Full text of Winfield W. Riefler Papers (RFLR), 1929-71 : Box 1, Folder 9 : August 7, 1934 Economic Situation - Reports of the Economic Adviser to the Executive Council

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Reproduced from the Unclassified / Declassified Holdings of the National Archives




ECONOMIC SITUATION

RE P O RT S OF THE
TO

ECONOMIC
THE

EXECUTIVE

COUNCI L

AUGUST 7 , 1 9 3 4 —

ADVISER

Reproduced from the Unclassified / Declassified Holdings of the National Archives

of tba aoonomic Mtiiir ta *he
latlonal amergency OemMil

M m r r

5, 1935

February 5 , 1935
UCOIQaflC S im t lO I
Product ion.
Industrial activity hat increased with exceptional rapidity
during tha past six weeks and currently is vail in axoass of operationa at this tlaa last year, and on a par for tha saason with
tha hast levels of tha spring of 193 ^*

Tba sharpness of tha re­

bound raflects primarily the rel&tivaly small voluma to which
inventories in several key industries were reduced by December
as a result of sustained consumption during the summer and early
autumn whan operations were at a orach lower rate*

flow that indus­

trial activity has recovered to levels more closely in line with
current consumption, further changes in output during the naxt
two months may be expected to conform more closely to tha usual
seasonal pattern*
Ihe most marked gains in industrial output have been in tha
automobile and steel industries, although certain non-durable goods
industries have shared in the advance*

Automobile plants are now

producing at a rata about equal to that of January 1930 « and a
further seasonal increase may be expected in tha next two months
since retail sales are now in good volume*

Meanwhile steal opera*

tions have advanced to about 55 per cant of capacity, reflecting




Reproduced from the Unclassified / Declassified Holdings of the National Archives

laoromood ordoro mot oaljr fro* mutoaobilo pXmmto tut mloo ! m
woll-divereifiod aioeollmaoomo liaoo.

Ordor* fro* ooaotrufitioa

mad tho rmilromdft roamia «amll.

IM L t lW II*

laoromtlac output hms boom mcooapmaiod by lmrfor aqpXeyaomt,
ospoeimlljr la tho homty aaaafmetari&c iaductrioo, to that im omrljr
Jmrmar* tho roduotioa im total fmotory working forooo whioh ordlamrily memo^pmaloo tho yomr-oad lavomtory period bad aneh loft* off«ot th&a awuml.

fho l«ri«it tomooaml laoromto la fmetorjr o^ploy-

■oat mt this tins of y w , howoror, noraalljr come* botwoma January
mad fobrmmvy, mad tho full offoot of tho roooat mdwmaem ia mativity
will aot bo rogittorod until thorn.




Keproduced from the Unclassified / Declassified Holdings of the National Archives

-3SM &s.

Latest reports os retail trad# indicate that ittsn m t k t r
hat reduced salat of merchandise, exoept ia tha case of viator
clothing*

freight shipments, with tho exception of coal, havo

also doelinad somewhat.
E iim -

On tho organised exchanges volume of trading has bean restricted
during tho past two weeks by uncertainty over the gold clause deoislone, and there have been alight recessions in prices of stocks
and of commodities entering into international trade.

Prices of

livestock have eontlimed to advance, as a consequence of smaller
supplies, and ia the Bureau of Labor Statistics index of wholesale
prices, farm products ae a group have advanced to
their

19 2 6

79

per cent of

average, tha same level ae the general average of all

commodities.

Retail food prices, especially prloee of meats, have

Increased rather sharply ia reoent weeks, aad in mid-January tha
index of the Bureau of Labor Statistics indicated that retail food
prloee were more than 12 per cant higher than last year*

Aside

from farm products aad foods* prices ehow relatively little change
from thie time a year ago.




Reproduced from the Unclassified / Declassified Holdings of the National Archives

m .m

if u * iMMwt* Mfii«r
S*ti«aal ftMrcoa*? Cowell

tfc*
If35

Booicmic s i m t i o *

Ulh tli# «al9Mbil« isl««li7 l«»disi t&# ««/, tho irtad »f
bu«in«t* activity k»« eontlaiMd *it*rpijr wp*&rd during the part
fortnight,

Tho mrabor of aow suit.o*obile* ***aabl*£ h&s advanced

vory mvlftlf and is now roach larger thaa a year aga*

Steel pro­

ducers, benefiting from iaere»te4 deaaiid fro* »*ojr wmXl lines aa
mil m

fro* automotive orders, k * n expanded their ftlptl fro*

kl per cent of MpMlijr to 50 per cent since tha bocinninc •*

uaxy«
is

At this rat* steel production it wall stove lit average

19 3 *»

asd althca** a farther immaiI rltf »•/ oecsr in the

»««r filvti mudi » iitil ««• hardly bo imifttftiMl




Reproduced from the Unclassified / Declassified Holdings of the National Archives

t&a yaar ualaaa daaaad picks

ia fiali* hitherto doraaat.

Ia athar ilaaa of aaaafaetmriag, * ctifity iaas not asipaadaA appracUbly during J&n&eU’y apart fron tiaa cas toaary •aasaa&l change®.
A* eo^pajrad witfc 4>a«a»bar aad Jana&ry of last yaar, tasiaasa ac­
tivity Is ^aneraily at a ni^iiar I aval * witfl production aad a»playnant &o# rsflaatiag tha larger volwaa of consuaor-purcaating.

final raports now available oa •m^loymaot ia Oeeeafcer «fe*«
large galas la tue autoaoMle aad steel iadastriee aad setae advaaee
ia aatffelaatf and ia I m U I m , m tfeat total w»pl%ymm*% im •aimfaaturiai aa a ahole, iastaad af deellaia* aa ia aaaal la Oaaaateap,
aetaally iaoraasad.
faada
la retail stores, aalaa af «iit types af aarebaadise have,
a» aaaal, deallaat smtetiaatially f m




the Christmas peak, teat

Reproduced from the Unclassified / Declassified Holdings of the National Archives

-3•**?* •*!•« la •ariy J m m ? ooatlaaoi

Uumi ia

tho p m U t i jraar*
m SJLL

Ffio aa of aoantoditla* ia *&olo*al«

fcooa fls ia f

•Xowiy dar 1«ms tfco past thraa mu%h* and ia tfco atfdiia of January
tbo iodax of Urn Saraau of I* te r £ ta ti» U « t raaehad %k* ^ighaet
io vol *m c* l-aaaafcar 1930*




tfei* ag}«ar& aiivanont fca# occurra*

Reproduced from the Unclassified / Declassified Holdings of the National Archives

principally in foodstuff* aad raw materials, reflecting smaller
*oppil** of livestock aad #r*in*, «ad improvement ia demand for
ootton, silk, stool scrap aad other basic raw materials.

The aver­

s e level of whol**al* pric** for other coosaodities, however, he*
caanfted very little during receat weeks.
ji»ea*sion of th* &old cUus* o**** caas*d * t**£*rary *p**alativ* re&ctloa la whole**!* eoamodlty markets, th* prio*s of
grata* fc*lac ®°*t **v*r*l/ *ffe*t*d.

Ifcer* were *1 * 0 sharp d*-

clla*s ia *t**fc prio*s and ia th* foreign *xehan** valm* of *th*r
ourr*Boi*e, whll* prlo*s of f o v rinat bonds ooatainiag cold clauses
ros* by fractions *f a p*iat«

fttor* r***ntly, h*w*v*r, th* aarit*t*

hav* st*adi*d at so«Mrarhat high** l«v*l*.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

Ofi.ee of the Economic Adviser to the
lational Emergency Council

January

1935.

Tflw.

ECOICMIC SITU ATI OS

Summary.
Business activity has increased in recent weeks and the new
year opens with prospects for farther advances.

Department stores

reoort s^les at the Christmas season froa 10 to 15 per cent above
last year,

with operations ia the automobile and steel industries

expending, the general level of industrial production and emoloyment was well maintained in December and failed to show the custom­
ary sharp d cline.

Consequently, factory employment averaged about

3 per cent higher than last year while payrolls were about 12 per
cent larger end industrial production was 7 per cent above December
1937’.
Qfrlis& .for 1,915*

during the next three months industrial operations can be ex­
pected to increase on seasonal grounds alone,

**his movement will

be strengthened this year by a material improvement in the relation
of inventories to industrial output and to retell trade.

Broadly

speaking, the first ohase of the revival beginning in M?reh 1933 was
characterised by the accumulation of inventories, reflecting a marked
increase in factory output and a much smaller increase in the physical
volume of retail trade.

This was followed in 193** by & relatively

smell advance in factory output snd a much larger extension in retail
activity,

"uring the past six months, especially, goods have been

consumed in the aggregate ia excess of the current rate of industrial




Reproduced from the Unclassified / Declassified Holdings of the National Archives

- 2

-

output, with the revolt that lm many lines of tn d t excessive accumu­
lations of commodities at factories and 1b the hands of distributors
have tfiea absorbed.

fhe current improvement lm consumer baying is,

therefore, mot merely s sustaining factor ia retail distribution
but also a direct stimulus to a farther Increase im manufacturing
operation*.
Among those limes of activity, maimly consumers perishable goods,
which have a coanted for the balk of production im recent years, we
may expect that 1935 output as a whole will be somewhat larger, es­
pecially im the textile industries.
will be reduced.

Output of meat products, however,

Among the durable goods industries, im whieh the

decline im ontput daring this depression hms been most heavily concern*
trated, we may expect increased activity both im the industries which
fam ish materials for public works and im those which, will benefit by
the current imerease im consumer demand for durable commodities such
as smtcmobiles, radios, and household electrical appliances.
foreign trade alee may be expected to show some Improvement
daring the next year, bmt not lm sufficient volume to constitute a
major factor lm business activity as a whole.

With inventories re­

duced smd basic production proceeding at a somewhat higher rate, the
sitaatiem will fewer increased imports, especially of raw materials.
In the export field, the prospect Is for a continuation of foreign
demand for American manufactured products such ms automobiles and
agricultural machinery.
In the months immediately ahead, therefore, the outlook indi­
cates sustained or Increased activity in most of the major industries




Reproduced from the Unclassified / Declassified Holdings of the National Archives

-5which have famished tbs hall: of employment Is recent years.

These

industries alone, however, will not absorb labor in sufficient volume
to reduce substantially the heavy responsibilities for emergency em­
ployment which the federal Government is now carrying.

For a material

decrease is that load, the spring expansion in activity toast spread
into fields that have been severely depressed or dormant for several
years.

It is impossible to forecast at present the extent to which

such an expansion may be expected Is 1935.

It should be encouraged,

however, by several factors which have hitherto been lacking, es­
pecially by better adjusted price relationships, and laq>rovement Is
the agricultural situation and In the financial situation.

PRICES IN WHOLESALE MARKETS
BUREAU

or

78*+

tfOTSt

LABOR

S T A T IS T IC S

P ric e Series

The top of the hatched section, reading from l a f t to rig h t, Indicates tha change In
wholesala prices during the ja a r 1931*.

Movements of prices in wholesale maikets during the past year
have gone far to restore a more balanced level among the major groups




Reproduced from the Unclassified / Declassified Holdings of the National Archives

of eonaoditiee.

Th* ladex of all wholeeele prices bow steads at 77

por coat of its 1926 level with ovary major group, inclad ia« haildiag
notarial»v withia 12 oar caat of that average.
tioa io tha snailest ia a nwhar jof yeare.

fhia raage of veria-

la effectlag this adjmst-

neat, prioaa of fam product* haw advaacad ahoat 28 par east daring tha
paet yaar# partly ao a resalt of dreamt shortages, hat alto heea&se
of tha crop control program of tha Federal Government, aad food pricao
have paralleled thit advance.

Cte tha other haadv price decline* have

occurrod la inportaat industrial products oaoh ao textiles, which
had previously advaacad nore rapidly aad to a higher point thaa eoald
ha oaetaiaed hy tha levol of coasuaer demand.

Othar industrial pricao

oa tha average have hooa remarkably stehla* .
la agriculture, tha outlook indicates aa iaereaoa ia iaooa* for
tha third successive year, reflecting tha elooar halaace of pricao
of font prodacto with prieao of iadaatrial ooaraoditio* aad a narked
reduction ia tha agricultural surplus.

*or aaxt yoar, tha iaereaoa

la iaeona vill refloat larger crops at ooawwhat lower pricao, tiaca
a droagrt of tho MTtrity of this paot

season io mot likely to recur.

Ia oil of thaoe reepects, tha oitaatioa io nore favorable to
a revival of Industrial activity during tha caning yaar thaa it aao
ia tho latter part of 1933 or tm 193**.

*he extent of tha revival,

however, will depoad aloo oa specific coadltloao la tha various fields
of ladastry where expanel oa aight ha oxpoetad to occar.

faking thooo

areas of potaatial expansion la ordar, thara is little proopact of
increased denand either for aa actual iaereaoa la Industrlel pleat
facilities ia 1935 or for a raaowal of activity la tha field of coat~




Reproduced from the Unclassified I Declassified Holdings of the National Archives

-5aercial construction Including office buildings, de luxe apartment
structures, theaters aad hotels.

these field* of constructioa nay be

expected to absorb labor only after revival hat taken place; they will
reflect revival rather thaa act at aa iaitiatiag stimulus.
■
a
he ease of aew residential construction la somewhat sore
favorable.

*he current outlook is for a larger volume of residen­

tial building thaa last year, reflecting primarily aa exp&nsioa ia
eertaia regioas where coaditioas are especially favorable.

Houses are

consumers* durable goods, aad ia this respect they fall ia the save
category as automobiles aad electric refrigerators, the market for both
of which has responded rapidly during the past two years aa sooa as
eonditieas becaate favorable for expaasioa.

Widespread revival ia ac­

tivity ia this field, however, depends priiaariiy mpoa three factors,
vacancies, conetruction costs ia relation to reatals aad the aortgage
situation.

these factors are aot aow ia each a favorable positioa

as to insure immediate widespread revival,

the situation with res­

pect to all three, at the same time, has shown improvement, aad may
continue to improve sufficiently so that residential building will
be aa important factor ia the absorption of idle labor firing the
coming year.
Outside of aew construct! aa aad expansion of pleat facilities,
there is a large area for economic revival ia the general field of
Maintenance, modernisation and repair of commercial aad industrial
structures and equipment as well as of residences.

Potential needs

for modernisation are sufficient to afford the basis for a substantial




Reproduced from the Unclassified I Declassified Holdings of the National Archives

-4abeorptioa of labor during 1935*

At tha beginning of tha depressl©* la

1929 oar physical assets la maay lltta* had been developed to a state of
productivity that was ia excess of that required by tha currant level
of consumer demand.

£lnce that time, datar i oration, obaolaseanca aad

ttader*3»aintenftace have mob more thaa abaorbad that excess.

fha res­

ponse to the initial phase of tha home modernisation campaign during
tha rast autumn lndieatas somathin* of tha opportunities for reemploymant which modernisation can furnish ia tha raaidantial field.

11th

tba advent of tha new construction aaasoa ia tha spring, modernisation
aay ba expected to supply a substantially larger volume of activity.
According to praaant indications, ganaral Commercial aad industrial
maintenance will also ba substantially larger thaa la recent years
when expenditures for this purpose were held to a minimum.

Expansion

of this type of activity, however, will have to be oa a major scale
such as ia 1923 to furnish a basic sustaining influence toward revival
after the aprlag seasonal peak ia general activity has passed.
Sphere is need for a substantial volume of maintenance and suuipmeat oa the railroads, if they ara to be placed la a condition to
handle efficiently tha inorea ed aaovement of goods which can be ex­
pected to aeccopaay industrial revival,

the undertaking of work of

this kind, however, awaits further progress ia other phases of the
transportation problem.

Ia the electrical industay, oa the other haad#

potential demand is somewhat more promising,
electric energy in 193** exceeded all past

fhe average demand for

years except 1929 and 1930*

notwithstanding a level of industrial activity one-third below 1929*
and at the present time production of electricity' is hovering close




Reproduced from the Unclassified / Declassified Holdings of the National Archives

to those high levels.

With any marked increase in industrial output, the

demand for electric power will reach new peaks which should call not
only for replacement and modernisation of generating equipment but also
for now installations in regions where demand is hoariest.

Outside the

fields of transportation and power, the rate at which maintenance,
modernisation and replacement will afford an outlet for idle labor will
depend largely noon specific conditions within eaeh industry aad the
extent to whieh these industries benefit from the current level of
consumer demand*
The rate at whieh refunding of debt takes place will constitute
a factor of basic importance in the degree to which these developments
afford the basis for substantial revival.

Improvement in the financial

situation has now made itself felt in the security markets, where prices
of bonds of prime duality have risen to record levels, reflecting not
only the large reserves of liquid funds in the banking system but also
the refinancing of home and farm mortgages, the insurance of deposits,
and the work of the Reconstruction finance Corporation in strengthening
the capital structure of the hanks and in advancing funds to help
off deposits in olosed banks.

ay

Our investment markets, as a consequence,

are now for the first time in years In a posit!cm to refund outstanding
obligation» at substantial reductions in Interest rates,

to the ex­

tent that advantage is taken of this situation during the earning year,
particularly in the bond market and in the mortgage market, debt bur­
dens will be lightened and industry will be in an increasingly favorable
position to .make inroads on the load of unemployment which the federal
Government Is now earrylag#




Reproduced from the Unclassified / Declassified Holdings of the National Archives

January
B2P0KT oy TlU SCOHOiUC Aj¥I33Bs

J, 1935

V I*?

Cttrwat Activity.
Business a c t i v i t y has increated in recent aeeks and the new
year opens with prospect* for farther advances. Department stores
report sales at the Christmas season from 10 to 15 p*? east above
last year* with operations in the automobile and steel industries
expanding, the general l®vei of industrial product!on and employ­
ment was well maintained and did not show the customary sharp decline*
As a result factory esaployaeiii in aid-*December averaged about 3
per cent higher than last year while factory payrolls were 12 per
eent larger, suad industrial production was ? per cent above Decem­
ber, 1933#
oatlook for 19^5.
During the next three isonth* industrial operations can be
expected to increase on seasonal grounds alone* *!Ma movement
will be strengthened by the substantial improvement in the rela­
tion of inventories to industrial output and to retail trad#*
the present liaprovseient in consumer buying is, therefore, not
merely a sustaining factor in retail distribution but also a direct
st lamias to a further Increase in zaavrafactoring operations*
In the n$onths imaediately ahead private industry will absorb
more labor, out not in sufficient volume to reduce substantially
the he&vy responsibilities for emergency em(loymnt which the Federal
Government i« now carrying, unless the spring scansion in activity
spreads into fields that have been depressed for several years*
It is unlikely that there will be vary substantial building of com­
mercial structures which were previously over-boilt* nor, without
specific assistance, any groat modernisation of railroad equipment,
although that is needed* iiore proulso is held for greator activity
in hoiae construction and the repair and raoderoination of industrial
equip&ient* It is impossible to forecast at present the extent to
which expansion in these lines aay be expected in i93*> It #ill
be facilitated, however, ay three influences tfhich have hitherto
been lacking, better adjusted price relationships, and improvement
in the ^tgriculturiii situation and in the financial situation* It
is especially significant that investment markets are now for the
first tirae in years in a position to reftond the outstanding debt
burden, both of bonds and mrtgages, at substantial reductions in
interest rates*
In the field of industrial maintenance and modernization, the
rate at which refunding of debt takes place will be an iHcortant
influence* Should industry as a whole undertake in 1935
restore
its equipment to a condition corresponding to what it was, say, as
recently as three years ago, substantial inroads will be sa&de on
the Government* a lead of unemployuent*




Reproduced from the Unclassified / Declassified Holdings of the National Archives

Office of tli® Economic Adviser %e
Yational Emergency Council

be
December 20, ^ 3 ^ .

December 20, 1g3MSOtWOMIC SIftfAfIC®
Snmmarr.
Industrial operation! have increeeed in recent weeks, especially
in the eteel Industry, where output has expanded from a rate of 29
per cent of estimated caoacity at the end of Xovember to 3*1—1/2 per
cent at the present time.

At automobile plants assemblies of 1935

models are now getting under way, and output in the textile industry has also increased.

For manufacturing as a whole some decrease

in operations is to be expected over the holidays when many plants
customarily reduce operations during the year-end inventory period,
But Deceafrer will show less than the usual sharp seasonal drop from
lovember.

Accumulation of stocks ef industrial preducts, with the

principal exception of lumber, are moderate in else, and the year
will end with most Industries in a relatively favorable inventory
position.
Consamer baying has been active during the early part of
December, according to preliminary reports, and holiday sales are
running well above last year.
Besteading to this improvement in the business situation, prices
of sensitive commodities have been stronger in the past three weeks,
Final figures for lovember covering the more important indus­
tries indicate a decline in output of about the usual seasonal amount,
with an accompanying reduction in industrial employment and payrolls.
Production of steel and some of the machinery industries expanded




Reproduced from the Unclassified I Declassified Holdings of the National Archives

somewhat,

However, automobile pleat* were changing to new models,

aad textile aad meat-packing companies reduced operatione fro* the
relatively hi$i level* of October,

Construction contract* decreased

slightly in Wovember iadicatlag *<ne slackening ia aew building,
although employment on private constructioa work was wall sustained*
fhe attached chart* summarise production aad employment la
manufacturing far the year 193** a* a whole aad *how their relation
to earlier year*.

Aggregate output will be 3 per cent larger thaa

ia 1933* employment 12 per ceat larger,

the advance from the low

of the depress!oa la 1932 kaa beea 22 per ceat.

Average output per

worker is still aear 1932 levels, largely because of the shorter
work week*
fhe chart of aaaaal output of selected maaaf&ctariag iadastrie*
since 1920 show# the relatively higher level of activity ef coawomirs1 goods iadastrie* a* coapared with durable goods industries*
Industrial Product!pa aad Inventories*
fhe volume ef productioa a* a whole declined by about the usual
seasonal amouat durlag Xovember, notwithstanding expansion la cer­
tain important Industrie*.

ffce output of iroa aad steel Increased

•lowly, reflect lag miseellaaeous demaad aad greater activity ia
the fans laplemeat industry aad in the manufacture of machine tools,
for which order* were larger thaa ia aay lovember since 19^9.

Coan

panie* producing goods for kome reaovation, such as paints aad plumblag aad heat lag equipment were also more active,

Increases ia coa~

samptioa of electric power aad ia oroductioa aad shipmeats of bita-




Reproduced from the Unclassified I Declassified Holdings of the National Archives

aineu* coal ia Woveaber can be attributed largely to seasonal in­
fluences.

*he aost raaiiced reductions in outsat during the month

vara at auteaoblle plants, aceoapanying tha cha&ge to new models,
and at luaber aills, in which product! a is again approaching ex­
ceptionally lav levels.

Output in the aeat-packing industry, while

aaah larger thaa ia previous year* as a result of abnormal marketings
due to the drought, did aot report the castoaary seasonal expansion
la Xoveaber.

A< compared with last year aggregate volaae of in­

dustrial outoat was only a sii$it increase.

It was lH per cent

•mailer than daring the peak of activity last spring.
As a consequence of reduced operations aad fairly well sustained
distribution of industrial orodacts during recent aoBths, the year
will aad with aost Industrie* in a relatively favorable position as
regards inventories.

Stocks of textiles end of finished steel have

beea lew for some time, and the gains ia activity in these industries
since September are believed to have reflected genuine increases ia
denaad rather than any new accuanlation of inventories.

In the

automobile industry, retail deaaad has easily absorbed the reaaiaiag stocks of 193^ cars ia the hands of dealer*, and the situation
is favorable for a fairly briak seasonal advance ia operations.
9he luaber industry orobably presents the ao*t striking exception
to this general rule.

St odes of luaber held by mill* aaouat to

about a six a oath*1 supply at the current rate of ehipaent*, in ad­
dition to large accaanlatioas ia the yard* of dealer*.

Ia aa atteapt

to bring about soae decrease ia these stocks, the luaber code author­
ity has ordered a farther redaction la production quota* for the




from the Unclassified I Declassified Holdings of the National Archives

first quarter of 1935 .

Building contracts were smaller in Bovember than the average
for ths past six months, and award* far private work, ia particular*
wars reduced.

Building permits reported for 7&0 cities indicated

a smaller amount af new woik under way than in October*

TM i

slackening in contfcractioa activity is largely because of weather
conditions and it aooears that for repair work* at least, the de­
cline this year is smaller than usual.

this is also indicated by

the sustained level of employment on privately financed construction
Job*.

Permits for additions and repairs shew an increase of 60

per cent,
Iwployaent «u»d P«yroll».

k somewhat smaller number of T>eople were employed at regalsr
4 ohs in Sovember than in October, as is usual at this time of the

year.

However, the volume of employment and of payrolls was some­

what larger than a year ago.

factories had fewer workers and

smaller payrolls in mid-Hovember than a month earlier, the decline
heins about the same amount as has been usual in recent years,
Smplo^mant was also seasonally smaller in agriculture, m the rail­
roads, and on public works projects, as roads and other Jobs af­
fected by weather were completed.
4s a result of tha Improved rate of manufacturing activity in
the past two weeks both employment and payrolls at factories will
probably be better sustained than usual in Becember.

k decline

may be expected towards the end of the month, however, as the yearend inventory period approaches.




Reproduced from the Unclassified / Declassified Holdings of the National Archives

let&il Trade.
detail cale* ae a whole increased hy a small amount between
October end toveiBber, registering an the average about the easto®&ry gain for the month,

tlafevorable weather in mny parts of the

errantry tended to discourage consumer-baying of general merchandise
of the type told in department stares, while variety (5. 10 and
15£) *tores add. chain grocery stores did a somewhat better basiness

than msnal.

Sales of new car® by automobile dealer*, which gener­

ally fall off substantially in November, held up relatively well*
M ssi.

Price* of cossnoditles in. the wholesale markets were compare*
tively stable during lovember, althongb toward the end of the
aonth the index of the Baraoa of Labor Statistics moved up slightly
to 76*7 per ceat of its 1926 average ia the first week ia December*
At this level, wholesale price* are about B per cent higher than
at this time a year ago, reflecting principally advance* ia fan*
products and foods*
Distinct strength characterized the prices of more sensitive
commodities late in 'Jfoveaber, continuing into December,

there was

a eharp rise in the price of steel scrap, in response to th*» greater

demand for finished steel products.

Other coamodltlea whieh ad­

vanced in price included silk, corn, wheat, hides, and lead*
Tery little change occurred la retail prices during Kovember.
Food price* were abcrat tea per cent higher than a year ago, bat

other price* at retail were only slightly above last year1* .level*




Reproduced from the Unclassified / Declassified Holdings of the National Archives




Reproduced from the Unclassified I Declassified Holdings of the National Archives

Office of th® .Sconotaic Adviser to the
H&tional Sner^ency Council

December 19, 193 **

mjymm ot

m rn tm n w rn m

Industrial operations have increased In recent week#, especially
in th© steel industry, where output has expanded from a rate of 29
per cent of estimated capacity at the end of Bovember to 3^-1 /2 per
cent at the present time. At automobile plants assemblies of 1935
modele are now getting under way, and output in the text11© indus­
try has also increased* For manufacturing as a whole some deer*&«#
in operations is to be expected ever tha holidays ^han saauy plants
customarily reduce operations during the year-end inventory period,
but December will show less than the usual sharp seasonal drop- from
November* tecnaaolation of stocks of industrial products* with th#
principal exception of Iwiber, are moderate in sis#, aa,:l tho year
will end with iaost industries in a relatively favorable inventory
position*
Consumer buying has been active during the early part of
December* according to preliminary reports* and holiday salas are
running well above last year*

Responding to this irjproirement in the business situation, prices
of sensitive commodities have been stronger in the past three weeks*
final figure for lovember covering the more important iniuetries Indicate a decline in output of about the usual seasonal amount,
with an accompanying reduction in industrial employment and payroll*.
Production of steel and some of the machinery industries expanded
somewhat* However, automobile plants were changing to new models,
and textile aad meatpacking companies reduced operations from the
relatively high levels of October# Construction contracts decreased
slightly in November indicating some slackening ia new building,

although employment on private construction work was well sustained*
She attached charts sussi&rize production and eraployaeat in
manufacturing for the year 193^ ** * whole and show their relation

to earlier years* Aggregate output will be 3 P** «•»% larger than
in 1933, « 5&lo^»»at 12 per cent larger. The advance from the low




Reproduced from the Unclassified I Declassified Holdings of the National Archives

~2~

of the depression ia 1932 lias been 22 per cent. Averse output per
worker is still near 1932 levels, largely because of the shorter
work week.

fhm chart of annual output of selected manufacturing indus­
tries since 1920 ehofft th® relatively higher l«*vel of activity of
consumer*1 ^oods Industrie* as coifipared with durable goods Indus**
trie*.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

Office of the Economics .Adviser to the
National Emergency Council
December 11, 193J+

JSCOSOUIC 3ITOATXOI
Snaaaary.
Retail activity normally constitutes the dominant element in

the business picture in 'December, which 1# marked both by the ad­
vent of cold weathe* and the approach of the Christmas holiday
season.

%

to Moveiaber this year the distribution of commodities

at retail was relatively well maintained even during the mmm t aad
early autumn, when manufacturing output and employment were declin­
ing.

In November, department store sale* showed less strength dur­

ing the prolonged spell of mrm and rainy weather, but th© aggre­
gate dollar volume of retail sales continued to average higher than
last year for most types of commodities and in most sections of
the country*

Inasmuch as retail prices, except prices of food,

have not varied greatly since the closing months of 1935, this
indicates an increase in the quantity as well as in the value of
goods distributed at retail*
Aside froia retail trade, most pha-p.ee of business activity con­
tinue to exhibit the slow but gradual improvement for the season
that has been in evidence since the latter part of September, with
the exception of new building in which there was a seasozsL decline
in contracts awarded in November*




Railroad traffic was well sue-

Reproduced from the Unclassified I Declassified Holdings of the National Archives

talned last month, however*

j&ectric power consumption i* high

and textile activity also continues relatively large.

Steel

operation* roee to 30 per cent of capacity last week with a tor-*
ther increase to around 33 per oent foreoast for this week.
Producer* of automobile parte are increasing operation*, althorny

actual automobile output is small during the transition to new
models*

In general, mmmmd business activity is now somewhat

greater than in this period in 1933* *** still well below the levels
reached during the active second quarter of the current year.
Ihird-quarter report* on industrial profits show a decline,
reflecting the reduced volume of industrial activity after mid-year.

Tor 193H as a whole, however, industrial profits will exceed those
of last year despite the advantage of inventory write-ups at that
time*
If retail trade is maintained at recent levels through the
remainder of this month, the new year will open with inventories
of manufactured .^oods, especially those held by retailers, reduced
to moderate levels*

Manufacturers stock® are larger than at the

exceptionally low levels prevailing at the end of 1932# but con­
siderably smaller than in the autumn of 1933* when anticipation
of higher price# for manufactured products stiiuulated the exces­
sive accumulation of stock* In sosse lines*
Animal levlew of laflasteldL Activity
for the year 193^

& whole, industrial output* including

both manufacturing and mining, will show an increase of about k per




Reproduced from the Unclassified I Declassified Holdings of the National Archives

-3cent as compared with 1933

23 pt* cwzit as compared with 1933*

tlie relation of these changes in factory output to earlier years is
indicated on the chart which traces changes in manufacturing produc­
tion, employment, and output per factory worker from 1$99 to 193 ^.
The index numbers on this chart, which are computed with the year
1S99 taken as 100, shew that factory output more than tripled between

1S99 and 1929.

Daring this sane period, factory employment only

doubled, the difference being made up by a 50 per cent increase
in output per industrial worker, an inorease that was zaost marked
after the war.
Between 1929 aad 19 3 2 , factory output deer eased by nearly onehalf, aaployiaent by 35 p«r cent, and output per person by 20 per
cent,

this reflected mainly part-time employment and a concerted

spread-the-work movement, but may have been affected somewhat by
a deterioration in the efficiency of factory equipment due to de­
ferred maintenance and obsolescence.

Since 1952# output and employ­

ment have increased at about the same rate, on the whole.

Output

per person in 193 H was again close to the 1932 levels due largely
to the effect of the shorter work week.
Hie relative extent to which different industries have contri­
buted to these ohaBge* in output is indicated in the second chart
which shows variations in annual output of several selected indus­
tries since

192O# ^n this chart, where fee average for the years

1923-1925 is plotted as 100, the smaller fluctuations in output of




Reproduced from the Unclassified I Declassified Holdings of the National Archives

non-durable goods as ©©©pared with durable t£00ds aro plainly apparent.
Mon-durable goods were only 16 por cent above the 100 lino in 1929
and 12 por cent below in 19 3 2 .

iw ing tho last two years, total

output of tills type of product 1ms recovered almost to its 19 2 3 -19 2 5
average,

fhere are some lines of activity, in fact, in which 193 H

output will com* close to peak levels, notably meat-packing, wiiich
has been increased this year by the henry slaughter of eattle from
drought areas; and the shoe industry, in which 193 ** output will
be the second largest on reoord.

iSven textiles, despite an off year

duo partly to exceesive inventories accumulated in 19 3 3 , were pro­
duced at $5 per cent of their 19 2 3 -19 2 5 rate.
Output in the durable goods group, which declined much more
rapidly during the depression, 1ms risen more sharply from its low
point, but is still only one-half as large as in the 1923-1925
period.

Tho reoovery that has taken place in this field is attribu­

table largely to the demand for automobiles, radios and other dur­
able consumer *s articles, and to public construction.
benefited from both of those sources of demand.

Steel has

However, because

of the small amount of new private construction, many building
materials, notably lumber, continue to be produced at a very low
rate.

Reoovery of industry as a whole to normal activity still

requires not only increased residential building but a resumption
of expenditures for durable goods by producers themselves, especi­
ally in the replacement of worn-out equipment.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

Offie* of Economic Adviser to tlm
national Emergency Connell

leoioMia simtioi

Koveaber 1 3 , 1 9 7'

November 13 , 193^

Sunmagr*
A moderate recovery in industrial activity lias taken place
since the end of the recession about six weeks age, reflecting priacipally the restoration of output, aad employment in the textile
industries*

Other fabricating industries, on balance, have shown

about the usual seasonal change in activity*

la the private constrac­

tion industry there has recently teen some increase in new work
at a time when construction usually declines*

Betail haying con­

tinues to he well-sustained, and in October, taking the country as
a whole, sales registered the usual late autumn advance*

In las tern

cities trade increased more than seasonally, while in the Middle
west and more particularly in the South, where the greatest in­
creases had been reported in earlier months, the volume of sales
did not increase*
The outlook for the winter months is for a continued gradual
gain in the rate of industrial production above the seasonal level,
aad some further pick-up in residential building.
In whcleeale markets, prices declined slightly ia the weak
ending Kovsmber

3, according to the Secretary of Labor.

Since

that time, more sensitive prices quoted in organised conmodity
markets have shown increases, and stock prices have also advanced.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

Production*
Tor October, industrial production at a whole will probably
show aa increase of three or four per cant from Sap tember whan
final report* become available.

Among tbe consumers* goods in­

dustries, there was aa unusually rapid rise ia textile operations,
oa the oae band, and, on tbe other band, a marked decline in activity
at me&tacking plants, which had been pushed to high levels ia
August aad September by government purchases of cattle ia drought
areas,

la the ia^ortaat durable goods industries, a decrease la

automobile production m s more thaa balanced by a moderate adv&ace
ia iroa aad steel output.
Ia the automobile industry, the clearance of dealers* stocks
ia October was relatively satisfactory, and the megor producers are
bow

rushiag the preparation. of 1335 models for introduction within

the next few weeks.

Stocks of finished cars have decreased since

July, aad by the end of Hovember the industry will again be ia a
positioa to coonance the expansion of activity which generally
follows the announcement of new models*
Orders for the full anonat of steel needed for these aow
models have yet to be placed, and as they materialise toward the
end of this moatii, steel iagot production will probably be pushed
up aaother two or three poiats.

Output of steel is aow estimated

at 2S per cent of capacity, as coa^ared with aa average of 3S per
cent for the year to date,




fhis capacity figure, computed by

Reproduced from the Unclassified / Declassified Holdings of the National Archives

-3 ~

the Iron aad Stael Institute, is * theoretical quantity and is
probably somewhat larger than practical operating capacity at tha
present time.

In certain branches of steel-processing, activity

has beea asotch closer to capacity thaa ia tha production of ingots.
tha peak of tha season has aow passed for road constract ion,
aad eaploymeat oa this typo of work has beea reduced ia recant
weeks*

Coastractioa activity oa buildings aad other aoa-eaglaser~

lag Jobs,however, has beea iacreaslng somewhat, ia oppositioa to tha
usual saasoaal tread*

Saploymeat has beea fairly steady oa PWA

projects other thaa highways and railroads, aad there has been an
iacreasa la private coastm et! on work, including small rehahilita^
tioa jobs which are aot caught ia regular statistical reports,
Because of the fact that oaly nore important contractors report
the uastber of employees engaged la private building, the iacreasa
ia jots available to building workers is probably somewhat larger
than any of tha curreat statistics show*
l\»r the next swath or two it is likely that employment ia
buildiag construction as opposed to street aad highway work will be
relatively well sustained*

This is indicated by a larger volume of

coastruetioa contract® issued la October at compared with September,
notably for residences, aad is confirmed by aa iacreasa of sore thaa
30 per cant ia permits issued for resideatlal building in 500 cities*

Permits issued for repairs, additions, and alterations also in­
creased substantially last month*

As con|>ared with October 1933*

preliaiaary reports show that permits issued this year recorded




Reproduced from the Unclassified I Declassified Holdings of the National Archives

aa increase ef over 25 per cant la value in the case of Bew resi­
dential construction and of kQ per cent i& the ease of alterations
aad repairs.
These figure* indicate that we are beginning to get some *oveneat in the construction field, particularly ia repair activity
aad la aew residential construction, where almost complete stagna*
tloa has reigned during the last three years,

the actual amount of

construction ia these fields Is still small, however.

Sew residen­

tial construction contracts ia October amounted to 12 per cant of
the average for the years 1925-1929*
The chart illustrates the relative io^ortaace of aew rest*
dential construction as compared with other type* of building ac­
tivity la twelve selected cltie* during the pre-depression years
192>-13^9.

These cities range ia else from lew York, with a popu­

lation of ?t000,000f to Lima, Ohio* aad OshlQesli, IIscoasia, with
a population of around 40,000*

The chart iadicate* for each city

the proportion of total construction which was represented first
by small houses, which are showa at the hot tern ia black; second,
by other residential type* of construction such as apartments; aad,
third, readiag up the chart, by other new buildings, such as stores
aad factories, office buildings,hotels, aad aiscellaneous building,
including public building.
Ia geaeral, the chart shows that snail houses have coasiltuted
the largest single source of demand for building except ia the




Reproduced from the Unclassified I Declassified Holdings of the National Archives

-5largest cities such aa lew York aad Chicago, where congestion lias
f oread greater dtpeadioet oa apartment dwell Inga,

fhe chart also

shows that la cities of the latter type hotels and offico buildings
constituted an iaportant factor In building operation, in contrast
to the smaller cities where they wore less is^ortant.

Stores aad

factories were a fairly important element in botb saall and large
cities,

fhe importance of repairs and alterations varied widely

ia the years l$2^4.$ZSm

In Chieago, for exauple, where new building

was especially large, they constituted only 3 per cent of total
building operations*

la Lowell, Massachusetts, and Charleston, oa

the other hand— both old cities where new construction was saall
because population was stable or declining—alt eratioas and repairs
aggregated froa 35 to

por oont of construction activity.

In

■ore typical cities, this type of work soess to have accounted for
13 to IE per oont of tho total value of building activity.







m iiw «x xeoiMio i«n««r w vw
Satleaal jfiaar*oncjr CowftOll

XoToafcor 13,

mMM w iLm m
I
C it/ tad $ !* !•

o&i&a^ot xxx*• ••««••
San fran c1too, C a l..
Dall&», f t m . . . . . . .
S a lt Lako C ity . Utafc
faoottn, %a*hin£ton..

-

193*

1925-1929

For Oont of to ta l faluo of Foraii to la Saeh of th« ?o llo *lB £ CXaofos
iA&imal av#ra$o :
Fopul*- vain* of t a lld Gth*r Saw B o lld ia*
low Bo&jo *
Apiarttlo a
la c j>«r»lts
Hopalr*
storos Offloo
s
»
*
ll
aad
aad
aoats
fo
ta
l
featIdBetols
Othor
to
ta
l
1930
1 9^ 1929
(ti*o»( la a lU lo n *
fac­
Ho**oo «to.
Addilags
t o r ia l
*,93®
3»37&
634
a6o
i**o
10?

100

L **»voport, Ia . . . . . •
Charlotte®, S. 0 . . . .
Topolca,

<*

O*hko«h, ilo o ........... ..

40

7?

959.9
330.0

**.9
1^.4
5-5

6-1
i.h
k .S

0.$
2 .5
1 .0
!• *

m

57
5^

45
3*
38
£5
*7
30
3*

17
19
31

3i
3$

33
39
33
33
35
25
*K)
21
3&

13
15
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1
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9
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ko

3*
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kz
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20
m
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19

17

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18

m

5
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7
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11
15
13
35
18
h2
13
IS

IS

Reproduced from the Unclassified I Declassified Holdings of the National Archives

URBAN BUILDING -

1925-1929

(BASED ON DOLLAR VALUE OF PERMITS ISSUED)
PERCENT
OF TOTAL
100

REPAIRS
AND ADDITIONS
Public and
Other
Hotels

Office
Buildings

Stores and
Factories

Apartments,etc

NEW
HOUSING

Small
Houses

ANNUAL AVG VALUE
OF BUILDING PERMITS
(MILLIONS OF DOLLARS)

J59.9

330.0

ra
O
cT
o

>Z
k_
O
>S
V
z

! N A T IO N A L EMERGENCY C O U N C IL
_________________
I




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Reproduced from the Unclassified / Declassified Holdings of the National Archives

Off let of %bm economic Adviser
to the Executive Council

October 30# 193^

October 30,

l$3k

m m m w n v sm n m

Hotail trade continues relatively grood and the pace of basi­
nets activity has responded somewhat during the j>ast two weeks,
bat the situation in general remains uiet# especially in the heavy
industries.

The most rapid increase ha? been concentrated in the

cotton textile industry where activity has recovered from the low
levels which .ci.ar&cterised the period of the strike and also the
preceding three months of official curtailment.

Output is now

averaging above 120,000,000 yards a week, which is almost up to
the levels of last winter.

Other branches of the textile industry

have also advanced their output ia response to brisk consumer buy­
ing of fall and winter apparel.
Tha heavy industries* on the ©trier hand, particularly the
steel industry, continue dull. During October as a whole, the out­
put of steel ingots has averaged somewhat higher than September
but has nevertheless remained around ?*) per cent of capacity as

Co-Tiered with an f.verage of 3& per cent during October of last
ysar.

Buying of steel products continues to be on a very conserva­

tive basis.

A further small increase in steel operations is fore­

cast for the current week.




Reproduced from the Unclassified I Declassified Holdings of the National Archives

E S TIM A TE D S TE E L P L A N T OPERATIO NS

ladlroad doaand for steel i* negligible and antoiaefcile dottand
im also lo* for tlio present, since mo«t of tho motor corppwiies,
after finishing operation* on

ears* have shut down their plants

is preparation for the introduction of now models*

Fam lisp1onest

Manufacture, on the other hand. Is expanding is response to the
higher level of farm income and is taking a larger volume of steel.
Construction.
Depression in the construction industry continues to exert
the largest single drag on the general level of eag>loyi»ent.

It In

now estimated that the total volnae of construction this year will
aggregate soaenh&t more than $3 *600 , 000,000 as eoo$ared with about




Reproduced from the Unclassified / Declassified Holdings of the National Archives

-3$3,200,000,000 last yoar» and ovor $11,000,000,000 on %im avora^o
is tho yoars 19?6-1929.

Tho part of this total whieh fluctuates aost

wldely «•& bo follow** fro* south to stomth

tho reports on

construction contracts awarded, compiled by tho ?• «• &odge Corporatioa.

Theae show aa i w m « « of ^0 por eent so far this year

a* compared with tho first Bln* and a half aoaths of l$33*

This

1* accounted for entirely* however, by publicly fiaenced contracts
whieh have aero than doubled, largely under tho auspices of P M .
Beeeat reports eevering tho first half of Oetohor show so»e
increase over Septeaber la contracts for ill classes of construc­
tion, both public and private*

Much of tha work under tho aoderni-

zatloa aoveaent, which 1* being pushed by tho Federal Housing
Administration. Is not rofloetod la these contract figures, however.
Becently aedernization loaas have booa expanding rapidly*

tho

veluae of loaas insured last waok roso to $2,250,000 as co&pared
with $1,850,000 during tho preceding wesk aad $1,100,000 during
tho last week la Septeaber*
ob a oash basis has

Other rosidoatlal repair work doao

also expanded, as indicated by increases ia

eaqpleyaent la private construction aad la building permits issued,
as reported by tho Secretary of Labor.

Ia tho past six week* «wploy»eat has follaaod tho same general
course as production*

Heports for tho oarly part of October indi-

oato substantial galas la factory saaployaont and earnings la soae




Reproduced from the Unclassified / Declassified Holdings of the National Archives

of the eastern states in which textile ©eaters are located*

In

September, according to the Secretary of Labor, there was a small
not gain ia urban employment outside tho textile industries, which
were tied up by the strike, notwithstanding reduced activity in heavy
manufacturing.
As compared with last year, current estimates of employment
in all private industry and la agriculture show a decline of about
400.000 for September.

If account is taken of f M and CCC, however,

there was an increase of 15 0 , 000.

Itois reported decline in private

employment during the past twelve months was due entirely to the
textiles and to a&riculturs, affected by the drought*

These

estimates are based upon a method used by private agencies whose
reports on employment are widely quoted ia the press.

A critical

revision of these estimates is now being made by government agen­
cies on the basis of new Census data which are now beeoning avail­
able for several important industries for which adequate informa­
tion has hitherto been lacking.

As soon as this revision is com­

pleted we will have fairly good monthly figures on about 60 per
cent of all of the persons gainfully employed outside of agricul­
ture, as compared with about 35 per oent used in the present estimates.
Unemployment for the remaining population, howevert is far
more difficult to measure, because of raa^or shifts in industry
during the five years since the last census was taken,

fo obtain

a really accurate total estimate of employment and unemployment




Keproaucea rrom tne unclassified / Declassified Holdings of the National Archives

will require a general census of occurs,*-ions and tmemployment,
such as




wan

lof.t in the closlug days

t%f

the last Congress*

rceproaucea rrom ine unciassmea / Declassified holdings or the National Archives

CONFIDENTIAL

THE COTTON TEXTILE INDUSTRY
Unit: Millions of Yards

1200

1200
✓
i

1000

\Unfi Iled Orders
\
\

1000

1934

1933
EXEC.COUNCIL




Production of cotton cloth exceeded shipments during nearly
every month from August, 19?3 > until August, l3?^. Stocks, which
normally represent a little more than one month's output, conse­
quently rose to twice that amount by the end of July. At the end
of September, when the strike was over, stocks nad been reduced,
and some expansion of output may now be expected.
Note:

All October figures estimated.

Reproduced from the Unclassified / Declassified Holdings of the National A iumvcs

0fi±ce of th© Bconoiaie Mviser
to the Executive Cornell

October 16, 193^

Oct- tfe, l<\34

Sanaary.
Business sentiiiient issproved last week and was reflected la
steadier prices in tlx© organised smtkets, both 'for securities and
coniioditiss.

It is still too early to trace statistically the ex­

tent to which a reversal of business trends aay have aceo&Qanied
thi© change*

She moat coopreheasive statistics now becoming avail­

able cover' September operations' and serve to delineate even saor©
strongly tii© previous pic tare of a sharp redaction in that month

in factor/ production, oraploy&ent and payrolls, on the one hand,
and. a captained level of retail trade, on the other# reflecting
steadiness in general consumer denjand aad a sharp increase in far®

incase.

^ragaentary report* covering the first part of October

Indicate first, that retail trade has continued brisk except where
It has been affected by unfavorable weather, second, that textile
activity has risen sharply, and, third, that steel operations re­
main sln^rish.

!&e s»et recent figures on electric power produc­

tion and freight car loadings reflect, this mixed situation.

Power

production has increased about seasonally during the past two weeks,
•srhlle freight car loadings have declined by a larger mount than
usual, reflecting mainly smaller loadings of two classes of freight—

livestock and ore.
According to the Secretary of Labor, prices in wholesale ccm*-




Reproduced from the Unclassified I Declassified Holdings of the National Archives

ige&ity

taken as a *hole to re lav®!ad off in recent weeke,

a fte r a slew bat alzaost continuous increase sine® la s t A pril.

Ihis

has also heen troe of prices for food in r e ta il saax&ete, wMch de­
clined slig h tly laW in Ser’tessber.
In th© bond laarkst there has bson 'considerable improvement in
prices for government and higfo-grad* industrial securities during
the past two creeks.
Saoloyaent.

Preliminary reports indicate- that the textile strike aad inac­
tivity ia the steel industry, together with so&e decrease is imto•nobile assemblies, resulted in a considerable reduction ia employ-*
sent and samiagB of factory workers in September*

aaployneot in­

creased, on the other hand, at coal minoa and in retail stores, ae
aatm m sales hecarae considerably saore active*
also engaged saore labor*

Private construction

On TWA contracts employment m s well sus­

tained in September* except on the public roads, where there m s a
sharp seasonal decline#

For tbe f i r s t h alf of October i t is anticipated, that factory
smloyraent

will sM i m increase beca&se of renewed te x tile

operas

tions and seasonal a c tiv ity in other lin e s, and that the volme of
construction employment w ill not decline m aterially, notwithstanding
the fact that a seasonal redaction is usual th is jaonth.

Shit w ill

re fle c t in p art the inodem i sation taovement which is. now gathering
headway under the Federal Housing M in is tra tio n *

A preliminary

report on hallding permits for modernisation and repair in $2§. c itie s




Reproduced from the Unclassified I Declassified Holdings of the National Archives

-3~

oor^ilsd lagr tho Bareaoi ©f Labor Statistic® shewed that the total

volvam of tMs typo of work was still snail in Septeober “bat that
it rose 10 por cost ffoe Aa^iuit sad was 50 por oent larger than
in September last jraar.

fhos© figures do aot include authorizations

for xaasqf soall repair and Installation jobs which do sot requirepermits.

Jtariag the past two ^nteks aederalsation loans h a w hoes

reported to tho Housing ActeiiiiistratioB at a rate of arotjda& $1,600,000
por *es&«

Horal Saloa.

ir&im in farm income aro being re flecte d . c u rre n tly in ra b id ly
oxpsm&ing r e t a i l buying*

l a Sopts&borj the nour ia to x o f d o lla r «rolmo

o f rural sales prepared by the dspartasnt of Oomaerce ro se sharply
to th© h ig h est le v e ls for th a t month sin ce 1$29*

She gain ancrantod

to 3^ p or cent as compared ^itlx Se^tashsr last year and 60 por cent
as eos&ared w ith Soptsrsbor 1932.*

fh e c lo s e correspondence between

farm incooe and the d o ll ar voltaas of raral s a le s i a town oa th©
upper ch art which eospares f lu c t m t io a s in those series- & sts 1929'

to d a ta.
ffa© rural areas in *hich retail trade ha® increased most rabidly
this year m m indicated oa the loser cliart* sftiicih cor^oaros aggregate
dollar sales b;/ states frost February to. Jxagast with the correspond­
ing* period of If33*

aost heavily shaded area* indicate the

states sliere increases hare been m e t striking.

Ia general the

chart shov?a that purchases of merchandise have increased most in




Reproduced from the Unclassified I Declassified Holdings of the National Archives

%he $ar % m t and im tlmt part of the South which w m least affects

by the drought*

Wren states l a the lieart of the tarn^t area., bowerer,

have shown eoae increase.
Retail tr a d e i a urban area® i s a ls o rmnitig higher than l a s t
y e a r b u t by a smch s m a lle r aam ant.

f m m a© & m olet the sustained

rjovenent of ecmmditiee into consumers’ hand* during reeeat ^souths
i s tli© s tr o n g e s t elem ent i n tl*e c u r r e n t b a s i n e t s p ic tu r e *




R ep rod uced from th e U ncla ssifie d

I D ecla ssified H oldings o f the N ational A rch ive s

of the Economic Adviser
tv the Executive Council




PRODUCTION

October l6 t

produced from the Unclassified I Declassified Holdings of the National Archives

Off e of the Economic Adviser
to the Executive Council




October l6, 1934,

RETAIL TRADE IN RURAL AREAS

FARM INCOME AND RURAL SALES OF GENERAL M ERCHANDISE
Index N um bers — 1929-31 = 100

........ 200

200 -

■175
-150
•125
•100
•75
— 50
125
1929

1111111L1|9.310I^111

' I9 3 l‘

19$^

T34

J ‘ ‘ M ■ 1 ...............

CXtC C.OUNCU

PERCENTAGE INCREASES IN M AIL ORDER AND RURAL CHAIN STORE SALES

R ep rod uced from th e U n cla ssified

I D ecla ssified H oldings o f the N ational A rchives

Th* Economic Adviser to the
Executive Council

October 2, 195*

m om m c situation

Summary*
Business la now at the end of the decline which began In June,
a recession which ran deeper end persisted longer than was generally
expected at that tine.

As compared with May, when operations reached

their peak for the current year, the final figures for August show
a drop of 1 5 psr cent in production in basic industries, of k per
cent in factory ong>loynent and 6 per cent in factory payrolls, notwithstanding an Increase during August in the seasonally active food
and clothing industries sufficient to increase factory employment
by one per cent.

In September the recession was extended further,

with factory employment estimated to have declined by an additional
k per cent*
from a short-time point of view, the initiation of this summer
recession can be attributed largely to conditions in two industries,
textiles and steel, In both of which operations were maintained in
excess of consumer demand during the spring.

The consequent sluqp

was accentuated by the drought which had the effect of delaying the
placement of orders for fall merchandise, by the break in the bond
market, and finally by the strike in the textile industry which
reduced operations sharply over a wide area*
These sane short-time factors now point to some recovery during
the final quarter of the year*




Sustained voltase of retail trade

R ep rod uced from th e U n cla ssified / D ecla ssified H oldings o f the N ational A rch ive s

•2has remained a favorable factor during tho i w r

and in September;

tho textile strike has been settled; tho formerly excessive inventorioo of toxtiloo and stool have been reduced aad otool output lo
again beginning expand, with more ordoro in prospect.
Moreover, prices have moved into clooor adjustment, and
in tho wholesale markets tho major groups of commodities aro more
nearly la balance than at any time since before tho d©prosel on*
7am pricos have moved up in rooont months, whilo industrial pricos
have remained generally stable*
Tho oxtont to which the rewound of activity now beginning
will gonorato a progressive movement toward rooovory depends on
deeper and more far-reaching factors*

In 1929 and preceding years,

our people by and large found employment and income in the produc­
tion, transportation, and marketing of four major groups of comnoditles, first, perishable comaoditles for general consumers— com­
modities such as food and clothing which are continuously in demand
and are required in the immediate process of living; second, con­
sumers1 conoodlties of a more durable character such as automobiles,
radios, electric appliances and homes*

These are products which

require relatively large expenditure per unit and are frequently
financed on credit* They are a symbol of our productivity, the
expression whieh it has taken in our standard of living.

The

third and fourth major industrial groups also employ large numbers
of people but touch the consumer less directly, being concerned




R ep rod uced from th e U ncla ssifie d

I D ecla ssified H oldings o f the N ational A rch ive s

-3with the maintenance aad expansion of our plant Mid equipment.
By 19 3 2 * our economy had eunk almost to * subsistence
level, vlth the major souroes of employment outeide tha public
servieea aad professions confined to tha production, traaeporta*
tioa and merchandising of perishable commodities.

We continued

to use conmoditiee of a more durable character aueh aa automobiles,
electric appliances aad radios, but we vara aot renewing than.
7<e coatiimad to lira in houses, but they wara houses built prior
to 1929.

Ia other worda, our actual standard of consm^ption was

higher than our output f aad wa ware living aa a aatioa in large part
on our capital*

It ia thia element of demand which has expanded

most sharply since that time*

Outaida of houeing there ia every

Indication that tha ultimate consumer haa confidence aad is spending
his income freely, on automobilea and vacationa as wall aa on food
and clothes*
subsiding*

fharo ia no evideaca, furthermore, that thia demand ia
Hotwi ths tanding tha expansion ia automebtle output during

the past fifteen monthe wa ara probably producing new oara at a rata
somewhat leas than that at which old onaa ara wearing out.

These

renewed elements of demand can, than, ba expected to peraist*

It

la difficult to meaaure even approximately their relative iaiportanee
but they have probably been the major factor la raiaing our average
level of factory output and employment from arouad (ft per cant of
its 1923-1925 average in 1932 to nearly SO per cant for tha currant
year*




A continuing advance from these average levaIs will depend,
first* oa a revival of housing activity, second, on a widespread re­
sumption of plant maintenance and purchase of equipment of all kinds,
and, finally, on a renewed expansion of our productive facilities.
This last cannot ha looked for until we are fairly wall out of tha
depression, until tha level of business activity has risan to a point
whara it indicates tha tine and direction in which additional
facilities ara required.
For tha immediate future*—say, the cosine year— therefore* we
are dependent for further advance largely on the success of the hous­
ing program which is now getting under way, and on the extent to
which industry copies what the consumer has done during the past
year in again undertaking to maintain and renew its capital equip­
ment,
fhe factors which determine the rate aad scope of activity of
this kind present peculiar analytical difficulties.

They depend

to a large extent upon intan&ifele considerations— considerations power­
ful enough to move business sen of all types to change from a policy
of caution in which every effort is made to conserve a liquid cash
position to a policy akin to advance planning.

There are certain

definite conditions, however, under which this transition takes
placa and certain signs that forecast their coming.
Most important of these is the actual current rate of industrial
and business activity.




The mere existence of obsolescence and de~

*5*
terioration determines th* need for replacements, but actual dis­
bursements ara usually deferred until the prospect ef immediate use
is at hand.

In most Industries there is sufficient equipment in

good condition to handle a moderate volume of orders efficiently.
It is not until orders increase to levels which necessitate the use
of less efficient equipment that the signal is given for the invest­
ment of depreciation reserves*

Then the mounting level of operating

costs of itself call* attention to the need for replacement and
constitutes an almost automatic source of demand for the products of
industries dependent on replacement needs*

Thus these industries quick*'

ened last spring with the increase in general business and subsided
when that business volume declined.

*t is difficult to determine at

just what level of general activity demand for equipment will become
an important independent factor capable of sustaining business*
Probably, however, we were near that level this spring*

With other

factors remaining favorable, a level of activity somewhat higher than
that which prevailed during the second quarter and lasting moderately
longer would be sufficient to turn th* hog* current need for main­
tenance and equipment into an active souro* of demand of Important
dimensions*
•ie will be able to trace the recurrence of this demand during
the autumn in the behaviour of the financial markets*

fhe replace­

ment of equipment does not require the iseu* of new securities
since it is not charged to capital account but to reserves pre­
viously set aside for depreciation and obsolescence.




It must,

however, be paid for, and ia affeoted directly by current cash
balance*

than credit is strained or Maturities art pending, re­

placement is deferred.

She ease with which commercial funds nay

be borrowed or maturing securities refunded, therefore, has an
important bearing on the amount of replacement business which aay
come out.

Daring recent weeks, the bond market has been unfavorable

to refondlng issues, but commercial loans have shown a marked increase.
It is isqpossible to tell as yet how significant this expansion is,
since some growth in commercial loans is customary at this season
aad a larger expansion than usual would be expected to result this
year from the higher level of prices for far* products.

The

development may, however, prove a significant factor in the autumn
business picture, especially if it is accompanied by renewed
strength in the bond market and an increase in refunding activity.







WHOLESALE PRICES

This chart shows indexes of average wholesale prices
for ten groups of commodities, ranged above and be­
low the index for all wholesale prices, ^he commod­
ity groups are farm products, foods, textiles, build­
ing materials, etc. The figures are related to the
average prices for 1923-29*
The different groups did not vary widely from the
average during the years 1923 to 1929, but the range
widened greatly during the depression, as indicated
by the wide spread between the indexes in 1932 and
1933. Recently the movements of prices in the dif­
ferent groups have brought them more nearly into a
balance like that of earlier years.

CONFIDENTIAL

THE COTTON TEXTILE INDUSTRY
Unit: M i ll i o n s of Yards

1933

1934

EXEC.COUNCIL




Production of cotton cloth exceeded shipments during nearly
every month from August, 1933, until August, 1934. Stocks, which
normally represent a little more than one month's output, conse­
quently rose to twice that amount by the end of July.* At the end
of September, when the strike was over, stocks aad been reduced,
and some expansion of output may now be expected.
Note:

All September figures estimated.

C O N FID EN TIA L

THE COTTON TEXTILE INDUSTRY
Unit: M i ll i o n s of Yards

1200

1200
/
ri
i
i
i

1000

800

-

i
ii

r
'
//
/

1

^
' N

/
^

i

\ U n f i 1led Orders
\
\\
\
\
\
\
\
\
\
\
\ ^ //
/

1000

__

/

\\
\ \

600

,

"

800

Stocks

/

400

400

^

200

200

0

1 1 1
S 0

i--- _i------- 1
------ 1
------ 1
— i
i
i
F M A M J J
N D J
1933
1934

A

i
i
i
i
A S O M

EX EX. C O U N C IL

Production of cotton cloth exceeded shipments during nearly
every month from August, 1933, until August, 1934. Stocks, which
normally represent a little mo^e than one month's output, conse­
quently rose to twice that amount by the end of July. At the end
of September, when the strike was over, stocks nad been reduced,
and some expansion of output may now be expected.
Note:




All September figures estimated.

i 0
D

AUTOMOBILE ABD S T ^ L IHGOT PBODUCTIOH
A U TO M O B ILE

PRO D UC TIO N - U .S .

In T housands of U n its

400-

^ —

i __ •

i

!

•

— 400

Automobile output has dropped off a little more than seasonally since May, following the most active spring season in several
years. Demand has held tip well, so that dealers* stocks are now
reduced to moderate totalB, after being high in April and May. A
further decrease in output may be anticipated in October, while
model changes are being made, but production will probably expand
again in December. Employment and payrolls will decline lest than
production*

E S T IM A T E D S T E E L P L A N T O P ER A TIO N S
In Per Cent of Capacity

Steel ingot production has advanced since the beginning of
September and i s estim ated for the current week at 25 P«r cent of
capacity. Stocks are low again a fter three months o f small oper­
a tio n s, but new orders have been delayed in the hope that p rices
would be reduced. With larger requirements in prospect for auto­
m obiles, PWA p rojects and farm machinery, i t is expected that de­
mand w ill pick up in October*



Office of Economic Advisor to tho
executive Council

August 21, 193*

2CQK0MIC SITUATION

Summary.

There has been little change in the business situation during
the past few weeks, except in those industries directly affected
by the drought.

Industrial activity in general continues near the

low levels reached in July and autumn expansion will probably not
begin in any volume until some time after Labor Day.

Retail trade,

however, has been relatively well maintained, especially in the South
and along the Pacific Coast, although sales have been slower in the
drought areas.

Since farm income for the country as a whole will

be larger this year than last, aggregate volume of rural sales may
be expected to increase in the autumn.
The stock market has reflected the dullness of the business
situation in a period of slow trading, although prices have made
some recovery during the past two weeks from their sharp declines
in late July.

Pricej..
In wholesale coitsnodity markets, activity has continued to cen­
ter in farm products and foods affected by the drought.

Prices of

farm products have advanced by 12 per cent since the latter part of
Stay, while, except for foods, other prices have weakened somewhat.




2 -

Accompanying this rapid advance in wholesale prices, there has been
a more moderate rise in the cost of food at retail*

The Bureau of

Labor otatistics retail food price index showed an increase of about
2 per cent from the end of Mtayr to the end of July, while wholesale
prices of foods were advancing 7 per cent.

Although retail food

prices are already 20 per cent above their low point for the depres­

sion they are still well below the levels to which they had declined
by the end of 1 9 3 1 .




PRICES OF FOOD AT R E T A IL
1913 = 100

fhe lag of r e ta il behind wholesale pricee has ordinarily been
suoh as to indicate that a further ris e ia cost to the consuaer is
in prospect*

Substantial advances are to be expected for pork prod*

u cts, eggs and dairy products, and la te r , for beef.

They w ill be

spreid over several sontha, and the fu ll effect of present conditions
w ill probably not be realised u n til la te winter*

However, wholesale

price i f only one element in the r e ta il cost of food, and consequently
the rise in r e ta il prices w ill be less marked*
Production*
In Industry, acre complete reports for July indicate a sharp
drop la segregate output of basic products to a level more than 10
per cant below the peak reached in May* Although many industries




M-

shared to

so me

extent in this decline, the recession

mainly in iron and steel.

was

concentrated

Stocks accumlated "by steel consumers in

the second quarter were larger than was generally realized, and de­
mand for steel products has not yet revived. With the completion
of orders for railroad steelA operations declined last week to 23
per cent of capacity end are forecast for the current week at about
the same rate.
In the principal non-durable goods industries, where the summer
recession came earlier than in steel, changes in activity during July
were largely seasonal.

Output in the textile industries is still

small. Most active at present are the food-processing industries,
especially meat-packing and fruit and vegetable canning*

In consequence of diminished industrial activity and smaller
demand for agricultural labor, employment in private industry was
reduced by nearly half a million during July.

The Secretary of Labor

reports a decline of 3 per cent in factory employment, more than is
usual at this time of year.
The emergency agencies of the Federal Government, however,
employed more men during July.

The Civilian Conservation Corps again

brought enrollment up to Its full strength, and PWA contractors added
to their payrolls.

PWA activities continued to expand until early

August, and are now beginning to level off as the seasonal peak is
reached.




-5-

The rate of business failures has continued te decline in recent
weeks, end, according to the special report prepared by Don A Bradstreet, insolvencies in July were not only far less numerous than
last year, "but were at the lewest level since 1920 .




CONFIDENTIAL

EMPLOYMENT AND UNEMPLOYMENT IN THE U.S.
Millions of Workers

55 ii 1 1 1 1 1 1 1 1 1 1 iii i n 'T 1 11111 hi 1111 m 111 mi 1 1 1 1 1 1 1 1 1 1 im 1 1 1 1 1 1 1 111 ii 55

50

45

40

-35

30

25

20
15

10

1930

1932
LATEST

EXEC.COUNCIL




1933
DATE: JULY

I5TH

■111 i 0

1934
SOURCE:

a . f. o r l .
U .S .B .L.S .
U.S. DEPT AGRI.




Tiw Economic Advisor to the
Executive Council

August 7. 1931*

BCOIOUIC 5ITUATI0K

According to present indications, business Activity may be
expected to remain at its current lower level throughout the re­
mainder of August*

The recession, which developed at the end of

June, has been most severe in the iron and steel industry, but
has also been marked in the cotton textile, tin plate and tire
industries, in all of which Inventories had accumulated during the
spring*

As a consequence, factory output, payrolls and employment

have dropped by considerably more than the usual seasonal amount
during the past five weeks, and freight movements have also declined
to some extent*

On the other hand, retail sales have remained

fairly constant in dollar volume except for purely seasonal changes
or changes directly affected by drought conditions, and electric
power consuaqption has continued to rise, largely in response to
increased domestic demands.
Consaodity prices as a whole, after reaching new highs since
1 9 3 1 » have shown little further change in recent weeks, strength

in prices of cotton, grains and cereal products being offset by
corresponding declines in livestock, hides, and certain other com­
modities.

In the security markets, a sharp break in common stocks,

especially railroad stocks, has carried the general averages back
to the low levels of last autumn*
but remain at high levels.




Bonds have also receded somewhat

In *11 probability, the first eigns of autunm revival would
now be making their appearance were it not for two new factors
which have entered the situation during the past month, namely,
a much further extension of the drought, and the renewed tension
abroad.

It le still too early to foretell what the ultimate ef­

fect of these developments may be upon the general business situa­
tion, but it Is clear that they are acting at present to retard the
normal pick-up in autiaam orders.

In this country, for example,

the drought is bringing about a radical shift in the consuming abil­
ity of agricultural regions.

In the drought areas themselves, the

reduction in farm income to subsistence levels will continue to act
as a depreesant on business activity for some time.

Ultimately,

this reduction will tend to be counterbalanced in part at least
by increased agricultural income outside the drought areas where
farmers will have greater purchasing power because of the rising
prices of farm products.

It may also be reflected ultimately in in­

creased exporte of automobiles and agricultural implements to pre­
dominantly agricultural communities outside this country in which
farm purchasing power is also being raised by the higher level of
farm prices.

These counteracting effects, however, will not make

themselves felt until later in the year, and they will not affect
the present tendency of the drought to retard the fall recovery.
1 ^ ,1 ? M l s l t
She demand for public relief has remained heavy during the past
year in spite of the marked revival in wage-earners1 employment and




-3-

income.

Daring the year ending May 1931**

latest month for which

reasonably complete figures are available, total employment both
public and private expanded by around 3*600,000 workers.

The bur­

den of public relief decreased during this same period but by a much
smaller amount.

In hay 193*** there were still 3*750,000 families

on public relief or receiving income through Emergency Work Program,
a decrease of only 500,000 families or 13 p«r cent from a year earli­
er.
The individuals making up this total, however, were not iden­
tical but showed a fairly rapid turnover from month to month as de­
mands for relief varied in different areas.

Between February and

May, for example, a period when total demands for relief increased,
more than 2,^00,000 individual cases were dropped from the rolls.
An analysis of relief and eo^loyment figures by states indi­
cates the main causes for the small drop in the amount of public re­
lief.

Taking the forty-nine governmental unite, comprising the

forty-eight states and the District of Columbia separately, it ap­
pears that the trend of relief has not been uniform but has varied
enormously in different localities.

There were only four states

(Connecticut, Illinois, Tennessee, and Vermont) where the number of
families on relief in May changed by 10 per cent or less as compared
with May ef last year.

Of the reruaining *+5 governmental units, the

number of families on relief decreased by about 28 per cent in the
aggregate in the case of 29.




In the remaining l6 governmental units,

on the o th e r hand, th e burden o f r e l i e f in c re a s e d in th e a g g re g a te
by a b o u t 32 p e r cent.

The f a i l u r e o f th e t o t a l number o f f a m ilie s

on r e l i e f to d e c re a se more r a p id ly , th e r e f o r e , r e f l e c t s p r im a r ily
c o n d itio n * w ith in th e s e s ix te e n a r e a s .
Two f a c t o r s , in tn e m ain, ap p ea r to acco u n t f o r th e in c re a s e
in r e l i e f in th e s e s t a t e s ; f i r s t , th e d ro u g h t, and second, th e more
a d eq u a te o r g a n is a tio n o f r e l i e f a c t i v i t i e s u n d er th e J'XSUL*

The

f i r s t p o in t i a In d ic a te d by th e f a c t th a t s e v e ra l o f th e s e s t a t e s
a r e lo c a te d i n th e d ro u g h t a r e a , and th e second by th e f a c t th a t
r e l i e f in n e a r ly a l l o f th e s e s t a t e s was in a d e q u a te ly o rg a n iz ed
l a s t y e a r and th e p e rc e n ta g e o f f a m ilie s on p u b lic r e l i e f i n iaost o f
the® was below th e n a tio n a l a v e ra g e .

Improved s ta n d a rd s o f r e l i e f

have b ro u g h t on th e r o l l s many f a m ilie s who were fo rm erly s tr u g g lin g
a lo n g on an i n s u f f i c i e n t s u b s is te n c e b a s is *
‘These f a c t o r s a p p ea r to have had more im m ediate in flu e n c e on
r e l i e f demands in th e s e a r e a s th a n th e r e v iv a l in employment.

In

th e i n d u s t r i a l s t a t e s in which r e l i e f demands d e c lin e d r a p id ly ,
f a c to r y employment in c re a s e d by * 0 p e r c e n t.

In th e e a s te r n in d u s­

t r i a l a r e a s , on th e o th e r hand, where demands f o r r e l i e f in c re a s e d ,
th e p ic k -u p i n fa c to r y employment, w hile somewhat s m a lle r , s t i l l
amounted to




27 p o r

c en t*