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The Monthly Business Review Covering business and industrial conditions in the Fourth Federal Reserve District FEDERAL RESERVE BANK OF CLEVELAND D. C. Wills, Chairman of the Board VOL. I CLEVELAND, OHIO, AUGUST 1, 1919 NO. 7 LTHOUGH our continually optim istic review o f business conditions may su bject us to the / ''ik charge o f over-optim ism by our readers, the m ovem ent o f the past thirty days com pels us to / Ik continue such a view in this report. The existing condition o f tw o basic branches o f industry has always been accepted as the barom eter o f business conditions in general. T hese are steel and agriculture. The steel barom eter has steadily been clim bing, as the unfilled tonnage o f one o f the largest steel corporations, alone, on June 30 was 610,545 tons greater than the previous month. This tonnage w as without the railroad dem and. If w e are w illing to accept the statem ent that business prosperity is in proportion to the p ros perity o f the farm ers, then there can be little question as to a general favorable condition. Added to this w e have the P eace Treaty sign ed; the security o f a President back in the W h ite H ouse; restrictions lifted on exports, w ith a strong dem and from European countries, and the financial m achinery for the extension o f their credit being assem bled. The w hole w orld is ju st b eg in ning to feel at hom e with h erself again. If other evidence be needed w e still have the fact that the per capita circulation o f m oney on July 1 was $54.28, as com pared w ith $50.86 a year ago — an increase o f 6.7 per cent, and that industrial and com m ercia l failures are the sm allest in num ber in 3 9 years. However, there are blots on the business escutcheon. W h ile an abnorm al dem and w ith sub norm al supply necessarily means high prices, w e can see no justification for the open wave o f profit eering w hich has struck us. T h e constant rise in prices rem inds one o f a horse w hich was used as a tread-horse for so lon g that through fo rce o f habit he w ould continue the m otion o f treading even after the tread-m ill was shut off. The rise in price, for w hich there was, in m ost instances, a legiti mate excuse during the war, has so fixed itself that the general public continues to tolerate the now illegitim ate rise. T o stimulate earnings business dem ands a rapid turnover o f m oney. T o stimulate the redu c tion in the high cost o f food products, a rapid turnover o f such products is also necessary. T o enact and en force laws w hich w ould com pel a reasonable and econ om ic storage o f produce w ould keep it m oving and thereby reduce the prices. The burden cannot all be shifted to the profiteers. The public, in a m easure, is to blam e in being too w illing to pay the prices w ith little com plaint. The “ I-d o n ’t-ca re ” feelin g seem s to be the attitude o f people o f all classes — a ten dency to let down. The feelin g o f relief w hich fo l low ed the term ination o f the w ar seem s to have transform ed itself first into lassitude and later into utter indifference. W e may con cede that this is the natural reaction o f the high tension to w hich the w orld was su bjected during the war, but it does not make for w h olesom en ess nor for national safety. W e will, o f course, w ork our w ay out in spite o f it, but the outlook w ould be brighter if it did not exist. The business situation cannot be w h olly sound until such an attitude is changed. This is certainly no time for extravagance. W e have a national debt w hich am ounts to one thousand dollars for every man in this country w h o is over 2 1 years o f age, and wealth is not created by extravagance. 2 THE MONTHLY BUSINESS REVIEW. As the supply o f labor continues insufficient and w ages high, there has been no low ering o f prices to consum er. H ow ever, the gap betw en the producer, the m anufacturer, and the consum er is in many cases far too w ide. P rice levels already reached are higher than the m axim um ones fixed by the G overn m ent under w ar-tim e regulations. Seem ingly, as long as the general public will continue to pay exorbitant prices on nearly all com m odities, w ithout m aking com plaint, such unnatural levels are very apt to be maintained. The intrinsic value o f the Federal Reserve System is again being shown, now that the bu m per crops throughout the District are being harvested and moved. Several years ago farm ers w ere on the anxious seat for w eeks w henever they had large crops, w ondering ju st what the attitude o f W a ll Street w ould be w hen they asked fo r m oney with w hich to move them. Because o f the greatly increased cost o f farm labor, it has taken a great deal o f m oney to get the crops into the fine condition in w hich they now are, but the farm er has been able to get all the m oney he needed through his ow n hom e town bank. If that bank was short o f funds it w as possible to secure them directly from the Federal Reserve Banks, or indirectly through their city correspondents. T h e real effect o f the Federal R eserve System is to create twelve m oney centers in as many sections o f the country, all w ork ing in close connection, so that the resources o f the w h ole country can be m obilized fo r the purpose o f m oving crops if that is necessary. Iron and Steel Industry Shaping Itself for a Very Active Market. Evidence fro m all quarters show s that June definitely turned the tide in the iron and steel business. T he increase o f 610,000 tons in the unfilled orders o f the steel corporation, as o f June 30, term inated heavy m onthly declines since N ovem ber, 1918, and is a clear and accurate index o f the change in m arket conditions. Independent producers have been booking business on a corresponding scale. Steel in g ot production in June, was at the rate o f about 32,400,000 tons annually, com pared with 2 7 ,106 ,094 tons in May. This represents 71.6 per cent, o f the m onth o f highest production in history, w h ich was O ctober, 1918, Operations have continued to increase so that they are represented today by practically 70 to 7 5 per cent, o f in got capacity. P ig iron production show ed the first increase since Septem ber, 1918. A ccordin g to figures com piled by the Iron Trade Review , the output for June, a thirty-day m onth, was 2,116,702 tons, com pared w ith 2,107,729 tons in May, a thirty-one day month. Furnaces in blast on July 1, w ere 200 as against 197 on June 1. Sinoe then several additional stacks have b een blow n in. The best buying continues to be done in lapweld tubes (representing the effect o f vigorous oil and gas field operations) in sheets, w ire, bars, and in tin plate. Som e o f the heavier lines still are lagging, such as plates, rails and shapes, and this can be readily accounted fo r by the abnorm ally sm all railroad buying and the absence o f shipyard requirem ents. T h e iron and steel industry virtually is m aking a surprising show ing in view o f the restricted buying in these m a jor lines. Farm ing im plem ent m anufacturers are buying on increasing scale. P ig iron sales in June w ere by far the heaviest since the arm istice. A careful com pilation shows that the total sales w ere betw een 1,250,000 and 1,500,000 tons for last half shipment. T he June sales w ere made up largely o f m alleable and foundry grades. S teel-m ak in g iron transactions have rem ained singularly few . W ith increased steel w orks operations, h ow ever, these are expected to com e along m ore briskly. Som e buying o f iron for 1920 delivery is being done in scattered cases, but furnacem en generally are not disposed to encourage future com m itm ents at this tim e. R eports from the Pittsburgh district show that conditions are steadily im proving and it is an assured fact that a distinct gain has been made. Mills in the District are operating at approxim ately 70 per cent, o f capacity. T h e payroll o f one o f the large independent mills has increased 33% per cent, since our last Review, and is now within 20 per cent, o f the peak during the w ar period. Collections fo r June w ere than fo r the m onth o f May. It senting material furnished to still; and due to the reduction a happy surprise, and a larger per cent was collected on the same basis m ust be taken into consideration that very substantial accounts, repre the equipm ent com panies fo r railway cars, stood virtually at a stand in the dollar and cent valuation o f the shipm ents these outstandings 3 THE MONTHLY BUSINESS REVIEW. naturally represent a continuously increasing percentage o f the total. Confidence is expressed that w hen the m ajority o f the Governm ent claim s are settled the situation w ill be a very satisfactory one. Tin plate industries report that their business is rounding out into som ething like norm al stride, and that mill operations are now on the heaviest scale since early last fall. A bout 80 per cent, capa city is claim ed, w hich show s a steady increase. A large dom estic dem and for w ire products, including bolts, rivets, and chains, maintains a co m fortable position for the w ire rod market. A g ood export dem and is also found fo r all classes o f sem i-finished steel. Export orders fo r w ire nails are large. Dem ands for pipe in con n ection w ith the oil boom are reported enorm ous, and plants are daily falling behind. Demand fo r eigh t-in ch pipe is reported beyond all precedent. Orders for new business are being scaled dow n to 50 per cent. Demand for structural steel continues to im prove. trade is still som ew hat spotty. Som e large bookings are reported, but the The industry in general is m oving forw ard under favorable conditions, and shaping itself for a very active market. T h ere is a m arked increase o f buying for export trade as shipping rates are now getting m ore in line, and there is a steady im provem ent in the outlook for necessary credit abroad. In a special study o f the ore tonnage carried b y the Great Lakes fleet, it is found that shipm ents o f ore for the 1919 season w ill show quite a drop com pared with those o f 1918. During the 1918 period, the m ines in the Lake Superior district sent forw ard 61,156,732 tons o f ore by lake. That the m ovem ent for this season w ill show a loss o f 1 0 , 0 0 0 , 0 0 0 tons is quite certain, and som e ship pers say that shipm ents w ill not reach the 50,000,000 ton margin. A loss o f 10,000,000 tons this season com pared with 1918 w ou ld make the m ovem ent a little m ore than 51,000,000 tons, and in order to reach that m ark the fleet w ou ld have to handle only 8,000,000 tons fo r July, August, Septem ber and O ctober, and 3,000,000 tons in N ovem ber. Shipm ents fo r that period last season w ere 10,659,203 tons in July; 9,725,331 tons in A ugust; 8,995,014 tons in S ep tem ber; 8,541,593 tons in O ctober and 4,279,025 tons in N ovem ber. The above figures indicate that if the m ovem ent does not exceed 51,000,000 tons the fleet and docks can handle this business w ithout difficulty. No m atter how heavy the late grain m ovem ent is, if furnacem en put off placing orders too long, and try to get a supply o f ore the last tw o m onths, a car shortage is looked fo r ; and if it com es, the m ovem ent w ill slow up all along the line. Ore shipm ents up to July 1 w ere 16,008,419 tons, w hich was a decrease o f 2,941,311 tons com pared with the same period last season. T h e m ovem ent fo r July w ill show a big loss com pared w ith July, 1918. That shipm ents up to A ugust 1 w ill be 5,000,000 tons behind last season for the same period is alm ost certain, and that w ill be about half the estim ated loss in the m ovem ent fo r the season. The outlook is im proving steadily and ore shippers figure that w ith the dem and fo r iron and steel in all lines, furnacem en w ill not take the ch an ce o f g oin g into the closed season with short supplies. Manufacturing Gradually Regaining Pre-War Levels. M anufacturers o f screw m a chinery products in Cleveland report that business is not yet back on a pre-w a r basis, but rapidly approaching it. Makers o f foundry m achinery rep ort a large volum e o f business w ith orders book ed for several m onths ahead. Autom obile m anufacturers say that p rod u ction is expected to reach a norm al output in the very near future. W h ile business in this industry is reported satisfactory, yet com paratively few con cern s have regained the p re-w ar basis. One large au tom obile m anufacturer reports that conditions in his plant are far ahead o f the highest level reached b e fo r e the war. T h ey have taken on hundreds o f additional men since the signing o f the arm istic, and report a large volum e o f business. In the chem ical m anufacturing industry the volu m e o f business is reported ow ing to labor unrest and strikes, the situation is far below the peace-tim e basis. satisfactory, but, Makers o f paints and varnishes can w ell take an optim istic view. W ith the increase in bu ild ing activity m anufacturers o f these products are experien cin g a very satisfactory volum e o f business THE MONTHLY BUSINESS REVIEW. 4 and m uch buying w ill have to be done to cope w ith the new business anticipated up to the end o f the year. V ery little labor unrest is noted in this industry, as these m anufacturers have been able to keep their labor satisfied. Generally speaking, it is thought m anufacturing conditions w ill soon regain the level maintained b efore the war. The labor condition is som ew hat uncertain, as a great many plants report a co n tinual dissatisfaction am ong the men, w hich in som e cases is difficult to analyze. Probably the high cost o f living is responsible fo r a great deal o f this. W h ile there is little m anufacturing in the L ex ington district yet these few concerns are w ork in g full tim e and are behind in their orders. M anufacturing in Pittsburgh is running 60 p er cent, o f capacity. Electrical supplies m aintained a satisfactory volum e fo r June, w ith considerable increase over that o f April and May. T he continued inquiries w ould indicate offerings o f considerable new business. C ollections are good, w ith a decrease in the offering o f paper, w hich is a good sign. Orders in the b oiler and radiator business are plentiful, but prices have been badly dem oralized. Erie reports m ore orders than thirty days ago. The foundry business, w hich is the principal industry, is m ore optim istic. B oiler and engine m anufacturers are receiving orders from foreig n countries and are m aking a special drive for this business. Men in the shops w ho, a few m onths ago, w ere w ork in g three and fou r days a w eek, are n ow putting in practically full tim e, and there is very little pessim ism , although m uch dissatisfaction is being show n on account o f the unreasonable cost o f living. Cincinnati reports that, broadly speaking, there has been som e im provem ent in m anufacturing conditions. Orders are com in g in m ore satisfactorily, but prices are rising and in som e instances these changes are very marked. For exam ple, copper and brass goods, soaps and shoes, show recen t advances w hich are very pronounced. W a g es are firm and show n, a tendency to increase. Wheat a Disappointment; Farm Labor Scarce. A big surprise in the agriculture report fo r this m onth is the unexpected condition o f the w heat berry. W h ile there w ill be an u n pre cedented yield, the results being revealed by the threshing-m achine are not w hat w ere expected. T he yield per acre is far out o f proportion to the am ount o f straw. In many places the berry is shriveled and not w ell filled. Apparently the frosts in spring and the extrem ely hot w eather in June proved harm ful. The Cincinnati A rea reports about th ree-fou rth s o f an average crop, with the best grain running from 49 to 55 pounds against a norm al o f 58 pounds a bushel. An interesting feature is that the quality o f the grain grow n on p oorer ground is averaging better than that grow n on good soil. P robably little grain threshed w ill grade No. 1, m ost o f the w heat being o f the second and third grades. A disappointm ent fo r the farm er lies in the fact that in order to obtain the guaranteed price o f $2.26 a bushel, his grain m ust make a No. 1 grade test. Three cents w ill be deducted on each bushel grading No. 2 ; seven cents w ill be deducted on all wheat o f No. 3 grade, w hile that grading below No. 3 w ill be bou gh t on its m erits at prices that w ill reflect its com m ercial value as com pared w ith grade No. 1. In m ost instances the binder was able to pick up the fallen wheat, and w herever this was im p os sible, hogs have been turned into the fields and fattened upon that w hich w ould otherw ise have been w asted. A nother disquieting feature in the life o f the farm er is the shortage o f labor. The heavy rains o f May delayed them to such an extent that they have not been able to catch up; how ever, they are re doubling their efforts and w ill no doubt be able to take care o f their crops. W h a t farm labor is obtainable is only at such prices that the farm er is gradually tending tow ard a “ on e-m an ” farm , or is undertaking only what he and his fam ily w ill be able to handle w ith occasional outside help. This seem ingly continuing condition is causing the farm er to turn m ore and m ore to m echanical means fo r re lie f and m eet the labor shortage by the introduction o f m otor pow er. T he farm tractor com panies report few sales in the District, there being a feeling am ong the farm ers that farm tractors w ill be reduced in price. A disposition is also noted to let m anufacturers do a little m ore experim enting b e fo re placing their orders. The buying o f other farm m achinery is quite active. Many farm ers in the D istrict are installing indiyujuad lighting system s. THE MONTHLY BUSINESS REVIEW. 5 A hopefu l agricultural sign is that the farm ers are getting together to study the cost o f p rod u c tion. A nother is the interest being taken in tile drainage. This w ill enable the farm er to obtain greater production per acre, reduce the acreage if necessary, and result in m ore intensive farm ing. E arly-sow n oats have grow n very rank, and in many cases have lod g ed ; but the late-sow n crop, due to insufficient m oisture, has made a very short grow th. Corn, generally, is grow in g rapidly; its appearance is healthy and present indications point to a norm al yield. One o f the im portant crops o f the Ohio valley is tobacco. A Cincinnati paper has ju s t published an annual forecast o f crop conditions, w hich shows an increased acreage o f 17,000, w ith an estim ated yield increase o f 20,000,000 o f Burley tobacco. The dark tob a cco section o f K entucky prom ises 22,000,000 pounds m ore than in 1918. This is an im portant matter with the Cincinnati bankers, as upon them falls the bulk o f financing this great crop, valued at approxim ately a quarter-billion dollars. Reports from the K entucky section list the crop conditions as fo llo w s : Oats, 89 per cen t; Burley tobacco, 80 per cen t; dark tobacco, 81 per cen t; clover, 93 per cen t; orchard grass, 93 per cen t; blue grass, 95 per cen t; cow -pea s, 82 per cen t; alfalfa acreage, 99 per cen t; garden conditions, 87 per cen t; potatoes, 87 per cent, with fruits sh ow in g a short crop. Many o f the tob a cco grow ers in Southern Ohio are still carrying in their barns last year’ s crop o f what is know n as the Spanish and Dutch leaves. The fruit situation is quite disappointing. The June drop has greatly reduced the crop prospects o f both peaches and apples. This condition has also affected the grapes, in that the clusters contain a sm aller num ber o f berries than they should. W e now have a condition o f large, open clusters, w hich may be som ew hat com pensated fo r in the larger berries w hich w ill be produced. P rices on grapes will be higher than ever b efore, ranging in price from $120 to $140 a ton. T h ey have been sold in the past as low as $ 2 0 a ton. The developm ent o f agriculture is very largely dependent upon road conditions. There is m uch road building in progress, but prices fo r road w ork are becom in g prohibitive. An e ig h teen -foot road at from forty to sixty thousand dollars a m ile frightens nearly everyone. T h e material w h ich enters into road construction has advanced in price from 150 to 500 per cent. Warnings of Coal Shortage Are Becoming Louder. “ BUY N O W ” is the keynote o f the coal situation. W arn in gs are constantly being issued by G overnm ent officials and the National Coal Association, both o f w h om have m ade a careful study o f the situation and are endeavoring to prevent suffering such as occu rred during the w inter o f 1917-1918. Several reasons contribute to this shortage. It is estim ated that from one m illion to one and o n e-h a lf m illion foreig n -b orn w ork ers, a considerable n um ber o f w h om have been w ork in g in and about our coal districts, are now sail ing and w ill continue to sail, a fact w hich w ill greatly ch eck production. Com bined with this con d i tion is the possibility o f a car shortage, due to the inability o f transportation com panies to obtain sufficient labor to keep cars in the necessary repair. Goal should be plentiful at this season o f the year, and it is really a serious condition to find ourselves facin g a shortage so soon. A nother factor is the scarcity o f team sters and m en fo r yard labor. The w ise con su m er o f coal w ill secure enough to carry him over any tem porary shortage. The reported shortage o f coal produ ction in England and som e o f the other European countries m eans that there w ill be a large export call. T he coal output in England to date is about 26 per cent below that fo r the correspon d in g period last year. The coal m ines in the vicinity o f Cincinnati have not so far this m onth done m uch to make up the deficit in this country’ s production. T h is m eans constant w ork fo r the m iners during the balance o f the sum m er, and throughout the com in g fall and winter. In eastern Ohio the production dropped from 75 per cent to 70 p e r c e n t o f capacity since ou r last report. It is estimated that 90 per cent o f the capacity production o f the sm okeless coal area o f eastern Kentucky and W e s t V irginia is under contract to 1920. T h e dem and fo r bunkering and export purposes has been particularly heavy. Sm okeless coal is being offered to the con su m er in this vicinity fo r the first tim e in m ore than three years. 6 THE MONTHLY BUSINESS REVIEW. C ollections are exceptionally good, with very few requests for extension o f tim e o f account o f inability o f the purchaser to pay according to contract. A special study w as m ade fo r this issue, at the coal docks in Cleveland, as to the coal tonnage w hich is being handled by the Great Lakes fleet. The results show that lake shippers believe the ton nage fo r this season w ill be at least 20 per cent less than in 1918, because, ow ing to the mild w eather and the slow in g-u p o f business, a large am ount o f coal was carried over at the upper lake ports. By reason o f small local dem ands, coal was rushed forw ard to the lake frontage during the early part o f the season in order to keep the mines running; and as a result the m ovem ent up to July 1 was about 1,500,000 tons ahead o f last season fo r the same period. There has been quite a let-up in the m ove m ent since July 4, due very largely to the shortage o f labor and cars at the m ines, and even the c o n tract boats have been experiencing difficulty in securing cargoes. Coal is slow going forw ard from the upper lake district to the N orthw est, and in som e cases dock space is getting scarce. T h e bulk freighters in 1918 carried 28,153,517 net tons o f bitum inous coal (w hich is a record fo r the tra d e), but shipments fo r this season w ill drop considerably below that mark. Exodus of Foreign-Born Labor Increasing• Many o f our foreign -b orn laborers are leaving the country, a fact borne out by the issuance o f passports, as many are needed to rebuild their ow n countries and to care for fam ilies w ho are victim s o f War conditions. It is reported that the exodus from Cleveland alone w ill am ount to 35,000 before the end o f the year. The steel and coal industries being large em ployers o f fO reign-born labor, their interests are being vitally affected by this em igration. The Pittsburgh district, w hich is the greatest steel center in the w orld, is facing a shortage o f labor that threatens to seriously cripple its m anufacturing plants. Five thousand com m on laborers could find w ork there im m ediately. In addition there are tw o thousand other places open fo r m echanics and skilled w orkm en. W h ile there w ill be always be som e idle m en in every com m unity, yet there is probably a sm aller num ber o f unem ployed in this District than ever b efore known. Apparently the problem to be m et later is not one o f w ages but o f the ability to get sufficient labor to offset the rapidly increasing exodus o f foreign -b orn help. Dwelling Construction the Gratifying Outlook of Building Activity. The trend o f increased building activities is evidenced by the reports from m anufacturers o f building brick and h ollow tile ; by the increased sale o f paints, the very noticeable increased demand for structural steel and for lum ber fo r the construction o f hom es, notwithstanding its scarcity and high price. The m ost h opefu l sign o f the entire building situation is found in the increased num ber o f hom es w hich are being built. This condition exists throughout the District, but has not as yet reached the required volum e. T here can be no question that the present housing condition is aggravating the unsettled state o f labor. Students o f the problem incline to the b elief that unless Government aid is offered in the form o f Federal loans, there is no hope fo r relief on an appreciable scale. The m ost serious problem in building construction is the inadequate supply o f skilled labor, resu lt ing in som e builders accepting contracts only on a cost-plus basis. Builders are also awake to the fact that present prices will not be low ered, but, on the contrary, are likely to advance. It must be rem em bered that it was approxim ately fourteen years after the Civil W a r before the quotations o f building materials declined to p re-w a r levels, so it is not to be expected that present prices o f materials entering into building w ill find an im m ediate reduction. As an indication o f the extent to w hich building operations are being carried on, Cleveland reports show that the value o f building perm its issued during the first six months o f this year exceeds that o f any one year from 1913 to 1918, am ounting to $15,091,315, w hich is a gain over the same period in 1918 o f $5,937,805. Akron estimates that the total cost o f new buildings for the first six months o f this year w ill amount to $10,044,552. Perm its for new construction in the city o f Dayton am ount to but $812,000 yet there are requests on file fo r perm its aggregating over one and on e-h a lf m illion dollars. THE MONTHLY BUSINESS REVIEW. 7 A detailed com parison o f building operations in the larger cities o f the District w ill be found else w here in this Review. The Realty Situation in Cleveland. Real estate conditions in Cleveland show a decided im provem ent over previous years. T h e city is basically sound, and real estate is w ell regarded as an investment. T here is a large volum e o f transfers and inquiries, and all indications point to a period o f unusual activity in buying. Vacant land is in great dem and, and allotm ent operators report big sales. There seem s to be plenty o f ready m oney in the hands o f w ork in gm en and others w ho desire to acquire h om e-sites, and larger dow n-paym ents are being made than ever b efore. Factory properties are m oving briskly. Many o f the so-called non-essential industries w hose activi ties w ere restricted during the war are expanding rapidly and seeking new locations. Factory space is at a great prem ium , although a considerable am ount o f new building is being done in this field. The large expansion in factory property during the w ar does not seem to have acted as a drag on the market, as factories w h ich w ere engaged in w ar w ork seem to have su ccessfu lly sw itched over into peace-tim e activities, and apparently require all the space they now have. Apartm ent house buying is brisk. Apartm ents as a class have probably advanced 15 per cent in value in the past six m onths and probably 25 per cent in value in the past fou r years. Merchants Unable to Obtain Better Grades of Goods. The general com plaint o f m erchants in the District is their inability to secure the better qualities o f m erchandise. Cleveland m erchants report very little change in textile trade. The supply o f piece goods has b ecom e m ore m eager, and deliveries against contracts fo r fall consum ption in the garm ent trade have not yet reach ed anything like a satisfactory state. Mills are offering very p oor deliveries for spring, as they are filled with orders for fall deliveries w hich w ill extend far beyond the norm al period. Retail dem and continues large, w ith no apparent change in the tem per o f the buying public with referen ce to prices. T h e dem ands seem s to continue for better qualities, irrespective o f cost. Sales so far this year, as reported by one o f the largest departm ent stores in Cleveland, show a 37 per cent in crease, with collections during the m onth o f June 33 per cent better than last year. Colum bus report says that retail business is unusually good, with reports continuing to com e from the East o f a shortage o f m erchandise. Colum bus m erchants are m aking hurried trips to New Y ork City to replenish their depleted stocks. Erie m erchants report that it is m ore difficult n ow to obtain m erchandise than ever b efore, giving as the reason the fact that the larger m ills in the East are receiving a great many orders for foreign deliveries, and that they are being held up by the strikes o f their em ployes. General w holesale and retail trade in the Cincinnati district has been active. Consum ers are lay ing in supplies o f both necessities and luxuries, w h ich had com e to low ebb because o f w ar-tim e sacri fices. They seem to be paying for these goods from their w eekly earnings, and not disturbing their savings accounts, so the pickup in retail trade prom ises to be steady until these deficiencies o f hom e demand have been filled. Export Trade Steadily Gaining in This District. Foreign trade in the Fourth Federal Reserve District is quietly but steadily on the gain. T he better-versed export m en w h o are returning from Europe report that in spite o f the chaotic conditions there, they w ere able to transact considerable business and consum m ate definite arrangem ents fo r future sales. The m a jo r ity 'o f the larger im ple ment, m achinery and tool m anufacturing plants have been quite busy filling their foreign orders dur ing the past several m onths o f dom estic depression. The increasing demand from the sm aller m anu facturers for inform ation on both markets and m ethods, indicates a grow in g realization o f the im port ance and possibilities o f foreign trade. The relaxation o f restrictions by the W a r Trade Board together with increasing am ounts o f ship ping space is facilitating freight m ovem ents. R eestablishm ent o f the issuance o f through b ills -o flading by the railroads w ill be w elcom ed by inland shippers. T he grow in g opinion that there is an THE MONTHLY BUSINESS REVIEW. appreciable volum e o f export business in this territory is substantiated by the appearance o f new fo r warders, m anufacturers, agents, and local representatives o f coast insurance and steam ship lines. T h e initiation o f ocean -bou n d freighters, either starting at or touching Cleveland, is arousing m uch interest. Statistics from the C ollector o f Customs indicate that approxim ately $5,000,000 o f im ports and exports passed through the Cleveland office during the first fou r months o f the present year. This does n o t necessarily indicate a local even trade balance; many im ports cam e directly to Cleveland, and th ere fo r the im port figures may be considered as reasonably indicative o f that activity in Cleveland. T h e export figures, on the other hand, represent a small proportion o f local products w hich ultim ately rea ch the foreign field. PHtPOSIP The ■ ■ ■ ■ legislation perm itting all N ational banks to becom e stockholders o f corporations engaged in prom oting foreign trade w ill doubtless b e taken advantage o f by the National banks in this District. Financial experts o f the United States T r e a s ury regard the B oard’ s action in m aking this recom m endation as one o f the m ost impprtant steps in reconstruction yet taken. Banks generally in the District are in fine shape, w ith ample funds fo r a ll legitim ate dem ands o f business. T he bankers are slow in lending m oney for speculative p u rp oses. A healthy dem and fo r com m ercial credit is observed. Brokers collateral loans are changing h an ds m ore freely, w ith rates show ing a tendency to soften, although m ost loans are still being made at 5 yz per cent to 6 per cent. Money Plentiful for Legitimate Demands. T he farm er’ s prosperity is the day-star o f the banking outlook at the present time. Deposits d u r ing the last 30 days have not show n a depreciation, regardless o f the drain o f taxpaying. The bank acceptance field has been practically at a stand-still since our last Review, as G overnm ent requirem ents and high call m oney in New Y ork have made the demand very light. The red eem in g feature, however, is that the sm aller country banks are beginning to buy bank acceptances as an in v est m ent for tem porary funds. The transm ission o f m oney to Europe is increasing. During one day one o f the the banks in Youngstow n, alone, sold foreign exchange to the am ount o f $115,000. Transportation Shows Encouraging Gains. It is very encouraging to find that transporta tion is slow ly gaining. Statistics com piled by the Transportation Department o f the Cleveland C h am bei o f Com m erce show the follow in g com parative statem ents: May, 1919 Gars Tons June, 1919 Gars T ons Inbound 37,588 1,319,945 Outbound 22,250 655,929 Total 59,838 1,975,874 40,384 1,228,185 25,948 850,865 66,332 2,079,050 This makes an increase o f 6,494 cars handled during June, while the increased tonnage is 103 1 7 « E quipm ent is reported as being about equal to present requirem ents, with passenger traffic u usually heavy. The city o f Pittsburgh is m aking trem endous plans for w idespread benefits in the w ay o f c o n struction o f a boulevard system as a means o f relief to traffic needs. Banks Entering the Federal Reserve System . The follow ing tw o banks have been a d mitted into the Federal Reserve system o f the Fourth District since the publication o f our last Review R esources B ridgeport Bank & Trust Company, Bridgeport, Ohio ..................$915,000 Citizens Savings Bank, Upper Sandusky, O h i o .............. ................... 785,000 The Federal Reserve Board has received word from the Com ptroller o f the Currency that th e new ly-organized First National Bank o f Pandora, Ohio, with a capitalization o f $30,000 has paid an in stallm ent o f $3,000 on its capital. 9 THE MONTHLY BUSINESS REVIEW. B U IL D IN G O P E R A TIO N S F O R M O N T H OF JUNE Valuations Permits Issued New Construction 1919—1918 Akron............................... Cincinnati....................... Cleveland........................ Columbus....................... D ayton............................ E rie.................................. Lexington....................... Pittsburgh...................... Springfield...................... T oled o ............................. Wheeling......................... Youngstown................... 612 195 468 243 252 165* 29 392 66 219 46 228 Alterations 1919— 1918 203 144 92 508 168 931 104 95 126* 1 0 0 119* 10 69 244 148 14 18 77 160 24 18 198 43 62 435 737 94 37 137 4 63 41 30 Now Construction 1919 New Construction 1918 2,266,772 780,605 288,105 623,755 4,101,300 1,276,400 249,995 531,655 395,112* 811,903 223,581* 285,925* 53,500 64,500 738,389 825,263 25,450 150,670 517,477 474,963 9,252 26,060 742,520 408,042 Alterations 1919 81,510 278,345 554,325 117,005 52,950 26,750 335,533 15,125 137,355 1,970 27,300 T O T A L ............... 2915 1383 2230 1640 10,885,456 4,985,738 1,628,168 Alterations 1918 Increase or Per Cent of Decrease o f total valuations 1919 over 1918 Increase or Decrease 31,945 1,535,732 427,205 186,790 292,400 3,086,825 318,790 79,875 469,741 62,344— 33,895 3,855 184,577 237,830 138,155 2,190 32,571 147,298 8,597 10,181 34,525 327,253 189. 90. 196.8 96.6 118.7 2 1 .8— 57.8 18.8 511.1 28.9 57. 73.9 910,578 6,617,308 1 1 2 .2 •Figures include new construction and alterations. C LE A R IN G S June 16 to July 15 1919 1918 Increase or Decrease Percent of Increase or Decrease Akron................................... Cincinnati........................... Cleveland............................ Colum bus........................... D ayton................................ E rie...................................... Lexington............................ Pittsburgh........................... Springfield........................... T oled o................................. W heeling............................. Youngstow n....................... 32,526,000 248,637,660 496,419,254 58,463,700 21,617,004 9,683,837 5,410,499 629,135,731 6,978,822 55,387,024 21,724,489 26,316,478 27.892.000 243,929,013 411,569,550 44,174,400 17,185,105 9,193,808 3,665,147 578,705,724 5,964,770 44.210.000 16,556,794 16,828,499 4,634,000 4,708,647 84,849,704 14,289,300 4,431,899 490,029 1,745,352 50,430,007 1,014,052 11,177,024 5,167,695 9,487,979 32.3 25.7 5.3 47.6 8.7 17. 25.2 31.2 56.3 TOTAL 1,612,300,498 1,419,874,810 192,425,688 13.5 16.6 1.9 20.6 THE MONTHLY BUSINESS REVIEW. 10 STATEMENT OF FEDERAL RESERVE BANK OF CLEVELAND. July 18, 1919. RESOURCES Gold Gold Gold Gold coin and certificates............................................................................ $32,239,000 settlement fund with F. R . Board................................................... 44,259,000 with Federal Reserve Agent............................................................. 120,438,000 redemption fund................................................................................ 1 ,0 1 1 , 0 0 0 T O T A L GOLD R E SE R V E ....................................................... 197,947,000 Legal tender notes, silver, etc..................................................................... 910,000 TO T A L CASH R E S E R V E ....................................................... ..............198,857,000 Bills discounted— Secured by Government War Obligations............... Bills discounted— All other......................................................................... Bills bought in open market..................................................................... .. 100,469,000 9,661,000 55,649,000 Total bills on hand....................................................................... 165,779,000 U. S. Government Bonds .......................................................................... 1,084,000 U. S. Government Victory N otes............................................................. _o_ U. S. Government certificates of indebtedness..................................... 18,574,000 T O T A L E A R N IN G ASSETS................................................... 185,437,000 Uncollected items and other deductions from gross deposits.............. 5 % Redemption fund against F. R. bank notes..................................... All other resources........................................................................................ 6g 449 qoo 897^000 1,388^000 455,028,000 T O T A L RE SO U RCES............................................................... LIABILITIES. Capital paid in .............................................................................................. Surplus fund.................................................................................................. $9,255,000 5,860,000 15,115,000 Government deposits.................................................................................. 14,597,000 Due to members— Reserve accounts....................................................... 126,924,000 Deferred availability items......................................................................... 56,798,000 Other deposits................................................................................................ 8,319,000 TO T A L GROSS DEPOSITS..................................................... 206,638,000 Federal Reserve notes in actual circulation......................................... Federal Reserve bank notes in circulation— net liability........ ............ All other liabilities........................................................................................ 215 948 000 16,774,000 553^000 T O T A L L IA B IL IT IE S .............................................................. 455,028,000 11 THE MONTHLY BUSINESS REVIEW. PICKUPS ON BUSINESS TOPICS AIL can now be sent by airplane from New York to Chicago leaving New York abput 5 a. m. and reaching Chicago about 1 p. m. Planes are changed at Belfont, Pa., and Cleveland. The air mail arrives in Cleveland in time to catch the plane leaving there at 9.30 a. m. for a non-stop flight to Chicago. About 12,000 letters a day are taken for Pacific coast points and through air mail service from New York to Chicago will advance the delivery of mail for Seattle, San Francisco, Los Angeles and other cities about twenty-four hours sooner than if sent from New York through by train mail. This applies to letters received in New York postoffice for the 8.40 p. m. train westward. Air mail from the west for Chicago and points east is taken on at Chicago and Cleveland. A plane leaves Chicago at 2.30 p. m. arriving in Cleveland at 5.30 p. m. in time to connect with the 20th Century limited, and the mail arrives in New York about 9 o ’clock the next morning. This gives the business men about three more hours to dispatch mail from Chicago than if sent by train about noon. An airplane leaves Chicago in the morning at 8.30 taking on all air mail from train connections and the mail arrives in New York about 1 p. m., a stop being made at Belfont, Pa., to change planes. This also gives the business man a late night service by train to Cleveland, connecting with the morning plane at that point for New York and points east and advancing mail delivery many hours over that by through train service. M 1.11IIII11IIIIIII)IIIH ilIIIIIIII United States mints established a new record for monthly output in June by turning out 98,610,000 pieces o f money, Director Ray T. Baker announced. Of the total pieces 91,364,000 were pennies which was 13,000,000 greater than the pre vious record made in December, 1917. The remainder con sisted of 6,427,000 nickles and 370,000 dimes. iiiiiiiiitiiiiiiiiiiiiiiimiiitiiiiitH Progress in reconstruction o f France Transportation Systems is shown in a report made by the Minister o f Trans portation to President Poincare. Since the signing o f the armistice 564 miles of double-track railway lines and 567 miles of single-track lines on the north and east railway have been restored. Of 645 miles of canals closed to navigation, 198 miles have been reopened to commerce. Seven thousand miles of highways, out o f 24,000 miles that were damaged have been put in good condition. iiiiiitfiuiiiiittinttim iitm tm iii By a unanimous vote the Argentine Senate last week approved without reservation the entrance o f Argentina into the League of Nations. The Argentine Republic is the first nation to assent, through its treaty-making body, to the League of Nation’s covenant. itiiiiiiiiiiimiiiHiiiiiiiiiiiiiiimi A new steamship line has been established between the ports of Boston and Buenos Aires. It is expected that other vessels of the United States Shipping Board will be assigned shortly for the South American service. This service has long been needed, and will go far in bringing the two conti nents together. imiiitiitiiiititiiiiiimitiHiitiiiti Chicago takes on the role o f an export port. The first steamer sailed on June 25 from Chicago to Great Britain. It will mark the first big step in the development o f inland water transportation by the Emergency Fleet Corporation. The trip by way of the Great Lakes and Montreal, to the Atlantic is expected to require three weeks. .......... . As a special compliment in honor o f Dr. Epitacio Pessoa, President-elect of Brazil, Postmaster General Burleson speeded up the completion o f the money order convention between the United States and Brazil so that as far as action by the United States is concerned the convention should be concluded while Dr. Pessoa was the nation’s guest at Washington. The money order exchange offices will be located at New York City and at Bio de Janeiro. When the treaty is signed at Rio de Janerio it will then go into effect and will greatly facilitate the commercial operations between the two countries. ALL national banks throughout the United States will be f l permitted to become stockholders of corporations en gaged in promoting foreign trade if Congress enacts legisla tion that is now being urged by the Federal Reserve Board and by bankers quite generally. The amendments would permit any national bank until January 1, 1921, without regard to the amount of its capital and surplus, to invest an amount not exceeding in the aggre gate 5 per cent of its paid-in capital and surplus in the stock of one or more corporations such as described, provided that the total o f such investments by any one national bank shall not exceed 10 per cent of its capital and surplus. As the capital and surplus of national banks now exceeds $2,000,000,000, enactment of the proposed legislation would enable them to devote about $100,000,000 for the purpose indicated. iiiiiiiiitimimiiuiiiiiiiiiiitiMiii Whatever may have been the fact three months ago, there are few students of the business situation who now hold that there must be or will be a general and important decline in commodity prices and wages before the real busi ness activity of the world will be resumed, says the Iron Age. From the present level no marked deflation need be expected in commodities and wages without corresponding decrease in the world’s currency, government bonds and bank deposits, and in those items there is no present promise of more than a very gradual decrease. Any approximation to prices com parable with pre-war standards would require great increases in efficiency in production, or it might come after severe industrial depression, making men much more willing than they are at present to work very hard for what they secure in the commodities or services they purchase with their earnings. iiitiiiiiiiiiiiHiiiiiniiHitiitiiinit) The fiscal year beginning July 1 next will witness, it is believed, the greatest annual expansion of trade between the United States and Latin America that has ever taken place in peace times, according to a statement by John Barrett, Director-General o f the Pan-American Union. This fact was emphasized at the recent Second Pan-American Commercial Conference held here. Ever since the beginning o f the war there has been an extraordinary growth in Pan-American commerce due largely to war conditions. It increased approxi mately from $750,000,000 in the fiscal year immediately pre ceding the war, 1913-14, to about $1,750,000,000 last year, 1917-18, a gain of $1,000,000,000, or 133 per cent in only four years. Of this total the growth in exports from the United States to the twenty other American republics amounted to 157 per cent, and the imports from those countries to 119 per cent. iiiiiiiiiiMiiiiiiiiiinHiiiiiiiiiiini President Wilson has created the position o f United States Wheat Director, and Julius H. Barnes, president of the Federal Grain Corporation, will be its first incumbent. The Wheat Director will direct the handling of the 1919 crop and administer the $1,000,000,000 appropriated to sustain the price guaranteed by the Government. m iim im iiH iiiiiim iim iiM iN iii There is a shortage o f one million homes in the United States, according to William H. Garland of Los Angeles, president o f the National Association of Real Estate Boards. Delegates predicted a nation-wide boom in building. They declared the only obstacle in the way is the failure of the manufacturers to stabilize prices for materials. IIIUIMtllllllttllltlllllllllltlllMllt A bill has passed the United States Congress granting permission for the construction of a vehicular tunnel under the Hudson River between New York and New Jersey. HIMIIItlttlllinllllllHIIIHIIIIIItt The Peruvian Postmaster General has been authorized to ask for tenders from several European and American firms for the establishment of aerial routes for transportation of mail, passengers and freight. lUHHiMMiimiitmiMHimiHiim. Sale of thrift stamps, which, at twenty-five cents apiece provided $956,023,121 toward financing the war will be con tinued permanently by the Treasury, Secretary Glass announced.
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