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MONTHLY BUSINESS REVIEW Covering fin an cial, industrial and a g ricu ltu ral co n d itio n s Vol. 24 Cleveland, O hio, August 31, 1942 Maintenance of a balanced flow of materials through proc essing plants was the most pressing problem faced by manu facturing concerns in this area during July and August. Out' put of war materiel continued to expand, but inability to obtain adequate supplies of raw materials and essential parts on short notice caused some temporary shutdowns and pre vented attainment of many production objectives. Industries largely dependent on civilian markets became further de pressed, either because of restrictions on their use of materi als, loss of markets, or loss of working forces to the army and navy or war plants. The critical shortages of steel, copper, and lumber have not yet resulted in widescale abandonment of plans for ex panding manufacturing facilities in this area. Total con struction contracts awarded in the fourth district in June and July were the largest for any two-month period on record. Nevertheless, construction of new plants has become increas ingly dependent on their need for filling immediate require ments for war production. Readjustment of the electric power expansion program by the War Production Board, for example, has resulted in suspending several utility construc tion projects being planned for the fourth district. Mate rials which would have been used by these plants have thereby been made available for other more pressing needs. In view of the immediate demands for steel, expansion plans for this industry have been curtailed in order to con serve present supplies. Existing furnaces are being pushed to the limit of their capacity, but output in recent weeks has failed to equal second quarter records. In fact, average weekly production in July was the second lowest in the past ten months. Trade reports attribute this relatively low out put to shutdowns for repairs made necessary by long-con tinued operation, and to shortage of scrap. In mid-August many mills were on a hand-to-mouth basis in so far as scrap was concerned. Use of inferior grades was necessitating longer heating in the furnaces, thus curtailing output of finished steel. The increased proportion of specialized alloy steels being used by war industries has also cut down tonnage because of the longer time required to produce such steels. No shortage of iron ore is anticipated this winter. Lake shipments have been at record levels, and the amount of ore now on hand at lower lake docks and furnaces is larger tlian at any other similar time. With more than two months of good shipping weather remaining, the major concern now is to find storage space. Fourth Federal Reserve D istrict Federal Reserve Bank of Cleveland N o. 8 Coal production has been at unusually high levels this summer, both because of heavy industrial consumption and accumulation of stocks. Lake shipments in recent weeks, however, have been lower than last year. This is due in part to the heavy demand for local consumption and in part to the desire to speed ore deliveries. Fourth district apparel factories reported considerable dif ficulty in obtaining materials in mid-August. Shoe fac tories had trouble securing adequate quantities of cements and soles; clothing plants expressed concern over supplies of buttons, threads, and linings. Retail sales of most clothing have not come up to expectations recently and retailers are working oft inventories. Apparel factories have lost large numbers of employees to the military services and the war industries, but present working forces are said to be ade quate in view of the reduced volume of operations. In general, labor shortages throughout the district are said to be less critical than scarcity of materials. Although skilled workers have long been at a premium the supply of unskilled workers is still adequate for present needs. These unskilled persons are being absorbed by war industries in ever in creasing numbers either through training programs, up grading, or breaking down complicated operations into simple steps. Retail trade in this area has recovered somewhat from the low levels of May and June. The seasonally adjusted index of department store sales rose from 105 in May to 118 in July and a further rise was indicated by reports covering the first half of August. Compared with last year, however. THE MONTHLY July sales were dawn three percent and the first half of Au gust showed a nine percent decrease. CONSUMER CREDIT Consumer instalment credit became subject to Govern ment regulation just a year ago, when Regulation W of the Board of Governors of the Federal Reserve System went into effect on September 1, 1941. The regulation was designed to combat inflation by reducing the civilian demand for goods and was to limit the volume of consumer credit. To this end, therefore, the Regulation established minimum down payments and maximum time limits for instalment loans made to finance purchases of a designated list of articles. The terms provided for in the original order were approxi mately the same as those then being followed by the more conservative consumer finance agencies. During the past year, however, various amendments have resulted in progressive tightening of instalment credit conditions. In addition, regular thirty-day charge accounts have been made subject to regulation. As discussed in our last month’s Review, effec tive with May purchases, articles bought on open book account have had to be paid for by the tenth day of the sec ond following calendar month if further charge purchases of listed articles are to be permitted. Since Regulation W has been in effect there has been 2 marked decline in the volume of consumer credit outstanding both in the entire country and in this district. Declines, of course, have varied wridely depending on the type of financ ing agency and the availability of merchandise financed by each agency. By far the largest decline has occurred ir the field of automobile financing, owing primarily to drastic restrictions on production and sale of motor vehicles for civilian use. A representative group of banks in the fourth district report an average decrease of nearly 50 percent in automobile instalment loans outstanding during the seven months ended July 31. This is approximately the same rate of decrease as that shown for automobile credit extended by sales finance companies operating throughout the coun try. Other types of consumer credit extended by reporting banks in this district show much less drastic liquidation. Personal instalment loans at the end of July were only ten percent under the December 31, 1941 figure, and repair and modernization loans were down only seven percent. Instalment sales of department stores, furniture stores, and wearing apparel shops in this district have declined less sharply than automobile sales, but the reduc tion in outstanding accounts has been marked. As shown in the following table, department store receivables at the end of July were 28 percent under a year ago. and 2 BUSINESS REVIEW the other types of stores showed corresponding declines. These decreases during the past twelve months have more than offset the expansion which occurred in the previous year. FOURTH DISTRICT RETAIL STORES 0 utstanding A ccounts Percentage change from July 31 of previous year. 1942 1941 Department Stores—Total ....................... -2 8 + 16 —Regular Charge., ., -2 8 + 14 —Instalment + 20 “ 29 F urniture—T otal (mainly instalment). . -2 3 + 16 Wearing Apparel-—Total (mainly charge) 21 + 10 Collections Percentage of Accounts Receivable June 30 collected during July, 1942 1941 Department Stores—Total ................... 49 36 —Regular Charge . 62 47 —Instalment .......... 23 18 Furniture— (mainly instalment) .............. 18 13 Wearing Apparel (mainly charge) .......... 44 34 The reduction in outstanding accounts at department stores and wearing apparel shops reflects improved collections and a greater proportion of cash sales, rather than a decline in total business. The high level of consumer incomes and the effects of more rapid amortization of instalment accounts un der Regulation W are reflected in the fact that for the past four months approximately 23 percent of all such accounts outstanding at the beginning of the month at department stores were collected during the month whereas a year ago only 18 percent were collected. The recent expansion of Regulation W to provide for freezing of delinquent accounts explains a sharp increase in this collection ratio from 51 percent in May to 57 percent in June, and 62 percent in July. A year ago only 47 percent of the regular charge ac counts outstanding at fourth district department stores on June 30 were collected during July. For several months an increasing proportion of retail trade in this area has been done on a cash, rather than a credit, basis. This trend first became marked in April, prior to announcement of the plan to freeze delinquent charge accounts, but it has undoubtedly been accelerated by this regulation. In July, 52 percent of all fourth district de THE MONTHLY partment store sales were for cash, compared with only 42 percent last year. Instalment sales made up only five per cent of total volume against eleven percent in July 1941, and charge sales were 43 percent of the total compared with 47 percent last year. FINANCIAL Member Bank There has been a marked contrast beCredit tween developments in the commercial loan field in the fourth district and in the remainder of the country thus far in 1942. Commercial, in dustrial and agricultural loans of all weekly reporting mem ber banks rose steadily from the beginning of 1939 until March of this year. During the past five months the trend has been downward; by mid-August this type of loans out standing had been reduced to the level prevailing last Oc tober. In the fourth district the expansion of commercial loans came to a halt earlier than was the case with the remainder of the country, but there has been no tendency for the vol ume of loans outstanding to contract. Since the first of the year they have fluctuated between $420 millions and $434 millions; on August 19 they were $428 millions, exact ly the same as last December 31. So-called “other” loans of member banks in this district have declined by about five percent since the beginning of the year. Local member banks have added further to their holdings of all types of Government bonds in recent weeks, with cer tificates of indebtedness and regular Treasury bonds account ing for the major part of the gain. Federal Reserve Total credit extended by the Federal Re* Credit serve Bank of Cleveland increased $46 millions in the four weeks ended August 19. The main factor in this increase was participation in the System's purchases of Government obligations, particularly Treasury bills and certificates of indebtedness. The amount of these short-term securities now held by the Cleveland bank exceeds $100,000,000; last April none of these types of Government obligations were held. Total Government securities held by this bank reached an all-time high of $321,749,000 on August 19. A year ago they were $227,243,000. As a further step to ease money market conditions and promote full use of banking resources in war financing, the Federal Reserve System announced on August 7 that any purchase of bills at the % of one percent buying rate es tablished April 30 may be made, if the seller desires, on the condition that the Federal reserve bank upon the request of the seller before the maturity of the bills, will sell to him Treasury bills of like amount and maturity at the same rate of discount. New Member Bank First Jeannette Bank and Trust Company, Jeannette, Penn sylvania. MANUFACTURING, MINING Iron and Steel making continues as close to capacSteel ity as conditions will allow'. Necessity for furnace repairs has prevented the operating rate from reaching 100 percent; during the past month it has remained in a narrow range of 97 to 98$4 per cent of capacity. Total production of steel ingots rose moder ately in July to 7,148,824 tons, an increase of 4.9 percent 3 BUSINESS REVIEW over last year. Consumption of Lake Superior ore at blast furnaces totaled 7,175,845 gross tons, the second highest for any month on record. Although statistics of pig iron pro duction are rust available for publication the present rate of ore consumption would indicate that present pig iron out put is near an all time record. Real concern is being expressed by the industry over the shortage of scrap since serious curtailment of steel output could occur during the winter months if diminishing scrap piles are not replenished. Trade sources report that dur ing the past 18 months steel mill's inventories of this im portant raw material have fallen 40 percent. The present supply is sufficient to sustain the mills at their present op erating rate for only two or three weeks. Part of the short age has been met by feeding more pig iron into the furnaces and thus reducing the required amounts of scrap. Shipments of ore from upper lake ports continued at rec ord levels in July and the first half of August. Concern is beginning to be felt by the industry over a lack of storage facilities at lower lake destinations which may require some slackening in the current rate of shipments. Ore stocks at furnaces and on lower lake docks reached more than 37 million tons on August 1. This is only 8 million tons less than the record at the close of the shipping season in De cember 1941. At the present rate, last December's peak will be passed during early September at a time when the season would normally still be in full swing. Addition of 2 new boats to the lake fleet in the past month has added 20.000 tons to the trip capacity. A significant development in lake shipping has been the approval by WPB of a program to construct a by-pass route for ore around the locks at Sault St. Marie, Michigan. Fear of ore shippers that the locks might be destroyed by sabotage or air raid has led to the proposal that an alternate rail-water route be developed. The program which has been approved includes the immediate construction of dock and harbor im provements at Escanaba and the improvement of railroad facilities between that city and Superior, Wisconsin. With such an alternate route, ore from Lake Superior fields fcould be shipped by rail to Escanaba and there loaded into ore boats for shipment down the lakes. The Escanaba by-pass is expected to be completed by the end of this year and will be capable of handling 60 million tons of ore a season. Coal Output of Ohio, Pennsylvania, and East ern Kentucky bituminous coal mines to taled 18,580,000 tons in July—eight per cent above the same month of last year and more than the output for any similar month since 1923. July production, however, was moderately lower than the second quarter months, declining five percent from the June figure of 19r 610.000 tons. All classes of consumers have built up near record stocks. It is thus believed that a possible autumn shortage arising from inadequate transportation facilities may be averted. Bi tuminous coal stocks of industrial and retail users totaled 73.268.000 tons on July 1. This was more than for any pre vious date since March of 1927 and is equivalent to 55 days supply. Not included in these figures are the large stocks accumulated in the coal bins of homes and apartment houses throughout the nation, which are reported by the industry to be considerably above normal. Shipments of coal from lowrer lake ports also declined from THE MONTHLY BUSINESS REVIEW earlier months. During July, 5,697,406 tons were loaded is made up of young men who have been entering the armed into vessels—three percent Jess than in June. Unlike coal forces in substantial numbers. This loss of manpower has production, however, the total tonnage of lake coal ship been greater than new hirings, and trade sources expect ments was lower than in any July since 1938. This reflects, labor shortages to limit production further in the coming in part, the faster schedule of ore shipping which is in some season. cases requiring vessels to return to Lake Superior light Other Activity in other manufacturing plants rather than take the time to load and unload coal. Neverthe Manufacturing in the fourth district in July and the first less, coal shipments in March and April of this year still half of August depended for the most part keep the total 1942 tonnage 17 percent above the record 1941 on the extent to which facilities had been converted to war year. Requirements of the steel industry for coke have been so work. Metal working plants generally were operating at with occasional delays due to unbalanced receipts of great that by-product ovens have been unable to meet the capacity, materials. Industries depending mainly on civilian demand demand. As a result, bee-hive ovens which were outmoded were generally well below capacity, either because by the more efficient by-product ovens have again been put of Government operating restrictions or reaction from the over-buying into production. In mid-August it was estimated there were about 9,000 bee-hive ovens in operation in fourth district which occurred late in 1941 and early this year. The War Production Board has announced that the value fields compared with only about 3,000 two years ago. Weekly production of beehive coke averaged about 135,000 tons in of new machine tools, presses, and other metal working ma July, compared with less than 30,000 tons in June 1940. So chinery shipped during June had reached an annual rate great has been the demand for beehive coke that the Office of more than $1,470,000,000. This represents a gain of more of Price Administration has found it necessary to establish than 75 percent over 1941 production of $840,000,000. Trade a higher price maximum to protect marginal producers reports in mid-August indicated that production was still as new facilities were placed in operation. Pri and prevent a threatened shortage. Effective August 12, expanding orities for these types of products carry high ratings so that hand drawn ovens whose total coal supply must necessarily have been less of a problem than the shortage oi be trucked from the mine to the ovens were permitted to materials charge $6.50 per ton f.o.b. Connellsville instead of the price skilled workers. Nut and bolt manufacturers, on the other hand, reported of $6.00 per ton in effect for other producers. difficulty in securing materials. Labor shortage was not a Clothing, Retail sales of men’s and women’s clothing problem for this industry since it was said that there was Textiles have followed somewhat different trends still an ample supply of unskilled labor. Upgrading was in recent months and operations of local being resorted to for replacement of skilled workers being clothing plants reflect this situation. July sales of men's lost to the armed forces. clothing in fourth district department stores and wearing Office equipment manufacturers have been making little apparel shops were 16 percent under last year whereas metal furniture since May 31, when a limitation order affect women’s coats and suits showed a 20 percent gain. Retailers ing the industry went into effect. Early in August manu now hold larger stocks of both men’s and women’s wear facturers were instructed by the War Production Board not than usual, and the disappointing sales volume in the men’s to work on any orders except those specifically authorized field has caused them to curtail orders for fall and winter by the director general for operations. Production of wood delivery. Men’s clothing makers in this district, therefore, furniture and office equipment was being hampered by a have been making a much smaller number of suits and over shortage of hardwoods and metal parts such as screws. coats for civilian use than they produced at this time last Electrical equipment manufacturers continued to expand year. In most plants, however, manufacture of Army and output in July and the first half of August. Exact figures Navy uniforms has taken the place of lost civilian business on the extent to which employment and production of this so that total output is about the same as last year’s peak industry have expanded is a military secret, but trade sources tevels. indicate that in most plants war work has more than offset The Office of Price Administration took further action the decline in civilian output. in August to prevent the necessity for price advances in the Sales of both trade and industrial paints in recent months retail clothing field. Manufacturers’ and wholesalers’ prices have fallen below the corresponding period in 1941. Because of staple work clothing were reduced to provide increased margins for retailers, and ceilings on cotton fabrics used in making this type of clothing were lowered to relieve the pressure on manufacturers. The O.P.A. also announced specific dollar and cents prices for a large number of other cotton products in August. Shoes Fourth district shoe factories were busy on fall lines in July and August but out put was somewhat below a }rear ago as shortages of both men and materials prevented maximum production. Government orders limiting the use of the best quality sole leather to military requirements have made it increasingly difficult for factories in this district to obtain sufficient soles to permit continued operations on their type of product. Cements were also said to be exceedingly scarce. todA large portion of the industry’s normal working force 4 1937_______ J938 1939 1940 1941 1942 THE MONTHLY of this situation, the industry reports no difficulty in obtain ing materials. Last year at this time plants producing lead and zinc oxides were working at capacity with large order backlogs. In mid-August these same plants were operating at from 25 to 50 percent of capacity with very small backlogs. A few plants had been shut down completely because of lack of business. The most critical shortage facing the paint in dustry was said to be containers. Inability to obtain steel and tin has caused some companies to turn to paper and plastics, but these substitutes have not yet been proven en tirely satisfactory. Paper and paperboard production was at a relatively low level in July and the early part of August; paper mills were operating at about 80 percent of capacity and paperboard factories were on a four or live days per week schedule with output at about 75 percent of capacity. Production of paperboard still exceeded new orders, and backlogs had fallen to the lowest level since early last year. Raw materials were plentiful for current operations but Government agencies have warned the industry that some shortages may occur because of restrictions on use of metals in pulp and paper machinery. Waste paper is now so plenti ful that prices are well below O.P.A. ceilings. Some labor shortages were reported in mid-August, but lack of man power was not a serious problem for the industry. There was little change in conditions in the glass industry in July and the first half of August. Production of both plate and window glass remained at low levels as the result of loss of the automobile market and Government restrictions on building. Output of glass containers, on the other hand, was close to capacity. As shown in the accompanying chart, plate glass production of 4,198,000 square feet in July was the lowest monthly output since early 1938. For the year through July 31, production of 39,108,000 square feet was less than one-third as large as in the corresponding period of 1941. Curtailment in the window glass industry occurred several months after the downward turn in plate glass production. During the first four months of this year, demand for glass to be used in smaller homes, Defense Housing, and army cantonments remained heavy. Production, therefore, rose to record levels; in some months output was in excess of rated capacity. Beginning in May, however, output began to decline. In June it was only 75 percent of capacity. Some pick-up occurred in July, but operations were still only 78 percent of capacity. The china and dinnerware branch of the ceramics industry has enjoyed relative prosperity ever since outbreak of the war in 1939 eliminated important foreign competition. Al though several materials which formerly were used quite extensively by the industry are no longer available, substi tutes and slight changes in body and glazes have permitted uninterrupted manufacture without these materials. Labor turnover has not been a serious problem for many fourth district potteries since their workers are relatively skilled persons of high average age and few potteries are located near war industries. In July and the first half of August potteries reported a seasonal decline in orders. Sales to department stores were less than in the same period last year as these stores were said to be attempting to reduce inventories. New orders from other sources, however, had taken up this slack. Former dealers in electrical household appliances are now preparing 5 BUSINESS REVIEW to handle china and pottery. Because of these new outlets production and shipments in mid-August were said to be approximately the same as last year and about 90 percent of capacity. The unfavorable record of fourth district portland cement mills was extended in July. Output in this area was at the rate of only 60 percem of capacity whereas the industry operated at 80 percent. A decrease of 14 percent compared with a year ago occurred despite an increase of 5 percent for the industry. Shipments during July exceeded prodtiction, and stocks declined 13 percent in this area, but this improvement in statistical position was not as great as that experienced in other producing regions. TRADE Retail Department store sales decreased less than usual from June to July and the seasonally adjusted index of sales in this district rose nine points to 118 percent of the 1923-25 av erage. A further gain in the index was indicated bv reports covering the first two weeks in August. Sales in July were three percent under last year; in the first half of August a decline of nine per cent was recorded. Sales were unusually high during the summer of 1491 as consumers made heavy purchases in an attempt to forestall price advances, scarcities, and credit regulations. Detailed departmental figures reveal considerable diver gence in sales trends between various departments. As shown in the table below, women’s apparel and accessories sales in July continued to show increases over last year whereas sales of men’s wear and household furnishings were less than a year ago. Despite the generally good showing made by women’s wear, fur sales were 41 percent under July 1941. The largest decrease in house furnishing sales oc curred in major appliances, many types of which are no longer available. DEPARTMENTAL SALES AND STOCKS Fourth District Department Stores Percentage Change July 1942 Compared With July 1941 Sales Stocks Women’s Apparel and Accessories..... +11 + 66 ‘Piece Goods ........................................... +27 + 74 Men’s and Boys’ Wear ....................... ~ 5 + 72 House Furnishings ............................... -1 7 + 57 Total—All Departments ................... - 3 + 73 The over-all inventory picture indicates that department stores are still generally well stocked. Dollar value of total goods on hand at the end of July was 73 percent greater than a year ago. At the July rate of sales, stocks were sufficient for nearly six months’ requirements whereas at the same time in both 1940 and 1941 stocks on hand were equal to only a little more than three months’ sales at the then current rates. Wholesale July sales of the 189 fourth district whole sale firms reporting to the Department of Commerce showed a slight increase from June to July. Dollar volume averaged exactly the same as last year, with gains in groceries, meats, drugs, and to bacco offsetting declines in electrical goods, general hard ware, automotive supplies, and paper. With prices gener ally exceeding last year by substantial margins, physical THE MONTHLY 6 volume of trade was less than a year ago. Most of the declines from 1941 were reported by firms which formerly handled goods whose production has been stopped or curtailed. Wholesale inventories of these ma terials have been depleted through heavy purchases by re tailers and consumers. Electrical appliance houses, for ex ample, reported in mid-August that inventories were so low that orders had to be routed direct from manufacturer to customer. * Collections in July were better than a year ago despite the fact there was no change in total sales. Accounts out standing were about nine percent less than a year ago. CONSTRUCTION Government restrictions have brought private construction activity in the fourth district to the lowest level since the winter of 1937-38. At that time building was almost at a standstill because of business depression and weather condi tions. The total volume of construction now under way, however, is at all-time high levels. Total contracts awarded in the fourth district during July amounted to $83,939,000. Al though this was considerably lower than the $114,284,000 reported for June, it was still the third highest monthly total on record. Projects on which work was started dur ing the first seven months of the year were valued at $426,000,000. This was greater than in any full year from 1931 through 1940 and was 81 percent of the 1941 total. It ex ceeded the corresponding seven months last year by 37 per cent. Factories for the production of war materiel and Defense Housing projects account for this unprecedented volume of construction. Because of these developments public funds were to finance 94 percent of all non-residential construc tion, and 89 percent of all construction, for which contracts were awarded in July. For the seven months through July public projects accounted for 78 percent of all building. A system of Government control over softwood lumber distribution was put into effect late in August. AGRICULTURE Increased employment and rising consumer incomes, LendLease requirements, and heavy purchases for the Army and Navy have combined to produce a marked rise in prices of agricultural products. The general level of prices received by farmers in the first seven months of 1942 averaged 35 percent higher than in the same period last year. By midJuly they had risen to the highest level since 1928. During CONSTRUCTION CONTRACTS AWARDED 150 OHIO, W.PA., W.VA., AND KY. too 50 T O TA L 'dL V p u B L IC W m . V/////////A T y P R IV A T E V ^ : 11 iHH/////// BUSINESS REVIEW the succeeding six weeks prices fluctuated near the high July levels, with little net change. Prices paid by farmers have advanced but little in recent months as the major portion of their purchases are subject to prices established under O.P.A. regulations. The ratio of prices received to prices paid, therefore, has shown a trend favorable to the farm population and has fluctuated around the 1910-14, or “parity”, relationship. Livestock The factors making for higher prices ol agricultural products have had their pri mary effect on livestock values. With re tail meat prices fixed, rising incomes have resulted in in creased meat consumption. Government purchases have been heavy; in June the Federal Surplus Commodity Corporation bought approximately 30 percent of all pork produced under Federal inspection, and 45 percent of the month’s federally inspected output of lard. Hog prices reached a 22-year peak on primary markets in mid-July and have shown little net change since that time. Ohio farmers who sold their hogs for only $5.00 per hun dredweight in June 1940 have received over $14.00 per hundredweight for hogs marketed this summer. Record production of pork is indicated for the coming months. The Department of Agriculture estimates that the spring pig crop was 25 percent larger than last year and that the fall crop will show about the same increase over 1941. On the basis of these estimates total hog slaughter in the 1942-43 marketing year may exceed 90 million head, and the number butchered under Federal inspection 65 mil lion head. The largest number of hogs slaughtered under Federal inspection in any other marketing year was slightly under 54 millions in 1923-24. Corn prices have not advanced to the same extent as hogs, so that the corn-hog ratio is more favorable to heavy feed ing than at any time since 1938. Advances in prices of beef cattle have been less spectacular than in the case of hogs, but prices have remained at high levels. On August 1 there were 30 percent fewer beef cattle being fattened on Ohio farms than at the same time last year. The entire corn belt showed a decline of 19 percent. A relatively low margin between prices of grass-fed and corn-fattened cattle has discouraged feeder operations in this area. Wheat The 1942 wheat crop is estimated to be the largest since 1915. Yields in many important winter wheat states proved to be better than expected earlier this year. The current crop of WHEAT eo- p rm n .. PRODUCTION __ ________FOURTH DISTRICT n pn. _________________________________________ W: AUGUST 1ST ESTIMATE i i THE MONTHLY 955 million bushels plus a carry-over of about 620 million bushels will provide the largest supply in the country's his tory. In contrast to the experience of the rest of the country, yields in this area were not up to expectations. Excessive rains continued through harvest, adding field losses to earlier Wholesale and Retail Trade (1942 compared with 1941) Percentage Increase or Decrease SALES SALES STOCKS July first 7 Tulv 1942 ___ 1942 months DEPARTMENT STORES (98) Akron.......................................... , + 7 +20 +65 Canton....... . ..................................................... + 2 +15 a Cincinnati...................... .................................... — 2 +12 +103 C le v e la n d ..,,................................................. — 2 +17 +66 Columbus. ................ ............................... . + 5 +13 +-60 Erie........................................................... . . . . . +3 +22 +61 Pittsburgh.......................................................... — 9 +10 +76 Springfield. . . . . . . . . . . ........ , , .............. .. +2 +7 a T o l e d o . . . , . . . . , ................... .............. ........... + 5 +15 +52 Wheeling.............................................. .............. — 14 +7 +77 Youngstown............................. ....................... — 8 +3 a Other Cities. . .......................... ......................... — 13 +3 +69 District................................................................. — 3 +13 +73 WEARING APPAREL (16) Canton................................................................. +15 +20 +48 Cincinnati............................................................ —• 5 +10 +41 +22 +78 Cleveland.................... ........................................ +12 Pittsburgh........................................................... + 2 +16 +61 Other Cities........................................................ +12 +20 +46 District................................................................. + 8 +18 +56 FURNITURE (87) C anton... ........................................................... —25 — 3 +65 Cincinnati............................................................ —36 — 8 a Cleveland............................................................. —29 — 6 +51 Columbus............................................................ —21 -— 9 +51 Dayton..................................... ........................... — 5 +13 a Pittsburgh........................................................... —43 — 11 +110 Toledo.................................................................. —24 + 3 +40 Other Cities........................................................ —24 — 3 +52 District................................................................. — 30 — 6 +-66 CHAIN STORES* Drugs— District (5).......................................... +17 +16 a Groceries— District (4).................................... +26 +33 a WHOLESALE TRADE** Automotive Supplies (11).............................. — 11 +7 +2 Beer (3)............................................................... +13 +21 —24 Clothing and Furnishings (3)....................... —0— +11 a Confectionery (4).............................................. +30 +27 a Drugs and Drug Sundries (4)..................... +13 +13 +33 Dry Goods (5).................................................. — 5 +26 +27 Electrical Goods (14)...................................... —27 — 1 —29 Fresh Fruits and Vegetables (6)................. +28 +13 +28 Furniture and House Furnishings (3) . . . . —51 a a Grocery Group (43)..................... *.................. + 8 +16 + 9 Total Hardware Group (31)......................... —0— +28 — 5 General Hardware (9) .............................. —11 +18 — 3 Industrial Supplies (11).............................. +16 +44 — 4 Plumbing & Heating Supplies (11)........ — 3 +11 —24 Jewelry (4)......................................................... +17 a a Machinery, Equip. & Sup. (exc. Elect.) (6). + 6 +25 +14 Meats and Meat Products (3)..................... +13 +29 +20 Metals (3).......... ................................................ — 14 — 15 a Paints and Varnishes (6)............................... — 15 + 1 +3 Paper and its Products (6)........................... —28 +15 a Tobacco and its Products (16)................... +8 +12 — 3 Miscellaneous (18)............................................ +10 +15 + 4 District—All Wholesale Trade (189)...... —0— +15 + 5 * Per individual unit operated. rtment of Commerce, Bureau of ** Wholesale data compiled by LI. S. the Census. a Not available. : firms reporting sales. ess Indexes i (1923-25 = 100)>) July July July July July 1942 1941 1940 1939 1938 Bank debits (24 cities). .................................... 140 120 92 80 73 21 32 47 48 46 Commercial Failures (Number)........................ 7 17 41 21 43 ” ” (Liabilities)..................... 71 92 88 67 64 Sales— Life Insurance (O. and Pa.)................... 86 85 67 63 59 ” — Department Stores (48 firms)............... ” — Wholesale Drugs (4 firms)................... 126 111 103 97 91 64 67 39 32 27 ” — ” Dry Goods (5 firms)......... 95 88 75 68 66 ” — ” Groceries (43 firms)........... ” — ” Hardware (31 firms).......... 142 142 89 71 61 ” — ” All (83 firms)....................... 105 100 74 64 60 ” — Chain Drugs (4 firms)*............................ 132 113 105 90 90 Building Contracts (Total)................................. 176 137 77 79 44 38 195 105 78 49 ” ” (Residential)....................... Production— Coal (O., W. Pa., E. K y.)........... 103 95 82 64 49 109 126 106 114 94 ” — Cement (O., W. Pa., E. Ky.) — Elec. Power (O., Pa., Ky.)**. . . . 293 260 209 188 166 ” —Petroleum (O., Pa., Ky.)**......... 121 109 108 119 119 ” —Shoes................................................ 130 135 113 113 100 * Per individual unit'operated. ** June 7 BUSINESS REVIEW damage. Total fourth district production amounted to an estimated 41 million bushels. This was the smallest output since 1934 and 24 percent under last year. Prices received by Ohio farmers averaged $1.06 per bushel for this year’s crop. This was a gain of about seven cents per bushel over 1941. Tobacco The excessive rains which lowered the local wheat crop also damaged tobacco. The August 1 estimate of fourth district tobacco production placed this year's output at 104 million pounds. This amount would be seven percent under last year and less than in any other year since 1936. Harvesting was begun earlier than usual and it was well under way in mid-August. Considerable damage from rust was reported. Oats Oats were one of the few crops to benefit from the relatively cool damp weather which prevailed during the growing sea son. Some damage occurred, however, before the grain was harvested. Fourth district production was estimated at 65 million bushels on August 1. This was the largest yield since 1931. Fourth District Business Statistics (000 Omitted) Fourth District Unless July % change Jan.-July % change Otherwise Specified 1942 from 1941 1942 from 1941 Bank Debits—24 cities.................33,789,000 +16 $24,784,000 + 17 Savings Deposits—end of month: 40 banks O. and W. Pa.............. $ 779,512 — 2 Life Insurance Sales: Ohio and Pa................................. $ 68,202 —23 571,193 Retail Sales: Dept. Stores—98 firms.............. $ 25,608 — 3223,473 + 13 Wearing Apparel— 16 firms....? 913 + 8 8,683 + 18 Furniture— 87 firms.....................$ 2,426 —30 21,998 — 6 426,048 Building Contracts—Total.......... $ 83,939 +28 +37 ” — Residential. $ 6,560 — 80 116,131 —15 Commercial Failures— Liabilities.? 295 —61 3,759 — 38 ”. ” — Number. . . 30 —36 309 — 26 Production: Steel Ingot—U. S............ Net tons 7,149 + 5 49,719 + 4 Bituminous Coal, O., W. Pa., 129,529 E. Ky.........................Net tons 18,580 + 8 +25 Cement—O., W. Pa., W. Va. bbls. 1,309 — 14 8,243 + 5 Elec. Power, O., Pa., Ky. ................................Thous. K.W.H. 2,462a +13 14,688b Petroleum—O., Pa., K y....bbls. 2,237a +11 12,900b ++136 Shoes...................................... pairs c — 4 c — 4 Bituminous Coal Shipments: L. E. Ports..................... Net tons 5,697 — 14 24,545 +17 a June b January-June c confidential Debits to Individual Accounts July 1942 133,785 Butler.............. 13,396 Canton............. 69,510 526,247 Cincinnati. . . . Cleveland........ 1,014,637 240,070 Columbus........ 114,176 50,040 Franklin.......... 4,771 Greensburg. , 10,967 18,045 4,977 Homestead, . Lexington........ 25,371 22,447 6,886 Middletown.. . 19,577 13,104 Oil City........... Pittsburgh. . . . . . 1,110,906 13,790 Springfield. . . . 26,061 12,257 Steubenville. . . 222,643 21,499 33,657 Youngstown. . . 73,180 12,043 3 814,042 (Thousands of Dollars) % change from Jan.-July 1941 1942 +32.8 821,674 — 1.3 92,613 +21.1 439,227 + 18.0 3,482,712 + 17.0 6,522,400 + 3.9 1,672,313 + 12.8 762,759 +14.7 328,697 +21.9 32,825 + 0.7 74,277 +11.2 122,976 —0— 33,077 + 15.0 193,420 +19.5 144,067 — 2.0 47,807 +28.3 131,949 + 1.5 93,770 +18.1 7,301,045 95,081 + 19.7 +12.8 172,726 82,185 — 4.8 1,372,521 +22.1 132,994 + 19.6 222,527 — 4.9 + 2.1 498,292 + 7.0 79,580 + 16.3 24,953,514 Jan.-July 1941 642,880 85,220 364,546 2,929,389 5,486,438 1,471,310 652,295 265,073 27,231 63,079 102,556 29,587 172,335 121,798 44,849 103,782 76,537 6,364,365 79,075 150,885 ‘ 79,422 1,128,104 110,534 233,590 447,954 71,137 21,303,971 % change from 1941 + 27.8 + 8.7 + 20.5 + 18.9 + 18.9 + 13.7 + 16.9 + 24.0 +20.5 + 17.8 +19.9 +11.8 + 12.2 +18.3 + 6.6 +27.1 +22.5 +14.7 + 20.2 +14.5 + 3.5 +21.7 +20.3 — 4.7 +11.2 + 11.9 + 17.1 THE MONTHLY BUSINESS REVIEW 8 Summary of National Business Conditions By the Board of Governors of the Federal Reserve System Industrial activity increased further in July and the first half of August, refleeting continued growth in output of military products. Retail sales increased during this period, following a decline, on a seasonally adjusted basis, during the first half of the year. Production Industrial output rose further in July and the Board’s seasonally adjusted index advanced from 176 to 180 per cent of the 1935-39 average. Activity continued to increase in the machinery and transportation equipment industries and in other lines producing war products. Shipbuilding expanded fur ther and 71 merchant vessels were delivered in July. These had an aggregate dead' weight tonnage of 790,300 tons—an all-time record for a single month’s deliveries. In the automobile industry armament production increased in July to an annual rate of about $5 billion as compared with a peak year’s civilian output of $4 bil~ lion. Iron ore shipments down the Great Lakes reached a new record of 13.4 million gross tons in July and plans were announced for improving rail and harbor facilities so that shipments next season could exceed considerably prospective ship ments of 90 million tons or more this year. Last season 80 million tons were time of production, adjusted for seasonal variaHon, 1935-39 average = 100. Latest figures shipped. shown are for July, 1942. In most other lines of manufacturing and mining, activity in July was main tained at about the levels prevailing in June. There were reports that some plants were forced to curtail operations owing to lack of certain materials, and further investi gations were undertaken to determine present and prospective availability of mate rial supplies. Value of construction contracts awarded in July showed a reduction of about 20 per cent from the record level reached in June, according to figures of the F. W. Dodge Corporation. Declines were reported for most types of construction; awards for manufacturing buildings, however, increased further and constituted about onethird of total contracts let. As in June, publicly-financed work amounted to over 90 per cent of the total. In the first seven months of this year, awards were about 50 per cent larger than in the corresponding period last year. Distribution Distribution of commodities to consumers declined less than seasonally in July. The Board's adjusted index of department store sales, which had dropped from a peak of 138 per cent of the 1923-25 average in January to 104 in June, rose to 117 and sales by variety stores and mail-order houses also advanced, after allowance Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 1923for usual seasonal changes. In the first half of August department store sales in 23 average = 100. Latest figures shown are for creased by more than the usual seasonal amount. July, 1942. Railroad freight-car loadings increased more than seasonally in July and rose somewhat further in the first half of August. Shipments of miscellaneous merchan dise, which include most manufactured products, and of forest products continued to rise. Grain shipments also increased but the rise was less than is usual at this time of year. Loadings of coal declined somewhat from the high level of other recent months. Commodity Prices Yy. Wholesale and retail food prices advanced further in July and the early part of August, while prices of petroleum products on the East Coast were reduced, and those for most other consumer goods continued to show little change. In raw material markets price declines occurred for cotton, inedible fats and oils, and some scrap items, particularly nonferrous metals and paper. Demand for materials used more exclusively for war products continued strong and prices of these ma terials were sustained at ceiling levels. Federal subsidies were arranged for additional commodities and Government ... war risk rates on shipments of imported commodities were reduced. These actions were taken to bring about price reductions, as in the case of petroleum products Bureau of Labor Statistics’ weekly indexes, 1926 on the East Coast, and to prevent further price increases, particularly for imported average = 100. Latest figures shown are for week commodities. About 30 new maximum price schedules were announced, chiefly for ending August 15, 1942. miscellaneous civilian products, and in some instances these schedules permitted substantial increases over ceilings set by the General Maximum Price Regulation. Bank Credit Excess reserves of member banks declined by about 200 million dollars in the four weeks ended August 19. An increase of about 400 million dollars of currency in circulation during this period was paralleled by a corresponding amount of Re serve Bank purchases of Government securities. There was an increase of 300 million dollars in required reserves resulting from a growth in deposits at member banks. Excess reserves in New York and Chicago reached the lowest levels since the third quarter of 1937. Effective August 20 reserve requirements on demand deposits at central reserve city banks were reduced from 26 per cent to 24 per cent by action of the Board of Governors of the Federal Reserve System. This had the effect of con verting over 400 million dollars from required to excess reserves. Member banks in leading cities continued to increase their holdings of United States Government securities, particularly in the week ended August 19, in which de livery of the new HVz months’ % per cent certificates of indebtedness was made. Wednesday figures. Required and excess reserves, Loans, which had declined during the second quarter of the year, have recently but not the total, are partly estimated. Latest fig shown little change. ure* shown are for August 12, 1942. INDUSTRIAL PRODUCTION DEPARTMENT STORE SALES AND STOCKS WHOLESALE PRICES A OTK Efl* _____ / I — COMMODITY i 1 |-v v w r ^ w i PRODUCT* ■ MEMBER BANK RESERVES
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