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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

R e s e r v e

C o n d itio n s
D is t r ic t

Federal Reserve Bank, New York

March 1,1940

M o n e y M a r k e t in F e b r u a r y

inflow o f gold, because o f the seasonal rise in the amount
o f currency in circulation and Treasury receipts in
excess of expenditures. On the other hand, during most
o f January, 1940, the rise in member bank reserves was
considerably more rapid than the increase in the gold
stock, as payments fo r gold purchased by the Treasury
were supplemented by the seasonal retirement o f cur­
rency from circulation and net expenditures by the
Government. A tem porary interruption o f this move­
ment occurred in the last week o f January and the first
week o f February, due chiefly to the collection o f social
security tax payments, but subsequently member bank
reserves again rose rapidly. Consequently, despite an
increase in the reserve requirements o f New Y ork City
member banks, accom panying a rise in their deposits to
new high levels, excess reserves o f member banks in the
latter half o f February reached higher levels than ever
before. F o r all member banks, excess reserves on F eb­
ruary 28 totaled $5,690,000,000, and fo r New Y ork City
banks amounted to $3,300,000,000.
The further increase in idle bank funds apparently
was an influence tending to offset the disturbing effects
o f developments abroad on the market fo r high grade
securities, as, except fo r some minor irregularities, the
prices o f such securities remained firm during February.
Prices o f lower grade bonds and stocks also showed a
considerable degree o f stability, despite the recession in
industrial activity since December. In this case, how-

Gold continued to come to this country in substantial
amounts during the past month. W eekly reports o f the
Department o f Commerce on gold imports during the
first three weeks o f February indicated that gold ship­
ments were received in that period from widely scattered
sources, from iNurwK to South A frica and from Canada
to Australia. In the fou r weeks ended February 28, the
increase in the United States gold stock amounted to
$235,000,000, an average weekly gain o f $59,000,000. In
spite o f the large sales of gold to the Treasury, most of
which were fo r foreign official accounts, foreign central
bank balances in the Reserve Banks showed a net reduc­
tion of $26,000,000 during this period, indicating that
foreign expenditures here have been exceeding foreign
sales of gold to this country.
W hile some transfers of funds to this country fo r the
account of nonresidents of the countries at war have
been reported, it seems fa ir to assume that a large part
o f the proceeds o f the gold imports and the reduction in
foreign central bank balances in this country was actually
spent in this country by foreigners, including foreign
governments. The figures for the past month, together
with similar figures fo r other recent months, suggest a
rate o f foreign spending in the United States well above
that indicated by the reported excess o f merchandise
exports over imports. In the past fou r months foreign
spending here appears to have averaged at least
$200,000,000 a month. The disparity between this figure
and the average excess o f reported valuations of mer­
chandise exports over imports during these months may
be attributable in part to the requirement of the Neutral­
ity A ct that foreign purchasers o f war materials must
make fu ll payment for, and acquire title to such mate­
rials in advance o f their shipment from the United States,
partly to advance payments against the cost of produc­
tion o f such materials, and partly to payments made, in
some cases, fo r the expansion o f productive facilities
required to expedite deliveries.
A s the accom panying chart indicates, the continued
inflow of gold has been paralleled in a general way by a
further rise in the volume o f member bank reserves.
Tem porary disparities have been caused by other factors,
however, such as changes in the volume of currency in
circulation and fluctuations from week to week in the
volume of net expenditures or receipts of the Govern­
ment. F or several weeks late in 1939, for example, the
volume o f member bank reserves diminished despite an

Gold Stock of the United States and Member Bank Reserve
Balances at the Federal Reserve Banks



ever, the stability of the market probably was not closely
related to the further growth of idle funds available for
investment. It might more accurately be attributed to
the discounting of the current recession in industrial
activity by the security markets last fall, well in advance
of any actual curtailment of production, and perhaps also
to the expectation in some quarters that the recession will
not be long continued.
M oney rates, both fo r long and short term obligations,
remained practically unchanged during February.
M oney Rates in New York
Feb. 28, 1939 Jan. 31,1940 Feb. 28,1940
Stock Exchange call loans......................
Stock Exchange 90 day loans................
Prime commercial paper 4 -6 m onths. .
Bills— 90 day unindorsed........................
Average yield on Treasury notes (3-5
Average yield on Treasury bonds (not
callable within 12 years).....................
Average rate on latest^Treasury bill
sale, 91 day issue..................................
Federal Reserve Bank of New York
discount rate..........................................
Federal Reserve Bank of New York
buying rate for 90 day indorsed bills.



X -X

X -X

x -x




0 .5 7

0 .5 0

0 .4 4



2 .33










~-*N ominal.

M em ber B a n k

C r e d it

Total loans and investments of all weekly reporting
member banks in 101 principal cities throughout the
country showed only a small net increase in the four
weeks ended February 21, as a moderate increase in New
Y ork City was partly offset by a slight decline elsewhere.
In the reporting New Y ork City banks, the amount o f
commercial and industrial loans again declined slightly,
and loans on securities showed a further small reduction,
but there were small increases in other loans and a further
expansion o f investment portfolios. The principal in­
creases in investments during the fo u r week period were
in holdings of United States Government notes and bonds
which rose $31,000,000, in United States Government
guaranteed securities which increased $44,000,000, and
in “ oth er’ ’ securities which increased $79,000,000. The
latter increase which brought such holdings to a higher
level than ever before, apparently was due chiefly to
purchases of the securities o f municipalities and other
governmental agencies, such as the Triborough Bridge
A uthority. H oldings o f Treasury bills were reduced
$81,000,000 further.
In 100 other principal cities, commercial and industrial
loans increased slightly in the four weeks ended February
21, but total investments were reduced by $40,000,000.
H oldings of Treasury bills increased slightly, but there
were further small declines in holdings of Treasury
bonds and notes, and a reduction o f $31,000,000 in hold­
ings of Government guaranteed securities.
Demand deposits o f the New Y ork City banks, ex­
clusive o f interbank deposits, rose $164,000,000 further
during the fou r week period, and again reached higher
levels than ever before. Banks in the 100 other cities
covered by the reports, however, showed a net reduction
of $71,000,000 in demand deposits during the same period.
G o v e rn m e n t S e c u r itie s

The Government security market was quiet but rather
sensitive during February, reflecting in part continued

apprehension over possible foreign developments in the
spring, and in part, later in the month, the approach o f
the quarterly financing period of the Treasury. W ith
respect to long term Treasury bonds, the average price
advanced ^ point on the opening day of the month and
then eased about % point, after which it rose another
point to reach the m on th ’s high on the 13th. On that
date, however, the average price remained about y2 point
below the January high. In the second half of the
month, prices o f long term Governm ent’s eased gradu­
ally, but remained slightly above the end o f January
level. Treasury note prices also firmed in the opening
two days of February, when the average yield on 3 to 5
year issues declined to 0.46 per cent, as com pared with
the January low o f 0.43 per cent, and in the subsequent
part o f February showed little change.
On February 14, the Treasury issued a call fo r redemp­
tion on June 15, 1940, o f the $353,000,000 o f 3 % per
cent Treasury bonds o f 1940-43 outstanding; at the same
time the Treasury indicated that holders of these securi­
ties might, prior to the redemption date, be offered the
privilege of exchanging them fo r new interest bearing
securities o f the Treasury.
Treasury bill financing during February included the
sale of fou r weekly issues o f $100,000,000 each, which
replaced similar maturities. F or the issue dated Febru­
ary 7, the accepted bids were at prices ranging from
slightly above par down to 99.999, the average price
being only fractionally below par, but fo r the issues o f
the three succeeding weeks, the average prices were such
as to produce average yields o f 0.005 to 0.006 per cent,
as compared with 0.004 per cent on the last issue o f
C o m m e r c ia l P a p e r a n d B il l s

Although during February the prevailing level o f
rates fo r average grade prime fou r to six month com­
mercial paper remained in the % -% per cent range which
has been in effect since the latter part of November, the
tendency toward new low levels became somewhat more
evident, in that a further increase was reported in the
amount o f choice paper sold at % per cent. Sales o f
paper at y2 per cent still constituted the largest part o f
the aggregate amount o f business consummated. Bank
investment demand fo r notes o f commercial concerns
again, to a considerable extent, went unfilled, owing to
the continued inability o f dealers to acquire adequate
supplies o f paper. The small supply, however, remained
representative o f a rather wide variety o f business enter­
prise. Reports to this bank by commercial paper con­
cerns show that $219,400,000 o f paper was outstanding
at the end o f January, the largest amount since the
$225,300,000 total fo r June, 1938. A month earlier out­
standings were $209,900,000 and a year ago the amount
was $195,200,000.
To an even greater degree than in commercial paper,
the conditions of limited supply and active demand con­
tinued to characterize the market fo r bankers acceptances
during February. D ealers’ quoted rates remained un­
changed. On January 31 the volume o f bills outstanding
totaled $229,000,000, a decrease, usual in January, of
about $4,000,000 from the December total. This decrease
resulted from slight declines in the several classifications


shown in the accom panying tabulation. In comparison
with a year ago the January volume was $26,000,000
lower, reflecting a drop o f $32,000,000 in bills based on
goods stored in or shipped between foreign countries and
a decline o f $19,000,000 in export bills, partly offset by
an increase o f $14,000,000 in bills drawn to furnish
dollar exchange and an increase of nearly equal amount
in im port bills.
(Millions of dollars)
T ype of acceptance
Im port.....................................................
E xp ort.....................................................
Domestic shipm ent..............................
Domestic warehouse credit.................
Dollar exchange....................................
Based on goods stored in or shipped
between foreign countries..............
T o ta l................................................

Jan. 31,1939 Dec. 30,1939 Jan. 31,1940










S e c u r it y M a r k e t s
Stock prices continued to fluctuate within narrow
limits in February and the turnover o f shares on the
New Y ork Stock Exchange remained extremely light.
In the first week of the month, the general average of
stock prices advanced about 3 per cent, but did not equal
the quotations o f the first part of January, and subse­
quently prices eased irregularly, and as the month closed
were only slightly higher than at the end o f January.
The announcement reaching this market on February 19,
that residents o f the United Kingdom had been ordered
to deliver to the British Treasury their holdings o f 60
specified common and preferred shares o f American
corporations, in order to insure orderly liquidation o f
these securities in Am erican markets, had no appreciable
effect on either prices or activity on the New Y ork Stock
Prices o f medium and lower grade bonds advanced
slightly in the first half of February, during which period
public utility bonds o f this grade touched higher quota­
tions than in January. Industrial bonds rose to about
the January highs, while railroad bonds o f this grade
failed to advance as high as in the first part o f January.
In the latter part o f February there was some easing in
the less high grade bonds, but average prices, as com­
puted b y M ood y ’s Investors Service, closed the month
higher than at the end o f January, particularly in the
case o f Baa public utility bonds.
H igh grade corporation bonds advanced further dur­
ing the first half o f February, and M ood y ’s average price
o f Aaa bonds reached a new high. In the second half o f
the month, there was a moderate recession from the high
reached on the 15th. H igh grade municipal issues recov­
ered somewhat in the first half o f February, follow ing
the decline in the second half o f January, but later in
F ebruary these issues declined again to below the level
prevailing at the end o f January. A ccord in g to the
Standard Statistics Company, the average yield on high
grade municipal bonds stood at 2.65 per cent on Febru­
ary 28, as compared with the recent low of 2.49 per cent,
reached in the first part o f January.


N e w F in a n c in g
Two exceptionally large flotations, $105,000,000 Beth­
lehem Steel Corporation refunding bonds and debentures
and $98,500,000 Triborough B ridge Authority revenue
bonds, raised F eb ru a ry’s aggregate o f corporate and
municipal new security issues to $430,000,000, an amount
which exceeds the total o f any month since June, 1939.
The Bethlehem Steel issues represented the largest single
piece of industrial financing to have been undertaken
since the passage o f the Securities A ct o f 1933, and the
Triborough B ridge offering was reported as the largest
single amount o f revenue bonds ever to have been issued
by a local governmental body. Both o f these issues were
publicly offered, the first on February 29, and the second
on February 14.
O f the $255,000,000 total o f corporate issues,
$42,000,000, the greatest amount since July, 1939, was
fo r the purpose o f raising new capital. Details o f the
larger issues publicly offered during the past month
are as follow s:

Bethlehem Steel Corporation refunding securities
composed of $30,000,000 of 20 year 3 per cent
consolidated mortgage bonds, priced at 98 to
yield about 3.14 per cent; $40,000,000 of 25 year
3 % per cent consolidated mortgage bonds, priced
at 100; $35,000,000 of 0.50 per cent to 2.60 per
cent serial debentures maturing from 1941 to
1950, priced at 100
26.000.000 Kentucky Utilities Company securities composed of
$20,000,000 of 4 per cent first mortgage bonds of
1970, priced at 102 to yield about 3.89 per cent
and $6,000,000 of 4% per cent sinking fund
mortgage bonds of 1955, priced at 101 y2 to yield
about 4.36 per cent, all for refunding purposes
25.000.000 Dayton Power and Light Company 3 per cent first
mortgage bonds of 1970, priced at 104 to yield
2.801 per cent; $19,700,000 for refunding
16.000.000 Southwestern Gas and Electric Company 3 % per
cent first mortgage bonds of 1970, priced at 103
to yield 3.10 per cent, for refunding purposes;
also 75,000 shares of 5 per cent preferred stock
offered to holders of outstanding 7 per cent pre­
ferred stock
10.000.000 Skelly Oil Company 3 per cent debentures of 1950,
priced at 100, for refunding purposes
98,500,000 Triborough Bridge Authority revenue bonds com­
posed of $50,000,000 of 3 % per cent sinking fund
bonds of 1980, priced at 1 0 2 % to yield 3.15 per
cent; $8,500,000 of 2 % per cent serial bonds of
1945-52, priced to yield from 1.50 per cent to 2.50
per cent; and $40,000,000 of 3 per cent serial
bonds of 1953-75, priced to yield from 2.55 to 3.00
per cent up to 1970 maturities and at 9 9 ^ for
maturities from 1971 to 1975; $81,000,000 for
refunding purposes
33.000.000 Port of New York Authority 3 per cent general and
refunding bonds of 1976 awarded at a net interest
cost of 3.022 per cent and reoffered at 100% to
yield 2.989 per cent.

A n interesting feature o f the Triborough Bridge
A uthority financing is the fact that approximately
$81,000,000 o f the proceeds o f the sale w ill be used to
refund at the present time (b y payment o f interest to
the call date plus the call price) $71,000,000 o f outstand­
ing bonds callable at 105 on A p ril 1, 1942. The first long
term bonds o f local housing authorities, aggregating
$1,700,000 fo r fou r cities, were awarded on February 15



and the bonds of some of the authorities were reoffered
on February 20. The securities carried various coupon
rates from i y 2 per cent to 2 % per cent, maturities from
1940 to 1966, and were reoffered to the public at prices
to yield from 0.20 per cent to 2.65 per cent according to
maturity. One large private sale o f securities was an­
nounced during the past month, that of $30,000,000
Commercial Investment Trust Corporation notes to two
insurance companies. These consisted of $20,000,000 of
2 per cent notes due in 1947 and $10,000,000 o f 1 per
cent notes due in 1943; the proceeds will be used to
finance expansion o f the com pany’s operations.
Tem porary financing accounted for an additional
$135,000,000 during the month and included $75,000,000
o f fou r month 0.15 per cent notes of the State o f New
Y o rk ; also $23,450,000 o f 0.75 per cent Federal Inter­
mediate Credit Bank consolidated debentures maturing
in December, 1940, which were sold at prices to yield 0.30
per cent per annum.
C en tra l B a n k R a te C h an ges
On February 17 the rediscount rate o f the Bank o f
Latvia, applicable to banks, was raised from 4 % to 5
per cent, and the rate fo r other borrowers was advanced
from 5 to 5 % per cent. The lower rates had been in
effect since January 1, 1939.

railroad equipment, paper and paper products, and
textile groups o f companies.
F or the entire year 1939, aggregate net profits o f these
221 companies were nearly twice the total reported by
these companies fo r 1938. The indications are, however,
that profits o f principal companies fo r 1939 remained
about one-fourth less than fo r the fu ll year 1937. This
bank’s tabulation o f annual business profits, covering a
much larger number o f companies, will appear in the
A p ril 1 Review.
(Net profits in millions of dollars)

Corporation group
Automobiles and automobile parts. . .
Building materials..................................
Chemicals and drugs..............................
Electrical equipm ent..............................
F ood and food products........................
Machinery and to o ls..............................
Paper and paper products.....................
Railroad equipm ent................................
S teel............................................................
Total, 14 groups..............................

Third Fourth
of Fourth
cos. quarter Year quarter quarter



7 7 .5
^6 .6
4 .9
2 5.3
3 .6
5 .6
0 .5
4 .2
0 .9
6 .3

7 0.8
8 3.0
2 0 .0

7 .4

3 .0
— 1 .8
— 6 .0
7 .5
4 .6
2 3.5



2 .0

8 .3
2 7.8
5 .7

8 8 .1

2 1 .1

3 2.4
‘" 8 .3
2 3.6

5 .2

6 .6

8 .6



2 .8

8 .1

8 .8

9 .5
4 .3
6 .4
4 .6
9 .8



2 8.2
2 .7
2 .4

8 3.8
5 .6
7 .5
11 .8
11 .1

3 5.0

— Deficit.

B u s in e s s P r o fit s

F o r e ig n E x c h a n g e s

The sharp rise in industrial production which followed
the outbreak of hostilities in Europe last September was
reflected in a very large increase in profits of several
groups of industrial corporations during the last quarter
o f 1939. A com pilation o f the quarterly profits o f 221
industrial and mercantile corporations whose reports
have been issued by this time indicates that aggregate
fourth quarter net profits o f this group o f companies
were nearly double those o f the third quarter o f 1939
and some 60 per cent larger than in the fourth quarter
o f 1938. On the basis o f the profits reported by this
group o f companies it appears that seasonally adjusted
profits o f leading companies rose in the fourth quarter
o f the year to at least the same general level as prevailed
in the first nine months of 1937, a level which was the
highest since the third quarter o f 1929. However, it
should be emphasized that the reports from which this
conclusion is drawn are, in general, those o f the larger
corporations o f the country, and include a large propor­
tion o f companies producing durable goods, whose output
rose more rapidly in the fourth quarter o f 1939 than the
output of nondurable goods. Profits reports fo r all cor­
porations in the country, were they available, undoubt­
edly would show a less favorable comparison than is
indicated fo r these principal corporations.
A ll o f the groups of companies listed in the follow ing
table showed increases in profits between the third and
fourth quarters o f 1939, and some o f the principal groups
o f companies, such as the automobile and steel com­
panies, reported profits which were considerably above
seasonal expectations fo r the fourth quarter. A s com­
pared with the fourth quarter o f 1938, the largest per­
centage increases were reported in profits of the steel,

One o f the outstanding developments in the foreign
exchange markets during February was an accelerated
flight o f capital from Sweden, which culminated in the
introduction o f official exchange control in Sweden on
February 25. The new regulations, which strengthened
the inform al control over capital transfers applied by
Swedish banks since the middle o f December, invested
the Riksbank and authorized banks with a m onopoly o f
exchange transactions and provided fo r the control o f
foreign exchange. Foreign exchange w ill be made avail­
able only fo r approved transactions, and the export and
im port of bank notes and securities are prohibited. The
new restrictions do not affect Sweden’s clearing agree­
ments with other countries. Despite the recent pressure,
the Swedish krona rate was maintained throughout the
past month near the level o f $0.2382.
Trading in the other neutral European exchanges
was featured b y irregular fluctuations in the belga and
the guilder. The Belgian currency, which had risen to
a fou r month high o f $0.1698% on January 29, receded
to as low as $0.1681:*/2 in the middle o f February. Sub­
sequently, however, the belga showed some renewed firm­
ness, ending February at $0.16871/2. A fte r opening
the month at $0.5309, the Netherlands currency rose to
$0.5326 during the first week. A reaction then occurred,
but the rate turned upw ard again in the latter part of
the month, accom panying the offering o f a new Nether­
lands Government issue, which was oversubscribed. A t
the end o f the month the guilder was quoted at $0.53191/2.
Swiss exchange, meanwhile, continued steady at about
the rate which has prevailed since the latter part o f
W ith respect to the currencies o f the allied countries,

a weaker tendency was shown during the first half o f
the past month. The pound-dollar rate, which had ad­
vanced to as high as $4.00 toward the end o f January,
declined irregularly to reach a low point o f $3.94% on
February 15. This reaction was reportedly due in large
part to relatively heavy European and South American
offerings o f the British currency, presumably induced
by rumors o f an impending tightening o f the British
exchange regulations. D uring the second half o f F eb­
ruary, however, quotations fo r the pound sterling outside
the London official market held fairly stable at about
$ 3 ,951/2 until the end of February when the rate declined
to $4.94% . In the forw ard market, the discount on three
month sterling deliveries narrowed during the month
from the equivalent o f 3 % per cent per annum to about
3 % per cent. The New Y ork rate fo r French francs
continued to keep more or less in line with sterling, in
view o f the official cross rate o f 176% francs to the
pound. Toward the end o f February the franc was
quoted in this market at $0.0223%, as compared with
the high o f $0.0226% reached about a month earlier.
The Canadian dollar showed some weakness against
United States currency during February, its discount
widening from 12 5 /1 6 per cent on January 31 to 13%
per cent near the end o f February, the largest discount
in about three months. O f the Latin American curren­
cies, the “ fr e e ” rate fo r the Argentine peso, which im­
proved noticeably in January, appreciated further in
early February, reaching $0.2347 on February 8, as
compared with about $0.2250 at the beginning o f Janu­
ary. Despite adverse pressure, reported to have been
occasioned largely b y discussion in this country o f a
proposal to suspend the foreign silver purchase p rovi­
sions o f the Silver Purchase A ct, the dollar rate fo r the
Mexican peso was maintained at about $0.1672 through­
out the past month.
G o ld M o v e m e n t
The volume o f gold imports into the United States
declined somewhat further during February, but con­
tinued to be very substantial. In addition, the amount
o f gold held under earmark fo r foreign account at the
Federal Eeserve Bank o f New Y ork decreased about
$35,000,000 further during the month, follow ing a de­
crease o f $40,000,000 in January. Chiefly as a result o f
these factors, the gold stock o f the United States increased
about $245,000,000 in February, after a gain o f
$287,000,000 in January. The amount o f gold held
under earmark fo r foreign account at the Federal R e­
serve Bank o f New Y ork at the end o f the month
amounted to about $1,085,000,000.
A s reported by the Department o f Commerce, gold
imports into the United States during the fo u r weeks
ended February 21 totaled $216,900,000, o f which
$43,400,000 came from Canada, $32,700,000 from
Sweden, $25,500,000 from the Netherlands, $21,300,000
from the Union o f South A frica, $20,300,000 from E n g­
land, $19,100,000 from Norway, $14,300,000 from India,
$10,500,000 from Switzerland, $6,400,000 from Australia,
$5,600,000 from Russia, $4,900,000 from Japan,
$2,800,000 from Italy, $1,400,000 from H ong Kong,
$1,400,000 from the Philippines, $1,000,000 from B el­
gium, and $500,000 from New Zealand.


P r o d u c t io n a n d T r a d e
Available weekly data indicate that there was a further
decline in business activity in February. Steel mill
operations continued to slacken, although the rate o f
decline was less marked during the latter half o f the
month. F o r February as a whole, ingot production ap­
pears to have averaged slightly above two-thirds o f theo­
retical capacity, as com pared with 83 per cent o f capacity
in January and 93 per cent in November. New orders
booked by steel mills continued to lag behind current
output, although trade reports indicated an increase in
export business. Cotton textile mill activity appears to
have been generally well maintained in February, despite
the fact that sales were again reported below output.
Autom obile production declined seasonally. Incomplete
data on department store sales in the New Y ork District
indicate a decrease from the January level, although the
rate o f sales is usually greater in February than in
Indexes o f electric power production and railway
freight traffic have also reflected the recent decline in
activity, although the decline in the form er apparently
has been less in proportion to the rise last year than
in indexes o f industrial production. A s shown in the
accom panying diagram, electric power production de­
clined in January and February sufficiently, after
seasonal adjustment, to cancel approximately one-fourth
o f the June-December rise.
The general level o f business activity declined in
January, follow ing the substantial advance which had
occurred during the last seven months o f 1939. Retail
trade, as is usual, contracted sharply, and available
monthly data indicate that the drop was larger than
in many other years. R ailroad car loadings o f mer­
chandise and miscellaneous freight showed a rather p ro­
nounced decline from the December level, but shipments
o f bulk freight increased. The volume o f industrial p ro­
duction was considerably reduced, on a seasonally ad­
justed basis, owing in substantial part to curtailment o f
output or absence o f expansion in some important lines
where increases usually occur between December and
J anuary.

Daily Average Volume of Electric Power Production, Adjusted
for Seasonal Variation (Four week moving averages)



(Adjusted for seasonal variations, for estimated long term trend,
and where necessary for price changes)

Industrial Production
Passenger cars...............................................
M otor trucks.................................................
Bituminous co a l...........................................
Crude petroleum ..........................................
Electric power r............................................
Cotton consum ption....................................
W ool consumption r....................................
Meat packing................................................
Tobacco products.........................................
Employment, manufacturing, U. S.........
Employee hours, manufacturing, U. S ...
Residential building contracts..................
Nonresidential building and engineering




N ov.








95 r

12 2


12 2


10 0

















Primary Distribution
Car loadings, merchandise and misc
Car loadings, other......................................
Im ports...........................................................





Distribution to Consumer
Department store sales, U. S....................
Department store sales, 2nd District . . .
Chain grocery sales r ..................................
Other chain store sales...............................
Mail order house sales................................
New passenger car registrations...............


Velocity o f Deposits*
Velocity of demand deposits, outside New
Y ork C ity (1919-25 average = 10 0 ) . .
Velocity of demand deposits, New York
C ity (1919-25 average = 1 0 0 ) ...........
Cost o f Living and Wages*
Cost of living (1913 a v era g e= 1 0 0 ) ........
Wage rates (1926 a v era g e= 10 0 ) .............
p Preliminary.

r Revised.


10 1

93 p
83 p
10 1


82 p
















* N ot adjusted for trend.

C o m m o d i t y P r ic e s
Commodity price movements during February were
irregular, but in most cases o f moderate proportions.
Nonferrous metal prices, which had been tending down­
wards, strengthened toward the end o f the month,
although the general level of all wholesale prices de­
clined slightly further.
The course o f political developments abroad appar­
ently exerted an im portant influence on wheat markets
in this country during February. Cash wheat at Kansas
City rose as high as $1.051/o a bushel on February 21,
7 % cents above the level at the end o f January, though
the gain fo r the month as a whole was reduced b y a
subsequent reaction. Other factors in the rise included
sizable British purchases o f Canadian wheat, reports
o f extensive damage to European crops b y cold weather,
and an estimate that the current Argentine crop would
be the smallest since 1917. Corn prices moved within
relatively narrow limits around 58 cents a bushel, as
the increased quantity o f the grain being sealed under
Government loan tended to offset the threat o f com peti­
tion from the large new Argentine crop. Although the
export subsidy was terminated at the end o f January,
the average price o f cotton at ten Southern markets ad­
vanced % cent to 10% cents a pound. On the other hand,

Daily Index o f Prices of 28 Basic Commodities, Computed by Bureau
of Labor Statistics (A ugust, 19 39= 10 0 per cent)

domestic wool prices eased several cents further, and
silk declined 21 cents to $2.90 a pound by the middle o f
February, the lowest level since early September. R ub­
ber receded % cent to 1 8 ^ cents a pound follow ing the
announcement by the International Rubber Regulation
Committee that the export quota fo r the second quarter
o f 1940 would remain unchanged at 80 per cent o f basic
quotas. Steers, however, rose sharply to more than
$10.00 a hundredweight fo r the first time since Septem­
ber, and raw sugar in New Y ork was quoted somewhat
higher as the Government reduced the 1940 domestic
sugar consumption estimate on which im port quota allot­
ments are based.
Metal markets, which had continued to decline during
the first part o f February, became firmer subsequently.
The produ cers’ price o f electrolytic copper, which had
been cut % cent a pound in the first week o f February,
was increased ^ cent to 1 1% cents a pound on February
20, accom panying reports o f the largest sales o f the
metal since September. The International Tin Commit­
tee reduced export quotas from 120 per cent to 80 per
cent o f standard, and the price o f the metal in this
country rose 2 cents to 4 7 % cents a pound. The price
o f zinc was advanced ^4 cent to 5 % cents a pound, and
lead recovered a ^ cent decline which had occurred
early in the month. Scrap steel quotations appeared to
level off in the final week o f the month.
The accom panying diagram shows the Bureau o f
Labor Statistics’ new daily index o f spot market prices
o f 28 basic commodities, and two o f its subgroups—
foodstuffs and raw industrial commodities. The index
begins A ugust 28, 1939, and hence covers the entire war
period, including the abrupt rise in September, a de­
cline and recovery in the final quarter o f 1939, and a
renewed decline in the first five or six weeks o f this
year, accom panying the downturn in business activity.
In the last three weeks o f February the three curves
tended to level out, in each case at about 15 per cent
above the A ugust average. The daily index is consider­
ably more sensitive than the B u reau ’s monthly index
o f 784 wholesale prices, which is estimated fo r Febru ­
ary at only 5 per cent above its prewar level.


D uring January the daily average rate of construction
contract awards in the 37 States included in the F . W .
Dodge Corporation survey was 42 per cent below the high
level of December and 25 per cent lower than a year ago.
The sharp decline from the preceding month was prin­
cipally the result o f a 67 per cent decrease in the heavy
engineering classification, which in December included
a large Tennessee V alley A uthority project. Contracts
fo r residential building registered a reduction, but con­
tracts fo r public purpose building were slightly above
the level o f the previous month. The latter type o f con­
struction, however, showed a 64 per cent decrease from
the relatively large volume in January o f last year.
Contracts fo r heavy engineering projects were 27 per
cent smaller than in January, 1939.
In the New Y ork and Northern New Jersey area the
average daily rate of contract awards was only 5 per
cent lower than in December, but as com pared with
January o f last year, the reduction in the volume o f
total construction contracts in this area amounted to
51 per cent. A ll the m ajor construction categories par­
ticipated in the decline from a year ago, with the excep­
tion o f commercial and industrial building, which, con­
tinuing the rising tendency o f recent months, was 19 per
cent larger than in January, 1939. Residential build­
ing contracts were 7 per cent less than a year previous.
In January, contracts fo r apartment house construc­
tion constituted a larger proportion o f all residential
contracts than a year ago, both in the New Y ork area
and in other areas. The relative growth in apartment
house construction is indicated in the accom panying
diagram, which shows that, fo r the year 1939, apartment
house construction in the New Y ork area accounted fo r
54 per cent of all residential construction, as com pared
with only 40 per cent in 1935, and that in other areas
1939 apartment house construction amounted to 17 per
cent o f the total, as compared with 12 per cent in 1935.
Meanwhile, in New Y ork the proportion o f contracts
fo r one fam ily houses (fo r sale or rent) has remained
approxim ately the same, and has increased somewhat in







other sections, but the proportion of contracts for owner
occupied one fam ily houses has been declining, both in
New Y ork and elsewhere.
D uring the first three weeks o f February, total con­
struction contracts in the 37 States were awarded at
approximately the same daily average rate as in Janu­
a ry ; the effect o f a substantial increase in the category
o f nonresidential building about offset decreases in
awards fo r heavy engineering projects and fo r residential
building. Compared with the corresponding period of
February, 1939, total contract awards were 14 per cent
lower, owing chiefly to a large reduction in the heavy
engineering classification.
E m p l o y m e n t a n d P a y r o lls
Factories reporting to the New Y ork State Depart­
ment o f Labor in January showed decreases o f 2 per
cent in employment and 3 % per cent in payrolls. The
decline in employment was of about the usual seasonal
magnitude, but the reduction in payrolls appears to have
been slightly larger than usual. Compared with Janu­
ary, 1939, factory employment in New Y ork State was
12 per cent higher and payrolls were 16 per cent greater.
A ll o f the m ajor industrial groups reported declines
fo r the month in both employment and payrolls; the
chief declines occurred in textile mills, in fur, leather,
and rubber goods plants, and in the stone, clay, and glass
industry. However, in several subgroups increased work­
ing forces were rep orted ; this was true o f the millinery,
m en’s clothing, and automobile and airplane industries.
F o r the country as a whole, the United States Depart­
ment o f Labor reported a decline in nonagricultural
employment o f more than 1,000,000 workers between the
middle o f December and the middle o f January— some­
what more than the usual seasonal reduction. A bout
half o f the reduction from December to January occurred
in retail trade, where approxim ately 600,000 workers
were laid off after the close o f the holiday trade. In
addition there was a decrease o f 200,000 workers in
factory employment and about 200,000 in construc­
tion work. However, there were estimated to be about
1,100,000 more nonagricultural workers employed in
January, 1940, than there were a year ago.
United States factories reported declines o f 2y2 per
cent in employment and 5 % per cent in payrolls, which
are somewhat larger than the usual decreases experienced
in January. The durable and nondurable goods cate­
gories shared about equally in the decline, and, with the
exception o f the transportation equipment and leather
goods groups, all m ajor industrial classifications em­
ployed fewer workers in January than in December.
Compared with January, 1939, however, total factory
employment was 10 per cent higher and payrolls were
17 per cent greater.
F o r e ig n T r a d e




*3 8

*3 9

Percentage Distribution o f Principal Types o f Residential Building
Contracts in the New Y ork and Northern New Jersey Area,
and in Other Areas from which Reports are Collected by
the F. W . Dodge Corporation

D uring January merchandise exports from the United
States were valued at $369,000,000, an amount which
was slightly larger than the December figure, contrary
to the usual tendency for exports to decline substan­
tially at this time o f year. A s com pared with the low
level o f a year ago, exports in January o f this year
were 73 per cent higher. Imports, with a value o f



showed a large increase. On the other hand, the exports
o f tobacco and gasoline were smaller in value than a year
ago. A m ong the imports, the largest percentage gain
occurred in receipts o f furs, but there were also large
increases in the value o f wool, sugar, rubber, and tin
imports. Im ports o f silk were slightly smaller in quan­
tity than a year ago, but, owing to the price rise, were
86 per cent larger in value than in January, 1939.
Receipts o f coffee showed a moderate decrease from a
year ago, in quantity as well as in value.
D e p a rtm e n t S tore T r a d e

Daily Average Value o f United States Merchandise Exports
and Imports, A djusted for Seasonal Variation

$242,000,000, were somewhat smaller than in the pre­
ceding month, but showed an increase o f 36 per cent
over a year ago. The resulting $127,000,000 excess of
exports in January o f this year was larger than in any
month since October, 1929.
A s is indicated in the accom panying diagram, both
exports and imports o f this country have increased
approxim ately 30 per cent, on a seasonally adjusted
basis, since last September. The increase has carried
exports to a considerably higher point than was reached
in 1937, while imports have not yet reached the 1937
The follow in g table shows the percentage changes
which have occurred between January, 1939 and Janu­
ary, 1940 in the value of the 10 export classifications
o f greatest importance (during 1939) in this cou n try’s
foreign trade, and in the values of the most important
imports. Reflecting heavy European demand, exports
o f aircraft from the United States in January were
more than five times as large as in January, 1939, and
the value o f exports of raw cotton and semifinished
copper showed increases o f 300 per cent and 225 per
cent, respectively, reflecting not only large increases in
quantity, but also higher p rices; a year ago, raw cotton
exports were at an extremely low level. In addition, ex­
ports of metal working machinery were more than
double those of a year ago, and lubricating oil exports

Individual items

change in value
Jan., 1940
compared with
Jan., 1939
+ 42 0
+ 30 0
+ 22 5
+ 117
+ 82
+ 39

A ircraft.......................................
Cotton, unmanufactured........
C opper........................................
Metalworking m achinery. . . .
Lubricating o il..........................
C o a l.............................................
Automobiles, parts, and ac­
Crude petroleum ......................
Gasoline, and other motor fuel
T ob a cco......................................

— 28

Total 10 exports...............
All exports.........................

Individual items

change in value
Jan., 1940
compared with
Jan., 1939

F o r the three weeks ended February 17, total sales
o f the reporting department stores in this D istrict fell
slightly below those o f the corresponding period of
1939, apparently owing in part to bad weather conditions
in the third week, and were also below the January
level, although the rate o f sales is usually somewhat
greater in February than in January.
Total January sales o f the reporting department stores
in this D istrict were about 14% per cent higher than
last year, but about one-third of the increase was due
to one more business day than in January, 1939. A s
com pared with the preceding month, when sales reached
their seasonal peak, about the usual decline was shown.
January sales o f the leading apparel stores in this
District were 12.2 per cent higher than last year, and
on an average daily basis the year-to-year increase was
larger than in the previous two months.
Stocks o f merchandise on hand in the department
stores, at retail valuation, were about 1 % per cent
higher at the end o f January than a year ago, and
apparel store stocks were about 8 % per cent lower.


5 0.4
3 9.4
5 5.8
3 7.7
4 1.4

3 8.4
3 9.8
3 8 .4
4 3.1

New Y ork and B rooklyn...............

Northern New Y ork State........
Southern New Y ork State........
Central New Y ork S tate...........
Hudson River Valley D istrict. .
Westchester and Stam ford.......
Niagara Falls................................

+ 1 4 .9
+ 7 .9
+ 1 3 .4
+ 1 9 .0
+ 1 5 .8
+ 1 6 .7
+ 1 1 .9
+ 1 0 .7
+ 1 5 .9
+ 1 5 .5
+ 1 4 .9
— 2 .5
+ 1 1 .9

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

+ 1 4 .6

+ 1 .4

4 6.8

4 6.1

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

+ 1 2 .2

— 8 .6

4 9.6


Northern New Jersey.....................

••. •
. •. .

Department Store Sales and Stocks, Second Federal Reserve District
(1923-25 average=100)

Sales, unadjusted..............................................
Sales, seasonally adjusted ..............................

+ 10 8

Total 10 imports

+ 64

Stocks, unadjusted...........................................
Stocks, adjusted...............................................

+ 73

All imports . . .

+ 36



+ 0 .2
+ 3 .4
+ 2 .0
+ 4 .3
+ 5 .8
— 2 .9
+ 5 .9


+ 21 3
+15 5
+ 11 3
+ 86
+ 53
+ 11
— 16


on hand
end of


Furs, undressed..
W o o l.....................
Sugar, ca n e.........
Rubber, cru d e.. .
T in ........................
Silk, raw..............
W ood p u lp ...........
Newsprint paper.
Hides and skins .


Per cent of
December 31
collected in

January, 1940
compared with
January, 1939


r Revised



N ov.