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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

/

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193C

V

%

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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

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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
'
/
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//

MILLIONS OF DOLLARS

MILLIONS OF DOLLARS

1

------------

1
)2Q

1929
A
A
A J928
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/
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i
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193< K

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193C ---RESIClENTIAL
i l l
1.... I__1.... 1i
J F M A M

i

i

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_ 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)

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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.