The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Busin Fourth Federal Reserve District Federal Reserve Bank of Cleveland Covering financial, industrial and a g ric u ltu ra l co n d itio n s V ol. 25 Cleveland, O hio, August 31, 1943 FINANCIAL ^ billions has been set by the • Secretary of the Treasury for the Third War oan rive j^oan j ) rjve beginning September 9. This amount is to be raised by selling Government securities to individuals, corporations, insurance companies, savings banks, and other investors (except banks receiving de mand deposits). It is somewhat less than the total of $18.5 billions obtained in the Second Drive, but it ex ceeds by $7 billions the goal set for nonbank investors in that drive and by $2.5 billions the amount actually raised from that group. The setting of a smaller over-all goal than was actually raised in the Second Drive is not prompted by the fact that the cost of the war is contracting in any way. It is now fluctuating around $7 billions per month. What has altered the situation is the fact that this drive is to be ex clusively a nonbank drive whereas commercial banks were included in the previous one. Although the securities offered during the drive are the same as those offered in the preceding drive, none will be available for subscription by commercial banks for their own account, and they are requested to refrain from purchasing eligible securities from other subscribers during the drive. Bank participation in war financing, it has been an nounced, henceforth will be confined to the more tradi tional function of extending credit during the interim between drives. Shortly after the public drive terminates, a two percent bond and a % percent certificate of in debtedness will be offered to commercial banks for sub scription for their own account. In other words, the task of raising the presently needed $15 billions falls entirely upon nonbanking investors, large and small, which last April purchased $12.5 billions. The problem confronting volunteer workers for the Third Drive is to locate either new purchasers or those who will be willing to increase their subscriptions over the amount taken in April to the extent of $2.5 billions. War costs have not diminished. During the present fiscal year, which began July 1, 1943, Government ex penditures are expected to amount to $100 billions for the prosecution of the war. Net receipts are expected to Th‘ rl W j No. 8 amount to only about $38 billions under present legisla tion. In the absence of additional revenue, somewhere around $70 billions probably will be borrowed during the year. The methods used to raise this huge total are of great importance. It is essential to borrow as much as possible out of existing deposits or from current income and as little as possible through the expansion of bank credit. No longer is the need for funds the dominant factor in war financing; the source is equally important. Financ ing the war by borrowing from commercial banks entails not saving, but the creation of new credit which explains the rapid rise in recent months in both bank deposits and probably to some extent in money in circulation. This continuous increase in the supply of money intensifies the inflationary forces, so long as this method of financing is permitted and the war economy further limits the goods available for purchase. By requesting $15 billions from individuals, partner ships, and corporations at this time it is felt that the SECOND WAR LOAN DRIVE Subscriptions by Non-Banking Investors Noo-Finoncial Corporations 2M/% Bonds & Institutions 2% Bonds 282 123 Ins. Co. & Mut. Sav. Bks. 2.132 228 Non-Fin. Corp. 504 1.983 246 Individuals & Partnerships 216 Certificates 540 I x' T «, Notes Series E 0 0 1,242 0 789 1,520 472 132 A Local Government* and Institutions Series F & G 0 620 0 0 3.603 O 242 5,037 1.473 425 3,290 Total Subscriptions b y N o n-B a n k in g Investors— Second W a r Loan (A p ril 1943) 12.550 *Not offered to ind ividuals in 3rd W a r Loan D rive. Source; Treasury Bul letin, M a y 1943. 2 THE MONTHLY BUSINESS REVIEW remaining expendable incomes will be less potent and more tractable. By confining the sale of securities to non commercial banking outlets no new deposits will be cre ated. To the extent that individual purchasers pay foi bonds with pocket or hoarded money, circulation figures might decline. It is extremely important that the Third War Loan Drive be an unqualified success. Admittedly there is little danger that war production will be hampered by lack of money. Bank deposits can always be created, but they should be held to an absolute minimum and only used as a last resort. The problem confronting the managers of the Third War Loan Drive is depicted in the accompanying chart. The six upright bars, beginning at the left, represent the volume of subscriptions for the various types of se curities obtained from all so-called nonbanking investors (including mutual savings banks) during the April drive. Each bar is subdivided to indicate relative amounts taken by each type of investor. The long-term 2%’s were sold in the largest quantity; and the Series F and G War Savings Bonds, in the smallest. The bar shown on the extreme right, denoted by ques tion marks, indicates the magnitude of the additional subscriptions required over the April non-banking sales. It does not indicate the probable source of such funds, except that the money must come from one of the four classes of investors shown. This bar is nearly four times as large as the adjoining one which measures total April sales of Series F and G War Savings Bonds. Last April, approximately $1.5 billions Series E bonds were purchased by small investors. It is not likely that this source will absorb $4 billions this time. Series C Treasury savings notes were purchased almost exclusively by corporations partly for tax anticipation pur poses and partly for investment. Corporate taxes will be come still larger and corporations have substantial funds that could be invested in series C tax notes, but it is un likely that the $2,450,000,000 addition can be sold entirely to such investors. The same kind of enterprises also took a substantial proportion of the short-term 7/s% certificates of indebted ness. It is not known to what extent corporations’ port folios of such paper can be expanded. The largest buyers of longer term 2% and 2V2% bonds were the life insurance companies and mutual savings banks. Investable funds of such institutions do not fluc tuate widely from month to month. Their net cash re ceipts from contractual operations are relatively steady and predictable. Thus, companies whose chief business is the writing of life insurance have been given until No vember 1 to make payment for their subscriptions permit ting October premium receipts to be anticipated. Nevertheless, no single category of investor can be ex pected to bear the entire added load as measured by the bar on the right. On the other hand, by spreading the $2,450,000,000 increment pro rata, or thereabouts, over the entire field, only a 20% increase in subscriptions is required to meet the minimum goal. To the extent that each category of buvers assumes its proportionate share of the added load, the distance down the inflation road will be shortened. Financial Modest expansion in commercial and real estate Trends loans has been more than sufficient to counter act the continuing contraction in “all other” loans, with the result that total loans in recent weeks have shown a small net gain from the war-time lows (to date) established in late June. Otherwise, trends in commercial banking affairs have been rather featureless in the fourth district. New Member Banks The Rossford Savings Bank, Rossford, Ohio The Miners & Merchants Bank, Smithfield, Ohio MANUFACTURING, MINING Iron and Steel According to estimates of the War Production Board, there will be approximately four million fewer tons of carbon steel available during the fourth quarter than has been requested by the 16 Claimant Agencies operating under the Controlled Materials Plan. Consequently, no steel will be available for any manu facturers other than the most essential civilian industries and producers engaged in direct war production. Re quests of the Claimant Agencies aggregated 19,500,000 tons, while the supply was estimated at 14,500,000 tons. Allocations to the Army, Navy, Maritime Commission, and Aircraft Resources Control Office were approximately nine percent less than the amount requested, while other Claim ant Agencies had their requests cut bv about 17 percent. However, the Office of Defense Transportation was granted all the steel it had asked for in connection with the construction of railroad facilities. The rapid deprecia tion of railroad equipment during recent years made the allocation of additional steel necessary if the industry is to continue to perform adequately its important task in moving war materiel. Steel mills again were operating at near-capacity levels during the last two weeks of July and in early August as furnaces, closed down during the coal stoppages, re sumed onerations. Production of ingots during July to taled 7.376,000 net tons, a rise of five percent from the low June figure, but more than 200,000 tons below the same month of last year. Reduced onerations during the first week of July, however, prevented the month’s output from equaling that of May, the last previous month in which operations were not materially disrupted by a coal strike. Pig iron production totaled 4,972,000 net tons, lower than any 1943 month except February (only 28 days) and June (coal strike). Plate production during Julv rose slightlv from June, but was lower than Julv 1942. Almost 1,090.000 tons were produced, with shipbuilding comprising the largest single demand factor. The shipbuilding program is also commencing to play a more important part in maintaining the activity in structural steel fabricating plants. Such producers now are devoting an increasing amount of their facilities to complicated sub-assemblies for ships, making use of their excess capacitv left idle bv the completion of the construction phase of the war program. Bituminous coal mines in the fourth district again have reached full scale operations with weekly pro duction averaging approximately the same volume as that of February and March. A few miners straggled back to work during the third week of July, after nearly three THE MONTHLY BUSINESS REVIEW months of uncertainty within the industry. The effects of the recent work stoppages upon bituminous coal pro duction are shown in the accompanying chart. The three general stoppages are shown clearly, one occurring dur ing the first week of May; the second in the first week of June; and the third about three weeks later. Many un authorized stoppages prevented a quick return to full pro duction after the first and third strikes. July output, however, exceeded all previous 1943 months except March. Mines located in Ohio, western Pennsylvania, and eastern Kentucky produced 19,263,000 tons in July, almost four percent more than during the same month of last year. The effect of unauthorized stoppages early in the month was overcome by keeping most mines operating over the Fourth of July holiday and by the general adoption of the 48-hour week. Not withstanding the erratic conditions in the industry this year, the nation’s aggregate output prior to August 8 ex ceeded that of the same period in 1942 by approximately five million tons, indicating that a fuel shortage may be averted if production is not interrupted later in the year. Stocks held by retailers and industrial consumers on July 1 were also above those on the same date of last year, although consumption during June exceeded production by approximately six million tons, causing many con sumers to draw heavily upon their inventories. Total coal stocks on July 1 amounted to 74 million tons, or approxi mately 52 days’ supply. Such inventories, however, were unevenly distributed. During the late spring and summer months coal stocks are usually replenished, the reduction in June being contrary to the usual seasonal pattern. Dur ing the remainder of the summer and this autumn, there fore, consumers may be expected to add considerably to their stocks, not only to prepare for the winter months, but also to assure a margin of safety should there be further interruptions in coal production this autumn. Also important in averting a coal shortage is the prob lem of transporting the coal from the mines to the con sumers. In the past, lake boats have handled a substan tial volume of coal cargoes although the emphasis on iron ore and the unfavorable weather conditions this year have resulted in a substantial decline in coal shipments. Only 21 million tons were handled by lake vessels during the first seven months of this year, whereas last year 25 mil lion tons were moved during the same period. The deficit must be transported by the railroads placing a further load upon their already overburdened facilities. 3 Other Almost without exception the major probManufacturing lem of other fourth district manufacturers continues to be the shortage of competent manpower. Some producers found a partial solution dur ing the summer months by hiring high school students, but with the opening of the schools in September they again will be faced with a critical labor problem. The difficulty encountered in obtaining raw materials, at pres ent, is not nearly as great, with many concerns using sub stitutes for one or more of their important supplies. The machine tool industry continues to search for new war products which they can make with their existing equipment. Order backlogs are growing smaller, although many producers of special purpose tools report a consider able volume of new orders. Output of machine tools, as reported by the National Machine Tool Builders Associa tion, declined during June to less than $109 millions. This is the first time since the start of the Defense Pro gram that current production was below the same month of the previous year. In June 1942 output of machine tool builders aggregated $111 millions. Rubber processors located in northern Ohio now are engaged in producing all types of munitions, many of which bear little resemblance to the former rubber prod' ucts made by the industry. Production of synthetic rub ber now has reached a point where the industry again is preparing to produce automobile and truck tires in large volume, although many difficulties must be worked out before civilian consumers can expect new tires. It takes a substantially longer time to make finished products of synthetic rubber than is the case with natural rubber. For this reason, to complete a given amount of synthetic rub ber products requires a substantially greater expenditure for plant and equipment, which may be difficult to ob tain, and a larger labor force than would be necessary if they were to be made of natural rubber. Moreover, the recruiting of expert tire builders is expected to be particularly troublesome, especially in view of the earlier transfers of this type of skilled worker to other war pro duction and the comparatively long period necessary to train men for such operations. Current production of civilian tires also is limited by a shortage of cotton fabric resulting from a manpower problem at cotton mills. There was little change in the stone, clay, and glass in dustries during July. Manufacturers of ceramics continue to report a large volume of new orders from both civilian and military consumers. Order backlogs are so large that many producers cannot promise shipment before the mid dle of 1944. Production of both plate glass and window glass rose during July, although window glass output re mained considerably below a year ago. Plate glass pro duction during the month totaled 6,416,000 square feet compared with 4,194,000 square feet a year earlier, while window glass output rose over June to 1,096,000 boxes in July (one box equals 50 square feet) against 1,274,000 boxes produced in July 1942. Paint sales during June, as indicated by Department of Commerce reports covering 680 concerns, were higher than during any post-depression month except May 1941 when residential construction was at a high level. Both trade sales and industrial sales contributed to the increase, with industrial sales setting a new record for recent years. This usual seasonal rise was less evident in 1942, so that sales THE MONTHLY BUSINESS REVIEW 4 for the early summer of 1943 were substantially above a year ago. The recent increase in the allotment of wool for civilian apparel is to a considerable extent overshadowed by the shortage of manpower, particularly at weaving mills, which has been more important in limiting the production of clothing than the scarcity of materials. Production of uniforms for the armed forces, however, continues to ac count for a major part of fourth district apparel manu facturers’ activity. Fourth district shoe production declined somewhat in Tuly and was 28 percent lower than in the same month of 1942. The situation in paper and paper products industries showed no change during the past month. A shortage of labor for logging operations continues to be the major deterrent to greater output. Lake With the help of somewhat more favorable Shipping weather and eleven additional vessels, lake ship pers were able to move more iron ore from the upper lakes during July than in any previous month. Near ly 13,589,000 tons were loaded into vessels, 15 percent more than last month. The record tonnage, however, did little to offset the nine million-ton decline in this sea son’s shipments compared with a year ago. There was a noticeable increase in the loadings of Michigan ore at the ports of Marquette and Escanaba. Shipments from these harbors, at least a day closer to the lower lakes, were 21 percent higher than in the same month of last year, while slightly less ore was loaded at Wisconsin and Minnesota ports than in July 1942. With little change in ore consumption, stocks on hand at lower lake ports and furnaces rose six million tons to 32,389,000 tons on August 1. These were still about five million tons below a year ago. With the steel expansion program somewhat behind schedule, however, ore require ments as originally estimated have been revised downward. As a result, the season’s quota for ore shipments also has been reduced and steel officals are not particularly con cerned over a possible shortage of this raw material devel oping next winter. TRADE Retail The issuance of Regulation W two years ago for the purpose of regulating the use of consumer cred it has contributed to a liquidation of credit outstanding at reporting furniture and department stores in this dis trict. Another factor causing this downward movement was the increased earnings of many consumers. As shown on the accompanying chart, the dollar volume of accounts receivable at furniture stores on July 31, 1943, declined 39 percent from the same date last year and was 53 percent smaller than that of September 1, 1941, the ef fective date of the Regulation. Practically all accounts outstanding at furniture stores at that time were affected by the restrictions since the greatest portion of their busi ness was on an instalment basis and consisted of merchan dise covered by the terms of the original order. The sharpest decline in department store credit oc curred last year, when Regulation W was amended to in clude more tvpes of goods sold by such retailers and to provide for the default of regular charge accounts when articles are not paid for in full within 40 days from the end of the month during which the article is purchased. At the end of July 1943 department store receivables dropped to the lowest point in recent years. Accounts outstanding on that date were down 16 percent irom those of July 31, 1942, and down 40 percent compared with the volume outstanding two years ago. Instalment receivables were 47 percent smaller, while the volume of 30-day accounts was two percent greater than that of last year. Restrictions on these regular accounts did not prove to be too great a departure from the former habits of many consumers. Moreover, regular 30-day charge sales dining recent months were at approximately the 1942 level, while instalment sales during this period showed a de cline compared with a year ago. There has been a marked improvement in collections on department store receivables. During July of this year 5b percent of the accounts outstanding on the first of the month were paid during the month, compared with 49 percent last year and 36 percent two years ago. In stalment collections last month amounted to 32 percent of such accounts receivable on July 1. The ratio was 23 percent during the same month a year ago and 18 percent for July 1941. Payments on regular charges during July of this year represented 63 percent of such accounts re ceivable the first of the month. This ratio is only slightly larger than that of 62 percent reported for July last year, but considerably greater than the 47 percent for the same month of 1941. The seasonally adjusted index of fourth district depart ment store sales advanced nine points during July to 170 percent of the 1935-39 average. .This was the highest since February of this year, and was the third consecu tive month that the index rose. Total July sales were 18 percent greater than those of the same month a year ago and were the largest for any similar period on record. Substantial year-to-year gains were experienced by stores in all leading cities of the district. Sales in Springfield were up 42 per cent, Youngstown and Columbus 18 per cent, Toledo 27 percent, Akron and Canton 21 percent. Somewhat smaller gains were reported by retailers in Cleveland, Pittsburgh, and Cincinnati. Heavy sales of women’s wear continued to be respon sible for the record volume of business that stores did last month. Consumers purchased an unusually large amount of fall and winter clothing. Sales of coats and suits were up 60 percent compared with July 1942, and over twice as many furs were sold. Dress sales were 40 percent greater. Departments selling accessories, with the ex ception of hosiery and shoes, also did considerably more business this July than last. Sales of neckwear and scarfs THE MONTHLY BUSINESS REVIEW were up 60 percent, leather goods 50 percent, millinery 38 percent, and underwear 33 percent. Piece goods depart ments sold 37 percent more merchandise last month than they did during July 1942. Sales of men's and boys’ wear and housefurnishings also were larger compared with those of last year. However, these increases were not as great as those the stores re ported for their women’s wear departments. Housefur nishings sales during July were 17 percent larger than they had been in the corresponding month last year. Sales of furniture, floor coverings, draperies, and domestics were all considerably higher. However, these large gains were offset somewhat by an increase of only one percent for housewares and a decrease of 56 percent for major house* hold appliances. Departments selling men’s and boys’ apparel did only four percent more business this July than last. During August retailers in this area did not experience year-to-year gains in their business as large as those re ported for previous months. During the three weeks ended August 21 sales were up nine percent from those oi the corresponding period a year ago. This increase is somewhat smaller than that of 18 percent reported for July sales and 20 percent for June. Despite the record high level of sales during July, in ventories at the end of the month were seven percent larger than they had been the previous month-end. This in crease was coxtraseasonal and the adjusted index rose to 161 percent of the 1935-39 average, 28 percent less than the peak of July last year but the highest since October 1942. Apparently stores are receiving delivery on a large portion of their outstanding orders, which on July 31 were almost three times as large as those of the same date a year ago. Wholesale Sales at 176 wholesale companies during July were up three percent compared with those of the same month last year, according to Department of Commerce reports. Firms selling furniture, drugs, paper and paper products reported that their volume was con siderably larger this July than last. Sales of hardware, electrical goods, and meats were smaller. Accounts outstanding on July 1, 1943, were down 16 percent from those of the same date last year. AGRICULTURE Farm During 1942 farmers in the Fourth District Mortgage States reduced their total farm mortgage inDebt debtedness by about $39 millions. This total represents a decrease of approximately six per 5 cent compared with the nation-wide drop of about five per cent. The decline was not a new development. Instead it represented merely an increase in the speed with which farm mortgage debt has been dropping trom the all-time high in the early Twenties. Among the four States of the district the reduction was greatest in Ohio where farmers cut their mortgage debt load by about $17 millions, or eight percent. The present downward trend in farm mortgage debt presents an interesting contrast to the situation which prevailed during the first world war (see chart). In Ohio, for example, during the first four years of World War I farm mortgage debt increased about 23 percent. In the United States the increase was about 24 percent during the same period. Although the present trend is exactly the opposite of that which took place during the first war, it is important to keep in mind that the most spec tacular rise in farm mortgage debt occurred after the Armistice in 1918. As pointed out above, the national decline in total farm mortgage debt in 1942 was about five percent. There was, however, considerable variation among the various lending agencies as to the amount of reduction in their farm mort gage holdings. On a nation-wide basis the percentage re ductions for the various lenders were: insured commer cial banks— 11 percent; Federal land banks and Land Bank Commissioner— 10 percent; life insurance companies — 1 percent; individuals and others— 3 percent. These data, of course, are only rough indications of the amount of cash principal payments since the decline is net reduc tions, i.e., the excess of principal payments over the amount of new mortgage contracts. Declining farm mortgage indebtedness may indicate either favorable or distressed agricultural conditions. Dur ing 1933, for example, there was a relatively large drop in farm mortgage debt owing to numerous foreclosures and related distress transfers. Recently there has been relatively little forced liquidation of farm mortgage debt. Therefore, it is obvious that the current drop in mortgage debt is a manifestation of high farm commodity prices and generally favorable agricultural conditions. Despite the fact that many farmers made substantial reductions in their mortgage debt last year it cannot be assumed that all farmers were in a safer debt position at the end of the year than at the beginning. The Bureau of Agricultural Economics reports that the volume of farm mortgages recorded in 1942 amounted to 11 percent of the mortgage debt at the beginning of the year. If these new mortgages reflect the increase in farm land values which are reported in many areas then undoubtedly many farmers are assuming a heavy mortgage obligation. Livestock The following summary of crop and livestock and conditions was assembled from data available Crops during the third week of August and is based mainly on reports issued by the Bureau of Agri cultural Economics, U. S. Department of Agriculture: Hogs— Production this year undoubtedly will be the largest on record. The annual June survey forecasted a fall pig crop of twice the 1924-33 average. The War Food Administration has requested that growers hold their fall production in line with feed supplies. During late July a ceiling price of $14.75 per cwt. at Chicago was 0 THE MONTHLY BUSINESS REVIEW announced and the price guarantee of $13.75 for butcher hogs weighing 240-270 pounds was revised to include weights of 200-270 pounds until March 31, 1944. The Ohio hog-corn ratio as of July 15 was 12.8 compared with 16.8 a year earlier. Cattle— Movement of livestock to slaughter during the next few months is expected to be greater than seasonal in contrast to the reduced slaughter for the first half of 1943. Inspected slaughter in June was smallest since 1915. Despite light receipts cattle prices have dropped during recent weeks. Marketings of stocker and feeder cattle have also met a dull market recently but are selling higher relative to last year than are slaughtered steers. The number of cattle on feed for market in the 11 Corn Belt States on August 1 this year was 11 percent smaller than a year earlier. The decrease was exceptionally pronounced in Ohio where it was esti mated that the number of cattle on feed was only 80 percent of the number a year ago. Lam bs— The 1943 lamb crop, estimated at about 31 million head, is five percent smaller than the 1942 crop and three percent larger than the 1932-41 average. The reduction from last year was a result of a slightly smaller number of breeding ewes and a decrease in the percentage lamb crop (number of lambs saved per 100 ewes) which dropped from 86 to 83. Wool— The wool clip in 1943 is estimated at 377 mil lion pounds, which is four percent under the record of 1942 but three percent above the 1932-41 average. Prices received by farmers this year are the highest since 1920. April-June United States farm prices averaged 41.3 cents per pound and were roughly 85 percent above the aver age price for the 1939 clip, before prices were affected by the strong wartime demand for wool. F eed — In relation to expected feed-consuming live stock numbers, the prospective 1943-44 supply of feed grains is about 20 percent smaller than the supply last year and about 14 percent below the 1937-41 average. The to tal supply of principal protein feeds in relation to the live stock population will likely be about 12 percent under last year. However, the 1943 hay crop is expected to be above average and together with the carry-over will probably produce a hay supply for 1943-44 of 113 million tons, the second largest supply in 25 years. Dairying— Milk production during the first half of 1943 was about the same as in the first six months of last year. However, during the last half of 1943, produc tion is expected to decline owing to constant price ceilings, the possibility of a scarcity of feed grains in deficit areas, and the reduced supply of high protein feeds per animal unit. Milk consumption during the April-June period was five percent greater than in the first quarter of the year and 10 percent greater than in the same period last year. With increased consumption and the possibility of a smaller supply of fluid milk, the production of manufac tured milk products in the last half of 1943 may continue considerably smaller than in the corresponding months in 1942. W heat— During the month of July the indicated total wheat production was raised five percent, to 835 mil lion bushels. Last year’s production was 981 million bushels and the 1932-41 average was 738 million bushels. July wheat prices, except for hard red spring wheat, were above the loan rate for the first time since the loan pro gram started. On July 1 the loan rate for the 1943 crop was increased one cent over the rate announced in June to an average at the farm of $1.23. Excluding the U.S.S.R. and China, indications point to a 1943 world wheat pro duction of about 12 percent below the 4.2 billion bushels estimated for 1942. Corn— Despite considerable recovery, corn in the fourth district as of August 1 was still somewhat behind schedule owing to delays in planting and slow growth in the early part of the season. In Ohio, forecasts for corn are now placed at about 145 million bushels, which is 22 percent less than last year’s production but slightly over the 1932-41 average. Prospects in the fourth district are poorest in northwestern Ohio where damage from water has materially reduced expectations. Nationally the corn crop is expected to be slightly smaller than last year, but larger than in any other year since 1932. The indicated yield per acre is 30.5 bushels compared with the 10-year (1932-41) average of 24.9 bushels. Oats— Although the prospects for oats fell sharply dur ing the month of July, the national estimated crop is still expected to be 17 percent above the 10-year average. In Ohio, however, the oats crop is expected to be only about 35 million bushels, which is 13 percent below the 10-year average. The yield per acre in Ohio is expected to average about 28 bushels, or 13 bushels under last year’s average. Tobacco— As of the middle of August considerable drought injury was noted in the burley belt. As a result some cutting had to be started although the tobacco was still small. The burley tobacco situation in general is rather spotty. Authorities state that some fields in Ken tucky may make 1,200-1,500 pounds per acre but there are others which will not make more than 500 pounds un less there is considerable late season growth. CONSTRUCTION Despite a slight rise in new residential building con tracts awarded during July, total fourth district awards of construction contracts, as reported by the F. W. Dodge Corporation, fell sharply to only $17,408,000. This was $6 millions less than during June and only 21 percent of the volume initiated during July 1942. Nonresidential construction accounted for the larger part of the total, almost $10 millions being so classified. Assuming that this region is not unlike the remainder of the nation, about 80 percent of the total war expansion was complete on July 1. The Chairman of the War Pro duction Board has reported that by the end of June $12,038 millions out of the $14,582 millions appropriated by the Government for war plants had already been spent. Facilities for producing ammunition and explosives were 95 percent complete, leading all other categories. The iron and steel expansion program, particularly important in the fourth district, was reported to be 75 percent fin ished. 7 THE MONTHLY BUSINESS REVIEW F o u rth D istrict B usiness Statistics (000 omitted) Fourth D istrict Unless Ju ly % change Ja n .-Ju ly % change Otherwise Specified 1943 from 1942 1943 from 1942 Bank D ebits— 24 c itie s .............. 34,412,000 +16 329,246,000 + 1 8 Savings Deposits— ^nd of m onth: 39 banks O. and W. P a........... 3 881,318 +13 ............. Life Insurance Sales: Ohio and P a ................................ 3 85,384 +2S 577,322 + 1 Retail Sales: Dept. Stores— 97 firm s........... 3 30,706 +18 249,044 +11 Wearing Apparel— 16 firm s. . . 3 1,213 +32 11,004 + 29 Furniture— 78 firm s...................3 2,658 +27 19,501 -0 Building C ontracts— T o t a l . . . . 3 17,408 — 79 159,082 — 63 ” -— R esid en tial. 3 7,636 +16 57,178 — 51 Commercial Failures— L iab ilities................................ 3 550 +86 2,195 — 42 Commercial Failures— Number. 11a — 62 120a -— 61 Production: Pig Iron— U. S..............N et tons 4,972 — 1 35,296 — 11 Steel Ingot— U. S .........N et tons 7,376 + 3 51,228 + 3 Bituminous Coal, O., W. Pa., E. K y ..............................N et tons 19,263 + 4 125,497 — 3 Cement— O., W. Pa., W. Va., .................................................bbls. 1,089b — 18 5,895c — 15 Elec. Power, O., Pa., K y ., ................................... Thous. k.w.h. 2,834b + 1 5 16,607c +15 Petroleum— 0 ., Pa., K y .. bbls. 2,317b + 4 13,182c + 2 Shoes ................................... pairs d — 26 d 18 Bituminous Coal Shipments: L. E. P o rts.....................Net tons 5,963 + 5 20,680 — 16 a Actual number c January-Ju ne b June d Confidential Indexes of D ep artm en t Store Sales S A L E S: Akron ( 6 ) ........... Canton ( 5 ) .......... Cincinnati ( 9 ) . . , Cleveland (1 0 ). . Columbus (5 ). . . Erie ( 3 ) ................... Pittsburgh ( 8 ) ... Springfield ( 3 ) . . . Toledo ( 6 ) ......... . Wheeling (6 ). . . . Youngstown ( 3 ) . D istrict (97) . . . . ST O C K S : D istrict ( 5 1 ) . . . . *Revised Daily Average for 1935-1939 = 100 Adjusted for W ithout Seasonal Variation Seasonal A djustm ent June Ju ly Ju ly Inly June Ju ly 1943 1942 1943 1942 1943 1943 170 183 127 126 145 149 100 178 126 99 137 124 187 216 154 151 173 171 139 204 155 124 160 154 139 151 108* 108 113 123 88 128 99* 85 107 105 200 229 172 166 185 191 153 240 178 135 187 170 194 229 168 161 188 184 134 200 165 140 167 161 163 189 153* 143 145 158 135 174 139* 116 146 143 143 134 198 161 144 223 Debits to Individual A ccounts July1943 187,671 A kron .............. B u tler.............. 15,819 76,506 C an to n ............ 594,643 Cincinnati . , 1,200,533 Cleveland, , . 289,258 Columbus. . . . Cov.-N ew port. . 23,772 144,413 D ay ton ............ E r ie .................. 63,913 F ran k lin ......... 5,317 11,363 G reensburg.. . 20,144 Hamilton , . . 5,167 Homestead, , . 28,394 Lexington. , . . 23,465 L im a................ Lorain .............. 7,778 Mansfield 18,902 20,415 Middletown. . . . 15,830 Oil C ity P ittsb u rg h . . . 1,260,426 P o rtsm o u th . . . . 10,918 Sh aro n ............ 14,930 Springfield , . 32,161 12,477 Steubenville. . . . 240,779 Toledo.............. 24,468 W arren............ Wheeling. . . . 42,096 86,083 Youngstow n.. . . Zanesville , . , 14,187 4,491,828 T o ta l........... (Thousands of Dollars) % change Ja n .-Ju ly from 1942 1943 1,179,467 + 4 0 .3 + 18.1 98,519 503,534 + 10.1 + 1 3 .0 3,997,095 7,785,818 + 18.3 + 2 0 .5 1,970,482 + 6 .7 + 2 6 .5 965,078 407,709 + 2 7 .7 + 1 1 .4 35,012 + 3 .6 72,583 + 1 1 .6 137,976 + 3 .8 31,668 + 1 1 .9 238,116 + 4 .5 164,261 + 1 3 .0 48,149 + 7 .5 1381663 + 4 .3 + 2 0 .8 109,577 + 13.5 8,459,165 + 1 0 .7 101,415 + 8 .3 214,057 + 2 3 .4 + 1 .8 87,218 + 8 .1 1,594,932 + 1 3 .8 165,151 + 2 5 .1 268,720 + 1 7 .6 557,051 + 1 7 .8 89,337 + 16.3 29.420,093 Ja n .-Ju ly 1942 821,674 92,613 439,227 3,482,712 6,522,400 1,672,313 762,759 328,697 32,825 74,277 122,976 33,077 193,441 144,067 47,807 % change from 1942 + 4 3 .5 + 6 .4 + 1 4 .6 + 1 4 .8 + 1 9 .4 + 1 7 .8 + 2 6 .'5 + 2 4 .0 + 6 .7 — 2 .3 + 1 2 .2 — 4 .3 + 2 3 .1 + 1 4 .0 + 0 .7 13L949 93,770 7,301,045 + ' + 6 .6 + 2 3 .9 + 6 .1 + 1 6 .2 + 2 4 .2 + 2 0 .8 + 1 1 .8 + 12.3 + 1 7 .9 9 5 J7 3 172,726 82,185 1,372,521 132,994 222,527 498,292 79,580 24.953,627 4 .6 + 1 6 .9 + 1 5 .9 Wholesale a n d R etail Trade (1943 compared with 1942) Percentage Increase or Decrease SA L E S SA LES STO C K S Ju ly first 7 Ju ly 1943 months 1943 .... D E P A R T M E N T S T O R E S (97) A k ro n ...................................................................... ......+ 2 1 +21 C a n to n .................................................................... ......+ 2 1 +17 C in cin n ati.................................................................... + 1 3 +12 Cleveland............................................................... ......+ 1 6 + 7 Colum bus.....................................................................+ 2 8 +30 E r ie .................................................................................+ 2 1 +14 P ittsb u rg h ............................................................. ......+ 1 4 + 4 Springfield............................................................. ...... + 4 2 +34 + 17 T oled o..................................................................... ......+ 2 7 W heeling...................................... ......................... ...... + 1 7 +10 Y oungstow n................................................................+ 2 8 +17 Other C itie s......................................................... ......+ 1 5 + 6 D is trict................................................................... ...... + 1 8 +11 W E A R IN G A P P A R E L (16) C an to n .......................................................................... + 4 2 + 32 C in cin n ati.................................................................... + 1 5 +19 Cleveland..................................................................... + 2 9 +22 P ittsb u rg h ............................................................. ...... + 4 9 +30 Other C ities......................................................... ...... + 3 6 + 42 +29 D is trict................................................................... ...... + 3 2 F U R N IT U R E (78) C an to n .......................................................................... + 1 3 -0 + 3 C in cin n ati.................................................................... + 1 8 C leveland..................................................................... + 3 2 + 3 +15 Colum bus..................................................................... + 1 0 D a y to n ................................................................... ...... — 3 — 14 P ittsb u rg h ............................................................. ...... + 3 9 — 9 T oled o ..................................................................... ...... + 4 6 +11 + 2 Other C ities......................................................... ...... + 2 2 D is tric t................................................................... ...... + 2 7 -0 C H A IN S T O R E S * Drugs— D istrict ( 5 ) .......................................... ...... + 1 6 +17 Groceries— D istrict ( 4 ) ................................... ...... + 2 6 +17 W H O LESA LE T R A D E ** Autom otive Supplies ( 9 ) ............................... .......+ 1 1 — 5 Beer ( 5 ) ................................................................. ...... + 1 +26 Confectionery ( 3 ) .............................................. ...... + 8 +20 +21 Drugs and Drug Sundries ( 5 ) .......................... + 2 2 D ry Goods ( 4 ) .......................................................... + 1 3 +10 Electrical Goods ( 1 6 ) ...................................... ...... — 26 — 37 Fresh Fruits and Vegetables ( 5 ) .............. ...... + 6 +19 Furniture & House Furnishings (3 ). . . . +41 a G rocery Group ( 4 5 ) ............................................... + 1 0 +11 T otal Hardware Group ( 2 9 ) .............................. — 7 — 9 General Hardware (8 )................................ .......— 9 ■— 15 Industrial Supplies ( 1 1 ) ............................ .......— 6 — 2 Plumbing & Heating Supplies ( 1 0 ) .. — 6 — 7 Jew elry ( 4 ) ........................................................... ...... — 5 a M achinery, Equip. & Sup. (exc. E lect.) (3) + 6 — 8 M eats and M eat Products ( 5 ) ..................... .......— 28 •—- 3 M etals ( 4 ) ................................................................... + 1 3 a Pain ts and Varnishes ( 4 ) ......................................+ 1 3 — 15 Paper and its Products ( 6 ) ............................ .......+ 3 2 — 17 T obacco and its Products ( 1 4 ) ..................... .......+ 3 + 7 Miscellaneous (1 2 ) ............................................ .......— 9 — 2 D istrict— All W holesale Trade ( 1 7 6 ) . . . . + 3 — 1 * Per individual unit operated. * * W holesale data compiled by L^. S. D epartm ent of Commerce, of the Census, a N ot available. Figures in parentheses indicate number of firmsreporting sales. — 11 a — 28 — 31 —0 — 23 — 38 a — 14 — 26 a — 21 28 + 8 — 26 — 5 — 13 + 6 — 6 — 25 — 38 — 22 — 23 — 4^ — 35 — 34 — 37 — 33 a a — 29 33 — 63 -— 5 47 — 47 +17 a — 31 — 35 — 8 — 36 a a — 2 +32 a a a + 1 — 12 Bureau F o u rth D istrict B usiness Indexes (1935-39 = 100) Bank Debits (24 c itie s ).......................... Commercial Failures (N um ber)............ ” (Liabilities) . . . . Sales— Life Insurance (O. and P a .). . . — D epartm ent Stores (97 firms) . — Wholesale Drugs (5 firm s). Dry Goods (4 firm s). . . ” Groceries (45 firm s). . . . ” Hardware (29 fir m s ).... All (83 firm s)..................... -Chain Drugs (5 firm s)*....................... Chain Groceries (4 firm s)..................... Building Contracts (T o ta l)................................. ” (R esid en tial)..................... Production— Coal (O., W. Pa., E. K y .) . . . . ” — Cement (O., W. Pa., E . K y .)* * ” — Elec. Power (O., Pa., K y .) * * . . ” — Petroleum (O., P a., K y .) * * . . . ” — Shoes................................................. * Per individual unit operated. * * June July 1943 199 16 38 101 124 148 148 142 171 155 163 163 71 99 154 132 186 105 82 July 1942 171 45 20 81 105 121 131 129 184 145 141 141 344 85 148 161 161 101 111 Ju ly 1941 147 70 52 105 106 107 138 119 184 138 120 122 268 433 137 178 143 91 123 Ju ly 1940 113 103 125 100 82 99 80 102 114 102 111 102 150 234 118 153 115 90 103 July 1939 98 104 62 77 75 94 66 92 92 89 96 102 155 172 92 142 104 100 103 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Board of Governors of the Federal Reserve System INDUSTRIAL PRODUCTION Industrial production advanced to a new high level in July following a slight decline in June, both of the changes reflecting chiefly fluctuations in coal production. Maximum food prices were reduced recently with a consequent slight decline in cost of living in July. Retail sales continued in large volume. Industrial production 1937 Federal 1958 1939 1940 1941 1942 1943 Reserve index. Monthly figures, shown is for July 1 9 4 3 . latest DEPARTM ENT S TO R E SALES AND STOCKS Industrial activity increased in July, reflecting a large rise in mineral production. Output at coal mines advanced sharply from the reduced level in June, production of crude petroleum increased, and iron ore shipments reached the highest monthly rate on record. In manufacturing industries, output of most durable products and chemicals continued to increase in July, reflecting chiefly a further rise in production of muni tions. At meat packing plants and cigarette factories production was also larger in July. Output of leather and textile products had shown small decreases in June and further declines occurred in July. Activity in most other nondurable goods industries showed little change from June to July. The decline in the value of construction contracts awarded continued during July, according to reports of the F . W . Dodge Corporation. Most of the decline is accounted for by a drop in awards for publicly-financed industrial facilities and for public works and utilities. Distribution F ed eral reserve indexes. Monthly figures, latest shown are for July— for sales, and June— for stocks. Value of retail sales declined less than seasonally in July and continued sub stantially larger than a year ago. During the first six months of this year sales had averaged about 12 per cent larger than in the corresponding period of 1942 and in July the increase was somewhat greater. The higher level of sales this year as com pared with last year reflects for the most part price increases. In the first half of August sales at department stores increased by about the usual seasonal amount. Freight carloadings rose sharply in July and were maintained at a high level during the first half of August. Total loadings were 10 per cent higher than the previous month owing to the largest volume of coal transported in many years and shipments of grain and livestock showed a considerable increase over June. Commodity prices C O S T OF LIVING The general level of wholesale commodity prices showed little change in July and the early part of August. The cost of living declined somewhat from June 15 to July 15, according to Bureau of Labor Statistics data. Food prices declined by 2 per cent as a result of reductions in maximum prices for meats and seasonal declines in prices of fresh vegetables from earlier high levels. Agriculture 1937 1938 1939 1941 1942 B ureau of L ab or Statistics’ indexes. L ast month in each calendar quarter through September 1 9 4 0 , monthly thereafter. M id-month figures, latest shown are for July 1 9 4 3 . MEMBER BANK RESERVES AND R E L A T E D ITE M S W ednesday figures, latest shown are for August 18 , 1 9 4 3 . General crop prospects improved somewhat during July according to Depart ment of Agriculture reports. Forecasts for the com and wheat crops were raised 6 per cent. Production expected for com and other feed grains, however, is 10 per cent less than last year and for wheat is 15 per cent less than the large crop of 1942. Milk production in July was as large as the same period a year ago, while output of most other livestock products was greater. Bank credit The average level of excess reserves at all member banks, which had been about 1.5 billion dollars in mid-July, declired to 1.2 billion in the latter part of the month and continued at that level during the first two weeks of August. There was some further decrease of excess reserves at reserve city banks, but most of the decline oc curred at country banks, where there had previously been little change. Two factors were principally responsible for the decline in excess reserves: an increase in de posits subject to reserve requirements, as funds expended by the Treasury from war loan accounts returned to the banks in other accounts; and a growth of over 500 million dollars in money in circulation. During the four weeks ending August 18 additional reserve funds were supplied to member banks by an increase of 580 mil lion dollars in Reserve Bank holdings of Government securities, principally Treasury' bills bought with option to repurchase. During the four weeks ending August 11, member banks in 101 leading cities increased their holdings of Gov ernment securities other than Treasury bills by almost 800 million dollars. Of this amount, 570 million represented allotments to banks of new certificates of indebtedness issued in early August. Bill holdings declined as member banks made sales to adjust their reserve positions. Commercial loans in creased somewhat over the four week period, but other loans declined.
@FedFRASER