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The Monthly Business Review Covering business and industrial conditions in the Fourth Federal R eserve District FEDERAL RESERVE BANK OF CLEVELAND D. C. W ills, C hairm an of th e Board VOL. I CLEVELAND, OHIO, FEBRUARY 1, 1919 NO. 1 The F ourth Federal Reserve District finds itself already entered into the field of industrial tra n s i tion and economic rea d ju stm en t. Satisfactory progress and a well-defined atm osphere of confidence and optim ism are generally in evidence. The m onth of January has been notew orthy for an extended cancellation of Governm ent contracts, with a resu lta n t release of considerable labor and a substantial am ount of raw materials. There is a general interest m anifested th ro u g h o u t the district w ith regard to the question of the developm ent of export trade, and activities along this line may be expected to increase as the re a d ju s tm e n t period progresses. Industry th ro u g h o u t the district may be truthfully said to be “ m a rk ing tim e,” but with little tendency to shade prices for the purpose of stim ulating demand. It is thought that the next sixty days will be indicative of w h a t the coming spring will bring forth along business lines. In spite of continued unseasonable w eather, the influenza has ceased, at least temporarily, to have a bearing on production. Manufacturing. — Activity in steel continues to decline, due chiefly to fu rth e r cancellation of Government contracts and a disposition on the pa rt of buyers to await a possible low ering of price levels. The steel industry is confidently expecting a system atic liquidation on w ork done for the Government, and it is thought this will have a tendency to stabilize conditions as regards new orders. It is reported from the P ittsb u rg h District th at while the trade authorities estim ate th at the steel industry is operating at only betw een 65% and 70% of capacity, yet, nevertheless, these operations represent 90% of available capacity four years ago. the situation may be said to be satisfactory. Hence, tested by norm al and not w a r standards, A specific feature of the m arket today is th a t large p ro ducers are booking orders which ordinarily would be passed along to small producers as in the nature of “ retail” business, and sales agents are instructed to accept anything th at comes along, provided price and term s of delivery are satisfactory. A m arked decrease in the p ressure for deliveries is noted. There is, however, a general confidence in the ultim ate outcome, coupled with a belief th a t w ith the retu rn of the steel industry from a w a r to a peace basis a competition will be created which will have a decided tendency to lower prices regardless of the continued high cost of production. Automobile dealers are buying m oderately in strip steel and there is m uch confidence as to the im m ediate future am ong the m an u fa ctu rers of trucks and pleasure cars. Several of the blast furnaces in the vicinity of P ittsburgh contem plate closing for repairs in the im m ediate future. Plate mills report good business for the Em ergency Fleet Corporation, as well as a fair dem and for freight car plates and some general line trade. W ire m an u fa ctu rers are receiving fair-sized export inquiries, but a lack of shipping facilities is said to hinder the consideration of orders. dom estic standpoint the m arket is quiet. From a The M onthly Business Review 2 T here is a growing activity, especially in preparation for future anticipated orders, on the part of industries which, during the war, were listed in the “ non-essential” class. Clay Products.— There is a continued dullness in the building brick and tile m arket, the lull being due, according to the m anufacturers, to a tendency on the part of buyers to await a lowering of prices in all building materials. The demand for window glass continues moderate but firm, while little change is noted over December and January in the ceramic industry. Fuel.— In m arked contrast to conditions during the war, there is a decided drop in fuel production. Many mines in southeastern Ohio and w estern Pennsylvania have closed down entirely, while several of the larger ones have reduced mining operations to a part time basis. Two factors are largely responsible for this situation, first — an unusually open winter, and, second, a larger tonnage on hand belonging to the larger m anufacturers, who were induced to stock up considerably in excess of imm ediate needs because of fear of a repetition of last w in ter’s fuel shortage. It is thought that should cold w e a th er set in conditions will improve, as fuel will be much in dem and by those indus tries whose operations w ere curtailed during the w ar and which are slowly returning to their pre-war production basis. Agriculture.— Reports seem to indicate that a large am ount of corn will be used during the current w inter for feed on the farms. Farm ers have been slow' in m arketing corn on account of mild weather resulting in bad road conditions, and the prevailing tendency of farm ers to hold corn w hen the price is strong with an inclination toward an additional rise. ing the w inter w heat crop. There is considerable anxiety evidenced concern W hile the acreage is large, the mild w eather and recurring frosts have worked damage which is thought to be serious, particularly in the northern portion of the district. Elsewhere conditions are not so unfavorable. The hurley tobacco section in Kentucky is especially prosperous, prices averaging as high as $0.35 to $0.40 per pound on the brakes, with a p re-w ar figure of $0.10 to $0.12. In addition to com m anding high prices the crop has been of excellent quality and unusual abundance. In the southw estern portion of Ohio, some complaint is heard that the hogs are sulTering from a form of influenza which shows a tendency to develop into pneumonia. ever, have been few, but, as a rule, the pigs are not fattening. Fatalities from this cause, how This condition does not appear to be general, but the disease has developed in quite a num ber of places. In all other sections of the district no disease in epidemic form is reported. Labor.— The labor situation is, in general, quite satisfactory, although unem ploym ent, while not .common, is not unknown. The slowing down of coal production has throw n some labor out of em ploy ment, and there is a tendency noted in this industry to discuss a revision of wages, made advisable since the cessation of hostilities. In general, however, the revision of wages has not been under discussion .and a nu m b er of the P ittsburgh District plants have stated that a revision downward in w ages should not be attem pted for at least six m onths hence. There are efforts being made th roughout the dis trict to reinstate persons, retu rn in g from active military service, to positions held by them before the entry of the nation into the world war. Little anxiety is felt for the future in regard to the labor situa tion, for with the r e a d j u s t m e n t of business to a peace basis it is felt that unem ploym ent, where any 3 The M onthly Business Review exists, will soon be wholly eradicated. Capital and labor are both coming to realize th a t each is d ependent upon the o ther for success, and th a t sudden, radical changes are, in general, to be avoided. Collections.— T h ro u g h o u t the entire district collections are satisfactory from every standpoint and no pressure is being employed. The steel and m ining industries, whose w ork has slowed down con siderably since the signing of the armistice, report sim ilar satisfactory conditions, but w ith some anxiety as to w hen paym ents on Governm ent contracts may be expected. Very little paper is being offered in s e ttle m en t of accounts, and settlem ents for retail C hristm as buying w ere largely on a cash basis. Transportation.— Practically no difficulty is being experienced in procuring cars for expeditious m ovem ent of freight and th ere is no apprehension th a t the delays and hardships of the w in te r of 1917-18 will be repeated. In some instances railroads report the volume of freight handled as so m e w hat sub-norm al, but believe this condition, w here it exists, will be short-lived. Mercantile Lines.— A well-defined “ nervousness” is noted in the m ercantile branches, largely by the prevailing high prices, both at wholesale and to the ultim ate consum er. caused T he latte r seem s to be holding off hoping for a shading down of price levels, while on the p a rt of the jo b b er th ere is a reluctance to fill c u rre n t needs for fear of being caught with a large inventory on a falling market. Some of the larger houses are stocking up on the theory th a t a cut in profits is preferable to being unable to supply c u sto m e rs’ dem ands. Already th ere is noted a slight dow nw ard tendency in prices and the general opinion seem s to be th a t this tendency m u st be continued before complete confidence along m ercantile lines is restored. Money and Investments.— Demand money for several weeks has been m ore plentiful as shown by prevailing rates, while a sim ilar tendency is shown on short time loans for com m ercial purposes. T here still exists, however, m uch conservatism in financing, which probably will continue to be in evidence until all G overnm ent requirem ents, including the Victory Liberty Loan, are successfully met. T here is a lively dem and for the securities of concerns of established financial repute. O ther con cerns, since the suspension of the activities of the Capital Issues Committee, are offering th e ir stocks and bonds in large quantities but w ith som ew hat indifferent success. Building. — Building operations are not going forw ard rapidly, although in some instances, as shown herew ith, a slight increase in building perm its and values is shown. prices are materially lowered all but the m ost tem porarily postponed. urgently necessary of building projects will be An increase in the n u m b e r of dwelling houses to be erected shows a notice able increase particularly in the rural sections. It is th o u g h t th a t until The M onthly Business Review 4 BUILDING Valuation Permits Issued Increase Dec. 1918 Dec. 1917 Akron............ Cincinnati.......... Cleveland........... Columbus........... Dayton............... Erie..................... Pittsburgh.......... Toledo................ Youngstown. . . . TOTALS 114 614 329 79 53 56 127 96 45 120 616 373 55 25 57 142 83 65 1,513 1,536 Percent of Decrease Dec. 1918 Dec. 1917 Increase $222,885 $1,179,150 362,115 188,835 529,905 1,370,280 442,685 145,780 161,506 32,625 72,320 180,094 513,238 506,622 119,672 126,113 58,635 139,685 2,476,345 $173,280 296,905 128,881 $956,265 81.1 91! 8 840,375 .... 61 ^3 203.7 395.0 107,774 6,616 6,441 81,050 3,875,800 Decrease 1,399,455 .... 59^9 1.3 5.1 58.0 --- 36.1 POST OFFICE RECEIPTS Dec. 1918 Dec. 1917 Increase Percent of Decrease Increase Akron................: ....................................... Cincinnati................................................. Cleveland.................................................. Columbus.................................................. D ayton...................................................... Erie............................................................. Pittsburgh................................................. Toledo........................................................ Youngstown. . ......................................... $ 88,420 374,660 463,393 159,425 89,350 47,597 504,167 146,734 48,959 $ 82,908 357,626 467,269 161,636 76,573 40,764 505 ,£93 130,070 47,146 $ 5,512 17,034 TOTALS 1,922,705 1,869,685 53,020 12,777 6,833 16,664 1,813 Decrease 6 6 4 7 $3,876 2,211 8 1.4 16 7 16.8 1,526 .3 12.8 3.8 2.8 • • • « CLEARINGS December 16 to January I 5 Increase 1918-19 Akron............................................... Cincinnati....................................... Cleveland......................................... Columbus........................................ D ayton............................................. Erie................................................... Pittsburgh....................................... Toledo.............................................. Youngstown................................... TOTALS 1917-18 Percent of Decrease Increase $ 24,875,000 $ 22,566,000 $ 2,309,000 262,666,551 156,469,841 106,196,710 422,303,245 329,412,917 92,890,328 48,119,200 41,778,400 6,340,800 16,267,544 20,084,197 3,816,653 9,770,177 8,192,575 1,577,602 579,998,802 326,197,093 253,801,709 47,305,513 39,650,623 7,654,890 20,856,511 15,634,829 5,221,682 10.2 67.9 28.2 15.2 23.5 19.3 77.8 19.3 33.4 1,435,979,196 956,169,822 50.2 479,809,374 Decrease
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