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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 Money Market inFebruary 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 BILLIONS OF DOLLARS 10V m . BILLIONS OF DOLLARS 91---------- ___' — 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 ALL OTfHER LOAIsJS i ..... _ i____t......... jI ... I - „.! .. ------ 1-----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 MILLIONS OF DOLLARS 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 Savings BankDeposits 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. GoldMovement 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. ForeignExchange 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 $0.23891/4 on the 1st to $0.2385% on Feb 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 $0.13921/4 on February 1 and $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. Central BankRate Changes 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. NewFinancing 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. Production 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. Building 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. ForeignTrade 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. CommodityPrices 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, 28r 1.50 /M 1930 A/ >YU Va “ w 1.25 * 20 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 alD O L L A R S PER POUND C E N T S PER POUND 28r 1.20 24 Al929 PER CENT 24 1928 \l9 2 8 « A .. -\1929 vv% J 929 1.00 % ! 1.00 1928 W H EA T .75 ...i i i..t...i_ 1929\f' *« *■ I i I 1.. t 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 ' j u * 1930 .60> DOMESTIC W OO L 1 1 1 1 ! I I I I ...l... L JASONDJFMAMJ 12 RUBBER 1 I...L . , 1 1...L... 1 _,L I . .1 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 • f**V929 a ■ a ; * 4 \ •\ 20 t\ 6 .7 5 5 .4 0 1928 m . 4 .8 0 vV iifi, _ 1929 18 1929 * 'Vi* 1929} V* 6.00 "1928 1930 1930 » r *1929 V \ w *•*■■■* 1928 16 16 14 14 192^ 4 .2 0 ^ 18 f A : -/\1 9 2 9 1 9 2 9 ..... \J 9 2 9 / •• » \ \I i 11930 VI J1928 5 .2 5 19 3 0 S ILK 3.60>—1_1—L ..I_! 1 I .11 l~. J A S O N D J F M A M J 4 .5 0 Z1IN1C1 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. Employment andWages 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 Indexes of Business Activity 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 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. 1930 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 Department StoreTrade 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 T ype of store Per cent of accounts outstanding December 31 collected in January Number of stores T otal sales Sales per store + 2 .6 + 8 .7 + 1 2 .3 + 1 0 .7 + 2 4 .4 — 6 .0 + 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 + 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 WholesaleTrade 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 +1-2 — 'oil 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 10 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.
@FedFRASER