TWELFTH ANNUAL REPORT OF THE SECRETARY OF COMMERCE To the PRESIDENT: DEPARTMENT OF COMMERCE, OFFICE OF THE SECRETARY, Washington, November 1, 1924. I have the honor to submit herewith, for transmission to Congress, the Twelfth Annual Report of the Secretary of Commerce, in four parts, as follows: I. Economic Progress. II. Elimination of National Waste. 1 The outstanding features of the fiscal year were: First, the advance in agricultural prices, which had hitherto lagged behind industry since the slump of 1920; second, the beginnings of sound policies in German reparations leading to a hopeful measure of economic recovery in Europe; and third, the complete recovery of our own industry and commerce (aside from agriculture), great stability of prices, high production, full employment, expanding foreign trade and prosperity throughout the business world. There were some moderate decreases in activity of some lines during the latter part of the fiscal year, but since its close there has again been general recovery in those lines. INDUSTRY The general condition of manufactures, industry, and commerce as distinguished from agriculture is indicated by the following table: The slight slackening in production at the end of the year is indicated by the fact that the index for manufacturing output for June was 15 points below the fiscal year average, that for railway ton mileage 13 points below, for building contracts 6 points, and for employment in factories 7 points below. However, the sales of department stores, chain stores, and mail-order houses, the seasonal/ fluctuations of which make comparison from one month to another misleading, were larger in June than in the corresponding month of 1923. The subsequent recovery is shown by the September indexes, which for manufacturing production stood 13 points higher than in June, for mineral production 9 points, and for forest production 1 point higher. All these facts indicate that there had been but a very minor temporary recession in the spring. Of the most importance, however, the agricultural recovery by September had proceeded to a point where the wholesale price index of farm products was 143 on the 1913 base as compared to 149 for the price of all commodities, thus marking the reestablishment of the farmers' buying power at much more nearly the pre-war ratio. AGRICULTURE The outstanding event of the year was the improvement in agricultural prices. Unlike manufacturing and mineral industries, a change in the volume of agricultural production often does not reflect a parallel change in the well-being of the producers. Farm products in general have little elasticity of demand in the home market. The farmer can not adapt his output rapidly to changes in the foreign demand. The aggregate area planted to crops in this country has varied only slightly from year to year since the war and most of the individual crops show little change in acreage, although the low prices of wheat have resulted in a very considerable reduction in the planting of that cereal. The farmer, from the very nature of things, can not suddenly and greatly increase or reduce his aggregate plantings or the proportion of his land devoted to different crops. Industries and commerce more readily adapt themselves to change in demand. The variations in output of crops from year to year are usually due much more to weather conditions than to the will of the farmer. Therefore, farm prosperity can not be judged upon the criterion of production alone but requires consideration of prices as well. The situation of agricultural prices may be well indicated by comparing September prices with the general level of commodity prices. Based upon 1913 as 100 the wholesale price index of all commodities was 149. The corresponding price index of No. 1 northern wheat was 148; of cotton (New York), 191; corn, 186; and hogs, 118. From the low point since the beginning of 1921 these figures represent recoveries: For wheat, of 37 points; cotton, 99; corn, 111; and hogs, 37. Many readjustments are needed yet, but agriculture has turned an important corner and this change marks a vital step in the whole afterwar economic readjustment. The increasing stability in agriculture is further marked by the fact that wholesale prices of food products show a continuing decrease in spread as compared to farm prices. This spread in the two indexes which amounted in certain months of 1921 to as much as 27 points has now (September, 1924) decreased to 5 points, indicating the steady elimination of speculation and closer trading margins through increasing economic stability and closer competition. The rise in agricultural prices, while in large part due to general world economic readjustment and to settlement of European economic conflicts, has been favored to some degree by local and special causes such as the decrease in corn crop and the fact that the abnormal world wheat crop of 1923 swung over to a slightly subnormal crop in 1924. TRANSPORTATION This fiscal year marks the first occasion since long before the war when our railway facilities have been completely equal to the demand of the country. There were no car shortages of any consequence. There was a speeding up of delivery of all goods. This complete reconstruction, expansion, and growing efficiency in transportation facilities marks a fine accomplishment on the part of our railway management. Its economic effect is most far-reaching. Every car shortage is a strangulation in the movement of commodities which reduces price levels to the producer and increases them to the consumer. It disarranges the synchronizing of our industrial fabric and widens the margin all along the line between producer and consumer. There is still requirement for extension of terminals and readjustment of rates. There are large consolidations needed for the ultimate best service and sound finance. The making of our transportation facilities adequate to our needs is one of the greatest contributions toward our economic stability. The following table shows the essential items of progress in transportation as compared with the two previous fiscal years: NOTE. Certain of the above items relate only to Class I roads which, however, include about 98 per cent of the total. BANKING AND FINANCE The following table indicates the movement in loans and discounts, investments, and deposits of all member banks of the Federal reserve system: TABLE III.-FEDERAL RESERVE MEMBER BANK OPERATIONS |