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MONTHLY BUSINESS REVIEW Covering Financial/ industria and agricultural condition: Vol. 23__________________ Fourth Federal Reserve District Federal Reserve Bank of Cleveland Cleveland, Ohio, February 28, 1941_____________________ No. 2 NATIONAL DEFENSE AND RESERVE BANKS have been awarded or funds committed for all but about % V /z billions of the $16 billions initial program. Contracts totaling approximately $400 millions were directly to con cerns in the Fourth Federal Reserve District. It has been announced that the defense program contemplated at the present time, without provisions for supplying materials to Great Britain under terms of the Lend-Lease Bill, will involve the expenditure of at least $28 billions for defense materials and provisions. It has been the practice of the armed service to award contracts for goods which can be produced in commercial plants to established concerns through competitive bidding. Contracts for special defense materials, for which limited or no production facilities exist, are negotiated with suc cessful industrial organizations having managerial ability. Once the contract is awarded, the Government purchasing agencies look to the firm for complete performance under that contract. Under Mr. Brainard’s direction there is being established The industrial system of this country has been described an organization which will endeavor to see that the sec as the “ subcontract solar system” whereby groups of skilled ond phase of the defense program, which is actual produc subcontractors revolve about major prime contractors. As tion of the needed articles, is speedily carried forward. The was pointed out last month, subcontracting operations are prime objective of the whole defense program is to obtain very important in the fourth district. This, together with acceptable defense production in the shortest possible time, the fact that a major portion of the contracts awarded have and it appears that this may be best accomplished by spread been for shipbuilding and airplane manufacture— industries ing the work, getting more bidders on direct Government which are located largely outside of this district, accounts in contracts, and developing more subcontracting of these con part for the fact that a relatively small amount of direct Gov tracts. ernment contracts has been placed with plants in this area. The Federal Reserve System, with its twelve offices At the present time, as a result of awarding large, and in and twenty-four branches with headquarters in Washington, some cases numerous contracts to relatively few concerns, has facilities which can assist in speeding up the defense the problem of subcontracting assumes more than usual im program. When the new defense organization is function portance. Facilities of parts and material concerns, which ing, it will be able to answer questions with respect to Gov customarily supply the companies to which Government ernment purchasing procedure and offer counsel with re contracts have been awarded, are rapidly becoming com spect to financing problems growing out of defense work. pletely occupied even though the production phase of the In addition, facilities are to be developed which may as defense program is just getting under way. sist in bringing together principal contractors wishing sub At the same time, however, there is felt to exist facili contracting assistance and subcontractors who want a part ties in other plants which are unknown to companies re in the defense program. To accomplish these objectives ceiving Government contracts. A number of these might services of persons with engineering ability and industrial well be utilized in defense work. This is especially true of experience are to be made available at each Federal re strategic equipment in such plants wrhich is used only in serve bank. cidentally in the completion of the companies’ peace-time The first phase of the defense program consisted of award products. Many of these concerns are anxious to obtain ad ing contracts to companies equipped to handle such work ditional orders and also assist the defense program. The by the War and Navy Departments. To date, contracts new program is designed to bring together the plants seek To assist in the National Defense Program, facilities de voted to defense work are being expanded at each of the twelve Federal reserve banks. This is part of the recentlyannounced program proposed by the newly-created Defense Contract Service, Office of Production Management. Mr. George C. Brainard has been appointed Fourth District Coordinator of Defense Contract Service by Mr. William S. Knudsen of the Office of Production Management. Mr. Brainard has been president of the General Fireproofing Company, Youngstown, Ohio, since 1928. He was appointed Class “ C” director of the Federal Reserve Bank of Cleve land July 31, 1936. He has been Chairman of the Board since January 1939. From 1918 to 1920 he was staff expert with the Production Division of the Ordnance Department, United States Army, in charge of shell forging. At pres ent, he is serving as Assistant Chief of the Cleveland Ord nance District. 2 THE MONTHLY BUSINESS REVIEW ing subcontracting assistance and the companies wishing additional work which are equipped to handle such work. Information with respect to facilities available at sub contracting plants is to be assembled and cataloged in such a way that assistance may be given to principal contractors who might be seeking subcontracting facilities. Through the services of the Defense Contract Department now being or ganized, it may also be possible to advise some subcon tractors how to adapt their facilities to defense work. Not all companies wishing subcontract work are equipped mechanically or with personnel to do the type of work that is required in many cases. However, as defense production steps up and subcontracting facilities are needed by primary contractors, it is hoped concerns which can best do that part of the defense job will be drawn into such service so the program can be completed in the shortest possible time. Any company wishing to make known its facilities which might be adapted to defense work and any company re quiring subcontracting assistance should communicate with the Federal reserve bank of its district. DISTRICT BUSINESS SUMMARY Since many important fourth district industries have op erated near the practical limits of capacity for some time, there was little fundamental change in the general rate of activity during January, save that several new monthly records were established. Operating schedules in a few continuous production industries like steel were rearranged early in February in order that deteriorated facilities might be renewed, but in many cases suspensions at one plant were offset by resumption of output at another. Incoming business continued in large volume, especially for heavy goods and other items directly related to the defense pro gram, though some leveling off in demand for certain types of products, especially style merchandise, appeared in midFebruary. Retailers generally had ordered spring and sum mer lines in somewhat greater quantities than usual when goods were first offered, and the subsequent decline con sequently was largely seasonal in nature. Though reorders were received by manufacturers, they were not in sufficient volume to maintain backlogs, prompt shipments being made according to requests. In some other industries, unfilled orders continue large, after reaching record levels. Further improvement was evident in Ohio industrial em ployment during January. The seasonally adjusted index computed by the Bureau of Labor Statistics rose one point to 118 percent of the 1926 average. A year ago the index was 95; at the peak in 1929 it was 118. Greatest gains re ported last month were at electrical machinery factories and automobile plants. Although dollar value of sales declined somewhat more than seasonally from the high December total, volume of re tail trade at reporting fourth district department stores last month was the best for any January since 1929. Siz able increases over a year ago were reported during the first weeks of February. Gains averaging approximately 20 percent were well distributed among principal trading centers. Because coastal yards are filled with Navy and Mari time Commission work, shipbuilding on the Great Lakes has assumed a significance unapproached since World War years. Twelve anti-submarine net tenders are to be con structed by a fourth district firm. In addition, four ocean fishing trawlers, which in more ordinary times probably would have been laid down at an Eastern yard, are to be built on Lake Erie between now and November. A large ore carrying company has announced its intentions to have two bulk freighters completed before the 1942 Great Lakes' navigating season. One of the Navy vessels was launched early in February, the first ship to come off construction ways into Lake Erie in recent years. FINANCIAL Federal Reserve Bank of Cleveland condition statements showed little change in the volume of credit outstanding during the four weeks ended February 19, save that there was a steady decline in the amount of bills discounted for mem ber banks and in direct industrial advances. However, the dollar change was comparatively small in both cases. Dis counts decreased to $53,000 from $93,000 during the four weeks. This amount of borrowing was done by only a few small banks, for most possessed large excess reserves. On January 31, reserves maintained by member banks in this district were 131 percent in excess of requirements. Direct advances to industrial concerns under section 13b of the Federal Reserve Act increased slightly during the first two weeks of the latest period, but then receded to the lowest total— $217,000—given on any reporting date in more than six years. In addition to making direct loans for working capital purposes, or issuing commitments to make such loans, re serve banks may make commitments to take over all or an agreed portion of loans made by financing institutions (o r dinarily the bank with which the concern involved does business) to established industrial or commercial businesses. Rates established by Federal Reserve Bank of Cleveland on February 1 with respect to advances and commitments under section 13b of the Federal Reserve Act, are: Advances direct to industrial or commercial busi nesses, 3>4 to 5 percent per annum. Advances to industrial or commercial businesses made through financing institutions, rate fixed by financing institution. Advances to financing institutions secured by obliga tions evidencing working capital loans made tinder the provisions of section 13b: On portion of such advances for which the financ ing institution remains obligated, 1 percent per annum less than the rate to the borrower. Reserve Bank Credit THE MONTHLY BUSINESS REVIEW On portion for which the financing institution is relieved of responsibility, same as rate to the borrower. Commitments with respect to: Direct loans by Federal reserve bank, y2 percent per annum. Loans made by financing institutions: On undisbursed portion of loan, J4 percent per annum. On disbursed portion of loan, if rate to bor rower is less than percent per annum, not to exceed ^4 percent per annum. On disbursed portion of loan, if rate to bor rower is 2>y2 percent per annum, or more, not to exceed 1 percent per annum. Commitments made by Federal Reserve Bank of Cleve land have increased slightly in dollar volume since the be ginning of the year, but at $745,000 on February 19 they were about 25 percent smaller than on the corresponding date a year ago. Reserve bank holdings of Treasury obligations remained constant at $215,303,000 during the four latest weeks. This compares with $252,665,000 a year ago. Note circulation of this bank declined during January from the pre-holiday level, only to expand considerably in the latest four weeks. On February 19, $547,687,000 of Fed eral reserve notes were outstanding. This total is less than one percent under the seasonal peak reported Christmas week. Member Bank Credit Commercial, industrial, and agricultural loans of fourth district weekly reporting member banks have risen almost uninter ruptedly for 26 consecutive weeks, as the accompanying chart indicates. Most marked increases have occurred since late November when distribution of defense orders became more widespread and an increasing amount of subcontract work was arranged for by manufacturers holding direct Government contracts. A net increase of $14,000,000 in commercial loans was reported by leading banks in this district in the two weeks ended February 19. Amounting to $352,000,000 on February 19, such loans were 7% percent larger than four weeks earlier and 19 percent above the total reported at the peak in 1937. Loans for other than commercial, industrial, and agricultural purposes showed practically no change since the beginning of the year. Member bank security portfolios were altered somewhat during the four weeks ended February 19. Holdings of Treasury bonds were reduced $12,000,000 while Treasury note ownership was increased $34,000,000, continuing the exchange of long-term for short-term obligations evident in recent months. Part of the larger note holdings repre sented purchase by banks in this district of a portion of the defense issue sold by the Treasury late in January. Adjusted demand deposits at fourth district banks which report weekly were slightly larger on February 19 than four weeks earlier; there had been a marked expansion late in January to the highest total—$1,634,000,000— ever report ed. Subsequently there was a moderate decline. Time de posits continued to increase during the period. NEW MEMBER BANK The Killbuck Savings Bank Company, Killbuck, Ohio. MANUFACTURING, MINING Iron and Steel The expansion in steel production that had continued uninterrupted since mid summer 1940, with the exception of the seasonally expected holiday recession at the year end, halted momentarily late in February. For six consecutive months previously, national output exceeded 6,000,000 net tons per period, a performance never before approached. January production established a new monthly record at 6,943,084 tons for all types of raw steel. The sustained high rate of activity resulted in deterioration of metal-producing facili ties, and steelmakers late in February withdrew a consid erable number of furnaces for relining. Operations were estimated at 94.6 percent of theoretical capacity the third week in the month, after averaging 97 percent during Janu ary. The following week the estimate was 96.3 percent. Operations in both the Pittsburgh and Youngstown re gions were hampered late in January and early in Febru ary by labor stoppages. A dispute closed all departments of one plant near Pittsburgh, but furnace additions at other mills offset any loss in raw steel production, the district rate remaining at 95j^-96}^ percent of capacity from early January until mid-February. At that time several melters shut down a number of open hearths for relining, and the rate declined two points. In the Youngstown territory ingot production moved off from 94-95 percent to 90 percent. After operating at theoretical capacity for five consecutive weeks, Wheeling mills suspended for furnace repairs the third week in February, the rate dropping twelve points. Schedules in the Cincinnati and Cleveland-Lorain areas were held at 95 percent and 84yi percent, respectively, dur ing the first three weeks of the month. Three blast furnaces in the fourth district, two of which had not been operated for nearly 40 years, have been taken off the list of stacks available for use, leaving 186 in the territory where pig iron producers depend primarily upon Lake Superior iron ore; 167 of these were in operation on February 1, one more than a month earlier. The greatest proportion of these furnaces is located in this district. Throughout the nation, there are 229 stacks which might be operated; on February 1, 205 of this number were ac tive. January pig iron production was 4,666,233 net tons. This record-breaking total compares with 4,542,864 tons in the previous month and 4,024,556 tons a year ago. Consumption of iron ore has risen steadily during the last nine months. Reaching an all-time peak, 6,333,018 gross tons of Lake Superior ore were used during January. Stocks at consuming furnaces and on Lake Erie docks were reduced accordingly to 29,794,047 tons at the month end. A year before, when consumption was averaging approxi mately 4,750,000 tons per month, inventories were two per cent greater. Sales of many steel companies during January were larg er than those of the previous month, comparing in some instances with October’s, which were the best in 1940. Record shipments of finished products from mills were reported in January by several manufacturers, but back logs of unfilled orders generally were increased further. Consumers recently have been purchasing farther ahead than was the practice late last year; a number of specifica tions call for third quarter delivery. Few mills have been accepting business from other than regular customers, and some have rationed types of steel in greatest demand. 4 THE MONTHLY BUSINESS REVIEW Coal Stimulated by unusually heavy demand from pig iron and steel producers who in recent months have been making more raw metal than at any other time in the past, weekly output of coke at beehive ovens in Pennsylvania early in February was at the highest level since these data first were published four years ago. Supplies of by-product coke, made principally at fully-integrated steel plants, have been inadequate for record-breaking pig iron production, and manufacturers have purchased increasingly larger quan tities of beehive coke as additional blast furnaces have been put in operation. To meet this expanding demand, great numbers of beehive ovens in Western Pennsylvania, the country’s most important beehive coke producing area, have been rehabilitated and placed in production. More than 7,100 ovens in the Fayette County field were operating in mid-February, compared with approximately 5,000 three months earlier. Many ovens are operating for the first time since World War years, and others are being rebuilt. At 16,603,000 net tons, last month’s bituminous coal out put at mines in this district was nine percent greater than it was in December, and the best for any January in a decade. National production was 2 percent smaller this January than last. Some fourth district operators in midFebruary noted that many industrial consumers continued to maintain stock piles, purchasing at about the rate sup plies were used. Wholesale dealers reported no material change in demand from mid-January to mid-February, save that colder weather in the latter month increased retail deliveries. Automobiles Automobile assembly schedules were stepped up rapidly after the year-end shutdown, and domestic production last month established an all-time record for January. Amount ing to 500,931 units, according to the Department of Com merce, output was 3j/2 percent greater than that of Decem ber, and the best for any month since May 1937. Further expansion was reported in February; United States and Canadian production was estimated by Ward's at 129,240 units the third week in the month. The continued high rate of activity reflected not only unusually brisk retail demand for this season of year, but also efforts of manufacturers to provide large dealer stocks against the eventuality of pos sibly limited production should the industry participate more actively in the defense effort. During January 371,800 passenger cars and trucks wrere delivered to purchasers, according to estimates of the Au tomobile Manufacturers' Association. This total compares with 379,700 units in the previous month and 285,400 a year ago. Since January production exceeded deliveries by approximately 120,000 cars, it is evident that inventories in transit, in warehouses, and on dealers’ floors were en larged last month, probably to record levels. In some fourth district cities, distributors contracted for storage space in public warehouses. Used car inventories also were reported larger than those at the peak late last spring. Operations of many fourth district parts and equipment manufacturers were increased early in the year in antici pation of expanding output at automobile assembly plants. Working forces were substantially larger than those of a year ago, and a few additions were reported in early February when schedules were rearranged somewhat. One correspondent noted in mid-February a heavy demand for truck items. In addition to producing ordinary parts and ac cessories, several equipment makers have been doing sub contracting work for airplane, truck, and tractor compa nies. Some also have received sizable direct Government contracts for shells, fuzes, boosters, and other ammunition components. Rubber and Tires Defense contracts received by major rubber companies in this district to a large extent have been superimposed on a somewhat hetter-than-ordinary demand for tires and me chanical goods. As a consequence, the continued high rate of activity in most divisions of the industry has been re flected in extraordinarily heavy consumption of crude rub ber. United States manufacturers in January used 64,225 gross tons, a new high for a single month. This compares with consumption of 56,539 tons in December and 54,978 tons a year ago. Volume production of defense items, such as gas masks, tank tracks, barrage balloons, and special heavy-duty tires for mechanized artillery, fabrication of which requires comparatively large amounts of rubber, has been reported. Although 10,000 tons less crude rubber were imported last month than in December, January receipts of 86,833 tons were the second best on record, and exceeded those of a year ago by 20 percent. Inventories were increased ac cordingly. However, a greater proportion of total imports was consigned to the Rubber Reserve Company last month than in other recent periods; 96 percent, or 21,527 tons, of the excess of receipts over consumption wras added to the strategic material pool. Amounting to 340,847 tons, total stocks on January 31 were the largest for any inventory date in six years. Tire production increased 9y2 percent betwreen Decem ber and January, somewhat less than did crude rubber con sumption; 5,472,043 casings were made last month, com pared with 4,998,520 in December and 4,953,585 a year ago. Manufacturers’ shipments declined during January for the third consecutive month, largely as a result of smaller original equipment sales. Replacement demand increased about seasonally in January from the previous month, and exceeded shipments of a year ago by nine percent. Fac tory sales totaled 4,846,991 casings, compared with 4,270,137 last year. During December 4,971,504 tires were shipped. 5 THE MONTHLY BUSINESS REVIEW Clothing: and Textiles Clothing manufacturers began shipping spring and summer merchandise about the middle of January. Backlogs of un filled orders were reduced seasonally after that time as shipments continued large. Employment at Ohio needle work factories declined three percent from December to Jan uary, according to Bureau of Labor Statistics data. Pay rolls dropped more sharply, by 28 percent. Experience was not similar at all shops. A few were operating near capacity, on a single shift basis, during the first weeks of Febru ary, as they had done in the previous month. Incoming business was in sizable volume and some could not readily handle fill-in orders for heavy-weight goods specifying im mediate delivery. Though clothing makers still were concerned about sup plies of cloth, they apparently were less apprehensive early in February than a month before. Prices on representative woolen fabrics for the fall and winter season announced by leading textile manufacturers late in January averaged approximately 25 cents per yard higher than quotations on comparable cloths published last August for the current season. Speculative buying reportedly was being discour aged, and in some instances cloth was being allocated on the basis of a clothing maker's average consumption dur ing the last five years. In other cases, textile companies had limited the amount of goods for which their selling agents might contract. Congressional action permitting the Quartermaster Corps to advertise and accept bids for heavy weight goods required next winter perhaps had a somewhat steadying influence on the market. In the past, such quo tations could not be called for before late summer. Other New business received by many importManufacturingant fourth district manufacturing indus tries continued in large volume during January and the first part of February, exceeding that of a year ago by a considerable margin. Despite the fact that production schedules were stepped up further in many in stances, backlogs of unfilled orders generally increased dur ing January. Purchasers of small tools recently have been requesting more prompt deliveries than had been specified late last year, according to correspondents in mid-February. Opera tions have been maintained near capacity for several months, but production has not kept pace with the volume of in coming business. The malleable and steel castings divisions of the foundry industry have been operating at about 90 percent of capacity, producing approximately 170,000 tons of castings per month. An estimated five to ten percent of recent production has been of war materials. A number of orders for shell and bomb castings have been received, but this type of wwk has accounted for only a small proportion of the industry's defense orders. January sales for both new equipment and repair work by members of the Foundry Equipment Manufacturers' A s sociation were the largest ever reported, the combined in dex reaching 285 percent of the 1937-39 base. This is 21 points above the previous peak reported last October. Inability of manufacturers to get dies hampered opera tions at some drop forgings plants, with the result that un filled orders piled up gradually. In the die castings’ indus try, a tight supply situation existed in zinc and aluminum. Nevertheless, production schedules in both cases were near capacity, though future operations were uncertain. Further increases in the volume of new business booked by heavy electrical equipment manufacturers were noted last month. January orders outstripped production and back logs rose accordingly. Demand wras greatest for heavy ap paratus, there being the customary seasonal decline in or ders for heating devices and household appliances. Flat glass makers expanded operations during January, and though there was some slackening in automotive buy ing the following month, schedules were only slightly cur tailed. Operating at 96 percent of rated capacity, manufac turers in January made more window glass than during any other month in recent years. Production of 1,561,000 boxes compared with 1,458,000 boxes in the previous month and 1,413,000 boxes a year ago. Inventories of plate glass were reduced moderately during January, despite the fact that production of 19,350,000 square feet was the best for any month since June 1937. Since much of the business written at the mid-winter china and glass shows held in January specified more prompt delivery than ordinarily is requested, unfilled orders of both dinnerware and glassware manufacturers have been reduced in recent weeks as these orders were filled. A high rate of activity has been maintained in both industries, pro duction of pressed and blown glassware being unusually large for this season of year. In mid-February, operations in the dinnerware division of the ceramics industry were averaging approximately 95 percent of capacity. Starting on the road somewhat earlier than usual last fall, shoe salesmen had covered their territories fully by mid-January; after that time there was some decline in the volume of new orders received by factories. Actual fourth district production last month was the best for any January since data first became available in 1923, but the increase from the high December level was slightly less than might have been expected seasonally. Considerable improvement was evident in the paper, pa perboard, and carton industries early this year. Some large paper manufacturers reported January sales to be 25 per cent greater than those of the previous month; compared with a year ago, orders were up approximately one-third. Production c o n t i n u e d to outstrip the volume of incoming business and inventories were increased some what further. Box makers' purchases of paperboard ex panded markedly during January and the first part of Feb ruary. Unfilled orders of National Paperboard Association members in mid-month were only slightly smaller than those at the peak early last summer. Some consumers of paper boxes and cartons who customarily make commit ments for fall and Christmas goods late in the spring have been ordering such merchandise in recent weeks, accord ing to correspondents. Ordinary requirements were being taken out more freely than during past months. Paint makers in mid-February reported some shortage of essential materials; aluminum powder, toluol, and a few chemical products were rather difficult to obtain. Conse quently, production was not expanded as the volume of new business increased. Incoming orders of some companies were nearly double those of a year ago. TRADE Retail Dollar volume of retail trade in the fourth district declined somewhat more than seasonally during January from the high level attained in the closing months of 1940, but gains THE MONTHLY BUSINESS REVIEW over a year ago were marked. Reporting department stores had an average increase in sales of 7 3/2 percent as compared with January 1940. Basement store volume was up four percent. The seasonally adjusted index of total department store sales at 100.3 percent of the 1923-25 average in Janu ary was the highest for that month since 1929. For the fiscal year ended January 31, sales of all reporting stores showed a gain of eight percent when compared with the previous twelve month period. Somewhat greater than average in creases were noted in Cincinnati and Erie. Inventories at the end of January were slightly larger than those held a year earlier, in most instances. Retail outlets other than department stores also reported volume of January trade over that of the corresponding month last year. On an individual unit operated basis, chain grocery sales were up 15 percent last month, declin ing only two percent from the December level. Chain drug sales, also per individual store operated, were off 33 percent in January from the high volume of the previous month, but three percent above those of a year ago. Wearing apparel shops last month had a sales increase of five percent over January 1940. Accounts receivable were four percent larger at the end of the month this year than last. Collections during January were up seven percent when compared with a year ago. Wholesale Total sales of 216 wholesale concerns in the fourth district cooperating with the Bureau of the Census were 20 percent larger this January than last. Greatest gains were reported in Cleveland and Canton, increases there being 35 percent and 29 percent, respectively. Sales in all groups except cloth ing and furnishings and dry goods were equal to or better than those of a year ago. Declines in the two lines were small, two percent and four percent, respectively. Combined inventories of reporting merchants on January 31 were six percent larger than those of a year before, on the average. However, experience varied somewhat; dry goods firms reported a ten percent decline in stocks. Sharp increases of 30 percent in inventories of electrical goods, 27 percent in meats and meat products, and 22 percent in plumbing and heating supplies were noted. CONSTRUCTION Comparatively mild and open weather in many parts of this district for a number of weeks after the beginning of the year was well suited for most outdoor construction work, and contracts awarded for residential buildings last month were the BUILDING COST INDEXES second best for any January since 1928. Amounting to $11,045,000, eight percent under the December total, awards were exceeded only in January last year when contracts were let for two United States Housing Authority projects in and near Pittsburgh costing $7,000,000. No comparably large Federal program was undertaken this year; the only project of any considerable size was for 219 one-family dwellings costing $794,000 to be erected in Barberton, Ohio. Privately-owned building accounted for 91 percent of the residential total last month, compared with 48 percent a year ago. More work was started in all sections of the district this January than last, but percentage gains were greatest in Southern Ohio and Western Pennsylvania. Dollar value of awards was twice as large as those of the previous year, in both instances. A greater amount of speculative building of one-family houses for sale or rent was the principal fac tor effecting this increase. In Northern Ohio, contracts for single-unit homes for owner occupancy were one-third larger last month than those of January 1940. As indicated in the accompanying chart, labor and mate rials costs ©f building a frame residence in each of three large industrial areas of this district have risen steadily during the past two years. Since the base of each index is local 1926-29 costs expressed as percentages of United States average prices for these same years, direct compari sons between the computed indexes of the various territories should not be drawn because the 1926-29 base index was different in each instance. Greatest gains, in every case, were during the last four months of 1940 when extraordinarily heavy demand from both the Govern ment and private builders, including industries enlarging plant facilities or erecting new factories, raised prices of building materials, especially lumber. Dollar value of noil-residential construction contracts let in this district also has remained at relatively high levels this winter. Though declining rather sharply from the un usually large totals reported monthly during the fourth quarter of 1940, awards for factory construction in January were the second best for that month in twelve years. W ith retail distributors increasing deliveries of lumber and builders’ supplies substantially so far this year in com parison with last January and February, several wholesalers in mid-month reported that February shipments of some items were twice those of a year ago. There also was a materially greater demand from industrial consumers for crating lumber and plant construction materials. Much of this business was attributed to the defense program. AGRICULTURE Acreage Allotments The 1941 acreage allotments pro mulgated by the Ohio Agricultural Conservation Committee, for soil-depleting crops grown on Ohio farms indicate some reduction this year in planted acreage under conservation control. The accompanying table lists allotments by prin cipal crops for the 1940 and 1941 growing seasons together with total acreage harvested last year. STATE OF OHIO Acreage Acreage Acreage Allotment Harvested Allotment Soil Depleting Crop 1940 1940 1941 Corn ................................. 2,396,291 3,220,000 2,386,441 Wheat ............................. 1,838,127 1,960,000 1,847,042 Potatoes ......................... 32,100 ............ 24,912 Cigar Leaf Tobacco .. . 17,649 16,200 17,471 Burley Tobacco............. 13,264 13,800 ............................. Commercial Vegetables 75,684 ......... .. 60,579 Sugar Beets ................... 44,781 (planted) 41,000 ............ THE MONTHLY BUSINESS REVIEW Acreage allotments for burley tobacco and sugar beets have not yet been announced, though it is believed that this year’s allotment for burlev will be slightly higher than that for 1940. The State allotment for sugar beets perhaps will be cut proportionately to the national allotment which has been reduced 16/. percent. The commercial vegetable and potato allotments are not directly comparable, since in 1941 fewer counties are included in what is considered to be the producing area for that portion of these crops which is sold on markets or is canned. Total acreages of commercial vege tables and potatoes harvested last year are not available. Tobacco All Kentucky hurley tobacco auctions closed be fore February 15, after six to ten weeks of sales. Offer ings late in the season were of comparatively poor quality, and prices averaged as low as $7.79 per hundredweight on some markets shortly before they closed. An unofficial total 294,765,000 pounds were disposed of on 22 Kentuckv auc tions during the marketing season at an average price of $15.81 per hundred pounds. During the 1939-40 trading season, a seven percent smaller poundage of somewhat bet ter quality tobacco sold for $17.70 per hundredweight, on the average. Wholesale and Retail Trade (1940 compared with 1939) D E P A R T M E N T STORES (52) Akron................................................... Erie............................................... Pittsburgh.................................. T oled o.......................................... W heeling..................................... Y oungstow n.............................. Other C ities............................... D istrict........................................ W EA R IN G A PPA R E L (12) C incinnati.................................. C leveland.................................... P ittsburgh.................................. D istrict........................................ F U R N IT U R E (37) C incinnati.................................. C leveland.................................... Colum bus.................................... D ayton......................................... T oled o.......................................... Other C ities............................... D istrict......................................... C H A IN STORES* Drugs— District (5 )............... Groceries— District ( 4 ) . . . . W HOLESALE TR A D E** Clothing and Furnishings (5 )............ Confectionery (3 ).................................... Drugs and Drug Sundries (6 )........... Dry Goods (7 ).......................................... Electrical Goods (19)............................. Fresh Fruits and Vegetables (6). . . , Furniture & House Furnishings (3). Plumbing & Heating Supplies (1 2 )............... Jewelry & Optical Goods (3 )................................ M achinery, Equip. & Sup. (exc. Elect.) (7). Meats and M eat Products (4 )............................. Paints and Varnishes (6 )........................................ Percentage Increase or Decrease COLLECSALES STOCKS TIO NS January January January 1941 1941 1941 + 16.1 + 4 .7 + 15.2 + 16.6 a a + 10.8 + 10.4 + 5 .4 + 8.5 + 0 .8 + 9 .9 + 0 .8 + 7 .8 + a + 12.8 + 8.1 a + 5 .4 + 1 .0 + 6 .8 + 6.1 + 5 .7 + 12.0 — 2 .7 + 5 .0 — 4 .0 + 5.1 a a + 9 .6 + 1.7 — 8.3 + 7 .7 + 3 .4 + 7.1 + 16.9 + 9 .0 + 6.5 + 0 .4 + 6 .4 + 8.1 + 2.3 — 5.5 + 1.3 + 5.3 + 5.1 + 7.2 + 4 0 .0 + 9 .9 + 16.0 + 14.9 + 16.8 + 3 4 .3 + 3 6 .4 + 2 0 .1 + 3 0 .3 — 2.1 + 8 3 .8 + 19.5 + 3 0 .5 + 14.9 + 2 .9 a a + 14.6 a a + 3.8 + 1 .0 + 2 1 .9 + 2 5 .0 — 17.6 a — 2 .2 a + 3.8 0 a + 3.0 + 1 2 .2 a 0 — 10.2 — 3 .7 — 7.3 + 2 7 .8 + 3 0 .4 + 4 7 .7 + 6 .8 + 10. 1 + 7 .9 + 4 6 .7 a a 0 a + 8 .6 + 11.9 a + 3 8 .6 + 1 3 .3 + 10.5 + 1 2 .8 + 3 1 .1 + 4 3 .1 a + 6.5 + 3 3 .9 + 5 0 .4 + 2 2 .3 + 3 5 .5 + 4 6 .2 a + 5 5 .6 a + 14.8 + 8 7 .2 + 4 1 .1 + 2 6 .5 + 4 .5 + 4 .7 + 3 4 .1 + 8.2 0 — 2 .0 + 9.3 + 9 .0 + 9 .7 + 8 .9 0 + 3 1 .3 + 11.3 + 16.3 + 19.5 + 6.3 + 1 5 .9 D istrict— All W holesale Trade (2 1 6 )........... *Per individual unit operated. **W holesale data compiled by U. S. Department Census . a N ot available Figures in parentheses indicate number of firms. , o f Com m erce Bureau o f the 7 Fourth District Business Indexes (1923-25 = 100) Bank debits (24 cities)............................................. Commercial Failures (N um ber).......................... ” ” (Liabilities)............................ Sales— Life Insurance (O. and P a .)................... ” — Department Stores (48 firm s)............... ” — Wholesale Drugs (6 firm s)...................... ” — ” Dry Goods (7 firm s)........... — ” Groceries (48 firm s)............ ” — ” Hardware (33 firm s)........... ” — ^ ” All (94 firm s).......................... ” — Chain Drugs (5 firm s)*............................ Building Contracts (T otal).................................... ” ” (R esidential)........................... Production— Coal (O., W. Pa., E. K y .).......... — Cement (O., W. Pa., E. K y .). . — Elec. Power (O., Pa., K y.)**. . — Petroleum (O., Pa., K y .)* * .. . . M — Shoes...................................... .............. * Per individual unit operated. ** December. Jan. Jan. Jan. Jan. Jan. 1941 1940 1939 1938 1937 ill 90 78 80 96 36 45 69 64 34 30 19 33 27 55 79 83 109 73 86 75 70 67 67 69 142 126 118 111 117 39 41 35 32 46 77 71 66 69 70 91 67 54 53 75 80 70 62 63 72 94 92 91 91 95 62 52 57 41 60 64 83 48 22 65 92 88 70 59 84 50 54 24 22 33 243 234 208 193 207 116 121 117 128 127 99 123 109 126 98 Debits to Individual Accounts (Thousands of Dollars) Year to Date Year to Date % 4 Weeks % change Dec. 26, 1940 Dec. 28, 1939 change ended Feb. 19, from to to from 1940 Feb. 19, 1941 Feb. 21, 1940 1940 1941 + 2 2 .7 152,255 72,339 Akron.................. 128,316 + 18.7 + 12.4 9,654 19,879 Butler................. 18,246 + 8 .9 43,320 + 3 1 .0 C anton............... 87,233 69,713 + 2 5 .1 C incinnati......... 343,815 + 16.2 715,796 610,337 + 17.3 C leveland.......... 616,119 + 17.9 1,360,720 1,132,389 + 2 0 .2 + 4 .7 165,400 335,552 312,146 + 7.5 74,144 + 2 3 .4 154,000 D ayton ............... 127,463 + 2 0 .8 30,059 + 17.8 62,523 53,536 + 16.8 6,287 3,040 + 2 .0 F ranklin............ 6,215 + 1.2 + 12.6 15,538 7,224 Greensburg.. . . 15,389 + 1.0 + 18.8 11,876 24,130 20,581 + 1 7 .2 H om estead. . . . 3,511 + 2 4 .0 7,089 5,871 + 2 0 .7 — 7.5 29,826 67,782 Lexington......... 70,154 — 3 .4 + 13.1 14,435 30,659 L im a.................... 29,003 + 5 .7 5,010 + 5.1 10,388 Lorain................. 9,489 + 9 .5 + 12.4 12,518 25,425 M iddletown . . . 23,133 + 9 .9 — 5.8 19,199 8,978 Oil C ity.............. 20,869 — 8 .0 1,816,824 Pittsburgh........ 787,539 + 2 1 .9 1,320,546 + 3 7 .6 9,647 + 14.7 18,947 Sharon................ 16,391 + 15.6 18,194 + 1 8 .9 37,074 Springfield........ 30,796 + 2 0 .4 9,354 + 5.3 Steubenville. . . 19,119 17,876 + 7 .0 127,577 276,417 + 14.2 232,667 + 18.8 + 3 8 .3 12,549 25,508 18,893 + 3 5 .0 62,047 + 2 2 .5 29,346 51,538 + 2 0 .4 + 15.8 105,652 50,388 Youngstown. . . 96,444 + 9 .5 + 13.7 17,987 Z anesville.......... 8,416 15,771 + 1 4 .1 + 17.6 5,474,030 4,453,772 T otal............... . . . 2,504,278 + 2 2 .9 Fourth District Business Statistics (000 omitted) Fourth District Unless January Otherwise Specified 1941 Bank Debits— 24 cities.........................................$3,009,644 Savings Deposits— end of month 40 banks O. and W. Pa......................................................... $ 796,491 Life Insurance Sales: Ohio and Pa............................................................$ 76,243 Retail Sales: Dept. Stores— 52 firm s.....................................3 18,779 Wearing Apparel— 12 firm s........................... # 733 Furniture— 37 firm s........................................... $ 762 Building Contracts— T otal.................................. $ 29,475 ” ” — R esidential..................... $ 11,045 Commercial Failures— Liabilities..................... $ 1,333 ” ” — N um ber........................ 53 Production: Pig Iron— U. S....................................net tons 4,666 Steel Ingot— U. S............................... net tons 6,943 Auto— Passenger Car— U. S........................... 411,258b ” — Trucks— U. S........ ................................... 86,673b Bituminous Coal, O., W. Pa., E. Ky. ....................................................................net tons 16,603 Cement— O., W. Pa., W. Va.................bbls. 605 Elec. Power, O., Pa., K y .. . thous. k. w. h. 2,042c Petroleum— O., Pa., K y..........................bbls. 2,144c Shoes .............................................................pairs e Tires, U . S . . . ......................................... casings 5,472 b actual number e confidential c December f revised January 1940 2,436,936 787,758 80,292 17,465 696 584 24,843 14,193 830 65 4,025 5,769f 362,736b 69,365b 15,930 653 1,969c 2,243c e 4,954 change from 1940 + 2 3 .5 + I. 1 — 5 .0 + 7.5 + 5.3 + 3.5 + 1 8 .6 — 22.2 + 6 0 .6 — 18. 5 + 1 5 .9 + 2 0 .4 + 13.4 + 2 9 .3 + 4 .2 — 7 .4 + 3 .7 — 4 .4 + 8.2 + 1 0 .5 THE MONTHLY BUSINESS REVIEW 8 Summary of National Business Conditions By the Board of Governors of the Federal Reserve System INDUSTRIAL PRODUCTION Index of physical volume of production, adjusted for seasonal variation, 1935-1939 average = 100. By months, January 1934 to January 1941. Latest figure 139 (pre liminary). FREIGHT CAR U0AD1N6S Index of total loadings of revenue freight, adjusted for seasonal variation, 1923-1925 average = 100. Miscellaneous, coal, and all other expressed in terms of points in the total index. By months, January 1934 to January 1941. la test figures— Total 86; Coal 15.8, Miscellaneous 48.4, All other, 21.7 WHOLESALE. PRICES OF BASIC COMMODITIES Indexes compiled by the United States Bu reau of Labor Statistics, 1926 = 100. By weeks* 1934 to week ending February 13, 1941. Latest figures— Total 65.7; Food stuffs 60.0, Industrial Materials 70.8 MONEY RATESi 1H NEW YORK: CITY eorr 1 ! 1 y'' , i I T*EAS<m <» fu i r* K.f> CtNT 4 BONDS 3 ft. V r * XLSUtVC M M K CMSCOUNT M l bw WM) A SURY 8ILU “u JV A. O For weeks ending January 6, 1934, to Feb ruary 15, 1941. Latest figures— Treasury bonds 2.11, 3 to 5 year Treasury notes 0.60, 91-day Treasury bills (new issues) 0.007, Reserve bank discount rate 1.00. Industrial activity continued at a high level in January and distri bution of commodities was maintained in large volume. Production In January volume of industrial production declined less than sea sonally and the Board’s adjusted index rose one point further to 139 per cent of the 1935-39 average. There were further considerable increases in activity in industries making machinery, aircraft, ships, and similar products important in the defense program, and output of industrial ma terials, such as steel and nonferrous metals, continued at near capacity rates. Lumber production also was in unusually large volume owing to demand arising from construction under the defense program as well as from private building. Automobile production, which ordinarily declines considerably at this time of year, was maintained at a high rate in January and the first half of February. This reflected in part an unusually large volume of retail sales and in part the industry’s efforts to build up dealers’ stocks of cars as much as possible with a view to having an adequate supply on hand in case priorities or work on defense orders should necessitate curtail ment of automobile production. Currently dealers’ stocks of new cars are probably near record levels. In the cotton textile industry, activity in January showed some further increase from the record level reached in December but the rise was less than usually occurs at this season. At wool textile mills there was some de cline from the high level of November and December, while output at rayon mills was maintained in large volume. Defense program orders for textiles, particularly wool and cotton products, have been substantial for some time, and these combined with considerable civilian demand have resulted in the accumulation of large order backlogs at most mills. Activity at meatpacking establishments was reduced in January owing chiefly to a sharp decline in hog slaughter, which had been exceptionally large in the latter part of 1940. Shoe production advanced by less than the usual seasonal amount following a high rate of output in November and December. At mines output of most metals continued at record levels in Janu ary. Production of fuels was sustained in large volume but was not at such high levels as output of other minerals owing in part to the ex istence of considerable stocks, particularly of petroleum products. Value of construction contracts, as reported by the F. W. Dodge Cor poration, declined in January. The decrease reflected chiefly a sharp reduction in awards for public construction from the exceptionally large December total, which had included a number of defense projects not previously reported by the Dodge Corporation for lack of detailed information. Contracts awarded for private nonresidential building de clined somewhat in January but as in December were twice as large as the amount awarded in the corresponding period a year ago. Awards for private residential building increased and on a seasonally adjusted basis were at the highest level since the middle of 1929. Distribution Distribution of commodities to consumers in January was maintained at the high level reached in the latter part of 1940. Sales at department and variety stores declined seasonally following an unusually large amount of Christmas trade, while sales of automobiles continued near the rate prevailing in December. In the early part of February depart ment store sales were sustained in large volume. Total freight-car loadings, which usually decline from December to January, showed little change this year and the Board’s seasonally ad justed index rose two points further to 86 per cent of the 1923-25 average. Wholesale Commodity Prices Prices of industrial materials and foodstuffs generally showed little change from the middle of January to the middle of February. Some imported commodities, principally coffee, cocoa, rubber, and tin, rose slightly and there were increases also in prices of lard and wool tops, while declines were reported for livestock and meats, hides, grains, lum ber, and scrap metals. Prices of some finished commodities, particu larly textile products, showed advances in this period. Bank Credit Total loans and investments at reporting member banks in 101 leading cities increased substantially during January and the first half of February, reflecting largely purchases of new Defense Notes issued by the Government. Commercial loans at these banks increased further while loans to New York security brokers and dealers declined. United States Government Security Prices Prices of United States Government securities continued to decline in the latter half of January and the first half of February, more than canceling the gains from the end of October to the December peak.
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