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Fr.DEFAL .HESERVE BOARD S T AT ENE NT X-13UO F 0 R T H E P R E S S. Released for evaning newspapers Saturday, Decerr,ber 7 1 1918. The Federal Reserve Board today issued a surrrr.ary of business cond:it~ons throughout the United States, based upon reports rece i'v ed from Federal ::i.::Jsc.~vs Agents as follovvs: Business £onditions throughout the United States were in a state of transition during the month of November. Up to the date when the armistice with Germany was rr.a.de known 1 industrial machinery was being operated ove:~ time for the purpose of meeting war requirements 1 and the produdive p0wer of the country was being developed to its highest capacHy, Subsequent to· the signing of the armistice there set in a period of temporary uncertainty which lasted for rather less than a week. It was terminated by the b8ginning of the process of "demobilization". This process has implied thus far the cancellatiQn of Government contracts, the suspension of ,var work in a variety of. lines, and a corr3sponding shifting of bv.ying power and rr,odir ic2.tions ·of prices in various directions. Accordbg to reports· written since the signing of the arrr:istice and relating generally to conditions in the eastern St~tes, the effect of industrial displacements already brought about has been to overcome t~e extreme scarcity of labor in rrany lines and to restore a rrtich more norrr.al condition among .vorking forces. From son~e districts the report comes that in certain lines of industry which rranufacture both for Governrrent and for civilian uses~ rranufacturing: establishments are 11 rrarking tirr.e" awaiting d.efinite inforrr.:~.tion as to Governrr.ent requiren.,mts and the direction of public derrand before finally corrn:itting tnon.selves to any definite course of action. Extensive suspension of purely war work and conservative readjustment in other lines have been the dominant factors of the situation since the completion of the arrangements with Gern:any. Prior to the signing of the armistice it was already evident in a nurr.ber of directions that continued activity in vvar work Nould still further nodify our business situation. Foreign corrrr.erce 'Nas reported from important shi:?ping points as declining, while overtirr.e had been abolished in those industries Nhich ·Nere not ,vorking upon J.istinctly Government d.::ra:ands. On the other hand) it a,pear.ed tl-:at prices Nere Y.:'robably past their peak an:i that 'Nith the readjustrr,ent of vvar conditions that had alroady been arranged, as ·.vell. as ·rvith the introduction of rr,ore effective methods of saving in sorr.e . industries, the drift of prices Nas likely to be sli;::htly lo-ner. Prices had already shoim a slight recession frorr. the lcvol reachod about the rr:i:idle of October. This tondancy is observed in quotations for vc.rious in·.portant staples, Cotton yarn uas slir:htly lo:;er aad this declinin;: te:1:iency was reflecte:i in sorr;e of ti1e textiles. On the oth·ar hand, in dorr.estic tr~lo t::a in.n~nse .:..er:-..;;..:',::'.;.3 of the Governrr.:mt for [Ooia l-.:d kept ''u,;ine·J~> at hj}r;sst :::;roiuctivity. :::ailrGad freis-hts :vere everyNhere roporteci ac: ho.:..vy, :~-:,~':or in derr.a.~:C.,a:,cl ret..:.il tr::.:ie ir: those lines Nh~ch .vare eGpecially ie)en:ie:,t v.l:-on the p;:.rc:usin§1 pvNor of employees of war ~lant:J a:1.l other estaClisl:.rr;J::.ts, !'las active) alt:"ou;h ::.t :vas true that the variety and. character of ti:o ~oods placed. on sale Nas r.ore linited than in the past. "Prospority 11 Nas ir,dic:.ted by the apparont Nillinc:,ness of tho public to buy at almost any pricG t'~at n.ic-ht be asked and by tho fact that c orrrrodities on hand were constantly subj 3Ct to short~>;e. - 2 ... Tho financial repcrt f rorr, all Federal Reserve districts is £"anerally favora '!)le. Subsequent to the co~pletion of the Fourth Liberty Loan there was the usual relaxation and tendency to enlar,:~e accorr.rr.odation to sorr:e extent in favor of ccmnercial uses. On the othsr hand 1 the ~eneral testimony is to the effect that banks ara carrying heavy loans 1 havin~; extended large acco:tnjodations upcm the basis of certificates of ir•debtedness and bonds. Rates of interest have continued firrr; with some tendency to shrink since the armistice v-1as announcadJ due to the belief that future burdens upon the banks will be less than at present. It is generally recot:nized 1 however: by bankers that Governrr:ent f inancing for the next several months will continue heavily and that conservatism is essential to tho rraintenance of soundness. In the agricultural regions reports indicate almost universally favorabla conditions. Good weather in the cotton districts is reported as having put the soil into f"OOd condition, while in the wheat re~;ion prcpax·aticn fer next year's crop has proceeded in an unusually satisfactory. way. While staple products have been held back somewhat by embargoes upon the mcvement ever the rnilr~ads the high prices .for them have ensured. the fal;ner a ~ocd current return and he has been. able to secur' bank accomrodation, 'Vv'hen needed, for carrying such products in ware-houses, pending sale. The crops of the past · season 1 now practically all harvested, have been almost unifonrJ.y of excellent financial yield, for ·Nhere the output was short, hie;h· pripes rrade up for the decreased quantity. .In a few places crop failure 1 either total or :partial, haS embarrass.ed the farming COtmunity I and thiS haS bean 6S:p6Cially true in some parts of the tattle-raising region. These.conditions are local and have little national significance. It is now recognized that· great changes .in business· are impending. In some districts it is already reported that cancellation of Govermi:ent contracts has altered the conftercial aspect very profoundly, besides influencing for the worse the ability of c.once1·ne with high-cost i.nventories to fay taxes. On the other hand, readjustment of labor, in a way that "IVill restore the employees in ®nitions and other war plants in their old lines of industry, is regarded as essential and vVill be a rroble~ of the irr.med.iate future ,VIlhether it will be practicable to take all of the floating sup?lY of labor off the narket as fast as it appears, is now admitted to be a serious question. On the other hand, the opening of new channels of civilian darr.and and the release of staple rraterials such as wool, cotton, rubber and others, i.s believeci likely to reestablish old rrarketing ltethods altr.ost without delay. "The readjustrr.ent period is expected to .be short" is the opinion in some districts. It is, bonever, reported frqm important sections, largely those engaged in a;ricul tural occupations) that comparatively little readjustment will be necessary and that · ··ample outlet for everything that can be produced is already seen. According to one Federal Reserve Agent 1 "As Gove.rnrr.ent dorrands relax 1 the t:mdency will be to release~ first 1 labor; second, materialj and third, cradit. These muchneeded essentials can be devoted to peace industries and will facilitate their return to supplying the enormous reccmstruction derr.ands of the world. The trade awaiting the industries of the district prorr.ises a continued and more stable prosperity." This appears, Nith n.ore or less modification~ to be the general opinion and is based upon the belief that the productive pO#er of the United States will be quite as steadily drawn upon in connection with restoring tho industries of the world as ha3 been the case in connection with their destruction. - 3 The banks of the country are ~drr:itted to be in a position which calls for careful and farsighted handling in order that their resources rray not be too rapidly absorbed in connection with purely developmGnt2l.l ,vork, Nhile on the other hand 1 i t is admitted that they aro no,.v in a position which calls for very conservative treatment in order gradually to reduce the loans on ·Nar paper Nhich have been piled up in the process of placing the various Liberty loans. Sun:n:ing up the general situation throughout tho United States for the month of November 1 it is necessary.., accordingly; to recoc;nize three peri.oc'>;' the first up to November 11 1 characterized by activity of productio~'l in we:•.• ·rvork and ganeral tensenoss of demand; the second coverj_ng t:1e period of a few days from November 11 to approximately November 18 and characterized by changes in industry 1 susp;;ns ion of war rranufacturing and rclease of labor. The third period..~ beginnj_ng about November .19 and continu.ing dovvn to the present time 1 rr.arks the opening of tho process of converti::1g An,ericar1 industry to the p0ace b21.sis. In this process great changes are looked for, but as yet only their beginnings are to be observed. The future is rega!·ded with general confidence and but little pessimisrr, or fear is evident. The banks of the country 1 although largely engaged with public fin21ncing 1 cont~._nue strong and confident and are ahowing their ability to provide reasonably for necessities.
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