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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 rising to $4.85 1 7 /3 2 on the 8th and clos­
/4,
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 a level not previously reached since December.
/4,
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 $0.17441 on the 27th. Among
4
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 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




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............................................................................................

___________________________________ _______

NET IMPC RTS

F o r e ig n B a la n c e s in t h e U n i t e d

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 Am
erica
** Reported by the National M
achine Tool B
uilders* 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.

W
holesale

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.