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MONTHLY REVIEW
of Credit and Business Conditions
S e c o n d
F ederal R eserve A g e n t

F e d e r a l

F ederal R eserve Bank, N ew Y ork

M o n e y M a r k e t in A u g u st
Excess reserves of the principal New York City banks
remained comparatively small during the first half of
August but subsequently increased substantially to about
$150,000,000, and open market money rates in New York
declined to levels even lower than those reached in June,
and about as low as in January and early February. For
all other member banks throughout the country excess
reserves remained around $450,000,000, and the total
for the entire country, therefore, rose above $600,000,000,
and about equaled the high level reached early last
January. The distribution has changed materially since
January, however, a large part now being distributed
throughout the country, whereas in January at least half
was concentrated in New York.
The increase in the excess reserves of New York banks
during the latter half of August was due partly to an
expansion i” Reserve Bank purchases of Government
securities. For a number of weeks purchases had been
made at the rate of about $10,000,000 a week, following
purchases varying from around $20,000,000 to $25,000,000 for several weeks in May and June. In the third
week of August the amount of Government securities
purchased by the System was increased to $35,000,000,
and in the fourth week a like amount was purchased.
The total loans and investments of principal New
York City banks showed greater stability during August
following a decline in July. In other principal cities
also the amount of member bank credit outstanding
showed no material change in August, following a rather
substantial increase from the middle of June to the end
of July. The failure of bank credit to expand in the
face of mounting excess reserves and increasing business
activity may, however, be attributed at least in part to
the further effect of the discontinuance of interest pay­
ments on demand deposits. In the four weeks ended
August 23 the demand deposits of reporting member
banks declined $220,000,000 to a volume $800,000,000
less than on June 14, just before the passage of the
Banking Act of 1933 which made discontinuance of
interest payments on demand deposits mandatory. Idle
demand deposits have sought investment in United
States Government securities and other high grade
securities of short maturity, and this has tended to pre­
vent further accumulation of such securities in bank
portfolios and even to cause some decline. The Govern­
ment security holdings of the reporting banks declined
about $150,000,000 between June 21 and August 23,




R e s e r v e

D is tr ic t
Septem ber 1 ,1 9 3 3

notwithstanding large purchases of new Government
securities, especially those issued on August 15.
There are indications, however, that the reduction in
demand deposits has not meant a corresponding reduc­
tion in the amount of money in active use. It has
reflected rather a tendency of corporations and others
to invest deposits not immediately needed, and to use
the remaining balances more intensively. This is reflected
in the accompanying diagram, which shows the velocity
or turnover of demand deposits in the principal cities
for a number of years past. As this indicates, the activity
of deposits following an extraordinary rise from 1925
to 1929 declined to between 50 and 60 per cent of the
1919-1925 avenge at the end of 1932. Subsequently
there has been a rapid rise to about 85 per cent of the
average for 1919-1925, the highest rate since the middle
of 1931.
This increase in the turnover of deposits has reflected
not only a reduction in idle deposits, but also an increase
in the volume of checks drawn against the remaining
deposits, accompanying the improvement in general busi­
ness conditions during recent months. Thus far the
recovery in business appears to have been financed
largely through more active use of the existing money
supply, although there has also been a fairly substantial
increase in deposits since March, resulting partly from
expansion of bank credit and partly from the return
of hoarded currency.
The volume of currency outstanding, which had de­
clined almost without interruption from the end of the
PER CEN T

R ate o f T u rn ov er o f D em and D eposits in Principal C ities
(F ed eral R eserve B ank o f N ew Y o rk index)

MONTHLY REVIEW, SEPTEMBER 1, 1933

66

bank holiday to the latter part of July, has shown little
net change during the past month. In view of the fact
that the seasonal increase in currency circulation usually
begins in August and that payroll requirements are in­
creasing, due to improving business and higher wage
scales, however, it would appear that the return flow of
money out of hoards has not ceased, although it has prob­
ably been less rapid accompanying the slower pace in the
security and commodity markets. As a diagram on a later
page of this Review indicates, the number of wage earners
receiving increases in their rates of pay during June
and July was far greater than in any other month in
several years. It appears that this movement has con­
tinued subsequently and has tended to increase payroll
requirements further during the past month.
M

oney

C o m m e r c ia l P a p e r M

R ates

Money rates declined somewhat in August, especially
in the latter half of the month accompanying the rise
in excess reserves of New York banks, and in most cases
reached the lowest levels of the year. Rates for accept­
ances of maturity exceeding 45 days were reduced %
per cent, and short bills declined Ys per cent. Yields on
short term Government securities were reduced ma­
terially, and quotations on 90 day Stock Exchange loans
decreased about Y2 per cent during the month. On
August 30 the Stock Exchange quotation for call money,
which had held for some time at 1 per cent, was reduced
to % per cent. A comparison with rates prevailing at
the end of July and with those of a year ago follows.
M oney'R ates at NewpTork
Aug. 31, 1932 July 31, 1933 Aug. 31, 1933
Stock Exchange call loans........................
Stock Exchange 80 day loans.................
Prime commercial p ap er......... ................
Bills— 90 day unindorsed.........................
Customers’ rates on commercial loans..
Treasury securities
Maturing December (y ield )................
Maturing March (y ield )......................
Federal Reserve Bank of N. Y . redis­
count ra te................................................
Federal Reserve Bank of N. Y . buying
rate for 90 day indorsed b ills.............
* Nominal

2

1

* l M -i H
2 -2 M
%
f4 .1 3

* i h - i y2
iy 2
f3 .2 4

%
*%
iy 2
H
t3 .1 9

0 .09
0.2 6

0 .08
0 .4 0

No yield
O .ll

2Y2
1

2
1

^
1

t Average rate of leading banks at middle of month

B il l M a r k e t

A strong and widespread investment demand for
bankers acceptances existed throughout the entire month
of August. New York City banks, out of town banks,
and corporations were in the market for bills, and as
accepting and discounting banks retained new bills that
came into their possession, the dealers were unable to
fill orders. By the third week of the month the port­
folios of the dealers were reduced to the lowest figure
in the history of the bill market and effective August 23
open market rates for bills maturing in 46 days to 6
months were reduced Ys per cent. This reduction re­
stored all bill rates to the levels which had prevailed
prior to the increase of early July, quotations for the
short bills having reverted to their former level shortly
after they were increased in July. On August 30, the
dealers made a further general reduction of Ys per cent
in their rates; the offering rate of Y± Per cen^ established
on 90 day bills equaled the low which prevailed for a
short time early this year.
During July, the volume of bankers acceptances out­




standing rose $51,000,000 further to $738,000,000, and
at that figure was above the level of the previous year
for the first time since June 1931. An increase of $36,000,000 in bills arising from domestic warehouse credits
was again the largest factor in the rise, although there
were also increases of $6,000,000 in import bills and in
bills based on goods stored in or shipped between foreign
countries. There was a large increase during July in
holdings of bills by accepting banks, both in New York
City and outside, and there was also a further material
rise in holdings by corporations. Accompanying these
increases, which were about twice as large as the rise in
the volume of bills outstanding, Federal Reserve hold­
ings of bills and the amount held in dealers’ portfolios
declined considerably.
arket

A further increase in the demand for accommodation
by commercial and industrial concerns eligible to use
the facilities of the open market resulted in a continued
rise in the amount of commercial paper outstanding
through dealers reporting to this bank. The total of
$97,000,000 on July 31 showed an increase of 33 per
cent for the month and raised outstandings to the highest
level since last November. Drawings of new paper dur­
ing August continued to be readily absorbed by the in­
vestment demand, and in fact orders received from
banks by the dealers considerably exceeded the paper
which was available. Most of the prime paper continued
to be sold during August at 1 Y2 per cent, with some
business also transacted at 1 % per cent.
Security M a rk e ts
The stock market showed a rising trend in August,
although daily movements were somewhat more irregular
than in preceding months. As a result representative
averages of general prices by the end of August had
recovered more than one-half of the loss sustained in the
sharp reaction between July 18 and 21. Industrial and
railroad stocks accounted for all the rise in the general
price averages, these types of shares recovering to
within 7 to 8 per cent of their July highs, while public
utility stocks showed little net change for the month
of August and remained about 20 per cent below the
peak reached in July. In comparison with the turnover
of immediately preceding months, stock trading was
rather dull in August. Trading on the New York Stock
Exchange averaged less than 2 million shares daily,
although activity tended to increase somewhat toward
the end of the month.
In contrast to the net advances in stock prices, domes­
tic corporation bond averages showed slight declines for
August, remaining about 2 points below their July highs.
Nevertheless, at present levels, domestic corporate bond
averages composed principally of high grade issues have
recovered more than 65 per cent of their declines during
the 1930-1932 period, and averages having a larger
representation of lower grade issues have recovered over
50 per cent of the ground lost in the 1930-1932 slump.
Recently the higher grade issues have continued to in­
crease in price or to hold steady, while the second grade
issues have declined slightly from their July highs.
Foreign dollar bonds showed a small net decline dur­
ing August. United States Government bonds, in keep­

6
7

FEDERAL RESERVE AGENT AT NEW YO R K

ing with other high grade bonds, advanced slightly for
the month. Liberty Loan issues rose about % of a point
and long term Treasury bonds about % of a point on
the average, with the new 3^4 per cent Treasury bonds
floated August 15 going to a premium of over 1 point.
N e w F inancing
Public offerings of new securities during July totaled
$169,000,000, of which $124,000,000 represented new
capital issues and $45,000,000 refunding issues. Domes­
tic corporate financing accounted for $53,000,000 of the
new capital issues, a Federal Intermediate Credit Bank
issue for $35,000,000, State and municipal offerings for
$28,000,000, and a foreign issue for $7,000,000. While
new capital issues during June and July were somewhat
larger than in immediately preceding months, the total
for the first seven months of this year at $403,000,000
was less than one-tenth of the average of $4,328,000,000
of new capital flotations during the first seven months
of the years 1926-1928. Furthermore, the larger part
of this year’s total represented State and municipal
financing, so that it appears that the flow of new capital
to industrial enterprises during this period was at a
very low level.
Between July 7 and August 29, registration state­
ments of security issues filed with the Federal Trade
Commission under the Securities Act of 1933 totaled
approximately $183,000,000. This aggregate amount
represented to a considerable extent proposed issues by
investment companies, including investment trusts, con­
cerns selling corporate trust shares, mortgage companies,
and small loan companies. While the registrations also
included a number of issues of mining, brewery, and
miscellaneous industrial concerns, there were no issues
of important size to indicate an acceleration of the rais­
ing of new capital funds in the securities markets for
the use of industry. According to preliminary data, new
security issues actually announced by public advertise­
ments during August totaled less than $50,000,000, com­
posed entirely of State and municipal financing.
U

n it e d

S

tates

T

reasu ry

F

F oreign E xch ange
Following a rather consistent advance in the second
half of July during which time the discount on the
dollar was reduced from 31.3 per cent to 25.8 per cent,
the dollar fluctuated within a range of 25 to 27 per cent
discount from the French franc through August 22. In
the next three days the discount widened suddenly to
31.1 per cent, and although the dollar again strengthened
somewhat thereafter, by August 31 it had recovered only
partly to a discount of 29.8 per cent.
In the first three weeks of the month all of the major
foreign currencies moved in rather close concordance,
advancing or declining together against the dollar. In
the latter part of the month, however, the pound sterling
showed weakness in terms of the gold currencies, and in
London the price of sterling declined to between 81 and
82 francs, as compared with a price range of about 85%
to 88 francs which had prevailed earlier this year.
Closing Cable Rates at New York

Exchange on

Italy....................................

Par of
Exchange
$ .1390
.2680
4.8666
.0392
.2382
.4020
.0526
.2680
.1930
.2680
.1930
1.0 000

Brazil..................................

.9648
.1196
1.0342
.4985
.3650

in a n c in g

On August 15, the Treasury sold a total of $1,189,000,000 of new securities, partly to replace a maturity
of $469,000,000 of certificates of indebtedness. The re­
cent financing was composed of $835,000,000 of 3 % per
cent Treasury bonds due in 1941, and $354,000,000 of
1 % per cent Treasury notes due in August 1935. Under
the terms of the Treasury offering, cash subscriptions
to the bonds and notes for amounts up to and including
$10,000 were allotted in full, and subscriptions for
which payment was tendered in certificates of indebted­
ness maturing August 15 were given preferred allot­
ment. Also subscriptions to the bond issue for which pay­
ment was tendered in certificates of indebtedness matur­
ing September 15 were allotted in full. In accordance
with the exchange provisions a total of $238,000,000 of
the August 15 certificates of indebtedness were ex­
changed for the new bond and note issues, leaving $231,000,000 to be redeemed for cash, and $231,000,000 of
certificates of indebtedness due September 15 were ex­
changed for the new bond issue, reducing the maturity
to be met on September 15 to only $220,000,000. Both




issues were heavily oversubscribed and immediately sold
up to substantial premiums.
In addition to the securities floated on August 15, five
Treasury bill issues, totaling $371,000,000, were put out
to replace corresponding maturities. Rates on this type
of financing ranged downward from 0.35 per cent on the
August 2 issue to 0.14 per cent on the August 30 issue.

Aug. 31, 1932 July 31, 1933 Aug. 31, 1933
$ .1387
.1780
3.4700
.03920
.2379
.4023
.0513
.1740
.0804
.1783
.1938

$ .1885
.2 0 1 0

4.4800
.05280
.3222
.5440
.0709
.2252
.1128
.2315
.2610

$ .1990
.2025
4.5275
.05578
.3395
.5730
.0748
.2275
.1190
.2335
.2748

.8963
.5865
.0763
.4750

.9300
.7756
.0829
.6000

.9500
.8193
.0839
.6600

.2288
.2628
.3156

.2770
.3380
.2850

.2681
.3410
.2875

G o ld M o v e m e n t
During the month of August there was an increase
of about $8,000,000 in the monetary gold stock of the
United States, due principally to the release of $6,249,000
of gold held by a New York bank for foreign account.
Exports of $73,200,000 to France, $6,500,000 to
Czechoslovakia, and $200,000 to Germany, represented
the release and shipment of gold previously held under
earmark, which had no effect on the gold stock of this
country; in addition, approximately $425,000 of gold
was exported to France under license of the Secretary
of the Treasury. Imports were negligible.
Central B a n k R a te C hanges
Following two reductions of one-half per cent each in
July, the Netherlands Bank reduced its discount rate
on August 15 from 3 y 2 to 3 per cent. On August 16
the Bank of Java rate was lowered from 5 to 4 %
per cent.

68

MONTHLY REVIEW, SEPTEMBER 1, 1933

C orporate E arnings in F irst H a lf of 1 9 3 3

(N p fits in m n o d lla
et ro
illio s f o rs)

Reflecting the recovery which occurred in business
volume and prices during the second quarter of 1933,
the earnings reports of industrial and mercantile con­
cerns for the April to June quarter made the most favor­
able aggregate showing since the third quarter of 1931.
This is indicated in the accompanying diagram which
compares quarterly net profits of a list of 163 represen­
tative corporations over the past 4 % years.
All reports available at this time for the second quarter
of the last three years are summarized in the following
table. As this shows, the greatest percentage improve­
ment in profits between the second quarter of 1932 and
the corresponding period of 1933 was in the automobile,
automobile accessory, household equipment, office equip­
ment, and aviation companies. More than two-thirds
of the groups of companies improved their earnings
position over last year, either increasing their net profits,
or converting deficits into profits, or reducing losses,
and aggregate net profits for all groups were nearly
five times as large as in the second quarter of 1932,
although they remained considerably below 1931.
For the first half of 1933, reports of 435 companies are
available, a larger number than for the second quarter,
since many concerns publish half-yearly but not quar­
terly reports. These reports indicate total net profits
more than twice as large as a year ago, although still
far below the total for the first half of 1931. Twelve
of the 27 groups shown in the table did not improve
their half-yearly net profits over those reported last
year, owing in part at least to the very poor showing
during the first quarter.
The improvement in the earning power of the railroads
paralleled that of the industrial concerns, as is indi­
cated by the second part of the diagram. Net operating
income of the Class I railroads in the second quarter
was between two and three times as large as in 1932,
with the result that the total for the first half year was
about 40 per cent ahead of last year, although in the
first quarter net operating income was only half as
large as in 1932.
The telephone and other public utility companies,
however, reported a smaller return this year than last,
both in the second quarter and in the first six months,
according to reports available at the present time.

Num­
ber
of
com ­
pa­
nies

MILLIONS
OF COLLARS

M
ILLIONS
OFQOLLARS

)

529
500

1

/

' \

.

\

400

— N l i 3 30
x

300
\

931
r v
193 3 /
\

\

200

\

)

100

\

J?*1

) INDUS,T R IA L '
..... ...... j
1ST

2N D

3RD

4TH

1ST

2ND

3R D

4TH

Q uarterly N e t Profits of 1 63 Industrial and M ercantile Corpora­
tions, and N e t Operating Incom e o f C lass I Railroads




Corporation groups

Second
quarter
1931

1932

13

Building supplies.........
S teel...............................

1.1
1 .0

1933

1.4

6
6

Mining and smelting
(excl. copper, coal
and co k e ).................
Household equipment.
Clothing and textiles..
Automobile parts and
access, (excl. tires)..
Office equipm ent.........
Leather and shoes. . . .
Shipping........................
Chemicals and drugs..
Food and food prod.. .
Printing and pub........
M otion picture and
amusement...............

6 1.5

— 0.2
— 1.5

12
6

5

47.9
0 .3
2 .9

5 .0
1.8
1.4 — 0 .3
— 0.8

2.6

6.6

i ’. i

18
37
4

41.9
3 .7

0 .5
7 .2
3 1.0

2
6
11

19
4
7

7 .9 — 1 . 0

12.0

Coal and co k e ..............
M achinery. ..................
Railroad equipment.. .
C op p er..........................
Rubber and tires.........
Electrical equipm ent..
O il..................................
Miscellaneous...............

24
36

i i *8
— 27.9
2 3.3

Total
f2 4 — for 2 nd quar.l
^27 — for 1 st half J ..

294

165.2

103

72.3

50

79.5

Total public utilities

153

Class I railroads {net
operating in co m e ). .

150

0.6
0.6
0.2

— 14.2
— 0 .5
— 1.4
— 2 .3
— 1.6
— 1.2

19.7

Telephone (net operat­
ing incom e)...............
Other public utilities
(net earnings)..........

12

9
5
'8

39

’ 6 ’.4
8 .4
31.8
0 .3

2.1

3 .2
2 .3
1.4
0 .7
1.5 — 1 . 8
8 . 2 — 36.3
0 .5 — 0 . 8
0 — 1.5
1 . 8 — 2 .4
2 .7 — 1.5
— 0 .7 — 1.3

17
8
22

5 .5
1.4

0.2

‘6

15
9
9
9

1.3
0 .4

0 .2

31
7

Num­
ber
of
com ­
pa­
nies

0 .5
0 .3
13.6 — 6 .5
7 .8
15.6

8
6
8
22

45
8
2

7
17
22

4
9
21
12
6
6
12

First
six months
1931

1932

8 9.5
2 .9

2 .4

1.2

— 1.8

13.0

2.1

0

1933
4 3.8
0 .5
2 .7
7 .5

11.3
3 .7
1.4 — 1 . 6
— 0 .9 — 15.3

10.1
0 .2

13.3 — 7 .2
1.4
5 .6
2 .9
5 .6
0.8 — 0 .2
28.7
18.3
100.3
7 4.5
10.7
5 .8

0 .4
2 .5
4 .6

8.0

6.0

1 .4

0

16.9
65.9
2 .3
2 .2

2 .7
1.2
5 .2 — 5.1
14.7 — 6 7.7
1.3 — 1 . 0
1 . 0 — 3.1
5.1 — 6 .5
6 .3 — 3 .8
— 0 .9 — 2 .3
1.7 — 4 .2
20.2

0 .4
— 2.0
— 50.3
— 0 .9
— 3 .2
— 7 .4
— 5 .1
— 3 .3
— 6.1
2 . 8 — 1.9
1 2 . 6 — 33.8
31.1
21.1

30
62

— 39.7
67.5

96.8

435

376.5

3 5.0

51.2

47.1

103

141.8

102.0

88.5

68.9

60.7

50

168.3

148.5

125.4

151.8

120.1

107.8

153

310.1

250.5

213.9

129.2

44.2

119.2

150

235.4

109.6

152.9

7 8.5

In dexes of Business A c tiv ity
A moderate recession appears to have occurred in
primary distribution of goods since the middle of July,
but the distribution of goods to consumers, which had
tended to lag, appears to have improved moderately.
Two of the best measures of general business activity—
the railroad movement of less than carload and miscel­
laneous freight, and electric power production — are
shown in the accompanying diagram. From March to
July the index of freight traffic rose 30 per cent, while
that of electric power output advanced 21 per cent, and
in both cases the July levels were the highest since early
in 1932. These gains were of longer duration and larger
magnitude than any previous advance during the last
four and a half years, as the diagram shows, and the
recession which has occurred since the middle of July
has offset a relatively small portion of the rise. In
contrast to these declines, the dollar value of department
store sales in the New York Metropolitan area during
the first half of August was 3 per cent larger than in the
corresponding period a year ago, which represents the
first year to year increase in the daily average rate of
sales since the middle of 1930.
For the month of July as a whole, increases over June
were shown by a large majority of this bank’s season­
ally adjusted indexes of trade and business activity.
Among the principal series, increases occurred in freight

FEDERAL RESERVE AGENT A T N EW YO R K
INDEX

W e e k ly Indexes o f E lectric Power Production and L o adings o f
M iscellaneou s and L e ss than Car Load F reigh t (Fed eral
R eserve B ank of N ew Y o rk indexes ad ju sted for usual
seasonal m ovem ent and long tim e grow th )

traffic, foreign trade, department store and wholesale
trade, chain store trade other than grocery sales, pas­
senger automobile registrations, volume of check trans­
actions, and electric power production. In addition,
business failures declined more than is usual in July.
There were only minor decreases in a few lines. Most
of the indexes in July were at a considerably higher
level than in July 1932.
(Adjusted for seasonal variations, for usual year to year growth,
and where necessary for price changes)

69

March to July, and in the steel industry operations dur­
ing the second half of the month declined 10 points
to 47 per cent of capacity, after having been maintained
during the first half of August at about the same level
as in the latter part of July. The production of auto­
mobiles, however, appears to have been well maintained.
In July, productive activity rose sharply for the fourth
consecutive month, with the result that the Federal Re­
serve Board's seasonally adjusted index increased 8 per
cent to 98 per cent of the 1923-25 average. A t this figure
the index was 38 points, or 63 per cent, above the March
level and was at about the average level of 1930. Large
increases from June to July, both before and after sea­
sonal adjustment, occurred in the production of pig iron,
steel, zinc, bituminous coal, and building materials, and
in the activity of wool mills, and the output of auto­
mobiles was reduced considerably less than usually. Con­
sumption of cotton and production of shoes showed little
change other than seasonal, but consumption of silk and
the output of lead and tobacco were substantially
reduced.
(Adjusted for seasonal variations and usual year to year growth)
1932

1933

July

M ay

June

July

19
21
28
29
41

25
41
32
40
71

39
64
38
46
85

59
85
32
61

25
28

33
48

45
66

50p
70p

50r
55 r
ser­
es
70

60r
47r
42r
82
68

69r
71r
52 r
81
71

82r
68r
65r
79p

Metals
Steel ingots..........................................................
Tin deliveries......................................................

Automobiles
1932

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

1933

Fuel»
July

Primary Distribution
Car loadings, merchandise and m isc.r. . .
Car loadings, oth er......................................
E xp orts............................................................
Im ports...........................................................
W aterways traffic.........................................
Wholesale tra d e............................................
Distribution to Consumer
Department store sales, 2nd dist..............
Chain grocery sales......................................
Other chain store sales................................
M ail order house sales.................................
A dvertising.....................................................
Gasoline consumption r ..............................
Passenger automobile registrations..........
General Business Activity
Bank debits, outside of New Y ork C ity..
Bank debits, New York C ity .....................
Velocity of bank deposits, outside of New
Y ork C it y ............... ..................................
Velocity of bank deposits, New Y ork C ity
Shares sold on N. Y . Stock E xch an ge. . .
Life insurance paid f o r ................................
Electric p ow er...............................................
Employment in the United S tates...........
Business failures............................................
Building co n tr a c ts .......................................
New corporations formed in N. Y . State.
Real estate transfers r .................................
General price level*......................................
Composite index of w ages*........................
Cost of liv in g *...............................................
p Preliminary

r Revised

M ay

June

July

Bituminous ooal r .............................................
Anthracite coal r ...............................................

51r
41
43
53
31
77

54r
48
43r
53
46
99

58 r

60r
63
57 p
77 p

Petroleum, crude...............................................
Petroleum products..........................................

47
64
55
lOOr

73
72
76
69

72
60
71
66
51

55

6 8r
29

72r
36

71
60
75
65
54
81r
47p

65
61

57
53

62
58

81
61
75
74
68
60
133
27
91
51r

73
52
231
64
66
62
84
15
85
45r

129
179
139

127
172
127r

55

112
73p
58
79 p
66
53

67
67 p

Cotton consumption........................................
W ool mill activity............................................
Silk consumption...............................................

56
64
82
77

104
104
82
114

120
133
88
122p

119
151
79
124p

87
85
94r
80r

105
101
93r
94r

110
98r
77 r
88 r

113
94
75r
79r

45
55
30
64r
72

37
62
33
57r
71

43
77
42
59r
77

48

Foods and Tobacco Products
Livestock slaughtered.....................................
W heat flour.........................................................
Sugar deliveries r ..............................................
Tobacco products r ..........................................

50p

Miscellaneous

.

78
62
310
67
69p
66
76
19
85
47r

90
75
375

128
173p
128r

132
175p

71p
7 lp
72
70
17
83

* 1913 average= 1 0 0

P rodu ction
During August a moderate recession from the com­
paratively high levels reached in July occurred in the
output of a few of the leading industries. Activity in
the cotton textile industry was reported to have declined
somewhat, following the extraordinary expansion from




Textiles and Leather Products

Lum ber.................................................................
Printing activity r ............................................
Newsprint paper................................................
p Preliminary

51
79

r Revised

C o m m o d ity Prices
Following an abrupt decline during the latter part of
July, the prices of actively traded farm products fluctu­
ated irregularly during August, but on the whole showed
a moderate net decrease for the month. The cash price
of Number 1 Northern wheat at Minneapolis dropped
7 % cents to 86*4 cents a bushel, as compared with a
July high of $1.22%, and spot cotton receded 55 points
to 9.45 cents a pound, reaching a level 2.30 cents below
its high of July 18. Moderate decreases occurred also
in the prices of livestock and hides. While the quota­
tions for those farm products which have been especially
sensitive to speculative influences were substantially
below the levels prevailing at the middle of July, prices

70

MONTHLY REVIEW, SEPTEMBER 1, 1933

of agricultural products as a whole showed only a moder­
ate decline from July 15 to August 15. Farm prices
at the farm, as measured by the index of the Depart­
ment of Agriculture, receded 5 per cent during this
period, following an advance of 55 per cent in the pre­
vious five months. Among the various component groups
of the index, pronounced declines occurred only in the
grain and cotton classifications, while fruits and vege­
tables showed a large advance, and miscellaneous farm
products rose moderately.
Basic commodities other than domestic agricultural
products showed little or no net change during August.
Commodities for which the changes in quotations were
small included the nonferrous metals, steel scrap, rubber,
silk, and sugar.
In general, the prices of manufactured goods were
stable or showed a continued upward tendency in
August. The prices of textile products advanced con­
siderably further accompanying increased manufactur­
ing costs, and building material prices also showed a
moderate advance.
F oreign T ra d e
The value of this country’s foreign merchandise trade
in July showed a substantial increase over the previous
month, contrary to the usual movement during the sum­
mer. After allowance for the usual seasonal variations,
both exports and imports were about 25 per cent above
June in value, due to increases both in commodity prices
and in the volume of shipments. Compared with a year
ago, exports which amounted to $145,000,000 were 36
per cent larger, and imports which totaled $143,000,000
were 80 per cent larger.
The quantities of several of the leading export and
import commodities in the foreign trade of the United
States which were shipped or received during the first
seven months of this year are shown in the accompany­
ing diagram in comparison with the movements of these
commodities during 1932 and 1931. All four of the im­
port commodities shown in the diagram were received
in larger volume in July than a year ago, the increases

ranging from 29 per cent in the case of coffee to 65
per cent in the case of sugar. Receipts of crude rubber
and raw silk also were above those for two years ago as
well, imports of rubber showing a sudden expansion
from June to July, while silk imports have increased
continuously and substantially since February.
In the case of the important export commodities shown
in the diagram July shipments of three of the four com­
modities or groups were considerably larger than a year
ago. An exception was the export of wheat and wheat
flour, which has declined and has been reduced in im­
portance from 7.5 per cent of the value of all exports
in 1921-1925 to about 1 per cent currently. Automobile
exports were nearly double the small number of a year
ago, while shipments abroad of raw cotton, which have
been expanding against the usual seasonal tendency since
April, showed an increase over last year of more than
50 per cent, and shipments of refined petroleum products
showed a rise of almost 40 per cent.
E m p lo y m e n t and P ayrolls
A large increase in employment and payrolls in the
United States was reported for the period from the mid­
dle of June to the middle of July. According to the
seasonally adjusted index of the Federal Reserve Board,
working forces at factories showed a rise of 8 per cent,
and payrolls advanced 12 per cent after seasonal allow­
ance. Considerable increases occurred in nearly all of
the principal manufacturing lines. Working forces and
wage payments were larger also in railroad transporta­
tion, mining, and wholesale trade, but the number of
workers engaged in building construction showed little
change, and employment in retail establishments receded
seasonally.
The number of workers returned to employment from
March to July is estimated at about 2,000,000. About
half of this increase represented a rise in factory work­
ing forces, and the balance occurred in other activities,
including agriculture, trade, railroad transportation,
and construction.
A sharp reversal of the downward tendency of factory

EXPORTS

J F M A M J J

A . S O N

D

J F M A M J J

A

5

O N

D

J

F M A M

J

J

A

S O N

D

J F M A M J J

A S O N D

Quantities of Important Commodities in Export and Import Trade of the United States, 1933 Compared with Previous Two Years




FEDERAL RESERVE AGENT AT NEW Y O R K
TH O U SAN D S
OF EMPLOYEES

2 5 0 , -----------------

200
WAGE RATE
-I N C R E A S E S -

150

100
50

0

tljttr

T
1

p ir n

50

100
150

WAGE RATE
- DECREASE S -

200
250

J ___ I
___L

J ___I
___L

J ___ I L
___

1929
1930
1931
N u m ber of F a ctory E m p loyees A ffected by
and D ecreases (D a ta collected b y B ureau
from reporting establishm en ts in the

J ___ I____L_

1932
1933
W a g e R ate Increases
of Labor S tatistics
U nited S ta te s )

wage rates during June and July is indicated by data
collected from reporting establishments by the Bureau
of Labor Statistics, which are shown in the accompany­
ing diagram. In the month ended June 15 wage rate
increases were granted to 213,000 workers, or 7.6 per
cent of the employees covered by reports to the Bureau
of Labor Statistics, and 202,000 workers received in­
creases in the following month. Wage rate increases had
been negligible since early in 1930, and reductions had
been especially numerous since the last quarter of 1931.
The recent increases have affected about the same num­
ber of employees as did wage cuts in the month of most
widespread reduction in 1932.
In New York State, factory employment increased 5
per cent from June to July, although the usual seasonal
movement is downward. After allowance for seasonal
changes, employment rose 20 per cent from March to
July, reaching a level 19 per cent above that of July
1932. Payrolls showed an unseasonal increase of 6 per
cent in July, and after seasonal adjustment were 32 per
cent higher than in March, and 22 per cent above the
corresponding period a year ago.
B u ilding
Following increases in the two previous months, this
bank’s index of building contracts which is adjusted
for seasonal variations and long term growth, receded
somewhat during July. Contracts for public works and
utilities and other non-residential building showed more
than seasonal declines, and total contracts for July were
19 per cent below the June total according to the F. W .
Dodge Corporation report. Residential contracts, how­
ever, showed little change after seasonal adjustment, and
continued above the level of a year ago for the third
consecutive month. The increase over a year ago of
20 per cent in residential building in July compares
with a decline of 67 per cent in public works and utility
contracts. There was also a decline of 18 per cent in
other non-residential construction, which was due
T
entirely to a shrinkage in contracts for buildings of a
public or semi-public character. Contracts for factory
construction and some types of commercial buildings,




7
1

such as warehouses, showed a considerable increase over
last year.
During the first three weeks of August, the average
daily amount of building and engineering contracts
awarded showed a sizable increase over the July level,
in contrast to a usual seasonal decline. The increase
was entirely in public works and utility projects, which
for this period considerably exceeded those for the whole
month of July. Total contracts as a consequence were
only 21 per cent below a year ago, a much more favor­
able comparison than in preceding months. Residential
building continued to be the only class to show an
increase over last year, but the decline in public works
and utilities was reduced to about 20 per cent.
For the first seven months of 1933, the total value of
building and engineering contracts was 35 per cent below
a year ago. Residential building was 25 per cent
smaller, public works and utility contracts nearly 50
per cent smaller, and other non-residential building 28
per cent less than in the corresponding months of 1932.
A few types of industrial construction, including chemi­
cal, food and beverage, and petroleum plants, showed
substantial increases over last year, but there were large
declines in contracts for schools, churches, hospitals and
other institutions, public buildings, and highways— all
of which are dependent largely for their financing upon
governmental organizations or upon public contribu­
tions. Private construction also has undoubtedly been
retarded by financing difficulties due to the unavail­
ability of mortgage money and the virtual cessation of
new security flotations.
Crops
According to the August 1 report of the Department
of Agriculture, weather conditions during the current
season were more adverse to the production of crops
than in any corresponding period of the past fifty years.
For several crops the estimated condition on August 1
was the lowest on record, and in the case of a number of
others the condition was unusually poor. In addition,
acreage under cultivation was somewhat smaller than the
acreage harvested last year; this reduction also was prin­
cipally the result of unfavorable weather conditions.
The following diagram shows the estimated pro­
duction of ten leading crops as percentages of the aver­
age harvests for the period 1926-1930. As this indicates,
the largest decline has occurred in grains other than
corn. The estimated 1933 harvest of all types of wheat,
at 500,000,000 bushels, is 42 per cent below the average
harvest of 1926-1930, and is the smallest since 1893. The
prospects for oats, rye, and barley are no more favorable
than those for wheat. On the other hand, the indicated
corn output, at 2,300,000,000 bushels, is only 10 per cent
below the five year average harvest, although it is 600,000,000 bushels or 21 per cent less than last year’s un­
usually large crop. The indicated yield of potatoes is
17 per cent smaller than last year’s harvest, which was
about equal to the average crop of 1926-1930. The esti­
mated production of tobacco, although somewhat below
the five year average, is considerably larger than last
year’s output, reflecting an increase of 22 per cent in
acreage planted to tobacco. The estimated production of

72

MONTHLY REVIEW, SEPTEMBER 1, 1933
1926-30 AVERAGE
= 100 PER CENT
TO B A CC O
CORN
HAY ( t a m e )

Department store stocks of merchandise on hand, at
retail valuation, were only 4 per cent below last year,
the smallest decline in 3 years, and apparel store stocks
showed a somewhat smaller decline than in recent months.
Department stores in practically all localities and also
apparel stores reported better collections on charge
accounts than a year ago for the third consecutive month.

APPLES
Percentage
change from
a year ago

COTTON
POTATOES

Locality

BARLEY
W HEAT
OATS
R YE
A u g u s t 1 9 3 3 Production E stim a tes o f D epartm en t o f A g ricu ltu re
for Ten Principal Crops Com pared w ith A v era g e
H a rv e sts o f 1 9 2 6 to 1 9 3 0

apples is also somewhat less than the five year average,
but is larger than last year 's harvest.
As a result of the expected removal of 10,300,000 acres
from cultivation through the acreage reduction program
of the Agricultural Adjustment Administration, this
year's indicated cotton crop has been reduced to 12,300,000 bales, which is 700,000 bales below last year's rather
small crop and the smallest production since 1923. The
acreage reduction amounts to about one-fourth of the area
in cultivation on July 1, and leaves an indicated area for
harvest of 29,700,000 acres. This figure is two-thirds of
the average acreage harvested in 1926-1930, and is the
smallest since 1907. In contrast to almost all of the other
principal crops, the condition of this year's cotton crop
is exceptionally high, and it is estimated that the har­
vest, had there been no reduction program, would have
been the third largest on record.
D e p a rtm e n t Store T rad e
Total July sales of the reporting department stores
in this district were 2 per cent below a year ago, the
smallest decline in average daily sales since March 1931.
The daily rate of sales of department stores in Buffalo,
Southern New York State, and the Capital district,
showed the largest increases over the previous year in
about 3 years, and sales of New York City stores were
reduced by the smallest percentage since March 1931.
Sales of the Bridgeport department stores were about
the same this year as last year, following a moderate
decline in June, and the Newark, Rochester, and Syra­
cuse stores reported approximately the same percentage
changes in July as in June. Sales of the leading apparel
stores in this district, moreover, were ahead of a year
ago by about the same amount as in June when the first
appreciable increase in more than three years occurred.
In the first half of August, department store sales
in the Metropolitan area of New York were 3 per cent
larger than the corresponding period a year ago, and
average daily sales showed the first increase since May
1930.




Net
sales

Stock
on hand
end of
month

Per cent of
accounts
outstanding
June 30
collected in
July
1932

1933

New Y o r k ...........................................................
Buffalo..................................................................
Rochester............................................................
Syracuse..............................................................
N ew ark................................................................
B ridgeport..........................................................
Elsewhere............................................................
Northern New Y ork S tate..........................
Southern New York S ta te..........................
Hudson River Valley D istrict...................
Capital district..............................................

— 1.7
+ 6 .3
— 10.2
+ 3.1
— 6 .9
+ 0 .3
+ 1.3
— 5 .5
+ 4 .7
— 0 .6
+ 4 .7

— 0 .4
— 20.5
— 10.8
— 2 1.7
— 3 .7
— 3 .3
— 11.3

4 0.8
37.8
39 .5
35.8
3 5.4
3 1.8

4 5.4
4 0.7
39 .2
24.7
38.4
39.0
2 9.6

All department stores..............................

— 2.0

— 3 .9

3 7.8

4 1.3

Apparel stores............................................

+ 2.2

— 17.5

38.1

4 2.3

22 .0

W h o lesale T ra d e
July sales of the reporting wholesale firms in this dis­
trict averaged 81 per cent higher than a year ago, by far
the largest increase ever recorded in reports to this
bank. All lines of wholesale trade showed increases over
last year, and in the hardware, grocery, shoe, cotton
goods, silk, men's clothing, jewelry, and diamond trades
the increases were of record proportions. Sales of the
paper concerns and orders for machine tools were above
those of a year previous by the largest percentages since
the fall of 1928, and sales of the stationery firms showed
the largest advance since December 1929.
The reporting grocery and hardware firms had larger
stocks on hand at the end of July than a year ago, but
other lines continued to report smaller inventories than
last year. July collections of accounts outstanding again
averaged higher than last year.

Com m odity

Percentage
change
July 1933
compared with
June 1933

N et
sales
M en’s clothing...............
Cotton go o d s..................

Machine tools**............
Paper................................

Weighted average. . .

— 1.5
— 26.2
+ 2 2 .4
— 2 .4 *
- f 7 .2
+ 5 .9
— 18.5
+ 3 5 .4
+ 2 .3
— 7 .4
— 3 .9
— 24.7
— 4 .0

Stock
end of
month

Percentage
change
July 1933
compared with
July 1932

Net
sales

+ 10.8

+ 3 1 .0
+ 1 5 6 .4
+ 2 2 '.3 + 1 2 8 .0
— 8 . 1 * + 9 0 .0 *
+ 9 0 .4
+ 0.6
+ 5.1
+ 1 8 .7
+ 2 3 .6
+ 1 1 3 .0
+ 9 .0
+ 1 7 .9
— 18.6 + 2 3 5 .2
— 7 .7 + 1 3 2 .9
+ 8 0 .9

Stock
end of
month

Per cent of
accounts
outstanding
June 30
collected in
July

1932

1933

— 8 ’.3
— 34.0*

73.8
27.2
29.7
61.3

84.4
30.2
30.1
64.8

— i o .7
+ 9 .2

2 i ’.4
4 4 .0

2 0 ‘3
.

48.1
3 9.4

— 38.6
— 4 4.4

5 i ‘.9
39.9
J 16.4

} 21 .0

4 7.0

51.1

+ 3 9 .4

* Quantity not value. Reported by Silk Association of America
** Reported by the National Machine Tool Builders Association

4 0.7

FEDERAL RESERVE BANK OF NEW YORK
MONTHLY REVIEW, SEPTEMBER 1, 1933

Business Conditions in the United States
(Summarized by the Federal Eeserve Board)

I ND USTRIAL

production increased further from June to July, contrary to
seasonal tendency, and in recent weeks has continued at a relatively high
level. Since the middle o f July there have been reductions in wholesale prices
o f leading raw materials while prices o f many other products have advanced.

Index N um ber o f Production o f M an u factu res
and M inerals Com bined, A d ju sted for Seasonal
V ariation ( 1 9 2 3 - 2 5 average = 1 0 0 per cen t)

Index N u m bers o f F a ctory E m p lo ym en t and
P a yrolls, W ith o u t A d ju s tm e n t for Seasonal
V ariation ( 1 9 2 3 -2 5 a v e r a g e = 1 0 0 per cen t)

P roduction and E mployment
Volume o f industrial output, as measured by the Board fs seasonally
adjusted index, advanced from 91 per cent o f the 1923-1925 average in June
to 98 per cent in July, which compares with 60 per cent in March. The prin­
cipal increase in July was at steel plants where activity advanced from 46 per
cent o f capacity to 59 per cent. Production in the lumber and coal industries
was also in larger volume and daily average output o f automobiles showed none
o f the usual seasonal decline. Output at shoe factories and woolen mills con­
tinued at an unusually high rate while consumption of cotton by domestic mills
decreased somewhat. Cigarette production declined sharply from the high level
o f May and June. Since the middle o f July a decrease has been reported in
the output o f steel.
Working forces and payrolls at factories increased considerably between
the middle of June and the middle o f July. As in other recent months the
largest increases were generally at establishments fabricating raw materials
into semi-finished products.
Value o f construction contracts awarded, as reported by the F. W. Dodge
Corporation, showed a decline in July followed by an increase in the first half
o f August. Total awards during the six weeks were in about the same volume
as in the preceding six weeks and in larger volume than in earlier periods
this year.
Department o f Agriculture estimates as o f August 1 indicate harvests
generally smaller than a year ago. The cotton crop is forecast at 12,314,000
bales, a reduction o f 700,000 bales from last season, reflecting curtailment in
acreage as a part o f the program o f the Agricultural Adjustment Administra­
tion, offset in large part by an unusually high yield per acre. The wheat crop
is estimated at 500,000,000 bushels, a reduction o f 225,000,000 bushels from
last year’ s small harvest, and feed crops are expected to be unusually small.
D istribution
Freight traffic increased further from June to July by a substantial
amount, but in recent weeks shipments, particularly of miscellaneous freight
and grains, have been somewhat smaller. Department store sales declined in
July by about the usual seasonal amount; they were larger than a year ago,
however, and trade reports for the first half o f August indicate an increase
in sales.
W holesale P rices
Wholesale prices o f commodities increased further during the first three
weeks o f July and, according to the index o f the Bureau of Labor Statistics,
there has been little change in their general level since that time. Prices of
grains, cotton, and many imported raw materials, however, were considerably
lower in the third week o f August than in the middle o f July while prices o f
textiles were higher, reflecting in part the application o f the processing tax on
cotton. Prices o f leather and coal also advanced during this period.

Index N u m bers of B uilding C ontracts B ased on
T h ree M onth M o v in g A v e r a g e s o f F . W .
D odge Corporation D ata for 3 7 S tates, A d ­
ju sted for Seasonal V ariation ( 1 9 2 3 - 2 5
average = 10 0 per cen t)

W e d n e sd a y F igu res fo r R eporting M em ber
B anks in 9 0 Cities (L a te s t figures are for
A u gu st 16)




F oreign E xchange
In the exchange market the value o f the dollar in terms o f the French
franc advanced from a low o f 69 per cent o f its gold parity on July 18 to 75
per cent at the beginning of August and since that time has fluctuated between
73 and 75 per cent.
B ank Credit
Net demand deposits o f weekly reporting member banks in 90 cities
declined between the middle o f July and the middle of August, owing in large
part to further withdrawals of bankers’ balances from banks in New York City
and elsewhere. The banks ’ loans decreased by $71,000,000 during the period,
reflecting chiefly a reduction in loans to brokers and dealers in securities. Their
holdings o f United States Government securities, after declining between
July 19 and August 9, increased during tlie week ended August 16 in connec­
tion with Treasury financing at that time.
Total reserves o f all member banks increased by $81,000,000 during the
four week period ended August 16, reflecting chiefly the purchase o f $42,000,000 o f United States Government securities by the Reserve Banks and a
return o f $23,000,000 of currency from circulation. The growth in member
bank reserves, occurring at a time when reserve requirements were being
reduced in consequence of a decline in their deposits, brought their excess
reserves to a level above $550,000,000.
Money rates in the open market generally continued at low levels.