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Summary ^ H E fin a n c ia l r e c o r d o f th e la s t t h ir t y d a y s sh o w s a s to c k m a r k e t r e c e n t ly a d ju s te d to s tr ic t e r b a n k in g r e q u ir e m e n t s b u t m a r k in g t i m e ; a bond m a r k e t o n w h ic h G o v e r n m e n t issu e s h a v e p r e p o n d e r a t e d ; a n e w in v e s t m e n t m a r k e t m u c h la r g e r th a n is c u s to m a r y a t th is se a so n , a n d a m o n e y m a r k e t w h ic h h a s b e e n a t o n c e s te a d ie r a n d e a s ie r th a n f o r s e v e r a l m o n th s . The d e c lin e in ra te s, f o llo w in g th e h e a v y r e d e m p t io n o n S e p t e m b e r 1 5 t h o f U n it e d S ta te s c e rtific a te s o f in d e b te d n e s s , w a s im m e d ia te a n d p r o n o u n c e d . F o r e ig n e x c h a n g e ra te s o n E u r o p e h a v e c o n tin u e d to go d o w n a n d e x p o r t tr a d e is lo o k in g to S o u t h A m e r ic a a n d th e O r ie n t f o r a g r e a t p a r t o f its b u s in e s s . T h e in c r e a s e in S o u t h A m e r i c a n b u s in e s s w a s m a in ly re s p o n s ib le f o r th e h ig h e r e x p o r t fig u r e s f o r A u g u s t . C e r t a in p r o d u c ts a t th e c o r e o f th e c o s t o f l iv i n g a r e d e c lin in g in p r ic e . C o r n , o ats, p o r k , l iv e b e e f a n d flo u r h a v e lo w e r e d f r o m 8 to 2 0 p e r c e n t, s in c e th e e n d o f J u l y . H id e s w h ic h b e a r im p o r t a n t ly o n sh o e a n d le a t h e r p r ic e s a r e d o w n a b o u t 1 5 p e r c e n t., a n d c e r ta in g r a d e s o f c o tto n go o d s a lso h a v e d e c lin e d . M o r e o v e r , th e r e a re sig n s o f c r e d it liq u id a t io n , w h ic h w o u ld b e a n a t u r a l a c c o m p a n im e n t o f r e d u c t io n in th e s c a le o f p r ic e s . R e t a il p r ic e s a r e s lo w to f o llo w r e d u c tio n s in th e w h o le s a le m a r k e t s a n d m a y b e e x p e c te d to k e e p u p a s lo n g as b u y e r s c o n tin u e to p u r c h a s e w it h o u t r e g a r d to e c o n o m y . L a b o r d iffic u ltie s a r e g e n e r a l, b a s e d c h ie fly o n th e d e s ir e o f la b o r in g p e o p le to s e c u r e a la r g e r sh a re in th e r e t u r n s o f in d u s t r y . seem s to b e a s e c o n d a r y fa c to r . T h e c o st o f l iv i n g A t th is tim e th e r e is in c r e a s in g p u b lic ir r i t a tio n w it h s tr ik e s w h ic h a ffe c t th e p r o d u c tio n o f a r t ic le s o f v it a l n e c e s s ity , a n d th e m o r e c o n s e r v a tiv e a m o n g la b o r le a d e r s a r e r e s p o n s iv e to th is p o in t o f v ie w . REPORT ON B U S IN E S S C O N D IT IO N S T h e e x tra o rd in a r y e v e n t in th e m o n e y m a r k e t d u rin g th e la s t m o n th w a s th e re M on ey and d e m p tio n on S e p te m b e r 1 5 o f U n ite d S t a t e s c e rtifica te s of in d e b te d n e ss. B a n k in g th e F e d e r a l R e s e r v e B a n k o f N e w Y o r k p a id $ 3 4 8 ,0 0 0 ,0 0 0 o f c e rtificate s a sid e fro m th o se re c e iv e d in p a y m e n t of ta x e s . $ 3 7 4 ,0 0 0 ,0 0 0 . On th a t d a y O n su ccee d in g d a y s th is a m o u n t in creased to a b o u t T h e effects o f th e release of th is la rg e su m o f m o n e y w ere w id e -sp r e a d . C a ll m o n e y on th e N e w Y o r k m a r k e t declin ed im m e d ia te ly to 4 p e r c e n t; w ith in th ree d a y s th e b o rro w in g s o f m e m b e r b a n k s a t th e F e d e r a l R e s e r v e B a n k fe ll off a b o u t $ 2 2 5 , 0 0 0 ,0 0 0 , in d ica tin g a h e a v y , th o u g h p e rh a p s tr a n s ie n t, liq u id a tio n ; tim e m o n e y b e c a m e easier a n d co m m e rcia l p a p e r ra te s declin ed to 5 ) 4 a n d 5 p e r c e n t fo r b e s t n a m e s, a n d th e d ealers re p o rte d in c re a sin g d e m a n d . M o r e o v e r , as th e T r e a s u r y D e p a r t m e n t fo re s a w , th e d eclin e in ra te s c re a te d a p a r tic u la r ly fa v o r a b le m a r k e t fo r th e n e w issues o f c e rtificate s o f in d e b te d n e ss, su b scrip tio n s fo r w h ic h o p en ed on S e p te m b e r 1 5 . I n th re e d a y s su b scrip tio n s re c e iv e d a t th e F e d e r a l R e s e r v e B a n k a m o u n te d to $ 4 3 7 ,0 0 0 ,0 0 0 , m o st o f w h ic h w ere fo r th e o n e -y e a r c e rtifica te s b e a rin g 4 3 ^ p e r c e n t. A seco n d a n d h ig h ly im p o r ta n t fa c to r in e ffe c tin g a d eclin e in th e m o n e y m a r k e t w a s a sm a ller d e m a n d th a n u su a l for c ro p -m o v in g fu n d s. P rio r to th e e s ta b lish m e n t o f th e F e d e r a l R e s e r v e S y s t e m th e w e s t d re w h e a v ily on N e w Y o r k fo r fu n d s w ith w h ic h to m o v e th e cro p s, b u t in th e la s t fiv e y e a r s th e re h a s b een a p e rc e p tib le d ecrea se. T h is d eclin e a p p e a rs to b e p a r tic u la r ly h e a v y th is y e a r n o t o n ly on a c c o u n t o f th e o p era tio n s o f th e s y s te m , b u t b e ca u se th e w h e a t crop p ro m ises to b e som e 3 0 0 ,0 0 0 ,0 0 0 b u sh els less th a n e a rly re p o rts in d ic a te d , a fa c t w h ich releases a co rresp o n d in g a m o u n t o f c re d it. M o r e o v e r , th e w e s t h a s e n jo y e d a p erio d o f g r e a t p r o s p e r it y . C o u p le d w ith th e h igh p rice s re a lize d on ce re a ls, liv e s to c k a n d lu m b e r is th e a c t i v i t y of n e w m a n u fa c tu rin g en te rp rise s, a n d th e re su lt is an in c re a sin g self-d ep e n d e n ce o f th e w e st in fin a n c in g its cro p s. T h e c o m p a ra tiv e ease o f th e m o n e y m a r k e ts in th e la s t t h ir t y d a y s is sh o w n in a co m p a riso n o f th e ra te s w ith th o se o f th e p re c e d in g m o n th . I n th e earlier p erio d call m o n e y ra te s rose a s h igh a s 2 0 p e r c e n t, w h e re as in th e A u g u s t-S e p te m b e r p erio d th e y h a v e ra n g e d b e tw e e n 3 3 ^ a n d 8 p e r c e n t. th e h igh ra te tw ic e . T h e lo w ra te w a s to u c h e d o n ly one d a y a n d O n A u g u s t 2 0 th e ra t e rose to 8 p e r c e n t in a n tic ip a tio n o f th e r e p a y m e n t to th e F e d e r a l R e s e r v e B a n k o f G o v e r n m e n t d e p o sits. T h e re n e w e d sto c k exch a n g e a c t iv i t y in S e p te m b e r w a s a tte n d e d b y a secon d rise to 8 p er c e n t on S e p te m b e r 8. T h is h ig h ra te a ttr a c te d fu n d s fro m th e in te rio r, w h e re a c c u m u la tio n s o f m o n e y h a d been e sta b lish e d in a n tic ip a tio n o f cro p m o v e m e n ts a n d th en fo u n d to b e in excess o f re q u ire m e n ts. T h e tim e m o n e y m a r k e t u p to th e la s t fe w d a y s of th e p erio d h a s been q u ie t a n d fe a tu re le ss. D e a lin g s w ere lig h t a n d con fin ed ch ie fly to th e sh o rter m a tu r itie s . R a te s rem a in e d v ir t u a lly u n ch a n g e d a t 5 % -6 p e r c e n t, w ith p r a c t ic a lly no loan s a t th e lo w e r ra te . D u r in g th e la s t w e ek th e re w a s g r e a te r fre e d o m in th e o fferin gs o f fu n d s fo r fo u r a n d six m o n th s’ p erio d s b y in te rio r b a n k s , a f a c t ta k e n a s a fu rth e r in d ica tio n t h a t re q u ire m en ts fo r c ro p -m o v in g w e re n o t as la rg e as h a d been e x p e c te d . T h r o u g h o u t th e p erio d th e re w a s a n a c t iv e d e m a n d fo r a c c e p ta n c e s fro m b o th o u t-o f-to w n a n d N e w Y o r k b u yers. B y S e p te m b e r 1 5 d ealers re p o rte d t h a t th e ir p o rtfo lio s w e re n e a r ly e x h a u ste d . R a t e s rem ain ed u n ch a n g e d . A s id e fro m p u r e ly te c h n ic a l d eficits in la w fu l re s e rv e s sh o w n in th e c le a rin g h ouse sta te m e n ts o f A u g u s t 2 3 a n d S e p te m b e r 2 0 , th e e xp e rie n ce o f N e w Y o r k b a n k s d id n o t d e v ia te fro m th e o rd in a ry . O n A u g u s t 2 3 th e p re c ip ita tin g c au se fo r th e d e fic ie n c y , w h ich a m o u n te d to $ 8 1 3 ,0 0 0 w a s th e w ith d ra w a l o f G o v e r n m e n t d ep o sits in th e a m o u n t FEDERAL o f $ 5 0 ,0 0 0 ,0 0 0 . RESERVE AGENT AT NEW YORK T h e d e ficie n cy w a s c o n v e rte d in to a n excess o f re s e rv e s , as sh o w n m th e sta te m e n t o f th e fo llo w in g w e e k , ch ie fly th ro u g h re d isco u n tin g a t th e F e d e r a l R e s e r v e B ank. C o n c u r r e n tly th e lo a n s a n d d isco u n ts ite m in cre a se d $ 1 0 5 ,0 0 0 ,0 0 0 . I n th e w e ek end ed S e p te m b e r 2 0 , th e b a n k s re d u ce d th e ir b o rro w in g s a t th e F e d e r a l R e s e r v e B a n k to su ch a d egree t h a t th e cle a rin g h o u se s ta te m e n t sh o w e d a d eficit in la w fu l re se rv e s o f a b o u t $ 5 3 ,0 0 0 ,0 0 0 . W it h th e p a y m e n t o f th e S e p te m b e r 1 5 m a tu r itie s o f c e r tific a te s, th e d ep o sits in c re a se d . N e w Y o r k b a n k cle a rin g s fo r A u g u s t d e cre a sed 1 0 . 7 p e r ce n t fro m J u l y , re flectin g a d im in ish e d sto c k e x c h a n g e a c t i v i t y . A u g u s t a y e a r a g o , h o w e v e r, b a n k cle a rin g s w ere u p 3 0 . 5 p e r c e n t. C o m p a re d w ith T h e fo llo w in g sh o w s th e to ta l o f e a ch w e e k o f th e p e rio d : W e e k E nd ed A mount A u g u st 16 $ 4 ,5 6 8 ,6 2 4 ,8 9 1 23 4 ,3 5 2 ,5 2 5 ,18 2 S e p te m b e r 30 3 ,9 0 8 ,4 2 1 ,5 9 3 6 3 ,8 2 6 ,6 9 9 ,1 2 1 13 4 ,2 8 4 ,9 5 9 ,6 4 8 I t a p p e a rs t h a t th e sto ck m a r k e t on o r a b o u t A u g u s t 2 1 e n te red u p o n a n e w p h a s e o f S to c k d e v e lo p m e n t. M ark et T h e N e w Y o r k sto c k e x c h a n g e h o u ses a n d th e ir cu sto m e rs, e s p e c ia lly th e la t te r , d id n o t b e co m e d e e p ly im p resse d w ith th e n e c e s sity o f a d a p tin g th e ir d e a lin g s to th e n e w co n d itio n s in th e m o n e y m a r k e t w h ic h d e v e lo p e d in J u n e a n d J u l y u n til a b o u t th e m id d le o f th e la t te r m o n th . T h e r e a fte r th e g e n e ra l p ro cess o f re d u c in g th e a g g r e g a te a m o u n t o f c a ll lo a n s, a n d in d u cin g th e m a rg in b u y e r s o f s to c k s eith er to ta k e u p th e sh ares b o u g h t, or else in crease th e m a rg in s b e h in d th e m , re q u ire d a little m o re th a n a m o n th . T h e liq u id a tio n in c id e n ta l to th is r e a d ju s tm e n t b r o u g h t d o w n th e W a ll S t r e e t J o u r n a l’ s a v e ra g e p rice o f t w e n t y in d u stria ls fro m 1 1 2 . 2 3 J u l y 1 4 to 9 8 .4 6 A u g u s t 2 0 . M o n e y co n d itio n s h a d been q u ite re a d ju s te d b y a b o u t th e first o f A u g u s t ; b u t th e a d a p ta tio n of th e sto c k m a r k e t to n e w c o n d itio n s p ro v e d a s u su a l to be a ra th e r slo w p ro ce ss. S o it w a s t h a t th e p a s t m o n th w h ic h w e a re n o w co n sid erin g p ro v e d to b e th e first one in v e r y re c e n t tim e s w h ere in th e s to c k m a r k e t c e ased to resp o n d to th e ge n e ra l e x p e c ta tio n s o f e x p a n d in g b u sin e ss a n d g r o w in g p r o s p e r ity , a n d b e g a n to reco gn ize th e m o n e y con d itio n s in cid e n ta l to th e cro p m o v e m e n t a n d a u tu m n b u sin e ss. D u r in g th e la s t w e e k in A u g u s t , w h ile in v e s tm e n t o p in io n a s to th e n e w s itu a tio n w a s fo rm in g its e lf, th e v o lu m e o f d e a lin gs w a s r e la tiv e ly sm a ll, b e in g o n ly a b o u t 7 0 0 ,0 0 0 sh a re s p e r d a y . B u t th e first w e e k o f S e p te m b e r w a s c h a ra c te riz e d b y s u b s ta n tia l b u y in g in a g ro u p o f in d u stria l sh a re s, w h ic h w e re th o u g h t to b e c h e a p ; a n d th is a c t i v i t y , in w h ich th e p u b lic a s w ell as th e p ro fe ssio n a l tra d e rs p a r tic ip a t e d , b ro u g h t th e d ea lin gs u p to m ore th a n 1,4 0 0 ,0 0 0 sh ares d a ily . B y th e b e g in n in g of th e secon d w e e k o f S e p te m b e r th e p u b lic b u y in g seem ed to h a v e la r g e ly sp e n t itse lf a t le a st fo r th e tim e b e in g ; a n d th e d e a lin gs b e c a m e m ore p ro fe ssio n a l a s w ell as sm a lle r. ju d g e s o f v a lu e s . T h e y cen tere d to o , in sto ck s less h ig h ly a p p r o v e d b y c o n s e rv a tiv e M o n e y a n d la b o r co n d itio n s as w ell as th e cro p co n d itio n s d isclo sed b y th e S e p te m b e r re p o rt fo r th e G o v e r n m e n t, h a v e been fu lly co n sid ered b y th e b u y e rs a n d sellers o f sto c k s ; a n d th u s a t th is w r itin g th e m a r k e t seem s to h a v e w o rk e d itse lf in to th e n e u tra l o r b a la n c e d p o sitio n o f h a v in g d isco u n te d th e fa c to rs w h ic h h a v e th u s fa r com e in to sig h t. T h e secon d w e e k o f th e m o n th w a s d is tin c tly one o f eq u ilib riu m ra th e r th a n o f d e v e lo p m e n t a lo n g a n y d efin ite lin e. REPORT ON B U S IN E S S C O N D IT IO N S T h e b o n d m a r k e t o f th e p a s t m o n th h a s been a c o n tin u a tio n o f t h a t o f th e p re v io u s B on d M ark et m o n th o r six w e e k s, e x c e p t t h a t it a c ts as th o u g h th e a d ju s tm e n t to n e w in v e s tm e n t and co n d itio n s w ere n o w m o re n e a r ly c o m p le te . N ew F in a n c in g m o re s lo w ly . A t le a st th is a d ju s tm e n t is g o in g fo r w a rd I n ra ilro a d b o n d s th e p ro n o u n ce d w e a k n e ss o f J u l y a n d A u g u s t h a s b een su cceed ed b y m ere h e a v in e ss a n d d u lln ess. R e p o r t s of ra ilro a d n e t ea rn in gs h a v e n o t im p ro v e d o f la te ; b u t th e b o n d s in d e clin in g fiv e to six p o in ts sin ce th e end o f la s t y e a r a re p e rh a p s co n sid ered b y in v e sto rs to h a v e d isc o u n te d th e u n s a t is fa c to r y ra ilro a d s itu a tio n . P u b lic u t ilit y b o n d s a re g e n e ra lly sellin g no lo w e r th a n t h e y w e re a m o n th a g o . T h e r e w a s w ea k n e ss in th e lo ca l tr a c tio n issues d u rin g th e seco n d w e e k o f S e p te m b e r, b u t lig h tin g a n d p o w e r c o m p a n y b o n d s h a v e b e en g e n e r a lly firm . w ith in th e p a s t m o n th h a v e been th e h e a v ie s t g r o u p ; In d u s t r ia l bonds b u t th e ir re a c tio n a m o u n ts to n o th in g m o re th a n th e loss o f a p o rtio n o f th e s u b s ta n tia l rise w h ic h t h e y e n jo y e d d u rin g th e y e a r en d ed J u n e , 1 9 1 9 . T h e d ea lin gs on th e sto c k e x c h a n g e h a v e c e n te re d m o s tly in U n ite d S t a t e s b o n d s, w h ile tra n sa c tio n s in s ta te a n d m u n ic ip a l issues h a v e b een lig h t, a n d th o se in r a ilw a y a n d in d u stria l b o n d s h a v e b een v e r y lig h t. T h e a b so rp tio n of n e w secu rities b y th e in v e s tin g p u b lic is m u c h la r g e r th a n u su a l fo r th is seaso n o f th e y e a r . T h e g e n e ra l ru le is t h a t as th e v o lu m e o f c a p ita l re q u ire d to fin a n ce th e cro p m o v e m e n t in cre a se s, th e a m o u n t o f liq u id c a p ita l se ek in g in v e s tm e n t in sto ck s a n d b o n d s d im in ish es. P re lim in a ry re p o rts sh o w , h o w e v e r , t h a t fo r th e m o n th en d ed S e p te m b e r 1 5 th ere h a v e been issu ed in th is m a r k e t, $ 4 8 , 2 1 6 , 1 0 0 o f p re fe rre d sto ck s p a y in g 7 p e r c e n t a n d y ie ld in g 6 to 8 p e r c e n t on th e o fferin g p ric e ; $ 1 0 , 6 7 8 , 0 0 0 o f m u n icip a l b o n d s, n o t in clu d in g sh o rt te rm lo a n s, th e in co m e b a sis o f w h ic h v a r ie d fro m 4 . 3 to 4 .9 p e r c e n t; $ 2 4 ,5 0 0 ,0 0 0 in d u stria l b o n d s p a y in g 6 p e r c e n t a n d o ffered on a 6 to 6 % b asis; a n d $ 4 0 ,9 2 0 ,0 0 0 o f co m m o n sto c k s. T h is is a to ta l o f $ 8 3 , 3 9 4 , 1 0 0 o f n e w in v e stm e n t issu es, n o t c o u n tin g th e co m m o n sto c k s. R a ilr o a d secu rities p la y a n in sig n ifica n t p a r t in th is to ta l a n d p u b lic u t ilit y issues n o t a la r g e p a r t . th e re is th e u su al a sso rtm e n t o f p e tro le u m a n d re a l e sta te se c u ritie s. B e sid e s th ese I n g e n e ra l c h a r a c t e r th e secu rities o ffered sh o w no c h a n ge fro m re c e n t m o n th s. P r e lim in a r y re p o rts fro m th e D e p a r t m e n t o f C o m m e rc e sh o w a d ecid ed g a in in e x F o r e ig n T rade and F o r e ig n E xchange p o rts d u rin g A u g u s t , n o t h o w e v e r su fficien t to b r in g th e to ta l b a c k w ith in re a c h o f th e u n p re ce d e n te d figu res fo r J u n e , a b o u t $ 9 2 0 ,0 0 0 ,0 0 0 . $ 5 7 0 ,0 0 0 ,0 0 0 , a n d fo r A u g u s t a b o u t $ 6 4 6 ,0 0 0 ,0 0 0 . T h e figu res fo r J u l y w ere a b o u t T h e ite m o f c h ie f in te re st in th e A u g u s t re p o rt is th e g r o w th of b u sin ess w ith S o u th A m e r ic a . T h e J u n e e x p o rts to E u r o p e w ere a lm o st p re c ise ly th e sam e as th e A u g u s t e x p o rts to th e w o rld . T h e d eclin e in ex p o rts to E u r o p e n o t o n ly a cc o u n ts fo r th e fa llin g off in o u r to ta l o f e x p o rts , b u t it p o in ts to th e p ro b a b le co u rse o u r bu sin ess w ith E u r o p e w ill ta k e a s lo n g a s p re se n t c o n d itio n s p re v a il. T h e r e is little d o u b t t h a t E u r o p e w ill n eed A m e r ic a n food p ro d u c ts in v e r y g r e a t v o lu m e , b u t th e e x te n t to w h ic h o u r o th e r p ro d u c ts w ill co n tin u e to b e e x p o rte d is p ro b le m a tic a l. T h e in crease in th e A u g u s t figu res fo r S o u th A m e r ic a su p p o rts th e o p inion w h ic h h a s com e to us fro m m a n y e x p o rte rs, t h a t o u r sh ip m e n ts o f m a n u fa c tu re d a rticle s to S o u th A m e r ic a a n d th e O rie n t m a y b e e x p e c te d to b e g r e a te r th a n su ch e x p o rts to E u r o p e . T h e r e a p p e a rs to b e a p ro fo u n d b elief in th e req u ire m en ts o f E u r o p e fo r A m e r ic a n m a te ria l a n d A m e r ic a n m a n u fa c tu re d a rtic le s. B u t th ere is a differen ce o f o p in io n a s to h o w fa r A m e r ic a n co m m e rce c a n ta k e a d v a n ta g e o f it , b e ca u se E u r o p e is fin d in g it in c re a sin g ly d ifficu lt to p a y fo r h er p u rch a se s. A t th is tim e E u r o p e a n e x p o rts to a la rg e e x te n t a re fin a n ce d b y le tte rs of c re d it p la c e d w ith lo ca l b a n k s b y fo re ig n m e rc h a n ts FEDERAL RESERVE AGENT AT NEW YORK o p e ra tiv e in t h ir t y , s ix t y a n d n in e t y -d a y p e rio d s, a n d p a y m e n ts a re m a d e b y d r a fts a t th e ra te o f e x c h a n g e p re v a ilin g on th e d a te o f d r a w in g . L o n g e r c re d its in m a n y cases a re desired b u t b a n k e rs h e sita te to g r a n t th e m s a v e w h e re th e s u p p ly o f n ece ssities is in v o lv e d . T h u s it a p p e a rs t h a t th e a u to m a tic ta r iff se t u p b y a d v e rs e e x c h a n g e ra te s is a lr e a d y p ro te c tin g E u r o p e a n m a rk e ts fro m A m e r ic a n p ro d u c ts , e x c e p t fo r a rticle s a n d m a te ria ls m o st v it a l ly n ee d e d . V ic e v e r s a , th e re la tiv e p a r it y o f ex c h a n g e s b e tw e e n th e U n ite d S t a t e s a n d S o u th A m e r ic a a n d th e O rie n t re lie v e s su ch tra d e fro m t h a t o b sta c le . A u g u s t im p o rts a m o u n te d to $ 3 0 8 ,0 0 0 ,0 0 0 , as a g a in s t th e J u l y to ta l o f $ 3 4 5 ,0 0 0 ,0 0 0 , w h ich w a s th e h ig h e st on re c o rd , a n d $ 2 9 6 ,0 0 0 ,0 0 0 fo r J u n e . F o r th e e ig h t m o n th s en d ed A u g u s t 3 1 , 1 9 1 9 , th e fa v o r a b le tr a d e b a la n c e a m o u n te d to $ 3 ,0 1 2 , 0 0 0 ,0 0 0 , a s a g a in s t a p p r o x im a te ly $ 2 ,0 0 0 ,0 0 0 ,0 0 0 fo r th e co rresp o n d in g p erio d o f 1 9 1 8 . R a t e s in p rin c ip a l E u r o p e a n e x c h a n g e s h a v e co n tin u e d to declin e a lm o st w ith o u t in te rru p tio n , a n d a n u m b e r o f n e w lo w reco rd s h a v e been e sta b lish e d . S te rlin g d e m a n d a fte r d ro p p in g to 4 . 1 2 u n d e r a n in cre a se d o fferin g o f b ills rose soon a fte r th e m id d le o f A u g u s t to 4 . 2 4 % . T h e r a lly la ste d b u t a sh o rt tim e a n d th e ra te soon d ro p p e d b a c k n e a r th e lo w le v e l, ra n g in g fo r th e re s t o f th e p e rio d b e tw e e n 4 . 1 8 % a n d 4 . 1 3 3 ^ . fra n c s a n d lire e sta b lish e d n e w lo w re c o rd s. B o th F r a n c s d e clin ed v e r y s h a rp ly fro m 8 . 3 2 on S e p te m b e r 8 to 9 . 2 1 on S e p te m b e r 1 6 , du e to u n s u u a lly h e a v y o fferin gs o f c o m m e rc ia l b ills. L ir e sh ared in th e d eclin e, fa llin g o v e r th e sa m e p e rio d fro m 9 . 7 3 to 1 0 . 1 4 . WEEKENDED England France Italy Spain China Japan C ost 4.24% 7.98 9.30 19.65 129.50 50.50 AUGUST 30 High Low SEPTEMBER 6 High Low 4.12 4.24 4.19% 4.18% 8.12 8.193^ 8.00 8.17 9.57 9.58 K 9.66% 9.64 19.12 19.20 19.20 19.08 128.00 129.50 129.50 129.50 50.50 50.50 50.50 50.50 SEPTEMBER 13 SEPTEMBER 20 High Low High Low 4.13% 4.17J* 8.32 8.38 9.743^ 9.73 19.02 19.10 129.50 128.50 50.50 50.50 4.143^ 4.17% 8.74 8.68 9.7 9^ 9.96 18.92 19.10 128.50 128.50 50.50 50.50 4 .1 2 ^ 9.20 10.14 18.80 128.50 50.50 D e v e lo p m e n ts u n d er w a y a re su fficien t to in d ica te t h a t if th e c o st o f liv in g h a s n o t o f L iv in g AUGUST 23 High Low a lr e a d y fa lle n , it sh o u ld sp e e d ily do so . B r a d s t r e e t ’ s a v e r a g e , b a s e d u p o n th e w h o le sale p rice s p e r p o u n d o f 3 1 a rticle s o f fo o d , fell fro m $ 5 . 3 0 J u l y 3 1 to $ 4 . 8 6 S e p te m b e r 1 1 . H e re is a d eclin e o f 8 . 3 p e r c e n t, w h ic h , w h e n d u p lic a te d in re ta il p ric e s, sh o u ld g o f a r to w a rd so lv in g a v e x in g p ro b le m . F o r la c k of a n y co m p re h e n siv e a n d re lia b le u p -to -d a te a v e ra g e s o f re ta il p r ic e s , h o w e v e r, one is le ft in d o u b t as to w h e th e r th e c o st o f liv in g h a s re ced e d m a t e r ia lly th u s fa r. R e t a il p rice s in ste a d o f flu c tu a tin g r a p id ly in p ro p o rtio n to w h o le sa le , m o v e o n ly in a slo w a n d re lu c ta n t m a n n e r. N o t u n til d e a le rs a re c o n v in c e d of th e p e rm a n e n c e o f n e w p rice te n d e n cie s, do th e y b eco m e w illin g a n d r e a d y to c h a n g e re ta il q u o ta tio n s in s y m p a t h y w ith w h o le sale . B u t so g r e a t is th e d isa p p ro b a tio n o f e x c e s s iv e ly h ig h p rice s t h a t th e o p in io n th a t th e d o w n w a r d m o v e m e n t w ill g o o n is g a in in g g ro u n d . q u o ta tio n s in m a n y q u a rte rs m a y p ro v e sig n ific a n t. H e n c e th e d eclin es in w h o lesale I n th e six w e ek s fro m A u g u s t 1 to S e p te m b e r 1 5 , sp rin g p a te n t flo u rs w e n t d o w n fro m $ 1 2 . 2 5 p e r b a rre l to $ 1 1 . 2 5 ; No. 3 y e llo w corn a t N e w Y o r k fro m $ 2 . 1 4 p e r b u sh el to $ 1 . 6 9 ; a n d N o . 3 w h ite o a ts fro m 8 8 3 ^ cen ts to 8 0 3 ^ . L ik e w is e , liv e b e e f p e r h u n d re d p o u n d s fell fro m $ 1 0 . 0 0 to $ 8 . 7 5 , a n d m ess p o rk p er b a rre l fro m $ 5 8 .0 0 to $ 4 8 .0 0 . N o . 1 n a t iv e p a c k e r h id es w h ic h str o n g ly in flu en ce shoe a n d le ath e r p ric e s, h a v e falle n fro m 5 3 ce n ts to 4 2 , a n d th e re h a v e b e e n recessio n s in c o tto n g o o d s, sp ices a n d o th e r a rtic le s . REPORT ON BUSINESS CONDITIONS C ro p s T h e w in te r w h e a t cro p fo r N e w Y o r k S t a t e fell s lig h tly sh o rt o f w h a t w a s e x p e c te d , b u t n e v e rth e le ss it a g g r e g a te d 1 0 ,4 2 8 ,0 0 0 b u sh e ls, a n in cre a se o f 5 2 p e r c e n t o v e r la s t y e a r ’ s p ro d u c tio n . S p r in g w h e a t p la n tin g w a s 5 ,0 0 0 a cres less in th is d is tr ic t th is y e a r th a n l a s t , w ith a n e stim a te d y ie ld o f 1 5 b u sh els p e r a c r e . b u sh els a s c o m p a re d w ith 1,0 0 0 ,0 0 0 in 1 9 1 8 . T h i s in d ica te s a cro p o f 6 8 0 ,0 0 0 T h e U n ite d S t a t e s B u r e a u o f C ro p E s t i m a te s also e x p e c ts th e o a ts cro p to be o n ly h a lf o f la s t y e a r ’ s a n d th e b a r le y a trifle less th a n th re e -fifth s of th e 1 9 1 8 p ro d u ctio n . is e x tre m e ly p ro m isin g . O n th e o th er h a n d th e o u tlo o k fo r h a y a n d corn T h e h a y c ro p , it is e s tim a te d , w ill b e th e la r g e s t w ith in fifteen y e a r s e x c e p t fo r th e b u m p e r cro p o f 1 9 1 6 , a n d , as c o m p a re d w ith 1 9 1 8 , it is e stim a te d t h a t p ro d u ctio n w ill sh o w an in crease o f 1 , 0 1 5 , 0 0 0 to n s. fo r e c a st, A corn cro p o f 4 0 , 1 4 1 , 0 0 0 b u sh e ls is a n in crea se o f a p p r o x im a te ly 1 4 p e r c e n t o v e r 1 9 1 8 , d esp ite th e f a c t t h a t th e a cre a g e th is y e a r w a s s m a lle r th a n la s t b y 1 5 , 7 5 0 a cre s. T h o u g h cro p s in som e lo c a litie s a re lig h te r th a n u su a l, h ig h p ric e s fo r fa r m p ro d u c ts w ill m a in ta in ru ra l p r o s p e r ity . T h e d is tin c tiv e fe a tu re o f th e b u ild in g situ a tio n is t h a t n o w fo r th e first tim e in B u ild in g s e v e ra l y e a r s th e a m o u n t o f b u ild in g u n d e r w a y is fu lly u p to n o rm a l, w h e th e r m e a su re d in v a lu e or in q u a n t it y . In d e e d as to v a lu e , it is fa r a b o v e n o rm a l, w h ile e v e n in re s p e c t to c u b ic en closu re o r floor sp a c e , it is a p p a re n tly so m e w h a t a b o v e . T h e M id d le S t a t e s , m e a n in g N e w Y o r k , N e w J e r s e y a n d P e n n s y lv a n ia , sh o w b u ild in g p e rm its to th e v a lu e o f $ 6 3 , 4 4 5 , 6 2 4 fo r A u g u s t , a n d o f th is N e w Y o r k C i t y alo n e re p resen ts $ 4 5 , 0 5 3 , 8 1 1 . T h e in crea se s in th e se s ta te s o v e r 1 9 1 8 w ere 1 1 4 . 6 p e r c e n t in n u m b e r o f p e rm its, a n d 3 3 1 . 2 p e r c e n t in v a lu e . e x c e e d th o se o f th e U n ite d S t a t e s as a w h o le . B o t h o f th ese p e rc e n ta g e s so m e w h a t O n th e b a sis o f c o n tra c ts a w a r d e d , th e to ta l fo r A u g u s t in N e w Y o r k a n d N o r th e r n N e w J e r s e y (figures fro m th e F . W . D o d g e C o m p a n y ) a m o u n te d to $ 6 9 ,8 6 1 ,0 0 0 ; th is in sp ite o f a d v e rse la b o r co n d itio n s w h ic h a re a ffe c tin g a lm o st e v e r y b ra n c h o f th e b u ild in g tr a d e s . T h e c o n tra s t o f th e p re se n t s itu a tio n w ith t h a t a t th e b eg in n in g o f th e y e a r co u ld n o t b e m o re m a rk e d , in a sm u c h as b u ild in g o p e ra tio n s in re s p e c t to q u a n t it y , d id n o t th en excee d o n e -fo u rth o f n o rm a l. Iro n T h e u n filled o rd ers o f th e U n ite d S t a t e s S te e l C o r p o r a tio n a t th e end o f la s t m o n th and S te e l sh o w e d a n o th e r s u b s ta n tia l in c re a se . T h e y w ere 6 , 1 0 9 , 1 0 3 to n s a g a in s t 5 , 5 7 8 , 6 6 1 a t th e end o f th e p re v io u s m o n th , a n d a s c o m p a re d w ith a re c e n t lo w re c o rd o f 4 , 2 8 2 , 3 1 0 to n s . N e v e rth e le s s it is re p o rte d t h a t th e n e w o rd ers b o o k e d a re ru n n in g b e lo w th o se o f a m o n th a g o . U n fille d to n n a g e is slo w in resp o n d in g to v a r ia tio n s in b o o k in g s, b e c a u se it req u ire s ro u g h ly fo u r to six m o n th s to m a k e d e liv e rie s on th e t y p ic a l o rd e r. T h e la s t w e e k of A u g u s t fo u n d m a n y o f th e in d ep e n d e n ts o p e ra tin g a t 80 p e r c e n t of c a p a c it y , a n d th e S te e l C o r p o r a tio n 1 0 p e r c e n t h ig h e r. P ig iron p ro d u c tio n , to o , th u s fa r co n tin u es to e x p a n d . T h e a v e r a g e d a ily o u tp u t fo r A u g u s t w a s 8 8 ,4 9 6 to n s as co m p a re d w ith a lo w re co rd o f 6 8 ,0 0 2 to n s a n d w ith 1 0 9 , 3 4 1 to n s fo r A u g u s t , 1 9 1 8 . T h e fu rn a c e s in b la s t on S e p te m b e r 1 excee d ed th o se o f A u g u s t 1 b y n e a r ly 8 ,0 0 0 to n s d a ily c a p a c it y , so t h a t th e p re lim in a ry in d ica tio n is t h a t th e S e p te m b e r o u tp u t sh o u ld exce ed t h a t o f A u g u s t . A c t u a l re su lts, o f co u rse , w ill d ep en d n o t o n ly u p o n th e strik e , th e e x te n t o f w h ic h a t th is w r itin g is p r o b le m a tic a l, b u t also u p o n th e d e m a n d s o f steel m a k e rs. H o w e v e r , th e exp a n sio n o f th e d o m e stic d e m a n d fo r steel h a s b een a c c o m p a n ie d b y som e loss o f in te re st in th e e x p o rt m a r k e t. O u r J u l y e x p o rts, th e la t e s t fo r w h ic h figu res a re a v a ila b le , w ere o n ly 2 8 7 ,8 2 8 to n s o f iron a n d steel as c o m p a re d w it h 4 5 7 , 2 3 3 a y e a r ago. B e sid e s th is , fo r th e first tim e in som e m o n th s, a d eclin e in p ric e h a s o cc u rre d in FEDERAL RESERVE AGENT AT NEW YORK one o f th e p rin c ip a l ty p e s o f fin ish ed stee l. T a n k p la te s fo r th e w e e k e n d e d S e p te m b e r 9 , fell 1 5 c e n ts p e r h u n d re d p o u n d s , w h e re as o th e r fin ish ed p ro d u c ts e v e r sin ce th e J a n u a r y a n d F e b r u a r y re a d ju s tm e n t h a v e b een h o ld in g firm . N e w te n d e n cie s, to o , a re b e in g d is p la y e d in th e o ld m a te ria l m a r k e t , w h ic h is th e first to sh o w e v e n s lig h t v a r ia tio n s in th e co n d itio n o f th e steel tr a d e . O ld m a te ria ls s te a d ily a d v a n c e d u p to a b o u t th e end o f th e first w e e k o f A u g u s t ; b u t sin ce th e n th e re h a v e b een q u ite a n u m b e r o f d eclin e s. a n d w r o u g h t iro n . T h e s e in clu d e c a r w h e e ls, h e a v y steel s c ra p , T h u s th e stee l m a r k e t is in a p o sitio n o f e q u ilib riu m a w a itin g som e n e w im p u lse . C o tto n M ark et B o t h sp o t co tto n a n d th e o p tio n s h a v e been s u b je c t to w id e flu c tu a tio n s . T h is seem s to re p re se n t n o t so m u c h a n y c h a n g e in th e fu n d a m e n ta l p o sitio n o f th e c o m m o d ity as in th e d a ily a n d te m p o r a r y n e w s a n d tr a d e re p o rts. A t a ll tim es th r o u g h o u t th e p a s t m o n th th e s ta tis tic s o f c ro p s, p ro d u c tio n , s u p p ly a n d c o n su m p tio n h a v e been su ch as to in d ic a te , so fa r a s p a r tia l d a t a a re c o m p e te n t to g iv e in d ic a tio n s , t h a t th e w o r ld ’ s 1 9 1 9 - 2 0 co n su m p tio n sh o u ld exce ed its p ro d u c tio n . T h e g o v e rn m e n t re p o rt sh o w in g th e c o n d i tio n as o f A u g u s t 2 5 in d ic a te d a to ta l y ie ld o f 1 1 , 2 3 0 , 0 0 0 b a le s as c o m p a re d w ith th e in d ic a tio n o f 1 1 , 0 1 6 , 0 0 0 a m o n th p re v io u s , b u t th e d e s tr u c tiv e sto rm in T e x a s o cc u rre d a fte r th e figu res w ere co m p ile d . F u r t h e r , th e g in n in g re p o rt sh o w ed t h a t th e a m o u n t g in n ed to S e p te m b e r 1 th is y e a r w a s o n ly 1 3 8 , 9 9 3 b a le s a g a in s t 1 , 0 3 8 , 0 7 9 fo r th e c o rre s p o n d in g p e rio d o f 1 9 1 8 , a n d 6 1 4 , 7 8 7 fo r th e lik e p e rio d o f 1 9 1 7 . P ric e s fo r sp o t c o tto n on th e N e w Y o r k m a r k e t h a v e ra n g e d b e tw e e n 3 2 ) 4 ce n ts a n d 2 8 . 9 5 . D ry G oods T h e b e s t e v id e n ce o f th e w e a k e n in g o f th e co tto n g o o d s m a r k e t is fu rn ish e d b y th e and p ric e s o b ta in e d a t th e secon d G o v e r n m e n t a u c tio n o f su rp lu s c o tto n c lo th s , h eld a t N e w T e x tile s Y o r k on S e p te m b e r 4 . A t th e first a u c tio n h eld J u l y 3 0 , th e g e n e ra l p ric e s o b ta in e d w ere e q u a l to o r exce ed ed th e p r e v a ilin g m a r k e t p ric e s . A t th e secon d a u c tio n , w ith m a r k e t p rice s q u ite a little b e lo w th e J u l y le v e ls , m o st o f th e fa b ric s offered d id n o t b rin g m o re th a n 90 p e r c e n t o f th e c u rre n t p ric e . T h e u n c e r ta in ty o f c o tto n p ric e s in th e secon d w e e k o f S e p te m b e r h a d its e ffe ct on u n fin ish ed c o tto n go o d s a n d p rin t c lo th s , w h ic h h a d re c e n tly so ld a t 16}^ ce n ts p e r y a r d , a n d w e re th e n sellin g a t 1 4 ^ c e n ts. P ric e s n a m e d on co lo red c o tto n s fo r th e sp rin g o f 1 9 2 0 , a v e r a g e d , h o w e v e r , a trifle h ig h e r th a n th e G o v e r n m e n t w a r tim e m a x im u m s, b e c a u se o f u n d e rp ro d u ctio n a t th e m ills. T h e B u r e a u o f M a r k e t ’ s w o o l co n su m p tio n figu re s in d ica te t h a t th e p ro d u c tio n of w oolen a n d w o rste d g o o d s is h e a v y . D u r in g J u l y , A m e r ic a n m ills u sed 6 3 ,3 0 0 ,0 0 0 p o u n d s c o m p a re d w ith 6 4 ,5 0 0 ,0 0 0 p o u n d s in J u l y , 1 9 1 8 , w h en w o o len m ills w e re ru sh in g o u t o rd ers fo r m ilita r y a n d n a v a l p u rp o se s. A m o n g m a n u fa c tu re r s o f w o o len a n d w o rste d dress go o d s a n d m e n ’ s w e a r fa b ric s th e o p in io n p re v a ils t h a t if g o o d s a re p ric e d a n y h ig h e r fo r sp rin g th e re w ill b e a serious h a lt in c o n su m p tio n . I t is n o t to b e a s su m e d , h o w e v e r , t h a t a m o n g th o se w h o h a v e th e m o n e y , th e re is sh o w n to b e m u c h in c lin a tio n to ta k e a n y th in g b u t th e h ig h e s t p ric e d p ro d u c ts . T h e silk in d u s tr y is o nce m o re h a rd h it b y la b o r d ifficu ltie s. T h is tim e it is th e d y e r s a t P a te rs o n w h o are on s trik e a n d th e silk w o rk e rs in P e n n s y lv a n ia , w h e re th e b u lk o f b la c k a n d o th e r sta p le silks are m a d e . P ro d u c tio n h a s been c u rta ile d b y th e sh o rte r w o rk in g d a y a n d b y strik e s a n d la b o r u n re st. T h e r e is no p a r tic u la r s c a r c it y o f r a w m a te ria l, b u t som e sh o rta g e o f p a r t ia lly m a n u fa c tu re d m a te ria ls , su ch as y a r n s . L abor L a b o r d ifficu lties h a v e b een g e n era l in th e p a s t m o n th b u t it is fe lt , n e v e rth e le ss, th a t th e situ a tio n in th is d is tr ic t is b e g in n in g to im p ro v e . S t r ik e s are b e c o m in g m o re u n p o p u la r b e c a u se o f th e ir in terferen ce w ith b u sin e ss, th e ir stim u la tio n o f p rice s a n d REPORT ON BUSINESS CONDITIONS th e ir u p s e ttin g e ffe ct u p o n th e d a ily liv in g o f th e p e o p le . T h e re s tra in in g in flu en ce o f th is se n tim e n t is fe lt b y la b o r o rg a n iz a tio n s, e sp e c ia lly a m o n g th o se o f m o re c o n s e r v a tiv e le a d e rsh ip . I t is n o te w o r th y in th is d is tric t, as else w h e re , t h a t fo re ig n -b o rn w o rk e rs h a v e been th e re a d ie s t to s tr ik e , w h ile th e A m e ric a n -b o r n h a v e b e en in clin e d to s t a y a t w o rk . Q u ite a sid e fro m w o rld -w id e la b o r d istu rb a n ce s strik e s a t th is tim e in th is c o u n tr y a re q u ite in a c c o rd w ith eco n o m ic e xp erien ce. I n p a s t p e rio d s o f p r o s p e r it y , w h e n th e d e m a n d fo r p ro d u ctio n h a s b een a t th e p e a k , strik e s h a v e been m o st p r e v a le n t. Ex p erien ce te a c h e s t h a t as a g e n e ra l ru le w id e -sp re a d strik e s are in th e n a tu re o f a fig h t fo r a la rg e r sh are o f th e re tu rn s of in d u s tr y , ra th e r th a n o f a stru g g le a g a in s t th e h ig h c o st o f liv in g . A d m it t e d ly strik e s sh o w a b ro a d te n d e n c y to in crea se a n d d im in ish w ith th e rise a n d fa ll of th e in d e x n u m b e rs o f c o m m o d ity p ric e s; b u t on th e o th e r h a n d e v e n w h en c o m m o d ity p rice s a re lo w th e c o st o f liv in g p ro b lem s w ith la b o rin g p e o p le is o fte n th e m o st seriou s b e c a u se o f th e g e n e ra l u n e m p lo y m e n t, a n d y e t strik e s do n o t o cc u r in larg e n u m b e rs a t su ch tim e s. F ig u r e s ta k e n d ir e c tly o r in d ire c tly fro m th e c o m p ila tio n s o f th e D e p a r t m e n t o f C o m m e rc e a n d L a b o r in d ica te t h a t th e p re v a le n c e o f strik e s in crea se s w ith p ro s p e rity a n d d im in ish es in tim e s o f d ep ressio n ; a n d o u r p re se n t exp e rie n ce is no e x c e p tio n to th is g e n e ra l ru le . T h e n u m b e r of strik e rs in v o lv e d in p ro sp e ro u s a n d u n p ro sp ero u s tim e s a re h ere c o n tra ste d : P r o spero u s U n pr o sper o u s Y ear S t r ik e r s Y ear 18 9 0 2 8 5 ,9 0 0 18 8 4 11 7 ,3 13 19 0 2 5 5 3 ,1 4 3 18 9 6 18 3 ,8 13 19 0 6 5 5 0 ,0 0 0 19 0 5 2 0 0 ,0 0 0 19 10 5 5 0 ,0 0 0 19 0 7 17 5 ,0 0 0 19 14 16 0 ,0 0 0 S t r ik e r s I n a p p ly in g th e in feren ce d r a w n fro m th is re co rd to th e p re se n t c a se , e s p e cia lly as it m a y a p p ly to th e fu tu re , du e re g a rd sh ould b e g iv e n to th e a b n o rm a l co n d itio n s o f th is p o s t-w a r p e rio d . U n d o u b te d ly th e a sp ira tio n s b o rn o f th e w a r , o r a t le a st g r e a t ly en h a n ced b y it , t h a t th e w o rk ers sh ould h a v e a g r e a te r sh are in th e re tu rn s o f in d u s tr y , h a v e m u ch to do w ith th e u n re st w ith w h ich th is c o u n tr y h a s been c o n fro n te d . The m o v e m e n t o f w a g e s as re co rd e d b y th e N e w Y o r k S t a t e L a b o r B u r e a u is n o te w o r th y in th is c o n n ectio n ; th e a v e ra g e w e e k ly w a g e a fte r risin g fro m a b o u t $ 1 2 . 5 0 w h e n th e w a r b e g a n to $ 2 8 . 1 8 la s t D e c e m b e r h a s m e re ly h eld firm a ro u n d $ 2 2 . 0 0 fo r so m e m o n th s p a s t . T h is is th e first issue in th is fo rm o f th e re p o rt o f th e F e d e r a l R e s e r v e A g e n t a t N e w Y o rk . I t w ill b e issu ed m o n th ly a n d is in ten d e d fo r th e in fo rm a tio n o f m em b e r b a n k s a n d fo r th o se w h o h a v e p a r tic ip a te d in its p re p a ra tio n . C o p ie s m a y be o b ta in e d b y a d d re ssin g TH E FED ER AL R ESER VE AG EN T, F e d e r a l R e s e r v e B a n k of N e w Y o r k . 1 5 N a ssau Stre e t, N e w Y o rk .
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