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MONTHLY REVIEW
o f C r e d it a n d B u s in e s s C o n d it io n s
Second Federal Reserve District
Federal R eserve A gen t
(4) Lower Federal Reserve discount rates
M o n e y M a r k e t in Septem ber
The first two of these factors have been influential
in reducing, as compared with a year ago, the demands
for Federal Reserve credit, and total bills and securities
of the System averaged $1,135,000,000 compared with
$1,225,000,000 in September 1926. The average amount
of member bank borrowing for the System as a whole
was $421,000,000 in the first 27 days of September this
year as compared with $642,000,000 in September 1926.
Member banks in New York City this year were borrow
ing an average of $106,000,000 compared with $138,000,000 at the same time last year,— an amount of borrowing
which is sufficient to avoid surplus money in the market.
ONEY continued generally easy during Septem
ber as compared with a year ago, although call
money was prevailingly 4 per cent after the 10th
of the month. The prevailing level of other money rates
was approximately the same as during August, except
for a slight rise in time money, as indicated by the fol
lowing table :
M
M oney Rates at New York
Sept. 30, 1926 Aug. 30,1927 Sept. 30, 1927
Call m o n e y .................................................
Time money— 90 d a y ................................
Prime commercial paper.........................
Bills— 90 day unendorsed.......................
Treasury certificates and notes
Maturing December 15.......................
Maturing March 15.............................
Federal Reserve Banc of New York
rediscount ra te..................... ................
Federal Reserve Bank of New Y ork
buying rate for 90 day bills...............
*4
4%
4
3H
*3^
4
4
3H
*5-5 H
5H
3%
R
3 .54
3.56
2.61
2.95
2.52
3.04
4
3H
3H
3%
3X
3X
o f
E a s ie r
M oney
The principal causes of easier money this year than
a year ago may be found in—
(1) A smaller demand for currency because of
slightly less activity in industry
(2) Net gold imports in each month of the year
up to September
(3) An increase in holdings of securities by the
Reserve Banks
■6r
Since July 1 as much as 300 million dollars has been
transferred from New York to the interior,— a move
ment far greater than the usual seasonal flow of funds
westward from New York during the late summer and
early autumn. This movement of funds has made it
unnecessary for banks in districts outside New York
DOLLARS
M
-----------------
y
9\
4.87r
h e ;r
GAIN
%
« .......
V***.
\
• 0%
•# \
V \
J926/m
e v e lo p m e n ts
(3) A gold export movement in September for the
first time this year
MILLIONS c f DOLLARS
RATE
D
ela ted
Accompanying, and somewhat related to, the continued
ease in money, there have been three important develop
ments :
(1) A large domestic flow of funds from New York
to other districts
(2) Strength of sterling exchange
Prevailing rate for preceding week.
C auses
O ctober 1, 1927
Federal R eserve Bank, New Y ork
li
' .............v
\
1926
ir
/
-200/.... . -...........
«
( 9 2 7 S -m ^
/•• •S .
485
V
....
192.7
-400) ........
"AUG-.'
484
DOMES T I C
T R A N S F ’ ER.S
-600, GA1NorLOS5|toN.Y
AVERA $E CALL
LOAN R ATES
JUL
SEPT
OCT
JUL
AUG-
S T E R L IN & E X C H A
!
4.83
SEPT
OCT
v m \N D R A T E S
iL_...
JUh
______ ___
AUG-
SEPT
Course o f Call Loan Rates, Inter-district Transfers and Sterling Exchange, July to September 1927, Compared with 1926.
x
m ZT LOSS
OCT
74
M ONTHLY REVIEW, OCTOBER 1, 1927
to increase their borrowings at their local Reserve Banks
to meet the usual requirements of the fall season for
financing the harvesting and movement of the crops
and early fall trade. Borrowing by member banks in
other districts has in fact decreased slightly in the past
two months, whereas there has been some increase in
borrowing by New York City banks.
A lower level of money rates in this market than in
London has been one of the causes of increasing strength
in sterling exchange during the past two months, in
contrast to the tendency a year ago. Last year sterling
showed a steady decline from early in July through
October. During the first six months of 1927 sterling
exchange was, for the most part, only slightly above the
point at which gold would move to this country, but
following easier money conditions here in July and
August the exchange has risen steadily until on Sep
tember 24 the demand rate was above $4.86^4, and the
cable rate advanced above par. This strength in sterling
exchange is particularly important at the present time,
because sterling is the medium through which a large
proportion of European purchases of American farm
products are made, and the volume of these purchases
and the prices at which they are made are much influ
enced by the position of the exchanges. Strength in
sterling exchange was accompanied by strength in most
other foreign exchanges in terms of dollars.
A net gold export in September— the first net export
movement for any month of this year— was due to the
shipment of 23 million dollars of gold to the Argentine
from the proceeds of securities sold by that country in
this market.
E
m p l o y m e n t
of
B
a n k
C
r e d it
Changes in the use of bank credit in recent months
in the Second Federal Reserve District as compared
with other districts are shown in the accompanying
diagrams. They indicate in general that the volume of
credit has moved much in accordance with the usual
seasonal tendencies. Both in the Second District and in
other districts there has been a large increase in loans
on stocks and bonds, but in other forms of credit there
appears to have been a considerable divergence between
the Second District and other districts. Commercial
(all other) loans in the Second District show more
than the usual year to year increase, whereas in other
districts some retardation in business activity is reflected
M
UON'So/DOlLARS
*BILUdm
oJ,'DOLLARS
3/41
/
A v
m i-
W
V /
A
s.%
i
A
y
15
1925 V
SECOND
DISTRIC r
J.
f
...»
1- .. '
M- _ A t t . _ j J A S O . N D
OTHEf I
DISTRIC TS
J.
r„
M
A
M
j
,j
*
s
u
n
u .
Commercial Loans o f Reporting Member Banks in Second District
and Other Districts in 1927, Compared with 1925 and 1926.
BlLUONSo/'MlARS
3 /2
t9 z n j'*
J- ....
*1
,
a
'
J
3'A
1927 J
\
s
''A
1
----
fS
y
*
1925
by{ ]
V
V jy w
A
19Z6
i
1 ^ 8
m e
y
2%
1925
✓r
SECON! > DISTR CT
M A M J
J A S O N D
0 THER
DK jTRICTS
Loans on Stocks and Bonds o f Reporting Member Banks in Second
D istrict and Other D istricts in 1927, Compared
with 1925 and 1926.
in smaller commercial loans than in 1926. Contrariwise,
investments by banks in the Second District show at
present little increase as compared with a year ago,
whereas in other districts the increase has been marked,
as funds not employed in business have been used for
increasing bank investments, as well as loans on stocks
and bonds.
MU0N5ofDOLLARS
mwNSofmam
4
1
1927 8*
,*
\ A
/ A
V
Z'M
/s W t
3 '/z
1925
19 2 6
1926 p
A
3/4
PA
SECON d
DI5TRH :t
A S O N D
1925
OTHE: r
DISTRI <jlT5
1 F M A M 1 .J A 5 O M D
Investments o f Reporting Member Banks in Second D istrict and
Other Districts in 1927, Compared with 1925 and 1926.
Q u a r te rly
T a x
P e rio d
O p e r a tio n s
Day to day movements in the money market during
September have largely centered about the quarterly
tax period operations of the Treasury. Aside from the
exchange of 4 % per cent Second Liberty Loan bonds
for the new 3 % per cent Treasury notes, a transaction
which had no effect on the money market, the principal
Treasury operations throughout the country over the tax
period were the redemption of $362,000,000 of maturing
certificates, the payment of $81,000,000 of interest on
current and maturing obligations, including interest to
November 15 on the amount of 4 % per cent Second
Liberty Loan bonds exchanged, and the collection of
$443,000,000 of income taxes.
A large part of the cash redemptions and interest pay
ments occurred on the 15th of the month in the New
York market, greatly exceeding income tax collections,
and the net gain to the market on that day by Treasury
operations was approximately $190,000,000. These gains,
however, were offset to a considerable degree by the
following operations:
75
FEDERAL RESERVE AGENT A T NEW YO R K
1. Temporary participations of $50,000,000 in the special
Treasury certificate of indebtedness issued to the Reserve
Bank to cover the Treasury overdraft were sold to New
York City banks.
2. Dealers in bills and Government securities repurchased
$50,000,000 of bills and securities previously sold to the
New York Eeserve Bank under repurchase agreement.
3. Member banks in New York City repaid $17,000,000 of
loans at the Reserve Bank.
In the following three days, funds were withdrawn
from the market by the collection of income taxes and
transfers of commercial funds to other districts to re
place Treasury tax collections there. Consequently, the
participations of New York City banks in the special
Treasury certificate were terminated and member bank
borrowing and sales contract holdings of bills and secu
rities at the Reserve Bank began to increase again.
B
il l
M
arket
The supply of bills offered to the market in September
continued in large volume and the investment demand
also was active. Toward the end of the period, the de
mand, due to local bank buying of short maturities, was
slightly in excess of dealers' purchases of new bills, and
dealers' portfolios were reduced somewhat from the
high levels maintained since the middle of August.
Open market rates were unchanged during the month,
with the 90-day maturity offered at 3 % per cent.
C
o m m e r c ia l
P
aper
M
arket
The demand for commercial paper outside of New
York City continued active in September and as a result
dealers were able to sell paper about as quickly as new
borrowing came into the market. Although the scarcity
of good paper and the active bank investment demand
tended to lower rates, by far the larger proportion of
actual sales continued to be at 4 per cent. Transactions
in very high grade names at 3 % per cent showed a
slight increase during the latter part of the month, but
the market at this rate was generally reported to be
narrow. The somewhat lower rates for commercial paper
in August appear to have brought in to the market some
additional borrowing, as evidenced by the outstandings
through 26 dealers which increased 4 per cent during
the month to $591,000,000. In the previous two years
there were declines during August. Total outstandings
on August 31, however, were 7 per cent smaller than a
year ago.
R e tire m e n t of the Second L ib e r ty L o a n
Largely through successive offers that have been made
this year, the amount of outstanding Second Liberty
Loan bonds has been reduced from an original issue
of $3,807,865,000 on November 15,1917 to approximately
$830,000,000 on October 1, 1927.
When the first
step towards the refunding of the issue was taken in
March of this year the amount outstanding had been
reduced by prior redemptions to $3,104,520,050. During
March approximately 45 per cent of these bonds were
exchanged for 3x/2 per cent, 3 to 5 year Treasury notes.
In June the remaining holders of Second Liberty Loan
bonds were offered a long-term issue of Treasury bonds
in exchange, and near the end of the month the Treasury
called for tenders of the bonds for purchase at prices
not to exceed 100%. Additional purchases were made
with funds in the surplus money account and for the
sinking fund, and in September a note issue similar to
that offered in March was made available. As the result
of these later operations nearly half of the bonds out
standing at the end of March were retired.
The principal steps toward the retirement of these
Second Liberty Loan bonds and the amounts outstanding
after each step are outlined below:
Originally issued November 15, 1917___ $3,807,865,000
Retired prior to February 28, 1927.........
703,344,950
Balance outstanding................................ $3,104,520,050
Exchanged during March for 3 % per cent
Treasury notes, Series A , 1930-32 1,360,456,450
Balance outstanding .............................. $1,744,063,600
Exchanged during June for 3 % per cent
Treasury bonds of 1943-47...............
245,256,450
Balance outstanding................................ $1,498,807,150
Purchases for Treasury sinking fund,
from surplus money in Treasury, and
misc., March to August........................
300,325,950
Balance outstanding .............................. $1,198,481,200
Exchanged during September for 3 % per
cent Treasury notes, Series B, 1930368,000,000
1932 (Estimated) ................................
Balance outstanding (Estimated)
. . . $ 830,481,200
These operations leave less than one-fourth of the
original amount to be retired on November 15, when the
issue has been called for redemption. The remainder
now outstanding includes a large proportion of small
holdings, and it appears probable that, notwithstanding
all possible efforts to notify the holders that the bonds
have been called, and that interest will cease on Novem
ber 15, a considerable part of the small denominations
will not be presented promptly for retirement. After
the books had been closed in March on the exchange of
notes for Second Liberty bonds, it was found that twothirds of the $10,000 bonds had been offered for ex
change, but that the proportion of exchanges diminished
rapidly with the denomination of the bonds. A t the
end of August nearly $300,000,000 of $50, $100, and
$500 Second Liberty bonds were outstanding, and it
is probable that a large part of them remain in the
hands of small holders. The following table shows the
amounts of the various denominations outstanding at
the end of February and the amounts remaining to be
retired before the September exchanges:
Denomination
Outstanding
February 28, 1927
Outstanding
August 31, 1927
$ 50
100
500
1,000
5,000
10,000
50,000
100,000
$ 65,960,150
143,290,900
186,534,000
739,360,000
298,345,000
1,464,280,000
28,350,000
178,400,000
$ 53,111,300
110,110,400
128,737,500
424,442,000
139,640,000
317,990,000
10,150,000
14,300,000
$3,104,520,050
$1,198,481,200
T otal
76
E u ropean
MONTHLY REVIEW, OCTOBER 1, 1927
M oney
M a rk ets
There was no great change in European market rates
during the month. The London 90-day bill rate re
mained at about 4 5/16 per cent; call money was gen
erally under 4 per cent. Treasury bill allotments in
the third week of September were on a basis of about
4*4 per cent, the lowest rate since May. In Berlin,
rates remained high; the prevailing bill rate was 5 % per
cent, rising to 6 per cent toward the end of the month;
call money fluctuated over a considerable range but was
no cheaper than in August; monthly money at 7 % -8 %
per cent was very slightly easier. The Paris market
was slightly firmer at about 2 to 2Ys per cent, with call
money below 3 per cent. Zurich was slightly easier, the
rate dropping* to 3 % per cent, but Amsterdam was
rather firm, with quotations virtually at the Bank rate,
which remained 3Y2 Per cent.
C h an ges in C en tral B a n k R a te s
On September 8, the Imperial Bank of India raised
its rate from 4 per cent to 5 per cent, and on Septem
ber 10, the Eeserve Bank of South Africa from 5 %
per cent to 6 per cent.
recent loan to Argentina, accompanying the return of
Argentina to gold payments and the reopening of the
Caja de Conversion, the office which redeems currency
in gold. Other gold movements at New York during
the first 28 days of September were small and included
exports of about $1,000,000, and imports of less than
$600,000.
During August both exports and imports of gold for
the country as a whole were the smallest of any month
this year. Imports totaled about $7,900,000, of which
$3,000,000 constituted a consignment from the Banco
Central de Chile for the strengthening of its reserves
in New York, and $2,400,000 represented additional
shipments from the Netherlands, bringing the total
received from that country since May 1 up to $15,000,000. Exports amounted to $1,500,000, of which
$550,000 went to Mexico and $850,000 to the Far East.
The net import of $6,400,000 raised the net inflow of
gold during the first eight months' of this year to
$146,790,000.
F oreign T ra d e
The value of both exports and imports of merchan
dise showed more than the usual seasonal increases
from July to August. Exports, valued at $375,000,000,
The upward movement of foreign exchanges which
were $33,000,000 more than in July but $9,000,000 be
began in July and August, became more general and
low those of a year ago. Imports, valued at $371,000,000,
extensive in September. Demand sterling, at $4.8628,
were $52,000,000 larger than in July and $35,000,000
with cables well over parity, was near the figure touched
larger than in August 1926.
in June 1926, which was the highest since 1914. Marks,
A ll groups of exports except manufactured and semi
over par at 23.84 cents, and belgas, at 13.93 cents, made
manufactured products were smaller in value than a
new highs for the year. Swedish crowns at 26.90 cents
year ago. A decline of $11,000,000 in the value of
were highest since July 1925. Swiss francs were firm
bituminous coal shipped abroad, which a year ago was
just under parity, and Netherlands florins at 40.08 were
unusually large on account of the British coal strike*
the highest since September 1926.
Fluctuations in
and a decline of $8,000,000 in exports of raw cotton
lire and French francs were small, both showing a
accounted for nearly all of the loss in exports of crude
tendency to rise with sterling. The Danish crown was
materials. Increased shipments of automobiles were a
firm; Norwegian crowns, at 26.44 cents, were only about
large factor in the increase in exports of finished manu
2 per cent below parity. Spanish pesetas were higher
factures. Compared with July, the value of all classes
than in any month since May.
of exports except semi-manufactures, showed some in
Among the American rates, Canadian dollars reached
crease. Grain shipments were the largest for any month
a substantial premium and Brazilian milreis were at
since last September, and in value exceeded those of
the highest figure since November 1926. Argentine July by $26,000,000. Although the quantity of ra;w
pesos, after rising to 42.70 cents, reacted slightly, pos
cotton exported was smaller than in July, the value
sibly under the influence of gold shipments.
was approximately the same, due to the rise in prices.
In the Far East rupees at 36.31 cents were at the
Every group of imports showed an increase as com
highest figure since February, but Japanese yen, after
pared both with July and with a year ago. The largest
touching 47.25 cents early in the month declined nearly
gains were in imports of crude materials, the value
one cent. Silver and the silver exchanges, which were
of which was $24,000,000 larger than in July, and
weak in August, moved up during September, but in the
$20,000,000 larger than a year ago. The two principal
first three weeks silver did not reach the best figures of
items in this group, raw silk and crude rubber, each
the previous month.
showed an increase of nearly 30 per cent over a year
Among the causes of the upward tendency in the
ago. Receipts of raw silk were the largest ever re
exchanges, which had been in contrast with the position
corded, but imports of crude rubber were smaller than
a year ago, may be included lower money rates in New
in any of the previous five months. Coffee imports were
York and a large volume of foreign financing in this
considerably larger than in July, or a year ago.
country.
As the following table shows, there has been a favor
G o ld M o v e m e n t
able balance in our foreign trade of 270 million dollars
The largest movement of gold at the Port of New during the first eight months of this year, compared
York during September and in fact for several months with a small import balance in the corresponding period
past was the export of $23,000,000 of the proceeds of a of 1926.
T h e F oreign E xch anges
FEDERAL RESERVE AGENT AT NEW YO R K
77
(In thousands of dollars)
Excess of
Imports
Exports
January.............................
F ebruary...........................
M a rch................................
A p ril...................................
M a y ....................................
June....................................
J u ly ....................................
A u gu st...............................
1927
356,841
310,877
378,331
375,733
346,501
354,892
319,380
371,000
419,393
372,666
408,973
415,374
393,140
356,966
342,163
375,000
T otal 8 months ended
August
1927....................................
1926....................................
2,813,555
2,977,475
3,083,675
2,959,619
Imports
Exports
62,552
61,789
30,642
39,641
46,639
2,074
22,783
4,000
the usual seasonal increase from July to August, but
was more than one-fourth smaller than a year ago, and
motor truck output remained small. Some decline in the
September rate of production has been indicated by a
gradual reduction in the number of workers shown by
Detroit employment reports. Mill consumption of cot
ton increased substantially in August and continued
much heavier than last year, and the activity of woolen
mills expanded, but silk consumption was curtailed.
(Computed trend of past years =100 per cent)
270,120
17,856
1927
1926
Security M a rk e ts
Stock trading continued very active in September and
average daily sales were more than 2,200,000 shares.
Price movements showed alternate periods of strength
and weakness. A further advance in industrial stocks
raised average prices at the middle of the month to
new high levels almost 8 points above the August peak,
but subsequently prices declined slightly.
Railroad
stocks continued to fluctuate narrowly at levels slightly
below the highest prices of early August.
Corporation bonds were generally firm at the top
prices of August, which were the highest since 1913,
Foreign bonds remained firm at about the highest levels
reached in August. United States Government issues
were in general irregular, but the June 3 % per cent
Treasury bonds advanced further to a new high price
since issuance, at 101 21/32.
The volume of new financing continued to increase
in September, but, as in the previous two months, was
smaller than the amount offered in any month during
the first half of the year. There was a resumption of
heavy financing by public utility companies in Sep
tember, and the total of state and municipal offerings
likewise was larger than in several months, due prin
cipally to a substantial new bond offering of the City
of Detroit. Realty issues also increased, but industrial
and railroad loans were relatively small. The principal
foreign offerings of the month were a Republic of
Colombia $25,000,000 bond issue, a Deutsche Bank
(Berlin) $25,000,000 offering, and $18,500,000 of Gati
neau Power Company of Canada bonds. While the
major parts of these issues were offered in this country,
substantial amounts were also withdrawn for place
ment in foreign markets.
P rodu ction
Production in a number of industries increased by
more than the customary seasonal amount from July
to August, but the productive activity of the country
continued at a lower rate than a year ago. The output
of steel ingots was somewhat larger in August than in
July, but pig iron production declined slightly, and
trade reports in September have indicated that activity
in the iron and steel industry has remained smaller than
last year. Production of both bituminous and anthra
cite coal has been increased considerably from the July
volume, partly reflecting the seasonal strengthening in
demand, but remains lower than a year ago.
Passenger automobile production showed more than
Aug.
June
July
Aug.
108
112
97r
104
99
111
110
95r
92
83
130
96
92r
115r
108
98
81r
99
88
98
118
97r
116
89
133
85
107r
116r
102
89
74r
98
92
95
119
99r
105
84
136
92
114r
1127*
99
96
82
96
112
101
105r
93r
lOOr
105r
99
104r
lOOr
106r
99r
105r
HOr
109 r
10 5r
103r
99
146
157
105
107r
87r
108r
105r
96
lOOr
lO lr
109r
102r
95 r
117r
97 r
103r
107r
86
100
102
91
98r
76r
98r
lO lr
91
87r
98r
102r
95r
99r
104r
94r
96r
114r
61
92
95
78
Producers* Goods
Steel ingots....................................................
Bituminous c o a l r ........................................
Copper, U. S. m ines....................................
Tin deliveries....................... .........................
Gas and fuel o il?*........................................
Cotton consumption ................................
W oolen mill a ctivity*..................................
Leather, sole?*................................................
Silk consumption?"........................................
Consumers* Goods
Cattle slaughtered?*......................................
Calves slaughtered?*.....................................
Sheep slaughtered?*............. .........................
Hogs slaughteredr........................................
Sugar meltings, U. S. p orts...............
Wheat flour?*..................................................
T obacco, m anufacturedr............................
Gasoline?*........................................................
Paper, total?*..................................................
Boots and shoes?*..........................................
Anthracite co a l.............................................
Automobile, a ll.............................................
Automobile, passenger................................
Automobile, truck........................................
*=Seasonal variation not allowed for
p=Prelim inary
115
89p
136
96p
112
110
108
90
106
111
96
87
103
118
98
102p
98
’ ‘ii6p ’
93
101
108
73
r= R evised
B u ild ing
Contracts for building and engineering projects
awarded in August were 3 per cent larger than in July,
in the 37 states covered by the reports of the F. W .
Dodge Corporation, but were 8 per cent below the un
usually large total of August 1926, which marked the
high level of building projects during 1926. The cumu
lative total of construction awards from the first of the
year to the end of August was practically the same as
in the corresponding period last year.
A decided increase in residential building in August,
together with larger amounts of industrial and educa
tional contracts, accounted for the increase over July.
Public works and engineering projects, on the other
hand, showed a reduction from the previous two months,
and commercial construction also was smaller. All
principal classes of building were smaller than in August
1926, industrial and residential construction showing
the largest decreases.
The New York and Northern New Jersey district
reported for August a contract volume 10 per cent
smaller than in July and 8 per cent smaller than a year
ago, due chiefly to a considerable decrease in public
works and engineering projects.
MONTHLY REVIEW, OCTOBER 1, 192?
78
T ren d
of F arm
R e a l E sta te
V a lu e s
A report* recently issued by the Department of Agri
culture indicates that the trend of farm real estate
values continues to be downward. The accompanying
diagram, prepared from the Department of Agricul
ture’s figures, indicates that farm land values respond
slowly to the major swings of prices of agricultural
products, and that the readjustment to post-war condi
tions is still in progress.
pm CENT,
Eetail trade showed an unusually large increase
over August 1926, and foreign trade, especially
import trade, showed more than the usual seasonal in
crease from July to August. Accompanying very active
trading on the stock exchange, the index of bank debits
in New York was higher than for any month in the
past. Life insurance sales, advertising, and postal re
ceipts also showed increases over July, after seasonal
adjustment.
This bank’s indexes of business activity are given in
the following table in percentages of the computed
trend, with allowance for seasonal variations, and, where
necessary, for price changes.
(Computed trend of past years=100 per cent)
1927
1926
Aug.
June
July
Aug.
Grain exports................................................
Panama Canal traffic..................................
107
107
106
113
132
102
106
97
99
131
90
91
105
93
104
m
63
96
103
97
106p
127p
120
Distribution to Consumer
Departm ent store sales, 2nd D ist............
Chain store sales..........................................
M ail order sales............................................
Life insurance paid fo r ................................
Real estate transfers........................... ..
Magazine advertising..................................
Newspaper advertising................................
105
99
114
113
106
107
113
101
100
106
112
96
97
100
101
106
117
109
97
97
97
108
101
121
113
112
132
102
116
134
104
116
136r
106
112
146
102
103
132
209
99
106r
104
lO lr
137
108
106
128
219
95
107r
100
115r
129
123
110
135
176
92
106r
100
104r
104
116
104
145
234
98
100
107
129
113
185
184
183
184
Primary Distribution
Car loadings, merchandise and m isc........
Car loadings, other'......................................
D ep artm ent o f A g ricu ltu re Indexes o f P'arm R eal E sta te V alu es
and P rices o f F arm P rod u cts at the F a rm s. (In d e x o f p rices
o f farm p rod u cts for 1927 based on first s ix m o n th s .)
The average valuation of farm real estate advanced
gradually accompanying the rapid rise in prices of farm
products during the War, but following a more rapid
advance after the close of the War, reached in the spring
of 1920 a level nearly 70 per cent above that of 1913.
The response to the price drop of 1920-21 was slow, but
a continuous decline has occurred for the past seven
years, reflecting the unfavorable position of agricul
tural prices compared with industrial prices during
most of the period.
In general, the most rapid rise in farm land values
up to 1920, and the most drastic decline in the subse
quent years, were in the predominantly agricultural
states. Land values in 1920 were at least double those
of 1913 in some of the cotton-growing states, and, al
though the reaction from the high level of that year
has likewise been rapid, the increase over the pre-war
level in these states remains above the average for the
entire country. Land values in most of the leading
grain-growing states last spring were little if any above
those of 1913.
* Index Numbers of the Value of Farm Real Estate, 1912-1927,
Crops and Markets, August 1927, p. 296.
In dexes o f Business A c tiv ity
Business activity appears to have shown no consistent
change from July to August. Two of the principal busi
ness indicators, merchandise carloadings and bank
debits outside of New York City, showed slight declines
after allowance for seasonal changes, but a large number
of other indexes showed advances from July to August.
General Business Activity
Bank debits, outside of N. Y . C it y .........
Bank debits, New Y ork C it y ....................
Bank debits, 2nd Dist. excl. N. Y . C ity.
V elocity of bank deposits, outside
New Y ork C it y ........................................
Velocity of bank deposits, N. Y . C it y ...
Shares sold on N. Y . Stock E xch an ge*..
Postal receipts...............................................
Electric p ow err.............................................
Employment in the United States...........
Business failuresr.........................................
Building perm its..........................................
New corporations formed in N. Y . State
General price level.......................................
*=Seasonal variation not allowed for
p=Prelim inary
104
102
r= R evised
C o m m o d ity Prices
Basic commodity prices, as the accompanying diagram
shows, have advanced steadily since the end of June to
the highest average level in more than a year. The
rise has been principally in agricultural products; prices
of industrial products, except for an advance in fuels
which is largely seasonal, have remained at the lowest
levels since 1916.
Cotton was an important factor in the advance from
the low point of March to the high point reached in the
early part of September, and the reaction in cotton
prices together with a decline in grain prices around the
middle of September checked the advance in the basic
price index. Unfavorable prospects early in the crop
growing season were reflected in strong advances in
grain prices during the spring, but more recently the
tendency has been downward in response to more favor
able crop conditions.
Cattle prices have advanced
steadily to the highest levels since 1920, hides have held
at high levels following a rapid advance last spring, and
hog prices have regained a part of the loss that occurred
during the first half of the year.
79
FEDERAL RESERVE AGENT AT NEW Y O R K
women’s wear, shoes, and hosiery were among the de
partments showing the more substantial increases.
Woolen yard goods sales, though not large in actual
amount, continued to show a considerable increase over
the small volume of a year ago.
TER CENT
Net Sales
Percentage Change
August 1927 from
August 1926
Stock on Hand
Percentage Change
August 31, 1927
from
August 31, 1926
+ 3 1 .2
+ 2 1 .9
+ 2 1 .4
+ 1 6 .4
+ 1 4 .7
+ 1 4 .1
+ 1 2 .6
+ 1 0 .9
+ 9 .9
+ 7 .3
+ 7 .0
+ 6 .6
+ 6 .3
+ 4 .1
+ 2 .4
+ 1.4
— 3 .2
— 0 .1
+ 6 .6
— 0 .6
— 4 .2
+ 1 2 .6
+ 3 0 .0
— 2 .2
— 1 .5
+ 2 .6
— 5 .5
+ 1 2 .2
— 4 .3
— 37.6
— 5.1
+ 1 0 .4
+ 0 .4
+ 3 .3
+ 3 .9
+ 5 .7
+ 1 0 .4
— 15.6
Books and sta tion ery................................
Toy3 and sporting good s..........................
W om en’s and Misses’ ready-to-wear. . .
Shoes..............................................................
Woolen g o o d s .............................................
Hom e furnishings.......................................
W om en’s ready-to-wear accessories. . . .
Toilet articles and drugs..........................
Indexes
of
Basic
Commodity Prices
United States.
in England and the
Among the non-agricultural commodities, coal has
shown a moderate seasonal advance, also crude petro
leum, and a rise occurred in cotton goods accompanying
higher raw cotton prices, but iron and steel prices have
remained weak, and little tendency toward an advance
has appeared in prices of other industrial products.
D e p a r tm e n t Store T ra d e
An average increase of more than 7 per cent in sales
compared with a year ago was reported by leading
department stores in this district for the month of
August. One more selling day than in August 1926
accounted for a part of the gain. Reporting apparel
stores had an equally large increase in sales, and mail
order business also showed a substantial increase.
The amount of stock on hand at the end of August
was slightly larger than a year previous for the first
time this year, but the rate of stock turnover during
the month was higher than a year ago. Collections were
better than last year as in most previous months of
this year.
Percentage Change
August 1927 from
August 1926
Locality
Net
Sales
Stock on
hand end
of month
Luggage and other leather good s ...........
Musical instruments and rad io...............
Silverware and je w e lr y ............................
Linens and handkerchiefs.........................
Furniture......................................................
C otton good s...............................................
M en’s and B oys’ w ear..............................
Silks and velvets........................................
M en’s furnishings.......................................
W h o le sa le T ra d e
Wholesale trade in this district in August showed
the largest year-to-year increase in more than two
years, according to reports received by this bank. As
in July, an important factor in the increase was a large
gain in sales of women’s coats and suits. Fairly large
increases over August 1926 were reported also in sales
of cotton goods, silks, shoes, drugs, and paper, and
small increases occurred in sales of groceries, machine
tools, and jewelry.
Stocks of groceries, cotton goods, and hardware were
smaller at the end of August than a year previous, but
shoe stocks continued substantially above the low level
of last year, and mill stocks of silk goods and wholesale
drug stocks also showed considerable increases. Col
lections showed no consistent change from those of
August 1926.
Per cent of
Charge Accounts
Outstanding
July 31
Collected in August
1927
1926
Commodity
Net
Sales
New Y o r k ......................... ................
B uffalo................................................
R ochester...........................................
Syracuse.............................................
N ew ark...............................................
Bridgeport.................................
Elsewhere...........................................
Northern New Y ork S tate........
Central New Yor^ S ta te...........
Southern New Y ork S tate........
Hudson River Valley D is tr ic t..
Capital D istrict...........................
Westchester D istrict...................
+ 8 .1
+ 0 .2
+ 0 .2
+ 9 .9
+ 9 .7
— l.i
+ 6 .2
+ 4 .9
+ 1 1 .8
+ 4 .9
+ 6 .6
+ 5 .4
+ 4 .5
+ 2 .2
— 7 .2
— 8 .6
— 12.1
+ 5 .9
— 14.8
— 2 .6
All department stores.....................
+ 7.1
+ 0 .3
Apparel stores..................................
Mail order houses............................
+ 7 .6
+ 1 4 .1
43.1
4 6.4
3 3.8
41 .0
45.1
3 5.0
* ± 1 .7
" 4 i.‘ 8
' 29.9
3 0.6
41.1
3 9 .7
4 3.0
3 5.6
Groceries........................
M en’s clothing..............
W om en’s dresses...........
W om en’s coats and
s u i t s ...........................
C otton goods— Jobbers
Cotton goods— Com mission
...........
Machine tools**...........
S ta tio n e ry .....................
P a p e r..............................
Jewelry............................
+
2 .7
+ 1 1 0 .1
+ 9 2.2
+ 1 6 0 .4
+ 12.6
+
+
+
+
+
+
+
+
+
+
2 2.6
3 5.8
5 5.5
14.1
9 .8
31.7
19.1
6 .3
2 9.4
57.1
Weighted A vera ge... + 54.9
Sales of books and stationery and sporting goods
showed the largest increases over August 1926, and
Per cent of
Accounts
Outstanding
July 31
Collected
in August
Percentage Change Percentage Change
August 1927
August 1927
from
from
August 1926
July 1927
Stock
end of
month
— 1.5
— 2 .2
Net
Sales
+
1.4
— 3 .4
— 12.1
+ 1 1 6 .6
+
4 .3
+ 12.9
— 1.1 * + 9 .1
— 8 .0 + 15.3
+ 1 3 .4 + 6 .3
+ 0 .4 — 0 .1
+ 2 .1
— 5 .1
+
6 .5
— 2 5.6
} — 0 .2 +
2 .3
+
12.6
Stock
end of
month
1927
1926
— 4 .2
7 5.0
37.8
77.1
45.4
— 8 .3
4 0.0
37.1
+ 1 1 .9 *
+ 3 0 .3
+ 1 0 .8
— 8 .4
4 8.9
36.0
46.8
4 6 .9
52.7
37.1
39.6
4 4.0
* 72^5
6 6.3
2 9.4
‘ 60! 7
66.8
} 24.4
51.8
5 3.0
}+
0 .8
|
*=Q uantity not value. Reported b y the Silk Association of America
**= R eported by the National Machine T ool Builders’ Association
80
MONTHLY REVIEW, OCTOBER 1, 1927
Business Conditions in the United States
(Summarized by the Federal Reserve Board)
N D U STRIAL production increased in August, reflecting a growth in the
output of mines, and the distribution of commodities, both at wholesale and
at retail, increased by more than the usual seasonal amount. The general level
of wholesale commodity prices rose about one per cent, owing chiefly to
advances in the prices of farm products.
I
MINER
o o i^ .
1923
Vs
1924
192.5
P r o d u c t io n
1926'
1927
Index Numbers o f Production o f M anufac
tures and Minerals, Adjusted for Seaonal Variations. (1923-25 aver
age = 100 per cent.)
Production of anthracite and bituminous coal, which showed a considerable
decline earlier in the season, increased sharply in August and the early weeks
of September, and this rise was reflected in an advance in the Board’s index
of mineral output from 98 per cent of the 1923-1925 average in July, to 106
per cent in August. The index of manufactures as a whole showed practically
no change for the month.
The iron and steel industry continued during
August and September with little change in demand or in production, and
the output of newsprint, lumber, and cement showed only customary seasonal
changes in August. Consumption of cotton remained unusually large for this
season of the year, and there was an increase in the production of automobiles,
which, however, remained below the output of August of last year. Output of
shoes and rubber tires increased from July to August by less than the customary seasonal amount. Factory employment was in practically the same volume
in August as in July, and both employment and production were smaller than
a year ago. The volume of building contracts awarded in August was smaller
than in August 1926, which was a month of unusually large awards. The
largest decreases, as compared with last year, were in Boston, New York,
and Chicago Federal Reserve districts. In the first half of September awards
were in practically the same volume as in the corresponding period of last year.
The Department of Agriculture’s estimate of corn production on the basis
of September 1 condition was 2,457,000,000 bushels, compared with 2,647,000,000 harvested in 1926. The total yield of wheat is expected to be some
what larger than a year ago. The forecast of the yield of cotton was
12,692,000 bales, representing a reduction of 800,000 bales from the August
estimate and of over 5,000,000 bales from last year’s crop.
Federal Reserve Board’ s Indexes o f Factory
Employment and Payrolls.
(1919
average = 100 per cent.)
TERCENT.
T rade
Distribution of merchandise at wholesale and retail increased more than is
usual in August, and sales were generally larger than in August of last year.
Sales of wholesale firms in most leading lines were larger than a year ago.
Inventories of department stores showed less than the usual seasonal increase
in August and at the end of the month were in about the same dollar volume
as a year ago. Stocks carried by wholesale firms continued in August generally
smaller than last year.
Freight car loadings of nearly all types of commodities increased consider
ably in August and the early part of September, but, with the exception of
grains and miscellaneous products, loadings for all groups continued in smaller
volume than in the same period of last year.
P r ic e s
W holesale Price Indexes o f United States
Bureau o f Labor Statistics.
(1913
average — 100 per cent.)
3JL LI0U 5 qfDOLLAkS
Wholesale commodity prices, as measured by the index of the Bureau of
Labor Statistics, increased from 145 in July to 147 in August. There were
large increases in the prices of farm products and of clothing materials, while
most of the other groups showed only slight changes. The price of raw cotton
advanced from 1 7 ^ cents a pound on August 1 to over 23 cents on September
8, but since that date has declined by about three cents a pound. Prices of
cotton goods, cattle, hogs, and sugar also increased during August and the
first three weeks of September, while those of grains declined; recently there
have been reductions in the prices of some iron and steel products.
B
1923
1924-
1925
1926
1927
M onthly A verages o f W eekly Figures for
Member Banks in 101 Leading Cities
(Latest figures are averages for three
weekly report dates in September.)
ank
Cr e d it
Total loans and investments of member banks in leading cities between
August 17 and September 21 increased by $400,000,000 to the largest figure
on record. There were increases in loans on securities and in investments as
well as the usual seasonal growth in loans for agricultural and commercial
purposes.
The volume of Reserve Bank credit increased during the month ended
September 21, reflecting the seasonal growth in the demand for currency and
an export of gold. The increase was entirely in the holdings of acceptances
and United States securities, as there was little change in the discounts for
member banks.
In the open money markets, rates on security loans increased slightly during
September, while rates on commercial paper and 90-day bankers acceptances
remained unchanged at the lowest levels of the year. Discount rates at the
Federal Reserve Banks of Philadelphia, Chicago, San Francisco, and Minne
apolis were reduced during September from 4 to 3 ^ per cent, the rate
prevailing in the other eight districts.
@FedFRASER