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MONTHLY REVIEW o f C r e d it a n d S e c o n d B u s in e s s F e d e r a l M o n e y M a r k e t in F e b r u a r y Conditions in the New York money market during the past month have been, on the whole, slightly firmer than in January. The large excess of bank reserves over requirements which persisted during most of January was much reduced and at times was replaced by a short age, making necessary occasional recourse to the Reserve Bank. This change in conditions reflected partly a small increase in the demand for currency, but more largely a further retirement of Federal Reserve credit. Accept ance holdings of the Reserve Banks declined slightly further during the first half of February; Government security holdings were reduced slightly; and discounts for member banks were reduced somewhat further to the smallest volume since last October. Gold imports con tinued, though in reduced volume. There has been no indication as yet of an unusual de mand for funds for business purposes such as would materially affect conditions in the money market. Cur rency requirements, after reaching the usual low point at the end of January, have shown approximately the usual seasonal expansion, but loans of reporting member BILLIONS OF DOLLARS 9.5r BILLIONS OF DOLLARS 10 r A 75 J > 6.51 1 \ SECURITNf LOANS i i i ... ---- 1 ---^ I . i j ._.J 1929 1930 1931 March 1,1931 banks other than security loans, which reflect largely short-term commercial borrowing, have not shown the tendency toward expansion which in past years has fre quently appeared in February; in fact, during the past month there has been a further substantial reduction in such loans, largely caused, however, by a decline in the acceptance holdings of New York City banks, which are included in this classification. The demand for funds on the part of business organi zations apparently continues to be chiefly a demand for capital. New security issues in February were not large, due to unsettlement in the market in the face of prospec tive Treasury financing for a payment to veterans. There were indications that the volume of new bond offerings would have been materially larger, had condi tions in the bond market been such as to facilitate their absorption. The limited demand by business for bank loans and the ample supply of funds are reflected in the changes in the loans and investments of reporting mem ber banks which are charted below. During February the investments of banks, which include a substantial proportion of United States Government obligations and a variety of other bonds and notes, many of them short A 8.5 D is tr ic t Federal E eserve Bank, N ew York Federal E eserve A gen t 6.5 R e s e r v e C o n d itio n s 5.5 A L L OTK ER LOANS, 1 ~ . I ... .1 -I.. Jf i i i l . 1 v 1930 1929 1931 4.5 INVESTM : n t s i i i I 1 1 1 1929 1930 Loans on Securities, All Other Loans, and Investments of Weekly Reporting Member Banks (Monthly averages of weekly data; February figures preliminary) ------ L_.yW 1931 18 MONTHLY REVIEW, MARCH 1, 1931 term, increased about $325,000,000, making a total in crease since the low point of October 1929 of about $1,700,000,000. During approximately the same period, the 4‘ all other” loans which include short-term commer cial borrowing have been reduced about $1,600,000,000. The security loans of the reporting banks also showed a further slight reduction during February to the small est volume since the early part of 1929, notwithstanding some increase in the loans of these banks to security brokers and dealers during the month. The total security loans of the reporting banks have been reduced approxi mately $1,300,000,000 since last June, although security brokers and dealers now receive a larger proportion of their funds from these banks than at any previous time in recent years. The total volume of credit extended by these banks which are located in the principal cities has shown little net increase during the past two years, and in the same period there has been a substantial reduction in the loans and investments of banks in smaller locali ties throughout the country. Consequently, the total volume of bank credit extended by all banks of the coun try is estimated by the Federal Reserve Board to have been approximately $3,000,000,000 less at the end of December 1930 than in October 1929. M o n ey R ates Call loan rates were virtually unchanged during Feb ruary, but rates charged for time loans on Stock Ex change collateral were advanced slightly near the end of the month. Acceptance rates, after a decline early in the month, advanced again to the same levels as at the end of January, and yields on short-term Government’s rose somewhat, reflecting in part the weakness in prices of long-term Government obligations which has accompa nied the discussions concerning the Treasury financing that will be required as the result of increased loans to war veterans. Contrary to the general tendency, com mercial paper rates declined slightly further during February. Money Rates at New York Feb. 28, 1930 Jan. 30,1931 Feb. 27, 1931 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 re discount rate....................................... Federal Reserve Bank of New York buying rate for 90 day indorsed bills * For preceding week middle of month f t Nominal *1M ttlfc -2 *4-4 X 4% 4 H -4 H 3% 2H- 2H IX t3.65 t3.81 2.98 3.24 1.10 1.19 1.21 1.32 t5.07 *1X tt2-2tf 2X IX 4 2 2 3H IX IX f Average rate of leading banks at B il l M a r k e t Holdings of acceptances by the accepting banks and bankers that report to the American Acceptance Council MILLIONS OF DOLLARS j------------------------ - 1 i FOREIGN 1 ci ORRESPONDENTS ^>F F R. BANKS T 1 F D R S BANKSE. E. OW ACCOUNT N I H V 1 \ I V / / ]r J j \1 - ) I ■ i I [pTING INSTITUTIOI i ... i i i 1 1 1 J .....J...J .... 1! I— J .....1 .... 1928 1929 1930 1931 Holdings of Acceptances by Federal Reserve Banks for Own Account, Amount Held by Federal Reserve Banks for Foreign Correspondents, and Holdings by Accepting Banks and Bankers increased $200,000,000 during January, following a re duction of $122,000,000 in the final month of 1930. Their holdings on January 31 reached $571,000,000, by far the largest amount of bills these banks have ever held as in vestments. As the accompanying diagram shows, this increase was accompanied by a large reduction in the Reserve Banks’ bill holdings for their own account. The volume of dollar acceptances outstanding showed a seasonal decline in January, and at the end of that month the total of $1,520,000,000 was $36,000,000 smaller than in December 1930 and $173,000,000 below the Jan uary 1930 figure. Decreases in all of the principal classes of acceptances contributed to the decline from December and only acceptances based on goods stored in or shipped between foreign countries remained larger than a year ago. Due to the continued withholding of bills from the discount market by the accepting institutions during the first few days of February, dealers’ portfolios remained at a low figure, and a Ys per cent reduction in open mar ket rates was effected, thereby canceling the advance of late January. In a further effort to attract bills with which to fill investment orders, another reduction of Ys per cent in rates was made by all dealers on February 6, and at this level— 1 % per cent for unindorsed bills of 90 day maturity— bill rates reached a new low yield in the history of the bill market in this country. The temporary appearance around the middle of the month of a slightly firmer money situation, as a result of the absorption of the excess reserves which the New York City banks had possessed during most of January, caused these banks to dispose of some of the large volume of bills held at the end of January, and dealers’ port folios rose moderately. The dealers then reversed their rate position by raising all maturities Ys per cent, and, FEDERAL RESERVE AGENT AT NEW YORK when a considerable further increase in their portfolios occurred, they raised their rates by another Ys to the level prevailing at the opening of the month, which was more nearly in accord with the Federal Reserve buying rate. In addition to the increased sales of bills to the dealers, the banks also offered bills from their portfolios to the Reserve Bank for the purpose of retiring tem porary borrowings which had been incurred in balanc ing their reserve position. During the latter part of the month, dealers’ portfolios were somewhat reduced, due to an increased investment demand for bills, principally foreign orders. The Federal Reserve System’s portfolio of bills con tinued to decline through February 11, and, although some increase occurred in the succeeding two weeks, Reserve Bank holdings at the close of the month were moderately lower than at the end of January. C o m m e r c ia l P a p e r M a r k e t The tendency in open market commercial paper rates was gradually downward throughout February, with the consequence that the prevailing rate for prime names reached 2 % per cent shortly after the middle of the month, as compared with 2 % -2 % per cent which was quoted as the going range at the end of January. In addition, some business was done at 2 % per cent and certain names continued to sell at 2 % per cent. Bank investment demand for paper throughout the country continued to be active and was well in excess of the supply of new paper that came into dealers’ portfolios from commercial and industrial concerns. Reflecting the limited volume of paper available in the market, the amount outstanding through the 20 deal ers reporting to this bank declined 9 per cent further during January. The January 31 outstandings of $327,000,000 were 19 per cent below the figure for the cor responding date in 1930, the first year-to-year decline to be shown in twelve months. Not since 1921 have Jan uary outstandings failed to show some increase over the figure for December, which usually marks the seasonal low point. In order to meet these requirements, the Treasury has announced the offering of a total of $1,400,000,000 of new securities. These include approximately $500,000,000 of 3 % per cent Treasury bonds, due March 15, 1943, but redeemable on or after March 15, 1941; $600,000,000 of one-year Treasury certificates of indebt edness, bearing 2 per cent coupons; and $300,000,000 six-months Treasury certificates, yielding 1 y 2 per cent. The offering is thus adjusted to meet the varying needs of investors as to types and maturities of securities. The announcement states that subscribers offering Treasury notes which have been called for redemption on March 16 in payment for the bonds and one-year certificates will be given preferred allotment. S e c u r ity M a r k e ts Throughout the month of February the stock market held rather consistently firm and for part of the time prices exhibited distinct strength. Around the end of January stock price averages were about 10 per cent above the mid-December low, but by the close of Feb ruary this recovery had been increased to about 25 per cent, and prices were the highest since last October. As is shown in the accompanying diagram, the February advance was general; industrial and public utility shares rose about 11 and 13 per cent, respectively, and railroad stocks, which had made a considerable recovery in Janu ary, advanced slightly in February. More widespread in terest in the stock market also appeared in the larger turnover of shares on the New York Stock Exchange. After the first week of the month trading averaged 3,800,000 shares and on several days was well in excess of 4 million shares. Domestic corporation bond prices moved within nar row limits during February, following the check to the PRICE INDEX T r e a s u r y F in a n c in g in M a r c h The volume of funds to be raised by the United States Government on March 16 is unusually large, due to the fact $1,100,000,0001 of 3y2 per cent Treasury notes, Series A and B— 1930-1932, have been called for pay ment on that date, together with the prospect of in creased disbursements on account of loans to World War veterans against their adjusted service certificates, and also the expectation of reduced receipts from taxes on 1930 income. 19 Price Movements of Industrial, Railroad, and Public Utility Stocks (Standard Statistics Company weekly indexes) 20 MONTHLY REVIEW, MARCH 1, 1931 upward movement that occurred during the closing days of January. The tendency was gradually upward, how ever, and an average advance of % of a point carried the general level of corporate bond prices to a point about half-way between the high of last September and the lowest point reached in December. Foreign bond quota tions varied but little during the month, shewing no de cided trend in either direction. The United States Government bond market again was subject to unsettling influences. When it appeared early in the month that veterans’ bonus legislation which would necessitate a very large flotation of bonds by the Treasury would probably not be enacted, United States Government bonds advanced vigorously and by the 10th of the month had recovered nearly three-fourths of the loss sustained in the preceding week. Shortly afterward, prices began to decline again, but the drop was more gradual than in the final week of January, since the veterans’ relief measure then under discussion in Con gress involved a smaller expenditure by the Treasury than the initial proposals. As the net result of these movements, the average price of the eight outstanding Government bonds stood near the end of the month about 1 % points below the highest level of this year, and about half a point above the lowest level reached in February. N ew F in a n c in g The total volume of new security issues floated during January reached $606,000,000, the largest amount since last June. Of this total, $416,000,000 represented new capital, and $190,000,000 was for refunding purposes. Refunding operations have not been conducted on as large a scale since September 1929. In the new capital issues, domestic corporate offerings showed a further substantial increase, but issues by States and municipali ties fell to an unusually small amount; consequently, total domestic offerings declined slightly from December to January, but the volume remained above the com paratively low levels of the last five months of 1930, as the accompanying diagram indicates. MILLIONS OF D O LLA RS 1 5 0 0 --------------- 1000 500 O 1928 1 92 9 1930 1931 Offerings of Securities to Provide New Capital (Commercial and Financial Chronicle figures for domestic issues, excluding financing by investment trusts, etc.; Federal Reserve Bank of New York data for foreign issues) Flotations of foreign securities in this market, also shown in the diagram, were larger in January than in any month since July. The data covering foreign issues include financing by American corporations in cases where the funds were for use abroad, but exclude private banking credits placed in this country on behalf of for eign borrowers where no offering of securities was involved. The total of new securities offered during February was well below the January volume, both in the domestic and foreign categories. Public utility and State and municipal financing constituted the larger part of the domestic issues. Railroad issues were very small, and, as for some months past, there appeared to be little de mand for new capital on the part of industrial com panies. The small volume of foreign issues was com posed entirely of Canadian financing. F o r e ig n E x c h a n g e The movement of the major exchanges in February was irregular and divergent. Sterling firmed up to $4.86 9/32 on the 7th, dipped gradually to $4.85 9/16 on the 20th, and thereafter firmed again around the monthend. French francs were irregularly strong until the 9th, but weaker through the rest of the month. The reichsmark moved through a narrow range and was per sistently weak at 5 to 6 points below its parity of $0.2382. The Swiss franc, which for twelve months had been above par and frequently close to the gold export point from this country, weakened in the second half of Feb ruary and declined to $0.1925% on the 26th. Another currency which declined during the month was the guilder, which sold at $0.4010% on the 26th, showing a loss of seven and a half points for the month. The Scan dinavian exchanges varied; rates on Norway and Den mark firmed slightly, but the Swedish rate around the month-end was two or three points below its high of $0.2679 ^ on the 7th. All three were below par. The belga remained above par throughout the month. The peseta slumped to $0.0969 on the 13th, but recovered steadily thereafter to $0.1072 on the 24th, its highest quotation since mid-December. Canadian dollars gained a little, closing at about 1/64 discount. The yen was steady within the narrow range of $0.4944 to $0.4946. The Brazilian milreis was off from $0.0880 to $0.0850, but the Argentine peso recovered to $0.7518 from a midJanuary low of $0.6757. G o ld M ovem en t Receipts from South America constituted the bulk of the gold imported at the Port of New York during Feb ruary, $9,300,000 coming from Argentina and $1,100,000 from Uruguay. A t San Francisco, $2,700,000 was received from China. There was in addition a gain of $2,500,000 to the country's gold stock through a decrease in gold held under earmark for foreign account. As exports were negligible, a preliminary estimate indicates a gain of about $16,500,000 for the month. French withdrawals of gold at the Bank of England ceased during February, and the Bank was able to show an increase in its gold holdings due to the reported re ceipts of £750,000 from South Africa and £300,000 from 2 1 FEDERAL RESERVE AGENT AT NEW YORK Brazil. Of the South African gold offered in the market approximately £1,800,000 was obtained by France and £700,000 by Belgium. About 65,000,000 reichsmarks of gold were received by Germany from Russia during the latter part of January and in February. (Adjusted for seasonal variations and usual year-to-year growth) Jan, INDEX INDEX Jan. 62 62 74 73 55 89 55 57 69 81 54 119 57 59 64p 69 51 102 87 99 36 83 48 78 50p 79p 87 103 97 105 92 73 83 75 83 79 71 88 71 82 77 66p 91p 70 79p 89 75 104 107 101 71 62 115 95 75 68 58 111 98 77p 71 62p 101 88p 77p 90 92 93 99 89 97 114 90 90 91 74 96 92 92 72 89 108 77 100 98 102 99 Tin deliveries............................................. 83 54 84 81 83 81 81 51 88 81 87 80p 88 Automobiles Passenger cars............................................ Motor trucks.............................................. Fuels Bituminous coal......................................... Anthracite coal.......................................... Petroleum, crude....................................... Petroleum products................................... An expansion in productive activity of at least sea sonal proportions was reported in several lines during February. Steel ingot output rose to 52 per cent of the oretical capacity, as against 47 per cent at the end of January, and production of cotton goods, anthracite coal, and crude petroleum also showed increases from the January level; output of bituminous coal, however, declined. In January the total volume of industrial production showed an expansion of close to the usual proportions from the low levels reached at the year-end. Among the metal industries, output of both pig iron and of steel increased slightly more than is usual for the month, so that this bank’s seasonally adjusted indexes showed ad vances for the first time in a number of months, but curtailment of output was general among the non-ferrous metal producers. Following the sizable expansion of automobile output in December, a further small increase in output occurred in January, bringing the level of activity in this industry well above its low point of last autumn. Production of bituminous coal declined sharply late in January, so that the total output for the month was lower than in December, in contrast to the usual seasonal increase; crude petroleum output also was reduced, but production of anthracite coal increased slightly. Textile mills operated at somewhat higher levels than in Decem ber, although in the case of silk the increase was less than seasonal. Output of other industries showed no con sistent change from December to January, after seasonal adjustment. Dcc. 94 91 92 79 83 84 Copper, U. S. mines.................................. P r o d u c tio n Nov. Metals C e n tra l B a n k R a te C hanges On February 6 the Bank of Sweden lowered its rate from 3 to 3 per cent, the last previous change having been a reduction from 4 to 3 % per cent on April 3, 1930. On January 29 the rate of the National Bank of Bul garia was lowered from 10 to 9 per cent. This was the first change made since July 2, 1929, when the rate was moved upward from 9 to 10 per cent. 1931 1930 Textile and Leather Products Cotton consumption................................. Wool mill activity..................................... Silk consumption....................................... Leather, sole.............................................. Boots and shoes......................................... Foods and Tobacco Products Live stock slaughtered.............................. Wheat flour................................................ Sugar meltings, U.S. ports...................... Tobacco products...................................... Miscellaneous Printing activity........................................ Paper, other than newsprint.................... Paper, newsprint....................................... In d e x e s o f B u s in e s s A c t i v i t y A few important indicators of business activity showed signs of greater stability in January and the first part of February. During most of January, merchandise and miscellaneous car loadings continued, after seasonal ad justment, at the level that had generally prevailed since early December, and in the first two weeks of February, the seasonally adjusted figures averaged slightly higher than in January. Average daily department store sales declined slightly less than usual in January from the December level, both in this district and in the country as a whole, and preliminary indications were that there was little change in this district during the early part of February. The January indexes of building contract awards, life insurance paid for, and advertising also tended to advance somewhat. IN D E X IN D E X . ii-------------------- ;V 4 \ too j A V * 50 1 K B U lL D ir M G C O N T ft\C T $ .. .. i - i.. i ...1 1 .1.- .... . I l,._1 A U T O h 1 0 B IL E S 1 1 1 1 I l 1 I 1929 1929 1930 1931 Production of Steel Ingots and Automobiles, Cotton Consumption, and Building Contract Awards, Adjusted for Seasonal Variation and Year-to-Year Growth 1930 J.. .1 1931 ! MONTHLY REVIEW, MARCH 1, 1931 22 INDEX Railroad Car Loadings of Merchandise and Miscellaneous Freight, Adjusted for Seasonal Variation and Year-to-Year Growth On the other hand, car loadings of bulk freight ex panded less than usually in January, and larger than seasonal declines were shown in bank debits, security trading, and postal receipts. The increase of new cor porate enterprises in New York State was less than the usual December to January increase, and the number of business failures rose to a level exceeding that of any previously recorded January. (Adjusted for seasonal variations and usual year-to-year growth) 1931 1930 Jan. Nov. Dec. 94 98 85 104 82 80 78 63 90 72 78 80 60 91 62 78 76 60p 78p 98 89 111 92 87 89 88 80 85 85 88 76 87 84 89 77 Bank debits, outside of New York City.. Bank debits, New York City................... Velocity of bank deposits, outside of New York City............................................... Velocity of bank deposits, New York City Shares sold on N. Y. Stock Exchange. . . Postal receipts........................................... Electric power............................................ Employment in the United States.......... Business failures........................................ Building contracts..................................... New corporations formed in N. Y. State Real estate transfers................................. 98 117 87 92 91 103 88 89 115 129 241 99 97 98 111 88 84 69 94 87 166 87 83 83 113 63 83 59 95 95 196 90 84p 82 123 62 80 60 97 83 159 88 General price level*................................... Composite index of wages*...................... Cost of living*........................................... 174 227 170 161 219 161 158 219 159 relative to the computed trend since 1921. The moder ately favorable showing of January was due to an in crease in public works and utilities undertakings, as both residential and non-residential building contracts declined from December to January. During the first three weeks of February, more than a seasonal advance in building contract awards was reported, chiefly as a result of larger contracts for residential building work. As compared with the level of a year previous, Jan uary contract awards continued to show a substantial reduction; total contracts were down 30 per cent, and public works and utilities and other non-residential work were down more than that amount, but residential build ing showed a decline of only 18 per cent. Residential building in recent months has been fluctuating at a low level but in general the changes have been largely con fined to seasonal fluctuations, following a decline of more than two years’ duration. Several of the districts from which construction contract figures are collected by the F. W . Dodge Corporation showed increases over the totals reported in January 1930; these localities were the Southern Michigan, Kansas City, New Orleans, and St. Louis districts. While the total volume of building contracts in Metro politan New York and vicinity continued to show a con siderable decline from the level of a year previous— a reduction of nearly one-fourth in January— contracts for residential work were approximately 20 per cent above a year ago. Public works and utilities, on the other hand, reversed the tendency of December and were 30 per cent smaller than a year ago, and other non-residential building contracts in this territory were 46 per cent be low the volume of January 1930. 157 216 158 Jan. Primary Distribution Car loadings, merchandise and misc........ Car loadings, other.................................... Exports....................................................... Imports....................................................... Panama Canal traffic................................ Distribution to Consumer Department store sales, 2nd Dist............ Chain store sales, other than grocery.. . . Life insurance paid for............................. Advertising................................................ General Business Activity p Preliminary C o m m o d it y P ric e s The tendency in commodity prices was predominantly downward again during February, and the weekly index shown in the accompanying diagram continued to decline rather rapidly. Few important commodities showed increases for the month as a whole. Raw cotton, the most conspicuous exception, continued the advance which began in December, and touched 11.35 cents a pound, which is 1.90 cents above the low of the middle of December. PER CEN T 80 132 63 78 *1913 average=100 B u il d i n g During January, the volume of building contracts awarded in the 37 States included in the F. W . Dodge Corporation survey was 9 per cent smaller than the amount of work contracted for during December, but as this decline was slightly less than the usual seasonal contraction between these two months the index of build ing contracts computed by this bank advanced 1 point. For the past three months this index has held within a narrow range, although it has been at the lowest levels Weekly Movements of General Commodity Prices (Index of the National Fertilizer Association; 1926-28=: 100 per cent) FEDERAL RESERVE AGENT AT NEW YORK No significant change occurred in the price of wheat, but most other important agricultural commodities de clined. Live stock generally showed marked weakness, and the price of hogs reached a new low level for recent years. Hides dropped 1 % cents further to 7 cents a pound, or less than one-third of the peak price of 1929. Silk reacted sharply, following its January gain, and rubber, wool, corn, and sugar also showed declines for the month as a whole; rubber equaled its record 1930 low, and wool and corn established new low levels for many years. Scrap steel dropped 50 cents a ton, thus canceling all of the gain made just after the turn of the year, but later recovered 25 cents; the Iron Age composite price of pig iron receded further to $15.71 a ton, the lowest figure since 1915. The non-ferrous metals declined early in the month, but subsequently recovered slightly. Cop per equaled its previous low of 9 % cents, but in conse quence of a marked stimulation of foreign and domestic buying at this level, recovered to 10% cents. Similarly, the price of lead was reduced further to a new low figure, 4.50 cents a pound, but subsequently recovered to 4.60 cents. Silver dropped as low as 2 5% cents an ounce, followed by an advance to 27% cents. Zinc re ceded to its previous low of 3.95 cents, but later recov ered somewhat; tin, on the other hand, showed a slight upward tendency. The wholesale commodity price index of the Bureau of Labor Statistics declined in January to 77.0 per cent of the 1926 average. This brought the total decrease since the peak of July 1929 to 21 per cent. F o r e ig n T r a d e During January, the value of this country’s foreign merchandise trade continued the downward course of the past fifteen months, which, as the accompanying diagram indicates, has been interrupted only by seasonal increases in a few months. Compared with a year pre vious, both exports and imports showed slightly larger percentage decreases than in any month during the past year. Exports, valued at $250,000,000, and imports, at $183,000,000, were 39 and 41 per cent, respectively, below the levels of a year ago. The decline from December in each case was about $25,000,000. In the case of exports, this reduction was not much larger than the usual sea sonal movement, whereas in the case of imports the decline was contrary to the seasonal tendency. In general the heaviest percentage reductions in for eign trade values during January occurred in the raw material group, which no doubt is partly explainable by wider fluctuations in the prices of basic commodities than in prices of finished or semi-finished products. Exports of raw materials, including a large proportion of raw cotton, totaled 44 per cent less than a year ago, and im ports of raw materials, chiefly raw silk and crude rubber, were 45 per cent smaller. Partly and wholly manufac tured exports and imports continued to be more than one-third smaller in value than last year. The quantity of raw cotton shipped abroad was 28 per cent smaller, and the value 57 per cent less, than in Janu ary 1930. Exports of grains decreased nearly 60 per cent in volume and about two-thirds in dollar value. Quantity 23 MILLIONS OF DOLLARS Foreign, Trade of the United States; Monthly Exports and Imports of Merchandise imports of crude rubber were 22 per cent less than a year ago, but raw silk and coffee importations increased 14 and 13 per cent, respectively. E m p lo y m e n t a n d W a g e s The number of workers employed in factories, both in New York State and in the country as a whole, showed a further decline of more than seasonal proportions in January, and reached a new low level for recent years. Outside of factories, it appears that the situation also was unfavorable, for weather conditions interfered with out-of-door operations, and the United States Employ ment Service reported that there were large surpluses of both skilled and unskilled workers. The indications of data on the relative availability of jobs were somewhat mixed. On the one hand, the rate of voluntary labor turnover in factories, after reaching in December a new low level for the twelve years for which the figures are available, showed an unusually large in crease for January. On the other hand, the number of persons who applied to the New York State Employment Bureaus for work was larger in January than in Decem ber, while the number of orders for workers was smaller, so that the ratio of applications to available jobs fell to a new low level. In the first two weeks of February, this ratio showed a small recovery, which was at least partly of a seasonal nature. Payroll and wage data indicate further reductions in the income of industrial employees in January. Factory payrolls in New York State dropped 4 per cent further, whereas the average December to January decline in past years has been a little over 1 per cent. Average weekly earnings of factory employees declined to the lowest level since 1923. D e p a r t m e n t S to r e T r a d e January sales of reporting department stores in this district were 7.6 per cent smaller than in 1930. Sub stantial decreases in sales continued to be reported in New York City, Buffalo, Syracuse, Bridgeport, Southern New York State, Hudson River Valley, and the Capital District, while the declines in sales in the other sections 24 MONTHLY REVIEW, MARCH 1, 1931 of this district were much smaller, ranging from 1 per cent to 5 per cent. The leading apparel stores reported sales 5 per cent below January 1930, as compared with a decline of more than 8 per cent in December. Stocks of merchandise on hand at the end of January, valued at retail prices, were nearly 10 per cent below last year, the largest reduction in a number of years. The rate of collections on charge accounts during the month was slightly lower in January 1930, but compared more favorably with a year ago than in December. Percentage change January 1931 compared with January 1930 Locality Net sales Per cent of accounts outstanding December 31 collected in January Stock on hand end of month 1930 1931 51.6 51.2 49.7 34.0 49.6 41.6 41.8 52.6 48.8 49.3 33.1 45.9 40.8 39.9 per cent decline compared with a year ago in January, following an increase in December, and the sales of gro ceries were 14 per cent smaller than a year previous. Wholesale diamond dealers reported January sales al most 50 per cent smaller than in 1930, and machine tool orders, reported by the National Machine Tool Builders Association, declined further to about one-third the vol ume of last year. Yardage sales of silk, reported by the Silk Association of America, increased for the third consecutive month; however, the increase in January was comparatively small. The value of stocks of merchandise held at the end of January in all reporting lines, with the exception of drugs, remained substantially smaller than a year ago. Collections in January this year were only slightly smaller than in 1930. New York....................................................... Buffalo............................................................ Rochester....................................................... Syracuse.......................................................... Newark........................................................... Bridgeport...................................................... Elsewhere....................................................... Northern New York State....................... Southern New York State........................ Hudson River Valley District.................. Capital District......................................... Westchester District................................. — 8.6 — 5.8 — 2.6 — 7.9 — 2.6 — 6.7 — 9.3 — 4.8 — 13.2 — 12.6 — 9.0 — 1.2 — 8.2 — 14.3 — 7.3 — 6.7 — 15.1 — 8.4 — 10.8 All department stores........................... — 7.6 — 9.5 50.1 49.5 Apparel stores........................................ — 4.9 — 13.0 50.7 47.3 Net sales Men’s clothing.............. Cotton goods................ As the following table shows, the principal apparel de partments were among those showing the more favorable comparisons of sales with those of a year ago, while the furniture, home furnishings, and musical instrument and radio departments were among those showing the larger reductions in sales. Net sales percentage change January 1931 compared with January 1930 Toilet articles and drugs..................... Toys and sporting goods..................... Men’s and Boys’ wear......................... Men’s furnishings................................ Woolen goods....................................... Women’s and Misses’ ready-to-wear.. Women’s ready-to-wear accessories... Hosiery................................................. Linens and handkerchiefs.................... Silverware and jewelry........................ Cotton goods........................................ Luggage and other leather goods....... Shoes..................................................... Furniture.............................................. Silks and velvets.................................. Books and stationery.......................... Home furnishings................................. Musical instruments and radio.......... Miscellaneous....................................... Commodity Stock on hand percentage change January 31, 1931 compared with January 31, 1930 +10.9 +10.4 + 4.1 + 1.7 + 1.6 — 0.7 — 1.1 — 1.2 — 1.4 — 3.8 — 4.7 — 7.8 — 8.3 — 9.6 — 9.9 — 10.7 — 11.5 — 51.3 — 15.4 — 7.0 — 7.1 — 14.1 — 15.9 — 31.8 — 21.3 — 11.0 — 19.1 + 0.2 — 9.1 — 9.6 — 20.8 — 15.7 — 13.5 — 16.7 — 15.0 — 7.4 + 9.0 — 15.4 Percentage change January 1931 compared with December 1930 Machine tools**........... — 4.9 + 13.2 — 42.8 +29.0* — 30.7 +21.3 — 34.1 — 2.8 — 2.8 + 3.7 —30.6 — 57.2 Percentage change January 1931 compared with January 1930 Stock end of month Net sales — 2.1 — 13.6 —44.2 + 0.7 — 29.1 — 5.0* + 2.1* +20.4 — 27.5 + 0.7 — 6.4 + 6.5 — 22.9 — 63.2 — 24.2 — 24.1 — *8‘.0 —48.4 — 10.5 — 35.4 Weighted average. . . — 4.8 Stock end of month Per cent of accounts outstanding December 31 <collected in January 1930 1931 73.1 45.8 32.3 47.9 39.7 33.7 51.6 75.4 41.9 32.7 46.4 38.8 36.4 46.2 73.2 57.2 — 17.5 } 43.8 —30.4 7i'.i 53.9 } 37.6 52.9 51.7 — 17.5 — 35‘.1 — 15.3* — 32.4 +29.8 — 14.0 — 25.2 * Quantity not value. Reported by Silk Association of America ** Reported by the National Machine Tool Builders Association C h a in S to r e T r a d e Total sales in January of the reporting chain store organizations were 1.3 per cent less than a year ago, the smallest decrease since last September. The sales of ten cent chain systems were 4 per cent larger than a year previous, the first increase in sales since April. The daily rate of sales of drug, shoe, and variety chains declined considerably less from a year ago than in December, while in groceries and candy the decreases in sales showed no material change from December. After allowing for the change in the number of stores operated, ten cent chains were the only type of chain stores that reported an increase; however, the average decrease in sales per store of all reporting chain systems showed the smallest decline since May 1930. Percentage change January 1931 compared with January 1930 W h o le s a le T r a d e The volume of January sales by wholesale dealers in this district averaged 25 per cent below a year ago. The sales of cotton goods, shoes, hardware, stationery, paper, and jewelry continued to be substantially smaller than a year previous, and the sales of men’s clothing showed the largest decrease from a year previous during the period covered by this bank’s records. Drug firms reported a 6 Type of store Number of stores Drug............................................. Total..................................... Total sales Sales per store 5.4 4.2 3.3 7.7 7.4 2.0 — 2.4 + 4.3 — 12.0 — 14.1 — 4.0 — 26.8 — 7.4 + 0.1 — 9.0 — 20.3 — 10.6 — 25.3 + 4.9 — 1.3 — 6.0 + + — + + — FED ERAL RESERVE B A N K OF N E W YO R K MONTHLY REVIEW, MARCH 1, 1931 B u s in e s s C o n d i t i o n s in t h e U n i t e d S t a t e s (Summarized by the Federal Eeserve Board) I N D USTRIAL activity increased in January by slightly less than the usual seasonal amount, and factory employment and pay rolls declined. Money rates in the open market declined further from the middle o f January to the middle of February. P roduction Index Number of Production of Manufactures and Minerals Combined, Adjusted for Seasonal Variations (1923-25 average=100 per cent) 1927 1928 1929 1930 1931 Index Numbers of Factory Employment and Payrolls, Without Adjustment for Seasonal Variations (1923-25 average= 10 0 per cent) B ILLIO S OF DOLLARS N and E mployment The Board’s index of industrial production, which is adjusted for seasonal variation, showed a decrease o f less than 1 per cent in January, compared with declines o f 3 per cent in November and in December. Activity in the steel industry, which was at a low level in December, increased during the following month by considerably more than the usual seasonal amount; output of automobiles, which had shown an unusual increase in December, increased less in January than in the corresponding month o f other recent years. The cotton and wool textile industries were more active in January, while the output of copper, petroleum, and coal declined. The number o f wage earners employed at factories was smaller in the pay roll period ending nearest the 15th of January than in the preceding month, reflecting in part extended year-end shut-downs. There were large declines in employment at foundries and at establishments producing hosiery, women’s clothing, lumber, brick, cement, and tobacco products; employment in the m en’s clothing, leather, and agricultural implement industries increased some what more than usual for the season. Factory pay rolls were considerably reduced in January. Value of contracts awarded for residential building continued to decline in January, according to the F. W. Dodge Corporation, while contracts for public works and utilities increased. In the first half o f February the daily average o f contracts awarded for residential building increased. D istribution Volume o f freight car loadings was reduced further in January, contrary to the usual seasonal tendency, reflecting decreases in shipments o f coal, mer chandise, and miscellaneous freight. Department store sales, which always show a sharp reduction from December to January, declined by less than the estimated seasonal amount. W holesale P rices The general level o f wholesale commodity prices declined further by 2 per cent in January, according to the Bureau o f Labor Statistics. Prices of many leading agricultural products, and o f copper, and silver decreased sub stantially, while prices o f cotton and silk advanced. In the first half of February the price o f cotton continued to rise and in the middle of the month copper also advanced, while the price o f silver declined to new low levels and prices o f livestock continued to decrease. 1927 1928 1929 1930 193« Monthly Averages of Weekly Figures for Re porting Member Banks in Leading Cities (Latest figures are averages of first 2 weeks of February) P RC N E ET B ank Credit Volume o f credit at member banks in leading cities showed little change from January 14 to February 11, further declines o f $200,000,000 in loans on securities and of $115,000,000 in all other loans being largely offset by an increase of $310,000,000 in the banks’ holdings o f investments. In the first three weeks o f February bank suspensions declined sharply and a number o f banks, previously suspended, resumed operations. Volume of Eeserve Bank credit outstanding decreased by $175,000,000 between the weeks ended January 17 and February 14, reflecting a reduction of $70,000,000 in member bank balances and $80,000,000 in money in circu lation, together with an increase of $25,000,000 in the stock o f monetary gold. The principal reduction has been in acceptance holdings of tlie Eeserve Banks. M oney R ates ary rates are averages for the first 19 days) Money rates in the open market continued to decline after the middle o f January and by the middle o f February were at new low levels. The pre vailing rate on prime commercial paper declined to a range of 2*4-2 % per cent; and the rate on bankers acceptances was reduced to l 1 per cent, but subse /^ quently advanced to 1 ^ per cent.
