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MONTHLY REVIEW BUSINESS AND AGRICULTURAL CONDITIONS WILLIAM W. H O X T O N . CHAIRMAN AND FEDERAL RESERVE AGENT R IC H M O N D , V IR G IN IA DISTRICT SUMMARY. U nseasonably cool w eather in most of the fifth reserve district dur ing M ay and the first half of June so delayed crop developm ent and so retarded retail trade that at the middle of June it is difficult to an alyze the current business situation. Elem ents of strength and w eakness are both present, but on the whole the general outlook appears to be som ewhat less favorable than at the same time a year ago. Credit demands declined seasonally during the period betw een the middle of M ay and the middle of ’June, and bank deposits rose at reporting member banks. Debits to individ ual accounts figures in fourteen of tw enty-th ree leading cities of the fifth district w ere higher during the four w eeks ended June 8th than dur ing the corresponding four w eeks in 1926, but the district total w as low er during the 1927 period, due to a large decrease in Baltim ore. The strike in union bituminous coal fields has increased demand for W est V irgin ia coal, and the textile situation in the district is much b et ter than it w as a year ago, but at the same time business failures are running ahead of 1926 in both number of defaults and in liabilities in volved, and during each of the past eight months the volum e of building construction provided for in permits issued in tw enty-nine leading cities was considerably below that provided for in per mits issued during the corresponding months of the preceding year. Labor is not as w ell em ployed as a year ago, and this is being reflected in retail trade, w hich in M ay w as in smaller volum e than in M ay 1926. T o tal sales during the first five months of 1927 w ere also less than those of the first five months in 1926. W holesale trade is not better than fair. A gricultural pros pects are highly uncertain at this time. The w eather has been too dry in some sections and too w et in others, and throughout the entire dis trict tem peratures have been so unseasonably low that plant g ro w th has been seriously re tarded. Conditions up to the present time have been favorable for the cotton crop in the fifth district, and on the whole the small grain crops are good, but fruit prospects are probably not better than 50 per cent of last year's, corn is late and much replanting has been necessary, and to bacco is too young to allow conclusions to be drawn in reference to its prospects. JU N E 30, 1927 RESERVE BANK OPERATIONS. The peak of credit demand for crop planting and fertilizer purchasing having passed, credit needs eased b e tw een M ay 15th and June 15th, in keeping w ith the seasonal trend. Rediscounts held by the F ed eral Reserve Bank of Richmond declined from $27,977,000 on M ay 15th to $19,590,000 on June 15th, and the volum e of Federal reserve notes in actual circulation dropped from $66,571,000 to $61,880,000 during the same period. T otal bill holdings of the Federal R eserve B ank of R ich mond declined from $38,173,000 on M ay 15th to $27,919,000 on June 15th, the decrease being made up of reductions of approxim ately $8,250,000 in rediscounts held and $2,000,000 in bills purchased in the open m arket and from member banks. M ember bank reserve deposits at the re serve bank rose from $67,878,000 to $70,888,000 betw een the middle of M ay and the middle of June. The several changes in the statement, w ith others of less importance, increased the to tal cash reserves held by the Federal R eserve Bank of Richmond from $97,010,000 on M ay 15th to $98,738,000 on June 15th, and raised the ratio of reserves to note and deposit liabilities com bined from 70.76 per cent to 74.11 per cent. On June 15, 1927, reserve bank credit w as in relatively little demand. A year earlier, member banks w ere borrow ing $45,576,000 from the F ed eral R eserve Bank of Richmond, but on June 15th this year this amount had declined to $19,590,000, a decrease of 57 per cent. T otal bill holdings of the Richmond bank declined during the year from $57,590,000 to $27,919,000, a de crease of 51.5 per cent. Federal reserve notes in actual circulation, which totaled $71,989,000 on June 15th last year, declined to $61,880,000 on June 15th this year, a drop of 14 per cent. On the other hand, member banks increased their reserve deposits from $65,045,000 on June 15, 1926, to $70,888,000 on June 15, 1927, a rise of approxim ately 9 per cent. A s a result of the low er credit needs of member banks this year, the cash reserves of the Federal R eserve Bank of Richmond rose from $76,709,000 at the middle of June last year to $98,738,000 on the correspond ing date this year, an increase of 28.7 per cent. The ratio of cash reserves to note and deposit liabilities combined, which stood at 55.58 per cent on June 15, 1926, rose to 74.11 per cent on June 15, 1927. CONDITION OF SIXTY-SEVEN REPORTING MEMBER BANKS IN SELECTED CITIES ITEMS June 15, 1927 1. Total Loans and Discounts (including all rediscounts) ...................................... 2. Total Investments in Bonds and Secu rities ........................................................... 3. Reserve Balance with Federal Reserve Bank ........................................................... 4. Cash in Vaults.............................................. 5. Demand Deposits ........................................ 6. Time Deposits.............................................. 7. Borrowed from Federal Reserve Bank... May 11, 1927 June 16, 1926 $520,040,000 $513,136,000 $516,144,000 146.033.000 145.920.000 132.815.000 42,520,000 13*038,000 385.965.000 225.567.000 4,774,000 40.821.000 13.958.000 381.159.000 221.992.000 6,993,000 39.742.000 13.547.000 365.036.000 207.321.000 15.346.000 The accom panying table shows the principal items of condition reported by sixty-seven iden tical member banks, located in thirteen leading fifth district cities, on three dates, June 15th and M ay n th , this year, and June 16th last year, thus affording an opportunity for comparison of the latest available figures w ith those of the preceding month and the preceding year. B etw een the middle of M ay and the middle of June, credit needs in agricultural sections of the fifth district usually lessen to some extent, crops being previously planted, fertilizer purchased, and sales of truck putting some money into the hands of the farm ers. This enables the country banks to reduce their borrow ing from the reserve bank or from their city correspondents. A ll of these developments occurred betw een M ay n t h and June 15th this year. Outstanding loans to custom ers of the reporting member banks increased slightly during the month, rising by $6,904,000, but investm ents in bonds and securities rose $113,000, aggregate reserve balances of the reporting banks at the reserve bank increased $1,699,000, and total deposits gained $8,381,000, of. which $4,806.000 was in demand and $3,575,000 in time deposits. Cash in vaults declined $920,000 during the month under review , and the sixty-seven banks reduced their rediscounts at the reserve b ark by $2,219,000. Comparing the figures for June 15, 1927, w ith those reported on June 16, 1926, total loans ana discounts to custom ers of the reporting banks show an increase during the year of $3,896,000. In vestm ents in bonds and securities rose $13,218,000 during the year, and reserve balances at the re serve bank gained $2,778,000. Cash in vaults declined $509,000, but demand deposits increased $20,929.000 and time deposits rose $18,346,000, a total deposit gain of $39,175,000. The reporting banks reduced their rediscounts at the reserve bank from $15,346,000 on June 16th last year to $4,774,000 on June 15th this year, a decline of $10,572,00, or 68.9 per cent during the year. DEBITS TO INDIVIDUAL ACCOUNTS TOTAL DEBITS DURING THE FOUR WEEKS ENDED CITIES June 8, 1927 May 11, 1927 June 9, 1926 Asheville, N. C................................................... Baltimore, Md.................................................... Charleston, S. C................................................ Charleston, W. Va............................................. Charlotte, N. C.................................................... Columbia, S. C................................................... Cumberland, Md................................................ Danville, Va................... .................................... Durham, N. C..................................................... Greensboro, N. C............................................... Greenville, S. C...... ..................................... ....... Hagerstown, Md................................................. Huntington, W . Va................................. .......... Lynchburg, Va.................................................... Newport News, Va............................................. Norfolk, Va.......................................................... Raleigh, N. C...................................................... Richmond, Va...................................................... Roanoke, Va........................................................ Spartanburg, S. C............................................. Washington, D. C............................................... Wilmington, N. C.............................................. Winston-Salem, N. C......................................... $ $ $ District Totals .................................................. $1,203,160,000 37,567,000 353.269.000 24.255.000 34.322.000 49.063.000 23.914.000 8.505.000 7.595.000 25.898.000 23.187.000 20.113.000 9.976.000 21.633.000 18.036.000 8.596.000 68.956.000 19.188.000 118.446.000 26.685.000 13.012.000 237.480.000 17.953.000 35.511.000 31,680,000 375.385.000 26.765.000 31.759.000 50.031.000 24.930.000 8.848.000 7.972.000 28.424.000 26.346.000 22.193.000 10.244.000 22.278.000 18.087.000 9.150.000 68.667.000 19.685.000 123.454.000 25.853.000 12.460.000 236.205.000 19.540.000 41.526.000 $1,241,482,000 36,653,000 393.350.000 25.117.000 33.094.000 45.227.000 18.414.000 7.941.000 7.570.000 24.408.000 23.536.000 16.803.000 9.153.000 22.939.000 19.025.000 9.475.000 68.626.000 18.907.000 115.358.000 27.359.000 13.493.000 231.961.000 18.729.000 33.390.000 $1,220,528,000 Debits to individual, firm and corporation accounts in the clearing house banks of tw enty-three leading fifth district cities totaled $1,203,160,000 for the four w eeks ended June 8, 1927, a decline of 2 3-i per cent under the total of $1,241,482,000 reported by the same banks for the preceding four w eeks, ended M ay n th . This decrease w as chiefly seasonal and was due to the occurrence of holidays dur ing the period ended June 8th. Seventeen cities reported low er figures for the later period, but larger totals w ere reported by Asheville, Charleston, W . Va., N orfolk, Roanoke, Spartansburg and W ash ing ton. A comparison of $1,203,160,000 reported for the four w eeks ended June 8th this year w ith $1,220,528,000 reported for the corresponding period a year ago shows a district decline of 1.4 per cent, but a m ajority of the reporting cities show higher figures this year, the average decline being due chiefly to a decrease of 10.1 per cent in Baltim ore's debits. Fourteen cities reported higher figures for the 1927 period, while nine cities reported low er totals. A s previously mentioned, B altim ore’s figures this year w ere below those of the 1926 period, but the next three cities, W ashington, R ich mond and N orfolk, reported higher figures this year. SAVINGS DEPOSITS— Savings deposits in the fifth district increased during the past month. Thirteen mutual savings banks in Baltim ore had deposits a g g rega tin g $165,558,711 at the close of busi ness M ay 31, 1927, compared w ith $165,482,800 at the end of April this year and $154,228,991 at the end of M ay 1926. S ixty-seven regu larly reporting member banks had a g g reg a te time deposits am ounting to $225,267,000 on June 15th this year, compared w ith $221,992,000 on M ay n , 1927, and $207,321,000 on June 16, 1926. BUSINESS FAILURES— Dun's Review for June 4, 1927, says, “ The reduction in the number of commercial failures in the United States which has been in progress since the end of last January, follow ing the usual trend, continued during M ay. W ith 1,852 defaults, last m onth’s total is 6 per cent below that for A pril, and is approxim ately 25 per cent under the number for January, which, as previ ously indicated, m arked the high point for this year. W hen comparison is made w ith the returns for M ay of the tw o im m ediately preceding years, how ever, increases are shown. The rise over the I,730 insolvencies of a year ago is a little more than 7 per cent, while there is an increase of 4.8 per cent over the 1,767 failures of M ay 1925. The falling off from A pril to M ay last year w as about II.5 per cent, and tw o years ago it w as approxim ately 9 per cent. Hence, the present record is less favorable, both actually and relatively, than that for M ay 1926 and 1925. Y e t it is not strik in gly ad verse, considering recent factors which m ight conceivably have brought about a distinctly higher comm ercial m ortality, such as floods and inclem ent w eather, and it also is to be remem bered that the larger number of firms and individuals in business enhances the possibilities of failure. “ The liabilities of the M ay defaults— $37,784,773— show decided im provem ent over the large amounts of recent months. The decrease from the A pril total is some 29 per cent, while there is an even greater contraction from the indebtedness for March. O11 the other hand, last m onth’s liabil ities exceed by about 12.5 per cent the $33,543,318 of M ay 1926. A n interesting feature of the statis tics is the fact that approxim ately 46 per cent of last m onth’s indebtedness w as supplied by defaults for $100,000 or more in each instance, which is a low er ratio than the 49 per cent provided by the similar class of failures in M ay 1926.” In the fifth reserve district, M ay failures totaled 125, compared w ith 123 in A pril this year and 118 in M ay last year, while liabilities last month a ggregated $5,707,404, compared w ith $3,800,752 in A pril 1927 and only $1,963,570 in M ay 1926. L ast m onth’s liabilities w ere the largest for any month since M ay 1925, and in fact have been exceeded only four months since the W orld W ar. LABOR— No changes of importance w ere noted in labor circles during the past month. A re duced building program this year in comparison w ith the tw o or three m ost recent years has resulted in some unemployment in the building trades and allied lines, but other em ployers are using their full quotas of w orkers. Tobacco factories in the fifth district are expanding operations in m any cases, the coal strike in union bituminous fields has increased demand for W est V irgin ia coal and has given miners in that state steadier w ork than is usual at this season of the year, road and street w ork is using a large number of both skilled and unskilled laborers, and shipyards are busy. T ex tile mills are operating full time, and em ploying full quotas of employees. The volum e of construction w ork under w ay, while less than a year ago, is still large, and is givin g em ployment to the bulk of skilled trades men. In the cities there is some unemployment, but the situation is not general nor serious. COAL— In spite of the strike of union miners in bituminous coal fields, production of soft coal in M ay totaled approxim ately 35,393,000 net tons, according to the June n t h report of the Bureau of Mines, D epartm ent of Commerce. This output exceeded that of A pril by approxim ately 2 per cent, and w as only 9.4 per cent under the production of M ay 1926, when there w ere no men out on strike. W est V irgin ia mines are producing close to 3,000,000 tons per w eek at present. Retailers have coal in their yards in sufficient quantities to fill all orders promptly, and retail prices are down to w ithin about 50 cents per ton of prices a year ago. A nth racite coal is now available at all yards, the short age of last year having been made up by the mines. H ow ever, relatively little anthracite is used in the fifth district. 3 TEXTILES— Cotton consumed in fifth district mills in M ay totaled 264,507 bales, of which N orth Carolina mills used 144,736 bales, South Carolina m ills 107,912 bales, and V irgin ia mills 11,859 bales. M ay consumption in the district exceeded 259,754 bales used in A pril 1927 and 209,204 bales used in M ay 1926. F ifth district mills are running full tim e on forw ard orders, and are accum ulating little stock in their w arehouses. Orders are more easily obtained than for m any months, but textile executives state that the business is being done on a very narrow m argin and that profits are small. The general situation in the industry is very much better than it w as at this time last year, when mills w ere forced to curtail operations m aterially to prevent the accum ulation of m anufactured goods. BUILDING OPERATIONS FOR THE MONTHS OF MAY 1927 AND 1926. Permits Issued 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 New CITIES 2 Winston-Salem, N. C. Charleston, S. C ... Columbia, S. C..... Greenville, S. C..... Spartanburg, S. C. Washington, D. C. 478 28 5 28 16 32 80 5 103 70 18 35 45 40 34 28 67 29 58 60 34 23 17 123 16 18 11 33 187 Alterations Repairs 1927 1926 Baltimore, Md...... Cumberland, Md... Frederick, Md...... Hagerstown, Md... Danville Va.......... Lynchburg, Va.... Norfolk, Va. ... Petersburg, Va..... Richmond, Va...... Roanoke, V a ....... Bluefield, W. Va... Charleston, W. Va. Clarksburg, W. Va Huntington, W.V a. Parkersburg,W.V a Asheville, N. C..... Charlotte, N. C..... Durham, N. C...... Greensboro, N. C. High Point, N. C... Raleigh, N. C....... Salisbury, N. C..... Wilmington, N. C. New Construction 1927 1926 1926 1927 598 1,432 1,403 $ 2,981,040 $ 4,209,600 33 4 15 203,802 62,353 11 2 1 18,285 196,765 4 26 25 31,470 32,925 11 13 35 17,065 59,435 32 30 43 89,296 78,434 62 93 65 306,275 242,320 7 3 5 16,850 30,550 88 153 83 798,579 544,016 121 32 59 209,282 722,380 24 12 7 94,505 50,950 55 20 18 81,327 101,752 23 18 16 38,495 25,275 92 4 7 272,380 69,948 42 5 4 148,850 147,750 102 78 68 577,924 275,220 76 28 i’8 760,599 256,975 40 10 26 225,915 579,150 57 44 43 139,536 290,220 83 13 15 221,050 327,720 41 15 12 637,425 114,250 23 10 7 107,500 98,745 9 10 5 28,700 17,200 89 31 53 568,945 410,190 8 24 25 87,700 18,373 12 38 30 25,500 120,450 18 32 28 107,750 48,305 26 31 30 63,460 62,750 274 508 382 3,251,610 4,323,670 Totals.......... 1,711 2,153 2,627 2,518 $10,347,903 $15,280,883 1927 1926 $ 792,840 $ 4,600 900 1,225 7,230 34,782 527,880 8,760 65,173 13,307 23,525 23,475 13,005 1,150 3,500 42,718 59,685 13,190 96,531 11,975 26,225 11,950 ^5,350 45,440 19,555 5,870 25,375 *(6,668 271,115 $2,162,999 674,760 13,165 1,100 129,235 17,546 32,162 31,601 6,141 72,415 10,326 3,950 7,497 11,800 11,090 1,950 15,014 10,300 37,885 128,825 9,750 18,954 15,190 6,700 38,260 107,510 11,795 48,285 16,105 936,585 Increase or Per Cent Decrease of of Increase Total or Z Valuation Decrease $—1,110,480 — 150,014 — 178,680 — 129,465 — 52,686 — 8,242 560,234 — 11,081 — 261,805 — 510,117 63,130 — 4,447 14,425 — 212,372 2,650 — 275,000 — 454,239 — 377,930 118,390 — 104,445 — 515,904 5,515 10,150 165,935 — 157,282 89,025 36,535 — 10,147 —1,737,530 — 22.7% — 69.1 — 90.3 — 79.8 — 68.4 — 6.8 204.5 — 30.2 — 30.1 — 69.6 115.0 — 4.1 38.9 — 74.9 1.8 — 46.4 — 58.9 — 61.2 44.1 — 30.9 — 78.6 4.8 42.5 37.0 — 80.6 238.7 37.8 — 12.8 — 33.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 $2,425,896 —$ 5,195,877 — 29.3°?o — Denotes decrease. NOTE— The figures in the above table reflect the amount of work provided for in the corporation limits of the several cities, but take no account of suburban developments. For the eighth consecutive month, the value of construction w ork provided for in perm its issued by building inspectors in tw enty-nine fifth district cities w as low er in M ay than in the corresponding month of the preceding year. Perm its issued for new construction in the tw enty-nine cities totaled 1,711 last month, compared w ith 2,153 permits for new w ork issued in M ay 1926. Valuation figures also m ake an unfavorable comparison, $10,347,903 in M ay 1927 com paring w ith $15,280,883 in M ay 1926, both figures covering estim ates for new construction. In alteration and repair wrork, 2,627 perm its issued last month exceed 2,518 perm its fo r this class of w ork in M ay last year, but M ay 1927 valuation figures of $2,162,999 are below $2,425,896 reported a year ago. In combined valua tion for both new and repair or alteration w ork, the tw enty-nine cities totaled $12,510,902 last month and $17,706,779 in M ay a year ago, a decrease during the 1927 month of $5,195,877, or 29.3 per cent. Nineteen of the reporting cities showed low er valuation figures this year, w hile ten cities reported higher figures last month. Four of the ten cities reporting gains are in N orth Carolina, three are in W est Virginia, tw o in South Carolina, and one in V irginia. The three largest cities in the district re ported low er 1927 figures, but N orfolk, fourth c ity in size in the district, showed an increase over M ay 1926 totals. Building contracts awarded in the fifth district in M ay totaled $39,735,738, including both urban and rural construction. O f this amount, $10,315,313 w as for residential wrork, according to statistics collected by the F. W . D odge Corporation. 4 COTTON— The factors mentioned a month ago as tending to raise cotton prices continued to operate during the period betw een the middle of M ay and the middle of June, and spot cotton prices in the Carolinas rose over a cent a pound. In our M ay 31st Review, w e quoted 14.50 cents per pound as the average price paid on Carolina m arkets during the w eek ended M ay 14th. From this price there w as a gradual rise to 15.66 cents per pound during the w eek ended June n th . The floods along the M ississippi, retarded developm ent of grow in g cotton by unseasonably cool w eather in eastern states, lack of rain in some w estern and southw estern sections, and a continuation of large consump tion and export figures are the chief influences at w ork on cotton prices at present. Cotton consumed in Am erican mills during M ay 1927 totaled 633,024 bales, compared w ith 619,140 bales consumed in A pril this year and 516,376 bales used in M ay 1926. The M ay consumption figure w as the third highest on record for a single month. T otal consumption for the ten months of the sea son to date— A u gu st 1, 1926, to M ay 31, 1927— amounted to 5,970,844 bales, compared w ith 5,475,502 bales consumed during the corresponding period ended M ay 31, 1926. A ccording to the Bureau of the Census report of June 14th, consum ing establishm ents held 1,794,284 bales of cotton in their w are houses on M ay 31st, compared w ith 1,448,739 bales so held on the corresponding date a year earlier. Public w arehouses and com presses held 2,868,947 bales in storage on M ay 31st, compared w ith 2,965,477 bales a year ago. E xports totaled 628,132 bales in M ay this year, compared w ith 419,459 bales shipped abroad during the same month of 1926, and total exports for the ten months ended M ay 31st amounted to $10,312,637 bales against 7,442,315 bales exported during the ten months ended M ay 31, 1926. Im ports last month totaled 21,347 bales, compared w ith 13,625 bales brought in during M ay last year. The cotton g ro w in g states consumed 456,285 bales in M ay this year, or 72.1 per cent of National consumption, compared w ith 362,987 bales, or 70.3 per cent of National consumption, used in cotton gro w in g states during M ay 1926. A lthough it is too early to form an opinion as to this y e a r’s cotton crop, present indications point to better prospects in the fifth district than existed a year ago or than now exist over the cotton gro w in g belt as a whole. The floods along the Mississippi, together w ith unfavorable w eather for planting and g ro w in g over much of the cotton belt, appear to indicate a very strong probability of considerably reduced yields from those of 1926. In the fifth district, how ever, the cotton crop on the whole is better than it was at this time a year ago, especially in the heavy producing Piedm ont counties of the Carolinas. E arly in the season the w eather in the Carolinas w as dry, but general rains fell when it w as really needed, and the crop has made splendid progress. The boll w eavil has appeared in southern and eastern counties of South Carolina, and the cotton flea is in the fields in the Piedmont, but tim ely w arning has been given of the danger from these pests and it is not certain that they will do m aterial damage. The farm ers should realize that these insects are a very real danger, how ever, and every effort should be made to control them. AGRICULTURAL NOTES— The agricultural outlook in the fifth reserve district is rather more difficult to estim ate at present than in most years at this season because unseasonable w eather has retarded crop development. In the southern half of this district, em bracing the Carolinas, insufficient rain fell during A pril and the first half of M ay, and several cool spells also checked grow th , w hile in the northern half of the district the w eather has been entirely too cold for youn g crops. The C aro linas had general rains early in June, how ever, and crops are now m aking good progress. The g re a t est dam age from unfavorable w eather w as done to fruit crops, in w hich late frosts and cold in A pril and early M ay lowered prospects far below those of last year. On the w hole, present indications are for a fruit crop not more than half that of 1926, although a definite opinion cannot be form ed until after the June drop occurs. N ational crops are also indicated to be unusually small and m ay result in higher prices for peaches and apples next Fall than in 1926 and offset in part the reduction in yield. In M aryland dry w eather early in June favored w heat, and a fair crop is in prospect, but corn is m ak ing slow grow th. W ildfire dam aged some tobacco plant beds, but the disease has been checked. Tobacco plants in the fields need warm weather. In V irginia prospects for small grains are about up to the average for the past five years, and the condition of hay and pastures is better than usual. E arly truck crops made only fair yields but prices w ere good. The early w hite potato crop in V ir ginia is good, and prices are also satisfactory. The corn crop is very poor at present. Considerable replanting of corn, peanuts and tobacco has been necessary because of poor germ ination and injury from cut worm s. N orth Carolina w heat and hay prospects are below those of a year ago, but the oat crop is better this year. The early Irish potato yield was cut b y dry w eather, and some fields that w ere dug late suffered from second grow th follow ing rains which fell around the first of June. Sm all grain prospects in South Carolina are below those of last year, but are about up to average, 1926 having been an exceptionally good year for wheat, oats, etc., in that State. 5 FIGURES ON RETAIL TRADE ________________ As Indicated By Reports from Thirty Representative Department Stores for the Month of May, 1927___________ Percentage increase in May 1927 sales, over sales in May 1926: Baltimore Richmond Washington Other Cities District — 6.4 .3 — 3.5 2.7 — 3.7 Percentage increase in total sales since January 1st, over sales during the same five months in 1926: — 3.2 4.4 — 1.5 — 1.4 — 1.7 Percentage increase in May 1927 sales over average May sales during the three years 1923-1925, inclusive : — 3.0 13.8 10.5 11.4 4.5 Percentage increase in stock on hand May 31, 1927, over stock on May 31, 1926: — 2.6 — .5 .6 4.3 — .5 Percentage increase in stock on hand May 31, 1927, over stock on April 30, 1927: — 1.8 .3 — 3.4 — 5.0 — 2.6 Percentage of sales in May 1927 to average stock carried during that month: 25.4 26.4 28.1 23.4 26.2 Percentage of total sales since January 1st to average stock carried during each of the five elapsed months *. 125.4 133.0 133.6 105.1 126.7 Percentage of outstanding orders on May 31st to total purchases of goods in 1926: 3.8 3.4 5.2 3.7 4.3 Percentage of collections in May 1927 to total accounts receivable on May 1st: 23.6 28.0 29.9 31.5 26.6 — Denotes decreased percentage. Confidential reports sent to the Federal R eserve Bank of Richmond by th irty leading department stores in the fifth reserve district show sales during M ay 1927 averagin g 3.7 per cent below the volum e of sales in M ay 1926, tw en ty of the thirty stores reporting low er figures last month. In total sales from January 1st through M ay 31st this year, sales in the reporting stores averaged 1.7 per cent below a gg re g a te sales during the first five months of 1926. On the other hand, M ay sales this year averaged 4.5 per cent above average M ay sales during the three years 1923-1925, inclusive. Unseasonably cool w eather probably reduced the volum e of trade in M ay to a considerable extent, and partly accounted for the decline in sales in comparison w ith the corresponding month of 1926. Stocks of merchandise on the shelves of the reporting stores w ere five-tenths of 1 per cent low er in selling value at the end of M ay 1927 than a y ear earlier, and w ere 2.6 per cent smaller than a month earlier. The decrease in M ay under the A p ril 30th figure w as about the seasonal average. The perecentage of sales to average stocks carried during M ay w as 26.2 per cent for the district as a whole, and the percentage of total sales during the first five months of this year to average stocks carried during each of the five months w as 126.7 Per cent, indicating an annual turnover of 3.041 times. D uring the first five months of 1926 the turnover was at a rate of 3.072 times. Collections by tw enty-nine of the th irty reporting stores during M ay totaled 26.6 per cent of out standing receivables as of M ay 1st, exactly the same average attained in A pril this year, but a low er figure than the average of 29.3 per cent collected in M ay 1926. A ll cities except Richmond reported low er percentages in M ay than in M ay a year ago, and Baltim ore and the O ther Cities group also showed declines in collections from those of A p ril this year. Richmond and W ashington collections improved slightly last month in comparison w ith A pril. 6 WHOLESALE TRADE, MAY 1927 Percentage increase in May 1927 sales, compared with sales in May 1926: 34 Groceries 12 D ry Goods 6 Shoes 16 Hardware 5 Furniture 13 Drugs — 3.1 — 7.4 — 11.5 10.4 25.5 1.7 Percentage increase in May 1927 sales, compared with sales in April, 1927: 6.5 — 5.8 — 8.9 .6 53.6 — 3.8 Percentage increase in total sales since Jan. 1, 1927, compared with sales during the same five months in 1926: — 6.5 — 3.1 .4 4.9 — 5.2 — 2.9 Percentage increase in stock on May 31, 1927, compared with stock on May 31, 1926: 4.5(11) — 7.2(5) 15.3(4) — 5.6(7) Percentage increase in stock on May 31, 1927, compared with stock on April 30, 1927: — 1.0(11) 3.2(5) — 7.9(4) — 3.9(8) Percentage of collections in May to total accounts receivable on May 1, 1927: 66.8(21) 31.6(8) 33.4(5) 35.0(12) 35.6(3) 58.0(8) —•Denotes decreased percentage. NOTE: The number of firms reporting stock and collection data in each group is shown immediately fol lowing the percentages. E ig h ty-six w holesale firms, representing six im portant lines of trade in the fifth reserve district, reported to the Federal R eserve Bank of Richmond on their M ay business. Increased sales during the month in comparison w ith sales during M ay 1926 w ere shown in hardware, furniture and drugs, but sales of groceries, dry goods, and shoes w ere in smaller volume than sales during the correspond ing month last year. In comparison w ith sales made in A pril this year, M ay sales gained in groceries, hardware and furniture, but declined in dry goods, shoes and drugs. T otal sales since January 1st w ere larger in shoes and hardware than during the corresponding five months in 1926, but grocery, dry goods, furniture and drug sales w ere smaller this year than last. Stocks on hand at the end of M ay this year w ere larger than stocks on hand on M ay 31, 1926, in groceries and shoes, but dry goods and hardware stocks w ere smaller on the 1927 date. D uring M ay stocks of dry goods on the shelves of the reporting firms increased over those on hand on April 30th this year, but stocks of groceries, shoes and hardw are declined during the month. Collections during M ay w ere better than in A pril in furniture and drugs, but w ere slow er in groceries, dry goods, shoes and hardware. The percentage of collections during M ay to total re ceivables as of M ay 1, 1927, averaged 66.8 per cent in groceries, 58.0 per cent in drugs, 35.6 per cent in furniture, 35.0 per cent in hardware, 33.4 per cent in shoes, and 31.6 per cent in dry goods. The shoe, hardware and drug percentages w ere slightly higher than those of M ay last year, but the M ay 1927 percentages in grocery, dry goods and furniture lines w ere low er than those of M ay 1926. (Compiled June 20, 1027.) 7 BUSINESS CONDITIONS IN THE UNITED STATES. (Compiled b y the Federal Reserve Board) Industrial production increased in May and continued at a higher lever than a year ago, while distribution o f commodities was in smaller volume than last year. The general level o f wholesale commodity prices has changed but little in the past two months. 192A- 1923 1926 1925 PRODUCTION. Output o f manufactures increased consider ably in May, while production o f minerals was maintained at the April level. Increased activity was shown in cotton and woolen mills, in meat packing, and in the production of lumber. The out put o f iron and steel, nonferrous metals, automobiles and building materials, after allowance fo r usual seasonal variations, was main tained at practically the same level as in April. Since the latter part o f May, however, production o f steel and automobiles has declined. The total value o f building contracts awarded continued slightly larger in May and in the first two weeks o f June than in the corresponding period of last year. Production o f winter wheat was estimated by the Department o f Agriculture on the basis o f June 1st condition at 537,000,000 bushels, or 90,000,000 bushels less than last year. The indicated rye production was placed at 48,600,000 bushels, which is 20 per cent larger than the crop in 1926. 1927 l&dex numbers of production of manufactures and minerals, adjusted for seasonal variations (1923-25 average - 100). Latest figures, May, manufacturers 112, minerals 107. PERCENT PERCEI 2001--------------- WHOLESALE PRICES Index of United States Bureau of Labor Statistics adopted by Bureau). Latest figure, llay 144.1. BILLIONS OF DOLLARS 2 “ --------------------- 1 1 1 ......... R E S E I R V E B A N K C R E D IT 1 . Total j Fteserve Bank I Credit 7 ' \ J/I TRADE. Sales of retail stores in May showed more than the usual seasonal decline from the high April level. Compared with May of last year, department store sales were about 4 per cent smaller, while those o f mail order houses were slightly larger. Value o f wholesale trade of all leading lines, except groceries and meats, was smaller in May than in April and in the corresponding month of 1926. Inventories of merchandise carried by department stores showed slightly more than the usual seasonal decline in May and at (1913 s 100, base the end o f the month were somewhat smaller than a year ago. Stocks o f wholesale firms were also smaller than last year. Freight car load BILLIONS OF DOLLARS 2 ings increased in May by less than the usual seasonal amount and fo r the first time in over a year daily average loadings were in smaller volume than in the corresponding month o f the preceding year. Loadings o f all classes o f commodities except livestock, ore and miscellaneous products were smaller than last year. PRICES. The general level o f wholesale commodity prices has remained practically unchanged since the middle of April. Prices o f grains, cotton, hides and skins have advanced but these advances have been offset in the general index by declines in the prices o f livestock, wool, silk, metals and rubber. l i Z * Disco untsfor Membisr Banks U.S.Secijrifies ' Y N A AJ 1923 1924 X Acceptanc» s 1925 _ 1...... .. 1926 1927 Monthly averages of daily figures for 12 Federal Reserve Banks. Latest figures are averages of first 23 days of June. BILLIONS OF DOLLARS BILLIONS OF DOLLARS 10 10 1924 1927 Monthly averages of weekly figures for banks in 101 leading cities. Latest figures are averages for first three weekly reports of June. BANK CREDIT. Demand fo r bank credit to finance trade and industrials remained at a constant level between the middle o f May and the middle o f June, and the growth in the volume o f credit extended by member banks in leading cities during the period was in holdings of securities and in loans on stocks and bonds. Loans to brokers and dealers in securities by reporting member banks in New York city increased rapidly and on June 15th were in larger volume than at any previous time covered by the reports. At the Federal re serve banks there was little net change in the volume o f bills and se curities between May 25th and June 22nd, the fluctuations during the period reflecting largely the effects o f Treasury operations. Dis counts fo r member banks toward the end of June were in about the same volume as a month earlier, whil£ there was a decline in the reserve banks’ holdings of acceptances and an increase in their portfolio o f United States securities. Conditions in the money market were fairly stable throughout the period, with slight ad vances in the rates on commercial paper and more recently on bankers acceptances. 8
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