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MONTHLY REVIEW o f C r e d it a n d B u s in e s s C o n d it io n s Second Federal Reserve District March 1,1928 Federal R eserve Bank, New Y ork Federal Reserve A gen t M o n e y M a r k e t in F eb ru a ry T H E tendency towards firmer money which became apparent in January continued into February and money rates reached a level generally equal to or above the rates prevailing a year ago, as indicated in the following table. M oney Rates at New York Feb. 28, 1927 Jan. 30, 1928 Feb. 28, 1928 Call m on ey................................................. Tim e money— 90 d a y ............................... Prime commercial paper......................... Bills— 90 day unendorsed........................ Treasury certificates and notes............. Maturing March 15.............................. M aturing June 1 5 ................................. Federal Reserve Bank of New Y ork— rediscount ra te....................................... Federal Reserve Bank of New York— buying rate for 90 day b ills................ *4- 4 y2 4 ^ -4 H 4 3 H -3 H *3J^-4H 4 3H 4 3M 3.45 3.37 3.20 3.30 4 3H 4 3% 3H 3M 3.00 3.15 *— Prevailing rate for preceding week. payrolls and lower commodity prices, approximately 160 million dollars of currency has been retired from circu lation in the past year. During that period, however, member bank reserve requirements, accompanying the rapid expansion of loans and investments, have in creased by about 160 millions, so that the total demand for reserve funds is about the same as a year ago. Gold movements and production and Federal Reserve credit are the two chief sources of reserve funds. The third section of the diagram shows that, as a result of the substantial earmarking and export movement last autumn, the gold stock of the country is now about 220 millions smaller than a year ago. In order to cover this gold loss, the Federal Reserve Banks have been called upon to extend about 230 million dollars of credit more than a year ago. The form in which this Reserve Bank credit has been supplied has been changing gradually during the past month; some further reduction of Re serve Bank security holdings early in the month has been followed by a corresponding increase in member bank borrowing, as has also the maturing of acceptances from Reserve Bank holdings, though these holdings are larger than a year ago. It has thus become evident that the ease in money rates which prevailed last autumn has passed. An increase in the discount rates of all the Reserve Banks during February from 3 % to 4 per cent, has been a factor in this change but in addition an analysis of the demand for and supply of reserve funds reveals impor tant changes from the situation of a year ago which are shown in the diagram below. The principal sources of demand for reserve funds are currency circulation and the reserve requirements of commercial banks. Accompanying reduced industrial The principal change during the month in commercial bank credit has been a substantial reduction in loans on securities. The accompanying diagram shows that loans BILLIONSof.'DOLLARS BiLUONS fDOLLARS BILLIONScfDOLLARS 4.8 1.6 BULLIONS<fDOLLARS 2.6 C h a n g e s in M e m b er 4.6 1.4 s!9Zd 1 J 1 m e, 1.2 4.4 1926 mi 2.2 C r e d it 1927 r 2.4 \ B a n k 1.0- 4.2 wri/1/V V 1917 J y •* I V 2.0 MEMBE fc BANK RESE RVES J F MA M J J A S O N D 4.0 u. 5. GOLD i STOCK J F M A M J t o t a l :3ILL5 & 3ECURH !ES A LL F.R.B ANKS J A 5 O N D J F M A M J Principal Sources o f Demand for and Supply o f R eserve Funds at the Beginning o f 1928 Compared with 1927 (February 1928 figures p a rtly estim ated). J 18 MONTHLY REVIEW, MARCH 1, 1928 BILLIONSofPOLLARS C o m m e r c ia l P a p e r M a r k e t Av J . / w+ * * *V v . f LOANS TVCCUSTOMERS ONSTOCKS 6 BONDS jJ F* u. I J BROKERS LOANS The amount of commercial paper outstanding through 25 dealers showed an increase of 4 per cent during January, in accordance with the usual seasonal tendency, and, at $577,000,000 on January 31, was 5 per cent larger than a year ago. In February, the market was moderately active considering the somewhat limited supply of new paper that was created, and dealers gen erally reported that the bank investment demand fully and quickly absorbed their offerings. Paper of the large well known concerns continued to sell readily at 4 per cent; other good names were sold on occasions at 4*4 per cent. D isc o u n t R a te s A b ro a d - ^ l i 1 1926 ... .1 . l ....i____ 1927 ? i i 19Z8 Loans to Brokers and Dealers in Securities Placed by New Y ork City Reporting Banks, and Estimated Loans Directly to Customers by All Reporting Member Banks. to brokers and dealers in securities placed by New York City banks for their own account and for correspond ents, after advancing to a new high level early in Feb ruary, declined 90 millions in the third week of the month, accompanying reductions in security prices, though they remained nearly 970 millions higher than a year ago. The diagram also indicates that direct loans to customers on stocks and bonds have been declining rather steadily since the first of the year. During the first two weeks of February the amount of these loans by all reporting member banks was reduced more than 100 millions, making a total reduction from the high point at the beginning of the year of nearly 270 millions. In the third week of February, however, an increase of 44 millions occurred, but the volume of such loans re mained the smallest since last May. Commercial loans made by reporting banks both in this district and in other districts showed the beginning of the seasonal expansion from the first week of Feb ruary, several weeks earlier than last year. Conse quently, the volume of these commercial loans, which at the end of December was about the same as a year ago, on February 21 was about 100 millions larger than on the corresponding date last year. B il l M a r k et Following the increase in the discount rate of the New York Reserve Bank, and also in the bank’s buying rates for bills early in February, open market bill rates were generally advanced an additional % per cent, bringing the offering rate for the 90 day maturity temporarily to 3 % per cent, or % per cent higher than a month earlier and the highest since last July. A greatly in creased demand soon developed, from foreign funds seeking investment, so that dealers’ rates for the 60 and 90 day maturities quickly reverted to 3 % and 3 % per cent respectively, the rates which had prevailed just before the Federal Reserve discount rate change, and dealers’ portfolios were reduced to the lowest levels since last July. The only change in foreign central bank rates during February was the advance by the Norges Bank on the 2nd of the month to 6 per cent from the 5 per cent rate which had been in effect since November 1, 1927. A similar advance from 5 to 6 per cent was made two years ago in January and remained in force until the middle of April that year. The discount rates of central banks in the principal countries are now as follows: Per cent Countries 3 y2 France, Sweden, Switzerland 4 Java, United States 4% England, Netherlands 5 Belgium, Czecho-Slovakia, Denmark, Spain 5% Japan 6 Austria, Finland, Hungary, Jugo-Slavia, Norway, Roumania, South Africa 7 Germany, India, Italy 8 Poland, Portugal, Russia 10 Bulgaria, Greece F oreign E x ch a n g e The gradual strengthening of sterling, which brought it on February 23 nearly to the high point of the year, was a feature of the foreign exchange market during the month. This firmness was shared only by German marks, which rose to 23.88 cents. French, Italian, Danish, Nor wegian, Argentine, and Brazilian rates showed little change from last month, and other currencies continued the decline begun in January. Dutch guilders eased gradually to 40.18 cents, Swedish kronor were quoted at 26.84 cents during most of the month, and Swiss francs at 19.23 cents. Spanish quotations showed wide fluctuations falling from 17.13 cents to 16.91 cents. Canadian dollars went to a discount of 25/128 of a cent and the shipment of gold to this country was re sumed. The Far Eastern exchanges were also generally weak. The rupee dropped to 36.31 cents, but advanced later to 36.44. The yen which had reached 46.94 cents in January, ranged from 46.77 cents, downward to 46.65 cents. Chinese rates, after falling to 49.63 cents for Hong Kong taels and 62.63 for Shanghai taels, recovered to 49.88 cents and 63.38 cents respeetively. Silver prices showed a similar trend, reaching 57.38 after a decline to 56.63 cents. A slight firming of rates was i parent dur ing the closing days of the mon1 FEDERAL RESERVE AGENT AT NEW YORK G o ld Security M a rk e ts M ovem ent Gold movements at New York during February were appreciably smaller than for some months preceding. As the accompanying diagram shows, the heavy outflow of gold which accompanied the low money rates of last autumn has largely ceased, but, with foreign exchanges other than Canadian generally higher than a year ago, there has been no net inflow such as occurred in the early part of 1927. Following a temporary rally early in February, stock prices in the third week of the month showed the largest decline since last October. During this reaction, which is shown in the accompanying diagram, representative industrial stock averages declined about 5 points, and railroad averages at least 2 points. In the final week of the month price movements were highly irregular and the volume of trading declined considerably. P R IC E 1919 1920 192! 19 1922 19Z5 IN D E X 1924 1925 1926 1927 19 26 M onthly Net Gold Exports or Im ports o f the United States (February 1928 .partly estim ated). Imports during the month of February totaled $13,200,000, which included $7,400,000 from Canada and $5,200,000 from Russia. Exports totaled $24,600,000 of which Argentina received $12,000,000, France $7,500,000, Uruguay $3,000,000, and Venezuela $1,300,000, while smaller amounts went to Mexico, Germany, and India. The net export of $11,400,000 was in part offset by the release of $3,000,000 of gold held under earmark, making the net loss about $8,400,000. Final figures for the country for January show ex ports of $52,100,000. The only large shipment in addi tion to those previously reported for the New York and St. Lawrence districts was $1,000,000 to Hong Kong. Imports totaled $38,300,000, of which $36,760,000 came from Canada. The export balance of $13,800,000 was reduced by the net release of $5,500,000 from earmark; so that the net loss of gold for the month was $8,300,000. The principal receipts and shipments of gold during January and February are summarized below. January 1-February 29, 1928* Source or Destination Net Imports Net Exports $31,800,000 $44,100,000 ‘ii,800,666’ ' 15,000,000 4.000.000 6.000.000 5,200,000 2,000,000 1.900.000 1.400.000 *— February figures are for New York and St. Lawrence districts only. Prices o f 223 Stocks (Standard Statistics Company Index) and o f 40 Dom estic Bonds (New York Times A vera ge). The lower line in the diagram indicates that corpora tion bond prices were maintained at high levels until the latter part of February, when a slight decline oc curred. In the foreign list, price movements were similar— a large number of active issues established new high points in the first half of the month but subse quently eased slightly. Liberty Loan bonds showed only minor fluctuations, and the four long-term Treasury issues recovered about one-half of the loss sustained in the last half of January, but still were quoted at prices ranging from M> to 1 point below the high levels of the first weeks of January. A moderately large volume of new securities was offered during February. The total was somewhat larger than for January, but offerings continued to be below last year’s volume, and the total amount of new financ ing in the first two months of this year was about $250,000,000, or 14 per cent smaller than in the corre sponding period last year. The month was featured by a number of stock issues of industrial and public utility companies, the total of which was about $85,000,000. Foreign financing during the month represented largely the refunding at lower coupon rates of bond issues floated several years ago carrying 6^/2 to 8 per cent coupons. Among these refunding issues were three large South American issues, a Republic of Finland issue, and a French railroad issue. MONTHLY REVIEW, MARCH 1, 1928 20 E m p lo y m e n t Reports from employment and relief agencies indicate some increase during the past month in the number of workers unemployed, and there appears in fact to be more serious unemployment in this district than at any time since 1921. In interpreting this statement it should, however, be noted that the recent reduction in business activity is the only important reduction since 1921, except for a reduction in 1924 which occurred in midsummer and partly for that reason was not accom panied by as extensive unemployment. Some light on the character and causes of present un employment is thrown by a survey recently made by the New York State Industrial Commissioner. This survey indicates that a considerable part of the unemployment in New York City is due to an influx of non-residents, some of which probably represents the usual migration to the city of men engaged at other times of the year in farm work, or road building and other construction work, and some of which probably arises from the cur tailment of manufacturing and coal mining in nearby states. Due to the mild winter there has been a much smaller amount of snow shoveling and other temporary work to give employment to casual labor of this sort. Reports of relief agencies indicate that the present un employment is more largely among migratory casual labor than among permanent residents. The increase in the needs for family relief has been considerably smaller than the increase in the care for homeless men. Some unemployment of residents is attributed to the poor season which has been experienced by the garment trades. In nearly all cities of New York State more than the usual seasonal unemployment among building PER CENT workers is reported; although the total of building con tracts has remained large, a considerable part of the new projects has been of a type that provides little work for building craftsmen. Evidence of the present scarcity of work appears in the ratio of orders for workers to applications for em ployment at New York State employment offices, which is shown in the first of the accompanying diagrams. The ratios shown in this diagram cannot be taken as an accu rate measure of employment opportunities, but serve as an indicator of the general tendencies; in January for the first time since the records were started in 1916, there were more than two applicants for each available job, but this does not show the real extent of unem ployment, because of the fact that many of the jobless do not register when there appears to be little chance of obtaining work. In the first three weeks of February the labor demand ratio declined even further, but the decline is attributed to an increase in the numjber of applications for work, due to the publicity given to the State ’s inquiry and discussion of relief measures, rather than to a further reduction in the amount of work available. The second diagram indicates that a further reduction in factory employment occurred in January, and indi cates further that in the past nine years factory em ployment has failed to expand in proportion to the increase in factory production by a wide margin. The lines in this diagram represent the Federal Reserve Board’s indexes of factory employment and of produc tion in leading manufacturing industries. Both series are based on partial representations of manufacturing, not identical for the two series, but the complete census of manufactures which is taken every two years supports PER CENT RY PRCm e n FA C TO > \J\ !\ / \ ./ v* / \ / Aj • V 1 / J I Vv \ j / V\ \ \ V *. » \; / FACTO,R Y E M )DLOYML: N T v \ r* 1^___ _ 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 R atio o f W orkers Called for to Registrations for Employment at New York State Employment O ffices. Factory Production and Factory Employment since 1919, Ad justed for Seasonal Variations (1919 average = IOO per cen t). FEDERAL RESERVE AGENT AT NEW YORK the conclusion that, through efficiencies of one sort or another, factory output per worker has been increased and thus the same or larger output achieved with a reduced number of workers. In the absence of any considerable amount of unemployment until recent months, it has been evident, however, that the reduced opportunities for employment in factories have been largely offset by increased opportunities for employment in other lines such as building, the radio industry, and automobile service and filling stations, and it seems probable that recent unemployment reflects temporary conditions in manufacturing, mining, and building more largely than this longer time tendency. curtailment in the production of cotton goods which began in December continued throughout February. Production and sales of silk goods, however, were re ported to be continuing at the high level of January. This bank’s indexes of production, which are adjusted for seasonal variations and for year-to-year growth, are shown below. (Computed trend of past years= 100 per cent) 1927 1928 Jan. Production in leading industries showed an increase in January after allowance for the usual seasonal varia tion, and, for the first time since last June, reached a level about the same as that of the preceding year. The outstanding features of the month were large increases in the production of automobiles, tires, and steel ingots and in silk consumption. While these were exceptional cases, some increase seems to have been rather general; of the 30 production indexes now available, only 8 showed declines for the month, while 17 advanced. In February, steel mill operations were expanded fur ther, but the rate of increase diminished considerably toward the end of the month, and purchases also slack ened. The number employed in Detroit factories con tinued to increase, though at a slower rate, and remained larger than last year, but was nearly 40,000 below the level of February 1926; and it was reported that the increase in automobile production had not been so large as was predicted at the first of the year. The Jan. N ov. Dec. 104 99 98 118 95 125 119 111 105 97r 109 112 102 108 91 124 99 107 88 84 108 82 96 117 116 78 91 97r 102 106 100 99 110 120 103r 100 91 94 97 66 90 115 114 79 93 98r 97 100 102 75 104r 129 101 100 87 100 106 105 95 97 69 94 106 107 96 103 102 101 90 106 103 136 85 97 104 95 96 106 87 98 103 100 102 93 102 106 96 101 50 71 89 87 103 100 93 77 110 99 119 99 84 94 102 101 91 99 54 86r Producers’ Goods Steel ingots.................................................... Cotton consum ption.................................... Cotton m ovem ent........................................ W oolen mill a ctivity*.................................. Silk consum ption*........................................ P rod u ction 21 Bituminous co a l............................................ Copper, U. S. m ines.................................... Tin deliveries................................................. Leather sole.................................................. Paper to ta l.................................................... Consumers' Goods Hogs slaughtered.......................................... Cattle slaughtered........................................ Sheep slaughtered......................................... Calves slaughtered....................................... Farm produce shipped................................ W heat receipts.............................................. Corn receipts................................................. W heat flour.................................................... Sugar meltings U. S. p orts....................... Anthracite co a l............................................. Printing a ctiv ity........................................... T obacco products......................................... Boots and shoes............................................ Automobile passenger................................ Automobile truck........................................ ♦“ Seasonal variation not allowed for. p=Prelim inary 95 101 94 67 89p 131 84 99 98p 97 100 90 90 97 142 99p 104p 103 89 108 95 io i 112 *84 89 io s 91p 109p 100 88 r=*Revised thousands • OFCARS 400 300 A aA 1 / 200TV too/ 0n9ZZ \ 1923 1924 A l)l\ n \f ) 1 1925 1 1 9 2 .6 \ \ 1927 1928 1 M onthly Production o f Passenger Automobiles in the United States. M onthly Production o f Steel Ingots in the United States and Unfilled Orders o f the U. S. Steel Corporation. 22 MONTHLY REVIEW, MARCH 1, 1928 F o r e ig n T r a d e In dexes o f B usiness A c tiv ity Exports of merchandise increased slightly from De cember to January, contrary to the usual seasonal ten dency, and with a value of $411,000,000, were close to the average for January in the past four years. Imports of $338,000,000 showed the usual small increase, but were the smallest for the month of January since 1924. Cotton exports declined further in January, but were nearly equal in value to those of a year ago, although the quantity was one-third smaller; grain shipments also showed a seasonal decline and were somewhat smaller than last year in value. Automobile exports, however, exceeded those of a year ago, both in number and in value. Crude rubber imports in January were much larger than in December and were second only to the unusually large imports of April 1927. The quantity of silk re ceived during the month remained somewhat smaller than a year ago, while coffee imports continued larger. After seasonal changes have been taken into consid eration it appears that primary distribution of goods recovered in January a part of the December decline, but remained considerably below the level of last year. In February average daily carloadings of merchandise and miscellaneous freight have shown about the usual seasonal increase, and loadings of bulk freight the usual decrease. Retail trade declined sharply in January even after allowance for the usual seasonal change; the index of department store sales was the lowest since last May, and other indexes of distribution to consumers showed rather substantial declines. January indexes of business activity in percentages of the computed trend, with allowance for seasonal varia tions, and, when necessary, for price changes, are com pared below with figures for recent months and a year ago. (Computed trend of past years =*100 per cent) 1927 1928 Jan. B u ild in g Construction contracts awarded during January in the 37 states east of the Rockies from which reports are received by the F. W . Dodge Corporation were 11 per cent larger than a year ago, and were the second largest for any January on record. A ll districts, with the ex ception of the Philadelphia and Pittsburgh districts, re ported substantial increases over last year. Residential building contracts were 15 per cent larger than a year ago, the largest increase since early in 1926, and projects for industrial, educational building, and public works and utilities also were larger than in January 1927. The increase in residential building was to a considerable extent concentrated in the Chicago and Boston districts. During the first half of February, the value of contracts awarded was slightly smaller than for the corresponding period of February 1927. In the New York and Northern New Jersey district, the percentage increase over January of last year was nearly as large as for all reporting districts combined, and the contract volume was slightly larger than in December, contrary to the usual seasonal tendency. All classes of construction work, excepting commercial build ing, were larger than last year, but the chief increase was in engineering and public works projects. Building permit values which largely exclude con struction of public works and engineering developments, also showed an increase in January. The S. W . Straus & Company report of building permits issued in 517 cities throughout the country, indicates a January total 8 per cent larger than a year ago, following continuous declines compared with the previous year in each month since February 1927. Jan. N ov. Dee. 106 105 90 114 88 97r 100 86 90 113 95 97r 95 86 78 104r 88 96r 102 93 85p 103p 85 104 99 101 96 103 100 106 103 105 102 106 100 108 104 107 119 107 97 99p 98 96 98 87 106r 123r 106r 134r 106r 138r 107 142 108 106 104 109 Shares sold on N .Y . Stock E xchanger.. . . Postal receipts............................................. Electric p ow er............................................. Employment in the United S tates......... Business failures.......................................... Building contracts...................................... New corporations formed in N. Y . S tate Real estate transfers.................................. 127 146r 94 103 100 101 127 114 97 135 179r 94 103 96 106 126 116 94 136 228r 98 102 95 108 138 116 95 140 234 88 General price levelr.................................... Composite index of wages......................... 170r 221 173r 220 174r 223 173 221 Primary Distribution Car loadings, merchandise and m iso___ Car loadings, oth er..................................... Panama Canal traffic................................. Wholesale trader......................................... Distribution to Consumer Department store sales, 2nd D ist........... Chain grocery sales.................................... Other chain store sales.............................. Mail order sales........................................... Life insurance paid f o r .............................. General Business Activity Bank debits, outside of N. Y . C it y r .. . . Bank debits. New York C ity r................. Velocity of bank deposits, outside of New York C it y ....................................... Velocity of bank deposits, New Y ork Preliminary *95 108 140 117 r —Revised D e p a r tm e n t Store T ra d e January sales of leading department stores in this district were 3 per cent smaller than a year ago, whereas there has been an average year-to-year increase of at least 4 per cent in recent years. Lower prices this year probably account for a part, but not all of the January decline. A s the following table shows, conditions varied considerably in the different localities within the district. Apparel store sales showed a substantial increase over FEDERAL RESERVE AGENT AT NEW YORK January 1927, and mail order houses continued to report somewhat larger sales than a year previous, though the increase was smaller in January than in December. Collections on charge accounts continued at a higher rate than a year ago in most localities for which an adequate number of reports were available. Stocks of merchandise at the end of January remained smaller than a year ago, but due to the relatively small sales, the rate of stock turnover for the month was slightly lower than in January 1927. Locality Percentage Change January 1928 from January 1927 Stock on hand end of month Net Sales New Y o r k ...................................... B uffalo............................................ R ochester....................................... Syracuse......................................... N ew ark........................................... B ridgeport..................................... Elsewhere....................................... Northern New Y ork S ta te ... Central New Y ork State. . . . Southern New Y ork S t a t e ... Hudson R iver Valley District Capital D istrict........................ Westchester D istrict............... — 4 .2 — 1.5 + 0.8 — — — + + 4 .1 0 .4 7 .9 5 .8 7 .4 — + — — 3 .4 4 .0 2 .3 9 .5 + 1.1 Per cent ofj Charge Accounts Outstanding December 31 Collected in January 1927 1928 4 7 .0 5 2.6 4 4.8 55.1 6 1.0 4 5.8 5 i ’. 7 49 '.7 37!4 39.4 0 — 7 .7 + 4 .2 +21.6 + 1 2 .9 All department stores................. — 3 .0 — 2 .5 4 8 .0 5 2.5 Apparel stores............................... Mail order houses........................ + 5 .0 + 3 .6 + 3 .9 4 5 .8 51.4 The following table indicates that among the principal departments shoe sales showed the largest increase over last year, while sales in most of the apparel and yardgoods departments showed decreases. Net Sales Stock on Hand Percentage Change Percentage Change January 1928 January 31, 1928 from January 1927 from Jan. 31, 1927 Shoes............... . .......................................... Books and stationery.............................. Hom e furnishings..................................... Luggage and other leather g ood s......... Toilet articles and drugs......................... H osiery........................................................ Toys and sporting good s........................ Linens and handkerchiefs....................... Furniture.................................................... W om en’s and Misses’ ready-to-wear. . W om en’s ready-to-wear accessories. . . Silverware and jew elry............................ Musical instruments and ra d io ............. M en’s furnishings..................................... Cotton good s............................................. Silks and velvets....................................... W oolen goods............................................. M en’s and boys’ wear.............................. Miscellaneous............................................. +10.2 + + + + + + 9 .3 7 .8 6 .7 5 .3 1 .7 1 .4 + 0.6 + 0 .5 — 0 .3 — 0 .9 — 2.1 — 2 .4 — 3 .3 — 3 .8 — 6.0 — 13.1 — 21.9 — 7 .0 + 1 5 .1 — 5 .8 + 5 .4 — 22.4 — 0 .3 + 6.6 — 4 .3 + 0.2 + 0.1 — 3 .4 — 0 .3 — 2 .4 — 51.7 + 0 .9 Percentage Change January 1928 from January 1927 T yp e of Store + 6 .9 — 17.2 +12.0 — 6 .3 Reports of leading chain store organizations, as well as department stores, indicated rather slow retail trade in January. Total sales in most lines continued larger than a year previous, but sales per store were smaller than in January 1927 in all lines except groceries. Variety stores continue to lead in the rate of growth, measured either by the increase in number of stores or Number of Stores T otal Sales Sales per Store + 7 .4 + 9 .4 + 3 .1 + 0 .8 + 8 .2 + 2 4 .6 + 8 .3 + 2 0 .4 + 7 .1 + 1 .2 — 6 .8 + 5 .5 + 2 1 .6 + 0 .9 + 1 2 .2 — 2 .2 — 1.9 — 7 .6 — 2 .5 — 2 .4 — 6 .8 + 7 .3 + 1 5 .5 + 7 .7 W h o le sa le T ra d e Total sales of reporting wholesale dealers in this dis trict were larger than a year previous in January for the first time since last August. The most important development was a large increase in orders for machine tools. In the past such an increase has usually preceded or accompanied an expansion of industrial activity. Substantial increases were reported also in sales of men’s clothing, drugs, and diamonds, and moderate in creases in cotton goods, silk goods, shoes, paper, and jewelry. Decreases continued to be reported in sales of groceries and hardware, but were the smallest in several months. Collections on outstanding accounts continued at about the same rates as a year ago. Stocks held by dealers in shoes, cotton goods, and jewelry and diamonds remained substantially larger than last year, but stocks of grocery, drug, and hardware dealers were somewhat smaller. Com m odity Percentage Change January 1928 from December 1927 Net Sales 0 C h a in Store Sales in total sales. The expansion in the number of units operated by grocery chains is proceeding somewhat less rapidly than a year ago, but the volume of business continues to show a large increase each month. Five and ten cent store, shoe, and candy chains have increased the number of stores considerably during the past year, but the increase in volume of sales in January was not correspondingly large. T o ta l............................................ — 3 .6 — 3 .3 23 — 4 .7 + 6 0.5 + 33.1 G roceries.................. M en’s clothing........ W om en’s dresses... W om en’s coats and suits...................... C otton goods— Job bers....................... C otton goods—C om mission ................. Silk goods................ Shoes......................... D rugs........................ Hardware................. Machine tools*. . . . S tationery................ P ap er........................ D iam onds................ Jewelry..................... — + — + — + — + + — 9 .9 3 0.3 4 0 .3 2 7.4 3 4.4 2 8.8 1 .5 5 .3 2 3 .7 6 4.2 W eighted Average.. + 1 9.8 Stock end of month — 2.8 N et Sales — 2 .9 + 1 7 .5 — 2 0.3 Stock end of month 1928 1927 — 10.5 7 2.8 4 9.8 7 3.0 52.2 + 1 4 .7 31.1 32.1 + 2 1 .1 — 1.3 — 4 .6 5 0.3 37.1 4 7.8 4 5.4 ’ 5 2 ‘.4 3 5.0 44.1 4 3.0 — 1.6 + 1 0 3 .9 — 16.6 Per cent of Accounts Outstanding December 31, Collected in January Percentage Change January 1928 from January 1927 + 6 .9 + 2 .3 — 6 .4 + 1 4 .6 + 1 3 .9 + 3 0 .9 + 2.8 + 3 .8 +10.2 — 3 .2 + 7 7 .6 — 9 .6 * 74. 8 69.4 + 2.1 — 4 .6 + 1 3 .6 + 5 .4 + 3 .8 ► + 5 .3 } 53,4 5 4.9 * Reported b y the National Machine T ool Builders’ Association. 73! 2 66.4 } 4 8.3 54.6 24 MONTHLY REVIEW, MARCH 1, 1928 Business Conditions in the United States (Summarized by the Federal Reserve Board) I NDUSTRIAL production and shipments of commodities by railroads increased considerably in January from the low point reached at the end of 1927. The general level of wholesale commodity prices showed a slight decline. P r o d u c t io n and Minerals, A djusted for Seasonal Vari ations (1923-25 average = 100 per cen t). The increase of 6 per cent in industrial production from December to January reflected a larger output of manufactures, particularly of iron and steel and automobiles. Daily average production of steel ingots increased by over 25 per cent in January— the largest monthly increase since 1924. Buying of steel products by the railroads, and by the automobile and construction industries was also active in January, and notwithstanding the large volume of production and shipments, unfilled orders showed an increase during the month. Since the first of February production of steel products has continued active with new orders and shipments more nearly in balance than in previous months. Automobile production, which in December was in smallest volume since 1922, increased considerably in January and was only slightly smaller than in the same month of the preceding year. Cotton consumption showed about the usual seasonal increase in January following substantial curtailment in December and the woolen and silk industries were somewhat more active than in December. Production of minerals, after adjustment for customary seasonal changes, was in practically the same volume in January as in December. Building contracts awarded in January exceeded those for the corresponding month of last year and awards during the first half of February were in practically the same volume as a year ago. T rade American Railway A ssociation, Adjusted for Seasonal Variations (1923-25 Sales of department stores showed more than the usual seasonal decline in January from the high levels reached in December and averaged slightly smaller than in January of last year. Sales of mail order houses, on the other hand, were about 6 per cent larger than a year ago. Wholesale trade in nine leading lines averaged larger than in January of last year. Stocks of groceries and hardware carried by wholesale firms were smaller than a year ago, but reports in other lines indicated that stocks were somewhat larger. Freight car loadings for all groups of commodities were larger in January than in December— the increase being particularly large for miscellaneous commodities. Compared with January of last year, however, loadings of all classes of commodities, except livestock, were smaller. P r ic e s The Bureau of Labor Statistics index number of wholesale commodity prices declined from 96.8 per cent of the 1926 average in December to 96.3 per cent in January. Prices of farm and hide and leather products increased, while prices of meats and dairy products, textiles, fuels, nonferrous metals, and rubber declined. During the first two weeks of February, prices of grains, cotton, silk, and wool advanced, while those of cattle, sugar, and rubber declined. B a n k C r e d it 1924 1925 1926 1927 1928 Reserve Bank Credits M onthly Averages o f Daily Figures for 12 Federal Reserve Banks (L atest figures are averages o f first 22 days in F ebruary). MONEY F?ATES IN N E.W YORK 5- 4-V A 11 ----J i V V \ J/ J ' V " -' , 3- \ • i V'-J ftp ! 'V — 1f? I w Z -------- v “ , _ — 0 ■ Commercial Paper fit ----fieserre>Bank Discoun Accept*ance Rote 1924- 1 1925 Weekly Rates in the New York Money Market. For the four weeks ended February 15 total loans and investments of member banks in leading cities showed a decline of more than $200,000,000, the decline being almost entirely in loans on securities. From the peak at the turn of the year this class of loans decreased by nearly $460,000,000. Loans for commercial purposes, after a further decline in January, showed a seasonal increase in the first two weeks of February. The decline in the volume of loans since the first of the year has been accompanied by a corresponding decline in net demand deposits, while time deposits have continued to increase. At the Reserve Banks the total volume of member bank borrowing declined seasonally during the opening weeks of the year and reached a low point on January 25, but increased by about $70,000,000 between that date and February 21. This increase in discounts accompanied smaller reductions in the Reserve Banks’ holdings of United States securities and acceptances, and the total volume of Reserve Bank credit in use showed an increase for the four weeks. During the four weeks ended February 21 a firmer tendency in the money market was indicated by increased rates on call and time loans and by a further increase from 3% per cent to 3% per cent in the rate on 90-day bankers acceptances. Between January 25 and February 21 discount rates at eleven Federal Reserve Banks were advanced from 3% to 4 per cent.
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