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470
FEDERAL RESERVE llOARD
STATEMENT FOR THE PRESS
For release in morning papers,
May 31,1920.
X-1938
May
27,1920.
The following is a review of general
b~siness
and financial concii tions throughout the several
Federal Reserve Districts during the month of
May, as contained in .the forthcoming issue of
the Federal Reserve Bulletin ..
Changes in prices, as well as in both business and credit conditions,
occurring during the month of May, have borne witness to the presence of
disturbing factors, whose importance and persistence are, however,as yet
uncertain..
Local reductions in retail prices have occurred at a. considerable
n'W!iler of points and have at least suggested the advent of a. serious modification of the price level
tlU'o~out
the country.
More careful analysis has
shown that there has been no material alteration in the ~derlying conditions
affecting the situation, there being no decided increase
in
the volume of
production sufficient to create a more normal relationship with consumption,
no substantial change in the volUIJle of credit extended, and no greater disposition to economize and invest than heretofore.
The changes that have
t~n
place cannot, .therefore, be looked upon as ind.ica:ting" a. modification of vnder_.
lying conditions..
They may, however, afford a. basis for changes in
busine~s
relationships that may broaden into more far-reaching alteration of the
essential price struct'W"8..
The continuance of labor difficulties and unrest,
particularly in connection with the railroads, when added to the difficult
si tua.tion produced by c.a.r shortage 8Dd lack of .equipment, haS caused. con- '
siderable interruption to business operations, and the whole
outlook~
such as to bring about a. severe curtailment in the volume of stock and
been
-2-
. X-1938
471
securities transactions and to compel very material lessening in the market
value of Liberty bonds and of other securities of the first grade.
In district No. 1 {:Boston) there is noted a trend toward greater
discrimination and econorey in buying, with pressure for lower prices, but
there is also noted very g_reat difficulty in the way of actual
deflation~
In district No. 2 (New York) price reductions are nott:4 in retail
stores• a considerable accumulation of goods awaiting shipment resulting
from st'rikes~ a growth in the cost of doing business, great reduction in
securities prices, but nevertheless a continued high demand for goods,
and actiV'i ty in trade.
In district No. 3 (Philadelphia) the congestion of freight and
accompanying conditions have combined with a quieter state of things in
the markets and a larger relative public demand for medium and lower priced
goods, to alter in some respects the general drift of development of preceding months ..
In district No. 4 (Cleveland) an orderly movement back toward a more
solid and substantial footing is noted, although not all business men are
agreed on the outlook. · 13\.ls iness oondi tions, however, are said to be fun....
damentally sound.
In district No¥ 5 (Richmond) unrest and uneertainty in comrr.etcial
fields have continued, end agitation against higb. prices bas led to some
curtailment in purchasing.
Collections are good, on the whole, and the
most serious olol.d on the present situation is the traffic outlook.
In district No. 6 (Atlanta) the peak of high prices has been reached
in most lines ani the tendency is downward, while there is
of reduction in stocks of goods.
som:~
indicati'On
Unrest still prevails on accoW'l.t of high
prices~
In district No- 7 (Chicago) decided readJustment in economic conditions
4'72
-3-
X-1938
is anticipated, one factor in which is the growth of inCLications of general
reductions of prices.
The transportation and associated difficulties
noted elsewhere in the country appear to be especially acute in the Chicago
'
, ..
district, while the labor situation shows small improvement4
In district No. 8 (St.Louis) tbe volume of business is enor.mous, the
total in both manufacturing and distribution showing broad gains over ·t;ne
corresponding period lasi year.
believed to be re~hed.
The peak of the upward movement is, however,
Productive conditions have been unfavorable agri-
culturally•
..
•
In district No. 9 (MinneapoU.s) ~rop conditions are promising.
demand for credit is
ver~r
The
strong and the business outlook is satisfactory,
although there is a disposition to be cautious.
In district No. 10 (Kansas City) there was during April the first
recession from the hi€)! tici.e of activity" of the past year or more.
has been a curtailed movement of livestock and grain, resulting
transportation
eon~i tions
producers and shippers.
situation
i~
~rom
11
real
There
bad
aecompanied by severe financial hardships upon
Retail trade has slowed down but the general
regarded as one of enCfouragement, although more or less
Wl-
settled conditions are expected to preyail during readJustment.
In district No. 11 (Dallas) there has been a slowing
l.lp
of agrieultural,
business and financial operations which, hONever. ba.s had some beneficial
effect.
Prices have conttnued upward but the falling off in demand has
affected largely the higher priced articles.
There is recognition of .. " a
healthy spirit of caution among bank borrowers end users of capital•!·.
In distriet No. l2 (San Francisco) the prospects for good crops are
better .than at any time this year, although the season is late.
Car shortage
has hurt lumbering; building has been less active; and retail trade has
47·3
X-1938
fallen off slightly- as compared with a month ago.
The arrival of the time for active effort in connection with crops
has introduced a new factor into the situation in those districts
agriculture is the chief industry.
..
wh~re
In the cotton region the movement of
the 1919 crop has continued to slow up, while farming conditions in the
southwest (district No. l l Dallas) have not been very favorable.
is late and much replanting has been found necessary.
only partly relieved.
Planting
Undue drouth has been
Livestock ranges are in fair to good condition and the
condition of animals is reported good.
In district No. 6 (Atlanta.) pre-
liminary inq,uiry indicates that while planting is not complete there is a
disposition to increase acreage..
delayed.
The progress of the crop has been
greatl~
Actual damage to crops thus far through unfavoraole weather has
been small.
With respect to wheat it is reported by district No •.9(MitmeapoUs)
that spring wheat. acreage will be
12%
less than a year ago, owing to shortage
•
of farm labor, but that there will be increased seeding to flax• barley
acreage
and oats. corn; is expected to be unusually large. Livestock conditions are
improving, but the herds are in poorer condition than at this time a year
ago.
AJ!" il.
·
ln district No. 10 (Kansas City) winter wheat made good progress in
.Abandonment of acreage is not as large as was at first reported ..
In some States of the district, notably Oklahoma and Nevada, condi tiona are
very much better, but it is still true that
taken place.
~
large reduction in acreage has
Corn planting is slow; cotton is also retarded.
In the middle
west (district No. 7 Grdcago) there is a great demand for credit in agricultural districts, the serious shortage of farm labor, as well as cold
weather and large rainfall having hindered farm work.
Spring wheat acreage
has been restricted, but the crop is now doing well.
The outlook is"fairly
promising".
The transportation "tieup" is reported from all districts as
having prevented nonnal movement to the markets as well as for e)..port 1 and a
474
-5correspondingly
l~rger
use of credit.
X-1938
Large stocks of both corn and wheat
are being carried on fannst in elevators and elsewhere.
.Agitation designed
to bring about some relief of the labor shortage may produce better
ditions in the near future.
co~
From district No. 10 (Kansas City) it is
reported that Eansas had 35,500,000 bushels of wheat in storage, as against
11 ,oco.ooo a year ago.
Throughout the district the dela.y in the movement
of products is serious.
The favorable conditions for livestocjc reported from some districts.
notably Dallas, Kansas City and Minneapolis. encourage the belief that the
year's output will be better than was expected.
tions already reported a month ago.
the movement to
Tnis continues tbe eApecta-
In livestocK,
a$
in grain, however,
markets has been delayed.
the
In iron and steel, demand has continued very heavy and steel mills_ are
booked far ahead.
The ore situation is, howeverp not improved.
portation has been slow.
The railroads can handle only a small portion of
the ore which is ready for shipment.
is expected.
with
1,4oo,ooo
Lake trans-
A shortage .of coal in tne northwest
Shipments of ore for fpril were only 231,000 tons, compared
in April, 1919.
In district No. 3 (Philadelphia) the general
iron and steel market has been much quieter lately
The level of prices continues firm.
buying has slackened.
and
Some ndlls have been fortunately
situated in possessing a large supply of raw
IT~terials,
and orders in practi-
cally all lines are booked for a long time ahead, so that YI'Bnufacturers
feel that the present year should be a time of
continue~
prosperity.
This,
however, is largely contingent upon the development of better transportatiQO
and improvement in labor conditions.
In ciistrict No .. 6 (.Atlanta) pig
ir6n
production has increased somewhat over 1919 • but there is a decreaee as
compared with March..
Pig iron prices are advancing.
Steel plants a.re well
. 475
..
X-1938
supplied with orders and working on full time.
Commercial work in fabri-
cating plants is active and prosrects bright.
The unfilled orders of the
United States Steel Corporation at the close of .A:pril were 10,359,747 toris,.
corresponding to an index number of·l97, as compared with 9.892,075 tons
at the close of March, the index number for which month was 188.
Pig iron
production during April decreased to 2.739, 797 tons as compared with
_3,375,907 tons during March, respective index numbers being 118 and 146;
while steel ingot production likewise decreased fram 3,299.049 tons during
~arch to 2,638,305 tons during .April, the index riumbexsbeing 137 and 109
~
respectively.
Coal conditions have been particularly important in connection-with
iron and steel, as with other industries.
The state of things in regard
to coal is now very acute in some districts.
In~istrict No. 2 (New York)
the supply is far below the demand and consumers are bidding· against one
another.
Railroads "'"!are more or less the victiins of systematic sabotage
at their terminals~. The car supply at the mines is only 3o% of normal,
wnile the labor situation there is also unsettled.
The situation as a whole
"is such as to cause considerable concern among conservative coal men" and
transportation is regarded a.s a fundamental factor requiring improvement.
In the middle west (d,istrict No. 4 Cleve land) coal shipments have fallen
off.
For .A:pr11, at lake ports ·they were about one third of what they were
in Jlpril, 1919..
take shippers will pool their coal in oltier to increase
the movement, but this is only. a partial remedy.
on record in the lake trade.
Fllel prices are the highest
Not only does a general shortage of coal exist
now, but a shortage· nex.t winter which ma.y curtail production of iron and
steel at interior furnaces is foreseen.
In ~istrict No. 6 (.Atlanta.) the
coal production is being held down, mines being able to get only an insufficient number of cars.
labor,. however, shows no disquntent and there is small
..
476
X-1938
-7movement of. coal in foreign
trad~,
:placed orders for fuel for the
neJ~.t
P.eilro?.cls
th:.otlgh~ut
the
ois tric t
ha11e
twelve months, "the amount in every
instance being larger and the price higher then ever. before",
Production
of bituminous coal for the country at large during April amounted to
32 ,oo6,ooo tons, as compared with 46,792,000 tons during March, and
32,164,000 tons during March, 1919, the respective index numbers being
86, 126 and 87.
tabor difficulties, although sporadically existing, appear
to be a relatively minor factor in coal production as compared with the
influence of car shortage.
In the southwest many bituminous coal mines
are operating at only about two-thirds of capacity.
is in sight.
No reduction of prices
Demand for petroleum continues very s trongA
In the Kansas
and Oklahoma oil fields April output was about 10,500,000 barrels, or
.
slightly larger than in March, as compared with about 9,000,000 barrels in
April, 1919.
wa~
Production still tends to increase.
about 275,000 barrels a day, as
con~ared
stocks have decreased nearly 500,000 barrels.
•.
The California output
with 276,000 in March.
Stored
Pt the present rate of pro-
_duction and consumption, the stored stocks in California will probably be
eXhausted before the close of 1921.
Metal mining has shown a slight improvement in Colorado, despite some
shortage in labor, while lead and zinc have shown a price reaction on the
Joplin market, although much of the output is still in cars and on the
sidings.
The average price for lead ores is one of the highest for man;yinsufficient
months, but the supply of ore is
to meet demand. Production,
however, is fairly well maintained.
General manut·acturing has continued in substantial volume, although
unsettled conditions of labor and uncertainty on the part of retail buyers
have had a restrictive effect.
In leather and shoes production is reported
by district No. 1 (Boston) to be low and "qu·antities uf merchanuise extremely
_g_
X-1938.
Prices of leathe~· are clown. ·~~ f.,')¢ f'l'":)m ~ peak of $1.75 per foot ..
high".
Dealers stopped buying about the mid.dle of Maj'.
Some manufacturers have had
overtures for cancellations which have been refused.
(Richmond) no recession in :prices is expected.
. Irl district No.
Taru.J.ers in district No. 3
(Philadelphia) are not op~mistic about present conditions.
manufacturing for foreign trade contemplate shutting down,
insufficiency of labor.
Some tanners
There is an
Retailers are restricting their orders for shoes.
Wholesalers and jobbers are overstO<(ked.
cancellatiuns~
Manufacturers are receiving"sorr.e
Increased buying, however, is expected in the near future
and most manufacturers are continuing to operate at capacity.
is for
11
5
The outlock
a steady volume of business but at lower price levels·" ..
Textile production has been ·subject to many disturbing conditions.
..
In the New :Bedford district of Massachusetts, textile strikes of some im-
portance have occurred.
An advance of wages of about
textile centere of New England has been announced.
15%
Higb
continue with very little indication of a reduction.
in the principal
:prices for cotton
Spinners., however,
are cautious, believing that :prices on fine cotton yarn have reached the
top.
~or
!n knit goods demand has practically ceased at the present
time~
Goods
fall delivery have been quoted at twenty to thirty per cent below those
of spring.
Cotton yarn continues at a high level.
11
The outlook in the trade
{for knit goods) is very uncertain" but "many manufacturers hold. to the
belief that orders will soon be placed in great numbers'!. In wool the auction
sales at Boston have resulted in the purchase of only about
3o%
of offerings,
and prices were off about 2rif, from the previous sales of English wool..
of American woo~ are off 10% and on lower grades 10 to
15%.
Prices
There is some
letting Uf in the demand of the :purchasing public for the finer grades of
cloth.
Cancellations of orders in both cotton and wool have not been large
but are already noticeable..
Clothing manufacturers are purchasing but little
4
I
478
.
~9-
X-1938
from the weavers in district No. 3 (Philadelphia).
They also are
rece1 ving numerous cance liations and are obliged to make concessions
to retailers.
.,;.
General wholesale trade, in spite of unsettlement due
to conditions already described, holds up tolerably well •
Building activity continues well sustained in many sections,
although seriously curtailed in certain districts, such as Chicago, by
·. the shortage of materials and by increased prices.
From several
districts it is re::ported that new construction is largely confined to
business building as against construction for .housing
purposes~
The
character of building o::perations has resulted, it is reported, in a
lessened demand for lumbet, whereas in the case of brick, cement, etc.,
as JUSt noted, demand outruns supply.
In certain districts complaint
is made of difficulty in financing construction, and in some of the
larger centers the great increase in rentals has resulted in a large
growth of purchasing of Sjtl'dicates of tenants.
The labor situation during the month has been one of the out\.
standing elements of doubt and difficulty.
In addition to intense
shortage of labor on fanns and at other points of primary production,.
sporadic strikes in many lines of manufacturing, notably textiles,
have continued to indicate unrest.
Wages nave apparently
the advance in prices and cost of living.
the far.ms to the cities is continuing.
falle~
behind
The movement of labor from
Various demands for higner
wages have been taken under advisement for the purpose of brtnging about
compromise adjustments -between employers snci em::ployees.
General
complaint of low e£fic1ency or small out::put per unit of labor continues
to be prevalent.
The difficulty of getting skilled labor in same of the.
more highly developed lines of manufacture is yery considerable.
The financial occurrences of the month have been of first
i~ortance.
479
X-1938
-10-
In ad.di tion to a heavy decline both in volvme and value of securities
in the financial centers, there has been a general tendency.to
revision of interest rates·.
This has applied both to call and time
funds and to rates for commercial paper4
No material change in
rediscount rates at Federal Reserve .Banks has occurred but an effort
to limit
. credit .to essential necessities·has been general.
It has
been sought to promote this control of credit through conferences
among bankers and discussions of the financial situation at meetings
of bankers and financial authorities generally..
On May 18.
aD
important conferehee betweert the Federal Reserve Board and the Federal:
Advisory Council and Class "A" Directors ·of· Res-erve :&nks occurred in
•
Washington, as the outcome of which agreement was reached to make a
more careful scr.utiny of applications for bank credit, with a:·. view
t.o granting those only which might be found to be necessary.
It was further agreed that caution must be exercised and cormJ.tments
must be made only with discretion.
\
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@FedFRASER