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M O N T H L Y R E V IE W
of Credit and Business Conditions
S e c o n d

F e d e r a l

R e s e r v e

March 1 , 1930

Federal Eeserve Bank, New York

Federal Eeserve Agent

M n y M rk t inF b u r
oe a e
e r ay
The movement toward a lower level of money rates
proceeded gradually in February. The principal
changes were a further reduction of Ys per cent in ac­
ceptance rates, following a reduction of similar amount
at the end of January; a reduction in rates on open mar­
ket commercial paper of % of one per cent; and the
most substantial reduction in the rates charged by large
New York City banks on commercial loans to their cus­
tomers which has been made since November. The rates
on customers’ loans reported at the middle of February
were 5 to 5% per cent in most cases, with a predominance
of the 5 per cent rate, whereas in January the prevailing
range had been 5*4 to 5 y2, with the 5 % per cent most
frequently indicated.
Stock Exchange call and time
money rates were little changed.
Money Rates at New York
Feb. 28, 1929 Jan. 31, 1930 Feb. 28, 1930
Stock Exchange call loans.......................
Stock Exchange 90 day loans.................
Prime commercial paper..........................
Bills— 90 day unindorsed.........................
Customers’ rates on commercial loans..
Treasury certificates
Maturing June 15 (yield)....................
Maturing September 15 (yield).........
Federal Reserve Bank of New York
rediscount rate.........................................
Federal Reserve Bank of New York
buying rate for 90 day bills.................

*6 M -io
7%
5X~S
A
5J<£
t5.50

*4-4 X
4%
4 % -5
3X
f5.41

*4-4 X

4 .4 5
4.67

3.72
3.85

2.98
3.24

3%
f5 .0 9

5

4x

4

5X

4

SH

* Range for preceding week
t Average rate of leading banks at middle of month

The way had been paved for these reductions in money
rates by rapid declines in member bank indebtedness
during the preceding months, and the movement was

accelerated by further reductions in the rediscount rates
of Federal Eeserve Banks. Borrowings of New York City
member banks from the Reserve Bank have been smaller
during the past month than at any time in the past three
years, and borrowings of member banks elsewhere
throughout the country declined in February to the
smallest amount since January 1928. A reduction in the
rediscount rate of the Federal Reserve Bank of New
York from 4 y 2 to 4 per cent was made on February 7,
and this was followed by corresponding reductions at
Chicago, Boston, and Kansas City. The Reserve Banks
of Richmond, Cleveland, Minneapolis, Dallas, and St.
Louis, which had retained 5 per cent discount rates until
February, reduced their rates to 4 Y2 per cent during
the mon^h.
Notwithstanding the decline in money rates, and the
fact that the position of member banks with respect to
indebtedness is more comfortable than at any time since
1927, there have been few indications of any pressure
of surplus funds seeking investment, and the weekly re­
ports received from member banks have indicated up
until the third week of the month a further contraction,
rather than expansion, of bank credit.
The diagram below shows the recent changes in the
principal classes of loans and investments of reporting
member banks, and the present position with reference to
the developments of recent years.
The first section
shows that in the case of security loans there has been
no evidence in February of a continuation of the Janu­
ary decline, which, in fact, represented largely a liquida­
tion of temporary year-end loans, and the present volume
of security loans remains close to the highest level
reached up to the time of the heavy credit demands on

B L N O DLAS
IL IO S F O L R
10V
m
.

B L N O DLAS
IL IO S F O L R
9 ---------1

___' —

9K

Ay
»A

1928

19

1929

V\

D is tr ic t

r-,

V
\1930
X

X

1929

1928

A/

\

/

---------

1930

v

/

1928

LOANS ON SECURITIES
______I______I____ J ___ __ I______I_____ I______I--------J F M A M J
J A S
O N D

73d

ER LOAIs
ALL OTfH
JS
-----i ..... _ i____t......... j ... I - „.! .. ------ 1
I
J F M A M J
J A S O N D

INVESTKrfENTS
..I . i
__
i . .r. ...
J F M A M J J

1
,

1 ... __ f._ Lu-v
A S O N D

Loans on Securities, All Other Loans, and Investments of Weekly Reporting Member Banks; 1930 Compared with 1929 and 192a.




18

MONTHLY REVIEW, MARCH 1, 1930

M
ILLIO S OF DOLLARS
N
the banks which occurred in connection with the break
in the stock market last October.
Other loans of the reporting banks, largely commer­
cial loans, the movement of which is indicated in the
second section of the diagram, have shown considerably
more than the usual seasonal liquidation in recent
months. Even excluding the unseasonal increase of late
October and November, which was probably related more
largely to the events in the security markets than to busi­
ness developments, the decline since early last October
has amounted to about 750 million dollars, a decline
much larger than the ordinary seasonal movement. The
reduction in business activity and in prices has prob­
ably been an important factor in this decline in loans.
The decline has continued in February when a seasonal
increase usually begins.
Although member banks are no longer under the pres­
sure of heavy indebtedness at the Reserve Bank, as they
were during much of the past two years, the reporting
clined from 4 % -5 per cent to 4 1 ^ -4 % per cent. Bank
banks have as yet made little increase in their invest­
investment demand at the lower range remained in the
ments. There was a moderate increase last November
same generally good volume that existed prior to the
following a substantial decline from July 1928 to Oc­
change, and the dealers reported a rather widespread
tober 1929, but since the first week of this year the
distribution of paper outside of New York City. New
tendency has been downward, rather than upward, ex­
paper coming into dealers’ hands about kept pace with
cept for the effect of the purchase of a $56,000,000 issue
the investment demand, but in the latter half of the
of Treasury bills in the third week of February. Con­
month it was reported that new supplies of the highest
sequently, the investments of these banks remain well
grade paper were rather more difficult to obtain, though
below their volume at the corresponding time in 1928
on the whole the creation of new paper continued in
or 1929.
fairly good volume.
B ill M arket
The more active market for commercial paper during
Following the rate reduction of Ys per cent effected
recent months has been accompanied by successive in­
by the dealers on January 31, open market bill rates were
creases in the amount of paper outstanding, dating back
reduced a further Ys Per cent on February 6, bringing
to last October. During February some of the paper
the offering rate for unendorsed 90 day bills to 3 % per
firms reported that their new purchases included names
cent. During the whole month of February, both the
of concerns which have not been in the market for many
demand for and the supply of bills were considerably
months, and that there were instances of the purchase
smaller than in January, but as the dealers’ purchases
° f notes of concerns which had never before utilized the
and sales approximately balanced, open market port­
facilities of the open market. The recent upturn in com­
folios of bills showed little net change for the month.
mercial paper outstandings is shown in the accompany­
Offerings of bills to the Reserve Bank by dealers and
banks were heavier after the reduction in the B ank’s ing diagram. Outstandings of 21 paper houses on Janu­
ary 31 reached $404,000,000, the largest amount since
buying rate for bills of 1-45 day maturity to 3 % per
February 1929; the increase over the December figure
cent on February 11, and the extension of that rate to
was 21 per cent, and the total increase from the low
bills of maturities up to 90 days on February 24. Total
level of last summer has amounted to 52 per cent.
System holdings of bills, however, showed only a small
increase for the month, as the excess of outright pur­
chases over maturities during this period was largely
Deposits in 30 representative savings banks, from
offset by a further decrease of bills held under repur­
which reports are received by this bank, showed a some­
chase agreements at the New York Reserve Bank.
what larger increase between the 10th of December and
The total volume of dollar acceptances outstanding
the 10th of February than has occurred in the corre­
declined $40,000,000 during January from the record
sponding period of recent years. This increase, as the
level reached at the end of 1929, but at $1,693,000,000
accompanying diagram shows, follows a substantial with­
on January 31, the amount was still $414,000,000 above
drawal of deposits from October to December, during
a year ago.
Seasonal declines in import and export
and following the decline in stock prices. A s a result of
transactions were offset to some extent by a continued
the renewed growth during the last two months, savings
expansion in the use of American acceptances in financ­
deposits in these banks on February 10 were for the first
ing shipments of goods between foreign countries and
time slightly above the previous high figure reached last
the storage of goods abroad.
July. The increase over a year ago is still smaller than
C ommercial P aper M arket
usual, however, due to the fact that deposits showed
The open market for commercial paper continued
unusually small increases or even decreases during most
active during the first week of February, and following
of 1929. The year-to-year increase between February
the reduction in the New York Reserve B ank’s discount
1929 and February 1930 was less than 1 per cent, as com­
rate, the prevailing offering range for prime paper depared with an average annual increase of about 5 Y2 per




S v g B n D p sits
a in s a k e o

FEDERAL RESERVE AGENT AT NEW YORK
MILLIONS OF DOLLARS

19

ever, was well under their parity of $0.0526.
The
Spanish peseta fell steadily from $0.1318 on February 1
to a low of $0.1228 on the 17th, and after slight recov­
ery dropped to $0.1227 on the 27th.
The Japanese yen remained below the gold point,
though it advanced irregularly from $0.4915 at the
month’s opening to $0.4920 on the 20th. The discount
on Canadian dollars was reduced from 1 1 /1 6 cents on
the 1st to % cent on the 24th; Argentine pesos con­
tinued their decline, dropping from around $0.90 at the
beginning of the month to around $0.86 at the close.

G ldM v mn
o oe e t

Deposits in 30 Representative Savings Banks in the Second Federal
Reserve District.

cent during the three preceding years,
Both the 15 representative savings banks in New York
City and the 15 banks elsewhere in the district more than
regained during the December to February period the
amounts of deposits lost in the previous two months.
The deposits of the reporting banks outside of New York
City, however, remained slightly below the total of a year
previous, whereas deposits of the New York City savings
banks, which at no time fell below the level of a year
previous, widened somewhat the increase over a year ago.

F r ig E c a g
oe n x h n e
The more active European exchanges were weak
throughout most of the first three weeks of February,
but were slightly firmer in the latter part of the month.
Sterling declined gradually from $ 4 .8 6 % on the 1st to
$4.85 3 1 /3 2 on the 19th, but was slightly higher there­
after. Following the reduction of the Bank of France
rate on January 31, French francs declined from
$0.0392 7 /1 6 on February 1st to $0.0391 on the 19th,
but recovered to $0.0391 3 /1 6 on the 27th. Reichsmarks
declined from $0.23891 on the 1st to $0.2385% on Feb­
/4
ruary 18, but made a partial recovery thereafter. Guild­
ers sold at $0.4012% on February 1, declined irregularly
to $0.4008^4: on the 15th, and after strengthening to
$ 0.4010% on the 24th declined to $0.4008% on the 27th.
Belgas fluctuated between $0.13921 on February 1 and
/4
$0.1394 on the 26th. Italian lire reached a new high
for the year on the 26th at $0.0524 3 /1 6 , which, how­
DOLLARS

DOLLARS

1929




1930
1929
1930
Course o f Foreign Exchange Quotations

The inflow of gold which began late in January con­
tinued during February, and in the course of the month
a net amount of about $48,500,000 was received. Im ­
ports at the Port of New York consisted principally of
$11,800,000 from Brazil and $2,000,000 from Bolivia.
In addition about $34,000,000 was received from Japan
at San Francisco. Exports were negligible and there
was no change in gold earmarked for foreign account.
Germany continued to take gold offered in the Lon­
don market, to the amount of £6,200,000 in the four
weeks ended February 25, and there were also two with­
drawals of gold from the Bank of France totaling
90,000,000 francs for shipment to Germany.

C n a B n R te C a g s
e tr l a k a h n e
The movement in the direction of lower money rates
inaugurated at the end of last October, continued dur­
ing February, when four European central banks and
one Far Eastern bank lowered their official discount
rates. The reduction in the Bank of France rate from
3 % to 3 per cent on January 31 was followed by a de­
crease in the Reichsbank rate from 6 % to 6 per cent on
February 5 and a lowering of the Bank of England rate
from 5 to 4 % per cent on the 6th. Both the Austrian
and the Hungarian banks of issue reduced their rates
from 7 to 6 % per cent, the Austrian National Bank on
the 11th and the Hungarian National Bank on the 13th.
The Reichsbank rate is back to its level of September
1927; the Bank rate in London is again where it stood
prior to February 6, 1929; the Austrian rate is now
where it was one year ago; and the Hungarian rate is
at its lowest since October 1928.
The discount rate of the Bank of Java was lowered
from 5 % to 5 per cent on February 10.
DOLLARS

DOLLARS

MONTHLY REVIEW, MARCH 1, 1930

20

MILLIONS OF DOLLARS

S ecu rity M a rk ets

—
800i-------------------- [

Stock prices continued during the first part of Feb­
ruary the advance which had developed toward the end
of January, and, at the highest level reached around
the middle of February, a general average of stock prices
was about 3 per cent above the top of the early Decem­
ber recovery. The net advance from early December
amounted in industrials to only 1 per cent, and in the
railroad stocks to about 4 per cent, but the net rise in
public utilities was approximately 10 per cent. During
the latter half of February stock prices tended slightly
lower, but at the close of the month the general level
still remained somewhat higher than in early December,
and also above the quotations at the end of January.
The daily turnover on the New York Stock Exchange
was unusually steady around 3,600,000 shares until the
last week of the month when it declined to an average
of below 3,000,000 shares.
PR IC E AV ER AGE

Price Movements

of U.

S. Government, Foreign,
Corporate Bonds.

and Domestic

Bond prices fluctuated irregularly during February.
Slight advances in prices occurred during weeks when
new bond flotations were relatively small, while a general
easing in prices occurred when the volume of new issues
increased, as in the second week of the month. For the
month as a whole there were small net advances in do­
mestic corporation bond averages, in foreign bonds, and
in United States Government issues. It was reported
that there was an improved demand for bonds on the
part of institutional investors, such as life insurance
companies and savings banks. On the other hand, com­
mercial banks have shown little tendency to increase
their investment holdings during recent weeks, and it is
reported that the demand from individual investors has
not been unusually active. The accompanying diagram
shows the movements of bond prices since the beginning
of last year.

N wF a c g
e in n in
January offerings of domestic bonds, exclusive of re­
funding issues, increased 47 per cent from the Decem­
ber figure to nearly $600,000,000, and, as the accom­
panying diagram indicates, were larger than at any pre-




6 00

1927

1928

1929

1930

New Bond Financing by Domestic Corporations, and by Municipal­
ities, States, and Farm Loan Agencies (Commercial and
Financial Chronicle figures; refunding issues excluded).

vious time during the past three years. In December
there already had been some increase in bond flotations
from the low level of November, chiefly in State and
municipal financing.
In January more than 80 per
cent of the issues were those of corporate borrowers, as
against only about 25 per cent in December. Most prom­
inent in the corporate bond issues of January were flota­
tions by public utility companies to provide for addi­
tions, improvements, and other capital expenditures.
New financing by means of stock issues totaled about
$125,000,000 in January, continuing the reduced vol­
ume that had characterized the two previous months.
Foreign security issues, exclusive of American com­
pany financing the proceeds of which are to be used
abroad, continued in small volume in January.
The
total nominal amount of new capital obtained by for­
eign borrowers through public offerings was only about
$15,000,000, which is somewhat below the total for any
previous month since last April.
During February no unusually large domestic issues
were announced, with the result that the total new financ­
ing for the month fell considerably below the January
volume. The amount, however, compared favorably with
the February 1929 volume. Stock offerings continued
to be of minor importance. In the field of foreign financ­
ing, there appears to have been a moderate increase over
the figures for either the previous month or a year ago.
The largest foreign offering of the month in this market
was the major part of a $40,000,000 Republic of Cuba
5 % per cent issue priced to yield 5.70 per cent. There
were also a number of smaller flotations, including the
Siemens & Halske A . G. debenture issue, which is esti­
mated to have raised about $10,000,000 in this country
through public subscription, in addition to a larger
amount placed privately.

Po u tio
rdc n
Industrial production in the aggregate increased some­
what in January, due largely to partial recoveries in a
few important industries, but remained considerably
lower than a year ago. The largest expansion of the
month occurred in the automobile industry, particularly

FEDERAL RESERVE AGENT AT NEW YORK
in production of passenger automobiles, the January out­
put of which was more than double the much curtailed
production of December. This increase was unusually
large even for the month of January, but the total output
for the month remained 32 per cent below that of Janu­
ary 1929.
Production of steel ingots increased 21 per cent from
December to January, as compared with a usual seasonal
increase of around 15 per cent, but this bank’s index of
pig iron production, adjusted for seasonal change and
year-to-year growth, declined slightly to a new low level
since December 1927. Output of copper was further cur­
tailed in January, a month when production usually
shows an increase, and after seasonal and growth allow­
ance reached the lowest level since A p ril 1923. Output
of zinc showed the usual seasonal increase, but tin de­
liveries increased less than is usual for January. Pro­
duction of coal declined, after seasonal allowance, while
petroleum production increased. Average daily mill con­
sumption of raw cotton increased more than usual in
January, but there was little change in this bank’s in­
dexes of wool mill activity and of mill consumption of
silk.
From such data as are at present available, it appears
likely that a number of February indexes of production
will show further increases. Operations in the steel in­
dustry were at a higher average level than in January,
although there was some decline in the final week of the
month. A t the beginning of February, furnaces in blast
were making pig iron at a daily rate of 96,755 tons, as
compared with a daily average of 91,209 tons for the
month of January as a whole, so that even if no further
increase had occurred during the month, February out­
put would show more than the usual seasonal increase
of about 3 per cent. There were also reports of an
increase in automobile production, but specifications for

21

shipments of automobile steel declined toward the end
of the month. Production of petroleum increased in the
first part of February and output of coal showed a small
gain, after seasonal allowance.

B ild g
u in
A n increase of 2 per cent occurred between December
and January in the volume of building contracts
awarded in the 37 States east of the Rockies that are in­
cluded in the F . W . Dodge Corporation report, contrary
to the usual tendency for building contracts to decline
at that time of the year. The January total, however,
was 21 per cent smaller than a year ago, and in fact was
the smallest for January of any year since 1925. The
December to January increase was due to awards of pub­
lic works and utilities contracts, which more than
doubled between the two months, This is shown in the
accompanying diagram, which indicates the course of the
three main groups of building work during the past
three years. Residential building contracts, which have
MILLIONS OF DOLLARS

..... .................1
R E SID EN TS
L fy \
f t '

A
/

.N c J i-R ESID EN TIA L

r \ If'

H

v Im
/ ^

L

i

»

\
ft

PUBLIC WORK;s
& U T IL IT IE S

(Adjusted for seasonal variations and usual year-to-year growth)
1929

1930

Jan.

N ov.

Dec.

Jan.

107
94
107
103
84
97

95
86
107r
94
83
94

94
91
92

Tin deliveries.................................................

115
109
118
99
83
132

Automobiles
Passenger cars................................................
M otor trucks..................................................

137
142

61
119

39
74

87 p
99 p

Fuels
Bituminous coal.............................................
Anthracite coal..............................................
C oke.................................................................
Petroleum .......................................................
Gasoline...........................................................

92
106
112
116
101

84
92
110
105
100

88
114
104
106
100

87 p
107 p
104
107p

Textiles and Leather Products
Cotton consum ption....................................
W ool mill a ctiv ity ........................................
Silk consum ption...........................................
Leather, sole...................................................
Boots and shoes.............................................

104
98
109
104
96

90
84
105
114
lOOr

80
76
103
109
8 bp

89
75 p
104
113p
92p

Foods and Tobacco Products
Livestock slaughtered..................................
W heat flour.....................................................
Sugar meltings, U. S. p orts ........................
T obacco products.........................................

99
103
98
103

97
91
103
102

95
88r
92
103

90
81p
93
99

Miscellaneous
Cem ent............................................................
Tires.................................................................
Paper, newsprint...........................................

131
129
91

109
73
88

111
65
86

Metals
Pig iron ............................................................
Steel ingots.....................................................
Copper, U. S. m ines.....................................
L ea d .................................................................

p Preliminary

r Revised




83
84

108
88
91

1 92 7

1928

1 929

1930

Amount of Residential, Non-Residential, and Public W orks and
Utilities Contracts Awarded in 37 States included in the F . W .
Dodge Corporation Report.

been on the decline ever since the first part of 1928, con­
tinued to diminish in January. Two years ago they con­
stituted the largest main group of construction contracts,
but since that time they have fallen from that position
to a volume well below that of non-residential work, and
even, in January, to a level below that of public works
and utilities.
The slight increase in building contracts reported for
January does not appear to have continued in February.
Daily average awards during the first three weeks of the
month were well below the January level, and continued
to show substantial decreases from a year ago.

F r ig T a e
oe n r d
January exports of merchandise, valued at $417,000,000, were $71,000,000 less than a year ago, but were
slightly larger than in January 1928. The decline from
December, however, was considerably smaller than is
usual between the two months.
Imports, valued at
$312,000,000, showed a slight increase over the low figure
for December, but remained $57,000,000 smaller than in
January 1929.

MONTHLY REVIEW, MARCH 1, 1930

22

Compared with a year ago, each major group of im­
ports and exports continued to show a decrease. A de­
cline in the value of shipments abroad of raw cotton
accounted for a large part of the decrease in exports
of crude materials.
The reduction of $33,000,000
in the value of imports of crude materials was due
mainly to decreases of 26 per cent in the quantity of
raw silk receipts and of 9 per cent in the quantity of
crude rubber imports, together with price declines in
each case.
Exports of crude foodstuffs, notably wheat and wheat
flour, were in somewhat larger volume than in the pre­
vious month, contrary to the usual seasonal tendency,
and exports of finished manufactures increased in value
$11,000,000, or 6 per cent. The value of imports of
semi-manufactures increased $11,000,000, or 18 per cent
over December.

C m o ityPic s
o md r e
The general level of wholesale commodity prices has
continued in recent weeks the decline which has pro­
ceeded almost without interruption since last July. In
fact, with the exception of a moderate advance in the
latter part of 1927 and in 1928, the general trend of
commodity prices has been downward since the autumn
of 1925. In January 1930 the general wholesale com­
modity price index of the United States Bureau of Labor
Statistics was 10.6 per cent lower than in November
1925; it was just under the lowest level reached in April
1927, and was the lowest since the early part of 1922.
The decline in commodity prices has not been confined
to this country, however, for price indexes in practically
all of the gold standard countries have participated in
the downward movement. The Board of Trade index for
Great Britain, for example, has declined from 159 in
D O LLA R S P E R B U S H E L

C E N T S PE R POUND

1.75,

PER CENT

U. S. Bureau of Labor Statistics Wholesale Commodity Price Index
and Group Indexes Showing the Movements of Prices of A gri­
cultural Commodities and Their Products, and of Fuel,
Metals, and Building Materials (1 9 26 = 100 per cent).

May 1925, when the pound was stabilized, to 131 in
January 1930, a decrease of 18 per cent.
Neither has the decline been centered in any one par­
ticular commodity or group of commodities. O f the ten
main groups into which the Bureau of Labor Statistics
index is divided, declines have occurred since November
1925 in nine of the groups, while an increase has
occurred in only one.
The more important groups have been combined in
the accompanying diagram into two major divisions—
agricultural commodities and their products, which are
largely influenced by crop conditions, and fuel, metals,
and building materials, which are largely influenced by
industrial conditions. This diagram indicates that al-

28r

1.50

D O L L A R S PER POUND

28r

1.20

24

Al929

/M

1930

A/
>YU

a
V“ w

1.25 *

20

C E N T S PER POUND

24
1928

\l9 2 8
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-\1929
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J 929

1.00

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1.00

1928

W H EA T
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1929\f'
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J A S O N D J F M A M J

7929
16

12

\
1930
COTTON
i i i i.

1 1 1 ! 1

J A S O N D J F M A M J

-------------------

.8 0

1930

/♦ \
1928** Y W

v

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u *

1930

.60>

DOMESTIC W OO L
1 1 1 1 ! I I I I ...l... L
JASONDJFMAMJ

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RUBBER

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1 I...L . , 1 1 ... 1 _,L

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J A S O N D J

F M A M J

D O LLA R S P E R TON

20

7.50

I

16

D O LLA R S P E R TON

CEN TS P ER POUND

D O LLARS P E R POUND

f

20

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a ■
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4
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5 .4 0

1928
4 .8 0 v iifi, .
V m

_

1929

18

1929

* 'Vi*

1929}

V*

6.00

"1928

1930

1930

»

r

*1929

V

\
w

*•*■■■* 1928

16

16

14

\

\I i 11930
VI

14

192^
4 .2 0

^

18

f

A

:

-/\1 9 2 9

1 9 2 9 .....

\J 9 2 9

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5 .2 5
1 30
9

S ILK
3.60> _1 L ..I_!
—1 —

1 I .11 l~.

J A S O N D J F M A M J




4 .5 0

Z1IN C1
1

f

1

I ,1 ,

J A S O N D J F M A M J

PIG IRON
12 — 1 .. L.. L....I_J _
_

1 1 1 1 .L...

J A S O N D J F M A M J

Price M ovements o f Selected Commodities, July 1928 to February 1930.

SCRAP ST -J E L
. .
12 ,„_l 1 1 L.._L.._ 1

1 1 1 1..

J A S O N D J F M . A M J

FEDERAL RESERVE AGENT AT NEW YORK
though the decline of the past six months has carried the
agricultural group to the lowest in more than two years,
the January level remained somewhat above that reached
early in 1927. The fuel, metals, and building materials
group has followed somewhat the course of industrial
activity. Prices of these commodities rose moderately in
1928 and early 1929, accompanying increasing industrial
output, and have turned downward with the curtail­
ment of industry in the last six months. The recent
decline, however, has been much less severe than that of
1927, when this group was affected by a rapid decline in
prices of petroleum and its products.
The group of diagrams shown below illustrates some of
the outstanding recent declines in individual commodities.

E p y e t a dW g s
m lo mn n a e
The number of workers employed in representative
factories in New York State showed a further net de­
cline of more than seasonal proportions between the
middle of December and the middle of January, and, as
the accompanying diagram indicates, this bank’s index
dropped to the lowest level reached in the spring of 1928.
The week-to-week movement during January was up­
ward, but the increases in the first two weeks of the
month apparently followed even larger declines in the
last two weeks of December. For the country as a whole,
January employment, after seasonal adjustment, was at
a lower level than at any time since November 1924.
PER CENT

23

In e e o B s e s A ity
d x s f uin s ctiv
Average daily car loadings of merchandise and miscel­
laneous freight increased somewhat in the early part
of January from the low level at the end of December,
but there was no further increase during the latter part
of the month and the January average, though higher
than that of December, remained considerably below the
levels of the preceding four years. Loadings of heavy
bulk freight also increased, but remained lower than in
recent years.
Distribution of goods to consumers apparently showed
more than the usual reduction from the holiday high
level of December. Average daily sales of department
stores in this district declined slightly more than usual,
as did also the sales of chain store systems, other than
grocery chains ; and the index of advertising declined
to about the lowest level in recent years. Bank debits
were in substantially smaller volume than a year ago.
On the other hand, the amount of life insurance paid
for continued to increase, after seasonal adjustment, and
this bank’s index equaled the level of last September,
which was the highest since December 1926. The num­
ber of new corporations formed in New York State
showed an increase of more than seasonal proportions
in January from the low levels of November and
December, but remained 17 per cent under the level of
a year previous. The number of business failures in­
creased more than usual to the highest figure for any
January on record.
(Adjusted for seasonal variations and~usual year-to-year growth)
1929

1930

Jan.

N ov.

Dec.

Jan.

Panama Canal traffic...................................
Wholesale trade.............................................

98
98
99
114
95
104

92
88
84r
113
84
103

87
88
80
104
75
96

92
90
86 v
102p

Distribution to Consumer
Department store sales, 2nd D ist.............
Chain grocery sales.......................................
Other chain store sales................................
Life insurance paid f o r ................................
A dvertising.....................................................

96
96
92
106
95

93
89
104
104
96

100
92
101
107
93

89
111
86

108
185

117
202

103
138

98
117

121
202
442
85
107
100
102
123
120
83

130
189
239
81
104
99
100
92
87
73

115
139
289
85
102p
96r
100
74
86
71

115
129
241
80

179
224
172

174
226
172

174
227
172

174
228
170

Primary Distribution
Car loadings, merchandise and misc........
Car loadings, oth er.......................................

Index of Factory Employment in New York State, 1925-1927 = 100
per cent (Federal Reserve Bank of New York index, adjusted
for seasonal variations; 1923 to 1927 figures adjusted to
census data).

A s in 1927, a more than seasonal decline in manufac­
turing activity, accompanied by winter declines in build­
ing operations, road construction, and farm work, has
resulted in a considerable amount of unemployment.
Voluntary labor turnover, which is an index of employ­
ment opportunities, continued at the low level reached
in December, and the ratio between orders for workers
and applications for employment at New York State
employment bureaus remained well below the levels of a
year ago, and averaged somewhat lower than in 1928.
In the first two weeks of February, there was little
change in the employment bureau ratio.
Some further increase in factory employment has been
reported during the past month, but it is doubtful
whether this has exceeded the usual increase at this time
of year.




General Business Activity
Bank debits, outside of New Y ork City..
Bank debits, New York C ity .....................
V elocity of bank deposits, outside New
York C it y ...................................................
V elocity of bank deposits, New York C ity
Shares sold on N. Y . Stock Exchange. . . .
Postal receipts...............................................
Electric p ow er................................................
Employment in the United States...........
Business failures............................................
Building contracts, 36 States......................
New corporations formed in N. Y . State.
Real estate transfers....................................
General price level*......................................
Composite index of w ages*........................
Cost of living*...............................................
p Preliminary

r Revised

98

96
111
89
96
69

* 1913 average= 100

Dp r e t S r Ta e
e a tmn to e r d
The total January sales of the reporting department
stores in this district showed an increase of 2 per cent
over a year ago. There was an increase of 4 per cent in
the sales of New York City stores, which is the largest

24

MONTHLY REVIEW, MARCH 1, 1930

increase reported since October. The Rochester, Hudson
River Valley District, and Albany District stores re­
ported substantial increases in their total sales, and the
reporting stores in the Westchester District showed a
small increase, but other localities continued to report
decreases in sales, some of which were larger than in the
two preceding months. The large apparel stores reported
a considerable decrease in sales for the third consecutive
month.
Stocks of merchandise on hand in department stores
at the end of January were 4 per cent lower than a year
ago, the largest decrease in several years. Collections on
charge accounts outstanding were noticeably slower than
a year previous.
Percentage
change
January 1930
compared with
January 1929

of five and ten cent stores reported a 3 per cent increase,
following a decrease in December, and candy chain sys­
tems reported the largest increase in sales since March
1929. The increase in sales of drug chains, however, was
smaller than in a number of months, and shoe chains
reported a decrease of nearly 7 per cent in sales.
After allowing for the change in the number of stores
operated, grocery and candy chains showed substantial
increases in sales per store, while all other reporting
types of chain stores showed decreases.
Percentage change January 1930
compared with January 1929
Number
of
stores

Sales
per
store

+ 1 4 .9
+ 3 .4
+ 5 .8
— 6 .6
+ 1 6 .4
+ 1 1 .4

+ 1 2 .0
— 4 .9
— 5 .8
— 15.6
— 6 .4
+ 1 8 .6

+ 7 .8

Per cent of
accounts
outstanding
December 31
collected in
January

T otal
sales

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

T ype of store

+ 9 .1

+

Locality

N et
sales

Stock
on hand
end of
month

1929

1930

+ 3 .8
— 10.7
+ 6 .4
— 7 .4
— 2 .2
— 1.8
+ 1.7
— 3 .9
— 1 .8
— 5 .1
+ 7 .8
+ 9 .9
+ 2 .1

— 1.5
— 2 .9
— 7 .7
+ 5 .0
— 18.7
+ 1-7
— 4 .4

51.7
4 9 .4
4 9 .0

4 9.7
4 4 .8
4 4.8

40 .4
4 4 .6

4i .6
4 2.9

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

+

1 .8

— 4 .0

50.8

4 8.7

Apparel stores............................................

— 9 .9

+ 0 .2

53.3

50.9

New Y o r k ...........................................................
Buffalo..................................................................
R ochester.............................................................
Syracuse ............................................................
Newark
.........................................................
Bridgeport....................... ...................................
Elsewhere............................................................
Northern New Y ork S ta te.........................
Central New York S ta te.............................
Southern New Y ork State. ........................
Hudson River Valley D istrict...................
Capital D istrict.............................................
Westchester D istrict....................................

Sales and stocks in major groups of departments are
compared with those of January 1929 in the following
table. The large distribution of radio sets showed the
effect of price reductions, and furniture sales also
showed a moderately large increase.
Net sales
percentage change
January 1930
compared with
January 1929
Musical instruments and ra d io...........
Furniture...................................................
W om en’s and Misses’ ready-to-w ear..
Toilet articles and drugs.......................
Silverware and jew elry..........................
T oys and sporting goods.......................
Books and station ery.............................
H osiery......................................................
Home furnishings....................................
Shoes..................................................
W om en’s ready-to-wear accessories...
Luggage and other leather goods........
Linens and handkerchiefs.....................
M en’s furnishings....................................
Cotton g ood s............................................
W oolen good s...........................................
Silks and v elv ets.....................................
M en’s and B oys’ wear...........................
M iscellaneous...........................................

+ 1 4 3 .4
+ 15.5
+ 12.0
+ 8 .0
7 .9
+
7 .1
+
6 .3
+
5 .7
+
5 .2
+
2 .0
+
1.3
+
— 2 .9
— 3 .8
—
5 .7
— 7 .3
— 7 .4
— 10.0
— 11.6
0 .5

Stock on hand
percentage change
January 31, 1930
compared with
January 31, 1929
—
+
+
—
+
+
+
—
—
—
+
+
+
+
—
—
—
—

2 7.3
6 .4
0 .4
6 .7
1 .0
1 5.3
12.3
1 .8
16.0
0 .4
12.8
17.7
6 .4
0
0 .9
14.5
17.7
2 .2
12.2

W o s leT a e
h le a r d
The sales reported by wholesale dealers in this dis­
trict for January averaged about 8 per cent smaller
than in January 1929.
Grocery sales were slightly
smaller than a year ago; quantity sales of silk goods
showed a moderate decline; substantial declines con­
tinued to be reported in sales of cotton goods, drugs,
hardware, and jew elry; diamond sales were lower by
one-half than a year ago; and shoe sales showed the
largest decline in more than a year. Machine tool orders
were slightly larger than in the previous month, but re­
mained 38 per cent smaller than in January 1929. Sta­
tionery dealers, however, reported an increase in sales,
as in each month since last April, and m en’s clothing
sales showed a slight increase, following declines in
recent months.
Stocks of groceries and drugs remained larger than
a year ago, but declines continued to be reported in
stocks held by cotton goods, hardware, and diamond and
jewelry dealers. A substantial increase in stocks was
reported by shoe firms for the first time in many months.
Collections averaged about 3 per cent below Janu­
ary 1929.
Percentage
change
January 1930
compared with
December 1929




Percentage
change
January 1930
compared with
January 1929

Per cent of
accounts
outstanding
December 31
collected
in January

Comm odity
N et
sales
M en’s clothing...............
C otton good s..................

Chain Store Trade
The total January sales of reporting chain stores in
this district averaged 9 per cent higher than in the cor­
responding month in 1929. A ll lines except shoe organi­
zations showed an increase in sales compared with last
year. Sales of grocery and variety chains continued to
be substantially larger than a year ago, while the sales

1.2

Machine tools**............

Jew elry............................
Weighted A v e ra g e ...

Stock
end of
month

Net
sales

Stock
end of
month

+1 —il
- 'o
2

1929

1930

7 2.3
4 3 .5
3 0.5
4 7 .8
41.7
5 6.4
4 9 .3

72.9
4 0.3
2 9.8
4 7.9
3 9.7
3 3.8
4 7 .3

+ 2 .4
— 3 .8
+ 8 1 .0
— 39.2
+ i 6 .5
+ 3 0 .3 * — 6 .7 *
— 2 8.4
+ 2 5 .0
+ 4 0 .2
— 0 .3
— 31.4
+ 9 .8
+ 1 0 .0
— 2 .7
+ 8 .3
— 15.0
— 58.6 j — 3 .0

— 10.0
— 5 .1 * + 0 .9 *
— 18.4
+ 3 1 .1
— 11.5
+ 5 .0
— 12.0
— 7 .6
— 3 7.7
+ 5 .6
7 3 ‘.2
+ 0 .1
67.4
— 50.0
} — 10.7 } 4 6.4
— 19.7

+ 1 3 .6

— 8 .1

— 0 .9

+ 4 .6

5 7.2

* Quantity not value. Reported by Silk Association of America
** Reported.by.the.National Machine Tool Builders Association

'.8

72
6 9.8

J

4 3.8
54.5

FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, MARCH 1, 1930

Business Conditions in the United States
(Summarized by tlie Federal Eeserve Board)
N D U S TR IA L production increased in January from the extreme low level
of December. Factory employment, which was in relatively small volume in
tlie middle of December, was further reduced by the middle of January, but
preliminary reports indicate a slight increase in the three weeks following.
There was a further liquidation of bank credit and a decline in money rates.
Commodity prices continued to move downward.

I

P r o d u c t io n

and Minerals Combined, Adjusted
for
Seasonal Variations (1 9 2 3 -2 5 average
— 100 per cent).

Industrial production showed an increase of about 4 per cent in January,
according to the Board’s index, which makes allowance fo r the usual seasonal
variations. This increase reflected principally a larger output of automobiles,
steel, cotton textiles, and shoes. Output of copper, cement, lumber, anthracite
coal, and flour declined, and the increase in bituminous coal output was smaller
than is usual fo r the season. In the first two weeks of February steel plants
increased their rate of operation further, but continued to be less active than
in the corresponding period of last year.
Building contracts awarded showed little change in January, a substantial
increase in public works and u tilities being in large part offset by a decrease
in residential construction. In the first ha lf of February the daily average of
contracts was lower than in January.
E

1926

1927

1928

1929

1930

Index Numbers of Factory Employment and
Payrolls, W ithout Adjustment for Sea­
sonal Variations
(1 9 2 3 -2 5 average
= 100 per cent).
BILLIONS OF DOLLARS

1
0

ALL 01fHER LOANS

A
LC3ANS ON SElCURITIES j

,

X'
S'S

/-■

%

rV

N V ES TM E N TS ^V

.

1^

1926

Monthly Averages of W eekly Figures for Re­
porting Member Banks in Leading Cities
(Latest figures are averages of first
two weeks of February).

P ayeolls

D is t r ib u t io n

Shipments of freight were in about the same volume in January as in
December. Average daily loadings of miscellaneous freight and merchandise
in less-tlian-carload ].ots decreased slightly during the month, but by a smaller
amount than is usual at this season. During the first two weeks in February
there was some increase in shipments, largely seasonal in nature.
Department store sales in January, according to preliminary figures received
by the Federal Reserve System, were about 2 per cent lower than in the corre­
sponding month of last year, this difference being about the same as was shown
the month before.
W

V

1

m ploym ent and

Tlie number of wage earners employed at factories declined further between
the middle of December and the middle of January, and wage payments showed
a larger reduction. In automobile and steel plants there was an increase in
employment in the month ended January 15, and in recent weeks further
increases have been reported fo r these industries. There were decreases in
January in the number of wage*earners employed in the machinery, carbuilding and repairing, lumber, and cement industries.
During the three-week period ended February 3 the Bureau of Labor
Statistics, on the basis of preliminary returns, reported a slight increase in
factory employment.

h olesale

P r ic e s

Wholesale prices of commodities in January continued to move downward.
In general, fluctuations were small u n til the latter part of the month, when
decreases occurred i:i the prices of grains, cotton, wool, iron and steel, and
petroleum. The prices of meats and live stock fluctuated over a wide range
and averaged higher in January than in December.
In the first half of February the prices of hogs, pork, and cattle increased,
while the prices of wheat, cotton, pig iron, petroleum, and textiles continued
to decline.
B a n k C r e d it

a

^ R E S E R V E BANK DISCOUNT
RATE

A CCEPTANCE RATE

1926

1927

1928

1929

Money Rates in the New York Market (Febru­
ary rates are averages for the first 20 days).




Liquidation of member bank credit in January and the early part of
February was in substantially larger volume than in the corresponding period
of 1929. Declines were reported in loans on securities and in all other loans,
which continued to decrease in February contrary to the usual seasonal trend.
There was little change in the banks* holdings of investments.
Tlie volume of Reserve Bank credit outstanding declined by about $140,000,000 between the middle of January and the middle of February. This
dccline was due in part to the reduction in member bank reserve balances
which accompanied the decline in the banks’ loans and investments; in part
to the continued return flow of currency from circulation; and in part to gold
imports, largely from Brazil and Japan.
Money rates in tl e open market eased further. Rates on commercial paper
declined to a range of 4 y 2 - 4 % per cent, and rates on G0-90 day bankers accept­
ances declined from 4 to 3% and later to 3% per cent. Discount rates at the
Federal Reserve Banks of New York, Chicago, Boston, and Kansas City were
reduced from 4 y 2 tc 4 per cent, and rates at Philadelphia, Cleveland, Rich­
mond, St. Louis, Minneapolis, and Dallas from 5 to 4% per cent.