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CHICAGO, APRIL 30, 1921 u s in e s s c o n t in u e s h e s it a n t , reports from d iv e r s if ie d in d u s - B tries and territories in the Seventh Federal Reserve District, while reflecting, as a rule, operations considerably below a year ago, may be characterized as variable. The chief com plaints are the limited market in which to sell the output and the difficulty encountered in the effort to reduce manufacturing and distribution costs. These have contributed to the uncer tainty regarding future demands. The situation is decidedly spotted; large concerns in the automobile industry, for example, in some instances report a production equal to or in excess of the corresponding period of last year, while other equally large producers report a cur tailment of 40 per cent. The employment situation is an important factor contributing to the curtailed buying power, but of even greater influence is the effect of the sharp reduction in prices for farm production, which apparently has left the farmer without the means of payment of obligations some of which were contracted before the price decline. The reports indicate clearly a freer buying movement in the cities during the last two months than in the country. Savings deposits, however, indicate that unemployment or shorter hours of employment is forcing some with drawal of savings from banks, especially in the larger centers where living expenses are high. While the decreases are small and may be overcome later on, they indicate that the employ ment situation is forcing the thrifty to fall back on their reserves. H E A V Y TA X A TIO N CO N SID ERED A R E T A R D IN G FACTO R Business is feeling also the weight of heavy taxa tion, for not only are the federal and state taxes to be reckoned with, but additional income is necessary in practically all of the municipalities, because of higher costs of administration and the elimination of reve nues which formerly came from the liquor licenses and other sources. Retail prices in the Middle West are not coming any nearer keeping pace with the decline in the wholesale prices than earlier in the year. This disparity is everywhere evident between prices which are based largely on raw materials and those for the finished products in which costs tend to pyramid through the continuance of the high level in wages, transporta tion and other factors, until by the time the article reaches the consumer the necessary selling price seems to be out of proportion. The demand on the commercial banks for money continues to be strong but some progress has been made in building up the reserve ratio at the Federal Reserve Bank. The liquidation of loans is gradual. Inven tories have been written down generally, while collec tions show a slight improvement and are generally pronounced as satisfactory. One stimulating feature of the credit situation is that the soil is working up well and seeding is progress ing satisfactorily. Recent rains have stimulated the hope for good crops. There is still some disposition reported, however, to seed smaller areas, due in some instances to hesitancy or inability on the part of farm ers to borrow. A tte n tio n is c a lle d to th e d is c u s s io n o f th e n o rm a l b a s ic lin e a n d e lig ib le p a p e r on th e la s t p a g e o f t h is r e p o rt. Compiled April 27, 1921 CO NDITIO N OF R ESERVE BA N K SHOWS IM PR O V E M E N T Total cash reserves of the Federal Reserve Bank of Chicago, which had increased since the first of the year to 388 millions on February 11, and then decreased sharply to 296 millions on April 1, showed a recovery to 352 millions on April 15. Deposits have been steady around 250 millions since March 18. Total bills on hand showed increase from 380 millions on March 4 to 439 millions on April 1, but on April 15 were reduced to 379 millions. Federal Reserve notes have shown a practically steady decrease from the 535 millions on January 7 to 474 millions on April 15. The ratio of total reserves to deposit and Fed eral Reserve note liabilities combined which has shown a decreasing trend since February 11 reached 40.9 per cent on April 1, but showed recovery on April 15 to 48.7 per cent, due chiefly to increase in gold reserves. Comparatively little change is shown in these items on April 22 from the figures of April t$. The reserve ratio decreased to 48.0 per cent. The figures relate to conditions as shown in the weekly statements of the bank. AU TOM OBILE IN D U ST R Y SHOWS G R E A T E R A C T IV IT Y Manufacturers of automobiles in some instances show a marked increase in operations. Two of the large manufacturers report operations at present equal to a year ago, while one reports a production in April larger than last year. Some car manufacturers report about two-thirds of the production of this time in 1920, while others are proceeding on an employment basis of about 50 per cent of a year ago, the production per employee, however, being greater. The spring demand for motor cars of the standard makes has increased notably in the last month or two. There is a trend to lower prices, but leading manufac turers say that until the volume can be increased ma terially there is very little opportunity to make reduc tions without accepting rather large losses. Stocks in the hands of retailers in consequence of the active demand are smaller than they were January 1. Foreign sales of automobiles have been very seri ously curtailed by the international exchange market, although makers of cars are building and strengthen ing their distributing organizations in the foreign mar kets by means of liberal advertising campaigns. The effort is to place American automobiles in importers’ warehouses abroad, at the lowest possible cost, in preparation for a turn in the international exchange market. Meantime there is a concerted effort to stimulate the buying of automobiles in this country, and this has had some effect as reflected in the volume of orders reported by factories. For instance, the De troit automobile shops and factories reinstated nearly 26,000 men during March and the early part of April, several of the factories in that city having increased the day to more than a six hour basis. The number of employees, however, is not regarded as a safe cri terion of automobile production, at this time, for the effort seems to be to keep as many men working as possible but to restrict the number of working hours in a day. The reports of shipments of automobiles received from the factories producing two-thirds of the total volume in this country shows 16,500 carloads shipped in March and 10,000 cars driven away on their own power. Computing the driveaways in carload equiva lents, the March shipment was 63 per cent greater than February, whereas a year ago this increase was 20 per cent. In March, 1920, the shipments aggre gated 29,326 carloads, while there were 57,273 machines driven away. The shipments this year amount to 4 2 per cent of that record month, while February’s completed figures show an increase of 58 per cent over January of this year. Last year the increase of Feb ruary shipments over January was 13 per cent. The shipments compare as follows: J a n u a r y .. . . F e b r u a r y .. . M a r c h ............ C a r lo a d s 192 1 192 0 6,442 25 .0 5 7 9,920 25 .5 0 5 16,500 29,32 6 D r iv e a w a y s M a c h in e s 19 2 1 1920 29,283 3 ,1 7 4 7 ,4 9 i 10,000 4 3 ,7 1 9 57,273 Boat M a c h in e s 19 2 1 1920 93 99 M AN U FACTU R ERS G E N E R A L L Y A R E CAUTIOUS Manufacturers in other lines of industry are cau tious. Improvement in the building situation has stimulated a call for building material. Lumber stocks at retailers’ yards are small and buying is light. Brick plants are closed down, or working at a low per centage of capacity. Prices are lower. Sales for road building are helping the cement industry somewhat. Stocks of farm implements in the hands of manufac turers are relatively large, and production is being cur tailed; the trend of prices is downward. Stocks in the hands of retailers are irregular, since large stocks of fall implements were not sold, but the stock of goods needed in the spring is quite small. Iron and steel mills are operating at a very large reduction from full capacity, unfilled orders continue to decline, and prices have been reduced. Furniture business is quiet, living costs and high rents having an adverse effect on the purchasing power of the public; prices tend downward. Manu facturers of furniture report that they are operating as high as 60 per cent capacity. IN D U STR IAL E M PL O Y M E N T CONDITIONS This questionnaire, covering March, shows: The expected improvement in the labor and em ployment situation, generally looked for in March, did not materialize. Instead the reports for this month seem to indicate further additions to the great mass of unemployed. Government figures, based on reports from 1424 large firms scattered over the entire country, employing 1,600,000 men, give the decrease for the month as 1.5 per cent. C h ica g o Number employed as compared with (a) the preceding m onth............... 8.5% decrease (b) the same month a year a g o ... 32.3% decrease Amount of pay roll as compared with (a) the preceding m onth............... 10.5% decrease (b) the same month a year a g o ... 36.2% decrease Percentage o f capacity of plant operating (a) M arch, 1921........................... 52.0 % (b) February, 1921...................... 53-0% (c) M arch, 1920........................... 88.0% The questionnaire, sent monthly by the Federal Reserve Bank of Chicago to 80 representative manu facturing plants in the Seventh Federal Reserve Dis trict, gives results indicating greater unemployment. The reporting firms, 78 in number, employing at the present time 58,000 persons, 14 per cent of which are women, reduced their number by 6.1 per cent, compared with the previous month. The pay roll for the same period decreased 1.9 per cent. In many cases two weeks extra pay was given to men laid off. IN D U STR Y N um ber OF F irms Automobiles and Accessories........................ Bakery and Confectionery............................ Brick and Building Construction M aterial. C anning............................................................. Cereals............................................................... Chemicals, Paints, and Soap......................... Clothing............................................................. Coal M ining..................................................... Contracting and Building.............................. Electrical Goods.............................................. Farm Im plements and E quipm ent.............. F u rn itu re........................................................... Glass, Porcelain, China, e tc .......................... H ardw are, Stoves, e tc .................................... Iron, Steel, and Brass...................................... Jewelry, Watches, and Clocks...................... Leather and L eather G oods.......................... Lumber and Mill W ork................................. M achinery......................................................... M etal W ork...................................................... Miscellaneous................................................... P acking.............................................................. P ap er.................................................................. Pianos and Musical In stru m ents................. P rin tin g ............................................................. Public U tility ................................................... Railway Cars and Supplies........................... Railroad Shops................................................. Wood and Paper C ontainers......................... W oodworking.................................................... Woolens, K nit Goods, T extiles..................... 32 133 32 11 8 22 18 19 T o ta ls........................................................ f —Increase. 929 N u m b e r of M e n E m p l o y e d on P a y R oll D ate N e a r e st -------------------------------A p r il i , A p r il i , 1920 1921 52,962 22,840 8>563 4.803 IM S 3»I05 273 $2,101,374 207,004 220,606 $734,645 190,855 123,691 294 5,253 4,936 5,166 10,044 2,954 5,533 83 , ” 7 143,898 21,330 15,863 D ecrease N um - 35-4 43-9 13-3 7 -7 t 42.8 44.9 25.6 10.7 70.5 6.0 51.8 12.7 15.6 52-5 137 31-9 20.6 65.0 9 43 4,3” 66 19,949 10,908 786,133 3 3,797 3,8” 95,33i *9 68 2,756 1,910 75,504 49,592 30-7 8,356 360,791 5,627 4,420 8,761 61,726 2,326 2,185 1,19 2 397,5T8 225,388 220,271 169,789 102,082 4i5,33o 253,749 2,178,202 88,850 120,958 1,712,74 4 26.4 47.6 42.6 39 -o 21.9 21.8 45.6 2,727 ” ,347 10,733 7,705 94 17 14,366 79,064 J5 2,974 IS 4,013 1,281 28 31,6 71 6 30,303 3,950 3 5,248 2,023 4,014 21 3,490 2,387 3,067 2,414 3,230 2,686 370,179 245,044 105,547 87,350 146,156 383,882 98,167 7o ,549 54,218 58,186 1,232,080 112,527 ecr ease 19.0 I O .lf in Pay D 65.0 7.8 21,736 4,755 3.078 7,851 3,443 ecr ease 56.9 16.2 78 3,891 1,248 12,683 543,669 160,706 105,827 32,485 461,054 D P er C e n t of 3,398 18 50.0% 5 1.0 % 89.0% M en P er C e n t ber 12 39 1.9% decrease 42.2% decrease A verP ay P er M an P er C e n t in 32 3,9i8 Complete analysis of the returns of this special questionnaire cannot be presented at this time. In considering the figures, allowance should be made for reduction in pay rolls of firms operating on part time, as well as for reduction in hourly scale due to increases in hours without a corresponding increase in the day scale. The automobile industry is apparently an excep tion to the general condition. The 79 firms reporting to the Employers’ Association of Detroit have shown a steady improvement since the low point reached in A m ount of P a y R o ll F or W e e k E n d in g on D a t e N e a r e s t -------------------------------A p r il i , A p r il i , 1921 1920 4,388 13,191 26 6 .1% decrease 37.5% decrease Analysis of returns from 929 additional representa tive employers of labor in this district employing 370,179 in April, 1920, offers comparison of labor conditions at present with those of a year ago. The number of men employed for dates nearest April 1 of 1920 and 1921, shows a decrease of 33.8 per cent while pay rolls decreased 37.4 per cent. On the basis of average week ly pay per man, a decrease of 5.5 per cent is shown. 172,325 302,884 798,360 202,484 302,642 122,505 866,502 158,968 104,194 347,840 9 D is t r ic t R oll in age 63-3 73-5 4 1.6 27.6 46.8 8.4 1 1.1 i8 .6 f 27.8 8.8 33-6 16.2 58.0 51.2 8-3 ” •4 45 -1 45*3 o .6 | 6.9 4-3 3 -ot 34-3 38-9 57-3 547 38-9 5-4 23-5 10 7 2 -3 t 5-3 17.1 18.5 21.0 0 .2 f 21.4 20.6 °7 t * -st 55 -1 *77 5-9t 226,445 58,521 62,092 63,605 23-5 1.4 1 1 .o f 40.3 18.8 31.6 21.3 16.8 34-3 33-6 17-5 J57 0.8 $” , 552,486 $7,852,435 33-8 37-4 5-5 59,033 1,109,456 188,428 278,897 89,017 93,565 77,144 48.8 i 6 .if 16 .6 f 6 .i j 3-9 December. At that time not more than 14 per cent of the 176,000 men employed in September were still working. On April 19 the number was 106,787 or 60 per cent of the September figures. Only a small num ber of these, about 6,000, are working on a reduced schedule of 39 hours per week. In several instances, wage reductions affecting large numbers of workmen have been effected without serious trouble. The Western Electric wage cut of 5 per cent affects about 25,000 employees. The Board of Arbitration between the local unions of the Amalga mated Clothing Workers of the World and the Chicago Clothing Manufacturers decided on a wage reduction of 5 per cent and io per cent affecting the majority of the 40,000 garment workers. This becomes effective April 28. Bricklayers at Detroit, Michigan, have accepted a reduced wage of an hour until May 1. After that the rate will be $1.00. The wage question of the railroads is still before the U. S. Labor Board. In Chicago the building trades have rejected the wage cut of 20 per cent proposed by builders and contractors. The present contracts expire M ay 1. BU ILD IN G A C T IV IT Y IN CREASES M arch, 1921 No. of permits IL L IN O IS Aurora.......... Chicago---E v a n sto n .. . Peoria.......... Rockford__ T o ta l........ 27 750 7« 85 137 1,077 IN D IA N A ' 107 G a ry ............. Hammond. . 59 Indianapolis 1,091 R ich m ond ... 47 192 South Bend . Terre Haute 151 T o ta l........ IO W A CedarRapids Davenport. . Des Moines . D u b u q u e.... Sioux C i t y . . T o ta l........ Estimated cost # 26,060 7,320,000 18 1,515 March, 1920 No. of permits Estimated cost Per Cent cost Gain Loss 79,870 3° # 480 10,600,100 275,401 44 72 280,880 67 3i 34 449 , 55° 48 76 #7 . 778 , 75 ° 764 #11,685,801 33 $ 36 i » ° 73 514,475 2 , 33 6,964 124 26 42 I 45 . 52 5 105,650 56,790 258,147 404,060 1,647 #3,932,166 133 # i 9 5,i 78 7^460 138 #629,865 99 , ° 5° 83 L 454 419 181 20,466 509,191 114,036 #2,204,062 78 7H J5 #240,000 497 ,95 1 424,900 116,460 298,910 58 181 48,292 260,780 596 #968,657 480 #1,578,221 39 392,947 2,981 No. of permits Estimated cost 49 59,375 137,352 63 6 , 297,397 1,986 # 516 180 100 327,321 348,047 65,485 166,790 240,501 44,216 111,844 Estimated cost Per Cent cost Gain Loss 27,350 117 94,900 # 44 28 8,762,410 1,154,829 600,890 198,773 7i 165 98 42 67 119 35 63,000 121,615 184 150,928 25 #7, 798,328 3,232 #11,174,695 3° # 158,887 1,640,988 21,966 27 119 552 #1,821,841 23 #28,464,620 81 # 112,125 804 2,082,087 96 48,087 121 368 #2,242,299 18 •. 85 7 12 981 63 Grand Total. 7,282 #22,720,200 49 75 37 T o ta l........ W IS C O N S IN K en osh a.. . . M ilw au k ee.. Sheboygan.. T o ta l........ 142 no 28 125 87 158 M IC H IG A N Battle Creek 63 1 21 B ay C ity __ D e tro it........ 1,683 270 F lin t............. Grand Rapids 255 81 Jackson........ 106 K alam azoo.. Lansing........ 164 P on tiac........ 43 Saginaw . . . . 195 M arch, 1920 29 254 1,160 No. of permits 177 181 ICO M arch, 1921 OO OO March building permit statistics for cities of the Seventh Federal Reserve District show an increase in total number of permits but a decrease in estimated cost compared with March, 1920. The statistics by cities follow: 20 Contracts awarded largely in this Federal Reserve District show increase of almost 75 per cent in num ber and of almost 50 per cent in estimated cost com pared with February. In comparing the figures of 1920 and 1921, it is necessary to consider that the decreased cost of ma terial from the high figures of 1920 will account for some of the decreased cost given in building statistics. BU ILD IN G STATISTICS FOR TH E M ONTH OF M ARCH , 1921 CHICAGO DISTRICT (Illinois, Indiana, Iowa, Wisconsin, Michigan, Missouri, and portions o f Eastern Kansas and Nebraska) C O N TE M PLA TE D PRO JECTS CONTRACTS AW ARDED N EW FLOOR NO. OF PRO JECTS V A L U A T IO N SPA CE PRO JECTS N O . OF (SQ.. F T .) 357 #13,708,000 229 1 ,094,300 132 i3>6 52,5°° 70 34 153 2,483,300 15,146,200 II 1,488,700 337,000 993,200 ......................... 47 ....................... 411 "3 4,037,200 35,049,900 3,930,900 30,687/500 20,071,500 2,714 #138,962,400 Business Buildings...................................................... Educational Buildings................................................ Hospitals and In stitu tio n s......................................... Industrial Buildings.................................................... ....................... ....................... ....................... ....................... Public Buildings.......................................................... Public Works and Public U tilities........................... Religious and Memorial Buildings........................... Residential Buildings.................................................. Social and Recreational Buildings........................... ......................... ....................... ....................... T o ta l.......................................................................... ......................... (a) 74 1,389 86 9 (b) 64,700 166 18 1,005 ............... 38 1,632 113,900 2,858,600 316,900 ........ V A L U A T IO N #6,570,400 9,132,200 1,475,3°° 4,832,200 347,800 9,723,500 650,400 13,146,700 2,635,000 #48,513,500 CO N TRACTS AW ARDED January 1 to April 1 I9 2 I.................................................#116,938,000 1920..................................... 213,576,000 I9 I9 ................................................ 110,164,000 I9 18 ................................................ 63,232,000 (a) (b) 2,347 Buildings 1,347 Buildings 19 17 .................................................#120,308,000 1916................................................ 81,380,000 i 9I5..................................... 43.834.000 i9 J4 ................................................ 38,796,000 19x3.................................................#34,591.000 19 12 ................................................ 22,674,000 1 9 1 1 ................................................ 42,764,000 1910................................................ 48,707,000 Statistics Compiled by F . W . Dodge & Company Similarly, in comparing statistics with former years, it is necessary to consider the relation of cost of contracts awarded and building cost. The accom panying chart gives a comparison by years since 1910. Using 1913 as a base, contracts awarded, principally in the Seventh Federal Reserve District, have been re duced to a percentage basis and these are compared with percentages or index numbers of building material costs taken from the U. S. Bureau of Labor Statistics. Chart showing Value o f Contracts awarded in the Chicago District and Cost of Building Materials during 1910-1920, PE7L C E N T expressed in percentage of the 1913 figures. Beginning with 1916, a steady increase in cost of building material is shown. A peak of 341 was reached in April and M ay, 1920. Settlement of the wage controversy in Chicago ap pears as far away as before the referendum of the build ing trades on the proposed reduction, since the vote showed that labor did not care to accept the proposal. The future course of practically all Chicago industries appears to be most intimately connected with a set tlement of this question. W HOLESALE T R A D E SHOWING H E SITA N C Y Wholesalers generally report buying very restricted and marked by a feeling that recessions in prices may go further. This view is not generally held by the jobbing trade except in groceries and shoes. The pre valent opinion is that prices have reached a stable level where supply and demand factors can operate normally, producing small fluctuations. The dry goods trade reports a decrease of 35.9 per cent net sales for March, 1921, compared with March, 1920. “ Cau tious buying” is reported by 75 per cent of the answers. The opinion of the trade as to prices is generally sum med up in the word “ stable,” only 25 per cent looking for a lower level. The shoe trade is off 31.6 per cent from March, 1920, being an improvement of 20 per cent from the February report. Over one-half of the re plies indicate a belief in lower prices. Grocery job bers report a decline of 25.0 per cent in net sales com pared with March, 1920. About two-thirds of the replies express the belief that prices will go lower, and about one-third are noncommittal or believe that the present level is stable. Wholesale clothing sales are off 35.3 per cent from a year ago but prices are regarded as stable by those who give an opinion. Buying is cautious. Cancellations show a distinct tendency to decline and are now rated “ negligible” in the whole sale trade. TRADE D ecr ease N et Sales M ar ch ’ 21 No. M a r ch ’ 20 D ry G oods 13 Sh o es......... 10 C lo t h in g .. 5 T a ilo rin g .. 3 G roceries.. 23 R epo rt B u y in g C a u t io u s P r ic e T endency No D ow n U p S t a b l e R e p l y 3 5 -9 % 3 1 -6 % 3 5 -3 % 3 7 -4 % 7 2-5 % 8 7.5 % 50.0% 3 33 -3 % 1 2 5 .0 % 96.0 % 14 5 2 6 5 2 2 I 3 3 1 5 R E T A IL T R A D E CO NDITIONS IM PROVED Conservative merchandising is the feature of the replies to our monthly questionnaire covering the re tail trade. Net sales show a decrease of 4.2 per cent for March, 1921, compared with March, 1920. This is an improvement of about 2 per cent on the similar comparison for February. For the first quarter year ending March 31, 1921, a decrease of 2.1 per cent in net sales appears, compared with the total for the same quarter of 1920. This, also, presents an improvement of 3.8 per cent. Inventories were reduced 15.0 per cent in March, 1921, compared with the previous March. Compared with February stock, there was a gain of 4.5 per cent, showing conservative shelf re plenishment and a careful policy. Retail stocks for the first quarter of 1921, to March 31, stood at 381.0 per cent of net sales for the same period, indicating a gain of 0.1 per cent in rate of turnover compared with the February report. In detail, the stock sales ratio for February was 398.0 per cent, and for March 381.0 per cent, corresponding to turnover rates of 3 and 3.1 respectively. Outstanding orders at the close of March were 3.2 per cent of the 1920 total purchases, against 9.6 per cent in February. This difference is due in part to the inclusion of stores, not before reporting, whose buying for stock is on a spot delivery basis. The situation reflected in the store returns is distinctly better than in previous months since the decline be gan, and moderate optimism is generally expressed. Number o f stores reporting............... 33 Decrease N et Sales— M arch, 1921, from M arch, 1 9 2 0 .... 4 .2 % Decrease N et Sales— January 1 — M arch 31, 1921, from same period, 1920 ...................................................................... 2 .1 % Decrease Stocks— M arch, 1921, from M arch, 1920........... 1 5 .0 % Increase Stocks— M arch, 1921, over February, 1921........... 4 - 5% Ratio o f Stocks to N et Sales January 1— M arch 31, 1921. .3 8 1.0 % Ratio o f Outstanding Orders M arch 31, 1921, to T otal P u r chases, Y ear 19 2 0 .......................................... 3 .2 % COMMERCIAL PAPER MARKET SLUGGISH The supply of commercial paper greatly exceeds the demand. Half of the reporting firms show an in crease in sales over the preceding month; the other half show decrease. The lack of funds for investments of this class is accounted for by brokers as due to the March i settlement period, income tax payments, in vestments in securities, delayed liquidation of farm products and purchases of seeds for Spring planting. The feeling of uncertainty as to the future has played an important part in the present stagnation of the commerical paper market. Reports of distribution show that the principal buying markets have been in the New England states, New York, and Pennsylvania, while the southern and Pacific states were comparatively sluggish. In all these districts, the principal buyers have been the coun try banks. Commercial paper rates in Chicago ranged from 7 to 8 percent, the majority of the paper being sold on the basis of 7 ^ per cent. D EM AN D FOR A C C E P TA N C E S IM PROVES Improvement in the demand for acceptances is noted. Statistics for March over February showed increased sales. Most of this demand has been from the suburban and country banks. One of the largest dealers reported 80 per cent of the bills sold to be nine ty day maturity and the remainder divided between thirty and sixty day maturity. The acceptances sold by one bank showed 25 per cent of acceptances drawn against grain, 25 per cent drawn against sugar and the remainder against oil, machinery, tobacco, coffee, and cotton. The March returns from three banks and one dealer show increase over February as follows: 26 per cent in amount of sales, 2 per cent in amount of purchases and 9 per cent in amount held at the close of month. The figures for these percentages are given below: M a r ch Total bankers acceptances bought dur ing m onth................................................. Total bankers acceptances sold during month........................................................ Total bankers acceptances held at close o f m onth................................................... M H igh Selling 30 day 60 day 90 day rates for prime bills m atu rity....................... • m atu rity....................... . m atu rity....................... • F ebruary $18,980,377 $18,558 189 21,667,561 17,182,243 3,704,819 3>393>6 i7 a r ch Low F ebruary L ow H igh sx sx sx SA 7 6 6% sx 5% 6 sx 5% sx CLEARIN GS M O VEM EN T SHOWS D E C R E A SE Clearings movement as indicated in the aggregate debits to individual accounts, shows a decrease of 2.7 per cent compared with the previous month, and a de crease of 21.2 per cent from a year ago. The total debits as of April 13, 1921, reported by 208 banks in 24 leading clearing house centers, includ ing Chicago, were $871,505,000, a decrease of $24,886,000 over the corresponding week of March, and a de crease of $234,617,000 compared with the same period of last year. BUSINESS M O R T A LIT Y B Y F E D E R A L RESE R VE D ISTR ICTS Tabulation of business mortality shows 138 de faults during March in the Seventh Federal Reserve District compared with 64 in the corresponding month of last year. The liabilities represented in these de faults amounted to $3,438,805 compared with $1,420,313 a year ago. Following are the number of defaults and liabilities by Federal Reserve Districts: D istrict F irst....................... Second.................... T h ird ...................... F ou rth ................... F ifth ....................... Sixth ....................... Seventh.................. L igh th .................... N in th ..................... T e n th ..................... Eleventh................ T w elfth .................. ... ... ... .. . ... ... ... ... ... ... ••• Number 1921 1920 88 54 248 139 63 33 88 63 123 36 152 34 64 138 3i 18 27 11 66 98 19 64 137 United S tates....... . . . 1336 566 Liabilities 1921 1920 $ 8,259,999 $ 866,304 30,836,832 6,213,228 1,082,419 644,376 553,082 2,767.384 2,918,460 464,017 382,988 2.397,39° 3,438,805 1,420,313 524,242 5,273 , i 93 209,558 703,571 4,189,798 42,587 2,702,583 203,445 2,838,475 1,175,216 $67,408,909 $12,699,356 L E A TH E R AN D SHOE T R A D E IM PRO VIN G Chicago shoe salesmen are calling on the trade, and orders for summer goods are being obtained in some quantity; demand for novelty lines is stronger than for staple goods. Shoe retailers in places still have some overstock of standard lines. Good qualities are wanted, the consumer not yet having reached the point of call ing for cheaper qualities. Buying is very cautious, many buyers holding for cheaper prices, and, although there has been some improvement since the first of the year, the industry is still quiet. Wholesale shoe prices have been reduced, but lead ing manufacturers say that prices cannot recede much further on the present wage basis. Some small wage reductions have been accepted, but delay in the reduc tions of wage scales seems likely. Most manufactur ers have small stocks on hand; collections are being closely watched. Stocks of leather in the hands of shoe manufactur ers are small, large quantities remaining in the hands of tanners. The supply would not be abnormal if manufacturing in leather lines were proceeding nor mally. Exports of leather have been light this year. Tanners are working on a “ hand to mouth” basis, but recently have been encouraged by a little improve ment in sales of leather. Top grades are in most demand. COAL PROD UCTION CONTIN UES LOW ER TH AN NO RM AL Consumers of coal generally are buying only for current use, the belief prevailing that a reduction in freight rates will come and lower the cost of fuel. The trend of all grades of coal has been downward, but the change during the last month has been small in the Middle West. The index number compiled by the Coal Age for bituminous coal shows practically no change, spot prices remaining at i o i . been no reductions made in wages paid to mine work ers. The accompanying charts show the trend of bi tuminous production as compared with other years, also the trend of prices as indicated by the Coal Trade index. IN D E X P R IC E O F B IT U M IN O U S C O A L Bituminous coal production has continued to de cline during the last month, the daily average nearing the one million net ton point, or one hundred thousand tons less than a month before. There is no sign of a revival of mining activity in the current returns. It is estimated that the requirements of the consumers, depending on Illinois coal throughout the year, neces sitate a production from the mines in this state of a weekly minimum average of one million seven hundred and fifty thousand tons. The Illinois fields during the last month have been producing only at the rate of a million to a million and a quarter tons. There have MILLIONS OF TOMS D A IL Y A V E R A G E P R O D U C T IO N O F B IT U M IN O U S C O A L IN T H E U. S. ie*o 192,1 M OVEM EN T OF COM M OD ITIES A T CH ICAGO Receipts and shipments of cereals at Chicago showed a large increase over last month and last year. Without exception, receipts exceeded shipments, which was not the case during March last year as both wheat and rye shipments exceeded receipts at that time. Receipts of other commodities are about the same as last year, except in hides which showed considerable falling off. Shipments of hides show a large increase over last year. Meat shipments show decrease from last year but an increase over last month. figures follow: The detailed (ooo’s Omitted) R E C E IP T S M ARCH FEBRUARY 1921 F lo u r .................. W heat.............. C o rn ................. O ats.................. R y e ................... B arley ................ Cured M eats. . Fresh M e a ts. .. L a rd .................. Cheese.............. B u tte r............... Eggs.................. P o tato es ............ H ides .................. Wool................... Lum ber ............. . .B arrels................................ .............. . .B ushels............................... .............. . . Bushels............................... .............. . . Bushels............................... .............. . . Bushels .................................. .............. . . Bushels .................................. .............. . .P ounds.................................. ............. . . Pounds.................................. ............. . . Pounds ..................................... ............. . .P o u n d s.................................. ............. . .P ounds.................................. ............. . . C ases..................................... ............. . .B ushels .................................... ............. . . Pounds ..................................... ............. . .P o u n d s ..................................... ............. . .Thousand feet ....................... S H IP M E N T S 1920 1,142 2,218 1921 6,089 218 828 796 6,461 71,844 9,188 15,822 20,638 460 1,098 15,040 1,047 284 14,693 20,445 815 1,270 9,005 i , i 45 688 1,484 10,716 5,488 172 I ,°°7 7,759 6,841 710 968 367 483 959 10,871 1921 2,231 13,657 3,874 5,568 829 3,942 73,055 1920 i , i 34 785 977 8,449 15,743 M ARCH 3,575 259 82,284 13,670 12,311 16,370 166 1,128 18,492 1 ,11 4 123 399 92,176 142,512 59,488 11,068 21,204 6,599 62,723 18,694 11,760 15,412 235 234 1,006 8,318 FEBRU ARY 1920 1921 1920 686 587 L 375 2,804 1,192 5,166 734 3, i 4 i 2,7* 5 4,679 901 269 106,701 203,092 46,469 21,040 3,304 234 3,645 605 465 37 ° 101,022 349 452 23,433 D ,723 73 26,371 267 378 13,789 2 ,37 i 122 79,932 136,482 199,337 49,376 53,752 9,666 16,817 32,780 45,256 145 183 291 20,373 5, 2 H 334 22,922 2,674 81 55 CO M PARATIVE L IV E STO CK STA TISTICS Receipts of live stock at Chicago for the four weeks ending April 9 show increase over those of the corres ponding period of last year. Receipts at all principal markets also increased except in hogs. However, re ceipts for the first three months, except in sheep and lambs, show a decrease. Prices are far below those of last year. Detailed statistics are given in the follow ing tables: Receipts of live stock at Chicago for the four weeks ending April 9, 1921, compare with 1920 as follows: Y ear ca ttle .................................. 196,625 J92o .............................. 146,472 Increase......................... 50,15 3 ca lv e s h ogs sh e e p 74,980 472i46 i 363,872 54,492 37 i , 903 138,943 20,488 100,558 224,929 Receipts of live stock at the principal markets during M arch, and during the first three months o f 1921, compared with the corresponding periods o f the previous year, show the following changes: 1921 CATTLE M arch............................................... 23 per cent increase First three m onths.........................15 per cent decrease CALVES SH EEP AN D LAM BS 22 per cent increase 3 per cent decrease 64 per cent increase 14 per cent increase HOGS 22 per cent decrease 7 per cent decrease Receipts o f hogs at the six principal markets during M arch, 1921, aggregated 1,487,884 head, against 1,909,122 in M arch, 1920. The average prices compared as follows per hundredweight: CATTLE CATTLE C H O IC E COMM ON SH EEP LAM BS M arch, 1921........................................................................................... M arch, 1920........................................................................................... $10.55 15.40 $ 9.03 13.08 $ 5.89 13.32 $ 9.50 18.82 9.90 15.21 Three months, 19 2 1............................................................................. Three months, 1920............................................................................. $10.62 17.05 $ 8.68 1 3-37 $ 5.28 12.72 $ 9.83 I 9-37 $ 9.55 14.90 HOGS Cash lard in M arch, 1921, ranged from $11.00 to $12.05 cw t- compared with $18.75 t0 $20.05 in M arch, 1920. Cash ribs in M arch, 1921, ranged from $11.00 to $11.87X cwt. compared with $17.50 to $18.75 *n M arch, 1920. AN ALYSIS OF E X P O R T T R A D E QUESTION NAIRE The Federal Reserve Bank of Chicago sent out dur ing the month a list of questions designed to obtain an expression from important houses in the District producing goods for the export trade, on points of great importance connected with the exchange situa tion and the difficulties of financing business with European and other foreign customers. Fifty-three replies were received and the analysis of the problem was fully detailed on all the principal points of the inquiry. Following is a digest of the information derived from the answers: 1. Do you produce goods for the export market? A nswer— Yes, 52; No, 1. Specify kinds. A nswer— Automobiles, trucks, ac cessories, leather goods, packing house products, meats, lard, soap, grain, mill products, lithography, chewing gum, candy, hats, heavy machinery, tractors, mining and roadmaking machinery, implements, steel and iron beams, rails, billets, merchant bars, electrical and mechanical instruments, clocks, watches, recording and computing devices, tungsten and molybdenum rods and wire, agricultural machinery and tools, chem icals and compounds. appreciate that the exchange situation justifies con servative banking. 6. Do you favor any change in the methods of financing exports? Specify. i. Are your foreign sales affected by the prevailing rates of exchange? A nswer— Yes, 52; No reply, 1. Suggested changes include establishment of Ameri can branch banks abroad, longer credits and greater liberality toward foreign paper. How? A nswer— By compelling the exporter to take too low a price for foreign bills and the foreign merchant to buy dollar exchange at a premium. 7. Do you favor any change in the American cus toms duties now in force in your line? 3. What efforts are you making to overcome foreign selling difficulties? A nswer— (a) Special study of foreign conditions — 9- (b) Personal representatives abroad— 9. (One has established representatives at 36 important trade centers.) (c) Direct advertising and mail order methods— 6. (d) Trading on arbitrary exchange rates — 10. (Cuts out most of the profit hoped for but establishes relations for the future.) (e) Special credit terms, discounts, etc. — 11. (f) Deposits abroad— 4. (g) Consignment shipping for own ac count— 4. 4. Are you aware of increasing competition with your goods by foreign makers? A nswer— Yes, 30; No, 11; No reply, 12. One states that Belgian steel has been offered on the Pacific at prices under American cost of production, this being partly due to the high domestic freight rates in America and the abnormally low ocean freights accorded “ ballast freight.” 5. Are you satisfied with the banking cooperation being accorded to you in exporting? A nswer— Yes, 20; No, 25; No reply, 8. Those classified in the negative generally wish for more liberal discounting of foreign paper. They A nswer— (a) More tariff protection— 22; (b) No, 16; (c) Fifteen are non-committal or already pro tected by processes, brands and exclusive character of goods. Those answering in the negative hold that this is not the time to shut out foreign goods when Eu rope is heavily in our debt and can pay only in goods and services. 8. Are your products costs so high, with reference to foreign productive costs as to require Federal action for your protection? The answers to this question and question 7 were given together. There is a call for better cooperation between ex porters and the consular representatives of this coun try. Several correspondents dwell on the fact that the readjustment of conditions can be brought about only by American purchases of European goods and securities for years to come, and one believes that final remedy for the disparity of the exchanges rests with foreign governments. One holds that the pre-war theory of gold reserves requires modification on the part of Americans to prevent our falling out of the international trade position we have held as a great producing nation. One believes that the remedy will be found when we begin to ship some gold. Of the thirty answering question 4 in the affirmative, twenty made specific mention of the increasing com petition of Germany and other European nations, in Italy and elsewhere. It is estimated that with the mark at its present level Germany can undersell America by 50 per cent. This advantage on the part of the German manufacturer is enhanced by liberal credit arrangements for the benefit of his customers and by the superiority of German export banking. The opinion is expressed that American banks should establish foreign branches and cooperate actively with American export houses. P R IC E T R E N D S AS R E F L E C T E D B Y IN D E X NUM BERS The accompanying charts show the trends of prices in foreign countries as compared with the United States. Explanation of these numbers and their sources will be found in the March report. OPEN M A R K E T DISCO UN T AN D IN T E R E ST RATES A T CH ICAGO The open market range of discount and interest rates prevailing in Chicago, during the thirty-day per iod ending April 15, 1921, together with a comparison of rates during the thirty-day periods ending March 15, 1921, and April 15, 1920, follows: A P R IL , I 9 2 I M ARCH, I9 2 I CU STO M H IG H I. 2. 3. 4. 5. 6. 7. 8. Rates o f discount charged by banks to customers for prime commercial paper such as is now eligible under the Federal Reserve A ct: a. Running 30, 60, and 90 d a y s ................................ 7 b. Running 4 to 6 m onths........................................... 7 Rates for prime commercial paper purchased in the open market: a. Running 30 to 90 d ay s.................................................... b. Running 4 to 6 m onths................................................... Rates charged on loans to other banks— secured by bills p ayab le................................................................................... 9 Rates for bankers acceptances o f 60 to 90 days maturi ties: a. Endorsed.............................................................................. b. Unendorsed......................................................................... Rates for demand paper secured by prime stock exchange collateral or other current collateral........................... 7 Rates for time paper secured by collateral mentioned in Number 5: a. Running 3 m onths................................................... 7 b. Running 3 to 6 m onths........................................... 7 Rates (when paper is current in city) for: a. Cattle lo a n s .............................................................. 7 b. Comm odity paper secured by warehouse re ceipts, e tc ...................................................................... 7 Rates for ordinary commercial loans running 30, 60, and 90 days, (not including loans to enable purchase of bonds) secured by: a. Liberty bonds............................................................ 7 b. Certificates o f Indebtedness................................. 7 LOW A P R IL , I9 2 O CU STO M LOW 7 7 7 7 7 CU STO M - 7 8 6m 7 H IG H LOW 7 7 7 7 6 6 6 M@ 7 6M@7 6 6 6 m @7 7 6 6X @ 7 6 6 7 H IG H ARY 7 7 6'A Gyi ARY 5^ sV s 5 % @6 S K @6 7 ARY 6M@7 6'A 7 7 6m 7 7 6m 6M@7 6K 7 7 7 7 7 6M 7 7 7 7 Gyi 6M 6m ®7 6% 7 7 7 7 7 7 6m 6M@7 6M 7 7 7 7 7 6M 6M@7 6K 6K<&7 6M 6 m @7 7 7 7 5 6M 6 5 6M@7 5^ 7 7 6M@7 6M@7 SE L E C TE D M EM BE R B A N K ST A TIST ICS SEVEN TH D IST R IC T (ooo’s Omitted) C H IC A G O APR. 8, M AR. II, D E T R O IT JAN . 7 , APR. 8, M AR. II, O T H E R S E L E C T E D C IT IE S JAN . 7 , APR. 8, M AR. 1921 Number o f Banks reporting...................... Loans and Discounts (exclusive o f re discounts) (a) Secured by U. S. G ovt, obliga tions................................................... (b) Secured by Stocks and Bonds other than U. S. Bonds................. (c) All other........................................... Investments: (a) U. S. Bonds..................................... (b) U. S. V ictory N otes...................... (c) U. S. Certificates o f Indebtedness (b) Other Bonds, Stocks and Securi ties ...................................................... Reserve balances with F. R. B a n k .......... Cash in V a u lt............................................... Deposits: N et D em and............................................ T im e.......................................................... Government............................................. 1921 19 2 1 1921 I9 2 I I9 2 I I9 2 I 52 52 52 13 *3 *3 48 49 5 6 ,3 8 0 5 1 .3 7 3 5 1 ,8 8 5 II, I9 2 I 5 ,9 9 0 7 ,2 4 4 5 ,* 7 2 6 4 ,3 ” 1 8 6 ,6 7 3 3 0 6 ,4 7 8 3 2 3 ,4 ” 3 2 7 ,5 0 4 6 1 ,1 3 0 6 1 ,8 0 7 7 * 9 ,3 5 9 7 3 9 ,6 7 6 7 2 0 ,2 2 1 1 6 2 ,0 8 3 1 6 4 ,9 4 9 2 1 ,8 6 6 2 2 ,7 1 6 1 5 ,8 6 2 1 5 ,0 1 9 “ ,4 3 7 1 3 8 ,8 3 9 2 9 ,2 8 8 1 9 ,8 1 2 1 9 ,2 8 2 1 3 ,0 1 0 I2/JQ O * 8 ,5 7 5 1 2 ,9 4 1 9 .5 5 1 8 ,5 9 9 7 ,9 8 1 1 0 ,3 4 3 1 1 ,3 6 6 1 4 3 .9 6 3 1 2 5 ,1 9 9 1 4 4 ,0 5 1 1 3 4 ,3 2 3 1 2 9 ,8 0 4 1 4 6 ,8 2 3 1 4 6 ,3 3 8 I 3 3 ,4 i 8 2 4 ,7 0 7 2 4 ,3 8 5 8 ,6 0 5 3**263 32,705 3 9 ,6 1 8 9,236 12,200 * 3 ,* 5 7 JAN . 7 , I9 H 50 12,123 5 8 ,7 0 0 6 0 ,4 4 7 5 8 ,5 8 5 2 4 6 ,9 3 1 2 5 4 ,6 3 9 2 5 9 ,8 7 6 2 6 ,8 4 9 3 5 ,2 1 3 3 5 ,9*8 3 5 ,7 8 0 1 4 ,8 8 4 5 ,9 7 4 7 ,4 6 8 6 ,1 6 6 5 ,9 4 6 7 .9 9 8 5,908 4 9 ,1 6 4 4 6 ,4 2 1 45*448 2 5 ,5 2 7 2 7 ,8 4 5 3 0 ,9 1 2 * 3 ,9 7 2 1 4 ,7 3 0 * 6 ,3 3 7 9,487 8 7 6 ,1 1 7 9 3 5 ,7 9 3 9 2 4 ,7 2 2 1 5 9 ,0 4 7 1 7 3 ,* 6 4 1 7 1 ,2 5 8 2 1 4 ,6 4 4 2 2 9 ,2 4 7 2 2 5 ,8 8 7 3H,37o 310,337 3 0 8 ,2 3 2 2 1 2 ,9 4 7 2 1 7 ,8 4 5 1 ,2 0 0 2 2 5 ,0 3 3 1 2 9 ,1 0 7 1 3 0 ,1 8 9 130,344 2 ,8 4 0 * ,4 * 7 * ,4 4 3 1 2 ,4 4 5 2 ,1 8 6 4,787 4 ,8 4 5 1 ,8 8 8 F R EIG H T CAR SURPLUS IN CREASES The accompanying chart shows the freight car surplus and loadings in the United States since Jan uary, 1919. The freight car surplus as given by weekly figures continues to increase. The decrease in aver age weekly carloadings by months beginning in Oc tober last year was checked in January, and since that time no material change in carloadings is shown. During the week ending April 9, car loadings showed a considerable gain in all districts except the Central HUNDREDS OP THOUSAND FR E IG H T CAR LOADINGS.1 FREIGHT CAR. SURPLUS. ■ FREIGHT C A R SHORTAGE Western and the Central Southern. Increases com pared with the previous week were shown in the load ing of grain and grain products, live stock, coal, for est products, merchandise, and miscellaneous freight. However, these increases were not reflected in the car surplus report. Previous records for the number of freight cars idle were again broken during the week ending April 8, reaching a new high point of 507,427 cars, or approximately 21 per cent of the total freight cars owned by the railroads of the United States. TH E BASIC L IN E The basic line of credit of a member bank is the amount of accommodation it would receive if the Federal Reserve Bank were to distribute all of its loanable funds at one time to all member banks equitably. The ability of a Federal Reserve Bank to loan an amount greater than its capital, surplus and reserve deposits to its member banks is based upon its right to issue currency in the form of Federal Reserve notes. As it must be in a position to pay out this currency to member banks when called upon to the extent of loans granted, its loaning power would be the maximum amount of currency it can issue. A 40% gold reserve must be maintained against currency issued and its loaning power would, therefore, depend upon the amount of gold held available for this reserve. Gold is contributed by the member banks in the form of reserve deposits and payments for Federal Reserve bank stock. If the Federal Reserve Bank were to loan all of its funds exclusive of statutory re serve to member banks at one time on an equitable basis, each member bank, therefore, would receive an amount equal to the currency which could be issued based upon the available gold such member bank has contributed. This amount is termed a member bank’s Basic Line of credit and may be determined in the following manner: Illustration: Country bank making following statem ent: Capital and su rp lu s.. . .$100,000 Demand Deposits.......... 500,000 (7% reserve required) Tim e Deposits................ 500,000 (3% reserve required) Federal Reserve Bank Capital Stock paid for (3% o f its own Capital and Surplus)...................................................... $ 3 >°°° 65% o f Required Reserve (35% being held as reserve against deposits)...................................................................... 31 3 S°° 24 > Total available gold contributed by individual member b an k ........................................................................................... $35.5°° This would be a 40 % gold reserve for Federal Reserve notes amounting to i y i times this am ount ................... 2.5 Total amount o f Federal Reserve notes which can be issued on basis o f gold contributed by individual mem ber bank, or its Basic Line of cred it................................... $88,750 In this manner the Basic Line of member banks of a state or an entire district may be figured. E L IG IB LE PAPER The extraordinary credit requirements incident to the war and the readjustment period have demon strated to banks the value of having a large portion of their loans in the form of paper which is eligible for rediscount at the Federal Reserve Bank. What con stitutes eligibility is here briefly, but not exhaustively set forth. Paper rediscounted with the Federal Reserve Banks is pledged as collateral to currency issued in the form of Federal Reserve notes and, therefore, must essen tially be of a liquid character if our currency is to properly expand and contract with the legitimate needs of business. The principal factors in determining the eligibility of notes, drafts or acceptances are: 1. Were the proceeds used for a current commer cial, industrial, or agricultural transaction which can reasonably be expected to be com pleted during the life of the instrument and provide funds for its payment? 1. Is the transaction involved a part of the pro duction, manufacture, or distribution of goods, and not one based on securities, (other than Government securities), real estate or fixed assets? C O M M E R C IA L P A P E R Notes given for current commercial or industrial purposes are eligible for rediscount if within ninety days of maturity. Evidence of the character of the loan must be obtained by the Federal Reserve Bank to establish the eligibility of paper. Financial state ments of the makers showing a reasonable amount of quick assets as compared with current liabilities may be accepted as evidence of the liquidity of paper. A G R IC U L T U R A L P A P E R Notes of responsible makers given for agricultural purposes are eligible for rediscount if within six months of maturity. Agricultural purposes include the use of the soil for planting seed, raising and harvesting crops, and the seasonal feeding and management of live stock. In general, agricultural purposes would include the requirements for the seasonal operation of the farm. P A P E R S E C U R E D B Y U N IT E D S T A T E S S E C U R IT IE S Notes secured by United States securities are eli gible for rediscount if within ninety days of maturity. G EN ER AL CLASSES OF IN E LIG IB L E PA PE R 1. 1. 3. 4. Demand notes not having a fixed maturity. Loans for investment purposes (except notes or bonds of the United States). Paper arising out of speculative transactions. Paper for fixed or permanent improvements. 5. Agricultural paper with a maturity of over six months and commercial paper with a maturity over 90 days at time of rediscount. 6. Non-negotiable paper.
@FedFRASER