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' T h e M o n t h ly BUSINESS REVIEW Gn)ering business and industrial conditions in the Emrih federal Reserve District FEDERAL RESERVE BANK of CLEVELAND D .C .W i l l s , C h a ir m a n o f the Board (COMPILED JUNE 15, 1920) VOL 2 CLEVELAND. OHIO, JULY 1. 1920 HE clouds of uncertainty and doubt are dissi pating before the sun of conservative optimism. An orderly deflation is proceeding, and many of the unfavorable influences of the past few months are apparently passing away. An especially gratify ing feature of the situation is the acceptance by busi ness generally of the opinion that a gradual reversal can be successfully accomplished; that credit restric tion is a wholesome rather than an unwholesome act, and will result in a better economic position— a safer foundation upon which to build the structure of future business. A forced deflation, at the expense of legitimate, essential business, is neither necessary nor desirable. In fact, any such movement might lead to disaster. Caught in the maelstrom of a too rapid deflation the essential businesses would suffer in common with other industry. Such a procedure would be economically unwise, as the resulting conditions would" be far more unpleasant than even those of the present, and would postpone the day when the busi ness ship shall be restored to an even keel. Neither, on the other hand, is the producer of essentials justified in further increasing his credit lines under present conditions, as only by a still further tightening of the credit strings can our future prosperity be reasonably assured. During the past thirty days the favorable signs far outweigh the unfavorable. From the early days of the war we have suffered as the result of many ills which have influenced our industrial life. Chief among these may be noted: (1) The war itself, drawing from industry mil lions of producers and requiring the raising of vast sums of money: (2) Extravagance; individual, corporate and state: (3) Inefficiency, indifference and unrest among labor, the result of which was decided reduction in the volume of output: (4) The “ vicious circle” of advancing wages and prices: (5) A shortage of transportation facilities, which did not permit of a free and uninterrupted move ment of goods: T No. 6 (6) Profiteering, which has shown its ugly head in many places: (7) Credit expansion to a point where the national industrial safety was endangered. These major points complete the indictment, al though there are some lesser influences which have also cast their shadows over the general situation. It does not require a critical analysis to discover a changed condition. Although the war is over and millions of service men have again been absorbed by industry, the major part of our war debt is still with us, and will be for many years. A definite check has been given to extravagance. The individual is showing more conservatism in buy ing, and corporate thrift is compelled by the difficul ty of securing funds. Practically all reports agree that the efficiency of labor continues to improve. Some manufacturers report that labor is more productive than at any time since the war. Some forced unemployment has created a desire on the part of workers generally to keep their names on the payroll, with beneficial results. Strikes are becoming less and less popular— not only with the public, but with the workers them selves. The upward trend of wages and prices appears to have been definitely broken, except perhaps prices of certain commodities. In support of this argument may be noted sales of merchandise at lower prices than have prevailed for months, and a growing dis position on the part of the people to purchase noth ing but necessities at the high prices which have prevailed in the immediate past. The announcement of the decision of the wage board, an event of the near future, will probably re sult in the settlement of the switchmen’s strike, which has perhaps given to industry its greatest set-back. The allocation of $125,000,000 from the revolving fund for the purchase of equipment is another favor able indication, though unfortunately it will be some time before this sum can be converted into actual carrying equipment. The market for the profiteer is rapidly disappear ing. He came into being because he had a market, and he is certain to disappear as that market is withdrawn. The conservative purchaser is in the ascendance; the disease of “ spenditis” is about stamped out. THE 2 MONTHLY BUSINESS The credit situation shows decided improvement in this District. The people generally are in accord with the Federal Reserve deflation policy, and the member banks are giving their loyal support. Busi ness men are convinced that this policy was not adopted hastily and on the spur of the moment, but is the result of the best banking thought, designed and put into practice in a conscientious effort to save American industry from a sudden plunge into the BEVIBW abyss of a depression from which it might take years to recover. Over-optimism is just as dangerous as extreme pes simism, as it leads to faulty judgment and wrong conclusions. We are not overly optimistic, but are a long way from pessimistic. It appears to us as safest to steer a middle course, with due regard for danger signals that may show, until the fog has lifted and our future course may be more plainly marked. Demand for New Loans Lessens; Savings Deposits Show Losses in Steel Centers; Acceptance Market Shows Improvement The Federal Reserve deflation policy has begun to bear fruit. The demand for new loans has materially lessened. Customers of banks are realizing more and more that they must not lean to any greater extent than they have upon their bankers, and that they must measure their activities by their ability to market goods. Bankers are now fully convinced of the vital necessity for conservation of credit, and are restricting loans for the greater part to essential industry. Banks in some of the steel centers, where much foreign labor is employed, report great losses in deposits, by reason of the heavy emigration of labor. The sum thus lost will run into millions of dollars. Somewhat contrary to anticipation, the dollar acceptance market in general for the last thirty days showed a decided improvement over the previous month. The country banks that have been the main support of the market since the first of the year, with the exception of last month when their local spring demands for money were abnormally heavy, again were the main source of the demand. x\lthough the demand was spasmodic, the turnover after each succeeding dull period was increased, showing that there is a growing confidence in the stability of the future of acceptance rates. Another encouraging development to the market was the fact that the demand for prime acceptances was not noticeably affected by the late Government issues of certificates at 5% % and 6%, which shows quite convincingly that there is now established a consistent following of purchasers for acceptances, which is very little influenced by offerings of other forms of like investments. It also shows, what was thought, but which was not a certainty, that banks’ acceptances and Government certificates are not in direct competition for similar funds and that to a great extent they attract money from somewhat dif ferent sources. An interesting change is expected in the bill market as a result of the $50,000,000 Belgian accept ance credit. These bills will be paid off on June 30th with funds supplied through the flotation of a loan. It is wondered Avhether the funds, so released in the bill market, will be reinvested in acceptances or go into some other channel. It is hoped and somewhat expected that this sum will remain in the market where it is now held, and some preparation to this end is being made by brokers. The supply of bills has been sufficient to me%t the demand and the slight variation of y ith of 1% in the purchase rates was given in order to draw in additional bills, when the demand slightly exceeded the bills in the brokers ’ portfolios; the rates however have remained in general stable at 6^2% for 90 days, for 60 days and 634% for 30 days. Steel and Iron Output Increases; Inadequate Transportation still a Handicap to Capacity Production; Strikes at Eastern Ports Restrict New Foreign Buying Iron and steel manufacturers have been making a brave attempt to increase restored production in the face of severe restrictive factors growing out of the tra n sp o rta tio n situation and they are making a sur prisingly good showing considering the circumstances. May production figures reflect the extent to which these ends have been attained. According to the statistics compiled by the Iron Trade Review, the May pig iron output was 2,991,825 tons, or on the basis of approximately 36,000,000 tons per annum. The gain of May over April was 239,155 tons, but there was one day longer operation. Stacks in blast at the end of May were 19 more than in the cor responding date in April, and stood at the total of 297. Steel ingot output in May, according to the partial figures of the American Iron and Steel Insti tute, showing approximately 3,400,000 tons, which figures out on the basis of actual working days over 42.000.000 tons per annum. This represents an increase in the annual rate of approximately 5.000.000 over April. Lake Superior ore shipments by water in May were 6,976,085 tons, which was much better than expected in view of the car and coal shortage. This reduces to approximately 1,800,000 tons the shortage to date against the 1918 total, against which this year's movement is being figured. With the better movement of coal to the northwest, operations of the ore mines are expected to improve and the outlook for a continuing larger down-lake movement is more promising. While the mills and furnaces have been able through various expedients to make a better showing on the side of gross output, operations are being car ried on with a narrow margin of safety, because of the short car supply and the uncertain receipts of raw materials. Unless the latter conditions show a material improvement, before many days, it is doubt THE MONTHLY BUSINESS ful whether the present rate of production can be maintained. The most serious aspect of the situation, bearing upon sustained operations, is the large amount of rolled steel that continues to be carried in the yards of the mills because of inability to ship. In many cases this tonnage has continued to grow, due to the lack of cars, and it has reached the point of excess where the producers will be obliged to again curtail their output pending some clearing away of these accumulations. In the Pittsburgh district alone a conservative estimate places mills’ stocks at not less than 500,000 tons. Two large companies alone have almost two-thirds as much tonnage as that indi cated. Corresponding stocks are being carried in other producing districts. The amount of tin plate in various makers’ hands recently was estimated at 2,500,000 boxes, or 125,000 tons, but a portion of this has been worked away, due to priority in shipments extended to this product for food purposes by the car service authorities. As represented by the unshipped finished material on the yards of the mills, the past month in reality has registered only slight improve ments, if at all; in the transportation situation as it affects the steel industry. New business in iron and steel generally has con tinued on a reduced basis, mainly due to the uncer tainty of deliveries, as neither producers nor buyers have been disposed to extend their obligations at this time. The underlying consumptive demand for iron and steel with some modifications, notably in the direction of the automotive industry, continues large. Most buyers appear as desirous as ever to retain their orders on mill and furnace books and cancella tions are few, although in some cases extensions of deliveries have been granted. Credit conditions are playifig a manifest part in reducing the volume of business in certain lines. New structural undertak ings are a case in point, as the number and size of new'contracts of this kind have been light. May REVIEW 3 structural awards show a further shrinkage in vol ume and were 61% per cent of shop capacity. This compares with 68 per cent in April, 83% per cent in March and 95 per cent in February. The railroads have not been buying new equip ment in the degree expected. However, it is believed that the completion of arrangements by the govern ment for the loan of large sums from the revolving fund, will bring about a considerable increase in car and locomotive buying in the near future. An inter esting sidelight on the equipment situation is the large number of industrial companies that have been ordering new railroad cars on their own account. Prices of steel products have shown a tendency to ease somewhat from the top figures previously named by the mills, and there has been a decided falling off of high premium business. In the main, however, there has been nothing which could be construed as weakness in the finished steel market. Pig iron prices have held strong, and spot metal, as regulated by the ability of the furnaces to deliver, has been command ing higher prices. Obstruction of shipments, both by the transporta tion conditions and by strikes of freight handlers at New York and other leading ports, have shut off new foreign buying of iron and steel in a considera ble degree. Buyers appear to have developed a more conservative attitude and this seems to be an echo of a similar situation which has developed in Eng land. Large inquiries for both pig iron and steel, however, have continued to come into the market, principally from Great Britain, Europe and South America, and there is evidence that the world-wide shortage still is exerting pressure. A number of cancellations of sales made to Japan have grown out of the financial stringency in that country and there also have been resales of material in this country by Japanese buyers who have found tonnage on their hands. Ore and Coal Shipments Show Loss Over Last Season; Fleet Delayed at Lake Erie Ports; Grain Movement Light Although the requirements in both trades are much greater than they were in 1919, shipments of ore and coal show a loss compared with last season, and, unless there is marked improvement in the car supply at the Lake Erie ports, there will be a short age at both ends of the route at the close of the shipping season. There is plenty of vessel capacity and the boats are spending much time in port on account of the shortage of cars. ; ; The docks at the receiving ports are only working part of the time, as the railroads cannot take the ore for interior furnaces forward as fast as it arrives, and a large number of freighters are on the waiting list all the time. Some of the ore carriers have been held in port a week, and the capacity of the fleet has been greatly reduced by the long delay. Most of the vessels are in the ore trade, owing to the light movement of grain and coal, but ore ship ments up to June 1 show a decrease of 820,641 tons, compared with the same time last season. The move ment up to June 1 was 7,206,939 tons, and in the same period in 1919 the fleet loaded 8,027,580 tons. The coal trade will have the call on the open top equipment until the supply reaches 50 per cent of the requirements of the trade, which means that no empty cars will be brought to the lake front for ore until that point is reached. Coal shipments up to June 1 were 3,216,730 tons less than they were for the same time last season, and, although coal has been coming forward more freely the past two weeks, the loss will be greater on July 1. There will have to be a marked increase in shipments from now on, in order to reach the 1919 total, which is far below the estimated requirements of the trade, as the docks at the upper lake ports were swept pretty clean at the opening of the season. All lake coal is now being pooled on practically the 1918 basis, and the movement is being directed by H. M. Griggs, manager of the ore and coal exchange. THE 4 MONTHLY BUSINESS REVIEW Manufacturing Conditions Chaotic; Declines Noted in Some Trades; Lack of Fuel and Materials Affects all Business Conditions are somewhat chaotic in the manufac turing field. Reports range from extreme optimism to the limit of pessimism. The complaint of car shortage is general, both as regards shipments of raw materials and the ability to move finished pro ducts. Makers of goods who depend for raw materials upon the metal trades report that steel was never so difficult to obtain as now. Much the same com plaint is heard with reference to coal, but this situa tion should ease somewhat as transportation con ditions improve. A disposition is noted on the part of many pro ducers (especially of raw materials) to book orders more freely, and they are willing to prophesy, to some extent, lower prices. The custom has been for months to accept orders only on a basis of price at time of delivery, the inference being that at that time prices would be higher than when booked. Some companies are now willing to accept orders at prices on a present-day basis, including an agree ment to adjust prices downward if costs at time of delivery justify. _ Throughout almost the entire manufacturing neld is found a marked increase in the productiveness of labor— one of the most hopeful signs we have seen for months. Automobile makers report no perceptible slacken ing in the demand for pleasure cars, except from cer tain points where banks have discriminated against automobile loans. Auto body makers state that conditions are slight ly hesitant, although work is being maintained at capacity to catch up with unfilled orders, rather than to meet present-day sales. Conditions in this line are affected by the inability of some automobile manu facturers to maintain production by reason of lack of materials to build chassis, rather than to a cessa tion of the demand for machines. Manufacturers of farming machinery report that conditions in their lines continue excellent, with col lections especially good. Hardware manufacturers are hampered in their activities by a shortage of materials’ and fuel. As one manufacturer succinctly says, “ We are living off our fat.” The future of this trade, according to reports, has never looked better. Tool makers report a slackening in their lines, due in part to the financial situation and the transporta tion tie-up. Orders are fully up to what should have been considered a normal business based on a normal growth from pre-war times. There is still a large shortage of production to be made up, which would not seem likely to permit dull business for any con siderable length of time. Glass manufacturers continue to operate under the handicap of inadequate transportation. Some plants have been closed for lack of fuel— many of them having orders booked to insure capacity pro duction for months ahead. Brick makers report an “ unheard of” number of cancellations, which they attribute to the building public becoming discouraged by reason of their inability to secure material, the increased cost of building, and the uncertainty of being able to com plete building operations within a reasonable length of time. Orders booked are far in excess of shipping capacity, which for the past year has been but about ten per cent of requirements. Textile Industry Running on Reduced Basis; Orders for Fall Delivery Curtailed; and Many Cancellations Received; Garment Industry Unsettled The textile business is perhaps the first big indus try in the United States to feel the pressure of the deflation process and it would seem as though others must follow slowly but surely. The clothing trade and the cloak trade have can celled their orders very heavily during the past two months, so much so that they have practically wiped out all'the orders on the books of the large mills, with a result that many of them have closed their factories for a week at a time and most of them are now operating on a three-day week basis. The garment industry has been very much dis turbed by the rather hysterical epidemic of pricecutting and forced sales which has spread over the country, with special reference to the large cities. Students of the situation are inclined to believe that the beginning of this was due to pressure of the banks and creditors in certain conspicuous cases. In the face of continued increases in wages and no appreciable decline in the piece-goods market, it is difficult to forecast what the result will be. There has been evidence of rather sharp curtailment of fall orders, with cancellations of high-priced goods in particular. These cancellations have been passed on in turn by the garment manufacturers to the woolen mills, who have pretty generally accepted them, but instead of reducing prices, the mills have shut down or are running on a reduced schedule. From the general impression, it appears that textiles for fall will not be sharply reduced, though there may be some weakening in some special quarters, and stock goods will undoubtedly be offered at substantial reductions. All of this is evidence of the pressure of public opinion on the producer in reference to prices. I f employment continues general, and at high prices, the movement will no doubt be of gradual character* but if further disturbances such as the railroad strike, resulting in traffic confusion which is pre venting delivery of coal and other materials, leads to any marked increase in unemployment, the price decline may be seriously accelerated. The process of deflation is of course a hazardous one under all circumstances, and its direction can never be clearly anticipated, but that it is a necessary process is obvious. That the loss of business which accompa nies all such processes is undoubtedly serious is also evident. THE MONTHLY BUSINESS 5 REVIEW Wholesale Trade Upset by Price Cutting Epidemic; Lower Prices Anticipated Except in Food Stuffs; Retail Trade Continues in Satisfactory Volume The price-cutting epidemic has had a somewhat unsettling influence on both wholesale and retail trade, although price reductions have so far been confined largely to the retailers. Cancellations of orders have been made freely, and the slightest pre text has been seized upon as a basis for the return of goods ordered. Collections in the trade are reported as fair to good, for the most part. Wholesale dry goods houses report a hesitancy in buying except for immediate requirements. Little or no speculative tendency exists. Good quality mer chandise is scarce, and will be until production is increased. Better transportation has improved the situation in permitting a more free movement of goods, both incoming and outgoing. It seems to be the concensus of opinion in the trade that prices for all textiles have reached the top and that any changes will be downward, although no radical or sweeping changes are considered prob able. Wholesale hardware dealers report a large increase in the value of May sales over those of May of last year, but state that there has been little increase in the physical volume of trade— a large part of in crease having been absorbed in higher costs. Unfilled orders are much larger than a year ago, due to the same causes as similar situations in other lines. The tendency in the harware trade is to stock no goods except for immediate demands. This also applies to the retail dealer. The opinion throughout the trade seems to be that the limit of prices has been reached. There are some weak spots in the market today, and some dealers are predicting that “ there are more to follow .” There probably is little change in the physical vol ume of trade in the grocery line, as requirements do not show much variation from year to year. The tendency among retailers is to confine purchases to spot goods, except in the canned goods line. Prices, according to the majority opinion, will hold for 1920, with probable advances in canned goods on account of high labor, high sugar, and the shortage of tin cans. Drug houses are purchasing liberally, as the demand continues strong, though a disposition toward more cautious purchasing on the part of the retailer is said to be noted. The belief in the trade is that lower prices are inevitable. Retail dry goods dealers report an increase in both the money value and physical volume of trade over both last month and over May of one year ago. Col lections show a slight decrease, but are still satis factory. Retail grocers report a disposition on the part of the people to purchase more conservatively. The volume of business holds up well, and collections are reported good. Elsewhere in this Review will be found our usual report on department store sales and stocks. Below is printed, for the first time, a tabulated report on wholesale trade in the following lines, showing percentage of increase in sales for the month of May, 1920, over the same month of previous year, and percentage increase (or decrease) in unfilled orders for the same month. These percentages are made up from unweighted averages, and will be a regular feature of the Review hereafter. A system of weights will eventually be worked out, which will greatly increase the value of these figures. Increase (or decrease) Increase (or decrease) in Sales during May, in unfilled orders at 1920, over same month end o f May, 1920, over last year same month last year Percent Percent Dry G o o d s ........— 24.0 Groceries ........... 32.2 H ardw are.......... 31.2 Drugs ................. 30.2 20.0 20.0 20.0 11.2 Coal and Coke Movement Shows Improvement; Oil Production Continues at Good Rate The past few days have witnessed a considerable improvement in the fuel line, though conditions are far from satisfactory. The movement of empty cars from the west will, no doubt, be accelerated by the return to work of the striking switchmen, thus enabling the mines to increase their output. Some miners have not worked more than one or two days a week since April 10. Petroleum production continues at a good rate, as transportation conditions do not affect oil movements in the same degree they do shipments of other pro ducts. Consumption of oil is constantly increasing, notwithstanding a tendency toward higher prices. Coal mines have been operating at from 20 to 50 per cent of capacity owing to inability to secure cars. Coke movement shows a decided betterment, though it is yet far from normal. THE 6 MONTHLY BUSINESS REVIEW Agricultural Conditions Show Some Improvement; Indications Point to Falling Off in Cattle Feeding; Tobacco Crop Very Late The agricultural situation, so far as the condition of crops is concerned, shows some improvement over that of 30 days ago. Favorable weather has per mitted planting and cultivation. Some replanting has been necessary, most of which has been accom plished. Wheat is in fair condition, about 75 per cent being headed out, but the heads are generally short. The crop is expected to be about nine million bushels short of last year’s crop in this District. Late sown oats are not doing so well on account of dry weather. Early sown oats are in fair con dition, although the straw is short. Potatoes have made a fair stand, though the late crop is not yet all up. Some planting remains to be done. The hay crop generally is poor, the stand being thin and weedy. Pastures are short, and in need of rain. There is every promise of a bumper fruit crop. The earlier cherries are now ripening and will soon be on the market. The drop was quite heavy, especi ally apples, but a good set will be retained. The farm labor situation shows slight improve ment near the industrial centers, but is still quite inadequate. The late season has delayed tobacco setting, and it is feared the crop may be materially reduced if an unfavorable season for tobacco growth is had. Not over 50 to 60 per cent of the crop is now in the fields. Cattle feeders have sustained heavy losses during the past few months, and many have abandoned that line of industry altogether. That the feeling of discouragement is general is evidenced by the large number of veal calf receipts at nearly all markets since the first of the year. Hogs have been in rather scant supply owing to the shortage and high price of corn. It is not believ ed that the supply of hogs will be very materially increased before the new corn crop is available for feed. Building Operations Show Decided Slowing-up There is a noticeable decrease in building opera tions incident to the approach of the summer months. This is all the more noticeable, because the present is usually the time of greatest activity. Not only have building permits been greatly reduced for this time of year, but work in prospect has slowed down per ceptibly. A feature to be regretted is the small number of housing operations being started, and unless some means shall be found to stimulate this class of building the housing shortage will become even more acute. The reasons for the diminution of building activity may be found in the high cost of labor and materials, and the gradual finishing up of building of pressing necessity. Elsewhere in this Review will be found a tabulated statement of building operation figures for the month of May. Probable Settlement of Switchmen*s Strike Helps Transportation Situation; Funds for Purchase of Additional Equipment Necessary The probable settlement of the switchmen’s strike is the outstanding feature in the transportation field. Conditions should rapidly improve as the men return to work, although it will probably be months before the effects of the strike have passed away. Railroad officials are practically a unit in declaring that even with plenty of labor they will not be able to handle the traffic offered them unless they can secure funds with which to increase terminal facili ties and purchase new motive power, cars, and other equipment to keep pace with industry. A prominent railroad official has stated that indus trial development now exceeds by 40 per cent the necessary facilities to transport commodities. A solu tion of the railroad problem will do much toward lowering the cost of living, and help materially toward a better industrial position. , Foreign Trade Slack but Manufacturers9 Interest Stimulated in Possibilities Cleveland export shippers are making little head way in the actual fulfillment of orders. The produc tion difficulties, congested transportation, and dock strikes, all contribute to the present slack in foreign trade by this district. The prevailing exchange rates and the credit situa tion of course enter also into the question. The local banks are exercising all their ingenuity to satisfy the triangle of seller, purchaser, and banker. Manufacturers report plenty of orders and good prospective business. It is largely a matter of deliv ery which is curtailing the trade. The long talked of value of foreign trade as a stabilizer is becoming apparent here and there. Manufacturers of some lines in which the domestic market is quiet are developing a lively interest in overseas possibilities. As the result of a careful campaign begun some time ago one manufacturer whose domestic business is practically at a standstill has enough foreign orders to carry him over the next six months. THE MONTHLY BUSINESS REVIEW 7 Special Report on Salt Industry Following our custom of preparing (at the request of the Federal Reserve Board) special surveys of industries basic in or peculiar to the Fourth Federal Reserve District, we present in this issue a survey of the salt industry. The discovery and manufacture of native salt in Ohio has played an important part in the develop ment of the state. From the time of the discovery of salt springs in southeastern Ohio until the later discovery of immense deposits of rock salt in the northern part of the state, the production of salt has been continuous—though in many cases unprofitable, as compared with districts more favorably situated. The early settlers throughout this District found salt one of the most expensive of necessities. At that time not a pound was produced in this territory, and, consequently, residents were compelled to rely on production east of the Appalachian mountains. This salt had to be transported on horseback or in wagons across the mountains, and in those days brought a price ranging from four to eight dollars a bushel. When the valleys of the southeastern part of the state began to be explored salt springs were found, and, naturally, the discoverers were not slow in tak ing advantage of these brines. These springs were well known to the Buffalo and other wild animals long before the white man dis covered them. That they were known to the Indians would seem to be indicated by the large number of Indian camps located in that section. Even when they were forced westward by the white man, pil grimages were made by them each summer until about 1815. The date of the white man’s discovery of the licks is not known, but it was probably early in the eight eenth century by Canadian fur traders. The Virginia colonists knew of them at least as early as 1755. In 1795 a company of white salt boilers settled at the licks, and the camp is said to have grown quite large before the end of the century. Knowledge of the licks reached the Federal gov ernment, and prompt action was taken to prevent their falling into the hands of parties who might make a monopoly of them. In the Act of 1796, pro viding for the sale of lands northwest of the Ohio river, the area containing these licks was expressly reserved. In the enabling Act of 1802, Congress provided that an area of 36 square miles containing the Scioto salt springs should be granted to the State for the use of its inhabitants. The State authorities granted leases to various individuals and companies, the provisions of which required payment to the State of 3 cents per gallon of salt produced and limited producers to the use of 120 kettles. The rent was raised in 1804 to 4 cents per gallon, from which it was subsequently reduced to two cents in 1805, once cent in 1808, and one-half cent in 1810. In 1818 the legislature announced that the salt licks were no longer a success, and asked permission of Congress to sell the lands. The request was not granted until 1824, and the lands were practically all sold in 1826. Early wells at these licks were quite shallow, being from 20 to 30 feet in depth. The brine was corre spondingly weak, from 600 to 800 gallons being necessary to produce a bushel of salt. The product was quite dark colored and was otherwise inferior, but it was so much better than none that it com manded a high price. In 1812-1815 various Acts were passed by the state legislature to encourage deeper drilling—the Act of 1815 requiring a depth of 350 feet. A stronger brine was found, but the quantity was not great. Drilling was begun in Muskingum County about 1817, in the vicinity of Zanesville. These wells, how ever, seem never to have been profitable. More favor able results were had further down the valley. Wells were drilled to a depth of 850 feet, where a brine was found sufficiently strong to produce one pound of salt per gallon of brine. By 1833 production in the Muskingum Valley had reached from 300,000 to 400,000 bushels per year. In the early days of salt making, it was manu factured by evaporating the brine in large iron kettles, each holding from 60 to 80 gallons. These were set in a row over a flue which terminated at one end in a chimney. The brine was pumped from the wells into a tank made of wood, connected with the kettles by tubes of the same material. After having been boiled for a time the brine was dipped into a cistern where it was allowed to cool and settle. In this way such material as had been mixed with the water in a mechanical way was deposited. When the settling had been completed, the brine was again conveyed to certain ones of the rows of kettles, known as ‘ ‘ grainers. ’ ’ Into this was thrown a small quantity of clay which served as a nucleus for any remaining impurities, the whole being skimmed from the surface of the kettles. B eef’s blood was also extensively used for that purpose. After the salt had been precipitated by boiling in the kettles, it was thrown into “ drainers” and the mother liquor (principally calcium chloride) drained off. The salt was then removed to the salt-house for drying, where it was barreled for market. During the eighties, the price of salt fell lower and lower, and the operators found their profits shrink ing until few could operate at a profit. It is said that, were it not for the by-products, not a pound of salt would be produced in southeastern Ohio today. It is claimed, and seems to be true, that the salt alone is produced at an actual loss, but the recovery of bromine and calcium chloride have yielded suffi cient returns to keep a few of the furnaces there active. Geology is full of surprises. The drill brought to light in 1884 the existence of oil and gas underneath the level fields of northwestern Ohio—a region where no geologist would have dared to prophesy the least encouragement for such resources. Similarly, the drill in northeastern Ohio has found large deposits of rock salt where an orderly sequence of shales, 8 THE MONTHLY BUSINESS sandstones and limestones was expected. True, there is good geological precedent for the existence of these salt beds, and now that we know they are there it seems quite a matter of course that it should be so; but the fact remains that geology did not lead anyone to predict their discovery, which was due to search for oil and gas. The discovery of these rock salt beds came at a time when the old industry, which had flourished since the days of the pioneers, was in the last stages of decadence. The discovery of rock salt in Michi gan, and the production of saturated brines instead of the weak brines of Ohio, soon gave the manufac turers of that state a decided advantage. The cheap fuel of Michigan was also in her favor—slabs and saw dust from her mills furnishing a splendid fuel, of which they were glad to get rid. Michigan salt began crowding Ohio salt to the wall in the 70’s, and in the late 80’s but a few plants continued to struggle along. The presence of the rock salt formations in north eastern Ohio was discovered by Herman Frasch, about 1890, while drilling for oil or gas. The first well was located at Newburgh, in Cuyahoga County, followed shortly by another well on the lake shore at East Madison Avenue. These wells were drilled to a depth of about 2,000 feet. Further to the south, in the neighborhood of Akron and Wadsworth, this same salt formation is found at a depth of about 2,700 feet. Several wells have been drilled in this section, which now furnishes the bulk of Ohio’s salt supply. The salt veins have at these these points a total thickness of about 150 feet, which would seem to assure an ample supply for an indefinite period. Ohio is third in the production of salt in the United States, furnishing about 2,000,000 barrels, or about one-seventh of our entire national output per year. Michigan and New York rank first and second, respectively. In the production of salt from deep wells, the brine is obtained by forcing water, under pressure, down the wells, and the salt recovered by evaporating these ‘ ‘ artificial” brines. The changes in methods employ ed in evaporation have been solely for the purpose of effecting economy of fuel. In all of the modern BEVIEW salt works the vacuum pan method is used, with the result that the use of one ton of fuel will produce two or more tons of salt. By whatever method the work is accomplished, the result is the same; the moisture is evaporated, the salt precipitated, dried, refined (for some grades) and packed for shipment. Packing is done in barrels, sacks and boxes, as trade conditions require. Some salt for meat packing purposes is shipped in bulk. The tendency is for salt producers to manufacture their own shipping containers. Salt is made in the following grades: special grades for farm use; table salt; butter salt, for creamery use; cheese salt; extra fine grades for meat packing, and a special high grade for canners. Salt is used largely for culinary purposes, and in the meat-packing, fish-curing, dairying and other industries to preserve the products from deteriora tion. It is used extensively in refrigeration. The chlorination of gold consumes some salt. It is also used to form a glaze on pottery, in enameling and pipe works, for salting cattle and other in curing hides, making pickles, and in clearing oleo margarine. In the form of brine it is largely used in the chemical industries in the preparation of soda ash, caustic soda, and various other chemicals con taining a sodium base. The revival of this industry on its present appar ently permanent basis means much to the Fourth Federal Reserve District. It means not only that we shall preserve our position or improve it, in the industrial competition, but also that allied industries may thrive— for instance the manufacturer of sodaash, the manufacturer of soap and glass, and many other industries using the element sodium in some of its saline forms. A list of commercial salt producers in the Fourth Federal Reserve District is given below: Akron, O., Colonial Salt Co. Cleveland, O., Union Salt Co. •Pomeroy, O., Pomeroy Chemical Co. Wadsworth, O., Wadsworth Salt Co. Pittsburg, Pa., Beck Salt Co. Rittman, O., Ohio Salt Co. ‘ Also producers of bromine and calcium chloride. Department Store Sales Percentage increase in net sales during May over net sales during same period last year.................... Percentage increase in net sales from Jan. 1 to May 31 over net sales during same period last year. . .. Percentage increase of stocks at close of May, 1920, over stocks at close of same month last year.......... Percentage increase of stocks at close of May, 1920, over stocks at close of April, 1920......................... Percentage of average stocks at close of each month from January 1 to average monthly net sales during same p e rio d ..................................................... Percentage of outstanding orders at close of May to total purchases during calendar year, 1919............ Cleve. Pgh. Other Cities District 38.8 29.3 30.2 31.4 45.3 27.7 34.9 32.7 75.4 51.8 56.9 57.8 1.1 —2.1 — 3.0 — 1.4 440.8 280.0 384.6 346.7 15.4 13.8 10.7 13.0 THE MONTHLY BUSINESS 9 REVIEW Building Operations for Month of May Permits Issued New Construction Alterations 1920 1919 1920 1919 Akron Cincinnati Cleveland Columbus Dayton Erie Lexington Pittsburgh Springfield Toledo Wheeling Youngstown 526 183 229 194 168 84 25 365 35 216 48 132 Total 655 161 189 735 376 1,025 243 134 272 110 64 86 8 82 362 149 44 23 277 181 21 27 156 37 Valuation Inc. or Dec. o f Percent of New Construction Alterations Total Valuation Inc. or Dec. 1919 1920 over 1919 1920 1919 1920 143 2,099,021 2,542,705 934,735 1,381,355 494 910 3,455,000 2,956,700 525,850 414,010 122 374,750 751,820 82 206,458 184,039 144 200,000 69 126,500 212 1,397,167 1,052,998 27,825 104,775 30 491,750 629,273 176 22,820 70,823 62 242,900 317,915 41 117,110 436,775 845,450 197,575 171,495 495,115 29,927 1,220,094 19,010 216,125 9,970 29,835 383,385 158,500 421,675 95,365 34,550 86,416 19,750 373,216 14,750 100,602 20,875 50',783 9,978,276 10,532,913 3,788,481 1,759,867 2,205 2,689 2,728 2,485 709,959— 24.2— 168,345— 10.9— 27.2 922,075 42. 214,050 240,125— 30.5— 431,118 159.6 56.8 83,677 83.5 1,191,047 72,690-- 60.5— 22,000-- 3.0— 58,908-- 63.7— 95,963-- 25.8— 1,473,977 11.9 Total Debits by Banks to Individual Accounts Akron Cincinnati Cleveland Columbus Dayton Erie Greensburg Lexington Oil City Pittsburgh Springfield Toledo Wheeling Youngstown Total June 16, 1920 Week ending June 18, 1919 Increase or Decrease 33,577,000 71,136,000 207,337,000 35,546,000 12,346,000 8,562,000 6,229,000 4,847,000 3,359,000 226,564,000 3,700,000 35,487,000 9,740,000 14,987,000 24,179,000 64,874,000 181,289,000 30,108,000 12,116,000 6,796,000 2,956,000 4,592,000 3,157,000 225,511,000 4,237,000 29,815,000 10,304,000 12,869,000 9,398,000 6,262,000 26,048,000 5,438,000 230,000 1,766,000 3,273,000 255,000 202,000 1,053,000 537,000— 5,672,000 564,000— 2,118,000 673,417,000 612,803,000 60,614,000 Percent of Increase or Dec. 38.8 9.6 14.3 18. 1.8 25.9 110.7 5.5 6.3 .4 12.6— 19. 5.4— 16.4 9.8 Clearings 1920 Akron Cincinnati Cleveland Columbus Dayton Greensburg Erie Lexington Pittsburgh Springfield Toledo Wheeling Youngstown 54,323,000 290,717,302 580,788,156 60,078,400 20,230,595 5,331.459 11,641,550 6,903,601 680,577,757 7,653,562 64,146,236 23,080,773 17,639,863 - - Total May- 16 to June 15 1919 - 1,823,112,254 40,823,000 247,042,592 401,009,769 53,969,400 18,440,885 3,873,899 8,887,271 5,709,984 ' 565,758,443 5,603,844 51,379,004 18,645,003 17,382,680 1,438,525,774 Increase or Decrease Percent o f Inc. or Dec. 13,500,000 43,674.710 179,778,387 6,109,000 1,789,710 1,457,560 2,754,279 1,193,617 114,819,314 2,049,718 12,767,232 4,435,770 257,183 33. 17.6 44.8 11.3 9.7 37.6 30.9 20.8 20.2 36.5 24.8 23.7 1.4 384,586,480 26.7 10 THE MONTHLY BUSINESS REVIEW STATEMENT OF CONDITION FEDERAL RESERVE BANK OF CLEVELAND JUNE 18, 1920 RESOURCES and gold certificates.................................................... settlement fund with F. R. Board................................. with foreign agencies.................................................... with Federal Reserve Agent......................................... redemption fund............................................................ $10,222,000 65,808,000 9,146,000 144,856,000 1,847,000 Total gold reserve............................................................ $231,879,000 Legal tender notes, silver, etc................................................ 1,699,000 Gold Gold Gold Gold Gold TOTAL CASH RESERVE............................................ " $233,578,000 Bills discounted— Secured by Government war obligations $100,038,000 Bills discounted— All other.................................................... 50,554,000 Bills bought in open market................................................ 57,229,000 Total bills on hand........................................................ $207,821,000 U. S. Government bonds........................................................ U. S. Government Victory notes.......................................... U. S. Government certificates of indebtedness................... All other earning assets........................................................ 833,000 10,000 23,392,000 TOTAL EARNING ASSETS........................................ Bank prem ises............................... ....................................... Uncollected items and other deductions from gross deposits 5% Redemption fund against F. R. bank n otes................... All other resources................................................................ TOTAL RESOURCES.................................................... $232,056,000 1,155,000 100 592 000 871,000 447,000 $568,699,000 LIABILITIES Capital paid i n ........................................................................................ $10,127,000 Surplus F u n d ............................................................................................ 9.089,000 Government deposits.............................................................. 1,643,000 Due to member banks—Reserve accounts........................... 137,880,000 Deferred availability items.................................................... 76,703,000 Other deposits including foreign government credits . . . . 5,067,000 TOTAL GROSS D E P O SITS......................................... 221,293,000 Federal Reserve notes in actual circulation......................... F. R. bank notes in circulation—net liability....................... All other liabilities.................................................................. 307,026 000 ^26 000 6 038 000 TOTAL LIABILITIES $568,699,000 THE MONTHLY BUSINESS II REVIEW PICKUPS ON BUSINESS TOPICS AT a recent all-day conference between wool growers and others interested in the wool trade and the Federal Re serve Board, a plan was suggested for financing the wool growers during the present emergency, and until normal marketing conditions are restored. Acceptances based on bills of lading or warehouse receipts, with a maturity o f not more than six months, are to be drawn by the grower against his bank. These in turn may be rediscounted at the Federal Reserve Banks when the maturity is not more than three months from the date of rediscount. It was also suggested that the Board prepare a statement to forestall the possibility of member banks overlooking the fact that wool paper is eligible for rediscount. inHM iitiiiiiiiiiiiiiiniiiiiiHUM ii Reports from England indicate that the wholesale supplies o f paper are now getting so low that salesmen are putting specific bounds on customers ’ purchases. In some cases, not more than ten reams at a time to any account are allowed. The wrapping paper mills are also rationing their customers. A trade paper prophesies an all around advance in paper in a very short time. Fine printing paper o f Scottish make is being sold from twenty-four to twenty-eight cents a pound, English mill finish of lower grade at twenty to twenty-two cents a pound. f \ IIIIIIMil IIlllltMil IItllil llllll Mil The Federation o f British Industries has devised a unique advertising scheme. A new steamship to be called the ‘ *Federation ’ * is to be constructed as an exhibit o f marine engineering. The cargo o f the ship will consist o f articles of British manufacture. Representatives o f the firms inter ested will make the voyage for the purpose of showing their goods and interviewing foreign buyers. The first voyage will probably be to South America, and subsequent voyages to Australia and the Far East. The city of Prague has established an institution for com mercial fairs, corresponding to the fairs held in Leipzig, Ger many, and Lyons, France. Every Spring and Fall sample exhibits will be held, and manufacturers and business men from all parts of the world will participate. The next fair will be held September 5 to 28 of this year, and the Czecho slovak Government is particularly desirous of interesting American business interests in the event. HIIIHtHUHIHIHIIttllHIMHMHIII Bulgaria is badly in need of agricultural implements. Chiefly an agricultural country, and since 1912, almost steadi ly at war, farm tools and machinery are to a great extent useless. The introduction of agricultural machinery had just started at the outbreak of the war and since then there has been no importation of any moment. The complete paralysis of building construction within the next few months, owing to the transportation situation, to gether with the scarcity of money for mortgages and the unwillingness exhibited by labor to carry out its contract o f a day’s work for a day’s wages, is predicted by a building association of New York. IMIIIHIMIIMIHHIMIIIimMlftmi The year 1919 in the automobile industry was the best in history. From an output o f .little more than 1,000,000 pas senger cars and trucks in 1918, production for 1919 reached nearly 2,000,000 vehicles, exceeding the output of 1917 which was 1,868,947, the best year until 1919. MMIMIMMIIMIMIIMMMMIItlMMMI Paris newspapers are seriously threatened with extinction. There has never been in the history of the newspapers a crisis comparable with the present. The price of print paper is at least ten times more than in 1914, and is still going up. tiimiitiiHimiiimiiiiiiuiimiii The American Acceptance Council has published a pamphlet on “ Trade Acceptances in the Rubber Industry.” Copies may be obtained through the executive offices of the Council, 111 Broadway, New York City. HHIHIIIMIIIIIIIHlllllHHIItltlttlt United States has bought between 7,000 and 8,000 tons of sugar from Czecho-Slovakian government, and is negotiating for an additional amount. HE consumers o f iron and steel in Sweden are eager for T American products, but with the rise in prices, the high rate o f exchange, and the uncertainty o f delivery, serious obstacles are being encountered in the importation of same. It was stated that deals closed in August for delivery in Novem ber had not been executed at the end o f February this year. In the meantime the rate o f exchange has advanced from about 4 to 5.5 crowns, causing heavy losses to the Swedish buyers. American firms seem to insist on money being de posited long before the goods are shipped, whereas the Swedish importer in trading with England and Germany has been accustomed to thirty days with 1 and 2 per cent discount for cash. iiiiiiiiiim iH iiiM iim iim ittm m A report from Tokyo states that the depression in trade continues generally throughout Japan, and that the balance of Japan’s foreign trade was very unfavorable during the first ten days o f June. It states also that the Seventy-Fourth Bank o f Japan, which was to have opened June 15, following its forced suspension on May 24, failed to do so. As this is primarily a silk bank, the postponement o f its reopening is indicative o f the difficulty being experienced by the bankers on the one hand and the silk merchants and manufacturers on the other in arriving at a compromise as to the security value of the silk to be used as the basis o f the advancement of credit. uiimiiitttniimimiittiiiiMiim The greatest wave of price cutting ever witnessed in France is now under way. At Havre and Marseilles whole sale and retail stores have announced 20 to 35 per cent reductions on their goods. They feel the terrible end to their long regime o f high profits is beginning, for in response to daily newspaper clamor some members of the trade are lowering prices and starting a competitive battle rather than staying in unofficial profit-making combines. iiiiiuiiiitM iiiiiiiiitim iiiiiiiiiiti During April, 718 commercial motor vehicles were imported from Germany into England, while only 200 were imported from the United States. The low value of the mark is respon sible for this state of affairs, which, however, is not likely to continue, since German manufacturers have now decided to charge for all exports in the currency o f the country to which they are sent. tiiniHiimtiM imuiM NiiiiiiiHiH On June 1, 1920, private American shipyards were building for private shipowners 345 steel vessels o f 1,360,643 gross tons, compared with 348 steel vessels of 1,391,341 gross tons of May 1, 1920, the first decline since July, 1919. These figures do not include Government ships building or con tracted for by the United States Shipping Board. ........ We are told that Japanese bankers are seeking a large loan from the United States. Such a loan would be used entirely for sound constructive enterprises, and would not be used to bolster credit or relieve the present financial situation, excepting insofar as it might accomplish this indirectly. IIIIIIMIIIIMIHMIIIIIIHHItHIIIMn A complete list of the commercial representatives of for eign governments in New York city, with their addresses and telephone numbers, has been compiled by an official of the National City Bank o f New York, and published in the May issue of its periodical, "T h e Americas.” 'iiiiin iiiiiin iiitiiiiin itiiitiiiim i An industrial bank to develop Spanish industries has been formed by the Government, which will furnish 80 per cent of the capital, the remainder to be provided by more than 100 Spanish banking institutions. IHIIIMIIHtmiMIMnillllllMINIIIl The Sixty-sixth Congress appropriated $4,859,890,327 at its session ending June 5. Of this amount $4,373,395,279 was for expenses in the fiscal year beginning July 1, and $486,495,048 to meet deficiencies in the year now drawing to a close. .•miiiiiiiiMiiiiiimiiiiiimiimt According to reports, the accumulations o f freight cars have been reduced to 116,962 cars on June 11, as compared with 125,606 the preceding week, 159,209 on May 28, and 290,000 on April 16. The car shortage on June 8 was 114,000.
@FedFRASER