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MONTHLY BUSINESS REVIEW Covering financial, industrial and agricultural conditions Vol. 20 Cleveland, Ohio, December 31, 1938 Fluctuations in various fields of trade and industry in this district were unusually great in 1938, but the year closed with business generally in a much better position than at mid-year. In several lines production and sales were high er than at the close of 1937. Recent gains, however, were insufficient to make up for the low level of output in the first six months, so that for the entire year sizable declines in most lines were apparent from the previous twelve months. The year 1938 will be regarded generally as a poor business year—chiefly one of adjustment and recovery. Inventories have been liquidated, particularly in the finished and semi manufactured goods fields. Employment also has shown improvement recently, but not commensurate with the production gains. Payrolls, however, have expanded more rapidly, whereas at the close of 1937 employment was still being maintained in some lines at a higher level, in relation to the year’s peak, than production. The rise in activity in the last half of 1938 was accompanied by only moderate gains in employment, but greater increases in the number of hours worked by those employed. As a result, the number employed in November, in most industries, was less than at that time in 1937. The accompanying chart shows the month ly index of Ohio industrial employment in 1937, and 1938 through November. In the latest month it was still 12.5 percent behind the previous year. In Pennsylvania, em ployment was still down 13 percent, and payrolls 10 per cent, from 1937. Working time averaged nearly 35 hours per week, compared with 33 in November 1937, but total manhours were down 14.5 percent from the preceding year. In the first half of December, demand for goods both from producers and distributors remained at a fairly high level, although in some circles seasonal year-end influences began to appear. Retail sales increased more than seasonally in November and continued to rise in December. In the two weeks ended December 17, department stores in leading cities experienced a gain of 2.4 percent over the comparable period of 1937. The seasonally adjusted index of depart ment store sales in this district rose 14 points from the low in May to November. At the same time inventories were reduced until October when a slight gain occurred. Dollar value of stocks was 16 percent under last year at this time. Debits to individual accounts at banks in leading cities in the four weeks ended December 21 were within Fourth Federal Reserve District Federal Reserve Bank of Cleveland No. 12 3.6 percent of the corresponding period of last year, but large decreases early in 1938 made the cumulative volume 20 percent smaller than in 1937. Changes in industrial activity in this area in many lines were largely a reflection of developments in the automo bile field. With operations rising from lower-than-average levels in the first part of 1938 to the highest point of the year in November and December, the improvement in the period has been quite marked. Steel mill activity, which was below the national average in most local centers early in the year, was above that figure since September except in Pittsburgh. Rubber factories showed marked recovery; shoe production at the year end was in excess of 1937; and clothing plants were active; glass factories, makers of elec trical equipment and machinery, and pottery plants also showed considerable improvement, but less than in other lines. Activity in the construction field increased to a level where contracts awarded were larger than since 1930, although for the entire year operations were slightly be hind 1937. Publicly-financed construction accounted for much of the improvement, but residential work increased considerably in the closing months of the year. Despite larger-than-usual crops, farm income in 1938 in this area was somewThat less than in 1937 because of low farm prices. Feeding of grains, instead of marketing them, is more prevalent than usual in this district. 2 THE MONTHLY BUSINESS REVIEW FINANCIAL iron production was about half as great in 1938 as in the Developments at the Federal reserve bank during the preceding year, but in December 121 furnaces were active latter part of November and the first three weeks of De against 93 in December 1937. The low point was 67 in cember were of little significance. Rediscounting increased June. The contrasting movements in the steel industry slightly, but other earning assets remained unchanged. in 1938 with the previous year are evident in the accom Federal reserve notes in circulation rose seasonally before panying chart of the weekly national operating rate in Christmas to $434,545,000 on December 21, but were $10,- the past four years. Fluctuations in operations at fourth district steel cen 000,000 below the corresponding date a year earlier. Condition statements of weekly reporting member banks ters were great; most local mills averaged less than the in leading cities of the fourth district also showed little national rate in the first half of the year, but, with the change in assets or liabilities during the four weeks ended exception of Pittsburgh, rose above that average in the last December 21, except as they reflected participation by these six months. The automobile industry was chiefly responsi banks and their customers in the fourth quarter financing ble for this situation. Early in the year, in addition to low program of the Federal Government. Miscellaneous loans assembly rates, it was working down inventories. In the increased slightly, but commercial, agricultural, and indus last six months new model requirements and advance buy trial loans were practically unchanged. Miscellaneous se ing of sheet and strip steel at reduced prices further in curity investments also remained at the same level as in creased operations. Because of the unforeseen demand for November, but United States Government obligations, after new cars, more of this steel has been consumed than was falling slightly in the preceding three weeks, rose from expected would be used by this time, and some reorder $791,000,000 on December 14, to $817,000,000 on Decem ing of these products at higher present prices has been reported. ber 21. While steel production in the first half of December Commercial, real estate, and stock purchase loans of tended to level off at about the rate of late November, weekly reporting member banks have all declined slowly, averaging close to 60 percent, holiday conditions and desire but steadily during 1938, as repayments exceeded new bor of consumers to limit inventories over the year end account rowings. There was some increase in holdings of securities largely for cessation of the steady rise in production in guaranteed by the United States Government, but until the previous months. In the week the rate dropped effects of the December 15 financing were reflected in the to 52 percent, but a yearpre-holiday ago it was 22 percent. banks’ condition reports, holdings of direct obligations of In the Cleveland-Lorain district, operating rates up to the Government showed little net change. Miscellaneous December 17 were lower than in November, ranging from security investments were increased somewhat from May 72 to 59 percent capacity. The same was true of the through September, but since then have fallen off slightly. Pittsburgh district,of the range there being from 47 to 51 Reserves of all member banks in this district were approxi percent. Youngstown reduced output from 65 to 56 per mately 61 percent in excess of requirements early in De cent. These rates were all materially higher than last cember, compared with 25 percent at the beginning of the year at this time. year. Most of the increase was due to the reduction of Automotive needs have increased recently as assemblies reserve requirements in April. Since that time excess passed 100,000 cars per week, but much of the steel for reserves have fluctuated between 48 and 67 percent, declin these was ordered several weeks ago, and large shipments ing abruptly when the Treasury sold new securities and been made since all steel bought at the lower October then slowly regaining former levels as funds were paid out have was supposed to be delivered before the year end. through governmental operations and deposited by individ prices have come into the market more actively in uals and business enterprises in their local banks. Adjust theRailroads past few weeks than at any previous period this year, ed demand deposits of weekly reporting member banks, placing moderate of rails and some cars and loco after declining steadily from the middle of 1937 through motives. Freight tonnages car awards in November totaled 1,232, the first three months of 1938, increased from $989,000,000 compared with 2,537 Various programs are on April 6 to $1,140,000,000 on December 21. Time de under consideration forinrailOctober. posits remained at almost the same level throughout the still in the planning stage. and car buying, but these are year. MANUFACTURING, MINING STEEL OPERATIONS The iron and steel industry, which in the first half of 1938 operated at the lowest levels since 1934, entered a period of rather remarkable recovery at mid-year, equaled 1937 in late October so far as weekly operating rates were concerned, and continued to show gains until mid-November. At that time seasonal movements were apparent and some contraction developed, but in eleven of the past fifteen years, December output has been less than in November. Despite the marked recovery in the fall months, operations for the entire year will average higher than in 1934, but somewhat under intervening years. With December esti mated, 1938 steel ingot production was close to 28,000,000 tons; in 1937, despite the contraction in the fourth quar ter, slightly more than 50,000,000 tons were made. Pig THE MONTHLY Pig iron production in November was the largest since October 1937, with an increase of 10.6 percent in total tonnage, and 14.3 percent in daily average production over the previous month. Total output was 2,286,530 gross tons, a gain of 14 percent over last year. Total for eleven months is 16,676,814 tons, compared with 35,205,665 tons in the corresponding period of 1937. Steel ingot production in November was 3,572,220 gross tons, compared with 3,117,934 tons in October. Operations averaged 62.05 percent of capacity, compared with 52.45 percent in October. For the eleven months this year, out put was 24,696,092 tons, compared with 48,029,886 tons in the same months of 1937. For the first time this year, November iron ore con sumption exceeded the like month of 1937. A gain of 15.2 percent was reported. Despite the fact that during the entire Lake shipping season ore transported totaled only 19,263,000 gross tons, a drop of 69 percent from the pre vious year, and the smallest volume since 1933, stocks of ore on hand at lower Lake ports and furnaces to carry through the winter months was 37,456,000 tons. This was within 15 percent of the amount on hand a year ago. At the rate ore was consumed in November, enough was on hand to last nearly twelve months. Conditions in the coal industry improved slightly as the year progressed. Inven tories were reduced generally, and many mines in this district in December were operating at the highest levels of the year. In same sections mines were working five days a week, and output in November and December rose above last year at that time, but then a con traction was well under way. Despite recent gains, output in 1938 for the entire country was approximately 25 per cent less than in 1937, and in the fourth district, which accounts for about one-third of the national total, the drop up to December 1 was 29 percent. In November, local mines turned out 13,118,000 tons, which was 0.5 percent greater than in the comparable period of 1937. The in crease over October was slightly more than seasonal, partly because Lake shipments of coal held up quite well. In the last month of the shipping year they were 22 percent larger than in November 1937, although for the entire season they were down 23 percent from the previous year. While industrial coal stocks have increased seasonally this fall, the gain has been exceeded by the rise in con sumption. Total coal stocks, reported at 39,010,000 tons Coal BUSINESS REVIEW 3 on the latetst date, were 18.7 percent smaller than on the same date in 1937. The recent gain was entirely in indus trial grades. Domestic coal supplies in the latest month were slightly smaller than a year ago. Automobiles Fluctuations in the automobile industry in 1938 were unusually great. In the first nine months of the year output was less than in any comparable period since 1932, and was 60 per cent less than in the same period of 1937. Demand for 1939 cars developed at the time dealers were being stocked with new models to an extent not envisioned by planning departments. As a result, production rates were stepped up sharply, the gap evident at the end of the third quarter from 1937 was closed by mid-November, and further expansion to above 100,000 cars a week developed by the second week of December. Last year the peak in fall production was 91,905 cars in the third week of October, output maintaining a level of around 85,000 for the re mainder of that year. In recent weeks almost continuous gains have been recorded and the peak for the year, 102,905 cars, according to Ward's reports, was attained in the week ended December 17. Holiday influences began to appear following that date, and two companies reduced production schedules from a five to four-day week. Basis for some of the recent improvement in the auto industry started last spring with concerted efforts to reduce inventories of both new and used cars which had accumu lated rapidly starting in late 1937. Stocks of new cars had reached a peak estimated to be in excess of 500,000 at the end of February. By September, they had declined to around 150,000 units, but there was some gain during October and November as dealers acquired new models. This increase was less than seasonal for retail demand in most areas was heavy; at the end of November, trade reports placed new car inventories at close to 275,000 cars which was still less than is considered necessary for normal display and demonstration purposes. However, it is re ported that efforts are being made to gear production very closely to actual sales in order to prevent a repetition of last year’s inventory situation. November output, according to the Department of Commerce, was 372,209 cars and trucks, a gain of 3.4 percent over last year, but still slightly behind November 1936, when 395,000 cars were made. The gain over October, 77 percent, was somewhat more than occurred at this sea son of other recent years, and the Board’s index rose to 97 percent of the 1923-25 average. A year ago it was 92. Whereas the decline in truck production in the first half of 1938 from 1937 was smaller than the drop in passenger car output, the latter has accounted for most of the recent improvement. Truck production has risen, but in Novem ber output was 20 percent below the previous year, while passenger car assemblies were ahead by 8.5 percent. The spurt in the fourth quarter has raised the 1938 total some what, but when complete annual data are available, a de cline of nearly 50 percent from 1937, and the smallest total since 1933, will be shown. Despite the decline in assembly plant operations, reports from auto parts and accessory plants indicate that parts releases in December were holding at about the Novem ber level which was somewhat above last year when they were being curtailed quite sharply. Employment has THE MONTHLY lagged, however, but payrolls have increased considerably. In 1937, the former was being maintained by shortening the work week, while this year employers were adding to their forces slowly, preferring to give those already work ing more hours. Ohio auto parts plants reported an increase in employment of 27 percent in November over October, but it was still 40 percent behind last year. Pay rolls at auto parts plants rose 23 percent in November over the previous month. November new car sales in leading counties of this district were 12 percent ahead of last year, and sales ex ceeded every month since October 1937. BUSINESS REVIEW Clothing, The year 1938 saw considerable recovery Textiles in the textile and clothing industries in general, and also in this district. In Ohio, employment in the textile industry rose from 73 per cent of the 1926 average in May to 90 in October, but re ceded to 88 in November. In October the index was within nine percent of the previous year, while in November it was four percent above that of November 1937. The gain was most pronounced in the men’s clothing field; in the latest month the number of employed was 21.5 per cent above the base period, and 7.5 percent in excess of a year ago at which time a sharp contraction developed. Improved retail trade conditions, and the fact that cloth ing buyers last spring purchased very limited quantities Rubber, The improved situation in the rubber and of goods, thus causing retail stocks to be reduced consid Tires tire industry is partially revealed by the erably, have been reflected in recent months. Fall order accompanying chart. Production has ing of spring lines has been exceptionally good, particu risen sharply since February. At the same time, stocks larly in the men’s clothing industry. Orders on hand in have been materially reduced to the lowest level for this mid-December were substantially ahead of last year. In season since 1935. Not only have manufacturers’ stocks one instance they were reported equal to 1936 when advance declined, but distributors’ stocks at the time of the latest orders were larger than since the war. Plants have suffi survey in October were smaller than since April 1936. cient orders to permit capacity production well into spring. They were half a million tires under a year ago, or on October apparel wool consumption was 50 percent great January 1, 1938, a decrease of more than eight percent. er than last year, and was two percent above estimated nor Manufacturers’ tire stocks on November 30 were 7,924,114 mal, according to the National Association of Wool Manu casings, a drop of 27 percent from the year previous. facturers. The usual seasonal change is a decrease of The improvement was due first to a greater replacement about six percent. Textile mills were active in Decem tire demand which assumed sizable proportions in the early ber with large enough orders on hand to permit a continua fall months as weather conditions continued favorable. tion of the present level for some time. Sales of women’s This was supplemented by increased orders from auto assem clothing in November at department stores were within bly plants. Factory tire shipments in November reached two percent of last year, but men’s clothing sales were down 4,442,296 units, a gain of 17.6 percent over last year. While nine percent. According to Fairchild's index, retail prices reports indicated a decline in replacement sales in Novem on December 1 were approximately five percent lower than ber, the drop was less than seasonal. they were a year ago. Rubber consumed in November totaled 46,048 tons, the Other Changes in operating rates, sales, and emlargest amount since June 1937, and a gain of 35 percent Manufacturing ployment were rather great in the past over November 1937. This was the first month this year year in most smaller industries, but gains in which domestic consumption exceeded that in foreign in the latter half of the period lessened materially the year’s countries, whereas prior to this year domestic consumption drop from 1937. has generally surpassed the amount used by the rest of the world. The 14 percent increase in rubber consumption China China and pottery plants stepped up operations over October was larger than trade expectations. Parallel this fall to the highest level since 1930, and the industry ing this was a rise in payrolls at Ohio rubber factories was reported operating at 85 percent of capacity. Orders of 13 percent in November over October, but employment decreased seasonally in November, but remained above last was up only four percent. Compared with last year at that year. time Ohio employment in the rubber industry was off by Electrical Machinery Employment at electrical manu more than 20 percent. November total tire production, facturing plants increased 4.7 percent in November, and at 4,117,457 casings, was 32 percent in excess of Novem ber 1937. The rise in output this year has been at about the same rate as the contraction which terminated in February, but a net decrease for the first 11 months of 33 percent from the preceding year was reported. At mid1938 the discrepancy was 49 percent. November crude rubber imports were 31,054 tons, 45 percent below the same month last year. As a result of the increased consumption and reduced amount arriving, do mestic stocks dropped to 254,318 long tons, the smallest in a year. At the current rate of consumption, this con stituted Syi months’ supply, somewhat less than is cus tomarily kept. Rubber prices recovered in December to above 16 cents a pound, about one cent under the year’s peak in early November. The low of 1938 for ribbed smoked sheets was ten cents in April. 4 THE MONTHLY payrolls were up about eight percent. Compared with November 1937, number of employed was still down 20 per cent. Orders for the first eleven months of 1938 were report ed about 35 percent smaller than in the previous year. Recent improvement has offset part of the large discrep ancy of early months of the year. Foundry Equipment There was a slight increase in foundry equipment orders in November over October, but volume reported was still much below the previous year. Unfilled orders continue to decline. Glass The glass industry was burdened with extremely large inventories at the beginning of the year. Progress in liquidating these has been substantial, but production has been retarded as a consequence. Window glass output up to December 1 was 7,000,000 boxes or 58 percent less than in the comparable period of 1937. Shipments, however, were down only 3,400,000 boxes, or 32 percent. As a result, inventories decreased and were off more than 50 percent. Production has increased for three consecutive months, and unfilled orders on December 1 were somewhat larger than a year previous. November production, 882,595 boxes, represented operations at 54 percent of capacity, compared with 71 percent in November 1937. Plate glass operations have shown similar fluctuations. Gains since September have been largely attributed to activity in the automobile industry, though other users also have taken more glass. Inventories are much reduced from last year at this time. Hardware Wholesale hardware sales in the first 11 months were 32 percent under the same period of 1937; industrial supplies were off 50 percent, though toward the year end considerable improvement occurred. Machine Tools New orders for machine tools received prior to December 1 were slightly in excess of the fiveyear average 1933-37, but were small in relation to 1937 alone. Foreign purchases early in the year account ed for a large share of new business, but these declined in the fall months while domestic sales improved slightly. Companies depending solely on domestic orders operated at low levels during most of the year. A slightly improved sit uation was reported in some sections in the first half of December, larger domestic inquiries appearing at that time. Production of small tools in December was at a much higher rate than in 1937. Paint November paint sales were reported somewhat larger than a year ago, continuing the slight gain in the BUSINESS REVIEW 5 two preceding months. Inventories of finished goods, both in dealers’ and manufacturers’ hands, have been reduced to where further gains in business will require larger pur chases. Paper Boxboard and paper companies reported a sizable increase in orders and production in November, partly as a result of price changes. Buying was reported nearly double last year so far as paper was concerned, and pro duction was up around 40 percent. Up to December 1, mills produced about 20 percent less than in 1937. A sea sonal contraction was reported in December in most lines. Employment showed little change, but number of hours which increased considerably in November has since been reduced. Shoes November shoe production at fourth district fac tories was 30 percent greater than a year previous, and the more-than-seasonal gains this fall offset in large part the low levels of the early months, so that output up to Decem ber 1 was only eight percent behind the comparable period of 1937. Ordering of spring footwear, which began in November, has exceeded last year, and inventories of both footwear and materials are smaller than a year ago. Sales at fourth district department stores in November were within two percent of November 1937; price changes ac count for most of this decline. TRADE Retail Retail trade in the fourth district during November recovered from the set-back resulting partly from unusually warm weather in October, and continued the expansion begun last summer. The seasonally adjusted index of department store sales for November was 88.3 percent of the 1923-25 average, the highest point reached in the last ten months. Figures for weekly reporting stores in the district indi cate that sales were continuing to advance in December, for dollar volume of these stores in the two weeks ended December 17 was 2.4 percent above the corresponding weeks in the preceding year, and 4.8 percent more trans actions were reported. Dollar volume of sales in Decem ber 1937 was 92 percent of the 1923-25 average. The accompanying chart shows that, although the sales trend in the last half of the year was strongly upward, the year as a whole compares quite unfavorably with 1937. Sales during the eleven months ended November 30 were 14.6 percent below those of the same period in the preced ing year. Recovery from the low summer months, how ever, was almost as rapid as the decline. The chart also shows that department store stocks apparently ceased falling in September after a period of steady liquidation lasting more than a year. Buyers, however, were still conserva tive in October and November, for stocks increased only slightly more than seasonally. At the beginning of Decem ber they were 16 percent below those on hand a year earlier. Other lines of retail trade also improved during Novem ber. Furniture stores reported a decline of only 5.2 per cent from the same month in 1937, while total sales for the eleven-month period ended November 30 were 34.7 per cent below the preceding year. Sales by reporting wear ing apparel stores in November were almost equal to those made in the corresponding month a year earlier, THE MONTHLY 6 while the eleven-month cumulative total was 16.2 percent below 1937. Chain drug store sales, although declining seasonally in November, showed a slightly better compari son with the same month in 1937 than was true of October. Sales were 4.1 percent above November of the year before, although the cumulative total for the eleven months ended November 30 was 5.6 percent below the same period in 1937. Chain grocery stores also reported a slight decline in November, but again this development was largely sea sonal. Sales during the month were slightly higher than in the preceding year, but the eleven-month total was 3.2 percent below the same period in 1937. Compared with 1937, accounts receivable were down about eight percent at department and wearing apparel stores, and 12 percent at retail furniture stores. Collec tions were slightly better than they were reported in Octo ber, although they remained from 12 to 14 percent below November 1937. Wholesale Wholesale trade in the fourth district resisted seasonal factors unusually well during November. As a result, this bank’s index of wholesale trade, based on data compiled by the Department of Commerce, dropped less than one point to 73.4 percent of the 1923-25 average, while in other recent years November has been from three to ten points under October. Compared with the preceding year, sales were 9.8 percent below the corresponding month, while in October the relative decline amounted to 13.6 percent. Thus the unfavorable spread between 1937 and 1938 was narrowed, but the eleven-month cumulative sales total still remained 23.6 percent under a year previous. Conditions in various centers of the district remained relatively about the same in November as in October. Firms located in Lexington, Kentucky, sold nearly eight percent more goods in November than in the same month of 1937, while sales in Cleveland, Warren, Toledo, Dayton, and Pittsburgh were substantially below the preceding year. Buying policies of wholesalers were still conservative in November, for their stocks on hand declined slightly during the month. Accounts outstanding and collections were approximately the same as in October. CONSTRUCTION Total construction contracts awarded in the Fourth Federal Reserve District during November amounted to $37,276,000, thus maintaining the rate of advance estab lished in the preceding three months. The November total MILLION <5 OF OOLLA RS 400 B U IL D IN G 11 11 C O N T R A C :t s FOURTH DISTF ICT a w a r d e d I 1 ! cu MULA TIVE TOTAl-5 1938 COMI=>ARED WITh1 I937 30 0 TOTAL CON S T R U C TION I I1 / 193 tUw 1938 * IW o J SO U RCE f 19 3 7 __ 1938 -------- 1 RESIC D E N T I jA L C I0N3T R U C T I O N 1 1 1 M r W. D O D G E . /^ C<> R P. M J J A 5 O N I> BUSINESS REVIEW was the largest for that month since 1930. Residential building also demonstrated strength by failing to record a seasonal drop. Residential contracts awarded during November were valued at $7,830,000, almost identical with the figures for September and October. Data available for the first half of December indicate that this strength in the building field was being maintained through the end of the year. The F. W . Dodge Corpora tion expects this trend to continue into 1939, for its tabu lations include only those projects on which work has been started or is to start within ten days. Therefore, although a large proportion of the current P. W. A. program has been approved, only about 50 percent of the projects had been included in figures released prior to December 1. Since public works have been largely responsible for the favorable showing made by total contracts during the last few months, this relatively high level is expected to continue into early 1939. The accompanying chart brings out certain facts relat ing to the progress made by the construction industry in this district during the year 1938 as compared with 1937. In the first half of the year, total contracts awarded lagged behind 1937, the gap between the two years growing pro gressively larger. After August the P. W. A. program helped to narrow this spread considerably, and at the end of November the cumulative total was only 11 percent below 1937. Data for the first half of December indicate that the difference between the totals for the two years may be somewhat less than this amount. The chart also shows that residential construction ceased losing ground in May. Since that time it has merely held its own in comparison with 1937; the total for the eleven months ended November 30 was 15 percent below the same period last year. This spread may also be narrowed somewhat when the annual total is available, for December 1937 ushered in the period of extremely low activity which prevailed during the early months, of 1938. AGRICULTURE December reports of the Department of Agriculture con firm earlier statements that for the fourth district, as well as for the entire country, 1938 was a year of high crop yields, but comparatively low farm income. Yields in general were only slightly below the exceptionally good returns of 1937, and were well above the ten-year average. Prices, on the other hand, dropped considerably during the year, and as a result, cash farm income in 1938 is now estimated to be 11 percent below the previous year. Because of the low level of grain prices, farmers in this district have marketed a smaller proportion of their crops than is usual at this time. Much of the grain, wheat as well as corn and oats, is being fed to livestock in Ohio and Kentucky. Western Pennsylvania potato growers are re ported to be holding their output off the market in the hope of better prices. Heavier feeding activity and post ponement of marketing have resulted in some increase in demand at country banks for loans to finance farm opera tions. Conditions unfavorable to wheat planting in this district during August and September apparently were prevalent in a large portion of the winter wheat belt, for the Bureau of Agricultural Economics estimates that winter wheat sown for harvest in 1939 was 46,173,000 acres for the entire THE MONTHLY country. This is more than 18 percent below amounts plant ed in 1937 and 1936, but about one per cent above average acreage in the ten-year period 1926-35. The condition of the crop on December 1 was not as good as it had been a year earlier, so that after allowance for reduced acreage and the effect of weather conditions during the past sum mer and fall, indicated production of winter wheat in 1939 is about 458,000,000 bushels, instead of the 686,637,000 bushels estimated to have been harvested this year. Tobacco The tobacco selling season in this district opened on December 5 with prices proving somewhat disappointing to growers. The average price paid for Burley tobacco at Lexington on the opening day was $21.95 per hundred pounds, 48 cents less than was paid on the opening day in 1937. Prices improved somewhat, but the average for the first week was $22.83, compared with $23.68 the same week last year, and $32.01 in 1936. The average for the season through December 16 was $22.40. The high propor tion of excellent quality tobacco in this year’s crop seems to be resulting in relatively lower prices for the better grades, while poor quality tobacco is selling at prices above last year, the medium grades at about the same level as in 1937. Marketing quotas, according to reports, apparently have not had much effect on the volume of this year’s crop being sold. It now appears that the total yield will not exceed the total allotment, so farmers are finding it possible to Debits to Individual Accounts Akron.......... Butler.......... C a n to n .. .. Cincinnati. C leveland.. Columbus.. D a y t o n ----E rie.............. Fran klin... Greensburg. H am ilton. . Homestead. L exington.. L im a............ Lorain......... Middletown Oil C ity ----Pittsburgh. . Sharon.......... Springfield. . Steubenville T o le d o ........... Warren......... Wheeling. . . Youngstown Zanesville... T o ta l......... (Thousands 4 Weeks % ended change from Dec. 21, 1937 1938 — 5 .9 3 56,078 8,327 — 8 .7 — 11.5 30,236 300,612 — 0.7 — 10.7 496,481 155,256 — 13.8 57,244 — 11.4 25,287 — 10.3 3,101 + 0 .6 — 16.2 6,451 — 0 .1 10,057 2,665 — 11.0 + 3.1 28,966 12,689 + 0.4 4,171 — 11.8 9,932 + 5 .5 8,871 — 14.2 762,096 + 3 .6 7,443 — 7 .9 14,370 — 13.9 8,347 — 11.9 130,822 + 5.1 8,610 — 10.3 — 4 .2 27,540 — 8 .2 37,885 7,704 + 1-2 32,221,241 — 3 .6 of Dollars) Year to Date Year to Date Dec. 30, 1937 Dec. 31, 1936 to to Dec. 21, 1938 Dec. 22, 1937 3 672,195 3 822,499 98,101 124,711 351,789 471,563 3,544,644 4,191,756 5,898,275 7,397,486 2,210,141 1,900,196 708,778 892,657 293,753 388,564 33,712 42,408 78,387 90,562 121,669 151,358 33,517 40,828 272,965 288,882 160,877 169,828 53,517 64,868 103,912 130,439 110,372 134,977 7,141,396 9,184,906 87,079 112,015 187,916 225,334 99,684 134,006 1,304,679 1,635,650 95,657 124,970 317,632 407,656 460,044 625,065 87,715 99,423 I3 24,218,461 330,162,552 Fourth District Business Indexes (1923-25 = 100) Bank debits (24 cities)............. Commercial Failures (N u m b er ).................. ” ” (Liabilities)............... Sales— Life Insurance (O. and P a . ) ............. ” — D epartment Stores (48 firms). . . . ” — Wholesale Drugs (6 firms)............. ” — »’ Dry Goods (8 firms). . ” — ” Groceries (67 firm s).. ” — ” Hardware (10 firms). . ” — All (91 firm s)............... ” — Chairt Drugs (4 firms)1** Building Contracts (T o t a l)... ” ” (Residential)................. (O., W. Pa., E. K y .) .. Production—-Coal »> ____ -Cement (0.,W . P,a., E. Kv.) ” — -Elec. Power (O., Pa., Ky.)* ” — -Petroleum (O., Pa., K y.)*. . ” — -S hoes...................... *October. **Per individual unit operated. % change from 1937 — 18.3 — 21.3 — 2 5.4 — 15.4 — 20.3 — 14.0 — 2 0.6 — 2 4.4 — 20.5 — 13.4 — 19.6 — 17.9 — 5.5 — 5.3 — 17.5 — 20.3 — 18.2 — 22.2 — 22.3 — 1 6.6 — 25 .6 — 2 0.2 — 23.5 — 22.1 — 26 .4 — 11.8 — 1 9.7 Nov. Nov. Nov. N ov. N o v . 1938 1937 1936 :1 935 1934 76 85 87 76 63 44 43 36 50 66 19 42 53 24 100 76 85 84 88 86 93 83 75 96 100 115 119 105 93 82 48 50 61 51 47 72 82 74 71 67 79 89 93 75 63 73 81 79 71 65 91 87 92 91 74 78 53 44 30 20 46 59 46 18 9 73 73 90 69 65 66 88 101 57 33 190 198 193 168 144 118 127 118 118 114 78 60 81 70 54 BUSINESS REVIEW 7 sell their surplus to other growers who do not have suffi cient tobacco to fill their quotas. Marketing quotas will not be in effect for Burley tobacco next year, for the plan failed to receive the necessary two-thirds vote in the recent referendum. This result occurred despite the fact that 73 percent of Kentucky Burley growers were in favor of the plan. Wholesale and Retail Trade (1938 compared with 1937) Percentage Increase or Decrease SALES SALES ST O C K S N ovem ber first 11 N ovem ber 1938 months 1938 D E P A R T M E N T ST O R E S (54) + 4.9 — 19.7 — 19.5 — 5.1 — 9 .7 — 11.9 — 4 .5 — 1 5.0 — 17.7 + 7 .2 — 7 .6 — 1 3.4 + 1.3 — 16.9 — 14.2 — 5.3 — 15.6 — 16 .6 — 1.9 — 16.9 — 15.2 — 10.4 — 15.0 — 15.4 Other Cities................................................... — 3 .2 — 16.8 — 15.0 — 3 .0 — 14.6 — 1 6.0 W E A R I N G A P P A R E L (12) Cincinnati........................................................ — 4 .7 — 2 0 .7 — 11.0 — 3.3 — 14.9 — 8 .6 + 2.3 — 14.8 — 14.0 — 0 .2 — 15.0 — 11.1 F U R N I T U R E (40) — 3.5 — 40.3 — 4 .2 — 33.4 — 0 .4 — 16.0 + 3 .0 — 35 .6 — 25.5 — 4 3 .9 Other Cities................................................... — 5 .0 — 4 4 .8 — 5 .2 — 3 4.7 C H A I N ST O R ES* Drugs— District ( 4 ) ................................... + 4 .1 — 5 .6 Groceries— District ( 4 ) ............................ + 1.9 — 3 .2 W H O L ESA L E T R A D E * * Automotive Supplies ( 8 ) ......................... — 0 .8 — 12.4 — 4 .0 — 2 .9 — 9 .7 — 1 .4 Dry Goods (8 )............................................. — 2 .9 — 24.9 — 25.2 Electrical Goods ( 9 ) ................................. — 15.5 — 42 .9 — 3 8.2 l l Furniture and House Furnishings (3) + 13.6 Groceries (6 7 )............................................... — 11.5 — 1 i4.6 — 11.5 i Total Hardware Group (3 5 )................. — 15.0 General Hardware ( 1 0 )..................... — 11.2 — 2 6 .4 — 20 .9 Industrial Supplies (1 3 ).................... — 30.2 — 4 6 .4 — 18.3 Plumbing and Heating Supplies (12) — 6 .6 — 26.3 — 1 .8 Jewelry and Optical Goods (8) . . . . — 14.0 — 35.2 — 16l .8 i Leather and Shoe Findings ( 3 ) .......... — 5 .6 l l Lumber and Building Materials (6). — 14.5 l M eats and M eat Products ( 5 ) ............. — 9 .8 + 28.0 l — 9 .6 — 3 3.6 l i Paints and Varnishes ( 4 ) ....................... — 14.3 i Paper and its Products ( 9 ) .................. — 7 .2 — 22.3 Tobacco and its Products (2 5 )............. — 5 .9 + 3.7 — 10.3 Miscellaneous (1 3 )...................................... + 1 .2 — 34.6 — 5 .4 District— All Lines (21 4)....................... — 9 .8 — 2 3 .6 — 16.4 *Per individual unit operated. **Wholesale data compiled by LJ. S. D epartment of Commerce. 1N o t available. Fourth District Business Statistics (000 Omitted) Fourth District Unless Novem ber % Change J an.-Nov. % Chan Otherwise Specified 1938 from 1937 1938 from 193 Bank Debits— 24 cities....................32,054,000 — 10.4 322,035,000 — 21. 1 Savings Deposits— erid of month: 1 1 40 Banks, O. and W. P a...............3 775,498 + 0 .3 Life Insurance Sales: Ohio and P a ...................................... 3 73,478 — 10.2 737,416 — 23. 7 Retail Sales: Dept. Stores— 54 firms...............3 22,095 — 3 .0 206,417 — 14.6 Wearing Apparel— 12 firms.........3 898 — 0 .2 8,467 — 15.0 Furniture— 40 firms.........................3 689 — 5 .2 7,505 — 34.7 Building Contracts— T o ta l............ 3 37,276 + 4 7 . 2 278,325 — 1 1.0 7,830 — 23.3 ” ” — Residential.3 83,685 — 1 5.4 844 — 54 .8 Commercial Failures— Liabilities.3 17,609 + 2 5 .5 ” . ” — N u m b e r ... 6 4 2 + 3 .2 9072 + 4 5 . 8 Production: Pig Iron— U. S.........................Tons 2,287 + 1 4 . 0 16,677 — 5 2 .6 Steel Ingot— U. S....................Tons 3,572 + 6 5 . 8 24,696 — 4 8 .6 Auto— Passenger Car— U. S.......... 320,3442 + 8.5 1,674,9792 — 5 4 .4 ” — Trucks— U. S.......................... 52,0142 — 1 9.6 426,2302 — 47 .5 Bituminous Coal, O., W. Pa., E. 13,118 + 0 .1 113,430 — 2 8 .8 Cement— O., W .P a.,W . Va. bbls. 799 — 24 .4 8,880 — 1 2.4 Elec. Power, O., Pa., Ky. 1,5993 — 3 .8 13,7584 — 15.3 2,1873 — 6 .9 22,2904 — 5 .2 Petroleum— O., Pa., K y .. ..b b l s . 5 5 + 3 0 .8 — 7 .7 4,117 + 3 2 . 3 35,366 — 3 2 .6 Bituminous Coal Shipments: 4,968 + 2 2 . 3 34,691 — 23.0 1 not available 4 J an.-Oct. 2 actual number 5 confidential 8 October 8 THE MONTHLY BUSINESS REVIEW Sum m ary of National Business Conditions By the Board of Governors of the Federal Reserve System The sharp rise in industrial production, which began early last sum mer, continued in November. Preliminary reports for the first three weeks of December indicate some slowing down in the advance. Employ ment also increased in November and payrolls showed little change, al though a decline is usual at this season. Distribution of commodities to consumers increased considerably. Production The Board’s seasonally adjusted index of industrial production in November rose to 103 percent of the 1923-1925 average from 96 percent in October. Output of steel continued to increase, contrary to the seasonal trend, and there was a further sharp rise in automobile production. In the first three weeks of December activity at steel mills declined somewhat Index of physical volum e of production, more than seasonally, while output of automobiles continued at the high adjusted for seasonal variation, 1923-25 level reached at the end of November. Lumber production in November average = 100. By months, January 1934 decreased by more than the usual seasonal amount. In the nondurable to November 1938. L atest figure Novem ber 103. goods industries, shoe production declined seasonally, while output of textiles showed a considerable expansion, with increased activity at cot ton, wool, and silk mills. At mines, bituminous coal output increased further and production of anthracite showed less than the usual seasonal decline. Output of petroleum showed little change. Value of construction contracts awarded in November showed a de cline from the high level reached in October, according to F. W. Dodge figures for 37 eastern states. Private and public projects both declined, following increases in October. The decline in contracts for private resi dential building was less than seasonal. INDUSTRIAL PRODUCTION factory employment Revised indexes of number employed, ad justed for seasonal variation, 1923-25 av erage = 100. By months, January 1934 to November 1938. Latest figure 90.1. CONSTRUCTION CONTRACTS AWARDED Three-month m oving averages of F. W. Dodge data for value of contracts award ed in 37 Eastern States, adjusted for beasonal variation. Latest figures based on data for October and November and esti m ate for December. MEMBER BANK RESERVES AND RELATED ITEMS Wednesday figures, January 3, 1934, to De cember 14, 1938. Employment Employment increased somewhat further and payrolls showed little change between the middle of October and the middle of November, although declines are usual at this time of year. In manufacturing, the number employed continued to rise, reflecting principally a further sharp increase at automobile factories and substantial increases in the ma chinery, steel, and textile industries. Employment declined seasonally at establishments producing clothing and shoes; in most other industries employment increased somewhat. In lines other than manufacturing, employment showed some increase, when allowance is made for usual seasonal changes. Distribution Distribution of commodities to consumers showed a considerable in crease in November. Department store sales and mail order sales, which had been retarded in October by unseasonably warm weather, rose sharply, and sales at variety stores also increased in November. Sales of automobiles to consumers expanded sharply following the intro duction of new models and in November were larger than a year earlier. Freight-car loadings, which had increased considerably in previous months, showed a slightly less than seasonal decline in November. Commodity Prices Prices of some industrial materials, such as nonferrous metals, hides, and cotton goods, decreased somewhat from the middle of Novem ber to the third week of December. Sugar prices also declined, while grains advanced somewhat. Prices of most other agricultural and industrial commodities continued to show a little change. Bank Credit In connection with pre-holiday trade, there was a sharp increase in money in circulation and as the result of this increase in the demand for currency, together with treasury operations around December 15, there was a temporary decline in member bank reserves. Following declines during November, total loans and investments of reporting member banks in 101 leading cities increased during the first three weeks of December, largely reflecting operations of the treasury. Loans to security dealers by New York banks increased sharply reflecting temporary borrowing for the purpose of carrying government securities exchangeable for new issues on December 15. Adjusted demand deposits rose to a new high level in the first half of December.
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