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MONTHLY REVIEW of Credit and Business Conditions Second Federal Reserve D is t r ic t Federal EeserveAgent Federal ReserveBank,NewYork June1,1931 relativetotheratesofthepasttwelveyearsisshownin Money Market inMay thediagrambelow. The principal occurrence of the past monthinthe moneymarket hasbeenacontinuationof thedeclinein money rates whichstartedlate inApril. The decline *iy2 *iy2 was ledby acceptance rates, whichreachedthelowest tnx-2 3X 3H-3H 2X-2X 2-2 X levels since the bill market was established in this IX country, andcarriedall of theotherprincipal rates in theNewYorkmoneymarket except call loanrates to newlowlevels for manyyears. There has beenalsoa iy2 markedtendency onthe part of commercial banks in various parts of the country to reduce their rates of H interestondeposits, inviewof thelowerratesof return that are nowobtainable ontheir investedfunds. On May19themembers of theNewYorkClearingHouse Therediscount rates of theReserveBanks alsohave Associationreducedtheinterest rate from1tol/2per eenrather generally reducedduringthepast month. centonalldomesticdemanddeposits, exceptthedeposits b he Federal Reserve Bank of NewYork reducedits madebysavingsbanks, onwhichtheratewasreduced T r e discount ratefrom2to l1^ per cent onMay 8, the from1%to1per cent. Rates paidonsom eclasses of low eserveBankrateeverestablishedinthis coun time deposits alsowere lowered. There were alsofre try,esatnR d nineof theother ReserveBanks madereduc quent reports during themonthof reductions or pro tionsinth irrediscountratesduringthemonth. posedreductionsintheinterestratespaidbythebanks The dece lin e inmarket rates for acceptances accom inotherlocalities. paniedsuccessivereductions inthebuyingrates of the Rates prevailinginNewYorkontheprincipal open Federal ReserveBankof NewYork. Duringtheearly market loans andshort-terminvestments near the end monthsof thisyearReserveBankbill holdingsdeclined of Mayarecomparedinthefollowingtablewiththose with unusual rapidity, and the volume in February of amonthpreviousandayearago, andtheirposition andMarchwas muchsmaller thaninprevious years. M oneyiRates at]New York M ay 29, 1930 Apr. 30, 1931 M a y 29, 1931 Stock Exchange call loans.......................... Stock Exchange 90 day loans................... Prime commercial paper............................. Bills— 90 day unindorsed........................... Customers’ rates on commercial loans.. Treasury certificates Maturing September 15 (yield).......... Maturing December 15 (yield)............ Federal Reserve Bank of New York re discount rate............................................... Federal Reserve Bank of New York buying rate for 90 day indorsed bills. *3 ttlH -lM f 4 .3 9 f 3 .54 2 .0 0 2 .4 2 1 .3 0 1 .5 2 .57 .76 2 3 2H % f 3 .46 l 1 *For preceding week ffN om in a l f Average rate of leading banks at middle ox i*onth RATE 42 MONTHLY REVIEW, JUNE 1, 1931 This was due to the fact that funds receivedby the commercial banks throughthe retirement of currency fromcirculationandthroughgoldimports were used directlyor indirectlytoretire Federal Reserve credit. Member bankindebtedness at the Reserve Banks was largely repaid, and most of the newbills that were createdwereretainedbythememberbanks, sothat the amount of bills offeredtothe Reserve Banks was not sufficient to offset maturities, except in occasional periods of slightlyfirmerconditionsinthemoneymar ket. Consequently, maturitiesof billsfromtheReserve Bankportfolios tendedtoabsorbmuchof the surplus funds inthe moneymarket soonafter they appeared, andthe supply of funds available for other purposes inmemberbankswasnotmateriallyincreasedeitherby the seasonal retirement of,currency or by theflowof gold fromother countries. The recent reductions in Federal Reserve buying rates for bills have not been followedby anylarge increase inthebill holdings of theReserveBanks, but accesstoFederal Reservecredit has been facilitated somewhat, and bills have been offeredtotheReserveBanks alittlemorefreelywhen fundshavebeenneededinthemoneymarket. Accompanyingthegeneral declineinmoneyrates, the prices of the highest grade bonds tended to advance graduallyduringmost of themonth. Theaverageprice of United States Government bonds advanced to the highest level reached at any time since the war, and highgrademunicipal andcorporationbondsrosegradu ally. Therewas alsoamoderate strengtheningof sev eral of theprincipal Europeanexchangesat NewYork during May, apparently reflecting the withdrawal of foreignfunds fromthis market, or anincrease inthe amount of domestic funds employed abroad, or both. NotendencyforfundstobewithdrawnfromNewYork tootherpartsofthiscountryoccurredduringMay, how ever, and, except for the advance inthe high grade issues, the bondmarket showedno material improve ment. Underpresentconditionsbanksgenerallytendto limit theemployment of their funds as far as possible tocallloansorbillsorthehighestgradeinvestments. Theonlynoticeableeffect of thereductionindeposit rates by NewYorkbanks was atendencyfor out-oftownbanks andotherdepositorstoemploytheirfunds more largely inthe call loanmarket. The StockEx change call loanrate was maintainedat 1%per cent, except ontwodaysintheearlypartof themonth, and, after deducting the commission charged by the New Yorkbanks, anet yieldof 1percent wasthus obtain able on call loans by out-of-town banks and other lenders, as compared with y2 per cent on deposits. During the twoweeks endedMay 27, the balances of out-of-townbanks withNewYorkbanks were reduced $108,000,000, while their loans to brokers increased $48,000,000. Similarly, although total brokers loans placed by reporting NewYork City member banks declined $97,000,000 during this period, the loans placedbythesebanks for customers otherthanout-oftownbanks increased$24,000,000. Theresult was that $169,000,000of theNewYorkbanks’ ownbrokersloans wereretired. Member B ank Credit Weeklyreports frommember banks intheprincipal cities throughout thecountryindicatedmuchthesame tendencies in member bank credit in May as in the precedingmonths. Dueinparttotheshiftingof funds notedabove, theloansonsecuritiesmadebythereport ingbanks declinedfurther tothelowest levels intwo andone-half years, andthe other loans of thesebanks were reducedtothe smallest volume since 1924. The continueddisbursement of funds bytheUnited States Treasury, largelythroughloans toveterans, tendedto increaseprivatedeposits andtooffset theshrinkageof depositsinthesebanksincident tothecontinuedliqui dationof loans. B il l M arket During May the principal development in the dis count market was the further decline inbill rates, as the result of whichunendorsed bills were offered by dealersinthelatterpartofthemonthat%percentfor 30to90 daymaturities, 1per cent for 4months, and 1%percent for5and6months. Theseratesshownet declinesduringthemonthof %of onepercent forthe maturities upto120 days andof *4 per cent for the longerbills. Inthefirst weekof May, the requirements of New YorkCitybanks for funds resultedinthe offeringof largeramountsofbillstothedealersandtotheReserve Bank. Following afurther slight increase duringthe next week, dealers’ portfolios remainednearlyconstant atasubstantialfigureforthebalanceofthemonth, and, onthewhole, conditions inthebill market wererather quiet. Thebill holdings of theFederal ReserveBanks tendeddownwardaftertheincreaseinthefirstweekof the month, but as the accompanying diagramshows, theyremainedat alevel well abovethe February and March lowpoints, whereas during the corresponding months of 1930 and1929 Reserve Bankbill portfolios weredeclining. Theamount of acceptances outstandingwas reduced $45,000,000duringApril to$1,422,000,000, andduring thesameperiodtheamount of billsheldasinvestments M ILLIO N S OF D O LL A R S Volume of Acceptances Held by Federal Reserve Banks (W eekly averages of daily figures) FED ERAL RESERVE AGENT A T N EW Y O R K 43 bythegroupof acceptinginstitutions reportingtothe American Acceptance Council declined $62,000,000. Federal Reserve holdings rose meanwhile by a net amount of $39,000,000. OutstandingsonApril 30were slightlyhigherthanonthecorrespondingdateof 1930, the first year-to-year increase to be shownsince Sep tember, due toacomparatively slight seasonal decline sofarin1931. C o m m e r c ia l P a p e r M arket Openmarket quotationsfor primecommercial paper declinedduringMay—firstto2*4percent, andthento arangeof 2-2%percent. Investment demandfor the best gradeof paper continuedrather activeandwide spread, and although the inducement of lower rates brought acertainamount of newborrowing into the market, thesupplyof highestgradematerial wasinsuf ficienttomeetthedemand, andtherewasarapidturn over of paperintoinvestinginstitutions’ portfolios. Reflectingthelimitedsupply of paper, outstandings of only$307,000,000 werereportedtothisbankby20 factorthat haspreventedtheaverageyieldfromgoing dealersonApril 30. Thisfigurewasdownll/2percent igherhas beenthefairlyfrequent reductions indivi further fromthe level of the previous month and h end payments. Nevertheless, the current yield on showedareductionof45percentfromtheamountout d s t ockshasreachedalevel about 1percent higherthan standinginApril 1930. earlyin1927, whereas pricesof stocks ingeneral have declinedtoabout thesamelevel as at thebeginningof Central BankRate Changes 1927. Thishigheryieldthanin1927apparentlyreflects OnMay14theBankof Englandlowereditsdiscount the maintenance of dividend rates by these corpora ratefrom3per cent to21 /%per cent, the higher rate tions at ahigher level thanin1927. Meanwhile, the havingbeeninforce since May 1, 1930. This change average yield on high grade domestic bonds during wasfollowedonMay16byareductionof theNether recent months has fluctuatedat alevel slightly below landsBankrateto2percent from21 /%percent, arate 4%percent, orabout1%percentlessthantheaverage whichhadbeenineffectsinceJanuary24, 1931. yieldobtainableoncommonstocks. TwiceduringMaytheCentral Bankof Chileraised In the bond market, the influence of lower money itsrateof discounttomemberbanks—thefirst timeon rates was manifest principally in prices of the high May5from7to8percent andagain*onMay7from g rade issues. Most of the price averages of domestic 8to9percent. OnMay7, also, theratetothepublic co rporation bonds ended the month showing minor wasraisedfrom8to10percent. Aseasonal lowering changes andnostrengthwas evident except inaverage of the Imperial Bank of India rate was effected on prices of the highest grade issues. Foreign bonds May 28 from7 to 6per cent, the higher rate having continued to decline rapidly, and an average of the beenoperativesinceJanuary15, 1931. prices of 40representativeforeignissues listedinthis m arket declinedtoalower level thanat anyprevious SecurityMarkets time through1925, the periodfor whichthe dataare After recovering somewhat on the closing day of available. April and holding fairly steady during the first two Prices of United States Government bonds, onthe weeksof May, stockprices developedrenewedweakness other hand, advanced continuously and substantially during the remainder of May. The railroad shares duringthefirst threeweeksof themonth. Theaverage declinedabout13percentfurtherfromthelowestpoint priceof thenineoutstandingLibertyLoanandTreas reachedinApril tonewlowssinceatleastearlyin1924. urybondissues advanced1% points toahigher level Inindustrial stockstheextentofthedropfromthepre thaneverbefore, exceedingby amoderatemarginthe viousmonth’slowwas somewhat lessthanintherails, relativelyhighprices at whichlong-termGovernment’s butpricesdeclinedtothelowestlevelssince1926. Public weresellingaroundthecloseof 1927andthebeginning utilitystocksalsowerereducedsomewhatfurthertonew of 1928. Despitesomerecessionintheclosingpart of lowpoints for the year, but at no time did average themonth, averagepricesof UnitedStates Government prices comewithin3 per cent of thelowreachedlast bondsshowedanet gainof about %of apoint forthe December. Throughout May, activityontheNewYork month. The strength in Government’s during recent Stock Exchange remained small, but the turnover monthshasbeeninthefaceof anincreaseof $950,000,000 since January 31 inthe volume of United States tendedtoincrease ondecliningprices. As aresult of thedropinprices over thepast few securitiesavailabletothepublic. The“public’s” hold months, the average yield obtainable on 90 dividend ings showninthe following diagraminclude those of paying commonstocks has risenslightly above 6 per banks, corporations, and individuals, but exclude the cent, as the accompanying diagramindicates. One amount of Government securities heldbytheTreasury 44 M O N T H L Y R E V I E W , JU N E 1, 1931 BILLIONS OF DOLLARS Total Gross Debt of the United States Estimated to be Held by Banks, Corporations, and Individuals, and United States Government Security Holdings of W eekly Reporting Member Banks (Latest figure April 30, 1931) asinvestmentsfortheAdjustedServiceCertificateFund andotherspecial accounts. Thenet increaseduringthe elapsedpart of thecurrent fiscal year (sinceJune 30, 1930) has amounted to $775,000,000; this follows a reductionof $900,000,000intheamount of Government securities heldbythepublicduringtheprevious fiscal year and substantial reductions in other preceding years, as the diagramshows. The rise in prices of Government bonds despite this increase inthe volume of Government securities outstanding undoubtedly is due to the recent tendency of banks to employ their funds as far as possible in the highest grade invest ments. As thediagramindicates, theweeklyreporting member banks’ investments inUnited States Govern ment securities have increasedtoahigher figure than everbefore; theincreaseof$1,100,000,000sinceJune30, 1930, hasbeenmorethanthetotal increaseintheesti mated amount of the Government’s debt outstanding withthepublic. NewFinancing Completedatafor April giveatotal of $615,000,000 ofbondsandstocksofferedduringthatmonth, exclusive of financing by the United States Government. The total was smaller thaninMarchandwas $335,000,000 less thaninApril 1930. About one-thirdof theissues werefor refundingpurposes, leavinganet amount of $412,000,000 of newcapital raised. Of this amount $262,000,000wenttodomesticcorporations, $101,000,000 toStatesandmunicipalities, and$49,000,000toforeign corporations and governments. The amount of new capital issues by domestic corporations was about as largeasinpreviousmonthsthisyear, dueinparttothe flotationof $100,000,000of stockissues, whichincluded $60,000,000 of American Telephone and Telegraph Companystockthat wassoldtoemployeesof theCom panyanditssubsidiaries. Newsecurity financing duringMay was also inre ducedvolume, withthe total somewhat less than the flotationsinthepreviousmonth. Theonlyclassification of security issues that compared favorably with the April offeringswasStateandmunicipalfinancing, which was enlargedbythe sale of $52,000,000 of 3per cent 4-year corporate stockof the City of NewYork. The net interest cost tothe Cityonthisissuewas approxi mately 3per cent, thelowest borrowingratesincethe Greater City’sincorporationin1898. ForeignExchange Theforeignexchangelist onthewholewasquiet and steadythroughoutMay. Thepoundsterling, at $4.86% andhigher, movedfor atimetolevels whichhadnot been reached previously since last September. The accompanying diagramshows the relative position of money rates inLondon andNewYork during recent months and the concurrent movement of sterling exchange. This diagramindicates that sterling firmed as the money rate differential widened andhas been virtuallyunchangedsincethereductionintheBankof EnglandrateandtheaccompanyingdeclineinLondon bill rates. Alikeinfluenceoperatedtolendstrengthto the French franc, which moved from$0.0390%—the vicinity of the gold import point fromParis—up to $0.0391!/£ onMay 27, the highest quotation for this currencysinceearlyMarch. Guilders weakened onthe lowering of the Nether lands Bankrate, losingfivepoints to$0.4015 between the1st andthe16th, but recoveredtowardsthecloseof themonthtoalevel abovethemonth’sopening. Swiss francs madeaslowadvancefrom$0.19261/4 onthe1st to$0.1931 onthe 23rd, thenfirmedto$0.1934 onthe 26th, andclosedthe monthslightly under this quota tion. Reichsmarks, whichhadbeenhesitant throughout the month, developed sudden weakness on the 26th, going onthat day from$0.2380%to $0.2374% after som esellingontheBerlinstockexchangeandmoderate withdrawals of funds from Berlin. The Austrian schilling remained steady in the second half of the month at $0.1406%. Scandinavian exchanges firmed slightlyinthecourseofthemonth. TheSpanishpeseta, following an early display of strength, weakened de cidedly onthe 11th, andafter relatively widefluctua tions, was quotedat thecloseof the28that $0.0912, a newlowforthiscurrency. Canadian dollars continued at a discount of about RATE DOLLARS Money Rates in New York and London and Movement of Sterling Exchange at New York FEDERAL RESERVE AGEN T A T NEW Y O R K 45 1/64 of acent. The silver exchanges easedgradually, HongKonggoingfrom$0.24^to$0.23%andShanghai from$0.31%to$0.28%, but thesequotationswerestill above their February lows. The Argentine peso was further depressed; after dropping below$0.70 onthe 22nd, it wasunabletoreturntothat level andruledat lastreportat$0.6849. OtherSouthAmericancurrencies continuedweak. ForeignTrade After atemporary gaininthe previous month, the value of this country’s foreign merchandise trade showedsomewhat morethantheusual seasonal decline duringApril. Exports, amountingto$217,000,000, were againatthelowestlevel sinceNovember1914. Imports, valuedat $187,000,000, wereseasonallylarger thanin JanuaryorFebruaryof thisyear, but, exceptforthose months, were the smallest since the summer of 192.1. Thedecreases fromayear agoinexports andimports amountedto35and39percent, respectively. ered in the London market. Gold continued to be Among the leading exports, finished manufactures offip ped fromRussia to Germany last month to the showedthe heaviest decline fromApril 1930, bothin sah m o u ntof $4,800,000. actual dollar value andinthe percentage of decline. This group, however, showedaslight gainoverMarch, Building contrarytothe usual seasonal tendency. The smallest decreaseinvaluefromayearagowasintheexportsof DuringApril adeclineof 9percentfromtheprevi crudefoodstuffs, chieflygrains, whichweredownonly ousmonthoccurredinthetotal volumeof buildingcon 9 per cent. Crude material exports were 24 per cent tractsawarded, accordingtotheF. W. DodgeCorpora less invalue than last year, about two-thirds of this tionsurvey of building activities in37 States. April declinebeingaccountedfor byadropinthevalue of usually marks the seasonal peak of building contract rawcottonshippedabroad, whichwasdueentirelytoa awards, andas aresult of theunseasonal decline, this reductionof over35percent inthepriceof that com bank’sApril indexof total contractsdroppedtoanew modity. Theactual volumeof cottonexportsduringthe lowlevel forrecent years. All themajor classifications past threemonthshasbeenlargerthanlast year. of contractsweresmallerthaninMarchof thisyearor All of themaingroupsof importsshoweddeclinesin inApril of 1930. Inthecaseof residential contractsa value, as comparedeither withayear agoorwiththe declineof 5per cent fromthe previous monthandof previous month. The largest actual decrease ineither 22percent fromayearagooccurred. Ordinarilyresi comparisonwas incrudematerials. Quantity receipts dential buildingismoreactiveinApril thaninMarch, of rawsilk, aftershowingincreases over ayear agoin andconsequentlythis bank’sseasonallyadjustedindex otherrecentmonths, were22percentlessthaninApril receded further in April, though it remained higher 1930, andwere reducedto about one-half the March thaninDecember orJanuary. Contracts awardedfor volume. Ontheotherhand, thevolumeof cruderubber publicworks andutilities showedaloss of 12percent importswasonlyslightlylessthanayear agoandwas fromthe previous month and of 20 per cent froma somewhatlargerthaninMarch. year ago, while other non-residential workwas 8 per cent lowerthaninMarchandnearlyone-half lessthan GoldMovement inApril of last year, duetolargedeclinesincommer Anet gainof approximately$70,000,000tothemone cial and factory construction. The total volume of tary goldstock of the country occurred during May contractswas30percentbelowthatof April 1930. chieflyastheresultof thereceiptof $40,030,000of gold Duringthefirstfourmonthsof thecurrentyeartotal fromArgentina, $15,650,000 fromFrance, $3,240,000 contracts were 26 per cent smaller than a year ago, fromColombia, $983,000 fromMexico, $964,000 from and declines were shown by all the major types of China, and$850,000fromJapan, aswell assomething construction. In the first three weeks of May, the over $1,000,000 in small amounts fromother foreign average dailyvolume of contracts dropped7per cent sources. Inadditiontherewasadecreaseof $4,000,000 belowtheApril level, whichis slightlymore thanthe ingoldheldunder earmarkfor foreignaccount at the usual seasonal decline, andcontinuedto be far below BostonReserveBank, partlyoffset byaspecial export thelevel of ayearago. of $600,000of goldtoMexico. Thenet gaintothegold InMetropolitanNewYork andvicinity, residential stockinthe first five months of 1931 is estimatedat buildingcontractsduringApril were31percent above about $203,000,000, asagainst $233,000,000 acquiredin thelevel of ayear ago. While all types of residential constructionexcept hotels participatedinthe increase theJanuarytoMayperiodof 1930. TheBankof Englandincreasedits goldholdings by over last year, themost important gainwas indwell about $23,800,000 in the four weeks ended May 27, ings erectedbyhousingdevelopment companies. Con chiefly through the acquisition of most of the gold tracts for public works andutilities, however, were44 MILLIONS OF DOLLARS Monthly Change in Monetary Gold Stock of the United States (M ay figure estimated) 46 MONTHLY REVIEW, JUNE 1, 1931 per cent belowthe volume placedinApril 1930, and other non-residential contracts in the aggregate were 26percentlower, sothattotalbuildingandengineering contractsintheMetropolitanareashowedanet lossof 17percentfromlastyear’sfigure. Business Profits Althoughonlyasmall number of companiesrelative tothetotal inthecountrymakepublicquarterlyearn ingsstatements, reportsof 287industrial andmercantile concerns, segregatedinto 20 maingroups of industry, havebeencompiledbythisbankforthefirst quarterof 1931. Thenet profitsof thislist of corporationsduring this periodwere 56 per cent smaller thaninthe cor responding periodof 1930 andwere 66 per cent less thanin1929. Thesefigures represent thenet earnings that remainafter deductingall fixedchargesincluding bondinterest, but beforepayment of anydividends on preferredorcommonstocks. Companiesengagedinthebusinessof supplyingfood andfoodproducts exhibitedthebest resistance tothe influenceofthebusinessdepression,showingareduction of only8percentfromthenetreturnof thefirst quar terof 1930and9percent fromthe1929first quarter. Thereportingpapercompanieshadareductionof only 11 per cent from1930, andshowedanincrease over 1929. The tobaccocompanies wereanother groupthat madeacomparativelygoodshowing, andchemical con cerns and companies in the printing and publishing businesssufferedmuchlessshrinkageinprofitsthanthe averageforall industrial corporations. Themotionpic ture companies, one of the most favorably situated groupsfortheyear1930, reported41percentlessprof itsinthefirstquarterof thisyearthanayearprevious, althoughthetotal wasonly10percent smallerthanin 1929. Net profits between40 and60per cent belowa yearagowerereportedinthecoalandcoke, officeequip ment, automobile, realty, miscellaneous mining and smelting, andelectrical equipment groups, Reductions of 60to70percentoccurredinthenetreturnsof com paniesmanufacturingautomobilepartsandaccessories, railroad equipment, andmachinery. The most severe declines were inthe steel industry, the net profits of whichwereonly12percentof thoseinthefirst quarter of 1930; inthecoppercompanies, whichshowedprofits only3percent aslargeasayearprevious; andinthe oil andbuildingsupplygroups, wheredeficitsoccurred. As thefirst part of theaccompanyingdiagramindi cates, industrial andmercantileprofitsduringtheinitial quarter of 1931 weresomewhat abovethelowlevel of thefinal quarterof 1930, inaccordancewiththeusual seasonal tendency. In1930, first quarterearningswere lowerthaninthelast quarter of 1929. Net operatingincome of Class I railroads, shownin the other part of the diagram, droppedto the lowest level forthefirst quarter of anyyearsince1921. The 1931first quarternet incomeshowedareductionof 39 percent fromthecomparableperiodof 1930andof 59 per cent from1929. The net returnof telephone and other public utility companies continued to be rela tively well maintained. Net operating income of the telephonecompanies was approximatelythesameasin thefirst quarterof 1930, andwasdownonly3percent M ILLIONS OF DOLLARS M IL LIO N S OF D O LLA R S from1929, whilenet earnings of other public utilities for whichreports are available showedareductionof 16percentfrom1930andof 8percentfrom1929. (Net profits in millions of dollars) First quarter Corporation group No. of Cos. 1929 1930 1931 36 9 5 16 8 6 7 6 17 6 4 0.2 4 .1 2 .1 2 0.2 8 .5 11.1 1 .3 5 .9 101.1 3 .6 3 9 .6 5 .8 1 .7 18.9 9 .5 16.9 1 .6 4 .4 55.1 3 .3 3 6.5 5 .2 1 .4 1 3.4 6 .5 10.0 0 .9 2 .3 2 8.8 1 .6 14 7 12.6 2 2.0 8 .7 19.3 3 .8 7 .8 S teel...................................................................... C opper.................................................................. O il......................................................................... Building supplies............................................... Miscellaneous..................................................... 29 7 17 15 8 22 9 43 23 .3 7 .3 10.2 70.3 15.3 3 1.5 3 .5 43 .3 12.9 9 .5 9 .4 5 8.0 6 .5 2 6.8 1 .7 3 0 .0 4 .6 2 .9 2 .9 7.1 0 .2 D e f.6 .2 D e f.0 .4 1 8.7 148.0 F ood and food products.................................. P aper.................................................................... T o b a cco ............................................................... Chem ical.............................................................. Printing and publishing................................... M otion picture................................................... Coal and co k e.................................................... Office equipm ent............................................... A utom obile......................................................... R e a lty .................................................................. Mining and smelting (excl. copper, coal and c o k e ) ..................... Electrical equipment......................................... Automobile parts and accessories (excl. tires)..................................................... Railroad equipm ent.......................................... Total 20 groups......................................... 287 437.4 339.6 Telephone (net operating in co m e )................ Other public utilities (net earnings)............. 104 40 7 0.0 66.5 6 7.6 7 2.3 T otal public utilities................................ 144 136.5 139.9 128.9 Class I railroads (net operating incom e). . . . 171 259.3 176.5 107.1 6 7 .8 * 61.1 * M arch estimated Commodity Prices Declines incommodity prices continuedtopredomi nate during May, and the general level of wholesale pricesreachedanewlowfor thepost-war period, and infact was closetothe 1913 level. The most notable exceptiontothegeneral movement wasinthepriceof crude rubber, whichrecoveredfromtherecordlowof 5%centsreachedinApril, andtowardthecloseof May wasfairlysteadyaround6%centsapound. Copperbrokethroughtheprevious lowpoint of 9]/2 cents, reaching arange of 8y2to 8% cents apound, whichisreportedtobethelowestpriceonrecord. Lead droppedto3.75 cents apound, anewlowsince 1915, FEDERAL RESERVE AGENT AT NEW YORK 47 andotherlowsfor anumber of years wereestablished Production byzinc, tin, scrapsteel, finishedsteel, andpigiron. Steelmill activityshowedafurtherreduction, largely Spot cotton fell to 8.65 cents a pound, the lowest sea al incharacter, during May, andthe IronAge figuresincetheperiodshortlyfollowingtheoutbreakof opesroan tingratiotowardtheendof themonthdeclinedto theWorldWar, andtheBorsodi compositeforrawsilk 4 er cent of theoretical capacity, approximatelythe touched$2.11apound, anewlowlevel inthehistoryof le4vep l of mid-January. Production of bituminous coal thiscommodity; wool priceslikewisedeclinedgradually show edonlypart of theupwardtendencythat isusual toanewlowformanyyears. Cornremainedabovethe M ay, andalthoughoutput of crude petroleumand lowlevel reachedat the endof April, but live stock in o f c o t tongoodsaveragedashighasinApril, thetend prices brokesharplytonewlows for manyyears, and yd uringthemonthwas downward. hides rangedbetween8 and8y2cents apound, about enIcn d u activityinApril wasirregular, but inthe % of acent undertheprevailinglevel of theprevious aggregastteriaslho wed a further slight upward tendency month. Thepriceof crudepetroleumdroppedfurther after allowanc e for the usual seasonal movements. to84centsabarrel. Amongthemajorindustries, perhapsthemost substan tial advance was inthe output of automobiles, which Indexes of Business Activity increased21 per cent over March. Increases occurred also inthis bank’s indexes of the output of various This bank’sindexes of thedistributionof goods and im ortant fuels—coal, coke, andpetroleum—andinthe of general businessactivitycontinuedinApril toshow p ughteringof livestockandinproductionof tobacco, nodecidedtendencytowardeither recoveryordecline. scla ement, andshoes. Asmall gainoccurredinmill con Perhaps thetwomost favorable factors wereincreases su mption of rawcotton, but asharp contractionwas of more thanseasonal proportions in car loadings of sho ninconsumptionofsilk. Productionofsteelingots merchandiseandmiscellaneous freight, andinsales of decw linedmorethanseasonally, andaveragedailyoutput department stores. Therewasalsoasubstantial decline of le adwasfurtherreduced. inthenumberofbusinessfailures. Carloadingsofbulk freight declinednomorethanusuallyinApril, andthe numberof newcorporationsformedinNewYorkState showed about the average seasonal contraction. Mer chandise exports showedlittle change other thansea sonal, butimportsdeclinedconsiderablymorethanusu allyinApril. Other reductions, after seasonal adjust ment, wereshowninadvertisingandinsalesofnewlife insurance. DuringthefirsthalfofMay, carloadingsofmerchan diseandmiscellaneousfreightdeclinedslightlyfromthe April level. (Adjusted for seasonal variations and usual year-to-yeargrow th) 1931 1930 April Feb. March Tin deliveries................................................. 102 101 85 99 78 89 60 66r 69 67 52 73 63 69 65 66 51 79 64 66 65 V 62 50 84 Automobiles Passenger cars............................................... M otor trucks.................................................. 90 113 55 87 57 76 65 p 79 p 105r 77r 101 99 96 76 r 91r 70 81 76 81r 78r 70 81 77 83 r 92 r 72 86p Textile and Leather Products Cotton consum ption..................................... W ool mill a ctiv ity ......................................... Silk consum ption........................................... Leather, sole................................................... Boots and shoes............................................. 86 67 85 105 107 75 75 99 85 88 78 73 100 80 96p 82 72p 84 88p lllp Foods and Tobacco Products Livestock slaughtered.................................. Wheat flour.................................................... Sugar meltings, U. S. p o rts........................ Tobacco p roducts......................................... 96 99 80 103 96 91 67 98 91 90 58 96 99 91 71 98 108 85 95 93 98 98 76 64 86 86 83 p 81 79 67 85 91 82 p 78 p 87 April Metals Steel ingots..................................................... Copper, U. S. m ines..................................... Fuels Bituminous coal r ......................................... Anthracite coal r ........................................... (Adiusted for seasonal variations and usual year-to-year growth) 1931 1930 Primary Distribution Car loadings, merchandise and m isc........ Car loadings, oth er....................................... E xports............................................................ Panama Canal traffic................................... Distribution to Consumer Department store sales, 2nd D ist............. Chain store sales, other than grocery .. .. Life insurance paid fo r ................................ Petroleum, crude........................................... Petroleum products...................................... April Feb. March April 96 93 81 102 78 78 75 65 77 63 77 73 65 82 57 80 74 64p 77 p 61 102 90 103 91 97 86 84 80 99 80 85 81 102 88 82 78 General Business Activity Bank debits, outside of New Y ork C ity.. Bank debits, New Y ork C it y . .................. Velocity of bank deposits, outside of New Y ork C it y ............................................... Velocity of bank deposits, New York C ity Shares sold on N. Y . Stock E xchange. . . Postal receipts............................................... Electric p ow er............................................... Employment in the United S tates........... Business failures............................................ Building contracts........................................ New corporations formed in N. Y . State. Real estate transfers.................................... 98 136 82 91 83 103 85 103 111 150 396 99 95 94 103 83 86 67 91 87 242 86 81 80 115 68 85 61 91 97 197 86 80p 80 114 72r 90 58 90 99 188 87 80 108 59 89 55 General price level*...................................... Composite index of w ages*........................ Cost of livin g*............................................... 174 226 168 157 218 152 157 219 151 155 217 149 p Preliminary r Revised *1913 average=100 Miscellaneous Printing a ctiv ity ........................................... Paper, newsprint........................................... Paper, other than newsprint...................... p Preliminary 89 r Revised Employment andWages Following aseasonal increase during February and March, little change appears to have taken place in factory employment inApril. Thenumber of workers employedinreportingNewYorkStatefactoriesshowed adeclineofabouttheusual proportionsfromthemiddle 48 MONTHLY REVIEW, JUNE 1, 1931 of Marchtothemiddleof April, andforthecountryas Salesandstocksinmajor groups of departments are awholefactoryemploymentshowedlittlechange. Both comparedwiththoseofApril 1930inthefollowingtable. payrolls and average weekly earnings in NewYork State factories receded somewhat during April, but these declines were inaccordance withthe usual sea sonal tendency for that month. Out-of-door activity increased materially in April in consequence of the return of favorable weather, and the United States Employment Servicereportedincreases inemployment infarmwork, building, androadconstruction. The ratio of orders for workers toapplications for employment at New York State employment offices showedaseasonal riseduringApril, andthislevel was maintainedinthemonthofMay. Therateofvoluntary laborturnover alsoincreasedseasonallyduringApril. Department StoreTrade The total April sales of the reporting department stores inthis district showedadecreaseof 8 per cent fromayear ago, due inpart to the fact that April sales this year included a much smaller part of the Easter business thanlast year. Department stores in all localitiesinthisdistrict, withtheexceptionof West chester, reportedsales smaller thaninApril 1930, the decreasesrangingfrom3percent to16percent. The reportsfromthevariouslocalitiesshowedgreaterirreg ularitythaninMarch; thedeclinesreportedinthesales of storesinBuffaloandtheHudsonRiver Valleywere onlyabout half aslargeasinMarch, andthedecreases reportedby the Rochester andBridgeport stores were about the same as in March, while the reductions in otherpartsofthedistrictweregenerallylargerinApril thanin March. The leading apparel stores reported April sales10percentsmallerthanlastyear, following aslight increase inMarch, doubtless reflecting chiefly theeffect of theearlyEaster. Stocks of merchandise on hand at the end of the month, valuedat retail prices, showedanevenlarger declinefromayearagothaninMarch. Thepercentage of outstandingcharge accounts collectedduringApril remainedslightlysmallerthanayear previous. Percentage change from a year ago + 9 .0 — 1.0 — 4 .5 — 6 .1 — 6 .2 — 9 .0 — 9 .9 — 9 .9 — 10.0 — 10.2 — 10.7 — 10.7 — 11.2 — 12.3 — 15. l — 19.5 — 23.8 — 36.6 + 0 .3 — 11 .3 + 2 .5 — 16.5 — 12.6 — 15.0 — 2 2.7 — 11 .0 — 14.8 — 16.9 — 18.2 — 13.1 — 10.5 — 8 .3 — 2 2.2 — 22.0 — 25.4 — 17.0 — 15.7 — 11.2 WholesaleTrade April salesofreportingwholesalefirmsinthisdistrict showedseasonal decreases inamajority of lines, and were 16.8 per cent smaller thanayear ago. Sales of men’s clothing, cottongoods, shoes, stationery, paper, diamonds, and jewelry continued to showsubstantial declinescomparedwithlast year, inmost casesaslarge orlargerthaninMarch. Thedeclineinsalesof hard ware comparedwithayear previous was the smallest since October 1929, however, andtheyardage sales of silkgoods, reportedbytheSilkAssociationof America, were almost 16 per cent above ayear ago, thelargest increaseinnearlytwoyears. April machinetool orders, reportedbytheNational Machine Tool Builders Asso ciation, decreased 11 per cent fromMarch, andwere somewhat further belowthe level of ayear agothan inMarch. The value of stocks of merchandise onhandat the endof themonthshowedlarge decreases fromayear agoinall reportinglines, withtheexceptionof drugs. The ratio of collections to accounts outstanding was slightlylowerthaninApril 1930. Com m odity Stock on hand end of January month to April Stock on hand percentage change April 30, 1931 compared with April 30, 1930 Toilet articles and drugs....................... Toys and sporting goods....................... W om en’u and Misses’ ready-to-w ear.. H om efurnishings................................... W om en’s} ready-to-wear accessories.. . H osiery...................................................... Books and stationery............................. M en’s furnishings................................... Shoes.......................................................... Silks and velvets..................................... Linens and handkerchiefs..................... Cotton g o o d s ........................................... Silverware and jew elry.......................... Furniture.................................................. W oolen i;ood s.......................................... Luggage and other leather goods........ M en’s and B oys’ w ea r........................... Musical instruments and ra d io ........... Miscellaneous.......................................... Per cent of accounts outstanding M arch 31 collected in April Locality Net sales percentage change April 1931 compared with April 1930 Percentage change April 1931 compared with M arch 1931 Percentage change April 1931 compared with April 1930 Per cent of accounts outstanding March 31 collected in April Net sales April New Y o r k ......................................... — 8 .4 B uffalo............................................... — 2 .7 Rochester........................................... — 3 .0 Syracuse............................................. — 9 .1 N ew ark.............................................. — 7 .4 Bridgeport........................................ — 7 .4 Elsewhere.......................................... — 8 .4 Northern New York State. . . . — 7 .6 Southern New York State........ — 8 .0 Hudson River Valley D istrict.. — 6 .6 Capital D istrict.......................... — 15.9 Westchester D istrict.................. + 1 0 .8 — — — — — — — 5 .9 5 .5 5.2 7 .5 4.9 8 .3 6 .9 — 13.0 — 17.3 — 9 .5 — 17.5 — 18.7 — 13.7 — 12.0 All department stores............ — 7 .9 — 5 .9 — 14.1 Apparel stores.......................... — 10.1 — 5 .7 — 13.6 1930 1931 Net 47.1 4 7 .0 38.9 3 2.3 44.1 4 0.0 3 4.8 4 7.7 4 6.8 4 1.5 29.0 4 1.6 37.0 32.9 4 4.6 44.1 4 7.6 44.0 Groceries............. M en’s clo th in g .. Cotton ?oods Silk go o d s ............ S hoes................... D ru gs.................. H ardware........... . Machine tools**. Stationery........... Paper................... D iam onds........... Jew elry............... . Weig ited average. + 0 .1 — 37.3 — 0 .2 + 1.4 * — 14.7 + 1 9 .8 + 8 .2 — 10.6 — 4 .7 — 4 .3 — 8 .9 + 2 .3 7 .6 Stock end of month — 8 .7 — — — — — 1 .7 9 .0 * 6 .1 4.1 0 .5 + 0 .3 + 4 .5 Net — 16.8 — 22.8 — 22.4 + 1 5 .8 * — 24.7 — 7 .2 — 4 .8 — 41.3 — 20.4 — 2 2.5 — 32.3 — 3 1.8 -1 6 .8 Stock end of month — 9 .1 — 3 2 ‘.8 — 21.6* — 38.8 + 1 9 .3 — 11.5 — 21.5 — 3 1.6 1930 1931 77.3 33.6 32.3 4 7.0 50.7 35.2 52.0 78.5 33.2 3 4.0 56.2 4 6.0 3 1.6 4 4 .8 76 ’.2 61.4 25.2 7 6 ’.3 5 6.7 19.7 51.8 51.3 * Quantity not value. Reported by SilkAssociation of America ** Reported by the National Machine Tool Builders Association FEDERAL RESERVE BANK OF NEW YORK M O N T H L Y R E V IE W , JU N E 1, 1931 PERCENT B u s in e s s C o n d i t i o n s in t h e U n ite d S ta te s (S u m m a rized b y the F e d e r a l R eserv e B o a r d ) U T P U T o f m a n u fa ctu res an d em p loy m en t a t fa c t o r ie s sh ow ed little ch a n g e fr o m M a rch to A p r il, an d ou tp u t o f m ines, w h ich o r d in a rily d ecreases at this season, also rem a in ed u n ch a n ged . W h olesa le p rice s con tin u ed to d eclin e, an d m on ey rates eased fu rth e r . O P r o d u c t io n Index Number of Production of Manufactures and Minerals Combined, Adjusted for Sea sonal Variations (1 9 23 -2 5 average = 100 per cent) PER CENT Index Numbers of Factory Employment and Payrolls, W ithout Adjustment for Seasonal Variations (1 9 23 -2 5 average = 100 per cent) PER CENT and E m ploym ent In d u s tr ia l p ro d u c tio n , as m easu red b y the B o a r d ’ s season ally a d ju ste d in d ex w h ich cov ers b o th m a n u fa ctu re s an d m ines, in creased fr o m 88 p er cen t o f the 1923*1925 a v era g e in M a rch , to 89 in A p r il, com p a red w ith 82, the low p o in t reach ed la st D ecem b er. S teel m ill a c tiv ity d eclin ed b y con sid era b ly m ore than the usual seasonal am oun t, w h ile in the a u tom ob ile in d u s try there was a la rg e r than seasonal in crease in ou tp u t, a c c o rd in g to p re lim in a r y reports. C on su m p tion o f co tto n b y d om estic m ills con tin u ed to in crease, c o n tra ry to the usual seasonal m ovem ent, w h ile there w as a decrease in u n filled orders fo r c o tto n cloth , w h ich w as on ly p a r tly season al in n a tu re ; con su m p tion o f w ool, w h ich o r d in a r ily d eclin es in A p r il, in crea sed c o n s id e r a b ly ; at silk m ills a c tiv ity d eclin ed . T h ere w ere la r g e in creases in the o u tp u t o f p etroleu m an d a n th ra cite coa l, w h ile p r o d u c tio n o f b itu m in ou s c o a l d eclin ed b y a b ou t the usual season al am oun t. T he nu m ber em p loy ed in fa c t o r ie s at the m id d le o f A p r il w as a b o u t the sam e as a m onth ea rlier. I n c a r -b u ild in g shops an d in establish m en ts p r o d u cin g m ach in ery , em p loy m en t d ecreased con sid e ra b ly , w h ile in the au tom ob ile and cem en t in d u stries there w ere seasonal increases, an d in the fe r tiliz e r in d u stry a la rg e r th an seasonal in crease. E m p lo y m e n t at te x tile m ills d eclin ed b y less than the seasonal am oun t, re fle c tin g c h iefly a slig h t in crea se in em p lo y m ent at co tto n m ills, and a sm all d ecrease in the c lo th in g in d u s tr y ; a t m ills p r o d u c in g w oolen an d silk g o o d s d eclin es in em p loy m en t w ere la r g e r than usual. F a c to r y p a y ro lls d eclin ed som ew hat in A p ril. V a lu e o f b u ild in g con tra cts aw a rd ed , w h ich flu ctu a tes w id e ly fr o m m onth to m onth, d eclin ed co n sid e r a b ly in A p r il, a c c o r d in g to the F . W . D o d g e C orp ora tion , an d d ecreases w ere re p o rte d in a ll the le a d in g classes o f c o n stru ction . I n the first fo u r m on th s o f the y ea r t o ta l aw a rd s d ecreased 26 p er cen t fr o m the c o rr e sp o n d in g p e r io d o f 1930, r e fle c tin g d eclin es o f 10 p er c en t f o r resid e n tia l b u ild in g , 17 p er cen t f o r p u b lic w ork s an d u tilities , 25 p er cen t f o r e d u ca tion a l b u ild in g , 43 p e r cen t f o r fa cto r ie s , an d 57 p e r cen t f o r com m ercia l b u ild in g s . D is t r ib u t io n F re ig h t-c a r lo a d in g s sh ow ed a b o u t the usual season al in crease in A p r il. D ep a rtm en t store sales in crea sed 9 p e r cen t fr o m M arch , an d the B o a r d ’ s in d ex , w h ich m akes allow a n ce f o r the u su al seasonal v a ria tio n s in c lu d in g ch an ges in the d ate o f E aster, stood at 105 p er cen t o f the 1923-1925 a verage, com p a red w ith 97 p er cent in M a rch . W h olesale P r ic e s T he g en era l level o f w h olesale p rices d eclin ed 1.6 p er cen t fu rth e r in A p r il, a c c o r d in g to the B u rea u o f L a b o r S ta tistics. I n the first h a lf o f M ay , p rices o f m an y le a d in g c o m m od ities w ere red u ced fu rth e r , an d f o r the sixw eek p e rio d as a w h ole there w ere la r g e d eclin es in the p rice s o f co tto n , silk, an d textiles, liv estock and d a ir y p ro d u cts, cem en t, p etroleu m p ro d u cts, and n o n fe rro u s m etals. B of Labor Statistics (1926 average = per cent) 100 ank C r e d it L oa n s an d investm ents o f r e p o r tin g m em ber banks in le a d in g cities d eclin ed b y a b ou t $150,000,000 betw een A p r il 1 an d the m id d le o f M ay, refle ctin g su b sta n tia l liq u id a tio n in loan s on secu rities an d in a ll other loans, la r g e ly com m ercia l. T h is liq u id a tio n o f loan s w as o ffs e t in p a r t b y fu rth e r la r g e a d d itio n s to the b a n k s ’ investm ents, w h ich on M a y 13 w ere over $1,000,000,000 la r g e r than at the b e g in n in g o f the y ea r. V olu m e o f R eserve B a n k c re d it d e clin ed som ew hat in the six w eeks ended on M a y 16. C on tra ry to the usual season al ten d en cy , there w as som e fu rth e r in crease in cu rren cy dem and f o r the p e rio d , r e fle c tin g ch iefly b a n k in g d is tu rban ces in the M id d le W est. G old im p orts con tin u ed in con sid era b le volum e an d su p p lied the m em ber ba n k s w ith su fficient fu n d s to m eet the a d d itio n a l dem and f o r cu rren cy , and also to red u ce som ew hat the am oun t o f R eserve B a n k cre d it ou tsta n d in g . M on ey rates d eclin ed to new low lev els d u rin g M ay . R ates on bankers accep tan ces, w h ich had d eclin ed fr o m 1 p er cen t in the m id d le o f A p r il to 1% p er cent b y the end o f the m on th , w ere red u ced to % p er cent b y the 19th o f M a y . R ates on com m ercia l p a p e r d eclin ed fr o m a ran g e o f 2%-2y2 to a ran g e o f 2 -2 % p er cent. A t the R eserve B an ks b u y in g rates on bankers accep tan ces w ere redu ced in A p r il an d the first h a lf o f M a y , an d in M a y d isco u n t rates w ere also redu ced , the rate at the F e d e r a l R eserve B an k o f N ew Y o r k b e in g low ered to 1 y2 p er cent. y2 Money Rates in the New York Market (May rates are averages for the first 20 days)
@FedFRASER