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Busin
Finance, Industry,
Agriculture, and Trade
Fourth Federal Reserve District
Federal Reserve Bank of Cleveland
V o l. 2 8__________________________ C leveland, O h io , A p r il 1 , 1 9 4 6 ________________________N o . 4
THE
ANGLO-AMERICAN FINANCIAL AGREEMENT
An Editorial
The proposal that the United States should estab
lish a line of credit to the amount of 33,750,000,000
in favor of Great Britain has evoked considerable
public discussion.
It is contended, on the one hand, that with a $275
billion public debt, the United States can not afford
to underwrite world recovery, and that the granting
of this credit to Britain would set in motion a series
of similar requests of unknown magnitude from other
countries. It is further argued that the rate of interest
is too low in view of the risk involved, that on the
basis of previous performances the credit will never
be repaid in full, and finally that such a loan would
enable British industry to undermine the competitive
position of American producers in the world market.
Conversely, advocates of the loan urge that such
a credit would be a most constructive move toward a
revival of world trade, that the benefits which would
thereby accrue to the United States would be im
measurable as compared to the cost. Furthermore,
after having given legislative effect and encourage
ment to the Bretton Woods Agreements, the United
States is under moral obligation to help create an
international climate under which the Monetary Fund
and World Bank would have a fair chance of survival.
It is also claimed that the British situation is utterly
without parallel and, therefore, the proposed loan
would not constitute an embarrassing precedent in
dealing with other potential borrowers.
Minor Such is the theme of the conflicting claims.
Issues The only common denominator is their
oblique approach. Most of these arguments,
both pro and con, merely skirt the perimeter of the
basic issue. For example, the amount involved is a
relatively minor consideration—if there is a demon
strable justification for the loan.
The effective rate of interest is likewise of small
moment.
If the loan is a good proposition the interest
charge is irrelevant; if the proposal is unsound, then
no conceivable rate however usurious would make it
desirable.
That the granting of this line of credit to Britain
would establish a prejudicial precedent in favor of
other potential borrowers can hardly be denied.
Obviously it would not discourage appeals from other
sources. But precedent or not, if the loan is basically
essential it should be made.
As for the prospect of ultimate repayment, that
depends largely upon the creditor’s attitude. Inter
national loans of this type are literally loans of goods
and services rather than money. The British are
surfeited with “money,” as all belligerents are by
virtue of inflationary war finance. The proceeds of
this proposed loan would be much more acceptable in
the form of food, raw material, and industrial equip
ment.
This does not imply that repayment could be ac
complished only by an importation of the same type
of product. It is extremely unlikely that the United
Kingdom will ever ship food or raw materials to this
country, in any measurable quantities. Repayment in
full or in part is more likely in terms of quality
merchandise, and by the rendering of services such
as financial, tourist, shipping, and other forms of
service. Conjecture regarding the probability of
ultimate repayment, however, is quite as secondary as
the contentions with respect to the original cost.
Consequences of The fundamental and overriding
British Distress questions are precisely these:
Would it be detrimental to this
country if Britain should regress to a third or fourth
rate position among nations? Would long continued
economic distress in Britain have an adverse effect
upon the American economy? Would the United
States be less secure if British power and influence
were to wane and disappear?
2
T hat is the heart of the problem. If the existence
of a reasonably strong United Kingdom would en
hance the prospects of enduring peace, or at least
contribute to American security, all other considera
tions are subordinate. If economic distress is one
of the major causes of war and civil disorder, then it is
imperative that one of the leading economic entities
of the democratic world be given a financial trans
fusion, regardless of its immediate cost in dollars and
cents, or the long-run probabilities of repayment.
W hat apparently is not widely realized in this
country, nor for that m atter in England, is the
seriousness of the British situation after two very
costly world wars.
For a half century or longer, the United Kingdom
has been able to produce only about one-third of its
own food requirements, and only a small portion of
the raw materials used by its industries. W hat would
appear to us an incredible proportion has had to be
obtained abroad and paid for out of current income.
Under conditions of peace the British were able to
obtain and pay for these quite indispensable imports
by a moderate volume of exports of finished products,
by extensive earnings from shipping services, by a
substantial income from overseas investments (which
incidentally involved a definite sacrifice at the time
they were made originally), by the rendering of tourist
services, and by the receipt of personal remittances.
Today, as a result of the war, nearly all of those
sources of economic sustenance have been severely
disrupted or impaired.
Exports and British exports have fallen to less
Food Supplies than one-third their prewar volume,
with no prospect of early recovery
without outside assistance. In the United States such
a shrinkage in exports would be cause for concern;
but it would not shut off the supply of meat and
bread. In the United Kingdom, where food imports
are dependent upon a satisfactory volume of exports
and other external income, the consequences are almost
tragic.
The drop in British exports was the result of delib
erate policy. The high command was in mutual agree
ment that for the duration of the war British export
industries should be devoted almost exclusively to pro
duction for direct military purposes, while LendLease would supplement the British diet and provide
the necessary industrial raw materials.
The sudden termination of Lend-Lease stirred| hardly
a ripple in this country; but it left a gaping hole in the
British economic structure. Shortly there came the
bitter realization that until export markets could be
reestablished, food and other essential import items
would be at an austere minimum because of lack of
means of payment.
The earning power of British shipping has also
suffered great contraction. More than half the prewar
tonnage was lost through enemy action. Until new
construction overcomes that deficit, shipping income
will remain far below 1939 levels. New construction
materials are not available in adequate amounts
because of the urgent need for food, raw materials,
industrial equipment, and housing material.
Another source of prewar earning power—overseas
investments—has
similarly shrunk to a low level,
April 1, 1946
THE MONTHLY BUSINESS REVIEW
with the result that such income now buys less than
half the former quantity of essential imports, partly
because of the rise in commodity prices, and partly
because of the sharp reduction in amount of such in
vestments held.
Decline in
Prior to enactment of Lend-Lease,
Buying Power Britain was forced to liquidate
foreign securities and direct invest
ments on a vast scale to obtain foreign funds needed
to make payment for war goods produced in the
United States and other still-neutral countries. Gold
reserves and dollar resources were virtually exhausted
before American munitions and materiel were made
freely available, under the Lend-Lease program.
Furthermore, throughout the war period British
foreign indebtedness was increasing rapidly, parti
cularly in the Near and Far East. M ilitary dis
bursements were made in British money, with the
understanding that such funds would remain im
mobilized until the British economy could liquidate
the debt — in terms of goods and services.
There is actually only one source of external income
that holds promise of an early return to prewar or
perhaps higher levels and it is tourist income. Yet
that is not all a net gain in that a sharp rise in tourist
traffic would accentuate food import requirements.
Moreover, it would take a miraculous expansion of
this trade to compensate for the deficit in any one of
the other major sources.
Undoubtedly people of this country are fully aware
that Britain suffered considerable physical loss during
the war. Everywhere there is visual evidence of de
struction of property.
In the United States the reconstruction process
would be hailed in many quarters for the jobs it
would create. It would involve no transfer problem
—no foreign loans—because most of the building ma
terials would be home-produced. In Britain, the
situation is radically different. Many of the con
struction materials must be imported. Imports require
foreign exchange—foreign money—the supply of
which was sharply reduced by the exigencies of war.
Financial Yet, the financial damage wrought
L>estruction by the war was much greater than
the physical destruction. It is largely
because of financial destruction that Britain’s eco
nomic plight is serious, and the more serious because
the deterioration is invisible to the naked eye.
Unless aid of considerable magnitude is forthcoming,
it will be a question of British survival. Reattainm ent
of prewar prominence would be a hopeless task. Purely
as a m atter of self-preservation, Britain would be
forced to use every known device to restrict imports to
rock-bottom requirements, and every conceivable
means to stimulate exports—by subsidies, by bilateral
trade agreements, by import quotas, by strict foreign
exchange rationing and controls and through a host
of other expedients in a struggle for mere existence.
Under such circumstances, all prospects for a revival
in world trade would vanish and the international
monetary institutions organized last month at Sa
vannah would be stillborn.
Of even more serious implication than the impact
of a desperate Britain upon our industrial situation, is
(Continued, page 3)
3
THE MONTHLY BUSINESS REVIEW
April 1, 1946
INDUSTRIAL SUMMARY
Problem of The consensus of manufacturers and
Price Control wholesalers in principal lines of busi
ness in the Fourth District, appears
to be that balanced volume production will not be
attained until a very large part of our present price
control system is scrapped, and the price mechanism
is allowed to function normally to allocate the uses of
material and labor.
An im portant manufacturer and distributor of nonferrous metal products questions the wisdom of the
present subsidy program for copper, lead, and zinc.
The lead subsidy, for example, grants premiums to
high cost and inefficient domestic producers in order
to keep them in business. The foreign price of lead
is higher than the ceiling price that may be paid for
foreign lead by consumers in the United States. To
supplement inadequate domestic production the
Government acquires lead in the world market and
resells it in this country at a loss. At the same time,
however, low domestic prices stimulate uneconomic
uses of lead and the demand for it continues far in
excess of estimated production and imports. Higher
prices would encourage the use of substitutes as well
as stimulate foreign lead production.
Strikes have sharply curtailed lead, copper, and
brass production. Settlement is made most difficult
under existing price ceilings, and these industries find
themselves in the same predicament that confronted
the steel industry earlier in the year.
A prominent work clothing manufacturer reports
that his industry is in a state of confusion with prices
still frozen at the March 1942 level. Union work
clothes manufacturers have given employees four wage
increases totaling 33 percent above the 1941 base. In
March, OPA authorized higher prices on denims and
cotton textiles which will add from 31-25 to 31-75
to material costs per dozen garments. Most manu
facturers are reported to be now operating at losses
or just breaking even. While relief is expected at some
future time, operations are being curtailed or stopped
completely.
{Continued, from page 2)
the potential political effect of the eclipse of Britain
as a constructive factor in world peace. If, because
of economic anemia, Britain can no longer exert her
former influence in the conduct of world affairs, the
United States will be confronted with a new concept
of isolation. Within the memory of all now living,
American foreign policy has always been able to rely
upon one known factor in the international equation.
British policy is not always sympathetic; but neither
is it inscrutable.
Britain’s economic disintegration at this vital
juncture of history would force a strange, unnecessary,
and perhaps ominous reorientation in our international
relationships. On the other hand, a grant-in-aid to
strengthen an independent Britain, whether repaid or
not, would be infinitely more constructive than a
military alliance with an overburdened and exhausted
empire.
New price directives for men’s suits, shirts, pajamas,
and underclothing afford some relief and should stimu
late production. The industry wonders, however,
why price relief is apparently unobtainable until
acute shortages develop.
A builder of small tools reports that there have
been no general price increases in his industry since
1937 and that only abnormal volume has enabled this
manufacturer to meet the increase in costs. A small
decline in volume would make necessary an immediate
application for price relief. He believes that discon
tinuance of all controls, both price and wage, would
be preferable, since in his opinion the customer is the
most effective policeman of prices in the long run.
An im portant paper products distributor states
that the paper industry is maintaining production
at an increasingly high level with employment gener
ally improving. Production of badly needed specific
grades is at a minimum because of deterrant price
ceilings on the cheaper grades. Hence, production is
limited to the higher priced papers with a resulting
dislocation of the distribution of the various grades in
demand. Unbalanced production is thus being fostered.
A leading lumber wholesaler in the eastern part of
the District says that a drastic change in price con
trols, if not their entire elimination, is the only solution
of the present chaotic condition of the lumber busi
ness. A rapid increase in prices might ensue but he
anticipates that the normal reaction of consumers
against paying exorbitant prices as well as increased
production would quickly offset such a rise.
Considerations of The foregoing represents a crossModified Controls section of the attitude of a
number of im portant Fourth
District manufacturers and wholesalers toward con
tinued price control as revealed in a survey made
during March. The responses were made largely in
terms of each firm’s individual experience with price
control and before OPA had begun its present program
of price relief in the capital goods industries and its
CURRENT EVENTS
The Board of Governors of the Federal Reserve
System recently approved the appointment of Mr.
Sam W. Emerson, President, The Sam W. Emerson
Company, Cleveland, Ohio, as a member of the
Industrial Advisory Committee for the Fourth Fed
eral Reserve District,"'effective March 1, 1946. Mr.
Emerson succeeds Mr. Dan C. Swander who died on
January 27, 1946.
NEW MEMBER BANK
The Hicksville Bank, Hicksville, Ohio.
4
THE MONTHLY BUSINESS REVIEW
attem pts to stimulate production of items in short
supply due to low ceiling prices.
The larger aspects of the problem of price control,
such as the futility of removing ceilings where sup
plies of particular goods are fixed and where higher
prices would not enlarge the supply, were not given
full consideration in these responses. Likewise, the
circular effects of general price increases which would
bring forth new demands for higher wages and a rise
in other operating expenses, apparently were largely
ignored. The effect of high prices upon those who live
on fixed incomes is also a factor in the evolution of
postwar price policies as is the effect of higher prices
upon Government expenditures.
If production—and more production—is the prime
requisite of the hour, price administration should be
tailored to that objective. That does not necessarily
require the elimination of all controls, but rather their
realistic modification.
Iron and Steel Following the end of the steel
Situation and strike, mills promptly resumed steel
Outlook
production and a rate of 84 percent
of capacity was achieved by midMarch. It is anticipated that operations at 90 percent
of capacity will be achieved by early April which
would be the highest rate since the fall of Japan.
The Office of Price Administration increased steel
prices for some 39 steel products on March 1 and made
the increase retroactive to February 15. Price in
creases averaged $5 per ton or about 8.2 percent and
ranged from $2 per gross ton on all types and qualities
of ingots and sheet bars, to $12 per ton on electrical
specialties. Finished steel composite price rose $6.18
to $64.45 and semi-finished steel rose $2.80 to $40.60.
On March 15, OPA announced a flat increase of 75
cents per ton on all grades of pig iron except charcoal
iron to be effective im m ediately. The raise is designed
to offset the recent wage increases and is the third
increase since prices were frozen in 1941. Total price
increase since that date is now $2.50. A major in
dependent steel producer has also increased the stain
less steel price 8.2 percent. Ceilings on this item
were suspended last October.
The exact effect of these price increases upon non
integrated mills is not yet clear. While their raw
materials received the smallest increases, it is possible
that the higher prices for finished items will cause
integrated mills to retain a larger portion of output
for finishing in their own plants and further reduce
the supply of semi-finished steel normally provided
the non-integrated manufacturer.
The situation with regard to the steel fabricating
industry remains confused. At the moment 50 per
cent of the producers have signed agreements with
the union and have reopened on the same basis as the
primary steel producers. The remaining members of
the industry feel that they cannot grant wage in
creases on top of increased metal costs without
definite assurance that adequate price adjustments
will be forthcoming immediately.
Scarcity of pig iron and scrap has been a persistent
problem in steel production and has slowed the rate
of improvement. Because steel consumers have not
April 1, 1946
been receiving material promptly or have been unable
to process it, the supply of industrial scrap has been
far below normal. This material usually returns to
mills with a minimum of delay as steel is fashioned
into consumer products and forms the bulk of supply
in normal times. Settlement of the strikes at General
Motors and General Electric as well as at many small
fabricators promises to alleviate the situation some
what.
The Civilian Production Administration estimates
that current scrap supplies are about 200,000 tons
below monthly requirements of 1,700,000 tons with
a resultant drain on pig iron stocks. A campaign is
to be inaugurated among householders, farmers, and
small manufacturers reminiscent of wartime scrap
drives to make up the deficit.
Steel producers are sold out through the year on
many products and most of them are unwilling to book
orders for 1947. Some products, notably alloy steel,
are available for delivery within a short time according
to magazine Steel.
The shortage of pig iron and coke is severe. Found
ries report more difficulty now than at any time during
the war in obtaining raw materials. The labor short
age still continues and returning veterans are reported
to be not interested in foundry work. As a result
foundries are operating at about 45 percent of ca
pacity. Buyers of iron castings consequently are
unable to obtain quantities needed and production
of farm machinery and consumer durable goods is
being delayed.
OPA granted this month an industry-wide four
percent increase in ceiling prices for all steel castings
and railroad specialties to take care of recent wage
increases. This is said to be the first price adjustm ent
to compensate an industry for “unabsorbable” wage
increases since the February basic steel adjustment.
A price increase of 11 percent was granted these com
modities last November.
All producers of iron and steel forgings were granted
a temporary 16.5 percent increase, based on 1941
prices, in late March to cover increased material and
labor costs. This replaces an 8 percent advance
awarded last September. A survey will be made
shortly to determine the adequacy of the adjustment.
Manufacturers of steam generating equipment were
also granted a temporary 12 percent increase.
Coal Production Bituminous coal production in
and Prospects the United States has proceeded
at a very satisfactory rate since
the beginning of the year. As of March 2, daily aver
age production of 2.1 million tons was six percent above
a year ago. Total United States production for the
period ending March 2, was 107.9 million tons as
compared to 104.7 million tons for the period ending
March 3, 1945. Bituminous coal production in the
Fourth District during February amounted to 19
million tons as compared to 17 million tons for Feb
ruary 1945, an increase of 12 percent.
Inventories of bituminous coal in the hands of
consumers at this time are about 46 million tons or
approximately normal. Coal stocks on the Great
Lakes docks in Canada, Lake Michigan, and Lake
April 1, 1946
THE MONTHLY BUSINESS REVIEW
Superior ports are extremely low. Domestic sizes
continue in short supply. Steel mills in general were
unable to increase coal inventories during the recent
strike and their supply position is spotty, ranging
from two to six weeks. A coal strike would speedily
curtail steel operations.
Coal operators throughout the nation as well as
in the District are vitally concerned over the outcome
of the wage negotiations being conducted between the
UMW and the operators’ negotiating committee.
Recent studies indicate that any substantial wage in
crease in bituminous mines will have to be accom
panied by price increases for coal. Mine operators and
distributors are also acutely aware of the importance
of price as it relates to the general competitive struggle
with other fuels. For the past twenty years, the rate
of growth in the coal industry has been substantially
less than that of general industry whereas fuel oil
and natural gas consumption have achieved sub
stantial gains. Higher prices will cause a further de
terioration in coal’s competitive position, not only by
stimulating the use of substitutes but also by en
couraging the more efficient utilization of coal itself
as a source of energy and thus reducing tonnage
needed.
Although mines have steadily introduced more
machines to ofF-set rising wages, labor costs per ton
of coal mined have nevertheless increased. In 1944,
machines cut 99 percent of the total product of under
ground mines in Ohio, and 68 percent of the 22.2
million tons of underground coal was machine loaded.
In addition, 11.6 million tons were mechanically
m ined by strip p in g . A b o ut 19 p e rcen t of total
output was cleaned by machines. It is therefore
apparent that further utilization of machine operation
(in Ohio at least) is virtually limited to the cleaning
process. Prospects for increasing the volume of
production, and thereby reducing unit costs are ex
ceedingly dim.
The best approach to increasing the use of coal and
checking the inroads of competitive fuels would be to
reduce prices. The opposite appears certain to occur,
to the long run detriment of the industry by way of
the more rapid elimination of marginal mines and
reduced employment opportunities in the industry.
Increased fuel costs will also have immediately
unfavorable effects upon large coal consumers such as
railroads, public utilities, steel mills, cement mills,
and coke and gas plants. Prices of their end products
are already under heavy pressure from increasing
material and labor costs, and fresh demands for price
or rate relief upon regulatory commissions and agen
cies are in the offing.
Ceramics Under The OPA has suspended price
Dual Price System controls for vitreous china sold
to hotels and institutions, but
at the same time announced that it has no plans for
lifting price ceilings on household ware and semivitreous products. Wage negotiations commenced
March 19, between pottery manufacturers and the
National Brotherhood of Operative Potters who are
requesting a 30 percent wage increase and correction
of certain other inequalities.
5
Many plants make both hotel and household ware
and all plants making either or both kinds are covered
by the same wage agreement. Industry-wide wage
contracts have been in effect for many years. House
hold ware potteries have taken the position that even
a small wage increase is impossible without adequate
price relief. The continuation of price ceilings for
an industry whose annual sales approximate only
$30,000,000 and whose product forms such a small
part of the nation’s cost of living is explained on the
ground that their removal might evoke charges of
discrimination.
Construction While total construction contracts
Industry
awarded in 37 eastern states ad
vanced in January over the previous
month, total construction contracts awarded in the
Fourth Federal Reserve District declined substanti
ally in January to $39.7 million as compared to $49.6
million in December 1945. However, the January 1946
District total was four times that of January 1945.
Residential contracts awarded were $9.3 million in
January or about the same as in December, but eight
times as great as the same month a year ago.
The F. W. Dodge Corporation reports valuation of
construction contracts awarded in three major areas
as follows:
Construction Contracts Awarded
(thousands of dollars)
Jan.
1946
Total building. . . . ....................... 310,786
Residential building..................
2,975
7,811
Non-residential building..........
Public works (public and private)
176
Utilities (public and p rivate).......................
TOTAL CO N STRU C TIO N . . . 10,962
Dec.
1945
312,512
2,222
10,290
390
715
13,617
Jan.
1945
32,935
198
2,737
693
400
4,028
Total building. ................................. 322,588
6,316
Residential building..................
Non-residential building.......... 16,272
Public works (public and private)
533
Utilities (public and private). . .
767
TOTAL C O N STRU C TIO N . . . 23,888
325,281
5,594
19,687
1,895
302
27,478
33,427
864
2,563
469
1,409
5,305
T otal building................................... 313,255
Residential building...................
1,727
Non-residential building.......... 11,508
Public works (public and private)
2,044
Utilities (public and private). . .
122
TOTAL CO N STRU C TIO N . . . 15,391
310,926
3,209
7,717
547
15
11,488
32,140
1,014
1,126
173
244
2,557
Pittsburgh Territory:
Cleveland Territory:
Cincinnati Territory:
Although these territories cover more than the
Fourth District, it should be noted that both Pitts
burgh and Cleveland suffered sharp reductions in nonresidential building from the previous month whereas
Cincinnati scored a 49 percent gain. Residential
building contracts awarded, however, increased slightly
in January over December in Pittsburgh and Cleve
land, while taking a substantial drop in Cincinnati.
Nearly all building materials, with the exception of
cement, continue in very short supply and a shortage
of skilled building craftsmen is reported in many
areas. Moderate weather is permitting construction to
proceed at a good pace.
THE MONTHLY BUSINESS REVIEW
6
April 1, 1946
CASH BALANCES OF INDUSTRIAL CONCERNS
The most recent demand deposit ownership survey
reveals that cash balances of industrial concerns have
dropped rather sharply since the end of last July.
At the eight largest banks in the Fourth District
deposits of mining and manufacturing establishments
had declined 23% by January 31. Presumably most
of the shrinkage occurred subsequent to September
30, when corporate cash reserves, according to SEC
reports, were close to the wartime peak. There is also
some evidence that the contraction has continued
since the end of January, the date of the latest semi
annual survey, with the possible consequence that
cash reserves of industrial concerns are now lower
than at any time in the past four or five years.
This reduction in bank balances of manufacturing
enterprises is attributable to a combination of factors.
Income tax payments undoubtedly made some inroads
upon working balances at a time when operations in
many instances were at a relatively low ebb. Repay
ment of Regulation V loans (Government-guaranteed
war loans) was another factor of some import, although
there were instances where such loans were paid off
with the proceeds of conventional bank loans.
Corporate balances were reduced in some measure
by renegotiation payments to the U. S. Treasury.
Acquisition of fixed assets in the form of buildings
and equipment may have been responsible for a small
part of the decline in bank deposits of manufacturing
firms.
An increase in inventories, largely because of the
uncertainty regarding future deliveries of raw ma
terials and other supplies, resulted in a drain of cash
reserves. A rise in non-Government receivables may
have been instrumental in some cases. There also
exists the possibility of a net shift of funds to other
districts, but this loss, if any, was probably of nominal
proportions,
The feeling among commercial bankers is that the
sharp contraction in industrial earnings, or the incur
rence of actual losses, was the predominant factor over
much of the period. The liquidation of wartime obliga
tions would have caused some depletion of corporate
treasuries, even under the most favorable circum
stances, and when it occurred in conjunction with a
period of relatively low and interrupted industrial
production, the effect was doubly noticeable.
This decline in industrial balances goes a long way
in explaining the midwinter rise in commercial and
industrial loans. During November, December, and
January, such loans increased #46 million at the eight
largest banks. But for this extension of credit, manu
facturers’ deposits presumably would have dropped
still further.
Effect Upon The shrinkage of industrial balances
Total Deposits was most evident among the largest
banks, and was of such magnitude as
to bring about a drop in aggregate demand deposits of
those institutions. Both developments are depicted
on the charts below. M anufacturing and mining
accounts represent such a large segment of the deposit
structure of metropolitan banks that any substantial
change in the volume of such balances is clearly
reflected in total demand deposits. In the case of
banks below the top bracket, the wartime upward
trend of deposits was barely deflected, because of the
lesser importance of industrial accounts.
Among the eight largest banks, aggregate deposits
of insurance companies, trust funds of banks, and
other financial firms at the end of January were at a
new high since the inauguration of these semiannual
surveys. The collective deposits of retail and whole
sale establishments, public utilities, nonprofit associa
tions, and other nonfinancial businesses were also at
the highest level on record. Personal accounts of over
310,000 each, likewise rose above the previous high
by a sizable margin. But the combined increase of all
these subgroups was not adequate to offset the con
traction in manufacturing balances. The net result
FLUCTUATIONS IN DEMAND DEPOSITS — JULY 1943 TO JANUARY 1946 *
E IG H T LA R G E ST BANKS
W ith D em an d D ep o sits of over $100,000,000
*
25 LA R G E BANKS
W ith D em an d D ep o sits of $10 -
$100,000,000
400-
*■ A T ROUGHLY H A L F YEAR
IN TE R V A LS
*
*
A C C O U N TS
W IT H
B A L A N C E S OF LE S S
TH A N
> 1 0 .0 0 0
April 1, 1946
was a 43^ percent decline in total demand deposits for
the six-month period. The shrinkage in manufactur
ing accounts increased the relative importance of all
other accounts, and brought about a more even
distribution by type of deposit.
Trend in
The postwar contraction in manuSmaller Banks facturers’ demand deposits has not
been confined exclusively to the
largest banks. It is equally visible in the case of banks
in the 310-3100 million range, of which 25 typical
institutions submitted deposit analyses. Percentage
wise the shrinkage was somewhat smaller, amounting
to approximately 16 percent over the six months, but
this type of deposit had shown virtually no expansion
during the preceding two years, and for perhaps a
much longer period. Thus with respect to these banks,
the outward movement of deposits of manufacturing
concerns represents more than a mere cancellation of
late wartime growth.
Banks in this size classification, however, did not
experience a decline in total demand deposits for
contraction in the industrial section was slightly more
than offset by gains elsewhere. All other types of
deposits expanded to the highest levels on record.
The rise was particularly pronounced in financial,
personal, and the trade and other nonmanufacturing
groups. Two and one-half years ago, mining and manu
facturing balances were approximately twice as large
as the trade and other nonfinancial block of accounts.
But as a result of the converging trends noted above,
there is no longer any great difference in the aggregate
dollar volume of the two groups. The future course of
trade, construction, service, and other nonmanufac
turing deposits have become almost as important
dollarwise as the one-time dominant industrial ac
counts.
The broad movement of funds out of industrial
accounts into other types of deposits has been equally
noticeable among banks outside the largest manufac
turing centers. During the year ended January 31,
manufacturing deposits at banks in the 31-310 million
PO STW A R FLU C TU A TIO N S IN IN V ESTM EN TS
F o u rth D is tric t W eekly R e p o rtin g M em b er B an k s
(C u m u la tiv e tro m A u g u st 15, 1945)
LAST
7
THE MONTHLY BUSINESS REVIEW
DAY PLOTTED- MARCH 21.194*
range declined 13 percent. All other demand deposits
at the same banks increased 14 percent causing a net
expansion of 8 percent in total demand deposits to a
new all-time high.
Recent Changes Commercial loans of the 41 weekin Loans
ly reporting member banks estab
lished another long-time high in
March, moderately above the level reported in our
previous issue. At mid-March, these banks had
loaned (net) 360 million since V-J Day, for com
mercial, industrial, and agricultural purposes. The
gross figure may be nearer 3100 million for concur
rently there was substantial repayment of loans by
some borrowers. Over the same period, “all other”
loans, principally the consumer type, increased about
327 million net. In this category the trend likewise
is still upward at a rate roughly comparable to that
of commercial loans.
Recent Changes Holdings of certificates and Treasin Investments ury notes were reduced sharply
during the past several weeks.
The cash redemption by the Treasury of a portion of
the March 1 m aturity of certificates and the entire
March 15 note m aturity was a major factor in reducing
note and certificate holdings to the levels of last No
vember. The cash redemption of a small Treasury
bond issue at mid-March did not similarly reduce the
Government bond portfolios of these banks. Holdings
of Treasury bonds by weekly reporting banks in
creased to a new all-time high on March 20, represen
ting acquisition of 3156 million since the close of the
war.
There has been no great change in Treasury bill
holdings for an extended period. But reporting banks
have purchased nearly 340 million corporate and
municipal securities since V-J Day. Longer term
bonds, whether Treasury or corporate, appear to have
been in more persistent demand than short term
Government obligations which logically and tradi
tionally are subject to more frequent variation in both
demand and supply.
PO STW A R FLU C TU A TIO N S IN LOANS
(C u m u la tiv e fro m A u g u st 15, 1945)
F o u rth D is tric t W eekly R e p o rtin g M em b er B an k s
— 1945 —
— 1946 —
8
THE MONTHLY BUSINESS REVIEW
April 1, 1946
WHEAT SUPPLY AND CROP PROSPECTS
Prospective
Winter wheat prospects are being
Wheat Carryover watched with keen interest, par
ticularly since the export goal
for the current half year was recently established at
225 million bushels. If that record level of shipments
abroad, however commendable and necessary, is to be
attained domestic consumption must be drastically
curtailed during the remaining months.
The following tabulation describes the status and
outlook for wheat stocks under both actual and pro
jected conditions:
Wheat Supply Situation and Prospects
(In bushels)
Total Domestic Supply, July 1, 1945........................ 1,414,000,000
Average Annual Consumption 1941-44:
Food Products...................................... 532,000,000
Livestock F eed..................................... 293,000,000
S e e d ...................................................... 71,000,000
Industrial U se....................................... 66,000,000
Exports, 2nd H alf 1945
(A ctual)................................................... 170,000,000
Exports, 1st Half 1946
(Proposed).............................................. 225,000,000
Total D isappearance........................................................ 1,357,000,000
Carryover, July 1, 1946...................................................
57,000,000
Source: U.S.D.A.
The above projected carryover would be the smallest
carryover in several decades, and would be less than
half of the amount believed to be necessary for oper
ating stocks and inventories. Nine years ago, the
United States carryover amounted to 83 million
bushels, but the world-wide need was far less urgent
and a good domestic crop was being harvested.
Obviously if exports approach 225 million bushels
during the current six months, only a sharp reduction
in average (1941-44) wheat consumption for food
products would prevent an abnormally low carryover.
On an annual basis the reduction would need to be
only 15 percent, but with three-fourths of the crop
year already elapsed, the reduction would have to be
nearer 60 percent over the remaining three months to
July 1. Curtailment on such a scale is obviously
impossible.
Conceivably a few million bushels might be di
verted from use for livestock feed but not without
implications as to future meat supplies. Thus, either
the July carryover will be below normal requirements,
or the export program will fall short of the original
schedule. Perhaps it is more logical to expect that
the final result will be a combination of the two.
Crop
The latest report on crop conditions
Conditions (March 1) indicates condition of winter
wheat to be about 82 percent of normal,
unchanged from early December, which indicates a
crop of about 750 million bushels. That is somewhat
below a harvest of 823 million last year and 759
million bushels in 1944. Production prospects for the
current year are based on a 14.5 bushel-per-acre yield
from 51.9 million acres seeded. Crops in the past
(1934-43) have averaged 12.7 bushels per acre from
a seeded area averaging 46.7 million acres. Weather
conditions throughout the wheat-growing area since
December have favored an improvement in wheat
condition in Texas, southern and eastern Kansas,
eastern Nebraska, and the adjacent states to the east,
and a slight decline in condition in Ohio, western
Nebraska, northwestern Kansas, Colorado, and Cali
fornia.
Recent reports on the condition of winter wheat in
the Fourth District vary from excellent in Kentucky
to good and fair in parts of Ohio and western Pennsyl
vania. Winter wheat seedings in the Fourth District
states are from six to twelve percent less than last
year, and are below the ten-year average in all but
Kentucky where the seeded acreage equaled the aver
age. Unfavorable weather at seeding time was
responsible for this variance from the national trend.
The national acreage of winter wheat is 3j^ percent
larger than in 1945, and nearly 12 percent above the
average acreage for the ten-year period 1934-43.
Acreage Seeded to Winter Wheat
(Thousand acres)
1946
K entucky........................................ 478
Ohio.................................................. 2,010
Pennsylvania.................................
901
West V irginia................................
100
United States................................ 51,940
Source: U.S.D.A.
1945
543
2,284
959
114
50,123
1934-43
478
2,092
945
149
46,757
Spring Spring wheat plantings in the Northern
Wheat States are being encouraged as a means of
compensating for the prospective decline in
carryover. If the farmers in the spring wheat belt
carry out their intentions and plant the 18.9 million
acres indicated March 20, and harvest a crop equal
to the average of 1937-44, about 257 million bushels
will be added to the 1946 crop. Thus the total harvest
of winter and spring wheat would approximate 1007
million bushels—a crop equal to 116 million bushels
less than was harvested in 1945 and slightly less than
the average of the past three years. Apparently a
surplus of wheat is still some distance in the future.
Agricultural Production Outlook
Intentions Farmers intend to plant an acreage
to Plant slightly larger than last year, but three
percent short of the goals set by the
Government for this year. This was revealed from a
survey of crop reporters completed by the Department
of Agriculture and released less than two weeks ago.
The survey shows that intended acreages will exceed
goals for some crops, but will be below the desired
April 1, 1946
THE MONTHLY BUSINESS REVIEW
acreages for others. Wheat, oats, rice, peanuts, and
tobacco are the crops for which intentions to plant
exceed requested acreages. Those of which the in
tended acreage will fall short of requests include: corn,
hay, grain, sorghum, barley, soybeans, flaxseed,
potatoes, sugar beets, dry beans, and peas. The
acreages of each crop actually planted may be either
larger or smaller than indicated by this survey as
farmers find it necessary to adjust their action to
weather conditions, labor supply, equipment avail
able, and other factors prevailing at planting time.
Planting intentions for most of the major crops in
the nation are listed below in comparison with crop
goals and 194-5 actual plantings.
Prospective Plantings—1946
(Thousand acres)
Above Goals:
1946
Goals
1946
Indicated
Planted Acreages
1946 as
percent
1945
of 1945
Tobacco.................... 1,900
2,000
1,800
105.9
Rice............................ 1,400
1,600
1,500
103.8
W heat— all.............. 69,900
70,900
W inter w heat. . .
51,900
103.5
Spring w heat. . .
19,000
18,700
101.6
O ats........................... 45,700
46,400
45,200
102.7
P eanuts..................... 2,500
3,800
4,000
95.0
Below Goals:
Sugar beets.............. 1,000
900
800
120.4
B arley....................... 13,400
11,400
100.8
11,500
C orn........................... 97,800
92,900
93,000
100.1
Tam e h ay ................ 61,300
59,800
59,900
99.8
Beans, dry edible. . 2,100
1,700
95.1
1,800
P otatoes................... 2,800
2,700
2,900
94.6
Sorghum (all uses). 17,100
14,800
15,800
93.4
Soybeans(beans). . 10,700
11,800*
13,400*
88.3
Peas (dry field). . . 500
500
500
87.5
Flaxseed ................... 4,300
3,500
4,100
86.0
*Acreage grown for all purposes. If usual percentage is harvested
for beans, the acreage would be below thie goal.
Source: U.S.D.A.
Two crops of which acreages might conceivably be
increased over intentions shown above are hay and
soybeans. Unfavorable weather for plowing and
seedbed preparation during the next two months
would result in an expansion of the hay and soybean
acreage at the expense of corn, oats, and other early
spring planted crops.
In view of the above planting intentions, a relatively
high livestock population, and low feed grain stocks,
it seems probable that feed grain supplies may con
tinue short throughout this year and the first half of
1947, unless another very favorable crop year occurs.
Farm Although wartime demands on manpower
Labor came to an end nearly eight months ago,
there has been no improvement in the farm
labor supply. After having to contend with a dwind
ling labor supply throughout the war period, farmers
were hopeful that the close of the war might bring
some relief on this point; but instead the situation so
far has actually become more difficult,
9
The 7.7 million of farm employees in January was
the lowest for the month in 21 years of record. The
small increase since then has been less than seasonal
and farm employment still stands at two percent below
a year ago.
Current reports from Fourth District sources in
dicate that few returning servicemen have entered the
farm labor field. Those who have were from farms
where they had an economic interest before entering
the service. Apparently few if any workers are re
turning to farms from industry. In fact, the available
evidence suggests that the net movement has been in
the opposite direction despite a decline in industrial
activity since the close of the war. This may be
partially attributable to the fact that the average age
of farm operators in many communities is high—over
SO—and even before the close of the war many of the
older men had expressed a desire to retire from active
management of a farm as soon as the need for war
time production ceased.
Present prospects are that the situation with respect
to seasonal labor, which is needed principally in the
peak harvest periods, may be even more critical than
a year ago. Prisoners of war were used extensively in
harvesting tobacco and canning crops during the past
season and had there been a fruit crop they would
undoubtedly have filled a great need there. In view
of the fact that most of the prisoners will have re
turned to their home countries by summer, one of the
unanswered questions so far as farm labor is con
cerned is from what source will sufficient seasonal
labor be obtained to harvest apples, potatoes, canning
crops, and tobacco.
A further complicating element in the labor situa
tion is the prospect that labor-saving machinery will
not be available in anywhere near the quantity needed.
Farm
The outlook for new farm machinery to
Machinery meet 1946 farm needs is distinctly un
favorable. It appears that shortages of
new implements will be more acute than was con
sidered possible three months ago. Even though 1945
production is estimated to have exceeded the preced
ing year by 320 million, that volume was accomplished
without a corresponding increase in new equipment.
Because machinery production was low during the
early war years, it subsequently became necessary to
produce an unusually large amount of repair parts
and attachments. During the past year, these replace
ment items accounted for over one-third of the dollar
volume of implement manufacturers. In the latter
half of 1945 there developed a trend away from the
production of repair parts, which had been a wartime
expedient. However, this shift in production was too
slow to bring the 1945 dollar volume of new equipment
up to the preceding year’s level.
10
THE MONTHLY BUSINESS REVIEW
Despite the fact that operations in some plants were
hampered by strikes the volume of farm machinery
produced continued to increase during January of this
year. Reports to the Civilian Production Administra
tion by manufacturers representing 90 percent of the
productive capacity indicate a dollar volume of 61
million. This was 31 million above the volume of each
of the previous two months and $6 million more than
was produced in the same month a year ago.
At the turn of the year implement and farm ma
chinery output were running ahead of a year earlier;
but work stoppages in the industry, beginning in late
January and extending through February into March,
have cut production sharply. One manufacturer re
ports output cut 60 percent by work stoppages.
Production has been virtually at a standstill in the
plants of another major implement manufacturer for
the past nine-week period, and the labor controversy
is still unsettled at this writing. Firms whose opera
tions have not been interrupted by labor controversies
within their own plants are now finding it necessary
in many cases to curtail output until they can over
come the effect of the recent suspension in steel
production on the supply of steel for parts. In some
April 1, 1946
cases inadequate steel supplies may entail a break of
from eight to twelve weeks in assembly line operations.
Another factor which serves to complicate the out
look for new farm machinery is that implement
makers customarily budget varying periods of the
year to the exclusive production of specific items of
farm equipment. Some of these periods have now
expired, and the manufacturer faces the problem of
omitting the production of certain implements en
tirely, or at best attaining only a portion of the original
quota.
Items which registered the greatest gain in produc
tion during the latter half of 1945, as well as during
the early part of this year were domestic water
systems and harvesting machinery. Farm poultry
equipment and dairy farm machinery and equipment
also showed sizable gains. Farm tractors, which are
important in meeting the peak periods of field work,
showed only a slight gain in production during the
last six months of 1945, and during the first month
of this year volume dropped below that of the same
month a year ago. All available reports indicate that
tractor output has deteriorated further since January.
DEPARTMENT STORE TRADE
Department store sales throughout the country
reached a record-high volume in February. In the
Fourth District, the adjusted index moved up to 242,
as against 222 in March 1945, the previous peak.
Seven out of the eleven cities for which separate
indexes are computed established individual records.
Columbus holds the distinction of being the first large
city in this district to reach the 300 mark, which
represents a 200 percent increase in sales over the
1935-9 base period.
Cincinnati was another city in which February sales
improved remarkably over the preceding month and
reached a point not far below the record set in Co
lumbus.
This broad buying movement is the end result of a
number of factors. One is the existence of war-ac
cumulated purchasing power. Another is the re
appearance of some lines of postwar durable merchanD EPA R T M E N T STO R E SALES & STO C K S
F o u rth D is tric t
PERCENT
dise. The possibility of higher prices may be another
factor. Last, and perhaps most im portant, is the
apparently strong belief that personal incomes will
not shrink drastically from their wartime level.
The sustained volume of retail trade is unquestion
ably one of the most significant developments in the
current business situation. It has a decided bearing
upon the problem of price control and the need for a
high level of industrial production. Certainly the out
look would be entirely different if trade statistics
reflected hesitation and indecision on the part of
consumers in general, instead of the keen desire and
willingness to buy as evinced by current record sales.
Based upon weekly reports from a smaller sample,
there was no diminution in the public’s eagerness
for merchandise during March, nor in the stores’
ability to gratify the demand, notwithstanding dis
ruptions in production and payrolls, and shortages
in a number of lines.
After moving alternately upward and downward
by small amounts during the past several months,
the seasonally adjusted index for stocks increased
further during February to the highest level since
last July despite record sales during February and
some interruption in deliveries. There has been a
noticeable increase in stocks of small wares, readyto-wear accessories, and house furnishings.
Outstanding orders of 296 large department stores
located throughout the country recently reached an
all-tim e high of n early 3900 million as against
around_3500 million two years earlier.
11
THE MONTHLY BUSINESS REVIEW
April 1, 1946
Indexes of Department Store Sales and Stocks
Daily Average for 1935-1939 - 100
Adjusted
for Seasonal Variation
Jan.
Feb.
Feb.
1945
1946 1946
SALES:
249
258
229
279
243
258
223
218
285
233
195
197
301
247
248
210
225
235
200
207
166
247
249
281
213
244
205
186
229
202
235
231
Youngstown (3) . . . . 252
214
204
D istrict (97)............... 242
STOCKS:
163
157
150
W ithout
Seasonal A djustm ent
Jan.
Feb.
Feb.
1945
1946 1946
196
204
222
187
212
196
214
178
167
182
162
153
200
186
226
191
183
179
180
150
156
180
194
219
192
152
168
141
151
185
187
204
181
167
194
163
140
151
138
Bank Debits in 29 Fourth District Cities
Bank debits continue to show year-to-year gains in the smaller cities, as
against decreases in the large industrial areas. During February, the volume
of money transfers as measured by bank debits was 5 percent ahead of last
year in the 19 smaller centers as against a drop of nearly 23-6 percent in th e
ten largest cities of the Fourth District.
10 L arg est C e n te rs :
C o lu m b u s . . . topped the list of large cities with a nearly 22 percent gain
over February 1945. For some tim e, Columbus has consistently shown relatively
large increases over the year before.
D ay to n . . . was second among the large cities with a 11.9 percent increaseD ayton also ranks high among comparable cities for the three-m onth period .
E rie . . . with a gain of approxim ately 11 percent stood third among the
large cities. T oledo and Y o u n g sto w n showed only nominal increases over
last year, and all other large cities reported year-to-year decreases.
19 O th e r C e n te rs :
Z an esv ille . . . reported the largest percentage increase of all reporting
cities. The 51.5 percent margin over last year represents an expansion of
nearly 36,000,000.
L o ra in . . . also reported a substantial increase of more than 30 percent
over the same period a year ago.
C o v in g to n -N e w p o rt . . . with a 23.4 percent gain likewise ranked high in
the list of smaller localities.
(In thousands of dollars)
% change
February from
1946
year ago
ALL 29 C E N T E R S ..
34,186,269 - 1.7
10 LARGEST C EN TE R S:
3 173,332 - 1.7
C anton........................ .Ohio
65,349 - 1 2 .1
.Ohio
578,374 - 2.4
. Ohio
1,072,067 - 4.3
324,297 + 2 1 .7
Colum bus.................. .Ohio
143,889 + 1 1 .9
.Ohio
. Ohio
221,957 + 0.5
77,735 + 1.6
Youngstown.............. . Ohio
55,937 + 10.9
E rie.............................. . Penna.
P ittsburgh................. . Penna. 1,078,125 - 8.5
T o ta l.......................
33,791,062 - 2.4
19 O TH ER C EN TE R S:
3 27,197 + 2 3 .4
Covington-Newport .K y.
64,382 -1 2 .2
Lexington.................. .K y.
21,745 + 1 2 .0
H am ilton................... .Ohio
. Ohio
26,057 - 3.0
. Ohio
9,685 + 30 .5
M ansfield................... .Ohio
22,382 + 8.2
21,422 + 23 .3
. Ohio
.Ohio
11,938 + 1 6 .8
. Ohio
30,069 + 4.9
.Ohio
15,061 + 9.7
19,288 - 1 7 .1
W arren....................... .Ohio
16,904 + 51 .5
.Ohio
18,346 + 2.0
B utler......................... . Penna.
5,986 + 19 .1
F ranklin..................... . Penna.
12,229 + 15 .1
, Penna.
5,092 + 12.8
H om estead.................. Penna.
14,368 + 6.2
Oil C ity ...................... . Penna.
13,559 -1 1 .5
. Penna.
39,497 + 1 3 .2
W heeling..................... W. Va.
3 395,207 + 5.1
3 months
ended
Feb. 1946
315,032,726
555,487
225,572
2,027,859
4,101,717
1,137,022
471,862
750,494
268,348
193,651
3,926,893
313,658,905
3 91,306
253,159
69,959
87,218
34,117
74,060
68,062
41,481
99,062
49,975
69,152
52,357
59,345
19,160
41,536
16,056
45,849
48,660
153,307
3 1,373,821
% from
changf
year ago
+ 0 .6
- 4.2
- 8.9
+ 1.2
- 0 .6
+ 2 1 .2
+ 6.1
- 1.2
+ 3.6
+ 11.4
- 5.3
- 0.2
+ 2 1 .2
+ 1 3 .7
+ 5.3
- 0.8
+ 2 4 .9
+ 11.2
+ 14.3
+ 17.3
+ 1.0
+ 1 0 .9
- 8.9
+ 3 5 .5
- 2.7
+ 9 .0
+ 1 4 .7
+ 1 1 .7
- 7.8
- 1.6
+ 16 .1
+ 9.1
Fourth District Business Statistics
(000 omitted)
Fourth D istrict Unless
Otherwise Specified
Savings Deposits— end of m onth:
39 banks O. and W. Pa.............................
Retail Sales:
D epartm ent Stores— 97 firm s................
Wearing Apparel— 17 firm s....................
Furniture—68 firm s............................ ..
Building C ontracts— T o ta l..........................
— R esidential...............
Commercial Failures— Liabilities..............
— N um ber.................
Production
Pig Iron— U. S............................N et tons
Steel Ingot— U. S...................... N et tons
Bituminous Coal—
O., W. Pa., E. Ky.................N et tons
Cem ent— O., W. Pa., W. Va.........Bbls.
Electric Power—
O., Pa., Ky........... Thousand K.W .H.
a— N ot available.
February
1946
3
1,441
3 43,682
3
2,033
3
3,106
3 50,019
3 11,605
3
70
7
1,354
19,066
% from
change
1945
+20
+ 19
+ 9
+ 58
+321
+672
-2 3
+ 40
-8 0
+12
January
1946
1,431
40,886
1,852
2,679
38,289
9,478
50
2
3,869
20,260
918
2,710
Wholesale and Retail Trade
(1946 compared with 1945)
D E P A R T M E N T STORES (97)
A kron..............................................................................
C an to n ...........................................................................
C incinnati......................................................................
Cleveland......................................................................
C olum bus......................................................................
E rie..................................................................................
Pittsburgh.....................................................................
Springfield.....................................................................
Toledo............................................................................
W heeling........................................................................
Y oungstown.................................................................
O ther C ities..................................................................
D istrict...........................................................................
W EA RING A PPA REL (17)
C anton...........................................................................
C incinnati.....................................................................
Cleveland......................................................................
Pittsburgh.....................................................................
Other C ities..................................................................
D istrict...........................................................................
FU R N IT U R E (68)
C anton.._.......................................................................
C incinnati......................................................................
Cleveland......................................................................
Columbus......................................................................
D ayton...........................................................................
P ittsburgh.....................................................................
Allegheny C o u n ty ....................................................
Toledo.............................................................................
Other C ities..................................................................
D istrict...........................................................................
WHOLESALE TRA DE**
Automotive Supplies (3 )..........................................
Beer (5 )..........................................................................
Confectionery (3 ).......................................................
Drug and Drug Sundries (4 )..................................
Dry Goods (4 ).............................................................
Fresh Fruits and Vegetables (1 0 )......................
Grocery Group (36 )...................................................
Total Hardware Group (20) .................................
General Hardware (5 )..........................................
Industrial Supplies (7).........................................
Plumbing and H eating Supplies (8 )...............
Jewelry (7 )................................. .................................
Lumber and Building M aterials (6 )....................
Paints and Varnishes (4 ).........................................
Paper and Its Products (3 ).....................................
Tobacco and Its Products (14).............................
Miscellaneous (21 ).....................................................
District— All Wholesale Trade (143)..................
Percentage
Increase or Decrease
SALES SALES STOCKS
Feb. First 2 Feb.
1946 months 1946
+ 9
+ 3
+ 9
a
+ 10
+ 9
+21
+ 2
+ 28
+ 12
+ 16
+ 18
+ 22
+ 19
+ 4
+ 14
+ 8
+ 7
+ 20
+ 20
+ 8
+ 10
a
+13
+ 14
+ 14
+ 9
+ 20
+23
+15
+ 10
a
+ 9
+25
+ 24
+ 4
+ 17
+19
+ 8
- 3
- 3
—3
- 5
-2 0
+ 4
+ 12
-1 5
+18
+ 7
+ 6
+ 5
- 1
+ 3
+ 6
- 8
+ 9
+ 4
+45
- 9
+57
+ 72
+13
+69
+53
+31
+ 44
+57
+ 24
+ 44
+ 92
+ 10
+ 90
+41
a
+46
+ 64
a
+ 56
a
+76
+67
+
84
+15
+81
+63
+ 15
+58
+35
a
+34
a
— 1 +11
+ 30
a
+ 34
+ 18
a
+13
a
+ 52
+15
+ 10
- 1
+ 10
+22
+ 37
+21
+ 17
-1 4
+ 16
+ 49
-1 4
+ 47
- 4
a
—10
a
+8
+ 9
+
70
a
+ 67
a
-4 5
+ 34
+ 30
a
+ 29
a
+ 7
+ 5
+ 36
+ 100
+ 40
+ 32
+ 1 + 12
+ 19
+ 27
+ 17
** Wholesale data compiled by U. S. D epartm ent of Commerce, Bureau o^
the Census,
a Not available.
Figures in parentheses indicate num ber of firms reporting sales.
12
THE MONTHLY BUSINESS REVIEW
April 1, 1946
SummaryBy theofBoardNational
Business
Conditions
of Governors of the Federal Reserve System
Production and employment at factories declined
in February but advanced in the first three weeks of
March, reflecting mainly the influence of the steel
strike. The value of retail trade reached new record
levels. Wholesale prices of a number of commodities
increased.
INDUSTRIAL PRODUCTION
Output of durable goods declined considerably
further in February, while production of nondurable
goods and minerals continued to increase. Production
of steel, automobiles, and machinery has advanced
sharply since the settlement of wage disputes in these
industries, and the Board’s index of industrial pro
duction, which declined from 160 in January to 154
percent of the 1935-39 average in February, will show
a considerable rise in March.
Steel mill operations in February were at an aver
age rate of 19 percent of capacity as compared with
50 percent in January. Output at steel mills has in
creased rapidly since the middle of February, and
during the week ending March 23 is scheduled at 89
percent of capacity—the highest rate since V-J Day.
In February production of nonferrous metals, ma
chinery, and transportation equipment also declined,
reflecting chiefly the direct or indirect effects of work
stoppages. Lumber production, after advancing in
January, showed little change in February. Plate
glass production increased sharply to the highest level
since November 1941.
Production of most nondurable goods continued to
advance in February, partly reflecting increases in
working forces. O utput at textile mills rose further
and was at a rate slightly above the level of a year
ago. Activity in the meat packing industry increased
sharply in February following settlement of the wage
dispute at major plants and was 20 percent higher
than a year ago. Flour production likewise showed a
substantial gain for the month. In March a Federal
program was instituted to reduce domestic con
sumption of wheat in order to increase exports for
relief purposes. Output of automobile tires in Feb
ruary rose to the highest rate on record.
Output of coal was maintained at exceptionally
high levels in February and early March. Crude
petroleum production showed a gain in February, but
declined in March.
EMPLOYMENT
Employment continued to advance from the middle
of January to the middle of February in most lines of
activity except at manufacturing plants closed by
industrial disputes. After February 15, with the
settlement of the steel strike, there were large in
creases in employment in the durable goods industries
Digitized for
andFRASER
by the middle of March employment in private
nonagricultural establishments is estimated to be
about 2J^ million larger than last September, after
allowing for seasonal changes. Unemployment in
creased from January to February by about 400,000
to a level of 2,700,000 persons.
DISTRIBUTION
Department store sales in February, after allowance
for seasonal changes, were the largest on record by a
considerable margin, and in the first half of March
sales continued to show marked increases over a year
ago. Total retail trade in February was probably
close to one-fourth higher than in the same month
last year.
Shipments of most classes of railroad freight in
creased from the middle of February to the middle of
March and almost the same number of cars were
being loaded in the first two weeks of March as during
the same period last year, when shipments of war
products were at peak levels.
COMMODITY PRICES
The general level of wholesale commodity prices
advanced one percent from the middle of February
to the middle of March, reflecting increases in most
groups of agricultural and industrial products. Since
last September wholesale prices have advanced 3.3
percent, according to the Bureau of Labor Statistics’
index. Price control regulations permit manufacturers
and distributors to pass on to consumers only part
of the recent advances granted in maximum whole
sale prices.
BANK CREDIT
i Retirement of 2.8 billion dollars of United States
Government obligations during March was reflected
in a decline of about the same amount in Treasury
balances during the four weeks ending March 20.
Holdings of Government securities by both Federal
Reserve Banks and member banks declined, accom
panying reductions in Treasury deposits at these
banks. Deposits, other than those of the Treasury,
at member banks showed little change. Member
banks required and excess reserves also changed little
during the period. Member banks increased their
borrowings at the Reserve Banks to over 700 million
dollars on March 13, but reduced them somewhat in
the following week.
Commercial and industrial loans at member banks
in leading cities continued to increase between the
middle of February and the middle of March. Loans
on Government securities to brokers and dealers
fluctuated considerably in connection with the
Treasury retirement and refunding operations, while
those to others continued to show a slow decline.
@FedFRASER