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MONTHLY REVIEW of Credit and Business Conditions Second F ed era l E eserve M o n e y A gen t M a rk e t in F e d e ra l F ed era l E eserve R e s e rv e B a n k , N ew F r a n c e to th e U n ite d S ta te s, w h ic h s ta r t e d e a r ly in A u g u s t , c o n t in u e d a t a n in c r e a s e d ra te a fte r th ir d th e w eek e n g a g em en ts U n ite d fir s t fe w days o f th e m o n th of S ta te s $ 5 6 ,0 0 0 ,0 0 0 g o ld in rea ch ed on of S ep tem b er, a c c e le r a te d P a r is a S ep tem b er fo r of E a r ly in th e u n til d a ily s h ip m e n t m a x im u m 25. and r a p id ly to m ore th e th e th a n fo llo w in g m o r n in g it w a s a n n o u n c e d th a t th e P a r is m a r k e ts w o u ld b e c lo s e d on th a t d a y and th a t th e F ren ch G overn m en t w o u ld s u b m it t o th e F r e n c h P a r lia m e n t o n S e p t e m b e r 2 8 a p rop osal about to red u ce o n e -fo u r th to th e g o ld o n e -th ir d . v a lu e A t of th e th e sam e fr a n c by t im e an The ta tio n s th a t th e F r e n c h , B r itis h , a n d U n ite d S ta te s G o v e r n m e n ts b e g in n in g w o u ld coop era te in th e m a in te n a n c e of e q u ilib r iu m in T h e t e x t o f th e s ta te m e n t is s u e d in W a s h in g to n fo llo w s . 1. The Government o f the United States, after consultation with the British Government and the French Government, joins with them in affirming a common desire to foster those condi tions which safeguard peace and will best contribute to the restoration of order in international economic relations and to pursue a policy wThich will tend to promote prosperity in the world and to improve the standard of living of peoples. 2. The Government o f the United States must, o f course, in its policy towards international monetary relations take into full account the requirements of internal prosperity, as corre sponding considerations will be taken into account by the Gov ernments o f France and Great B ritain; it welcomes this oppor tunity to reaffirm its purpose to continue the policy which it has pursued in the course o f recent years, one constant object of which is to maintain the greatest possible equilibrium in the system o f international exchange and to avoid to the utmost extent the creation of any disturbance of that system by Amer ican monetary action. The Government of the United States shares with the Governments of France and Great Britain the conviction that the continuation of this two-fold policy will serve the general purpose which all the Governments should pursue. 3. The French Government informs the United States Gov ernment that, judging that the desired stability o f the principal currencies cannot be insured on a solid basis except after the re-establishment o f a lasting equilibrium between the various economic systems, it has decided with this object to propose to its Parliament the readjustment o f its currency. The Govern ment of the United States, as also the British Government, has welcomed this decision in the hope that it will establish more solid foundations for the stability of international economic relations. The United States Government, as also the British and French Governments, declares its intention to continue to use appropriate available resources so as to avoid as far as possible any disturbance o f the basis o f international exchange resulting from the proposed readjustment. It will arrange for such consultation for this purpose as may prove necessary with the other two Governments and their authorized agencies. O c to b er a c c o m p a n y in g n o u n c e m e n t w a s m a d e in P a r is , L o n d o n , a n d W a s h in g to n in te r n a tio n a l e x c h a n g e . Y ork 1 , 1936 4. The Government o f the United States is moreover con vinced, as are also the Governments of France and Great Britain, that the success o f the policy set forth above is linked with the development o f international trade. In particular it attaches the greatest importance to action being taken without delay to relax progressively the present system o f quotas and exchange controls with a view to their abolition. 5. The Government o f the United States, in common with the Governments o f France and Great Britain, desires and invites the cooperation o f the other nations to realize the policy laid down in the present declaration. It trusts that no country will attempt to obtain an unreasonable competitive exchange advan tage and thereby hamper the effort to restore more stable economic relations which it is the aim of the three Governments to promote. S e p te m b e r T h e g o ld m o v e m e n t fr o m D is t r ic t of fo r th e th e of of fr o m e a r ly part Jan u ary A s fr a n c rose th e r e d u c tio n d ia g r a m F ren ch 1933. F ren ch cou n try in th e in in th is of 1933 g o ld 1934, an d in N ew ch art term s arou n d th e sh ow s th e fr a n c of th e p a r ity to arou n d o f th e p r e s u m a b ly th e cu rren cy o ld of 6 .6 0 of quo s in c e in d ic a te s , its v a lu e cou rse Y ork th e v a lu e of th is 3 .9 2 ce n ts ce n ts a fte r d o lla r a t th e e n d w ill n o w be redu ced t o b e t w e e n a b o u t 4 .3 5 c e n t s a n d 4 .9 6 c e n t s , o r w e l l a b o v e its o ld p a r it y . T h e c ir c u m s ta n c e s s u r r o u n d in g th e r e d u c t io n in th e v a lu e o f th e fr a n c a n d th e m e a s u r e s ta k e n b y th e F r e n c h G o v e r n m e n t a re r e p o r t e d in s o m e w h a t g r e a t e r d e t a il o n a la te r p a g e o f th is R e v ie w . D u r in g fra n c by in th e o u tflo w s th e th is p e r io d cou n try r e v a lu a tio n of g o ld of fr o m in w h ic h th e w as r a is e d th e d o lla r , F ra n ce to v a lu e to th ere th e of th e arou n d w ere U n ite d F ren ch 6 .6 0 ce n ts recu rren t S ta te s and 74 MONTHLY REVIEW, OCTOBER 1, 1936 a ls o to L ondon. B e tw e e n 25, th e tem b er to th e 1936 U n ite d S ta te s G o ld lo s s e s to m ore th a n th e s o u r c e s , b u t s in c e about S ta te s by e a r ly 1934 fr o m F ran ce th e recen t th e to ta l and r e c e ip t s in 1935 E n g la n d of th e g o ld g o ld to m ovem ent s in c e L ondon The th e th e began, P u rch a ses are rep orts of rep orted v a lu e S ta te s s in c e t o ta le d b e g in n in g a n n ou n cem en t g o ld in 1934 fr o m oth er reserve of th e o f m o re th a n R e p o r te d e n g a g e m e n ts o f g o ld fo r e x p o r t to th e U n ite d $ 5 0 0 ,0 0 0 ,0 0 0 . Sep F ran ce $ 1 ,6 6 5 ,0 0 0 ,0 0 0 , B a n k o f F r a n c e h as sh o w n a n e t r e d u c tio n $ 2 ,0 0 0 ,0 0 0 ,0 0 0 . and fr o m t o t a l e d c lo s e t o $ 1 ,0 0 0 ,0 0 0 ,0 0 0 . U n ite d o ffs e t 31, s h ip m e n ts a g g reg a ted a n d s h ip m e n ts to L o n d o n w ere Jan u ary rep orted of to in d ic a tin g g o ld th e th a t in th e is P a r is even fr a n c g o ld th a n s h ip m e n t of R u s s ia , $ 2 1 ,5 0 0 ,0 0 0 ,0 0 0 , su ch g o ld g o ld h o ld in g s , w ith th e is n o w in in r e la tio n o f an exch an ge s id e r e d new to oth er em bargo on c u r r e n c ie s , g o ld r e d u c tio n in fo llo w e d by of represen t a lig n m e n t o f and fu n d . fu r th e r its th e c r e d it has th e le v e l im p o s itio n e s ta b lis h m e n t o f T hese ch an ges im p o r ta n t a re ste p s an con to w a rd a c u r r e n c ie s . on th e been The b a s is g r e a tly le a s t, upon m u ch le s s d e fin ite v a r io u s c u r r e n c ie s to g o ld s e r ie s of W ar. cu rren cy G reat r e la te d r e a d ju s t m e n t s B r ita in , t h e ir r e la tio n s h ip s th a n w a s th e and c u r r e n c ie s ca se in fo llo w in g oth er to have of W o r ld th a t not th e th e fir s t th e c o u n tr ie s s te r lin g , of m em ber 19 te m b e r ta x cu rren cy a fin a n c in g c u r r e n c ie s in years. F ran ce and S ta te s, have w h ic h term s g o ld g o ld a of d u r in g S w itz e r la n d , a n n ou n ced th e n e w of of v a lu e s o f t h e ir in g fo r th e p ast of tw o by th e p r o v is io n a l fix in g w ith in s u ch r a n g e . th e b e lg a , been fix e d on cash U n ite d T reasu ry w ith in F ed eral c u r r e n c ie s o f a s p e c ifie d d e fin ite ly a d o p te d , a n d in th is a re to g o ld m an n er, th e ra n g e be v a lu e has s in c e o f p o s s ib le v a r ia t io n in g o l d v a lu e s , o r i g i n a l l y a d o p t e d i n A p r i l 1 9 3 5 , h a s been abandoned. A ra th er v a lu e s a d o p tio n of v a r io u s s ta b iliz a tio n c o u n tr ie s , th e to a v o id in th e and upon in c id e n ta l th rou gh ou t m on eta ry m in e d g o ld In cu rren cy an p u b lis h e d th e w o r ld sto ck of fu n d s o f w h ic h and th e d o m e s tic of th e has of are w id e by th e w o r ld h ig h e r s tim u la te d c r e d it in th e in te n d e d c u r r e n c ie s , te rm s p r ic e s g row th of in of c u r r e n c ie s of p a id th e d u r in g d o lla r s , of in c r e a s e p r o d u c tio n , e x p a n s io n term s great fo r so th e cu rren cy fo r n e w ly th a t g o ld th e in th ere base p ast a r e s u lt presen t sto ck o f m o n e ta r y o f cu rren cy g o ld and bank reserv es, th e r e fo r e , in s ta n c e , fr o m fro m 16, th e in c r e a s e d little excess 15 c h ie fly ta x d a te . of dem an ds. drop p ed to to T reasu ry Out s e c u r itie s on S ep w ith d r a w a ls reserv es due th e seasonal in reserves $ 1 ,8 0 0 ,0 0 0 ,0 0 0 p r e c e d in g m eet T reasu ry d e p o s its excess fu r th e r to h ow ever, new over ju s t d e s p ite banks S ep tem b er of a b r o a d , t o g e t h e r w ith G overn m en t B anks a in a n c i n g of s o ld about on th a t s e c u r i t i e s o f f e r e d in e x c h a n g e f o r m a t u r a p p r o x im a te ly in s te a d of The tog eth er $ 3 6 0 ,0 0 0 ,0 0 0 d e p o s its p a y a b le p a y m en ts w ith in c o m e fo r to th e ta x w ere th e new p a id G overn T reasu ry c o lle c tio n s , g r e a tly d is b u r s e m e n ts , R eserve 9 B anks to and rose T rea su ry fro m $ 4 1 8 ,0 0 0 ,0 0 0 on b a la n c e s about in $ 5 5 ,0 0 0 ,0 0 0 S ep tem b er 16. th e on L a te r in th e m o n th , h o w e v e r , G o v e r n m e n t d is b u r s e m e n ts a g a in exceeded m ent cu rren t d e p o s its p roceed s of in r e c e ip t s , th e g o ld and R eserve im p o r ts , p a y m en ts B an k s, cau sed a fr o m tog eth er ren ew ed G overn w ith th e e x p a n s io n o f e x ce ss re s e rv e s in m e m b e r b a n k s. In N ew Y ork C it y , p a y m e n t s t o G overn m en t s e c u r itie s and th e T reasu ry fo r in c o m e fo r th e ta x es, fo r Sept. 30, 1935 Aug. 31, 1936 Sept. 30, 1936 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 (Average rate of leading banks at middle of m onth ).............................. Treasury securities: M aturing December (v ie ld )............... M aturing February 1938 (y ie ld ). . . . Average yield on Treasury notes (1-5 vears)....................................................... Average yield on Treasury bonds (more than 5 years to earliest call d ate). . . . Average rate on latest Treasury bill sales 273 day issue................................ Federal Reserve Bank of New York re discount ra te .......................................... Federal Reserve Bank of New York buying rate for 90 day indorsed bills. 34 *U X X 1 X A 1 * ix X A 1.67 1.71 1.67 No yield No yield 0 .13 N o yield 0.25 0.96 0.67 t0.80 2.67 2 .3 0 #2.33 0.23 0.17 0.19 IX IX IX X X X fiv e th e d a ta o n th e m o n e ta r y g o ld h o ld in g s o f c e n tr a l A s of econ om y. a o f g o ld th e flu c tu a tio n s r e s p e c t iv e r e v a lu a tio n been th e e x tr a o r d in a r y M ea su red r e a d ju s t m e n t yea rs has been e q u a liz a t io n fr e q u e n t e ffe ct have and th e so f a r as p o s s ib le , th e im p a c t o f s u c h a d d it io n , g o ld has been years. th e of o p e r a t io n s u n n e c e s s a r ily flu c tu a tio n s u n it s . or in te r n a t io n a l v a lu e s to p r e v e n t , in A n fe a tu r e d u r in g th e p a st fe w of fo r m e r a b ro a d , th e T reasury F and fro m dem and. S ep tem b er new gen eral cu rren cy v a lu e th e e x c e e d e d in te re s t p a y m e n ts on G o v e r n m e n t d e b t a n d o th e r th e I n B e lg iu m , th e s p e c ific g o ld v a lu e o f p r o v is io n a lly of S ta te s in d o lla r v a lu e g o ld $ 1 ,7 0 0 ,0 0 0 ,0 0 0 , s e c u r itie s , in q u o ta tio n s fix e d a n d in S w it z e r la n d th is a n n o u n c e m e n t h a s b e e n f o l lo w e d e x is tin g fu n d s th £ d a te , a p a r t fr o m any s ta b ilit y fo llo w in g ra n g e of p e r io d , $ 4 7 0 ,0 0 0 ,0 0 0 s e c u r itie s , t h e ir fr o m $ 2 ,0 0 0 ,0 0 0 ,0 0 0 over m en t on degree to S ep tem b er d e fin ite g o ld v a lu e s f o r th e ir c u r r e n c ie s , b u t h a v e n e v e r c o n s id e r a b le th e d o lla r s $ 1 1 ,0 0 0 ,0 0 0 ,0 0 0 . o f g o ld R eserve fro m little have fix e d of banks A u gu st th e le s s m a in t a in e d a a p p r o x im a te ly in c r e a s e d . r e c e n t in flo w F ed eral On I n g e n e r a l , t h e n e w a l ig n m e n t is b a s e d , f o r t h e p r e s e n t at in flo w E x c e s s R e se r v e s S w is s a p p r o p r ia te th ro u g h e x p o rts s ta b iliz a tio n to fin d of T h e p o t e n t ia l e x p a n s io n th e to term s n e a r ly e q u a l to th e w o r ld 1931. of ago in th e g o ld v a lu e o f th e d o lla r , t o g e t h e r heavy g u ild e r a llo w e d to ta l yea rs m o n e ta r y g o ld s to c k o f th e U n ite d d is b u r s e m e n ts be in a fiv e c o n t e n t w a s le s s t h a n o f th e r e d u c tio n f r a n c w o u ld b e r e d u c e d a c c o r d in g ly , a n d th a t th e D u tc h w o u ld in d ic a te w h ereas la rg e r . w as v a lu e and m ore fo r p r o s p e c t iv e F ren ch 7, w h en $ 2 1 6 ,4 0 0 ,0 0 0 , 1936 have been of th e of A u gu st b a n k s a n d G o v e r n m e n ts in 5 2 o f th e p r in c ip a l c o u n t r ie s , e x c lu s iv e ♦ Nominal f Change of + 0 .0 8 from previous yields due to the dropping of the September 15, 1937 Treasury note issue from the average as it matures within one year. # Average raised + 0 .0 3 by inclusion of 2 X per cent Treasury bonds of 1956-59. FEDERAL RESERVE AGENT AT NEW YORK tog eth er w ith d is tr ic ts , S ep tem b er th e a p r e c e d in g red u ced end excess 18, as of o u tflo w com pared A u g u st. of reserv es In w ith th e fu n d s to about la tte r to oth er $ 4 3 0 ,0 0 0 ,0 0 0 $ 7 0 0 ,0 0 0 ,0 0 0 part of at A llo t m e n t s h o w e v e r , t h e r e w a s a g r a d u a l in c r e a s e t o o v e r $ 5 0 0 ,0 0 0 ,th e r e d u c tio n in excess reserves d u r in g th e th e of r e p la c e d on u n u su al a c t iv ity in th e m oney m ark et w as rep orted . th e In th e fo u r w eeks in v e s tm e n ts N ew Y ork th e c h ie fly and in c r e a s e s in h o ld in g s , s e c u r itie s , r e d it p r in c ip a l c o m m e r c ia l tog eth er la r g e ly to 23 c itie s lo a n s and $ 2 0 0 ,0 0 0 ,0 0 0 a m ou n ted The in v e s tm e n ts and to about and in c r e a s e d e a le r s Y ork C ity ban ks, banks 23, a n d on grea ter in c r e a s e T reasu ry r e m a in e d and e a r ly s e c u r itie s th e J u ly , o u ts ta n d in g , e x c lu s iv e in c r e a s e d tie s t io n s th e been oth er an of fig u r e s w as by on banks lo a n s in to N ew r e p o r tin g S ep tem b er $ 5 2 7 ,0 0 0 ,0 0 0 r e p o r tin g e ls e w h e r e s h o w e d p u rch a ses la tte r in c r e a s e of th e S ep tem b er th e of V e te ra n s of banks S 0 0 0 ,0 0 0 o r t h e r e a b o u t s o f 2 % th e new 15, 1936. is s u e s c r ip tio n fo r C ash th a n an G o v e r n m e n t s e c u r i in v e s tin g d u r in g th e in s titu past fe w D e s p ite th e fir s t f e w T reasu ry $ 5 ,1 0 0 ,0 0 0 ,0 0 0 books w ere w as th e in on excess reserves, on to th e open, and th e A u gu st S econ d in 15 th e day th e bank in G overn m en t of as la r g e as in s io n occu rred th e n e w lo w in g bond a lth o u g h la tte r in fu rth e r tow a rd in th e w e e k th e th e part of and A verage 0 .1 9 per ra tes ce n t, or s e c u r ity p r ic e s , w h ic h h ig h le v e ls . b e tw e e n th e th e s m a ll r e c e s m arket v o lu m e of th e b ecam e of t r a d in g m on th a n arrow th e clo s e o f in th e f o l in c r e a s in g ly r e m a in e d p r ic e s reced ed about m a rk e t, so th a t a v e ra g e S ep tem b er w ere ir r e g u la r , lig h t. about In *4 th e p o in t q u o ta tio n s % o f a p o in t of A u g u st. The 1 9 5 6 -5 9 , w h ic h new 2 % c lo s e d p r io r to th e s e co n d per at 101 cen t 9 /3 2 T rea su ry on in it ia l d a y o f t r a d in g o n th e N e w S ep tem b er Y ork h a lf bonds S to ck of 15, th e E xch an ge, w e r e q u o t e d a t 1 0 1 a t th e c lo s e o f S e p t e m b e r 2 8 , a n d th e 2 % p e r c e n t T r e a s u r y b o n d s o f 1 9 5 5 -6 0 , w h ic h as 1 0 3 % on S ep tem b er 2 a n d 103 1 5, clo s e d a t 1 0 2 2 2 /3 2 o n S e p te m b e r 2 8. w ere som ew hat h ea vy d u r in g 0 .7 6 per cen t on on had been S ep tem b er T r e a s u r y n ote s th e la tt e r p a r t o f S ep tem o u t s t a n d i n g is s u e s o f 1 to r o s e t o 0 .8 3 p e r c e n t , a s c o m p a r e d on S ep tem b er 15. A s th e m on th w ith c lo s e d , h o w e v e r , p r ic e s o f a ll T r e a s u r y s e c u r itie s t u r n e d s lig h t ly fir m e r . B il l s an d C o m m e r c ia l T r a d in g a c t iv it y in b ills in c r e a s e d P aper s lig h t ly f o r a s h o r t t im e a r o u n d t h e m id d le o f S e p t e m b e r b u t f o r t h e m o n t h a s a w h o le ch an ge th e a ccep ta n ce occu rred in fro m and J u ly . b ills fo r e ig n in B ills th e decrease c o n tin u e d q u ie t. N o o u ts ta n d in g at th e end a c c o m p a n y in g of ta b le , t o ta le d a p p r o x im a te ly $ 8 ,0 0 0 ,0 0 0 E x p o r t b ill s s h o w e d a d e c r e a s e o f $ 5 ,0 0 0 ,0 0 0 based on goods sto re d c o u n tr ie s d e c lin e d in g b a n k s a n d 0 0 0 ,0 0 0 a m arket ra tes. s h ip p e d b e tw e e n b y a s im ila r a m o u n t. in A ccep t b a n k e rs a t th e e n d o f b ills , o r r o u g h ly or o f A u g u s t h e ld 91 p er cen t o f $ 2 7 9 ,- a ll b ills th e n o u ts ta n d in g . (Millions of dollars) su b D is tr ic t. r e q u ir e r e d u c tio n new A th e a n n o u n ce m e n t o f b e lo w th e h ig h e s t le v e ls o f e a r ly S e p t e m b e r , b u t r e m a in e d Type of acceptance August 1935 July 1936 August 1936 102 81 9 43 4 105 68 10 47 2 104 63 10 50 2 in T reasu ry 83 84 79 322 316 308 Dom estic shipment.................................... Dom estic warehouse credit...................... Dollar exchange......................................... Based on goods stored in or shipped bebetween foreign countries................... ca sh r a th e r th a n w ith dem an d— 77 p er June, and w a s la rg e r C o m m e r c ia l s m a lle r , T h e to ta l o f th e S e p te m b e r n e w te m b e r n o te s cash . o ffe r in g a n d th e is s u e d a te , a n d w eek t h a n t h e p r o p o r t i o n p a id f o r in c a s h o n t h e M a r c h is s u e s . c o n s id e r a b ly s m a lle r t h a n th e d a y s o f S e p te m b e r, a n d th e a v e ra g e p r ic e o f t o ta le d o f th e n e w reserv e con sequ en t p r o p o r tio n in M arch . $ 2 ,0 0 0 ,0 0 0 a m ou n ts. o v e r $ 2 0 0 ,- R eserve to th e G o v e rn m e n t o n ce n t— w a s v ir tu a lly th a t s lig h t ly F ed eral S ep tem b er bonds $ 4 7 0 ,0 0 0 ,0 0 0 m em ber and new one s e c u r itie s p a id f o r im m e d ia te ly in d e p o s it s p a y a b le m a t u r in g th e a llo t t e d , o f w h ic h in c r e a s e m en ts p e r c e n t 2 0 -2 3 y e a r b o n d s n otes fo r o n ly con se or S e p te m b e r w a s lim ite d 0 .1 3 T rea su ry b on d s rea ch ed n ew $ 3 0 8 ,0 0 0 ,0 0 0 , e c u r it ie s a n o ffe r to e x c h a n g e b o n d s o f s u b s c r ip t io n s is s u e w a s a c t u a l ly 0 0 0 ,0 0 0 stre n g th S e r v ic e th a t T h e T r e a s u r y o n S e p t e m b e r 8 a n n o u n c e d its q u a r t e r ly f o r ca s h s u b s c r ip t io n , a n d cash th e A u g u s t ra tes. o f A u g u st, as sh ow n o vern m en t s im ila r b e tw e e n but June f i n a n c i n g p r o g r a m , w h ic h i n c l u d e d t h e o f f e r i n g o f $ 4 0 0 ,- m ore of 5 y e a r m a t u r it y m on th s. G d u r in g b er, a n d th e a v e ra g e y ie ld s e c u r itie s A d ju s t e d and in June exch an ge red eem ed th e a p p r o x im a te ly th e re fo re , in v e s to r s of 15, part G overn m en t in d ic a te , m em ber by and o f o u ts ta n d in g ta k en th a n a ll ended r e fle c tin g v o lu m e p r o p o r tio n has C it y of be b ill fin a n c in g b e lo w as h ig h s o ld d e s p ite in T h ese in w eeks s e c u r itie s le v e ls $ 5 0 0 ,0 0 0 ,0 0 0 bon ds. in c lu d e s $ 6 4 ,0 0 0 ,0 0 0 th e to ta l v o lu m e Y ork to in le a v in g a b o v e th e q u o ta tio n s p r e v a ilin g w h ic h fo u r S ep tem b er, b e lo w w as p r e v io u s . N ew in C it y m em ber $ 1 5 8 ,0 0 0 ,0 0 0 th e G overn m en t m e m b e r b a n k s in lo a n s c o n n e c tio n Y ork r e p o r tin g lo a n s and a year of in in T h e in c r e a s e in N ew in c r e a s e d d u r in g th a t d a te th a n H o ld in g s new of o r g a n iz a t io n s m em ber in a ll G overn m en t $ 3 5 0 ,0 0 0 ,0 0 0 . c la s s ific a t io n b u s in e s s som e fo r r e fle c tin g som e s e c u r ity in th rou g h ou t lo a n s w ith and banks in c r e a s e s , w it h th e S e p te m b e r T r e a s u r y fin a n c in g . to ta l th e lo a n s m em ber s u b s t a n t ia l bonds fo r in w a s e v id e n t d u r in g A u g u s t , c o n t in u e d t o b e e x h ib it e d in S ep tem b er r e p o r tin g oth er show ed C a n k ended w e e k ly C it y cou n try s e c u r ity on of B is s u e m a t u r it ie s s lig h t ly em ber new p a id th a n $ 5 1 2 ,0 0 0 ,0 0 0 , is s u e s v a r ie d The M th e am ount s m a lle r t o fiv e w e e k ly s a le s o f $ 5 0 ,0 0 0 ,0 0 0 o f 2 7 3 d a y b ills w h ic h S e p t e m b e r m o n e y r a te s in th e N e w Y o r k m a r k e t r e m a in e d no of to T reasu ry a ctu a l m u ch m a t u r in g u n ch an ged , and th e w as a m ou n ted D e s p ite m on th and q u e n tly S ep tem b er, 0 0 0 , r e fle c tin g la r g e ly th e e ffe c t o f g o ld im p o r ts . d a te s, on fin a n c in g , h o w e v e r , w a s o n th e tw o p r e v io u s q u a r te r ly paper th o u g h fo r cr e d it d e a le r s g e n e r a lly fr o m rep orted fa ir , con cern s th e c o m m e r c ia l p a p e r m a r k e t. dem and u s in g th e a som ew h at d u r in g S ep fa c ilitie s of B a n k in v e s tm e n t d e m a n d MONTHLY REVIEW, OCTOBER 1, 1956 fo r b u s in e s s o ffe r in g s . s lig h t ly n otes r e m a in e d A lt h o u g h fir m e r m a rk et, w e ll th e re ra te w as ten d en cy q u o ta tio n s w ere in not in excess som e th e of a v a ila b le in d ic a tio n of c o m m e r c ia l m a te r ia lly a paper a ffe c te d p a r ity , per and cen t th e S w is s b e lo w its fr a n c , fo r m e r at 2 3 .0 0 p a r ity ce n ts, and clo s e w as 2 9 .6 th e new to d e fa c t o p a r ity . and The p e r io d im m e d ia te ly p r e c e d in g th e F ren ch G ov a v e r a g e g r a d e p r im e f o u r t o s ix m o n t h c o m m e r c ia l p a p e r e r n m e n t ’s d e c is io n w a s m a r k e d b y a p r o n o u n c e d a c c e n t u r e m a in e d a tio n at % per ce n t. A t th e end of A u gu st com of p ressu re m e r c ia l p a p e r h o u s e s h a d a t o t a l o f $ 2 0 5 ,2 0 0 ,0 0 0 o f p a p e r r e fle c te d o u t s t a n d in g ; th is c o m p a r e s w it h la r g e w id e n in g of J u ly , and is th e la r g e s t $ 1 8 7 ,6 0 0 ,0 0 0 a t t h e e n d am ount o u ts ta n d in g s in c e O cto b e r 1931. B ank in of d u r in g The at E x ch a n g e s F ren ch or near cou n try m e n ts w ere in at to g o ld U n ite d of m ade to fo llo w in g th rou gh its s im u lt a n e o u s ly B r itis h c o n tin u e to g o ld 26 th is engage S ep tem b er 2 5, th e an n ou n ced P a r lia m e n t fr a n c . s te a d ily s h ip m e n ts S ep tem b er to th e S ta te s a n d in te n tio n on r e m a in e d g o ld and v o lu m e p ropose v a lu e w as S ep tem b er w h ic h p r o fita b le , G overn m en t d e c is io n m ent in le v e l in c r e a s in g F ren ch th e fr a n c th e a r e d u c tio n The F ren ch w ith sta te m e n ts use in by a p p r o p r ia te th e th e ir a v a ila b le th e $ 2 ,1 5 7 ,0 0 0 ,0 0 0 th e p rop osed The cu rren cy F ren ch S ep tem b er to vote m on eta ry m easu res. to th e red u ce to 3 4 .3 5 per g o ld ce n t, fo r th e p u r p o s e fr a n c . r a is e d to in A lt h o u g h th rou g h and to m easu res of th e a of bank n otes 2 5 .1 9 s t a b iliz a tio n d e a lin g s w ere th e fu n d g o ld . o f th e t e m p o r a r ily B ank th e m in im u m in to a u th o r ity fr o m e x c h a n g e v a lu e th e P a r is m a rk e t a n d fig u r e by on p rop osed in c lu d e fr a n c e s t a b lis h exch an ge con ven ed G o v e r n m e n t ’s o f r e g u la tin g th e u p o n th e F r e n c h fr o m o f F ran ce u n it f o r F o llo w in g th e s w iftly G o v e r n m e n t ’s d e c i s io n , a c t i o n w a s a ls o of g o ld cen t a th o s e of F ran ce. a u th o r iz in g ren cy of In S w itz e r la n d a r e d u c tio n fr o m 2 5 .9 4 in to th e la w s g o ld 3 4 .5 6 per th is le g is la t io n , de fa c to of r e d u c tio n 3 0 .0 8 per th e in ce n t. S w is s th e ce n t, A n N a tio n a l g o ld v a lu e em ba rgo w ere co n te n t f o r t h e e s t a b lis h m e n t o f a s t a b iliz a t io n to s im ila r en a cted of th e cu r and p r o v id in g fu n d . P u rsu an t B ank o f th e on to e ffe c te d a th e fo llo w in g w eek and exchan ge th e a of had b e g in n in g p r o v is io n a l r e v a lu a t io n o f M arch th e of o f th e p o i n t o f $ 5 ,4 7 9 ,0 0 0 ,0 0 0 1935, w ere s u c c e e d in g q u o ta tio n fo r a t its lo w e r r a p id ly th e d u r in g r e a c h in g w eak n ess as th e p o in t in fra n c in of d is c o u n t on th e days fe w w ith by a h a lf. N ew Y ork $ 0 .0 6 5 8 fo rw a r d D u r in g an of 14 5 /1 6 fra n c s p r e c e d in g th e at 50 per th e end c o n tr a c ts o f s h o r te r m a t u r it y , d r a in b a s is , w e r e e v e n w id e r . r e s u lt in g fr o m exch an ge, of upw ard th e S ep tem b er ten d en cy d o lla r -s t e r lin g 22. ra te In m ovem ent on cen t B ank of an th e a cu te F ran ce in c r e a s e on in d is 3 to 5 p e r c e n t, e ffe c tiv e th e fo llo w in g d a y . m ost S ep tem b er r o u g h ly per S ep tem b er 24, a n n o u n ce d co u n t ra te fr o m th e dow n and sp o t fr a n c s g o ld e q u iv a le n t com p a red D is c o u n ts o n T h u rsd ay, show d raw n year G o v e r n m e n t ’s a c t io n , t h e r a t e f o r t h r e e m o n t h s 7 O w in g t o th e h e a v y g o ld $ 5 .0 1 % b r o a d ly F ren ch s in c e s h ip m e n ts , o f A u g u st. th is w ere e a r lie r . a The $ 1 7 1 ,1 0 0 ,0 0 0 p r e v io u s w h e n c a lc u la te d o n a p e r a n n u m s p e c ia l d iffic u ltie s th e year ta k e n b y th e r e m a in in g c o u n t r ie s o f th e g o ld b lo c , w h o s e m on eta ry th e in S e p te m b e r 25 b y m e a n s o f th e u s u a l m a c h in e r y co n tra cts s p e c ia lly th e T hese a p r o h ib itiv e co n v e r s io n w as on co n te n t M e a n w h ile su spen ded r e s u lt in g r e a d ju s t m e n t . P a r lia m e n t 28 exch an ges of p ressu re d u r in g w a s m a in ta in e d F ren ch in te r n a tio n a l in w as and fr a n c s . 25, under la tte r p a r t of of lo s s S ep tem b er o f F r a n c e , w h ic h w e r e a t a h ig h in w id e n e d b a s is fo rw a r d g o ld w h ic h o u tflo w B e lg ia n m o n e t a r y u n it , a n d th e g o ld h o ld in g s o f th e B a n k r e s o u r c e s so as t o a v o id a s f a r a s p o s s ib le a n y d is t u r b a n c e th e exchan ge, g o ld w eeks r e c u r r e n tly A p r il 1935, fo llo w in g a n n ou n ce G o v e rn m e n ts , d e c la r in g to its tw o a ended $ 5 5 ,7 0 0 ,0 0 0 $ 4 3 ,3 0 0 ,0 0 0 been rep orted w eek of F ren ch a c c e le r a te d o f th e d is c o u n t o n F ra n ce th e d ecrease F o r e ig n a g a in s t a g r e a tly w as pound term s r e a c h in g th e F r id a y , th e in a reversed and th e On to c u r r e n c ie s , of fe w 25. c o n tin u e d g o ld h ig h su bsequ en t S ep tem b er of $ 5 . 0 7 1/4 days, on h ow ever, ra te c lo s e d S a tu rd a y at m orn in g , im m e d ia te ly fo llo w in g th e p u b lic a tio n o f th e F r e n c h G o v e r n m e n t ’s a n n o u n c e m e n t , m o v e m e n t s d o lla r q u o ta tio n q u ic k ly b ecam e a n d $ 4 .9 5 % on w ere som ew hat m ore s ta b le , in e r r a tic , r a n g in g th e but pound- th e b e tw e e n ra te $ 4 .9 3 ^ S e p te m b e r 28, 29, a n d 30. S w is s f r a n c g o ld ex p o rts w as G o ld M o v e m e n t im p o s e d b y th e N e th e r la n d s G o v e r n m e n t a n d a s ta b iliz a tio n fu n d D u r in g th e th e above s e ttlin g t e m p la te d 29, p r e v io u s m arket b e in g w h ic h p a r ity . w as d e c lin e d in in of in th e th e th e P a r is in S ep tem b er 30, q u oted w as The g u ild e r or th e as o n ly on 1 9 .2 per 1 3 .3 th e fo r d e c lin e th e v a lu e , th e per cen t co n d itio n in 30 and at b e lo w 5 5 .0 0 its in con fr a n c - on Sep b e lo w th e its fr a n c th e a d e p r e c ia t io n q u oted cen t to fr a n c s $ 0 .0 5 7 5 S e p te m b e r w as and in it ia l as fo r s u s p e n s io n s m a lle r t h a n h ig h s p e c ia l ra tes a d ju s t m e n t m arket th e f r a n c ’s g o ld corrected The th e of o b ta in in g c o n s id e r a b ly t o $ 0 .0 4 8 5 , e q u iv a le n t t o ce n t. m on th p rocess p r o m p tly c o m m it m e n t s , w as d ecrease ra te tem b er per d e a lin g s m a t u r in g days w ere O w in g to th e t e m p o r a r y d iffic u lty exch an ge d o lla r fe w bases. exch an ge r e s u lt in g fra n c la s t c u r r e n c ie s to t h e ir n e w of The a u th o r iz e d . ra te o f 2 6 .9 ce n ts fo r m e r on g o ld m ovem ent of g o ld to th e U n ite d S ta te s w h ic h b e g a n d u r in g th e e a r ly p a r t o f A u g u s t c o n tin u e d d u r in g S e p te m b e r a t a n a c c e le r a te d m on eta ry 000 , 0 0 0 , fro m g o ld of s to ck w h ic h E n g la n d , e r la n d , Y ork, and and A u s tr a lia tog eth er scrap and C h ile $ 4 0 0 ,0 0 0 f r o m c o n tin u e d o f g o ld fr o m w ere fr o m r e c e iv e d H ongkong. of to $ 1 0 7 ,- $ 8 ,1 0 0 ,0 0 0 $ 5 ,7 0 0 ,0 0 0 $ 1 ,7 0 0 ,0 0 0 r e c e ip t s fro m S w itz at cam e N ew fr o m T h e s e im p o r ts , n e w ly m in e d and a s s a y o ffic e s a n d t h e r e le a s e ea rm ark B ank o f a p p r o x im a te ly s to ck F ran ce, In d ia , C oast a ffe c t in g th e a m ou n ted fr o m fr o m fr o m W est F ed era l R eserve g o ld Im p o rts H o l l a n d , $ 5 0 0 ,0 0 0 a t th e m in ts a n d a n in c r e a s e ta ry th e w ith o f $ 3 ,5 0 0 ,0 0 0 a t th e fro m $ 5 0 0 ,0 0 0 on g o ld $ 8 2 ,3 0 0 ,0 0 0 $ 6 ,5 0 0 ,0 0 0 C a n a d a , $ 1 ,4 0 0 ,0 0 0 ra te. o f th is c o u n t r y of fo r N ew fo r e ig n $ 1 3 0 ,0 0 0 ,0 0 0 o f th is c o u n t r y d u r in g a ccou n t Y o r k , r e s u lte d in in th e m o n e S ep tem b er. 77 FEDERAL RESERVE AGENT AT NEW YORK A d d itio n a l im p o r ts to ta lin g u n d e r e a rm a rk fo r fo r e ig n $ 3 2 ,4 0 0 ,0 0 0 w ere p la c e d a c c o u n t o n a r r iv a l, a n d c o n s e a ls o to have been q u e n t ly t h e ir r e c e ip t in th is c o u n t r y d id n o t in c r e a s e th e t ic c o r p o r a t io n g o ld in g sto ck . som ew hat is s u e s t o t a le d $ 7 3 ,0 0 0 ,0 0 0 of p u b lic in d u s tr ia l s e c u r itie s , a n d C e n tra l B a n k R a te S ta te , C h a n g es m u n ic ip a l, $ 2 0 0 ,0 0 0 ,0 0 0 . E ffe c t iv e S ep tem b er 9 th e d is c o u n t N a tio n a l B a n k w a s lo w e r e d fr o m e a r lie r r a te h a d been in fo rce ra te 2 % of th e S w is s to 2 p e r ce n t. s in c e M ay 3, 1 9 3 5 . The A s of le s s th a n in S ep tem b er la s t y e a r , a c c o r d in g to p r e lim in a r y w e e k ly d a ta . and The a b o u t $ 1 7 0 ,0 0 0 ,0 0 0 , i n c l u d u t ilit y bon ds, $ 2 8 ,0 0 0 ,0 0 0 fa r m to ta l of D om es lo a n of a ll $ 6 7 ,0 0 0 ,0 0 0 of r a ilr o a d fin a n c in g iss u e s , of bon ds. a gg rega ted in c lu d in g som e s m a ll fin a n c e c o m p a n y iss u e s , w a s in th e n e ig h b o r h o o d o f $ 3 8 0 ,0 0 0 ,0 0 0 . The la r g e r is s u e s of th e m on th are lis te d b e lo w . th e 2 5 t h th e B a n k o f F r a n c e r a is e d its d is c o u n t r a t e a n d its r a t e fo r s e c u r itie s 30 day fr o m a d van ces 3 to 5 per on sh ort term ce n t, and th e G overn m en t ra te fo r th ree m o n th s ’ a d v a n c e s o n o th e r s e c u r itie s w a s in c r e a s e d s im u l t a n e o u s ly fr o m in f o r c e 4 to 6 p e r ce n t. s in c e J u l y S e c u r ity M a rk e ts M o v e m e n ts S ep tem b er. m on th of s to ck p r ic e s w ere ra th er ir r e g u la r recovered and a lth o u g h fu r th e r a fr o m th e r e p r e s e n ta tiv e The of a ll a s id e of B e th le h e m fr o m s u b s id ia r y it p oses in c lu d in g m a te r ia lly above th e le v e ls tou ch ed in th e la tt e r p a r t o f J u ly a n d a g a in in th e fir s t p a r t o f A u g u s t . of R a ilr o a d a n d in d u s tr ia l s to c k s w e r e th e s tr o n g e s t g r o u p s , la r g e s t b lo c k w h ile th e p u b lic u t ilit ie s r e m a in e d b e lo w th a t A u g u s t h ig h s . S ep tem b er In th e p e r io d 16, a d ow n w a rd b e tw e e n ten d en cy arou n d u pw ard th e m id d le m ovem ent of of A u g u st. p r ic e s w as and 8 and d e v e lo p e d , th e te n t o f th e d e c lin e b e in g a b o u t th e sa m e s io n th e ir J u ly S ep tem b er ex as in th e r e c e s S u b s e q u e n tly , resu m ed, and th e average th e th e 30 1-10 9 mos. 30 34 30 3 83 0 2 5 -1 .5 0 1.00 3 35 3.53 3.24 th e N ew a cost to record . cou p on is s u e th e The be of fo r p u r fe a tu r e it per P a c ific w as th e V2 p e r per cen t— w as R a ilr o a d o p e r a t io n o n ly 4 The th a t S t a t e — 1 .3 6 bear used S ta t e a t o n e t im e a n d r e fu n d in g (w h ic h becau se, s e c u r itie s corp ora te w as U n io n d iffe r e n tia l bonds t h e n e w is s u e of w ill oth er o f b o n d s s o ld b y th e in te r e s t c a lle d in te r e s t p roceed s and Y ork w a s th e fir s t la r g e w ith th e of r e t ir e m e n t a d d it io n a l w o r k in g c a p ita l. of lo w e s t o f t io n w as th e im p r o v e m e n ts , S ta te th e is s u e fo r c o m p a n ie s , a c q u is itio n s , not S te e l $ 1 4 ,7 0 0 ,0 0 0 g r o u p s o f s to c k s e s ta b lis h e d a n e w h ig h s in c e A p r i l 1 9 3 1 , w as Yield to M a tu rity (per cent) in m id -A u g u s t a verage Term of Years $55,000 000 55.000.000 45,000,000 28,000,000 20,000,000 20,000,000 Bethlehem Steel Corporation........... State of New Y o r k ................... Commonwealth of Pennsylvania. . . Louisville Gas & Electric Company, Union Pacific Railroad C om pany... D etroit Edison Company.................. D u r in g a p p r o x im a t e ly th e fir s t w e e k o f th e p r ic e s d e c lin e , T h e lo w e r ra te s h a d b e e n 10. " Amount Issue cen t cen t flo ta u n d e rta k e n b e tw e e n in te r e s t) ( o n w h ic h t h e c o u p o n r a t e is 3 ^ and p e r ce n t). p r ic e s o f in d u s t r ia l a n d r a ilr o a d sh a re s e q u a le d th e h ig h T h e a d v a n t a g e o f t h e o p e r a t i o n is s o m e w h a t g r e a t e r r e l a le v e ls t iv e rea ch ed e a r ly in S ep tem b er, but th e u t ilit ie s re to m a in e d s o m e w h a t lo w e r a n d w e r e a b o u t 6 p e r ce n t b e lo w ca ted th e y e a r ’s h ig h th e w h ic h w as reach ed in J u ly . In th e la s t oth er by c a lle d r e fu n d in g The be red eem ed E xch an ge of sto ck t r a d in g c o n tin u e d to on be th e ra th er N ew Y ork lig h t S to ck th ro u g h o u t S e p tem b er. The c o r p o r a tio n bonds g e n e r a lly ad va n ced d u r is o p e r a t io n s cou pon th e at ra tes, is in d i h ow ever, th a n s in c e p a r, w h ereas s e c u r itie s to be in m any r e p la c e d m ust a t p r ic e s w e ll a b o v e p a r . new is s u e s d u r in g r e c e iv e d a d van ced in r e d e e m a b le o p e r a t io n s fa v o r a b ly D o m e s tic r e fu n d in g d iffe r e n c e is s u e w e e k o f th e m o n t h ,-ir r e g u la r p r ic e m o v e m e n t s p r e v a ile d . v o lu m e recen t th e in S ep tem b er th e som ew h at above g e n e r a lly m a rk et, o r h e ld and at th e w ere q u o ta tio n s o ffe r in g le v e ls . in g S e p te m b e r, fo llo w in g th e ir r e g u la r m o v e m e n ts d u r in g A u g u st. T h e r is e in c lu d e d a ll c la s s e s a n d g r a d e s o f b o n d s b u t w as m ost p ron ou n ced r a ilr o a d bon ds, le v e ls 1936 of c r e a s in g in g s . w h ic h rea ch ed tr a ffic and in th e rose in ca se above of D e s p ite th e m o re r a p id p u b lic c o n tin u e u t ilit y to bon ds, in p r e v io u s s e ll a t l o w e r p r i c e s h ig h to ra ilr o a d in earn a d v a n c e in m e d iu m grade g r a d e s o f in d u s tr ia l h ow ever, th e th a n C o m m o d ity P r ic e s grade respon se im p r o v e d r a ilr o a d b o n d s th a n th e c o m p a r a b le and m e d iu m th e ir F ebru ary, rep orts of r a ilr o a d bonds e ith e r o f th e oth er F o llo w in g A u gu st in d e x of B u reau to and w h o le s a le of L abor e q u a l th e le v e l a m o d e r a t e r e c e s s io n in th e la t t e r p a r t o f fir s t p a r t s ix of S e p te m b e r, th e c o m m o d it y S ta tis tic s year p r e v io u s ly of on m e n ts r e s u lte d la r g e ly fr o m r a ilr o a d bonds fo o d p ro d u cts g ro u p s. a re n o w s e llin g a t p r ic e s t o y ie ld com p ared and 4 .1 0 w ith 4 .6 5 p e r cen t fo r B aa per by M o o d y ’s I n v e s t o r s cen t S e r v ic e a b o u t 5 .1 5 p e r c e n t , a s fo r p u b lic u t ilit y bonds in d u s t r ia l b o n d s o f s im ila r g r a d e . 8 1 .5 c o m p r e h e n s iv e c o m p ile d in per A u gu st th e w eek ended S ep tem b er 1930, A u g u s t h ig h . cen t o f 22, th e and S ep tem b er e x c e e d in g th e 1926 d e c lin e d T hese m ove flu c t u a t io n s in th e f a r m F arm E x c lu s iv e by m id -S e p t e m b e r m o d e r a t e ly t o w a r d s th e c lo s e o f th e m o n t h . c la s s e s o f b o n d s ; e x p r e s s e d o n t h e b a s is o f a v e r a g e y ie ld s , ra ted a d va n ced h ig h rea ch ed p r ic e s and p r ic e s as a g r o u p r e a c h e d in 19 a by o f th e new a h ig h s lig h t fa r m and le v e l s in c e m a r g in fo o d th e p ro d u cts g r o u p s , litt le n e t c h a n g e in b a s ic c o m m o d it y p r ic e s fr o m N e w F in a n c in g The v o lu m e e r a t e ly A u g u st, o f new d u r in g but th e p r e v io u s m o n t h ’s q u o t a t io n s w a s r e g is t e r e d . s e c u r ity S ep tem b er n e v e r th e le s s over o ffe r in g s th e r e m a in e d n u m b e r o f m o n th s e a r lie r th is y e a r . in c r e a s e d v o lu m e s m a lle r put m od out th a n in in a T h e am ou n t appears A m ong m ost th e in d iv id u a l s u b s t a n t ia l in c r e a s e R is in g s te a d ily f r o m tio n of th e N um ber a g r ic u ltu r a l w as in c o m m o d it ie s , th e p r ic e of th e w h ea t. e a r ly in S e p t e m b e r , th e c a s h q u o t a 1 N orth ern grade at M in n e a p o lis 78 MONTHLY REVIEW, OCTOBER 1, 1936 ad van ced 12 b e lo w seven th e ce n ts to $ 1 .4 8 % year and s u b s e q u e n tly The ca sh h ig h lo s t q u o ta tio n o n ly fo r a b u s h e l, e s ta b lis h e d a s m a ll corn or o n ly e a r ly p art a d van ced in of 1 cen t PASSEN G ER CARS M OTOR T R U C K S A u g u st, th is d u r in g g a in . th e fir s t h a lf o f th e m o n th , b u t r e c e d e d s u b s e q u e n tly , a n d s h o w e d little net g a in fo r cen t a p ou n d th e a ls o p a r t th e r e d u c tio n m ent rep ort fo r m on th . occu rred in A in th e c r o p S ep tem b er net spot g a in in d ic a te d 1. of S te e r b y th e p r ic e s show ed on th e but ten d average at to m o v e p o in ts to th is a d e c lin e season of 3 .4 0 o f 90 th e s o m e w h a t lo w e r . in G overn H o g p r ic e s ce n ts a h u n d r e d year R aw ce n ts a p o u n d , th e % d is p la y e d a r is in g t r e n d a n d h id e s a ls o r o s e s o m e w h a t . w e ig h t, n e a r ly c o tto n , r e fle c tin g th ey su gar g e n e r a lly d ecreased lo w e s t q u o t a t io n 30 s in c e F ebru ary. The p r in c ip a l ch a n g e in m e ta l p r ic e s d u r in g S ep tem b e r w a s a r is e in s c r a p s t e e l ; a t P it t s b u r g h th e q u o t a t io n a d va n ced $2 fu r th e r to $ 1 8 .2 5 a ls o p r ic e s w e r e m o d e r a t e ly m on th h ig h o f 4 6 % th e se ton , h ig h e r . ce n ts a p o u n d c lo s e d th e m o n t h s lig h t ly b e lo w w ith a e x c e p tio n s , s h o w e d and T in on Production of Passenger Cars and Motor Trucks During the First Eight Months of 1928-1936 (Data for First Eight Months of 1929 = 100 per cent) C h ic a g o rea ch ed a fo u r S ep tem b er 18 a n d th is fig u r e . little at M e ta l p r ic e s , ch an ge. ea ch year 1929 p e r io d . s in c e 1928, F rom in p e rce n ta g e s 1929 to 1932 of ou tp u t p assen ger car in th e p rod u c t io n d e c lin e d 7 5 p e r c e n t , b u t s in c e t h a t t im e 8 p o in t s o f d e c lin e w e r e recovered 1 9 3 5 , a n d 8 in P r o d u c tio n in 1 9 3 3 , 17 p o in ts in 1 93 6 , so th a t p r o d u c tio n 1 9 3 4 , 1 4 in in th e fir s t e ig h t m o n th s o f th e p r e s e n t y e a r w a s w ith in 28 p e r c e n t o f th e The le v e l of in d u s tr ia l p r o d u c tio n th a t p r e v a ile d in 1 9 2 9 p e a k , a n d w a s a lm o s t e q u a l t o th e 1 9 2 8 fig u r e , w h ic h A u g u s t a p p e a r s to h a v e b e e n m a in ta in e d d u r in g S e p te m w a s n e x t t o t h e h ig h e s t in t h e i n d u s t r y 's h is t o r y . b er. to flu c tu a te w it h in p r o d u c tio n d e c lin e d th e n a r r o w ra n g e a r o u n d th e 7 0 p e r c e n t o f c a p a c ity le v e l p r o d u c tio n fr o m th a t s u b s e q u e n tly S te e l m ill o p e r a t io n s has p r e v a ile d a n tic ip a tio n a u to m o b ile over th e s in c e o f p r ic e c o n tin u e d A p r il, r is e s a n d m a n u fa ctu re r s m on th as a a lth o u g h r e s u lte d w h o le , pu rch ases r e s u m p tio n in and a r is in g d u r in g in o f b u y in g b y te n d e n cy th e la s t w eek 71 p o in t recovered yea r. a ffe c te d ity . of It w as rep orted op era te pow er at a th a t h ig h p r o d u c tio n cotton le v e l in c r e a s e d w ere p r o d u c tio n sto p p e d The tio n of th e S y ste m c o n tin u e d and B oard 1933, 29 som e in d u s tr y in as of in d e x G overn ors of of 1934, by year to a v e ra g e , as p r o d u c tio n d e c lin e s in a ll in ca ses. h ig h e s t oth er S te e l le v e l fo r lin e s , ou tp u t any in G a in s in th e season al a s s e m b ly lin e s 7 w ith show ed w ere o ffs e t a llo w e d per one cen t fo r to th e e x c e p tio n , and c o t t o n t e x t ile p r o d u c t io n , in r is in g 4 p e r c e n t, e s ta b lis h e d a s im ila r in ra yon record . m ills , fu r n a ce s , p eak s. E xpanded m eat and a c t iv ity p a c k in g sh oe D e c lin e s , p r o d u c tio n on th e w as p la n ts , a ls o flo u r hand, e v id e n t m ills , exceeded oth er z in c . a retu rn ed W ith and a ll p r e v i occu rred in The and tool th e c e s s a tio n is t i m e l y a u to m o b ile cars and to of in ou tp u t a s s e m b ly r e v ie w in d u s t r y a c c o m p a n y in g senger a ls o of o rd ers, fo llo w in g th e c o a l, le a d , spu rt and in J u ly , on 1936 to th e le v e l o f J u n e . m o d e ls , it th e c lo s e , M a c h in e d ia g r a m tru ck s th e d u r in g o p e r a t io n s ex ten t th e sh ow s d u r in g th e of p ast in and yea rs seasonal w ere 12 th is m ay be a c t iv ity year. 1935 recovery fo u r p r o d u c tio n 1936 Aug. June July Aug. 53 69 50 67 75 91 59 86 77 95 59 87 81 101 49 81 Automobiles Passenger carsr.............................................. M otor trucks................................................. 81r 98 92r 101 106r 108 98 v 106p Fuels Bituminous coal............................................ Anthracite coal.............................................. Petroleum, crude.......................................... Petroleum products...................................... Electric powerr.............................................. 63 43 68 68 86r 79 77 70 69 91r 86 71 68 71 92r 82 p 57 p 70 p Metals Textiles and Leather Products Cotton consum ption.................................... W ool consumption........................................ Silk mill a ctiv ity ........................................... R ayon deliveries*.......................................... a u t o m o b ile a s s e m b lie s as p r o d u c t io n o f 1 9 3 6 m o d e ls d r e w tow a rd s 1935, O f th e p o in ts lin e s p rod u c a g g reg a te fa c to r s in c r e a s e d A u gu st in peak. (Adjusted for seasonal variations and usual year to year growth) F ed era l R eserve som e has 11 v a r io u s ch an ges car cen t— a n d 1929 1932, 18 th e per T ru ck p assen ger b itu m in o u s in d u s tr ia l th e th a n th e to b e tw e e n e x ten t fr o m to 1929 w a s u n c h a n g e d in A u g u s t a t 1 0 7 p e r c e n t o f th e by ous p r a c t ic a lly fr o m le s s 1932— 71 O n th e o th e r h a n d , a u to fu r th e r a d ju s t e d u s u a l s e a s o n a l r is e . b la s t th e e le c tr ic to to m od el ch an geovers. s e a s o n a lly 1 9 2 3 -2 5 th e fo r d e c lin e d m ills S ep tem b er; s lig h t ly ; c o a l o u t p u t ro s e s u b s t a n t ia lly . m o b ile t e x t ile d u r in g r is e n C o m p a r is o n s o p e r a t io n s w e r e e s tim a te d a t a b o u t 75 p e r c e n t o f c a p a c to 1929 d e c lin e in som ew hat pas fir s t e ig h t m o n th s of 72 134 70 116 99 93 103 56 98 98 105 113 61 119 113 77 68 71 82 84 89 78 83 89 98 57 93 96 102 36 59 68 118r 55 83 74 118r 58 94 71 153r 61 106 118p 67 134 112p *89 Miscellaneous in years. of Foods and Tobacco Products Meat packing................................................. W heat flour.................................................... Refined sugar deliveries.............................. T obacco products.......................................... 94p Newsprint p a p er........................................... Machine toolsr............................................... p Preliminary r Revised * For quarter ended 72p 120r FEDERAL RESERVE AGENT AT NEW YORK 79 Indexes o f Business A c tiv ity D u r in g th e fir s t th r e e w e e k s o f o f m e r c h a n d is e roa d s show ed p o r tio n s an and a d ju s t m e n t upw ard and ad van ce rea ch ed s in c e S e p te m b e r , s h ip m e n ts m is c e lla n e o u s th e th e m ovem en t, of fr e ig h t m ore th a n h ig h e s t sum m er w h ic h le v e l of has over th e in r a il p ro a fte r season al The p resen t 1931. been th e u sual p rogress s in c e F e b r u a r y , h as b e en a b o u t 10 p e r ce n t m o re th a n th e u s u a l s e a s o n a l in cr e a s e . m is c e lla n e o u s The car p r e s e n t le v e l o f m e r c h a n d is e a n d lo a d in g s , w h ile o n ly a b o u t tw o -th ir d s t h a t o f 1 9 2 9 is 4 0 p e r c e n t a b o v e t h e M a r c h 1 9 3 3 l o w p o i n t . A n in c r e a s e a ls o show n r a ilr o a d s fo r th e a to fa ll tard ed m ore th e d u r in g fo llo w in g rep orted of in th e d e c lin e have fir s t in been m e r c h a n d is e , r e t a il tr a d e cou n try th a n seasonal p r o p o r tio n s of fr e ig h t m ovem ent b u lk th ree w eeks A u g u st. by c o n tin u e d covered by th e w e e k ly tra d e in c r e a s e d w a rm s o m e w h a t, a lth o u g h th e S ep tem b er, W h o le s a le a c c e le r a te d but of w as over w as dem and w ea th er re m o s t s e c t io n s su rvey of th e 1929 of 1930 1931 1932 1933 1934 1935 1936 Average Daily Value of Residential Building Contracts in 37 States, Adjusted for Seasonal Variation (Based on F. W . Dodge Corporation figures; preliminary data for first three weeks of September) D e p a r t m e n t o f C o m m e r c e c o n t in u e d t o r e p o r t a t le a s t s m a ll a d v a n c e s in yea r. th e s a le s o v e r t h e c o r r e s p o n d in g R e p o r t s t o th is b a n k N ew Y ork S ep tem b er on M e tr o p o lita n show ed s a le s p e r io d s d e p a rtm e n t sto re a rea s lig h tly in th e fir s t s m a lle r th a n o f la s t s a le s in h a lf a of year ago, h ow ever. I n d e x e s o f b u s in e s s a c t iv it y f o r A u g u s t a p p e a r b e lo w . (Adjusted for seasonal variations, for usual year to year growth, and where necessary for price changes) 1935 a p a rtm e n t in c r e a s e o ffs e t h ou se in by and oth er co n tra cts a s m a ll fo r h o u s in g heavy decrease in o f n o n r e s id e n t ia l b u ild in g . 1935, a ll tered s iz a b le show n 2 % of in th e m a jo r p r o je c t s . co n tra cts In fo r of w ith w h ic h w as A u gu st b e in g a p p r o x im a te ly t im e s la r g e r , a n d t h e t o t a l o f a ll c o n t r a c t s w a s m o r e F o r th e 37 S ta te s c o v e r e d b y th e F . W . D o d g e June r e g is g a in th a n d o u b le th e v o lu m e o f a y e a r a g o . 1936 Aug. w as ty p es b u ild in g m o st o u ts ta n d in g r e s id e n t ia l b u ild in g s lig h t w ork oth er c o m p a r is o n c la s s ific a t io n s a d v a n ce s, th e A e n g in e e r in g July Aug. r a t io n c o m p le te rep ort, to ta l co n tra cts in C orpo A u gu st a p p r o x im a t e ly 7 p e r c e n t lo w e r th a n in J u ly . w ere C on tra cts Primary Distribution Car loadings, merchandise and m isc.r. . . Car loadings, otherr..................................... E xp orts........................................................... Im ports........................................................... 62r 61r 48 66 71r 76 r 53 80 72 r 80r 51 81 72 r 77 r 51 p 74 p Distribution to Consumer Department store sales, U. S .r ................. Department store sales, 2nd D is t............ Chain grocery salesr.................................... Other chain store salesr.............................. Mail order house salesr............................... Advertising..................................................... New passenger car registrationsr.............. Gasoline consum ption.................................. 82r 70 68r 89r 77 r 60 79r 85 87 r 74 71 r 99r 98r 65 lOlr 87 88r 73 73r 95r 91r 65 97 p 92 90 r 72 72r 96r 92r 65 90p 63 45 67 43 65 41 65p 39 m en ts. T h e fig u r e f o r A u g u s t 1 9 3 6 , d u e to th e in c lu s io n of F ed eral 67 73 71 70 rea ch ed 45 55 83 36 59 44 54 88 43 57 40 54 89 55 61 40 52 90p 57 56 a lth o u g h 146 187 141 152 191 142 154 193r 143 155p 194p 142p General Business Activity Bank debits, outside New York C it y ... . Bank debits, New York C ity..................... V elocity of demand deposits, outside New York C it y ................................................... Velocity of demand deposits, New York C it y .............................................................. New life insurance sales.............................. Factory employment, United States........ Building contracts........................................ New corporations formed in N. Y . S tate. . General price level*...................................... Composite index of w ages*........................ Cost of livin g *............................................... p Preliminary r Revised A * 1913 ave ra ge* 100. N ot adjusted for trend. in w as w ere th e a d va n ce N ew in d ic a te d in Y ork by an b u ild in g and a c t iv ity N orth ern in c r e a s e of 16 d u r in g N ew per to th e in c lu s io n The e x tr e m e ly 1934 lo w each m on th , th e th e F . fo r W . by w h ic h D odge a The C o r p o r a tio n d a ta , g a in in c lu d e d of 60 per several cen t P u b lic in c r e a s e , w as in la r g e ly r e s id e n t ia l W ork s r e s id e n t ia l con S ep tem b er th e th e p e r io d fr o m a c c o m p a n y in g d a ily v o lu m e a d ju s t e d fo r h o u s in g of th e u sual s in c e fig u r e s som e fr o m 1932 d ia g r a m , w h ic h season al r e fe r r e d th e fir s t r e c e s s io n , th e m ove to D ecem ber fo r th e th rou gh r e s id e n t ia l c o n tr a c ts p r o je c t s p o in t in d ic a te p r o je c ts . b u ild in g above, 1929, th ree and w eeks a verage le v e l o f r e c e n t m o n t h s h a s b e e n s u c h as to in d ic a t e s u b s t a n t ia l r e c o v e r y in r e s id e n t ia l b u ild in g . T h e d a ta f o r th e fir s t th r e e w e e k s o f S e p t e m b e r s h o w e d a d e c lin e in w orks and d en cy and n o n r e s id e n tia l u t ilit ie s , an th e b u ild in g co n tra ry in c r e a s e in to th e heavy oth er usual th a n p u b lic season al ten e n g in e e r in g w ork of u s u a l se a so n a l p r o p o r tio n s . E m p lo y m e n t a n d P a y r o lls J ersey cen t sh ow n by p r e lim in a r y over N ew Y ork S ta te f a c t o r y e m p lo y m e n t a d v a n c e d a b o u t 1 fr o m years. of h ig h e s t to ta l fiv e but r e s id e n t ia l le v e l a verage p e r ce n t, a fte r n e a r ly o th e r ty p e s o f n o n r e s id e n tia l s m a lle r , F e d e r a l h o u s in g in is i n d i c a t e d sh ow s th e of of recovery J u l y in b u ild in g a n d e n g in e e r in g c o n t r a c t s t o th e la r g e s t in and c o n s id e r a b ly tr a c ts s h o w e d a g a in o f n e a r ly 4 0 p e r c e n t o w in g la r g e ly le s s t h a n c o n tin u e d a rea w ork in B u ild in g A u gu st f o r h e a v y e n g in e e r in g by th e a ccou n ted co n tra cts A d m in is tr a tio n th e a llo w a n c e m id d le of J u ly fo r to th e th e u su a l season al ch an ge, m id d le of A u g u st, and p a y r o l l s i n c r e a s e d n e a r l y 2 p e r c e n t m o r e t h a n is u s u a l a t th is tim e fa c to r y of th e yea r. e m p lo y m e n t T h is reach ed b a n k 's th e a d ju s t e d h ig h e s t in d e x le v e l of s in c e MONTHLY REVIEW, OCTOBER 1, 1936 80 S ep tem b er th e 1930 h ig h e s t and p o in t th e a d ju s t e d s in c e M ay m ent w as rep orted in fic a tio n s e x c e p tio n m ost w ith th e p ron ou n ced p a y r o ll in d e x 1931. a ll o f th e m a j o r g a in in of rose In creased th e to e m p lo y in d u s t r ia l c la s s i fo o d e m p lo y m e n t grou p. occu rred The in th e Y ork to Im p rovem en t d ep a rtm en t g a in s in over a p p a r e l sto re s in th is th a n sto re s tw o show ed years. d is tr ic t la s t y e a r , b u t t h a t w a s O cto b e r w ere th e th e S a le s 7 .3 la r g e s t of th e per s m a lle s t year le a d in g cen t h ig h e r in c r e a s e s in c e 1935. D e p a r t m e n t s to r e s to c k s o f m e r c h a n d is e o n h a n d w e r e c lo t h in g in d u s t r y , w h e re th e n u m b e r o f w o r k e r s in c r e a s e d at m o re th a n th e c u s to m a r y se a so n a l ra te . S ta te year 9 .8 per c e n t h ig h e r th a n la s t y e a r , th e m o s t s u b s t a n t ia l in p r i v a t e e m p lo y m e n t in t h is S t a t e is f u r t h e r e v i d e n c e d in c r e a s e to b e s h o w n in o v e r t w o y e a r s . in c o lle c t io n s in A u g u s t w e r e a t th e s a m e r a t e a s la s t y e a r , a c o m b in e d m ent report S e r v ic e w h ic h and in d ic a te s of th e th e N ew N a tio n a l th a t th e tw o Y ork S ta te s e r v ic e s p la c e d m a te ly 38 p e r ce n t m o r e w o r k e r s in p r iv a t e d u r in g A u g u s t th a n in th e sa m e m o n th F or th e e n tir e in d u s t r ie s Labor cov ered in c r e a s e d p e r io d fr o m r a is in g s in c e J u ly fa c tu r in g by fo r J u ly m ent ad van ced t io n s , cou n try 15 by to The covered by in m on th F a ctory in to th e of in th e e m p lo y m e n t D ep a rtm en t 71 of th e p o in t in m anu of th e L abor 90 rep ort T r a d e of th is cou n try p r e v io u s m on th , w as s u b s t a n t ia lly e x p o rts a n d im p o r t s t o $ 1 9 5 ,0 0 0 ,0 0 0 . of 4 per cen t over a year th e a m o u n tin g to sam e as in w h ile 1935 1936 + 1 1 .0 + 14.7 — 1.4 + 0 .8 + 8 .6 + 1 2 .1 — 4 .0 42.7 45.6 42.1 33.4 34.8 39.3 29.6 41.1 46.4 46.6 35.3 36.4 40.8 30.4 All department stores........ + 2. + 9.8 39.9 39.9 Apparel stores....................... + 7 .3 + 7 .6 34.9 34.6 w h o le s a le fir m s Net New Y o r k ...................................... Buffalo............................................ Rochester....................................... Syracuse......................................... Northern New Jersey................. Bridgeport...................................... Elsewhere...................................... Northern New York S ta te .. . Southern New York State. . . Central New York State........ Hudson River Valley District Capital D istrict........................ Westchester and Stamford. . . Niagara Falls............................ $ 1 7 8 ,0 0 0 ,0 0 0 im p o r ts g a in e d Per cent of accounts outstanding July 31 collected in August + 0 .2 + 14.1 + 1 3 .4 + 2 .4 + 6 .1 + 1 0 .1 + 4 .8 + 9 .4 — 2 .1 + 5 .9 + 6 .6 + 7 .9 + 0 .3 + 1 3 .3 Locality E x p o r t s s h o w e d a n in c r e a s e ago lo w e r . Stock on hand end of month e m p lo y h ig h e s t d is tr ib u te d , s lig h t ly Per cent change August 1936 compared with August 1935 th e D ep a rtm en t D u r in g A u g u s t th e a m o u n t o f th e fo r e ig n m e r c h a n d is e tra d e c o lle c t io n s w e r e e m p lo y m e n t in g m o re w o r k e r s in A u g u s t th a n in J u ly . F o r e ig n a p p a r e l sto re th e u s u a l sea so n a l p r o p o r in d e x w e ll th e th e 15. w h ile a p p r o x i la s t y e a r . c o n s e c u tiv e in c r e a s e w as S e r v ic e e m p lo y m e n t to A u gu st a d ju s t e d in d u s tr ie s in d u s tr ie s s ix th m o re th a n th e 1930. p r iv a te rep orts th e E m p lo y R e -e m p lo y m e n t D e p a r tm e n t s to re 15 p e r c e n t ; b o th e x p o r ts a n d im p o r ts w e r e la r g e r in v a lu e th a n in th e 1930. w as The th e c o r r e s p o n d in g $ 1 7 ,0 0 0 ,0 0 0 s ix th com p ares im p o r t w ith an 1935. The m on th s of year an export p e r io d excess b a la n c e of to occu r im p o r ts to any year im p o r ts b a la n c e a m ou n ts of of of b a la n c e export A u gu st th is m on th excess fo r th is yea r, in A u gu st fir s t e ig h t s m a lle r in c r e a s e as in d iv id u a l fo r th e a g a in s t c o r r e s p o n d in g A u gu st to F or th e p o r tin g N ew Y ork s p o n d in g w ere N ew a year cu rred In in cen t lo w e r ago, and in s a le s J ersey w h ic h even day of th ose rep orted th e 2 .6 is Y ork of m ore th e Y ork fo r d s a le s fa v o r a b le B u ffa lo , S ta te , N ia g a r a sto re s s h o w e d of th e R o ch e ste r, usual have th a n ago in in r e p o r tin g per th a n in J u ly . rep orted th e several s u b s t a n t ia l. c e n t h ig h e r ty p es D ru g A lt h o u g h s m a lle r p r e v io u s of th a n th e w h o le s a le fir m s show ed of in s a le s g a in s tra d e a th is m ost in c r e a s e s m on th , in la s t y e a r , a th e in over a c o n tin u e d s lig h t ly la r g e r and w h ic h in and d e c lin e S a le s th e c o n s id e r a b ly of s ilk N a tio n a l lo w e r th a n goods, la s t fo r one la s t N ew m u ch d a ily le s s s a le s a vera ge in s a le s C en tra l N ew s in c e and S ta m M ay, and N orth ern Comm odity le s s N orth ern W estch ester year, of on a T e x tile s , fo llo w in g Percentage change August 1936 compared with August 1935 d e p a rtm en t w ere rep orted F e d e r a tio n fo u r m o n t h s in w h ic h in c r e a s e s o c c u r r e d . oc s in c e D a ily and by th e F e d e r a l R e s e r v e D is tr ic t B r id g e p o r t, w ere d e c lin e . b a s is s a le s in c r e a s e average la r g e s t in c r e a s e s s m a lle r yard age s to re s. r e p o r tin g C it y a occu rred s to r e s in in c r e a s e C a p it a l D is tr ic t, F a lls , th e corre th e o ffs e ttin g c o m p a r is o n s . S yracu se, of th e s m a lle s t but m o st o th e r p a rts o f th e S e c o n d m ade re in a llo w a n c e th e J u ly , an th e a rea p e r c e n t h ig h e r th a n in c r e a s e s in of th a n to B r o o k ly n m a k in g year show ed had th a n and S a le s o f N e w store s appears a m ore a fte r th is th a n le s s T h e r e p o r tin g D is tr ic t s a le s s a le s M e tr o p o lita n per S e p tem b er. to ta l to ta l th e year ago, but D ecem ber. th a n a in th is d is t r ic t w e r e s h o p p in g Jersey 1 .1 be lin e s th e 1 0 .6 i n c r e a s e in s a le s t h a n in J u l y , a n d s h o e c o n c e r n s r e c o r d e d S ep tem b er sto re s th e M a n h a tta n A u g u st, s to r e s in year, of e x p a n s io n A u g u s t to N orth ern over h a lf p e r io d seasonal fr o m fir s t T r a d e d e p a rtm en t of a veraged year S to re s a le s d is tr ic t o f la s t y e a r . D e p a rtm e n t T ra d e in $ 3 ,0 0 0 ,0 0 0 th e W h o le s a le and of $ 4 1 ,0 0 0 ,0 0 0 , $ 2 9 ,0 0 0 ,0 0 0 s in c e A u gu st N ew Groceries....................... M en’s clothing............. Cotton go o d s............... R ayon and silk g o o d s. Shoes.............................. Drugs............................. H ardware...................... Stationery..................... P aper............................. D iam onds..................... Jew elry.......................... Weighted average. Net sales Stock end of month + 9 .4 — 1 .8 + 1 4 .9 + 8 .2 — 14.4* — 3 .0 + 1 5 .2 + 2 2 .5 + 12.9 + 9 .6 + 4 .9 + 2 .5 — 2 .2 + 2 4 .4 + 2 4 .7 + 112.0 + 10 .i Per cent of accounts outstanding July 31 collected in August 1935 1936 9 4.6 55.1 43.9 6 2.4 33.9 25.3 46.3 55.9 43.9 22.6 90.3 46.4 42.9 6 4.4 3 8.3 27.8 44.6 58.8 58.8 } 2 2.3 59.2 57.3 Quantity figures reported by the National Federationof Textiles, Incorporated not included in weighted average for total wholesale trade. FEDERAL RESERVE BANK OF NEW YORK MONTHLY REVIEW, OCTOBER 1, 1936 B u s in e s s C o n d it io n s in t h e U n it e d S ta t e s (Summarized by the Board of Governors of the Federal Reserve System) I N DUSTRIAL activity increased seasonally in August, and there was a sub stantial increase in factory employment and payrolls. Commodity prices, which had advanced for three months, showed little change after the middle of August. P r o d u c t io n Index Number of Production of Manufactures and Minerals Combined, Adjusted for Seasonal Variation (1923-25 average = 100 per cent) Index Numbers of Factory Employment and Payrolls, Without Adjustment for Seasonal Variation (1923-25 average = 100 per cent) and E m ploym ent The Board’s index o f industrial production, which makes allowance for usual seasonal movements, remained unchanged in August at 107 per cent of the 1923-1925 average. Output o f steel increased by more than the seasonal amount and the higher level was maintained in the first three weeks o f Sep tember. Production of automobiles was sharply reduced as plants were closed for inventory taking and for mechanical changes in connection with the intro duction o f new models. Output o f nondurable manufactures increased further in August, reflecting chiefly continued expansion in activity at textile plants and shoe factories. At bituminous coal mines output increased less than is usual at this season and at anthracite mines production declined. Output of petroleum showed an increase. Factory employment rose further between the middle of July and the middle of August by an amount larger than is usual at this season. There were substantial increases in working forces at establishments producing textiles and wearing apparel and smaller increases in most other lines, partly offset in the total by a decline in employment in the automobile industry. Factory pay rolls increased. Value o f construction contracts, which had increased sharply in July, de clined somewhat in August, according to the figures of the F. W. Dodge Cor poration. The value of nonresidential projects was smaller than in July but larger than in other recent months. Residential building increased consider ably, reflecting a marked increase in contracts for apartments, several of which were publicly financed projects. Awards for single-family houses, which have accounted for most o f the increase in residential building during the past year and a half, showed little change in August. A g r ic u l t u r e Department o f Agriculture crop estimates based on September 1 conditions were about the same as the estimates made a month earlier, except for a sharp decline in prospects for cotton. Prospective output of leading crops, with the exception of cotton and winter wheat, is considerably smaller than last year, but, in comparison with the drought year 1934, it is larger, except for com and potatoes. D is t r ib u t io n Freight car loadings o f most classes of commodities showed about the usual seasonal increase from July to August. Shipments o f grain, however, declined sharply and the increase in total loadings was less than seasonal. Department store sales increased by less than the usual amount and the Board *s seasonally adjusted index was 86 per cent of the 1923-1925 average as com pared with 91 per cent in July and 87 per cent in June. C o m m o d it y P r ic e s Wholesale Price Index of United States Bureau of Labor Statistics (1926 average = 100 per cent) Wholesale commodity prices showed little change between the middle of August and the third week o f September, following three months o f advance. Prices o f steel scrap and chemicals and drugs continued to advance and there were also increases in the prices o f hides and nonferrous metals. There was a seasonal decline in hog prices. Cotton, which advanced in price early this month at the time o f the official crop report, declined after the middle o f the month. B a n k C r e d it (Latest figures are for September 16) Demand deposits of reporting member banks in leading cities increased somewhat further in the four weeks ended September 16, reflecting gold im ports, Treasury expenditures, and an increase in bank loans. Growth in loans was principally in so-called “ other” loans, which include loans to customers for agricultural, commercial, and industrial purposes. These loans are now at the highest level since early in 1933. Loans to security dealers showed an increase, as is usual, prior to flotation of the new issue of Treasury bonds on September 15. A part o f the new Treasury issue was purchased by reporting banks, principally by drawing upon their balances with the Reserve Banks. Largely as a consequence of payments to the Treasury excess reserves of member banks showed a decrease o f $280,000,000 in the week ended September 16. This decline followed an increase o f nearly $200,000,000 in the preceding three weeks, when the Treasury was reducing its deposits with the Reserve Banks. Since early in August there has been a renewed inflow o f gold and the country’s monetary gold stock has increased by about $100,000,000 in the past month.