Full text of Business Review (Federal Reserve Bank of Philadelphia) : April 1, 1919

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Business

Conditions in

the Philadelphia Federal
R eserve D istrict
federal

reserve

bank

OF PHILADELPHIA

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April I, 1919

r T l H E declines in prices of raw materials and manufactured
I
articles during the past few weeks have improved the business
situation, and indicate that progress is being made in the
process of readjustment.
Retail sales are showing continued growth, and as far as can
be foreseen, the outlook promises to be good for some time to come.
Distributors of women’s wearing apparel report difficulties in se­
curing merchandise. Most of the desired goods are made by
women, and this class of labor is very hard to obtain. Should these
conditions clear up, a tremendous spring business is expected. Col­
lections are reported as remarkably good.
Manufacturers of men’s shirts report satisfactory orders, and
are laying plans for largely increased business for the fall season.

Automobiles

Trade conditions in the passenger automobile
business are not only extremely encouraging as
to prospects, but actual sales and deliveries are greater than ever
known at this time of the year. Ordinarily, during the winter
months, dealers feel fortunate to make a small profit or to break
even, but since the middle of October there has been a continuous
and profitable business. Collections have been exceptionally
prompt, and it is interesting to note that dealers have been asked
to take fewer notes from car buyers than at any time during the
past two years. One distributor of a popular medium-priced car




reports that the demands for the car are far in excess of the
ability to supply it.

Coal

Coal production, which, during the month of February,
was at a very low ebb, is now showing some increase.
Bituminous production in the central Pennsylvania fields is still
only at about 60 per cent, of capacity, due in a very large measure
to the lack of a market. Scarcity of labor no longer plays an impor­
tant part; the problem now is to keep available labor employed.
The lack of demand is proving a source of trouble to the operators.
In the anthracite trade the unnatural and unusual policy is being
pursued, in the face of decreased buying and increasing supplies, of
raising prices, in the hope of stimulating (?) buyers.

Cotton

Conditions are still very much unsettled with the mills,
especially those having Government contracts on their
books. The delay in settling some of these contracts has caused
some unrest, and there is also some complaint about the slow pay­
ments made by the Government for goods already delivered or on
which cancellation has been effected. Generally speaking, there
seems to be a better feeling in the cotton trade than has existed
for some time, and improvement is expected. The South still has
a large portion of this year’s cotton crop unsold, and there is a
strong tendency on the part of growers to hold for higher prices.
It is expected that the terms of the Peace Conference will provide
for an early ending of the blockades which will mean additional
outlets for American cotton. Present conditions in the cotton piece
goods market are unsettled, but the feeling is that prices have
reached a point where improvement can be looked for.

Furniture

Furniture manufacturers say that collections are very
good and that new business seems to be very much
easier to get. The demand for talking machings and other articles
of luxury in the furniture line is exceedingly large. Manufacturers
continue to complain about the difficulties of securing skilled work­
men.

Groceries

Retail grocers are buying from hand to mouth, and
wholesalers report business very dull. The large
stocks of goods on hand have resulted in sharp declines in prices,
due to lack of demand. Export business in evaporated and canned
fruits is very active. Cereals have declined sharply. There is some
apprehension as to what disposition the. Government will finally
make of its surplus stocks.




Iron and steel

Conditions in the iron and steel industry up to
a short time ago were very dull and new orders
few. This was due to the uncertainty as to the stability of prices.
Buyers felt there should be further reductions and declined to place
orders. Since the establishment of the revised schedule of prices
buyers are manifesting much greater interest and the long-deferred
buying movement is expected to soon be under way. Steel men
also complain about slow collections, due to the delay on the
part of the Government in adjusting and settling its war contracts.
Manufacturers of machine tools report business as being very dull,
but this is only what was expected to follow the cessation of hos­
tilities.

Jewelry

The demand for jewelry continues to be brisk. Many
of the finer articles are noticeably scarce, and prices are
rising as a result, but customers seem willing to pay the new prices.
The outlook is deemed favorable, and the heavier taxes on jewelry
are not expected to have a harmful effect on the business.

Leather

Business has been very good and prices have held
firm, due to the strong demand. As the European mar­
ket becomes more accessible, following the return of peace, demand
is expected to be even better, as export trade will be greatly stimu­
lated. Supplies of leather, especially of the finer grades, are becom­
ing scarce. The feeling seems uniform that prices of finished leath­
ers are no higher than they should be, based on the replacement
cost of hides, and there appears to be no immediate prospect of
any marked declines in leather goods.

Paints, etc.

Demand for paints, and materials used in their
composition, has not been up to normal, due to the
expectation that prices would drop. As the spring advances, it is
felt that an increased demand will be very noticeable. Very little
linseed oil has been sold, as paint manufacturers and oil cloth and
linoleum manufacturers are not calling for the usual amount re­
quired at this season of the year. As the upkeep of properties was
very generally neglected during the war, it is anticipated that the
demand for lead, oil and all articles required in the manufacture
of paint will be unprecedented, as structures generally throughout
the country are said to require repainting.

Resorts

There have been unusually large crowds in Atlantic
City the past two months, weather conditions being
very favorable, and the large beach-front hotels have been filled.




The war imposed upon everyone a large amount of work, and dur­
ing the past two summers people did not take their customary va­
cations. The community wants a relaxation from the strain caused
by war conditions, and present indications point to an extraordinary
exodus during summer months to various seashore and mountain
resorts, despite the high income taxes.

Rubber goods

Rubber products, such as rubbers, raincoats,
etc., have not been in as good demand as usual,
due to the very mild winter.

Automobile tires have been in brisk demand, the business being
helped by the open winter. The outlook is for a brisk business
during the coming season, especially in the agricultural and farm­
ing districts of the W est and South.

Shoes

Generally speaking, manufacturers are busy. Orders for
fall delivery are being placed freely, and a good season is
expected. Prices are not expected to go lower, due to the limited
amount of raw material available, high cost of labor, and the
European demands, which are expected to be augmented as condi­
tions become more settled there.

Textiles

Slow, but steady, improvement is shown in knit-goods,
buying having been stimulated to some extent by the
fact that the closing down of many mills and the operating of many
others on part time threatened a scarcity in some lines. Jobbers
manifest more confidence, as it becomes apparent that retail busi­
ness now is approximately normal. Further reductions in prices
are expected, but on account of the present cost of materials and
labor, they are not expected to be drastic.
There is a good demand for novelties and specialties, notably
in sweater coats. There has been moderate buying for next fall, but
this has been retarded to some extent by the mild winter, making
it appear that merchants feel they will have a possible carry-over
of heavy weights. A stronger demand for hosiery and underwear
has developed, some manufacturers selling in good volume, and
there is increasing interest in the domestic market. As to the re­
mainder of the year, the outlook is more promising that at any time
since the signing of the armistice.

W ool and woolens

The course of prices at the recent auction
sales of Government wool, indicate that
the values established are based upon an immediate and urgent de­




mand from the mills to cover orders already booked. Within the
past fortnight a big business has been placed with the mills.
A very large manufacturer of woolens reports that business is
running ahead of last year, and that their customers all over the
country seem to be very busy and look forward to the future with
confidence.

Financial

From inquiries made of commercial paper dealers as
to the results shown by statements covering last
year’s business, we learn that in a large number of cases, the state­
ments show reduced inventories, as the result of drastic liquida­
tions, in order to avoid heavy losses in a falling market. For this
reason, borrowings have been light and concerns are using their
brokers and their banks much less than is usual at this time of
year. Quite satisfactory profits were realized in the majority of
instances, and very few cases of a decrease in net worth are re­
corded. Due to a careful pricing of inventory and heavy deprecia­
tion charges on merchandise, plants and machinery, the profits
shown are not as large as the actual results.
There has been no change in money market conditions in the
district. Borrowings at the Reserve Bank have been large, total
loans and investment operations in February amounting to $643,150,000, compared to $683,722,000 the previous month. In Feb­
ruary, 322 member banks were accommodated through the discount
of paper, compared with 351 in January.




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STATEM ENT SHOWING THE PRINCIPAL RESOURCE
AND LIABILITY ITEMS OF MEMBER BANKS
IN PHILADELPHIA, SCRANTON,
CAMDEN AND WILMINGTON

At the dote of bosiaeu
Mar. 14, 1 W

Feb. 1 4 . » »

(In thousands of dollars; l. e.
000's omitted)

Number of banks reporting.................................

56

56

United States bonds to secure circulation........

$11,597

$11,497

Other United States bonds, including Liberty
bonds .............................................................

38,010

44,904

United States certificates of indebtedness........

140,744

113,187

Total United States securities owned ..

190,351

169,588

Loans secured by United States bonds and
certificates ................................................

142,916

147,033

All other loans and investments.....................

614,739

620,808

Total loans and investments...................

948,006

937,429

Reserve with Federal Reserve Bank.................

67,219

62,289

Cash in vault.........................................................

19,400

19,650

Net demand deposits on which reserve is
computed .......................................................

666,588

631,872

Time deposits .......................................................

21,822

21,316

Government d ep osits...........................................

48,681

43,513




STATEMENT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA
March 17, 1919

RESOURCES

Previous month

Year ago

r e s e r v e .........................

$127,817,471

$132,954,981

$141,402,155

Legal tender, silver, e t c .. .

270,294

362,303

667,446

128,087,765

133,317,284

142,069,601

169,965,103

173,938,888

15,991,888

1 1,462,529

13,892,312

9,969,934

Gold

T o ta l

....

r e se rv e

Bills discounted— members.
Secured by Governm ent
war o b lig a tio n s ..........
All other ..........................
Bills bought in open market

1,777,063

2,409,783

18,437,843

United States securities. . .

15,164,900

12,665,400

1 1,497,900

T o t a l e a rn in g asse ts

198,369,595

202,906,383

55,897,565

12,629,315

7,307,305

3,797,080

643,735

350,145

Mutilated and fit notes on
hand:
Federal reserve n o te s ..
Federal
Due

reserve

bank

from other Federal
reserve b a n k s .............

1,758,993

Due from depositary banks
— war loan deposit ac78,251,900

63,956,375

Uncollected i t e m s ...............

84,395,107

69,051,267

All other r e s o u r c e s ............

2,356,051

2,005,491

1,222,164

504,733,468

47 8,894,250

24 4,94 4,22 7

7,577,400

7,472,900

6,863,900

2,608,344

1,304,172

Government deposits . . . .

12,397,741

8,975,347

4,341,421

Due to members— reserve
account ........................

1 10,097,018

101,407,519

87,995,951

Collection i t e m s .................

55,210,771

56,755,674

33,956,789

177,705,530

167,138,540

126,294,161

T o ta l r e s o u r c e s . . .

40 ,198,824

LIABILITIES
Capital paid in ......................

Profit and lo s s ......................

T o ta l g r o ss d e p o sits

220,238

Government deposits— spe82,828,137

67,480,017

Federal reserve notes out­
standing ......................

218,569,400

22 1,675,275

Federal reserve bank notes
ou tsta n d in g .................

13,460,000

1 1,088,000

All other liabilities..............

1,984,657

2,735,346

665,848

504,733,468

478,894,250

24 4,94 4,22 7

T o t a l lia b ilitie s




. . .

110,900,080

BUSINESS INDICATORS
Percentage increase or decrease
compared with

March 17, 1919

Previous month
Philadelphia banks:
Loans ........................................................
Deposits ...................................................
Ratio of loans to deposits....................

Year ago

$7 77,767,000
664,061,000
117%

+2
+3
* 1 17

+34
+ 5
*91

Discounts and collateral loa n s..........
Cash reserve............................................
Ninety-day discount rate......................

181,427,000
42 %
434 %

— 3
*41

+ 600
*74

Commercial paper ra te .............................

5 / 2%

Federal Reserve Bank:

*434

* 4 '/2

*5|/2

*6

Percentage inci ease or decrease
cotnpar ed with

February, 1919

Previous month

Year ago

Bank clearings:
In Philadelphia.........................................
Elsewhere in district.............................

$1,457,1 13,000
88,787,000

— 20
— 21

+ 19
+ 4

T o t a l ......................................................

$1 ,545 ,9 00 ,0 00

— 20

+ 18

$1,140,685
1,049,778

+67

+93

26

*41

*78

+3

-r 2

— 2

-

Port o f Philadelphia:
Exports .....................................................
Im p o r t s ......................................................
Building permits, Philadelphia...............
Postoffice receipts, Philadelphia............
Commercial failures in district (per
Bradstreet’ s) ..........................................
Com m odity prices:
Annalist, March 1 5 ................................
Dun’ s, March 1 .
Bradstreet’ s, March 1...........................

291.794
$17.2244

+4

!

+

* Actual figures.

The purpose of this bulletin is to provide member banks
and the business community in general with a brief monthly
review of prevailing business conditions in this particular Federal
Reserve District.




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