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MONTHLY REVIEW
of Financial and Business Conditions

F ifth
Federal

\

Richmond® o

y

If

yA.

T ..... r 4
'

Federal Reserve Bank, Richmond, Va.




Reserve
Dist r ic t

September 30,1938

Debits to individual accounts (24 cities)........................................ .............................
Number of business failures, 5th district........................................
Liabilities in failures, 5th district.—
.............................................. .............................
Sales, 59 Department stores, 5th district........................................ .............................
Sales, 199 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) ......................................
Tobacco sold in district (Pounds)..................................................
Coal mined, U. S. (Tons)..................................................... ............

U SIN E SS in the Fifth Federal Reserve district
achieved somewhat more than seasonal improvement
in August and early September, and nearly all indices com­
pared more favorably with last year than in earlier months
this year. Changes in bank statements last month were
minor and for the most part seasonal in character. Federal
Reserve note circulation rose between August 15 and
September 15, to supply needs for additional currency to
move tobacco and other crops. Member bank loans rose
moderately, probably as a reflection of mercantile needs
of funds with which to discount bills for fall merchandise.
Debits to individual accounts figures, reflecting transac­
tions through banks, showed a decrease of only 6 per cent
in August in comparison with August 1937, the best com­
parison made in any month since December. A much
more unfavorable comparison was registered by commer­
cial failures, which in August rose 169 per cent in num­
ber and 184 per cent in liabilities over corresponding fig­
ures for August 1937. Registrations of new automobiles
in the district in August, while 50 per cent below regis­
trations in August last year, showed the smallest decline
from the corresponding month of the preceding year for
any month since April. Coal production on a work-day
basis rose 12 per cent in August over July, but continued
substantially below 1937 figures for the same month. Cot­
ton textile mills increased operating time further in Au­
gust and cotton consumption in the district lacked only 6
per cent of equaling August 1937 consumption, while

_

August 1938_____ August 1937 % Change
— 6
$1,201,523,000
$1,125,303,000
+169
26
70
+184
514,000
181,000
$
$
7,720,242
0
7,728,252
$
$
— 6
$ 13,837,000
$ 14,774,000
21,855
— 50
10,903
8,518,978
— 21
6,757,976
$
$
+ 10
$ 32,347,000
$ 29,456,000
273,351
289,841
— 6
140,430,629
90,357,981
+ 55
28,280,000
33,988,000
— 17

shipments of rayon yarn by producers set a record and
surplus stocks of rayon were greatly reduced. Construc­
tion work under way in the Fifth district increased sharply
during August, contract award figures rising 51 per cent
above the July figures and 10 per cent above August 1937
contracts. Tobacco manufacturing increased materially
last month over July, and in all lines except snuff exceeded
output in August last year. Tobacco auction markets in
the Carolinas which opened in August sold considerably
larger quantities of tobacco than in August last year, and
at prices slightly better than those of August 1937. These
improvements were reflected in employment, which in­
creased in nearly all sections of the district. Retail trade
in August as reflected in department store sales was prac­
tically the same as in August 1937, and cumulative sales
in the first 8 months of this year were only 4 per cent
lower than sales in the same period last year. Wholesale
trade reported by 199 firms in the Fifth district was 6 per
cent less in dollar amount in August 1938 than in August
1937, but showed a seasonal rise of 23 per cent over the
volume of trade in July this year. Developments in agri­
culture during August were chiefly unfavorable, dry
weather having hastened maturity of late crops and thereby
reduced prospective yield figures. On the whole, how­
ever, Fifth district crops are up to average in condition,
and yields will compare favorably with ten-year average
yields in all crops except in a few instances of material re­
duction in acreage this year.

2

MONTHLY REVIEW

B a n k S t a t e m e n t : T w o items changed mate^
rially on the statement o f the Federal Reserve Bank of
Richmond between August 15 and September 15. Fed­
eral Reserve notes in actual circulation rose $3,965,000 as
the opening o f additional tobacco markets in North Caro­
lina and early sales of cotton required an increased volume
o f money, a seasonal development at this time. Cash re­
serves o f the bank rose by $13,537,000 during the same
period, due chiefly to an increase o f approximately $10,000,000 in the deposit balance o f the Treasurer o f the
United States. The substantial increase in cash reserves
on September 15, 1938, over those on September 15, 1937,
was caused by a corresponding rise in the Treasurer’s
balance.

000 omitted

R eserve

ITEMS
Discounts held ...........................................
Open market p ap er.................................
Industrial advances .................................
Government securities ...........................
Total earning assets .........................
Circulation of Fed. Res. notes..............
Members’ reserve deposits ...................
Cash reserves ..........................................
Reserve ratio ..........................................

000 omitted
Sept. 15
Aug. 15
Sept. 15
1938
1938
1937
$
553
$
919
$
677
23
23
25
1,472
1,479
1,929
127,873_____ 127,224_____ 133,035
129,921
129,645
135,666
199,151
195,186
203,779
221,881
223,113
221,413
353,254
339,717
322,600
74.00
73.52
71.20

S t a t e m e n t o f 41 R e p o r t i n g M e m b e r B a n k s :
Loans
and discounts in reporting member banks rose by $4,753,000 between August 10 and September 14, and in­
vestments in securities increased $7,286,000. There was
a rise of $19,134,000 in demand deposits during the same
period. In comparison with figures on September 15,
1937, the statement for September 14, 1938, shows sub­
stantial increases in investments in securities and reserve
balances, and a decline in loans and discounts.
ITEMS
Loans & discounts ...........................
Investments in securities ................
Reserve bal. with Fed. Res. bank...
Demand deposits ...............................
Time deposits ...................................... , ,
Money borrowed .....................................

000 omitted
Sept. 14
Aug. 10
1938
1938
$234,138
$229,385
384,509
377,223
147,415
18,425
439,826
198,683
197,934
0
0

Sept. 15
1937
$246,931
374,854
135,951
17,057
462,402
197,560
0

S avings B a n k D eposits : For the fourth suc­
cessive month deposits in 10 mutual savings banks in
Baltimore declined in August. Some recession in savings
usually occurs during vacation season, but the decrease
was greater this year than in most years. Total deposits
in the 10 banks amounting to $217,598,810 on August 31,
1938, compared with the record figure of $219,926,013 on
April 30 this year: and with $217,294,470 on August 31
last year. Deposits in 8 of the 10 banks declined during
August.
M u tu a l

: Debits to individual,
firm and corporation accounts in banks in 24 Fifth district
cities were 1 per cent less in August than in July, a
smaller than normal seasonal decrease, and were only 6
per cent less than August 1937 debits, the smallest decline
from the corresponding month of the preceding year since
last December. Twelve cities reported larger August fig­
ures than those for July, Durham leading with an increase
of 67 per cent, and 5 cities increased over August 1937,
Durham again leading with 26 per cent. Durham made
the only gains over 1937 figures in May, June and July,
in addition to leading in percentage increase in August.
D e b its t o I n d iv id u a l A c c o u n t s




CITIES
Maryland
Baltimore ............
Cumberland ........
Hagerstown ........
Dist. of Col.
Washington ........
Virginia
Danville ..............
Lynchburg ..........
Newport News ..
Norfolk ................
Portsmouth ........
Richmond ............
Roanoke ..............
West Virginia
Charleston ..........
Huntington ........
North Carolina
Asheville ..............
Charlotte ............
Durham ..............
Greensboro ..........
Wilmington ........
Winston-Salem ..
Sputh Carolina
Charleston ..........
Columbia ..........
Greenville ............
Spartanburg
District Totals ..

Aug.
1938

July
1938

Aug.
1937

% of Change
Month
Year

$ 303,924
7,485
7,717

$ 324,984
7,950
9,099

$ 344,857
9,533
8,700

— 6
— 6
— 15

— 12
— 21
— 11

221,504

242,216

228,398

— 9

— 3

8,749
13,443
7,683
42,439
3,738
164,377
22,223

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

8,518
13,939
8,638
47,073
3,701
159,849
27,286

+ 16
-1 5
0
— 2
— 12
+ 20
— 6

+ 3
— 4
— 11
— 10
+ 1
+ 3
— 19

38,701
14,252

46,226
14,442

50,858
17,788

— 16
—
1

— 24
— 20

11,707
51,250
46,634
15,556
36,448
11,350
36,658

11,308
50,616
27,936
15,494
38,628
9,894
34,772

13,897
55,715
37,106
16,948
31,174
11,496
39,584

+ 4
+ 1
+ 67
0
— 6
+ 15
+ 5

— 16
— 8
+ 26
— 8
+ 17
— 1
— 7

13,938
21,738
15,814
7,975
$1,125,303

15,003
22,654
15,095
7,936
$1,133,054

16,259
23,718
18,042
8,446
$1,201,523

— 7
— 4
+ 5
0
—
1

— 14
— 8
— 12
— 6
— 6

Increase in employment in Fifth district
industries which was noted in July continued moderately
in August. Rayon manufacturers and cotton textile mills
further expanded operations, and tobacco factories in­
creased output. Opening of additional auction tobacco
markets gave work to several hundred handlers. Con­
struction work as reflected in contract awards increased
notably last month, most of it in suburban and rural areas
which are not included in city building permits. The fol­
lowing figures, compiled chiefly by the Bureau of Labor
Statistics from reports furnished by a large number of
identical industries, show the trends of employment and
payrolls in the Fifth district geographical divisions from
July to August 1938, the latest available figures:
E m p lo y m e n t:

Percentage change from
July 1938 to Aug. 1938
In number
In amount
on payroll
of payroll
+ 3.7
+ 5.4
— 2.4
— 2.6
+ 6.8
+ 3.6
+ 4.2
+ 10.1
+ 6.5
+ 11.3
+ 4.5
+ 1.1

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 :
Insolvencies in the Fifth Re­
serve district in August increased 169 per cent in number
over those in August 1937, while the United States
showed a total increase of only 38 per cent. In liabilities
involved, a district rise of 184 per cent compared with a
National decline of 2 per cent. Total insolvency figures
for 8 months of 1938 show rises in number of bankrupt­
cies of 32 per cent for the district and 45 per cent for
the United States, and increases in liabilities involved of
66 per cent for the district and 52 per cent for the Nation.
Dun & Brad street insolvency figures are as follows:
PERIODS

Number of Failures
District U. S.

August, 1938 ................

70

August 1937 ..................

26

974
995
707

8 Months, 1938 ............
8 Months, 1937 ............

430
326

8,661
5,967

Total Liabilities
District
U. S.
$ 514,000
$ 11,692,000
440,000
10,793,000
181,000
11,916,000
$4,543,000!
$113,347,000
2,745,000
74,497,000

MONTHLY REVIEW
A utomobile N ew Car R egistrations : Purchases o f
new automobiles tend to decline gradually after the spring
months, and in August registrations o f new cars in the
Fifth district declined from the July number in all states
except South Carolina, in which sales of tobacco stimu­
lated nearly all lines o f trade. The number of new cars
sold in the Fifth district in August was 50 per cent below
the number sold in August last year, but the percentage
o f decrease in sales in August was lower than in any
other month since April. Used cars sold well during the
summer and most dealers cut down the backlog they were
carrying earlier in the year. The following figures, com­
piled by R. L. Polk & Co., o f Detroit, show August and
8 months’ registration figures for new passenger cars in
Fifth district states:
Registration of New Passenger Cars
STATES
Maryland ..........
Dist. of Col.........
Virginia ..........
West. Va.
No. Carolina . . .
So. Carolina
District .........

Aug.
1938
1,868
1,189
2,269
1,172
3,015
1,390
10,903

Aug.
1937
4,245
2,435
4,490
3,370
4,741
2,574
21,855

%
Change
— 56
— 51
— 50
— 65
— 36
— 46
— 50

8 Months 8 Months
%
1937
Change
1938
35,038
-5 0
17,667
— 46
11,901
22,034
21,170
37,445
— 44
27,843
— 59
11,295
38,905
20,789
-4 7
9,870
20,533
— 52
92,692
181,798
— 49

C o a l P r o d u c t i o n : Output of bituminous coal in August
totaling 28,280,000 net tons increased 2 1 per cent over
23.357.000 tons in July 1938, but was 17 per cent less than
33.988.000 tons in, August 1937. On a work-day basis,
production of 1,047,000 tons per day in August showed
an increase of 12 per cent over output in July this year
but a decline of 20 per cent from the August 1937 daily
average. Total production of bituminous coal this calen­
dar year to September 10 of 211,948,000 tons compares
with 300,538,000 tons mined in 1937 and 355,156,000 tons
in 1929 to the same date. Shipments of coal through
Hampton Roads ports to September 10 totaled 11,140,833
tons in 1938, against 14,645,368 tons in 1937 and 15,066,542 tons in 1929.

Cotton mills further increased oper­
ations in August, and cotton consumption in Fifth dis­
trict mills not only rose 2 1 per cent over consumption
in July but lacked only 6 per cent of equaling August
1937 consumption. Reports indicate, however, that out­
put at the mills was in excess of distribution in August,
and early in September there was a tendency to re­
duce output to some extent. Cloth prices softened
slightly between the middle of August and the middle of
September. Cotton consumption figures in Fifth district
states in August 1938, July 1938, August 1937, and in
the first 8 months of last year and this are shown here­
with :
C o tto n T e x t ile s :

MONTHS

No. Carolina So. Carolina Virginia

District

August 1938 ...............................
July 1938 .....................................
August 1937 ...............................

143,560
119,305
149,928

114,916
93,542
123,763

14,875
12,818
16,150

273,351
225,665
289,841

8 Months, 1938 ...........................
8 Months, 1937 ...........................

964,160
1,355,388

744,991
1,031,463

91,511
120,767

1,800,662
2,507,618

: After setting a record for daily shipments of
rayon yarn in July, producers went further in August and
shipped 895 per cent of average daily shipments in 19231925 against 841 per cent in July and only 473 per cent
as recently as June of this year. Surplus stocks of yarn
R ayon




3

were reduced from 3.1 months’ supply on July 31 to 2.3
months’ supply on August 31. The Rayon Organon states
that stock of rayon in pounds showed a reduction of 38
per cent from the high point in June to the end of August.
Weaving mill activity also increased substantially in July
and August, and production of such staples as twills and
serges, faille taffetas and the pigment taffetas, as well
as box loom fabrics, showed notable improvement.
C o n s t r u c t i o n : Building permits issued in 31 Fifth dis­
trict cities in August rose 7 per cent in number over per­
mits issued in August 1937, but estimated valuation fig­
ures declined 21 per cent. Permits issued last month
totaled 2,775, with estimated valuation of $6,757,976, com­
pared with 2,591 permits and a valuation of $8,518,978
in August last year. Washington reported the largest val­
uation in August 1938, $3,114,975, Baltimore was second
with $1,044,587, Norfolk third with $245,169, Richmond
fourth with $234,205, and Winston-Salem fifth with
$200,932. Among the five largest cities, Richmond and
Norfolk reported higher figures than for August last year,
while Baltimore, Washington and Charlotte reported lower
figures. Seventeen cities showed higher figures for the
1938 month, while 14 cities showed lower figures.
Contract award figures, furnished by F. W. Dodge Cor­
poration, totaled $32,347,000 for the Fifth district in
August, an increase of 50 per cent over contracts totaling
$21,560,000 awarded in July this year and 10 per cent
above $29,456,600 awarded in August last year. Con­
tract award figures are a better measure of construction
activity than city building permits, since contracts include
all types of work located anywhere in the district while
city permits cover activities within corporate limits only.

C o t t o n : Spot cotton prices, after advancing somewhat in
the second half of August, declined in September to the
lowest point registered since last December. From an
average of 8.27 cents per pound for middling grade, the
average of ten Southern spot markets rose to 8.40 cents
on August 26, but then dropped to 8.01 cents on Sep­
tember 16. The second condition report on the 1938
crop, issued by the Department of Agriculture on Sep­
tember 8 , estimated the yield at 11,825,000 equivalent
500-lb. bales, a reduction of 163,000 bales below the
August 1 estimate, 7,121,000 bales less than the 1937 crop,
and 1,376,000 bales less than the 1927-36 average pro­
duction. In the Fifth district, prospective yield figures
were reduced for South Carolina in August, but remained
unchanged in North Carolina and Virginia.
r
Cotton Consumed and On Hand
(Bales)
Fifth district states:
Cotton consumed .......................................

Aug. 1988

Aug. 1937

273,351

289,841

Cotton growing states:
Cotton consumed .........................................
Cotton on hand August 31 in
Consuming establishments .....................
Storage & compresses .............................

472,693

505,365

851,213
9,757,377

733,266
3,432,201

United States:
Cotton consumed ........................................
Cotton on hand August 31 in
Consuming establishments .....................
Storage & compresses .............................

561,406

603,617

1,052,631
9,825,616

958,887
3,500,711

Exports of cotton ............................................

200,851

220,415

Spindles active in month ...............................

22,152,526

24,341,192

MONTHLY REVIEW

4

: Auction tobacco markets in South
Carolina and 7 towns in North Carolina opened early in
August, and later in the same month markets in the New
Bright belt in North Carolina opened. All sales in Au­
gust were of flue-cured tobacco, and figures were as fol­
lows :

CROP FO REC A STS

T obacco M a r k e tin g

Producers* Tobacco Sales, Lbs. Price per Cwt.
Aug. 1938
Aug. 1937
1938
1937

STATES
South Carolina ...................
North Carolina ...................

58,683,790
81,746,839

41,372,414
48,985,567

$23.86
23.93

$23.56
23.66

The weather in the Fifth district was too dry during
August, and curtailed yields of many crops by hastening
maturity. The dry weather was favorable for harvesting,
however. The accompanying figures show forecasts based
on September 1 conditions, 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. Figures for peanuts,
commercial apples and peaches are shown this month for
the first time this season.

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

T obacco

Aug. 1938
Smoking & Chewing
Tobacco, Pounds ............
Cigarettes, Number ...............
Cigars, Number ..................... .
Snuff, Pounds ....................... *

R e t a il T

rade in

Same stores by
States, with 29
stores added:
Virginia (13). . .
West Va. (10). .
No. Carolina (8)
So. Carolina (12)
District (59). .

25,351,631
15,097,837,400
452,897,908
3,009,478

+ 9
+5
+5
—1

43,000
780,000
1,023,000

40,000
710,000
798,000

18,576,000
37,740,000
14,245,000
45,357,000
24,945,000

15,477,000
32,199,000
12,104,000
40,787,000
21,161,000

1,083,000
1,680,000
1,520,000
4,830,000
10,076,000

1,407,000
2,389,000
2,366,000
3,682,000
8,316,000

518,000
1,204,000
741,000
824,000
502,000

468,000
907,000
661,000
630,000
309,000

3,480,000
10,920,000
3,264,000!
9,894,000
3,120,000

3,348,000
12,998,000
3,150,000
7,729,000
2,419,000

1,200,0003,990,000 —
8,600,000 —
5,610,000 —

1,000,000
5,070,000
8,160,000
5,130,000

1,205,000
4,282,000
7,915,000
4,898,000

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

Tobacco (Pounds)
7
30,030,000 +
0
100,115,000 +
+ 17
3,798,000 —
— 4
529,590,000
— 7
90,900,000

25,200,000
107,276,000
3,408,000
595,530,000
108,080,000

25,560,000
99,838,000
3,304,000
481,939,000
76,724,000

....
North Carolina , . , . . .
South Carolina .. . . . .

+ 5
+ 5
+ 9

173,650,000
278,460,000
7,865,000

145,288,000
228,960,000
8,539,000

Commercial Apples (Bushels)
1,400,000
1,750,000
7,200,000
10,391,000
3,300,000
5,500,000
500,000
875,000

1,266,000
7,609,000
3,410,000
597,000

North Carolina . . . . . .
South Carolina . . . . . .
Maryland

— 2
— 2

+
—
—
—
+

Com
.............. . . .

...

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

+ 12

Shoes (4) ..............
,
Drugs (10) ............
,
.
Dry Goods (7) ----Elec. Goods (27) .
Groceries (72)
.
,
Hardware (23)
Industrial Supplies (8) .
Plumbing & Heating (9)
Paper & Products (6). .
Tobacco Products (16). .
Miscellaneous (17)
.
All Firms (199)

(Bushels)

18,216,000
33,350,000 —
12,116,000 —
43,475,000 —
27,014,000 —

+
+
+
+
+

7.5
6.9
5.0
11.7
6.7

Ratio Aug.
collections
to accounts
outstanding
August 1
28.7
28.2
25.9
24.0
26.7

Maryland

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

+ 3
+ 10
0
0
+ 2

Maryland

.............. . . .
....
West V irginia___ . . .
North Carolina . .. . . .
South Carolina . . . . . .

+
+
+
+
+

— 7
— 13
0
— 13
— 15

1,170,000 +
1,892,000 —
1,596,000 —
5,060,000
10,648,000
Hay (Tons)

3
4
5
6
4

576,000 +
1,158,000
802,000
925,000
468,000

White Potatoes (Bushels)

199

+ 3.7
+ 5.3
—21.7
— 15.1
— 7.9
— 4.5
— 13.5
— 9.7
+ 8.0
+ 3.6
— 6.8
- 6.3

+
+
+
+
+
+
+
+
+
+
+
+

161.2
7.8
67.6
3.7
9.6
36.1
51.7
10.4
16.9
8.3
9.6
22.7

3,276,000 —
10,243,000 —
2,720,000 —
9,828,000
2,596,000

Sweet Potatoes (Bushels)
Maryland

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

Maryland

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

...
North Carolina . . , ...
South Carolina . . . . . .

F ir m s :

Net Sales
Aug. 1938
comp, with
Aug.
July
1938
1937

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

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

— 1.0
— 14.8
— 7.3
- 8.8
— 4.5

3.1
8.6
2.1
2.4
.1

LINES

— .4
-1 2 .2
— 8.3
— 6.1
— 8.6

18,000
453,000
643,000 —

— 18
—23

Maryland

+
-2
- 6.0
— 2.5
— 10.2
— 4.1

Yield
1927-1936

Oats (Bushels)

Net Sales
Stocks
Jan. 1 to date Aug. 31, 1938
comp, with
comp, with
same period Aug. 31 July 31
1938
1937
last year

+ 2.4
— 4.1
+ 3.9
— 4.9
.1
+

W h o lesale T rade,




27,506,542
15,891,586,977
477,595,984
2,966,448

% Change

Yield
1937

Yield
1938

Acreage

D e p a r t m e n t S t o r es :

Net Sales
Aug. 1938
comp, with
August
1937
Richmond (3)
Baltimore (8)
Washington (6).
Other Cities (13)
District (30).

Aug. 1937

Cotton (Bales)
% Change

Stocks
Aug. 31, 1938
comp. with
July 31
Aug. 31
1938
1937
— 30.0
+
.6
— 36.2
— 18.9
-1 8 .6
— 5.2
— 4.7
— 16.9
-1 4 .3
+ 7-1
— 5.8
-1 7 .0

+ 1.3
+
-3
+ 3.9
- 4.8
— .5
+ -8
+ 1.4
- 8.9
— 3.8
+ 1.5
— .7
— .8

Ratio Aug.
collections
to accounts
outstanding
August 1
54.8
104.01
44.2
72.2
103.5
42.3
58.3
56.4
57.2
91.6
66.2
68.4

0
— 3
+ 1
+16
+

Peanuts (Pounds)

Maryland

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

West Virginia . , .
North Carolina . ..
Maryland

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

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

(Compiled September 21, 1938)

141,300,000
262,500,000
8,400,000

Peaches (Bushels)
368,000
1,161,000
204,000
2,232,000
1,515,000

448,000
1,599,000
528,000
1,984,000
1,080,000

374,000
767,000
299,000
1,813,000
1,095,000

MONTHLY REVIEW, September 30, 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

Industrial activity increased considerably in August and advanced further
in September. Factory employment and payrolls also showed a substantial rise
in August, and distribution of commodities to consumers increased seasonally.
PRODUCTION

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

CONSTRUCTION CONTRACTS AWARDED

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 July and August and
estimate for September.

Volume of industrial production showed a further considerable increase
in August, and the Board’s seasonally adjusted index rose from 83 to 88 per­
cent of the 1923-1925 average. In manufacturing, increases in output were
general except in the automobile industry where there was a sharp seasonal
decline as plants were closed for inventory taking and for preparation for the
shift to new model production. At steel mills, where activity had risen consid­
erably in July, there was a further advance in August and production was at
an average rate of 42 percent of capacity as compared with 35 percent in the
previous month. Output of lumber and plate glass also increased. In the tex­
tile industry the sharp advance that had been under way since early summer
continued. Mill consumption o f wool and cotton increased further, and de­
liveries of rayon were maintained at the high level reached in July. Shoe pro­
duction showed a further increase and activity at meat-packing establishments
showed less than the usual seasonal decline. Production of bituminous coal and
crude petroleum increased somewhat further.
In the first three weeks of September steel ingot production continued to
increase, while automobile production remained at the low level reached in
August. Output of crude petroleum was reduced, as wells in Texas were closed
on both Saturdays and Sundays, whereas in August only Sunday closings had
been required.
Value of construction contracts awarded in 37 Eastern States increased
considerably in August, according to figures of the F. W. Dodge Corporation.
The increase was in publicly-financed projects and reflected partly the expan­
sion of the Public Works Administration program and the award of the first
contract for the slum clearance projects of the United States Housing Author­
ity. Awards for private residential building continued at about the same rate
as in July and were close to the level reached in the spring o f 1937. Com­
mercial building, which had increased in July owing to the award of a contract
for a large office building, declined in August to about the level o f other recent
months.
EMPLOYMENT

Factory employment and payrolls showed a marked rise from the middle
of July to the middle of August, while in nonmanufacturing industries em­
ployment showed little change. The number employed at factories producing
durable goods increased for the first time since the summer of 1937 and in the
nondurable goods industries, where employment had increased in July, there
was a further rise. Most leading industries reported increases in the number
of workers.
DISTRIBUTION

Distribution of commodities to consumers increased seasonally from July
to August. Department store sales showed about the usual rise and mail order
sales increased, while variety store sales declined. In the first half of Sep­
tember sales at department stores increased more than seasonally.
Freight-car loadings increased somewhat further in August, reflecting
chiefly larger shipments of miscellaneous freight.
COMMODITY PRICES
Discount rate of Federal Reserve Bank; weekly
averages of daily yields on 3-5 year Treasury notes
and on Treasury bonds callable after 8 years; and
weekly average of daily dealers’ quotations on
90-day Treasury bills, or rate on new bills offered
in week. For weeks ended January 6, 1934, to
September 17, 1938.

Prices of silk and rubber showed some advance from the middle of August
to the third week of September and there were also increases at the end of
the period in nonferrous metals. Wheat prices fluctuated considerably but
showed little net change in this period. Prices of cotton and wool declined
somewhat, and there were further decreases in prices of some finished industrial
products.
BANK CREDIT

A heavy inflow of gold from abroad during the five weeks ending Septem­
ber 21 resulted in an increase of over $500,000,000 in the monetary gold stock.
Member bank reserves were increased by Treasury payments for gold acquired
but were sharply reduced in the last week of the period by paymnts to the
Treasury for cash purchases of new securities and quarterly income tax col­
lections. As a consequence of these transactions, excess reserves, which had
increased to $3,130,000,000, were reduced to $2,740,000,000 on September 21.
Total loans and investments of reporting member banks in leading cities
increased sharply during August and the first three weeks of September, re­
flecting chiefly an increase in holdings of United States Government obliga­
tions. Balances held in New York City for foreign banks showed a substantial
increase.
MONEY RATES AND BOND YIELDS

Wednesday figures, January 3, 1934, to Septem­
ber 21, 1938.




The average yield on long-term Treasury bonds increased in September
from the low point reached at the end of August. The average rate on new
issues of Treasury bills increased to 0.11 percent, compared with 0.05 percent.
Yields on high-grade corporate bonds increased slightly.

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