Federal Reserve Bank of Philadelphia. "February 1, 1921," Business Review (Federal Reserve Bank of Philadelphia) (February 1, 1921). https://fraser.stlouisfed.org/title/5580/item/557813, accessed on April 14, 2025.

Title: February 1, 1921

Date: February 1, 1921
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image-container-0 BUSINESS CONDITIONS TH IR D F E D E R A L IN T H E R ESER V E DISTRICT ■n Report of the Federal Reserve Agent at Philadelphia to the Federal Reserve Board PHILADELPHIA, FEBRUARY 1, 1921 G E N E R A L S U M M A R Y In our last report mention was made of a slight increase in interest in the textile and leather lines. The past few wreeks have witnessed a partial realiza tion of the hopes which were aroused at that time and manufacturers have received some orders of fair size and quite a number of inquiries. These orders are almost entirely for the filling o f present needs and come as a result of the diminution of stocks in the hands of retailers. Little interest is manifested in orders for future delivery. Prices o f textiles and shoes have become a bit firmer as a result of the business which is being transacted. Iron and steel products continue in very little demand. This is perhaps natural, as the iron and steel industry continued to maintain full activity up to September, when peak prices were attained, whereas the textiles were feeling the effects of dimin ished demand early in the spring and have had time in which to effect a readjustment. Prices o f pig iron and the more finished products are unsteady and the month has witnessed further price recessions in man}7 of them. The dull building situation has produced a similar situation in the market for materials used in construction work. The results of the retail trade during the month of December were encouraging to the retailers and the volume o f trade in dollars was in excess of that in December, 1919. January has been marked by many reduction sales, and it is stated that good results have been obtained except in a few sections m which the curtailment o f industrial operations has Tesulted in strict economy upon the part of the workers. The cancellation evil is gradually spending its force as the amount o f unfilled orders that could he cancelled is reaching a minimum. There is a strong feeling in this district that some organized steps should be taken to avoid a recurrence of similar conditions in the future. More stringent contract terms have been urged, so that purchasers may exer cise care in the placing of orders and not permit themselves to be carried beyond the bounds of pru dence in the enthusiasm of the moment. A great deal of unemployment is reported through out the district. In response to a questionnaire which was circulated among the business firms about the middle of the month, 248 firms reported that there was a large amount of unemployment in their indus try, 286 reported a small amount, whereas only 53 stated that there was none. These findings are sup ported by the reports of the Employment Division of the Pennsylvania Department of Labor. The figures given below are composite totals for the cities of Philadelphia, Harrisburg, Scranton, Altoona, Johns town and W illiamsport: Persons seeking employment 1921— Jan., 2nd week................ 6,003 1st week................ 6,583 1920— Dec., 1st week................ 4,655 Nov., 1st week................ 3,587 Oct., 1st week................ 3,095 Persons requested by employers 5,156 2,011 5,134 6,914 9,230 The second week of January shows a large increase in the number of persons requested by employers. However, the great majority of these were requested for work in mines and quarries and not for employ ment in manufacturing plants. The greatest surplus exists in the line of common labor, as 4,464 persons in that class applied for positions and only 70 were requested by employers in the latest week under consideration. Reductions in wages have been made in quite a large number of plants, but the movement cannot yet
image-container-1 2 BUSINESS CONDITIONS IN THE be called general in this district. Lower compensa tion in many instances has taken the form of elimin ating bonuses and other forms of extra pay. The loans o f this Bank have decreased somewhat during the month, with an accompanying improve ment in the reserve position. The reports of mem ber banks in Philadelphia, Camden, Scranton and Wilmington show a decrease in their total loans and investments o f about 2 per cent. In answer to the question, “ Are bank credit conditions in your business becoming any easier,” 255 concerns answered “ yes” and 211 answered “ no.” The larger number of affirmative answers may be taken as an indication of an improvement in the general credit situation. A further indication is to be found in the prevalence of a 7 % per cent rate on commercial paper as com pared to 8 per cent during the last six months of 1920. R E T A IL T R A D E A review o f the retail trade situation in this Federal Reserve District for the past year discloses the fact that sales during 1920 were greatly in excess of those o f 1919. The volume o f business for the last six months did not equal that o f the first half o f the year, but it was still considerably greater than that of the closing six months o f 1919, as is shown in the table below. F or the first time in the last few years, after- Christmas reduction sales have been the policy among the m ajority of retail stores. As the figures reflect, the stocks on hand at the close of 1920 were greater than those of 1919, and there was necessity for clear ing the shelves. There is seemingly an anomaly in the fact that although sales were greater in Decem ber, 1920, than December, 1919, stocks at the end of the month were likewise greater. This was true, however, despite the determined policy of stock liquidation which retailers followed. The explanation of this lies in the fact that in the fall of 1919 retailers could not secure enough stock to take care of the trade, with the result that at the close of the Christmas season inventories were at a very low point and reduction sales, therefore, were unnecessary. In the past season, however, the retailer had no difficulty in securing all that he required, or thought that he required, and in a number of instances he overbought. As a result, stocks on hand were excessive and not even the large volume of Christmas trade resulted in the desired liquidation. T o accom plish this, January sales were resorted to. The result of these has been most encouraging, and many stores report that their sales for the month will show a great increase over January o f 1920. There are, however, two noticeable exceptions to these reports. The first is found in localities where R E T A IL T R A D E OF D E P A R T M E N T STO R E S 41 Firms Reporting Net Sales: For month named compared to same month, 1919................. ior period July 1 to end of month named, compared to same period last year.............................................................. Stocks at end of month named: Compared to same month, 1919.................................................... Compared to previous month........................................................ Ratio of average stocks at end of each month for period from July 1 to date, to average monthly sales for same period.. . Ratio of outstanding orders at end of month named to total purchases during year 1919.......................................................... July Aug. -1-23.8% + 22.5% + 23.8% + 24.9% +28.3% + 31.0% + 3.3% + 6.4% 399.7% 471.1% 19.8% 14.2% 1920 Sept. Oct. + 15.1% + 15.8% + 19.5% + 17.3% +20.5% + 16.1% + 8.3% + .8% 454.2% 437.2% 10.1% 5.9% Nov. Dec. + 8.4% + 6.0% + 14.6% + 14.3% + 10.0% + 4.4% — 4.6% — 17.2% 417.9% 371.1% 4.0% 4.6% Net Sales: For month named compared to same month, 1919................... For period July 1 to end of month named, compared to same period last year................................................................................ Stocks at end of month named: Compared to same month, 1919.................................................... Compared to previous month........................................................ Ratio of average stocks at end of each month for period from July 1 to date, to average monthly sales for same period... Ratio of outstanding orders at end of month named, to total purchases during year 1919.......................................................... 1920 In Philadelphia Outside Philadelphia 9 Firms Reporting 32 Firms Reporting Oct. Nov. + 9-9% + 8.5% + 13.2% + 12.0% + 10.5% + 5.6% — -4% — 5.0% 378.3% 360.3% 7.0% 4.7% Dec. Oct. + 2.8% + 23.4% + 9.4% +22.6% + 2.2% + 24.3% — 15.5% + 2.7% 322.6% 532.9% 4.8% 4.5% Nov. Dec. + 8.4% + 10.6% + 18.5% +21.6% + 17.3% + 8.0% — 4.1% — 20.0% 520.3% 458.5% 2.9% 4.1%
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Date: February 1, 1921
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