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FEDERAL RESERVE BANK OF ST. LOUIS MONTHLY REVIEW OF BUSINESS CONDITIONS IN EIGHTH DISTRICT Released for Publication On and After the Morning of February 28, 1927 WILLIAM McC. MARTIN Chairman of the Board and Federal Reserve Agent B U SIN E SS in this district during the past thirty days developed considerable irregu larity, but as a whole showed improvement over the similar period immediately preceding, though volume was below that of the same time last year. Relatively the wholesale and jobbing trade made a better showing than the retail section, and generally distribution of merchandise reflected greater improvement than industry. In certain im portant manufacturing lines, notably iron and steel, automobiles, some food products and building materials, activities have not been resumed at the rate which prevailed prior to the holidays and in ventory period. On the other hand a high rate o f production was maintained at textile mills, coal mines, drug and chemical plants, and in the furni ture and boot and shoe industries. There was a further marked slump in building, as reflected in permits issued for new construction and contracts let. Unevenness extended to the different sections of the district as well as to industries. T hrough the South business continues to feel the detrimental effects of the low price o f cotton, and in the North unfavorable weather and floods hampered trade in the rural districts. Business in the coal mining areas and in the lead and zinc fields was more active than at the corresponding period last year, with collec tions more satisfactory and the demand for goods active. Favorable em ploym ent conditions were the rule in the large centers of population, but buying is being cautiously pursued. Retail trade, as re flected by sales of leading department stores, was 6.4 per cent smaller in January than during the same month in 1926. Debits to individual accounts in the principal cities in January fell 5.9 per cent below the total for the same month last year and 3.2 per cent under the December, 1926, total. W eather throughout the period under review was unfavorable for outdoor work, and early farm operations were interfered with, and are from one to three weeks behind the usual average at this time of year. A ccording to reports of the E m ploy ment Service of the U. S. Department of Labor there was a decrease in employment in the district as a whole, both as compared with the preceding month and a year ago. Inclement weather slack ened building activities, and in several cities there is a perceptible increase in idleness am ong skilled and common labor in the building trades. Fewer workers were employed at the lumber and flour mills, and at food and kindred products plants, leather tanneries, paper and printing establishments, oil refineries, department stores, iron and steel mills and railroad repair shops. Some scattered dow n ward adjustments in wages were reported, but no general scale reductions in any industry. Rigorous winter weather generally through the district had a stimulating effect on production of coal. Retail yard stocks had been allowed to drop to small proportions, and since the middle o f Janu ary there has been a movement to replenish, mainly in response to improved demand from ultimate con sumers. Another factor tending to help the situa tion has been continued storing by industrial inter ests, municipalities and railroads against possible strike of bituminous miners in the spring. Current buying by the carriers for immediate use has also been in heavy volume, and since the first of this month demands of users of steam coal have devel oped moderate improvement. Shaft mines in the Illinois and Indiana fields have been getting from three to five days per week, and in the Kentucky fields numerous important mines have been operat ing at full time. Sleet and snow seriously hampered work at the strip pits, many of which w ere obliged to temporarily suspend operations. Prices o f steam ing coal showed no notable change, but circular prices on domestic lump coal were reduced about the first of this month. In the immediate past there has been some increase in the number o f loaded cars on tract at mines for which no orders have been received. Demand for export has dropped to such small size as to be no longer a factor in the Mid W estern situation. Production of bituminous coal during the present coal year to February 5, approxi mately 262 working days, totaled 499,894,000 net tons, against 456,696,000 tons for the corresponding period during the preceding coal year. Relatively open weather and an unusually heavy movem ent of coal were factors in holding freight traffic of railroads operating in the district at levels higher than during the corresponding period last year or in 1925. For the entire country loadings of revenue freight for the first five weeks of this year totaled 4,524,749 cars, against 4,428,256 cars for the corresponding period in 1926, and 4,456,949 cars in 1925. The St. Louis Terminal Railway Association, which handles interchanges for 28 con necting lines, interchanged 216,573 loads in January, against 202,625 loads in Decem ber and 217,952 loads in January, 1926. D uring the first 9 days of Febru ary the interchange amounted to 67,409 loads, com pared with 54,376 loads during the same period in January, and 63,909 loads in the first 9 days of February, 1926. Passenger traffic of the reporting roads in January was 5 per cent below the same month in 1926. Estimated tonnage of the Federal Barge Line, between St. Louis and New Orleans, for January was 88,200 tons, against 80,910 tons in December, and 57,996 tons in January, 1926. Reports relative to collections during the past thirty days reflect somewhat uneven results. Pay ments in the large cities and towns were relatively better than in the country, where heavy roads, floods and inclement weather interfered with com munications. Generally through the South im prove ment was shown over the preceding thirty days, though there are still numerous backward spots, notably in the cotton areas. Retailers in the large cities are for the m ost part getting in their money promptly, and settlements with wholesalers were also satisfactory. Good liquidation was reported by merchants and bankers in the tobacco and rice areas and the general average in the coal fields con tinues ahead of the same period last year. Answers to 470 questionnaires addressed to representative interests in the several lines throughout the district showed the follow ing results: Excellent January, 1927............... 1.2% December, 1926........... 1.4 January, 1926............... 2.6 Good 25.9% 30.1 36.9 Fair 52.1% 57.5 54.1 Poor 20.8% 11.0 6.4 Commercial failures in the Eighth Federal R e serve District during January, according to Dun’s, numbered 145, involving liabilities of $6,728,951, against 86 defaults in Decem ber with liabilities of $1,331,361, and 136 failures for $2,116,266 in Janu ary, 1926. The per capita circulation of the United States on February 1, 1927, was $40.51, against $43.03 on January 1, 1927, and $41.24 on February 1, 1926. M A N U F A C T U R IN G A N D W H O L E S A L E Autom obiles — Production of passenger cars and trucks in the United States during January scored a good gain over the preceeding month, but fell sharply below the aggregate of January, 1926. The total 234,130 compares with 165,000 in D ecem ber and 302,685 in January, 1926. A heavy falling off in distribution of autom o biles, both as compared with the preceding month and the corresponding period last year, took place in January, total sales being the smallest for any single month in more than three years. Dealers report a stronger resistance to sales efforts among all classes of buyers than at any time in recent months. Results in the country are particularly unsatisfactory, due in part to inclement weather. Farmers generally are repairing and conditioning their old cars in order to make them serviceable as long as possible, and are replacing them only when absolutely necessary. In the large cities there is a disposition to postpone purchasing until after the annual automobile shows and the introduction of new types and models. The feeling prevails that the present keen competition in certain classifica tions may result in lower prices, and prospective buyers are waiting to take advantage of any possi ble concessions. A general comment with dealers is that the field for new sales, that is sales to per sons w ho have never owned cars, appears to be smaller than heretofore. January sales of 320 deal ers scattered through the district were 37.3 per cent smaller than in the preceding month and 38.0 per cent below the January, 1926, total. Business in parts and accessories made a relatively better show ing than in new cars, the January total being only 8.6 per cent below that of December and 15.8 per cent below January, 1926. Stocks of new cars on dealers’ floors were larger than a month earlier, but not above the seasonal average for the past five years, and slightly below the total at the corres ponding period last year. A s has been the case since late last fall, the used car market was dull and unsatisfactory. Sales are difficult to make, and stocks continued to increase, due to the narrow outlet rather than the taking in of large additional stocks. The investment represented in used car stocks, however, is considerably smaller than at this time last year, though stocks are larger. There was no change worthy of note in the tire situation. Purchasing by both dealers and the public is on a strictly necessity basis. Boots and Shoes — January sales of the 10 re porting interests were 5.2 per cent larger than for the same month last year, and 132.4 per cent in excess of the Decem ber, 1926, total. T he gain in the month-to-month comparison is seasonal in char acter, but considerably larger than the average dur ing the past five years. Stocks on February 1 were 9.8 per cent larger than a month earlier, but 3.6 per cent below those on February 1, 1926. Current orders are reported satisfactory, though style un certainty and the lateness of Easter is holding down buying of certain lines. Orders for future delivery are the smallest at this particular season in recent years. Factory operation was curtailed somewhat, averaging only about 85 per cent of capacity, against 90 to 95 per cent during the pre ceding thirty days. Prices of finished goods showed no change w orthy of note. The decline in hides was reflected in an easier trend on certain grades of leather. Clothing — A s compared with the preceding month, January sales of the 8 reporting clothiers showed a decrease of 20.0 per cent, but the total was 19.6 per cent larger than in January, 1926. Pur chasing of both men’s and w om en’s clothing for dis tribution in the spring developed considerable im provement during the past thirty days, but more particularly since the first of this month. The cold est weather of the winter stimulated the movement of heavyweight apparel at wholesale, and a fair volum e o f reordering enabled wholesalers to effect a good clearance of this class of goods. W hile buy ing of w ork clothing in January continued to in crease slightly, stocks in manufacturers hands are still large, and above those at this time last year. Sales of dresses declined somewhat in January, and the m ovement o f sport suits was below expecta tions. Prices average about steady with the pre ceding month, but were a shade under the corres ponding period last year. Drugs and Chemicals — Im provem ent both as contrasted with the preceding month and a year ago featured business in this classification. Stocks of retail druggists are generally low, and there has been a disposition to replenish during recent weeks. Increased illness, due to inclement weather, ac counted for heavier sales of remedial drugs. A d vance ordering of fertilizers and insecticides are reported satisfactory. Gradual improvement is developing in the demand for heavy drugs and chemicals from the manufacturing trade. Prices showed no notable change during the month, but are lower than a year ago. January sales of the 7 reporting interests were 6.4 per cent larger than a year ago and 5.3 per cent in excess of the December, 1926, total. D ry Goods — Losses noted in recent months in dry good sales as compared with a year earlier con tinued in January, total sales of the 11 reporting firms in that month being 21.9 per cent smaller than in January, 1926. The January sales, however, were 52.9 per cent larger than in December, much of this gain being due to seasonal considerations. Stocks on February 1 were 1.0 per cent larger than a month earlier, but 17.4 per cent smaller than on February 1, 1926. Demand for cotton goods of all descriptions w^as reported active, with prices mainly firm, the lower price of raw cotton not having reached cot ton fabrics. Visiting merchants at the large centers were more numerous than a year ago, but they were purchasing cautiously and only for immediate needs. Orders for future delivery sustained a further de cline. Electrical Supplies — January sales of the 5 re porting interests were 5.6 per cent smaller than for the same month last year, and 14.9 per cent less than in December, 1926. Demand for installations for new buildings fell off, and interference with outdoor work by inclement weather cut down de mand for pole and line hardware. Some recession in radio sales was noted but household appliances and refrigerator material and small motors continue to m ove in large volume. Flour — Production of the 12 leading mills of the district in January was 318,908 barrels, the smallest since last July, and comparing with 365,612 in December, and 293,724 in January, 1926. The dull conditions existing during the preceding two months continued during the period under review. N ew orders were of small size, and mainly for prompt shipment, and shipping directions were re ported poor. Aside from the routine demand from Latin-American countries, there was little doing in the way of export trade. Sales of local mills were only from 35 to 45 per cent of capacity. Stocks of flour in St. Louis on February 1 were 1.0 per cent smaller than a month earlier but 8.8 per cent larger than on February 1, 1926. Furniture — Satisfactory bookings at recent furniture shows and an increase in the number of stock orders were factors in a gain in January sales of the 10 reporting firms of 63.3 per cent over the same month last year, and of 80.8 per cent over the December, 1926, total. Stocks on February 1 were 1.0 per cent larger than a month earlier, and 3.2 per cent less than on the same date last year. D e mand for household furniture and furnishings is reported more active than heretofore, and there is also a more active call for hotel and theater equip ment. Groceries — January sales of the 9 reporting firms were 21.4 per cent under those o f the same month last year, and 16.0 per cent under those of December, 1926. Stocks on February 1 were 21.4 per cent smaller than on the same date in 1926, and 12.0 per cent larger than those on January 1 this year. Heaviest losses were reported in country sales, rigorous weather preventing salesmen from making their rounds in many sections, and floods and heavy roads seriously hampering communica tions. Hardware — T he movement o f staple hardware has declined noticeably, and sales o f seasonal goods were in the main below expectations. Building materials and the general run of farm supplies were reported slow, though some improvement in these lines has developed since the first of this month. Few price changes of importance were announced during the period under review. A n advance took place in wrought steel goods, and prices of dry cell batteries were revised as of February 1. January sales of the 9 reporting interests were 18.3 per cent below those o f the same month last year, and 4.7 per cent larger than the December, 1926, total. Stocks on February 1 were 12.4 per cent smaller than thirty days earlier, and 1.2 per cent below those of a year ago. Iron and Steel Products — Uncertainty relative to prices and a general disposition to purchase for well defined requirements only, are holding down the volume of business in the iron and steel indus try. N ew orders booked by mills, foundries and machine shops, while show ing a gradual increase, are on the whole disappointing and less than at the corresponding period last year. Operations at job foundries averaged only about 60 per cent of capacity, while steel mills were slightly below 70 per cent. Stove manufacturers report backwardness in advance business and a number of the most im portant ones are working on stock in order to keep their organizations intact. Sales of implement makers in January fell below those of the same time last year, but have picked up considerably since the first week of this month. B uying generally by the railroads continued at a low ebb, and specifica tions by the automobile industry were only slightly better than during the preceding thirty days. U n favorable weather conditions for outside work had a detrimental effect on sales and specifications of building materials. Fabricators o f iron and steel report a decrease in orders, and an almost complete absence of large lettings. Unfinished orders, how ever, enabled them to maintain operations at about the same rate as during the month before. The general demand for sheets developed moderate im provement, but is still below the seasonal average of the past several years. T he leading producer reduced its operations from 80 to 70 per cent of capacity. The movement of wire fencing and wire products generally is reported quiet, and the same is true of tubular goods, rods and the entire line of oil country materials. Production of pig iron for the country as a whole during January was a shade larger than the Decem ber output, but fell considerably below the January, 1926 total. The amount, 3,096,789 tons, compares with 3,089,175 tons in December, and 3,318,789 tons in January, 1926. Steel ingot production increased in January and was the largest since last October. The total, 3,807,000 tons, compared with 3,472,000 tons in D ecem ber and 4,150,000 in January, 1926. P ig iron prices again declined, and the market for scrap iron was also lower. January sales of the 6 reporting stove makers were 13.2 per cent smaller than for the same month last year and 26.5 per cent under the December, 1926, total. Reporting job foundries show slight losses under both the preceding month and a year ago. Lum ber — Due to unfavorable weather for ex cavation in the late fall and during the winter, demand for lumber for building is below the aver age for this season. W et weather in the South has curtailed production materially, and stocks at mills, in transit and in hands of distributors and industrial consumers are light. In the immediate past there has been a fair volum e of buying by retail yards, but competition is keen, and the price trend lower. Autom obile manufacturers and the furniture trade have slightly increased their commitments. T im ber orders are somewhat m ore numerous, with prices firm. R E T A IL T R A D E Conditions in the retail trade are reflected in the follow ing comparative tables showing activities at department stores and shoe and men’s furnish ings stores in leading cities of the district. N e t sales comparison January 1927" comp, to January 1926 Stocks on hand Jan. 3 1 , St ock turnover comp, to January Jan. 31, 1926 1927 1926 Evansville .................. + 2 2 . 4 + 1 1 .8 Little R ock.................. — 8.4 — 9.3 Louisville ....................— 3.9 — 1.1 M em phis .....................— 2.9 + 0.7 Quincy ..........................— 16.3 — 7.3 St. L ouis....................... — 7.6 — 1.8 Springfield, M o .........— 6.2 + 0.8 8th D istrict.................. — 6.4_____________— 1.9_________ N e t sales comparisons Jan. 1927 compared to’ Jan. 1926 D ec. 1926 M en ’s furnishings............ .— 7 9^5? Boots and shoes................— 11.1 — 3 9 .8 % — 38.9 21.1 18.3 18.0 18.0 24.7 25.2 20.3 20.1 15.1 16.8 25.0 27.1 9.7 10.0 23.1 24.3 Stocks on hand Jan. 1927 compared to Jan. 1926 D ec. 1926 + 1 3 .3 % l + 3 3 .2 + 2 .6 % + 1 1 .1 CONSUM PTION OF E L E C T R IC IT Y Public utilities companies in the five largest cities of the district reported consumption of elec tricity by selected industrial customers during Janu ary as 2.1 per cent smaller than in the same month last year, and 3.7 per cent less than in December, 1926. Losses and gains were unevenly distributed, changes being more individual than in any special line of industry. Flour mills used less current, as did also iron and steel plants, but food and food products and furniture plants increased their loads. Detailed figures fo llo w : N o . of Jan. D ec. Custom 1927 1926 ers * K .W . H . * K .W . H . Evansville ..... 40 L ittle R ock....35 Louisville .......80 M em phis .........31 St. L ou is.........93 1,094 1,164 4,316 1,942 12,232 1,034 1,196 4,338 1,903 12,717 T o ta l.........279 20,748 *In thousands (000 om itted). Jan. 1927 comp, to D ec. 1926 Jan. 1926 * K .W .H . + 5 .7 % 2.7 — 0.5 + 2.0 — 4.1 995 1,124 5,105 1,718 12,611 t — 21,188 — 2.1 21,553 Jan. 1927 comp, to Jan. 1926 + 1 0 .0 % + 3.6 — 15.5 + 1 3 .0 — 3.0 — 3.7 The follow ing figures compiled by the Depart ment of the Interior, show kilowatt production both for lighting and industrial purposes for the country as a w hole: B y water power December, Novem ber, December, 1926.....................2,384,037,000 1926.....................2,233,684,000 1925.....................1,961,942,000 B y fuels 4,383,296,000 4,216,618,000 4,145,685^000 Totals 6,767,333,000 6,450,302,000 6,107,627,000 BU ILD IN G The dollar value of permits issued for new buildings in the five largest cities of the district during January was the smallest since October, 1923, and 8.7 per cent and 17.7 per cent respectively, below the totals of January and December, 1926. A ccording to figures compiled by the F. W . Dodge Corporation, building contracts let in the Eighth Federal Reserve District in January amounted to $21,495,642, which compares with $22,504,037 in December, and $22,255,000 in January, 1926. A further small reduction in building costs was re corded, due principally to an appreciable cut in the price o f portland cement. Production of Port land cement in January totaled 8,222,000 barrels, against 10,744,000 barrels in December, and 8,032,000 barrels in January, 1926. Building figures for January fo llo w : N ew Construction Permits *£ost 1927 Evansville .. Little Rock Louisville .. Memphis ... St. Louis.... 1926 243 54 138 253 266 105 82 174 377 428 Jan. totals 954 1,166 D ec. totals 1,003 1,088 N o v . totals 1,253 1,491 * I n thousands of dollars 1927 $ 250 36 2,833 754 755 _______Repairs, etc. Permits 1926 $ 1927 100 312 904 1,068 2,686 25 89 48 89 217 1926 36 58 47 65 293 468 364 755 499 503 701 $4,628 $15,070 5,625 6,185 5,216 6,290 (000 om itted). *Cost 1927 1926 $ 10 26 94 101 185 $ 16 44 111 106 496 $ 416 327 1,164 $773 1,145 468 A G R IC U LT U R E W eather conditions generally through the dis trict during the past thirty days were unfavorable for agricultural activities. Excessive rains and snow hampered field work, and belated harvesting o f corn arid cotton made little progress. In many sections heavy roads prevented the movement of farm pro ducts to market, and serious flood damage was re ported in parts of Illinois, Indiana, Kentucky and Missouri. Farmers have been unable to get into their fields to accomplish the usual seasonal repairs, and generally early farm work is from one to three weeks behind the usual seasonal schedule. Reports from scattered sections indicate rather serious dam age to orchards from ice and sleet. The abundant moisture, however, has made for good soil condi tions, and fall sown grain is for the most part doing well. Farm labor is adequate to all requirements, with no change in wages as compared with the same time last year. Winter Wheat — Generally through the district winter wheat is in good condition, and in the South the plant is beginning to take on color and looks healthy. There has been fair snow covering in the northern counties. A favorable feature during the past two weeks has been almost complete removal of the ice covering. There are some complaints of alternate freezing and thawing, but injury from this cause is estimated to be no greater than the aver age of the past few years. The movement of wheat to market was accelerated in late January and early this month by improved market prices, but the de cline since the middle of February has served to curtail shipments from farms and country elevators. Com — Gathering of corn still in fields was in terfered with by excessive rains, and quality of the grain remaining in shock has suffered further deteri oration. Quality o f corn arriving at primary mar kets is universally poor, very little grading above No. 3. Floods have destroyed much corn in the rich creek and river bottom lands. There has been an increased movement to feeders at interior points, where the local crop has been consumed. Choice seed corn for spring planting is scarce. Live Stock — A ccording to the annual survey of the Department of Agriculture, the number and value of all live stock in states lying w holly or partly within the Eighth Federal Reserve District, showed relatively little variation between January 1, 1926, and the same date this year. The aggregate number of horses, mules, cattle, sheep and lambs and swine on January 1, 1927, was 32,156,000 head with total value of $934,351,000, which compares with 31,827,000 head on January 1, 1926, having, a total value of $921,057,000. There were gains in the number of horses, sheep and lambs, and swine, and losses in mules and cattle. For the country as a whole the total number o f live stock on farms in creased 339,000 head, or two-thirds of 1 per cent between January, 1926, and January, 1927. The increase in total numbers resulted from an increase o f about 2,045,000 head in sheep, and 481,000 head in swine, while all cattle decreased 1,626,000 head, and horses 561,000 head. Mules showed no change. Milk cow s decreased 324,000 head. Receipts and shipments at St. Louis, as reported by the National Stock Yards, were as follow s: Receipts Jan. 1927 Cattle and Calves...... 104,267 H o g s .............................. 341,681 H orses and M ules.... 7,968 Sheep .............................. 37,154 D ec. Jan. 1926 1926 105,097 104,917 309,117 310,464 3,421 10,011 37,021 32,781 Shipments_________ Jan. D ec. Jan. 1927 1926 1926 62,293 r68,879 63,307 225,676 225,085 189,628 7,946 3,103 10,028 11,239 13,596 14A 292 Cotton — Preparations for the new crop are making little progress, due to excessive rains and low temperatures. Some plowing has been done in the lower tiers of the district, but virtually none north of the Arkansas River. Ideas relative to acreage are not as yet well defined, though unofficial reports indicate decreases under last year in all the most important sections of the district. In many localities winter wheat has been substituted for cot ton acreage, and elsewhere planters have signified their intention of putting in corn, legumes and other crops on part of the land which last year was de voted to raising cotton. Campaigns for reduction o f acreage are general in all states of the district. A further decrease in the movement to market was noted, occasioned in part b y inclement weather, Receipts at Arkansas warehouses from August 1, 1926, to February 11, 1927, totaled 1,280,452 bales, against 1,086,394 bales for the corresponding period last year. Prices o f raw cotton were fractionally higher, the middling grade in the St. Louis market closing at 12% c per pound on February 17, against 12% c on January 17. Rice — Demand for rice has increased substan tially during the past three weeks, and there has been considerable selling by farmers. However, on account o f continuous rains deliveries have been delayed. T he price ruled higher than during the preceding month, best grades selling as high as $1.12 per bushel, with an average price o f $1.05 foi all grades. Shipment o f clean rice from mills in January were heavy, and stocks on hand are light. Tobacco — Offerings o f new burley tobacco continue large, but of ordinary quality, much of the leaf being in soft condition, making prices irregular and with a lower trend on inferior grades. All good tobacco in sound condition is firm, with the best grades selling at high prices. A large percentage of the aircured and green river crop has been sold, the market having been active and quality some what improved, but with no change in price levels. In the dark fired markets o f Tennessee and Ken tucky the warehouses have been taxed to capacity. Common to medium leaf in good condition has sold at firm p rices; medium grades irregular and better grades commanding high prices. Lugs have been in better demand and higher than at this time last year. Taken as a whole, inferior grades predomi nate in the crop, choice tobacco being relatively scarce. Additional sales of large quantities from the 1924 and 1925 crops were made by the Burley T obacco Growers’ Cooperative Association. Commodity Prices — Range of prices in the St. Louis market between January 15, 1927 and Febru ary 15, 1927, with closing quotations on the latter date and on February 15, 1926, follow : Close W heat H igh Low ...per b u .$1.42i6* N o . 2 red winter ** 1.40J4 L 35 4 N o . 2 hard...... ..... " 1.42 1,36 Corn .... " .855* .8 2 '^ N o . 2 .................. ..... “ .75 .78 N o . 2 white....,.... " .73 .78 Oats N o. 2 white.... .... “ .52 .46 Flour Soft patent..... ...per bbl. 7.50 6.50 Spring patent,. .... " 7.30 7.00 M iddling cotton.. ..per lb. .1234 .1254 H o g s on hoof...... ..per cw t.12.75 10.50 Feb. 15, 1927 $1.38 1.36 @ 1.38 1.39 .7 5 ® .7 6 ® 1.79 1.71 @ @ .82*4 .76 .78 .49 6 .5 0 ® 7 .1 0 ® Feb. 15, 1926 7.00 7.15 .1254 1 0 .5 0 @ 12.05 $1.6854 1.81 1.73 .79V2 .7254 .74 .4154 @ .4154 9 .2 5 @ 9.50 8 .4 0 ® 8.75 .20 10.25 ® 13.75 F IN A N C IA L Liquidation of bank loans continued on a fairly liberal scale during the past thirty days, and de posits of the commercial banks rose to the highest point of the year, though the peak at the middle of February was below that of the corresponding period in 1926. Demand for credit from general commercial and industrial sources increased slightly as compared with the month before, and exhibited considerable spottiness, both with reference to localities and the several lines of industry. Loans of the reporting member banks have gained stead ily since the first of the year, but their borrowings from this institution decreased radically during the same period, and in the second week of February reached the lowest point since early in 1925. Gene rally through the district country banks have in creased their deposits with city correspondents, and in a number of instances are seeking invest ment for surplus funds. There was a moderate gain in investments o f the reporting member banks, and financial institutions in the large cities are loaning in the Eastern call money market. Grain and milling interests further reduced their borrow ings, but this was offset by heavier requirements of packers and other manufacturers. There is a continued heavy demand for financing live stock operations, but otherwise demand from the country for agricultural purposes is seasonaly light. Market ing of the 1926 crop, and large sales of 1924 and 1925 tobacco by the cooperative marketing associa tions, have served to place banks in the tobacco areas in strong position. Good liquidation was also reported in the cotton and rice sections, though some o f the less conservatively managed banks are still burdened with passed due paper. Smaller cur rency requirements follow ing the holiday period are reflected in a decline in the note circulation to the lowest point for the year. Little variation took place in interest rates, such changes as were noted having appeared in the relative volum e of transactions at the higher or lower points of the range quoted on the several classes o f loans. A t the St. Louis banks current quotations were as fo llo w s : Prime commer cial paper, 4 y2 to 5y2 per cent; customers’ overthe-counter loans, 5 to 5^2 per cent; collateral loans, 5 to 5^4 per cent and brokers loans 5 to per cent. Federal Reserve Operations — During January the Federal Reserve Bank of St. Louis discounted for 203 member banks against 218 in December and 179 in January, 1926. The discount rate remained unchanged at 4 per cent. ♦Feb. 16, 1927 Bills discounted......................................................... $15,602 Bills bought................................................................. 9,830 U . S. Securities......................................................... 21,414 Foreign loans on gold.......................................................... T otal bills and securities............................$46,846 F . R. N otes in Circulation................................. ?5 ,0 2 9 Total deposits.............................................................. 84,544 Ratio of reserves to deposit and F . R . N ote liabilities....................... 6 9 .9 % * I n thousands (000 om itted). *Jan. 16, 1927 $ 1 8 ,7 3 3 ’ 10,413 20,440 *F eb. 16, 1926 ------$20,971 16,000 24,483 322 $49,586 47,171 83,319 $61,776 37,258 85,146 6 2 .0 % 5 5 .3 % Debits to Individual A ccounts — T he follow ing comparative table gives the total debits charged by banks to checking accounts, savings accounts, cer tificates of deposit accounts and trust accounts of individuals, firms, corporations and U. S. Govern ment in leading cities of the district. Charges to accounts of banks are not included. *Jan. 1927 E . St. Louis and N at. Stock Yards, 111....$ 46,875 E l Dorado, A r k ......... .............. 11,147 Evansville, In d ......... Fort Smith, A r k ...... Greenville, M iss........ .............. 4,991 H elena, A r k ................ Little R ods, A r k ...... Louisville, K y ........... .............. 204,510 Mem phis, Ten n ......... Owensboro, K y ......... Pine Bluff, A r k ........ .............. 12,217 Quincy, 111.................. .............. 12,580 St. Louis, M o ........... .............. 783,226 Sedalia, M o ................ .............. 5,466 Springfield, M o ......... .............. 15,119 T o ta l....................... .........$1,398,312 * I n thousands (000 om itted). *D ec. 1926 *J,an. 1926 $ 47,135 10,845 46,934 15,276 4,892 4,632 84,343 197,677 161,301 6,318 12,841 12,961 816,280 5,495 16,991 $ 47,846 13,353 39,989 14,864 5,374 5,296 88,338 205,654 179,777 7,460 12,543 12,230 828,940 5,753 17,742 $1,443,921 $1,485,159 Jan. 1927 comp, with Jan. 1926 — 2 .0 % — 16.5 *4" 2.6 — 2.8 — 7.2 — 20.1 — 10.6 — 0.6 — 13.1 — 3.5 — 2.6 + 2.9 — 5.5 — 5.0 — 14.8 — Composite state- *F eb. 16, 1927 . *Jan. 19, *F eb. 17, 1927 1926 t3l t31 Loans and discounts (incl. rediscounts) .$ 4,712 . 186,709 . 308,403 $ 33 5,922 189,449 309,171 $ 11,980 209,054 313,296 .$499,824 $504,542 $534,330 . 72,392 . 121,994 65,723 121,916 60,408 107,750 .$194,386 . 49,890 . 7,239 $187,639 47,087 7,575 $168,158 47,006 7,581 . 411,872 . 232,415 . 2,763 409,161 226,375 3,082 423,354 221,662 5,864 .$647,050 Investments U . S. Go\ $638,618 $650,880 2,969 3,347 6,120 8,673 Deposits Bills payable and rediscounts with Federal Reserve Bank, . . 4,150 1,218 * I n thousands (000 om itted). t Decreases due to consolidation. These 31 banks are located in St. Louis, Louisville, M em phis, Little Rock afid Evansville and their total re sources comprise approximately 53.5 per Cent of the resources of all member banks in the district. C O ST O F L IV IN G Follow ing increases for four successive months the cost of living in the United States showed a decline of 0.9 per cent in January, 1927, as com pared with December, 1926, according to the data compiled by the National Industrial Conference Board. The index number stood at 166.9 in Janu ary, while in Decem ber it was 168.4. Although there was a consistent downward tendency in the prices of all the goods and services entering in the living costs, the main factor in the recession was a drop of 1.9 per cent in the retail food prices. The reduction in the index number for clothing was largely because of decreases in the price of cotton goods and men’s clothing. Fuel costs were slightly lower while all other items re mained the same. The follow ing table shows the index numbers of the cost of living as compared with average prices in July, 1914, also the percentage changes between December, 1926, and January, 1927: Per cent of Relative Im portance in family budget ...43.1 5.9 Condition of Banks — Loans and discounts of the reporting member banks on February 16 showed a decrease of 0.9 per cent as compared with a month earlier and 6.5 per cent compared with February 17, 1926. Deposits gained 1.3 per cent between Janu ary 19 and February 16 but were 0.6 per cent small- er than on February 17, 1926. ment fo llo w s : ... 5.6 ...(3 .7 ) ...(1 .9 ) ...20.4 Index numbers of the cost of living A verage prices July, 1914 _________ gqy a L iP O _________ 1927 1926 January Decem ber 159 162 173 173 173 174 168 169 (1 9 2 ) (194) (1 2 1 ) (1 2 1 ) 174 174 between Decem ber, 1926 an(j January, 1927 1.9 • •• •• 0.6 0.6 d.o; ( ..... : W o 166.9 0.9 168.4 *Food price index is from the United States Bureau of Labor Statistics. The purchasing value of the dollar based on the cost of living was 59.9c in January, 1927, as com pared with $1.00 in July, 1914. (Compiled Feb. 21, 1927) B U SIN E SS CONDITIONS IN T H E U N ITED S T A T E S Industrial activity has been slightly larger since the turn of the year than at the close of 1926. Seasonal liqui dation of Reserve bank credit has been in unusually large volume owing chiefly to the inflow of gold from abroad, and conditions in the money market have been easy. Wholesale prices have continued to decline. P R O D U C T IO N — Output of factories was larger in January than in December, but smaller than in January, 1926 or 1925. Mineral production, though somewhat below the December level, continued in unusually large volume, reflecting the maintenance of production of bituminous coal, crude petroleum and copper. Manufacture of iron and steel, Index numbers of production of manufactures and minerals combined, adjusted for seasonal variations (1923-24 a v e ra g e s 100). Latest figures, January— 106. which was sharply curtailed in December, increased in January and February. Automobile output was increased considerably from the unusually low level of December, but the number of passenger cars produced since January 1 has been smaller than for the corresponding period of the past four years. The textile industries have continued active since December, without, however, showing the usual sea sonal increase. Building contracts awarded in 37 states during the first seven weeks of the year were smaller in value than those for the same period of 1926. Decreases have been largest in New York and the New England, Southeastern and Northwestern states, while increases occurred in the Mid dle Atlantic and Central Western states. By types of build ing, contracts awarded for residential and industrial build ing in January showed large reductions as compared with but continued in smaller volume than in the corresponding month of the previous year. Freight carloadings declined by somewhat more than the usual seasonal amount between December and January, but owing chiefly to heavier ship ments of coal this year, weekly loadings since the begin ning of the year were larger than for the same period of 1926. Shipments of merchandise in less than carload lots were also slightly larger than last year, but those of most basic commodities were smaller. PR ICE S — The general level of wholesale prices de clined fractionally in January, according to the index of the Bureau of Labor Statistics, considerable advances in M onthly averages of daily figures for 12 Federal Reserve Banks. Latest figures are averages of first 23 days in February. prices of live stock being somewhat more than offset in the total by decreases in nearly all other commodity groups included in the index. Prices of non-agricultural products, as a group, declined to the lowest level since early in 1922. In February there were decreases in the price of iron and steel, nonferrous metals, bituminous coal, grains and hides, while prices of cattle, sheep, cotton, and gasoline increased. B A N K C R E D IT — Commercial loans of member banks in leading cities, continued to decline during the four weeks ending February 16, although at a less rapid rate than in earlier weeks, and in the middle of February the volume of these loans was about $270,000,000 below the seasonal peak reached in the middle of November, though about $200,000,000 above last year’s level. Loans on securities also de clined, while the banks’ investment holdings increased somewhat. M onthly averages of w eekly figures for banks in 101 leading cities. Latest figures are averages for first three w eekly report dates in February. December and with January, 1926, while contracts for commercial buildings were larger than a month or year ago. T R A D E — Retail trade showed more than the usual seasonal decline between December and January. Sales of department stores were in about the same volume as a year ago, while those of mail order houses were 7 per cent smaller. Wholesale trade declined in nearly all lead ing lines in January and was considerably smaller than a year ago. Inventories of department stores were reduced less than is customary and at the end of the month were in about the same volume as in January, 1926. Stocks of merchandise carried by wholesale firms increased slightly, The volume of reserve bank credit remained during the four weeks ending February 23, near the low level reached at the end of January. Liquidation of Reserve bank credit since the high point of last December has been in excess of $500,000,000, the unusual extent of this reduction being due chiefly to the large inflow of gold from abroad. The total bills and securities of the Reserve banks on February 23 were about $200,000,000 smaller than on the correspond ing date of last year. Easier money conditions in Febru ary were reflected in a decline in the rate on prime com mercial paper from 4% to 4 per cent after the first week of the month.