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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 REPO RT O F BUSINESS C O N D IT IO N S IN T H E S E VE N TH FEDER AL RESERVE D IS T R IC T N O VE M B ER 25, 1919 Compiled November 22, 1919 While business continues active in most lines of production throughout the Seventh Federal Reserve District, there is reflected here and there, especially in the metal trades, the effect of the interference with the steel industry by the strike. Many manufacturers either report that their supply of steel is running low, thus restricting operation, or is so depleted as to bring plant operations to a standstill. In the basic industry, however, the steel mills are gradually increasing operation notwithstanding the strike, until in some instances they are approaching capacity. Another factor which is causing apprehension is the coal strike. While this has been officially called off, the miners are not yet working to any appreciable extent in the Middle West. This has made a serious inroad in the fuel supply. The available supply of coal is only sufficient to meet the requirements of a very few weeks. Money is in Strong Demand Money is in strong demand in all parts of the Middle West. This is reflected clearly in the volume of rediscounts and borrowings by the member banks of the Federal Reserve Bank. Assurances from bankers point to the liquidation of these loans the first of the new year when the cattle now being fed and grain still being held on the farms can be moved conveniently. This applies more especially to Iowa which is the heaviest of the cattle feeding States in the Seventh District. Wisconsin is expected to clean up its produce around January 1. The general outlook in the district, therefore, is for an easing up in money as soon as the seasonal demand is cared for, especially if the pressure from the Federal Reserve Board has the desired effect of releasing money employed in speculation. Rates on prime bankers’ acceptances recently advanced slightly both as to rediscount and brokers’ purchases. High Living Cost Still Troublesome Factor Living costs continue to be the embarrassing feature in the industrial situation, and the recession in certain prices which is still moderate is already finding its reflection in the situation in the agricultural districts. Farmers seem to be somewhat worried over the fact that what they have for sale must be disposed of at lower prices while what they have to buy must be obtained at higher prices, the latter condition being attributed by them to the persistent demand of labor for shorter hours, curtailing production, and for higher wages. Even labor on the farms is demanding a much higher wage and shorter hours and necessarily this, if persisted in, means a cut in the plan of production to a point where it can be cared for by the farmer without the employment of outside labor. Land Activity Halts but Financing Problem Remains High prices obtained for farm lands in Iowa and in sections of Illinois are resulting in the curtailment of activity in the movement of land and in some instances there has been a slight reaction in values. The problem of financing this land activity and speculation continues, as the settlement under land contracts already in existence falls around the first of March next year. The enhancement in rentals in Iowa has also been a factor in checking the rise in farm lands, many farmers in sisting upon a rental basis approximately 100 per cent greater than in previous years. Even at the present range of produce prices it is held impossible to show a farm income justifying some of the extravagant prices which purchasers have contracted to pay for farm acres. Correspondents generally are inclined to condemn land speculation as a source of public peril. Wage Earners Continue to Spend Lavishly ■Wage earners continue to be lavish in their expenditures and this is spreading to the clerical forces as well as those employed in factories, according to advices from merchants. The demand from these classes is for the more expensive fabrics and the desire for pretty things is so insistent as to result in the sacrifice of savings and even Liberty Bond in vestments in many instances. The tendency away from thrift is indicated further by the fact that the highest priced merchandise is not always the most serviceable, as for instance hosiery, waists and goods of that character. Retail Price Recession is Stubborn Careful surveys of food prices by official and private investigators reveal little change in the cost of subsistence compared with previous months. Heavy receipts of cattle and hogs have brought down the prices of meat rations for careful buyers who are shrewd enough to take advantage of the wide range for different grades and qualities of indentical food value. Beef quotations at the Union Stock Yards range from $5.50 to $21.00 at the present writing. This “ spread” indicates the difference between lean and ill-favored starvelings at the $5.50 end and the corn-fed aristocrat of the herd at the other. Translated into local prices at the butcher shop, this “ range” means pot roasts quoted all the way from 15 to 28 cents a pound, rib roasts from 11 to 38 cents a pound and porterhouse steaks from 22 cents to 60 cents a pound, according to the neighborhood served and the number of slow accounts carried on the butcher’s books. The taste is the same. Ignore Opportunities for Buying Cheaper One striking feature in the investigation of the trend in living costs is the disposition on the part of buyers to ignore opportunities to curtail living costs and to demand increased service and the choicest food rations. The investigation clearly indicates that the spread between maximum and minimum quotations at the present time is about 6 per cent greater than that of a year ago, whereas the maximum price on most of those commodities is approximately the same or only slightly lower. This is the price the public is paying for convenience and service. Food specialists agree that the persistent high cost of subsistence is mainly due to the refusal of the public to buy merchandise on a net basis, without “ ornamental packages” and expensive “ service.” Rolled oats are obtainable in bulk at 6 cents a pound but only boarding house keepers will buy them. The housewife insists on a decorated carton and a familiar name, paying a high premium for equivalent food value. Store costs and “ overhead” formerly figured at 20 to 22 per cent have gone up with the rise in rents and wages and the decline in efficiency. Stocks are broken and supplies hard to replace, hence retailers try to protect themselves by “ taking all the traffic will bear” regardless of the wholesale market fluctuations favoring the consumer. How Live Stock Receipts and Prices Compare The receipts of cattle during the month of October at the principal markets, compared with the corresponding months of the previous year, show an increase of 6 per cent, calves an increase of 19 per cent and sheep an increase of 7 per cent, while for the first ten months of 1919 receipts of cattle decreased 7 per cent compared with the corresponding period of the previous year. Calves increased 2 per cent and sheep increased 24 per cent. The average price for choice cattle for October, 1919, wTas $19.05 per hundredweight, against $19.58 the previous October, while common cattle brought $16.15 in October, compared with $14.48 the corresponding month of 1918. The average price for sheep and lambs in October last was $8.06 and $15.06 per hundredweight respectively, compared with $10.46 and $15.38 the corresponding month of the previous year. The average price for beef and mutton in October was $14.70 per hundred weight for beef, $10.21 per hundredweight for mutton and $23.13 for lambs, compared with $16.60 for beef, $13.49 for mutton and $21.46 for lambs in the corresponding month of 1918. The receipts of hogs in October at the principal markets of the Middle West show a sharp falling off compared with a year ago, the total for last October being 1,357,585 head, compared with 1,694,609 in October 1918. The trend of prices in October in live hogs and their products for Chicago only shows an average of $14.80 compared with $17.76 a year ago. Cash lard ranged from $26.75 to $27.50 in October, compared with $25.00 to $27,123^ a year ago. Cash ribs ranged from $18.50 to $19.50 in October, 1919, compared with $20.25 to $23.70 a year ago. How Prices Vary in the Same Neighborhood There is a wide difference between the wholesale price, or the price at which the retailer buys, and the price at which the consumer purchases his rations, both in meats and groceries. Investigations show that bacon is quoted between 28 and 50 cents, according to where you buy and the brand you specify. Lamb chops bring 38 cents at one shop and another nearby offers the same specifications at 20 cents. One large packer reports $13.87 per hundred as the average price of all beef carcasses sold for the week ending November 15. The price wTas $20.91 for the same item April 28, to May 3, 1919. This is a decline of 33 per cent. The decline is not translated into correspondingly cheaper stews and steaks for the people. Waste added and the “ percentage on” prorated over the various cuts, the prices charged over the counter for choice domestic pieces remain very high. Beans are very much cheaper, canned and dry alike being quoted a fifth lower than during the war. The pork that goes with beans is lower by the difference between $22.50 and $25.50 a year ago, and $16 and $22 now. But this advantage is only for the few who are willing to buy provisions with discretion. New pack canned goods are in. The quality is high and prices are yielding. Only in the fruit department is the price level being maintained or advanced. High sugar and the great drought last summer virtually stopped domestic canning operations. The “ preserve shelf” is empty and more housekeepers will have to buy tinned peaches, at 55 cents a can, or higher, for what they bought two years ago at 28 cents. Big city jobbers agree that canned foods are on the edge of a drop, with fruit and tomatoes excepted. What Quoted Market Prices Reveal Based on bona fide sales daily in the open market at Chicago, the following table represents the actual change in “ high” and “ low” prices for standard qualities in jobbing and dealers’ original packages: OFFICIAL PRICES TO RETAILERS— N O V. 12 1918 $10.50 $11.35 10.00 Pea beans, 100 Lbs..... .......... . 9.50 13.50 Kidney beans.......................... . 13.00 .33 Cheese (Domestic varieties).. . .35 .47 .46 Cheese, Swiss No. 1............... . .37 .38 Cheese. Swiss No. 2___ ...____ . 25.50 Dressed hogs........................... . 22.50 .53 .56 Eggs (ordinary first) D o z ..... . 1919 $12.00 $13.60 7.50 '8.00 11.00 11.50 .30 .33 .47 .48 .35 .36 16 00 22.00 .58 .56 1918— -N O V . 12, 1919. 191S . $0.22 Sweet potatoes (Bbls.)______ . '4.50 Baldwin apples (Bbls.).......... . 5.00 Oranges (California) Box........ 9.50 Cabbage (100 Lbs.)................ . 1.00 Green and wax beans_______ . 1.00 Onions (100 Lbs.). ................ . 2.50 Butter, 90 score.................... . .55 $0.23 '4.75 5.25 12.00 1.25 3.50 2.75 .58 1919 $0.28 4.25 8.50 5.00 2.00 1.00 4.25 .59 4.50 9.00 6.00 2.25 4.00 5.00 .62 On this selection of staples averaging the “ price range” at each date without arbitrary “ weighting” for quantities consumed, it appears that retailers have been buying at a saving of 6.6 per cent compared with a year ago. Small consumers have not enjoyed a corresponding decrease in prices at the store counter. How Retail Prices Compare Over the District From a questionnaire sent to the retail grocery trade of the Seventh District, comparing prices of forty-three staple food items as of September 15, October 15 and November 5, 1919, we deduce a decline of 7 3^ per cent for the months September 15—October 15. But for the period from October 15 to November 5, the advance was 10.8 per cent. Actual retail prices for standard qualities and brands show an advance of 34 per cent between the week of May 3-10, 1917 and the week ending November 14, 1919. Following is the price comparison for a selected list of common necessaries of the larder: ACTUAL RETAIL PRICES 1917 May 3-9 1919 November 14 $0.13 $0.17 .22 .28 .14 .30 .60 .70 .14 .14 .49 Flour (Minneapolis brands) Bbl............................................ 3.69 .95 .43 .25 .23 1.39 .059 .29 Onions, lb. ................................ .25 Standard brand soaps, per bar... .04 Pot roast, lb. ......................... .18 Rib roast, lb................................ .21 1.10 .05 ___ 3.40 1.48 .76 .30 .25 2.05 .04 .60 .075 .35 .075 .15 .15 3.70 1.50 .08 .28 .28 1917 May 3-9 . $0.24 .24 .20 .22 Red and Lima beans, can....... .. .125 Prunes............ ........................... .10 .12 .. .25 Corn flakes__*........................... .10 .09 _ .28 .08 Bitter chocolate .32 Salmon...................................... .28 Evaporated m ilk ..................... .13 .15 Fresh trout................... ........... .. .18 Cheese....................................... .29 1919 November 14 $0.26 $0.32 .38 .25 .30 .15 .20 .25 .35 .45 .14 .18 .55 .12 .50 .38 .15 .17 .25 .60 Potatoes Prove to be a Troublesome Factor One of the most troublesome items in the pantry list of the average housewife is potatoes. Retail prices range from 3 to 4 cents a pound against V /i to 2 cents a pound at wholesale. The official price range to retailers, Chicago Produce Exchange record, follows: POTATO RANGE PER 100 LBS. January 1 1919..... ....................................... $1.75 $1.85 2.15 1918............................................. 1.85 November 15 $2.25 $2.45 1.60 1.85 January 1 1917................ ................................$1.60 $1.95 1916.............. ...................................... 80 1.00 November 15 $1.70 $2.40 1.40 1.85 The advance this year to date is 30 per cent. Cabbage prices, also, are very obstinate, causing much discomfort to those of humble incomes. Apples, the one fruit necessity, become an unobtainable luxury to the ordinary wage earner at $10 a barrel wholesale for Jonathans and $8.50 to $9.00 for the plebeian Baldwins. How Bank Investments and Loans Compare There has been a general decrease in the holdings of government securities owned by representative banks in the district. The 44 selected member banks in Chicago show a decrease of $63,451,000 between August 22 and November 7, while the 12 selected Detroit banks show a decrease of $4,377,000, and the 44 selected banks in other clearing house cities show a slight decrease. Total loans secured by government securities decreased $4,189,000 in the 44 selected Chicago banks, $953,000 in the 12 selected Detroit banks, and $429,000 in the 44 selected banks in other large cities. Loans secured by stocks and bonds other than government securities increased $22,708,000 in the 44 Chicago selected banks between August 22 and November 7, while this item increased $15,126,000 in the 12 selected Detroit banks. There was a decrease of $5,807,000 in the selected banks in other clearing house cities. Bank exchanges at the Chicago Clearing House for the first eighteen days of November aggregate $1,614,649,000, an increase of $378,317,000 compared with a year ago, while exchanges at twenty-two of the leading clearing houses of the Seventh Federal Reserve District aggregated $485,554,600, an increase of $147,817,000 compared with a year ago SELECTED M E M B E R BANK STATISTICS— SEVEN TH DISTRICT (000’s omitted) Chicago ------ 44 Member Banks-----Jan. 3 Oct. 10 Nov. 7 Loans— Secured by U. S. war obligations..$61,160 Loans secured by stocks and bonds other than U. S. securities...... All other loans and investments... .846,008 Reserve Balance with Federal Reserve Banks.......................... . ..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 Detroit ------ 12 Member Banks-----Jan. 3 Oct. 10 Nov. 7 Other ------ 44 Member Banks-----Jan. 3 Oct. 10 Nov. 7 $75,786 $66,542 $ 8,720 $10,529 $11,372 $13,420 $14,668 $14,258 248,423 698,206 278,031 714,002 *244,085 41,407 273,522 42,105 276,058 280,939 38,334 295,492 37,111 300,061 119,616 39,619 122,921 39,270 21,886 13,821 27,919 14,723 27,607 15,879 25,241 15,811 27,893 13,927 27,150 14,642 862,499 172,051 29,353 904,086 176,238 18,042 162,048 155,896 13,964 211,892 183,525 6,141 211,330 187,616 3,140 209,707 89,211 6,189 231,043 106,490 7.519 231,453 104,857 4.809 37,852 23,769 40,252 22,974 12,154 412 17,590 4,016 30,825 2,252 18,380 16,191 21,419 1 9,754 29,103 11,562 includes Loans secured by stocks and bonds other than U. S. securities. CROP ESTIM A T E S FOR FEDERAL RESERVE D ISTRICT N O . 7 (CHICAGO) Government estimates on the principal crops in the States of Illinois, Indiana, Iowa, Michigan and Wisconsin, excluding those counties which are not in the Seventh Federal Reserve District, compare as follows: Crop Corn Acreage 1919 Acres .24,178,000 Forecast of Production Based on Condition November 1, 1919 Bushels 921,410,000 Acreage 1918 Production 1918 Acres 35,345,000 Bushels 695,130,000 NOTE— No new estimates were made in November for wheat, oats, rye and barley. RECEIPTS AN D SH IP M E N T S OF IM P O R T A N T C O M M O D IT IE S AT CH ICAGO (000’s omitted) Flour, barrels............................................. Wheat, bushels.......................................... Corn, bushels..... ....................................... Oats, bushels.............................................. Cured Meats, pounds............................... Fresh Meats, pounds................................ Lard, pounds.............................................. Cheese, pounds.......................................... Butter, pounds..... ..................................... Eggs, cases.. ............................................ Potatoes, bushels....................................... Hides, pounds............................................ Lumber, thousand feet............................. ----------------Shipments-----------— September— —October— 1919 1918 1919 1918 652 597 790 553 15,440 10,228 5,507 3,484 2,857 2,603 3,076 5,084 6,506 8,730 7,863 6,914 100,097 66,371 104,012 94,557 175,611 171,870 113,058 153,490 55,980 50,636 22,137 55,686 41,025 5,368 24,333 6,361 40,540 16,981 25,126 20,486 219 284 379 369 680 446 1,432 1,854 33,839 27,939 16,502 8,906 93 68 95 70 ----------------Receipts---------------—September— — October— 1919 1918 1919 1918 1,074 1,190 995 919 4,872 9,191 6,279 20,218 4,802 11,550 7,554 9,530 10,942 8,940 11,417 9,385 10,160 16,895 11,413 22,439 67,095 77,829 128,424 101,389 6,230 7,260 7,232 8,320 20,523 17,156 22,384 18,399 24,497 21,916 22,731 21,134 320 240 337 236 1,877 3,600 2,889 1,611 14,309 10,874 11,115 16,863 171 208 130 205 Receipts of live stock at the Chicago market during the four weeks ended November 15, compared with the cor responding period of 1918, are as follows: 1919_______ ______________________ ___________________________________ 1918......................................................................._............................................ Increase *Decrease Cattle 389,086 363,258 Calves 61,952 38,285 Hogs 656,115 750,563 Sheep 647,251 518,089 25,828 23,285 *94,448 129,162 CO M PARATIVE STATISTICS OF BUILDING AND EN GINEERIN G OPERATION S Contracts awarded in States north of the Ohio and east of the Missouri Rivers, from January 1, to November 1, 1919. 1919........ $2,111,452,000 1918_________________________ 1,501,596,000 1917__________________ 1,433,092,000 1916....................... $1,121,616,397 1915................................................ 769,173,100 1914................................................ 632,462,200 1913............................................ $743,758,000 1912............. 743,331,500 1911............................................ 667,433,813 1910.......................................... 694,007,066 Contracts awarded in Seventh Federal Reserve District States—Illinois, Indiana, Iowa, Michigan and Wisconsin — also Northern Missouri and Eastern Kansas. 1919____ 1918....... 1917....... $749,120,000 389,965,000 548,787,000 1916................. $381,021,897 1915.................................................. 249,414,600 1914.................................................. 182,120,700 1913________________________ $158,373,000 1912.......................................... 152,748,000 1911_________________ 117,557,313 1910............................................ 170,497,066 NOTE— Building areconstruction statistics compiled by the P. W. Dodge Co. BUILDING PER M ITS OF SEVEN TH FEDERAL RESERVE DISTRICT CITIES Illinois — October, 1919— No. of Estimated Buildings Cost Aurora_____________________________________________________ 17 Chicago..................................... 758 Danville..... ........................................................................................ 7 86 Decatur.___________________ Peoria______________________________________________________ 69 Springfield............................................................. 68 Indiana Fort WayneL.............. 76 Indianapolis............. 711 Richmond.... ...................................................................................... 25 South BentL— .... ............................................................................ 295 Terre Haute................................................................ 68 $ — October, 1918— No. of Estimated Buildings Cost 31,625 16,948,050 25,400 318,650 498,220 673,050 19 119 1 17 31 20 330,042 1,576,890 84,700 507,281 149,615 9 Per Cent Gain PerCent Loss 19.016 1,312,200 3,400 58,875 38,970 6,240 66 1191 647 441 1181 10686 ....... ....... ....... ....... ....... ....... 34 395 18 80 59 37,150 191,902 60,000 23,126 26,840 788 721 41 2093 457 ____ ....... ....... ....... 14 19 38 18,000 16,950 127,600 866 4336 339 ....... ....... 8 25,900 1480 ....... Iowa Cedar Rapids.................................................................................... Davenport......................... Des Moines......................... 84 95 126 Sioux City....................................... 173 174,000 751,915 559,960 45,009 409,250 Michigan Bay City_________ 61 Detroit____________________________________________________ 2,561 Grand Rapids.______________________________________________ 179 Jackson.___________ 104 Lansing_______________________ 217 Saginaw________________________ 217 338,450 9,448,585 425,082 194,630 396,535 1,181,214 13 509 69 32 19 77 21,065 1,431,080 28,374 18,398 7,635 38,768 1506 560 1398 959 5095 2947 ....... ....... ....... ....... ....... ____ Wisconsin Madison........................................................................................... Milwaukee....................... 228,440 3,470,083 4 106 4,500 268,468 4976 1192 ....... ____ 49 479