The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY BUSINESS REVIEW
Covering financial, industrial, and agricultural conditions
in the
Fourth Federal Reserve District
Federal Reserve Bank of Cleveland
Vol. 9
Cicvoland, Ohio, February 1, 1927
The feeling among business men in the Fourth Dis
trict seems to be one of some uncertainty. The general
decline of a month ago has slackened, and some improve
ment over December is reported here and there; but in
many lines, business is rath er dull, and no definite trend
either way is apparent.
The prosperity of this D istrict depends in no small
degree upon the iron and steel trade, and reports from
that source have not been particularly encouraging re
cently. Operations continue at about the 75 per cent
level, well below a year ago. The trade was, of course,
considerably affected by the severe slump in automobile
production during the last quarter of 1926, as the auto
mobile industry is one of the best buyers of steel. One
bright spot is found in the heavy volume of railroad
orders for freight cars in January, orders for the second
week exceeding those of the entire month in 1926.
Final statistics for December show clearly w hat caused
to a large extent the downward trend of business during
that month. Automobile production dropped for the fifth
successive month, being the smallest since February,
1922, and only a little more than half th a t of December,
1925. Output for the fourth quarter was about 30 per
cent under the preceding year. Steel ingot production
in December was the lowest since August, 1925, and th at
of pig iron was the lowest in 1926 except February.
Building held up fairly well, but B radstreet’s record of
permits in 187 cities was 3 per cent u&der December
of 1925.
Financial
Conditions
The usual after-holiday decline in bills
discounted by the Cleveland Federal
Reserve Bank took place in the first
two weeks in January. On December 1, this bank’s hold
ings of discounted bills amounted to about $75,000,000;
by the 22nd they had increased to almost $100,000,000;
while on January 12 they were only $71,000,000. The
latter figure is $5,000,000 greater than a year ago.
Holdings of acceptances also declined seasonally during
early January, while Government securities held remained
virtually unchanged. Note circulation showed the usual
decline. Cash reserves finally turned upward, a fte r a
decline beginning September 1, but are considerably
under 1925.
Interest rates in the principal cities have eased slight
ly. On December 15, the prevailing rate charged on prime
commercial
paper was 6 per cent, while on Jan u ary 15
No. 2
it ranged from 5 to 6 per cent in Cleveland, Pittsburgh,
and Cincinnati. On the latte r date Cleveland banks were
charging
per cent on loans secured by stock exchange
or other collateral; in Cincinnati, the prevailing range
was from 5 y2 to 6 per cent, and in Pittsburgh, 5 to 6
per cent.
Debits to individual accounts a t banks in 13 large cities
in the D istrict amounted to 2786 millions in December, as
compared with 2387 millions in November and 2653 a
year ago. In 140 cities in the United States excluding
New York City, the figures were 23,640—21,568—and 23,224 millions respectively.
Commercial failures in the Fourth D istrict as reported
by Dun's numbered 132 in December, as compared with
134 in November, and 194 last year. Liabilities were
$3,263,000 in December, $2,775,000 in November and $4,339,000 a year ago. In the United States, there were
2069 failures in December, 1830 in November, and 1878
in December, 1925.
Savings deposits of 70 large banks in Ohio and W estern
Pennsylvania were $927,674,389 on December 31, a gain
of 0.4 per cent over November 30 and of 5.8 per cent
over December 31, 1925.
Changes in the main items in the balance sheets of
Federal Reserve and reporting member banks are as
follows:
Federal Reserve
Bank o f Cleveland Federal Reserve System
(In M illions)
(In M illions)
Jan. 12, Jan. 13, Dec. 15, Jan. 12, Jan. 13, Dec. 15,
1927
1926
1928
1927
1926
1926
Gold reserves ..........
268
294
259
2,916
2,799
2,830
D iscounts ..................... ......71
66
89
490
506
662
A cceptances ...--- -----------81
8
85
838
327
884
U . S. Securities ......... ......
85
36
85
811
869
478
Total bills and securities
137
111
159
1,148
1,212
1,427
Federal Reserve notes in
circulation -----...>-------212
2\9
224
1,750
1,733
1,840
184
180
188
2,324
2,325
2,392
T otal deposit* .......... ........
R eporting Member Banks
Fourth D istrict
U nited States
. (In M illions)
(In M illions)
Jan. 12, Jan. 18, Dec. 16, Jan. 12, Jim . 18, Dec. 15,
1927
1926
1926
1927
1926
1926
Loans secured by stocks
and bonds .................. 651
492
552
6,591
5,567
5,474
A ll other ..............................
811
767
818
8,828
8,487
8,905
Total loans ............ ...... ...... 1,862
1,258
1,865 14,419 14,054 14,879
Investm ents
.................—
621
624
639
5,543
5,435
5.654
Demand deposit* ----------- 1,009
986
1,028 18,191 18,247 13,214
Tim e deposit* ................... 822
748
811
6,878
5,363
5,782
Iron
and Steel
January failed to live up to its promise
in iron and steel. A large proportion
of December new business having been
specified for delivery early in January, considerable roa-
2
THE MONTHLY BUSINESS REVIEW
terial was shipped in the first few days of the month.
While inquiry and new business both stepped up to a
rate slightly higher than the December level, still the
expected rebound after the holiday and inventory season
was absent.
This condition resulted in spite of the presence of a
number of favorable factors and the lack of any severely
bad spots. The comeback in the automotive industry was
much slower than had been anticipated and the industry
exerted considerable pressure on the price structure, yet
this maneuvering differed little from that of last January.
In the second week of January freight car orders exceeded
10,000, compared with a total of only 8,830 in all of last
January. Demand for tin plate, steel pipe, rails and track
fastenings in January was at least equal to that of
January a year ago.
Last January consumers were ordering more freely in
spite of their hand-to-mouth policies; this year short buy
ing has been accentuated and consumers have been more
disposed to wait out the price situation. Mid-January
saw a weakening in practically the entire finished steel
price structure. Beginning with sharp competition for
freight car steel, producers sought business much more
actively and the $2.00 (Pittsburgh) quotation on steel
bars and structural shapes gave way to $1.90 for at
tractive business. The plate quotation of $1.90 (Pitts
burgh) also suffered. Absence of automotive buying in
particular so depressed sheets that at times prices had
a range as great as $7.00 per ton and No. 24 black
sheets went to a minimum of $2.90 (Pittsburgh), No. 24
galvanized to $3.75 and No. 10 blue annealed to $2.20,
with occasional concessions under even these low levels
reported. Hot strip prices also became unsteady.
Pig iron buying in January was relatively light and
furnaces received many holdups, due largely to low
schedules of foundries on automotive work. A $2.00 re
duction at Birmingham, to $18, brought about a condition
whereby the lake furnaces took considerable business in
Southern Ohio. Quotations at Cleveland softened and
went to $19, furnace. Weakness in the Mahoning Valley
was arrested in the middle of January when Connellsville
coke operators decided not to cut wages and some blast
furnace interests began asking $19, or an advance of
50 cents.
December steel ingot production fell to 3,472,000 tons,
the lowest in all 1926, yet the year’s output was 47,133,517 tons or a record for all time. Pig iron production in
December dropped to 3,094,629 tons, the lowest since
February but the year’s total of 39,106,395 tons was
second only to the record 40,025,850 tons in 1923.
The decline in the IRON TRADE REVIEW composite
of fourteen leading iron and steel products which set
in early in December continued through January, owing
to the weakness in pig iron, sheets and heavy finished
steel. This barometer by the end of January was below
$37.40, while in early December when the slide started
it was $38.46.
Coal
With the price flurry caused by
British strike definitely over, the
coal industry has returned to its
strike basis. The Coal Age average price, which
from $2.27 on October 8 to $3.61 on November 8,
the
soft
pre
rose
has
fallen steadily since the latter date, and on January 7
stood at $2.33. Production held up longer than prices*
making a new record in the week ending December 4;
but a rapid decline followed, bringing production down
almost to the levels of preceding years. W ages in the
non-union fields are being reduced to their pre-strike
levels, and union fields operating under the Jacksonville
agreement are again experiencing great difficulty in mak
ing operations profitable. Eliminating the period of ac
tivity during the British strike, the most noticeable change
in the last six months has been the steady rise of stor
age stocks in the hands of industrial consumers.
In the Foui*th District, operators characterize the sit
uation as only fair, with sales being made at prices too
low in comparison with production costs.
Cleveland
dealers report a heavy surplus of coal on the market
Operators in the Ohio union fields have had several meet
ings recently to determine upon the policy to be pursued
in connection with the expiration of the Jacksonville wage
agreement on March 31.
Rubber
and Tires
Shipments of tires by Akron manufacturers under the spring dating plan
have been going steadily forward. This
plan has resulted in larger sales than a year ago, when
it was not in operation; but after allowing for the* effect
of spring dating, business has hardly equaled that of last
year—a natural consequence of the pronounced decline in
automobile output during recent months.
Crude rubber prices were stable during December and
early January, fluctuating between 37 and 40 cents a
pound.
Automobiles
December was a very poor month in
the matter of automobile production,
the total output of cars and trucks in
this country being only 165,663, a decline of 90,000 from
November and of 146,000 from a year ago. The December
figure was the smallest for any month since February,
1922. In spite of the falling-off in fourth quarter pro
duction, the number of automobiles made in tha United
States during the entire year 1926 exceeded 1925 by
85,000, setting a new yearly record. The figures were
4,259,000 and 4,174,000 respectively. Output of Canadian
plants would add 205,000 to the 1926 total and 161000
to that of 1925.
The slump in fourth quarter production is all the more
marked when compared with last year, since production
in the same quarter in 1925 was considerably above what
might have been expected at that se a so n / The record
of production by quarters for the past three years is as
follows:
P er cen t
1924
F irst Quarter .....................
Second Quarter .....................
Third Quarter ...................
Fourth Quarter .................
1925
1926
(In thousands o f cars)
1,06ft
872
1 086
932
1.224
1^*9
830
962
1 mo
712
1,116
754
P e r cent
c^ f e
}£
over 1094
X z l 'l
I I 22
+ 5 9
over 1925
± 2J*S
3^4
Yoar ............................. 3‘540 4474
4*59
+2<hS V I 0
The total registration of cars in the United States in
1926 increased 10 per cent over 1925, according to a report compiled by the Goodrich Company
Th-» fi
are 22,273,643 and 20,229,025 respectively. ' i n n u m W ^ f
THE MONTHLY BUSINESS REVIEW
cars, New York ranks first and California second; in cars
per person, Florida leads with one for every 2.2 persons,
and California is second with one for every 2.4. Ohio
ranks third in number, Pennsylvania fourth, Kentucky
twenty-fourth and West Virginia thirtieth.
Clothing
So far, 1927 has proved to be as good
or better than 1926 in various clothing
lines, according to reports from manu
facturers in this District, and the outlook is described
as “good”. In knit goods, spring orders are stated to be
larger than last year. In worsteds, mills have been run
ning at full capacity, orders being greater than antici
pated. The usual Easter trade to date is at least as
heavy as in 1925. Bookings of women’s dresses compare
favorably with a year ago. Underwear manufacturers
report 1926 as having been an unusually prosperous year;
at present, the fall selling season is getting under way
following fall openings early in January. Satisfactory
business is reported by makers of men’s suits.
Cotton prices have picked up slightly, advancing from
.119 cents a pound on December 10 to .132 on Jan
uary 14. Cotton goods, however, declined steadily from
the middle of November to January 7, but rose slightly
the following wee]:. Silk has also weakened, standing
at $5.55% a pound on January 14 as compared with $5.65
on December 10 and $5.70 on November 19. Raw wool
dropped from .674 cents a pound on November 19 to
•653 on December 17, remaining at the latter figure for
the next four weeks. Woolen goods have not changed.
Sales of 17 reporting wholesale dry goods firms in
this District in December were 7.3 per cent less than a
year ago, and 15.2 per cent under November. The en
tire year 1926 showed a loss of 4.7 per cent from 1925.
Preliminary reports from 33 department and apparel
firms for December indicate a fair increase over last
year. Men’s clothing gained 2.2 per cent; women’s readyto-wear, 1.8 per cent; house dresses, 14.0; infants’ wear,
7.0; knit underwear, 14.3; muslin and silk underwear, 9.1;
hosiery, 12.4; and furs, 8.9.
Shoes
Business in this line was rather slow in
December, according to Cincinnati man
ufacturers, but since the first of the
year a considerable increase in orders placed has oc
curred, factory operations have picked up, and the out
look is good.
Wholesale firms continue to report sales far ahead
of last year. The gain in December was 19.7 per cent,
bringing the increase for the entire year 1926 up to
11.7 per cent. This is the largest yearly gain made
by any reporting wholesale line in this District since
1920 with the exception of 1923 over 1922, when drugs,
dry goods, and hardware showed larger gains.
Retail sales in December also held up very well. Early
reports from 33 department stores in this District show
a gain of 14.3 per cent over last year in women’s and
children’s shoes, and of 12.3 per cent in men’s and boys’
shoes.
General
Msnufac taring
Reports from representative manufacturers in this District reflect wide varia
tions in conditions as between different
industries. Taken as a whole, the general downward
3
trend reported a month ago is not so noticeable now,
and in fact several changes for the better have taken
place. With January two-thirds over, there was no clear
movement either way; the first half of the month ap
peared to be a period of uncertainty as to the future
trend, but with a somewhat more confident feeling evi
dent in certain lines.
Several paint manufacturers commented on the fact
that this is ordinarily a rather slow time of year for
them, but stated that December was normal, business
at present is about up to last year, and the outlook
encouraging. Agricultural implement makers are some
what uncertain as to the effect of the rather poor 1926
crops upon the farmer’s purchases in 1927. The point is
made, however, that many farmers have delayed so long
in purchasing implements that they will be forced to
do so this year. Business so far is about up to last
year. Electrical supply manufacturers have experienced
an improvement in sales and are more optimistic than
a month ago. There has been a decided decrease in the
demand for glass, caused by large imports of both plate
and window glass and a slump in automobile buying.
The paper trade, which has been rather backward for
some time, reports a pick-up, with factories operating
well up to capacity. The stove trade shows no great
change from last month. Inventory-taking and holidayclosing has brought the usual lull in boxboard manu
facturing; prices have stiffened, but overproductive ca
pacity is still an adverse factor.
Agriculture,
Canning
The following table gives the final
crop figures for 1926 as estimated by
the Department of Agriculture.
Corn (bu.) ..................................
W heat (bu.) ..................................
Oats (bu.) .......................................
Tobacco (lb s.) ..............................
Potatoes (bu.) ..............................
Fourth D istrict U nited States
1926
1925
1926
197,337
229,673 2,645,031
46,354
29,629
832,305
92,130
101,218 1,235,739
143.155
159,382 1,323,388
18,183
19,648
357,800
1925
2,916.961
676,429
1,487,550
1,376,628
323,465
It will be noted that all of the above crops in the
Fourth District except wheat were smaller than in 1925,
and all in the country except wheat and potatoes.
The last three months have not been particularly good
for the canning industry. An overproduction of both corn
and peas, combined with a more restricted buying policy
on the part of wholesale grocers, has created a buyers’
market, with low prices on these items. But an im
proved tone is noticeable recently, as the low prices
have brought heavy purchases. The outlook for next
season is considered promising.
Tobacco
The Burley Tobacco Growers’ Asso
ciation has sold some additional to
bacco privately during the past month
as well as at public auction, and during January was
preparing to distribute checks to its members on the
1925 crop totaling $6,000,000. The price situation con
tinues rather unsatisfactory;—the Kentucky Commis
sioner of Agriculture states that the average received
by growers during December was $13.81 a pound, this
being lower than last year and also the 5-year average,
1921-25. The United States Department of Agriculture’s
annual crop summary for Kentucky puts the 1926 price of
all types of Kentucky tobacco at 11.4 cents a pound, as
compared with 16 cents a year ago. As stated in
4
THE MONTHLY BUSINESS REVIEW
last month's Review, however, a good p art of the
price slump may be blamed on the poor quality of
most of the crop. Low prices appear to be quite gen
eral throughout the tobacco regions of the South.
Final production of all types of tobacco in Kentucky is
put at 374,880,000 pounds in the United States Depart
ment of A griculture's report, as compared with 387,990,000 in 1925. Burley production in Kentucky in 1926
was approximately 223,125,000 pounds, or over half of
the total. Most of the burley is produced in eastern
Kentucky, which is in the Fourth District, while most
of the other tobacco,—dark-fired, oae-sucker, etc.—is
raised in th a t p a rt of the state not included in the
District.
Stocks of unsold burley tobacco in the hands of the
Association are stated to be about 95,000,000 pounds,
approxim ating last year's figures. The greater part
of this is from the 1925 crop.
Building
For the ninth successive month, the
value of building permits in the United
States during November was less than
for the corresponding month in the previous year, ac
cording to B radstreet’s. Perm its in 187 cities totaled
$270,224,839 in December, a decline of 3 per cent from
a year ago but a gain of 5 per cent over November.
The fourth quarter showed a decrease of 6 per cent
from 1925, and the year 1926 a decrease of 5.9 per cent.
In the Fourth District, the value of perm its in 28
cities in 1926 was 10.5 per cent less than in 1925. De
cember, however, made a gain of 33.6 per cent over
last year, which is rath er surprising in yiew of the losses
shown by nearly every month of 1926. An analysis of
the individual city figures shows th a t 14 cities gained
and 14 lost, but very large increases in Akron (134.7
per cent), Cincinnati (94.6), Dayton (317.3) and Pitts
burgh (50.4) account for the District gain, as the other
24 cities combined experienced a slight loss.
Building Operations
Decem ber, 1926
(V aluation of Perm its)
December
1926
1,420,595
12,210
25,365
134,497
4,736,465
3,548,100
% change
from 1925
+ 134.7
— 82.2
— 33.3
— 63.2
+ 9 4 .6
+ 7.5
Jan.-D ec.
1926
16,068,106
941,626
986,299
5,343,767
33.241,099
61,776,575
Jan.-D ec. % change
1925
from 1925
14,504,742
10.8
909,599 + 3.5
873,029 + 1 3 .0
8,033,923 — 33.5
31,113,555
6.8
69,254,400 —10.8
270,480
333,891
79,230
95,300
330,810
177,420
80,900
343,430
1,054,300
92,300
2,534,525
252,560
135,795
503,810
60,375
45,908
4,600
3,781,727
60,100
513,394
87,399
617,620
— 19.7
+ 2 9 .1
+ 13.3
— 5 .0
— 20.4
+ 2 2 2 .0
+ 2 2 .9
— 2 .9
— 3 7.7
+ 142.9
+ 3 1 7 .3
— 10.2
+ 2 1 .3
+ 1 2 1 3 .0
+ 8 8 8 .9
— 10.6
— 87.8
+ 5 0 .4
— 13.3
— 46.4
+ 5 3 .4
— 38.5
7,080,307
1,584,771
1,703,988
2,203,050
4,362,823
1,783,853
978,004
7,528,950
25,250,700
2,165,300
11,076,109
6,132,251
2,550,712
2,186,201
1,231.954
2,929,674
377,125
43,790,103
1,383,788
13,041,090
1,810,537
9,168,282
9 017,480
4,042,513
1,841,946
3,170,300
6,488,155
1,491,006
897,177
9,122,530
29,353,300
2,231,450
12,483,526
8,695,673
2,207,516
1,966,470
2,256,206
3,120,025
641,570
41,512.222
1,672,323
17,754,587
3,294,232
12,324,895
—41.2
+ S .5
— 17.3
— 26.5
—4 5 .0
— 25.6
J TotaI*................. 21,333,106
♦January om itted.
+ 3 3 .6
300,274,350
— 10.5
A kron......................
A sh tab u la..............
B arb erto n..............
C a n to n ...................
C in c in n ati..............
C leveland...............
“
suburbs
Cleve. H eights..
Eaat Cleveland.
E uclid .................
Garfield Heights
L akew ood..........
Parm a*...............
Rocky R iv e r...
Shaker H eights,
Colum bus...............
Covington, K y .. . .
D a y to n ...................
Erie, P a ..................
H a m ilto n ...............
Lexington, K y .. ..
L im a........................
M ansfield...............
N ew ark ...................
Pittsburgh . P a .. ..
Springfield.............
T oledo.....................
W heeling, W. Va.
Y oungstow n..........
+
+
— 21.5
— 60.8
— 7.5
— 30.5
— 32.8
+ 19.6
+ 9 .0
— 17.5
— 14.0
— 3.0
— 11.3
— 29,5
+ 15.5
+ 11.2
— 15.4
—
6. 1
Building
M aterials
Lumber production of about 330 mills
in the country in the first week in Ja n
uary was slightly g re a te r th a n last
year, but both orders and shipments were less__17 and 16
p er cent, respectively. According to the N ational Lumber
M anufacturers Association, lumber sale£ in 1926 were
larger than in any of the three preceding years.
In the Fourth District, lumber m anufacturers and deal
ers are starting the new year with about the same volume
of business as a year ago, the m arket being ra th e r dull in
both years. Retailers did not buy to any g re a t extent
early in January, preferring to await price developments
Softwood prices have weakened during the p a st two
months, but hardwoods have been firm. Reports in d W P
th at the year 1926 was not particularly prosperous for
lumber concerns in this section, and while the outlook for
the next few months is stated to be fair to good a c o n
servative spirit is apparent.
*
The common brick industry reports conditions as hmn<,
satisfactory.
Government figures put consumption of
common bnck in 1925 at 5.7 per cent over 1924
a
private reports indicate a similar gain in 1926 o v e r’l l
Cement stocks in producers’ hands made th eir
seasonal rise during November and December, and ™
January 1 were somewhat greater than a year p re v io u ,iT
Production in Ohio, W estern Pennsylvania and W est V V
ginia in December was 851,000 barrels, as compared wifh
955,000 in December, 1925; shipments, 543,000 as
545,000; and stocks, 2,460,000 as against 2,314,000 FouJ?h
D istrict production was almost 10 per cent o f’ t w
t
the United States.
th a t of
December business in hollow building tile was excellent
being the largest for that period in many years.
The Aberthaw index of industrial building costs
clined one point to 196 on January 1.
Retail
Trade
The holiday trade in December slig h tly
exceeded th at of 1925, measured by
sales of 66 departm ent stores in th is
District. The gain for all firms was 2.3 per cent the
only cities to show decreases being Cleveland and Canton
For the year 1926, the District gained 1.4 p e r cent
over 1925. Dayton, with 12.6 per cent, showed the la rg e st
increase, while gains also took Place in C incinnati
Columbus, Toledo, and Youngstown. Both Cleveland and
Pittsburgh showed slight decreases, as did Akron ^ d
Wheeling. Canton reported a decline of 5 per cent
Thirty-one out of 52 separate departm ents showed
gains in sales over December, 1925. The largest increases
were in neckwear (13.5%), women’s skirts
7\
,
v j
, , .
women’s
and childrens hosiery (10.1), knit underwear ( i 3 n
silk underwear (11.8), women’s and children’s shoes ( i s s i ’
men’s and boys’ shoes (10.5) and musical instruments
Decreases of 10 per cent or more took place in
woolen dress goods (19.8), laces, trim m ings and em
broideries (12.7), women’s suits (57 7 \
j
( 10.6 ).
sw eaters
Figures for the departments doing the largest business
in December are as follows:
»«««>&
THE MONTHLY BtJSINESS REVIEW
Per cent
Kain or loss
Dec., 192G over
Dec., 1025
Silks and Velvets ............................................................................. — S.7
Toilet Articles, Drugs ...................... ..............................................
4* 2*2
Silverware, Jewelry ......................................................................... — 0.6
Leather Goods ................................................................................ + ^.9
Men's Clothing ................................................................................ — 7.6
Men’s
Furnishings
................................................................................
BoyB’ Wear ....................................................................................
Women's Coata ............................................ ....................................
Women’s Dresses .......................................................... ..............
Furs ........................................................... ....................... ........... ......
Gloves ...................................................... .............. ...........................
Hosiery ..............................................................................................
Silk and Muslin Underwear ......................................................
Shoes
+
4*
— 7.8
+ 6*2
-f- 2.5
4* 6*7
4-10-1
+ 6.2
............................................................................................................
+ 11 .2
Furniture ..........................................................................................
Draperies, Lamps, Shades ................................................................
Toys, Sport Goods .........................................................................
+ 2.1
— 1-6
— 2.8
Wholesale
Trade
This bank's index number of sales of
102 wholesale firms in the Fourth Dis
trict stood at 87 in December as com
pared with 90 a year ago, 89 in 1924, 83 in 1923, and 89
in 1922. For December, shoes made a big gain over
last year, drugs and hardware showed smaller gains, and
groceries and dry goods experienced decreases. For the
year 1926, shoe sales increased 11.7 per cent over 1925,
and drugs, 5.7 per cent. Groceries declined 2.7 per cent,
hardware 0.3, and dry goods 4.7.
Types of Money
in Circulation
The chart below illustrates the changes
in circulation since 1900 of the main
types of money used in the United
States (as of June 30). Money “in circulation” is here
defined as th at which is outside the vaults of the Treasury
and the Federal reserve banks. It therefore includes
coin and currency held by other banks, as well as th a t
actually in public circulation at any given time. The
kinds of money in the United States are:
(A) Gold coin, now minted in denominations of $5,
$10, and $20. The gold dollar was made the standard
of value in this country by the Gold Standard Act of
1900, and has, of course, full legal tender privileges. As
shown on the chart, the circulation of gold has been
gradually declining, paper currency taking its place, de
spite the tremendous increase of some 330 per cent in
our gold holdings since 1900. As a m atter of fact, only
9 per cent of the total stock of gold is now “in cir
culation,n and the greater part of this is doubtless in
the vaults of the commercial and savings banks of the
country, as almost no gold actually passes from hand
to hand. Following the establishment of the Federal
Reserve System and the strain of war financing, the
idea has become generally accepted th a t gold better
serves its purpose when it is concentrated and serves as
a reserve against currency circulation, rath er than when
it is scattered and in general circulation itself.
(B) Gold certificates, issued in denominations of $10,
$20, $50, $100, $500, $1000, $5000 and $10,000. These
are backed dollar for dollar by gold held by the T reas
ury Department, are redeemable in gold, and are legal
tender in payment of all debts. They are used as a
substitute for gold coin, being considered more convenient
and permitting the gold itself to remain in vaults, thus
saving abrasion. In appearance, they are easily dis
tinguished from other forms of currency by the yellow
back, hence the term “yellowbacks”. They showed a
marked increase in circulation between 1900 and our
5
entrance into the war, but then declined rapidly until
1922 because of the fact th at they were held in large
quantities by Federal reserve banks as reserve against
Federal reserve notes. They have since increased prac
tically to their pre-w ar level.
(C) Silver coin, consisting of standard silver dollars
and subsidiary coins. Silver dollars are legal tender
for all debts in any amount; subsidiary silver, up to
$10 for any one payment. The public circulation of
silver dollars has been much reduced in recent years,
owing to popular dislike, but th a t of minor coins has
grown with the population of the country, and the total
amount of silver coin in circulation has shown a very
gradual increase since 1900.
(D) Silver certificates. These are backed dollar for
dollar by silver dollars held by the Treasury, and are
now issued mostly in one dollar denominations, although
certificates of $2, $5, $10, $20, $50, and $100 may also
be issued. They are redeemable only in standard silver
dollars, and are not legal tender, but are receivable in
payment of all public dues. Like gold certificates, they
are used because they are a convenient substitute for
coin. Their circulation gradually increased until the war
period, when they almost disappeared as a result of
the melting-up and shipping to India of large amounts
of silver dollars form erly used as a reserve against the
silver certificates. With the passing of this tem porary
condition, silver certificates are again approaching their
pre-w ar circulation.
(E ) United States notes. The total stock of these
notes is now fixed by law a t $346,681,016, and a gold
reserve of $153,000,000 is held against them a t all times
by the Treasury. They are the so-called “greenbacks”,
first issued during the Civil War. They are full legal
tender for all debts except im port duties and interest
on the public debt, and are redeemable in gold coin.
They are issued in denominations of $1, $2, $5, $10, and
$20, the one dollar denomination being the most com
mon. As the total amount of these notes has been fixed
since 1878, the amount in actual circulation varies but
little from year to year.
(F ) National bank notes. The National Bank Act,
passed during the Civil W ar, authorizes any national
bank to deposit certain Government bonds with the
Treasury and to issue National bank notes against these
bonds having the “circulation privilege”, up to the par
value of the bonds. A redemption fund of 5 per cent
of its note circulation m ust be m aintained by each is
suing bank with the Treasury. The notes are obliga
tions of the issuing bank, but are redeemable in lawful
money either a t the Treasury or at the issuing bank.
They are not legal tender, but are receivable for pub
lic dues except import duties. A t present, these notes
are issued in denominations of $5, $10, $20, $50, and $100;
denominations of $1, $2, $500, and $1000 are also au
thorized. Their circulation more than doubled between
1900 and 1915, but since the la tte r date have declined
somewhat. Their potential circulation is limited by the
total amount of bonds bearing the “circulation privilege”,
and when these bonds have all matured, national bank
notes will disappear unless additional bonds bearing the
circulation privilege are issued, or unless the present
law is changed.
6
THE MONTHLY BUSINESS REVIEW
(G) Federal reserve notes. These notes, authorized
by the Federal Reserve Act of 1913, may be issued by
any Federal reserve bank upon application to the Fed
eral Reserve Agent together with collateral equal to
the amount of the notes desired. This collateral may
consist either of gold or gold certificates, or of com
mercial paper, etc., already purchased or rediscounted
by the Federal reserve bank. The bank m ust main
tain at all times a gold reserve of at least 40 per cent
against its notes in circulation, partly in the form of a
5 per cent redemption fund deposited with the Treasury.
The notes are obligations of the Government, redeemable
either at the Treasury (in gold), or at any Federal re
serve bank {in gold or lawful money); they are re
ceivable for all public dues; and they are issued in de
nominations of $5, $10, $20, $50, $100, $500, $1000,
$5000, and $10,000. They are prim arily intended to help
supply the currency requirem ents of the member banks,
and in normal times the supply tends to expand or con
trac t in accordance with the needs of business. The
circulation of these notes grew rapidly a fte r our en
trance into the war, and by the end of 1920 was greater
than th at of all other form s of money put together.
A fter the passing of the depression period, with the re
duction of member bank borrowings and the consequent
reduction in the amount of Federal reserve notes, their
circulation declined to a little over one-half of the 1920
total, where it remained during 1925 and 1926 with a
slight upward trend.
his hands except as between gold, silver, and paper.
The various forms of paper are accepted as money with
equal readiness, are uniform in size, quite sim ilar in
color (except the gold certificate), and present no par
ticularly distinguishing features to the casual observer.
It may safely be stated th at few people realize that
there are today seven distinct kinds of paper m oney in
use in the United States.
The circulation of the various types on Ju n e
1900, and June 30, 1926, was as follows:
1900
192fi
Gold Coin ..................................................................... $ 610,806,000 $ 445 068 000
200.733.000 1.067,'s64 000
Gold C ertificates .......................................................
Si ver Com ....................... - .........................................
142.060,000
321,952 000
Silver Certificates .................................................
408,466,000
877 741*000
U nited States N otes .............................................
Sog.oooiooo
294 916 000
N ation al Bank N otes ...........................................
309,640.000
702 669 000
Federal Reserve N otes .............................................................
Federal Reserve Bank Notes .............................................
*
T reasury N otes of 1890 ......................................
76,027,000
lisse^OOO
T o t* 1
......................................................................... $2,055,722,000 $4,885,903,000
Kinds of Money in Circulation in the United
States (as of June 30).
(H) Two other forms of money whose circulation
at present is negligible are (1) Federal reserve bank
notes, and (2) Treasury notes of 1890. The form er are
issued by the Federal reserve banks in the same way
as National bank notes are issued by National banks, and
may be issued in the same denominations. In the years
1919-1921, when silver certificates were greatly reduced,
a considerable amount of Federal reserve bank notes
were put out, mostly in one dollar denominations, to in
crease the supply of small bills. The increase in silver
certificate circulation during the past few years has
resulted in the practical disappearance of Federal reserve
bank notes (which should not be confused with Federal
reserve notes). Treasury notes of 1890 were originally
issued to pay for silver bullion purchased under the
Sherman Silver Purchase Act of th at year. The Act of
1900 provided for their retirem ent when received for
redemption, and only a very small amount remain in
circulation. They are redeemable at the holder’s option
in either gold coin or silver dollars, and are legal tender
for all debts.
The average individual probably makes no distinction
between the various types of money passing through
30,
A. Gold Coin
B. Gold Certificate*
C. Silver Coin
D. Silver Certificate*
E.
U nited S U t e . KatM
7
THE MONTHLY BUSINESS REVIEW
Fourth District Business Statistics
(All figures are for Fourth District unless otherwise specified)
Bank Debits (23 cities)
Savings Deposits (end of month)
Ohio (43 banks)
Western Pennsylvania (27 banks)
Total (70 banks)
Commercial Failures—-Number
**
" — Liabilities
Postal Receipts—9 cities
Sales—Life Insurance— Ohio and Pa.
“ — Dept. Stores— (50 firms)
** — Wholesale Grocery
(51 firms)
« —
«
Dry Goods
(17 " )
“ —
**
Hardware
(16 ** )
“ —
“
Drugs
(16 " )
Building Permits, Valuation— 28 cities
Production — Pig Iron, U. S.
“
— Steel Ingots, U. S.
“
— Automobiles, U. S.
Passenger Cars
Trucks
“
— Bituminous Coal, 4th Dist.
“
— Cement: Ohio. W. Va., Wn. Pa.
“
— Petroleum: Ohio, Pa., Ky.
4*
— Shoes, 4th Dist.
— Tires, U. S.
Bituminous Coal Shipments (from Lake Erie poits)
Iron Ore Receipts (at Lake Erie ports)
1 12 months' average
* November
* Jan.-Nov.
4 Figures Confidential
Millions of dollars
Thou s. of dollars
Actual Number
Thous. of dollars
Thous. of Tons
Actual Number
Thous. of Tons
“
“ barrels
“
i4
“
** pairs
“ casings
** tons
Index Numbers of Trade in the Fourth Federal
Reserve District
+ 4 .5
Jan.-Dee.
1926
35,921
Jan.-Dee.
1925
34,4$ 1
643,116
233,637
876,753
194
4,339
3,645
103,763
40,714
7,477
3,453
1,911
1,864
15,973
3,250
3,971
+ S.9
+ 5.5
+ 5 .8
— 32.0
— 24.8
+ 5 .0
+ 1 8 .2
+ 1.4
— 5 .0
— 7.3
+ 2 .9
+ 3 .2
+ 3 3 .6
— 4 .9
— 12.6
661,925*
239,510*
901,4311
2,008
40,498
36,668
1,151,979
294,420
85,054
38,770
25,407
22,368
268,677
39,070
47,134
619,444*
230,861*
850,305*
1,960
43,977
34,217
1,098,244
292,793
87,816
40,698
25,487
21,171
300,274
36,403
44,141
+ 6.9*
+ 3.7*
+ 6.0*
+ 2 .4
— 7 .9
+ 7 .2
+ 4 .9
+ 0 .6
— 3.1
— 4 .7
— 0 .3
+ 5 .7
— 10.5
+ 7.3
+ 6 .8
137,361
28,302
24,517*
851
1,868*
«
278,643
32,757
19,811*
955
1,723*
3,764,950
493,567
219,912*
15,597
20,655*
3,696,490
478,396
193,546*
15,563
20,273*
4
3,287s
507
88
3,219*
493
48
— 50.7
— 13.6
+ 2 3 .8 *
— 10.9
+ 8.4*
+ 1 9 .5 *
+ 2.1*
+ 2 .8
+ 8 3 .3
+ 1 .9
+ 3 .2
+ 1 3 .6 *
+ 0 .2
+ 1.9*
— 5.7*
+ 0.6*
+ 6 .8
+ 9 .3
December
1926
3,246
December
1925
3,105
681,246
246,428
927,674
132
3,263
3,826
122,611
41,285
7,101
3,202
1,966
1,924
21,333
3,091
3,472
% change
December December December December Decemb
1922
1923
1925
1924
1926
165
175
180
188
191
Wholesale Drugs (IS)*
104
101
106
116
121
Wholesale Dry Goods
(16)*............................
90
77
86
82
76
Wholesale
Groceries
(SI)*.................
85
85
88
87
82
Wholesale
Hardware
( 1 5 ) * ...........................................
91
80
94
94
97
Wholesale Shoes (5 )* ..
75
58
71
74
79
Wholesale— All (102)*
89
83
89
90
87
Chain Drugs (3)*t . . .
125
122
106
127
129
* Number of firms.
t operated.
Debits to Individual Accounts
Akron......................
Butler, Pa..............
C anton .. . .............
Cincinnati.............
Cleveland...............
Columbus..............
Connellsville, Pa..
D ayton...................
Erie, Pa..................
Greensburg, P a...
Homestead, Pa....
Lexington, K y . . . .
Lima.......................
Lorain.....................
Oil City, Pa...........
Pittsburgh.............
Springfield.............
Steubenville..........
Toledo....................
Warren...................
Wheeling, W. Va.
Youngstown..........
Zanesville...............
(In thousands of
4 weeks
ending
Jan. 12.
1927
% change
88,325
— 3 .8
12,242
+ 11.7
51.979
+ 3 .2
408,816
+ 6 .0
867,990
+ 1 2 .4
187,243
+ 1 3 .6
5,611
+ 16.0
98,808
+ 17.6
35,864
+ 1 2 .2
21,393
+ 2.2
4,210
+ 3.8
30,637
+ 1 9 .9
17,537
+ 14.9
5,671
+ 4 .9
13,773
+ 8 .4
933,268
+ 2 .7
23,231
— 6.1
10,905
— 3 .6
240,362
+ 5 .8
12,182
+ 0 .8
49,459
— 3 .8
83,613
+ 18.5
13,257
— 0 .0 4
T otal..................
+ 7 .2
dollars)
1926 to
date
(Dec. 30Dec. 29)
1,124,453
136,022
570,108
4,424,725
9,019,632
1,915,138
68,860
1,051,020
431,443
248,320
56,635
279,137
194,426
73,826
171,012
11,287,723
287,484
133,145
2,620,078
161,215
565,093
839,010
152,992
1925 to
date
(D ec. 31Dec. 30) % change
1,075,345 + 4 .6
132,739 + 2 .5
569,781 + 0 .0 6
4,203,618 + 5 .3
8,300,225 + 8 .7
1,754,719 + 9 .1
56,362 + 2 2 .2
930,017 + 1 3 .0
409,978 + 5 .2
249,242 — 0 .4
55,724 + 1 .6
275,861 + 1 .2
209,946 — 7 .4
79,939 — 7 .6
178,24! — 4 .1
11,262,832 + 0 .2
263,306 + 9 .2
141,381 — 5 .8
2,477,449 + 5 .8
161,759 — 0 .3
546,186 + 3 .5
837,646 + 0 .2
147,294 + 3 .9
35,811,497
34,319,590
+ 4 .3
42,761®
27,863
38,702
Retail and Wholesale Trade
Percentage Increase or Decrease
SALES
SALES
December, 1926 Jan.-Dee. 1926
No. of compared with compared with
Reports December, 1925 Jan.-Dee. 1925
(Average Monthly Sales for the Five-Year Period 1919-1923 i n c . - 100)
*
4
43,008*
29,744
42,287
% change
+ 4 .2
D E P A R T M E N T STORES
Akron..........................................................
C anton.......................................................
Cincinnati.................................................
Cleveland..................................................
Columbus..................................................
D ayton.......................................................
Pittsburgh.................................................
T oledo........................................................
W heeling....................................................
Youngstown.............................................
Other C ities.............................................
D istrict.......................................................
5
3
7
6
7
3
7
4
5
3
16
66
+ 1.2
— 3.1
+ 1 .6
— 1.3
+ 1 2 .S
+ 6 .5
+ 1.5
+ 6 .5
+ 3.5
+ 1 1 .0
+
+ 2.3
— 0 .5
— 5 .0
+ 4 .8
— 0 .2
+ 5.5
+ 1 2 .6
— 0 .2
+ 0 .6
— 1.8
+ 5 .6
+ 3.2
+ 14
W EARING APPAREL
Cincinnati.................................................
Cleveland..................................................
Other Cities.............................................
D istrict.......................................................
6
3
9
18
+
—
+
+
+
+
+
+
FU R N IT U R E
C anton.......................................................
C incinnati.................................................
Cleveland..................................................
Colu m bus..................................................
D ayton.......................................................
T oledo........................................................
Other C ities.............................................
D istrict.......................................................
3
11
8
16
5
6
7
56
— 8.5
— 2 .6
+ 1 1 .0
— 11.7
— 1.4
— 9 .8
— 4 .8
— 3.1
3
5
+ 1.7
— 8 .6
+ 2 .8
+ 0 .2
3
3
4
4
— 18.7
+ 2 .6
— 8 .2
— 5 .8
— 0 .2
— 4.1
— 4 .3
— 5 .4
— 7.3
+ 3 .2
+ 2 .9
+ 1 9 .7
— 11.5
+ 3 .8
— 5.3
— 1.1
— 7.5
— 0 .6
+ 0 .7
— 2 .7
— 4 .7
+ 5 .7
— 0 .3
+ 1 1 .7
CHAIN STORES*
Drugs— D istrict......................................
Groceries— D istrict................................
WHOLESALE GROCERIES
Akron..........................................................
Cincinnati.................................................
C leveland..................................................
Erie..............................................................
Pittsburgh.................................................
T oledo........................................................
Other C ities.............................................
D istrict.......................................................
WHOLESALE D RY G O O D S ....! !
WHOLESALE D R U G S .......................
WHOLESALE H A R D W A R E ..............
WHOLESALE SH O ES...........................
* Sales per individual unit operated.
K
3
27
52
17
16
16
5
1.0
3 .4
1.2
0 .7
0 .7
5 .4
3 .6
2 .4
3 .7
THE MONTHLY BUSINESS REVIEW
8
S u m m a r y o f N a tio n a l B u sin ess C o n d itio n s
By The Federal Reserve Board
Volume of output of industry decreased fu rther in December to the
lowest level in more than a year, and wholesale prices continued to decline.
Easier conditions in the money m arket in January reflected the usual sea
sonal liquidation after the turn of the year.
Index numbers of production o f m anufactures
and m inerals, adjusted for seasonal variations
<1923-1925 = 100). L atest figures: December
— m anufactures, 104; m inerals, 117.
Indexes of U. S. Bureau of Labor Statistics
<1913 = 100, base adopted by B ureau). Lat
est figu res: December— A ll commodities, 147.2;
non-agricultural, 151.5; agricultural, 142.2.
BIUIOMSOF00U.AHS
'
I
T~
RESERVE BANK CREDIT
' Tots)
*
}teserve 3anfc 1
/p
{
{
v
V
/
USSfci
V
J\
^
1923
Discoiints for
Memferr Banta
a/
S / p ' x / 1 '—
/
Acceptances
1
I
192<t-
1925
^
1926
1927
Monthly averages of daily figures for the 12
Federal Reserve Banks. Latest figures are
averages of first 25 days in January.
1923
192^
1S25
1926
1927
Index o f sales o f 359 stores <1919 = 100)
L atest figures— December, adjusted, 146; unadjusted, Z3o.
Production
In December, for the third consecutive month, there was a decrease in
industrial production, and the Board’s new index, with adjustm ent for sea
sonal variations, was 105 on the basis of the average for 1923, 1924 and
1925 as 100. This compares with 113 in September, the high point of the
year, and with 108 a year ago. The decline since the recent high point
has been entirely in the manufacturing industries, as the output of m inerals
was at a record high level in November and showed only a slight decline
in December. By fa r the greatest recession of recent months has been in
the automobile industry, output of passenger cars and trucks in the U nited
States decreasing from 425,000 in August to 165,000 in December. Reduc
tion in the manufacture of automobiles is usual at the end of the year
when plants close for inventory-taking and repairs, but in December, 1926,
the decline was considerably larger than usual. Production of iron and steel
has also been sharply reduced since the middle of autumn, and activity
in the woolen and worsted and silk industries has been somewhat curtailed.
Production of lumber, cement, and other building m aterials has reflected the
usual w inter decrease in demand. Cotton consumption, on the other hand,
was larger than in any previous December. Factory employment and pay
rolls declined further in December, reflecting decreases in nearly all in
dustries except cotton goods, clothing, foundries, and machine shops and
printing and publishing.
The value of building contracts awarded in December, as in November
was larger than in the corresponding period a year earlier.
Trade
Retail sales during the holiday trade in December exceeded all previous
lecords. Sales of departm ent stores were approximately 4 per cent la rg e r
than in December of last year and sales of mail order houses, while slightly
smaller than in 1925, were larger than in the corresponding month of any
other year.
F reight car loadings showed about the usual seasonal decline in De
cember with shipments of all groups of commodities, except coal and m er
chandise in less than carload lots, in smaller volume than a year earlier
Prices
Wholesale prices declined furth er in December and the Bureau of
Labor Statistics' index a t 147 for th a t month was a t the lowest level since
the middle of 1924. Prices of agricultural products which declined consider
ably in October and November, increased slightly in December, owing to ad
vances in prices of grains and cattle. Prices of non-agricultural products
declined in December owing chiefly to decreases in bituminous coal cloth
ing m aterials and building m aterials. In January iron and steel prices
were slightly reduced and there were fu rther declines in bituminous coal
and non-ferrous metals, while prices of cotton goods and coke advanced.
Bank Credit
A t the reserve banks during the four weeks following the peak of the
seasonal currency demand, there was a return flow of Federal reserve
notes and other cash from circulation amounting in the aggregate to about
$400,000,000. This return flow of currency was in about the same volume
as a year ago, and together with substantial gold imports, w as reflected
in a reduction of the volume of reserve bank credit in use to a level on
January 19 lower than at any time since the summer of 1925.
Loans and investments of member banks in leading cities, a fte r in
creasing to a record level a t the end of the year declined sharply in Ja n
uary- Commercial loans, which had reached their seasonal peak in No
vember were in the middle of January about $200,000,000 below the m axi
mum figure but still more than $300,000,000 abcrve the level of a year ago
@FedFRASER