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MONTHLY REVIEW
o f C r e d it a n d
S e c o n d
Federal Reserve Agent

B u s in e s s

F e d e r a l

R e s e r v e

C o n d itio n s
D is t r ic t

Federal Reserve Bank, New York

Business Conditions in the U nited States
U R T H E R growth in production during January
carried the output of basic commodities to the
highest point reached since the spring o f 1923.
Employment at industrial establishments increased
slightly, but remained below the level o f a year ago.
Prices of farm products continued to advance and there
were smaller increases in the wholesale prices o f most
o f the other groups o f commodities.

F

P r o d u c t io n

P roduction in basic industries, after a rapid increase
in recent months, advanced 8 per cent, in January and
was 34 per cent, above the low point o f last summer.
The most important factor in the increase in the level
o f production since August has been the greater activity
in the iron and steel industry, but in January the output
o f lumber, minerals, food products, and paper, and the
mill consumption o f cotton also showed considerable
increases. The woolen industry was somewhat less active
in January and output o f automobiles, though larger
than in December, was considerably smaller than a year
ago. Further increases during the month in employment
in the metal, textile, and leather industries were largely
offset by seasonal declines in the number employed in
the building materials and food products industries.
PER CENT.

March 1, 1925

B uilding activity, as measured by contracts awarded,
though less in January than during the closing months
o f 1924, was near the high level o f a year ago.
T r ad e

Railroad shipments were in record volume fo r this
time o f year, and loadings o f merchandise and miscella­
neous products were particularly heavy. W holesale trade
in January, however, was slightly smaller than in Decem­
ber. Sales o f groceries, shoes, and hardware were in
smaller volume, while sales o f dry goods and drugs
increased. Department store sales in most districts were
somewhat smaller than a year ago, but sales o f mail order
houses were considerably larger.
P r ic e s

Wholesale prices, as measured by the index o f the
Bureau o f Labor Statistics, rose 2 per cent, during
January to the highest level in fou r years. The increase
o f 10 per cent, in the index since last June represents
an advance o f 19 per cent, in prices o f agricultural com­
modities and 3 per cent, in other commodities. In the
first half o f February prices o f grains, wool, coal, and
lead declined, while petroleum and gasoline prices ad­
vanced sharply, and cotton, silk, and rubber showed
smaller increases.
PERCENT.

*1 6 0
WHOLESALE
PRICES
1913*100

Index of 22 Basic Commodities Corrected for Seasonal Variation.
(1919 = 100 Per cent. Latest figure, January.)




1922
1923
19 &4
1925
Index of U. S. Bureau of Labor Statistics. (1913 = 100 Per Cent,
base adopted by Bureau. Latest figure, January.)

MONTHLY REVIEW, MARCH 1, 1925

B L N ODLAS
I I S FO R
LO
L

BILLIONS OF DOLLARS

Reserve Bank Credit
Weekly Figures for 12 Federal Reserve Banks
(Latest figures, February 18.)

Weekly Figures for Member Banks in 101 Leading Cities.
(Latest figures, February 11.)
B

an k

C r e d it

Loans and investments o f member banks in leading
cities, follow ing the rapid growth during the last half
o f 1924, declined by about $100,000,000 between the
m iddle of January and the m iddle of February. This
decrease represents a reduction in the holdings o f invest­
ments, chiefly at banks in New Y ork, partly offset by an
increase in loans. Loans on stocks and bonds increased,
though less rapidly than in the latter part of 1924, while
loans for commercial purposes declined slightly from the
high level reached in the middle o f January. Net demand
deposits, owing largely to decreases at New Y ork City
banks, declined sharply from the high point reached in
the middle of January.
A t the Federal Reserve Banks the seasonal liquidation
resulting from the return flow o f currency from circula­
tion came to a close by January 21 and during the fo l­
low ing fou r weeks there was an increase in total earning
assets. This increase reflected largely the demand fo r
gold fo r export, which led member banks to increase their
discounts at the Reserve Banks. Reserve Bank holdings
o f United States securities declined further, while ac­
ceptances showed relatively little change fo r the period.
Money rates, after remaining comparatively steady
during most o f January, showed a firmer tendency dur­
ing February, when rates fo r prime commercial paper
advanced to 3% per cent.
Effective February 27 the discount rate of the Federal
Reserve Bank of New Y ork was increased from 3 to 3y 2
per cent, on all discounts and advances.

exports o f gold from New Y ork, loss o f funds to the
interior during the early part o f February, and further
reduction o f Government security holdings by the
Federal Reserve Bank o f New Y ork and by the System.
Most o f the decrease in member bank credit within
the district was due to a further reduction o f security
holdings by New Y ork City banks to a level on February
18 o f $233,000,000, or 12 per cent, below the high point
reached last fall. Loans secured by stocks and bonds
were relatively little changed, and the volume o f bor­
row ing fo r commercial purposes, while considerably
reduced early in the period, increased $70,000,000 in the
week ended February 18, almost to the highest levels o f
last fall.
The follow ing diagram indicates b y weeks the recent
tendencies in the aggregate figures o f loans and invest­
ments, and deposits, o f reporting banks in the Second
District, and in all districts except the Second.
BILLIONS
OF DOLLARS

8

BILLIONS
OF DOLLARS

iZ

1
1
i................
ALL RET>ORTING \ SANKS
SECC>ND D IS T I RICT

ORIiNG e>ANKS
ALL REP1
EXCEPT SECOND C
)IST.

AJ
TOTAL LOAN5
INVESTMEf'i t S

&
jA

^

TCfTAL LOANS& J
1NVESTME

W
J r

F

^

T a TAL
DEPID51T5

10

f

v

JQVM
DEPO!5ITS

,

Banking Conditions in the Second D istrict
The volume of credit extended by reporting member
banks in the Second D istrict declined in the latter part
o f January and the first half o f February, and on Feb­
ruary 18 total loans and investments were $178,000,000
lower than on January 14, while total deposits showed
a decrease o f $307,000,000. These changes were in con­
trast with moderate increases fo r reporting banks in
other sections o f the country, and accompanied continued




-----1 — S
-----1 .

i‘ i

--- Li---- 1
___ ... t..... i

APR M Y JUN JUL A G 5£P O T N V DC JAN FEB M R
A
U
C O
A

192.4

1925

.......i_...j
—

1 1
___ ___

APR M YJUN JUL AU SEP O TN V DEC JAN FEB M R
A
G
C O
A

1924

192£

Total Loans and Investments and Total Deposits of Weekly
Reporting Member Banks in the Second District and in all
Districts except the Second.
A t the Federal Reserve Bank o f New Y ork rediscounts
fo r member banks increased substantially in February
and in the latter part o f the month exceeded $200,000,000

FEDERAL RESERVE AGENT AT NEW YORK

or the highest in over a year. These increases were only
partly offset by a decrease in holdings of Government
securities, so that total earning assets rose again to
approximately the levels prevailing during the holiday
trade expansion in December.

Velocity of B ank Deposits
Increases in January in various phases o f business
and financial activity were accompanied by a consider­
able increase in the velocity o f bank deposits, or rate
at which funds are checked out of banks. In the
last six months o f 1924 the rate o f turnover o f bank
funds in 140 centers outside o f New Y ork fell approxi­
mately 8 per cent, below the average o f the past six
years, a factor which tended to lim it the effects o f the
large expansion o f deposits upon prices and general busi­
ness activity. The increase in velocity in January, accom­
panied by a further increase in bank deposits, resulted
in a larger total of check payments, or debits to indivi­
dual deposits, than in any previous month.
The follow ing diagram shows in percentages o f the
six year average the changes in the rate o f turnover fo r
140 centers outside o f New Y ork and compares this with
the rate in New Y ork City, which was at a relatively
high level during most o f last year, reflecting partly
activity in the security markets.

3

In the bill market firmer conditions were indicated
by a somewhat reduced demand fo r bills and mod­
erately increased sales to the Reserve Banks. Open
market rates advanced % o f 1 per cent, on most maturi­
ties to 3 % per cent, on dealers’ purchases o f 90-day bills
and 3% per cent, on their sales, the highest rates since
May. Yields on Treasury short term issues m aturing in
six and nine months also increased slightly.
Rates fo r 60-90 day loans on stock market collateral
advanced % o f 1 per cent, to 4 per cent., the highest since
June. Call money renewals ranging 3 to 4^4 per cent,
were generally higher than in January, and late in the
month the rate fo r new loans advanced to 5 per cent.
MILLIONS
OF OOLLAH5

Commercial Paper Outstanding—26 Dealers.

PERCENT.

Security M arkets

Rate of Turnover of Bank Deposits in New York City and in 140
Centers Outside of New York City after Allowance for Sea­
sonal Variation. (Six-year average =100 Per cent.
Latest figures, January.)

M on ey M ark et
Further outflow o f gold, loss of funds to the interior,
and a seasonal increase in the demand fo r funds contri­
buted to firmer money conditions in February.
A somewhat less active demand fo r commercial paper
in the middle west, together with small demand at
New York, was reflected in a slight advance in open
market rates on prime paper to 3 % per cent. Supplies
o f paper were reported only moderate follow ing con­
siderably less than the usual seasonal increase in Janu­
ary, when the volume o f paper outstanding reported
by 26 dealers increased $20,000,000 to $818,000,000 on
January 31.




The bond market continued active and firm during
most o f February. Representative averages o f high
grade corporation bonds advanced over % a point to a
new high level fo r recent years. United States Govern­
ment securities were steady and foreign bonds generally
firm, although French issues reacted slightly accom pany­
ing the decline in exchange rates.
In the stock market industrial price averages advanced
early in the month to a new high point while railroad
averages continued at about the highest levels since
1917. Later in the month stocks reacted sharply, but
in somewhat slackened trading prices subsequently re­
covered their losses and both railway and industrial
averages held close to the y e a r’s high levels.
New security offerings continued in large volume and
brought the total since the first o f the year to a billion
dollars. Domestic stock issues continued heavy, while
foreign issues o f all kinds during the first 26 days o f
February totaled $150,000,000. O f these, the largest
were $35,000,000 bonds o f the Republic o f Poland,
$20,000,000 bonds o f the Est R ailroad o f France,
$35,000,000 Canadian National Railw ay bonds, and
$25,000,000 six months refunding notes o f the Argentine
Government.

Foreign Exchange
Foreign exchange rates generally reacted in February,
follow ing their rapid advance in previous months.
Sterling declined over 5 cents to $4.74% , Swiss and
Dutch exchanges fell somewhat below par and most
other leading European exchanges except those of

4

MONTHLY REVIEW, MARCH 1, 1925

Sweden, Germany, and Austria likewise lost ground.
These reactions were accompanied by a slight decline in
the Canadian dollar, and losses in rates on Argentina,
Brazil, India, and China. The Japanese yen, on the
other hand, advanced substantially, accom panying an­
nouncement o f the governm ent’s policy o f stabilization.

European Public Finance
A pa rt from the marked rise in exchanges during the
past year, one o f the important evidences o f im proved
economic conditions in E urope has been the substantial
progress made towards a balancing o f governmental
budgets. A t the close o f the war the belligerent nations
were covering a com paratively small part o f their ex­
penditures out o f current revenue. W hile neutral coun­
tries were doing much better, only Sweden and Norway
apparently were fu lly paying their way.
In 1920-21 England, by heavy taxation and economy,
reestablished a balanced budget. Through programs of
currency revaluation or stabilization, supported by fo r­
eign loans, the budgets o f Germany, H ungary, and
Poland have been balanced in the past year, and the
deficit in A ustria greatly reduced. Improvement in
Greek finances since the cessation o f the war and progress
in Italy are likewise noteworthy. Denmark, which had
achieved a balance in 1922-23, was less successful in
1923-24 as a result o f losses occurring to the State from
the failure of the Landmansbank.
The follow ing diagram indicates the percentage of
government expenditures covered by revenue o f leading
European countries by fiscal years. W hile the figures
are taken from the best available sources they are in
some cases preliminary and subject to later revision.
Owing also to the different accounting methods in d if­
ferent countries, the comparisons should be taken as
approximate only.

1 1 1 2 12 1 2 1 2 1 2
9 9 9 0 91 9 2 9 3 9 4

ENGLAND

1 1 1 2 12 1 2 1 2 1 2
9 9 9 0 91 9 2 9 3 9 4

FRANCE

12 1 2 1 2 1 2
91 9 2 9 3 9 4

Gold M ovem en t
Exports o f gold amounting to $32,000,000 from the
P ort o f New Y ork during the first 24 days o f February,
while considerably smaller than in the corresponding
period o f January, raised total exports fo r the country
since December 1 to approxim ately $150,000,000. Ship­
ments aggregating about $12,500,000 to Germany and a
like amount to India brought the total movement from
the United States since December 1 to $50,000,000 in the
case o f Germany, and to a slightly larger sum in the
case o f India. In addition to these larger shipments,
exports in February included between $1,000,000 and
$2,000,000 separately to Venezuela, Poland, H olland,
and England, and smaller amounts to eleven other coun­
tries. There was also reported to have been a substantial
shipment o f gold from San Francisco to A ustralia dur­
ing the month.
Final figures on the gold movement fo r the country
for January indicated total exports o f $73,000,000, with
the exception o f June 1919 the largest amount ever
shipped in one month. Im ports aggregated slightly over
$4,000,000, o f which more than half was from Canada.

Foreign Trade
Imports o f merchandise in January showed a further
increase o f $13,000,000 to $346,000,000, the highest total
since May 1923 and, with the exception o f that month
and the two preceding months, the highest since 1920.
Exports were practically unchanged at $447,000,000,
and, as a result, the export merchandise balance was
reduced to $101,000,000, the smallest since last A ugust,
but about the same as in January a year ago.
The recent increase in imports o f 36 per cent, com ­
pared with last August, or several times more than the

1 1 1 2 12 1 2 1 2 1 2
9 9 9 0 91 9 2 9 3 9 4

1 1 1 2 12 1 2 1 2 1 2
9 9 9 0 91 9 2 9 3 9 4

1 1 1 2 1 2 1 2 1 2 12
9 9 9 0 9 1 9 2 9 3 94

B E L G IU M

ITALY

GREECE

GERMANY

1 1 * 9 0 I921T922 12 B2.4
9 91 2
93

1 1 12 12 12 12 12
9 9 90 91 9 2 9 3 94

11 12 12 1 2 1 2 1 2
99 90 91 9 2 9 3 9 4

1 1 12 1 2 1 2 192
9 9 90 9 1 9 2
11924'

H N AR
UG Y
POLAND
SWEDEN ^
NORWAY
DENMARK
Government Revenue in Leading European Countries compared with Expenditures by Fiscal Years.
as a percentage of expenditures.




1 1 1 2 1 2 1 2 12 1 2
9 9 9 0 9 1 9 2 93 9 4

1 2 12 1 2 12 1 2
9 0 91 9 2 9 3 9 4

AUSTRIA

T 1 ~ 9 0 1 2 1 2 12 1 2
9 9 T 2 5 1 9 2 93 9 4

HOLLAND
SW
ITZERLAN
D
Columns show revenue for each year

FEDERAL RESERVE AGENT AT NEW YORK
usual seasonal increase, was due in part to increased
imports o f raw silk and rubber at higher prices, accom­
panying greater activity in consuming industries in this
country.
F or the entire year 1924 the detailed figures recently
made available reveal com paratively little change in the
general character o f exports and imports notwithstand­
ing the substantial increase in grain shipments in the
later months. This is shown by the follow in g table,
which compares the percentages of various m ajor groups
o f commodities to the total exports and imports in
recent years and in 1913.
Im ports
Com m odity Group

Exports

1913 1922 1923 1924 1913

1923 1924

Foodstuff's in crude condition and food
animals..................................................
Foodstuffs partly or wholly prepared.
Crude materials for use in manufacturing
Manufactures for further use in manu­
facturing ....................................................
Manufactures ready for con sum ption...
All com m odities.......................................

9
13
29
14
35

100 100 100 100 100 100 100 100

Production
Further marked increase in production occurred in
most m anufacturing industries in January.
In the iron and steel industry 23 additional blast
furnaces were blown in, and average daily production o f
pig iron and steel increased almost to the exceptionally
high levels o f last March. Despite this activity, unfilled
orders o f the Steel Corporation increased 221,000 tons
to the highest since A ugust 1923. In February new
(Computed trend of past years—100 Per cent.)
1924

1925

Jan.
Producers’ Goods
Pig iron ...........................................................
Steel ingots....................................................
Bituminous co a l..........................................
Copper, U. S. m ines....................................
Tin deliveries............................................
Z in c..................................................................
Petroleum ......................................................
Gas and fuel o il............................................
Cotton consum ption....................................
Woolen mill a ctiv ity *.................................
C em ent............................................................
Lum ber...........................................................
Leather, sole..................................................
Consumers' Goods
Cattle slaughtered.......................................
Calves slaughtered.......................................
Sheep slaughtered........................................
Hogs slaughtered.........................................
Sugar meltings, U. S. p orts.......................
Wheat flour...................................................
C igars..............................................................
Cigarettes.......................................................
Tobacco, m anufactured..............................
Gasoline..........................................................
T ires*..............................................................
Newsprint......................................................
Paper, to ta l...................................................
Boots and shoes............................................
Anthracite coa l.............................................
Automobile, a ll.............................................
Automobile, passenger................................
Automobile, truck........................................

p=>Preliminary
r » Revised




N ov.

Dec.

76
90r
89
113
124
97 r
118
100
87
98
123r
116
81

92
112r
98
109
75
105r
116
107
92
100
126r
122
87

Indexes of Business A ctivity
Indexes o f trade and general business activity showed,
as a rule, further advances in January. Bank debits in
140 centers outside o f New Y ork City were larger than
in any previous month, notwithstanding that a decline
usually occurs from December, and this ban k ’s index
advanced to 12 per cent, above the com puted trend, the
highest since M ay 1923.
Railway loadings o f revenue freight throughout the
country in the first six weeks o f the year were over
3 per cent, above the corresponding period a year ago.
Increases occurred in every district except the eastern
and were particularly marked in merchandise and mis­
cellaneous loadings in the western districts. The follow ­
ing table gives this ban k ’s indexes, after allowance fo r
seasonal variation and, where necessary, fo r price
changes.
(Computed trend of past years=100 Per cent.)

Jan.

94
lO lr
108
111
91
lOOr
126
109
95
94
148r
137
84

buying failed to keep pace with output, and while calls
fo r delivery on old orders raised mill operations to over
90 per cent, o f capacity early in February, the rate o f
operations tended to decrease later in the month.
A further increase o f nearly 58,000 bales in m ill con­
sumption o f cotton in January raised this ban k’s index
to within 5 per cent, o f computed normal, the highest
since November 1923, and woolen m ill activity was also
at a relatively high level. Output o f bituminous coal
and cement was larger than in any previous January.
In the automobile industry, on the other hand, passenger
car production, while larger than in December, fell 29
per cent, below January o f last year. The truck output
was also larger than in December but smaller than a
year ago.
The foregoing table gives fo r recent months this
ban k’s indexes o f production in percentages o f the com­
puted trend, after allowance fo r seasonal variation.

102
113r
109
i30
97r
*96
98p
145r

1924
Jan.
Primary Distribution
C ar loadings, merchandise and m is c . . . .
C ar loadings, o th e r................... ..................
Wholesale trade, Second D is t r ic t.............
E x p o rts ...........................................................
Im p o rts ...........................................................
G rain e xpo rts................................................
Panama C anal tr a ffic ..................................

Distribution to Consumer
106
145
92
113
90
99r
98r
99
115
125
144
109
100
79
97
142
139
152

104
146
77
110
91
9Or
lO lr
69
93
120
158
107
96
81
78
110
112
104

109
174
81
119
110
lO lr
lOOr
84
98
133
165
106
102
79
86
97
92
118

* = Seasonal variation not allowed for

110
149
83
112
i03r
102r
90
111
i09
77p
90
lOOp
94p
122p

D ep a rtm e n t store sales, Second D is tric t.
C hain store sales...........................................
M a il order sales............................................
L ife insurance paid fo r ................................
M agazine a d v e rtis in g ..................................
Newspaper a d v e rtis in g ...............................
General Business Activity
B a n k debits, outside of N ew Y o rk C ity .
B a n k debits, N ew Y o rk C it y ...................
V e lo c ity of bank deposits, outside of
New Y o rk C it y ........................................
V e lo city of b ank deposits, New Y o rk
C it y .........................................................
Postal receipts..........................................
E le c tric p ow e r..................................
E m p lo ym e n t, N . Y . State fa c to rie s ...
Business fa ilu re s .......................................

p=»Preliminary

r= Revised
»

101

N ov.

Dec.

Jan.

102

103

104
113
96
96p
112p

108
105

105
91

62
146

119
106

88
100

99r
92
92
103
97
96

101

104

1925

102
101

110

93
89
108
93

120

104r
97
90
107
99
92

103r
99
104
125
98
92

99

104
118

110

97 r
92
98
98
92

112
122

lOOr

94r

92r

lO lr

llO r

106r
94
lOOr
91

107r
103
107r
91

111 r
98

101

105r
99
91

102

111

92
98

MONTHLY REVIEW, M ARCH 1, 1925

6

(1913=100 Per cent.)

E m p lo y m e n t a n d W a g e s

F actory employment in January declined slightly in
New Y ork State, in accordance with the seasonal ten­
dency, but fo r the country as a whole increased about
1 per cent, to the highest point since May. Both in
New Y ork State and fo r the country generally, the fig­
ures continued considerably below a year ago, and while
a shortage of skilled mechanics was reported in a few
localities, there continued to be a surplus o f unskilled
and semi-skilled labor. In contrast, production in basic
industries reached levels substantially higher than a
year ago, and while the figures do not cover precisely
the same establishments an increase in the output of
goods per worker appears to be indicated. The follow ­
ing table compares indexes of factory employment and
production in basic industries in January with recent
years, and indicates also the relative position o f wages
and wholesale prices.
(191 9 -1 00 Per cent.)
Jan. 1923
Production (F. R. B. In d ex )...............................
Em ploym ent (F. R. B. Ind ex)...........................
Wages (N. Y . State Factories)...........................
C om m odity Prices (U. S. Dept, of L a b or). . . .

Jan. 1924

Jan. 1925

121
99
112
76

120
98
118
73

126p
93
120
78

p=-Preliminary

W age reductions in the cotton industry and to a
limited extent in the iron and steel industry were re­
ported in other districts, but in general wage scales held
steady. Total payrolls and average weekly earnings,
however, were reduced somewhat by time out fo r factory
inventory and repair work.

Percentage Change from
Com m odity Group
Jan.
1925

June
1924

Jan.
1924

Farm products...........................................
F o o d s............................................................
Cloths and clothing..................................
Fuel and lighting.......................................
Metals and metal products.....................
Building m aterials....................................
Chemicals and drugs................................
House furnishings......................................
M iscellaneous.............................................

163.4
159.8
191.1
167.9
136.3
179.3
135.2
172.6
127.1

+ 2 1 .9
+ 1 7 .8
+ 2 .1
— 3 .9
+ 3 .1
+ 3 .8
+ 6 .8
+ 0 .5
+ 1 4 .4

+ 1 3 .5
+ 1 1 .7
— 4 .4
— 0 .7
— 4 .0
— 0 .9
+ 2 .4
— 1 .9
+ 8 .6

All com m odities....................................

160.0

+ 1 0 .7

+ 6 .0

D uring the first three weeks o f February reactions
from the January high levels were general among basic
commodities. Due, however, to increases in prices o f
hogs, petroleum, and silk, this ban k ’s weekly index o f
20 basic commodities remained approxim ately at the
January high level.
The follow ing diagram, com paring recent price move­
ments in Great Britain and the United States, indicates
some downward tendency recently in England, reflecting
the rise in sterling exchange in January. A large part
o f the spread, however, which developed between price
levels in the two countries, follow in g the fall in sterling
a year ago, remains.
PERCENT,

Building
Building contracts awarded throughout the country
in January, while 10 per cent, smaller than in Decem­
ber, were practically equal to the exceptionally large
figures o f last year. Contemplated new work, as re­
ported by the F . W . D odge Corporation, and permits
issued in leading cities, were also close to the 1924
totals.
Building materials prices advanced in January, and
according to the Department o f L a b or’s index were
6 per cent, higher than last summer, though slightly
lower than a year ago. B uilding wages continued gen­
erally unchanged.

Com m odity Prices
Further rise of 2 per cent, in the Department of
L a b or’s index of wholesale prices occurred in January
and brought the index to the highest level since 1921.
A s over the past six months, this advance was due largely
to rise in farm products and foods. The follow ing table,
showing recent tendencies in the various commodity
groups, indicates that as compared with last June most
o f the advance has been in commodities which had been
below the general average, while com pared with January
last year, all groups but fou r show actual decreases.




Department of Labor Index of Wholesale Prices in the United
States and the Economist Index of Prices in Engand.
(Latest figures, January. 1913 average = 100 Per cent).)

Business Profits
Available financial statements o f 102 important manu­
factu ring and distributing concerns fo r 1924 reveal a
substantial decrease in aggregate net profits com pared
with 1923, due to smaller profits in the steel and railroad
equipment, and textile and clothing industries. In the
case o f motor and accessory companies, not included in
the list, owing to delay in publication o f annual state­
ments, figures fo r 9 months also indicate substantially
smaller profits than in 1923. Other groups o f industrial
and merchandising companies included in the list, on
the other hand, showed little change or had profits some­
what larger than last year.

7

FEDERAL RESERVE AGENT A T NEW Y O R K

Net profits of public utility companies, both telephone
and other utilities, continued the increase which has been
in progress since 1918. Earnings o f Class I railroads
continued at the relatively high level reached in 1923,
notwithstanding a decline o f about 7 per cent, in traffic,
which was offset by economies in operation.
(Net Profits in r Millions of Dollars)

Group
Steel and railroad equipment___
Oils....................................................
Food and food products...............
Clothing (inc. leather & textiles)
T ob a cco............................................
Miscellaneous industrials.............
Stores................................................

N o. of
Corpo­ 1917 1918 1919 1920 1921 1922 1923 1924
rations
16
9

12
1
1

7
37

Total 7 groups............................

10
102

Telephone........................................
Other public utilities.....................

310 198
17
13
53
65
52
41
28
29
133 108
41
37

130 162
17
18
55
57
59
6
33
30
78
75
25
56

175 123
12 13
75 75
35 17
49 56
93 95
65 68

647 478 427 374

172 347 504 447

70
27

107
46

Total public utilities.................

97

125 113

120

Total 9 groups .........................

199

772 591

547 501

Class I railroads.............................

192

934 639 516

127

126
71

136 150p
84 96

153

197

220 246

325 544 724 693

58 616 777 984 987

♦Deficit
p —Preliminary

the sales figures, the comparative merchandise stocks fo r
January in 1925 and 1924, in fou r lines from which a
representative number o f reports was obtained. A s in­
dicated in the table, stocks held by cotton jobbers and
shoe dealers are running considerably below last year,
while those o f dealers in groceries and jew elry and dia­
monds are higher than a year ago.

D epartm ent Store Business
January sales o f 79 leading department stores in
this district averaged 1.4 per cent, larger than a year
ago, which is less than the usual year to year increase.
More than half o f the reports, especially those from the
smaller stores, showed a decrease in sales com pared with
last year. W liile apparel stores reported a substantial
increase, this was due, as in recent months, to store
expansion during the year.
Department store stocks o f merchandise on hand on
January 31 showed about the same increase over a year
ago as did sales. The average amount o f the individual
sales transaction was $2.87, the same as in January 1924.
The follow ing table compares January sales and stocks
in the various localities in the district with those o f a
year ago.

W holesale Trade
January sales in most o f the reporting lines of whole­
sale trade in this district fell below those o f January
1924. A s the aggregate sales last year, however, were
fairly large, this ban k ’s index, which allows fo r price
changes and seasonal variation, advanced 3 points from
the December figure to 96 per cent, of the com puted
trend or normal.
Commission house sales o f cotton goods, which were
unusually low last year, increased 18 per cent., and in­
creases occurred also in silk goods, w om en’s dresses,
m en ’s clothing, and paper. Reductions, on the other
hand, ranging from 4 to 27 per cent., occurred in gro­
ceries, w om en’s coats and suits, stationery, machine tools,
shoes, and job bers’ sales of cotton goods.
Beginning with January this bank has undertaken the
collection o f stock figures in certain lines of wholesale
trade, and the follow ing table gives, in conjunction with
January 1925 Sales
C omm odity

Stocks on
Jan. 31, 1925

Percentage
Percentage
Change
Change
from
from
December 1924 January 1924

— 6 .5
— 54.7
+ 7 .6
— 14.7
— 6 .5
+ 8 2 .9
+ 3 .0
— 19.9
— 1'5.8
— 2 6.5

+ 1 8 .4
+ 5 .9
+ 4 .9
+ 2 .6
+ 1 .8
+ 0 .2
— 0 .6
— 1.1
— 1 .8
— 4 .4
— 5 .3
— 7 .4
— 14.9
— 16.3
— 26.7

Weighted A verage.............

+ 6 .5

— 4 .9

— 6 .6
+ 7 7 .0
+ 1 8 .0
+ 3 0 .6

+ 6.6

+i4'.3
— is! 4
— i9!9

Percentage Change
in Stock
January 31, 1924
to
January 31, 1925

R ochester......................................................
Syracuse........................................................
N ewark..........................................................
Bridgeport....................................................
Elsewhere.....................................................
Northern New York State...................
Central New York S tate......................
Southern New York S ta te...................
Hudson River Valley D istrict.............
Capital D istrict......................................

+
+
+
—
+
+
+
—
—
+
—
+

0 .7
4 .6
4 .5
0 .2
2 .8
1.1
1 .2
5 .1
6 .3
4 .4
6 .8
9 .4

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

All department stores................................

+

1.4

+

Apparel stores..............................................
Mail order houses.......................................

+ 1 3 .3
+ 1 0 .7

1.5

+ 4 6 .3

The chief increases in sales by departments were in
shoes, cotton and linen goods, furniture and home fu r ­
nishings, w om en’s apparel, and toilet articles and drugs.
Changes in sales and stocks in these and other depart­
ments are shown in the table follow ing.

Percentage
Change
from
Jan. 31, 1924

Cotton— Commission houses
W omen’s dresses.....................
Silk good s.................................
M en’s clothing........................
Paper.........................................
Diam onds.................................
Jewelry......................................
D rugs........................................
Hardware.................................
Groceries..................... . ..........
W om en’s coat* and suits----Stationery................................
Shoes.........................................
Machine tools.........................
C otton— Jobbers....................




Percentage Change
in Sales
January 1924
to
January 1925

Percentage Change
in Sales
January 1924
to
January 1925
Shoes..............................................................
Cotton good s ...............................................
F urniture.....................................................
W om en’s and Misses’ ready-to-wear. . .
Toilet articles and drugs...........................
Linens and handkerchiefs.........................
Home furnishings........................................
M en’s furnishings.......................................
W om en’s accessories..................................
Woolen goods...............................................
H osiery..........................................................
Silk good s.....................................................
Silverware and jew elry..............................
Books and stationery................................
M en’s and boys’ wear................................
Miscellaneous...............................................

Percentage Change
in Stock
January 31, 1924
to
January 31, 1925

+ 2 4 .7
+ 1 4 .4
+ 1 2 .2
+ 1 0 .7
+ 8 .8
+ 8 .8
+ 5 .8
+ 4 .7
+ 2 .9
+ 2.1
+ 0 .2
— 2 .0
— 3 .5
— 7 .0
— 8 .9
— 3 .5

+ 1.1
— 2 .7
— 2 .9
+ 1 3 .8
+ 5 .7
— 1 .6
+ 4 .7
+ 1 0 .7
+ 7.1
— 15.1
— 3 .8
— 10.4
0
+ 1 0 .7
+ 1 1 .2
— 4 .2

(Extract from the Annual Report of this bank just issued.

Copies of the report will be furnished on request.)

Relation of Reserve B ank Loans and Investm ents to M o n ey M ark et M ovem ents
H E New Y ork money market is the leading money
market o f the country, the one that is central and
national in scope. A s such it is the market to
which gravitates the idle money o f other sections in the
effort to find employment and thus it becomes a pool o f
the cou n try’s surplus funds. A bank with funds on
hand which it is likely to need on a d a y ’s notice puts
these funds in the New Y ork money market. Many
large financial and industrial concerns do likewise. In
the market these funds are invested in short term se­
curities, such as short Government securities, short mu­
nicipal securities, bankers acceptances, or other short
obligations, or they are lent on a day to day basis as
call money, either to brokers to carry stocks and bonds
or to dealers in Government securities and bankers ac­
ceptances to carry their portfolios. Such obligations
involve a minimum o f risk and can usually be converted
into cash immediately. A s the funds so invested or lent
are needed from time to time, the securities are sold or
the loans called, thus making possible an immediate
withdrawal o f the funds.

in the same way as other money markets have access to
the Federal Reserve Banks o f their districts. In a rap­
idly changing market, like that o f New Y ork, which
employs surplus funds, the supply o f funds is never in
complete equilibrium with the demand. One week the
supply o f funds will be large and another week unusual
needs in some parts o f the country w ill draw off funds.
I f all o f these tem porary fluctuations in the supply o f
funds were reflected in changes in money rates the move­
ment o f rates would be wide and irregular. A s a matter
o f fact, any tem porary shortage o f funds in the market
is usually met by the use o f funds from the Federal
Reserve Bank. Similarly, when member banks are bor­
row ing at the Reserve Bank, a large excess o f funds
seldom occurs, because any available funds are generally
used to reduce or repay loans at the Reserve Bank.

Banks and industrial concerns all over the country
have funds em ployed in the New Y ork money market,
and there is a constant movement, to and fro, o f these
funds. Alm ost any sudden need fo r funds in any part
o f the country finds reflection in some withdrawal o f
funds from the New Y ork money market, while any
accumulation of funds in any part o f the country is apt
to result in an increase in the supply o f funds in the
New Y ork market. The New Y ork City banks as the
depositaries o f out-of-town banks and industrial con­
cerns are the principal agencies through which funds
reach or are withdrawn from the New Y ork money
market.

(1 ) Member banks whose reserves have been depleted
by withdrawals o f deposits or currency, or fo r any other
reason, may restore these reserves by discounting paper
at the Reserve Bank at its established discount rate. In
such transactions the initiative lies with the member
bank.

T

R e l a t io n

of

R eserve B a n k

to

M

oney

M arket

The Federal Reserve Bank o f New Y ork has two rela­
tions to the New Y ork money market.
In the first place it has certain mechanical relation­
ships. The Federal Reserve Bank furnishes the mechan­
ism by which currency is issued or retired, Government
securities are issued and redeemed, and by which funds
are transferred to and from all parts o f the country fo r
the Government and fo r member banks. Transfers o f
funds include not only direct telegraphic transfers, but
also the daily settlements made between New Y ork and
other sections fo r the immense volume o f checks either
deposited in or drawn upon the banks o f this district.
In fact, practically all financial transactions o f banks,
business houses, and the Government, between this dis­
trict and other districts, are reflected in wire transfers
or settlements made through this bank.
In the second place the Federal Reserve Bank o f New
Y ork is a credit reservoir to which, largely through the
member banks, the New Y ork money market has access,




H ow F e d e r a l R e s e r v e F u n d s R e a c h t h e M a r k e t
Funds from the Federal Reserve reservoir reach the
market mainly in fou r w a y s :

(2 ) Member banks, discount houses, bankers, and
others may obtain funds from the Reserve Bank from
time to time by selling to it bankers acceptances. The
immediate initiative in such transactions lies as a rule
not with the Reserve Bank but with the sellers, since the
Reserve Bank stands ready to purchase at its established
buying rate all offerings o f bankers acceptances that
carry not less than two good banking names and meet
certain other eligibility requirements.
(3 ) Dealers in short Government securities and bank­
ers acceptances, in addition to selling such securities
outright to the Reserve Bank, may obtain funds from
time to time by selling them to the Reserve Bank, at
established rates fo r this type o f transaction, under
agreement to repurchase them w ithin fifteen days. In
these transactions the immediate initiative is taken by
the dealers.
(4 ) The Reserve Bank may furnish funds directly to
the market by purchasing short Government or m unici­
pal securities, or may withdraw funds from the market
either by selling such securities or by not replacing them
when they mature. Transactions o f this nature are
ordinarily undertaken on the initiative o f the Reserve
Bank.
These fou r classes o f loans or investments constitute
the m ajor earning assets o f the Federal Reserve Bank,
and changes in money market conditions are prom ptly
reflected in one or more o f them.