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R e p o r t S e c o n d o n B u s in e s s F e d e r a l C R e s e r v e o n d i t i o n s D i s t r i c t F r o m th e F e d e r a l R e s e r v e A g e n t at N e w Y o r k to th e F ed era l R eserve N ew Y o rk , B oard M a rch 2 0 , 1 9 2 0 O n D e c e m b e r 31, 1918, fo llo w in g the arm istice, T h e con serv a tiv e a ttitu d e o f the n a tion a l b a n k loan s sto o d a t 9,919 m illions. O n banks and m a n y business houses B a n k in g tow a rd s furth er exp an sion has been D e c e m b e r 31, 1919, these loan s s to o d a t 11,786 m il lions an increase o f 1,867 m illions, or close to 20 con tin u ed th rou gh th e p a st th irty d ays. A m o n g th e N e w Y o r k C ity banks there w as a gradu al re d u ctio n per cen t. Since th e close o f 1919, th e co u n try -w id e exp an sion has co n tin u e d , and th e g ro w th in th e to ta l o f loans during m ore th an half o f the p eriod , b u t loan s o f th e ban k s o f th e co u n tr y , b o th N a tio n a l la tterly , w ith ren ew ed s to ck m a rk et a ctiv ity , th e y and S tate, in th e last fifteen m on th s m a y b e esti rose again, b arely a b o v e th e level o f a m o n th ago. m a ted w ith reason able con serv atism a t a m in im u m A s in th e p reviou s fo u r w eeks, b a n k cred it ou tsid e o f this d istrict con tin u ed to exp an d . T h e loans o f o f 5 billion s. In this exp an sion , taken as a w h ole, all ban k s in th e co u n try rep ortin g to th e F ed eral the N e w Y o r k C ity ban k s h ad a lm ost n o part. R eserv e B o a rd s tood on M a rc h 12 at their high est I t sh ould be o b se rv e d th a t this great exp an sion , w ith d eclin in g g o ld h old in gs and dim in ish in g b a n k p oin t, 15,908 m illions. O n th e sam e d a te th e loans o f the 73 rep ortin g ban ks o f N e w Y o r k C ity sto o d reserves, to o k p la ce n o t w ith a co n cu rre n t e x p a n at 557 m illions b elow the p eak reach ed last O cto b e r sion b u t w ith a sligh t co n tra ctio n in th e v o lu m e o f 10. A v ery large th e n a tio n ’ s p r o p a rt o f th e re d u c d u ctio n and trad e. ...... 7 tion was d irectly A n in d ex figure o f 1 1 d ue to s to ck m a r n ation al p r o d u c f P /? O i lU C T / o n '3 , 1 k et l i q u i d a t i o n , tio n in ten o f its / O / fo r on M a rc h 12 m o st im p o rta n t Zfo? ................ / ~y & U & . loans on stock s b a sic c o m m o d i > /9 0 C ' - /7 Z O / and b on d s o f N ew ties p rep a red b y r ----------------a t C o n n o aD JTY _ P a? /C £ 9 / zzo Y o r k C ity banks this b a n k in d i ( 3 ua '.£ M O f i \fiBO K) / ) I n o c x >£/ C T f O/V sh ow ed a red u c cates th a t fo r th e / OF P R O i (* ’OOCfCT.s) 0° / tion fro m the high yea r 1919 there ) I n d e x O r B u t 5 1 H L 2 3 ffC T IV /T V > .............. 0 \ / ^ (C ii ( b r s /D £ A 'Y ~ < o ) p o in t o f last fall was a d eclin e \ s s' ft?.: o f 200 m illions, or in v o l u m e o f 1 v 'o rj — .— / m ore than 14 per /6&i a b o u t 6 p er cen t, ........... / fro m 1918, w hen cen t. 0 J / p ro d u ctio n fo r th e / i x fla t f / 5 T/CC /j o _ P R IC * T h e loans o f the co u n tr y was at its N e w Y o r k C ity high p o in t. T h is s banks stand n ow com p a res closely ft yea. K C* at p ra ctica lly th e w ith a co rre sp o n d sam e level as a ing estim ate fro m yea r a go, so th a t a competent all o f th e in terven in g expan sion o f b a n k loan s has sou rce o f th e c o u n t r y ’s to ta l trad e in 1919, co m p u te d been n eutralized. F o r th e co u n tr y a t large th e re fro m th e traffic o f th e railw ays, lake and seagoin g verse is true. E x a ct com p a rison s fo r all th e ban ks ton n ag e, b a n k clearings, and th e like. T h is b a n k ’ s in th e F ederal R eserv e S ystem are difficu lt on a c in d ex o f p ro d u ctio n is ch a rted a b o v e , and a d etailed co u n t o f the adm ission o f new m em b er b a n k s; b u t e xp la n a tion appears elsew here in this rep ort. it is well k n ow n th a t th e loans and deposits o f the A n exp an sion o f 20 p er cen t, in th e cred it stru ctu re n ation al banks of the co u n try reflect v e ry closely w ith a co n tra ctio n in p ro d u ctio n and trad e has one th e general b an k in g con d ition s o f the w h ole co u n try . p rim ary effect— th a t is, rising prices, w h ich in turn 'J _ _ HI & * N. o r>, C r e d it a n d REPORT ON BUSINESS CONDITIONS 2 brin g a d em an d fo r fu rth er cred it togeth er w ith high w ages, high costs o f p ro d u ctio n , and the general u n settlem en t w h ich com es in v a ria b ly w ith a serious ch an ge in th e p urch a sin g p ow er o f th e dollar. T h is loss o f eq u ilib riu m con tin u es until exp an sion o f cred it is ch eck ed , and u ntil th e p ro d u ctio n o f g o o d s overtak es th e d em an d . T h e n orm a l and grad u al ch eck to th e exp an sion o f cred it is t o increase th e rates fo r cred it. T h e LOAN S, E T C ., A N D D E P O S I T S (In Millions) 73 Reporting Banks 809 Reporting Banks All Districts in New York City* Total Loans and Investments Mar. Mar. Mar. Feb. Feb. Oct. Mar. 19, 12, 5, 27, 20, 10, 7, 1920 1920 1920 1920 1920 1919 1919 effect o f th e increase o f rates w h ich t o o k p la ce fo llo w in g th e a ctio n o f th e F ed era l R e se rv e B an k s in raising th eir d isco u n t rates is a lread y b eg in n in g t o b e felt. T h e fo llo w in g ta b le show s th e m o v e m e n t o f th e v o lu m e o f cred it o f the rep ortin g b an k s in N e w Y o r k C ity , as in d ica ted b o t h in their loan and d e p o sit a cco u n ts, and gives also th e loan s and deposits o f all re p o rtin g b an k s in th e co u n try , in clu d in g this d is trict: 5,288 5,293 5,247 5,248 5,281 5,850 (highest) 5,226 Total Deposits 5,018 4,985 4,919 4,881 4,878 5,397 4,655 Total Loans and Investments Total Deposits 15,831 15,912 15,811 15,731 15,732 15,476 14,137 14,312 14,318 14,147 14,024 13,986 13,699 12,223 *The number of reporting banks throughout the country increased from 757 on January 3, 1919, to 809 on March 19, 1920. the same time the reporting banks in this district increased from 65 to 73. T h e co n tr a c tio n in b a n k cre d it in this d istrict in d ica te d a b o v e has o n ly a p a rtia l cou n terp a rt in th e loan a ccou n ts o f th e F ed era l R e se rv e B a n k o f N e w Y o r k . T h e loan s and in v estm en ts o f this b a n k s to o d a t th eir h igh p o in t on F eb ru a ry 27, w hen th e to ta l was 1,148 m illion s, to w h ich sh ould b e a d d ed 48 m illion s o f p a p er w h ich this b a n k h ad red iscou n ted w ith oth er F ed era l R e se rv e B an k s and carried as a co n tin g e n t lia b ility . B y M a r c h 19, h ow ever, th e to ta l o f these tw o item s h a d b een red u ced t o 1,069 m illions, a d ecrease in th ree w eeks o f 127 m illion s o f b a n k b orrow in gs, w h ich w as ow in g v e ry largely to th e red em p tion o f certificates o f in d eb tedn ess m a tu rin g on M a r c h 15 and p a r tly t o a te m p o ra ry rep letion o f fu n d s p en d in g th e co lle ctio n o f ch eck s d ra w n in p a y m e n t o f in co m e taxes. T h e red iscou n ts w h ich th is b a n k m a d e w ith o th er F ed era l R e se rv e B an k s in ord er to restore its reserves, w ere a t th eir high p o in t on M a r c h 12, w hen th e y s to o d a t 85 m illion s, b u t o n M a r c h 19 w ere d o w n to sligh tly less th a n 20 m illion s. T h e g o ld reserves o f this b a n k sto o d on M a rc h 19 a t 477 m illions as co m p a re d w ith 527 m illions on In F e b ru a ry 20, a n d a h igh p o in t o f 880 m illion s in 1918. S ince F e b ru a ry 20 g o ld has b een w ith d raw n fro m this b a n k fo r e x p o rt, ch iefly t o S ou th A m e rica , in th e a m o u n t o f $33,610,000, and $6,000,000 has been receiv ed fro m C an a da . T h is b a n k ’ s circu la tio n o f F ed era l R e se rv e n otes has u n d ergon e a sligh t increase in th e fo u r w eeks, fro m $817,400,000 on F e b ru a ry 20 to $837,700,000 o n M a r c h 19, a b o u t $10,000,000 a b o v e th e h igh p o in t fo r 1919, rea ch ed a t th e en d o f th e year. T h e effect o f th ese m o v e m e n ts has been a grad u al im p ro v e m e n t in th e figures p u b lish ed w eek ly sh ow in g th e ra tio o f reserves to co m b in e d n e t d e p o sit and n o te lia b ility , w h ich sto o d o n F e b ru a ry 20 a t a lo w p o in t o f 37.1. T h e co rre sp o n d in g figu re on M a r c h 19 w as 38.8. B a n k clearings fo r th e first w eek o f th e p e rio d w ere th e lo w e st in a n y w eek since late in th e sum m er o f 1919. T h e increase a t th e close o f th e p e rio d , p a rticu la rly in N e w Y o r k C ity , reflected ren ew ed s to ck exch an ge a c tiv ity . T h e tota ls fo r ea ch w eek o f th e cu rren t p e rio d w ere as fo llo w s : (000 OMITTED) Week Ended New York City Six Cities Outside New York City Entire District Feb. 25....... Mar. 3 ....... Mar. 10....... Mar. 17....... $3,750,232 5,190,718 4,473,374 5,258,759 $131,975 158,223 123,859 151,972 $3,882,207 5,348.941 4,597,233 5,410,731 FEDERAL RESERVE AGENT AT NEW YORK M oney In general, conditions in the stock R a tes exch an ge m o n e y m a rk et h a v e been m ore sta b le th an d u rin g th e p re ced in g p eriod , and rates h a v e a vera ged b e lo w th e figures q u o te d d u rin g J an u ary and F eb ru a ry . In th e last w eek o f F eb ru a ry , w hen m o n e y rates w ere a t th eir m a xim u m fo r th e cu rren t p erio d , 10 per cen t, was th e h igh est rate fo r call loan renew als, and 15 p er cen t, was th e h igh est fo r n ew loans. T h is com p a res w ith renew al q u ota tion s a t 17 p e r c e n t , fo r several d a ys early in F eb ru a ry , w hen n ew loans w ere m a d e as h igh as 25 p er cen t. T h e som ew h at easier con d ition s w h ich h a v e p reva iled this m o n th are a ttrib u ta b le, in large p a rt, to th e g rea tly d im in ished a c tiv ity in th e s to ck m a rk et d u rin g th e first tw o w eeks, and later to the m a tu rin g th ro u g h o u t th e c o u n tr y o f a b o u t $840,000,000 certificates o f in d eb tedn ess, o f w h ich a p p rox im a tely $268,000,000 w ere red eem ed in this d istrict. T h e a c tiv ity o f th e sto ck m a rk et tog eth er w ith th e p ro s p e ctiv e d em a n d fo r fu n d s fo r ta x p a y m en ts was reflected in a rise in call m o n e y rates F rid a y , M a rc h 12, to 15 p e r ce n t., b u t fo llo w in g th e p a y m e n t o f certificates and p e n d in g th e collection o f ch eck s draw n in p a y m e n t o f taxes, rates eased off gra d u a lly to 7 and 6 p er cen t. T im e loan s, w h ich h ad b een p ra ctica lly u n ob ta in a b le at fro m 9 to 10 p er cen t, on a ll-in du strial a n d 8 to 9 p er cen t, on m ixed collateral, w ith lenders in m o st cases d em a n d in g p a y m e n t o f m a tu rin g ob lig a tion s, h a v e la tely been ren ew ed m ore freely a t 8 p er cen t, on m ixed collateral and 8 ^ p er cen t, on all-in du strial, b u t little new m o n e y is fo rth co m in g . O fferin g rates fo r com m ercia l p a p er a n d a c c e p t ances, ta k in g th e p eriod as a w h ole, h a v e b een firm er, in d ica tin g th e tru e p osition o f th e m o n e y m ark et. C om m ercia l p a p er d istrib u tion con tin u es co n sid e r a b ly b e lo w th e n orm a l v olu m e, th o u g h dealers re ce n tly h a v e rep orted larger sales. T h e m a rk et a d v a n ce d to a 7 p er cen t, level, b u t la te ly rates h a v e sh aded tow a rd s 6 % p er cen t, fo r b e st pap er. F e w c ity ban k s are b u y in g . A cce p ta n ce s m o v e d slow ly th rou g h th e greater p a rt o f th e p e rio d , w ith a b roa d er sale rep orted ou tsid e durin g th e last tw o w eeks, p a rticu la rly to savin gs ban k s and indu strial and co u n tr y ban k s. D ea lers are m a k in g special efforts to en cou rage th e d ra w in g o f bills in sm all units, as th ey find a readier m a rk et u n der p resen t con d ition s. T h eir offerin g rates fo r p rim e bills w ere a d v a n ced to 6 and p er cen t, early in th e p e rio d , w hile the F ederal R eserv e B a n k raised its m in im u m p u rch a se rate fo r prim e in d orsed bills on e-q u a rter o f 1 p er cen t, and is n o w b u y in g a t fro m 5 ^ to 5 % p er cen t, a ccord in g to m aturities. 3 T h e S tock M a rk et T h e d eclin e in s to ck p rices, w h ich h ad b een in progress since N o v e m b er, was sh arply reversed d u rin g th e p a st th irty d ays. In a ra p id rise, m a in ly in th e final tw o w eeks o f th e p e rio d , th e m a rk et re co v e re d n early all o f th e losses sustain ed d u rin g th e d ra stic liq u id a tio n o f th e latter p a rt o f J an u ary and F e b ru a ry . C h ief a m o n g th e influences co n trib u tin g to this m o v e m en t w ere easier m o n e y co n d itio n s, th e a d o p tio n o f th e R a ilw a y B ill, and th e return o f th e railroads to p riv a te ow n ersh ip, stron ger foreign exch an ges, and th e d ecision s o f th e Su p rem e C o u rt in th e Steel C o r p o ra tio n , th e s to ck d iv id e n d , and th e ra ilw a y v a lu a tio n cases. T h e m o s t im p o rta n t in its e ffe ct o n th e m a rk et was th e s to ck d iv id e n d d ecision , w h ich fixed th e status o f s to ck d iv id e n d s as free fro m in co m e taxes u n der th e p resen t law , a n d th erefore op e n e d th e w a y fo r th e d e cla ra tio n o f such d iv id e n d s b y m a n y co rp o ra tio n s w h ich h a v e re ce n tly a d d ed m a terially to th eir ca p ita l o u t o f earnings. N o t since th e sp ecu la tiv e m o v e m e n t o f last fall has th e m a rk et d isp la y e d such a c tiv ity . D a ily sales after th e first w eek in M a r c h a v e ra g e d w ell o v e r a m illion shares, and on tw o occa sion s th e to ta l fell ju s t sh ort o f tw o m illion shares. P rices to M a r c h 20 o f th e a ctiv e sp ecu la tiv e stock s a d v a n ce d 50 t o 100 p o in ts o r m ore, w hile an a vera ge o f tw e n ty -fiv e indu strial stock s, fro m a lo w level o f 101, rea ch ed in th e secon d w eek o f F e b ru a ry , rose 23 p o in ts t o 124, or o n ly 3 p o in ts b e lo w th e h igh est p rice a vera ge th u s far this year. T w e n ty -fiv e railroad stock s a vera ged 10 p o in ts a b o v e th e low est prices o n re co rd fo r this g ro u p , w h ich h ad b een rea ch ed d u rin g th e F e b ru a ry liq u id ation . F e b ru a ry s to ck sales a ggregated 21,729,000 shares. T h is is th e largest to ta l on reco rd fo r th a t m o n th since 1905, and represents an increse o f 2 ,075,000 shares o v e r th e J an u ary to ta l, b u t is a p p ro x im a te ly 2 ,000,000 b e lo w th e figures fo r D e ce m b e r. The B ond M a rk et T h e general m o v e m e n t o f b o n d p rices has b een u p w a rd d u rin g th e p a st th irty d a y s, a m o u n tin g t o an a d v a n ce o f a p p ro x im a te ly 2 p o in ts in th e a verage o f 40 listed issues fro m th e re co rd lo w levels rea ch ed d u rin g th e se co n d w eek in F e b ru a ry . T h e a verage, h ow ever, is still ro u g h ly 2 p o in ts b e lo w th e high p o in t o f th e y ea r estab lish ed in J an u ary and a p p ro x m a te ly 6 p o in ts b e lo w th e p rice level a t this tim e last year. P ra c tica lly all classes o f b o n d s suffered a te m p o ra ry s e tb a ck in th e la tter p a rt o f F e b ru a ry . L ib e r ty issues sh ow ed th e sh arpest rea ction s a t th a t tim e , establish in g n ew lo w record s fo r th e 3 }^ p er 4 REPORT ON BUSINESS CONDITIONS cen ts., th e first and secon d 4 p er cen ts., a n d b o th V ic to r y issues. S u b seq u en tly these issues m a d e su bstan tial progress in re c o v e r y . Stren gth o f th e A n g lo -F re n ch loan and Japan ese sterling b o n d s was n o te w o r th y in th e foreign g o v e r n m en t g rou p . A n g lo -F r e n ch b on d s a d v a n ce d to a b o v e 98, as co m p a re d w ith a lo w p rice of 9 3 ^ early in F eb ru a ry , o n stron g b u y in g m u ch o f w h ich was re p orted t o h a v e origin a ted w ith th e B ritish G o v e r n m en t. P rep a ra tion fo r m eetin g this issue at m a tu rity was a later fa c to r influential in th e rise. T h e Japan ese issues a p p a ren tly h a v e been influen ced la rgely b y th e flu ctu a tion s in sterling exch an ge. T h e Japan ese G o v e rn m e n t is rep orted to b e b u y in g these b o n d s in L o n d o n b u t w e h a v e learned o f n o orders o f this ch a ra cter p la ce d in this m a rk et fo r several m on th s, T o ta l b o n d sales fo r F e b ru a ry w ere $300, 400.000, w h ich , th o u g h a record fo r th a t m o n th , is $62,000,000 b e lo w th e to ta l of J an u ary sales. T h e sale in this m a rk et o f E u rop ea n intern al se curities rendered a ttra ctiv e b y p reva ilin g rates o f fo reig n exch an ge is rep orted to b e increasin g in vo lu m e, th ou g h it is p ro b a b le th a t th e tota l v o lu m e o f this business is exa ggerated. In q u iry a m on g dealers is basis fo r th e estim ate th a t $600,000 to $650,000 a d a y w ou ld a m p ly c o v e r th e aggregate. G erm an m u n icip a l ob lig a tion s h a v e b een p articu la rly in d em an d . C a n a d ia n b o n d s p a y a b le in C a n a d a or in N e w Y o r k con tin u e to e n jo y a g o o d m a rk et here. I t is estim ated th a t a p p ro x im a te ly $138,000,000 o f C an a dian m u n icip a l and p ro v in cia l o b lig a tio n s and o f th e C an a dian V ic to r y loan h a v e been sold since th e first o f O cto b e r. N ew F in a n c in g N e w c o r p o ra te fin a n cin g d u rin g J an u ary and F eb ru a ry , th o u g h b e low th e h igh level attain ed in O c to b e r, was still h e a v y . T h e high record in O c to b e r was $391,000,000. F eb ru a ry issues aggregated $202,528.000, a con sid erab le shrinkage since the sharp J an u ary rise to $338,000,000, b u t a p p ro x im a te ly level w ith th e D e c e m b e r a m ou n t, $223,000,000. I t is estim ated th a t b etw een 25 and 35 p er cen t, o f last m o n th ’ s issues w ere used to refu n d or p a y o ff m a tu r ing ob lig a tion s. M a rc h m atu rities, a cco rd in g to F O R E IG N FEBRUARY 21 High Low England..................... France........................ Ita ly ........................... Spain.......................... Argentina.................. China (Hong K on g ). 13.22 17.65 17.52 43.25 98.50 149.00 48.125 F o r e ig n E xch an ges Q u o ta tio n s fo r th e p rin cip a l E u ro p ean exch an ges h a v e fo llo w e d an erratic cou rse in th e last fo u r w eeks. S terling, w h ich to u ch e d a lo w p o in t o f 3.18 in F e b ru a ry, rose to 3.81 and th en lo st a b o u t on e -h a lf o f its a d v a n ce , w ith a su bsequ en t re c o v e r y to near th e h igh figure o f th e m o v e m e n t. F ran cs, w h ich h ad rea ch ed a figure o f 15.15 to th e d ollar, rose to 12.94, a n d a sim ilar re c o v e r y t o o k p la ce in lire, w h ich rose fro m 19.72 to 17.48. T h ere was a sen sation al rise in m arks fro m th e lo w o f 1.01 to 1.66, w ith a su b seq u en t re lapse to arou n d 1,30. A p a rt o f this general re c o v e r y was p ro b a b ly due t o a sp ecu la tiv e re b o u n d fro m th e lo w figures re p o rte d in F e b ru a ry , w h ich h ad carried F ren ch , E n glish , and Ita lia n exch an ge v e r y m a rk ed ly b e lo w a n y a p p ro x im a te p a r ity w h ich m ig h t be c a lcu lated fro m th e rela tiv e p rice level o f these cou n tries and ou r ow n . F o r exam p le, since 1914 E n glish prices h a v e risen som eth in g like 200 p er cen t, as a gain st ou r 148 p er ce n t., th e F e b ru a ry in d ex figu re re p o rte d b y th e B u reau o f L a b o r . T h is m eans th a t rela tiv e to prices p reva ilin g in 1914 it n o w requires th e e q u iv a len t o f $300 in E n glish m o n e y to p u rch a se g o o d s to th e a m o u n t o f $250 in A m e rica , w h ich im plies a p rice level d ifferen ce o f o n ly a b o u t 16 p er cen t. I t is e v id e n t fro m this th a t a d e p re cia tio n o f E n glish ex ch an ge, e xten d in g to m ore th a n d o u b le th is, was th e p ro d u ct o f th e te m p o ra ry pressure o f bills and p r o b a b ly also o f sp ecu la tiv e pressure rath er th a n th e re flection o f th e rela tive va lu e o f th e tw o cu rren cies. P a rticu la rly im p o rta n t fa cto rs in th e rise o f sterling w ere th e rep orts th a t g o ld sh ipm en ts w ere u n d er w a y fro m L o n d o n to N e w Y o r k , and th e assurances g iven b y th e B ritish G o v e rn m e n t o f th e p a y m e n t at m a tu rity in O c to b e r o f $500,000,000 A n g lo -F re n ch b o n d s. EXCHANGE WEEK ENDED 3.47M estim ates, a p p ro x im a te $59,000,000, again st $ 91 ,000,000 d u rin g F e b ru a ry . T h e n ew issues w ere p u t o u t on bases t o y ie ld high returns, n ecessita ted b y th e sca rcity o f m o n e y . T h e general level o f rates fo r p rim e issues w h ich co m m a n d sales are fro m to 1 p er cen t, a b o v e th e level o f a m o n th a go, and reflect th e su bm ission o f b orrow ers t o th e co n d itio n s o f th e m o n e y su p p ly . 3.35)4 14.38 18.30 17.20 43.25 97.00 147.00 48.00 RATES FEBRUARY 28 High Low 3.41 M 14.12 18.14 17.40 43.75 97.00 147.00 48.00 3.35)4 14.34 18.38 17.30 43.50 96.00 143.00 47.75 M ARCH 6 High Low 3.68% 13.60 17.84 18.00 43.65 101.00 152.00 48.00 3.40% 14.24 18.34 17.40 43.50 97.00 143.00 47.125 M ARCH 13 Low High 3.81 12.94 17.48 18.00 43.65 100.00 146.00 48.75 3.53 14.02 18.17 17.65 43.25 94.00 133.00 47.00 FEDERAL RESERVE AGENT AT NEW YORK O u r F o r e ig n T rade F e b ru a ry exp orts were a b o u t 10 Per cen t, larger in d ollar va lu e th a n a yea r a go, w hile im p orts were te n d ing u pw ards in m u ch greater p ro p o rtio n . D e p a r t m en t of C om m erce returns fo r F e b ru a ry sh ow e x p orts fo r $646 m illions as com p a red w ith $722 m illions in J an u ary and $586 m illion s in F e b ru a ry on e yea r a go. Im p o rts w ere $467 m illion s as c o m p ared w ith $474 m illions in J an u ary and $235 m illion s in F e b ru a ry o f on e yea r a go. F o r th e th ree m on th s o f N o v e m b e r, D e c e m b e r an d Jan u ary, th e increase, in th e va lu e o f exp orts, was a b o u t 26 p er cen t., or sligh tly a b o v e th e increase in a vera ge prices d urin g th e yea r. Im p o rts on th e oth er h an d sh ow ed a q u ite con sid era b le increase, b y v o lu m e m ore th an on e-h a lf o v e r th e 1918-1919 p eriod. F r o m E u ro p e th e increases in th e va lu e o f im p orts w ere n o ta b le ; 418 p er cen t, fro m G rea t B ritain , and Division and Country Grand T otal....... Europe................. South Am erica... A sia...................... France.................. United Kingdom. Canada................ Japan.................... *Decrease. P resen t 395 p er cen t, fro m F r a n c e ; w h ile in v o lu m e ou r e x p orts to th ose cou n tries d ecreased sligh tly. T h e re is a p ersisten t b u t erron eou s b elief th a t the w ar b ro u g h t g rea t ch a n ges in th e d ire ctio n o f ou r trad e. F o r th e sam e th ree m on th s o f 1913-1914, E u ro p e to o k a b o u t tw o -th ird s o f ou r exp orts and sent us n early o n e-h a lf o f ou r im p orts. T h is w in ter its p ro p o rtio n o f o u r e xp orts w as v e r y n early th e sam e. O n th e oth er h an d , th e p e rce n ta g e o f th e va lu e o f ou r im p orts d eclin ed v e r y co n sid e ra b ly , fa llin g to a b o u t on e-q u a rter o f th e to ta l. T h e largest increase in im p o rts w a s in th e d ire ctio n o f A sia, w h ich a ctu a lly sent us this w in ter m ore g o o d s th a n E u ro p e . T h e y were m ore th an d o u b le th a t o f e ven a yea r a go, w hile on th e oth er h an d th e p r o p o rtio n o f ou r exp orts g o in g to A sia ch a n ged v e r y little. A com p a riso n fo r the p rin cip al d ivision s and cou n tries fo llo w s : AMOUNT--IMPORTS Nov.-Jan. Nov.-Jan. Per Cent. 1918-19 1919-20 Increase $674,886,554 $1,279,465,990 89.6 67,952,346 319,676,847 370.5 138,861,398 55.4 215,788,107 157,838,721 347,334,407 120.1 10,398,930 51,539,249 395.6 26,968,516 139,869,919 418.6 122,531,741 143,588,719 17.2 64,775,545 150,258,173 132.0 I t is rep orted t o us th a t th ere is a som ew h at slack en in g d em an d fro m foreig n cou n tries w here ou r dealings in F o r e ig n h a v e b een largest. T h ere h a v e b een T rade few ca n cella tion s o f orders con tra cte d b y im p orters a b roa d , and there h a v e b een few , if a n y , d em an d s fo r con cession s on losses resu ltin g fro m th e gy ra tion s in foreig n exch an ge, b u t som e d eclin e in fo rw a rd orders. E n g la n d is rep orted as tu rn in g elsew here fo r su pp lies; esp ecia lly t o S ou th A m erica . P rin cip a lly this has a ffected ou r grain m ov em e n ts to B ritain and th e C on tin en t w h ich h a v e fe lt th e ex p a n sion o f sh ipm en ts fro m A rg en tin a a nd C h ile. E x p o rts o f c o t to n to th e B ritish Isles are still h e a v y ; b u t G e r m a n y , fo rm e rly a h e a v y purch aser, is retu rn in g to the m a rk et v e r y slow ly. T h e em b a rg o and th e recen t strike are influences adverse t o a large ou tflo w o f coa l. In the iron and steel trad e th e situ a tion is som ew h at m ore a ctiv e . A ll E u ro p e a n cou n tries are in th e m a rk et fo r rails and rollin g s to ck in general. Shippers o f cru de oils and p etroleu m p ro d u cts , also, are fin din g little d ifficu lty in p la cin g orders a b ro a d a n d are exp ectin g an increased d em a n d , w ith th e sam e true, t o a less exten t, o f m a n u fa ctu red articles. F ra n ce and G erm a n y are purch asers o f co p p e r on a sligh tly increasing scale. S im u lta n eou sly there has T e n d e n cie s 5 AMOUNT--EXPORTS Nov.-Jan. Nov.-Jan. Per Cent. 1919-20 Increase 1918-19 $1,710,674,706 $2,155,382,162 26.0 35.0 1,029,692,311 1,389,720,085 111,024,537 104,967,075 5.4* 29.6 194,301,245 149,882,171 187,867,750 213,724,945 13.8 19.1 526,013,806 626,451,491 1.9 215,455,502 219,483,657 91,284,556 37.6 125,622,760 been a h e a v y d eclin e in fo re ig n orders o f p a c k e r s ’ p ro d u cts. T h e losses in to n n a g e h a v e fallen largely on ou r sh ip pin g a n d a g ro w in g su p p ly o f b o tto m s is re p o rte d w ith a corre sp o n d in g decrease o f m arin e freigh t rates. F o re ig n b u y in g o f leath er d w in d led co n sid e ra b ly d u rin g J a n u a ry and F e b ru a ry , a lth ou gh a fa irly g o o d business h a d b een d o n e u p t o th e tim e o f th e severe breaks o f sterlin g b e lo w $4. T h ere is still a d em an d , th o u g h n o t general, fo r lig h t and p a te n t leathers, d u e t o th e fa c t th a t this is p r a c tica lly th e o n ly m a rk et fo r su ch leathers. F o o d stuffs are m o v in g slo w ly , and storage w arehouses h a v e in m a n y cases re p o rte d th a t th e b u lk o f g o o d s on h an d w ere p ro d u cts o f this class, th e ou tw a rd m o v e m e n t o f w h ich h ad b een ch e ck e d b y th e d e clin in g rates o f exch a n ge. C a n a d ia n T rade W h ile C a n a d a ’ s exp orts since 1914 h a v e stea d ily e x ceed ed her im p orts, her tra d e b a la n ce w ith th e U n ited S tates has b een adverse. C a n a d a ’ s im p orts fro m th e U n ite d S tates d u rin g J an u ary w ere $74,500,000 as again st $71,000,000 in D e c e m b e r , and $57,000,000 in Jan u ary, 1919. E x p o rts t o th e U n ite d States w ere $43,500,000 in J an u ary co m p a re d w ith $41,000,000 a yea r a go. H e r tra d e w ith th e U n ited REPORT ON BUSINESS CONDITIONS 6 S ta tes, exclu d in g im p orts and exp orts o f ca p ita l, d u rin g th e last th ree years is giv en in th e fo llo w in g ta b le , w h ich show s a dim in ish in g b a la n ce a dverse to C a n a d a : IMPORTS EXPORTS BALANCE 191 7 191 8 191 9 ............ $829,845,747 741,336,304 740,580,225 $401,479,287 433,182,149 454,686,294 $428,366,460 308,154,155 285,893,931 T h e p ercen ta g e o f her to ta l im p orts re ce iv e d fro m th e U n ited S tates has risen fro m 59 p er cen t, in 1910 t o 82 p er cen t, in 1919. C a n a d a is also a co n sta n t im p orter o f ca p ita l, a nd w hile b e fo re th e w ar, th e greater p a rt o f this ca m e fro m E n g la n d , th e U n ited States has n o w b e co m e th e ch ief sou rce o f such fun d s. T o t a l C an a dian b o n d sales in th e U n ited S tates increased fro m $ 54,000,000 in 1914 to $199,000,000 in 1919 w hile su ch sales in U n ite d K in g d o m d ecreased fro m $186,000,000 in 1914 t o $5,000,000 in 1919. I t is esti m a ted th a t th e to ta l A m erica n in v estm en t in C an a da a p p rox im a tes $1,250,000,000. T h e cou rse o f ex ch a n g e b etw een th e U n ited States a nd C an a d a , h ow ev er, ca n n o t b e exp la in ed solely b y th e tra d e a n d fin an cial relation s b etw een these tw o cou n tries. P ra c tica lly all exch an ge tran saction s b etw een C a n a d a a n d E n g la n d are m a d e th rou g h N e w Y o r k and ev en in n orm a l tim es sterlin g e x ch a n ge in C a n a d a d epen d s on sterling in N e w Y o r k . W h en sterling exch a n ge rea ch ed its lo w e st levels a rou n d th e first o f F eb ru a ry , N e w Y o r k fu n d s in C an a d a rea ch ed a p rem iu m o f 17 p er cen t, and h a v e n ow decreased t o a p p ro x im a te ly 12 p er cen t, as sterling has gra d u a lly recovered . I t is rep orted th a t som e A m erica n firm s share w ith th eir cu stom ers in C a n a d a on e h a lf th e loss d u e to d ep recia ted exch an ge, and in m a n y cases lo n g cred its are gra n ted w ith th e ex p e cta tio n th a t all exch an ges w ill ten d to n orm a l levels. A n o th e r p ra ctice th a t helps to m a in ta in a co m m o n level o f prices in th e tw o cou n tries w hile exch a n ge is a t a d isco u n t is th a t m a n y A m erica n firm s p ra ctica lly ign ore th e exch a n ge in q u o tin g prices a n d d o n o t w ith d ra w th eir fu n d s fro m C an a d a b u t a llow th em t o rem ain th ere fo r in v estm en t. P r ic e s a n d P r o d u c tio n T h e ch a rt re p rod u ced on th e first p a g e o f this rep ort is d esign ed to a n d B u s i n e s s sh° w the, rate, o f increase in th e a . . v olu m e o i p ro d u ctio n or ten or th e ^ m ost im p o rta n t b a sic co m m o d itie s o f this co u n tr y fro m 1900, com p a red w ith th e prices o f a large n u m ber o f co m m o d itie s and th e general tra d e m o v e m e n t as reflected in b a n k clearings o u t side o f N e w Y o r k C ity . T h e line sh ow in g th e p h y sical v o lu m e o f p ro d u ctio n in clu d es th e b a sic p r o d u cts, c o tto n , co rn , w h eat, w o o l, p ig iron , c o p p e r, lead , coa l, p e tro le u m and sugar. T h e secon d g iv in g th e in d ex o f b a n k clearings ou tsid e o f N e w Y o r k , represents th e n om in a l a m o u n t o f clearings d iv id e d b y th e B u rea u o f L a b o r ’ s in d ex figure fo r c o m m o d ity p rices so as to elim in ate th e d isto rtin g influen ce o f th e h e a v y rise in th e p rice level d u rin g and since th e war. N e w Y o r k C ity b a n k clearings are o m itte d so th a t th e fa c to r o f s to ck m a rk et op e ra tio n s m a y be ex clu d e d as far as p ossible. T h e th ird line g ives th e B u rea u o f L a b o r ’ s c o m m o d ity in d ex itself. I t will b e seen th a t d u rin g th e w ar th e rate a t w h ich p ro d u ctio n increased was a lm ost e x a ctly th e sam e as fo r p re-w a r years and e ven a t a lesser rate th a n , fo r exa m p le, fo r th e years fro m 1908-06. T h e d e crease fo r 1919, th o u g h th e sharpest in a n y o f th e tw e n ty years sh ow n , was u n d er 6 p er ce n t. I f we regard sp ecu la tion in co m m o d itie s as an in sep arable p a rt o f “ tr a d e ” th e in d ex o f b a n k clearings is g e n erally regarded as an excellen t b a ro m e te r o f business a c tiv ity . T h is in d ex likew ise show s n o rem ark a ble rate o f exp an sion d u rin g th e w ar. C o n tra ry t o th e p ro d u ctio n cu rv e it show s a sligh t increase fo r 1919 o v e r th e p re v io u s y ea r b u t it is t o b e o b se rv e d th a t this is n o t b o rn e o u t b y figures o f ra ilw a y traffic and sim ilar indices o f business v o lu m e . T h e on e v e ry strik in g fa c t th a t stands o u t is th e e x tra o rd in a ry rise in p rices w h ich b egan to w a rd s th e close o f 1915 and has co n tin u e d w ith o n ly a b rie f recession u p to the p resen t tim e. R e ta il T rade R e ta il b u y in g has b een som ew h a t q u ieter th an in th e m o n th p re ce d in g and stock s are sligh tly larger on an avera ge th a n a m o n th a go. Sales to ta ls are n o t b o u n d in g ahead as ra p id ly and som e stores are a tte m p tin g t o rem e d y this decrease o f sales u n its b y h a v in g special re d u ctio n sales. In som e quarters con su m ers are tu rn in g fro m h igh er p rice d g o o d s , w hile in oth ers ch ea p er grad e m erch an d ise is a d ru g on th e m ark et. T h e re is som e evid e n ce th a t th e u ltim a te con su m er is cu ttin g d o w n his p urch ases e x c e p t w hen n ecessity fo rce s h im t o b u y . T h e retail je w e lry business seem s to h a v e lo st b u t little m o m e n tu m in spite o f th e fiv e m on th s strik e settled early this m on th . P rices fo r je w e lry h a v e b een u p w ard , and likew ise fo r clo th in g , and th o u g h the im pression is th a t th e gen eral p rice p e a k m a y b e near a t h an d , little ta n g ib le e v id e n ce has th u s far presen ted itself in retail trad e. P rices th a t d o retrea t are a b o u t offset b y oth ers w h ich a d va n ce. C re d it-g iv in g is b e in g w a tch e d m ore closely . FEDERAL RESERVE AGENT AT NEW YORK C o m m o d ity F or th e first tim e since last P r ic e s D e c e m b e r D u n ’ s and B ra d s tre e t’ s in d ices as o f M a r c h 1 failed to record a fu rth er increase in th e level o f w h olesale c o m m o d it y prices, w hile an in d ex o f tw elv e b a sic co m m o d ity prices m a in ta in ed b y this b a n k show s a slight d eclin e fro m th e h igh level o f F e b ru a ry first. A com p a riso n 7 since th e a rm istice has risen 20 per ce n t., ou r b asic co m m o d ity in d ex has risen less th a n 5 p er cen t. T h e m o m e n tu m o f th e gre a t p rice rise in th e last fo u r years, has b een cu m u la tiv e in its effe ct o n th e general level o f w ages and costs, and has carried th em o u t o f p ro p o rtio n w ith th e p rices o f b a sic m a terials, on w h ich b o th th e w ages and indu stries o f o f th e m ov em en ts o f this la tter in d ex w ith th a t o f tw o oth er p rice ind ices is giv en in th e d iagram sh ow n th e co u n tr y rest. T h is is gen erally th e a fterm a th o f b e low . T h is in d ex is m a d e u p fro m th e tw elv e m o st im p o rta n t b a sic co m m o d itie s, in w h ich th e m ark ets will m o v e m ore ra p id ly th a n w ages, and reach th eir tu rn soon er. such a rise, or fall. In gen eral, sp ecu la tiv e p rices I f ou r b a sic in d ex h old s b e lo w th e and sp ecu la tion are freest and p rice ch anges th e m o st h igh p o in t o f F e b ru a ry 1, it will p r o b a b ly d efin itely rap id . I t inclu des th e three largest crop s, corn , c o t to n and in d ica te th a t th e p e a k o f w ages and costs o f m a n u fa ctu re has b een reach ed. w h e a t; th e th ree ch ief m etals, iron , co p p e r and le a d ; th e tw o ch ief fuels, coa l and p e tr o leu m ; and hogs, h id es, ru b b er, sugar and lum ber. I t will b e seen th a t since th e a rm istice, this b a sic in d ex show s n o such sharp a d v a n ce , as fo r ex a m p le ; th e B u reau o f L a b o r in d ex, w h ich is m a d e u p o f n early fo u r h u n dred co m m o d itie s, and inclu des m a n y m a n u fa ctu red or finished articles. W h ile th e la tter F a ilu r e s C om m ercia l failures fo r F e b ru a ry , as re p o rte d b y D u n ’ s A g e n cy , w ere th e sm allest y e t re co rd e d fo r th a t m o n th . F o r this d istrict there w ere b u t 75 failures w ith liabilities o f $1,062 322 as co m p a re d w ith 102 failures on e y e a r a go w ith liabilities o f $2,686,546. T h is was a d eclin e e ven fro m th e low re co rd o f J an u ary. 8 REPORT ON BUSINESS CONDITIONS C otton S p o t c o tto n this m on th to u ch e d a new lev el at 41 cen ts., sligh tly a b o v e th e p o in t rea ch ed in D e ce m b e r, w h ich w as th e h igh est figure k n ow n in N e w Y o r k since 1866. T h is is in th e fa ce o f th e fa c t th a t w h ile exp orts are well a b o v e th ose o f last yea r, th e y are still far b e lo w th ose o f p re w ar years. D o m e s tic m ill-tak in g s fo r F e b ru a ry , 516,594 b ales, co n tin u ed th e high rate fo r J an u ary, and b ro u g h t th e to ta l fo r th e season fro m A u g u st 1 to 3,659,795 bales, or a b o u t 10 p er cen t, m ore th an a y ea r p reviou s. E x p o rts fo r the sam e p eriod increased o v e r 40 p er cen t. A serious sh ortage o f la b o r is re p o rte d in th e sou th , w ith a th rea ten ed fu rth er cu r ta ilm en t o f acreage, if n o t o f p r o d u c tio n ; b u t this is n o t y e t in e v id en ce, and ea rly rep orts to th e N a tio n a l G in n ers’ A ss o cia tio n in d ica te som e acreage increase. Iron and M e ta ls F igu res fo r F eb ru a ry steel p ro d u ctio n in d ica te th a t th e o u tp u t is still co n sid e ra b ly b e lo w th e p e a k attain ed d u rin g th e w ar. T h is is in spite o f th e h igh prices p rev a ilin g and a m aterial increase in w ages. T h e un filled to n n a g e o f th e Steel C o rp o ra tio n is still in creasing, a n d stan ds a t th e h igh est figure fo r th e last 18 m on th s. B o th B essem er billets and o p en hearth are q u o te d a t $60 t o $65 a t P ittsb u rg , and B essem er p ig at a rou n d $43. A ll th e m ills are fa r b e h in d th eir orders and all a ccou n ts agree th a t th e d em a n d is c o n sid era bly in a d v a n ce o f th e su p p ly . In a p p earan ce o n ly th e con serv a tism o f th e steel com p a n ies has p re v en ted a ru n a w a y m ark et. B ritish p rices h a v e lik e wise show n an a d v a n cin g te n d e n c y d u rin g th e m on th . P ig iron is n ow b ein g q u o te d at £ 1 0 and ov e r, or n o m in a lly a b o u t 15 p er cen t, a b o v e A m erica n prices, a strik in g exa m p le o f th e p rice changes w h ich th e w ar has w rou gh t. T h ere has b een n o n o ta b le ch a n ge in th e co p p e r m a rk et, and p rod u cers con tin u e to q u o te 1 8 j^ cen ts fo r M a r c h and A p ril deliveries. S om e forw a rd business has also been a cce p te d a t the sam e figures. P r o d u c tio n is n ow reck o n e d a t n o t o v e r 60 p er cen t, o f m a xim u m , w h ich has resu lted in a large red u ction o f surplus stock s. L ea d p ro d u ctio n has n o t m a terially increased th ou g h p rices rem ain high , w ith a q u o ta tio n o f 93^ cen ts at N e w Y o r k . In zin c th ere has b een an a ctiv e d em a n d and th e m ark et is stea d y a t 8 % cen ts. T h e tin m a rk et is ste a d y a t a b o u t 63 cen ts, N e w Y o r k q u o ta tio n s. T h e ind ex figure fo r th e m eta l g rou p in D u n ’ s list on M a rc h first s to o d a t th e h igh est p o in t since th e a rm istice. B u ild in g O p e r a tio n s P ro s p e cts fo r con tin u e d a c tiv ity in b u ild in g are sh ow n in th e rep orts o f co n te m p la te d p r o je c ts giv e n b y the F . W . D o d g e C o m p a n y , w h ich fo r this d istrict were a lm o st as high as in J an u ary, rea ch in g a to ta l o f $ 104,654,800. A ctu a l co n tra cts aw arded , h o w e v e r, a m o u n te d o n ly to $36,374 800, w h ich was less th a n h alf th ose o f Jan u ary. Im m ig r a t io n A lien arrivals and d epartu res a t th e P o r t o f N e w Y o r k co n tin u e to d isa p p o in t th e e x p e cta tio n s o f a resu m p tion o f ou r im m ig ra tion influx. F o r th e seven m on th s since last J u ly th e to ta l o f alien em igran ts e x ceed ed th e in com ers b y m ore th a n 57,000. T h e figures fo llo w : IM M IGRATION July........................................ August................ ................... September............................... October................................... November............................... Decem ber ............................... January.................................. February................................. Total............................ 9,432 9,430 20,577 24,641 17,557 34,529 25,057 22,086 163,309 EM IGRATION 25,354 32,901 29,746 25,300 36,459 21,996 25,051 24,379 221,186 C u rren t a d vices to the p rin cip a l steam sh ip lines here in d ica te n o im m ed ia te ch a n ge in p reva ilin g co n d itio n s. T h is is a m a tter o f m ore th a n ord in a ry interest. T h e re n ever w as in th e U n ite d States a tim e o f m ore general e m p lo y m e n t a t h igh w ages th a n n o w . Y e t in th e fa ce o f this, fifteen m on th s a fter h ostilities d efin itely en ded , th ere w ere few er arrivals in F e b ru a ry th a n departu res. M a n y aliens w h o h a d b een in this co u n tr y d u rin g th e w ar w ere a ttra cte d h om e b y th e n atural w ish t o lo o k a fter their fam ilies and th e rem nan ts o f th eir fa m ilie s’ p ro p e rty . I t is t o be n o te d also th a t a large n u m b e r o f th e retu rn in g aliens carried w ith th e m v e r y h a n d som e w ar earnings. T h e y fo u n d e x cite d sp ecu la tio n in lan d , and m a n y w h o retu rn ed ea rly m ade fortu n es in th e rise. E m p lo y m e n t A c c o r d in g t o th e p relim in ary a n alysis o f F e b ru a ry rep orts receiv ed fro m m an u factu rers in N e w Y o r k S ta te b y th e S tate In d u stria l C om m ission , th ere appears to h a v e b een a sligh t d eclin e in th e a m o u n t o f e m p lo y m e n t in N e w Y o r k factories. T h e decrease re p o rte d , h o w e v e r, a m ou n ts to little m ore th a n 1 p er cen t, b u t is th e first d eclin e sh ow n in fo u r m on th s and com p a res w ith a re p o rte d increase o f 3 p er cen t, in b o th N o v e m b e r and D e ce m b e r. T h e avera ge w eek ly earnings o f fa c t o r y w orkers in F e b ru a ry co n tin u e d at p ea k a n d show s an increase o f 20 p er cen t, o v e r F e b ru a ry , 1919, and 113 per cen t, o v e r 1915. In d ic a tio n s fo r M a rc h are fo r a still fu rth er increase. A strike o f co a s t w ise lon g sh orem en was b egu n on M a r c h 20 w ith d em an d s fo r w age increases o f fro m 10 t o 15 per cen t.
@FedFRASER