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M ONTHLY BUSINESS REVIEW Covering financial, industrial and agricu ltu ra l c o n d itio n s Vol. 19 Cleveland, Ohio, January 30, 1937 General conditions in this district in January were unsettled as a result of record breaking floods in some sec tions and of prevailing strikes in the automobile and plate glass industries. Notwithstanding these developments gen eral business continued close to the high level of the recovery movement. Buying of parts and materials by Gen eral Motors Corporation was sharply curtailed because of strikes though not completely stopped, but other as sembly plants continued to specify deliveries of materials in large volume and to operate at a high level. Auto as semblies in the four weeks ended January 23 were only one per cent less than in the same period last year, but curtailment of assemblies was somewhat greater in the latest week. Even plants very dependent on General Mo tors Corporation for an outlet for their products were in some cases continuing to manufacture for inventory pur poses. Were it not for floods and strikes, manufactur ing activity in this district wrould compare favorably with December; as it is, a set-back in the upward movement has occurred. The steel industry, so far as basic production is con cerned, was not seriously affected by conditions in the auto industry. Operations were maintained, according to reports, by shifting deliveries on large backlogs of orders for finished steels to other users and production in the third week of January was at 80 per cent of capacity, the highest rate since February 1930. The sharp reduc tion at Cincinnati from 96 to 68 per cent and the slight drop at Wheeling, entirely due to floods, was more than off set by increases of two points at Pittsburgh to 82 per cent, Youngstown to 79 per cent, and slight gains elsewhere. Further reductions of about three per cent because of flood conditions were reported in the fourth week of January. Practically all of the general manufacturing industries operated at a high rate in December and showed little change in early January. Inventories of both raw mate rials and finished products were larger at the year end than at the close of 1935, but higher operating rates neces sitate larger stocks in most cases. New orders for machine tools received in December were the largest on record; tire production was being maintained to build up inven tories further; shoe and clothing plants were active; paint Fourth Federal Reserve D istric Federal Reserve Bank of Clevelanc No. 1 production was ahead of last season; paper factories were operating at a rate closer to capacity than for several years; metal specialty plants were very busy and operations at some plate glass plants were resumed after being closed several weeks. While weather conditions hindered coal consumption for heating purposes, industrial demand held up very well, particularly in the coke-producing areas. Also the mild weather permitted more building. Residential contracts awarded in December in this section were larger than since 1928 and a gain of 139 per cent was reported from December 1935. Other types of construction contracts awarded were under the previous year due to a drop in public works, but contemplated projects reported were much larger than a year earlier. Contracts awrarded in the first half of January were 50 per cent larger than in early 1936 and a sizable gain was evident from December. Labor difficulties apparently wrere responsible for the slight decline in employment indexes in December and these, to gether with floods, were further affecting conditions in January. Trade was stimulated in December by the higher wages, bonuses and dividend payments; department stor<* sales were 23 per cent larger than in December 1935, and the index of sales was only about eight per cent be low December 1929. Retail prices, however, are still about 20 per cent under late 1929, although an increase of four per cent occurred in 1936. New passenger car registrations in December in principal counties of the district were nearly 70 per cent above the preceding year and debits to individual accounts at banks in leading cities in the four weeks ended January 20 were 23 per cent above the same interval of the previous year. In the year 1936 debits were up 19 per cent from 1935. Commercial fail ures, both in number and liabilities involved, continued at the lowest levels in over 15 years. FINANCIAL A further rise of $5,000,000 in this bank’s holdings of Government securities occurred at the end of 1936, but. as was the case in the two previous increases, this merely represented a reallocation of the Federal Reserve Sys tem’s total holdings. At $250,228,000 they represent ap THE MONTHLY BUSINESS REVIEW 2 proximately ten per cent of the System's total investments in Government securities. Bills discounted on January 20 amounted to only $9,000 and acceptance holdings were $294,000. Industrial advances continued to decline and on the latest date were $1,178,000, compared with $1,726,000 on January 22 last year. Gold certificate reserves of this bank declined over $50,000,000 in the first three weeks of January, a more or less seasonal development, but at $613,000,000 they were $115,000,000 larger than a year ago. Note circulation of this bank declined about $24,000,000 from the high level of December 23 to the third week of January. This falling-off was less than the increase in note circulation in the month preceding the holidays. The return flow of currency was greater in actual amount than in any year since 1930, but on a percentage basis it still was much less than in years prior to 1931. As shown in the accompanying table the average pre-holiday increase in the five years 1926 to 1930 was $24,300,000 and the average decline following the holidays in those five years was about $30,000,000. Since 1930 the pre-holiday increase has averaged $20,200,000, but the average post-holiday de cline was $16,300,000 in the six years. Although the sea sonal increase in December, both in amount and percentage, in recent years has been smaller than in years prior to 1931, the January decline has equaled the pre-holiday rise in only one of the past six years. 192 6 192 7 1928 1929 193 0 193 1 193 2 193 3 193 4 1935 1936 FEDERAL RESERVE NOTE CIRCULATION (000 omitted) $ Increase from $ Decline November low High following (about the 15th) December January -$31,542 $235,614 $36,213 17,788 227,284 27,376 25,525 230,145 30,952 27,258 202,732 27,770 19,182 203,650 24,767 18,465 330,232 14,251 -........... 12,495 289,540 12,950 15,225 293,220 12,484 16,445 314,892 17,418 25,854 362,738 16,109 32.936 432,230 24,470 % Decline —14.9 —12.0 —13.4 —13.7 —12.2 — 4.3 — 4.5 — 4.3 — 5.5 — 4.4 — 5.4 Barring year-end fluctuations, total reserve deposits of member banks in this district declined about $25,000,000 from mid-December to the third week of January. At the same time deposits at member banks showxd little change and required reserves remained close to the previous level of December. Despite the reduction, however, estimated excess reserves in mid-January amounted to 50 per cent of requirements for all member banks in the district. This excess was distributed as follows: member banks in re serve cities had 44 per cent more than was required and country member banks had an excess of about 66 per cent, based on average deposits at country member banks in the last half of December. In mid-January excess re serves of member banks, estimated at $144,000,000, were about $100,000,000 less than they were in August 1936 prior to the 50 per cent raise in reserve requirements at that time. Member Bank Credit Year-end condition figures of mem ber banks in this district reveal to a degree the changes that occurred in the financial situation in 1936. The fol lowing table shows loans, investments and deposits of all member banks in this district on December 31, 1936, com pared with June 30 figures and those at the end of 1935. ALL MEMBER BANKS—FOURTH DISTRICT (000 omitted) Dec. 31, June 30, Dec. 31, 1936* 1936 1935 Loans and Discounts............ $1,008,610 $ 988,522 $ 940,163 Investments: U. S. Gov’t. Securities— direct and/or fully guar anteed ............................. 1,243,634 1,151,677 1,088,602 All other securities.. .. 565,312 534,623 482,763 Total loans and investments 2,817,556 2,674,822 2,511,528 Total Deposits ..................... 3,698,450 3,268,141 3,005,621 622 627 628 Number of banks............... •Subject to revision. % change 1936 from 1935 + 7.3 +13.3 -f-17.1 +12.2 +23.1 + 0.8 While there was an increase of five in the number of member banks in the year (chiefly small ones) total loans and investments of these banks rose 12 per cent during the period. Loans and discounts were up seven per cent and the gain was chiefly in other than security loans, which declined in the year. Holdings of Government se curities by these banks were 13 per cent larger at the close of 1936 than a year previous, but investments in other than Government securities were up 17 per cent in the twelve months. In contrast with these gains was the rise of 22 per cent in total deposits in the year to an alltime high level despite the smaller number of member banks as compared with years prior to the banking holi day. While time deposits were up in the year, the bulk of the increase was in demand deposits. Earnings reports, while not complete, indicate con siderable improvement in 1936 compared with other recent years and many banks have again declared dividends. Prof its from banking operations were small in many cases, but THE MONTHLY BUSINESS REVIEW recoveries on assets previously charged off and profits on investments sold were larger than in previous years because of the improved general business conditions. The more or less usual year-end fluctuations were evi dent at weekly reporting member banks in the four weeks ended January 20, although in the period there was a net gain in commercial loans; on the latest date they were over 30 per cent larger than a year previous. Loans on securities declined in January after increasing at the year end. Investments in Government securities rose quite sharply over the year end to a new high level, but holdings of these securities declined slightly in the second and third weeks of January. Reporting banks also reduced their in vestments in other securities in the period. Demand de posits were up quite sharply in the latter half of De cember, but since that time a decline occurred and the net change from the third week of December was only slight. Time deposits increased moderately. MANUFACTURING, MINING Iron and Although the automobile industry is the Steel largest consumer of steel, current labor difficulties of General Motors Corpora tion, which have practically stopped the flow of steel to that outlet and also to some parts plants, have had little effect on the rate of steel production as a whole. One reason why the interruption has not had a substantial effect is found in the heavy backlogs of steel mills and the diversity of outlets. Practically every steel consumer depends on current shipments rather than on accumulations in its plants. As a result mills found no difficulty in diverting some deliveries to other lines than automotive and simply made deliveries a week or weeks sooner than had seemed possible. Some manufacturers of automotive accessories are continuing production to build up stocks. The net result of the situation has been that production of steel ingots remains substantially unchanged from the best rate of December, before the holidays caused the usual interruption. At 80 per cent of rated output, the in dustry was producing close to practical capacity because a certain number of open hearths must be down for repairs at regular intervals. A year ago the rate was 52.5 per cent. Production rates in principal steel centers of this dis trict were all close to the national average rate. Enlarge ment of demand for heavy steel products, rails, structural vshapes, bars and plates has balanced output somewhat and Pittsburgh mills have operated above the country average for the first time in several years. At 81.5 per cent in the week ended January 23, the Pittsburgh rate compared with 37.5 per cent a year ago. Youngstown was producing at 79 per cent. Northern Ohio mills were working at 78, com pared with 67 per cent in early 1935; Wheeling was at 94 as against 70, and at Cincinnati the rate prior to the flood was 92, whereas a year ago it was 75 per cent. Both the latter rates were reduced by flood conditions. While the auto industry continued to lead as a steel con sumer in 1936, improvement in other lines reduced the percentage of total steel used to 20.9 from 24 per cent in 1935. Building ranked second with 13.9 per cent, as against 13 per cent in 1935. The largest increase occurred in the share required by railroads which took 11.3 per cent of all steel made, compared with 7.75 per cent n 1935. Con 3 tainers dropped from third to fourth place; although ac tual tonnage increased, the percentage of total output was 8.4 against 9.3 in 1935. A slightly smaller proportion of steel was exported and used for agricultural purposes in 1936 than in the* preceding year, although the actual amounts were greater. The machinery industry took the largest share of total production in 1936 ever taken by that branch, nearly five per cent. Per capita steel con sumption was 840 pounds in 1936 compared with 583 pounds in the preceding year. In 1929 the per capita figure was nearly 1,000 pounds. Steel ingot production in December, at 4,431,645 tons, was the largest for that month in the history of the steel industry. Next highest is December 1928, with 4,018,208 tons. Fourth quarter output was the largest for any final quarter in history and the best for any three-month period since the third quarter of 1929. Average production for the year was at 68.52 per cent of capacity, compared with 48.54 per cent in 1935. Pig iron production in 1936 was 45.8 per cent greater than in 1935, at 30,682,704 tons, compared with 21,040,483 tons in 1935. December production was 3,125,192 tons, a gain of 5.9 per cent over November. These figures are the best made since 1930, going back to May of that year for a better month. There was a further increase of five in the number of blast furnaces in operation in December and at the year end 170 were active, compared with 120 at the close of 1935. iron ore stocks at furnaces and on lower Lake docks on January 1 totaled 31,402,148 tons, approximately the same as a year ago, despite the fact that ore shipments in 1936, at nearly 45,000,000 tons, were more than 50 per cent in excess of the previous year. Consumption of iron ore in December by furnaces which rely on the aforementioned stocks for their supply was 4,551,000 tons, a gain of near ly 50 per cent over last year. Coal Production of coal in recent weeks has continued at the highest rate in seven years, both in this district and the entire country, although demand for coal for heating purposes has been considerably retarded by the unusually mild weather. Prices on these grades weakened as inventories accumulated, but demand for coke continued at a high rate and prices on this type of fuel were somewhat better than a year ago. Rebuilding of beehive ovens in the south western section of Pennsylvania continues and a large by- 4 THE MONTHLY BUSINESS REVIEW product coke plant at Cleveland, idle four years, has been maintained at most plants. Crude rubber consumption in ordered back in operation. December by domestic manufacturers was 49,626 long tons. Large coal consumers were reported to be buying sup This was only slightly under the November figure of plies somewhat in excess of current requirements in De 50,303 tons and was a gain of 16.8 per cent over Decem cember and early January, but inventory figures for the ber 1935. Rubber consumption in the entire year estab entire country are not available. With Lake shipments lished an all-time record, and at 573,522 tons, an increase cut off, local mines in December were dependent on other of over 16 per cent from 1935 was evident. outlets for their product. While crude rubber imports increased in the closing Automobiles Strike conditions disturbed the auto as months of last year as quotas in producing countries were sembly industry in January, despite the stepped up, total imports to the United States, at 490,858 fact that they were confined chiefly to long tons, were much below consumption during the year General Motors Corporation which produced about 40 and stocks of crude rubber on December 31, at 219,000 per cent of all autos in 1936 and even there the shut tons, were 28 per cent smaller than on the corresponding down was not complete. In the wTeek ended January 23 the date of 1935. Rubber stocks increased slightly in December, industry was reported by Cram to have produced 81,395 imports exceeding consumption for the first time since cars and trucks. This was a drop of 10,000 from the pre August 1935. This diminishing inventory in the face of vious wreek, but compared with 87,415 cars in the corre increased consumption was accompanied by a marked sponding period of 1936. In the four weeks prior to January price rise. In the third week of January crude rubber 23 assemblies were estimated to be 341,660 cars and trucks, was quoted above 21 cents a pound, down slightly from compared with 345,004 in the four corresponding weeks the recent peak of 23% cents, but still higher than of last year. In the latest week, however, General Mo since early 1929 and compared with a recent low of less tors’ production represented about 15 per cent of total than three cents a pound in 1932. The rise in the fourth output, while most other plants reported assemblies con quarter of 1936 was about 30 per cent. These higher material costs and other operating ex siderably in excess of last year. In early 1936 factory output was reduced from the high penses caused manufacturers to advance tire prices six levels of the preceding December and November and yet the per cent on January 18. This followed a general increase in year’s production, reported by the Department of Commerce May 1936 of 5 to 13 per cent and a slight readjustment to be 4,455,000 cars and trucks, was the second largest on of prices last November. Production of pneumatic tires in 1936 (with Decem record, only being exceeded by 1929. The gain over 1935 was nearly 13 per cent. December output, at 498,721 units, ber estimated) was about 55,000,000 units. Eleven months’ was up more than seasonally from November, the Board’s ad output, according to The Rubber Manufacturers’ Associa justed index, at 122 per cent of the 1923-25 average, being tion, was 52,779,000 casings, a gain of 16.5 per cent over 17 points higher than in the previous month. Decem the same interval of the previous year. Shipments to deal ber production was 498,721 cars and trucks, the largest ers, auto assembly plants and exports in the first eleven figure for that month on record and an increase of 23 months, at 50,300,000 casings, although nine per cent per cent over December 1935. Passenger car production larger than in the same period of 1935, were 2,440,000 in December was 426,019 units, a gain of 24 per cent over casings under production in the eleven-month period and the previous year. Truck production, at 72,702 units, was inventories on December 1 were that much larger than in late 1935. According to trade reports, sales of tires up 18 per cent in the same period. replacement purposes in 1936 were only slightly While complete figures on car sales and registrations in for greater in 1935; exports were little changed, but December are not available, new passenger car registra shipmentsthan to the auto industry accounted for the bulk of tions in principal centers of this district in the month were the increase in tire Output of mechanical rubber nearly 70 per cent greater than in December 1935, and the goods in the year wassales. reported to have been considerably total for the year exceeded 1935 by more than 40 per cent. greater than in 1935, in part due to additional uses to Demand for cars in the first half of January is reported to which rubber is being adapted. have held up very well. Peak assembly rates have been Conditions in the smaller manufacturing reported in most cases, however, excluding General Motors Other Corporation. Lack of plate glass was stated to be responsible Manufacturing industries of this district remained bet for the four-day wreek at one plant. Some parts plants in ter in early January than at this season this district have had to curtail operations where General of the past several years. Unfilled orders generally were Motors were their chief customers, but in other cases opera much larger than a year ago and increased inventories also tions have been maintained and inventories of finished parts were reported. have accumulated. Auto Parts, Accessories Up to mid-January most parts and Tires, Tire plants in this district have been accessory plants in this district experienced few ill ef Rubber taking advantage of the slack season to fects of the automobile strike. Some had to curtail opera build up inventories, according to re tions to a degree and others had varying quantities of ma ports, and while the year end figure is not yet available, terials tied up, but the majority continued to manu on December 1 tire inventories in hands of manufactur facture for inventory purposes. Most plants operated in ers were nearly 11,000,000 casings. The increase over the December at an unusually high rate, for that season of year, same date in 1935 was 31 per cent and further gains were to supply materials for current auto assemblies as well as to reported in December and January as schedules were build up an inventory of parts at assembly points. Since THE MONTHLY BUSINESS REVIEW mid-January a slowing down was reported as plants not directly affected by strikes found it necessary to curtail operations because of shortages of certain materials, par ticularly glass at assembly plants. China, Pottery At the beginning of the year china and pottery plants in this section had a larger volume of un filled orders on hand than a year previous and produc tion was estimated to be about 85 per cent of capacity. Employment was greater than a year ago and while wage rates were unchanged, earnings were larger. Considerable buying interest was evident at the Pittsburgh pottery and glass show in January. Clothing Orders on hand for spring clothing were re ported up to 20 per cent in excess of last year and plant operations, though somewhat curtailed by sickness in Cin cinnati, were above early 1936. Textile mills are operating full time and have on hand a very large volume of un filled orders. Finished clothing inventories were smaller at the year end than at the close of 1935. Electrical Supplies Conditions in the electrical apparatus and supply industries remain quite favorable. Unfilled or ders are very much larger than a year ago and employ ment, sales and operations all show large gains over last year. Hardware Demand for metal specialties continued at a high rate in early January, heavy hardware products show ing the greatest improvement as compared with last year. Orders and inventories were considerably larger than in early 1936. Glass Plate glass production was all but stopped com pletely in late December and the first half of January by strikes, and while they wTere terminated in late January, it was reported that it would be some time before peak production could be reached. Demand for glass from all consuming units continued at a high rate and even increased as the strikes spread with the result that stocks were reduced to a minimum; in some cases supplies were completely exhausted and automobile assembly plants were reported to have imported some glass from Europe through Canada. While window glass production was not cur tailed to the extent plate glass output was, plants ac counting for approximately 50 per cent of the country's supply of window glass were not operating in the first half of January. Window glass inventories of both job bers and manufacturers are reported at the lowest level on record, and unfilled orders at the beginning of 1937 were 2,000,000 boxes in excess of those on hand a year pre vious. Prices have not changed materially since the in crease of eight per cent last May. Makers of molded and blown glassware were not affected by the strike. Machine Tools A decided spurt in buying of machine tools occurred in December and the index of the National Ma chine Tool Builders’ Association rose from 147 in No vember to 257 per cent of 1926 shipments in the last month of 1936. Buying was greater than in any month on record back to 1919 when tabulation of these figures be gan. While foreign purchases rose somewhat, the bulk of the increase was in domestic orders. The index, based on dollar value, reflects higher prices that prevail on machine tools. In addition, since plants generally are 5 behind on shipments, considerable buying in advance of actual needs was reported in the month. Small tool and foundry equipment sales also were large in December and both were reported to have held up well in the first half of January. Inventories of the former are lower than for some time, but supplies of raw materials have been purchased in rather large quantities. Faint Operations at paint plants have been maintained at high levels this winter to build up inventories in prepara tion for the spring season. Sales, even in this dull period, have been reported much larger than in corresponding in tervals of previous years. Inventories of both raw materials and finished goods are larger than a year ago, but prices also are higher. Paper Makers of paperboard in this district reported that operations held up very well over the year end and in the first half of January. Inventories are not large, buying continues in good volume, and prices have been advanced three times since December, aggregating $10 a ton. Shoes Footwear production at plants in this district was 30 per cent greater in December than in November and nine per cent above the previous year. Factory output for the entire year 1936, both in this district and the en tire country attained a new high record, and with a larger volume of unfilled orders on hand than a year ago, early January operations were in excess of last year. Hide and leather prices continue firm and higher than a year ago. Retail shoe prices have advanced slightly. CONSTRUCTION The relatively mild weather so far this winter in this district has permitted many construction projects to move forward that would have been held up had weather condi tions been more severe. As a result the seasonal let-up in demand for building materials has been less than usual and inventories of construction supply dealers at the year end were reported smaller than a year ago. Lumber prices have increased quite sharply in recent weeks, some items as much as 25 per cent on the mill value. Dry lumber is reported as being quite scarce in this section. Residential building in the fourth district in December, according to figures of the F. W. Dodge Corporation, was 139 per cent larger than in December 1935 and, valued at $6,400,000, contracts awarded for this type of work exceed ed every December since 1928. More than 50 per cent of this amount represented construction of dwellings for owner occupation, but there was a good increase in construction of houses indicated for sale or rent. It was reported that building done in 1936 for market was readily disposed of in most sections of this district and contemplated work of this type reported in December was nearly three times as great as a year ago. In 1936, residential construction contracts awarded in the fourth district were val ued at $76,400,000, a gain of 65 per cent over 1935. Hous ing developments in this district in 1936 had a contract value in excess of $9,000,000 and apartment contracts awarded were valued at about $10,000,000. The value of total contracts awarded in this section in December was slightly under November and was three per cent less than in the closing month of 1935. The drop from 6 THE MONTHLY BUSINESS REVIEW last year was chiefly in contracts for public works, educa tional, and public buildings. The marked increase in com mercial and factory construction contracts awarded and the gain in the residential field were not quite sufficient to overcome the loss in other classifications from late 1935. In the entire year 1936 total awards were valued at $247,000,000, not much below the figure of 1931 and exceeding any year since then. Awarding of a large factory contract in Cleveland in December swelled that city’s figures, but the majority of cities experienced gains from last year, both in December and the year. Canton was the only city in the district in which 1936 building was less than in 1935. TRADE Retail Department store sales in the fourth dis trict in December were 23 per cent larger than in the same month of 1935 and dollar volume was the best since December 1929. Daily average sales in the month, writh adjustment for seasonal variation, amounted to 96.3 per cent of the 1923-25 average* a gain of one per cent over November. In 1929 the De cember index was 104, but retail prices at that time were considerably higher than at present, judging by Fairchild’s index. Increases in principal cities in December ranged from 18 per cent at Cincinnati, 20 per cent at Cleveland, to 32 per cent for the group of stores in cities from which in sufficient reports are received to show a separate figure. In every one of the 55 departments, for which individual per centages are computed, gains were recorded over December 1935. The smallest increase shown was seven per cent in the yard goods and art needlework departments, while gains from 25 to 50 per cent were not uncommon. Fur sales were up 48 per cent, furniture 42 per cent, women’s ready-to-wTear 30 per cent, and silverware and jewelry 25 per cent. For the entire year, stores reported an increase of 15 per cent in dollar sales over 1935 and the largest annual volume since 1930. Prices on January 2, 1937, wrere about four per cent higher than a year previous. Sales were 87 per cent of the average of 1923-25. As in other recent months sales of basement departments in December represented a smaller percentage of total store sales than a year previous. The increase in December basement store sales from 1935 was 18 per cent and sales of these departments represented 15.6 per cent of total store volume. Wearing apparel stores showed smaller increases in De cember and the entire year than department stores, but gains in sales at reporting furniture stores were 31 per cent in December and 29 per cent in the year 1936. Despite the increase in total department store volume, cred it sales represented a smaller share of total sales than in December 1935, and a seasonal decline from November was evident. Compared with last year, however, the drop was entirely in regular charge sales, for a greater proportion of total sales represented installment buying than a year ago. While accounts receivable at the year end were 19 per cent larger than a year previous, collections have shown con siderable improvement. In December they were 26 per cent larger than in December 1935 and the ratio of all collections during the month to accounts receivable at the beginning of the month was 38.2 per cent, compared with 36.1 per cent in December 1935. Department store stocks declined 18 per cent in Decem ber, but the reduction was less than seasonal and the adjust ed index was 17 per cent higher than at the end of 1935 and also was above any month since 1930. The increase in inventories was not as great as the gain in sales and the ratio of sales to stocks continued higher than in other recent years. Sales of all reporting wholesale lines in this district in December were larger than in November and the increase over December 1935 was considerably greater than was report ed in the entire year. Reporting wholesale hardware firms experienced an increase of more than 36 per cent in the month from December 1935 and in the entire year a gain of 14 per cent was evident. Sales of wholesale dry goods firms were up 30 and 14 per cent, respectively, in similar periods. Wholesale drug sales were 22 per cent larger in December and up 14 per cent in the entire year, and the gains in grocery sales were 15 and 7 per cent in the month and the year. While advancing wholesale prices were re sponsible for part of the rise in dollar volume, wholesale trade conditions improved generally in 1936. AGRICULTURE Recent changes in market prices of farm products in dicate that the general level of prices received by farmers rose substantially from mid-December to mid-Jan uary. Rather sharp declines were experienced in poultry and egg prices, but advances occurred in all livestock, wheat, corn, oats, butter, wool and potatoes in the period. Live stock and wheat prices reacted somewhat in the third week of January, but both remained substantially above other recent years. In December, the Department of Agricul ture’s index of prices received by farmers was 126 per cent of the five-year pre-war average compared with 110 at the close of 1935. All wholesale prices were up about five per cent in the same period. Prices of goods farmers buy were 127 per cent of pre-war average in December compared with 122 a year previous and the ratio of prices received to prices paid was 99 in December, compared with 90 at the end of 1935. The annual inventory of grain stocks on farms as of January 1 showed that a smaller percentage of last year's wheat and corn crops remained in farmers* hands than a Wholesale THE MONTHLY BUSINESS REVIEW year ago, or the average of the five years 1928 to 1932. Wheat stocks on Ohio farms represented only 25 per cent of the previous year’s harvest, compared with 29 per cent in 1936 and 36 per cent, the five-year average. Other states of the district and the entire country showed a similar sit uation. The total supply was smaller than on January 1 of the eleven years for which figures are available, attractive prices being partly responsible for close marketings. Corn on farms also was less than at any time in the same period, but as a per cent of the 1936 crop, it was close to average. Oats stocks bear about the same relation to previous years as corn. Acreage seeded to winter wheat last fall was by far the largest on record, both in states of this district and the en tire country. The total increase over the autumn of 1935 was 15 per cent, while compared wTith the five years 1927-31 it was 26 per cent. The gain in Ohio acreage sown to win ter wheat was ten per cent over last year, but 34 per cent as compared with the five-year average. The relatively smaller increase in Ohio over 1935 than in the entire country was partly due to the fact that in recent years a relatively larger acreage has been planted to wheat locally than in other sections. Tobacco Prices prevailing on Kentucky tobacco auction floors continued to exceed expectations in the first three weeks of January and the average price received so far for the 1936 crop at Lexington was in excess of 41 cents a pound, whereas the average for the entire previous season was 19.2 cents a pound. This was the highest average price since 1919. Despite the small crop of 1936, more had been paid growers at the Lexington auction markets by midTannan' than in the entire selling season last year. Fourth District Business Statistics (000 omitted) Fourth District Unless Dec. % change Year % change Otherwise Specified 1936 from 1935 1936 from 1935 Bank Debits— 24 cities. . . . 33,056,000 + 3 1 . 0 327,839,000 + 18.7 Savings Deposits— End of M onth: i 40 banks, O. and W . P a ............3 741,071 + 5 .3 Life Insurance Sales: Ohio and P a ....................................... 3 80,627 — 1 .9 876,305 + 7 .0 Retail Sales: Dept. Stores— 52 firms.................3 36,888 + 2 2 . 9 239,358 + 1 5 .2 1,466 + 18.3 Wearing Apparel— 13 f i r m s . . . . 3 10,820 + 9 .4 Furniture—-42 firms.........................3 1,315 + 3 1 . 4 11,844 + 2 8 .6 Wholesale Sales: Drugs— 11 firms.................................3 17,828 + 1 3 .7 1,765 + 2 2 . 1 15,526 Dry Goods— 10 firms.................... 3 1,525 + 3 0 . 2 + 14.2 49,518 4,343 + 1 5 . 1 Groceries— 30 firms.........................3 + 6 .8 17,315 + 1 4 .1 1,989 + 3 6 . 6 Hardware— 13 firms........................ 3 + 35 .9 Building Contracts— to t a l............. $ 20,638 — 3 .2 247,098 “ “ — Residential. $ 6,400 + 1 3 8 . 9 76,442 + 6 5 .0 757 — 21 .0 11,331 — 25 .0 Com mercial Failures— Li abilities.3 “ “ — N um ber. . . 6672 — 24 .9 402 — 31 .0 Production: 3,125 + 4 7 . 6 30,682 Pig Iron— U. S.............................tons + 4 5 .8 46,919 + 4 0 .4 Steel Ingot— U. S......................tons 4,432 + 4 4 . 2 3,676,063* Auto— Passenger Car— U. S.......... 426,0192 + 2 4 . 2 + 13.0 Auto— Trucks— U. S.......................... 72,7022 + 1 8 . 2 778,4722 + 1 2 . 1 Bituminous Coal, O., W. Pa., E. K y ...................................................tons 770 + 9 1 . 1 10,650 + 4 5 .8 Cement— O., W. Pa., W. V a .. bbls. Elec. Power, O., Pa., Ky. ........................................ thcus k.w.h. 1,6083 + 1 3 . 4 16,199* + 1 4 . 3 21,8884 — 5 .8 2,1748 + 1 .2 Petroleum— O., Pa., Ky. ..b b ls. 17,773 1,386 + 8 .9 + 6 .5 Shoes ........................................... pairs 52,7794 + 1 6 . 5 4,9693 + 2 4 . 3 Tires, U. S..............................casings Bituminous Coal Shipments: 519 + 6 0 . 7 45,441 + 2 6 .8 L. E. P o rts ................................... tons Iron Ore Receipts: + 5 7 .9 62 + 2 4 4 . 4 31,438 L. E. P o rts ................................ .tons 4 Eleven months 1 N o t available 5 Confidential 2 Actual number 3 Novem ber Debits to Individual Accounts Wholesale and Retail Trade (1936 compared with 1935) D E P A R T M E N T S T O R E S (52) A kron................................................................. Cincinnati........................................................ C levelan d......................................................... C o lu m b us...................... .................................. Pittsburgh....................................................... T o le d o ............................................................... W heeling.......................................................... Other C ities................................................... D istrict............................................................. W E A R I N G A P P A R E L (13) Cincinnati........................................................ Cleveland......................................................... Pittsburgh............................................... Other C ities................................................... District.............................................................. F U R N I T U R E (42) C incinnati............... ....................................... C leveland......................................................... C o lum bus........................................................ D a y t o n .............................................................. T o le d o ............................................................... Other C it ie s .. . ............................................ D istrict............................................................. C H A IN ST O R E S * Drugs— District ( 4 ) ................................... Groceries— District ( 5 ) ........................... W H O L E S A L E G R O C E R I E S (30) A kron................................................................. C levelan d......................................................... E rie .................................................................... Pittsbu rgh....................................................... T o le d o ............................................................... Other Cities................................................... D istrict............................................................. W H O L E S A L E D R Y GO O DS (1 0 )... W H O L E S A L E D R U G S (1 1 ) .................. W H O L E S A L E H A R D W A R E (1 3 ) ... *Per individual unit operated. Percentage Increase or decrease SALES SALES STO CKS December Year December 1936 1936 1936 + 23.7 + 19.7 + 11 .6 + 17.8 + 1 1 .5 + 1 4 .3 + 1 9 .9 + 1 5 .4 + 26 .0 + 2 1 .1 + 11.4 + 13 .8 + 2 5 .1 + 17.4 + 1 5 .2 + 2 2 .7 + 1 2 .1 + 16.2 + 2 2 .0 + 15 .4 + 1 2 .3 + 3 2 .7 + 13.4 + 19.3 + 2 2 .9 + 1 5 .2 + 1 7 .0 + 13.9 + 2 .6 + 5 .7 + 12.9 + 1 6.4 + 2 5 .6 + 2 1 .3 + 10.4 + 1 2.9 + 2 3 .3 + 1 2 .7 + 6 .7 + 18.3 + 12.8 + 9 .4 + 3 6 .7 + 2 6 .6 + 2 7 .6 + 2 7 .5 + 2 3 .3 + 2 2 .3 + 57 .0 + 3 4 .6 + 2 5 .2 + 2 9 .2 + 3 5 .0 + 3 3 .7 + 3 1 .4 + 2 8 .6 + 14.5 + 14.0 + 11.6 + 3 .4 + 2 2 .1 + 7 .5 + 5 .0 + 3 .2 + 2 0 .7 + 7.2 + 7 .0 + 0.8 + 1 3 .8 + 4 .2 + 2 0 .7 + 1 0 .5 + 15.1 + 6 .8 + 8 .9 + 3 0 .2 + 7 .4 + 1 4 .2 + 2 2 .1 + 1 3 .7 + 3 6 .6 +14 1 7 Greensburg. . . H o m e stea d .. . . Middletown. . . Steuben ville.. . Youngstow n. . (Thousands 4 weeks % ended Change January 20, f rom 1937 1936 3 63,506 + 14.2 9,971 + 2 9 .4 35,998 + 15.5 351,846 + 1 7 . 3 595,687 + 1 1 . 6 + 2 1 .8 187,075 69,901 + 3 7 .3 30,181 + 3 2 . 5 + 0.7 3,295 7,444 + 7 .6 11,504 + 3 6 . 5 3,191 + 4 8 . 4 54,531 + 1 0 3 . 4 13,072 + 2 8 . 2 4,648 + 5 1 . 3 9,618 + 15.3 10,669 + 1 6 . 6 811,945 + 2 8 .1 8,375 + 3 3 . 7 17,565 + 1 8 .2 9,739 + 5 1 . 1 153,061 + 4 3 .6 9,454 + 4 6 . 7 36,810 + 15 .4 50,533 + 4 4 .1 8,203 + 2 0 .7 32,567,822 + 2 3 .3 of Dollars) Year Year % Jan. 1, 1936 Jan. 2, 1935 change to from to Dec. 30, 1936 Dec. 31, 1935 1935 3 734,786 3 608,291 + 2 0.8 106,803 86,895 + 22.9 358,121 411,790 + 1 5 .0 3,996,621 + 18.3 3,378,788 6,832,841 + 22 .2 5,591,462 2,120,788 1,842,810 + 15.1 760,973 585,999 + 2 9 .9 319,197 255,526 + 2 4 .9 41,907 34,091 + 22 .9 80,559 64,289 + 2 5 .3 134,654 105,362 + 27 .8 32,639 26,137 + 2 4 .9 246,883 + 4 .2 237,039 141,624 110,849 + 2 7 .8 50,458 39,913 + 26 .4 110,334 90,406 + 22 .0 121,201 105,958 + 14 .4 8,625,332 + 14.1 7,558,225 + 26.7 95,220 75,161 191,933 167,921 + 14.3 106,591 + 2 9 .7 82,211 1,475,269 1,123,904 + 3 1 .3 103,748 81,412 + 2 7 .4 393,530 340,893 + 1 5.4 549,123 453,846 + 2 1 .0 89,141 77,472 + 15.1 + 18.7 327,873,945 323,482,981 Fourth District Business Indexes (1923-25 = 100) Bank Debits (24 cities)................................................ Commercial Failures (N u m b e r )............................ “ “ (Liabilities)......................... Sales— Life Insurance (O. and P a .) ....................... “ Department Stores (50 firm s)............... “ Wholesale Drugs (10 firms).................... “ Dry Goods (10 firm s).......... “ Groceries (30 f i r m s ) . . . . . . “ “ Hardware (13 firm s)........... All (63 firms)........................... “ Chain Drugs (4 firm s)**................................. Building Contracts ( T o t a l ) . . . .............................. “ “ (R esiden tial)......................... Production— Coal (O., W. Pa., E. K y . ) ............. Cement (O., W. Pa., E. K y . ) . . . . Elec. Power (O., Pa., K y.)*. . . . “ Petroleum (O., Pa., K y.)*. “ Shoes......................................................... * Novem ber ** Per individual unit operated. Dec. Dec. Dec. Dec. D e c . 1936 1935 1934 1933 1932 113 86 75 57 58 27 41 40 62 135 17 22 14 36 187 91 96 98 110 91 158 134 123 108 91 83 99 83 120 100 33 62 43 48 34 80 70 63 51 55 37 59 105 76 56 86 70 61 57 49 129 112 86 79 93 43 45 11 14 63 37 16 6 5 4 71 62 64 62 53 64 34 20 8 191 169 143 129 120 97 118 116 109 99 51 51 106 98 74 THE MONTHLY BUSINESS REVIEW 8 S u m m a ry of N a tio n a l Business Conditions By the Board of Governors of the Federal Reserve System The Board’s index of industrial production showed a sharp advance in December after allowance is made for the usual seasonal changes. There was a marked expansion in employment and payrolls and retail trade continued at high levels. Production and Employment Actual volume of industrial production showed little change from November to December, at a time when a sharp seasonal decline is usual, and the Board’s adjusted index advanced from 114 to 121 per cent of the 1923-1925 average. There was a further rise in activity at textile mills to the highest level on record and output of other nondurable manufactures was maintained. Declines in production of steel and lumber were smaller Ihdex of physical volum e of production, in December than are usual in that month. At automobile factories there adjusted for seasonal variation, 1923-25 = 100. By months, January 1929 to De was a marked increase in output. In the first three wxeks of January cember 1986, the latest figure being 121, preliminary activity at steel mills increased somewhat, but there was a decline in as semblies of automobiles as a result of shutdowns occasioned by strikes. Coal production declined seasonally from November to December, while output of crude petroleum increased contrary to seasonal tendency. Value of construction contracts awarded, according tc? figures of the F. W. Dodge Corporation, showred a seasonal decrease in December. Factory employment expanded further between the middle of November and the middle of December, contrary to the usual seasonal movement. In creases were general among the durable goods industries, with the largest advances at plants producing automobiles and machinery. In the nondurable goods industries there were marked increases in the number employed at textile mills and at shoe factories. Reflecting principally the higher level of employment and advances in wage rates, factory payrolls increased sharply Indexes of number employed and payrolls in December, particularly at steel mills and in the textile industries. In without adjustm ent for seasonal variation, 1923-25 average = 100. By months, Jan retail trade, employment rose more than seasonally and in most other nonuary 1929 to December 1936. Indexes compiled by the United States Bureau of igricultural pursuits there were increases, when allowance is made for seasonal Labor Statistics. changes. Distribution Retail sales in December increased seasonally at department stores and by more than the usual seasonal amount at variety stores and mail order houses serving rural areas. Freight-car loadings showed a smaller decrease than is usual in December, and the Board’s seasonally adjusted index advanced further. Commodity Prices Wholesale prices, for both industrial and agricultural commodities, con tinued to advance in the second half of December and the first half of January. There were marked increases in prices of industrial raw materials, particularly nonferrous metals, lumber, hides, and wool, and prices of a number of finished goods, such as steel products, paper, and textiles also advanced. Since Indexes compiled by the United States Bureau of Labor Statistics, 1926 = 100. the middle of January there has been a decline in prices of commodities traded By months 1929 to 1931; by weeks 1932 to date. Latest figures are for week end in on the organized exchanges. ing January 16, 1937. Bank Credit Loans and investments of reporting member banks in leading cities de clined in the first three weeks of January, as a result of reductions in commercial loans and in loans to brokers. The decrease in loans reflected in part the retirement of notes issued by the Commodity Credit Corporation last July and in part repayment of other loans, which had increased sharply in preceding weeks. Holdings of Government obligations declined further at New York City banks but increased at banks in other leading cities. Demand deposits decreased at the turn of the year, but thereafter increased somewhat, reflecting chiefly the return of currency from holiday use. The rate on 90-day bankers’ acceptances was raised 1/16 of 1 per cent on January 13 and now stands at % of 1 per cent. Excess reserves of member banks increased from $1,880,000,000 to $2,130,000,000 in the four weeks end W ednesday figures for reporting member banks in 101 leading cities, September 5, ing January 20, reflecting largely the post-holiday return flow of currency from 1934 to January 20, 1937. Loans on real circulation. estate and loans to banks excluded. IN DUSTRIAL PRODUCTION FACTORY EMPLOYMENT AND PAYROLLS WHOLESALE PRlCtS MEMBER BANK LOANS AND INVESTMENTS
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