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MONTHLY BUSINESS REVIEW Covering fin a n c ia l, industrial and a g ric u ltu ra l c onditions Vol. 24 Cleveland, Ohio, February 28, 1942 An increasing proportion of fourth district productive facilities is being converted to the manufacture of military items. War work was expanded further at most plants during recent weeks, largely offsetting the decreased ac tivity in civilian goods’ industries. Curtailment in con sumers’ lines is resulting both from direct Governmental orders restricting output and from additional material shortages. Scarcities have become more apparent since the magnitude of war requirements has been more clearly defined. As time passes, an ever greater variety of mate rials is available only on high priority, even to war in dustries. The very large inventories some manufacturers ac cumulated last year are beginning to be reduced. Total industrial employment in many cities of the dis trict, both large and small, continues at unusually high levels. Working forces generally are very much larger than at this season in past years; in a number of instances they are the greatest ever reported. More and more work ers are being hired in expanding war industries. Many times, persons who have been released from divisions that had been making civilian goods are being employed in war work after comparatively short periods of training. Weekly earnings in these new jobs often exceed those formerly received, partially because of higher w'age rates, but perhaps more importantly as a result of overtime pay ments. Many firms with war contracts or subcontracts have lengthened the work week materially, though a few concerns have reported that bids based on overtime work with its higher costs have not been accepted. Retail trade volume was at a contraseasonally high level during January as consumers stocked up heavily against impending shortages, deterioration in the quality of goods available, and further rises in prices. Early in February there was some slackening in demand and increases over a year ago were markedly smaller than those shown in the previous month. For the first three weeks of February the gain approximated 20 percent, compared with a yearto-year rise of roughly 50 percent in January. Debits to individual accounts at banks in 24 fourth dis trict cities averaged 24 percent larger in the four weeks ended February 18 than those of the same 1941 period. Living costs in fourth district cities for which data are available advanced on an average of 1^2 percent from De cember to January, according to the National Industrial Conference Board; food and clothing costs increased most. Fourth Federal Reserve District Federal Reserve Bank of Cleveland No. 2 INSTALMENT CREDIT One of the requirements of Regulation W, which was adopted by the Board of Governors of the Federal Re serve System in order to carry out the President’s Ex ecutive order of August 9, 1941, was that each person en gaged in the business of making extensions of instalment sale credit arising out of the sale of certain specified ar ticles, or instalment loan credit, or engaged in the busi ness of lending on the security of or discounting or pur chasing obligations or claims arising out of such exten sions of credit shall be licensed. Such a license is obtain able by registration with the Federal reserve bank of the district in which the main office of the registrant is lo cated on registration statement forms designed for that purpose. These forms call for certain information as to the type of business of the registrant and size of the reg istrant, based on either the total amount of instalment pa per held, if a financial institution, or the total annual re tail sales if the principal business is nonfinancial. Prior to the receipt and tabulation of data called for on these registration statements, only general information was available with respect to instalment selling and in stalment lending in this reserve district. The figures re ceived, while probably not complete, and subject to some refinement as concerns not accustomed to reporting this type of information become more familiar with the prepa ration of such reports, shed considerable light on instal ment loan and instalment credit business in the fourth district. The accompanying detailed table summarizes the infor mation obtained from nearly 14,500 individual registrants whose statements had been received up to January 16. Since that time, an additional 520 firms have been regis tered. Of the total tabulated, approximately 3,700 repre sented financial institutions. The group classified as miscel laneous financial companies includes building and loan as sociations, mutual savings banks, and mortgage companies. Commercial banks accounted for approximately one-third of the total instalment loan credit extended by financial in stitutions located in this district. Sales finance companies and state-licensed small loan companies ranked second and third in importance. In the case of sales finance companies, instalment paper held represented, in large part, paper purchased which 2 THE MONTHLY originated as instalment sale credit, while licensed small loan companies* holdings represented chiefly personal in stalment loans made direct. In the retail field, automobile dealers accounted for more than 50 percent of total instalment sales made by report ing institutions in the year ended September 30. This was the fiscal period covered by the registration statement. By far the greater share of instalment paper arising out of the sale of automobiles was transferred to sales finance companies or other purchasers of such evidences of debt. Automobile dealers themselves held instalment receivables representing only 3.2 percent of their total annual sales as of September 30. Furniture and home furnishings es tablishments ranked second in importance in this district, so far as instalment sales are concerned, and a much greater proportion of total sales reported by these con cerns was instalment sales than in the case of automobile dealers. Furniture dealers, however, held title to the greater share of their own instalment paper, instalment accounts receivable reported by these concerns represent ing 64 percent of total annual sales. Total retail sales reported by 10,770 registrants in this district, nearly all of which dealt in articles “listed” in Regulation W, amounted to $1,720,000,000 in the year ended September 30. Instalment sales accounted for 37 percent of this volume; other credit sales, 30 percent. Instalment accounts receivable of these registering dealers on September 30 represented 24 percent of total instal ment sales made during the entire twelve months previous. The period covered by the registration statement, i. e., the year ended September 30, 1941, was one in which sale of consumers’ durable goods increased very rapidly. The rise in income payments during the first nine months of 1941 caused all trade to advance to record-high levels, with the sale of durable goods increasing at a faster than av BUSINESS REVIEW erage rate. Prior to the effective date of the Regulation, consumer demand, partly because of the awareness of pros pective shortages in consumers’ durable goods, rose to record-high levels. Since September 1, the general level of instalment sell ing has declined rather sharply from the peak rate evi denced just previous to that date. A large part of this decline is attributable to the falling off in demand for automobiles, but there also was some reduction in house hold appliance sales. While the decline happened to begin at the very time Regulation W became effective, limita tion of credit terms was only one of a number of factors responsible for the contraction in retail volume. It is re ported that instalment selling in fields not covered by Reg ulation W declined almost as much as in those fields cov ered by the Regulation. Regulation W, therefore, probably was not the dominant influence in the contraction in the durable goods field in the closing months of 1941. FINANCIAL Defense Defense Savings Bond sales through the Bonds reserve bank and other qualified sales agencies in the fourth district, except post offices, declined in February from the record Janu ary rate, in part because some large investors purchased in January all the bonds they may buy during the calen dar year. This fact was further demonstrated, to a certain extent, in mid-February when no Series F and G bonds were sold for several days. These issues are designed pri marily for trust accounts and institutional investors that might not, under law, purchase more than $50,000 worth, issue price, in any one year. Series E purchases during a calendar year are limited to $5,000, maturity value. Commercial and savings banks, loan associations, credit unions, qualified corporations, and the reserve bank dur STATISTIC A I, DATA OBTAINED FROM REGULATION W REGISTRANTS (thousands of dollars) FINANCIAL INSTITUTIONS Number Total Number of Instalm ent Paper of Paper Purchased Registrants Branches Sales Finance Companies.......................................... 132 78,343 59,878 125 Commercial Banks ..................................................... 1,083 37,335 183 105,333 43 Industrial Loan Companies & B a n k s .................. 10,144 10 24,175 State Licensed Small Loan C om panies............. 281 76,354 8,391 307 Credit Unions ........... * .................... 1,033 77 20,336 Remedial Loan Companies ................................... 9 1 159 M iscellaneous Financial Institutions ............... 1,108 4,911 59 29,005 Instalm ent Credit held by Retail Dealers. .. . (16)* 383 275 Total ......................................................................... 3,689 121,012 684 334,088 RETAIL INST ALM ENT INSTITUTIONS Other No. of R egis No. of Total Instalm ent Credit trants Branches Sales Sales Sales Department & General Stores ................................... 428 49,057 217,496 333 426,940 Automobile Dealers ......................................................... 3,076 214 666,723 345,798 73,928 Furniture & Home Furnishings D ealers.................. 1,368 140,237 102,997 17,485 159 Household Appliance Dealers ...................................... 1,731 28,830 12,082 179 55,070 Hardware & Auto Appliance D ealers...................... 1,070 209 52,801 10,998 18,568 Dealers & Contractors in Heating, Plumbing, & Airconditioning Equipment ................................. 858 58 27,287 7,128 13,406 Dealers & Contractors in Other Repair & Con struction M aterials................................................... 1,151 103,194 13,535 74,546 299 Jewelry Stores .................................................................... 287 17,185 1,388 47 23,027 Piano, Organ & Music Dealers ................................... 160 3,918 1,554 25 7,283 Motorcycle, Aircraft, Boat, Bicycle, Business 2,174 12,984 Supply, Fuel & Ice Dealers ................................. 153 48 27,537 Electric & Gas, Manufacturing, Farm Implement, & M iscellaneous Dealers ........................................ 488 190,166 53,281 79,414 840 Total ...................................................................... 10,770 2,411 1,720,265 634,901 522,851 Grand Total ....................................................... 14,459 Note: Report covers only statem ents received through January 16, 1942. *Not included in total Direct Loans 2,092 37,429 4,708 4,071 5,674 1 18,187 43 72,205 Personal Loans 16,373 30,569 9,323 63,892 14,575 157 5,907 65 140,861 Instalm ent Other Accounts Receiv Receivable ables 41,071 24,786 11,072 10,900 5,441 66,003 2,814 8,874 5,240 3,290 3,283 1,251 19,126 2,971 525 7,786 230 1,331 647 2,800 18,606 24,067 110,036 152,078 to avoid duplication. THE MONTHLY ing the first 27 days of February sold $33,587,000 worth of defense bonds, compared with $82,051,000 in the full month of January, and $43,023,000 in December. Sales of Series E bonds totaled $20,935,000 during the February period, while volume of Series F and G bonds was $3,450,000 and $9,192,000, respectively. Since May 1, 1941, when these three issues first became available, $288,932,000 worth have been sold in this district through sources other than post offices. Member Bank A number of fourth district banks exCredit perienced a further decline in savings deposits during January and the fore part of February. Some judged that a smaller proportion of these withdrawals was invested in Defense Savings Bonds than in other recent months, the remainder accounts for part of the additional increase in currency circulation. For the 40 banks in Ohio and western Pennsylvania re porting savings account activity, the decrease in such ac counts between December 31 and January 31 was 2.1 per cent, with twenty Ohio institutions showing the larger decrease. Previously, withdrawals had been proportionately greater at western Pennsylvania banks. Compared with a year ago, savings deposits of the Ohio banks were up slightly, while those of western Pennsylvania institutions were 4.8 percent smaller. Earning assets of weekly reporting member banks in this district were at an all-time high, level of $2,392,000,000 on February 18, following a substantial rise in Treasury security holdings during the four latest weeks. Compared with a year ago, aggregate investment portfolios were $302, 000,000 larger; virtually the entire increase has occurred in direct Government and Government-guaranteed obliga tions. Total loans outstanding on February 18 were up $9,000,000 in four weeks and $92,000,000 during the past year. Most of the change occurred in commercial, indus trial, and agricultural loan volume, though open market paper holdings of $33,000,000 on the latest date were 2% times as large as those of a year ago. Member Bank Deposits maintained by member banks Reserves at the reserve bank rose above $1,000,000,000 in the last week of January for the second time in history. Member institutions during the last half of January carried reserves that averaged 72 per cent in excess of requirements, compared with 64 percent in the corresponding December period and 131 percent a year before, when requirements were less. Proportionately, excess reserves of fourth district member banks were twice as large as those of all member banks in the United States at the end of January. The situation in this district re flected a decline in Treasury deposits with the reserve bank, and more importantly, a flow of funds into the district greater than the outward movement. This resulted princi pally from expanding war work activity here, most of which arises from material and parts production. During the forepart of February, member bank balances declined moderately, and Treasury deposits continued at a relatively low level. Note Note circulation of this bank increased Circulation further to successive new record levels during the latest four-week period. There was virtually no return flow of currency in January, and BUSINESS REVIEW 3 by February 18 the Federal Reserve Bank of Cleveland had a note liability of $804,500,000 outstanding, $22,600,000 more than a month earlier. A year ago it was $547,700,000, or 32 percent smaller. MANUFACTURING, MINING Iron and Improved allocations of steelmaking Steel scrap and a slightly heavier flow of old metal to melters, principally from socalled automobile graveyards, resulted in increased ingot operations in February. The last week in the month, the American Iron and Steel Institute estimated national raw steel production to be the second best ever reported for a single week. The all-time high was established the last week in October 1941. January output, amounting to 7,129,000 net tons, was by three percent the largest for any similar month in history, though fractionally smaller than that of December. Activity in fourth district steel producing centers con tinued virtually unchanged during late January and early February, averaging about 92 percent of theoretical ingot capacity. Mills in the Pittsburgh and ClevelandLorain areas worked at a somewhat higher rate than those in other localities. Operations in finishing departments gen erally have been at reduced levels recently; some oldertype sheet mills in this district have been closed. The largest proportion of inquiries currently is for heavier steel products, such as plates, bars, and structural shapes, which require less finishing than lighter gauge flat-rolled items. Demand is so great and backlogs are so large that only orders carrying the highest priority ratings were being delivered with any degree of promptness, according to re ports. In a move to speed up shipments, the War Produc tion Board in mid-February placed steel plates under com plete production, allocation, and consumptiton control. National plate capacity at the present time is 932,100 net tons per month; about one-third of this represents the ca pacity of continuous strip mills that have been converted to roll heavier material. Under construction and scheduled for completion at various times this year and early in 1943 are facilities rated to produce 46,000 tons additional each month. Most of these mills will turn out sheared plates, which currently are in greatest demand. Raw steelmaking capacity in the United States was in creased by 4,418,000 tons, or 5%. percent, last year, and four new blast furnaces, one of them located in this dis trict, added 2,784,000 tons to annual pig iron capacity, rais ing it to 60,394,000 tons. On February 1, there were 219 blast furnaces operating throughout the country, two more than at the year end. During January 4,959,000 net tons of pig iron were made. This is the second best monthly output in history, being exceeded by approximately one percent in December. In the fourth district, 101 stacks were in blast on February 1 and six were being rebuilt. A month earlier 99 were active. Blast furnaces depending primarily upon Lake Superior iron ore consumed an all-time record tonnage during Jan uary; 7,158,000 gross tons were used. Inventories at con suming furnaces in the United States and Canada and on Lake Erie docks dropped to 33,919,000 tons on February 1. For that date, this total had been exceeded only once before, in 1938 when monthly consumption was roughly one-fourth what it has been recently . THE MONTHLY BUSINESS REVIEW Coal With an increasing number of manufac month, but to varying degrees. Some needlework concerns turing concerns having curtailed civilian had to curtail operations almost immediately since they production, many in order to convert fa were not carrying material stocks large enough to main cilities to war work, several fourth district bituminous coal tain existing production schedules for any length of time. suppliers experienced at least a temporary slackening in Others had sizable cloth inventories which were being re demand for industrial fuel in mid-February. Even the duced as spring merchandise was delivered and reorders market for domestic heating grades was irregular, despite for men’s wear were filled. There was a fairly good vol cold weather in many localities. As a consequence, the en ume of this type of business from retailers, the increase tire wholesale price structure was soft, and some mines noted prior to Christmas continuing well into the new were carrying heavy tonnages of unbilled coal. year. A few producers reported that more inquiries than Mining activity in this district was curtailed moderately usual were being received in advance of initial showings early in February, following nominal expansion in the of fall lines, which will take place about the first of April. previous month. January production, amounting to 18,Numerous needlework shops had specified early ship 068,000 net tons, exceeded that of December by two per ment of their spring manufacturing season material re cent and was the best for any similar month since 1930. quirements. By mid-February, some had received about 85 Weekly output during the first part of February declined percent of their wool cloth commitments. The status of somewhat more in western Pennsylvania fields than else remaining portions of these orders was uncertain. Pur where in the district, even though coking coals continued chasers expected a considerable reduction, and most were in heavy demand. making plans accordingly. Weavers stated that deliveries Industrial consumers and retail dealers, following rec on unfilled orders taken prior to announcement of the con ommendations of various Governmental organizations that servation ruling would be lengthened. greater than ordinary quantities of bituminous coal be New orders, production, and shipments of cotton over bought and stored so that shortages do not develop later alls and work garments continued in large volume during as a result of transportation difficulties, have accumulated January and the forepart of February, though there was the largest total inventories held at any time during the a slight decline in deliveries from the high December level. past fifteen years. In terms of days’ supply at existing Manufacturers were experiencing increasing difficulty in rates of consumption, however, stocks carried by prin obtaining certain materials, especially drill and duck cloth. cipal users in this district on the latest Bituminous Coal Operations in this industry, as in the wool garment trade, Division survey date were below the national average, in generally have been on a one shift, 40 hours per week the case of by-product coke producers, steel mills, and basis during recent months. Somewhat greater than sea cement plants sharply so. sonal changes in employment are expected by correspond ents in both lines during the next few months, due to the Rubber, Civilians were advised officially in mid- material supply situation. Tires February that military requirements would take virtually all of the rubber Other Activity in other important fourth disavailable to this country and to go on the assumption that Manufacturing trict industries in January and the first there would be no new passenger car tires until the war part of February continued at a high is over. level, with a greater number of concerns working on orders According to testimony of the Secretary of Commerce directly or indirectly related to the war effort. Increasing before a Congressional committee, 114,000 gross tons of ly, smaller companies were seeking war work. More and crude rubber were received in the United States during more materials and semifinished products have become December and January. About 40 percent of this was scarce; many of them are available only on high priority added to the Government-owned stockpile and the remain rating. A few manufacturing firms consequently have be der was sold to be processed. An additional 114,000 tons gun to reduce accumulated inventories, but stocks gener were said to be on the way from Far Eastern ports. The ally still were larger than those of a year ago. size of inventories naturally was not specified, but it has Metal Working Industries Plants which formerly had been estimated that with judicious conservation present machined automobile parts and subassemblies have greatly stocks would fill essential war needs, direct and indirect, expanded output of heavier items used in Army trucks and for two or three years. By that time, synthetic rubber pro tanks while converting other facilities to a wide variety duction is expected to meet such demand. of war work. Retooling in numerous shops of this type Activity in war divisions of fourth district rubber com has had to be much less extensive than in stamping fac panies was at a high level in January and early February. tories since more of the existing equipment was of the Hours in military truck tire departments had been length general-purpose sort. Civilian passenger car and light com ened somewhat in January; demand for mechanical rub mercial truck part production during the first six months ber goods from essential war industries was heavy. War of the year can be 150 percent of the entire 1941 volume, goods production was further expanded. Total employment under Governmental order, so that a large stockpile of re in the Akron area was the largest for this time of year pair items for the cars now on the road might be accumu lated. This has permitted continuation of a relatively high in the recent past. rate of activity in some divisions, but war production re Textiles, Conditions in the fourth district textile cently has been the more important. Clothing industry were mixed early in February. Machine tool companies have stepped up output sharply Both weavers and clothing manufactur during past months as new plants have come into opera ers had been affected by the wool conservation order pro tion and by subcontracting and extending the work week. mulgated by the War Production Board the previous January deliveries to users were at a new record level 4 THE MONTHLY of $85,200,000, slightly in excess of December volume. Further expansion in the industry was indicated in Feb ruary; at least five concerns in this district had building programs under way. Operations generally have been at a more constant rate since the so-called pool order system was adopted by the Government. Under this arrangement, individual firms are assigned a given number of machines to make, whether orders have been received or not; the Government may advance up to 30 percent of the cost to help meet the builder's working capital requirements. When machines are sold to ultimate users the advance is repaid. Deliveries consequently have been speeded up by this prac tice, which to some extent permits the accumulation of machine tool inventories. Small tool manufacturers noted a slight downward trend in new order volume early in February. Pending inquir ies, however, were large, and the expectation was that capacity demand would prevail again shortly. Operations and shipments continued to surpass those of a year ago by a wide margin, in part because of a longer work week. The sustained high rate of activity in foundry divisions and independent shops has been reflected in the orders index of the Foundry Equipment Manufacturers’ Associa tion., which in January was at a new all-time peak at 533 percent of the 1937-39 average. New equipment and repair volume both were up sharply. Electrical Equipment and Apparatus Household 'refrig erator production will cease April 30, under a War Pro duction Board order. Between now and then, manufactur ers may make 489,000 units to be placed with others al ready in inventory to form a pool of approximately 750,000 boxes for future essential needs. After completing this run, makers are to convert to war work. By mid-February some fourth district plants had changed over, but the transition has not been easy due to the difference in basic operations. Heavy equipment divisions are working on record order backlogs. Land turbine production reportedly has been curtailed slightly so that output of naval propul sion equipment might be speeded up as the tempo of ac tivity at shipyards increases. Glass, Dinnerware In January, for the second time in history, window glass divisions operated at better than theoretical capacity, turning out 1,639,000 boxes of flat drawn glass. This total exceeds last year’s volume by five percent, and is three percent less than December produc tion, the all-time record. Loss of the automobile market has occasioned sharp curtailment in operations at plate glass plants, as the accompanying chart indicates. January outGLASS PRODUCTION U N IT E D 1937 1938 1939 STATES 1940 1941 1942 BUSINESS REVIEW 5 put of 9,143,000 square feet of glass polished by commer cial firms was the smallest in 18 months. Layoffs in these divisions reportedly have not been proportionate to the drop in production, however. Companies making glass containers have been especially busy during recent months, in part because much packag ing, especially of foods, has had to be redesigned, due to the tin situation. Early in February, the amount of tin to be made available for coating metal cans was restricted; numerous items may not be packed in tin coated contain ers after March 1. Can manufacturers consequently were using so-called black plate more extensively. At the request of the Office of Price Administration, price increases on dinnerware, announced for February 1, when a ten percent wage advance became effective at pot teries, were postponed. As a result, manufacturers have been accepting new orders at prices prevailing when ship ments are made. Plants recently have maintained near capacity operations, but some raw materials were re portedly becoming scarce. Paper, Paperboard Orders for paper products have con tinued in unusually large volume, exceeding shipments by a rather sizable margin. Production in both paper and paperboard divisions has been at better than rated capacity since early winter. Some carton makers in mid-February experienced a mod erate slackening in new order volume as compared with other recent months, chiefly because of uncertainties with regard to supplies of articles available for packaging. Office Appliances and Equipment Companies equipped to fabricate only metal office furniture and appliances have found it necessary to curtail activity somewhat because of Governmental restrictions. Some of these concerns with facilities to machine subassemblies have converted, at least in part, to war work. Others that have woodworking shops have expanded operations there. New orders for wooden desks, filing cases, and the like have been received in rec ord volume recently. Shoes Fourth district shoe production in January and early February dropped contraseasonally, principally because la bor disputes closed some shops. Those that continued op erations generally were working one shift, 40 hours per week. Most advance spring orders had been placed by the first of the year, but fill-in business continued in good volume. TRADE Retail Dollar volume of reporting fourth dis trict department stores declined only moderately from December to January, whereas there usually is a sharp contraction, and the sea sonally adjusted sales index rose to a new all-time peak. At 149 percent of the 1923-25 average, it was four points above the August 1941 level and up 49 percent from a year previous. Buying in January extended to a wide range of merchandise, with the greatest consumer inter est shown in textiles, clothing, and articles made of rubber. Experience at wearing apparel shops was similar to that at department stores, these outlets selling 47 percent more merchandise this January than last. Demand for major household appliances and furniture, at both depart ment and furniture stores, also was markedly greater than that of a year ago. Some retailers noted that purchasers THE MONTHLY BUSINESS REVIEW were less interested in certain trade-marked goods than inventories, ou the average, were one-fifth larger than those formerly. of a year previous. Much of this retail buying evidenced a concern on the Collections, while much greater this January than a year part of consumers that less merchandise would be avail ago, were smaller than those of December. In comparison able later in the year and that which could be had prob with the outstanding accounts at the beginning of the ably would be of poorer quality and higher priced. Fear month, relatively more receivables were collected during of impending shortages extended to the grocery field. Sales January than in similar periods of previous years. The pro per individual store in reporting fourth district chains were portion in January and December was approximately the ten percent larger in January than in December, though same. there customarily is a decrease, and 55 percent greater than those of a year ago. Compared with last January, CONSTRUCTION chain drug sales, also on a unit operated basis, were up Shooting war has increased military materiel re 31 percent, but there was a 28 percent decline from De quirements, and this greatly fact in turn has recently occasioned cember. a sharp upswing in factory construction in fourth district During the fiscal year ended January 31, department areas. Much of this work was contracted for late in Janu stores sold 23 percent more merchandise than in the pre ary, and for the entire month dollar value of awards ap vious year. Apparel shop volume was 18 percent greater, proximated the mid-summer 1941 high, as the accompany and furniture store sales were up 26 percent. Retail prices, ing chart shows. At $16,447,000, the total of such contracts according to the Fairchild index, advanced 17 percent dur was more than twice that of December and over 2 2/3 ing the period to the highest level since inception of this times as large as that of a year previous. January volume measure in 1930. has been exceeded only three times during the past eleven Department store volume early in February continued years. In July 1937 contracts were let for a large steel to exceed that of a year previous. The 20 percent margin, rolling mill in western Pennsylvania. Work on the Raven however, was much smaller than that shown in January, na shell loading plant was started in November 1940. Last both because of a decrease in sales this year and an in July, as in January, a wide variety of factory awards crease in dollar volume in corresponding weeks last year. was made, with no single project dominating. Approximately the same proportion of total depart Although there has been rather marked fluctuation in ment store sales in January were on credit as in December factory construction volume during recent months, the to or January 1941, but collections were both absolutely and tal for the period, July through January, is the largest for relatively greater. During January 43 percent of accounts ar¥j seven months since 1928. outstanding on the first of the month were collected, com January experience in fourth district areas differed from pared with 38 percent in December and 39 percent last that of the 37 eastern states as a group. In this larger year. For wearing apparel shops, the percentages are 39 area, factory contracts last month declined one-third from percent for January, 35 percent for December, and 36 the December volume, though they were 35 percent greater percent for January 1941. Furniture store collections dur than those of January 1941. ing January represented 15 percent of first of month re All fourth district construction awards aggregated $35,ceivables, the proportion was twelve percent in December 247,000 in January, according to F. W . Dodge Corporation and a year ago. February 1 accounts receivable of depart data. This three percent above the December total and ment and apparel stores were 16 percent greater this year the largest isvolume for any January since 1929. than last; for furniture stores the increase was six percent. Two-thirds of these contracts was publicly financed, a Despite the unusually heavy consumer demand in Jan much proportion than in other recent months or uary, total stocks held by reporting department stores were a yeargreater ago. In this reflects an unusual amount of reduced less than seasonally. At the month end, they were heavy engineeringpartw^ork for in western Penn 41 percent greater than those of a year ago. Wearing ap sylvania by Governmentalcontracted agencies. Federal funds were parel shops had inventories which were 19 percent greater. utilized to varying extents for residential construction. In Outstanding orders of department stores on January 31 northern Ohio all new home building was undertaken by were up 97 percent, compared with those of last year, private capital, although over half the total was one-family while apparel shop commitments were 50 percent larger. Like retail trade, wholesale volume did Wholesale not decline seasonally in January. Where as in most past years there has been an appreciable decrease in dollar sales of fourth district whole salers, the 181 firms reporting to the Bureau of the Census sold slightly more merchandise during January than in the previous month. Compared with a year ago, sales of all groups, with the exception of lumber dealers, were up; the average gain for all concerns was 38 percent. In creases of 70 percent or more were experienced by paint and varnish wholesalers, furniture and housefurnishings distributors, and dry goods merchants. Despite the increase in sales, wholesalers generally added further to their stocks during January. At the month-end, 6 THE MONTHLY dwellings for sale or rent. Only a small part of the resi dential work started in the southern section of the district was publicly financed, while the majority of such construc tion in eastern counties was Federally sponsored. Home building activity varies markedly in different lo calities, according to mid-February reports from lumber and building supply dealers. Demand for lower-priced grades of materials has been brisk in regions where expanding war production has attracted workers from other areas and has caused housing problems. In sections where there is little or no war activity, retail lumber yards have re ceived very few new orders. AGRICULTURE All burley tobacco auctions in Kentucky closed before the middle of February. Warehouse receipts during the final weeks of sales were small and quality generally was poor; bid prices, however, declined only moderately from the high early season level. Kentucky farmers received more money for their 1941 burley tobacco crop, which was one of the smallest in the last twenty years, than for any other since 1919. Commodity Credit Corporation ac tivities in the tobacco markets were less extensive this Debits to Individual Accounts A kron....................... B u tler...................... C an ton .................... C in cin n a ti............. C levelan d............... C olum bus.............. D a y to n .................... E rie........................... F ranklin................. G reensburg........... H am ilton ............... H om estead............ L exington............... L im a......................... Lorain...................... M id d letow n .......... Oil C ity .................. P ittsb u rgh ............. S h aron ..................... Springfield............. Steu b en ville.......... T o le d o ..................... W arren.................... W h eeling............... Y ou ngstow n . . . . Z anesville............... T o ta l................... (T housands 4 W eeks % ended change Feb. 18, from 1942 1941 97,261 + 3 4 .4 12,170 + 2 6 .1 55,072 + 2 7 .1 438,444 + 2 7 .5 766,750 + 2 4 .4 209,012 + 2 6 .4 94,447 + 2 7 .4 40,789 + 3 5 .7 4,029 + 3 2 .5 9,132 + 2 6 .4 15,522 + 3 0 .7 4,416 + 2 5 .8 30,049 + 0 .7 18,521 + 2 8 .3 6,217 + 2 4 .1 16,814 + 3 4 .3 11,622 + 2 9 .4 942,857 + 1 9 .7 13,127 + 3 6 .1 21,396 + 1 7 .6 10,499 + 1 2 .3 166,637 + 3 0 .6 15,557 + 2 4 .0 28,071 — 4 .3 63,063 + 2 5 .2 10,651 + 2 6 .6 3,102,125 + 2 3 .9 of Dollars) Year to D ate Jan. 2, 1942 to Feb. 18, 1942 170,131 21,954 97,146 775,350 1,362,517 361,694 166,363 71,197 7,722 17,393 27,285 7,862 69,024 33,057 11,452 29,121 20,997 1,594,549 22,130 37,763 18,912 290,370 27,873 49,036 112,981 18,590 5,422,469 Year to D ate Jan. 2, 1941 change from to Feb. 19, 1942 1941 + 2 9 .9 130,972 + 2 5 .7 17,472 + 2 6 .7 76,652 + 2 4 .2 624,276 + 1 9 .6 1,138,784 + 2 3 .7 292,382 + 2 4 .9 133,249 + 3 1 .0 54,351 + 3 6 .7 5,650 + 2 8 .5 13,532 + 2 8 .4 21,250 + 2 4 .8 6,301 + 13 .8 60,637 + 2 1 .9 27,115 + 2 5 .2 9,145 + 2 9 .0 22,581 + 2 6 .5 16,595 + 3 .3 1,543,272 + 3 1 .6 16,813 + 1 6 .1 32,531 + 1 3 .0 16,741 + 2 2 .5 236,980 + 2 3 .4 22,585 — 6.0 52,192 +22.2 92,452 + 1 7 .8 15,787 + 15 .9 4,680,297 Fourth D istrict Business Statistics (000 om itted) January January % chang< Fourth D istrict U nless 1941 from 194! 1942 O therwise Specified +15 B ank D ebits— 24 c itie s .................. ............... $ 3,461,000 3,010,000 Savings D eposits— end of m onth — 2 785,142 797,146 40 banks O. and W . P a ........... ’ ...............3 Life Insurance Sales: 76,243 +93 147,199 ..................3 R etail Sales: 21,607 +49 32,243 D ept. Stores— 95 firm s.............. ..................3 +47 1,319 895 W earing Apparel— 16 fir m s... ..................3 +29 1,153 896 ..................3 +20 35,247 29,475 B uilding C ontracts— T o ta l. . . ..................3 14,232 11,045 +29 ” ” — R esid en tial,..................3 — 46 722 1,333 C om m ercial Failures— L iabilities...................3 — 2 52 53 ” ** — N u m b er.. Production: 4,666 4,959 + 6 P ig Iron— U . S............................. 6,928 7,129 + 3 Steel Ingot— U. S......................... Bitum inous Coal, O., W. Pa., E. Ky. 18,068 16,603 net tons + 9 605 +64 992 Cem ent— O.. W. Pa., W. V a.. .. . . . .bbls. +26 2,042a 2,566a Elec. Power, O., Pa., K y .. . .th ou s. k.w.h. b — 9 b Sh oes........................................................ — 73 1,461 5,486 Tires, U. S............................................. a D ecem ber b confidential BUSINESS REVIEW 7 season than last, and growers’ associations took over only a small part of the crop, since market prices, which on all Kentucky auctions averaged $29.22 per hundred-weight for the season, compared with $15.78 last year, were consid erably higher than scheduled loan rates. Wholesale and Retail Trade (1942 com pared with 1941) Percentage Increase or Decrease COLLEC SA LES ST O C K S T IO N S January January January 1942 1942 1942 D E P A R T M E N T ST O R ES (95) A kron............................................................................. +60 +27 +51 C an ton ........................................................................... +55 a a C in cinnati.................................................................... +42 +42 +21 C levelan d..................................................................... +49 +45 +16 C olum bus..................................................................... +44 +37 +20 E rie.................................................................................. +56 +27 a P ittsb u rgh ................................................................... +50 +39 +16 a Springfield................................................................... +48 a T oled o............................................................................ +46 +28 +18 W heeling...................................................................... +54 +17 +22 Y ou ngstow n............................................................... +44 a a Other C ities............................................................... +56 +43 +15 D istrict.......................................................................... +41 +49 +18 W E A R IN G A P P A R E L (16) C an ton........................................................................... +50 +24 +22 C incinnati.................................................................... +34 +15 +16 C levelan d..................................................................... +57 + 13 +19 P ittsbu rgh................................................................... +57 +25 +19 Other C ities............................................................... +42 +25 +18 D istrict.......................................................................... +47 +19 +19 F U R N IT U R E (41) C an ton........................................................................... +44 C incinnati.................................................................... +26 C levelan d..................................................................... +31 C olum bus..................................................................... — 2 D a y to n .......................................................................... +51 T oled o ........................................................................... +31 Other C ities............................................................... +30 D istrict.......................................................................... +29 C H A IN STO R ES* D rugs— D istrict (5 )............................................... a +31 Groceries— D istrict (4 )........................................ +55 a W H O L ESA L E T R A D E ** A utom otive Supplies (1 0 )................................... +43 +20 +43 Beer (4 ) ........................................................................ +27 a a C lothing and Furnishings (4 )......................... +44 a — 3 C onfectionery (5 ) ................................................... +30 +33 +32 Drugs and Drug Sundries ( 5 ) ....................... + 18 a +24 D ry Goods (6 ) ......................................................... +70 +25 +42 Electrical Goods (8 ) ............................................. 4-32 +20 +40 Fresh Fruits and Vegetables (6 ) .................. + 18 + 82 +23 Furniture & H ouse Furnishings ( 3 ) .......... 470 a a G rocery Group (4 2 )............................................. + 41 + 30 +33 T otal Hardware Group (3 0 )........................... + 51 + 30 +46 General H ardware ( 8 ) .................................... +53 +24 +37 +49 Industrial Supplies (1 3 )................................ +50 +56 +50 Plum bing & H eating Supplies (9 )......... +35 +47 Jew elry ( 3 ) . . . . . . .^................................................ + 7 a a --- 9 a Lum ber and B uilding M aterials (3) . . . . — 6 M achinery, Equip. & Sup. (exc. Elect.) (5) + 49 4-20 +36 M eats and M eat Products (4 )...................... + ^6 + 25 +40 M etals (3 )................................................................... +} 1 a a P aints and Varnishes (6 ).................................. — 1 4-81 +51 4-4 5 Paper and its Products (7 )............................. a +38 -4- 9 Tobacco and its Products (1 3 ).................... 4- 1 + 10 M iscellaneous (1 4 )................................................. +22 +34 D istrict— All W holesale Trade (1 8 1 ).......... + 38 +25 +35 * Per individual unit operated. ** W holesale data com piled by U. S. D epartm ent of Com merce, Bureau of the Census. a N o t available. Figures in parentheses in dicate num ber of firms reporting sales. Fourth D istrict Business Indexes (1923-25 = 100) B ank debits (24 c itie s )................................................ Com m ercial Failures (N u m b er )............................ ” # ” (L ia b ilitie s)....................... Sales— Life Insurance (O. and P a .).................... ” — D epartm ent Stores (48 firm s).................. ” — W holesale Drugs (5 firm s)....................... ” — ” D ry Goods (6 firm s).......... ” — ” Groceries (42 firm s)............. ” — ” H ardware (30 firm s)............. ” — .” All (83 firm s)........................... ” — Chain D rugs (4 firms)*'................................ Building C ontracts (T o ta l)........................................ ” ” (R esid en tial)........................... Production— Coal (O., W. P a., E. K y .)............. — C em ent (O., W. Pa., E. K y.) . . . . ” — Elec. Pow er (O., Pa., K y .)* * . . . . ” — Shoes......................................................... * Per individual unit operated. ** Decem ber. Jan. Jan. Jan. Jan. Jan. 1942 1941 1940 1939 1938 128 111 90 78 80 36 36 45 63 64 16 30 19 33 55 153 79 83 109 73 112 75 70 67 67 167 142 126 118 111 66 39 41 35 32 108 77 71 66 69 137 91 67 54 53 114 80 70 62 63 123 94 92 91 91 74 62 52 57 41 83 64 83 48 22 100 92 88 70 59 82 50 54 24 22 305 243 234 209 193 110 121 118 123 109 THE MONTHLY BUSINESS REVIEW 8 Sum m ary of National Business Conditions By the Board of Governors of the Federal Reserve System Industrial activity rose further in January and the first half of Feb ruary, reflecting continued sharp advances in output of military prod ucts. Retail trade was unusually active and prices, particularly of unreg ulated commodities, advanced. Production Volume of industrial production increased in January, although usu ally there is some decline at this season, and the Board’s adjusted index rose further to 170 per cent of the 1935-39 average. Continued rapid in creases in activity were reported in the machinery and armament indus tries and production of chemicals likewise rose sharply. Activity at cot ton textile mills reached a new high level, following some decline in De cember. In the meatpacking industry, where activity had risen to record levels in December, there was a further advance in January and output of most other manufactured food products was maintained in large vol ume for this time of year. Federal R eserve m onthly index of physical Production of steel and nonferrous metals continued near capacity volum e of production, adjusted for sea in January and lumber production, which usually declines at this season, sonal variation, 1935-39 average = 100. was sustained. In the automobile industry output of passenger cars and light trucks continued at about the December rate; in February, however, production of cars and trucks for civilian use was halted and the plants were shut down for conversion to armament production. Coal production increased in January, following a decline in December when demand was curtailed somewhat by unusually warm weather, and output of crude pe troleum was maintained at record levels. Value of construction contracts awarded in January was some twofifths below the level of the last quarter of 1941, according to figures of the F. W. Dodge Corporation. Declines were reported in all classes of construc tion; the decrease in residential building being usual at this season. Total awards in January were slightly larger than last year, but pub lic projects accounted for a much larger proportion of the total than a year ago. Distribution In January retail trade was stimulated considerably by widespread anticipatory buying of many products resulting from announcements that Federal R eserve m onthly indexes of valu e distribution of new tires and tubes, new automobiles, and sugar would of sales and stocks, adjusted for seasonal variation, 1923-25 average = 100. henceforth be rationed and that the amount of materials available for use in various other goods would be restricted. Sales at department stores, variety stores, and general merchandise stores declined much less than is usual after the Christmas season, while sales of tires and tubes were re stricted to essential uses and sales of automobiles ceased pending the estab lishment of a rationing system. In the first half of February department store sales decreased somewhat from the high level reached in mid-January. Total carloa dings of revenue freight, which usually decline in Janu ary, showed little change this year and the Board’s seasonally adjusted index advanced from 137 to 140 per cent of the 1935-39 average. Loadings | of grain and forest products rose to unusually high levels for this time of year and coal shipments also increased, following a decline in December. Shipments of miscellaneous freight, which include most manufactured --------... products, declined less than seasonally. Commodity Prices 1 I Prices of commodities and services continued to advance sharply in January and the first half of February. The Emergency Price Control Act Bureau of Labor S ta tistics’ indexes, 1935of 1942 became a law on January 30 and former Federal maximum price 39 average = 100. F ifteen th of m onth fig ures. Last m onth in each calendar quar schedules—approximately 100 in number—remained in effect under its ter through Septem ber 1940, m onthly terms. About one-half of these schedules were issued following the United thereafter. States’ entry into the war. In this period, price controls were extended to a number of finished consumers’ goods and covered mainly items for which output for civilian use had been sharply curtailed or prohibited by Federal order. Retail prices of foods and textile products, which are not subject to direct control, showed exceptionally large increases from De cember 15 to January 15 and, according to preliminary indications, have continued to advance since that time. Bank Credit Since the beginning of the year loans and investments at banks in leading cities have increased, reflecting purchases of Government securi ties by city banks outside New York and increases in commercial loans by banks in New York. Demand deposits and currency in circulation have risen sharply. Member bank reserves have shown little change in recent weeks, and excess reserves have continued close to 3 Vs billion, dollars. United States Government Security Prices Prices of United States Government bonds declined somewhat in the W ednesday figures. Com m ercial loans, first half of February, following little change during the previous month, which include industrial and agricultural while prices of short-term securities, which had risen in January, were loans, represent prior to M ay 19, 1937 sosteady. called “Other loan s” as then reported. INDUSTRIAL PRODUCTION DEPARTMENT STORE SALES AND STOCKS COST OF LIVING CLCTHI.NG ^ RENT p * ..... . F000 MEMBER BANKS IN 101 LEADING CITIES
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