Finance

Abstract

Finance S prices fluctuated within a narrow range during December, and stock "averages" closed the year moderately below the 1938 highs reached in early November. The announced intention of the Treasury to sell 2%-percent bonds as part of its December 15 financing was followed by higher prices for longterm Government obligations, but average prices for all long-term issues were lower for the month than in November. Corporate bond quotations showed some improvement during the month but were not up to the best levels of the year. Among industrial share issues, aircraft stocks moved to new high levels for the year. Moody's index of the average dividend rate of 600 companies advanced in November for the first time since November 1937. On December 15 the Treasury borrowed $731,445,000 of "new money" in the form of 2%-percent 22 to 27year bonds and 1%-percent 5-year notes and in addition received in exchange $929,084,000 of 1 ̂ -percent notes maturing on March 15, 1939, for both of the newissues and for a new series of 9-year 2-percent bonds. During the month there was an increase over November in the volume of corporate bond issues, but the volume of loans was not large. The Treasury financing was reflected in the volume of member-bank loans to brokers and dealers in securities, which increased $143,000,000 during the 4 weeks ended December 14. The estimated excess reserves of member banks, which on December 14 stood at the record level of $3,480,000,000, were reduced by 500 million dollars in the third week of the month incident to the midDecember operations of the Treasury. December fluctuations in quotations for foreign currencies in New York were relatively narrow. The mild firmness of the major European currencies was related to both political and commercial factors, which seemingly aided the various stabilization funds in reducing the amplitudes of exchange fluctuations. In France the votes of confidence obtained by the Government during the budget debates were followed by a reported return flow of capital. Although London, which has for some time been the largest depository abroad for foreign funds, still bore the burden of meeting Europe's demand for dollars, the Federal Reserve Bank of New York pointed out that the pressure upon sterling growing out of the large merchandise export balance of the United States had somewhat abated. Nevertheless, the Chancellor of the Exchequer announced that the restrictions on foreign lending of British capital were being reimposed. The belga, unlike the franc and the pound, displayed a persistent though orderly weakness in December. Both the continued influx of foreign capital and the commercial demand for dollar exchange operated to bring the gross receipts of gold for the year above the record inflow of 1,741 million dollars in 1935 and to raise the monetary gold stock of the United States to nearly 14,500 million dollars.