, and tended to keep the supply of funds in the money market ample. The A pril decline in volume of bond trading and the gradual recession in prices was checked, and bond prices in May averaged somewhat higher than in the latter part of April. Probably due at least in part to the large volume of new bonds coming onto the market, however, no great strength developed in the market for outstand ing issues. M em ber B a n k C redit A rather slack demand for bank credit during the past month has been indicated by the weekly reports from member banks in leading cities in this district and throughout the country. Security loans of all reporting banks on May 21 showed little change from a month previous, and all other loans, largely commercial, showed a further decline of $145,000,000. A s in other periods when there has been a small demand for loans, and a considerable proportion of the banks have been out of debt at the Reserve Banks, there has been a tendency for banks to turn to investments in bonds for the employment of their funds. During the past month the reporting banks have increased their investments nearly $65,000,000, bringing their total investment holdings to a volume $350,000,000, or more than 6 per cent, larger than in the first week of February. Un doubtedly this increase in bank investments has been an important factor in the absorption of the unusually large volume of bond issues during recent months, and so has aided in the financing of public and corporation construction programs. B il l M a r k e t Following a downward revision in the closing days of April, open market rates for bills were reduced progressively during May, so that by the end of the month offering quotations were % to % per cent lower than at the end of April. Unendorsed bills of not more than 90 days maturity reached by the third week of May an offering rate of 2 % per cent, which is % per cent below the quotation reached for a few days during the middle of March, and is the lowest rate for these maturities since the closing months of 1924. Four months bills at 2 % per cent and 5 and 6 months maturi ties at 2 % per cent equaled the lowest levels reached in March. Accompanying the declines in open market rates, the New York Reserve Bank’s buying rates were reduced, the rate for maturities up to 90 days being 2500i---- ---—i---- j- 2,000 1927 1928 1929 1930 Total Volume of Bankers Bills Outstanding, Showing Amount Held by Federal Reserve Banks, by Foreign Correspondents of Federal Reserve Banks, and by Other Investors lowered by a total of Y2 per cent during the month to 2 Yz per cent. During the first three weeks of May, the investment demand for bills was reported to have been in substan tial volume and generally in excess of the amount of new bills being offered to the dealers. This condition gave impetus to the reductions in bill rates and resulted in a decline in dealers’ portfolios to a comparatively small figure— especially their holdings of 90 day bills, which were in greatest demand. A fter the latest reduc tion of Yg per cent in the rate on 30 to 90 day bills effected on May 19, there was a moderate increase in the supply of bills, so that dealers’ portfolios returned to about the same level as at the beginning of the month. The bill holdings of the Federal Reserve System declined somewhat further in May, accompanying the seasonal decrease in the total volume of bills outstanding. A s the diagram indicates, the retirement of Federal Reserve bill holdings from the year-end peak during the first four months of this year was less rapid than in 1929, although the total volume of bills outstanding declined by a larger amount than a year ago. From a December 1929 figure which was much higher than a year previous, acceptance outstandings dropped $318,000,000 during the first four months of this year to $1,414,000,000 on A p ril 30, a reduction of 18 per cent, while Reserve System holdings during the same period declined $182,000,000. In the first four months of 1929, the liquidation of outstanding acceptance credits amounted to $173,000,000 or 13 per cent, and Federal Reserve bill holdings decreased $310,000,000. Holdings of bills for foreign correspondents by Reserve Banks and holdings of bills outside of the Reserve System declined during the first four months of this year, whereas in the high rate period last year sizable in creases occurred. C o m m e rc ial P aper M ar k e t Commercial paper rates in the open market tended gradually lower throughout May, so that by the end of the month the principal selling range at 3^ 2 -3 % per cent showed a reduction of Y± Per cen^ from the quota tions prevailing at the end of April. Prime commercial paper is now being sold through the open market at the lowest rates since February 1925. Coincident with FEDERAL RESERVE AGENT AT NEW YORK declines in the return on other types of short-term in vestments, the banks throughout the country came into the market for a large amount of paper, especially after the middle of the month. During part of the time, avail able supplies of paper in dealers’ portfolios fell short of the investment demand, and to that extent the activity of the market was curtailed. The 21 dealers who report to this bank had $553,000,000 of commercial paper outstanding on A p ril 30, which represents a further increase of $24,000,000, or 5 per cent, during that month, and a rise of $288,000,000, or more than 100 per cent, from the low level reached last September. Although the excellent buying of paper by bank investors has made it possible for the dealers to offer increasingly attractive rates to commercial custom ers, the absence of a need for additional funds on the part of a number of commercial and industrial concerns has been given as a reason why the volume of com mercial paper has not increased even more rapidly. SecurityMarkets Continuing the downward tendency that developed in the latter part of April, stock prices underwent a sharp decline in the first few days of May, accompanied by the largest turnover of shares in several months. Following this decline, a recovery occurred until the middle of the month, after which the general movement of prices was irregular. In the second half of May there was a marked falling off in the activity of the market, sales on the Stock Exchange declining on a number of days to between 1,900,000 and 2,400,000 shares. A s the net re sult of the diverse movements during the month, the average level of share prices in the closing days of May was about 6 per cent below the highest quotations of the first part of April. This recent level, however, still shows a net recovery of 47 per cent of the loss sustained in the break of last autumn, but is about one-fourth lower than the peak level of last September. Bond prices, after a moderate advance in the closing days of A p ril and the first few days of May, held steady for the balance of the past month at levels slightly below those reached in mid-March. Throughout the month of May, the bond market was called upon to absorb rather large amounts of new bond flotations, and this tended to limit buying power for previously outstanding issues and to prevent any material advance in prices. Trading in bonds on the New York Stock Exchange was generally in rather small volume, considerably below the active turnover of March. NewFinancing New security issues in A pril totaled $950,000,000, a larger amount than in any preceding month of 1930, and $150,000,000 above the total of A p ril 1929. A ll but $50,000,000 of the A p ril total represented issues for new capital purposes, and of the $900,000,000 of new money obtained, 70 per cent was through the medium of bond flotations. Stock offerings, even excluding the American Telephone and Telegraph Company issue which is pay able in August, were somewhat larger than in im mediately preceding months, but the amount remained much smaller than a year ago. 43 529 431 CORPORATE GOVERNMENT 1926 1927 1928 1929 1930 Foreign Security Issues for New Capital Purposes— Governmental and Corporate—during the First Four Months of 1926-1930. (In millions of dollars) Domestic corporate new capital issues during the first four months of this year have aggregated $2,000,000,000, but due to the great decline in stock financing of invest ment trusts and financial companies, have been $800,000,000 smaller than in the corresponding period of last year. In new bond offerings, however, there has been a large increase— from about $850,000,000 in 1929 to $1,400,000,000 this year, an expansion of 65 per cent. State and municipal financing, which is greatly facilitated by a favorable bond market, has shown an increase of 40 per cent between the two years. In the field of foreign financing also, a notable resumption of borrowing has occurred; the total for the first four months of 1930 was over 70 per cent larger than in the corresponding period last year, and practically as large as in 1928. The accompanying diagram compares the volume of foreign government and corporate financing in this market during the first four months of this year with that of the corresponding period in recent years. The corporate issues include security offerings by American concerns in cases where the funds were for employment in foreign countries; the inclusion of such issues con siderably increased the amount of corporate securities shown for 1929 in the diagram. The volume of new securities brought out during May appears to have compared favorably with the amount offered during the previous month. Some increase oc curred in domestic industrial and public utility company flotations, while railroad financing, which had been large in the preceding two months, declined in M ay. Numer ous State and municipal issues were announced, and the total for this group was substantial. The total of foreign issues does not appear to have quite kept pace with the $158,000,000 average of March and April, since the only very large offering was the $50,000,000 Japanese Government issue. On May 19, the United States Treasury effected its fourth sale of Treasury bills. The allotted $104,600,000 of bills, maturing on August 18, 1930, were sold by the Treasury at an average discount equivalent to an annual rate of 2.54 per cent on a bank discount basis. This rate 44 MONTHLY REVIEW, JUNE 1, 1930 compares with a cost to the Treasury of 3.28 per cent on a 90 day issue floated last December, 3.31 per cent on the issue of last February, and 2.93 per cent on the issue sold on A pril 15. Central BankRateChanges The trend towards lower money rates abroad was further accelerated during May, twelve foreign central banks— eleven in Europe and one in South America— re porting reductions in their official discount rates. Five central banks made their reductions in the first three days of the month, as follows; on May 1, England and Belgium lowered their respective rates from 3 y2 to 3 per cent; on the 2nd the Bank of France rate was reduced from 3 to 2 y2 per cent and the Bank of Danzig rate from 5y2 to 5 per cent. On the 3rd the Danish bank rate was cut from &y2 to 4 per cent. The Belgian rate has not been as low as 3 per cent since October 1909; the French rate was last below 3 per cent in October 1898; Denmark has not had a 4 per cent rate since 1913; and the Danzig rate is the lowest since that bank was founded in 1924. The second group of changes came soon after the middle of the month. On the 19th the Bank of Italy rate was moved from 6 to 5 % per cent, this being its third reduction since the beginning of March. The Reichsbank rate was lowered on the 20th by y2 per cent to 4 y 2 per cent, the lowest German bank rate since July 1914. This was followed by a reduction from 6 to 5 y 2 per cent in the Austrian rate on the 24th, and a drop in the rate of the National Bank of Czechoslovakia from 5 to 4 y2 per cent on the 26th. The Czech bank rate had remained unaltered since March 1927. On the 30th, the National Bank of Hungary reduced its rate by y 2 per cent to by2 per cent, the lowest since this central bank was organized in 1924. Reference was made last month to press reports of a reduction in the Yugoslav bank rate in April. The National Bank of Yugoslavia did not lower its rate until May 28. This reduction was from 6 to § y 2 per cent, and was the first change since the war. On May 21 the Bank of the Republic of Colombia lowered its discount rate from 9 to 8 per cent, the higher rate having been in force since November 20, 1929. GoldMovement The receipt of $2,400,000 of gold from Peru was the only import of substantial amount at the Port of New York during May, but gold continued to arrive at San Francisco from the Far East, $12,000,000 coming from Japan and $900,000 from China. In addition there was a release of $2,000,000 of gold earmarked for foreign account. Exports for the month were negligible. The net gain in May to the country’s gold stock through these movements showed a considerable decline from previous months, amounting to only $17,800,000. The preliminary figure of gold added to the gold stock in the first five months of 1930 is $218,900,000 as compared with $151,500,000 in January-May, 1929. The principal movement abroad in M ay was the series of withdrawals of gold from the Bank of England for shipment to France, amounting to over £11,000,000, off set in part by the receipt of £5,000,000 in sovereigns from Australia and £800,000 from South Africa. The movement from Australia to London appears to have ended on May 17 with a cumulative total of £22,000,000. Of the £2,500,000 South African gold offered in the London market in May, Germany secured £1,250,000 and France £515,000, the balance going mainly to the trades and to India. ForeignExchange The steadiness which characterized the foreign ex changes in A pril was followed by a slight decline early in May. Through the middle of the month changes were few, but in the last week a sagging tendency reappeared and towards the month-end a number of quotations were somewhat below those of A pril 30. Despite this tendency, only the Spanish, Argentine, and Brazilian currencies and the Shanghai tael continue to be quoted below last year’s levels. Sterling fluctuated within narrow limits, and French francs and lire were practically unchanged throughout the month. Guilders, which had risen sharply in April, lost nearly half their gain by May 14 but re covered part of the decline in the last week. Pesetas fell rather sharply in the first two weeks and then became steadier at almost their lowest level. Japanese yen and Canadian dollars showed a net gain for the month. Cable Hates C ountry M ay 31, 1929 April 30, 1930 M ay 27, 1930 Belgium .......................................... E n gla n d ......................................... France............................................. Germ any................................ .. Ita ly ................................................. Netherlands................................... Spain............................................... Sweden............................................ Switzerland.................................... Canada............................................ $.1390 4.8488 .0391 .2385 .0523 .4018 .1403 .2674 .1925 .9919 .9533 .1188 .4419 .5850 $.1397 4.8622 .0392 .2388 .0524 .4026 .1242 .2688 .1939 .9988 .8726 .1188 .4940 .4706 $ . 1396 4.8603 .0392 .2387 .0524 .4022 .1221 .2684 .1935 .9995 .8681 .1185 .4943 .4275 Japan............................................... Shanghai (tael)......................... Employment andWages The number of workers employed in representative factories throughout the United States declined only seasonally between the middle week of March and the middle week of April. Consequently, for the first time since last July, this bank’s national index of factory employment, adjusted for seasonal variations, did not decline. In New York State, factory employment de creased slightly more than usual in April, but the season ally adjusted index showed only a small decline follow ing steady and substantial declines in each of the preced ing six months. The rate of voluntary labor turnover showed an un usually small increase in April, which is usually a month when many factory employees change their jobs. L ay offs were fairly numerous, and the number of new em ployees hired was small, so that it appears to have continued to be difficult for those out of work to secure factory employment. A slightly more favorable situation is reflected in the ratio between orders for workers and applications for employment at New York State employ ment bureaus; this ratio increased more than seasonally in April in response to the expansion of outdoor activ ities, and showed a further advance in the first three weeks of May, so that comparisons with 1929 were more favorable than in a number of months. FEDERAL RESERVE AGENT AT NEW YORK Business P rofits The earnings reports of 257 industrial and mercantile companies available at this time show that first quarter net profits this year were smaller than in 1929 by 22 per cent. The aggregate profits of these companies, however, remained 5 per cent larger than in the first quarter of 1928. Of the 19 groups of companies shown in the table below, 14 reported smaller net income than a year ago. The largest reduction in actual amount of profits was suffered by the automobile companies, and this group also showed one of the largest percentage reductions. Profits of the industry as a whole were down 43 per cent from the first quarter of 1929, and excluding General Motors Corporation, whose net return was 27 per cent lower, the profits of the remaining companies which so far have reported, were 75 per cent smaller. The profits of the automobile parts and accessories industry were only about half of those of a year ago, and the copper companies likewise reported a shrinkage of over 50 per cent. The next largest percentage declines occurred in the net income of machinery, oil, building supply, office equipment, tobacco, and miscellaneous mining and smelt ing concerns. Steel companies’ profits showed a con traction somewhat smaller than the average for all con cerns, and the chemical and electrical equipment groups reported reductions of only 6 and 10 per cent, respect ively. The food and food products group showed unusual stability in earning power, with net profits off less than 1 per cent. Motion picture companies continued to expand earnings; the first quarter net profits of reporting com panies in this group were 39 per cent larger than in 1929, and three times as large as in 1928. Other groups whose profits were in excess of a year ago included the coal and coke, paper, printing and publishing, and rail road equipment concerns. A s the first part of the accompanying diagram indi cates, industrial corporation profits in the first quarter MILLIONS OF DOLLARS MILLIONS OF DOLLARS 45 of 1930 were below those of the last quarter of 1929, following a large decrease in that period. In each of the past three years, first quarter profits have been larger than those of the preceding quarter. Net operating in come of Class I railroads, depicted in the second part of the diagram, declined considerably further in the first three months of this year, to an amount 32 per cent below a year ago, and the smallest since the first quarter of 1922. Telephone companies and other large public utility corporations earned less in the first quarter of 1930 than in the preceding quarter, contrary to the usual seasonal movement, but total public utility profits were slightly above the level of a year ago. (Net profits in thousands of dollars) First quarter Number 1928 1929 1930 15 88,686 93,484 52,945 Printing and publishing.................. Railroad equipm ent........................ T o b a cco....................... .......... ............ Miscellaneous.................................... 28 25 13 29 14 8 7 12 5 10 14 8 6 7 6 6 4 40 10,971 12,435 34,216 34,168 5,867 6,016 1,482 6,163 4,841 2,912 15,193 16,400 4,596 3,579 7,207 5,394 1,701 41,527 19,167 23,970 68,424 38,959 7,764 15,321 1,869 10,612 10,428 3,797 20,169 22,265 6,173 2,650 8,130 7,215 1,965 47,033 9,149 16,939 56,562 38,595 5,099 6,545 2,539 7,596 14,516 2,622 19,057 20,160 4,655 4,205 9,228 8,629 1,521 37,231 T otal 19 groups. . ................... 257 303,354 409,395 317,793 Telephone (net operating income) Other public utilities (net earnings) 106 95 62,700 226,100 69,600 263,000 66.000* 270,000 Total public utilities . ............. 201 288,800 332,600 336,000 Class I railroads................................ (net operating income) 172 217,400 259,300 176,300 Corporation groups Automobile parts and accessories (exclusive of tires)........................ O il........................ ............................... S teel..................................................... Food and food products................. Coal and co k e ................................... Other mining and smelting............ M otion p ictu re ................................. Building supplies.............................. Electrical equipment........................ Office equipm ent.............................. ♦March 1930 estimated MILLIONS OF DOLLARS Quarterly N et Profits of 163 Industrial Companies, N et Operating Income of 172 Class I Railroads, and Net Operating Income of 106 Telephone Companies and N et Earnings of 9 5 Other Public Utilities Combined 46 MONTHLY REVIEW, JUNE 1, 1930 C o m m o d ity P rices Further declines in commodity prices occurred in May, and the general level consequently reached a new low since 1916. The most substantial declines were in metal prices, while the agricultural commodities were irregular. A t some time during the month, new low levels for recent years were established by finished steel, lead, zinc, tin, crude rubber, domestic wool, and raw silk. Pig iron also declined further, and was the lowest since September 1928. The price of domestic copper was reduced further from 14 to 1 2 ^ cents, the lowest since July 1927, but there was a recovery of % cent from this level. Scrap steel declined rapidly; from the high of $19.75 a ton, reached in January 1929, the price had dropped to $15.25 in December, and after recovering to $17.00 in February, declined to $14.75 in the fourth week of May. The general index of the Bureau of Labor Statistics declined only a fraction of a point further in April, as recoveries in some of the agricultural commodities and their products, which are heavily weighted in the index, nearly offset further declines in other groups, prin cipally in the metals. This is illustrated in the accom panying diagram, where the more important groups have been combined into two major divisions. The diagram shows that the agricultural commodities in March were 13 points under the high level of September 1928, and were about 1 point under the low of March 1927; in April, however, a small recovery occurred. The group composed of fuels, metals, and building materials, however, has declined almost continuously since the middle of last year. PER CENT indicated, however, by the fact that all but one of the twenty-four indexes of production of this bank now available for A pril were below the high levels of April 1929, and sixteen were below the long-time trend of growth, calculated from the records of past years. Production in the metal industries was virtually un changed in April, and this bank’s index of total auto mobile production likewise was practically the same in April as in March, as output showed just about the usual seasonal expansion. The fuel industries, however, generally increased their activity. In the textile in dustries there was a sharp decline in mill consumption of raw silk, and although a moderate increase in cotton consumption occurred, this bank’s index of textile out put declined to a new low level since 1924. In May, operations in the steel industry declined seasonally, and production of bituminous coal failed to show the usual increase in the first three weeks of the month, while output of anthracite increased more than in the corresponding period in most previous years, and average daily production of petroleum was larger than in April. A sharp curtailment in the production of cot ton goods was reported. (Adjusted for seasonal variations and usual year-to-year growth) 1929 1930 Apr. Feb. Mar. Apr. 118 122 134 114 99 114 101 109 87 89 81 73 101 99 83 91 78 115 102 101 84p 93p 76 89 137 146 88 109 90 117 90p 113p 90 100 118 112 100 81 100 103 107 94 70 67 103 98r 93 85p 77 p 108p 99p 104 103 123 101 97 86 75 108 118 90 83 67 98 109 88p 86 67 85 116p 95p 101 109 96 112 94 95 75 102 89 94 75 98 96 106p 80 103 114 132 87 105 110 87 92 114 111 80 84 109 108 96p 80 Metals Copper, U. S. m ines..................................... Tin deliveries................................................. Automobiles Passenger cars................................................ M otor trucks.................................................. Fuels Bituminous coa l............................................. Anthracite co a l.............................................. Petroleum, crude........................................... Petroleum products...................................... Textiles and Leather Products C otton consum ption..................................... W ool mill a ctiv ity ......................................... Silk consum ption........................................... Leather, so le ................................................... Boots and shoes............................................. Foods and Tobacco Products Live stock slaughtered................................. Wheat flour.................................................... Sugar meltings, U. S. p o rts........................ T obacco products.......................................... Miscellaneous Paper, newsprint........................................... U . S. Bureau of Labor Statistics Wholesale Commodity Price^ Index and Group Indexes Showing Movements of Prices of Agricul tural Commodities and Their Products, and of Fuels, Metals, and Building Materials (1 9 2 6 = 1 0 0 per cent) Production Increases in individual lines of industrial production slightly more than offset decreases in April, after al lowance is made for the usual seasonal changes, and the net result was a small advance in total productive ac tivity. This followed some reduction in activity during March. A continued rather low level of production is p Preliminary r Revised Building Some further seasonal increase in building contracts occurred during April, but the total for 37 States re ported by the F . W . Dodge Corporation, while the larg est for any month since last August, was 25 per cent below the rather high total for A pril 1929. The accom panying diagram indicates the recent movements of the three major classifications of construction work. Both residential building and public works and utilities con- FEDERAL RESERVE AGENT AT NEW YORK MILLIONS-OFDOLLARS * RESIDENT!/ i A L r S \ 1 ER NON-RES IEI e n t ia l t0T H *1 •*«■ * •« # i 1^ i A * \ /• t \ .♦ \ » a v j j \ * 1929 UV %j■» * ik / : \ ness was done in the latter month. The number of busi ness failures declined less than usual in April, however, and after seasonal adjustment were as numerous as in any month in about eight years. The number of new corporations formed in New York State showed only a seasonal change, and was much smaller than in 1929. (Adjusted for seasonal variations and usual year-to-year growth) \\ J V •n : J J t 47 1930 , Apr. Feb. Mar. Apr. 102 102 100 122 91 94 89 84 97 80 91 77 87p 92p 79 94 87 81p 99p 101 94 102 97 99 96 106 89 104 93 109 87 105 90p 103 89 Primary Distribution \ v: V |j PUBLIC WORK;s & UTILITIES \ Car loadings, merchandise and m isc........ Car loadings, other....................................... f Panama Canal traffic................................... Distribution to Consumer 1927 1928 1929 1930 Residential, Public W orks and Utilities, and Other Non-Residential Building Contracts Awarded in 37 States included in the F. W . Dodge Corporation Report Department store sales, 2nd D ist............. Chain store sales, other than g ro ce ry .. . . Life insurance paid f o r ................................ A dvertising....................... ............................. General Business Activity tracts increased seasonally between March and April, while other non-residential work, composed principally of industrial and commercial building, declined. Ever since January, public works and utilities projects have been a more important element in the general building situation than have residential contracts, and the total volume in the first four months of the year has been 30 per cent greater than in 1929, while residential build ing has been little more than half of last year ’s volume. The total volume of building contracted for, due largely to the decline in residential awards, has been 17 per cent smaller than in 1929. In the New York and Northern New Jersey district the building contract total for the period from the first of the year to A p ril 30 has been 14 per cent smaller than for the corresponding period of 1929. This decline has been entirely due to a drop of 60 per cent in residen tial contracts, as other principal types of construction have all shown at least small increases over a year ago; in fact, contracts for public works and utilities have increased substantially. A decrease of $94,000,000 in apartment house construction has accounted for much of the decline in residential contracts, though in addi tion contracts for other residential work have also shown considerable percentage reductions. The daily average amount of building contracts awarded during the first three weeks of M ay was some what smaller than in the preceding month, and remained well below the level of a year ago. Indexes of Business Activity General business activity showed little change between March and April, and remained at a relatively low level. Car loadings of merchandise and miscellaneous freight increased moderately over the level of March, and load ings of bulk freight were practically unchanged when usually there is a sharp decline, but both remained con siderably under the levels of recent years. Foreign trade showed no consistent change from March, and remained substantially lower than a year ago. Department store sales in the Second District in creased more than usual between March and April, even after allowance for the fact that this year’s Easter busi Bank debits, outside of New York 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 E xchange. . . Postal receipts............................................... Electric pow er................................................ Employment in the United S tates........... Business failures............................................ Building contracts, 37 States r .................. New corporations form ed in N. Y . State. Real estate transfers.................................... 109 170 98 126 101 142 98 136 124 195 304 85 102 103 112 117r 112 82 115 143 267 79 94 94 116 90r 101 69 116 159 299 73 91p 93 118 88r 93 70 111 150 396 80 General price level*...................................... Composite index of wages*........................ Cost of living*............................................... 179 226 171 173 226 170 173 228 168 174 226 p Preliminary r Revised 93 121 83r 94 * 1913 average=100 ForeignTrade Both exports and imports of merchandise during April continued to show considerable decreases from a year ago. Exports of merchandise, valued at $334,000,000, declined somewhat more than usual from March, and were 22 per cent smaller than in A p ril 1929. Imports, valued at $308,000,000, showed a slight increase over March, but were 25 per cent less than a year ago. A ll of the principal economic groups of exports and imports participated in the decline compared with A pril 1929. The finished manufactures group, however, showed the smallest percentage loss, both in exports and in imports. The value of exports of grains and grain products in A pril remained low as compared with a year ago. The quantity of raw silk imported declined slightly from the previous month, and was 20 per cent less than in A pril 1929. Receipts of crude rubber were larger than in March, and were only 8 per cent less than a year ago. ChainStoreTrade The total A pril sales of reporting chain stores aver aged 14 per cent higher than a year ago, due to the unusually large increases in sales reported by ten cent, shoe, variety, and candy chain store systems, which no doubt reflected the inclusion of Easter trade this year, whereas it was included in March figures in 1929. Grocery chains also reported a substantial increase in sales compared with a year previous, but drug store sales continued slightly below last year. 48 MONTHLY REVIEW, JUNE 1, 1930 The Easter trade was reflected also in sales per store, especially in the case of candy stores. A ll lines except drug chains showed at least slight increases in sales per unit. compared with those of A pril 1929 in the following table. It will be noted that sales in the apparel depart ments showed the largest increases. N et sales percentage change April 1930 compared with April 1929 Percentage change April 1930 compared with April 1929 Number of stores Total sales Sales per store G rocery............................................ Ten cen t.......................................... D ru g................................................. S hoe.................................................. V ariety............................................. C an dy............................................... + 3 .6 + 8 .0 + 7 .4 + 9 .2 + 1 9 .4 — 2 .8 + 1 5 .5 + 1 1 .0 — 0 .8 + 2 2 .6 + 2 0 .0 + 4 2 .9 + 1 1 .5 + 2 .8 — 7 .6 + 1 2 .3 + 0 .4 + 4 7 .1 T ota l........................................ + 7 .2 + 1 4 .1 + 6 .4 Type of store M en’s and B oys’ w ear........................... T oys and sporting g ood s....................... Luggage and other leath ergood s........ M en’s furnishings................................... W om en’s ready-to-wear accessories... W om en’s and Misses’ ready-to-wear. W oolen good s........................................... Toilet articles and drugs....................... Books and stationery............................. Silverware and jew elry.......................... Department StoreTrade Home furnishings............................... Musical instruments and ra d io ........... Linens and handkerchiefs..................... The total sales of the reporting department stores in this district showed an increase of more than 10 per cent over a year ago in April, the largest increase since August 1926, undoubtedly due in large part to the Easter trade, which occurred in A pril this year, but in March last year. However, the total sales of these stores for March and A pril combined were 2 per cent larger than in the corresponding period last year. Unusually large increases in sales were reported in April by stores in New York City, Rochester, Newark, central New York State, the Capital District, and the Westchester Dis trict. The Buffalo and Syracuse reporting department stores also showed increases in sales, following decreases in each month since August, and moderate increases in sales were reported in Bridgeport, southern New York State, the Hudson River Valley District, and in northern New York State. Reflecting Easter purchases of cloth ing, the reporting apparel stores showed about an 8 per cent increase in their sales compared with last year. Stocks of merchandise on hand were smaller than a year ago for the fourth consecutive month. The per centage of outstanding charge accounts collected during A p ril continued below the corresponding month last year. Sales and stocks in major groups of departments are Silks and velvets. ................................... Miscellaneous........................................... L ocality Percentage change April 1930 compared with April 1929 Net sales Wholesale dealers in this district reported A pril sales 10 per cent smaller than in 1929. Sales of diamonds showed an even greater decrease than in March, but in the sales of jewelry and m en’s clothing the declines, while substantial, were not so large in A p ril as in the month previous. Grocery sales declined slightly follow ing increases from a year ago in February and March, and decreases of varying size continued to be reported in the sales of cotton goods, hardware, stationery, and paper. The Machine Tool Builders Association reported machine tool orders far below the volume of last year, for the sixth consecutive month. Sales of silk goods, shoes, and drugs, however, showed increases compared with last year, following decreases in recent months. Stocks held by grocery, cotton goods, and hardware dealers remained smaller than a year ago, but stocks of silk goods and drugs continued to be larger than in 1929. Wholesale shoe firms reported a decline in stocks from a year previous for the first time since December. Collec tions were slower than in A pril 1929 in a majority of lines. Per cent of accounts outstanding March 31 collected in April New Y o r k ........................................................... B uffalo................................................................. R ochester......... .................................................. Syracuse.............................................................. N ewark................................................................ Bridgeport........................................................... Elsewhere............................................................ Northern New Y ork S tate.......................... Central New York S tate............................. Southern New York S tate.......................... Hudson River Valley D istrict................... Capital D istrict............................................. Westchester D istrict.................................... + 1 0 .4 + 5 .4 + 1 2 .7 + 1.9 + 1 4 .1 + 6 .5 + 1 0 .4 + 2 .5 + 1 1 .2 + S .3 + 5 .4 + 1 3 .6 + 1 6 .1 + — — + — — — All department stores.............................. + 1 0 .4 — 1.9 Apparel stores............................................ + 7 .7 0 .4 5 .0 9 .6 0 .4 8 .1 4 .0 6 .3 1929 1930 5 2.7 51.7 4 2 .6 3 8 ‘.9 4 5 .3 38.4 4 0.4 43 .0 3 8 .8 3 8.8 — 5 .4 4 9.7 Percentage change April 1930 compared with March 1930 Net sales M en’s clothing............... Cotton good s.................. Machine tools**............ 4 7.8 — 5 .8 — 5 .5 + 2 .3 — 7 .0 — 6 .0 — 3 .0 + 9 .3 -5 .1 — 18.9 + 0 .6 + 1 0 .6 — 5 .2 — 3 .2 — 2 .4 + 1 8 .2 + 7 .3 + 1 3 .0 — 16.4 — 9 .3 WholesaleTrade Com m odity Stock on hand end of month + 5 1 .4 + 2 9 .8 + 2 7 .5 + 2 4 .2 + 1 9 .1 + 1 4 .7 + 1 4 .4 + 1 4 .3 + 9 .8 + 9 .1 + 8 .0 + 7 .1 + 5 .3 + 0 .2 — 4 .5 — 4 .7 — 8 .8 — 14.9 + 8 .7 Stock on hand percentage change April 30, 1930 compared with April 30, 1929 + 0 .9 — 33.3 + 2 .7 — 4 .9 * — 4 .9 + 1 9 .5 + 4 .4 — 1 .2 — 7 .2 — 2 .9 — 14.2 — 2 .5 — 6 .2 Stock end of month — 11.1 — ’6.5 — 4 .4 * — 13.9* — 7 .1 + 3 .8 .... — *8.2 — 0 .1 Percentage change April 1930 compared with April 1929 Net sales — 2 .7 — 20.1 — 12.7 + 6 .3 * + 8 .8 + 8 .6 — 2 1.3 — 4 4 .0 — 6 .7 — 7 .8 — 6 1.5 — 3 0.2 — 10.2 Stock end of month — 4 .2 — ‘ 3 .9 + 1 3 .9 * — 5 .7 + 7 .4 — 9 .5 * « •* — 39! 2 — 17.8 Per cent of accounts outstanding M arch 31 collected in April 1929 1930 7 6.9 3 6.7 3 3.8 4 6 .3 4 7.8 4 9 .3 4 9 .7 7 6.9 33.1 3 1.6 4 7 .0 5 0.7 35.1 4 8 .7 7 4.6 68.4 } 2 7.3 7 6 ‘.2 6 1 .4 } 2 5.3 53.1 5 1.2 4 6.3 Weighted average.. 4 7.6 * Quantity not value. Reported by Silk Association- of America ** Reported by the National Machine Tool Builders Association FEDERAL RESERVE BANK OF NEW YORK MONTHLY REVIEW, JUNE 1, 1930 "PERCENT Business Conditions in the United States (Summarized by the Federal Reserve Board) N D U S T R IA L activity increased slightly in A p ril from the rate prevailing in March. Factory employment declined by the usual seasonal amount, while factory payrolls showed a smaller reduction than usual. Wholesale prices continued to decline in A p ril and the first ha lf of May. There was a further easing of open-market money rates. I P r o d u c t io n Index Number of Industrial Production of Manufactures and Minerals Combined. Ad justed for Seasonal Variations (10231925 average — 100 per cent) PER CENT > r r O Payrolls, Withoat Adjustment for Seasonal Variations (1923-2* average = 100 per cent) 1 I A A- 19?f> 1327 / J r 'V V 1928 1929 1930 o o s ? ___________ r ^ / \ R E S E R V E BANK D ISC D U N T A RA TE A 1 * f/ J A C C E F 3t a n c e ”ra 'TE 1926 1927 '< t 1928 1929 1S30 Money Rates in the New York Market (May rates are average for the first 20 days) holesale P r ic e s An increase in wholesale prices in the first week in A p ril was followed by a substantial decline which continued into May and brought the level of prices to the lowest point in a number of years. Prices of important raw materials, such as wheat, cotton, and silk declined during most of the period, but steadied somewhat around the middle of May, while prices of silver, hides, and coffee were comparatively stable. There were fa irly continuous price declines in steel, sugar, raw wool, and the textiles. Copper prices were reduced further early in May, but recovered somewhat following large purchases fo r domestic and foreign consumption. B a n k C r e d it 1ERCIAL PA P E R R A T E — J P ayrolls Department store sales increased during the month by an amount esti mated to be slightly larger than is accounted fo r by the late Easter holiday. The value o f foreign trade decreased further in A p ril, and fo r the first four months of the year exports were about 20 per cent smaller than a year ago, when trade was exceptionally active. In part this decline reflected the lower level of wholesale prices. W Monthly Averages of Weekly Figures for Re porting Member Banks in Leading Cities (Latest figures are averages of first 2 weeks of May) -------- m ploym ent and D is t r ib u t io n L . . / jUV j - S |____ __ E Factory employment, which had been decreasing since last September, declined by about 1 per cent in A p ril, which represents the usual development fo r that month, while the reduction in factory payrolls from March to A p ril was smaller than usual. A rHER LOAN! LCJANS ON SE:curities i r Production in basic industries in A p ril was slightly larger than in March and the Board’s index, which makes allowance fo r the usual seasonal changes, shows an increase o f about 2 per cent, offsetting a large part of the decrease in March. Output of automobiles showed the usual seasonal expansion. Steel output declined seasonally in A p ril and the early part of May. The output of silk textiles was considerably reduced, and woolen mills curtailed operations, though less than seasonally. Cotton mills were more active in A p ril and there was some increase in stocks. In the first h a lf of May, however, a program of cur tailment was instituted in the industry. In comparison with the first four months of 1929, a year of exceptionally active business, production was smaller in almost all major branches of indus try, with the exception of tobacco. In comparison w ith 1928, however, output was larger in the automobile, petroleum, and silk industries, slightly smaller in steel and coal, and considerably smaller in cotton and wool textiles, flour, meatpacking, automobile tires, and lumber. Building contracts awarded during A p ril, according to the F. W. Dodge Corporation,' were 6 per cent larger than in March, reflecting further expansion in awards fo r public works and utilities, and some increase in residential con struction, largely seasonal in character. In the first two weeks in May there was a further increase in building activity. In comparison w ith 1929, awards in the first four months of the year were 17 per cent smaller, reflecting chiefly the continued small volume of residential building, which more than offset increases in public works and in u tility construction. Loans and investments of member banks increased by about $160,000,000 in the latter half of A p ril, but declined by $140,000,000 in the first two weeks in May, both movements reflecting chiefly fluctuations in loans on securities. Investments increased further, while “ all other ’ ’ loans continued to decline, and on May 14 at $8,560,000,000 were the smallest in more than two years. The volume of Reserve Bank credit declined further by $125,000,000 between the weeks ended A p ril 19 and May 17, largely as a result of the addi tion of about $65,000,000 to the stock of monetary gold and of a further lubstantial reduction in the volume of money in circulation, which reflected chiefly smaller volume of payrolls and declines in retail prices. The System’s holdings of bills declined, while United States securities and discounts fo r member banks showed little change. Money rates on all classes of paper declined further in May. The dis count rate of the Federal Reserve Bank of New York was reduced from 3*4 to 3 per cent on May 2, and that at the Federal Reserve Bank of Boston from 4 to 3% per cent on May 8.
@FedFRASER