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Of Credit and Business Conditions
In the Second Federal Reserve District

th e





R e se rv e


N ew


New York, October 30th, 1920.

C redit E lasticity
HE volume of bank loans in the country as a whole
reached its highest point on October 15, almost
precisely a year after the bank loans in this
Federal Reserve district reached their maximum.


A year ago this district was passing through a period
of unexampled expansion shown in high and rising prices,
in unrestrained personal spending, in very active stock
and commodity speculation, and in the issue and ab­
sorption of an immense volume of new corporate securities.
Each of these conditions has undergone material change,
and on October 15 the loans of the banks in New York City
reporting weekly to the Federal Reserve Board were
$130,000,000 less than at the corresponding date in 1919.

coincident with the usual seasonal expansion of bank
loans for the purposes indicated in the Board’s statement.
The ready elasticity of credit at a time when prices were
falling has been a most important factor in meeting the
difficulties inherent in such a period.


Since a year ago the loans of the reporting banks of the
country as a whole, which represent at least 40 per cent,
of total banking resources, increased $1,362,000,000.
Since January 1, 1918, when they stood at $11,200,000,000, the loans of these banks expanded almost without
interruption until January 1, 1920, when they stood at
$16,700,000,000. On August 6 they stood at $16,800,000,000,
an expansion of only $100,000,000 in seven months. But
since August 6 the usual fall expansion of credit has oc­
curred, carrying the loans on October 15 to $17,300,000,000. The elasticity of credit indicated in this increase of
$500,000,000 in the loans of the reporting banks alone, or
for all banks in the country of at least $1,000,000,000, was
referred to in a statement by the Federal Reserve Board
issued under date of October 16:

In view of the representations which have recently been made
to the Board as to the unavailability of credit in agricultural
sections, the Board requested information concerning credit con­
ditions throughout the country from the chairmen and governors
of Federal Reserve Banks at the usual autumn conference here
this week. The Board is advised that credit has been steadily
available for the successive seasonal requirements of agriculture
as well as for the needs of commerce and industry, and that
there is no ground for expecting that its availability for these
purposes will not continue. The present improved credit
situation is due in part to the timely steps taken last spring,
following conferences between the Board and governors and
directors of Federal Reserve Banks, to provide credit for crop
moving requirements and in part to the jubsequent improvement
in transportation reported from all districts, except in a few
The fall in commodity prices, which has been taking
place, was most pronounced in the last two months


/ 9/ 7




Showing the Close Conformity of the Volume of Notes to the Volume
of Rediscounts at the Federal Reserve Banks.
(See following page.)



R ela tio n o f N o te s to D e p o sit E x p a n sio n

The foregoing chart records, for the entire Federal
Reserve System, (1) the reserve deposits of member banks,
(2) the total of rediscounts and other investments of the
Federal Reserve Banks, and (3) the amount of Federal
Reserve notes outstanding. It shows a much more direct
relation between notes and rediscounts than between
reserve deposits and rediscounts. The obvious reason for
this is that while the member banks have within them­
selves the ability to expand their deposits, subject only to
the maintenance of a reserve with the Federal Reserve
Banks of from 7 to 13 per cent., they have within them­
selves no power of note expansion. Owing to the limi­
tations surrounding their issue the expansiveness of
national bank notes is negligible.
Consequently, while
member banks are obliged to rediscount with the Federal
Reserve Banks to create additional reserves, such redis­
counts would perhaps not aggregate more than 10 per cent,
of the additional credit they create in the form of deposits.
But to obtain additional notes they must rediscount 100
per cent, of the amount desired.
The relation of the expansion of bank deposits as a whole
to the expansion of Federal Reserve notes has been fairly
steady, although, of course, the amount of notes is far
smaller. That the notes of Federal Reserve Banks are
substantially larger than Federal Reserve Bank deposits
is not, therefore, a subject to be especially remarked upon.
The important comparison is between the deposits of
member and other banks on the one hand and the notes of
Federal Reserve Banks on the other. It is the notes of
Federal Reserve Banks which provide the hand-to-hand
currency required by the increase in the deposits of member
and other banks.

B ill

M arket

The bill market has broadened very materially during
the past thirty days. New York City banks bought
extensively at times, but demand here was erratic, due
to firmer conditions in the money market which also ham­
pered the dealers somewhat in carrying their portfolios.
Buying by outside banks was well sustained and in large

volume, and showed evidence of a widening market for
bills in diverse sections of the country. Substantial
demand was reported from savings banks, firms and cor­
porations, apparently buying for strictly investment
As a result of the larger movement of bills, the dealers
early in the period lowered their buying rates by Yq, but
their selling rates remained unchanged at 6 to 634 for
prime bills. Offerings of bills to the dealers were rather
heavy, with grain, cotton and packers’ products predom­
inating as underlying commodities. In October, the
dealers raised slightly their purchase rates on non-member
acceptances, which sold less readily than the member
names. The minimum purchase rates of the Federal
Reserve Bank ruled without change at 5% to 6 per cent,
for endorsed bills.
The Federal Reserve Bank of New York, which for
some time has made a practice of buying bills for the
account of its members upon their request, has largely
increased such purchases this year. In 1919 this bank
bought $8,200,000 of bills for the account of 38 member
banks. Thus far this year it has bought $31,500,000 for
the account of 188 member banks. In the interval a
number of banks, formerly buying through the Federal
Reserve Bank, have established the practice of purchasing
direct from the dealers.

Com m ercial Paper
Distribution of commercial paper has broadened slowly,
due entirely to active buying by country banks. The
market with New York City banks and in other large
commercial centers continues practically at a standstill.
Sales to rural banks, though in small individual pieces,
are sufficiently widespread to offset to a considerable
extent the absence of the larger buyers from the market.
Most dealers report the eastern states the most favorable
market, while demand from the South is unusually light.
Volume of paper available is still good, and many prime
names are included, but dealers say that quieter condi­
tions in many trades are now resulting in a declining
volume of offerings. Seasonal demand from the cotton
mill and grain trades, ordinarily large at this time, is
much below normal. Rates show a slightly easier tend-

B a n k D e p o sits and L o an s
(In Millions)

Oct. 15
Oct. 8
Oct. 1
Sept. 24
Sept. 17
Oct. 10
Oct. 17

71 Reporting Banks in New York City
U. S. Securities
Total Loans
Loans Thereon
(excluding U. S.
Bonds to secure


6,010 (high)

822 Reporting Banks in all Districts
U. S. Securities
Total Loans
Loans Thereon
(excluding U. S. Investments
Bonds to secure


Between October 17, 1919, and October 15, 1920, the reporting banks throughout the country increased from 778 to 822.




In October, firmer money conditions prevailed, caused
mainly by the unusually heavy transfers of funds pre­
paratory to redeeming the Anglo-French loan on October
15. Immediately prior to that day call loans were re­
newed at 9 per cent, and new loans were made as high as
10 per cent. On the day of redemption, however, after
renewing at 9 per cent., new loans declined to 6 per cent,
and after that time renewal rates were 7 per cent.
G old M o v e m e n t

Volume of Commercial Paper Outstanding from July, 1918.

ency, and rule principally at 8 per cent., compared with
8 to 8K in previous months. It is noteworthy that oc­
casional sales of prime names occur at 7% per cent., and
a small amount of paper has been offered at even a lower
rate, though it is reported that no new business was at­
With the consent of eleven large distributors of com­
mercial paper we are able, on the accompanying chart, to
show from reports made by them month by month to this
bank the aggregate amount of commercial paper out­
standing for their respective houses, exclusive of short
time notes and similar instruments. The amount shows
praetically a steady increase from $662,000,000 on October
31,1918, to a peak of $1,019,000,000, on January 31, 1920.
Within the past eight months, however, the total out­
standing has declined $216,000,000 to $803,000,000,
reported at the close of September.
S to ck M a r k e t M o n e y R a te s

Call money rates during the past thirty days moved
over much the same range as in the preceding period.
During the last half of September, the market was com­
paratively easy. Call money held stationary at 7 per cent,
until the final two days when the usual month-end re­
quirements caused a rise to 8 and 9 per cent. Time money
relaxed somewhat, and rates declined to a range of 7%
to 8}4> according to collateral and maturities. Offerings,
however, were not large, and the demand at those rates
was limited.

Gold movements in September resulted in a balance
of $22,100,000 favorable to this country, due in part to
shipments in connection with the Anglo-French loan
redemption. Imports amounted to $39,300,000, of which
$16,400,000 came from England, $15,000,000 from France
and $1,500,000 from Argentina. About half the impor­
tation from England was reported to have been bought
in the open market. Of the $17,200,000 of exports about
$9,000,000 went to Japan and $6,500,000 to China.
Arrival of gold at New York for the first nineteen days
of October totaled about $54,000,000, of which $47,500,000
was ear-marked gold which had been held for about a
year by the Bank of England for the Federal Reserve
Banks. While this will appear as an addition to the
country’s stock of money, it will not change in any way
the reserve position of the Federal Reserve Banks, because
this gold and $64,000,000 still to be received has already
been counted in their gold reserves.
No exports have been reported thus far in October.
Japan, to which latterly the majority of our exports has
gone, has announced that it will cease its withdrawals
for the present.
G o v e rn m e n t Securities

Liberty Bond prices which have been growing somewhat
firmer for several months, rapidly strengthened during
the period, and the 4 and 4 ^ per cent, issues advanced 2
to nearly 5j^ points. As a result of these and previous
gains, these bonds have recovered more than half to more
than three-quarters of the loss sustained in the long
decline between the first of the year aiid the low point of
May. The 33^s and Victory Notes also gained sub­
stantially, but not to the same degree. The sharp rise
in prices was checked temporarily at the close of September,
and a moderate reaction occurred, due apparently to
profit-taking sales. In October the list again strengthened,
and most issues reached their highest prices during the
third week of the period.
Trading in Liberty issues on the New York Stock Ex­
change during September totaled $164,000,000 compared
with average monthly sales during the first half of the
year of $262,000,000. This was a moderate expansion
over August, but a decrease during the month of about
11 per cent, in proportion to the total sales of all classes
of bonds.
On October 15 the Treasury offered a new issue of
certificates of indebtedness, running five months at 5%
per cent, interest, which was largely over-subscribed on
the date of issue. Total allotments amounted to $124,252,500; of this $40,566,500, or 32 per cent., was allotted
in this district, where the issue was particularly well
received and well distributed.



B ond M arket

The bond market continues to expand in activity and
breadth. Buoyancy in the railroad issues has lately been
followed by a sharp rise in public utility and traction
securities, and though industrial bonds have advanced
more slowly, the combined average of corporate bond
prices has reached the highest levels of the year. Semispeculative issues continued active, and there was also
a steady increase in the absorption of first grade securities.
Activity and strength were not confined to the underlying
issues running for long terms, but extended to a number
of the new high interest-bearing obligations sold at prices
ranging 2 to 5 points above the original sale price. An
advance of 5 to 7 points in New York City issues from the
low levels reached about the first of September, was
indicative of a marked strengthening of the municipa1
bond market.
A compilation of bond averages indicates that~since
the May low prices 10 high grade railroad bonds advanced
9 points, 10 second grade railroad bonds advanced 10
points, 10 industrials rose 3 points, and 10 public utility
issues rose 6 ^ points. Excepting the high priced rails,
the greater part of these advances occurred in the past
eight or nine weeks.
Foreign government bonds were generally firm, and
many tended upward. United Kingdom issues were
strong, apparently reflecting reinvestment by holders
of the maturing Anglo-French loan. French 8s were
active slightly below highest prices; the new Norway
8s sold slightly above the offering price; and Belgian issues
strengthened slightly. Cuban bonds were heavy, and
both the 4j^s and 5s reached new low prices for the year.
Mexican issues continued active around higher levels.
Japanese issues showed little change.
Total sales of corporate, state, and foreign government
bonds during September were $123,000,000, the largest
for one month since December and nearly three times
the total for September of last year.
N e w F in a n cin g

Following a month of dulness through September when
corporate financing totaled only $145,000,000, the lowest
in over a year and a half, a marked revival of activity
occurred in early October. A number of large issues,
aggregating over $175,000,000, principally industrial notes
and bonds, some of them of short maturities, sold quickly,
and it appeared that yields in some cases were slightly
below the recent high levels. More recently, investment
demand has been somewhat slower, with a preference for
longer term bonds. The total for the nine months of the
year stands at $2,354,000,000, a maximum so far as the
compilation extends, and exceeding that for the cor­
responding period in 1919 by $200,000,000.
Demand for municipal issues also developed greater
strength, and a larger number of fair-sized issues were sold.
Success of the French $100,000,000 loan early in September
encouraged further foreign financing here, and offerings in
most cases were quickly over-subscribed. These included
$20,000,000 twenty-year 8 per cent, bonds of the Kingdom
of Norway, and two small municipal issues. A Belgian
industrial issue was quickly taken and reflected in some
degree the attitude of investors here toward new foreign
financing other than Government issues.

Course of Market Prices for American and English War Bonds, and
representative Railway Bonds, from June, 1919.

Sto ck M a r k e t
The stock market during the first half of the period was
sharply divided between advancing railroad and declining
industrial stocks.
The former group rose, on an average,
to highest prices of the year, while the latter broke sharply
as the downward trend of commodity prices became more
clearly defined. A number of industrial issues reached
lowest prices of the year, but the majority of representa­
tive stocks held above the low level reached in August.
Professional operations appeared to play a considerable
part in both the industrial and railroad lists and public
participation in the market apparently continued much


In the final two weeks there was an abatement in de­
mand for railroad stocks, which in two months had aver­
aged an advance of over 10 points. Some irregularity
developed, but most issues, particularly those of higher
price, maintained their gains fairly well. In the same time
industrial stocks fluctuated narrowly, but with a slight
tendency to recover despite firmer money rates and certain
other developments ordinarily considered unfavorable. A
minority of especially affected issues, however, continued
to show heaviness.
Trading continued to expand slowly. Total sales for
September were 15,000,000 shares, compared with 13,700,000 the month previous and 9,300,000 in June, the
low month this year. Compared with September of
last year, there is still a large reduction amounting to
about 37 per cent.
F oreign B a n k R a te s

No changes have been made in the official discount
rates in the leading financial centers. The private bank
rate in London is somewhat easier and sixty and ninety
day bills are now quoted at 6)^ to 6 ^ .
Call money
which, unlike call money in New York, does not finance
daily transactions in the stock market, declined to 4%
per cent, the first week in October, and continues to be
quoted at that figure. The present bank rates are shown
in the September 30 issue of this review.
F oreign E xch a n g e

Trading in European exchanges has been comparatively
quiet during the greater part of the last thirty days and
the tendency has been downward. Weakness has been
more pronounced during the last few days and practically
all exchanges closed the period considerably below the
levels of September 20.
A number of factors are influencing the exchange market
at present, the most important of which is the coal strike
in England. Recent offerings of sterling bills, partly due
to importations to relieve a possible shortage of com­
modities under strike conditions, partly to a correspond­
ing check to their exports, have depressed the market.
Italian lire have shown consistent weakness throughout
the period and the decline was greater than in other rates
because of occasional heavy offerings of bills, together
with long-continued labor troubles. German marks have
been weak during the past ten days, due to an increased
The principal South American exchanges have con­
tinued downward, due to declines in prices of their princi­
pal commodities and the slackened demand abroad.
Argentina has found poor markets for her wool, hides,
leather and meat products, and no wheat is being exported.
Low prices of coffee, rubber and hides have caused further
declines in exchange on Brazil. Depressed trade condi­
tions in the Far East are largely responsible for a further
drop in Shanghai taels and Indian rupees, with a conse­
quent decline in silver. The year’s monsoon in India did
not bring the usual amount of rainfall, her trade balance
is unfavorable and her ports are congested with foreign


Rates from September 20 to October 23 were as
China (Hong Kong). . .
China (Shanghai)....... 108.00
Japan (Yokohama) . . . .
Sweden (Stockholm)...
Silver in New York....
*—Silver exchange basis


of Depreciation
from Par
3.45 Vs 29.
6.45H 66.6
3.75^ 80.5
.... *
.... *
1.43^ 94.00
6.8 2l/2 64.6

F oreign T ra d e

The forward export demand for American products has
shown a further decline, according to exporters, and in
many important lines new orders have been much reduced.
The fall in prices of many commodities in foreign as well
as domestic markets, with the attendant financial strain
abroad, has curtailed buying power and everywhere the
tendency is towards hand-to-mouth purchasing. Many
report that large amounts of goods have been turned back,
and the disposition toward cancellations has been more
general. Exporters are unusually cautious in accepting
orders or making shipments.
Wheat, coal, and oil continue the large exceptions to the
general slackening. Though wheat is in active demand,
there is little buying of flour. However, the combined
total of wheat and flour shipments from the United States
and Canada in the fifteen weeks ended October 14 were
over 53,000,000 bushels in excess of the total for the same
period last year. Demand for coal continues strong and
well up to the exporting capacity of the country, but the
pressure buying which some expected would result from
the British coal strike has not developed, and prices even
show a somewhat easier tendency. Oil and oil products
are in good demand, but shipments are limited somewhat
by shortage of containers.
The market for textiles, dry goods and kindred materials
has not strengthened and cancellations have continued
heavy. Generally depressed conditions in the markets
for cotton manufactures is resulting in a very low demand
for raw cotton from foreign mills. Exports of the raw
material are expanding somewhat, but exporters say that
the shipments are almost entirely on old orders. There is
a little buying from time to time of certain classes of hides,
but as a rule the export hide, leather, and shoe markets
have been extremely dull. Demand for general mer­
chandise, hardware, and chemicals is also slower. Trade
in meat products is reported somewhat more active.
Buying of iron and steel has fallen off to a very large
extent, and shippers are receiving many requests for
cancellations or extensions. There is considerable competi­
tion from Belgian producers, and the decline in sterling is



handicapping American exporters in meeting British
prices abroad. The Japanese market has not strengthened,
and there is still a large amount of re-selling here by
Japanese holders. India and the East Indies, which until
recently were active markets, are now quiet. Demand for
heavy machinery has declined, but there is still a fair
amount of buying of smaller machinery and machine tools
for necessary replacements. Call for electrical machinery
and equipment appears to be sustained at a fairly con­
sistent level.
The foreign market for copper continues practically at
a standstill, and it is said that supplies of scrap copper
abroad are still large. Export demand for automobiles and
automotive products has shown a marked decline.
A relative decline in the foreign trade of the country is
indicated by the figures reported for September by the
Department of Commerce. In reported value, exports
increased $22,000,000 to $606,000,000. But if allowance
is made for the normal seasonal expansion as well as for
changes in prices, there appears not only a decline in the
relative volume of exports compared with August totals
but also a fall of nearly 15 per cent, below the high average
reached in 1917. Imports showed a decline of $157,000,000
to $363,000,000, the lowest since August, 1919. After

correcting for seasonal and price variation, the relative
volume of imports is still 13 per cent, above the average
of 1917, though much below the August volume, which was
53 per cent, above 1917.

P roportions o f O ur F oreign T ra d e

Foreign trade figures for the United States covering the
first eight months of the year 1920 show that the pro­
portions of our trade, both import and export, with the
other major divisions of the world, have shifted in several
important respects since 1919. Most evident among these
changes is that Europe is sending us proportionately more
and receiving from us proportionately less as her re­
habilitation progresses.
The distribution of our exports and imports among the
principal countries and continents for the first 8 months
of 1919 and 1920 is shown in the accompanying charts.
Europe this year is sending us 24 per cent, of our total
imports as against 18 per cent, last year, and is taking
54 per cent, of our exports, as against 67 per cent, last

Distribution of Imports, First 8 months 1919

Distribution of Imports, First 8 months 1920

Distribution of Exports, First 8 months 1919

Distribution of Exports, First 8 months 1920




World Commodity Prices
The world-wide check in prices which still continues is
convincing evidence that price declines are not purely
national phenomena. Local prices in each country are
influenced not only by local conditions but also by what
is taking place in other countries. The recent turn in prices
in the various countries came within a few weeks time
and the downward movement has been common to prac­
tically all nations.
The French and Italian indices turned upward slightly
in August; and apparently the decline in other countries
has been less precipitate during recent weeks than in the
United States. In England the Economist index regis­
tered a decline of 1.3 per cent, during September and
the Statist’s (Sauerbeck) 2.0 per cent. These indices
have shown a downward trend since April with the ex­
ception of a slight check in July. In these indices,
textiles declined substantially, but cereals and meat
advanced in September.
The table below gives the latest available figures of the
various index numbers of wholesale prices, together with
the preceding figures and percentage changes.
D o m e stic Prices

The general drop in prices has proceeded with in­
creased momentum and only a relatively small number of
commodities has remained unaffected. Reports from
various markets in all sections give unmistakable evi­
dence that readjustment is in progress. Many of the
basic raw products, such as hides, leather, rubber, cereals,
sugar, cotton and potatoes have declined rather abruptly,
and certain manufactured articles, notably textiles, auto­
mobiles and a number of other products have had sub­
stantial declines also. While quotations of iron and steel
show no important changes there is an easier market,
induced by such movements as the reaction in the auto­
mobile trade. The non-ferrous metals such as copper,
lead and tin show substantial declines.
This bank’s index of 12 basic commodities dropped
ll}/2 per cent, between September 20 and October 18,
the heaviest month’s decline yet recorded. The only
commodities composing this index which have not de-




Movement of three Indices of Wholesale Commodity Prices from
the Armistice (November, 1918=100.)

clined are pig iron, lumber and petroleum. Both Bradstreet’s and this bank’s indices have declined about 20
per cent, from the peak. The United States Bureau of
Labor index, however, which reflects wholesale prices of
about 330 commodities, manufactured as well as raw,
has declined 11 per cent, from the high point of May.

W h o le sa le Price In dex
United States
Bureau of Labor.................
This Bank’s Index..............
( 12 basic commodities)
French....................................... . . .

Latest Available


Per Cent.


Per Cent.
High Point

250 (Aug. average)
88.9 (Oct. 11)


272 (May average)
112.9 (May 17)


196.3 (Oct. 1)
183.6 (Oct. 1)

205.4 (Sept. 1)
195.1 (Sept. 1)


217.81 (May 1)
226.46 (Feb. 1)


283.9 (Oct. 1)
292 (Sept. 30)
501 (Aug.)
632 (Aug.)

287.5 (Sept. 1)
298 (Aug. 31)
496 (July)
613 (July)
235 (Aug.)
244 (Aug.)
365 (Aug.)
233 (June)
209 (Aug.)


310.14 (Mar. 31)
313 (April)
584 (April)
679 (April)
321 (March)
263 (May)
366 (June)
234 (July)
218 (January)


87.9 (Oct. 18)

362 (Sept.)
234 (July)


+ .4





The only groups of commodities of the Bureau of Labor
index which have continued to advance are fuel and
lighting, house furnishing goods, and chemicals and
drugs. The heaviest decline was in cloths and clothing,
but farm products and food showed substantial declines

C ollection s
W ith certain exceptions, no general improvement in
collections has been noted in this district. It is reported
that accounts are being settled more satisfactorily in
several industries in which there has recently been some
renewal of buying, and where prices have become fairly
steady at the new low levels, as in the women’s dress and
waist trades. October 10 datings, which were heavy in
the piece goods and cutting-up trades, are reported to
have been more promptly met than for some time pre­
viously. Manufacturers of men’s garments, especially
in Syracuse and Rochester, report fair to slow payments.
Glove manufacturers report a slight decrease in their
collections, while the Rochester shoe manufacturers have
failed to note any improvement. Manufacturers and
jobbers of furniture, drugs and chemicals, and cigars
report a continuation of the recent delays in securing
payments. It is understood that the number of accounts
now being placed in the hands of collection agencies is
unusually high.

Savings Bank D eposits
Deposits in the savings banks of New York State have
continued to increase in fairly normal or slightly better
than normal proportions this year both as to number of
accounts and aggregate of deposits. Moreover there has
been a distinct increase in the rate of growth during the
past two months and particularly since the first of October.
In addition to a better than normal growth of deposits
there has been a rather unusual falling off of withdrawals
both in September and October.
While some of the prominent institutions have en­
couraged the purchase of government obligations by
depositors there has been no marked withdrawal of funds
for such investments. Particularly has this been noted of
banks the depositors of which are largely manual workers,
who are allowing their funds to accumulate. But the
tendency of the clerical workers in the financial district of
New York City to withdraw deposits for that purpose is
more evident.
For the year ended June 30 last deposits of savings banks
in New York State increased 10.1 per cent. Since that
time, basing an estimate upon reports from large savings
banks covering the entire district, deposits have shown a
further increase of from 3 to 5 per cent., indicating a
recent acceleration of saving.

C o tto n and C o tto n G o o d s
F ailures
The period of readjustment in this country during the
past nine months has been marked by increases in the
number of failures and the amount of liabilities. Never­
theless, index figures prepared by this bank show the
number of failures in September to have been only 68 per
cent, of normal, based upon the experience of a series of
years. An average of the index figures for the first six
months of 1920 was 48 per cent, of normal.
Failures in the Second Federal Reserve District con­
tinue to center largely in the textile and fur industries, and
latterly include a number of ship owning and operating
companies and exporting concerns. The total of liabilities
in this district bears a somewhat larger proportion to the
total for the country than in the first quarter of the year.
The following figures taken from the Dun reports are
for this Federal Reserve District:

Number of Failures
1920 1919
$ 1,212,644
1st quarter..................317


$ 8,488,194


April.............................. 117
May........................ ...... 133
June........................ ...... 164




2nd quarter.................414




July......................... .......172
September............... .......145






3rd quarter..........



Manufacturers of cotton goods have lowered their
prices during the last thirty days to a level close to the
cost of production, based upon twenty cent cotton.
Reductions throughout the cotton goods market average
50 per cent, from the peak prices which prevailed last
spring, only part of which, however, is saved to the
manufacturer in the 50 per cent, decline in the cost of raw
The reduction does not appear yet to have caused an
increase in orders on the books of the manufacturers, who
at this time last year had sold the total production of their
mills for six months in advance. A t present few of the
mills have any large advance orders on their books, and
those that are continuing operations are manufacturing
merchandise which they will place in stock until a demand
appears. There are fairly large stocks of cotton goods
available in the market which are distributed among the
retailers, wholesalers and the producers. M any retailers
continue to compute their profits upon the cost price of
stocks on hand rather than upon the replacement value
of the merchandise they own. The jobbers have accepted
their losses and are now endeavoring to do business on the
new price basis.
Aside from reducing prices, the manufacturers by way
of stimulating demand have reverted to their former
practice of giving long-term credits. Merchandise is now
being offered with March 1 datings, with an additional
per cent, off if paid prior to March 10. These terms were
in effect before the war but were abolished when the
demand for merchandise was greater than the supply.


Present operation of cotton mills is at about 60 per cent,
of capacity. While few mills are closing down completely
many are limiting their output by shutting down for one,
two and even three days a week. Manufacturers are


reported to have moderate stocks of raw material on hand.
They are not buying for future needs at prevailing prices,
but only to meet immediate requirements.
The raw cotton market showed the widest change
during the past month since the break in July. Spot
cotton fell from 31 cents per pound to 20}^ cents, a decline
of 34 per cent., and the options declined 27 to 32 per
The trend was almost continuously downward
during the month and few rallies were long sustained.

W o o le n G oo d s and C lo th in g
Orders for woolen and worsted piece goods received up
to this time by manufacturers for the 1921 spring season
are estimated at about ten per cent, of the total volume
and eight per cent, of the value of orders received up to
the corresponding date a year ago. Price reductions of
20 to 25 per cent, from last year’s level do not yet appear
to have stimulated forward buying, and production is
still much curtailed. It is estimated that the industry
as a whole is now running at about thirty per cent, of its
capacity. Many of the mills that were forced to close last
summer when a large number of cancellations were
received, have not found it necessary to reopen. Others
that have resumed operations are running but three or
four days a week.
The cutting up trades still hold a surplus of materials
because of a falling off in the manufacture of clothing
from the high level of production in the previous three
years. The surplus of men’s wear fabrics is proportion­
ately greater than in other classes of goods, and the decline
in the market price of this class offmaterials has been
more marked.
The men’s clothing industry is undergoing a period of
readjustment. Usually at this time of the year half the
orders for spring merchandise have been booked. So far
this year the clothiers have received very few orders for
next spring. In addition they hold large stocks of fall
merchandise for which they have found no outlet thus
Unseasonable weather during September and
October was a factor in the accumulation of this large
Wages of clothing workers have been increased very
largely during the last two years. So far labor has shown
no disposition to accept lower wages. Clothiers assert
that while wages have increased production has decreased.
A majority of the factories were closed during the summer
and only about forty per cent, of them are now open.
In these plants efforts are being made to induce labor to
return to the piece work basis of pay in lieu of the weekly
wage system now in effect. Clothiers assert that they
can double production without the necessity of reducing
wages if this system is adopted. Negotiations are now
under way between union representatives and the manu­
Woolen manufacturers are reported as having fairly
large stocks of raw materials on hand and are not in the
market for raw wool except in very limited quantities.
They are not buying for future needs.
This year’s
domestic clip is practically untouched.


The average price of manufactured silk to-day is about
40 per cent, of the price prevailing last spring when the
market was at its peak. Orders for silk goods now on the
books of the manufacturers are estimated to be 60 per
cent, in volume and 35 per cent, in value of the total orders
received up to the corresponding date last year. M anu­
facturers estimate the price paid for raw silk, which has
declined 70 per cent, since last February, at one-third of
the cost of production.
When the recession in the value of silk came, there was
a large surplus of all kinds of silk merchandise available
in the New York market, held by the retailers, by a large
number of jobbers, many of whom entered the industry
when speculation was rife, and by the manufacturers.
During the subsequent period of readjustment, there has
been a partial liquidation. The retailers are not basing
their prices on the replacement value, but rather are en­
deavoring to average their stock by adding merchandise
bought at the new price level.
The jobbers in their
efforts to liquidate are disposing of their holdings when­
ever possible at prices slightly below those which the
manufacturer can afford to offer. This has had a tend­
ency to decrease the orders so far received by the pro­
ducers of merchandise. The manufacturers, many of
whom have sufficient raw silk on hand to meet their
immediate needs, are reluctant to make future commit­
ments at present prices for more than they need to keep
their mills in operation, even at the present partial

Iron and Steel
Since early in September there has been a marked and
continuous change in the iron and steel industry. For­
eign and domestic orders have fallen off sharply, cancel­
lations have been heavy, collections have slowed down
and there has been some softening of prices.
The decline was due to a number of factors, but the
major cause apparently was the curtailing of operations
and the decided price reductions in other industries, such
as the automobile industry. Mills charging premium
prices and those with price schedules comparatively high
have felt the depression most. Premiums have practically
been done away with and there has been some shading
of the prices of independents toward the level of the United
States Steel Corporation.
Deliveries have greatly improved during the past two
months and this accounts in some degree for the decline
in unfilled orders which for the Steel Corporation amounted
to 430,000 tons from the previous month. Orders held
by the Steel Corporation are estimated to be enough to
run its mills at capacity for eight months, and orders held
by independents are believed to be enough for two or
three months’ operations.
The production of pig iron and of steel ingots in Sep­
tember was approximately the same as in August. Prices
have softened and most transactions consist of resales or
purchases from small producers. Quotations in some
instances are nominal with actual business transacted
at lower levels.



R e ta il T ra d e

Figures received from representative retail stores in
New York City indicate that net sales in September were
below those of September, 1919. Elsewhere in this dis­
trict, however, sales are reported to have increased. Sim­
ilarly, the rate of turnover as shown by the proportion
of average stocks held in the last three months to average
sales has decreased in New York City, and has increased
slightly elsewhere in the district.
Estimates covering business thus far in October indi­
cate a fair comparison with the business done in October
a year ago. In a number of lines, such as men’s clothing,
unusually warm weather for this season has delayed sales.
The demand for jewelry, musical instruments, furniture
and house furnishings is below the average. The cut in
automobile prices has stimulated business somewhat,
particularly for the higher priced cars.
Consumers are attracted by price cuts and continue
to scrutinize values. Retailers are buying only for
immediate needs and not so much from manufacturers
as from jobbers and wholesale dealers, who found them­
selves with heavy stocks on hand when the market de­
The schedule printed below, compiled from figures
furnished us from department stores, is self explanatory.
B u ild in g
Although there was some softening of the material
market during the month of September, the building
situation in this district is not markedly different from
what it was a month ago. Contemplated projects de­
creased in number and value, but there was a sharp in­
crease in the value of contracts awarded, due mainly to
an increase of about $25,000,000 in the value of contracts
for public works aind public utilities.

According to the figures compiled by the F. W . Dodge
Co. for September, 837 contracts for buildings of all
classes were awarded in New York State and Northern
New Jersey, the valuation of which was $59,818,100.
Comparable figures for August were 1,010 contracts
amounting to $38,430,500. The number of contracts
awarded for residence projects in this district decreased
from 496 in August to 402 in September, and their value
from $12,788,300 to $9,687,300.

The acuteness in the housing situation in New York
City did not develop into a crisis on October 1, the date
when most residential leases expire. Newly enacted
legislation, intended to protect the interests of tenants,
permitted them to remain in their former quarters,
whether they held new leases for them or not. Con­
sequently, there was less rather than more moving on that
day, the reverse of general expectations. Since October
1 there have been a few reductions in rentals.
Considerable vacant loft space in the city is reported
and rentals on this class of property have declined slightly.

C rop

C on dition s

September weather was exceptionally favorable not
only for the growing crops but for harvesting. Crop yields
in the Second Federal Reserve District this year will be
proportionate for the most part with the record crops of
the country as a whole. The average yield per acre of all
crops in New York State this year will be about 9 per cent,
above the average of the past ten years, while the com­
posite condition of all crops in the country is estimated at
about 7 per cent, above the ten year average.
The corn crop in this district is 4.7 per cent, below last
year’s record yield but the oats crop forecast this year is
51.6 per cent, greater than the 1919 crop, and has shown
a gain of 4.7 per cent, over the harvest forecast a month
While the fruit crop this year will be of record size the
recent sharp drop in prices has made it unprofitable to
harvest a very considerable portion, particularly of the
apple crop. The yield of potatoes will be the fourth
highest in fifty years but a smaller acreage will reduce the
total crop slightly below that of 1919. The condition of
this crop, moreover, is very uneven through the State
owing to rot in many sections.
A study of the crop production for the entire country,
as forecast on October 1, weighted by the average price
of each crop for the period 1909-1918, shows that the total
of all crops this year wTill be at a maximum. Whereas
index figures have averaged 185.2 during the past ten
years the 1920 figure is 206.3, an increase of 11.4 per cent,
over the ten year average and 6.8 per cent, over last year.

B u siness o f D e p a r tm e n t Stores

Percentage of increase or decrease in net sales during September, 1920, over net
sales during the same month last year...............................................................
Percentage of increase in net sales from August 1, 1920, to September 30, 1920,
over net sales during same month last year........................................................
Percentage of increase of stocks at close of September, 1920, over stocks at close
of the same month last year........................, .....................................................
Percentage of increase of stocks at close of September, 1920, over stocks at close
of August, 1920...................................................................................................
Percentage of average stocks at close of each month from August 1, to average
monthly net sales during same period.................................................................
Percentage of outstanding orders at close of September, 1920, to total purchases
during the calendar year, 1919............................................................................

New York City
and Brooklyn

Outside of
New York City
and Brooklyn






















general merchandise, and, in some cases, coal by the roads
in the south and middle west. An evidence of this is given
by recent figures of the New York Central lines which show
that while the total of revenue freight loaded at the
stations on that system continues to show gains month
by month and in September was 1.7 per cent, more than
in August, the freight “ received from connecting lines”
showed a reduction of 15.5 per cent, from the previous
The movement of coal continues particularly heavy and
the momentum lost during the short strike of anthracite
miners last month has been regained. The Lehigh Valley
Railroad, a heavy carrier of anthracite, reports an increase
of 37 per cent, in the first 15 days of October over the
last fifteen days of September and 6.3 per cent, over the
corresponding period of last year. The Baltimore and
Ohio, a representative carrier of bituminous coal, reports
an increase of 3.7 per cent, in the first 15 days of October
over the same period of September and 5.9 per cent, over
the last 15 days of that month.
Statistics of the United States Geological Survey
show that the movement of bituminous coal is now at
the highest rate for the present year and closely ap­
proaches the previous maximum.
Im m ig ra tio n

with Population.
(Crops in millions of dollars, reduced to average value 1909-1918;
population in units of 100,000.)
R ailroads and T ran sp ortation
Although the railway tonnage handled during the
month of September showed a slight falling off from the
unprecedented volume carried in August, September
freights were heavier than in any other previous month.
This slight decline occurred rather with the railroads of
the south and middle west than with those centering in
New York. Furthermore the traffic during the first week
in October reached a new high level for the year and was
heavier than in any one week heretofore with a single
The eastbound traffic to the port of New York remains
at or near the maximum and is about the heaviest that
can safely be taken care of without danger of congesting
the port. The volume of export freight, not only coal
but manufactured goods, now passing through the port
is extremely large, being no longer hampered by labor
difficulties either among the railroad or port workers.
In westbound traffic, however, the present totals are
slightly below the recent business.
Some reduction in volume of freight traffic recently is
the result, it appears, of reduced receipts of livestock and

More than 85,000 immigrants entered the port of New
York during September— nearly 30,000 more than came
in August and nearly the same as in pre-war years. The
number of arrivals has been well maintained thus far in
Most of the immigrants are from northern and southern
Europe. Those coming from northern Europe include
Polish Jews, Irish, English and Scandinavians, the majority
of whom are women and children. Those coming from
southern Europe are chiefly Italians, Greeks, Jugo-Slavs,
Spaniards and Portuguese. A much larger proportion of
these are able-bodied males.
About 55 per cent, of the immigrants go west, 12 per
cent, settle in the east outside the metropolitan district,
and the remaining 33 per cent, stay in New York City and
its suburbs. The distribution by nationality throughout
the country at this time is generally as follows: The
Italians about evenly divide between the west and the
east, the Irish stay along the Atlantic seaboard, the
Portuguese go to the New England spinning mill towns,
the Scandinavians to the farming districts of the northcentral valleys, the Polish Jews remain for the most part in
New York and the Spaniards go to the oil fields and
agricultural sections of the southwest. Very recently the
local officials of Detroit, Akron and some other cities where
unemployment is beginning to increase have asked the
Ellis Island authorities not to send immigrants to them.
Approximate figures of arrivals and departures at this
port from January 1 to September 30, are as follows:
Arrivals Departures
January..................................................... 25,051
April.......................................................... 36,958
July................................................ .......... 56,102
August...................................................... 57,874





E m p lo y m e n t

The period of practically no unemployment terminated
in this district with the railway strike last April. During
the readjustment of the spring and summer those who left
an industry where operations were being curtailed were
generally able to find work elsewhere. But in September
and more markedly during the first weeks of October it
became apparent that the supply of labor was running
beyond the demand. Many concerns have reduced their
forces because of business dulness, particularly those
manufacturing men’s clothing, textiles, boots and shoes,
refined sugar and automobiles. Other concerns are weed­
ing out the less efficient employees. The result has been a
considerable growth in unemployment and a trend toward
lower wages, which is particularly noticeable in the textile
Employment placement bureaus handling various types
of labor say the number of applicants for positions has
caught up to and passed beyond the demand. The present
over-supply includes not only manual workers, but sales­
men and clerks.
The larger amount of unemployment exists in the cities

to which workers were attracted during the era of business
expansion. Labor union officers estimate that 50 per cent,
or more of the operatives in the clothing trades in New
York City are idle at the end of October. Unemployment
appears to have been lower in other centers in New York
State because factories there find it desirable to hold their
working forces together.
According to the New York State Industrial Commission
there were reductions from August 15 to September 15 in
the number employed in State industries as follows:
automobiles, 18 per cent.; sugar refining, 11 per cent.;
cotton and woolen knit goods, 9 per cent.; buttons, 8 per
cent.; boots and shoes, 8 per cent, and men’s clothing and
cotton goods, 6 per cent. Since last March the average
reduction in factory employment is computed at 7 per
cent., or approximately 100,000 employees.
There were some increases during the month, mostly
seasonal, such as 10 per cent, in the canning industry,
9 per cent, in women’s clothing and 28 per cent, in mil­
linery. There were also increases in steel, candy and
tobacco manufacturing. There is enough building going
on in the metropolitan district of New York City to keep
the various building trades active.