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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 atTNew 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 .2960 .3745 .3644 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 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 Aug. June July Aug. 60 70 31 62 90 59 73 50 48 54 39 38 46 48r 53 34 32 38 48 60 / — ^ // 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 63 121 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 101 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 \x ___ 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, wThile raw silk advanced 9 cents to $ 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 ► __1__i....1.... 1929 L..1....t . ....i 1930 1 I 1931 1932 J ... 1. !... ...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 wTere reported by the silk 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...................... 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.............................................. + 0 .3 — 4 .2 + 0.8 — — 2.8 1.6 + 1.5 + 0.6 1.2 — + — — + 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 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 01rHER COMM iodities^ \ X V*“\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 Wednesday Figures for Reporting Member Banks (Latest figures are for September 19) 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.