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MONTHLY REVIEW o f C r e d it a n d S e c o n d Federal Reserve Agent B u s in e s s F e d e r a l R e s e r v e D i s t r i c t Federal Reserve Bank, New York MoneyMarket inSeptember October 1 , 1930 of income tax checks had proceeded to the point where the balance between Treasury disbursements and receipts had been largely restored. During the past month it has become increasingly evident that seasonal requirements for currency and bank credit this year are running substantially below the usual amount. Consequently in a month when a slightly firmer tendency in the money market fre quently appears, no perceptible change from the condi tions of July and August has occurred. During the early part of September, as in each of the two previous months, New York City banks found it necessary to bor row from the Reserve Bank for a few days, chiefly on account of currency withdrawals over the August monthend and Labor Day holiday, but this indebtedness was soon retired through a reduction in requirements and through the sale of acceptances to the Reserve Bank. Subsequently, a return flow of currency to the banks and accompanying transfers of funds to New York re sulted in the accumulation of some surplus funds in the hands of New York banks, much the same as in the latter part of July. A t the middle of the month, Treasury redemptions of maturing securities threatened to cause a very large temporary surplus of funds in the market, but this was largely averted by the sale to New York City banks of participations in the special one-day certificates of in debtedness issued by the Treasury to cover the tempo rary advances made by the Reserve Bank. The amount of these participations sold was $170,500,000 on the 15th and $68,000,000 on the 16th. B y the 17th, the collection B IL L IO N S OF D O LLA R S 10i-------- C o n d itio n s Sea C so na l u r r e n c y C r e d it D e m a n d s B ILLIO N S OF D O LLA R S 1 8r B IL L IO N S OF D O LLA R S 1 lr r ■ ...... IN V E S Ir M E N T s A L L CD T H E R L O ;\ N S LOAN S ON S E C U R IT IE S a n d The increase in the amount of currency in circulation at the beginning of September was substantial, but more than the usual return flow occurred during the second and third weeks of the month. Ordinarily a considerable part of the currency that goes into circulation over Labor Day remains outstanding and is used for the expanding autumn trade and payrolls. This year the persistent de cline in commodity prices and the shrinkage in industrial payrolls appear to have released enough currency to off set largely the autumn expansion. The net increase in currency circulation from the low point in the last week of July to the third week of September wr- -nly 47 mil lion dollars, less than half of the usual increase during that period. In addition to the unusually small currency demand, the total loans and investments of reporting member banks have failed to show the usual seasonal increase during the past two months. A s the second section of the diagram below shows, loans other than security loans— the so-called “ commercial loans” of these banks— have shown practically no change since July. The experience of previous periods of business recession indicates, how ever, that an expansion in commercial borrowing of short-term credit is more likely to follow than to precede an increase in business activity. 10 1 9 2 9 ^ *. _________ "^ 1 9 2 8 V 1928 ____ ...a .......... J F M A M J J pf "^ 1 9 2 9 ^ 1930 F M A M ' 1 9 30__. A S O N D J F M A M J J A S O N D Loans on Securities, All Other Loans, and Investments o f W eekly Reporting Member Banks; 1930 Compared with 1929 and 1928 MONTHLY REVIEW, OCTOBER 1, 1930 74 Security loans also have shown no important change during the past two months, but remain at a consider ably higher level than a year ago, due to the partial replacement with bank loans of the funds withdrawn from brokers loans by corporations and other non-bank ing lenders. The reduction of brokers loans placed for lenders other than the New York City banks and their correspondent banks has continued gradually, even within the past month, so that the present volume of such loans is less than one-fifth that of a year ago. As in previous months, the principal increase in bank credit at the weekly reporting banks in principal centers has been in investments. The increase in the investment holdings of these banks during the past nine months has now reached a total of about $800,000,000, and has largely counterbalanced the decline in loans other than security loans. This increase has roughly paralleled the increase in time deposits, and has contributed substan tially to supplying the capital which has been in active demand through the bond market this year. During the first eight months of this year the total volume of new bond offerings, excluding refunding issues, was about $1,450,000,000 larger than in the corresponding period last year. An analysis of these bond issues shows that a large part of the increase has been in domestic public utility and railroad issues— types of financing which usually represent the construction of additional facilities and the purchase of equipment to provide for the normal growth of the services of such companies. State and municipal issues also, which in many cases are sold to provide funds for public construction, have increased moderately. In addition, flotations of foreign securities, which last year were severely curtailed, have increased to a volume nearly as large as in the corresponding months of 1927 or 1928, and have thus tended to restore the purchasing power of foreign countries. F ederal R eserve C r e d it As a result of the subnormal increase in currency and bank credit, the amount of Reserve Bank credit out standing has shown much less than the usual increase during the past two months. The small increase in the total has been fully supplied by purchases of acceptances offered to the Reserve Banks, even though such offer ings of acceptances have been somewhat restricted, due to the fact that accepting banks in a number of cases, having surplus funds, have held new bills in their own portfolios, instead of selling them to discount houses or to the Reserve Banks. Member bank discounts at the Reserve Banks, which a few months ago appeared to have about reached the practicable minimum at around $200,000,000. have de clined still further in recent weeks to $167,000,000 on September 24, which, excepting only the figure for Sep tember 17 that was affected by the Treasury tax period operations, was a new low point since 1917. In the New York district the large city banks have been practically out of debt for several months, and there has been a marked tendency during the past three months for banks in the smaller localities to repay their indebtedness at the Reserve Bank. Similar tendencies in other districts are indicated by the recent changes in Reserve Bank discounts. Except for declines in the last few days of the month in rates on Stock Exchange loans and in yields on short term Government securities, money rates during the past month have remained virtually unchanged. M oney Rates at New York Aug. 29, 1930 Sept. 30, 1929 Stock Exchange call loans........... Stock Exchange 90 day loans.. . Prime commercial p ap er............. Bills— 90 dav unindorsed............ Customers’ rates on commercial Sept. 30, 1930 *iy2- 2 X-X *8-10 9-9 \i 6K 5Vs *2 1T2M-H 3 f 6 .07 t4 .0 0 t 4 .00 4 .6 2 4 .7 6 1.58 2 .0 2 1.25 1.77 6 2H 2^ Treasury certificates and notes Maturing Dec. 15 (vield)........ Maturing Mar. 15 (y ie ld ). . . . Federal Reserve Bank of New York rediscount rate................ Federal lieserve Bank of New York buying rate for 90 day indorsed b ills.............................. IK t2 12 3 m 12 * For preceding week ^ Nominal t Average rate of leading banks at middle of month X 1— 75 days— 1 % per cent C o m m e r c ia l P aper M a r k et The potential bank investment demand for prime commercial paper during September appears to have continued in excess of the amount of new paper in the market. Dealers reported a widespread demand from interior banks, some part of which came through New York City correspondents. Inquiry was lacking for less well known paper of the smaller borrowers, which could be obtained at rates of 3*4 and 3V2 per cent, as com pared with 3 per cent for prime names. Outstandings of commercial paper showed compara tively little change from the end of July to the end of August. The 21 dealers who report to this bank had out standing on August 31, $526,000,000 of paper, as com pared with a final figure of $528,000,000 on July 31. The amount of paper outstanding continued to be nearly twice as large as a year ago. B il l M a r k et Rather quiet conditions prevailed in the bill market during the month of September, due to the limited vol ume of bills that found their way into dealers’ hands. Discounting and accepting banks were still disposed to hold new bills as investments instead of offering them to the discount houses, due to the small demand for other types of loans and the plentiful supply of funds. Coupled with this condition, there was a good demand for bills, so that dealers’ portfolios throughout the month remained low. Open market and Federal Reserve buying rates for bills were unchanged at the levels that pre vailed during the summer. Federal Reserve purchases of bills were light, except for a short period during the first part of the month when temporarily firmer money conditions resulted in a sizable amount of sales of bills to the Reserve Bank by New York City member banks and some sales by dealers under repurchase agreement, and again, around the 15th, when a block of bills previously held by foreign corre spondents was sold to the Reserve Bank. During the four week period ended September 24, the Reserve Sys tem ’s portfolio of bills showed a net increase of $35,000,000, a considerably smaller increase than in the corresponding period last year. A fter increasing $45,000,000 in the previous month, the total volume of acceptances outstanding was reduced FEDERAL RESERVE AGENT AT NEW YORK MILLIONS OF DOLLARS ACCEPTANCES / OUTST/ENDING / —------ —-\ ... 1 FEDIERAL RESEj&VE \ acceptANCE HOLIDINGS 1... ..... . . __ 1 \ r .. L .. ... 1 .... i 1928 1929 193 0 Volume of Bankers Acceptances Outstanding at End of Month, and Monthly Average Amount Held by Federal Reserve Banks $ 10 ,000,000 during August to $1,339,000,000 at the end of the month. Acceptances arising from the financing of foreign shipped and stored goods and from domestic warehouse transactions increased, while import and ex port bills declined. As the upper part of the accompany ing diagram shows, the recent changes in bills outstand ing, following an unusually large liquidation in the first half of this year, have been more similar to the course of 1928 than to that of 1929; in 1928 there was no rise in outstandings until September, while in 1929 the increase began in June and was of substantial amount by August. Reduced foreign trade and declining commodity prices have tended to restrict the amount of acceptance credits this year. Eeserve Bank holdings have been restricted by the larger member bank holdings of bills, as well as by the limited volume of new bills created. S e c u r ity M a r k e t s Following a continuation during the first part of Sep tember of the recovery of the last three weeks of August, stock prices again turned downward after the 10 th of the month, and near the end of the month the general level was slightly below the previous low of the year reached in June. In the months following the severe decline of June, stock prices have been fluctuating within the relatively narrow range of about 20 points, as meas ured by most of the well known stock price averages. Each moderate rise in stock prices has been followed by a relapse, so that no important change in the direction of the market has been discernible in several months. At the end of September the Standard Statistics Company index of 90 stocks was 7 per cent above the low of last November. Moderate strength continued to be manifested in most divisions of the domestic bond market during Septem ber. A further rise of about % point carried prices of high grade corporation bonds to new high levels since 1928, and it was reported that the less high grade issues participated in the advance to a larger extent than had been the case in most preceding months. In the earlier part of the rise from the 1929 lows, municipal and rail 75 road issues, the groups of bonds more frequently classi fied as “ legal” for the investment of savings and trust funds, had the larger price advances. Recently, however, the higher yielding industrial and public utility bonds have participated in the rise more largely. United States Government long-term bond issues were little changed during the first part of the month, but after the announcement of the Treasury’s intention to call the outstanding Treasury notes of Series A and B for redemption next March, there was an advance of nearly y 2 point in the average price of the eight long term issues now outstanding. Government short-term issues were very strong in the latter part of the month. The foreign bond list was unsettled by political devel opments in South America and Germany, and the aver age price of 40 representative issues dropped about 1V2 points following a decline of y 2 point in the last week of August. Argentine, Brazilian, Chilean, German, and Peruvian issues all closed the month well below their 1930 highs. The German International 51/? per cent bonds floated last June at 90 sold as low as 80, and although there was some recovery from that level, showed a net decline of about 6 points for the month, a somewhat larger decline than occurred in most of the other German issues. N e w F in a n c in g During September, the issuance of new securities was resumed on a larger scale than in August, when the usual mid-summer dulness prevailed. The increase was largely in domestic corporate bond offerings, but foreign issues also increased, and both classes appear to have been larger than in September 1929. Municipal and state financing showed no expansion and was smaller than a year ago, according to a preliminary compilation. The amount of new stock issues was relatively small, as has been the case for some months. Final figures covering new financing during the month of August indicate a total of only $273,000,000 for all types of securities. This was less than half of the July flotations and about one-third of the August 1929 financing, and the total appears to have been the small est for any month since August 1928. Of the total offered, a substantial amount was for refunding pur poses, so that only $187,000,000 represented new capital funds. Domestic corporate security issues, which were about evenly divided between bonds and stocks, totaled $83,000,000, the smallest amount in many months. State and municipal issues, while smaller than in most pre ceding months of this year, were in approximately the same volume as a year ago. For the first eight months of this year new capital issues of domestic corporations have reached a total of $3,700,000,000; new bond flotations at $2,400,000,000 have totaled $900,000,000 more than a year ago, while stock issues at $1,300,000,000 have shown a decline of $2,900,000,000. State and municipal issues have in creased $130,000,000 to $950,000,000 for the eight months. Despite an August drop, the amount of new capital raised in this country for use abroad during the January to August period of this year has been considerably MONTHLY REVIEW, OCTOBER 1, 1930 76 larger than in the corresponding period of last year, and nearly as large as in 1928. These figures include not only issues of foreign borrowers, but also sales of securities by domestic corporations where the proceeds of such issues are used in foreign countries. The following table indicates that there has been a considerable change in the type of foreign financing between 1929 and 1930. A year ago, corporate financing exceeded issues of a gov ernmental nature, whereas this year governmental issues have predominated, as in each of the three years prior to 1929. (In millions of dollars) 1926 1927 1928 1929 1930 Governmental............................... 336 271 5S0 295 559 339 208 385 541 318 T otal..................................... 607 875 898 593 859 Japan and $500,000 from China at San Francisco. There was also a net decrease of $4,000,000 in the amount of gold held under earmark for foreign account. The Sep tember change in this country’s gold stock through actual movements and changes in earmarked gold is estimated to have been a net gain of $3,000,000; the net gain for the year to date has accordingly increased slightly to $ 202,000,000. Switzerland continued to withdraw gold at the Bank of England, taking £350,000 in September, while France, after a month’s interruption, again appeared as a pur chaser, withdrawing £900,000 of gold from the bank. France also obtained £2,800,000 of the South African gold in the market during the past month. Gold exports from Berlin to Paris of about 70,000,000 reichsmarks were reported. C e n tra l B a n k R a te C hanges F o r e ig n E x c h a n g e The European exchanges on the whole showed con siderable weakness in the first half of September, fol lowed by greater steadiness and occasionally some real strength. Sterling, which had averaged over $4.87 during August, declined to $4.85 31/32 on September 15, recovered slightly in the ensuing week, but declined again below $4.86 toward the end of the month. French francs throughout the month were weaker than in Au gust, touching $0.0393 only rarely. Reichsmarks, which averaged $0.2389 1/16 in August, weakened irregularly from $0.238714 on September 2 to a low of $0.2380% on the 22d, and then steadied at around $0.2381V2. Guild ers declined 2 % points to $0.4025 on the 12th, after which they showed considerable strength, closing at $0.4034. In addition to the guilder, Austrian schillings, Swiss francs, Swedish crowns, and Canadian dollars, all stood appreciably above par. The Spanish peseta fluctu ated widely and toward the end of the month it was somewhat above its opening position of $0.1063. The Argentine peso reached a new low quotation at $0.7874 on September 2. A temporary recovery to $0.84 followed on the 1 1 th, but the trend has been downward since. Brazilian milreis recovered decidedly from $0.0970 on the 2d to $0.1045 on the 27th, but were still well below their parity of $0.1196. Intermittent gold exports to Canada left the exchange rate comparatively unaffected, and Canadian dollars ruled uninterruptedly at a premium. Though several shipments of gold arrived from Japan, the yen dipped sharply around the middle of the month, but subsequently advanced and closed higher than in the first part of September. The Shang hai tael remained above $0.40 nearly all the last half of the month, marking a steady recovery from $0.37% early in August. In Europe the National Bank of Austria, and in South America the central banks of Peru and Colombia, lowered their discount rates during September. The Austrian rate was reduced on the 10th to 5 per cent from the 5 % per cent level at which it had ruled since May 24. On the 1st, the Reserve Bank of Peru lowered its rate from 8 to 7 per cent, the higher rate having been in force since August 18, 1930. The central bank of Colombia, the Bank of the Republic, reduced its rate to 7 per cent on the 19th, the previous rate of 8 per cent having been established on May 21, 1930. E m p lo y m e n t In the latter part of August and in September there appears to have been an increase in employment of something like the usual seasonal proportions. This is indicated by the accompanying diagram, which shows the ratio between orders for workers and applications for employment at New York State employment offices. This ratio rose at least as much as usual in the latter part of August and has pursued in September about the same course as in the previous two years, although it has remained at a considerably lower level. At the middle of August the number of workers em ployed in representative factories throughout the United PER CENT i 192c w / r -'7 . V V' 1 \ J r v \ ..192 8 / V \ v J 193C V % v / J G o ld M o v e m e n t Withdrawals of gold from New York for shipment to Canada continued to take place in September, amount ing in all to $7,000,000. In addition, $3,000,000 was ex ported to Italy and $965,000 to Venezuela. Receipts from South America and the Far East made up the bulk of the imports, $1,300,000 having arrived from Brazil, $2,300,000 from Uruguay, and $1,000,000 from Vene zuela at the Port of New York, and $4,200,000 from V VAV / > V - J V > ) J F M A M J J A S O N D Ratio of Orders for Workers to Applications for Employment at New York State Public Employment Bureaus, 1930 Com pared with Previous Two Years 77 FEDERAL RESERVE AGENT AT NEW YORK States showed a decline of slightly less than 1 per cent compared with the middle of July. Usually the autumn increase in employment starts during this period; conse quently, the small decrease this year resulted in a further decline in this bank's seasonally adjusted employment index, which in August equaled the lowest point in 1922 and was only 3 per cent above the low of 1921. In New York State, reports on factory employment showed similar tendencies. However, while employment in all manufacturing industries combined showed a further decline instead of the usual moderate seasonal increase, there were a number of individual industries in which the August changes compared favorably with those of a year ago. The woolen mills and men’s cloth ing factories increased their working forces more than in the corresponding month last year; the machinery and electrical apparatus, instruments and appliances, and men’s furnishing industries reduced working forces less than last year; and the automobile and knit goods industries employed more people than in July, whereas last year they reduced the number of their employees. In all of these industries, however, employment con tinued well under the levels of the year previous. months following the substantial decline that has per sisted since early in 1928. The volume of building and construction work con tracted for during the period from the first of January through the end of August totaled nearly 20 per cent less than in the corresponding months of 1929, and was smaller than in the first eight months of any year since 1924. In the Metropolitan area of New York, a district that usually accounts for between one-fourth and one-fifth of all contracts awarded in the 37 Eastern states, August contracts for building and construction work were 1 1 per cent larger than in the previous month and about 1 per cent larger than in August 1929; and during the first 19 days of September the daily average contract awards were above those of August 1930, or of September a year ago. C o m m o d it y P ric e s The upturn in commodity price indexes early in August, caused by higher prices for agricultural com modities on account of the drought, was followed by a period of some stability in the latter part of August and the early part of September, but renewed weakness again developed in commodity prices during the latter part of September. Consequently, the weekly index of prices of more than 450 commodities, which is com puted by the National Fertilizer Association, declined in the last two weeks of September to new low levels for recent years, as the diagram on the next page shows. Grain prices weakened around the middle of Septem ber, and subsequently lost a good part of the August advances that were occasioned by the deterioration of crops. Cash wheat sold down to 791/4 cents a bushel, as compared with a high price of 96% cents reached during August, and the future deliveries were reported to have reached the lowest points since 1906. The price of corn reacted to 83l/2 cents from the high of $ 1.02 in the early part of August, but remained 10 cents above the year’s low. Live stock prices advanced markedly in August and early September, and hide prices showed some in crease, but just before the close of September a part of these gains was lost. The price of cotton fell in September to 10.25 cents a pound, reported to be the lowest since 1915. A com posite of raw silk prices declined to a new record low of $2.59 a pound, while domestic wool was steady at a little below 65 cents. Fairchild’s composite fiber index, which B u il d i n g After declining in August to the lowest level of the past six years, excepting only the mid-winter months of 1929-30, the volume of building contracts awarded in 37 Eastern states during the first 19 days of September was reported to have been slightly above the level of the previous month. Residential contracts were only moder ately below September 1929, and public works and utility construction compared favorably with the contracts placed a year ago, but other non-residential contracts were materially below last year’s level. For the month of August, the F. W . Dodge Corpora tion reports showed a volume of building contracts awarded in the 37 Eastern states that was 5 per cent smaller than in the previous month and 29 per cent be low the August 1929 figure. The accompanying diagram indicates that recently there has been a considerable de cline in non-residential contracts, chiefly in industrial and commercial projects. On the other hand, contracts for public works and utilities, shown separately from other non-residential work in the diagram, have been maintained during the past few months in a volume about equal to a year ago, and monthly totals for residential contracts have shown more stability in the past four MILLIONS OF DOLLARS / r \ j / -A ' / */ // MILLIONS OF DOLLARS MILLIONS OF DOLLARS 1 ------------ 1 )2Q 1929 A A A J928 < \ / 7yy \ \ V/ i A V |/ 193o/\ VV / " \ ) \\ i\,1929 x //h V V 1929\ 193< K A l928 \\ % \ % V* ~ ' 7 j \ y) 193C ---RESIClENTIAL i l l 1.... I__1.... 1i J F M A M i i . _ l ..I.....1 J J A S O N D PUBLIC; WORK S & UTI LITIES > 1 I ! l J ...I . J F M A M J J A S O ND OTHER NON-F*ESIDEISITIAL I I I__ L. I I!, _L 1__ .L......... J F M A M J J A S O N D Volume of Building Contracts Awarded in 37 States, 1930 Compared with Previous Two Years (F. W . Dodge Corporation figures) MONTHLY REVIEW, OCTOBER 1, 1930 78 low level d u rin g th e first th re e w eeks of S ep tem b e r, a l th o u g h sales w ere re p o rte d to h av e in c re a se d to a volu m e c o n sid erab ly in excess of th e c u rr e n t ra te of p ro d u c tio n . D u rin g A u g u st, a lth o u g h th e re wTas no p ro n o u n c e d ch an g e, th e w e ig h t o f ev idence p o in te d to w a rd a sm all f u r th e r d eclin e in p ro d u c tiv e a c tiv ity to th e lo w est lev el re a c h e d so f a r d u rin g th e c u rr e n t b u sin ess recession. A u to m o b ile p ro d u c tio n w as f u r th e r c u rta ile d , a n d th is b a n k ’s seaso n ally a d ju s te d in d e x d e clin ed to th e low est lev el since la s t D ecem ber, w h en p ro d u c tio n w as la rg e ly su sp en d e d . A fa v o ra b le d ev elo p m en t, how ever, w as th e f a c t th a t th e re w as no f u r th e r g e n e ra l d eclin e in m e ta l p ro d u c tio n , fo llo w in g th e s h a rp c u rta ilm e n t o f J u ly . O u tp u t of steel in g o ts in c re a se d 6 p e r c e n t in A u g u st, th e first ad v an c e in six m o n th s, w7h e re as o rd in a rily th e re is no m a te ria l ch an g e b etw een J u ly a n d A u g u s t. T h e in crease in p ro d u c tio n w as ac co m p an ied , how ever, b y a s u b s ta n tia l d eclin e in u n filled o rd e rs o f th e U n ite d S ta te s S teel C o rp o ra tio n . O u tp u t o f c o p p e r a n d of le a d National Fertilizer Association; 1926-28 = 100 per cent) h a d a little m ore th a n th e u s u a l seaso n al ex p an sio n , a n d in c lu d es co tto n , w ool, ra y o n , a n d silk, fe ll to a lev el 13 zinc p ro d u c tio n in c re ased slig h tly in s te a d of sh o w in g th e p e r c e n t u n d e r th e 1911-1913 av erag e. T h e p ric e of u s u a l sm all decline. P ig iro n p ro d u c tio n , how ev er, d e c ru d e ru b b e r d eclin ed f u r th e r to 7^2 cen ts a p o u n d , th e clin ed 4 p e r ce n t fro m J u ly , in c o n tra s t to a s lig h t in low est level in th e h is to ry of th e in d u s try , fo llo w in g r e crease in m ost of th e p re c e d in g y e a rs, a n d tin d e liv eries p o rts th a t th e B ritis h a n d D u tc h G o v ern m en ts h a d d e te r show ed a m a rk e d u n sea so n al decline. m in e d n o t to a tte m p t a n y re s tric tio n of o u tp u t. T he I n th e fu e l in d u strie s , b itu m in o u s coal p ro d u c tio n in p ric e of refin ed s u g a r w as lo w ered f u r th e r to 4.35 cents. creased s lig h tly less th a n seaso n ally , a n d o u tp u t of coke M etal p ric e s also show ed an e a sie r te n d e n c y . D o m estic a n d of c ru d e p e tro le u m d e clin ed slig h tly f u r th e r , w h ile co p p er fe ll to 10 cents, w h ich w as re p o rte d to be th e a n th ra c ite o u tp u t rose m o d erately . I n all b ra n c h e s of th e low est p ric e since 1897. Z inc d eclin ed to 4.25 cents, te x tile in d u strie s , a c tiv ity d e clin ed in A u g u s t in s te a d of lo sin g m ost of th e reco v ery w7h ich h a d c a rrie d it fro m show in g th e seaso n al e x p an sio n th a t u s u a lly b eg in s w ith th e low of 4.05 cen ts to a h ig h of 4 .771/2 cen ts a t th e th a t m o n th , a n d a co m posite in d e x of te x tile o u tp u t en d of J u ly . T in also declin ed , w h ile le a d wTas u n re a c h e d a new low level since 1921. ch an g e d a t th e lev el reac h ed e a rly in A u g u st. T he Iro n A ge av erag es of finished steel a n d p ig iro n d eclin ed (Adjusted for seasonal variations and usual year-to-year growth) s lig h tly f u r th e r to th e low est levels since 1922 a n d 1915, 1929 1930 resp ec tiv ely . S c ra p steel, w h ich u su a lly re sp o n d s q u ic k ly to a n y ch an g e in th e in d u s tria l situ a tio n , rose $1.00 a Aug. June July Aug. to n in A u g u s t a n d e a rly S ep tem b e r, b u t show ed no f u r th e r ad v an c e in th e la tte r h a lf of S ep tem b e r. C oal p rice s M etals 129 100 91 86 in c re a se d som ew hat, w h ile c ru d e p e tro le u m q u o ta tio n s 134 101 82 86 Copper, U. S. mines.................................. 112 81 79 80p declin ed . 96 90 92 93 PER CENT Tin deliveries............................................. P r o d u c tio n I n d u s tr ia l a c tiv ity a p p e a rs to h av e show n no m a te ria l ch an g e d u rin g S ep tem b e r, a fte r allo w ance fo r seasonal ten d en cies, a n d a g g re g a te p ro d u c tio n re m a in e d re la tiv e ly sm all. T h e steel in d u s try o p e ra tin g ra tio , as e stim a te d b y Iro n A ge, a d v an c ed to 61 p e r c e n t of th e o re tic a l c a p a c ity to w a rd th e close of th e m o n th , as c o m p ared w ith a low of 52 p e r ce n t in th e e a rly p a r t of A u g u st, w h ich w o u ld in d ic a te th a t even a f te r seaso n al a d ju s t m e n t, steel o u tp u t fo r th e m o n th w o u ld show a n in crease. P ro d u c tio n of b itu m io u s coal also show ed a m ore th a n seasonal in crease. O n th e o th e r h a n d , th e re w ere r e p o rts of f u r th e r re s tric tio n of o u tp u t in th e au to m o tiv e in d u s try , a n d one of th e im p o rta n t p ro d u c e rs of low p ric e d c a rs w as re p o rte d to h av e c u rta ile d o p e ra tio n s m a rk e d ly in o rd e r to p re p a re fo r th e in tro d u c tio n of a new m odel. O u tp u t of c ru d e p e tro le u m rece d ed f u r th e r in resp o n se to c o n tin u e d efforts to w a rd s th e lim ita tio n of p ro d u c tio n . C o tto n goods p ro d u c tio n c o n tin u e d a t a 104 110 78 86 73 94 75 85 122 110 76 87 60 79 51 p 70p 83 79 121 119 104 72 74 101 95 92 69 78 94 92 90 68 86 88 91p 99 101 109 109 123 73 80 64 111 91 71 74 84 123 96p 65 70p 75 114p 91p 99 106r 102 *106 92 102r 74 107 92 105r 93 105 93 lOlr 74p 100 124 8Fr lOfir 91 111 118 81r 94r 81 98 114 64r 114 66r Automobiles Passenger cars........................................... Motor trucks............................................. Fuels Bituminous coal......................................... Anthracite coal.......................................... Petroleum, crude....................................... Petroleum products................................... Textiles and Leather Products Cotton consumption................................. Wool mill activity..................................... Silk consumption....................................... Leather, sole.............................................. Boots and shoes......................................... Foods and Tobacco Products Live stock slaughtered.............................. Wheat flourr.............................................. Sugar meltings, U. S. ports...................... Tobacco products...................................... Miscellaneous Printing activitvr..................................... Paper, newsprint....................................... p Preliminary r Revised 95r 78 94r 75 95p 79 FEDERAL RESERVE AGENT AT NEW YORK Indexes of Business Activity MILLIONS OF DOLLARS This bank’s indexes of the distribution of goods and of general business activity indicate a continued low level in August as compared either with last year or with the long-time trend of growth, and such information as is now available indicates no material change in September. Average daily car loadings of merchandise and miscel laneous freight showed slightly less than the usual sea sonal increase in August, and remained under the levels of the past five years. Loadings of heavy bulk material also increased less than seasonally in August, and re mained at a comparatively low level. Furthermore, dur ing the first two weeks of September, it appears that loadings of merchandise and miscellaneous freight showed no more than the usual seasonal increase. Average daily sales of the reporting department stores in the Second District during August increased season ally over July, but newspaper and magazine advertising and life insurance sales declined, after seasonal adjust ment. The number of business failures remained rela tively large. (Adjusted for seasonal variations and usual year-to-year growth) 1930 1929 Aug. June July Primary Distribution Car loadings, merchandise and misc. Car loadings, other............................. Exports................................................ Imports.............................................. . Panama Canal traffic.......................... 105r 97 100 122 92 92r 80 81 93 71 89r 80 99 89 95 87r 95 Distribution to Consumer Depart ment store sales, 2nd Dist.. . . Chain store sales, other than grocery. Life insurance paid for........................ Advertising r ........................................ 99 103 101 lOOr 90 77 86 94 85r Aug. 88r 78 88p 84p 70 95 89 89 82r General Business Activiiy Brink debits, outside of New York City.. B^nk debits. New York C'ity. ................ Velocity of bank deposits, outside of New York City........................................... Velocity of bank deposits, New York City Shares sold on N. Y. Stock Exchange. . . Postal receipts........................................... 117 195 104 141 96 115 95 109 135 228 404 114 146 269 94 105 118 103 212 94 163 91 100 Employment in the United States.......... Business failures........................................ Building contracts..................................... New corporations formed in N. Y. State r Real estate transfers................................. 104 103 109 99 lOlr 78 General price level*.............. Composite index of wages*. Cost of living*...................... 182 227 174 E le c tr ic p o w e r .......................................................... p Preliminary r Revised 112 91 93p 90 124 115 90r 65 87 117 72 92r 62 85 117 72 169 225 165 167 223 164 166 223 164 63 * 1913 = 100 F o re ig n T r a d e In August, the total foreign merchandise trade of this country did not show quite as large a percentage decline from a year ago as in July. The August exports of $300,000,000 were 13 per cent larger than in July, and imports, valued at $217,000,000, were only slightly lower. This arresting of the decline in this country’s foreign trade, which, as the accompanying diagram shows, has been in progress during recent months, may be ascribed in part to seasonal influences. The value of exports and imports remained 21 and 41 per cent, respectively, smaller than in August 1929, reductions which are ac- f LuA if 4 EXF O R T S l l , f t h w V s - tA k y ¥ I i n k \ IM P O f T T S 1924 1925 Foreign Trade of 1926 1927 1928 * 1929 the United States; Monthly Imports of Merchandise 1930 Exports and counted for by decreases in the volume of foreign trade as well as by the decline in commodity prices. Compared with a year ago, large declines again oc curred in the value of all major groups of imports. There were, however, slight increases over July in the value of imports of crude materials and finished manu factures. Volume receipts of both crude rubber and raw silk showed gains from the previous month, although they remained less than in August 1929. Every group of exports was larger in value than in July, due more or less to seasonal influences, especially in those exports which are related to crop movements, such as crude materials and crude foodstuffs. There was a gain over the previous month of $13,000,000 in the value of exports of raw cotton, and of $12,000,000 in grain exports. Compared with a year ago, raw cotton ex ports showed an increase in value of $4,000,000 or 14 per cent, accompanying a gain of 62 per cent in volume. Due to this increase, the total value of crude materials exported during the month showed an increase of 4 per cent over a year ago, contrary to the general tendency. On the other hand, there were declines from a year ago of $4,000,000 in the value of exports of grains, $8,000,000 in farm machinery, and $19,000,000 in automobiles. C h a in S to re T r a d e The August sales of the reporting chain stores in this district were 8 per cent below a year previous, the larg est decrease ever reported to this bank, but part of the reduction undoubtedly was due to the fact that there was one less selling day than in August 1929. Grocery chains again were the only type that reported sales larger than last year, and the increase in their average daily sales was the smallest this year, probably due in part to the decline in food prices during recent months. The sales of shoe, variety, and candy organizations showed the largest declines in recent months, and the sales of ten cent and drug chain systems also showed unusually large decreases. All lines of chains showed decreases in sales per store, reflecting, in some cases, the smaller amount of business MONTHLY REVIEW, OCTOBER 1, 1930 80 done by new stores, as well as the effect of generally slow business. P e r c e n t a g e c h a n g e A u g u s t 1 93 0 c o m p a r e d w it h A u g u s t 192 9 Number T y p e o f store G r o c e r y ........................... T e n c e n t .......................... of stores Total s a le s S a le s per sto re + 6.6 + 1.8 —10.8 — 4 .6 — 1 6 .5 0 — 1 3 .8 — 1 8 .6 — 8 .4 — 1 1 .4 — 1 9 .4 — 11 .4 6 .9 — 8.0 + 6 .7 — 2 .3 + 5 .4 + 1 3 .6 Drug.................. Shoe........................ Variety.................... C a n d y ............................. T o t a l ..................... + —11.8 —22. S — 1 3 .9 W h o le s a le T r a d e August sales of wholesale dealers in this district averaged 24 per cent smaller than a year ago, a decline of the same amount as in July. The decline in com modity prices during the past year undoubtedly has been an im portant factor in the decrease in sales, and one less business day than in August 1929 made the reductions in August sales slightly larger than would otherwise have been the case. The decreases in the sales of groceries, stationery, paper, and jewelry were the largest reported during the period covered by this bank’s records, and the decrease in drug sales was the largest since December 1927. Sales of m en’s clothing, cotton goods, and shoes, and machine tool orders also continued to show unusually large declines from a year previous, although the decreases were not as large as those reported in Ju ly ; sales of diamonds and hardware showed somewhat larger declines than in July. Y ard age sales of silk goods, reported by the Silk Association of America, however, showed the smallest decrease from a year ago since May. The value of stocks of groceries, cotton goods, hard ware, and diamonds continued to be smaller than in 1929, but the value of stocks of shoes and drugs re mained larger than last year. Stocks of jewelry and quantity stocks of silk goods on hand at the end of August were smaller than a year ago, after showing in creases in July. Collections were somewhat slower than a year previous in most lines. C o m m o d ity P e rce n ta g e ch a n g e A u g u s t 1 93 0 c o m p a r e d w ith J u ly 193 0 N et sa le s G r o c e r ie s ................................ — 9 . 0 M e n ’ s c l o t h i n g ................... + 131 2 C o t t o n g o o d s ...................... + 1 5 .6 + 3 5 .4 * S ilk g o o d s ............................. + 2 3 .4 S h o e s ....................................... + 1 0 .7 D r u g s ...................................... Hn rd w a r e ............................. — 1 .4 + 2 4 .9 M a c h i n e t o o l s * * ............... S t a t i o n e r y ............................. — 11 .0 P a p e r ....................................... — 2 .6 D i a m o n d s ............................. — 4 . 9 J e w e l r y ................................... + 2 1 .6 W e ig h te d a v e ra g e + 3 1 .7 S to ck end of m on th + 2 .0 + 3 6 — 6 .1 * — 1 0 .0 +21 9 + 7 .1 — 2 3 ’. 9 — 1 7 .1 P e rce n ta g e ch a n ge A u g u st 1930 c o m p a r e d w ith A u g u s t 1 92 9 N et s a le s — — — — — — — — — — — — 1 6 .7 2 8 .6 2 4 .1 8 .4 * 2 3 .0 1 3 .3 1 9 .1 61 .8 2 7 .3 2 2 .6 4 8 .4 4 4 .8 | — 23 6 S tock en d o f m on th — 2 .6 — i o .7 — 4 .6 * + 0 .8 + 4 2 .1 — 1 3 .7 — 32 2 — 1 8 .3 P e r ce n t o f a cco u n ts ou ts ta n d in g J u ly 31 c o l le c t e d in A u g u s t 1 92 9 19 3 0 7 6 .8 3 3 .8 3 6 .6 4 7 .5 3 8 .8 3 6 .1 4 7 .8 7 2 .4 3 3 .2 35 7 4 3 .6 3 7 .1 4 2 .0 4 5 .7 6 7 '.3 5 6 .5 6 7 .9 55 .4 | 2 7 .2 } 2 0 .7 5 0 .2 4 8 .2 * Quantity not value. Reported by Silk Association of America ** Reported by the National Machine Tool Builders Association D e p a r t m e n t S to re T r a d e The total August sales of the reporting departm ent stores in this district showed a 7 per cent decline from a year previous, the largest decrease reported so far this year. However, there was one less selling day than in August 1929, and the decrease in the average daily vol ume of sales was no larger than in July. The total sales of the New York City stores showed a decline of almost 6 per cen t; the reporting Newark and Rochester depart ment stores showed decreases in sales of 6 per cent and 7.7 per cent, respectively, following an increase in sales in J u ly ; and sales in other localities declined from 9 per cent to 18 per cent from a year previous. The leading apparel stores continued to report a substantial decrease in sales, but the decline in the daily average volume of sales was the smallest since May. Stocks of merchandise on hand at the end of the month, valued at retail prices, showed a larger decrease from a year ago than in any previous month in several years. The percentage of outstanding charge accounts collected during the month was nearly 2 per cent lower than in August 1929. P e rce n ta g e ch a n ge A u g u s t 1030 c o m p a r e d w it h A u g u s t 192 9 L o c a li t y N et s a le s S tock on h a n d end of m o n th P er cen t o f a cco u n ts o u ts ta n d in g J u ly 31 c o l le c t e d in A u gu st 1929 1930 N e w Y o r k ......................................................................... B u f f a l o ................................................................................ R o c h e s t e r .......................................................................... S v r a c u s e ............................................................................ N e w a r k .............................................................................. B r i d g e p o r t ........................................................................ E l s e w h e r e ......................................................................... N o r t h e r n N e w Y o r k S t a t e .......................... C e n t r a l N e w Y o r k S t a t e ................................... S o u t h e r n N e w Y o r k S t a t e ................................ H u d s o n R i v e r V a lle y D i s t r i c t ....................... C a p it a l D i s t r i c t ....................................................... W e s t c h e s t e r D i s t r i c t ............................................ — — — — — — — — — — — — — 5 .8 9 4 7 7 1 5 .7 6 .0 1 5 .2 1 4 .5 1 7 .2 1 3 .4 18 2 1 0 .6 14 0 1 3 .2 — — — — — — — 5 .3 3 .0 1 4 .2 1 1 .1 1 4 .9 14 3 5 .9 4 2 .9 48 2 3 3 .8 4 1 .1 44 0 3 1 .4 4 0 .5 37 1 3 9 .4 3 6 .4 36 7 3 5 .4 A ll d e p a r t m e n t s t o r e s .................................... — 7 .2 — 6 .9 4 0 .5 3 8 .7 A p p a r e l s t o r e s ..................................................... — 1 3 .1 — 6 .5 3 9 .3 3 5 .7 Sales and stocks in m ajor groups of departm ents are compared with those of August 1929 in the following table. N e t sa le s p ercen ta g e ch a n g e A u g u s t 1 93 0 c o m p a r e d w it h A u g u s t 1 92 9 F u r n i t u r e .............................................................. T o il e t a r t ic le s a n d d r u g s ............................ T o y s a n d s p o r t in g g o o d s ............................ C o t t o n g o o d s ...................................................... M e n ’ s f u r n is h in g s ........................................... S ilk s a n d v e l v e t s ............................................. W o m e n ’ s r e a d y -t o - w e a r a c c e s s o r ie s .. . S ilv e r w a r e a n d j e w e l r y ................................ W o m e n ’s a n d M is s e s ’ r e a d y - t o - w e a r . . H o s i e r y .................................................................. H o m e fu r n is h in g s ............................................ M e n ’ s a n d B o y s ’ w e a r .................................. S h o e s ....................................................................... B o o k s a n d s t a t i o n e r y ................................... W o o l e n g o o d s .................................................... L u g g a g e a n d o t h e r le a t h e r g o o d s .......... L in e n s a n d h a n d k e r c h i e fs .......................... M u s ic a l in s t r u m e n t s a n d r a d i o .............. M i s c e ll a n e o u s .................................................... + + + — — — — — — — — — — — — — — — — 1 .1 0 .9 0 .3 3 .7 5 .5 5 7 6 .0 7 .0 8 .6 1 0 .2 10 5 11 .3 1 2 .2 1 3 .1 1 3 .6 13 7 1 4 .3 1 4 .3 1 4 .5 S tock on h a n d p e rce n ta g e ch a n g e A u g u s t 31, 1930 c o m p a r e d w it h A u g u s t 3 1, 1 92 9 — 3 .8 — 0 6 — 1 6 .9 + 1 .9 — 9 .1 — 2 3 .0 — 1 0 .4 — 14 2 — 17 6 — 1 0 .7 — 6 .2 — 1 1 .0 — 9 .7 — 3 2 — 1 6 .5 — 8 .9 + 5 .1 — 1 2 .3 — 2 0 .4 FED ER AL RESERVE B A N K OF N E W Y O R K MONTHLY REVIEW, OCTOBER 1, 1930 B u s in e s s C o n d i t i o n s in t h e U n i t e d S t a t e s (Summarized by the Federal Eeserve Board) I ND U STRIAL production as a whole was in the same volume in August as in July, contrary to the usual upward trend at this season, although there were seasonal increases in activity in a number of basic industries. Factory employ ment and payrolls declined further. The general level of commodity prices at wholesale, which had declined continuously for a year, remained unchanged between July and August, advances in price being reported for certain important agricultural staples. P r o d u c t io n The B oard's index o f industrial production, which makes allowance for seasonal variations, continued to decline in August. Production o f automobiles, pig iron, lumber, and sugar decreased, and there was a reduction in the con sumption of cotton and wool. In the bituminous coal and silk industries, there was less increase than is usual at this season, while in steel, cement, flour, and shoes the increase was slightly more than seasonal. During the first two weeks o f September, activity at steel plants increased, while a further reduction in output o f automobiles was reported. Building contracts awarded, as rejjorted to the F. W. Dodge Corporation, were in slightly smaller volume during August, largely on account of reduc tions in educational and industrial construction projects. Residential building contracts continued small. During the first two weeks in September, awards averaged about the same as in August. A t the middle o f August, the latest date for which figures are available, the number o f wage earners employed in factories and the volume of factory payrolls was smaller than in the middle o f July. There were decreases in employment in the iron and steel and cotton textile industries, and at foundries and machine shops, automobile plants, and saw mills. Substantial seasonal increases occurred in the canning and preserving, bituminous coal mining, and clothing industries. Minerals Combined, Adjusted for Seasonal Vari ations (1923-25 average = 1 0 0 per cent) 1926 1927 1928 1929 1930 Index Numbers of Factory Employment and Pay rolls, Without Adjustment for Seasonal Vari ations (1923-25 average = 100 per cent) A g r ic u l t u r e September first estimates by the Department o f Agriculture indicate a corn crop o f 1,983,000,000 bushels, about 700,000,000 bushels less than the fiveyear average; a spring wheat crop o f 240,000,000 bushels, slightly larger than last year's unusually small crop, making the total wheat crop about equal to the five-year average; and a crop o f oats o f about the usual size. Condition o f pastures on September first was reported to be unusually poor. The cotton crop is expected to be about 14,340,000 bales, nearly one-half million bales less than last year. D is t r ib u t io n Volume o f freight shipped by rail increased by slightly less than the usual seasonal amount during August. Sales o f department stores were larger than in July, but continued considerably smaller than a year ago. W Wholesale Price Indexes of the United States Bu reau of Labor Statistics (1926 average = 100 per cent) ALL Ol[her LOANi h olesale B _ ..A V. I I LC)ANSONSEiCURITIESj ...Av,/ V A / SIVESTMENTS>. . i | VA \ i V* i 1926 1927 1928 1929 1930 Monthly Averages of Weekly Figures for Reporting Member Banks in Leading Cities (Latest fig ures are averages of first 2 weeks of September) P r ic e s There were increases during August in prices o f many agricultural prod ucts, especially meats, livestock, and grains, while the price of cotton decreased. Prices of mineral and forest products and of imported raw materials and their manufactures in general declined, with the principal exception o f silk. The Bureau o f Labor Statistics index o f wholesale prices showed no change from the preceding month. During the first half o f September, there were pronounced declines in prices o f wheat, corn, hogs, pork, and rubber. Prices o f cotton and woolen textiles remained fairly stable, while those o f hides and coffee increased. ank Cr e d it Between August 20 and September 17 there was an increase in member bank holdings of investments and in their loans on securities, while all other loans, wrhich include loans for commercial purposes, declined, contrary to the usual seasonal trend. The volume o f Reserve Bank credit outstanding showed a growth for the period, as is usual at this season, but the increase was relatively small owing to the fact that the seasonal demand for currency was smaller than in other recent years and owing to an addition o f $15,000,000 to tlie country’s stock of gold. The increase was in holdings of acceptances, offset in part by a further decline in discounts for member banks to the lowest level since 1917. Money rates continued at low levels during August and the first half of September, and the yield on high-grade bonds declined further. Discount rates at the Federal Reserve Banks o f Dallas and Minneapolis, the only banks which had maintained a 4 per cent rate, were reduced to 3% per cent during September.