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MONTHLY REVIEW o f C r e d it a n d S e c o n d Federal Reserve Agent M on ey B u s in e s s F e d e r a l D is tr ic t Federal Reserve Bank, New York M a r k e t in A p r il Important banking developments during April" in cluded a considerable growth in the deposits of reporting member banks outside of New York City, an acceleration of the flow of gold to this country, and a decline in bankers acceptance rates and in yields on short-term Government securities to levels which approximately equaled the previous low points reached earlier in the year. The expansion in the private deposits of reporting member banks located in cities other than New York, which since early March has exceeded $300,000,000, made available a considerable increase in purchasing power, the effects of which on business are as yet obscure. This increase, which is shown in the accompanying diagram, is quite definitely attributable to Treasury disbursements. Since the latter part of March, Treasury disbursements have steadily exceeded tax receipts and other revenue, due largely to the payment of loans to veterans, and large amounts of the credit obtained by the Government through the sale of new securities on March 15 and again on April 15 have been withdrawn BILLIONSOF DOLLARS Net Demand and Time Deposits of Reporting* Member Banks in Leading Cities Outside of New York City (Figures for Wednesday of each week) R e s e r v e C o n d itio n s May 1,1931 from the banks by the Treasury and paid out into private deposit accounts. In addition the Government obtained funds for immediate disbursement on two occa sions in April through the sale of Treasury bills. Thus an expansion of bank credit through Government bor rowing has been taking place at a rapid rate. G old I n f l o w The shipment of a substantial amount of gold from Paris to New York marks the reversal of a tendency dur ing the past three years for gold to move from New York to Paris, especially at times when money rates in this market declined to levels that offered no attraction in comparison with rates in the Paris money market. So far this year about $110,000,000 of gold has been received in the United States from other countries, and fc^bst/ujvial additional shipments are reported to be in transit to this country. This follows the net import of $280,000,000 of gold in 1930. Thus far the heavy inflow of gold this year has had little apparent influence toward the lowering of money rates or an expansion of bank credit here, due to the fact that the funds obtained by the banks through gold im ports have been applied, directly or indirectly, to the retirement of Federal Reserve credit instead of forming the basis for an expansion of bank credit. Member bank borrowings from the Reserve Banks have declined to new low levels for many years, and the acceptance hold ings of the Reserve Banks during recent months have averaged much below the usual volume for the time of year. This retirement of Reserve Bank credit together with the recent increase in currency circulation has absorbed not only the imported gold but also most of the excess reserves which were held by the New York City banks earlier in the year. In fact, money conditions during most of April were less continuously easy than in the previous three months. In the absence of continuous or substantial excess reserves in the New York banks, every movement of funds from New York, even though tem porary, tended to produce a slight firming of money con ditions. Such tendencies did not proceed far enough to affect money rates materially, however, as the reserves of the New York banks were quickly adjusted through temporary borrowing or the sale of acceptances to the Reserve Bank. Near the end of April, two successive reductions of Vs per cent in acceptance rates were made, accompanying reductions in the Reserve Bank buying rates for bills, so 34 MONTHLY REVIEW, MAY 1, 1931 that rates quoted at the end of the month equaled the previous low levels reached in early February. Yields on short-term Government securities followed acceptance rates downward, but other open market money rates at the end of April were unchanged from a month previous. Money Rates at New York Apr. 30, 1930 Mar. 31, 1931 Apr. 30, 1931 Stock Exchange call loans...................... Stock Exchange 90 day loans................ Prime commercial paper........................ Bills—90 day unindorsed....................... Customers’ rates on commercial loans.. Treasury certificates Maturing September 15 (yield)........ Maturing December 15 (yield). . . . . . Federal Reserve Bank of New York re discount rate....................................... Federal Reserve Batik of New York buying rate for 90 day indorsed bills. * For preceding week f t Nominal *1 ^ 2 *1H ft 1%~2 1H * 3 ^ -4 4 3K -4 23^ t 4 .59 2H-2H 1H 2 M -2 H +3.56 t3.54 3.02 3.19 1.45 1.69 1.30 1.52 3H 2 2 3 lH lH f Average rate of leading banks at middle of month B il l M a r k e t During the first week of April, slightly firmer money conditions caused the New York banks to dispose of some of their bill holdings and to call a substantial amount of their loans to dealers against acceptances. This situation resulted in a further increase in dealers’ portfolios, and in the bill holdings of the Federal Reserve System, re flecting the purchase of bills from dealers under repur chase agreement. Subsequently as the reserve position of the banks improved they began to lend more freely to the bill dealers, and investment demand also became more active; consequently by the middle of the month considerable reductions occurred in dealers’ portfolios and in Federal Reserve bill holdings. Again, shortly af ter the 15th, there was a period when withdrawals of funds from the New York banks caused renewed firm ness in money conditions, and again the bill holdings of the System rose, due chiefly to purchase of bills from dealers under repurchase agreement. By the 22nd, the banks’ reserves had been raised to such an extent by an inflow of funds from other centers that easier money prevailed; bills previously sold to the Reserve Bank un der repurchase agreement were taken up by the dealers, and considerable improvement in the investment demand was reflected in a decline in dealers’ portfolios. Follow ing this, the supply of and demand for bills continued approximately in balance until the closing days of the month, when slightly firmer conditions developed, and the discount market again had recourse to the Reserve Bank by selling bills under repurchase agreement. Two general reductions of Ys per cent were made in the New York Reserve Bank’s buying rates for bills, and at the end of the month the rate for 1-45 day maturities was 1^4 per cent and the rate for longer maturities up to 120 days was 1 % per cent. Open market rates were re duced similarly, and at the end of the month these rates were at the same levels as in early February— levels which had not previously been equaled in the history of the bill market in this country. The volume of acceptances outstanding showed a sea sonal reduction of $53,000,000 during March, making a total decline of $89,000,000 since December 31, and of $105,000,000 since November 30, 1930, when the largest amount was reached. This decline compares with a drop of $193,000,000 in bills outstanding during the first quar ter of 1930. Outstandings on March 31, 1931 of $1,467,000,000 were only $73,000,000 smaller than a year ago, and, as the accompanying diagram indicates, were larger than at the corresponding period of other previous years. It is probable that, after allowing for the substantial de cline in commodity prices, a larger volume of trade has been financed during recent months by the use of the bankers acceptance than in any previous year. The larg est reductions from February to March were in the amount of acceptances based on goods stored in or shipped between foreign countries and in domestic ware house credits, the two accounting for $38,000,000' of the $53,000,000 total decline. A t the end of March, the group of accepting banks and other institutions report ing to the American Acceptance Council held in their own portfolios $78,000,000 less acceptances than a month earlier, but their holdings remained large, totaling $472,000,000. C o m m e r c ia l P a p e r M a r k e t Rather quiet conditions prevailed in the commercial paper market during April, due to the small amount of new paper that the dealers were able to offer to inter ested institutions. Throughout the month, the invest ment demand was in excess of the amount of paper drawn by commercial and industrial concerns. Recently it has been reported that the banks are exercising an un usual degree of care in the selection of paper. Rates of 21/4 -21/2 per cent, the prevailing range reached toward the end of March, continued to be generally quoted in April. The amount of open market paper outstanding at the end of March at $311,000,000 was slightly more than 1 per cent smaller than a month earlier and 41 per cent below the figure of a year ago. The amount of paper out standing has been declining since April 1930, and has shown no seasonal rise this year. F o r e ig n E x c h a n g e During the first half of April the major exchanges were on the whole hesitant and inclined to weakness. The French franc declined from $0.0391 5/16 on the 1st to $0.0390 15/16 on the 20th. A temporary reduction in the cost of shipping gold from France to New York 35 FEDERAL RESERVE AGENT AT N EW YO R K monthbyshipmentsfromFrance. Goldimportedatthe Port of NewYork during April included$14,800,000 fromArgentina, $1,200,000fromMexico, and$3,500,000 fromFrance. At SanFrancisco, $7,600,000wasreceived fromChinaand$2,700,000fromJapan. Exports were negligible, but there was anincrease of $7,500,000 in goldheldunder earmark for foreign account at this bankandat the Federal Reserve Bankof Boston. A preliminaryestimate indicates anet gaintothecoun try’s goldstockof $23,000,000 for the monthandof $117,000,000fortheyear. As themonthclosed, anad ditional$15,500,000ofgoldwasabouttoenterthiscoun try?sgoldstockfromFrance. Thefollowingtableshows theoriginof theprincipal goldimportsintotheUnited Statesthusfarin1931. DOLLARS .03941 .0393 .0092 .0391 .0390 Gold Imports into United States .1 F M A M J J A S O N U J 1930 Movement of French Exchange at New York Shipping Points T .......... 1931 Relative Country of origin to Gold havingmeanwhilebeenannounced,thegoldimportpoint was momentarilyhigher thanthe$0.039015/16 quota tionand$3,500,000 of goldwas engagedinParis for shipment toNewYorkonthe 22nd. Additional gold totaling $15,500,000 was engagedfor shipment onthe 25th. Thereafterthefreight ratewasreportedashav ingrevertedto the earlier level. Frenchfrancs held abovethereadjustedgoldimport point duringtherest of themonth, althoughdisplayingrenewedweakness as themonthclosed. The weakness of the franc was probably inpart a reflectionof thestrengthshownbysterlinginthelatter half of April, whichwasitself inpart aconsequenceof the wideneddifferential betweenbill rates inLondon andNewYork, whichtendedtodrawfundstoLondon. Withthefirst reductionof thebill ratehere, sterling gained5/16 of acent to$4.865/16. Whenthebill rate wasloweredasecondtimeonthe27th, thepoundmoved upto$4.867/16, anditclosedonthe29that$4.8611/32. TheNetherlandsguilderfirmedfrom$0.400814 onthe 1stto$0.4020%onthe28th. Guilderstrengthisattri butedtothefirmingofmoneyratesatAmsterdamafter aratherlongperiodof extremeease. TheSwissfranc alsogainedinthecourseofthemonth. Narrowfluctua tions, closingwithashowof strength, wererecordedby thereichsmark,thebelga, thelira, andtheScandinavian currencies; the Swedishcrown, at $0.2681, crossedits parityforthefirsttimethisyear. Canadiandollars wereinclinedtoweaken, but they closedonthe29thatadiscountof only3/128of oneper cent, ashadeabovetheirmonth’sopening. TheArgen tinepesowassteadyearlyinthemonthat $0.7911. On the 16th, following announcement bythe Banco dela NacionArgentina that it had ceasedto support this exchange, thepesodroppedto$0.7407. It temporarily recoveredsomewhat, butonthe29thitclosedat$0.7385. Uruguayanpesos movedinsympathywithArgentines. The Brazilian milreis was last quoted nominally at $0.0730. GoldMovement GoldshipmentsfromSouthAmericaandMexicocon tinuedduringApril andweresupplementedlateinthe C an ada.................................................................................................. China and H ong K on g...................................................................... Japan................................................................................................. F rance................................................................................................... U ruguay................................................................................................ C u b a ...................................................................................................... Amount $41,100,000 24.800.000 12.500.000 6,000,000 6,000,000 4.900.000 3.500.000 2.300.000 995,000 The Bank of England increased its gold holdings duringApril by $13,100,000. Gains throughthe pur chaseof $17,300,000of goldintheopenmarket andthe reportedreceipt insovereignsof $4,900,000fromSouth Africa, $3,400,000fromAustralia, and$2,400,000from Brazil were offset inpart by gold“set aside’’ at the Bankof Englandamountingto$20,400,000. Goldcon tinuedtobe shippedfromRussiatoGermany during Apriltotheamountof $10,300,000. Central BankRate Changes OnApril 1, 1931 the National Bank of Roumania loweredits discount rate from9 to 8 per cent. The earlierratehadbeeninforcesinceNovember26, 1929. Advicehasbeenreceivedof anincreaseinrates at the Central Bank of Ecuador, during March, as follows: discountratetomemberbanks, raisedfrom9to10per cent; tothepublic, from11to12 per cent. Thelast previouschangewaseffectedinNovember1930. WorldProductionof Basic Commodities Since 1875 Thisbankrecentlyhascompiledanindexoftheworld productionof basiccommodities, excludingRussianpro duction,formorethanthelasthalf century. Thisindex wasweightedinaccordancewiththe1923-25 values of thecomponentseries, andcalculatedinpercentagesofthe 1923-25 average. For theyears 1875-1883, dataon14 linesof productionwereavailable; fortheperiod18841889thenumberwasincreasedto17; for 1890-1899to 20; andforthebalanceoftheyearsthrough1930, when considerably more data were available than for the earlieryears, 30serieswereincluded. Inadditiontothe aggregateindex, groupindexeswerecomputedforfoods andtobacco, andfor other rawmaterials, withasub groupcomposedof mineralsandmetals. Theseindexes are showninthe following diagramon a ratio scale M O N THLY REVIEW , M A Y 1, 1931 36 of theprecedingthreemonths. Therailroadstocksasa groupdeclinedat least 5percent belowtheDecember bottomlevel tonewlowssincetheautumnof 1924, and industrial stocksdroppedsomewhat belowtheirlows of last December andtowardthe endof themonthwere thelowestsinceearly1927. Thepublicutilitiesalsosuf feredsubstantial declinesthroughout April, but onthe wholeremainedabovetheDecemberlow. Pricemovementsinthebondmarketwerealsogener ally downward during April. All of the well known domestic corporate bond averages showeddeclines for themonthofvaryingamount, dependinguponthecom positionof theaverages. Thoseincludingalarge pro portionof highgrade issues registeredrelativelymod erate recessions, while those withaheavier weight of lower grade issues showeddeclines averaging about 2 points. The composite of 5 domestic bond averages, showninthesecondpart of thediagram,underwent a decline of about l1 /^ points tothe lowest level of the year, butremainedabout2pointsabovethelowof midDecember1930. All of theindividual priceaveragesre mainedsomewhat abovetheirDecember lows, although some didestablishnewlows for 1931. Weakness was inordertoindicatethecomparativerates of growthin most pronouncedintheindustrial issues duringApril, though railroad bonds again declined, following the thevariousindexesandinvariousperiods. This diagramshows clearly the interruptionto the sharpdropduringMarch. Publicutilityissues, onthe normal growthof agriculture andindustrywhichwas otherhand,werefairlywell sustainedatquotationscon causedby the World War, andindicates that the in siderablyabovetheDecemberlows, andmunicipal issues creasedoutputduringrecentyearshasnotcarriedworld continuedtoadvance. production to levels that appear high in relation to Foreignbondstradedinthismarketwereunderpres thepre-wartrendofgrowth. Infacttherateofincrease surethroughoutApril, andanaverageof40representa inproductionsincetherecoveryfromthepost-warde tiveissueshaslost 31 /2pointssinceMarch20, following pressionhasbeenat muchthesamerateasbeforethe ariseof 2%pointsintheprecedingfourweeks. Much war—therateofincreaseineachcasebeingslightlyless of thelosswas inSouthAmericanbonds andinAus than3percentayear. Intheearlieryearsthefoodsand tralianissues. tobacco group predominatedinthe aggregate produc TheUnitedStatesGovernmentsecuritymarketwasin tionindex, butasthesubsequentrateof increaseinthis contrast tothemarket for domesticcorporateandfor grouphasbeenmuchlessrapidthaninotherrawma eignbonds. LibertyLoanandTreasuryissues for the terials, in recent years the two groups have been of mostpartheldsteadyoradvancedslightly, andtheaver nearly equal importance inthe composite. It appears agepriceof the9issuesnowoutstandingshowedanet that, exceptduringandfollowingthewar, variationsin advanceof about %of apoint forthemonth. theaggregateindexof worldproductionhavebeendue principally tofluctuations inthe productionof foods. The index of production of minerals andmetals has shownasteadygrowthexceptinperiodsof pronounced depressionandinthewarperiod. Thislatterindexleads tothesurprisingconclusionthatthedemandsofthewar a didnotresultinanaccelerationoftherateof growthin theproductionof minerals andmetals, but ratherthat thegrowthintheseindustrieswasretardedduringthe \ war andthe fewyears immediately following. Since 1922 the productionof commodities inthis grouphas shownarenewedincrease, but at arate slightly less V rapidthanintheperiodfrom1875to1913. 120 1 SecurityMarkets \ Followingdeclinesinthelatterpart of March, stock pricescontinueddownwardduringApril, andthegen eral level neartheendof themonthwasvirtuallythe sameasatthelowestpointreachedinDecember. Asthe first part of the accompanying diagramindicates, the declinesincelateMarchhaswipedoutall oftheadvance 1875 6 0 *85 *90 *95 1900 '0 5 '10 ’15 '2 0 *25 ’3 0 Growth of W orld Production! since 1875, and o f Various Groups of Products (Federal Reserve Bank of New York indexes, plotted on ratio scale to indicate rates of increase) INDEX I5 0 r INDEX 105r fI 140 yv i / 130 v -\ 95 i I Y 100 / 90 i STO CKS B o r JD S 85 110 D 1930 F M 1931 D 1930 F M 1931 W eekly Price Movements of Stocks and Bonds (Standard Statistics Company index of 90 industrial, railroad, and public utility stocks; Federal Reserve Bank of New York composite of 5 domestic corporate bond averages) FEDERAL RESERVE AGENT A T N EW Y O R K 37 tions, thoughmuchinexcessof theofferingsduringthe shortmonthof February. Themonthwasmarkedbya Final figures showedatotal of $584,000,000 of se c mpleteabsenceof domesticrailroadissueswhichhad curityissuessoldfornewcapitalpurposesduringMarch, bo e largeearlierthisyear. Industrial issues, however, of which $260,000,000 represented domestic corporate incern e a somewhat above the small totals for several flotations, $291,000,000Stateandmunicipal issues, and monthssed p a ublic utility financing alsowas larger $33,000,000 foreign financing. Despite the relatively than in thset. pP r e us two months, due partly to the largetotal forthatmonth, theaggregatevolumeof new $100,000,000 Penvnio s y aniaPower andLight Company securityissues, bothbondsandstocks, brought out dur issue, most of whichlvw s for refundingpurposes, and ingthefirstquarterofthisyear, totaling$1,227,000,000, partlytoseveral othersau stantial issues. Intheaggre was considerably smaller thaninany of the previous gate, domestic corporateb f in cingdifferednot greatly fouryears, astheaccompanyingdiagramindicates. In fromthepreviousmonth,butan S ateandmunicipal issues factitisnecessarytogobackto1922forayearwitha showedalargereductionfromtth Marchvolume, which smaller first-quarter output of newsecurities, although wasunusuallyhighbecauseof the e inclusionof thePort thevolumein1923and1924wasnotmateriallylarger. of NewYork andNewYork City issues aggregating Refunding issues, flotations by investment trusts and $166,000,000. Theprincipal April issu einthiscategory financial trading and holding companies, andprivate was the Stateof NewYorksaleof $3 75,000 of 3% foreign credits have been excluded fromthe figures and31/2 percentserialbonds. Thesebo4n,9 d eresoldat showninthechart. ThesefiguresdonotincludeUnited anetinterestcosttotheStateof 3.46perscew n helow StatesGovernmentissueswhichwereabout$500,000,000 est rateinmorethan25years. Foreignsecutr,itty ta inexcessof maturities. Theanticipationof largeaddi tions, as for somemonths past, continuedinrestrflo ic t tional Government financing in connection with pay volume, representinglargely Canadianborrowings. ed ments toveterans was partlyresponsiblefor restricted ForeignTrade issuesofothersortsofsecurities. Domesticcorporatefinancingduringthefirstquarter, Thevalueofthiscountry’sforeignmerchandisetrade totaling$614,000,000, fell substantiallybelowanyofthe uringMarchshowedagainoverthelowlevel of the pastfouryears, beingroughlyhalfofthe1930and1927 d eviousmonth,whichappearstohavebeenonlypartly volume, lessthan40percentoftheamountin1929, and spera sonal. Imports, valuedat$211,000,000, increasedcon abouttwo-thirdsof the1928volume. Stateandmunici side blymorethanusual over February, andshowed pal financing, includingfarmloanissues, hascontinued thersa m llest percentage decline fromayear ago since toincreasesince 1929, however, andthe 1931 total of last Jua n . Theincreaseinexports to$237,000,000was $474,000,000wasthelargestinatleast tenyears. For aboutinea cordancewiththeusual seasonal increase. eignfinancinginthis market, evenincluding sales of The mac in groups of imports were all substantially securities byAmericancompanies toraisefunds tobe largerthanin ebruary. Quantityreceiptsof rawsilk usedabroad, was particularly small inthe first three continuedtoshF o w largeincreaseoverayearago, but monthsof thisyear, andthetotal at only$139,000,000 the total value ofaim was considerablylessthaninthecorrespondingperiod showedaheavyloss. ports of crude materials again oftheyearsbackatleastto1924. xportsof finishedmanufactures, thevalueof which DuringthefirsttendaysofApril, numerouslargese isE t h largest for anygroup, showedafurther decline, curityissueswereoffered, but subsequentlythevolume ande w e bout 45 per cent less invalue thanayear of security flotations has become exceedingly small, ago. Allreoa f theother principal groups, however, made probablyreflectingweaknessinthebondandstockmar seasonal gain February. Comparedwithayear kets. Thetotal forthemonthof April appearstohave ago, exportssofovcerrud foodstuffs increasedslightly in beenconsiderablysmallerthanMarchorJanuaryflota- value, whileshipmente sof crudematerialsweredown20 percent. CommodityPrices A pronounced downward tendency in commodity prices continuedduringApril, andaverage quotations reachednewlowlevels for thepost-warperiod. Losses wererathergeneral andincludedpracticallyall of the basic commodities withthe exceptionof wheat, which advancedmoderately. Among the metals, scrap steel brokethroughtheprevious lowof $12.75 aton, which hadbeentouchedtwoorthreetimessincelastNovember, droppingto$12.25, thelowest figuresince1915. Zinc declinedto 3.35 cents apound, the lowest price since 1896, leadwasreduced50pointsto4.00cents, andlosses wereshownalsoincopper, tin,andsilver; tinestablished a newlowlevel, and copper was officially quoted at 9y2 cents, thepreviouslow,withsmall salesreportedat 9% cents. The price of crude petroleumdropped to 85centsabarrel, anewlowformanyyears, andanthra citecoalwasreducedmarkedly. N ew F in an cin g 2.059 ------ FOREIGN MUNICIPAL D O M E S T IC CORPORATE 1927 1928 1929 1930 1931 New Security Offerings During the First Three Months of 19271931 (Commercial and Financial Chronicle figures for domes tic flotations; Federal Reserve Bank of New York data for foreign issues— in millions » f dollars) M O N THLY REVIEW , M A Y 1, 1931 38 PERCENT of C ost of L iv in g (D a ta on a 1 9 1 3 base plotted on ratio scale to show relative declin es) Anotherimportantdeclinewasinthepriceof rubber, whichestablishedanewlowat slightlyunder 6cents. The price of steers droppedsharply, andlower prices alsoprevailedfor cotton, wool, andsilk. The price of cornheldwell duringmost of themonth, but broketo anewlowtowardthecloseofthemonth. Hidesreacted, followingthesharprecoveryof March. The wholesale price index of the Bureau of Labor Statisticsdeclinedfurtherforthemonthof Marchtoa level only7percent abovethe 1913 average. Thede clinesinceJanuary1929nowamountsto23percent. As thediagramshows, therehasbeenanaccompanyingde clineinthecost of livingintheUnitedStates, at aless rapidrate, however, thanthedeclineinwholesaleprices, duetothefact that thereareanumberof itemsinliv ingcostswhicharecomparativelyinflexibleandrespond slowly to changes inwholesale commodity prices. In Marchthe cost of living remainedabout 50 per cent abovethe1913level. Building Thetotal volumeof buildingcontractsawardedin37 StatesduringMarchwas57percentlargerthaninFeb ruaryaccordingtotheF. W. Dodge Corporation, and asthisincreasewassomewhatmorethantheusual sea sonal expansionbetweenthesetwomonths, this bank’s adjustedindexof total buildingcontractsrose5points further, followingasimilar increaseinFebruary, and reachedthehighest level sinceJuneof last year. The rise reflectedchieflylarger contracts for public works andutilities^althoughincreases werealsoreportedfor othernon-residential buildingworkandfor residential contracts. The expansionin residential construction, however, was less thanthe average Marchincrease of otherrecentyears, andtheseasonallyadjustedindexof residential contractscomputedbythisbank, afterrising considerably in February, receded several points in March. FollowingtheMarchincrease, thedailyaveragevol umeofbuildingcontractsawardedduringthefirstthree weeksofAprilwas12percentlessthanintheprevious month, and about one-thirdsmaller than ayear ago. Ordinarily, the seasonal movement continues upward throughApril. Thefirstquartertotalofbuildingcontractswas24per centsmallerthanthefigureforthecomparableperiodof 1930. Residential work, withadecline of only 4 per centinvalue, madethemost favorablecomparisonwith ayearago; infact, figuresontheamount of residential floorspacecontractedforwere2percentlargerthanin 1930. Inpublicworksandutilitiesthe1931firstquarter reductionamountedto16 per cent, gains inhighway, sewerage, and water front developments being more thanoffset by large declines incontracts for bridges, lighting, powerplant, andrailroadconstruction. A41 per cent dropinother non-residential workoccurred, duetolargedecreasesinthevolumeof commercial and factorybuilding. ReportsforMetropolitanNewYorkandvicinityindi catethat residential buildingcontracts duringthefirst quarterofthisyearwere65percentlargerthanin1930, due principally to apartment house construction. A moderatereductioninpublicworksandutilityprojects andalargedropinothernon-residentialwork,however, resultedinatotal volumeof contracts for thequarter thatwas21percentlessthanlastyear. Employment andWages Furtherseasonal improvement intheemployment sit uationduringMarchisindicatedbyavailabledata. The number of workers employed inreporting NewYork State factories showedanincreasefromthemiddle of February tothe middle of Marchwhichwas slightly greaterthanusuallyoccursduringthisinterval, andthe seasonally adjustedindex of employment rose slightly following asmall advance inFebruary, as the accom panyingdiagramindicates. Forthecountryasawhole, thegaininMarchequaledtheaverageseasonal riseof pastyears. Factorypayrollsalsoexpandedatleastsea sonally, bothinNewYorkStateandinthecountryasa whole. The ratio of orders for workers to applications for workat NewYorkState Employment Bureaus during Marchroseslightly, andduringthefirst fourweeks of PERCENT Index o f F a cto ry E m p lo ym en t in N ew Y o r k State, 1 9 2 5 -1 9 2 7 = per cen t (N e w Y o rk S ta te D ep artm en t o f Labor index ad ju sted for seasoned variation s) 1 00 FEDERAL RESERVE AGENT A T N E W Y O R K April a further rise of seasonal nature occurred. A moderateincreaseintherateof voluntarylabor turn overinMarchapparentlyindicates that workersfound conditionssomewhat morefavorablefor changingtheir positionsthanduringtheimmediatelyprecedingmonths. Production AvailabledataforApril indicatethedevelopment of som eirregularityinproductiveactivity. Contractionin thesteelindustryisindicatedbytheIronAgeoperating ratio, whichdeclinedto48percentof theoretical capac ityinthelastweekof April, asagainsttheMarchpeak of 57percent. This decline, however, was partlyof a seasonal nature. Productionof bituminouscoal alsode clinedseasonally, but preliminary estimates indicate a further seasonal expansioninthe automobile industry duringApril, andincreaseswerereportedintheoutput of cottongoodsandof crudepetroleum. Industrial productioninMarchshowedagainmod eratelyinexcess of theusual seasonal proportions fol lowingasimilar gaininFebruary, andtheseasonally adjusted index of industrial production, prepared by the Federal Eeserve Board, rose in March to the highest level since last September. Increases propor tionatelylargerthanthoseof pastyearswereshownin theoutput of most important industries, includingpig iron, steel ingots, petroleum,automobiles, andcement, whilemill consumptionof rawcottonrosefurther in steadof showingtheusual decrease, andproductionof bituminous coal declinedless thanusually. These ad vanceswereonlypartlyoffsetbydeclines, afterseasonal adjustment, in the production of non-ferrous metals, foods, andtobaccoproducts. (Adjusted for seasonal variations and usual year-to-year growth) 1931 1930 Metals Pig iro n ........................................................... Steel ingots...................................................... Copper, U. S. m ines..................................... L ea d ................................................................. Z in c.................................................................. Tin deliveries................................................. Automobiles Passenger ca rs............................................... Mar. Mar. Jan. Feb. 101 99 83 91 78 115 57 59 65 69 51 102 60 67 69 67 52 73 63 69 65p 66 51 79 90 117 49 r 84r 55 87 57 p 76p Petroleum, cru d e.......................................... Petroleum products...................................... 70 73 97 98 93 66 96 70 81 73 63 91 70 81 76 65p 78 p 70 82p Textile and Leather Products Cotton consum ption.................................... W ool mill a ctiv ity ........................................ Silk consum ption.......................................... Leather, s ole.................................................. Boots and shoes............................................. 83 67 98 107 96 71 62 104 87 77 75 75 99 85 86p Foods and Tobacco Products Live stock slaughtered................................ Wheat flou r.................................................... Sugar meltings, U .S . p orts ........................ T obacco p rod ucts......................................... 89 98 75 98 92 92 72 89 96 91 67 98 91 90 58 96 111 76 95 99 94 107 81 61 86 85 81 77 76 64 86 86 83p 82p 79 Fuels Bituminous co a l............................................ Anthracite co a l.............................................. 78 73 100 81p 94p Miscellaneous T ires................................................................. Printing a ctiv ity ........................................... Paper, newsprint........................................... Paper, other than new sprint...................... W ood p u lp ...................................................... p Preliminary r Revised 91 39 Indexes of Business Activity This bank’s indexes continued to indicate compara tivelystablegeneral business conditions duringMarch, withthe weight of evidence onthe side of afurther slight recovery. Department storesales inthis district rose slightly more thanseasonally fromthe February level, andadvertisingshowedabouttheusual expansion. Merchandise exports alsoshowedanincrease of about seasonal proportions, andimportsrosemorethanusual forthemonthof March. Ontheotherhand, merchan diseandmiscellaneousfreight carloadings didnotshow quitetheaverageMarchincrease, andloadings of bulk freight declinedmorethanusual. The number of business failures showed about the averageseasonal declineinMarch, but waslargerthan inthecorrespondingmonthof anypreviousyear. The number of corporations charteredinNewYork State increased, insteadof showingtheusual seasonal decline. (Adjusted for seasonal'variations and usual year-to-year growth) 1930 Primary Distribution Car loadings, merchandise and m isc........ Car loadings, oth er....................................... Panama Canal traffic................................... Distribution to Consumer Department store sales, 2nd Dist r ......... Chain store sales, other than gro ce ry .. . . Life insurance paid f o r ................................ Advertising.......................................... .......... General Business Activity Bank debits, outside of New Y ork C ity.. Bank debits, New York C it y .................... Velocity of bank deposits, outside New York C it y ................................................... V elocity of bank deposits, New Y ork C ity Shares sold on N. Y . Stock E xch an ge. . . Postal receipts............................................... Electric p ow er................................................ Employment in the United S tates........... Business failures r ......................................... Building contracts......................................... New corporations form ed in N. Y . State Real estate transfers.................................... General price level*...................................... Composite index of w ages*........................ Cost of livin g*............................................... p Preliminary r Revised 1931 Mar. Jan. Feb. 95 86 86 92 79 78 76 60 76 63 78 75 65 77 63 77 73 66p 83p 103r 93 109 92 93r 84 89 77 97r 86 84 80 99r 80 85 81 101 142 88 89 82 91 83 103 116 159 299 94 91 95 106r 88 87 70 97 83 159 88 81 80 116r 63 78 59 91 87 242 86 81p 80 115r 68 85 61 91 97 197 86 173 228 168 157 216 158 157 218 152 157 219 151 Mar. 80 114r 73 90 58 * 1913 average=100 Department StoreTrade Sales of reporting department stores inthis district inMarchwere1.7percentbelowthoseof ayearprevi ous. Thiswasthesmallest declinesinceMay1930, due inparttothefactthatMarchsalesthisyearincludeda considerablepartoftheEastertrade, mostof whichlast year was done inApril. The decreases in the sales reportedbystoresintheNewYorkCity, SouthernNew YorkState, andCapital Districtswerethesmallestsince last May, and the decline insales of the Bridgeport storeswasthesmallestsinceApril oflastyear. Salesof Westchester stores continuedtoshowanincrease com paredwithayearago, andreportingstoresinNorthern NewYorkStateshowedanincreaseforthefirsttimein almost ayear. Sales in other localities continued to showdecreasesrangingfrom2percent to11percent, butinmost casesthedecreasesweresmallerthaninthe 40 M ONTHLY REVIEW , M A Y 1, 1931 previous month. Sales of the leading apparel stores not as large as in February. Machine tool orders, wereslightlylargerthaninMarch1930, thefirstincrease reportedbytheNational Machine Tool Builders Asso innearlyayear. ciation, increasedconsiderablyover February, andthe Stocks of merchandiseonhandat theendof March, decline fromayear previous, thoughsubstantial, was valuedatretailprices, showedthelargestreductionfrom thesmallest inanumberof months. TheSilkAssocia ayearpreviouseverreportedtothisbank. Therateof tionof Americareportedyardagesalesof silkgoodsin chargeaccountcollectionsduringMarchcontinuedtobe Marchmorethan8per cent abovelast year, thefifth slightlylowerthanayearprevious. consecutiveincreaseinquantitysalescomparedwiththe previousyear. The value of stocks inall reportinglines, withthe exceptionof drugs, continuedtobesubstantiallysmaller thanayear ago. Collections averagedslightly better thaninMarch1930. Percentage change from a year ago Locality Net sales March New Y o r k ......................................... Rochester........................................... Syracuse............................................. Newark.............................................. B ridgeport......................................... Elsewhere.......................................... Northern New Y ork S ta te. . . . Southern New Y ork S ta te.. . . . Hudson River Valley D istrict.. Capital D istrict........................... Westchester D istrict................... All department stores............ Apparel stores.......................... January to March Stock on hand end of month 1930 — 13.6 — 9 .3 — 11.5 — 13.2 — 18.2 — 10.8 — 11.7 4 4.9 4 7 .2 3 9.9 3 0.8 4 2.8 4 0.6 3 3.4 1931 — 1.0 — 7 .4 — 4 .3 — 3 .8 — 2 .1 — 5 .5 — 2 .5 + 3 .8 — 3 .5 — 11.3 — 0 .2 + 4 .8 — — — — — — — — 1 .7 — 5 .1 — 13.7 4 3.2 4 2.2 — 3.7 — 13.3 4 3.0 4 1.4 + 0.4 5 .0 6 .9 6 .1 6 .7 3 .8 8 .6 6 .3 Per cent of accounts outstanding February 28 collected in March 4 5 .3 4 5 .3 3 4.4 2 9 .0 4 1.4 3 5.7 3 0 .8 Net sales percentage change March 1931 compared with M arch 1930 Stock on hand percentage change M arch 31, 1931 compared with M arch 31, 1930 + 1 2 .0 + 9 .3 + 6 .7 + 4 .8 + 4 .7 + 4 .1 + 3 .4 + 3 .2 + 1.9 — 1 .5 — 2 .9 — 3 .7 — 4 .6 — 7 .2 — 9 .5 — 11.3 — 14.9 — 17.0 — 5 .7 — 19.9 — 6 .2 — 2 3.6 — 14.2 — 15.7 — 1 .9 — 8 .4 — 18.5 — 3 0.7 — 16.7 — 13.3 — 17.3 — 11.2 — 2 0.3 — 9 .3 — 9 .2 — 2 1.0 — 2 2.4 — 16.2 WholesaleTrade Thedollarvolumeofbusinessof thereportingwhole salefirmsinthisdistrictin,Marchshowedasubstantial increase, largelyseasonal, overFebruary, but continued tobe considerably smaller thanayear previous. The decreaseof 16percent, however, wasthesmallest since December. Declinesof around20percentcontinuedto be reportedby wholesale dealers incottongoods, sta tionery, andpaper, anddecreasesinthesalesof jewelry anddiamonds againwereevenlarger. Sales of men’s clothing, shoes, andhardwarealsocontinuedtobecon siderablysmaller thanin1930, but thedecreaseswere Net sales M en’s clothing............... C otton g o o d s.................. Marchsales andstocks intheprincipal departments arecomparedwiththoseof ayear previousinthefol lowingtable. Appareldepartmentsareprominentamong those showingincreases over last year, due, no doubt, totheeffectsof Easterbusiness. M en’s and B oys’ w ea r........................... Toilet articles and drugs....................... Luggage and other leather g o o d s . . . . Shoes............................................... .. W om en’s ready-to-wear accessories... T oys and sporting g o o d s ...................... Silverware and jew elry.......................... W om en’s and Misses’ ready-to-w ear.. W oolen g o o d s ........................................... M en’s furnishings................................... Books and stationery............................. H osiery......... ............................................ H om e furnishings.................................... Furniture.................................................. Cotton go o d s ............................................ Linens and handkerchiefs..................... Silks and velv ets..................................... Musical instruments and ra d io ........... Miscellaneous........................................... C om m odity Percentage change M arch 1931 compared with February 1931 Machine tools**............. W eighted average h 5 .4 -3 5 .4 -16.1 f-14.7* -6 1.2 -1 0 .2 -4 4 .6 -4 0 .5 - 2 .2 1-11.7 - 4 .2 - 0 .9 Percentage change March 1931 compared with March 1930 Stock end of month Net sales + 3 .3 +■*4.0 — 4 .8 * — 18.2 + 2 .7 — 1 .7 — '7\5 — 8 .0 + 2 2 .8 — 15.8 — 17.8 — 20.1 + 8 .5 * — 16.0 — 7 .4 — 13.1 — 35.1 — 2 2.5 — 2 1.8 — 3 6.2 — 34.9 Stock end of month — 11.2 — 32^4 — 17.8* — 43.8 + 1 5 .8 — 8 .7 — 2 8.2 — 3 4.6 — 15.8 Per cent of accounts outstanding February 28 collected in M arch 1930 1931 75.1 4 1.1 32.1 4 7 .8 37.1 34.4 4 6 .4 7 6.9 4 3 .0 34.1 4 9 .3 4 0.1 4 6 .6 4 2 .2 7 4 ’.8 6 4 .6 }2 6 .4 74*.i 55.1 }l9 .8 51.1 52 .3 * Quantity not value. Reported b y Silk Association of America ** Reported b y the National Machine T ool Builders Association ChainStoreTrade TheMarchsalesof*reportingchainstoresinthisdis trict were 3.6 per cent smaller than in March 1930, indicatinglittle change in general fromconditions in February. Thedecreasesinthesalesofshoesandcandy were considerably smaller thaninFebruary, probably reflecting Easter buying inMarchthis year, and the declinesinthesalesof tencentandvarietychainswere slightlysmaller thaninFebruary. Drug andgrocery chain store organizations, however, reported slightly largerdecreasesinsalescomparedwithayearprevious thaninFebruary. All types of chains continuedtoshowsmaller sales perstorethanayear agowiththeexceptionof candy, whichshowedaslight increase, dueinparttoareduc tioninthenumberofstoresoperated, andinparttothe earlydateof Easterthisyear. Percentage change March 1931 compared with March 1930 T ype of store Number of stores T otal sales Sales per store + 5 .0 + 3 .8 — 3 .0 + 1 1 .5 + 7 .6 — 2 .4 — 0 .7 — 2 .1 — 14.2 — 6 .8 — 7 .1 — 1 .6 — 5 .5 — 5 .6 — 1 1.5 — 1 6.4 — 13.7 + 0 .8 + 4 .9 — 3 .6 — 8 .1 FEDERAL RESERVE BANK OF NEW YORK MONTHLY REVIEW, M AY 1, 1931 PERCENT B u s in e s s C o n d i t i o n s in th e U n ite d S ta te s (S u m m a rized b y the F e d e r a l R eserv e B o a r d ) U R T H E R in crease in in d u s tria l a c t iv it y w as r ep orted f o r the m on th o f M arch , w h ich u su ally show s little ch a n g e fr o m F e b r u a r y . F a c to r y em p lo y m ent an d p a y rolls in creased b y the u su al season al am oun t b etw een the m id d le o f F e b r u a r y an d the m id d le o f M a rch . T h e v olu m e o f b u ild in g con tra cts aw a rd ed in M a rch sh ow ed c o n sid era b le g row th , la r g e ly o f a seasonal natu re. T h e g en era l lev el o f w h olesale p rice s c o n tin u ed to d eclin e. F P r o d u c t io n Index N u m ber o f Production o f M an u factu res and M inerals Com bined, A d ju ste d for Seasonal V ariation s ( 1 9 2 3 - 2 5 average = 1 0 0 per cen t) Federal R eserve B oard’ s Index o f F a ctory E m p lo ym en t w ith A d ju s tm e n t for Seasonal Variation ( 1 9 2 3 - 2 5 average = 1 0 0 per cen t) and E m ploym ent In d u s tr ia l p ro d u c tio n in crea sed 2 p er cen t fu rth e r in M a rch an d the F e d e r a l R eserve B o a r d *s season ally a d ju s te d in d e x stood at 88 p er cen t o f the 19 23-1925 a v era g e, com p a red w ith 104 p er cen t in M a rch 1930. T h ere w as a c on sid era b le in crease in d a ily a v era g e ou tp u t o f steel, w h ich o r d in a r ily show s litt le ch a n g e fr o m F e b r u a r y to M a rch , w h ile p ro d u c tio n o f a u tom ob iles in creased b y a b o u t the usual seasonal p e rcen ta g e. A c t iv it y at c o tto n m ills in creased slig h tly , c o n tra ry to the o r d in a r y seasonal m ovem ent, an d th ere w as a su b sta n tia l in crease in ou tp u t o f shoes. I n the first h a lf o f A p r il steel m ill a c tiv ity d eclin ed . T h e n u m b er o f m en em p loy ed a t fa c t o r ie s in creased betw een the m id d le o f F e b r u a r y an d the m id d le o f M a rch b y a b o u t the u su al season al am oun t. In the ir o n an d steel an d a u tom ob ile in d u stries som ew hat la r g e r than usual in creases w ere sh ow n an d at te x tile m ills an d sh oe fa cto r ie s , w here the num ber em p loy ed o r d in a r ily d eclin es in M a rch , su b sta n tia l in creases in em p loy m en t w ere r ep orted . I n the a g r icu ltu r a l m a ch in ery an d p etroleu m refin in g in d u stries and at car b u ild in g shops, em p loy m en t d eclin ed co n tra ry to the usual seasonal tren d, an d in the au tom ob ile tire an d fe r t iliz e r in d u stries em p loy m en t in crea sed less than usual. V o lu m e o f b u ild in g c o n tra cts a w a rd ed in M a rch in crea sed con sid e r a b ly fr o m F e b r u a r y , a c c o rd in g to the F . W . D o d g e C orp ora tion , r e fle c tin g in la rg e p a r t d evelop m en ts o f a season al ch a ra cter. C on tracts f o r resid en tia l b u ild in g in creased sea son a lly an d w ere in a b o u t the sam e volu m e as a y e a r a g o, w h ile c on tra cts f o r p u b lic w ork s an d u tilitie s ro se to the h ig h lev el o f M a rch 1930. A g r ic u l t u r e D efin ite im p rov em en t in m oistu re c o n d itio n s in th e d rou g h t area w as an im p orta n t d evelop m en t in M a rch an d the first w eek o f A p r i l ; su p p lies o f m oistu re in th e to p s o il have b een rep len ish ed , b u t th e su b so il con tin u ed to b e d ry in ce rta in areas, p a r tic u la rly in the s p r in g w h eat b e lt. D ep a rtm en t o f A g ric u ltu r e estim ates, ba sed on A p r il 1 co n d itio n s, in d ic a te a w in ter w h eat crop o f 644,000,000 bushels, a b o u t 10 0,00 0,00 0 bu shels la r g e r th an the five-year a v era g e an d 40 ,000,000 m ore th an la st y ea r. In te n tio n s to p lan t, as rep orted M a rch 1, in d ica te a con sid era b le re d u ctio n in s p r in g w h eat acreag e, an d an in crease in a crea g e to b e p la n ted to corn . D is t r ib u t io n V o lu m e o f fr e ig h t -c a r lo a d in g s in crea sed sea son a lly in M a rch an d d e p a rt m ent store sales in creased d u rin g the E a ste r season b y a b o u t the usual am oun t. P W h o le sa le P rice Indexes o f th e U n ited S tates Bureau o f Labor S ta tis tic s ( 1 9 2 6 ave r a g e s 1 0 0 per cen t) r ic e s T he g en era l lev el o f w h olesale c o m m o d ity p rice s con tin u ed to d eclin e in M arch , a c c o r d in g to the B u rea u o f L a b o r S ta tistics, re fle c tin g ch ie fly r e d u c tion s in the p rices o f p etroleu m p ro d u cts, bitu m in ou s coa l, an d te x tile p rod u cts. P ric e s o f fa r m p ro d u cts in crea sed s lig h tly an d th ere w as a su b sta n tia l ad v an ce in the p ric e o f h id es. I n the first h a lf o f A p r il p ric e s o f m a n y com m od ities, in c lu d in g ca ttle, c o tton , ru b b er, an d c o ffe e , d eclin ed , w h ile th e p ric e o f w h eat a d v an ced . B a n k C r e d it M on th ly A v e ra g e s o f W e e k ly F igu res for R eporting M em ber B an k s in Leading C ities (L a t e s t figures are averages o f first three w eeks o f A p r il) L oa n s an d investm ents o f m em ber ba n k s in le a d in g cities, w h ich had in creased in the m id d le o f M a rch as the resu lt o f T re a su ry op era tion s, sh ow ed a d eclin e f o r ev ery w eek b etw een M a rch 18 an d A p r il 8, b u t on the la tter d ate w ere s till $270,000,000 la r g e r th a n fo u r w eeks earlier. In v estm en t h o ld in g s o f these banks w ere at a new h ig h fig u re on A p r il 8, ow in g la r g e ly to an in crease in th eir h old in g s o f U n ite d S ta tes G overn m en t o b lig a tio n s, w h ile loan s on secu rities as w e ll as a ll oth er loa n s sh ow ed a d eclin e f o r th e fo u r-w e e k p e rio d . V olu m e o f R eserve B a n k c re d it has flu ctu a ted since the m id d le o f F e b r u a ry arou n d a lev el o f $9 25,0 00,0 00. C on tin u ed im p orts o f g o ld , d e p o site d b y m em ber banks w ith the R eserve B an k s, have p ro v id e d the m em ber ba n ks w ith su fficient fu n d s to m eet an in crea se in the d em a n d f o r cu rren cy. U n ite d S tates G overnm ent se cu rity h o ld in g s o f the R eserv e B an k s have rem a in ed a t the lev el o f $6 00,000,000 establish ed la st sum m er, w h ile d iscou n ts f o r m em ber banks have co n tin u e d to d eclin e an d h o ld in g s o f p u rch ased a ccep ta n ces have flu c tu a ted in resp on se to te m p o ra ry ch an g es in the d em and fo r R eserv e B a n k cre d it. M o n e y rates sh ow ed little ch a n g e fr o m the m id d le o f M a rch t o the m id d le o f A p r il. R a tes on com m ercia l p a p er d eclin e d fu rth e r fr o m a p r e v a ilin g ra te o f 2V2 p er cen t to a ra n g e o f 2 ^ 4 -2 % p er cent, w h ile b o n d y ie ld s in creased slig h tly .
@FedFRASER