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,,.us•d Weekly ., the FEDERAL RESERVE BANK of CLEVELAND
September
29, 1959
to
October
5, 1959
The Treasury set a 5'/o interest rate on a new borrowing today for the first t 1me since 192<). It
did so in order to assure the sale o:f $2 billion
of' notes dne in f'our years and ten months. A note of this duration
was ottered because the Treasury felt strongly that it had to break
:free of the recent practice of selling very short-term issues almost
exclusively. In a drive to obtain subscriptions :from individuals
and other small. investors--vho do not usually take part in Treasury
financing operations--the Treasury guaranteed that subscript ions up
to $25,000 wou1d be allotted in full if the subscriber would pay in
cash. As part of the same :financing operation, the Treasury o:f:fered
$2 billion in tax anticipation bills due next June. These will be
so1d at auction. Of':ficial.s said the Treasury would raise another
$2 billion to $3 billion in late November and · would raise additional
funds, the amount of which was unspeci:fied, in January. (Dale, Jr.
B.Y. Times, 10/2 p.1}
TREASURY TO PAY
5'/, 1'0R m.v LOAN
The steelworkers' 33-ma.n executive committee, at a
meeting in Pittsburgh late yesterday, is believed to
have rejected the :first cash of:fer made by the Big 12
steel producers since the steel strike began 83 days ago. The sticking point seemed to be that the proposal was tied to industry's denmds for greater freedom to change working rules. The union's
171--:member Wage Policy Committee will vote on the o:f:fer today. But
it rarely, if' ever., :fai.Ls to follow the executive board's lead.
With the stalemate continuing in contract negotiations, the dispute
moved toward a Tart-Hartley injunction, which President Eisenhower
bas warned he v111 seek unless a settlement is reached by Thursday.
STEEL OFFER
REJEC'.l'ED
(Vall st.
J.,
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Federal Reserve Bank of St. Louis
10/5 -p.l)
Selection of these items does not imply this bank's guaranty of their a.ccuracy,
nor agreement with the views expressed.
The mmiber or workers on strike or made idle by
strikes is estimated to have passed 1 million.
Official. figures were 1acking, but reliable
sources said that a surprise walkout of' 85,000 dockworkers in East
and Gulf' Coast ports had sent the 111Bnpower loss past the mill ion mark
by a conservative count. Major strikes were under way in the, steel,
meat-packing, ship repair, gl.ass and nonferrous ~ta1 industries.
About 500,000 workers are idle in the basic steel industry, as veil
as 200,000 in industries dependent on steel. (B.Y. Times, 10/2 p.21)
A MILLION ARE IDLE
THROUGH S1'RIKES
EXPERl.1S WEIGH
S'l'RIKE'S EFFECT
.If' the striking steelworkers go back to their jobs
_within the next week or so, the strike's e:f:fects
on the over-all. ecollOIV will be slight and largely
:forgotten six months f'rom now. otherwise, ecoDOJllic dislocations
will multiply rapidly. ~ s was the consensus of' several leading
economists asked last week to sit back and take a 1ong view o:f the
strike~ s impact on the nation as a .whole. Their apprfP.sals dif':fered
in important details, but most agreed that the effects .o:f the eightyone-day strike could be likened to those of' a major hurricane: the
people and the companies directly involved have been hit hard and it
will be months bef'ore the damage is repaired--but the economy has
the vitality to take the repairs in stride af'ter a temporary surge
o:f inflation caused by stee1 shortages. (Ryan. B.Y. Times, 10/4 III
p.1)
With the possible exception of' the United
States, where the DDnetary measures to combat·
the 1957-58 recession produced an increase in
liquidity, "in all likelihood, world inflation is over," Per Jacobsson, rnanagtng director of' the International. .Monetary Fund, told the
annual meeting o:f the Fund•s board of' governors. He also voiced
what amounted to an endorsement of U.S. credit restraining policies
and de:fense o:f interest rates. "Stif':fer monetary policies are, o:f
course, not intended to initiate a period of' de:f"lation, but represent
simply an .adjustment to a particu1ar phase of' the business cycle.
By avoiding the twin dangers of' inf'1ation and ex-deflation, the
basis should be laid :for a vigorous expansion in production and
trade." (Amer. Bkr., 9/~ p.1)
WORLD INFLATION NEAR
END - PER JACOBSSON
NEW WORLD LOAN
AGENCY APPROVED
The sixty-eight member nations of' the World Bank
and International Monetary Fund approved establishment of a new lending agency, the International Development Association. Hard bargaining remains to be done on
the details o:f the new institution's charter. The size o:f the new
agency is not in question. Its capital vi11 be $1 billion, with contribution to be ma.de in general. in the same proportion as subscrip-
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Federal Reserve Bank of St. Louis
tion to the World Bank. This would
United States, possibly spread over
that the association would make its
ably "sof'ter" and easier terms than
(N.Y·. Times, 10/2 p.1)
come to $330 million for the
five years. It was also agreed
development loans on considerits parent, the World Bank.
MANUFAC'.I'URERS' SALES,
Manufacturers' sales, orders and inventories
dropped in August because of the steel strike,
the Department of Connnerce reported. The
inventory reduction--the first this year--amounted to a seasonally adjusted $200 million for the month, with all of the drop in durable
goods. New orders placed with manufacturers in August dropped 6~
from the July seasonally adjusted level to $29.1 billion. In the
durable goods industries, new orders were down 1C1/o from July. (Wall
St. J., 10/5 p.5)
ORDERS, FELL IN AUGUST
INST.ALMEN.I' DEBT SEI'S
RECORD FOR AUGUST
Consumer instalment credit in August increased
by a seasonally adjusted $502 million, slightly above the $500 million adjusted boost registered in July, the Federal Reserve Board r~ported. This increase
raised the total instalment debt outstanding at the end of the month
to a record of more than $37 billion. Extensions of new credit in
August totaled a seasonally adjusted $4.103 billion and repayments
amounted to an adjusted $3.601 billion. Both figures approximated
the July totals, officials said. The total instalment debt outstanding August 31, 1958, was $33.2 billion. The willingness of consumers
to take on an increasing amount of instalment debt is a prime factor
in the business boom, Government economists say. {Wall St. J., 10/5
p.5)
DU PONT MAY
KEEP G.M. STOCK
Du Pont Company may keep its 63 million General
Motors Corporation shares, although it must pass
the voting rights of a majority of the stock -o n to
public Du Pont shareholders, Federal District Judge Walter J. LaBuy
ruled in .Chica.go. The judge's decision marked another phase of the
ten-year-old attempt by the Government to strip Du Pont of its 23i
interest in G.M. under the Clayton antitrust law. This interest
works out to 1.38 shares of G.M. for each Du Pont share. A final
decision in the case, however, appears to hinge on what the Justice
Department, the Supreme Court and Congress do or don't do. Judge
LaBuy himself gave Congress a role in the case. In .h is 101-page decision issued Friday, he stated his ruling would be subject to review if its terms were violated or if the tax laws were changed so
as to "significantly alter the tax consequences of a distribution of
the General Motors stock owned by Du Pont." (Wall St. J., 10/5 p.2)
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Federal Reserve Bank of St. Louis
HOG PRICES
Hog prices drifted lower again yesterday, with
the top price of $13. 50 a hundred pounds, the
lowest :for a September market siilce 1941. It
was also the lowest :for any day since March 1956. Heavy marketings
end a break in the price o:f :fresh pork at wholesale were blamed :for
the decline, which sent most hogs down 25¢ to 5o¢ :for the day.
With hog prices already down more than $5 a hundred pounds f'rODl the
1959 high set in January and almost an equal amount under last year's
low, prospects are :for still lower prices. The reason is that
marketings have not reached their heaviest point. Livestock men
:figure that :farmers will continue heavy shipments :for the rest o:f
the year, with the high point coming late in October or November.
(Wall St. J., 10/1 p.14)
LOWES!' SIBCE 1941
CONrRACT RAIL RATE
The :first "contract" rate :for railroad transportation may become operative this week. Unless the Interstate Commerce Conmission steps
in, a tari:f:f o:f the New York Central Railroad will become e:f:fective
tomorrow, under which a rug and carpet shipper at Amsterdam., N.Y.,
will enjoy a lower rate so long as the railroad is tendered &:1f,, o:f
the total tra:ffic moving between Amsterdam and Chicago. Only one
other such contract rate has been publif:>hed in this country. Contract, or agreed rates, is the accepted practice in Canada. ( J. o:f
Coimn., 9/'c$ p.4)
DUE TO TAKE EFFECT
TVA PLANS mnE
STEAM POWER PLAN.r
The directors o:f the Tennessee Valley Authority
announced yesterday that it planned to build a
plant to house the world's largest steam turbinegenerator. The group also said, that it had awarded the world's
largest coal contract to provide fuel :for the giant power producer.
This will be the :first TVA project to be :financed under the public
sale of revenue bonds as approved recently by Congress. Congress
authorized the power authority to issue up to $750 million in revenue bonds to :finance its electric power projects. (N.Y. Times, 10/2
p.39)
CHILE TO ADOPT NEW
MONETARY UNIT
Chile, a land where prices are measured in the
thousands, will adopt a new monetary unit January 1, 1960. It will be known as the escudo
and will be worth 1,000 o:f the present pesos. The Chilean pe:;;os has
su:ffered one of the world's worst depreciations in the last 10 years.
It is now worth only one-twentieth o:f what it was then. (J. o:f Conn.,
9/30 p.9)
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