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MONTHLY BUSINESS REVIEW
Covering financial, industrial
and a g ricu ltu ra lx o n d itio n s
V o l. 21
Cleveland, O h io , January 3 1 , 1 9 3 9
Developments in trade and industry in the fourth dis
trict in the first three weeks of January were chiefly sea
sonal and about in line with earlier trade expectations. De
cember data reveal that changes in that month were also
about seasonal, although for the fourth quarter as a whole
substantial recovery was experienced in nearly every in
dustry of the district, both large and small. As a result,
the current year, in some respects at least, started under
more favorable conditions than was true of 1938. Many
factors generally regarded as having a retarding effect
have not been entirely removed from the path of business,
but they are modified by other elements of a slightly more
favorable nature.
Employment gains, slightly in excess of, or contrary to,
seasonal movements of other years, were recorded in Ohio
and Pennsylvania, as well as in the entire country in De
cember. Thus the rising trend prevailing since last August
was continued. In Ohio the number employed was greater
than in any month of the year, although still under the
closing period of 1937. Payrolls expanded by a larger
amount in December over November than did the number
employed, reflecting further gains in hours worked. This
factor is important to consumers goods industries. Depart
ment store sales in December were up more than season
ally from November, were slightly above 1937, and when
allowance is made for the fact that retail prices are about
four percent lower now than a year ago, it is evident that
the Christmas selling season was only exceeded on two
or three previous occasions. Sales in December were 0.7
percent larger than in the last month of 1937. Other fields
of retail distribution in December also recorded gains.
Passenger car registrations in principal counties were up
50 percent from the previous year, and there was a slight
gain over November. Wholesale trade also improved in
some lines.
There seemed to be more of a disposition to add to in
ventories than for some time. Department stores, even
though sales increased more than seasonally in December,
reduced their stocks by less than the usual amount. De
spite this relative gain, inventories at the year end were
still 14 percent smaller than at the close of 1937. Manu
facturers of shoes, clothing, china and glassware, and fur
niture, all reported more advance orders on hand than for
some time, and also better attendance at the various trade
shows in January than a year ago. Orders placed were
Fourth Federal Reserve District
Federal Reserve Bank of Cleveland
No. 1
also reported in larger volume than at that time.
In the industrial field the situation was rather mixed
and not enough time has elapsed this year to determine
the underlying trend with any assurance. Reports of in
creased buying in several fields have recently been re
ceived. Machine tool orders in January were reported
holding at the December rate, with domestic purchases ac
counting for a proportionately larger share than was true
in most months of 1938. Structural steel orders have been
in good volume, and rail buying so far this year has been
well ahead of the 1938 weekly average. Much of the con
struction work for which contracts were awarded late in
1938 remains to be done. Such awards in December were
larger than since 1926, and the gain over the previous year
was 49 percent. While much of the recent activity was a
result of Federally-financed construction, residential build
ing held up better in the fourth quarter than in other
recent years.
Steel ingot production in December was more than dou
ble the previous year, although it declined more than sea
sonally from November. The operating rate receded mod
erately in the first three weeks of January, but remained
20 points higher than a year ago.
In the automobile field reports were confusing. Weekly
production advanced in January and was more than 50
percent ahead of early 1938. Retail sales in the first ten
days of the month were reported larger than expected. In
ventory data that are available, while indicating a much
better situation than a year ago, show that stocks of both
new and used cars have accumulated. Parts plants reported
January releases down 10 to 15 percent from December,
Coal mining held relatively steady in recent weeks and
was in excess of last year, despite the moderate demand
for household fuels. Electric power produced in the latest
month was 1.2 percent greater than in the corresponding
period of the previous year.
FINANCIAL
Developments at the Cleveland Federal reserve bank and
at member banks during the last month continued to re
flect ease in the money market. Bills discounted for mem
ber banks declined in the four weeks ended January 18
to the lowest level in nearly two years. Federal reserve
notes were returned from circulation in about the usual
post-Christmas volume, and member bank reserves in
2
THE MONTHLY BUSINESS REVIEW
creased slightly to an amount estimated to be 51 percent
in excess of requirements. Repayments of loans at banks
in leading cities of the district continued to exceed new
borrowings, and total outstanding loans declined. These
banks increased their holdings of United States Govern
ment securities to the highest level in 15 months.
Member Bank Credit Changes in weekly condition fig
ures of reporting banks located in important cities of the
fourth district are usually interpreted as being representa
tive of all member banks, for, although only 41 in num
ber, they account for about two-thirds of the loans and
investments of all member banks in this district. Quarter
ly call reports for all member banks, however, indicate
that the large and smaller banks experienced quite different
trends during the past year. The table below gives sepa
rate figures for selected items from condition reports of
banks reporting weekly, and those which report only quar
terly. Data for the weekly reporting banks pertain to the
Wednesdays nearest the call dates, whereas figures for the
other banks were obtained by deducting the nearest weekly
data from figures pertaining to all member banks on call
dates. The December 31, 1938 data are preliminary.
MEMBER BANKS — FOURTH DISTRICT
{Millions of Dollars)
Weekly Reporting Member Banks
Dec. 29 Mar. 9 June 29 Sept. 28 Dec. 28
1938
1938
1938
1937
1938
644
704
679
653
Loans and Discounts ........... 712
1,082
1,203
1,161
1,086
Total Securities ..................... 1,116
831
826
881
926
U. S. Gov’t Obligations*. . 858
280
Other Securities................. 258
255
256
277
1,814
1.847
1,790
1,761
Total Loans and Investments 1,828
2,114
2,144
2*236
Total Deposits ....................... 2,140
2,187
41
41
41
Number of Banks ...............
40
40
All Other Member Banks
Dec. 31 Mar. 7 June 30 Sept. 28 Dec. 31
1938
1938
1938
1938
1937
Loans and D iscou nts........... 379
380
388
389
385
Total Securities ..................... 565
559
525
536
537
273
U. S. Gov’t Obligations*. . 287
264
271
288
271
261
264
265
Other securities ................. 278
Total Loans and Investments 944
939
913
925
922
Total Deposits ....................... 1,212
1,164
1,177
1,168
1,186
Number of Banks ............... 582
582
582
583
583
♦Includes direct and/or fully Guaranteed Securities.
The accompanying chart shows that total loans and dis
counts of all member banks in the fourth district decreased
nearly six percent during the past year. The table, how
ever, reveals that the full amount of this loss was experi
enced at larger city banks. Country banks increased their
loans during the period. The chart also shows that all mem
ber bank holdings of Government and miscellaneous securi
ties, after declining in the first half of the year, rose almost
to the peaks reached at the end of 1936. The table, on the
other hand, indicates that only the large city banks ex
panded their security portfolios during the past twelve
months. So-called country banks reversed a downward
trend in the last two quarters of the year, but total se
curity holdings of the group, at the close of 1938, were
five percent lower than at the beginning. Deposit trends
were very similar to those displayed by investments, show
ing a net gain at weekly reporting banks, and a net loss
at other institutions.
Federal Reserve Operations Total earning assets of the
Federal Reserve Bank of Cleveland averaged $250,859,000
in 1938, of which over 99 percent was United States Gov
ernment obligations. Assets were increased $2,000,000 over
1937, as a result of reallocation of the System’s holdings
of Government securities by the Open Market Commit
tee. Nevertheless, a fall from 1.60 to 1.39 percent in the
average yield obtained on these investments and loans re
duced total earnings in the year by one-eighth. Profits from
the sale of U. S. Government obligations amounted to
$816,000. Only $10,000 were earned on loans and redis
counts to member banks, which were made at the rate
of 1y2 percent throughout the year. The total volume of
such loans fell from $22,000,000 in 1937 to $13,000,000 in
1938. The number of borrowing banks, however, increased
from 43 to 48. No trade or bankers’ acceptances were pur
chased or paper rediscounted secured by bills of lading.
Nearly all credit extended to member banks was on col
lateral notes secured by U. S. Government securities. Loans
made directly to industry under Section 13b of the Fed
eral Reserve Act, increased from $319,000 in 1937 to
$369,000 in 1938, and commitments to make advances rose
from $729,000 to $2,131,000. Net earnings, amounting to
$1,069,626.59 were disposed of as follows: paid to mem
ber banks as dividends on stock held by them, $799,145.05;
paid to the Federal Government under Section 13b of the
Federal Reserve Act, $227.04; credited to reserves for
losses and contingencies, $270,254.50.
MANUFACTURING, MINING
Iron and
Steel
Operations in the iron and steel industry since the beginning of the year have
fluctuated in a rather narrow range, be
low the level of November and part of December, but
about 20 points above the rate for the entire industry a
year ago at this time. The seasonal movement in steel pro
duction in years when new automobiles were first shown
in January, allowed for an increase of around seven per
cent between December and January. Now with the new
model stimulus to the steel industry occurring from two
to three months earlier than was formerly the case, the
seasonal movement has been changed, but as yet insuf
ficient data are available to determine with any accuracy
what the new seasonal trend might be. Current purchases
by the auto industry were further affected by the fact that
large quantities of steel were contracted for last October
when price concessions were available, so that early Janu
ary orders were reported small in relation to the assembly
rate. Toward the month end, however, there were signs
of larger inquiries from this source, following reports
that new car sales were holding up better than expected.
In both 1936 and 1937, two reasonably good years in the
THE MONTHLY BUSINESS REVIEW
steel industry, January demand was relatively light in
comparison with December and February.
Railroads have been somewhat more active, necessity
forcing buying of rails and rolling stock in spite of low
financial resources. Some moderate tonnages of rails have
been placed and some larger lots are pending. Court per
mission has been granted to a number of roads in receiver
ship to proceed with car programs. However, despite re
cent gains, total new business is considerably below most
former years.
Bookings of fabricated structural shapes are consider
ably higher than in 1938, the weekly average for January
being more than 50 percent above last year. Much of this
is for public projects on which the deadline for starting
work was December 31. Tin plate production is at about
45 percent of capacity with prospects for increased re
leases shortly to provide for spring packing needs.
Steel production in the Cleveland and Pittsburgh dis
tricts since the first of the year has been fairly steady, al
though below the level of November and part of Decem
ber. At Cleveland mills the rate in November was 77 to
79 percent of capacity, declining to 50 percent at the
year end, and rising to 60 near the close of January. The
Pittsburgh district operated at 45 to 52 percent in No
vember, ended the year at 26 percent, and in January
was producing at 42 to 46 percent. Youngstown dropped
from 65 percent in early December to 32 at the year end,
recovered to 55 and then receded to 49 percent of capaci
ty. At Wheeling, except for the holiday adjustment, the
rate has remained above 60 percent, while at Cincinnati
it has receded from 72 percent on January 7 to 55 percent
on January 21.
Hesitancy is evident in the attitude of many steel con
sumers who are buying from hand to mouth. Inasmuch
as mills now can make practically any delivery, little in
centive exists to cause accumulation of stocks. Warehouse
steel sales, usually relatively small quantities or special
grades, were running 10 to 15 percent larger in January
than in December, a further reflection of buying only for
immediate needs.
Final production figures for 1938 show steel ingot and
pig iron production was the smallest for any year since
1934. Contraction during the latter half of December up
set earlier expectations, and most estimates for the year
were above actual performance. Steel ingot output was
27,839,261 gross tons, compared with 49,502,907 tons in
1937, a decline of about 44 percent. Pig iron production
in the year was 18,889,663 gross tons, compared with
36,709,139 tons in 1937, a drop of 49 percent.
Coal
There was a slight seasonal decline in
coal production in December, both in
this district and the entire country, but
weekly activity showed less fluctuation over the holiday
period than in other recent years. In the first two weeks
of January, output was somewhat in excess of early 1938,
although it was slightly under the December level. In this
district, December mine production was 12,987,000 tons,
a gain of 4.7 percent over December 1937, but this rep
resented 35.8 percent of the entire country’s output com
pared with 33 percent a year ago.
Demand for coal from domestic users has been retarded
by the relatively moderate weather during most of the
season, but there has been an increase in takings by in
3
dustrial users. There is some evidence that industrial stocks
are being augmented in anticipation of the time when the
Coal Code again becomes effective, and also the expira
tion of the miners’ wage agreement at the end of the
coal year on March 31. On December 1, industrial coal
stocks were reported at 33,325,000 tons, a gain of 6.4
percent in the latest month. This compared with 40,016,000
tons on the corresponding date in 1937. In terms of con
sumption, the current supply is sufficient to last 40 days,
compared with 44 days a year ago. Steel mills and rail
roads had 24 days’ supply, while electric utilities had 72
days’ supply on hand.
Conditions are not uniform throughout the coal areas
of the district. Some mines are idle; others are working
two to three days a week, while a few are operating full
time. Competition is keen and prices are very low, in re
lation to cost.
Automobiles
The usual decline in purchases of both
new and used cars at this season of
the year apparently has developed, al
though the extent of the contraction in early January
from the December level was reported less than expected.
This is reflected, to some extent, in assembly field develop
ments, but year-end and holiday interruptions and adjust
ments and other factors make it difficult to judge ac
curately the underlying trend. It is reported that auto
manufacturers are varying assemblies with actual sales,
so far as possible, in an effort to avoid building up large
stocks now that dealers have been supplied and the early
demand for new cars has been satisfied. Parts makers in
this area reported January releases down 10 to 15 per
cent from December, but comparison with last year at
this time shows considerable variation. In some instances,
where a sharp curtailment had already been effected early
in 1938 and inventories were large, the current level of
operation shows a sizable increase. In other cases the
gains are more moderate. At Ohio auto parts plants the
December employment index was 9.8 percent higher than
in November, but in comparison with December 1937 it
was still more than 20 percent. Pa)^roll figures and employeehour data, however, show larger relative gains from the low
point last year than are revealed by employment compari
sons.
The four percent gain in automobile production in De
cember over November was slightly greater than esti
mated seasonal change, and the index of daily average
output rose three points to 99 percent of the 1923-25 av
erage. Compared with December 1937, passenger car pro
duction rose 33 percent, but truck output fell 24 percent,
a combined gain of 19 percent. While the rise in truck
assemblies in recent months has been about proportionate
to the increase in passenger car output, the relatively
poor current comparison with 1937 is accounted for by the
fact that truck production held up much better a year
ago than did other automotive lines. For the entire year,
truck assemblies were off 45 percent from 1937, while
passenger car production was off 49 percent. Total out
put for the year was 2,490,000 units, a drop of 48 percent
from 1937 and the smallest since 1933. It was reported
that new car inventories increased about 65,000 during
December, but at the beginning of 1939 they were esti
mated to be nearly 150,000 less than a year previous. In
the first three weeks of January assemblies averaged
4
THE MONTHLY BUSINESS REVIEW
85.000 units, according to Ward's reports, with a gain
being shown each week. In January 1938 output was
210.000 cars.
Used car inventory data are very limited. However, a
recent survey from 725 dealers making five percent of
1938 sales, indicated used car stocks were down 18 per
cent from last year, but 61 percent of those reporting
considered the supply as excessive, and dollar inventor
ies were reduced less proportionately than units. This
reflected a larger percentage of late model cars.
There were slightly more new car registrations in lead
ing counties of the district in December than in Novem
ber, and the number reported was the largest since Septem
ber 1937.
Rubber,
Tires
The favorable upward trend in the rubber industry evident since February last
year, after allowing for seasonal changes,
continued unabated through December, and there were
reports of further slight gains in the first half of Janu
ary, although a leveling-off also was evident. In the
fourth quarter, tire demand from auto assembly plants
exceeded expectations and there were, in addition, heavy
tire shipments to dealers and distributors for replacement
use. Demand for rubber products, other than tires and
tubes, also improved quite sharply in the last half of
1938, and this branch of the industry accounts for an
important share of present rubber consumption. One com
pany estimated that 29 percent of the 1938 sales volume
represented rubber products which were not made ten
years ago.
Replacement tire demand was extremely heavy in the
last half of 1938. Allowing for seasonal conditions, it was
reported better than in any period since 1932, with the
exception of the latter part of 1936 and early 1937 when
price advances were being made. In the entire year re
placement sales were reported slightly ahead of 1937
so that all of the 26 percent decrease in annual tire pro
duction in 1938 was due to the contraction in automobile
assemblies. While sales of tires to auto manufacturers
showed considerable improvement in the closing months
of last year, for the entire twelve months they were about
half as large as in 1937.
December tire production, according to the Rubber Manu
facturers’ Association, was 4,679,000 casings. This was an
increase over November of 13 percent, but compared
with December 1937 the gain was 64 percent. In the en
tire year, total tire output was reported at 40,026,000 casings,
a decrease of 25 percent from 1937. Shipments from manu
facturers in the year, however, exceeded output by 2,369,000
casings, and inventories consequently were reduced by that
amount and were at the lowest level since August 1936.
Employment at Ohio rubber factories increased two
percent in December over November, but payrolls rose
over six percent in the same period. The number employed
was at the highest level since January, but since there
was a sharp contraction from December 1937 to January
1938 the current index was about 13 percent lower than
a year ago and 66 percent of the 1926 base period.
December crude rubber consumption in the entire
country was 45,315 tons, a gain of 55 percent over
the previous year. There was only a slight drop from No
vember, and, with that exception, December was the best
month since June 1937. In the entire year 1938, consump
tion of crude rubber, at 411,363 long tons, was 24 per
cent behind the year 1937, but the improvement in the
rubber industry in the last half of the year was so marked
that fourth quarter consumption exceeded the comparable
period of 1937 by 29 percent. Domestic rubber inventor
ies at the year end were 245,413 long tons, a decline of
56,000 tons from the peak last April. The December fig
ure was the first in 15 months to be smaller than on the
comparable date of the year preceding.
Clothing:
Reports concerning the clothing industry
indicate that it started the year 1939
in much better position than was true
of 1938. A year ago retail demand was declining, stocks
were large, advance ordering of clothing by retailers was
limited and, so far as textiles were concerned, the show
ing of 1938 fall materials had been indefinitely postponed.
Employment was about 20 percent under the previous year.
A depressed condition prevailed until almost the middle
of 1938 in the production field. At that time a reversal
of trend occurred and an almost continuous upward move
ment has since prevailed. Apparel wool consumed in the
entire country has more than doubled and in No
vember 1938, the latest period for which informa
tion is available, it was 122 percent in excess of the cor
responding month in 1937. These gains in late 1938 did
not counteract entirely the limited consumption early in
the year, so that for the entire period wool consumption
was off between 15 and 20 percent from 1937. In the
latest month, however, it was reported by the National A s
sociation of Wool Manufacturers to be nearly 30 percent
above estimated normal.
Advance ordering of clothing from manufacturers and
textiles from weavers this season has been in rather large
volume. In the fall of 1937 and the spring of 1938 it was
quite limited. Local plants, both clothing and textile, were
operating at a high rate in mid-January. Employment in
December was 3 percent ahead of November, and about 4
percent above December 1937. Payrolls, however, increased
seven percent in the men's clothing field in the latest month
over the one preceding.
Inventories of both raw materials and finished clothing
are conservative, it is reported. At fourth district depart
ment stores, December wearing apparel sales were larger
than in December 1937. Sales of women’s ready-to-wear
were up more than two percent in dollar volume, and al
lowing for the fact that prices were lower by nearly five
percent, the volume of merchandise sold was probably six
to seven percent greater than a year previous. Men's
clothing sales were slightly larger than in December 1937
when allowance is made for price differences. Clothing
inventories were 10 to 20 percent smaller at reporting
stores at the year end than at the end of 1937.
Other
Manufacturing
Business sentiment seemed moderately
optimistic in mid-January in many of
the smaller industries of the district,
even though the marked increases which occurred in the
last quarter of 1938 were not continuing. Year end, holi
day, and inventory period adjustments generally result in
a seasonal contraction. A year ago at this time the fallingoff was most severe, so that as a result of the ex
pansion in the fall and early winter of 1938 current com
parisons are quite favorable in some cases, even though
THE MONTHLY BUSINESS REVIEW
most lines are still below what might be regarded as nor
mal levels. Just as employment lagged behind production
in the downward adjustment, it has not improved to a
degree comparable with the recent rise in output. Both
employment and payrolls gained in December, and while
there was evidence of increases in the first half of Janu
ary, data for that period are meager at this time.
In the china and pottery field, operations in early Janu
ary were reported to be between 80 and 85 percent ot
capacity, whereas a year ago they were between 50 and
60 percent. Attendance at the annual Pittsburgh china
and glass show was said to have been better than last
year, and manufacturers of domestic dinnerware obtained
orders substantially ahead of those placed in the 1938 dis
play week.
Glass production in mid-January was at a good rate,
considering the season, and the industry was much more
active than in early 1938. Inventories are down generally.
December plate glass production was 42 percent in excess
of the preceding year, although down 1.5 percent season
ally from November. The entire year's output, at 85,726,000
square feet, was less than half as great as in 1937. W in
dow glass production in the last month of 1938 was five
percent ahead of November, and 13.6 percent in excess
of December 1937; this branch of the industry was op
erating at 62 percent of capacity at the year end. Glass
inventories are being kept down, generally, according to
reports. At Ohio glass plants, employment in December
was about on a par with the previous year.
Makers of electrical equipment reported December sales
at the highest level of the year, and also about equal to
December 1937, but for the entire year sales were down
30 to 35 percent. In that period, however, inventories
were reduced. Wholesalers of electrical supplies in this
district at the year end had 40 percent smaller stocks than
on the corresponding date of the previous year. Stocks of
refrigerators and other electrical supplies at department
stores were down 42 percent. Ordering in January to
replace these depleted inventories was reported in larger
volume than in 1938.
Wholesale hardware sales in December were five percent
smaller than in the previous year, with sales of industrial
supplies off 16 percent. Makers of small tools report Jan
uary sales running about 25 percent above last year with
engineering appliance sales and shipments equal to or
slightly in excess of a year ago. Foundry equipment
orders placed in December were 58 percent larger than
in November, and 28 percent ahead of December 1937.
This was the first increase in orders on hand since last
March. The National Machine Tool Builders’ Associa
tion reported orders received in December as the best since
October 1937. Closing of accumulated inquiries from do
mestic sources accounted for the gain, and the month s
index was within ten points of the average of 1929.
Shoe production in December was ten percent in excess
of December 1937 at fourth district factories, and gains
in the closing months of the year partly offset earlier large
declines, so that in all 1938 local plants produced only 6.6
percent fewer shoes than in the previous year. In De
cember, employment at shoe factories was up 3.8 percent
oyer November, and payrolls were larger by 18 percent.
Seasonal factors were responsible in part for the changes,
but advance ordering of spring footwear has been in rather
large volume, in comparison with other years. Demand
5
for immediate delivery is greater than usual at this season.
Inventories of both leather and finished footwear are
smaller than a year ago.
Paper and boxboard plants stepped up operations in
January to a level slightly under that prevailing prior to
the holiday reduction. Paper prices have been advanced
$3 to $4 a ton effective February 15, making the total
advance on Kraft paper $8.25 since November. Boxboard
markets were strong, but steady, in the third week of
January. December, usually a poor month in the box
board industry, w s l s an exception to the rule. In fine
papers, December sales were reported 30 percent larger
than in the previous comparable period.
TRADE
Retail
Dollar volume of sales reported by de
partment stores in the fourth district
was 70 percent larger in December than
in November. This was greater than the usual Christmas
gain, and the department store sales index rose from 88.2
to 92.8 percent of the 1923-25 base. The table on page
seven indicates that for these stores the 1938 Christmas
season was one of the best in several years, for December
sales were slightly higher than in 1937, and were only four
percent under 1936, when dollar volume was larger than
in any year since 1929. Retail prices in December, as
reported by Fairchild Publications, were about four per
cent under 1937 and three percent below 1936,
thus indicating that physical volume of goods han
dled was larger than in 1937 and about equal to
1936. Stores reporting weekly recorded seven percent
more separate transactions in the four weeks ended Decem
ber 31 than in the corresponding period a year earlier.
This relatively favorable Christmas volume was quite
general. Retail furniture dealers reported 8.7 percent
more sales in December than in the same month a year
ago. Chain drug stores showed a gain of 4.5 percent.
Wearing apparel shops were slightly ahead of last year
and chain grocery stores sold six percent more goods
in December than in the same month a year ago.
Better retail sales apparently encouraged department
store buyers, for, although sales by these firms increased
more than seasonally during December, inventories of
reporting stores declined less than usual. As a result, the
seasonally adjusted index of department store stocks in
creased for the second consecutive month for the first time
since the summer of 1937. Nevertheless, at the end of
the year, they were still 14.3 percent smaller than at the
beginning.
Large Christmas cash business resulted in the usual
sharp decrease in relative importance of installment sales,
and a similar small decline in regular charge accounts.
Installment collections were better at department stores
during December than they had been in November, but
collections on other accounts at these stores and at retail
furniture dealers were slow.
Based on weekly reports, consumer spending fell off in
the first half of January. Warm weather at that time
hindered January clearance sales of winter goods and, on
a daily average basis, dollar volume was three percent
below the same period last year, when the adjusted index
of department store sales was 88.2 percent of the base
period, compared with 92.8 for December 1938.
THE MONTHLY BUSINESS REVIEW
6
Wholesale
Mixed developments in the field of whole
sale trade prevailed in the fourth district
during December. Some groups, such
as suppliers of drugs, electrical equipment, industrial mate
rials, and machinery, sold more goods in that month than
in November, but firms in other lines suffered losses in
volume.
Comparison with last year, however, showed
marked improvement, for the decline in total sales from
December to December was less than six percent, where
as the similar figure for November was nearly ten percent.
To a large extent, this change reflects rapid falling-off
of activity a year ago. This drop was so extensive and
prolonged that in spite of improvement during the latter
half of the year, sales of all wholesale firms reporting to
the Department of Commerce were 20 percent less in 1938
than in 1937. Percentage declines for different groups
of firms varied widely, as is shown in the table on page
seven.
Purchases by wholesalers still remained on a conserva
tive basis, and inventories of all groups of reporting firms
were further reduced during December. At the end of the
year, stocks were approximately 16 percent below those
on hand a year earlier. Collections increased somewhat
during December. They showed approximately the same
percentage decline from a year ago, however, as was true
of accounts receivable, thus indicating about the same rate
of payment as was then the case.
CONSTRUCTION
The extent to which activity in the construction indus
try in the fourth district improved during 1938 is indi
cated by the accompanying chart, which shows a threemonth moving average of F. W. Dodge Corporation data
for value of construction contracts awarded in this dis
trict. The latest figures are based on November and
December, and an estimate for January. Expansion con
tinued in December, but there was a falling-off in the first
half of January as Federally-financed awards declined
quite sharply. Projects contracted for in this area during
December were valued at $40,249,000, eight percent above
November and 49 percent higher than December 1937. It
was the largest total reported in any December since 1926.
Most of the current activity was in the non-residential
field, but a large Federal housing project in Youngstown
prevented a seasonal decline in total residential contracts.
The chart reveals that three conspicuous peaks have
occurred in the construction industry in this district dur
ing the last six years. The first period of sharp expan
sion was caused by the first P. W . A. program. The 1937
peak in the figures for contracts awarded reflects con
struction of one large steel mill. The current high level
is almost entirely due to progress made by the Public
Works Administration in getting its present program under
way. Construction contracts financed by private inter
ests have been declining since September, whereas gov
ernmental projects have been increasing. During the first
nine months of 1938 public money paid for only 46 percent
of fourth district construction started during that period,
while in the last three months of the year 71 percent of
the projects arose from governmental operations. In De
cember, 78 percent of these undertakings were financed by
public funds.
As already pointed out, influence of the Government has
been felt in the residential field as well as in other cate
gories. During December, half of the dollar volume of
these contracts was publicly-financed. In no other month
of the year, however, with the exception of August, was
residential construction augmented directly by Government
spending. The rapid recovery during the spring months
and the fairly high level maintained during the fall, when
seasonal factors retard starting new projects, were there
fore due to increased use of private funds in the residen
tial field.
AGRICULTURE
Agricultural conditions in the Fourth Federal Reserve
District showed little change during December and the
first three weeks of January. Market quotations indicate
that prices received by farmers late in January were about
the same as in mid-December, when they were 96 percent
of the pre-war base. This level compares with 94 percent
in November and an average of 95 percent for the year,
which was more than 20 percent below 1937. All groups
of commodities were lower in 1938 than a year earlier, but
in varying degrees. Prices of grains and fruits dropped
about 40 percent, miscellaneous commodities about 26 per
cent, and chickens and eggs only three percent.
Livestock and Feeding Earlier reports of heavy feeding
operations in this district are now confirmed by the D epirtment of Agriculture. In Ohio, as well as in most other
eastern Corn Belt States, the number of cattle on feed
was estimated to be the largest in many years. Feeding of
sheep and lambs in the district was approximately six per
cent lower than last year, but still 13 percent above the
1934-38 average. Ohio remains the fourth largest pro
ducer of finished lambs. Plentiful feed supplies have also
resulted in expansion of the number of brood sows on
farms in this region.
Although feeding operations are heavy, stocks of grains
remaining on local farms are larger than usual. The
Bureau of Agricultural Economics estimates that by Jan
uary 1, only 29 percent of the 1938 Ohio corn crop had
been sold or fed to livestock. On the same date a year
earlier, 35 percent of the year’s production had been con
sumed or sold, whereas average crop disappearance by
January 1, during the ten years 1928-1937, was 37 per
cent. The situation with regard to oats and wheat was
similar, though wheat consumption and sales were nearer
the average rate. Conditions in Pennsylvania and Ken
tucky corresponded to those in Ohio. Failure of local
grains to move to market does not seem to be due to ac-
THE MONTHLY BUSINESS REVIEW
tivity of the Commodity Credit Corporation, for at the
end of December this agency reported that only one-fourth
of one percent of the wheat and one-tenth of one percent
of the corn produced in Ohio in 1938 were impounded under
crop loans at that time.
Tobacco Sales on the Burley auction markets were re
sumed after the Christmas holidays without much change
in prices for the various types of leaf. Average prices,
however, fell somewhat during January as lower grade to
bacco was marketed. At Lexington, the decline in the
season’s average was from $22.48 per hundred pounds
on December 16 to $21.79 on January 18. Farmers report
disappointment over prices received for better grades, for
they range from five to eight dollars below those received
for similar tobacco last year. Lower quality leaf, on the
other hand, is selling at prices far enough above last year
to keep the average for the entire crop approximately the
same as a year ago. This narrowing of the price spread
between high and medium or low grades reverses a ten
dency toward larger premiums on quality which was ap
parent in recent years. Sales have been progressing so
rapidly that, in spite of the relatively large crop, the mar
kets are expected to close earlier than usual.
7
Fourth District Business Statistics
(000 omitted)
Fourth District Unless
December % Change
Year
% Change
Otherwise Specified
1938
from 1937
1938
from 19f7
Bank Debits— 24 Cities................ $2,633,000 — 4 .8
$24,668,000
— 19.6
Savings Deposits— end of month:
40 banks, O. and W. Pa..............$ 781,936 — 0 .1
Life Insurance Sales:
Ohio and Pa..................................$ 114,429 + 3 6 .7
851,845
— 18.9
Retail Sales:
Dept. Stores— 54 firms................$
37,643 + 0 .7
244,049
— 12.6
Wearing Apparel— 12 firms. . . .$
1,280 + 0 .6
9,747
— 13.3
Furniture— 40 firms..................... $
969 + 8.6
8,475
— 31.6
Building Contracts— Total.......... $
40,249 + 4 9 .1
318,574
— 6 .2
”
”
— Residential. $
10,471 + 2 2 3 .2
94,156
— 8 .4
Commercial Failures— Liabilities $
960 — 41.9
18,569
+ 1 8 .4
572 — 16.2
”
”
— Number...
9642
+ 3 9 .7
Production:
Pig Iron— U. S.......................tons
2,213 + 4 7 .2
18,890
— 48.5
Steel Ingot— U. S...................tons
3,143 + 1 1 3 .4
27,839
— 43.8
Auto— Passenger Car— U. S......... 326,0062 + 3 3 .4
2,000,985 2
— 48.9
” — Trucks— U. S......................
488,5702
62,3402 — 23.8
— 45.3
Bituminous Coal, O., W. Pa., E.
Ky........................................ tons
12,987 + 4 .7
126,417
— 26.4
Cement— O., W. Pa., W. Va. Bbls.
536 — 24.9
10,861
— 13.3
Elec. Power, O., Pa., Ky.
............................ Thous. k.w.h.
15,389^
1,6313 + 1.2
— 13.8
Petroleum— O., Pa., Ky___ bbls.
2,0893 — 9.8
24,379*
— 5 .6
s
5
Shoes...................................... pairs
+ 1 0 .1
— 6 .6
Tires, U. S......................... casings
4,679 + 6 4 .1
40,026
— 24.9
Bituminous Coal Shipments:
L. E. Ports. ............................tons
439 + 1 6 6.1
35,131
— 22.4
1 not available
4 First eleven months
3 actual number
* Confidential
* November
Fourth District Business Indexes
(1923-25 == 100)
Wholesale and Retail Trade
(1938 compared with 1937)
Percentage
Decrease
Increase
STOCKS
SALES
SALES
December
Year
December
1938
1938
1938
D EPARTM ENT STORES (54)
Akron.......................................................
Cincinnati...............................................
Cleveland................................................
Columbus................................................
Pittsburgh...............................................
Toledo......................................................
Wheeling.................................................
Other Cities...........................................
District....................................................
W EARING APPAREL (12)
Cincinnati...............................................
Cleveland................................................
District....................................................
FURNITURE (40)
Cleveland................................................
Dayton....................................................
Toledo......................................................
Other Cities...........................................
District....................................................
CHAIN STORES*
Drugs— District (4)..............................
Groceries— District (4)........................
WHOLESALE TRADE**
Automotive Supplies (9)....................
Drugs (5)...............................................
Dry Goods (6)......................................
Electrical Goods (8).............................
Groceries (5 9 ).......................................
Total Hardware Group (34)...............
General Hardware (8).....................
Industrial Supplies (14)...................
Plumbing & Heating Supplies (12)
Tewelry & Optical Goods (4).............
Leather & Shoe Findings (3 ).............
Lumber & Building Materials (5 ).. .
Machinery Equipment & Supplies (3)
Meats & Meat Products (3 )...............
Metals (5 )...............................................
Paints & Varnishes (4)........................
Paper & its Products (8).....................
Tobacco & its Products (23)..............
Miscellaneous (13)....................... ..
+
—
+
+
+
—
+
—
—
+
4.1
0 .4
0 .4
3.7
8.7
1.2
2.3
0 .8
0 .3
0 .7
— 16.8
— 8.3
— 13.0
— 5.9
— 13.5
— 13.7
— 14.2
— 12.8
— 14.6
— 12.6
— 12.9
— 13.1
— 12.8
— 9.9
— 13.0
— 17.1
— 17.1
— 20.2
— 9 .8
— 14.3
—
—
+
+
0 .2
6 .7
7.5
0 .6
—
—
—
—
—
+
—
—
18.8
13.9
12.2
13.3
+ 1.8
+ 9.1
+ 1 5 .4
+ 5.1
— 7.9
+ 1 9 .4
+ 8.7
— 37.4
— 30.5
— 12.9
— 32.6
— 41.3
— 41.0
— 31.6
+ 4.5
+ 6.1
— 4.5
— 2.4
— 17.0
+ 5.1
+ 8.5
— 19.1
— 10.1
— 5.5
+ 2 .7
— 15.7
— 4 .4
+ 1 2 .1
0 .0
+ 1.0
— 47.5
— 13.7
— 6 .5
— 7.1
+ 4.3
0 .0
+ 2 0 .4
— 5 .8
— 16.7
— 2.0
— 22.3
— 42.3
— 11.8
— 32.9
— 26.7
— 44.7
— 25.3
— 26.7
— 14.3
— 24.1
X
x
— 33.7
— 17.2
— 5 .9
+ 0 .8
— 34.9
— 20.2
*Per individual unit operated.
**Wholesale data compiled by U, S. Department: of Commerce.
1 Not available.
Bank Debits (24 cities)......................................
Commercial Failures (Number)......................
”
”
(Liabilities)...................
Sales— Life Insurance (O. and Pa.).................
” — Department Stores (48 firms).............
” — Wholesale Drugs (5 firms)..................
” —
”
Dry Goods (6 firms).........
” —
”
Groceries (59 firms)...........
” —
”
Hardware (8 firms)...........
” —
”
All (78 firms)................. ..
” — Chain Drugs (4 firms)**.....................
Building Contracts (Total).............................
”
”
(Residential)...................
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..............................................
*November.
**Per individual unit operated.
Dec.
1938
97
39
22
119
152
120
48
66
84
70
126
84
61
72
45
194
113
92
Dec. Dec.
1937 1936
102
113
47
27
38
17
87
96
151
158
114
120
44
62
73
80
81
105
74
86
120
129
57
43
19
37
6(>
76
59
64
192
191
125
127
83
103
Dec.
1935
86
43
28
98
134
100
48
70
76
70
112
45
16
71
34
169
116
98
Dec.
1934
75
43
99
110
123
83
43
63
59
61
93
14
6
64
20
143
109
74
19.6
1.1
12.7
9 .9
Debits to Individual Accounts
— 4.4
l
— 25.5
— 40.5
— 8.7
— 16.8
— 16.9
— 17.1
— 16.0
l
Greensburg. . .
Homestead... .
i
i
l
l
-2 3 .4
X
1*5
— 28.2
+
4.7
— 15.9
Middletown...
Oil City...........
Springfield----Steubenville...
Youngstown. .
4 Weeks
ended
Ian. 18,
' 1939
$ 62,509
8,116
32,397
290,289
553,582
151,411
58,632
24,507
2,706
6,426
9,728
2,575
43,531
12,844
4,202
8,550
8,350
608,528
7,465
15,812
8,201
115,315
8,409
28,282
40,110
7,827
$2,120,304
%
change
from
1938
+ 7.5
— 19.5
+ 1.8
— 5 .6
+ 4 .2
— 3 .4
— 9 .7
— 11.9
— 4.1
— 6 .2
— 1.4
— 10.8
— 3.0
— 8.4
— 4.1
+ 8 .6
— 19.4
. — 15.6
— 5 .8
— 9 .0
— 2.6
— 4.3
+ 3 .9
— 8.1
— 0 .3
+ 7 .9
— 5 .9
Year
Dec. 30, 1937
to
Dec. 28, 1938
$ 687,672
100,027
360,445
3,607,506
6,014,141
1,935,722
721,110
299,458
34,552
79,987
123,955
34,132
283,981
163,368
54,351
105,839
112,132
7,318,754
88,963
191,418
101,767
1,334,465
97,761
324,701
470,178
89,613
$24,735,998
Year
Dec. 31, 1936
to
Dec. 29, 1937
$ 836,097
126,918
479,007
4,265,854
7,543,463
2,247,471
907,128
395,635
42,965
92,346
153,829
41,510
300,578
173,132
65,834
132,315
137,844
9,421,182
113,970
229,248
136,097
1,669,170
127,107
415,588
634,287
101,097
$30,789,672
%
change
from
1937
— 17.8
— 21.2
— 24.8
— 15.4
— 20.3
— 13.9
— 20.5
— 24.3
— 19.6
— 13.4
— 19.4
— 17.8
— 5.5
— 5.6
— 17.4
— 20.0
— 18.7
— 22.3
— 21.9
— 16.5
— 25.2
— 20.1
— 23.1
— 21.9
— 25.9
— 11.4
—19.7
8
THE MONTHLY BUSINESS REVIEW
Summary of National Business Conditions
By the Board of Governors of the Federal Reserve System
INDUSTRIAL PRODUCTION
Volume of industrial production declined seasonally in December and
showed little change in the first three weeks of January, when an in
crease is usual. Wholesale commodity prices were steady. Employment
and payrolls increased further in December, and retail sales showed more
than the usual seasonal rise.
Production
Index of physical volume of production,
adjusted for seasonal variation, 1923-26
average = 100. By months, January 1934
to December 1938. Latest figure 104.
FACTORY EMPLOYMENT
Index of number employed, adjusted for
seasonal variation, 1923-25 average = 100.
By months, January 1934 to December
1938. ^Latest figure 91.4.
WHOLESALE PRICES
In December volume of industrial production declined by about
the usual seasonal amount and the Board's adjusted index was at 104
percent o f the 1923-1925 average, about the level reached in November
following an exceptionally rapid advance after the middle o f the year.
Changes in output in most lines in December were largely seasonal. In
the steel industry, however, production showed a greater-than-seasonal
decline, and averaged 54 per cent of capacity in December as compared
with 61 percent in November. Lumber production showed little change
from November to December, although usually there is a decline, and at
textile mills and shoe factories activity declined less than seasonally. At
meat-packing establishments there was a reduction in output.
Automobile production increased somewhat further in December. In
the fourth quarter of 1938 production and sales of the new model cars
were in about the same volume as in 1937; dealers* stocks of new cars
increased seasonally in this period, but at the year end were much below
the high level of a year earlier.
Value of construction contract awards increased considerably from
November to December, according to F. W. Dodge Corporation figures
for 37 Eastern States. The increase reflected principally a further rise
in contracts awarded for Public Works Administration projects, which
accounted for most o f the sharp increase in awards that occurred in the
last half of 1938. Contracts for private residential building decreased
less than seasonally in December, while other private construction showed
little change and remained at a low level.
Employment
Employment and payrolls rose further between the middle of Novem
ber and the middle of December. In most manufacturing lines the num
ber employed continued to increase, when allowance is made for the usual
seasonal changes, and in the automobile and machinery industries the
rise was considerable. Employment and payrolls in trade increased
more than is usual in the holiday season and in the construction industry
employment showed much less than the usual seasonal decline.
Distribution
Distribution of commodities increased more than seasonally in De
cember. Sales at department stores showed the usual sharp expansion
prior to Christmas and sales at variety stores and mail order sales showed
a more-than-seasonal rise.
Freight-car loadings declined seasonally from November to Decem
ber, reflecting largely the customary decrease at this time of year in ship
ments of miscellaneous freight.
Index compiled by the United States Bu
reau of jLabor Statistics, 1926 = 100. By
weeks, 1934 to week ending January 14,
1939. ^Latest figure 76.8
Bank Credit
As the result of the post-holiday return of money from circu
lation, together with Treasury disbursements from its balances with the
reserve banks, and gold imports, excess reserves of member banks increased
nearly $600,000,000 in the four weeks ending January 18 to a new high
level of $3,560,000,000. A large part of the increase occurred at New York
City banks..
Total loans and investments of reporting member banks in 101 lead
ing cities, which increased substantially in the first three weeks of De
cember, declined in the following four weeks. There was some decline in
loans and a reduction in holdings of United States Government obligations,
reflecting in part distribution to the public of new securities purchased by
banks in December. Deposits declined somewhat in the latter part of De
cember but increased in January.
Money Rates and Bond Yields
Wednesday figures of estimated excess re
serves for all member banks and for
selected New York City banks, January 3,
1934 to January 11, 1939.
Average yields on United States Government securities declined slightly
in December and the first three weeks of January. For three consecutive
weeks the entire new issue of 91-day Treasury bills sold on or slightly
above a no-yield ba§is. Commercial paper rates declined slightly in Janu
ary while other dpen-market money rates continued unchanged.
@FedFRASER