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MONTHLY REVIEW of Credit and Business Conditions S e c o n d Federal Reserve Agent F e d e r a l R e s e r v e D is tr ic t Federal Reserve Bank, New York Business Conditions in the United States RODUCTION of basic commodities declined dur ing September, wholesale trade continued large, while retail trade, though larger than a year ago, increased less than is usual at this season of the year. Wholesale prices, particularly those of agricultural products, advanced during the month. P P r o d u c t io n Production in basic industries, according to the Federal Reserve Board’s index, declined 5 per cent, during September, and was 10 per cent, below the peak output of May. The principal factors in this decline were the suspension of anthracite coal mining for oyer two weeks and a substantial reduction in the production of iron and steel. Cement production and sugar melt ing's were larger than in August. The decline in the production index, which is corrected for seasonal varia tions and reflects chiefly changes in the output of raw and semi-finished products, was not accompanied by a reduction of employment at industrial establishments. New building construction showed about the usual sea sonal decline in September, due to a curtailment in con tracts for residences. Contract awards for business and industrial buildings, however, were larger than in August. Estimates by the Department of Agriculture on October 1 showed some reduction from the September November 1 , 1923 forecasts in the yields of corn, wheat, oats, and tobacco, but increased yields of cotton, potatoes, and hay. T r ad e Distribution of all classes of commodities by rail roads continued at a high rate throughout September. Wholesale trade, according to the Federal Reserve Board’s index, in September reached the largest total in three years and was 9 per cent, larger than a year ago. Sales of meat, hardware, and drugs were considerably larger than in last September, while shoe sales were smaller. Retail trade was slightly larger in September, but the increase was much less than is usual at this season of the year. Department store sales were 6 per cent, more than in September 1922, and stocks at the end of the month were 13 per cent, larger than a year ago. P r ice s Wholesale prices increased over 2 per cent, during September, according to the index of the Bureau of Labor Statistics, particularly large increases occurring in the prices of clothing, farm products, and foods. Fuel prices, on the other hand, declined in September for the eighth successive month, and prices of building materials and metals were also lower. During the first three weeks of October prices of certain farm products continued to advance, wheat and cotton reaching the highest prices of the current year, while prices of hogs, coal, and metals declined. PERCENT. Production in Basic Industries— Combination of 22 Individual Series corrected for Seasonal Variation (1919 average = 100 Per cent.) Index of Wholesale Prices, U. S. Bureau of Labor Statistics (1913 average = 100 Per cent.) 2 M O N T H L Y R E V IE W , N O V E M B E R 1, 1923 BILLIONS O f DOLLARS BILLIONS OF DOLLARS Sf W . \ FEDERAL . RESERVE NO T E 5 EARN 1m A5SET5 1919 1920 1921 1922 1919 1923 Bank Credit— 800 Member Banks in Leading Cities B a n k C r e d it The demand for bank credit showed a seasonal in crease in September and the early part of October, loans of member banks in leading cities increasing by $116,000,000 between September 12 and October 10. This increase reflected chiefly the demand for commer cial loans, which on the latter date stood at a new high point for the year, almost $100,000,000 above the total on September 12. Increases in the holdings of Government securities by these banks were partly offset by reductions in corporate security holdings. The demand for accommodation at the Federal Re serve Banks in some of the agricultural districts in creased, while at the Reserve Banks in the East the volume of discounts for member banks declined. Federal Reserve note circulation continued to increase and in the middle of October was about $100,000,000 above the July level. In October, money rates showed an easier tendency and after the fifteenth of the month rates for commercial paper in the New York market declined from a range of 5 % — 5 ^ to 5— 5y4 per cent. 1920 1921 V V 1922. Bank Credit— All Federal Reserve Banks October, reflecting in part larger portfolios held by the dealers, but bills discounted for member banks and holdings of United States securities declined. Bank Debits During recent months there has been a decline in the volume of checks drawn against deposits in banks located in New York and other cities, after allowance has been made for seasonal variation, price changes, and annual growth. As shown in the accompanying dia gram, the decline has been more rapid in New York City where the fluctuations are much affected by whole sale trade and transactions in the security markets. Debits outside of New York, which reflect closely changes in the general volume of commercial and in dustrial activity, have likewise shown a decrease, and in September were 3 per cent, below estimated normal. The statistical methods used in the following diagram in making allowance for growth, and for seasonal and price changes are similar to those used in other indexes of industrial and trade activity which have been pub lished from time to time in the R e v ie w . PER CENT. Banking Conditions, Second District Total loans and investments of reporting member banks in this district were practically unchanged during the last half of September and first half of October. Loans largely for commercial purposes increased $50,000,000 to a new high point for the year, chiefly due to seasonal causes, but this increase was largely offset by a reduction in loans on stocks and bonds. Total de posits increased $50,000,000 to the highest point since July. Total earning assets of the Federal Reserve Bank of New York increased during the latter part of September and first part of October, but after the 15th of the month declined sharply to $204,000,000, the lowest this year except during periods of heavy Government dis bursements at quarterly tax dates. Bills bought in the open market increased during the first three weeks of 1923 Bank Debits— New York City and Outside (Computed normal = 100 Per cent.) FEDERAL RESERVE AGENT AT NEW YORK Money Rates A slight easing in money rates after October 1, which became more distinct after the 15th of the month, ap peared to indicate an unusually early culmination of seasonal demands, accompanying reductions in cer tain phases of industrial and business activity. Commercial paper rates, which averaged close to 5y 2 per cent, about the middle of September, declined to 5*A per cent, for most prime paper, and some sales were made at 5 per cent. This change reflected a good demand from the interior, together with some increase in buying by New York City banks. Supplies of paper, on the other hand, were generally reported as light, due to small demand from commercial concerns for funds. The accompanying diagram shows the decline between September 1 and October 1 in the outstanding paper of 26 dealers. M IL L IO N S OF DOLLARS 1918 1919 19£0 1921 1922 1923 Commercial Paper Outstanding— Twenty-Six Dealers Demand for bills likewise increased slightly during October, but not to the same extent as did the supply of bills which was increased by seasonal drawings on cotton and grain. In consequence, dealers * portfolios increased. Rates, however, were unchanged at 4y 8 to 414 per cent, on purchases by the dealers, and 4 to 4 % per cent, on sales by them. After a slight rise at the first of the month, there was practically no change in offering rates for Govern ment short term certificates and notes. Call money displayed the usual first-of-the-month firmness, but eased by the middle of the month to 4y 2 and 414 per cent, for renewals, and to 4 per cent, on some days for new loans. Time money on stock market collateral dropped to 5-5*4 per cent., compared with per cent, for a period during the latter part of September. Security Markets Stock trading was generally dull during October and price tendencies lower. Railroad stocks were relatively steady, due presumably to favorable earnings reports, but averages of industrial issues in some instances reached new low points for the year. Bond prices, on the other hand, were firmer in Octo ber, accompanying an easier tendency in money rates. Liberty and high grade corporation issues recovered 3 substantially from the losses incurred during September. The volume of new securities offered likewise in creased in October, and during the third week was the largest since June. Railway issues were an important part of the total. A $15,000,000 preferred stock issue by a leading railway marks a departure from recent railway financing which has largely been in the form of bonds or notes. Other noteworthy offerings were $47,000,000 Federal Land Bank 4 % per cent, bonds, $21,000,000 bonds of the State of Illinois, and a $10,000,000 loan for the Government of Finland. Foreign Exchange After holding steady at close to $4.55 during the first ten days of October, sterling later in the month declined sharply to $4.47%, the lowest quotation since November 1922. Seasonal bill offerings, British Government pur chases of dollars, and political disorders in Germany were probably factors in the decline. French and Belgian francs were off about ^4 of a cent to the lowest since mid-September. Italian exchange was under some pressure, and marks continued their precipitate decline. Chief changes in other rates included a continued downward tendency in the Scandinavian exchanges and some loss in Dutch, Argentine, and Chinese exchanges. Canadian, Japanese, and Indian rates were firmer. Most exchanges advanced following announcement of a pro posed international conference on reparations. Gold Movement Continuation of the heavy inflow of gold was shown by imports of $27,803,961 during September, chiefly from England, Germany, Canada, and France, com pared with exports of $862,697, largely to British India and Mexico. Net imports during the month were $26,941,264. The accompanying table, comparing the gold move ment by quarters in 1922 and 1923, shows that net gold imports for the first nine months of this year were practically equal to those for the same period of last year. 1922 Imports First Quarter............. Second Quarter......... Third Quarter........... $88,798,547 34,214,148 80,543,170 $3,558,190 6,586,279 2,998,174 Exports $85,240,357 27,627,869 83,544,996 Total, 9 m onths. . . $209,555,865 $13,142,643 $196,413,222 1923 First Quarter............. Second Quarter......... Third Quarter............ $57,154,256 74,778,204 88,589,505 $20,263,387 2,028,163 3,586,484 $36,890,869 72,750,041 85.003,021 Total, 9 m on th s.. . $220,521,965 $25,878,034 $194,643,931 Net Imports Foreign Trade September exports, valued at $381,000,000, were the largest for any month since March 1921, while imports valued at $255,000,000 were the smallest for any month since July 1922. The increase in exports was due chiefly to heavy shipments of raw cotton which were not far from twice as large as in August, or in Septem 4 MONTHLY REVIEW, NOVEMBER 1, 1923 ber last year. The increase in cotton exports accounted for $66,000,000 of the total gain of $70,000,000 in ex ports between August and September. Grain and meat exports also increased. Per cent. Increase Commodity C o tto n ......................................................... ................... C orn............................. . C attle.......................................................................................... W heat....................................................................................... Sheep............................................................... Oats.............................................................................................. H o g s ....................................................................................... Merchandise imports have shown almost continuous reduction since March of this year when a high total of $397,000,000 was reached. Factors in this decline have been decreases in imports of sugar and of raw materials for use in manufacturing. 41 34 18 13 10 7 Date of Low July 28 July 3 April 17 August 6 March 16 July 13 .lune 11 Cost of Living The accompanying diagram shows the recent move ments of imports and exports. During the four months March to June, imports exceeded exports by a substan tial margin, but since then there has been a growing export balance which in September amounted to $126,000,000, the largest since October 1921. Advances of more than 2 per cent, in the retail prices of food and clothing caused an increase of 1.1 per cent, between August 15 and September 15, in the index of the cost of living for a workingman’s family, pre pared by the National Industrial Conference Board. This index is now 6 per cent, above the 1922 low point and 63 per cent, higher than in 1914. Detailed changes were as follows: (July 1914 = 100 Per cent.) •1IU.ION* OP 1000 ... » 900 i 800 J '; 700 UM fv EXPORT5 A' / Vi JU-V V V 600 a 500 N - /A * --------- 400 J J 1 1 300 f-K.j ZOO I ilIf ! A h V ! 1 ------------ 1 i i \ M ,A > K l V A . j \ i NA , >------------ v,. a V 30RT5 1 4$ y jy V i ----------^ j J A — A f i j j 1-------------1 I 1915 1916 1917 1915 1919 1920 1921 1922. 1923 Value of Imports into the United States and Value of Exports from the United States Prices Largely because of increases in prices of farm prod ucts and foodstuffs and advances in cloths and cloth ing attributable to higher cotton and raw silk, the index of wholesale prices of the Bureau of Labor Statistics advanced 2.7 per cent, in September to a point 54 per cent, above the 1913 average. There were fractional advances in chemicals and drugs, and in miscellaneous items, but the group indexes for building materials, metals and metal products, and fuel and lighting de clined. During the first three weeks of October the price index of 20 basic commodities computed by this bank declined 2.1 per cent,, due to further declines in basic materials used in manufacturing which offset continued strength in agricultural products. Wheat reached the highest price in several months, and spot cotton at 31.75 on October 25, was the highest since August 1920. The fol lowing table indicates advances recorded by staple agri cultural products since the low points of the year. Per cent. Change September 1922 to September 1923 Index September 1923 Clothing...................... Shelter......................... Fuel and Light.......... 149 175 175 176 173 + 2 .1 + 2 .3 + 6 .4 + 1 2 .9 + 6 .1 -5 .9 + 0 .6 163 + 1 .1 + 5 .0 IL_____ It It Per cent. Change August 1923 to September 1923 Item The quarterly index of living costs in New York City computed by the Bureau of Labor Statistics was 1.6 per cent, higher in September than in June and 3.4 per cent, above the lowest point reached in 1922. Com pared with the 1913 average the advance in this index was 72 per cent. Employment and Wages Due chiefly to seasonal activity in the clothing industry in New York City, employment in New York State factories increased slightly in September, accord ing to reports to the State Department of Labor. The number of workers on payrolls September 15 was 3.2 per cent, smaller than in March, the high month this year, and 7 per cent, larger than in September a year ago. The State Employment Service reported more requests for workers than there were applicants for positions. In the United States at large, the number of factory workers was virtually unchanged, although a slightly larger proportion of the reporting firms worked full time. Average weekly earnings of factory workers in New York State were 1 per cent, higher in September than in August, reflecting the seasonal increase in employ ment. Wage rates in general were unchanged. The principal exceptions were an increase of 6 to 7 per cent, in wages of New York City newspaper pressmen and of 14 per cent, in wages of longshoremen. In Octo ber the Railway Labor Board awarded increases of 1 to 2 cents an hour to clerks, station forces, dock, warehouse, and platform freight handlers of 65 railroads in order to bring the wages of these workers in line with the wages of other workers. FEDERAL RESERVE AGENT AT NEW YORK Production The decline in production in basic industries first apparent in June was continued during September, with fewer exceptions than in preceding months. In all but three industries, sugar refining, cement, and woolen goods, the available reports show a lower output in Sep tember than in August, after allowance has been made for normal seasonal variations. The following diagram groups the various industries into producers’ and consumers’ goods and indicates the decline in each group since the early months of the year. 5 silk many silk mills in this district have reduced opera tions to three days a week. The following table shows the indexes of production computed by this bank in percentages of estimated normal production. Allowance has been made for sea sonal variations and for year to year growth. (Estimated Normal = 100 Per cent.) 1922 1923 Sept. M ay June July Aug. Sept. Producers’ Goods /PERCENT. Bituminous co a l............................................. Copper, U. S. m ine........................................ Tin deliveries................................................. C otton consum ption...................................... W oolen mill a ctivity*.................................... Leather, so le .................................................... Consumers' Goods Anthracite co a l............................................... Wheat flour..................................................... Cattle slaughtered......................................... Calves slaughtered......................................... Sheep slaughtered.......................................... Hogs slaughtered........................................... Sugar meltings, U. S. ports......................... Paper, to ta l..................................................... Tobacco consum ption................................... Production of Consumers’ Goods and Producers’ Goods (Computed normal = 100 Per cent.) Pig iron jjroduction, amounting to 3,126,000 tons in September, was 9 per cent, less than in August, and 19 per cent, below the high total of May, when the out put was 24 per cent, above estimated normal. At the close of September there were 15 less blast furnaces in operation than at the beginning of the month and dur ing October there was a further reduction. There was a nearly equivalent decrease in the output of steel ingots, which fell slightly below estimated normal for the first time since September last year. Unfilled orders of the United States Steel Corporation declined 378,913 tons between August and September to 5,036,000 tons, the smallest amount since March 1922. After a slight increase in August, the production of passenger automobiles declined 15,000 during Sep tember to 298,900, but was only 51,000 lower than during the record month of May, and the output of trucks in creased. This continued high rate of production follows an output for the preceding eight months that was larger than during the entire year of 1922. Due to the strike in the anthracite coal fields the production of anthracite coal decreased from 8,868,000 tons in August to 2,917,000 tons in September. On the settlement of the strike in the latter part of the month production was resumed at slightly under the normal rate. Cotton consumption in September was slightly less than in August, due to further curtailment by New England mills. Partly to conserve their supplies of raw Automobile, a ll............................................... Automobile, passenger.................................. Automobile, truck.......................................... Boots and shoes.............................................. Automobile tires........................................... r p * e 68 87 86 79 92 109 92 99 102 107 121 62 95 124 122 114 95 114 139 108 118 120 125 133 83 96 122 121 1 14 105 109 106 102 98 92 84 142 139 96 83 113 104 123 e 110c 123 114 135 128 75 75 93 105 110? 102 107 99 105 99/> 111 103/> 09 80 145 89 '88 98 98p 103 e 125 130 i38 73 68 106 91 p 61 114 97 127 79 128 110 105 98 102 97 101 79 95 123 98 113 118 130 104 122 118 114 93 108 146 150 130 114 162 98 107 101 114 89 122 79 101c 93 111 152 159 126 105 134 104 116 109 145 79 149 74 93 e 89 108 145 157 98 89 121/; 100 122 105 123 86 135 70 84 e 88 110 151 162 109 89 95 r 35 109 98 118 76 146 102 i 40p 149 p 104p Revised. Preliminary. Seasonal variation not allowed for. Estimated. Indexes of Business Activity As in the case of production, index numbers of busi ness activity, shown in the subjoined table, were gen erally lower in September than in August but on the (Estimated Normal =100 Per cent.) Primary Distribution Car loadings, mdse, and misc..................... Car loadings, other................................ Wholesale trade, Second D istrict............... Cereal exports................................................. Distribution to Consumer Department store sales, Second D istrict.. Mail order sales.............................................. New life insurance written.......................... Amusement receipts...................................... Magazine advertising.................................... General Business Activity Bank debits, outside N. Y. C it y ............... Bank debits, New York C ity . .. . ............. Electric power................................................. Postal receipts................................................ Building permits............................................. Business failures............................................. p Preliminary, r Revised. 1922 1923 Sept. M ay June July Aug. Sept. 98 93 105 79 111 183 108 119 103 83 130 143 103 117 100 no 119 92 102 119 102 95 110 73 102 118 112 92 99 86 103 106 100 95/; 94 p 105 102 80 107 82 85 99 99 110 105 108 91 101 103 103 108 93 95 93 94 91 103 94 100 101 98 81 112 98 98 97 96 91 112 100 110 102 102 130 113 112 105 112 104 122 102 107 105 110 102 114 101 99 98 109 99 111 84 102 93 110 103 123r 95 97 93 *90 97 127p 88 (i MONTHLY RE V IE W , NOVEMBER 1, 1923 average indicated activity close to estimated normal. In each case the figures are expressed as percentages of the estimated normal. Allowance has been made for seasonal changes, year to year growth, and, when neces sary, for changes in prices. Building Due largely to seasonal tendencies, the value of build ing permits granted in 158 principal cities declined $29,000,000 in September, or 12 per cent. Approxi mately half the decline occurred in New York City but declines were also general in other sections of the country except the Southwest and Central West, where there were increases. This bank’s index of the volume of building, which allows for seasonal variation and changes in the cost of construction, was slightly higher in September than in August though 30 per cent, lower than in March, the high month this year. The accompanying diagram indicates the course of the building index since 1919 and compares this with changes in pig iron production which may be taken as representative of the movement of industrial production. The way in which pig iron production has followed the granting of building per mits is an indication of the close relationship between the volume of building and industrial activity in recent years. PER CENT x\partment Rents Inquiry among apartment house renting agencies in this city as to rents following October 1 indicated a continued shortage of medium and low priced apart ments, and no reduction in rents, which generally aver aged 9 per cent, higher than a year ago. In the case of higher priced apartments renting for $30 a room and over, there was reported to be some surplus, due to active construction of apartments of this type and of private houses in recent years. This situation has resulted in few reductions in rents which are generally maintained at close to the levels of a year ago. Wholesale Trade Wholesale trade in this district was less active in September than in August and the index, prepared by this bank from reports of 162 dealers in 11 lines, declined from 12 per cent, above computed normal in August to less than 1 per cent, above normal in Septem ber. The September figure is the lowest since June and is 16 per cent, lower than in February, when sales were 19 per cent, above normal. The accompanying diagram shows the fluctuations of wholesale trade in percentages of computed normal since 1919, and compares with these a similar index of railway car loadings of merchandise and miscellaneous freight which represents largely the shipment of manu factured goods in wholesale trade. The courses of the two lines are closely similar but freight shipments as a rule follow wholesale sales by some months. Both in dexes are now lower than in earlier months, though both remain above normal. In the computations of these in dexes allowance has been made for seasonal v a ria tio n s and year to year growth. PER CENT, Volume of Building: and Production of Pig Iron (Computed normal = 100 Per cent.) Building wages remained in September at the high levels reached in August but prices of building materials continued to decline. As a result, the cost of construc tion index computed by this bank receded further and was about 5 per cent, below the May high point. The value of building contracts awarded in 27 north eastern States, as reported by the F. W . Dodge Co., was virtually unchanged in September at $253,000,000, al though a smaller number of projects was involved. The aggregate value of contracts awarded in these States during the first nine months of 1923 was slightly less than in the corresponding period of 1922. Wholesale Trade in the Second Federal Reserve District and Oar Loadings of Merchandise and Miscellaneous Freight (Computed normal = 100 Per cent.) FEDERAL RESERVE AGENT AT NEW YORK The decline in trade in September was the result of smaller sales of men’s and women’s clothing, groceries, shoes, hardware, machine tools, and diamonds. In the cases of women’s dresses, machine tools, and shoes, sales were below those of 1922 for the first time this year. Sales of silk goods, shown separate from sales of cotton goods for the first time, were 22 per cent, higher than in September a year ago, partly due to price advances. Detailed figures for various groups are shown below. Dollar Value of September Sales (September 1922 = 100 Per cent.) Comm odity D ry G o o d s .......................... (a) Silk goods................. (b) Cotton good s........... D rugs.................................... Jew elry................................. H ardw are............................ Stationery.............................. C lothin g................................. (a) M en’s and boys’ . . . (b) W om en’s coats and suits............................ (c) W om en’s dresses. . . . Groceries................................ Machine tools....................... Shoes...................................... D iam onds.............................. Total (w eighted)............. 1919 1920 1921 1922 118 129 108 99 21S 108 140 96 81 96 92 80 104 93 81 82 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 109 104 138 231 233 164 122 86 106 93 181 131 161 102 140 80 77 120 103 110 126 238 99 91 122 74 88 94 25 99 48 91 1923 116 122 113 112 109 108 107 103 113 During September sales of furniture and men’s and boys’ clothing were 10 per cent, larger than a year ago. Shoe sales were 7 per cent, above those of last September but the increase in sales of women’s ready to wear clothing and accessories was smaller than for several months past. The foregoing table shows the changes in sales in eleven major groups of departments. The number of individual transactions declined 0.8 per cent, but the average amount of each transaction advanced 5.2 per cent, from $2.86 last September to $3.01 this year. Stocks held by department stores increased 11 per cent, between September 1 and October 1, due to the receipt of fall and winter merchandise, and were 9 per cent, above those of October 1, a year ago. Detailed figures of sales and stocks are shown in the following table. 105 N et S ales D uring S ept . (Sept. 1922 100 Per cent.) 88 102 96 94 81 All dept, sto re s... New Y o r k ......... Department Store Business September sales by department stores in this district were 4.2 per cent, above those of September a year ago, compared with gains of 11 per cent, in August, 9 per cent, in July, and 8 per cent, during the first half of the year. The index of department store sales main tained by this bank, in which allowance is made for seasonal variations, year to year growth, and changes in prices, declined from 1 per cent, above normal in August to 3 per cent, below normal in September. Sales were possibly affected by unseasonably warm weather during the latter part of the month and a slightly earlier date for the Jewish holidays. Sales in New York City were relatively smaller than those in other cities of the district due perhaps in part to the newspaper pressmen’s strike which prevented stores from carrying out their usual advertising program. In Boston, however, where there was no such strike, the decline in sales was greater than in New York City. Rochester.......... Syracuse............ Bridgeport......... Elsewhere.......... Apparel sto re s.... Mail order houses Furniture.................................................................................................. M en’s and Boys* clothing.................................................................... Women’s ready to w ea r........................................................................ Silk goods................................................................................................. H osiery............................................................................................. W omen’s ready to wear accessories................................................... House f urnish ings.................................................................................. C otton g o od s........................................................................................... W oolen go o d s .......................................................................................... M iscellaneous.................................................................... + 10.3 + 9 .9 + 7 .0 + 4 .8 + 4 .4 + 3 .8 + 2 .3 + 10 + 0 .1 - 0 .9 — 6 .9 1919 1920 1921 1922 1923 1919 1920 1921 1922 1923 90 93 84 79 88 88 95 88 86 136 96 97 97 88 102 103 104 103 89 117 86 85 91 89 89 89 87 94 85 96 100 100 100 100 100 100 100 100 100 100 104 103 104 109 112 111 102 101 105 122 97 95 105 99 119 119 103 95 85 123 122 130 131 147 155 124 118 104 102 101 108 99 111 101 101 112 96 100 100 100 100 100 100 100 100 100 109 108 109 109 110 109 97 105 116 Sales by mail order houses were 22 per cent, larger than in September of last year and the index of sales in percentages of normal, computed by this bank, recovered from a point 19 per cent, below normal in August to 9 per cent, below in September. The accompanying dia gram shows fluctuations in mail order sales, together with department store sales, from 1919 to date. PERCENT. 150 r ‘125 DEPAfUT1ENT 5TORI:S * NORMAL 100 Per cent. Change in Sales Sept. 1922 to Sept. 1923 Stock on H and O ctober 1 (Oct. l f 1922 * 100 Per cent.) M A IL ^ W l .ORDER V\ HOUSES \ 75 JnA/JA/" * h K A - 50 1919 1 9£ 0 192.1 1 9Z £ 192-3 Sales of Department Stores in the Second Federal Reserve District and Mail Order Houses (Computed normal = 100 Per cent.) 8 M O N T H L Y R E V IE W , N O V E M B E R 1, 1923 MOTORS & ACCESSORIES IRON & STEEL 3920 1921 1922 1920 1923 1922 OTHER PRODUCERS GOODS J 1921 1920 O IL S 1923 1921 1920 1923 PU B LI U T IL IT I CONSUM ERS GOODS 1922 1922 1923 Net Profits by Six Months Periods of Representative Industrial and Public Utility Concerns (First six months of 1 9 2 0 = 1 0 0 Per cent.) Profits in the First Half of 1923 Production and trade during the first half of 1923 were in most lines larger than in 1920. A compilation of the statements which have been published currently in dicates that profits of business concerns in the first half of 1923, while considerably larger than in 1921 or 1922, were with a few exceptions slightly smaller than in 1920. Largely increased profits were made by public utility corporations and by manufacturers of miscel laneous products used in industry. The diagram at the top of this page shows by half yearly periods the profits of 57 corporations engaged in industrial production and trade, and 133 public utility companies. In each case the figures for the first half of 1920 are taken as 100 per cent. Computations of net profits have been after all charges and tax deduc tions, but before dividends. It is notable that these figures for profits show much wider fluctuations than figures for the volume of in dustry or trade. On the average, changes in the volume of business are within a range of 10 to 25 per cent., de pending on the nature of the industry, whereas these figures for profits have a fluctuation from two to three (Net Profits in Hundreds of Thousands of Dollars—00,000 omitted) Class Number of Corpo rations 1921 1920 1st Half 2nd Half 1st Half 507 254 68 1922 2nd Half 1923 1st Half 2nd Half 1st Half 278 277* 141 447 526 324 587 451 288 642 621 397 46 62 111 112 149 135 175 130 Iron and Steel.......... Motors & Accessories O il................................ Other producers’ goods ( 1 ) ................ Consumers’ goods (2) 9 7 14 682 757 439 491 344 391 17 10 80 177 115* 63 Industrials, t o t a l.. 57 2,141 1,174 877 250 1,520 1,610 1,965 Telephones................ Other utilities........... 72 61 426 411 392 314 544 354 524 348 619 431 638 413 715 548 22* 70 Public utilities, total 133 837 706 898 872 1,050 1,051 1,263 Grand T o t a l......... 190 2,978 1,880 1,775 1,122 2,570 2,661 3,228 * Deficit. (1) Includes such as leather, machinery, cement, zinc, elevators, coal. (2) Includes such as printing, beverages, cigars, syrups, candy, drugs. times as great. In general, profits of firms whose prod ucts supply other industries have fluctuated more since 1920 than profits of public utilities and other companies dealing more directly with the individual consumer. The accompanying table gives the figures upon which the diagram is based. The earnings of railroads were not included in the diagram above because the 1920 earnings were too low to give a true basis of comparison. The net operating income of Class 1 railroads during the first 8 months of 1923 as reported by the Bureau of Railway Econom ics was equal to 5.40 per cent, on their minimum tentative valuation as fixed by the Interstate Commerce Commission, as compared with 5.75 per cent, set by the Commission as a fair return on capital invested. The diagram below shows the rate of return earned by roads in the eastern, western, and southern districts since the expiration on September 1, 1920, of the 6 months’ guaranty provided by the Transportation Act. After small earnings or deficits during the months of 1920 and 1921, earnings of eastern and southern roads increased in 1922 as a result of more active business and heavy traffic preceding the coal strike of that year, but in the later months earnings of all roads were cur tailed by the shopmen’s strike. In the case of the west ern roads, earnings have been persistently below the fair return established by the Commission. ii-------s ------ - LiL_k_ A i1V W £ »<»£0 !<}£» >9*3 0 V p i\ i [pOUTHERI 192.1 1922. 192.3 1921 Monthly Rate of Net Profits on Tentative Valuation of Class I Railroads