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MONTHLY BUSINESS REVIEW Covering financial, industrial, and agricultural conditions in the Fourth Federal Reserve District Federal Reserve Bank of Cleveland Vol. 15 Cleveland, Ohio, August 1, 1933 Gains in trade and industry were reported in late June and the first half of July which placed operations definitely above a year ago, and in several lines m ade them approach or even exceed 1931 levels. A slight tem pering of the sharp rate of expansion was apparent in the latter part of July. However, this m ight have been a belated sea sonal change, for norm ally in July and August there is a considerable letdown in most lines of activity. Accompanying the gain in production, em ployment and pay rolls expanded quite m aterially in June and July. In Ohio the gain in industrial em ploym ent in June was re ported to be approxim ately 9.5 per cent, compared w ith a five-year average reduction for this period of one per cent. Pay rolls showed a sharper upturn because wage increases were granted in many lines. According to the U. S. De partm ent of Labor, em ploym ent in the entire country in June was up 14 per cent from the low point touched in March. Pay rolls were up 29 per cent in the same period and were approxim ately ten per cent higher than a year ago. Despite the increase they are still less than half as large as the m onthly average of 1926. As in May the gains in this district in June and early July were largely the result of im provem ent in the iron and steel, autom obile and allied industries. The steel pro ducing rate at P ittsburgh and Cleveland rose eight points in the four latest weeks. At the same tim e Youngstown m ills increased operations 14 points or approxim ately 28 per cent. The autom obile industry continued to be the chief source of steel orders, though m iscellaneous buying im proved and a few rail orders for m aintenance m aterials werl3 reported. Price advances were quite general, which caused buyers to place rath er large orders in June and July, but a tapering-off in the latter part of the month was reported. Iron ore receipts at Lake Erie ports in June were over six tim es as large as a year ago and in the first half-year were 7 V2 tim es w hat they were in the corresponding period of 1932. More boats have been, or are soon to be placed in operation carrying ore from upper lake ports than since 1929. Automobile production moved contrary to the seasonal trend of past years in June and output was 38.3 per cent h igh er than a year ago. F u rth er im provem ent occurred in early July and orders for parts and m aterials received by local m anufacturers indicated little sum m er dullness in this industry. No. 8 Coal production in recent weeks has been the highest for this season in two years, output of local mines being up 58 per cent in June from the corresponding m onth in 1932. Shipm ents of soft coal in June from Lake Erie ports were up 46 per cent from last year. Electric power production continued to show gains, the total for this district in May being 8.8 per cent above May a year ago, and fu rth er gains in June and July were in dicated by prelim inary reports. Tire production increased sharply in May and June and conditions in Akron are very much improved. The glass industry has experienced an unprecedented dem and for goods in recent weeks and orders for elec trical appliances and household goods have improved. P aint and paper companies are operating at capacity levels in m ost cases. R etail buying in June im proved contrary to the sea sonal trend of past years and sales in the latest m onth were slightly higher than a year ago, the first gain since April, 1930. A gricultural conditions continue to be quite unfavor able, though the w heat crop in this district was much larger than in m ost sections of the country. O ther crops have been very adversely affected by lack of m oisture in recent weeks. FINANCIAL/ In the m onth ended July 25 there was a reduction in demand for reserve bank credit in the fourth district. The volume of loans made to custom ers by reporting mem ber banks in leading cities continued downward, however, AUTOMOBILE PRODUCTION THOUSANDS OF CARS 3 5 0 0 1 ----------------------------------- — --------------------------------------------------------------------------- 3000 FIRST 6 MONTHS 2500 I 2000 1500 1000 50 B ni ' ; I in 2 THE MONTHLY BUSINESS REVIEW although there was little change in deposits in the latest m onth. Tke volume of financial transactions was up sharp ly in June, debits to individual accounts being only 0.8 per cent below June, 1932, despite the fact th at funds im pounded in closed banks rem ain at high levels. Bank debits in the first six m onths of 1932 were 19.5 per cent below the same period of last year. Paym ent of liquidat ing dividends at a few of the larger failed banks stim u lated trade in some sections of the district in the latter part of July. Savings deposits at selected banks increased one per cent in June, but on June 30 they were 9.3 per cent sm aller than on the sam e date of 1932. There were only 135 commercial failures reported in the fourth district in June, a reduction of 5 4 per cent from last year and liabilities of the defaulting concerns also were less than half as large as those reported a year ago. The num ber of failures in the half-year ended June 30 were 31 per cent sm aller than in the corresponding period of last year and liabilities were down 2 7.8 per cent in the sam e period. R eserve B ank Credit. Loans made to member banks in this district declined from $24,065,000 on June 21 to $11,044,000 on July 19 and in the first three weeks of July direct loans to m em bers averaged lower than since 1917. One year ago bills discounted were about $5 3,000,000. In vestm ents in Governm ent securities increased slightly in the four latest weeks in conjunction w ith the System ’s open m arket operations, but the gain was m ore than off set by the decline in bills discounted. Total bills and securities on July 19 am ounted to $196,722,000, and in early July they were lower than since the spring of 1932. Of the total am ount of credit outstanding, however, Gov ernm ent securities owned represented 94.6 per cent of all bills and securities h$ld, since holdings of acceptances were only $702,000, an unusually low level. Note circulation continued to decline in the four latest weeks despite the fact th at trade and industry advanced sharply. The reduction was sm all, am ounting to $5,000,000, but, at $309,000,000, Federal reserve notes and bank notes in circulation were only $14,000,000 higher than a year ago. Total deposits, including reserve de posits, increased $17,000,000 in the four latest weeks. Total reserves of the Federal Reserve Bank of Cleve land were up $23,000,000 in the four weeks ended July 19, and the ratio of reserves to deposit and note liability combined, at 65.7 on the latest date, was up three points from a m onth ago and was ten points higher than last year at this tim e. Member B ank Credit. Judging by reports from mem ber banks in leading cities, the volume of loans made to customers continued t© decline in the four weeks ended July 19, loans on securities and “ all o th er” loans shar ing about equally in the reduction. Investm ent holdings of these banks declined m oderately through the sale of other than Governm ent securities, the latter showing a slight increase in the period. Total deposits of reporting m em ber banks, excluding Governm ent deposits, were practically unchanged in the four weeks ended July 19. Compared with the low point touched on March 1, a gain of about $100,000,000, or 15 per cent, was shown to date. Following the passage of the Banking Act of 1933, there was .a considerable tran sfer of funds from dem and to tim e deposits. The form er dropped from $592,000,000 on June 21 to $537,000,000 on July 19, and in the same period tim e deposits increased from $369,000,000 to $423,000,000. This Act, which forbids the paym ent of interest on demand accounts, caused a considerable shifting of bank balances from dem and to tim e accounts and also from one section of the country to another, though little change in the latter was indicated by reporting m em ber bank figures in this district. MANUFACTURING, MINING Iron and F or an accurate understanding of the Steel situation in steel between the third week of June and July, production, spe cifications, and orders m ust be differentiated. Approaching the beginning of the third quarter, con sum ers specified their second q uarter contracts to the full est extent in the last half of June. In those products where second q uarter prices were extended through July, specifying showed no abatement in the first half of th at month. In those products where an increase became effec tive, specifications declined moderately. The result was th at the rise in steel production con tinued unabated, the national average going from 51 per cent in the third week of June to 57 per cent in the third week of July. E arly July production benefited not only from specifying against the July extension of prices in some products, but also from the fact th a t late June specifying against expiring contracts was so heavy th a t deliveries autom atically were carried aver into July. A leveling off in the rate of expansion appeared in the clos ing week of the month. During the last half of June, new buying was heavy and there was no dim inution in orders for products where prices rem ained stationary, but price increases, especially in the flat rolled lines, rem oved much of the incentive for coverage. Hence w hat m ight be considered new com m itm ents tapered rath er sharply in the first half of July in contrast w ith continued heavy specifications and a fu r ther advance in production. In m id-July the situation was fu rth er com plicated by the filing of the steel industry’s code under the N ational Recovery Act and a general 15 per cent increase in wages. This wage advance was effective as of July 15. It was expected th at new prices soon to be filed would com pensate for this increased cost. So far as the fourth district was concerned, the unusu al activity for this season of the year in the autom obile inSTEEL INGOT PRODUCTION FIRST 6 MONTHS 24 I FI n ii . i in THE MONTHLY BUSINESS REVIEW dustry in late June and early July accounted for muck of the gain sh©wn; the rate at P ittsburgh from June 24 to July 22 advanced from 41 per cent to 48; at Cleve land from 80 to 87 and at Youngstown from 52 to 66 per cent of capacity. Save for some delay due to extrem ely hot w eather, tin plate dem and continued to keep those mills operating at practical capacity, tin plate and auto motive steel thus far being the chief reason for the rise in steel. M iscellaneous buying tended to broaden steadily, and in an unspectacular w^ay requirem ents of railroads for various m aterials for equipm ent m aintenance bulked com paratively large. Building rem ained a distinct laggard with pipe line construction also in the doldrum s. June production of steel ingots was sufficiently large t@ overcome the deficit of the preceding m onths, and in the first half of 1933 m ore steel was produced than in the first half of 1932. The com parison is 8,98^,192 tons for 1933, against 7,697,210 for the first half of 1932. The June daily rate, at 99,904 tons, represented the industry operating at 45.9 per cent. In pig iron the rise was equally encouraging. The daily rate of 42,165 tons in June gave the m onth a total of 1,264,95 3 tons, but, unlike steel, pig iron output in the first half of 1933 was 4,444,750 tons, not equal to the 5,164,520 tons made in the sam e period of 1932. 3 even more than was necessary for im m ediate consum p tion. In addition, shipm ents of coal from Lake E rie ports in creased sharply in June as lake traffic assum ed m ore nor mal proportions as a result of larger iron ore shipm ents from Lake Superior ports. Soft coal is used as a retu rn cargo by boats going up the lakes for iron ore. Such shipm ents in June am ounted to 3,925,000 tons, an increase of 46 per cent from June, 1932, and for the season to date coal shipm ents were 38.7 per cent larger than in the sam e interval of 1932. In m id-July coal production had expanded to a level above th at prevailing in 1931, and was furth er above a year ago than in June. The situation at coal mines has improved m aterially as additional men were called back to work and wage increases were granted in several in stances. Automobiles Moving absolutely contrary to the sea sonal trend ©f past years autom obile production in June increased 16 per cent from May and, at 25 3,322 units, output was 38.3 per cent higher than a year ago. The Federal Reserve B oard’s seasonally adjusted index advanced from 51 to 62 per cent of the 1923-1925 m onthly average, w hereas a year ago it was 47. The advance from May and last year was so large th at assemblies in the first half of 19 33 exceeded one m illion cars and trucks, and they were 15.6 per cent Coal Production of bitum inous coal in the greater than the num ber of cars assembled in the first fourth district in June am ounted to 11,- half of 1932. According to weekly estim ates, and ex first week of July when a slight contraction 350,000 tons, the highestcluding for th atthem onth in two years. Compared w ith May, output was up 17.3 per occurred due to the short week, furth er advances were cent, w hereas the ten-year average M ay-to-June change apparent in the first three weeks of the latest m onth. in this district was an increase of 1.2 per cent. The gain On the basis of figures now available, it is estim ated that from May to Ju ne in the entire country was 10.6 per July production will alm ost double th at of a year ago. Retail buying in recent m onths has increased quite cent. Compared w ith a year ago output of local mines was sharply, but the estim ate of June passenger car reg istra up 58.2 per cent, the large gain more than offsetting losses tions indicates th a t a gain of only 16 per cent was made reported in previous m onths, and the half-year produc from a year ago, w hereas passenger car production in tion of 58,125,000 tons was 7.7 per cent greater than in the period was up 31.9 per cent. R eports from dealers covering the first three weeks of July indicate th at sales the same period of 19 32. Several factors contributed to the advance in June; in the period held up quite well for this season of the higher operations at steel plants necessitated larger sup year. Passenger car assem blies in June num bered 211,483 plies of coke, and prices advanced slightly; expansion in other lines of industrial activity, together w ith greatly in units and in the first six m onths 849,234 new cars were creased railroad operations and the possibility of higher made, a gain of 16.1 per cent from the same period of coal prices caused dealers and industrialists to order coal, 19 32. Truck assem blies increased sharply in June and were 83.8 per cent above a year ago, whereas the gain in the six-month period was 12.7 per cent. Orders for auto parts and m aterials were received in good volume by local concerns in June and early July, indicating th at production schedules were being m ain tained. As yet there have been no price increases announced, though reports of some being im m inent have followed the increased raw m aterial and parts prices. Autom obile registrations in Ohio and western Pennsylvania in June num bered 16,209 units, the highest since June, 1931. They showed an increase of 25 per cent from June, 1932. Tires, W hile tire and rubber factories have R ubber been consuming crude rubber at an un precedented rate in the past six weeks ther# are indications th at some of the activity resulted in 4 THE MONTHLY BUSINESS REVIEW an increase in inventories. Sales of tires for orignal equipm ent increased w ith the advance in autom obile pro duction, while replacem ent tire sales, though up sharply from the low point touched earlier this year, have not shown the gain indicated by crude rubber consum ption figures. According to the Rubber M anufacturers’ A ssociation, crude rubber consum ption in June was 51,32 6 long tons, a new high record. This com pares w ith 44,580 tons in May and represents an increase of 23.8 per cent from June last year when dom estic consum ption was unusually high due to the fact th at tire companies were operating at high rates supplying dealers w ith stocks prior to the date the Federal tax on tires became effective. In the first six m onths of the year consum ption was 184,724 tons, a slight reduction from the 190,924 tons used in the cor responding period of 1932. Im ports of crude rubber in June were 22,729 tons, a decrease of 17.5 per cent from May and of 45.1 per cent from June, 1932. The sharp drop in imports in con trast w ith the increase in rubber consum ption caused do m estic crude rubber stocks to decline to 333,954 tons on June 30, slightly less than was on hand a year ago. Rec ord rubber consum ption in June occurred in the face of price increases of more than 100 per cent; rubber was quoted at ten cents a pound in the third week of July. Most tire companies expanded operations sharply in June and showed a furth er increase in the early part of July, judging by reports from leading producers. Em ploym ent at Akron was up 13 per cent fom May to June and in the latest m onth was 6.7 per cent above a year ago. P art of this increase represented a building up of in ventories which were very low earlier this year. Efforts to dodge the processing tax on cotton tire fabrics also partly accounted for the increased output. Tire production in May was 35.5 per cent ahead of the same m onth of 19 32, and the Federal Reserve B oard’s ad justed index advanced to 94 per cent of the 192 3-1925 m onthly average from 65 in April and a low of 41 in March. In the first five m onths of 19 33 production was off 18.7 per cent from the same period last year. Clothing The im provem ent m entioned a m onth ago in the clothing industry continued in the latter part of June and the first two weeks of July, according to reports received. M anu facturers in all lines have experienced more forw ard buy ing than in several past years and some report enough orders on hand to keep plants operating at present levels for the rem ainder of the year. Confusion regarding com m itm ents as a result of the N ational Industrial Recovery Act was still prevalent in late July because of failure of enactm ent of codes covering this and allied industries. Sharply advancing raw m aterial prices no doubt were factors responsible in part for the larger volum e of orders, although considerably m ore retail buying of clothing was reported in June than for m any m onths. Sales of m en’s clothing at reporting departm ent stores in the fourth district were 20 per cent larger than in the same period of 19 32, and wom en’s clothing sales were off only 5.7 per cent, the decline occurring chiefly in dresses, for sales of coats and suits were only one per cent sm aller than in June, 1932. As an indication of the sharply increased activity in the clothing and textile industry cotton consum ption in June was 696,472 bales in the entire country, the greatest am ount reported for any m onth on record, and wool con sum ption in May, the latest available, was three tim es as great as in May last year. Price increases undoubtedly were partly accountable for the larger mill orders, for wool was bringing 40 per cent m ore than a year ago, and cot ton has advanced over 100 per cent in the past few m onths. Stocks of finished goods also were built up in an effort to avoid the processing tax which goes into ef fect A ugust 1. In the fourth district em ploym ent at clothing and tex tile plants increased 15 per cent from May to June, and in the latest m onth was 27 per cent ahead of a year ago. F or the six-m onth period em ploym ent this year averaged eight per cent better than in the sam e interval of 1932. Most factories are now operating full tim e and some pay increases have been reported. O ther A furth er extension of the upw ard moveM anufacturing m ent in some of the sm aller m anufac turing lines of the fourth district was ap parent in the latter p art of June and the first three weeks of July. This was particularly favorable in view of the fact th at this is norm ally the dull season of the year, and as yet signs of a sum m er lull are not very noticeable. Operations in some cases have been to replenish inven tories, prom pted by the general increase in raw m aterial prices, though retail buying has been stim ulated slightly by the improved em ploym ent situation and larg er pay rolls. Auto parts, Accessories. P aralleling the upw ard move m ent in autom obile assemblies, parts and accessory con cerns in this district reported a sharp increase in opera tions in June which is contrary to the seasonal m ovement of past years. Em ploym ent, according to the Ohio State University Bureau of Business Research, increased 13.4 per cent from May, w hereas the average change in the five years 1928-32 was a decline of 3.5 per cent. In the latest m onth the num ber employed was 2 3.1 per cent above a year ago. Pay rolls also increased m oderately. Up to the third week in July there were no indications of a seasonal slackening in assemblies, and specifications for parts and accessories continued at a high rate. In past years the autom obile industry has experienced a considerable letdown at this tim e of year. THE MONTHLY BUSINESS REVIEW Brick and Tile. Activity in the brick and tile industry continues at an unusually low level and there was a de cline of four per cent in em ploym ent from May to June, which was contrary to the trend of past years. In May, the latest available, production of face brick was 33 per cent below a year ago and only 6.5 per cent of the m a chine capacity of the entire country was being utilized. Stocks on hand are down about 20 per cent from last year. China, Pottery. Operations in the china and pottery in dustry of this district continued upw ard in June and the first part of July. Em ploym ent in June was up 7.5 per cent from May and was 44 per cent above a year ago. The average May-to-June change in the past five years was a decline of 3.2 per cent. According to reports there are fewer potters out of work at the present tim e than during the past four years. Selling prices rem ain un changed and collections are reported “fairly good.” E lectrical Supplies. Demand for electrical appliances continued to im prove in June and the first p art of July contrary to seasonal trends of past years. M anufacturers of electrical goods, particularly refrigerators, are operat ing at com paratively high levels. Em ploym ent in June at 29 concerns was 37 per cent above a year ago and 29 per cent above the 1926 m onthly average. Dollar value of retail sales of electrical appliances at departm ent stores in the fourth district in June was 76 per cent greater than a year ago. Glass. Sections of the glass industry have experienced an unprecendented dem and for goods. This is particularly true of the molded and lam inated divisions. Orders for plate and flat rolled glass continued at low levels, partly because of the situation in the building industry. Em ploym ent in June at all reporting Ohio concerns was 70 per cent above a year ago and the index of the Bureau of Business Research was 63 per cent above the average of 1926. M achinery, M achine Tools. Operations at most com panies m anufacturing m achinery or machine tools in creased quite sharply in June, whereas in most past years a seasonal decline has been experienced. Companies in creasing production schedules found it necessary either to replace or repair equipm ent which had been idle for some tim e, and rush orders kept the m achine tool and m achinery concerns of this district operating at levels much above those of early spring, though slightly be low a year ago. P aint. The paint industry experienced a m arked im provem ent in June and the first half of July. Rapidly rising raw m aterial prices, particularly raw linseed oil, caused many paint users to order heavily and obtain con tracts for the rem ainder of the year. Most companies are operating at capacity levels and the num ber employed in creased in the past three m onths. Reconditioning of fac tories, railw ay and m arine equipm ent, unusual activity in the autom obile industry and considerable house painting were factors contributing to the favorable condition re ported. P aper. Paper board m ills are operating at capacity levels supplying many new users of containers w ith their products. Paper mills, w ith the exception of new sprint, also experienced a sharp increase in dem and, orders be ing received in recent weeks in a volume exceeding pro 5 ductive capacity. Advancing prices and uncertainties re garding the Industrial Recovery Act caused users of paper to place orders for goods in excess of current needs. Shoes. Production of shoes in June at 30 establishm ents in the fourth district was up 12 per cent from May, a greater-than-seasonal increase. O utput in the latest m onth was 45.8 per cent higher than a year ago and in the first half-year factories m ade 25 per cent more footw ear than in the same period of 1932. Salesmen now showing fall goods report a m uch larger volum e of orders than for the past three years and output of local factories in June was g reater than for any corresponding m onth since 1927. Prices of hides and leather have advanced sharply. Hides in m id-July were quoted at 12% cents a pound com pared w ith five cents a pound a year ago. Some of the recent buying has been prom pted by these advanced prices, although some im provem ent in retail shoe sales has oc curred recently, particularly in the low and medium priced classes. TRADE R etail The value of departm ent store sales in leading cities of the fourth district in June was 0.7 per cent higher than in June, 1932. This was the first increase from the corre sponding m onth a year ago since April, 1930. The de cline in sales from May to June was slightly less than sea sonal, and the adjusted index rose from 61.2 to 62.0 per cent of the 1923-1925 m onthly average. P our of the seven individual reporting cities experienced increases in sales in June. In the first six m onths of 1933 the sales volume was 15 per cent sm aller than in the corresponding period of 1932. A fu rth er im provem ent in retail trade was re ported in July, particularly in the latter p art of the m onth in centers w here liquidating dividends were paid by some of the closed banks. Larger pay rolls and the somewhat general feeling th at retail prices were on the verge of an increase no doubt were factors partly responsible for the expansion in June sales. According to Fairchild's index, retail prices advanced 2.6 per cent in June from the May level, and from the low point touched in April the advance has been 4.2 per cent. Compared w ith a year ago, however, current prices are still down 3.8 per cent. It is interesting to note th at prices of yard goods and home furnishings re corded the largest gains and it was in these departm ents th at the greatest im provem ent in sales was experienced. All home furnishing departm ents, excluding m usical in strum ents, showed favorable gains from a year ago, and sales of cottons, linens and domestics also showed in creases from last year. Sales of silverw are, m en’s cloth ing and furnishings, and some wom en’s apparel were larger than in June, 1932. Dollar value of stocks declined 0.6 per cent from May to June, the drop being slightly less than seasonal, but on June 30, stocks were still valued at 20 per cent less than on the corresponding date of 1932. Approxim ately the same per cent of total sales in June were credit sales as a year ago, but an increase in installm ent buying was noted in the period. Such sales in June accounted for 6.4 per cent of total sales, w hereas a year ago installm ent buying represented only 4.5 per cent of all sales. A slight im provem ent in collections was reported, pay 6 THE MONTHLY BUSINESS REVIEW m ents in June on accounts receivable at the end of May am ounted to 32.0 per cent, w hereas last year collections were 29.6 per cent of the accounts receivable at the end of the preceding m onth. W holesale A slightly greater-than-seasonal increase in the four reporting lines of wholesale trade occurred in June, and sales of two groups, dry goods and hardw are, were considerably larger than a year ago. Depleted inventories and the possibility of increased prices caused retailers to specify quite heavily and the dollar value of dry goods sales was 34 per cent larger in June than a year ago. The gains of the past two m onths offset part of the large losses re ported earlier in the year and the decline in sales in the first six m onths of 1933 from the sam e period of 19 32 was only 6.9 per cent. H ardw are sales were nine per cent larger in June, but down 10.9 per cent in the first six m onths from corresponding periods of 1932. W holesale drug and grocery sales have been lagging somewhat, the form er being 13 per cent sm aller in June than last year and a reduction of 20 per cent was re corded in the first six m onths. Grocery sales were down 3.5 per cent in June and 11.4 per cent in the January-toJune interval from corresponding periods of 19 32. BUILDING Building operations in the fourth district in June showed a slight increase from the preceding m onth, but were still 27.8 per cent below the corresponding m onth of 19 32, and the decline in the six-m onth period was 46 per cent. Gains over May were recorded in residential and non-residential building of sufficient size m ore than to counteract losses in public works and utilities. Com pared with a year ago all major classes of building showed gains except public works, and in this latter classifica tion the decline was so large th at it m ore than overbal anced the gains recorded in the other groups. Consider ably more factory building was reported in June, 1933, than a year ago or than in May. Contracts aw arded in June were larger than last year in Akron, Cincinnati, Cleveland, Dayton, Erie, Pittsburgh and Youngstown, but for the year-to-date gains were shown only in Dayton and Toledo. Though actual aw ards have lagged somewhat, the value of contem plated projects reported has increased m aterially in recent m onths. In June it totaled $70,000,000, com pared w ith $74,000,000 in May and $13,000,000 a year ago. Although a m arked im provem ent in the value of nonresidential building contem plated was shown from last year, the m ajor part of the increase was to be found in the public works and utilities classifications. Lum ber dealers throughout the district reported a spurt of speculative buying in June, although several indicated th a t some real im provem ent had occurred in the m onth. R etail lum ber prices have increased approxim ately 20 per cent, according to reports. AGRICULTURE According to the D epartm ent of A griculture, the year 1933 to date has been less favorable for crop produc tion than the corresponding portion of any crop season in fifty years. Estim ates indicate th at even with average w eather during the rem ainder of the year yields of prin cipal crops will be much below the average production of the five years, 1926-30. Seventeen of the 19 listed crops showed a condition on July 1 which indicated th at probable yields would be considerably below average. Crop areas in June had only about half the norm al rainfall and at the same tim e tem peratures w ere much above average. This followed an unusually w et spring which prevented proper soil preparation in some cases and delayed planting in general. In addition, several other significant developm ents oc curred in the past month. The program for the reduction of cotton, wheat, and tobacco acreages, w ith produoers benefiting from funds raised by a processing tax was announced by the Secretary of A griculture. Farm prices have advanced sharply, the average gain in prices received by farm ers advancing almost 50 per cent from the low of February. Grain prices in mid-July were the highest in three years. The ratio of prices received for farm products to prices paid for certain goods farm ers buy was 72 per cent of the 1909-14 average in July, compared with a low of 48 about a year ago. W ith the exception of w heat and hay, crops in this section were in about the sam e condition on July 1 as in the entire country and averaged som ewhat below preced ing years. The following table shows the July 1 esti m ate of probable yields of principal crops com pared w ith the harvest of 1932, for both the fourth district and the United States. ESTIMATED PRODUCTION OF PRINCIPAL CROPS (000 emitted) *------Fou rth Distin et------ —---------u 3rated Stat<as —-------% change % change 1933 1932 from 1932 1933 1932 from 1982 Wheat, bu.............. 38,853 35,908 4- 8.2 495,681 726,283 —31.8 Corn, bu............... 131,400 158,549 —17.1 2,384,032 2,875,570 —17.1 88,420 55,920 —31.3 698,941 1,288.281 —4S.fi Tame Hay, tons.. &,967 8,826 4- 3.7 66,047 69,794 — 5.4 Tobacco, lbs........ 119,037 121,582 — 2.1 1,244,637 1,015,512 +22.6 Potatoes, bu. , 15,215 19,465 —21.8 306,425 857,679 —14.3 W heat. The July 1 condition of w inter w heat in this section was about equal to the average condition of past years, a very favorable situation so far as local farm ers are concerned in view of the very poor crop condition in other sections of the country. High tem peratures in June hastened ripening, and harvest was completed much earlier than usual. Some dam age may have resulted from pre m ature ripening, but average yield in Ohio was estim ated to be about 19.5 bushels per acre. The fact th a t acreage harvested was som ewhat above th at harvested in 1932 was responsible for the 8.2 per cent gain in the total crop. The rise in grain prices in the past three m onths has been little less than spectacular. Cash w heat in m id-July was bringing $1.20 a bushel in Ohio, the highest in three years, com pared w ith less than fifty cents a bushel in ear lier m onths this year. Farm ers having w heat carried over from previous seasons or crops to thresh this year are un usually fortunate. Com. W arm w eather is conducive to corn growing, but unfavorable conditions prevailed at planting tim e and lack of m oisture in late June and the first p art of July caused the latest estim ate of probable yield in the fourth district to be about 17 per cent below the harvest of 1932. This drop was approxim ately the same as in tke entir* country. THE MONTHLY BUSINESS REVIEW Oats. The condition of oats on July 1 was by far the lowest on record. In Ohio it was 45 per cent of norm al and, though som ew hat higher in other states of the dis trict, was below the average of past years and the crop was indicated to be 31 per cent sm aller than the harvest of 1932. In the entire country the crop is expected to be under 700,000,000 bushels, the lowest since 1897. The local crop headed very short and in m any sections prob ably will be harvested green for hay. Potatoes. Judging by present conditions the 1933 po tato crop in the entire country is expected to be one of the sm allest on record. In the fourth district a reduction of 21.8 per cent from the 1932 harvest is indicated. Tobacco. A lthough an increase in the size of the coun try ’s 1933 tobacco crop is indicated, chiefly because of the gain in the southern states where the 1932 crop was alm ost a total failure, unfavorable conditions at tran s planting tim e in the fourth district caused a decline in the crop outlook despite the fact th at a 21 per cent increase in burley acreage has been planted, com pared w ith th at harvested last year. F ourth district crop prospects are 2.1 per cent sm aller than a year ago, whereas in the entire country a gain of 22.6 per cent is indicated. The July 1 condition in K entucky was 59 per cent of estim ated norm al, com pared w ith a ten-year average condition of 78 per cent. In Ohio, for respective periods, conditions of 45 and 80 per cent were reported. F ruits. Condition of all types of fru it raised in this district except grapes declined sharply in June, as a re sult of a heavy June drop, and insect and scab infesta tion, and indicated crops are much below the average of past years. The grape crop, w ith a condition of 77 per cent of norm al, is expected to be about 20 per cent above the average of past years. Wholesale and Retail Trade (1933 compared with 1932) D E P A R T M E N T STORES (51) Cincinnati........................................................... C leveland............................................................ W heeling............................................................. Other C ities...................................................... D istrict................................................................ W EA R IN G A PPA REL (11) F U R N IT U R E (44) CH AIN STORES* Drugs— District (4)...................................... Groceries— District (5 )............................... W HOLESALE GRO CERIES (33) Other C ities...................................................... W HOLESALE D R Y GOODS (1 0 )... W HOLESALE D R UG S (1 3 )................. W HOLESALE H A R D W A R E ( 1 4 )... *P er individ ual unit operated. Percentage Increase or Decrease STOCKS SALES SALES June, First six June, 1933 months 1933 — 16.6 — 12.4 + 1 0 .9 — 20.9 — 14.2 — 1 .4 — 24.2 — 10.6 + 5 .4 — 14.6 — 17.9 — 11.4 — 18.4 — 16.8 — 0.5 — 21.2 — 16.6 + 5 .8 — 12.6 — 15.5 + 6 .5 — 25.8 — 17.8 — 0 .2 — 20.1 — 15.1 + 0 .7 — 20.3 — 17.4 — 5.8 — 26.2 — 19.6 — 30.9 — 24.3 — 26.6 — 15.1 — 10.2 + 1 5 .7 — 3.9 + 3 9 .7 — 10.1 + 4 7 .1 — 19.4 — 2.3 — 21.5 + 3 4 .6 — 9.5 + 4 9 .3 — 9.9 + 3 1 .7 — 16.6 — 6 .0 — 4 .7 + 3.1 — 13.6 — 0 .8 — 10.4 + 2.5 — 21.5 — 2 1 .9 + 2 .7 + 1 8 .8 — 26.2 — 20.3 — 6 .8 — 2 .4 — 16.h — 11.4 — 3.5 + 11.8 — 6 .9 + 3 4 .1 — 19.6 — 13.3 — 10.9 + 9 .0 7 Fourth D istrict Business Statistics (000 om itted) June, 1933 Fourth D istrict Unless Otherwise Specified Bank Debits— 24 cities....................S I,583,000 Savings Deposits— end of month: 42 banks, O. & Pa.........................$ 656,081 Postal Receipts— 9 cities...............$ 2,347 Life Insurance Sales: Ohio and Pa.......................................$ 74,261 Retail Sales: Department Stores— 51 firm s.. .$ 13,461 Wearing Apparel— 11 firms. . . .$ 613 Furniture— 44 firm s........................$ 565 W holesale Sales: Drugs— 13 firms................................$ 1,055 Dry Goods— 10 firm s....................$ 1,003 Groceries— 33 firm s.........................$ 3,569 Hardware— 14 firms........................$ 1,127 Building Contracts— residential. .$ 2,521 ” ” — total..............$ 9,209 Commercial Failures— Liabilities $ 3,627 1352 ” ^ ” — N um ber... Production: Pig Iron, U. S..........................Tons 1,265 Steel Ingots, U. S...................Tons 2,598 Automobiles— Pass. C a r ...U . S. 211,483 ” — T r u c k s..........U. S. 41,839 Bituminous Coal................. Ton# 11,350 Cement— O., W. Pa., W. Va. Bbls. 839 Elec. Power— O., Pa., Ky. .k.w.h. 1,011s 1,7493 Petroleum— O., Pa., K y ...B b ls. 5 4,151s Bitumino-us Coal Shipments: Lake Erie P orts......................Tons 3,925 Irom Ore Receipts: Lake Erie Ports........................ Tons 887 not availblc. M ay confideatial % change % change from Jan.-June from 1932 1933 1932 — 0 .8 8,228,000 — 19.5 1 — 9 .3 + 11.9 13,512 — ' 6 .2 — 8.3 429,905 — 27.2 + 0 .7 70,667 — 15.1 — 15.1 3,463 — 26.6 + 3 1 .7 2,750 — 9 .9 — 13.3 6,090 — 19.6 + 3 4 .1 4,706 — 6 .9 — 3.5 17,904 — 11.4 + 9.1 4,862 — 10.9 + 2 3 .1 9,680 — 22.2 — 27.8 33,658 — 46 .0 — 54.1 34,027 — 27.8 — 54.4 1,073 — 31.4 + 101.4 4,441 — 14.0 + 184.6 8,989 + 1 6 .8 + 3 1 .9 849,234 + 16.1 + 8 3 .8 157,876 + 1 2 .7 + 5 8 .2 58,125 + 7 .7 + 3 0 .1 2,172 + 2.1 + 8 .8 4,755'i — 6 .6 — 15.2 8,5144 — 12.6 5 + 4 5 .8 + 2 4 .9 + 3 5 .5 11,957-* — 18.7 + 4 6 .1 8,477 + 3 8 .7 + 6 6 4 .7 1,343 + 7 6 0 .9 actual number first 5 months Debits to Individual Accounts Greensburg. . . . Hom estead......... M iddletown. . . . Pittsburgh.......... Steubenville. . . . Y oungstow n. . . (Thousands 4 weeks % change ending from July 19, 1933 1932 28,534 — 39.8 5,961 — 5 .2 19,752 + 1 7 .0 228,776 — 0.1 318,331 — 20.9 86,965 — 2 .9 39,724 + 0 .6 16,967 — 9 .7 2,178 — 15.7 3,406 — 35.5 6,006 — 12.1 1,705 — 29.2 13,165 — 2 .6 5,231 — 36.6 2,021 — 25.4 5,797 + 17.6 5,656 — 35.9 530,259 + 13.5 9,982 — 8.2 4,739 + 7.2 73,659 + 13.4 4,678 + 3 3 .8 29,020 + 1 7 .4 25,674 + 19.0 5,576 + 13.7 1,473,762 — 2.2 of Dollars) Year-to-date Dec. 29, 1932 to July 19, 1933 212,565 39,165 116,782 1,508,692 2,262,319 589,013 254,777 105,979 14,409 26,005 42,304 10,741 103,583 38,451 14,682 37,437 39,787 3,395,993 65,609 29,000 455,377 29,985 173,758 154,319 34,280 9,755,012 Year-to-date Dec. 31, 1931 to July 20, 1932 368,001 44,145 129,182 1,791,064 3,065,827 708,923 321,203 155,887 20,628 39,483 56,947 16,985 120,384 56,854 22,256 41,739 64,726 3,814,466 86,009 38,796 540,547 32,067 193,830 195,779 41,337 11,967,065 Fourth D istrict Business Indexes % change from 1932 — 42 .2 — 11 .3 — 9 .6 — 15 .8 — 26..2 — 16 .9 — 20..7 — 32..0 — 30..1 — 34..1 — 25..7 — 36.,8 — 14..0 — 32. 4 — 34. 0 — 10. 3 — 38.,5 — 11. 0 — 23. 7 — 25. 2 — 15. 8 — 6. 5 — 10. 4 — 21. 2 — 17. 1 — 18. 5 (1923-1925 = 100) June, June,June, June, June, 1933 1932 1931 1930 1929 Bank Debits (24 cities)............................................. 58 59 94 126 129 Commercial Failures (N um ber)........................... 93 203 95 112 109 (Liabilities)........................ 82 179 249 87 79 Postal Receipts (9 c i t i e s ) . . . . , ........................... 90 81 101 108 111 Sales— Life Insurance (Ohio & P a .).................... 89 97 124 146 143 60 59 83 91 103 ” — Department Stores (53)............................. ” — Wholesale Drugs (12 firm s).................... 70 80 89 98 108 »» _ ” Dry Goods (10 firm s).......... 41 30 53 65 91 ” — ” Groceries (33 firm s)............. 62 64 77 87 95 ” — ” Hardware (14 firm s)............ 58 53 66 78 102 ” — ” All (69)....................................... 58 57 72 83 98 ” — Chain Drugs (3 firms)**........................... 67 71 84 85 86 Bmilding Contracts (T otal)...................................... 17 27 53 103 112 (Residential).......................... 15 12 35 64 95 Production— Coal (O., W. Pa., E. K y .). . . . 63 40 67 81 91 — Cement (O., W. Pa., W. V a.). . . 70 54 125 160 157 — Elec. Power (O., Pa., K y.)*. .. . 120 111 128 145 142 — Petroleum (O., Pa., K y .)* ............ 95 112 101 138 121 — Shoes....................................................... 101 69 71 73 88 *M ay. **Per individual unit operated. 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Federal Reserve Board Index of industrial production, adjusted for sea sonal variation, (1923-1925 average = 100) Latest figure, June, 89. Indexes of factory employment and pay rolls, without adjustment for seasonal variation, (1923-1925 = 100) Latest figure, June, employ ment, 64.1; pay rolls, 45.9. Indexes based on three-month moving averages of F. W. Dodge data for 37 eastern states, ad justed for seasonal variations, (1923-1925 aver age = 100) Latest figure, June, total, 19; residential, 14. W HOLESALE PRICE! 5 i i arm Product!% foods Othar Commodities 'S "s Indexes of the United States Bureau of Labor Statistics (1926 = 10'0) Latest figures, June, farm products, 53.2; foods, 61.2; other com modities, 68.9. In June, as in the two preceding m onths, industrial activity increased rapidly and in the first half of July there was some fu rth er advance. Fac tory em ploym ent and pay rolls showed a considerable increase. W holesale commodity prices rose rapidly until the third week of July when prices of leading raw m aterials showed a sharp decline. Production and Employment Volume of industrial production, as m easured by the B oard’s seasonally adjusted index, advanced from 77 per cent of the 1923-25 average in May to 8 9 per cent in June, as com pared w ith 60 per cent in March. A ctivity in the steel industry continued to increase during June and, according to trade reports, during the first two weeks of July; in the third week of the month it showed little change. Demand for steel from the railroads and the construction industry continued at a low level. O utput of autom obiles, which usually declines at this season, increased in Ju ne and showed little change in July. Consumption of cotton by domestic mills was larger in June than in any previous m onth, and continued at a high rate during the first half of July. At woolen mills and shoe factories activity increased further in June to unusually high levels. W orking forces at factories increased substantially between May and June and the B oard’s seasonally adjusted index of factory em ploym ent advanced from 61 per cent of the 1923-25 average to 65 per cent. Factory pay rolls also increased by a considerable am ount, to 46 per cent of the 1923-25 average. Value of construction contracts aw arded, as reported by the F. W. Dodge Corporation, showed an increase in May and June, contrary to the usual seasonal movement. D epartm ent of A griculture estim ates as of July 1 indicated a w heat crop of about 500,000,000 bushels, 350,000,000 bushels below the average of 19 26-30, reflecting chiefly adverse w eather conditions. Feed crops have also been seriously dam aged. Cotton acreage on July 1 was estim ated at about 41,000,000 acres, an increase of 4,000,000 acres over last year, but it is proposed as a part of the program of the A gricultural A djustm ent Ad m inistration to reduce the area by about 10,000,000 acres. Distribution F reight traffic continued to increase during June, reflecting in large part heavier shipm ents of coal, m iscellaneous freight, and lum ber products. D istribution of commodities through departm ent stores showed about the usual seasonal decline in June. Wholesale Prices W holesale prices of commodities advanced from 64 per cent of the 19 2 6 average in the first week of June to 69 per cent in the m iddle of July, according to the index of the Bureau of Labor statistics. This marked upward m ovement reflected large increases in the prices of m ost basic raw m aterials, including grains, cotton, hides, nonferrous m etals, steel scrap, petroleum and rubber; m ost of these commodities are traded in on or ganized exchanges and enter into world trade. The prices of m any m anu factured products, particularly textiles, leather and gasoline, also advanced substantially. On July 19, 20 and 21, following rapid advances in the pre ceding period, prices of leading raw m aterials declined sharply. Foreign Exchanges In the exchange m arket the value of the dollar in term s of the French franc declined to 69 per cent of its gold parity on July 18 and then ad vanced to 72 per cent on July 21. Bank Credit D uring the four weeks following the enactm ent on June 16 of the Banking Act of 1933, which prohibits the paym ent of interest on dem and deposits, net dem and deposits of weekly reporting m em ber banks in 90 cities declined by $500,000,000, reflecting the w ithdraw al of $300,000,000 in bankers* balances from banks in New York City and elsewhere, and the trans fer of funds from dem and to tim e accounts. Time deposits increased by $260,000,000. The banks’ holdings of United States Governm ent securi ties increased during the four weeks ending July 12, and there was a further rapid growth in open-market brokers' loans, while loans to customers de clined. R eturn flow of currency am ounted to $90,000,000 during the five weeks ending July 19. D uring the same period the Federal reserve banks p u r chased $85,000,000 of United States Governm ent obligations and m em ber banks reduced their indebtedness to the reserve banks by $90,000,000. The withdrawal of bankers' balances from New York City reduced excess reserves of m em ber banks in th at city, while surplus reserves of m em ber banks out side New York increased substantially. Money rates in the open m arket generally continued at low levels, although recently slight increases have occurred in acceptance rates, tim e money against stock exchange collateral, and yields on short-term United States Governm ent securities.
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