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Business Conditions in the Philadelphia. Federal Reserve District federal reserve bank OF PHI LADELPHI A June 3, 1918 T HE industries of the district are adjusting themselves to meet the war requirements of the Nation, the output in many lines being almost entirely devoted to filling Government orders. The concentration of all the energies of the business life on the problems of the war is gradually resulting in a more smoothly running machinery of production. The district is singularly fortu nate in being able to render services of inestimable value to the country in these times of emergency because of the central position which it occupies with reference to supplies and materials of all kinds. Retail trade is reported to be about 40 per cent ahead of last year in volume of business, wage-earners on account of their very large earnings being large consumers of goods. Seasonable lines are particularly in good demand. Manufacturers, as a rule, are extremely busy, but considerable embarrassment is being caused by the scarcity of many kinds of raw materials and the inadequate supply of competent labor. Shipments of anthracite coal over the 9 principal anthracite carrying railroads amounted to 6,368,372 tons during April according to estimates of the Anthracite Bureau of Information. This compares to 7,276,777 tons in March, which was the record month in the history of the anthracite industry, and 5,592,209 tons in April, 1917. While large quantities of coal continue to arrive, dealers are unable to accumulate reserve supplies because of the continuing strong demand. People are trying to secure a sufficient stock of coal in their bins so as to preclude the possibility of a coal shortage next winter. In order to conserve the supply of anthra cite coal for those who need it most, the Fuel Administration has ordered that 24 western and southern states shall not receive anthracite shipments except by special permits. C oal Bituminous coal production is steadily increasing, due to a better supply of cars and more favorable operating conditions. Labor difficulties are still strongly in evidence as men are attracted elsewhere or drafted. Estimates of the United States Geological Survey, of the production of bituminous coal since the beginning of the year, are as follows: BITUM INOUS COAL PRODUCTION W eek ending J a n u a ry January January January February t ebruary February February March March Tons per working day 5 ........... 1 2 ........... 1 9 ........... 2 6 ........... 2 ........... 9 ........... 1 6 ........... 2 3 ........... 2 ........... 9 ........... ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 1,8 75,000 1,7 35,0 00 1,428,000 1,683,000 1,580,000 1,685,000 1,854,000 1,840,000 1,852,0 00 1,878,000 W eek ending March March March April April April April May May Tons per working day 1 6 ........... ............. 2 3 ........... ............. 3 0 ........... ............. 6 ........... ............. 1 3 ........... ............. 2 0 ........... ............. 2 7 ........... ............. 4 ........... ............. 1 1 .......................... 1,820,000 1,833,000 1,816,0 00 1,853,0 00 1,811,000 1,840,0 00 1,967,000 1,927,000 1,968,0 00 The decline in raw cotton prices of late does not seem to have been a determining factor in computing the prices of manufactured cotton goods, as prices are still very high and are governed mainly by supply and demand. Trading in cotton goods has been rather quiet in contrast with the excited dealing which existed a short time ago. The Government has entered the market with very large orders, 70,000,000 yards of denim for over all manufacture alone having been ordered lately. This huge Gov ernment demand has displaced civilian orders completely in many lines and it will be some time before any large amount of goods of certain kinds can go to civilian consumers. Print cloths are not in as great demand and there has been some lowering in prices. Bleached goods are very scarce and it is almost impossible to secure any without a Government order. C otton Reports of the United States Department of Agriculture for May 1 show an estimated winter wheat and rye produc tion considerably in excess of the past few years. The economizing in the consumption of wheat has resulted in a much greater con sumption of the smaller grains. Wheat flour is very scarce, but the substitutes are plentiful and it is stated that there is a consider able surplus of corn meal. Food The sugar situation is easing up a little, but the approaching canning season will result in a stronger demand. However, the National Food Administration is limiting the use of sugar by manu facturers of nonessential products to 80 per cent of their 1917 requirements, except in certain special instances where the amount used is negligible. The canned goods situation is still very considerably tangled. Canners will not quote prices, only in exceptional cases, because of their inability to estimate the increased costs of canning. Buyers are holding off until prices are quoted. Government regulations are preventing speculation. While the canners and jobbers are being held down to reasonable prices, the growers are asking high figures. The Government is having from 15 to 25 per cent of the pack of various commodities reserved for its needs. Collections in the wholesale grocery business are only fair. This is explained by the great increase in the amount of capital required to carry an adequate stock, according to a leading whole saler. The holdings of the various meat and dairy prod ucts in the main compare very favorably with the holdings a year ago, with the exception of lamb, mutton and poul try. The estimates of the Bureau of Markets of the United States Department of Agriculture are given below: F o o d stora g e COM PARISON OF COLD STORAGE HOLDINGS Commodity Frozen beef .......................... Cured b e e f ............................. Frozen lamb and mutton. . Frozen pork ........................... Dry salt p o r k ........................ Sweet pickled p ork ............. Lard .......................................... Total frozen p o u ltr y ........... Cold storage eggs................ Frozen eggs ........................... Creamery butter ................ Packing stock butter........... American cheese ............. . *Cases HOLDINGS IN POUNDS May 1. 1917 1 18,391 ,00 0 2 9 ,4 0 8 ,0 0 0 4 ,3 6 8 ,0 0 0 7 6 ,0 9 1 ,0 0 0 2 1 9 ,8 1 8 ,0 0 0 3 7 7 ,2 8 0 ,0 0 0 6 1 ,6 4 0 ,0 0 0 4 2 ,3 1 6 ,0 0 0 2 ,0 8 2 ,0 0 0 * 3 ,3 2 8 ,0 0 0 3 ,6 0 7 ,0 0 0 173,000 7 ,9 2 7 ,0 0 0 May I, 1918 Per cent increase 2 0 6 ,4 0 0 ,0 0 0 2 9 ,4 0 9 ,0 0 0 3 ,6 6 3 ,0 0 0 1 2 5 ,1 3 4 ,0 0 0 4 5 5 ,9 0 8 ,0 0 0 3 9 4 ,7 5 3 ,0 0 0 9 7 ,7 1 6 ,0 0 0 1 4 ,295 ,00 0 2 ,9 1 5 ,0 0 0 * 8 ,8 4 7 ,0 0 0 10 ,100 ,00 0 1,229,0 00 19 ,839 ,00 0 or decrease 74 + + 0 .0 0 4 — 16 64 + 107 + 5 + 58 + 66 a~ 40 166 180 + 610 + 150 + Iron and steel The iron and steel industry is operating at greater capacity. It is stated that the general average of pig iron production is now around 95 per cent of capacity, while in the case of the subsidiaries of the largest corporation manu facturing iron and steel it has been estimated that 95 per cent of capacity would not represent an excessive figure. The daily aver age production of coke and anthracite pig iron during April was 109,607 tons, which represents an increase of approximately 6 per cent over March, 1918, and a slight decrease as compared to April, 1917. On May 1, production was estimated at 113,440 tons per day. The output of steel ingots during April totalled 3,163,410 tons, com pared with 3,110,381 tons in March. The Government requirements have resulted in an appreciable tightening in the supply of pig iron and steel which civilian con sumers are getting. Control of the situation is passing more and more into the hands of the Government. Steel manufacturers in this district have pledged 100 per cent of their capacity to the Gov ernment until further notification. This, it is hoped, will bring about such an improvement in the general situation that it will be possible to devote further capacity to non-war business at a later date. Meanwhile the Government has announced its intention to co-operate with two of the largest steel companies in the erection of large ordnance factories. This will cause a large demand for structural steel and other equipment. The large orders for cars and locomotives which have just been placed will also tend to inten sify the demand for iron and steel in all their forms. Deliveries of coke have shown some improvement and the bettering of the transportation situation has enabled a large amount of manufactured products which were held up to be delivered and make room for further production. The situation in general is showing a very great advance over the stringent days of the winter months, but efforts must continue in order to insure an increasing supply of coke to take care of increasing demands. Leather After due deliberation with cattle raisers, importers, packers, etc., prices have been fixed by the Government for all kinds of domestic and foreign hides and skins. Dealers in leather are expecting the promulgation of a price-fixing schedule for their commodity within a short time and it is thought that this may render the cost of civilian footwear more equitable. The demand for leather has been gaining momentum of late. Jobbers and retailers of boots and shoes are beginning to realize that they had better order early from the manufacturer if they desire to get their goods in the proper season. The demand for spring foot wear was not as heavy as was anticipated, but the Government demands have been so pressing that there is never a lack of business in the shoe market. Various organizations of leather-producers have in contempla tion a merging of the individual organizations into one large body so that they may be better able to serve the country at this time and meet the competition which is expected after the war. The raw silk market does not show much change from week to week. Buying is rather slow and much difficulty is experienced in interpreting the situation, though in some quarters a fall in prices is expected. Silk g o o d s On the other hand the manufacturers of silk have been display ing great activity. Buyers are trying to get their goods de livered on time but this is often impossible as the mills are behind schedule. There is a strong demand for seasonable goods and prices have risen. The mills are rather cautious about taking orders for delivery very far in the future as changes affecting the markets of supply and demand take place with disconcerting rapidity. The general purchasing public does not seem to heed the increased prices of textile products as much as might have been expected. They want good materials and are willing to pay for them. Demand is very strong both from the civilian users and the Government, but in many lines the Government demands have represented such a large proportion of the possible output that other buyers have been somewhat neglected. T ex tile s Materials are very expensive, not only because of the high cost of the raw products necessary to their manufacture, but also be cause of the inability to secure sufficient labor to keep all the machinery in operation. The railroad situation is showing improvement as the season advances. The figures for the movement of cars on the Pennsylvania Railroad past Lewistown Junction show a total of 188,000 cars east and west during April, compared with 176,000 cars in March, and 185,000 in April, 1917. The necessity for equipment of all kinds is very urgent as the greatly increased demand for transportation facilities cannot be met by the T ransportation means now at the disposal of the Railroad Administration. In an attempt to partially satisfy this need, orders have been placed by the Government for 1,025 locomotives and 95,654 cars of various types, deliveries of which are to begin in July. The benefit to be derived from these increases in equipment will no doubt be con siderable. The Philadelphia-Baltimore-Pittsburgh Conference Committee of the Eastern Railroads, which is a branch of the National Railroad Administration, has issued an order, which became effective May 15, to the effect that all carload shipments of freight into Philadel phia and Baltimore must be accompanied by a permit which is to be secured by the consignee. This ruling is expected to be in effect for the duration of the war, and it is intended to relieve congestion around these seaports and guard against the wasteful misuse of railroad facilities through the forwarding of freight in excess of the consignee’s needs or his ability to unload. Motor trucks have been coming more and more into use as the congestion has increased around the principal ports and industrial centers of this district. Shipments by motor trucks between cities are being made on regular schedules maintained by numerous com panies operating trucks. The Philadelphia Chamber of Commerce has instituted a “ Return Loads Bureau” to bring shippers and truck operators together and avoid inefficiency due to return trips made without any load or a load below capacity of the truck. While shipments by truck are more costly in the majority of cases, the advantages of certainty and rapidity of transportation more than offset that disadvantage in the case of the lighter and more valuable commodities. W ool The Government is now taking more complete control of the woolen industry. Prices are usually given as of July 30, 1917. All stocks of wool in the dealers’ hands have been listed with the W ool Administrator at Boston. Valuation committees in the various markets are examining wools and fixing prices for those qualities title to which the Government wishes to take over promptly, in order to accelerate the manufacture of uniform fabrics. Deliveries of spot wools when taken over are being made to ap proved mills by the W ool Distributor, and the wants of those mills having Government contracts supplied with Government-owned wools. The Government has taken over the new clip and shipments are being made to preferred dealers. A. firm money market prevailed during the past month, 6 per cent being asked on both call and time loans. Com mercial paper ranged from 5^4 to 6 per cent, with but little paper selling under the higher rate. M on ey While loan and investment operations of the Federal Reserve Bank averaged about $2,000,000 per day during April, and more than $2,500,000 during the first three weeks of May, borrowings by member banks have not been as heavy as had been anticipated, and it is apparent that the Third Liberty Loan has been floated thus far without any undue strain on the money market. The bulk of the discounting has been in the form of notes secured by Govern ment obligations. Such loans amounted to $35,100,000 in April, compared with $21,100,000 in March and $40,500,000 from May 1 to May 21, inclusive. Loan and investment operations of the Federal Reserve Bank, and earnings from investments, are given in the following table : January February March April First Fou Months 1918 Discounts of eligible paper or member banks’ collateral notes secured by eligible paper...................... $28,236,402 11,185,312 17,977.768 11,903,817 69,303,299 Discounts secured by Government obliga tions ........................ Acceptances purchased 16,907,280 26,262.056 21,119,160 35,102,271 10,000 Government obliga tions purchased . . . 843,750 Total— 1917 . . . . 1917 . . . 99,390,767 10,000 451,000 1,336,000 3,334,000 1,422,767 5,964,750 4,598,300 $51,165,269 47,069,568 53,562,290 61,161,414 212,958,541 3,940,771 11, 766,311 12,220,424 7,780,935 January Earnings from invest ments: 1918 . . . 7,642,058 5,167,837 9,171,200 13,129,362 10,821,326 38,289,725 22,045,316 Municipal w arrants purchased.............. Total— 1918 . . . . 1917 $181,212 36,868 February March April — Total 158,443 194,086 212,440 746,181 42,145 43,664 46,938 169,583 — 35,708,441 BUSINESS IN DICATORS Percentage increase or decrease compared with May 20, 1918 Philadelphia banks: Loans ................................... Deposits ............................. Ratio ................................... Previous month $ 6 2 4 ,2 7 8 ,0 0 0 6 3 8 ,7 2 4 ,0 0 0 98% Year ago + 4 -0 .5 (A ctu al) 93% + (A ctu al) 12 2 85% Federal Reserve Bank: Discounts and collateral loans ............................. Cash reserve..................... 90-day discount rate. . . Commercial paper................ 3 7 ,7 8 7 ,0 0 0 72% 4 y4% 6% + 324 + 47. 2 (A ctu al) 4 2 4 % (A ctu al) 4% (A ctual) (A ctu al) 5% 6% + 2 Percentage increase or decrease compared with April, 1918 Previous month Year ago Bank clearings: In Philadelphia................ Elsewhere in district. . . $ 1 ,5 7 9 ,8 2 5 ,0 0 0 1 2 0 ,7 7 7 ,0 0 0 44- n 19 + + 12 19 Total .............................. $ 1 ,7 0 0 ,6 0 2 ,0 0 0 + 11 + 13 $ 3 9 ,9 6 2 ,4 5 6 13 ,086 ,63 0 4- 21 4- 30 + 18 $ 2 ,3 8 1 ,0 7 5 4 -1 2 0 - 53 $846,082 457 39 (A ctu al) 63 Port of Philadelphia: E x p o r t s ................................ Im p o r ts ................................ Building permits — Philadelphia .......................... Post-Office r e c e i p t a— Philadelphia ..................... Commercial failures in district (per Bradstreet’ s) . + 0 .2 — 18 (A ctu al) 56 Commodity prices: Bradstreet’ s ....................... $1 8 .9 1 3 3 4- 3 Compiled May 22. 1918 The purpose of this report is to provide member banks and the business community in general with a brief monthly review of prevailing business conditions in this particular Federal reserve district. + 25