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M O N T H L Y R E V IE W of Credit and Business Conditions ______________________________S e c o n d Federal Reserve Agent F e d e r a l Federal Reserve Bank, New York M o n e y M a r k e t in A u g u s t In August there was a continued large demand for credit for the security markets and also to finance the movement of crops and other seasonal trade, and, as a result, money rates remained firm. On August 9 the discount rate of the Federal Reserve Bank of New York, which for some months had been below the principal open market rates, was advanced from 5 per cent to 6 per cent. This advance restored the discount rate to its usual position with respect to other money rates, which, as the diagram below indicates, has been almost invariably above the bankers acceptance offering rate but not higher than the open market commercial paper rate during the past ten years. The advance in the discount rate was not followed by any material change in rates charged on commercial borrowing. The prevailing rate on prime commercial paper offered by note brokers, which for several months had held around 6 per cent, with a gradual tendency toward higher levels, was quoted in August at 6 to 6 ^ per cent. Most of the leading New York City banks reported a flat rate of 6 per cent on commercial loans RATE R e s e r v e D i s t r i c t _____________________________ September 1,1929 to customers in August, compared with 5 % to 6 per cent in July. Reserve Bank buying rates for bankers acceptances were adjusted early in the month to open market offering rates, and these rates for bills of short maturity remained stable at the level which had pre vailed since early in July. Rates on bills of long ma turity were advanced somewhat in the latter part of August, reflecting the preference of many important investors for bills of not more than three months maturity, as the result of which there was some accumu lation of long bills in dealers’ portfolios. Rates charged on collateral loans were irregular in August. Call loan rates were 10 to 12 per cent early in the month, but subsequently eased to a prevailing level of 7 per cent, with occasional declines to 6, largely as the result of a substantial flow of funds to New York from other districts and the offering of a large amount of funds in the call loan market by lenders other than banks. A reversal of the transfer movement and the approach of the month-end, however, were accompanied by a rise in call money to 9 per cent in the final week of the month. Funds available for time loans on securi ties continued scarce and rates regained firm. Rates MONTHLY REVIEW, SEPTEMBER 1, 1929 66 charged by New York City banks on security loans directly to customers other than brokers were advanced to the highest level since 1921. Money rates at New BILLIONS OF DOLLARS 9.5 York Aug. 30, 1928 July 30, 1929 Aug. 29, 1929 Stock Exchange call loans....................... Stock Exchange 90 day loans................. Prime commercial paper......................... Bills— 90 day unindorsed........................ Customers’ rates on commercial loans. Treasury certificates and notes Maturing December 15....................... Maturing March 15.............................. Federal Reserve Bank of New York rediscount rate....................................... Federal Reserve Bank of New York buying rate for 90 day bills................ *7-8 6^ 5y2 4 *A f5 .3 4 *7-10 8H 6 5Vs t5 .8 0 *7-9 8 ^ -9 6-6 M 5X f6 .0 0 4 .25 4 .36 4 .7 7 4.5 2 4.53 4.52 5 5 6 4M 5K 5Vs 9.0 8.5 * Range for preceding week t Average rate of leading banks at middle of month M em ber B an k I n debted n ess A fter the first week of August, borrowings of New York City member banks, which since early in July had been running 50 to 100 million dollars higher than a year previous, declined about 170 million and by the third week of August were well below the level of a year ago. A t the same time the loans of these banks to security brokers were reduced by approximately the same amount. A n important factor in this reduction in both indebt edness and in the security loans of New York City mem ber banks was an inflow of more than 100 million dol lars to New York from other districts. This movement of funds to New York appears to have represented trans fers by corporations and individuals rather than by banks for their own account, as loans placed in New York for out-of-town banks showed a small decline, while loans for ‘ 4others7’ showed a large increase. In the last week of August the movement of funds was reversed. Funds were withdrawn from New York by banks in other localities, probably in anticipation of the month-end or for autumn trade requirements, and demands on the New York banks by the security mar kets showed a renewed increase. D em and fo r C r e d it Largely as the result of the substantial reduction in brokers loans placed by New York City banks for their own account, the total security loans of all reporting member banks were reduced about 275 million dollars during the first three weeks of August. This reduction, however, did not reflect a reduced demand for security loans; the total volume of brokers loans reported by New York City members rose during August to a new high level at $6,217,000,000. Funds to meet the additional demand for loans as well as to replace loans retired by member banks were supplied by lenders other than banks. Consequently the total of loans placed “ for account of others’ ’ increased more than 400 million further, and on August 28 constituted well over half of the total volume of brokers loans. The renewed in crease in loans of this category followed a period of several months of relative stability. There has also been a demand for commercial and agricultural loans during the past month which has been unusually large for the time of year. A s the accom panying diagram shows, loans other than security loans 8.0 All reported by member banks have shown an almost unin terrupted increase since the latter part of May, and on August 21 were more than 350 million dollars above the volume at the height of the spring season. This com pares with an increase of about 100 million in the cor responding period last year and a small decline in 1927. Nearly half of this year ’s increase was in the loans of New York City banks, and substantial increases were reported also in the loans of banks in the middle-western and western agricultural districts. A considerable part of this demand for credit may be attributed to the rapid rise in wheat prices, and the early marketing of the crop. B il l M arket The supply of new bills offered to the market increased in August, reflecting transactions such as the storage of grains and sugar, exports of wheat and cotton, and imports of silk. A t the same time, investment demand for bills diminished somewhat, and dealers’ portfolios showed an increase for the month. The rise in open market supplies of bills on hand was accompanied by an increase in the amount of the temporary accommoda tion extended to the dealers by the Eeserve Bank. Dur ing the second half of the month, the open market offer ing rate for 4 months bills was raised % per cent to 5%: per cent, and the offering rate for 5 and 6 months maturities was advanced a total of % per cent to 5 % per cent; these increases reflected the efforts of the dealers to move the longer maturities of bills, supplies of which were tending to accumulate. Dealers’ offering rates for maturities up to 90 days were unchanged throughout the month at 5 Ys per cent. The American Acceptance Council survey of accept ances outstanding shows that the total rose $14,000,000 further in July to $1,127,000,000. Outstandings on July 31 were $149,000,000 larger than a year ago and $385,000,000 above the figure for July 1927. C o m m e r c ia l P aper M arket Commercial and industrial concerns have continued to finance their requirements principally by direct bor FEDERAL RESERVE AGENT AT NEW YORK rowing at their banks, and as a result the volume of open market commercial paper outstanding through 23 firms declined 3 per cent further in July. A t $265,000,000 on July 31, a decrease of 45 per cent from a year ago was indicated in commercial paper outstandings. In August, the investment demand for paper on the part of the banks throughout the country remained rather small, but at the same time new drawings of paper remained light. The dealers advanced their quoted offering rates for prime names slightly to a range of 6-6*4 per cent, as compared with 6 per cent around the end of July. G o ld 67 MILLIONS OF DOLLARS IOOOi---------------------- M ovem en t Shipments from Argentina totaling $8,500,000 and from England of $5,000,000 make up practically all the gold imported into the United States during August. Exports were negligible. Preliminary figures for the month are: Imports, $14,043,000; exports, $592,000; increase in gold held under earmark for foreign account, $1,000,000; net gain to country $12,500,000. Since the beginning of the year this country has gained about $199,000,000 of gold. The outflow of gold from London continued through out August, but was smaller in volume than during July. France took slightly over £6,000,000 in London in the past month, practically all from the Bank of England. Germany acquired some £1,900,000, of which about £1,100,000 came from the Bank and the balance by open market purchase. £1,125,000 was withdrawn from the Bank of England for the United States, and £500,000 was taken in the market by an undisclosed buyer. Despite the persistent weakness of sterling as against the other major exchanges, the Bank was able to secure some open market gold by competitive bid on three of the four market sales days in August. In this movement, which began towards mid-June, France has taken about £17,000,000 of gold in London, Germany about £14,000,000, and the United States £5,000,000. The bullion stock of the Bank of England declined from £164,200,000 at the middle of June, to £142,600,000 at the end of July, and to £137,600,000 on August 28. are used largely for the purchase of existing securities, rather than to place additional capital at the disposal of commerce and industry. Further evidence of a widespread preference for stocks over bonds appears in the large proportion of all recent bond issues that have had provisions for their conversion into stock, or have had stock purchase war rants attached. July issues of securities by domestic municipalities and States were only about one-half as large as in June but compared favorably with the total a year ago. For eign security flotations in this market were reduced to a figure about one-fourth that of June, and were slightly smaller than the total offered in July of last year. The principal feature of new financing in August con tinued to be the numerous and large issues of stock by investment and financial trading and holding companies. The total of all domestic corporate issues remained well above the volume in the mid-summer of 1928, and for eign issues, while small, were also somewhat above the total for last August. N ew S e c u r ity M a r k e ts F in a n c in g Total domestic corporate issues for new capital pur poses were much larger in July than in the previous month or in July 1928. A nearly three-fold increase over a year ago was due almost entirely to issues of stock. Beginning last autumn, the volume of stock issues expanded rapidly, as is indicated in the accompanying diagram, and, although the amount of bond offerings has declined, total new financing by domestic corpora tions during recent months has been in larger volume than ever before. In July, bond issues constituted less than 20 per cent of the total new financing by domestic corporations. This large volume of security flotations, however, does not represent a corresponding increase in the capital of industrial and mercantile corporations. The increase in stock issues reflects in a large measure the very heavy offerings of securities by investment trusts, and financial trading and holding companies, the proceeds of which New Security Issues o f Dom estic Corporations (Commercial and Financial Chronicle figures; refunding issues excluded) Following the irregularity of the latter part of July, stock prices continued to fluctuate without definite trend in the first week of August. This irregularity cul minated in a temporary sharp reaction in share prices, from which there was a rapid recovery. Subsequently, the market continued to move forward, and a composite average of stock prices advanced to new high ground on successive days. B y the latter part of August, repre sentative industrial stocks had risen to new high levels, and averaged 6 % per cent above the early July high point; utility shares also had advanced to new high quotations, exceeding their high level at the end of July by 8 % per cent; and railroad stocks had also exceeded their record level of the third week of July by nearly 3 per cent. In the last few days of the month the market turned irregular except for sustained strength in the rails. The volume of trading on the New York Stock Exchange was little different from July with the 63 MONTHLY REVIEW, SEPTEMBER 1, 1929 daily turnover averaging slightly below 4 million shares. Domestic corporation bonds, after holding practically at a level in July, resumed in August the decline that has been in progress during the past one and a half years, and the current level of corporation bond prices is now the lowest in more than three years. Foreign bonds quoted in this market also declined during the past month. United States Government bonds eased in the first part of August, but subsequently more than recov ered this loss. Near the end of the month, an average of the eight Government bond issues now outstanding was about one point above the low of this year reached at mid-March. F o r e ig n E xchange W ith unimportant exceptions, the European exchanges closed the month of August at lower levels than those of the previous month. Sterling declined from a high of $4.85 1 1 /3 2 on August 2 to a low of $4.84 1 1 /1 6 on the 8th, maintaining itself thereafter at around $4.8 4 % or a shade higher. Although this is a little below the theoretical gold import point, there was only one arrival of London gold during the month. French francs slid off from $0.0391 1 5 /1 6 to $0.0391 in the first half of the month, recovering gradually to around $0.0391% . The reichsmark showed decided weakness between the 1st and the 12th, when it declined 3 % points to $ 0 .2 3 7 9 % ; it was last reported at $0.2381. The same course— a dip towards the middle of the month followed by a temporary recovery— marked the progress of the Dutch guilder, which fell off to $0.4006% on the 28th as against an average of nearly $0.4014 in July. The lira was subject to constant though narrow fluctuation in the neighborhood of $0.0523. The Scandinavian ex changes weakened consistently. A t $0.1409% the Austrian schilling remained firmly at 2 % points above par. The Spanish peseta continued the upward trend begun in June, firming from $0.1462 to $0.1471 at last report. The peseta had not crossed $0.1470 in any pre vious month since last April. Canadian dollars weakened from a discount of at the beginning of the month to a discount of % on the 26th. Gold continued to arrive from Argentina, but the gold peso remained constantly below the month’s open ing of $0.9551 3 /3 2 , which is itself below the import point. The Japanese yen firmed to a new high for the year at $0.4701 on the 8th. A fter some fluctuation it settled at around $0.4668 at the close of the month. C e n tra l B a n k R a te Changes Effective August 1 the National Bank of Belgium raised its discount rate from 4 per cent to 5 per cent. The lower rate had been in force since June 30, 1928. In the intervening thirteen months the bank has in creased its reserve of gold and foreign exchange by $30,000,000, or some 17 per cent. Its sight liabilities expanded in the same period by about 20 per cent, the ratio of reserve declining slightly from 55.8 to 54.9 per cent. The loan and discount portfolio of the bank has meanwhile increased by about 70 per cent, apparently in response to increased trade activity. The higher money rates prevalent elsewhere throughout the world (with the exception of France and Switzerland), as well as the inception of the autumn importing season, are other factors making for firmer money. The South African Reserve Bank increased its rate from 5 % to 6 per cent on August 16, the earlier rate having been in effect since January 9, 1928. The Bank of the Republic of Colombia rate, which had been 8 per cent since March 18, 1929, was reduced to 7 per cent on August 1, 1929. F o r e ig n T r a d e During July, exports of merchandise showed a slight increase, and imports remained fairly stationary, com pared with the previous month, whereas usually there is a decline both in exports and in imports from June to July. Exports, valued at $401,000,000, were 6 per cent above July 1928, while imports, valued at $353,000,000, were 11 per cent above a year ago. The unusually early movement of the wheat crop was reflected in shipments abroad of grain and grain prod ucts which showed a gain, both in quantity and value, of about 50 per cent over the low figures of June. There was also an increase of similar amount, as compared with a year ago, in the value of grain exports, and an even greater increase in the quantity exported. Raw cotton shipments abroad continued to decline and were the smallest in any month since July 1925. A reduction, as compared with July 1928, of $13,700,000, in the value of cotton exports slightly more than offset gains in the value of the exports of other farm products and of cotton manufactures. Quantity receipts of raw silk and crude rubber were 21 per cent and 33 per cent, respectively, above a year ago. Silk imports, however, were somewhat less than in June, and rubber imports showed little change. B u s in e s s P r o fits Accompanying the continuance of a very high rate of business activity during the second quarter of this year, net profits of 236 commercial and industrial concerns for the quarter were 31 per cent larger than in the corre sponding period of 1928, and showed even larger in creases over the reported net profits of the second quar ter in the two preceding years. W hile the reports from the limited number of companies making quarterly statements perhaps tend to present a more favorable showing than would returns from all corporations, it is still evident that the general level of net earnings during the period must have been unusually high. Leading steel companies continued in the second quarter to report net profits more than double those of a year ago, reflecting the maintenance into the summer season of a capacity output of steel. Profits about 75 per cent larger than a year ago were reported by coal and coke, and miscellaneous mining and smelting com panies, but in the case of coal the increase was from a low level of earnings last year. Increases of between 40 and 60 per cent occurred in the net profits of railroad equipment, building supply, oil, copper, and miscella neous manufacturing and industrial concerns. Electrical FEDERAL RESERVE AGENT AT NEW YORK equipment, and machine and machine manufacturing companies showed increases that were just about the same as the average for all industrial concerns, while somewhat smaller increases were reported by the chem ical, tobacco, and motor parts and accessories companies. The motor group showed net profits only 5 per cent larger than a year ago, and the food and food products group also showed a relatively small increase. The only industry to report a less favorable showing than in 1928 was the leather companies, which as a group sustained a deficit. Profits of these 236 companies for the completed half year were 33 per cent larger than in the first half of 1928, and 47 per cent larger than in 1927. A s compared with 1928, results for the second quarter were largely the same as for the half year. In the cases of the copper, and motor parts and accessories companies, however, the percentage increases in the second quarter were smaller than in half-year profits, while for the railroad equipment and building supply companies the increases in second quarter profits were larger than the increases for the half year. Earnings of telephone companies during the second quarter of the year showed a relatively small increase over a year ago, but the total for the half year was 7 per cent larger. Other public utilities, on the other hand, reported earnings, both for the second quarter and the half year, that were close to 20 per cent larger than a year ago, a much larger year-to-year increase than oc curred in 1928. Net operating income of Class I rail roads for the second quarter and for the completed half year was over 20 per cent larger than in 1928, and was also materially larger than in the corresponding period of 1927 and 1926. (Net profits in millions of dollars) Second quarter Corporation groups Motors..................................................... Motor parts and accessories (exclusive of tires)............................ First six months No. 18 Railroad equipment.............................. Food and food products....................... Machine and machine manufacturing Copper..................................................... Coal and coke......................................... Other mining and smelting................. Chemicals................................................ Building supplies................................... Leather..................................................... Tobacco................................................... Electrical equipment............................ Miscellaneous......................................... 19 26 13 5 30 17 7 5 13 10 13 5 4 5 46 1928 1929 1927 1928 1929 129 136 184 223 235 13 15 33 48 45 92 3 5 41 43 11 15 12 16 2 1 8 14 16 19 6 9 0 D ef.2 3 3 14 19 38 55 16 48 87 10 71 20 14 5 12 26 13 2 5 24 70 21 30 49 75 80 164 6 8 82 74 21 28 20 38 2 4 15 25 30 38 10 14 2 D ef.3 4 5 26 34 87 115 Total 16 groups.................................. 236 373 489 607 670 892 Telephone (net operating income). . . Other public utilities............................ 99 95 66 204 68 245 118 391 129 430 138 508 Total public utilities........................ 194 270 313 509 559 646 Class I railroads (net operating income)................................................. 181 245 304 473 462 563 E m p lo y m e n t a n d W a g e s Eeports from both the New York State and Federal Labor Departments continue to indicate a high level of employment. In July, there is usually a sizable decline in the number of persons employed in factories; this PER 69 C E N T Index of Factory Employment in New York State, 1925-1927 = 100 per cent. (Federal Reserve Bank of New York index, adjusted for seasoned variations; 1923 to 1927 figures adjusted to census data) decline has been estimated to average about 1.8 per cent for the country as a whole, and about 1.4 per cent for New York State. This year, however, the decline amounted to only 0.1 per cent in the country as a whole, and to only 0.3 per cent in New York State. A s a result, this bank’s indexes, which are adjusted to allow for the usual seasonal changes, advanced between 1 and 2 per cent, and the New York State index reached the highest level since early in 1924. W hile factory employment continued at a relatively high level, it was also reported that farm work and road construction were giving employment to a large number of workers, but some unemployment was indicated in the building trades, following the decline in contracts for residential buildings which began in this district early this year. B u ild in g Although the usual seasonal tendency is for building contracts to decline in July, this year total contracts awarded in the 37 States from which reports are received by the F . W . Dodge Corporation increased 20 per cent in July over the June total, and reached a larger volume than in any previous July. In fact, the July total has been exceeded only in one other month— May 1928. A considerable part of the July increase was due to an in crease in contracts for public works and utilities, which included subway contracts and an unusually large vol ume of contracts for road building. Other non-residential contracts also increased somewhat, and residential awards showed a moderate increase. The total volume of non residential construction contracts was larger than in any previous month in recent years. A s a result of the larger July volume, the cumulative decline in the amount of contracts awarded in the 37 States since January 1, 1929 was reduced to 9 per cent. The increase in building contracts noted in July did not appear to have continued in August, however, since the daily average of contracts placed in the first three weeks of the month was about 4 per cent smaller than the daily average for the month of August 1928. 70 MONTHLY REVIEW, SEPTEMBER 1, 1929 Commodity Prices A fter declining in May to 95.8, the lowest level since August 1927, the general wholesale index of the United States Bureau of Labor Statistics advanced in July to 98.0, a level which has been exceeded only in four months since November 1926. The upturn in the index reflected a sharp recovery in the farm products, foods, and hides and leather products groups, which were at relatively low levels in May. The only other sizable net increase was in the miscellaneous group. During this period there was a further reduction in prices of textiles, which have shown an almost continuous decline since September 1927, and in July the Bureau of Labor Statistics average of this group was lower than at any time since 1921. This bank’s index of basic commodity prices, which is shown in the accompanying chart with the Bureau of Labor index, more than recovered the loss sustained be tween March 16 and June 1, advancing for eight suc cessive weeks to the highest level since last September. The strong advance in grain prices was the principal factor in the recovery during this period. For the month of July as a whole, this bank’s index averaged 99.3, as compared with 95.0 for May. In August, wheat reacted about 20 cents from the peak, and this resulted in a 2.0 point decline in this bank’s basic index. The average for the month, how ever, was 99.0, which is about the same as the July average. PER CENT ther decline in copper production, somewhat larger than usually takes place in July, and the seasonally ad justed index declined to the lowest level since last September. Tin deliveries also showed a decrease that was larger than usual, while zinc production did not show the usual seasonal decline. Output of bituminous coal increased in about the usual seasonal proportions, but anthracite declined. Produc tion of crude petroleum, according to preliminary fig ures, increased to a new high record. July production of both passenger automobiles and motor trucks declined somewhat more than usual, and this bank’s index of the combined output reached the lowest level since last December. Cotton consumption in July declined more than usual, and the adjusted index also reached the lowest level since last December, while consumption of silk increased rather substantially. (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1928 Producers' Goods Pig iron........................................................... Steel ingots..................................................... Cotton consumption.................................... Woolen mill activity r ................................. Silk consumption r ....................................... Petroleum....................................................... Bituminous coal............................................ Coke............................................................. Copper, U .S . mines................................. Lead............................................................... Zinc.................................................................. Tin deliveries................................................. Leather, sole................................................... Wood pulp...................................................... Consumers' Goods Hogs slaughtered.................................... Cattle slaughtered........................................ Sheep slaughtered......................................... Calves slaughtered....................................... Farm produce shipped................................. Wheat flour.................................................... Sugar meltings, U. S. ports........................ Anthracite coal.............................................. Paper, newsprint........................................... Tobacco products r ...................................... Boots and shoes............................................. Tires................................................................. Automobile, passenger r ............................. Automobile, truck r ..................................... 1929 July May June July 107 113 88 87r 104r 106 79 99 109 92 96 91 123 132 99 126 135 109 102r lOlr 112 88 128 131 109 101 141 94 112 106 127 145 106 lOlr lllr 112 83 123r 118r 105 99 112 103r 120 103 131 137 103 99r I20r 116p 83 123 116 107 102 109 103 125 86 87 103 73 103 87 83 101 62 86 105r 115 126 108r 124r 96 94 128 70 107 116 73 99 90 92 112r 106 140 133r 154r 89 83 111 62 96 104 80 97 72 86 llOr 108 124 128r 188r 102 92 119 69 93 96 82 68 86 105r 122p 123r 153r p Preliminary r Revised In d e x e s o f B u s in e s s A c t iv it y United States Bureau of Labor Statistics Index of Wholesale Prices and Federal Reserve Bank of New York Basic Commodity Price Index P r o d u c tio n Changes in productive activity in leading industries showed a considerable amount of irregularity in July, and in general it appears that there was a small reces sion from the unusually high levels of recent months. Average daily production of steel ingots declined nearly 5 per cent, whereas usually there is practically no change from June to July, but pig iron production declined less than usual, and after seasonal allowance reached a new high level on the current movement. There was a fur This bank’s indexes indicate that, while financial activity increased in July, the distribution of goods showed irregular changes. Both the volume of trading on the New York Stock Exchange and bank debits in New York City increased sharply in July to new high records for that month, and debits in 140 centers out side of New York City showed an increase after seasonal allowance, which may also have been attributable largely to security and other financial transactions. There was little change in freight car loadings after seasonal adjustment, but foreign trade increased instead of showing the usual seasonal decline. Distribution of goods to consumers, on the other hand, showed a decrease of somewhat more than seasonal proportions, and conse quently this bank’s indexes of department store, mail order, chain store, and life insurance sales declined. FEDERAL RESERVE AGENT AT NEW YORK (Computed trend of past years=100 per cent; adjusted for seasonal variations) 1929 1928 July May June July Primary Distribution Car loadings, merchandise and misc........ Car loadings, other....................................... Exports............................................................ Imports............................................................ Panama Canal traffic................................... Wholesale trade............................................. 103 91 108 104 83 97 105 104 94 124 79 108 103 98 102 117 85 101 103 99 114p 122p 88 104 Distribution to Consumer Department store sales, 2nd Dist............. Chain grocery sales...................................... Other chain store sales................................ Mail order sales............................................. Life insurance paid for................................ Advertising..................................................... 102 102 100 116 98 94 103 94 103 126 101 98 104 95 105 137 102 98 99 94 100 136 99 96 Sales and stocks by departments are compared with July 1928 in the following table. The furniture, home furnishings, and radio departments were among those showing the largest increases over last year. Net sales percentage change July 1929 compared with July 1928 Toys and sporting goods....................... General Business Activity Bank debits, outside of New York City.. Bank debits, New York City..................... Velocity of bank deposits, outside of New York City................................................... Velocity of bank deposits, New York City Shares sold on N. Y . Stock Exchange. . . Postal receipts............................................... Electric power................................................ Employment in the United States........... Business failures............................................ Building contracts, 36 States..................... New corporations formed in N. Y . State. 104 142 107 178 109 158 112 181 114 154 186 87 108 97 101 126 120 123 201 329 87 112 101 106 119 112 126 182 252 81 108 102 109 110 111 131 208 429 88 General price level........................................ Composite index of wages................'......... Cost of living................................................. 176 226 172 179 226 171 179 227 171 181 226 172 104 102 130 93 p Preliminary D e p a r tm e n t S to r e T r a d e The July sales of the reporting department stores in this district showed about a 4 per cent increase from a year ago, but as there was one more selling day in July of this year, the average daily rate of sales showed little change from that of July 1928. A t least small increases in the daily rate of sales were reported by stores in New York, Syracuse, the Capital District, and Central New York State, but there were considerable decreases in several other localities within the district. Stocks of merchandise on hand at the end of the month remained somewhat higher than a year ago, and the rate of stock turnover was about the same as in July 1928. The percentage of outstanding charge accounts during July showed a slight increase over last year, following decreases in the three preceding months. Locality Percentage change July 1929 compared with July 1928 Linens and handkerchiefs..................... Luggage and other leather goods........ Books and stationery............................. Home furnishings.................................... Musical instruments and radio........... Silverware and jewelry.......................... Toilet articles and drugs....................... Cotton goods............................................ Women’s ready-to-wear accessories.. . Woolen goods........................................... Men’s furnishings................................... Women’s and Misses’ ready-to-wear.. Men’s and Boys’ wear........................... Silks and velvets..................................... Miscellaneous.......................................... Net sales Stock on hand end of month 1929 50.0 50.9 39.9 32.8 44.2 50.7 50.4 40.4 30.6 43.9 4 2 ‘.8 42.5 5 .0 1.3 6 .2 9 .6 1.1 9 .7 1.2 5 .0 4 .4 2 .9 2 .5 4 .9 9 .3 + 3.1 — 2 .9 — 2.1 4- 8 .2 4- 5 .9 4-13.8 — 2 .4 All department stores.................................. + 3 .8 4- 3 .0 4 6.4 4 6.8 Apparel stores................................................ + — 4 .2 4 4.8 46.1 + — — + + + + — + + + + — 1.8 4- 2 .4 4- 5 .8 4- 4 .2 4- 7 .9 4-11.8 4- 2 .6 — 3 .6 4- 4 .1 4-19.7 — 7 .8 — 2 .9 — 4 .8 4- 9 .0 — 14.5 — 0 .8 4-11.0 4- 8 .7 — 10.9 — 8 .7 The average July sales of reporting wholesale firms in this district were 9 per cent larger than in July 1928, but a part of the increase was probably due to the fact that there was one more selling day in July this year than last. Increases were reported in sales of groceries, stationery, shoes, paper, cotton goods, and silk goods, following gains in these lines in each of the pre ceding three months. Sales of diamonds and jewelry also showed increases over a year ago in July, which followed decreases in June, and drug sales showed the largest increase since January. Sales of machine tools continued well above the high level of last year. Stocks showed no consistent change from a year pre vious. Silk and drug firms reported increases, while cotton goods, shoes, hardware, and diamonds and jewelry firms reported smaller stocks than last year. Collections were considerably better than in July 1928 in most lines. Per cent of accounts outstanding June 30 collected in July 1928 4-23.2 4-20.0 4-19.1 4-15.1 4-15.0 4-14.6 4-10.3 4- 9 .8 4- 9 .8 4- 9 .2 + 9 .1 4- 4 .6 4- 1.4 — 0 .3 — 0 .3 — 1.5 — 6 .5 — 15.4 4- 2 .7 Stock on hand percentage change July 31, 1929 compared with July 31, 1928 W h o le s a le T r a d e Commodity New York........................................................... Buffalo................................................................. Rochester............................................................ Syracuse.............................................................. Newark................................................................ Bridgeport.......................................................... Elsewhere............................................................ Northern New York State......................... Central New York State............................. Southern New York State.......................... Hudson River Valley District................... Capital District............................................. Westchester District.................................... 71 Percentage change July 1929 compared with June 1929 Net sales Groceries......................... Men’s clothing............... Cotton goods.................. Silk goods*..................... Drugs............................... Hardware........................ Machine tools**............ Stationery....................... Diamonds....................... Jewelry............................ Weighted Average... Stock end of month Percentage change July 1929# compared with July 1928 Net sales — 0 .5 + 8 .9 4- 0 .8 4-40.7 + 1.9 — 0 .2 + i i ’.4 + 3 .8 — 6 .7 * 4- 6 .6 * 4-18.6* — 16.1 4-15.7 4- 5.1 4-15.3 4-14.0 4- 3 .3 — 0 .2 — 21.0 — 0 .7 — 11.3 4-26.8 — 7 .0 4- 6 .3 — 1.4 + 1 1 .6 4-47.4 + 2 3 .8 — 35.1 j - 1.6 + 4 .1 4- 5 .0 + 8 .6 Stock end of month + 0 .4 — 6 .2 + 5 .6 * — 18.7 + 2 3 .8 — 10.1 j — 12.1 Per cent of accounts outstanding June 30 collected in July 1928 1929 70.9 3 7.0 73.9 38.8 38.4 42.8 4 6.4 4 2.4 4 4.7 47.7 6 8.7 61.8 J 23.9 65.8 67.0 J 28.4 50.7 53.2 * Quantity not value. Reported by Silk Association of America ** Reported by the National Machine Tool Builders' Association MONTHLY REVIEW, SEPTEMBER 1, 1929 72 Business Conditions in the United States (Summarized by the Federal Reserve Board) NDUSTRIAL production decreased slightly during July, but continued at a higher level than in other recent years. Wholesale commodity prices increased further during the month, reflecting chiefly higher prices of agricul tural products. Loans for commercial and agricultural purposes by reporting member banks increased during July and the first half of August. I P r o d u c tio n Output of manufactures decreased in July, while mineral production in creased. Average daily output of automobiles, copper, tin, zinc, and cotton and wool textiles decreased and there was a small decline in the production of iron and steel. In all of these industries, however, output was larger than in the same month in earlier years. Activity increased during July in silk and shoe factories and in meatpacking plants, and there was also a larger output of bituminous coal and crude petroleum than in June. Reports for the first half of August indicate sustained activity in the iron and steel and automobile industries, and a further increase in the output of coal and petroleum. and Minerals Combined, Adjusted for Sea sonal Variations (1923-25 average = 100 per cent) Employment in manufacturing industries decreased in July by less than one per cent while a somewhat greater decrease in payrolls was reported. At this level, factory employment and payrolls, as in earlier months, were larger than in any other year since 1926. Value of construction contracts awarded in July wras higher than in the preceding month or in July 1928, reflecting chiefly a sharp increase in contracts for public works and utilities. For the first half of August, however, total con tracts declined to a level below the corresponding period a year ago. The August estimate of the Department of Agriculture indicates a wheat crop of 774,000,000 bushels, slightly below the five-year average, and 128,000,bushels below last year’s production, and a corn crop approximately equal to the five-year average crop and about 100,000,000 bushels smaller than in 1928. The cotton crop is estimated at 15,543,000 bales, 7 per cent larger than last year. 000 D is t r ib u t io n of Labor Statistics (1926 average = 100 per cent) Freight-car loadings increased seasonally during July and the first two weeks of August, reflecting chiefly increased loadings of coal, grain, and ore, while shipments of miscellaneous freight continued in about the same volume as in June. Sales of department stores declined seasonally from June and on a daily basis were about the same as in July a year ago. P r ic e s 1927 1928 Wholesale prices in July continued the rise which began in June, according to the index of the Bureau of Labor Statistics, reflecting chiefly higher prices for farm products and their manufactures, particularly livestock and meats, grains and flour, and potatoes. Prices of hides and leather also increased. Wool, rayon, and textile products declined slightly in price. There was a marked advance in the price of sugar and rubber prices also rose somewhat. Prices of petroleum and gasoline declined and prices of iron and steel were somewhat lower. 1929 Monthly Averages o f W eekly Figures for Re porting Member Banks in Leading Cities (Latest figures are averages of first three weeks o f A ugust) During the first three weeks in August there were declines in the prices of cotton, petroleum, beef, sugar, oats, rubber, and tin, and marked fluctuations in prices of pork and wheat. PERCENT 7 B a n k C r e d it Loans for commercial purposes by reporting member banks increased to new high levels during the four weeks ended August 14, while security loans, after increasing further during the latter part of July, declined during the first two weeks in August. 1925 1926 1927 1928 1929 M oney Rates in the New Y ork Market (A ugust rates are averages for first 24 days) Member bank borrowing at the Reserve Banks averaged $45,000,000 less during the week ended August 17 than in the week ended July 20 reflecting increased sales of acceptances to the Reserve Banks, and further imports of gold. Open market rates on call and time loans on securities were firmer during the last half of July and the first week of August. During the second week of August rates on call loans declined while rates on commercial paper in the open market advanced from 6 to 6-6% per cent. On August 9 the discount rate of the Federal Reserve Bank of New York was increased from 5 to 6 per cent, and the buying rate on bankers acceptances was reduced from 5 Va to the market rate of 5% per cent.
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