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I BUSINESS AND FIN A N C IA L | CONDITIONS j THIRD FEDERAL PHILADELPHIA IN THE j s RESERVE DISTRICT AUGUST 1, 1921 By RICHARD L. AUSTIN, Federal Reserve Agent and Chairman FEDERAL RESERVE BANK of PHILADELPHIA G E N E R A L SU M M A R Y B U SIN ESS during Ju ly was overtaken by the usual midsummer lethargy, and no out standing development caused it to deviate to any appreciable extent from the listless, drift ing course which it assumed after the active buying movement of late January and February had spent its force. As a result, the relative po sitions of the more important industries in the Third Federal Reserve District remain unchanged, liquidation continues, and definite improvement in the situation as a whole is still lacking. Some encouragement is to be found, however, in conditions in the shoe and leather trade, and in certain of the textile lines. The finer grades of upper leathers, especially colored and black kid and calf, are in active demand, and the market at this time is oversold. The export call for these goods, too, is better. But sole leathers and lower grade uppers are being moved in only limited quantities. Manufacturers of high grade shoes for women report the receipt of large-sized orders for fall and winter delivery, and several plants are booked to capacity until October and No vember. The poorer quality shoes, however, are being disposed of only with great difficulty, price shading is being resorted to continually, and the actual demand is so small that operations are being curtailed. Of the textiles, silk is making the best showing in this district. The figures indicating the con sumption of silk in June were higher than those for any month since the readjustment period in the industry began early last year. Orders already booked and still being booked are of very satisfactory size, the raw silk market displays conservative strength, and the posi- TABLE OF CONTENTS PA G E N U M BER Agriculture........................... ............ Automobiles......................... ............ Bankers’ acceptances........ ............ Building materials............... ............ Carpets and ru gs............... ............ Cement................................... ............ Coal, anthracite................. ............ Coal, bituminous................. ............ Coke ........................................ ............ Commercial paper................. ............ Cotton, raw........... Cotton, yarns....................... ............ 33 16 11 18 25 19 17 17 18 10 22 22 23 PA G E NU M BER Financial conditions....................... . . Foreign exchange........................... . . General summary........................... Groceries, wholesale....................... .. Hardware......................................... .. Hides and skins............................... . . Hosiery.............................................. . . Iron and steel................................. . . Leather.............................................. . Lumber............................................. . . Paper ................................................ . Paper Boxes................................... . 7 11 1 29 20 23 24 15 26 19 19 27 29 PA G E NU M BER Pottery..................................... ........... Retail trade........................... .......... Savings deposits................... .......... Shoes......................................... .......... Silk........................................... .......... Sugar......................................... .......... Tobacco, cigars....................... .......... Tobacco, leaf........................... .......... Underwear............................... .......... Wool, cloth ............................. .......... Wool, raw ............................... ........... Wool and worsted yarns . .. . .......... 20 13 10 25 23 29 35 35 24 21 22 21 2 BUSINESS AND F I N A N C I A L C O N D I T I O N S tion of the industry as a whole is distinctly favorable. Seasonable cotton fabrics are in good spot demand, but the volume of fall orders is still small. A most favorable factor in the current cotton situation is the increase in exports. The call from the Orient for heavy cotton fabrics is steadily improving, and this has given a decidedly optimistic tone to the markets. The woolen cloth industry is busily engaged in producing materials for autumn delivery to fill orders now on hand, but the volume of fall busi ness being placed at this time is small. There is considerable activity in summer woolens for spot delivery. It is still impossible for the knit goods industry to meet the demand for full-fashioned hosiery, owing to the continuation of the strike in Philadelphia mills, and the importation of Ger man hosiery of this type is being resorted to in order to meet the shortage that has resulted. The business being transacted in underwear is limited, and a large portion of fall orders still remains to be placed. Owing to the lack of in terest in heavy weight underwear on the part of jobbers, manufacturers have delayed the opening of the spring 1922 lines. The foregoing summary may seem to indicate that textiles, as a group, are enjoying a fair amount of activity, but it is of interest to note that, in the main, orders received are for im mediate or for early deliveries, and that all pur chasers are extremely cautious in making com mitments calling for future shipment. In sharp contrast with conditions in the leather and textile trades are those in the basic industries. The iron and steel business con tinues in the throes of deep depression, and signs of recovery are few. During the month, the Steel Corporation, although not calling it such, instituted a reduction in wages by elimi nating the extra compensation for overtime work, and also made its second formal price revision. But as the newly announced level had already prevailed in the markets for some time, the expected interest failed to develop. Steel prices today are 80 per cent under the war peak, but are still 50 per cent above the ten-year pre war average; and the latter fact is pointed to by the trade as one of the controlling causes for the absence of demand. Sales are few and small in size, and as a result the industry is operating at 20 per cent of capacity, the lowest per cent in its history. The coal industry, too, experienced a decidedly sluggish market during Ju ly, and present condi tions are far from favorable. With the settle ment of the British strike and the resultant can cellations, with the accumulations of large stocks at Lake ports, caused by the lack of demand from the Northwest, and with the absence of contract buying, there is little to engender enthusiasm in the bituminous coal situation. However, Secre tary Hoover has counselled public utilities to purchase coal at this time, because he believes there is a possibility that with a large percentage of their equipment unfit for use, the railroads will be unable to handle coal shipments in volume if an active demand develops in the fall. This is expected to have some immediate effect in in creasing demand. Little activity was displayed in the market for anthracite coal during July, and the situation, if anything, was poorer than that which existed in June. As there is practi cally no demand for steam sizes, these are being stored at the mines by the companies having facilities for the purpose; but the independents, who for the most part lack such accommodations, have found it necessary to dispose of them at any price obtainable. That the consumer has bought domestic sizes to a larger extent than is com monly supposed, is evidenced by the fact that one and one-quarter million tons more were shipped during the first three months of the present coal year, which began April 1, than were shipped in the same period of 1920. This, coupled with the fact that the storage capacity of dealers is inadequate to handle this excess, leads to the belief that fairly large supplies have been laid in for domestic purposes. At the pres ent time, however, the market is dull and few sales are reported. Although building activity was slightly greater in Ju ly than in June, the demand for building materials showed no in1' provement. Sales of paper were so small during the month as to force the closing of several mills and the curtailment of operations in others. xAnd this was true despite the fact that, with the return of many of the strikers, printing plants were BUSINESS AND F I N A N C I A L C O N D I T I O N S able to catch up on delayed work. No demand for paper arose from this source because, while printing plants are well occupied in filling back orders, the volume of new business being placed is small, owing to the belief that prices have not yet been thoroughly readjusted. The agricultural situation is far from bright. The recent exces sively hot weather and the resultant drought have worked havoc with the fruits and certain other crops, especially in New Jersey and Dela 3 ware, and the total yield is expected to be small. The accompanying table, which is a compila tion of 496 replies to a questionnaire on labor conditions, gives a fair picture of industrial ac tivity in this district. It will be seen that the total number of men on the payrolls of the re porting firms on June 30 of this year was 29.9 per cent less than the number employed on the same date of 1920, and 6.7 per cent less than the number on January 1 of this year, a time when T A B U L A T E D S T A T IS T IC S ON E M P L O Y M E N T CONDITIO NS IN T H E T H IR D F E D E R A L R E S E R V E D IS T R IC T As obtained from 496 questionnaires 668 1,539 221 1,385 313 2,240 7,344 453 5,626 2,900 6,049 488 1,959 1,813 721 1,349 1,269 52,924 23,833 742 3,201 2,401 1,618 1,496 2,797 3,421 4,576 8,839 3,685 12,498 5,037 186 3,419 498 167,508 Lumber.................. Paints..................... Paper..................... . Pottery................... Printing and pub lishing............... . Public utilities. . .. Rubber.................... Silk......................... Tobacco. ,j .............. Underwear........... . Wool...................... Otherwise unclassi __ fied..................... T o ta l............. £_- P ercen tag e of in c re a se o r decrease in n u m b e r o f em ployees fo r Ja n . 1, 1921, as co m p ared w ith Jan . 1, 1920 Ju n e 30, 1920 + -3% + 12.7% + 16.9% +25.9% + 6.1% + 7.9% + 9.3% + 1.1% - 6.9% -19.1% - 3.2% + 4.9% - .6% + 2.5% -11.6% 1 .0 % -13.8% + 16.6% ' + -8% + 4.8% -22.0% - 5.3% - 6.3% -13.0% + 2.9% + 5.1% - 9.6% + 10.8% + 11.2% - 8.9% + 9.3% -15.8% -21.4% —11.1% +3.3% 599 1,024 151 816 275 795 4,846 457 6,060 2,653 4,691 328 1,288 1,553 213 1,190 816 34,826 16,062 589 1,547 1,498 1,489 860 2,584 2,712 4,733 8,672 2,125 \ 10,397 6,162 189 3,075 540 125,815 -10.1% -25.0% -20.1% -25.8% - 6.8% -61.7% -27.9% + 2.0% + -2% -26.0% -25.0% -29.5% -34.7% -12.2% -73.9% -12.7% -44.6% -23.3% -32.1% -16.8% -62.3% -40.9% -13.8% -50.0% - 5.0% -16.7% - 6.5% + 8.7% -35.9% -24.2% +33.8% -14.5% -29.3% - 3.6% -22.4% " u c —O * — • - Q.~> CL— - Z“ -10.3% -33.5% -31.7% -41.1% -12.1% -64.5% -34.0% + -9% + 7.7% - 8.5% -22.4% -32.8% -34.3% -14.3% -70.5% -11.8% -35.7% -34.2% -32.6% -20.6% -51.7% -37.6% - 8.0% -42.5% - 7.6% -20.7% + 3.4% - 1-9% -42.3% -16.8% +22.3% + 1.6% -10.1% +8.4% -24.9% CO u m b er o f e oyees J u n e 1921 666 1,365 189 1,100 295 2,076 6,718 448 6,046 3,585 6,252 465 1,971 1,768 816 1,363 1,472 45,392 23,653 708 4,103 2,536 1,727 1,720 2,719 3,254 5,062 7,979 3,315 13,724 4,607 221 4,352 560 162, Z& i 2 £ c E5 u m b er o f e doyees J a n . 1921 N u m b er o f e ploy ees Tune 1920 5 21 3 12 3 18 11 4 11 10 20 5 13 6 3 8 6 60 63 3 23 20 13 8 14 IS 17 16 8 28 16 9 23 1 496 z Automobiles.......... Boxes—paper........ Boxes—wooden. . . B rick....................... Caps and clothing. Carpets and ru gs. Cement................. . Chemicals............... C oal......................... Confect’onery. Cotton..................... Fertilizers............... Furniture................ Gas and electric fix tures.................... G lass........................ Hardware............... H osiery................... Iron and steel........ Iron and steel prod ucts.................... . Lace....................... . Leather................. . Leather—shoes Eg u m b er o f e doyees Ja n . 1920 INDUSTRY £-t u m b e ro f fir re p o rtin g i ircen tag e o f :ase or decre; num ber of e oyees fo r Je , 1929, CO red w ith J 1920 ’ Table no. 1 645 1,154 128 953 323 1,024 6,153 417 5,327 2,636 6,177 350 1,290 1,285 426 940 1,622 24,179 12,660 749 2,632 2,300 1,426 838 2,714 2,634 3,481 8,412 2,148 12,726 4,609 171 4,426 493 117,448 Z'a. P erce n ta g e o f in crease o r d ecrease in n u m b e r o f em ploy ees on J u n e 30, 1921, as co m pared w ith J a n . 1, J u n e 30, J a n . 1, 1920 1920 1921 - 3.2% -15.5% -32.3% -13.4% + 9.5% -50.7% - 8.4% - 6.9% -1L 9% -26.5% - 1-2% -24.7% -34.6% -27.3% -47.8% -31.0% + 10.2% -46.7% -46.5% + 5.8% -35.9% - 9.3% -17.4% -51.3% - -2% -19.1% -31.2% + 5.4% -35.2% - 7.3% + .04% -22.6% + 1-7% -12.0% -27.6% - 3.4% -25.0% 42.1% -31.2% + 3.2% -54.3% -16.2% - 7.9% - 5.3% - 9.1% + 2.1% -28.3% -34.2% -29.1% -40.9% -30.3% +27.8% -54.3% -46.9% + .9% -17.8% - +2% -H .9 % -44.0% - 3.0% -23.0% -23.9% - 4.8% -41.7% + 1.8% - 8.5% - 8.1% +29.5% - i.o% -29.9% + 7.7% + 12.7% -15.2% + 16.8% + 17.5% +28.8% +27.0% - 8.8% -12.1% - -6% +31.7% + 6.7% + -2% -17.3% + 100.0% -21.0% +98.8% -30.6% -21.2% +27.2% +70.1% +53.5% - 4.2% - 2.6% + 5.0% - 2.9% -26.5% - 3.0% + Ll% +22.4% -25.2% — 9.5% +43.9% - 8.7% - 6.7% 4 BUSINESS AND F I N A N C I A L C ON D IT I O N S operations were at a decidedly low ebb. An analysis of the table discloses the fact that the iron and steel, printing and publishing, and to bacco industries account for the greater propor tion of this decrease. The textile groups show an increase in manufacturing activity, as measured by the number of employees. The totals, how ever, which disclose an increase in unemploy ment, are substantiated by the figures of the Pennsylvania State Department of Labor. That bureau estimated the number of unemployed in Altoona, Harrisburg, Johnstown, Philadelphia, Scranton and Williamsport, on Ju ly 15, as 204,260; on January 1, 1921, as 81,344; and on March 3 1, 190,265. The second table compiled from the labor questionnaire gives the time dur ing which the men on the payrolls were actually at work, based upon detailed information given by 415 firms. It is of interest to note that the metal trades, which showed the greatest decrease T A B U L A T E D ST A T IS T IC S ON E M P L O Y M E N T CO NDITIO NS IN T H E T H IR D F E D E R A L R E S E R V E D IS T R IC T As obtained from 415 questionnaires Table no. 2 T E X T IL E S Caps and clothing. Carpets and rugs. . Cotton................... Hosiery.................. Lace....................... Silk......................... Underwear............ Wool...................... Totals................ (Number of workers who were employed on June 30, 1921, divided according to hours of employment.) Full tim e M ore th a n L ess th a n h a lf tim e h a lf tim e N u m b er o f firm s re p o rtin g T o ta l 303 492 5,161 4,528 622 12,629 98 3,142 23,976 20 71 767 53 119 83 66 110 1,289 0 323 13 576 111 6,039 15 1,596 749 8 20 12,733 5 169 0 3,252 172 25,437 3 7 18 4 3 25 8 20 88 Iron and steel. . . . 5,867 Iron and steel products............ 4,861 Automobiles.......... 641 Hardware.............. 638 Totals................ 12,007 9,894 3,973 4 284 14,155 4,636 20,397 2,341 11,175 645 0 14 936 6,991 33,153 48 56 5 7 116 Brick...................... 791 Cement.................. . 4,887 Gas and electric fixtures.............. 1,094 131 91 161 M ETALS B U IL D IN G M A T E R IA L S 31 20 5 953 4,998 1.260 11 9 5 B U IL D IN G M A T E R IA L S th a n Less th a n Fu ll tim e Mh ore a lf tim e h a lf tim e Glass....................... 356 Lumber.................. 1,346 344 8,818 M IS C E L L A N E O U S Boxes—paper....... Chemicals.............. Coal........................ Confectionery Fertilizer................ Furniture.............. Leather—shoes. . . Potterv.................. Printing and pub lishing................ Public utilities.. . . Rubber.................. Tobacco................. Totals................ 818 83 438 3,235 1,979 215 606 2,416 1,769 687 3,023 8,274 1,228 1,745 26,516 42 6 34 465 192 23 126 1,197 570 135 408 99 407 652 363 95 377 2,455 7,099 T o ta l N u m b er o f firm s rep o rtin g 3 12 426 1,383 402 9,422 47 24 1,034 22 128 8 572 485 4,917 19 2,568 0 350 26 1,040 7 2,522 0 2,176 1,295 2,634 95 3,481 43 8,412 194 1,799 0 4,200 2,218 35,833 17 3 5 8 7 5 11 22 18 15 17 16 7 13 164 28 31 24 139 7 . G RA N D SU M M A R Y Textiles............................................................. Metals............................................................... Building materials.......................................... Miscellaneous.................................................. Grand total............................................. Full tim e M ore th a n h a lf tim e N u m b er o f P ercentage em ployees o f to ta l N u m b er o f P ercentage em ployees o f to ta l 23,976 12,€07 8,818 26,516 71,317 94.2% 36.2% 93.6% 74.0% 68.7% 1,289 14,155 465 7,099 23,008 5.1% 42.7% 4.9% 19.8% 22.1% L ess th a n h a lf tim e N u m b e r o f P erce n ta g e em ploy ees o f to ta l 172 6,991 139 2,218 9,520 •7% 21.1% 1.5% 6.2% 9.2% T o ta l N u m b er o f firm s rep o rtin g 25,437 33,153 9,422 35,833 103,845 88 116 47 164 415 | BUSINESS AND F I N A N C I A L C O N D I T I O N S in the number of workers, employed only 36.2 per cent of them at full time, 42.7 per cent at more than half-time, and 2 1.1 per cent at less than half-time. The textile industries were able to give full employment to 94.2 per cent of their workers, and only a fraction of one per cent were engaged at less than half-time. Labor conditions, in general, show little change since last month. The strikes in the full-fashioned hosiery and carpet and rug industries continue, and there are few signs of early settlement. Carpet and rug manu facturers report that a few of their old employ ees have returned to work under open shop conditions, and that the places of those who re fuse to return are being slowly filled. The strike in the allied trades, which was nominally settled by the return of carpenters on Ju ly 22, was hav ing little effect on the building situation prior to that time, owing to the general inactivity in building operations. But the strike in the ho siery industry has interfered and still is seriously interfering with production. Hosiery manu facturers, however, declare that they are deter mined to put into effect the 15 per cent wage reduction which caused the controversy, and that they will not operate their plants on any other basis. The situation in the printing and publish ing industry was partially cleared by the aban doning of the strike by one of the two Philadelphia pressmen’s unions, and by the return of the press feeders. Compositors, however, are still on strike. Commercial failures in this Federal Reserve district, as reported by R. G. Dun and Company, continue to increase. There were 71 failures in with liabilities of $1,939,408, as compared with 69 in May, with liabilities of $1,516,894. Although the actual business situation showed no improvement during July, there were political developments which should influence the business °utlook favorably, the more important of these being the tabling of the Bonus Bill, the accept ance by the foreign powers of President Harding’s mvitation to a conference on disarmament and ‘ar Eastern problems, the definite steps which Were taken to adjust the Irish difficulties, the Slgning of the resolution declaring peace with Germany, and the commencement of negotia tions leading to the early consummation of a formal treaty between the two countries. June, 5 A study of wholesale commodity quotations shows that prices are becoming stabilized. The following table gives the index numbers com piled by Bradstreet’s, Dun’s, and the Bureau of Labor Statistics for the months of November, 1919 to June, 1921, inclusive: B ra d stre e t’s 1919—Dec. 1920—Jan. Feb. Mar. Apr. May June July Aug. 1................ 1 ................ 1................ 1 ................ 1................ 1................ 1 ........ 1................ 1................ Sept. 1................ Oct. 1 ................ Nov. 1 ................ Dec. 1 ................ 1921—Jan. 1 ................ Feb. 1 ................ Mar. 1................ Apr. 1................ May 1 ................ June 1................ July 1 ................ 20.1756 20.3638 20.8690 20.7950 20.7124 20.7341 19.8752 19.3528 18.8273 17.9746 16.9094 15.6750 13.6263 12.6631 12.3689 11.8650 11.3749 10.8208 10.6169 10.7284 D u n ’s 244.639 247.394 253.748 253.016 257.901 263.332 262.149 260.414 252.288 248.257 237.341 227.188 211.628 198.600 185.822 181.921 174.404 166.658 165.995 159.833 B ureau o f L ab o r S tatistic s 230 238 248 249 253 265 272 269 262 250 242 225 207 189 177 167 152 154 151 148 It will be seen that in recent months the rate of decline has been much slower in the indexes of both Dun and the Bureau of Labor Statistics, but that the Bradstreet number of Ju ly 1 showed an increase. This is especially significant in view of the fact that, whereas the Bradstreet number showed a decline from the post-war peak, on March 1 of last year, the Dun index continued to rise until June 1, and that of the Bureau of Labor Statistics until Ju ly 1. Since the con tinued drop of prices has been in so large a measure responsible for business inactivity, the recent signs of stabilization are especially en couraging. FIN A N C IA L CONDITIONS U R IN G the month the Federal Reserve Bank of Philadelphia improved its ratio of reserves to total deposits and Federal Reserve notes in circulation, decreased its loans to member banks, and decreased the number of Federal Re serve notes in circulation. The reporting mem ber banks of the district curtailed their borrow- 6 BUSINESS AND F I N A N C I A L C O N D I T I O N S Compiled as of July B u sin ess SYN O PSIS OF B U SIN E SS SITU A TIO N Third Federal Reserve District 21, 1921 D emand | Agriculture........................... Good Automobiles......................... Fair Carpets and rugs................ Fair ! Cement................................. Coal, anthracite ................ Coal, bituminous................ ! Coke..................................... ' Cotton goods....................... | Cotton yarns....................... 1 Cotton, raw......................... Groceries ............................. Hardware............................. Hosiery, seamless, cotton. . “ “ silk . .. . Hosiery, full-fashioned. . .. Iron and steel..................... , Leather, upper.................... Leather, heavy................... Lumber................................. Paint..................................... Paper ................................... Paper boxes......................... Pottery................................. Shoes..................................... Silk....................................... Sugar..................................... Tobacco and cigars............. Underwear, heavy weight. . Underwear, light weight . . Wool cloth............................ Wool yarns........................... Wool, raw............................. Good Poor Poor Poor Fair Low Poor Slightly better Fair Moderate Good Excellent Poor Good Improved Fair Slightly less Small Small Fair Good Good Improved Improved Poor Moderate Steady Fair Poor P rices Low but firm Lower R a w m a t e r ia l or m er c h a n d ise situ atio n Plentiful—lower Steady to higher Plentiful Firm Slightly higher Lower Lower Steady Steady Lower Lower Lower Lower Firm Firm Lower Firm Firm Steadier Firm Lower Lower Steady Firm Firm Firmer Steady Lower Steady Firm Firm Steady Easily obtainable Easily obtainable Plentiful Plentiful Plentiful Easily obtainable Easily obtainable Abundant Sufficient Sufficient Easily obtainable Sufficient Sufficient Easily obtainable Easily obtainable Easily obtainable Easily obtainable Easily obtainable Sufficient Scarce for spot delivery Easily obtainable Scarce in some grades Abundant Abundant Plentiful Plentiful Plentiful C o llectio n s Fair Fair to good Good Fair Poor Fair Fair Fair Fair Fair Good Fair Fair Good Fair Good Good Poor Poor to fair Poor Poorer Poor Good Good Fair Good Fair Fair Fair Poor Good F in ish ed stocks Normal Sufficient Low in Wiltons Normal in others Sufficient Accumulating Large Sufficient Sufficient Sufficient Sufficient Sufficient Sufficient Small Scarce Sufficient Sufficient Abundant Sufficient Sufficient Smaller Normal Sufficient Normal Normal Sufficient Sufficient Sufficient Sufficient Sufficient Sufficient _—A BUSINESS AND F I N A N C I A L C O N D I T I O N S ings from the district reserve bank and reduced their outstanding loans and discounts. Collec tions in the district showed little improvement. Lower rates on commercial paper induced greater offerings. Bankers’ acceptances, on the contrary, declined in both volume and rates in comparison with the preceding month. In the country as a whole the twelve Federal Reserve banks increased their total reserves, de creased their loans to member banks and their Federal Reserve notes in circulation, and in creased their reserve ratio. In the latter part of June, one of the banks whose rate of per cent had applied to all classes of paper except that collateraled by war paper, which enjoyed a 6 per cent rate, changed to a flat 6 per cent rate for all classes; and on Ju ly 20, four banks reduced their rates for all classes of paper from 6 to per cent. The general tendency among more than 8oo reporting member banks was to reduce their 7 loans and discounts and to curtail their borrow ings from the Federal Reserve banks. Interest rates have been somewhat easier, although call rates have at times been higher. The bond mar ket has shown an upward trend. The stock mar ket also has moved upward, with the rails leading the industrials. The volume of new securities floated during the first six months of the year was much smaller than it was in 1920, and this is an eloquent bit of testimony as to what has hap pened to profits in industry. Similar testimony is furnished by the figures pertaining to business failures and banking suspensions, which are very much higher than the corresponding figures for 1920. The fiscal situation may be judged to be better by the fact that the Government intends to retire $132,000,000 of Treasury certificates outright rather than refund them, and by the fact also that operations with the sinking fund, to re tire our public debt, have exceeded requirements. 8 BUSINESS AND F I N A N C I A L C O N D I T I O N S In England, too, there are unmistakable signs of easing financial conditions. The bank rate was lowered early in the month from to 6 per cent and on Ju ly 21 it was further reduced to 5 ^ per cent; and the Bank of England increased its reserve ratio one-quarter of one per cent. The volume of currency notes outstanding was de creased. The rate of interest on British treasury bills was lowered to 5 per cent, and market rates for commercial paper were also reduced. The stock and bond markets tended upward, the move ment in bonds being more pronounced. As in this country, new security issues fell sharply, and business failures rose sharply, in comparison with 1920. Although the first quarter of the current fiscal year showed a deficit in government receipts which gave rise to a greater volume of treasury bills outstanding, it is expected that according to the provisions of the budget, this deficit will be cancelled later on. The Bank of France slightly increased its re serves and its loans to borrowers, and decreased its notes in circulation. The failure of the Banque Industrielle de Chine, which, it is reported, the government refused to aid, might be regarded as clearing the banking situation of some deadwood and as a step in the necessary process of liquida tion. The fact that the French budget for 1922, recently submitted to the French Chamber, will come within two and a half billion francs of bal ancing, is, comparatively speaking, a good sign. It is not all that could be desired, but it is at least an improvement over all other post-war budgets. In Germany, the note circulation stands at the highest point yet reported. Loans to borrowers, however, have decreased somewhat, for industry is slowing down there as it is elsewhere. Foreign exchange rates have moved downward. It is probable that this reflects a seasonal trend rather than a worse economic situation. BUSINESS AND F I N A NC I A L C O N D I T I O N S In the light of this review, financial conditions of the past month seem to be following the same trend and telling the same general story—with exceptions and some diverse tendencies, of course, —both in Europe and America. And conditions in this district are in alignment with the general trend. Because borrowers are gradually paying off old loans and are asking for a smaller volume of new loans, the position of the banks has gradually been growing stronger, as is reflected by their higher reserve ratios, by their increased re serve holdings, and by their declining volume of loans in comparison with their deposits. The reduction of some of its rates by the Dallas bank, whose reserve ratio is just a little above the legal minimum, indicated a desire to ease the strained credit situation in that district. In spite of the bank’s low reserve position, this move was possible in view of the ease with which the bank can borrow from the stronger banks of the system. The reduction of discount rates by the Boston, New York, Phi’adelphia and San Francisco banks is a natural result of their increasing y strong po sition; these banks have for some time headed the list as to reserve strength, Boston standing first, New York second, Philadelphia fourth, and San Francisco fifth. Third place is held by Cleveland. This lowering of discount rates in districts of great financial and industrial prominence may be considered as an important step. Lower dis count rates ordinarily mean lower interest rates, °t at least more money available at the old rate. Lower interest rates, or more money available at the old rate, ordinarily means that those firms undergoing a process of readjustment find the strain a little relaxed, and that those in a position to continue or increase their activity can do so at a lower cost. This lowering of discount rates, casing of interest rates, and improvement in the condition of the banks are perhaps the most en couraging features of the entire situation. They are all the more so when taken in conjunction with fiscal conditions, which seem to be shaping themselves for considerable improvement in the future. ; The most significant feature of all, however, is the decline in profits that is taking place. That profits are being very greatly reduced may be scen in almost any financial report that has been 9 issued recently, as well as in the increase in busi ness mortality, the decline in stock values, and the falling off in the issue of new securities. This decline in profits has been caused, for the most part, by high costs of production, by prices that instead of keeping in advance of costs ceased to j rise and finally fell, thus wiping out the margin j between cost and selling price, and by a shrink I ing volume of trade. The high costs of produc tion were due mainly to high prices of materials, high wages, high overhead charges, and high cost of money. Insofar as high costs still obtain they are due to the same causes in varying degrees of importance. It is true that in certain indus tries wages and prices of materials have dec ined substantially, and that in some localities inter est rates and perhaps even overhead charges are ! lower. But still there are important instances of j wages being maintained at a high level by wage I agreements, important instances of high prices of materials, of overhead charges fixed at high fig ures by contract, and finally, of high interest rates on large amounts of capital borrowed when the boom was at its height. Because of this lagging tendency of overhead charges, wages, and interest rates to undergo adjustment, costs of production have not kept pace with the declines in volume of trade and selling prices, and the result has been that profits were, and are, being drastically cut down. As security values are based largely on earning power, investors have been revising their estimates of security values. The direc tion of this revision was downward, as was shown by the decided slump in the market last month. Since then, prices reacted and have fluctuated on a little higher level, indicating either: (i) influence of easier money; or, (2) re action from a downward revision of values more severe than was warranted; (3) an increasingly bright future outlook as to profits; or (4) a com bination of them. It is significant to note, how ever, that, both on the slump and on the recent reaction, those securities of proven earning power have fared best. Promoters and others have not been as much attracted by prospects of making profits in business as they were last year, as is evidenced by the decline in the volume of new securities offered. Thus it will be seen that the inability to produce at low costs and to sell at low 10 BUSINESS AND F I N A N C I A L C O N D I T I O N S prices with a profit, is one of the chief factors of the present industrial situation, and one that must be solved before any substantial recovery is possible. It is for this reason chiefly that our foreign trade question is of such grave concern. Present industrial conditions will not be reme died by readjusting some elements of our indus trial organization and leaving others unadjusted. Finance, of course, is only one of the elements of that organization; but it is the one which seems to have shown the most improvement and to be more nearly in a position to resume normal opera tions. Moreover, the lower prices are, the easier it is to finance a given volume of business. It is safe to assume, then, that when prices reach, or approach, the bottom, the banks ought to be able easily to finance any revival in business. S a v in g s D e p o s it s A further decrease in deposits during June was reported by 24 savings banks in this district. The figures are: Ju ly 1, 1921— $305,514,366; June 1, 19 21—$306,931,038; Ju ly 1, 1920—$291,799,640. This was the fourth consecutive month of this de cline, the fall from the peak of March 1 being $4,487,000, or 1.5 per cent. During the first three months deposits declined both in the Phila delphia and outside banks, but in June there was a slight increase outside of Philadelphia which was counterbalanced by a larger decrease in that city. In Philadelphia 1921— July June May April March 1 9 2 0 — July 1 ....... 1 ....... 1 . ... . 1 ....... 1 ....... 1 ....... Outside Philadelphia Totals $ 2 5 2 ,7 1 6 ,9 5 3 $ 5 2 ,7 9 7 ,4 1 3 $ 3 0 5 ,5 1 4 ,3 6 6 2 5 4 ,1 6 9 ,8 0 1 5 2 ,7 6 1 ,2 3 7 3 0 6 ,9 3 1 ,0 3 8 2 5 5 ,3 1 7 ,1 8 1 5 2 ,9 0 2 ,3 7 5 3 0 8 ,2 1 9 ,5 5 6 2 5 6 ,3 3 5 ,6 4 1 5 3 ,0 6 6 ,7 3 3 3 0 9 ,4 0 2 ,3 7 4 2 5 6 ,9 0 1 ,3 5 9 5 3 ,1 0 0 ,4 2 9 3 1 0 ,0 0 1 ,7 8 8 2 4 1 ,6 2 3 ,1 3 5 5 0 ,1 7 6 ,5 0 5 2 9 1 ,7 9 9 ,6 4 0 C o m m e r c ia l P a p e r Sales of commercial paper in this district show an increase over last month. Since the beginning of Ju ly there has been a larger amount of money available for purchases of this kind, according to the dealers, not so apparent in Philadelphia as in the outlying cities and towns. Lower money rates and better business in some lines have brought a number of names into the market in the past few weeks that have not been offered for some time past, materially increasing the volume of paper offered. The accompanying chart of the commercial paper outstandings of eleven dealers was prepared from data furnished by the Federal Reserve Bank of New York. This chart covers a period from Ju ly 3 1, 1918, to the end of June, 1921. The peak of the out standings was reached on January 3 1, 1920, with a total of $1,157,000,000. From that point there was an almost steady decline to $684,000,000 at the end of June, or 41 per cent. Recent offering sheets of the dealers contain a large number of names of firms handling or manu facturing shoes, groceries, dry goods, leather and meat products, as well as retail merchandising con cerns. Names that have sold at 6 per cent are increasing, but the recent sales generally average 6jY and 6^2 per cent. C o m m e r c ia l Pa p e r OiJDTAiiDinG Eleven Dealers MILLICrO DOLLARS 1100 1000 900 600 700 MIUI0H5 V 600 500 400 300 200 100 0 — 1916 1919 1920 1921 DOllAjd 1100 1000! 900 800! 7001 600 500! 4001 300 200' 100: 0 BUSINESS AND F I N A N C I A L C O N D I T I O N S 11 B a n k e r s’ A cceptances A further decline during June in the sale of bankers’ acceptances has been reported by deal ers. Five dealers had sales totaling $6,355,000 in June, as compared with $13,185,000 in May, a decrease of 53 per cent. As a result of the decline in foreign trade, the volume of prime bankers’ bills is not large, and demand is in excess of sup ply. Import and export transactions in sugar, cotton, wool, silk, and grain are the principal sources of acceptances lately. Twelve member banks in this Reserve district show a smaller amount of their own acceptances' outstanding on July 10 than on June 10, although they report a small increase in the amount executed during the last month. Comparative figures for these banks are given below: Executed during Outstanding on preceding month date given 19 2 1 — March 1 0 ...................................... April 1 0 ...................................... May 1 0 ...................................... June 1 0 ...................................... July 1 0 ...................................... 1 5 ,3 2 5 ,0 0 0 4 .5 5 8 .0 0 0 5 .6 1 1 .0 0 0 2 .7 9 5 .0 0 0 3 .1 2 1 .0 0 0 £ 1 4 ,1 2 7 ,0 0 0 1 3 .2 3 4 .0 0 0 1 2 .8 9 2 .0 0 0 1 0 .7 9 8 .0 0 0 9 ,2 8 6 ,0 0 0 National banks were empowered to accept by the Federal Reserve Act, but did not make active use of this privilege until 1916 and 1917. Data which appear in the Comptroller’s call reports, though not very recent, show the trend clearly. "The highest amount of acceptances outstanding °n any call date thus far was $438,430,000 on May 4, 1920. The decline since that time has ^en steady—$431,198,000 on June 30, 1920; $375>4I6,ooo on December 29, 1920; $345,644,°oo on February 2 1, 19 2 1; and $287,177,000 on April 28, 1921. Selling rates declined further during the month, lri keeping with the general lowering of money rates Comparative rates for eligible members’ bil!s follow: Maturity July 30 days.... days.. 90days. 5 V s-A % 5 X -'A % 5 yA-n % 5 H -A % 60 6 m onths June May April SK-X% 5 A - H % 5 A -H % 5 1 4 -6 % 5 t t - 3A % 5 A -H % 5H -X % FO REIGN EXCH ANGE HE past few weeks have witnessed violent and, in many cases, perplexing fluctuations in for eign exchange rates. Although many partial re coveries have been recorded, the general trend of practically all foreign currencies has been toward lower levels since the high quotations recorded last May. This tendency has been especially marked in the case of European rates, sterling, guilders and lire leading the reaction. Pounds sterling were quoted on Ju ly 25 at $3.57 as com pared with $4.00 on M ay 20, the high point of the year. This was a net loss of 10.8 per cent. Guil ders dropped from 36.30 cents on M ay 14 t 0 3 1.11 cents on Ju ly 25, a decline of 14.3 per cent. The changes in Scandinavian rates have been equally pronounced, Swedish and Norwegian crowns fall ing respectively from 23.80 cents and 16.10 cents on M ay 20 to 20.35 cents and 12.96 cents on Ju ly 25. Marks and pesetas have also declined, but the latter rate fell much less violently than the other Continental currencies. Marks fell from 1.84 cents on M ay 13 to 1.27 on Ju ly 25, a net loss of .57 cents or 31 per cent. Pesetas lost only 1.23 cents during the same period, declining from 14.01 on M ay 2 to 12.78 on Ju ly 25. The factors that affect foreign exchange rates are so many and various that the reasons for the recent erratic fluctuations are rather obscure, especially since bankers report only a small vol ume of bills coming on to the market. It is prob able, however, that the negotiations leading to the fixing of the German indemnity and the subse quent payment of a portion of this sum in dollar exchange had a considerable influence upon the exchange market. European allied rates rose steadily during the first part of the year and reached their high quotations in the latter part of M ay, immediately preceding the initial payment on the reparations account. Immediately follow ing this payment the dollar rose steadily in value, and this is attributed to the fact that the first payment was required to be made in dollars, which necessitated large purchases of dollar credits for German account through Holland and England. T 12 BUSINESS AND F I N A N C I A L C O N D I T I O N S The accompanying chart shows the bewildering fluctuations which have characterized the Ger man, French, Italian and English rates during the past two years and, in fact, since the declaration of war nearly seven years ago. Although only the rates on currencies of the principal belligerents are given, the fluctuations in other foreign cur rencies have been equally erratic. It will be seen that, although these currencies have depreciated al most continuously during, and subsequent to, the war, the depreciation has been most severe during 1 920 and 1921. The war demands of the belliger ents upon the United States, together with the depreciation of their currencies and the termina tion of international gold shipments, led to an almost immediate decline in the dollar value of their currencies. Without the stabilization af forded by gold shipments, these currencies fluctu ated widely and to the detriment of international trade. The British Government immediately took steps to correct this condition by “ pegging” the rate of exchange between England, France and the United States. This was accomplished by establishing dollar credits in this country for the purchase of a sufficient amount of the current offerings to keep the rates approximately stabil ized. This method, which was later practiced by the Italian Government, was successful in steady ing the rates at what was known as the “ war par.” During this period— from October, 1915, to April, 1919— the British and French rates fluctuated only moderately, remaining at discounts of 2 and 10 per cent respectively from the gold par of ex change. Likewise, the Italian rate was stabilized at a discount of 18 per cent, from August, 1918, to April, 1919. Quotations on Berlin were, of course, discontinued from the time we entered the war until April, 1919. During the latter month, however, the Allied Governments removed this artificial support and F o reig n E xchange: in P P ercent e r c e n t of of P P ar ar ________ m ftRCEflT 110 100 PtRCDF A 110 ( L v i ° 100 \ . __- ____ / 90 o ' A O ^.C W SO TO " T \ i \ \ X OOOOOl too \ o \ o o o %% \\ 0 °-oe----° °9, --------5------o °o \ 0 °o 3 °0 °% \ >o° 60 $ °o° 90 L ondon \ 60 ' 70 \o\ » 60 \ \ 50 O \ Pa r i 5 c> * 50 M il a n 1 ’ o A p J \ % o°o — — —y A-------------------------- l 40 30 \ B e r l in \ 20 \ © o-----OO o A / / 40 30 J 20 \ \ 10 0 ^ 0 Mar 1914 1915 1916 1917 1916 1919 1920 10 ___ 2 June 1921 Sep Dec 0 B USI NE SS AND F I N A N C I A L C O N D I T I O N S these rates plunged rapidly during the ensuing few months to levels very close to those prevailing at the present time. Although fluctuations dur ing the last two years have been quite violent, being unrestrained by artificial influences, they have been seasonal in their character, as is indi cated by the fact that the rise during the summer of 1920, and the subsequent reaction have been virtually duplicated during the present year. These fluctuations are no doubt partly due to changes in trade and financial balances between these countries, but it is doubtful if the extreme and continuous depreciation is entirely attribu table to these causes. The United States is practically the only coun try in the world today which is actually on a gold basis. Hence the value of any foreign currency quoted in dollars represents the actual gold value of the currency in question on the date of the transaction. Evidence of this is seen in the fact that the price of gold on the London market on any day is fixed by the rate of dollar exchange on that day. Consequently the dollar exchange rate is a reflection of the gold values of foreign currencies and therefore an indication of the cur rency inflation which has taken place abroad. It is interesting in this connection to compare the exchange rates between these countries and the United States with the relative commodity prices 'n these various countries and n the United 13 power parity” between the United States and these countries. A comparison of this purchas ing power parity with the exchange rates for the past two years shows a remarkable similarity be tween the two, which leads to the belief that the exchange rate between two countries, in the ab sence of the stabilizing effects of gold shipments, depends very largely upon the commodity values of the two currencies in question. In other words the rate of exchange is a reflection of the inflation, and of the decline in purchasing power, of the cur rency that is quoted at a discount. A return or these rates to the nominal gold par of exchange, in the absence of uncontrolled gold shipment, must be accompanied by a deflation of the cur rency and an elevation of the commodity pur chasing power of these currenc es to a level equiv alent to that of the dollar In fact this deprecia tion, extreme as it is, is not per se, prohibitive to international trade, but the violent fluctuations which have occurred during recent months make legitimate trade between countries extremely haz ardous, as an expected profit on imported or ex ported merchandise may be turned into a loss through a change in the rate of exchange before the payment of the account. Some stabilization of rates even at the present low levels would be preferable to such violent and unpredictable fluc tuations as are occurring constantly. R E T A IL TRADE England..................... F ran ce ... Ita ly .. Germ any................. United States........... In d ex n u m b ers R a tio to U S. index num ber A verage ex ch an g e ra te in per cen t o f p ar 191 328 547 1429 151 79.0 46.0 27.6 10.6 81.4 44.0 27.2 5.3 States. The foregoing table shows the index lumbers for May for the countries whose rates are shown in the chart, compared with the aver s e exchange rates quoted during the month. I he second column was obtained by dividing the United States index number, which is a gold Ptice index number, by each of the other index numbers in turn. This quotient thus represents approximately the commodity value of the dollar ‘n each of the countries listed, or the “ purchasing U N E business in the retail trade as measured in dollars shows a decline, compared with June, 1920, of 7.3 per cent. Last year the sensational reduction sales were still in progress, so that the showing for this year, when it is considered that heavy reductions in prices in nearly all lines have been in progress for the entire twelvemonth, is remarkably good. In the department stores the departments that are showing to the best advantage are those that handle merchandise which, in the minds of the buying public, has passed through a period of thorough liquidation. Fashion and the dimin ished purse of the buyer also play important parts in determining the volume of sales. Gloves are but slightly in vogue, and the two-piece suit has J 14 BUSINESS AND F I N A N C I A L C O N D I T I O N S been superseded by the one-piece dress. Desire and at the same time maintaining high standards to economize has caused a large increase in home of quality, are in a rather better position than the sewing, and the purchase of dress patterns has in average. In the city department stores the sec creased accordingly. For the same reason ging tions where lower priced goods are sold, are re ham has displaced silk as the leading fabric of the ported to be extremely busy. The number of sales in retail business in general has shown a season. In the agricultural and steel and iron producing marked increase, although it is not possible to sections of the district, trade is more restricted give the exact figures. The so-called buyers’ than elsewhere, because of lack of purchasing strike appears to be a thing of the past, but in all power and increase in unemployment. Two cases reported, the sales unit is smaller than it branches of business are especially affected by was in 1920. Buying, both by the retail trade the shortage in houses, namely furniture and and by the public, is marked by conservatism, the chance for an upturn in prices being considered household furnishings. During the past month particular attention has small. Sales of high-class jewelry, measured in dollars, been given to special sales. The store buyers watch eagerly for opportunities to purchase mer are 20 per cent less than they were at this time chandise at especially low prices. This when last year. Since, however, prices are likewise 20 purchased is well advertised and priced sufficient per cent lower, it is clear that the number of sales ly low to attract the public, with the result that a has not fallen off. One feature in which the jew quick turnover is effected. elry business differs from the retail trade in gen Stores handling merchandise of medium price, eral is that collections are poor. R E T A IL T R A D E R E PO R T Third Federal Reserve District January to June, 1921 N e t sales :o m p ared to C u m u lativ e period (Ja n . 1 to end of m o n th n am ed) y e a r ago Sam e m o n th y e a r ago Stocks end o f m o n th com pared to S am e m o n th p ; month y e a r ago S tocks to sales C u m u lativ e period (Ja n . 1 to end of m o n th n am ed ) O u tsta n d in g ord ers to to ta l purchases 1920 1 Firms in Philadelphia: January................................. February................................. March................................... April...................................... Mav................................. June....................................... Firms outside Philadelphia: January................................. February................................. March..................................... j April........................................ May......................................... June......................................... All reporting firms: January................................... February................................. March..................................... April........................................ May......................................... June....................................... +2.9% +3.4% + +% -2 .5 % -8 .8 % -9 -5 % +2.9% +4.4% +2.0% + 1.8% -1 9 % -3 .3 % - -8% -1 1 .6 % -2 0 .4 % —20.5% -1 7 .0 % -1 1 9 % -1 3 .8 % + 4.2% + 5.4% + 1-4% - -5% - -9% 281.8% 314.3% 330.5% 313.5% 314.2% 311.9% 4.4% 7.9 % 7.6% 8.6% 7.5% 8.2% +3.2% +4.7% +4.6% +5.8% —4.8% - -8% +3.2% + 16% +2.1% +3.7% + -7% + 1-9% -1 0 .7 % -1 2 .4 % -1 4 .3 % -1 3 .0 % - 8.2% -1 2 .9 % + + + + - 7.4% 9.4% 7.3% -8% 2.7% +6% 479.2% 508.6% 465.8% 426.4% 447.7% 432.3% 4.8% 6.1% 6.1% 4.9% 5.0% 5.4% +3.0% +3.7% + 1.8% - -4% - 7 .8 % -7 .3 % +3.0% +3.6% +2.0% +2.3% —1.2% — 19% - 4.5% —11.8% -1 9 .0 % -1 8 .7 % —14.9% -1 2 .1 % -1 1 .5 % + 5.5% + 5.9% + 1.3% + -2% - 1-7% 357.5% 365.6% 361.9% 340.4% 346.1% 341.0% 4.5% 7.4% 7.3% 7.8% 7.0% 7.5% BUSINESS AND F I N A N C I A L C O N D I T I O N S 15 turers. Consumers’ stocks have been steadily decreasing during the past months, and no at IRO N AND S T E E L tempt is being made to replenish them. Although ROFOUND stagnation still prevails in the the trade believes the present prices to be as low iron and steel industry,, in spite of substantial as production costs permit, consumers do not price reductions recently announced by the seem to fear advancing prices and hence are buy leading producers. On Ju ly 5, one of the larger ing only as their needs render it necessary. In independents published a new scale of prices for spite of the present apathy in the trade, the ruin standard products, and this action was dupli ous competition and price cutting which prevailed cated a few days later by all the leading inde in previous years are not now in evidence. The pendent companies and by the Steel Corporation. prosperous war years enabled most of the larger Some such formal action had been expected, as manufacturers to entrench themselves strongly the schedule of prices announced April 13 had financially, and the present policy seems to be to been frequently shaded by both the independents shut down their plants or curtail operations rath and the Corporation subsidiaries during the past er than attempt to force their goods upon the few months. That this new level is in no sense a market irrespective of price. Although a few “ stabilization” of prices is evidenced by the fact exceptions to this practice are found among the that even the new prices have recently been smaller companies, it seems to be the policy gen erally followed by the larger producers. shaded by some of the smaller companies. Hence, present production is at a rate not more The following table, showing present prices (as quoted in the Iron Age) of standard products than sufficient to meet current demands and compared with those of last year, is indicative of j manufacturers’ stocks, although very small, are the extent of liquidation which has taken place in j not accumulating, except where the operation of the by-product ovens makes it profitable to con these materials: sume the coke produced by manufacturing pig iron. Many firms report that their plants are Ju ly 12, J u ly 13, Per cent decline 1920 1921 entirely closed down, but the average production throughout the district is probably slightly over 47.1. 348.15 No. 2 X Philadelphia pig iron. . 325.50 20 per cent. Production figures for the month of 54.5 45.00 No. 2 Valley furnace pig iron. . 20.50 June indicate that the industry as a whole is not 46.00 57.5 Basic Valley furnace pig iron. . 19.20 51.6 47.40 Bessemer Pittsburgh pig iron. . 22.96 operating at more than one-fifth of capacity at 45.0 60.00 Bessemer billets, Pittsburgh. . . 35.00 the present time. Pig iron production during 43.9 Open hearth billets, Philadelphia 38.74 69.10 42.6 75.00 Wire rods, Pittsburgh .............. 43.00 June registered another sharp decline from the Iron bars, Philadelphia............. .0215 .0475 54.6 previous month, the total output being 1,064, $33 Steel bars, New York................ .0402 43.3 .0228 Beams, New York .................. .0327 27.2 .0238 tons, or 35,494 tons per day, as compared with .04 Wire nails, Pittsburgh.............. .0275 31.2 1,221,221 tons, or 39,394 tons per day, in May. Plain wire, Pittsburgh.............. .025 .035 28.6 This is the lowest daily average production re Although these prices are from 30 to 60 per cent corded since January, 1908, when production below those of last year and are even greater re declined to 33,918 tons per day, following the ductions from the highest point reached for steel panic of 1907. This did not reflect as serious a products in 1917, they are still 40 to 50 per cent condition as the present, however, for the total capacity of the country was not more than half above the pre-war average. The fact that the new price level failed to stim- what it is now. June witnessed a net decline of ulate additional business shows clearly that the 14 in active blast furnaces, leaving a total of 76 Ptice factor does not dominate the situation, but | furnaces in blast on Ju ly 1, as compared with that consumers simply have no present need of 319 in blast nine months ago. Unfilled orders of the U. S. Steel Corporation these materials. Demand for nearly all lines is j Practically extinct, but some firms report a few j again declined, the total reported on June 30 lnquiries from automobile and oil-tank manufac- j being 5,117,868 tons, a decline of 364,619 tons P 16 BUSINESS AND F I N A N C I A L C O N D I T I O N S from the total of 5,482,487 tons reported on M ay 3 1. This figure represents the eleventh consecu tive monthly decrease from the high total of 11,118,468 tons reported on Ju ly 3 1, 1920. Steel ingot production underwent a similar de cline, the total output for June reported by the American Iron and Steel Institute being 1,003,406 tons, a decline of 262,444 tons from M ay’s total of 1,265,850. Production reports clearly indicate that the iron and steel industry is at the lowest level in its history, when present activities are compared with actual capacity. Declining prices and curtailment of operations have been accompanied by increasing unemploy ment and further wage reductions. All of the large independents announced wage cuts of 10 to 15 per cent when the new price level was an nounced, and the Steel Corporation abrogated the overtime pay for the ten hour and twelve hour day, a change that amounted to a virtual wage reduction of about 10 per cent. Manufacturers of machinery and machine tools report a similar dearth of demand, many letters stating that the present readjustment is the most severe ever experienced by the industry. Wages, prices, and production have shown a like tendency to go lower, but manufacturers’ stocks at present probably are more plentiful than are those ol iron and steel manufacturers. The industry is await ing patiently the revival of demands from the railroads, which is expected to follow improvement in their financial position. Manufacturers of chains, wire and similar prod ucts report a greater activity than exists in iron and steel, but operations and production in gen eral average less than 50 per cent of normal. Credit conditions in the iron and steel and allied industries are generally unchanged, al though some firms report that a few cancellations followed the recent price reduction. Collections, as a rule, are satisfactory, but a tendency to tar diness is still noted on the part of the railroads. AUTOM OBILES H E wave of price cutting in the automobile business, which commenced early in May, has swept through the industry to such an extent T that nearly all makes of cars and trucks have been reduced. Of the ninety large automobile manu facturers in the country, over two-thirds have lowered prices during the present year. These decreases have varied from $25 to $2,000 in amount, and from 5 to 35 per cent from the high quotations of 1920. Although the larger dollar cuts were made in the high priced cars, the more substantial percentage reductions were made in the low and medium priced cars. The average reduction throughout the industry is probably between 10 and 15 per cent. In most cases, the response of purchasers to these changes has been satisfactory, and this is especially noteworthy in view of the marked lack of interest they showed in early spring. Even now a subsidence of this stimulated demand is noticeable, and the midsummer season bids fair to be duller than usual. That greater economy in purchasing is being experienced is evidenced by the relatively better demand for the lower priced cars and for used cars of all types. Motor dealers and hardware dealers report an exceptionally good demand for accessories and parts, which is a further indication that many owners are repair ing and rebuilding their old cars rather than pur chase new ones. The call for trucks, which, of course, is dependent upon the commercial and industrial situation, is very poor, sales averaging about 25 per cent of last year’s volume. Except for the most popular make of low priced cars, which is selling in record quantities, the demand for automobiles has been from 40 per cent to 50 per cent less than that of last year. Producers are watching the market carefully and are endeavoring to prevent accumulation ol cars by holding production very close to the exist ing need. In fact, some producers are so cautious as to run their factories at far less than capacity even in the face of an accumulation of unfilled orders. With the exception of the Ford Com pany, the automobile industry as a whole has probably not averaged more than 50 per cent this year of the amount of its production during the first half of 1920, which, of course, was a record year. In spite of curtailed output and decreased vol ume of sales, many of the larger companies have materially improved their financial position by BUSINESS AND F I N A N C I A L C O N D I T I O N S writing off high priced raw materials purchased last year, and by making greater operating econ omies. Wages have been materially reduced, and raw materials, especially rubber and iron and steel, are obtainable at much lower prices. COAL AND COKE A n t h r a c it e N C R E A SIN G dulness is becoming apparent in the anthracite market as summer advances. Although production still continues at the rate maintained during the spring months, it is evi dent that larger amounts of the domestic sizes are now being stored by dealers than during the early months of the year. Steam sizes continue to move but sluggishly, and practically all of the company output of these sizes is being stored at the mines. The independents, having little stor age capacity, have been forced to sell their steam sizes for what they would bring in competition with bituminous. The contrast between the situation with re spect to steam sizes and that with respect to do mestic is indicated by a report of the Anthracite Bureau of Information, which shows that where as shipments of steam sizes for the first quarter of the present coal year have declined more than 7 5°}ooo tons from the total for the first quarter of the preceding coal year, shipments of domestic sizes exceed last year’s figure by 1,255,000 tons. It is evident from this that domestic consumers have been laying in their winter’s supply in fairly large quantities. Deliveries to New England and totheLakes have not beengreat enough to account for these extra shipments, and dealers’ storage capacities are hardly sufficient to accommodate such amounts of domestic sizes. Retail prices were advanced the usual 10 cents per ton on Ju ly 1, plus an additional 15 cents per ton to pay the new state tax. Steam coals con tinue to be sacrificed by the independents, and recently these operators have reduced the price of their domestic sizes, which is usually a sure indi cation of a sluggish market. I B it u m in o u s 17 disappearance of the two best outlets for bitumi nous coal,— the Lake shipments and the export demand resulting from the British strike. The settlement of this strike and the resumption of mining in Great Britain has resulted in several cancellations of contracts placed during the short age, and in a general lack of future orders. Many dealers still have contracts, however, and current deliveries continue at a fairly good rate. The heavy movements of coal to the Lake ports, however, are slackening considerably, and little interior demand is being felt, as much the same industrial inactivity as exists in the East seems to prevail in the Northwest. In spite of this dull market, receipts of coal at the Lake docks during the present season to June 30 have been 3,788,400 tons, as compared with receipts of only 959,000 tons during the same period of 1920. Local de mand continues to be very dull. The largest orders come from railroads and public utilities, but not even these companies are placing future contracts. The reports of the United States Geological Survey indicate that production is going on at a low rate, averaging less than 1,300,000 tons daily, which is 25 per cent less than last year’s daily average. Firms in this district report declining operations, and many owners are closing their mines entirely during the summer months. Oper ations and output in general do not average more than 60 per cent in this district, and this inactiv ity has resulted in decreased employment. Many mines have released 30 to 50 per cent of their for mer working forces, and wages and working hours also have been reduced. Operators have fre quently been able to lower wages without diffi culty, occasionally even in union fields, by offer ing the alternative of full time employment at a smaller wage, or part time employment at the union scale. The result has been that those operators who reduced the scale of wages have been able to work at a higher rate than those ad hering to the union scale. Many union miners have migrated from the highly unionized dis tricts, where inactivity was great, and accepted the 1917 wage in non-union fields. Collections are still rather slow in the case of The inevitable midsummer dulness in the soft coal trade has been accentuated by the gradual | the railroads. 18 BUSINESS AND FINAN CIAL COND ITION S C oke Beehive coke production has continued its un interrupted declineduring the past month,and the daily average output for the two weeks ending Ju ly 1 6, as reported by the United States Geological Survey, was only 7,000 tons, as compared with a daily average of 8,000 tons for the preceding two weeks. The severity of the present readjustment is apparent from the fact that the present output is only 11.7 per cent of the daily output of 60,000 tons reported in July, 1920. The production of by-product coke for June, as reported by the Geological Survey, was 1,540,000 tons, an amount several times as large as the pro duction of beehive. Inasmuch as the maximum capacity of the nation’s 81 plants is approximate ly 3,510,000 tons per month, it is apparent that the industry is operating at less than 50 per cent of the normal rate. This situation is even more distressing in view of the almost total cessation of beehive coke manufacture. Although demand for beehive coke is con stantly slackening, the by-product output is being largely consumed by blast furnaces operated in conjunction with the ovens, the pig iron being more easily stored than the coke. Prices have changed but little, the price of $2.75 for furnace, and $4.00 for foundry coke, being quite firmly established. As in the iron and steel industry, the price factor alone does not seem to be a deterrent to purchasing; demand seems simply to be entirely lacking. BU ILD IN G M A T E R IA L S LTHOUGH the carpenters in Philadelphia abandoned their strike and returned to work on Ju ly 22, that of other building workers con tinues at this writing. However, the entire building strike for some time past has not been a serious check upon building operations. The volume of construction in this district, during Ju ly, although greater than it was in June, has been so far below normal that contractors have had no difficulty in finding a suffiicient supply of labor. Labor is especially plentiful in the A smaller cities and in the suburbs, and building activities are relatively greater in these districts than in the larger centers. The following table shows the number of per mits issued and the estimated cost of construction in the principal cities of the Third Federal Re serve district for the months of M ay and June, 1921, and for June, 1920: C it ie s Ju n e , 1921 N u m - E stim a te d her cost Ju n e , 1920 M a y , 1921 N u m - E stim a te d N u m - E stim a te d her cost her cost Allentown.. . 68 3207,968 72 3255,450 63 3173,250 Altoona........ 184 243,947 305 172,888 96 32,917 Atlantic City 237 1,096,770 267 111,674 81 71,100 Camden . .. . 114 183,507 86 166,908 97 139,090 Harrisburg. . 45 426,395 49 223,555 48 101,625 Lancaster. . . 33 106,795 67 124,399 36 128,200 Philadelphia. 1,407 4,587,395 1,430 3,569,890 1,213 6,743,015 Reading . . . . 278 297,250 312 367,750 240 261,850 Scranton. . . . 64 206,019 77 131,545 84 87,160 Trenton . .. . 134 149,731 145 645,631 162 430,453 Wilkes Barre 77 94,975 95 140,318 76 52,124 Williamsport 36 63,945 54 89,414 9 14,010 Wilmington.. 84 172,640 94 146,481 135 336,602 York............ 113 38,302 134 98,889 74 172,872 Totals. . . . 2,87437,875,639 3,187 36,244,792 2,414 38,742,268 It will be seen that the June figures show an in crease in the number of permits issued as com pared with the same month of 1920, in spite of a considerable decrease in the estimated cost of construction. Although this is partly a result of decreased building costs, it is probably more largely due to the fact that a relatively greater proportion of the total building permits issued during June were for the construction of houses, garages and other small structures and for repairs and alterations involving a moderate expenditure. A comparison of the totals of the numbers and estimated costs of permits for the cities for the first six months of the years 1920 and 1921 gives even more striking support to this view. During the six months ending June 30, 1921, a total ol 14,895 permits were issued, representing esti mated construction costs of $30,768,876, as com pared with a total of 13,134 permits and an esti mated cost of $57,869,113 during the correspond ing period of 1920. Although these figures are in no sense accurate records of construction com pleted, they serve to give an approximate indica tion of the building situation in this district. In spite of the continued high rents and short BUSINESS AND F I N A N C I A L C O N D I T I O N S age of houses, construction demands seem to await lower freight rates and lower labor costs. Present building costs are between 70 and 75 per cent above those of 1914, and the major portion of this increase is attributable to increased freight rates on building materials and to higher wages. The expectation by builders that these costs will early be reduced, accounts for their hesitancy in expending large sums in an investment of such a permanent nature as a building. A reawakening of demand must result, it is believed, as soon as building costs are approximately stabilized, even if the point of stabilization be considerably above pre-war levels. L um ber 19 of the custom of closing over the Fourth of Ju ly, and stocks are now diminishing. Some small firms report difficulty in securing adequate credit accommodations, particularly for extension of business. Collections are still poor. P a in t The paint market is now in the midst of the period of summer inactivity, which this season is being felt by the trade to a greater extent than for the past few years. Some houses report a volume of sales in June greater than in May, but demand in Ju ly has fallen off. The greater part of present business is being furnished by the retail trade, as the use of paint by individuals this year has been extensive. The corporation demand is small, and j the firms supplying this trade are doing little business. A corporation that would formerly j order one car each of several kinds of paint, now orders one car only, to consist of different grades. | Stocks on hand are normal, and though activi ties are reduced in some cases, they are being maintained at full capacity in others, depending upon the character of the trade supplied. Manu facturers usually continue operating through Ju ly and August in order to accumulate stocks to meet the fall demand. Labor is fairly easy to secure, except that skilled workers are inclined to strike if wages are lowered. Few wage reductions, however, have been made. Prices remain steady at a level 25 per cent be low that of last year. There is some anticipation of a further decline, but no actual cuts have been announced. White lead is quoted at 13 cents as against 15^2 cents last July. The prices for most raw materials are low, particularly of thinners. Linseed oil, however, has recently gone some what higher. Collections are reported variously as being poor to fair. No increase has occurred in the demand for lumber within the past month, and buying is still limited to small orders for immediate needs. The present business in lumber n this district is only from 50 to 60 per cent of normal, and improvement is not expected at this time of the year. The finer grades of hardwood seem to be more in de mand than other lumber. This lack of demand for cheaper grades, as well as local competition, high freight rates and low prices make it unprof itable for firms operating Southern mills to ship these grades to local markets. Freight rates are indeed a dominant factor in the whole lumber situation and are such as to leave on many grades little or no margin of profit. Some reductions in prices on Douglas fir and yellow pine occurred toward the end of June. Definite quotations on lumber are difficult to se cure, as there is a considerable range of prices on each particular grade; but the general level is from 30 to 50 per cent below that of last year. Prices have been steadier recently than they were a few months ago, when the decline was rapid and when many firms were of the opinion that the bottom had been reached. C em ent Stocks have been fairly large, but some dealers, because of the small demand, have permitted This time last year the cement industry was their supplies of certain grades to become some what depleted. The continued operation of mills operating on a reduced basis, owing to difficulty in sometimes even at a loss, caused stocks to accu- j procuring coal. Shipments of orders could not rnulate for a time, but recently more mills have | be made on time because of the car shortage; and closed down, either because of lack of orders or j because more business was offered than could be 20 BUSINESS AND F I N A N C I A L C O N D I T I O N S handled, prices in many cases were not even quot vailed in the trade for some time has been accen ed. Under such circumstances, much unfilled tuated by the usual summer slackening. Sales business was carried over from the first half of the values average from 20 to 30 per cent below those year to the second, with the result that an abnor of last year, but owing to general price reductions mally large number of sales were made between the volume of deliveries is about the same. The June and January 1st. This year, production strenuous competition which has characterized and shipments during June and during the first the trade recently continues to depress prices, and six months of the year have exceeded those of the a few dealers have announced further reductions same periods in 1920. Stocks are smaller, but are of from 5 to 10 per cent during the past month. sufficient to care for the demand. And as there Prices now average about 30 per cent below the is no transportation trouble, orders are being han highest quotations of 1920. Most dealers have plentiful stocks, and manu dled promptly. Many firms report that demand has been falling off in July, and in general, business facturers frequently report an accumulation, as in is not expected to equal the record of last year. many instances they are operating, not in re Operations are still large, many plants running at sponse to urgent demand, but merely to keep their organizations intact. Raw materials, es capacity. Raw materials are in ample supply and are pecially steel products, are plentiful and for sev easily obtainable at lower prices. As most com eral months now have shown a tendency to fall panies have their own raw material quarries, the in price. chief article they must buy is gas slack coal. For Wage reductions by hardware manufacturers 17 years the price of this ranged from 30 to 50 have been rather general, and so severe has com cents per ton at the mines, and the freight petition been in the wholesale trade that several amounted to $2. At present, the lowest price companies have made similar readjustments in quoted is $1.40 per ton, and the freight rate is salaries. $3.57, making the delivered price $4.97, as against The accompanying table is an indication of $2.50 formerly. Thus the present cost of coal is sales and credit conditions in the trade during double what it was in 1914, although there has June as reported by dealers in this district: been a reduction in the past year. But even so, WHOLESALE HARDWARE TRADE it is considered by some that cement manufac turers are paying the operator less for fuel than it Ju n e 1921 Ju n e 1921 com pared to com p ared to costs him to mine it. Wages in the cement indus M a y 1921 Ju n e 1920 try have been reduced 20 per cent, but are still Net sales during m onth............................. + 1.2% - 3 3 . 4 % nearly twice as high as they were in 1914. It has Accounts outstanding at end of month. .. . - -5% —28.2% been estimated that coal and wages account for Ratio of accounts outstanding to sales: 75 per cent of the cost of cement. June, 1921........................................... 167.5% May, 1921........................................... 169.4% Prices are 20 per cent below those of last year. April, 1921........................................... 155.2% The present price is $2.00 per barrel, as compared March, 1921........................................... 172.2% Feb., 1921........................................... 213.3% with the nominal quotation of $2.50 in Ju ly, 1920. Jan., 1921........................................... 193.2% No change has occurred within the past month; in fact, the present figure has been quoted, in some cases, since March. PO TTER Y Collections have been holding up well and are considered good. H/VNGES in the demand for pottery within the last month have occurred only in sporadic H ardw are instances. Some firms report more business, others Hardware dealers in this district report that less. A falling off in sales usually occurs in July no improvement has been felt in their business and August, and in some instances this can already since last month, but that dulness which has pre be noticed. It is quite uniformly agreed that the C BUSINESS AND F I N A N C I A L C O N D I T I O N S 21 present demand is only 50 per cent of that of last | staple lines in the latter part of July. This would summer. Operations vary with individual firms. I serve to establish a price basis and would be fol Some have closed down for the summer; others lowed by the opening of fancy lines during August. are running at from 20 to 50 per cent of capacity What styles of fabrics will be favored by the and one is running on full time, owing to the public next spring is still largely a matter of opin steady demand for its special product. Stocks ion. The increase in the demand for serges is at are entirely adequate to care for present business, tributed largely to satisfactory price quotations. and in some cases are quite heavy. One manufacturer finds another explanation in Prices have, in general, not changed materially the scarcity of serge stocks, resulting from past within the past month; they are still approxi inactivity in production. During the present mately 20 per cent less than last year. A few season herringbone and pencil stripes have been further reductions are reported, and frequently the staple products, and as yet the curtailment of where prices have not been lowered, special con orders for these goods, which was expected to fol cessions are granted. One firm states that the low more thorough distribution, has not occurred. average price for its products was $9.61 in July, 1 Indeed, one prominent retailer even predicts that 1920, $8.00 last month, and $7.50 now. Raw the demand for them during the coming season materials are becoming cheaper and can be ob will be greater than it has been. In the dress goods trade, conditions are less tained in any quantities. Reductions are reported in the wages of un satisfactory than in men’s wear. Reasonable skilled labor, and in a few cases, of skilled labor. demand for tweeds, for fancy skirtings and for But many firms cannot reduce the wages they are coating materials for use with fancy skirts, has paying to skilled workers because of agreements resulted in small purchases, but generally speak entered into in November, 1920. A conference ing, the business is unsatisfactory as compared has been requested to consider the question, but with that in men’s goods. This is largely attrib no results are to be expected for a month or two. uted to the use of cotton goods in summer wear A few firms report that collections are fair, but and to the high prices still asked for desirable the majority find them to be poor. There seems garments. to be a tendency for jobbers to agree upon 90 days W ool a n d W o r sted Y a r n s as the most satisfactory period of grace. WOOL W o ol C loth H E between season period has been largely responsible for the inactivity in woolen and worsted goods during the past month. Practically all of the business for fall and winter goods has been placed, and purchasers are now mainly con cerned with securing sample goods at the earliest possible date. It is anticipated that difficulties will be experienced in securing these, for the late start on production and the consequent shortness of the present season has retarded deliveries on fall merchandise to a marked extent. Buyers are requesting an early opening of light weight lines for spring. This desire, though not approved of by manufacturers or selling agents, will probably bring about the showing of certain T The usual seasonal dulness, slightly accentu ated by general industrial inactivity, has pre vailed during the past month in the woolen and worsted yarn market. Mills producing men’s wear have been tolerably active, and the acceptiI ance of duplicate orders by some firms has neces sitated purchases of additional yarn. In other cases, new buyers have been forced to enter the market by the complete depletion of yarns held in stock. However, all orders have been for small quantities and are such as to show on how close a margin the manufacturer is operating. The condition of the finer counts of yarn is con sidered especially satisfactory. Fall production has consumed large amounts of these, and the light weight seasons will require an even greater In addition, many ij volume of 2-4OS and 2-50S. mills are not able to produce the finer counts. j Because of the demand that has existed for finer 22 BUSINESS AND F I N A N C I A L C O N D I T I O N S counts, the available supply is small, and spinners who are able to produce them are well pleased with future prospects. The knitting trade, especially that in bathing suits, has developed beyond expectations, and some operators have had difficulty in securing suitable yarns. One large producer of knitting yarns, however, considers that the market is un satisfactory at present, and is therefore putting the larger part of his production in stock, in order to be in a better position to fill the future require ments of the trade. Business in hosiery and un derwear yarns, though still dull, shows improve ment over that of June Carpet and rug yarns are more active, and it is expected that the grad ual return of rug looms to production will stimu late a demand that has been sluggish since the beginning of the rug weavers’ strike in January. i ues, as spinners are forced to meet immediate needs. Prices have receded slightly on the coarser grades, and advanced on half blood and better wools. Dealers are of the opinion that further recessions in the value of fine wools are doubtful, as the market is well cleaned up of de sirable grades. Buying in western markets continues, especial ly in Texas and Oregon. Three-eighth scombing wool has sold as high as 55 cents, scoured, al though the average price is between 48 cents and 52 cents. Fine Australian wools are scarce, and values range from 90 cents to $1.00, clean. Car pet wools are gaining in strength and importa tions are increasing, in anticipation of the enact ment of a permanent tariff law. The foregoing chart shows the steady increase in the consumption of raw wool from 20 million i pounds in December, 1920, to 50 million pounds R a w W o o ls in M ay, 1921. During the same time, a corre sponding decrease has occurred in the percentage Dulness in wool textiles is reflected in the raw of idle cloth looms of all sizes to the total number wool market. Buying in small amounts contin reported. With the single exception of carpet looms, all other textile machinery is likewise showing increased productivity. COTTON C otton G oods H E cotton goods market displays slightly in creased activity in some lines though in others it has shown no gain during the past month. Some time ago manufacturers of print cloths contended that present production costs made it impossible for them to sell at a profit. To remedy this situation they reduced output considerably, with the result that print cloths were immediately subject to an increasing demand. Prices, how ever, did not advance, because large accumulated stocks of print cloth were still on hand. Summer dress goods continue to lead in the de mand for cotton fabrics. Ginghams are scarce, and it is reported by one firm that premiums have been paid to secure immediate delivery. This scarcity of gingham has led to the use of coarser and cheaper materials, such as osnaburgs, suiting fabrics and chambrays, as substitutes. Novelties of all kinds are receiving attention from buyers. T BUSINESS AND F I N A N C I A L C O N D I T I O N S The cotton goods export trade has recently been stimulated by the fact that customers who have been inactive for some time are again enter ing the market. The total business done is slight as compared with pre-war trade, but the recur rence of small orders from abroad points to the growing confidence of foreign merchants. The bulk of the goods sold has been 3 and 4 yard sheeting. Competition for the limited volume of business available has become very keen throughout the cotton goods industry. As one manufacturer states, “ fighting for business has been the big factor in keeping our mills running.” Those in the trade who realized the importance of low prices in securing orders have been able to maintain operations at from 80 to 100 per cent capacity, although their profits are said to be small and in some cases nil. Manufacturing costs are still rela tively high. Efforts to reduce wages in southern mills have thus far been unsuccessful, but it is re ported that steps have been taken to bring about the arbitration of the strikers’ and mill owners’ differences. conclude that no marked improvement will be noticed for some time. The slump in the price of raw cotton was imme diately followed by a sympathetic drop in yarns. However, the settlement of British labor difficul ties, with its promise of an early resumption of ; cotton exports and the increased interest in cot ton goods which is being shown by the foreign trade, are indications of a clearing horizon and give assurance that confidence in yarn quotations j will eventually be restored. j R aw C otton ; The recent less favorable crop report and ad vices concerning better industrial conditions abroad have been partially responsible for the increased firmness of the raw cotton market. Advances have been greatest in the spot market, although future prices have gained strength under increased buying. Consumption of foreign and domestic cotton in American mills in M ay amounted to 439,884 bales, as compared with 408,883 in April, 437,933 in March, 385,563 in February, 366,270 in Janu ary, and 294,851 in December, 1920. C otton Y a rn s No appreciable increase in the demand for cot ton yarns was noticeable during the first three weeks of July. Inquiries were few in number, and practically all were for immediate delivery. Prices have changed but little, though on carded Southern yarns they have receded from one to two cents per pound. Holders of distress stocks who were forced to liquidate have accepted even greater reductions, but these transactions cannot be considered indicative of actual market con ditions. The market for combed yarns is in a better position and has fluctuated less widely. In some cases improved prices were brought about by the decision of operators to accept no offers that were below the cost of production. Large stocks of yarn obtained at a relatively high price are still held by dealers and manufacturers, and until these yarns are consumed it is unlikely that the market will experience any great activity. The present dulness in many lines of cotton goods and the reduced operations ° f spinning mills have led a number of dealers to 23 S IL K H E silk industry occupies a decidedly favor able position at the present time. One im portant firm reports a larger business for the first six months of 1921 than for any similar period in its history. Prices in the primary markets have remained firm. Canton prices are advancing as a result of the receipt of information that reelers are sold up until September. As the Italian market is also sold well in advance, purchasers in order to secure deliveries for the near future, have had to turn to Yokohama. Recent arrivals of silk have partially eased the demand for spot silks, but there is still a shortage of certain grades, particularly of new style Can ton, both in 14-16 and 20-22 sizes. June consumption of raw silk by American mills was slightly in excess of 33,000 bales. This amount is equal to that used during the month of greatest activity in 1919. The following figures for 1921 show the gradual increase in consump- T j ! j j 1 ! j | j | 1 24 BUSINESS AND F I N A N C I A L C O N D I T I O N S tion, and the decrease in the volume of raw silk in storage at the end of each month: 1921 S to rag e 1st of m o n th b ale* Tan......... Feb........ Mar. . .. Apr........ M a y .... June---- 44,536 31,859 27,928 16,386 20,038 20,541 Im p o rts bales 9,499 12 ,7 9 4 14,043 32,552 27,712 28,857 T o ta l bales S torage end o f m o n th bales C on su m p tio n bales 54,035 44,653 41,971 48,938 47,750 49,398 31,859 27,928 16,386 20,038 20,541 15,552 22,176 16,525 25,585 28,900 27,209 33,846 Purchasers of raw silk are following a very con servative policy, in view of the increased shortage of raw silk for immediate delivery. This condi tion indicates that the increased imports are be ing more widely distributed throughout the indus try instead of being concentrated in a few places. The conservative attitude of buyers is probably strengthened by recent advices from Japan to the effect that the Syndicate holdings amount to 42,000 bales. In spite of reported shortage of cocoons it is believed that liquidation of Syndi cate holdings will bring quotations below the present levels, which are still considered by manu facturers to be too high. Retail merchants have noticed a slight de crease in the demand for silk goods, and they at tribute this to the competition of cotton fabrics. Woolens and worsteds have been affected to a marked degree by a tendency on the part of con sumers to economize, but dealers do not expect any further curtailment of the sales of silk. Spot trading has been featured by rapidly increasing calls for silk sport skirtings. Supplies of these, however, are small and buyers report difficulty in obtaining desirable assortments. Prices have held firm at prevailing levels for some time. pacity to fill orders. Prices on all such articles have easily been maintained and in some cases advanced. As there is no indication of an early break in the strike, buyers are turning to Europe, especially to Germany, for a supply of goods to supplement the domestic output. It is reported that some for eign goods are now in the hands of New York jobbers for distribution to the trade. Better grades of lisle hosiery show a slightly improved activity, and low end cotton has been moving in larger quantity, but only when con cessions have been made in price. In the export trade, M ay was the poorest month of the year for cotton, and the best for artificial silk hosiery. Manufacturers of cotton hosiery expect that the demand will improve, but the situation is a diffi cult one. Buyers are continually demanding lower prices, though under present conditions lower prices are impossible unless goods are to be marketed at a loss. OPERATIONS IN THE HOSIERY INDUSTRY Ju n e 1921 co m pared to M a y 1921 Ju n e 1921 com pared to Ju n e 1920 + 17.3% - 3.1% + 6.2% -4 2 .7 % -1 3 .4 % -4 8 .1 % -6 8 .1 % -4 4 .2 % +804.0% — 11.2% +26.7% + 10.5% - 2.2% +65.0% +40.0% —70.9% —65.6% - 5.1% +283.7% + 25.2% F irm s selling to the wholesale trade: Product manufactured during June............................................ Finished product on hand June 30....................................... Raw materials on hand June 30. . Orders booked during June. .. . Unfilled orders on hand June 30 F irm s selling to the retail trade: Product manufactured during June............................................ Finished product on hand Tune 30..................................... Raw materials on hand June 30 Orders booked during June........ Unfilled orders on hand June 30 H O SIERY UNDERW EAR ULL-Fx\SHIONED silk hosiery is still the bright spot in the hosiery trade. Ow’ng to the continuation of the strike in Philadelphia fullfashioned mills, the output of the country is not large enough to supply the demand. This has caused business to increase in artificial silk and mock-fashion silk lines, with the result that man ufacturers of these goods also are working to ca F U R IN G June a fair number of orders was received for the late spring trade in under wear, and operations were 75 per cent of capacity or better, in the case of the majority of our report ing firms. The production was in excess ol that of M ay, 1921, but considerably below that of June, 1920. As to the size of stocks of heavy D BUSINESS AND F I N A N C I A L C O N D I T I O N S 25 weights carried over by jobbers opinions vary Both jobbers and retailers are still buying con greatly, but judging from the small purchases last servatively, but they are unanimous in the opinion season, it seems unlikely that there is an abnor that there is no menacing over-supply of floor cov mally large supply in the hands of either jobbers erings. Indications of confidence are also found or retailers. Buying for the fall trade continues in the new price list of the Alexander Smith & to lag, and it is estimated that though the season Sons Carpet Company, effective Ju ly 1 1. In this, is so far advanced, little more than one-quarter of advances of from two to three per cent from their the normal business has been placed. As pro M ay quotations are made on all Axminster rugs. duction has been curtailed and is now more But tapestries and velvets and the entire line o f nearly adjusted to consumption than it has been carpets remain unchanged. Other bright spots in for some months, and as the remainder of the the market are the increasing importations of buying season is short, there will in all likelihood carpet wool and the decrease in the number of idle be a lack of supply, such as existed in the spring carpet looms. The production of Wilton and Brusse’s rugs is season just past. Unless there is a marked in crease of buying within the next few weeks, it still retarded by the weavers’ strike, which began be will impossible for manufacturers to fill orders in January when the manufacturers announced within the season, for the output of wool and a 25 per cent reduction in wages and the rein cotton ribbed underwear is particularly small, statement of creeler boys. An offer of a 20 per and in the opinion of some firms has amounted to cent reduction subsequently made to the weavers not more than 15 per cent of normal since last was refused, the weavers agreeing, however, to December. At present buyers seem to be await accept a 15 per cent reduction. The manufac ing the August cotton crop report, in the convic turers despairing of success by conciliation and tion that this will give them information on which feeling that many weavers desired to return to their looms, announced that on June 15 the mills to shape their future policy more intelligently. Prices are much lower than they were a year would resume operations on an open shop basis. ago; in some cases almost 50 per cent lower. Dur In no case, however, did enough weavers return to ing the last month reductions were made by a few permit of economic operation of the plants, and mills in the hope of stimulating business, but the the manufacturers decided to train new weavers. Labor officials stated that it would take seven move did not prove successful. Owing to the lateness of the fall season, the years to break in new weavers, but saleable pat opening of the spring season has been postponed j terns of plain construction were produced at the until September 1. Last year under similar con end of the seventh week. The scarcity of Wilton and Brussels rugs has ditions several postponements were made and been a distinct advantage to producers of lower some manufacturers are of opinion that several quality floor coverings. Axminsters have thus will be made this year also. far received the greatest amount of benefit, but it CONDITIONS IN THE UNDERWEAR INDUSTRY is expected that the demand will extend to the Ju n e 1921 [u n e 1921 cheaper lines when retail buying commences in com pared to c o m p ile d to M ay 1921 Ju n e 1920 the fall. SHOES AND LEA TH ER Product manufactured during June + 13.2% -3 7 .7 % finished product on hand |une 30 + -5% Raw materials on hand June 30. . . +49.5% Orders booked during June.......... +43.9%. Unfilled orders on hand June 30. . -2 2 .9 % +65.9% —40.7% + 59.7% -5 9 .4 % Shoes N T H E shoe trade all efforts are now being concentrated on securing orders for the Fall season. The stocks in the hands of manufac turers, jobbers and retailers on Ju ly 1 were very C A R P E T S AND RUGS materially smaller than they were at the begin [ T I E summer period has brought on the usual | ning of the year, and are pretty generally in need seasonal dulness in the carpet and rug market. ! of being replenished. Consequently manufac- I 26 BUSINESS AND F I N A N C I A L C O N D I T I O N S turers are for the most part well supplied with business, especially those making ladies’, misse’s and girls’ shoes of high grade; and prices as a rule have been firmly maintained. On medium and low grades of women’s and girls’ shoes some price concessions have been made, and manu facturers of these are not so well off as regards the volume of orders placed as are those making high grade shoes. Few firms in this district manufacture men’s shoes, but those that do, report an improving demand. Styles for women have changed but little since spring, except that the ball strap is no longer demanded. Heavy stitching predominates, and single and double straps continue to be in vogue. High shoes are being ordered in smaller quanti ties than low shoes, but they are expected to be in stronger demand later in the season. The leathers in greatest requisition are calf and kid, especially in black and the darker shades of brown. Side and patent leathers are being cut in fair quantities, and black satin is also called for. Labor, except in one department, is plentiful, and its increased efficiency has been an important factor in lowering costs. Some factories are obliged to send out part of their work, owing to the scarcity of skilled women workers in the : fitting room. Collections are good in all sections of the i country except certain parts of the South, where losses in cotton and tobacco have seriously af fected all lines of business. ties. Holland, Spain, Italy, Japan and New Foundland have also bought, so that the tanners are looking with confidence toward a steady im provement in export demand. The output of glazed kid is slowly increasing, but manufac turers as a rule are selling more than they are at present producing. An analysis of recent reports of the Department of Commerce, Bureau of the Census, shows in a very concrete way the im provement in the glazed kid business. On March 1, 1921, there were on spot and in transit........................... *................... 9.798,000 goat skins On April 1, 1921, there were on spot and goatskins in transit................................................... 8,652,000 On May 1, 1921, there were on spot and in transit...................................................7,740,000 goatskins On June 1, 1921, there were on spot and goatskins in transit................................................... 8,789,000 The increase recorded for June i, after the previous steady decline, was due to heavy ar rivals during M ay. These were caused by in creased purchases made possible by better trade conditions. For the same periods the stocks of leather made from goat skins were as follows: March 1 on hand............................................................ 22,731,000skins April 1 on hand.............................................................. 23,888,000skins May 1 on hand...............................................................22,757,000skins June 1 on hand...............................................................22,691,000skins Sole leather continues in abundant supply. Sales have fallen off in Ju ly, but there has been no change of consequence in price; the high grades are moving best. Double shoulders for welting leather have sold more freely, so that some of the L eather makers of this leather are behind on deliveries to Upper leathers for shoes continue to sell freely. | shoe manufacturers. The lack of foreign trade Glazed kid, in both black and colors in the higher is severely felt in all branches of the heavy grades, is now sold ahead, and the demand can leather business. Belting butts continue to be not be supplied. This has caused an increased neglected, reflecting the general dulness in manu business in lower grades, with the result that the facturing plants throughout the country. The domestic demand for these leathers is now about total number of butts on hand and in process on normal and the export demand is increasing. In June i was 1,403,330, an increase since April 1 past years foreign trade has taken many grades of 121,923. Consumption, which in April showed which are of slow sale in this country. As stocks an improvement over previous months, fell off of glazed kid in England are now reduced to a low in M ay to approximately its former total, or point, some shipments have been made to that about 43,391. It is estimated that there is a market and recently several of the largest firms sufficient stock on hand to last, under normal there have been inquiring for important quanti conditions, for eighteen months. BUSINESS AND F I N A N C I A L C O N D I T I O N S Hat leather is one of the few leathers in which the manufacturer is doing a very satisfactory business. Volume and price are both to his liking. Fleshings, used almost entirely by the glove trade, are stagnant. Skivers are moving in only small volumes, and mostly in the higher grades. 27 tion in this district since May. In fact, during Ju ly some additional mills have either lessened production or closed down. This, however, is partly due to seasonal dulness, as mills fre quently closed during Ju ly and August before the abnormally large demand of the last few years required that production be continued throughout the year. On the other hand, it is R a w S k in s a n d H id e s thought by some that existing stocks of certain Calf skins have held steady at 18 cents and the grades of paper are so low that it will be neces business being done in them is very considerable. sary to resume operations in order to supply the The fact that the market has ceased fluctuating current market. The present demand is spotty, rapidly has allowed the tanners to obtain steady and, for particular grades, to meet immediate supplies and to keep their product at a uniform needs only. According to those who hold the price. Goat skins of the most desired qualities more optimistic opinion, many of these grades on spot or for early delivery have found a ready are exhausted and will have to be manufactured market, and quotations, despite some falling off if orders are received for them. Dealers’ pur in the number of purchases by tanners, continue chases have been small for several months and to hold firm in the foreign shipping points. Those j hence the supply of paper on their shelves is low. selections that produce a large proportion of j Consequently, more of the business that is being spready and low grade skins can still be bought received is transmitted directly to manufac at the same prices as have prevailed during the turers. These previously had felt only a small past few months, which are lower than they have part of the demand for paper, because the deal been for some years. ers with their large stocks were able to handle Activity in the hide market has been governed all orders. The question then is will the mill almost entirely by the course of the Fordney stocks be large enough to supply demands, or Tariff Bill in the House of Representatives. will further production be necessary. Some are Early in the month dulness prevailed. But when inclined to think that the supply is sufficient. the motion to place a duty of 15 per cent on Government figures show that stocks of all hides was passed the market became active, large grades in mills on June 1 exceeded those of the sales were made, and prices strengthened. At same date for last year and that most of them the present writing, however, hides have been were larger than they have been for the past restored to the free list and the effect of this three years. This supply was less than on M ay 1, as shipments during M ay exceeded production. action is still to be seen. On Ju ly 6, the printing strike, which has been in existence for two months, came to an end in PAPER one of its branches. The members of the PressLTHOUGH some paper distributors report I men’s Union No. 4, consented to return to work, - that sales in June exceeded those in May, ; and all for whom positions were open were taken the general demand for paper has shown no im j back by the employers. The other pressmen’s provement worth noting within the past few | union and the compositors are still out. The rnonths. Some are of the opinion that the paper latter are needed by the trade, but for some time trade is at the lowest point in its history. De the shops have been able to handle all business partment of Commerce figures show that during offered. The demand for paper has been quite May, 1921, 1,031 machines were idle, of which steady recently, as none of the printers pos 691 were inactive because of lack of orders; sessed stocks of any considerable size. Prices on most grades of paper continued to whereas in the same month last year only 439 j decline, but some of them are quite steady and machines were idle, 7 because of no orders. There has been no improvement in the situa J are thought to have reached bottom. The book A 28 BUSINESS AND F I N A N C I A L C O N D I T I O N S and fine paper markets are spotty. It has been estimated that the general level of fine paper prices is about ioo per cent above the 1914 basis. There have been recent cuts in the quotations on coarse and wrapping paper, but these failed to stimulate demand and served only to ucmoralize the market. Kraft was reduced from 8 cents to 6 cents, and newsprint also declined. Raw materials are easy to get in any quanti ties, and prices continue to drop. The paperstock market is particularly dull. Collections of scrap paper are small, because of the low prices paid; quotations on rags are also lower. Price cutting has been prevalent in the chemical pulp market, but a better demand has recent y de veloped for ground wood. Many mills have anticipated reductions in raw materials and are basing quotations for finished paper upon pos sible lower prices in the future. Credit accommodations are easily secured, wherever desired, and the prevailing rate of interest is 6 per cent. Collections seem to be growing worse, as they are described in most cases as being poor. P A P E R BO XES OME paper box manufacturers report that June was the best month of the year. Sales were greater than they were in any previous month since last fall,and in number of boxes sold, compare favorably with the volume of sales dur ing June, 1920. In fact, one manufacturer goes so far as to say that June could be considered as a normal month. But this opinion is not held by the entire trade, and conditions are still con sidered generally to be far from normal. In Ju ly, the trade has been affected by the usual seasonal dulness and sales have fallen off. In the paper box trade, a good indication of the volume of business being done is the extent of manufacturing operations, as goods are usually made only after receipt of an order for them. At present, production is variously estimated at from 35 to 60 per cent of last year’s volume, the figure of 50 per cent being the one most commonly given. Although it is the general custom of the trade to make goods only on order, some manu S facturers this year adopted the policy of carrying stock for certain customers, whose orders could usually be anticipated. Deliveries of these sup plies have been deferred in many cases beyond the expected date, and although these stocks will, no doubt, eventually be sold, they must be carried by the manufacturer, until the customer needs them. In a few cases, however, specifica tions have been changed, and this has caused a loss which the box-maker has had to bear. The market continues to be a buyer’s market. No reliable quotations can be given, as prices change with each transaction. Competition is still keen, and prices are therefore computed on the lowest possible basis. The average quota tions on different grades of boxes range from 30 to 50 per cent below the level of this time last year. The raw material market is still dull and prices have reached new low levels. Box board is being offered at about $28 per ton as compared with $30 a month ago. Some manufacturers who formerly made their own board find that now they can buy it cheaper than they can make it. Board is considered to be a good investment at the present price, and at least one manufacturer is filling every available space with it. Others are prevented from following the same course by large stocks on hand, lack of storage space, or inability to secure funds to carry extra supplies. Other manufacturing costs have not changed materially. Wage reductions in the industry have been few. GROCERIES U R statistical reports show an improvement in the wholesale grocery trade during June. Sales exceeded those of M ay by 4.7 per cent, and the ratio of accounts outstanding to net sales has fallen to 96.5 per cent. With the exception of March, which was an unusually good month in the trade, the June figures are the most favorable that have been received since the beginning of the reporting service a year ago. The volume of sales as compared with those of June, 1920, shows a decrease of 46.9 per cent; the cor responding figure in M ay was 43.4 per cent. This O BUSINESS AND F I N A N C I A L C O N D I T I O N S further decline is not encouraging, but it may be partially accounted for by falling prices. The demand in Ju ly has in general been about the same as it was in June, though improvement is noticed in some lines. For a while there was considerable buying of dairy products for storage purposes. This took a fairly large supply of these commodities from the market, and caused a rise in prices which has continued, even though the storage demand has been filled. Butter rose approximately ten cents a pound during the month and is still firm. The Philadelphia market was not so strong as the others, but it followed the advance. The canned goods situation is a subject of frequent comment by reporting firms. Canned goods have been low in price and abundant in amount. Consequently the acreage planted to truck products for canning purposes was smaller than usual. But late frosts materially damaged the fruit crops, and the recent drought has in jured vegetables. Therefore a short pack of canned goods is expected this season, and a good demand is looked for next winter, above all for fruits, owing to the scarcity of fruit for home canning. As a result, the market has been fairly active this month and prices have advanced on many varieties. California fruits seem to be in particular request and are becoming difficult to secure. Especially strong is the interest mani fested in the buying of canned goods for future delivery. Sugar is the most important commodity in the grocery trade, and the condition of the sugar market affects general buying. The demand for this product in Ju ly has become firmer, and the price has risen above the June quotations, which fell to the lowest point since November, 1915. I he arrival of the canning season and the hot Weather demand for soft drinks are chiefly re sponsible for the stronger market. The fresh produce market is in full summer activity. Fruits and vegetables have been com ing in from California and the South in good Quantities, and recently supplies have been re ceived from adjacent territory, though as this district was affected by the dry weather to a Sreater extent than other sections, it will not Provide as great a supply as usual. Prices have ranged well below those of last season, but as a 29 whole have been steady. Lemons shot up in price from $2 per crate in M ay to $13 at the end of June, owing to the hot weather, the holi day demand, and small stocks. The price fell in July, but is still high. Potatoes recovered from their early summer depression and are now bring ing better prices. Collections are considered by the trade to be fair. The decrease in the ratio of accounts out standing to sales indicates that they have im proved. WHOLESALE GROCERY TRADE J u n e 1921 J u n e 1921 c o m p a re d to c o m p a r e d to M a y 1921 J u n e 1920 Net sales during month................................ +4.7% —46.9% Accounts outstanding at end of month . . . +3.3% —40.5% Ratio of accounts outstanding to sales: June, 1921...................... .................... 96.5% May, 1921...................... .................... 103.7% April, 1921...................... .................... 102.3% March,, 1921...................... .................... 90.8% Feb., 1921...................... .................... 106.3% Jan., 1921...................... .................... 101.3% SUGAR N D E R normal conditions, more than 50 per cent of the sugar needed to supply the x-\merican market comes from foreign countries, U So u r c e A m ount (sh o rt to n s) Foreign sources: Cuba, “ preferential duty,” sugar ........ 1,930,000 All other (Java Germany }4 ) f u l l duty sugar............. 150,000 Territories of the U. S. Hawaii ...................... 550,000 Porto Rico................. 335,000 Philippines................. 115,000 Continental U. S.: Domestic beet (re fined) ....................... 610,000 Domestic cane (raw and refined)........... 310,000 Total................... 4,000,000 50,000 Exports.............. Net available for con sumption ................... 3,950,000 P er c e n t o f to ta l su p p ly P roducing season 48 December-June 4 May-November (Java) 14 8 3 November-July January-June November-June 15 July-Januarv October-January 8 100 30 BUSINESS AND F I N A N C I A L C O N D I T I O N S and of the remainder more than half is imported caused high prices in spite of large stocks in the from territories of the United States. Most of Atlantic ports. Raw sugar was quoted at $6 these supplies enter commerce as raw sugar to per 100 pounds when the United States entered be refined in this country, and the seasons are the war, having almost doubled in price since so distributed that sugar is entering our market 1913 In August, 1917, government control was in in every month of the year. The preceding table (compiled by the War Industries Board) shows stituted, and although prices of food could not the average amount of sugar consumed by the be fixed absolutely, much was accomplished in United States and the sources from which it was this direction by withdrawing licenses from deal ers who disobeyed the regulations. Maximum derived during the five years preceding 1914. One result of this large dependence upon for prices were determined, reports of stocks, con eign sources is that domestic prices have little sumption, etc., were required, and arbitrary ap relation to domestic stocks of raw sugar, but de portionment was adopted. The Cuban crop was pend upon the world supply. This was admirably contracted for by the Food Administration at illustrated by what happened during the war $4.60 f.o.b. Cuba. This price was raised to when European countries entered the Cuban $5.50 in September, 1918. The prices on refined market after their usual sources of supply failed. sugar were changed frequently during the period, When the war began, prices in the United States and ranged from 7.45 cents to 9.00 cents, less were lower than they had been since 1895. The 2 per cent discount for cash. The latter figure average price in 1913 for refined sugar was 4.28 remained fixed from September, 1918, to De cents per pound, and for raw sugar 3.51 cents. cember, 1919. This situation was caused by record-breaking Early in 1919 buying of sugar was light. The crops successively in 1912, 19 13, and 1914, and chief reason for this lack of demand was the by a reduction in tariff rates, the anticipation of fixed price guaranteed by the continuation of which had depressed the market. When the government control. Householders and manu war broke out Great Britain immediately entered facturers, not fearing the usual spring rise, did the Cuban market in order to supply her needs, not attempt to keep stocks of sugar, but bought and American consumers, beginning to fear a only for the moment. Another factor was the shortage, bought in large quantities. As a result, inability of Great Britain to send ships for its the price of raw sugar rose in two weeks from purchases. Refiners’ stocks became large and 3.29 cents to 6.51 cents. It remained at that there was no market for raws. The Sugar Equali price for a month, and then fell again to 3.45 zation Board then began a campaign of propa ganda through newspapers to encourage buying, cents. In 1915, a short Cuban crop, extensive Euro and fearing a repetition of war rationing, house pean buying, and higher freight charges sent the holders and manufacturers responded and began price up to 5 cents in August. But expectation accumulating sugar. At the same time, the of free duty on sugar caused it to fall again, until British Royal Commission sent ships to lift their it became known that the clause would not be export granulated. In consequence an abnormal adopted. In 1916, a large crop, reduced con demand developed, which could not be checked sumption, and concentration of allied purchases, by the natural force of a rising price. In July, tended to depress prices. But corporation con buying of the 1919-20 Cuban crop began at 6.5° trol of the crop, sufficient funds to finance hold cents, f.o.b. Cuba, at which figure it was offered ings in Cuba, import duties, and curtailed pro to the Sugar Equalization Board, and rejected. duction in European countries, were the factors Buyers from all over the world attempted to sufficiently strong to offset this tendency and guarantee themselves a sufficient supply, and the cause a continued advance. The usual summer price of sugar futures rose rapidly. Then govern slump came, however, when the public refused ment control of sugar was extended by Congress to pay *the prices demanded. Early in 1917, into 1920, to be exercised at the President’s dis labor troubles in American refineries and in Cuba cretion. The President, however, decided not to BUSINESS AND F I N A N C I A L C O N D I T I O N S exercise control over the raw market, and the year ended with the price of raws fluctuating between 12 cents and 13 cents, duty paid. The old crop of refined remained fixed at 9 cents, less 2 per cent for cash, but some refiners were allo cating the new crop to customers at figures rang ing from 15.20 cents to 16.75 cents. Willett and Gray Trade Journal characterized 1920 as the most remarkable year ever experi enced in the history of the sugar business, par ticularly as to the high prices, and the rapidity of the advance and of the subsequent decline. Under the influence of heavy Cuban production, raws declined spasmodically from 12.79 cents, duty paid, to 10.16 cents on March 2. But from March 2 to May 19, the price rose, with only one slight interruption, until it reached 23.57 cents, The previous highest price for raws had been 21.75 cents, which was paid in 1864 for a grade known as Havana Browns. The highest price j j j I I 31 for centrifugals had been 13 cents, obtained in 1869. The causes of this phenomenal rise were several: (1) An idea prevailed throughout the world that there would be a sugar shortage. (2) Cuba was indifferent about selling, hoping to obtain 25 cents, c. & f. (3) The premium on dollar exchange gave the United States an ad vantage in the market, and American buyers made large purchases regardless of the price asked. (4) The European crop was small, and European buyers bought heavily before the harvest began. The Lever Food Control Law acted as a check upon refiners, so that the anomalous situation developed in which refined quotations were lower than the current market price for raws. Refiners made allocations at prices based on the actual cost of the raw sugar from which the refined grade was made. There was no open market for refined sugar from the first of the year until 32 BUSINESS AND F I N A N C I A L C O N D I T I O N S August 12. The highest allocation prices were L993>545 tons, as compared with 3 7 5 ,111 tons made in June and varied with the different re in 1920 and 686,582 tons in 1919. Falling prices finers from 22 cents to 26.50 cents, less 2 per in January failed to stimulate demand and cent. During M ay and June, allocations were stocks increased. In addition to this the trade made for July and August for shipment at 22.50 wished to avoid a repetition of previous situa cents. These caused much trouble later on, as tions in which a rise in price was followed by a the market declined before shipments were made break that had destructive consequences. Lack of money in Cuba to finance holdings on many of these contracts, and many buyers served to increase the supply of sugar on the refused acceptance. Recent test cases have market. Conditions were so bad that a mora been decided in favor of the refiners. The decline in raws began on M ay 19 and torium was decreed in that country on October continued steadily until October 8. In that 11 and continued until January 3 1, when a meas period they dropped from 223^ cents to 6^4 cents, ure providing for the gradual liquidation of c. & f. The price fell further to 5.50 cents, debts was passed by the Cuban Congress. About c. & f., on November 12, which was below the the middle of February the Cuban Sugar Finance figure paid for the 1918-1919 crop, and to 4.75 Commission was appointed by the President to cents, c. & f., on November 22, being then lower market the crop. This commission, by agree than the contract price for the 1917-18 crop. ment among the planters, secured control of The year closed with sales made at 4 cents about 75 per cent of the crop. All sales were to c. & f. After the establishment of an open market be made through the commission and distributed for refined sugar on August 12, the price con pro rata among the planters; the price estab tinued to decline during the remainder of the lished was to be based on market conditions. On year, closing at 7.90 cents, less 2 per cent for March 2, 100,000 tons were sold by the com cash, or 7.742 net cash. mission at 4.75 cents, c. & f., equaling 5.77 cents, The causes of the 1920 slump were as follows: duty paid. Other sales were made at intervals, (1) As a result of the rise in Cuban prices, large and at prices as high as 5.25 cents, c. & f. The imports of full duty sugar were made. Shipments appointment of the commission with its control were received from Java, Asia, South America, over the crop, brought an improvement in the Central America, the British West Indies and market during February and March. The price Europe, and the consumption of full duty sugar of refined sugar rose from 6.85 cents on February by the United States increased tenfold in 1920. 11 to 8.25 cents on March 17. Refiners became (2) Large stocks were held in Cuba for higher more active and meltings increased. The high prices. (3) The British Royal Commission dis point in prices on raws fo * the year was reached continued purchases with the beginning of the on the 17th, when sales were made at 6.27 cents, decline. (4) Demand decreased when the market duty paid. In addition to a seasonal dulness in April began to fall. (5) Invisible stocks in consumers’ hands were large, and when prices became lower, and M ay, other factors caused the market to buying ceased until these accumulated stocks decline again. These were the large visible stocks could be used. in the United States and Cuba, dulness and large The decline which began over a year ago has supplies in the candy and soft-drink trades, low continued, with but few slight interruptions to condensed milk exports, lack of speculative buy date. Prices on January 1 were 5.52 cents, duty ing, uncertainty as to the Emergency Tariff Bill paid, for raws, and 7.90 cents for refined. The then pending in Congress, and the improved domestic beet crop was 50 per cent above that of European crop situation. The tariff bill became 1920 and 27 per cent greater than the record crop effective M ay 28, and the duty on Cuban sugar in 1915. The new Cuban crop was estimated, was increased from 1.0048 cents per pound to at that time, at 4,000,000 tons, the largest in 1.60 cents, and that on foreign imports was fixed history. Moreover, there was a carry-over in at 2 cents. Then we witnessed the anomaly of the United States of beet and cane sugar of I an article declining in prices as the tariff on it BUSINESS AND F I N A N C I A L C O N D I T I O N S became higher. The reason for this was that the increase had to be carried by producer and could not be shifted to the consumer. June began with a dull and declining market, which continued throughout the month. The present situation is characterized by an abnor mally light demand for this season of the year. Usually during the summer, a large quantity of sugar is used for canning, but this year the fruit crop is practically a failure, and the possible con sumption of sugar for canning purposes is limited. In addition, the present prices of canned goods are very low, and the carry-over from last year is large. The confectionery trade is doing little business and is well stocked with sugar. More over, the consumer has no fear of a shortage of sugar or of higher prices, and is therefore buying only for every-day needs. Commitments are not made for future delivery because of the uncer tainty of the market. The stock situation is another drag upon the trade. Total stocks on hand in all American ports are about 120 per cent above those on the same date last year, and 40 per cent greater than those of 1919. Stocks in Cuba are even larger, but these are largely under the control of the Sugar Finance Commission. The better part of the supply for the past few months has come from Porto Rico, the Philippines, and from full-duty sources. But full-duty sugar is refined for export trade, as the duty paid is returned when the sugar bas been exported; and the fact remains that nearly half of our own supply comes from Cuba. The question is, can we secure enough from other sources to avoid paying the higher price demanded by the Cuban Sugar Finance Com mission? The invisible supplies:—i. e., those in the hands of consumers— are considered to be small, as purchases have been limited for so long a time. Stocks of refined sugar held by refiners are said to be large. Meltings to date are lower than in previous years, and refiners are operating °n only an 80 per cent basis. I he lowest point in prices was reached in June, Paws sold at as low as 4.00 cents, duty paid, and many refiners quoted fine granulated at 5*2° Cents, less 2 per cent for cash. During that tnonth, trading was characterized by keen comPetition and severe price cutting. Irregular and 33 special concessions were granted, such as guaran teeing prices upon arrival. During the early weeks of Ju ly a better demand was noted and prices were firmer, owing, no doubt, to the rise of a small seasonal demand stimulated by hot weather sales of soft drinks, and to the fact that Jav a prices are higher than prices in the American market and to suggested plans for financing the Cuban crop. The Cuban Finance Commission re-entered the market and sold 20,000 bags at 3 cents, c. & f., equal to 4.6 cents, duty paid, which, although a decline of seven-eights of a cent from the last scale, is considered a good price in the present market and helped to steady it. Again on Ju ly 14 the commission sold 50,000 bags at the same price, which would indicate that they | have definitely entered the market on a 3 cent j basis. Only two refiners still quote fine granu lated at 5.20 cents; the others having raised their quotations to 5.75 cents and 5.90 cents. These two can supply only a small part of what is wanted at 5.20 cents, so that buyers in immediate need of sugar are forced to pay the higher prices. The situation, although improved recently, is still one of uncertainty. The summer demand has not developed to anything like what it has been in previous years, and the season is now ap proaching in which a decline in price usually occurs. The statistical position of the trade is not clear. Stocks in American ports and in Cuba are large, but the invisible supply is supposed to be small, and any increased consumption should be felt immediately by the refiners. Another factor is the strained financial situation in Cuba, and the doubt as to whether the Cuban planters can secure sufficient credit to hold the crops much longer. Considerable optimism has been engendered, however, by the steady and even slightly rising market in both raw and refined sugars during July. AG RICU LTU RE j X T R E M E L Y dry weather from the middle of M ay to the latter part of June materially j retarded the development of crops throughout I this district. The damage was particularly great J in Delaware and New Jersey. Crops in Pennsyl E 34 BUSINESS AND F I N A N C I A L C ON D I T I O N S vania had a good start and bumper yields were farmers, but this practice is not as general as it promised until the dry weather came. Their should be. The following comparative quota condition is now about normal. It has been tions furnished by the New Jersey Department estimated by the local statistician of the Bureau of Agriculture show the decline in prices of fer of Markets and Crop Estimates that the drought tilizer materials since last year: caused a loss to Pennsylvania of 1,000,000 bushels AVERAGE NEW YORK WHOLESALE PRICES of wheat, 7,000,000 bushels of oats, 285 tons of OF STANDARD FERTILIZER MATERIALS hay, and proportionate losses in corn, potatoes Ju n e 1921 Ju n e 1920 and tobacco. The weather in Ju ly has been, on (C en ts (C en ts p e r lb .) the whole, favorable to crop growth. Local rains per lb .) are still needed in places, but other sections have 25.14 Nitrogen from nitrate soda....................... 16.43 been fairly well watered. 26.59 Nitrogen from sulphate ammonia............. 9.76 The acreage planted to various crops has not 48.58 Nitrogen from dried blood......................... 18.21 6.02 Phosphoric acid from acid phosphate 16% 3.83 been materially changed since last year. More 17.50 Potash from sulphate potash..................... 6.88 white potatoes have been planted through out the district, and the New Jersey sweet The prices paid for farm products have dropped potato acreage is somewhat larger. The area probably more rapidly within the past year than planted to tomatoes in New Jersey and Dela those of any other group of commodities, but ware is smaller, owing to the fact that few some advances have taken place recently, owing canneries will operate this year. The tobacco to the poor condition of this year’s crops. The acreage in Lancaster county has been reduced accompanying table, presenting data furnished because of poor planting weather. by the State Department of Agriculture of New The condition of the different crops varies Jersey, gives some idea of the change in prices considerably. Wheat production, it is believed, within the last two years: will exceed that of last year, and is above the average for the past ten years. The dry spell Ju ly 1921 Ju n e 1921 Ju ly 1920 Ju n e 1919 furnished good weather for harvesting. The corn crop is also promising. Hay is being har 30.85 Corn (bushel) ........ 30.90 31.91 31.78 1.35 2.88 2.36 Wheat (bushel). . . . 1.35 vested, but the yield is light. The condition of 33.00 Hay (ton)................ 22.50 19.30 40.00 the rye crop is about 90 per cent of normal, and 1.74 .70 4.00 Potatoes (bushel) . . .70 that of oats, 77 per cent of normal. As men The financial status of the farmers is quite tioned last month, the tree fruits were practically serious in some sections. This is particularly destroyed by late frosts and will not average 20 per cent of normal. Small fruits were hurt by true of Delaware, owing to the fact that this is the dry weather and their production was slight. the third unfortunate year in agriculture for that Early potatoes were a failure because of the state. It has been estimated by the State Board drought, particularly in New Jersey and Dela of Agriculture that the returns to Delaware ware. As their growth was checked, they had to farmers this year will be reduced approximately be marketed in an immature state, which natu $3,000,000 on fruits, $1,500,000 on wheat, rally depressed the price. Grass lands and truck $1,000,000 on tomatoes, and $1,000,000 on po tatoes, as compared with those of a normal yield. crops also suffered considerably. Conflicting reports have been received re In many sections of the district, farmers have garding the use of fertilizer. The largest number had to borrow money to meet obligations, even indicate that less has been used this year than at times of the year in which they ordinarily last. On the other hand, some are to the effect have ready cash. Particularly serious is the con that because of lower prices, the amount used dition of those who bought farms or orchards at this year is slightly greater. Leguminous crops the abnormally high prices prevailing in 19 1 9 have been substituted for fertilizer and used for and 1920. Some dissatisfaction is expressed re cover crops by some of the more progressive garding present marketing facilities, but little B U S I N E S S A N D F I N A N C I A L C O N D I T I O N S 35 action has been taken to improve them. In tailers’ and distributors’ stocks are at present New Jersey, public markets have been established Srather low, any change in demand is felt directly for certain truck products and are said to be a by the manufacturers. Distributors are being success. Standardization and grading of crops advised to buy only to supply immediate needs are being discussed and have been tried with in order to avoid the chance of their dumping some things, particularly tomatoes and tobacco. cigars on the market at cut prices, should a dei crease in demand come and leave them with | large stocks. TOBACCO Skilled workers are easy to secure. Although C ig a r s wages have been reduced in the cigar trade, no H E cigar industry has recently experienced further cuts have been made recently. More a general improvement. The demand for emphasis is placed on quality of workmanship, cigars is increasing slowly, and sales are of larger and therefore better cigars are being produced size and occur more frequently. Collections on now than when production was large and labor cigar stamps sold in Lancaster during June were hard to secure. Collections in the cigar trade are good. greater than in M ay, but were smaller than in June of last year; and these figures are repre L eaf sentative of the general situation. Although business has improved, the demand is still spotty The Sumatra sales were the dominant factors and is not up to last year’s standard, which, it in the leaf market during the last month. High must be remembered, was a high one. prices ruled during the first four inscriptions, and The ten cent sizes are still the best sellers, ac American purchases were smaller than usual. cording to manufacturers who make cigars that retail at many prices. To be sure, some higher These expensive purchases of the new crop priced cigars are selling well, but these are ex j stimulated interest in old Sumatra in commerce, ceptions. From the industrial sections of the ; and some sales were made at good prices. The Lancaster county 1920 crop is in the hands district there is a demand for cheap cigars. In the central section of Philadelphia the medium ! of the packers, who have made some sales at priced products sell best, and the new five-cent prices ranging around 28 cents. The condition brands are not very popular. On standard cigars 1 of the packings is still uncertain and manufacconsiderable price cutting is being done by I turers are not buying in large quantities. The 1 1921 crop was retarded by the June drought, but retailers. Operations have been increased in many fac I has been aided by recent rains. A few crops were tories. Some, which were running only part of ! damaged by storms and had to be replanted, and the time, are now working at capacity. Produc ; some growers held back planting until after the tion is being regulated by sales, so that stocks dry spell. Because of these things the crop is will not accumulate in the factories, and as re not very far advanced for this season of the year. T COMPILED AS OF JULY 23 , 1921 This business report will be sent regularly without charge to any address upon request 36 BUSINESS AND F I N A N C I A L C O N D I T I O N S CHARGES TO DEPOSITORS’ ACCOUNTS other than banks’ or bankers’, as reported by Clearing Houses RESOURCE AND LIABILITY ITEMS of Member Banks in Philadelphia, Camden, Scranton and Wilmington (000’s o m itte d ) A t th e close o f b u s in e s s July 13, 1921 June 15, 1921 July 14, 1920 33,209,000 33,190,000 32,314.000 5,789,000 4,459,000 Chester............. 4,078,000 7,056,000 3,468,000 Harrisburg....... 6,853,000 4,866,000 4,998,000 Tohnstown........ 4,962,000 6,274,000 4,871,000 Lancaster......... 4,390,000 Philadelphia... . 289,668,000 307,859,000 347,789,000 Reading............ 4,563,000* 7,267,000 5,894,000 Scranton........... 17,474,000 15,754,000 17,074,000 Trenton............ 10,552,000 11,100,000 11,620,000 8,546,000 10,013,000 Wilkes-Barre... 8,578,000 5,480,000 3,644,000 Williamsport... 4,295,000 7,732,000 7,621,000 Wilmington___ 7,132,000 York.................. 3,717,000 3,923,000 4,638,000 Totals........... 3369,471,000 3390,156,000 3433,083,000 *Smaller number of banks reporting. J u ly 2 0 , 1921 M o n th ag o Y e a r ag o eso u r ces L IA B IL IT IE S J J u ly 2 0 ,1 9 2 1 M o n th ago 38,613 3 8 ,6 1 6 Capital paid in............ 17,564 17,010 Surplus.......................... 3,674 Government deposits.. 1,303 Member banks — reserve account............ 99,208 105,406 1,388 1,954 Other deposits............. Total deposits......... 3104,270 3108,663 Federal Reserve notes 219,130 226,633 Federal Reserve Bank 8,946 11,078 notes.......................... Deferred availability 70,159 items.......................... 44,883 3,596 4,298 All other liabilities---3407,002 3446,457 T L .. o tal ia b il it ie s 340,262 190,586 348,187 46,611 8,749 337,934 198,983 378,718 45,283 11,342 9,809 159,863 12,447 154,363 3813,040 3804.067 625,106 621,181 41,316 41,065 76,504 110,482 3839,070 672,893 36,976 110,036 348,623 192,948 343,188 46,993 6,330 9,271 7,976 157,711 J u ly 1 8 ,1 9 2 1 Gold reserves............... 3204,415 3176,235 3162,557 5,019 3,753 270 Legal tender, etc......... Total reserves.......... 3 2 0 8 , 1 6 8 3181,254 3162,827 Discounts—secured by 85,638 104,111 140,499 U. S. securities........ 34,969 41,128 Discounts—all other. . 33,197 1,492 8,149 11,085 Purchased bills............ 33,070 28,379 48,489 U. S. securities............ Total earning assets. 3148,706 3195,718 3225,782 48,626 67,426 77,362 Uncollected items....... 1,502 2,059 2,206 All other resources___ 3407,002 3446,457 3468,177 T R . .. otal J a n . 7, 1921 BUSINESS INDICATORS STATEMENT Federal Reserve Bank of Philadelphia (000’s omitted) RESOURCES Loans and discounts: Secured by U. S. securities Secured by other stocks and bonds....................... All other............................. Investments: United States bonds......... U. S. Victory notes.......... U. S. Treasury notes.... U. S. certificates of indebtedness...................... Other bonds, stocks and securities......................... Total loans, discounts and investments.... Demand deposits................ Time deposits...................... Borrowings from Federal Reserve Bank.................... J u ly 13, 1921 J u n e 8 , 1921 Y e a r ag o 38,326 13,069 2,816 106,062 3,108 3111,986 255,772 19,179 58,030 . 1,815 3468,177 P erce n ta g e increase o r decrease con ip a re d w ith P revious Y e a r ago m o n th Philadelphia banks: Loans........................ 3673,177,000 -3.2% -10.1% Deposits................... 605,330,000 + -7% -12.7% Ratio loans to deposits..................... 111.2% 115.7%* 108.% * Federal Reserve Bank: Discounts and collateral loans......... 3117,510,000 -12.2% -3.11% 65.4% 57.8%* 49.2%* Reserve ratio........... 90-day discount rate 6.%* 6%* s y 2% Commercial paper.. _ 6H-6y2% 6M-7%* 8.%* J u n e , 1921 P e rce n ta g e increase o r decrease co m p ared w ith P rev io u s \ ear ago m o n th Bank clearings: In Philadelphia. . . 31,769,343,000 +9.9% —22.5% Elsewhere in district..................... 156,506,000 + 12.7% —10.4% Total................... 31,925,859,000 + 10.1% —21.6% Building permits, Philadelphia.......... 4,587,395 +28.5% —32.0% Post office receipts, Philadelphia.......... 1,161,581 +.6% -10.2% Commercial failures in 26* district (per Dun’s) 71 69* Latest commodity index figures: Annalist (food 159.130 -3.5% —48.4% prices only)........ Dun’s...................... 159.833 -3.7% —38.6% 10.7284 +1.0% —44.6% Bradstreet’s ........... *Actual figures -----—
@FedFRASER