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MONTHLY REVIEW ofCredit andBusiness Conditions Second Federal Reserve District Federal ReserveAgent Federal ReserveBank, NewYork MoneyMarket inFebruary The money market duringthe past monthhas con tinued to reflect the pressure of the unusually large supplyof funds availableforemployment, especiallyin the market for longer terminvestments. Yields on nearlyall classesof securitiesshowedreductionsduring themonth, andinthe caseof Government bonds and thehighest gradecorporationissues, reachedthelowest levelsinmanyyears. Reports from member banks showed a renewed expansionininvestments that carriedthetotal volume of loansandinvestmentstothehighest levelsinseveral years. Theincreaseinbankinvestments hascontinued tobelargelyindirect obligations of theUnitedStates Government, Government guaranteed securities, and Stateandmunicipal securities. HoldingsbyNewYork Citymemberbanksof Governmentsecurities, including securitiesfullyguaranteedbytheGovernment, showed anincreaseof $105,000,000duringthefourweeksended February 19, andholdings of other securities showed anincrease of $77,000,000 which apparently reflected largely purchases of State andmunicipal obligations. March1, 1936 Reportingmemberbanksinotherprincipalcitiesshowed comparativelylittle changeinholdings of Government securities, but had asmall increase ininvestments in other securities. In general the volume of outstanding loans of the weekly reporting member banks continued to decline gradually during the past month. Loans to security brokersanddealers, afterafurtherdeclineinthelatter part of January andearly February, turned upward slightly, but theincreasewassmall incomparisonwith thestrongriseinsecurityprices. Loansonsecuritiesto otherborrowers declinedslightly further. Therewere indications that thefurther riseinsecurityprices was financedlargelybynewfunds comingintothemarket, rather thanborrowedmoney. Thebreadthof therise inprices, inpracticallyall formsof securities, indicated investmentbyavarietyof typesofinvestors. Accompanying the increase inthe earning assets of reportingmemberbanks, therehas beenarenewedex pansionduringthepastmonthintheirdemanddeposits, whichcarriedsuchdeposits tonewhighlevels. Data forall memberbanksasof December31, 1935, recently issuedbytheBoardof GovernorsoftheFederalReserve System,areshowninthe accompanyingdiagramwith B IL L IO N S OF DOLLARS 8r C O U N 'T R Y B A N } <S 1930 1931 1 932 Adjusted Demand Deposits of Various Groups of Member Banks on Condition Report Dates 1933 1934 1935 18 MONTHLY REVIEW, MARCH 1, 1936 precedingdatasincethebeginningof1930. Theyindicate theextent of theexpansioninthemoneysupplyinthe formof demanddepositsduringthepasttwoandahalf years. The data showninthe diagramrepresent the demanddeposits of individuals, partnerships, corpora tions, local governments, etc., andexcludedepositsheld bymember banks for domestic andforeignbanks and fortheUnitedStatesGovernment. Thevolumeof suchdepositsinNewYorkCitymem ber banks, showninthe first sectionof the diagram, increasedmorethan50percent betweenJune30, 1932, andDecember31, 1935, andonthelatterdatewasabout 40percentabovetheaveragefortheyear1929. Inother Eeserve cities, where the lowpoint for deposits was reachedearlyin1933, theexpansionbetweenthemiddle of 1933 andthe endof 1935 amountedtomore than 60per cent, andtheincreaseovertheaveragelevel of 1929wasabout 23percent. Adjusteddemanddeposits inall other member banks—*‘country99banks—also reachedtheirlowpoint intheearlypart of 1933, and betweenthemiddle of that year andthe endof 1935 increasedabout65percent. Althoughtheproportionate expansion fromthe lowpoint of the depression was greatest inthisgroupof banks, however, theamount at theendof 1935 remainedwell belowtheaveragelevel of theperiodfrom1928to.1930, despiteanincreasein membershipinthisgroup. Thelatest availabledatafor all nonmemberbanksalsoshewedaconsiderableexpan sion of demand deposits since 1933, but indicated a substantiallylowerlevel thanintheyearsprecedingthe depression. ExcessReservesandMoneyRates The volume of excess reserves inmember banks has fluctuatedirregularlyduringthepastmonthandonthe wholehasshownnomaterial change. Government dis bursements of cashpreviouslyheldinthe Treasury or intheReserveBanks addedmorethan$100,000,000 to memberbankreserves, butthegainfromthissourcewas offset byaseasonal increaseintheamount of currency in circulation, the small gold export movement that occurredin February, and other miscellaneous trans actions. Astheaccompanyingtableindicates, shorttermmoney ratesremainedpracticallyunchanged, andtheprincipal M oney Rates a t New Y o rk Feb. 28, 1935 Jan. 31, 1936 Feb. 28, 1936 Stock Exchange call loans....................... Stock Exchange 90 day loa n s................. P rim e commercial paper— 4 to 6 months B ills — 90 day unindorsed......................... Customers’ rates on comm ercial loans (Average rate of leading banks a t m iddle of m o n th ).............................. Treasury securities: M a tu rin g December (y ie ld )............... M a tu rin g February 1938 (y ie ld ). . . . Average yield on Treasury notes (1-5 y e a rs)....................................................... Average yield on Treasury bonds (more th a n 5 years to earliest call d a te ). . . . Average rate on latest Treasury b ill sales 273-274 day issue......................... Federal Reserve B ank of New Y o rk re discount r a te .......................................... Federal Reserve B ank of New Y o rk buyin g rate fo r 90 day indorsed b ills * Nominal 1 * H -1 H Vs *1 H H Vs *1 H % Vs .67 1.83 1.67 N o yield N o yield 0.33 N o yield 0.14 0.66 0.72 #0.63 2.56 2.48 2.38 0 .17 0.10 0.07 IX IX IX X X X # Average raised 0 06 by exclusion of issue maturing February 15, 1937 changeinmoneyrates duringthepast monthhasbeen inyields onthelongertermsecurities. BillsandCommercialPaper Asthemonthprogressedsom eincreaseoccurredinthe volumeofbillsboughtandsoldbythedealers, butinthe aggregatetheturnoverinthebill marketremainedvery small during February. Rates were unchanged. The volume of bills outstanding at the end of January amountedto$384,000,000, adeclineof $13,000,000from amonthearlier, following the increase of $10,000,000 reported for December. The decline during January reflected a further decrease in domestic warehouse credits. Of all billsoutstandingat theendof January, 92percentwereintheportfoliosofacceptingbanksand bankers, and the amount held by other investors amountedtoonly$31,000,000. Thecommercialpapermarketalsoremainedquiet, due toadearthofnewpaper. Whileratesgenerallyquoted for four to sixmonthcommercial paper remained at % per cent, small amounts of notes maturinginfour months were soldat % per cent inthelatter part of February. At the endof January commercial paper houses had $177,700,000 of paper outstanding, anin creaseof 4 per cent comparedbothwithamonthago andwithayearago. SecurityMarkets Prices bothof bonds andof stocks advancedfurther inFebruary. Thetotal volumeof tradingalsoincreased considerably, turnoverof stocksontheNewYorkStock Exchange averagingthreemillionshares dailyfor the monthandtradinginbondsontheExchangeaveraging around$18,000,000aday. Inthebondmarket theadvanceindomesticcorpora tion issues carriedrepresentative price averages from 1to2pointshigher. Whileallgroupsofcorporatebonds were quite strong, the largest advances occurred in mediumgraderailroadbondswhichasaclasshadlagged behindothersectionsof themarketuntil recentmonths. United States Government bondprices also showeda moderateadvanceduringFebruary, withtheresultthat theaverageyieldonTreasurybondsrecededtoapproxi matelythesamelowlevel aswas reachedlast summer. The movements of United States Government, high grademunicipal, andhighgradecorporatebondsduring thepastseventeenyearsareshownintermsof inverted yields in the accompanying diagram, which indicates thatpricesofalltheseclassesofbondsarenowathigher levelsthanatanytimeinthepost-warperiod. In1919, whentheNational debt wasat itswarpeak, longterm Government bondsyieldedanaverageof 4.62percent, or0.16percentmorethanmunicipalsand0.86percent less thanAaa corporate issues. BetweenAugust 1919 and December 1930 the Federal debt was reduced $10,500,000,000 tothepost-war lowof $15,800,000,000, and during this period the yield on Government’s declinedmore rapidly thanthe return onother high gradebonds, sothat by December 1930 United States Government bondswereyielding3.20percent, or 0.85 percentlessthanmunicipalswhicharefullytaxexempt, and1.32percent lessthanAaacorporatebonds. Since FEDERAL RESERVE AGENT AT NEW YORK 19 monthbutalsototheabsenceof manylargeissues, but thevolumecontinuedtocomparefavorablywiththatof ayearago. Domesticcorporationfinancingaggregated approximately $145,000,000 in February, including $50,000,000ofindustrialcompanyissuesand$95,000,000 of publicutilitysecurities; alargepart of theproceeds oftheseissuescontinuedtobefortherefundingof out standingsecurities. Themost important of themonth’s corporateissues was anofferingat par of $55,000,000 of NewYorkEdisonCompanyrefunding3*4 per cent 30yearbonds. Thesebondswereimmediatelyquotedin themarketatapremiumof about2points. Stateandmunicipal issues totaledabout $50,000,000 andtherewasa$10,000,000refundingissueof Federal Intermediate Credit Bank debentures. In additionto the public offerings, Remington Rand, Inc., offered $20,000,000 of 20 year 4% per cent debentures (with stockpurchasewarrants) inexchange for outstanding 5y2per cent debentures of thecompany, andfor sub scription by common stockholders; any of the new debentures not sotakenwill be offeredto the public. Thisoperation, inadditiontotherefundingof $17,500,December 1930, although the public debt has risen 0 00of securities, will provideabout$2,500,000of work $13,800,000,000, theaverageyieldonTreasurybondshas in capital. declinedfurther to2.63 per cent, but thedecreasehas g A n entofunusual interestwastheregistrationwith beensomewhat less thaninyields onotherhighgrade the Seecvu rities and Exchange Commission, toward the bonds, sothatGovernment’snowyield0.26percentless endof th onth, of aproposedissue of $40,000,000 thanhighgrademunicipalsand0.99percent lessthan firstmortgeagm e longtermbondsof theJones&Laughlin Aaacorporatebonds. S t e e l C o r p o r a t io . Theproceedsof thisissuearetobe These differences inyields betweenGovernment and usedtotheextenn t $31,500,000intheconstructionand other bonds, however, remainlarger thanthose which equipment of newofpla ndinadditions to existing existedin1919, despitethefact that thetotal interest mills;$5,500,000willbentussea d dischargebankindebted bearingdebt of the Government is now$3,300,000,000 ness contractedinconnectiotnow hthe redemption of largerthanin1919. Thegreaterpart of theincreasein outstandingbonds calledbeforeit m aturity; andthere the National debt has beeninsecurities maturing in mainderwillincreaseworkingcapita lofthecorporation. less than five years, and the supply of long term United States Treasury financing uring February Governmentsecuritiesoutstandingisabout$2,700,000,000 resultedinnochangeintheinterestbed a ringdebtof the smallerthanatthewarpeak. Thesupplyofcorporation Government, asfourweeklyissuesof $50 00,000of 273 bondsratedAaahasundoubtedlydiminishedduringthe dayTreasurybillsreplacedmaturitiesof,0 a pproximately past fiveyears, but anumber of suchbonds whichare thesameamount. RatesonthenewTreasury illstended includedinthediagramhaveoptional redemptionfea downwardfrom0.095percentonthefirstFebb r uaryissue turesthat haveprobablytendedtorestrict theadvance to0.074ontheissuedatedFebruary26. intheirpricesandthedeclineintheiryields. Thegeneral averageof stockpricesadvancedabout 3 percentduringthefirsthalfofFebruary,followingarise Central BankRate Changes of 7percentinJanuary, andreachedthehighestpoint Effective February4, theNetherlands Banklowered sinceJuly1931. Somedecline,chieflyinthepublicutility its discount ratefrom3to2y2percent, thesixthcon shares, occurredonFebruary17followingannouncement secutivedecreaseinaserieswhichbeganwhentherate oftheUnitedStatesSupremeCourtdecisionintheTen wasreducedfrom6to5percent, effectiveOctober 17, nesseeValleyAuthoritycase, andinthesucceedingtwo 1935. Onthe7ththeBankof Prancediscountratewas daysthepublicutilitystocksdeclinedfurther, makinga reducedfrom4to3y2percent, representingthethird total reductionof about 8per cent for thegroupas a successivereductionsincetheendof 1935whentherate whole. Meanwhile the industrial and railroad shares was6percent. ThenewlyformedCentral Bankof the resumed their advances, and subsequently the utility Argentine Republic has establishedadiscount ratefor sharesrecoveredmorethanhalfoftheirdecline. Toward thefirsttime, fixingitat3y2percenteffectiveMarch1. thecloseofthemonthanirregulardeclineoccurred, but ForeignExchanges industrialandrailroadstocksingeneralremainedhigher thanattheopeningofthemonth,andpublicutilityshares DuringtheearlypartofFebruary, theEuropeangold werewithinonepercentof theFebruaryopeninglevel. blocexchangesweregenerallyquotedinNewYorkator abovetheiruppergoldpoints, butafteracomparatively NewFinancing small amountof goldhadbeenengagedforshipmentto DuringFebruarytheamountofnewsecurityflotations FranceandHolland, thegoldexchangesdeclinedmoder wassmallerthaninJanuary, duenot onlytotheshort atelyandingeneral remainedsomewhat belowthegold Yields on United States Government Bonds Compared with Yields on Other High Grade Bonds— Scale Inverted to Show Price M ove ments (Yields on Treasury bonds not due or callable within 8 years computed by Treasury Department; yield on municipal bonds computed by Standard Statistics Company; yield on Aaa corporate issues computed by Moody’ s Investors Service) 20 MONTHLY REVIEW, MARCH 1, 1936 Dollars dollars GoldMovement After a heavy and almost uninterrupted inflowof goldfromabroadformorethanayear, asmall outflow of gold occurred early in February when dollar ex change declined to the point where gold shipments became profitable. Between February 3 and 8, $17,200.000of goldwas exportedtoFranceand$3,400,000 to Holland. OnFebruary 10 the dollar recoveredto abovethegoldexportpoint, andnofurthergoldexports fromtheUnitedStates occurredduringtheremainder of themonth. Inadditiontothe exports of the first week of the month, there was a net increase of $9,900.000 during February inthe amount of goldheld under earmark for foreign account at the Federal ReserveBankof NewYork. Imports of gold for the month amounted to about $2,200,000, of which $900,000 came fromAustralia, 700,000 fromChina, $300,000 fromChile, $200,000 export level duringtheremainderof themonth, accom $ fr mRussia, and$100,000fromNicaragua. Therewere panyingasubsidenceof theinflationrumorswhichhad alsoo e usual receipts of newly mined domestic and previously given rise to moderate selling of dollar scrapth g oldatthemintsandassayoffices. exchange. The gold exports were at least in part a Then t result of theexportsandearmarkingof gold reflectionof irregular tendencies inthe movement of andof te eimports anddomesticreceiptswas adecline shorttermforeignbalances, followingthelargeincrease of abouth$ ,000,000 inthemonetarygoldstockof the insuchbalancesinpreviousmonths, butforeigncapital countrydu1r5 gFebruary, thefirstmonthlydeclinesince continued to be transferred to this country during devaluationin o f the dollar at theendof January 1934. mostofFebruaryforinvestmentinAmericansecurities. Although the gold outflowwas almost negligible in magnitude and duration when compared with the Production unprecedented inflow amounting to approximately Datathusfaravailableindicatethattherewasafurther $2,800,000,000 duringthepast twoyears, the outward oderatedeclineduringFebruaryinthegenerallevel of movement was noteworthy in that it was only the m dustrial production, after adjustments for recurring second such movement that has occurred since the ina sonalinfluences. Operationsatautomobileplantswere devaluationofthedollarinJanuary1934. Thefirstperiod sce u r iledsomewhat further, apparently due chiefly to of small goldexportswasinthelatesummerandearly advtea eweatherconditionsandreportedcongestioninthe autumnof 1934, followingthepassageoftheSilverPur usedresa rmarket. Steelmillswereestimatedtohaveoper chase Act and the nationalization of domestic silver atedata naveragerateslightlyabovethatofthepreceding holdings. onth,butariseinactivityisusualbetweenJanuaryand Accompanying the strength of the European gold m ebruaryandinmostyearsthegainhasbeensubstantial. exchanges,thepound-dollarratereachedapeakof$5.03% F T edemandforsteel fromtheautomobileindustrywas duringthecourseoftradingonFebruary3,andremained reh duced, butpurchasesbyotherconsumers, particularly steadilyabove$5.00until February11. Thereafter, the the ilroads, gavesupporttosteel operations. Therate raterecededslightly, rangingbetween$4.98 and$5.00. of croan umptionof cottonby manufacturers of cotton FollowingreportsonFebruary26of political assassina goods, sw hordinarilyreachesitshighpoint at about tionsinJapan, theratefortheyenwasreducedslightly thistimehoic ftheyear, appearstohavebeenapproximately to$0.2889, from$0.2916ontheprevious day. unchangedfromthelevel of theprecedingmonth. This rateof operationswasreportedtohavebeenmaintained partlybydeliveriesagainstorderspreviouslyonhand,for theflowofnewbusinessremainedrestricted. Bituminous coalproduction,ontheotherhand,increasedfurtherdur ingthefirsthalfofFebruary, contrarytothetendencyof manyotheryears, andelectricpowerproduction, which usuallydeclinesinFebruary, waspracticallyunchanged. TheriseinindustrialproductionthatbeganlastAugust wasinterruptedinJanuarywhentheseasonallyadjusted indexof theBoardof Governorsof theFederal Reserve Systemdeclinedto99percentof the1923-1925average from104inDecember. Therewasareductionof 14per cent inthedailyaveragerateof automobileassemblies, steeloperationsdecreasedby8^percent, andcottoncon sumption, whilehigherthaninthecorrespondingmonth Movements of French Franc and Sterling Exchange Rates at New York (Latest quotations are for February 26 ) C losing Cable Rates a t N ew Y o rk Exchange on B e lg iu m ........................................... D e n m a rk ......................................... E n g la n d ........................................... F ra n ce ............................................. G e rm a n y......................................... H o lla n d ........................................... I t a l y ................................................. N o rw a y ........................................... S pain................................................ Sweden............................................ S w itzerla n d .................................... Feb. 28, 1935 $ .2358 .2161 4.8375 .06653 .4050 .6824 .0853 .2437 .1378 .2500 .3265 Jan. 31, 1936 Feb. 27, 1936 $ .1708 .2236 5.0063 .06694 .4074 .6873 .0805 .2516 .1387 .2582 .3297 $ .1705 .2229 4.9913 .06683 .4066 .6871 .0803 .2509 .1385 .2573 .3306 C an a d a ............................................ A rg e n tin a ........................................ B r a z il............................................... U ru g u a y .......................................... .9981 .3225 .0845 .8000 1.0019 .3337 .0859 .8000 1.0013 .3328 .0859 .8000 Ja p a n ............................................... In d ia ................................................ S hanghai......................................... .2838 .3666 .3881 .2922 .3783 .3000 .2900 .3775 .3013 21 FEDERAL RESERVE AGENT AT NEW YORK reachingthehighestpointsince1923. Cottonmanufactur ingaswellaswoolmill activitywasatalowlevelduring 1930-32, andincreasedsubstantiallyin1933, butin1935 cottonmillactivity, althoughhigherthanin1934, showed nosuchincreaseaswool mill operations, andremained belowthe 1933level. Activityat silkmills was main tainedrelativelywell during1930-32, butfell sharplyin 1933 andhas sincerecoveredonlymoderately. Aten dencyfortextileoutputtoriseinoneyearandtofall in thenextisobservableinall of theseseries, thoughmost conspicuouslyinwool andrayon. (A d ju ste d fo r seasonal va ria tio n s and usual year to year grow th) 19 3 5 1936 Jan. N ov. Dec. Jan. 52 67 42 64 69 81 54 71 75 87 58 73 71 70 53 75 67r 98 r 77r 104r 76r 108r 66p IlO p 74 98 70 65 72 74 55 71 70 76 76 83 72 70 76p 78p 93 p 74 p 83 114 69 123 107 86 129 63 99 110 91 126 67 107 128p 89 128p 61 lllp 120p 83 86 80 84 81 87 67 85 83 86 100 88 83 89 69p 87 37 74 71 57 49 93 74 83 54 93 41 Metals Index of Dollar Volume of Machine Tool Orders, Adjusted for Seasonal Variation (1 9 22 -2 4 average = 100 per cent) Steel in g o ts ................................................... of anyyearsince1929, didnot increaseoverDecember asmuchasusual. Thegaininshoeproductionalsowas somewhatlessthanthatexperiencedinmanyotheryears, andleadproductiondecreasedby10per cent. Onthe other hand, activityat meat packingplants was little changedandtherewereincreasesinproductionof coal, zinc, andwheatflour, andinthevolumeof machinetool business. Theaccompanyingdiagram,showingthevolume ofmachinetool orders, adjustedforusualseasonalmove ments, givesanindicationof theextent of therecovery inthisindustryinthepast threeyears. Thevolumeof businessdonesinceJune1935comparesfavorablywith thatofanyothersimilarperiodsincethelasthalfof1929. Operations of the principal textile manufacturing industriesduringrecentyearsarereviewedintheaccom panyingdiagram,activitybeingmeasuredineachcaseby thephysical quantityof rawmaterial consumedrelative totheamount in1929. Activityintherayonindustry reachednewhighpointsin1931,1933, and1935, andinthe lastyearoutputwas61percentabove1929. Wool mill operations, whichhavebeensubject toespeciallywide swings, andwhichin1934declined38percentbelowthe Employment andPayrolls 1929rate, thelowestpointtouchedbyanyof thetextile mployment inrepresentative NewYork State fac indexes, rosein1935to10percentabovethe1929level, torE iesdeclinedslightlylessthanusuallyfromthemiddle of December tothemiddle of January, while payrolls showedabout theusual decreasefor this periodof the year. Thereportof theDepartment of Laborindicated that the seasonal decline in employment was fairly general, eight of theelevenprincipal industrial groups reportingfewerworkersinJanuarythaninDecember. Thelargestreductionsinworkingforcesoccurredinthe building materials, food, and textile and clothing in dustries. For theentire country, likewise, therewere declines infactoryemployment andpayrollsfrommid-December tomid-January. After adjustment for the usual sea sonalvariationsthedecreaseinemploymentamountedto less than 1 per cent while the decline in payrolls amountedtoapproximately2percent. Thenumberof workers at automobile plants remainedpractically un changed, but employment in all of the other major factory classifications with the exception of leather products showed declines, many of which were of a Indexes of Activity in the Textile Industries (1929 = 100 per cent) Automobiles Passenger cars r ............................................. M o to r tru c k s r ............................................... Fuels B itu m in o u s coal............................................ A n th ra c ite c o a l............................................. Petroleum , c ru d e .......................................... Petroleum p ro d u c ts ..................................... E le c tric p o w e r............................................... 75p Textiles and Leather Products C o tto n c o nsu m p tio n .................................... W ool m ill a c tiv it y ........................................ S ilk m ill a c tiv it y ........................................... R ayon d e liv e rie s *......................................... Foods and Tobacco Products M e a t p a c k in g ................................................ W heat flo u r .................................................... Refined sugar delive rie s.............................. Tobacco p ro d u c ts ......................................... Miscellaneous N e w sp rin t p a p e r.................................... .. M achine to o ls ................................................ p P re lim in a ry PER CENT r Revised * F o r q u a rte r ended 72p 84 71p 92 22 MONTHLY REVIEW, MARCH 1, 1936 rise. Department store sales inthe Metropolitanarea of NewYorkalsoshowedless thantheusual seasonal advance, probablyduetothebadweatherprevalent in thisperiod. DuringJanuary,areactionoccurredinthedistribution of goodsandgeneral businessactivityfollowingtheup wardtendencyofprecedingmonths. Morethanseasonal recessionswereshowninsuchindicators of retail trade asurbandepartmentstoresales,salesofmailorderhouses, andvarietychainstoresales. Registrationofnewpassen gercarsalsorecededevenafterallowancefortheearly introductionof newmodels. Chaingrocerytrade, how ever, increasedfromDecembertoJanuary, contraryto theusual movementinpreviousyears. Amongthemore general businessindicators, merchandiseandmiscellane ousfreightcarloadings, thevolumeofchecktransactions andadvertising, andexportsandimportsall showedde~ creases after adjustment for customaryseasonal move ments. Gains, however, occurredintheadjustedindexes seasonal nature. In comparison with January 1935, ofbulkfreightcarloadingsandlifeinsurancesales. employmentshowedanincreaseofabout5percent, with the gain concentrated inthe durable goods group of industries. Thetrendof employment since 1929 infour of the heavy industries—those manufacturing automobiles, agricultural implements, iron and steel, and railroad equipment—is indicatedintheaccompanyingdiagram. Employment in the agricultural implement industry, after havingdeclinedthemost from1929to1932, has shown the greatest increase since that time, about fivetimes as manyworkers beingengagedinJanuary 1936 as in October 1932. Employment at automobile factoriesinJanuarywasnearlythreetimesaslargeas atthe1932lowpoint andcomparedfavorablywiththe 1929level, whileintherailroadequipmentandironand steel industries employment has shownmore moderate increases. Among the manufacturing industries, employment was greatly curtailed during January inretail trade, owingtothedismissal of extraholidayworkers, andin building construction, because of the unusually severe winterweather. Increaseddemandforfuel, ontheother hand, accountedfortheemploymentof moreworkersin bothanthraciteandbituminouscoal mining. During the monthendedJanuary 15, there was an increaseof morethan500,000inthenumber of people employedundertheprogramfinancedbytheEmergency Relief Act of 1935, bringing the total engaged to Building 3,000,000workers. EmploymentonPublicWorksAdmin istrationconstructionprojects was somewhat curtailed Althoughthetotal of buildingandengineeringcon duetobadweather conditions andtothe approaching tractsawardedinJanuaryinthe37Statescoveredbythe completionof theroadbuildingprogramfinancedfrom F. W. DodgeCorporationreport wasapproximately23 percent belowthecomparativelyhighlevel reachedin oldappropriations. December, thevolumeofcontractswasmorethandouble t hat reportedforJanuary1935. Gainsoverayearago Indexes of Business Activity occurredineachofthemajorbuildingclassifications,non Owinglargelytocontinuedheavydemandforcoal, a residential contracts other thanfor public works and substantial gainoccurredinbulkfreight shipmentsover utilityprojectsbeingnearlythreetimesaslargeasinthe therailroadsduringthefirst half of February, but the precedingJanuary. ThedeclineduringJanuary1936in movement of miscellaneousandlessthancar-lot freight residentialcontractswasofsomewhatlessthantheusual recededfurther incontrast tothecustomaryFebruary seasonalproportions,whiledecreasesinawardsforpublic PERCENT Indexes of Employment in Selected Durable Goods Industries (1 9 23 -2 5 average = 100 per cent) (Adjusted for seasonal variations, for usual year to year growth, and where necessary for price changes) 1935 1936 Jan. Nov. Dec. Jan. 62r 61r 46 70 65r 60r 63 71 67r 66r 58 79 64r 69r 51p 74p 70 68 63 80 71 59 68r 82 75 72 59 86 80 64 68r 88 79 75r 57r 85 79 69 81r 86 73 73 63 81 72 63 65p 59 42 70 44 75 44 66 p 44 Primary Distribution Car loadings, merchandise and misc. r ... Car loadings, other r.................................... Distribution to Consumer Department store sales, U. S..................... Department store sales, 2nd Dist............. Chain grocery sales...................................... Other chain store sales................................ Mail order house sales................................. New passenger car registrations r ............. Gasohne consumption.................................. Oeneral Business Activity Bank debits, outside New York C ity .. .. Bank debits, New York City..................... Velocity of demand deposits, outside New York City................................................... Velocity of demand deposits. New York C ity............................................................. New life insurance sales.............................. Factory employment, United States........ Business failures........................................... Building contracts r ..................................... New corporations formed in N. Y . State General price level*..................................... Composite index of wages*........................ Cost of living*............................................... p Preliminary r Revised 65 72 71 69p 45 82 82 35 29r 60 43 58 86 42 51r 56 43 55 87 37 71r 58 42 p 57 86 p 32 57 p 58 141 182 139 149 189 141 * 1913 average=100 149 189 140 150p 189p 139 FEDERAL RESERVE AGENT AT NEW YORK MILLIONS OF DOLLARS Value of Building and Engineering Contracts Awarded in Metro politan New York and Vicinity and Up-State New York Area (F . W . Dodge Corporation data) works andutilityprojects andfor othernonresidential workwereconsiderablymorethanusual forthistimeof theyear. TotalawardsofconstructioncontractsintheMetropoli tanNewYorkandup-StateNewYorkareasdeclinedless fromDecembertoJanuarythandidthetotal forthe37 States. Infacttherewereincreasesof16percentinresi dentialcontractsand4percentinawardsforpublicworks andutilityprojectsinthisdistrict, which,however, were morethanoffset byadecreaseof approximately38per cent incontractsfor othertypes of nonresidential con structioninJanuary, sothattotal constructioncontracts showeda decline of about 12 per cent. The gradual recoveryinbuildingactivityinthisdistrict duringthe pastyearfromtheextremelylowlevelsofthepreceding threeyears is indicatedintheaccompanyingdiagram. TotalcontractsawardedinJanuary1936werenearly125 percenthigherthaninJanuary1935andhadrecovered toapproximatelythelevel oftheclosingmonthsof 1931, butremainedfarbelowpredepressionlevels. DataforthefirsthalfofFebruaryindicateacontinued declineinthevolumeofbuildingcontractsawardedinthe 37States,reducingthisbank’spreliminaryindexofbuild ingcontractstothelowestpointsincelastSeptember. A morethanseasonal declineoccurredinpublicworksand utilitycontracts, andothermajorclassificationsshowed reductions, contrarytotheusual seasonal movements. Commodity Prices The general level of prices of actively traded com modities, as measured by Moody’s Investors Service index, showednomaterial netchangeduringFebruary, but som esizableanddiversepricechanges occurredin theindividualcommodities. Thelargestmovementwasa declineinthepriceof rawsilk, continuingtherecession whichhadbeeninprogress withonlyminor interrup tionssincethehighof $2.351/2apoundwasreachedlast October; attheendofFebruarytheaveragepricestood at $1.63 apound, 26%cents lowerthanat theendof January, andthe lowest price since last August. In contrast tothismovement, thepriceof wool hasshown apersistent advance since last May, andinFebruary the domestic price reached the highest level since 23 December 1929. Rayonprices wereunchangedduring February, following a decline inthe previous month. Therewasnonoticeablechangeincottonprices during the first half of February, but subsequently the spot quotationat NewYorkdeclined33 points, endingthe monthat 11.27 cents apound, the lowest price since October. WeaknessdevelopedincattlepricesduringFebruary, andtheaveragepriceofsteersatChicagodeclined$1.25 to$9.17 ahundredweight, aprice almost $4belowthe highpointoflastAprilandthelowestsincethebeginning of 1935, but increasedsomewhat inthelast daysof the month. Theriseinhogprices, whichfollowedthedis continuanceof thehogprocessingtaxinearlyJanuary, continuedduringthegreater part of February, but in thelatterpart of themonthareactionoccurredanda slight net gainwas shownfor the monthas awhole. Thepriceof hideswasreduced1%centsto13%cents a pound during the month, and a small decrease occurredalsointhe cashquotationfor wheat at Min neapolis. Thepriceofcruderubbercontinuedtoadvance, andinthecourseof themonthtouchedthehighestlevel sinceFebruary1930. Afirmertendencyalsowasapparent inthepriceof rawsugar, but quotationsfortherefined productremainedatpreviouslyquotedlevels. Inthedomesticcoppermarket, twoleadingconcerns increasedthepriceforspotcopperto9%centsapound onFebruary 15, while other firms continuedto quote 91/4cents, thepricewhichhadprevailedsincethebegin ningoflastOctober. Thepriceofzincandleadincreased slightly. Scrapsteel atPittsburghrose$1.25furtherto $15.75 aton, the highest price since September 1930. On the other hand, the composite price of finished steel, compiledbythe IronAge, declinedsomewhat in February. Silver prices inthe leading markets were relativelysteadyduringthemonth. ForeignTrade Merchandiseexports duringJanuarywerevaluedat $198,000,000, a substantially smaller amount than in December, while imports, valuedat $187,000,000, were approximately the same as in the preceding month. Exportsordinarilyshowlittlechangebetweenthesetwo months, whileimports usuallyshowanincrease. This country’s foreigntrade continuedtobe larger thana year ago, however, the gainin exports amounting to 13percent andinimports 12percent. The decrease inexports fromDecember toJanuary waslargelyaccountedforbyadeclineof $21,000,000in shipmentsof rawcotton,whichshowedmuchmorethan theusualseasonalreductionfromthecomparativelyhigh figures of recent months. Nevertheless, cottonexports registeredincreases over ayear agoof 18 per cent in quantity and11 per cent invalue. Exports of other agricultural productsshoweddecreasesfromayearago. Ontheotherhand, largeincreasescontinuedtooccurin exports of anumber of Americanmanufactures, espe cially passenger automobiles andmotor trucks, indus trial andagricultural machinery, fertilizers, andwood and paper products. Exports of crude and refined petroleumproducts were alsosubstantiallyabovethose of January1935. 24 MONTHLY REVIEW, MARCH 1, 1936 Among the imports, receipts of most of the leading commodities werelarger inquantityandvalue thana year ago. Thechief exceptions wereimports of crude rubber and certain vegetable food products, notably sugar, receipts of whichwereonlyabout half thecom parativelylargevolumeof ayear ago, but werelarger thaninanyotherJanuarysince1929. Importsof wool werealmost twoandahalf timesthevolumeof ayear ago, andshowedanevenlargergaininvalue. Receipts of burlapwere nearly doubledinquantity andvalue. Imports of rawsilkshowedanincreaseof 15per cent inquantityandof75percentinvalue. Relativelylarge gainsoverayearagooccurredalsoinimports of hides andskins, crude petroleum,tinandnickel, meat and dairyproducts, beverages, andunmanufacturedtobacco. WholesaleTrade Januarysalesofthereportingwholesalefirmsaveraged about 12y2percenthigherthanayearago, asomewhat largerincreasethaninthetwoprecedingmonths. This favorablecomparisonwasdueinconsiderablepart toa gaininsalesofthemen’sclothingconcernswhichshowed the largest advance over ayear previous since March 1934. Drugfirmsreportedamoderateincreaseinsales, thelargest sinceJuly, andsales of stationeryconcerns showedlarger gainsthaninthetwoprecedingmonths. Less favorable comparisons were made by the other reporting lines, however. Diamond sales continued substantiallyaboveayearago, but theincreasewasless than in December, and sales of shoes registered the smallest gainsinceAugust. Hardware, grocery, paper, and jewelry sales declined following increases in the precedingfewmonths, andsalesof silkgoods, reported onayardagebasisbytheNational Federationof Tex tiles, showedthelargestreductionsincelast June. sponding period a year ago. Although this was the largest year toyear increasetobereportedsince Sep tember, thecomparisoniswitharatherpoormonthin 1935, and sales showedmore than the usual seasonal definefromDecember, owingtoadverseweathercondi**i.ns. Department stores in Northern New Jersey reportedthelargestincreaseinsalesoverayearprevious sinceMarch1934, andNewYorkCitystoresshowedthe mostsubstantialgainsinceSeptember. InSouthernNew YorkState andtheHudsonRiver ValleyDistrict, the comparisons withayear agowere alsomorefavorable thanintheprecedingmonth. Theincreasesreportedin Buffalo, Rochester, Syracuse, Bridgeport, and West chesterandStamfordsales, ontheotherhand, werethe smallest inseveral months. The NorthernNewYork State andCapital District stores reporteddecreases in sales fromayear ago. Sales of the leading apparel stores were 18% per cent higher than ayear ago, a largerincreasethaninDecember, butapproximatelythe sameasthat registeredinNovember. Theretail valueof stocksof merchandiseheldbythe department stores at the end of January continued smallerthanayearagoonthewhole, but apparel store stocksremainedhigherthaninthepreviousyear. The ratioof collections toaccounts outstanding at the end of December averagedbetter in1936thanin1935 for boththedepartment andapparel stores. Percentage change Janu a ry 1936 compared w ith January 1935 L o c a lity N et sales Per cent of accounts o utstanding December 31 collected in January C om m odity N et sales Groceries........................................................... *. M e n ’s c lo th in g .................................................. R ayon and s ilk goods...................................... Shoes.................................................................... D ru g s................................................................... H a rd w a re ............................................................ S ta tio n e ry ........................................................... P a p er................................................................... D ia m o n d s ........................................................... J e w e lry ................................................................ — 3 .7 + 5 0 .1 — 2 2 .6 * + 0 .9 + 1 5 .7 — 6 .9 + 1 1 .0 — 0 .3 + 3 1 .7 — 4 .2 W eighted average.......................... .. + 1 2 .7 Stock end of m o n th — 13.0 + 4 .2 — 13.0 + 1 6 .3 — 6 .0 1935 1936 Syracuse.............................................................. N o rth e rn N ew Jersey...................................... B rid g e p o rt.......................................................... Elsew here........................................................... N o rth e rn New Y o rk S ta te ......................... Southern N ew Y o rk S ta te .......................... Hudson R iv e r V alley D is t r ic t................... C a p ita l D is t r ic t............................................ Westchester and S ta m fo rd ......................... — + — — + — — 3 .0 4 .6 0 .3 7 .3 4 .7 1.9 3 .0 53.3 49.0 47.0 36.4 42.1 38.1 34.6 55.6 4 9 .3 4 8.8 37.9 4 2.2 4 1 .4 34.9 1935 1936 A ll department, sto re s............................. + 9 .0 — 1 .7 48.2 4 9 .8 90.8 4 4 .5 6 6.5 3 4.3 2 6.3 4 4.7 43.1 46.4 A pparel stores........................................... + 18.5 + 8 .1 4 3.8 5 0.8 } 44.9 9 1.4 4 8.9 63.6 3 2.3 29.8 4 3.6 4 3.6 5 4.7 } 4 4.9 5 7.0 58.0 * Q u a n tity figures reported b y the N a tio n a l Federation of Textiles, Incorporated, n ot included in weighted average fo r to ta l wholesale trade. Department StoreTrade Sales of the reporting department stores in the MetropolitanNewYork area during the first half of Februarywere5.3percent largerthanayearago, but there was less thanthe usual increase over January, apparentlyduetothecontinuanceof severeweather. InJanuarysales of thereportingdepartment stores inthisdistrictwere9percenthigherthaninthecorre Stock on hand end of m onth + 9 .7 + 3 .7 + 2 .7 + 2 .0 + 1 1 .4 + 8 .9 + 2 .0 — 8 .2 + 2 .4 + 2 .0 — 4 .4 + 1 1 .8 N ew Y o r k ........................................................... B u ffa lo ................................................................. Percentage change January 1936 compared w ith January 1935 Per cent of accounts outsta n din g December 31 collected in January Toys and sporting goods.......................... M e n ’s and boys’ w ea r................................ Books and s ta tio n e ry ................................. Luggage and other leather goods............ T o ile t articles and d ru g s ........................... W om en’s and misses’ ready-to-w ear. . . . Hom e fu rn is h in g ......................................... M e n ’s fu rn is h in g s ....................................... Linens and handkerchiefs......................... Silverware and je w e lry .............................. W om en’s ready-to-w ear accessories........ M usical instrum ents and ra d io ............... W oolen goods.............................................. Silks and v e lv e ts ......................................... M iscellaneous.............................................. N e t sales percentage change January 1936 compared w ith January 1935 Stock on hand percentage change J anuary 31, 1936 compared w ith January 31, 1935 + 2 9 .3 + 2 7 .5 + 1 6 .4 + 1 5 .9 + 1 5 .7 + 1 3 .8 + 1 2 .9 + 1 0 .8 + 9 .2 + 8 .7 + 7 .2 + 6 .4 + 6 .3 + 3 .4 + 0 .4 — 2 .6 — 5 .0 — 9 .7 + 5 .3 + 1.0 — 3 .8 + 1 7 .7 + 5 .4 — 1.3 + 1 4 .2 + 2 9 .3 — 1 .5 + 4 .8 — 7 .0 — 5 .2 — 2 .4 + 5 .0 + 4 .4 — 6 .1 + 5.1 — 8 .6 — 4 .2 — 1.8 FED ERAL RESERVE M O NTHLY BANK OF N E W R E V IE W , M A R C H YORK 1 , 1936 BusinessConditions intheUnitedStates ( S u m m a r iz e d b y t h e B o a r d o f G o v e r n o r s o f th e F e d e r a l R e s e rv e S y s te m ) T O T A L v o lu m e o f i n d u s t r i a l p r o d u c t io n in c r e a s e d i n J a n u a r y , b u t , o w in g to a d e c lin e i n a c t i v i t y i n th e a u t o m o b ile a n d a ll i e d i n d u s t r ie s f r o m an excep t i o n a l l y h ig h le v e l i n D e c e m b e r, th e in c r e a s e w a s less th a n is u s u a l a t t h i s se aso n . P r o d u c t io n E and mploym ent T o t a l o u t p u t a t f a c t o r ie s in c r e a s e d b y a s m a lle r a m o u n t t h a n is u s u a l i n J a n u a ry , w h ile o u tp u t at m in e s show ed a s e a s o n a l in c r e a s e . The B o a r d ’s c o m b in e d in d e x o f i n d u s t r i a l p r o d u c t io n , w h ic h m a k e s a llo w a n c e f o r s e a s o n a l c h a n g e s , d e c lin e d f r o m Index Number of Production of Manufactures and Minerals Combined, Adjusted for Seasonal Variation (1 9 23 -2 5 a v erages 100 per cent) 99 p e r c e n t in 1 0 4 p e r c e n t o f th e 1 9 2 3 -1 9 2 5 a v e r a g e i n D e c e m b e r to J a n u a ry . T h is d e c re a s e r e fle c t e d o u t p u t o f s te e l a n d o f a u t o m o b ile s f r o m c h ie f ly s h a rp r e d u c t io n s in th e h ig h le v e ls re a c h e d i n D e c e m b e r. I n th e f i r s t th r e e w e e k s o f F e b r u a r y th e a v e r a g e r a t e o f o p e r a tio n s a t s te e l m i ll s sh ow e d a s m a lle r a u t o m o b ile J a n u a ry . in c re a s e f a c t o r ie s o v e r th e o u tp u t w as J a n u a ry e s tim a t e d a v e ra g e to S m a lle r t h a n s e a s o n a l in c re a s e s i n be th a n at a is u s u a l, lo w e r and at le v e l t h a n in a c t i v i t y w e re r e p o r te d a t t e x t i l e m i ll s a n d a t shoe f a c t o r ie s , w h ile o u t p u t o f fo o d p r o d u c ts w a s i n c o n s id e r a b ly la r g e r v o lu m e i n J a n u a r y t h a n a m o n t h e a r lie r . F a c t o r y e m p lo y m e n t s h o w e d a s m a ll s e a s o n a l d e c re a s e b e tw e e n th e m id d le o f D e c e m b e r a n d t h e m id d le o f J a n u a r y . of w o rk e rs , t e x tile w h ic h m i ll s u s u a lly in c re a s e s e m p lo y m e n t d e c lin e d . at A t a u t o m o b ile f a c t o r ie s th e n u m b e r th is se aso n , w a s unchanged, F a c t o r y p a y r o lls d e c re a s e d b y and at m o re th a n th e u s u a l a m o u n t. V a lu e o f c o n s t r u c t io n c o n t r a c ts a w a r d e d , as r e p o r t e d b y th e F . W . D o d g e C o r p o r a tio n , w a s s m a lle r i n J a n u a r y th a n i n D e c e m b e r. Index of Factory Employment with Adjustment for Seasonal Variation (1 9 23 -2 5 average = 100 per cent) A w a r d s f o r p u b l i c ly - fin a n c e d p r o je c t s d e c re a s e d f r o m th e r e la t i v e ly h ig h D e c e m b e r f ig u r e , a n d th e r e w a s a s e a s o n a l d e c lin e i n c o n t r a c ts f o r r e s id e n t i a l c o n s t r u c tio n . D is t r ib u t io n R e t a i l tr a d e w a s re d u c e d m o r e t h a n p a r t t h e in f lu e n c e v a r ie t y s to re s , and s e a s o n a l a m o u n t. s e a s o n a lly i n o f u n u s u a lly s e v e re w e a th e r . m a il o rd e r houses a ll J a n u a r y , r e f le c t in g in S a le s b y d e p a r t m e n t s to re s , d e c lin e d by F r e i g h t c a r lo a d in g s s h o w e d l i t t l e m o re th a n th e usual c h a n g e ; lo a d in g s o f c o a l in c r e a s e d c o n s id e r a b ly , w h ile r a i l s h ip m e n ts o f m is c e lla n e o u s f r e i g h t d e c lin e d . C o m m o d i t y P r ic e s T h e g e n e r a l le v e l o f w h o le s a le c o m m o d ity p r ic e s c o n t in u e d t o change d u r in g J a n u a ry and th e fir s t th r e e w eeks of show lit tle F e b ru a ry . P r ic e s of c o t t o n t e x t ile s , f lo u r , w h e a t, a n d s i lk d e c lin e d , w h ile p r ic e s o f h o g s , p e t r o le u m , c o ffe e , Member Bank Reserve Balances (Latest figures are for February 19) and ru b b e r in c r e a s e d c o n s id e r a b ly . R e t a i l p r ic e s of fo o d s d e c re a s e d s o m e w h a t d u r in g J a n u a ry . B a n k Cr e d it E xcess re s e rv e s of m em ber banks f lu c t u a t e d b e tw e e n J a n u a ry 22 and F e b r u a r y 19 n e a r a $ 3 ,0 0 0 ,0 0 0 ,0 0 0 le v e l, c h a n g e s r e f l e c t in g p r i n c i p a l l y f lu c t u a t io n s i n ** ..♦■‘W M TOTAL LGA.M.' r AND INVeSTME*?TS 19 = < .r U S. GOV’T IRFC.T ORI tOATkTIM I I OTHER LOANS I IU U JblUM tKi I :EPT OhJ<L^E£rATf) T r e a s u r y h o ld in g s o f c a s h a n d d e p o s its w i t h b y $ 3 0 0 ,0 0 0 ,0 0 0 i n th e f o u r w e e k s e n d e d F e b r u a r y 1 2, a n d r e a c h e d th e la r g e s t a m o u n t e v e r h e ld b y th e s e b a n k s , w h ile lo a n s d e c re a s e d b y $ 1 3 0 ,0 0 0 ,0 0 0 . = ( exi OTHER SECURITIES — 2 LOANS ON SEC. TO CUSTOMERS-----------------STREET U. S. GUAR. SEC. — loa n s------- < = n : --------------------------------- o f o b lig a t io n s g u a r a n te e d b y th e G o v e r n m e n t b y $ 5 0 ,0 0 0 ,0 0 0 , a n d o th e r s e c u r i tie s b y $ 1 1 0 ,0 0 0 ,0 0 0 . A d ju s t e d dem and so m ew h a t fro m Wednesday Figures for Reporting Member Banks (Latest figures are for February 12) H o ld in g s o f U n i t e d S ta te s G o v e r n m e n t o b lig a t io n s in c r e a s e d b y $ 1 4 0 ,0 0 0 ,0 0 0 , h o ld in g s i F e d e r a l R e s e rv e B a n k s . In v e s tm e n ts o f w e e k ly r e p o r t i n g m e m b e r b a n k s i n le a d in g c it ie s in c r e a s e d by $ 2 9 0 ,0 0 0 ,0 0 0 d e p o s its th e m id d le in th e of r e p o r tin g m em ber o f D e c e m b e r to th e m id d le fo u r w eeks ended F e b ru a ry G o v e r n m e n t d e p o s its d e c lin e d b y $ 1 5 0 ,0 0 0 ,0 0 0 . banks, w h ic h d e c lin e d o f J a n u a r y , in c r e a s e d 1 2, w h ile U n ite d S ta te s
@FedFRASER