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BUSINESS CONDITIONS
A S R E P O R T E D B Y THE
FEDERAL RESERVE BANK
OF P H IL A D E L P H IA
May 1, 1919
H ERE has been apparently not much change in business
conditions in this district since our last report, the only
notable changes being increased buying in nearly all lines
and some stiffening of prices.
T
Retail trade continues wonderfully good, and reports from all
parts of the district are very encouraging. The demand for the
better class of merchandise is noticeable, and an excellent business
for the balance of the year is anticipated. Collections have been
good, as the buying public seems to have been educated to pay for
their bills more promptly.
For the many industries that are depending upon building
operations for their business, it is encouraging to report that the
lack of building operations in the past few years has resulted in a
shortage of houses and has stabilized values, and properties are
being taken up quickly. In Atlantic City, for instance, a building
boom has commenced in spite of the existing high prices. By actual
survey, it is reported that Philadelphia and Camden are at least
20,000 dwellings short of immediate requirements, and when the
house building begins, an immense demand for lumber is expected.
At present the lumber business is dull.
Chemicals
Business is subnormal. Buyers are marking time,
letting their stocks decrease, hoping to get the bene
fit of a lower level on purchases for their current and future needs.
Within the past week there has been a slightly better tone and
decidedly more inquiries have been received. The great disad
vantage the chemical market is laboring under at present is due to
the fact that many manufacturers who have been doing war work
are heavily stocked with many lines of materials which were bought
for Government contracts, and for which there is no apparent imme
diate use. A market is being urgently sought for these goods even
in the face of a probable loss.
Coal
While production of both anthracite and bituminous coal
has been maintained at a level which represents a very much
curtailed output, reports generally indicate a larger volume of
inquiries and orders. Prices in the bituminous fields of central
Pennsylvania are reported to be higher on some sizes. By far the
greater part of the curtailment, however, is still due to lack of a
market. Collections have been a bit slow since the cessation of
hostilities but some improvement is noted of late.
Coffee
Supplies of coffee were small at the time of the signing
of the armistice, as steamer space had been lacking.
Since then there has been some improvement. The Central Powers
were large users of coffee and the probability that they will soon
be back in the market is one of the reasons for an increase of about
50 per cent in the price of coffee since last November, advances in
green coffees averaging around 5 to 6 cents per pound. Dealers
are not stocking up in any quantity, although they are maintaining
a fairly good supply to meet the current demand.
The mills have less stocks on hand
than usual at this time of year, as
business has been poor since the armistice was signed and many
orders were canceled. The demand for goods and yarns is now
better, mills are resuming on new orders and showing more interest
in cotton. There is a good hand-to-mouth demand from all quar
ters for desirable cotton and indications are that the demand from
now on will be sufficient to enable the South to dispose without
further sacrifice of the cotton it is carrying. During the past month,
there have been advances in the prices of raw cotton and cotton
goods.
Cotton and cotton goods
Electrical apparatus
Actual going business is rather poor
and practically confined to such sup
plies as are incident to the operations of established plants and in
dustries. However, quite a volume of important inquiries are com
ing in, which indicate that new projects will be given attention as
soon as national and international questions are settled. Collections
are fairly good.
Failures
The following table of commercial failures (Bradstreet’s) in this district shows the significant decrease
not only in the number but also in the capital involved in failures:
$5,000
and
less
1918
January . . . .
February . . .
March .........
A p r il...........
May ............
June ............
J u ly ..............
August . . . .
September
October . . .
November . .
December . .
$5,000
to
$10,000
7
7
4
1
4
$20,000
to
$50,000
...
...
...
..
..
..
..
...
...
...
...
...
71
68
54
36
48
33
28
30
28
16
20
23
2
3
3
3
I
31
23
16
7
2
2
2
1
1
.#
#.
3
2
2
,.
2
2
Total
1
1
79
78
63
39
56
33
29
32
32
19
26
26
1
41
26
19
2
1919
January . . . . . . .
February . . . .
March ......... . . .
$50,000 $100,000
to
to
$100,000 $500,000
2
1
i
3
Iron and steel
Business at present is quiet, some plants op
erating at 50 per cent of capacity, and are only
selling one-half of the pig iron made.. The ultimate outcome, how
ever, is believed to be favorable. The Hines-Redfield controversy
has had a very depressing effect. Many concerns which had antici
pated placing orders for their steel requirements have now decided
to hold off awaiting the result of the controversy. Many would be
in the market for material, but on account of unsettled conditions t
they continue to defer purchasing their requirements. Taken as a
whole, collections are fair.
The daily average production of pig iron during March was
99,685 tons, compared to an average of 108,060 tons in February.
Total production of steel ingots by thirty companies as reported to
the American Iron and Steel Institute was 2,662,265 tons, compared
to 2,704,683 in the short month of February. Manufacturers gen
erally are running their plants in excess of the amount of new
orders received in order to keep their organizations intact.
Lace
Business conditions in the laoe industry were quiet up to
about the middle of March. Since that time demand for
lace shows a notable increase and reports generally indicate a con
siderable increase in orders. Manufacturers feel that the stocks of
the retailers have become so depleted that good business will be
assured to them for some time to come.
37
Leather
The demand exceeds the supply. Sole leather has
shown a decided improvement, both for domestic and
foreign trade, and lifting by England of the embargo on the cheaper
grades of leather has stimulated trade in this country for such stock,
which had become somewhat redundant following the signing of
the armistice. Supplies of raw material continue to be scarce, par
ticularly the better grades of goatskins. No complaints concerning
collections are reported.
Machinery
There would be some demand for machinery for re
placement purposes, but uncertainty with regard to
prices has delayed buying, and business consequently is dull. Man
ufacturers, however, are optimistic, especially those making pumps
and road building machinery. Increasing activity in the oil fields
has increased the business of concerns manufacturing machinery
used there.
Pottery
The pottery manufacturers in the Trenton district,
one of the most important pottery districts in the coun
try, and a considerable portion of whose products go into buildings,
state that so far this year business has been the poorest for a long
time. The replies to inquiries are, however, hopeful, as it is believed
buildings of all character are needed in almost every city in the
country and that the erection of them must soon begin. Some con
cerns are operating their plants to about one-half capacity, accum
ulating goods for a demand which they anticipate will come later
in the year. Collections have been good with what sales have been
made.
Silk Silk concerns are doing a large business and feel more con
fident regarding the outlook, the selling of merchandise go
ing on without interruption. Raw material has advanced further,
and some concerns fear that the raw silk market is in a speculative
and dangerous position.
Sugar Sugar refineries report an excellent volume of business.
Export demand is very large and is expected to continue so
until Germany and Austria once more produce sugar in sufficient
quantities to resume exportations. Reports as to collections are
not quite in accord, some companies reporting them better than
ever, others say there is some falling off in promptness of payments.
Tobacco
Tobacco growers report that business was very good
for the first three months of the year. Since then,
sales have been small, dealers and cigar manufacturers buying in a
■A
hand to mouth manner. One of the largest cigar manufacturers
reports that business is rapidly coming back to normal, that they
are selling not only their entire production, but for some time
have been oversold.
W ool
Business has picked up considerably in March and there
is now a big demand for all grades of wools and wool sub
stitutes. W oolen mills and manufacturers of men’s and women’s
wear are all busy. Business is rather dull with the underwear and
blanket mills, although it is believed they, too, will soon be running
full again. In view of the conditions with the woolen mills, the
wool market has strengthened considerably, and wools have sold at
the recent Government auctions on a par with the Government al
lotment prices in operation during the war. This is particularly
true of the fine and fine medium grades.
Financial The money market in Philadelphia during the past
month has been dull. High grade paper has been
scarce. What little paper the banks bought was taken at 5% per
cent, with choice short maturities
per cent lower.
Loan operations of the Federal Reserve Bank continue large,
the figures for March being $839,369,000. Three hundred and fortyone member banks were accommodated compared with 322 the pre
ceding month. The Bank’s earning assets averaged $204,604,000
daily during the month, compared with $58,196,000 in March, 1918.
Currency movements have been large, shipments made to banks by
the Reserve Bank during March amounting to $25,565,000, and
shipments to the Reserve Bank from banks, $28,172,000.. Total
debits in the gold settlement fund amounted to $524,869,000, and
credits, $512,989,000, exclusive of operations for the account of the
United States Treasurer.
STATEMENT SHOWING THE PRINCIPAL RESOURCE
AND LIABILITY ITEMS OF MEMBER BANKS
IN PHILADELPHIA, SCRANTON,
CAMDEN AND WILMINGTON
At the close of business
Apr. 11. 1919
Mar. 14. 1919
(In thousands of dollars; /.e.
M il's om itted)
Number of banks reporting...............................
56
56
United States bonds to secure circulation........
$11,597
$11,597
Other United States bonds, including Libertybonds .............................................................
34,826
38,010
United States certificates of indebtedness........
141,931
140,744
Total United States securities owned ..
188,354
190,351
Loans secured by United States bonds and
certificates .....................................................
141,573
142,916
All other loans and investments........................
613,398
614,739
Total loans and investments....................
943,325
948,006
Reserve with Federal Reserve Bank..................
67,307
67,219
Cash in v a u lt .........................................................
18,836
19,400
Net demand deposits on which reserve is
computed .......................................................
645,302
666,588
Time deposits .......................................................
22,605
21,822
Government d ep o sits ...........................................
41,460
48,681
uo
STATEMENT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA
A pril 16, 1919
P reviou s m on th
1 3 0 ,3 9 3 ,3 6 2
1 2 7 ,8 1 7 ,4 7 1
1 4 1 ,3 5 7 ,1 5 5
2 7 0 ,2 9 4
6 6 8 ,0 0 8
130,661,990
128,087,765
142,025,163
1 8 4 ,2 0 0 ,4 4 8
1 6 9 ,9 6 5 ,1 0 3
1 3 ,9 7 9 ,0 2 6
1 1 ,4 6 2 ,5 2 9
* 2 4 ,3 4 5 ,8 5 7
Bills b o u g h t in o p e n m arket
9 6 3 ,6 9 3
1 ,7 7 7 ,0 6 3
1 9 ,3 4 2 ,8 2 6
U nited States secu rities. . .
1 8 ,6 6 5 ,4 0 0
1 5 ,1 6 4 ,9 0 0
1 1 ,5 3 7 ,9 0 0
Total earning assets
217,808,567
198,369,595
55,226,583
8 ,4 0 6 ,5 6 0
1 2 ,6 2 9 ,3 1 5
3,31 1,260
2 2 3 ,1 8 0
6 4 3 ,7 3 5
RESO U R C E S
G old r e s e r v e ...........................
2 8 ,6 2 8
L egal tender, 6silver, e t c . . .
Total reserve . . . .
Y ea r a g o
Bills discou n ted — m em bers.
S e cu re d b y G overn m en t
A ll oth er ............................
M utilated and fit n otes on
hand:
Federal reserve n o t e s ..
F ed eral
reserve
bank
D ue fro m d e p osita ry banks
— w a r lo a n d ep osit a c6 2 ,5 1 6 ,7 0 0
7 8 ,2 5 1 ,9 0 0
U n collected i t e m s ................
7 2 ,1 4 0 ,4 3 1
8 4 ,3 9 5 ,1 0 7
3 2 ,8 9 2 ,8 4 3
A ll oth er r e s o u r c e s .............
2 ,6 0 5 ,7 5 2
2 ,3 5 6 ,0 5 1
4 ,2 6 9 ,3 3 3
Total resources. . .
494,094,552
504,733,468
237,725,182
6 ,8 6 3 ,9 0 0
LIAB ILITIES
7 ,5 8 4 ,6 5 0
7 ,5 7 7 ,4 0 0
2 ,6 0 8 ,3 4 4
Capital pa id i n .......................
2 ,6 0 8 ,3 4 4
2 2 0 ,2 3 8
P rofit and lo s s ........................
4 ,7 4 8 ,8 2 0
1 2 ,39 7 ,7 4 1
to m em bers— reserve
a cco u n t .........................
1 1 2 ,8 8 4 ,2 1 7
1 1 0 ,0 9 7 ,0 1 8
8 6 ,3 6 0 ,5 2 0
C o lle ctio n i t e m s ...................
6 5 ,5 4 7 ,5 0 0
5 5 ,2 1 0 ,7 7 1
2 7 ,7 2 8 ,5 2 2
Total gross deposits
183,180,537
177,705,530
119,083,438
6 7 ,0 7 8 ,3 9 0
8 2 ,8 2 8 ,1 3 7
Pederal reserve n otes o u t
standing ........................
2 1 5 ,1 6 5 ,7 9 0
2 1 8 ,5 6 9 ,4 0 0
Federal reserve bank notes
o u t s t a n d in g ...................
1 5 ,8 4 0 ,0 0 0
1 3 ,4 6 0 ,0 0 0
A ll oth er lia b ilities............... 1
2 ,6 3 6 ,8 4 1
1 ,9 8 4 ,6 5 7
6 5 7 ,5 2 6
504,733,468
237,725,182
G overn m en t d ep osits . . . .
D ue
4 ,9 9 4 ,3 9 6
G overn m en t dep osits— spe-
T o ta l liabilities . . .
!
494,094,552
T ota l a m ou n t o f bills d iscou n ted m em bers.
1 1 0 ,9 0 0 ,0 8 0
BUSINESS INDICATORS
Percentage increase or decrease
compared with
A pril 21. 1919
Previous month
P h iladelphia ba n k s:
L oa n s .............................................................
D eposits .......................................................
R a tio o f loans to d e p o s its .....................
— 0.5
— 1.5
117*
$ 7 7 4 ,6 4 0 ,0 0 0
6 5 3 ,1 8 4 ,0 0 0
118%
Year ago
+29
+
2
93*
F ederal R eserve B ank:
D iscou n ts and colla tera l lo a n s ...........
Cash r e s e r v e ................................................
N in ety-da y d iscou n t r a te ..................... .
1 9 4 ,5 8 0 ,0 0 0
42%
4^%
C om m ercia l p a p er r a t e ................................
5 yA%
M arch ,
+7
42*
434*
+655
74*
43/4*
6*
5^2*
Percentage increase or decrease
compared with
1919
Previous month
Year ago
Bank clea rin gs:
In P h ila d e lp h ia ............................................
E lsew here in d is trict................................
$ 1 ,7 3 0 ,2 8 6 ,0 0 0
9 1 ,4 1 4 ,0 0 0
T o t a l ..........................................................
1 ,8 3 2 ,2 0 0 ,0 0 0
+ 18
Building perm its, P h ila d elp h ia ................
P ostoffice receipts, P h ila d e lp h ia .............
C om m ercia l failures in district (p e r
.............................................
B radstreet’ s )
$ 2 ,6 6 2 ,2 9 0
1 ,1 7 9 ,7 5 4
+ 134
C o m m o d ity p r ice s :
A nnalist, M a rch 1 5 ..................................
D u n ’ s, M arch 1 ...........................................
B radstreet’ s, M a rch 1 .............................
*Actual figures.
19
+ 19
+
+
9
7
26*
+21
— 10
+
20
+ 138
+5
63*
31 1.801
+7
+7
2 1 9 .9 7 3
+ 1
— 4
$ 1 7 .2 7 9 5
-{-0 .3
— 6
Paul Warburg, former member of the Federal Reserve Board,
made the following pertinent comments at a recent dinner held by
the Council of Foreign Relations:
“ W e around this table appreciate fully the duties now ours in
consequence of the attainment of a position of such overtowering
economic strength as to place other nations—with whom, both for
their sake and ours, we must continue to trade— in a position of
having to make good to us an annual debit balance larger than they
may be able to equalize by the shipment of goods or gold. In these
circumstances it is inevitable that such foreign customers must
either sell us the foreign securities or assets they now hold, or their
own national obligations, or failing that, they must make money so
attractive within their own boundaries that our capital will seek to
invest there. .
“ Foreign countries will require many hundred millions’ worth
of raw material and finished articles for which, in their present dis
organized condition, they will not be able to pay by the sale of
goods or services. Conditions abroad in some countries are so
grave and alarming that we must frankly admit our inability or
even unwillingness, at this time to come to their support. There
are others where we should feel justified and glad to help, if only
we could see our way clear eventually to open to them the avenues
leading to American savings.”
Mr. Warburg suggests the formation of a great investment
trust through which foreign securities might pass to investors in
the United States, thereby providing funds for the settlement of
foreign obligations in this country and the granting of credit.
------------ o-------------
Sir Josiah Childs said to Englishmen more than 200 years ago:
“ The greatness of this kingdom depends on foreign trade.
’Tis observable of the Dutch that they erect the most noble tombs
and statues to the memory of their famous sea commanders; which is
certain indication of their being sensible of the vast advantages that
accrue to them by their shipping, and I heartily wish we in this
nation were not less apprehensive thereof.” — System, April, 1919.
------------ o------------Professor Irving Fisher, in a statement prepared for the Depart
ment of Labor, expresses the opinion that prices will remain at a
high level for the following reasons: 1. Gold will not return to
circulation inasmuch as people find it more convenient to use notes
and checks ; 2. Gold will not leave the country in any considerable
quantity as we are a great creditor nation; 3. Outstanding credit
will not be greatly reduced as the Victory loan must be disposed of,
and afterward business men will use the bonds to float large com
mercial loans.
------------ o------------Babson’s make the following comment apropos of the curtail
ment in foreign buying: “ Up to this time in the war period the
financial over-expansion of the principal nations has apparently
been of but little consequence to United States business. Merchants
and manufacturers were able to sell their goods at high prices and
get payment for them without difficulty. It seemed logical enough
that this situation would continue at least thru the reconstruction
period. This was the principal argument of those who have been
expecting a great period of business prosperity to follow the settle
ment of peace. The facts, however, are different. Nothing but war
could induce a sane nation to buy on the reckless scale which the
warring nations have bought during the past four years. Neither
would it be sound judgment for the United States Government to
lend as it has for any less than the emergency of war. Reconstruc
tion cannot be accomplished that way.”
------------ o------------The Federal Reserve banks and the member banks, and, in
fact, the whole banking world are but servants of the public and
must fulfill their duties to the best of their ability. They must also
fulfill a duty to the Government in insuring the success of the V ic
tory loan as they have so ably done in the past. However, the public
likewise has a duty to perform, and that is to see that the banks are
not forced to carry a larger percentage of the new loan for a longer
period than they did when they underwrote the previous loans. If
they fail to give their whole-hearted support, it will simply mean
that the banks cannot extend the credit to commercial undertakings
which is so necessary for the orderly continuation of business on a
big scale.
------------ o------------The Government will take the fourteenth census of farms as
of January 1, 1920, instead of collecting this data as of April 15.
This change of date was made so as to obtain more accurate data
and cause less interference with the work of the farmers.
------------ o------------T o avoid the spread of radical socialism, American business
men must revise their ideas regarding methods of handling labor,
according to a report of the Employers’ Industrial Commission of
the Department of Labor. The commissioners made a study of
conditions in Great Britain and all were agreed that: 1. The
spirit of co-operation between capital and labor is highly desirable;
2. The spirit of conciliation is important for the benefit of the
employer in stabilizing his business and for the benefit of the
employe in preserving his regularly organized unions; 3. In col
lective bargaining the right-minded employer will not attempt to
return to the pre-war industrial era and that the right-minded
employee will not attempt to crowd his demand to the point at
which the stimulus for private business enterprise would disappear.
They find that practically all employers and employees who believe
in organization are united against the radical leaders who oppose
collective bargaining.
------------ o-----------Otto H. Kahn recently said: “ Our readjustment problem pre
sents no serious difficulty, I think the time has come for business
and the public to abandon a waiting attitude and to proceed to full
activity with courage and with faith in the country and in the
future.”
------------ o------------The Council of National Defense announces its readiness to
place at the command of the business world the information con
tained in the voluminous collection of data brought together, clas
sified, indexed and partly digested by its Reconstruction Research
Division. It also offers the services of this Division in the pro
curement of such further special information as may be desired and
which may add in the reorganization of industry and resumption
of trade, or which may in any other manner promote progress.
------------ o------------The number of tractors manufactured in this country in 1918
totaled 133,000. It is estimated that 315,000 will be produced in
Vr
1919. Tractors are proving their practical utility even on farms of
small size. The Federal Reserve Board has ruled that notes given
by farmers in payment for agricultural implements constitute agri
cultural paper eligible for rediscount at Federal Reserve banks.
------------ o------------During March, 1919, almost $16,000,000 were loaned to over
4600 farmers of the United States by the Federal Land Banks on
long-time first mortgages. On April 1 the total amount of the
mortgage loans closed since the establishment of the Federal Land
Banks was $199,000,000 to 80,000 borrowers.
------------ o------------The Japanese Government has proposed to its legislative body
that foreign corporations be permitted to do business in Japan and
operate mines there.
------------ o------------The issue of securities by British companies for capital pur
poses abroad, and issues on behalf of persons resident abroad, is
still controlled by the British Government.
------------ o------------Canada has provided $25,000,000 to be loaned to workingmen
who desire to build homes.
------------ o------------The Journal of Commerce prints a letter criticising the policy
of holding cotton of the last crop until it reaches a price of 30 cents
per pound and of reducing cotton acreage of the next crop, which
steps have been so ardently advocated in the South of late. The
writer points out that cotton was not held down in price by the
war but rose exactly the same as other commodities to a high level,
and that the cost of production instead of being around a 30 to 40
cent level was in reality slightly over 11 cents. The apparent
unwillingness of the Southern planters to forego part of their profits
as have the manufacturers throughout the country in an effort to
stimulate business and aid reconstruction is branded as an act of
supreme selfishness.
------------ o------------The Department of Labor estimates that one million new
houses and apartments are needed throughout the country. The
war has caused such a slackening of the building industry in every
thing except for war essentials that the demand for homes is now
the greatest in the history of the country. Reports up to a recent
date show that this demand is being only slowly met, probably due
to the uncertainty of the prices of nearly all building materials.
O
iU
Building contracts awarded for the week ending April 4 totaled
$61,000,000, compared with $44,000,000 awarded in the preceding
week and $28,000,000 in the first week of March.
------------ o-----------Although the War Finance Corporation is prepared to assist
in financing exporters under the Victory Liberty Loan Act, no
formal applications have been received, according to the Federal
Trade Information Service. The absence of applications for loans
is a source of surprise to the officials of the corporation.
------------ o------------A recent issue of the Financial Age states that our banks and
business men have little ground for complaint and should be bullish
on fundamental conditions as they exist in the country today. The
following diagram shows in concrete style how well off the United
States is compared to the rest of the world.
"Worlds
L
\Sforfds
W ealth
X
*
@FedFRASER