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MONTHLY REVIEW
of Financial and Business Conditions

F ift h
Federal

i

x

Richmond® - o

va.

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_

Reserve
District

June 30, 1938

Federal Reserve Bank, Richmond, Va.
B U SIN E SS in the Fifth Federal Reserve district in
May and the first half of June continued at about the
same levels as in earlier months this year. There were a
few instances of improvement, but on the whole little
progress out of the recession was indicated. Increased ac­
tivity in the cotton textile industry in June was the chief
improvement, a number of mills resuming operations after
several weeks of idleness because of excess inventories.
Tobacco manufacturing in May increased substantially
over April in all lines, and production of tobacco products
was larger than in May 1937 in all lines except cigars.
The number of cigarettes manufactured in May 1938 was
9.6 pier cent above the number made in May last year, and
the Fifth district manufactures approximately 83 per
cent of American cigarettes. In banking, no important
developments occurred between May 15 and June 15. At
the Federal Reserve Bank of Richmond, discounts rose
moderately and there was also an increase in loans made
direct to industry for working capital, but both items were
lower than on June 15, 1937. Circulation of Federal Re­
serve notes declined seasonally last month, and continued
below the volume of notes in circulation a year ago. Mem­
ber bank reserve deposits rose between the middle of May
and the middle of June, and on the latter date were higher
than on June 15 last year. Regularly reporting member
banks showed declines between May 11 and June 15 in
loans, investments in securities, cash in vaults and demand
deposits, while increases were reported in reserve balances
and time deposits. Debits to individual accounts in twen­
ty-four cities showed a seasonal decrease in May in com­
parison with April, partly due to Easter buying in the
earlier month but chiefly because quarterly payments al­
ways increase debits materially early in April. Dtebits in
May were 14.5 per cent less than in May last year, the
largest percentage decline in any month this year. Em­
ployment showed no material change in May, but work
increased in the textile industry in early June and there
are signs of some betterment in prospects for workers in
building trades. Commercial failures were more num­
erous in May in the Fifth district than in either April this




year or May last year, and liabilities involved also ex­
ceeded those of the other two months. Sales of new pas­
senger automobiles declined further in May, and were
51.2 per cent lesisi than sales in May 1937, when the re­
cession was just beginning in certain lines. Building per­
mits issued in 31 Fifth district cities in May showed a de­
crease of 25 per cent under April figures and were nearly
35 per cent less than in May 1937. Contracts actually
awarded last month for construction work in the district
made a better comparison, declining only 11.7 per cent
from the May 1937 awards. Coal production in May
was in less amount than in either April 1938 or May 1937,
and coal mined this calendar year was 32 per cent less
than production in the first five months of last year. Se­
vere curtailment of operations in late April and May in
the textile field reduced excess inventories at the mills
and improved conditions sufficiently to allow resumption
of operations on restricted schedules in June. Rayon
yarn deliveries to fabricators were about the same in May
as in April, and approximately equaled production. Rayon
yarn prices were reduced late in May. Cotton prices de­
clined during the second half of May but turned upward
in June and recovered part of the May decline. Cotton
consumption in American mills in May w 36 per cent
ras
less than consumption in' May last year, and exports of
cotton last month were 40 per cent less than a year ago.
Wheat and oats crops in the Fifth district are turning out
somewhat better than last year, while prospects for fruit
are fair in comparison with exceptionally large yields in
1937. It is too early in the season to comment on other
crops.
There follows a statistical summary of conditions de­
scribed above:
%

May 1938
Debits to individual accounts (24
cities .............................................. ... $1,076,528,000
No. of business failures, 5th dist...
55
Liabilities in failures, 5th dist......... ....$
462,000
Sales, 57 department stores, 5th dist $
9,395,769
Sales, 179 wholesale firms, 5th dist.. $ 10,823,000
Registrations, new passeger autos..
12,591
Value bldg. permits (31 cities)............$
6,630,214
Value of contracts awarded, 5th dist. $ 21,473,000
Cotton consumption, 5th dist. (bales)
202,647
Soft coal mined, U. S. (tons).........
21,995,000

May 1937

$1,259,069,000
42
$
310,000
$ 10,772,918
$ 12,765,000
25,795
$ 10,178,457
$ 24,330,000
309,778
30,077,000

Change

— 14.5
+31.0
+49.0
— 12.8
— 15.2
— 51.2
—34.9
— 11.7
—34.6
— 26.9

MONTHLY REVIEW

2

BA N K IN G CONDITIONS
R eserve B ank Statement : Discounts held by the Fed­
eral Reserve Bank of Richmond increased $117,000 be­
tween May 15 and June 15, 1938, but on the latter date
were $76,000 less than on June 15, 1937. Industrial ad­
vances for working capital rose by $63,000 last month, but
declined $502,000 during the past year. Holdings of
Government securities on June 15, 1938, were the same
as on May 15 this year, but rose $6,944,000 over hold­
ings on June 15 last year. Total earning assets of the
Richmond bank were $179,000 higher on June 15 than a
month earlier, and $6,355,000 higher than on June 15,
1937. Federal Reserve notes in actual circulation declined
$1,725,000 between the middle of May and the middle of
June, and dropped $3,041,000 during the past year. The
decline last month was probably due to return of currency
after the spring shopping season, but the decrease in cir­
culation in comparison with 1937 reflects a smaller need
for money with which to carry on a lesser volume of
trade and industry. Member bank reserve deposits rose
by $5,727,000 between May 15 and June 15, and showed
an increase of $3,782,000 since June 15, 1937. The sev­
eral changes previously mentioned in the bank's state­
ment, together with fluctuations in the balance to the credit
of the Treasurer of the United States, caused a decline of
$5,940,000 last month in the cash reserves of the Rich­
mond Reserve bank, but raised them $22,093,000 over ag­
gregate cash reserves on June 15, 1937. The ratios of
cash reserves to note and deposit liabilities combined were
within less than one point of each other on June 15 and
May 15, 1938, and June 15, 1937.
ITEMS
Discounts held ..............................................
Government securities ...............................

Total earning assets .............................
Circulation of Fed. Res. notes ..................
Members’ reserve deposits .......................
Cash reserves ................................................
Reserve ratio ............................. i..................

S ta te m e n t o f

41

000
June 15
1938
$
627
23
1,540
139,979
142,169
188,523
220,312
331,802
70.72

omitted
May 15
1938
$
510
24
1,477
139,979
141,990
190,248
214,585
337,742
71.32

R e p o r tin g M e m b e r B a n k s :

June 15
1937
$
703
54
2,042
133,035
135,834
191,564
216,530
309,709
70.39

Loans

and discounts at reporting member banks declined $4,525,000 between May 11 and June 15 this year, and drop­
ped $8,275,000 since June 16 last year. Investments in
securities also declined, by $246,000 during the month
and by $26,165,000 during the year. On the other hand,
the 41 reporting banks increased reserve balances at the
Reserve bank by $4,443,000 last month and $9,500,000
in the year. Cash in vaults decreased $1,812,000 between
May 11 and June 15, and on the latter date was $54,000
less than on June 16, 1937. Deposits declined in the
past month and year, in keeping with the drop in loans,
ITEMS
Loans & discounts .............. .....................
Investments in securities. .. .....................
Reserve bal. with Fed. Res.
.....................
Cash in vaults ..............
Demand deposits ................. .....................
Time deposits ....................... .....................
Money borrowed .........................................

000 omitted
June 15
May 11
1938
1938
$233,061
377,444
16,793
440,483
199,265
0

$237,586
377,690
137,571
18,605
444,409
198,355
23

June 16
1937
$241,336
403,609
132,514
16,847
466,501
199,288
0

but to a much greater degree during the year* Demand
deposits decreased $3,926,000 between May 11 and June
15, 1938, and dropped $26,018,000 since mid-June last




year. Time deposits on June 15 were slightly higher than
on May 11, and remained practically unchanged in com­
parison with time deposits a year earlier.
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 : Deposits in 10 mu­
tual savings banks in Baltimore declined in May from the
record figure of $219,926,013 on April 30, 1938, to $219,376,413 on May 31, but on the latter date were 1.4 per
cent higher than deposits totaling $216,298,343 on May
31, 1937. Deposits in 7 of the 10 banks declined during
the month of May.
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 : Debits to individual,
firm and corporation accounts in the banks in 24 Fifth
district cities declined 6.1 per cent in May in comparison
with debits in April, a seasonal decrease due chiefly to
quarterly payments early in April. Reflecting a smaller
volume of business activity this year, debits in May were
14.5 per cent less than those of May 1937, a slightly larger
percentage decline than was shown for any earlier month
this year in contrast with the corresponding month last
year. Only four cities, Roanoke, Durham, Charleston, S .
C., and Columbia, reported higher debits in May than in
April 1938, and only Durham exceeded May 1937 figures.
May
1938

CITIES
Maryland
Baltimore ..........
Cumberland . . . .
Hagerstown . . . .

000 omitted
April
May
1938
1937

% of Change
Year
Month

$ 306,043
7,213
7,410

$ 337,582
7,249
8,165

$ 354,792
9,200
8,692

— 9.3
— .5
— 9.2

— 13.7
— 21.6
— 14.7

Dist. of Col.
Washington . . .

232,636

253,283

265,533

- 8.2

-1 2 .4

Virginia
Danville ............
Lynchburg ........
Newport News .
Norfolk ..............
Portsmouth . . . .
Richmond ..........
Roanoke ............

6,318
12,850
7,784
41,473
3,775
128,301
25,245

7,000
13,496
7,886
45,774
4,047
133,041
23,297

8,712
15,616
9,430
49,293
4,139
144,669
33,107

West Virginia
Charleston ........
Huntington . . . .

42,441
16,455

43,607
16,662

Wilmington . . . .
Winston-Salem .

11,020
47,497
24,413
16,117
32,587
9,361
33,629

South Carolina
Charleston ........
Columbia ..........
Greenville ........
Spartanburg . . .
District Totals

16,248
24,474
15,812
7,426
$1,076,528

North Carolina
Asheville ..........
Charlotte ..........
Durham ............
Greensboro . . . .

—
—
—
—
—
—
+

9.7
4.8
1.3
9.4
6.7
3.6
8.4

— 27.5
— 17.7
— 17.5
— 15.9
— 8.8
— 11.3
— 23.7

59,127
20,549

— 2.7
— 1.2

— 28.2
— 19.9

11,236
50,687
23,580
16,819
35,530
9,753
34,851

13,121
59,721
24,383
18,404
34,422
10,436
39,355

— 1.9
— 6.3
+ 3.5
4.2
— 8.3
— 4.0
— 3.5

— 16.0
— 20.5
+
.1
— 12.4
— 5.3
— 10.3
— 14.5

16,181
22,541
16,125
8,017
$1,146,409

18,755
27,297
20,633
9,683
$1,259,069

.4
8.6
1.9
— 7.4
— 6.1

— 13.4
— 10.3
— 23.4
— 23.3
— 14.5

+
+

B U S IN E S S CONDITIONS
E m p lo y m e n t:
Unofficial reports indicate that moderate
improvement occurred in employment in the cotton textile
industry in the Fifth Reserve district in early June, a num­
ber of mills resuming operations on part time after com­
plete shut-downs for brief periods. Otherwise little
change occurred in the number of persons gainfully em­
ployed in the district during late May and early June. The
following figures, compiled for the most part by the Bur­
eau of Labor Statistics from reports furnished by a large
number of identical industries, show' the trends of em­
ployment and payrolls in the Fifth district geographical
divisions from April to May 1938, the latest available
figures:

MONTHLY REVIEW
Percentage change from
April 1938 to May 1938
In number
In amount
on payroll
of payroll
— 1.8
— 1.1
— 1.2
+
.3
— 2.4
— .7
— 1.8
+
-6
— 4.7
— 4.1
— 11.6
— 7.4

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

C o m m e r c ia l F a i l u r e s : Business failures in the Fifth
district in May were more numerous than in either April
of this year or May of last year, and liabilities involved in
May failures were also larger than liabilities in either of
the earlier months mentioned. The number of failures
in May was 31 per cent larger than the number in May
last year, and last month’s liabilities were 49 per cent
larger than liabilities a year earlier. The United States
showed an increase of 26 per cent in number of failures
in the same period, while liabilities rose 74 per cent. The
Fifth district, therefore, made a poorer comparison in
number of failures in May 1938 and May 1937 than the
United States as a whole, but made a better comparison
in liabilities involved. Dun & Bradstreet insolvency fig­
ures are as follows:
Number of failures
District U. S.

PERIODS
May 1938 .............................
April 1938 ...........................
May 1937 .............................
5 months, 1938 ...................
5 months, 1937 ...................

55
39
42
248
236

1,053
1,116
834
5,648
3,972

Total Liabilities
District
U. S.
$ 462,000
421,000
310,00*0
$2,916,000
1,942,000

$14,559,000
20,106,000
8,364,000
$78,626,000
46,624,000

3

reported $1,867,425 for May 1938 and $4,122,135 for May
1937. Washington permits reached the highest valuation
in May this year with $1,867,425, Norfolk was second
with $1,257,729, and Baltimore third with $1,073,668.
Contracts actually awarded in the Fifth district in April
and May are shown in the accompanying table by states,
figures from F. W. Dodge Corporation reports being used:
Construction Contracts Awarded
STATES
April 1938April 1937
%
May 1938May 19*37
%
Maryland ___ $ 6,550,000 $ 5,269,000 +24.3 $ 3,324,000 $ 5,448,000 — 39.0
D. of Col.........
1,799,000
4,855,000 — 62.9
4,611,000
5,564,000 — 17.1
Virginia ___
5,593,000 10,276,000 — 45.6
3,801,000
4,356,000 — 12.7
West Va..........
4,783,000
3,933,000 +21.6
2,320,000
2,139,000 + 8,5
No. Carolina
4,636,000
5,895,000 —21.4
5,231,000
3,669,000 +42.6
So. Carolina .
2,451,000
2,716,000 — 9.8___ 2,186,000
3,154,000 —30.7
District
$25,812,000 $32,944,000 —21.7 $21,473,000 $24,330,000 — 11.7

Some large contracts let in the Fifth district during April
and May were as follows: State Penitentiary, Roxbury,
Md., $2,000,000; Apartment House Group, Baltimore,
Md., $1,000,000; Apartment House, Richmond, Va.,
$830,000; Veteran’s Hospital, Roanoke, Va., $495,000;
Warehouse, Washington, D. C., $1,000,000; College Fac­
ulty Building, Washington, D. C., $400,000; Ohio River
Flood Control Project, Huntington, W. Va., $2,625,000;
Highway Bridge, Morgan County, W. Va., $338,000;
Hydro-electric Dam, Greenwood County, S. C., $617,000;
Apartment House, Winston-Salem, N. C., $430,000; and
Apartment House, Raleigh, N. C , $700,000.
: Mining of bituminous coal declined
further in May, and totaled only 21,995,000 net tons, in
comparison with 22,380,000 tons dug in April this year
and 30,077,000 tons in May 1937. Total production this
calendar year to June 1 amounting to 129,413,000 tons is
32 per cent less than 191,141,000 tons mined in the first
five months of 1937. Prior to June 1 1, shipments of coal
through Hampton Roads ports totaled 7,525,471 tons,
compared with 10,085,611 tons shipped to the same date
in 1937. Reserve stocks of coal held by industrial con­
sumers decreased 4.3 per cent during April, but consump­
tion of coal in industry declined 10.4 per cent in compari­
son with March. In terms of current rates of consump­
tion, industrial stocks on May 1, 1938, were sufficient to
last 42 days.
C o a l P r o d u c tio n

Sales of new
passenger automobiles in the Fifth district declined some­
what more than seasonally in May in comparison with
April sales, and were 51.2 per cent below sales in May
1937, the largest percentage decline in any month this
year. Virginia sales in May 1938 made the best com­
parison with May 1937 sales, while South Carolina sales
compared most unfavorably. Cumulative sales in the five
elapsed months of 1938 were 47.4 per cent below sales in
the first five months of 1937, Virginia with a decline of
41.1 per cent making the best record and West Virginia
with a decline of 57.3 per cent the worst. The following
figures, compiled by R . L. Polk & Co., of Detroit, show
May and five-months’ registration figures for new cars
in Fifth district sales:
A u t o m o b ile

N ew

C ar R e g is tr a tio n s:

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

May
1938

May
1937

%
Change

2,532
1,735
3,004
1,479
2,650
1,191
12,591

5,179
3,179
5,459
3,981
5,301
2.696
25,795

— 51.1
— 45.4
— 45.0
— 62.8
— 50.0
— 55.8
— 51.2

5 Months 5 Months
%
1938
1937
Change
11,246
7,656
13,615
6,675
12,383
6,067
57,642

20,809
13,415
23,101
15,634
23,993
12,578
109,530

— 46.0
— 42.9
— 41.1
— 57.3
— 48.4
— 51.8
— 47.4

C o n s t r u c t i o n : Building permits issued in 31 Fifth dis­
trict cities totaling $6,630,214 in May 1938 was 25 per
cent below permits amounting to $8,861,313 issued in
April this year, and 34.9 per cent below the May 1937
valuation of $10,178,457. Permits issued in 5 Maryland
cities totaled $1,164,416 and $2,388,705 in May 1938 and
1937, respectively; 7 Virginia cities totaled $1,772,306 and
$1,299,937 for the same periods; 4 West Virginia cities
reported $475,908 and $422,074 ; 9 North Carolina cities
showed $1,083,510 &nd $1,461,266; 5 South Carolina
cities $266,649 and $484,340; and the District of Columbia




C o t t o n T e x t i l e s : Operations in cotton textiles in May
continued at the very low level reached in the latter half
of April, but reports indicate some improvement in early
June. A number of mills which closed temporarily in
late April or May have recently reopened. Moderate re­
ductions in inventories occurred during May in the in­
dustry, and stocks of cotton goods in department and dry
goods stores are lower than a year ago. Consumption of
cotton by states in the Fifth district in May 1938, April
1938, May 1937, and in the first five months of this year
and last is shown in the accompanying table:
MONTHS

No. Carolina So. Carolina Virginia

District

May 1938 ...................................
April 1938 .................................
May 1937 ...................................

112,139
109,676
168,744

80,354
84,296
125,731

10,154
10,182
15,303

202,647
204,154
309,778

5 months, 1938 .........................
5 months, 1937 .........................

586,143
896,973

442,606
656,014

54,361
73,776

1,083,110
1,626,763

Spindle activity in April registered a marked decline
from that of March, falling from an average of 245 hours
per spindle in place to 198 hours. South Carolina declined

4

MONTHLY REVIEW

from 302 hours in March to 244 hours in April, Virginia
dropped from 280 hours to 206, and North Carolina from
247 hours to 203. Total spindle hours of operation in the
United States declined from 6,485,416,000 hours in March
to 5,265,957,000 hours in April, a decrease of 18.8 per
cent. The Fifth district accounted for 52.3 per cent of
total spindle hours of activity in April, the same figure as
in March.
R a y o n : The daily rate of domestic rayon yarn deliver­
ies by producers during May is measured by 444 on the
Rayon Organon index, compared with 445 in April and
724 in May last year, these figures being based on daily
deliveries in 1923-1925. Producers’ stocks of yarn at the
end of May amounted to a 3.8 month’s supply, based on
average monthly shipments over the previous 12 months.
The Organon states that the decline in rayon shipments
in May reflected a seasonal lull between the end of the
spring season and preparation for fall activities. Adjust­
ments in rayon yarn prices were made in the latter part of
May, quotations being marked down to levels which in
some instances reached all time lows. The reductions
were timed to take effect between seasons and when yarn
stocks in the hands of converters are very low, thus mini­
mizing yarn inventory write-downs by fabricators.

: Average prices for middling grade spot cotton
declined during the second half of May, but rose in the
first half of June, chiefly due to reports of unfavorable
W/eather over most of the cotton belt since June 1. The
average price on 10 Southern markets declined from 8.79
cents per pound on May 13 to 8.06 cents on June 3, but
then rose to 8.16 cents on June 10 and further to 8.43
cents on June 17, the latest date for which official figures
are available. Consumption of cotton in American mills
in May was 36 per cent below May 1937 consumption,
and exports declined 40 per cent in the 1938 month.
C o tto n




Cotton Consumed and On Hand
(Bales)
M
ayMay
Aug. 1 to May 31
1937 This year Last Year

Fifth district states:
Cotton consumed ..................
Cotton growing states:
Cotton consumed .................
Cotton on hand May 31 in
Consuming establishments
Storage & compresses . . . .
United States:
Cotton consumed ..................
Cotton on hand May 31 in
Consuming establishments
Storage & compresses . . . .
Exports of cotton .....................

202,647

309,778 1,083,110

1,626,763

355,895

558,769 4,128,553

5,572,905

1,316,307
9,973,762

1,473,891
3,478,517

425,684

669,665

4,863,843

6,686,547

1,585,551
10,058,430
193,002

1,814,701
3,583,781
323,736

5,226,831

5,086,093

T o b a c c o M a n u f a c t u r i n g : The Bureau of Internal Rev­
enue reports tobacco products manufactured in May 1938
and 1937 as follows :
May 1938

R e t a il T

rade i n

D

Shoes (4) .........................
Drugs (14) .....................
Dry Goods (7) ................
Elec. Goods (27) . . . . . . .
Groceries (45) .................
Hardware (23) ..............
Indus. Supplies (11) . . . .
Plumbing & Heating (19)
Paper & Products ( 5) . . .
Tobacco Products ( 8) . . .
Miscellaneous (16) ........
All Firms (179)..........

+
+
—
+

4.7
9.6
3.1
7.0

S tores:

Net Sales
Stocks
Ratio May
Jan. 1 to date May 31, 1938
collections
comp, with
comp, with
to accounts
same period May 31 Apr. 30 outstanding
last year
1937
1938
May 1
+ 2.4
+ 2.5 — .1
30.4
— 4.9
— 5.8 — .8
30.8
— 3.9
— 5.5 — .1
26.9
— 9.4
— 2.8 — 1.1
27.0
— 4.0
— 4.4 — .4
28.5

— 14.1
—

8.1

—

10.6

— 4.4

12.8

W h o le s a le T rad e,

% Change

+ 1.0

— 7.9
— 27.5
— 14.5
— 18.4
—

24,639,079
13,069,936,403
430,628,149
2,917,691

epartm ent

Net Sales
May 1988
oomp. with
May
1937
Richmond (3)
— 5.5
Baltimore (8)
— 14.5
Washington (6).
— 10.5
Other Cities (13)
— 17.1
District (30) .
— 11.9
Same stores by
States, with 27
stores added:
Virginia (13) ..
West Va. ( 10). . .
No. Carolina (8)
So. Carolina (11)
District (57) . .

May 1938

25,800,026
14,323,650,620
417,143,506
3,120,500

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

179

F ir m s :

Net Sales
May 1938
comp, with
May
May
1937
1938
— 7.8
— 30.0
— 6.7
— 7.3
— 25.0
— 8.1
— 26.9
+ 5.2
— 10.6
+
.4
— 25.2
— 4.4
— 29.5
+ 4.1
— 10.2
+ 10.9
— 10.2
— 1.5
— 1.9
+ 1.3
— 10.1
— .1
— 15.2
— 3.1

Stocks
May 31, 1968
May 31
1937
— 38.6
— 3.4
— 23.3
— 8.9
— 19.3
— 2.5
— 6.8
— 16.6
+ ’ 7.0
— 1.8
— 13.3

Ratio May
collections
to accounts
April 30 outstanding
1938
May 1
— 15.2
64.1
— 5.3
96.1
— 2.3
40.3
— 7.1
80.4
— 5.6
100.9
— 2.6
49.0
— .9
33.5
— 4.2
58.9
85.2
—’ 1.6
— .3
69.9
— 5.1
67.9

Note: Wholesale trade figures are included by arrangement with
the Bureau of Foreign & Domestic Commerce. Only 129 of the 179 firms
reported on receivables and collections, and only 104 on stocks.

(Compiled June 21, 1938)

MONTHLY REVIEW, June 30, 1938

FEDERAL RESERVE BANK OF RICHMOND

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

In May and the first three weeks of June industrial activity showed little
change from the April level. Wholesale commodity prices generally declined
further, but in June wheat and cotton prices advanced and at the end of the
period some other staple commodities showed increases.

IN D U S T R IA L PRODUCTION

PRODUCTION

In May the Board’s seasonally adjusted index of industrial production was
at 76 percent of the 1923-1925 average as compared with 77 in April and an
average of 79 in the first quarter of the year. Steel ingot production, which
in March and April had been at a rate of 33 percent of capacity, averaged
about 31 percent in May, and automobile output also showed a decrease. Tex­
tile production increased in May. Activity at woolen mills rose sharply and
there was some increase at cotton mills, while silk mills showed a decline.
Changes in output in most other manufacturing industries were largely seasonal
in character. Output of crude petroleum was curtailed sharply in May, and
bituminous coal production declined somewhat, while anthracite production in­
creased considerably. Lake shipments of iron ore were in very small volume,
reflecting both the low rate of activity in the iron and steel industry and the
large supply of ore remaining from the previous season.
In the first three weeks of June output of steel and petroleum increased
somewhat, but the rate of activity in these industries remained below the aver­
age for May. Automobile production showed a further decline and continued
below sales, so that stocks of new cars were further reduced.
Value of construction contracts awarded, as reported by the F. W. Dodge
Corporation, showed a substantial increase in May, reflecting chiefly a marked
rise in awards for publicly-financed projects. Contracts for residential build­
ing increased moderately and were in about the same amount as in May a
year ago. Other privately-financed work remained in small volume.

Index of physical volume of production, adjust­
ed for seasonal variation, 1923-1925 average=100.
By months, January 1934 to May 1938.
F R E IG H T -C A R LOADING S

EMPLOYMENT

Factory employment and payrolls continued to decline from the middle
of April to the middle of May. There were further decreases in employment in
the machinery, steel, and automobile industries and a sharp decrease in the
number employed in the men’s clothing industry. In most other manufactured
lines changes in employment were small in amount. The number employed at
mines and on the railroads continued to decline.

Index of total loadings of revenue freight, ad­
justed for seasonal variation, 1923-1925 average
=100. By months, January 1934 to May 1938.
W H O L E SA L E

P R IC E S

DISTRIBUTION

Department store sales declined considerably in May and the Board’s sea­
sonally adjusted index was at 79 percent of the 1923-1925 average as compared
with 83 in April. Sales at variety stores and by mail order houses also de­
creased from April to May. Reports for the first half of June indicate about
the usual seasonal decline in department store sales.
The volume of railroad freight traffic showed little change in May follow­
ing sharp declines in previous months.
COMMODITY PRICES

Prices of both agricultural and industrial commodities decreased in the
latter part of May. In the first three weeks of June wheat and cotton prices
advanced, while prices of industrial products generally continued to decline.
BANK CREDIT

Reserves of member banks continued to increase in May and June, largely
as the result of Treasury disbursements from its deposits with the Reserve
banks. Excess reserves increased chiefly at city banks, reflecting retirement
of Treasury bills and further expansion of bankers’ balances.
Demand deposits at reporting member banks in 101 leading cities increased
further during the first half of June, and total loans and investments, which
had declined in May, also increased, reflecting substantial purchases of United
States Government obligations by New York City banks.
MONEY RATES

Yields on Treasury bonds declined further in the four weeks ending June
18, and those on Treasury notes reached new low levels. Rates on open-market
commercial paper declined somewhat about the middle of June.




Indexes compiled by the U. S. Bureau of Labor
Statistics, 1926=rl00. By weeks, 1934 to week
ending June 18, 1938.
M E M B E R BAN K R E S E R V E S A N D R E L A T E D IT E M S
BILLIONS O DOLLARS
F

BILLIONS OF DOLLARS

GOLD S'r o c K

/ /

V -------

-J- M
ONEY IN C ICULATION
IP
1 ____ _______
/ " M ember a 4N
K
RESERVE BALUNCES

t REASURY CASH
|

< -■

j
K------------------ --------------------- j---------------------•-RESERVE BAIM
:
CREDIT
. \
TREASURY DEPOSITS
!
N
___ 1

1934

1935

1936

1937

1938

Wednesday figures, January 3, 1934, to June 15,
1938.