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F E D E R A L R E S E R V E B A N K O F C H IC A G O R E P O R T O F B U S IN E S S C O N D IT IO N S IN T H E S E V E N T H F E D E R A L R E S E R V E D I S T R IC T A P R IL 25, 19 1 9 (Compiled A pril 22, 1919.) Fundamental conditions in the Seventh Federal Reserve District, aside from a lack of confidence in the stability of the present price level, are considered sound, generally speaking. Agricultural prospects are excellent, and the buying power, so greatly increased in consequence of the tremendous crop production of the last few years, and the war industrial activity, together with the high prices and wages received, is manifesting itself in all lines of trade where confidence in the existing price level has been established. It is apparently difficult for business men to divorce from their minds precedents established in former readjustment periods, and to realize that the W orld’s War and the enormous expenditures and activities which it entailed has brought about a changed economic condition which, to a considerable extent, may prove permanent. Hence the continuance of uncertainty and hesitancy to make commitments for the future because of an inability to measure such changed economic conditions satisfactorily. Manifestations of Strong Buying Power. That underlying conditions are sufficiently strong to support a considerable period of prosperity is indicated in channels of trade usually classed as luxuries or semi-luxuries, as for instance, jewelry and musical instruments. Both felt the restraint placed upon production by the war and upon the individual by the need of conservation of capital and credit. With the removal of this restraint people began to buy liberally both jewelry and pianos, with the result that while manufacturing in these lines has not reached the pre-war volume, advices from representatives in the retail trade of pianos and jewlery are that the demand is large and the trade excellent, while the stocks are conservative. One big jewlery concern reports March sales as 27 per cent, in excess of the previous March, while the first two months of the fiscal year shows business 51 per cent, in excess of the corresponding period of last year. In 1918 some allowance should be made for the fuelless days and the severe winter. Stocks of watches in retailers’ and jobbers’ hands are light. Watch makers have not increased their output to any extent in the last five years. Present conservatism in increasing their working force is explained by the holding open of places for former employees returning from military service. Labor Conditions Fairly Satisfactory. Labor conditions also are fairly satisfactory in the Seventh Federal Reserve District, although the idea still prevails that sooner or later labor will have to adjust on a lower wage level to correspond with other prices. Employers, however, are beginning to realize that the cost readjustment, owing to the inflation, which is particularly reflected in the enormous increase in paper money circulation in the European coun tries, is likely to be slow for a considerable period at least, and that so long as living expenses are high, not much if any decline in wages may be expected. The Middle West, outside of amount of unemployment found ment growing out of the release expected. Indianapolis seems to the unemployment in that city a strong demand for farm labor, the coal mining districts and in the quarries, is not experiencing the in the eastern section of the country. Necessarily there is some unemploy of soldiers for civil pursuits, but the situation is far better than had been have the largest labor surplus, not only in Indiana but in the district, yet is comparatively small, while industrial relations are excellent. There is not only in Indiana but all through the district. Spring Construction Work Slow in Opening Up. Necessarily there is a considerable number of unemployed in Chicago, but this is very largely tran sitory. The railroad contracting work and the building industry have not opened up as rapidly as de sired, but prospects in that direction are growing brighter. In consequence of the slowing down in production of iron and steel, reflecting hesitancy in other metal manufacturing, there is a decline in the earning power, due, of course, to only partial employment and the disappearance of overtime earnings, which has contributed to some retrenchment in the costs of living by families dependent upon the metal industries. This does not indicate increasing thrift but rather decreasing incomes. Automobile Industry Is Now Approaching Normal Production. The automobile manfacturers in Detroit and in other centers are experiencing a good satisfactory prospects ahead, and this activity extends into the accessory plants. Detroit cupies the position of having as large a volume of this class of business as can be handled present man-power. It is estimated that the automobile industry now has readjusted to a about 90 per cent, of the existing facilities. business, with apparently oc there with the peace basis at Efforts to stabilize steel prices had a beneficial effect in stimulating inquiry, but this was offset some what by the attitude taken by the Railroad Administration in the matter of the buying of steel for railway needs. The adoption of highway construction programs in several States is beginning to find its reflec tion in a healthier business sentiment. Demand for Housing Exceeds Available Supply. Building operations are gradually increasing, but the most reassuring feature in the Middle West is the activity in the preparatory steps for building rather than any actual construction. Owing to weather conditions, as well as hesitancy in regard to price, construction has not been up to expectations. Engi neers and architects, however, report plans in the making in excess of any period in the last five years. It is very difficult to find a vacant house in Chicago or in the immediate vicinity. The demand for apart ments is keen, and people seeking houses frequently find it necessary to buy because it is almost im possible to rent one. The demand for summer homes is close to if not in excess of the supply, and people today are occupying summer homes and installing stove heat because of inability to supply their needs temporarily in the city. Similar conditions, although possibly not so intensified, are reported from other cities. This situa tion, of course, is the outgrowth of the restricted building in the last two years. Manufacturers of lumber and of building materials, as well as those engaged in actual construction work, are convinced a building boom is near at hand. The present activities in building, so far as Chicago and the immediate vicinity is concerned, have been confined chiefly to repair or alteration work of more or less an emergent character, and to factory and other commercial buildings, where owners are obliged to protect individual interests. Price Readjustment in Building Lines Slow and Orderly. Building material prices are on the down grade, with the exception of lumber. During the last month there has been a decline of at least 15 per cent, in cast iron radiation, 10 per cent, in cast iron boilers, 10 per cent, in pipes, and about 20 per cent, in fittings, but with these reductions plumbing and heating contracts are still 90 per cent, above the normal market period from 1914 to 1915. Brick manufacturers have a very large supply on hand, and are not operating at the present time. A similar condition is found among lumber manufacturers and dealers. The lumber mills at this season are obliged to cut their winter accumulated supply of logs, hence are producing lumber faster than it can be absorbed by the market. The prospective demand for lumber, however, is very good. Large Stocks of Structural Material Available. Large stocks of cement are available and also of miscellaneous building materials, while manufacturers of structural steel are willing to take large and small contracts for immediate delivery. Cement prices are about 70 per cent, higher than the pre-war level, but costs of manufacturing are higher by about the same per cent. One conspicuous feature in the cement industry is that there are practically no purchases except for immediate use, which means that the stocks of cement in the hands of dealers and users are at the minimum, and presages a quick improvement in production when the construction work gets well under way. Not only in the building line but in practically all lines of industrial activity the price situation seems to be the greatest stumbling block, buyers apparently feeling that the price level has not reached normal. Raw materials stocks are quite large. In the iron and steel industries advices indicate that stocks of raw materials are quite large, and, in fact, many of the plants are overstocked as the result of being compelled to purchase heavily and far in advance during the last year. The sudden cessation of hostilities found these manufacturers with high priced raw materials on hand in large quantites, which they are working off in a slow market. Necessarily these manufacturers w ill buy extremely conservatively during the next six months, and to some extent this course is likely to be pursued in other lines of industry where similar conditions exist. Dry Goods Trade Is Quite Active. With the exception of cotton goods, which are slightly lower, prices for textiles have been fairly steady. Wholesalers are carrying quite heavy stocks, but the retailers are purchasing only for their immediate needs, on account of uncertainty of future prices. The large city retailers, however, are doing an un usually big business, while the impression is gaining ground that there will be no sudden reduction of prices, but that the readjustment will be gradual. The labor trouble in the mill districts in the East and the shortage of raw materials is making it difficult to replenish depleted stocks of merchandise. Trend In Amount of Live Stock. Cattle, hogs and lambs are all sold around the twenty dollar mark, this being stimulated by the strong foreign demand and the decreasing ratio of live animals to the population of this country. It is pointed out that twenty years ago there were approximately 660 cattle for every thousand people, whereas at the present time the number is 350 head per thousand people. A decade ago there were approximately 800 hogs and 880 sheep for every thousand people. These figures have been reduced to about 600 head of hogs and 450 head of sheep per thousand people. As the rangers go under the fence the market is compelled to lag, and the small farms must be depended upon for beef, which must increase the cost of production. Receipts of live stock at Chicago for the four weeks ended April 12, 1919, compared with the corres ponding period of 1918, are as follows: 1919 1918 Cattle. ..................................................................................197,820 ..................................................................................278,156 Increase •Decrease Calves. 77,870 80,426 Sheep. 237,194 112,621 *2,556 ................................................................. *80,336 Hogs. 610,930 842,362 *231,432 124,573 Banks Set for Big Victory Loan Drive. The announcement of terms of the Victory Loan has called forth favorable comment, and indications point to a satisfactory subscription in this district to this Fifth Liberty Bond offering. Money is firm at around 5% per cent., but opinion differs as to the effect of government financing on interest rates in the next few weeks. It is quite evident from statistics and advices that the banks in all parts of the district are fairly well prepared to meet any demands made upon them. An indication of the trend of the banking situation in Chicago is found in a comparison of the gross deposits and aggregate loans. The gross deposits of twelve leading Chicago banks aggregate $916,600,000, a decrease of $43,600,000 compared with the month previous. Aggregate loans and discounts, exclusive of bonds, amounted to $577,500,000, a decrease of $42,300,000. Chicago bank clearings for the first nineteen days of April aggregated $1,486,349,697, an increase of $674,914 compared with last year, while exchanges at nineteen of the leading clearing houses in the district, outside of Chicago, for the first fifteen days of April aggregated $350,876,900, an increase of $38,400,000, compared with a year ago. ___________ SELECTED MEMBER BANK STATISTICS— SEVENTH DISTRICT. (000’s Omitted) Chicago ------44 Member Banks-----Jctn. 3. March 7. April 11. Loans—■ Secured by U. S. Securities.. .$61,160 A ll other loans and investments .......... ................... 846,008 Reserve balance with Federal Reserve Bank ........ ....................108,825 Cash in Vault ........ .................... 44,555 Deposits— Net demand ....... ....................794,398 Time .................. ................... 149,859 Government ----- .................... 13,962 Bills Payable and Rediscounts— Collateral Notes .................... 37,735 Bills Rediscounted ................ 10,186 $64,977 Detroit ------121Member B a nks-----Jan. 3. March 7. A pril 11. Other — 45: Member B<inks-----Jan. 3. March 7. A pril 11. $67,605 $8,720 $9,799 $11,195 $13,420 $14,115 $14,272 861,297 849,253 244,085 246,019 256,349 280,939 280,882 281,276 115,322 35,939 104,811 37,455 21,886 13,821 21,836 10,544 23,442 12,540 25,241 15,811 28,033 12,898 26,034 14,251 830,644 160,154 38,856 794,988 163,057 36,445 162,048 155,896 13,964 151,322 164,079 13,907 167,508 166,677 13,746 201,707 89,211 6,189 232,538 93,660 11,104 229,291 95,706 13,497 33,110 2,844 64,130 4,874 12,154 412 14,716 162 15,140 18,380 16,181 19,090 5,446 23,038 4,816 COMPARATIVE BUSINESS M O RTALITY FIGURES, Business failures Seventh Federal Reserve District for three months of 1919 and 1918 with assets and liabilities as compiled by Bradstreets. ------No. of Failures-----1919 1918 124 Illinois .................................................... 222 ..................... 34 86 Indiana ............................. 52 Iow a .................................. Michigan .......................... ..................... 51 110 Wisconsin .......................... ..................... 33 69 Total ........................ ..................... 271 529 ------------ Assets-----------1919. 1918. $1,838,778 $1,155,176 1,090,014 542,723 120,001 1,070,700 560,651 1,962,703 294,679 305,198 $4,171,220 $4,769,403 --------- Liabilities--------1918. 1919. $7,284,394 $3,979,741 3,274,388 938,916 236,247 1,795,230 867,140 2,729,494 479,521 471,604 $13,700,673 $8,356,002 POST OFFICE BECEIPTS. ■March Receipts-----------1918. 1919. $2,948,044 $3,276,512 413,091 439,481 208,569 213,021 248,073 255,482 65,397 62,106 Chicago ....... Detroit ........ Indianapolis . Milwaukee ... P e o r i a .......... •Decrease --------------- IncreaseAmount. P er Cen $328,468 11.14 26,390 6.39 4,452 2.13 7,409 2.98 *3,291 5.03 BECEIPTS AND SHIPMENTS OF IMPOBTANT COMMODITIES AT CHICAGO. (000’s Omitted) --------------- Receipts--------------— February— — March— 1918. 1919. 1919. 1918. 648 1,003 Flour, barrels .......................... .......... 390 851 1,231 539 Wheat, bushels ....................... .......... 2,812 363 3,824 14,045 Corn, bushels .......................... .......... 3,714 10,555 3,719 9,699 Oats, bushels .......................... .......... 4,346 8,773 21,533 30,332 23,621 Cured Meats, pounds ............. .......... 18,840 117,194 90,027 Fresh Meats, pounds ............. .......... 79,322 87,010 17,311 17,147 Lard, pounds .......................... .......... 15,282 9,662 15,394 10,830 10,226 Cheese, pounds ....................... .......... 11,250 15,946 24,051 .......... 15,488 22,169 Butter, pounds ........................ 414 377 131 29 Eggs, cases ............................. .......... 19,510 16,025 13,149 Hides, pounds .......................... .......... 16,761 124 261 Lumber, thousand feet .......... .......... 98 133 1,436 1,663 Potatoes, bushels .................... .......... 1,364 1,082 --------------- Shipments--------------— February— — March— 1918. 1919. 1919. 1918. 744 199 440 1,086 111 627 1,760 206 1,964 2,612 1,572 4,964 3,493 4,073 5,403 5,934 69,218 129,757 159,756 72,535 225,589 125,541 158,551 106,374 46,576 16,504 60,206 21,842 5,733 8,823 8,775 8,253 14,671 20,807 20,090 21,214 162 54 223 170 22,279 15,312 20,927 15,286 45 60 46 137 482 362 692 580 COMPABATIYE STATISTICS OF BUILDING AND ENGINEEBING OPEEATIONS. Contracts awarded in States north of the Ohio and east of the Missouri rivers, from January 1 to April 1: 1919 ...................................... $253,806,000 1916 $223,645,000 1913 .......................................$196,788,000 415,069,0001915 167,637,000 1912 ...................................... 154,413,500 1918 ............................ 1917 ...................................... 318,785,000 1914 ...................................... 149,032,000 1911 ..........■ .......................... 173,904,313 Contracts awarded in Seventh Federal Reserve District States— Illinois, Indiana, Iowa, Michigan and Wis consin—also northern Missouri and eastern Kansas: 1919 ......................................$105,281,000 1918 ....................................... 63,232,000 1917 ....................................... 120,308,000 1916 ......................................$ 81,380,000 1915 43,834,800 1914 38,796,000 1913 ......................................$ 34,591,000 1912 ...................................... 22,674,000 1911 ......................... 42,764,313 BUILDING PERMITS OF SEVENTH FEDERAL RESERVE DISTRICT CITIES. City. Cedar Rapids, Iow a ........... Chicago, 1 1 1 ............................. Decatur, 1 1 1 ........................... Des Moines, I o w a ................ Detroit, Mich. ....................... Dubuque, I o w a ..................... Fort W ayne, Ind................... Grand Rapids, Mich.............. Indianapolis, I n d .................. Jackson, Mich........................ Joliet, 1 1 1 ................................ Lansing, Mich........................ Milwaukee, W is .................... Peoria, 1 1 1 ............................... Saginaw, Mich........................ Sioux City, I o w a .................. South Bend, Ind..................... Terre Haute, Ind................... -March, 1919--------Estimated. No. of Cost. Buildings. $ 64,000 .................. 35 1,758,150 123,125 .................. 53 .................. 104 301,950 ..................1,042 3,230,700 .................. 23 126,359 .................. 52 151,127 .................. 130 164,343 .................. 606 529,314, .................. 67 48,833 22,500 .................. 61 116,490 .................. 362 1,138,108 .................. 43 110,010 50,680 225,900 .................. 62 97,140 53,187 --------- March, 1918No. of Estimated Buildings. Cost. $ 81,000 93 2,376,000 45 47,000 78 174,170 517 1,101,155 1 2 13,300 38 68,246 73 76,530 462 334,719 40 9,530 8 71,500 1 2 5,273 188 445,911 13 12,600 1 2 28,965 39 149,650 54 29,467 81 105,125 P er Cent Gains. Building and construction statistics compiled by the F. W. Dodge Company. P er Cent Loss. 2 0 26 iii 73 193 85 11 2 114 58 412 6 8 13 155 773 74 50 229 49
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