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MONTHLY BUSINESS REVIEW Covering financial, industrial Fourth F ed era l Reserve District and a gricu ltu ral c o n d itio n s Federal Reserve Bank of Cleveland V o l. 20 Cleveland, Ohio, August 31, 1938 In iron and steel and some of the smaller industries of the district, a noticeable pick up occurred in July and the first three weeks of August, but in other lines only slight changes from recent levels were evident. As a re sult of the earlier-than-usual shut-down of auto assembly plants for model changeovers, however, local conditions failed to reflect the full increase evident for the entire country in July over June, despite the rise in steel pro duction. Sentiment has improved materially, and in Au gust there were reports of some resumption of, or increased operations at parts plants, and tool and die factories. The gains in most cases in these lines have been moderate, and should be considered in connection with developments in the auto industry. Despite increases of less than one percent in employ ment at steel plants, glass and miscellaneous factories, and a rise of two percent at lumber mills, three percent at shoe factories, and seven percent at textile plants, total Ohio industrial employment was down one percent in July from June, and payrolls were off 1.5 percent, chiefly as a result of the earlier-than-usual shutdown at auto plants. Compared with last year, Ohio employment was off 30 per cent. Preliminary reports point to slight gains in August in several lines, but notably the metal industries. Department store sales in July registered a second in crease, after allowing for seasonal variations, but they were still close to 20 percent behind a year ago. In the first three wT of August they were showing only a slightly eeks smaller loss from 1937 than in the previous month, al though in the week ended August 20 sales were down only 14 percent. July and first seven months' retail passenger car sales were off about two-thirds from last year in prin cipal counties of this district. Sales of Ohio prepaid tax stamps for the first seven months of 1938 wrere 27 percent smaller than a year ago, but since certain goods are exempt from tax, this reduction is larger than the drop in retail trade. Debits to accounts at banks in leading cities were 27.6 percent off in the five w^eeks ended August 24, and down 22.5 percent for the year to date from similar periods of 1937. A rather substantial increase in steel mill operations occurred in recent weeks, the national rate rising to about 43 percent in the last week of August, compared with around 35 percent in late July. With the exception of No. 8 Pittsburgh, all steel areas in this district were operating at close to or better-than-average rates in the latest week, and gains have occurred at Pittsburgh recently. Lake shipments of iron ore in July increased slightly over June, but ore consumption wras still lagging, and ore stocks at furnaces and on Lake Erie docks rose to 35,846,000 tons, which was 23 percent above last year on July 31. Blast furnace activity was increased by the addition of ten fur naces in July, but there were still nearly four times as many idle as a year ago. July tire production was the highest since last October, and nearly eight percent over June, although Ohio rubber factories reported a reduction in both employment and payrolls in July from the previous month. Auto parts companies reduced operations further in July, but expand ed them slightly in August by increasing the number of hours w'orked, and in a fewT cases by adding to the num ber employed. In July, auto parts makers reported 61 percent fewrer employes than a year ago. Machine tool and foundry equipment orders advanced slightly; textile, cloth ing, and shoe plant operations were up; paper and boxboard demand wras better, and electrical equipment sales increased moderately in late July and early August over previous months. July cement production was ahead of last year by 3.7 percent, the first increase in 15 months, and lumber com panies reported a slight gain in employment, and also a rise in sales. In the construction industry a possible im- THE MONTHLY BUSINESS REVIEW 2 provement was indicated by the fact that contemplated Other earning assets were unchanged in volume in the building reported in various parts of the district was two period. Circulation of this bank’s Federal reserve notes fluctuated to three times greater than last year at this time, and there was a decided gain over earlier months of 1938 in every around $405,000,000 in the period with a tendency to in field. Actual contracts awarded in this area in July were crease being evident, though not to the extent that it has still behind last year, and for the first seven months a been in previous years at this season. Compared with last year, note circulation is down about $32,000,000. decrease of 33 percent was showT n. Conditions in agricultural areas of the district, from a MANUFACTURING, MINING crop yield standpoint, are above the average of previous Iron and Steel ingot production continued to inyears, but estimated farm income is approximately 15 Steel crease in August above 40 percent of ca percent lowrer than in 1937 because of sharply reduced farm July, prices. They are off nearly 25 percent from a year ago. accompanied by anpacity, after a sharp rise during from upward buying tendency, chiefly FINANCIAL miscellaneous steel consumers. Beginning at 40 percent, The contraction in total loans made by reporting mem the national rate gained 3.5 points during the month. The rate at Cleveland rose from 23 percent on July 30 ber banks in leading cities of the district, which set in last October, continued at a modified rate in late July and the to above 40 percent during the latter half of August, while first three weeks of August. While commercial loans ex the Pittsburgh rate fluctuated between 29 and 33 percent hibited no definite trend in August, on the latest report in the same period. Youngstowrn operations continued the date they were down $9,000,000 from the third week of steady rate of increase started in July, moving from 38 July, and were 17 percent lower than a year ago at this to 43 percent, while Wheeling mills advanced operations time. Other types of loans were little changed in the from 46 to 54 percent of capacity. Southwestern Ohio four latest weeks and were down less, proportionately, plants got up to 65 percent in the two latest weeks, the than commercial loans. Total loans made by these banks highest rate in the industry. The steel industry as a whole were 7.3 percent smaller in the third week of August than was operating at the highest rate of the year in what gen erally is a dull period. According to trade reports, the a year previous. Investments in other than Government securities in industry was receiving its chief support from miscellaneous creased in the five latest weeks and they were approxi buyers and from structural shape and plate work, while mately the same as at this time in 1937. The upward the automobile, railroad, and farm implements industries trend in these security holdings has continued uninter were reported as purchasing steel in only limited quan ruptedly since the first of June. Investments in Govern tities. Shipments of the U. S. Steel Corporation were ment and guaranteed securities also have increased since down in July from June and the smallest of the recent that time, but they are still well belowr August last year. downward movement, but it is more dependent on heavy steel buying than others in the industry. The reduction wras 14 percent. Railroads are showing little interest, although some Total credit extended by these reporting banks in late small buying repair and August was at about the same level of the third week of tenance work, is being done in steel for being placedmain and some rolling stock is each July, but, at $1,771,000,000 on the latest date, it was 7.6 percent less than a year ago. Total deposits at these week. Freight car orders on hand on August 1 were the banks were down less than one percent from last year, largest this year. Construction is gaining steadily, and the fall season is and although they fluctuated somewhat in the five latest weeks, on August 24 they were larger than in the third expected to see this on a better basis, as soon as public week of July. Time deposits show’ed little change in work reaches the bidding stage. Numerous Ohio munici the latest five weeks, but w-ere within $1,000,000 of the palities voted bonds in August for improvements that will high point of recent years, and they were slightly higher require steel in structural and reinforcing lines and also than a year ago. Adjusted demand deposits were up in cast iron pipe. The automobile industry as yet has given only limited the four latest weeks, but they were down $36,000,000, or 3.2 percent from last year. The upward trend in deposits support to steel production even though it is about to in recently has only been partly paralleled by total credit troduce new models. A few material and parts orders are extended by these banks. Expenditure of Government funds through various channels creates deposits at banks without necessarily expanding loans or investments. They do, however, increase either cash or reserves, and excess of the latter over requirements at the reserve bank rose in August to the highest level since early June. On the latest date excess reserves of all member banks in this district were estimated at $188,000,000. This was 62 percent in excess of those required by law. The recent increase was chiefly at reserve city banks, but, on a percentage basis, excess reserves in this district are about equally distrib uted between country and city banks. At the Federal reserve bank, changes in condition fig ures were of little importance in the five weeks ended August 24. Bills discounted and direct industrial loans declined slightly, but the volume of each was small. THE MONTHLY BUSINESS REVIEW 3 being placed, but they have been very conservative. Most available, makes it difficult to allow for so-called seasonal steel buying has been on a hand-to-mouth basis, although changes in various indexes. In 1935, 1936 and 1937, the it was reported that tonnages placed in the first half of low point of the year was in September, and the annual August were larger than in the first half of July. Ware shows were in November. This year the shows also are house business in August also was better than in the corre in November, but present indications point to a low rate sponding period of July, and orders represent a wide variety of assemblies in early August, for slight increases were shown of consumers. Number of orders has increased and slightly in the two closing weeks of the month as some plants started larger tonnages are involved. new models, while others resumed production for a time A disturbing factor, to those who regard steelmaking on 1938 models after a shut-down for vacations and inven scrap prices as barometric, was the sudden check at mid- tory taking. Actual July output was 141,437 cars and trucks, August in the composite price of this material, which had a drop of 19 percent from June, and of 68 percent from been moving upward steadily for several weeks. Quota last year when 439,000 cars and trucks w'ere made, accord tions dropped 50 cents on nearly all grades in most con ing to the Department of Commerce. Passenger car pro suming centers, indicating melters had sufficient stocks duction was off 70 per cent from 1937 to 106,841 units, for immediate needs and are not interested in additional while truck output held to within 56 percent of last year purchases at present levels. On the other hand, it might be with 34,596 units being made in the month. In the first pointed out that the previous advance was very rapid seven months auto production was down 58 percent from and probably due for a check and adjustment to condi 1937 with 1,345,317 cars and trucks being assembled, of which 402,000 were trucks. The decline in passenger car tions. Steel ingot production in July was 1,982,058 gross tons, production was twice as great in the seven-month period compared with 1,638,277 tons in June, an increase of 21 as in truck output, which was off 31 percent. The fact that the seasonally adjusted index of automo percent. Weekly production in July was 448,429 tons, compared with 381,883 tons in June. July production was bile production was lower in July than since late 1934 is nearly 57 percent lower than in July 1937, at 4,556,304 less significant than that sales in recent weeks did not de cline seasonally, and sentiment of the entire industry has tons. Pig iron output in July gained 10.7 percent in daily rate improved materially. The Department of Commerce esti and 14.3 percent in total tonnage over June, but was still mates that new cars in hands of dealers have dropped 65 percent below last year. Seven months’ output this to the lowest position since 1934; used car stocks have been year aggregated 9,143,882 tons, compared with 23,272,694 decreasing at an accelerated rate, and prices have stiffened. tons in the period last year, a loss of 60.4 percent. The Dealers thus are favorably situated to handle the new number of furnaces in blast, however, registered the first cars when they are released, but actual demand will de gain since July last year. Active stacks at end of July pend on such factors as price, style, and most important, the trend of employment and payrolls in coming months. totaled 77, against 67 in June, and 192 in July 1937. Despite in feeling, Coal A slight increase in activity at coal mines panies havethis reversalreticent about however, auto com been very releasing orders for in this district and the entire country oc materials beyond needs for the first run of sample cars. curred in July, compared with June, and and parts continued in the first half of August, but the gain was Employment and payrolls at Ohio autorespectively, factories in July were 6 and 9 percent smaller, than in chiefly seasonal and July output was down about 23 June, and employment was down 61 percent from last year. percent from last year. Industrial coal stocks above Some scattered improvement was evident in August, both ground still constitute a retarding f a c t o r , for at received and the rate coal was being consumed in June they represent in orders were small, theactual operations, butin employment increases chiefly number of ed seven percent more on hand than a year ago, despite hours worked. Since at gain being manufacturer is plan least the fact that they actually were 27 percent smaller than ning to continue production of one models for a time, 1938 in mid-1937. Retail coal stocks have been rather well and not be in production of 1939 models until late October, liquidated and are six percent smaller than at this time the trend of assemblies is likely to show “a slow steady last year. Electric utility plants had sufficient coal on rise until the end of October”, according to the Department hand to last 85 days at the present rate of consumption, or a gain of eleven percent over a year ago, while railroad of Commerce. New auto registrations in principal counties of this dis stocks were enough for 27 days, a drop of 40 percent from last year. Other consumers showed inventory positions trict in July declined somewhat more than the expected ranging between these two extremes, with decreases in seasonal amount, and in the month and the first seven months of 1938 they were less than one-third of those in most cases. Coal shipments from Lake Erie ports in July were similar periods of the previous year. 20 percent larger than in June, a more-than-seasonal gain, Rubber, From the standpoint of replacement debut at 4,800,000 tons, they were still 21 percent behind last Tires mand and size of inventories, of both year. Prior to August 1, 40 percent less coal was shipped manufacturers and dealers, the rubber this season than in 1937. and tire industry has shown improvement in recent weeks. Automobiles With the first of 1939 models already Operations also have increased moderately, those plants coming from assembly lines, chief inter doing entirely a replacement business being at or close to est in this area in industrial circles is capacity under the limited schedules of four shifts of 36 centering more on them and sales prospects for the re hours per week. Larger manufacturers also have increased mainder of the year than on the 1938 models and their operations somewhat, but limited original equipment de limited July production. Shifting forward again by about mand has been a retarding factor to those companies. six weeks, the time when new models are likely to be Employment at Ohio factories, however, was lower in 4 THE MONTHLY BUSINESS REVIEW July than in June. Crude rubber consumption in United States increased in July over June for the first time in many years; at 32,207 tons it was larger than since last November, although still 26 percent behind July 1937. This was the smallest decline recorded from 1937 so far this year, but last July was the first month to show a marked drop in rubber consumption from the high rate prevailing in the first six months. July consumption was the largest for any month, so far in 1938, and it was over 9,000 tons in excess of rubber imported in the period. Imports, at 22,918 tons, were down 41 percent from last year, and the smallest for any month in the first half of 1938. Crude rubber inventories in hands of manufactur ers remain large at 285,000 tons, 70.5 percent in excess of last year at this time, but for three consecutive months rubber stocks have declined moderately. Extension of the rubber export quota at 45 percent, by the International Rubber Regulation Committee, in the face of slightly bet ter demand caused prices to firm and advance to above 16 cents a pound for the first time this year. A year ago rubber was 18 cents, but the low point in April was about 10 cents a pound. Considerable progress has been made in reducing inven tories of finished tires. Manufacturers' stocks on July 31, as reported by the Rubber Manufacturers' Association, wrere 8,201,000 casings, compared with 11,654,000 casings on the corresponding date last year. The reduction from the spring peak has been quite sharp and tire inventories are now at about the level of this time in 1936. At the rate tires were delivered to dealers in July, (shipments were 3,947,000 casings) inventories constituted 2.4 months' supply. The Department of Commerce survey of dealers' tire inventories as of July 1, indicated that tires taken from manufacturers' stocks moved into consumers’ hands, for dealer tire stocks were reduced eight percent in the sec ond quarter, and were 18 percent smaller than a year ago. Tire stocks at other retail outlets were larger on July 1 than on April 1, but combined distributors' inventories were nearly seven percent smaller than in mid-1937. Deal er tire stocks are smaller than reported in any previous survey, but marketing of tires through oil companies, mail order houses, and manufacturer-owned outlets has increased, and their stocks were slightly larger than a year ago. July tire production was 3,352,000 casings, the highest since last October, and an increase of 7.8 percent over June, but 21.9 percent below July 1937. Clothing Employment at men's clothing plants in this district increased ten percent in July over June and payrolls were up 19 per cent, both largely seasonal gains indicating activity on fall merchandise, but on a more conservative basis than a year ago, for employment in all textile lines was still down 15 percent. Sentiment in the trade has improved considerably and most plants were operating at fair rates, but advance orders have been received in smaller volume than last year. Unless buying this fall for immediate de livery increases, the season is likely to be shorter than usual. Retail sales of clothing at department stores were from 18 to 22 percent smaller in July than a year ago, about the same falling-off as in total store sales. Stocks have been reduced through semi-annual clearance sales of seasonal merchandise, but new fall goods have been taken with some caution since in some cases carry-over from last winter has been rather an important item. This was particularly true of men’s wear. Textile mill activity in July showed a further rise, there being a considerable increase in wool consumption, part of which represented a delay in weaving materials for fall and winter lines. While approximately only half as much wool was consumed in the first half of 1938 as in the corresponding period of 1937, improvement evident in the second quarter continued in July. Wool prices rose to 73 cents a pound for fine Territory grades at Boston in early August, but reacted to 71 cents in the third week. A year ago it wras 98 cents a pound. Other Many plants in this district recently were Manufacturing affected by developments in the auto in dustry. Moving forward the time of model changeovers by about six weeks from what it was in the three previous years, caused July operations of many factories to drop lower than in June. Also the indus try, so far, has released orders for only a limited volume of cars, and is reported to have done much of its own retooling, and so far has purchased relatively few machine tools, with the result that only moderate gains were shown in these lines in the first three weeks of August over July. Metal products plants in July reported employment down 32 percent from last year, and makers of machinery, and autos and parts showed decreases of 39 and 61 percent, respectively, from July 1937. Makers of machine tools reported an increase of 17 per cent in domestic sales in July over June, and of 38 per cent in foreign orders, the combined gain being 28 percent for the month, but in relation to last year July orders were down 49 percent, the bulk of the drop being in orders from domestic sources. Foreign purchases constituted 53 per cent of total sales in the latest month, as against 32 per cent last year at this time. The slight increase in July was reported more general than in June, and there were indications of further gains in August. Foundry equip ment orders in July showed a similar slight increase over June, but both new and unfilled orders were off sharply from last year. Survey of the industry revealed some improvement was expected in August and September in this field. Electric machinery companies showed a decrease of one percent in employment, and 2.4 percent in payrolls in July from June, and more reported smaller sales than increases in the latest month, compared with June. New business obtained so far this year was off from 40 to 75 percent from 1937, and orders placed recently were small generally. Large capital goods orders are rare. Inventories have been reduced further. Makers of small tools, engineering appliances, and screwmachine products reported slight improvement in orders in July over June, and further gains in August. Employ ment changes were small, but some increase in hours worked was evident. In the glass industry, conditions were varied. Plate glass demand was very limited, inventories are large, and operations at very low levels. Window glass sales, how ever, have improved recently. Stocks, particularly in deal ers’ hands, are low and manufacturers' supplies are being further reduced by the orders which specify immediate de livery, in most cases. Production so far this year was about one-third what it was in 1937. Glass container and THE MONTHLY BUSINESS REVIEW molded glass demand receded seasonally in July, but so far this year moderate gains have been experienced. July employment in the entire industry in this district was 20 percent under last year, but up one percent from June. China and pottery sales in the first half of August increased over July, but operations remained unchanged, sufficient inventories being available to supply the additional re quirements. Shoe production at fourth district factories increased 15 percent in July over June, and in August factories were running at a fair rate, though in both periods production was behind last year. The July drop wras 14.6 percent, but the seven-month production was 17 percent less than in 1937. Shoe inventories in hands of both manufacturers and retailers were somewhat lower than a year ago. Em ployment at shoe factories increased three percent in July over June, and payrolls were up 20 percent, both seasonal gains as production was stepped up on fall and winter lines. A slight demand for paperboard has occurred in recent weeks, and in mid-August the industry was operating at 65 percent of capacity, compared with 58 percent for the year to date. Price reductions earlier in the year brought out orders from various sources, and while container prices re main at low levels, boxboard prices are reported to be showring a firming tendency. TRADE Retail For the second consecutive month the seasonally adjusted index of daily aver age sales at department stores in the fourth district increased. The gain in the latest month resulted from the fact that July sales did not show the usual falling-off from June. Dollar volume, however, was still nearly 20 percent smaller than in July last year, and in first three weeks of August little change from this level was indi cated by weekly reports received. These declines are larger than the national average, partly because local retail trade a year ago was above the level for the country as a whole, and since the business contraction has been most pro nounced in durable goods industries, including iron and steel, automobiles, and mining, which predominate locally, trade has suffered proportionately more in this district than in the entire country where diversification and the relatively better trade in agricultural areas have buoyed the national figures. The decrease in July total sales was slightly smaller than in June, but it was greater than the 16 percent decline re corded for the first seven months from the corresponding 5 period of 1937. Reductions in sales at Cincinnati and Colum bus stores were about half as great in July as the aver age for the entire district, but those areas are less depend ent on heavy industry than other centers. Credit sales in the latest month represented 58 percent of total sales, slightly less than in June, but a little greater than in July 1937. The increase over last year was entirely in regular charge sales, which represented 51 percent of total sales, compared with 47 percent a year ago. In stallment sales represented only 7.3 percent of total sales in the latest month as against 10.6 percent last July. Wearing apparel stores in this area reported about the same sales decline in July as department stores, and fur niture store sales were down 36 percent as against 41 percent in both June and the first seven months from last year. Chain grocery and drug sales were off four and nine percent, respectively, in the latest month from a year ago. Both were larger than in June. While reports have been received that buyers were purchasing merchandise in slightly better volume in an ticipation of a possible upswing in retail business this fall, inventory figures of reporting stores in this district failed to show any expansion. Dollar value of stocks on July 31 was 7.5 percent less than a month previous, and down 13.7 percent from last year. The drop from June was greater than seasonal, and the adjusted index receded one point further to 67.8 percent of the 1923-25 average. Collections held up quite well in July, being 33 percent of accounts receivable at the end of June, only slightly under last year. The reduction was about evenly divided be tween regular and installment collections. Wholesale July sales of all reporting wholesale firms in this district were off 29 percent from last year. The declines in June and the first seven months were 26 percent. All lines except automotive supplies, drugs, and electrical goods showed larger reductions in July from 1937 than were evident in June. Firms in Youngstown reported slightly larger sales than in June, but in all other centers a contraction oc curred, and, in relation to last year, decreases ranging from 17 to 50 percent wrere reported in the various cities. Whole sale sales in Cleveland and Pittsburgh were down about 38 percent, while at Cincinnati the drop was 23 percent. Electrical goods, hardware, jewelry, and miscellaneous wholesalers reported the largest decreases in July sales from last year. Inventories of wholesalers in this area also were further reduced moderately in July, and were 17 percent smaller than a year ago. The decreases in some lines, however, ranged up to 37 percent. Collections were bettter than in June, but the decrease from last year in July was greater than in the previous month. CONSTRUCTION Residential contracts awarded in this district were ten percent smaller in July than in June, but this contraction was less than the average falling-off at this season in previous years. Contracts awarded in this field, at $8,410,000, were also slightly under July 1937, whereas in the entire country a gain in the residential field was evident. Despite this fact, however, the accompanying chart show ing monthly residential contracts awarded since January 1937, indicates moderate improvement in the residential field from the beginning of the year and a narrowing of the spread between last year and 1938, when, after the THE MONTHLY BUSINESS REVIEW 6 April peak, the decline in residential work was quite pro favorable in mid-August, so far as crop conditions and prospective yields wT concerned, but price weakness in ere nounced. Throughout the district conditions were not uniform. nearly all crops was a disturbing element, and one which In western Pennsylvania, July residential contracts award was causing reduction in estimated farm incomes. Farm ed were more numerous than in June or July last year, prices in mid-August, according to the Bureau of Labor's but the value of such awards was up by a smaller amount, index, were 22 percent lower than a year ago. The recent indicating that the average cost per new dwelling awarded decreases in grain prices, with world record production was less than a year ago. For the seven-month period and near record wrheat supplies, and in cotton, more than residential work started in western Pennsylvania was wiped out increases shown in other products in July, and within six percent of the corresponding period of 1937. the current index of farm prices was 30 points lower than In Ohio and Kentucky, decreases were shown in July a year ago. from June, and in July and the first seven months from For the country as a whole, indications in August, last year in the residential field, but less public residential according to the Department of Agriculture, pointed to work occurred in these areas than in western Pennsyl yields of a number of important field crops in excess of the generally excellent yields secured last year. Even vania. Comparison of total contracts awarded in this district allowing for less promising prospects of some principal in July with last year shows a drop of 62 percent, increas fruits, the August 1 composite of prospective yields per ing the cumulative decline for the year to date to 33 per acre was nearly ten percent above the ten-year, 1923-32 cent. In July 1937, however, large industrial contracts average. This would be about six percent below the were awarded in western Pennsylvania which raised that exceptionally high yields of 1937, but substantially above figure to an unusually high level, although in Ohio non- any other year since 1920. Cotton, flaxseed, and buck residential contracts awarded in July were less than half wheat are the only field crops which show 1938 prospects below average production. The fact that, compared with what they were in July 1937. Publicly-financed building of all types constituted 57 1937, reduced acreages of many crops were planted, is percent of all contracts awarded in western Pennsylvania expected to be offset by less than usual loss of acreage, in the first seven months of 1938, and 21 percent in 1937. and about an average acreage will be harvested. As a In northern Ohio, public construction represented only 38 result, a further increase in both feed supplies and food percent of all awards in 1938 to August 1, compared with crops is indicated. 24 percent in 1937, while in the Cincinnati area public In the fourth district, generally favorable weather in construction wras 43 percent of all work started in 1938, July caused prospects for nearly all crops to improve. August 1 estimates of all principal crops in this district and 37 percent in 1937. Possible increased activity in the construction field were revised upward over the July figures, which, with is reflected in contemplated building reported, particularly the exception of oats and tobacco, were somewhat above in the large-scale medium or low-price residential rental the ten-year average harvest. field. Recent residential activity has been chiefly in one Wheat The accompanying chart shows estimated wheat or two-family houses. Contemplated construction report production in the fourth district for the past fourteen years. ed in this area in the first seven months was more than The 1938 crop, now estimated at 53,550,000 bushels, is double last year, figures in recent weeks increasing over within 200,000 bushels of the record output last year, de earlier ones this year. spite the smaller acreage sown last fall. Yields per acre, Lumber dealers report conditions just about in line with particularly in the northern parts of the district, were the contract figures. In western Pennsylvania they are above the ten-year average and last year’s yields, and the more optimistic than elsewhere in the district. Increased grain generally is of better-than-average quality. Little buying of lumber and materials was reported in July yet is known about acreage curtailment likely to be accom over June, partly for inventory purposes. Firming of plished in this district on next year’s crop which soon will lumber prices brought out some orders. be sown. A general reduction of 30 percent is being sought and additional adjustment payments are being offered as AGRICULTURE The agricultural situation in this district was quite inducements. Estimated total wheat production for the entire country was reduced slightly in July, but at 956,000,000 bushels, OF it was within five percent of the record crop of 1915, and exceeded all crops for intervening years. Corn While corn plantings were rather uneven early in the season, very favorable weather recently has overcome much of this condition in this district. Estimated pro duction has been revised upward to within seven percent of last year’s harvest which was the largest in this dis trict since 1925. The indicated yield per acre is about the same as last year, and considerably above the ten-year av erage, so the smaller crop is due to reduced acreage plant ed. Oats The oat crop this year was slightly better than in 1937, but rains at harvest time reduced the quality of grain in many areas. Indicated yield is around 34 bush els per acre, greater than last year, but still less than ’‘Based on Aug. 1 estim ate. 7 THE MONTHLY BUSINESS REVIEW average. A good oat crop has not been harvested locally since 1931, largely due to unfavorable weather conditions. Potatoes This district’s 1938 potato crop, estimated at 20,740,000 bushels, is expected to be about 3,000,000 bush els larger than last year’s harvest, and slightly in excess of the ten-year average crop. Recent hot weather has damaged potatoes in some sections through development of late blight and the crop was still in a critical condition. Fruits The light crop of fruit in this district, on the whole, developed satisfactorily in July. Estimated pro duction of all crops, except apples, was raised on August 1, but with the exception of pears a smaller than average crop was indicated for all fruits. Weather has been gen erally favorable for grape development, and a larger crop is now expected than was estimated earlier in the season. The apple crop is little more than one-third of last year’s large harvest, but about two-thirds of the average of recent years. Tobacco Harvesting of tobacco started somewhat earlier than usual, and on the whole it is reported the best crop ever grown, but not the largest, chiefly because of acreage reduction which followed adoption of a marketing quota for this year. The indicated crop of Burley tobacco is Fourth D istrict Business Statistics (000 omitted) July % change Tan.-Tuly Fourth District Unless 1938 1938 from 1937 Otherwise Specified Hank Debits— 24 cities.................31,968,000 — 27.0 313,903,000 Savings Deposits—end of month 40 Banks, O. and W. P a.............3 770,154 + 1.1 i Life Insurance Sales 480,416 Ohio and P a .................................. 3 61,184 —28.0 Rf-tail Sales: — 124,592 Dept. Stores— 53 firms............... 3 14,123 19.4 5,051 Wearing Apparel— 12 firms. . . .3 522— 19.8 4,530 Furniture—40 firms.....................3 593— 36.0 —61.9 143,404 Building Contracts—T otal.......... 3 20,894 — 48,157 — Residential. 3 8,410 1.7 7,326 Commercial Failures— Liabilities.3 508— 27.4 5752 ” ” — Number. . 642+ 36.2 Production: —65.4 9,144 Pig Iron—U. S.......................Tons 1,213 12,801 —56.5 Steel Ingot—U. S.................. Tons 1,982 —70.4 1,043,3582 Auto— Passenger Car—U. S........ 106,8412 — 401,9532 —Trucks—U. S...................... 32,596256.0 4,519 Cement—O., W. Pa., W. Va. Bbls. 1,132 + 3.2 Elec. Power, O., Pa., Ky........ 7,703* ........................... Thous. K.W.H. 1,3973 — 11.4 13,431* Petroleum— O., Pa., K y....B bls. 2,205s — 9.2 s 5 — 14.6 Shoes......................................Pairs 19,729 Tires, U. S.............. ............casings 3,353 — 21.9 Bituminous Coal Shipments: 14,512 L. E. Ports..............................Tons 4,800 -21.4 Jan.-June 1 not available confidential 2 actual number June % change from 1937 — 22.7 —26.1 — 16.0 — 16.7 —41.1 — 33.2 — 33.7 +42.3 +54.2 —60.7 —61.6 —60.6 -30. - 20. - 21. 2. -16. -46. — 39.7 - Debits to Individual Accounts Akron............... Butler.............. Canton............ Cincinnati. . . . Cleveland........ Columbus........ Dayton............ Erie.................. Franklin.......... Greensburg. . . Hamilton........ Homestead.. . . Lexington........ Lima................ Lorain.............. Middletown. . , Oil City.......... Pittsburgh Sharon............. Springfield . . . , Steubenville. . Toledo............. W arren............ Wheeling......... Youngstown. . Zanesville........ 5 Weeks ended Aug. 24, 1938 3 58,478 8,633 30,453 301,860 514,280 166,142 59,055 27,336 2,998 7,299 11,096 3,294 20,837 14,593 4,896 9,552 9,949 615,523 8,226 16,900 9,404 114,568 8,059 27,768 41,585 8,019 % change from 1937 — 22.1 — 28.4 — 32.7 — 23.6 — 27.7 — 17.2 — 26.8 — 32.6 — 19.1 — 17.2 — 30.4 — 20.3 — 9.2 — 5.9 — 20.6 —24.4 — 22.3 — 32.4 — 29.6 — 19.3 —27.5 —27.7 — 32.9 — 31.7 — 33.4 — 15.3 — 27.6 Year to Date Dec. 30, 1937 to Aug. 24,1938 3434,888 65,186 228,155 2,326,976 3,798,775 1,245,614 469,166 193,156 21,863 51,972 79,366 22,777 182,950 108,470 35,231 66,445 73,869 4,600,137 56,447 126,552 64,811 823,340 61,183 208,181 294,732 57,144 315,697,386 Year to Date Dec. 31, 1936 to Aug. 25, 1937 3541,152 83,123 315,839 2,823,269 4,952,119 1,475,915 594,689 263,798 28,335 58,759 102,340 27,085 201,886 112,081 42,347 85,748 89,484 6,193,109 73,643 149,625 87,987 1,089,704 83,343 280,928 424,832 66,411 320,247,551 still nearly 50,000,000 pounds over the first quota set. This is the most important type raised in the fourth dis trict and it is used largely in the manufacture of cigarettes. Warm, damp weather has been harmful to some crops already cut because it has prevented proper curing and drying. Prospects are for a very large acreage yield in most sections. The fourth district crop, all types, is estimated at 128,000,000 pounds, with the exception of last year, larger than in any year since 1931, the recent high record for this area. The Department of Agriculture indicates that “the general outlook for all types of tobacco is rather favorable, although less so than last year” Burley tobacco stocks were 80,000,000 pounds larger on July 1, 1938, than a year ago, and they constituted 641,000,000 pounds. As a result of this and the large indicat* ed production, the prospective supply of Burley is six percent above last year. Wholesale and R etail Trade (1938 compared with 1937) Percentage Increase or Decrease SVLES SALES STOCKS Tulv Tulv first 7 1938 months 1938 DEPARTM ENT STORES (53) — 27.7 — 24.9 — 20.1 — 12.0 — 11.6 — 9.5 — 15.9 — 16.7 — 21.4 — 10.4 — 9.9 — 13.1 — 21.2 — 21.3 — 10.3 — 19.1 — 16.3 — 11.5 — 23.2 — 20.1 — 17.0 — 15.2 — 14.8 — 7.5 Other Cities........................................... — 24.3 — 11.4 — 18.3 — 13.7 — 19.4 — 16.0 WEARING APPAREL (12) — 2.8 —21.3 — 21.9 — 23.3 — 16.1 — 21.3 — 18.3 — 15.6 — 6.4 — 16.7 — 10.1 — 19.8 FURNITURE (40) —48.4 —46.8 — 30.3 —41.3 — 7.9 — 20.5 —44.1 — 40.3 — 51.7 —48.0 Other Cities........................................... —51.5 —49.1 — 36.0 —41.1 CHAIN STORES* Drugs— District (4)............................. — 9.4 — 7.8 Groceries— District (4)........................ — 4.1 — 4.8 WHOLESALE TRADE** l Automotive Supplies (6)................... — 13.6 Drugs (7)................................................ — 11.9 — 10.7 — 8.6 Dry Goods (8)...................................... — 36.5 —28.9 — 33.5 Electrical Goods (16).......................... —49.5 —44.7 — 31.9 Groceries (62)........................................ —20.0 — 10.7 — 14.9 l Total Hardware Group (37)............ —41.2 — 35.2 General Hardware (12).................. — 35.8 — 22.7 — 29.5 Industrial Supplies (15)................. —56.3 — 15.4 —49.4 Plumbing & Heating Supplies (10) — 33.0 — 29.6 — 5.0 l Jewelry & Optical Goods (7)........... —43.4 — 15.5 Leather & Shoe Findings (3)............. — 18.9 — 15.5 l l Lumber & Building Materials (3). . . — 18.7 l Tobacco & its Products (23).............. — 6.3 — 12.6 Miscellaneous (12)................................ — 44.4 + 36.9 —43.4 District—All Lines (184).................... — 29.3 — 17.3 — 26.2 *Per individual unit operated. **Wholesale data compiled by U. S. Department of Commerce. *Not available. i i % change from 1937 — 19.6 — 21.6 — 27.8 — 17.6 — 23.3 — 15.6 —21.1 —26.8 — 22.8 — 11.6 — 22.4 — 15.9 — 9.4 — 3.2 — 16.8 — 22.5 — 17.5 — 25.7 — 23.4 — 15.4 — 26.3 — 24.4 — 26.6 — 25.9 — 30.6 — 14.0 —22.5 Fourth D istrict Business Indexes (1923-25 =* 100) Bank debits (24 cities)......................................... Commercial Failures (Num ber)......................... ” # ” (Liabilities).................... Sales—Life Insurance (O. and Pa.)................... ” — Department Stores (48 firms)............... ” — Wholesale Drugs (7 firms).................... ” — ” Dry Goods (8 firms)........... ” — ” Groceries (62 firms)........... ” — ” Hardware (12 firms)........... ” — ” All (89 firms)....................... ” — Chain Drugs (4 firms)**....................... Building Contracts (Total)................................. ” ” (Residential)....................... Production— Coal (O., W. Pa., E. K y.)........... ” — Cement (O., W. Pa., E. K y.)___ ” — Elec. Power (O., Pa., K y.)*.. .. ” — Petroleum (O., Pa., K y.)*......... ” — Shoes................................................ *June **Per individual unit operated. July Julv July July July 1938 1937 1936 1935 1934 73 99 89 73 65 44 32 36 47 38 12 16 13 38 39 64 89 90 90 94 59 71 63 55 51 91 103 97 84 76 27 43 43 35 34 66 82 86 72 63 61 95 83 64 57 60 79 78 64 58 90 99 90 79 69 44 115 59 47 21 12 49 50 37 25 49 73 72 51 59 94 91 103 76 83 166 188 172 143 134 119 131 122 111 113 99 116 118 113 108 8 THE MONTHLY BUSINESS REVIEW Sum m ary of National Business Conditions By the Board of Governors of the Federal Reserve System Industrial activity increased in July, when there is usually a consider able decline, and rose somewhat further in the first three weeks of August. Production Volume of industrial production increased from 77 percent of the 1923-1925 average in June to 83 percent in July, according to the Board’s index which is adjusted for changes in the number of working days and for usual seasonal variations. Steel output rose sharply, lumber production also increased, and output of cement and glass was maintained. Automo bile production declined somewhat further. In the first three weeks of August activity at steel mills was at a rate of around 40 percent of cap acity as compared with an average of 35 percent in July, while in the automobile industry there was more than the usual seasonal reduction in output as producers closed plants somewhat earlier than in other recent years to prepare for the shift to new model production. At textile mills activity in July showed a further rise, marked in Index of physical volum e of production, creases being reported in mill consumption of cotton and wool and in adjusted for seasonal variation, 1923-25 average = 100. By months, January 1934 shipments of rayon yarn. Shoe production also increased substantially, to July 1938. L.atest figure July 83. following a decline in June. Bituminous coal production advanced somewhat in July, and out put of crude petroleum was at a much higher rate, reflecting chiefly a return to production on a six-day week basis in Texas. Anthracite pro duction decreased sharply following a considerable volume of output dur ing May and June. Value of construction contracts awarded in 37 eastern States showed little change from June to July, according to figures of the F. W. Dodge Corporation. Contracts for residential building continued to increase, and there was an increase also in commercial building, reflecting the award of a contract for a large office building. Factory construction remained at a low level and declines were reported in most other types of con struction. Employment Factory employment and payrolls, which usually decline at this sea son, increased somewhat from the middle of June to the middle of July. There were substantial increases in the number employed at textile Three-month m oving averages of F. W. mills, clothing establishments, and shoe factories, and at railroad re Dodge data for value of contracts award pair shops there was a slight increase. In the machinery and automobile ed in 37 Eastern States, adjusted for sea industries employment declined somewhat further. In non-manufacturing sonal variation. Latest figures based on data for June and July and estim ate for industries the principal changes in employment were a decrease at mines August. and an increase on the railroads. Agriculture A domestic cotton crop of 12,000,000 bales was indicated on August 1, according to the Department of Agriculture. Last season the crop was 19,000,000 bales and, with world consumption of American cotton about 11.000.000 bales, the carryover increased sharply to 13,500,000 bales. The wheat crop was forecast at 956,000.000 bushels, as compared with 874,000,000 bushels harvested last year and usual domestic consumption of about 670.000.000 bushels. Production estimates for most other major crops were slightly under the large harvests of a year ago. Distribution JO j In July department store sales declined by less than the usual AV seasonal amount, while sales at variety stores and mail-order houses de creased seasonally. Retail sales of automobiles increased somewhat, although there is ordinarily a decline in July. In the first half of August sales at department stores showed less than the usual seasonal rise. Indexes compiled by the United States Bu Freight-car loadings increased from June to July, reflecting chiefly reau of l<abor Statistics, 1926 = 100. By larger shipments of grain, coal, and miscellaneous freight. weeks, 1934 to week ending August 20, Commodity Prices 1938. Prices of grains, cotton, livestock, and meats were lower in the third week of August than in the middle of July, while prices of most industrial commodities were unchanged. Steel scrap advanced further in July, then declined somewhat in the first half of August. Cotton grey goods also declined in the early part of August, while prices of copper and rubber were maintained, following increases in the latter part of July. Bank Credit Excess reserves of member banks declined by about $230,000,000 in the five weeks ending August 17 to a total of $2,930,000,000, following a steady growth from the middle of April to a peak on July 13. Most of the decrease in excess reserves was at city banks. Following substantial declines since the autumn of last year, commer cial loans and brokers’ loans at reporting member banks in 101 leading cities increased somewhat during the first half of August. Member banks in leading cities added about $170,000,000 to their holdings of investments in the middle of July, mainly United States Government guaranteed obli W ednesday figures, January 3, 1934, to gations, but thereafter their holdings showed little change. August 17, 1938 IN D U STR IAL PRODUCTION CONSTRUCTION CONTRACTS AWARDED W HOLESALE PRICES t 1 , 1 FARM P R O D U C T S f . IV V <...... :.- " V a7 V ' cITHER CO MOOITIES M .. ... 1 / . .... s. \ ^ ’ Vv/A\ i a \ .; r 1934 1935 1936 1937 1938 MEMBER BANK RESERVES AND RELATED ITEMS
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