Full text of Basic Business News : June 23, 1959 to June 29, 1959

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·• Published Weekly by the FEDERAL RESERVE BANK of CLEVELAND
June 23, 1959
to
June 29, 1959

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GOVERNMENT SEEKS
STRIKE SE:rrLEMENT

Steel labor and management negotiators can expect
the Government to continue seeking settlement of
their contract dispute. Top Administration officials made this plain as both sides accepted President Eisenhower's
proposal for extension of present labor contracts, expiring at midnight June 30. Vice President Nixon and Labor Secretary Mitchell
were disclosed as having been in frequent contact with David J.
McDonald, Steelworkers' chief, and Roger M. Blough, U.S. Steel chairman. And this procedure "will continue" until an agreement is reached,
Administration spoke£men emphasized. (Wall St. J., 6/29 p.1)
CONSTRUCTION AT
OVER MAY 1958

Continued construction gains in housing and in industrial and commercial structures increased the
volume o:f building contracts throughout the country in May to $3,541,858,000. This was a rise of 4i over the volume
for May 1958, according to the F .W. Dodge Corporation . The report
says that so far in 1959 housing has been the chief source of strength
in the construction industry. (N.Y. Times, 6/26 p.39)

4i

MACillNE TOOL ORDERS
DOWN; SHIPMENTS OFF

New orders for machine tools last month
slipped lCJI, from the April level, largely as
a result of reduced bookings from overseas
customers. New business in May nevertheless topped the like month of
1958 by 11i, the National Machine Tool Builders' Association reported.
Shipments of completed machines also slipped last month. Generally
it takes six months or more to construct this complicated and frequently custom-built equipment, so the current shipment pace still reflects
the slow ordering activity of late last year. Shipments in May totaled $41,250,000, off f!ff,, from April. But there are signs the shipment trend soon will be reversed. (Wall St. J., 6/24 p.5)
·
Selection of tlaese items does not imply this bank's guaranty of their accuracy,


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nor agreement with the views el(pressed .

TREASURY TO BORROW
$5 BILLION IN CASH

The Treasury announced plans (June 25)to borrow
$5 billion of cash by selling two issues of
short-term securities on an auction basis in
early July. The borrowing will consist of $3 billion of March tax
anticipation bills and $2 billion of one-year bills maturing July 15,
1960. Interest rates on both will be determined by the bidding of
prospective investors. The decision to borrow $5 billion _in July,
instead of' the $4 billion that had been indicated, was a matter of'
playing safe, officials said. It was not caused by any change in the
budgetary outlook, they continued, but by a desire not to have to
borrow again before August. (Mooney. N.Y. Times, 6/26 p.31)

SENATE APPROVES BILL
TO INCREASE DEBT CEILING

The Senate passed and sent to the White
House a bill to increase the Federal debt
ceiling to $295 billion through June 30,
1960. It would raise the permanent ceiling from the present $283 bil•
lion, and increase the temporary ceiling to the $295 billion level
for the coming fiscal year. Secretary Anderson .told the Finance Committee he would accept the House bill even though its passage will
mean that the Treasury shall be operating under a very narrow margin
on June 30, 1960, unless there is a substantial. budget surplus next
year. (Wall St. J., 6/26 p.2)
AGENCIES HIKE INrEREST

While Congress hesitates to permit the Treasury to pa:y more than 4-1/41, on its long-term
bonds, other Government agencies are announcing increases. Home Loan
Banks across the nation have announced regional increases in interest
rates for advances to member institutions ranging from highs of 4-3/41,
in New York and San Francisco for long-term loans to 3-1/'4, in Indianapolis. The Department of Agriculture alao announced an increase in
Commodity Credit Corporation certificates issued to banks participating in the financing of 1959 crop price support loans to 3-l/4S, effective July 1. The 1958 crop price support loan rate is 2-3/41,.
There are, too, requests reaching the Federal Reserve Board urging
that the present ceiling of 3'/o. on savings be raised. Suggestions
are from 3'fo to 3-1/41, and 3-1/2',,. (Amer. Bkr., 6/25 p.1)
U.S. GOLD STOCK
AT 19-YE.AR LOW

The nation's gold stock fell below $20 billion in
the week ended last Wednesday for the first time
since June 26, 194o, the Federal Reserve Bank of
New York has reported. Gold holdings dropped to $19.8 billion. Of
the decline, $343,750,000 represented payment by the United States
to fulfill its increased gold subscription to the International
Monetary Fund. (N.Y. Times, 6/26 p.31)
.


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WHEAT-TOBACCO MEASURES

.President Eisenhower vetoed two -Democratic
farm bills aimed at .easing ·the nation's
difficulties with wheat and tobacco, asserting that neither measure solves the problem. The veto presumably
kills chances of further Congressional action this session on wheat.
The compromise measure was pulled through the legislative process .with
difficulty, and finally passed with the frank expe<:tation among sponsors that it would be rejected by the White llouse • .Supporters .are not
expected to have enough strength .to override the veto of either bill,
and it is possible they will not even try. (Wall St. J., 6/26 p.4)

Vfil'OED BY THE PRESIDENI'

u.s.

American .companies are shifting their new overseas
investments toward Europe and, in particular, the
common market area .of France, Germany, Italy, Holland, Belgium and Luxembourg. The trend was reported in a .survey by
the Department of Commerce of U.S. payments with :foreign countries.
in the first quarter of .the year. "Direct inveatments"--a category
consisting largely of f\mda put into factories abroad-•8Jll0unted to
$240 million in the first three months .of the ye~, up $90 million from the same period of 1958. The Agency also reported a sharp in·c rease in Americans' investments in the stock. of European companies.
(J. of Comm., 6/24 p.1)
CAPITAL

FLOWS TO EUROPE

u.s. MAINTAINS
DEHI'OR STATUS

The deficit in this country's international balance
of peyments remained . large in the first quarter of
this year, the Department of Connnerce reported.
Rising interest rates in this country had the classic effect. They
attracted funds, thus tending to reduce the payments' deficit. But
the excess of exports over imports narrowed. The net result was a
payments deficit of about the same size as in the final quarter of
last year. Payments out of the United States exceeded payments into
the United States by $864 million, which was equivalent to a rate of
$3.7 billion a year. Last year's deficit was $3.4 billion, of which
about $2.3 billion was paid in ,old~-the much publicized outflow.
(Mooney. N.Y. Times, 6724 p.39)
SOCIAL SECURITY FUND
TO SHOW DEFICIT

The Administration told Congress the Social
Security :fund will run $87 million in the red
--its third deficit in a row-in the fiscal
year starting July 1. But that deficit, the smallest of' the three,
will be the last one in the foreseeable future. The 19-year-old fund
ran its first deficit--$216 million--in fiscal 1958, which ended last
June 30. In the fiscal year ending June 30, 1959, the f'und is expected to run $1,242,000,000 1n the red. (Wall St. J., 6/23 p.8)


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PE.rROLEUM PRICES OFF
DESPITE HIGH DEMAND

Petroleum product prices are declining on the
eve o:f what should be the high demand period
:for the year. Midcontinent refiners trimmed
as much as one-half cent a gallon off bulk prices on gasoline for
northern shipment. And, on the gulf coast, petroleum processors lopped
three-eighths of a cent a gallon off their cargo quotations for kerosene, home heating oils and diesel fuel. In several cases, products
are being sold at prices under the depressed postings of a year ago.
Marketers say the downtrend--unusual :for this time of year as the industry heads into the peak motoring season--stems from continued high
refinery runs and a glut of products. (Tanner. Wall St. J., 6/23 p.5)
COPPER PRICE

American custom smelters cut their refined copper
price another half cent a pound to 30-1/2 cents, the
second such cut in as many days and the third decrease
o:f that a.mount in a week and a half. The smelter price is thus a
full cent below the 31-1/2-cent-a-pound quotation of large U.S. mine
producers, whose price since Wednesday has been the highest in the
world. Smelters continued to cite slack demand :for their metal as
the reason for the reduction. (Wall St. J., 6/26 p.5)

CtJr 1/2 CENT

ASPHALT ROOFING
PRICES REDUCED

Asphalt roofing makers across the nation cut their
prices by 6'/o to 151>. The move came at a time when
demand from home builders, the biggest market for
the roofing, is the highest in several years. Many manufacturers
blamed the price reductions on competitive ~ressures, saying there
are "too many producers in the business." lWall St. J., 6/25 p.1)

SHOE PRODUCTION
AT RECORD PACE

The shoe industry continues to pour out :footwear
at the fastest pace in its history. Production
~igu.res are topping the highest trade estimates
and, barring unforeseen. developments, industry leaders say it is no
longer a question o:f reaching the 600 million-pair level :for the
first time in 1959, but how much in excess of this :figure output will
run. Supporting the high rate of production has been surprisingly
good retail sales. Instead of building up inventories, as many in
the trade had expected, the flow of shoes into consumers' hands has
kept inventories at normal, or perhaps even subnormal levels. The
New England shoe industry this year is accounting for 35~ of the
total output. (Wall St. J., . 6/29 p.26)
SEAWAY PRODUCES
5<:1/o RISE IN CARGO

Cargo carried through the St. Lawrence Seaway
in the first full month of operation totaled .
2,243,450 tons. The increase in cargo was
7¼1,360 tons, representing a gain of 49.3~ over May traffic last year
when the 14-foot canal. system was still in operation. The sharpest
rate o:f increase was in upbound traffic, which totaled 785,200 tons
compared with 457,593 tons. (N.Y. Times, 6/23 p.54)

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