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MONTHLY REVI EW of Financial and Business Conditions F if t h Federal Federal Reserve Bank, Richmond, Va. B uy W ar B onds Reserve D is t r ic t November 30, 1942 Buy S a v in g s St a m p s INVEST FOR VICTORY NOW 2 MONTHLY REVIEW Summary of October Business Conditions B U SIN E SS in the Fifth Federal Reserve district in October and early November advanced perhaps more than seasonally, and was in most lines substantially above the volume of business transacted in the correspond ing period last year. At the Federal Reserve Bank of Richmond, Government security holdings rose by $36,393,000 between October 15 and November 15, and on the latter date were $164,204,000 higher than a year earlier. These increases occurred through allocation to the Richmond bank of its share of System purchases. Federal Reserve notes in actual circu lation rose $41,570,000 in the district last month, and at mid-November totaled $329,137,000 above the November 15, 1941 figure, having increased 82 per cent during the year. Member bank reserve deposits at the Federal Re serve Bank of Richmond increased by $27,075,000 during the past month and $38,468,000 over reserves a year ago. Cash reserves of the Richmond bank likewise rose last month and during the year, but proportionately less than the increases in note and deposit liabilities, and therefore the ratio of cash reserves to note and deposit liabilities combined, 75.41 on November 15, 1942, was lower than either 77.07 on October 15, 1942 or 84.96 on November 15, 1941. At reporting member banks, loans declined slightly between the middle of October and the middle of Novem ber, but investments in securities and both demand and time deposits rose moderately. Debits to individual ac counts in the banks of 25 leading cities in the Fifth district totaled $2,498,659,000 in October, showing increases of 10 per cent and 18 per cent, respectively, over debits in September 1942 and October 1941. Fifth district industries continued operations at virtual capacity during October. Cotton textile mills, working two and three shifts chiefly on Government orders, have begun to feel a labor pinch, but no reduction in output of textiles or consumption of cotton has occurred. Tobacco manufacturers set a new production record in cigarettes for the fifth consecutive month in October, and the Fifth district alone made 18,998,155,000 cigarettes, or 82 per cent of total production for the United States. Coal mines in the district produced 15,795,000 net tons of bituminous coal in October, 31 per cent of National production. Rayon yarn mills continued operations up to full capacity, and in the third quarter of this year set a new record for yarn shipments to domestic consumers. Construction work is still in very large volume in the district, in spite of re strictions on civilian work, the decline in private work being more than made up by public construction connected with war work and defense housing. Many relatively small industries in various lines have Government contracts and are working at an all-time high level. Shipyards and airplane plants are of course using every human and me chanical facility to increase output. Distribution of consumer goods in October set new records in many lines where restrictions are not in effect. People have money with which to buy the goods they want, and apparently the public is not providing for next year's sharply expanded payments on income taxes this far ahead of the date of payment; in any event, holiday trade has already opened in very large volume. Seventy-seven de partment stores in the Fifth district sold 26 per cent more goods in October 1942 than in October 1941, and in spite of restrictions on installment buying 105 furniture stores sold 2 per cent more last month than a year ago. Two hundred and fifteen wholesale firms in varied lines also sold a little more in October this year. Returns to farmers from their 1942 operations are far above 1941 returns. Nearly every crop yielded better this year, and prices were also generally higher. The two lead ing cash crops in the Fifth district, tobacco and cotton, increased 26 per cent and 49 per cent, respectively, in yields, and prices this year are approximately 31 per cent higher for tobacco and 18 per cent higher for cotton. Yields of feed crops were good, and farmers are better supplied than usual with winter feed for their stock. FINANCIAL AND BUSINESS CONDITIONS IN THE FIFTH FEDERAL RESERVE DISTRICT Debits to individual accounts (25 cities)...... Sales, 77 department stores, 5th district........ Sales, 105 furniture stores, 5th district........... Sales, 215 wholesale firms, 5th district......... Tobacco sold in 5th district (Pounds)........... Average price of tobacco, per 100 lbs...... ;..... Growers’ receipts from tobacco, 5th district.. October 1942 $2,498,659,000 $ 23,891,906 $ 26.050.000 17.857.000 238,970,501 42.19 $ 100,830,027 Number of business failures, 5th district........ Liabilities in failures, 5th district...... ........... Value of building permits issued, 29 cities.... Value of contracts awarded, 5th district........ Cotton consumption, 5th district (Bales)...... Cotton price, cents per lb., end of month........ 515,000 2,707,847 81.713.000 454,121 19.07 Rayon yarn shipments, U. S. (Pounds)......... Rayon yarn stocks, U. S. (Pounds)................ Cigarettes made, 5th district................ .......... Cigarettes made, U. S..................................... Bituminous coal mined, 5th district (Tons).... Bituminous coal mined, U. S. (Tons)........... 40.600.000 7,400,000 18,998,155,000 23,075,492,090 15.795.000 51.065.000 22 September 1942 $2,263,480,000 19,739,670 $ 23.791.000 $ 17,362,000 270,651,001 $ 37.74 $ 102,150,130 $ $ $ 17 315,000 8,989,501 78,946,000 458,495 18.68 38.400.000 8,000,000 18,180,351,000 21,798,447,820 15.145.000 48.760.000 October 1941 $2,116,532,000 $ 19,014,891 $ 25,430,000 $ 17,789,000 162,237,929 $ 33.47 $ 54,301,996 $ $ $ 28 180,000 11,494,803 83,065,000 442,728 16.21 41.700.000 5,400,000 16,572,086,000 19,632,466,010 16.625.000 51.328.000 % Change Month Year +10 + 18 +21 + 26 + 9 + 2 0 + 3 —12 + 47 +12 + 26 — 1 + 86 +29 +63 —70 + 4 — 1 + 2 — 21 +186 — 76 — 2 + 3 + 18 + — + + + + — + + + — — 6 8 4 6 4 5 3 37 15 18 5 1 MONTHLY REVIEW BANKING STATISTICS EMPLOYMENT RESERVE BANK STATEMENT ITEMS Fifth District 000 omitted Nov. 15 Oct. 15 ITEMS 1942 1942 $ 10 $ 10 Discounts held .......................... 220 220 Foreign loans on gold............... 747 777 Industrial advances .................. 262,807 299,200 Government securities ............. 263,814 300,177 Total earning assets............... 728,458 686,888 Circulation of Fed. Res. notes. 500,393 527,468 Members’ reserve deposits....... 952,031 Cash reserves ........................... 984,268 75.41 77.07 Reserve ratio ............................. Nov. 15 1941 $ 0 0 779 134,996 135,775 399,321 489,000 832,765 84.96 SELECTED ITEMS—41 REPORTING MEMBER BANKS Fifth District 000 omitted ITEMS Nov. 11 Oct. 14 Nov. 12 1941 1942 1942 $143,454 $148,979 $161,107 Loans to business & agriculture. 146,497 149,559 170,473 All other loans............................. 891,734 832,036 Investments in securities........... 551,926 312,274 308,660 Reserve bal. with F. R. bank. . . . 321,854 33,720 Cash in vaults............................. 31,753 30,764 986,775 970,379 785,068 Demand deposits .......................... 210,210 Time deposits ............................. 208,408 211,780 0 0 Money borrowed .......................... 0 Oct. 31, 1941 $225,557,877 DEBITS TO INDIVIDUAL ACCOUNTS Fifth District 000 omitted Oct. Sept. Oct. 1942 1941 1942 % of Month Change Year +11 + + + + + 1 1 + + + 7 11 3 3 5 0 9 + 32 + 29 — 4 + 1 5 + 36 — 6 + 69 + 20 + 1 6 + 5 + 1 1 + 21 + 1 8 + 14 + 8 + — — — 10 12 11 — 14 + 23 + 3 + 75 — 1 —241 + 43 -- 16 + 1 1 + 4 + 7 + 1 1 _±_ 3 + 10 + + + + 0 352 33 62 28 BITUMINOUS COAL MINING Goal mining continued at a high rate in October, and mines in the United States produced 51,065,000 net tons of bituminous coal, against 48,760,000 tons mined in Sep tember and 51,328,000 tons in October 1941. Daily pro duction in October of 1,891,000 tons showed a decline from the daily average of 1,950,000 tons in the shorter month of September. Total production of soft coal this calendar year to November 7 amounted to 491,197,000 tons, an increase of 14 per cent over 430,499,000 tons pro duced to the corresponding date last year. In the Fifth district production of coal in October 1942, September 1942 and October 1941 was as follows: SOFT COAL PRODUCTION REGIONS Oct. 1942 West Virginia .................... 13,826,000 1,825,000 Virginia ............................... Maryland ............................. 144,000 5th District ...................... 15,795,000 United States ................ 51,065,000 % in District.................. 31 IN TONS Sept. 1942 13,319,000 1,681,000 145,000 15,145,000 48,760,000 31 Oct. 1941 14,614,000 1,845,000 166,000 16,625,000 51,328,000 32 CONSTRUCTION + 7 — 2 + 18 Figures on insolvencies in the Fifth District and the United States, as compiled by Dun & Bradstreet for several recent periods, are as follows: Maryland ......... Dist. of Col. .. . Virginia ........... West Virginia . North Carolina South Carolina Percentage change from September 1942 to October 1942 In number In amount on payroll of payroll —0.5 + 0.4 + 0.9 + 0.9 —0.6 — 1.7 —0.2 + 3.8 —0.4 + 3.2 + 0.1 + 0.3 0 -- 8 -- 20 -- 6 COMMERCIAL FAILURES PERIODS October 1942............. September 1942............. October 1941............. 10 Months 1942............. 10 Months 1941............. Labor shortages are developing in additional lines in the Fifth Reserve district, caused partly by induction of workers into the armed forces and partly by a shift of younger people to defense work which pays better than civilian employment. Mechanics of all kinds are in great demand and there are not nearly enough skilled men to meet the demands of industry. Farm laborers have left the land in large numbers for employment in industry, and in some sections the labor shortage on farms is quite acute. Skilled white collar workers are in strong demand, partly as replacements for people called to arms and partly to do the expanded clerical and stenographic work arising from the war program. Retail distributors are losing younger employees and are replacing them with older people, many of whom are new workers. The following figures, com piled for the most part by the Bureau of Labor Statistics, show the trends of employment and payrolls in Fifth dis trict industries from September to October: STATES MUTUAL SAVINGS BANK DEPOSITS 9 Baltimore Banks Oct. 31, 1942 Sept. 30, 1942 $228,250,410 $225,881,379 Total deposits .................. CITIES Dist. of Col. $ 451,303 $ 406,390 $ 412,871 Washington ... Maryland 648,051 692,826 614,763 Baltimore ....... 11,469 10.357 11,374 Cumberland . . . 10,090* 10,385* Frederick ....... 15,190 14,756 Hagerstown . . . . lV 6 i ,6 North Carolina 19,697 20,751 20,835 Asheville ....... 141,631 141,707 Charlotte ....... 107,293 97,744 89,360 Durham ........... 75,534 27,868 31,035 28,916 Greensboro . . . . 21,461* Kinston ........... 24,355* 57,072 42,008 Raleigh............. 60,82i 32,869 Wilmington 37,727 22,351 37,790* Wilson ............. 33,763* 76,904 64,334 Winston-Salem 66,553 South Carolina 37,294 35,511 Charleston . . . . 31,608 46,752 54,220 Columbia ....... 41,103 34,628 Greenville ....... 38,367 35,584 Spartanburg . . . 23,854 19,681 19,407 Virginia 12,086* 11,699* Charlottesville . 42,662 D anville........... 24.358 29,888 18,863 Lynchburg . . . . 18,706 18,884 66,586 19,526 14,736 Newport News. 113,866 105,376 Norfolk ........... 85,815 12,952 10,799 Portsmouth----8,013 319,874 301,771 249,109 Richmond ....... 37,738 32,665 37,692 Roanoke ......... West Virginia 20,219* 18,203* Bluefield ......... 69,356 66,592 70,114 Charleston....... 13,703* Clarksburg ----12,770* 27,234 24,600 Huntington----25,551 Parkersburg . . 13,830 13,429 14,056 District Totals.. $2,498,659 ?,263,480 $2,116,532 * Figures not included in District Total. 3 Number of Failures Total Liabilities District U. S. District U. S. 22 673 $ 515,000 $ 7,181,000 17 556 315,000 5,473,000 28 809 180,000 7,333,000 262 8,314 88,568,000 4,067,000 334 10,108 3,655,000 113,438,000 Building for civilian use has almost ceased under prior ity regulations made in the interest of conserving materials and labor for use in war work, and for the most part city building permits now represent necessary repair jobs to preserve existing structures. In the Fifth district in Oc tober, building permits issued in 29 leading cities totaled only $2,707,847 for all classes of work except Government projects in Washington. This was the smallest total figure reported for any month in many years, and compared with permits totaling $11,494,803 issued in October last year. The total of permits issued in the 29 cities in the first 10 months of 1942 amounted to $73,212,839, compared with $123,256,356 in the corresponding period last year. In October 1942, Washington led in permits with $1,566,663 MONTHLY REVIEW 4 (Federal building not included) and Baltimore was second with $309,340. Durham with $253,722 was third, WinstonSalem with $117,081 was fourth, and Portsmouth with $106,496 was fifth. In spite of the great decline in city building permits, which reflect private work for the most part, a large volume of construction connected with the war effort is going on, and contracts awarded in the Fifth district in October totaled $81,713,000, in comparison with contract awards totaling $78,946,000 in September this year and $83,065,000 in October last year. A large volume of hous ing contracts was let in October, chiefly in regions in which a great deal of defense work has drawn thousands of ad ditional workers to communities which could not absorb them. These housing projects are publicly financed, and are in some cases temporary developments designed to furnish quarters for defense workers for the duration only. Figures on contract awards by states for September 1942, which were not available when the October 30 Review went to press, were reported by the F. W . Dodge Corporation as follows: CONSTRUCTION CONTRACTS AWARDED STATES Sept. 1942 Sept. 1941 % Change Maryland ............................... $26,108,000 $15,797,000 + 65 Dist. of Col............................ —5,963,000 6,755,000 Virginia ................................. 34,144,000 32,596,000 + 5 West Virginia ...................... 3,220,000 2,171,000 + 48 11,512,000 11,119,000 + 4 North Carolina .................... South Carolina ................................... 9,925,000_______9,300,000______+ 7 $78,946,000 $77,738,000______ + 2 Fifth District .................... Note: The District of Columbia figure is shown negatively, due to revision of figures for an earlier month. COTTON TEXTILES Cotton textile mills in the Fifth district continued to operate in October above the National level, and with 50 per cent of spindles in place accounted for 53 per cent of actual spindle hours of operation. With 11,865,816 spindles in place, Fifth district mills operated 6,049,670,682 spindle hours in October, an average of 510 hours per spindle against the National average of 478 hours. South Carolina with 529 hours and North Carolina with 498 hours both bettered the National figure, but Virginia with 455 hours fell behind. North and South Carolina are first and sec ond, respectively, in spindles in place, but Virginia ranks seventh. Labor in textile mills is beginning to present a serious problem, due to inductions of workers into the armed forces, and to shifts of personnel to industries paying higher wages. The relationship between textile prices and costs appear to have become fairly well bal anced, and mill margins for 17 constructions of medium and coarse fabrics averaged 21.85 cents in October, com pared with 22.03 cents in September and 20.45 cents in October last year. COTTON CONSUMPTION—FIFTH DISTRICT In Bales MONTHS No. Carolina So. Carolina Virginia District October 1942................ 244,472187,302 22,347 454,121 September 1942................ 243,817192,449 22,229 458,495 October 1941................. 244,667177,431 20,630 442,728 10 Months 1942................ 2,428,020 1,872,393 222,361 4,522,774 10 Months 1941................ 2,187,602 1,641,611 186,684 4,015,897 % Inc. in 1942................ +11 + 14 .+ 19 +13 RAYON YARN Rayon filament yarn deliveries to domestic consumers totaled 40,600,000 pounds in October, compared with 38.400.000 pounds delivered in September and 41,700,000 pounds ‘ in October 1941, according to data released in Rayon Organon for November. Shipments slightly ex ceeded production, and stocks on hand at mills declined from 8,000,000 pounds on September 30 to 7,400,000 pounds on October 31. Rayon staple fiber deliveries totaled 12,600,000 pounds in October, compared with 12.400.000 pounds in September this year and 13,200,000 pounds in October last year. Staple fiber stocks also de clined during October, from 4,300,000 pounds to 4,100,000 pounds. During the third quarter of 1942, the rayon industry set a new quarterly record for production in both the fila ment yarn and staple fiber divisions. Filament yarn pro duction during the quarter totaled 119,600,000 pounds, and staple fiber production totaled 39,800,000 pounds. In the latter part of October, the Government approved a plan offered by the rayon industry to convert certain viscose rayon producing facilities to the manufacture of high tenacity rayon yarn for military purposes, chiefly for use in tires. The quantity of high tenacity yarns to be fur nished approximates 50,000,000 pounds on an annual basis, and five viscose producing companies are included in the program. The program is expected to produce ap proximately 100,000,000 pounds annually when the con version is completed. One of the large rayon producing companies recently announced a new contribution to the war effort in the form of a special rayon tow for mechanical packing in hydraulic presses, pumps, etc. In the past mechanical packing came chiefly from braided rope made of imported flax, but shipping difficulties have greatly reduced the supply of flax and the development of a substitute material is im portant. Performance reports indicate that the new rayon tow is equally as good as flax tow, and has one or two definite advantages over the older material. COTTON STATISTICS Spot cotton prices on ten Southern markets advanced moderately between the middle of October and the middle of November. From an average price of 18.95 cents on October 16, the average price for middling grade, upland cotton rose to 19.73 cents per pound on November 6, but then turned down again to 19.27 cents on November 20, the latest date for which official figures are available. The fourth forecast of 1942 cotton production, issued on November 8 by the Department of Agriculture, lowered the estimate from 13,818,000 bales at the first of October to 13,329,000 bales on the first of November, but the per spective yield is still much higher than 10,744,000 bales raised in 1941. In the Fifth Reserve District, South Caro lina’s perspective yield was reduced from 757,000 bales last month to 735,000 bales, Virginia’s yield was lowered from 35,000 bales to 33,000 bales, and North Carolina’s prospects declined from 750,000 to 705,000 bales. MONTHLY REVIEW COTTON CONSUMPTION AND ON HAND—BALES Oct. 1942 Fifth district states: Cotton consumed ................. Cotton growing states: Cotton consumed ................ Cotton on hand Oct. 31 in Consuming establishments Storage & compresses . . . United States: Cotton consumed .................. Cotton on hand Oct. 31 in Consuming establishments. Storage & compresses ....... Spindles active .......................... RETAIL AND WHOLESALE TRADE Oct. Aug. 1 to Oct. 31 1941 This Year Last Year 454,121 442,728 1,351,057 1,244,836 838,039 807,996 2,477,572 2,296,158 1,744,613 1,648,718 12,372,847 12,937,595 972,490 955,657 2,863,728 2,705,663 2,117,902 1,993,595 12,674,414 13,318,190 23,012,046 23,054,236 Note: 1941 collection percentages in parentheses. TOBACCO MANUFACTURING Cigarette production continues to set new records, and in September the number manufactured reached a new high for the fifth successive month. The output of cigars in October also exceeded production in October 1941, but the amount of snuff and chewing and smoking tobacco manufactured declined last month from the corresponding month of the preceding year. Production figures released by the Bureau of Internal Revenue on November 21 are as follows: Oct. 1942 Smoking & chewing tobacco, pounds ................. Cigarettes, number ............. Cigars, number .................... Snuff, pounds ...................... Sept. 1942 Oct. 1941 27,393,220 24,238,452 23,075,492,090 21,798,447,820 633,349,780 519,975,860 3,563,073 3,090,569 28,485,698 19,632,466,010 621,989,890 3,693,671 AUCTION TOBACCO MARKETING Tobacco markets closed in South Carolina during Oc tober, and North Carolina markets in the Carolina Border Belt also completed sales for the 1942 season, but sales on other North Carolina and Virginia markets continued large. Average prices advanced about 12 per cent in October, and were 26 per cent above October 1941 prices. Through October, Fifth district tobacco sales from the 1942 crop brought growers $263,934,000, an increase of 70 per cent over $155,005,000 received prior to November 1 last year. All sales so far this year have been of fluecured tobacco. Sales in October, both this year and last, were as follows in the Fifth district: STATES South Carolina......... North Carolina......... Virginia .................... District Total Season through . Producers’ Tobacco October 1942 441,981 182,132,504 56,396,016 238,970,501 671,169,378 Sales, Lbs. October 1941 225,640 121,737,343 40,274,946 162,237,929 517,506,012 DEPARTMENT STORE TRADE Richmond Baltimore Washington Other Cities District Change in October 1942 sales in comparison with sales in October 1941 + 34 +21 +25 +30 +26 Change in Jan.-Oct. 1942 sales in comparison with sales in Jan.-Oct. 1941 + 17 +19 + 21 +16 +19 Change in stocks on Oct. 31, 1942 compared to stocks on Oct. 31, 1941 + 19 +21 + 19 + 7 +19 Change in outstanding orders on Oct. 31, 1942 compared with Oct. 31, 1941 + 36 + 2 +13 + 23 +13 Change in total receivables on Oct. 31, 1942 compared with Oct. 31, 19-41 —26 —34 —29 —32 — 31 Percentage of current receivables as of Oct. 1, 1942 collected in October 57 (37) 59 (35) 59 (44) 61 (40) 59 (41) Percentage of instalment receivables as of Oct. 1, 1942 collected in October 30 (15) 33 (21) 22 (16) 26 (15) 25 (17) Price per Cwt. 1942 1941 $36.64 $19.38 42.27 33.53 41.49 33.37 42.19 33.47 39.32 29.95 State figures on sales, October 1942 compared with October 1941, and total sales in 10 months this year com pared with total sales in the like 1941 period, show the following percentage changes: Maryland + 2 2 & + 2 0 ; Virginia + 3 5 & + 1 9 ; West Virginia + 1 0 & + 1 ; North Carolina + 2 6 & + 6 ; South Carolina + 5 1 & +27. RETAIL FURNITURE SALES Percentage Changes in October 1942 Sales STATES Compared with Compared with Oct. 1941 Sept. 1942 Maryland (8)* ......... — 11 + 6 Dist. of Col. (8)* .. 5 + 6 Virginia (34)* ......... + 12 + 18 West Virginia (14)* — 20 + 13 North Carolina (22)* + 23 + 11 South Carolina (19)* + 13 + 9 District (105)* . . . . + 9 + 2 Individual Cities Baltimore ( 8 ) * ......... — 11 + 6 Washington ( 8 ) * ___ — 5 + 6 Danville (3)* ........... 45 + 18 + Lynchburg (3)* ....... + 16 + 21 Richmond ( 7 ) * ......... + 12 + 2 Charleston (3)* ....... —25 + 24 Huntington (3)* . . . . + 31 + 9 Charlotte (4)* ......... — 6 + 13 Columbia (4)* ......... — 15 + 3 Greenville ( 3 ) * ......... + 18 + 5 Greenwood (3)* . . . . — 21 + 21 * Number of reporting stores. WHOLESALE TRADE, 215 FIRMS Net Sales Stocks Ratio Oct. October 1942 Oct. 31, 1942 collections compared with compared with to accounts LINES Oct. Sept. Oct. 31 Sept. 30 outstanding 1941 1942 1941 1942 Oct. 1 Auto supplies (12) . . . — 14 —23 + 3 89 + 3 Shoes (4) .................. + 13 -11 —25 + 3 75 Drugs & sundries (8). + 13 + 8 108 Dry goods (7 )............... + 25 — *3 — 13 + 6 65 Electrical goods (16) . — 33 - 6 • — 32 — 5 55 Groceries (61) ........... + 15 — 15 b 2 — 2 129 Hardware (14) ......... — 9 - 7 — 39 — 12 85 Industrial supplies (8). - 5 + 8 —24 — 8 77 Paper & products (10) —22 - 2 + 28 0 82 Tobacco & products (6) + 47 -15 Miscellaneous (69) . . . . — 6 - 8 — 12 — *4 90 District Average (215) 0 - 3 -1 7 — 9 82 Source: Department of Commerce. (Compiled November 21, 1942) MONTHLY REVIEW 6 SUMMARY OF NATIONAL BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION Industrial output expanded further in October and the first half of Novem ber. Retail food prices continued to advance while prices of other commodities generally showed little change. Distribution of commodities to consumers was maintained in large volume. PRODUCTION Federal Reserve monthly index of physical vol ume of production, adjusted for seasonal variation, 1935-1939 average = 100. Latest figures shown are for October 1942. DEPARTMENT STORE SALES AND STOCKS Industrial production continued to .advance in October and the Board’s sea sonally adjusted index rose 3 points to 188 per cent of the 1935-1939 average. Gains in armament production accounted for most of the increase, and it is estimated that currently well over 50 per cent of total industrial output is for war purposes. In lines producing durable manufactures, approximately 80 per cent of output now consists of products essential to the war effort. Steel output reached a new high level in October as production expanded to 100 per cent of rated capacity. In the first half of November output declined slightly to around 99 per cent, reflecting some shutdowns for furnace repairs, according to trade reports. Activity in industries producing nondurable goods declined less than seasonally in October. Production of foods, especially canning, was unusually large for this time of year and output of textiles continued at a high level. Mineral production, which usually increases in October, declined slightly this year owing chiefly to a decrease in coal production which had been maintained in large volume throughout the summer. Value of construction contracts awarded in October increased somewhat over that of September, according to reports of the F. W. Dodge Corporation. Publicly-financed projects continued to account for over 90 per cent of total awards. The Department of Commerce estimates that, in the third quarter of 1942, expenditures for new construction amounted to 4.2 billion dollars, of which 3.5 billion came from public funds. For the first nine months of this year the cor responding figures were 10.2 and 7.7 billion dollars. Construction of military and naval facilities and of industrial buildings accounted for the bulk of the expen ditures. DISTRIBUTION 1936 1937 1938 1939 1940 1941 1942 Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 1923-25 average = 100. Latest figures shown are for October 1942. COST OF LIVING Department store sales increased in October and the Board’s seasonally ad justed index rose to 129 per cent of the 1923-1925 average as compared with 123 in September and 130 in August. In the first half of November sales increased further and were 17 per cent larger than in the corresponding period last year, reflecting in part price advances of about 10 per cent. Railroad shipments of freight were maintained in large volume during October and declined seasonally in the first half of November. COMMODITY PRICES Retail food prices continued to advance sharply from the middle of Sep tember to the middle of October and further increases are indicated in Novem ber. Prices of most other goods and services increased slightly in this period. In the early part of October maximum price controls were established for a number of additional foods. Maximum price levels for many other food products have been raised, however, and the Office of Price Administration reports on the basis of a recent survey that in numerous instances sellers are not complying fully with the regulations now in effect. BANK CREDIT 1936 1937 1938 1939 1940 194! 194? Bureau o f Labor Statistics* indexes, 1935-89 average = 100. Fifteenth of month figures. Last month in each calendar quarter through Sept. 1940, monthly thereafter. Latest figures shown are for October 1942. EXCESS RESERVES OF MEMBER BANKS Excess reserves of member banks were 2.5 billion dollars in the middle of November, a somewhat higher level than generally prevailed in the preceding four months. At New York City banks excess reserves amounted to about 500 million dollars. Additions to member bank reserve balances during the four weeks ending November 18 were the net result of an increase of 500 million dollars in Reserve Bank holdings of Government obligations, which approximately covered the continued heavy currency drain, and a decrease of 200 million in Treasury balances at the Reserve Banks. Holdings of Government securities by reporting banks in 101 cities increased by 1.9 billion dollars to 24 billion during the four weeks ending November 11. Almost half of the increase occurred at New York City banks. There were substantial increases in holdings of Treasury notes, bonds, and certificates, and a smaller increase in Treasury bills, while holdings of guaranteed obligations declined. These changes reflected new offerings and retirements by the Treasury during the period. Commercial and industrial loans at reporting member banks in leading cities increased somewhat during the first two weeks of November. Brokers’ loans in New York City increased around Government financing dates, but subsequently declined. UNITED STATES GOVERNMENT SECURITY PRICES 1936 1937 1938 1939 1940 1941 1942 Wednesday figures, partly estimated. figures shown are for Nov. 11, 1942. Latest Prices of United States Government securities were steady in the four weeks ending November 18. Long-term taxable bonds yielded 2.32 per cent, and 3month Treasury bills sold at a yield of 0.37 per cent.
