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MONTHLY REVIEW OF Business and Industrial Conditions in the New England District B,. Frederio H. Curti11, Chairman and Federal Reaene Aient FEDERAL RESERVE BANK OF BOSTON Vol. I BosTON, MAss., October General business conditions in the New England district continue to reflect unprecedented prosperity as defined in terms of high wages and purchasing power, high prices, complete full time en:iployment in all lines of industry for all available able-bodied labor, skilled and unskilled, orders booked by manufacturers in some cases far into 1920, projected plans for expansion of plants and equipment which in some cases are already taking the form of actual building construction, and the absence of serious or widespread dislocation of working relationship between employer and employee in any of the great basic industries ; on the other hand, that industrial unrest lies very close to the surface is apparent since it is impossible that any portion of the country can be wholly unaffected by such events as the steel strike, the threatened coal strike and uncertainty as to wheth er the industrial conference at Washington will have a hopeful and constructive outcome. The real ly serious aspect of the situation is under-production, just at a time when factors which are beyond the possibility of being changed h1ve contributed to decrease the supply of the world's goods below the demands of healthy consumption, the only remedy for which lies in the abandonment of attempts to further curtail the present limitations of the working day and the putting of every ounce of productive energy into that d ly, and, wherever possible, the extension of the aggregate working time within reasonable limitations. It is gratifying to note from our reports that the wage-earners in New England industries appear to be gradually acquiring a clearer appreciation of the fact that living costs cannot possibly drop unless and until production begins to catch up with the world's commodity requirements. Everywhere throughout New E ngLabor land with only occasional exceptions, mills and factories are reported running on full time and as a rule, to capacity, with a slowing down, at least in the strictly industrial field, of insistent demands for higher 2 5, 1919 No. 10 wages and shorter hours. Whether this condition is due to mere considerations of exped iency and is therefore to be counted upon as only temporary, or whether it may properly be attributed to an increasing and genuine appreciation by wage earners that strikes whether won or lost, and even if won, when called for the purpose of enforcing shorter hours, only mean still further curtailed production and increasing prices, thereby rendering more acute instead of helping to solve the cost of living problem, may be a matter of speculation. While, therdore, manufacturers may well feel justified in proceeding cautiously, there would seem to be elements in the situation to warrant a fairly optimistic attitude for at least some months to come. Testimony from employers and commercial organizations as to the carcity of labor, both skilled and unskilled, is borne out by the records of the Public Employment Offices, though in some cases employers have been affected disadvantageously by virtue of workmen being lured away from this district by offers of higher wages in distant states than local employers are evidently willing to pay. The condition of the money market Money remains unchanged with rates not reflecting the erratic conditions in the New York market. Call and time money are both 6 per cent. for new loans and renewals. Commercial paper ranges from 5 per cent. to 6 per cent., the low rate being only for very choice names. Prime bankers' acceptances, ninety days, 4i36 per cent. endorsed and 4f6 per cent. unenclorsed. Outlying district banks are able to take care of the local demands but are having frequent recourse to the Federal Reserve Bank. . Retail trade conGeneral Retad Trade tinues active and merchants are prosperous, reflecting the condition of t heir customers, the reports from many quarters indicating apparently no slackening in the buying of either necessities or luxuries. Volume of business is reported as showing an increase, not only in amount as reflected in selling prices, but in the number of transactions. The latter is not, however, proportionately as great as the former, i. e., increased business when measured in terms of money docs not because of the steady rise in prices necessarily mean an increase in transactions. There has been a widespread impression that the people in general have been in rc:cent months disposed to extraordinary extravagance, and numerous incidents within almost every one's experience, many of which find their way into print, are constantly cited to support this bdief. There is, on the other hand, evidence that such cases are exceptional; indeed, the number of persons who positivdy refuse to pay for goods with respect to which they can exercise discretion in buying more than a fixed figure, which they deem consistent with their means or necessary to adhere to in view of the cost of other items which enter into the family budget and over which they have no control, is reported by some of the larger stores to be apparently increasing. In the meantime retailers continue to experience difficulty in getting deliveries of goods in season for consumption, a circumstance making for continued high and in some lines still higher prices, though merchants prefer to be optimistic in the belief that in general prices have reached the peak. Wool dealers reWool and Woolen Goods port the market, while in general still marking time, to be gradually showing increased activity. No relief from the shortage in the finer goods is yet in evidence, with resulting buoyancy in prices. There is considerable speculation as to the effect upon this situation of the offering here, probably early in the new year, of 50,000 bales of Australian wool by the British government, it being generally assumed that this will take place notwithstanding the opposition of the growers which has been very vigorous, and the opening of the London sales to American competition. Some dealers sympathize with the growers in the view that the movement to bring about this sale reflects a short-sighted policy inasmuch as the argument made in its behalf for the benefit of the manufacturers, and presumably for the consuming public, . might be advanced with equal force with respect to furnishing an outlet for surplus stocks of other materials accumulated by Great Britain, it being contended that a reactionary effect upon American industry might result which would in the long r-un offset immediate advantages; other dealers are inclined to look upon the situation more philosophically, t:iking the ground that the demand for fine . goods is so great that it will readily absorb tht: best grades of wool, which they believe will form .the bulk of the Australian shipment. In the meantime the auctions of our own government supply, chiefly of the medium and coarse grades, are scheduled to come off next month and their possible effect upon the offering of the British stock is a matter of some speculati ve interest. The falling off both in Cotton • t h1s • Cotton and Goods quantity and qua1ity m year's cotton crop, due to unfavorable weather conditions which have prevailed over much of the cotton growing section of the South, together with the high cost of labor and the fact that the supply of last year's crop which was carried over was largely of the coarser grades, has resulted in such extraordinary prices for the choice qualities as to cause a marked reaction in buying activity; indeed, buyers themselves, while eager to take whatever the mills are able to offer in the way of fine goods at the prices hitherto prevailing, are reported as balking when confronted with the advances in the price of cloth they would find it necessary to pay to meet the sudden rise in the price of the raw material. Thus a situation has been created in the fine goods market which may be expected to cause a reaction to set in, or, .at any rate, to reconcile the consumer to accepting the less expensive grades. Manufacturers of goods for household use are sold 60 to 90 days ahead, but are by no means running in all cases to capacity, being apparently reluctant with few exceptions to take orders for delivery very far into the new year because of uncer: ainty as to prices and labor conditions. The situation as respects the market for coarser grades such as are used for ducking, automobile tops, hose, etc., is somewhat different, customers of the mills for this class of goods being not so dependent upon market fluctuations in the price of raw cotton in making sales to supply the demands of current trade, and therefore willing to make contracts with the manufacturers for monthly deliveries for many months in advance on the basis of the cost of cotton at the time of delive ry. Mills having or able to install the equipment to handle orders of this kind are accordingly willing to book orders for practically an indefinite period • in advance and there are instances of this being do1Je far into 1920. Continued prosperity Leather and Shoes dominates all branches of the allied shoe and leather trades from hides to shoes, a condition equally true of the related industries, such as the manufacture of shoe mach inery, lasts, tanning materials, and shoe findings. Some of the largest concerns in · the United States have reached a point- where it will be impossible for them to accept additional orders for five or six months, and an actual shortage of footwear, although perhaps it will not be acute, is a possibility since the shortened hours of labor are beginning to show their effect in reduced production,- estimated by one manufacturer as at least Io per cent.,- a factor likely to contribute permanently to a much higher average in shoe prices than formerly. The upward tendency in hide and leather prices has been somewhat checked, but at the present time these commodities remain on a strong basis. In the meantime shoe prices, always six months or so removed from leather quotations of the moment, have continued to advance. The present checking of leather values, however, gives some ground for the hope that the "peak" in shoe prices will be reached by tli.: mid-summer of 1920. Extensions to existing plants are being made in some quarters, and the example set by those who have had the courage to take th e initiative in this respect will probably be followed by other concerns as soon as they are better able to forecast economic conditions. The export trade in both leather and shoes is still averaging large totals, despite the discouraging condition of international exchllnge, and we are now sending out footwear to some seventy-five foreign countries, one of the most important of our customers at this moment being Cuba. Certain prominent concerns arc making ambitious plans for foreign trade after conditions are stabilized, and one of the largest New England companies has recently organized subsidiary British and French corporations to simplify the distribution of its products throughout Northern Europe. The situation as to lumber Lu!D~er and and building operations remains Butldmg substantially the same as a month ago. There is some isolated activity in house building, but nothing indicative of a 11 boom " anywhen~, notwithstanding the widespread demand for living accommodations,a condition due not so much to a shortage in the supply of lumber and other builcl i11g materials as to lack of labor and the unwillingness of available labor to work the normal hours of the pre-war period, alth(,ugh it is admitted that the current demand for hard wood for interior finish is quite equal to the supply, and that if contractors were suddenly faced with widespread activity in dwelling house and hotel building th ey would be embarrassed in meeting their requirements for the finer grades of lumber for this · purpose. Such activity as is reported in this field continues to be confined very largely to factory expansion and the construction, immediately or definitely in prospect, by large corporations, of homes for their employees. The lumber trade is constaptly hearing of projects in the latter field which are opening up to it an entirely new outlet such as scarcely existed before the war, due to the stimulus furnished by the construction work of the shipping board and the government housing corporation, together with the increasing conviction of concerns employing large numbers of men that the housing problem must be met by them as a permanent incident of operation. Furniture manufacturers using chiefly hard woods are sharing in the contemporary prosperity, feeling to a very appreciable degree the reaction from the period of war-time economy. A strong undercurrent of optimism, therefore, pervades the lumber trade in all its branches, not only with regard to present conditions, backward as they st ill are in some respects, but in anticipation of what is believed to be inevitable activity in the not distant future. The outlook for the three leading Crops New England crops,- apples, potatoes and tobacco,- has improved somewhat for apples, but is not quite so good for potatoes and tobacco as was reported last month, though the tobacco yield still promises to exceed that of last year by about 6,000,000 pounds, being estimated at 58,447,000 pounds, a slight reduction from the September forecast due to the excessive dampness during the month which affected the curing process. The potato crop for the New England district is now estimated at 32,473,000 bushels or somewhat over a million bushels less than the estimate a month ago, the warm rainy September causing the crop generally outside of Maine and in some parts of that State, to rot badly. The Aroostook crop has apparently thus far escaped damage, the yield for the county being figured now at 191000,000 bushels, and the crop for the cw whole State of Maine at 21,8 I 21000. England's commercial apple crop is now estimated at I ,406,000 barrels, an increase of about 40,000 barrels over last month's estimate, the wet weather not affecting this favorite fr.nit as it di the grou nd crops. Cranberry harvesting on Cape Cod is practically over, with about 360,000 barrels of good quality as against on ly 195,000 last year. The onion yield is 2,500 cars as against 3,6oo in 1918 ; oats are estimated at 11 ,388,000 bushels as against 13,280,000 in 1918 ; corn, 9,321,000 bushels as compared with 9,273,000 in 1918; buckwheat 805,000 bushels as compared with 780,000. The absence of frost and a mild temperature has produced a large crop of fine quality sweet corn for cann ing. Cleariat Houae Bealr.1 ia the tarter citiea in this diltriot Buildiat Permit• for New Coastruotioa Ia1ued in the Leediat Citie of this District Repon tbe fellowlor cbarcee aplast tbdr individul depoeiton• a«ollAtu (la Thou11nd1 of Oollan) JANUARY 1 TO OCTOBER 1 No, Permit, Brockton Fltcbburr Han.ford Lawrence Lynn Mann_, New Bedford . New Haven 248 161 61l 221 278 109 452 890 276 Portland Sprinr6eld Worttattr 1,100 Total Outside Boston, 5,334 eo.oa Total 76? 951 Amount Pcrmiu 104 77 287 698. 1 8♦ 164 195 516 !OIi 118 l,998.H0 4.JZ0,61? 1,114,127 2.559,418 1.Zll,600 118 ---s20,1m,m 11.-116.119 6,287 S32,239,596 +796 + 491 +s69 + 56 + ll7 +zso + 160 111 67Z,Si0 550 1,217.230 2,548 $8,989,200 197 1,602.172 + 131 + 211 2,945 S12,591,572 +156 ------ -- +l97 +z6s + 67 - 46 Sept 17, · 19 $12,227 34,026 96,277 14,812 20,573 28 , 371 68,124 133,610 66,764 28,702 69,300 $10,985 27,73 0 80,859 13,455 18,961 26,679 63 ,673 124,159 55,865 28,835 57,955 Total outside ofBostoa Boston $572,786 1,176,234 $509,156 1,014,477 Total all Cities . $1,749,020 $1,543,633 Bangor, Me. Fall River, Mass. Hartford, Conn. Holyoke, Mass. Lowell, Mass. New Bedford, Mass. New Haven, Conn. Providence, R. I. Springfield, Mass. Waterbury, Conn. Worcester, Mass. Amount Chanre SI09.9l0 117,1!7 1,462.0ZZ 1,559.671 61,9?1 117,690 597,162 2,776.691 255.152 Endinr Eodinr Oct, 15. '19 % No. 1546,962 504.'175 2, 417,59l 816,llS 572.708 FourW«lu Four Weeki 1918 1919 Condition of Forty-four Selected Member Banks ON OCTOBER 17, 1919 W ith Comparative Totals for September 19, 1919 and October 18, 1918 (Ia Tbounnd1 of Doll1ra) Twenty-lour B•••• outeid• of Boatoa Sept. 19 Oct.17 Oct. 18 % Cbau •• in yc:u 1919 1919 19 1 $26,350 16,007 16,S ll I 92,911 15,956 179,971 86,005 5,869 U. S. Bonds and ates . U. S. Certificates Loans secured by U. S. obligations, Other loans and investments Reserve Federal Reserve Bank Net Demand Deposits T ime Deposits Government Depo•its $26,665 19,013 16,939 182,306 13,766 172,046 78,280 10,920 Tweo«-,· Baak1 ia $17, 068 + 54.38 30,283 - 47.14 8,621 + 91.59 235,781 - 18.18 14,210 . + 12.28 166,717 + 7. 97 72,927 + 17. 93 10,930 - 86. 23 Oct. 17 S<p<. 19 1910 1919 $12,513 19,073 40, 379 437,648 60,816 566,214 28,852 20,943 $12,6 59 27,617 46,666 418,833 51,174 511,355 32, 351 49,544 Bo■ toa Oct, 18 1918 $16, 573 91,737 33,193 S30,469 S6,136 543,155 2S,989 31,723 % Cb111re iayear -24. 13 -79.20 + 21.64 -17.53 + 8. 33 + 4.24 +11.01 -3 3.91 Statement of Condition of the Federal Reserve Bank of Boston (Ia Thouaodt of Dollara) LIABILITIES RESOURCES Oct, 17, •19 5<0(. $87,663 $86,368 Gold Reserve against F. R. N ates, 37,605 73,178 Gold Reserve against Deposits, 123,973 160,841 Total Gold . 5,501 6,726 Legal Tender and Silver 166,342 130,699 Total Reservea 121,104 115,900 Discounts secured by U. S. Sec., 7,895 12,877 Discounts - Commercial Paper 44,279 Bankers Acct. bought in open market, '46,078 21, 436 U.S. Sec. pledged to secure circulation, 21,670 544 548 Other U. S. Securities owned 202,273 190,058 Total Earniat Aaaets . 91,8 78 98,011 Uncollected Items 3,421 3,600 Other Resources 470,226 416,056 Total Resource . 19,• 19 Oct, 18, •18 Oct. 17, •19 ~ 19, ·19 Oct. 18. •18 F. R. Notes Net $215,092 $205,73S $155,629 2, 260 21,316 F. R. Bank Notes Net, 21 , 270 11,384 12,285 17,071 Due Treasury U. S. , 99,545 Due Memben Net . . 122,372 100,136 54,117 63,062 Collection Items, etc., 84,4SS 170,733 Gross Depoaits, 219,112 174,582 6,580 7,0H 7,03-t Capital 1S 5,206 5, 206 Surplus All other Liabilities, 2,51 2 2, 183 2,925 $73,712 51,471 125,183 2,745 127,928 67,306 11,079 59,744 2,416 53 8 141,083 68, 223 968 338,202 Total Liehilitie-. 470,226 416,056 338,202 OFFICERS CHARLES A . MORSS FREDERIC H. CURTISS G"'trnor Cltairman and Ftdtra/ RtJt MJt Agtnt CHARLES E. SPE CER, JR . CH EST ER C. BULLEN WILLIAM WILLETT Ca1lzitr DtJ,uty GO'Vn-n,r CHARLES F. GETTEMY A11i11ant Ftdtral Rl1tMJt Agtnt A11i1ta1tt Ca1ltitr1 FRANK W . CHASE ERNEST M. LEAVITT L. WALLACE SWEETSER WILLIAM N. KENYON HARRY A. SAUNDERS
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