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The Monthly Business Review Covering business and industrial conditions in the Fourth Federal Reserve D istrict FEDERAL RESERVE BANK OF CLEVELAND D. C. Wills, C h a ir m a n of th e Board VOL. I CLEVELAND, OHIO, MARCH 1, 1919 NO. 2 F ew c h a n g e s in in d u s tria l co n d itio n s have b ee n n o ted in th e F o u r t h F e d e r a l R es e rv e D istrict d u r ing th e p a s t m o n th . T h e p ro b le m s of r e a d j u s t m e n t have b ec o m e m o re real, and delay and u n c e rta in ty , w h e r e th e y have existed, in r e g a r d to th e n e c e s s a ry tra n s itio n , have effected a sta g n a tio n of b u s in e s s in th e in d u s trie s involved. It is g e n e ra lly co n ced ed t h a t an effect, d e t e r r e n t to th e active re s u m p t i o n of b u s in e ss and in d u s tria l activity, has b ee n p ro d u c e d by a fe elin g of u n c e r ta in ty w ith r e g a r d to F e d e r a l tax legislation. T h e g e n e ra l b elief s e e m s to prevail t h a t w ith th e s e t t l e m e n t of this i m p o r t a n t fa c to r in th e co m m e rc ia l w orld, a stab iliz in g influence will be c r e a te d w h ic h will n a tu ra lly c a u se a s tim u lu s in all lines of trad e . A w id e s p r e a d b u t u n o rg a n iz e d d e m a n d fo r the lo w e r in g of price levels a p p e a rs as yet to have a c c o m p lish e d no s u b s ta n tia l re s u lts. In th e b a c k g ro u n d o p tim is m c o n tin u e s to prevail, b u t it is based, a p p a ren tly , on th e u ltim a te o u tc o m e r a t h e r th a n im m e d ia te p ro s p e c ts . S p a n is h In fluenza has ceased to be p re v a le n t in ep id em ic form , and co n tin u e d m o d e ra te w eather, a lth o u g h som ew hat m ore s e a s o n ab le t h a n e a rlie r in th e year, is lik ew ise conducive to qu ick t r a n s p o r ta t io n an d a r e s u m p tion of activities generally. M anufacturing.— All lines of m a n u f a c t u r i n g reflect, to a g r e a t e r o r less ex ten t, c o n d itio n s a t p r e s e n t p rev ailing in th e steel in d u stry . specialized lines. T h e steel m a r k e t c o n tin u e s inactive, except a lo n g som ew hat T h e P it t s b u r g h as well as th e Y o u n g sto w n d is tric t re p o r ts a d e c re a s e in b u s in e s s and th e te m p o r a r y closing of a n u m b e r of mills. T h e Y o u n g sto w n d istric t is said to be o p e r a tin g at a b o u t 60% of capacity, b u t ex pects to re a c h 100 % p ro d u c tio n w ith in a s h o r t tim e, w h e n a n tic ip a te d o rd e rs , w h ic h have n ot yet m ateria liz ed , are booked. S ev eral m ills w h ic h ex p e cted to avail th e m s e lv e s of th e p r e s e n t lull to m a k e m u c h n e e d e d re p a irs are re p o r te d to have since a b a n d o n e d t h a t in te n tio n d u e to p rohibitive costs in b u ild in g and k in d re d lines. T h e p r e s e n t relatively h ig h o u t p u t of in g o ts in t h e P it t s b u r g h d is tric t reflects the b elief on th e p a r t of p ro d u c e rs t h a t la te r on t h e r e will be a d ecided im p ro v e m e n t in new b u sin e s s . T h a t division of th e steel in d u s tr y affiliated w ith th e ra ilro a d s, w h ic h u n d e r n o rm a l cond itio ns are th e b ig g e st c o n s u m e r s , sh ow s a pra ctically co m p le te s u s p e n s io n of o p e r a tions. T h is cond itio n is no d o u b t due to th e u n c e r t a i n t y at p r e s e n t p re v ailin g w ith r e g a r d to th e f u t u r e of th e ra ilro a d s as w ell as to th e fact t h a t e x ten siv e add itio n s an d re p la c e m e n ts , in t r a c k an d ro llin g stock, w e re m a d e d u r in g th e w a r. In c o n tra s t to th e d e su lto ry m a r k e t co ndition s d e sc rib e d above, th e steel s h e e t d e p a r t m e n t is quite active, au to m o b ile m a n u f a c t u r e r s dem and. c r e a tin g a lively an d p e r s is t e n t A u th o ritie s on m o to r ca rs p re d ic t an u n u s u a lly heavy o u t p u t an d m a n u f a c t u r e r s ’ n e e d s as r e g a rd s s h e e t steel will be an i m p o r t a n t fa c to r d u r i n g th e year. plate fo r w h ic h a la rg e d e m a n d is looked fo r f r o m c a n n e rs . T h e r e is also a lively activity in tin W i t h th e e x c ep tio n of a slig h t re d u c tio n The M onthly Business Review 2 in q u o ta tio n s on steel b ars, th e ten ta tiv e p rices a n n o u n c e d fo r all iro n and steel p ro d u c ts a t th e o p e n in g of th e y e a r a re still qu oted, b u t are m o re o r less nom inal. In th is re sp ect, th e steel m a r k e t is rad ically d ifferen t fro m th e co p p e r m a r k e t w h e re dra stic cuts have very re c e n tly been m ade. T h e policy of th e steel tra d e s e e m s to be to leave th e initiative as re g a rd s price co n c essio n s to th e c o n s u m e r. If the l a t t e r shou ld m a k e a firm bid fo r d esirable bu sin ess, it se e m s p rob able it w o u ld be m e t by p ro d u c e rs or a c o u n te r -p ro p o s itio n w o u ld be m ade w h ich u ltim ate ly w o u ld re s u lt in th e placing of bo n a fide c o n tra cts. No w e ll-de fin ed step s to w a r d w age re d u c tio n s in the steel in d u s try have as y et b e e n a tte m p te d , and w h e r e m e n a re em plo yed a t all, th e te r m s of su ch e m p lo y m e n t are largely on a w a r - t i m e basis. S e n t i m e n t is a p p a re n tly divided b o th as re g a rd s th e w is d o m of a revision d o w n w a rd in w a g e s and also as to w h e t h e r an im m e d ia te r e d u c tio n in steel prices w ou ld have th e effect of a t once s tim u la tin g d em a n d . Clay P roducts.— R e p o rts as to th e c e ram ic in d u s try w ould s e e m to indicate a m o d e ra te revival of b u s in e s s w ith ex c ellent p ro s p e c ts, ac c o rd in g to m a n u f a c t u r e r s , for th e c o m in g six m o n th s . d e m a n d fo r cro ck ery is lik ew ise indicated. a b u n d a n t supply of labor. A heavy P o tt e r i e s are re p o rte d to be ru n n i n g full tim e w ith an T h e b u ild in g b rick and tile m a rk e t co n tin u es dull w ith few e n c o u ra g in g p r o s p e c ts fo r th e im m e d ia te fu tu re . A griculture.— T h e co nd ition of w i n t e r w h e a t is said to have m ateria lly im pro ved d u rin g th e p a s t fe w w eek s. F a r m e r s , w h o u n til re c e n tly w e re ap p re h e n s iv e as to th e c ro p ’s condition, are n ow h o p e ful t h a t c o n tin u ed mild, d ry w e a t h e r will p ro d u c e excellent resu lts, a lth o u g h it is a d m itte d t h a t ra in s follow ed by heavy fre e z in g m ig h t prove d isastro u s. Hog influenza, re p o rte d p re v a le n t la s t m o n th in th e s o u th w e s te r n p o rtio n of Ohio, has a p p a re n tly su b s id e d — at least the ep id em ic is n o t sp re a d in g . T h e to bacco cro p c o n tin u e s to m a k e fo r g re a t p ro s p e rity in th e re g io n of K e n tu c k y n e a r L ex ing to n. D u rin g th e c u r r e n t se a s o n fancy to bacco is said to have yielded as high as $0.90 and $ 1.00 p e r p o und . M a rk e tin g co ndition s, d u e to good ro a d s and favorable w e a th e r, have also been ideal. H igh p ric e s realized on th is y e a r ’s to b acco cro p have cau sed th e g ro w e rs to invest heavily in G o v e rn m e n t T r e a s u r y C ertificates, an d b a n k d ep o sits have sh o w n s u b s ta n tia l in creases. T h e price of b u tte r, eggs and p o u ltry have e x p e rie n c e d m ate ria l dro p s b u t o t h e r fa rm p ro d u c ts c o n tin u e to c o m m a n d h ig h levels. Labor.— T h e la b o r s itu a tio n c o n tin u e s to cause w id e s p re a d anxiety th r o u g h o u t the District. T h e r e is a p p a re n tly a la rg e s u rp lu s of u n sk ille d labor, w hile in som e q u a r te rs an over-su p p ly of skilled la b o r is likew ise in evidence. Aside fr o m th o s e c o n s tan tly r e tu r n in g from m ilitary service, th o se te m p o ra rily laid off by th e steel and coal in d u s trie s add to th e n u m b e r of unem plo yed . Y o u n g sto w n , h ow ever, re p o r ts t h a t th e steel m ills in th a t city are re ta in in g all of t h e i r m en on t h e i r payrolls, w h e t h e r r u n n i n g a t full capacity o r not. T h e r e is a co n tin u ed discu ssio n as to th e advisability Of re v is in g w a g e scales, b u t it is q uite g e n e ra lly co n ceded t h a t su ch a move w o uld h ard ly be in o r d e r 3 The M onthly Business Review un til a m o re p ro n o u n c e d fall in living costs is in evidence. It is quite ce rta in t h a t la b o r h as r e a c h e d tt h ig h e r s ta le of efficiency t h a n at any tim e w ith in th e p a s t y ea r o r two. S trik e s have b ee n p ractically negligible in n u m b e r, and th is is c o n s id ered e n c o u ra g in g , as it te n d s to sh ow t h a t b o th ca p ital and la b o r se e m to realize th a t th e p ro s p e rity of one is th e p ro s p e rity of the o th er, and t h a t d ra s tic m oves seld o m re s u lt in a n y th in g b u t d is a s te r. In sh o rt, th e l a b o r situ atio n , ex c ep t for anx iety c a u s e d by th o se unem p lo y ed , m ay be said to be s a tisfac to ry , especially fro m th e s ta n d p o in t of s e rio u s in d u s tria l d is tu rb an c es. F a r m la b o r is m o re a b u n d a n t, alth o u g h t h e r e is a te n d e n c y on the p a r t of th o s e r e tu r n in g fro m m ilitary service to see k e m p lo y m e n t in th e cities. F uel.— F u el p ro d u c tio n c o n tin u e s at low ebb a n d it is quite g e n e ra lly r e p o r t e d fro m th e m in in g d is tric ts of Ohio, P en n s y lv a n ia , and th a t portion of W e s t V irg in ia in th e vicinity of W h e e lin g , t h a t th e l a r g e r m in e s are o p e r a tin g fro m one to t h r e e days p e r w eek. T h e s m a lle r m in es have pra ctically s u s p e n d e d o p eratio n s, ex c ep t th o s e capable of p ro d u c in g th e h ig h e s t g ra d e s of coal. M in ing conditions, alth o u g h n o t wholly s a tisfac to ry , are the n a tu ra l r e s u lt of an ex c eed in gly mild w in te r. It is t h o u g h t t h a t a co n tin u a tio n of th e w e a t h e r e x p e rie n c e d d u rin g th e p ast w e e k or ten days w o u ld do m u c h to im pro ve conditions. Goal p ro d u c tio n , sm all as it is, c o n tin u e s to be in excess of d e m a n d . T i m b e r p r o d u c ts are said to be ho ld in g w ell an d m oving satisfac to rily . S h a rp declines, e x c e p t to the u ltim a te c o n s u m e r , have o c c u rre d in the p rice of fuel oil b e c a u s e th e su pply of gas and coal has bee n equal to all in d u s tria l needs. O th e rw is e th e oil m a r k e t holds firm. M arsh a ll County, W e s t V ir ginia, and L icking County, Ohio, have b ee n th e sce n e of sev e ral s u c c e s s fu l oil t e s ts by o p e r a tin g c o m panies. C ollections.— In spite of r a t h e r u n s e ttle d b u s in e s s con d itio n s in all lines, collections a re r e p o r t e d as bein g very s a tis fa c to ry fro m every s ta n d p o in t. S e ttle m e n ts are larg ely on a ca s h d is c o u n t basis, an d w h e n any p a p e r is offered in s e ttle m e n t, r e q u e s t s fo r r e n e w a ls a re a rarity. T r a d e a c c e p ta n c e s c o n tin u e to in c re a s e in v olu m e as w ell as in favor and it is t h o u g h t t h e i r use will have a p e r m a n e n t as w ell as a beneficial effect on collections generally. T ransportation.— R a ilro ad traffic is b e in g ex p e d itio u sly h an d le d , s h ip p e rs r e p o r t in g no tro u b le in s e c u rin g quick m o v e m e n t of goods. T h e a m o u n t o f less t h a n ca rlo ad fre ig h t, w h ic h h a s b e e n s m all in vo lum e for th e p a s t sev eral w e ek s, s h o w s an e n c o u r a g in g gain. T r a c tio n as w e ll as s t e a m ra ilro a d officials r e p o r t a slig h t d im in u tio n on th e p a r t of b o th d u rin g th e day an d p e a k traffic. T h is is said to be d ue to th e slo w in g do w n of w a r in d u s trie s. M ercantile L ines.— T h e g e n e ra l u n r e s t a p p a r e n t fo r th e la s t m o n th or so c o n tin u e s to d o m in a te m e rc a n tile activities. B uying fro m jo b b e r s is n ig g a rd ly an d only for im m e d ia te need s. A n ticip atin g a slow r e a d j u s t m e n t of prices, r e ta ile rs have ta k e n b ro k e n ite m s in t h e i r sto ck and m a r k e d t h e m for quick selling. F r o m so m e q u a r te r s t h e r e is c o m p la in t t h a t th is ste p w a s n e c e s s a ry , b u t all in all th e p e r c e n ta g e of n e t profit is r e p o r t e d as g ratify in g . P ric e re d u c tio n s r a n g in g fro m 5 % to 2 5 % a re noted. T h e price of sh o es still holds h ig h an d m a n y d e a le r s p re d ic t f u r t h e r a d v a n ces d u e to th e scarcity of The M onthly Business Review 4 l e a th e r. T h e d e m a n d for m e rc a n tile p ro d u c ts g e n e ra lly is light, an d policy s e e m s u n s e ttle d as to w h e t h e r to m a k e g ra d u a l price c o n c essio n s o r to cu t prices to b e d ro ck at one strok e. T h e l a t t e r id e a s e e m s to be g ain in g th e m o re favor. T ex tiles.— C onditions in th e larg e Cleveland textile m a rk e ts are still very u n s e ttle d , d u e p rim a rily to u n c e rta in ty as to prices. W h ile re ta ile rs r e p o r t s a tis fa c to ry J a n u a r y sales, the w a r m w i n t e r h as le ft r a th e r larg e stock s on h and. T h e fu tu re w o u ld see m to indicate t h a t th e sp rin g b u sin ess, w hile n o t n e c e s s a rily cu rta ile d in volum e, will be a t very m u ch re d u c e d m arg in s, d u e to th e d e s ire of th e re ta ile rs to u nload. Money and In vestm ents.— T h e r e is a fa ir d e m a n d for m oney on s h o rt tim e loans, b u t th e d e m a n d fo r co m m e rc ia l loans s e e m s , to so m e extent, to have d ecreased. A ltho ugh m oney is said to be fairly easy t h e r e is little a p p reciab le s h a d in g of ra te s, 5 V2 and 6 % b eing th e u su a l figure. C o n siderab le c o n s e rv atio n exists, how ev er, in m o n ey ch a n n els, d u e to th e com in g Victory L ib erty Loan, a n d m u c h in t e r e s t is evinced as to th e c h a r a c te r of th e la s t larg e g o v e rn m e n t offering. T h a t th e s e c u rity will have a s h o r t m a tu rity is ac c e p te d g e n e ra lly as a foreg o n e conclusion. T h e sto ck an d b o nd m a r k e t s h o w s sign s of bein g erratic, alth o u g h choice offerings are d isp osed of w ith o u t difficulty. B uilding.— T h e b u ild in g in d u s try is still su ffe rin g fro m th e effects of a m a in te n a n c e of w a r p rice s a n d t h e r e is c o n sid erab le d isc u s s io n as to how th e s e conditions can be b e s t re m e d ie d . In th e l a rg e r cities civic bodies are g oing into th e m a t t e r w ith a view to benefiting th e u n e m p lo y m e n t s itu atio n , b u t t h u s fa r w ith o u t m u c h su ccess. M unicipal p ro je c ts are b ein g vigorously e n c o u ra g e d fo r th e sake of providin g em p lo y m e n t, b u t it is t h o u g h t th a t ac tu a l co n stru c tio n w o rk on a larg e scale can h ardly be co m m e n c e d b e f o re early sp rin g . W h ile th e b uild in g p e r m its and v alu atio n s ap p e n d e d h e r e to sh o w a gain, it is th e g e n e ra l opinion t h a t ac tu a l c o n s tru c tio n w o rk will be d e f e r r e d un til t h e r e is a s u b s ta n tia l re d u c tio n in b u ild in g costs. 5 The M onthly Business Review BUILDING Valuations No. of Perm its J a n . 1919 % of Increase Increase or Decrease or Decrease J a n . 1918 J a n . 1919 J a n . 1918 $322,298 150,260 927,900 123,360 137,372 117,034 281,571 139,086 122,750 $174,545 781,895 363,460 78,515 101,685 42,310 314,415 62,635 139,685 $148,753 631,635* 564,440 44,845 35,687 74,724 32,844* 76,451 16,935* 85.2 80.7* 155.2 57.1 35 176.6 10.4* 2,321,631 2,059,145 261,486 12 .6 A k ron ....................................... C incin nati............................... Cleveland................................ C o lum b u s............................... D a y to n .................................... E rie ........................................... P ittsb u rg h ............................... T o le d o ...................................... Y o un gsto w n ........................... 139 586 431 95 91 63 129 62 53 516 262 39 34 25 85 25 65 T O T A L ...................... 1,696 1,104 100 122 12 . 1 * *Decrease. POST OFFICE. Percent of Increase or Decrease J a n . 1919 J a n . 1918 Increase or Decrease P ittsburgh .................................................................. Toledo. .................................................................... Y o u n g s t o w n ................................................................ $ 77,546 335,310 462,602 149,740 80,417 39,049 437,772 122,058 38,872 $ 81,216 295,937 426,363 143,658 61,094 34,409 415,072 111,809 39,725 $ 3,670* 39,373 36,239 6,082 19,323 4,640 22,800 10,249 853* 4 5* 13.3 8.5 4 2 31 6 13 5 5 5 9 2 2 2* T O T A L ........................................ 1,743,466 1,609,283 134,183 8 3 Akron ........................................................................... C incinnati...................................................................... Cleveland....................................................................... C olum bus...................................................................... D a y to n ........................................................................... ♦Decrease. CLEARINGS 1919 1918 Increase or Decrease Percent of Increase or Decrease A k r o n ................................................................ C in c i n n a t i ....................................................... Cleveland......................................................... Colum bus......................................................... D a y to n .............................................................. E r ie .................................................................... P itts b u r g h ........................................................ Toledo............................................................... Youngstow n..................................................... $ 28,452,000 269,495,619 403,266,065 50,272,700 17,197,440 8,757,818 576,992,423 47,183,883 15,983,683 $ 24,468,000 193,252,698 311,602,301 41,062,400 3,681,151 7,549,721 294,021,767 38,535,000 15,958,748 $ 3,984,000 76,242,921 91,663,764 9,210,300 13,516,289 1,208,097 282,970,656 9,648,883 24,935 16 3 39.5 29 7 22 4 367 2 16 96.9 25.0 T O T A L .......................... 1,417,601,631 930,131,786 487,469,845 52.4 .2 The M onthly Business Review 6 STATEMENT OF FEDERAL RESERVE BANK OF CLEVELAND. FEBRUARY 14, 1919. RESOURCES (In thousands of dollars.) Gold Gold Gold Gold Gold coin and certificates................................................................................. settlem ent fund with F. R. B o ard ...................................................... w ith foreign agencies............................................................................... with Federal Reserve A g e n t................................................................. redemption fu n d ....................................................................................... 21,172 58,013 525 130,996 2,570 TO T A L GOLD R E S E R V E ........................................................... 213,276 Legal tender notes, silver, e tc ......................................................................... 1,351 T O T A L CASH R E S E R V E .............................................................................. 214,627 Bills discounted—Secured by Governm ent W ar Obligations................ Bills discounted—All o ther.............................................................................. Bills bought in open m ark e t............................................................................ 97,060 6,745 61,750 T o tal bills on h a n d .......... .. ............................................................. U. S. Governm ent long term securities........................................................ U. S. Government short term securities...................................................... 165,555 1,084 11,066 T O T A L E A R N IN G A S S E T S ...................................................... ...................177,705 Uncollected transit ite m s ................................................................................. 5 % Redemption fund against F. R. bank notes....................................... All other resources.............................................................................................. 49,018 534 963 50,515 T O TA L R E S O U R C E S ................................................................... .................. 442,347 L IA B IL IT IE S . Capital paid i n .................................................................................................... Surplus f u n d ......................................................................................................... G overnm ent deposits......................................................................................... Due to members— Reserve accounts........................................... ................. Deferred availability item s.............................................................................. Other deposits...................................................................................................... 9,204 1,776 10,980 19,155 130,188 35,852 251 T O T A L GROSS D E P O S IT S ........................................................ ................. 185,446 Federal Reserve notes in circulation............................................................. Federal Reserve b an k notes in circulation.................................................. All other liabilities.............................................................................................. 233,874 10,102 2,445 246,421 T O T A L L I A B I L I T I E S .................................................................. ................. 442,347
@FedFRASER