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MONTHLY BUSINESS REVIEW Covering financial, industrial, and agricultural conditions in the Fourth Federal Reserve District Federal Reserve Bank of Cleveland Vol. 10 Cleveland, Ohio, January 1, 1928 After a business recession lasting since the Spring of 1927, a slightly better tone prevailed in the Fourth District in December. Conditions generally are still dull, but the more optimistic feeling of business men noted in last month’s Review has been borne out by an improvement in some industries and by the cessation of the business reaction in others. Renewed activity in a number of manufacturing plants connected with the mo tor trade is foreshadowed by the actual receipt of orders from Ford. Definite improvement in the District's largest industry—iron and steel—was reported about the middle of December in the shape of an increasing demand for products for delivery in the first quarter of next year. Steel prices have also exhibited a stiffen ing tendency. Some industries, however, are still in a depressed condition, such as coal and, to a lesser extent, lumber, and still others report conditions virtually un changed from a month ago. The general business trend in the United States was again definitely downward in November. This bank's weekly index of distribution, based on car loadings, de clined from 96.0 for the week ending November 5 to 92.9 for the week ending December 3, the latter being ft*ure: Week ending December 10— 91.3. Broken line— Monthly index of industrial pro duction, F. figure: R. Board. (1923-1925—100). La test November, &9. Both curves ad justed for seasonal variation. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis No. 1 the lowest point since 1924. The Federal Reserve Board's index of industrial production fell from 103 in October to 99 in November, also the lowest point since 1924. These downward movements were confirmed by the An nalist’s index of general business activity, which declined from 96.4 in October to 92.1 (preliminary) in November. The Federal Reserve Board’s production index has now fallen 13 points from the year’s high of 112 in March. As for December, the distribution index stood at 92.9 for the week ending the 3rd; fell to 91.3 the follow ing week, but rose to 92.9 for the week ending the 17th. Financial Money rates in general show no great change from a month ago, either in the Fourth District or in the United States as a whole. Call money, however, advanced from ZVi per cent— the rate prevailing throughout November— to 4 per cent on November 30th and to 4 ^ on Decem ber 2, due largely to first-of-month settlements. It then reacted to 4 per cent on December 7th, and was still quoted at that figure on the 16th. Time money on the stock exchange has recently been steady at 4% -4% per cent, prime commercial paper has remained at the 4 per cent level, and bankers acceptances were quoted at 3*4 per cent in mid-December. The discount rates of the Federal Reserve banks remain unchanged at 3% per cent. Gold reserves of the Federal Reserve System have undergone a noticeable decline in the past several months, particularly since the middle of October. Gold exports were heavy in September, October, and Novem ber, exceeding imports in those months for the first time since September, 1926. November exports reached the large total of $55,266,000—the largest since Janu ary, 1925— and further heavy shipments have occurred in December, including gold sent to Great Britain for the first time in many months. The reserve ratio of the System, however, is still very high, standing at 69.2 on December 14 against a legal requirement of roughly 38 per cent. Bills discounted by this bank have increased less than is usual at this season, and on December 21 were con siderably less than a year ago. Open market purchases of Government securities have increased rather sharply, however, and acceptance holdings also increased from Au 2 THE MONTHLY BUSINESS REVIEW gust to November, although a slight decline has manifested itself. The total of bills and securities by this bank therefore has undergone an expansion midsummer, though not to the same extent as last since held since year. Contrary to the trend exhibited by all reporting mem ber banks in the country, loans secured by stocks and bonds in this District have fallen off since the middle of September, standing at about $600,000,000 on December 7, “ All other” loans are also down from the Fall level, amounting to about $770,000,000 on December 7. Invest ments, on the contrary, have gradually increased, reach ing the high point for the year to date of $720,000,000 on November 16 and then declining to about $705,000,000 on December 7. Demand deposits rose somewhat during November, while time deposits changed but little. Savings deposits of 68 leading banks in this District were $986,399,768 on November 30, a gain of 7.4 per cent for the year and of 1.4 per cent for the month. Commercial failures in this District numbered 147 in November, 175 in October, and 134 a year ago, accord ing to R. G. Dun and Company. Liabilities aggregated $3,449,315 in November, as compared with $7,009,505 in October and $2,775,023 last year. There were 1,864 fail ures in the United States in November, 1,787 in October, and 1,830 in November, 1926. Debits to individual accounts at 13 leading centers in this District amounted to $2,464,748,000 in November, as compared with $2,648,308,000 in October and $2,386,738,000 in November of last year. The following table gives the main changes in the balance sheets of the Federal Reserve and reporting member banks. Gold Reserves .................... Discounts .......................... Acceptances ...................... U. S. Securities .............. Total bills and securities Federal Reserve notes in circulation ...................... Total deposits .................. Federal Reserve Bank of Cleveland Federal Reserve System (In Millions) (In Millions) Dec. 7 Dec. 8 Nov. 9 Dec. 7 Dec. 8 Nov. 9 1927 1926 1927 1927 1926 1927 296 261 282 2,827 2,828 2,910 44 84 55 444 605 461 17 33 20 380 391 336 61 36 60 604 324 530 123 153 135 1,429 1,322 1,328 217 187 210 183 2131,750 1,804 186 2,427 2,289 1,735 2,423 REPORTING MEMBER BANKS Fourth District United States (In Millions) (In Millions) Dec. 7 Dec. 8 Nov. 9 Dec. 7 Dec. 8 Nov. 9 1927 1926 1927 1927 1926 1927 Loans secured by stocks 6,364 5,400 6,122 552 603 591 and bonds ...................... 8,909 8,942 8,962 810 787 789 All other - .......................... 1,362 1,378 15,273 14,342 15,084 Total loans ........................ 1,392 6,348 5,531 6,088 635 704 708 Investments ........................ 1,019 1,037 13,955 12,924 13,530 1,076 Demand deposits .............. 6,468 5,780 6,405 807 888 889 Time deposits .................... Iron and Steel Iron and steel demand, chiefly for first quarter delivery, displayed more vigor in December than in any month of the last half of the year. Optimism concerning the 1928 markets was gathering momentum, the Ford Motor Com pany was giving inspiration to better automotive buying, the railroads were more interested in new rolling stock than at any time since last January, and foundries especially those on automotive work, were covering liberally for the first quarter. Not a little of the activity in finished steel was stimu lated by the stiffening tendency in prices. With makers of plates, shapes and bars standing firmly on $1.80 (Pittsburgh) for first quarter, users having lower priced contracts were specifying the material out. Practically all makers of sheets went on the new basis of $2.10 (Pittsburgh) on blue annealed, $2.90 on black and $3.75 on galvanized; these prices represent not so much an advance as an effort to stem further weakness. Cold finished bar makers took their stand on $2.20 (Pitts burgh). Strip continued to evidence considerable weak ness and mills solicited first quarter contracts at prices as low as $1.80 (Pittsburgh). In no district was pig iron contracting so marked in December as at Cleveland, where the market on foundry and malleable iron was firm at $18.50, furnace, for local delivery. There were two consecutive weeks in which sales of Cleveland furnaces approximated 60,000 tons. Buying in the Pittsburgh district received impetus when a large user bid $17.25 (valley) on No. 2 foundry. Semi-finished steel, like finished products, has come to be sold on a short-range basis. The prices quoted cur rently are as follows: $34.00 (Pittsburgh, Youngstown, Cleveland) on sheet bars, $33.00 on billets and $40.00 to $42.00 on wire rods. Tin plate contracting for the first half of 1928 went forward when important makers announced $5.25 (Pitts burgh) per base box. Indications are that the first half of 1928 will be better for tin plate than the last half o f 1927. Freight car inquiry passed the 10,000 mark at one time in December, the largest prospective business since January, 1927. Pittsburgh district car builders ex pect to book approximately half of this inquiry. With the railroads generously covered on their 1928 railway requirements, they were turning to their needs for track fastenings, and Pittsburgh mills entered the heaviest orders since the early months of 1927. Although forward buying of both pig iron and finished steel overshadowed orders for spot shipment, Decem ber production was expected to compare favorably with November and if it displayed the usual seasonal decline to modify it considerably. Pig iron production in November continued the decline which set in last April. The daily rate of 88,728 gross tons compared with 90,710 tons in October and 107,933 tons last November. The 1927 total of pig iron is *in. dicated as 36,350,000 tons compared with 39,100,941 tons in 1926. November steel ingot output also developed a slight loss, the daily average being 119,299 tons com pared with 126,500 tons in October and 142,529 tons in November, 1926. The 1927 output of steel ingots ap proximated 43,034,000 tons compared with 46,936,205 tons in 1926. Further adjustments in pig iron, strip and wire nails brought the Iron Trade Review composite of 14 leading iron and steel products to an average of $85.09 in Decent- THE MONTHLY BUSINESS REVIEW ber, compared with $35.35 in November and $38.22 last December. The following chart clearly exhibits the decline in iron and steel activity since April, 1927: Crude rubber prices have strengthened noticeably in the past two months. This advance is probably connected with recent efforts to check smuggling from Britishowned plantations; with reduced assessments of rubber estates in Malaya, which if effective would mean smaller production and export of crude rubber from that colony in 1928; and with continued heavy demand for crude both in America and Europe. Russia has been a steady pur chaser lately. The actual price per pound of crude finally crossed the 40-cent mark about the first of December, after fluctuating in the 30-to-40 cent range for several months previous. On December 14, first latex (spot) was quoted at 40^ cents per pound, as compared with 37^ cents on November 18, and 35 cents two months ago. A recent report of the Department of Commerce states that the consumption of inner tubes in relation to cas ings has declined sharply in the last year or two. For the year ending October 1, 1925, tire dealers sold an average of 1.47 inner tubes with every casing; in 1926, only 1.42 tubes per casing; and in 1927, only 1.23 tubes per casing. The estimated stocks in the hands of the 100,000 tire dealers in the United States at six-months’ intervals l 1924 to 1927 were as follows: Coal The soft coal industry remains in a state of dullness which has been almost chronic for months. The same unfavora ble factors exist which have been reported in previous Reviews: unseasonably warm weather, sluggish demand, heavy stocks on hand, and general overproductive capacity. In addition, Ohio union mines are still suffering from lower wage competition in non-union territories and from adverse freight rates. Fourth District concerns report that domestic demand in December has been quiet, as the weather for the most part has been above normal. A falling-off in orders has also taken place in the case of large manufacturing plants whose operations are now being curtailed for in ventory purposes. Consumers’ stock piles remain large. The price decline which started about the time of the strike settlement in Illinois has apparently halted, but the present price level is not at all satisfactory to pro ducers, being well below the winter quotations of earlier years. The Coal Age average price of bituminous coal (spot, mine) stood at $1.90 in the middle of December, there having been practically no change since October. Doubtless as a result of the inactivity of coal markets in the last two months, production of bituminous has not undergone the usual seasonal rise this year but has been fairly stable since Labor Day. The 1927 produc tion curve is now running behind all of the preceding four years. For the year up to December 3, the total output amounted to 482,559,000 tons, or 46,000,000 less than in 1926. Rubber and Tires Tire manufacturers in this District re port conditions as being seasonally quiet but satisfactory for this time of year. Although it is too early for any material gain in sales of tires as original equipment on the new Ford car, some increase in that direction is beginning to appear. The FRASER Digitized forrenewal tire business continues to be good. October 1, 1924 April 1, 1925 October 1, 1925 April 1, 1926 October 1, 1926 April 1, 1927 October 1, 1927 Casings 5,360,000 6,220,000 5,660,000 6,390,000 4,990,000 7,060,000 5,760,000 Inner Tubes 7,990,000 10,210,000 9,910,000 11,960,000 9,380,000 12,090,000 10,310,000 Automobiles Automobile production in November amounted to only 133,000 cars and trucks, as compared with 256,000 a year ago. For the first eleven months of 1927, production was 3,259,000 cars and trucks (United States only), as against 4,131,000 in the corresponding period in 1926. Conditions within the industry are very quiet at present, inasmuch as this is the period when factories close for inventory-taking. Furthermore, Ford has not swung into quantity production as yet. The following table gives an idea of the decline in automobile production in 1927. Automobile Production (U. S. only) 1927 1926 (In thousands of cars) 310 January .......................... ...239 February ........................ ...305 364 March .................................394 434 April ...................................405 441 May .....................................404 421 June .....................................322 388 July .................................... 268 359 August ............................ .. 309 427 September ...................... .. 260 396 October ............................ .. 220 335 November ........................ .. 183 256 11 months 3,259 4,131 1925 231 275 362 422 410 387 387 251 320 487 365 3,847 4 THE MONTHLY BUSINESS REVIEW Paint In response to an inquiry as to whether the paint and varnish business in this District had shown any stimulus as yet from new Ford production, paint manufacturers in general replied in the negative. A more optimistic state of mind prevails among most concerns, however, owing to the potential increase in demand which would cer tainly follow from any increase in automobile produc tion. Such a gain in motor output, of course, has not yet taken place. December business of most paint firms has been equal to or better than last year, and November was about on a par with 1926. Business in the third quarter was rather dull, in common with other lines, but two or three manufacturers report a fair gain in the past few weeks which cannot be accounted for on seasonal grounds. Buying by customers is still on a hand-to-mouth basis. Clothing Unseasonable weather continues to be one of the main factors in the cloth ing situation in this District. October and November were both much warmer than usual, and this kept down the sale of Fall and Winter wear to the public and also made retailers hesitate about ordering for the future on account of heavy stocks on hand. As a result of all this, retail sales of numerous articles of clothing were materially lower than in 1926 in both October and November, although the latter month showed fewer declines in this respect than the former and manufacturers report that demand on the whole improved in November, particularly in women’s apparel. The first half of December brought two severe cold snaps which resulted in some tardy buying, and retailers were thus enabled to dispose of part of their excess stocks. Spring orders for knit goods are stated to be considerably better than last year at present. Business in woolens is about on a par with December a year ago. The men’s wear trade has been particularly affected by the weather, and signs of recovery from the back ward Fall business have occurred only very recently. Preliminary sales figures of 41 department stores in the Fourth District for November show the following gains over 1926 in clothing lines: women’s coats, 8.8 per cent, misses’ ready-to-wear, 20.2; juniors’ and girls’ wear, 2.6; waists and blouses, 30.5; sweaters, 5.7; hosiery, 5.6; muslin and silk underwear, 0.3; infants’ wear, 3.4; and house dresses, 21.2. On the other hand, the following departments suffered losses: men’s clothing, 13.1; men’s furnishings, 2.7; boys’ wear, 3.7; women’s dresses, 2.3; furs, 13.4; knit underwear, 7.5; gloves, 8.2; millinery, 0.6; and negligees, 1.0 per cent. Sales of 15 wholesale dry goods houses in the Fourth District in November showed the usual falling-off from last year, the decrease being 11.0 per cent. For the first eleven months of 1927, sales were 8.4 per cent less than in the same period in 1926. Shoes Some improvement is reported in the shoe industry in this District after a rather disappointing Fall. Retail sales in November exceeded those of the same month last year, after falling behind in both September and October. Wholesale shoe sales also showed improvement in Novem ber, although still lagging behind last year. Manufac turers report a revival of interest on the part of cu*. tomers. Salesmen are now on the road and Spring orders are beginning to come in, the volume of such orders so far being greater than last year in some cases. Other Manufacturing With the exception of concerns who deal with Ford, there has been but little change in manufacturing operations in this District during the past month. Some establish ments report a slight turn for the better in December but the majority state that conditions are virtually un changed from a month ago. Imports of glass into this country in 1927 have been met by price-cutting by domestic glass manufacturers. This has very considerably reduced such imports, but has also cut into the earnings of American concerns. Do mestic glass output for the first ten months of 1927 was 15 per cent under 1926, caused partly by smaller automobile demand. Conditions in the industry at present are about the same as last month. The paper trade is experiencing the usual seasonal recession, owing to the practice of let ting stocks run low while taking inventory. Business generally has not been up to the 1926 level. No changes of importance have recently occurred in the electrical supply trade. The situation in the boxboard industry has been spotty; some price-cutting has taken place, but on the whole 1927 proved to be a good year. Seasonal quiet prevails in the stove trade. Manufacturers of metal containers report orders as being better than usual at this season, and the outlook is promising. A seasonal increase has lately marked the watch and jewelry indus try. Three lines of machinery and tool manufacturing report a pickup in December, these being woodworking, engineering, and foundry products. No changes have taken place in the agricultural implement line. Makers of white lead for the paint and varnish trade report the outlook bright on the basis of orders for the Spring 0f 1928, which are fully up to last year. Raw material prices have been very low, but lead has recently advanced $5.00 per ton. Tobacco The selling season for Kentucky burley tobacco is now under way, and reports to date are very encouraging. The volume of sales is about on a par with former years, while the prices received have been much higher than last year The average price for the first week of selling was $24.54 per 100 pounds, as compared with $15.88 in the corre sponding week a year ago, $22.32 in 1925, $24.94 in 1924 and $19.72 in 1923. It is apparent, therefore, that the short crop this year has restored the price so far to the 1923-1925 level, or even a little higher. The growers appear well satisfied with the situation. The Burley Association is selling at auction this year. The Association recently made the final payment o f $6,000,000 to its members on the 1923 crop. THE MONTHLY BUSINESS REVIEW Building Contracts awarded in 37 Eastern states in November fell below last year, amounting to $466,393,400 as against 1487,012,600. Contemplated projects, however, were con siderably larger in volume on December 1 than a year ago. Bradstreet's record of building permits for 167 cities showed a loss of 1.7 per cent in November from the same month in 1926. For the first eleven months of 1927, con tracts awarded were almost equal to the corresponding period last year, but building permits were some 10 per cent less. These figures indicate that while residential building has fallen off this year in common with many other lines of industry, construction of engineering proj ects, etc., has exceeded that of 1926, so that the total amount of construction has held up exceptionally well in comparison with general business. In the Fourth District, contracts awarded totaled $41,639,000 in November, as against $38,733,000 a year ago, a gain of 8 per cent. Residential construction alone in creased 16 per cent, from $15,862,000 to $18,402,000. The value of permits in 27 leading cities totaled $17,004,232 in November, a loss of 9.2 per cent from last year. Sub stantial gains were shown in Newark, Euclid, and Canton, while large declines occurred in Akron, Ashtabula, Cleve land Heights, East Cleveland, Rocky River, Erie, Hamilton, Lexington, Lima and Pittsburgh. For the first eleven months of this year, permits were $231,902,260, a loss of 6.4 per cent from last year. The largest gains were in Wheeling, Newark, and Parma, while the largest de creases were in Ashtabula, Canton, Cleveland, Cleveland Heights, Covington, Hamilton and Lima. Building Operations (Valuation o f Permits) A k r o n ............................... A s h t a b u l a ...................... B a r b e r t o n ...................... C a n t o n ............................ C i n c i n n a t i ..................... C l e v e l a n d ...................... C l e v e l a n d su b u rb ?: C l e v e l a n d H ei g h t s East C l e v e l a n d . . . E u c l i d ......................... Garfield H e i p h t s . . L a k e w o o d ................. P a r m a ........................ R o c k y R i v e r .......... S ha ke r H e i g h t s . . C o l u m b u s ................... C o v i n g t o n , K y ............ D a y t o n ............................ Erie, P a .......................... H a m ilton . . L e x i n g t o n , K y .......... L i m a ................................. N e w a r k ........................... Pittsburgh* P a . . S p r i n g f i e l d ..................... T o l e d o ............................. W h e e l i n g , \V. V a . . . Y o u n g s t o w n ................. T o t a l ................ November, % cha ni?e 1927 from 1926 910 ,2S7 — 31 1 8,182 — 44. 5 156,438 — 20. 0 433,082 + 79. 1 2,258,155 — 25. 4 +28. 6 4,281,000 J a n .-N o v . 1927 18,662,409 502,307 1,128,379 3,955,403 33,273,205 40,728,650 J a n .-N o v . < char % 1926 from 1926 +27. 4 14,647,511 929.416 — 46. 0 1,074,934 + 5. 0 5,204,770 — 24. 0 31.204,738 + 6. 6 58,228,475 — 30. I 229,725 — 51. 7 51,199 — 37. 9 250.660 + 75. 1 105,000 + 3 .2 425.100 — 4 1 168,113 + 8 3 38.325 — 63. 7 655,580 — 8. 9 1,6^9,700 + 4..5 10S.100 + 4 0 .9 696,276 + 12 .3 767,870 — 33. 3 81.2SO — 47 6 53,596 — 5 3 .6 15,000 - 3 8 .3 28,425 + 192 .3 1,816,648 — 38 .8 64,5^5 — 24 0 921,476 + 8 .5 17V,SQ% -1 4 .5 6 ’ 0,525 + 12 2 4,848,607 1.319,323 1.846,370 2.557,000 5,727.097 5,106,074 1,140,219 8,648,090 21,772,500 1,566,406 10,241,792 5,155.486 1,832,931 2,172,560 693,701 629,342 33,920,987 1,723,703 15,667,061 2,923,888 8,158,770 6,809,827 1,250,880 1,624,758 2,107,750 4,032,013 1,623,033 897,104 7,186,520 24,196,400 2 073,000 8,541,584 5,879,691 2,412,663 1,682,391 1,171,579 372.525 40,008,376 1,388,618 12,527,696 1,723,138 8,850,662 2 j 1,902,260 247,650,052 7,0 0 4 , 2 : : Q 2 — 28. <s + 5. 5 + 13. 6 +21. 3 — 7. 6 +91 + 27. Q +20 .5 — 10 0 — 24 4 + 19 — 12 3 — 24 .0 +2^ . 1 — 40 .8 + 6 8 .9 — 15 . 2 + 24 .] + 25 . 1 +69 .7 - - 7 .8 — 6A Building Materials The lumber trade is dull at present, according to reports from manufac turers and wholesalers in the Fourth District. Inquiries for the most part are few; a buyers' market exists with selling competition very keen and buyers showing even more conservatism than heretofore in their purchases. Prices have been weak, particularly in softwoods. Cement production in Ohio, West Virginia, and Western 6 Pennsylvania totaled 1,542,000 barrels in November, as compared with 1,157,000 barrels in the same month in 1926. Orders for building tile were above normal in November and December, the demand being strong. Retail Trade Department store sales in November declined from last year for the third successive month, the loss being 3.7 per cent. Unusually warm weather continued to retard the winter selling season, and in addition it should be remem bered that sales in August, particularly of Fall wear, were exceptionally heavy due to the cool weather of that month. Consequently, total sales for the District during the year up to December 1 were slightly higher than in the first eleven months of 1926, in spite of the falling-off in busi ness in the past three months. Only 18 out of 52 individual departments of about 70 department and apparel stores in the District were able to register gains in November sales as compared with last year. The largest increases were: jewelry, 19.7 per cent; umbrellas and parasols, 16.7; women's suits, 14.4; misses' ready-to-wear, 15.7; and aprons and house dresses, 13.4 per cent. Changes in the fifteen departments doing the largest business in November, in order of the volume of business done, appear below. % change, 1927 over 1926 1. Women’s Coats ........................................ 3.1 2. Women’s Dresses .................................. — 5.5 3. Men's Furnishings ................................ — 5.4 4. Men's Clothing ...................................... — 14.5 5. Hosiery ..................................................... _ _ 5.6 | 6. Women's Shoes ........................................ ... 0.4 7. Furs ........................................................... ... 18.7 8. Misses' Ready-to-Wear ...................... +15.7 9. M illinery.................................................. ... 4.2 10. Furniture ......................... ....................... ... 3.5 11. Boys' Wear ............................................. ... 6.0 12. Floor Coverings .................................... .+ 1.6 13. Silks and Velvets ............................. . — 9.5 14. Draperies ................................................. — 6.8 15. Juniors' Ready-to-Wear ...................... — 0.4 Wholesale Trade Sales of all reporting wholesale lines in this District were in smaller volume in November than last year. The de creases were as follows: drugs, 2.5 per cent; hardware, 7.3; dry goods, 11.0; shoes, 15.1; and groceries, 4.1. For the first eleven months all lines again reported decreases, which were as follows: drugs, 0.2 per cent; hardware 2.6; dry goods, 8.4; shoes, 7.1; and groceries, 4.8. Stocks on hand on November 30 were less than a year ago in all lines. Hardware stocks were 23.9 per cent less; dry goods, 7.9; shoes, 9.6; and groceries, 3.7. Accounts receivable were also less on November 30 than the preceding year. The decreases in this item were: drugs, 3.7 per cent; hardware, 5.7; dry goods, 11.1; shoes, 1.2; and groceries, 2.8. Wholesale drug collections were greater than in November, 1926, by 3.8 per cent, and grocery collections were larger by 1.5 per cent. Dry goods, hardware, and 6 THE MONTHLY BUSINESS REVIEW shoes, however, showed declines of 10.4, 3.9 and 9.7 per cent respectively. The percentage of collections during November to ac counts receivable on October 31 was as follows: drugs, 83.2 per cent, hardware, 38.2; dry goods, 39.0; shoes, 30.2; and groceries, 79.0. The stock turnover rate in November was .62*6 for groceries, or 7.51 times a year, and .38 for dry goods, or 4.56 times a year. Growth of Credit Sales Much has been said about the growth of sales made on credit during the last two or three years. An evidence of such a growth in the retail field is found in the figures of 45 department stores in the Fourth District which have reported their credit sales to this bank each month, com mencing with April, 1926. The chart below gives the proportion of credit to total sales by months from April, 1926, to November, 1927, inclusive. It is apparent from the chart that a slight but persistent growth in the percentage of credit sales has occurred in the last year and a half. In fact, each of the eight months of 1927, comparing directly with 1926, shows a larger proportion of such sales than the same month in the preceding year. From April to November inclusive, the ratio of credit sales to total sales in the group of stores under discussion was 58.5 per cent in 1926, while in 1927 the percentage rose to 59.8. The eight months of the present year thus show an increase of 2.2 per cent in the ratio of credit to total sales, the gain in each individual month varying but little from that for the entire period. The noticeable feature of this increase is its regularity month after month rather than its size. There also appears to be a seasonal swing in the matter of the ratio of credit to all sales, although no definite conclusions on that score can be drawn on the basis of only two years' experience. But for 1926 and 1927, the proportion of credit sales reached a high point in May, slumped during the early summer, and then rose rather sharply to the peak of the year, which occurred in November in 1926 and September in 1927. Figures for December of this year are not yet available, but in 1926 the percentage of credit sales dropped markedly in that month to the lowest point of the year, possibly due to the great number of relatively low-priced articles ordi narily purchased for cash during the holiday season. The above data include both regular charge sales and instalment sales. Of the 45 stores, only 11 of the larger firms reported their instalment sales separately each month for the entire period, this number being hardly representative enough to justify any conclusions concern ing retail instalment selling as a whole in this District. One or two points of interest, however, may be found in the reports of these 11 department stores. The ratio o f all their credit sales to total sales in 1927 ran ahead o f last year pretty consistently, thus exhibiting the same tendency as the ratio of all credit to total sales in the larger group of 45 firms. However, this increase in the case o f the 11 stores was not accounted for by a gain in the percent age of instalment sales, but rather by a larger proportion of 30-day charge sales. The latter in 1927 ran ahead o f 1926 in all but one of the eight comparable months, while the ratio of instalment to total sales in 1927 was less than last year in some months and greater in others, being about the same for the eight months combined. The ratio of instalment to total sales averaged around 7 to 8 per cent in both years, rising to almost 11 per cent in August on account of furniture sales and declining to a low point of 5 per cent in December. 7 THE MONTHLY BUSTNESS REVIEW Fourth District Business Statistics (All figure* are for Fourth District unless otherwise specified) Nov. 1927 2,980 722,538 263,862 986,400 147 3,449 3,107 88,479 26,231 7,222 2,836 2,108 1,803 17,004 41,639 2,648 3,102 Bank Debits (23 cities) Millions of dollars Savings Deposits (end of month) Ohio (41 banks) Thous. o f dollars Western Pennsylvania (27 banks) “ “ “ Total (68 banks) “ “ Commercial Failures — Number Actual Number “ “ — Liabilities Thous. of dollars Postal Receipts — 9 cities 4 4 “ “ Sales— Life Insurance — Ohio and Pa. “ “ “ “ — Dept. Stores— (SO firms) 1 — Wholesale Groceries (50 firms) 4 “ “ “ “ — “ Dry Goods — (15 firms) “ “ “ ** — 4 1 Hardware — (16 firms) " “ “ * — * “ Drugs — (15 firms) 4 4 “ “ Building Permits, Valuation— 27 cities “ 4 4 “ Building Contracts Awarded— “ “ “ Production — Pig Iron, U. S. Thous. of tons “ — Steel Ingots, U. S, “ 4 4 “ “ — Automobiles, U. S. Passenger Cars Actual Number Trucks “ 4 4 *" — Bituminous Coal, 4th Dist. Thous. of tons — Cement: Ohio, W. V a .,W n . Pa. " “ bbls. — Electric Power: Ohio, Pa., Ky. Millions of k. w. hrs * * — Petroleum: Ohio, Pa., Ky. Thous. of barrels — Shoes, 4th District “ '« pairs ~ * * * casings * Bituminous Coal Shipments (from Lake Erie ports) 4 4 “ tons Iron Ore Receipts (at Lake Erie ports) 4 4 “ 4 4 111 months' average “ October *Jan.-October ‘ Figures confidential N ov. 1926 2,926 673,054 245,045 918,099 134 2,775 3,048 95,810 27,219 7,606 3,186 2,273 1,850 18,726 38,733 3,237 3,706 + 7 .4 + 7 .7 + 7 .4 + 9 .7 + 2 4 .3 4* 1 .9 — 7 .7 — 3 .6 — 5 .0 — 11.0 — 7.3 — 2 .5 — 9 .2 + 7.5 — 18.2 — 16.3 222.419 33,881 22,808* 1,157 1,145* 1,947* 108,903 24,2^9 17,342s 1,542 1,129= 2,038* « 3,617* 3,281 1,831 4 3,871* 3,441 3,282 Jan.-N ov. % change 1927 35,157 + 1.8 Jan.-Nov, 1926 32,675 % change + 7 .6 695,587* 257,1801 952,767* 1,822 49,310 33,489 1,073,327 252,480 73,992 27,575 22,841 20,092 231,902 658,603 33,536 39,891 654,4611 239,108* 893,5691 1,876 37,235 32,842 1,029,368 253,135 77,953 30,099 23.441 20,136 247,650 588,657 35,979 43,469 + 6 .3 4- 7 .6 + 6 .6 — 2 .9 + 3 2 .4 + 20 + 4 .3 — 0 .3 — 5 .1 — 8 .4 — 2 .6 — 0 .2 — 6 .4 + 11.9 — 6 .8 — 8 .2 2,832,117 427,200 — 24.0 185,695’ + 3 3 .3 16,312 — 1.4 10,8073 + 4 .7 19.9813 i + 2 .1 " — 6 .6 42,175* — 4 .6 34,083 — 44.2 36,553 3,668,903 461,960 195,352s 15,050 10,406a 18,7693 * 39,721’ 29,237 42,171 — 22.8 — 7.5 — 4 .9 4- 8 .4 + 3 .9 + 6 .5 4-14.2* 4* 6 .2 4*16.6 — 13.3 — 51.1 — 2 8 .3 Index Numbers of Trade in the Fourth Federal Reserve District ive-Year Period 1919-1923 inc. » 100) Department Stores (5 0 )* ................ Wholesale Drugs (1 5 )* .................... Wholesale Dry Goods (1 4 )* ........... Wholesale Groceries (50)*............... Wholesale Hardware (1 5 )* ........... Wholesale Shoes (5 )* ....................... Wholesale All (9 9 )* .......................... Chain Drugs ( 3 )* t ............................ •Number of firms. tPer individual unit operated. Nov. 1923 121 106 97 98 104 75 98 97 Nov. 1924 120 100 83 90 99 73 90 95 Nov. 1925 116 106 82 90 100 74 91 99 Nov. 1926 126 118 91 88 112 87 101 101 N ov. 1927 121 114 81 84 104 73 89 92 Debits to Individual Accounts (In Akron..................... Butler, P a ............. Canton................... Cincinnati............. C leveland.............. C olumbus.............. Connellsville, P a .. D ayton.................. Erie, Pa.................. Greensburg, p a. Homestead, P a .. . Lexington, K y .. . . L im a...................... Lorain.................... M iddletow n.......... Oil City, Pa........ Pittsburgh, Pa. . . Springfield............ Steubenville.......... T oled o ........... W arren............ Wheeling, W. Va.. Youngstown___ Zanesville.............. thousands of dollars) 4 weeks ending Dec. 14, 1927 90.435 10,441 40,181 393,817 712,324 155,776 4,335 80,012 31,143 19.477 3,742 23,614 13,555 5,639 10,442 13,984 841,434 19,962 10,448 226,713 11.114 46,227 61,633 11,623 % change from 1926 + 11.9 4* 1-0 — 1.3 + 13.6 4- 1.9 + 6 .2 — 28.7 4- 4 .0 — 8 .7 + 3 .8 — 12.7 + 2 0 .3 — 1.5 + 2 .4 + 2 .6 + 8.2 + 0.1 — 6 .4 — 3 .8 + 2 0 .4 — 0 .2 + 3 .9 + 2 .7 + 3.5 T u l FRASER Digitizedofor.................. 2,838,071 ~ 6 1927 to date (D ec. 29-Dec. 14) 1,162,806 136,948 547,729 4,721,501 9,331,823 1,930,791 58,212 1,086,297 418,242 256,265 51,853 285,671 174,650 72,262 130,555 178,410 11,772.102 276,324 130,643 2,708,339 162.282 534,19$ 823,421 149,282 1926 to date ( Dec. 30-Dec. 15) 1,083,379 130,183 547,322 4,251,232 8,658,919 1,841,885 65,964 1,011,804 413.957 237,297 54,415 265.561 187,716 70,990 130,692 163,889 10,833.557 277,886 127,977 2,522,178 155,506 541.238 805.488 146,661 % change from 1926 h 7.3 - 5 .2 - 0 .1 h ll.l h 7 .8 h 4 .8 -1 1 .8 + 7 .4 + 1.0 + 8 .0 - 4 .7 + 7.5 - 7 .0 f 1.8 - 0 .1 | 8 .9 f 8 .7 - 0 .6 + 2.1 t" 7 * £ 4 .4 — 1.3 f- 2 .2 f 1 .8 37.100,606 34,5 2S,696 4- 7.5 Retail and Wholesale Trade No. of reports D E P A R T M E N T STO R ES A k r o n .. . ; ............................................... Cincinnati................................................ C leveland................................................. C olum bus................................................. Pittsburgh............................................... T o le d o ...................................................... W heeling.................................................. Youngstow n............................................ Other C ities............................................ D istrict..................................................... W E A R IN G A P P A R E L Cincinnati................................................ C leveland................................................. Other C ities............................................ D istrict..................................................... F U R N IT U R E Cincinnati................................................ C leveland................................................. C olum bus................................................. D a y ton ..................................................... T o le d o ...................................................... Other C ities............................................ D istrict..................................................... C H A IN STO R E* Drugs— D istrict..................................... Groceries.................................................. W H O LE SA LE G R O C E R IE S A kron........................................................ Cincinnati................................................ Cleveland................................................. E rie........................................................... Pittsburgh............................................... T oled o...................................................... Other Cities............................................ D istrict..................................................... W H O LE SA LE D R Y G O O D S .......... W H O LE SA LE D R U G S ..................... W H O LE SA LE H A R D W A R E .......... W H O LE SA LE SH O E S....................... 5 7 6 6 7 4 5 5 15 58 Percentage Increase or Decrease Nov. 1927 Jan.-N ov. 1927 compared with compared with N ov. 1926 Jan.-N ov. 1926 + 0 .1 + 2 .7 — 3.2 + 0 .8 — 6 .9 + 1 0 .4 — 13.1 — 11.9 — 10.0 — 3 .7 + 2 .4 + 3 .8 + 0 .5 + 11.0 — 3 .6 + 4 .4 — 4.1 + 3.3 — 1.4 + 0.1 3 9 18 — — — — + — + + 11 7 10 4 6 5 43 + 9.2 — 21.6 — 0 .7 — 14.1 + 1 2 .5 — 1.9 — 4.1 3 6 — 9 .2 — 1.2 — 6 .8 — 2.2 3 3 4 4 7 4 27 52 15 15 16 6 — 0.1 — 1.5 — 0.1 — 13.9 + 4 .4 — 7.0 — 8.3 — 4.1 — 11.0 — 2.5 — 7.3 — 15.1 — 5.2 + 2 .9 — 4 .9 — 12.0 + 1.6 — 6.1 — 6 .2 — 4 .8 — 8 .4 — 0 .2 — 2 .6 — 7.1 6 td . 3 .6 4 .6 2.3 3.5 6 .5 2.3 4.1 2 .6 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions (By the Federal Reserve Board) Industrial activity and freight car loadings declined further in November while retail trade showed more than the usual seasonal increase. The gen eral level of wholesale commodity prices after advancing for four months remained practically unchanged in October and November. Production Index number of production o f manufactures and minerals combined, adjusted for seasonal variations (1923-1925 = 100). Latest figure: November— 99. PRE T ECN 150 1! i WHCHESALE PRICES 1 . 1 Trade Index o f U. 8. Bureau of Labor Statistics, (1926 = 100). Latest figure: November, 96.7. A 1 i / J ! R E S E I «VE B A N K C R ED IT 1 f Output of manufactures and minerals was reduced in November and the combined index of production, after adjustments for customary seasonal variations, fell below the 1923-1925 average for the first time since 1924. The largest decline was in the output of automobiles owing largely to prepa ration for production of new models. Iron and steel production has also declined further, and in November was the lowest since 1924. In December however, inquiries for iron and steel increased. Textile mill activity was slightly curtailed in November, but continued at a higher level than in previous years. There were decreases in the pi*oduction of coal, building materials, and leather and shoes. Building contract awards showed seasonal declines in November and the first two weeks of December, and were slightly smaller than in the corresponding period of last year. The total value of about fifty crops in 1927 is estimated by the Depart ment of Agriculture at $8,430,000,000, an increase of $635,000,000 over 1926. The greatest increases in value were shown for cotton, corn, barley, and oats while the largest decrease for any individual crop was shown for potatoes* The physical quantity of production of the seventeen principal crops was about two per cent less than last year, but three per cent above the average of the last ten years. •nsaH/ Retail trade increased slightly more than usual in November. Compared with a year ago, retail trade of department stores, mail order houses and chain stores was larger, while wholesale trade continued in slightly smaller volume in nearly all reporting lines. Freight car loadings declined during November and in the early part of December were smaller than in the corresponding period for the past four years. There were large decreases in loadings of all classes of commodities. Monthly averages o f daily figures for 12 Federal Reserve Banks. Latest figures are averages o f first 23 days in December. Prices The general level of wholesale commodity prices as measured by the index of the Bureau of Labor statistics, after a continuous advance since early in the summer, remained at practically the same level in November as in October. Changes were relatively small in all groups, increases occurring in foods, hides, and leather, and decreases in farm products textiles, fuels, and building materials. In the first two weeks of December* prices of wheat, cattle, hogs, cotton, pig iron, and softwood lumber declined* while those of silk, woolen goods, hides, and sole leather advanced. Monthly averages of weekly figures for banks in 101 leading cities. Latest figures are aver ages for first three weekly report dates in for FRASER December. Between the middle of November and the middle of December, total loans and investments of member banks in leading cities showed a con siderable increase, reflecting continued growth in the volume of loans on securities and in the bank’s investment holdings. In the same period, loans chiefly for commercial purposes, which reached a seasonal peak in October showed a further slight decline. At Federal Reserve banks the seasonal increase in currency require ments and the continued demand for gold for export during the four weeks ending December 21 were reflected in a growth in member bank borrowing At the end of this period the total volume of reserve bank credit in was larger than on any other date in the past six years. Somewhat firmer conditions in the money market in December were reflected in increased rates on call money. Rates on prime commercial paper and bankers’ acceptances remained unchanged during the month. L L er Bants SSSuntsfin U-SSfciirrfiw vA j 1923 192* 1925 I 1926 1927 Bank Credit Digitized
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