frsbog_mim_v10_0167.pdf

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F E D E R A L R E S E R V E B O A R D

STATEMENT

FOR THE

PRESS

X-1454

Apri l

2, 1919.

Release f o r morning papers,

April 3, 1919*

BUSINESS AND FINANCIAL CONDITICSS DURING MARCH, 1919.

Improvement

i n

general business conditions

and the

continuance

of an

undertone

of

confidence

in t he

essen t ia l s t rength

an d

soundness

of the

country

1

s economic position a r e ind ica ted by the r epo r t s of Federal Reserve

agents a s represen ta t ive• of the business si tuation toward t h e c lo se of

March.

The

ac tua l s i tua t i on i t se l f

h a s n o t

changed very fundamentally,

bu t

there a r e symptoms po int i ng t o improvement i n fu ture prospec ts and to a

more complete readjustment of business to normal conditions.

According

to t he

report from

t h e

F i r s t Dis t r ic t , " sa t i s fa c tor y progress

i s being made * * * in ad jus t ing bus iness t o preva i l ing condi t io ns ," re t a i l

trade being gen era lly good, savings de po si ts in cre asi ng, and stagnant

businesses beginning t o recover. In the Second D i s t r i c t the re i s a general

be li ef tha t fundamental conditions

a r e

soundj

V

although there

i s

s t i l l

a

wai t ing a t t i tude and uncer ta in ty as t o p r i c e s . I n t h e Thi rd Dis t r ic t d e -

c l i ne s i n pr i ces during th e pa s t f e w weeks have "improved t h e business

•s i tuat ion an d indicate that progress i s being made in t he process o f r e -

adjustment. In the Fourth Di st r i c t " industry may be said to be

1

looking

u p , I tha t i s , i t i s gla ncing upward toward gr ea te r ac t iv it y , r at he r than

downward,

a s

formerly,

t o a

fur ther per iod

of

s tagnat ion, depression,

and

dec l ine . The optimism which h a s been constantly i n evidence, during the

w&ole period of t r a n s i t i o n , i s being slowly b u t sure ly subs tan t ia ted by f ac t s .

The Fi f t h Di st r i c t s t a t es that "while rep ort s s t i l l show cro ss- cur ren ts f rom

very

rtnilriPfcs pnri Tinner t a in

t v ,

there

a re / f ew

t ha t

d o n o t

indicate some improvement,

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- 2 - X-I454 l

• f

r

f

e n t

o r

P rospec t ive , and the sp i r i t genera l ly i s conf ident of overcoming

difficulties.'

1

I n District No,6 no great

p r o g r e s s

has been nade during the past few

weeks

toward a return to normal conditions,

n

but the general status of business is

fairly satisfactory and it is felt that as soon as cotton begins to move at

a satisfactory

p rz . ce ,

trade in all lines will revive

* I n

pistrict

W o.

7 >

business

men

while proceeding along conservative lines, reflect less

apprehension regarding the immediate future than a month ago, It i s also

stated that

h

there is every reason to expect increased activity all through

the Middle West, In District No»8

:r

business is rapidly resuming a normal

basis i n m a n y l i n e s . " District No*9 reports that " t r a d e i n a l l the principal

wholesale lines

i s satisfactory and retail

t r ade

lis

l ikewise

good* Collections

a r e good." I n D i s t r i c t No. 10 " r e p o r t s from a l l sec t ions * * * point to a

year of a c t i v i t y and pro spe r i t y , while business is f a r less inclined than

h e r e t o f o r e t o wait f o r t h e development of new c o n d i t i o n s /

1

In D i s t r i c t No, 11

no changes of importance have occurred i n t he general t rade situation during

t h e pas t 30 days, b u t " fu r the r p rogress i s evident i n t h e readjustment period,

and

l e s s

i s

heard

of the

unce r t a in t i e s fo l lowing

th e

tu rn

of the new

year,

l1

In D i s t r i c t No• 12 manufactur ing and industry have been, on t h e whole, fair ,

while prospects a r e good, exports t h e lar gest ever repor ted , and the p r i n c i -

p a l source of anx ie ty i s due t o t he labor s i tua t ion*

From a l l Federa l Beserve d is t r ic t s i t i s reported that t h e p r i ce s i tua t ion

i s s t i l l t h e c o n t r o l l i n g f a c t o r i n business condi t ions an d outlook* Several

developments of importance a r e evident i n this connection* There h a s been a

continuous though moderate decline of p r i c e s . P r a c t i c a l l y a l l of t h e standard

index numbers show a f a l l i n g o f f . Brads t r ee t *s number f o r March 1 was $17.2244,

a decrease of 2~3/lO p e r c ent from February 1 ; Dun's index number was $217-037

on

March

1 , a s

compared with $220,050

on

February

1 , a

dec l ine

of

1-4 /10

p e r

cent * Sauerbeck's Br i t is h index number in di ca te s a p a r a l l e l f a l l i n g of f of about

2 p e r cent .

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X-1454

-

iL

- 3 -

The general index number of the Bureau of labor Statist ics fo r th e month

ending February 28th

h a s

decreased

5

po in ts , from

33 2 to 197* The

Board*s

compilation of index numbers showing th e s ituat ion up to March 1 , indicates

that during February the prices of consumers' goods decreased 10 points,

th e number fo r th e month of February standing at 202 . Smaller decreases

were shown i n producers* goods, from 1$4 to ig i , and fo r raw materials, from

195 to 192, the decline in the latter being due large ly to the decline in

th e index number f o r farm products from 2^2 t o 222; Reports since rece ived

indicate that

th e

decline

i n

prices

h a s

been moderately continued

i n

some

l ines .

Almost equally important with

the

decline

i n

prices

i s th e

fact that

the public a t large h a s apparently given up expectations of immediate and

dec isi ve de cl in es. From some di st r i c t s i t i s reported that, in the opinion

of the local bu si ness community, Whatever change i n priced i s y e t t o come

will come slowly,

n

an d that i n consequence th e business community has de-

cided that further postponement

of

ac t iv i ty ,

in the

belief that drastic

declines will occur,

i s n o t

warranted. During

the

latter part

of

March

there were further downward revi s ions of prices i n important lines. The

steel industry sent a representative committee to Washington which, i n

consultation with

a

board representing

the

Government, agreed upon standard

quotations

for the

pri ncip al st ee l products, representing

a

reduction

of

about

$5 per ton.

Some fur ther re vi si on

i n

copper

and

other metal prices

h as likewise occurred. The problem of working o f f th e Government's surplus

copper stocks i s st i l l unsett led or only par ti al l y set tle d.

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- 4 -

X-1454

The War Department announced that under a tentative agreement reached

with

9 0 p e r

cent

of the

copper producers,

t h e

l a t t e r w i l l s e l l

th e

Government surplus a t the market price, charging th e Government actual

cost f o r s o doing. Producers wi ll di st r i bu te i t i n connection with

the i r

own

product ,

a

minimum monthly amount being fixed

and the

actual

amount disposed of being a cer ta in percentage of thei r total sales , i f

I t

exceeds

th e

minimum amount.

The

copper

i s t o b e

d i s t r i b u t e d

i n

15 months. Pr ic es f o r lead a r e expected n o t t o b e advanced from their

cur rent low f ig ure un t i l exi s t i ng overstock h a s been largely disposed

o f . Lead or es averaged $51-95 i& February, a s compared with $60.

i n January, while a year ago average prices ranged around $85.

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_ 5 -

x

Cotton prices have continued

t o

decline somewhat during

th e

early part

of the month, hut the prospects of a resumption of free export trade have

materially strengthened them. According to the prevailing opinion i n most

districts , rapid and general decline of the prices of loc^l products are not

to be expected* Very great diversity of conditions exists in the manufacturing

f i e l d - From Philadelp hia i t i s reported that i n a number of lines conditions

are st i l l unset t led at mills. This i s dist inctly true of cotton manufacturing

and of iron and steel* The iron and steel output i s sti l l relat ively small

and probably does n o t exceed more than 60 to 66 per cent of capacity in the

case of the independent mills, although th e United States Steel Corporation

reports about 95 per cent of full operation f o r February, a s compared with 97

p er

cent

f o r

January, During March conditions have improved somewhat,

a s

shown

by reports received by the Board from some of the principal producing districts

P ig

iron production during February amounted

t o 2

,940,168 tons ,

a s

compared

with 3*302,260 tons during January, and 2,319,399 tons a year ago, the re-

143

sp ec ti ve index numbers being '1?6, and 10 7• Steel ingot production likewise

shows

a

dec lin e from 3,082,42

f

tons

i n

January

t o

2,688,011 tons

i n

February,

a s

compared, however, with 2,273*741 tons

a

year

ago , the

respective index

numbers being 129, 120, and 102. The unfilled orders of the United States Steel

Corporation have continued their decline, the figure at the close of February

being 6,010*787 tons,

as

compared with 6,684,268 tons

at the

close

of

January,

th e respective index numbers being 114 and 127> while th e figure at the close

of

February,

1 91 8, was 9>2

88,453 t on s, corresponding

to an

index number

of 176%

In general manufacturing the situation i s reported a s

M

somewhat mixed*

Manufacturers of boots and shoes report from various d i s t r i c t s that th ei r bu si -

ness i s almost normal and in some cases up to capacity* In groceries retai lers

are buying slowly, while large stocks on hand have caused sharp declines i n

price* In some parts of the country, however, wholesalers find business im -

nrnvirirr,

Tn the

Middle West activity

i n

many lines

i s a l l

that could

b e

asked,

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- 6 - • .

x

'

1 4

^

while elsewhere production

i s

s t i l l

f a r

fr om norm al. Woolen mi ll produ ct io n

has

reached i t s lowest point and i s beginning t o improve. The American Woolen Co . ,

i n consequence of t he cu t i n prices inaugurated some time a g o , h a s , i t i s believed,

succeeded i n booking a considerable volume of orders and has adopted a po l i cy of

aggressive bidding fo r new bus iness . In miscellaneous l i ne s there i s a very

variable

s i t ua t i on .

The

demand

f o r

jewelry, automobiles*

and

other luxuries

appears

to be

b r i s k

i n

many d i s t r i c t s . Purchases

of

gold

a t t h e

assay off ice

i n

New

York

f o r t h e

purpose

of

manufacturing jewelry were greater

i n

January grri

February than during

any

preceding month since October,

1 9 l b . I n t h e

case

of

mater ia l s and in some cases clothing, which h a s been affected by the unusual

weather conditions, demand i s unsa t i s f ac to ry and manufacturing l o w . Production

of anthraci te coal h a s reached a low l eve l , due to t he f a l l i n g off of demand

consequent upon extraordinarily mild weather i n most parts of the country, while

t h e production of bituminous coal and of coke h a s likewise decreased, although

recent reports show a tendency to an upward movement.

In connection with t h e manufacturing situation there i s t o be noted a

distinct improvement

i n t h e

labor

and

employment ou tloo k. From D i s t r i c t

No. 1

i t i s reported that except i n certain centers where strikes have been i n progress

condi t ions a r e n o t alarming, while many of those who have been re le as ed from

war work a r e f i nd ing i t comparatively easy t o shif t in to other occupat ions. In

Chicago t h e employment situation i s noticeably improving. Returning soldiers a r e

being generally reemployed, although there i s d i f f i c u l t y i n placing those who

desire higher wages and better appointment than they h a d before en te r ing t h e

Army*

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173

X-1454

- 7 -

I n t h e a g r i c u l t u r a l d i s t r i c t s a large demand f o r labor is now opening, due

to t h e

prospec t s

of

excellent crops.

On th e

Pac i f i c coas t

th e

problem

of

unemployment i s s t i l l se r ious, b u t i n var ious par t s of the d i s t r i c t t h e s u r -

plus of unemployed i s beginning t o decl ine and in some sections i t i s b e -

l ieved that

by May 1 the

entire labor surplus will have been absorbed.

In New York Ci ty , alt hough th e supply i s only about equal t o demand, c o n -

s iderable labor t rouble s t i l l exis ts , wi th

a

number

of

s t r i k e s

i n

progress .

Reports from t h e producing dis t r ic ts cont inue to be very sa t i s fac tory .

In the West and Middle West i t i s s ta ted that th e condi t ion of winter wheat

i s

exce l len t

and in

some quarters

th e

best that

h a s

ever been reco rded

f o r

th e month of March. I n t h e Tenth Dist r ic t i t i s repo rte d that crop pro spe cts

a r e b r i gh t e r a t this time than a t t h e winter break-up of any of the l as t

10

y e a r s .

n

From

th e

Chicago dis t r ic t

i t i s

reported that crop condit ions

a r e

exce l len t and tha t an unprecedentedly small amount of complaint of crcrp damage

i s heard from plan t ing d i s t r i c t s . In the South there h a s been a reduc t ion of

cotton acreage,

b u t

prospects

f o r

product ion

a r e

good, while

th e

other crops

of the South and Southwest a r e s e l l i n g a t high pr ices and have at least p r o -

a fa i r y ie ld .

Grain movements have considerably declined during t h e past month. This

been noticeable

f o r

each

of the

f i ve pr inc ip al grains . Stocks

on

hand

a t

th e c lose of the month also show a re l a t i ve l y s l i ght dec l ine i n each case.

Flour production likewise shows

a

decrease,amounting

to

7*736,000 barrels

during February, a s compared wit h 12,994,000 b a r r e l s i n t h e previous month.

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X-1454

While th e stocks have increased from 3*341,000 at the close of January t o

3)544,000 at the close of February, conditions a s a whole are dul l , and there

i s a

dispos i t ion

t o

await further developments.

In the

live-stock market

th e

situation

i s

reported

a s

bright.

The

average

price of cat t l e h a s advanced very considerably over a year a g o , while sheep

and lambs f o r February averaged about the same. The price of meats has ad-

vanced; while there has been a slight decrease in the stocks of meats, there

has

been

a 50 per

cent increase

in the

stock

of

lard.

The

trend

of

prices

f o r

live hogs f o r Chicago during February an d early March h as been higher than a

year a g o . Receipts of cat t l e and calves at 15 principal markets have decreased

considerably from las t month, re spe ctive f ig ur es being 1,656,046 and

1,096,118 head, corresponding

t o

index numbers

of l 6 4 and l l 6 . The

February

figure, however, i s almost a s large a s that f o r a year ago . A decrease has

likewise occurred

in the

receipts

of

hogs,

the

figures

for the two

months

being 4,603,335

an

<l 3»^5l»8$4, corresponding t o index numbers of 209 and l6S,

The receipts during February, 1919 , are approximately the same a s receipts

f o r a year a g o , while receipts of sheep have also ftecreased considerably

from the January figures. They a r e , however, somewhat larger than the Feb-

ruary, 1918 , f igures . The figure f o r February 1919 , i s 744,891.. head, a s

compared with 1,079*377 during January,

th e

index number having decreased

from 79 t o 6 l , while figures f o r February, 1918 , are 733>895 bead, correspond-

ing to an index number of 58.

Receipts, meltings, an d stocks of sugar a t t h c lose of February show a

considerable increase, both over

th e

f igures

f o r t h e

previous month,

an d

over

th e same month in 1918 , the increase i n rece ipts , an d espec ia l ly i n stocks,

having been considerably greater, however, than t h e increase i n meltings.

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- 9 -

X-1454

I n t e r e s t

and.

disco unt ra te s have

n o t

var ied mater ia l ly

in any of the

markets during th e month of March. Th e Boar d's re po rt s show minor va ri at io ns

a t d i f f e r e n t p o i n t s . In th e New York market occ asio nal in cr ea se s i n both

c a l l an d time funds have been followed by f u l l y o f f s e t t i n g d e c l in e s . No

def in i t e t rend i s t o b e not iced in any of the pr incipal f inancial markets of

the month.

The

Boa rd's fi gu re s, showing de bi ts

to

deposit accounts, both

of

ind iv idua l s and batiks, r eg is te r a moderate decline during th e f i r s t h a l f of

March, t h e high point (based on daily averages) having been reached during the

last week i n February. Bates a t Federal Reserve Banks have been stable*

Banking conditions a s a whole have been satisfactory, with some operations

of

cons ide rab le si ze su cc es sf ul ly completed. Prominent among the se

was the

Belgian indus t r i a l c redi t f o r $50,000,000, while other operations have been

undertaken an d a r e i n pro gre ss. There h a s again been an increase i n Federal

reserve note c i r cu lat ion ,

th e

total advance

f o r t h e

period between February

28th and March 28th amounting to $49,469,000.

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