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MONTHLY REVIEW of Credit and Business Conditions S e c o n d Federal Reserve Agent M on ey M ark et F e d e r a l R e s e r v e D is tr ic t Federal Reserve Bank, New York in A p r i l Some reduction during A p ril in the total of brokers loans and a slight easing of rates for bankers accept ances and time money in the latter half of the month make it desirable to examine the credit position with a view to discovering what, if any, fundamental changes have occurred. Brokers loans as reported to this bank by the New York City banks have declined 301 million dollars since the highest point on March 20, and 177 million dollars since February 6, when the Federal Reserve Board made its public statement regarding speculative use of credit. Loans to brokers are, however, only a part of the credit employed in carrying securities. Large sums are lent for this purpose by banks directly to their customers. The recent decrease in brokers loans has reflected in part a transfer of loans from brokers to banks, as the accom panying diagram indicates. High call rates have induced many holders of securities on margin to seek funds di rectly from their banks and reduce their borrowing from brokers. W hile the statistics do not allow a complete analysis of this transfer, the following table shows a computation based upon the figures of the reporting member banks in 101 leading cities and is only approxi mate as to loans of banks direct to customers. May 1 , 1929 been some reduction since March 20 in the total demand for credit though not sufficient to release any consider able amount of funds. The gains and losses of reserve funds, which are the determinants of money conditions, may be summarized as follow s: (Weekly averages of daily ^figures, in millions of dollars) W eek ended April 26 ^ compared with W eek ended March 29 * Gains of reserve funds: N et gain of gold.................................................... Reduction in currency circulation................. Reduction in member bank reserves............ Miscellaneous......................................................... 60 31 Total gains......................................................... 117 10 16 Losses of reserve funds: Reduction in Federal Reserve acceptances Reduction in Federal Reserve securities.. . Treasury credit and miscellaneous................ 80 13 Total losses......................................................... 113 20 N et gain of reserve funds............................. Decrease in Federal Reserve discounts.. It will thus be seen that gains to the market from gold imports and releases of gold from earmark early in the (In millions of^dollars) Bank loans to brokers^ Loans by “ others” to brokers Bank security loans directly to customers*^ Feb. 6 .................................... M ar. 2 0 ................................. Apr. 2 4 ................................. 3,047 2,859 2,576 2,621 2,934 2,916 4,511 4,783 4,759 10,179 10,576 10,251 Change from Feb. 6.. . Change from M ar. 20. — 471 — 283 +295 — 18 +248 — 24 +72 — 325 1929 Total security loansf n^ lo ^ S T X J C U o f O N / ERS BANk ; LO A N S TO BRO <ERS ♦Brokers loans reported by New York C ity banks for own account and for outof-town banks; figures probably include some loans for customers of outof-town banks. ♦♦Estimated figures computed by deducting “ bank loans to brokers” from total security loans of reporting member banks; actual figures probably are somewhat larger. fT otal security loans of reporting banks (these banks have about 40 per cent of the country’s banking resources) plus brokers loans for “ others” ; this does not include the security loans of non-reporting banks, which if avail able would increase this total at least^Ojper cent. From these figures it is clear that the total amount of credit employed in carrying securities remains slightly larger than early in February, but is reduced from the high point of March 20. Meantime the total loans and investments of the reporting member banks have fol lowed a somewhat similar course as an increase in “ all other loans, ’ ’ largely commercial, has been partly offset by a slight reduction in investments. There has thus e c u r it v >/ A V A ' ./B R O K E R S LOAN S-"O THERS-' _t______ i__ i ._..J____ 1 j j 1928 . . .. -.1______ 1------ L , _____ I ..........U ------- 1--------- F 1929 Estimated Security Loans o f Reporting Member Banks to Cus tomers, Brokers Loans Placed by New York City Banks for Own A ccount and for Out-of-Tow n Banks, and Brokers Loans Placed for Others 34 MONTHLY REVIEW, MAY 1, 1929 month together with some reduction in currency circula tion were offset by decreases in Federal Reserve hold ings of bankers acceptances and Government securities. There was little net gain or loss of funds to the market. A measure of the relation of the supply of and demand for funds is to be found in the borrowings of the New York City banks from the Federal Reserve Bank. In order to keep their reserves in balance the city banks continued to find it necessary to borrow about 200 mil lion dollars or about 30 per cent of their total reserves. There has thus been no essential change during the month in the position of the money market. The following table shows the general level of money rates in New York at the end of A pril compared with a month previous. While rates for bankers acceptances showed some ease, rates for commercial paper and for bank loans to customers were slightly firmer. Time money advanced further in the early part of the month but subsequently eased slightly, and at the close of April was practically the same as a month ago. The change in rates for bankers acceptances was due to conditions peculiar to that market, which will be described later. M oney Rates at New York Apr. 30, 1928 M ar. 28, 1929 Apr. 29, 1929 Stock Exchange call loans......................... Stock Exchange 90 day loans.................. Prime commercial paper............................ Bills— 90 day unindorsed........................... Customers’ rates on commercial loans. Treasury certificates and notes Maturing June 15..................................... Maturing September 1 5 ........................ Federal Reserve Bank of New York rediscount rate........................................... Federal Reserve Bank of New York buying rate for 90 day bills................. * 5 -6 5 4H * 8 -2 0 **8^ SVs 5H t 5 .6 0 14.47 5 M -6 * 7 M -1 6 8^ 6 5 y8 f 5 .73 3 .6 5 4 .8 9 4 .8 8 4 .9 0 4 .9 4 4 5 5 5X 5H * Range for preceding week t Average rate of leading banks at middle of month * * Nominal quotation In the call loan market the chief event of importance beyond the firming of rates in the first week of the month was a distinct tightening of the market in the last week of the month following a recovery in stock prices and the approach of the month end. On Friday, April 26, the rate for new loans rose to 16 per cent— the highest rate in recent years except for the 20 per cent rate on March 26. The causes of this high rate were similar to those operating on March 26— an increasing demand for funds at the time of month-end demands upon the banks. The New York banks, with their heavy borrowing at the Reserve Bank, were reluctant to put out funds except in case of extreme necessity to avoid a breakdown of the market. Under such circumstances very tight money and high rates are from time to time inevitable. B il l M a r k e t Both the supply of and demand for bills were rather large during the early part of April, but after the first week a substantial decrease occurred in offerings of new bills to the market while the investment demand con tinued active. Due to the resulting depletion of their portfolios, both as to volume and maturities, the dealers had difficulty in filling the demand and their sales con sequently were sharply curtailed. A s a result, the deal MILUONS OF DOLLARS 1500]--------- ------- 1927 1928 1929 Volume o f Bankers Acceptances, Showing Proportion Held by Federal Reserve Banks, by Foreign Accounts of Federal Reserve Banks, and by Other Investors ers on April 22 lowered their bid and offered rates % per cent on all maturities, except 30 day bills. A fter this rate reduction there was a moderate increase in the sup ply of bills, and due to this and other causes the port folios of the dealers were increased somewhat. A further decline of $23,000,000 occurred during March in the total volume of dollar acceptances out standing in this country, according to the survey of the American Acceptance Council. A t $1,205,000,000 on March 30, the outstandings were $79,000,000 smaller than at the end of 1928, which was the high point of acceptance outstandings, but were $120,000,000 larger than in March of last year. Meanwhile the Reserve Banks’ holdings of bills for their own account were re duced $289,000,000 during the first quarter of this year, and at the end of March were $150,000,000 smaller than on the corresponding date of last year. They were also somewhat smaller than in March 1927, when the total amount of bills outstanding was approximately $400,000,000 below the current level. A small increase oc curred in the Reserve Banks’ holdings of bills for for eign correspondents between the end of December and the end of March, but the decline in the Reserve Banks’ own portfolio of bills was offset principally by an in crease of nearly $200,000,000 in the holdings of bills by other investors. These other holdings are composed of bills purchased by banks for their own account and foi4 foreign institutions, and of bills purchased by other domestic corporations and individuals; and the increase undoubtedly was induced by the higher yield offered on bills during the past few months. The accompany ing diagram indicates that these holdings are larger, and the market less dependent upon the Reserve Banks, than at any other time in recent years. Between the end of March and April 24, the Reserve Banks’ portfolio of bills showed a further decline of $59,000,000 to $141,000,000, a figure $225,000,000 below the total of a year ago, and the smallest since October 1924. FEDERAL RESERVE AGENT AT NEW YORK C o m m er c ial P aper M ar k et The prevailing rate for the usual grade of prime com mercial paper advanced to 6 per cent early in April and remained at that level throughout the month. De spite the higher rates, the banks throughout the country showed no increased interest in dealers’ offerings. Due to the difficulty in disposing of paper, commercial paper firms limited their purchases for the most part to pro viding for the borrowing requirements of their old cus tomers, and were little disposed to seek additional amounts of paper from new borrowers. The amount of commercial paper outstanding showed a decline of 6 per cent in March, following slight in creases in the two previous months. The outstandings of $387,000,000 reported to this bank by 23 firms on March 30 were 32 per cent smaller than a year ago. C e n tra l B a n k R a te C h an ges Five European central banks raised their discount rates during the month of April. On the 19th the Bank of Poland rate, which had stood at 8 per cent since May 1927, was raised to 9 per cent. A “ prolonged and acute shortage of ready money” was reported from Poland throughout the winter and early spring, and the central bank bill portfolio expanded to 703,900,000 zlotys on March 31 as against 495,800,000 zlotys one year earlier and 623,500,000 zlotys at the end of November 1928. The technical position of the bank is still strong, how ever, with a gold and exchange reserve ratio of 62.5 per cent against notes and demand liabilities. On the 24th the Austrian National Bank increased its rate from 6 % to 7 % per cent, and the Hungarian National Bank from 7 to 8 per cent. Both banks had already raised their rates during the latter half of last year, and the present increases were effected in order to arrest a further loss of foreign exchange reserves occa sioned by the attraction of high interest rates in other centers. Between the end of June 1928 and A pril 7, 1929 the Austrian bank’s reserve declined by 29,000,000 schillings or over 7 per cent. A s against one year earlier, its bill portfolio has expanded by 74 per cent, while the reserve ratio was last reported at 41.3 per cent as against 52.8 one year before. The Hungarian National Bank shows a loss of 58,400,000 pengos or 21 per cent in gold and foreign exchange reserve between June 30, 1928 and A pril 7, 1929. Its bills discounted were 15 per cent greater on A pril 7 than one year before, the reserve ratio meanwhile declining from 49 to 43.2 per cent. On A pril 25 the Reichsbank increased its rate from 6Y2 to 7y% per cent. The last previous change in the dis count rate of this bank was a reduction of one-half per cent made in January 1929, after a considerable inflow of gold and foreign short-term funds had eased the Ber lin money market to a point where the official rate was losing contact with the private rates. Since then strin gency has reappeared. A s a result, the Reichsbank state ments show a decline of 550,000,000 reichsmarks in gold between the end of 1928 and A pril 23, and a simul taneous decrease of 115,000,000 reichsmarks in foreign exchange reserve. The statutory reserve ratio of gold and exchange to notes in circulation was 56.6 per cent on April 23 as against 58.8 per cent on the corresponding 35 date in 1928. The slight drop in this ratio in the face of such a substantial loss of reserves is due to the fact that large additional reserves were acquired in the second half of 1928, and the recent losses bring the bank prac tically back to its situation of one year ago. Presumably in response to the higher rates of its neighbors, Germany and Poland, the Bank of Danzig increased its discount rate from 6 to 7 per cent on April 30. The earlier rate had been in force since June 1927. Official discount rates of the European central banks are as follow s: Below 5 per cent: France ( 3 ^ % ) , Switzerland ( 3 % % ) , Belgium ( 4 % ) , Sweden ( 4 % % ) . 5 per cent (New York bank r a te ): Czechoslovakia, Den mark. 5 % per cent: England, Netherlands, Norway, Spain. 6 per cent: Jugoslavia, Latvia, Rumania. 7 per cent: Danzig, Finland, Italy, Lithuania. 7 % per cent: Austria, Estonia, Germany. 8 per cent: Hungary, Portugal, Soviet Russia. 9 per cent: Bulgaria, Greece, Poland. On April 11 the Imperial Bank of India lowered its discount rate from 8 to 7 per cent. The higher rate had been in force since February of this year. F o r e ig n E xchange Probably reflecting the effect of higher central bank rates abroad, a number of European exchanges gained strength in April. Sterling remained steadily at or above $4.851/4, rising to $4.85 1 7 /3 2 on the 8th and clos ing on the 27th at $4.85 11 /3 2 . The Dutch guilder, which had been slow to recover following the rise in the Netherlands Bank rate on March 25, firmed con sistently from $0.4006% at the beginning of A p ril to $0.4020% or % above par, on the 27th. The French franc was maintained above the outgoing gold point from Paris to New York, and the Swiss franc rose to $0.19261/4, a level not previously reached since December. For the first time in several months the Italian lira crossed $.0524, standing on the 27th at only 1 % points below its parity of $.0526. It will be recalled that the discount rate of the Bank of Italy was raised on March 14 without immediate effect. The increase in the Hun garian National Bank rate on the 24th was followed by a firming of the pengo to $0.174414 on the 27th. Among the Scandinavian exchanges, the Danish crown showed an appreciation of three and one-half points to $0.2668. The European currencies which weakened in A pril were the reichsmark and the peseta. From $0.2372 on the 1st, the reichsmark dropped to $.02370 on the 19th and then touched a new low of $.02359 on the 26th, recovering on the 27th to $0.2370. The sharp drop in German exchange to the lowest point since the new reichsmark was established followed an advance of 1 per cent in the Reichsbank rate, and was generally be lieved to be due to the psychological effect of the re ported impasse in the reparation negotiations in Paris. A new low of $0.1422 was touched by the peseta on the 24th, this exchange opening the month at $0.1515 and closing on the 27th at $0.1440. 36 MONTHLY REVIEW, MAY 1, 1929 The Canadian dollar lost % in the period surveyed, closing at a discount of % . It is now about five months since this exchange has touched par and it has been well below the gold import point during the entire month. This is the season of the year when Canadian exchange is generally at a premium. Moving within a range for the month of $0.9551%: to $0.9569% , the Argentine peso closed almost daily at $0.9560*4, which is still 18 points below the gold export point for New York and considerably under the parity of $0.9648. The Brazilian milreis appreciated from $0.1178 to $0.1190 during the month. Among the Far Eastern exchanges, the rupee declined from $0.3642 to $0.3632, while both the Hong Kong and Shanghai exchanges were weaker in accordance with the downward tendency of Far Eastern exchanges begun last autumn. The Japanese yen fluctuated widely, but was last quoted at $0.4500, some 50 points above the market quotation at the close of A p ril 1st. The strength in yen exchange is probably due to renewed rumors that the gold embargo is to be lifted. an excess of imports over exports of gold since the be ginning of the year, but that a substantial earmarking caused a loss of gold early in January which more than offset imports until the second week of February. The net gain of gold remained comparatively small until April, when the release of earmarked gold, combined with further imports, raised the net gain of gold since the beginning of the year to about $110,000,000. The figures in the diagram cover the period through A pril 24, and transactions between that date and A pril 30, while included in the aforementioned totals, are not shown in the diagram. A s concerns gold movements abroad, the principal events have been: (1) The drain of some $131,000,000 in gold out of the Reichsbank since the first of the year, of which over $120,000,000 was lost in the first three weeks of A p r il; and (2) the gradual acquisition of nearly $33,000,000 in gold by the Bank of England since the increase of its discount rate on February 7 to 5 % per cent. G o ld Each year for some years past the Department of Commerce, in connection with its computation of this country’s balance of payments, has sent a questionnaire to each of the principal banks and banking houses to ascertain the amounts of foreign funds in our money market, and also the amounts of American funds em ployed at short term abroad. The figures for December 31, 1928 have just been compiled and show foreign funds in this market amounting to $2,900,000,000, com pared with $3,000,000,000 on December 31, 1927. The principal items in this total are shown in the following table. Due to Foreigners M ovem en t There was a further gain of gold to this country through net imports and earmarking transactions dur ing April. A s in March the gold imports were largely from Germany and Argentina; shipments from Ger many amounted to about $14,500,000, and shipments from Argentina to $6,425,000. Substantial amounts of gold were released from earmark for foreign account during April, and although there were additional ear markings in the latter part of the month, the reduction for the month in gold held under earmark here amounted to approximately $48,600,000. These preliminary figures indicate a net gain of about $69,800,000 of gold to this country during A p ril through the release of gold from earmark and through imports. MILLIONS OF DOLLARS ___________________________________ _______ ^ NET IMPC RTS NET GAIN OR LOSS / / 1----- ---------------------NET EARMAR*<ING ------------- r JAN FEB . > MAR / APR Gold M ovements Since Beginning of 1929, Showing Steady Gain through Imports, Largely Offset by Earmarking of Gold until April when Earmarked Gold was Released. The accompanying diagram reviews the gold move ments since the beginning of the year, as shown by the weekly statements issued by this bank, with minor ad justments based on final figures reported by the Depart ment of Commerce for the first three months of the year. This shows that this country has gained steadily through F o r e ig n B a la n c e s in t h e U n i t e d S ta te s (In millions of dollars) Dec. 31, 1927 Dec. 31, 1928 Foreign deposits.......................................................................... Borrowings from foreigners.................................................... Employed in bankers acceptances....................................... Employed in brokers lo a n s.................................................... Employed in treasury certificates........................................ Employed in other short-term loans.................................. 1,938 109 406 101 445 13 1,751 201 570 208 174 8 T o ta l............................................................................................ 3,012 2,912 The changes shown above are accounted for in part by the fact that the high money rates in the New York market during 1928 attracted a considerable amount of funds of foreigners. On the other hand the movement of funds from foreign countries to this market, together with the reduction in new foreign financing here, placed pressure upon the exchanges which made it necessary for foreign banks of issue to liquidate some of their deposits and holdings of short-term securities in this market in order to support the exchanges of those coun tries. There was also a tendency for foreign funds to be transferred from employment in Treasury certificates to employment in bankers acceptances because of the higher relative yield from acceptances and the change in the tax provision, by which foreign central banks no longer were required to pay taxes on income received from investments in bankers acceptances. It seems likely that the amount of foreign funds re ported as employed in brokers loans would have been considerably larger if some other date were reported than December 31, for a number of foreign lenders in 37 FEDERAL RESERVE AGENT AT NEW YORK the call market withdrew funds on December 31, prob ably for “ window dressing” purposes. While the report includes returns from practically all of the important banks and banking houses, it was not, of course, possible to secure returns from every concern doing some foreign banking business. It seems probable that if the returns had been entirely complete there would be even less difference between the figures for December 31, 1928 and those for December 31, 1927, because of the nature of the shift of funds during the year from the account of central banks of issue to pri vate account. The data for American balances abroad are probably somewhat less completely satisfactory, but show in gen eral a further increase. S e c u r ity M a r k e ts The volume of stock trading on the New York E x change was much reduced in April, following the very heavy turnover of March. Stock prices generally fluctu ated without definite direction until the third week of the month, when the market developed a moderate up ward tendency, as a result of which a general average of stock prices at the end of the month reached a level within 1 per cent of the mid-March peak. A moderate recovery in bond prices occurred during April, following the declines of March and previous months. The average price of the 8 United States Gov ernment bond issues now outstanding rose 2 full points from the lowest level of March, while the average price of a list of 40 representative domestic corporation bonds advanced nearly 1 point, and an average of the prices of 40 foreign bonds rose about % of a point. N ew F in a n c in g Offerings of new domestic securities, other than for refunding purposes, were somewhat smaller in March than in February, but showed a 60 per cent increase over a year ago, approximately the same increase as occurred in February. The increase over last year again was entirely confined to domestic corporate issues; State and municipal flotations were about one-fourth smaller than in March 1928. Refunding issues continued to be offered in much smaller volume than a year ago. A s in other recent months, it appears that the increase in domestic corporate issues largely represented increased borrowing by investment trusts, holding companies, and other financial corporations for the purpose of engaging in financial operations, rather than increased borrowing by commercial and industrial enterprises. This bank’s compilation of new foreign security offer ings in this market showed a total for March that was somewhat larger than a year ago. This was entirely due to a large offering of stock direct to stockholders by a domestic corporation, the proceeds of which were to be used in furthering the development of power facilities in foreign countries. Security flotations for foreign borrowers continued in much smaller volume than a year ago. For the first quarter of this year, the total of foreign borrowings, excluding issues to refund loans originally placed in this market, but including flotations to refund securities originally sold abroad, and also funds borrowed by domestic corporations for employ ment abroad, has been 29 per cent smaller than during the corresponding period of last year, following declines in the last two quarters of 1928 of 45 and 41 per cent, respectively, compared with the corresponding periods of the previous year. Six out of the last nine months have shown reduced volumes of foreign financing as com pared with the preceding year. New Foreign Capital Flotations Offered in the United States (In millions of dollars) 1927 1928 1929p M arch.................. .......................................................................... 127 78 107 115 98 114 31 35 167 Total 1st quarter.................................................................. 312 327 233 M a y ................................................................................................ June................................................................................................ 217 43 124 113 216 193 January......................................................................................... Total 2nd quarter................................................................ 384 522 July................................................................................................. A u gu st........................................................................................... September.................................................................................... 70 109 85 48 1 95 Total 3rd quarter................................................................. 264 144 October.......................................................................................... N ovem ber.................................................................................. .. December...................................................................................... 234 107 81 71 70 110 Total 4th quarter................................................................. 422 251 p Preliminary In April, there appears to have been a somewhat larger volume of issues offered to provide capital directly to industrial undertakings, but as public utility and rail road issues have been smaller, total domestic corporate security offerings declined below the March volume. A $50,000,000 loan by the City of Chicago and a $28,000,000 issue of the State of Arkansas, however, resulted in making the total of State and municipal financing for April the largest in a number of months. Foreign financing in this market was extremely sm all; there were no important issues, either corporate or governmental. F o r e ig n T r a d e Exports of merchandise, valued at $486,000,000 in March, showed considerably more than the usual in crease over February, and were larger than in March of any year since 1920 when the peak of commodity prices was reached. Imports, on the other hand, valued at $383,000,000, showed less than the usual seasonal increase, but were slightly larger than in March 1927, despite a decline during the year in the average of import prices. The continued large gains in exports of finished prod ucts accounted for the entire increase in total exports, compared either with February or with a year ago. Other groups of exports did not change materially. Shipments abroad of grain and raw cotton were both seasonally smaller than in the previous month; as com pared with a year ago, the volume of cotton exports declined somewhat, while exports of grains increased. Compared with a year ago, imports of partly and wholly manufactured products increased in March, while imports of crude materials and crude foodstuffs declined. The volume of crude rubber imports was smaller than the record volume of the previous month, 38 MONTHLY REVIEW, MAY 1, 1929 but remained larger than last year. Quantity receipts of raw silk and coffee, however, were smaller than a year ago. B u ild in g Although building contracts in the New York and Northern New Jersey district showed a sharp increase from the previous month, the total for March, neverthe less, was 27 per cent smaller than a year ago. The F . W . Dodge Corporation figures of building activities in this district during each of the first three months of the year have been substantially smaller than those of the corre sponding months of last year, and the total for the first quarter shows a reduction of nearly one-third from a year ago. Residential building declined 45 per cent from the first quarter of 1928, and was mainly responsible for the decrease in total contracts. Educational building contracts were slightly larger than last year, but other classes of construction work, including public works and utilities, and commercial and industrial building, were smaller. Total building contracts awarded in the 37 States east of the Rockies likewise showed a large increase in March over the previous month, but were 18 per cent smaller than in March 1928. This decrease followed a decline of 4 per cent in January and of 22 per cent in February, so that the first! quarter total of building contracts awarded was 15 per cent below the first quarter of 1928. Declines of 34 per cent in residential building, and of 19 per cent in public works and utilities, were only partly offset by increases of 22 per cent in commercial building, and of 44 per cent in industrial projects, and a slight increase in educational building work. During the first two weeks of April there appeared to be somewhat more than the usual seasonal expansion in building activities, especially in the New York district, but in the third week of the month contracts again dropped below the level of a year ago, and the total in crease for the first three weeks over last year was 9 per cent. E m p lo y m e n t a n d W a g e s Factory employment, both in New York State and in the country as a whole, showed a further increase of more than seasonal proportions in March. In addition to the improvement in factory employment during recent months, the usual spring increase is being shown in outof-door labor, such as for agricultural work, building, and road construction. A considerable increase in employment opportunities is shown also by the rate of voluntary labor turnover reported by the Metropolitan Life Insurance Company, and by the ratio of orders for workers to applications for employment at New York State Employment Offices. Voluntary labor turnover was the largest for any March since 1924, which indicates that workers are finding con ditions more favorable for changing jobs. The employ ment office figures during March were substantially above a year ago, and equaled the corresponding period in 1927. A n equally favorable picture is presented by wage payments. In New York State, average weekly earnings of factory employees reached the highest level ever re ported, and total wage payments were the largest since March 1926. P r o d u c tio n Productive activity in leading industries continued at a high level in March. New records for all time were established in production of steel ingots, passenger auto mobiles, and motor trucks. A fter allowance for the usual seasonal increase, however, production of passen ger automobiles and of steel ingots showed little change from the high levels of February, and production of motor trucks declined substantially. Pig iron produc tion increased more than usual in March to the second largest monthly total on record, and after seasonal and growth allowance was the largest since February 1925. Consumption of silk increased slightly, but declines oc curred in mill consumption of cotton, and in production of petroleum, copper, leather, zinc, and cement, after allowance has been made for the usual seasonal varia tions. Output of both bituminous and anthracite coal declined sharply. Steel mill activity remained at a high level during April, and the present indications are that there was no substantial change in activity in other industries. This bank’s indexes of production, adjusted for sea sonal variations and growth, are shown below. (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1929 1928 Mar. Jan. Feb. M ar. 104 109 95 86 140 110 87 100 101 96 100 98 114 109 106 107 100 113 113 106 96 127 116 92 112 89 120 104r 83 141 104 136 108 109 116 122 107 95 109 119 99 110 79 130 91 111 100 102 106 108 107 120 120 102 94p 113 lllp 79 114 128 94 106 83 95 103 88 97 76 91 104 105 101 116 132 87 106 91 108 87 109 103 113 101 106 91 115 117 96 129 171 164 96 85 103 77 103 103 90 102 107 86 89 89 104 79 98 98 91 107 96 130 179r 155 104 94p 120p 178 136 Producers' Goods Pig iron................................................................. Steel ingots.......................................................... Cotton consumption ..................................... Woolen mill activity*..................................... Silk consumption*............................................ Petroleum............................................................ Bituminous coal................................................ C oke....................................................................... Lum ber................................................................. Copper, U. S. m ines........................................ Lead....................................................................... Z inc........................................................................ Tin deliveries...................................................... Leather, sole....................................................... C em ent................................................................. Paper, t o t a l........................................................ W ood pu lp........................................................... 126 85 94 114 94 100 Consumers' Goods Hogs slaughtered.............................................. Cattle slaughtered............................................ Sheep slaughtered............................................ Calves slaughtered........................................... Farm produce shipped................................... W heat flour......................................................... Sugar meltings, U. S. ports.......................... Gasoline................................................................ Anthracite coal.................................................. Paper, newsprint............................................... Printing activity............................................... Tobacco products............................................. Boots and shoes................................................. Tires...................................................................... Automobile, passenger................................... Automobile, truck............................................ * Seasonal variation not allowed for In d e x e s o f B u s in e s s p Preliminary 73 86 r Revised A c tiv ity Average daily car loadings of merchandise and mis cellaneous freight in March showed about the usual seasonal increase, and in the early part of April showed a more rapid increase. Loadings of bulk freight, how ever, especially coal, declined sharply in March. Retail trade appears to have been considerably more active than in February, as increases were shown, after seasonal al lowance, in average daily sales of department stores and mail order houses; there were increases also in sales of life insurance companies and in advertising. 39 FEDERAL RESERVE AGENT AT NEW YORK This bank’s indexes of business activity, in which al lowance has been made for the usual seasonal variations, year-to-year growth, and where necessary for price changes, are shown in the following table. (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1929 1928 M ar. Jan. Feb. M ar. 103 92 97 104 86 98 101 98 99 114 95 104 103 104 105 117 91 100 103 87 109p 108p 90 lO lp 98 107 100 89 102 95 96 96 92 96 106 95 101 103 99 102 104 98 107 96 102 106 107 99 Primary Distribution Car loadings, merchandise and misc........ Car loadings, other.......................................... Exports................................................................. Imports................................................................. Panama Canal traffic...................................... Wholesale trade................................................. Distribution to Consumer Department store sales, 2nd D ist.............. Chain grocery sales.......................................... Other chain store sales................................... M ail order sales................................................. Life insurance paid fo r................................... Advertising.......................................................... General Business Activity Bank debits, outside of New York C ity. Bank debits, New York C it y ...................... Velocity of bank deposits, outside of New York C it y ............................................. Velocity of bank deposits, New York City Shares sold on N . Y . Stock Exchange. . . Postal receipts................................................... Electric power................................................... Employment in the United States............ Business failures............................................... Building contracts, 36 States...... ................ New corporations formed in N . Y . State. 107 159 108 185 112 187 113 194 111 162 281 90 104 95 115 125 115 121 202 442 85 107r 98 102 123 120 125 210 313 87 106 99 102 108 119 128 216 338 84 General price level........................................... Composite index of wages............................ Cost of living...................................................... 174 223 169 179 224 172 179 225 170 180 227 171 p Preliminary D e p a r tm e n t S to re T r a d e Reporting department stores in this district showed in March the largest increase in sales, as compared with a year previous, since August 1926. The reported increase for the month was nearly 8 per cent, and, after allow ance for one less business day than in March 1928, the daily rate of sales showed an increase of 12 per cent. While the early Easter this year undoubtedly was a factor in the large volume of sales in March, the increase was probably more than can be attributed to this factor alone. The sales in each locality throughout the district were larger than last year; especially large increases were reported from Newark, Southern New York State, and the Westchester District, and sales in New York City, Buffalo, Bridgeport, Central New York State, and the Capital District showed more than a 6 per cent in crease. The increase in sales was even larger in apparel stores than in department stores. Stocks of merchandise on hand in department stores at the end of March were slightly larger than a year previous, notwithstanding the large sales during the month, but the rate of stock turnover was considerably higher than a year ago. 100 101 91 109 Percentage Change March 1929 compared with March 1928 Locality r Revised N et Sales W h o le s a le T r a d e Wholesale trade, as reflected in reports received from dealers in this district, was very irregular in March, but in general showed a substantial seasonal increase over February, and was slightly larger than a year previous, although there was one less selling day than in March of last year. Diamond sales were substantially larger than a year ago, and sales of paper, m en’s clothing, jewelry, and hardware showed moderate increases. Sales of groceries, cotton goods, and stationery were smaller than in March 1928, and sales of shoes and drugs showed little change. Machine tool orders continued much larger than a year ago, and quantity sales of silk goods also were considerably larger. Percentage Change March 1929 compared with February 1929 Percentage Change March 1929 compared with March 1928 Per cent of Accounts Outstanding February 28 Collected in March New Y o rk ................................................................ Buffalo....................................................................... Rochester................................................................. Syracuse.................................................................... Bridgeport............................................................... Elsewhere................................................................. Northern New York State........................... Central New York S ta te............................... Southern New York State............................ Hudson River Valley D istrict..................... Capital D istrict................................................. Westchester D istrict....................................... Groceries.......................... M en’s clothing............... Cotton g o o d s ................. Silk goods*....................... Shoes.................................. D rugs................................. Hardware......................... Machine to o ls**............ Stationery........................ Paper................................. Diamonds......................... Jewelry.............................. Weighted A v erage... Stock end of month N et Sales Stock end of month + 7 .4 + 1 .6 + 1 9 .1 — 2 .5 + 2 .2 + 1 4 . 4 * — 8 .2 * — 1 3 .2 + 4 3 .8 + 1 9 .7 — 1 .1 + 2 9 .7 + 0 .9 — 0 .5 + 6 .9 + 1 2 .3 + 1 2 .8 + 1 1 .6 } - 1 . 9 — 8 .9 + 6 .1 + 3 .7 — 2 .2 — 6 .5 + 1 7 .9 * + 1 0 .1 * — 2 1 .8 — 0 .1 + 0 .4 + 1 9 .5 + 1 .0 — 1 1 .2 + 5 0 .8 — 9 .3 + 5 .4 + 1 3 .9 } — 1 1 .8 + 1 .8 + 1 5 .7 + 3 .0 3 5 .0 3 2 .8 + 1-1 4 5 .6 4 5 .6 + 3 .4 4 9 .5 4 7 .2 Sales in the apparel departments showed the largest increases, but sales in nearly all principal classes of merchandise except yard goods showed moderate in creases over a year ago. N et Sales Percentage Change March 1929 compared with March 1928 7 2 .3 4 5 .3 4 8 ‘. 7 3 4 .0 4 2 .4 4 4 .7 4 9 .3 32 .3 4 2 .5 4 1 .3 8 i .8 6 7 .5 7 2 '.8 6 9 .1 Toilet articles and drugs.............................. Silverware and jewelry................................. * Quantity not value. Reported by Silk Association of America ** Reported by the National Machine Tool Builders* Association 1929 4 7 .1 5 1 .7 3 8 .4 3 6 .3 4 6 .1 7 .9 7 8 .9 3 8 .9 5 2 .3 1928 4 7 .2 5 6 .2 3 8 .6 3 4 .3 4 5 .1 + Toys and sporting goods............................. Musical instruments and rad io................. M en’s and B oys’ w ear.................................. W om en’s and Misses’ ready-to-wear. . . Luggage and other leather goods............ W om en’s ready-to-wear accessories. . . . M en’s furnishings........................................... Linens and handkerchiefs............................ Books and stationery.................................... } 2 8 .1 1 -4 2 .3 1 .3 2 .8 4 .5 0 .4 5 .7 + 1 4 .1 1929 5 3 .4 + — + + + + — All department stores..................................... 1928 J 2 7 .6 + 6 .6 + 6 .0 + 2 .4 + 5 .6 + 1 6 .2 + 8 .3 + 9 .3 + 1 .6 + 6 .9 + 1 7 .3 + 4 .4 + 6 .5 + 8 .3 Stock on hand end of month Apparel stores................................................... Commodity N et Sales Per cent of Accounts Outstanding February 28 Collected in March Home furnishings............................................ Cotton goods.................................................... Silks and velvets............................................. Woolen goods.................................................... Miscellaneous................................................... + 2 6 .7 + 2 6 .3 + 2 2 .8 + 2 1 .0 + 1 9 .2 + 1 7 .8 + 1 5 .6 + 1 4 .6 + 5 .3 + 4 .9 + 4 .6 + 4 .6 + 3 .9 + 1 .3 — 2 .9 — 5 .9 — 1 6 .2 — 2 2 .0 — 5 .8 Stock on Hand Percentage Change March 31, 1929 compared with March 31, 1928 + — — — — — — — — — — + — + + — — — — 2 .8 1 .0 1 9 .7 1 .3 2 .4 2 .6 5 .1 7 .9 2 .0 4 .9 6 .5 4 .0 11 .9 7 .6 6 .9 2 .6 9 .8 1 6 .1 6 .2 40 MONTHLY REVIEW, MAY 1, 1929 Business C on ditions in the U n ited States (Summarized by the Federal Reserve Board) V OLUME o f industrial production and o f trade increased in March and wholesale prices advanced somewhat. There was a growth o f commercial loans o f member banks in leading cities in March and the first half o f April, while investments and loans on securities o f these banks showed a reduction fo r the period. P r o d u c t io n Index Numbers o f Production o f Manufactures and Minerals, A djusted for Seasonal Variations (1923-25 average = 100 per cent) Output o f manufactures reached a new high level in March. Automobile production was exceptionally large, and steel ingot output was reported to be above rated capacity. Output of refined copper, lumber, cotton and silk tex tiles, and sugar was also large for the season. There was some seasonal reces sion from February in the production o f wool textiles and leather, and a fu r ther decline in production by meat-packing plants. The volume o f factory employment and payrolls continued to increase during the month and was sub stantially above the level o f March 1928. Production o f minerals as a group declined sharply, reflecting reduction in output o f coal by more than the usual seasonal amount. Output o f nonferrous metals continued large and petroleum production increased. During the first part o f April industrial activity continued at a high rate, although preliminary reports indicated a slight slowing down in certain branches o f the steel industry, and a smaller output o f coal and petroleum. The value o f building contracts awarded increased seasonally during March and the first two weeks in April, reflecting in part the award o f a few large contracts, chiefly commercial and industrial. The total volume o f building, however, continued smaller in March than a year ago. Contracts for residential building and public works and utilities were substantially below the level o f March 1928, while industrial and commercial building was in larger volume. Wholesale D is t r ib u t io n 80 80 1925 1926 1927 192& 1929 W holesale Price Index o f United States Bureau o f Labor Statistics (1926 average = 100 per cent) Railroad shipments o f commodities declined somewhat in March but were larger than in the same period o f the preceding year. The decline from Febru ary reflected smaller shipments o f coal and coke, grain products, and livestock, all o f which were also below March a year ago. Loadings o f ore and miscel laneous freight increased substantially over February and continued above 1928. Sales by wholesale firms in all lines o f trade reporting to the Federal Reserve System were seasonally larger than in February. In comparison with the same month a year ago, however, sales in most lines o f trade were smaller, except in the case o f dry goods, m en’s clothing, and hardware. Department store sales showed a larger increase in March than is usual at this season, and were larger than in the same month in the preceding year, partly on account o f the fact that Easter came in March this year. P r ic e s Reserve Bank Credit: M onthly Averages o f Daily Figures for 12 Federal Reserve Banks (Latest Figures are Averages of First 22 days o f A pril) Wholesale prices of commodities during March averaged slightly higher than in February, according to the index o f the United States Bureau o f Labor Statistics. There were marked increases in prices o f copper and lead, and smaller advances in prices o f iron and steel and cotton goods, as well as o f certain agricultural products, particularly cotton, livestock, meats, and hides. Prices o f grain and flour were lower during the month and the price o f leather declined, reflecting an earlier decline in prices o f hides. Silk and rayon tex tiles and raw wool were also somewhat lower in price. In the middle of April prices o f livestock and raw silk were higher than at the end o f March, while cotton and wool had declined in price. Among the non-agricultural products there were marked declines in the prices o f copper, lead, tin, and zinc; a further decline in rubber and increases in pig iron and finished steel. B ank C r e d it Between March 20 and April 17 there was a considerable decline in the volume o f member bank loans to brokers and in the banks, holdings o f invest ments. Loans chiefly for commercial and agricultural purposes showed a rapid increase, and at the end o f the period were near the high level o f last autumn. During the same period the volume o f Reserve Bank credit in use declined further as a consequence of additions to the country’s stock o f monetary gold. A continued rapid reduction in holdings o f acceptances carried the total to the lowest point since the autumn of 1924. Security holdings also decreased some what, while discounts for member banks increased. 1925 M oney 1926 1927 1928 1929 Rates in the New Y ork Market (April rates are averages for first 22 days) Open-market rates on bankers acceptances and commercial paper increased further. Rates on collateral loans increased sharply in the latter part of March, but declined in April.
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