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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 9 Cleveland, Ohio, September 1, 1927 No. 9 General business activity receded further in July, the Annalist index declining from 105 in June to 101 (pre liminary) in July. Both employment and payrolls also exhibited a downtrend in the past month, the Federal Beserve Board’s index of employment falling from 92,3 in Jane to 90.7 in July, and that of payrolls falling from 105.7 to 101.1. Wholesale prices, on the other hand, strengthened slightly for the first time in months, due to the rise in agricultural prices. The record of second quarter earnings also indicates a moderate recession during the last three months. Earn ings of 153 industrial corporatons, excluding General Motors and United States Steel, showed a loss of over 12 per cent from last year. Including these two companies, earnings were just about equal to last year; but it is apparent that profits in general were not up to the 1926 level. An increase in profits was re ported by 73 corporations, and a decrease by 80. In this District, a slight revival of demand for iron and steel took place in August, but operations were still at a low point. Coal prices rose noticeably in response to increased demand. The tire industry is doing well, and shoe manufacturing has experienced an improvement. Building contracts awarded in July were 25 per cent under a year ago. Crops in general are poor; corn is late, wheat is only fair, tobacco is uneven, and fruit is very poor. Hay, oats, and potatoes, however, are doing well. of the Board of Directors on August 5. Bills dis counted on August 17 totaled $28,000,000, the same as a month previously but $12,000,000 less than a year ago. Acceptance holdings fell from 19 to 11 millions during the month, while holdings of Government securities advanced from 46 to 50 millions. Member bank borrow ings during the last few weeks have been at their lowest level since the summer of 1924, owing at least in part to the moderate business recession which was under way during May, June, and July. Loans of reporting member banks in this District se cured by stock and bonds fell slightly between July 20 and August 17, but on the latter date were still 34 millions ahead of the figure of $558,000,000 on August 18, 1926. "A ll other” loans, largely commercial, increased from $785,000,000 on July 20 to $804,000,000 on August 17, the latter figure being 10 millions higher than a year ago. Investments during the same period rose from 672 to 681 millions, as compared with 642 millions a year ago; demand deposits were almost the same on all three dates, while time deposits on August 17 were $906,000,000, a gain of 84 millions over last year and 18 millions over last month. Debits to individual accounts at 13 large cities in the Fourth District aggregated $2,775,779,000 in July, as compared with $2,671,960,000 a year ago and with $2,984,591,000 in June. Financial Commercial failures in this District numbered 140 in July of 1927 and 137 in 1926. Liabilities in July took a big jump, amounting to $7,269,891 as compared with $3,202,436 last year and $3,572,903 in June. In the United States, there were 1756 failures in July, 1833 in June, and 1605 in July of last year. The past month from a financial view point has been characterized by a general lowering of the Federal Reserve banks9 discount rate from 4 to 3% per cent, and a further sagging of money rates in the New York market. The commercial paper rate touched 4 per cent during the second week in August, the lowest since early in March, and acceptances, which held at the 3% per cent mark for several months, finally declined to 3% per cent late in July and to 3% per cent in August. In the Fourth District, interest rates have shown practically no change, remaining at 4% -6 per cent for prime com mercial paper and 5-6 on collateral loans. The banks report that funds are plentiful for the coming crop-moving season* In accordance with the lowering of rates by other Federal Reserve banks, the discount rate of the Cleve land bank was reduced from 4 to 3% per cent by action The following table gives the monthly and yearly comparison of the main items in the balance sheets of the Federal Reserve and reporting member banks: Federal Reserve Bank of Cleveland Federal Reserve System (In Millions) (In Millions) Aug. 17. Aug. 18, July 20, Aug. 17, Aug. 18. July 20. 1927 1926 1927 1927 1926 1927 325 Gold Reserves .............. 297 809 3,003 2,884 3,012 Discount ......................... 28 40 28 390 536 403 11 25 19 171 254 185 U. S. Securities ............ 50 88 46 442 860 886 Total bills and securities 89 108 93 1,003 1,152 976 Federal Reserve notes in circulation ...................... 212 195 211 1.665 1,686 1,676 Total deposits .................... 194 196 187 2,347 2,272 2,346 2 THE MONTHLY BUSINESS REVIEW REPORTING MEMBER BANKS Fourth District United States (In Millions) (In Millions) Aug. 17, Aug. 18, July 20, Aug. 17, Aug. 18, July 20, 1927 1926 1927 1927 1926 1927 Loans secured by stocks and bonds ...................... 592 558 604 5,847 5,459 5,787 All Other ........................ 804 794 785 8,656 8,462 8,597 Total loans ........................ 1,414 1,373 1,407 14,621 14,065 14,492 Investments ...................... 681 642 672 5,913 5,620 5,986 Demand deposits ............ 1,068 1,064 1,064 13,281 12,845 13,240 Time deposits .................. 906 822 88S 6,251 5,738 6,188 Iron and Steel Demand fo r the finished steel lines improved perceptibly in the early part of August, but the remainder o f the month did little more than hold this gain. Expansion in automotive schedules did not materialize. Railroads, as usual in August, bought sparingly. Tractor manufac turers stepped up their operations, but the output o f tillage and harvesting equipment fell back. Tubular goods experienced a slight revival but still continued under the cloud o f over-production in August. Bookings o f structural steel were at an unusually high rate for August. Pig iron production enjoyed a good month considering mid-quarter factors, but at the expense o f price. While finished steel prices were holding in all districts, pig iron was losing an average of 50 cents a ton. The Pittsburgh market was not active on the surface, but quiet closings are numerous. A t Cleveland sales aver aged nearly 50,000 tons weekly and northern Ohio pro ducers were a shade more firm in their price attitude at the close o f the month. A Mahoning valley furnace was quoting $17 on basic, with a general market at $17.25 to $17.50, while No. 2 foundry was sold at the equivalent of $17.50 (V alley). The rise in beehive coke at Pittsburgh, which put the market to $3 to $3.35, was checked when production and demand struck a balance. Spot offerings o f beehive furnace fuel was a stiffening factor. Heavy finished lines of steel held throughout the month at $1.80 to $1.85 (Pittsburgh), fo r general con sumers. Sheet prices, while subject to some pressure at Detroit, showed no major break. Cold finished steel was weak at Detroit, but firm elsewhere. Alloy steel continued highly competitive, especially fo r the auto motive trade. Strips, like sheets, continued firm. Scrap was strong sentimentally, and in dealer trading some grades advanced, but consumer buying was light and the market lacked real support. The production o f pig iron in July was 2,944,251 gross tons compared with 3,489,726 tons in June and 3,224,663 tons last July. For seven months, production has totaled 22,373,478 tons against 23,075,576 tons in the same period of 1926 and 21,647,145 tons in 1925. A t the end o f July, 190 blast furnaces or 52.5 per cent o f the country’s serviceable furnaces were in blast. This was a reduction of eight from the end o f June. Steel ingot production also declined in July, being 3,178,342 tons as compared with 3,468,055 tons in June and 3,634,993 tons last July. Seven-month figures for 1927 are 26,796,783 tons and fo r 1926, 27,788,802 tons. The Iron Trade Review composite o f fourteen leading iron and steel products continued to decline in August, due largely to weakness in pig iron, and this barometer averaged $36.23 or a loss o f approximately 20 cents from July. Coal The coal markets have finally shown signs of activity, after an exceedingly dull spring and early summer. Prices continued to slump up to mid-July, but since then have undergone a sharp rise. On July 15, the Coal A ge aver age price of bituminous coal stood at $1.80 a ton, a decline o f 27 cents during the four months’ existence o f the strike, but by August 5 it had advanced to $2.12, slightly higher than before the strike. Railroads have been buying more heavily. Production has varied but little since April, fluctuating about the 1,400,000 daily average mark, but showed a slight advancing tendency during July. The output is now running behind both 1926 and 1925, but owing to heavy production early in the year, the total up to August 6 was practically the same as in 1926. Stocks in the hands of industrial consumers have declined slightly. This indicates that the present rate o f production is not quite sufficient to take care o f the demand, although no figures are available on householders1 stocks. Non-union coal mines in the Fourth District have naturally benefited from the recent price rise, some eastern coal going westward to the market form erly supplied by Illinois and Indiana mines. W holesalers report no great change in the situation since last month, although inquiries are more numerous, and the general feeling among coal men is better. Conditions in the Ohio fields are very unsatisfactory. The miners and operators have been unable to come to any agreement, and the state’s level of production has dropped to one-third o f that of last year and one-sixth o f 1923. In Pennsylvania, on the other hand, a considerable number o f mines have re-opened on a non-union basis, and the output is running at about 80 per cent of last year and 56 per cent o f 1923. Kentucky’s production continues high, being well ahead of previous years, and W est Virginia still ranks first in soft coal producing states, being slightly ahead o f Pennsylvania. Rubber and Tires The tire industry in this District is in good shape at present. First half-year profits were considerably in excess o f last year in a number of cases, net earnings during this period fo r six large companies amounting to $17,600,000, as against $12,400,000 in 1926, a gain o f more than 40 per cent. Last year, of course, was a poor one for rubber manufacturers, and although 1927 to date has shown a marked improvement, it has not equaled the unusually prosperous first half year o f 1925, when net earnings for the same six corporations amounted to $24,200,000. July and August business has compared favorably with the first half-year. Stocks in manufacturers’ hands are still very large, but this is made necessary by the great number o f sizes o f tires now in use and by the gradual change from cord to balloon tires. Sales continue in good volume in mechanical rubber products as well as in tires although a small seasonal let-up is reported. Demand fo r footwear is increasing. One reason for the better showing made by rubber concerns in 1927 has been the stability in the price of crude rubber. This has fluctuated around the 40-cent level since the first o f the year, and early in August stood at THE MONTHLY BUSINESS REVIEW 35% cents a pound, the same as a month earlier but 3 cents under last year. Aotofliobiles Automobile production in every month of 1927 to date has been less than in the corresponding month of 1926. The July total, for the United States only, was 263,406 cars md trucks, as compared with 354,394 last year, a de crease of about 26 per cent. Truck production slumped noticeably in July, but the first seven months* total is still slightly ahead of last year. Passenger car output lor the seven months, however, is considerably below that of 1926. Demand at present appears to be rather dull, due possibly to the desire of many people to await the appearance of the new Ford car. For example, new registrations in July in Wayne County (including Detroit) show a tremendous falling-otf in Ford cars registered, while other makes were holding their own as compared with a year ago. In Cuyahoga County (including Cleve land) both new and used cars sold in July numbered less than in July, 1926, the percentage decreases being 11.7 and 7-6 respectively. The number of used cars sold was more than three times as great as that of new cars. Half-year earnings statements of 15 automobile and track manufacturers (excluding General Motors) illustrate the irregularity which has characterized conditions within the industry. Only three concerns showed a gain over the first half of 1926, the group as a whole showing a loss of 22.8 per cent. General Motors, on the other hand, gained 27.1 per cent. 3 Shoes The price of leather has moved up rather sharply during the last two months. On June 17, sole leather was selling at 49 cents a pound, but by August 13 it had advanced to 55 cents. The latter quotation is 9 cents higher than a year ago. In spite of this upward move ment, Cincinnati manufacturers report that orders are still coming in plentifully. July was a good month for most of the factories in the District, and shoe manufac turing here, as in the country as a whole, appears to have taken a slight turn for the better after a long period of very mediocre business, amounting to actual depres sion in some cases. One evidence of this is found in the half-year earnings of five shoe and leather concerns, which were 14.4 per cent greater than in the first half of 1926. This contrasts favorably with the loss of 6.7 per cent shown by 221 firms of all types. Sales of reporting wholesale shoe houses in the Fourth District in July fell 13.5 per cent behind last year’s figure but were ahead of 1925. Retail shoe sales also failed to equal the 1926 total by 6.6 per cent. Fourth District shoe production in June showed a very large gain of 31.2 per cent over the same month a year ago. Preliminary figures for July indicate a fallingoff of about 20 per cent from June, and also a decline from a year ago. In the United States, 27,302,372 shoes were produced in June and 25,625,840 in May. The pre liminary figure for July indicates a slight increase over June. Clothing Earnings for the first six months of General Reports from manufacturers in various 1927 of ten representative clothing and lines in the Fourth District are rather Manufacturing more optimistic than a month ago. textile concerns in the United States showed a gain of 59 per cent over the first half of Several instances of a real improvement are recorded, 1926. This was the largest gain reported by any major in spite of the fact that the usual dull season is not over. industrial line, and speaks well for the condition of the In general, business is a little better than a month ago, clothing industry. and compares fairly well with last year. The sales season for the Spring of 1928 has formally Conditions are quiet in the paint and varnish trade. opened and clothing concerns in this District are showing Business is average or better, and is about equal to 1926. Spring models at prices almost identical with a year ago Orders are coming in well for the season. Makers of Retailers at large, particularly the city stores, are white lead report a very active demand, taxing operating following a very hesitant buying policy and have not capacity, and the price of raw materials, particularly entered to any extent into forward buying as in former pig lead, has strengthened. A slight improvement has years. The prevailing cooler weather, however, has taken place in the glass industry, which has been forced stimulated an earlier demand for Fall wearables, so that to meet keen foreign competition in recent months. The repeat orders are beginning to come to the manufacturer usual seasonal lull prevails in the paper trade, but one in larger quantities than is usual at this time of year. or two concerns are experiencing an unusually active So far this year manufacturers in this District report sales which compare quite favorably with those of last year. One cause of this is found in the strike of the New York clothing industry of a year ago, which re sulted in many orders being diverted to other markets, including those of the District. Wholesale dry goods sales were somewhat less during July than either in June or a year ago. Sales by the manufacturer of dry goods to the wholesaler for the Spring of 1928 have increased, which is in keeping with the recent rise in the price of cotton. The increase in price of the raw' material has not been reflected in the price of the manufactured article as yet. demand. Conditions in the electrical supply trade are practically unchanged from last month. An improved tone is noted in the demand for boxboard, and that in dustry has been on the upgrade during the past month. Agricultural implement makers report business as satis factory, one firm having a gain in business of 20 per cent over a year ago. Shipments in the watch and jewelry trade are holding up to last year. A decided improvement in business has been experienced by manu facturers of woodworking machinery. In the stove trade, makers of ranges for public institutions report an active demand, but business in household ranges is stated to be rather quiet. 4 Agriculture, Livestock THE MONTHLY BUSINESS REVIEW The growing season has made up some time during the past month and the principal crops in this District are somewhat nearer normal development. Improvement in the corn crop was general during the last month, but much of the crop is still from two to five weeks late. Early planted com has been in tassel for some time, but later planted varieties have made slow growth, and the net result is a very spotted corn outlook. The latest estimate of probable production fo r the District, August 1st, is 138,073,000 bushels against a yield last year o f 197,337,000 bushels. The conditon o f the crop is reported as 68 per cent in contrast with the ten year average of 84 per cent fo r the District. The poor stands so noticeable throughout the District point to a much larger abandonment o f fields this year than fo r several years past. The condition of corn fo r the entire United States on August 1 was 71.2 per cent o f normal as compared with 80.3, the five-year average, and 72.5 on August 1, 1926. The condition of 71.2 per cent indicates a crop of 2,385,226,000 bushels, which would be the smallest crop in 26 years with the exception o f 1924. The estimated wheat yield fo r the District is 138,073,000 bushels against a yield last year of 197,337,000 bushels, a probable decrease o f 30 per cent. The quality of the Ohio wheat is generally good with little damage to grain in shocks from rain reported. The yield is estimated at 18 bushels per acre, slightly above the average but con siderably lower than the bumper crop o f last year which was 22.5 bushels per acre. Pennsylvania reports a wheat crop below expectations, both in quality and yield. Smut, fly, rust, and hail appear to have done considerable damage to the crop in that part of the District. The harvest was late, and in some cases rushed, so that a number o f farmers cut the crop too green and as a result early deliveries to the mills contain excessive moisture. The average yield for the country is reported to be 14.5 bushels per acre, one bushel less than the five-year average and 2.5 bushels less than last year. The preliminary estimate o f total production is 551 million bushels as compared with 579 million pre dicted at this time a year ago and 627 million actually harvested. The condition of the oat crop has improved considerably in the past month and the yield for the District is pre dicted to be only slightly less than last year. The District shares in the increase in potato prospects over last year. The United States crop is estimated at 411,000,000 bushels as compared with 356,000,000 bushels in 1926; the estimated production fo r the District is 20,408,000 as compared with actual production last year o f 18,183,000 bushels. The fruit outlook both fo r the District and for the country is anything but favorable. The Ohio apple crop is estimated at 70 per cent o f average and the total orchard crop is about 60 per cent o f the average o f recent years. In West Virginia, the condition o f the apple crop is 25 per cent o f normal as compared with 63 per cent last year and a ten-year average o f 46 per cent. The estimated production o f apples fo r the United States, as indicated by their August 1st condition, is 128 million bushels, against 246 million bushels harvested in 1926. Considerable damage has been done by aphids, scabs, and caterpillars, and apples now on the market are small and o f poor quality. Hay has made an excellent crop both in quality and quantity, and though rain interfered with harvest in some sections, by fa r the greater part o f the crop has been stored away in good condition. A lfalfa was affected b y the dry weather during the month o f July and the second cutting is short. A favorable outlook for producers of lambs is indi cated by an increase o f 22 per cent in lamb production over last year. The increase in the number o f lam bs is due both to an increase in the number o f breeding ewes and the increase in the number o f lambs saved p er 100 head of ewes. W ool prices have shown some strength during the past months. Domestic mills have follow ed a hand-to-mouth policy. Imports have shown a considerable decline and stocks have been depleted. Dom estic p ro duction of fleece wool was 4.4 per cent greater than fo r 1926. Tobacco Recent rains have helped the grow th of burley tobacco in Kentucky. The crop continues uneven, however, and m uch of it is only fa ir in quality. The Department o f A gricu ltu re on August 1 reported a slight increase in the estimated yield for the country as a whole, the outlook on that date being for 1138 million pounds as compared with 1099 million pounds on July 1. The Kentucky crop is sm all owing to reduced acreage and late planting. The Burley Co-operative Growers’ A ssociation has sold an additional 3,625,000 pounds o f redried tobacco leaving only 2,000,000 o f the old crop on hand; but stocks* in general are still high, dealers and m anufacturers reporting 518 million pounds o f burley leaf on hand on July 1. The rapid growth in the demand fo r cigarettes has re sulted in some wide variations in acreage figures o f the various different types of tobacco as compared with last year. Bright flue-cured tobacco, the chief cigarette type__ grown mostly in the Carolinas and Georgia— has an acre age 15 per cent greater than in 1926. Dark fire-cured tobacco, on the other hand, has suffered from the drift to cigarettes and the increase in the production o f dark tobacco abroad; as a result, acreage o f the various types coming under this heading has declined from 25 to 40 per cent as compared with last year. Burley tobacco acreage is 25 per cent less than a year ago, and the aircured types also show heavy declines, ranging from 16 to 45 per cent. Building Contracts awarded in 37 Eastern states in July, according to the Dodge Com pany, ran slightly ahead o f last year” the figures being 534 and 518 millions respectively. The gain was chiefly in public works and utilities, including road building. Bradstreet’s record o f building permits confined to residences, factories, office buildings and stores, showed a big decline o f 19.5 per cent from Ju ly 1926, the figures being 240 millions for this year and 299 fo r last year. In the states o f the Fourth District, July contracts awarded totaled $66,736,000, as compared with $76,224 800 6 THE MONTHLY BUSINESS REVIEW a year ago, a loss of nearly 25 per cent. Permits in 27 cities aggregated $24,300,508 in July, a loss of 3.8 per cent from last year, and for the first seven months of 1927 they were $148,142,826, a loss of 6.3 per cent. For July, Wheeling led with an increase of 225.4 per cent, followed by Lexington with 177.6 per cent, Dayton with 135.1, and Ashtabula with 80 per cent. Several of Cleve land^ suburbs also recorded very large gains. The greatest decline took place in Newark, with 82.6 per cent. Heavy declines were also shown by Canton, Columbus, Covington, Erie, Lima, and Springfield. For the first seven months of 1927, the largest increase— 144.3 per cent — occurred in Parma, while gains of more than 50 per cent also appeared in Barberton, Rocky River, Dayton, and Wheeling. The largest declines were in Canton, Ashtabula, Lima, and Cleveland. Building Operations Akron...................... Ashtabula................ Barberton................ Canton.................... Cincinnati............... Cleveland................ Cleveland suburbs: Cleveland Heights East Cleveland... Kuclid.................. Garfield Heights.. Lakewood............ Parma.................. Rocky River........ Shaker Heights... Columbus................. Covington, K y........ Dayton.................... Krie, Pa................... Hamilton................. Lexington, Ky......... Lima........................ Newark................... Pittsburgh, Pa......... Springfield............... Toledo..................... Wheeling, W. Va.... Youngstown............ Total................... (Valuation of Permits) % change Jan.-July, 1927 12,728,845 397,290 760,470 2,303,058 18,148,425 26,905,225 July from 1927 1926 1,544,470 — 3.1 100,150 +80.0 111,517 +12.6 256,880 —38.9 3,314,167 + 9.2 7,077,400 +5.3 from 1926 +26.3 —50.2 +53.2 —33.4 + 3 .8 —35.5 4,307,487 757,103 1,028,791 1,446*750 2,768,204 958,633 527,589 3,896,255 14,711,100 1,068,600 4,646,827 3,183,700 1,688,267 1,291,558 990,506 278,455 23,600,396 920,229 8,467,672 1,056,415 6,522,552 —23.5 + 8.2 + 6 .8 +27.0 — 13.9 +144.3 +55.3 +37.5 —0.01 + 5.4 +55.1 —4.5 —26.3 —0.5 —50.4 —20.4 — 12.0 +37.5 +19.3 +80.2 —14.4 — 3 8 148,142,826 158,154,421 —6.3 400,535 —45.1 233,505 +209.1 173,980 —6.7 439,300 +124.6 394,242 +65.7 454,320 +154.5 108,000 —55.6 811,450 —5.5 1,518,800 — 50.1 135,800 — 39.1 1,315,050 +135.1 278,238 —50.6 142,793 — 10.9 265,465 +177.6 23,365 —68.5 11,400 —82.6 2,813,964 —20.3 71,720 —52.6 1,346,566 —6.8 406,326 +225.4 551,105 — 5.8 24,300,508 % change Jan.-July, 1926 10,076,242 797,102 496,444 3,459,409 17,488,285 41,719,850 3,295,757 819,324 1,098,248 1,837,500 2,382,999 2,341,707 819,325 5,357,175 14,708,300 1,126,006 7,206,861 3,039,334 1,244,517 1,285,197 491,516 221,738 20,766,120 1,265,191 10,102,960 1,903,513 5,586,225 Building Materials The lumber business is dull, with consumers adhering closely to hand-tomouth buying, according to lumber concerns in the Fourth District. Hardwood prices were unable to maintain their advance of June, and slackened from $42.77 on July 8 to $42.40 on August 5 (composite index). Softwoods have also undergone a rather notice able decline following a period of steadiness; on August 5 the composite index stood at $29.40, as compared with $30.65 a month earlier. Cement production in Ohio, West Virginia, and Western Pennsylvania amounted to 1,909,000 barrels in July, as against 1,851,000 in the same month of 1926. Shipments were respectively 2,056,000 and 2,053,000 barrels. The Aberthaw index of industrial building costs re mained unchanged at 192 on August 1. This compares with 198 a year ago and 194 two years ago. Wholesale Trade All reporting wholesale lines in this District showed a decline in sales during July as compared with a year ago. This bank's index of sales of 100 wholesale firms (1919-1923=100) stood at 77 in July, the lowest of any year in the past seven except 1922, when it also stood at 77. Beginning with 1923, when the index was 90, each year has shown a decrease in sales from the preceding year. Grocery firms in July underwent a loss of 5.6 per cent from a year ago, and for the first seven months the decrease was 4.4 per cent. The grocery index number in July was 75, the lowest of any of the past seven years. Dry goods sales showed less than the usual decrease from last year, the July decline amounting to only 3.6 per cent. For the first seven months the loss was 10 per cent. The index number of dry goods sales was 53 in July, the lowest for that month in seven years. Drug sales were 2.6 per cent under 1926 in July, and 0.6 per cent less for the first seven months. The index number of drug sales stood at 110 in July, higher than any of the past seven years except 1926. Sales of wholesale drug concerns have held up exceptionally well in com parison with most of the other wholesale lines. Hardware sales in July ran 2.1 per cent under last year, and 1 per cent under for the first seven months. The hardware index compares fairly well with past years, the July figure of 102 being only exceeded in 1923 and equaled in 1925. Sales of reporting wholesale shoe houses in July were 13.5 per cent less than a year ago, and for the first seven months of this year were 5.3 per cent less. The shoe index, 53, was lower than any of the last seven years except 1922 and 1925. The monthly stock turnover rate in July for groceries was .61, or slightly more than seven times a year, and for dry goods was .25, or four times a year. Retail Trade Sales of 64 department stores in the Fourth District in July were 0.2 per cent less than last year, but for the first seven months of 1927 were 0.9 per cent greater. Sales of 19 wearing apparel firms decreased 1.8 per cent in July, but for the seven months ran 2.9 per cent ahead of last year. Individual departments showing gains of more than ten per cent as compared with July, 1926, were: ribbons, 11.4; jewelry, 20.8; leather goods, 11.6; women's skirts, 15.9; sweaters, 23.8; gloves, 28.0; petticoats, 27.0; house dresses, 31.7; and radios, 77.7 Departments having decreases of more than ten per cent were: silks and velvets, 15.2; woolen dress goods, 12.5; linens, 10.3; laces, 12.1; and neckwear, 11.0. Changes in the twelve departments doing the largest business in July were as follows (in order of sales made): Women's Dresses Men’s Furnishings Women’s and Children’s Hosiery Men's Clothing Women's Shoes Furniture Silks and Velvets Floor Coverings Silk and Muslin Underwear Millinery Draperies Toilet Articles, Drugs % change from 1926 + 1.3 — 3.2 + 7.7 — 7.9 — 5.2 + 2.2 — 15.2 — 6.0 + 2.1 — 2.4 + 1.0 — 2.4 M t£ MONTHLY BUSINESS REVIEW 6 Corporation Earnings Second quarter net earnings o f industrial corporations in the United States compared less favorably with last year than did those o f the first quarter. This bank's record of 100 identical industrials shows that net earnings in the second quarter amounted to $93,225,000, as compared with $101,046,000 last year, a decline of 7.7 per cent, while the first quarter showed a decline o f only 4.8 per cent. As usual, second quarter earnings were larger than in the first quarter, but the gain was not as great as that which took place in 1926 and 1925. The quarterly record (excluding General Motors and United States Steel) is as follow s: (A few slight revisions have been made since the publication of these figures in the June Review.) NET EARNINGS OP 100 INDUSTRIAL CORPORATIONS (In thousands of dollars) % change, % change, 1927 1926 1927-1926 1925 1927-1925 First Quarter ........ $88,842 $ 93,299 — 4.8 $80,419 + 1 0 .5 3econd Quarter ........ 93,225 101,046 — 7.7 91,295 + 2.1 Third Quarter ..................... 101,194 ........ 93,418 Fourth Quarter ...................... 98,750 ........ 87,083 It is evident from this table that earnings in 1927 have steadily lost ground as compared with 1926, and have almost decreased to the 1925 level. The first quar ter showed a gain o f 10.5 per cent over 1925, but the second quarter's gain was only 2.1 per cent. The con clusion drawn from these figures is that general business conditions have been gradually receding during recent months from their record high level in 1926, and this is borne out by the various indexes o f business activity. An analysis o f the net earnings o f 221 corporations, in cluding 17 groups, fo r the first half-year shows that profits in 1927 were $414,254,000, as compared with $443,802,000 for last year, a loss of 6.7 per cent. If the earnings of General Motors and United States Steel be included— these two corporations combined showing a gain of about 24 per cent— there would be a slight gain of 0.9 per cent over last year, the figures being $595,969,000 and $590,811,000 respectively. Of the 221 con cerns, 106 reported an increase from last year's profits, and 115 reported a decrease. As shown in the table below, half year earnings varied widely as between different industries. The best showing was made by the clothing and textile group, whose earn ings gained 59.2 per cent over a year ago. The chemical and tobacco group, whose earnings have grown almost uninterruptedly in the last several years, also showed substantial increases. Rubber companies have enjoyed a “ come-back” , having an increase of 32.3 per cent over the poor figure of 1926. A fair increase o f 14.4 per cent is reported by the shoe and leather group, while small gains appear in the coal, food, mining, office equipment, and stores groups. The oil industry, of course, has experienced the hardest going so far this year. Large overproduction and lower prices have resulted in a falling-off in earnings o f 49 per cent, most of it coming in the second quarter. Motot corporations, except General Motors and a fe w others, have also been unable to keep net earnings up to last year's levels, their loss being 22.8 per cent. M otor accessories have been similarly affected. Railroad equip ment companies have suffered from rather light buying by railroads, the group showing a decline of 12.9 per cent in earnings. Alm ost all the steel companies earned less, but the de crease was moderate in many cases. Corporation Earnings 7 9 10 7 17 9 9 6 20 8 5 17 6 61 N e t E a r n in g s N e t E a r n in g s F ir s t 6 F irst 6 m on th s o f m on th s o f 1927 1926 (0 0 0 o m it t e d ) (0 0 0 o m it t e d ) £ 4 ,9 6 4 B u i l d i n g ................ .. £ 6 ,5 6 4 4 8 ,5 0 8 C h e m i c a l ................. 4 2 ,0 6 5 5 ,1 7 8 C lo t h in g , T e x t i le . 3 ,2 5 2 2 ,9 7 9 2 ,8 1 0 E q u ip m e n t ( R . R .) 1 4 ,0 2 6 1 6,1 11 5 3 ,0 7 9 5 0 ,1 8 7 F o o d , P a c k in g . . . 2 0 ,0 2 5 1 9 ,0 1 8 M i n i n g ...................... 5 2 ,4 5 2 6 7 ,9 7 2 7 ,3 8 8 M o to r A ccessory. 8 ,7 5 2 7 ,1 7 0 O ffice E q u ip m e n t . 6 ,5 8 5 2 2 ,9 5 2 4 5 ,0 6 1 O i l ................................ 17,153 R u b b e r ..................... 1 2 ,9 6 4 3 ,0 3 0 S h o e , L e a t h e r .. . . 2 ,6 4 8 4 0 ,4 4 5 S t e e l ........................... 4 4 ,9 4 0 1 7 ,1 9 4 1 6 ,0 5 4 9 ,1 6 8 T o b a c c o ................... 7 ,5 2 2 8 8 ,5 4 3 9 1 ,2 9 7 M is c e lla n e o u s .. . . No. No. firms firms showing showing increase decrease 2 5 8 1 7 3 +6.0 3 4 — 1 2 .9 I 6 + 5 .8 13 4 + 5 .3 4 5 —22.8 3 12 — 1 5 .6 3 6 + 8 .9 5 1 — 4 9 .1 5 15 + 3 2 .3 4 4 + 1 4 .4 2 3 — 10.0 4 13 + 7.1 6 2 + 2 1 .9 5 1 —3.0 31 30 c%Oam or L oss — 2 4 .4 4 -1 5 .3 + 5 9 .2 —6.7 221 T o t a l .......................... 1 G e n e ra l M o t o r s . . 1 U n it e d S ta te s S teel 3 4 1 4 ,2 5 4 1 2 9 ,2 5 0 5 2 ,4 6 5 £ 4 4 3 ,8 0 2 9 3 ,2 8 6 5 3 ,7 2 3 + 3 8 .6 — 2 .3 2 2 3 G r a n d T o t a l .......... $ 5 9 5 ,9 6 9 £ 5 9 0 ,8 1 1 + 0 .9 — - ____ 106 1 -----107 115 ------i ■ 116 n THE MONTHLY BUSINESS REVIEW Fourth District Business Statistics (All Bank Debits (23 cities) Savings Deposits (end of month) Ohio (41 oanks) Western Pennsylvania (27 banks) figures are for Fourth District unless otherwise specified) 3,345 Millions of dollars Thousands of dollars Total (68 banks) Commercial Failures—Number Actual Number Thousands of dollars a . *4 —Liabilities Postal Receipts—9 cities Sales—Life Insurance—Ohio and Pa. 44 44 “ ;* “ -Dept. Stores—(SO firms) 44 44 “ — Wholesale Grocery —(SO firms) “ 44 44 ** 44 Dry Goods—(16 firms) 44 44 44 „ 44 Hardware —(16 firms) 44 44 44 • « 44 t>rugs ■—(15 firms) Building Permits, Valuation—27 cities 44 44 44 Building Contracts Awarded—0., Wn. Pa., Ky., W. Va. 44 44 44 Production — Pig Iron, L. S. Thousands of tons ” —Steel Ingots, L\ S. 44 44 44 —Automobiles, U. S. Actual Number Passenger Cars tt Trucks Thousands of tons —Bituminous Coal, 4th Dist. ** *' barrels —Cement: Ohio, W. Va., Wn. Pa. Millions of k. w. hours M —Klectric Power: Ohio, Pa., Ky. Thousands of barrels —Petroleum: Ohio, Pa.t Ky. ** 4* pairs .. —Shoes, 4th District “ casings . —Tires, U. S. 44 tons Bituminous Coal Shipments (from Lake Erie ports) Iron Ore Receipts (at Lake Erie ports) 6 months' average •June *Jan.-June 926 3,179 K% change +5 .2 +5.0 694,902 256,459 951,362 140 7,270 2,736 97,328 18,281 6,503 2,227 2,058 1,749 24,301 66,736 2,951 3,178 661,926 231,386 893,312 137 3,202 2,711 97,899 18,346 6,779 2,309 1,796 25,248 76,225 3,223 3,635 2.6 — 3.8 — 12.4 —8.4 233,425 29,981 16,462* 1,909 1,057* 2,053* 317,006 37,388 17,587* 1,851 987* 1,953* 4,720* 4,462 6,136 4,109* 4,642 7,300 —26.4 — 19.8 —6.4* +3.1 +7.1* +5.1* +31.2* +14.9* —3.9 —15.9 4 2,102 4 +10.8 +6.5 +2.2 +127.0 + 0 .9 — 0.6 —0 .4 —4.1 — 3.6 — 2.1 — — 12.6 J' ni £ f y J« $ ,y 22,924 20,964 688,138' 254,632* 942,770* I,178 31,362 21,249 715,844 155,491 44,983 18,278 14,289 12,675 148,143 474,099 22,371 26,795 646,923* 236,899* 883,822* 1,282 27,346 20,745 676,213 154.847 47,021 20,312 14,434 12,748 158,154 469,120 23,070 27,911 2,011,961 278,571 117,077* 9,249 6,618s II,793* 2,387,424 272.847 114,251® 8,477 6,197* 10,990* 26,680s 19,016 17,849 23,334* 14,617 16,984 change + 9.3 + 6 .4 ' +7.5* +6.7* 8.1 — +14.7 + 2 .4 + 5 .9 + 0 .4 —4.3 10.0 — — — 1.0 0.6 —6.3 +11 —3.0 —4.0 — 15.7 +2.1 +2.5* +9.1 + 6. 8* +7.3* +22.4* +14.3* +30.1 +5.1 •Figures Confidential Index Numbers of Trade in the Fourth Federal Reserve District (Average Monthly Sales for the Five-Year Period 1919-1923 inc. Department Stores (501* .............. Wholesale Drugs (IS)*'................ Wholesale Dry Goods (IS)*......... Wholesale Groceries (50)*............. Wholesale Hardware (H>*........... Wholesale Shoes (5)*.................... Wholesale All (100)*..................... Chain Drugs (3)*f........................ ^Number of firms. tPer individual unit operated. Ji*fi 82 103 82 89 104 59 90 104 }m yi 81 104 62 80 99 55 84 100 \#i 84 109 64 84 102 48 83 102 100) 85 114 55 79 104 62 80 108 Ji & 84 110 53 75 102 53 77 101 Debits to Individual Accounts A A kron ......................... Butler, Pa..................... Canto®--:.................... Cincinnati..................... Cleveland...................... Columbus.................. Connellsville, Pa........... g a m ? ......................... .......•................ Greensburg, Pa............. Homestead, Pa.............. Lexington, Ky............... ............................. i f f f l f v ......................... Middletown................. Oil City, P a ................. Pittsburah, Pa.............. Springfield.................... Steubenville.................. ........................... Warren.... ........... Wheeling, W. Va........... Youngstown.................. ...................................... T ota l........................ (In thousands of dollars) 5 weeks % 1927 to 1926 to ending change date date Aug. 17, from (Dec. 29 (Dec. 30 to 1927 1926to Aug. 17) August 18} 128,460 +18.9 765,345 720,610 13,103 + 3 .6 88,844 85,117 55,514 + 3.3 371,564 374,066 480,771 +17.1 3,138,960 2,852,926 * 907.521 + 4.0 6,226,079 5,684,328 189,013 — 1.2 1,288,092 1,226,721 5,858 — 14.6 39,618 40,694 105,125 —0.6 739,780 672,564 42,969 + 3 .4 277,097 267,431 26,181 +11.9 172,358 158,270 5,402 —5.1 34,258 35,364 27,709 +16.0 193,163 187,428 16,188 —19.8 114,005 125,685 ,?.234 -0 .8 46,719 46,633 13,066 —5.4 84,805 86,656 17,485 — 18.6 118,567 108,632 1,065,714 - 0 . 2 8,218,150 7,225,840 • 28,850 + 3 .4 186,166 185,229 12,628 + 1 .0 86,402 84,692 —5-0 M 00,752 1,693,592 16,675 + 7 .4 107,771 100,980 52,712 + 6 .7 359,665 360,894 82,979 —0.9 558,728 528,674 14,174 + 0 .9 98,015 97,685 3,581,089 + 3 .6 25,114,903 22,864,055 Retail and Wholesale Trade + 9 .8 No. of reports DEPARTMENT STORES Akron......................................... 5 Cincinnati.................................. 7 Cleveland................................... 6 Columbus................................... 7 Dayton....................................... 3 Pittsburgh.................................. 7 Toledo........................................ 4 Wheeling.................................... 5 Youngstown............................... 3 Other Cities............................... 17 District...................................... 64 WEARING APPAREL Cincinnati.................................. 6 Cleveland................................... 3 Other Cities............................... 10 District....................................... 19 FURNITURE 11 Cincinnati.................................. Cleveland................................... 8 Columbus................................... 16 Dayton....................................... 5 Toledo........................................ 6 Other Cities............................... 8 District...................................... 54 CHAIN STORES* Drugs— District......................... 3 Groceries— District.................... 5 WHOLESALE GROCERIES Akron......................................... 3 Cincinnati.................................. 3 Cleveland................................... 4 Erie............................................ 4 Pittsburgh.................................. 8 Toledo.?.................................... .......3 Other Cities............................... 27 District....................................... 52 WHOLESALE DRY GOODS. . . . 16 WHOLESALE DRUGS............... 15 WHOLESALE HARDWARE.. . . 16 WHOLESALE SHOES....................... 5 ♦Sales per individual unit operated. Percentage Increase or Decrease SALES SALES July, 1927 Jan-July, 1927 compared with compared with July, 1926 Jan.-July, 1926 + 7 .0 h i till —4.5 + 2 .4 —4.3 + 6.5 —4.2 0.2 — .0 2.2 0.8 1.8 ++ 22.8 .9 +1.2 + 1 4 .4 — 1.4 —2.7 + 5 .4 —2.4 + 7 .0 — 1.3 + 0 .9 —0.3 + 5.1 + 4 .9 + 2 .9 —9.7 —5.8 2.2 — —9.S —6.3 — 7.1 —6.3 — 7.0 + 0 .5 — 1.5 + 9 .4 — 1.6 —18.0 — 11.8 — 6.0 — 8 .1 —2.4 + 4 .6 —3.0 —9.4 —9.3 =3:f —5.6 —3.6 -t .i — 6 .8 — — 2.6 2.1 —13.5 10.0 — — 0.6 1.0 —5.3 — 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions (By the Federal Reserve Board) Index numbers of production of manufactures and minerals, adjusted for seasonal variations (1923-1925 — 100). Latest figures: July, man ufactures, 107; minerals, 97. PER CEMT 200 r WHO LESAIE PRICES I 1923 1924 1 . ...J 1925 1926 1927 Index of U. S. Bureau of Labor Statistics (1913 = 100, base adopted by Bureau). Latest figure: July— 144.6. Industrial production declined in July to a level below that of a year ago, while the Department of Labor's index of wholesale prices advanced fo r the first time since last autumn. Demand fo r bank credit showed a seasonal increase, but easy conditions prevailed in the money market. Production Output of manufactures declined in July and was in practically the same volume as a year ago, and the production of minerals, which was further reduced during the month, was at the lowest level since' early in 1926, when the anthracite strike was in progress. Iron and steel production in July was in the smallest volume since 1925 and continued at practically the same level during the first three weeks of August. Automobile output fo r July and the early weeks o f August was considerably below that of the corresponding month o f last yearproduction of rubber tires, non-ferrous metals and food products and activity of woolen mills were smaller in July than in the preceding month. Cotton consumption was smaller than in June, but continued unusually large for this season of the year. Production o f leather shoes, and lumber increased in July as compared with June. Factory employment and payrolls showed seasonal decreases in July and were smaller than in any month since 1924. Employment in coal mining has be’en reduced in recent months, and reports indicate some unern^ ployment in certain o f the building trades owing to the decline in the construction of houses. Building contracts awarded in July and in the first three weeks o f August continued larger than a year ago the increase reflecting chiefly a growth in awards for engineering projects. The August 1 cotton report o f the’ Department o f Agriculture indicated a production o f 13,492,000 bales or 25 per cent less than "the record yield of last year. The indicated production o f corn, though considerably larger than the expectation in July, was 262,000 000 bushels lower than the harvested crop o f 1926. The August estimate of 851,000,000 bushels o f wheat indicated an increase o f 18,000 000 bushels over the 1926 <?rop yield. ’ ’ Trade Distribution o f merchandise at wholesale and retail showed about the usual seasonal decline in July. Compared with a year ago sales o f wholesale firms and department stores were slightly smaller, owing largely to the fa ct that there was one less business day in J u ly ’ o f this year than in July, 1926. Sales of mail order houses and chain stores were somewhat larger than a year ago. Inventories of department stores continued to decline in July and at the end of the month were slightly smaller than a year ago; and wholesale stocks also continued smaller than last year. Shipments of commodities by freight decreased contrary to the usual seasonal trend, and were smaller in July and in the first two weeks o f August than in the same period of last year Plf\ CENT 6 MONEYRATES ! — ™ Gvmrrerctaf P c o trftafc | M P w ' r e Ban^ D isc u n f Rrfo - - - Acccp;‘a n c e fto te ----- Weekly rates in New York money market, commercial paper rate on 4 to 6 months’ paper, and acceptance rate on 90-day paper. PfWCCHT ''iso Payrolls / / \ A Employment FACTC)RY EMPU) YMEHT ANID PAY ROL LS 1 >923 1 1925 1326 Federal Reserve Board’s indexes of factory employment and payrolls (1919 = 100). Latest figures, July, employment— 90.7; payrolls — 101.1 Prices The Bureau o f Labor Statistics index of wholesale prices advanced slightly in July, reflecting chiefly increases in the prices o f corn, live stock, cotton, and leather, while prices of wheat, silk, metals', and building materials declined. Since the latter part of July, prices o f com , cotton, and cattle have continued upward and those o f wheat non-fe'rrous metals, and rubber have also advanced, while hogs, lumber and hides have declined. Bank Credit There was an increase in the volume of commercial loans at mem ber banks in leading cities between July 20 and August 17, as is usual at the beginning o f the crop-moving season. Loans on securities as well as commercial loans, increased, while investment holdings declined and total loans and investments were about $60,000,000 larger than a month earlier. Total borrowings o f member banks at the Reserve banks increased slightly between July 20 and August 24; there was a growth o f dis counts at the Federal Reserve bank of New York, partly offset bv decline's in other Districts. There was little change in the System’s holdings o f acceptances and a growth in the portfolio o f United States securities. Money rates on all classes o f paper in the open market declined sharply in August, and were at a lower level than a year ago. Discount rates at eight Federal Reserve banks were reduced from 4 to 3 ^ per cent.
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