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M O N T H LY REVIEW O f Credit and Business Conditions F E D E R A L R E S E R V E V ol. 26 M AY M O N E Y B A N K 1, N E W Y O R K 1944 M A R K E T As a result of the Treasury Department’s deferment, from O F IN No. 5 A P R IL Reserve Bank holdings of Government securities, principally March 15 to April 15, of the deadline for filing estimated in accounted for by net purchases of Treasury bills. come tax returns against 1944 incomes, more than $1,500,000,- factors were roughly offset by a rise of $500,000,000 in reserve 000 of income tax collections were shifted from March into requirements and losses of $360,000,000 in reserve balances through enlarged currency circulation and $235,000,000 April. These funds, together with other tax receipts and the unusually large volume of Treasury deposits with the Federal Reserve Banks which had been accumulated toward the end These through gold and foreign account operations. G row th of M e m b e r B a n k D e p o sit s of March, met roughly half of the Government’s expenditures In the April 1 issue of this Review, it was pointed out that during April. The balance of the Treasury’s cash require ments were met by withdrawals of $4,300,000,000 from member bank reserve requirements over the past year have War Loan deposit accounts with commercial banks. ject to reserve requirements. There been rising at a somewhat slower rate than their deposits sub For example, between May 1943 still remained in these accounts, at the end of April, about and February 1944— two months which are more or less com $10,500,000,000, mainly representing unexpended proceeds of the Fourth War Loan. These funds will be available to meet parable from the standpoint of the timing of the War Loan the excess of expenditures over tax receipts until proceeds banks rose 10.4 per cent while reserve requirements were from the Fifth War Loan, scheduled for June 12-July 8, begin to come in. M e m b e r B a n k R e serve P o s it io n s During April the central reserve New York City banks drives— total net demand plus time deposits of all meiiiber enlarged 8.7 per cent. This difference is explained by the geographic distribution of the expansion in net demand de posits and the relatively faster increase in time deposits than in demand deposits. The accompanying chart, showing the gained a considerable volume of reserves through an inflow relative growth in member bank deposits in New York, Chi of funds from other sections of the country; deposit balances cago, reserve city and ’ country” banks, provides a basis for further analysis of the rise in deposits and reserve requirements. of out-of-town banks with their New York correspondents were increased about $50,000,000, and at the same time there was a $350,000,000 influx of other commercial and financial funds. Reserves gained through these channels, however, were roughly offset by a rise in required reserves and losses of re serve balances from increased currency circulation, gold and foreign account operations, and net Treasury receipts. Reflect ing a rough balancing of gains and losses to their reserve positions, the Government security holdings of the New York City banks showed little net change for the month. As the chart illustrates, the m ost rapid growth in demand deposits has occurred at ’ country” banks, whose reserve require ments against net demand deposits are 14 per cent, compared with 20 per cent for reserve city and central reserve city member banks. As a matter of fact, taking account of the wave-like fluctuations associated with the periodic War Loan drives and measuring from one post-drive low point to the next, net demand deposits with the central reserve city banks of New York and Chicago have risen very little, while those Excess reserves of all member banks, which had temporarily of the reserve city banks have expanded only about half as dipped to about $600,000,000 on March 29, fluctuated for the fast, in percentage terms, as those of the "country” banks. most part between $900,000,000 and $1,000,000,000 during For more than a year the rate of increase in time deposits, most of April, but again dropped down to around $600,000,000 against which reserve requirements are only 6 per cent (as on April 26. compared with 14 and 20 per cent against net demand depos The principal influences tending to enlarge the volume of excess reserves over the four weeks ended April 26 its), has been perceptibly greater than the over-all rise in net were a net reduction in Treasury deposits with the Federal Re demand deposits, thus tending somewhat to check the growth serve Banks, from $753,000,000 on March 29 to $373,000,000 of reserve requirements in relationship to the expansion in on April 26, and an increase of $701,000,000 in Federal total deposits. All classes of member banks have experienced M O N T H L Y R E V I E W , M A Y 1, 1944 34 N et Demand Deposits and Time Deposits of All Member Banks, by Reserve Classification of Banks, December 1942-March 1944* (Monthly averages of daily figures. In billions of dollars.) CENTRAL R E S E R V E M .V C . 8 A N K S C E N T R A L RESERVE C H iC A G O B A N K S RESERVE C IT Y B A N K S COUNTRY BANKS NET DEMAND DEPOSITS drive, adjusted demand deposits of the New York City banks have been rebuilt about as rapidly as they were in the nineweek period following the Third War Loan drive. In the 100 other centers, however, such deposits have expanded only 1.5 billion dollars since the Fourth drive, compared with an increase of 2.4 billion dollars after the Third. S E C U R IT Y M A R K E TS Activity in the Government security market during April was characterized largely by portfolio adjustments, in some cases in anticipation of the Fifth War Loan drive scheduled to open June 12. The announcement on April 3 of the securi ties to be sold during the Fifth War Loan drive was well received by the market and resulted in an improved demand for certificates of indebtedness, notes, and taxable bonds. In the following week, the firmer tone was broadened to include partially tax-exempt bonds, yields on which had tended to rise * From F ed eral R eserve Bulletin. Plotted on ratio scale to show proportion ate changes. t Adjusted to exclude W ar Loan account deposits. somewhat in March. During the latter part of April, however, yields on tax-exempt bonds again rose, and the demand for taxable bonds contracted. substantial increases in their time deposits since the begin Interest in Treasury bonds centered chiefly in the taxable ning of 1943, in contrast to 1942 when these deposits increased issues callable within six years, in the 2 V4 per cent bonds of less than 3 per cent. 1956-59 sold during the Fourth drive, and in the intermediate partially tax-exempt issues, and yields on these bonds showed M EM B ER B A N K CREDIT net declines during April. Both loans and investments of the weekly reporting member On the other hand, yields on many of the longer term taxable and tax-exempt bonds were un banks in 101 cities showed a further net decline during the changed or showed increases for the month. four-week period from March 22 through April 19. Demand for taxable Treasury notes and certificates of indebt edness resulted in lower yields, while yields on tax-exempt Although Government security holdings of the New York City banks increased 117 million dollars, the rise was not sufficient to notes tended to rise. offset a net decline in the holdings of member banks in 100 cities outside New York. This decline amounted to 336 million dollars, the decrease being due almost entirely to the sale of Treasury bills to the Reserve Banks. Small net sales were exchanged for a maturing issue on April 1, were selling of certificates of indebtedness and Treasury notes were about offset by purchases of Treasury bonds and guaranteed issues. In New York City, the increase resulted from purchases of Treasury bills (107 million dollars) and certificates of indebt Certificates due April 1, 1945, which to yield 0.79 per cent by the end of the month; the certificates due May 1, 1945, to be issued in exchange for another matur ing issue on May 1, were also selling to yield 0.79 per cent, when issued. The volume of trading on the New York Stock Exchange edness (135 million dollars), which exceeded sales of Treasury was light during April, and Standard and Poors 90-stock price index showed a slight net decline for the month. At the end of April, the index was about 4 per cent below the 1944 high, notes, bonds, and guaranteed obligations. attained around the middle of March. Member banks in both New York and 100 other cities re Corporation bond prices rose slightly during April, in a ported a decline in total loans for the four-week period, due quiet market. in part to the continued liquidation of loans made during the Gains were registered by industrial and rail road bonds, especially the medium and lower grade issues, Fourth War Loan drive for purchasing or carrying Govern although there was some recession toward the end of the ment securities, and in part to a decrease in commercial, indus month. trial, and agricultural loans. On April 19, loans on Govern per cent on March 31 to 3.66 per cent on April 29, establishing ment securities to brokers and dealers by the reporting banks a new low for the index for the fourth successive month; the Moody’s index of Baa bond yields declined from 3.70 were 138 million dollars less than on January 5, before the index of Aaa bond yields declined from 2.74 per cent to 2.73 increase in dealers’ borrowing in connection with the Fourth per cent. War Loan, but loans on such securities to other borrowers rose from 1.83 per cent on March 29 to 1.88 per cent on April remained 95 million dollars higher than on January 5. 26. This marks the first month since December that the index In the nine weeks since the close of the Fourth War Loan Standard and Poor’s index of municipal bond yields has registered an advance. 35 FEDERAL RESERVE BANK OF NEW YORK RETAIL CREDIT SURVEY FOR 1943 This bank, as part of a Federal Reserve System project, recently completed a survey for 1943 of retail credit sales and accounts receivable in the Second Federal Reserve District.1 Between 250 and 300 retail merchants in the District partici Chart II Percentage Distribution of Sales, 1942 and 1943, by Type of SaJe, for Various Classes of Stores Covered in the Retail Credit Survey, Second Federal Reserve District pated in the survey and made available comparative figures SECOND CHARGE A C C O U N T % ////\ IN S T A L M E N T D IS T R IC T for 1942 and 1943 on cash and credit sales and a number of D E P A R T M E N T STO RES balance sheet items. As indicated in the chart below (Chart I ), total sales volumes expanded between 1942 and 1943 for most retail lines in the District. The largest increases were experienced by jewelry stores (29 per cent) and women’s specialty shops (25 per cent), reflecting increased demands, advanced prices, and the shifting of consumer purchases to higher-grade mer chandise. M E N ’ S C L O T H IN G STO RES W O M E N ’ S S P E C IA L T Y STO RES A U T O M O B IL E D E A L E R S a A U T O M O T IV E S T O R E S H O U S E H O L D A P P L IA N C E STORES F U E L DEALERS Sales of automobile dealers and automotive supply stores rose 14 per cent, following a sharp decline in 1942; the increase probably stemmed in considerable part from enlarged maintenance expenditures on cars and from sales of non HARDW ARE STO RES F U R N IT U R E S T O R E S JEW ELRY STORES automotive classes of merchandise which had been taken on by merchants in this field. On the other hand, for household appliance stores, and lumber and building material dealers, L U M B E R 8. B U IL D IN G M A T E R IA L D E A L E R S M IL K m m w M rn m m DEALERS where production cuts and restrictions on supplies had been 20% 40% 60% 80% imposed later and more gradually than in the case of automobiles, sales volumes dropped 28 and 18 per cent, respec 1 The annual Retail Credit Survey, formerly conducted by the Bureau of Foreign and Domestic Commerce of the Department of Commerce, was transferred to the Federal Reserve System in 1942 as part of a program of centralizing the collection and analysis of con sumer credit statistics. An analysis of the results of the first Survey conducted by the Federal Reserve System, that for 1942, was published by the Board of Governors in July 1943. Chart I Percentage Changes, 1942 to 1943, in Sales and Accounts Receivable, for Stores Covered in the Retail Credit Survey, by Type of Business, Second Federal Reserve District* TOTAL SA LES T SECOND DISTRICT C H A R G E ACCOUNT R E C E IV A B L E S —1 I--- 1---1---1--- 1 IN STA LM EN T R E C E IV A B L E S greater than a year earlier. The proportion of credit sales to total sales, which had dropped sharply in 1942, decreased further in most lines last year (Chart II). The chief influences behind the relative contraction in credit sales have been restrictions on the pro duction of many classes of consumer goods, especially the more durable types sold extensively on credit; consumer credit regu individual incomes. Both charge account and instalment credit sales have been affected by these influences. Changes between December 31, 1942 and December 31, 1943 in accounts receivable reflect differences in sales experi wm ence in various lines, shifts (mostly reductions) in the pro MILK DEALERS MEN’S CLOTHING STORES Sales of many hardware and furniture stores also.Re lations, first imposed in the autumn of 1941; and enlarged JEWELRY STORES WOMEN’S SPECIALTY STORES AUTOMOBILE DEALERS & AUTOMOTIVE STORES tively. clined in 1943, while department store sales were 7 per cent portions of credit business, and changes (generally increases) j;'/;.':?:*»5 j in rates of collections against receivables. As indicated in Chart I, women’s specialty shops showed considerable increases DEPARTMENT STORES FUEL DEALERS in receivables as well as in sales, but the increases in receiv FURNITURE STORES ables were less marked than in the case of sales. m mm HARDWARE STORES LUMBER & BUILDING MATERIAL DEALERS HOUSEHOLD APPLIANCE STORES PERCENT group declined, but charge accounts increased, indicating a tt O + 20 +40 - 4 0 - 2 0 0 +20 + 4 0 -0 0 - 6 0 - 4 0 - 2 0 0 + 20 * Sales figures are based on annual totals; accounts receivable, on end of year data, t No change. J No instalment sales. $$ Percentage withheld to avoid disclosure of operations of individual dealers. shift from the instalment to the charge account type of credit business. - 4 0 -2 0 Instalment accounts outstanding of jewelry stores and of the automotive For department stores and the other groups experi encing sales growth of less than 10 per cent, receivables gen erally declined. Where 1943 sales fell below 1942 levels receivables also dropped^— in every case more than sales. The data supplied by the stores covered in the survey indi 36 MONTHLY REVIEW, MAY 1, 1944 Sales and Current Assets and Liabilities, 1942 and 1943, for Stores Covered in the Retail Credit Survey, Second Federal Reserve District* cate that the largest increases in retail sales, between 1942 and, 1943, occurred in Binghamton, Buffalo, and Syracuse. Two cities, Bridgeport and Newark, showed small decreases. In millions of dollars The rise in New York City was roughly comparable to the increase for the remainder of the Federal Reserve District taken as a whole. Percentage change, 1942 to 1943 1943 1942 Instalment credit receivables declined in Sales each of the 11 cities covered— the decreases ranging from 13 per cent in New York to 51 per cent in Elmira. Charge account receivables, on the other hand, rose in 4 cities and 702.9 392.2 237.1 73.6 Total salest................................................ Charge account.................................... Instalment............................................. declined in the remaining 7. C u r r e n t A ssets 757.4 453.4 234.7 69.3 + 8 +16 - I - 6 Current assets and liabilities and L ia b il it ie s In the light of the important changes that are occurring in balance sheet positions of business over the war period, fig ures on additional current asset items (supplementing the data which have been collected regularly on receivables) and Total accounts receivablef.................... Charge account.................................... Instalment............................................. Cash on hand and in banks*................. Marketable securitiesj............................ Inventories, at costj................................ 85.6 47.7 37.9 35.8 24.4 75.5 Notes payable to bankst........................ Other current liabilities^........................ 5 .6 46.1 i 79.1 47.9 31.2 50.8 35.2 71.9 4 .3 50.7 - j 8 0 -1 8 +42 +44 - 5 1 -2 3 + io j on current liabilities were collected for the first time in con junction with the Retail Credit Survey for 1943. For the reporting retailers in the Second Federal Reserve * Sales figures are annual totals; other figures are end of year data, f Based on reports for 274 stores. t Based on reports for 214 stores. District, current liabilities generally increased during 1943— Lim it a t io n s apparently the result of an enlargement in tax reserves which more than counterbalanced reductions in borrowing from banks. Current assets rose even more than current liabilities, of the D ata In making use of the results of the Retail Credit Survey, it must be borne in mind that the figures are based entirely upon through growth in resources held to meet tax liabilities, the records of credit-granting stores, and for this reason the accumulations of undisbursed depreciation funds, and reten proportions of cash sales tend to be understated and biases tion of earnings in the business. may arise from divergent trends between credit-granting stores The entire gain in current assets went into cash on hand and in banks, and into market and stores operating solely on a cash basis. able security holdings; in addition, there was some conversion ing, the coverages of larger department, womens apparel, Generally speak of accounts receivable and inventories into these liquid forms. and furniture stores are the most satisfactory; department Changes of this kind in the balance sheet positions of stores embraced in the survey are estimated to account for retail merchants are symptomatic of changes which have been about 70 per cent of total department store sales in the Second occurring in the balance sheet positions of individuals and of business generally over the war period— especially the rapid accumulation of liquid assets, in the shape of currency, bank Federal Reserve District, the furniture store coverage is esti mated at 25 per cent, and the womens apparel store coverage at 20-25 per cent. For the other classes of stores, the compila deposits, and Government securities; the using up of physical tions are based upon small samples. assets; and the reduction of indebtedness. In these develop these cases appear to be reasonable and to fit into a general ments there is the making both for a firm credit basis in the pattern, they are necessarily subject to considerable margins postwar period and for needs to make capital outlays. of error. T H E W O R K IN G P O P U L A T IO N O F N E W Y O R K While the results in C IT Y An analysis of the working population of New York City large industrial centers of the country so that radical changes provides a useful background for an understanding of the in the occupational structure of the City after the war are not problems that will arise in relation to postwar adjustments presently in prospect. arid developments. A survey of the long term changes in the Lo n g T e r m T r e n d s occupational structure of the City's resident population, re The accompanying table, based on Census data, reveals vealing the major shifts that have occurred over a period of clearly the major shifts that have occurred since 1890 in New years, and a detailed study of the occupational distribution York City’s resident working population. before the economy was affected by the war, afford particu comparable data for the fifty year period, the 1940 classifica larly effective means for determining the broad economic basis tions published by the Census were regrouped to conform to of the City’s livelihood. While many aspects of the economic the tabulations of the earlier years. In order to obtain Over the fifty years, life of the City have been affected by wartime developments, the proportion engaged in transportation, communications, and thtse developments have been less important than in other trade ( including banking, brokerage, and other financial activi- FEDERAL RESERVE BANK OF NEW YORK Percentage Distribution of New York City Residents Gainfully Occupied, 1890-1940* 37 proper represented 27.0 per cent, and of this number only two thirds were factory operatives. Group 1890 Manufacturing and mechanical industries................................ Transportation, communica tion, and trade...................... Clerical occupations................. Domestic and personal services .................................... Professional services................. Government............................... Agriculture and mining........... 1900 1910 1920 1930 1940 39.2 37.6 40.6 37.6 32.0 28.6 29.2 32.0 f j 26.2 t 24.7 10.9 25.0 15.9 26.7 16.8 33.6 17.0 24.0 15.5 5.9 1.9 0 .5 12.1 6 .7 2 .4 0 .3 14.1 8 .0 2 .2 0 .2 9 .9 8.1 2 .6 0 .2 I 49 0 .5 5 .7 0 .7 The remaining one third held clerical or similar jobs connected with manufacturing, which is an unusually high proportion. This is due to the fact that administrative offices of many concerns, which have manufacturing plants located throughout the United States, are in New York City. Trade absorbed nearly the same per centage of the total working population as in other cities, while the proportion of employed residents engaged in finance, * Based on data from U. S. Bureau of the Census, Census of the United States, 1890-1940, Population. Data of the 1940 Census were reclassified to conform to the tabulations of the previous censuses. insurance, and real estate was almost twice as high as else where. With the exception of domestic service, employment ties) increased without interruption, and in 1940 this group in the various service industries was relatively larger in New was the largest of all the occupational groups. Clerical employ York City than in other urban areas. ment, the third largest group, increased substantially from 1910 through 1940, while the percentage for the domestic and per P r i n c i p a l So u r c e s of Em p l o y m e n t In 1940 New York City’s 2,300,000 private wage and salary sonal service group dropped irregularly and in 1940 was more earners were employed in as many as 300,000 different estab than one-third lower than in 1910. A decrease in the percent lishments of which only about 75,000 had more than 4 em age of residents of New York City who are employed in a particular industry does not necessarily mean that the industry ployees. is declining. dominance of trade and service industries, and partly to the For example, a decreasing percentage of bank The number of workers per establishment averaged less than 8. This small number was due partly to the pre employees recorded by the Census of Population can mean prevalence of small manufacturing establishments. either that fewer jobs are available in that industry, that em ber of jobs offered by the large public utility companies and The num ployment in banks has grown less rapidly than total employ railroads was greater than employment in the largest units of ment, or that the number of bank employees who have taken the manufacturing industry. up residence in suburban counties has increased. system employed in 1940 about the same number of people No data on the total working population including com The City-owned rapid transit as the combined manufacturing establishments of the City with muters, as contrasted with the occupations of the resident 1,000 or more employees. population analyzed in the table, are available. employment could also be found among banks, insurance com- On the basis of incomplete data it might be estimated that on or about April 1, 1940 between 3,200,000 and 3,300,000 persons were gainfully employed in New York City, compared with about Establishments with large unit Distribution of Employed Residents of New York City, by Industries, as of April 1, 1940* A G R IC U LTU R E & MINING 2,800,000 gainfully employed residents. O c c u p a t i o n a l St r u c t u r e Po p u l a t io n in of R e s id e n t 1940 The distribution, by industry, of the 2,839,000 residents of New York City who were employed on April 1, 1940 is shown on the accompanying chart. The percentage distributions shown on the chart are based on classifications from the 1940 Census and are somewhat different from those presented in the table. The major difference is that the 1940 Census allocated clerical workers to the industries in which they were employed, whereas previous Censuses classified in one group the clerical workers of all industries. The predominance of occupations not directly connected with the production of commodities and usually designated as service functions characterizes the economic structure of this City. In 1940 less than one third of the City’s residents were engaged in production (manufacturing, mining, construction, and agriculture), compared with 37.3 per cent in all other urban areas of the country. Those engaged in manufacturing * Based on data from U. S. Bureau of the Census, Census of the United States, 1940, Population. M O N T H L Y R E V I E W , M A Y 1, 1944 38 panies, administrative offices of corporations, department stores, hotels, and hospitals. minerals and metals, however, increased during the first quarter of 1944. Daily average coal production was 11 per cent greater than in the preceding three months, when mine O u tlook A rather reasonable assumption is that after the postwar period of reconversion and readjustment the pattern of em ployment in New York City may be much the same as in the operations were hindered by strikes. Steel production rose about 2 per cent, and other metals, such as pig iron* copper, lead, and zinc, also registered gains. It does not appear likely that the trends Department store sales for the country as a whole increased which have been operating since the beginning of the century about 7 per cent during the quarter, after adjustment for will be reversed. seasonal changes; sales in March were large as a result of the years before the war. New York City will probably remain the The activity early date of Easter and because of expanded consumer buying of thousands of manufacturing, mining, and trade establish in anticipation of an increase in Federal excise taxes on April financial and wholesaling center of the country. ments throughout the United States will be directed from 1. administrative offices located in the City. quarter, grocery chains 3 per cent, and mail order house sales New Yorks impor tance in the nation’s publishing and advertising business may Sales of variety chains rose about 5 per cent during the approximately 9 per cent. Its manufacturing industries will Despite the falling off in industrial activity in the first three probably continue to show less wide fluctuations than those of the country generally. When war production is discontinued, months of 1944, income payments to individuals were esti mated at an annual rate of 154 billion dollars, compared with the City will no doubt again employ twice as many people at 148 billion dollars in the preceding quarter. be expected to continue. New York City’s Preliminary data for the first three weeks of April indicate prosperity will again depend more on economic conditions in that electric power production was down one per cent from the March level; except for a brief decline last December, the desks and sales counters as in factories. the country at large than on the volume of production of its seasonally adjusted index of electric power output had ad own manufacturing establishments. vanced steadily during the two years since March 1942. BUSINESS A C T IV IT Y IN RECE N T M ON THS Some reduction in bituminous coal production is also indicated for Activity in many industries manufacturing war materials the first half of April. Steel production for the month is has been somewhat lower in the past few months than in estimated at an all time high of about 254,000 tons daily, the final quarter of 1943. with operations during the last week of the month reaching Change-overs in production from one type of war goods to another, and difficulties in securing 100 per cent of the industry’s estimated capacity. an adequate supply of manpower in some areas, have pre department stores declined following the March buying rush. vented many industries from maintaining the high rate of output reached late last year. materials and facilities released by cutbacks are being shifted to other types of war goods, in so far as possible. Production for civilian use continues to be restricted, although the restric tions have been relaxed for a few items such as electric irons, typewriters, tires, farm machinery, and railroad equipment. The Federal Reserve index of industrial production (sea sonally adjusted) was 243 per cent of the 1935-39 average in January, 244 in February, and 242 in March, compared with last fall’s high figure of 247. Among the individual indus tries in which production decreased in the first quarter were the chemical and transportation equipment industries. Cut backs in the manufacture of small arms ammunition and explosives were primarily responsible for the decline in chem ical production. Reduced activity in shipbuilding, as com mercial yards converted from Liberty ships to Victory or other type vessels, and a decrease in the production of heavy trucks, caused the decline in transportation equipment indus tries. Output of lumber and of cement also was smaller than In the final quarter of last year. Indexes of Business In a few cases, cutbacks in the munitions program have brought about reductions in output of a particular commodity; in such cases, however, critical Production of most Sales of 1943 1944 Index Industrial production*, 1935-39 = 100. . . (Board o f Governors, Federal Reserve System) Munitions output, Nov. 1941 =* 100........... (W ar Production Board) Electric power output*, 1935-39 = 100. . . (Federal Reserve Bank o f New York) Ton-miles of railway freight*, 1935-39 =100 (Federal Reserve Bank o f New York) Sales of all retail stores*, 1935-39 = 100 . . (Department o f Commerce) Factory employment United States, 1939 =* 100........................ (Bureau of Labor Statistics) New York State, 1935-39 = 100............. (New York State Dept, o f Labor) Factory payrolls United States, 1939 = 100........................ *(Bureau o f Labor Statistics) New York State, 1935—39 = 100............. (New York State Dept, o f Labor) Income payments*, 1935—39 = 100............. (Department of Commerce) Wage rates, 1926 = 100................................. (Federal Reserve Bank of New York) Cost of living, 1935—39 = 100...................... (Bureau o f Labor Statistics) Velocity of demand deposits*, 1935-39 =100 (Federal Reserve Bank o f New York) New York C ity ............................................. Outside New York City. ............................ * Adjusted for seasonal variation. Mar. Jan. Feb. Mar. 235 243 244 242p 518 647 643 660p 181 200 201 202p 226 235 237p 161 178 177 p 168 167 166 164p 161 158 157 155p 305 328 328p 286 300 300 206 226 230p 149 160 160p 123 124 124 124p 74 81 88 87 79 82 63r 78 p Preliminary. r Revised 299p 39 FEDERAL RESERVE BANK OF NEW YORK W A R SU PPLY A N D F A C IL IT Y C O NTRA C TS, SECOND FE D E R A L Reports of the War Production Board reveal the part that Second Federal Reserve District industries are playing in the war program. War supply and facility contract awards within the District, as reported to the War Production Board between June 1940 and the early months of 1944, amounted to about 27.8 billion dollars— about 15 per cent of total awards in the United States. Supply contracts, consisting of aircraft, ships, ordnance, and other war products, amounted to 25.7 billion dollars, or 93 per cent of all Second District contracts; the remainder were facility contracts for industrial and military projects. The proportion of total supply contracts let in the District through February 1944 to supply contracts awarded throughout the nation during the same period was 17 per cent. This figure closely approaches the prewar proportion (18 per cent) of the value of products of manufacturing industries in the District to the value of products of manufacturing industries in the continental United States, as reported in the 1939 Census of Manufactures. The value of supply contracts placed in the Second District, from the launching of the national defense R ESER VE D IS T R IC T by the end of 1942, facility awards over the past year have been minor. Of the District’s eleven major industrial areas in which war supply and facility contracts are concentrated, NewarkJersey City, New York City, and Buffalo are the areas that received the largest share of war work. Their proportion of total contracts awarded in the Second District amounted to 33 per cent, 19 per cent, and 12 per cent, respectively. The distribution of war contracts among various areas in the Sec ond District is shown in the accompanying table. The air craft contracts placed in the Newark-Jersey City, Buffalo, and Nassau areas made up 85 per cent of all aircraft contracts let in the District. Four areas combined (New York City, Newark-Jersey City, Albany-Schenectady-Troy, and Bridge port) accounted for about 70 per cent of the ordnance con tracts, while more than 80 per cent of all contracts for ships in the District were placed in the Newark-Jersey City and New York City areas. The table also reveals the relative importance of the different types of contracts within each area. program in June 1940 up to the early part of 1944, was two The proportion of supply contracts received by certain areas and one-half times the value of the manufacturing products in the District was far in excess of the share of those areas in of the District in 1939. Reflecting to a considerable extent the influence of strategic trict. considerations in the location of new plants, camps, and other only 0.2 per cent of the District’s 1939 value of products, the 1939 total value of products of manufacture for the Dis Thus the Nassau County area, which had accounted for military installations, the Second Federal Reserve District’s received 9 per cent of the supply contracts, reflecting the share of facility contract awards has been much smaller than expansion of aircraft production in that area. its share of supply contracts— only 9 per cent of the national proportion of supply contracts awarded in the Albany- total in the case of awards for new industrial facilities and 4 Schenectady-Troy and per cent in the case of military facilities. larger than the share of each area in the 1939 total value of Facility contract Bridgeport Likewise, the areas was substantially awards for the country as a whole were of considerable impor products. tance during the early stages of the war program, but with supply contracts was 19 per cent in contrast to its 42 per cent On the other hand, New York City’s share of war the facilities part of the war program very largely completed share in the District’s 1939 value of products. Value of Major War Supply and Facility Contracts, United States and Second Federal Reserve District* (In millions of dollars) Facility contracts (Cumulative from June 1940 through January 1944) Supply contracts (Cumulative from June 1940 through February 1944) Area Totalf Totalf Aircraft Ships Ordnance All other Totalf Industrial Military Total United Stalest............................... 186,159 156,523 49,349 25,138 35,332 46,704 29,636 15,947 13,689 Second Federal Reserve District................................... 27,784 25,740 9,129 2,390 5,538 8,683 2,044 1,480 564 Albany-Schenectady-Troy................. Binghamton.......................................... Bridgeport............................................. Buffalo................................................... Dover..................................................... Nassau................................................... New York C ity.................................... Newark-Jersey C ity............................ Rochester.............................................. Syracuse................................................ Utica....................................................... Remainder of Second District.......... 1,924 434 1,738 3,406 138 2,433 5,225 9.067 933 632 300 1,553 1,849 406 1,689 3,120 123 2,314 4,818 8,588 897 558 238 1,141 86 250 759 2,247 § 2,165 187 3,391 3 7 § 34 83 1 23 107 1 16 571 1,392 28 73 1 93 765 62 650 304 50 30 1,593 935 449 222 129 348 916 93 256 462 73 102 2,467 2,869 417 256 107 666 75 28 49 286 15 120 407 480 36 74 62 412 43 28 49 282 10 111 317 379 36 58 22 146 32 __ § 4 5 9 90 101 __ 16 41 266 * Compiled from War Production Board, Summary of War Supply and Facility Contracts, B y State and Industrial Area, Cumulative through February 1944 (March 27 1944). The counties included in the various industrial areas (all of which are in New York State unless otherwise specified) are as follows: 1. Albany-Schenectady-Troy area: Albany, Rensselaer, Schenectady. 2. Binghamton area: Broome. 3, Bridgeport (Connecticut) area: Fairfield. 4. Buffalo area: Erie, Niagara. 5. Dover (New Jersey) area: Morris. 6. Nassau area: Nassau. 7. New York City area: Bronx, Kings, New York, Queens, Richmond, Westchester. 8. Newark-J ersey City (New Jersey) area: Bergen, Essex, Hudson, Middlesex, Passaic, Union. 9. Rochester area: Monroe. 10. Syracuse area: Cayuga, Onondaga. 11. Utica area: Oneida, t Because of rounding, the totals do not agree in all cases with the sum of individual items. I Includes also off continent contracts. § Less than $500,000. 40 MONTHLY REVIEW, MAY 1, 1944 EMPLOYMENT AND PAYROLLS index of department store sales exceeded by 3 per cent the During March total employment in nonagricultural estab lishments declined to 36.9 million persons, compared with 37.1 million in February, and 38.1 million in March 1943. A decrease, between February and March, of about 225,000 previous record figure attained in February 1943. The April index, however, was more than 10 per cent below the March peak, and approximately the same as in January and February of this year. workers in manufacturing industries, together with small re March sales for the seven departments affected by the higher ductions in construction and mining, more than offset increases taxes were 80 per cent greater than in March 1943; sales of in other industry divisions (Government, trade, finance, serv all other departments rose only 15 per cent. ice, and transportation and public utilities). (141 per cent) was reported for the fur department, followed Cutbacks in the The largest gain munitions program continue to be the main factor affecting by increases of 88 per cent for handbags, 84 per cent for employment in plants manufacturing small arms ammunition, liquor, and 73 per cent for jewelry. explosives, and machine tools. also of toilet articles, were up 62 per cent, and of luggage 30 Reductions have occurred also in plants producing aircraft, aircraft engines, and ships. For manufacturing industries as a whole, the number of workers employed has been declining since last November. Agricul per cent. Sales of silverware, and In spite of these substantial increases in sales, stocks of handbags, toilet articles, and jewelry at the close of March were about 25 per cent greater than a year earlier; liquor tural employment advanced less than is usual between March 1 stocks were up almost 5 per cent. and April 1, and the total number of workers on farms on April 1 was 2.5 per cent less than a year earlier. The West- furs, on the other hand, decreased approximately 10 per cent. South-Central region reported the largest decrease from last during March, and were the lowest since April 1943. year, due to unseasonable weather and scarcity of labor. The number of wage earners employed in New York State orders are now about four-fifths the dollar volume of stocks on factories was 1 per cent lower in March than in February, ages, actual or anticipated, led to a rapid rise in outstanding purchase commitments. according to the State Department of Labor; the decrease from the peak attained last November has amounted to 3.7 per cent. Cancellation of contracts and tightening up of military defer Silverware, luggage, and Outstanding orders of department stores again declined Such hand; the proportion was about one third in 1940, before short Department and Apparel Store Sales and Stocks, Second Federal Reserve District, Percentage Change from the Preceding Year ments were reported as responsible for the over-all decline in Net Sales war industries during March. The only industry group to show a substantial percentage increase was lumber and timber basic March 1944 products, but the apparel group showed a small net gain. Each summer of 1943. Payrolls reported to the State Department changed only slightly between February and March; the index Department stores, Second District. . . . New York City...................................... Northern New Jersey........................... Newark............................................... Westchester and Fairfield Counties. . Bridgeport.......................................... Lower Hudson River Valley............... Poughkeepsie..................................... Upper Hudson River Valley............... Albany................................................ Schenectady....................................... Central New York State..................... Mohawk River Valley...................... stood at 298.5 per cent of the 1935-39 average, a figure 0.4 per cent below February but 4.4 per cent above March 1943. Average weekly earnings were $47.59 in March, compared Northern New York State.................. Southern New York State.................. Binghamton....................................... Elmira................................................. Western New York State.................... reporting area in the State indicated that its total number of factory employees was smaller than in February, the declines ranging from 0.1 per cent for Buffalo to 3.0 per cent for Utica. For several areas, including Albany-Schenectady-Troy, Utica, Rochester, and Buffalo, there has been a steady drop since the with $44.08 a year ago. D E P A R T M E N T STORE T R AD E Stocks on hand Jan. through Mar. 31, 1944 March 1944 Locality Niagara Falls..................................... Rochester............................................ + 21 +23 +16 +15 + 7 + 4 +2 6 +23 +15 +18 + 11 +20 + 11 +12 +24 +17 +17 +20 + 16 +18 +24 + 13 +11 Apparel stores (chiefly New York City) +25 i| 1 ! i I ! ! +1 2 +1 4 + 4 + 4 + 3 - 4 + 15 + 7 + 9 + 1 - 1 - 4 - 8 + 19 + 17 + 4 +1 0 — 2 + 10 + 1 + 3 +1 4 + 10 + 3 + 3 + 5 + 6 + 8 - 1 + 4 + 1 + 4 + 19 + 3 — +28 — +22 __ + 10 + 9 + 7 +12 + 7 +2 6 Department store sales in the Second Federal Reserve Dis trict during March and April exceeded by approximately 10 Indexes of Department Store Sales and Stocks Second Federal Reserve District per cent sales during the corresponding two months of 1943. The increase was due almost entirely to higher sales in March; April sales differed little from those a year earlier. The large purchases in March resulted in part from the earlier Easter trade this year, but more largely from anticipation of the increased excise tax on certain commodities, effective April 1; the "beat-the-tax” buying gained momentum particularly in the final week of the month. The March seasonally adjusted 1944 1943 Item Mar. Jan. Feb. Mar. 1985-39 average —100 Sales (average daily), unadjusted................. Sales (average daily), seasonally adjusted . . 115 137 112 141 114 141 138 157 1928-25 average —100 Stocks, unadjusted........................................... Stocks, seasonally adjusted............................ 107 106 109 119 119 125 121 120 FEDERAL RESERVE BANK OF NEW YORK MONTHLY REVIEW, M AY 1, 1944 GeneralBusinessandFinancialConditionsintheUnitedStates (Summarized by the Board of Governors of the Federal Reserve System) I NDUSTRIAL activity declined slightly in March. Retail sales were maintained at an excep tionally high level and commodity prices were relatively stable. INDUSTRIAL PRODUCTION 1938 1939 1940 1941 1942 Index of Physical Volume of Industrial Produc tion, Adjusted for Seasonal Variation (1935-39 average= 1 0 0 per cent) Output of manufactures and minerals was slightly smaller in March than in the previous two months and the Board’s index of total industrial production declined 2 points to 242 per cent of the 1935-39 average. Steel production advanced somewhat further in March and the first three weeks of April. Output of lumber was maintained at the level of the first two months of the year and produc tion in the first quarter is indicated to be 3 per cent larger than in the first quarter of 1943. The number of aircraft delivered increased about 4 per cent above the level of the pre ceding 4 months to a new high of 9,118 planes. Deliveries of merchant ships continued to rise from the low January rate and in March were at approximately the level of a year ago. Output of other products in the machinery and transportation equipment industries declined somewhat in March. Output of nondurable manufactures, as measured by the Board’s index, declined about 1 per cent in March: This decline was due largely to the continued drop in small arms ammunition production. Manufactured food production was 11 per cent greater than in March of last year. Coal production declined 6 per cent in March from the exceptionally high rate in Febru ary owing partly to the return to a six-day work week in anthracite mines and partly to a con tinuation of manpower shortages in both hard and soft coal mines. Output of crude petroleum and metals was maintained in large volume. The value of construction contracts awarded in March, according to reports of the F. W . Dodge Corporation, was slightly greater than in January and February, but was still lower than in any corresponding month since 1935. D Indexes of the Cost of Living as Compiled by Bureau of Labor Statistics. Last Month in Each Calendar Quarter through September 1940, Monthly Thereafter (1935-39 average = 100 per cent) .IONSOFDOLLARS is t r ib u t io n Department store sales increased more than seasonally in March and continued at a high level in the first half of April. Sales in March were about 18 per cent larger than in the corresponding month last year, reflecting in part the earlier date of Easter this year and the heavy buying of jewelry, cosmetics, furs, and other items before higher tax rates became effective on April 1. Freight carloadings declined slightly in March from the high level of earlier months, owing chiefly to a drop in the movement of coal and grain products. Total loadings were maintained in the first half of April. C o m m o d it y Prices The general level of wholesale commodity prices advanced slighdy from the middle of March to the middle of April. Federal maximum prices for cement, lumber, and various other industrial commodities were increased. Retail food prices showed little change from February to March, while retail prices of most other commodities continued to advance slightly. Ba n k Credit Member Bank Reserves and Related Items (Latest figures are for April 19) - I m Js’ U» TO ! f — /V''~ V ^ 0tEQUIREDRESERVES J -J r yl - . y V L / \v /* j .......' V ■v^l Aj„ EXC ESSR E 3EK VES 1 i li Member Bank Reserves. Breakdown between Required and Excess Reserves Partly Esti mated (Latest figures are for April 19) Continued growth in currency and the transfers from Treasury War Loan deposits to deposits subject to reserve requirements resulted in a decline in excess reserves of member banks and in substantial purchases of Government securities by the Reserve Banks during March and the first three weeks of April. Owing to special factors, excess reserves declined to a low point of 600 million dollars at the end of March but increased in April and on April 19 were about 900 million dollars, somewhat less than had generally been held in recent months. Federal Reserve Bank holdings of U. S. Government securities were at a new high level of 12.7 billion dollars on April 19, after increasing by half a billion in the preceding four weeks. Most of the growth was in holdings of Treasury bills. Reporting member banks in 101 leading cities reduced their holdings of Treasury bills by 325 million dollars in the four weeks ended April 12, while holdings of other Govern ment securities showed little change. The greater part of the decline in bill holdings in the four-week period occurred at banks outside New York and Chicago, but there were wide fluctuations within the period reflecting transactions at Chicago banks associated with the April 1 personal property tax assessment date in Illinois. Loans for purchasing or carrying Government securities continued to decline, as repayments were made on funds advanced during the Fourth War Loan Drive; these loans to brokers and dealers have fallen by 450 million dollars since the end of the drive and are now less than at any time in recent months; loans to others, which rose by 600 million during the drive have subsequently declined by 400 million. Commercial loans declined by 210 million over the month. Adjusted demand deposits, which declined somewhat in the latter half of March, increased during the first half of April, bringing the total outstanding to about a billion less than the level prior to the opening of the drive. Government deposits at these same banks fell by 1.5 billion dollars during the four weeks ended April 12.
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