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MONTHLY BUSINESS REVIEW Covering financial, industrial, and agricultural conditions in the Fourth Federal Reserve D istrict Federal Reserve Bank o f Cleveland Vol. 17 Cleveland, Ohio, February 28, 1935 Industrial operations in the fourth district in January were a t a higher rate than in December, even allow ing for usual changes, and the volume of trad e declined by a lessthan-seasonal am ount. The upw ard movement, however, was not so sharp as in December, and in the first half of F ebruary there was a slowing-down in some lines, al though declines have been slight and not so noticeable in this section as in some parts of the country because operations in the autom obile industry continued to expand in the period. The greater p art of the expansion in the past two m onths was due more to the autom obile industry than to any other single factor. Production in Jan uary was 292,765 units, the highest for th a t m onth since 1929. A furth er expansion in plant activity was reported in the first three weeks of February, but when allow ance is made for the fact th at assembly plant operations generally increase at a rapid rate at this time of year, the Annalist’s weekly in dex of production showed little change in February and was only slightly under the average for the three years 1927-1929. Dem and for parts and autom obile steel has been un usually heavy and orders in m id-February kept local plants operating at much higher levels than prevailed a year ago. Steel finishing and fabricating m ills in some cases w ere running at capacity levels and glass factories reported a production increase of about 20 per cent from last year. Tire plants reported a good volum e of orders for original equipm ent, but sales of replacem ent tires to dealers were down slightly from a year ago. W hile operations a t steel finishing m ills in m id-Febru ary continued at approxim ately the high rate of January, steel ingot production declined in the first three weeks; in the latest weekly period output was estim ated to be 50 per cent of capacity. The falling-off was not widespread and raw steel stocks have declined. M akers of agricultural im plem ents rank next to the autom obile industry in de mand for steel, and m iscellaneous users have increased specifications recently. The railroad and construction in dustries continue to take only lim ited quantities. E lectric power production in the first half of F ebruary was about nine per cent above a year ago in this section and em ploym ent in Jan uary in Ohio showed a contraryto-seasonal increase from December. Compared w ith a year ago there were 9.1 per cent m ore employes at over 700 factories in this district than a year ago at th at time. No. 2 Coal production in this district in Jan uary exceeded any sim ilar m onth since 1929, and an increase of eight per cent from last year was reported. Shoe factories in this section w ere u nusually active in Jan uary and output was 40 per cent g reater than in Jan uary 1934, and up 14 per cent from December. Retail trade in Jan uary in Ohio declined less than sea sonally from December; buying prior to Jan uary 27, the effective date of the three per cent sales tax, particu larly of the m ore expensive types of m erchandise, was in considerable volume. Dollar sales at fourth district departm ent stores were 14.5 per cent larger than in Jan uary 1934, and the seasonally adjusted index of daily average sales was 77.4 per cent of the 1923-1925 m onthly average, com pared w ith 74.1 in December. This was high er than since 1931. W holesale sales of groceries and dry goods were larg er in January than a year ago, but de clines were shown in other reporting lines. Total construction contracts aw arded continue in lim ited volume and in Jan uary they were considerably under a year ago. R esidential construction, however, showed a little im provem ent both in January and the first half of F ebru ary. The num ber of com m ercial failures rem ains under the corresponding m onth of the preceding year; there was a seasonal increase from December. New life insurance sales in Ohio and Pennsylvania were up 36 per cent in Jan u ary from the corresponding m onth of 19 34, and dollar sales were larger than in any sim ilar month since 1931. 2 THE MONTHLY BUSINESS REVIEW FINANCIAL L ittle change was evident in the condition of reporting m em ber banks in leading cities of the fourth district in the four weeks ended F ebruary 20 or at the Federal Reserve Bank of Cleveland in the sam e period. Deposits increased slightly, but the volume of credit extended rem ained at ap proxim ately the levels of the past several m onths. A lthough the volume of trade and industrial activity increased in January, debits to individual accounts at banks in principal cities in the four weeks ended Feb ruary 20 were only ten per cent larger than in the same period of 1934. This com pared with a gain of about 25 per cent in the four previous weeks. Savings deposits at selected banks throughout the dis trict declined slightly in January, but a drop has occurred at this season of several recent years. At the m onth end, however, savings deposits were 5.6 per cent larger than a year ago. Reserve B ank Credit. There was a slight increase in the volum e of bills discounted for fourth district member banks in late January and the first week of February, but a falling-off occurred in the two following weeks. On the latest date total bills discounted were $409,000 compared w ith $3,595,000 a year previous. Industrial advances to provide w orking capital showed a slight expansion in the four weeks ended February 20 and com m itm ents to make advances also increased in the period. On the latest date actual advances were $1,217,000 and com m itm ents were $1,326,000. The 'volume of acceptances and Government securities held by this bank was unchanged in the four latest weeks. There was an increase of $6,000,000 in the volum e of this b ank’s note circulation between January 2 3 and Feb ruary 20, but in m ost past years some expansion has oc curred at this season. This b ank’s liability for note cir culation on the latest date was about $10,000,000 less than a year ago. Since the beginning of the year reserve deposits of m em ber banks have increased about $20,000,000, but the m ajor share of the gain occurred in the first three weeks of F ebruary. P art of this reflected a rise in deposits at m em ber banks, but the rest represented excess reserves. In Jan uary these excess reserves averaged $129,445,000, a decrease of $4,000,000 from the daily average of Decem ber. L ast year at this tim e excess reserves of fourth dis trict banks were $75,000,000. The ratio of total reserves to deposit and note liability combined was 68.2 in late F ebruary, com pared w ith 66.1 on the corresponding date in 1934. M ember B ank Credit. At reporting m em ber banks in leading cities of the district time deposits increased quite sharply in the four weeks ended February 20. The $13,000,000 rise to $451,000,000 was well distributed throughout the period and these deposits were slightly higher than a year ago. Demand deposits fluctuated in recent weeks, but at $706,000,000 on the latest reporting date they com pared w ith $560,000,000 on the corresponding date of 1934. G overnm ent deposits at these banks declined in the period and were considerably sm aller than a year ago. Total credit extended by these weekly reporting m em ber banks showed a slight increase in the four latest weeks. Investm ents in other than Governm ent securities rose $5,C00,000 to $192,000,000 in the period, but holdings of G overnm ent securities were unchanged. The volum e of loans outstanding at these banks continued to show a downward trend, but the decline was alm ost entirely due to a reduction in loans on securities. Loans on real estate and “all o th er” (largely com m ercial) loans were approxi m ately the same in late F ebruary as four weeks earlier. MANUFACTURING, MINING The iron and steel industry appeared to be m arking tim e in m id-February, fol lowing the sharp rise in December and January. The rate of steel ingot production slowed down and actually fell off in the two weeks ended F ebruary 23, the drop being about five points to approxim ately 50 per cent of capacity. This decline occurred at a tim e when in most years the rate of production has advanced. Changes in operating rates at local steel centers in the past m onth were as follows: the Cleveland-Lorain district dropped from 82 per cent in the week ended Jan uary 19 to 77 per cent in the week ended F ebruary 16, but ad vanced two points in the following week; W heeling was down from 90 to 85 per cent; Youngstown was unchanged at 60 per cent, while at P ittsburgh the rate increased from 33 to 37 per cent. The increase in the last-nam ed center was significant in th at those mills are quite dependent on the heavier industries for orders. Sheet and strip mills in the Cleveland district have con tinued operating near capacity, wire mills holding at about 6 0 per cent, and steel bar m ills at 50 per cent. At Youngs town, finishing mill operations were at a higher rate than ingot production. Steel requirem ents of autom obile and parts m anu facturers, agricultural im plem ent m akers, and the leading producers of household equipm ent, such as w ashing m a chines and electric refrigerators, continue at high levels judging by recent shipm ents. New orders, however, have fallen off, m ainly because these consum ers have contracted for their needs for the rem ainder of this quarter. Raw steel production has slowed down m oderately, in keeping w ith a conservative inventory policy, until finished steel m akers can obtain a b etter perspective of second q uarter business. Prices on the m ajority of finished steel products have been extended for th a t period, and on March 1 books will be opened for actual com m itm ents. It is im possible to say with any accuracy w hether the 55 per cent rate of production for the entire industry represented the usual spring peak in operations, but it com pared with about 45 per cent a year ago and a high for last year of 62 per cent in May. C ontributing to th a t peak rate of pro duction were sizable railroad orders, and m any Govern m ent building projects at the outset of the year. This year structural shape aw ards so far have lacked the stim ulus of public construction, and are only about 85 per cent of those in the com parable period last year. R ailroad buying has rem ained at a low ebb, w hereas at the beginning of last year heavy orders were placed for cars and rails. P ub lic w orks’ construction is expected to im prove som ew hat as spring approaches. N evertheless, these two im portant consum ing interests hold the key to steelw orks’ activity this year. Pig iron production in Jan uary averaged 47,627 gross tons daily, up 14,466 tons; and total output was 1,476,424 tons, an increase of 448,418 tons over December. Both Iron and Steel T H E M O N TH L Y these gains were the largest for any Jan uary in history. The m onth’s output was the highest since June 19 34. The increase in the num ber of blast furnace stacks in opera tion to 89 on Jan uary 31 was the largest for the m onth except January 192 0, when the net gain was 23, and Jan uary 1925, with a net increase of 22. The supply of iron ore on hand at furnaces and Lake Erie docks on February 1 was only 2.7 per cent less than a year ago despite the fact th a t consum ption this past win ter was som ewhat above th a t in the w inter of 1933-34. Steel ingot output in January, 2,834,170 gross tons, was the largest for th at m onth since 1930, and the ton nage was only 15 per cent below last y ear’s peak in May. Daily average output was 104,969 tons, 35 per cent more than in December; 44 per cent m ore than in January 19 34; and 29 per cent over the daily average for all of last year. The operating rate in Jan uary was 47.67 per cent of ca pacity, highest since last June, when it was 52.68 per cent. Coal Production of bitum inous coal mines in the fourth district in January, at 13,311,000 tons, was up 14.4 per cent from December and was eight per cent above the first m onth of 1934. The increase from December was approxim ately the sam e as was reported for the entire country, but it was greater than seasonal. O utput of local mines in Jan u ary was larger than in any sim ilar m onth since 19 31. According to reports from producers there has been an increase in coal consum ption by railroads and public u til ities since the first of the year, partly on account of the w eather, and industrial dem and im proved considerably in the period. As a result the supply of steam-size coal, which has been som ew hat of a problem to the industry for some tim e, was reduced. Dem and for domestic grades of coal, while irregular, has been fairly heavy, reflecting the fact th at many householders bought coal this w inter only as it actually was needed. Stocks of bitum inous coal in hands of commercial con sum ers and retailers on January 1 were reported to be 34,440,0 00 tons. In term s of day’s supply on hand, which is calculated at the rate of consum ption for each period of the year, these stocks were 27 per cent less than a t the beginning of the w inter quarter, but were approxim ately the sam e as a year ago. The total supply of coal above ground was actually 4.1 per cent larger than at the be ginning of 19 34, but m ore coal is being used currently than at this tim e last year. Activity at fourth district mines in the first half of F ebruary continued to show an upw ard trend. The m ar BUSINESS R E V IE W ket, so far as prices are concerned, was very much con fused. C urrent quotations for bitum inous coal and coke are som ewhat higher than they were at this tim e in 19 34. Automobiles Activity in the autom obile industry in Jan uary was at the highest rate for th at m onth since 1929, and the Federal Re serve B oard’s index, after allow ing for seasonal variations, was 105 per cent of the 192 3-1925 m onthly average. This was unchanged from December, but com pared w ith 56 per cent in January 1934. O utput in the m onth was 292,765 cars and trucks, according to the D epartm ent of Commerce. This was an increase of 8 6.6 per cent from Jan uary 1934 and was 20 per cent larger than the average Jan uary pro duction of the preceding ten years. The gain in produc tion from December was 6 0 per cent. W hile output of most factories continued to increase in the first three weeks of F ebruary the fact th at autom obile production generally expands quite rapidly at this season of the year offset most of the gain, and the Annalist’s weekly adjusted index in the first three weeks of February was slightly below the average for January. However, autom obile production for the year to date, according to Crain’s reports, has aver aged 50 per cent above the corresponding period of 1934. In the third week of February output was reported to be over 82,000 units. This compared w ith 64,000 units in the corresponding week of 19 34 and only three producers were operating at lower rates than in the preceding week; all other companies either m aintained or increased sched ules. Passenger car production in Jan uary was 22 9,199 units, a gain of m ore than 100 per cent from the first m onth of 1934 and an increase of 79 per cent from December. Truck production, which in the closing m onths of 1934 showed larger increases from corresponding periods of the pre ceding year than did passenger car output, was up 47 per cent in Jan uary from a year ago. Actual output was 63,5 66 units, a gain of 15 per cent from December. R etail sales of cars in January exceeded trade expecta tions in many cases and a shortage of low-priced cars was reported in many sections. The dollar volum e of re tail financing of new passenger car sales was 85 per cent larger in Jan uary than in the same period of 193 4, and 88 per cent larger than in the opening m onth of 1933; compared w ith December 1934, an increase of 41 per cent was shown. The increase in financing from a year ago was slightly less than the rise in passenger car production in the period. In the fourth district, and particularly in Ohio, dealers reported the largest volum e of passenger car orders for th at m onth on record. The im pending three per cent sales tax was responsible for the placing of a large num ber of orders, but in m any cases buyers were not taking deliveries until later this year. N evertheless new passenger car reg istrations in Ohio in Jan uary were nearly twice as large as in December and were three tim es as large as in Jan uary 1934. The five-year average D ecem ber-to-January change in the num ber of new passenger car registrations was a reduction of 23 per cent. R ubber Operations at rubber and tire plants in and Tires this district in January were up quite sharply com pared w ith both the preced ing m onth and a year ago and according to reports the 4 THE MONTHLY BUSINESS REVIEW im provem ent continued in the first half of F ebruary. The increase in activity was considered in the trade to be some w hat abnorm al; it was due entirely to the sharp rise in dem and for original equipm ent tires from the autom obile industry. Sales of tires for replacem ent were reported to be slightly under last year at this time. Em ploym ent at 18 factories engaged in the production of rubber products which report regularly to the Ohio State University B ureau of Business Research was three per cent higher than in the closing m onth of 1934 and five per cent higher than in Jan uary last year. The gain in the latest m onth com pared w ith a five-year average decline for th at period of 0.8 per cent. Crude rubber consum ption in Jan uary by m anufacturers throughout the country am ounted to 47,103 tons, com pared w ith 36,662 tons in December. This was an increase of 28.5 per cent and consum ption in the latest m onth was about 20 per cent g reater than in January, 1934. Accord ing to statistics released by the Rubber Manufacturers' Association, more rubber was consumed in January than was im ported, but im ports, a t 42,059 long tons, were up 44 per cent from December; however, they were nine per cent under January, 1934. As a resu lt of these changes, dom estic stocks of crude rubber on hand, at 388,150 long tons on Jan u ary 31, com pared w ith 400,276 tons at the end of 1934 and were 6.7 per cent sm aller than on Jan u ary 31, 1934. Tire production in December, the latest m onth for which complete figures are available, was 22.6 per cent greater than in December, 1933, and output was larger than in any m onth since June. As in October and November, pro duction exceeded shipm ents, and inventories in hands of m anufacturers have increased since September, the gain being approximately 12 per cent. Excluding 1932 and 1933, tire inventories either declined or showed little change in the closing m onths of the year Clothing A sharp increase in production at cloth ing factories in this district occurred in Jan uary in contrast w ith little change at this season of recent years. The expansion was due partly to the fact th a t the delayed delivery of textiles from woolen mills, a result of the strike last fall, prevented op erators from starting work on spring models as early as usual. Em ploym ent at 34 local concerns increased seven per cent from December and was slightly above a year ago. At m en’s clothing factories the gain in em ploym ent was 15 per cent from December to January and there were 7.6 per cent m ore employees at these plants than in the first m onth of 1934. Some m anufacturers reported a large enough volum e of orders on hand to insure near capacity operations throughout the spring season. W holesale prices on spring lines were reported to be slightly higher than last year and a rise in retail prices of m en’s apparel at departm ent stores throughout the coun try was evident. Prices of wom en’s apparel, according to Fairchild's retail price index, were slightly lower on Feb* ruary 1 than a year previous. Operations at textile plants, particularly those engaged in the production of woolen m aterials, continued at a high rate in Jan uary and cotton consum ption by domestic m ills in the en tire country in the period was higher than in any sim ilar m onth since 1930. Raw cotton prices in m id-Feb ruary were approxim ately the sam e as a year ago. O ther M anufacturing Most of the sm aller industries in the district reported increases in operations in late January and the first part of Feb ruary of som ewhat g reater than seasonal proportions. Siz able gains from a year ago were shown in m ost lines and em ploym ent and payrolls have expanded. Auto P arts, Accessories. The unusual rate of activity in the autom obile industry was, of course, reflected in op erations at local parts and accessory factories in January and, according to reports, output of these plants in the first half of F ebruary was at a higher rate than in the pre ceding m onth and com pared very favorably w ith the cor responding period of 1934. Em ploym ent in Jan u ary at 35 plants reporting regularly to the Ohio State University Bureau of Business Research was up approxim ately seven per cent from December, w hereas the five-year average in crease for this period was 4.3 per cent. In contrast with a year ago em ploym ent showed a gain of 32 per cent and the index in the latest m onth was 109 per cent of the m onthly average of 1926. Increases in Jan uary shipm ents of parts to assem bly plants ranged upw ard from 50 per cent in m ost cases com pared w ith a year ago. B rick and Tile. L ittle change was reported in the brick and tile industry in this district or other parts of the coun try in the latest m onth and output continues to be only a fraction of capacity. China, P ottery. Favorable reports regarding sales, op erations, and shipm ents in Jan uary and the first half of F ebruary were received from local china and pottery m an ufacturers. Em ploym ent in Jan uary com pared favorably w ith a year ago and current prices are up slightly, but raw m aterial costs have increased considerably in the period. Several local concerns have reported sizable plant expansions or rebuilding program s in the past few weeks. E lectrical Supplies. Sales of electrical supplies, partic ularly household articles, increased in Jan uary compared with the preceding year and orders for ind ustrial m a chinery also im proved, but activity in the public utility field continued at a low level. Companies engaged in this general type of work reported an increase of 2.1 per cent in em ploym ent in January com pared w ith December and a gain of 6.5 per cent from last year, with an increase of 40 per cent from the m onthly average of 192 6. Glass. Demand for plate and safety glass in January was extrem ely heavy as a result of the high rate of activ ity at autom obile assem bly plants. Most plate glass fac tories consequently were operating at capacity, which was an increase of approxim ately 20 per cent from last year. Demands from the building trade are at a m inim um and contribute very little to the present rate of activity. Sales of containers and molded glassw are continued above a year ago and prices are m ore stabilized than they were at this tim e last year. H ardw are. Sales of hardw are in Jan uary increased from the preceding m onth and last year, and operations at local plants showed a corresponding im provem ent. W hile much of the activity has resulted from the increase in au tom obile production, sales to m iscellaneous m anufacturers, including m akers of farm im plem ents, have im proved also. M achinery, M achine Tools. M achine tool orders re ceived in Jan uary from dom estic corporations w ere slight ly larger than in December and better than in any corre THE MONTHLY BUSINESS REVIEW sponding m onth since 1930. Compared w ith a year ago the gain was substantial. Inquiries received in the first half of February, according to reports, were num erous, but orders actually placed were som ewhat lim ited. Sales of sm all tools in Jan uary were considerably larger than in the first m onth of 1934 and em ploym ent at local plants showed an increase of from ten to fifteen per cent in most cases. Sales of foundry equipm ent in January were some what larg er than in December and a sizable gain from last year was reported. F aint. Sales of paint in January com pared quite fa vorably w ith December and a year ago, although consid erable variation was reported in the type of sales. The largest gain was shown in sales of industrial paints, with a slight im provem ent reported in sales of m aterials used for m aintenance purposes and a decline in dem and for household paints. The industry as a whole, several im portant units of which are located in this district, enjoyed a better volume of sales in 1934 than for several years. The accom panying chart shows m onthly dollar sales of paints, varnish and lacquer products as reported by about 600 m anufacturers to the D epartm ent of Commerce for the past three years. Sales in each m onth of 19 34 were larger than in the corresponding m onth of 1933 and 19 32, and the gain in total sales for the entire year was 26.8 per cent from 1933 and 38.9 per cent over 1932. Em ploy m ent and payrolls have shown sizable increases, although the gains w ere not so large as in total sales, judging by the indexes of the Bureau of Labor Statistics. Factors which have stim ulated dem and for paint in recent m onths and continue to influence activity in the industry have been the various program s of the F ederal H ousing Ad m inistration, which have encouraged home m odernization and renovizing, the increased activity in the autom obile industry, and the slight im provem ent in general m anu facturing. Prices of raw paint m aterials, particularly oils, are higher than a year ago, but zinc and lead prices in the latest m onth were slightly lower than at this tim e last year. P aper, Box board. Production of fine paper, including stationery, so far this year has been about ten per cent higher than in the corresponding period of 19 34. De m and for boxboard and paper containers has been quite satisfactory, although slightly less than was expected by some m anufacturers. Prices are little changed from a year ago. Shoes. Shoe factories in the fourth district in Jan u 5 ary were very active and production in the m onth at 24 factories (prelim inary) was 41 per cent ahead of the same period of 1934 and larger than in any sim ilar m onth since 1929. Dollar sales in Jan uary in this district at reporting departm ent stores were slightly above a year ago, but reports for other sections of the country in dicated a falling-off because of the unfavorable w eather prevailing in m ost areas of the country. C urrent shoe prices are slightly higher than at this tim e last year, but the cost of both raw m aterials and labor was greater in the early p art of 1935 than a year ago. TRADE R etail R etail trade in Ohio in Jan uary was stim ulated by the im m inence of the three per cent sales tax which became effective Jan uary 27. Buying throughout the state was in larger volume than in other sections of the district or the entire country. Gains at stores in principal Ohio cities ranged from 14 to 31 per cent in Jan uary com pared with a year ago, the average increase being 21.8 per cent, w hereas dollar sales at P ittsburgh stores were ap proxim ately the same as in Jan uary last year and a de cline of four per cent was reported in W heeling. In the entire country departm ent store sales in Jan uary were four per cent larg er than in the opening m onth of 1934. Jan uary dollar sales in the fourth district averaged 14.5 per cent larger than in 1934, arid the decline from December was som ew hat less than seasonal. The ad justed index of daily average sales rose to 77.4 per cent of the 192 3-1925 m onthly average com pared with 74.1 per cent in December. A rise of eight points in this index has occurred in the two m ost recent m onths and in the latest period it was higher than since 1931. W hile gains were shown in the m ajority of the prin cipal departm ents at reporting stores, increases were most pronounced in the furn iture and house furnishings de partm ents. Sales of electrical appliances were 46 per cent larger in Jan uary than a year ago; furn iture sales were up 42 per cent and other house furnishings 24 per cent. Sales of furs, linens and domestics, and toiiei articles were considerably larger in Jan uary than a year ago. There was rath er a sharp increase in the volum e of credit sales in January, the ratio of all credit to total sales in the m onth being 58.7 per cent com pared with 5 3.5 per cent in December and 55 per cent in January 1334. All of the increase was in installm ent sales, 7.9 per cent of total sales m ade in the m onth being of this type. Collections in Jan uary im proved slightly, 37.8 per cent of all accounts receivable on Jan uary 1 being paid in the m onth. This was an increase both from December and Jan uary 1934. Collections on both regular and install m ent accounts im proved in the period. The dollar value of stocks at departm ent stores was reduced more than seasonally from December and on January 31 was 4.9 per cent sm aller than on the same date of 1934. The seasonally adjusted index was 59.6 per cent of the 1923-1925 m onthly average compared w ith 61.2 per cent in December. D ollar sales in base m ent departm ents of reporting stores were 8.6 per cent larger in Jan uary than a year ago and the percentage of 6 THE MONTHLY BUSINESS REVIEW basem ent sales to total sales was som ewhat sm aller than in other recent m onths. D ollar sales of reporting furn iture stores in the dis trict were 33 per cent larger in January than a year previous, and here again the largest increases were shown by Ohio reporting stores. Chain grocery sales, per indi vidual unit operated, were 14 per cent larger in January than in the opening m onth of 19 34 and chain drug sales were up 6.1 per cent in the same period. Reporting wearing apparel stores experienced an increase of 17 per cent in dollar sales in January, while in the fiscal year ended Jan uary 31 an increase of 14.5 per cent was reported. There was a som ewhat greater-thanW holesale seasonal increase in dollar sales of fourth district reporting wholesale grocery and drug firms in Jan uary from the preceding m onth, but sales of the latter type were down three per cent from Jan uary 1934, while wholesale grocery sales were up 14 per cent. Much of this gain, however, rep resented higher food prices. Dollar sales of reporting hardw are firms were slightly sm aller in January than iii the sam e m onth of 19 34, and were down seasonally from December. Sales of reporting w holesale dry goods firms in Jan uary were 5.6 per cent larger than a year ago, but a reduction of ten per cent in sales was shown from De cember. The dollar value of stocks at reporting stores was slightly lower on Jan uary 31 than on the same date of the preceding m onth. Commodity The general level of wholesale prices in Prices the United States in m id-February was higher than since 1930 and the gain since the first of the year has been quite rapid. Compared with a year ago the B ureau of L abor’s index of 784 com m odities wTas up eight per cent, and the rise from the low point in M arch 19 33 has been nearly 33 per cent. The accom panying chart, however, shows th a t the rise has not been well distributed; it has been confined chiefly to two m ain groups, farm products and foods. The lines representing the changes in these two groups rose above all other comm odities for the first tim e since 1931 in the case of foods and since 1930 so far as farm products were concerned. The price index of farm products was 27 per cent higher than a year ago and the gain from the recent low of early 1933 has been 94 per cent. Food prices, which to a cer tain extent have paralleled prices of farm products, have increased nearly ten per cent in the past two m onths, and are 23 per cent higher than a year ago and 54 per cent above the low of 1933. On the other hand the average price of all other com m odities has shown practically no change in the past year. In fact the current index of these prices was slightly under a year ago and only 18.8 per cent above the low level of early 1933. The fact th at this group has shown only a m oderate rise from the low point and practically no in crease in the past year would seem to indicate th a t much of the rise in prices has been a result of shortages in the farm products’ group, particularly in grains and live stock, which have caused food prices to advance quite sharply. BUILDING The dollar value of construction contracts aw arded in the fourth district in Jan uary was up sharply from Decem ber, but was 65 per cent sm aller than a year ago. The unfavorable com parison w ith last year was due to the fact th at contracts aw arded for public works, financed chiefly by Federal funds, were at their peak in th at m onth, w here as in Jan uary of this year such contracts had a relatively sm all value. R esidential contracts aw arded in the fourth district in Jan uary com pared favorably w ith December and also with January 1934; gains of 71 and 98 per cent, respectively, were shown from those two periods. An increase in resi dential construction is som ew hat unusual for this season of the year, but activity of the Federal H ousing Adm inis tration and the fact th a t building funds at lower rates than have prevailed for some tim e are now available through some banks and also the Federal building and loan associations, has slightly stim ulated activity in this field. Despite the im provem ent, however, total volum e of residential construction is still much below the average of form er years. There was an increase in commercial building and factory construction contracts aw arded in Jan uary com pared w ith December and Jan uary of last year. The gain in the latter type of building was chiefly a result of the aw arding of three contracts for new iron and steel mills, although m iscellaneous factory construc tion also improved. A fu rth er increase in residential building was reported in this section in the first half of F ebruary and the daily average dollar value of contracts aw arded for non-residential building in the period, other than public w orks and utilities, was slightly larger than in F ebruary 1934. AGRICULTURE The annual inventory of livestock on farm s made by the crop reporting board of the D epartm ent of A gricul ture, as of Jan uary 1, revealed a decrease in the num ber and an increase in the value of each species, com pared w ith the preceding year. This was the first tim e on record when a decline occurred in all types and the composite decrease for the entire country in the num ber of anim al units, which m akes allow ance for the difference in size and feed requirem ents of the several species, was approx im ately 13 per cent. This drop was m ore than twice as large as has occurred in any of the past 44 years, and the 7 THE MONTHLY BUSINESS REVIEW num ber of anim als on farm s throughout the entire coun try was the sm allest since 1900. Because of an increase in livestock prices in the past year the total value of all livestock on farm s on Jan uary 1, at $3,102,136,000, was about eight per cent higher than a year ago and the highest since 1931. In the individual species the increase in the value per head was most m arked in the case of hogs and least in the case of sheep. In the states of this district there was a slight increase in the num ber of horses on farm s in the year 1934, but the value per head and consequently the total value in creased quite sharply in the period. In Ohio the average value per horse was reported to be $111 on Jan uary 1, com pared w ith $100 at the beginning of 1934 and $87 in 19 33. Corresponding increases were shown in other states, although the average value per horse in K entucky and W est Virginia was less than in Ohio, while in Pennsyl vania it was greater. There were slightly fewer cattle on farm s in this sec tion on January 1 than a year ago, but the decline was much sm aller than in the country as a whole. In Ohid the reduction was three per cent, in W est V irginia five per cent, while in K entucky an increase of two per cent, and in Pennsylvania a gain of one per cent was reported. The total value of these anim als at the beginning of the year was som ewhat higher than a year previous, but was about the same as at the beginning of 1933. Debits to Individual Accounts 4 weeks ended Feb. 20, 1935 41,753 Akron. . ............ 5,690 Butler................ 24,141 Canton.. . . . . . 237,491 Cincinnati Cleveland. . 349,617 151,268 Columbus........ 44,959 Dayton............. 17,716 Erie.................... 2,209 Franklin........... Greensburg. . . 4,216 7,605 Hamilton......... 1,877 Homestead.. . . 25,719 Lexington......... 7,143 Lima.................. 2,668 Lorain................ 5,832. Middletown.. . 6,638 Oil City........... Pittsburgh 512,922 Springfield 11,854 5,672 Steubenville... 76,227 Toledo.............. 5,657 Warren............. 22,458 Wheeling......... 29,851 Youngstown. . . 5,346 Zanesville......... Total............. 1,606,529 (Thousands % change from 1934 + 1 2 .5 + 3.9 + 4.3 + 11.3 +1 1 .5 + 7 0 .0 + 4 2 .4 + 1 4 .8 + 3.2 + 15.7 + 2 2 .1 + 3 9 .2 — 11.5 + 11.0 + 2 5 .8 + 1 2 .0 + 2 0 .7 — 1.1 + 1 8 .3 + 1 7 .6 — 1.0 + 1 1 .6 — 2.4 + 13.1 + 1 9 .3 +10 .1 of Dollars) Year to date Year to date Jan. 2, 1935 Jan. 3, 1934 to to Feb. 20, 1935 Feb. 21, 1934 71,945 88,222 11,518 11,827 46,804 48,572 436,675 485,650 649,407 755,374 180,401 300,456 63,823 91,331 31,285 37,782 4,395 4,833 7,569 10,308 12,692 15,049 2,851 3,606 47,900 55,973 13,528 15,400 4,088 5,243 10,528 12,341 11,336 14,312 1,003,238 1,139,448 20,659 24,405 9,530 11,077 145,256 162,025 9,621 10,623 48,346 48,706 48,156 58,777 9,618 11,094 2,901,169 3,422,434 % change from 1934 + 2 2 .6 + 2.7 + 3.8 + 1 1 .2 + 16.3 + 6 6 .5 +43.1 + 2 0 .8 hio.o -36.2 -18.6 [-26.5 (-16.9 [-13.8 [-28.3 [-17.2 [-26. 3 -13.6 -18.1 -16.2 b ll.5 -10.4 - 0.7 -22.1 -15.3 + 1 8 .0 Fourth D istrict Business Indexes (1923-1925 = 100) Bank Debits (24 cities).............................................. Commercial Failures ( N u m b e r ) ........................... ” ” (Liabilities)................. Sales— Life Insurance (O. & P a . ) ......................... ” — D epartm ent Stores (47 firm s)............. ” — Wholesale Drugs (12 firm s)................. ” — ” D ry Goods (10 firms).. ” — ” Groceries (32 firm s). . . ” — ” H ardw are (14 firms). .. ” — ” All (68 firms)................... ” — Chain Drugs (4 firms)**........................ Building Contracts (Total).................................... ” ” (Residential).......................... Production— Coal (O., W. Pa., E. K y .) ............ ” — Cement (O., W. Pa., W. V a .). . . . ” — Elec. Power (O., Pa., K y . ) * . . . . ” — Petroleum (O., Pa., K y .)* ............. ” — Shoes..................................................... *December. **Per individual unit operated. Jan. Jan. Jan. Jan. Jan. 1935 1934 1933 1932 1931 77 122 57 55 68 71 71 172 221 174 27 45 135 218 271 120 88 89 116 109 43 55 72 59 52 84 101 75 97 100 29 49 37 24 39 48 57 76 70 61 37 49 50 30 49 70 59 43 52 64 77 86 73 65 77 15 38 69 9 24 29 11 6 6 11 68 55 51 83 74 6 IS 20 42 5 152 139 129 141 152 97 97 112 106 106 67 61 68 70 96 The num ber of sheep and lam bs on local farm s was little changed on Jan uary 1 from a year previous, but the total value was som ewhat greater. The reduction in the num ber of swine on fourth district farm s in 1934 was som ewhat sm aller than in the entire country, partly because the corn-hog reduction program of the AAA was not entered into by local farm ers with the enthusiasm shown in some of the other Corn-belt states. Despite the fact th a t the num ber of swine was reduced approxim ately 30 per cent in 1934, the total value of those rem aining on farm s on January 1 was slightly greater than a year earlier. Wholesale and Retail Trade (1935 compared with 1934) Percentage Increase or Decrease COLLEC TIONS SALES STOCKS Jan. Jan. Jan. 1935 1935 1935 DEPARTM ENT STORES (49) +3 1 .3 + 9.6 +1 7 .5 + 2 7 .9 — 6.3 + 2 2 .2 + 1 5 .5 + 0.6 + 1 8 .6 + 14.0 — 3.9 + 1 3 .8 + 0.1 — 13.0 + 7.9 +19.1 + 3.1 — 4.1 + 2.7 +is>!9 + 2 8 .7 + 6.0 + 1 9 .8 + 1 4 .5 — 4.9 + 1 4 .4 WEARING APPAREL (12) + 1 7 .9 — 7.8 + 2.1 + 3.9 + 3.2 + 9.0 + 2 0 .9 + 7.9 + 1 2 .7 + 17.1 + 1.7 + 9.3 FURNITURE (42) + 7.0 + 2 7 .8 + 2 4 .0 + 8.9 + 28.0 + 1 5 .0 + 58.2 + 7.6 + 53.3 + 2 9 .8 + 57.4 + 2 3 .3 + 33.4 + 15.0 CHAIN STORES* Drugs— District (4) ............................... + 6.1 + 14.3 Groceries— District (5)................... . WHOLESALE GROCERIES (32) + 52-0 Cleveland....................................................... + 6.3 Erie................................................................... + 24.4 Pittsburgh...................................................... + 15.7 + 11.9 + 16.8 + 14.0 + 4.9 + 12 .4 WHOLESALE DRY GOODS ( 10)... + 5.6 + 0.2 + 1 8 .4 WHOLESALE DRUGS ( 13) . . . _____ — 3.0 — 11.1 WHOLESALE HARDWARE (14>i... — 1. 5 — 0.03 *Per individual unit operated. Fourth Statistics D istrict Business (000 omitted) Fourth District Unless January J anuary Otherwise Specified 1935 1934 Bank Debits— 24 cities. . ............ . . . ................ $ 1,833,000 1,543,000 Savings Deposits—end of month: 41 Banks, O. and Pa.......... .............. ................ $ 664,768 629,778 Life Insurance Sales: Ohio and Penna................................... ................3 100,194 73,221 Retail Sales: 13,581 Dept. Stores—49 firms..................... ................ $ 11,860 Wearing Apparel— 12 firms. . . . . . ................ $ 699 597 Furniture— 42 firms........................... ................£ 627 470 Wholesale Sales: Drugs— 13 firms.................................. ................ $ 1,453 1,499 Dry Goods— 10 firms........................ ................ $ 955 904 Groceries— 32 firms............................ ................3 3,978 3,490 Hardware— 14 firms........................... ................ $ 956 971 Building Contracts— Total................ ................ $ 11,452 32,645 1,867 ” ” — Residential. . . ................ $ 944 Commercial Failures— Liabilities., ................$ 1,201 1,998 1032 ” ” — Number. . . . 1042 Production: Pig Iron, U. S................................. 1,447 1,215 Steel Ingot, U. S............................... 2,834 1,997 229,1992 113,6522 Auto— Pass. Car., U. S..................... 63,5662 43,2552 Auto—Trucks, U. S........................... Bituminous Coal.............................. 13,311 12,325 Cement— O., W. Pa., W. Va . , Bbls. 54 66 1,2801 Elec. Power— O., Pa., Ky.............. . . . k. w.h. 1,1651 Petroleum— O., Pa., Ky.................. . . Bbls. 1.9641 1,7961 s 3 3,665i 2,9901 Tires, U. S............................................. 1 December 2Actual Number 8Confidential % change + 1 8 .8 + 5.6 + 3 6 .8 + 1 4 .5 +17.1 + 3 3 .4 — 3.1 + 5.6 + 1 4 .0 — 1.5 — 64.9 + 9 7 .8 —40.0 — 1.0 +19.1 + 4 1 .9 +101.7 + 4 7 .0 + 8.0 — 18.2 + 9.9 + 9.4 + 4 0 .8 +2 2 .6 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Federal Reserve Board Industrial output, which had snown a rapid grow th in December, in creased fu rth er in January. Activity in the building industry continued at a low level. W holesale commodity prices advanced considerably during Jan uary and the first half of F ebruary, reflecting chiefly m arked increases in the prices of livestock and livestock products. Production and Em ploym ent Indexes of factory employment and payrolls, without adjustment for seasonal variation (19231925™ 100). Latest figures, January, employ ment 78.6; payrolls 64.1. Volume of industrial production, as m easured by the B oard’s seasonally adjusted index, increased from 86 per cent of the 1923-25 average in Decem ber to 90 per cent in January. Activity in the steel and autom obile indus tries continued to increase rapidly during Jan uary and the early p art of Feb ruary; in the m iddle of the m onth, however, steel production declined. Out put of lum ber increased in Jan uary but was still at a low level. At cotton and woolen textile mills activity showed a considerable grow th while in the m eatpacking industry output declined. O utput of crude petroleum increased furth er in Jan uary and the first half of February. Factory em ploym ent and payrolls increased som ew hat between the m id dle of December and the m iddle of January, although a decline is usual at this season. At autom obile factories the volum e of em ploym ent increased furth er by a large am ount and there were substantial increases at steel mills, foundries, and woolen mills. Em ploym ent in the m eatpacking industry con tinued to decline and in Jan uary was at about the same level as a year ago. Among the non-m anufacturing industries, the num ber employed at retail trade establishm ents and on construction projects showed declines of a sea sonal nature. Value of construction contracts aw arded in January, as reported by the F. W. Dodge Corporation, was slightly larger than in December but consid erably sm aller than a year ago, when the volum e of public projects was ex ceptionally large. The value of contracts aw arded for residential building in the three m onths from Novem ber to Jan uary was about the sam e as in the corresponding periods of the two preceding years. WHOLESALE PRICES D istribution Index of industrial production, adjusted for sea sonal variation (1923-1925 = 100). Latest figure, January, preliminary 90. 1 oiiher r \ \ Farm Pri 1929 1930 1931 1 1932 w \J 1933 1934 1935 Indexes of the United States Bureau of Labor Statistics (1926 = 100). By months 1929 to 1931, by weeks 1932 to date. Latest figures February 13. Farm products 79.3; foods 83.1; other com modities 77.7. Wednesday figures for reporting member banks in 91 leading cities. Latest figures are for February 13. F reight-car loadings showed a seasonal grow th in January. At depart m ent stores the volum e of business declined som ew hat m ore than is usual after the C hristm as holidays. Commodity Prices The general level of wholesale commodity prices, as m easured by the index of the Bureau of Labor Statistics, advanced from 77.9 per cent of the 1926 average in the week ending January 5 to 79.4 per cent in the week ending February 16. D uring January prices of cattle and beef showed sub stantial increases and in F ebruary the price of hogs advanced considerably. Prices of cotton, grains, and silk showed a decline in Jan uary and the first few days of February, followed by an advance in the m iddle of the m onth. Bank Credit D uring the five weeks ended F ebruary 20 m em ber bank balances with the Reserve banks increased by $260,000,000 and th eir excess reserves rose to about $2,300,000,000. The principal factors in the increase were an in flow of gold from abroad and disbursem ents by the T reasury of funds pre viously held as cash or on deposit w ith the F ederal Reserve banks. Net dem and deposits of weekly reporting m em ber banks in leading cities increased by m ore than $200,000,000 in the four weeks ended F ebruary 13. Total loans and investm ents of these banks showed no significant changes during the period. Slight declines occurred in loans on securities and in holdings of direct obligations of the United States Governm ent, while other loans and other securities increased som ewhat. Yields on United States Governm ent securities declined slightly fu r ther and other open m arket money rates continued at a low level.
@FedFRASER