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MONTHLY REVIEW
Of Credit and Business Conditions
In
B y

th e

F ederal

th e

S e c o n d

R eserv e

F e d e r a l

A g e n t,

R e s e r v e

F ed eral

D is tr ic t

R eserv e

B a n k ,

N ew

Y ork

New York, March 1, 1922

The Treasury announced on February 9, 1922, a
general offer to redeem before June 15, 1922, at the
option of the holder, at par and accrued interest to
the date of optional redemption, 3 % per cent.
Victory notes, which have been called for redemp­
tion on June 15, 1922. Upon presentation and
surrender of notes of that series the Federal Reserve
Bank of N ew Y ork will redeem them prom ptly.

Credit Conditions

relatively slight recurrence of the very material change
in money conditions which used to occur immediately
after the first of the year. At that season, with the
return flow of currency to New York and other centers,
rates formerly declined sharply, just as in the preceding
autumn they had risen sharply. The period of low rates
used to continue well into February, as the surplus funds
sought employment, and then rates started upward.
Under present conditions, however, and particularly while
the war and post-war borrowings of the member banks of
the Federal Reserve system have not been fully liquidated,
there is not the same tendency for funds to flow to New
York, because as they become excessive in other parts
of the country they are largely used to pay indebtedness
at Federal Reserve Banks of other districts, just as funds
in this district when the demand for them subs ded were
utilized to pay the loans of member banks at the Federal
Reserve Bank of New York.

HE brief period of relative ease in the money
market which coincided with the increase after
the first of the year in the volume of loanable funds
in New York City, was followed by an upward turn in
interest rates, which has lasted from the middle of January
until the present. The rates on bankers acceptances
and commercial paper rose about
Per cent, and Stock
The return of interest rates to the level of December,
Exchange call money also was higher. The return to
after a decline which had been fairly continuous for
the investor on Treasury certificates and those issues of
Liberty bonds and Victory notes not affected by the more than a year, took place at a time when the reduc­
Treasury’s announcement that the tax exempt series tion of loans at the New York Reserve Bank was pro­
of Victory notes was called for redemption on June 15, gressing at a much diminished rate. The accompanying
changed little. In general, money rates late in February diagram compares the reduction that has occurred in the
stood substantially where they were in December.
Reference was made a month ago to the fact that in
the last five years interest rates have reflected the move­
ment of the seasons to a much less degree than before
the Federal Reserve system was established. Just as
the demands for credit and currency at the crop-moving
and holiday seasons have not been attended by as sharp
a rise in interest rates, so the passing of those demands
has not been attended by as sharp a decline in interest
rates. The Federal Reserve system has provided a
means whereby the volume of credit expands or diminishes
as the demand for it rises and falls, and an effect which
naturally follows, is a relative freedom from seasonal
fluctuations in interest rates.
Earning Assets of^the Federal
Earning Assets of All Federal
The temporary decline in interest rates in the first
Reserve Bank of
Reserve Banks Except
two weeks of January appears to have beenjt briefjtnd
New|York
New York

T




2

MONTHLY REVIEW

total loans of the New Y ork Reserve Bank with the re­
duction in all other Reserve Banks. The major part of
the reduction at the New Y ork Reserve Bank took place
in the first half of 1921, continuing at a slower rate dur­
ing the last half of the year. The average of loans and
investments for February, 1922, was practically un­
changed from the average of the preceding month. The
reduction of loans in the rest of the Federal Reserve
system, on the other hand, has been much more con­
tinuous, moving at a slower rate than at the N ew Y ork
Reserve Bank in the first half of 1921, and at a relatively
rapid rate since that time.

An explanation of the accelerated rate of reduction in
the last few weeks, especially in districts where agriculture
predominates, may be found in the rise in the prices of
farm products during the last ten weeks. Higher prices
have not only permitted the liquidation of bank loans in
agricultural districts, and the reduction of indebtedness
at the Reserve Banks, but have provided the banks in
the West with funds for the purchase of increased amounts
of commercial paper.
The advance in prices of wheat, corn, hogs, wool and
certain other agricultural products in the last ten weeks
has been important not only in affording the means for
improving credit conditions in many parts of the country,
but has tended to restore a more normal relation between
the prices of different groups of commodities. Farm
products declined-further than any other group during
the period of heavy price recession, and their recent rise,
together with a continued moderate decline in most of
the other groups, has resulted in bringing prices more
nearly to a com mon level.
PER CENT.

Deposits of 15 Savings Banks in New York City and 15 Savings Banks
in the Second District Outside New York City. (Average Deposits in
1918 == 100 per cent.)
*




Savings Bank Deposits
Representative savings banks in New Y ork, N ew
Jersey, and Connecticut report a slight decline between
January 10 and February 10 in the aggregate amount
due their depositors, a result of the withdrawals which
normally follow the semi-annual crediting of interest in
January. The number of reporting banks has been in­
creased this month from 21 to 30, by adding to the list
institutions in N ew Y ork C ity and in cities elsewhere
in the district. The fifteen reporting banks in N ew Y ork
C ity now contain practically 65 per cent, of the savings
bank deposits of the city while the fifteen reporting in­
stitutions in thirteen cities of the district outside New
Y ork represent about 44 per cent, of the aggregate savings
bank balances of that territory. The 30 banks have
about 60 per cent, of the deposits of the district.

Bill Market
The firmer money conditions of late January caused
dealers to advance their offering rates for prime un­
indorsed bills from 3 % to 4 per cent., at which level they
remained throughout February.
The higher rate
stimulated some buying b y interior banks, but New
Y ork C ity banks and other buyers were attracted by
somewhat higher yields on tax exempt Government
securities of early maturity, and the aggregate m ove­
ment of bills was com paratively slow. Although the
supply of new bills created was small, the discount
market again found it necessary to avail itself of Federal
Reserve Bank accom m odation to a substantial amount.
Despite dulness in the market for bankers bills at 4
per cent., trade acceptances with banking indorsement
found a ready sale here at 4 ^ to 4 ^ per cent., or slightly
under the commercial paper rate.
The total amount of bankers acceptances outstanding
December 31 is estimated at approximately $600,000,000,
a decrease of about 40 per cent, compared with the
average amount outstanding in 1919 and 1920. This
decrease was partly due to the decline in com m odity
prices, partly to an increased tendency on the part of
European importers to provide American shippers with
sight credits instead of time credits, and partly to a
reduction in the volume of trade which is financed nor­
mally through three or four months credits. Further­
more, in domestic trade, changed money conditions per­
mitted many users of credit to borrow directly from their
banks or through the commercial paper market more
cheaply than they could finance through the acceptance
market.

A decreased volume of bills is outstanding in the London
market also, for reasons similar to those effective in New
York.

FEDERAL RESERVE AGENT AT NEW YORK

3

Commercial Paper

Stock Market Money Rates

Accom panying generally firmer money conditions in
the latter part of January and in February, commercial
paper selling rates returned to the 5 per cent, level, and
sales below that rate again became exceptional. For
a time earlier in the year, paper sold freely at 4 % Per
cent., and in numerous instances at 4 Yi per cent.

Following the upward movem ent in money rates in
the third week of January, 5 per cent, tended to be the
typical rate for Stock Exchange call loans. When rates
rose above this level to
per cent, and on two occasions
to 6 per cent., funds were offered more freely, and a lower
rate was restored. Conversely, when rates at times
fell below 5 per cent., there was a tendency for lenders
to withdraw their funds for employm ent elsewhere, thus
causing a stiffening in the rate.
In the middle of
February, the rate held rather consistently around 4
per cent., due largely to an excess of Government dis­
bursements in this district over receipts in connection
with the maturity of Treasury certificates on February 15.

The rise in rates accompanied a marked falling off in
the demand for paper, particularly in N ew Y ork City.
Whereas about the middle of January paper was selling
here in considerable volume, in later weeks there was a
large falling off.

Demand in other parts of the East

also tended to diminish, but in the M iddle W est and on
the Pacific Coast was somewhat stronger.

Chicago and

Pacific Coast city banks bought more freely around the
third week of February, and there was also a larger
demand from the smaller banks of the M iddle and Far
West.

Tim e money continued to be quoted at 4 % to 5 per
cent., the level to which it had been advanced in the third
week of January. Com paratively little business was
transacted.

Rates at these points held for the most part

around 5 per cent., as in the East, but some distributors

Stock Market

well established through the W est reported a considerable

The tendency for stocks to work irregularly upward
continued during the four weeks ended February 20,
and representative averages of industrials reached levels
slightly the highest of the current rise. Railroad stocks
in February were stronger, reflecting reports of heavier
traffic, and representative averages approached closely
the highest points of last fall. Trading remained largely
in professional hands, as indicated b y the generally
reduced volume of transactions and the irregular char­
acter of daily fluctuations.

volume of sales at 4 % per cent., and some business on the
Pacific Coast at 4J^ per cent.
The supply of paper offered to dealers showed no ap­
preciable increase, and was about equal to the generally
slow demand.
The

accompanying

diagram,

carrying forward

the

record of outstanding paper of thirty dealers who report
regularly to this bank, reflects in the higher figures for
January 31 the increased distribution that occurred
during the period of easier money in the early part of
the month.
MILLIONS OF
DOLLARS

In the last week of February the market became more
active and prices rose sharply.
T otal stock transactions in January were somewhat
over 16,000,000 shares, slightly less than the total in
December, and about equal to transactions in January
a year ago.

Bond Market

Commercial Paper Outstanding—Thirty Dealers




Corporation bonds shared to some extent with Liberty
bonds the late January reaction from the unusual activity
and strength of the earlier part of the month. The
reaction, however, was much less marked than in the
case of the Government issues, notwithstanding con­
tinued com petition of new bond offerings and the same
unfavorable influences that were affecting Government
loans. W hile trading fell off considerably compared
with the volume in the most active periods, it remained
well up to the average of recent months, and prices, as a
rule, showed only slight declines from the high levels
reached during the first-of-the-year advance.

4

MONTHLY REVIEW

The state and municipal bond market became rather
more markedly dull, due in large measure to the heavy
amount of new issues recently offered, which, in some
cases, were not fully distributed. This slackening was
reflected in a slight easing in prices. Announcement
of the calling of V ictory 3 % notes gave a slight impetus
to buying around the middle of February.

The accom panying diagram indicates that as a result
of three issues of notes, $1,304,000,000 of early maturing
debt has been postponed to 1924 and 1925. Nearly
$6,000,000,000 of outstanding public debt is however
still concentrated in a relatively few maturities falling
due in the next year and a half. Figures shown in the
diagram are inclusive of all changes through February 20.

Foreign government bonds carrying foreign exchange
conversion privileges became active and strong in sym­
pathy with the rise in exchange rates. Belgian and
British bonds of this character made particularly rapid
advances. The general foreign bond list was also in good
demand; French issues were especially strong and reached
new high prices.

As a further step in the refinancing program, the
Treasury announced on February 9 that the V ictory
3 % per cent, notes were called for redemption on June
15, 1922. Holders received the optional privilege of
redemption at any date prior to that time, and, in ac­
cordance with this provision, paym ent of the issue is
proceeding daily. In furtherance, also, of the general
Treasury plan, the authorization given to the Federal
Reserve Banks to purchase 4 % per cent. V ictory notes
at par and accrued interest, up to an aggregate amount
of not more than $100,000,000, was extended from
February 15 to M arch 15, 1922.

January dealings in bonds other than United States
Government securities on the N ew Y ork Stock Exchange
amounted to $188,000,000, only slightly less than in
Decem ber, when the total was the largest since 1904.

United States Government Securities
In the last week of January, the Treasury offered its
third series of notes since the initiation of its program
for redistributing the short dated debt. These were
dated February 1, 1922, and bore interest at 4 % per
cent, to M arch 15, 1925, a rate which compares with
5 % per cent, on the June 15 issue, and 5 ^ per cent, on
the September 15 issue. Dem and for these notes was
even more active than in the case of the preceding of­
ferings. T otal subscriptions amounted to $1,249,965,300,
and total allotments were $601,599,500, including $200,000,000 paid for through exchange of V ictory notes.
Of the total allotments, $254,213,300, or 42 pet cent.,
was allotted in this district, a somewhat larger percentage
than usual.
£918

Announcement of the early redemption of the 3 % per
cent. V ictory notes was followed b y a decline of about
of a point in price of the issue to par or slightly under,
while the tax exempt Liberty 3 % s advanced nearly 2
points. Other Liberty issues, which had reacted 1 to
2 points in the latter part of January, as a result of firmer
money and discussion of a soldiers’ bonus, were quiet
and steady in February until the third week, when prices
m oved upward rather strongly in reflection of easier
money and lessened probability of a bond issue for
bonus purposes.
T otal transactions in Liberty and V ictory issues on
the N ew Y ork Stock Exchange during January were
$229,000,000, the largest for any month since 1920.
In February, however, after the price reaction, the market
became quiet.
Issues Maturing 1922 - 1925
Victory 4 J Notes................................
^ j£
Certificates of Indebtedness*............
Treasury Notes........................................
W Saving Certificates.......................
ar
Victory
Notes..................................

<2,918,000,000
1,938,000,000
1,304,000,000
741,000,000
367.000.000

TTL
O A ...............................................

#7.268,000,000

♦Including fll2,000,000 Pittman A6t certificates*
maturing at various dates,not show in diagram*
n
746

645

I
259

311

244

66

5Z
MR
A.

602

391

m




J L SEPI N V JAN. M
UY
O.
AR. M Y JU Y SEPT. N V JA ,
A
L
O,
N
-------------1------------1922
*
1923
’

30

MAR. M Y J L SEPT. N V JAN. MAR.
A
UY
O.
---------------r
- 1924
1925

Months of Maturity of the Short-Dated Government Debt, 1922-1025 (In Millions of Dollars)

5

FEDERAL RESERVE AGENT AT NEW YORK

New Financing
New security issues were offered heavily in the four
weeks ended February 20, and in the majority of cases
enjoyed a good distribution. This was particularly
true of long term non-callable bonds, which have been
offered more frequently in recent months, due both to
strong preference on the part of investors for issues of
this character and to the fact that the lower range of
interest rates has made borrowers more willing to finance
over long periods.
Corporation offerings were in large part railway issues,
divided between two $80,000,000 long term bond issues,
about $56,000,000 equipment trust notes bought from
the Railroad Administration, and a smaller amount of
older seasoned issues taken in exchange by dealers and
reoffered. Several fair sized industrial issues were also
sold, but there were comparatively few public utility
bonds offered. The largest single issue of the period was
$75,000,000 Federal Land Bank 5 per cent, bonds, sold
at a price to yield about 4.70 per cent, to the first re­
demption date, 1931. The greater part of this issue sold
rapidly, and stimulus to final distribution was given by
the announcement of the calling of the tax exempt Victory
notes. Offerings of State and municipal bonds decreased
to the lowest in recent months, partly because of some
congestion resulting from previous heavy offerings and
partly because many projects for spring work had al­
ready been financed.
Foreign bond offerings, payable in dollars, during the
four weeks amounted to $41,000,000, excluding a small
Canadian provincial issue. Late in January $25,000,000
Department of Seine, France, bonds, and a small issue of
the City of Porto Alegre, Brazil, were sold here on about
an 8 per cent, basis, while February foreign offerings in­
cluded $10,000,000 twenty-five year non-callable bonds
of the State of Queensland, Australia, sold on a 6.25 per
cent, basis, and a small issue of a public utility concern
in Melbourne, Australia. The Queensland issue was
the second of its kind placed in this market; the first,
a $12,000,000 long term non-callable issue, sold here last
October on a 7.10 per cent, basis.

and some decrease in imports, to a figure which is probably
much more than offset by shipping and other services to
foreign nations. Buying of sterling by Germany for
reparations payments due every ten days was probably
the immediate occasion of some of the upward turns.
German purchases of other currencies was an important
factor in an advance during the month in rates on all
other principal European centers except Berlin. A
decline in marks accompanied every sharp rise during
the month in other currencies. The percentage ad­
vances in the French, Italian, and Belgian rates were
even greater than in sterling.
The following table shows the changes in the principal
exchanges.

Country

February 20
Last

Change
from
January 20

Per Cent.
Depreciation
from Par

England.................................

$4.3925
.0915
.0503
.0045
.0869
.3803
.1950
.1575
.2655
.3652
.1354
.4738
.5388
.7188
.2813
.9700
.6488

+.1825
+ .0104
+ .0066
-.0 0 0 5
+ .0092
+ .0161
+ .0010
+ .0085
+ .0162
+ .0304
+ .0115
-.0 0 2 5
-.0 1 0 0
-.0 2 0 0
+ .0125
+ .0231
-.0 0 1 2

9.7
52.6
73.9
98.1
55.0
5.4
+ 1.0
18.4
0.9
14.0
58.3
5.0
*
*
42.2
3.0

Italy.......................................

Switzerland............................
Sweden (Stockholm).............
Japan (Yokohama)...............
China (Hong Kong)..............
China (Shanghai)..................
Bar Silver in New York.......
* Silver Exchange Basis.

Gold M ovem ent
Gold imports for January, totaling $26,571,000, were
the smallest in any month since August, 1920, and were
$31,036,000 less than the monthly average in 1921.
Total exports were $863,000, compared with $2,150,000
during December. Principal sources of imports are
shown in the following table.
(000 omitted)

Foreign Exchange
Sterling exchange advanced more than 20 cents during
the past month, reaching $4.41^ on February 25, within
10 per cent, of par value, and the highest quotation since
July, 1919. This rise accompanies a steady increase in
the domestic purchasing power of the pound as shown
by the fall in British price indices. A further influence
has been the reduction of the British adverse trade balance
in the last six months, by a 50 per cent, increase of exports




Country

January,
1922

Monthly Average
1921

All Other........................................

$10,468
4,276
2,381
1,946
1,875
5,625

$16,841
5,530
3,071
1,168
15,891
15,106

Total Imports........................

$26,571

$57,607

England..........................................

6

MONTHLY REVIEW

Foreign Trade
Reports from exporters indicate an increase in the
foreign demand for a number of important American
products. Orders for steel have increased considerably,
particularly from Japanese sources, and also more orders
are reported from China and South America. Foreign
competition in steel is now less severe, due in part to
increased production costs abroad, which have raised
foreign export prices above American prices in some
markets.
Since the low point reached in August, iron and steel
exports have been steadily increasing. December ship­
ments of 130,023 tons were nearly double the August
amount, but were only a little over half the 1913 monthly
average and far below the January, 1921, total of 540,196
tons.
Wheat demand has again become active, after having
been dull since early last fall. The United Kingdom was
the largest buyer, and there were also purchases for the
Russian relief and by Holland, Belgium, Greece, and
Germany. Corn continued to be in steady demand.
Cotton goods buying was moderately larger, and while
not active in any one locality was sufficiently wide­
spread to make a fair aggregate volume. Various other
commodities shared somewhat in the strengthening,
though in most cases to a more limited extent. Buyers
are very cautious and tend to postpone making commit­
ments as long as possible, as indicated by the receipt
of numerous orders by cable instead of by mail.
The January exports of cotton were 475,910 bales, 26
per cent, less than in December, and 21 per cent, less
than in January, last year. Since October, the monthly
figures have shown successive declines. Dulness in the
foreign demand for copper, even more marked than a
month ago, was in sharp contrast with the active buying
that occurred in the closing months of last year.
Due partly to small cotton shipments, the total value
of exports from the United States in January was $17,000,000 less than in December, and amounted to $279,000,000,
the smallest sum reported since 1915. Imports, valued at
$216,000,000, were $21,000,000 less than in December,
but larger than in any other month of 1921, except March
and April. Silk and rubber imports were somewhat lower
in January, while sugar imports were the largest since
August.

(Base of 19IS = 100 unless otherwise noted)
Per Cent. Change During
Country

Latest
Quotation
Nov.

United States:
12 basic commodities*..
Dept, of Labor.............
Dun’s.............................
Bradstreet’s ..................
Great Britain:
Economist.....................
20 basic commodities*..
Italy..................................
Sweden**...........................
Australiaf.........................
Norway.............................
Germany t .........................
Denmark".........................

109
148
137
124

(Feb. 18)
(Jan. av.)
(Feb. 1)
(Feb. i)

+
—
+
—

159
156
129
314
595
209
168
170
148
239
3867
110
177

(Feb. i)
(Feb. i)
(Feb. 18)
(Feb. 1)
(Jan. 1)
(Dec. av.)
(Jan. 15)
(Jan. 15)
(Dec. av.)
(Feb. 1)
(Feb. 1)
(Jan. 1)
(Feb. 1)

1. 9
0. 7
0. 5
0. 3

Jan.

Dec.

— 0. 8
0.,0
— 0. 1
+ 0,.6

—
—
—
—
—
—
—
—
—

2..8 — 2..2
1. 2 — 2,.3
7. 0 — 4..4
0.,2 — 1 9§
0..7 — 0 .1
2.,2
2,.2
0. 9 + 1 .6
0..6 — 1 .1
3..2 — 2 .0
2. 5 _ 5 .3
+22..2 ; + 5 .6
— 1 5 + 1 ,2
5 .8
+ 1. 1

+
+

2.8
0.7
0.4
0.4

-

1.7
0.8
3.1
3.7

-

1.4
1.2

- 5.4
+ 10.0
-

0.6

"“
Computed by this bank. tJuty* 1914 55 100. JMiddle of 1914 *=
=
100. ^September, 1919 « 100. "July, 1912-June, 1914 - 100.
**July, 1913-June, 1914
100. {Revised.

Domestic Wholesale Prices
Rapid recovery in prices of leading farm products
overshadowed other wholesale price movements during
the past month. Wheat prices reached a new high level
for the crop, and certain other grains and types of live­
stock rose strongly to points not touched in periods rang­
ing from two to six months. The following table in­
dicates the advance in five important farm products
since January 3 and the 1921-22 low point, prices quoted
being those of the Chicago market, except in the case of
wheat for which New York prices are given.

Product

Price
Feb. 21

Per Cent.
Rise
Since
Jan. S

Per Cent.
Rise
Since
Low

Wor]d Wholesale Prices

Wheat, No. 2 red.........
Corn, No. 3 yellow. . . .
Oats, No. 3 white.........
Hogs, bulk of sales. . . .
Steers, good live...........

$1.50^2
M%
.se y %
10.35
8.69

28
24
9
47
2

39
38
21
57
5

Available foreign price indices showed further declines
of varying degree during January. The British price
decline was slower than in preceding months, and not
far different from the rate of fall of prices in the United
States. French prices, on the other hand, fell somewhat
more rapidly in January than in the months previous.

A recession in prices of eggs and dairy products, due
chiefly to the larger receipts which accompanied mild
weather, was the principal exception to the general
upward movement during the month in prices of farm
products.

German prices continued to move apart from the
general tendency, the index showing a rise during January
nearly twice that which occurred in December. Since
June, this index has made successive monthly advances
amounting in all to a 177 per cent, advance. Indices for
different countries are shown in the following table.

As farm products suffered more severely from the fall
in prices than most other commodities, the recent re­
covery is an important step towards the restoration of a
more normal commodity price relationship. This ten­
dency is reflected in the group changes of the Depart­
ment of Labor wholesale price average for January.




Date
of
Low
Point
Nov.
Oct.
Aug.
Dec.
Dec.

5
19
22
20
23

FEDERAL RESERVE AGENT AT NEW YORK

(1913 average = 100 per cent.)

Commodity Group

Dec.,
1921

Jan.,
1922

Per Cent.
Change

Farm products.....................................
Food............................................. .
Cloths and clothing.............................
Fuel and lighting.................................
Metals and metal products..................
Lumber and building material.............
Chemicals and drugs............................
House furnishings................................
Miscellaneous.......................................

113
139
185
187
119
203
161
218
148

116
134
183
183
117
202
159
214
146

+ 2 .7
-3 .6
- 1 .1
-2 .1
-1 .7
-0 .5
-1 .2
-1 .8
- 1 .4

All Groups....................................

149

148

-0 .7

Cost of Living
The cost of living for a wage earner’s family in the
United States declined 2.3 per cent, during January,
according to the index of the National Industrial Con­
ference Board. The February 1 index number was
157.7 (July, 1914 = 100) the lowest quotation since 1918,
and 22.9 per cent, under the maximum of July 1, 1920.
The January decrease was largely due to a 5.3 per cent,
decline in food prices, although there were also slight
declines in fuel and light and sundries. The decline in
food reflected mainly sharp decreases in the prices of
eggs and dairy products. The decline in food prices
was particularly marked in New York City, amounting
to over 7 per cent.
The following table shows the items of the Conference
Board Index for February 1.

Item
Food...............................
Clothing.........................
Shelter............................
Fuel and lig h t................
Sundries.........................
Total.......................

January 1

February 1

Per Cent.
Change

150
156
169
178
178

142
156
169
177
177

-5 .3
0
0
-0 .6
-0 .6

161.4

157.7

-2 .3

In the United Kingdom a sharp drop in food prices
resulted in a 5.5 per cent, decline in the cost of living
index number published by the Ministry of Labor. The
index is now 88 per cent, above the July, 1914, level.

Employment and Wages
There was little change in the employment situation
during the past month. Slight decreases between Decem­
ber and January, in the number employed as reported by
the New York State and United States Departments of
Labor, are probably explained by normal seasonal ten­
dencies.
Numerous wage reductions during January were re­
flected in figures for the average weekly earnings of
workers in thirteen industries throughout the United




7

States, compiled by the United States Bureau of Labor
Statistics, which declined 8 per cent., from $22.75 in D e­
cember to $21.03 in January. An index of earnings com­
piled from these figures is now 25 per cent, lower than the
high point reached in August, 1920, and is 106 per cent,
higher than in 1914. Average earnings in New York
State factories declined from $24.91 in December to
$24.43 in January.
Early in February many large cotton mills in New
England announced wage reductions of 20 per cent,
and the substitution of a fifty-four hour week for the
forty-eight hour week which had prevailed for several
years. This 20 per cent, reduction follows a reduction
of 223^ per cent, made in the textile industry in New
England about a year ago. The announcement of the
latest reduction was followed immediately by strikes
and nearly all mills making the reduction are now closed.
B y the terms of an arbitration settlement between
the publishers of daily newspapers and union pressmen
in New York City, wages of pressmen are fixed at prac­
tically the current rate, with the exception of an increase
of fifty cents per day for the night force, until September
1, 1923, but the publishers acquire much greater control
over conditions of work. The determining of the number
of men to be employed on each press, the assignment of
men to any work within the press room, and judgment
as to competency are placed entirely within the control
of the employer.
The working agreement between the United Mine
Workers of America and the coal mine operators expires
on March 31. The union officials have proposed a joint
conference to be held on March 15 in New York City.
This proposal has been accepted by the anthracite as­
sociation.

Production of Basic Commodities
January output of both anthracite and bituminous
coal showed a slight increase over the small December
figures. The quantity of anthracite mined was insuf­
ficient to meet estimated current consumption, and as a
result reserves in storage and in transit probably de­
creased. In the case of bituminous on the other hand,
production as February opened was in excess of con­
sumption, and coal was again moving into storage.
A feature of the January output of pig iron was the
marked relative increase in steel making pig iron as com­
pared with merchant pig iron, an increase which found
its reflection in an enlarged output of ingot steel.
Tin deliveries continued to mount as the demand for
tin plate showed but little abatement. Crude oil pro­
duction showed a slight diminution, although still con­
siderably above the estimated normal. Total output for
1921 was 469,639,000 barrels, the largest in the history
of the industry. Consumption of cotton, exclusive of
linters, fell off as did also cotton exports for the month.
The following table shows for a number of basic com­
modities current monthly production as percentages of
estimated normal production. Allowance has been made
for year to year growth and seasonal variations.

8

MONTHLY REVIEW
(Normal production = 100)

ations. This line may be thought of as representing normal
production.

1921
Commodity
April
to
June
Anthracite coal mined.......
Bituminous coal mined. . . .
Pig iron production............
Steel ingot production.......
Copper production (mine).
Tin deliveries.....................
Crude petroleum product’n
Cotton consumption..........
Wool consumption.............
Wheat flour production.. . .
Meat slaughtered...............
Sugar meltings...................
Portland cement product’n f
Gasoline production. . . .
Zinc production f ............
Lumber production........
Wood pulp production. .
*Preliminary.

95
66
32
37
26

28
108
67
104
107
99
86
103
92
36
75
74

July
to
Sept.

63
27
34
17
48
104
73
106
131
101
89
109
84
30
73
71

1922
Jan.
Oct.

Nov.

Dec.

89
76
33
50
20
44
94
76
124
111
93
114
110
84
29
80
77

87
67
39
53
18
63
100
85
121
78
86
125
102
85
42
73
83

81
60
45
48
15
72
111
81
113
74
59
144
98

82
64
44
50
21*
80
108*
75

44
89
92

44

85
140

fRevised

Pig Iron Production
Pig iron enters into so large a number of products and
requires in its production so high a proportion of the
country’s output of coal and transportation facilities,
that the rate of production of pig iron has always coin­
cided closely with the fluctuations in general business
activity in the country. The diagram at the foot of this
page shows the production of pig iron each month since
1884. The light dash line represents the general rate of
growth from year to year, independent of unusual fluctu­

THOUSANDS of
0RQ&5TONS




The diagram makes it clear that the decline in the pro­
duction of pig iron which culminated in midsummer of
1921 was the largest decline as far back as our records go.
The nearest approach was the decline in 1893-1894.
Other considerable decreases took place in 1896, 1903,
1907, and 1914. The duration of sub-normal production
in these different periods varied from eighteen months
to about thirty months. The most recent period of
reduced output has now continued for fourteen months.
The recovery since midsummer of 1921 has been from a
point where operations were at about 25 per cent, of
capacity to a point where they are at about 50 per cent,
of capacity.
The diagram also shows that during the war years
1916, 1917, and 1918 production was only moderately in
excess of normal. The difficulty of meeting war needs
arose from the specialized character of the demands rather
than from the magnitude of the tonnage which they in­
volved. Increased war demands were moreover offset by
the curtailment of production for commercial uses.
It is also noteworthy that the years succeeding the
war, 1919 and 1920, were not, in the aggregate, years of
exceptionally large production. There was no marked
over-production of pig iron previous to the beginning of
the industrial inactivity of 1920.
The figures of the diagram since January, 1903, are
taken from a tabulation of the Iron Age. Prior to that
date the exact figures for monthly production are not
available, but are estimated from figures published by the
Iron Age showing the capacity of furnaces in blast. The
figures are plotted on a logarithmic or ratio scale because
when such a scale is employed the upward slope of the
line indicates the percentage rate of increase, which is
THOUSANDSof
GROSS TONS

9

FEDERAL RESERVE AGENT AT NEW YORK

more pertinent in this case than the actual increase in
tonnage. Correspondingly, the dips in the line which
illustrate periods when production was below normal
may be compared directly, because with a ratio scale the
same sized dip means the same percentage of decrease.

Commodity Stocks on Hand

Monthly Sales
Relative
Values
January,
1919
Dry goods...........

The following table shows index figures for stocks on
hand on the first day of the month expressed as per­
centages of normal. Allowance has been made for year
to year growth and seasonal variations.
Sugar (raw cane at Boston, New York, and Phila­
delphia) increased materially: large imports more than
compensated for meltings which were considerably above
normal.
A good export demand was a factor in the reduction
of stocks of corn and wheat at principal centers.
(Normal stocks = 100)
1922

1921
Commodity

July
to
Oct. 1 Nov. 1 Dec. 1 Jan. 1 Feb. 1
Sept.

Diamonds...........
Jewelry...............
Stationery..........
Hardware...........
Machine tools. . .
Weighted A v.

20
3
7
1
1
37
25
2
3
1

January,
1920

134
106
131
274
120
118
97
89
112
200

274
126
242
309
255
158
176
98
140
186

100
100
100
100
100
100
100
100
100
100

140
110
106
100
90
91
77
75
72
31

114

181

100

94

January, January,
1922
1921

The following diagram shows an index of the value of
wholesale trade in the district for three years computed
from the reports received by this bank for 10 lines. In
making up the total figures sales in the different lines
have been weighted in accordance with their relative
values, as shown in the preceding table. N o allowance
has been made for price changes which affect the figures
considerably.
PRET
E CN.

Sugar...................................
Coffee..................................
Wheat.................................
Flour (in chief centers).......
Oats.....................................
Corn....................................
Barley.................................
Rye......................................
Dairy products and eggs...
Poultry, frozen...................
Meats, cured and frozen...
Cotton.................................
Tin (world visible supply) .
Lead, bonded......................
Cement, Portland..............
Paper pulp..........................
Paper...................................

54
95
108
87
643
238
295
315
104
82
94
155
134
191
95
142
138

61
72
126
123
520
161
146
452
102
88
74
140
137
165
88
107
129

40
65
109
131
461
371
96
402
98
100
65
113
168
193
68
93
120

51
72
88
150
458
449
74
364
96
119
59
104
147
202
109
91
122

35
90
91
112
517
249
75
377
71
121
59
165

57
77
83
506
195
85
424

155

118
97
124

Wholesale Trade
Sales reports received by this bank from 90 repre­
sentative wholesale dealers in 10 principal commodities
in this district show that January sales compare some­
what more favorably with those of January, 1921, than
did the December sales with those of December, 1920.
However, in only four of the lines reported were sales
equal to or greater than sales in January, 1921, although
sales in January, 1921, were not large compared with the
figures for preceding years.
The following table shows the value of sales in the
month of January for the past four years. For pur­
poses of comparison sales in January, 1921, are taken
as 100 and January sales in other years are expressed
in percentages of this base. A column is also added
showing the approximate relative values of the products
handled in the different lines. The reports of the United
States census of manufactures have been used as the
basis for calculating the relative values.




Weighted Index of Sales of Wholesale Houses in the Second District
(Average Sales in 1919 = 100)

Retail Trade
The dollar value of department store sales during
January in this district was 8 per cent, smaller than in
January, 1921, and 12 per cent, smaller than in January,
1920, according to reports from 64 stores. Total sales
by these stores were $27,448,000 in January, 1922, against
$29,755,000 in January, 1921.
Sales of apparel, stimulated by further price reductions,
compare favorably with those of last year. The most
notable reductions were made in men’s suits and over­
coats, and resulted in many instances from the desire

w

M ONTHLY

of manufacturers to dispose of surplus stocks. Mer­
chants report that the public bought liberally when
these sales were first announced, but that the response
was less satisfactory after the first day or two. At the
annual midwinter clearance sales of furniture a smaller
volume of goods was disposed of, and a considerable part
of the total decline in January sales as compared with
January, 1921, was due to declines in the furniture de­
partments of the large stores.
January sales by stores in up-State cities show relatively
greater losses than sales by stores in New York City
and vicinity, as indicated in the table immediately
below. Evidence that the volume of sales was greater
than last year when allowance is made for price changes
is found in an increase of 7 per cent, in the number of
individual transactions, as reported by the stores that
keep such records. The amount of the average transac­
tion declined 11 per cent, from $2.94 in January, 1921,
to $2.61 in January, 1922.

Stocks of department stores computed at the selling
price decreased 4 per cent, between January 1 and Feb­
ruary 1, and on the latter date were about 4 per cent,
greater than on February 1, 1921. The fluctuations
in stocks and sales in the past three years are shown
in the accompanying diagram. Last year stocks were
reduced during January by clearance sales at low prices
and purchases were made sparingly. At the present
time merchants are buying with much less fear of further
price declines but are buying for immediate delivery
rather than placing forward orders. Outstanding orders
on February 1, 1922, amounted to 6 per cent, of the total
purchases during the previous year, as compared with 5
per cent, on February 1, 1921. During the past month
there have been unusually large numbers of buyers
for out-of-town retail stores in the primary markets of
New York.
PERCENT.

Stock on Hand
(Selling Price)

Monthly Sales
Jan., Jan.,

R E V IE W

Jan., Jan., Feb.l Feb.l Feb.l Feb.l

v
/
ir.KS

/

1919 1920 1921 1922 1919 1920 1921 1922

i
i

—

...0
|

\J

\

/

All Dept. Stores........
New York.............
Buffalo...................
Newark..................
Rochester..............
Syracuse................
Bridgeport............
Elsewhere..............
Apparel stores...........

72
73
71
75
68
76
76
75
67

104
109
95
107
91
106
122
105
84

100
100
100
100
100
100
100
100
100

92
93
84
99
89
93
86
98
90

79
80
82
78
66
81
119
86
69

115
116
116
124
101
110
121
107
114

100
100
100
100
100
100
100
100
100

104
106
94
100
79
95
108
113
113

$
/

t
* J

The following table compares the sales of department
stores with those of other classes of stores during the
T
month of January for the past four years. In each case
sales during January, 1921, are taken as 100 and January
sales of other years are expressed in percentages of this
base. The number of stores covered by the figures is
also given. Mail order house sales, reflecting agricul­
tural conditions, were not far below the figures for a year
ago, but were much reduced from 1919 and 1920. Figures
for all types of stores are to be interpreted in the light
of price changes.
Monthly Sales
Number
of Stores
Reporting January, January, January, January,
1922
1921
1919
1920
All
department
stores..............
Mail order houses
All chain stores. .
Grocery stores. .
Ten cent stores .
Cigar stores. . . .
Drug stores. . . .
Dry goods stores




64
3
10,259
6,590
1,647
1,423
241
358

72
124
76
81
82
62
83
49

104
173
101
111
100
89
101
66

100
100
100
100
100
100
100
100

92
95
108
116
110
93
99
$6

V
/

a V
A
V

1919

< /

1920

V

1

1921

/

*352

'1
37

19 ZZ

Stocks and Sales of Representative Department Stores in the Second
District (Average Sales in 1919 = 100)

Business Failures
Commercial failures in January and the first three
weeks of February were substantially higher than in
December, an increase which is accounted for largely by a
normal tendency for failures to be heavy during the first
two months of the year. Average liabilities of failures
in January throughout the country were over 15 per
cent, less than in December and in the Second Federal
Reserve District were almost 40 per cent. less. Recent
failures in New York City include a number of manu­
facturing and trading concerns which had been carried
by creditors’ committees for considerable periods.

V o lu m e o f B iu ld m g
New building operations in New York State and
Northern New Jersey during January showed the normal
seasonal reduction from December but were two and onehalf times as great as in January, 1921. The increase

FEDERAL

RESERVE

AGENT

was mainly in residential building which first benefited
from State tax exemption in February, 1921. For the
twenty-seven northeastern States January contract awards
were smaller than in December, but almost 50 per cent,
ahead of January, 1921.

Apartment Rents and Construction Costs
A study recently completed by this bank shows that
the rents paid by clerical and other workers receiving
moderate sized salaries in New York City are at present
about 70 per cent, higher than in 1914. Rents of the
more expensive of the moderate priced apartments in­
creased slightly more than those of the less expensive.
Reports of individual dealers show a wide range between
different buildings: in some cases the rents increased
less than SO per cent, since 1914, and in others they consid­
erably more than doubled, but the typical increase, was
between 60 and 80 per cent. The highest figures were
reached in October, 1921, and there has been little change
since that date.
The accompanying diagram shows the changes in
rents for two types of apartments: those renting for less
than $15 per room in 1920, and those renting for between
$15 and $30 per room in 1920. A third line in the diagram
shows the changes which have taken place since 1917
in the cost of building construction in New York City.
Reductions in building costs during 1921 have brought
that curve to about the same point as the index figures
for rents. While there are other factors determining
rents than construction costs, such as legal restrictions,
interest rates and the availability of funds, taxes, and
the shortage or surplus in the supply of dwellings,
construction costs may be considered the major factor
over a term of years.
The index figures shown for rents are averages of the
percentage changes for typical buildings reported by
twenty-one owners and operators of apartments. Rates
of rental were calculated on the basis of continuous oc­
cupancy. The average index figures are given in the
table at the foot of this page, together with other indices
for changes in rents prepared by different agencies. The
index numbers prepared by the United States Bureau
of Labor Statistics and the National Industrial Con­
ference Board are for buildings occupied by wage earners

AT

NEW

11

YORK

and are of a somewhat less expensive type than those
included in the indices prepared by this bank.
The cost of construction index presented in the diagram
is used through the courtesy of the George A. Fuller
Company. It represents the computed cost at different
periods of a representative hotel building erected by that
concern some years ago in New York City and is used in
lieu of figures specifically for an apartment house, since
the construction costs of different buildings of this general
type have fluctuated closely together.
Labor costs entering into the index are computed on
the basis of the pre-war efficiency of labor. If allowance
were made for changes in efficiency the figures for 1920
would probably be higher but no appreciable change
would be made in the present level of the index, since
the rate of output per man is now not far from the pre­
war rate.
PERCENT.

CS O
OT F
C S R IC I0
0N T U T N

200

mmm/

R
ZHT
AAT E T >
P K M N *B

150

S
'
^ RN
ET

iP R M N X
AT CT

11 LVL
9 4 EE

100

Rents of Apartments in New York City Compared with Changes in the
Cost of Building Construction. Apartment A is the Typical Apart­
ment Renting for Less than $15 per Room in 1920. Apartment B
is the Typical Apartment Renting for Between $15 and $30 per Room
in 1920

Apartment Rents and Construction Costs in New York City and the United States
(1914 - 100)
Index

1914

1915

1916

1917

1918

1919

1920

May
1921

Oct.,
1921

Jan.,
1922

100

101

102

102

110

121

144

160

167

167

100
100
100
100
100

101
100
102
100
112

102
100
102
102
143

107
103
100
105
164

112
107
109
115
168

127
113
114
128
168

145
132
135
151
230

168
142
159
171
193

175
144
160
169
177

175
146*
161*
169
173

Rents:
Federal Reserve Bank (apartments, type A, renting under
$15 per room in 1920)..........................................................
Federal Reserve Bank (apartments, type B, renting $15
to $80 per room in 1920).....................................................
U. S. Bureau of Labor Statistics (for New York City).......
U. S. Bureau of Labor Statistics (for U .S .).........................
National Industrial Conference Board (for U. S.)................
Construction Costs (George A. Fuller Co., New York City)
♦Dee. 1921.




Course of Credit Demands in 1921
HE R E V IE W of last April contained a diagram similar to the one given below, but relating to the year 1920.
That diagram showed (as does the one for 1921) the reserve percentages of each of the Federal Reserve Banks
before lending to other Reserve Banks or borrowing from them, and illustrated graphically the course of
the credit demands in each district during the year. Through the process of inter-Reserve Bank borrowing credit
equilibrium and elasticity are maintained in districts where for seasonal or emergency reasons the reserves of Federal
Reserve Banks fall below the legal minimum. Early in 1920 the New York Reserve Bank borrowed $100,000,000
from the Reserve Banks of six other districts, some of them agricultural. As the demand for credit moved to other
districts the pressure was relieved and the New York Reserve Bank was enabled to lend to other districts. In the
autumn of 1920 the total of inter-Reserve Bank borrowings reached $267,000,000, nearly all taken by Reserve Banks
in agricultural districts. But in spite of the large swings of credit between different parts of the country the reserve
percentage of the entire system fluctuated within very narrow limits.
The 1921 diagram printed below shows the same, though less acute, seasonal movement of credit. Early in the
year the New York Reserve Bank sold to other Reserve Banks bills from its portfolio amounting at the highest point
to $54,938,000; in the autumn the demand for credit in agricultural districts required loans to the Reserve Banks in
those districts of only $70,998,000 at maximum. At the close of the year inter-Reserve Bank borrowings had been
entirely liquidated and each Reserve Bank was operating solely upon its own reserves. The last block shows the
course of the reserves of the entire system during 1921.

T




B O ST O N

N E W

Y O R K

100

P H IL A D E L P H IA

CLEVELAND
100

/k /W
Y” v

80

80

J
\rr

60

60

.J
\r

40

40

Z0

20

0
R IC H M O N D

A T L A N T A

C H I C A G O

S T

L O U IS
100

80
/'A *

r ..

■60

40
20
0
M IN N E A P O L IS

K A N S A S C IT Y

D A L L A S

100

80
60
40

r
y\

r

\

s \ “W

f

Z0
0
A L L D IS T R IC T S

S A N F R A N C IS C 0