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M ONTHLY

R E V IE W

of Credit and Business Conditions
S e c o n d
Federal Reserve A gen t

F e d e r a l

Federal R eserve Bank, New York

M o n e y M a r k e t in Septem ber
Data on the banking situation that have become avail­
able during the past month indicate a further increase in
the available money supply in the form of demand
deposits and currency outstanding, but a considerably
less active use of funds recently than in the early months
of this year. During the past year the money supply has
increased by approximately 15 per cent, but in the same
period the average rate of-turnover of demand deposits
in the principal cities has declined by about 14 per cent.
In the first four months of this year there was an in­
crease in the activity of demand deposits accompanying
an expansion of business activity, but subsequently the
rate of turnover of deposits has declined substantially,
even after allowance for seasonal changes, and, as the
accompanying diagram shows, was only slightly higher
in August of this year than in the early months of 1933.
The rate of turnover or velocity of deposits is largely
a reflection of changes in business activity. It is an
element of flexibility by which a given money supply
can be made to serve the varying monetary needs of a
fluctuating volume of business. The experience of past
years indicates that if the present money supply were
actively used it could finance a substantially larger
volume of business than at present.
The volume of bank deposits has shown an almost
continuous increase for a number of months. Demand
deposits, exclusive of inter-bank deposits, in the report­
ing member banks in principal cities now show an in­
crease of approximately 17 per cent over a year ago. In
the same period the amount of currency outstanding has
increased about 2 per cent, notwithstanding some
further return flow of hoarded money to the banks. In
banks outside of the principal cities, for which current
reports are not available, the June 30 condition reports
showed demand deposits 24 per cent larger than a year
previous. The aggregate increase in the volume of de­
mand deposits in all banks throughout the country
during the past year has probably amounted to more
than $2,500,000,000, and in addition the amount of cur­
rency outstanding has increased nearly $100,000,000
over the relatively high level of a year ago.
The increase in the volume of demand deposits has
resulted chiefly from gold imports, and from purchases
of Government securities by banks. New loans made by




R e s e r v e

D is tr ic t
October 1, 1934

the banks to finance commodity and other business trans­
actions have been more than offset during the year by
the repayment or charging off of old commercial loans
and by a further shrinkage in the volume of loans on
securities. This net decline in the volume of loans has
tended to diminish the volume of bank deposits some­
what, but any reduction in deposits due to repayment
of loans has been much more than offset by the large
increase in deposits produced by the increase in bank
investments in Government securities and in securities
guaranteed by the Government.
Reports on member banks’ assets and liabilities and
on bank debits during the past month have indicated
much the same tendencies as in preceding months.
Demand deposits in the reporting member banks in­
creased somewhat further, principally as a result of
disbursements of Government funds, but the volume
of checks and other items drawn on deposit accounts
remained at a comparatively low level.
Loans, other than security loans, in the reporting
banks— largely commercial loans— increased $161,000,000 in the four weeks ended September 19, following an
increase of approximately $100,000,000 in the preceding
month, but security loans declined $176,000,000 further
to a new low point for recent years. Holdings of Govern­
ment securities showed a net decline of $20,000,000
during the four weeks ended September 19, but holdings
of other securities, including securities guaranteed by
the Government, as well as municipal and corporation
securities, increased $66,000,000.
The net result of
PER CENT

R ate o f T u rnover o f D em and D eposits in Principal C ities
R eserve B ank o f N ew Y o r k index)

(Fed eral

74

MONTHLY REVIEW, OCTOBER 1, 1934

these changes was an increase of $31,000,000 in the
total loans and investments of the reporting banks.
M oney

R ates

During the first half of September yields on short
term Government securities rose somewhat accompany­
ing a decline in prices and a rise in yields on the longer
term Government securities. Subsequently there ap­
peared to be a tendency towards slightly higher levels
for other money rates, which presumably represented
a move to conform with the rise in yields on short
term Government securities rather than a reflection of
a reduction in the supply of funds. No material change
in rates occurred, however, and in the latter part of
the month money rate quotations were not appreciably
above those of a month earlier.
Excess reserves of member banks were reduced some­
what in September, due partly to a gold export move­
ment early in the month, but more largely to a consider­
able accumulation of Treasury balances in the Reserve
Banks through the sale of Treasury bills in excess of
maturities and withdrawals of funds from depositary
institutions. The volume of excess reserves for the entire
country, however, remained around $1,700,000,000 or
higher, and excess reserves in New York City were above
$500,000,000 throughout the month.
Money Rates atT
New York
Sept. 29, 1933 Aug. 31, 1934 Sept. 28, 1934
Stock Exchange call loans.....................
Stock Exchange 90 day loans...............
Prime commercial paper—4 to 6 months
Bills—90 day unindorsed.......................
Customers’ rates on commercial loans..
Treasury securities
Maturing December (yield)..............
Maturing March (yield)....................
Maturing December 1935 (yield).. . .
Average rate on latest Treasury bill sales
91 day issue.......................................
182 day issue.......................................
Federal Reserve Bank of New York re­
discount rate.......................................
Federal Reserve Bank of New York
buying rate for 90 day indorsed bills
* Nominal

%

IK

1

1

* H -1

1

H -l

V a t

f2.92

•j-2.25

3/16
t2.08

No yield
No yield

No yield
No yield
0.37

No yield
No yield
0.72

0.22

0.29

1H

IK

M

0.10

y%-A

1

f Average rate of leading banks at middle of month
B il l

M arket

Although the bill market generally remained quiet
during September, there was some increase in activity
occasioned by the seasonal appearance of grain bills.
Dealers’ portfolios tended to increase slightly in the
second half of the month, as the distribution of bills was
narrowed by reluctance on the part of banks to buy bills
at the Ys per cent rate at which most of the business had
been transacted in the previous few months. Accord­
ingly, in the closing days of the month it was reported
that the dealers’ offering rates on bills up to 90 day
maturity had been advanced from % to 3/16 per cent.
Rates continued to be quoted by the dealers only on
application, however.
The volume of bankers acceptances outstanding at
the end of August amounted to $520,000,000, a total
$4,400,000 higher than at the end of July. This was the
first increase to be shown since January.
During
August domestic warehouse acceptances outstanding rose
$7,700,000 and bills drawn to finance exports from this
country rose $4,300,000.
On the other hand, import




bills declined $5,300,000 and bills drawn to finance goods
stored in or shipped between foreign countries decreased
$3,600,000. Accepting banks and bankers held 93 per
cent of all bills outstanding at the end of August, leav­
ing only $37,000,000 of bills in the hands of others.
C o m m e r c ia l

P aper

M arket

The supply of new commercial paper coming into the
market increased during the first week of September,
due to additional drawings by concerns in a number of
lines of business, and throughout the month the supply
remained of moderately large proportions. Bank invest­
ment demand was also generally active and readily ab­
sorbed this new paper, although after the middle of the
month some banks no longer were interested in acquiring
paper at % per cent. On the whole, however, dealers
continued to report that a considerable portion of their
sales were made at % per cent, and therefore the pre­
vailing range of rates remained throughout September
at % - l per cent, a level which has been unchanged
since June.
Open market commercial paper outstanding at the end
of August totaled $188,000,000, an amount 12 per cent
larger than on July 31 and 75 per cent above the level
of a year ago. Although outstandings were more than
three times as large as in May 1933 when the low total of
$60,000,000 was reached, they represent only a small
amount when compared with figures for earlier years.
Security M a rk e ts
During the first half of September, stock prices moved
lower in a light volume of trading, continuing the move­
ment of the last week of August, and by September 17
representative price averages for all groups combined
were at about the same level as was reached near the end
of July when a new low since May 1933 was established.
The industrial shares remained slightly above the July
low while the railroad and public utility groups declined
even further. After reaching these levels, stock prices
turned upward and in the succeeding week or so
recovered nearly two-thirds of the ground lost since
August 25. In the closing days of the month a fairly
steady market prevailed. The bank stock group declined
rather steadily during the first part of the month to the
lowest level since early January, and the subsequent
recovery was less than in other stocks, so that average
prices of bank stocks closed the month about 9 per cent
lower than at the end of August.
All sections of the domestic bond market were also
subject to price declines in the first part of September, as
the accompanying diagram indicates. During this period,
United States Treasury bonds showed an average decline
of 2Yl points, highest grade domestic bonds receded about
1 % points, and medium grade bonds dropped around 3
points. These declines which carried prices down to the
lowest levels in a number of months were followed by
some recovery in the second half of the month when
Treasury bonds moved up between Y2 and % of a point,
highest grade corporate issues about 1 point, and medium
grade bonds about 2Y2 points. Furthermore, near the
close of the month the prevailing price tendency in
the bond market was toward higher levels. Foreign dollar

FEDERAL RESERVE AGENT AT NEW YORK

75

Loan bonds for 3 % per cent Treasury bonds would
remain open until further notice. Through September
24, $248,000,000 of Fourth Liberty’s had been exchanged
for the 10-12 year bonds, and the amount doubtless
was increased further in the last week of the month.
In addition to the exchange offerings, the Treasury
sold four issues of 182 day Treasury bills totaling $300,000,000 during September, which provided for two
maturities aggregating $150,000,000 and also placed
$150,000,000 of new funds at the disposal of the Treas­
ury. Average rates on these new bill issues ranged from
0.18 to 0.29 per cent.
G o ld M o v e m e n t

101 I l I I I I I I I I I 1 I I ___I I _1 —1_ ....1 __
_
_ _ —1 _
.1
1933

1934

A ve ra ge
Y ie ld
on
V a r io u s
G ro u p s
of
B ond s
( M o o d y 's
In v e s t o r s
S e r v ic e a v e ra g e y ie ld s fo r A a a a n d B a a c o rp o ra te b o n d s, a n d
F e d e ra l
R e se rve
B an k
of
N ew
Y o rk
a ve ra ge
y ie ld
on
T re a su ry
b o n d s;
sc a le
in v e r t e d
to
sh o w
m ovem ent
o f p r ic e s )

bonds quoted in the market began to move up after the
first week of the month and a representative list showed
a net advance of about i y 2 points for September, in
contrast to the net declines that occurred in domestic
bonds during the month.
N e w F inancing
Public offerings of new securities, other than United
States Government issues, continued at a low level dur­
ing September, accompanying further unsettlement in
prices of outstanding securities. State and municipal
issues amounted to about $25,000,000, and there was a
$13,000,000 issue of Federal Intermediate Credit Bank
short term debentures which replaced in part a maturity
of $21,800,000. Corporation financing amounted to only
$2,000,000. In addition to these public security offerings,
the State of New York allotted $75,000,000 of % Per
cent short term revenue anticipation notes to 40 financial
institutions; some of these concerns were reported to
have sold portions of their allotments, but there was
no general offering to the public of these securities.
The United States Treasury on September 10 an­
nounced its program for the refunding of September 15
maturities and of that part of the Fourth Liberty Loan
which had been called for payment on October 15. In
exchange for the $525,000,000 of certificates maturing
September 15, a 1 % Per cent two year note issue was
offered, and substantially all of the maturing securities
were exchanged for the new notes. In exchange for the
$1,250,000,000 of Fourth Liberty Loan 4^4 per cent
bonds called for redemption, a 21/2 per cent four year
note issue and a 3 % per cent 10-12 year bond issue were
offered. Interest on the Fourth Liberty’s turned in on
exchange for the notes and bonds was paid through
October 15 and consequently enhanced the attractiveness
of the exchange offering. The subscription books for the
exchange of Fourth Liberty’s for notes closed at the
close of business September 24, with a total of $596,000,000 exchanged, but the Treasury announced that
subscription books for the exchange of called Liberty




The gold export movement from this country which
began around the middle of August ceased after the first
week of September, accompanying a strengthening in the
dollar to above the gold export point. Gold shipments
for September totaled $20,300,000, including $17,700,000
to France, $2,100,000 to Belgium, and $500,000 to Hol­
land. The total export movement, including shipments
made in August, amounted to $33,900,000.
Exports in September were largely offset by the re­
ceipt of $500,000 from China, the release of $1,600,000
of gold previously earmarked at this bank for foreign
account, and the receipt by the mints and assay offices of
newly mined domestic gold and of scrap gold averaging
about $2,500,000 and $1,000,000 a week, respectively.
Additional transactions at New York which did not affect
the monetary gold stock involved the release from ear­
mark of $900,000 of gold for export to Chile.
Foreign E xch an ge
Foreign exchange movements during the early days
of September were mixed; the dollar gained moderately
against the gold currencies to the point where gold ship­
ments ceased, while it declined in relation to other ex­
changes. Towards the end of September, however, dollar
exchange rose strongly against virtually the entire list
of exchanges.
On September 5, as the following diagram indicates,
the French franc closed below the estimated gold
export point from New York, after being above that level
during much of the time since the middle of August, and
fell further to $0.0666% on the 10th. Subsequently the
franc fluctuated irregularly and closed at $0.0665^ on
the 27th. Guilders likewise dipped below the gold export
point on the 5th and continued downward to $0.6850 on
the 10th; the export point was nearly reached again on
the 19th and 20th, but this exchange weakened thereafter
in accordance with the general tendency. The belga and
particularly the Swiss franc declined during the first few
days of the month, but in general were stronger than the
French and Dutch currencies. Swiss francs closed below
the estimated outgoing gold point on only four occasions
before September 21, and belgas sold above or only
slightly below the gold point until the general strength­
ening of the dollar in the final week. Lire followed the
course of the gold currencies. Reichsmarks, on the con­
trary, advanced steadily from $0.3992 on the 4th to
$0.4054 on the 18th, reaching their new parity of $0.4033
on the 11th for the first time since its establishment.

MONTHLY REVIEW, OCTOBER 1, 1934

76

appears to have been somewhat lower than in August,
when operations were slackening. The American Iron
and Steel Institute estimated production during the
final week of September at 24 per cent of capacity, as
compared with 18'y% per cent in the first week, and an
average of 23 per cent during August.

D aily Q uotations for the French Franc a t N ew Y o r k (L a t e s t rate is
for Septem ber 2 6 )

Sterling was somewhat stronger against the dollar dur­
ing the early and middle portion of the month than at
the opening. British exchange rose from $4.98% on
September 1 to $5.02 on the 4th, and held above $5.00
until the 20th when a decline developed which carried
the rate to $4.96% on the 27th. The Scandinavian cur­
rencies, the Japanese yen, and the Argentine peso fluc­
tuated with sterling but Brazilian milreis moved more
independently. The Canadian dollar rose almost without
interruption from $1.02 3/16 on the 1st to its high for
the month of $1.03 11/16 on the 22nd, but later quota­
tions were slightly lower.
Closing Cable Rates at New York

Exchange on

Par of
Exchange

Belgium...........................
Denmark.........................
England...........................
France.............................
Germany.........................
Holland...........................
Italy................................
Norway...........................
Spain...............................
Sweden............................
Switzerland.....................

$ .2354
.4537
8.2397
.0663
.4033
.6806
.0891
.4537
.3267
.4537
.3267

Canada............................
Argentina........................
Brazil...............................
Uruguay..........................

1.6931
.7187
.2026
1.7511

Japan...............................
India................................
Shanghai.........................

.8440
.6180
........

Sept. 30, 1933 Aug. 31, 1934 Sept. 27, 1934
$ .2142
.2129
4.7588
.05985
.3665
.6175
.0806
.2395
.1286
.2458
.2974

$ .2381
.2230
4.9900
.06695
.3990
.6875
.0870
.2510
.1388
.2575
.3314

$ .2359
.2220
4.9675
.06653
.4050
.6843
.0866
.2499
.1380
.2562
.3294

.9800
.3868
.0847
.6800

1.0206
.3328
.0857
.8000

1.0263
.3312
.0825
.8000

.2819
.3580
.3088

.2987
.3783
.3569

The recession in industrial output which began in
June continued in August, and the Federal Reserve
Board’s seasonally adjusted index declined to 73 per
cent of the 1923-25 average, as compared with 75 in July,
83 in June, and 86 in May. The July decline had been
associated chiefly with the abrupt decline in steel mill
activity in that month, while the August decline reflected
principally a considerable recession in passenger auto­
mobile production as well as a further drop in steel out­
put. There were also recessions in August in the ad­
justed indexes of coal, electric power, and shoe produc­
tion. On the other hand, activity at packing plants in­
creased after seasonal adjustment, and lumber output
rose substantially more than is usual from, July to
August.
The course of industrial activity in the United States,
England, France, and Germany during recent years is
shown in the accompanying diagram. Although an exact
comparison of the month to month changes in industrial
activity in various countries is not possible in view of
the differences in the composition of the available indexes
and in the economic life of the countries represented,
certain significant similarities and differences may be
noted in the movements of the indexes. The low point in
three of these four countries was reached around the
middle of 1932; in England, however, the 1932 low point
was slightly above the level reached in October 1931,
following Great Britain’s suspension of gold payments,
and in the United States the index declined again nearly
to the 1932 low point during the banking crisis of March
1933. The magnitude of the decline from 1929 to 1932
was much greater in the United States and Germany
than in France and England. The recovery of the past
two years has been much more nearly continuous in

.2960
.3745
.3644

PER CENT

P rodu ction
The textile strike was the most important element
influencing the aggregate volume of production in Sep­
tember, as operations in the textile industry as a whole
were substantially below the curtailed level of July and
August, whereas there is usually a seasonal increase in
September. Automobile production decreased more than
seasonally, and present tentative estimates place total
output for September at approximately 30 per cent less
than August. Seasonal acceleration, however, was re­
ported in bituminous coal production, and the tendency
of steel operations was also upward after the first week
of September, though the average rate for the month




V o lu m e of Production in Principal Industrial C ountries, A d ju ste d
for Seasonal V ariation ( 1 9 2 8 a v e r a g e s 100 per c e n t; la te st data
available are for A u g u s t for U n ited S tates and Ju ly for
other cou ntries)

77

FEDERAL RESERVE AGENT AT NEW YORK

England and Germany than in the United States, while
in France a steady decline in industrial activity since
the middle of 1933 has canceled the greater part of the
advance in the previous year. Of the four countries
shown in the diagram England is the only one in which
the present level of activity compares favorably with
1929; recovery in England has been particularly pro­
nounced in a few of the durable goods industries.

PER C E N T

11 Or

100
90

__/

*>

s\

/
COMMODITI
ES

80

X

;
OTHEF
-...COMMODI TIES

(Adjusted for seasonal variations and usual year to year growth)

/

70
1934

1933

\x

Aug.

June

July

Aug.

60
70
31
62
90

59
73
50
48
54

39
38
46
48r
53

34
32
38
48

/ — ^ //
7 /

r I

✓

x v .

J

J

v>/
\
FOODS

r

Metals
Pig iron...................................
Steel ingots............................
L ead.........................................
Z in c..........................................
Tin deliveries.......................

Automobiles
Passenger cars......................
M otor trucks........................

Fuels
Bituminous coal...................
Anthracite coal.....................
C ok e.........................................
Petroleum, crude................
Petroleum products............
Electric power......................

Textiles and Leather Products
Cotton consumption..........
W ool mill activity..............
Silk consumption................
Rayon deliveries.................
Shoes.......................................
Leather...................................

45

56
72

54
74

82
69
69
80
70
70

71
78

70

68
73
66

102
131
63

11
2

67

64
77
56
85

Livestock slaughtered. . . .
Wheat flour...........................
Sugar deliveries...................
Tobacco products...............

58p

55
71
67
67p

68p
66p

82
53

72
70p
53

87p

87

126
79
62
83

132
77
71p
82

46
55
34
r
74
30

43
51
32
71
74
33

39
49p
39

lOlr

117

107

73
83

91

87p

90

86

Miscellaneous
C em ent...................................
Tires.........................................
Lumber...................................
Printing activity.................
Newsprint paper.................
Machine tools.......................

43
76
51
64
78
27

41p
82v

11
0

97
92

66

73

r Revised

C o m m o d ity Prices
The advance of the previous four months in the prices
of farm products was interrupted early in September,
and moderate recessions occurred subsequently in the
prices of several of the actively traded domestic agri­
cultural commodities. The average price of hogs de­
clined $1.14 from the late August peak of $7.87 a
hundredweight, and in grain prices an upward tendency
during the first week of the month was followed by an
irregular downward movement, so that fractional net
recessions were shown for September as a whole. The
price of cotton held steady early in September but sub­
sequently declined to 12.65 cents a pound, as compared
with 13.35 cents at the end of August, and an average
of steer quotations closed the month considerably below
the high level reached in the previous month. On the
other hand, the price of hides advanced 1 cent in
September to 10 cents a pound. On the whole prices of
farm products, despite some recession during the month,
averaged higher during September than in any month
in about 3 % years.




50
40

rMKM \
—
P R O D U C T S \ /V . I I I

i ..I ... i ...

1929

66

Foods and Tobacco Products

p Preliminary

60

___

1930

i

i

1931

I...!.,

i

i..... (..._ M . . . L

1932

1933

J
___ ... I . - J — U v.

1934

B ureau o f Labor S ta tistic s M o n th ly Indexes o f W h o lesa le C om ­
m odity Prices ( 1 9 2 6 a v e r a g e 100 per c e n t; Septem ber data
are indexes for w eek ended Septem ber 2 2 )

In general, changes in the prices of other actively
traded commodities were rather narrow during Sep­
tember. Small recessions occurred in scrap steel, lead,
zinc, and rubber, while raw silk advanced 9 cents to
T
$ 1 .1 9 ^ a pound, and sugar prices increased moderately.
The advance in the general level of wholesale com­
modity prices during recent months has been wholly the
result of sharp increases in the prices of farm products
and foods, as the accompanying diagram shows. The
farm products group of the Bureau of Labor Statistics
index rose 25 per cent from April to September and
wholesale food prices increased 16 per cent. The general
level of non-agricultural prices showed only minor fluc­
tuations during this period, advances in fuel prices off­
setting declines in textile and leather products. The rise
in agricultural prices was the result of a reduction in
the supply of many farm products owing to exceedingly
adverse weather conditions over a large part of the
farming area and the curtailment of cultivated acreage
under the program of the Agricultural Adjustment
Administration. As the diagram indicates, the recent
rise in farm prices during a period when other com­
modity prices remained stable has removed a large part
of the disparity between agricultural and non-agricul­
tural prices which developed from 1929 to 1933. Relative
to 1926 agricultural prices now show a decline only
slightly greater than non-agricultural prices. The gen­
eral level of wholesale commodity prices is about midway
between the 1929 average and the low of March 1933.
E m p lo y m e n t
Factory employment in the United States showed an
increase of about the usual seasonal proportions from
the middle of July to the middle of August, and the
seasonally adjusted index of the Federal Reserve Board
showed virtually no change between these two months.
There was a pronounced seasonal increase in activity in
the canning and preserving, and clothing industries, but
employment in the durable goods industries continued
to decline, the recessions being most pronounced in the
steel and automobile industries, and at railroad repair

78

MONTHLY REVIEW, OCTOBER 1, 1934

shops. The increase in the number of persons employed
in factories was estimated by the Departm ent of Labor
at about 75,000. Declines in a number of the non-m anu­
facturing industries, however, reduced the gain in pri­
vate em ployment for all of the industries from which
m onthly data are collected by the B ureau of Labor
Statistics to about 15,000. A m o n g the non-m anufactur­
ing industries, anthracite coal mining showed the largest
percentage drop in em ployment and the selling forces of
retail establishments were reduced m oderately, but a
small increase occurred in private building construction.
D u rin g September, aggregate factory em ployment was
adversely affected by the textile strike.
The number of workers engaged on projects financed
by extraordinary Federal outlays increased only slightly
from Ju ly to A u gu st. There were nearly 2,240,000 per­
sons on the G overnm ent’s emergency payrolls— over
1,210,000 with the Federal Em ergency R elief A d m in is­
tration, more than 625,000 with the Public W orks
A dm inistration, 385,000 in the Civilian Conservation
camps, and 18,000 on construction projects financed by
loans of the Reconstruction Finance Corporation. It is
estimated by the Am erican Federation of Labor that the
number of workers without jobs of any sort in A u gu st
was nearly 8,600,000.

Indexes of Business Activity
A considerable increase in the volume of retail trade
during A u gu st, follow ing declines in the two preceding
months, is shown by the seasonally adjusted indexes of
retail distribution computed by this bank. Substantial
advances occurred in the indexes of department store
and mail order house sales, while chain store and auto­
mobile sales indexes remained at the previous m on th ’s
level.
The amount of advertising in newspapers and
magazines, which is related to changes in the volume of
retail business, also showed a moderate increase from
July to A u gu st. Retail trade reports covering the first
h alf of September for the New Y ork M etropolitan area
indicated at least the usual seasonal expansion in sales
over A u gu st, and the dollar volume of sales was 7 per
cent larger than in the corresponding period a year ago.
In general, retail trade during the past year and a
half has not shown the wide variations which have
characterized the movements of basic industrial activity.
This is indicated in the accompanying diagram , which
is based on the Federal Reserve B o a r d ’s seasonally ad­
justed index of the dollar value of sales of reporting
department stores throughout the country. In A u gu st
this index was 3 per cent higher than in the correspond­
ing month of 1933, when consumer buying in anticipa­
tion of price increases reached its peak, and was one-third
above the low level reached during the first quarter of
1933, but the increase in the actual volume of goods sold
has been considerably smaller, as much of the increase in
dollar sales has been due to the rise in retail selling
prices during the past year and a half. A t the same time,
a quite substantial increase has occurred in sales of
durable consumers goods, such as automobiles and elec­
tric refrigerators, which are not a very large element in
department store business. In general, it appears that
while retail trade expanded less rapidly than industrial




PER CENT

Daily Average Value of Department Store Sales, Adjusted for Sea­
sonal Variation (Federal Reserve Board index; 1923-25
average = 100 per cent)

production in the early stages of recovery, it has been
better sustained during recent months.
Railroad freight traffic did not show the seasonal ex­
pansion which is usual during A u gu st and while the
movement of bulk commodities by rail increased season­
ally in the first half of September, the rise in loadings
of merchandise and miscellaneous freight was of some­
what smaller than seasonal proportions. Most of this
b a n k ’s other indexes of business activity, such as bank
debits and life insurance sales, receded very slightly
from July to A u gu st, while merchandise imports
dropped considerably, but the wholesale trade index
rose moderately.
(Adjusted for seasonal variations, for usual year to year growth,
and where necessary for price changes)
1933

1934

Aug.

June

July

56
62
44
72
63
88

60
61
54
63
67
88

57
60
52
62
52
91

56
58
50p
49 p

85
83
77
75
73
58
75
52

72
69
68
78
67
60
72
57

71
67
66
73
62
58
69

78 p
74
66
74
67
60

56 p

56p

61
50

64
47

62
48

61
43

Aug.

P rim a ry Distribution

Car loadings, merchandise and misc........
Car loadings, oth er......................................
E xports...........................................................
Waterways traffic.........................................
Wholesale trade............................................

94

Distribution to Consumer

Department store sales, U. S.....................
Department store sales, 2nd D ist.............
Chain grocery sales......................................
Other chain store sales................................
Mail order house sales................................
Gasoline consum ption.................................
Passenger automobile registrations..........
General B usin ess Activity

Bank debits, outside New York C it y .. . .
Bank debits, New York C ity .....................
Velocity of demand deposits, outside New
York C it y ....................... ...........................
Velocity of demand deposits, New York
C ity .............................................................
Shares sold on N. Y . Stock Exchange r . .
Life insurance paid for r ....................................
Employment in the United S tates...........
Business failures............................................
Building contracts........................................
New corporations formed in N. Y . State.
Real estate transfers....................................

80

73

72

68

60
188r
64r
77
71
20
75
45

53
54r
61r
83
47
20
60
49

52
46r
63 r
81
45
21
66
45

48

General price level*......................................
Composite index of w ages*........................
Cost of livin g*...............................................

132
177
133

p Preliminary

r Revised

137
183
136

* 1913 average=100

138
182
137

62r
80 p
44
21
63
138p
182p
138

79

FEDERAL RESERVE AGENT AT NEW YORK
B uilding
The total value of building and engineering contracts
awarded in A u gu st was about the same as in July.
A s there were more business days in A u gu st, the average
daily amount of contracts was about 7 per cent less than
in July, which, however, is in accordance with the usual
seasonal movement and consequently this b a n k ’s index
was unchanged at 21 per cent of the long time trend of
construction volume. P rivately financed building de­
clined in A u gu st, follow ing the higher level attained
tem porarily in the previous few months, but this decline
was offset by an upturn in publicly financed work which
had dropped in the previous month to the lowest level
in a year. A s compared with A u gu st 1933, the total of
contracts reported by the F . W . Dodge Corporation was
13 per cent larger, publicly financed construction show­
ing an increase of nearly 50 per cent over a year ago,
while privately financed work showed a 13 per cent
reduction. Eesidential contracts, alone, were 15 per cent
below the level of a year ago in A u gu st, the fourth
consecutive month to show a decline.
F o r the first eight months of 1934, total contracts
awarded were about 75 per cent higher than in the
corresponding period of 1933, due almost entirely to
the larger amount of construction financed by public
funds. In this category, the outstanding increases were
in construction of highways, sewerage systems, and water
front developments.
D u rin g the first h alf of September, total awards of
building and engineering contracts were at a somewhat
higher rate than in the previous month, reflecting an
increase in contracts for publicly financed construction
to the highest level since A p ril. P rivately financed con­
tracts, however, were smaller than in A u gu st, as a decline
in non-residential construction exceeded a slightly larger
than seasonal increase in residential contracts.

Foreign Trade
D u rin g A u gu st total merchandise exports from the
United States amounted to $172,000,000, and total im ­
ports to $120,000,000. E xports showed about the usual
seasonal increase over the preceding month, and were
31 per cent larger than a year ago, and in fact were the
largest for any A u gu st since 1930. Im ports, however,
declined contrary to their customary seasonal tendency
and were smaller than in any month since M ay 1933. A s
the accompanying diagram indicates, the general course
o f exports has been upw ard since M arch 1933, after
allowance for seasonal factors, but imports after rising
rapidly in the summer of 1933 have shown no further
increase in the past year.
E xports of a number of leading commodities showed
considerable gains in A u gu st as compared with last year,
both in volume and in value. Shipments of passenger
automobiles and trucks were nearly double the small
number of last year, and showed a corresponding in­
crease in value. E xports o f copper and iron and steel
products also were approxim ately double the A u gu st
1933 value.
Other exports that showed notable in­
creases over a year ago included shipments of crude and
refined petroleum and o f unm anufactured tobacco, but
these increases were due largely to higher prices. Large




;

.... - ■

VtEXPC)RTS

)

- ..- ■V"

■
■

IMPO RTS
► __i....1
__1
....
1929

L
..1....t . ....i
1930

1 I
1931

.
J ... 1 !...
1932

...1..1.... 1
....

1933

1934

Average Daily Amount of Merchandise Exports and Imports (Dollar
value adjusted for seasonal variation)

increases also occurred in exports of canned fruits and
wheat, the latter being almost negligible in 1933. E xports
of raw cotton, on the other hand, continued to be only
about one-half as large in quantity as last year, although
the value did not show as large a decrease.
In contrast to the increase in exports, a number of
m ajor foreign products were imported into this country
during A u gu st in smaller quantity and value than a year
ago. Im ports of raw silk were only about two-thirds the
volume of A u gu st 1933 and, owing to lower prices this
year, were less than h alf as great in value. Receipts of
sugar exceeded the very small amount in July, but still
were only about h alf those of a year ago. Tin imports
were less than one-third the quantity of a year ago. The
volume of coffee and crude rubber imports continued
smaller than in 1933, but the value of rubber imports
was nearly 50 per cent larger than a year ago, due to
higher prices.

Department Store Trade
D u rin g the first h alf of September total sales of the
reporting department stores in the M etropolitan area of
New Y o rk were 7 per cent higher than in the correspond­
ing period a year ago, the most favorable year to year
comparison since M arch. The comparison is with a
month in 1933 in which retail trade was not very good,
but it appears that September business this year is at
least showing the usual seasonal expansion. E xcludin g
sales of liquor from this y e a r ’s figures, the increase over
a year ago amounted to 5 per cent.
F o r the month o f A u gu st, total sales o f the reporting
department stores in this district were at approxim ately
the same level as a year ago, and exclusive of liquor
sales were 2 per cent below last year, but in this connec­
tion it should be noted that comparison is with a month
that, seasonal factors considered, showed the best retail
sales record of 1933. The W estchester and Stam ford
department stores reported a substantial gain in sales
over last year, and the B ridgeport and Southern New
Y o rk State stores showed small increases, while sales of
the New Y o rk City, Rochester, and Northern New Y o rk
State department stores were at approxim ately the same
level as last year. D epartm ent stores in the remaining

80

MONTHLY REVIEW, OCTOBER 1, 1934

localities reported smaller sales this year than a year
ago. Sales of the leading apparel stores in this district
were 6 % per cent higher than last year.
D epartm ent store stocks of merchandise on hand, at
retail valuation, were smaller than a year previous for
the first time since Ju ly 1933, while apparel store stocks
remained considerably larger.
Collections continued
larger than a year ago fo r the department stores, but
were slightly smaller fo r the apparel stores.

Percentage change
August 1934
compared with
August 1933

Per cent of
accounts
outstanding
July 31
collected in
August

a number of months, due partly to the fact that sales
reached relatively high levels in A u gu st 1933.
Sizable increases over last year in the amount of
merchandise on hand again w ere reported by the silk
T
goods, drug, and diamond firms, and jew elry concerns
registered the first increase in stocks since Ju ly 1930,
while grocery firms showed the first decrease in over a
year, and stocks held by hardware dealers were also
somewhat smaller than in A u gu st 1933. Collections of
accounts outstanding at the end of the previous month
continued higher than a year ago in nearly all reporting
lines.

Net
sales
New Y o r k ......................................
Buffalo............................................
R ochester.......................................
Syracuse.........................................
Northern New Jersey.................
B ridgeport.....................................
Elsewhere.......................................
Northern New York S ta te .. .
Southern New York State. . .
Hudson River Valley District
Capital D istrict........................
Westchester and Stamford. . .
All department stores........
Apparel stores......................

+ 0 .3
— 4 .2

+ 0.8
— 2.8
— 1.6
+ 1.5
+ 1.2
— 0.6
+
—
—
+

Stock
on hand
end of
month
5 .2
7 .4
3 .0
9 .3

0.6
5 .0
6 .7

1933

1934

38.9
37.9
38.4
2 5.0
33.9
32.4
3 0.3

41.4
42.1
40.8
29.7
35.4
35.8
28.6

3 .0
7 .3
3 .4
7 .8

— 0.2
+ 6.6

4 .9
+ 1 9 .5

36.2

3 8.7

36.

36.1

Net sales
percentage change
August 1934
compared with
August 1933
W oolen good s...............................................
Shoes..............................................................
Silks and velvets.........................................
W om en’s and Misses’ ready-to-wear... .
W omen’s ready-to-wear accessories........
Luggage and other leather goods............
Toys and sporting goods...........................
Silverware and jew elry..............................
H osiery..........................................................
Musical instruments and ra d io ...............
M en’s furnishings.......................................
Books and stationery.................................
Toilet articles and drugs...........................
Furniture.......................................................
Home furnishings........................................
M en’s and B oys’ w ear...............................
Cotton g ood s...............................................
Linens and handkerchiefs.........................
Miscellaneous..............................................

Stock on hand
percentage change
August 31, 1934
compared with
August 31, 1933

+ 2 4 .3
+ 1 0 .0
+ 8 .8
+ 8 .7
+ 3 .2
+ 1.8
+ 0 .2
— 0 .3
— 0 .5
— 1 .2
— 1.7
— 4 .4
— 5 .4
— 9 .0
— 12.9
— 13.3
— 17.7
— 19.8
+ 1 4 .2

— 18.0
+ 1 1 .8
— 19.9
— 0 .8
— 16.0
— 4 .0
— 1.3
+ 5 .4
— 18.3
— 0 .3
— 10.8
+ 3 .5
+ 7 .6
+ 8 .9
— 5 .1
— 0 .4
— 19.5
— 7 .9
— 6 .3

Wholesale Trade
Total A u gu st sales of the reporting wholesale firms
in this district averaged approxim ately 6 % per cent
higher than a year ago, follow ing two months in which
decreases were shown. F or the first time in a year sales
of silk goods, reported on a yardage basis by the
National Federation of Textiles, showed an increase over
a year previous. W holesale grocers reported the most
substantial gain in sales since A p r il; total sales were
18 per cent above a year ago, and exclusive of liquor
sales the increase amounted to 7 per cent. Sales of the
hardware, drug, shoe, cotton goods, and m e n ’s clothing
concerns presented considerably more favorable yearly
comparisons than in the two preceding months. Sales
of the stationery, paper, and diamond concerns, on the
other hand, showed the least favorable comparisons in




Per cent of
charge accounts
outstanding
July 31
collected in
August

Percentage
change
August 1934
compared with
August 1933

Locality

Comm odity
Net
sales
Groceries.............................................................
M en’s clothing...................................................
Cotton go o d s.....................................................
Silk go o d s .........................................................
Shoes................................................................
D rugs...................................................................
H ardware............................................................
Stationery...........................................................
P ap er...................................................................
D iam onds...........................................................
Jewelry................................................................

+ 1 8 .2
+ 8 .7
+ 6 .4
+ 1 2 .0 *
— 5 .8
+ 1-1
+ 4 .9
— 6 .8
— 1.1
— 21.6
— 11.2

Weighted average.....................................

Stock
end of
month

1933

1934

86.9
4 4.0
31.9
4 4.3

98.4
45.1
4 0.5
58.0

23'.4
41.2
46.1
4 7.5
{ 23.4

24.2
4 6.2
50.0
4 6.0
{ 25.3

5 3.5

60.1

— 2 .7
+ 2 3 .4 *
+ 2 4 .2
— 3 .9
+ 9 .6
+ 5 .3

+ 6 .7

* Quantity figures reported by the National Federation of Textiles, Incorporated,
not included in weighted average for total wholesale trade.

Chain Store Trade
D u rin g A u gu st, total sales of reporting chain stores
were 4 per cent higher than a year ago, a more favorable
year to year comparison than occurred in the preceding
month. Larger increases than in Ju ly were shown by
the ten cent, variety, and candy chain store system s;
in the case of the candy chains the comparison with a
year ago was the most favorable since M arch. Grocery
chain store sales were at approxim ately the same level
as last year, follow ing two months in which decreases
occurred, and the decline in sales of shoe chain systems
was slightly less than that reported in the previous
month. D ru g chain sales, however, were lower than a
year ago for the first time since February.
A ll groups of chain store systems with the exception
of the candy chains reported fewer stores in operation
in A u gu st this year than a year ago. A s a result, the
increase in sales per store for all reporting chains was
slightly larger than the increase in total sales.
Percentage change August 1934
compared with August 1933
Type of store

G rocery.........................................................
Ten cent.......................................................
D r u g .............................................................
S hoe..............................................................
V ariety.........................................................
C andy...........................................................
T otal.....................................................

Number
of
stores

Total
sales

Sales
per
store

1 .2
0 .1
3 .2
6 .9
0 3
6 .9

+ 0 .1
+ 3 .0
— 2 .9
— 9 .3
+ 1 2 .3
+ 2 7 .6

+ 1.3
+ 3.1
+ 0 .3
__ 2 6
+12>
+ 1 9 .4

— 0 .9

+ 4 .2

+ 5 .1

—
—
—
—
—
+

FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, OCTOBER 1, 1934

B u sin ess C o n d itio n s in th e U n ite d S ta te s
(Summarized by the Federal Eeserve Board)
OTAL output of industry, which usually increases at this season, showed
little change in August. Factory employment and payrolls increased be­
tween the middle o f July and the middle of August by about the usual
seasonal amount. Distribution of commodities at department stores showed a
more than seasonal growth.

T

P roduction and E m p l o y m e n t

Index Number of Production of Manufactures
and Minerals Combined, Adjusted for
Seasonal Variation (1923-25
averages 100 per cent)
PER CENT

Indexes of Daily Average Value of Department
Store Sales (1923-25 average=100 per cent)
PER CENT

D istribution

)

)'A‘A

Output o f basic industrial products, as measured by the B oard’s index,
which makes allowance for usual seasonal changes, declined from 75 per cent
o f the 1923-1925 average in July to 73 per cent in August. At steel mills
production continued to decline during August and the early part o f September,
contrary to seasonal tendency; in the middle of September a slight increase
in activity was reported. Output o f automobiles, which had been maintained
at a relatively high rate during the spring and early summer, declined in
August. Lumber production showed an increase. In the cotton textile industry
production was in larger volume in August than in July, but was retarded
by the strike in the first three weeks o f September. At meatpacking establish­
ments output in August was larger than in any other recent month, accompany­
ing heavy marketings o f cattle from drought areas.
Factory employment showed a seasonal increase between the middle of
July and the middle of August, reflecting considerable growth in employment
in the wearing apparel, canning, and meatpacking industries, while employment
in the iron and steel industries and at railroad repair shops declined.
The value of construction contracts awarded, as reported by the F. W.
Dodge Corporation, was about the same in August as in each o f the four
preceding months.
Department of Agriculture estimates as of September 1 indicate a corn
crop 40 per cent smaller than the average for the five years 1927-1931 and
other feed crops also are expected to be unusually small. The condition of
pastures on September 1 was poorer than in any other recent year but some
improvement has been reported in the early part of September. The spring
wheat crop, estimated at 93,000,000 bushels, is about one-tliird of the five
year average and the winter wheat crop is also small. The cotton crop is
estimated at 9,300,000 bales, a sharp reduction from other recent years.

c

DODS

01iodities
COMMrHER ^

\

XV
*“\A

\
FARM PRODUCTS]
V

Group Price Indexes of the Bureau of Labor
Statistics (1926 average— 100 per cent)

Volume o f freight car loadings, which usually increases at this season,
showed little change in August. Shipments of miscellaneous freight showed
no seasonal expansion, while shipments of livestock increased considerably.
Department store sales increased by an amount substantially larger than is
usual in August and were 2 per cent higher than a year ago.
C om m od ity P rices

Wholesale prices of commodities increased in August and the first week
of September, reflecting sharp advances in the prices of farm products and
foods. Hog prices advanced rapidly during the month of August and in the
latter part o f the month cattle prices also showed a marked increase. Since
the beginning o f September, prices for both hogs and cattle have declined
somewhat, and in the middle of the month there have also been decreases in
the prices o f wheat and cotton. In August, as in other recent months, there
was little change in prices of commodities other than farm products and foods.
B a n k Credit

W
ednesday Figures for Reporting M ber
em
Banks (Latest figures are for Septem 19)
ber




A seasonal increase in demand for currency by the public and an increase
in Government deposits at the Eeserve Banks were reflected in a decline in
member bank reserve balances between the middle o f August and the middle
of September. On September 19 reserve balances were about $1,700,000,000
in excess o f legal requirements. There was little change in the volume of
Eeserve Bank credit during August and September.
Total loans and investments of reporting member banks showed little
change between August 15 and September 19; loans, other than security loans,
increased by $170,000,000 and holdings o f securities by $50,000,000, while
security loans declined by $200,000,000. The increase in loans other than on
securities occurred largely at banks in New York City and in the Western
districts and reflected chiefly a growth in direct loans to customers for ordinary
commercial purposes and for financing the harvesting of crops. The banks*’
holdings o f acceptances and commercial paper, which also reflect current
business financing, increased during the period.
Short term money rates continued at low levels. Yields on both United
States Government and corporate bonds increased during August and the
first half of September.