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Published by: fedfraser on Jul 24, 2014
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The Monthly
Business Review
Covering business and industrial conditions in the Fourth Federal Reserve District
D. C. Wills, Chairman of the Board
No. 11
again has had its attention strongly called to the resourcefulness and stability of the Federal Reserve System by its recent curbing of speculation. Speculation can no longer work | itself into a frenzied panic, drawing whole businesses and industrial activities with it. With its control of reserves and the gradual sliding up of rediscount rates, the System can quickly
bring a
speculating public to sane action and prevent an added thorn in the flesh from doing serious
With the steel strike a failure, the coal strike crumbling, the fading away of the longshoremen’s
the striking “vacationist” printers realizing that a long vacation is before them, together with
results of the Massachusetts election staring them in the face, is it any wonder that the executive
of the American Federation of Labor in its call to union chiefs for a conference on December 13
say: “In this critical reconstruction period labor is confronted with grave dangers affecting
foundation of its structure?
chiefs of the railroad brotherhoods and the representatives of farm organizations were also
to participate in this conference. The farmer, however, in the convention of the National
Grange has
declined the invitation, doubtless reasoning that the way to improve conditions in this
reconstruction period” is to keep right on “sawing wood” rather than by driving a spike into
the log and
 putting the saw on a vacationwhich is a new polite word for plain striking.
editor of one of the labor publications in this District said recently that organized labor in per-
the radical leaders to “bore from the inside,” as William Z. Foster himself openly confessed,
 put itself back fifteen years in the sympathies of public sentiment.
this period in the affairs of capital and labor there is the opportune moment for the display of
the fact that
labor leaders have misread and misjudged American labor. The psychological moment
has come
for the absolute removal of some, at least, of the heads of organized labor, and just as radi-
calism and
its teachings is disappearing before public scrutiny and popular acclaim, so the American
should be allowed to assert his individualism. This will develop a more careful scrutiny in the
methods and
character of his organization leader and ultimately insure a better standing in a court of
The steel strike was instrumental in bringing to the surface the scum of radicalism in organized
which was apparently working unopposed. This unearthing should result in more prosecutions
deportations of those anarchybreeding destructionists, who use our United States as an inter-
 boardinghouse and an anarchistic cafe.
fires of immigration have been allowed to burn too freely and our much famed “melting pot”
 boiled over, unable to so rapidly render the polyglot peoples of the world into pure Americans.Investigation shows that only 30 per cent of the aliens who have come to this country have become
other words, less than onethird of our immigrants become Americanized. The statement that there are 20,000,000 people in America who have no understanding of our language and
form of
government is interesting but not of great import. Education will remedy that condition in
at least in some degree. But the fact that our basic industries are in the grip of aliens is a
that has not fully been appreciated up to the present time.
The great American people is fast reaching the point where it is unwilling
that our nation should
  be exploited by either capital or labor. Neither should be permitted to rule the
Government, nor one
 ♦attempt to be the overlord of the other. The right to work, the right to be free,
and the right to be
 free to work were builded into the foundation upon which our country was founded.
Carlyle believed
 a man’s honest labor only slightly removed from his religion; it therefore takes on the
nature of sacred
ness and should not be subjected to the indignity of exploitation.Capital as well as labor must practice the spirit of fairness, honesty, and justice,
for schemes, union
 recognition, open shop and industrial democracy are only “ ’round Robin Hood’s barn”
by-ways which
 must eventually terminate in these three qualities before this industrial
war will
end.Seemingly every concession made to organized labor has been the parent of a new demand.
 spirit is illustrated by the increased wages of the railroad brotherhoods, but being dissatisfied
 these they come back and demand the railroads themselves.We are a country drunk with prosperitya vast people permeated with the “gettingsomething fornothingidea. We need to sober up and come to our senses. We should recall that industrial
many is working twelve and fourteen hours a day instead of six and eight. The antiquated law
of supply
 and demand ought to be permitted to reassert itself. We should be constantly reminded
of the enor
mous debt hanging over our heads, and the only way a debt is ever paid is by working
and saving.
To put up wages and not put up salaries is to overfeed part of our workers and starve the
 As the present order stands, our very educational institutions are being menaced. When dock
dores, soda fountain clerks, and delivery boys are able to obtain better wages than college
 and college trained men, can our youth be blamed for dodging ten years of expensive training
and tak
ing a short cut to independent living? It makes it difficult for them to see why they should
 finer thoughts for finer food and living conditions.War wages should not be peace wages, but they cannot be reduced while men receive
twice as
 much money for working part of a day as they should receive for working
It is not only that part of the people represented by unions that has lost
Less work
 and more pay is not confined to any one group. To the mental twist, affected by the prosperity
of the
 war period, the relaxation which has followed the release of wartime restraints has given
an additional
 turn. The whole country is in a bad state of mind. If it does not recover its balance by
reason alone
 it must have the jolt of an unpleasant experience.It would be a fortunate thing if we could recover our balance by reasoning, for if we do not we will pay the penalty the natural economic law prescribes—contention, disturbances and depression.Looking beyond all this, we still have man power, natural resources, producing machinery,
habits of 
 scientific practice, ambition, and we are fundamentally sane. It is only for the near future
that the
 outlook is uncertain.
Speculative Tendencies Have a Setback by Federal Reserve Board's Action
Without doubt, the increase in rates of discount at the Federal Reserve banks has been the
most im
 portant event in the money market. The mental suggestion that credit expansion had reached a
point at
 which a warning was necessary, rather than the direct effect, is the real feature
increase in
 rates. Whether this warning is sufficient, time alone will tell.Our banks are experiencing an unprecedented demand for credit. Commodities of all kinds but especially the necessities of life, command staggering prices, and in many cases are the basis of specu-lation. Speculation, not only in commodities and real estate, but in securities of all kinds, has been indulged in to a greater extent than ever before. People who never made a practice of investing merely for speculation have been carried along in the wild scramble for “easy money.” The result has been an unprecedented demand upon our members, and on banks in general, for credit.In addition to this demand, there has been a demand from the rural districts for the movement of crops, especially tobacco, and the purchase of cattle for feeding and fattening purposes; and from the centers of the steel industry, where the effects of the strike are being keenly felt.
  been requests for abnormal rediscounting and borrowing, and in many cases, not only to take care
of the
demands of the banks’ communities, but also the speculative demands. Taking it all in all, a
expansion of credit has taken place, and at a time when, under ordinary circumstances,
should have been the order. No doubt the lure of the high rates on call money in New
has also had its bearing on the situation.Another result in this District of the increase in the rates is that paper secured by the Liberty
and Victory
Bond issues no longer commands a preferential rate over commercial paper, suggesting
that the
time has arrived when a great effort must be made to practice thrift and economy, and to
apply the
 product of thrift and economy to a reduction in the loans against United States securities
in other
words, to put the war issues back of us and thus release funds for our commercial and indus-
demand for both commercial and collateral loans is very strong and rates are high and firm.
Only the
highest grade commercial loans are being made at 5
 per cent, all others secured and un-
secured are
 being negotiated at
 per cent.
uncertainty and unfavorable development of conditions surrounding the discount market of
Fourth Federal Reserve District during the past month, have had a reactionary effect on the volume
of the
acceptance business. In the early part of the month the general improvement of the market spread
great deal of optimism among the dealers, but the constantly increasing rates for call money
and the
change of rates by the Federal Reserve Banks soon caused the market to become very dull. There
has been
a complete fallingoff of business from new sources, as well as from banks that were already
in the
market. The only supply of bills at present comes from the banks that had made previous arrangements with their customers to accept their drafts. There seems to be no indication that the
are encouraging the use of bankers’ acceptances while such a small margin remains to their
credit, in
comparison with other forms of commercial paper. It is too early to state what ultimate
effect the
change in discount rates will have on the open market, but so far it has tended to stop all
The portfolios of the brokers are filled, and they are not seeking additional bills until there
will be
some hope that the former demand will be restored.
would seem that the higher rates would attract new buyers into the acceptance market, and this
expected unless other forms of loans rise to rates that are unheard of. Just at present it seems that
entire market is awaiting a readjustment of present conditions, and all are watching the action
of others
to learn what procedure will be necessary.
 Effects of Steel Strike Greatly Minimized. Production Almost Normal 
With the steel strike now reduced to a scale of small importance, producers and consumers are
concerned with the effects of the loss of production previously incurred than with present operat-
difficulties.Except for a very few spots, Western Pennsylvania may be said to be practically free from strikes.
Wheeling district remains almost entirely closed. It is estimated that the strike thus far will
a loss of about one month’s production. Apparently steel has not become as scarce by reason
of the
strike as was expected—the forecasts of scarcity having been based upon the assumption that
was far from plentiful before the strike began. The large demand was occasioned somewhat by
disposition to stock up.
 production of steel for October, it is said, averaged about 60 per cent of the rate immediately
before the
strike while production at the present is estimated at 70 per cent of this amount.A premium is the present rule for immediate shipments in small tonnage lots. The regular market
is governed
 by the March schedule. Common grade sheets are in good demand and the supply fairly
with a better situation than that of thirty days ago. .The strike seemed strong where this
grade of
sheet was made and the effect was immediate and the curtailment pronounced. The effect
was also to
curtail the processes necessary for special sheets. Production
reported to be constantly
on the increase.
Automobile builders have suffered not alone for want of sheets, but also in the matter of other

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