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- . -- - - - - ; ; . . o Published Weekly by the FEDERAL RES ERVE BAN Kof CLEVELAND
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February 25, 1957
February 19, 1957
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COST OF LIVING
RISES AGAIN
Living costs hit a new record high in January for
the fifth straight month, the Bureau of Labor Statistics has reported. It said the trend still points
upward. The index of consumer prices climbed 0.2{o from December to
January, to 118.2{o of the 1947-49 average. The January living cost
level is 3.1% higher than a year earlier. Factory workers' earnings
also reached record levels for a January. The latest cost of living
increase means 1.4 million workers will get a penny-an-hour increase
under automatic inflation-adjusted labor contracts. (N. Y. Herald
Trib., 2/22 II p.7)
Ward's Automotive Reports has announced that the
automobile industry would produce an estimated
578,370 cars this month, compared with 555,596
in February last year. It added that March output was being scheduled at the same daily rate as for February. The agency termed Chevrolet's reduced output this week as a "month-end adjustment" . Passenger car production in United States plants so far this year amounts
to 1,101,168 units, compared with 1,086,346 in the similar 1956
period. (N. Y. Times, 2/23 p.24)
AUTOMOBILE OUTPUT
RISING TEIS MONTH
It is not time yet to ease the central banking brakes
that are restraining the use of money and credit,
sources close to the Federal Reserve System believe .
Central banking authorities are still convinced that the economy is
strong despite some soft spots. Though the loss of steam is shown in
a number of directions, for example housing , there is still enough
pressure to maintain a high degree of business momentum. Signs of
retrogression are as yet too weak to call for easier money. To adm i ni ster it prematurely, it is felt , might only rejuvenate inflationary
forces . ( J . of Comm ., 2/20 p . l )
FRS ST ILL WARY
OF EASY MONEY
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Se lec tion of the se ite ms does not im p ly this ba nk' s gu ara nty of their a ccura cy,
nor ag ree ment with the views expressed .
ECONOMIC UNITY OF
EUROPE ADVANCES
What may prove to be the greatest step so far
toward the economic and, eventually, the political union of Europe has been taken in Paris.
The heads of the Governments of France, West Germany, Italy, Belgium,
the Netherlands, and Luxembourg agreed on the basic provisions of two
treaties tending to merge their economies. One would pool their nuclear resources under a European Atomic Energy Commission not unlike
that of the United States. The other would introduce gradually, over
a period of 12 to 17 years, a single or common market without tariffs
or other barriers covering both the European and the overseas territories of the six nations. They already are joined in a common market for two basic commodities in the European Coal and Steel Community .
Their leaders expe ct that the treaties to broaden this economic union
will be s igned in Rome in March. (Callender. N. Y. Times, 2/21 p.1)
The outstanding number of shares sold short on
the New York Stock Exchange in anticipation of
lower prices jumped 576,946 shares between January 1 ) , and February 15--the largest increase in one month since June
1933. The short interest refers to the number of shares "sold short".
The short interest on February 15, was the largest since September 15,
1955. The February 15 short position represented 0.1% of the total
shares listed on the exchange. (Wall St. J., 2/21 p.9)
SHOR'r INTEREST
HIGHEST SINCE 1933
Checkbook spending had its first three-trillion-dollar
year in the U.S. in 1956, surpassing by more than $200
billion the previous all-time high of $2.9 trillion es timated for 1955. At least nine billion checks, possibly ten billion,
were drawn on and paid by the nation's 14,000 banks in handling this
colossal total of transactions, it is estimated. Attainment of the
three-trillion level is indicated by the fact that during 1956, total
check debits to individual and corporate bank accounts in the U.S.,
as compiled monthly for 344 cities by the Federal Reserve Board, aggregated $2.2 trillion for the 12-month period, a gain of 7.&{o above
1955, and a new all-time high. According to official estimates, the
check debit figures for the 344 cities represent about 7afo of total
checks drawn by all depositors in all banks in the U.S. (Amer.
Banker, 2/19 p.1)
CHECKS TOP
$3 TRILLION
MACHINE TOOL
ORDERS INCREASE
Machine tool makers' new orders in January increased
about lo% from December, though continuing to lag
far behind the huge inflow a year earlier. Tool
manufacturers generally expect incoming business to hold around the
January level, but doubt that 1957 orders will come up to last year's
near-record volume. Shipments, on the other hand, may continue the
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rising trend of recent months as builders work off big backlogs acquired during the ordering spree that started in the fall of 1955.
(Wall St. J., 2/25 p.1)
HOUSE VOTES MORE
HOUSING CREDIT
The House has voted to make more housing credit
available through the Federal National Mortgage Association. The "stop-gap" bill was passed to increase by $500 million the amount the agency can borrow from the
Treasury and the public to carry on its mort gage-buying activities.
A Senate Banking subcommittee has reported out a similar bill. Fannie
Mae officials had asked for a $1 billion i n crease in the Association's
borrowing authority, but lawmakers decided to give it $500 million
more to tide it over the rest of the current fiscal year. (Wall St.
J., 2/21, p.3)
The Senate Banking Committee voted to make $500
million available to the Federal National Mortgage Association to
keep buying Government-backed home mortgage s from private lenders.
(Wall St. J., 2/25 p.4)
The House Veterans Committee rejected the Administration's r equest for a 5% interest rate on GI mort·gages and approved instead an increase in the Government's program of direct lending for veterans' housing. Under the approved bill , home builders will be able to obtain construction funds
as well as placement of mortgages directly f rom the Veterans Administration. The direct lending program will continue to be confined to
areas remote from major financial centers. 'Maximum face value of
mortgages to be purchased under the direct lend ing program was set at
$12,500 instead of the present $10,000. (J. of Comm., 2/19 p.1)
RISE IN DIRECT
GI LOANS ASKED
EXCISE TAX
CUT UNLIKELY
The House Ways and Means Committee ruled out any major
excise tax rate change in a pending bill on technical
provisions of the excise laws. Some members believe
this, in effect, ruled out action this year on excise tax cuts. (Wall
St. J., 2/20 p.3)
WESTERN ELECTRIC PLANS
$50 MILLION FACTORY
Plans for a $50 million factory of the Western Electric Company have been outlined to
100 Columbus, Ohio , bus ines s leaders . Loca tion of the plant in Columbus depends on re zoning and other problems.
If they are solved, ground will be broken i n May with init ial occupancy early in 1959. The plant's production of telephone equipment
for the Bell System eventually would employ 4000 with an annual payroll of more than $16 million. (Ohio State J., 2/20 p.1)
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SMELTERS CUT
COPPER PRICE
Custom smelters reduced their price for copper another
cent to 31 Gents a pound. This is the lowest price
since January 27, 1955, when the quotation rose from
30 to 33 cents. The further cut in the custom smelter field put additional pressure on the 32-cent price for copper recently established
by major U.S. producers . (Wall St. J ., 2/21 p.1)
Copper consumers await a test of whether the domestic
price of the metal, now quoted at 31 cents a pound by custom smelters
and 32 cents by major producers, will stabilize around present levels,
or drop below 30 cents. Trade interests say much depends on whether
the supply-demand relationship is corrected through production cutbacks now being given serious study by big mining concerns. One important copper source estimated a world-wide cut of 24,ooo tons a
month--about loc1,--would do the job. (Wall St. J., 2/25 p.1)
The nation's gasoline stocks crossed the 200 million barrel mark for the first time on February 15.
At that time, motor fuel in storage amounted to
202,254,000 barrels, compared with 199,895,000 barrels the preceding
week. The year ago total was 189,428,000 barrels. (Wall St. J.,
2/21 p.16)
GASOLINE STOCKS
AT RECORD HIGH
The bargain prices housewives are paying for
eggs and poultry will continue for most of 1957- perhaps into 1958. That's the consensus of many
of the poultry men at the lnstitute of American Poultry Industries'
fact-finding conference. The reason is not lack of demand. It is
because the poultry industry has overproduced and is true more of
broiler production than egg output. Since 1950, broiler slaughter had
doubled to 1.3 billion birds last year. The 1956 output was 22/o
above 1955's 1.078 billion birds and in 1957, broiler men anticipate
another loc1, growth in production. (Wall St ·. J., 2/19 p. 2D)
EGG, POULTRY OUTPUT
CONTINUES RISE
Organized labor is about to unleash a one-two
punch on behalf of more wage-hour protection
for workers. Some success looks likely. This
year union men will concentrate on getting Congress to extend to some
10 million more workers the law that calls for a $1 an hour minimum
wage and extra pay after 40 hour's work a week. Wi~h the expected
help of the Eisenhower Administration's first specific proposals for
wider coverage, the unions probably will win at least part of what
they want. Then labor will push next year for a boost in the wage
floor to $1.25 an hour. (Grimes & Otten. Wall St. J., 2/21 p.1)
UNIONS OPEN DRIVE
TO BOOST MINIMUM PAY
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