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X-1377 t FEDERAL RESERVE BOARD STATEMENT FOR THE PRESS. For release afternoon , papers February 7, 1919. Business conditions throughout the United. States are reported by the Federal Reserve Board in its February Bulletin as follows: Business Conditions in January, 1919. "Practically throughout the country the month of January has been characterized by the uncertainty incident to a period of transition in business. In some cases more readjustment than had been expected has proved to be necessary. Favorable developments which some had thought would present themselves immediately after the conclusion of the armistice with Germany have been delayed. There has, therefore,been "hesitation" in business but not essential loss of confidence in the future of the general situation. Vast changes are now occurring in industry and extensive readjustments in labor. Slackening in productive effort is reported from manufacturing districts,but retail trade has as yet shown only moderate decline and in some cases little or none. Such dullness as exists is attributed to the usual after-holiday reaction, and it is the general opinion that the influence of changes in manufacturing and wholesaling lines have not yet reached the retailer and consumer. "In the manufacturing field the changes that are taking place are affected primarily by alterations in the prices of raw materials and changes in the direction of demand. The extensive cancellation of Government war contracts has resulted in modifying the plans of many producers, while the withdrawal of Government restrictions upon the movement of raw materials has led others to the adoption of a conservative policy, pending the "settling down" of prices upon a stable basis. The changes that have taken place are, however, described as being productive of less disturbance than might reasonably have been expected,while the tone of the business community and its expectation of prosperous conditions to develop in the near future is strong. There has been some disappointment over the failure of export trade in manufactures to develop promptly, but confidence in the capacity of export demand to develop vigorously is still felt. "In a variety of lines in which the Government has controlled the bulk or a large part of vhe stock of a commodity, t h e process of bringing about readjustment is not proving easy. The wool auctions, for example, which were first held seemed to be on too high a price basis, but subsequent revisions of prices have brought about better buying and stronger demand. The large supply of wool now available has limited X-1377 - 2 - buying in South America. Producers of dry goods, however, find t r a d e s l a c k , while in the cotton t r a d e s reductions of p r i c e s which have already occurred a r e the l a r g e s t a t any time since the C i v i l War, and the p r o f i t s a t the m i l l s have been Correspondingly curt a i l e d . Nevertheless, buyers a r e s t i l l r e l u c t a n t to take the product off the hands of the manufacturers a t e x i s t i n g l e v e l s . In the consuming p a r t s of t h e country purchases of r e t a i l e r s a r e n e v e r t h e l e s s reported about normal, although in rrany places buyers a r e cautiously operating upon a cash b a s i s , so f a r as p r a c t i c a b l e . In l e a t h e r and shoes p r i c e s continue high and r e t a i l e r s ' stocks a r e reported low. The s t e e l business has been u n s a t i s f a c t o r i l y small, and as a r u l e the industry has not truch more than a month's orders ahead. Although a reduction of p r i c e s ranging from $4 to $6 per ton on f i n i s h e d m a t e r i a l s had been recommended before the close of 1918,demand has not been enlarged, while the purchases of t h e shipbuilding companies and the r a i l r o a d s have f a l l e n off m a t e r i a l l y , Purchases f o r b u i l d ing purposes have been small and would-be consumers who had made cont r a c t s a t high p r i c e s have derranded a revision of the r a t e s charged then. "Price movements show, on the whole, a general tendency to d e c l i n e , which has become more marked since the opening of the new y e a r . While t h e general index number of the Bureau of Labor S t a t i s t i c s retrains unchanged a t 206, the number f o r producers' goods as computed by t h e Federal Reserve Board shows a f a l l i n g off from 205 in Novembert o 199 in December. In raw m a t e r i a l s t h e r e i s a s l i g h t increase from 197 to 198 due t o an increase in the p r i c e s of farm products from 234 in November to 237 in December. Animal products remained unchanged a t 208, as did f o r e s t products a t 105, while mineral products declined from 183 t o 182. "On the o t h e r hand, consumers 1 goods showed a continued increase, r i s i n g frem 214 in November to 216 in December. During t h e e a r l y part of January t h e r e was a sharp downward tendency in many c l a s s e s of p r i c e s , p a r t i c u l a r l y in s t a p l e woolens, cottons, iron and s t e e l , and f i n a l l y in some clashes of farm products. The movement toward p r i c e reductions i s now f u l l y under way. From the second d i s t r i c t i t i s reported t h a t producers of raw m a t e r i a l s and manufacturers g e n e r a l l y express the belief t h a t prices w i l l hold about as they a r e now, a t l e a s t f o r a considerable time to come, and t h a t those which a r e holding off from purchasing in the hope t h a t p r i c e s w i l l be lower soon a r e l i k e l y to be disappointed. R e t a i l e r s and jobbers, however, take the view t h a t p r i c e s must come down, and t h a t while t h e r e has been a s e l l e r ' s market f o r the past f o u r y e a r s , the s i t u a t i o n i s now e n t i r e l y changed and we a r e having a b u y e r ' s market. An i n t e r e s t i n g evidence of t h i s i s given by an important f i r m dealing l a r g e l y in dry goods, which s t a t e s t h a t those who speculated too f r e e l y in piece goods have been obliged t o cut p r i c e s s h a r p l y , so t h a t woolens and worsteds are o f f e r e d to-day on a lower b a s i s than m i l l s can manufacture them. - 3 - X-137 7 "The volume of business during the month, as a l r e a d y i n d i c a t e d , has shown a decided slackening i n most productive l i n o s - Information received by the Board's business index r e p o r t i n g s e c t i o n , covering r e t u r n s up to the end of December, i n d i c a t e s an upward movement i n t o t a l r e c e i p t s of g r a i n at primary and secondary markers, while shipments from t h e s e same p o i n t s show a f u r t h e r s l i g h t decrease. Stocks on hand in these markets at the close of the month are not m a t e r i a l l y changed, the aggregate r e p o r t e d at the end of December being 4.27,000,000 bushels of t o t a l g r a i n s . The movement of g r a i n s , both to and away from the m a n m t s , was p r a c t i c a l l y p a r a l l e l , f i g u r e s showing s u b s t a n t i a l l y the same i n c r e a s e s and d e c l i n e s expressed i n terms of percentages as? to wheat, o a t s , corn, b a r l e y , and rye. Flour production has increased about 20 per cent during the month, the stocks on hand at the close of the month, however, retraining p r a c t i c a l l y unchanged. In t h e coal t r a d e , bitumunous production shows recovery, but has not yet reached the high normal l e v e l e s t a b l i s h e d during the month of October. Anthracite production s t i l l shows a decline as compared with October and even with November, when the i n f l u e n z a epidemic was at i t s worst. The production of beehave coke f o r the month of December was 2,255,000 t o n s , which i s lowest since February 1918. The by-product, however, shows an increase over November, t h e f i g u r e being p r a c t i c a l l y the sama%or October, which was the high month of the present y e a r . Conditions during the e a r l y p a r t of January i n d i c a t e continued increase i n the production of ant h r a c i t e and bitumunous c o a l , as compared with t h e low point reached during the h o l i d a y s , and are p r a c t i c a l l y back t o the s t a n d a r d of the f i r s t h a l f of December. In iron and s t e e l , production during December shows an increase in p i g iron and a s l i g h t f a l l i n g o f f of about t h r e e p o i n t s in s t e e l ingot production, the index number (1911-1913 average being taken as a b a s i s ) being 128 f o r November and 125 f o r December. The corresponding index numbers f o r p i g i r o n were 145 f o r November and 148 f o r December. U n f i l l e d orders of the U.S. S t e e l Corporation at the close of December were 7,380,000 t o n s , as against 8,125,000 tons a month e a r l i e r , the index number being 154 f o r November, as against 140 f o r December. "Information for the f i r s t two weeks of January, which was t r a n s m i t t e d by one of t h e p r i n c i p a l producing c e n t e r s , i n d i c a t e s t h a t t h e production of s t e e l m i l l s in t h e d i s t r i c t i s about 65 p e r cent of c a p a c i t y , such production, however, being equal to about 90 p e r cent of t h e prewar production of the p l a n t s . In the nonf e r r o u s m e t a l s , r e p o r t s from various producing d i s t r i c t s are unfavorable. In Colorado the value of g o l d , s i l v e r , copper, l e a d , and zinc was only ,#33,000,000 f o r 1918, a f a l l i n g o f f of $10,000,000 from the previous y e a r . In t h e J o p l i n d i s t r i c t the end of t h e war brought an end of the p r i c e agreement on high-grade zinc o r e s , and t h e p r i c e of a l l grades of zinc blende was #44.60 in December a g a i n s t $56.20 i n November. Sales were about s t a b l e , or 26,000 tons p e r month. In s p e l t e r the decline in p r i c e s brought a n increased production in Becember t h e output being 47,000 t o n s , the l a r g e s t f i g u r e s i n c e April,1918. The stocks on hand a t t h e c l o s e of t h e year increased s l i g h t l y over the f i g u r e s f o r t h e c l o s e of October and the c l o s e of November. Lead shoved the sharpest r e d u c t i o n i n p r i c e s yet recorded, going down from #100 p e r t o n e a r l y in December, and #65 at the close of t h e month, "/ages were cut correspondingly* 71 - 4 - X-1377 "Cattle r e c e i p t s at the s i x markets of the Kansas City d i s t r i c t have been about 43 p e r cent l a r g e r than in January a year ago and have shown a higher l e v e l of p r i c e s than p r e v a i l e d a t the beginning of l a s t y e a r . The supply and movement of meat animals is more extensive t h a n a t the opening of 1918 and r e c e i p t s of hogs as well as of sheep are p a r t i c u l a r l y heavy. Packers report a continued run of the heaviest business they have ever handled.Cotton consumed durirg the month of December was s l i g h t l y l a r g e r than daring November, the r e l a t i v e index numbers being 101 and 105, r e s p e c t i v e l y . During the e a r l y p a r t of January t h e r e has, however, been a tendency of c o t t o n consumption t o d e c l i n e . The number of active spindles daring December was s l i g h t l y more than daring November, but since the opening of January has also shown a tendency t o f a l l o f f . Both c o t t o n and woolen m i l l s are r i g i d l y c u r t a i l i n g t h e i r production for the f i r s t time in t h r e e or four y e a r s . "Labor is passing through a period of r e d i s t r i b u t i o n . Demobilization is proceeding r a p i d l y and is already l i b e r a t i n g a considerable Quantity of men a v a i l a b l e for employment, while i t is also bringing about a r e d i s t r i b u t i o n of men, many deciding not to r e t u r n t o t h e i r o r i g i n a l places of residence. On the other hand, many employees are being set f r e e in the s o - c a l l e d "war i n d u s t r i e s " . The process of. absorbing the labor made a v a i l a b l e in these two ways into other l i n e s is s t i l l r e l a t i v e l y slow. In s p i t e of the existence of unemployment at some p o i n t s , t h i s condition has not become s u f f i c i e n t l y general to cause serious d i f f i c u l t i e s thus f a r , and t h e e a r l y r e s t o r a t i o n of f u l l a c t i v i t y in business, if accomplished, may r e s u l t in absorbing the s u r p l u s supply of labor from t h e market comparatively soon. "The labor s i t u a t i o n v a r i e s very g r e a t l y from place to p l a c e , and in some of t h e e a s t e r n s e c t i o n s of the country where r e t u r n e d s o l d i e r s have been demobilized in large numbers unemployment p r e s e n t s a problem of d i f f i c u l t y . X-1377 - 5 "The f o l l o w i n g t a b l e prepared by the United S t a t e s Employment Service gives a general estimate of the s i t u a t i o n beginning with the week ending November 30, 1918: £ o & Week ending. CO <D •H ~P b0 •H O *tiH U -P U CD O S <D 3 L. % co CO <D <D W) *H c3 -P Tp •H U O O rC U Q CO rO hO w P: $3 1918 Nov. 3 0 . . . Dec. 7..„ Dec. 1 4 . . , Dec. 2 1 . . . Dec. 2 8 . . . . 115 122 122 120 122 29 ;• 29 30 25 26 1919 Jan. 4 . . . Jan, 1 1 . . . Jan. 1 8 . . . Jan. 2 5 . . . 121 122 122 122 27 22 18 18 CD hO d -p u o & CO T(D * -P cd e •H -P W 33,878 48,226 47,130 41,002 35,542 33,397 20,033 18,644 14,350 m CO 3 H C P-t 0)O f-1 •H 3 -P CO •H O bO O ^ e 3 S5 3 H p4 W 3CO (D *P d e £ Number cities showing industrial relations as: T(D 3 H -P CD <D ^ o ^ w +» W **C$ o 5 12 16 26 37 41 11,114 22,200 30,000 66,350 91,889 90 91 95 88 91 12 8 7 7 6 : : ; : : 120,682 176,145 211,700 258,332 87 81 83 83 9. 8 12 14 : 6 : 8 :12 : 8 48 47 55 61 ro : :: :: :; O ro 5 5 5 4 7 7 "At Cleveland the unemployed, as reported by the United States Employment Service, f o r the week ending January 25, 1919, amount to 65,000, as compared with 55,000 f o r the preceding week; Detroit,33,000, as compared with 30,000; Buffalo,17,000 as compared with 15,000; Milwaukee, 10,000, f t , a s compared with none; and S e a t t l e , 10,000, as compared with 8,000. Other c i t i e s showing a considerable surplus are the following: Toledo, 9,000; Dayton, 8,000; P i t t s b u r g h , 8,000; Butte, 7,500; Bridgeport, 7,000; Portland, Ore., 6,500; New Haven, 6,000; Worcester, 6,000; Minneapolis, 5,000; and Syracuse, 5,000, "There has been some measure of i n d u s t r i a l u n r e s t evidenced by s t r i k e s , but s e v e r a l of t h e s e have already been s e t t l e d , among them t h a t of the New York City workers in men's and boys' clothing,who, t o the number of over 50,000, have been out f o r t h r e e months. They r e turned t o work on January 23, the employers having granted t h e i r demand f o r a 44-hour working week. A s t r i k e of 23,000 employees of t h e General E l e c t r i c Co. a t Schenectady began December 19 and ended January 11. - 6 - X-137 7 About 15,000 members of the Marine Workers Union quit work January 9, t y i n g up p r a c t i c a l l y a l l shipping i n New York harbor, but r e t u r n e d to work January 12, and t h e Federal War Labor Board is conducting hearings on the matters i n d i s p u t e , which include wages and h o u r s . The only large s t r i k e pending i n the New York d i s t r i c t i s t h a t c a l l e d on January 21 and involving about 35,000 garment workers in t h e New York City waist aid dress t r a d e . In Connecticut the labor s i t u a t i o n is bad and t h e r e i s an oversupply due t o the discharge of employees from munitions f a c t o r i e s . Somewhat the same s i t u a t i o n e x i s t s throughout the manufacturing d i s t r i c t of New England, with some few exceptions, t h e most favorable p o s i t i o n being found where progress has been madetoward t h e readjustment of industry t o peace c o n d i t i o n s , ard where consequently demobilizatli labor has been r e a d i l y reabsorbed. In t h e a g r i c u l t u r a l regions labor is s t i l l scarce and expensive. On the P a c i f i c coast t h e r e is some unemployment, but the bulk of the labor a v a i l a b l e has been r a p i d l y reabsorbed. I t i s s t i l l too soon t o s t a t e with any degree of c e r t a i n t y how the labor s i t u a t i o n w i l l develop a f t e r industry has been reconverted t© i t s normal b a s i s . " I t had been expected t h a t b u i l d i n g would almost immediately expand with the removal of r e s t r i c t i o n s which had been imposed upon the movement of m a t e r i a l s , but i n most d i s t r i c t s it would seem t h a t recovery has been thus f a r very small. There is s t i l l considerable confidence that b u i l d i n g must promptly be resumed on account of the shortage of accommodations f o r business and f o r dwellings, but the high p r i c e s which s t i l l p r e v a i l have prevented would-be b u i l d e r s from embarking on any large operations thus f a r . In lumber and o t h e r a r t i c l e s c l a s s e d as m a t e r i a l s , p r i c e s have in some sections advanced even above war l e v e l s since the removal of Government r e s t r i c t i o n s , while men employed in the b u i l d i n g t r a d e s are i n some cases asking h i g h e r wages than they received during the war p e r i o d . These f a c t o r s tend t o prevent recovery i n c o n s t r u c t i o n . " F i n a n c i a l l y i t i s r e p o r t e d t h a t banking c o n d i t i o n s are encouraging. Money is flowing back t o the f i n a n c i a l c e n t e r s , and t h e r e has been a shrinkage in t h e outstanding volume of Federal Reserve notes a t a number of banks. United S t a t e s Treasury c e r t i f i c a t e s have g e n e r a l l y been s a t i s f a c t o r i l y disposed o f , although some banks have had t r o u b l e i n absorbing t h e i r quota. This has l e d to some increase in rediscounting at a number of banks. During the p a s t 10 days, however, t h e r e has been an e a s i e r tendency i n money and r a t e s have been lower. In some s e c t i o n s banks have not taken up t h e i r e n t i r e quota of Treasury c e r t i f i c a t e s . Commercial paper is markedly e a s i e r , e s p e c i a l l y f o r t h e prime v a r i e t i e s , but r a t e s f o r c o l l a t e r a l loans are but s l i g h t l y changed. The r a t e tends t o become f i r m as the p e r i o d of the paper i n c r e a s e s . Financing i n the form of s h o r t term notes and bonds has been s u c c e s s f u l , but r a t e s have been firm to strong. - 7 - X-3.3 77 Foreign loans sold in the New York market daring the month of December were o f f e r e d on terms very f a v o r a b l e t o the i n v e s t o r , the conditions i n d i c a t i n g c l e a r l y appreciation, on the p a r t of borrowers t h a t the supply of a v a i l a b l e c a p i t a l i s not overabundant. In New York c a l l loans have f a l l e n from 6 p e r cent t o 5 per c e n t , anl occasionally a renewal r a t e of 4 per cent was made. Time money is not only somewhat lower i n the New York market, r u l i n g toward the end of January at 5 p e r cent to &§• per c e n t , but is d i s t i n c t l y more abundant.
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