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The Monthly
Business Review
Covering financial, industrial and agricultural conditions
in the Fourth Federal Reserve District
VOL. 5
CLEVELAND, OHIO, APRIL 1, 1923
NO. 4
Past Month Witnessed a Further Advance in Business
Accommodations T o Member Banks Show Upward Trend
Iron and Steel Operations Near 90 Per Cent O f Capacity
February Second High Month in Record Automotive Output
Expanding Business Causes Increased Demand For Coal
R a ilr o a d
C o n g e stio n a P roblem in C ertain D istricts
Heavy Crude Oil Shipments From California T o The East
Cooperative Associations Becoming Part of Business Fabric
Farm Implement Trade Some Heavier as Spring Advances
R u b b er Factories O peratin g N ear Peak Production
Better Banking
Under
Credit Expansion
The
Outside
Federal
Reserve
System
The Federal Reserve Banks
FEDERAL RESERVE BANK of CLEVELAND
D. C. Wills, Chairman of the Board
(COMPILED MARCH 20, 1923)
THE
2
MONTHLY
BUSINESS
REVIEW
An Editorial
HE past month has witnessed a further advance of industry
and trade. Business growth has now reached that stage where
those who up to this time have been “looking on” are now be
ginning to get some tangible results.
T
In our judgment business at present is following a course which is
charted largely by the present industrial expansion. Certain im
portant lines, it is true, are setting a pace which appears to be out of
keeping with industry as a whole.
It is not the use but the misuse of opportunities brought about by
the present business expansion which may lay the foundation for
future difficulties. It is the latter which provokes inquiry as to
whether business is sound or whether we might possibly be on the edge
of another inflation period.
Business in many lines at the present time is highly competitive
and it seems that this will act as a balancing factor in preventing us
from going too fast.
Then, too, there does not appear to be that tendency to let price
advances lead to abnormal buying policies such as were experienced
a few years ago.
Considering these facts we feel that business at the present time
is reasonably healthy. “The makings” of prosperity are here. We
are entitled to them. How long they last will depend largely upon
how we use them.
There is one phase of the present business situation which we feel
should be studied very carefully at this time. It is the placing of
orders in three or four different places in order to insure the delivery
of goods. Production was led astray by this practice a few years ago,
but we believe it will be on the lookout for any repetition of this sort
of thing.
THE
MONTHLY
BUSINESS
REVIEW
3
Member Bank Borrowings Show Upward Trend; Acceptance Market
In Improved Condition
For the past several m onths and until near the
latter part of February of this year, m em ber bank
borrowings showed a practically continuous dow n
ward tendency. One of the m ost noticeable de
clines occurred during the m onth ending January
20 when loans showed a drop of approxim ately
$29,500,000.
showed little change during the past m onth. On
F ebruary 21 it stood a t 75.8 per cent and on M arch
21 at 75.7 per cent. The increased demand for ac
comm odations, however is reflected in the reserve
ratio of this bank. On the tw enty-first of last
m onth it was 78.9 per cent while on M arch 21 it
had decreased to 73.9 per cent.
The low point of city bank borrow ings for the
month ending M arch 20 was reached on February
24 and for the country banks, on M arch 5. From
February 24 until March 20, accom modations ex
tended to city banks have shown an increase of
approxim ately $18,000,000. The gain in country
bank borrowings from March 5 until M arch 20
amounted to about $2,000,000. T he present upward
tendency is attributable to the general expansion
of business, income tax paym ents, and also to the
fact that the farm ers are m aking preparations for
spring activities.
T he savings deposits of representative banks re
porting to us this m onth show a decided increase
when compared w ith the same m onth for last
year. Deposits for the m onth of February as com
pared w ith February, 1921, showed a gain of 10.1
per cent. The increase for February over the pre
vious m onth am ounted to .4 per cent.
The reserve ratio of the Federal Reserve System
T he acceptance m arket showed a generally im
proved condition during the m onth. T here has
been a fair demand for bills in this m arket during
the past m onth, b u t the supply has been som ew hat
limited. M ember banks are show ing more interest
in the m arket, both as buyers and sellers.
Operations of Iron and Steel Industry Near Ninety Per Cent of Capacity; Ruhr
Situation Brings Orders and Inquiries to American Producers
N CONSEQUENCE of the continued high pres
sure of demand, iron and steel production is rap
idly reaching a level which promises to establish
new tonnage records for the industry. February output
of pig iron was the greatest of any February in the
history of the country. As compiled by Iron Trade
Review it amounted to 2,989,819 tons at the average
daily rate of 106,779 tons compared with 3,228,226
tons in total and 104,136 tons in daily average in
January. The number of furnaces in blast on the
last day of February was 278, a net gain of 17 over
the corresponding date the previous month. Steel ingot
production in February is estimated at the rate of 43,230,000 tons annually, compared with an annual rate
of 42,800,000 tons in January. The annual rate of
steel ingot output in February was more than 98 per
cent of the production for the full calendar year of
1917, which established the high record of all time
for this country.
General operations of the iron and steel industry
have been pushed up to about 90 per cent of capacity,
which, in the face of shortages of common labor and
irregular transportation facilities, is notable. A large
steel company at present has 50 out of 59 blast fur
naces in commission and with three additional stacks
now under orders to resume, it may soon surpass all
previous records of pig iron activity. At least 41 of
46 furnaces in the Youngstown district will be produc
ing by April 1, representing the best record in three
years. Sheet mill operations in the Mahoning Valley
are up to the highest record point of production which
was established during the war.
In the face of the high-tide output of the mills and
furnaces, free supplies of steel have been almost un
I
obtainable owing to the filled-up condition of producers.
The larger mills on the common lines of products are
sold up for from four to six months and their posi
tion on deliveries, instead of growing better has been
becoming worse, due to the fact that incoming specifi
cations and orders have been in excess of shipments.
Many producers, as far as possible, are refusing new
business. Some of the smaller mills which have been
specializing on comparatively early deliveries are readily
obtaining premiums ranging from $7 to $10 per ton
above the schedules of the larger makers. Demand
upon the jobbers is heavy, and orders of the size which
customarily go direct to the mills, are being placed
through this channel at correspondingly higher prices.
Steel prices during the past month have advanced on
the average $3 to $5 per ton and are still buoyant
although there is a disposition among the more influen
tial producers to stand out against further rapid eleva
tions in an endeavor to keep conditions fundamentally
sound. The Iron Trade Review composite of 14 lead
ing iron and steel products for the week of March 14
stood at $44.95 as against $42.24 one month previously.
The composite now is at the highest point for any
weekly period since March 16, 1921, when the market
was in the general decline following the high market
of 1920.
5
New buying of steel for building, railroad, automo
tive and general manufacturing purposes has been keejving to a large volume. H ere and there some contem
plated new work has been deferred, but these in
stances have not been many, and they have been largely
attributable to ^the uncertainty of getting steel and to
the higher prices of other materials. Railroad car
buying in February fell back to a total »f 7,800 but
THE
4
MONTHLY
BUSINESS
this has now revived and the total already placed the
present month is well in excess of the former figure,
Motive power buying has been heavy, with builders
so loaded with orders that they are unable to accept
new business at present except for delivery in the
latter part of the year. Extensive building activity
continues to direct a large tonnage of new requirements to the mills. According to the Bureau of the
Census, the fabricated steel awards in January were
approximately 188,000 tons or at the rate of 75.2 per
cent of shop capacity. February figures have not yet
been issued.
Under a broad expansion of melt by the special
and jobbing foundries, steelworks, etc., the pig iron
market has turned more sharply upward. The advance of the general market during the past month
has averaged from $2 to $3 per ton. Consumers are
endeavoring to buy for more extended periods of de-
REVIEW
livery or through the third quarter of the year. F u rnaces, however, are selling more cautiously because
of the uncertainty of future costs and prices,
The Ruhr situation with its consequent closing of
much French and Germany iron and steel capacity
has diverted a heavy export inquiry for iron and steel
and related products to American producers. Such
business as has been accepted has been taken at attractive prices. French and German buyers have placed
orders for from 40,000 to 50,000 tons of Connellsville
furnace coke. The foreign pig iron market has reversed itself. Whereas, the United States over a period
of some months past had imported approximately 4 0 0 000 tons of pig iron from Great Britain and continental Europe, the latter now is bidding for tonnage
on this side. Some sales of American iron have aJready been made to Great Britain and other European
destinations.
Reports From Manufacturers This Month Show That Business
Is Moving Rapidly
Automobiles—February was a surprising month in
the automobile industry. The output of 275,769 cars
and trucks fe regarded by the industry as indicative
of a big year, as February ^ usually a light period.
This output is 32 687 greater than he previous month
of January. The February production figure has
been surpassed on only one previous month—that
of June of last year.
The following table, furnished by the Department of
Commerce, gives the total production for each of the
last eight months, with the corresponding figures for
die same months of the previous year.
A U T O M O B IL E P R O D U C TIO N
(Number of Machines^
( p a ^ L ,g e r & rs
)
Trucks
July ...................
August ..............
S ep tem b er..........
October ..............
November ..........
December ..........
224,770 1659574
248,118 167,705
187,637 144,669
216,099 134,734
215,297 106,042
206,372
70,690
1923
1922
January .............. *223,706
81,693
February ........... 254,415 109,171
♦Revised.
21739
*24,466
*19,212
*21,512
*21,683
*20,050
1923
*19,376
21,354
10766
13,080
13,648
12,813
10,010
8,307
1922
9,416
13,195
belief of the manufacturers that this steady climb
in orders and sales is evidence of a normal demand
that promises good business over a considerable period
H a rd w a re -The manufacture of hardware is Dr;
nicely The m m ifactu rtrs rcp0r t t h i t t h S i
is a more general demand that ;
tnere
m0re generally distributed throughout’ the
the orders are more generally distributed through the
various departments. The production is being severe! ^
handicapped because of the lack of laborers
Brushes and Supplies—A large brush and su 1
manufacturer states that business continues to come
iJ g
* y
?
Bookinp for February were
Au£ust« 1920, and about
**
for tlle
volume of business for
*ny m° nth since M arch,
fte fas?Quarter
1922 g^ ter
^ y ^ ra g e
of l92} ' J a™ary and February
^
^
° ? y, about 20 Per cent greater
• q?artefr of 1922. M any
^ 2
C?mi£ g T t or foimdry equipment
^
u u gray iron and malle~
months oast
g
V° lume than for
. .
^ *
Electrical Goods—The heavy demand for large electrical machinery wjuch has not changed materially in
the last two months, is coming from public utilities,
The call for all kinds of elecfric products, especially
letting up in t^ ffa in s ^ rS s te re d
outiook {or March is
noticeahle n irk W ,in ;«
j
K
Z
5
ud4 n Cthe S ^ e l e ^ t r i c T w e r ^
tjons than they anticipated or could provide Z during
the stress of the war period; consequently they are
now forced to provide extra machinery rather freely.
Small Tools— For some months the number of orders in the manufacturing of small tools has shown a
steady increase over the preceding month. While this
gain has not been spectacular from one month to the
next, the combined gain has been marked. It is the
^
C oat
S ™
^ t “
the average size town and from the farm .
g from
Pottery— The pottery industry a w n V ttfh .
ti
plied with orders and the prospects assurer! f
* iSUjK
a few months. There is considerable m V* i
*
building expansion by several of the 1
emplated
plants. A new kiln is being introduced a n F p°.tter>r
successfully operated, which will crrJli see.m.lngly
S*10wed no
° r > nua£y an<1, the
, «>• lh ere is a
u s reatiy
minimize
THE
MONTHLY
BUSINESS
the quantity of fuel, provide a better quality of fin
ished products, and continuous operation.
Glass—The plate glass business was very active dur
ing both January and February, and March is on a
par with those months. The spring demand has not
yet developed in full force at the time of this writing,
but doubtless will have by the time this Review reaches
you. The best market at the present is the automobile
trade.
Pulp and Paper—The paper industry continues to
proceed at a fairly rapid pace. Statistics available in
dicate that distribution is proceeding fairly uniformly
down through the various distributing agencies which
handle the product before it reaches the hands of the
final consumer. In addition, the indications are that
the ultimate consumer is in turn using up the product.
There has been some tendency toward both cost and
price advances. Just at the moment, however, it seems
as if the raw materials were stabilizing and the changes
in the cost of the finished product working out to a
proper differential to show a reasonable, but not ex
cessive profit.
The spring season is always one of considerable
activity in the paper business, this being largely due
to increased advertising.
It does not seem, as indicated above, that production
is at present exceeding demands. In fact, there has
been a slight falling behind of the paper mills, when
production is compared with orders on hand. On the
whole the condition seems to be fairly well balanced.
Bags—Business in the manufacturing of bags is
fully as good as last month, with demand and prices
continuing firm. At the present time, perhaps the
strongest demand is from the building, grain, plaster,
cement, soda ash, and fertilizer trades. There is com
paratively little anticipation of future requirements.
Though there are some indications of softer values
in the late summer and fall, the majority of evidence
at the present writing seems to point to a continuance
of good business and good values for several months
to come.
Cork—There is a large demand for cork for insula
tion at prices which are not greatly in excess of those
which prevailed prior to the war.
REVIEW
5
The European conditions in the cork trade were
greatly disturbed by the war. The middle European
countries and Russia were formerly very large con
sumers of cork but are now very small factors. This
has resulted in a large accumulation of low grade
cork which sells at low prices compared with the pre
war standards, while on the other hand, there is a
scarcity of fine cork which is now selling on a very
high basis. The growers of cork are compelled to re
cast their prices, putting higher values on the finer
qualities and lower values on the inferior grades. There
will probably be no marked change in cork products
for the next two or three months.
The demand for linoleum is very brisk and the in
creased cost of production will force some advance in
the price of this commodity.
Stoves and Ranges—The stove industry is experienc
ing very good business. One large manufacturer says
that they have enjoyed an increase in sales of 86 per
cent for the month of February over last year, while
another says that their February sales showed a very
satisfactory improvement, and that March thus far
has been an exceptional month.
Paper Box Board—The paper box board business is
increasing steadily each month. Even the short month
of February was better than any month since the ad
verse market conditions engulfed the market two and
one-half years ago. Prices are very firm. Quite a
number of mills are from six to eight weeks behind
on orders, but the average is perhaps two to three
weeks, for the reason that most board mills will not
take any chances in quoting on orders that are for de
ferred deliveries.
Undoubtedly the strike in Sweden will begin to
affect the American market from now on.
Cans—Orders for cans are coming in in good volume.
The purchasers are insisting on prompt deliveries, in
dicating that stocks are small, and that purchases are
required for immediate consumption.
The railroad embargoes to the east are causing both
the manufacturers and consumers considerable incon
venience. In fact, orders packed for shipment have
been held in warehouses for over thirty days.
Expanding Business Causes Increased Demand For Coal; Part-Time Work Causes
Miners to Seek Other Employment
The increasing consumption of coal and coke, due
to improved business conditions, is tending to equalize
the preseat supply and demand. New furnaces are
bang placed in blast in the steel districts and ship
ments of coal to the head of the lakes are now getting
tinder way.
The industry is still confronted by the problem of
transportation shortage, although some reports would
seem to indicate that the past few weeks have wit
nessed a slight improvement in certain sections of the
country. The improvement is most noticeable in the
middle Appalachian districts and in the states imme
diately
west of the Mississippi River. In western
Pennsylvania, Kentucky, W est Virginia, and part of
Ohio, transportation disability is causing considerable
trouble.
While union coal miners in the bituminous fields
appear to be pretty well satisfied with their wages,
many of them are leaving the pits at this time in
search of other employment. This is due largely to the
part-time employment conditions which now exist.
The week ending March 10 showed a slight drop in
the production of bituminous coal. According to a
recent report of the United States Geological Survey,
production for that week was estimated at 10,609,000
net tons. This is a decrease of 337,000 tons as com
THE
6
MONTHLY
BUSINESS
REVIEW
pared with the revised estimate of 10,946,000 tons
for the week preceding.
compared with 83,409,000 tons a year ago, thus bearing
out early estimates of 40 per cent deficiency.
The production of anthracite coal in the week ended
March 10 is estimated, on the basis of 39,170 cars
loaded, at 2,048,000 net tons including coal shipped,
mine fuel, local sales, and dredge and washery output.
This is a little less than the output during the week
preceding. The cumulative production for the coal year,
now nearly closed, stands at 49,365,000 net tons as
The production of beehive coke in the week ended
March 10 showed a sharp decline. The total output,
estimated from reports of cars loaded by the principal
coke carriers, and in part on reports of producers, was
366,000 net tons, against 402,000 tons in the preced
ing week. The decrease was principally in the Pennsyl
vania and W est Virginia districts.
Railroads Gradually Strengthen Their Position; Congestion a Serious
Problem in Certain Districts
The volume of traffic being handled by the railroads
of the country continues to be very heavy, operating
results have shown further improvement, and the work
of repairing old equipment and adding new equipment
is being pushed forward. Revenue freight loadings
for the week ending February 24, however, show a
noticeable reduction when compared with the week
of January 27.
During the week ending February 24 the railroads
received for transportation 830,223 cars of revenue
freight, this being a reduction of 40,941 cars when
compared with the week ending January 27, when
871,164 cars were received. It is, however, an increase
of over 100,000 cars when comparison is made with the
corresponding week in 1922 and over 150,000 cars
compared with 1921.
In some parts of the country rail movements are
being seriously hampered by congestion, but the indi
cations are that this situation is being gradually cor
rected. W ith reference to this matter it is necessary
to remember that the customary increase in traffic
which comes with the arrival of spring is not very
far advanced.
The shortage of freight cars has increased so that
C ru d e
on February 28 it amounted to 80,633 as compared
with 76,900 for the week preceding.
Preliminary figures which have been made public by
the Interstate Commerce Commission show a net
revenue for the railroads during the past year of 4.11
per cent. This figure was reached notwithstanding the
fact that the coal strike of last spring and summer
resulted in a heavy loss of revenue, and the shopmen's
strike, which began on July 1, increased costs very
materially for some roads, and curtailed operations on
most lines.
Preliminary figures show that the railroads earned
during January a sufficient net revenue to equal 5.54
per cent if the same rate of earning is continued
throughout the year. This is the highest net earning
reported for more than six years, for the country
a whole.
The improved condition of the carriers is further
borne out by the figures as to operating revenue; that
is to say, the ratio of operating cost to operating reve
nue. In 1920 the ratio was 93.65 per cent* in 1921
82.61 per cent; and in 1922, 79.32 per cent. The ratios
for December and January last are better than for the
vear 1922.
Oil Shipments From California to the East Show Marked Increase; United
States Production Gains 16.7 Per Cent in 1922
The outstanding development in the oil industry dur
ing March was the increasing extent to which Cali
fornia crude became a factor in the oil business east
of the Rocky Mountains. Practically ever since the
beginning of the oil industry in California, its opera
tions and activities have been confined to the Pacific
Coast states and exports through various Asiatic ports.
W ith the steady decline of production in Mexico, upon
which the big refineries along the eastern seaboard de
pended for a large part of their crude supply, the cli
max was reached about two months ago which made
it necessary for these refining companies to seek a
substitute for the Mexican oil they had been using.
California has been for some time producing an ex
cess of oil for the needs of its marketing territory, and
it was to the California fields that the eastern refineries
turned for a new source of crude supply. For some
months large shipments of California crude have been
moving by tanker through the Panama Canal to the
East Coast. It was not until March, however, that
these shipments assumed really great proportions
There are now estimated to be at least 50 tank steamers
engaged exclusively in this trade.
The large shipments of California crude to
the East began to have their effect on the zeneral
crude market in March. The price of Mid Continent
crude, which up to that time had been advancing steadily has remamed stationary since March 1, due largely
to the influx of Pacific Coast crude. Production if so
large in California that it appears likely that a verv
much larger amount of crude than is at present b e S
exported can be shipped if needed. Shipments of Cali
forma crude to the East are now estimated at
m o o o to 180,000 barrels a day. T h e t t y i n ^ J
crude prices marked up during March was on G,.1f
Coast Crude, due largely to local conditions—a mim
fo? this o<u neneS ° “ * e Gulf ° >ast biddinS actively
Februapr and March were good months from the
standpoint of the refiner. Gasoline retail business was
THE
MONTHLY
BUSINESS
better than that of a year ago because of the fact that
more and more cars are being operated throughout the
winter. Fuel oil was in fairly good demand, although
the present status of the coal miners and operators and
the increasing output of coal, together with improve
ments in shipping conditions are an adverse influence
on the fuel oil market.
Reserves of gasoline in storage at present are large,
but present indications are that the demand for gasoline
during the summer of 1923 will be very heavy. Tabu
lations made by National Petroleum News show an in
dicated consumption for 1923 of 6,302,000,000 gallons,
an increase of almost a billion gallons over consump
tion in 1922.
As against the adverse influence on fuel oil exerted
by the favorable conditions in the coal industry, a
stimulating influence is the extensive erection of crack
ing plants that is now going on over the country
which, while it increases the supply of gasoline by some
REVIEW
7
15 to 20 per cent, will also reduce the supply of fuel
oil by about the same amount.
The American Petroleum Institute estimates the
world’s petroleum production in 1922 at 851,540,000
barrels, compared with 765,065,000 barrels reported by
the U. S. Geological Survey for 1921. The increase
in 1922 amounted to 84,475,000 barrels, or 11.3 per
cent.
The United States produced 551,197,000 barrels in
1922, or 64.7 per cent of the total world production.
In 1921 the United States produced 472,183,000 bar
rels or 61.7 per cent of the world’s production in that
year. The increase in the United States production in
1922 amounted to 79,014,000 barrels, or 16.7 per cent.
Mexico produced 185,057,000 barrels in 1922 amount
ing to 21.7 per cent of the world’s production. In 1921
Mexico produced 193,397,587 barrels, or 25.3 per cent
of the total production that year. The decrease for
Mexico in 1922 amounted to 8,34-0,587 barrels, or
4.3 per cent.
Approach of Spring Creates Demand For New Clothes; Knit Goods Business
Shows Marked Improvement
The textile and ready-to-wear clothing industries con
tinue to enjoy a favorable amount of business. New
styles are causing a demand for spring and summer
goods, but retail sales have been delayed somewhat
on account of the continuation of cold weather well
into the month of March.
The approach of
Easter is also stimulating the interest in new clothes
to some extent but authorities say this period does not
have the effect which it formerly had.
The men’s ready-to-wear industry is active. Busi
ness reflected by mail orders is reported by a large
manufacturer as showing a considerable advance over
last month.
Business in the women’s garment industry during
the month of February is reported to have declined
somewhat owing to the fact that it was the period be
tween early buying and the retail selling season.
In the knit underwear line business is exceptionally
active. An unusual number of re-orders for spring
is being received and also a large amount of re-orders
for next fall delivery. Fall re-orders are usually not
received this early. Buyers are ordering in large
volume and are paying in advance.
There has been quite an improvement in the knitted
goods business during the past year and a constantly
growing demand in practically all branches of the
trade has been in evidence. Owing to the advance in
the prices of raw materials, quite a lot of fall business
has been placed and most of the knit goods factories
have sufficient orders booked to enable them to operate
at capacity.
Cooperative Associations Fast Becoming Part of Our Business Fabric; Report of
Progress Made by Cooperative Tobacco Associations; Ohio is Sixth Wool
Producing State; Deflation in Farm Land Prices Has Proceeded Far
It is probably true that most people do not fully ap
preciate the development of cooperative marketing
which has come among the farmers of this country dur
ing recent years. The large scale movements among
growers of cotton, tobacco, dairy products, grain,
fruits and vegetables and other farm products show
that the farmer is making more and more use of busi
ness methods in the sale of his products. The growing
o f farm products is mainly a matter of production on
the individual farm. We have not reached a stage
where the corporate organization has been found gen
erally adapted to producing farm products. The or
ganized method, however, is adapted to the selling of
these products in the same way as it is suited to the
distribution and sale of manufactured products.
The end of the season for the delivery of the 1922
crop of Burley tobacco is now drawing near. The
loose leaf sales probably will be completed some time
during March and most, if not all, of the association’s
tobacco will have been delivered by the first of April.
According to the reports which have been given out,
the Burley Tobacco Growers’ Cooperative Association
had sold in the neighborhood of 125 million pounds of
the 1922 crop up to the middle of March. It is ex
pected that it will handle in the neighborhood of 180
million pounds of this crop. W hile no definite prices
are given out by the association until all of the season’s
tobacco has been sold, it has been indicated that the
average will probably be somewhere near $30 a hun
dred. According to the reports compiled by the Com
missioner of Agriculture, the independent sales for
growers up to the first of March totalled about 49
million pounds.
1 he association in the Burley district appears to be
THE
8
MONTHLY
BUSINESS
meeting with continued success. Naturally among 77
thousand growers there are some who have broken
their contracts and have sold tobacco outside of the
organization, but they are a very small proportion of
the membership, as the rank and file are active in sup
port of their association. The contract of the associa
tion has been upheld in the cases which have been
brought into court, indicating that it will have no diffi
culty on that score.
The growers no doubt are beginning to appreciate
more and more the fact that their marketing associa
tion is a large business enterprise which is engaged
in the performing of certain real and specific services
for the members in die marketing of their crop. At
first the idea seemed to be prevalent among the mem
bers that this organization offered possibilities for im
provement through price fixing powers which it might
exercise. As time goes on, this conception of the or
ganization will probably be supplanted more and more
with the understanding of the fact that while the or
ganization cannot hope to exact arbitrary prices, that
by the employment of business methods it can mer
chandise the products which it handles in the same
manner as that of other sales organizations.
The Dark Tobacco Growers’ Co-operative Association
which is organized on the same plan as the Burley as
sociation to serve the growers of the dark types of to
bacco in Western Kentucky, appears to be making
very satisfactory headway in the sale of the 1922 crop
of those types.
The 1922 wool dip in Ohio amounted to 13,596,000
pounds, a three per cent increase over last year. Ohio
ranks sixth in the production of wool. Wyoming is
first in the 1922 dip, Texas second; Montana, Idaho,
and Utah also exceed Ohio kt the size of last year’s
clip.
The states exceeding Ohio are all western or range
states. The wool from these states is called “territory”
wool as distinguished from the “fine” wool of Ohio
and other eastern states. Ohio is the largest wool pro
REVIEW
ducing state east of the Mississippi River. Michigan,
the second largest, produces a little more than half
as much as Ohio.
Sales of farm land in Ohio during recent months
average $105 per acre according to a compilation made
by the State-Federal Crop Reporting Service, from
reports of 360 sales of farms distributed over the
state. When compared with the high prices of four
and five years ago, these figures show that much o f
the inflation in farm land values has been eliminated.
Almost 40 per cent of the reported sales were fore
closures, settlement of estates, or were made under
other forced conditions. For these forced sales the
average price was $82 per acre as compared with $118
for the free and open sales. Sales on improved lands
averaged $117 as compared with $70 for unimproved
farms. The average number of acres in the sales
reported was 102 with the forced sales averaging 118
acres and free sales 93 acres.
O f the farms 100 acres or more in size no
sales were reported at a greater price than $200* and
less than 10 per cent of the farms of this size sold
for more than $150 per acre. The figures for these
larger farms are interesting because the greater p art
of the speculation a few years ago was in farms of
this class. At that time sales of $300 per acre were
reported and from $200 to $250 was a frequent price.
The average selling price in the western and cen
tral corn belt counties was around $120 an acre In
the southwestern part of the state, the average* was
not far from $60 per acre. In the counties around
the larger cities a number of sales at high figures
were reported.
s
The average rental per acre for farms rented for
cash in Ohio is not far from $6.00 per acre.
The reports indicate a decline on the average of
around 50 cents an acre over last year. It is quite
possible that the number of farms rented for c a s h is
materially less this year than formerly, with a corre
sponding increase in share rentals.
Farm Implement Trade Heavier as Spring Work Gets Under Way; Farmers
Want Labor Saving Machinery
W ith a month of spring farm work in the south
and a general opening of agricultural activity through
out the entire country, the manufacturers in the im
plement and tractor industries, the former especially,
are finding the trade heavier than had been expected.
Re-orders are beginning to convince factory sales de
partments that preliminary estimates of 1923 bus
iness were conservative. Manufacturing activities are
being extended to meet the increasing demand. Not
withstanding the continued advances in material prices,
notably an advance of $3 a ton on steel bars used
extensively in implement manufacture, manufacturers
are expecting for the time being at least to keep
prices within the limits of the 10 per cent advance
made six weeks ago. The increased prices are strength
ening retail trade, and present sales activity indicates
that advancing prices, up to this time, are not effec
tive in retarding the buying of actual requirements.
Some plants are running at full capacity, but a con
servativeestim ate: of manufacturing activity a t the
present time would place it at about 70 per cent
car ? ty- -n U hea™ 5‘ production seems to be in lin S
wh'ch will be required by the farmer later in t £
season such as haying and harvesting machinery, et T
practically all the plants making such implements n o ^
being operated at quite close to maximum c a L ^ T
The implement manufacturers are now t a k i n e ^ n S .
steel than at any previous time since 1920
have bought very little harvesting
he past few years a fact which is c o n t r i b u t i r i ^
the present manufacturing activity in these lines?
Some manufacturers are experiencing a strone de
mand for improved machines, and especially machinS
THE
MONTHLY
BUSINESS
REVIEW
9
of larger capacity than they formerly used, such as however, instead of applying nationally, applies by
mowers and binders with longer cutting bars. The zones supplied from each of its branch houses. This
labor shortage which is confronting various man is the first answer to the requests of numerous as
ufacturers is being felt on the farm. Northern Euro sociations of implement dealers, and the dealers’ re
peans adapt themselves most readily to American farm action seems to be quite favorable inasmuch as the
ing, and the natives of these countries are not com discounts permit an adequate profit for them.
ing to this country as they did when the Middle West
Annual reports of the leading companies which are
was being developed agriculturally.
now appearing in the daily press reflect the condi
There is considerable increased activity among the tion of the industry during the last two years. Nearly
tractor’ manufacturers even with those generally con all the 1922 statements show that the industry oper
sidered very conservative. For instance one company ated at a loss in 1922, but the losses were quite gen
which has not been in production for two years is erally reduced to about 60 per cent of what they were
now making tractors and reducing its supply of trac in 1921. The largest company in the industry re
tor engines carried for two years. This supply is ports net profits of approximately five million dollars,
almost equal to a full year’s production.
but makes the candid statement that no profits were
One full-line implement manufacturer has placed made on domestic sales in 1922. Manufacturers at
in effect a list-and-discount method of pricing goods present are making an effort to wipe out a large
to the dealer and farmer. This company includes portion of the losses of the two previous years, and
every tool in its line in its new price schedule which, believe that the outlook for business in 1923 is bright.
Rubber Factories Operating Near Peak Production; Many Leading
Companies Announce Price Advances
Rubber factories are operating at practically peak
capacity, and some plants report tire production at the
highest point it has ever been. Spring dating bus
iness is also heavier than usual.
The mechanical goods end of the industry is in
very good shape and the general expansion of in
dustrial activities is causing a brisk demand for ar
ticles such as hose, belting, and supplies for manufac
turers. When mills are running at top speed they
consume large quantities of these materials. The past
winter has been most favorable for the sale of foot
wear in several years; consequently sales have in
creased and collections are very good.
Several of the larger rubber companies recently
announced a tire price increase of 10 per cent and
this move has been followed by many of the smaller
concerns. A few companies, however, have not yet
made any announcement of new price schedules.
The labor shortage which has been evident in cer
tain industries for some time has extended to the rub
ber industry. India Rubber Review states that the
cost of labor in Akron, Ohio, has advanced 10 per
cent and yet there is a shortage of labor of the proper
type. A few of the rubber companies have recently
introduced a 10 per cent bonus for factory workers.
The rapid pace which the rubber industry is set
ting at the present time naturally causes a general
feeling of optimism throughout the trade. Manufac
turers, however, see in the rush for business the danger
of over-stocking the dealers. But on the other hand,
and counteracting this to some extent, are those smaller
rubber factories which in the aggregate are capable
of producing a great many tires and which are shut
dow n; the increased number of c a rs; and the pres
ent heavy consumption of gasoline.
Opinions with reference to the British export tax
on rubber vary considerably, but there appears to be
a growing conviction that the situation will gradually
adjust itself through the law of supply and demand.
The rapid advance in the price of crude rubber
from 15 to 37 cents in a ninety-day period influenced
the government to investigate the possibility of solv
ing the problem through American-grown rubber.
The prevailing price of crude rubber prior to last
fall was due to an over-supply. The low-priced rub
ber of 1921 and 1922 represented distress sales. They
also represented heavy losses on the part of the plan
tation owners.
Authorities now believe that American- frown rub
ber is only a partial solution to the proble n and that
such a plan will not bring the price back to the 16cent level. Rather, they say, a price level sufficient
to provide a reasonable return for the growers, one
which induces production sufficient to insure a supply
for future needs, but at the same time prevents a runa
way market which would add to the price the public
pays for the finished goods, is the situation which they
hope will eventually come about.
High Costs Handicap Construction Work; Workers Are Given
General Wage Increase
Building statistics continue to make a favorable
showing. Operations during the winter months were
unusually heavy considering the season of the year, and
at present building activities are getting under way
for the spring season.
But it is doubtful whether this industry is making as good a showing as it did a month ago. Building costs have now reached the stage where prospective buyers are studying them very closely before undertaking new developments, and reports of sidetracked
THE
ID
MONTHLY
BUSINESS
building prospects, due to high costs, are becoming
quite numerous.
Spring wage adjustments have been carried to con
clusion in nearly all of the skilled trades in Cleve
land, the settlement in most cases dating from March
1, the new starting date for agreements established
last year. Although wages were considered high be
fore these adjustments, a still further addition has
been made in practically all of the trades, amounting
in some cases to as much as 15 cents per hour, or
$120 per day for each man employed. There are
those who believe this increase in wages being reflected
in the total cost of buildings will have a deterrent
effect upon new operations. The first two months
of the year have kept workers in the building trades
well occupied and there has been a steady demand for
materials.
The Secretary of Commerce has recommended that
no new government construction work be initiated ex
cept that which is absolutely necessary, and that work
now in progress be slowed down to the extent com
patible with economy. This is for the purpose of
releasing the labor which would be required for this
work, to relieve transportation facilities of this extra
load, and to give private construction programs more
freedom.
The total value of permits issued in the suburbs
of Cleveland, which includes Cleveland Heights, Lake
REVIEW
wood, East Cleveland, Shaker Heights, and Garfield
Heights, showed a marked increase for the first two
months of the present year as compared with the
same period last year. The total value was $6,076,012
as compared with a valuation of $2,701,892 for the
same period of 1922 and $1,651,555 in 1921. This
aggregate sum indicates the widespread interest in
home and apartment house building which charac
terizes most of the construction in the outlying dis
tricts.
In the city proper the total value of permits is
sued for the first two months of the year was $8 910,125 as compared with $2,554,615 for the first twomonths of 1922.
Common Brick—On March 1 nearly one-third o f
the common brick plants were shut down, due to sea
sonal conditions. Those plants which are equipped fo r
winter operations have been producing in larger vol
ume than usual. This, however, has not resulted in
built-up stock for the demand has also been unusually
large. The industry is going into the spring building
season with a rather short supply of brick in the yards
and with a strong demand. In the larger centers an
unusual amount of winter building has been going on
and the plants which have been taking care of this
business have had practically no cessation of activities
through the cold months.
Reports From Wholesale Grocers Reflect Healthy Trade Conditions; Sugar
Prices Show Further Advance
The wholesale grocery business is in very good
shape, and with the possible exception of the present
sugar situation, reports this month reflect a generally
healthy condition. There seems to be little delay in
securing goods when ordered, but there is room for
further improvement in the transportation situation.
The following report on various wholesale grovery
lines shows no particular change over last month and
does not yet reflect the higher price of sugar to any
great extent.
Sugar—Prices still advancing; demand slow due
to season.
Cigars and Cigarettes—Sales very satisfactory.
Market steady.
Cheese—No particular change since last month
when sales were reported to be very good with a
steady market.
Coffee and Tea—Prices very firm and advancing.
Sales good.
Crushed Fruits and Syrups—Sales good with prices
showing an advancing tendency.
Canned Goods—Prices in standard brands very firm
with good demand. Fancy brands practically off the
market and difficult to get.
Tobaccos—Sales normal. Prices unsteady due to
competition.
Pickles—Demand good.
Market active. Prices
on sweet pickles advancing.
Cereals—Demand light. Prices firm.
Sauerkraut—Normal demand. Prices firm.
Fish—Good demand.
Bakers’ Supplies March sales show improvement Markets maintain stronger prices.
Candy Sales good. Prices show an upward trend
Olives—Sales good. Production oversold. M arket
firm.
Condiments—Sales good. Prices firm.
Preserves—Little demand.
Soap—Sales good. Prices advancing.
The fact that practically all labor throughout the
country is now employed is one of the principal rea
sons back of the increasing demand for canned goods.
Packers in some sections have reduced their open
ing prices on tomatoes. A 50 per cent gain in to
mato shipments in 1922 compared with the move
ment of the previous year, as reported by the United
States Department of Agriculture shows the increas
ing demand for this product. Average shipments have
been less than 18,000 cars per year, but during the
past season 26,000 cars were forwarded.
The general scarcity of farm labor and the ad
vancing tendency of prices for other farm products
are causing the packers to have some difficulty in se
curing their usual allotment of acreage from the
grower.
THE
MONTHLY
BUSINESS
REVIEW
IS
Better Banking Under the Federal Reserve System
1907. For, moved by apprehension, almost even- one
The Strength of Organization
It is usually better to work with other people than of the twenty-four thousand banks sought, for its own
to work alone. We have clubs, associations, societies protection, to withdraw such currency as it could from
for the purpose of multiplying the strength or effective other banks and pay out as little as possible to its de
ness or resources of the individual members. A regi positors. Though emergency measures were finally tak
ment is stronger than the strength of all the men who en, they were too late to prevent the coming of trouble,
and the existing banking machinery fell apart into
make it up. An army is stronger than a mob.
thousands of separate units.
What a Bank Does
Each bank had to trust largely to its own cash re
Just so with money. Men work and save, and sources, because, however willing, the other banks felt
deposit in banks their savings or the ready money they could not give up much of their cash, for by doing
needed for business use. In every bank there are so they might impar their ability to meet the possible
many deposits, none of which may be large in itse lf; needs of their own customers. Each bank, in seeking
but taken together they become much more useful than to protect itself, necessarily weakened the entire bank
if they had been kept separately. Taken together they ing structure. The defenses were weakest when the
enable a bank to lend its customers the money they need danger was greatest.
for carrying on their business. Thus the money of
The result was that every few years a money panic
many individuals serves the business needs of city and occurred, bringing disaster and depression. These
town and the farm ing needs of the country.
money panics from which the United States suffered,
and which the organization of the Federal Reserve
What the Federal Reserve Bank Does
A Federal Reserve Bank does for banks almost ex system now prevents, were, of course, quite different
actly what banks do for their customers. It receives from the commercial crises from which every country
money on deposit from such banks as have become occasionally suffers.
members of the Federal Reserve system, and lends to
U nder the F ederal Reserve System
them. All National banks are members of the Federal
Under the Federal Reserve system there is a quick,
Reserve system, and many State banks and trust com
panies have become members also. Every member bank certain, automatic way by which the banks that are
members of the system help one another, in good
is obliged by law to keep with its Federal Reserve
times and bad. This is important to every business
Bank an amount of money which bears a certain pro
portion to the deposits it has received from its custo man, every farmer, every working man, every citizen.
mers. This is called a “reserve,” and as the Federal It is the result of organization—the kind of organiza
Reserve Banks keep the reserves of their members they tion that makes a system of reservoirs in a community
are called “Reserve” Banks. At times, member banks better than many separate wells.
It is appropriate to think of the Federal Reserve
borrow from their Federal Reserve Bank just as in
system
as exactly that—a system of reservoirs. There
dividuals borrow from their own bank. Individuals can
not deposit money with a Federal Reserve Bank, or are twelve of these reservoirs, the Federal Reserve
borrow from it; their relation with it is through the Banks of Boston, New York, Philadelphia, Cleveland,.
Richmond, Atlanta, Chicago, St. Louis, Minneapolis,
member banks.
Kansas City, Dallas and San Francisco—each serving
Before the Federal Reserve System
the needs of the member banks in its own Federal Re
Before the Federal Reserve system was in operation, serve district. In each of these reservoirs credit is
each individual bank stood virtually alone. This was stored up, and from it, as the need arises, credit is
safe enough as long as things went well in the business supplied to the member banks and through them to
world, but even then the machinery of banking was their customers, including not only business men and
farmers, but other banks as well. The process is much
so cumbersome that it often worked badly.
In order to meet the requirements of law and to like the storing up of water in a city reservoir, from
pay depositors, all banks used to keep large amounts which it is supplied to houses and their occupants.
of gold and currency on hand and most of them also
A Reservoir of Credit
kept money on deposit with other banks in the larger
It
may
be
thought
strange that such a thing as credit,
cities.' When all went well, the money on deposit with
which
in
this
sense
is the power to make loans, can
the d ty banks could be withdrawn in currency when
be
stored
up.
But
the
fact is, a great deal of it is
ever it was wanted But when, as sometimes hap
pened, business or banking conditions were disturbed stored up in the Federal Reserve reservoirs. For, as
and suspicion was in the air, the banks were anxious we have seen, the member banks deposit in the Federal
to increase the amount of cash on hand lest an unusual Reserve Banks most of the gold they formerly kept in
number of depositors might want to withdraw their their own vaults and some of the money they used
money. And it was at those times that the city banks to keep on deposit with other banks. And it is the gold
were least able to furnish cash. For the available which Federal Reserve Banks acquire in this and other
supply of currency was limited, and there was no quick ways that gives them the ability to make loans and
issue currency.
way of increasing it.
The provisions of the law are such that the Fed
Defenses Weakest When Needed Most
eral Reserve Banks can make loans to an amount be
This limited supply of currency led to the panic ot tween two and three times as much as the gold they
12
09
THE
MONTHLY
have. So, having a supply of gold in storage, they
have a lending power in storage also. As this lend
ing power is used, the level in the reservoirs falls.
In 1920 the reservoirs ran very low, because the farm
ers and business men made unusually heavy demands
upon them at a time when they had already been
drawn down by the war needs of the Government.
The supply of water in a reservoir becomes useful
when it is distributed through the water mains. The
supply of credit in a Federal Reserve reservoir be
comes useful when it is distributed through the mem
ber banks. But just as it is the individual and not
the reservoir that draws the water, so it is the business
man or the farmer who takes the first step which may
result in drawing upon the reservoir of credit.
For example:
The Grocer of Austin, Texas
A grocer in Austin, Texas, wishes to buy fifty bar
rels of flour. He has not enough money in the bank
with which to pay for it so he asks his local Austin
bank for a loan. This is the first step just referred to.
The Austin bank, satisfied with the grocer’s credit,
makes him a ninety-day loan on his note. The grocer
buys the flour, and proceeds to sell it barrel by barrel
to his customers. As his customers pay their bills,
the grocer accumulates money with which he pays off
his note.
When a Bank Borrows
In ordinary times and in slack seasons, a bank’s
own resources are sufficient for its customers’ needs.
But perhaps the Austin bank, which is a member of
the Federal Reserve System, is asked to make the
loan to the grocer at a time when many people are
asking for loans to carry on their business. O r per
haps its depositors for one reason or another are hav
ing to draw down their deposits. If the Austin bank
is to continue to lend money and pay its depositors,
it in turn will have to borrow.
Before the Federal Reserve system was in operation,
the Austin bank would have had to ask for a loan
from some larger bank w ith which it had an ac
count. O rdinarily the loan could be obtained. But
if money happened to be scarce, the larger bank
m ight be compelled to refuse to lend, because its
own resources were running below w hat it m ight
need to m eet all the demands of its customers.
Now, however, as a member of the Federal Reserve
System, the Austin bank is in a quite different position.
It has a bank of its own, the Federal Reserve Bank
of Dallas, to which it goes as a matter of right given
it by law. It sends to the Federal Reserve Bank of
Dallas the grocer’s note and other notes upon which it
has already made loans. With these as security, the
Austin bank asks the Federal Reserve Bank for a loan.
This is the second step in drawing upon the reser
voir of credit, and follows the first step which the in
dividual took when he borrowed from his bank.
BUSINESS
REVIEW
Both steps m ust be taken before the Federal R e
serve Bank lends a dollar.
Into the Channels o f the Federal Reserve
The Dallas Federal Reserve Bank examines the
notes to see whether they are sound and acceptable,
and of the kind the law permits it to lend upon.
Being satisfied, it makes the loan to the Austin mem
ber bank. This is called “rediscounting” ; and the
rate of interest the Federal Reserve Bank charges is
called the “discount rate.” This is a published rate,
applying uniformly to all member banks in its dis
trict, and is often quite different from the rate the
member bank charges its own customers. The rate a
member bank charges its customers is determined sub
ject to State law, largely by local business condi
tions and local banking custom. The rate a Federal
Reserve Bank charges its member banks is determined
from time to time, largely by the amount of creditmaking power it has in its reservoir, and also to
some extent, by credit conditions generally th ro u g h
out the United States.
Later, when the grocer’s note falls due the Fed
eral Reserve Bank sends it back to the Austin mem
ber bank and receives payment for it. The A ustin
bank in turn receives payment from the grocer and
gives him back his note. Thus the circle is com
pleted. Meanwhile, the grocer has been able to carrv
on his business, and the Austin member bank with
the money it borrowed from the Federal Reserve
Bank, has been able to make more loans to its cu«
tomers than if it had had no reservoir to draw u p o i
The Kinds of Loans Federal Reserve Banks M ake
Loans to Commerce and Industry
The simple transaction of the Austin grocer is tvnlcal of the vast mass of loans which enter into the
operations of the Federal Reserve System. SupposT
for instance that instead of the grocer, the b o f S w S
is a dry goods merchant in Butte, a hardware dealer
in Chicago, a steelmaker m Birmingham, a lumber
man m Seattle, or an exporter in New York__each
responsible business man in good financial s ta n d in e
locally. T heir borrow ings from m em ber b a n k f
w hether large or small, can in tu rn be borrow ed
upon by the member banks a t their Federal R e
serve Banks, provided they arose out of the oro
duction, sale or m arketing of goods, and are w ith in
ninety days of falling due.
Loans to Agriculture
Suppose, again, that instead of the grocer of Austin
the borrowers are farmers, or planters, or cattle m en’
likewise m good financial standing locally Their bor*
rowings from member banks, whether large or small
ran be borrowed upon by the member banks at thew
Federal Reserve Banks, provided they were for jS
ricultural purposes, including the raising or markST
mg of livestock, and are within six months of fall
ing due.
(T o be Continued)
THE
MONTHLY
BUSINESS
REVIEW
13
Debit8 to Individual Accounts
Increase or Decrease Week Ending
Amount ]Per Cent Mar. 15, 1922
(326 Banks)
Increase or Decrease
Amount Per Cent
Week Ending
Mar. 14, 1923
(326 Banks)
Week Ending
Feb. 14, 1923
(327 Banks)
Akron....................
Butler, P a.............
Canton...................
Gncinnati.............
Cleveland............
Columbus............
Connellsville. . . .
Dayton................
Erie......................
Greensburg..........
Homestead.........
Lexington............
Lima....................
Lorain..................
M iddletown*.. . .
New Brighton...
Oil C ity...............
Pittsburgh...........
Springfield...........
Toledo..................
Warren, O ...........
Wheeling.............
Youngstown........
Zanesville............
$ 16.263.000
2.648.000
12.208.000
76.423.000
133.208.000
31.325.000
1.759.000
15.877.000
7.218.000
4.795.000
704,000
8.643.000
3.494.000
1.216.000
2.303.000
2.327.000
2.902.000
193.697.000
5.497.000
42.907.000
4.103.000
11.153.000
12.183.000
3.003.000
$ 16,420,000
2.320.000
9.296.000
63.192.000
123.748.000
29.507.000
1.322.000
13.251.000
6.426.000
4.702.000
547,000
8.779.000
3.059.000
1.042.000
1.657.000
2.234.000
2.536.000
177.993.000
4.381.000
31.047.000
2.705.000
8.474.000
12.166.000
2.375.000
$ — 157,000 — 1.0
328,000
14. 1
2,912,000
31. 3
13,231,000
20. 9
9,460,000
7. 6
1,818,000
6..2
437,000
33..1
2,626,000
19. 8
792,000
12..3
93,000
2. 0
157,000
28. 7
— 136,000 — 1..5
435,000
14..2
174,000
16..7
646,000
39 .0
93,000
4..2
366,000
14,.4
15,704,000
8..8
1,116,000
25..5
11,860,000
38.,2
1,398,000
51. 7
2,679,000
31 .6
17,000
0 .1
26 .4
628,000
$ 10,858,000
1,833,000
5,819,000
65,404,000
107,572,000
28,849,000
995,000
11,610,000
6,737,000
4,047,000
597,000
8,246,000
3,280,000
1,032,000
1,885,000
2,591,000
135,431,000
4,012,000
27,492,000
3,295,000
7,300,000
10,642,000
2,638,000
442,000
311,000
58,266,000
1,485,000
15,415,000
808,000
3,853,000
1,541,000
365,000
49..8
44..5
109. 8
16. 8
23. 8
8. 6
76. 8
36. 8
7. 1
18. 5
17. 9
4. 8
6. 5
17. 8
. •, .
23..4
12. 0
43. 0
37..0
56,.1
24,.5
52, 8
14 .5
13 .8
T o ta l___
$595,856,000
$529,179,000
$66,677,000
12..6
$452,165,000
$141,388,000
31 .3
$
5,405,000
815,000
6,389,000
11,019,000
25,636,000
2,476,000
764,000
4,267,000
481,000
748,000
107,000
397,000
214,000
184,000
Comparative Statem ent of Selected Member Banks in Fourth District
Mar. 14, 1923 Feb. 14, 1923
(84 Banks)
(84 Banks)
Loans and Discounts secured by U. S. Govern
ment obligations................................................ $ 32,746,000 $ 31,807,000
Loans and Discounts secured by other stocks and
bonds...................................................................
379.172.000
369.598.000
Loans and Discounts, all o th e r..............................
668.809.000
657.876.000
U. S. Pre-War Bonds...............................................
48.001.000
48.128.000
U. S. Liberty Bonds.................................................
121.585.000
121.163.000
U. S. Treasury Bonds...............................................
8,816,000
9.279.000
U. S. Victory Notes and Treasury N o tes..........
58.131.000
55.670.000
U. S. Certificates of Indebtedness.........................
9.683.000
11.890.000
Other Bonds, Stocks, and Securities.....................
287.014.000
290.407.000
T otal Loans, Discounts, and Investm ents...........
1.613.957.000 1.595.818.000
Reserve with Federal Reserve B an k .....................
112.109.000
114.863.000
Cash in V ault............................................................
30.572.000
31.526.000
N et Demand Deposits.............................................
935.499.000
933.893.000
Tim e Deposits...........................................................
551.839.000
548.677.000
Government Deposits..............................................
4.892.000
5.893.000
T otal Resources at date of this rep o rt.................
2.051.699.000 2.035.574.000
Decrease
Increase
$
939,000
$,
9,574,000
10,933,000
127.000
422,666
463.000
'2,461,666
2.207.000
3.393.000
i 8, 139,660
’2,754,666
954,000
1,606,000
3,162,000
1,001,000
i6,'125,666
Wholesale Trade
Percentage Increase (or Decrease) in Net Sales During February, 1923,
as Compared with January, 1923, and February 1922
D ry Goods
N et Sales (selling price) during February, 1923, compared with
Tanuarv, 1923........................................... . . . . . . . . . . . . . . . . . .
2 .0
N et Sales (selling price) during February, 1923, compared with
February, 1922....................... ........................................................
32.1
Hardware
Drugs
Groceries
111
— 7 .4
—4 .9
51.1
17.2
12.4
14
THE
MONTHLY
BUSINESS
REVIEW
Department Store Sales
Cleve- Pitts- Cincinland burgh nati
Percentage of net sales (selling price) dur
ing February, 1923, over net sales (sell
ing price) during same month last year. 16.4 25.1
9.5
Percentage of net sales (selling price) from
January 1, 1923, to February 28, 1923,
over net sales (selling price) during same
6.2
period last year......................................... 19.3 22.3
Percentage of stocks at close of February,
1923, over stocks at close of same month
5.3 —8.3
last year...................................................... 14.8
Percentage of stocks at close of February,
1923, over stocks a t close of January,
7.5
1923............................................................. 23.3 19.2
Percentage of average stocks at close of
each month this season (commencing
with January 1,1923) to average month
ly net sales during the same period. .. . 379.7 359.1 493.7
Percentage of outstanding orders (cost)
at close of February, 1923, to total pur
chases (cost) during the calendar year,
1922............................................................. 10.4 10.4 11.9
Akron Can- Colum- Day- Tol- Youngs Dis
ton
bus
ton edo
town
trict
12.7
15.1
15.2
9 .9
13.9
41.3
18,
15.4
17.3
14.0
11.7
9.8
38.0
17.9
13.5
3 .6
29.9
15.4
6 .9
9 .3
8 .3
8.2
6.7
18.3
13.1
14.1
17.5
17.3
412.3 783.3 423.0 427.5 402.8
277.2
394.5
10.6
10.7
11.2
17.5
12.4
,
12.8
8.8
Building Operations for Month of February 1923-1922
Valuation
Permits Issued
New Construction
New Construction Alterations
Alterations Increase or Decrease
1922
1923
1923
1923 1922 1923 1922
1922
Amount Per C ent
20
30 $ 561,401 $ 100,205 $ 11,285 $ 43,900 $ 428,581 297.4
96
71
A kron.........
120,558
1,007,493
22,340
55
27
87
27
Ca n t o n . . . .
13,375
895,900 668.9
1,671,175
886,525
503,325
179
200
185
185
C incinnati..
153,770
1,134,205 109.0
2,900,140
5,627,467
724,550
383
477
488
615
Cleveland*.
442,190
3,009,687
9 0 .0
1,146,765
668,615
109,735
228
72
103
247
C olum bus..
75,285
512,600
6 8 .9
483,064
164,049
95,047
65
37
85
D ay to n ........
I111
ll
46,267
367,795 174.9
74,475
68,815
52,895
37
20
35
45
E rie ..............
40,910
6,325
5 .5
367,550
14,525
8,200
29
13
31
20
L exington.. .
46,831 —391,656 —9 4 .5
1,590,524
1,625,836
276
86
207,720
83
250
P ittsb u rg h ...
180,088
— 7,680 —0 .4
31,500
60,280
8
15
11,250
43
18
Springfield...
6,845
—24,375 —3 6 .3
200,980
772,700
100
118
73
145,715
139
Toledo..........
102,415
615,020 202.7
154,870
135,740
22
31
34,250
34
53
20,884
W heeling... .
32,496
2 0 .7
119,990
43,425
12
27
18,200
35
50
62,535
Youngstown.
32,230
3 0 .4
T o ta l. . . 1,916 1,529 1,099 1,252 $13,250,289 $7,348,378 $1,944,512 $1,235,295 $6,611,128
7 7 .0
Includes figures for East Cleveland, Lakewood, Cleveland Heights, and Shaker Heights.
Movement of Livestock at Principal Centers in Fourth Federal
Reserve District for Month of February, 1923-1922
C incinnati......................
Cleveland.......................
Columbus.......................
D ay to n ...........................
Fostoria..........................
M arion...........................
P ittsburgh.....................
Springfield.....................
Toledo............................
W heeling........................
C incinnati......................
C leveland.......................
Colum bus......................
Fostoria.........................
M arion...........................
Pittsburgh.....................
Springfield.....................
Wheeling........................
Cattle
Hogs
Sheep
1923
1922
1923
1922
1923
1922
5,076
17,255 17,342 105,623
100,827 2,319
9,017
9,184 75,417
68,020 14,406 19,596
224
98
140 2,806
3,482
258
191
1,568
1,118 11,144
11,663
138
226
126 6,011
5,587
702
445
270
22
21 2,621
3,057
70
25,662 30,918 237,644
190,269 54,563 67,111
489
123
169 2,992
3,304
990
486
561
845 10,216
6,047 1,266
197
234 2,014
2,248
1
99
Purchases for Local Slaughter
1,931
4,578
11,891 14,111
58,407
62,255
8,675 8,905
54,268
49,624 12,502 12,356
18
175
19
68
372
590
5
5
25
30
200
510
4
42
22
19
2,032
2,831
5,626
8,260
4,647 5,567
42,668
35,789
12
20
32
651
433
99
197
234
2,014
2,248 ........ i
Calves
1923
1922
11,165 11,747
8,398
9,954
93
166
680
541
396
447
99
108
24,822 20,296
112
128
578
451
592
656
4,720
8,345
58
25
84
5,159
34
592
7,169
9,022
73
72
66
5,596
9
656
Cars
Unloaded
1923
1922
1,576 1,552
1,413 1,334
4
14
8
3,844
3,5 i7
118
23
97
21
THE
MONTHLY
BUSINESS
REVIEW
15
Summary of Business and Credit Conditions in the United States
By the Federal Reserve Board
Continued active business is indicated by the maintenance of a high rate
of industrial production, increases in freight traffic and employment, and a large
volume of retail and wholesale trade.
PR O D U C T IO N
The Federal Reserve Board’s index of production in basic industries for
February was at the same high level as in January. The index number for these
industries is now approximately equal to the highest point reached in the past.
Since the low point in July, 1921, there has been an increase of 61 per cent.
The volume of new building projected in February was exceptionally large for
the season, particularly in western districts. Railroad freight shipments have
been increasing and the car shortage, which was somewhat relieved in December
and January, became more marked in recent weeks.
A continued increase in industrial employment has been accompanied by
further advances in wage rates in a number of industries. Many New England
woolen mills announced a wage increase of \2Y2 per cent effective April 30.
A shortage of women workers has been reported in the textile, rubber, and gar
ment industries, and there is a shortage of unskilled labor in many industrial
centers.
TRADE
Wholesale and retail distribution of goods continued at a high level during
February. Sales of both wholesale and retail concerns reporting to the Federal
Reserve banks were well above those of a year ago, but the increase was relative
ly more pronounced in wholesale trade. Mail order and chain store business
was almost as large in February as in January despite the shorter month, and
sales of five and ten cent stores were actually larger than in January.
W H O L E S A L E P R IC E S
SANK
CREDIT
The Bureau of Labor Statistics index of wholesale prices advanced slightly
during February. Prices of metals, building materials, and clothing increased,
while prices of fuels and farm products declined. Building materials and metals
during the past year have advanced more than any other groups of commodities
and are now about 25 per cent higher than in March, 1922.
s
V
\\j
BANK C R E D IT
l
f~
**—
•Ml
'
....
■
Recent increases in industrial and commercial activity have been reflected
in a larger volume of loans by member banks for commercial purposes, especially
in the New York, Chicago, and San Francisco districts. Loans of this character
by reporting member banks are now approximately $500,000,000 larger than at
the end of December. This increase has been accompanied by a reduction in
holdings of investments, so that there has been only a moderate net increase in
total loans and investments.
The larger demand for funds has not led to any increase during the past
m onth in the total volume of credit extended by the Reserve banks.
Total earning assets and loans to member banks on March 21 were approxi
mately the same as four weeks earlier. Borrowings by member banks in the in
terior increased, particularly in the Chicago district, but borrowings by member
banks in the New York district decreased. Since the end of February, there
has been a small decline in the volume of Federal Reserve Note circulation
which is now at approximately the same level as six m onths ago. O ther forms
of currency in circulation, however, have recently increased.
The market rates on commercial paper advanced further to a range of 5 to
5% per cent and the rate on bankers’ acceptances remained steady at about 4
per cent. There has been a slight increase in the yield of short term treasury
certificates as well as of government and other high grade bonds.
THE
16
MONTHLY
BUSINESS
REVIEW
Credit Expansion Outside The Federal Reserve Banks
T he loans and investments of all member banks throughout the country, which measure the current public demand
for credit, are not much below what they were at the height
of credit expansion in 1920. The recent statement of the
Comptroller of the Currency covering all member banks,
both city and country, permits the following comparisons:
Total loans and investments
N o v em b er 15, 1920............... ....... $26,108,000,000
December 31, 1921....................... 23,630,000,000
December 29, 1922 ....................... 25,749,000,000
Demand and time deposits
N o v e m b e r 15 1920.......................$20,924,000,000
December 31,’ 1921....................... 19,627,000,000
December 29, 1922 ....................... 22,460,000,000
The Extent of Present Increase of Credit
nf K,_ |,
,
before and the volume o ^ h a n k I n° W
§er.
n ever
{f
loans and investm ent.
Jnrfd
®Jfxlmum* The pror a n a r i t v - l t h f o . / 01 the country is very
near its capacity; it has already overtaxed our ordinary
transportation facilities and in many departments of industry has caused a shortage of labor. Also, the general
level of commodity prices has risen about 11 ner cent
in a year.
That this activity could have developed to such an extf nt T 1 , 0l!t P . mg a strain upon the credit facilities of
the whole banking system is in itself an indication of the
“ P1* supply o£ credlt avaUable for use.
In 1920 Reserve Bank Credit was Largely Used
In 1920, the lending power of the Reserve Banks was used
almost to the legal limit of possibility, and on November 12
of that year the reserve ratio of all twelve Federal Reserve
Banks stood at 43.6 per cent. On December 27, 1922,
when the volume of member bank credit was practically
the same as in the autumn of 1920, the reserve ratio was
72 per cent. Indeed, during the whole of 1922 the reserve
ratio was very high and varied little from week to week.
„
In 1923 Reserve Bank Credit is L ittle Used
I t will be seen from the foregoing that the reserve ratio
Is not under present conditions an accurate measure of
the amount of bank credit in use. Its steadiness at a
high level during 1922 was mainly the result of large imports of gold. In 1920 the gold in the country was about
a billion dollars less than it is at present, and in order
to supply the demands for credit and currency prevailing in
that period the member banks drew heavily upon the
Federal Reserve Banks. The immense volume of gold
which has since come here from foreign countries has en•bled the banks during the past year to satisfy the increased credit demands without increasing the amount of
Reserve Bank credit in use.
Absences of the Natural Corrective: Free Gold M ovem ents
One of the natural regulators or correctives to a to
rapid increase of bank credit is not now in oDeratiAi?
The United States is the only great nation of the
which is on a free gold basis. In ordinary times t h e n
is a delicate adjustment in international economic relatfanl
which causes the tide of gold to ebb and flow and so nr«Z
vents an excessive accumulation in any one countrv
A*
such times a rapid increase of credit in any countrv
coupled with a rise in commodity prices, results in a
ing off in its exports, an increase in its imports, and uhimately in an outward flow of gold. _ Such an outward flow
tends to reduce the amount of credit available for use, and
is ordinarly followed by a decline in prices and ultim ately
by a stimulation of export trade. A t this time and for
many months past this corrective has been absent because
of financial disorganization abroad, and on monthly balance the gold flow has been only one way, namely to th e
United States, to purchase goods and pay debts, and for
other purposes.
In the absence of this automatic international c o rr~ .* „ moderation of the volume of bank credit called in*!? *
in this country is effected largely as a result of dom
influences of which the economical use of bank credit h*
borrowers may be one of the most important in preventing
a too rapid increase in the credit volume. In 1918-1920
the .use
^ edit wa?
on*y uneconomical but excf slve and was accompanied by a specu ative bidding up
P r e s e n t Credit Increase Based on Increased Gold
Almost all of the gold which comes in finds its way in
nat ural course into the reserves of the Federal Reserve
B »ks,
becomes Ac basis for potential in-
crease of bank deposits. This is because the banks are
obliged by law to hold in reserve only a portion of their
deposits. M em b er banks keep all of their reserves with
the Federal Reserve Banks, on the average about one
dollar of reserve to every ten dollars of deposits.
W hen additional gold is lodged with a reserve bank and
is not used to pay debt owing to the reserve bank, it becomes the potential reserve for bank deposits of several
times its face amount. The banks create these additional
deposits when they make loans to customers or buy securities, the proceeds of which are deposited with them or
with other banks. In 1922 gold imports amounted to
$238,000,000; while the loans and investments of all member banks throughout the country increased $2,100,000,000,
and their deposits increased $2,800,000,000, or roughly, ten
times the amount of the additional gold.
^ dP" “ s u m p S
f£ .d
he
ral stand;frd o£ Uvin^.
w eT T h?
VL as b£. “ ^ c re a s e in
esponding increase In
°
The Accommodation of Credit to Commerce and Businesm
I t is clear that commerce and business are best ae»
commodated as the Federal Reserve Act contemplates, by
a volume of credit responsive to the changes in the physical volume of production and trade. I t is also d e a r fha*
nothing accommodates commerce and business less thaw
a volume of credit fluctuating without reference to the
needs of industry and agriculture. The more nearly the
volume of credit, by economical use, remains comxnensur.
ate with the legitimate needs of business, the -better are
accommodated not only commerce and business but the
welfare of every citizen is protected.
@FedFRASER