The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
?
3
ECONOMIC SITUATION
R E P O R T S OF T H E
TO
ECONOMI C
THE
EXE C UT I VE
July 18,1933 -
ADVISER
COUNCIL
July 2 4 , 1 9 3 4
5
Reproduced from the Unclassified / Declassified Holdings of the National Archives
riifc> iiconoraic Adviser to tlxe
Executive Cotmcil
COIiFIDSHTIAL
July 2U,
19 3 U
REVIEW OS’ THE FIRST HAL? OF I93I+
Business continues quiet at tiie lower levels reached after
the end of Jims* The recession appears to be temporary in char
acter, "but no substantial pick-up is to be expected during the next
month* The volume of industrial production for July as a whole
will be well below tlxe level of June, and factory employment will
be reduced except in certain seasonally active industries. Betail
trade, however, shows no corresponding reduction so far in July,
except in drought areas. In the organised markets, prices of farm
products have continued strong, reflecting drought conditions*
Prices of common stocks have shown marked weakness during the past
few days, following a period of extreme dullness.
Looking back over the past six months as a whole, it appears
that industry consolidated raany of tlxe gains made in 15 )3 3 *
Ths sources of demand for industrial products which either
maintained business activity or lifted it to higher levels can be
subdivided into three major groups; First, day-to-day items of
consumer expenditure such as those for food, clothing, tobacco,
gasoline, tires, in which demand remained fairly steady at a rela
tively high rate; second, consumer outlays for heavier durable com
modities such as automobiles, refrigerators, radios* Among these
commodities demand continued to advance repidly fron the low levels
of two years ago. Third, there are items which are not sold to
individual consumers but find their uses in business, such as office
equipment, machinery, tracks, transportation equipment, air condi
tioning units, etc. For these, in the aggregate, there was a mod
erate increase in demand. In general, it would appear that im
proved conditions have not been reflected in any great change in
the day-to-day habits of consumption, but rather in increased expen
ditures for durable consumers’ items where credit financing is
readily available. This type of activity at the present phase of
ths depression when total volume is low represents a self-multiply
ing force of considerable importance, not only in the direct employ-
Keproaucea irom tne unclassified / Declassified Holdings ot the National Archives
Review of the /’irst Half of 193^
merit which it gives, bat also in the larger demands for business
equipment to which it leads.
Construction, on the other hand, aside from public works pro
jects, lias remained abnormally depressed. How far this reflects
difficulties of financing as distinguished from genuine absence of
deraand, it is impossible to state. It is significant, however, that
home construction, although it involves a more substantial finan
cial outlay, falls into much the same category as autonobiles and
refrigerators that have shown such strength of late. As the new
Housing Administration develops financial facilities in this field,
home construction will also be in a position to take full advantage
of this latent consumer demand.
The past six .months have brought relatively little change in
the general level of prices following the rapid advances of 1 9 3 3 *
The major exception is the rise in farm prices as a consequence of
the drought* Prices of laamifactuxed contaodities in wholesale mar
kets have not varied greatly except for gradual downward adjustments
in textiles and leather, both of which represent commodity groups in
which price advances last autunm were exceptionally rapid.
Retail prices have evidenced the sane general stability, ex
cept for food supplies that are affected by the drought. TCage-earners1
cost of living as a whole was reported by the Secretary of Labor
as only 1 per cent higher on June 30 than in last December, and 6
per cent higher than the low point last June*
'ihe agricultural outlook is now dominated almost completely
by the drought situation. It lias reduced or eliminated surpluses
overhanging the market and in consequence 1ms raised prices of
grains, feeds, cotton and certain fruits* At the sane tine it has
temporarily lowered prices of livestock because of the hurried Liarketing of cattle from drought areas. In terms of money income, it
appears that higher prices in the aggregate will about offset the
decreased volume of sales, with the result that total farm income
from marketings will vary widely as between regions but for the coun
try as a whole will average about the sarae as last year. With
rental, benefit and drought relief payments included, gross farm
income may be 20 per cent in excess of last year.
The charts that follow illustrate in greater detail develop
ments in industry during the first six months of 133*** In general
they indicate the depth of the depression as compared with 1929 and
the extent of the recovery up to the end of June.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
learly 2,000,000 more men were at work in June in private industry
than at the first of the year* In Federally sponsored emergency agen
cies, however, there were less than 900,000 on the payrolls as compared
with U ,700,000 in January, when CWA was at its height* This does not
include the Emergency Works Program of the Federal Snergency Belief Ad
ministration which had nearly 1,000,000 persons on its rolls receiving
relief in the form of part-time work*
Of the 2,000,000 reemployed in private enterprises and regular
government activities in the past six months, more than 1,000,000 were
in industry and trade and 350*000 in agriculture* Part of this gain
was seasonal*
In Jtine there was little change in the aggregate volume of employ
ment*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
MANUFACTURING
1929 = 100
OUTPUT
Durable durable
H05E:
EMPLOYMENT
Tot.il
Durable
Nondurable
PAYROLLS“
Tot al
IToniXireble durable
The top of the hatched section, reading from left to right, indi
cates changes in the six months ending June, 193^ •
Manufacturing activity had regained a little more than one-third
of its depression losses in the second quarter of this year. The in
crease during recent months, shown on the chart, was concentrated in
the durable goods industries. In spite of this advance, however, the
output of durable goods remained more than forty per cent below the high
point reached in 1929* The production of non-durable goods, which
showed little change in the first half of 193^t was within eighteen
per cent of 1929 levels.
In part because of the limitation of hours under the ESA, employ
ment was closer to 1929 levels than were either payrolls or output.
The fact that payrolls remain small in comparison with 1929 may be ac
counted for partly by the fewer hours worked and partly by lower wage
rates than prevailed at that time#
Last month there were small declines in manufacturing output,
employment, and payrolls, concentrated largely in textiles, the prin
cipal component of the non-durable goods group.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
FACTORY EMPLOYMENT
1929
100
-V
SemiPerishdurable
able
Consumers Consumers
Goods
Goods
100
10
lumber
Jhspl ojed
In 1929 0
(Thousands)
BOTE:
Total
Construetlon
Materials
= 100
UadiinTraas.
Materials Durable
ery and Equipment
for
Consumers
SqoipErcl. Durable
Goods
nent
Autos
Goods
Incl.Autos
£.337
2,-235
1,287
The top of the hatched section, reading from left to right, indi
cates changes in the six months ending June, 193^«
During the depression, factories laid off ko per cent of the wageearners who had teen on their payrolls in 1929* At the spring peak in
May, I93H, after more than a year of recovery, half of that loss had
"been regained.
Greatest unemployment at the low of the depression was in construc
tion materials, machinery, railway cars, automobiles and other durable
goods such as jewelry and furniture. It was smallest in the manufacture
of foods, tobacco and semi-durable consumer's goods, such as clothing
and tires.
Eeenrployment is nearest 1929 levels in consumer1s goods industries
— clothing and automobiles, for example. There has been a steady ad
vance from low levels in the building of machinery and equipment, rail
way cars, ships, etc., and much less rapid improvement in the construc
tion materials industries.
Declines in June were principally at clothing factories and textile
mills; increases in seasonally active food industries.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
IMPORTS AND EXPORTS - PHYSICAL VOLUME
1929
IMPORTS
Coffae
Wood
P alp
S ilk
inn
60-
B ibber
Sugar
EXPORTS
C otton
Tob acco
Ueat
P rodu c te
Bafin e d
P e tro l,
» .■
1
40-
20-i
UOTEj
Bewsp rin t
= 100
1
1
III
■
i
I
III
1
1
1
A ato*
100
Mill
1
Ua>c h in e ry
1
1
1
1
1
Annual figures. The solid ‘black liars represent volume in 1932 la
relation to 1929* Increases between 1932 and July 1933-Jxine 193**
are shown "by the white portions of the bars; decreases by white
lines across the "black bars.
o ---
The decrease in the physical volttme of our foreign trade between
1929 and 1932 was larger for principal exports than it was for imports.
Trade in roamifactured prodxicts such as automobiles and machinery de
clined ranch more sharply than that in foodstuffs and essential raw
materials such as cotton and rubber* Exports of automobiles and ma
chinery have recovered relatively more rapidly than raw materials, hut
are still low*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
P R IC E S IN W HO LESALE MARKETS
B U R E AU
NOTE:
or LABO R S T A TIS T IC S
1QU- P rice Series
The top of the hatched section, reading from left to right, in
dicates changes in the six months ending June, 19^*
-------o -------—
Wholesale prices as a whole have regained a third of their decline
between 1926 and the low year of the depression* During the first half
of 1934, the tendency has been upward with declines confined largely to
textiles, and hides and leather products, all of which had risen rapidly
in 1933*
Parra products have made a large relative gain fron their low levels,
but remain depressed in comparison with 1926. Prices of building mater
ials rose further during the first half of the year in spite of the com
paratively small deiaand for these products*
In the month of June prices advanced slightly on the average,
largely because of higher prices for farm products and foods, affected
by drought.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Th
JSconomlc Adviser to the
Executive Council
July 10,
KCOSOMIC SI'BJAftOf
Snamary.
The anticipated midsummer recession ia output is under way,
signalized by an exceptionally sharp decline in steel operations.
This follows a period of nearly six months in which industrial outmt and employment have increased steadily and were maintained at
higher levels than had been anticipated, so th^t a. greater th?>n
seasonal decline has been widely forecast.
The extent of the de
cline is difficult to determine st present because much of the cur
tailment in the Fourth of July week is purely temporary.
By mid-
July the extent of the recession will be more clearly evident.
fhis year it appears that s number of plants have taken advanv 4
tege of the holiday to remain closed for s somewhat longer time than
usual.
In some eases this reoresents an attempt to limit outcmt in
order to reduce Accumulated stocks, or to maintain prices; in others,
as demand is dull st this tiae, it is convenient to make repairs and
to take inventory.
This holiday closing is always reflected also in
the auxiliary service industries— in reduced sales of power and ship
ments of freight, for example.
Accordingly, reports during the coming
week will probably show a considerably smaller volume of operations
in mrny branches of industry than in earlier weeks.
Meantime the speculative markets continue quiet,
In the agri
cultural markets, prior to the July holiday, tirices of cotton and corn
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-2 -
continued to increase following a marked advance during the month of
May, while wheat price*, once at $1.00, have recently varied around
a 90-cent level.
Price* of livestock have also receded somewhat.
For domestic manufactured products there have recently been
price reductions that are significant not so nmch because of their
magnitude hut because of the appearance of a policy of adjusting to
levels that may result in a larger volume of business.
In addition
to lower prieea for certain steel products and for automobiles, there
have been cuts in quotations for such products as lumber, leather
and shoes, most of the textiles and gasoline*
These declines, together
with declining prices for some of the principal imported raw materials,
principally silk and rubber, hsve been reflected in the weekly whole
sale price index of the Bureau of Labor Statistics, in which commo
dities other than farm products and foods have shown a decrease of
about one x>er cent since the end of April at the same time that the
index as a whole has risen sli^itly because of a generally stronger
situation in farm products.
Production and mployaent.
June reports indicate that there was probably a smell net
reduction in output and a somewhat greater than seasonal decline
in factory employment end payroll# during the month.
The reduction
in output was accounted for principally by curtailment in textiles,
by a smaller production of lumber and coal, and the absence of the
usual seasonal increase in meatpacking.
Railroads reported about
the same volume of freight shipped during the month as a whole,
although at the month end shiparents were increasing.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ift tb« «t**l tataaijry jnwbntioa f#r
5%
aa$*ettr.
* • m »hol# ry*#a£*t
1*1# i* tfca M t l , fcav*r**r» tb#r« waa • vajy
Aarp dr*$ la ®p*rati**a* aad. laat vi«k oatf*.i oi lmgat# fall to *¥o*t
j*r aaat «f «*$•#$%.*
at a eeaaifaat ktjfe*r
rm ta.
fa* tb# mxnem%- iNW&
At %l»
pr«*«at
tlx* th#
air* ««%ia*t*ft
aaoaat
of
«ta*k:s
reproduced from the Unclassified / Declassified Holdings of the National Archives
i» th* hands of steel consumers is such that relatively few new orders
can be expected for the present, aad output is likely to continue
at a low rate during ths balance of July.
Ia recognition of this
situation prices have been reduced ia the past week oa a masher of
steel product8, wiping oat about one-half of the advance which had
*
previously been announced on these items for the third quarter.
In the automobile industry, ia contrast, sales made aa inuaediate response to price reductions ia June, aad production was advanced
again during the last week ia the maath.
In the week of July H,
because of holiday shut-downs, outwit was drastically curtailed,
much
but assemblies are unlikely to show/more than the usual seasonal
drop for July as a whole.
In industries auxiliary to automobiles,
production trends have been diverse.
Tire companies have unusually
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
5-
large stocks and output hag bam reduced; while, oa tha other band,
some activity is again beginning in the tool and die-making plants.
Trade.
Aside from automobiles and a few other similar heavy products,
the volume of retail distribution of merchandise to consumers over
the country as a whole seems to have declined by slightly more than
the usual seasonal amount during June.
The reports of two large mail
order houses indicate that a noticeable drop occurred in the agri
cultural regions.
However, the sales of department stores and five
and ten cent stores, which represent baying by the urban population,
were also slightly reduced.
Chain grocery stores meanwhile made a
better showing than usual at this time of year.
Analysis of department store sales by federal E#serve districts
indicates that the decline in sales volume was concentrated in the
Middle West.
Commercial failures.
Both the number and dollar volume of commercial failures remain
low, according to a special report prepared by Don & Bradstreet.
In the month of May fewer firms failed than at any time in lk years,
and in June the number was only slightly larger.
The total Bomber
of insolvencies during the first six months was about half the total
recorded in the corresponding period of 1933*
Geographically there are considerable differences, aithewgh gen
erally the situation is mnch improved.
As compered with last
year, failures in the South and the Bocky Mountain States are much smaller,
while oa the Pacific Coast the reduction has been somewhat
Reproduced from the Unclassified / Declassified Holdings of the National Archives
less.
During the
month, however,
there
* considerable
increase in insolvencies in the ft at Central states, following #
period of exceptionally few failures.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
The Sconomic Adviser to the
Sxeoutive Council
economic
June 26, 1954
si® ;m o w
Sunmary.
llhe lavel of business activity has bean well maintained thus
far in June, with a auch more moderate decline than was generally
anticipated fron the spring peak of production reached early in Kay.
This may be attributed in part to tha continued accunutetion of
stocks in certain Industries in which prospective price advances or
the fear of labor disputes have accelerated activity*
In addition,
however, it reflects the persistence of the recovery nove«ent, as is
indicated by the naimer in whioh retail demand has been maintained,
notwithstanding the end of Civil Works payments, no general decline
has appeared in the dollar volume of sales to consumers.
After
some slackening in April, retail sales as a whole increased during
: ay by the full seasonal amount and even in the drought areas there
was little evidence of a substantial drop in business.
Prices.
Developments in the wholesale commodity markets since the
beginning of June have been confined to advances in the prices of
several food products and a sharp rise in hog quotations.
ing to the Secretary of Labor, the Bureau of
Accord
L?bor Statistics index
of wholesale prices rose during the week ending June Id to a point
about one per cent higher than the level maintained from IJSareh
through :,'ay.
Price movements on the security exchanges have been
hesitant aad the volume of trading small.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Production.
Ia naaafae taring» a greater than aeaaoaaX deeXiae during the
aunaer Is atill to be expected.
Mjaataeat of auppXy to tha
current larval of demand ia aader aay ia tha looker aad taztila iaduatrlee aad ia aoa beginning ia a amber of othere, notably atael aad
tia plate.
At the eeae tiae, a aeaaoaaX growth ia eoaatroetion act
ivity ead ia agrieuXtaraX operatione will tend to offaet tba affeet of
theae a m e r readjustment* ia naaafaetoriag.
Steal operaticaa peraiated at a rate eloae to that of the apriag
peak aatiX Xaat week, refleetiag a ruah oa the part of eoaavmera to
obtaia ateeX at the more favorable pricea poated for aeaoad quarter
daliveriea.
Thi# demand baa aov beea met ia greater part aad ateaX
output ia droppiag rapidly.
For tba aarreat week, the rate of pro*
duetion ia foraeaat at 45 per eaat of eapaeity, a drop of more thaa
1Z pointa froa Xaat week.
Operative at fiaiahiag mills are expected
to eontiaue at a high rate until the end of the Meath.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-3Xn the automobile industry, prieo reductions have hem. success
ful in sti-mlating retail sales, and factory output has hold up well
during June*
i’otal production for the first six months will approxi-
'asate 1,700,000 ears and trucks.
I f output follows a normal seasonal
pattern during the last half of tha year, the ysar’ * total will exceed
S ,300,000
ears aad tracfes, twice as large as 1932 and 40 per emit
larger than 1395*
There is still a substantial accttctulated replacement
deraand for automobiloa which is reflected in the unusually heavy demand
for used ears as well as in increased sales of new automobiles*
over, the export demand has increased substantially*
!->oro~
Last year*
according to the Secretary of Coransrce, the United States exported
over 100*000 no tor vehicles.
fhis year foreign akijisaats in tto* first
five mnths have already equalled the total for all twelve mouths of
1&33.
Construction*
The total volume of construction continues to be «aall compared
with earlier years, particularly in private building, but the seasonal
tjick-up noii .mdor waj la providing additional aaploy:.'jent»
$his in
crease reflects both larger private construction and an increased rate
of activity under contracts previously awarded by ?***•
Reports to
the Secretary of labor indicate an increase of one-third in building
permits issued in principal cities during «ay as compared with April,
hile ne« contracts for =ublic
orka projects have been diminishing in
volume in the past teo Months, worir is now getting under way more
rapidly on those jobs for which contracts were awarded during the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
mJLm
vlater*
Many of these are far extensive engineering projects that
will require a considerable period of time for completion.
JtefiSESSti*
It is estimated tbat over half a Billion people found work dur
ing May, principally as a result of seasonally larger activity in
agriculture aad in construction, including an Increase of 125,000 men
<m PfA projects*
Railroads, mines and quarries expanded their forces
more than is usual at this tine of year, and factories, as a group,
had a few more employees on their payrolls in early Hay than in
April*
the maintenance of employment in these fields is significant
of considerable underlying strength ia the industrial situation.
fhe Secretary of Labor reports that the recent tendency for the
durable goods industries to expand activity aad employment continued
into Flay.
factories producing durable goods, as a group, added nearly
Reproduced from the Unclassified I Declassified Holdings of the National Archives
60,000
§
men to their payrolls, a&& tha gains were general in almost
all lines*
Oa the other lxand, th® uon&urable goods industries, v/ith
the exception of the food group, laid off almost as many worker* as
the durable goods industries engaged*
If the anticipated suraoer slump in activity in lumber, steel,
automobiles and related activities naterialiaes, a decline in xaanufacturing employment of greater than seasonal proportions may be expected
later in the sunnier unless it is offset by further advances in the
equipment and construction materials industries*
Outside o f manufacturing, employment will increase seasonally.
It is expected that farmers will employ another 135,000 men in June
and that fara employment outside the drought area will continue through
the summer and into October at a fairly high level.
Public *sorks and
other construction activity will also continue to increase until
August and possibly into September.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Th« 3cono*ic Advisor to tho
ifeoeatlvo Connell
momm
J w i 5, 193 %
s im tio *
S r a iin ,
% to tho prosont, tho doelino lit bnsinoss aetiwity aatlcipip
tod for tha 9*717 stsonor ba* not boon substantial, and for the aoath
of May as * whoIs ontpttt in basic Industries will probably show m l y
* alight reduction frwi April lotols.
factory *aploy»snt and payroll*,
according to prtlialatfjr roports, woro noarly at largo In tho first
half of Hay as ia tlio provlaaa aoaUi, dtlwi^i a reduction ia working
fores* is usual at this tine of year.
Thm auolcet situation, h<rwer«r,
continues to 1m dot&inated by a fooling of uncertainty on tho part of
tho business oos— inlty, refloated ia tho dullness of nost of tho seeur~
Ity and coonodity markets.
Production.
A tooewh&t greater than seasonal doellao In industrial activity
Is still to ho expected this sanmer.
Beadjust&eat of supply to tho
level of oorront demand is under way for sone Indus trios and is still
ahead for others; and whilo con* tract ion it seasonally larger, it is
expanding too slowly to offsot completely adjus latent in other linos.
To thoso Influences haws now boon addod tho severe drought and tho
foar of BMtJor industrial disputes.
Sustained operation* in eortaln
industries, notably stool aad tinplato* aro attributed in scow pirtsrs
tho accwmlatioa of goods against tho possibility of strlkos.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-2-
Dariag thm pa»t fortnight, indhastrial actlrity contirro«d at &
fairly
«v«e
rato«
fbit it indicated %y a flight
lucres*
in
tha
t o Iran*
of «l*ctrlc powar promotion aad a rioa of aoro than aaasosial pro ortiono ia fraight-car loading*, principally a* a rooult of larger *hip~
s&ant* of eoal and «r«>
In tha iron asid »taal industry, operations faav* navaaa^d and tua
production of *toal Ingot* in now attiaated at 6l par cant of capacity,
although actual consumption of ataal by aatonoMlo aad far® tap lament
aamofaeturora it reported to have bsen decreasing.
The movoaaat of
Reproduced from the Unclassified / Declassified Holdings of the National Archives
•3*
stool inis stoeks, while still boltovod to bo nodor*to ia anoaat» has
reoontly wrpaadod sonowhat.
Iks outlook for fitters production is tm-
esrtaia, bat’thoro will uado&btodly bo s roduetioa at tbs cud of tbo
soeoad quarter on a rasult of the accasalatioa of stocks.
Ia tho textile iadustri«s, which aro aoar the bottom of tho
•Mtofiil swing, operatioas are ot u macth low«r lewel • aad aggregate
output will probably drop still further during tho aoxt two noaths.
Oeaaad for toxtilos is more or less at a standstill awaiting market
developneats, bat by August tho iaflaoaeo of aatuna requirements
should make itself folt la a rising volume of productioa.
A&toaobile output ia isy amounted to about 535*000 units, a
Reproduced from the Unclassified I Declassified Holdings of the National Archives
..fa
doollno of 25,000 fro* April*
sales havo maintained a fairljr
ovon trsnd, naaufaotorors aro koopinf a eloso
oa doalors* stocks
mod aoany plants took an oxtonaod holiday last nook.
Thoso companies
whoso solos havo doclined aro no* rottasiac prlcos to thoir oarlior
lovols.
In tho tiro Indus try, on tho other bond, shers production is also
beginning to tapor off, supplios aro salt to h&vo grown tumsually largo*
Pricos»
ffcoro has boon littlo ehango roeontly la tho wholesala pric# lite-
*
ation, ezetpt for grains t aad tho indox of tho Bureau of !*bor Statis
tics raaai&od at practical ljr tho saao lovol for tho vook endod Mogr ?6th.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-V
The draught torn* stloal&tad haasvy speculative activity la the grain
Markets la the past fortnight* with prices rising 15 to 20 par cant*
Wheat went ftWv* a dollar last week, aad then dropped hack slightly.
At the clo«« of the aarktt yesterday, September futures aero quoted
at 97-5/8 cants a feaahel•
ta tha industrial field, however, prloas for
certain produets have weakened slightly, aad there has also heoa aaaa
reaction ia ratall priaas of aaa&factmrad goods daring recent weeks,
followiBg a steady twelve months' t d v u M .
fiia
earetary of Labor reports that ratail faod prices, aftar a
six weeks’ recession, aovad up*ard slightly la tha first week ia limy
and ara about 15 par eaat higher than a year ago.
Trad*.
~«porte froa ratal! merchants afford avldomea that conruartioa
goods ara moving ia well-sustained voluaa#
Sales h»ve that far been
only aoderataly retarded in tha drought areas.
>©r dapartaaat tiaras, preliminary reports iadlcats that sales
for tha country as a whole showed tha fall seasonal increase la dollar
volo&a between *pril aad aay.
Ia T i n of tho widespread reports of
special *»aiesa at lower prices, this increase m s prob&bly somewhat
larger in terns of physical vo Iuh* .
tha voloase of expert trada ia April registered a decline of about
tho usual saaseaal snount, although exports of automobiles aad juaahinery
continued to increase.
According to tho Secretary of Ccwaarca, exports
of agricultural machinery aero aore than 70 per coat larger ia the first
four months of this year than ia 1933*
than usual at this tla» of year#
I*¥>orts in April decreased isoro
Reproduced from the Unclassified / Declassified Holdings of the National Archives
The Sconoaic Adviear to tho
Ibtecutive Council
May
22, 193^
SCOIOMIC SIT0ATIO*
Tho voluae of indna trial activity appears to hare reached
ita Spring peak ia tho last veek of April •
Business indexes for
May oa o whole will shoo a doelino of aore than seasonal propor
t io n , accoapanied
rolla.
hgr reductions in factory eaployaent and pay-
Soae readjustment is already taking plaeo in those fiolda
where production has m
soaewh&t ahead of deaand, aad tho aoem -
lation of excess stocks la being checked in a naaber of industries.
Retail deaand for general merchandise has picked «p . again in aoet
aroaa aftor tho poet-Saater lull.
In wholesale markets rising prices for farm producta have been
tho principal feature of tha past too weeks.
Thi a movement is
attributable mainly to tho offsets of tho drought.
At tho aaaM
time, there hare hoea Moderate declines in tho pricoa of siosl tex~
tilee and of atool scrap, while tho stock aaxteet hae recovered part
of its recent losses.
Production.
In both tho stool and autoaobile industries, which aade the
aoat important gains in industrial activity during; April, output
haa recently been reduced froa poak level a.
Autoaobile aasufac-
turora, having aade *jp shortages in deal era* stocks, reduced their
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-2®*tpmt trm 100,000 per vitk at the sad of April to 75,000 las* week,
conforming aero nearly to current demand.
Although the seasonal ia-
crease 1» sales of earn was smaller thaa had k n
expected, partly
t#c«a*« of price advances in April, latest reports indicate that
•aloft art hoi ding at even levels*
Ia tho stool industry, tho rato of operatioas has been reduced
for two successive weeks, aad 1« aow estimated at 5* par cant of
capacity.
Thii represents tho off oat of declining demand for auto
mobile otaol, and creator hesitancy oa tho part of consumers to
build up stocks.
If tho aeeaaolatioa of stocks is smaller as a
result of this redaction la eatput, a sharp decline is loss likely
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Cttrtailaoat of production ia textiles, where stocks hawe wade
soao readjustment necessary, is already uad«r way aad is likely to
continue into early swsRer, with aa advorso offset oa e^»leyaeat
aad payrolls ia textile centers.
Declines ia these throe aajor industries, as woll as ia sent
other lines, aro reflected ia goaoral business iadieators such as
tho rotaas of froi^it oar loadings aad output of oiootric power,
whioh show a slightly lower rato of operatioas la the oarly part of
May.
uas lag>ortant industry that is axpaadiag its operatioao seasonally is construction.
Tho Secretary of Labor reports aoro pomits
issued for private building during April, aad work is also progressing
Reproduced from the Unclassified I Declassified Holdings of the National Archives
More rapidly on PfcA projects.
Employment.
The Secretary of Labor reports that final figures for April in
dicate continued reeiaployment in private occupation*.
Additional
men were taken on in manufacturing, construction, transportation,
agriculture, retail trade and other service industries.
was the only major industry to reduce its working forces.
Coal mining
These
changes were in response to seasonal influences except in manufac
turing, where an increase of 125.000 wage earners was reported in
stead of the customary seasonal decline.
from January to mid-April, it is estimated that 1,kOO,000 men
found employment in private industry and agriculture, bringing the
total near to the seasonal peak of last autumn*
notwithstanding
this large increase, and a substantial addition to PWA and CCC
forces during April, it appears that unemployment is much larger
than in January, because of the end of the Civil Works program.
The fact that private industry has not yet absorbed all of the
former Civil lorks employees is also indicated by the increase in
the number of families receiving public relief.
The Federal Government *s payroll in April included seme
1,700,000 men, about 650,000 more than in April of last year.
Of
this increase the largest share is the Civilian Conservation Corps.
About one-third, is accounted for by ?WA, which now employs about
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-5200,000 more men thm were at work oa federally sponsored construe*
tion & year ago*
The executive 'branches of tbe Federal serfice
have added about 75*000 people to the payroll, principally as
supervisor* of the CCC, and on the st^ff of the Home Owners1 lean
Corporation, the Tennessee Talley Authority ant! the t.Ak and other
emergency organi«aticns.
Agriculture.
la agriculture, cash incocae from farm products sold in April
declined slightly, as is usual at this season.
Income is expected
to he somwhat larger in May, however, as sore fruit, vegetables and
dairy products come onto the market.
£he drought lias not yet af
fected agricultural income as a whole although it has already re
duced farmers* purchase* ia these affected areas.
It has also
cheeked the decline la prices of grains, and, if it is aot broken
in Juae by good rains, will result ia such a reduction ia yield
that the totel wheat crop mey not exceed domestic requirements.
If
this is the case, wheat prices ia the Whited States could he main
tained on a high level in relation to world markets for another
season.
Prices for other grains and for butter will also he
strengthened.
Somewhat lower livestock prices ere likely, how
ever, h^c^ute of distress selling.
In terras of cash income for the year 195^ ** a whole, the
drought *ill probably have little effect, since rising prices will
offset reduced acreage.
In the states affseted the season’s cash
returns from sales of grain ia the market will, of course, he ex-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
6-
tremely small, although benefit payments from crop reduction uro
grams will provide tome additional cash income.
Foreign Trade.
Preliminary foreign trade reports from the Secretary of Com
merce indicate a decline in imports between March and April of
somewhat more than the usual seasonal proportions.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
’
V*he ''.'.canonic Adviser to the
!x©Ctttive Council
1tar s, 193*
ICOIOMIC SITOWIOI
Summary.
She uneven nature of tlio current business situation has become
aore pronounced during tho past two v««ki.
factory production con
tinuee to advance, with further increases in eaployaent and payrolls
reported during April. Betail trade, on the other hand, is apparent
ly
less active.
In the organised markets, prices of bonds
continue strong, especially U. S. Government securities, while prices
of leading commodities have shown diverse trends with declines pre
dominating, especially for important fara products, although there
has been some recovery during the past few days,
fhe principal ele
ment of aarket weakness has been in prices of coaaon stocks.
In broad perspective, these uneven developments reflect largely
the fact that we are at present in a transition period.
The current
rate of production has now reached a point that in a number of cases
is equal to or even slightly in excess of current demand.
At the
present rate of output, probably as auch food and as many shoes, for
exaaple, are produced as will be sold to consumers, while in the case
of automobiles and textiles, production seems to be at a somewhat
higher rate than probable sales.
Steel is also reaching that point.
Certain readjustments in rates of output as between industries, con-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2-
sequently, appear to be ia order during the next two month*.
These readjustments may involve more than a seasonal decline
in the volume of industrial activity during the summer, although
this is not certain.
Underlying the whole situation, there is
present a latent demand of large proportions for durable goods,
including the replacement of worn equipment of all kinds, and the
modernisation of housing and of industrial facilities.
There is
also some further deaaand for new construction which should increase
as the year progresses.
If the Public "toiks program and the x>ro-
jacted housing program succeed in releasing this potential demand
to aay appreciable degree, the volume of activity engendered will
he more than sufficient to offset the readjustments which appear
to he in store for those industries which have contributed most
largely to the spring advance.
Fending the development of these new demands, however, there
is a certain degree of uncertainty in the situation; some of the
markets are hesitant, aad more attention is concentrated on the mer
chandising situation, particularly consumer resistance to price ad
vances.
Production *nd a w A w e n t .
General indexes of productive activity indicate moderately in
creasing output during April.
According to preliminary reports,
there was a net gain in factory employment up to mid-April affecting
75,000 - 100,000 workers.
Payrolls were also somewhat larger.
One of the important fields in which production increased during
the past fortnight was the Iron and steel Industry.
Output this
Reproduced from the Unclassified / Declassified Holdings of the National Archives
week will probably fa** last summer* s peak and tha building up of
stocks should sustain operations at this high level for some time.
By the end of June, when higher prices become effective, it is an
ticipated that stocks in the hands of major consumers will appreciably
reduce demands from these sources.
Automobile production approached **00,000 units in April, but a
decline of more than seasonal proportions is anticipated for June.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
In th# textile industries, production of certain staple goods
has run ahead of orders for several weeks and stocks hair# been ac
cumulating.
A consequent curtailment of output i# in prospect, and
& shut-down of one veek has already been arranged by the Silk Code
Authority.
SStSt-
Preliminary reports on retail volume in April indicate a let-down
from the active business of iarch.
sales of 5
The greatest decreases were in
10 cent variety stores and in apparel sales, which,
because of an early Plaster, had been unusually good in March.
Curing
April, the rapid increase in sales of automobiles was somewhat re
tarded by price advances.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fhe Economic Adviser to tha
Executive Council
April ?3, 193**
SCOSOttlG
Sxmmanr*
Industrial operations are now near the seasonal .peak of activity
which is customary at tills time of the year.
During the past four
saonths, this expansion in activity has been mach larger than usual,
reflecting, in part, th* general underlying trend of business revival
from the depths of 193?? aad the early part of 1953# &nd, In part, a
rebound frost the temporary recession of last autumn and winter.
At that time factory operation* in a wile variety of industries—
steel, textile*, sho«s and
Taany
others— fell off sharply to a level
below current consumption demands, largely as a result of over-expansi on earlier in the year.
$y January most of thes* excesses had
been absorbed and operations strain Increased rapidly.
fhe pick-up
was especially rapid in the motor industry whar* production difficul
ties in connection with 193** &&d*l$ had created a deficiency in
dealers* stocks.
At the present time* some of the factors making
for expansion appear to have spent their fore*, with the result that
there is greater diversity in trends as between different industries.
Production* sroloment and Income*
iJuring March production in the basic industries expanded quite
generally by more than the usual seasonal saaount, principally be
cause of added output in the heavy -manufacturing' industries and in
Reproduced from the Unclassified I Declassified Holdings of the National Archives
coal.
there was also an increase in construction activity and in
contracts and permits for new building.
In the light industries as
a group, there was comparatively little change in the volume of
output.
^uloyment in private industries also increased in March* and
the Secretary of Labor reports that our f&ctories &re now al loying
rtore people than at any ti^e since fee letter part of
1930# while
the total factory payroll is the largest since the'snamer of 1931*
Tho additions to working forces in the past three months have been
general in all industrial groups, but they h&ve been largest in the
durable iioo&s industries.
In the automobile industry employment is
now buck to the level of September 1 $29* in the principal machinery
industries, employment is still low as compared with pre-Depression
years, but has nevertheless shown a steady growth, reaching levels
in many w-es from t>0 to 100 per cent above last year.
There were
also increases during March in working forces in agriculture and in
other non-nteiBufMCturinfc; industries, including construction, where
unemployment is especially severe.
Taking into account all of these fields of employment, it ap
pears that the total number of workers, excluding employees of the
federal emergency agencies, increesed by 550,000 to 600,000 in ilarch
and by 1,000,000 &s eosipared with January 15 t not %uite two-thirds
as many m were laid off by C'vA in the nwm period.
Since K&rch
there has been a small addition to factory f.^yrolls. Probably a
larger miah^r of workers have been taken on in agriculture, construc
tion and other seasonally active lines.
The total increase in pri-
Reproduced from the Unclassified / Declassified Holdings ofthe National Archives
-3wate employment in recent week* k s not ?>een sufficient, however,
te offset dismissals ftom CfA roils*
la retail trade, there was a gain of considerably jaore tJian or
dinary seasonal proportions during March* affecting practically every
kind of aerclv-mtise#
Beworts for tha first half of ^>rll9 however,
h*-.ve bsen less favorable.
Comparing the first quarter as a whole
with tha corresponding period of 1933*
increase ia sales has been
raost pronounced for the heavier types of merchandise such as auto
mobiles aad electrical appliances, with only a ^derate increase in
sales of clothing,
la the grocery trade it is doubtful whether the
actual physical volume has increased at all.
On the basis of a
re >ert by tbe Secretary of Coomrce on the increased volume of busi
ness of the automobile finance coaroanies, it appears that the propor
tion of new automobiles sold on credit has not increased since lact
year.
fhe Secretary of Conraerce further reports that American foreign
trade, altbowfr still in small volume, showed a further advance dur
ing March,
4xpan«ion in exports of machinery aad automobiles was
particularly notable.
Prices.
In wholesale markets, there has been, in recent weeks, a contin
uation of price advances for fuels and aarttfactured products, especi
ally steel and certain sake* of autonohiles, in contrast to easing
Reproduced from the Unclassified / Declassified Holdings of the National Archives
of prices for agrlcnltural products and certain other r&» materials.
latter tendency has been evident since early in March, hut with
the exceptionally sharp break in the grain raarkets last week, offset only in part by advancing price* for livestock, the general
average of farra. prices ia now lower than it was six weeks ago.
the Secretary of Labor report# that the general index of whole
sale price# compiled by the Bureau of Labor Statistic* declined by
1/2 point froa it* early March peak to April lk. Judging by the
coarse of price* in the organised markets since that date, the Bu
reau* s index will probably show a farther decline for the week just
past.
In the stock and bond markets there was a brief reaction on April
IS coincident with the break in grain prices, followed by a fairly ste
advance this week, when price* again declined.
High-grade corporate
Reproduced from the Unclassified I Declassified Holdings of the National Archives
bonds, aa rated by Moody* s, hare in recent weeks boon quoted at higher
price* than hmm prevailed for a mmbvr of year*, exceeding in soae
group* the levels of 1928*
In agriculture., as the planting season approach#*, it is antici
pated by the
©partalent that the combined production of crop* and live
stock will not be greatly different, in the aggregate* fros that of
1933 »otwithstauding reductions in soae of the basic crops.
However,
because of the higher price level prevailing for farm product** agri
cultural income for 193^ i* expected to show a gain of moderate pro
portion® over 1933*
#or the first quarter of 193 % the economic posi
tion of the farmer was materially better than last year when prices
were exceptionally low.
farm income in tho three months just past
is reported by the epartsaent of Agriculture to have been 50 por eent
larger, including rental and benefit payments, than in the sane period
of 1933. Ixcludiag these paymejci.% it was aWat ^0 per eent larger.
1**
ft* *■*»«*«•»Since the beginning of April, industrial developments have been
somewhat uneven*
Late in March there was a leveling off in activity,
which, with the exception of steel and aatosaobile*, has continued
into April* as evidenced by a relatively stable volxaae of carloadiags
and electric power production.
Automobile output sveraged close to
80*000 cars a week is March and is now estimated at over 91,000.
This is the highest rate since early 1930# reflecting & final effort
Reproduced from the Unclassified I Declassified Holdings of the National Archives
to catch up with depleted dealers* stocks as well as current retail
demand.
It cannot be ejected that the isiotor industry will continue
to operate at these peak level* wach beyond the isiddle of May.
Ia
the steel Industry operations have also espaaded rapidly of late— *
from k& per cent of capacity in March to about 55
current week.
cent for the
This represeats taiediate demand for steel fro® the
rail aad automobile industries, aad, in addition, a rash of advance
orders following anneoncefaente oa April 1 of higjher steel prices.
While taase advaaee orders will probably push operations to a higher
level during the remainder of this quarter, they may cause a corres
ponding decline ia third-quarter shipments.
Consequently, it appears
that in the third quarter continuing activity will depend less than
at present on the motor industry aad to a such greater extent on new
orders fro® other sources.
Development of the VKk program will be
Reproduced from the Unclassified I Declassified Holdings of the National Archives
. 7.
an important factor, as will .also the rate at wtdch private industry
undertakes to make wp deferred iaadntcnance and replacesient of wornout or obsolete equipment.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fhe Icono&ic Mviser to the
Executive Connell
uccmowic siroAtiow
Svmmry*
ikisinass continues to advance, but tha mavwmnt has become
uneven during the past two weak*, and shows soae tendency to level
off.
13d* hesitation ha» reflected in part, at least, apprehension
ovsr labor difficulties* and the settlement of the threatened auto
mobile strike vm&vvn a i&ajor factor of uncert&int/ in the situation.
In the meantime, the organized stock and eosaModity markets luwe
marked time, with a email volume of speculative trading, and prices
soaewh&t easier as coopered with the high levels of raid-February.
The extent of the recent speculative price decline has varied in
different market?* as of last ni^it's close cossnon stocks were 7
per cent lower taan at their higb In siid-?*sbrti&ry, while prices of
1
seasitiv© coiseftoditiee had declined 1*3 per cent.
Bonde have
shown greater ’underlying strength* both U. f• Government bonds and
high-grade corr.orate issues having reached now high levels during
the last two weeks.
Outside the organised markets, Wholesale co»-*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ftadity prices including tii* !*•« sensitive eonvaoditlec, bov* In.
general,, been mil $&stain*&9 and the indtx of tbs tjf, S. M t m n
of fcubor Statistic* Is** fluctuated fc#tw*ea 7 3 ©M jk per &m t of
its 19$> m v m ®e sine© the e^rly part of February.
The rat# of ^rations in the steel industry has leveled off
daring Kerch, after rising 15 joints ia the vpM# of six wtefcs to
**7 -per eent; of capacity,
fit#- Indcitts? it
now am iting a
m w m p tim
of orders fro® tho fttttanefeiie as&mf&eturers* and tb* rate of ot>«ra
ti ans is esttjs^ted for th* easing wMte at ¥S*| per eent of eapaeity.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
tmtmMl* product!*11 !»• cotrttrmad to i m r m m at mom th&a th* uoorl
Maana&l
*xe*4dffl 80,000 ears l«i®t
fh* Industry *»-
&*av.?f*d t* place »« m a y «ars m p^asifcl* in t'he haa&t of dealer*
fcefor* th* %kvw-%mam& strike, fcat th* fea«kio$ of order* from feeder*
it still lance *a& orodaetl'm aluml* ccmtlnoe at a. !sl$* rat* f«r *oa*
tiise.
Shipsaant* of s»utoiBobU*« were ir-oVbiy a, factor in ths gr@«t#s>
ten aeaafm&l inmea* la railroad traffic, particularly in a&*ce&*
Ifmem* darlo»4in^».
Mleetrle ;o«*r :
3 Tom,tti ^n &F % held relatively
Reproduced from the Unclassified / Declassified Holdings of the National Archives
#t#$4y9 cos#pared with a moderate
y#&n#
at this tim# in 'vrevioa*
I® tii® eaattniGti^ft in4««txy t.h#r# #»# * l&rg# xjerc#ist#g#
iner##.## fran ?#fcya*a:ry ta goutntet# &wrrd#d daring th# first h<
of March# p&rtiaalfi.rly ia Hi# r##i&*nii&l field* feut tim total ?oXus#
of privet#. ba.ilding i$*ill wry mriasH.
Anoag th® li£ht«r ccm*aaip~
tioo good# indu#triea, ©socially cattoa $ood* aad sh:>o*9 9*?<mtti»»#
in March hair# c^'ntiaa#d active, re&om&ing to th® inert*## ia retail
trade and th# usual .Sfesi&r d#m^nd,
Bttoll frad*.
?«t#.iX trad# rep ort* to f a r
roXnot of tasit»t#« r e f le c t in g not
in Harsh
ml$
im tieat#
th©
m
mntalniag
i»ert®*iag
e f fe c t of
CfA difltarttBiontt and th# rseent adrane# o f tnduvtriaX amoXosretxit
Reproduced from the Unclassified / Declassified Holdings of the National Archives
H5-
ft&& payroll#* tat a lto
it u m u ii to ooloo*
il10
oorly dato of £*«tor» which i t elwoyt *
Bro» oftor taking oeewmt of tho Baotor trade,
l i epptftvt that fin a l roportt w ill ehow * f a ll ooftoouatl inc resow for
tt&roh it* eeaparod with ea rlier months of thto yoor, and m y ohow eoa»
eidiraM y sore, arstodlag on tho rd lw n t of *& !•• toward tho el© to o f
th# month*
8o^pftil»oci« with Warch 1$53
w loo nor® mt to ft
minimum by the haafc holiday *how oxtreordinary reaaU *.
Im Bootoft,
for example* oalet of do?ortamt «teres for the week of Itereh 10 woro
122 p *r eont i k n lo o t year*
toereeeee Is retail volume hove H w moot meiiked in th# eooe of
tho more durable em m aw tim foods*
l^eotdiii^ to tho Seeretnry of
Csraenerce, fohroaiaqr report* ehowed a rite of 7® pof eont over l&*t
ye*r im the value of new ««r« told by dealer**
In tha oleetrio re-*
frigerstor lnda*tiy# report# fraa two targe firmt iadioote recordbreaking «M|X»#ftt**
frede import* aloo not* oximmdiac emlet for
hordes re *nd mifcellAneottt electric e^sdpaoat m tho port of both
m&aafft.etsrer« mad wfaoleeolor*.
Prodiaetiott. Mi laraw Bt sad p a y ro ll«.
February dot* whioh ore siow beoamiac « t *it *M * In grenter detail,
©oufira tho earlier is^rotsl^ that tho recent a&vimc* la bud s***
activity is snacfc hot tor balanced thsn that whieh occurred loot y*sr»
and, for that r m *m t give* better or"Maine of W in g mataised*
tho
o**fc*& tzr^Atlai i« aafrsfct in febstiary oeoarred *lmo*t wholly ia tho
heavy isd&otri** where volnsa* it low and where oxpoMiag oafcmt oak**
Reproduced from the Unclassified / Declassified Holdings of the National Archives
6
- -
aa aspacially iwportaat
Is- &ar?».»aat raamoloerment.
Asiatic
that* industrial the adtiira rat^ll market for emtasaMlaa mm W
far tha largest slngla factor feat there « j gsaaral deawiad for a
wide v?>.riaty of Imvj product* that did met perticipata ia tha ad*
vaaea last aaiaiBar* reflecting ara&ll aeattarad ris^airwmmXt for
machinery and dars'bI® equipment of ail kiarfs *&u*&g feoth industrial and
doraaatie consumers*
la tba li#t industries* which were already op
erating at ssore aaarly a o w l !#▼«!*, iacrasae* in output in :Mnmry
ware almost shally teasoaal ia character* aad la lime with current
retail &eaie,ad.
fh* Secretary
Labor rasarta tJmt factory
analqroa&t iacra&sed
hy *1* per cant or lay afeo*t 373*09° persons fcatwaaa aarly J&aimry and
early fafcruary.
At the s&ise time, factory Tsajnralla increased l*y raor*
tliaa 12 ^er cant or *y $15*000,000 par weak.
ia additim* tha rail
roads took a aVait 101000 snore mien, There waa a slight dacra&aa ia
«K?lc*ps®at Its other lines of iadnstry* feoactoer, aad tha toericsa fed
eration of '.tshor estimate* th# aat Increase for tba month at
which m s aTmrO'jciimtaly offset V
tha l^y-off of
hetwaaa January IS «*& fafcrumry 1*5*
Ot
330,000 QtfA w^r'.c-fs
the same individual* aara aot
affected, of court*, sinee tha reductions ia ®f& were lar&att ia tha
$ m t h aad in
agricultural regi^aa, fsrhile $*i*i* la orimta asioloy-
maat war* largest ia tha iadustHist oaatsra of the north*
PW* *;*•
•/ma&ad ita worklag force* %y atoKi-t 20*000 i?ie»* not*!thatnaAlxtg a *n*tl*r
amount of w d work because of bad weather*
is of Fahmary 15* the
Jteerican fadaratioa of Pallor*a aatimta for iia^toyinaat* which doe*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
not take memmt of osaorgeaoy fo«ui
mblie. work u M *r th* CWA* tb»
FfA or tbo OCO stood si 11*375*000 p m a u u
Talcing amount of th***
additional fora# of oaploytwrat* tho total m tkm t* of motapleyssont
for Fobraaty 15 «oold bo
7*075*000,
or about tho *®s*o us on 3wm*vj
15.
Sineo Fobruary 15* privnto oaplisymont In factorio* m & in othor
industrial and noro&atilo mrooit* ha* ojpin inoro&ood, and tbor#
ba# boon n u sto m l ojsmaolon lm tbo 4wbkbA for agrloultarnl Imbor*
It Is dcrabtfol, howoror, nfeothor
Inoreaoos bavo bom m tfieloitt
to offoot tho conoomntt rod»eti<m in foreot on ptblio payrolls*
Bot^oea foknutry 15 &»& March If* OfA luit off 1*300,000 wm*9 aad
l(j tba oiid of tbi* montb, whoa tba aa# *o»fca filvlaloa of igfcA *•»
plana* 0*4 1ft n b a * and i&daatrtal oaaiar®, it i« «r*tt#A tb&t t&aro
will bo frost 1*500*000 to 1*790,000 p&mmis on tba woxk roll#* a rotiiatlon of moro tb©a 2*000*000 aiaeo febfmfy 15.
nm ttttWI s u t « . Balance of I n f raatlaaal P«yaw»*« ia .M T l ( f w l M a i g )
Tho S«crot®ry of Oowaoroa ropori* that in 1933*
iatoraatloMl
balaneo of p*pm*nt* of tin eaontry obosrod a "fftTrorffiblo** b&litnc© on
aoecsmt of tra&a* torvioo and ®old iteme auMnntln# lo oil to about
1^25*000,000.
Biit m « ©ffaat is largo part by m m t nitbdraaal of
dollar balaneoo pravloaoly bold in t M i country for tba
aeeawnt of forolipaon ubieb i® oattmiad at #112*000,000*
Otbor *i$*
nifleant f#«turo* tsroro, flret* a doelia# of 36 par oant in. tb® aotlnatad
•zpMdltaro* of taorie&a toar!tin in foreign eoimtrina; Record*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
«•»!$«»
m continue rwfeetids—
two pMMfti-ac
mot m prcm^tmced es in mc'h of the
th* toIur** of fortlgB lwrftsti*«iit« lu&4 Im
IMt c«mtiy; and* thiii, a tmotd m t inflow of tlait«d $%*%•* pnti£»#:r
curr«»cy Mtlaeiil at $90,000,000*
Th# Saorwt&iy af Oos»o«pc© further n»mrt& t3»t
in WttomAtj m r
a&gr*0 nt& foreign trade d#clift«4 ty x®ag. thaji the u « m I
azftotaat.
Jtorsort*, iaoludiiig r#Hixps>rt«, were valued at $16 5 ,000,000,
«» ataouat * m » $30,000*000 in «xeess of g m v m t import* timrlng the
m m th*
(itoortt of -Jaitad
port* for c m w x m t l m m m
prodaota
l3.%O0OtO®0#)
were $16 0 ,000,000 and. lafhi* i m p t m m X n » 3 P*t
omnt doeline fra* J a m m y ia assort*— which is erosidaniMy loa* tfc&a
tiie ufRoal Jamair-Fefcro&ty t o m m i m of e l « n » $>*r ceat.
ia iaiport*
expeot&ticaa.
The decline
to 2 par otxit and v&s a%®&t la. line with ea&eon#!
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fhe .Economic Mviser to th*
l&eeutive Coujacil
mpctt 1 3 , *93*
-mmcmc
Basic businees reports indicate a continuation of the february trend into the early part of March, with tone slaefceBinf hare
and there in the rate of advance*
Ia the organized markets, price*
of sensitive cossaodities tare been sustained at their comparative
ly hi,gh levels of *id~February, while prices of condom stock* have
given ground.
Corporate bonds have recovered fro* their recent
reaction and U. S. $overattest bonds have advanced sharply to the
highest levels since last autwn.
Production.
Steel mills *ra operating thia weak at 46 par cant of cap*city, a decline of one and one-half points from last wee3c.
Operations are being maintained by deoands for steel fron tin
plate mills, from general miscellaneous sources, and from the
automobile industry which is expanding its output, with large
blocks of orders still unfilled.
Prospective orders for struc
tural and railroad steel are receiving increasing mention in the
trade press but do not appear
to account for a large proportion
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-a-
SCHEDULED STEEL PLANT OPERATIONS
i
of current output.
Coal mining and the coal-carrying railroads profited
considerably from cold weather in February.
Anthracite aim#* were
sore active than at any time in mere than three years.
0* the rail
roads, a somewhat larger than seasonal gala in traffic during Febru
ary was attributable almost wholly to shipments of coal and coke; ship
ments of other goods were at a slightly lower rate for the season
than ia January,
the latest weekly report frost the railroads, for
the week of March 3, shows a soaewh&t smaller Increase in traffic
than in past years.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
~3~
la th* c©attraction industry, contractu awarded is febraary for
private building increased slightly trm the exceptionally small
volxsae reported la Sam ary, while fewer contracts were awarded for
public project#.
However, preliminary report* Indicate that employ
ment on ?$& projects Increased in febroary* except oa roadwork rtaieli
was held np by dwnm*
ffce Secretary of XAbor reports tl\at, wttti advancing activity
in saaafaetmres* there was a better than average increase in factory
ewpl®$B»nt and payrolls in February.
The railroads also took on
more employees, particularly in their shops and in train service*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
letail trade in recent weeks Itat been in coaco&rativsly good
voluae for ths km m k except where stonsy weather has slowed tap
sales.
At department stores in leading el ties business wa* at about
the same rate ia ?ebm&ry ae in Oeceraber aad January, after allow
ance for usual seasonal changes.
fhe rural areas, especially la
the South, continue to shew relatively greater gains in trade than the
cities*
k leading sail order feease reports that its February m il
orders, which com principally fron the country, were SO per eent
larger than in 1933
larger,
sales at its city stores were jO per cent
fhe Secretary of Conferee reports that trade of leading
chain stores aad mail order houses is rural areas is
running more
than HO per cent a&eve last year, approxiiaateiy t © same percentage
gain as is shown by fanaers* cask incomes estimated by the D@partsi.eat
of %ri culture.
throughout the country, an active market for con-*
STsaers1 durable- goods, such as autosaobiles and electric refrigerators*
is reported.
the Secretary of Cousaerce also reports that sales of groceries
by chain stores increased more than seasonally in February and, in
dollar value, were 9 per eent larger than last year, *Mle the Sec
retary of Labor reports that prices of staple groceries and meata
at shops in leading cities have increased by nearly 20 per cent freaa
last year,
fhe fact that the increase in food prices as compared
with last year ‘
has been larger than the increase in dollar sales at
chain grocery stores would appear to indicate that the physical
Toltat #f food sales had decreased.
t&e two indexes ar# not toffi*
ciontly comparable. b w m r , to permit one to say definitely whether
there has baen aa actual increase or decrease during tho year in
the quantity of groceries «old.
whoi— 1« m c » » .
In wholesale markets tho average level of coiaBtodity price* has
shoim little change since tho middle of February, following tho
rapid rise of tho preceding too month*.
fesong sensitive coasnodities,
prices of grain* and silk havo declined and quotations on livestock
have o&sod slightly! cotton prices have been relatively well sus
tained around their highest levels sine# last stasraer; and firmness
has developed in markets for soioo of tho setals, in particular cop
per, tin, and sorap steel, which has ofton served as a barometer for
tho steel Industry.
it their levele of tt&rch 3 , prieoo in tho wholesale Markets
covered by the weekly index of the Bureau of labor Statistics aro
reported by the Secretary of Labor to have been nearly £5 por eont
above tne estroao low level reached in tho week of March k a year
ago.
In this recovery, as la tho decline, prieoo of farm products
have aoved more rapidly than prices of isost other eosnodities.
far*
products as a groi^o have gained more than r
j0 per cent during the
year, while prices of other products, principally semi-finished and
aaaofactursd goods which are typically not traded in organised mar
kets aad which change »ore gradually, have gained only 20 per cent.
.Jfc.
At these levels,
levela
mad other product*
icete of Smmmaej
prioee
p ri«•» of fw® products are
79
per e « l .
62 per
Saetatljr*
cent of th e ir
1926
in Use risin g « « *
'**riy fifcw **** rnSnmam were chiefly in mmmg*
f m £®m #nAm te ribtofe are aipti* near the high of la s t *t» -
S5M03?*
,ltei.,,Iiiecfib.
the recent lucre*** ia fri©** for a&riealtaral product* mm
reflected ia a
larger IS*** seasonal increase in agffioaltar-
al incoa* in Janaary, *ba* few er* sold products valaei at about
$^2^,000,000 ia central maxfertB*
la aiiStiea* ther received 160,000,000
in income from rental aad benefit payments uadar the M A pre^reni
including, for cotton £*»«*?*, lean* oa eptl**s M m
last year on
govsfMtsst*©waod iiottoa*
fhe report on a&rtealtaral income ia ^aimary iaaa^arates
m mm
service ¥y the nepartaeat of Agrlealtare, making available each month
cossprehensive estimates of the value of the principal farm product#
t&*$ are toli is ceatral markets.
$h* chart give# a record of laoath-
ly f a m incorae since the beginning of 132*1.
The lower area show*
imcosae fro* livestock, »eat aad dairy products, which coaopriae a
relatively a®*'* ©teniy source of income th&a crops# fruits, aai
vegetables, receipts fro* which are shown la the i®?por area.
Setttai
and benefit payments aad etSier atftitioa* to carrent farm incmm
thremi#*- operations of the AAA, are show® by the black urea,
ft**
chart illustrates th« wide saasoaal variations im farm
wMcb,
usually reaches & peak in Detour, wfe©a craps are mark®tod, and th*a
decline® mmff month until April or Hay, wlian.ii again increases.
LiTestock and dairy products are asaifkistei ttftoi* a m
rt®a#ilf
out the year, fee peak season ordinarily e^Aimg in ia^ or l«Bi*
Office of Economic Adviser
to the Executive Council
February
27» 193**
ECONOMIC SITUATION
Summary*
Irregularity which developed in the stock market last week
was reflected in prices of bonds and sensitive commodities*
These
movements have "been ascribed in the daily press to apprehension
over Federal regulation, the possibility of labor disturbances in
the automobile industry and other factors.
In part, at least, how
ever, they represent a speculative reaction from the recent rapid
advance.
Exceptionally severe weather conditions during the past two
weeks have affected business activity.
While demand for coal and
winter apparel has been increased, retail trade in general appears
to have been retarded by the storms, which have also interfered with
construction and other outdoor activities.
Aside from these day-to-day
developments, the business news confirms the rapid pace of the current
upswing in basic industries, the extent of which cannot be fully
measured until more complete reports become available.
Production.
In the automobile industry 70»000 cars were produced last week
as compared with less than half that number in the middle of January,
and, while reported labor difficulties in certain automobile centers
may slow up production somewhat, it is not unlikely that output in
-2-
February will reach. 250,000 cars, a rate of 3*000,000 a year#
Steel
operations continue to advance and during the current week are es
timated at ^5*7 P©r cent of capacity, an increase of 13 points since
mid-January.
Increased activity is also reported in the finished
steel industries, which have formerly been less active and in woolen
and silk mills and hosiery plants*
Railroad carloadings, which measure in a "broad way weekly ship
ments of both finished goods aad fuels and materials for production,
show a continued increase and axe running well above both last year
-3-
and 1932*
latest report, for the week of February 17 » is some
what exceptional because of abnormally large shipments of coal, but
after allowance for this, the current movement relative to normal
February traffic is at a higher rate than during the peak of operac
tions last summer, when manufacturing output was for a time much
larger than at present.
With these advances in production and in freight traffic, fac
tories and railroads should take on more than the usual additional
number of workers in February.
Confidential preliminary reports
from Pennsylvania indicate a considerable increase in factory em
ployment and earnings in that region in the first half of February.
-ty-
The advance in activity which, has been notable daring February
apparently began at an accelerated pace in the middle of January.
This is indicated by a comparison of reports of factory employment
for the middle of January with production for the entire month of
January.
Employment in factories, as reported by the Secretary
of Labor, decreased by 1.1 per cent between the middle of December
and the middle of January, while weekly factory payrolls were reduced
by .8 of 1 per cent,
for the month as a whole, however, output in
basic manufacturing industries showed an increase of nearly 11 per
cent, according to the index compiled by the Federal Reserve Board.
Normally there is an increase in output in January, and after allow
ance is made for expected seasonal changes, the rate of advance
appears to have been about
per cent.
These differences between
production and employment are due partly to the fact that the produc
tion figures represent mainly semi-finished goods industries, but
they also indicate an increased rate of revival during the latter
part of the month.
23ae rapidity of the advance in production naturally raises ques
tions as to whether it will last; whether it is of a character to
pile -up unsold inventories in certain industries, or whether it is
more broadly based and so balanced as to lead to a further genera
tion of employment during the coming months,
for an answer to this
question, it is necessary to analyze, first, the relation of demand
to current output in the light industries which manufacture the bulk
-5-
of products for consumers; and, second, the present and prospective
rate of demand for products of the heavy industries which dqfaot, in
the main, sell to the ultimate consumer, hut are occupied with con
struction or production of new equipment or with the replacement of
worn out or obsolete machinery*
Taking these problems in their order, in the light industries
it appears that the current rate of consumer demand is sufficient
to absorb the going rate of output.
The textile, leather and food
industries curtailed output rapidly in the latter months of last
year, after the advance of the summer and early autumn, and although,
there has recently been a renewed increase, activity in January,
after allowance for seasonal changes, was at about the same rate as
in 1930~1931 •
£he volume of retail trade indicates that at present
these goods are moving in substantial volume into channels of con
sumption.
However, the current rate of output in the light indus
tries is sufficiently high to suggest that, with certain exceptions
such as tires, etc., any further substantial advance, other than
seasonal, cannot be expected this year.
Should such expansion begin,
especially if it were rapid, it would merit close attention as to
the permanence of demand.
farther progress in reemployment, consequently, rests on a ris
ing tide of demand among the heavy industries and on the regenerative
effect of revival in these industries throughout the economic struc
ture.
The advance in output during the past month was largely in
those industries and, in terms of present market demand, their ac
tivity is nmch more broadly based than it was last June when steel
mills, for example, were operating at about the same per cent of
capacity as they are at present.
The market for consumers* goods
of a durable sort, such as automobiles and electric refrigerators,
is already active and expanding; the market for machine tools and
other types of factory equipment is becoming somewhat broader and
will probably show increasing strength as needs for replacement of
worn out and obsolete equipment develop*
Baring the coming year,
furthermore, the public works program will restore public building
to a rate equal to or above the normal volume of public cons truetion to which this country was adjusted before the depression*
De
mands from our transportation system for heavy equipment foi1 oon
are reappearing and are making themselves effective, in
part by means of financial aid from the Public Works Administration*
It is impossible to tell how widespread demands of this sort will
be during the remainder of the year; for the present they appear more
than adequate to account for the persistent increase in activity in
the basic heavy industries, nail tn
*'kn* nn
44 4n *****
npwcTiliali^e.ia wntiara.
Hew residential construction, on the other hand, is negligible
in volume*
The absence of activity in this field reflects in part
the depth of the depression and the fact that it is even now less
than a year since mounting unemployment and decreasing business vol
ume began to be checked.
In view of the general oversupply of residen
-7tial facilities in 1923 and the apparent temporary increase in this
oversupply 'brought about during the depression by the practice of
“doubling upM and also of moving back from cities to rural home
steads, it could not be expected that there would be any widespread
demand for new private residential construction until after a consi
derable interval of emergence from depression.
Five years of under
building have •undoubtedly created a shortage which in time will
make itself felt, but at present the most promising field for fuar&her
activity in the heavy industries lies in stimulation of rehabilitation
and modernization of existing dwellings.
Later a more widespread
demand for new construction may be expected to assert itself.
Foreign Trade
According to a statement from Secretary Roper, exports declined
by somewhat more than the usual seasonal amount between December and
January,
fetal exports, including re-exports, were valued at
$172,000,000 in January against a total value of imports for con
sumption of $128,500,000.
The recession in January from the pre
ceding month was ten per cent in exports as
seasonal decline
of four per cent.
*
against the usual
Imports rose from $12^,318*000
in December to $128,500,000 in January.
The increase of 3*^ P©r
cent slightly exceeded the usual seasonal increase of about 2 per
cent.
Office of Economic Adviser
Fafcraary 13, lf3*§
scjOEOMiG zvmutim
fa ara mm approaching a period when comparisons of business
statistics with last year will become increasingly misleading be
cause ef the exceptional development* of 19 3 3 *
©Bring. the next
fee weeks, tasinees statistics are almost certain to skew large,
sudden increases ia comparison with the sane wastes in 1933 wiiea
activity was nearing a standstill as the leaking crisis developed.
Beginning with the latter part ©f March* on the other hand, gains
over 1933 »ill be such smaller fcecaaase of collar Ison with a period
in which activity was recovering at a phenoneaal rate after tha re
opening of the banks and tha beginning of the recovery prog#**.
For lids reason litaral interpretations of routine statistics are
to
avoided.
In i
It will %e desirable to «se data, which have %een
corrected fer seasonal changes or, when that is impossible, to make
coa^arisons with earlier years when conditions were more nearly
nones!*
flie aest recent weekly statistics continne to show the sa*e ^
trends that have W en noted in earlier repertss— generally rising
prices for coaneditlee and securitise; production advancing from
add-Jauaary levels, especially in ths aatoBwblle aad steel laflos-
-2 -
tries; retail trad® coutinnlug to gain; public construction at
ki$i
levels* and private building lagging,.
Prices.
In the security markets, prices advanced vigorously up to
ike
raiddie of last week when there was a reaction in both bonds and
stocks.
Among cosiaodities traded in organized xaarkets, there was
some irregularity -during the week, with prices of .grains anc silk
receding, while laany other prices continued to rise, both here and
abroad..
Price advances were pronounced for cotton and rubber, and
:narkets for sugar, coffee, lard and other products were also strong*
Prices of less sensitive commodities have also moved upward, on the
average, and the Bureau of Labor Statistics general index of whole
sale commodity prices has advanced steadily for six successive weeks.
WHOLESALE COMMODITY PRICES
U.S.B.L.S.
~3During the first week in February, th© index rose to J2»Z per cent
of ita 13.
2b average.
Hiis is the highest level in nearly three years,
and is P2 per cent above the low point last "i&reh and
1/2 per cent
above the level prevailing during the ten&orary peak of business
activity in aid-Jfaly of 1933.
Production.
Industrial production early in 3'ebruary appears to be showing
distinctly more than seasonal iiaproveaent.
Electric power output,
which measures a wide variety of productive activity, increased
more than seasonally during the early part of February.
Automobile
production, wMcli had been advanced to about **5*000 cars two weeks
ago, continues to increase and was cstiza&t&d at 65*000 cars during
last week.
1930.
Shis is the largest output for early February since
Steel operations are also increasing r&pidly, and have risen
fro* 3**~1/2 per cent of capacity at the flr»t of the Month to a
level estimated at about ^0 per cent of capacity at the present time,
fhis rite, which is somewhat sore than seasonal for this period of
the year, reflects a ranch wider v&riety of demand than was present
during the sharp increase in steel operation* last m » e r , since
at that time the railroad and construction industries, cmstoiaarily
among the heaviest takers of steel, were corspletely out of the mar
ket, and orders were confined to the autosobile industry, the tin
plate industry 'and to other miscellaneous users of steel.
In January contracts for construction in the states east of
the Eocky Mountains amounted to $190,000,000 according to the ?. V.
ledge Corporation, representing a eaa£>&rativ®Xy snail decline frm
Decsei&er.
learly four-fifths of the contracts were for public con
struction.
Contracts for private W ilding were afeout $20,000,000
smaller than in Beceefcer and near their lowest levels for the de
pression period.
fhe Public works Administration reports that construction con
tracts ef about $30,000,000 were arranged under its auspice* in Jan
uary, a decline ef aim* $20JD0Q#000 from those aw**ted im fce^oaber.
There was a sarked increase, fcewewer, in construction work done %y
workmen hired directly by federal nr state supervising agencies so
that in the aggregate there was little reduction in new work began
-*5 ~
V
PWA.
Contracts for PfA projects include a nuniber of important
orders, such as those for laval vessels, which are not
classed as
»
construction is the reports of the f. ?/• DoSge Corporation*
Distribution and Trade.
Railroad, freight traffic has been showing more than its- usual
seasonal increase since the holidays and after seasonal adjustment
averaged ^ p«* cent of its 1923-1925 level in January as co*a$&red
with 6l per cent in liovember and 65 P®** cent last July,
fhe latest
figures on car loadings show traffic to be at about the same levels
as 1932 and 16 per cent larger than last year.
.
Mm* «.
Trade reports for the first half of February continue to empha
sise a strong situation in both wholesale and retail trade.
In
January, so far as final figures are available, the seasonal de
cline in retail dollar sales froa the holiday peak was about aver*
age ia tha cate of department stores aad grocery stores* bat mm
mach leas thaa usual im the. ease of variety stores aad m i l order
houses,
as compared with last year when trade m s restricted aad.
retail prices were considerably lower, average daily sales showed
gains of k per cent ia groceries, 1% per east l a department stores,
aad 15 per cast ia variety stores.
Preliminary reports indicate
aa increase of well ever **0 per cent la **11 order sales,
teeeat
galas la trad* ware general throughout the ooafctry bat were parties
larly narked in Massachasetts, aad ale# tfcro’aghomt the middle west
aad south.
hjblic m*tm
la October, lf33* *&• 7adaral laergemcy Relief Adminifttratioa
took a census of faadlles receiving uae^loynent relief froa public
fimds and found that nearly 11 far ceat of all familie* ia Hi# coun
try vara oa public relief rolla.
Shey nanbarad ware than 3#1T5»000
families aad included 12-1/2 million persons.
A surprisingly large
number— forty-six far cent— were chlldrea uader 18* a gronp that
accounted for only a little aora thaa oaa^third of tha total popular
tion.
The number of single individuals without dependeat families
aad faatillss of siare thaa 5 persons aaa also disproportionately
large*
f&e rural raliaf laad was heavier than night hawe beea ex
pected.
lima per cant of all rural families were receiving raliaf*
while ia cities of over 2,500 population tha proportion was 11-1/2
per eaat.
fha relative relief laad varied widely among tha states*
f n » 27 par cent of all fas&liea in Florida aad
fat eaat la South
Carolina, to 3 Far eaat la Tenaont, Virginia and Wyoming.
This aas the raliaf situation ia October.
It represented a
»atarial iasprovaaeat over March, 1933— tla* aost eevere sjoath of tha
depraaaiaa«
At that tiaa it la estlaated that wore thaa
500*000
families and ©war 13,600*000 persons vara receiving public raliaf.
Aa this winter cane on* there was sooa increase ia tha raliaf
laad* especially early la Koveaber.
After tha OVA prograa became
active lata ia loveaber, however, thara was a rapid reduction in
tha .nwnber of families receiving relief.
In Hie past four /ear*
relief eases have increased from 20-30' per cant between November
and December, and 10*20 per cent between December aad January.
Thie year the nuaber has decreased in both periods, by 20 per cent
in December and 15
per
cent in January.
Leas than half as many
families are now receiving relief than in Ifereh, 19 3 3 * and cash out*
lays froa public funds— federal, state and local—have been redhead
froa over $80,000,000 inll&rch to $**8,000,000 in January.
Since
Federal funds becaae available, relief has been aore nearly adequate
than in the early months of the year.
ihile CfA was employing *4,000,000 workers between late lovembar
and the middle of January, 1,100,000 families left public relief
rolls.
Mr. Hopkins reports that in the past two weeks, with cur
tailment of the CfA program* the number of CWA workers drawing pay
in the week of February 1 was about 1 JO,000 less than at Its maximum
In the week of January IS .
fhelr average weekly earnings had de
creased froa $15*22 te $11.12, because of a reduction in weekly work
ing hoars of urban employees froa 30 to 2** per week and of rural work
ers to 15*
Altogether the Civil forks Administration has expended
$435,000,000 In wagas*
Hr* R ie fle r
Jmrn&y SO, ly§4
ECONOMIC SZTUAfXOi
SMBtiQL*
Prices in the organised coaaodity &rsd security markets levelled
off last week following a vigorous rise ia the preceding week*
Xesterday,
however, these market# again advanced. in the security Markets, price
index** of both bonds and stocks have risen sharply fra* Dece&ber aad are
close to the 1955 high level* readied ia July.
In the ©ogaaodity write te,
price indexes of sensitive commodities have continued to advance but the
rate of increase last week w&s glower than in the two preceding weeks.
Lea*
sensitive ooaaaodities have also risen on the average, and the Bureau of X*abor
Statistics index of wholesale cosuaodity prices ^overlng 784 eerier, has ed~
v&need steadily froa 70*4 of its 1026 average in the week preceding Christaas
to ?£*5 in the week ending January &0. -Higher prices for fans products aad
foods have been the largest factor in this rise, hat increases have also
occurred in sost of the other m $or groups*
In industry, it now appears that msasifeeturing production .in January
as & whole will average about the m m in volume as -in December*. textile
output continues at a sosaewfeat reduced rete, reflecting as in earlier months,
compensation for the high rate of activity maintained last earner.
In the
steel industry, whieh has been Biarking ■
tim pending releases of specifications
on automobiles and public works contracts, operations dropped X~l/£ points
last week to 8£*5 per cent of ingot capacity, imt are forecast for the present
week at 34.4 per cent of capacity.
Shipaeat® of finished steel were com
paratively OJBfill in th© first part of January, eXthough mkers of farm
~£~
impleaents ana road-building mohimry 6T6 reported to be buffing ia f& ir
quantities*
Automobile output increased from £0,000 ears i a the f i r s t week
in January to about 45,000 oars l a s t week# Thus the to ta l fo r the month
w ill be not fa r from 150,000 cars, a very substantial increase ov@r the
84,000 produced in December* Certain important plant® are s t i l l hampered
by production d iffic u ltie s and aye not able to go ahead m f a s t as orders
warrant*
taking a longer view th&n i s indicated by these short tens movements,
i t appears th at oertain branches of the heavy in d u stries, which f e l t the
brunt of the depression, are gradually coning to life* The current operations
in tha lig h t in d u stries, that i s , te x tile s , leath er goods, food ja&nufkctures
and miscellaneous items, are running slightly lover than last year or tap©
years ago* Operation© in the heavy industries, on the other hand, while they
are s t i l l small in volutae as compared with pre-depression lev els, are mater
ia lly larger than la s t year and somewhat larger than two years ago#
In fact,
a l l of the current gain in production ia basic industries as compared with
those periods is concentre ted in the heavy in d u stries, reflectin g principally
the resumption of active demand for automobiles, e le c tric refrigerator© , and
Iim JM
also for tools, far® implements, engines, machine tools, and certain other
types of mechanical equipment*
Hhis i s confirmed ty Secretory Perkins* report
which indicates substantial gains ia employment and payrolls in these Indus
tr ie s in the month of December*
Constructtogu
In the construction industry, despite th© large increase in contracts
&werd©d in recent months, natu&l ^ork under way continues relatively 1on,
because of the d iffic u lty of inaugurating large scale construction projects
of m engineering type euch as road building during the winter months*
Contracts awarded through the &£d of Jeumwry, according to the F. I* Dodge
Corporation, w r e at about the same rate a# in December, which represented
the largest volume la many months,
Residential construction continues in snail volume.
According to
Secretary Perkins* report there was a decline in December in both number and
value of permits issued for new private construetion.
Permits for addition®,
alteration© iind repairs also decreased in softer but increased in wane in
that month.
Bet a i l trade figures received during the past week confirm earlier trad#
reporte,
Confidential figures on department store sales have shown a higher
then seasonal level during the first three weeks of Janurry» this has not been
confined to the South and Middle West m in earlier months, but has also
penetrated Hew England.
Improveiaent of sales in Hew England has also been,
confirmed by aore oQaprohensive figure© covering all principal types of retail
trade in Massachusetts, which indicats a trade volume markedly higher then
last year, especially in wearing apparel, general merchandise, end miscellaneous
it©as.
Effi^loyaent.
Implograeat in factories will probably show a somewhat larger reduction
then ueutl in the .middle of January as compared with December.
Preliminary
confident^! figures from Pennsylvania indicate jester- than seasonal reductions
from early December in employment, payrolls and tottl number of hour® worked
by employees.
In Detroit, on the other bund, it is reported th a t sore workers
were employed last week than at any time in two years*
Baoratary Perkim raporta that total attpXayaaat at factories dropped
by 1*$ par aaat batvaaa tba aIddle of iovaaber and tha middle of Eaoaabar
while payrolla declined tgp X par cant.
aiallar decline# between Xoveabar
asd Daaaafear b&*» occurred in 7 of tha Xaat 10 years but tba decline thi#
yaar vaa aos*>wbai greater than average.
It ia aatlieated that these ahaagaa,
taitfn in coiiiunation vdth ah***** in mnlftiii m t »mi yayrolla in 16 -jriv&te
noanraimfacturing iiaduatriea, raaulted in a sat deoratae of 50,000 worker®
during tba period and a sat reduction of |£44f00Q par *»ek ia payroll diaburaoeie&ta*
Far tba aoat party declines ware aonoantarfetad in highly aaaaanal
induatriaa each aa private oonitructtcm, canning and preaarviag, dyeing aad
cleaning.
2m tba aarchandiae field, an tha other head, thara «&a a sharp
»a<t tonal iaaraaaa ia employment rafXeatdng the la rg e expansion in Chriata& a
trade*
Secretary Perkin a fu rth e r rep o rts th a t eixteea ia«$uat r ia l diaputea in
volving 6 ,*49 aorkera d ire c tly end 6,061 in d ire c tly vara adjiiated by tha
C o a c ilia tia a t a r tia a between Jaaaary 16 aad Jsaii& ry 27*
Mr. Eiefler
January !<>• 193*
ECONOMIC S i m f l O *
StUBtnftTT.
A sharp advance la prices oa the organised security aad cosmod! ty •&>&»%* accompanied publication of tha Presidents message
to Caagrssi oa Monetary policy yesterday.
During tha preceding three
r«e>c# prices oa soaks of tha organiiad exchanges bad showa definite
signs of firimess.
Prices of cotton aad silver had advanced telk
here and abroad{ aad ia Attarlaaa markets prices of cattle and hogs*
of coffee, and, recently, wheatt had increased.
had also.shown definite strength*
Corporate bonds
The Bow-Joaes average of Ho
bonds -had recovered to the level of B&d~Sepie»bor, 10 per caat above
tha recant lav palat reached ia loveaber aad only 3 per cent below
the preceding; high palat reached in jaijr.
Ia retail narkets, there is some evidence that tha advance ia
retail prices, which had provoked a cartaia amount of consular re
sistance* had aorni to aa aad* at least far the tl«e being,
.fhe
Fairchild index of retail prieaa quoted by department stores showed
no change between December 1 aad January 1, while tha Bureau of
Labor Statistics iadex of retail food prices registered a farther
decline during Deceraber.
-2 **
la industry, since the sladkoaing at tha ysar~ead, activity
has ^w o r » H M 4 oa a soaowhat larger seal* than usual.
Both
po#e* output aad railroad carloading* lava shown a slow bat grad
ual laproveaent during tha past few weeks, aa compared with tho
same period ia other years.
Stool aills, which were scheduled
to operate at 29*3 P** coat capacity daring the first week of
January, advanood operations by aboat 1 point last week aad aro
scheduled at 3^*2 por cent for tho current week.
Aatoiaobile M a
kers aro now rapidly increasing output aa production problems oa
tho aow medals aro overeoae; output is reported to havo expanded
fra* about 20,000 ears la tho first week of Jaavary to ^>,000
daring the week Just past*
Trade reports indicate that makers of
supplies aad parts are exceptionally busy.
fho smeooss of tho
low Yoifc iatoaobile Show is particularly gratifying to tho indus
try.
Sufficiently comprehensive reports oa business activity ia
Deeonfeor havo aow % k w m available to Indicate the general position
at tho close of tho year.
Ia general, tho story of factory opera*
tioas is one of little change, other thaa seasonal, between Novem
ber aad I5eee*ber.
Qatpat ia basic aarrufacturing industries as a
whole showed about tho asaal change.
Xadividaal industries were
exGoptloas; stool oatput increased instead of declining, cotton out
put was reduced by aore than is oastoaary *
However , estployaent aad
payrolls la factories, for which oar figures cover a wider range of
finishing industries thaa do reports oa output, declined slightly
*ere between foveaber aad PtmmBbm than in past years, according to
prelia&nary reports.
Ilaal reports indicate that retail tales* except for aa.tomo~
bile*. gained considerably i» Dece»b«rt measured in dollars.
Allow
ing for price changes, physical volume of goods sold appears ale#
to have increased fro* lovember, M t not froai a year ago in the case
of these 1tents slier* price flotations are available.
food sales
by chain organisations, which are ordinarily fairly stable, showed
an increase in dollar veliMs for the country as a whole of two per
cent over last year*
Is the merchandise field* department store
sales were 12 per cent larger than last year, 5* 10* aad 1*$ stores
1 5 p«r cerst larger* while gains at mail order houses were m m great
er.
As ia the previous »onth, reports indicate that the urban areas
of the Sortheast and the Pacific Coast States have experienced a
saaller pidaip in activity thaa agricultural districts, particularly
those in the cotton-growing States*
this is illustrated by the sales
of department stores in leading cities as reported to the Federal
Reserve Systeau
As a whole they increased 12 per cent on. a daily
basis as compared with Decsasber 19 3 2 .
In the lortiieast* that is*
is the Boston* Kew Tork sad Philadelphia federal reserve districts*
this increase ranged fro* 3 P«r cent to $ per cent.
Moving West
to the Oletelaad, Chicago, and Minneapolis districts* the increases
ranged fron 1$ ts 1| per cent,
fo the South, Bichmond and St. I*oais
•bowed gains ©f 13 and 15 per cent; while still farther South* im
the Atlanta, Kansas City and Dallas district*.* Increases ia sales
ranged from 26 to 28 per cent.
Ia the region west of the Bocky
fountains, however* tbe increase was only 11 per ®«mt*
Department store sales, averaging tbe country as a whole, do
not appear to have been exceptionally large daring the first week
of January, according to confidential data, bat trade eaanents con
tinue to eaphasise a generally strong situation in both wholesale
and retail trade.
Secretary Perkins reporte that tha coat of living survey made
‘by the Department of Labor showed a decline in the cost of Hiring
of 21 per cent between the last half of 1928 aad the last half of
1933*
I* the District of Colmabia* the corresponding decline in
tha cost of living for federal employees was 1*1.6 per cant.
luring
the last six months.* however, the cost of living has baen increaaing, by $ par ©mat for the United State* a* a whole and by 6-1/2 per
cant in th* District.
Bant was the only major item in the cost of
living which ccmtinned to decline during the last six months.
Housefurnishings and clothing increased by about 11*1/2 per cent,
food by f per cent, aad fuel aad light by 7 per cent.
Miscellaneous
items showed only small increases ia the aggregate .
Construction.
Construction activity has increased materially im the past
f « r aoaths, predominantly because of Federal c M t n e U awarded tmder
the FIA.
5he roporta of the F. W. Bodge Corporation on construction
cob tracts
awarded, which include only tha 37 states east of the Eocky
Me?antains, reached thair low point in febraary and March of -thia
year at about $55*000,000 a month, aa compared with an average month
ly voloae of $550*000,000 in tha year 1926.
%
August they war#
•till at a rate of only slightly ©*er $200,000,000.
Since that
ti*e they have increased rapidly to double that a a s n l, or mam
than $200,000,000 1m Deeeefcer.
Projects are M t classified by the I . V. Dodge Corporation
according to whether they are awarded under tha FfA or not, feat
public awards, including Federal, State aad municipal, are segre-»
gated fro* private contracts.
Of tha total of $635,000,000 of co»~
tract* awarded in these State* fro* September to l>0€«aber, 1933*
over 70 per cant were for public project*.
These ware all largely
PIk project* nine# the present volume of State and municipal coastraction, excluding contract* on which the PWA 1# eaagwratlag* it
negligible.
The chart conp&res public aad private construction contract*
let In these eastern State* daring the past two years.
Public
construction contract* wwre considerably larger than private con*
tract* daring the last three quarters of 19 3 2 , M t subsequently
fell to very low level* during the first seven months of If 33*
Be
ginning in August the total of contract* for public construction
expanded very rabidly and in December they were about $155*000,000.
*•<£*»
Private contracts, shown hy the gray hars, declined gradually
from the first quarter «f I 932 until early ia 1933*
Sines that
tixse, they have shown largely seasonal changes except in December,
when they rose sharply against their usual seasonal trend.
A
substantial proportion ©f the increa*e ia private construction
during the summer mouths was in siaall residences, mostly for owner
occupancy, hat business construction and distilleries also account
ed for Sim of this building activity.
Wat* Stiefler
January
193 ^ ■
wm m n sim fio s
S-anaary*
Sotail trawl#, which dominates the holiday season, it reported .
to havo mmI* large galas a* cowpared with last year.
Holiday tales
of the largest nail order house increased 2? per cent as eosqparsd
with December 1932*
The basic industries showed a continued Moderate gain im ths
rate of activity over the year-end.
Railroad freight traffic, per
haps the heat geaeral Indicator, declined considerably less than
usual during the entire holiday season; and sore electric
powor was sold than in past years.
Stool plants aro beginning the
year with operations at 29 por eoat of capacity, according to tho
estimate of the American Iron aad Stool Institute.
This decline of
only 5 points since tho third week in December is considerably lots
than, the trade expected*
Autonobile factories are still largely
occupied with tooling up for now models and output in the last week
of Doeoaber was at about half the rate of last December.
Present
trads expectations aro that resaaption of output will bo slow and
irregular la several of the larger plants until lato in January or
early in February, when the now nodols are expected to reach a quaa-
•tijgjW
tity production basis.
Looking back on 1933* total output Im light industries m a
group— textiles, leather, foods, etc. — recovered to within 15 per
c#nt of the average for tho peak /ear
1929* It does not appear
probable, therefore, that these industries will show a further
large Increase during 193^*
hand, the year
Im the heavy Industries, on the other
193^ *pons with prospects of a material increase in
activity, especially is the automobile industry and in the construc
tion industry,
frm l$2% to 1930 aa average of over *4,000,000 no tor
cars were produced annually in this country while in 1932 automo
bile output totalled leas than 1,**00,000 cars, a decrease of 6$
per cent*
In the spring of
1933*
automobile market was astong
the first to show signs of expanding activity, and total output for
the year increased to nearly 2,000,000 cars.
Bven this large in
crease was probably not sufficient to replace ears that because worn
out and were abandoned during the year,
fith dealers* stocks of cars
reported at exceptionally low levels at the present tiiae, it is ex
pected that total.
193^ output will Make a further Material gain
over 1933*
In th# construction industry, which accounted in the aggregat#
for about $11,000,000,000 of work in 1929 a# cofi^pared with about
$3,000,00©,000 daring the past year, activity has persisted at low
levels until recently.
Contracts for new construction, however,
have increased rapidly during the past four Months in response to
-3the Public M i*ks program.
Boring the first three weeks of Decem
ber* total construction contract* awarded in 5? states* according
to tii* F. W. Bodge Corporation, wore at a rate nearly throe tines
'as large as that at the end of June, and are M r tip to about onehalf their December level in the years 1926, 1927 and 1921 when con
struction was exceptionally active in this country.
Although the
greater part of these contracted operation* are outside the resi
dential field, residential eonstraction is also shoving sows in~
crease.
Secretary Perkins reports that building permits compiled
froaa JSO cities by the Bureau of Labor Statistics showed an increase
of 22 per cent in the naaber of new residential undertaking* in
fioveaiber as compared with October and an increase of 66 per cent
in the estimated
value of these projects,
These figures include
repair* as veil as new construction.
Secretary Perkins also reports that the Bureau of Iiabor Statis
tics index of wholesale eoswodlty prices declined by about one-half
of one per cent, from 70.$ tc 7&#*l per cent of the 1926 aver
age, ia the week ending Bccamber 2 3 , reflecting .Marked reduc
tions ia the market pricvo of farm products and manufactured
foods.
Sacrataary ldc«» reports that Hi# Furchaslag; Officer of the
i>epart»ent of the Interior ha* cosspiled figures showing the bid
prices m
certain articles of wearing apparel oa tho dates of June
I# 1933* *»& October 1# 1933* the tommr date being prior to tho
effective dato of any of tho code* mder tho H1A..
these figures
aro Wood oa broad, coa$>otlfcTo bidding covering every part of
tho Uni tod State* aad apply to articles of voarfag apparel of a
quality -aat kind m od by wage-eamors#
fho quotation! given aro
not exhaustive of thio H o t bat aro typical of the variation* shown.
jootation* received -
' : Juste l t t Oct. l t t Percent
arnBl_________ *-i«i___»..1212.-.tJaeaait
s
Voaaa's Lisle Cotton Hoso, per
t
dosoa pair*
i
Bight Qovna, outing flannel, each*
Overalls, blua deaitt, per pair
■8
Pajanaa, bleached cotton, oaoh
8
Woaen’ s Union Suite, light
I
w ei^t ribbed cotton, eac.
1
Jackets, blue denim, ©aeh
t
W m m m * * Hftloa Salto, heavy
t
ribbed cotton, each
t
3
Mem** Union Suit*, chocked
nainsook, aa*
I
Boys* and Girls* libbed Cotton
%
Stocking*, per dot* pr*.
1
lea9* Union Suits, heavy ribbed S
cotton, aa.
I'
ilea* a Cotton Socks, per dosea
1
pairs
s
Women1s fasts, ribbed, each
:
Work Suite, blue deals* each
i
Corduroy trousers* per pair
I
Khaki Trousers, per fair
*
total
*3.11
0-79
0.825
13
17
22
32
0.59
0.V1
0.795
32
35
o.Ho
0.55
38
0.255
0-355
39
1 .6 0
2.25
1*1
0.57
0.82
%
0.85
0.12
0.85
1 .28
.JBrJ05
1.28
0.19
I .35
51
58
5?
♦2-75
0*71
O .65
0.625
0.31
t112.095
JL_________
0.83
2.23
1.17
116.955
>»
■5*
f hey show that the aggregate cost of the fifteea art!clef cited
was $12.06 on J w « X* 1933*
increase
of Ho fo r oont.
$1 6 .9 6 oa October 1, an aggregate
Increases la tho prices submitted
oa com
petitive bids to Secretary I ekes rasge from 13 por cent ia tho
case of eonea's llslo cotton hose to 136 por coat la tho case of
khaki troasert.
Prices charged for apparel by department stores
la leading cities, coa^ilod by Fairchild Publications, show & much
smaller iacroase of 20 por cent between Jane and October, aad
2k por eoat from Jane to December.
Other Indices of tho retail
cost of elothiag to consumers also shov smaller advances .la the
««rae period.
Mr. Biefler
December 2 7 , 1933
icoHOtac sim fio s
Summary.
Gnrrent weekly data continue to indicate a distinct tendency toward increased activity.
Electric power production increased
thaa seasonally during the week ending Decssaber 1 6 .
frelght-
car leadings war# also larger although a decline ia freight traffic
ia usual at this season.
Steel operations advanced fro» 28.3 to
3 1 *5 per cent of capacity at a time whan it it usual to expect a
seasonal decline.
'During tha week endiag December 2 3 , steel operas
tioas advanced still farther to 3^.2 per cent of capacity, aad the
American Iron and Steel Institute estimates that they will he 31.6
per cent of capacity during the holiday week, a period when exten
sive suspensions are usually to he expected.
This sharp pickaap la
steel operations during the last half of December, against the cus
tomary seasonal trend, reflects ia part at least the desire of con
sumers to avoid paying higher prices posted on certain types of steel
products for next month.
It ia possible, therefore, that operations
’ will slacken temporarily after the year ead until these advance shipneats have been absorbed*
Automobile production continues to expand
moderately but remains well below last year, due to continued diffi
culties in obtaining volua® output on the 1^3% models.
As a conse
quence, the total volume of oatoraobile output this month will be
near the lowest level for the current year.
Construction contracts
for the first half of Beceiaber showed a further sharp Increase
again reflecting large awards for public works,
trade reports in
dicate an active holiday shopping season bat there are not yet suf
ficient figures available to sraxa&rixe the result*.
Tha increase
of $S6,000,000 in money in circulation between December 13 and December 20, however* repretented a fall seasonal rise for this period
of the year*
Production.
At additional data for lovenbsr are coaiplled, it becomes in
creasingly clear that the general recession in business activity
levelled off during that .south.
As compared with October, however*
the average for lovenber at a whole showed declines.
In output of
basic .materials thia decrease amounted to J per cent as compared
with a customary seasonal decline of about one per cent.
Corres
ponding to this decline* figuret on factory payrolls, which cover a
wider range of industrial processes, especially of finished goods,
f
thal figuref .on factory output, declined k per cent at compared with
a customary seasonal decline of lets than. .2 per cent, while factory
esqplojntent declined
cline of k per cent.
6 -1 /2
per cent at compared with a
cue
ternary de
The highly seasonal canning industry, which
it included in these figures, accounts for a large part of tho sea
sonal decline.
-3-
fhi* receesion was essential to correct an over-rapid expansion
in ike output of certain basic raw materials and semi-finlshed good*,
especially ia the textile, leather, aad ateel industries, which took
place between March aad July.
It was pointed out in aa earl let i » >
nary that 6j per ©eat of the huge increase ia factory production be
tween March aad July wae accounted for by these three industries
which expandod temporarily to a rate of operation* far beyond the
current demand for their products either in the finished good* In
dustrie* or in retail markets.
Skat a correction of this situation
was the aain factor in the autuian recession is shown by the fact
that these sane three industries accounted for J2 per cent of the
recession in output between July aad Koveaber.
At present it look* as if Koveabar will mark a point that is
close to the low of the amtnaa recession.
The stock*taking of our
position shown on the chart* is for that reason a conservative one,
especially ,in view of the fact that the Civil Works program and the
Public forks program had not yet began to operate in fall volume so
far as actual employment or production of construction materials
is concerned.Secretary Perkin* reports that retail food price* declined by
sonewhat more than I per cent during the two weeks ending December
5 but oa that date were lfe-l/ 2 por cent above the low point in
April and ? per cent higher than in December last year.
were reported froa
Decrease*
of the 51 cities covered by these figure*#
Wholesale cocesodity prices decreased hy a very slight amount taring
th® week ending December IS.
fha Department of Coaaerea reports that export trad# was wall
maintained during Sovemher while iajsorta decreased rather sharply.
Tha Talma of exports at $18^,000,000 ahowed a decline of 5 P®r cant
fr«» October as coapared with a usual decline of 6 par cant while
inporta at $128,000,000 showed a decline of 15 par cant froa October
aa compared with a usual decline of about 2 par cant.
At a result,
tha excass of exports increased to #56*000*000 for tha month, tha
largest net export fe&lanca since January 1931.
As compared with
their average value in tha period 1923-25* exporta in XevanW* showed
a dacraasa of 5® per eiat while the decreaae in imparts araountad to
SO par cant.
Mr. Riefler
December
i 9 # 1933
3C0H0MIC S im flO S
la Beceaaber, business is dominated wore largely %
al wovements than at any other period of the year.
season
To a cer
tain extent these movements reflect almost solely weather con
ditions, as instanced by a larger than ordinary movement of
coal aad fael, aa tbs one hand, aad a tendency toward Blowing down
in outdoor heavy cons traction operations oa the other.
In ad
dition to this waather factor, however, there is tha overshadow
ing fact of tha Christmas holiday season accompanied by increased
travel aad a huge acceleration la retail trade.
This provides
a natural seasonal division for plant operating schedules.
The
latter part of December aad the early part of January, consequent
ly, is a period ia which production is usually curtailed socewhat
while inventories ara taken, plants ara repaired* and production
operations oa new styles ara introduced.
Oa account of these wide normal movements, it is peculiarly
difficult to judge tha significance of such current business da
ta as are available.
Ia general, the reports appear to show that
changes during recent weeks have been largely seasonal in charac
ter.
Tha latest figures on car loadings and electric power produc
tion which refer to the week ending December 9 appear to have beam
scaewhat lewmr than usual but not by * significant amount.
Steel
operations, on tha oilier hand, rose Is contrast to a custosaary
decline.
Steel operations again increased sharply against their
usual trend last weak, froa 2g*3 par cant of capacity to Jl»5 par
cant 6f capacity.
Baring tha present week, they will average
3^.2 p®r cant of capacity according to tha estimate of tha Ameri
can Iron and Steel Institute.
Production of new 193^ a**.to»ohll#
models to stock up dealers prior to tha automobile ahov ia still
Slav in getting under way.
This production, which usually falls in
Ifovember, was delayed thia year, first, by tho die ankersf strike,
and wore recently, apparently, by difficulties in attaining nass
output for tha ssazsy innovations that are to be incorporated in
tha 193% s&ri.
As a result, while automobile output rose further ■
last waek, Deember production will probably not come
to ear
lier expectation#, and jaoch of thia activity will carry over into
the maw year.
Holiday shopping has bean reflected in an enormous
Increase in retail trade but it is too early to tall whether thia
increase is ®ore than seasonal or not.
Biring the week ending
December 9, department store sales, according to confidential pre
liminary figures, were showing about tha usual seasonal increase
from Koveaaber.
Bxese seasonal aove&ents at the year end, are reflected sharply
in the ebb and flow of tha deaand for currency,
lost large business
transactions are paid for by cheek aad their affects are traced
through figures showing tha voluae of check payments.
Hand to hand
ia still the principal means of payment in re-
>
tail trads, aad the volwm of currency expands enormously la De
cember whan Christmas baying dosda&tes th# business picture,
Shis
i* shown In the chart which compare* normal month to month change*
im tha deraand for pocket currency with corresponding changes im
departi&e©.t store sales, grocery tales, and factory payrolls* three
segments of owt economic life where currency is used store largely
thaa checks,
the figures on this chart do not refer to any parti*
cular year, hut represent those changes which are perfectly normal
and should he expected to occur in any steady business year.
Ba*
ginning at tha bottom of the chart and working up, the lowest lift*
shows changes in factory payrolls from month to month in a normal
year* with the average daily payroll throughout the year represented
by the zero lime.
The chart shows that payrolls dip below average
fey over a ail lion dollars & day in July when many factories shat
down for vacations before starting in on their autumn manufacturing
schedules,
from this low point in July there is usually aa abrupt
rise ia factory payrolls until Octobsr when they are nearly
$1*000*000 a day larger than average while autumn manufacturing,
operations are in full swing.
This is followed by a moderate drop
between October and lovember and a sharp drop between December and
January when plants close down for inventory prior to resuming oper
ations on their spring manufacturing assemblies•
fhe full seasonal
drop trm early October to the first half, of January mounts to
about £ per cant ia factory payroll*, 3*1/2 par cent In factory em
ployment*
factory output is at it* low point in December when the
average for the month aa a whole is usually 7 per cent lower than
the month of October.
the second line from the bottom shews grocery sale* im a normal
year.
Im this ease* the lowest month of the year falls is August,
wham daily sale* dip mere than $2*300,000 a day below normal.
Im
December, on the other hand, grocery sale* reach their peak at
nearly $2*000,000 a day store thaa average* reflacting the effect of
Christmas trade.
%
far the largest seasonal changes occur in department store
sales* which are represented by the third line om the chart,
these
sales* im a normal year* ram $**>,000,000 a day below average in August
and them rise to $1 0 , 500*000 a day above average in December.
The top lime im the chart shows how promptly these seasonal,
movements are reflected im the demand for currency.
Ordinarily,
the total volume of currency im circulation from February to July
rums about $50,000,000 a day below average*
Then when harvesting
season starts, there is a steady increase umtil November, and a
furrier very rapid rise in December.
fhe second chart shows what has been happening to currency
this year.
this chart is based om weekly figures and the solid
lime shows those changes that would ordinarily be expected im a
normal year, ehile the broken lime shows actual changes during 1933-
Tha mn% spectacular movement this year was the tremendous increase
in currency hoarding before the bank crisis .and the rapid decline
in hoarding after March when confidence was restored.
currency has been acting saich aare normally.
Since July,
It has shown about
the usual seasonal 'Changes and is now rising by about the usual
seasonal a u m t .
She last date shown on the ehart is for Decwaher
13 when currency had risen $115*000*000 from Labor Day and $20,000,000
It will probably rise by an additional $150,000,000
to & 0 0 ,000,000 iq? to December 2^ and will then begin t© fall off
rabidly until the latter fart of January.
The fact that currency aoveiaents in the aggregate have been
normal in recent months does not mean that the return of currency
from hoarding has stepped, but rather that at the present tiae
dehoarding of currency is about offset in the aggregate by increased
use of currency for business jwposes-
This is %own, first, by
the fact that la recant months, increases in currency have been
more than seasonal in agricultural regions especially in the cotton
states.
In the big industrial regions* on the other hand,, the lew
York, Philadelphia, Cleveland and Chicago areas# the voluae of
currency has increased less than usual*
this neans that the larg
est increases have occurred la regions where hoarding of currency
had been relatively snail while the smallest increases are taking
place ia those areas where currency hoarding was laost acute.
It is
evident, therefore, that the use of currency for business purposes
has Increased in recent months by an even larger amount than Is
•I**
Indicated by th* total figures of currency outstanding which
include currency ia hoard*,
fhe dishoarding shich is indicated
by these seasonal figures ia ale# substantiated by the fact that
the circulation of large
Mils suitable for hoarding, i . e.»
$50* 1100 aad $500 notes* i* decreacingr while the circulation of
saall alsed notes, such as are used in retail trade, la increas
ing*
Mr. Kiefler
December 12, 1933
XCOHOMIC SXYU&TXOI
S tn r t
Corroat figure* aa the volaae of business activity continue
to slum a fairly level movoaont daring recent weeks.
Stool oper
ation* averaged about 27 per cent of capacity daring Kornibor,
and aronad 28 por coat last week.
Boring tho current nook, tbo
Aaerican Iron aad Stool Institato estimates thoy will average
3 1*5 por em t of capa&ity.
Trado report* indicate that tho sea
sonal decline in stool operations daring tho lattor part of £oeta~
bor will bo saallor than asnal this year.
On tho basis of average
figures for tho two votks ending December 2, both electric powor
production and railroad ear loadings levelled off and showed
approximately tho sane percentage increase over last year as in
tho woOk ending Bovoniber 18.
Automobile manufacturers have ap
parently experienced farther delays in perfecting their new models
for vo'm e production *
Total automobile oatpat last week rose fra*
tho Thanksgiving week, bat remained relatively low for this period
of tho year.
Constract ion contract awards showed an exceptionally largo
increase daring tho last part of Bovoaber which acre than offset
lewer awards earlier im the month.
the Sovaater total far 37 atatos*
anointing te $1 6 2 , 000 *000 , was tha largest for any mouth tinea
October, If 31.
As contract* aa coBstraction ere awarded soma lias
before the expend!tmres lavtlvtd ara reflected in a peak Velma af
work «b tha jeh, the influence af these contreats on general ha* iness
will met te fully reflected until soa» tiiae after the holidays.
A sufficient hedy af data covering ratail trade is November
la saw available to delins&te tha stain lines af tha pietare.
general, department stara sales made tha paora*t showing.
In
Depart-
«ant store salaa far tha country aa a whole, on a daily average % *•
si*, daeraasad 3 par cant between October and Soveaber, aa eoaq?ared
with a cu*ternary increase af 5 par cent.
A* compared with Sovember
last year* which was a relatively poor month, department stara
aalee *howed a gala of 2 par eant.
Variety stara salaa wara n»-
chaaged frea October on a daily basis, hat shewed an increase of
$ .6 per eant* aa compared with last yaar.
Preliminary estimates
af aalaa at anil order ho&ses indicate a gain of froa
eant, aa coapered with Xeveaher 1932.
20
to
25
par
geographical differences in
trade conditions ere reflected im the department stare, figures
whera total sal as in the Bostoo, Sew fork and Philadelphia federal
teserve Districts averaged slightly below last year*
In other re
gions ' there were increases, which ranged fro* 1 per eent in the
Rldaaomd District te I f per eent la the Atlanta District,
the fi-
garce clearly refleeted the improved cotton situation in the South.
**3"*
Oa the basis of physical volaae, miter correction for price
changss fairing tha last twelve months* It appear* that total
sal oa of heavy products, smch. as aatowoblles* centinn* to show
Increase* ia coatmat to a decrease la the physical volume of
sales at department stores*
Secretary Perkins reports that the wholesale conEaodity price
ind*x cosapnted by the Bureau of Labor Statistics fell slightly
darlag the week ending December 2.
fhe Index now stands at 70*7
per cent of its l$a§ average as compared with Jl*J per cent of
its recent high daring the week endlag Boveaber IS.
fhe lorearn
of Labor Statistics Index of retail food prices rose by l/lQth of one
per cent daring- the two weeks ending lovember 21, and Is now IS per
cent above the low point reached in April and 7-1/2 per cent
higher than last year.
All cities showed an increase as compared
with last year which ranged from If por cent In Detroit to less
than 2 per cent ia Jatte* Montana, and Portland* Oregon.
The in
crease in fashington as compared with last year was S .3 per cent.
Secretary Perkin* also reports that daring the week ending Becerabar 11 the Conciliation Service figured in the settlement of 26
Industrial, disp-ates involving 7#673
indirectly*
directly and 1 , 32 $
Mr. Rl«fler
B eecher 5, I f 35
XC0B0M1C t z m f I0S
fho advent of fhanksglving several days later la lovosaher this
year as cos*>*red with 1932 Makes it difficult to Judge tho s ig n ifi
cance of most of tho current statistic* which became available dur
ing tho fast week*
On tho whole, however, the record again see** to
confim tho iMpro**ioa noted .In 'tho preceding three weeks, namely,
that the decline im output which ha* characterised most of tho dominant
basic industries since July began to level off during the early port
of Sovomber.
Stool ingot production has reoainod steady at about 2J
per coat of capacity during tho past three weeks, and operation*
during tho currant week aro forecast by the American Iron and Stool
Institute at 2S.3 P*r cent of capacity.
H o c trie power production and
frelght-car loadings both declined slightly daring tho week ending
foveaber 2T
y,
In view of the different incidence of tho Thanksgiving
holiday noted above, it io difficult to state whether this decline
was greater or loos thaa should ordinarily havo been expected.
Among
the haavy industries, construction contract awards during tho third
waok of tho month showed a rather sharp decline oa a daily average
basis from tho levels reached during preceding weeks.
these figures
ordinarily fluctuate sharply from wade to weak, however, and a decline
Im am* vMk has frequently little significance with relation to
the general tread.
The automobile industry began production of
net 193 ^ models during the week ending forever 2 5 * M t motor output
decreased ia the final fee days of tbe month reflecting in part the
Thanksgiving holiday end in part further delays in starting volnne
production of new 19 31* cars*
fhe delay this year ia toIsm output
of new models at a time when retail demand for Motors was strong
has reduced dealers* inventories of 1933 »©del* to abnormally low
levels.
December output, consequently, is expected to increase sharp
ly and this increase is expected to carry over at a relatively high
rate into the new year.
According to latest reports, retail trade conditions, especially
ia Bastem cities, were somewhat slower ia the last half of Movember.
Preliminary confidential data indicates that department store sales
for the month as a whole may shoe slightly less than the usual seasonal
increase from October,
fhey will make a much better showing than Xove»~
her last year, however, when sales dropped between October and Hoveaber.
It is expected that sales of mall order coaqpanies aad other retail out
lets in a position to benefit more directly from the improvement in
agricultural conditions will make a relatively better showing thaa de
partment stores.
Secretary Perkins reports that the Bureau of Labor statistics
wholesale commodity price Index covering
per cent daring the week ending November 2 5 *
price series dropped 1
$hi® placed the lades at
*»3’
—
71 per cent of its 1926 average aa coatpared with the high point of
71.7 per cent reached during the week ending Xovemher 13.
was
fhe fall
to a general weakening of aarket prices for widely saattered
coaaaoditiss.
The present iadex is still 19 per cent over the low
point for tha year reached in liareh and 11 per cent ahove the cor
responding week of 19 3 2 *
Secretary leper reports that both import aad export trade showed
aa increase in physical qnaatity as well as la dollar voltae during
the third quarter of 19 3 3 *
3h* physical volone of exports is e&tioated
to havo increased about 16 per cent above the third quarter of 19 3 2 ,
which was also the lowest quarter of the depression, while the phy
sical volttBs of imports showed a corresponding increase of around kO
per cent.
Hr. Riefler
Hoveaber 2S, 1933
sm m n situation
Suaaarv.
JHaslness developments dariag the past week, aa the basts of
smell data a* are avail able, wore saall and mixed la character,
feat, on the whole, again tended to confirm tho iarpression that tho
dooliae ia output of basic commodities which began la July was
levelling off.
Trade publication* continue to report increased
inquiries for stool* reflecting largely the undertaking of actaal
work on construction project* uador tho public works program.
fho Jttoricoaa ! m
aad Stool Institute this morning estimated
stool operations at tS.S per coat of capacity during tho carroat
waste as compared with operations at about 27 per coat of capacity
during tho past two weeks.
Frel^at car loadings during tho week
oodiag Soverahor 18 increased aero than seasonally, hat electric
power production remained unchanged, whereas usually there is a
snail seasonal advance,
lepert* on retail trade conditions show
considerable variation.
Secretary **oper aotes that "statistics
of retail trade indicate that trade la urban industrial regions
has been much loos satisfactory thaa la the major agricultural
aroas**
lor exastple, a loading nail order hoaso reported nail or-
dor sales doriag the wook ending lovoabor 13 nt 70 per coat above
the tea* week ia 1932 * whereas sales at the city department stores
of this coispaay increased oaly 23 per cent.
Department store sales
la October confirmed this obeervation ia that sales ia the last
raa sosaewfc&t below last year Pereas tales ia vest era aad southera
districts raa higher*
Preliminary figures indicate that dollar tales
of department tteres were lea during the apeaiag week ©f loveaber,
increased tharply with the advent of cold weather during the saeaad
vatic* aad receded somewhat Saariag the third week of the month.
A special aotmary covering a wide variety of retail trade outlets
la Hassachasetts far the first half of Kovember showed aa average
increase ia dollar volume of about 5 P«* cent as c©scared with tha
corresponding period of last year*
The hitter level of this year* a retail prices makes it diffl*
calt to Judge the extent to which a higher dollar volume of sales
it moving a larger volume of goods•
Retail food prices ia October
averaged J per cent slave October 1332, while retail prices at da*
partment stores at thowa by tha fairchild index ware IS per caat
higher thaa last year.
Automobiles constitute the one large field
of retail trade ia which there hat beea a very subttantial iacreata
im the physical volume of tales.
Secretary leper reports that pre
liminary estimate! of aufcaobile aalet im October thaw aa iacreata
ia value af 103 per aaat over October
1532.
Trade reports forecast
that November retail talet of motors will decline oaly 10*000 units
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-3-
from Octooer. This is much less than the usual seasonal decline.
Production. 'jrrployment and Payrolls in October.
It was noted in this sturamary last week that our figures showing
changes in factory output are based mainly on the output of semi
finished products whereas our
data
on factory employment and pay
rolls cover fairly complete operations in factories producing
finished as well as semi-finis,ted goods.
These differences in the
sources of data aay account in part for the divergence in statistics
covering production, employment and payrolls between September and
October.
Factory production of basic materials and also of finished
goods, so far as regular data are available, declined by almost
8
per cent after seasonal adjustment between September and October,
whereas factory employment and payrolls were maintained in October
at about the same rate as in the preceding month.
This brings the
decline in output since July to about 2 ^ per cent as compared with
a
concurrent rise of about
12
per cent in factory employment and
lb per cent in factory payroll#*
In part, this picture of increased
employment and wage payments per unit of output reflects shorter
hours and higher wage rates under the codes.
It is also probable,
however, that output showed less decrease or possibly even sone in
crease in industries for which only employment and payroll
available.
data
As coaparad with the lav year of tha depression, namely,
the 12 montas ending with March 1933* which we have used on our
are
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-H-
charts, factory output in October showed an increase of 25 per
cent, factory employment of
^1
32
per cent, and factory payrolls of
per cent.
Foreign Trade.
Secretary Roper reports that the foreign trade of the country
expanded in both volume and value during October.
Exports increased
21 per cent over September and 27 per cent over October last year.
Imports, on the other hand, were only 3 per cent larger than Septem
ber but were **3 Per cent larger than October last year.
Illc.es,
Secretary Perkins reports that the index of retail food prices
rose from
1 0 b. 6
per cent of its pre-war level to
two-week period ending Kovember
7*
1 0 6 .7
during the
On the latter date retail food
prices were still slightly lower than the recent high level reached
in the period ending September
6
bat were 13 per cent above the low
point reached in April.
Secretary Perkins also reports that the Bureau of Labor Statis
tics index of wholesale commodity prices covering JSk price series
rose to
ber IS.
71*7
per cent of its
19 2 6
average in the week ending Novem
This is the highest level reached since March and compares
with 71*2 per cent during the preceding week and 71*5 P©r cent dur
ing the middle of September, the highest point reached prior to last
week.
The index as a whole is now 20 per cent above its low point
in March and 12 per cent higher than a year ago.
fhe regular weekly
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-5-
price chart covering this index as a whole and by groups shows
that tha rise in the index reflected largely a sharp advance
during that week in the prices of farm products.
Reproduced from the Unclassified I Declassified Holdings of fhe National Archives
Mr. Biefler
Koveraber
2 0 , 19 3 3
SCOHOMIC SITUATION
Beports of business conditions remained mixed last week but
an increasing nnaber of items showed resistance to further de
clines or a tendency to rise.
Preliminary reports on retail
trade indicated an increasing gain in dollar volume as compared
with last year.
Steel operations rose from about 25 per cent
capacity in the week ending Kovem'oer
11
capacity in the week ending November IS.
to about
27
of
PQ* cent of
During the current week,
the American Iron and Steel Institute estimates that operations
will average 26*9 per cent of capacity.
Hoveirtber
11
During the week ending
, electric power production increased more than season
ally, reflecting in part at least colder weather.
I’reight car
loadings declined, but shoved a more favorable comparison with last
year than in the preceding week.
The current low rate of output
at automobile plants does not reflect a declining tendency in the
demand for automobiles, which remains strong, but rather prepara
tions for production of new 193^ models.
It appears, therefore,
that the decline in output of basic industries which began toward
the end of July is levelling off.
The average results for love®-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-2 -
ber will be below October but production will probably expand in
December as volume production of new models in the motor industry
gets nn er way.
Trade reports indicate that the gradual rise
of construction contracts in recent months to a level above last
year and also the provision for steel rail purchases by the rail
roads are being reflected currently in larger inquiries for con
struction materials.
In general the rapid advance in output of basic products be
tween March, and -July and the subsequent decline from July to lovember lias characterized industries producing serai-finished, storeable
goods such as steel ingots, lumber, cotton yams, etc., to a much
greater extent than industries producing finished or style goods
for the consumer.
This has affected somewhat the statistical pic
ture of the past eight months, since our statistical information,
showing change* ia a*tp*t of baste Material** ia anch more
complete than the data showing changes in output of finished com
modities ready for the consumer.
It is probable, therefor®, that
production of commodities as a whole, including those for which
data is incomplete or missing, did not expand as rapidly between
March and July as is indicated by the operations of industries where
current data is available.
It would, also, follow that the decline
in output for industry as a whole since July has been smaller in
relative magnitude than is indicated by the available data.
This interpretation of the production situation is confirmed by
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-3-
the figures on payrolls aad employment which are com. iled by the
Department of Labor.
These figures, which include comprehensive
reports on the volume of employment and payrolls at factories turn
ing out finished, as well as serai-finished, products, continued to
rise steadily from March to September.
Secretary Perkins states
that in October both employment and payrolls at factories main
tained the level of September ia spite of the drop ia output of
basic products during the same period.
Secretary Perkins also points
out that employment in lb non-manufacturing industries increased
somewhat further in October, bringing the total increase in employ
ment since March to 2,800,000 workers in the industries regularly
surveyed by the department of Labor.
Secretary Perkins further states
that total japroll* ia th— a industries increased by $7 0 ,0 0 0 ,0 0 0 far
week between March and October, making a total increase in pay envelopes
at an annual rate of more than '<3 *0 0 0 ,0 0 0 ,0 0 0 per year.
.grade.
Trade reports indicate a relatively sharp pickup in the dollar
volvaa of retail ta,ai> sines the week ending lovetaber %*
Mail order
sales have shown the greatest expansion but department store sales
appear also to be expanding in dollar volume as compared with last
year.
The higher level of retail prices makes it difficult to
judge the extent to which a greater volume of goods are being moved
aa tha whole aa aes^arad with last year*
The rise ia prices at
department stores slowed up materially during October according to
Reproduced from the Unclassified / Declassified Holdings of the National Archives
the Fairchild
index
which increased only 1*2 per cent in October
as cor,roared with increases of *t-.2 per cent in September and
per cent in August.
S.k
Trade reports also indicate that during Kovem-
ber, retail outlets have stimulated consumer buying by price con
cessions in some lines.
Secretary Boper reports that the average dollar volume of
retail grocery sales in October increased by 3*6 per cent over
September and by 1 per cent over October last year.
The in
crease of October over September m s larger than last year but smaller
than the average in earlier years.
Secretary Soper also reports
on the basis of preliminary returns that the average dollar volume
of sales at chain variety stores in October was
September and
6
per cent above
5
per cent above October last year.
Commodity /rices.
flie Bureau of Labor Statistics index of wholesale commodity
prices covering
!(%M
price series advanced from JO. 9 psr cent of
its igp6 average during the week ending November
during the week ending lovember 11.
k
to
71*2
per cent
Secretary Boper1s report con
tains an analysis of price movements in
770
of these price series
between March and November **. Baring this period, the index cover
ing the
19 2 6
cent.
JSk
series as a whole increased from
60*2
per cent of its
average to JO*9 P®* cent, or an increase of about
1 J.8
per
Concurrently dollar exchange declined from par to 6 H . 6 per
cent of par.
To have offset this decline in the exchange value
of the dollar, wholesale prices in this country would have had to
Reproduced from the Unclassified / Declassified Holdings of the National Archives
rise by
per cent instead of 1?.8 per cent*
Secretary Poper
states, however, that the effect of the decline in the dollar on
foreign trade should not be measured by changes in the general
index but by changes in the prices of specific commodities.
analysis shows that during this period
His
commodities actually declined
in price, 12^ commodities showed no change, H56 commodities increased
by less than 55 per cent and
12 6
commodities increased by more than
55 per cent.
Recent movements in wholesale prices as a whole and by groups
are shown on the regular charts which have been brought mr to date
for this meeting.
The chart comparing changes in agricultural
income with changes in the income of various groups of urban workers
has also been brought up to date for October*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
(As delivered)
Biefler
November 1 ^#
19 3 3
ECONOMIC SITUATIOH
Sgiar.ary..
Such fragmentary data as are available indicate little change
in the trend of production during the first two creeks of Kovember,
Steel operations dropped sharply at the end of October, but remained
relatively constant at about £$ P®r cent of capacity during the first
—
-
November.
Ihjs morning th® American Iron and
ISli^ted ,that operations would increase .slightly to
t>ie current week.
teel Institute
27
per cent dur-
Changes in railroad car loading®, as shown
by the latest figures for the week ending Kovember
kt
were largely
seasonal, while electric power production declined more than would be
expected at this season of the year.
As a result, it is now fairly
clear that total figures of production for November, when they appear,
will be below October. On the other hand, th® rate of decline which
has characterized certain industries since July is slowing up.
A
positive expansion from present levels of productive activity awaits
(1 ) the inauguration by the automobile industry of volume production
on the new 193^ models, (2 ) the increased demands for construction
materials which are expected to result from th® somewhat higher
level of construction awards in recent months and the placing of
actual further orders under the public works program, and (3 ) the
final absorption of inventories built up in certain industries which
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-2 overexpanded earlier in the year*
It^de..
The retail trade situation for the month of October as a whole,
which appeared somewhat confused on the basis of earlier data, has "been
clarified by additional information which has become available during
the past week.. Secretary Roper submits a table showing that sales
very
of mail order houses showed/marked improvement over October, 1932,
sales of other chain and variety stores showed less marked improve
ment, while department store sales remained at about the same
level as October 1932*
These marked divergences in indexes of
retail trade conditions which usually show a somewhat greater de
gree of uniformity may reflect the point, noted last week, namely,
that the revival in consumer income since March has been concentra
ted to a considerable extent among farmers and factory workers, in
other words, among those groups who are more likely to patronize the
mail order houses and chain stores.
Other groups in the population,
on the other hand, who trade more largely at department stores,
have not had a corresponding increase in their incomes as com
pared with last year.
Trade reports indicate a falling off in retail
gales auriiu; tha first week o/Jjoyem^r and a sharr pleirap las^ »egk
reflecting the advent of colder weather last week.
miuwf u wti— •■■■■»<."...I............... mu................
Effect of.,Key
IX
...11
0 old .roller
hmmihh w h h .......■».*........"
to.iktg*
Since the new gold policy was announced on October 22 and first
actually put into operation on October 25, it is still too soon to
Reproduced from the Unclassified I Declassified Holdings of the National Archives
have any wide or comprehensive body of statistical data showing its
effects.
The available trade data summarized above do not lend
themselves to any definite interpretation of the effect of a rising
dollar quotation for gold on the current volume of trade.
The gen
eral wholesale price level also shows no conclusive movement tip to
November *4, the latest date for which the Bureau of Labor Statistics
index is available.
The wholesale price chart covering
J$h
series shows
mainly a condition of price stability in the index as a whole during
the four weeks ending Koveraber
k.
There was also relatively little
movement in most of the sub-groups from which the index is derived.
This stability in both the general index and also in most of the
sub-groups during a period of such marked changes in prices in the
highly organized markets as characterized the two weeks preceding
October 22 and the two weeks following the announcement of the new
'olicy on
illustrates the complicated nature of our price
system, in which prices of individual commodities frequently move
over a wide range but are not reflected in the feneral index because
of offsetting movements in other prices.
To compare changes in the gold value of th« dollar with changes
in specific prices most likely to be immediately affected by the new
policy,
$go
new charts have been prepared.
With the exception of the
weekly index of the Bureau of Labor Statistics, the series on this
chart are plotted on a daily basis from October 1 through November 11,
so that movements from day to day can be observed.
They have been
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-nrl j . nr
computed in percentages of their level on October 21, the day be
fore the new policy was announced, that is, October 21 lias been
taken as equal to 100 in each case.
made ..for.usin&.October,
A theoretical case might be
the .da^ ..the new .
i.olicy wasjmt Jnto
actual operation, as the basis of coniparison*
This was not adopted^
however* since fluctuations in most of the series indicated t;,at
the res, onse to the new policy coincided witlLits ann<^cement.
In order to make the
comparison
clear* the line showing changes in
the dollar price of gold has been repeated against each of the other
series shown so that the eye can judge the extent to which day to day
movements in the series have been comparable.
The first four comjjarisons are financial comparisons since
the new policy operates through the financial mechanism and would
naturally show its effect there before it showed its effects upon
most commodity prices or
Vtpon
trade.
The remaining comparisons
are all commodity comparisons, that is, in each sase day to day
fluctuations in the dollar value of gold are coc pared with day to
day fluctuations in the prices of specific cotrsnc-iities or groups
of commodities.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
thirteen 0. S. Sovernraent Bond Prices include 3 Liberty Loans
of
19 3 2 -^ 7
verted),
wiiich are 3“l/2 per cent bonds,
per cent bonds (con
k
per cent bonds (converted), and 10 Treasury bonds:
k~l/k
per cent bonds
of
19U 7-52
M
H
M
» 1944-54
3-3/1* •
M
H
« 1946-56
3-3/8
R
M
II
. 1943-47
3-3/8
II
H
1)
• ig4o-43
3-3/8
**
N
N
« X9 U1 -I+3
3-1/8
*
3
*
tt
II
•
m
II
II
* 19H1
n
n
n
»
3-lA
* 1946-49
1951-55
4-1/4
3-1/H
191 *3 - 4 5
from the Unclassified I Declassified Holdings of the National Archives
Mi
Run
Sovember 6,
19 3 3
/
ICONIC SITUATION
Summary.
There t m little change during the past week in the general
relationships noted in the two preceding sura?:.aries. With the ex
ception of a continued decline in bond prices and a further drop
in steel opsrations to
2b
per cent of capacity, changes in other cur
rent indicators such as railroad traffic, electric power production,
and prices in the organised commodity and security markets were, for
the most part, small and Indecisive in character.
A continued strong
retail demand for automobiles is indicated by trade reports, but new
automobile production is relatively low.
This is usual at this
season of the ysar when model changes dominate the picture.
Last week, this sumtaary was accompanied by two charts which
showed changes in wholesale commodity prices by groups of products,
and changes in retail food prices and in prices paid and received
by farmers-
This week an additional chart has been prepared which
compares changes in the money income of farmers from products which
usually contribute approximately S3 P6* cent of their total cash
income with changes in payrolls of certain major groups of wage
earners.
In this chart, the top line represents the level of
money income received by these workers in
19 2 9 ,
while the black por
tion of each bar represents the level to which this income had fallen
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-
2-
in the year ending March 1933*
^ ie bar at the left shows that during
the low year of the depression agricultural cash income averaged
about 3^ P«r cent of its
19 2 9
average.
The heavy fear in the center
section shows that during this period income of factory workers fell
to about
39
per cent of its
19 2 9
average, or "by almost exactly the
same amount as agricultural income,
fhe bar at the extreme right
of the chart shows that the aggreg. te payroll® of workers in the
raining, railroad an; public utility industries fell to about 53
per cent of its 1929 average.
It should be noted that these figures all reflect general con*
ditions and not the status of any one worker.
In a&riculture, the
cash income of wheat farmers, for example, fell by a very much larg
er amount than th© average cash income of all farmers.
Ia Industry,
likewise, the loss of income on the part of the unemployed worker
was complete, while the loss on the part of the worker who managed
to retain his Job was generally less than the average decline shorn
on the chart.
These differences are illustrated to a certain extent in the
center section devoted to factory payrolls which shows not only the
4r«p |« all factory payrolls, but also iwfirn the rel&tivo toeline
in payrolls of workers at factories which produce heavy or durable
goods with th* relative decline in payrolls of workers at factories
which produce non-durable goods for immediate consumption.
This
section of the chart shows that the decline in factory payrolls,
or workers1 buying power, was very much larger in the heavy or dur-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-3-
able good# industries, than it was in other factories or even in
agriculture as a whole.
March
In fact, during the twelve months ending
aggregate payrolls in the factories producing durable
1933
goods, that is, steel, machinery, automobiles, lumber and lumber
products, etc., averaged little more than one-fourth of their
average,
19 2 9
fhis low level reflected not only wage cuts, but the
extremely heavy unemployment which was concentrated in those indus
tries.
In factories producing light or non-dur&ole goods for imme
diate consumption, 01 the ether hand, that is. Industries ee&h as
the textile, leather, tobacco and food industries, the level of pay
rolls was slightly more than
50
per cent of the 1929 level.
Changes in the incomes of different groups during the four months
ending September
top of each bar.
variations.
19 3 3
**• shown by the cross-hatched section at the
These changes are not corrected for usual seasonal
Hie hatched portion of the agricultural income bar shows
the sharp gain in farm income from June to July, the equally sharp
drop in August ,*»& the partial recovery in September.
It also shows
the relative importance of the benefit payment checks mailed in Sep
tember which raised the total for that month above July.
The hatched
portions in the centsr section dealing with factory payrolls show not
only the steady increase in factory labor income from June through
September, but also the fact that workers in both heavy and light
industries shared in this advance.
By September, in consequence,
aggregate income of factory workers in the light industries had
Reproduced from the Unclassified I Declassified Holdings of the National Archives
recovered to over 70 par cant of Its 1929 level.
In spite of the
large increase in income of workers in the heavy factory industries,
however, the aggregate payroll of these factories was still around
HO per cant of its
1 9 S9
level.
'Tha hatched portion of the bar at the extreme right of the chart
shows that-the aggregate payroll of workers in mining, railroads
and public utilities has shared only slightly in these advances and
is still practically at the same level as in the depression year
ending March 1933*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ur. Bieflsr
October 30, 1933
m ow m c m m n m
Preliuiin&ry data indicate that final figure* for October
will show a soiaewhat farther decline in factory operations,
ally la th* output of seml-flnlshed rood**
factory operation* a* a
whole, however, will remin wall above tho highest level* of last
year*
The can*** of this decline wore outlined ia the summary pro*
pared on Septeaiber 2 where it was ointed out, first, that two~
third* of the huge advance in factory output between Uarch and July
was concentrated in the textile industry, the leather industry,
aad the steel industry; second, that all three of theee large indue*
trie* were operating at higher rate* than could be sustained in
view of the level of market dmaaand for their product*, and, third,
that there was little prospect of isaedl&te expansion in other Industries sufficient to offset a more balanced rate of operations in
these Industries*
fhe recession In output which has occurred since
July* therefore, was to be expected*
It does not in itself repre
sent a fundamental downward trend so ranch as reaction fro«# an over*
rapid expansion in particular industries earlier In the year*
The fundamental trend of industry, ae contrasted with
these month-to-month movessents, Is determined much more by condi-
Reproduced from the Unclassified / Declassified Holdings of the National Archives
tlons la the heavy industries where the depression is now concen
tre ted.
In canvassing the current prospect® In these Industries,
the break In steel operations frost an average of 59 per cent of
f f f l ty it
It about Jt fer neat ef — p— tty taring the fearth
week of October should not be overemphasised, since there wae no
evident that coaming outlets for steel were operating at a rate
sufficient to Justify steel making at anything like 59 per cent of
capacity In July#
So far as we can Judge, the trend of final
consuming outlets for steel has Increased rather then decreased In
recent weeks*
While construction contract# are still low, they
have Increased steadily on a dally average basis since Hareh (re*
fleeting largely an increased volraw of contracts for public works),
and in the first half of October exceeded contracts last year.
Demand for oachine tools has also continued to rise since the spring
reflecting revival in the automobile Industry and a scattered demand
for ireproved factory equipment*
fhe recent decline in automobile
output la partly seasonal in character and represents preparation
fer the Introduction of new models for I93U which la expected to
ehew n continuation of the revival In antosttblle demand which he*
gan last spring*
Railroad fcaylag haa remained lew hut will improve
now that actuations over the price of eteel rails have been suc
cessfully concluded,
Oaile ao great volume of activity ia the heavy
induatriee caa be expected ao long aa the mortgage mrk»% and the
bond market remain stagnant, these facts Indicate that there are
evidences of revival in tfee demand for heavy products which were
Reproduced from the Unclassified I Declassified Holdings of the National Archives
lacking
earll«r
la the yaar*
LtM kJrM &t.
fbm expansion la retail trad* which aaa la evidence earlier
In the ye*ur and became aar&ad la August baa apparently subsided
to a considerable extant*
Automobile aalaa continue wall above
last year, but other indicators point to a velum close to last
year1a levels aad in sane eases below last yaar If account is
tafcsn of Intervening prioa changes.
Yen though'dep&rtsaent stores
cater in general to middle-class shoppers and not to factory work
ers, tha recent absence of pickup In department store sales is
difficult to reconcile with the widespread gain In factory employ
ment and payroll a*
Secretary
oper notes In his report that while
Ssptanlw factory payrolls were 37 per cant larger than last yaar* .
department atore aalaa were only 2 par cent above September 1932,
fha p i s of only 2 par eait in department store aalaa over a period
In which prices charged at departmsnt atoree are estimated to have
advanced by 17 per cent, indicates that the physical volume of ffloods
sold In department stores In September was substantially lower
than in September last year*
Preliminary data indicate that
department store sales in October have remained dose to the Sep
tember level.
Secretary Boper indicates that the failure of trade
to measure up to expectations Is probably due In large part to the
reaction of consumers against hlghar retail prlcee.
It is also
possible that many consumers anticipated higher prices by purchas
ing their supplies in August.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
'isssim lay.
Secretary a,op#r reports that United States exports during
September were valued mt $160*000,000 and Imports at 1X^7*000,0001
leaving a net balance of merchandise exports of $13 ,000*000* Ex
ports increaeed 22 par coat from Mgnet as compared with a customary
Increase of lH per cent while imports decreased 5
pared with a customary decrease of 1 per cent*
cent as com
inking ths third
quarter of the year as a whole* experte chewed an expansion of 25
per cent over last year as compared wit* an increase of 65 per cent
in tqpertft*
These large inereeees reflect M # * r prlctc fer raw
materials which enter heavily into oar foreign trade as well as a
larger physical movetaeat of goods.
Ig t t t l i t o f
The Interdependence of sericulture and Industry are illuetrated by the fact that farm Income usually corresponds with com*
stderable accuracy with ehsngeo Im the Inocms of laker, that ie*
fans income usually increasee when manufacturing payrolls increase
and usually declines when manufacturing payrolls decline*
Secre
tary -allace reports that torts* the current year this correepoadence has continued in a broad sense in that farm income and manu
facturing payrolls have both advanced, as coopered with last winter*
but the agreement between the two series has been somewhat less
marled than usual.
Farm income rose mnch more rapidly than manu
facturing payrolls through July* hut declined to much lower levele
Reproduced from the Unclassified I Declassified Holdings of the National Archives
in Angost and September when manufacturing payroll* oontlnaed to
rite.
This disparity reflected largely wide variation* In dif
ferent farm price*.
Secretary Wallace state* that net is»rice gain*
to far thie year are noticeable chiefly In tbe International coxamodi tie*, trheat, cotton and woolft while eoamedltlee *old chiefly
In the domestic aarkets b a n experienced Moderate net galas, and,
In seme case*, even net decline* from tbe levels of last spring.
Cash Income from these fans products consuaad chiefly domestical
ly ha* continued se far this year te depend closely on the course
of consumer Money Incomes, while returns from grains aad cotton
have been influenced in addition Isgr monetary changes and redac
tions in supply.
Labor.
Secretary Perkins reports that the increase in average
hourly wage rates and the decrease In average hours worked per
week which was noted In August* continued In September.
Taking the
two nenthe together, average hourly wa^ee have increased from H2 .7
cente to 5l«fe cants* while average hours worked per week have de
clined concurrently from kg.} to }6,l.
due to the I . R, A* codes,
^heee changee ara clearly
Secretary Parkins statee that tha
changee in wage rates da not necessarily represent an locrease In
total average weekly earnings, bat they do represent shorter 2&urs
with no pay cat at tha same time that esaployment m s provided for
thousands of additional workers.
~ 6~
fh® Iterean of iUfcor SUilttlM index of retail food price*
which is now available for Oetohar 10 »bewa practically no change
aw compared with two wowin earlier*
fhe Boreas. of Labor SUtliliM
index of wholeeale coaeaodity price* dropped froa 71.1 of it* 192&
average to TO.k during tha week anding: October 21.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ur. Riefler.
October 23. 1933
XC0BOWXC SlfUATIOI
Summary.
The Bureau of Labor Statistics index of wholesale commo
dity prices dropped 33 per cent between the year 1929 and the twelve
months ending in March 1933 during which the depression reached its
lowest levels,
from March to July wholesale commodity prices rose
rapidly reflecting in part a rapid advance in raw materials used
in international trade and dealt in upon organised exchanges.
Since
July prices of most of these primary commodities have shown a declin
ing tendency, bit the general level of commodity prices has continued
to rise slowly because rising quotations for many finished commo
dities have more than offset falling prices for most raw materials.
-During the week ending October iHth, the latest week for which figures
\
are now available, the index stood at ?1.1 per cent of the 1926 aver
age t a- W f fy of nearly one-fourth of the drop between 1929 and
the twelve months ending in March 1933.
ffce greatest advances have occurred in textile prices which
as a whole nave recovered about three-fifths of their total decline
between 1929 and the twelve months ending March 1933*
Prices of
finished textile products have shared in this recovery much more
than prices of raw textile materials.
Prices of farm products de
clined more drastically than any other group of prices between 1929
Reproduced from the Unclassified I Declassified Holdings of the National Archives
mmQm
and the twelve months ending In March 1933*
M
preeent levels
these prices show a recovery of nearly one-fifth of the ground loet
since 1929.
Prices of building materials have shown great resistance
to decline.
Although activity has decreased by * «r*ai«r amount
in the construction industry than in any other major Industry, prices
of building materials as a croup declined only 26 per cent between
1929 and the year ending Hart* 1933*
Since March* the construction
Industry has had little share in the general revival, hut wholesale
prices of building materials have recovered more than one-half of
their preceding; decline and now average only 12 per cent below the
1929 level.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Hiefler
October 16, 1933
ECONOMIC SITUATION
Summary.
During the past two month*, th* general direction of
economic condition* h u become obscured by divergent trend* in pro
duction, employment, price* and purchasing power.
Prices In the
security narlosts and in the speculative markets for raw materials
have shown a declining tendency, while prices which are reflected
in the cost of living, 1. e., prices for finished goods and for
general commodities at retail have advanced.
Available indexes of
production, freight traffic, and to some extent retail trade like
wise have shown a tendency to level off or decline at the same time
that factory employment and payrolls have continued to advance.
These divergent trends In various Indexes which have usually moved
together in the past have confused the outlook and led to a con
siderable degree of uncertainty In the public mind.
In order to see Just where we stand at present, It Is pro
posed In the following paragraphs to compare present conditions,
as shown by the latest available data, first with conditions during
1929. and second with conditions during the twelve months ending
in March 1933«
The twelve months ending with March 1933' ar6 chosen
as marking the bottom of the depression, because the long and sharp
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
2-
decline ia production, employment, payrolls, and prices which
continued throughout
dle of 1932.
19 3 0
&n<*
1931
began to slow up toward the mid
Of the six important indicators of current conditions,
two, stock and bond prices, reached their lowest points of the de
pression in the summer of 1932 and have never again touched those
lows, even in the midst of the banking crisis; two others, factory
production and factory employment, reached approximately the same
lows in March
19 3 3*
as in the summer of
1 9 3 2;
while the remaining
two, namely, factory payrolls and wholesale prices, reached lower
points in the spring of 1933 than in the summer of 1932.
Data
based on an average of the twelve months ending in March 1933*
therefore, affords a fairly satisfactory basis from which to measure
the extent to which we have emerged from the depression.
Agriculture.
The farmers* cash income from grains, cotton and livestock
dropped 6 U per cent between
March 1933.
19 2 9
and the twelve months ending with
Prices of products which the farmer bays, on the other
hand, dropped only one-half of this amount.
In the six months between
March 1933 and the present, the cash income of farmers on these
crops recovered about one-fifth of the decline from
19 2 9
reflecting largely the rise in prices of farm products.
to
1933*
In Sep
tember, however, farm Income made a much less favorable showing
In small part as a result of a lower level of prices for farm pro
ducts, but in greater part as the result of a smaller volume of
farm marketings.
At the same time the farmer has been harassed
Reproduced from the Unclassified I Declassified Holdings of the National Archives
~3«
by a rapid rise in th® prices of products which he Isays.
As com*
pared with the twelve months ending March 1933 • prices of products
which the farmer sells showed an increase of 32 per cent in Sep
tember whereas prices of products which he buys showed an increase
of il per cent.
The actual volume of farm marketings was smaller
than is customary, however, and was reflected in a relatively low
September cash income for agriculture.
Income of factory workers decreased by 61 per cent, or by
almost exactly the same amount as farm income, between 1929 and the
twelve months ending March 1933*
ment decreased by ko per cent.
by
2k per
At the same time factory employ
The cost of living index decreased
cent during this period.
By September, factory employment
had recovered two-fifths of the decline since 1929 and the income
of factory workers had recovered one-fourth.
That the increase
In factory employment and payrolls reflected the effect of the X.E.A.
codes as well as the sharp rise in factory output is shown by the
Increase from 42.7 cents to $1.** cents in average hourly wage rates
between July and September, and the concurrent decline from *+2.3
to 3^.1 in average hours worked per week.
The cost of living in
September had risen 9 per cent since ?4arch but was still only slight
ly higher than the average for the twelve months ending in March
1933*
B a r e :.
The continued low rate of operations in the heavy Indus-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
tries constitutes one of the most important factors in further re
covery.
In August* the volume of employment in the light manufac
turing Industries which normally employ a little over half of our
factory workers was only 15 per cent under 1929, whereas employment
in our heavy manufacturing induetries was still down **2 per cent
from 1929 and employment in the construction industry was 66 per
cent below 1929.
In other words, 6 out of 7 workers normally at
tached to that half of our industry which specialises in light
consumption goods were employed, whereas lees-»3a»a one out of two
found employment in that equally important segment of our indus
try which specialises in producing heavy durable goods.
Clearly, our ability to close this disparity by increas
ing the damnd for heavy products is the key to a further pickup in
employment.
O o to b e r
fo*
Mr. Wal&er
f'roai Mr* Kiefler
Sublet!
%
1933
Kffeet of mmr*ry
on UertMe *»»••
i l i n f >»
the ibo«t coRnlete bre&Mewn la tH# m r t ^ m m,rk^%
Surlng the part throe ywurt ban oreatad a tituatton in which
buelneea recowerj m y be aeeonpanied by an tnereaee is feraclee*
area rather than a diminution In prea»ure *m 4«lin$u*nt fiAtor**
fhere ara at present outatandtn& about #**3*000*090,000
of mrtm&**4 of ehioh $80,000,008,000 art wtan l m > s»rt$»fea,
$15*000,000,000 urban Mortgage* on office buildings* hotels* 3?art"»
©outs, etc., awl »omnfe*t $rer 18*000,000*000 ara mort*a&»e on
farae*
It la lotiaiilUa to elate the «xaet voltaae of those w t *
^£®a m i eh ara In difficulty but *uch awidenoe m It availabla
Indicate* that delinquency it lar#R In volume and that oroiitora
coaid faraeleaa if ihar cheoe oa about one-half of thia isdehtedneee.
fha collate absence of a smrlcot for new TRortp^fe money
haa eneratoaaiy ©oatlicated the debtor preblea in reoent y m re*
With the exception of
loaned hr the ?«deral land
and tha Building and Loan Aaaeeiatl ^na* amounting to around
#10,000,000,000 In all# aeat »r%$a&oe In thia country are written
on a three or flee~year baeie, and have, therefore* either nature*
already daring the depreoelon or are due for matoritj durinc the
eoatng year*
Fart ef these mortwea In good standing have baen
Reproduced from the Unclassified I Declassified Holdings of the National Archives
■m&m
renewed fey the creditors * feat port have mia&kjr feoon extended tem
porarily pending the revival of a
market#
Uai«r these
eirouas tanaoo, creditor* now hare Hi# option of foreclosing not
only 4m mortgage# on which the debtor has failed to pay Interact,
but alco on a considerable volume of 3»rt«aa&ee which aro In $ood
standing no to Interest fent widen have jaatmred during tha d#j>?os•ion and are feeing carried cm m
tndotofadonto or dew*id ksli.
Up to the present* eoonosalc conditions have feoon such
os to discourse* creditor® from exercising this option to fore
close*
fhe fact*. where they aro iliiUltlt show that althw&h
foreclosure# have feoon hiifc, they have constituted only n amll
proportion of dnlin^oneioo, nnd that the greater part fey far of
delinquent aort«*4sno have not feoon foreclosed*
Property vrJuos
and roots have feoon falling, *nd tenant# nave feoon difficult lo
got, vltn the result that tt has usually paid creditors to ooop**
orate with delinquent dofetors rather than to proceed to oosUy
dis^oooosoion and foreclosure Taaaonroo*
r$nsiaooo recovery will toad to chance this situation
in that rising real estate value# and rising rents will provide
a narJeet for properties and nafce it somewhat more profitable for
creditors to forecio## on delinquent dofetors than to cantinas tho
decree of cooperation they have practised np to tho present.
If
recovery is aeeo&panied fey a revival In mortgage financing, dofetors
will fee afele to protect themselves fey refinancing their loan# through
Reproduced from the Unclassified I Declassified Holdings of the National Archives
compattn^ loadara* Irot If tho marSeat for mort^a^a m aty ritemim
inactive, m o w r ; of raal oei&to talmoo m&y be aooaapantod fcjr
an inore&ae ia foracloauroe#
A revival ta aort&an* financing,
tharafora, would b&wo tha effeet of protecting
dafetorc
aa m il m of att;miatia& now construction.
HtaAcr isaiillMM of rapid inflation, the forcoi eat la
sietioa to Increase forecXoettree would l>a accelerated eince, an
o»o hand, there ooold bo loae incentive than at proaoot for
lavaetora to load m fixed latoroat eoo**ritie», eucfc aa mr%~
ia^ooi otSllo# on tho other hand, a vapid Ha t ia prapartjr valuee
aad raata woold tend to iacre&ae oradltora1 profit* If they foreeloaod and took equity ownership ta roal aetate, wherever they
had. tha right to exarolae tha option of for^eloauro.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr Sit ,er
October 2, 1933
lOOHOMIC
S1WJ&1QV
September closed with a note of apprehension in the air,
reflecting in part the levelling off of business activity since
July, and, in part the recent emergence into sharper focus of
several points of tension in the economic situation.
These are
(l) the drop in prices of farm products since July, (2) the con
current advance in the cost of living, and the extremely rapid
increase in the prices of certain products at retail, (3 ) the slow
ing up of retail trade in September, (U) the increase in strikes
and labor difficulties, and (5) the lower level of prices in the
security markets, and the complete absence of new issues of either
stocks or bonds.
All of these situations merit serious concern but they
do not, either individually or in con,function, warrant extreme
pessimism.
The most recent facts Indicate (l) that employment in
creased by over 3#000,000 persons between March and August, and
that fewer people are unemployed today than at any time since the
early spring of 1932* (2) that those who remain unemployed are re
ceiving more adequate relief than last year, (3) that although prices
of products farmers buy have risen 16 per cent since March, pro
ducts farmers sell, even after their recent decline, are Ug per
cent higher than in Marchi aggregate farm income in August, more
over, was around $3^0,000,000, a drastic decline from July but
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-2-
still 20 par cent above August last year; (H) that income of wa^e
earners in manufacturing, mining, railroads, public utilities, and
construction combined was. $792,000,000 in August, 19 per cent above
August last year and the highest for any month since the spring of
1932, and (5) that retail trade, though it dropped perceptibly
after seasonal adjustment between Aogast and September, was still
above the first six months of the current year.
This record of Increase since last year is amsingly good
ia view of the continued inactivity in the construction and other
heavy industries* and the stagnation in the bond and mortgage mar
ket where the funde which provide employment in the heavy indus
tries are normally raised.
fhe drop in retail trade, which preliminary reports indi
cate occurred in September, constitutes a normal reaction on the
part of the consumer to recent price advances and indicates the
complexities of our price structure in which advances in certain
prices tend to increase activity while advances in other prices
act as a retardingfkctor.
In this particular instance, manufac
turers. wholesalers and retailers have been testing the market to
find the most remunerative prices at which they could move goods
at a time when both prices and costs were in a considerable degree
of flux.
The rise in costs due to the labor codes, the processing
taxes, end the higher level of raw material prices made some upward
revision of retail prices inevitable.
It came, moreover, at a time
when the depreciation of the dollar acted to lessen foreign compe-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-v
titlon and when a rapid increase in consumer demand indicated that
the retail markets were in a position to eupport higher prices.
Under these circumstances many classes of retail prices appear to
have "been advanced too far and retail baying has temporarily de
creased*
In the absence of a considerable degree of collusion, re
tail competition will tend to reduce those prices which have risen
to excessive heights.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
September IS, 1933
fcCOWOMJC 3XTUATIOW
3uB»nary«
The increase In factory payrolls end emoloyment fror? July
to August controlte s)v rply with the decline in production dur
ing tho same period*
In the tote of some Industrie®, notably the
cotton textile industry, the maintenance of employment during a
period of declining production constitutes a testimonial to the
effectiveness of the codes*
ffcn divergence, however, in also
due in part to thy* more comprehensive character of the payroll
and employment indexes, especially in their coverage of finished
goods industries.
there is little data available on September business condi
tions to date,
Steel operations continue to decline and there are
fragmentary reports of a sharp drop in consumer fmrchnsing during
the second srnslc of $optssftsr, inn In part to wnntlIter conditions,
and in part to consumer reelstanee to hinder retail prices*
fhe
&irchlld composite Index of retail prices for «oner«l merchandise
other than foods, shows an increase of 19 percent between May 1
and irptgnftir X.
etaiX food priooo t i n increased bar slightly
less than this amount during the period*
The purchasing power of the dollar at wholesale has now shown
extraordinary stability for a period of eight weeks.
On July 22
the Bureau of Labor Statistics index number of wholesale commodity
Reproduced from the Unclassified I Declassified Holdings of the National Archives
prlcee, which includes J$k comsaodities* reached a h i # level of 6 9 .7
percent of lit 1926 Average, as compared with a low of 59*6 percent
in tho week ending March U.
Since July 22 the index h&e moved with
in o narrow range, the lowest point feeing 6 9 .2 percent for tho week
ending July 29 .
This stability has been confined to the average purchasing
power of the dollar at wholesals, and has not characterised prices
of important Individual conaaodltlos or groups of commodities which
enter the in<ie*.
During this seas period, tho price of wheat do*
cllned from $ 1 * 2 1 to *5 *ents V** bushel, and of cotton from 12
cents to 9 cents per pound.
declined by 10 percent.
Prices of fans products as a whole
This sharp dro
In price of farm products
has been offset In the index by compensating Increases In the price
of finished goods.
Lower raw material prices since July reflect world conditions
as well as conditions within the United States*
During the spring
when prices ef many ram materials were advancing rapidly in this
country* there was a supporting advance of lesser magnitude in the
gold prices of these seme eonmodltles abroad*
Since July, gold
prices of many of the leading raw materials have declined to the
level prevailing In April when the more rapid phase of the price
advance began.
fhe divergent movements of prices of finished goods and raw
materials between July and August Is illustrated on the chart#
which cosqpares wholesale prices of finished products with those of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
*3*
th« raw materials froa which they are wholly or mainly produced
for four different gronpe of eoaaioditle#.
Tha group# aro selected
food#, textile#* leather, and iron aad steel product#*
Ik «w h
ca*# tho conparlwon 1# iaado In torn* of Index mature with the aver
age for 1929 ae 100.
fhe chart show# that between 1929 and the
boginning of 1 9 3 3 # wholesale price# of raw material# in each of
thee# group# deelined to a Much greater extent than price# of their
finished products.
Up to July of the present year, on the other
hand* prices of raw Material# in eaeh of the groups advanced much
more rapidly than these of finished products.
Between July and
August, prices of finished products continued to advance but price#
of raw Material# In the food and textile group# deelined.
Since
August* there have also been decline# in the prices of raw Materials
in the other two &reupe.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
WHOLESALE PRICE MOVEMENTS
FOUR MAJOR GROUPS
PER CENT
1929 * 1 0 0
PER CENT
Reproduced from the Unclassified I Declassified Holdings of the National Archives
September XX» 1933
mmmiLmsmm
There hare been no developments during the past
week to iailiftli *
i* t&e immediate u t M o lt flttllMk*
Factory output which expanded at an extremely rapid rate
between March aad July It still showing a tendency to de
cline.
Hr tall trade, on the other hand, which did not in
crease so rapidly during the second quarter of the year, con
tinues to expand,
according to reports from 219 cities,
department store sales in August were 16 percent larger than
last year aad 6 percent larger than in July, after adjust
ment for customary seasonal variations.
This increase reflec
ted, in part, the rising trend of retail prices, but there
was also a distinct Increase in the volume of goods moved.
Improvement was especially marked at stores located in the
Middle Vest and the South.
Consumer demand for automobiles
has been exceptionally well maintained in recent weeks.
Incomplete reports indicate that the Federal Re
serve Board index of Industrial production which reached
$g ia July will show a decline of around 8 percent for Au
gust, reflecting a sharp drop in operations of textile plants
Reproduced from the Unclassified I Declassified Holdings of the National Archives
- 2-
and stool mills, where output previously advanced nor* rapid
ly than consumer dsaand*
the aeviwssnt repres*r.ts, therefore,
* corrective reaction froa an unbalanced production situa
tion aad lo not aa occasion for alarm*
Apart froa autoaobileo, thoro it still little evi
dence of iaproved doaand for products of tho hoar/ Indus trios*
In 1929# tho not wholesale value of produets of tho heavy
Indus trios was about $2**,000,000,000 as compared with a
factory value of about $ 30 *000 *000,000 for other factory
products.
ilnce 1929, tho output of tho light industries
has shown a relatively snail decline, in the a^gregte, while
the heavy industries have declined by around 60 percent.
According to latest ootiaatoo, heavy industries alone dropped
3,600*000 workers between 1929 and July 1933* ** compared
with only 1 *500*000 dropped froa the payroll at other fac
tories.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
teptoislMr *,
tcow^ic
1933
mmm
WKmmSBm
ffad• r«port* aad p r m l i m i m r f data mil point to ha unusual
expaaoioa ia retail *uyia« durin# August.
W a n e n tally thia re
flects tbo expeatslon ia payrolls ^hicia bat continued siare Enroll
*mt it ia alee bated ia part oa tho conraner'e desire to ttaek up
foedt ia aatlelpattaa of a iharp increase la tha east of U t1b|.
fXm adjueted index of industrial production riiieh flood at
9« por cent of it* 1925-1925 average ia July, will tara dona ia
August aad a&y eoatiaaa to show a decline la faptanfcer.
indexes
af faattrjr payroll 0 aad e^ieynent, oa tho ath®r hand* will corM a
ly afaow a •Taller docliao tn*n tho ladax of production aad nay
•how a snail m vsnce.
This divergence will rofloet la part tha
offoot af tha codao vhich aro dooifood to iaareasa aaployaoat aad
payrolls relative to output.
It will aloa rofloet* however, tho
uneven character of tho recovery whloh hao taken piece since
Barth*
The daallaa la production ia August will rofloet a lower
volume of output la oartala industries, especially tho lif t e r la*
duetries, which ewerexpanded between Mrefe aad 4fuly, without a
counterbalancing laoroaoa la other Industries, oueh at tha eeattrue*
tloa Industry, which have oo far ehowa oaly small response to Ih*
recovery movement.
Of tho total laerewss ia output between Mirth
Reproduced from the Unclassified I Declassified Holdings of the National Archives
and. July which lifted th* index of production fro® 60 to
percent of lie 1923-1925
ftbwt *7
arcent tti due te an
enormous Increaae ia output in th# textile end leather indue tries*
Thase industries frequently expand or contract rapidly from uoath
to month ia accordance with wholeoale mmrket conditions, but
changes ia their annual average output aro arach smaller la oxtoat«
Ao a r«ault# sodiea largo increasee la output, such as
were experienced this spring, aro invariably followed by reduced
operatloat.
About UO percent of the total lncreaae la tho produotioa
latex betwoea Mnreh aat July was t m to tho espaaslea of stool U >
got operatlone from 16 percent of capacity la larch to aa aver•* * 9f 5$ percent of capacity la July.
Ia part this expansion la
steel reflects aa increase la Inventories aad la part a marked
plolcqp ia consumer demand for automobiles, electric refrigerators
aad miscellaneous light steel products such ao shoots
aad cans.
There hao seen little demand, however, from tho railroad and cornotruetloa Industries, which aro usually two heavy takers of stool
products aad customarily account for nearly Uo percent of eteel
output*
the recent let~down in steel operations — to about kj
percent lu tho current wosfe — has reflected in part the continued
low at*to of demand from those two Industries, aad there lo little
ohaaoo of a return to tho July levelo uatll th* railroad aad con-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
struetien industries purchase steel la volt#*#.
Conditions in
ths textile, leather and eteel industries, therefore, which togeth
er have accounted for two-thirds of the advance in ths production
index sines March, all point toward lower levels In the Iwsedlate
future pending revival in the construction anA heavy equipment
industries.
The indexes ef payrolls and employment will not de
cline correspond inf ly because they are somewhat less sensitive to
chaagee In conditions and ere hated upon a breaker volume ef oper
ations.
A Materiel further increase in production during the autumn
sad early srlnter will depend* Is lerg e aeaeure, upea m e^ aaslen of demand in the construction and heavy equipment industries*
II
la theee industries where the bul* ef unemployment ia new concen
trated, and a Material increase In the purchasing power of eerkers
la theee industries will he necessary to Maintain the recent rate
ef expanelon In retail trade*
Among Industrlee of this type, the
eutleek le aoet promising for a continued expansion in automobile
operations.
Construction operations, on the other hand, which con
stitute by far the largest single element in the heavy industries are
leas promising.
Construction contracts for public works rase sharp*
ly during the first three weeks of August, but the level le still
below leet year*
Residential building, which usually accounts for
about one*third ef total construction, remains negligible in volume,
reflecting bath an oversupply af houses in many areas aad the
Reproduced from the Unclassified I Declassified Holdings ot the National Arcmves
aval lability af Martha#* moaoy.
k low laval af damaad (tom ia*
dwtfjr far atw construction aad naw factory aquiputat it alaa in
dicated by tha law lava! af racaat capital flotation*,
law doaw
attic corporate flatationa. far asaapla, af bath *tackt aad boadt,
hawa a*tr<\fad aaty 116,000.000 par aaath daring tha currant yaar,
at cosoD^rad with £2 7 , 000,000 par month la 1932 aad awar $300*000,000
par oaath la l$2&.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
SaptMbcr
m aam m
m m
i.
m jt m u a m
2 , lfJ3
m
xw m m *
giriaiu »w to .
Hatton th * w d * r W i i | of actual construction
wft*r* public work* a llo t« fa t# hav* boon made.
II.
Cwalfal 0o«d«.
A* Avoid II. X* A* co4* provision* which mi^fct bo
tnt*rpr*t«d to support or pt r a i t re s tric tio n of
plant atodoraisatioa, relocation of plants* or
a t* plant construction.
XXX.
1*
f.timulat* Railroad ^ u ip « * a t ^vgrlaf*
6*
Ixplor* pro b ab ilities of fiaaaeinj? plant aodoraication.
frlT’t. Con«trwctira,
A*
Avoid I . I* A* otdt provisions which would
raist tht cost tf coAstructioa to tht polat
wtetr* aow eoastractioa it ttifltd.
1*
Fora a ^tdtral Coanittftt to oordiaat* aoatarot
to li<!*lfjr th* tsortfDi* anrk#t. Such a Doamitto* aifht l n h i i r*pr*s*nt*tlv*s tf ttoi I— ta
structloa finance Corporatioa, th* Hont Loaa
Board, th* * t m fcntit Adaiaittrstioa* aad Bnqp■
r*pr*teat*
atives of State Xasuranet tad Banking Commits!©as.
Cm Accelerate efforts to tp*a tlo ttd bank* aad fo rtify
open bank*.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
August 3&t If33
m m iS L r n m m
ftacent data ladleatt liiUc chaa^e la the principal trend* whidh
have characterised economic conditions since mid-July,
Increased Income
continues to mefee Itself felt la retail trade, bath ia tha automobile
marknt rtiore sales remain mil above laet year and ia general retail
merchandising where report* from chain aad department store* ladicate
aa inoreaelii&iy favorable margin aa corapared with last year.
Such data
an production aa are available continue to indicate a relatively level
movement with seme tendency toward decline In thaaa induatri&e where the
spring expansion waa moat marked.
In the weak ending August If there
ware elicit advances in frei^it*aar loadings aad electric power output*
Steel operations, on the other hand, have continued to decline aad are
now at SO percent of capacity aa compared with a hi# for the year of
69 percent In July.
Retail prieee continue to advance but the Bureau of
labor Statistics index of wholesale commodity price* in tha week endian
August 19 m e practically unchanged at 6f,3 percent of it# 1936 average.
Building contract* expanded sharply in tha firet half of August under tho
influence of increased award* for public merles but the total remained be*
low th* low level* of August last year*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
August 21, 1933
ifflM ii m m m .
Jnly and oarly t o m t *» A * • at body of data cowing operation*
In July has become available during the past week*
Contrary to aistoraary
seasonal tendencies, Industrial production, aside from construction* ad
vanced 4 percent further, reflecting large operations In the steel, lumher, and coal industries and a sustained volume of output in the automo
bile, shoe and &athe*Xindustries,
There was a slight decline in cotton
textile operations and a sharp reduction in cigarette output,
Manufact
uring employment and payrolls also advanced, In the face of a customary
seasonal decline, by ? and 8 percent respectively.
Freight-car loadings
increased 10 percent over June as compared with a usual seasonal increase
of less than 3 percent.
Department store sales decreased by sll^itly
less than ths usual seasonal amount and department store inventories in
creased somewhat although a decrease is usual In July,
Turnover at i&ole-
sale was again very large in volume especially In dry goods, groceries,
hardware, sod shoes#
Hetall trade has continued to show distinct improvement during August*
Demand for automobiles has remained well in excess of last year, and pre
liminary figures show an Increase of 10 percent over last year In the dol
lar value of department store sales during the first half of August,
Pro
duction figures also remain well abovs last year but continue to show the
slight declining tendency which has been in evidence In recent weeks.
Steel
Reproduced from the Unclassified I Declassified
H o ld in g s
01m e
inhuuiich «.w..»Co
m3 •
operations declined last week from 5? to 53 porcont of capacity.
In
tho week ending August 13 railroad car loadings increased somewhat but
electric power production declined sll£itly.
The index of wholesale
oommodlty prices of the Bureau of Labor Statistics has now remained
practically level for four weeks at about <39 1/3 percent of the 1936
average, declines in raw material prices during this period being off*
set by increases in prices for finished goods.
Building operations have
remained low*
March-July Incsreage. la Actiyjfer — The leveling off in factory out
put during recent weeks suggests that the first phase of the recovery
movement which started in March has been completed.
This movement which
was stinulated first by the return of confidence which accompanied the
reopening of the banks and later by expectation of higher prices result
ing from the suspension of gold exports and the establishment of the
national Reoovery Administration, was characterised by an unprecedented
increase In the rate of output In manufacture of raw materlale Into semifinished goods.
The manufacture of finished goods for the retail market
also inoreased la meny lines bat generally by much emaller amounts end
in much closer relation to current changes in retail demand.
As a result,
inventories formerly carried in the form of raw materials have been ad
vanced one etage In the process of production into seml-finlehed goods.
Retail markets have strengthened therefore since larger activity In semi
finished goods has afforded increased income to factory workers without
as yet a corresponding increase in finished goods pressing for sale in
the retail markets.
In addition, retail markets have benefited by an
Reproduced from the Unclassified / Declassified Holdings of the National Archives
♦ 9 ♦
enormous release of hoarded money, and by improved agricultural buying
power* Under these favorable conditions retail prices have advanced
3oni«Vhat# but not sufficiently to date to restrict the volume of consumer
purchases.
Aside from automobiles, operations In the construction and other
heavy finished goods Industries have remained abnormally low, especial
ly ia the case of industries vhlch are not tmrmidiately affected by changes
In consumer purchasing power but find their market in the decision of cor
porations and others to undert&lce per*manent long*term Improvements*
1
to IS
l^es
about $30,000,000,000 was spent annually In this country
for the creation and maintenance of heavy durable goods, such as housing,
factory equipment, public utility extensions, etc*
% 1932, expenditures
of this character were reduced by at least two-thirds, and at the present
time they are running at a somewhat lower animal rate,
the next phase
f t the recovery awveeent will iaptoi, ta considerable part am the mt m i
and rapidity with whleh the present Improvement In the market for light
c> oilties and for some of the more durable products such as automobiles
i* extended into the market for permanent oapital equipment*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
August 14, 1933
m
m
z m
m
Sumnary
Thera was little change In tha economic situation during tha past
m lc.
Steel operations remained at 57 percent of capacity.
Retail demand
for autoraobilee remains strong for this season of the year, and last week**
production of new cars brought total production for 1933 to date up to the
full production for the entire year of 1932*
Security prices fluctuated
in general within the ranges established in the preceding week, and did
not appear to be greatly affected by the announcement of a decrease in
unfilled orders of U. 8* Steel*
In the organised cowaodity markets grains
were weaker; cotton also declined but by a relatively small amount In view
of the forecast of a 1933 crop materially larger than was expected.
In
the week ending August 5 the index ustn&er of wholesale commodity prices
computed by the Bureau of Labor Statistic® remained unchanged at 69*3 per
cent of its 1936 average as compared with 69.7 percent at its high for the
year two weeks earlier*
Electric power production and freidit*car loadii^s
declined but remained well above a year ago,
Smaller shipments of coal,
resulting from labor difficulties in the coal industry, accounted directly
for a large part of the decline in car loadings,
>iuployraent and payrolls increased further in July, and retail trade
rose to levels above laet year,
Xn the field of general merchandising,
July sales of department stores, chain stores, and mail order houses all
ran generally ahead of Jfcly last year*
Outside the field of general mer
chandising, retail consumer demand for more durable products, such as
motor cars and electric refrigerators, was sustained at a level well
above last year.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
m 2 *
The rise In general activity has now bean extended generally througfcout tho lighter industries and has boon reflected both in employment and
in consaa^tion of th* product® of tfcese industries.
Many heavier Indus-
trios on the othor hand, such as thoss whioh produce railroad equipment
arid maintenance supplies, machine tools, and heavy construction of all
kinds, remain severely depressed.
In general a large part of the pro*
duction of these industries does not reach the retail marIket and is not
bought directly out of consumers income.
It is important to watch for
the spread of activity to these Industries in the interest of economic
balance between different sections of the country as well as Increased
employment and retail consuming pewor.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Aucu.t 7,
1933
ROCBOHIC SITUAfflCB
SSEBSECt
Available data indicate U t il e chaise la businaea aetifity during tha
past w«3c«
there vat a alight setback In wholeaale commodity prices and in
tbs volume af railroad traffic, but steal output remained unchanged #t 57
percaat af capacity aa oompaarad vith a high point of 59 percent in ^idhjuly.
Haw textile basinet* ia reported quiet pending response of rat all are and
conturners to h i^ a r prices, snd textile activity haa apparently reeadad
aomsahat fVarthar from tha extremely high peak in rald?*?uly*
Demand for auto-*
mobllaa ranalna large at a time when falfty heavy aaaaooal mrtailmant ia
usually expectad*
Building contracts declined a»ra than aeaeonally in July
and eonatruction continue* to oonetitate tha moat depTeaaad major industry.
Further analysis of payroll data indloatee that inisraaaad incomo of wage
earners daring tha second quarter was concentrated in tha manufacturing indue*
triet ithere payrolls increased
25
percent from an srumal rata of jH,000,000,000
In March to 35,000,000,000 in Juaa* There «aa practically no change in segre
gate wage payment a in tha conatruction, railroad, public utility, and miacellaneoua aerrlca industries for thich figures ara becoming available, where
aggregate payrolla remained at aa asmual rata of about $3,500,000,000* On
tha baaia of tha induatrlaa covered by thaae figures tha nat increase in waga
payraante taring tha aaoand quarter was about lU paroant, an amount sufficient
to bring total wagee In thaaa induatrlaa to about tha level of Juaa last yaar.
July figurea alii aha* m increase over laat yaar*
According to preliminary figures released today tha dolljar volume of
dapartnamt atore aalaa decreaeed no more than seasonally from Juno to July
Reproduced from the Unclassified I Declassified Holdings of the National Archives
2
and in July was ftoimhat hitter than last year.
There were slight decreases
la Sew fork and Chic^o, but sales in other districts were generally si>ore
those of last rear*
Inasmuch as prices cfcax&ed at department stores ia July
were sonevhat lower than last year* an increase in dollar volrae of sales
indicates m even larger increase in the pfciysteal Tolme of goods sold*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
July 31, 1^,5
SCOHQMIC SITUATION
_____
Toward the end of July thex* sppears to hava been some slackening la
the rapid rift of industrial cotiTitjr, aad aecurity aad coaaodity prices*
Steel plant oparatloaa, after rising from 14 par oaat of capacity ia tha
middle of March to &9 par eeat ia tha middle of July, have raoadad slightly
during tha past two weeks to around 57 par east of capacity.
Tha rata of
iaaraasa la fz*lght«aar load lags and alaatrie power production has also
diminished, and thara have been raports of some hasitatloa la textile output
toward tha aad of July.
Prioaa of ecenoa stock® and highly sensitive commod-
ltlaa fluctuatad at somewhat lowar levels during the lattar part of July,
but bond prlaaa rmnsined firm.
The Bureau of Labor Statistics index of
wholassla commodity prices agaia advanced slightly la tha third week of
July to 69.7 par cant of tha 19E6 average, an increase of 17 par cant sinca
March.
Botwithatending thass movements toward tha sad of tha month, pre
liminary figures indicate that both Industrial activity aad prioaa will
average materially higher for July as a whole thaa for Juaa.
Retail trade of department at ores seems to have held its own ia July.
According to preliminary figures covering the first half of the month, thara
was a drop la sales from June that was almost wholly seasonal in character,
and total aales were at about the eame level as la July last year.
Further analysis of produetloa and payrolls data indicates that tha
rapid advance ia manufacturing production, employment, aad payrolls during
the second quarter of the year waa much more highly characteristic of induatrlea fabricating raw materials into semifinished products than in
plaata turniag out flaished products where Inventories cannot ba accumulated
Reproduced from the Unclassified / Declassified Holdings of the National Archives
•8*
••fitly beoausa output is affaatad by ahangaa Ia atyla and m at wait dafinlta
consumer daaand.
Ia those industries whera production of aasil-fini shad goods
eaa ba oaaparad with tha output of flnlahad gooda, payrolls of plaata aa*
gagad Ixi turning out aaml-flalshad naaafaoturaa increased 55 par oant between
March and June, while payrolls of Induatrlaa turning out flnlahad goods Xargaly for tba ratall *arkat advanced £0 par eent.
Thia indicates a largar la~
arsasa In tba volume of goods In prooasa of aaaufaeture aa compared with In
ventor la a of flnlahad goods than was at first suggested by eattpariaon of
relative changea In aggregate production aad payrolls.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
July £4, 193'
$conomic simrioH
A
4
4
m
Sammxy
r
im
.. . ,-JL
The sharp reaction ia the speculative market* last week followed
a period of unusually rapid increase in business activity, and in conmod ity and eeeurity prices,
tha physical volume of production at fac
tories and nines Increased from 60 per cent of the 1923-1925 average
in Maroh to 90 per cent in June, reflecting exceptionally heavy output
in the textile, shoe, and tobacco industries, and a rapid increase in
operations represented heavier sales of automobiles and large takings
of steel fro* miscellaneous sources.
Orders froK the railroad and
construction Industries which are usually among the heaviest takers of
steel products have so far remained smell.
Contracts awarded for new
construction Increased ooneiderably in May and June but activity in the
building Industry as a whole remained at low levels.
The American federation of Labor estimates that about £, >00,000
new workers found employment between Maroh and June, and that the pres
ent volume of unemployment is around 11,500,000 persons.
There was
also a large increase in full-time employment of workers formerly em
ployed part time.
Factory employment alone increased by about 6$0,000
workers, or 13 per oent, and there has also been Increased employment
in tha railroad, agricultural, and other seasonal industries.
The sharp riee in production, employment, and prices brought in
creased 1noons to many classes of the cananunity.
Weakly payrolls at
factories increased 26 per cent from an average of #76,000,000 per week
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-2 *
la Mare* to about #9g,00a,000 par week in June,
la addition to these ia-
ereeaes la laeoue resulting from, Increased pzoduotloa and employMent, the
level of agricultural inoome rose rapidly with the rlee la prices of fa m
products.
Large profit* were also made ia the security markets.
Dlstribatloa of increased activity
w i m m ' i i.............rnm rnm m m m m m m m m m im m m m m m m m SH m kB m im m tm m im m m m m m tm m m m m m m km
Although practically all llaeo of business activity increased sharply
during, the quarter, there were mrked variations ia the reapoase of dif
ferent Industries to the new conditions.
The construction industry, which
baa felt the depression sore severely than any other Major Industry, Is
still running veil below the lowest levels of 1*32 despite Increased eoa~
treat awards la May and June*
Automobile output, whieh increased sharply
during the quarter to a level 2? per eent above the sseond quarter of 193K,
was still 28 per oeat beloe the corresponding quarter of 1931.
The other
heavy iadustrles also remained relatively aore depressed than the light
industries where output la some cases—notably textiles, shoes, and cigar
ettes—established aew high records for all Uae la Hay or Juae*
dividing
industrial output Into two aaln categories of durable goode~~ei*ch as steel,
automobile*, luaber, etc.—on the oae hand, and nondurable or lighter goods*
suoh aa mmufactured food* textiles, leather, and tobacco products—on the
other, It appears that each group was respoaalble for about oae-half of the
lacxeaee la production during the quarter.
Ia the ease of durable goods,
however, this Barked Increase restored total output oaly to the level of
the spring of 1931, whereas la the case of the lighter Iaduetrlee total
output again reached the high levels of 1929,
These sharp variations la output as between different Industries,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
and especially the extraordinarily high level of output la tha lightar
induatriea, such aa textiles, shoea, and tobacco, have raised questions
aa to tha nature of tha sources of demand for tha lighter products.
It
haa been widely fait that the country, with ita large volume of totally
or partially unemployed workers, was not la a position to consume theae
produets currently at tha saa» rate of consumption aa in 1929, and that
tha high rate of output In consequence must represent in part an Increase
in demand for inventories etimulated by the prospect of higher prloea.
There la little organised information on Inventorlea and retail distribu
tion, but such aa la available indicates a large turnover at wholeaale
establishments, a moderate Increase in inventories— both at wholeaale and
retail—and a fair volume of retail sales.
The dollar volume of depart
ment atore aales in June* after adjustment for seasonal variations, waa 16
per cent above March, but 4 per cent m ailer than in June laat year, while
aalea of 10 chain atore end rail order systems in June, without aeaaonal
adjuatment, were 30 per cent above Kerch, but only 3# per cent above June
1932*
'alee of 800 hardware retailers also increased since Inarch and were
4 per cent above June laat year.
Stocks of department stores, after adjust
ment for aeaaonal variation, inereaaed only 5 per cent from the end of
March to the end of June, but at that time were still 12 per cent below
June of lest yeer.
Such figures aa are available on wholesale trade show
that in June there were very large increases in aalea of dry goods, furni
ture, end shoes, as compared with June of laat year.
Wholeaale stocks
actually on hand, however, apparently increased only moderately.
The dis
crepancies in theae figures may possibly be explained either by inereaaed
Reproduced from the Unclassified / Declassified Holdings of the National Archives
-4~
retail distribution through scalier outlets from which no figures are
available, or by large increased ordering of goods which have not yet
been delivered, and do not, therefore, register ia the aost recent figure*
for inventories.
Coamodlty prices
Wholesale cocsaodity prices rose 1& per cent from the first week in
March up to tho reaction last wees, according to the index of the Bureau
of Labor Statistics.
The largest advances occurred in far® products, es
pecially grains, and ia other raw materials which have a world Hsarxet and
are traded in the organised exchanges.
Prices of manufactured and send-
oanufactursd products heve advanced less rapidly, although there were large
increases in Manufactured textile, food, and leather produets, reflecting
both Increases in demand end rising costs for raw materials.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
J - ' y
1 8 ,
1 9 5 5
msimss in jot*
Preliminary confidential reports indicate that tbe increase betvean
May and June in Industrial production iother than construction; amounted
to 13 per east, in factory employment to ? per cent, and in factory payrolla to 11 par cent.
Between March and June factory production in
creased 51 per cent aa compared with increases of 12 per cent and 2? per
cent respectively ia factory employment and payroll a.
The larger percent
age Increase in factory payroll* as compared with factory employment re
flects largely less part-time work in June than in March, while tha larger
Increase la factory output than in either employment or payrolls reflects
la part increased activity la the heavy industries such as steel where
the number of workers employed to achieve a given volume of output is
normally less than in industries where more hand labor is used.
The ex
tent of the total increase In output In some lines, particularly textiles,
indicates sows flow of commodities into stocks, probably in anticipation
of higher prices.
I am enclosing a confidential copy of preliminary business indexes
for June, prepared by the Division of Research and Statistics of the Fed
eral Reserve Board.
@FedFRASER