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MONTHLY REVIEW
Of Credit and Business Conditions
In
B y

th e

F ed eral

th e

S e c o n d

R eserv e

F e d e r a l

A g e n t,

R e s e r v e

F ed eral

D is tr ic t

R eserv e

B a n k ,

N ew

Y o rk

New York, May 1 , 1922

Credit Conditions
H E outstanding development in the money markets
during the month was the issue on April 15, of
$150,000,000 of Treasury certificates, maturing in
six months, at
per cent. This is the lowest rate since
1917 and compares with the
per cent, rate carried
by the one-year certificates issued in March. The lower
rate fairly reflected the current yields prevailing in the
open market both for short Treasury certificates and for
bankers acceptances.
While there was a slight easing in rates in the open
market for commercial paper, rates charged by banks on
commercial loans to their customers remained unchanged.
The disparity between the present rates for certificates
and bills on the one hand and the rates for loans by banks
to their commercial customers on the other, is due in part
to inherent differences between the two classes of loans
and in part to a special condition prevailing at this time.
The inherent differences may be summarized as follows:
First, Treasury certificates and bankers bills, which may
be purchased at will or instantly sold without indorsement
in the open markets, represent, as has often been stated in
the R e v i e w , a class of temporary investment for banking
and other short time funds combining minimum risk with
immediate convertibility; whereas the loans a bank makes
to its commercial customers involve the usual commercial
risk and may be converted only with indorsement at
Federal Reserve or other banks. Second, such loans are
usually made to suit the convenience of the borrower as to
time and amount ; whereas bills and certificates are pur­
chased at the bank’s convenience. Third, the volume of
bankers acceptances and short Government obligations is
small compared with the great mass of commercial loans
made by banks. This is common to both the English and
the American money markets. In this country these com­
mercial loans take the form of promissory notes, while in
England they are carried as cash advances in open account
similar to overdrafts. Before the war the volume of prime
bills in the English market ran perhaps as high as £500,000,000 as compared with many times that amount of ad­
vances in open account. Now such bills together with
short government bills amount perhaps to £1,200,000,000
and their proportion to the cash advances made by
English banks has probably not changed materially. In
the United States bankers bills and short Treasury cer­
tificates now amount to about $2,200,000,000, some
$1,250,000,000 less than a year ago, while bank loans to

T




commercial customers are $19,000,000,000 or thereabouts.
The special condition referred to above, which accentu­
ates the present disparity in the rates for these two classes
of loans, arises out of the large volume of foreign-owned
money now seeking temporary investment in New York
and other American cities. For in addition to the balances
which foreign banks ordinarily maintain here the proceeds
of such of the foreign financing recently placed in this
market as have not been utilized immediately have found
temporary investment in bills or certificates. This de­
mand, coming at a time when the amount of these classes
of paper has been shrinking rather than increasing, has
tended to depress the rates at which they sell. In the
first three months of the year foreign financing in this
country amounted to over $300,000,000, or about $220,000,000 more than the credit balance of the United States
in foreign trade during those months, after taking into
account the import and export movement of gold and
silver. About half this sum represents March transac­
tions, and foreign financing has continued on an even
larger scale in April.
The falling rates for certificates and bills which the
per cent, certificate issue recognized stimulated further

1919

1920

19£1

192.2.

Open Market Rate on Prime 90-Day Bankers Acceptances and Treas­
ury Certificates Maturing in 4 to 6 Months, Compared with the Pre­
vailing Commercial Bank Discount ;Rate on 30 to 90-Day Commercial
Paper

2

M ONTHLY

activity of Government bonds and notes in the market, and
all issues of Liberty bonds reached points fractionally
above or below par.
Other bonds have risen corre­
spondingly.
Stock Exchange loans were made at easier rates also.
Since the middle of April call money has ruled at or near
S}/2 per cent, and time money at 4J^ to
The activity
of the stock market was stimulated further by the pro­
gressive ease of money and trading during April was in
larger volume than at any time in the last two years. In­
creased demands from the security markets for loans have
substantially offset the liquidation which has continued in
other forms of bank credit.
In aggregate the loans of New York City member banks
have declined $1,204,000,000 since they reached maximum
on October 10, 1919. In the early stages of the decline,
deposits moved downward with loans, since they were
created to a large extent by borrowing. But about the
middle of 1921 deposits began to increase as customers’
bank balances were built up, and since that time have
risen about $400,000,000. As loans were declining during
this period, the ratio of loans to deposits, which is fre­
quently used as an index of banking conditions, has been
rapidly lowered. A t the end of 1920 loans of New York
City banks and of banks in other principal cities, exclusive
of investments, amounted to about 95 per cent, of deposits.
A t present the loans of New York City banks are about
75 per cent, of deposits, and the loans of banks in other
principal cities about 82 per cent, of deposits. These
changes are shown in the following diagram.
BILLIONS
OF DOLLARS

R E V IE W

rates of some of the Federal Reserve Banks. In nine of
the twelve districts the rate is now 43^ per cent. Chicago
reduced its rate from 5 to 4}/£ per cent, on March 25,
St. Louis on April 6, and Richmond on April 14.
The Bank of England reduced its discount rate on
April 13 from 4 }^ to 4 per cent., the lowest since the out­
break of the European war in 1914. The open market
rate for bankers bills in London is now 2J^ per cent.
It has been pointed out above that the amount of bank­
ers and government bills in both England and the United
States is relatively small as compared with the great
volume of ordinary commercial borrowings. In the
United States the official discount rates relate not only to
bankers bills and Treasury certificates, but also to the
great bulk of the loans made to carry on commerce and
agriculture, which being in the form of promissory notes,
are available for rediscount at the Federal Reserve Banks.
In England, however, the official discount rate relates only
to advances from the Bank of England against the rela­
tively small volume of prime commercial and Treasury
bills, since the ordinary advances to industry and agri­
culture, being in the nature of overdrafts, are not available
as security for such advances.

Savings Bank Deposits
Aggregate deposits of fifteen representative savings
banks in New York City increased slightly between
March 10 and April 10 while deposits of fifteen banks in
other cities of this district were reduced somewhat. Each
of the New York City banks showed a slight gain in
deposits during the month while eleven of the banks in
other cities reported declines and four gains.

Bill Market
Accompanying easier money conditions, caused in part
by the volume of foreign-owned funds seeking employ­
ment in New York, dealers’ offering rates for prime
bankers bills were reduced early in April from
per
cent, to 3 % per cent, and later in the month to 3 % per
cent.
The volume of sales was limited by the scarcity of new
bills. Of the bills offered, cotton and grain export bills
were most numerous and bills drawn for the import of
sugar and coffee were next in importance.
In London the bill rate declined even more rapidly
than in New York. For a short time in March New York
and London open market rates were approximately the
same, but during April the London rate dropped to 9,%
per cent.

Commercial Paper
J918

1919

1920

1921

19ZZ

Deposits and Loans (Exclusive of Investments) of 802 Reporting Banks
in Principal Cities of the United States

The reduction of bank loans in this country in the past
few months has been most marked in agricultural districts
and has been reflected in further reductions in the discount




About the middle of April, dealers lowered their offering
rates for prime commercial paper
of one per cent, to a
range of 4J4 to 4J^ per cent. Shortly thereafter, some
sales of unusually prime paper were made at 4 per cent.
The reduction was caused largely by the continued
scarcity of paper, accompanied by some further broaden­
ing in demand. Several of the larger banks in New York
City bought freely at the lower rates, while others bought

FEDERAL RESERVE AGENT AT NEW YORK

sparingly or not at all, regarding commercial paper rates
as out of line with prevailing rates of 5 per cent, or higher
on customers’ loans, and yields still to be obtained on tax
exempt Government securities.
The accompanying diagram of outstanding commercial
paper, based upon the reports of twenty-nine dealers
instead of thirty, as heretofore, indicates a further increase
in distribution during March.

3

a very broad list, and twice during the month new high
figures were reached in the number of separate stocks in
which there were transactions.
The accompanying diagram shows by months from the
beginning of 1919, fluctuations in average prices of fifty
stocks as given in the Annalist index of 25 industrials; and
25 rails, the average Stock Exchange call loan rate, and
total stock transactions.
A close relationship between stock prices’ and transac­
tions, and call loan rates, prevailed until about the middle
of 1921. Then, accompanying extensive business and
commodity liquidation in the latter part of the year, the
rates for call loans declined rapidly, and reached the 4 per
cent, average level in April. This increase in available
funds at lower rates is one factor, among others, in the
recent expansion of stock trading and higher prices.

MILLIONS O
F
DOLLARS

Commercial Paper Outstanding—Twenty-nine Dealers

Stock Market Money Rates
Call money rates during the first three weeks of April
tended to work lower, notwithstanding increased demand
for funds from active and rising stock and bond markets.
During the third week of April, 3 % per cent, became the
prevailing rate, as it was for a time in January and March,
when the usual declines after the first of the year and at
the quarterly tax payment date took place.
Time money dealers reported the freest market since
the outbreak of the war. After rising somewhat in the
latter part of March and early in April to a 4 ^ per cent,
level for all maturities, rates again became easier and by
the end of the third week money was freely available for
the nearer maturities at 4*4 per cent.

Stock Market
Accompanying the heaviest volume of trading in two
years, stock prices advanced rapidly in April and repre­
sentative averages of industrial and railway issues rose to
the highest points since the fall of 1920. A t the new
levels, averages of industrial stocks showed a nearly
unbroken rise of about 30 points since last August, and
railway averages a gain of about 15 points from the lowest
of last year. In railway stocks, however, the advance did
not become consistent until after the first of this year.
Shortly before April 20, profit taking following these
extended advances caused some irregularity.
During the first three weeks of April, transactions on
full trading days did not once fall below a million shares,
and on April 17 the total reached two million shares for
the first time since April, 1920. Trading extended over




1919

192.0

1921

1922

Average Price of Stocks, Average Call Loan Rate, and Total Trans­
actions in Stocks Each Month

Bond Market
Sales of bonds on the New York Stock Exchange during
March and April were the heaviest ever reported. March
dealings in listed issues, other than United States Govern­
ment securities, reached $237,000,000, larger than any
previous month’s total, and more than double the volume
of transactions in March last year. During April, the
market was even more active.
Heavy trading was accompanied by strength in prices,
and representative averages of high grade corporation
issues during the four weeks ended April 20, extended
their advances a point or more to the highest levels since
the close of 1918. Accompanying reductions in yields in
these groups, demand spread more markedly to bonds of
more speculative grade, and dealings in these accounted for
a large part of the activity of the market.
Nearly all the foreign issues listed in this market
reached, in April, new high prices for the year under
active buying stimulated by relatively high yields and by
expectations centering in the Genoa financial conference.
French issues subsequently reacted about a point, ap­
parently affected by the later developments of the con-

4

MONTHLY REVIEW

ference, but most other issues on April 20 sold at, or only
a fraction below, highest prices.
The accompanying diagram indicates by months the
extent of recovery in average prices of forty representative
corporation bonds from the low points of the past two

years, and compares with this the movement of United
States and British war loans. The United States war
loans included are the Second, Third, and Fourth 4 ^ s ,
while the British loans included are the 3%s, the
and the 5s.

Dealers reported heavy trading outside of the Stock
Exchange, but the transactions on the exchange fell con­
siderably below totals reached in previous periods of
unusual activity, and were frequently exceeded by trans­
actions in other bonds. March transactions in Govern­
ment loans on the exchange totaled $178,000,000, a
figure less than those for recent months except February,
though considerably more than in March last year.
On April 12, the Treasury offered a new issue of ap­
proximately $150,000,000 six-months certificates, dated
April 15, and bearing interest at 3J^> per cent., the lowest
rate since 1917. This was a reduction of % per cent,
from the rate on the preceding offering, which was of one
year maturity and for a larger amount. Total subscrip­
tions to the new issue were in the neighborhood of $300,000,000.
Subscriptions in this district amounted to
$115,524,500, of which $50,880,000 was allotted.
By
April 21, this issue was being offered in the open market
on a 3.35 per cent, basis.
The successive changes in the issuing rates for certifi­
cates of indebtedness of approximately the same or longer
maturity, and the average yield at market prices of four
issues of Liberty bonds have been as follows:

Issuing Rate on Certificates and Notes
Month

Average Monthly Prices of Liberty and Corporation Bonds at New
York and British War Loans at London

United States Government Securities
The rise of four active Liberty issues to par in the
second week of April marked the first complete recovery
in any of them from the low prices to which they fell
during the period of high money rates and difficult credit
conditions of 1920 and the first part of 1921. Increased
selling at the high prices and revival of the discussion of a
soldiers’ bonus caused a moderate reaction from the
highest prices reached.
Since the extreme low prices, advances in the Liberty
issues have ranged between 14 and nearly 19 points. The
following table compares highest prices reached by Liberty
and Victory issues during the first three weeks of April
with lowest prices in 1920 and 1921.

Issue

Liberty
Liberty
Liberty
Liberty
Liberty
Liberty
Liberty
Victory
Victory

3 J^s----1st 4s. . .
2nd 4s..
1st 4J^s.
2nd 4j^s
3rd 4j^ s.
4th 4 J^s.
4% s----3
____




Highest
Price,
April 1-21

Lowest
Price,
1921

Lowest
Price,
1920

100.06
99.70
99.60
100.08
99.80
100.06
100.00
100.92
100.08

86.00
85.24
85.34
85.40
85.30
88.00
85.34
95.56
95.80

89.10
83.00
81.40
84.00
81.10
85.60
82.00
94.70
94.64

About
6 Months
Maturity

January, 1918........
January, 1919........
January, 1920........
March, 1920..........
April, 1920.............
June, 1920.............
December, 1920. . .
March, 1 9 2 1 ......
June, 1921.............
August, 1921.........
September, 1921. . .
November, 1921. . .
February, 1922....
March, 1922..........
April, 1922.............

About
1 Year
Maturity

3-4
Year
Notes

Yield on
Liberty
Bonds

4
4Ji2*
5{
A
5H
5%
5V2
5H
5
4K

4%
4%
6
6
&A
5'A
5V2
5H
4V2
Hi

Hi
5H
'Hi
4%

4.67
5.04
5.27
5.48
5.79
5.05
5.65
5.54
5.43
5.28
4.77
4.58
4.37
4.20

* Issued December 15, 1919.

New Financing
The flow of new foreign securities into this market was
even heavier in April than in March, and up to and in­
cluding April 25 added over $200,000,000 to the $300,000,000 previously placed here since the first of the year.
Offering of $100,000,000 Dominion of Canada 30-year
5 per cent, bonds at par was the largest foreign issue sold
here at one time since the $100,000,000 French Government
loan in M ay last year. Under the attraction of high
yields, these issues sold rapidly and some reached sub­
stantial premiums soon after they were offered.
The following table gives approximately the totals of
foreign offerings in previous months of the year, to­
gether with a list of the more important April offerings

FEDERAL

RESERVE

through the 25th of the month and their yields at sale
prices.
Month
January..................................................................................
February................................................................................
March....................................................................................
April.......................................................................................
Dominican Republic, at 6 per cent............. $6,700,000
Czechoslovak Republic, at 8.30 per cent.. . 14,000,000
Rio de Janeiro, at 7.90 per cent................... 13,000,000
Paulista Ry., Brazil, at 7.10 per cent..........
4,000,000
Paris-Lyons-Mediterranean R.R., at 7.25
10,000,000
per cent....................................................
Holland-America Line (guilders), at 6.306.90 per cent............................................ 11,040,000
Dutch East Indies, at 6.24-6.48 per cent... 20,000,000
Dominion of Canada, at 5 per cent............. 100,000,000
Province of Ontario, at 5.05 per cent.......... 15,000,000
Other Canadian issues................................
12,790,100
Manila Electric Co., at 7.10 per cent..........
2,500,000
Total, January 1 to April 25....................................

Amount
$92,346,000
57,768,000
155,513,000

209,030,100
$514,657,100

Domestic corporation financing was active, and in­
cluded several large issues, among them $60,000,000 New
York Central Railroad long term 5 per cent, bonds,
offered at 5.30 per cent, yield. Bonds continue to pre­
ponderate as a form of financing, though stock issues
have become more frequent. During the past two months,
the 8 per cent, rate among corporation issues has prac­
tically disappeared, and there is a widening propor­
tion of offerings at yields between 6 and 7 per cent.
Lower yields on new domestic and municipal offerings
were in keeping with further advances in prices of out­
standing bonds. The City of New York sold an issue of
$45,000,000 4 ^ per cent, corporate stock at approxi­
mately 102% to yield about 4.11 per cent., compared
with a yield of about 4.33 per cent, on a large 4 Y2 Per
cent, issue sold in December. The new issue was re­
offered to the public on a 4.06 per cent, basis.

Gold Movement
Gold imports for March amounted to $33,488,000,
bringing the total imports for the first three months of
1922 to $88,760,000 as compared with $163,535,000 for
the corresponding period in 1921.
Exports totaled
$986,000.
Sources of imports are shown in the following
table.
(000 omitted)

Country

Monthly
Average,
January February March
1921

England........................ $16,841 $10,468
5,530
4,276
Sweden.........................
2,381
3,071
Canada.........................
1,946
1,168
Australia.......................
1,875
France........................... 15,891
1,158
453
Denmark......................
128
660
Norway.........................
14,524
3,807
All Other......................
Total..................... $57,606




$26,571

$8,310
8,821
1,649
730
1,426
5,169
3
2,593
$28,701

$21
14,938
1,264
6,650
3,983
4,139
2,493

Total,
1922
$18,799
28,035
5,294
2,676
9,951
10,310
4,802
8,893

$33,488 $88,760

AGENT

AT

NEW

5

YORK

Foreign Exchange
Exchange rates were firmer in April after general weak­
ness in March but trading was limited because of the Easter
holidays abroad. Sterling advanced five cents from the
quotation prevailing at the close of March but was still
slightly under the highest rate for the year. Exchange
rates on France, Belgium and Italy were proportionately
higher.
Financial unsettlement in Greece due to uncertainty
over provisions of a forced internal government loan
announced early in April resulted in the closing of all
banks and of the Greek Bourse for a few days and several
of the larger banks here suspended temporarily the pur­
chase or sale of Greek exchange. The rate of exchange,
however, remained fairly steady.
Large Chinese purchases of bar silver in London caused
an advance in the price of silver with coincident gains in
exchange rates on China.
The following table shows the changes during the month
in the principal exchanges.

Country

April 20
Last

Change
from
March 20

England..................................
France.....................................
Italy........................................
Germany.................................
Belgium..................................
Holland...................................
Switzerland............................
Spain.......................................
Sweden (Stockholm).............
Argentina...............................
Brazil......................................
Japan (Yokohama)...............
China (Hong Kong)..............
China (Shanghai)..................
India.......................................
Canada...................................
Bar Silver in New York.......

$4.4100
.0927
.0536
.0034
.0856
.3782
.1943
.1553
.2598
.3528
.1355
.4745
.5638
.7563
.2788
.9775
.6800

-f-. 0350
+ .0030
+ .0029
-.0 0 0 3
+ .0011
+ .0009
-.0 0 0 3
+ .0008
-.0 0 2 2
-.0 1 2 4
+ .0002
-.0 0 0 5
+ .0225
+ .0325
+ .0007
+ .0106
+ .0325

Per Cent.
Depreciation
from Par
9.4
52.0
72.2
98.6
55.6
5.9
+ 0.7
19.5
3.1
16.9
58.2
4.8
*
*
42.7
2.8

* Silver Exchange Basis.

Foreign Trade
Reports from leading export houses indicate that steel
continues to lead other commodities in regaining activity
in export trade. The Steel Corporation’s foreign orders
are back nearly to the highest point reached before the
war, and other exporters of steel products likewise have
reported larger buying. Regarding most other finished
or partly finished commodities reports of increased activity
are less uniform.
Copper exporters reported large foreign buying during
March, but only a moderately active market in April.
Exports of raw cotton during March were considerably
larger than in February, and larger than in the correspond­
ing month of the previous year for the first time since
October. Wheat exports during March, amounting to
7,645,000 bushels valued at $10,000,000, were likewise
larger than in February, but smaller than in any other
preceding month since early in 1920. March corn exports,

6

MONTHLY REVIEW

on the other hand, amounting to 22,668,000 bushels
valued at $16,000,000, were the largest in twenty
years.
Reflecting the generally larger export demand noted in
recent months, as well as increased shipments of cotton,
corn, wheat, and other foodstuffs, the total value of the
country’s exports during March rose $81,000,000 to
$332,000,000, the largest since October.
Despite de­
creased imports of silk, coffee, rubber, and cement, and
due partly to larger arrivals of sugar, petroleum, and
foreign cotton, the total value of imports increased
$42,000,000 to $258,000,000, the (largest since December
1920. As a result of these changes,, the excess of exports
rose from $35,000,000 in February to $74,000,000 in
March.

Current Balance of Trade

The accompanying table shows by months the amount
of foreign financing in the United States since January
1921, the net imports of gold and silver, and compares
with the total of these two figures the export balance in
merchandise.
(000 omitted)

Foreign
Financing in
United States

Net
Imports
of Gold
and Silver

Total of
Foreign
Financing
and Net
Imports
of Gold
and Silver

United States
Export
Balance
(Merchan­
dise)

January..........
February........
March............
April...............
May................
June................
July................
August............
September.. . .
October..........
November. . . .
December. . . .

$61,192
50,485
29,500
5,750
137,200*
8,302
40,000
50,600
121,322
52,824
63,079
72,350

$29,054
41,116
87,516
81,256
61,711
45,006
59,913
88,339
63,177
42,282
51,777
27,905

$80,746
94,291
123,326
83,756
195,411
57,058
101,722
139,939
177,677
95,520
114,456
100,255

$445,474
271,924
134,711
85,785
124,799
151,143
147,022
172,119
145,571
155,323
83,144
58,702

1922
January..........
February........
March............

92,346
57,768
155,513

28,227
24,663
34,150

120,573
82,431
189,663

61,678
35,005
74,000

has lagged somewhat behind that of other countries, pro­
ceeded more rapidly, and there were rather sharp falls also
in Scandinavian countries. Component groups of March
price indices generally showed textiles and metals some­
what lower, while in most countries foodstuffs averaged
higher. The following table shows the recent changes
from month to month in the price indices of the various
countries.

Per Cent. Change During
Country

Latest
Quotation
January February March

United States:
20 basic commodities*.
Department of Labor.
Dun’s...........................
Bradstreet’s ................
Great Britain:
Economist...................
Statist........................
20 basic commodities*.
France.............................
Italy f t .............................

131 (April 22)
152 (March av.)
138 (April
1)
125 (April
1)

-0 .2
-0 .7
+ 0 .4
+ 0 .4

160 (April
1) - 1 . 7
157 (April
1) - 0 . 8
-3 .1
129 (April 22)
307 (April
1) - 3 . 7
533 (April
1) - 5 . 4
201 (March av.) - 1 . 6
Canada............................
166 (March 15)
-1 .4
164 (March 15)
-1 .2
Swedenf ..........................
AustraliaX.......................
147 (Feb. av. ) - 0 . 7
Calcutta ^ .......................
182 (April
1) - 1 . 1
Norway | .........................
|
240 (April
1) - 3 . 4
1) + 10.0
Germany**..................... 5,769 (April
Denmark .......................
178 (April
1) - 0 . 6
Peru.................................
190 (March 15)
0

+
+
+
+

2.5
2.0
2.9
1.5

-0 .7
+ 0 .7
-2 .1
-0 .6

+
+
-

0.6 + 0 .9
0.2 + 0 .8
0.2 + 0 .3
2.3 + 0 .2
-5 .2
2.5
1.1
-1 .5
0.8
-1 .7
2.4
-1 .2
0
+ 0.6 + 1 .7
- 2.7
-5 .1
+ 2 3 .6 + 20.7
+ 2.8
-2 .2
+ 0.5
-0 .5

*Computed by this bank.
fJuly 1, 1913 - June 30, 1914 = 100.
JJuly, 1914 = 100.
HEnd of July, 1914 = 100.
||D
ec. 31, 1913June 30, 1914 *= 100. Source: Oekonomisk Revue. **Middle of 1914 =
100. _July, 1912-June, 1914 = 100. fflndex revised January, 1922.

Somewhat lower levels touched by three of the American
price indices reflected chiefly reaction in prices of farm
products from their highest points.

In April, there were

recoveries again in the farm group, and wheat prices in the
New York market reached a new high point on the crop.
The index number published by the United States
Department of Labor, covering the average of prices
throughout the entire month of March, showed a rise of
slightly less than one per cent, from the average of prices

* $50,000,000 refunding.




In March as in February, the general tendency of world
prices was somewhat indefinite, but the larger changes,
with the exception of prices in Germany, continued to be
in a downward direction. The Italian price decline, which

(Base 1913 = 100 unless otherwise noted)

The comparatively small excess of United States exports
over imports in the past five months has been more than
offset by the continued heavy receipts of imported gold
and especially by the sale of foreign securities in this
market. The excess of foreign credits over debits created
month by month in this market by gold payments and the
floating of new securities has been one factor in the rise
in recent weeks of the foreign exchanges, and has put
funds at the disposal of foreign holders who have invested
a considerable portion of them in this market in the
highest grade short-time obligations. The demand thus
created has been an important factor in recent declines in
market rates on bankers acceptances and Treasury
certificates.

1921

Domestic and World Wholesale Prices

in February. This marks the tenth month during which
the average has maintained a fairly even level. The
following table gives the detailed movement in the various
groups during March.

7

FEDERAL RESERVE AGENT AT NEW YORK
(1913 average = 100)

Commodity Group

Feb.
1922

Mar.
1922

Per Cent.
Change

Farm products........................................
Metals......................................................
Food, etc..................................................
Chemicals and drugs..............................
Cloths and clothing................................
Fuel and lighting....................................
Building materials..................................
House furnishings...................................
Miscellaneous..........................................

126
115
138
159
183
183
202
213
150

128
114
138
159
182
183
202
213
153

+ 1.6
—0.9
0
0
-0 .5
0
0
0
+ 2 .0

All Groups.......................................

151

152

+ 0 .7

by the National Industrial Conference Board and the
index of the prices of 20 basic commodities compiled by
this bank.
The following table shows the most recent changes in
the component groups of the National Industrial Con­
ference Board and the United States Department of Labor
index numbers.
(1914 = 100 per cent.)

March Level

Per Cent. Change
Since December

United
States*

New
York
Cityf

Buf- United
falof States*

New
York
Cityf

139
154
165
174

136.5
207.1
154.5
189.4

139.4
187.7
161.9
178.8

-8 .6
-1 .9
-2 .4
-2 .8

1.74

222.3
213.2

215.5
199.5

—2^2 -

4.2
1.7

-4 .1
-1 .7

154.7 169.9

169.9

-4 .9

-

4.6

-3 .9

Groups
Buf­
falof

Cost of Living and Wholesale Prices
A further moderate decline in the cost of living is shown
by the latest figures reported by the National Industrial
Conference Board and the United States Department of
Labor. Although there has been practically no change in
the general average of wholesale prices since last June,
index numbers for the cost of living have declined in that
period in the neighborhood of 5 per cent., illustrating by
their movement the extent to which retail prices and rent
lag behind wholesale prices. The contrast is even greater
between the prices of basic raw commodities and the cost
of living; prices of basic commodities changed with much
greater rapidity and to a much greater extent. The
striking dissimilarity between the movements of these two
kinds of prices is indicated by the accompanying diagram
of the cost of living index for the United States compiled
P£R CENT.

Changes in the Prices of^ Basic Commodities Compared with Changes
in the Cost of Living




Food.........................
Clothing...................
Housing....................
Fuel and light..........
Furniture and house
furnishings...........
Miscellaneous..........
Total................

-1 0 .1
- 4.9
+ 0.5
- 0.7

-7 .6
-4 .5
+ 0 .1
-0 .5

* National Industrial Conference Board,
f United States Department of Labor.

Wages
The total wage payments made to their employees by
1,600 representative industrial establishments in New York
City showed a marked increase in the past two months.
This increase was due to an increase in the number of
employees and a somewhat fuller working week, accom­
panied by a tendency towards stabilization in wage rates.
The latest increases bring total wage payments to a point
88 per cent, higher than in 1914 and the highest point
since M ay 1921.
From the point of view of the purchas­
ing power which these wage payments to employees
represent, it is probable that because of the decline in the
cost of living since last year, current wage payments in
aggregate are more than the equivalent of those of Feb­
ruary and March 1921.
The change in the relationship between wage payments,
the number of employees, and the common labor wage
rate is shown in the diagram on page 8. Figures for
wage payments and employees are those reported by the
New York State Department of Labor, and the common
labor wage rate is the index compiled quarterly by this
bank from returns submitted by representative employers
of labor. While this index does not reflect precisely the
scale of wages in factories, the wages of common labor are
in the nature of a basic wage to which other wages tend to
be adjusted and is more indicative of the general wage
trend than perhaps any other single index. The April
returns show that the average hiring rate for unskilled
labor in the district is now $17.80 a week, or about 36
cents an hour, as compared with $18.06, or about 37 cents
an hour in January. The present rate is 63 per cent,
higher than in 1914.

8

MONTHLY REVIEW

been an appreciable decrease in employment in recent
months.
The changes in employment between April 1, 1921 and
April 1, 1922, as reported by the United States Employ­
ment Service for principal cities of this district, are il­
lustrated in the following diagram. The bars show the
number of workers employed this year as percentages of
the number employed a year ago. The greatest decreases
have occurred mainly in New Jersey and Connecticut
points. In New York State cities the number employed
this year is practically the same as last year. A year
ago there was a steady decrease from month to month
in the number of workers employed until a low point
was reached last summer. Since then there has been a
gradual recovery.

APR-11921

Changes in Total Wage Payments in Representative New York State
Factories Compared with Changes in the Number of Workers Employed
by these Factories and the Average Hiring Wage for Unskilled Labor
in this District. (July 1914 Figures = 100 per cent.)

Average weekly earnings in New York State factories
as reported by the New York State Department of Labor
increased 2 per cent., from $24.17 in February to $24.57
in March, reflecting longer working hours. The principal
change in wage scales in industrial establishments during
the month was a reduction of 15 per cent, in the wages of
clothing workers in Rochester by the terms of an agree­
ment between employers and the employees, effective on
M ay 1. This action follows a similar action in Chicago.
Even with these latest adjustments wages of clothing
workers are more than twice as high as in 1914. No
adjustment has as yet been effected in the wage dispute
in the building trades of New York City.

PASSAIC
YONKERS
BUFFALO
N G R FLS
IA A A A L
NEW YORK
BAYONNE
ROCHESTER
JERSEY CITY
PR A BY
E TH M O
ALBAN D 'T
Y IS .
BRIDGEPORT
SYRACUSE
NEWARK

NUMBER EMPLOYED APR-1 1 9 2 Z

IOO%

El

PATERSON
TOTAL
Number of Workers Employed by Representative Industrial Concerns
in Principal Centers in the Second District on April 1, 1922, Compared
with the Number Employed by the Same Concerns on April 1, 1921

Employment
Reports by the Departments of Labor of the United
States, and of New York State, indicated a continued in­
crease during March and April in the number of persons
employed, both in this district and throughout the
country. In New York State the increase in employment
in industrial establishments between February 15 and
March 15 amounted to 1.3 per cent. The records of the
United States Employment Service for 65 industrial
centers throughout the country showed an increase of 2.5
per cent, between March 1 and April 1.
Recent large increases in the iron and steel and auto­
motive industries, and in car building and repair shops
reflect a larger volume of business transactions, while
increases in the clothing industry, the building trades, and
lumber and brick plants are partly seasonal. In only two
industries— cotton manufacturing and coal mining, in
which large numbers of workers are on strike,— has there




Production
Of 11 commodities for which this bank has computed
index numbers of production for March, 10 show larger
production in March than in February, and in most cases
the increase is considerable. The effect of increases in
recent months is to place production in practically every
commodity reported well ahead of the low points of last
year. The following diagram shows production in March
in per cent, of normal production and compares with it the
lowest monthly volume of production reached during the
year 1921.
In the cases of wool consumption, meat
slaughtered and the production of petroleum, tobacco,
wood pulp and paper, February figures are used since those
for March are not yet available. The figures are adjusted
to make allowance for year to year growth and seasonal
variation.

FEDERAL

RESERVE

NORM AL
lO O PERCENT.

___________________

;

MARCH

1912.

SU G A R M ELTING S
V/OOL CONSUMPTION
W HEAT

FLOU R.

PETROLEUM
AN TH RACITE COAL

AGENT

AT

N E W J .Y O R K

9

pated in view of the widespread textile strike in New
England. Increased production in plants elsewhere in the
country has tended to offset the decrease there.
The following table shows monthly production as per­
centages of estimated normal production. In the calcula­
tion of the normals, allowance has been made both for
year to year growth and for seasonal variation.

CEM EN T
T IN

1921

1922

Commodity

MEAT SLAUGHTERED
LUM BER

!

WOOD

|

PULP

Oct.

BITUMINOUS COAL
PAPER
TOBACCO
COTTON CONSUMPTION
STEEL INGOTS
P IG IRON

Production of Basic Commodities in March 1922, and the Low Point
in 1921 Compared with Normal Production. In Cases in Which March
Production Figures are Not Available, February Figures are Shown

In the cases of bituminous and anthracite coal, and to
a lesser degree of iron and steel, a heavy output in March
was anticipatory of the coal strike. Since the coal strike
began, on April 1, there has been practically no production
of anthracite, while that of bituminous in non-union mines
has been in the neighborhood of 3,500,000 tons per week,
as compared with a total production of 11,000,000 tons
per week in March. The curtailing of production of coke
in the non-union Connellsville field has resulted in some
restriction of the pig iron output. Several large interests
have banked their furnaces and orders which had been
issued for blowing in additional stacks have been rescinded.
It is estimated by the United States Geological Survey that
stocks of bituminous coal available on April 1 were
sufficient to last the country in the neighborhood of fifty
days, on the assumption of distribution according to need.
The daily production of pig iron was at the rate of
65,639 tons per day during March, as compared with
58,214 tons in February and the increase in steel ingot
production was still more striking, 87,800 tons daily as
compared with 72,700 tons in February. A number of the

Anthracite coal mined........
Bituminous coal mined. . . .
Pig iron production............
Steel ingot production........
Copper production (mine) f .
Tin deliveriesf ....................
Crude petroleumf ...............
Portland cement.................
Wheat flour.........................
Meat slaughteredf ..............
Sugar meltings....................
Cotton consumption...........
Wool consumption*............
Lumber production............
Wood pulp...........................
Tobacco, cigars and cigar-

Nov.

Dec.

Jan.

Feb.

Mar.

85
75
33
50
20
43
91
110
111
87
114
76
124
80
77

82
67
39
53
19
76
102
102
78
83
125
85
121
73
83

74
59
45
48
15
74
112
98
74
77
144
81
113
89
92

78
64
44
50
22
85
108
97
85
89
140
75
111
78
85

99 f
82
46
58f
33
58
113 J
82
105
98
129
76
115
83
90

105
89
53
71
46
103

91
94

90
93

78
88

80
86

77
85

Paper, total.........................

104
114
i42
75
93

* Seasonal variation not allowed for.
f Revised.
t Preliminary.

Commodity Stocks on Hand
As a result of continued heavy receipts of sugar at
Atlantic ports, stocks of raw sugar in this country rose to
considerably above normal on April 1. The increase has
been consistent since the first of the year.
Stocks of coffee have continued to diminish as American
exporters have hesitated to make large commitments at
advancing prices. The supply of wheat and wheat flour
has also been rather steadily diminished since the first of
the year.
W ith the exception of grains at principal
centers, which have in many cases been in abnormally
large supply, stocks of other commodities reported have
continued to be in the neighborhood of the normal amount.

porphyry copper mines resumed operations on April 1

While stocks of the basic raw commodities for which

after a suspension of over a year, as a result of increased

figures are available have not been in general materially

foreign and domestic demands for the metal, and the

reduced during the past year of lessened production,

reduction of stocks on hand available for delivery.

D e­

available evidence goes to show that this is not true of

liveries of tin were sharply increased, the bulk of the de­

many finished products.

mand coming from the manufacturers of mixed metals

of industrial concerns are showing considerable reductions

and of foil.
The heavy production of cement and lumber is a direct
reflection of the large volume of building construction now

from the figures of a year or two years ago.
The following table shows index figures for stocks on
hand on the first day of the month expressed as per­

under way.

centages of the normal.

The index number for cotton consumption

shows a smaller decrease than might have been antici­




The inventories of large numbers

Allowance has been made for

year to year growth and seasonal variations.

10

MONTHLY REVIEW
(Normal Stocks = 100)

1921

Sales have recently been heaviest, as compared with
previous years, in Newark, and in some of the other
cities of the district included under the heading “ Else­
where Second District.”
Sales have been reduced in
Buffalo and Bridgeport.

1922

Commodity
Nov. 1 Dec. 1 Jan. 1 Feb. 1 Mar. 1 Apr. 1
Sugar....................................
Coffee...................................
Wheat..................................
Flour (in chief centers). . . .
Oats.....................................
Corn.....................................
Barley..................................
Rye......................................
Dairy products and eggs. . .
Poultry, frozen....................
Meats, cured and frozen... .
Cotton.................................
Tin (world visible supply)..
Lead, bonded......................
Cement, Portland...............
Paper pulp..........................
Paper...................................

40
65
109
131
461
371
96
402
98
100
65
113
168
193
68
93
120

51
72
88
150
458
449
74
364
96
119
59
104
147
202
109
91
122

35
90
91
112
517
249
75
377
71
121
59
96
165
162
118
97
124

57
77
83
98
506
195
85
424
81
110
54
93
155

88
81
85
91
524
212
68
471
84
103
56
93
158

124
66
78
85
506
268
73
684

ii<j
101
130

iu *
102
135

In the past few months there has been a noticeable
change in the relationship between sales and stocks of
goods held by the department stores reporting. While the
sales have been running somewhat under those of last
year, the stock on hand at the selling price is larger than
last year. This appears to be the result of greater as­
surance on the part of merchants in placing orders and
carrying more complete lines of goods. As a result of
these changes, the annual rate of stock turnover for the
first quarter was somewhat smaller than during 1921 and
was approximately the same as in 1919. The figures
are shown in the following table.

io9

*94
145

* Revised.

Apr.l Apr.l Apr.l Apr.l
1919 1920 1921 1922 1919 1920 1921 1922

Department Stores
M arch sales b y representative department stores in this
district were 8 per cent, under sales in M arch 1921, a
reduction accounted for in part by the fact that Easter was
later this year than last and many spring purchases were
postponed until April. The decline in M arch sales from
those of last year was largely the result of smaller sales by
apparel stores and apparel sections of department stores.
Sales of house furnishing goods are running well ahead of
those of last year, reflecting the heavy volume of residen­
tial building in recent months.
An indication of the actual volume of business as con­
trasted with the dollar value of sales is given b y the fact
that the number of individual transactions reported for
M arch was 3.8 per cent, larger than those of M arch 1921.
The average amount of each transaction was more than
10 per cent, less, $2.71 as compared with $3.03 in 1921.
The following table compares the dollar value of net
sales for March of this year and the past three years, and
also sales for the first quarter of the same years.

All Dept. Stores........
New York..............
Buffalo...................
Newark..................
Rochester...............
Syracuse.................
Bridgeport.............
Elsewhere 2nd Dist.
Apparel stores...........




103
109
101
100
89
102
104
105
87
137

100
100
100
100
100
100
100
100
100
100

92
93
86
104
84
89
78
96
88
88

73
74
72
71
66
71
74
78
67
104

102
107
95
101
89
102
111
101
87
163

100
100
100
100
100
100
100
100
100
100

93
94
84
99
90
90
84
98
91
91

100
100
100
100
100
100
100
100
100

106
107
90
105
86
91
106
117
118

3.3
3.4
2.5
3.1
2.8
2.5
2.7
2.0
5.6

3.0
3.2
2.3
2.7
2.3
2.5
3.0
2.0
4.4

3.6
3.6
2.7
3.5
2.8
2.9
3.4
2.3
5.8

3.2
3.3
2.5
3.4
3.2
2.8
2.7
1.9
4.6

1

a/\j

12.5

W/
iV
11
99

100

AVER/

r
Yi

1

D P R M fVT
EAT E
STORES

r

\
\

A

r
V

A HZ

V

\
i\
(All,0RIder'V \
HbusiIS
(

u

Net Sales, First Quarter

Mar. Mar. Mar. Mar.
1919 1920 1921 1922 1919 1920 1921 1922
70
72
73
66
67
67
69
79
61
85

125
128
112
138
114
125
126
117
114

150

75
Monthly Net Sales

79
80
76
78
67
81
85
90
69

P E R CENT

b

All Dept. Stores........
New York..............
Buffalo...................
Newark..................
Rochester...............
Syracuse.................
Bridgeport.............
Elsewhere 2nd Dist.
Apparel stores...........
Mail order houses___

Annual Rate of Stock
Turnover
(First Quarter)

Stock on Hand
(Selling Price)

tV
V

V

J*

V

\

W

V ■J

50

Z5
0
1919

\9Z0

1922

19Z2

Sales of Representative Department Stores in the Second District and
of Three Mail Order Houses Doing a Country-Wide Business. Figures
Adjusted to Eliminate Seasonal Fluctuations. (Average Sales in
1919 = 100 per cent.)

FEDERAL RESERVE AGENT AT NEW YORK

A comparison between the sales of department stores
in this district and three mail order houses doing a country­
wide business is made in the foregoing diagram. Figures
have been adjusted to make allowance for normal seasonal
fluctuations in sales, as far as it is possible to do so from
the incomplete data now available. March sales of mail
order houses show a sharp increase, but were 12 per cent,
behind those of March last year, which were especially
heavy. There is as yet no indication of a consistent gain
in the sales of these houses, which represent in the main
purchases by the rural population.

Chain Store Sales
March sales by chain grocery stores were 19 per cent,
greater in dollar value than sales during March 1921.
This increase was due in part to the increase in the number
of stores operated by the systems reporting to this bank,
which amounted during the past year to 11 per cent.
March sales by other chain stores were slightly below
those of March 1921, as shown in the following table.

Number of Stores
Reporting

Dollar Value of Sales

Type of
Store
March
1921
Grocery........
Ten cent . . . .
Drug.............
Cigar.............
Dry goods. . .
Total........

March
1922

March
1919

March
1920

March
1921

March
1922

5,677
1,598
250
2,196
350

6,639
1,665
254
2,236
359

78
75
83
71
52

120
92
97
91
67

100
100
100
100
100

119
98
97
94
89

10,071

11,153

74

101

100

105

PERCENT.

PERCENT.

Relation of Wholesale to Retail Sales
A comparison of the figures which this bank has been
collecting, both for wholesale and retail trade, makes it
clear that during the past two years purchases by the
ultimate consumer have in general gone forward with
little fluctuation. W ith the exception of sales by mail
order houses, which deal largely with rural buyers, all of
the available figures for retail trade indicate an actual
volume of sales above that of 1919.
On the other hand, it is clear that purchases by re­
tailers from wholesalers were reduced greatly and that the
continued buying by customers resulted in a considerable
reduction in the stocks held by retailers. Recently, how­
ever, the volume of retailers’ stocks has shown a tendency
to increase.
The diagrams at the foot of this page show the trend of
sales by several kinds of wholesalers and retailers since
January 1919.
In each case the figures have been ad­
justed to remove the influence of normal seasonal fluctua­
tions, but no allowance has been made for price changes.
These diagrams show that the dollar value of purchases
by consumers has remained above that of 1919 while
sales by wholesale dealers have shown decided declines.
The difference between the lines representing wholesale
and retail trade in the diagrams is due in part to the fact
that the decline in wholesale prices during the past two
years has been somewhat greater than the decline in retail
prices, and in part, in the case of chain stores, to a slight
increase in the number of stores reporting. But after
allowance is made for such factors as these it is clear that
the actual volume of retail sales was maintained much
more consistently than were wholesale sales.
The wide fluctuations in the sales of chain groceries are
accounted for in part by increases in the number of stores
and a speedy downward revision of prices in 1920 and
1921, accompanying a rapid turnover of goods.
PERCENT.

Retail Sales Compared with Wholesale Sales. Figures are for Sales of Representative Concerns in this District or Having Headquarters
in this District. The “ All Wholesale Houses” Line is a Weighted Index of Sales of Concerns in Various Lines. (Average Sales in 1919 =
100 per cent.)




11

12

MONTHLY REVIEW

Business Failures

Wholesale Trade
Reflecting normal seasonal demand, March sales by 102
wholesale dealers in ten principal commodities were larger
than those of February. But when allowance is made for
the usual seasonal changes the trend of sales in March
was about the same as in the previous month. The
weighted index of wholesale trade in this district, on the
basis of the dollar value of sales and without making al­
lowance for price changes, was 8 per cent, lower than in
March 1921. In February the decline from the previous
year’s figures was 13 per cent. The summarized returns
are shown in the following table, in which sales in March
1921, are taken as 100 per cent.

Dollar Value of Sales
March
1919

March
1920

March
1921

March
1922

Feb.
1922*

Drugs............................
Diamonds.....................
Groceries.......................
Hardware......................
Stationery.....................
Clothing........................
Jewelry.........................
Dry goods.....................
Shoes.............................
Machine tools..............

96
302
108
112
87
126
144
64
101
263

131
387
152
145
125
155
255
153
199
360

100
100
100
100
100
100
100
100
100
100

111
104
100
98
87
87
87
86
83
60

121
96
94
80
91
66
97
93
80
34

Weighted average........

105

157

100

92

87

•Expressed as percentages of sales in February 1921.

The principal increases in March sales were reported by
clothing dealers, due largely to the fact that retailers
deferred spring purchases until late in the season because
of the late Easter, and by machine tool dealers, whose
sales were the largest since last July. March sales of hard­
ware also show a marked increase because of the large
amount of new construction now under way throughout
the district. For the first month since July 1920, March
sales by wholesale grocers were larger than those of the
corresponding month in the preceding year. Sales by
wholesale grocers in the metropolitan district were about
6 per cent, larger, but this gain was nearly offset by
smaller sales by firms in up-State cities, and the
total net increase amounted to about one-half of one
per cent.

Commercial failures in the United States reported during
March were more numerous than in February as a result
of the failure of a number of comparatively small con­
cerns in the Second Federal Reserve District.
Total
liabilities were practically the same as in the two preceding
months but in this district were less than in either January
or February. During the first three weeks of April failures
were reported at practically the same rate as in March.

Volume of Building
Building contracts were awarded during March in New
York State and Northern New Jersey in larger volume
than in any other month for which figures are available,
except September 1921.
March contracts were nearly
50 per cent, larger than those of February and were nearly
three times the total for March 1921.
For the twentyseven northeastern States the March aggregate was 66 per
cent, larger than in February and nearly 80 per cent,
larger than in March 1921. While more than half of the
contracts let continue to be for residential buildings the
proportion for business buildings has been increasing con­
siderably in recent months.
The accompanying diagram shows the volume of build­
ing in this district each month since January 1919. It is
based upon the dollar figures for contract awards compiled
by the F. W . Dodge Company, but allowance has been
made for changes in the cost of construction. The light
line shows actual volume each month; the heavy line is a
moving average showing the general movement. While a
sharp increase in March is normal after light construction
during the winter months, the increase this year was
exceptionally large.
As a result of the large volume of new construction,
particularly in New York City, the movement of basic
building materials toward this center was unusually heavy
both by rail and by water. The supply of material was
sufficient to fill ordinary demands and prevent any advance
in prices but dealers were unable to accumulate a surplus
beyond day-to-day needs.
PER CENT.

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Railway Freight Traffic
Due almost entirely to smaller shipments of coal,
loadings of revenue freight on railroads of the United
States declined 14 per cent, in the first week of April.
There were increases in loadings of manufactured goods
and miscellaneous freight, forest products, and ore.
Previous to April 1 car loadings were unusually heavy
for the season, and showed week-to-week increases due
mainly to shipments of coal for storage in anticipation of
the strike and to a steady increase in shipments of mer­
chandise, miscellaneous commodities, and basic building
materials.




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1913 AVERAGE

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1921

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Volume of Building in New York and Northern New Jersey. Light
Line Shows Monthly Figures; Heavy Line General Movement. Allow­
ance is Made for Changes in Building Costs