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Business Conditions Report o f the Federal Reserve Bank o f Philadelphia March 1, 1920. T H E current industrial situation is marked by a brisk demand for manufactures of all kinds. In certain lines the danger of a runaway market is recognized, and, while a full volume of busi ness is desirable, unchecked demand and increasing prices can work much harm. This tendency is particularly serious when the demands for credit and bank accommodation are at such high evels as they are at present. There cannot be any long continuation of price advances combined with increased purchasing unless production can at the same time be made larger. While admitting the need for many commodities, the plea is made for the use of sound common sense and business judgment in filling only the more urgent needs at this time. The year 1919 was marked by a readjustment of industry to a peace basis, uncertainty early in the year, and many labor troubles which combined to hold back production. Our industries can produce a very fair supply for all, but they cannot be expected to overcome immediately the shortages due to war and extravagant purchasing. The bearing of the foreign trade situation on domestic com modity prices, which was mentioned in our last report, is being felt in a very practical way. The prices of certain commodities which formed a large portion of our exports have shown weak ness following the drop of sterling and exchanges on other countries to low levels. The probabilities that new credits will be granted on a large scale to European nations appear to be growing smaller. l Reports from twelve large mutual savings banks in the dis trict showed deposits of $273,000,000, as compared with $250,000,000 a year ago, a gain of 9.2 per cent. The number of deposi tors increased from 524,000 to 538,000 or 2.7 per cent. Neither the figures showing increase in deposits nor the increase of deposi tors indicate any distinct tendency toward thrift. Accompanying letters in many cases emphasize the fact that old depositors con tinued to add steadily to their savings, whereas new accounts were frequently transitory. During the first few weeks of February retail trade was hampered by bad weather conditions, though sales compare favorably with a year ago. At this time trade is customarily somewhat dull due to its being a midway point between the sea sons. Spring goods are scarce and dealers find it impossible to secure complete stocks. Manufacturers and jobbers are allotting their products among their customers as best they can. , Chemicals etc. The release of nitrate of soda for agricultural purposes has resulted in an appreciable lowering in the prices of fertilizers, the decrease being estimated at about 10 per cent from prices ruling a year ago. Demand is good, but not beyond the ability of manufacturers to supply it. Raw materials are available in better quantities than a year ago. Certain chemical manufacturers who specialize in wood alco hol and other products derived from the distillation of wood, have been hindered by the extreme shortage of hard wood. A large producer states that it is able to have cut only 25 per cent of its requirements. This scarcity of raw material, combined with an active demand, has resulted in price increases during the past year considerably in excess of 50 per cent. Pigments used in the manufacture of paints have been in active request for some time past, and a leading manufacturer reports that his plants are operating at 100 per cent of capacity, as compared to 60 per cent in February, 1919. The present heavy demand dates from April of last year and shows no present signs of abatement. Prices do not show much change. Raw materials are in good supply at slightly higher price levels. A high degree of optimism permeates the paint trade and those who furnish raw materials to it. 2 Coal The production of anthracite coal for the year 1919 totaled approximately 86,200,000 tons, as compared to 98,826,084 tons in 1918. Though this represents a decrease of 12,400,000 tons, the supply appears to be sufficient to satisfy demand. Shipments over the nine anthracite coal-carrying roads in January amounted to 5,713,319 tons according to the Anthracite Bureau of Informa tion, as compared to 6,138,460 in December, and 5,638,383 tons in January, 1919. Late in January and during the first few weeks in February weather conditions and car shortages have tended to restrict pro duction of bituminous coal. Prices hold firm for the most part and demand is steady. Shippers of coal are much embarrassed by the large amount of money tied up by the confiscation of coal and its delivery to other than the original consignee. Much delay arises in determining the price of such coal and the collection of the accounts, during which time the shippers must get very un usual bank credits to carry themselves. This makes a serious situation for the shippers and absorbs a large amount of bank credit. Cotton The demand for raw cotton during the last thirty days has somewhat decreased, principally due to the fact that the mills are well covered against their sales of finished goods and yarns. Most of the manufacturers seem to be pursuing a conservative policy as regards the purchase of raw material and are covering their wants from time to time. The export demand has also fallen off, due in large measure to the depreciation of foreign exchange. While there has been a decline in the price of cotton for future delivery on the exchanges, the holders of actual cotton in the south generally have not met this decline and seem willing and able to hold their cotton until they can get the higher prices which they anticipate. While the manufacturing demand is at present comparatively small, the thought is advanced that the urgent call for all kinds of cotton manufactures will force the mills into the market again within a short time. It is reported to us that the acreage for the new crop will probably be as large as last season, but a shortage of good seed is noted. Cotton yarn manufacturers are well sold ahead and are grad ually bringing their mill production nearer to capacity. Demand 3 fell off lately. Fabricators of finished goods have been making inquiries for delivery in the third quarter of this year, but yarn spinners show little disposition to commit themselves so far ahead. Prices to-day are considerably higher than they were a year ago, in some cases as much as 100 per cent. While recogniz ing the danger of such a level, spinners state that raw material and manufacturing costs make them necessary and they can see little possibility of a decrease at this time. One yarn manu facturer gives it as his opinion that the ultimate consumer is experiencing a shortage of textiles and that the demand arising from necessary purchases will easily take care of all they can produce. Cotton goods manufacturers are running at capacity, insofar as conditions will permit, but lately there seems to have been a falling off in demand. This is ascribed to the tendency of jobbers to wait until it can be seen whether or not the retailers will have ready sale for the goods shipped to them at very high prices. Export demand is still fairly strong. Opinion as to price ten dencies is conflicting, some manufacturers saying that the ten dency is still upward, while others feel that we have reached the peak and that lower prices may be seen within the next few months. If export demand is further curtailed as a result of the exchange situation the latter opinion would seem to be logical. Furniture The output of furniture during the past year has increased largely, and some manufacturers are going to considerable ex pense to put up new plants to increase their production. Demand seems to have no limit and prices are rarely questioned by pur chasers. Raw materials, especially veneers, built-up panels and various grades of lumber, are scarce. Strikes and raw material shortages have seriously impeded the production of pianos and sales therefore bulk small, although the demand is strong. Prices have advanced and show no dis position to halt. Talking machines and records cannot be man ufactured in sufficient supply to meet the demand. During the war production was seriously curtailed and the thought is pre sented that the prohibition of intoxicants has resulted in much larger expenditure for musical instruments and other home com forts. 4 Iron and steel Demand for iron and steel has been exceedingly heavy and manufacturers had brought their production nearly to capacity a short time ago. Lately, however, weather difficulties have seri ously impeded car movements and material and fuel shortages have been troublesome, resulting in large cuts in production. The price of Eastern Pennsylvania No. 2X pig iron a year ago was $36.15 and it is now quoted at $45.35 to $46.35 per ton. Prices of very nearly all products have advanced markedly during the past few months in keeping with the enormous demand which has deluged manufacturers with orders. The demand covers practically all kinds of products—sheets, tin plate, bars, pipe, tubes, etc. Many manufacturers are booked far ahead, while others are holding off in their acceptance of orders with the thought that they may book orders at more advantageous prices at a later date. Steel castings have not felt the same demand as have most of the other lines, but reports indicate that this line is picking up and that prospects are much better. The demand for chain has been heavy during the past six months but manufacturing operations have not been up to ca pacity due to raw material shortage. Heavier chains have not been in such active request. Prices of chain generally have been kept in check as manufacturers fear the results of a runaway market. While not so optimistic over the last half of the year, prospects for the first six months are declared to be good. The output of wire rope is restricted by fuel and material shortages. Demand is strong and urgency of delivery is placed before price considerations. In common with nearly all iron and steel lines labor shortage is holding back production. The extreme prosperity of the automobile industry has cre ated a practically unlimited demand for sheet steel and plants which manufacture this product are placed favorably. Prices compared to a year ago show an average increase of $21.00 per net ton. Manufacturers have faith in continued prosperity for a long time to come in this line. Boiler manufacturers are running for the most part at 100 per cent of capacity and cannot catch up with demand. Shortages of plates and tubes are disturbing to some. Prices trend upwards. The demand for street railway cars has been active though the output is not up to capacity. Raw materials are scant in supply and upwards in their price tendencies. The outlook is 5 considered good. The demand for the car wheels for locomotives and railroad cars has been slack but at a later date this business is expected to increase considerably, with the entry of the rail roads into the market for new equipment. Locomotive manu facturers are now operating at about 70 per cent of capacity and look for prosperous conditions during the coming year. Meats The market for beef and pork has been affected by the drop in foreign exchange with a consequent decrease in meat prices. Cattle and hogs appear to be in sufficient supply to care for all demands. The immediate outlook is dominated by the export sit uation as the domestic demand holds fairly steady and is not in excess of the present supply. Paper The demand for paper is much heavier than a year ago. This demand extends to practically all kinds—book, newsprint, wrap ping and writing papers and cardboards. Prices have advanced materially. Manufacturers seem to average about 90 per cent of capacity but are hindered by the extreme scarcity of woodpulp and paper stock and inadequate transportation facilities. Many producers have been allotting their output to their cus tomers as they cannot cope with the demand. The labor situa tion is causing some trouble due to the constant demands for higher wages and the shortage of operatives. There seems to be no present expectation of any decrease in demand. It is thought that if consumers would be more reason able in their demands for immediate delivery and recognize the difficulties at present surrounding production, the return of more normal conditions would be hastened. Pottery Pottery manufacturers report that they are running their plants at as near capacity as conditions will permit, our reports indicating operations at 80 to 100 per cent capacity. This com pares with 50 to 60 per cent of capacity a year ago. The demand for sanitary pottery, porcelain and specialties is far in excess of supply and orders have been booked for some time ahead. Raw materials have for the most part been in fair supply, though certain ingredients and fuel have been scarce. Prices 6 are increasing. Labor is scarce and is continually demanding wage increases. Confidence in the future of the industry for the coming year is expressed by reporting firms. Rubber The demand for mechanical rubber goods is good though it is not beyond the ability of the manufacturers to meet it. Some trouble in securing raw materials is reported and orders for such commodities have to be placed far in advance. Rubber is some what lower in price compared with a year ago, but cotton fabric is exceedingly scarce and very expensive. Hose manufacturers report a large call for their product. There appears to have been little diminution in demand for the last few years, and no cessation is looked for at this time. Though the factories are being operated at capacity, they are producing only in sufficient volume to meet the demand. Prices are higher than a year ago. Vulcanized fibre has been actively sought after by both for eign and domestic buyers, though purchases for foreign account now show some decrease. Plants are running to full capacity, but unfilled orders on hand are increasing. Prices are approxi mately 10 to 15 per cent higher than a year ago. Though present conditions would indicate capacity production for some time to come, protracted delays on the part of foreign buyers in placing their orders would seriously affect business, as a large part of the output is usually exported. Shipbuilding Shipbuilding plants in this district are now operating for the most part at 85 to 100 per cent capacity. New orders are rather difficult to procure, especially in view of the higher prices quoted, because of increased production costs. There is a feeling that cargo carriers of smaller than 10,000 tons are already in sufficient supply, and that little good will be gained by increasing produc tion of such ships. The point is raised that our merchant marine is not well-balanced, that is, we are very well supplied with freighters of smaller sizes, but lack a sufficient number of tank ers, passenger ships and cargo carriers of large size and greater speed. Plants are fairly well booked-up for the coming year. With the exception of the yards engaged on work for the Ship 7 ping Board, considerable difficulty is met with in securing mate rials. Lf bor is giving little trouble at this time. Cargo space is becoming more available and the general sentiment is that, with the exception of certain specialized types of vessels mentioned above, our merchant marine is ample in size to care for our needs for some time to come. The inadequacy and throttling effect of the present shipping laws is emphasized by all who have reported to us and little hope is expressed that our merchant marine will become a permanent part of the nation’s equipment unless there are radical changes in the present laws. The active program of the Emergency Fleet Corporation contemplates the construction of 2,311 ships of 13,592,711 dead weight tons. On February 1, the condition of the work was as follows: N um ber D eadw eigh t ton* Ships delivered . . . ____ 1 8 0 2 9 ,9 4 3 , 5 4 4 In wet b a sin ........... ____ 213 1 ,2 2 7 ,2 3 4 On w a y s .................. ____ 253 1 ,9 8 9 ,0 3 3 Keels not laid . . . . . . . . 43 4 3 2 ,9 0 0 2311 1 3 ,5 9 2 ,7 1 1 There has been a very large reduction in the number of active ways. At present only 253 are being used, whereas last June 434 were active. Silk Silk mills report an active demand for their product. Raw materials are difficult to secure but are available when ordered sufficiently in advance. Prices of silk goods are high, whereas the raw material recently declined somewhat. Labor conditions are troublesome, and the construction of new mills is emphasizing the shortage of operatives which had already existed. W ool Supplies of wools of the finer grades are low and little is offered on the market at present. Later, however, some fine for eign wools will be available. Government sales in England and in this country have been marked by very low prices for the low-grades in order to induce buying. Undoubtedly large quan tities are sold but there are few commodities at this time in which they can be used, as the public demands only the finest products. Yarn manufacturers report an excellerlt demand for their products and, insofar as labor conditions will permit, they are 8 operating their plants to capacity. Supplies of wool in the hands of the mills are fairly ample and they are able to cover their needs from time to time, though only at prices which are much higher than a year ago. Finished goods manufacturers are equally as busy and have been compelled to allot their output among their customers. Good business for the coming year is anticipated, unless the financial situation should become serious. Financial The operations of this bank decreased somewhat during the month of January. Investment operations for the month totaled $656,620,000, as compared to $852,038,000 in December, and the average daily earning assets decreased from $243,809,000 to $239,284.000. The average annual rate of return on all earning assets increased from 4.22 per cent to 4.36 per cent. Federal reserve notes in actual circulation at the end of January amounted to $223,585,000, as compared to $237,050,000 at the end of December. At no time since the end of last year have they been below $220,000,000 and latest figures are approaching the levels attained toward the end of December. The reserve position remains unchanged around 40 per cent. Operations of the transit department were somewhat smaller in January, as might be expected, following the large holiday business in December. The total amount of checks handled in December was $1,395,056,000; in January the figure was $1,329,506.000. The rate for commercial paper in the open market holds firm at 6 per cent, which is the legal maximum for the State of Penn sylvania. % STATEMENT Federal Reserve Bank o f Philadelphia M onth ago R ESO U R CES Feb. 18, 192 0 Gold reserve......................... $134,491,033 $128,825,192 $132,954,981 466,596 183,557 362,303 $ 1 3 4 ,9 5 7 ,6 2 9 $ 1 2 9 ,0 0 8 ,7 4 9 $ 1 3 3 ,3 1 7 ,2 8 4 $154,512,890 $162,488,730 $173,938,888 54,491,670 33,926,084 13,892,312 Bills bought in open market 7,205,696 7,790,214 2,409,783 United States securities.. 32,305,900 35,461,400 12,665,400 Total earning assets $ 2 4 8 ,5 1 6 ,1 5 6 $ 2 3 9 ,6 6 6 ,4 2 8 $ 2 0 2 ,9 0 6 ,3 8 3 Legal tender, silver, e t c .. Total reserve............. Year ago Bills discounted,members: Secured by Governm ent war . Mutilated and fit notes on hand: Federal reserve n otes........... $13,780,135 $8,592,275 $7,307,305 Federal reserve bank notes. 278,479 95,494 350,145 Due from d e p o s i t a r y banks— war loan deposit 41,752,500 63,956,375 Uncollected it e m s .............. 91,519,410 85,583,766 69,051,267 A ll other re so u rce s........... 2,462,714 2,650,341 2,005,491 Total resources......... $ 4 9 1 ,5 1 4 ,5 2 3 $ 5 0 7 ,3 4 9 ,5 5 4 $ 4 7 8 ,8 9 4 ,2 5 0 L IA B IL IT IE S Feb. 18, 1920 M onth ago Year ago Capital paid i n .................... $8,129,650 $7,886,550 $7,472,900 Surplus.................................... 8,805,132 7 0 7 fi 8,805,132 1,304,172 Government d e p o s its___ 2,725,632 362,347 8,975,347 Due to m em bers— reserve account................................ 107,925,799 106,228,359 101,407,519 Collection ite m s .................. 84,926,422 81,494,340 56,655,673 Gross deposits........... $ 1 9 5 ,5 7 7 ,8 5 3 $ 1 8 8 ,0 8 5 ,0 4 6 $ 1 6 7 ,1 3 8 ,5 4 0 $42,173,006 $67,480,017 G o ve rn m e n t d e p o s its — Federal reserve notes ou tstan d in g.............................. $249,374,750 230,186,965 221,675,275 Federal reserve bank notes outstandin g....................... 26,952,000 28,628,000 11,088,000 A ll other liabilities............. 2,668,062 1,584,855 2,735,346 Total liabilities......... $ 4 9 1 ,5 1 4 ,5 2 3 $ 5 0 7 ,3 4 9 ,5 5 4 $ 4 7 8 ,8 9 4 ,2 5 0 10 RESOURCE AND LIABILITY ITEM S o f member banks in Philadelphia, Scranton, Camden and W ilmington A t the dose of business Feb. 13, 1920 Jan. 16, 1920 Feb. 14, 1919 T in thousands o f dollars— - ! i.e., o o o ’ s omitted. J United States bonds to secure circulation. . . . . . $11,097 $11,097 Other United States bonds and n o te s........... ____ 38,822 41,885 44,904 Certificates of indebtedness................................ 49,900 58,716 113,187 $169,588 $11,497 T otal United States securities owned . . . . $99,819 $111,698 Loans secured by United States securities. ____ 79,818 89,065 147,033 All other loans and in vestm en ts.................... ____ 7 4 4 .6 4 6 706,101 620,808 Total loans and in v e stm e n ts................ . . . . $924,283 $906,864 $937,429 Reserve with Federal Reserve B a n k ........... 59,838 65,301 62,289 Cash in v a u l t ........................................................... 17,916 16,650 19,650 com puted...................................................... . . . . 665,604 668,121 631,872 T im e deposits ........................................................ ____ 26,070 23,156 21,316 5,899 35,180 43,513 56 56 56 N et dem an d d ep osits on w hich reserve is Government deposits............................................. N um ber 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 Feb. 18, 1920 J&n. 21, 1920 Feb. 19, 1919 A lto o n a .................................. ..................... $3,101,000 $2,715,000 $2,528,000 C h e s te r .................................. .................... 4,775,000 5,497,000 4,980,000 Harrisburg ......................... ..................... 2,720,000 4,239,000 5,937,000 Joh n sto w n ........................... ..................... 3,626,000 3,275,000 2,916,000 Lancaster ........................... .................... 5,341,000 5,881,000 4,329,000 P h ilad elp h ia....................... .................... 331,070,000 387,236,000 302,813,000 R e a d in g ................................ .................... 5,711,000 5,451,000 4,641,000 Scranton ............................. ..................... 12,068,000 12,169,000 10,798,000 T r e n t o n ................................ .................... 11,188,000 11,183,000 12,796,000 W ilk e s -B a r r e ..................... .................... 8,722,000 8,188,000 6,729,000 W illia m sp ort....................... ..................... 3,805,000 3,806,000 2,846,000 W ilm in g to n ......................... .................... 9,356,000 8,942,000 8,926,000 Y o r k ....................................... .................... 4,094,000 4,046,000 3,090,000 T o t a l s ......................... ...................... $405,577,000 $462,628,000 $373,329,000 n BUSINESS IN D ICATO RS Percentage Increase or decreaie compared with Feb. 16, 1920 P revious m on th Y e a r a go Philadelphia banks: L o a n s ............................................................. $804,350,000 + D ep osits........................................................ $672,931,000 — Ratio of loans to deposits.................... 120 1 4 113 Jo % + 4 % + 4 Jo Jo 118 J o* J c* Federal Reserve Bank: Discounts and collateral lo a n s........... $201,744,000 Cash r e s e r v e ......................................................... 40 Jc 90-day discount rate................................ 6 Jo 4 % J o* 4U J c* Commercial p ap er........................................ 6 Jo 6 S 'A J c * j 3 % 40 + Jc + 7 Jc 42 Jo* J c* Percentage increase or decrease compared with Jan. 1920 Previous month Year ago Bank clearings: In Philadelphia........................................... $ 2 , 1 7 5 , 7 4 1 ,6 8 8 Elsewhere in district................................ 1 3 6 ,5 6 7 ,4 6 0 Total clearings...................................... $ 2 ,3 1 2 ,3 0 9 ,1 4 8 Building permits, Philadelphia............... Post office receipts, Philadelphia........... Commercial failures — 1 % -L 19 + 3 % + 21 J o % — 1 j° j + 19 Jo $ 3 ,5 3 3 ,7 9 0 — 68 % 1 ,2 8 1 ,9 4 7 — 7 Jo -4- 4 5 0 Jo 11 Jo in district (per Bradstreet’s ) .................................... * 28 36 # 41 i Latest commodity index figures: Annalist (food prices only) ................ 2 8 9 .4 0 2 D u n ’s ............................................................. $ 2 5 3 ,7 4 8 Bradstreet’s ................................................. $ 2 0 .8 6 9 0 1~ 1+ j “f* 2 J o + 2 2 Jo + 10 Jo Jc ! + 18 Jo 3 ♦Actual figurea. This business report 'will be sent regularly to any address upon request. Jo ON THE H O R IZO N The Federal Trade Information Service remarks in drawing attention to the gold situation in this country: “ The reserve gold stock of the United States was depleted in 1919 by the shipment of $292,796,000 to Europe for the purpose of maintaining export trade and allowing our Allies to pay their bills. The value of gold under conditions of minimum cost was fixed by Congress many years ago at $20.67 per ounce. To-day the purchasing power of an ounce of gold is $9.00 and the cost of production has so far increased that it is no longer possible to produce gold at a profit. “As a result, the gold mines of the United States are being closed down at an alarming rate. Many of these mines will never be reopened because of the great expense of retimbering and unwatering, especially in the deep mining districts. Many mining camps are now dead; whole cities of homes abandoned, and thousands of skilled gold miners are out of employment. . . . “ At the Chicago convention in 1918 and again at St. Louis in 1919, the American Bankers’ Association passed a strong reso lution asking the Congress of the United States to take some steps to preserve the gold standard of the United States. In November last, the American Mining Congress called a National Conference of bankers, economists, and gold producers in St. Louis to discuss the gold situation. It was shown that while the production in the United States in 1915 was $101,000,000; in 1919 it was but $58,000,000, a loss of 42 per cent; and estimates indi cate that the production for the present year will be less than $40,000,000. “ . . . During 1919, the manufacturers of the United States used $80,337,600 worth of gold, $21,848,800 more than was pro duced in the United States, and the indications for the present is year are that the American jewelry buyers will demand far more for manufacturing purposes than the total demands of 1919. . . The gold in the bank reserves of the United States limits the expansion of credit; and as these reserves have been steadily falling by export, reduced production and increased commercial use of gold, it is believed that the legal limit of gold reserves can not be long maintained. John Clausen, Vice-President of the Chemical National Bank, calls attention to the fact that the present ratio of depletion, no matter what the cause, will soon eliminate the possibilities of the commercial supremacy on the part of the United States, which by virtue of its natural resources and usual industrial efficiency and financial foresight should easily remain the leader among nations. “ In an effort to rectify this disturbing situation various types of proposed legislation have been introduced into Congress. One bill provides that manufacturers of gold articles may pay the increased cost of gold production in order that there will be sufficient gold produced to satisfy trade requirements. This bill proposes a tax on gold used in such a way and the payment of a premium on new gold produced out of the fund established.” The following letter on the attitude of the Federal Reserve Board toward the trade acceptance was recently addressed to the American Acceptance Council by Governor Harding of the Board: “ The Board is advised by letter from your Executive Sec retary, dated October 22, that the American Acceptance Council, organized to encourage the use of bankers’ and trade acceptances, is at this time conducting a campaign in the interests of trade acceptances. “ Your activities in this connection are observed by the Board with satisfaction. It is a matter of public knowledge, justified by frequent and emphatic expressions from the Board, that the purposes of the Federal Reserve Act would in many cases be better served by the general adoption of trade acceptances in lieu of book accounts and ‘one name’ paper. The acceptance has the added security of a second name, it usually evidences upon its face that it represents a commercial, industrial or agricultural transaction, and gives reasonable assurance that it will be liquid ated at maturity by proceeds from the sale of the identical goods 14 involved. For these reasons, the Board believes that this class of credit instrument is often more desirable than single name paper as an investment for the funds of the Federal reserve banks, and has backed this belief by authorizing a preferential rate for trade acceptances. “ There are, of course, some branches and kinds of business which are not adaptable to the use of trade acceptances, and the question of such adaptability must be left to the judgment of those interested. The Board does not undertake to urge the use of the trade acceptance against the wishes of interested parties, but merely takes the view that the trade acceptance represents generally a convenient and scientific kind of credit instrument, and has no hesitancy in recommending that it be utilized wherever practicable.” % Regarding the ownership of railroad securities, the Asso ciation of Railway Executives issues the following statements: “ Individuals, numbering over 1,000,000, own outright about $10,000,000,000 in railroad securities. Over 600,000 are stockhold ers with an average holding of $13,956. “ Life insurance companies, with 53,000,000 policies in force, own nearly $2,000,000,000 of railway securities. “ Savings banks, with 10,000,000 depositors, own $847,000,000. “ Fire and marine insurance companies, casualty and surety companies own a total of $549,000,000. “ Benevolent associations, colleges, schools, charitable insti tutions, etc., own $350,000,000. “ Trust companies, State and National banks own $865,000,000. “ According to statistics compiled for the Association of Life Insurance Presidents in 1918, 27.65 per cent of life insurance com panies’ assets were invested in railroad bonds, and during the first half of 1919 the percentage of railroad bonds held by the life insurance companies was 26.25 per cent of the total assets of these companies.” In his annual report for the fiscal year 1919, the Comptroller of the Currency in discussing the foreign exchange situation says: “ The quotations for foreign exchange represent nothing but the depreciation in value of paper currency of foreign countries. 15 The only way to bring foreign exchange back to the old gold parity is to re-establish the credit of foreign countries. This should be done— (1) By putting the millions of working men and women back to work, so that human energy may be fully utilized in increased production and the creation of wealth. (2) By thrift, economy, and saving—to widen the margin between the cost of living and the wealth created. (3) By avoidance by foreign nations of purchase and impor tation of luxuries and by the refusal even to import essentials when these can be produced at home. (4) By every possible effort to increase the production abroad of those things for which a market can be found in this country; and at the present prices prevailing here the list of such articles is long and extensive. “ Substantially the only use which peoples in this country have for European exchange—which no longer means gold but merely paper currency of the different European nations—is to apply those currencies to the purchase of merchandise or securi ties in Europe at prices at which they can afford to import that merchandise or those securities to this country, pay the shipping charges and insurance, and then dispose of them here without loss.” 16
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