View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

MONTHLY R E V IE W
Of Credit and Business Conditions
In
By

th e

Federal

th e

S e c o n d

Reserve

F e d e r a l

Agent,

R e se r v e

Federal

D is tr ic t

R e se rv e

Bank,

N ew

York

New York, November 30th, 1920.

C red it C on d ition s
H E world wide decline in commodity prices which set
in last spring, has shown considerable acceleration
during the past month, especially in Great Britain
and the United States. From the peak, British prices are
down from 10 to 14 per cent, and Canadian prices are down
11 per cent., while the various price indices in the United
States show declines of from 13 to 33 per cent. A sub­
stantial portion of these declines has occurred in the last
sixty days, and already there are signs that the lower
prices for raw material and goods at wholesale are begin­
ning in some cases to be reflected in retail prices and that
thus consumers are beginning to receive the benefit of the
enhanced buying power of the dollar.

T

Wholesale Price Indices
Country
United States
Bureau of Labor..............
This bank’s index
(12 basic commodities)....
Dun’s...............................
Bradstreet’s.....................
British
Economist.......................
Statist..............................
French.....................................
Italian.....................................
Japanese..................................
Canadian.................................
Swedish....................................
Australian................................
Calcutta..................................
*Increase

Per-cent.
declinejduring
latestjfmonth
reported
.........

Per cent.
decline
from
highest
17.3

7.0
-

5.2
4.3
7.3
......... 6.2
......... 3.4
......... 4.4
................ 8*
2.1
2.9
......... 4.4
2.5
1.0

33.5
13.7
24.9
14.1
9.9
13.9
2.1
28.3
11.0
6.2
2.5
5.5

Cancellation of orders by manufacturers and merchants,
and postponement of purchasing by consumers have
accompanied the fall in commodity prices abroad as well
as at home. In the United States, where the price decline
of the past six months is the most abrupt since that of
the first six months of 1865 accompanying the close of
the Civil War, these tendencies are necessarily causing
substantial interruptions and readjustments in many
industries. The orderly manner in which these read­
justments have proceeded has been greatly facilitated by




the existence of the present machinery for the mainten­
ance of credit flexibility and elasticity. Throughout the
year credit has been at all times available, as the Federal
Reserve Board pointed out in its statement of October 16,
for in spite of the rapid movements of funds from one part
of the country to another, member banks have always
felt ready to extend additional credit where such a course
seemed necessary and sound, knowing that they could in
turn fall back upon their Federal Reserve Bank.
It is probable that in no part of the country has the
demand for credit been felt more acutely than in New York
City. In the September number of the Review, the
movements of funds in and out of New York for the pre­
ceding three months were set out in considerable detail.
Further drafts in October and November upon the New
York City banks have reduced their deposits $250,000,000.
N ot only have they been called upon to make direct
advances to industry, commerce and agriculture in all
parts of the country, but they have been called upon for
indirect advances as well, through loans to interior
correspondent banks for the accomodation of their local
customers. In many of the New York banks the demands
of interior banks have been the heaviest on record, exceed­
ing even the accommodation they required before the
establishment of the Federal Reserve System. Among
those asking for loans are many banks which have never
borrowed before. On the other hand in this district the
country banks are gradually getting out of debt. On
June 1, 361 out of 771 member banks were borrowing
from the Federal Reserve Bank. On November 20, the
number of borrowers was reduced to 261.
Just as with increasing prices the volume of bank
credit, that is, bank loans, deposits and circulating
notes, increased, so with falling prices the volume of
bank credit has lately shown a tendency to decrease.
British currency notes have declined ^16,000,000 from
their maximum, reached August 11, and Bank of England
notes have recently declined also. The notes of the
Bank of France have declined 390,000,000 francs from
their maximum reached early in November. Canadian
notes always have a seasonal increase, but this year the
increase is far less than usual.
Current changes in
bank loans and deposits for these countries are not
now available.
In the United States the course of bank credit during
1920 is shown in the chart printed on the following

2

M O N T H L Y RE V IE W

page. The fluctuations of bank loans and deposits are
shown by the figures of the 823 banks which report

weekly and which present accurately the banking move­
ments of the entire country. The recent decline in the
volume of bank credit which these figures indicate is in
turn reflected in the decreased loans and note issues of
the Federal Reserve System as well as in its reserve
percentage which has risen from 42.5 on October 16 to
44.4 on November 26.

T h e B ill M a r k e t
With firmer money conditions, there was a decrease
in the demand for bankers acceptances during the past
thirty days and the total turnover of the dealers fell
below that of the preceding period. Not only did the
market in New York City become relatively dull, but
there was also a diminished demand from out-of-town
banks. In spite of this falling off in the volume of business,
dealers reported a considerable number of new customers.
During the second week of November there was a brief
period of increased activity, with good demand from both
local and interior banks, but it was not sustained. Offer­
ings of bills to the dealers were fairly heavy during the
T
period, and dealers continued to be hampered by diffi­
culty in obtaining money with which to carry their port­
folios. Bills drawn against cotton, grain, food products,
and to provide dollar exchange predominated, with
leather, metals, sugar, and tobacco bills in smaller volume.
Dealers slightly reduced their rates late in November
and offered prime member bank bills at 6 to 6 } i per
cent., according to maturity. The minimum buying
rates of the Federal Reserve Bank, remained unchanged,
varying from 5 ^ to 6 per cent, according to maturity
for prime endorsed bills.

Course of Reporting Member Bank Loans and Deposits, and
Federal Reserve Bank Earning Assets and
Notes in Circulation, 1920.

Date
1920
Nov. 19
Nov. 12
Nov. 5
Oct. 29
Oct. 22
Oct. 15
1919
Oct. 10
Nov. 14

The total volume of bills now outstanding in the country
is estimated at $1,000,000,000, approximately the same
as on January 1, 1920. At that time the Federal Reserve
System, which is commonly called upon to purchase bills
not absorbed by the market, held $574,000,000. At
present the System holds only $275,000,000.

B a n k D e p o sits and L o a n s
(In Millions)
Reporting Banks in New York City
Reporting Banks in all Districts
U. S. Securities
U. S. Securities
and
Total Loans
and
Total Loans
Loans Thereon
Loans Thereon
and
and
(excluding U. S.
Investments
(excluding U. S. Investments
Total
Total
Bonds to secure
(including
Bonds to secure
(including
Rediscounts)
Circulation)
Deposits
Rediscounts)
Deposits
Circulation)
$13,952
$721
$5,542
$4,778
$1,799
$16,794
13,961
5,575
1,735
4,750
693
16,838
13,956
4,770
695
5,611
1,743
16,952
5,681
14,058
698
1,751
4,853
17,017
5,738
14,207
4,920
719
1,776
17,103
5,830
14,470
738
5,070
1,825
17,284
5,397
5,207

1,512
1,256

6,010 (High)
5,788

13,699
13,865

3,231
2,803

15,944
16,090

Between November 14, 1919 and November 19, 1920 New York City Banks increased from 71 to 72 and banks throughout the
country from 782 to 824.




FED ER AL RESERVE AG E N T A T NEW Y O R K

As evidence of the wider market in this district for bills
during 1920, it appears from the most recent calls of the
New York State Superintendent of Banks and the Comp­
troller of the Currency, that 174 banks in the Second
Federal Reserve District were holders of bills, as com­
pared with 58 a year ago. During 1920 this bank has
purchased bills for 210 country member banks, amounting
to about $36,000,000, whereas in 1919 it bought $8,200,000
for 38 member banks. Purchases by savings banks have
also been an important factor in broadening the market.
At present savings banks in this district are reported to
be holding about $70,000,000 of bills, more than twice
the amount held by them last June.
C om m ercial Paper
Country banks have been active buyers of commercial
paper during the period and a number of dealers with
wide facilities for selling to country banks report that
their total sales for October compared favorably with
those of a year ago. The total volume of paper out­
standing, however, has been considerably reduced from
the peak level of last January. The period of this reduc­
tion coincides with the period of high Federal Reserve
Bank rediscount rates on commercial paper, when many
borrowers turned to their regular lines of credit at the banks
in preference to selling paper to the dealers. Moreover,
the larger city banks have been continuously out of the
market for commercial paper, thus curtailing the demand,
and latterly, especially since November, there has been
a noticeable decline in the supply of paper. The smaller
supply reflects the greater quietness now prevailing
in many lines of trade, and marks a decided change from
the situation through the spring and summer. Seasonal
offerings now due from such industries as flour and tex-

3

tile mills are very low. Distribution is fairly widespread
in most sections excepting the South where demand is
light, but in general the most favorable market continues
in the States east of the Mississippi. In consequence
of the sustained demand for paper, and the falling off
in supply, the easier trend of rates was more marked.
Eight per cent, continued the prevailing rate, but to­
wards the close of the period a considerable volume of
choice paper was being sold at 7 % per cent., and occasional
sales were reported at 7J^ per cent.
The attached chart shows the total amount of paper
outstanding for certain large distributors of commercial
paper who report month by month to this bank, and con­
tinues the chart printed a month ago, with, however, the
figures of an additional firm for the entire period covered
by the chart. The October figures now shown are sub­
ject to slight amendment when final figures are received.
Other large distributors, representing practically the entire
body of commercial paper dealers of the country, have
been invited to report their outstandings in confidence
to this bank, and when a sufficient time has elapsed to
permit of comparisons, the figures will be published in
total.

S to ck M a r k e t M o n e y R a tes
Following three weeks of unusual firmness, the stock
exchange money market showed a marked relaxation in
tension in recent days. Call money renewed at 7 and 6
per cent., and new time money was available in moderate
amounts at 7 % to 8J4 per cent. This comparative ease
in the market occurred following the usual corporate
payments on November 15, a moderate excess of Gov­
ernment disbursements over receipts in this district,
sharp liquidation in the stock market, and heavy pay­
ments here of November 1 ten-day commercial datings.
In late October and the first half of November call
loan renewals held at 9 per cent, for sixteen successive
days, a longer period of high rates than at any time
since last March. The closing rate was often 10 per cent.,
and only once declined below the renewal rate. Business
in time money was confined almost entirely to renewals,
with rates slightly firmer. This stringency was largely a
reflection of the seasonal demands upon this center by
the interior, resulting in a heavy loss of bank deposits.

U n ite d S tates Securities

Volume of Commercial Paper Outstanding from July, 1918




Liberty Bond prices have followed much the same
course as the general bond market. In both their rapid
advance and later fall, however, these issues moved more
abruptly and over a considerably wider range than other
investment securities of nearest comparable grade. Most
of the issues reached the peak of their recent rise about
the middle of October, fluctuated irregularly about those

M ON TH LY RE VIEW

levels for a time, and then turned sharply downward in
November. At lowest points in the closing week of the
period, the 4 and 4 }4 per cent, issues showed declines of
2 % to over 4 points from the October peak, which brought
most of the issues back practically to the levels of midSeptember. The tax-exempt 3j^s, which previously had
been slower to rise than other issues, moved sharply
contrary to the market for a time and rose to slightly
above 95. Victory Notes declined somewhat less than
a point below the October highest level. Liberty issues
shared to a limited extent in the general increase in the
volume of bond sales.
The new issue of Treasury certificates of indebtedness,
dated November 15, and running six months at 5 % per
cent, interest, was largely over-subscribed. Allotments
totaled $232,124,000; of this amount, $83,515,500, or 36
per cent., was allotted in this district, where there was an
T
excellent public distribution. This and former issues are
being traded in generally in the New York market. Six
per cent, issues are quoted at a slight premium and the
5 % per cent, issues are commonly quoted at par.
The extent to which the increasing demand for certi­
ficates of indebtedness has taken them out of the banks,
thereby relieving the burden of Government finance upon
bank credit, appears from the decline in the amount of
certificates held by the Federal Reserve Banks as col­
lateral for loans. On November 19 the amount of certi­
ficates so pledged amounted to $241,000,000, a decrease
of 30 per cent, in the past four months. As borrowing
banks having certificates of indebtedness are apt to use
them in preference to other collateral, it is probable that
this figure which is only about 10 per cent, of the total
certificates outstanding, represents practically the entire
amount of certificates held by borrowing banks. Non-,
borrowing banks purchase these certificates with their
own funds just as they would purchase any other invest
ments or commercial paper.

Foreign bonds, in most cases, were lower. French,
r
Norwegian, and Danish 8s declined to or slightly below
the original offering prices, as did the new municipals,
and Swiss 8s and Belgian 73^2S were also easier. British
bonds were steady, apparently unaffected by movements
of sterling exchange. Japanese issues moved only slightly.
Heaviness in Cuban 4j^s and 5s and Italian 6j^s resulted
in new low prices for the year. Mexican issues were
active at the year’s highest prices.
Sales on the exchange of corporate, state, foreign and
miscellaneous bonds during October totaled $128,700,000,
the largest for one month since December and an increase
of 83 per cent, compared with the total for October of
last year.

B ond M ark et
Bond prices reached the peak of their recent rise about
the third week in October. Thereafter there was a de­
cided reaction in some groups in November, coinciding
with the heavy decline in the stock market. In the main
losses were confined to the issues which had previously
had a sharp advance. The standard railway mortgages
were only moderately affected. New high interest bear­
ing notes and equipments held close to the recent high
levels, but some new industrial issues moved lower.
Municipal bonds continued firm at levels considerably
above the September low prices though still much below
prices at the first of the year.
Indicating the tendency of prices in the various groups,
ten representative high grade railroad bonds averaged
a decline of nearly 2 points from October high levels,
ten second grade railroad bonds declined 3 points, ten
public utility bonds lost
points, and ten industrial
issues lost 1Yi points.




Course of Market Prices for American and English War Bonds, and
representative Railway Bonds from June, 1919

FED ER AL RESERVE AG EN T A T NEW Y O R K

N e w F inancing
New financing during October, mainly by industrial
and public utility corporations, totaled $346,000,000, and
was more than double the amount issued in September,
and only moderately less than the large total for October
a year ago. In addition, the market absorbed $60,000,000 of domestic municipal and $36,000,000 of foreign
dollar issues. Demand for prime high yield issues was
unusually active, save in the case of a few large industrial
offerings. Dealers regarded this marked revival of ac­
tivity as largely due to heavy October maturities which
included the Anglo-French loan. Since January 1, the
output of new securities has totaled $2,693,000,000, an
increase of $150,000,000 over the same period last year.
Notes and bonds continued to preponderate over
stocks, and aggregated 92 per cent, of the October total,
compared with 26 per cent, in October a year ago. Rail­
road securities comprised only 6 per cent, of all issues.
The majority of offerings were of ten to twenty-five years
maturity, and carried provisions for sinking fund pur­
chases and the payment of premiums if redeemed in
advance of maturity. The base yields of offerings re­
mained firm for industrial securities, but were lower for
railroad and municipal issues.
Foreign offerings since October 20 include $25,000,000 twenty-five year 8 per cent, bonds of the Kingdom of
Denmark, issued at par, and three small issues of Swiss
and Norwegian cities offered to yield slightly over 8
per cent. There were also several additional foreign
currency bond offerings, sold on a basis of possible profits
through exchange. A small Philippine Government issue
was placed here in October.

S tock M a rk e t
Heavy and continuous liquidation since the first of
November depressed averages of industrial stocks 10 to
13 points below the previous low level of the year reached
in August. The number of stocks of all classes traded in
was the broadest of any previous time this year, and 185
issues, mainly industrials, touched lowest prices for 1920.
Selling appeared to reflect principally the fall in com­
modity prices, with evidence of accompanying readjust­
ment in industry. Further selling of foreign held American
securities was also reported. On November 20 industrial
stocks averaged within only a few points of the lowest
levels following the Armistice, a decline from the last
November peak of about 55 points, or close to 40 per
cent. But soon thereafter prices again turned upward.
Railroad stocks were held up temporarily by unusual
strength of three or four individual issues, but as liquida­
tion in the industrial list increased in volume, prices of
railroad shares at length also broke precipitately. Declines
averaged 8 points, or a loss of approximately half the
previous rise from the lowest levels of the year. These




losses were partially overcome when the market began
to move upward on November 22.
The volume of sales in November averaged the heaviest
of any period since the break in prices in April. This
followed unusual dulness in October when sales totalled
only 13,700,000, a decrease compared with September and
a reduction of 64 per cent, compared with the heavy
trading of last October.
G o ld M o v e m e n t
Although gold imports during October and the first
ten days of November amounted to $135,000,000, less
than $31,000,000 of this represents an increase in the
country’s gold reserves. Approximately $104,000,000
of it came from the store of gold, now completely trans­
ferred to the United States, which the Bank of England
T
has been holding under earmark for the Federal Reserve
Banks, and which the latter have been including in their
gold reserves. Including this gold, 90 per cent, of the
imports came from England, and excluding it, $17,000,000,
or 55 per cent. Gold exports from October 1 to Novem­
ber 10 amounted to $38,000,000, of which $32,500,000,
or nearly 86 per cent, went to Japan. Aside from the
transfer of earmarked gold from the Bank of England,
imports since the first of the year have been $68,000,000
less than the exports.
Foreign Bank R a te s
There have been a number of increases in the official
discount rates of foreign banks. Early in November
the Bank of Spain raised its discount rate from 5 to 6 per
cent., which had been in effect since November, 1919.
On November 6 both the Bank of Bombay and the Bank
of Bengal raised their discount rates from 5 to 6 per cent,
and a few days later to 7 per cent. These rates had been
reduced last May from 8 per cent. No other changes
in official bank rates had been reported.
The private bank rate in London has again hardened
&id is now quoted at 6J^ @ 6 13-16 for sixty and ninety
day bills. Call money in London, which is quite different
from call money in New York in that it finances the
carrying of commercial bills rather than stocks and bonds,
has advanced to 5 )4 per cent, after falling as low as 4
per cent, a month ago. Present rates are as follows:
Rate
7
Bank of England
6
Bank of France................
6
Bank of Italy....................
8
Bank of Japan..................
Netherlands Bank............ . . . 41/2
National Bank of Belgium. ...514
Bank of Spain..................
6
Bank of Sweden............... . . . 71/2
7
Bank of Norway..............
5
Swiss National Bank........
German Reichsbank.........
5
Austro-Hungarian Bank. .

Change
April
15, 1920
April
8, 1920
May
13, 1920
November 18, 1919
July
1, 1915
April
29, 1920
November
1920
September 17, 1920
June
25, 1920
August
22, 1919
December 23, 1914
April
12, 1915

6

M ON TH LY REVIEW

F oreign E xch an g es
The European exchanges have been characterized by
erratic fluctuations during the past thirty days with
rates generally moving lower, but with a partial recovery
at the close of the period. Trading was comparatively
quiet until the second week in November when
heavy offerings were followed by a decline.
It is
reported that considerable quantities of bills were withreported that considerable quantities of bills were with­
held from the market until after the election here and
the final settlement of the British coal strike. More­
over shipments in fulfillment of contracts made some time
ago for fall delivery helped to swell the volume of offerings.
Little substantial support was given to the market and
buyers were scarce even at the low rates. The sharp
decline in commodity prices in this country was an
additional factor in depressing exchange since it brought
about a greater variation between the gold prices of this
country and paper prices of European countries.
Sterling dropped to $3.32% on November 8, which was
the lowest level reached on the current movement and
15 points above the minimum of last February. Heavy
declines occurred in both francs and lire, which reached
their lowest levels for any time thus far during the second
week of November. At these low points lire were worth
in dollars slightly less than one-fifth of their gold parity,
and francs about three-tenths. The recent declines
in francs and lire have come in spite: of the fact that the
balances of trade in both Italy and France have been
gradually improving and that much progress has been
made in reconstruction in France. On the 16th and 17th
sterling made a sharp recovery— amounting to 10 cents
in the pound— followed by similar recoveries in francs
and lire.
Rates from October 25 to November 20 were as follows:

High
England.............................
France................................
Italy...................................
Spain..................................
Argentina...........................
China (Hong Kong)...........
China (Shanghai)...............
Japan (Yokohama)............
Germany............................
Switzerland........................
Sweden (Stockholm)..........
Holland..............................
Belgium..............................
Canada..............................
Silver in N. Y.....................
+Silver exchange basis.
*Premium.




Low

3.4925 3.3287
.0646
.0570
.0381
.0337
.1408
.1184
.3512
.3287
.7075
.6600
.9500
.8600
.5100
.5025
.0154
.0110
.1580
.1505
.1855
.1960
.3065
.2925
.0684
.0606
.885
.909
.8263
.7613

Percentage
of DepreLast ciation
from Par
3.4650 28.8
.0609 68.4
.0380 80.3
.1315 31.9
.3287 22.6
.6575 . . . . +
.8800 . . . . +
.5137
3.0 *
.0145 93.9
.1562 19.1
.1908 28.8
.3037 24.4
.0648 66.4
.887
11.3
.7613

/? <
</?
/<?£0
Movement of Foreign Exchanges on New York (expressed in terms
of depreciation from parity) and of Commodity Prices in
four Principal Countries. (Note: Prices above heavy line.
Exchanges below heavy line).

F o reig n T ra d e
Difficulties besetting export trade, which have been
developing rapidly during the past few months, have
lately reached a more acute stage. Just as a falling
market for silk sharply curtailed Japanese buying here,
in the same manner the purchasing power of other coun­
tries of the Far East, including India and Australasia, and
Cuba and South America, has been reduced by the lessened
marketability of many of their products accompanied by
exchange rates rapidly growing more unfavorable to them.
Furthermore, the price decline in this country has made
foreign buyers reluctant to accept goods contracted for
at higher prices, and uncertainty as to prices in the future
has been an additional influence against new orders.
Trade unsettlement is made severe by the fact that high
rates for money, which are world wide, have tended to
restrict the extension of credits and to increase the burden
upon the exchange market.
Exporters are having to deal with many requests for
cancellations of orders or extensions on drafts. Only in
Cuba and Paraguay have moratoriums been officially
declared, but individual delinquencies are widespread
elsewhere, due largely to the inability or reluctance of
importers to absorb the financial loss involved in con­

F ED ER AL RESERVE AG EN T A T NEW YORK

verting their currencies into dollars. Many of these
merchants, it is reported, offer to deposit native currency
in the banks to the collection accounts of American ex­
porters and pay interest on these deposits if remittance
in dollars be deferred for a possible recovery in exchange.
In some countries, including Australasia, there is reported
to be a lack of commercial exchange even for those who
are willing and would be able to remit funds, and the
export of gold is limited.
In consequence of these conditions, banks here have
restricted their purchases of fresh drafts on these countries,
and renewal drafts are not being purchased except in
urgent cases. On some countries where exchange is
particularly disrupted banks are undertaking collections
only at the customer’s risk. On certain other countries,
banks are still buying drafts but are advancing only part
of the value of the instrument. The foregoing restrictions
apply particularly to dollar drafts, which devolve upon
the banks responsibility for collection. Drafts in foreign
currencies on the more stable European countries are
being purchased more freely.
Present orders now being received from abroad reflect
these disturbed conditions, and are confined to necessities.
Exporters are not seeking additional business, but on the
contrary are advising their clients to place as few orders
as possible.
Wheat and flour shipments from the United States
and Canada, according to Bradstreet’s have fallen off
somewhat during the past thirty days, but are still run­
ning above this time last year. New foreign buying of
wheat in this country is reported less active and a con­
siderable portion of such purchases are of Canadian
wheat. Export demand for flour is still dull, notwith­
standing the lowering in the differential of ocean rates
for flour compared with wheat. Easier conditions in the
coal market are reflected in lower ship chartering rates,
and coal carriers are reported offering at lowest hire in
more than five years. Inquiry for oil and oil products,
though still quite active, is apparently not so insistent
as in the past.
Cotton exports expanded sharply during October, but
in late weeks have fallen much behind the movement at
this time last year. Deliveries now going forward are

said to be largely on purchases over six to twelve months
ago.
Demand for most classes of manufactured prod­
ucts is quiet, though exporters of electrical machinery
and equipment report a fairly sustained buying of the
heavier articles. Lower prices for copper stimulated
larger buying for only a brief period.
Heavy expansion in the reported total of export ship­
ments during October, but a much more moderate increase
in their relative volume, is indicated by the foreign trade
statistics of the Department of Commerce for October.
Exports, expressed in dollars, rose $145,000,000 to $752,
000,000, or the highest on record in dollar amount with
the exception of June last year. But if allowance is made
for the normal seasonal increase in the physical volume of
exports in October, and also for price variation, the rela­
tive increase is slight. Imports, expressed in dollars,
declined $1,000,000 to $362,000,000, but if corrections for
price and seasonal variations are made, there appears to
be, relatively, a slight increase.

W o r ld C o m m o d ity Prices
Price declines have been general except in Italy, ac­
cording to the latest indices, and in that country the
level is still below the high point of last April. The
United States Bureau of Labor index is 17 per cent,
below the maximum reached in M ay.
The Japanese
index shows a decline relatively much greater, and in
Australia, where prices were still rising according to the
index (June) available a month ago, prices also have
turned downward.
British commodity prices, as given in both the Statist
and the Economist indices, show the sharpest decline of
the current movement. The Statist index on November
1 registered a total decline of about 10 per cent, from the
peak and the Economist 14 per cent. Canadian prices
declined 3 per cent, during October, as compared with
7 per cent, for the United States Bureau of Labor index,
and are now 11 per cent, below the peak of last M ay.
The table below gives the latest available figures of
the various index numbers of wholesale prices, together
with preceding figures and percentage changes.

W h o le sa le Price Indices
.

Per Cent.
Change

Country
Latest Available
Preceding
United States
225 (October)
242 (September)
-7.0
Bureau of Labor..................................
This Bank’s Index
(12 basic Commodities)...................... 75.1 (November 22) 79.2 (November 15) -5.2
Dun’s.................................................. 187.9 (November 1) 196.3 (October 1)
-4.3
Bradstreet’s........................................ 170.2 (November 1) 183.6 (October 1)
-7.3
British
Economist........................................... 266.4 (November 1) 283.9 (October 1)
-6.2
Statist.................................................
282
(October)
292
(September)
-3.4
French.......................................................
503
(October)
526 (September)
-4.4
Italian.......................................................
665
(October)
660
(September)
+ .7 6
Japanese....................................................
230
(September) 235
(August)
-2.1
Canadian...................................................
234
(October)
241
(September
-2.9
Swedish......................................................
346
(October)
362 (September)
-4.4
Australian..................................................
230
(September) 236
(August)
-2.5
Calcutta....................................................
206 (October)
208 (Septem
ber)
-.96




Highest
272

Per Cent.
Decline from
Highest

(May Ay .)

17.3

112.9 (May 17)
217.8 (May 1)
226.6 (February 1)

33.5
13.7
24 9

310.1
313
584
679
321
263
369
236
218

14.1
9 9
13 9
2 1
28.3
11 0
6.2
2.5
5.5

(March 31)
(April)
(April)
(April)
(March)
(May)
(January 1919)
(August)
(January)

8

MONTHLY REVIEW
on to the consumer. But a noticeable decline is shown
in the retail prices of such commodities as shoes, clothing,
sugar, potatoes and flour.
The following table gives the percentage decline from
peak wholesale prices for a number of important com­
modities :

Commodity

Per cent. Decline
From Peak

Foods
Sugar
Wheat
Corn
Oats
Potatoes
Flour
Hogs, live

54.5
36.4
52.7
57.4
71.7
33.9
24.5

June
May
May
May
April
May
September

Textiles and Leather
Cotton, raw
Cotton goods
Wool, raw
Woolen goods
Silk
Hides
Leather

55.6
45.3
46.0
25.0
63.5
43.9
28.6

July
July
January
July
January
January
February

Metals and Coal
Pig Iron
Copper
Lead
Tin
Steel
Coke
Bituminous coal

12.9
26.2
28.6
41.9
14.3
55.6
61.5

September
January
March
January
July
July
July

Other
Rubber
Lumber

53.5
10.5

January
February

Peak Month

C o tto n and C o tto n G oo d s
Movement of three Indices of Wholesale Commodity Prices from
the Armistice (November, 1918=100).

D o m e stic Prices
Both Bradstreet’s and the Bureau of Labor indices of
wholesale prices showed greater declines in October than
in any previous month taken account of in those indices.
This drop following the continued recession since last
M ay makes the present decline in prices the greatest in
the history of the country in any single year. Bradstreet’s
index is now 25 per cent, below the peak and this bank’s
index of 12 basic commodities is 33 per cent, below the
high point of M ay, petroleum being the only commodity
of the twelve which has shown no decline. Of the 325
items making up the Bureau of Labor index only 37
showed an increase during October. Textiles, food and
farm products continue to show the heaviest declines.
An outstanding feature in November was the heavy
reductions made in prices of bituminous coal and coke
and the lesser reductions in pig iron and steel.
Bitumi­
nous coal and coke are both quoted at present approximate­
ly 60 per-cent, below the peak prices; the total decline
in coke has come within the last 30 days, and declines in
lumber have also been extensive.
Crude rubber has
reached the lowest price ever known.
The readjustment in retail trade has been much slower
and the reduced prices have only partially been passed




Cotton goods reached new low levels during November
and are now about 50 per cent, below the peak of last
spring. The new prices are based on the great decline
in raw materials, a lower scale or elimination of profit
and a reduction in wages. The new levels have not yet
brought out a large volume of orders. Retailers maintain
their policy of buying only for immediate needs and
jobbers are delaying their purchases.
Buyers ask for
assurances that there will be no further decline, without
which they hesitate to place large orders.
As a result of the limited demand, mills in both New
England and the South are said to have accumulated
large stocks of manufactured goods.
Shortening of
production followed as the stocks increased and demand
decreased. Some of the mills are closed entirely, while
others are running three or four days a week, many of
them for the purpose of keeping their operating forces
together. It is estimated that the mills of the country,
as a whole, are running between 50 and 60 per cent, of
maximum.
Workers in m an y. instances have agreed to accept
lower wages when confronted with the alternative of
working for less or having the mills close entirely. In
some mills operators are working longer hours for the
same pay. The wage agreement in the Fall River dis­
trict expires on December 6, but it has been announced
that for the time being it will be continued without
change.
Consumption of cotton declined again for the sixth

FED ER AL RESERVE AG E N T A T NEW Y O R K

successive month. This bank’s index of cotton consump­
tion, which allows for seasonal variation and is based on
the average of 1917 taken as 100, follows:

June..................................................................... ...97.8%
July...................................................................... ...94.4%
August................................................................. ...87.7 %
September............................................................ ...83.9 %
October................................................................ ...69.7%
The decline of 14.2 points from September to October
covers a drop of 58,000 bales in monthly consumption
to less than 400,000 bales per month.
Raw cotton declined about 15.9 per cent, during the
month, falling from 20.50 to 17.25. The price of cotton
reached its peak on July 22, when it touched 43.75, and
the decline since has been about 60 per cent. The decline
during November was steady and rallies were not long
sustained. Mills are not buying for the future but ex­
ports were larger in October and the first weeks of Novem­
ber than for several months previous.

W o o l and W o o le n G oo d s
Woolen and worsted piece goods were offered by the
mills at additional reductions of 15 to 20 per cent, during
the month and are now from 35 to 40 per cent, below the
prices last fall. These reductions have not greatly stimu­
lated buying, and garment manufacturers, who consume
85 per cent, of the piece goods, are not in the market for
large quantities of materials. Buying has been so far
restricted that more mills have been forced to curtail
production, either by closing entirely or by operating
three or four days a week. It is estimated that pro­
duction in the woolen industry is now not above half the
high output of last spring and last fall.
The raw wool market is still in an unsettled state and
prices are more or less nominal. Reports from the auc­
tion sales in London indicate further recessions and the
demand has been so limited that many of the offerings,
especially of the coarser grades, have been withdrawn.
Manufacturers here have but small stocks of wool on
hand and are not placing future orders. Practically none
of this year’s clip has yet gone into manufacture.

C lo th in g
Manufacturers of men’s clothing have announced re­
ductions of 33 to 50 per cent, in the price of winter
clothing. To retailers who bought early in the season
were given assurances that if a decline occurred prior to
November 15 they would receive the benefit of it, but
after the expiration of this guarantee manufacturers
reduced prices in efforts to liquidate stocks before taking
inventories.
Retailers whose stocks were small took
advantage of the reductions, while those with stocks on
hand did not buy. The price guarantee on overcoats ex­
pires on December 1.
Several Rochester manufacturers during the month
showed their lines for the spring of 1921, at prices from
25 to 33 per cent, below those of the present fall and
winter, based on the new price level of woolens.
Few
retailers have placed orders for spring merchandise.

Makers of women’s suits and dresses have no surplus
stocks, as they made up no garments during the season
except on bona fide orders. As a result prices of women’s
clothing have not been reduced to a comparable extent.




Silk
There was a further decline of 10 to 12 per cent, in
the price of broad silks during November and quotations
are now 50 to 55 per cent, below the peak prices of the
year. Jobbers in New York and other cities are en­
deavoring to liquidate their stocks before the first of the
year and have offered goods below manufacturers’ prices.
Demand for merchandise increased during the month
and sales were larger during the week ended November
20 than for many months past, owing largely to renewed
requirements from makers of women’s wear and to the
action of many retailers in reducing prices.
Reduction of manufacture, however, is still going
on.
In Paterson, New Jersey, alone there are 24,000
looms, capable, at a maximum of 44 hours a week,
of running 1,056,000 loom hours.
During the week
ended November 8 these looms operated 90,920 loom
hours or 8.6 per cent, of the maximum. According to
Bradstreet’s there have been 126 failures in Paterson,
many of them of very small concerns. In addition 150
plants have closed temporarily for various reasons. In
other silk manufacturing districts in northern New Jersey,
New England and Pennsylvania, conditions are some­
what better and about 35 per cent, of the looms are run­
ning, but on part time.
Wages have been lowered, in some instances from 20
to 30 per cent. Wages in this industry increased more
rapidly during the period of inflation and similarly were
the first to decline. About 25,000 silk workers are re­
ported to be idle in Paterson alone.
Suspension of production of raw silk in Japan for three
months has been ordered by the Imperial Silk Corpora­
tion, which was organized under Government control.
This step followed the establishment of a minimum price
of yen 1,500 per picul, at which the corporation pur­
chased all stocks offered. Eighty per cent, of the funds
required were derived from the Government and 20 per
cent, from the corporation. Offerings became so great
and stocks on hand in Yokohama so large, amounting
to 60,000 bales, that the plan to curtail production was
effected. A decrease of about 20 per cent, in this year’s
crop is expected.
Prices of raw silk here are about the same as the
minimum established in Japan which is equivalent to
about $6.25 per pound for Sinshui No. 1. Trading in
raw silk here is quiet. Stocks in local warehouses amount
to about 50,000 bales.

C ollection s
In the textile industry some improvement is observed
in collections over a month ago. Outside of delayed col­
lections resulting from disputes over prices, collections in
the textile and allied industries are reported not to show
much variation from normal. It is estimated that col­
lections in these industries, all things considered, are
now only from 7 to 10 per cent, slow for the entire
country as against perhaps 10 to 12 per cent, a month ago.
Taken as a whole, however, collections do not appear
to have changed substantially from a month ago and
are still reported to be fair to slow. Much business is
being done on a cash basis, with a view to keeping assets
liquid and also to eliminate the chances of cancellation.
There has been a slowing down of collections in the
automobile, musical instrument, jewelry, drug and chem­
ical, shipping and furniture trades.

M ON TH LY REVIEW

10

Failures
Failures throughout the country increased rather
sharply in October. They totaled 923, with $38,914,659
of liabilities, and according to the Dun reports, were the
largest both in number and amount since last spring.
There was an unusual number in excess of $100,000,
which made up nearly two-thirds of the total. Half
of them were of manufacturing concerns, so that as a
whole the number of reverses in manufacturing was about
three times the number a year ago. Failures in the Second
Federal Reserve District, in October, increased in number
by 130 and ran nearly double those of September; but
the liabilities involved increased only by about 6.3 per
cent. The following figures are from Dun’s reports for
this Federal Reserve District:
Number of Failures
1920
1919
134
January....... 103
February.. . .
75
102
102
March......... 139

Liabilities
1919
1920
$ 1,212,644
$ 3,258,200
2,686,546
1,062,322
4,033,008
6,213,228

1st quarter 317

338

$ 8,488,194

$ 9,977,754

April........... ...117
May...............133
June............ ...164

107
93
104

2,865,153
2,413,591
16,218,230

4,365,253
3,194,187
4,040,301

2nd quarter 414

304

$21,496,974

$11,599,741

July................172
August............179
September. . 145

79
68
92

11,438,511
15,009,838
14,551,283

1,836,523
1,615,398
2,335,120

3rd quarter 496

239

$40,999,632

$ 5,787,041

86

$15,462,866

$ 1,650,441

October.......

275

much publicity was given to lower wholesale prices, con­
sumers hesitated to buy, expecting price reductions to be
passed on to them. Retailers have recently undertaken
to overcome this attitude by advertising reduction sales,
and there has been a fair volume of purchasing where the
public had confidence in values.
Within the past month men’s clothing has been reduced
from 15 to 30 per cent. Reductions on men’s wear, such as
collars, shirts, ties and underwear, have been sharp and
considerable merchandise has been sold. There have
also been reductions on women’s garments, but they were
not so large as in some other lines, inasmuch as there has
been a fairly good demand from consumers. There have
been substantial reductions on piece goods, particularly
on silks. Holiday buying is below normal. Sales of
musical instruments, jewelry and passenger automobiles
are lower than a month ago, considering the usual increase
at this season. There has been a slight lowering of prices,
apparently due largely to a need for liquidation.
Figures received from representative retail stores in
New York City indicate that net sales in October were
above those of last year and this increase has been even
more marked in smaller cities in the district. These
increases, however, are due mostly to large dollar receipts
resulting from higher prices in October, 1920, than in
October a year ago. Stocks at the end of October were
practically unchanged from what they were at the end
of September. This fact, coupled with the small number
of outstanding orders, would indicate that stores have
kept up their stocks for the holidays largely by replace­
ment purchases for their immediate needs
The schedule printed below, compiled from figures
furnished us by department stores, is self explanatory.

R etail T ra d e

Iron and Steel

There are numerous signs of a determination on the
part of retailers to reduce their stocks. Many price re­
ductions have been advertised, particularly in the last
few weeks, covering a wide range of merchandise. At the
same time retailers as a whole are not replenishing stocks,
except to meet current demands.
Present efforts to stimulate trade contrast with the
relative indifference to prices prevailing a year ago, when
certain stores refrained from advertising prices altogether,
and the consumers were buying without much concern as
to what they paid. When wholesale prices declined and

The decline in activity in the iron and steel industry
has continued. The lack of demand has resulted in
further curtailment of operations and in a weakening of
prices. This slackening is not confined to the United
States. British prices have weakened because of smaller
demand and strong continental competition, and the
industry has been handicapped by the strike of coal
miners.
Some independent manufacturers in this country have
shut down because of lack of orders, and the mills on the
average are running only about 50 per cent, of capacity.

B usiness o f D e p a r tm e n t Stores
New York
City and
Brooklyn
Percentage of increase in net sales during October, 1920, over net sales during the same month
last year.................................................................................................................................
Percentage of increase in net sales from July 1, 1920, to October 31, 1920, over net sales during
same period last year............................................................................................................
Percentage of increase of stocks at close of October, 1920, over stocks at close of the same
month last year.....................................................................................................................
Percentage of increase of stocks at close of October, 1920, over stocks at close of September, 1920
Percentage of average stocks at close of each month from July 1, to average monthly net sales
during same period................................................................................................................
Percentage of outstanding orders at close of October, 1920, to total purchases during the
calendar year, 1919 ..............................................................................................................
^Decrease




Outside
New York
City and
Brooklyn

Second
District

1.71

15.35

6.23

5.24

19.55

9.98

17.18
1.01

15.59
.42*

16.65
.54

479.43

441.28

466.85

9.16

6.56

8.06

F E D E R A L RE SERVE A G E N T A T NEW Y O R K

The United States Steel Corporation, which still has large
orders on its books, is operating on about an 80 per cent,
basis.
The corporation has made no revision of its
price schedule, but the rates of the independents have
been lowered until they are near the level of that schedule.
Little new business is being booked and the resales of
pig iron, which were in considerable volume a month ago,
have fallen off. From October 19 to November 16 Bes­
semer billets, Pittsburgh, declined $5 per gross ton and
the various types of pig iron have fallen during the same
period from $3 to $10 per gross ton. Connellsville coke
has declined from $4.00 to $7.50 per net ton.
The production of pig iron and steel ingots increased
in October, as compared with the previous month, but
this is less than the usual seasonal increase. Index figures
maintained by this bank show declines from 100.4 to
98.1 and from 98.7 to 92.7 respectively for this month,
the monthly averages for 1917 being taken as 100.
Prices on all the non-ferrous metals have tended steadily
downward and the markets are very quiet.

B u ild in g
New construction going forward in this district, par­
ticularly in New York City, is considerably less than six
weeks ago. Builders report that this reduced activity
is owing in part to the general decline in industry and to
an unsettlement resulting from a legislative inquiry into
problems related to the housing situation. This inquiry
has developed a close relation between contractors’
associations and labor unions, the result of which is said
to have increased the cost of construction. The cost of
building materials has declined, but thus far does not
appear to have stimulated building.
According to the figures compiled by the F. W . Dodge
Co. for October, contracts for buildings of all classes
awarded in New York State and northern New Jersey
amounted to $49,207,000, against $59,818,100 in Sep­
tember.
Contracts awarded during October in the twenty-five
States comprising the northeastern quarter of the country
amounted to $177,791,000, which was $28,000,000 less
than the September figure. The general decline in busi­
ness, particularly in manufacturing, contributed to this
reduction in activity.

T h e R e a l E sta te M a rk e t
An inquiry made by this bank among representative
real estate brokers throughout the Second Federal
Reserve District indicates a distinct change within the
past two months in the supply of space and in rentals.
While this increase in supply is reported particularly
for certain business districts within New York City, it
appears that there has been an increase in the available
space in the industrial centers generally, reflecting a return
of workers to the country districts.
Extensive office building construction in the uptown com­
mercial district of New York City, together with the
slowing down of business within the past two months,




1
1

has resulted in a temporary over supply of space in that
part of Manhattan. A reliable estimate places the amount
of office space now for rent in that district at approxi­
mately 4,000,000 square feet. This has not, apparently,
resulted in any easing of rentals.
The dulness of the textile trades together with the
completion of several buildings designed primarily for
such concerns increased the amount of loft, factory, and
office space available in the textile districts of New York
City and has resulted in offerings at materially lower
rates. Furthermore, many factory buildings, built dur­
ing the war and now beyond the present business needs
of the occupants, have recently been placed on the market
for sale or rent.
In New York City rentals of housing accommodations
reached their maximum about October 1 and have since
tended downward, despite the fact that the recent leg­
islation limiting rents, the high costs of construction,
and the shortage of mortgage money have abnormally
reduced new building of this character.
There appear
to be at present a sufficient supply of single family dwell­
ings, and a moderate over supply of small apartments
in remodeled private houses and of very large high-priced
apartments.
There remains an unsatisfied demand for both cheap
and medium-priced apartments of moderate size although
this has been met to a very considerable extent through
a movement of population to the suburbs. A fairly
reliable estimate of the number of vacant apartments
in Manhattan places that total at over 2,000, which one
broker considers about twice the number of vacancies
at this time last year. This surplus, however, consists
of the types of quarters for which there is only a limited
demand.
In other cities throughout the district the supply of
office and store space is barely sufficient to meet present
demands but rentals have steadied. Reduced demands
for manufacturing and factory space have placed a pro­
portionately greater amount of space on the market in
several important industrial centers and leases have
recently been renewed on a much lower basis.
The housing situation outside of New York City has
not shown an improvement comparable to that within
the metropolitan district. Practically every other city
in New York State and northern New Jersey reports that
construction has fallen far behind the demands, largely
as a result of the rapid increase in population in recent
years.
Building has been greatly hampered by largely
increased building costs within the past year.
Sale prices of dwellings have been so greatly in excess
of pre-war prices that people have been willing to pay
high rentals rather than be committed to purchases at
recent values. In consequence, rentals have increased
this year up to October 1, from 10 to 30 per cent, and
in some cases as high as 40 to 50 per cent., according to
estimates by brokers throughout the district. These
increases apply generally to such cities as Albany, Buffalo,
Binghamton, Syracuse, Watertown, N . Y ., Newark,
N . J., and the commuting towns around New York City.
In several of the latter, however, rentals within the past
three months have been at slightly lower rates.

1
2

M O N T H L Y RE V IE W

R ailro a d s and T ra n sp o rta tio n

E m p lo y m e n t

From mid-November reports it appears that for the
first time since last April the railroads are handling a
diminished volume of freight, most evident in the west­
bound loaded car movement. The volume of general
merchandise and manufactured goods which ordinarily
form a large portion of the freight shipped out of New
York City and nearby manufacturing towns is much
reduced, as is also the volume of imports passing through
this port to other parts of the country.
Freight coming to the Atlantic seaboard from the in­
terior is also much below September and the first weeks
of October. Export freight, though still in somewhat
greater volume than at this time last year, is much below
recent levels and even export grain shipments are
somewhat under the average traffic for this season.
The movement of bituminous coal to the seaboard has
also been very irregular despite the high rate of produc­
tion. Iron ore movements remain at a high level.
In the month of October the railroads carried a maxi­
mum volume of revenue freight and at the same time
effected a further decrease in the car shortage, reaching
a slightly higher standard of operating efficiency than at
any time during the war. Even in October, however,
offerings of freight had begun to show sharp reductions
in some sections of the country.
From the car loading figures, it appears that the reduc­
tion in traffic within this district is hardly as great as in
other parts of the country. But it has already been
sufficient to permit of considerable reductions in main­
tenance and operating forces at near-by division points on
roads radiating from New York. Such reductions have
reached as high as 10 per cent, of the shop forces although
the average is below that. This reduction, which has
been selective rather than general, has extended in New
York City to harbor crews and dock workers.

During November there has been a decline of about 5
per cent, in the number employed in this district. This
estimate is arrived at through preliminary figures gathered
by the New York State Industrial Commission, sup­
plemented by data secured by this bank from employers
and labor unions. There has been a total decline of 13
per cent, from the maximum, as follows:

Im m ig ra tio n
October arrivals at the port of New York were about
11,000 less than in September, but the number of aliens
leaving the country decreased by nearly the same num­
ber. Thus the net movement was substantially the same
as in September, when more immigrants arrived at this
port than in any previous month this year. The countries
from which the immigrants came were largely in northern
and southern Europe, and the portions of the United
States to which they went were much the same as in
previous months. Again, the proportion of able-bodied
men was limited.
Approximate figures of arrivals and departures at
this port from January 1 to October 31 are as follows:

January...............................................
February.............................................
March.................................................
April...................................................
May....................................................
June....................................................
July....................................................
August................................................
September...........................................
October...............................................
Total........................................




Arrivals
25,051
22,086
29,098
36,958
40,048
49,715
56,102
57,874
85,394
74,665
476,991

Departures
24,529
24,379
18,714
26,169
21,162
37,584
32,935
36,932
35,689
25,593
283,686

April
1%

May June
2%
0

July
%%

Aug. Sept.
l% % 2%

Oct.
2%

Nov.
5%

In New York City employment agencies placing all
classes of men and women office workers report that the
number of applicants has much increased during the past
month while requests for help have declined about 10 per
cent.
Employment managers of large concerns are besieged
with applicants for positions, but they say they still have
difficulty in finding the standard of worker they are seek­
ing. One large concern reports that for the week ended
November 13 the total of its women applicants was 1,600,
an increase of 500 as compared with the previous week.
The increase in the number of accepted applicants was
very slight.
In this district the most notable decline has occurred
in the clothing trades, in which some estimates place the
decrease at 80 per cent., due to the usual seasonal re­
duction, the inactivity in the industry and labor troubles.
In normal years the new season starts in November but
this year few factories have begun work on spring goods.
The textile trades show an average decrease in employ­
ment of around 50 per cent, from the maximum reached
in the spring of 1920, and a decrease of 17 per cent, in
November as compared with October. It is estimated
that 25 per cent, of the textile workers are idle, 50 per
cent, are working on half time and 25 per cent, are un­
affected. In the boot and shoe trade estimates of the
decline run as high as 75 per cent., due to curtailment
on the part of the manufacturers.
Employment decreased in the building trades some 12
per cent, during November and is now 30 per cent, below
the peak reached in the spring and early summer, due in
part to the usual seasonal declines and in part to a
lack of new construction. In automotive industries the
decrease in some centers has been from 60 to 80 per cent.
In a special survey embracing only industries most
affected by the decline the New York State Industrial
Commission finds that of 358,806 persons employed in a
selected list of factories and industries on August 1, 1920,
the same firms on November 10 employed 212,616, a de­
crease of 146,190 or 40.7 per cent. The decrease in the
number of males employed by these firms was 39.1 per cent,
and in the number of females 45.9 per cent. These figures
show a decline of 23.7 per cent, in the number of clerical
workers, 19.5 per cent, in printing and publishing plants,
25.7 per cent, in hotels and restaurants and 8.3 per cent,
of the male and 20 per cent, of the female employes in
wholesale and retail stores.