Knowledge that Transforms

chart and its predecessors, and the relations among the curves and their significance are comparable with those found in the study of similar index charts extending back to I875. Such changes as have been made in the present revision are directed toward improvement in the accuracy and clarity of the picture given by the three curves. These changes, like those in earlier revisions, have been intended, not to abandon in whole or in part, but to reinforce, the fundamental principle of the chart.'

allowed for, the decline was steady after the middle of I929. Early in August I930, the items without such adjustment reached a seasonal low point; but the gain thereafter fell short of the full seasonal movement until the middle of November. Then appeared the unusual demands which subsequently dominated the situation, and brought the volume of currency above the figures reached at the previous peak, late in I920. Chief among them has been the demand for the purpose of hoarding; but the published statistics are subject to many influences in addition. These published figures are simply a count of our currency which is held outside the United States Treasury and outside the federal reserve banks. They thus include the pocket money of individuals, till money held by merchants and others,

W HEN the I930 balance sheets of the leading copper companies of the Western Hemisphere appeared in I93I, it was evident that with certain significant exceptions these companies could, if they chose, go on for some time producing copper at then &rrent rates, sell most of it for less than total true cost, if need be, and stock the rest, without worrying unduly about working capital. This, most of them did for a time. The rest of the world's producers, for one reason or another, also generally went on producing copper at previous rates. The consumers of copper finally chose to stop, look, and listen. Six-and-a-quarter cent copper was one result. Excess world stocks of refined copper at the yearend, amounting to at least 500,000 tons, were another. A third consequence was the series of intercontinental conferences and conversations which lasted from early autumn until the second half of December and brought about further cuts in production. There was, to be sure, substantial curtailment of output in the United States in I93i, as compared with I930. It amounted to about I90,000 tons out of a total world curtailment of approximately 250,000 tons. The major part of the domestic decline was accounted for merely by the fact that production during the first half of I93I was about on a level with that of December I930, when output was well below the average for the other eleven months of that year. Further curtailment including that resulting from the shutdown of the United Verde property in May -occurred in the second half of I93I. Elsewhere in the world, changes were relatively small. The American Bureau of Metal Statistics was forced in October to discontinue the publication of its regular monthly statistics. The data of the Bureau of Mines of the Department of Commerce indicate smelter production in the United States from domestic ores of about 525,000 tons of copper. This figure, in conjunction with the American Bureau's figures for the first nine months of I93I, points to domestic mine output of about 500,000 to 5I0,000 tons, as compared with 69o,ooo to 700,000 tons in I930. Domestic outpuit was just about one-third of total world production of approximately I,500,000 tons. The latter figure, as has been said, represents a decline of some 250,000 tons from the I930 total of I,750,000 tons. In I93I, therefore, curtailment by United States mines accounted for 75 to 8o per cent of world curtailment, a rather smaller ratio than in I930. Curtailment by Latin-American mines was apparently responsible for the greater part of the 5o,ooo-odd tons reduction outside the United States. Changes elsewhere were quite minor. In Canada, production declined about 4 per cent. In Africa, reductions at some properties were virtually offset by increases at others. In Europe, it is probable that the little curtailment which occurred was principally by Rio Tinto. The I93I world output of I,500,000 tons was less than 30 per cent below the I929 production of approximately 2,I25,000 tons, and was only slightly below the output of I924. World consumption of copper, however whatever it was for the year I93I as a whole -had apparently by the end of the year declined to a level that represented an annual rate not exceeding that of IgIo, or about i,000,ooo tons, and was perhaps below that level. For September, the last month for which figures were made available by the American Bureau of Metal Statistics, there was an increase of more than 24,000 tons in the stocks of refined copper in the yards of refineries in the Western Hemisphere. Doubtless stocks increased elsewhere, also. Since there was a world output of blister copper that month of around I20,000 tons, September shipments to consumers at an annual rate between i,000,ooo and i,I00,ooo tons were indicated. There is good reason for believing that in the last quarter of the year both takings and consumption were below, rather than above, the September figure. Output, however, apparently continued at about previous rates, so that stocks of refined copper in WesternHemisphere refineries at the end of I93I may have been as high as 55o,ooo tons, in addition to stocks in the Eastern Hemisphere. It is therefore conservative to say that excess stocks of at least 5oo,ooo tons of refined copper existed in the world at the close of last year.

THE widespread interest and concern over the mounting volume of credit based on security collateral in the years I927-30 resulted in a notable improvement in both the quantity and the quality of banking figures relating to such credit, and in the future there will be presumably no such lack of adequate data as hampered analysis in those critical years. In previous years loans on securities had seldom been separated from other loans in banking statistics. At present, however, by the use of the abundant source figures that are at hand, it is possible to construct an estimate of the total volume of security loans, from non-banking as well as banking sources, and to extend this estimate back for a decade. By this means a broad base can be supplied for comparisons and conclusions. Such inclusive estimates have been made for a few recent years.1 There are two series of first importance in making estimates of total collateral loans for the recent period beginning in 1928. The first is the quarterly figure of the Federal Reserve Board showing the total loans on securities for all member banks. On the present quarterly basis this series extends back only to October I928, but it was presented annually as of June 30 for the years beginning with I925. A second figure of basic importance is the annual total of the Comptroller of the Currency for all banking institutions in the country. Since 1929 the classification used by the Comptroller in securing data from the various state banking officials is the same as that used by the Reserve Board in making up the quarterly figure just referred to. Thus the composite figure of the Comptroller, which in past years had not been comparable with other series, will be so in the future, and hence of far greater value. Since under any conditions the figure is dependent upon the cooperation of many state authorities, it is dangerous to place complete reliance upon it; a margin of error always exists in a figure built up from many sources. But a major portion of the total is, of course, furnished by national banks, for which uniformity and homogeneity are possible. Thiis yearly total, with adjustment for loans to banks, is entered on the accompanying table (p. I93) as the suggested banking total for I929, I930, and I93I.2 The less inclusive figures relating to loans on securities became well known during the boom years. The weekly total compiled by a group of member banks in New York City is generally used as an up-to-date weekly barometer of loan conditions. Another figure of special value is the monthly total of borrowings by all members of the New York Stock Exchange. It includes borrowings from non-banking sources that would not otherwise be known. The weekly figure for reporting member banks scattered throughout the country reflects loans made direct to other customers as well as to brokers.

T HE three larger tables accompanying this article are in continuation of those given in this REVIEW of May I929 and previous issues, but the first and third tables have been somewhat re-arranged and amplified. Each table covers a period of ten years. It is perhaps rather unfortunate that Table i commences with I922, for the production of the Transvaal in that year was reduced by about ?6,ooo,ooo in consequence of a strike of white miners. In I9I 5, the year of highest world output, ?96,400,000 of gold was produced, of which the Transvaal contributed ?38,600,ooo or 40 per cent of the total and the rest of the world ?57,800,000 or 6o per cent. By 1921 the world output had declined to ?68,ooo,ooo, of which ?34,500,000 or 5I per cent was due to the Transvaal and ?33,500,000 or 49 per cent to the rest of the world. The continuation of the record is shown in Table i, from which it will be seen that the world output in I93I advanced to ?90,000,000, of which the Transvaal accounted for ?46,200,000, or again 5I per cent, and the rest of the world for ?43,800,ooo. Between I92I and I93I the Transvaal continually improved its position, while the rest of the world recovered until I924, then slightly declined to I929, and has since advanced appreciably. From examination of the figures of individual countries, it will be seen that the United States has declined somewhat, while Canada has gone str ngly ahead and last year captured second

GENERAL business in the United States, already severely depressed at the close of I930, declined sharply during 193I; and, by the end of the year, the depression had become one of the longest and most destructive of which we have record. Early in the year some improvement actually appeared, and was reflected in numerous series measuring the volume of business. But this incipient revival was cut short as the world financial crisis became acute and introduced a new phase of contraction and liquidation. Even commodity prices showed some signs of stabilization during the year, especially in the third quarter; but the main course of prices continued downward, with the most severe declines affecting chiefly certain agricultural and mineral products entering largely into international trade. Severe as were the renewed curtailment in business activity and slump in commodity prices during I93I, with the attendant increased unemployment, reduced wage payments, impaired business earnings, and frequent commercial failures, the most sensational developments were in banking and currency. The overshadowing event of the year was the world monetary crisis, which reached its most acute stage in the drive on the gold standard of the United States in SeptemberOctober. For a few feverish weeks it was feared that the dollar as well as the pound would be driven from the gold basis. In spite of an unprecedented drain of gold abroad, suspension of gold payments in England, and stupendous shifts in the banking situation here, it presently became clear that the gold standard could be maintained in the United States. The panic then subsided, gold export halted and was followed by a substantial return flow, and the problems of reconstruction could be attacked with assurance that a greater disaster had been averted. The world crisis was accompanled, in its various phases, by the chief characteristic developments: huge international gold movements, from countries of impaired credit to the stronger centers; active flight from weakened currencies; widespread hoarding of currency, with preference for gold-standard currency rather than domestic currency; suspension of gold payments in numerous centers; acute banking difficulties, with severe liquidation of commodities and securities. In the United States, the banking system, already weakened by the prolonged depression and drastic liquidation, was subjected to an unprecedented strain. Hoarding, bank runs, and bank failures became more serious factors in the situation. The resulting pressure for liquidity in the closing months of the year contributed largely to the final wave of drastic liquidation which drove stock prices to new low levels and forced bond yields far above the current rates on money.