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Business Conditions Report o f the Federal Reserve Bank o f Philadelphia August 26, 1920. FEATURES G ood crops on the way. Freight embargoes and poor transportation hampering business. Coal shortage still prevails. General inactivity in textile trades. N o change in credit conditions. GENERAL SUMMARY T H E transportation situation is so controlling a factor in the business life of this district that it is engrossing the attention of all business men. Practically every industry which has even a fair demand for its output has had production checked either by in ability to get cars or inability to ship or receive merchandise. Slight improvement is reported from time to time, but it is not nearly sufficient to be of material aid and many manufacturers state that a continuation of present conditions for even a short time will further curtail their operations. The focusing of atten tion on the danger of a short coal supply has resulted in drastic action on the part of the Interstate Commerce Commission, but the problem still presents many difficulties. The award of higher rates to the railroads by the Interstate Commerce Commission is undoubtedly a most important step in the right direction. It will now be possible to secure new equip ment and make such improvements as are necessary to facilitate the movement of freight. A rapid recovery is not possible, but steady progress can and should be expected. 1 Prices in textile, leather and shoe lines continue to drop, due to the small demand for such products. The index of wholesale cloth and clothing prices, compiled by the United States Depart ment of Labor, declined 5.5 per cent during July, which furnishes some measure of this tendency. The general level of wholesale prices, according to the same authority, decreased 2.5 per cent. Coal, coke and some iron and steel products are higher. The roots of labor unrest are perhaps deeper than many of us think. During the period of expanding production, wages went higher and higher without curb or serious thought because of the needs of the times. As a consequence many workers spent their greatly increased wages with little regard for the future and felt practically assured that they could get more by asking for it. Others accepted higher wages, but worked fewer days. W e are now experiencing curtailment of production due to the revulsion against high prices, and as a result many operatives are working part time and some are out of employment. This has caused an increase in industrial efficiency in some plants, though in others the old disregard of production and desire for more pay still holds sway. Many employers question the permanency of the improve ment in the attitude of labor and feel that it is due only to the present decrease of employment. Collections reported slower W ith the intention of securing more definite data on collec tion conditions in this district, a questionnaire was sent to many of the leading manufacturers and wholesalers. The replies indi cate that slowness predominated in those lines which have been affected by declining business demand, as would be expected. Cigar manufacturers, wholesale grocers, and manufacturers and jobbers in the textile and leather lines have had many difficulties, except in the case of such concerns as were fortunate enough to have customers who were all very responsible and conservative in their management. It would be difficult to assign a particular time at which any line first experienced this slowing-up of collections, though it can be generally said that the order of their succession was somewhat as follows— silk goods, clothing, wool cloths, knit goods, leather and cotton goods. Apparently the period at which they were worst was in June and July, while August shows a slight recovery in some lines. The manner in which this tendency was principally manifested was in the taking of full time before payment, instead of taking 2 advantage of such discounts as might be had. Where several dis counts were offered the higher rates were neglected. Many firms reported an increase in past-due paper and requests for extension of time are far more general than six months ago. Notes are apparently in disfavor and are taken only as a last resort. Judging from our reports, it would appear that the manufac turers have been the slowest pay, with jobbers and wholesalers next. Retailers, since they enjoy largely a cash business, can be expected to be the best pay. RETAIL TRADE Buying active; medium-priced articles in demand In contrast with the business situation in manufacturing lines and in the raw material markets, retail trade continues very active, and it is reported that the volume of trade for the past month was in excess of the same period in 1919. While there is a marked tendency on the part of the public away from luxury goods, its purchasing power has not been diminished, and as a result there is a strong demand for the medium price staple articles. Retailers are experiencing no difficulty in obtaining necessary supplies, with the possible exception of a few odd lines. They are, however, holding off in the placing of their usual orders for fall merchandise in the expectation of lower prices. Whether this hope is to be realized is problematical. Due to the curtailment of operations in manufacturing lines, scarcity of goods may be the result when retailers enter the markets in large numbers. This may tend toward higher rather than lower prices. The outlook in the retail trade is exceptionally bright, and there is a feeling that the fall will witness a continuation of the present large volume of sales. Below are given the figures showing conditions in the trade for the month of July as compared to June, 1920, and July, 1919: R E T A IL T R A D E O F D E P A R T M E N T S T O R E S July, 1920 Net sales: For month named compared to same month, 1 9 1 9 .... For period from July 1 to July 31, 1920, compared to same period last year ................................................. + 23.8% Stocks at end of month named : Compared to same month, 1919........................................ Compared to previous m onth............................................. + 28.3% - f 3.3% Ratio of average stocks for period from July 1 to July 31, to average sales for same period ...................................... 399.7 % Ratio o f outstanding orders at end o f month named, to total purchases during year 1919 ................................. 19.8% 3 + 23.8% AGRICULTURE Outlook fo r district excellent The past month has been exceptionally favorable for the growth of vegetation throughout the entire district and practi cally all crops have exceeded the July estimates. The fruit crop has turned out very well and the trees are simply loaded down with ripening fruit of all kinds. Crops as a whole are bountiful and the law of demand and supply has already manifested itself in this direction with the downward trend in the prices of produce and fruits. Tractors are being tried out by a large number of farmers, especially the rather recently developed tractors of two or threeplow capacity. Their exact place on the farm has not yet been fully established. Farm tractors are not practical for all farms, especially on hilly ground and where the land is cut up by streams. As a rule the tractor is finding more favor with the large farmer. There is a wide gap existing between the prices farmers are receiving for their goods and those exacted from the consumer as reported by the various county agents and superintendents of farm demonstration, primarily due to the fact that there are too many transfers of the goods and 50 to 100 per cent is added to the original cost with each successive transfer. There is already a movement on foot to bring about a more scientific system of marketing. The table given below will show the increased production o f various crops for New Jersey and Pennsylvania: PENNSYLVANIA A U G U S T 1,, 1920 Crop Estimated condition (per cent) Estimated yield per acre Estimated total production LAST YEAR PAST TEN YEARS Final production Average production 61,115,000 bu. 23,722,000 “ 37,898,000 “ 4,549,000 “ 23,580,000 “ C orn ............ 86 40.4 bu. W h e a t......... 16.6 “ 58,973,000 bu. 25,581,000 “ 72,192,000 bu. 28,665,000 “ Oats.............. 93 97 R y e .............. Potatoes.. . . 94 92 35.5 “ 16 “ 40,934,000 “ 3,424,000 “ 96.6 “ Sweet potatoes 91 23,281,000 “ 118,000 “ 36,859,000 3,648,000 25,400,000 138,000 A pp les.......... Peaches. . . . . 81 Pears............ Hay (tame) L18 “ 18,871,000 “ 1,967,000 “ 75 80 91 632,000 “ 1.45 tons 4,318,000 tons 4 “ “ “ “ 115,000 “ 7,972,000 “ 1,200,000 “ 355,000 “ 4,319,000 tons 4,248,000 tons NEW JERSEY AUG U ST Crops Estimated yield per acre Estimated condition (per cent) Corn............ W heat......... O ats............. R y e .............. Potatoes.. . . Sweet potatoes A pples........ P each es.. . . P ears............ Hay (tame) 88 88 96 94 95 93 84 74 70 98 1, 1920 40 bu. 16.3 “ 33.6 “ 17.5 “ 129.1 “ 135.8 “ 1.64 tons Estimated total production 10,240,000 bu. 1,549,000 “ 2,587,000 “ 1,260,000 “ 13,824,000 “ 1,901,000 “ 3,225,000 “ 1,032,000 “ 764,000 “ 554,000 tons LAST YEAR PAST TEN YEARS Final production Average production 10,800,000 bu. 1,962,000 “ 2,461,000 “ 1,296,000 “ 10,560,000 “ 1,750,000 “ 2,313,000 “ 1,018,000 “ 500,000 “ 487,000 tons 10,603,000 bu. 1,602,000 “ 2,327,000 “ 1,291,000 “ 9,903,000 “ 2,627,000 “ 2,241,000 “ 937,000 “ 605,000 “ 499,000 tons BUILDING AND BUILDING MATERIALS Building inactive There is practically no building of any kind going on at the present time because of the uncertainty of securing building ma terials, unsettled labor conditions, transportation difficulties and the inability on the part of banks and building and loan associa tions to take on any more mortgage loans. To complete small two-story dwellings has required fully one year. This means that the houses started in the spring and sum mer of 1919 are just being completed and that contracts for ma terial and labor were made under conditions then existing. The prices of building in 1919 represent an advance of about 100 per cent, over 1914, whereas building costs this year average close to 170 per cent. The following comparative table will illustrate: August 1, 1920 1914 $3,000 4,000 5,000 6,000 8,000 10,000 12,000 house house house house house house house ............... ................... ............... ................. ................ ................. ................ ................. ................ .................. ................ ................. ................ .................. $8,000 11,000 13,500 16,000 22,000 27,500 31,000 It is estimated that to build a small dwelling house now, the cost would be at least two and a half times the cost of producing the same kind of a house in 1914, and it is the general opinion that there is no prospect of an early reduction in these costs on account of the unsatisfied demand for houses and the increase in population. 5 The trend of rents is distinctly upward. Rents to date are higher than at any time heretofore. Two-story houses, which formerly rented for $25 and $30, are now bringing between $60 and $80 per month. Home buyers and building operators are experiencing consid erable difficulty in the matter of financing the buying or building of homes. Mortgage money is very scarce, as banks and building and loan associations are not increasing their mortgage holdings due to the tight money market, and investors are inclined to be less liberal than heretofore and a great deal of money which for merly was placed on first mortgage is now being diverted to other investment channels, where the returns are greater. Decreased demand fo r building materials The great decrease in industrial and residential construction in practically every section of the country will inevitably affect building materials. Lumber has already turned downward. Other building materials may be expected to follow. Production of building materials in general has by no means equalled capacity, as labor troubles, shortage of materials, and transportation have intervened, and new orders which forecast the future are rapidly declining. Prospects now favor a more rapid replenishment of stocks. Lumber supply easier The demand for lumber has fallen off appreciably in the last few weeks and mills are offering stocks more freely at lower prices than asked two months ago, the wood mostly affected being long and short leaf yellow pine, which in some grades has dropped about 30 per cent. White pine and hemlock are more firm and prices have not declined although both are offered more freely. Hardwoods are also on the decline but it is still difficult to get dry stock in some grades. Prices generally are 25 to 100 per cent higher compared with one year ago, depending on the kind of wood wanted. Brick prices hold firm While there is a lull at the present time in the demand for building brick, yet the market holds firm, with an advance in price of about 10 per cent since the first of the year. There is no noticeable surplus of stock on hand, manufacturers claiming that they are filling orders for current demand only. As most of the brick plants are located at the source of supply, their main diffi 6 culty lies in the inability to secure sufficient quantities of coal caused by the congested transportation situation. Urgent demand fo r hardware The demand for hardware continues unabated, and manufac turers are unable to keep pace with the demand. This condition may be ascribed to various causes—slow transportation, and inability to secure raw materials and the changing over of many plants from a war-time basis to a peace basis. Comparison o f 1914 and 1920 prices The following table, which was furnished us by a prominent builder of this city, will show the advances in prices over 1914 of the various building materials: 1914 Bricks ............................. ........... $7.00 Cement .......................... ........... 1.55 Rough lumber ........... ........... 20.00 Flooring ........................ ........... 30.00 Lath ................................. ...........5.00 Builders’ l i m e ............. .................25 Prepared plaster ......... ...........2.00 Jersey gravel ............... ........... 1.70 Bar s a n d ........................ ........... 1.70 Structural i r o n ........... ........... 1.40 Tin ................................... ...........2.10 Felt ................................. ........... 30.00 Slag ................................. ........... 1.80 Pitch ............................... ................. 70 Nails ............................... ........... 3.00 Sash cord ...................... ................. 55 Tile w a l l s ...................... ................. 30 1920 1,000 barrel 1,000 £t. ii a bushel barrel yard ii hundred lbs. box ton ii hundred keg base hank foot $22.00 2.72 65.00 125.00 17.50 .65 5.60 3.30 3.30 5.25 6.20 110.00 4.00 2.00 7.50 1.75 1.50 1,000 barrel 1,000 ft. ii a bushel barrel yard ii hundred lbs. box ton ii hundred keg base hank foot COAL Slight improvement in car situation Moderate improvement in production and transportation of coal has taken place during the last month. With the official ending of the strike in the central western bituminous fields, pro duction is estimated at over 11,000,000 tons per week. Cars are moving a little more freely to destination and operators report a somewhat improved supply furnished the mines. The decision of the Pennsylvania Public Service Commission forbidding railroads to supply open-top cars to mines which load their coal on wagons and are not provided with tipples is expected to help the situation in this state. 7 The bituminous production for the first six months of this year is estimated by the United States Geological Survey at 226,000,000 tons as compared with 218,000,000 tons in the correspond ing period last year. After deducting the tonnage of bituminous imported, the net exports of coal in that period were 10,724,000 tons this year, as compared with 6,507,000 in the first six months of 1919. This would indicate a balance for domestic consumption of 215,000,000 tons this year, against 211,000,000 tons last year, shown as follows: 1920 (six months) 1919 (six months) Production N et exports Balance 226,000,000 218,000,000 10,724,000 6,507,000 215,276,000 211,493,000 In spite of predictions in certain quarters that prices for spot coal would ease off, no improvement is yet to be seen. The new freight rates effective August 26 will add from 65 to 85 cents a ton to the cost of anthracite coal to the retail dealer. In addi tion to the freight rates the independent shippers have added 25 cents to their former mine prices, which makes their rates now $9 for egg, stove and nut, and $7 for pea coal. It is thought that the domestic sizes will not sell for less than $16 to the consumer, following the addition of these latest advances. Bituminous coal continues high in price, although the trend is downward. This is shown by the fact that since the $15 price dropped two weeks ago, most sales have been made at $13. The follow ing chart shows average daily production of bitu minous coal during 1917, 1918, 1919, and seven months of 1920. Millions o f tons A V E R A G E D A IL Y P R O D U C T IO N .O F B IT U M IN O U S C O A L A new feature of the present situation is the tendency of large industrial plants to assure themselves of a supply of coal at 8 reasonable prices through control of production and transporta tion by purchasing coal mines and railroads leading thereto and in this manner assuring themselves of a dependable supply. The demand for anthracite apparently grows stronger daily. Producers, however, maintain there will be plenty of anthracite for domestic consumption next winter, although it is not possible for every householder to secure his year’s supply this summer. A year’s supply cannot be mined and delivered in a few months. It appears that production is sufficiently great to supply current needs, but not to supply the current buying for accumulation. The European demand for bituminous coal is very urgent and they are bidding strongly for all the American coal that we can spare after caring for our domestic needs. W ith coal selling at European ports for $35 and $40 a ton and charter rates to French Atlantic ports $11 to $12 a ton, Rotterdam the same, and west coast of Italy about $14.50, it is evident Europe can be ex pected to bid high prices for coal in this market. This condition has enticed much American coal into the spot market and has advanced prices at north Atlantic ports up to $20 a ton. The transportation of bituminous coal to New England con tinues very heavy. It is reported that during the last week of July, 6,368 cars were forwarded to New England destinations through the five Hudson River gateways of the Harlem River, Maybrook, Albany, Rotterdam and Mechanicsville. W ith the exception of the preceding week this was the largest movement of the year and one of the largest on record, being 1,489 cars, or 30 per cent greater than that of the corresponding week of 1919, which amounted to 4,879 cars. Anthracite movement to market is re ported somewhat improved as concerns the north, while ship ments from Pennsylvania fields to Philadelphia and other points to the south are still slow. Unfortunately the outlaw strike has been very disastrous to the railroads, the men, in some cases, deliberately removing tickets from cars, making it impossible for the railroads to tell where or to whom cars were moving, and causing a needless tying up of equipment. This has been overcome and within the next thirty days we should see a better movement of coal cars by the railroads. IRON AND STEEL Industry dependent upon solution o f transportation problem Iron and steel producers still suffer seriously from transporta tion inadequacy, which has been delaying the shipment of ma terials. In certain lines slackening in demand has been noticed, 9 which is ascribed in part, at least, to the uncertainty of the de livery date. While some hold the view that a clearing-up of the car situation would result in producing a supply in excess of de mand, few manufacturers subscribe to this opinion. They are unwilling to accept business for 1921, but this hesitancy appears to be due more to the uncertainty of the price and production situation than to any other factors. Increased railroad freight rates are expected to add considerably to manufacturing costs. Pig iron prices increase Demand for pig iron is steady and inquiries are in greater volume than producers can accommodate. The average daily pro duction during July— 98,937 tons— shows a falling off from the June total of 101,451 tons, though considerably above the low point touched in April. The greatest difficulty is encountered in securing sufficient quantities of coke, and such supplies as are available are said to be deficient in quality in many instances, resulting in further curtailment of output. High fuel prices have caused advances in prices and no. 2X Pennsylvania pig was quoted at $52.90 on August 17, as compared to $48.15 a month previous, and $29.60 a year ago. Furnaces are booked for the rest of the year. In some quarters an increase in fuel supply with declining quotations for coke is expected to result in easier prices for pig iron. A large manufacturer, whose principal product is bar iron, is optimistic about conditions for the rest of the year. He states that no weakening whatsoever is to be found in demand and that their production is held back only by hot weather and the car situation. Steel ingot production smaller; structural steel quiet Steel ingot production decreased quite noticeably in July, the output of representative companies being 90,413 tons daily, on the average, as compared to 99,356 tons in June. The July total is not far from the low point of 87,943 tons in April. That there is no slackening in demand is evidenced by the unfilled orders of the United States Steel Corporation, whose unfilled orders increased 139,000 tons to a total of 11,118,000 tons during July. The structural steel market has been quieter due to decreased building activity in some places, and the impossibility of shipping material to customers. New business offered during July to the members of the Bridge Builders’ and Structural Society totalled 79,350 tons, which compares with 86,550 in June and an average 10 of 133,200 tons for the first six months of 1920. Orders taken in July were about 46 per cent of capacity and shipments were 68 per cent. This percentage of shipments to capacity is greater than that of June, which was 66 per cent. Orders on hand were sufficient for more than three months’ operation at capacity. In quiries for 1921 delivery have been received but few, if any, orders are being taken. Prices show some weakness. Rails are in strong demand, as might be expected with the improved financial outlook of the railroads, and inquiries for next year are being made. Plates in fair demand; sheets active Steel plates for certain uses, such as ship construction, have been in smaller demand, but for car and building repairs the mar ket is quite active. Prices hold firm due to high costs and trans portation delays. Orders are on hand for the rest of the year in a number of plants, though this is not universally true. Steel sheets are in steady demand. Tin plate inquiries have not been so strong lately due to the credit situation and the disadvantageous position of foreign ex change. This does not cause the manufacturers any concern, how ever, as they have a large amount of business on their books. Founders’ business may benefit from railroad buying Demand for castings—both iron and steel—and forgings has been rather weak. It is stated that this does not apply to small castings, but to large work, on which the foundries depend for ton nage. Prices of castings are almost without change and condi tions indicate their continuation at a fairly stable level. Orders on hand are sufficient to assure operations in the case of some plants for three or four months, while others are expecting opera tion at full capacity for the rest of the year. With the manifesta tion of greater interest on the part of the railroads much heavy work is expected. Prices o f wire products steady Wire rope has enjoyed a steady market for some time past and manufacturers have a large volume of business on their books which remains to be filled. Latest reports show a weakening de mand which is ascribed to delays in manufacture, because of slow transportation. Operations are now at the rate of 70 to 80 per cent. Prices show no change. 11 Chain prices also hold firm, but there has been no decrease in demand. Supply is considerably below the needs of consumers. The outlook is considered satisfactory. Active demand fo r machinery and equipment Certain types of machinery which are largely used by the railroads are still slow in moving as the roads are concentrating at this time on equipment needs, with the result that car builders and locomotive manufacturers are experiencing a strong demand. It is not thought that there will be much delay in the placing of orders for cranes, riveters, etc. Special kinds of track work are in good demand from steam railroads, but the hope of the manu facturers for a much larger volume of business may not be real ized until next year. Electric roads are said still to be restricted in their purchases from monetary considerations. Power transmission machinery is in very good demand, and one manufacturer informs us that the orders on hand are in as great quantity as ever in their career. This condition is said to be due to the extension of facilities by industries. The difficulties which labor shortage causes impel many plants to install labor-saving machinery of all kinds, and the busi ness of concerns manufacturing such machinery is good. A large company draws attention to the strong demand now and gives it as their opinion that it will be still stronger next year. The large amount of road construction and improvement has caused a steady demand for road machinery, which the manufac turers are unable to supply. As a consequence, prices are firm and are expected to continue so unless present labor and material costs are reduced. Due to large road-building programs as yet not carried out, this kind of machinery will probably have a ready market for a long time to come. SHIPBUILDING Bulk o f orders placed are fo r tankers Due to the large number of cargo carriers offered for sale by the Shipping Board, that type of ship is in very little demand. Tankers are in fair demand but the amount of new business in all lines being offered is comparatively small. Orders on the books of the yards show considerable variation in amount but it is thought that operations can be maintained into the year 1921. Ships ordered from or building in American shipyards for private 12 account totalled 435 vessels of 1,594,921 gross tons on July 15, according to the Atlantic Coast Shipbuilders’ Association. Of these, 121 ships, of 814,906 gross tons, were tankers. Prices are stationary. American yards are said still to have the advantage in ability to make prompt delivery, and foreign yards, though enjoying lower wages, have not found it possible to get down to a working basis and have not sufficiently modern equipment to underbid us. It is said that English shipbuilders will only take contracts on a cost plus profit basis. It must be recognized that such circumstances will not always exist and it is, therefore, necessary to hold costs down in order to be able to face future competition. The new Merchant Marine Act meets with the general ap proval of the shipbuilders. They feel that the future of our mer chant marine is assured if it is carefully administered, and empha size the importance of appointing men to the board who are prop erly qualified. COTTON YARNS Market continues dull Further curtailment of operations was noted among cotton yarn manufacturers during the past month. Many manufacturers to avoid doing this are offering large lots of yarns at lower prices, but the buyers, especially knit goods manufacturers, are of the opinion that prices will find still lower levels. They base this contention on the condition of the money market, holding that if funds are difficult to obtain spinners will be forced to still further reduce their prices to dispose of their product. Spinners who are still operating are therefore accumulating large stores of finished product in the hope that an active demand will soon develop, for which they desire to be prepared. Buyers, on the other hand, are using this accumulation of stocks as an additional reason for awaiting further developments before placing orders, feeling that with the continued absence of demand, manu facturers will slash prices to bring buyers into the market. There is, therefore, no demand on the part of the spinners for raw cotton, and the spot market remains exceedingly quiet. Collection conditions in the cotton yarn industry are ex tremely poor, and requests for extensions are common. The transportation situation continues to hamper the industry, as de liveries of raw cotton to the mills and shipments of the product when finished are still subject to considerable delays in transit. 13 This accentuates the financial situation in that capital is being unduly tied up in merchandise which should reach the markets and be converted into cash weeks before it is possible to do so today. The acute condition of the cotton yarn industry is attributed in large measure to the restricting of credits by the banks. This, manufacturers feel, has created a loss of confidence in which all elements of the industry fear to operate. This action by the banks, however, is commended on numerous sides. T o quote from one of the larger cotton yarn spinners, “ W e believe the position taken by the banks is the correct one. It is bound to have a good effect in the end. Prices have been entirely too high and profits too great, and this is certainly a good way to bring them down.” The outlook for the balance of the year is very doubtful, al though it is hoped that with a continuation of the present decline in yarns a level will soon be reached where manufacturers, jobbers and retailers will feel it is safe to operate. WOOL Entire wool industry stagnant An unprecedented situation exists in the entire industry today. From the raw wool markets to the retailers of woolen products, there is an absence of buying activity such as has never been known. As has been the case for the past two months, there is prac tically no market for raw wool, and as a result there are no regular price quotations. Some few sales of small lots have been reported and the prices for these are from 30 to 50 per cent below the peak of the early part of the year. The cause of the situation in the raw wool markets may be traced in large part to the ultimate consumer. Protesting against the exhorbitantly high cost of woolen clothing, the public refrained from buying and retailers, therefore, were forced to resort to special sales to dispose of their stocks. These sales have been productive from the retailers’ standpoint, but they in turn, sensing the public feeling and the business situation in general, have placed but few orders for new stocks. This has caused clothing manufacturers to greatly curtail operations and they have placed no orders for woolen piece goods. Such is the apathy shown in the market that samples for next spring’s materials, which in normal times would have been displayed in July, have not been prepared in numerous instances. 14 In the few lines of woolens that have been opened a decline of approximately 15 per cent, as compared to the prices of spring, 1920, is noted. With the lack of demand for their product, woolen goods manufacturers are placing no orders for yarns. There is also no demand on the part of carpet manufacturers. Yarn spin ners, in their turn, are contracting for no raw wool, and this product is therefore a glut on the market. Warehouses are loaded, and dealers see no end of the present situation until after the elections, when they hope activity will again manifest itself. A hopeful sign is to be seen in the fact that inquiries are becoming general, tending to show that the trade is keeping in close touch with the situation even if showing no immediate inten tion of entering the market. SILK Some activity manifested in broad silks Following the sharp declines in the raw silk market during the last two months, the cutting up trade looked for radical re ductions in broad silks. These materialized during the past month and considerable interest was manifested in the market, with some few purchases being reported. There were no fixed prices and buyers, therefore, made numerous inquiries before placing orders, desiring to obtain the best possible quotations. The buying move ment, however, was not a general one, for greater reductions are expected since raw silk continues its downward trend, further de clines having been noted during the early weeks of August. Few silk mills remain open, and in these curtailed operations are general. Labor conditions, therefore, are satisfactory, for workers, realizing the possibility of losing their employment, are content with present wage scales and hours of labor. Many of the operatives who have been laid off have found positions in other industries. Collections are very slow as compared with last year, and manufacturers expect no improvement for some time to come. The outlook in the industry continues very uncertain and no ac tivity on a large scale is looked for during the balance of the year, although some business is expected. KNIT GOODS Almost no market fo r underwear The deadlock between underwear manufacturers and jobbers, which has existed for the last two months, continues, and the 15 break is not yet in sight. It was expected that September 1 would see the quotations of spring 1921 prices (which have now been delayed over two months), but the present prospect is that they will not make their appearance before the latter part of the month or early in October. Since jobbers are waiting for lower prices, manufacturers are making no attempt to sell their product or to force the markets, for they hope that with the continued decline in yarn prices, lower quotations may be possible. One concern has made tentative quotations to jobbers as fol low s: Suits, $12.75 per dozen; vests, $6.50 per dozen. These rep resent an advance of from 40 to 50 per cent over last year’s prices. To prove that these advances are legitimate and entirely called for, the manufacturer analyzes these figures, as follows: Material .................................................... 63% Labor .......................................................... 7% Superintendence Transportation Overhead Miscellaneous Selling Commission 1 ................................... 10% Discount J Profit ........................................................... 8% Yarn constitutes 95 per cent of the material cost. The yarns which went into underwear for spring, 1920, cost from 80 cents to $1.15 per pound. In May and June, 1920, when yam ordinarily would have been purchased for spring, 1921, it was quoted at $2.50 to $2.65 per pound. Since July 1 of this year, it has fallen to $1.50 and $1.65 per pound, which is still more than 40 per cent higher than last year, and the prices of trimmings and thread are from 60 to 100 per cent higher. Labor, transportation and other expenses have also advanced considerably. With such operating conditions facing them, manufacturers can see no means of making quotations to meet the desires of the jobbing trade unless yarn prices register very substantial declines. As a result of the jobbers’ policy, the industry is practically at a standstill. Some few concerns, however, are still operating filling back orders, and to these the transportation situation fur nishes a grave problem. One firm reports that it was forced to close its plant for two weeks, awaiting yarns in shipment. Collection conditions are extremely poor and the situation in the industry as a whole is very depressing. 16 Below are published figures for the underwear industry, show ing operating conditions for the month of July, as compared to June, 1920, and July, 1919: O P E R A T IO N S IN T H E U N D E R W E A R I N D U S T R Y -J U L Y , 1920 Per cent increase or decrease as compared to June, 1920 July, 1919 1. 2. 3. 4. 5. Product manufactured during month (selling p rice)............ Finished product on hand at end o f month (selling price) Raw materials on hand at end o f month (cost price).......... Orders booked during month (selling p rice)......................... Unfilled orders on hand at end o f month (selling price) . . . — 16.9 — 13.0 + 4 6 .6 -----— 15.6 -----— 60.0 -----— 2 3 . 4 ------ Interest in hosiery market still lags The situation in the hosiery industry is little better than that in underwear. The only buying demand is for export, and this is in very small volume. The domestic business is at a standstill. There is no question of price, as jobbers refuse to make commit ments at any quotation and there is a general loss of confidence throughout the trade. Manufacturers hold the policy of the banks in curtailing credits as responsible for this situation, and many of them have been forced to dispose of investment securities at decidedly lower prices in order to obtain funds to operate. The outlook in the industry is very dull, and the end of the present situation is not in sight. Many concerns, however, report interest in the nature of inquiries on the part of jobbers and dealers and they hope for a resumption of activity during the fall months. The following statistics portray conditions in the hosiery in dustry for July as compared to July of last year and June, 1920: O P E R A T IO N S IN T H E H O S IE R Y IN D U S T R Y —J U L Y , 1920 For firms selling to the wholesale trade . Product manufactured during month (selling price)............ 1 2. 3. 4. Finished product on hand at end of month (selling price) Raw materials on hand at end of month (cost price).......... Unfilled orders on hand at end of month (selling price). . . . Product manufactured during month (selling price)........ Finished product on hand at end of month (selling price) Raw materials on hand at end of month (cost price). . . . Unfilled orders on hand at end of month (selling price).. — 36.2 -f- 6.2 — 5.0 — 17.6 — + + — 17.5 137.7 84.5 35.2 Per cent increase or decrease as compared to June, 1920 July, 1919 For firms selling to the retail trade 1. 2. 3. 4. Per cent increase or decrease as compared to June, 1920 July, 1919 17 — 49.8 — 14.1 + 7.3 — 10.9 6.4 43.5 + 130.2 — 82.2 BUSINESS S I T U A T I O N Compiled as of August 21, 1920 Business Philadelphia Fedid Reserve District Demand Ability to supply demand Price trends l aw material or merchandise situation Attitude o f labor Transportation Collections Fair Very poor Good Fair Very poor Slower Outlook for balance o f year Demand good • Output improving COAL Very strong Unable Higher IRON AN D ST E E L Good Unable Firm Poor SH IPB U ILD IN G Weak Firm Poor COTTON Y A R N S Inactive Able Lower lood Fair Poor Poor Uncertain W OOLEN YARN S Inactive Able Lower rood Fair Poor Poor Uncertain W O O L E N S and W O R S T E D S Inactive Able Lower rood Fair Poor Poor Uncertain SILK GOODS Inactive Able Lower rood Fair Poor Poor Uncertain H O SIE RY Inactive Able Lower rood Poor Poor Uncertain UNDERW EAR Inactive Able Lower rood Poor Poor Uncertain LEATH ER Inactive Able Lower rood Poor Poor Uncertain SHOES Inactive Able Lower rood Poor Poor Uncertain PAPER Very strong Unable Higher •oor Poor Good Good C H E M IC ALS (IN D U S T R IA L ) Restricted Able Firm rood Improved Poor Slower Uncertain DRUGS Strong Able Firm to higher rood! Improved Poor Slower Encouraging R U B B E R T IR E S R U B B E R PRO D U CTS Poor ) Strong J Able Lower rood Good Poor Slower Good TOBACCO Very strong Unable Higher rood Fair Very poor Satisfactory Good M E A TS Dull at this season Able Lower rood Excellent Poor Good Good Fair Poor ......... 18 Demand good Output uncertain 19 LEATHER, HIDES AND SHOES Retailers dispose o f stocks; more interest in shoe market W ith the end of the summer season in sight, shoe retailers during the past month resorted to sales, extensive advertising and radical reductions to dispose of their stocks, and lower retail shoe prices were quoted. The public, which had been refraining from purchasing high price shoes, took advantage of these reductions with the result that in most cases retailers were able to accom plish their purpose. As a result, the retail trade is now manifest ing some interest in the shoe market, and while few orders—and these only for small lots—have been placed, inquiries have been general and shoe manufacturers look for fairly substantial orders for next spring’s shoes when their salesmen take the road early in September. With this as a prospect, plants which have been shut down or running at a minimum capacity for the past two months have now resumed operations preparing samples. To meet the public demand for a lower price shoe, the styles, it is said, are to be more conservative and in many cases the popular lines will be made of leather other than the best grades. While at this time of the year dealers and retailers should be* receiving shipments of fall shoes, in the majority of cases, the orders have not yet been placed. Since manufacturers refused to produce for stock and therefore curtailed operations, a scarcity in these lines is looked for when retailers enter the market. Delivery from five to six weeks from date of order is the best manufacturers will promise. They, therefore, expect much competitive bidding to obtain the available supplies. This, they say, may cause higher retail prices for fall shoes than would have been the case had orders been placed at the proper time. The curtailment of operations in the shoe industry continues to be reflected in the leather markets, where practical stagnation still rules. Tanneries inactire But few tanneries in the district are operating and in these the production is negligible. This condition of affairs has caused the entire industry to suffer considerable losses, and one manu facturer holds to the opinion that there will be few tanneries that do not show a loss in their balance sheet at the end of the present year. Both tanneries and shoe manufacturers lay much stress upon the transportation situation as a cause for existing conditions in 20 their industries. Embargoes and delayed shipments have fur nished a serious factor both from the producing and delivering ends. This, they feel, has accounted in no small part for the loss of confidence throughout the entire industry, from the hide mar kets to the retailers’ shelves. The weakness in the hide markets continues, and as a result slaughtering both in this country and the Argentine has been de creased. It is reported that “ the slaughter of Frigorifico cattle in the Argentine up to July 1 shows a decrease in excess of 38 per cent for the first half of this year as compared to the same period last year.” Some tanners feel that this will cause a shortage of raw materials for their industry when activity on a large scale is resumed, although huge stores of hides in warehouses are reported. The weakness in the hide market and its approach to pre-war prices is clearly shown in the following table, reprinted from the Standard Daily Trade Service of August 12: C O M P A R A T IV E PRICES O F H ID E S A N D SKIN S July 31, 1920 March 6, 1920 August 1, 1914 Packer heavy native steers . . ___ 29c Packer heavy Texas steers . . ___ 28c Packer light cows .................... Country buff hides .................... ___ 17 @ 21c Country extra light hides . . . . .. . . 17 @ 21c City calfskins ............................. 38 @ 39c 31c 40c 20 @ 22c 25 @ 30c 50c 20@20^2C 19^c 19^c 16^c 17^c 20@ 20^c PAPER Demand far exceeds supply The improvement in the paper industry does not show much change over last month. The transportation problem, the coal shortage and the inability to secure sufficient raw materials con tinue to dominate the industry. Manufacturers are so far behind on orders already booked that they decline to take further com mitments, and practically 90 per cent of the purchases being made are based on “ prices prevailing at the time of shipment.” Production for the first six months of 1920 has exceeded that of the same period of 1919 by about 9 per cent as a result of some additional production both here and in Canada, as well as for the reason that there was no interruption of production by strikes this year as was the case last year. Pulp, while not much easier in price, is being offered in greater volume. A short time ago it was reported that there would be no tonnage available for 1920, and but little to offer in 1921. It appears that restriction of credits and consequent high rates for money are beginning to have their effect by squeezing out some speculation in paper, which may 21 have a tendency to change the present pulp market from a seller’s to a buyer’s market. Newsprint production reached a new level; there was an in crease of 88,000 tons during the six months of 1920 over the corresponding period last year; however, stocks on hand at mills on June 30 were only slightly larger than on May 30. Exports for May, 1920, were 12,336 tons less than for May, 1919. Prices have advanced in most grades of paper and it appears very likely that another advance will take place within the next ninety days to provide for the freight rate increase. This increase of 40 per cent in freight rates will mean an added cost of 7 or 8 per cent on the selling price of the lower grades of paper, because it takes about three and one-half to four and one-half carloads of all materials in the mill to manufacture one carload of finished product. Deliveries on contracts are said to continue in arrear of delivery schedules and mills are having difficulty in obtaining suffi cient fuel and wood supplies. With the increasing prices of fuel and wood pulp and other raw materials, it is to be expected that the trend of prices will continue upward. There is, however, one feature in the pulp situation which looks very promising and that is, this country will soon have opened up a new source of supply of wood pulp from Alaska. A rough estimate shows that the Tongass forest reserve contains about 70,000,000,000 board feet of Sitka spruce and western hem lock well situated for the manufacture of paper. The estimate indicates that the timber from that region alone will furnish a perpetual supply sufficient to meet one-half of the newsprint re quirements of the United States. The transportation and coal situation are the dominating fac tors at the present time controlling the manufacture of paper. Some mills are reported to be running from hand to mouth on coal and are forced into the spot market in order to fill their contracts. Collections as a rule are reported to be good, but not as good as a year ago. The outlook for the remainder of the year seems to be good, and the supply should improve greatly with better railroad facili ties, adequate coal supply and the new sources of raw material as outlined above. DRUGS AND CHEMICALS Outlook encouraging The inactivity throughout the textile and tanning industries has reacted upon the chemical trade, causing a restricted demand 22 for dyes and industrial chemicals generally. The anticipated re sumption, in the fall, of operations in the textile and tanning lines holds a ray of hope to chemical manufacturers, and they look forward to an active season. The drug market is enjoying more activity and better working conditions. Labor is more easily obtained and a generally im proved attitude is observed. Where maximum demands for wages are being made, greater efficiency is reported. There seems to be a plentiful supply of most raw materials at the source, but the transportation hold-ups have, in some instances, caused a shortage of supplies in hand. American crude drugs, however, are difficult to obtain. The demand for charcoal is in excess of the supply, but a falling off in the demand for alcohol has been noticed. The demand for luxury goods, such as toilet articles, seems unabated, and these are difficult to obtain in suffi cient quantities to meet the requirements of purchasers. Sales are far in advance of this time last year, with prices more or less constant, although occasional spasmodic advances are caused by scarcity in some lines. There is, however, a feeling that the forced liquidation on the part of second-hand holders of chemicals, who were keeping them in expectation of a large export business, has eased the market and that prices may soon trend to lower levels. Great inconvenience has been experienced all along the line in regard to both outgoing and incoming shipments, through em bargoes, car shortages and the tying up of capital for unusually long periods. One jobber, however, reports that a number of manufacturers, in soliciting orders for the winter months, are offering extended datings, thus affording a measure of relief along this line. A slight retardation in collections is noted, and the general restriction of credits has appeared to result in more cautious buying. The outlook for the remainder of the year is encouraging. RUBBER High money rates affecting production The rubber industry is marked by a decreasing demand for tires, which is attributed in some degree to the economy wave which has hit the country. The greatly increased production schedules which some of the larger companies carried out early in the year have resulted in a surplus of tires. A consequent re 23 duction of the wording forces has released thousands of workers and has had a salutary effect upon those remaining. Employes seem to be more willing to give a return in work commensurate to the wages paid, and are anxious for enough work to earn as much as possible. There is no difficulty in obtaining raw materials, which are in ample supply, and in some instances are offered at very much lower quotations. The buying demand is readily satisfied. Sales generally up until July of this year have been greater than for the same period of last year. T o maintain this, however, greater efforts of salesmanship have had to be called into play and dealers report a falling off in sales during August, with antici pation of a further declining market. Collections are reported as very slow and this is attributed to the fact that customers are unable to secure accommodations at the banks. The financial situation appears to have a most adverse effect upon this branch of business. One large concern writes: “ High money rates are paralyzing our business. It is taking 400 per cent more capital to carry our crude materials and stocks than it did a couple of years ago. Cotton fabrics are still from 300 to 900 per cent higher than they were before the war.” There is also a feeling that in the effort to curtail credits, the listing of tires as a non-essential has had a drastic effect upon the industry and is causing many failures. Firms are obliged to liquidate their slow-moving stocks at a sacrifice. The outlook is rather disquieting. The smaller manufacturer is feeling the effect of the overstocked condition in the larger factories and a decided trend to lower prices is looked for. Other rubber products in strong demand In contrast to the uncertainties of the tire industry, the manu facturers of vulcanized fibre, mechanical rubber goods, and rubber hose are experiencing a prosperous season. Labor has greatly improved, raw materials are sufficient to meet requirements, and the buying demand is excellent, in fact, beyond the ability to sup ply. Sales have shown an increase over last year, and although cancellations from the automobile trade have been numerous, de mand for the other products has offset this. The recent rate de cision, it is thought, will stimulate buying on the part of the railroads. Collections are slowing up. Those engaged in foreign trade report that last year “ goods were sold cash against shipping 24 documents,” but during the past year they have been giving 60 to 90 days’ time on most of their orders. The transportation situation is interfering somewhat with the receipt of raw materials and it necessitates carrying large in ventories at a time when manufacturers would like to reduce their stocks to a minimum. Plants are running at full capacity and there are sufficient orders, even allowing for a proportion of cancellations, to keep the mills busy for several months. TOBACCO Bright outlook continues Labor in the tobacco industry apparently continues unsettled and since it is not confronted with curtailed operations, is still demanding increased wages and in some cases shorter hours. Some scarcity of labor also is reported, causing very often reduced operations. The raw material supply is ample to meet requirements, the principal drawback in obtaining supplies being delayed deliveries. There seems to have been little let up in the difficulties caused by the transportation situation. It is a most severe handicap, and seems to be affecting all branches of the trade. One manufac turer from the outlying district reports that he has been within a few hours of closing his plant when delayed shipments arrived. Tobacco men especially are eagerly looking forward to the im provement which is hoped for as a result of the increased freight rates. It is expected that manufacturers will absorb the increased cost of shipment rather than add it to the prices to the public, being satisfied with the relief which will attend the normal move ment of freight. Production in the majority of plants is not up to 100 per cent capacity, and the demand for cigars still exceeds the supply. Sales as compared to last month and last year are increasing. While there is some indication of a tendency toward slower collections, on the whole, they are said to be satisfactory, and even good. The financial situation is hampering many concerns, who are feeling the restriction of credits. One firm complains that the payment of Federal excess profit taxes depleted its cash resources at a time when rising prices made necessary the use of all avail able capital. The smaller manufacturer feels this stringent con dition more keenly than the larger corporations, because he is 25 almost entirely dependent upon his bank for funds, while the big corporations are acquiring funds by issuing attractive securities in large amounts for investment purposes. Prices are high and are reported as trending higher. How ever, this anticipation may not be warranted if the present crop expectations are realized. The 1920 tobacco crop, it is thought, will exceed that of 1919 in both volume and quality. This fact, together with a decline in exports and a material increase in im ports, should result eventually in lower prices. MEATS Wholesale prices somewhat lower While this period of the year is known to be the dullest sea son of the year in the meat industry because of people leaving the cities on vacations, yet the buying continues active. The trend of wholesale meat prices has been downward dur ing the past month, packers estimate that the selling price of beef in the East has decreased approximately 10 to 25 per cent, that is, the decrease has been greater in the less costly grades than with the higher grades. The demand by the public, however, is still maintained for the better grades. The amount of goods in cold storage is comparatively small compared to that of previous years. There is reported to be a large stock of lard still on hand which will be reduced materially by the next sixty days’ con sumption. Lard is about 50 per cent of last year’s price. The labor situation in the meat industry is reported to be very satisfactory in view of the fact that they are taking on people coming from mills that have shut down. Plants are being oper ated to full capacity and are able to take on all the help they can get. The outlook for the industry is very good and a strong de mand for foodstuffs is anticipated during the last four months of this year. FINANCIAL SITUATION Little change in banking conditions Though the total reserves of the Federal reserve system show an increase during the month ending August 13, the reserve ratio shows little change. On August 13 the ratio was 43.9 per cent, which compares with 43.6 per cent at the end of June, and 43.9 per cent on July 16. Since July 16 there has been some drop in reserve deposits, but this decrease was counterbalanced by 26 an increase in Federal reserve note circulation, which reached $3,169,000,000 on August 13. This is not quite as high as the high point of $3,180,000,000 attained on July 9, just after the holi days. Earning assets are also lower than in the beginning of July. Bills bought in the open market have declined steadily since the beginning of the year, as the following comparison of earning assets will indicate: A u g. 13,1920 Bills discounted: Secured by Government war obligations.. $1,484,26?,000 All other .................................................................. 746,925,000 Bills bought in open m a r k e t................................. 574,631,000 United States securities ....................................... 375,990,000 Total earning assets $3,181,808,000 $1,296,981,000 1,292,025,000 320.618.000 304.715.000 $3,214,339,000 Banks in the third district show little change in condition during the past month. If anything, there has been a slight in crease in loans and deposits. Philadelphia Clearing House mem bers shared in the increase in loans, but they are still considerably below the figures which they reported earlier in the year. Savings deposits in this district continue to show little change. Vacations, home buying, etc., combine to hold down savings and in some sections employment is not as steady as has been the case. The summer months are usually poor savings months. Com parative figures of savings deposits for 24 scattered institutions follow : Philadelphia August July 1 , June 1, August 1, 1920.................. 1920 ..................... 1920 ..................... 1, 1919 .............. $242,087,000 241,639,000 242,015,000 223,976,000 Outside Philadelphia $49,399,000 49,575,000 49,320,000 37,614,000 Total $291,486,000 291,214,000 291,335,000 261,590,000 Steady decline in debits to individual accounts The decreased volume of general business is reflected in the debits to individual accounts as reported by clearing house banks throughout the country. If we are to take this as an indicator of business volume, and it would seem fair to take it as such, it can be said that business has been declining since March last. Debits for the week ending August 11 were $8,337,771,000, which is the smallest total for any week thus far this year with the exception of one week in February which contained a holiday. The eastern districts apparently are most affected. Average debits for the 27 weeks ending in the months specified are as follows: May, $9,338,815,000; June, $9,072,410,000; July, $8,861,924,000. Commercial paper market quiet Commercial paper dealers feel that some firms at least are adjusting their finances -to the present credit situation and are offering paper in smaller volume. The general supply is sufficient, however, to care for the small demand from the banks. It is said that greater discrimination is being shown in purchases and that first class paper only is wanted by many institutions. The average rate is unchanged at 8 per cent for good names. RICHARD L. AUSTIN, Chairman and Federal Reserve Agent. Compiled as o f August 21, 1920. 28 STATEMENT Federal Reserve Bank o f Philadelphia Month ago RESOURCES Aug. 19, 1920 Gold reserve............................ Legal tender, silver, etc.. $178,656,468 405,963 $169,217,758 242,945 $126,552,971 308,278 Total reserve............ $179,062,431 $169,460,703 $126,861,249 $138,652,805 42,081,617 11,456,111 33,677,800 $137,397,207 33,182,254 11,084,776 33,614,800 $173,229,256 21,527,756 811,438 30,053,500 $225,868,333 $215,279,037 $225,621,950 $18,234,510 195,703 72,647,279 2,584,325 $11,316,280 484,289 69,538,906 2,268,457 $14,847,728 88,909 86,338,335 77,863,697 Total resources........ $498,592,581 $468,347,672 $531,665,868 LIABILITIES Aug. 19, 1920 Month ago Year ago Year ago Bills discounted,members: Secured by Governm ent w ar obligations.......................... All oth er............................ Bills bought in open market United States securities.. Total earning assets Mutilated and fit notes on hand: Federal reserve n o t e s ... Federal reserve bank notes. Uncollected items . .. All other resources . Capital paid i n ................. Surplus.............. Profit and loss . . . . Government deposits___ Due to members—reserve account........ Collection items . . . . Gross deposits.......... F ederal reserve notes outstanding.......... Federal reserve bank notes outstanding. . . . All other liabilities.. . . Total liabilities........ $8,397,350 13,068,886 469,091 3,647,082 $8,325,500 13,068,886 469,091 2,188,364 $7,757,250 5,311,336 272,700 4,807,927 111,371,065 58,753,823 97,003,260 61,103,779 100,973,567 76,616,255 $173,771,970 $160,295,403 $182,397,749 $280,399,855 $265,129,950 $226,225,645 19,575,000 1,483,842 26,140,000 83,561,188 $468,347,672 $531,665,868 20,112,000 ' 2,373,429 $498,592,581 29 RESOURCE AND LIABILITY ITEM S o f member banks in Philadelphia, Scranton, Camden and W ilmington At the close of business Aug. 13, 1920 July 16, 1920 United States bonds to secure circulation.. ......... $11,347,000 $11,347,000 Other United States bonds and n o t e s ......... ......... 39,737,000 38.222.000 Certificates of indebtedness ............................. ......... 22,406,000 27.613.000 Total United States securities owned. ......... $73,490,000 $77,182,000 Loans secured by United States securities . ......... 44,264,000 40,749,000 All other loans and investments.................. ......... 757,180,000 727,833,000 Total loans and investments .................. .........$874,934,000 $845,764,000 Reserve with Federal Reserve B a n k ........... ......... 69,325,000 67.502.000 Cash in vault ......................................................... ......... 16,921,000 15.914.000 Net demand deposits on which reserve is computed ................................................................. ......... 688,348,000 672,455,000 Time deposits ....................................................... ......... 36,966,000 33.332.000 Government deposits .......................................... ......... 4,291,000 6,551,000 59 56 Number of banks reporting CHARGES TO ............... ......... D EPO SITO R S’ A C C O U N T S other than banks’ or bankers’ , as reported by Clearing Houses Weeks ending Aug. 18, 1920 July 21, 1920 Altoona ......................... ........... $2,631,000 $3,330,000 $3,667,000 ........................ ............ 5,950,000 5,904,000 4,779,000 Harrisburg ................... ........... 2,067,000 3,572,000 3,800,000 Johnstown ................... ............ 4,650,000 4,174,000 3,512,000 Lancaster .................... ........... 5,522,000 7,563,000 4,629,000 ............... ........... 330,977,000 349,136,000 312,379,000 Chester Philadelphia Aug. 20, 1919 Reading ........................ ........... 3,481,000 5,718,000 4,145,000 Scranton ....................... ........... 12,238,000 13,863,000 10,390,000 Trenton ........................ ........... 11,936,000 13,396,000 9,732,000 Wilkes-Barre ............. ........... 8,879,000 9,483,000 7,504,000 Williamsport ............. ........... 4,675,000 4,595,000 3,422,000 ............... ........... 8,060,000 8,072,000 9,511,000 ............................... ........... 4,249,000 4,210,000 3,559,000 Totals ............... ........... $405,315,000 $432,016,000 $381,029,000 W ilmington York 30 BUSINESS IN D ICATO RS Percentage increase or decrease compared with Aug. 19, 1920 Previous m onth ' Philadelphia banks: Loans..................................................... Deposits................................................. Ratio of loans to deposits................. $753,708,000 681,092,000 111 + 1 Jo — 2 Jo 109 Jo Year ago — + J o* 6 1 118 Jo Jo Jo* • Federal Reserve Bank: Discounts and collateral loans.......... Reserve ratio.................... 90-day discount rate........................... $180,734,000 49 6 Jo Commercial paper rate........................... 8 Jo + Jo 6 49 Jo Jo* — 6 Jo 41 Jo* 4% J o * 8 Jo* s y z jo * Percentage increase or decrease compared with July, 1920 Year ago Previous month Bank clearings: In Philadelphia..................................... Elsewhere in district............................ $ 2 , 1 9 5 , 5 3 8 ,7 0 7 — 4 Jo - f 13 Jo 1 3 5 ,8 0 2 ,7 8 3 — 12 Jo + 13 % Total clearings................................. $ 2 , 3 3 1 , 3 4 1 ,4 9 0 — 5 Jo + 13 % Building permits, Philadelphia............. Post office receipts, Philadelphia......... Commercial failures in district (per Bradstreet’s ) ............................... $ 4 ,7 2 7 ,0 0 0 — 30 Jo — 29 % 9 7 1 ,0 0 0 — 25 Jo — 23 % 32 Latest commodity index figures : Annalist (food prices o n ly )................ Dun’s ................ Bradstreet’s .......... 31 * 34 3 0 5 .8 9 3 — 0 .6 % — 1 .3 % $ 2 5 2 ,2 8 8 — 3 .2 % + 4 .4 % — 2 .7 % — 5 .9 % $ 1 8 .8 2 7 3 *A ctual figures. 21 * ON THE HORIZON In response to a request for information concerning the home building situation as compared to prewar days, a prominent Phila delphia builder has submitted the follow ing statistics covering wage rates of labor: LABOR 191 4 1920 Common labor .................................$0.17^4 Per Hour Carpenters ............................................... 40 Carpenters’ la b o r e r s .............................20 “ “ $0.55}4 Per Hour 1.12/4 .60 Plasterers ..................................................50 “ Plasterers’ la b o r e r s...............................35 “ B rick la y ers............................................... 50 “ 1.30 “ 1.25 1.10“ Bricklayers’ la b o r e r s........................... 35 “ 1.10 Stone masons .......................................... 45 “ 1.30 P a in te r s......................................................40 “ 1.00 Roofers ...................................................... 40 “ 1.10 Roofers’ h e lp e r s..................................... 25 “ .70 Cement finishers..................................... 50 “ 1.00 Cement la b o rers..................................... 20 “ .60 Tile s e t t e r s .............................................. 65 “ 1.00 Tile setters’ h e lp e r s ............................ 40*4 Plumbers ...................................................44 “ “ -80 1.15 Plumbers’ h e lp e r s..................................20 “ .75 Discussing the function of imports in foreign trade, George E. Roberts, vice president of the National City Bank, drew atten tion to the fact that in the long run, and without taking into account new lending operations, a borrowing country exports more, and a lending country less, than it imports. In the past it was necessary for this country to have a trade balance of approxi mately $500,000,000 a year in its favor in order to pay the charges 33 accruing against it abroad but in the future it will be necessary for this country to receive an equal balance in order to collect the interest running in its favor abroad. The effect of an unbal anced trade is illustrated by the present relation between Canada and this country, forcing exchange to a premium, really an induce ment to Canadians to export to this country. But the same rela tion discourages exports from this country to Canada, after Great Britain, our best customer. Thus, it is in the interest of both debtor and creditor nations to maintain the equilibrium of for eign exchange. *8 In an interesting article in “ The Manufacturer” on “ The Demand for the Open Shop,” there is published a proclamation recently issued by the Chamber of Commerce of Philadelphia (and endorsed by the Board of Directors of the Manufacturers’ Club) expounding the open shop principle and what it seeks to attain. The article says: “ Sentiment which over a long period has been crystallizing in favor of the open shop principle, has, within the last few weeks in many sections, reached the proportions of a definite demand, and almost simultaneously from a dozen differ ent parts of the country reports are received of action taken to restore that freedom by which a man may work where and for whom he chooses without first paying private license to any group or organization for that privilege, and under which, by corollary, an employer may hire and pay his employees according to their energy, ability, loyalty and productivity, and not merely as may be dictated by the walking delegate of some labor union. “ This movement is by no means a mere grouping of em ployers in certain sections in protection of their right to operate their plants according to their own best judgments. It is an outspoken determination to re-state and restore the principle of the right to work. It is a declaration that one-tenth of the people shall not dominate and dictate to the other nine-tenths. It is a proclamation of freedom in industry. It is an unmistakable assertion that an organized minority shall not, by excessive wages, abbreviated working hours and restricted production, place an intolerable burden upon the balance of the population and even threaten its safety by depriving the farmers of the initiative and even the ability to produce sufficient foodstuffs to meet the normal demands of domestic consumption. It is Americanism, and it is supported by a great majority of the American people.” 33 As an example of the beneficial influences of the open shop principle over the restricting and baneful effects of the closed shop, it cites the growth of Los Angeles as compared to San Fran cisco. “ Los Angeles has embraced the open shop principle, while San Francisco remains under the dictation of union labor. Los Angeles has forged ahead and San Francisco has stood still, or gone backward.” Concerning the rapidity with which our national forests are being depleted and the need for correcting this growing menace to the nation’s welfare, the Forest Service of the United States Department of Agriculture in a late report, states: (1) That three-fifths of the original timber of the United States is gone and that we are using timber four times as fast as we are growing it. The forests remaining are so localized as greatly to reduce their national utility. The bulk of the population and manufacturing industries of the United States are dependent upon dis tant supplies of timber as the result of the depletion o f the principal forests east of the Great Plain. (2) That the depletion of timber is not the sole cause of the recent high prices of forest products, but is an impor tant contributing cause whose effects will increase steadily as depletion continues. (3) That the fundamental problem is to increase the produc tion of timber by stopping forest devastation. The report points out that the total consumption of all classes of timber is about twenty-six billion cubic feet annually and that less than one-fourth of this amount is being grown each year. Not only are the virgin forests being rapidly stripped, but the smaller stocks, upon which the future supply of timber depends, are being used up at a greater rate than they are being replaced. The situation is indeed alarming and the solution, the report states, is a national policy of reforestation. It continues— “ Increased and widely distributed production of wood is the the most effective attack upon excessive prices and monopolistic tendencies. Depletion has not resulted from the use of forests but from their devastation, from our failure, while drawing upon our reservoirs of virgin timber to also use our timber-growing 34 land. I f our enormous areas of forest growing land, now idle or largely idle, which are not required for any other economic use, can be restored to timber growth, a future supply of forest prod ucts adequate in the main to the needs o f the country will be as sured.” The chart reproduced below shows the comparative size of original forest areas and present available supplies: New H I England O r i g in a l F o r e s t A r e a lllllllllll P r e s e n t V ir g in F o r e s t A r e a M iddle Atlantic I I R e m a in d e r o f p r e s e n t F o r e s t A r e a Lake C en tra l S.Atlantic [ _ ond . East G u lf Lower Mississippi Rocky Mountains 1 * C o m p l e t e d a ta f o r th is r e g io n n o t a v a i l Pacific Coast * ■ 20 a b le, p re s e n t to ta l F o r e s t A r e a p r o b a b / y \some 5 m illio n a c r e s m o r e th a n indicafedX ____ I______ I______ I______ I____ 80 100 /*<? MU lion A cres V In the course of an address before the United States Senate Committee on Reconstruction and Production, Otto Kahn at tributed many of the present difficulties which business is meet ing to a faulty system of taxation. “ I am convinced that the effect of the faultiness of our system of taxation is all pervasive, that you find it as a basic influence wherever you look for the true causes o f our economic troubles, including lack of transportation facilities, insufficient housing accommodation, retardation or other abnormalties of production and distribution, high rents, high prices and extravagance. I believe it is as harmful—if not more so—as any other single factor now at work in affecting the pros 35 perity and well being of the people and especially the people of small and moderate means. * * * * “ I am convinced no remedy for the very serious situation for which your committee is seeking a cure can be effective which does not include a wise and courageous revision of our existing taxation system. Such a revision is not really a task of great difficulty. For a country as immensely rich and intrinsically as little burdened, relatively speaking, as ours, it is not a very hard problem to raise by taxation the sum which the economical admin istration o f our Government requires without causing the sinister effects that our present taxation has brought about, indeed, with out causing any serious economic disturbance whatever.” C O M P IL E D A S O F A U G U S T 21, 1920 This business report •will be sent regularly to any address upon request. 36
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