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M O N T H L Y R E V IE W of Credit and Business Conditions S e c o n d Federal Reserve Agent M on ey F e d e r a l R e s e r v e Federal Reserve Bank, New York M a r k e t in S e p t e m b e r The most important requirements to be met by the banking system of the country in September were sea sonal increases in currency circulation and in commer cial and agricultural credit demands. These seasonal requirements, which are similar from year to year, in volve usually an increase in currency circulation of about 400 million dollars between the end of July and the end of the y ear; also an expansion of approximately 500 million in the commercial and agricultural loans of mem ber banks, which is accompanied by a corresponding ex pansion of the deposits and a consequent increase of about 50 million dollars in the required reserves of these banks. In order to provide for these requirements of the autumn, the Federal Reserve Banks are called upon reg ularly to supply additional credit to the money market either through direct loans to member banks, or through purchases of bankers acceptances and United States Government securities. The diagram below shows an D is tr ic t October 1,1929 estimate of the amount of additional Eeserve Bank credit ordinarily required for the autumn season. This esti mate, which was calculated from the records of the past seven years, after adjustment of the figures to eliminate the effect of gold movements, probably represents the maximum amount of Eeserve Bank credit that is likely to be needed for seasonal business requirements this sea son. In fact this year’s increased requirements for the season’s business are likely to be smaller than this esti mate because an unusual amount of currency went into circulation in July due to a curiosity demand for the new, small sized currency, which now appears to be passing gradually. It is quite possible, therefore, that all ordinary requirements may be met this year with a some what smaller increase in Eeserve Bank credit than is indicated in the diagram. The manner in which additional credit is supplied determines to a considerable extent whether autumn de mands cause a tightening of credit conditions and an advance in money rates or whether fairly stable con MILLIONS OF DOLLARS Increase in Reserve Bank Holdings of Acceptances and U. S. Government Securities (mostly acceptances) since W eek Ended July 27, Compared with Estimated Amount of Federal Reserve Credit Required for the Autumn Season MONTHLY REVIEW, OCTOBER 1, 1929 74 ditions are maintained. I f the seasonal requirements are met largely by increased member bank borrowing from the Reserve Banks, the tendency is for banks to be come more conservative in their lending policy and hence for credit to become less readily available, and for money rates to rise. On the other hand, if these requirements are met by Reserve Bank purchases of bankers accept ances or United States Government securities, so that the indebtedness of member banks is not increased, there is less tendency toward firmer money conditions. In addition to the estimate of Reserve Bank seasonal credit requirements the accompanying diagram shows the changes since the end of July this year in the ac ceptance and Government security holdings of the Fed eral Reserve System. Between the end of July and the latter part of September increases in the acceptance and Government security holdings of the Reserve Banks pro vided an amount of funds more than sufficient to meet the usual seasonal increases in demand for Reserve Bank credit. Most of the increase was in holdings of accept ances, and the minor increase which occurred in the Gov ernment security account was largely in the form of securities held under sales contracts and special one day certificates of indebtedness received from the Treasury during the September tax period. A s a result of these open market operations, together with the net import of about 25 million of gold during the past two months, the member banks have been able to meet all seasonal de mands on them and also to reduce their aggregate indebt edness at the Reserve Banks. This reduction of indebted ness was particularly large in the case of the New York City member banks. M oney R ates Despite the reduction in member bank borrowing money conditions have grown no easier since the end of July. On the contrary money rates are now slightly higher than they were at that time. Call money has held at rates of from 8 to 10 per cent during most of the month, and time loans on Stock Exchange collateral have advanced from 8% per cent to 9-914 : per cent. Accom panying this advance in rates on security loans, rates charged on commercial borrowing also were slightly higher, though rates charged by banks on loans to com mercial customers continued to be made most commonly at 6 per cent throughout this Federal Reserve district. Bankers acceptance rates were unchanged. Money Rates at New York Sept. 28, 1928 Aug. 30, 1929 Sept. 30, 1929 Stock Exchange call loans....................... Stock Exchange 90 day loans................. Prime commercial paper.......................... Bills— 90 day unindorsed....................... Customers’ rates on commercial loans. Treasury certificates and notes Maturing December 15........................ Maturing March 15.............................. Federal Reserve Bank of New York rediscount rate....................................... Federal Reserve Bank of New York buying rate for 90 day bills................ *6-8 7M 5H t 5.47 *7-9 8M -9 6-6 % 5Vs t 6.00 *8-10 9-9 X 6H 5H t 6.07 4.73 4.81 4.53 4.51 4.62 4.63 5 6 *y2 5V8 * Range for preceding week f Average rate of leading banks at middle of month 6 M e m b e r B a n k C r e d it During the past month the commercial loans of report ing member banks, both in this district and in other dis tricts, have shown an increase of at least the usual sea sonal proportions. The increase in these loans in this district between August 21 and September 18 amounted to nearly 60 million dollars, and in all districts to about 140 million. This increase, following an unusually rapid expansion during the summer, made a total increase dur ing the past three months of 500 million dollars, an amount larger than the usual increase from the mid-sum mer low point to the highest point of the autumn season. Security loans of reporting banks also showed an in crease during the past month, but remained below the volume of late July and early August. Total loans to brokers and dealers in securities continued to show a very rapid expansion, but, as in other recent months, most of the funds were obtained from lenders other than New York City member banks and their out-of-town corre spondent banks. Bank investments continued to decline steadily until the third week of September when an increase, appar ently reflecting in part subscriptions to the new issue of Treasury certificates, canceled the declines of the preced ing three weeks. B ill M arket The volume of new bills coming into the market con tinued in large volume in September. Although the in vestment demand for bills increased substantially, due chiefly to foreign orders, the dealers found it necessary to make heavier offerings of bills to the Reserve Banks in order to prevent their portfolios from mounting ma terially. Open market offering rates for bills were unchanged throughout the month at 5 % per cent for un endorsed bills up to 90 days maturity, and at 5 ^ and 5 y2 per cent respectively for 4 and 6 months bills. There has been an unusually early seasonal increase this year in outstandings of dollar acceptances, which rose $74,000,000 further in August, bringing the total increase since the low point at the end of May to $94,000,000. In 1928 and also in 1926 and 1925, no sea sonal expansion occurred until September, while in 1927 the expansion began in August. Much of the increase in August of this year represented credits based on goods stored abroad or shipped between foreign countries; in fact, this class of transaction showed a considerably larger gain than any other type of acceptance business, and at the end of August totaled $162,000,000 larger than a year ago, as compared with an increase of $249,000,000 for all classes of acceptance credits. Accompanying the rise in the volume of bills out standing, the bill portfolio of the Reserve System has shown a substantial increase in recent weeks, as is indi cated in the accompanying diagram. Beginning at the low point of $66,000,000 reached in July, a level $122,000,000 lower than in the corresponding period of 1928, the bill holdings of the Reserve Banks have increased toward the end of September to $264,000,000, or prac tically the same volume as a year ago. FEDERAL RESERVE AGENT AT NEW YO R K MILLIONS OF DOLLARS 500 75 increased a full per cent to 5 % per cent; the Norwegian Bank rate, which was last reduced by y 2 per cent to 5 % per cent on March 26, 1928, was increased again to 6 per cent; the rate of the central bank of Denmark, which had been maintained at 5 per cent since June 24, 1926, was advanced by y2 per cent to 5 y2 per cent; the in crease of one per cent to Sy2 per cent in the Austrian National B ank’s rate was the third consecutive increase since January 1928. 400 300 200 F o r e ig n E x c h a n g e 100 0 Bankers Acceptances Held by Federal Reserve Banks, 1029 Compared with 1927 and 1928 Com m e r c ia l P aper M arket The prevailing rate for the limited amount of com mercial paper that was sold by the dealers to investing institutions advanced early in September to 6%, per cent. Occasional transactions, chiefly in the Middle West, continued to be reported at 6 per cent, but a number of offerings of the smaller names at 6y2 per cent also appeared in the market. The creation of new open market paper continued in relatively light volume. Open market outstandings of commercial paper in creased about y2 per cent in August to $267,000,000, following a continuous and substantial decline during the previous five months. A t the end of August, the outstandings were nearly 42 per cent smaller than a year ago. C e n tra l B a n k R a te C hanges The increase of the Bank of England’s rate by one per cent to 6 % per cent on September 26 brings this rate to the highest level established since the period of 1920-21. The Bank rate was last advanced from 4 y2 to 5y2 per cent on February 7, 1929, when the bullion stock of the Bank of England had fallen to £149,900,000 from a high figure of £176,600,000 in the previous Sep tember. A t the time of that advance in the rate the banking reserve stood at £52,400,000 and the propor tion of the reserve to deposits was 46.02 per cent. On September 25, 1929 the bullion holdings were £133,200,000; the reserve was £32,100,000, and the proportion to deposits was 29.7 per cent. The market rate for three months bankers bills was generally quoted within 1 /1 6 per cent of the Bank rate between July and September 25, and occasionally was up to the Bank rate level of 5 % per cent. On September 26, following the advance in the Bank rate, the bill rate was advanced to 6 1 /1 6 to 6 % per cent. Directly after the Bank of England’s announcement was made public, the central banks of Sweden, Norway, and Denmark announced increases in their bank rates effective September 27, and the National Bank of Austria increased its rate effective September 28. The rate of the Swedish Riksbank, which had last been moved upward y 2 per cent to 4 y2 per cent on August 24, 1928, was In contrast to the sagging tendency which they dis played in August, the important European exchanges were firmer at the close of September than in the earlier weeks of the month. Despite the taking of five separate parcels of gold for New York in London, sterling con tinued weak, declining to a low of $4.84 9 /1 6 on the 20th. Thereafter a slight recovery set in, followed by a decided strengthening around the time of the advance in the Bank rate to $4 .8 5 % , well above the gold export point to the United States. Other exchanges moved up with sterling. French francs, which had been practically stable until the 21st, advanced gradually to a high of $0.0392 on the 28th. Reichsmarks, quoted for nearly two months below the par of $0.2382, closed on the 27th at $0.2383% . On the 26th, belgas reached a high of $0.13921/2 (par is $0,139). Lire moved upward to $0.0523 11/16 on the 26th, and eased back to $0.0523% on the 28th. The Scandinavian exchanges, followed the same trend, registering sudden gains during the last week of the month after continuing their August weakness up to that time. The Swedish krona moved up three points to $0.2681 on the 26th, or one point over par; the Danish and Norwegian crowns made gains of four points in the period covered, but were still 12 to 13 points below their parity of $0,268. Dutch, Spanish, and Swiss exchanges were the only ones to show continued improvement throughout the whole month. The guilder firmed from $0.4006 on the 3rd to $0.40141/2 on the 28th. Pesetas, which had begun to decline towards the middle of last A pril and had reached their low point at under 14 cents in early June, continued their summer recovery to a high of $0.1481 y2 on September 28, or practically the April level from which the drop began. Swiss francs touched $0.1928% on the 26th, a new high for the year. W ith the excep tion of a slight weakness in Austrian schillings, the Central European exchanges showed little change. On September 21 and 23 the Canadian dollar was quoted below $0.99 for the first time in several years. Recovering thereafter, it stood at a discount of 2 5 /3 2 cents on September 28. The Japanese yen rose to $0.4805 on the 23rd and was last quoted at $0.4798, a rise of slightly more than a cent and a quarter since September 1st. The Argentine peso dipped to $0.9524 on the 12th, but recovered to $0.9542. G o ld M ovem en t During September gold imports of $2,500,000 from Argentina, $3,570,000 from Bolivia, $8,054,000 from Eng land, and $504,000 from Colombia made up nearly the 76 MONTHLY REVIEW, OCTOBER 1, 1929 whole of the import total of about $15,000,000. Exports were confined to gold for non-monetary purposes and were negligible at about $800,000. The increase in gold held under earmark for foreign account, was $6,600,000, and the net gain in gold to the country was $7,600,000. The net gain of gold since January 1 is provisionally estimated to be $211,900,000. The outflow of gold from London continued through out September and was not immediately stopped by the increase in the Bank rate on the 26th, nearly £1,950,000 being taken on the four days following. A s against some £10,300,000 sent abroad in August, roughly £7,800,000 was shipped during September, the bulk going, as in the earlier month, to France. During September the Bank of England did not obtain any of the African gold in the market by competitive bid, owing to the persistent weakness of sterling exchange up to the time of the increase in Bank rate. In the course of the movement which began in mid-June, and up to Septem ber 28, the Bank lost gold to the amout of £32,700,000 net in round figures. In this period the United States received from London, £6,400,000, Germany, £16,900,000, and France, £23,300,000. These figures include both market purchases and withdrawals from the Bank of England. F o r e ig n T r a d e Exports of merchandise, valued at $382,000,000 dur ing August, showed a decline of 5 per cent from the high figures of the previous month, contrary to the usualseasonal tendency. They were however, about equal to the average for August of the past four years. Imports of merchandise, valued at $377,000,000, showed slightly more than the usual increase over July, and were nearly 9 per cent above a year ago and larger than in any August since 1920. The value of exports of grains and grain products con tinued to reflect an early crop movement and was 37 per cent larger than in July, but showed practically no change from a year ago. Shipments abroad of raw cot ton, both in volume and value, remained virtually un changed from the previous month, but were slightly less than a year ago. Quantity receipts of crude rubber were considerably less than the large volume of the previous month, but nearly 30 per cent above a year ago. Raw silk imports during August were the largest in quantity for any month ever recorded, and prices were slightly higher than in the past few months or a year ago. S e c u r ity M a r k e ts Stock price movements in September were irregular, and near the end of the month the general level of prices showed a net decline. During the first week of the month, industrial and railroad shares advanced slightly over the August quotations and representative averages attained new high levels, but by the end of September these averages had declined about 7 to 10 per cent. Average quotations of public utility stocks, on the other hand, finished the month approximately the same as at the opening, despite a considerable amount of intervening irregularity. A recent calculation made by the Standard Statistics PRICE AVERAGE --------------10 2 1 90!____i......i____ ___ j-----i - - ------- 1------——!-------- 1------ 1-----J F M A M J J A S O N D Average Prices of 40 Domestic Corporation Bonds (Dow-Jones average) Company showed that more than half of the issues traded in on the New York Stock Exchange have actu ally declined since the beginning of this year, despite a rise of 28 per cent in a weighted average of the prices of 90 leading stocks, including industrials, rails, and public utilities. Of 662 stocks traded in on January 2, 1929, 310 showed net advances for the period up to September 18, while 339 showed losses, and 13 were unchanged. Domestic corporation bonds held fairly steady in September, following the continuous decline of recent months, and at the close of the period representative price averages were little changed from the end of August. United States Government bonds likewise moved within a narrow range, for the most part slightly above that of August, but closed the month somewhat below the level of a month earlier. In the foreign bond list, the tendency towards lower prices persisted. N ew F in a n c in g New security offerings by domestic corporations in August were only slightly smaller than in July and were more than four times as large as in August of last year, when flotations were at the lowest level in recent years. Bond and note issues were even smaller than a year ago, but offerings of common stock were over nine times as large as in August 1928. The per centage increase in preferred stock offerings was still larger, though the amount involved was considerably smaller than in the case of common stocks. The huge increase in stock flotations does not appear to have resulted in supplying a corresponding amount of addi tional capital to industrial and mercantile concerns, however, since the month’s stock issues included what is apparently one of the largest amounts of securities of investment trusts, and financial trading and holding companies ever offered in a single month. It appears from a compilation of the Standard Sta tistics Company that investment trust security issues during the first eight months of this year have totaled more than $2,100,000,000, as compared with $800,000,- 77 FEDERAL RESERVE AGENT AT NEW YO R K 1928 - 000 for the full year 1928, only $300,000,000 in 1927, and less than $50,000,000 in each of the three preceding years. The following table shows the increase in volume of investment trust issues during the past several years. 1924 $ 41,000,000 1925 37,000,000 1926 41,000,000 1927 314,000,000 1928 806,000,000 Jan. to Aug., incl., 1 9 2 9 ... 2,142,000,000 0 20 40 60 80 100 12C CORN WHEAT OATS Total .................................. $3,381,000,000 In September, the larger issues of new domestic securities continued to be chiefly by companies in the nature of investment trusts, and consequently stock issues again predominated. Industrial and public util ity issues, as well as financing by States and munici palities, were in somewhat larger volume than in the previous month, but, compared with September 1928, the amount of public utility financing was substantially smaller. A feature of the municipal financing was the sale of several short-term loans of the City of New York, maturing in November and December of this year, and priced to yield 5 % per cent. Foreign security flotations in this market were considerably smaller than in the previous month or in September of last year. COTTON 100 PRODUCTION The following table shows the production of the most important crops indicated by the Department of A gri culture as of the first of September, and compares this with the production indicated a month previous, the ac tual harvest of last year, and the average harvest of the preceding five years. Crops A widespread drought in August reduced crop pros pects even further, according to the September crop report of the United States Department of Agricul ture, and made it more apparent that this year will be one of generally small agricultural output. Indicated yields of 43 principal crops declined 4.6 per cent dur ing the month and on September 1 were 9.0 per cent below actual yields in 1928, and 6.0 per cent under the average yields of the previous ten years. The largest decline was in the estimate of the corn crop, which was lowered 285,000,000 bushels, and at 2,456,000,000 bushels was 13.4 per cent below the harvest of last year. Other declines of more than 10 per cent from a year ago were forecast in yields of wheat, oats, barley, flaxseed, rice, apples, peaches, pears, grapes, white potatoes and broomcorn, and against this list there was only one crop— sugar beets— that gave promise of showing an increase of as much as 10 per cent. The out standing declines were expected in the fruit crops, all of which apparently will be smaller than either the harvest of last year or the five year average. The cotton crop, however, is forecast at 14,825,000 bales, or 2.4 per cent more than a year ago. The accompanying diagram, which compares yields and prices of a few of the principal crops with those of 1928, indicates that the prospect of smaller grain crops has resulted in an advance in prices, which will tend to offset the decline in yields, so that the total return from these crops will be close to that of last year. The slightly larger cotton crop in prospect has caused cotton prices to decline to levels a little below those of last year. Since the first of September, rains have improved agricultural conditions somewhat, but many crops were reported to have been too far advanced to have benefited. h=zE-~| PRICE September 1929 Production Estimates and Prices of Four Prin cipal Crops Compared with 1928 Final Yields and November Prices (In millions) Harvested Crop Corn, bushels.................................... Wheat, bushels................................. Oats, bushels.................................... Barley, bushels................................. Potatoes, white, bushels................ Tobacco, pounds.............................. Hay, tame, tons............................... Apples, total, bushels..................... Cotton, bales.................................... 1923-1927 average 2,747 810 1,345 209 383 1,331 92.8 183 14.2 Indicated by condition 1928 actual Aug. 1 1929 Sept. 1 1929 2,836 902 1,449 .357 464 1,378 9 3 .0 186 14.5 2,741 774 1,203 304 373 1,519 97.4 149 15.5 2,456 786 1,205 304 349 1,462 93.6 146 14.8 B u ild in g Contracts awarded in August were 25 per cent below the unusually large total for July, and were also 5 per cent smaller than in August 1928, according to the F . W . Dodge Corporation survey of building activities in 37 States east of the Rockies. The volume of residen tial work dropped sharply in August to a figure nearly one-third smaller than a year ago, while total non-residential building work, though also substantially below the July figure, remained larger than in August of last year. The increase over a year ago in non-residential contracts reflected heavier industrial and commercial un dertakings; public works and utility projects were in about the same volume as in August of last year. Virtually half of the reduction in residential building from last year’s level was in the New York and Northern New Jersey district, where residential contract awards showed a decrease of 45 per cent from the August 1928 volume. A drop from the previous month in the coun tr y ’s total of public construction work likewise repre sented a contraction in the New York district. Con versely, this district did not contribute materially to the increase in commercial and industrial building con tracts reported for the country at large. A s a result, 78 MONTHLY REVIEW, OCTOBER 1, 1929 total building contracts awarded in the New York and Northern New Jersey district showed a decline of 57 per cent from the exceptionally large total for July and were 26 per cent smaller than a year ago. For the first eight months of the year, contracts awarded in the 37 States were 9 per cent smaller than in the comparable period of 1928, while in the New York and Northern New Jersey district the decline amounted to 16 per cent. Reports for the first three weeks of September indicate a moderate decline in the daily average of contracts awarded from the average for the month of August, but a decrease of about 21 per cent from the daily average for September 1928 when contracts were at a relatively high level. I n d e x e s o f B u s in e s s A c t iv it y This bank’s indexes of business activity for August showed mixed changes as compared with July, but were generally higher than a year previous. Freight car loadings showed slightly less than the usual seasonal expansion from July to August, and merchandise ex ports showed an unseasonal decline. On the other hand, both retail and wholesale trade were somewhat higher than in July, and merchandise imports increased slightly more than usual. Moreover, bank debits, both in New York City and in 140 centers outside of New York City, showed less than the usual seasonal decline. (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1929 1928 Aug. June July Aug. Primary Distribution Car loadings, merchandise and misc........ Car loadings, other....................................... Exports........................................................... Imports........................................................... Panama Canal traffic.................................. Wholesale trade............................................ 102 93 100 110 89 101 103 98 102 117 85 101 103 99 114 123 88 104 102 97 lOOp 124p Distribution to Consumer Department store sales, 2nd Dist............. Chain grocery sales...................................... Other chain store sales................................ Mail order sales............................................ Life insurance paid for................................ Advertising..................................................... 93 102 97 116 94 97 104 95 105 137 102 98 99 94 100 136 99 96 99 96 103 139 101 99 104 149 109 158 112 181 117 195 113 166 293 90 109 99 115 110 108 84r 126 182 252 81 108 102 109 110 111 85r 131 208 429 88 111 104 102 130 119 79r 136 228 404 87 176 223 172 179 227 171 181 226 172 182 227 174 General Business Activity Bank debits, outside of New York City.. Bank debits, New York City..................... Velocity of bank deposits, outside of New Y ork City................. ............................. Velocity of bank deposits, New York City Shares sold on N. Y. Stock Exchange. . . Postal receipts............................................... Electric power............................................... Employment in the United States........... Business failures............................................ Building contracts, 36 States..................... New corporations formed in N. Y. State. Real estate transfers r ................................. Composite index of wages.......................... Cost of living................................................. 107 104 109 96 113 p Preliminary r Revised E m p lo y m e n t a n d W a g e s Factory employment, in both New York State and the country as a whole, began to show something of a sea sonal increase in August, though it appears that the increase was not quite as large as usual. In both cases, the increase amounted to 0.4 per cent, while the normal increase ordinarily is slightly larger. Employment con tinued at a relatively high level, however, and was more than 5 per cent above that of a year previous. The most substantial increases over August 1928 were in the iron and steel industries, in the chemical industries, and in such industries as agricultural implements, elec trical machinery, shipbuilding, and particularly the manufacture of machine tools. Employment in other lines of work outside of the manufacturing field, such as mining, public utilities, and wholesale trade, showed a seasonal increase in August, while employment in retail trade was practi cally unchanged. The rate of voluntary labor turnover, which is a general index of employment opportunities, has been at a relatively high level for some time, but did not show the usual increase in August. Average weekly earnings of New York State factory employees increased seasonally in August, and were the largest for any August on record; in fact, new high records for the respective months have been established for every month since May 1928. Total factory pay rolls also increased, and were the largest for any August since 1923. P r o d u c tio n August production figures for the metal industries in dicate some recession from the high levels of recent months. Declines were shown in output of pig iron, steel ingots, copper, and lead, whereas steel usually shows little change, and pig iron, copper, and lead usually begin their autumn expansion. These declines were only partly off set by small increases in tin deliveries and in production of zinc, and consequently this bank’s combined index of metal production declined 3 points. Output of passenger automobiles, following the more than seasonal decrease of July, showed about the usual increase in August, but output of motor trucks declined sharply further to a level 45 per cent below the record month of June. Changes in other industries were irregular, and when all available indexes are weighted according to their rel ative importance, it appears that the declines overbal anced the advances in August. Production was still on a relatively high plane, however, as is indicated by the fact that a majority of the available indexes were higher than a year previous, and that some of the largest in creases were in the most important industries. According to trade reports, a further decline occurred during September in unfilled orders for steel, following a substantial reduction in A u gust; it was also reported that the tendency of steel production during September was downward. Activity in the automobile industry also was reported to have declined further. On the other hand, the coal industry was more active; output of bituminous coal increased more than usual in the first three weeks of the month, and output of anthracite showed a moderate increase instead of the usual small decline. Production of petroleum declined from the very high level attained at the end of August, but the average for the first three weeks of September was above the average for the month of August as a whole. FEDERAL RESERVE AGENT AT NEW YORK (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1928 1929 Aug. June July Aug. Bituminous coal............................................ Coke................................................................. Copper, U. S. mines.................................... Lead................................................................. Zinc.................................................................. Tin deliveries................................................. Leather, sole................................................... Cement............................................................ Paper, total.................................................... Wood pulp...................................................... 108 115 93 90 lOlr 110 79 100 110 99 102 114 120 134 105 107 127 145 106 101 lllr 112 83 123 118 105 99 112 103 120 103 103 131 137 103 99 115r 118 83 123 116 104r 102 109 104r 126r 106 109 129 134 99 lOOp 109r 119p 82 121 112 97 104 110 109 128 Consumers' Goods Animals slaughtered r .................................. Farm produce shipped................................. Wheat flour.................................................... Sugar meltings, U. S. ports........................ Gasoline........................................................... Anthracite coal.............................................. Paper, newsprint........................................... Tobacco products r ...................................... Boots and shoes............................................ Tires................................................................. Automobile, passenger................................. Automobile, truck........................................ 87 r 102 95 95 104 90 88 108r 119 125 115 126 91r 96 104 80 97 72 86 HOr 108 124 128 188 98r 93 96 82 102 68 86 105r 121 120 123 154r 99r Producers' Goods 98 79 91 106r 120p 122 109 79 D e p a r tm e n t S to r e T r a d e The reporting department stores in this district had a substantial increase in their total sales in August compared with a year ago, and all localities within the district reported at least small increases. The total sales of these stores were 4 per cent larger than in August 1928, notwithstanding the somewhat shorter business month this year, which was due to the fact that there were five Saturdays during the month and that stores are closed the full day on Saturday during the summer in New York City and vicinity, and a half day in other principal cities. In New York City the average daily rate of sales was 9 per cent higher than a year ago, and in several other localities within the district there were substantial increases. The large apparel stores also reported a considerable increase in sales compared with August 1928. Stocks of merchandise on hand in department stores at the end of the month continued to be slightly larger than a year previous, but the rate of stock turnover was somewhat more rapid than in August of last year. The percentage of outstanding charge accounts collected dur ing August was slightly lower than in 1928. p Preliminary r Revised W h o le s a le T r a d e The volume of business done by wholesale dealers in this district in August continued well above a year ago. The average increase over August 1928 was 7 per cent, and there were larger increases in several lines. Drug and stationery concerns showed the largest gains over 1928 among the reports sent to this bank, but sales of groceries, men’s clothing, and paper also showed sub stantial increases. Orders reported by the Machine Tool Builders’ Association continued about one-fourth above the high level of a year ago, and quantity sales of silk goods reported by the Silk Association were 20 per cent larger than in August of last year. Decreases from a year previous were reported in sales of cotton and shoes. Stocks of groceries, silk goods, and drugs were larger than a year ago, but there were declines in the stocks of shoes, diamonds and jewelry, and cotton goods. Commodity Percentage change August 1929 compared with July 1929 Net sales Stock end of month Percentage change August 1929 compared with August 1928 Net sales Stock end of month Per cent of accounts outstanding July 31 collected in August Locality Net sales 1928 1929 42.4 49.9 34.2 41.4 48.2 34.2 39'.7 39 ’.5 Bridgeport........................................................... Elsewhere............................................................ Northern New York State......................... Central New York State......... .................. Southern New York State.......................... Hudson River Valley District................... Capital District............................................. Westchester District.................................... 0 — 2 .7 — 1.9 + 6 .6 + 8 .2 + 1 3 .2 — 1.8 35.3 39‘.4 All department stores.............................. + 4 .0 + 1.2 41.0 40.6 Apparel stores........................................... + 5.9 + 3 .5 39.2 39.0 August sales and stocks in the principal departments are compared with those of a year ago in the following table. 1929 Books and stationery........................ + 0 .1 Groceries......................... Men’s clothing............... + 1 2 5 .4 + 0 .6 Cotton goods................. + 2 6 .0 Silk goods*..................... Shoes................................ + 18.3 + 1 3 .5 Drugs............................... Hardware........................ + 1.4 + 15.2 Machine tools**............ Stationery....................... + 7 .4 — 0 .7 Paper................................ + 0 .5 Diamonds....................... Jewelry............................ + 3 9 .8 Weighted Average... + 3 1 .9 + 2.9 + + — + — 0 .5 0 .6 3.8 3.1 0 .6 } + 5 .0 + 7 .5 + 5 .4 — 8 .7 + 2 0 .4 — 8 .7 + 1 2 .5 + 0 .7 + 2 3 .6 + 1 9 .8 + 5 .7 — 0 .3 + 2 .4 + 6 .5 + 1.6 — io .9 + 3.1 — 11.9 + 1 4 .6 — 6 .9 } - 4 -5 72.1 38.6 75.3 35.7 33 ’. 1 50.0 46.8 38 '.8 43.2 45.6 75.2 60.6 69. i 64.2 } 27.2 } 23.3 * 51.6 * Quantity not value. Reported by Silk Association of America ** Reported by the National Machine Tool Builders’ Association 52.1 Stock on hand end of month + 4 .2 + 1.6 + 1.8 + 7.3 + 1.9 + 1.6 + 8.1 + 4 .3 + 9 .5 + 7 .7 + 1 2 .7 + 8 .8 + 0 .7 New York........................................................... Buffalo................................................................. Rochester............................................................ Syracuse.............................................................. Toys and sporting goods.................. 1928 Per cent of accounts outstanding July 31 collected in August Percentage change August 1929 compared with August 1928 Toilet articles and drugs................... Men’s furnishings............................... Home furnishings............................... Silverware and jewelry...................... Women’s ready-to-wear accessories Luggage and other leather goods... Women’s and Misses’ ready-to-wear Linens and handkerchiefs................. Woolen goods...................................... Cotton goods....................................... Men’s and Boys’ wear....................... Silks and velvets................................ Musical instruments and radio. . . . Net sales percentage change August 1929 compared with August 1928 Stock on hand percentage change August 31, 1929 compared with August 31, 1928 + 2 2 .2 + 16.3 + 12.2 + 9 .0 + 7.1 + 5.5 + 5.0 + 4.9 + 3.9 + 3.8 + 2.5 + 2.4 — 0 .6 — 0.8 — 1.7 — 5.3 — 17.0 — 23.9 — 2.8 + 1.2 + 6 .0 + 8 .0 — 16.3 — 6.1 + 3.3 — 1.7 + 3.8 — 3.9 + 3 .5 + 3.3 — 11.4 + 3 .3 — 15.5 — 1.4 + 4 .6 — 11.7 + 2 6 .2 — 3 .9 80 MONTHLY REVIEW, OCTOBER 1, 1929 Business Conditions in the United States (Summarized by the Federal Reserve Board) RODUCTION in basic industries increased somewhat in August as compared with July, but the increase was less than is usual at this season, with the consequence that the Board’s index of industrial production, which makes allowance for usual seasonal changes, showed a decline. Wholesale prices declined slightly. Credit extended by member banks increased between the middle of August and the middle of September, reflecting chiefly a growth in commercial loans. P P ro d u ctio n Index Number of Production of Manufactures and Minerals Combined, Adjusted for Seasonal Vari ations (1 9 23 -2 5 average = 100 per cent) PER CENT 1251----Miscellaneous L xv-'V Total \ 75 50 1925 1926 192: 1928 1929 50 Loadings of Revenue Freight Reported by the Amer ican Railway Association, Adjusted for Seasonal Variations (1 9 2 3 -2 5 average — 100 per cent) BILLIONSOFDOLLARS BILLIONS OFPOlLARr, During the month of August there was a reduction in the output of iron and steel and copper, and a slight decline in the production of automobiles. Meatpacking establishments were also somewhat less active during the month, while seasonal increases were reported in the production of textiles and shoes, coal and cement, flour and sugar, and petroleum output continued to expand. A slight increase in the number of workers employed in factories was accom panied by a substantial increase in payrolls. This increase was especially notable in industries manufacturing products for the autumn retail trade, such as clothing and furniture. For the first two weeks of September reports indicate further decline in steel operations; reduction in lumber output resulting in part from the Labor Day holiday; and a continued seasonal rise in coal production. In the construction industry contracts awarded in August were 25 per cent less than in July, reflecting a sharp decline in the residential group as well as in contracts for public works and utilities which were unusually large in July. As compared with last year contracts were 5 per cent lower in August, but in the first two weeks of September they were in approximately the same volume as in 1928. The September report of the Department of Agriculture indicates a corn crop of 2,456,000,000 bushels, 13 per cent less than in 1928 and 11 per cent under the five-year average. The estimated wheat crop of 786,000,000 bushels is substantially below last year, but only slightly less than the five-year average. Cotton production, estimated on August 1 at 15,543,000 bales, is now expected to total 14,825,000 bales, slightly above last year. D is t r ib u t io n Freight-car loadings increased seasonally in August, as a consequence of larger shipments of all classes of freight except grains, which moved in smaller volume than in July, when shipments of wheat were unusually large. In comparison with 1928 total car loadings showed an increase of 5 per cent. Sales of department stores in leading cities were larger than in July and about 5 per cent above the total of August 1928. P r ic e s are averages of first three weeks of September) MILLIONS OF DOLLARS MILLIONS OF DOLtARS Wholesale prices showed a slight downward movement in August, according to the index of the United States Bureau of Labor Statistics. This reflected chiefly declines in the prices of farm products, especially grains and flour, and livestock and meats. Woolens and worsteds also decreased in price, while silk and rayon materials were higher. There was a decline in prices of iron and steel and automobiles, and a further decrease in prices of petroleum and its products, especially gasoline. Coal prices advanced during the month. In the middle of September the prices of grains, beef, raw sugar, silk, and coal were higher than at the end of August, while prices of hogs, pork, and cotton were somewhat lower. B a n k Cr e d it Reserve Bank Credit (Monthly averages of daily figures for 12 Federal Reserve Banks; latest fig ures are averages of first 22 days in September) Between the middle of August and the middle of September there was a further rapid increase in loans for commercial and agricultural purposes at member banks in leading cities. Security loans also increased, while invest ments continued to decline. During the first half of September the volume of Reserve Bank credit outstanding was about $120,000,000 larger than in the middle of the year. The increase was for the most part in the Reserve Banks’ acceptance holdings and reflected chiefly growth in the demand for currency, partly seasonal in character. Discounts for member banks, following the increase over the holiday period early in September, declined at the time of the Treasury financial operations around the middle of the month, and on September 18 were at a lower level than at any time since last June. Open market rates on prime commercial paper increased from a range of % to a prevailing level of 6% during the first week in September, while acceptance rates remain unchanged. 6-6
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