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MONTHLY REVIEW
of Financial and Business Conditions

F ifth
Federal

Reserve
Dist r ic t

Federal Reserve Bank, Richmond, Va.
Debits to individual accounts (24 cities)...
Number of business failures, 5th district...
Liabilities in failures, 5 district...............
Sales, 55 department stores, 5th district...
Sales, 190 wholesale firms, 5th district.....
Registrations, new passenger autos.......... .
Value of bldg. permits (31 cities)..............
Value of contracts awarded, 5th district....
Cotton consumption, 5th district (Bales)..
Soft coal mined, U. S. (Tons)....................

A

LTHOUGH there was no general improvement in
business conditions in the Fifth Reserve district in
July and the first half of August, there were several in­
dications of a stronger tone. The most marked change
occurred in rayon sales, deliveries by producers reaching
the highest figure on record and nearly doubling shipments
of yarn in June. This sudden demand cut substantially
into surplus yarn stocks built up by producers during the
winter, and caused an increase in August in operating
time at mills. Cotton textiles also were in better demand
during the past month, but the improvement was much
less marked than in rayon. Tobacco auction markets
opened in the South Carolina belt early in August, and
tobacco sold for prices averaging around $27 per hundred
on unofficial calculations. The quality of tobacco appears
to be good, although somewhat light in weight. Some in­
crease in employment developed in July and early August
as rayon and cotton manufacturers added employees, to­
bacco markets began sales, and coal output increased.
Bituminous coal mined in July rose 4 per cent above
June production, and although July output was 27 per
cent below July 1937 production, it compared more favor­
ably with last year than output in some other recent
months. Debits to individual accounts showed a seasonal




August 31,1938
July 1938
$1,133,054,000
56
$
440,000
$
6,771,641
$
9,998,000
11,704
$ 6,967,940
21.560.000
225,665
23.460.000

July 1937 % Change
— 14
$1,323,424,000
+107
27
$
180,000
+144
$
7,196,717
— 6
$ 12,308,000
— 19
— 51
24,130
—
11
$
7,866,938
—
22
$ 27,635,000
276,415
— 18
31,990,000
— 27

drop of 4 per cent in July under June, and were but 14
per cent below July 1937 debits. Except for tobacco,
which deteriorated because of excessive rain, crops im­
proved or held their own during July. There were no
significant changes affecting business in banking last
month.
Construction work included in building permits issued
and contracts actually awarded was less in July than in
either June this year or July last year. However, a large
amount of work, chiefly dependent upon Government
loans or grants which have been approved, are in the
planning stage or about ready for bids, and the outlook
for construction work for the near future is therefore
better than it has been for some time. Business failures
in the district in July were more than double July 1937
failures, and last month’s liabilities rose 144 per cent,
but it should be noted that the July 1937 insolvency figures
were unusually small. Registration figures on newr auto­
mobiles in July were 51 per cent below July 1937 regis­
trations, but the decrease was less than occurred in June.
Retail trade in July as reflected in department store sales
was 6 per cent less than in July 1937, and wholesale trade
was nearly 19 per cent less than a year ago.

MONTHLY REVIEW

2

made the; only gains in June and May over corresponding
figures for 1937.

BA N K IN G CONDITIONS
R eserve B ank Statement: During the past month—

July 15 to August 15—three items on the Reserve bank’s
statement changed materially. Cash reserves of the
Richmond bank and member bank reserve deposits both
rose, payments to Fifth district banks by outside banks
apparently materially exceeding payments by them to
banks in other districts. The increase in Federal Reserve
notes in actual circulation, a seasonal development, was
largely due to opening of tobacco markets in South Caro­
lina and along the lower border of North Carolina. A
large increase in the Reserve bank’s cash reserves between
the middle of August last year and this was chiefly due
to a rise of approximately the same amount in the balance
of the Treasurer of the United States.
ITEMS
Discounts held .....................................
Open market paper .........................
Industrial advances .........................
Government securities .....................
Total earning assets ......................
Circulation of Fed. Res. nots............ . ,
Members’ reserve deposits ..............
Cash reserves .....................................
Reserve ratio .......................................

000 omitted
Aug. 15
July 15
1938
1938
$
692
23
1,479
1,490
127,224
127,224
129,429
195,186
189,571
223,113
206,975
339,717
319,872
72.06

Aug. 15
1937
$ 1,266
25
1,974
133,035
136,300
195,382
213,736
306,547
70.12

Statement of 41 R eporting M ember Ba n k s : T wo
items on the composite statement of 41 member banks in
12 cities changed considerably between July 13 and Au­
gust 10 this year. Reserve balance at the Reserve bank
rose, due in large part to an, excess of receipts from over
payments to banks in other districts, and these same trans­
actions substantially increased demand deposits. Between
August 11 last year and August 10 this year, loans and
discounts, investments in securities and demand deposits
declined materially, while reserve balances rose.
ITEMS
Investments in securities .....................
Reserve bal. with Fed. Res. Bank........
Cash in vaults .......................................
Demand deposits ...................................
Money borrowed .......................................

000 omitted
Aug. 10
July 13
1938
1938
$229,385
$229,016
377,223
379,721
147,415
131,787
18,425
19,211
439,826
433,280
198,683
198,459
0
0

Aug. 11
1937
$242,022
398,336
128,683
18,223
462,651
198,218
0

CITIES
Maryland
Baltimore ..........
Cumberland ___
Hagerstown . . . .
Dist. of Col.
Washington . ..
Virginia
Danville ............
Lynchburg ........
Newport News .

July
1938

000 omitted
June
July
1938
1937

$ 324,984
7,950
9,099

$ 334,683
8,316
8,309

$ 380,479
11,082
11,020

242,216

278,184

7,560
15,797
7,701
43,230
4,225
136,686
23,602

6,962
13,309
7,941
45,409
4,069
136,609
23,749

to I ndividual A ccounts : Checks drawn against
individual, firm and corporation accounts in 24 Fifth dis­
trict cities in July totaled 4 per cent less than those drawn
in June, approximately a normal decline. Debits figures
are large in the first week of July, due to quarterly and
semi-annual payments, but trade in the balance of the
month is usually relatively slow. Thirteen of the 24
cities reported higher figures for July than for June, but
lower figures in three of the four largest cities pulled the
average down. July 1938 debits were 14 per cent below
debits in July 1937, Durham being the only city to report
a higher 1938 figure. It is interesting that Durham also

Debits




— 3
— 4
+ 10

— 15
— 28
— 17

266,015

-1 3

— 9

9,509
17,497
11,161
54,397
4,246
160,072
30,761

+ 9
+ 19
— 3
— 5
+
4
0
— 1

— 20
— 10
— 31
— 21
0
— 15
— 23

+
—

5

— 23
— 26

+ 9
— 1
— 4
+ 3
— 3
0

— 21
— 12
+
1
-2 3
— 4
— 9
— 14

— 9
1
1
1
— 4

— 22
— 16
— 27
— 16
— 14

Portsmouth . . . .
Richmond ..........
Roanoke ............
West Virginia
Charleston ........
46,226
43,856
60,078
Huntington ___
14,442
19,493
18,129
North Carolina
Asheville ............
11,308
10,335
14,306
Charlotte ..........
50,616
50,884
57,824
Durham ............
27,936
26,466
27,752
15,494
Greensboro ........
16,111
20,170
Raleigh ..............
38,628
37,664
40,144
Wilmington
9,894
10,171
10,834
Winston-Salem .
34,772
40,498
34,655
South Carolina
Charleston ........
19,160
15,003
16,515
Columbia ..........
22,654
22,518
26,897
Greenville ........
15,095
14,989
20,541
Spartanburg . . .
7,936
7,850
9,488
District Totals .
$1,133,054
$1,177,683
$1,323,424
Note: Changes marked (0), less than y2 of 1%.

+

+
+
+

20

6

E mployment : Between the middle of July and the mid­
dle of August, employment apparently increased appreci­
ably in some Fifth district industries, and no important
reductions in personnel were noted in other lines. Rayon
manufacturers stepped up operations in August, and both
increased hours for those already employed and called
back many workers who were laid off last fall and winter.
Carolina tobacco markets took several hundred helpers
early in August, and several large construction projects
also got under way. Most of the new projects planned
under the Government’s latest grants or loans have not
yet reached the actual work state. The following figures,
compiled chiefly by the Bureau of Labor Statistics from
reports furnished by a large number of identical indus­
tries, show the trends of employment and payrolls in the
Fifth district geographical divisions from June to July
1938, the latest available figures:

M utual Savings Bank D eposits : There was a decline

in total deposits in July in 10 mutual savings banks in
Baltimore, but there is usually a moderate decrease at
vacation season. Deposits in 9 of the 10 banks dropped
last month, the total falling from $219,222,718 at the
close of business June 30 to $217,975,431 on July 31. On
July 31, 1937, the same banks had deposits aggregating
$216,704,389.

c/o of Change
Year
Month

STATES
Maryland ..............................................................
Dist. of Columbia ................................................
Virginia ..................................................................
West Virginia ......................................................
North Carolina ..................................................
South Carolina ...................................................

Percentage change from
June 1938 to July 1938
In number
In amount
on payroll
of payroll
— 0.9
+0.1
— 2.8
— 2.3
. — 2.9
— 1.2
— 0.5
+ 2.7
+4.5
+3.9
+2.5
+ 7.2

Commercial F ailures: The insolvency record in the
Fifth district was substantially worse in July than in the
United States as a whole. In comparison with failures
in July last year, the district had an increase of 107
per cent in number and a rise of 144 per cent in liabilities
in July this year, against increases of 61 per cent in
number and 39 per cent in liabilities in the Nation. The
Fifth district record for the year through July is better
than the National record, however, the number of insol­
vencies increasing 20 per cent in the district and 46 per
cent in the United States, and aggregate liabilities in­
volved rising 57 per cent in the district and 62 per cent
in the Nation. Dun & Brad street insolvency figures are
as follows:

3

MONTHLY REVIEW
Number of failures
District U. S.

PERIODS

56
56
27
360
300

July 1938 ..........
June 1938 ..........
July 1937 ............
7 Months, 1938
7 Months, 1937 .

Total Liabilities
U. S.
District

995
1,018
618

$ 440,000
673.000
180.000

$ 10,793,000
12.236.000
7,766,000

7,661
5,260

$4,029,000
2,564,000

$101,655,000
62.581.000

The number of
new passenger automobiles registered in the Fifth district
in July was less than in June in all states except North
and South Carolina, and was much less than in July
last year in all states. North Carolina showed the small­
est decline from July 1937 registrations, while West Vir­
ginia showed the largest decrease. For the first 7 months
of 1938, Virginia registrations declined least from 1937
figures, with West Virginia again showing the largest
decrease. The following figures, compiled by R. L. Polk
& Co., of Detroit, show July and 7 months’ registration
figures for new passenger cars in Fifth district states:

A u to m o b ile N e w C a r R e g is t r a t io n s :

Registration of New Passenger Cars
STATES
Maryland . . .
Dist. of Coll
Virginia
West Va. . . .
No. Carolina
So. Carolina .
District . . .

July
1938
2,214
1,413
2,435
1,332
3,094
1,216
11,704

July
1937
4,809
2,880
4,679
3,597
5,455
2,710
24,130

%

Change
— 54
— 51
— 48
— 63
— 43
— 55
— 51

7 Months 7 Months
1938
Change
1937
-4 9
15,799
30,793
19,599
10,712
-4 5
18,901
— 43
32,955
10,123
— 59
24,473
17,774
— 48
34,164
8,480
-5 3
17,959
81,789
159,9
— 49

C o a l P r o d u c t i o n : Soft coal mined in the United States
in July 1938 totaled 23,460,000 net tons, an increase of 4
per cent over 22,470,000 tons in June 1938 but 27 per cent
less than 31,990,000 tons in July 1937. Total production
of 180,352,000 tons this calendar year to August 6 was
31 per cent less than 260,884,000 tons mined to the same
date last year and 41 per cent less than 305,148,000 tons
dug in the corresponding period in 1929. Hampton Roads
ports shipped 9,658,414 tons in 1938 to August 6 , com­
pared with 12,777,309 tons last year to the same date.
Reserve stocks of coal held by industrial consumers de­
clined in June in tonnage, but since consumption declined
more the reserve stocks in terms of days’ supply rose from
43 at the end of May to 44 at the end of June.
C o t t o n T e x t i l e s : The cotton textile industry expanded
operations in July to a moderate degree, and cotton con­
sumption in the Fifth district mills increased 3 per cent
over June figures but was 18 per cent less than consump­
tion in July last year. Prior to the August 8 cotton con­
dition report the demand for textile products had strength­
ened, and W PA orders had also helped the mills increase
working time. Cotton consumption figures in Fifth dis­
trict states in July 1938, June 1938, July 1937, and in the
first 7 months of last year and this are shown herewith:
m onths

No. Carolina So. Carolina Virginia

District

July 1938 .........................
June 1938 .......................
July 1937 .......................

119,305
115,152
143,568

93,542
93,927
118,014

12,818
9,457
14,833

225,665
218,536
276,415

7 Months, 1938 ................
7 Months, 1937 ..............

820,600
1,205,460

630,075
907,700

76,636
104,617

1,527,311
2,217,777

: In July the market for rayon yarn suddenly ex­
panded amazingly, and the Rayon Organon's index of
deliveries jumped from 473 in June to an all-time high
of 843. To make these shipments, producers drew heavily
on their available stocks, and at the end of July pro­
ducers held 3.1 months’ supply as compared with 3.9
months’ supply held at the end of June. Actual poundage
R ayon




stocks of rayon yarn on July 31 approximated holdings at
the end of 1937. The Organon says that all yarn shipped
in July will not pass at once to ultimate consumers, but
much of it will go toward building up to normal levels the
inventories of yarn, semi-finished and finished goods held
by weavers, converters and other distributors of rayon
goods. An interesting and perhaps extremely important
development in the past month was the introduction of
passenger car tires with rayon bases instead of cotton, put
on the market by two leading tire manufacturers.
C o n s t r u c t i o n : The value of building permits issued in
31 Fifth district cities in July 1938 was $6,967,940, com­
pared with a total valuation of $7,866,938 in July 1937.
Washington led last month with $2,959,910, followed in
order by Baltimore with $829,235, Charleston, W. Va.,
with $671,123, Norfolk with $409,672, and Richmond
with $255,061. Larger figures were reported for July
this year than last in 1 of 5 reporting cities in Maryland,
in 4 of 7 Virginia cities, in 2 of 4 West Virginia cities,
in 3 of 9 North Carolina cities, in 4 of 5 South Carolina
cities, and in Washington, a total of 15 of the 31 cities.
Contracts awarded for all classes of construction in the
Fifth district in July totaled $21,560,000, according to fig­
ures collected by F. W. Dodge Corporation. This rela­
tively low figure shows a decrease of 28 per cent in
comparison with $29,981,000 in June this year and a drop
of 22 per cent below $27,635,000 in July 1937.
C o t t o n : Spot cotton prices, which had advanced above
9 cents per pound early in July, slowly moved downward
during the balance of that month, and dropped further
after the August 8 cotton condition report by the Depart­
ment of Agriculture. The average price on ten Southern
spot markets for middling grade upland cotton on July
8 was 9.15 cents per pound, but on August 5 the average
had declined to 8.49 cents. On August 12, the average
was 8.27 cents. The first condition report on the 1938
crop estimated probable yield at 11,988,000 equivalent
500-lb. bales, approximately 700,000 bales above the aver­
age of several private reports previously issued. While
this year’s crop is nearly 37 per cent lower than the 1937
record yield, and is 9 per cent below the ten-year average,
it is still higher than probable consumption requirements
for American cotton. In the Fifth district, production
figures for 1938 are much lower than last year, actual fig­
ures being shown elsewhere in this Review.
Cotton Consumed and On Hand
(Bales)
July
1938
Fifth district states:
Cotton consumed ...................
Cotton growing states:
Cotton consumed ...................
Cotton on hand July 31 in
Consuming establishments . .
Storage & compresses ___ _.
United States:
Cotton consumed ...................
Cotton on hand July 31 in
Consuming establishments . .
.
Storage & compresses
Exports of cotton .......................

July
1937

225,665

276,415

381,30i6

484,693

1,037,161
9,564,411

1,007,308
2,720,608

449,511

583,011

1,266,983
9,641,201
195,706

1,285,543
2,813,305
124,312

M a n u fa c tu r in g :
The Bureau of Internal
Revenue reports tobacco products manufactured in July
1938 and 1937 as follows:
Tobacco

4

MONTHLY REVIEW
July 1938

R e t a il T

rade i n

Richmond (3)
Baltimore (8)
Washington (6)
Other Cities (13)
District (30) .
Same stores by
States, with 25
stores added:
Virginia (12). . .
West Va. (10..
No. Carolina (8)
So. Carolina (10)
District (55).

—

26,702,350
15,290,072,227
476,489,266
2,816,456

% Change

— 7
—
—

10
12

D epartm ent S tores:

Net Sales
July 1938
comp, with
July
1937
— 4.8
—

July 1937

24,812,074
13,784,357,840
420,510,372
2,731,960

Smoking & Chewing
Tobacco, Pounds ..............
Cigarettes, Number ................
Cigars, Number .......................
Snuff, Pounds ...........................

8.0

2.1

— 15.5
— 5.9

Net Saltes
Stocks
Jan. 1 to date July 31, 1938
comp, with
comp, with
same period July 31 June 30
last year
1937
1938
—
.1
+ .8 - 4 .2
— 7.2
—
6.2
6.8
— 3.3
— 8.7 — 5.1
— 7.1 — 8.8
— 10.9
— 6.7 — 6.1
— 4.6

— 6.4
— 14.1
— 10.4
— 6.5
— 5.9

W h o le s a le T rade,

l in e s

Shoes (4) .........................
Drugs (14) .....................
Dry Goods (7) ................
Electrical* Goods (18) . . .
Groceries (71) ................
Hardware (23) ................
Indus. Supplies (9) . . . .
Plumbing & Heating (9)
Paper & Products (6). .
Tobacco Products (13)
Miscellaneous (16) ........
All Firms (190) ........

—

Ratio July
collections
to accounts
outstanding
July 1
29.7
30.3
24.9
25.3
27.2

1.6

— 15.6
—

8.1

— 10.4
— 5.0

190

1937. A low point of 34,000 acres was reached in 1936.
During the five-year period from 1931 to 1935, the aver­
age estimated production declined to 6,563,000 bushels, a
reduction of 34.5 per cent. On the other hand, acreage
has increased in certain competitive states, particularly
New Jersey, North Carolina and California. Partly be­
cause of the pressure of competition farmers in Accomac
county realized in 1937 an average income of only about
$60.00 per acre from white potatoes. Data on cost of
production in 1937 are not available, but the average cost
in 1936 was found to be about $67.00 per acre and it is
known that 1937 costs were somewhat higher. North­
ampton county farmers did somewhat better in 1937 since
they realized an average income of about $90.00 per acre.
Average cost of production was about $73.00 an acre in
1936 and somewhat higher in 1937.*

F ir m s :

Net Sales
July 1938
comp., with
July
June
1937
1938
— 26.8
+ 30.5
— 5.5
+ 1.1
— 23.9
+
-8
— 29.4
— 3.3
— 3.4
— 18.3
— 25.3
— 9.1
— 30.9
— 13.3
— 9.2
— 8.0
— 10.0
+ 6.5
- 5.4
— 6.6
— 19.9
— 7.2
— 18.8
— 2.4

Stocks
July 31, 1938
comp, with
July 31 June 30
1937
1938
— 33.4
+ 57.1
— 1.3
— .3
— 40.7
+ 7.6
-1 4 .8
— .8
— 19.5
— 2.6
— 3.7
+ 3.7
— 7.0
— 4.1
— 9.S
+ 2.4
— 8.8
- 1.4
+ 8.6
+ 10.7
— 6.3
+ 1.8
— 16.8
+ 6.1

Ratio July
collections
to accounts
outstanding
July 1
60.5
91.2
37.1
73.5
86.7
40.9
55.8
61.6
54.8
81.5
43.6
62.5

Note: Wholesale trade figures are included by arrangement with the
Bureau of Foreign & Domestic Commerce. Only 137 firms reported on re­
ceivables and collections, and only 95 on inventories.

On the whole, weather in July was favorable for de­
velopment of crops in the Fifth district except for tobacco.
The accompanying figures show forecasts based on Au­
gust 1 condition, compared with yields in 1937 and in
the ten-year period 1927-1936. Estimates for 1938 which
were increased or decreased last month are indicated by
+ or — signs, respectively.
Cotton (Bales)
% Change

Acreage
,
North Carolina ..,, ,
South Carolina .. ,
Maryland..............

Maryland

CROP FO RECA STS
Over a period of years, white potatoes is the third
ranking cash crop in the Fifth district, and special atten­
tion to prospects for 1938 is pertinent. According to
official reports, the crop will fall somewhat under the
production for 1937 and also under the 1927-1936 aver­
age. This decline in production is accounted for by the
decrease in acreage devoted to this crop from 276,000
acres in 1937 to 245,400 acres in 1938, a decline which is
not fully offset by the indicated increase in the yield per
acre from 1 1 1 bushels in 1937 to 119 in 1938. It is sig­
nificant that the yield per acre in both years is higher
than that for the ten-year average, 1927-1936, of 110
bushels. The indicated production in 1938 for the coun­
try as a whole is about 4 per cent higher than the ten-year
average, while production in the Fifth district is more
than one per cent lower than the ten-year average.
Until recently the Eastern Shore of Virginia (Acco­
mac and Northampton counties) was the largest producer
of white potatoes in the intermediate area (Kansas, Ken­
tucky, Maryland, Missouri, Virginia, Nebraska and New
Jersey). In 1935 the New Jersey acreage exceeded the
Eastern Shore acreage. This was the first time that the
Virginia district had not been dominant in the group. The
trend in acreage planted was downward from 1924 to
1937. Approximately 67,000 acres were planted in these
two counties in 1924 as compared with 41,500 acres in




....

....
West Virginia . . . , , . .
North Carolina ...
South Carolina . . , . . . .
............

West Virginia . . . , . . .
North Carolina . ....
South Carolina . .,. . . .
Maryland

............ . . . .
....
West Virginia
North Carolina . .,
South Carolina .. . . . .
............ . . . .
....
West Virginia
....
North Carolina . , . . .
.
South Carolina .. . . . .

Maryland

Maryland

............
.. . ,
North CaroMna .. ....
South Carolina .... . . .
Maryland

............ . . . .

West Virginia .. , . . . .
North Carolina . , , . .
South Carolina .. , . . . .
Maryland

............

West Virginia
North Carolina . ,
Maryland

............

West Virginia .. .
North Carolina ..
South Carolina .

— 35
— 18
— 23

YieM
1938

Yield
1937

18,000
43,000
780,000
453,000
691,000
1,023,000
Wheat (Bushels)
9,420,000
9,044,000
— 1
8,624,000 +
— 5
9,720,000
2,464,000 +
— 7
2,736,000
— 2
5,554,000
5,817,000
1,416,000
+12
1,837,000
Corn (Bushels)
— 2
18,216,000 +
18,576,000
37,740,000
— 2
34,800,000 +
14,245,000
— 10
12,349,000 —
44,650,000
45,357,000
+ 1
27,945,000 +
+12
24,945,000
Oats (Bushels)
1,083,000
+ 3
1,131,000 —
+10
1,936,000 +
1,680,000
1,520,000
0
1,634,000 +
0
5,060,000 +
4,830,000
10,648,000
10,076,000
+ 2
Hay (Tons)
518,000
+ 3
536,000
1,204,000
1,158,000
+ 4
802,000
741,000
+ 5
925,000 +
824,000
+ 6
468,000 +
502,000
+ 4
Sweet Potatoes (Bushels)
0
1,000,000
1,280,000
— 3
4,180,000 —
5,070,000
8,772,000
8,160,000'
+ 1
6,270,000 +
+16
5,130,000
Tobacco (Pounds)
28,875,000
25,200,000
+ 7
0
97,982,000 —
107,276,000
+17
3,920,000 —
3,408,000
530,650,000 —
595,530,000
— 4
86,860,000
108,080,000
— 7
Apples (Bushels)
2,194,000
2,847,000
18,000,000
10,320,000 +
10,004,000
5,520,000
2,544,000
4,505,000
White Potatoes (Bushels)
3,480,000
3,360,000 +
— 7
10,920,000
— 13
10,401,000
3,264,000
3,040,000 —
0
9,894,000
9,828,000 —
— 13
2,596,000 +
3,120,000
— 15

Yield
1927-1936
40,000
710,000
798,000
8,372,000
8,598,000
1,855,000
4,275,000
974,000
15,477,000
32,199,000
12,104,000
40,787,000
21,161,000
1,407,000
2,389,000
2,366,000
3,682,000
8,316,000
468,000
907,000
661,000
630,000
309,000
1,205,000
4,282,000
7,915,000
4,898,000
25,560,000
99,838,000
3,304,000
481,939,000
76,724,000
1,920,000
11,533,000
5,780,000
2,928,000
3,348,000
12,998,000
3,150,000
7,729,000
2,419,000

* For further information on this subject see Publication No. 40,407, a
“ Survey of Conditions affecting the Production & Marketing of White
Potatoes on the Eastern Shore of Virginia” , by J. L. Maxton & J. H.
Heckman, Agricul. Exper. Station, V. P. I.

MONTHLY REVIEW, August 31, 1938

FEDERAL RESERVE BANK OF RICHMOND

SUMMARY OF NATIONAL BUSINESS CONDITIONS
(Compiled by the Board of Governors of the Federal Reserve System)
INDUSTRIAL PRODUCTION

Industrial activity increased in July, when there is usually a considerable
decline, and rose somewhat further in the first three weeks of August.
PRODUCTION

Index of physical volume of production, adjust­
ed for seasonal variation, 1923-1925 average=
100. By months, January 1934 to July 1938.

CONSTRUCTION CONTRACTS AWARDED

Volume of industrial production increased from 77 percent of the 1923-1925
average in June to 83 percent in July, according to the Board's index which is
adjusted for changes in the number of working days and for usual seasonal
variations. Steel output rose sharply, lumber production also increased, and
output of cement and glass was maintained. Automobile production declined
somewhat further. In the first three weeks o f August activity at steel mills
was at a rate of around 40 percent of capacity as compared with an average
of 35 percent in July, while in the automobile industry there was more than the
usual seasonal reduction in output as producers closed plants somewhat earlier
than in other recent years to prepare for the shift to new model production.
At textile mills activity in July showed a further rise, marked increases
being reported in mill consumption of cotton and wool and in shipments of
rayon yarn. Shoe production also increased substantially, following a decline
in June.
Bituminous coal production advanced somewhat in July, and output of
crude petroleum was at a much higher rate, reflecting chiefly a return to pro­
duction on a six-day week basis in Texas. Anthracite production decreased
sharply following a considerable volume of output during May and June.
Value o f construction contracts awarded in 37 eastern States showed little
change from June to July, according to figures of the F. W. Dodge Corporation.
Contracts for residential building continued to increase, and there was an in­
crease also in commercial building, reflecting the award of a contract for a
large office building. Factory construction remained at a low level and declines
were reported in most other tjipes of construction.
EMPLOYMENT

Three-month moving averages of F. W . Dodge
data for value of contracts awarded in 37 Eastern
States, adjusted for seasonal variation. Latest
figures based on data for May and June and esti­
mate for July.

WHOLESALE PRICES

Factory employment and payrolls, which usually decline at this season, in­
creased somewhat from -the middle of June to the middle of July. There were
substantial increases in the number employed at textile mills, clothing establish­
ments, and shoe factories, and at railroad repair shops there was a slight in­
crease. In the machinery and automobile industries employment declined some­
what further. In non-manufacturing industries the principal changes in employ­
ment were a decrease at mines and an increase on the railroads.
AGRICULTURE

A domestic cotton crop of 12,000,000 bales was indicated on August 1, ac­
cording to the Department of Agriculture. Last season the crop was 19,000,000
bales and, with world consumption of American cotton about 11,000,000 bales,
the carryover increased sharply to 13,500,000 bales. The wheat crop was fore­
cast at 956,000,000 bushels, as compared with 874,000,000 bushels harvested last
year and usual domestic consumption of about 670,000,000 bushels. Production
estimates for most other major crops were slightly under the large harvests of a
year ago. Preliminary estimates by the Department of Agriculture indicate
that cash farm income, including Government payments, will total $7,500,000,000
for the calendar year 1938, a decline of 12 percent from last year, which was
the highest since 1929.
DISTRIBUTION

Indexes compiled by the U. S. Bureau of Labor
Statistics, 1926=100. By weeks, 1934 to week
ending August 20, 1938.

MEM BER BANK RESERVES AND RELATED ITEMS

In July department store sales declined by less than the usual seasonal
amount, while sales at variety stores and mail-order houses decreased seasonally.
Retail sales of automobiles increased somewhat, although there is ordinarily a
decline in July. In the first half of August sales at department stores showed
less than the usual seasonal rise.
Freight-car loadings increased from June to July, reflecting chiefly larger
shipments of grain, coal, and miscellaneous freight.
COMMODITY PRICES

Prices o f grains, cotton, livestock, and meats were lower in the third
week of August than in the middle of July, while prices of most industrial
commodities were unchanged. Steel scrap advanced further in July, then de­
clined somewhat in the first half of August. Cotton grey goods also declined in
the early part of August, while prices of copper and rubber were maintained,
following increases in the latter part of July.
BANK CREDIT

Wednesday figures, January 3, 1934, to August
17, 1938.




Excess reserves of member banks declined by about $230,000,000 in the five
weeks ending August 17 to a total of $2,930,000,000, following a steady growth
from the middle of April to a peak on July 13. The decline in reserves was
largely the result of an increase in Treasury deposits with the Reserve banks,
reflecting receipts from weekly Treasury bill offerings in excess of maturities and
a sale of Reconstruction Finance Corporation notes. Most of the decrease in
excess reserves was at city banks.
Following substantial declines since the autumn of last year, commercial
loans and brokers' loans at reporting member banks in 101 leading cities increased
somewhat during the first half of August. Member banks in leading cities added
about $170,000,000 to their holdings of investments in the middle of July, mainly
United States Government guaranteed obligations, but thereafter their holdings
showed little change.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102