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MONTHLY REVIEW of Credit and Business Conditions S e c o n d Federal Reserve Agent F e d e r a l R e s e r v e D is t r ic t Federal Reserve Bank, New York Money Market in April U RIN G recent weeks there has been a renewal of the rapid expansion o f bank credit which occurred last year. In 1927 the total loans and investments o f all banks, including commercial banks and trust companies, private banks, and savings insti tutions, increased 7 per cent, or more than 3 % billion dollars, to nearly 56 billion dollars. The rate of increase in the loans and investments of reporting banks in lead ing cities, which is shown in the accom panying diagram, was even more rapid, amounting to nearly 9 per cent. This expansion in bank credit compares with an esti mated increase in the total volume of production and trade o f the country of not more than 2 % per cent during the past year, and an average yearly growth of about 4 per cent during the past thirty years. The increase since February 21 in the loans and in vestments o f weekly reporting banks, which represent 40 per cent of the total resources of all banks in the United States, has amounted to 800 million dollars, or nearly 4 per cent— an increase in two months about three-fourths as large as the average annual increase during the past five years. The seasonal expansion o f commercial borrow ing accounted fo r part o f the increase, but during the last month a renewed increase in security loans has been the principal factor. These recent changes in the loans and investments of weekly reporting mem ber banks are summarized b elow : D M a y 1, 19 2 8 Bank security holdings. A ll of these factors have had the effect o f increasing member bank indebtedness at the Reserve Banks and o f raising money rates. The close relationship between member bank indebtedness and money rates is shown in the diagram on the follow ing page. In most cases, money rates at the end of A p ril are higher than at the corresponding time o f any year since 1923. It will be noted, however, that the rates on com mercial borrow ing are lower relative to those o f previous years than are rates on security loans, which have been in greatest demand. M oney Rates at New York on April 30 each year 1923 1924 1925 1926 1927 1928 *Call money Time money (90 day) Prime commercial paper Bills (90 day unindorsed) 4H - 6 3^2 ~ 4 Yl 3V2 - 4 H 3 - 4 Vz 5M 4 M - 4 Yl 3% - 4 5 H - 5V2 4 V2 - 4M 4 4H 3H 3Vs 3 ys 35 A 3Vs 4 - 5 5 -6 *Range for preceding week. 4 - 4M 4 Vs 5 4 - 434 4 - 4M 4M mUONSo/WLLARS (In millions of dollars) February 21 April 18 Change Commercial l o a n s ..................................... Loans on stocks and b o n d s ................... I n v e s t m e n t s ............................................... 8,748 6,300 6,527 9,070 6,693 6,618 +322 +393 + 91 T o t a l ........................................................ 21,575 22,381 +806 A b s o r p tio n o f R e s e rv e Funds One important result o f the credit expansion o f the past year has been a rapid absorption of reserve funds. The increase in loans and investments of member banks during 1927 was accompanied by an expansion o f de posits, which increased the reserve requirements of these banks by approxim ately 180 million dollars, as compared with an average annual increase during the past five years of 110 million, A renewed increase in reserve requirements o f member banks during recent weeks has accompanied the expansion of loans, and has been a factor in the continued tightening of the money market. Other factors during the past month have been a con tinued loss of gold, and a further reduction in Reserve G ro w th o f T o t a l L o a n s a n d In v e s t m e n t s o f A l l R e p o rtin g M e m b e r B a n k s . 1 9 2 S to 1 9 2 8 . MONTHLY REVIEW, MAY 1; 1928 34 C O M M L -P A P E R . RATE M IL L IO N S OF DO LLA RS 6 "BILLIONS o f DOLLARS D is c o u n t s o f F e d e r a l R e s e r v e B a n k s fo r M e m b e r B a n k s in P r i n c ip a l C i t ie s , C o m p a r e d w it h C o m m e r c ia l P a p e r R a t e s . C a l l M o n e y M a r k e t in A p r i l Loans Call loan rates have been very irregular during the past month. A n advance to 6 p er cent occurred early in A p ril as the combined result o f Easter currency requirements, the periodic withdrawal of funds from New Y ork which occurs early in each month, an increase in reserve re quirements, and a resulting rise in borrowings o f New Y ork City banks from the Reserve Bank to the highest level since 1923. D uring the second and third weeks o f the month there was some retirement of currency and a heavy movement o f funds to New Y ork from other districts which resulted in a reduction in call loan rates to 4 % per cent on several days, and an increase in brokers’ loans placed by New Y ork banks fo r out-of-town banks to the highest level ever recorded. The total amount and distribution of brokers’ loans on A p ril 18 were as follow s: Loans to Brokers and Dealers placed by New York City banks (In millions of dollars) For own account........................... For account of out-of-town banks For account of others................... 1,163 1,703 1,263 4,129 Total This inflow of funds to New Y ork was accompanied by increased borrow ing from the Reserve Banks in districts other than New Y ork. The rediscount rates o f the Boston, Chicago, St. Louis, Richmond, and Mineapolis Reserve Banks were advanced from 4 to 4 % per cent, and in the latter part o f the month there was a move ment o f funds from New York, which was reflected in a reduction in brokers’ loans placed fo r out-of-town banks, and call money advanced to 5 per cent and on A p ril 30 to 6 per cent. The New Y ork Reserve B an k ’s buying rate on bills was advanced Ys per cent during the month, so that the rate on 90 day bills at the end of A p ril was 3 % per ce n t; the rediscount rate remained unchanged at 4 per cent. B il l M arket The supply o f bills offered to the market during the first week of A p ril was unusually large, but subsequently decreased during the balance o f the month to a more moderate volume. A lthough dealers’ sales o f bills to t o t s r o K e r s a n a t h e a t e r s in s e c u r i t i e s n a i e u C i t y R e p o rt in g M e m b e r B a n k s . uy domestic investing institutions were somewhat irregular, open market portfolios were reduced considerably by heavy purchases of bills fo r foreign account after the middle o f the month. A further general advance of Ys per cent in dealers’ rates occurred at the middle of A pril, and later rates on all maturities except the 30 and 90 day bills were increased an additional Ys per cent. A t the close of the month, 90 day unindorsed bills were offered at 3 % per cent, as com pared with 3 % per cent at the end of M arch; 30 day bills were also up Ys per cen t; and other maturities o f bills showed a net advance o f Yl Per cent f ° r the month. Co m m e r c ia l P aper M arket The amount o f commercial paper outstanding through 25 dealers at the end of M arch totaled $569,000,000, a figure only slightly larger than a month earlier and 6 per cent below the outstandings o f a year previous. In A p ril also, supplies o f paper were small as dealers gen erally reported that commercial borrowers were making only limited demands on them for accommodation. The principal development in the commercial paper market was an advance of at least Yl o f one per cent in rates. A t the opening o f the month the bulk o f the prime names were being offered at 4 % per cent, but soon afterward names priced at 4 % per cent appeared in dealers’ lists, and by the end of the month the prevailing rate reached the 4 Y2 per cent level, and the firmer tendency o f the market was indicated by some transactions at 4 % per cent. These current rates fo r commercial paper are the highest since the latter part o f 1926. The bank invest ment demand, which had been rather quiet in previous weeks, increased somewhat with the advance in rates. Gold Movement The gold export movement continued during A p ril with total shipments of about $94,800,000. Im ports totaled about $3,800,000, and there was a net release of approxim ately $45,700,000 from earmark during the m on th ; so that the net gold loss fo r the month was about $45,300,000. This makes the net loss to the country 35 FEDERAL RESERVE AGENT AT NEW YORK about $345,000,000 since the beginning of the export movement in September. The export movements to Argentina and Brazil and the shipments o f earmarked gold to France continued during A p r il; further exports to Italy and Uruguay were m a de; and the strength o f sterling exchange led to another small export of gold to England. The shipment of about $5,000,000 of gold received in February from Russia and refused by the Assay Office was transferred by the consignors to Germany. The only important im port movement was the receipt o f $3,400,000 from Greece. The destination of the largest shipments from New Y ork during A p ril and the total amounts sent to those countries since September 1 last are given in the follow ing ta b le: MILLIONSofVOLlARS (In thousands of dollars) April 1928* Sept. 1, 1927 to April 30, 1928* $ 3,500 Argentina............ Brazil................... France................. Germany.............. Italy..................... United Kingdom. Uruguay.............. 1,680 71,741 5,358** 6,000 $117,090 54,994 132,540 26,881** 1,465 3,000 12,000 11,033 11,000 ♦April figures preliminary, covering Port of New York only. ♦♦Including $5,201,000 previously received from Russia. The monthly changes in the cou n try’s stock of gold in consequence of exports, imports and earmarking transactions during 1927 and the first four months of 1928 are given b elow : Gain or Loss to Gold Stock (In millions of dollars) Through Imports or Exports Month 1927 Through Earmarking Total 44 20 11 12 32 13 9 6 11 9 53 68 + 20 + 3 — 2 — 1 — 95 — 1 September....................................... October........................................... November....................................... December....................................... + + + + + + + + — — — — — 2 — 9 — 25 — 40 — 8 + + + + — + + 4* — — — — T o t a l ........................................... + 6 — 160 — 154 — — — — 14 11 95 91* + 6 4* 3 + 36 + 46* — 8 — 8 — 59 — 45* — 211* + 91* — 120* February ....................................... March.............................................. A p r i l .............................................. M a y .............................................. J u n e .............................................. July.................................................. 1928 February ....................................... Total, 4 m o n t h s ....................... *Preliminary 64 23 9 11 63 12 9 4 20 34 93 76 Foreign Exchange The pound sterling at $4.8803 reached the highest point thus far in 1928. One o f the factors contributing to this strength in sterling has presumably been the purchase by Am erican interests of bonds of the British Funding Loan o f 1960-1990 in preparation fo r the list ing of that issue upon the New Y ork Stock Exchange. A number of other European exchanges were likewise strong during A pril. Norwegian quotations stimulated by the report that the gold standard would be reestab lished on M ay 1, rose to 26.77 cents, only three points below parity. Both Danish and Swedish rates were maintained at several points over par, reichsmarks con tinued about ten points above par, and Dutch guilders at 40.32 cents reached their highest point since January. C u m u la t iv e G o ld E a r m a r k in g M o v e m e n t , in c lu d in g E x p o rts, Im p o rts T r a n s a c t io n s , 1 9 2 8 c o m p a re d w it h 1 9 2 7 . and The French franc continued unchanged, the Belgian belga was quoted at 13.97 cents throughout the month and the Italian lira weakened slightly to 5.27 cents. Swiss rates, although still slightly under par, were stronger than in March, but the Spanish peseta, which receives no official support, declined to 16.65 cents, the lowest quotation this year. Argentine and Brazilian rates, although still strong, eased slightly from the level o f the previous month. The Canadian dollar ranged from a discount of 3 /64 to a premium of 7/64, which was below the level reached in A p ril 1927. In the F ar East, the rupee was slightly higher than in March and Chinese rates, reflecting the rise in silver prices, were stronger than at any time since last Jan uary. The Japanese yen on the contrary declined to ward the close of the month to 47.07 cents. Discount Rates Abroad The Bank o f Italy, after reducing its rate on March 5 to 6y2 per cent from 7 per cent which had been effective since the middle of 1925, made a further cut on A p ril 2 to 6 per cent. The Bank o f Latvia as o f A p ril 2 estab lished a rate of 6 per cent to banks charging their cus tomers not more than 11 per cent and 7 per cent to banks charging their customers 11 to 12 per cent. The Bank of Sweden advanced its rate from 3Y2 to 4 per cent effective May 1, the first advance by a central bank this year. E ight institutions have announced re ductions, the Banks o f Italy and Norway having made two such changes since the first o f the year. Country Austria . . Belgium . Bulgaria . Czecho slovakia Denmark . England . Estonia . Finland . France . . Germany . Greece . . Hungary . India . . Italy . . . . Rate In Effect Since . . . . . . . . . . . . 6 Jan. 28, 1928 4 y2* Nov. 16, 1927 Aug. 31, 1924 10 5 5 4H 7X 6 sy2 7 10 6 7 6 Mar. 8, 1927 June 24, 1926 Apr. 21, 19,27 Jan. 2, 1928 Nov. 24, 1927 Jan. 19, 1928 Oct. 4, 1927 June 6, 1927 Aug. 26, 1926 Dec. 22, 1927 Apr. 2, 1928 Country Japan . . . . Latvia . . . . Lithuania . Netherlands Norway. . . Poland . . . . Portugal . . Rumania . . Russia . . . . South Africa. Spain . . . . Sweden . . Switzerland . Yugoslavia . *Previously given by error as 5 per cent. Rate . . . . . . . . 5.48 6- 7 6 4% 5H 8 8 6 8 5M 5 4 3H 6 In Effect Since Oct. 10, 1927 Apr. 2, 1928 Nov. 9, 1927 Oct. 13, 1927 Mar. 27, 1928 May 13, 1927 July 27, 1926 Sept. 4, 1920 July 1, 1923 Jan. 9, 1928 Mar. 23, 1923 May 1, 1928 Oct. 22, 1925 July 26, 1921 MONTHLY REVIEW, MAY 1, 1928 36 Security Markets Further bidding up of stocks in continued very active trading occurred during the first half of A pril, and aver age prices reached new high levels. Follow ing the middle o f the month, however, there was a gradual decline in stock prices and a slowing down in the volume o f trading on the exchanges. Towards the end of A pril, the ad vance in the stock market was resumed, and industrial stocks rose to within a few points o f the high levels reached earlier in the month, and railroad shares to higher levels than at any time in the past. Recent levels of stock prices and of the volume o f sales, relative to those of previous years, are shown in the accom panying diagram. STOCK PRICE INDEX o f Copenhagen, Denmark, flotation— both issues offered at a price to yield less than 5 per cent. Security offerings during the first quarter o f this year totaled $2,584,000,000, an amount only slightly larger than last year, but materially larger than in the corre sponding quarter of any other year. A s the accom pany ing diagram shows, there has been a considerable change SHARES SOLD In M iU io n s 1924 192.5 1926 19Z 1 1928 Volume of New Capital Issues Offered in First Quarter of Each Year, 1924-1928. (In millions of dollars.) from last year in the nature of the fin ancin g; domestic new capital issues were 286 million smaller than in the first quarter of 1927, while refunding issues were 257 million larger. Foreign offerings, both fo r new capital and refunding purposes, however, were somewhat larger than in 1927. The demand fo r new capital from domestic and foreign sources combined during the first quarter of this year was nearly 235 million smaller than in the same period o f last year. Index of Prices of 228 Stocks (Standard Statistics Company index) and Volume of Sales on the New York Stock Exchange. A fte r a period of stability during the first ten days of A pril, bond prices in general tended to decline some what, in response to firmer money conditions. Cor poration bonds, with the exception of public utility issues, declined about % point on the average, and fo r eign bonds, after showing numerous advances early in the month to the highest levels of the year, also receded somewhat. United States Government obligations, always the most sensitive to changes in money rates, showed declines fo r the month ranging up to % of a point in the case of the long term Treasury issues. New Financing Due chiefly to a number of very large offerings by public utility companies, the total volume of new securi ties floated during A p ril was larger than in the previous month or in A p ril a year ago. Industrial offerings, about one-half o f which were in the form of stock issues, increased slightly, but the amount of railroad, and state and m unicipal financing was much smaller than in the previous month. Foreign offerings in this market were of approxim ately the same amount as in March, but were considerably below the total of A p ril a year a go; the principal offerings were the m ajor part o f a $55,000,000 K ingdom of Denmark loan, and a $12,000,000 City Foreign Trade Total foreign merchandise trade during M arch was larger in dollar value than a year ago, due partly to higher prices, and was also seasonally larger than in February. Exports, valued at $423,000,000, showed more than the usual seasonal increase and imports, valued at $382,000,000, a somewhat smaller increase than is usual in March. Shipments o f raw cotton continued to decline and the total since August 1, 1927 has amounted to about onethird less in volume than in the corresponding period of the previous crop year. The value o f cotton exports in March also showed a decline o f 22 per cent as compared with last year, but fo r the past eight months the decline in value was only about 9 per cent owing to the higher prices received fo r the 1927 crop. The value o f the cotton manufactures exported during this period has shown an 11 per cent gain. E xports o f automobiles were valued at $10,000,000 more than in either the previous month or March 1927. Grain exports, however, were smaller in volume and value than a year ago. Quantity imports o f crude rubber, raw silk, and coffee were larger than in February and were also substan tially larger than a year ago. The increase in the volume o f rubber imports, however, was not sufficient to offset the effect o f the decline o f nearly 50 per cent in price. FEDERAL RESERVE AGENT AT NEW YORK 37 P r o d u c tio n Building Follow ing an increase in production in January and February from the low levels that prevailed at the close o f 1927, changes in the activity of leading industries were irregular in March. A few industries, notably pas senger automobiles and silk, showed further advances; production of passenger automobiles was larger than at any time since A ugust 1926, and raw silk consumption reached the highest level ever attained. Most o f the other leading industries, however, either were unchanged or showed declines fo r the month. A fter seasonal ad justment, cotton consumption and the output o f motor trucks remained at com paratively low levels, and the production of tires declined from the high volume of F eb ru a ry .. Cement production was below the preceding year fo r the first time since February 1927, and the output of newsprint paper continued at a level con siderably lower than a year ago. D uring A pril, there have been increases in the output o f petroleum and of anthracite coa l; about the usual seasonal expansion apparently has taken place in auto mobile p roduction; and production of lumber has con tinued in substantial volume. On the other hand, the output of cotton goods has held at the relatively low levels of the past few m onths; steel mills, after continu ing for some weeks the fairly large production o f March, have commenced to curtail operations ; and bituminous coal production has shown a decline somewhat larger than is usual at this time of the year. This bank’s indexes in the follow ing table are adjusted fo r seasonal variations and year-to-year growth. March contracts awarded for building and engineer ing projects in the 37 states east of the Rockies showed a seasonal increase o f 27 per cent over February, but were 5 per cent smaller than the very large volume of March a year ago. The total amount o f construction work awarded between the first o f this year and the end of M arch was 6 per cent larger than during the corre sponding quarter o f 1927, however, and was nearly as large as the record volume reported by the F . W . Dodge Corporation fo r the corresponding period o f 1926. A continuance in A p ril of active building operations was indicated by reports fo r the first three weeks o f the month, which, on a daily basis, averaged slightly higher than a year ago. j^ g g (Computed trend of past years=100 per cent) 19 2 5 1927 Mar. Jan. 114 112 115 161 91 133 120 122 107 96 96 108 98 97 111 124 108 109 95 101 94 67 89 125 111 84 99 98 97 100 90 90 97 141 100 99 105 115 104 65 88 124 115 86 100 103 104 107r 93 88 112r 114 110 108 97 109 108 99 100 95 78 100 108 106 83 103 102 106 100 113 125 101 103 89 108 95 101 108 103 101 108 93 84 89 105 105 93r 108r 104 89 126 100 114 98 105 107 116 115 76 99 85 95 104 107 103 126 128 92 Feb. Mar. Producers’ Goods Pig iron.................................................. Steel in g o ts ........................................... Cotton consumption........................... Cotton m ovem ent............................... Woolen mill activity*........................... Silk consumption*............................... Petroleum............................................... Bituminous c o a l ................................... C o k e ...................................................... Lumber.................................................. Copper, U.S. mines............................... L e a d ...................................................... Z i n c ...................................................... Tin deliveries ....................................... Leather, sole ....................................... Cement.................................................. Paper, t o t a l........................................... Wood pulp............................................... 104 109 95 89 86p 140 *87 100 lOlp 96 100 93 114 109 106 107p lOOp Consumers' Goods Hogs slaughtered................................... Cattle slaughtered............................... Sheep slaughtered............................... Calves slaughtered............................... Farm produce shipped........................... Wheat receipts....................................... Corn receipts........................................... Wheat flo u r........................................... Sugar meltings, U. S. p o r t s ................ G a so lin e ............................................... Anthracite c o a l ................................... Newsprint.............................................. Printing activity................................... Tobacco p ro d u cts............................... Boots and s h o e s ................................... Tires . ............................................... Automobile, passenger........................... Automobile, t r u c k ............................... ♦Seasonal variation not allowed for. ^Preliminary rRevised 1926 1927 1928 B u ild i n g ' C o n t r a c t s A w a r d e d i n 3 7 S t a t e s ( F . W . D o d g e C o r p o r a t io n F i g u r e s ) i n F i r s t Q u a r t e r o f E a c h Y e a r , 1 9 2 5 - 1 9 2 8 . ( I n m illio n s o f d o lla r s .) 1928 128 94 106 83 95 134 158 103 88 *76 91 105 lOOp 117p 132 86 The principal increase over a year ago continued to be in residential building. This increase follow ed even larger increases in the preceding two months, so that residential building fo r the quarter was 22 per cent larger than last year, and was the principal element in the expansion o f building activity. This is shown in the accom panying diagram, which also indicates that public works and utilities projects have continued some what larger than a year previous, but that commercial and industrial building has been smaller. Indexes of Business Activity It appears that in general the distribution o f goods showed less than the usual seasonal increase during March, and this bank’s indexes in most cases remained lower than a year ago. E xports of merchandise showed an advance after seasonal allowance, but there were de clines in imports o f merchandise, in retail trade, and in average daily freight car loadings. Indexes o f financial activity, however, advanced to very high levels, reflecting the unusually heavy trading in stocks. In A p ril also the principal increase in activity has been in financial transactions rather than in general business. This bank’s indexes, in which allowance is made for year-to-year growth, seasonal variations and price changes are shown on the follow ing page. 38 W, MAY 1, 1928 MONTHLY (Computed trend of past years=100 per cent) 1928 1927 Mar. Jan. Feb. Mar. 108 99 98 109 97 99 102 93 85 102 85 100 104 96 90 107 102 102 103 92 97p 104p 86 98 103 102 99 119 99 99 101 98 96 98 87 104 103 102 98 113 98 98 102 100 97 111 95 Bank debits, outside of N. Y. City . . Bank debits, New York City . . . . Velocity of bank deposits, outside of New York City. . ............................ Velocity of bank deposits, New York C i t y .................................................. Shares sold on N. Y. Stock Exchange . Postal receipts....................................... Electric power....................................... Employment in the United States . . Business failures................................... Building contracts............................... New corporations formed in N. Y. State Real estate tran sfers........................... 106 129 107 142 102 135 107 159 106 109 104 111 135 168 97 106 100 111 134 120 100 140 234 88 102r 95 108 140 117 93 138 196 95 107 96 114 151 127 101 162 281 90 General price le v e l............................... Composite index of w ages................... 170 223 173 221 173 221 174 223 Primary Distribution Car loadings, merchandise and misc. . Car loadings, other............................... Exports.................................................. Imports.................................................. Panama Canal traffic ....................... Wholesale t r a d e ................................... Distribution to Consumer Department store sales, 2nd Dist.. . . Chain grocery sales............................... Other chain store s a l e s ....................... Mail order s a l e s ................................... Life insurance paid f o r ....................... Advertising........................................... General Business Activity ^Preliminary. '95 115 125 115 92 rRevised. Commodity Prices The general index of wholesale prices which is com puted by the United States Bureau of Labor Statistics declined slightly in March to a level about 1 % per cent below that o f last October. Since the middle o f March, however, this ban k ’s index of basic com modity prices has shown a substantial recovery, advancing 4 per cent to the highest level since October 15. _____ I l I I A fte r an advance during February of more than sea sonal proportions, factory employment increased slightly less than usual in March, and in New Y ork State remained about 6 per cent below the level o f a year ago. A lthough the seasonal expansion in factory em ploy ment from January to March was not unusually large, it was sufficient to relieve to some extent the unem ploy ment prevalent during the winter. A seasonal increase in building also has provided employment fo r a number o f workers, and the State Em ploym ent Service reports evidence o f a further increase during recent weeks. The ratio o f orders fo r workers to applications fo r em ploy ment at New Y ork State employment offices advanced sharply during March, and in the week ended A p ril 7 was closer to the corresponding week of the preceding year than at any time since last J u ly ; there was a slight decline however in the two weeks follow ing A p ril 7. I__ __ I__ I-------- 1----L 1 9 2 7 M o v e m e n ts Employment CENTS PZRBw. CENTS PER lb . P r ic e The upturn of the past month has been o f an irregu lar character, for, as the accom panying diagrams show, a number of cross-movements have taken place in individual commodities. Rubber, follow in g the abandon ment o f the Stevenson plan restrictions on shipments, declined rapidly, and on A p ril 21 sold at less than one-half o f its value on February 4. The large decline in the price o f this com m odity has been more than offset, however, by substantial advances in a number o f others. A sharp recovery occurred in the price of hides, which on A p ril 21 was close to the high level o f January, and cotton has shown a slow but steady advance. The price of wheat advanced very sharply, follow ing a Govern ment report of poor condition o f the winter crop, and corn in general has shown an upw ard tendency since last December ; both commodities are now close to the highest levels reached during 1927. of C ru d e R u b b e r, R a w Ja n u a ry 1927. 1928 C o tto n , a n d H id e s s in c e Price Movements of W heat and Corn since January 1927. FEDERAL RESERVE AGENT AT NEW YORK 39 W h o le s a le T r a d e D e p a rtm e n t S to re T ra d e A verage sales of reporting wholesale dealers in this district were smaller in M arch than a year previous, follow ing moderate increases in January and February. Machine tool orders continued much larger than last year and moderate increases were reported also in sales of drugs, stationery, and jew elry, but sales in all other reporting lines were smaller than in March 1927. Sales o f hardware showed an unusually large decline, and sales of w om en’s apparel and diamonds also were much smaller than a year ago. Stocks o f merchandise held by dealers in cotton goods, drugs, and hardware were larger than last year, while shoe stocks were somewhat smaller, and in other report ing lines there was little change. Sales o f reporting department stores in this district continued in moderate volume during March. F or the entire district the increase over last year was slightly under 3 per cent, although, owing to the earlier date of Easter, it is probable that more o f the Easter business was done in M arch this year than last year. Nearly all sections of the district reported moderate increases over March 1927 sales. The increase in sales o f apparel stores continued to be somewhat larger than in depart ment stores. Stocks o f merchandise on hand in department stores at the end of March were somewhat smaller than a year previous, and the rate o f stock turnover continued higher than last year. The rate o f collections on charge ac counts also continued to exceed that o f a year previous. Percentage Change March 1928 compared with February 1928 Commodity Net Sales +12.6 + 2.2 — 5.4 + 7.1 — 8.1 Stock end of month + 0.2 Net Sales Groceries ................ Men’s clothing . . . Women’s dresses . . Women’s coats and suits Cotton goods—Jobbers Cotton goods—Com mission ............... Silk g o o d s ............... S h o e s ....................... D rugs....................... H a r d w a re ................ Machine tools* . . . Stationery............... P a p er....................... Diamonds................ J ew elry ................... +13.7 + 5.3 +70.2 +30.7 +15.0 +10.5 +11.0 + 9.9 — 4.4 +20.9 1— 6.2 ?j— 5.3 — 8'.8 *— 1.4 + 0.6 : + 1 . 3 + 8.9 — 13.3 £+46.3 i + 5.0 0 — 10.3 [ + 5 -3 + 7.0 Weighted Average +12.1 — 4.6 + 6^4 Per cent of Accounts Outstanding February 29 Collected in March Percentage Change March 1928 compared with March 1927 — 1.0 — 5.2 — 22.0 — 16.8 — 3.8 Stock end of month 1927 1928 + 0.9 77.4 44.1 78.9 38.9 + 8 .8 36.2 3i *5 — 6'.5 + 7.9 +11.3 48'.9 34.0 46.7 44.6 48'.7 34.0 42.5 42.5 7 i ’.i 65.9 ^ 27.1 8 i ‘.8 67.3 } 32.2 53.0 52.2 I 0 *Reported by the National Machine Tool Builders’ Association. Chain Store Sales Sales in most lines of chain store business compared more favorably with those o f last year in March than in February. Especially large increases were reported by shoe and variety stores, probably due in part to the earlier date o f Easter this year, and increases in grocery, ten cent store, and candy chains also were somewhat larger than in February. The March increases in sales per store were unusually large in several types of stores, and the decline in aver age sales o f candy stores was the smallest in 5 months. Percentage Change March 1928 compared with March 1927 Type of Store Grocery............................................... Ten cent............................................... D r u g .................................................. Tobacco............................................... S h o e .................................................. V a r ie ty .............................................. Candy .................................................. T o t a l .............................................. Number of Stores Total Sales Sales per Store + 2.4 + 9.3 + 3.6 + 0.5 +11.6 +16.2 + 8.8 +19.9 +13.7 + 5.4 — 3.4 +22.3 +32.0 + 3.7 +17.0 + 4.0 + 1.8 — 4.0 + 9.6 +13.5 — 4.6 + 4.6 +15.7 +10.7 Percentage Change March 1928 compared with March 1927 Per cent of Charge Accounts Outstanding February 29 Collected in March Locality Net Sales Stock on hand end of month 1927 1928 Northern New York State . . Central New York State . . Southern New York State . . Hudson River Valley District Capital D istric t.................... Westchester District . . . . + 2.4 + 2.6 + 4.0 + 2.4 + 3.2 + 5.7 + 2.5 + 3.4 + 3.3 — 4.9 + 4.4 + 5.7 +10.4 All department stores................ + 2.6 — 2.3 47.1 50.6 Apparel stores........................... Mail order houses....................... + 6.4 + 1.4 — 0.5 46.4 49.8 Bridgeport............................... — + + + — — — 3.1 6.1 0.8 0.1 0.4 9.2 6.7 48.3 54.6 39.1 54.9 55.5 38.6 47’.9 46. i 35‘.9 38‘.4 Shoes and hosiery were among the departments show ing the largest increases in March as com pared with a year ago, but sales in other apparel departments appear to have been somewhat irregular. Comparisons o f sales and stocks in March with those o f last year are presented fo r leading departments in the follow ing table. Net Sales Stock on Hand Percentage Change Percentage Change March 1928 March 31, 1928 compared with compared with March 1927 March 31, 1927 Shoes...................................................... Books and stationery ....................... Furniture ........................................... Toilet articles and d ru g s................... Cotton goods....................................... Men’s furnishings............................... Luggage and other leather goods . . Women’s ready-to-wear accessories Toys and sporting go od s................... Women’s and Misses’ ready-to-wear . Men’s and Boys’ w e a r ....................... Linens and handkerchiefs................... Home furnishings............................... Woolen goods....................................... Silverware and jewelry....................... Silks and v e l v e t s ............................... Musical instruments and radio. . . . Miscellaneous....................................... +15.6 +12.1 + 6.8 + 6.4 + 6.2 + 5.4 + 4.8 + 4.0 + 3.8 + 2.8 — 0.1 — 0.5 — 0.6 — 1.2 — 1.3 — 3.8 — 11.2 — 24.4 — 5.0 +10.7 — 1.5 — 2 7 + 0.1 — 1.8 — 5.2 — 8.7 — 20.1 — 7.2 + 0.3 — 7.1 — 4.3 — 7.5 0 — 15.2 — 1.4 — 7 2 — 33 6 — 2.9 40 MONTHLY REVIEW, MAY 1, 1928 Business C onditions in the U nited States (Summarized by the Federal Reserve Board) N D U STR IAL production during March was in about the same volume as in February and there was a seasonal increase in the distribution of com modities. Wholesale prices remained practically unchanged. During the past month there have been increases in bank credit in use and in member bank borrowings at the Reserve Banks, and open market money rates have shown further advances. I P r o d u c t io n In d e x N u m b e r s o f P r o d u c t io n o f M a n u f a c t u r e s a n d M in e r a ls , A d ju s t e d fo r S e a s o n a l V a r i a t io n s ( 1 9 2 3 - 2 5 a v e r a g e = 100 p e r c e n t). PERCENT. Production of manufactures was maintained during March at the high level reached in February, and the output of minerals also showed little change. Production of passenger automobiles and trucks during March totaled 413,000, the largest output recorded for any month since August 1926, and production schedules in automobile plants continued large during April. Activity in the iron and steel industry was also maintained at a high level during March and April, and lumber production was in larger volume than a year ago. Cotton and wool consumption declined in March, but silk deliveries were the largest on record. There was some decline in meat packing and in the production of sole leather, and the output of boots and shoes in March showed less than the usual seasonal increase. Mining of bituminous coal decreased during March by less than the usual seasonal amount, but as the result of a strike in certain Middle Western mines, production in the early weeks of April was considerably curtailed. Building contracts awarded were smaller in March than a year ago, while those for the first three weeks in April were in about the same volume as in the corresponding period of last year. As a result of large contracts during the first two months of this year, total awards for the year to April 20 exceeded those for the same period of 1927. Contracts for residential buildings and for public works have been especially large. T rade W h o le s a le P r i c e In d e x o f U n it e d S t a t e s o f L a b o r S t a t is t ic s (1 9 2 6 a v e ra g e 100 p er c e n t). B u re a u = Sales of wholesale firms increased less than usual in March and were some what smaller than in the same month of last year. Sales of department stores, on the other hand, after allowance is made for customary seasonal changes and the early date of Easter, were about the same in March as in the preced ing month and in March 1927. Stocks of merchandise carried in March by wholesale firms were larger, while those of department stores were smaller, than at this time last year. The volume of freight car loadings showed more than the usual seasonal increase in March, but declined in the first two weeks of April. Loadings con tinued smaller than a year ago for all classes of commodities except grains and live stock. P r ic e s The general level of wholesale commodity prices showed little change in March, the index of the Bureau of Labor Statistics declining slightly from 96.4 to 96 per cent of the 1926 average. There were decreases in the prices of livestock, dairy products, meats, coal, and rubber; prices of grains, cattle feed, cotton, and steel on the other hand, advanced. During the first three weeks in April, there were further substantial increases in the prices of grains and more moderate advances in flour, hogs, cotton, and lumber, while prices of cattle and rubber declined. M o n th ly A v e ra g e s o f W e e k ly F ig u r e s fo r M e m b e r B a n k s in 1 01 L e a d in g C i t ie s ( L a t e s t f ig u r e s a r e a v e r a g e s f o r t h r e e w e e k ly r e p o r t d a te s in A p r i l) . 'LIIONSofHOLLARS B a n k Cr e d it Between March 21 and April 18 total loans and investments of member banks in leading cities increased by about $410,000,000, reaching the highest level on record. The advance was largely in loans on securities which showed an increase of nearly $380,000,000 and in April were close to the high point of the first of the year. Loans for commercial purposes continued the increase which began in February and notwithstanding a small decline during the last week of the period were nearly $350,000,000 larger on April 18 than at the end of January. The volume of Eeserve Bank credit in use increased by $180,000,000 during the five weeks ended April 25, reflecting increased reserve requirements of member banks and a further net outflow of gold amounting to more than $50,000,000. Reserve Bank holdings of securities were reduced by about $80,000,000 during the period, while discounts for member banks increased by $230,000,000. Acceptance holdings also showed a small increase. R e se rv e Bank C r e d it : M o n t h ly A v e ra g e s of D a ily F ig u r e s fo r 12 F e d e ra l R e se rv e B a n k s ( L a t e s t fig u r e s a r e a v e r a g e s of fir s t 2 3 d a y s o f A p r il) . A firmer tendency in the money market was evidenced at the end of March and during April by further increases in rates on call and time loans on securities, and by increases of from 4-4% per cent to 4 ^ per cent in the rates on commercial paper and from Sy2 per cent to 3 % per cent in the rate on 90 day bankers acceptances. Between April 20 and April 25 discount rates were raised from 4 to 4 % per cent at the Boston, Chicago, St. Louis, Rich mond, and Minneapolis Federal reserve banks.