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The Monthly Business Review Covering business and industrial conditions in the Fourth Federal Reserve District FEDERAL RESERVE BANK OF CLEVELAND D. G. Wills, Chairm an of th e Board VOL. I CLEVELAND, OHIO, APRIL 1, 1919 NO. 3 The passing of each m onth continues to be p regnant with industrial and economic changes indica tive of the prese n t and prophetic of the future. The extrem ely restive conditions brought about by the cessation of hostilities caused, during the first two m onths of the c u rre n t year, a decline in activi ties which, during the past month, shows first indications of coming to a halt. In o ther words, the impression is prevalent th a t the bottom of the toboggan, as it were, has been reached, and th a t a new angle to affairs is in evidence. Keen satisfaction is universally expressed over the fact th at the m uch discussed “ inform al” w ar contracts have been legalized by law, thus relieving a tension which has obtained for some months. It is certain, however, that the passage of this legislation has p ro duced th roughout the nation a stabilizing effect which will undoubtedly pay dividends in be tte r con ditions generally. The past m onth has, indeed, also been notew orthy for the paym ent of huge sum s in personal income taxes. These paym ents have been made with dispatch and a m inim um of com plaint— in short, with a spirit which bodes well for the success of the coming Victory Loan. In a*word, industry may be said to be “ looking up,” th at is, it is glancing upw ard toward grea ter activity ra th e r than downward, as formerly, to a fu rth e r period of stagnation, depression and decline. The optim ism which has been constantly in evidence, during the whole period of transition, is being slowly but surely substantiated by facts rath e r than by m ere academic economics. Manufacturing.— Conditions prevailing during the m onth of F ebruary continue to exist, with the possible exception that m an u facturing plants rep o rt the general decline, noted earlier in the year, practically at a standstill. Conditions in the steel m arket rem ain unsatisfactory but not discouraging. It is an open secret th a t the plans of Secretary lledfield for discussing a substantial cut in iron and steel prices have found a w arm welcome at the hands of the industries involved. Iron and steel m en give evidence of unanim ity of opinion in believing th at some reductions m ust be im m ediately made to stim ulate demand, and that small cuts, constantly occurring, are demoralizing, while one substantial reduction will make for confidence and stability even though operations m u st be carried on tem porarily at a small m argin of profit. The P ittsb u rg h District reports continued inactivity in steel with a n u m ber of plants, previously shut down, which have not yet resum ed operations. It is also reported that a considerable portion of the p resen t small P ittsb u rg h production is going into stock and in replenish ing w arehouse supplies, against the day w hen th ere will be a genuine revival in consumptive demand. Increased operations in the tin plate and sheet mills act as an offset to stagnant conditions p re vailing in o ther lines. Prices on finished steel are m aintained and it is also interesting to note th at the The Monthly Business Review 2 automobile industry is m aking a ra th e r vigorous dem and for sheet products, the sheet mills being operated at about 80% of capacity. There is also a small increase in dem and for boiler tubes. General sluggishness characterizes the wire and wire nail trades, and w here sales are reported they are made at greatly reduced prices. Makers of structural m aterial see little of e ncouragem ent in prospect, owing to the fact th a t new orders are not being received, inquiries likewise being scarce. P ending financial relief to the railroads, which assistance the last Congress failed to provide, it is thought th at no substantial im provem ent can be looked for in that branch of the steel industry which ordinarily supplies the needs of the nation’s carriers. The tin plate mills look forward to the imm ediate future with considerable optimism. This is said to be due to large oil developm ents and bu m p er crops which are expected. The outstanding feature of the m onth is undoubtedly the sentiment, which has been steadily crystalizing for the past thirty days, th at cuts to as near bed-rock as possible are necessary before b e tte r things can really be expected. W hile the cut, which it is thought will be announced shortly, will undoubtedly not be final, it is confidently believed th at the prices named will obtain for a sufficient period to create a lively as well as a healthy demand. The sentim ent being unanim ous th a t a cut is indispensable, m an u fa ctu rers are hopeful that Secretary Redfield’s plan will afford the m ost effective m eans of successful accom plishment. Clay Products.— The pottery business in all ceramic centers in the district is in a state of encourag ing and apparently stable prosperity. Potteries and jobbers report a flood of inquiries as well as the booking of orders on a scale w ith which the ceramic industry has been unfam iliar for the past two years. A well-defined dem and for art pottery is indicative of a reversal of conditions w’hich prevailed during the progress of the war. A g ric u ltu re . — Reports as to the condition of w inter w heat as well as regards agriculture in ge n e ra l m aintain th eir optimistic trend. In some quarters it is persistently claimed, in refutation of a r g u m ents previously advanced, that the open w inter instead of being injurious to the w heat will produce a crop of a quality and quantity unheard of in the history of farming. It is certain, however, from t h e thoroughly conservative standpoint, that w inter w heat in the Fourth District presents a plentiful a s well as a healthy appearance. F u rth e r advantage of the mild w e a th er will be taken in the shape of early plowing and p lan tin g . A scarcity of farm labor, som ew hat less acute than formerly, continues to be noticeable, and some com plaint is heard in rural com m unities to the effect that men employed on farm s prior to their entrance into military service, now evince an unwillingness to return to agricultural pursuits. The good r o a d s situation is apparently becom ing of compelling interest to the farm er and the s ta te m e n t is f r e q u e n tl y heard that the price of foodstuffs will not be materially lowered until the proper outlets in the shape o f good roads are everywhere provided. The Monthly Business Review $ Tractors, especially in Ohio, w here the scarcity of farm labor is still the cause of some anxiety, are becoming increasingly popular. Tobacco grow ers and dealers are still basking in the light of unheard of prosperity and bankers in the tobacco regions of S outhern Ohio and N orthern Kentucky are complaining that they are experiencing real difficulty in placing loans. Garages, barns, and h e re to fore abandoned sheds are being utilized to prepare tobacco for m arketing and the high prices paid on the brakes are being consistently maintained. Strangely enough, it is said th a t the favorite invest m ents of the prosperous tobacco grow er are U. S. T re asu ry Certificates of Indebtedness and au to mobiles. Labor.— The labor situation during the past m onth has been, on the whole, satisfactory. It can be truthfully said that while no appreciable im provem ent in the unem ploym ent situation has been noted, it is equally true th at conditions have not grown worse. In view of the fact that additional m en are con stantly being released from military service, this latte r fact is regarded as highly encouraging, for it proves th at surplus labor, both skilled and unskilled, is being gradually absorbed. The dull conditions prevailing in the steel, iron and coal industries have a n atural tendency to throw a large n u m b er of unem ployed on the labor m arket. It is confidently believed th at w ere these industries, particularly the iron and steel trades, to experience a quick revival, the unem ploym ent problem in this district, at least, would be more th an fifty per cent, solved. The past m onth shows few industrial disturbances in the shape of strikes, and discussions as to wage revisions have been few in num ber. The general condition seem s to be th a t w hen industries are running at all, their labor is w orking quite largely on wage scales established during the war. Several of the larger cities in the district have instituted inquiries th ro u g h th eir Cham bers of Com m erce in regard to the unem ploym ent situation, but the fault being found with these investigations is that they furnish m any figures but fail to prescribe the proper remedy. The efficiency of labor continues m uch in evidence and few discharges are recorded. C ontem plated public im provem ents, to be u n dertaken in the early Spring, are confidently expected to absorb m uch of the rem aining labor surplus. Fuel.— Conditions in the fuel and mining industries continue to be discouraging and with the coming of Spring little im provem ent can be expected. The highest grade of anthracite is apparently the only fuel in p ersistent dem and and closed mines, with m uch unem ploym ent as the result, are the rule rath e r th an the exception. In other localities m ines are being operated on a one or two days per week basis. It is expected th at stocks of coal, stored in anticipation of a repetition of last w in te r’s fuel con ditions, will soon be exhausted, and it is th o u g h t som e substantial orders will follow as a result. Oil and gasoline are moving satisfactorily in spite of a slight over-supply. No reductions in price to the ultim ate consum er, except in rare instances, have, however, as yet been noted. in the Ohio and Kentucky fields are said to be both num erous and successful. Oil developments The M onthly Business Review 4 Collections.— W h a te v e r tends tow ard unstable conditions in other lines apparently has little b e a r ing on collections, for they are universally reported to be exceptionally satisfactory. Some little com plaint is heard that utilities are offering paper in settlem ent in a proportion far exceeding other indus tries. From all other quarters general satisfaction with collection conditions is noticeable. Some responsible investm ent houses in the district have opened departm ents to deal in b a n k e rs’ acceptances and the work of the American Acceptance Council is being watched with interest. Transportation.— Railroad traffic is considerably below normal in the handling of freight. Owing to the fact that the railroads are seriously em barrassed by lack of sufficient funds, crews have been laid off instead of being employed in making improvements, as has been the custom in fo rm er dull periods. Through passenger traffic seems to be holding its own, but suburban traffic shows a small but well-defined decrease in volume. Traction traffic in the larger centers rem ains som ew hat s u b normal. Mercantile Lines.— The restive conditions prevailing in the m ercantile m arkets since the signing of the armistice are still existent, although more freedom is noticed in purchases covering im m e diate needs. Some articles are higher than during the war, but the large m ajority have experienced drops presage which still g rea ter reductions. Retailers are continuing to dispose of stocks by m arking them for quick sale and everywhere the wish is expressed that commodities will reach rock-bottom at the earliest possible moment, to the end that confidence may again be fully restored. Merchants report a slackening of business during the time when income returns were being filed. W e a th e r conditions have been favorable to business this Spring and it is thought that this may cause a slight reaction a little later when the normal Spring business should be well under way. Money and Investments. — The coming Victory Loan overshadows all financial operations, and a nnouncem ent as to the rate which the notes will bear is awaited with interest. Demand for money for the usual seasonal requirem ents may be said to be som ew hat light, but borrowings for other purposes, such as the payment of taxes, have more than made up for any deficiency. around 6%. T here has been only a m odest dem and for long time commercial loans with in te rest rates Some loans at 5% and 5y 2% are recorded, but these were largely Governm ent secured obligations. Several large industrial offerings have been successfully floated, but the stock and bond m arket is, to all appearances, holding back until industry and commerce again assum e their normal tone. Building.— Building is still in the same sluggish, uncertain condition which has characterized the trade for some months. M aintenance of w ar prices with no disposition toward a proper revision is said by some to be the moving cause of the extreme conservatism now existing. trict some drastic cuts ranging from 10% to 33%% have very recently been made. the record drop of 3 3 In the Cleveland dis Building tile shows aild it is hoped that these reductions will encourage a resum ption of activities on a nearly normal scale. In other cities price revisions decisions, in m ost instances, have not as yet been reached. are still being seriously considered, but Akron is proceeding rapidly w ith the e re c tion of a large nu m b er of new dwellings, the city having experienced a serious shortage of houses for nearly a decade. It is hoped th at the coming of Spring will give rise to inquiries which may result in orders, but m uch doubt is expressed as to w h e th e r any substantial contracts will be let at p resen t prices. 5 The M onthly Business Review BUILDING Valuations No. of Permits F e b . 1919 Feb. 1918 Feb. 1919 F e b . 1918 Akron..................................... Cincinnati............................. Cleveland.............................. Columbus.............................. D a yton.................................. Erie........................................ Pittsburgh............................. Toledo................................... Youngstown......................... 297 784 526 167 91 60 170 152 83 155 681 464 91 49 25 103 52 31 $698,890 191,915 1,135,605 571,470 137,372 71,833 379,951 366,957 126,723 $177',585 249,700 1,262,070 158,510 665,114 30,025 414,688 30,782 683,740 T O T A L ..................... 2,330 1,651 3,680,716 3,672,214 Increase % of Increase or Decrease or Decrease $521,305 57,785* 126,465* 412,960 527,742* 41,808 34,737* 336,175 557,017* 8,502 293.5 23.1* 10. * 260.5 79.3* 139.2 8.3* 1092.1 81.4* .2 *Decrease. POST OFFICE. Increase or Decrease Percent of Increase or Decrease Feb. 1919 Feb. 1918 Pittsburgh................................................................. Toledo........................................................................ Youngstown.............................................................. $ 72,904 313,817 439,585 138,376 69,811 33,295 397,133 112,529 35,890 $ 70,793 283,090 404,241 123,542 65,986 32,207 396,772 100,110 31,938 $ 2,111 30,727 35,344 14,834 3,825 1,088 361 12,419 3,952 2.9 10 8 8 7 12 5 8 3 3 1 12.4 12.3 TO T A L ..................................... 1,613,340 1,508,679 104,661 6 9 Akron......................................................................... Cincinnati.................................................................. Cleveland.................................................................. Columbus.................................................................. Dayton .................................................................. CLEARINGS February. 16 to March 15 1919 1918 Increase or Decrease Percent of 1ncrease or Decrease Akron ...................................................... Cincinnati..................................................... Cleveland...................................................... Columbus...................................................... D a y to n .......................................................... Erie................................................................ Pittsburgh.................................................... Toledo............ Youngstown................................................. $ 26,897,000 228,915,492 332,926,476 43,762,100 16,279,447 7,138,731 496,859,042 41,456,535 16,994,697 $ 19,311,000 199,243,073 271,631,640 39,105,700 15,983,305 7,162,584 273,122,605 36,352,000 14,693,422 $ 7,586,000 29,672,419 61,294,836 4,656,400 296,142 23,853* 223,736,437 5,104,535 2,301,275 39 2 14.9 22 6 11.9 1.8 .3* 82. 13.9 15.6 T O T A L ........................ 1,211,229,520 876,605,329 334,624,191 38.2 •Decrease. The M onthly Business Review 6 STATEMENT OF FEDERAL RESERVE BANK OF CLEVELAND. MARCH 14, 1919. RESOURCES (In thousands of dollars.) Gold Gold Gold Gold Gold coin and certificates............................................................................ settlement fund with F. R. Board................................................... with foreign agencies.......................................................................... with Federal Reserve Agent............................................................. redemption fund.................................................................................. 21,444 55,125 525 130,781 727 TOTAL GOLD R E SER V E....................................................... 208,602 Legal tender notes, silver, etc..................................................................... 1(083 TOTAL CASH R E S E R V E ....................................................... ..................209,685 Bills discounted—Secured by Government War Obligations............... Bills discounted—All other......................................................................... Bills bought in open market....................................................................... 110,674 4,503 51,183 Total bills on ha n d ....................................................................... U. S. Government long term securities.................................................... U. S. Government short term securities................................................... 166,360 1083 12,842 TOTAL EA RNING ASSETS................................................... ................. 180,285 Uncollected transit item s............................................................................ 5% Redemption fund against F. R. bank notes..................................... All other resources........................................................................................ 57,000 576 245 57,821 TOTAL RESOURCES............................................................... ................. 447,791 LIABILITIES. Capital paid i n .............................................................................................. Surplus fu n d .................................................................................................. Government deposits.................................................................................... Due to members—Reserve accounts......................................................... Deferred availability items......................................................................... Other deposits................................................................................................ 9,218 3,552 12,770 15,295 132,499 44,856 313 TOTAL GROSS DEPOSITS...................................................................... 192,963 Federal Reserve notes in circulation......................................................... Federal Reserve bank notes in circulation............................................... All other liabilities........................................................................................ 229,761 11,178 l tH 9 242,058 TOTAL L IA B IL IT IE S .............................................................. ................ 447,791
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