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Co THE BUSINESS REVIEW jsbftii FEDERAL RESERVE BANK t)F PHILADELPHIA SEPTEMBER 1, 1942 T NDUSTRIAL output is establishing new rec ords as expansion in the heavy industries con tinues. Scarcities of certain strategic raw ma terials have been developing, and the emphasis is shifting from the construction of new facili ties to the balanced use of existing plants. A possible forerunner of reduced construction ac tivity is the sharp decline in new contracts. Nonessential housing and other building have been greatly reduced. The production and ship ment of both bituminous and anthracite coal continue heavy as consumers purchase these fuels in anticipation of needs. Factory employment reached a new high in July and payrolls remained at about the June level. Further increases in average hourly wages were offset by decreases in working time. A considerable proportion of the expanded in comes of wage earners is being saved. Sub stantial amounts are being used to purchase War Savings bonds and stamps and to repay debts. Additional funds are being set aside partly in anticipation of taxes. Retail sales in recent weeks have been no larger than a year ago in dollars and appear to be somewhat smaller in physical units. Manufacturing. Stimulated by heavy war re quirements, the demand for factory products in this district has continued strong. Growing scarcities of materials, and the diversion of additional manufacturing facilities have further restricted purchases by civilians; but commit ments on Government account are still increas ing, chiefly in heavy goods lines. Operations in the munitions industries are continuing to expand as new plants are com pleted and output is resumed at establishments converted to war production. Backlogs remain close to record levels in the heavy industries but further declines are reported in textiles and certain other nondurable lines. Factory employment in Pennsylvania in July increased slightly to a new high of 1,178,000 workers, and wage disbursements continued near the record level of June, approximating $40,600,000 a week. In the heavy industries, wage payments rose slightly further to a level 29 per cent above 1941; a small decline was reported at establishments making lighter prod ucts, where the volume was only 6 per cent greater than a year earlier. Preliminary re ports indicated little change in employment and payrolls during August. Hourly earnings of factory workers in Penn sylvania increased in July to a new high average of 91 cents, or about 10 cents an hour more than a year ago. The average number of hours worked per week decreased to 41% from the twelve-year peak of 42% in June. Weekly in come declined slightly to an average of $37.81, but was $5.55 more than in July, 1941. The output of factory products in this dis trict increased further in July and was 17 per cent greater than a year ago. At plants mak ing durable goods, production on a seasonally adjusted basis rose 9 per cent to a level 42 per cent above 1941. In nondurable lines, the gain in the month was slight and operations were 7 per cent lower than a year earlier. In the year to date productive activity in the heavy One PRODUCTION AND PRICES RETAIL SALES AND PAYROLLS PERCENT PERCENT PAYROLLS - PA. PRODUCTION "COST OF LIVING IN PHILADELPHIA WHOLESALE COMMODITY PRICES US. DEPARTMENT STORE SALES * Adjusted for sauonsl variation 1937 1938 1939 1940 1941 1942 industries has increased 46 per cent over last year, as against a decline of 2 per cent in lighter goods lines. Coal and other fuels. The market for fuels remains exceptionally active. The continued accumulation of reserves by distributors and consumers will lighten the demands on trans portation facilities in the fall. Advance buying of anthracite has been especially heavy. The production of anthracite has exceeded seasonal expectations since May. Output of collieries in July was 10 per cent greater than a year ago, and the largest for the month since 1930. Shipments have expanded, averaging 3,850 cars a day in July, as against 3,680 in June, and 3,700 a year ago. Output of bituminous coal in Pennsylvania has been well sustained since January. Pro duction totaling 83,000,000 tons in the first seven months was 21 per cent greater than in 1941, and the largest for the period since the early nineteen-twenties. Shipments through July were sharply more than a year earlier. Building. Construction activity in this dis trict in July was close to the high level reached in June. Operations against contracts placed earlier continued somewhat above 1941 in most lines. Awards of building contracts declined 41 per cent in July to $23.2 million; they were the smallest since January and less than half as large as a year ago. Declines in the month and year were substantial in all types of construc tion except public works and utilities. In the Page Two 1937 193 3 193 9 19 41 19 42 first seven months of 1942, total contract awards approximating $200 million were 5 per cent greater than a year earlier and the largest for the period in over a decade. The sharpest gain over 1941 was in contracts for public works and utilities; awards for factory build ings also increased considerably, but a substan tial decline was shown in residential awards. Agriculture. Harvesting and other farming operations were delayed by excessive rains in early August. Some damage to tobacco, fruit and certain vegetables was reported, but grow ing conditions for other crops were generally favorable. Farmers are experiencing increas ing difficulty in securing adequate labor. Production of leading field crops other than wheat and white potatoes will be somewhat above average this year, according to official estimates. Yields of orchard fruits, other than peaches, and of many truck crops also are ex pected to compare favorably with those of re cent years. Farm cash income in Pennsylvania, New Jer sey, and Delaware has continued to expand, approximating $263,363,000 in the first half of 1942, or 33 per cent more than a year earlier. Trade. Improvement in retail sales in July was shown in smaller than seasonal declines in most of the lines reporting to this Bank. Mixed changes were shown in comparison with a year ago, the sales of department, women’s apparel, and shoe stores being larger, while those of furniture and men’s apparel stores were sub stantially smaller. Reports for the first few DEPARTMENT STORE COLLECTIONS BUILDING CONTRACTS THIRD FEDERAL RESERVE DISTRICT PERCENT THIRD FEDERAL RESERVE DISTRICT Ratio of collections to outstandings MILLIONS 1942 CHARGE ACCOUNTS FACTORY AND COMMERCIAL RESIDENTIAL INSTALMENT ACCOUNTS 1937 1938 1939 1940 JAN. 1941 Source: weeks of August showed that dollar sales were about the same as a year ago. The influence of consumer credit regulations relating to charge accounts was reflected in a further rise during July in the ratio of collections on charge accounts to receivables. Inventories at the close of July were sharply larger than a year ago. Merchandise on order by department stores increased slightly, but was considerably less than in 1941, when advance commitments were unusually heavy. Wholesale trade sales in the aggregate in creased from June to July and were somewhat above a year ago. Increases in the year were reported in all lines except electrical supplies, paper and shoes. Inventories generally de clined in July, but in dollars remained somewhat larger than a year earlier. Rail freight shipments in this section did not change materially from June to July but fewer cars were loaded than a year ago. The ton nage of freight moved, however, probably has continued larger than in 1941 owing to the in creasing minimum loads for less than carlot merchandise. On a seasonally adjusted basis, loadings of coke and forest products increased in the month. Banking conditions. Heavy Treasury fi nancing operations during the past month have been reflected in sharply increased holdings of Governments by the reporting banks, carrying earning assets to a new high point. The invest ment in Treasury bills rose $30 million to $96 million in the four weeks ended August 19. FEB. MAR APR. MAY JUNE JULY AUG SEPT. OCT NOV. DEC r. W. Dodge Corp. Allotment of certificates of indebtedness in creased holdings by $21 million, and smaller amounts of Treasury notes and bonds were added to the securities portfolio. Since the be ginning of the defense program the investment in Governments, direct and guaranteed, has in creased $359 million to $802 million; this is over one-half of total earning assets. Outstanding commercial advances recently have been steady, following a substantial de cline from the peak reached early in the spring. Deposits of individuals and business concerns increased moderately in the month, but this gain was more than offset by withdrawals from other deposit accounts. The reserves of all member banks declined $50 million to $640 million in the period from July 22 to August 19, but the volume of surplus funds in this district remains substantial and apparently well distributed. In the first half of July combined reserves and amounts due from banks were more than twice required re serves at four-fifths of the banks. Treasury income from securities sales, tax collections and other sources exceeded disburse ments by $128 million in the four latest weeks. Reserves were further reduced by a substantial increase in currency demand, but the decline was limited by heavy gains in commercial trans actions through the interdistrict settlements. Borrowings from the Reserve Bank continued light, the only material change in bills and securities being an increase of $33 million to $256 million in its participation in Government securities held by the System. Page Three Treasury Financing The United States Government expects to spend about $77 billion in the current fiscal year and estimates are that not over $25 billion will be raised through taxes. The balance must be borrowed. The problem is to borrow as much as possible from current income and a minimum from commercial banks, so that the already heavy inflationary pressure may not be greatly increased. In the fiscal year 1941-42 approxi mately 60 per cent of the expansion in outstand ing securities issued or guaranteed by the Fed eral Government was in holdings of private in vestors other than commercial banks. During August War Savings bonds and tax savings notes were continuously on sale, and weekly offerings of Treasury bills were main tained at the advanced level of $350 million in stituted late in July. To these were added the sale of $1.2 billion of registered bonds of 1962 67, and the placement of $1.6 billion in certifi cates of indebtedness. The special province of the Victory Fund Committees, set up in each Federal Reserve Dis trict, is to encourage the purchase of new Treas ury securities by individuals, business concerns, various funds and organizations, savings banks and insurance companies. Active work on their part was reflected in the Third Federal Reserve District in sharply increased subscriptions to the registered 2y2 per cent bonds. Books were open over a period of two weeks and subscrip tions increased to $77 million from the $27 mil lion received on a like offering in May. The OWNERSHIP OF U. S. GOVERNMENT SECURITIES DIRECT AND GUARANTEED BILLIONS HELD BY FEDERAL AGENCIES AND FEDERAL RESERVE BANKS TOTAL OUTSTANDING OTHER PRIVATE HOLDINGS COMMERCIAL BANKS '32 '33 '34 Page Four '35 '36 '37 '36 proportionate increase in subscriptions was the largest of any Federal Reserve District, and the number of subscribers was second only to the New York District. These bonds cannot be held by commercial banks until 1952, but are eligible as collateral for loans. They were bought by large numbers of individuals and trust funds, but the greatest amounts were taken by insur ance companies, with 43 per cent of the total; savings banks, with 20 per cent; and by various pension, retirement and other funds. Subscriptions to % per cent, lli/2-month, Treasury certificates of indebtedness" totaled $142 million, as against $120 million on the shorter term, % per cent, issue placed in June. The number of subscriptions increased to 437 from 334. Commercial banks and trust com panies again accounted for three-fourths of the dollar amount; the balance was taken chiefly by business concerns. Tenders on the weekly offerings of Treasury bills dropped off early in August, when other securities were being actively marketed. But the number of banks submitting tenders in creased to 64 on the issue dated August 19 and to a new peak of 74 on the following issue. Bids were placed for $29.5 and $25.1 million re spectively. Since last April the Reserve Banks have stood ready to purchase bills tendered to them at a discount rate of % per cent per an num. This offer was broadened recently to per mit the seller to repurchase bills before ma turity at a like rate. Incomplete figures for August indicate that sales of War Savings bonds of Series E in this district were close to the July level. But the sales of Series F and G declined substantially from July, when distribution was stimulated by the increase from $50,000 to $100,000 in the maximum amount purchasable in any one year. Bank Financing of War Production The flow of bank credit is being diverted to an increasing extent from production and dis tribution of civilian goods to the war program. Bank investments have increased substantially as a result of active buying of Government se curities, and a growing proportion of bank loans is to finance war production by prime contrac tors and subcontractors. According to a recent survey of lending operations at member banks, over 40 per cent of new bank credit to industry and trade, both in this district and in the coun try as a whole, has been for war purposes. The survey, made for the period April 16 through May 15, 1942, and covering in this district 472 banks with 95 per cent of outstand ing commercial and industrial loans, indicates that an active demand for bank credit is coming from war plants needing funds to maintain large volumes of goods in process, to pay heavy wage bills, and to provide equipment and supplies for record production. About one-half of the funds advanced during this period was at interest rates of from 3 to 5 per cent, with the balance divided about equally between higher and lower rates. importance, with 15 per cent of the total, was the construction industry, and third, the warstimulated metals industry with 13 per cent. Manufacturers of textile and leather products, important in the industrial structure of the dis trict, received 11 per cent of the new loans. About nine-tenths of the new loans advanced to the metal industries and to the construction industry, busy enlarging productive facilities and providing houses for defense workers, was wholly or partly for war purposes. In the tex tile and leather, chemical and rubber industries more than one-half of the dollar volume was for war. The only lines of manufacturing in which the proportion was less than one-half were in the food, liquor and tobacco, and the unclassified groups. Loans to trade, financial, and service establishments were chiefly to finance civilian requirements. Loans to the wholesale and retail trade ac counted for 22 per cent of the dollar amount of all new loans last spring, apparently reflect ing earlier inventory accumulation. Second in New loans and renewals were about equal in dollar amount. Renewals, one-third of which were to trade, were largely for non-war pur poses. Banks in Philadelphia accounted for 61 per cent of the loans and renewals made by the reporting banks. Nearly two-fifths of the amounts reported by them was wholly or partly to sustain war activities, as against little more than one-sixth at banks in smaller centers. Concerns with estimated assets of less than $50,000 received over one-half of the loans and renewals in number and one-sixth of the dollar amount. Those with assets of $5 million or more accounted for only one per cent of the number of loans made, but received one-fifth of the total accommodation. The bulk of the funds—over three-fifths—was extended to the moderate-sized businesses which fall between these extremes. A tabular summary of the survey is given be low. The banks submitted details with respect to commercial and industrial loans of $1,000 or more in the case of the smaller institutions and of $5,000 or more at institutions handling large amounts of this class of business. COMMERCIAL AND INDUSTRIAL LOANS Made in Period April 16—May 15, 1942 Summary of reports from 472 member banks Third Federal Reserve District TOTAL Dollar figures in thousands NEW LOANS Purpose* Actual % Manufacturing and mining: Metals................................... Petroleum............................ Chemicals and rubber. Textiles and leather.......... Foods, liquor and tobacco Other..................................... $13,485 4,362 1,564 15,908 7,657 12,109 Total mfg. and mining. . Construction.......................... Trade....................................... Utilities................................... Services................................... Finance companies.............. All other................................. GRAND TOTAL............. Purpose* % War Non war Mixed $8,494 2,909 1,151 7,105 2,979 4,871 13% 4 2 11 5 7 84% 8 52 48 7 35 13% '33 46 44 90 63 3% 59 2 8 3 2 7% 3 2 7 1 0 1 $27,509 9,632 14,413 5,246 893 5,947 1,751 42% 15 22 8 1 9 3 48% 87 9 23 8 42% 10 87 67 89 100 85 4% $65,391 100% 56% War Non war Mixed 10% 4 1 12 6 9 79% 5 47 35 4 28 16% 54 51 58 95 70 5% 41 2 7 1 2 $55,085 14,204 35,275 7,399 3,739 8.016 7,833 42% 11 27 5 3 6 6 38% 67 6 18 4 6 55% 30 92 75 95 100 93 $131,550 100% 26% 70% — RENEWALS Purpose* Actual — 13 38% Actual % War Non war Mixed $4,991 1,453 h -413 8,803 4,678 7,237 8% 2 1 13 7 11 71% 21% 96 64 69 98 74 8% 3 2 6 0 3 10% 3 3 10 3 0 2 $27,575 4,572 20,862 2,153 2,846 2,069 6,082 42% 7 32 3 4 3 9 28% 24 3 4 3 4% 4 1 3 68% 72 96 96 97 100 96 6% $66,160 100% 15% 83% 34 25 2 23 — 0 0 1 2% * Percentage of total amount in each line. Page Five BUSINESS STATISTICS Production Employment and Income Philadelphia Federal Reserve District in Pennsylvania Not adjusted asonal variation Industry, Trade and Service Per cent change Indexes: 1923-5=100 INDUSTRIAL PRODUCTION MANUFACTURING................ Durable goods.......................... Consumers’ goods.................. Metal products......................... Textile products........................ Transportation equipment. . . Food products........................... Tobacco and products............ Building materials.................... Chemicals and products......... Leather and products............. Paper and printing.................. Individual lines Pig iron........................................ Steel.............................................. Silk manufactures.................... Woolens and worsteds............ Cotton products........................ Carpets and rugs...................... Hosiery........................................ Underwear.................................. Gemept........................................ Brick............................................ Lumber and products............. Bread arid bakery products. . Slaughtering, meat packing. . Sugar refining............................ Canning and preserving......... Cigars........................................... Paper and wood pulp............. Printing and publishing......... Shoes............................................ Leather, goat and kid............. Paints and varnishes............... Coke, by-product..................... COAL MINING.......................... Anthracite.................................. Bituminous................................. CRUDE OIL................................ ELEC. POWER—OUTPUT. . Sales, total................................. Sales to industries.................... BUILDING CONTRACTS TOTAL AW ARDS f................... Residentalf................................ Nonresidentialf........................ Public works and utilities!.. . Employment July 1942 from July June July 1942 1942 1941 1942 July June July from 1942 1942 1941 7 Mo. Year mos. ago ago 1941 130 131 193 90 157 74 437 97 116 111 51 52 137 133 120p 114 90 87 119 119r 148 98 r 148r 90 235r 91 108 54 154 151 92 + + + 115r 128r 86 90 64p 63 66 61 59p 58 81r 92 184 154 68 69 69 73 32 29 113 132 139p 139p 211p 91p 164 77p 506 102p 115 140 100 100 29 75 121p 116 111 116 79 83 86 78 67 r 107 115 188 78 73 30 95 ** 142 138 lOOp 92 81 91 162 158 100 83 80 99 112 111 458 465 383 374 374 367 265 269 109r 107 91 93 167 135 110 152 93 r 90r 114r 415 353 342 239 122 32 173 261 156 85 212 186 88 93 131 57 212 162 + + + + + + 7 + 17 + 20 6 + 17 4- 21 9 + 42 4- 46 — 2 1 + 11 + 19 15 — 11 3 16 4-115 +118 + 5 11 + 7 4 + 4 + 16 5 + 8 0 1 3 _ 11 6 — 20 — 2 3 - 6 + 2 0 9 5 _ + 2 + 7 + 1 + 15 + 19 + 1 + 5 7 + 3* 0 4-161 + 4 4 + 4 5 + 3 + 9 + 12 4. 2 + 20 + 24 0 + 2 + 2 + 2 1 + 4+ _ — __ _ — _ — + + + 11 + 4 _ 9 — 5 _ 15 — 26 _ 17 + 6 + 8 + 10 2 + 12 + 8 + 9' + 11 7 44 _ — 18 — + 61 + __ — — * Unadjusted for seasonal variation. T 3-month moving daily average centered at 3rd month. ** No July 1941 figures due to strike. 1 6 0 17 1 45 20 2 11 0 1 8* 6 132p 129 134p 131 158 71p 491 93p 120 55 134 109p 84 + 14 106 + 12 127 — 1 85 61p — 11 + 2 57 — 50 56p 76 — 11 + 3 153 + 9 81 + 6 70 + 1 32 + 6* 107 0 89 — 33 77 + 22 8 ip + 171 120 + 5 79 + 1 85 8 132 — + 9 88p — 4 85 + 7 158 + 11 79 + 10 77 + 21 98 + 16 465 + 10 355 + 12 352 + 17 270 22 + 24 112 62 — 20 36 18 + 34 160 41 + 85 225 114r 114 159r 72 437 r 90 126 56 133 111 89 142 84r 229 r 87 r 116 59 151 137 90 110 131 86 61 58 57 79 154 82 72 32 103 95 31 83 125 78 92 131 93 83 158 77 74 98 476 356 356 271 104 120 85 73 58r 99 94 156 91 70 33 99 85 89 r 115 87 90 155 119 102 149 73 r 70r lOOr 415 329 322 244 134 60 216 154 144 96 195 160 Payrolls Per cent Per cent July change from July change from 1942 1942 index June July index J une July 1942 1941 1942 1941 Indexes: 1932=100 GENEHAL INDEX........... Manufacturing...................... Anthracite mining............... Bituminous coal mining. . . Building and construction . Quar. and nonmet. mining Crude petroleum prod........ Public utilities...................... Retail trade........................... Wholesale trade.................... Hotels...................................... Laundries............................... Dyeing and cleaning........... 133 177 63 102 58 124 143 104 105 117 96 119 109 0 +1 0 + 3 - 1 - 3 - 1 +1 0 - 5 0 - 2 +52 - 3 + 5 - 4 - 3 -12 - 3 +1 0 - 5 - 8 - 8 - 4 - 2 264 - 2 375 0 79 -18 320 -17 120 - 2 344 - 2 205 + 3 131 - 1 142 - 5 141 0 132 - 2 179 +81 205 -14 - h17 - ■21 - -32 - -13 - 7 - 9 r20 - 6 +1 1 + 2 + a +34 Manufacturing Employment* Indexes': 1923-5=100 TOTAL..................................... Iron, steel and products. . . Nonferrous metal products. Transportation equipment. Textiles and clothing.......... Textiles................................. Clothing............................... Food products...................... Stone, clay a*nd glass.......... Lumber products.................. Chemicals and products. . . Leather and products......... Paper and printing.............. Printing................................. Others: Cigars and tobacco........... Rubber tires, goods........... Musical instruments......... Payrolls* Per cent July change from July 1942 1942 index Juhe July index 1942 1941 114 0 + S 153 124 0 + 9 215 190 0 + 8 332 116 + i +28 178 91 0 - 9 108 83 0 -11 99 124 + 1 - 4 149 112 + 3 + 4 141 94 - 1 + J 116 58 - 2 -16 71 115 0 + 3 161 95 - 2 - 3 118 98 - 2 - 4 116 89 - 4 - 3 101 70 102 60 0 + 5 - 4 +1 + 2 -21 74 169 81 Per cent change from June July 1942 1941 0 +21 +22 - I + 3 +36 + 3 +60 - 2 + 4 - 2 + 2 - 1 + 7 +1 +16 0 +11 - 1 - 3 0 +14 - 4 + 7 - 3 - 2 - 6 - 1 - 4 + 9 - 9 +10 +29 -20 * Figures from 2848 plants. p—Preliminary. r—Revised. Hours and Wages Factory workers Averages July 1942 nnd per cent change from year ago Local Business Conditions* Percentage change— July month and year ago Allentown.... Altoona........... Harrisburg. . . Johnstown.... Lancaster. . . . Philadelphia.. Reading.......... Scranton......... Trenton........... Wilkes-Barre.. Williamsport.. Wilmington... York................. Employment June 1942 0 - 2 +1 - 1 + 2 + 1 0 - 5 - 1 + 2 + 1 + 1 0 * Area not restricted Payrolls Building permits value Retail sales July June July June July June 1941 1942 1941 1942 1941 1942 + 6 0 +13 + 123 -84 -20 0 - 8 +14 - 21 -74 -19 +24 + 122 -90 + 3 - 2 -24 - 4 - 1 0 + 62 + 8 +26 + 5 + 3 +27 + 55 -63 - 5 +16 + 4 +44 +1105 +40 -23 - 4 - 2 + 7 + 63 -71 -19 - 4 -10 + 8 - 66 -74 -19 - 4 - 1 +13 -135 -11 .-27 +16 + 6 +65 + 19 -38 -21 + 9 + 1 +34 + 68 +29 +16 + 5 +45 - 21 -83 -16 - 3 - 1 +21 + 323 -27 -15 to the corporate limits of cities given here. Page Six July 1941 + 3 -24 + 5 -21 + 8s + 6. + 5 -12 - 4* + 3 -16 +17 Debits June July 1942 1941 +10 + 3 0 - 8 +10 +23 + 6 + 8 + 7 - 1 - 2 - 3 + 5 -15 - 3 - 2 0 0 + 6 +10 +17 +41 -w + 3 + 9 +21 Weekly working time* Hourly earnings* Aver Aver Ch’ge age Gh’ge age hours TOTAL............................ 41.4 Iron, steel and prod.. . 42.8 Nonfer. metal prod . . . 42.5 Transportation equip.. 46.9 Textiles and clothing.. 37.5 Textiles........................ 38.3 Clothing....................... 35.5 Food products.............. 39.8 Stone, clay and glass.. 36.7 Lumber products......... 41.5 Chemicals and prod.. . 39.5 Leather and prod........ 38.4 Paper and printing. . . 38.9 Printing........................ 36.6 Others: Cigars and tobacco. . 37.9 Rubber tires, goods. . 42.8 Musical instruments. 41.1 * Figures from 2657 plants. + + + + + + + + + - 3 $.910 4 .979 5 . 843 8 1.073 1 . 638 .657 2 0 .587 4 .72L 1 .837 1 . 626 0 .952 2 .619 4 . 804 2 .938 +12 +18 +18 + 11 +13 + 9 + 8 + 9 +10 +11 +12 + 7 + 3 Weekly earniDgst Aver Gh’ge age $37.81 +17 41.88 +12 35.85 +25 50.24 +28 23.82 +13 25.13 +15 21.15 + 9 29.06 +12 30.60 + 9 25.71 +n 37.16 +n 21.99 +n 31.87 +1 35.22 - 2 + 2 .507 + 9 19.20 +n + J2 .860 +14 36.87 +28 - 5 .796 + 6 35.09 +1 f Figures from 2848 plants. Distribution and Prices Wholesale trade Unadjusted for seasonal variation 1942 from 7 mos. 1941 July 1942 from Month Year ago ago Sales Total of all lines..................... Boots and shoes.................... Drugs....................................... Dry goods............................... Electrical supplies............... Groceries................................. Hardware............................... Jewelry.................................... Paper........................................ Inventories Paper....................................... Source: + 4 - 2 — + — — — — - + 4 +13 +36 — i9 + 1 — 16 —23 + 7 +21 +18 +12 +45 - 9 +16 +30 + a +55 +19 -32 + 9 + 4 +31 - 4. 5 l 2 7 7 5 9 2 Per cent c lange Indexes: July June July 1942 1 942 1941 1935-1939 = 100 Basic commodities (Aug. 1939 = 100). . Wholesale (1926 = 100)........... Farm........................... Food............................ Other....................... . Living costs (1935-1939 = 100). . United States........... Philadelphia............. Food......................... Clothing................... Rent.......................... Fuels......................... Housefurnishings. . Other........................ Per cent change from July 1942 Month Year Aug. 1939 ago ago 167 0 +13 +67 99 105 99 96 0 +1 0 0 +11 +23 + 17 + 7 +32 +73 +48 +19 117 116 123 126 107 104 122 111 0 + I + 3 0 0 0 0 0 +11 +12 +19 +21 + 2 + 2 +13 + 8 +19 +19 +32 +27 + 4 + 7 +21 + 11 RETAIL TRADE Sales 89 84 65 88 96 100 172p 172 151 99 229p 175 175 147 122 229 103 98 88 87 138 + 4 0 -13 +14 +13 +10 + 7 - 1 + 8 144 132 75 143 328 192 139 128 98 143 132 80 143 326 193 140 100 98 150 143 108 139 282 187 138 161 80 -25 - 3 75 79 99 + 5* +16* + 7* 108p 122 + 11* 106p 127 103 92 -29* 76 -52* 53 + 6 133 91 34 136 134 133 115 114 115 143 .+12 + r + 4 ;+ 5 +17 -15 +14 -12 200p 200 201 114 247p 187 180 127 252 120 114 117 100 148 + 7 + 6 +12 -10 - 2 +66 +75 +72 +14 +67 FREIGHT-CAR LOADINCS Total................................................................... Merchandise and miscellaneous................ Merchandise—l.c.l......................................... Goal................................................................... Ore...................................................................... Coke................................................................... Forest products.............................................. Grain and products....................................... Livestock.......................................................... 139 127 76 161 175 208 134 114 109 140 127 80 165 190 205 130 119 114 145 139 109 157 150 203 133 143 89 + + - - 1 0 5 2 8 2 3 4 4 - 4 - 9 -30 + 3 +16 + 3 0 -30 +22 MISCELLANEOUS Life insurance sales......................................... Hotels—(1934 = 100) 78 76 104 + 2 -11* -16* +11* +73* - 1 -16* +53* - 2 Check payments.............................................. ♦Computed from unadjusted data. 137 1.39 140 July June July 1942 1942 1941 116 11d 90 118 145 103 122 122 104 10,2 122 112 Credit................................................................ +14 +15 +29 - 5 1942 from 7 mos. 1941 92p 88 75 75 110 88p 139p 140 134 97 132 126p Philadelphia............. Business liquidations U. S. Bureau of Labor Statistics. July 1942 from Month Year ago .ago U. S. Department of Commerce. Prices Source: + 9 - 9 + 2 + 9 +12 +17 -10 + 5 - 2 Not adjusted Adjusted for seasonal variation Per cent change +15 +17 +13 +18 +25 +*4 69 30 144 p—Preliminary. BANKING STATISTICS MEMBER BANK RESERVES AND RELATED FACTORS Reporting member banks (000,000’s omitted) Aug. 19, 1942 Changes in— Four weeks One year Assets Commercial loans.................. $ 279 Open market paper............... 30 Loans to brokers, etc............. 28 Other loans to carry secur.. . 31 Loans on real estate.............. 48 Loans to banks....................... Other loans............................... 97 -$ + . . -$ 20 2 - 14 - 3 1+2 2-14 Total loans............................ $ 513 -$ 3 -$ 49 Government securities..........$ Obligations fully guar’teed. . Other securities....................... 738 64 250 +$63 +$330 - 32 Total investments................ $1052 +$64 +$277 Total loans & investments. $1565 Reserve with F. R. Bank. . . 432 Cash in vault........................... 27 Balances with other banks. . 109 66 Other assets—net................... +$61 - 59 +$228 - 161 Liabilities Demand deposits, adjusted. $1392 165 Time deposits................. . . . . U. S. Government deposits. . 45 Interbank deposits................. 365 Borrowings............................... Other liabilities....................... 13 219 Capital account...................... + 1 - + 122 + - 1 - 2 * +$ 6 +$140 - 3 + - 131 + + 1 1 93 28 * 3 Changes in four weeks July 29 Aug. 5 Aug. 12 Aug. 19 Sources of funds: Reserve Bank credit extended in district........................ Commercial transfers (chiefly intcrdistrict)...................... Treasury operations................................................................ + 1.4 +20.8 - 8.4 + 3.4 +33.0 -53.5 - 2.4 +32.4 -20.4 + 2.2 +14.0 -45.4 + 4.6 +100.2 -127.7 Total.......................................................................................... +13.8 -17.1 + 9.6 -29.2 - 22.9 + + + - 5.8 2.2 5.8 0.0 + 6.5 -19.9 - 3.6 - 0.1 + + + 9.3 1.0 1.3 0.0 + 5.5 -31.6 - 3.1 - 0.0 + 27.1 - 50.3 + 0.4 - 0.1 +13.8 -17.1 + 9.6 -29.2 - 22.9 Uses of funds: Currency demand..................................................................... Member bank reserve deposits............................................ “Other deposits” at Reserve Bank..................................... Total.......................................................................................... 21 13 Changes in weeks ended—• Philadelphia Federal Reserve District v (Millions of dollars) Member bank reserves (Daily averages: dollar figures i n millions) Re Held quired Ex cess Ratio of excess to re quired Phila. banks 1941: Aug. 1-15. $564.3 $259.6 $304.7 117% 1942: July 1-15. 473.8 313.6 160.2 51” 46 ” July 16-31. 469.2 322.1 147.1 Aug. 1-15. 448.6 Country banks 1941: Aug. 1-15. $203.7 $111.0 $ 92.7 1942: July 1-15. 216.0 148.0 68.0 July 16-31. 217.7 152.6 65.1 Aug. 1-15. 223.5 83 ” 46 ” 43 ” Federal Reserve Bank of Phila. (Dollar figures in millions) Changes in— Aug. 19, 1942 Four weeks One year Bills discounted........ $ 0.3 Bills bought................ 0 Industrial advances.. 5.3 U. S. securities.......... 256.3 -$ 0.1 0 - 0.1 + 33.2 +$ 0.1 0 + 1.6 + 84.4 Total.......................... Note circulation........ Member bk. deposits U.S. general account Foreign deposits........ Other deposits........... Total reserves............ Reserve ratio............. +$33.0 + 27.6 - 50.3 - 4.7 + 4.4 + 0.4 - 60.3 - 2.8% +$86.1 +222.5 -148.0 - 41.5 - 45.6 - 13.5 -116.5 - 6.4% $261.9 707.2 639.5 19.5 69.2 9.6 1202.3 83.2% ♦Reciprocal bank balances now reported net. Page Seven National Summary of Business Conditions INDUSTRIAL Industrial activity increased further in July and the first half of August, reflecting continued growth in output of military products. Retail sales in creased during this period, following a decline, on a seasonally adjusted basis, during the first half of the year. PRODUCTION Federal Reserve monthly index of physical volume of production, adjusted for seasonal variation, 1935-39 average = 100. Subgroups shown are expressed in terms of points in the total index. Latest figures shown are for July 1942. DEPARTMENT STORE SALES AND STOCKS Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal vari ation, 1923-25 average = 100. Latest figures shown are for July 1942. EMBER BANK RESERVE. I6 ""-v TOTAL Production. Industrial output rose further in July and the Board’s seasonally adjusted index advanced from 176 to 180 per cent of the 1935-39 average. Activity continued to increase in the machinery and transportation equip ment industries and in other lines producing war products. Shipbuilding ex panded further and 71 merchant vessels were delivered in July. These had an aggregate deadweight tonnage of 790,300 tons—an all-time record for a single month’s deliveries. In the automobile industry armament production increased in July to an annual rate of about $5 billion as compared with a peak year’s civilian output of $4 billion. Iron ore shipments down the Great Lakes reached a new record of 13.4 million gross tons in July and plans were announced for improving rail and harbor facilities so that shipments next season could exceed considerably prospective shipments of 90 million tons or more this year. Last season 80 million tons were shipped. In most other lines of manufacturing and mining, activity in July was main tained at about the levels prevailing in June. There were reports that some plants were forced to curtail operations owing to lack of certain materials, and further investigations were undertaken to determine present and prospective availability of material supplies. Value of construction contracts awarded in July showed a reduction of about 20 per cent from the record level reached in June, according to figures of the F. W. Dodge Corporation. Declines were reported for most types of con struction; awards for manufacturing buildings, however, increased further and constituted about one-third of total contracts let. As in June, publicly-financed work amounted to over 90 per cent of the total. In the first seven months of this year, awards were about 50 per cent larger than in the corresponding period last year. Distribution. Distribution of commodities to consumers declined less than sea sonally in July. The Board’s adjusted index of department store sales, which had dropped from a peak of 138 per cent of the 1923-25 average in January to 104 in June, rose to 117 and sales by variety stores and mail-order houses also advanced, after allowance for usual seasonal changes. In the first half of August department store sales increased by more than the usual seasonal amount. Railroad freight-car loadings increased more than seasonally in July and rose somewhat further in the first half of August. Shipments of miscellaneous mer chandise, which include most manufactured products, and of forest products continued to rise. Grain shipments also increased but the rise was less than is usual1 at this time of year. Loadings of coal declined somewhat from the high level of other recent months. Commodity prices. Wholesale and retail food prices advanced further in July and the early part of August, while prices of petroleum products on the East Coast were reduced, and those for most other consumer goods continued to show '7^k ■vf little change. In raw material markets price declines occurred for cotton, inedible fats and oils, and some scrap items, particularly nonferrous metals and paper. Demand for materials used more exclusively for war products continued strong RESERVES . Xand prices of these materials were sustained at ceiling levels. Federal subsidies were arranged for additional commodities and Government 1936 1937 1938 1939 1940 1941 1942 war risk rates on shipments of imported commodities were reduced. These actions were taken to bring about price reductions, as in the case of petroleum Wednesday figures. Required and excess re serves, but not the total, are partly estimated. products on the East Coast, and to prevent further price increases, particularly Latest figures shown are for August 12, 1942. for imported commodities. About 30 new maximum price schedules were an nounced, chiefly for miscellaneous civilian products, and in some instances these schedules permitted substantial in creases over ceilings set by the General Maximum Price Regulation. reqiareo J RESERVES^ fP) I r \ HX Bank credit. Excess reserves of member banks declined by about 200 million dollars in the four weeks ended August 19. An increase of about 400 million dollars of currency in circulation during this period was paralleled by a corresponding amount of Reserve Bank purchases of Government securities. There was an increase of 300 million dollars in required reserves resulting from a growth in deposits at member banks. Excess reserves in New York and Chicago reached the lowest levels since the third quarter of 1937. Effective August 20 reserve requirements on demand deposits at central reserve city banks were reduced from 26 per cent to 24 per cent by action of the Board of Governors of the Federal Re serve System. This had the effect of converting over 400 million dollars from required to excess reserves. Member banks in leading cities continued to increase their holdings of United States Government securities, particu larly in the week ended August .19, in which delivery of the new 11% months’ % per cent certificates of indebtedness was made. Loans, which had declined during the second quarter of the year, have recently shown little change. Adjusted demand deposits continued to increase at reporting banks, although purchases of Government securities, particularly the 2% per cent Treasury bonds of 1962-67, by investors other than banks temporarily reduced demand de posits of individuals and added to United States Government deposits. United States Government security prices. Prices of United States taxable bonds have shown little change during the past month. Taxable notes of 3- to 5-year maturity are currently yielding 1.26 per cent on the average as compared with 1.20 per cent in July. The rate of discount on new issues of Treasury bills has averaged 0.372 per cent for the past three weeks.
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