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MONTHLY BUSINESS REVIEW Covering financial, industrial, and agricultural conditions in the Fourth Federal Reserve District Federal Reserve Bank of Cleveland Vol. 17 Cleveland, Ohio, January 31, 1935 An expansion in Industrial activity occu rred in this dis trict and elsew here in the cou n try in D ecem ber and the first three w eeks o f January w hich raised operations in som e lines to levels rem iniscent o f pre-depression periods. The F ederal R eserve B oa rd ’s season ally adjusted index o f in du strial p rodu ction rose eleven points in D ecem ber to 85 per cent o f the 1923-25 m on th ly average and was ten poin ts above the precedin g year. B arrin g the recovery fo llo w in g the banking h olida y o f 1933, this was the largest increase in a single m onth ever show n by this index. W h ile practically all industries shared in the upturn, the m ost pronou n ced rise was in the au tom obile field. A fte r a sa tisfactory disposal o f dea lers’ 1934 stocks, p ro du ction o f 1935 m odels in early January was at the h igh est rate fo r the season since 1930, fo llo w in g the best D e cem ber since 1928. This high rate o f activity w as very beneficial to m any industries in the fou rth district, and em ploym ent and payrolls im proved m ore than seasonally, accord in g to reports. In this con n ection , h ow ever, it sh ou ld be rem em bered that last year the tool and die m a k ers’ strike delayed new m odel produ ction considerably. O rders fo r a u tom obile steel caused local producers to increase operation s sharply. A dvan cin g schedules were reported fo r fou rteen consecu tive w eeks, the average fo r the industry risin g to 51 per cent o f capacity from a low last A u gu st o f 18.4 per cent. F ou rth district steel cen ters, w ith the exception o f P ittsbu rgh, expanded op era tions at a m uch better-th an -average rate. Som e plants in the latter part o f January, particu larly in N orthern Ohio, w ere w ork in g at or near capacity levels and had a con siderable b a ck log o f orders. Other steel users also increased purchases ov er the year end and the six-point rise in operation s at P ittsbu rgh in the third week o f January was en cou ra gin g in this respect, because activity in this area has la gged behind the n ational average on ac count of the depressed condition in industries using types o f steel made by the Pittsburgh mills. No. 1 rise in this district was som ew h at greater than average was the gain in electric pow er consum ption. A ll through D ecem ber and in the first three w eeks o f January, pow er consum ption in the central indu strial region o f the cou n try com pared m ore fa v orably w ith the correspon din g period o f the preceding year than it did in the entire country. In the w eek ended January 19 the gain in this section was 11.9 per cent, w hereas in the United States the increase was 9.4 per cent. P roduction o f local bitu m in ou s coal m ines in D ecem ber was 3.8 per cent above the sam e m onth o f 1933, and ou tpu t in early 1935 was h igh er than in recent years. Tire factories also expanded operations and paint and glass m anufacturers reported that orders and output w ere som ew hat above early 1934. The im provem en t was not confined to the industrial field entirely. Bank debits to in dividu al accoun ts in the five w eeks ended January 23 w ere 25 per cent larger than in the same period o f the preceding year, w hereas the gain in the entire year 1934 from 1933 was 17 per cent. R etail trade in January, particu larly sales o f m ore ex pensive articles such as fu rn itu re, au tom obiles, etc., was stim ulated by the approach o f the effective date o f the sales tax in Ohio, b?it this follow ed a greater-than-season al increase in D ecem ber. The ad ju sted index o f depa rt ment store sales rose fou r points, but stocks, after allow ing fo r seasonal variations, w ere little changed, though ELECTRIC POWER PRODUCTION CENTRAL IN D U S T R IA L REGION PER C E N T IN C R E A S E OVER CO RRESPONDING WEEK A YEAR AGO New dom estic orders fo r m achine tools received in De cem ber w ere la rger than since 1930 and fou n dry equ ip m ent sales w ere up sh arply from N ovem ber though they w ere sligh tly sm aller in the closin g m onth o f 1934 than a year earlier. In dicative o f the im provem en t and the fact that the DECEMBER JANUARY 2 THE MONTHLY BUSINESS R E V I E W the d olla r valu e at the year end was dow n tw o per cent from the close o f 1933. L ife insurance sales in O hio and Pennsylvania in D ecem ber w ere 21 per cent la rger than in the same m onth o f 1933 and the num ber o f com m ercial failures rem ains m uch below oth er recen t years. As trade and industry have expanded, sentim ent has im proved generally th rou g h ou t the district. F IN A N C IA L Changes in con d ition o f w eekly reportin g m em ber banks in leadin g cities o f the fou rth district and o f the F ederal R eserve Bank o f Cleveland w ere sligh t over the year end and in the first three weeks of January. Year-end bank state ments, however, reveal that a sharp increase in deposits oc curred generally in 1934, w hile the liquidation of loans con tinued at a m oderate, but steady rate. This con tra ction was m ore than offset by a rise in investm ents, the bulk o f w hich w as G overnm ent securities, so that total credit ex tended by banking in stitu tions in this section at the end o f 1934 w as som ew hat grea ter than at the close o f 1933. C on dition figures o f all licen sed m em ber banks in the fou rth d istrict on call dates since the banking h olida y are show n b elow : A L L M EM BER B A N K S — FO U R TH D ISTR IC T (000 om itted) Loans and discounts.............. Investm ents— U. S. Governm ent ....... ...... A ll other Securities............ Total Loans & Investm ents Total Deposits ........................ N um ber o f Banks ................ Dec. 31, 1934* $943,067 Oct. 17, 1934 $968,696 Dec. 30, 1933 $1,033,157 981,649 439,960 2,364,676 2,647,886 627 898,964 450,361 2,318,022 2,519,481 622 673,008 392,402 2,098,567 2,111,068 544 % change 1934 from 1933 — 8.7 + + + + + 45.9 12.1 12.7 25.4 15.3 ♦Subject to revision. A s o f D ecem ber 31, 1934, there w ere 627 licensed banks w hich are m em bers o f the F ederal R eserve System. This com pared w ith 544 at the end o f 1933, an increase o f about 15 per cent. D espite the gain in the num ber o f banks, loans and discounts w ere reduced 8.7 per cent, or $9 0,000,000. W h ile new loans w ere being m ade in the period, old loans w ere being paid up at a considerably faster rate. These surplus fu nds w ere used by m em ber banks in part fo r investm ent purposes. H oldings o f Unit ed States G overnm ent secu rities by these banks increased 46 per cent betw een D ecem ber 1933 and the end o f the fo llo w in g year. Investm ents in oth er than G overnm ent secu rities rose in the first part o f 1 9 3 4 ; they declin ed in N ovem ber and D ecem ber, but at the year end w ere tw elve per cent la rg er than at the close o f 1933. The net re sult o f these changes was that total loans and invest m ents o f all m em ber banks in the fou rth d istrict were 12.7 per cent la rger on the latest call date than they were at the close o f 1933. C oinciden t w ith the rise in credit extended, deposits at all m em ber banks increased 25 per cen t; the grea ter part o f the gain was in dem and deposits and represented in part the allocation to this district of funds obtained by the Federal Governm ent through the sale o f United States securities. The m ore rapid increase in deposits than in cred it ex tended by these banks resu lted in an expansion in re serve deposits at the F ederal R eserve Bank o f Cleveland. In D ecem ber reserves in excess o f legal rqu irem ents av eraged $1 34 ,000,000 com pared w ith $5 4,00 0,00 0 in D e cem ber 1933. This was a new h igh record. The accom pa n yin g chart show s total loans and in vest m ents and total deposits o f licen sed m em ber banks on each call date since the bank ing h olid a y in 1933. W h ile the increase in the year and a h a lf w as partly a result o f the licen sin g o f banks w hich did not reopen im m ediately fo llo w in g the h olida y and to the organ ization o f new banks, the gain was con siderably m ore than cou ld be ac coun ted fo r in this w ay and the expansion in total de posits in the period was m uch grea ter than in the am ount o f credit extended. Between D ecem ber 19, 1934 and January 23, 1935 there was a con tra ction in dem and deposits at w eek ly re portin g m em ber banks in lea d in g cities, but tim e deposits w ere p ractically u nchanged in the five latest w eeks. Loans o f these w eek ly reportin g banks w ere fu rth er reduced in the five w eeks and there w as a sligh t declin e in invest ments in G overnm ent and oth er securities. T ota l credit extended by these weekly rep ortin g banks in the third w eek o f January, h ow ever, w as still ap proxim ately $100,000,000, or nine per cent grea ter than in early 1934. Savings deposits at selected banks th rou g h ou t the dis trict w ere seven per cent la rger at the end o f 19 34 than a year previous. R eserv e B a n k Credit. Changes in con d ition figures o f the F ederal R eserve Bank o f Cleveland in the five w eeks ended January 23 w ere o f little im portance. C irculation o f this b a n k ’s F ederal reserve notes, w hich increased prior to the h olida y season, w as redu ced fo llo w in g the turn o f the year and the n ote lia b ility o f this bank on January 23 was approxim ately $10,000,000 less than a year ago at that tim e. Industrial advances to provide w ork in g cap ital increased over the year end and on the latest date they am ounted to $1 ,132,000. In ad dition, com m itm en ts o f this bank to m ake in du strial advances totaled $1,029,000 on the latest date. There w as a very sligh t in crease in bills discou n ted fo r m em ber banks in the five latest w eeks, but h old in gs o f acceptances and o f G overn m ent secu rities w ere unchanged in the period. M AN U FACTU RIN G , M INING Iron and Steel O perations in the steel cent w eeks have show n n oun ced advance since m ediately follow in g the banking holiday in du stry in rethe m ost pro the period im and activity In T H E M O N TH L Y BUSINESS R E V IE W the third w eek o f January averaged better than 50 per cent o f capacity. This com pared w ith 35 per cent a year a go and an average rate o f 37 per cent in the entire year 1934. The sharp rise was prim arily due to a much great* er-than-seasonal increase in au tom obile produ ction , al th ou gh dem and from oth er users o f steel also expanded in the period. A ccord in g to Steel, “ The volum e o f sheet, strip, and w ire business is com pa ra ble to that in early 1929, sheet m ills being unable to m ake delivery o f fu lly finished a u tom obile m aterial fo r fo u r to six w eek s,” In this con n ection the accom panyin g chart show s the percen tage o f total annual steel p rodu ction taken by prin cipal consum in g industries in the period 1926 th rough 1934. In the past year the a u tom obile in du stry led all oth er industries by a g ood m argin, using 21 per cent o f all steel m ade in the year. This was an increase on a percen tage basis even from 1929 w hen consum ption was 17.6 per cent o f total output. The next largest percen t age gain in the amount of steel consumed in the nine-year pe riod was in the container industry, although a slight reduc tion occu rred in 1934 from the preceding year. The greatest decline in the period w as in the railroad in du s try. P rior to 1930 there was on ly one year in w hich the consum ption o f steel by the railroad s did n ot lead that o f all oth er industries. There w as a sligh t increase in sales o f steel to railroads in 1934, but the industry ranked third am ong the prin cipal consum ers. The fou rth district, because o f its dependence on the a u tom obile industry, shared pa rticu la rly w ell in the re cent steel bu ying m ovem en t and the Im provem ent in the m anufacture o f a gricu ltu ral im plem ents, h ousehold u tili ties, and increased dem and fo r h eavier grades o f steel has benefited em ploym ent gen erally and caused steel payrolls to rise sharply. Steel in g ot p rodu ction in the C leveland-L orain district in the w eek ended January 19 w as 79 per cent o f capac ity, com pared w ith 64 per cent in the w eek ended De cem ber 22 and 59 per cent a year ago. O perations at W h eelin g in the latest period w ere at 95 per cent, a fif teen -poin t gain in fo u r w eeks, and Y ou n gstow n m ills w ere op eratin g at 64 per cent, up 23 points in the fo u r latest w eeks. Because o f the lim ited dem and fo r heavy grades o f steel, Pittsbu rgh m ill operations have lagged behind the n ational average fo r several m onths. The advance o f 11 points to 38 per cent o f capa city in the secon d and third w eeks o f January in that section w as m ost sig n if icant, alth ough dem and fo r stru ctu ral and railroad steel was still quite lim ited. M ost sheet and strip m ills in the n orthern part o f the district w hich serve a u tom obile m anu factu rers, w ere w ork in g at capacity and, a ccord in g to reports, have b o o k ings to continu e at this rate fo u r to five w eeks. It is stated fu rth er that m ost m aterial is g oin g directly in to consum ption, m otor-car builders and parts* manufacturers h aving little op portu n ity to acqu ire stocks. W ire m ills also w ere active m aking m aterials fo r autom obile springs, etc., w hile nut and bolt m a nu factu rers operated at 45 per cent o f capacity, a gain o f 20 points in the fo u r latest w eeks. The recen t advance in steel p rodu ction has been partly seasonal, but a fter m ak in g due allow an ce fo r norm al in creases, operations in the th ird w eek o f January approxi m ated 80 per cent o f the 1921-31 average, the h igh est fo r this season o f the year since 1930. P rices rem ain u nu su ally firm and S teel’s iron and steel price com posite w as $32.62 in late January com pared w ith $31.15 a year ago. D em and fo r scrap steel is heavy and the average price in the secon d w eek o f January was $12.25 a ton compared w ith $11.02 a month earlier. D aily average pig iron p rodu ction in D ecem ber was 33,153 gross tons, a gain o f 3.8 per cent from N ovem ber. T otal output, at 1,027,740 tons, w as 7.3 per cent greater than in N ovem ber, but w as 13.8 per cent u nder D ecem ber 1933. F o r the en tire year pig iron p rodu ction w as up 20.8 per cent from the precedin g tw elve m onths. There w ere 67 blast fu rn aces in operation on D ecem ber 31, seven m ore than on N ovem ber 30, but several ad ditional fu r naces resum ed prod u ction in the first three w eeks o f January. D aily average steel in got p rodu ction in D ecem ber was 77,645 gross tons, an increase o f 27 per cent over N ovem ber. T otal p rodu ction , am oun ting to 1,941,127 tons, was 7.9 per cent ahead o f the closin g m onth o f 1933 and fo r the entire year steel in got p rodu ction w as 11.8 per cent g reater than in the precedin g year. Coal B itu m in ous coal p rodu ction at fou rth district m ines in D ecem ber was 11,640,000 tons. This was 3.8 per cent grea t er than in D ecem ber 1933 and exceeded any sim ilar m onth since 1930. O utput was dow n season ally from N ovem STEEL CONSUMPTION BY PRINC IPA L IND U STR IES AUTOMOTIVE B U IL D IN G S CONTAINERS EXPORTS OtL.GAS.WATER MACHINERY A L L OTHER 1927 1938 1929 1930 1931 1932 1933 1934 4 THE MONTHLY BUSINESS R E V IE W ber, bu t in the en tire year 1934 loca l m ines produ ced ten per cen t m ore coa l than in 1933 and reported the best year o f operation s since 1931. E arnings also im proved in the p eriod since coa l prices w ere advanced this past year. Mine operations in early 1935 continu ed at a higher rate than in the tw o preced in g years as dem and fo r coal, both fo r industrial and household consum ption, in creased. Stock s o f coa l in the hands o f in du strial consum ers were ab ou t three per cent la rg er in D ecem ber than in N o vem ber and at 25,810,000 tons in the latest month were ap proxim ately the sam e as a year ago. Stocks o f coal at steel and rollin g m ills w ere up sh arply from last year and electric pow er u tility com panies show ed an increase o f ten per cent, but sm aller stocks in hands of other consumers largely offset these increases. A u tom obiles D evelopm ents in the au tom obile in du s try in the past six o r eigh t w eeks com pletely ov ersh a dow ed changes in other fields and the sharp increase in new-model output has been chiefly respon sible fo r the decided gain in industrial p rod u ction in the period. In 1934, 21 per cent o f all steel m a de in the United States w as used by the au tom o bile in du stry and it is estim ated that at least 25 per cent o f cu rren t ou tpu t is being so utilized. W ith such a la rge share o f m any basic m aterials— glass, ru b ber and tires, steel, new m achinery, parts and accessories o f every description (a s show n on the a ccom panying chart) being supplied or used by fourth district man ufacturers, the recent upturn has been practically beneficial to lo ca l producers, and in cid en tally to retail and w h ole sale trade. In creased em p loym en t and la rg er payrolls also w ere reported. A u tom ob ile p rodu ction in D ecem ber, a ccord in g to the D epartm ent o f C om m erce, w as 183,187 cars and trucks. This w as an increase o f 134 per cen t from N ovem ber and the Federal Reserve B oard’s index, after adjusting for seasonal variations, was 105 per cent o f the 1923-25 month ly average com pared w ith 37 per cent in N ovem ber and 45 per cent in D ecem ber 1933. W ith p ractically all m an u factu rers m akin g every effort to supply dealers w ith new m od els and at the sam e tim e m ake delivery on the un usu ally la rg e v olu m e o f orders fo r this season w hich r e cen tly have been received, operation s increased in m id- January to the h ighest level since D ecem ber 1930. The Annalist in dex fo r the w eek en ded January 20 w as 100.4 per cent o f the 1927-30 average com pared w ith 47.4 per cent a year ago. In this con n ection , h ow ever, it sh ou ld be remembered that last year new-model production was delayed because o f the tool and diemakers* strike and the in dustry did not really hit its stride until the beginning of Feb ruary. A cco rd in g to trade reports, January p rodu ction is expected to exceed 250,000 units and if this figure is attained it w ill be the high est fo r that m onth since 1930. R etail sales in the first tw o w eeks o f January w ere re ported to be ap proxim ately tw ice w hat th ey w ere a year ago and in this district the increase has been even greater, due chiefly to the im position o f a general sales tax effec tive January 27th. A large volum e o f new passenger cars have been ord ered to av oid paym ent o f this three per cent tax, but delivery is being spread ou t ov er a period o f several w eeks partly because m a nu factu rers are unable to make deliveries. Passenger car p rodu ction in D ecem ber w as 128,059 units, a gain o f 152 per cent from D ecem ber 1933 and the h igh est fo r that m onth since 1930. F o r the entire year 2,190,000 passenger cars w ere produced, an increase of 39 per cent from 1933. T ru ck p rodu ction in D ecem ber was 55,128 units, a gain o f 85 per cent from D ecem ber 1933, and in the year 63 per cent, or 220,000 m ore trucks w ere m ade than in 1933. R u bber, T ires P rod u ction sch edules o f loca l tire and ru bber plants in creased g en erally in D ecem ber and continu ed to sh ow an upward trend in January, accord in g to reports, the expan sion being somewhat greater than seasonal. W hile in creased activity in the au tom obile in du stry w as chiefly respon sible fo r the upturn, in som e instances m a n u factu r ers w ere ad din g to inven tories. A t the end o f 1934 m an u fa ctu rer’s stock s o f tires w ere about the sam e as a year previous, bu t increases w ere apparent from the low point o f the year tou ched in Septem ber. T ire sales in 1934 were ap proxim ately 45 ,500 ,0 00 units, a gain o f abou t fo u r per cent from 1933, and the year, as a whole, was much better than the preceding tw elve m onths from the stand point o f sales, produ ction , em ploym ent, and earnings. The advance in prices last fall w as an im portan t fa c to r in the im proved earnings, but at the same tim e m anufacturing costs rose during the year. CONSUMPTION OF BASIC MATERIALS BY THE AUTOMOBILE 7555 • 1931 1931 1933 1934 i93F INDUSTRY T H E M O N TH L Y BUSINESS R E V IE W C onsum ption o f cru de rubber by m a nu factu rers in the United States am oun ted to 36,662 tons in D ecem ber, an increase o f 5.2 per cent from N ovem ber and o f 27.5 per cent from Decem ber 1933, according to figures o f the Rub ber M anufacturers’ A ssociation. Crude rubber consum p tion in 1934 was 453,905 tons, an increase o f 13.2 from the precedin g year and w ith the exception o f 1929, when 467,000 tons w ere consum ed, was a record fo r all time. Im ports o f crude rubber in Decem ber were 20 per cent under N ovem ber and 31 per cent below D ecem ber 1933, but fo r the entire year 1934 im ports am oun ted to 469,484 tons, a gain o f 14.1 per cent from 1933. W ith im ports in the year sligh tly la rg er than consum p tion, the supply o f cru de rubber on hand at the end o f the p eriod w as a little la rger than at the close o f 1933. C loth in g F rom the stan dpoin t o f in ven tories o f both u n m an ufactured and finished g oods, the cloth in g and textile industry was reported to be in a rather favorable position. Most loca l plants in m id-January w ere operatin g at close to capacity levels on spring m odels, the season h aving been som ew h at delayed by the textile strike. A dvan ce orders on hand were reported to be som ewhat larger than in early 1934 and there has been little m an u factu rin g fo r inventories. E m ploym en t in D ecem ber at 38 factories reportin g to the O hio State U niversity Bureau o f B usiness R e search w as about six per cent u nder the precedin g m onth and was dow n a like am oun t from the closin g m onth o f 1933. D eclines w ere quite general in the period, alth ough an im provem en t was reported in early January. R etail cloth in g sales at loca l stores continue above a year ago, but the gain in sales o f men's clothing was som ew h at larger than in w om en ’s ready-to-w ear. P rices, according to FaircM ild’s index, were little changed from a year ago. O ther M an ufacturin g The sm aller m an u factu rin g industries o f the fou rth district shared in the gen eral in du strial expansion w hich was eviden t in the latter part o f D ecem ber and the first three w eeks o f January. E m ploym en t im proved sligh tly in the p eriod and the volum e o f new orders and shipm ents com pared v ery fa v ora b ly w ith the preced in g year. A u tom ob ile P arts, A ccessories. O perations o f local parts and accessory plants in early January w ere reported to be a b ou t 40 per cent above early 1934, but last year the in du stry en cou ntered con siderable d ifficu lty due to the tool and die m akers’ strike. Em ploym ent in December in creased ten per cent from the preceding month and was 22 per cent ahead o f D ecem ber 19 33 ; fu rth er gains w ere re ported in January. In ven tories o f both raw and sem i-fin ished products w ere sm all in m ost cases. B rick an d T ile. P rod u ction o f face brick im proved sligh tly tow ard the end o f 1934 alth ough ou tpu t fo r the entire year w as a little below the preceding tw elve m onths. E m ploym en t continu ed at a very low level and the in du stry as a w hole is still quite depressed, 6 China, P ottery . In creased in terest eviden t at the an nual pottery and glass exhibit recently held in Pittsburgh was en cou ra gin g to m a nu factu rers in this district. O rders received at the show were reported to be about 25 per cent larger than in early 1934 and operations in the first part o f January averaged 15 to 20 per cent above the corresponding period o f the p recedin g year. E lectrica l Supplies. Sales o f electrical apparatus and supplies im proved in early January and em p loym ent and plant operation s sh ow ed a corresp on d in g increase. In D e cem ber em p loym en t at 28 loca l com panies w as seven per cent h igh er than at the close o f 1933 and fo r the en tire year averaged 29 per cent above the preced in g period. Glass. O perations at plate glass fa ctories in recent w eeks have expanded con siderably due to a seasonal rise in orders from the au tom obile industry. M uch o f the in creased v olu m e represented sa fety glass, w hich is rapidly b ecom in g standard equ ipm ent on m any au tom obiles. O ut put o f oth er branches o f the in du stry show ed a little im provem ent, and a fa v ora b le situation was eviden t gen erally. M achine T ools. N ew orders fo r m achine tools received from dom estic users by m anufacturers in December were high er than since 1930, but the total v olu m e was slightly below D ecem ber 1933 because in that m onth a large num ber o f foreign orders w ere placed w ith dom estic m anu fac turers. New orders have increased fo r fo u r consecu tive m onths. E m ploym en t at loca l plants at the close o f the year w as sligh tly h igh er than at the end o f 1933 and fo r the entire year averaged 50 per cent above the preceding tw elve m onths. P aint. Sales o f paint in D ecem ber 1934 held up bet ter than in lik e periods o f precedin g years. The m od ernization program o f the F ederal H ou sin g A dm in istra tion, increased activity in the au tom obile industry, and a slight gain from a year ago in residential construction were factors contributing to the im provement. Stocks o f raw ma terials and finished g ood s at the begin ning o f the year w ere abou t the sam e as in early 1934, but em ploym ent, w ages, and sales w ere above a year ago at this time. Paper. A ccord in g to reports, operation s in the paper board in du stry in early January w ere sligh tly below those o f the corresp on d in g period o f 1934. In ven tories w ere smaller than at this time last year, but w ere reported to be su fficien tly la rge fo r curren t needs. O rders fo r v ari ous grades o f paper recen tly received have been som ew hat la rger than usual fo r this season, and em ploym ent and earnings have show n an upw ard tendency. Shoes. P rod u ction at fou rth district factories increased considerably m ore than seasonally in December, was 37 per cent ahead o f the closing month o f 1933, and higher than in any corresponding month since 1929. F or the entire year, shoe prod u ction in this district was up 2.6 per cent from the p recedin g tw elve m onths. Stocks o f raw m aterials and finished goods at the year end were lower than at the close o f 1933. Orders recen tly placed fo r spring g ood s have been som ew hat la rg er than a year ago. $ THE MONTHLY BUSINESS R E V IE W B U ILD IN G F o r the year 1934, departm en t stores reported an in crease o f 16.5 per cent in d olla r sales. Stores in sm aller cities o f the d istrict reported an increase o f 25 per cent in the y e a r’s sales, pu rch asing pow er o f rural com m u n i ties h aving been augm ented by paym ents o f the A g ricu l tural A d ju stm en t A dm in istration and also by the h igh er prices obtain ed fo r m ost farm products. C on stru ction activity in D ecem ber declin ed quite sharp ly from the precedin g m onth, both in the fou rth district and in oth er parts o f the coun try. The drop w as chiefly seasonal, but the valu e o f aw ards fo r residen tial con stru ction held up better in the period than in oth er types. Com pared w ith D ecem ber 1933, total contracts aw arded in the fourth district, valued at $6,671,000 in the closing m onth o f 1934, w ere dow n 78 per cent, the fa llin g -off be ing due prim arily to a con tra ction in publicly-fin an ced n on-resid ential bu ildin g. R esiden tial contracts aw arded in the closin g m onth o f the year w ere valu ed at $1,089,000, an increase o f 25 per cent from the correspon din g period o f 1933, but about 35 per cent u nder N ovem ber. F or the entire year 1934, total contracts awarded in the fou rth district w ere valu ed at $1 48 ,5 16 ,0 00 , an in crease o f 21 per cent from 1933 and greater than since 1931. R esiden tial con tra cts aw arded in the year w ere ap proxim ately the sam e as in 1933. Contracts aw arded fo r n on -resid en tial con stru ction , oth er than public w ork s and u tilities, in the year w ere valu ed at 23 per cent m ore than in 1933. Contracts fo r pu blic w ork s and utilities, the bu lk o f w hich w ere financed by the use o f F ederal fu nds, w ere ap proxim ately 70 per cen t la rg er in 19 34 than in the preceding year. D olla r valu e o f departm ent store stocks declin ed 18 per cent in D ecem ber, a less-th an -season al redu ction , and the ad ju sted in dex rose from 59.7 per cent to 61.2 per cent o f the 1923-25 m on th ly average. A t the end o f 1934 the d olla r value o f stocks at departm en t stores w as tw o per cent low er than at the end o f 1933. Contemplated construction reported in December in this section had a slightly sm aller value in December than in N ovem b er and was less than on e-h a lf as great as in D ecem ber 1933. W h ile b u ild in g activity at this tim e o f the year is gen erally quite lim ited, b u ildin g m aterial and supply dealers in this territory reported a somewhat greater-th an -seasonal fa llin g -off, alth ou gh a sligh t im p rov e m ent fo r the year as a w hole from 1933 w as apparent in m ost instances. Sales o f rep ortin g w earin g apparel stores in D ecem ber w ere 4.9 per cent la rg er than in the closin g m onth o f 1933, but fo r the entire year an increase o f 14 per cent was shown. Chain drug sales w ere up 8.8 per cent in December and 11.9 per cent in the year 1934 from corre sp onding periods o f the preced in g year. Sales o f rep ort in g fu rn itu re stores w ere 19 per cent la rg er in D ecem ber than a year earlier, but a gain o f 26 per cent in yearly sales w as reported from 1933. The ratio o f all credit sales to total sales in D ecem ber declined season ally from N ovem ber, but, com pared w ith a year ago, an in crease o f abou t fo u r per cent w as evi dent. This was due en tirely to an expansion in in stall m ent sales, the ratio o f regu lar cred it to total sales being sligh tly sm aller than in the closin g m onth o f 1933. C ollection s held up quite w ell in D ecem ber and the per cent o f accounts receivable on Novem ber 30 w hich were c ollected in D ecem ber was a b ou t eigh t per cen t la rg er than in D ecem ber 1933. TRADE W h olesa le R eta il The dolla r v olu m e o f retail trade in the fou rth district, ju d g in g by D ecem ber reports from departm ent stores, in creased som ew hat m ore than season ally from N ovem ber and w as approxim ately 14 per cent larger than in D ecem ber 1933. B etter-th an -average gains in D ecem ber co m pared w ith the precedin g year w ere reported at A k ron, C incinnati, Cleveland, and in m ost o f the sm aller centers o f the district, but sales la gg ed som ew h at in Pittsbu rgh and W h eelin g. A fte r a llow in g fo r seasonal variations, the index o f daily average sales fo r D ecem ber was 74.1 per cent o f the 1923-25 m on th ly average, a gain o f fou r points from N ovem ber. Changes in retail prices appar ently had little effect on these comparisons, fo r Fair child’s index o f department store prices declined slightly in D ecem ber and at the year end w as dow n one per cent from w hat it w as at the close o f 1933. A som ew hat greater-than -seasonal fa ll ing-off was evident in wholesale sales of groceries, dry goods, and hardware in this district in Decem ber and drug sales in the period showed a con sid erably less-than-seasonal increase. Gains in D e cem ber sales com pared w ith the p recedin g year w ere evi dent in all rep ortin g lines except drugs. G rocery sales w ere up 13.6 per cent, dry g ood s, 27.6 per cent, and h ard w are 5.2 per cent from D ecem ber 1933, and in the entire year, sales o f reporting wholesale grocery, dry goods, and dru g firms w ere up a p proxim a tely 18 per cent from 1933, w hile hardw are sales in the same period increased 23 per cent. Collections im proved slightly in the year and the dollar value o f stocks on hand at rep ortin g firms at the close o f 1934 w as sligh tly h igh er than at the end o f the preced in g year. THE MONTHLY BUSINESS R EVIEW 7 Fourth District Business Statistics Wholesale and Retail Trade (000 omitted) (1934 compared with 1933) Fourth District Unless Dec., % change Year, % change Otherwise Specified 1934 from 1933 1934 from 1933 Bank Debits— 24 cities. . . . . . . . . .3 2,020,000 + 2 9 .9 20,291,000 + 1 6 .9 Savings Deposits— end of month: 41 banks, O. and P a ...................... $ 672,811 + 7 .0 * Life Insurance Sales: Ohio and P a .....................................3 91,686 + 2 1 .1 940,894 + 8 .6 Retail Sales: Dept. Stores— 49 firms................. 3 27,000 + 1 3 .7 191,754 + 1 6 .5 Wearing Apparel— 11 firms......... $ 1,076 + 4 .9 8,911 + 1 4 .4 Furniture— 42 firms....................... $ 759 + 1 9 .0 7,911 + 2 6 .1 Wholesale Sales: Drugs— 13 firms.............................$ 1,260 — 16.1 15,644 + 1 8 .9 Dry Goods— 10 firms.....................$ 1,061 + 2 7 .6 13,143 + 1 8 .0 Groceries— 33 firms........................$ 3,624 + 1 3 .6 45,477 + 1 7 .9 Hardware— 14 firms....................... $ 1,143 + 5.2 14,076 + 2 2 .6 Building Contracts— T otal.............$ 6,671 — 77.9 148,516 + 2 1 .3 — Residential. .$ 1,089 + 2 5 .2 19,843 — 0 .4 Commercial Failures— Liabilities. .$ 729 — 54.0 23,961 — 51.2 — N u m b e r... 61* — 32.2 7792 — 53.8 Production: Pig Iron, U. S........................... Tons 1,028 — 13.8 15,977 + 2 0 .8 Steel Ingot, U. S....................... Tons 1,941 + 7 .9 25,261 + 1 1 .8 Auto-Pass. Car, U. S ........................ 128,059*+152.1 2,190,099* + 3 9 .2 ” Trucks, U. S.............................. 55,128* + 8 5 .1 566,4212 + 6 3 .4 Bituminous C oal..................... Tons 11,640 + 3 .8 142,018 + 1 0 .1 Cement, O., W. Pa., W. Va. bbls. 235 + 1 4 2 .3 7,311 + 3 5 .0 Elec. Power, O., Pa., K y .,..k .w .h . 1,1983 + 1 0 .6 12,765* + 1 0 .8 Petroleum, O., Pa., K y.......... bbls. 2,007* + 1 0 .0 21,625* + 9 . 7 S h o e s ........................................ Pairs 6 + 3 7 .5 5 + 2.6 Tires, U. S............ .............. Casings 3,248* + 1 0 .1 42,159* + 2 . 9 Bituminous Coal Shipments: 243 — 13.5 35,971 + 1 1 .3 L. E. Ports................................Tons Iron Ore Receipts: L. E. Ports..............................Tons .. 15,573 — 4 .6 1 not available 2 actual number 3 November * first eleven months 5 confidential D E P A R T M E N T STORES (49) A kron....................................................... Cincinnati............................................... Cleveland................................................ Columbus................................................ Pittsburgh............................................... T oled o...................................................... Wheeling................................................. Other Cities............................................ District.................................................... W E A R IN G A P P A R E L (11) Cincinnati............................................... Other Cities........................................... D istrict.................................................... F U R N IT U R E (42) Cincinnati............................................... Cleveland................................................. Columbus................................................ D ayton..................................................... T oled o...................................................... Other Cities........................................... District.................................................... C H AIN STORES* Drugs— District ( 4 ) .............................. Groceries— District ( 5 ) ........................ WHOLESALE G R O C E RIE S (33) Akron....................................................... Cleveland................................................ Erie........................................................... Pittsburgh............................................... T oledo...................................................... Other Cities........................................... District.................................................... W HOLESALE D R Y GOODS (10).. W HOLESALE DRUGS (1 3 )............. W HOLESALE H A R D W A R E (14). ♦Per individual unit operated. Percentage Increase or Decrease SALES SALES STOCKS Dec. Year Dec. 1934 1934 1934 f-17.2 f-16.0 (-15.9 K13.5 h 9 .7 -13.6 (-11.3 f-17.1 -1 3 .7 + 3 2 .0 + 1 1 .7 + 1 9 .0 + 1 7 .4 + 1 1 .9 + 1 4 .9 + 1 4 .9 + 2 5 .2 + 16.5 — — + — — + + + — + 3.5 + 5 .6 + 4 .9 + 8 .7 + 17.3 + 1 4 .4 — 8.5 + 6 .7 + 0 .9 + 2 7 .7 + 1 1 .2 + 3 2 .4 + 1 4 .8 + 1 1 .1 + 3 6 .0 + 1 9 .0 + 3 0 .4 + 2 6 .8 + 2 3 .4 + 7.4 + 3 2 .1 + 3 5 .2 + 2 6 .1 + 8.8 + 4.1 + 1 1 .9 + 8.2 + 2 8 .8 + 2 0 .2 + 9 .6 + 1 2 .3 + 4.3 + 1 1 .2 + 13.6 + 2 7 .6 -1 6.1 + 5.2 + 3 3 .7 + 1 7 .0 + 1 9 .8 + 1 5 .9 + 1 8 .3 + 1 6 .5 + 1 7 .9 + 1 8 .0 + 1 8 .9 + 2 2 .6 1.3 7.2 2 .7 5.3 4 .8 5.3 0 .2 8.8 2.0 + 10.4 + 4 .9 Debits to Individual Accounts (Thousands of Dollars) 5 weeks ended Jan. 23, 1935 A kron..................... 56,529 Butler..................... 7,659 C anton................... 29,753 Cincinnati............. 301,264 Cleveland.............. 496,005 Colum bus.............. 180,512 D a y ton ................... 56,722 E rie......................... 24,098 3,206 Franklin................. Greensburg........... 7,472 9,017 H am ilton............... Homestead............ 2,247 Lexington............... 36,108 L im a....................... 10,014 Lorain..................... 3,194 M iddletown........... 7,828 Oil C ity................. 9,430 Pittsburgh............. 747,085 Springfield............. 15,300 Steubenville.......... 6,829 T oled o .................... 104,376 Warren................... 6,278 W heeling............... 32,380 36,127 Youngstow n......... Zanesville.............. 7,129 T o ta l.................. 2,196,562 % change Year Year from Jan. 3, 1934 Jan. 4, 1933 1933 to to Jan. 2, 1935 Jan. 3, 1934 389,890 + 3 2 .7 546,592 73,310 + 2 .7 81,213 229,582 307,285 + 5 .8 2,701,179 + 9 .9 2,982,645 4,820,524 4,205,247 + 2 2 .4 1,472,571 1,094,563 + 5 9 .4 443,339 + 4 4 .1 496,246 196,728 + 2 5 .3 229,618 30,871 27,234 + 16.4 61,392 46,570 + 5 4 .9 93,207 80,282 + 1 4 .8 19,592 22,841 + 2 0 .2 211,577 175,241 + 6 2 .2 + 13.6 93,305 70,764 26,877 32,575 + 3 3 .0 69,539 75,580 + 1 8 .6 70,871 + 38.2 86,712 6,083,220 6,940,937 -r27. 7 121,795 4-17.3 146,441 + 15.5 72,388 57,098 860,853 -2 6 .3 1,038,236 60,503 72,501 + 3.8 329,558 317,787 + 3.5 392,329 309,134 -2 9 .2 62,940 + 12.2 70,152 + 2 5 .4 20,707,296 17,794,138 change from 1933 + 4 0 .2 +10.8 + 3 3 .“ + 10.4 + 14.6 + 3 4 .5 + 11.9 + 1 6 .7 + 1 3 .4 + 3 1 .8 + 16.1 + 1 6 .0 + 2 0 .7 + 3 1 .9 + 2 1 .2 + 8.7 + 2 2 .4 + 14.1 + 2 0 .2 + 2 6 .8 + 2 0 .6 + 19.8 + 3.7 + 2 6 .9 + 11.5 +16* 4 Fourth District Business Indexes (1923-1925 = 100) Bank Debits (24 cities)........... Commercial Failures (N u m ber)........... ” ” (Liabilities)................... Sales— Life Insurance (Ohio & P a .). . . . . . . . ” — Department Stores (47 firm s)............. ” — Wholesale Drugs (12 firm s)................ ” — ” Dry Goods (10 firm s). . . . ” — ” Groceries (33 firm s).......... ” — ” Hardware (14 firm s)......... ” — ” All (69 firm s)............... .. ” — Chain Drugs (4 firms)**....................... Building Contracts— (T o ta l)............................ ” ” — (R esidential).................. Production— Coal (O., W. Pa., E. K y .) ......... — Cement (O., W. Pa., W. V a .) .. ” — Elec. power (O., Pa., K y .)*. . . . ” — Petroleum (O., Pa., K v .)* ......... ** — Shoes............................................... ♦November. **Per individual unit operated. Dec., Dec., Dec., Dec., Dec., 1934 1933 1932 1931 1930 75 57 58 83 124 42 62 135 180 143 17 36 187 136 102 110 91 91 140 126 91 122 108 123 149 83 99 83 83 101 43 33 34 49 70 63 55 51 67 80 59 56 37 49 65 61 57 49 63 78 93 86 79 90 97 14 63 11 30 35 6 5 4 17 29 64 62 62 61 84 20 8 53 35 64 143 129 120 134 144 109 99 97 112 102 51 70 51 59 44 THB MONTHLY BUSINESS RHVIEIW Summary of National Business Conditions By the F ederal R eserve B oa rd In D ecem ber the F ederal R eserve B oa rd ’s season ally ad ju sted indexes o f industrial production and fa ctory em ploym ent increased sharply. W h o le sale prices o f farm products and food s show ed a con siderable advance in the latter part o f the m onth and in the early part o f January, w h ile prices o f oth er com m odities as a g rou p show ed little change. P rod u ction and E m ploym en t O utput o f basic indu strial products increased in D ecem ber, w hen usually declines, and the F ederal R eserve B oa rd ’s index, w hich m akes allow ance fo r the usual seasonal variations, in creased from 74 per cent o f the 1923-25 average in N ovem ber to 85 per cent in D ecem ber. A ctivity at steel m ills increased, contrary to the usual seasonal tendency, and ou tpu t at au to m obile factories rose rapidly. In both o f these industries there w ere fu r ther sharp increases in a ctivity in the first th ree w eeks o f January. A t w oolen m ills and silk m ills activity increased in D ecem ber, con tra ry to seasonal tendency, and at cotton m ills and tob a cco fa ctories it declin ed by less than the usual seasonal am ount. O utput o f petroleu m increased som e w hat in D ecem ber and the first h a lf o f January. F actory em ploym ent increased betw een the m iddle o f N ovem ber and the m iddle o f D ecem ber, con tra ry to seasonal tendency, and there w as a co n siderable g row th in fa ctory payrolls. Substantial increases w ere reported fo r the a u tom obile, textile, shoe, and tire industries, w hile in the m eat packin g industry there was a fu rth er declin e from recen t h igh levels. E m ploym en t in retail trade show ed an increase la rg ely o f a seasonal character. V alue o f con stru ction contracts aw arded, as reported by the F. W . D odge C orporation, show ed a declin e in D ecem ber, partly seasonal in nature, fo llo w e d by an increase in the first h a lf o f January. F o r the fou rth qu ar ter as a w h ole the value o f con tra cts fo r privately-financed p rojects was about the sam e as in the corresp on d in g period o f 1933, w hile the volum e o f publicly-fin an ced p rojects w as con siderably sm aller than last year. it Index number of industrial production, adjusted for seasonal variation (1923-1925=100). Latest figure, December, preliminary 85. Indexes of factory employment and payrolls, without adjustment for seasonal variation <19231925 average=100). Latest figures, December, employment 78.1; payrolls 632. D istribu tion V olu m e o f freig h t-ca r loa din gs declin ed less in D ecem ber than is usual at that season. Sales o f m erchandise by departm ent stores show ed an in crease o f m ore than the estim ated seasonal am ount and w ere approxim ately 11 per cent la rger than in the corresp on d in g m onth a year earlier. C om m odity P rices The gen eral level o f w h olesale com m od ity prices, as m easured by the index o f the Bureau o f L ab or Statistics, advanced con sid erably du rin g the latter part o f D ecem ber and the early part o f January, reflectin g chiefly m arked increases in the prices o f farm products and food s. Scrap steel prices also increased. In the th ird w eek o f January prices o f grains, cotton , hides, and rubber show ed a declin e from the level o f the precedin g w eek. C urrently w h olesale prices are 9 per cent h igh er than a year ago, reflecting an increase o f 30 per cent fo r farm products, an in crease o f 24 per cent for food s and little change fo r oth er com m odities. R etail prices o f food s, as reported by the Bureau o f L ab or Statistics, increased con siderably in the latter part o f D ecem ber, fo llo w in g three m onths o f gradual decline. Indexes of daily average sales (1923-1925=100). Latest figures, December, adjusted 76; unad justed 133. B ank Credit D uring the six w eeks en din g January 23 seasonal return flow o f cur* rency from circu lation , fu rth er im ports o f g old , and disbu rsem en t by the T reasury o f funds previou sly held as cash or on deposit w ith the R eserve banks w ere reflected in a g row th o f m em ber bank balances w ith the R eserve banks to $4 ,500 ,0 00 ,0 00 , the h igh est figure on record and in an increase o f their excess reserves to the h igh level o f $2 ,160,000,000. L oans and investm ents o f reportin g m em ber banks in leadin g cities increased by $3 50 ,000,000 in the 5 w eeks ended January 16. H oldin g s o f United States G overnm ent obliga tion s rose $4 20 ,0 00 ,0 00 and an increase was show n also in h old in gs o f obliga tion s guaranteed by the G overnm ent and in oth er secu rity h oldin gs, w hile loans declined by $ 1 30 ,0 00 ,0 00 . C om m ercial paper rates, w hich had been reported at a ran ge o f % — -1 per cent since June, declin ed to a general level o f % per cent early in Jan uary. O ther sh ort-term open m arket m on ey rates sh ow ed little change, w hile yields on lon g-term United States T reasu ry bonds declin ed from 3 to 2 per cent. In D ecem ber and January d iscou n t rates w ere low ered from 3 to 2V2 per cen t at the F ederal R eserve Banks o f R ich m on d , M inneapolis, K ansas City, and D allas, and from 2 % to 2 per cen t at Ph iladelph ia, C h icago, and St. L ou is. A t the F ederal R eserve Bank o f A tlan ta the d iscou n t rate was low ered to 2 ^ per cent in D ecem ber and to 2 per cen t in January. % Three-month moving averages of F. W. Dodge data for 37 Eastern States, adjusted for seasonal variation. Latest figures based on data for November, December, and estimate for January.
@FedFRASER