Economic Review
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MONTHLY REVIEW BUSINESS AND AGRICULTURAL CONDITIONS s^ j t/ QlSgS^ BY CALDWELL HARDY, CHAIRMAN AND FEDERAL RESERVE AGENT RICHMOND, VIRGINIA M A Y 31, 1923 DISTRICT SUMMARY twenty-three of the District's leading cities showed Business slowed up somewhat during April in substantial increases during the four weeks ending comparison with March. Part of the decrease was May 9th of this year in comparison with the pre seasonal, a dull period naturally following the pre- ceding four weeks and with the corresponding four Easter weeks, but there are signs that the slowing weeks of 1922. Business failures in the Fifth Dis up was partly based upon a hesitancy and uncertainty trict in April were 41.9% fewer in number than about business prospects. Many thoughtful ob during April 1922, and 20.9% less in the aggregate servers believe that the expansion in industry and of liabilities involved. The April 1923 number of trade, and in construction lines, has been too rapid, failures was the lowest in the District since Septem and lately advancing prices of labor and many com ber 1921. Labor is scarce in all lines except clerical modities have not only caused concern but have help, farmers and contractors finding it especially resulted in holding up some construction plans. The hard to secure the help they need. Coal is being experiences of 1919 and 1920 have not been for produced in sufficient volume to meet all needs, but gotten by either sellers or buyers. The first deter mined resistance against mounting costs appears to there have been no recent changes in prices to con have been made in the building industry, in which sumers. Textile mills are receiving very few for advances have been perhaps greater than in other ward orders, but they are busy filling orders pre lines. This resistance has taken the form of indefi viously received, and the managers believe the nite postponement of the erection of a number of present lull is temporary. Cotton prices have de buildings that doubtless would have been built if clined sharply during the past month, but it is to be prices for labor and material had not advanced so noted that very little cotton remained in the hands rapidly and to such high levels. How far this resis of the growers. Cotton consumption in April was tance will spread cannot be anticipated, nor to what less than in March, but was 30 % above consumption extent if any it will flow over into other fields in in April 1922. Tobacco markets closed during April, addition to the building industry. only a little low grade tobacco having remained to be Reviewing business statistics for April, reports sold that month. The new crop is being planted, but from regularly reporting member banks show sea cold weather has damaged plant beds to a consider sonal increases in outstanding loans to customers, able extent. Nearly all crops are getting a late start decreased deposits, and increased rediscounts in this year because of unseasonably cool weather, and order to provide the needed accommodations for their it is yet too early to form any opinion as to the crop customers. Savings in commercial banks show a prospects. New construction work for which per slight decline for the first time in many months, mits were secured in April broke all previous records but savings reported by savings banks show a con for both number of permits and estimated valuation, tinuation of the steady increase that has been in evi but many projects have recently been postponed be dence since 1920. The Federal Reserve Bank’s cause of high costs, and the outlook for the building rediscounts for members rose during April, while industry has become uncertain. Retail trade was the note circulation declined, resulting in lowering good in April, considering the date on which Easter the reserve ratio to 57.03% on May 16th. Debits fell, and wholesale trade was considerably ahead of to individual accounts in clearing house banks in the April 1922 business. The National Summary will be found on pages 10 and 11. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis CONDITION OF SEVENTY-SEVEN REPORTING MEMBER BANKS IN SELECTED CITIES. ITEMS May 9, 1923 April 4, 1923 May 10, 1922 1. Total Loans and Discounts (including all rediscounts) .................................. $ 461,666,000 $ 458,545,000 $ 415,308,000* 2. Total Investments in Bonds and Securi ties ........................................................ 130.508.000 131.469.000 113.843.000 3. Total Loans and Investments................... 592.174.000 590.014.000 529.151.000 4. Reserve Balance with Federal Reserve Bank...................................................... 35.073.000 35.336.000 32.683.000 5. Cash in Vaults......................................... 13.509.000 13.527.000 14.016.000 6. Demand Deposits....................................... 328.516.000 332.561.000 310.691.000 7. Time Deposits............................................ 153.238.000 154.318.000 135.355.000 8. Borrowed from Federal Reserve Bank..... 37.081.000 32.242.000 19.999.000 ♦Does not include Rediscounts. The above table gives a comparative statement of the principal items of condition in seventy-seven regularly reporting member banks, located in thirteen cities of the Fifth District, as of the close of business May 9 and April 4, 1923, and May 10, 1922. All items except number 1 are comparable for the three dates, but the 1922 total of Loans and Discounts does not include rediscounts and is therefore not comparable with the two 1923 amounts under that heading. The seasonal expansion of credit mentioned in our Review last month is further reflected in the figures shown in the table herewith for May 9th in comparison with the figures as of April 4th, both this year. Item 1, Total Loans and Discounts (including all rediscounts) shows an increase from $458,545,000 on April 4th to $461,666,000 on May 9th, and during the same five weeks Item 8, Borrowed from Federal Reserve Bank, increased from $32,242,000 to $37,081,000. Between April 4th and May 9th all other items show de clines, Item 2, Total Investments in Bonds and Securities, decreasing from $131,469,000 to $130,508,000; Item 4, Reserve Balance with Federal Reserve Bank, decreasing from $35,336,000 to $35,073,000; Item 5, Cash in Vaults, decreasing from $13,527,000 to $13,509,000; Item 6, Demand Deposits, decreasing from $332,- 561,000 to $328,516,000; and Item 7, Time Deposits, decreasing from $154,318,000 to $153,238,000. The decline in Time Deposits is the first downward movement reported under that head for many months, but the decrease is partly, if not wholly, accounted for by the transfer of Vacation Club funds from Time to Demand deposits as the date of maturity of the Clubs approaches. The other changes noted in the compari son between the April 4th and May 9th totals all indicate an increased demand for credit and funds for crop planting and for the expansion in mercantile and industrial activity in nearly all fields. During April 1922 the seasonal expansion of credit was practically absent, and during that month bor rowing by reporting member banks from the Federal Reserve Bank of Richmond actually decreased, reach ing the low total of $19,999,000 on May 10, 1922. A year ago many member banks were still carrying an excessive volume of frozen loans and the further borrowing power of many of their customers was limited. The good prices realized for farm products during the fall of 1922 greatly improved the situation, however, and enabled a large number of the member banks to reduce their slow loans, thus getting themselves in position to care for this spring’s demands. The payment of old accounts also restored the credit of the bank’s customers and placed them in position to ask and secure new accommodation from their banks as the needs arose. These improvements in the positions of both the banks and their customers have naturally resulted in greater use of credit facilities this spring than was the case a year ago, a comparison of the items in the above statement for May 9, 1923 with the items reported on May 10, 1922 showing the expansion clearly, and also the greater ability of the banks to meet the new demands. The amounts given for Item 1, Total Loans and Investments, are not comparable because the May 10, 1922 figure does not include any redis counts, but it is safe to say that outstanding loans to the reporting banks’ customers are now considerably greater than they were a year ago. Item 2, Total Investments in Bonds and Securities, shows an increase during the year from $113,843,000 to $130,508,000; Item 4, Reserve Balance with Federal Reserve Bank, increased from $32,683,000 to $35,073,000; Item 6, Demand Deposits, rose from $310,691,000 to $328,516,- 000; Item 7, Time Deposits, increased from $135,355,000 to $153,238,000; and Item 8, Borrowed from Fed eral Reserve Bank, increased from $19,999,000 to $37,081,000. The only decrease shown is in Item 5, Cash in Vaults, which declined from $14,016,000 on May 10, 1922 to $13,509,000 on May 9, 1923. SAVINGS BANK DEPOSITS Reports from fifteen mutual savings banks in Baltimore giving total deposits at the end of April show an increase over both the March 31, 1923 and the April 30, 1922 deposits. At the close of business April 30, 1923, the fifteen reporting banks had on deposit an aggregate of $135,948,482, compared with $127,- 295>J73 on deposit April 30, 1922, $125,132,192 on deposit April 30, 1921, and $121,710,304 on deposit April 30, 1920.