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MONTHLY REVIEW o f Financial and Business Conditions F ifth Federal Federal Reserve Bank, Richmond, Va. I N the Fifth Federal Reserve district the volume of Fed eral Reserve notes in actual circulation continued to decline seasonally between the middle of January and the middle of February, and member banks further added to their reserve balances at the Reserve bank. Reporting member banks in leading cities reduced loans and dis counts, and demand deposits declined proportionally. Time deposits, however, increased slightly during the past month in both reporting member banks and mutual savings banks. Debits to individual accounts figures, reflecting transac tions through banks in 24 Fifth district cities, were more than seasonally below debits in December and showed a larger percentage decline in comparison with January 1937 debits than the percentage decrease in any other month for several years. For the first time since the banking holiday in March 1933, every reporting city had lower debit figures in January 1938 than in the corresponding month of the preceding year. Trade and industry is at a relatively low level in Janu ary in most years, and this year the comparison with De cember appears somewhat more adverse than usual. Em ployment conditions on the whole grew worse, chiefly due to shortened hours with lower payrolls, notwithstanding favorable weather for outside work and less seasonal de cline in employment of this nature than in average mid winter. Commercial failures in both the Fifth district and the United States increased over December insolvencies, a seasonal result of pressure caused by year-end settle ments. In comparison with January 1937 failures, the district in January 1938 showed a small decline in num ber and an increase in liabilities involved, but compared more favorably with figures for the preceding year than the Nation in both number and liabilities. Sales of new automobiles in the district declined approximately 33 per cent from the December figures, and were 48 per cent lower than registrations in January last year. Construc tion work provided for in building permits issued and con tracts actually awarded in the district in January was in about the same volume as in December, but was substan tially lower in estimated valuation than the work provided Reserve Dist r ic t February 28,1938 for in January 1937. Coal production in January was materially lower than in either December or January last year, due chiefly to reduced use of fuel in industry. Cot ton textile mills in the Fifth district operated in January at approximately the December level, and s h i p m e n t s roughly balanced production. Inventories of cotton goods in secondary hands are reported semi-officially to be sub stantially lower than two or three months ago, and during the same period the mills have also lowered their manu factured stocks to a moderate degree. Rayon manufac turers shipped about a third more yarn in January than in December, but they did not restrict operations to as great an extent as cotton mills and their yarn stocks increased slightly during the month. Cotton prices advanced a little in late January and the first half of February, and mill margins of profit narrowed when cloth prices failed to reflect the cotton advance. Tobacco markets in North Carolina and Virginia operated in January, but the tobacco handled was lower in grade than earlier in the season and prices declined accordingly. Tobacco manufacturing de clined in comparison with January 1937 figures for all products except chewing and smoking tobacco, but cigar ette output exceeded that of December. Retail trade in January continued to hold up well in comparison with developments in other lines of trade, sales in Fifth district department stores slightly exceeding sales in January last year, and inventories in reporting stores averaging about 5 per cent below inventories on January 31, 1937. There were no developments last month in agriculture, but un usually warm weather in February advanced vegetation to a dangerous point if severe weather occurs later. There follows a statistical summary of conditions de% scribed above: Jan. 1938_____ Jan. 1937 Change Debits to individual accounts (24 $1,201,934,000 $1,359,793,000 — 11.6 cities) ............................................ 59 61 — 3.3 No. of business failures, 5th district 719,000 $ 523,000 + 37.5 Liabilities in failures, 5th district.. $ 7,291,464 $ 7,243,656 + .7 Sales, 56 dept, stores, 5th district... $ 9,110,000 $ 10,523,000 — 13.4 Sales, 133 wholesale firms, 5th dist.. $ 9,916 19,188 — 48.3 Registrations, new passenger autos. 4,125,673 $ 5,672,717 — 27.3 Value bldg. permits (31 c itie s )..... $ Value of contracts awarded, 5th dist. $ 19,438,000 $ 28,647,900 — 32.1 216,303 315,420 — 31.4 Cotton consumption, 5th dist. (bales) 30,173,000 40,940,000 — 26.3 Soft coal mined, U. S. (tons).......... 2 MONTHLY REVIEW BA N K IN G CONDITIONS eserve B a n k Statem en t: Changes in items on the statement of the Federal Reserve Bank of Richmond be tween the middle of January and the middle of February were seasonal. The circulation of Federal Reserve notes dropped by $7,577,000 as the return flow of currency con tinued after the passing of the holiday season, and member bank reserve deposits rose by $3,801,000 during the month. Little change occurred in the bank's earning assets, dis counts held and industrial advances declining $36,000 and $52,000, respectively, while the portfolio of open market paper rose by $1,000. Cash reserves of the bank rose $1,593,000 between January 15 and February 15, and the ratio of cash reserves to note and deposit liabili ties combined gained approximately a tenth of a point. R ITEMS E'iscounts held .............................................. Open market paper ..................................... Industrial advances ..................................... Government securities ......................... • Total earning assets ............................... Circulation of Fed. Res. notes .................. Members’ reserve deposits ......................... Cash reserves ................................................ Reserve ratio ................................................ 000 omitted Feb. 15 Jan. 15 1938 1938 $ 523 $ 559 24 23 1,707 1.759 _136,297______ 136,297 138,551 138,638 195,377 202,954 222,014 218,213 307,930 306,337 69.81 69.68 Feb. 15 1937 4 25 2,548 _2.33.417 135,994 1917,378 211,325 303,997 69.90 $ E xcess R e ser ves: A study of member bank reserves in the Fifth district has recently been made, covering the week ending January 14, 1938. In reserve cities, 11 Balti more banks had excess reserves averaging 38 per cent of required reserves, 13 Washington banks 37 per cent, 5 Richmond banks 17 per cent, and 4 Charlotte banks 15 per cent, an average excess for 33 reserve city banks of 32 per cent of required reserves. Country bank figures varied more widely, as indicated in the following table: Percent of excess reserves to required reserves Less than 10............................................ 10 to 25 .................................................. 25 to 50 .................................................. 50 to 75 .................................................. 75 to 100 ................................................ 100 or more ............................................ Total .............................................. No. of banks 119 88 86 33 18 28 372 % of total no. of banks 32.0 23.7 23.1 8.9 4.8 7.5 100. In addition, the 372 country banks had balances “ due from domestic banks” totaling 182.4 per cent of required re serves. These balances, combined with excess reserves at the Federal Reserve bank, were equal to more than 200 per cent of required reserves. However, all balances with correspondent banks cannot be considered as equivalent to excess reserve, because they are not available in their entirety for transfer to the Federal Reserve bank. 41 R e p o r t i n g M e m b e r B a n k s : Fortyone member banks in 12 leading Fifth district cities which regularly send weekly condition reports to the Reserve bank showed declines in all principal items except time deposits between the middle of January and the middle of February. Loans and discounts decreased $7,611,000 and demand deposits dropped $7,505,000. Investments in securities declined $4,851,000 during the month, and cash holdings in vaults were reduced by $2,812,000. Aggre gate reserve balance of the 41 banks at the Reserve bank showed no more than a daily fluctuation, declining $442,000 between January 12 and February 16. Time deposits showed a rise of $1,029,000. Statem en t of February 16, 1938, figures showed three substantial changes in comparison with February 17, 1937, figures. Loans and discounts rose $13,846,000, but investment in securities dropped $45,087,000 during the year and de mand deposits declined $19,738,000. 000 omitted Jan. 12 1938 $251,281 389,379 137,296 19,006 448,616 194,702 0 Feb. 16 ITEMS Loans & discounts ................... ................... Investments in securities , , . ................... Reserve bal. with F. R. bank .................. Cash in vaults ........................... ................... Demand deposits ....................... ................... Time deposits .............................. .................... Money borrowed ....................... .............. 1938 $243,670 384,528 136,854 16,194 441,111 195,731 0 Feb. 17 1937 $229,824 429,615 132,401 17,484 460,849 196,852 0 D e b i t s t o I n d i v i d u a l A c c o u n t s : The volume of checks drawn against accounts of individuals, firms and corpora tions in the banks in 24 Fifth district cities in January 1938 was 15.2 per cent less than the aggregate of checks drawn in December 1937 and 11.6 per cent below the total for January last year. Every reporting city showed lower figures for last month than for either the preceding month or the corresponding month last year. The following per centages show how debits in each month of the past year compared with debits in the corresponding month of the preceding year: January 1937 + 20 .7 % ; February + 16.0 % ; March + 2 5 .0 % ; April + 19 .7 % ; May + 16 .5 % ; June +9.6% ; July + 8 .1% ; August +6.9% ; September + 8 .6 % ; October + 3 .5 % ; November + 2 .5 % ; Decem ber —4 .1% ; January 1938 —11.6 % . These figures il lustrate the decline in the volume of business transacted by checks since the high point in March 1937 in compari son with business a year earlier. c it ie s Maryland Baltimore .......... Cumberland . . . . Hagerstown . . . . Jan. 1938 , 000 omitted Dec. Jan. 1937 1937 % of Change Month Year $ 333,781 6,291 7,538 $ 402,105 9,117 8,682 $ 392,921 8,619 8,459 — 17.0 — 31.0 — 13.2 — 15.1 — 27.0 — 10.9 Dist. of Col. Washington 246,204 283,615 258,811 -1 3 .2 - 4.9 Virginia Danville ........... Lynchburg . . . . . Newport News . Norfolk .............. Portsmouth . . . . Richmond .......... Roanoke . . . . . . . 9,396 15,281 8,208 48,509 4,089 160,986 24,308 12,442 16,162 10,443 56,604 4,698 176,927 30,695 10,801 16,902 9,664 52,493 4,397 185,655 31,093 — 24.5 — 5.5 — 21.4 — 14.3 — 13.0 — 9.0 — 20.8 — 13.0 — 9.6 — 15.1 — 7.6 — 7.0 — 13.3 — 21.8 West Virginia Charleston ........ Huntington . . . . 49,657 15,602 71,157 20,064 51,676 16,836 — 30.2 — 22.2 — 3.9 — 7.3 Wilmington . . . . Winston-Salem . 12,296 51,749 28,612 17,571 39,959 10,196 40,702 13,992 62,151 33,443 19,543 48,742 11,620 45,534 13,111 62,113 30,636 19,647 45,736 11,459 43,737 -1 2 .1 — 16.7 — 14.4 — 10.1 — 18.0 -1 2 .3 — 10.6 — 6.2 — 16.7 — 6.6 — 10.6 — 12.6 — 11.0 — 6.9 South Carolina Charleston ........ Columbia .......... Greenville . . . . Spartanburg . .. 16,766 26,472 18,707 9,054 17,909 31,228 19,707 10,676 19,884 30,574 23,947 10,622 — 6.4 — 15.2 — 5.1 — 15.2 — 15.7 — 13.4 — 21.9 -1 4 .8 $1,201,934 $1,417,256 $1,359,793 — 15.2 -1 1 .6 North Carolina Asheville ............ Charlotte .......... Durham ............ Greensboro ........ District Totals . . M u t u a l S a v i n g s B a n k D e p o s i t s : At the end of Janu ary 1938, ten mutual savings banks in Baltimore had de posits aggregating $219,551,305, an increase of 3/10ths of 1 per cent over deposits totaling $218,947,860 on De cember 31, 1937, and a gain of 2.5 per cent over $214,116,289 on deposit on January 31, 1937. Deposits at the end of January 1938 were the highest on record in the ten banks for the second successive month. MONTHLY REVIEW B U SIN E SS CONDITIONS E m ploym ent : Employment conditions did not improve in the Fifth district in January, but on the contrary there appears to have been some increase in workers laid off en tirely and a greater reduction in payrolls through short ened hours. The volume of construction work under way in January was about the same as in December, but was much below the January 1937 level. Coal output in Janu ary was substantially below output in either December or last January. Textile mills and rayon plants operated at approximately the December rate, but a number of less important industries worked on sharply reduced schedules. The following figures, compiled by the Bureau of Labor Statistics from records submitted by a large number of identical industries, show the trends of employment and payrolls in the Fifth district from December to January: STATES Maryland ........................................ L’. of Columbia............................... Virginia .......................................... West Virginia ............................... North Carolina ............................. South Carolina ............................... ..................... ..................... ..................... ..................... ..................... ..................... Percentage change from Dec. 1937 to Jan. 1938 In number In amount on payroll of payroll — 10.6 — 9.8 — 13.5 — 10.7 — 4.3 — 9.2 — 24.4 — 7.7 — 2.2 — 4.3 — 1.8 — 6.1 C o m m e r c i a l F a i l u r e s : Due to the pressure of year-end settlements, business failures usually rise in January, and in the Fifth district last month bankruptcies increased 37.2 per cent in number in comparison with December fail ures, while aggregate liabilities involved rose by 101.4 per cent. At the same time, bankruptcies in the United States rose in number by 41.6 per cent, but liabilities in volved rose only 13.1 per cent. Fifth district insolvency figures in January 1938 for both number and liabilities compared more favorably than National figures with the corresponding data a year earlier. January 1938 failures in the Fifth district decreased 3.3 per cent in comparison with January 1937 insolvencies, while the United States showed an increase in number of 62.8 per cent. Further, Fifth district liability figures in January this year were only 37.5 per cent higher than liabilities in January 1937, while the United States showed a rise in liabilities of 73.6 per cent during the year. PERIOD January, 1938 ..................... December 1937 ................... January 1937 ..................... Number of failures District U. S. 59 1,320 43 932 61 811 Total Liabilities District U. S. $ 719,000 $15,035,000 357,000 13,291,000 523,000 8,661,000 A u t o m o b il e N e w C a r R e g is t r a t io n s : Sales of new passenger automobiles in January in the Fifth district de clined nearly 33 per cent from sales in December, and were 48.3 per cent less than January 1937 sales. The de cline in comparison with January a year ago was compara tively uniform throughout the district, varying from a decrease of 40.1 per cent in Virginia sales to 51.8 per cent in North Carolina. Of the cars sold in January this year, 65.4 per cent were models of the three most popular makes, while 66.8 per cent of cars sold in January 1937 were of the same makes. The following figures on sales were re ported by R. L. Polk & Company of Detroit: Registrations of New Passenger Cars STATES January 1938 January 1937 9c Change Maryland ................................................. 1,648 3,373 — 51.1 Dist. of Col............................................... 1,115 2,137 —47.8 Virginia ................................................... 2,441 4,076 — 40.1 West Virginia ..................... .................. 1,124 2,303 —51.2 North Carolina ................... .................. 2,404 4,991 —51.8 South Carolina ..................... .................. 1,184 ~ _________ 2,308___________—48.7 Totals ......................... 9,916 19,188 —48.3 3 C o n s t r u c t io n : New building provided for in permits issued and contracts awarded shows some signs of revival, but total figures continue much below the figures for the corresponding period a year ago. Building permits is sued in January 1938 in 31 Fifth district cities totaled $4,125,673, a decrease of 27.3 per cent in comparison with permits issued in January 1937 totaling $5,672,717, but 16 of the 31 cities reported higher figures for the later month. Baltimore and Washington, with a combined de cline of 53.6 per cent, accounted for most of the district decrease. The five leading cities in order in value of per mits issued last month were Washington, Charlotte, Balti more, Norfolk and Richmond, the Charlotte and Norfolk figures being much larger than January 1937 figures. Contract awards for all types of construction, both rural and urban, totaled $19,438,000 in the Fifth district in January 1938, a decrease of 32.1 per cent in comparison with awards totaling $28,647,900 in January 1937, ac cording to figures collected by F. W. Dodge Corporation. Of last month's contracts, $4,587,000 represented resi dential work, compared with $11,241,700 for this type of work in January 1937, a decrease this year of 59.2 per cent. Contract award figures include such projects as bridges, roads, dams and other engineering work as well as industrial, commercial and residential buildings. M in in g : Bituminous coal mines in the United States dug 30,173,000 net tons of coal in January 1938, compared with 36,226,000 tons in December 1937 and 40.940.000 tons in January last year. On a daily basis, output for January this year was 1,202,000 tons, against 1.393.000 tons in December and 1,631,000 tons in Janu ary 1937. Hampton Roads ports shipped 1,829,430 tons between January 1 and February 5, 1938, compared with 2,546,984 tons shipped through the same ports in the cor responding period last year. Coal Co tto n T e x t il e s : Mill activity increased somewhat in early January, but slackened again toward the end of the month when production began to exceed shipments and mill inventories increased. Indications are that stocks of cotton goods in finishing and garment manufacturing establishments, as well as in wholesale and retail channels, have decreased considerably during recent weeks. Prices of textile products have not advanced as much as cotton prices, and mill margins narrowed in late January and the first half of February. Consumption of cotton by states in the Fifth district in January 1938, December 1937 and January 1937, in bales, is shown in the accompanying table: MONTHS No. Carolina So. Carolina Virginia January 1938 ........................... December 1937 ......................... January 1937 ............................... 116,448 104,593 174,415 89,303 93,865 127,699 10,552 10,237 13,306 District 216,303 208,695 315,420 Spindle activity in December declined to an average of 214 hours per spindle in place for the United States as a whole. South Carolina led all states with 287 hours per spindle in place, and Virginia with 232 hours tied for seventh place and was above the National average, but North Carolina dropped to ninth place and below the aver age with 2 11 hours per spindle. Total spindle hours of operation in December numbered 5,726,020,185 hours, of which the Carolinas and Virginia accounted for 3,058,102,237 hours, or 53.4 per cent, although the three states con tain only 46.4 per cent of spindles in place. 4 MONTHLY REVIEW R a y o n : The Rayon Organon index of deliveries of yarn by manufacturers was 374 in January 1938, in comparison with 240 in December and 737 in January last year, the index being based on average monthly shipments in 19231925 as ICO. At the end of January rayon manufacturers held 2.8 months’ supply, based on average shipments in the past 12 months. According to the Organon, prices of yarn were materially reduced in December and January, placing rayon in a favorable bargaining position with other textile fibers. Weavers’ excess stocks of rayon woven goods, except highly seasonal lines, have been largely reduced by drastic liquidation of inventories in the past five months, and the trade expects that even a hand-to-mouth yarn buying policy over the next few months will continue to lift rayon deliveries from the ex ceedingly low point reached in December. C otton : Spot cotton prices on ten Southern markets advanced slowly but steadily during the last week in Janu ary and the first half of February, and on February 11 averaged 8.82 cents per pound for 7/8 inch staple, middling grade. The Commodity Credit Corporation received re ports on a total of 4,936,000 bales of the 1937 crop pledged on Government loans through February 10. E x ports of cotton in January, while smaller than in December, exceeded January 1937 shipments abroad, and Japan came back into the market strongly for 108,584 bales after tak ing only 119,921 bales between August 1 and December 31, 1937. Japanese use of cotton has been reduced sub stantially in the past year by Government regulations re quiring the inclusion of rayon fibers in all cotton textiles, averaging about 10 to 15 per cent. Japan has become the leading manufacturer of rayon yarn, but has to import COttOn. Cotton Consumed and On Hand (Bales) Jan. Jan. 1938 1937 Fifth district states: Cotton consumed ................... Aug.l to Jan. 31 This Year Last Year 315,420 1.511,593 2,631,857 3,223,525 17,625,606 3,005,494 20,631,100 575,472,031 11,438,188 1,055,180 12,493,368 435,121,786 $14.41 19.27 15.09 24.47 $16.73 39.59 18.65 22.92 Virginia (Flue-cured) ........ (Fire-cured) ........ (Burley) ................ (Sun-cured) ........ Virginia. Total .................... Va. Season to 1/31/38 ........ 12,519,845 9,355,594 7,841,406 1,362,843 31,079,688 119,819,250 10,116,549 9,380.583 3,652,790 1,605,876 24,755,798 111.297,855 $13.50 11.02 17.13 9.30 13.48 20.54 $18.06 14.10 33.90 16.44 18.79 21.74 South Carolina, Season . . . 2,073,679 6,778,820 647,481 538,280 678,786 3,085,298 3,855,288 3,832,247 3,435,082 T obacco M a r k e t in g : Although most leaf tobacco was sold prior to the Christmas holidays, 14 markets in North Carolina and 18 in Virginia were open in January and 101,352,469 69,841,461 $20.83 $19.89 obacco M a n u f a c t u r in g : The Bureau of Internal Rev enue reports tobacco products manufactured in January 1938 and 1937 as follows: T Jan. 1938 R e t a il T rade in D Jan. 1937 23,354,516 13,058,452,906 328,574,263 2,925,067 Smoking & Chewing Tobacco, Pounds Cigarettes, Number . Cigars, Number ........ Snuff, Pounds .......... 22,785,433 13,436,210,177 356,996,363 2,973,836 Richmond (3) Baltimore (8) Washington (6) . Other Cities (15) District (30) + 8.7 + .7 — 2.3 4* *1 + .3 Same stores by States with 26 stores added: Virginia (13) ............ West Virginia (9) . . . North Carolina (8) South Carolina (11) . District (56) .......... % Change + 2.5 — 2.8 — 8.0 1.6 — S tores : epartm ent Net Sales Jan. 1938 comp, with January 1937 Stocks Ratio Jan. Jan. 31, 1938 collections to accounts compared with Jan.31 Dec. 31 outstanding January 1 1937 1937 33.0 + 7.8 — 7.1 — 7.9 — 10.0 33.1 — 7.4 — 4.8 27.6 + 2.8 — 3.0 29.8 — 4.9 — 6.8 30.2 + 8.2 + 13.7 — 3.2 — 7.1 + -7 h olesale T rade LINES 1,755,065 6,689,943 United States: 434,740 Cotton consumed ................... Cotton on hand Jan. 31 in . 1,762,609 Consuming establishments . Storage & compresses ........ . 11,771,749 North Carolina (Flue-cured) (Burley) .. North Carolina, Total ........ N. C. Season to 1 /31 /3 8 ___ 1,801,477 565,270 Producer’s Tobacco Sales, Lbs. Price per Cwt. Jan. 1938 Jan. 1937 1938 1937 STATES W 216,303 Cotton growing states: 373,080 Cotton consumed ................... Cotton on hand Jan. 31 la Consuming establishments . . 1,489,994 Storage & Compresses ----- . 11,684,083 Exports of cotton ....................... sold 51,710,788 pounds of relatively low grade tobacco. Prices declined as the end of the season* approached, as usual when growers sell the odds and ends of the crop. Sales last month and for the season to February 1 were as follows: ' Drugs (14) ..................... Dry Goods (6) ................ Electrical Goods (28) General Hardward (23). Groceries (20) ................ Industrial Supplies (10) Plumbing & Heating (8) Paper & Products (6). . Miscellaneous (13) ........ All Firms (133) ........ , 133 F ir m s : Net Sales Jan. 1938 comp, with Dec. Jan. 1937 1937 — 26.2 + 145.8 — 3.4 — .5 — 28.4 + 1.2 — 42.2 — 28.9 — 16.3 + 11.4 — 4.0 — 9.0 — 33.5 — 5.7 — 8.9 — 21.6 — 13.8 — 3.0 - 2.9 — 17.0 — 13.4 — 9.3 Stocks Jan. 31, 1938 compared with Jan. 31 Dec. 31 1937 1937 — 18.2 + 3.1 — 3.6 + 15.4 + 4.1 — .4 + 5.4 .0 + 4.9 + 5.1 + -8 + 8.4 + 4.8 + 14.2 + -3 + 3.9 + -3 — 1.3 + 6.2 + 4.9 — 5.3 + 3.5 Ratio Jan. collections to accounts outstanding January 1 46.5 93.6 42.3 72.5 44.6 109.3 65.1 56,8 57.4 69.6 63.0 Note: The wholesale trade figures are included through the courtesy of the Bureau of Foreign & Domestic Commerce. Only 81 of the 133 whole sale firms reported on stocks, and 98 reported on receivables and collections. (Compiled February 21, 1938) MONTHLY REVIEW, February 28, 1938 FEDERAL' RESERVE BANK? OF RICHMOND SUMMARY OF NATIONAL BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reserve System) IN D U S T R IA L PRODUCTION The decline in business activity, which had been rapid during the last quarter o f 1937, continued in January but at a slower rate. PRODUCTION Index of physical volume of production, ad justed for seasonal variation, 1923-1925 average =100. By months, January 1929 to January 1938. FACTORY E M P L O Y M EN T AN D PAY RO LLS Indexes of number employed and payrolls, with out adjustment for seasonal variation, 1923-1925 average=100. By months, January 1929 to Janu ary 1938. W H O LESALE P R IC E S Volume o f industrial production, as measured by the Board's seasonally adjusted index, was at 81 percent o f the 1923-1925 average in January as compared with 84 percent in December. Output o f durable goods continued to decline, reflecting chiefly considerable decreases in production o f automo biles and plate glass and a further decline in output o f lumber. Steel ingot production increased somewhat, the output fo r January averaging 30 percent o f capacity. In the first three weeks o f February, activity at steel mills showed little change at about 31 percent o f capacity, while production o f automobiles was at a lower rate than in January. In the textile industries, activity at silk and rayon mills in January showed a sharp rise from the low levels reached in December. A t cotton mills, how ever, there was less than the usual seasonal increase and output o f woolen products continued in small volume. Shoe production, which also had been at a low rate in December, increased considerably in January, and activity at meat-packing establishments rose somewhat further. Output o f tobacco prod ucts remained at a high level, while sugar meltings declined. A t mines, bitumi nous coal production was considerably smaller than in December, and there was also a reduction in output o f nonferrous metals. Petroleum production continued at the high level o f other recent months. Value o f construction contracts awarded in January was smaller than in December and somewhat below the level maintained during the last fou r months o f 1937, according to figures o f the F. W. Dodge Corporation. Contracts awarded fo r public projects increased somewhat further, while awards fo r private work continued to decline, reflecting a further decrease in residential building and a sharp reduction in awards fo r factory construction. In the first half o f Feb ruary awards fo r private projects were at about the same rate as in January, while those fo r public work showed a sharp decline. EMPLOYMENT Factory employment and payrolls declined substantially further between the middle o f December and the middle o f January. In the durable goods industries, decreases in employment were general and were particularly large at factories producing automobiles, steel, and machinery. Employment in non durable goods industries showed a somewhat smaller decline than in previous months. There was some increase in the number employed at shoe factories and little change in the food industries as a group, but in other nondurable goods industries employment continued to decrease. Employment on the rail roads, in mining, and in the construction industry also declined. DISTRIBUTION Department stores sales showed a seasonal decrease from December to January, while sales at variety stores and mail order sales declined by more than the usual seasonal amount. Freight-car loadings continued to decline in January, reflecting principally a reduction in shipments o f coal. Index compiled by the United States Bureau of Labor Statistics, 1926=100. By months, 1929 to 1931; by weeks, 1932 to date. Latest figure is for week ending February 19, 1938. M E M B E R B A N K S IN 101 L EAD IN G C IT IE S COMMODITY PRICES Prices o f steel scrap and nonferrous metals declined from the middle o f January to the third week o f February, follow ing some advance in December and the early part o f January. There were further decreases in some other basic commodities, while prices o f cotton and silk advanced. Livestock prod ucts continued downward and a number o f finished industrial products declined further. Prices o f pig iron and most finished steel products have been re affirmed fo r second quarter delivery. BANK CREDIT During the first three weeks o f February excess reserves o f member banks were little changed from the level o f $1,400,000,000 reached at the end o f January follow ing the post-holiday return o f currency from circulation. During January there were substantial reductions in commercial loans and brokers’ loans and moderate increases in investments at reporting member banks in 101 leading cities. In the first three weeks o f February loans and investments o f these banks showed little change. MONEY R A TES Wednesday figures for reporting member banks in 101 leading cities, Sept. 5, 1934, to Feb. 16, 1938. Loans on real estate and loans to banks excluded. Rates on Treasury bills and yields on Treasury notes and bonds continued in February at the low levels reached in the latter part o f January.
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