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MONTHLY BUSINESS REVIEW Covering financial, industrial and a gricu ltu ral co n d itio n s Vol. 23 Cleveland, Ohio, January 31, 1941 Fourth district industries manufacturing items sig nificant to the defense effort continue to be the most active, though producers of style merchandise, such as clothing and shoes, increased operations somewhat more than seasonally in December when work was started on spring and summer lines. Backlogs of unfilled orders held by many of these companies were the largest report ed at this season in recent years and indicated that produc tion would be maintained near capacity until the beginning of the second quarter, or longer. Steel output at mills in this district has approximated 650,000 net tons weekly since late October, except during Christmas week when many operators took advantage of the holiday closing to do necessary maintenance work. New business received has exceeded production and shipments for some time; rolling schedules generally are filled until late April. Consumers recently have been placing orders farther ahead than was customary late last year. Dollar value of machine tool production was doubled during 1940 as manufacturers added considerably to ca pacity in various ways and arranged to have an increasing amount of sub-assemblies made outside of company plants. With automobile assemblies averaging more than 120,000 units weekly since early January, parts and accessories manufacturers in this district have maintained operating schedules at high levels, as have tire makers. Plate glass manufacturers also have benefited from the high rate of activity in the automotive field, while window glass pro duction reached the highest level in recent years, largely as a result of the increased amount of building. Dollar value of contracts for factory construction, including those for defense purposes, awarded in this district during the fourth quarter of 1940 was the greatest since the corresponding period in 1929. Further increases in Ohio industrial employment were reported in December. At 107 percent of the 1926 aver age, the index was the highest in eleven years. Improve ment over the previous month was most marked in the style goods’ industries, though gains also were reported by steelmakers, foundries, and electrical equipment manu facturers. There were additional indications that payment for overtime has become more common, payrolls at Ohio and Western Pennsylvania factories continuing to increase more rapidly than working forces. Some manufacturers have reported that a shortage of equipment more than a shortage of skilled labor has contributed to this condition. No. 1 Record retail sales in December fully reflected the in creases in employment and incomes which took place in the closing months of 1940. While holiday expansion of de partment store trade from the unusually high level of No vember was slightly less than seasonal in this district, De cembers dollar volume was the third best for any similar month in the last 21 years, being exceeded only in 1928 and 1929. Sizable gains over corresponding periods a year ago were noted weekly during the early part of Jan uary. Improvement has been greatest in shopping centers where industrial employment has expanded most. NATIONAL DEFENSE By virtue of the fact that basic industries, such as steel, machine tools, glass, and rubber, and semi-finished manu factures of parts and accessories are predominently impor tant in the fourth district, indirect, rather than direct, effects of the national defense program are more evident locally. As reported in 1937 by the Bureau of the Census, \Sy2 percent of United States’ manufacturing facilities were located within this district, assuming that productive capacity is proportionate to the value added by manufac ture. Survey of steelmaking facilities indicates that more than two-fifths of the nation’s open-hearth and Bessemer furnace capacity is in the fourth district, while 65 percent DEFENSE CONTRACTS AWARDED FOURTH DISTRICT________ JUNE I-DECEMBER 31.1940 INDUSTRIAL AREA CLEVELAND MILLIONS OP DOLLARS THE MONTHLY BUSINESS REVIEW 2 of all sheet and strip finishing facilities are here. Thirty percent of all machine tool manufacturing is done in Ohio factories, according to the 1937 Census of Manufacturers, the latest complete regional data available. More than two-fifths of total value added in the manufacture of glass results from operations at Ohio and Western Pennsylvania plants, while three-fifths of the country's tire production in 1937 was centered in Ohio. Between June 1 and December 31, 1940, seven percent of all direct defense contracts, exclusive of those for ships and airplanes, were placed for construction of or fabrication at fourth district plants. Including awards for ships and airplanes, which of necessity must be ordered where either manufacturing facilities are available or nat ural conditions are most favorable, 3.3 percent of all direct defense contracts were awarded to fourth district manufac turers. Owing chiefly to the effect of defense contracts awarded in this district and to the indirect effect of defense contracts awarded elsewhere, productive activity in many local industries has been at record high levels for some time and carried into 1941 at rates uncommon for the begin ning of a year in the recent past. Open-hearth and Bes semer steel ingot production in this district has exceeded 92 percent of theoretical capacity weekly since late October, except during Christmas week, although few direct Gov ernment orders for steel have been placed. Machine tool builders have expanded manufacturing facilities more than 61 percent since September 1939 and increased out put correspondingly. At the time of a recent survey, how ever, only percent of unfilled machine tool orders on hand was for Government account while 52 percent was for the aviation industry and others holding direct defense contracts. Both window and plate glass produc tion last year were up sharply from output in 1939, that for window glass being the best in the four years for which complete data are available. A comparatively small amount of glass has gone directly into defense uses. The high rate of activity at tire and rubber goods factories during 1940 is reflected in record consumption of crude rubber. Approximately $20,000,000 worth of direct Govern ment contracts were awarded to fourth district rubber com panies during the seven months ended December 31, 1940; indirect awards are estimated to exceed this total. As the accompanying chart indicates, direct defense con tracts, including those for ship construction and airplanes, awarded to manufacturers in this district are compara tively widespread among local industrial areas. In fact, centers with relatively small population have received un usually large contracts. This has resulted in some mi gration of construction labor forces, but serious shortages of factory labor have not been markedly evident. Appren tice training courses, maintained by many manufacturers, and “ upgrading” apparently have met the needs in most skilled trades, though a more rapid rise in payrolls than in employment indicates that some industries have found it advisable to work overtime. FINANCIAL Reserve Bank Credit Payments for national defense notes, changes in currency circulation, and in come tax payments, were among the prin cipal factors affecting Reserve bank and reporting member bank statistics during December and the early part of Jan uary. Member bank reserve balances at the Federal Reserve Bank of Cleveland fell from a peak of $939,000,000 in early December to $888,000,000 by December 24. A large part of this decline represented currency withdrawals, but book transfers of credit from member bank reserve accounts to United States Treasury account at the Reserve bank also accounted for a portion. During the first three weeks of December, fourth district note circulation increased $25,000,000, or about five percent. By January 22 approximately three-fifths of this increase had been retired. As shown by the accompanying chart, there has been a steady rise in Federal Reserve note circu lation in this district during the last two years. Part of the larger circulation represents greater business demands for currency for transaction purposes, while another part is add ed to the currency holdings of individuals or of Government units. Reporting member banks in this district held $4,000,000 more cash in vaults during 1940 than during the previ ous year, on an average weekly basis. Loans and discounts to fourth district member banks by the Federal Reserve Bank of Cleveland in 1940 amounted to only $1,274,000, about 40 percent of the 1939 volume. Threefourths of the amount represented loans on member banks’ notes secured by United States Government securities. In dustrial loans made under provisions of Section 13b amounted to $330,000 during the year, well over twice the amount ad vanced in 1939. Commitments made under this section, how ever, showed a slight decrease. Member Bank Credit Commercial, industrial, and agricultural loans of weekly reporting member banks in this district increased at the rate of $4,000,000 a week during December and the early part of January. Total loans of these banks increased $84,000,000 between January 3, 1940, and January 8, 1941, whereas total investments fell $25,000,000. As a result, investments relative to all earning assets declined from 65 percent to 62 percent during the period. Although United States Government and Government-guaranteed obligations comprised the same pro portion, 77 percent, of total investments on each date, some marked changes occurred within the combined Government portfolio of reporting banks. Treasury bills increased $6,000,000, or 55 percent; Treasury notes fell $40,000,000, or 21 percent; Government bonds rose $4,000,000, or one percent; and Government-guaranteed obligations expanded $16,000,000, or 13 percent. Demand deposits of weekly reporting member banks in this district fell $16,000,000 during the pre-holiday period THE MONTHLY BUSINESS REVIEW in December, but had more than recovered from this de cline by the middle of January when they amounted to $1,578,000,000, up 18 percent from a year earlier. Time deposits of $745,000,000 in weekly reporting banks were up iy 2 percent from a year ago. NEW MEMBER BANK The Bolivar State Bank Company, Bolivar, Ohio. MANUFACTURING, MINING A renewed heavy volume of incoming business, continued record raw iron and steel production by mills, and some down ward revision in prices of steelmaking scrap were noted early in the year. Steel sales volume declined during the holiday weeks as had been expected, but only to levels ap proximating the rate of operations and shipments. Most orders received early in January were reported to be for delivery in the second quarter, or later, whereas late last year more prompt shipments generally were specified. In view of the changed conditions, many steel companies were insisting on complete specifications with each order rather than blanket commitments, which were common in the past. Production of open hearth and Bessemer steel ingots in 1940, totaling 65,246,953 net tons, exceeded the former record output of 1929 by seven percent. In that year, steel plants operated at 89 percent of theoretical capacity; last year, operations averaged 82 percent, though fourth quar ter production was at the rate of 9 5 percent. Despite the fact that the Christmas holiday cut one day from work ing schedules, December output of 6,300,768 tons was the second best monthly production on record, being exceeded only in October 1940. Operations in fourth district steel centers have been increased steadily since the first of the year, and by the fourth week in January surpassed the peaks reported late in November. Mills in the Wheeling territory were operat ing at capacity. Pittsburgh operators were maintaining production at 96 percent, the rate prevailing before the holidays. At 94 percent of rated capacity, operations in the Youngstown territory were up three points from those of a month before. Operating rates in the Cleveland-Lorain area were increased from 86}4 percent to 89 percent be tween December and mid-January; subsequently there was some decline when schedules were curtailed to allow for furnace repairs. Cincinnati producers maintained output at 87-90 percent of capacity during most of December and January. Pig iron production set a new monthly record of 4,542,864 net tons in December. For the entire year 1940, how ever, output, totaling 46,849,676 tons, was only the second largest, production in 1929 being approximately 450,000 tons greater. Of the 202 blast furnaces in operation throughout the country at the year end, 166 were primarily dependent upon Lake Superior iron ore. These stacks con sumed 6,173,038 gross tons of ore during December, more than in any other period since monthly data became available in 1919. Exceeding the previous year’s consumption by 41 percent, 62,426,314 tons were used during the full year 1940. Four percent more ore was stored on Lake Erie docks and at furnaces on January 1 than a year earlier. At the average rate of consumption during the fourth quarter of 1940, the 36,072,833 ton inventory would last approximately Iron and Steel 3 six months, or considerably after the 1941 Great Lakes’ navigating season opens in April or May. Quotations on steelmaking grades of scrap declined early in January following conferences of dealers and a committee from the National Defense Advisory Commis sion. Prices ranging from $23 to $24 per gross ton had been reported at the beginning of the year, but by the fourth week in January price of No. 1 heavy melting scrap at Pittsburgh was $21.75 per ton, $1 under Decem ber quotations. At the peak late in 1939, prices exceeded $24.25 per ton; lowest quotations since the beginning of European war were $16.25 per ton early in the second quarter of last year. Coal More bituminous coal was mined in the fourth district during 1940 than during any other year in the last decade. De cember production of 15,265,000 net tons raised the year’s total to 175,648,000 tons, 21 percent in excess of output in 1939. Demand was stimulated, for the most part, by the in creased rate of industrial activity during the second half of 1940 and unusually heavy shipments over the Great Lakes. An all-time record total of 46,547,987 tons of cargo coal was loaded at Lake Erie docks; another 1,563,204 tons were used as vessel fuel. Approximately half of this rec ord tonnage moved through the port of Toledo. Ship ments were continuing from there to Detroit late in Jan uary, one small steamer remaining in daily service. Coal consumers had built up stock piles during the third quarter before provisions of the Bituminous Coal Act raised minimum at-the-mine prices on October 1. Since that time, users have continued to increase inven tories, though wholesalers reported in mid-January that there had been some decline in demand for industrial sizes. Operators, on the other hand, noted that a few purchasers who evidently had been using coal they had stored re entered the market early in the year. Inventories held by industrial consumers on December 1, the latest date for which information is available, were 15 percent larger than those of a year before. Representing 42 days’ supply at November rates of consumption, stocks totaled 43,051,000 tons. Retail dealers held another 8,950,~ 000 tons, or 41 days’ supply. Production of beehive coke at Western Pennsylvania ovens has been increased regularly in recent weeks as more facilities are reconditioned and placed in operation. By mid-January over 5,200 of the 6,000 beehive ovens in Fayette County, Pennsylvania, were in operation, more than at any other time since 1929. One interest expects soon to light 400 ovens unused since World War days. Several other groups of ovens are being rehabilitated, and a num ber of large steel interests have large banks of by-product ovens under construction. Automobiles Automobile production made rapid recov ery from the holiday decline and estab lished successive new weekly records for the month of January, according to Ward's Reports. For the week ended January 24, an estimated 121,948 cars and trucks came off assembly lines in United States and Canadian plants. This figure was close to the high rate of output during the first three weeks of December, and reflected efforts of manufacturers to keep abreast of the high level of sales and provide for accumulation of satis 4 THE MONTHLY BUSINESS REVIEW factory stocks in the hands of dealers as a precaution against possible curtailed output due to the defense pro gram. Despite the fact that some plants operated only three days during the holiday week, domestic production, accord ing to the Department of Commerce, amounted to 483,567 cars and trucks during December. This output was the second largest on record for the month and raised 1940 fourth quarter volume to 1,464,142 units, a new last quarter peak. Domestic factory sales in 1940 totaled 4,469,354 units, slightly above the 1936 output, and exceeded only by production in 1929 and 1937. Trucks, busses, and road tractors formed 17 percent of United States factory output last year, compared with 20 percent in 1939. New car registrations in eight major Ohio counties during December amounted to 12,715 units, the same num ber as in November and 27 more than during December 1939. With sales of some makes of cars reaching record levels, retail deliveries in the United States during the last three months of 1940 exceeded a million cars, a performance unequaled in any previous fourth quarter. Employment in Ohio automotive parts plants at the end of December was down slightly from the preceding month, but in excess of that in December 1939. A good volume of business was reported in mid-January, with some firms working overtime. Rubber and Tires As a result of the last quarter spurt in automobile production and the rise in Government demands for rubber products of all types, crude rubber consumption reached an all-time high of 618,349 gross tons during 1940, a gain of four per cent over 1939. December consumption was 56,539 tons, less than a thousand tons under the peak of October 1939. Despite this high rate of consumption, imports arrived in sufficient volume during December to increase Govern ment reserves held through the Rubber Reserve Company by 27,142 tons and to enable manufacturers to add about 14,000 tons to inventories. Gross imports during 1940 were 818,417 tons, over 36 percent above the previous peak of 600,477 tons in 1937. December imports of 97,984 tons were by far the largest on record, exceeding the former peak month of September 1940 by almost 20,000 tons. Stocks in this country at the year end totaled 318,486 tons. Thirty-five percent of this inventory was held in Government reserve; the remainder would last about 3j4 months at the December rate of consumption. The war situation abroad and Government defense needs at home have stimulated interest in synthetic and reclaimed rubber as sources of supply. Production of reclaimed rubber in 1940 approximated 210,000 gross tons, 13 percent above output of the previous year; whereas consumption amounted to 187,000 tons, a gain of ten percent over 1939. Stocks at the end of last year were about 35,000 tons. December production of 4,998,520 tires exceeded that of the previous month by three percent and was twelve percent greater than in the corresponding period of the pre vious year. Total production for 1940 amounted to 59,352,643 casings, three percent over the 1939 output. Firms were operating six and in some cases seven days a week as volume of new business continued at a high level. Replacement shipments held up well in December despite the facts that spring-dated orders were accepted somewhat earlier in 1940 than in other recent years and that slight reductions in discounts to dealers were put into effect around the first of the month. Stimulated by the high rate of automobile production, original equipment sales of 2,626,190 tires brought total December shipments to 4,971,504 casings, a gain of five percent over those of the same month in 1939. Manufacturers’ sales of 59,155,326 tires for the entire year were the largest since 1929. Textiles and Clothing Needlework firms in the fourth district were operating at capacity in mid-Jan uary. Deliveries of spring lines to re tailers began about the middle of January and backlogs of or ders were reported sufficient to keep production schedules at capacity into April and early May, several weeks beyond the usual peak season. Most immediate concern of the garment industry is its ability to obtain deliveries of cloth. Unfilled orders for men's wear piece goods were reported to be greatly above normal for this time of year because of orders from the Army and Navy. Some textile mills were not accept ing orders for deliveries before late summer. Total imports of wool fibers during 1940 were estimated to be the largest in fifteen years, the British blockade having diverted supplies from foreign markets to the United States. Furthermore, the agreement concluded in December between this country and Great Britain for the storage here of 250,000,000 pounds of Australian wool as a reserve stock would seem to assure the continuance of a steady importation of foreign fibers. Overall and rough cotton garment manufacturers were re ceiving orders during January in even larger volume than during the active months of November and December. Ex pansion of production schedules was being undertaken in or der to meet the large orders for garments for the military services. Some progress in reduction of unfilled orders was reported. Other Manufacturing’ Mid-January operating rates in several important fourth district industries would be maintained throughout most of the first quarter, according to some correspondents, though other reports indicated that operations might average lower. Machine tool production was at record high rates during December. Operations in the industry average 96.8 percent of capacity, measured in terms of payroll hours, accord ing to the National Machine Tool Builders’ Association. Productive facilities were increased four percent further during the month, and at the year end capacity of industry members was approximately 50 percent greater than at the RUBBER STOCKS AND CONSUMPTION ....... r ---------- ■ 700 1 1 UlMITED STAT E S 60 600 50 40 30 \ JL.__J y A -jC O N iSUMPTION r \A /A ^ 500 400 V j STO< KS v 20 / 300 / \ 200 N 10 0 100 1936 SOURCE: RUBBER MFRS. ASSOC. 0 THE MONTHLY BUSINESS REVIEW beginning of 1940. Practically every machine tool builder was reported to be having more sub-assembly work done outside of company plants than at any other time in the past. As a result of this record amount of subcontracting, total dollar value of machine tool production doubled dur ing the past year. Some small tool manufacturers in mid-January indicated that production schedules were being constantly increased as rapidly as new personnel could be added. No shortage of skilled labor was evident, and shops were moving to three-shift operation. More new orders were received dur ing the first part of January than in the corresponding December period, resulting in some further increase in backlogs. Forging and die castings manufacturers noted the volume of new orders was continuing during Jan uary at the rate of the previous month. Foundries like wise were busy, most of them having backlogs of unfilled or ders which would maintain one-shift operations for some time; one large foundry was pouring more metal than it had for twelve years. Supplies of foundry materials appeared ade quate, but some electrical equipment manufacturers reported difficulty in securing raw materials and supplies, particularly fabricating steel and brass. Flat-drawn glass production in 1940 was the best since 1937, largely as a result of record output of window glass in December; 1,458,000 boxes, each containing 50 square feet of glass, were made during the month. Total 1940 production exceeded that of the previous year by 27 per cent. During December 17,491,000 square feet of plate glass were made, more than in any other month of the year, and total twelve months' output was 16 percent greater than 1939 production. Volume of new orders received by manufacturers early in January was smaller than that of corresponding periods in immediately preceding months. Some reduction had been made in the amount of unfilled orders on hand, but mid-January rates of opera tion were expected to be maintained for about sixty days, though activity in the plate glass divisions was to a degree dependent upon operations at automobile body plants. Pressed and blown glassware and; chinaware manufac turers exhibited new lines of merchandise at January shows in Pittsburgh and Chicago. A greater volume of buying was reported this year than in the recent past, mostly for immediate and early spring delivery. Large manufactur ers in the dinnerware division of the ceramics industry indicated they were scheduled practically at capacity, on the basis of one-shift operations in many departments, for the first three months of the year. Some pickup in the volume of new business was noted by carton makers in mid-January, but the paper and paper board industries generally continued to lag. Unfilled or ders at larger paper mills in this district were considerably reduced during the fourth quarter of 1940, production and shipments exceeding new orders. Mill inventories also were increased during that period. Paper merchants, on the other hand, reduced stocks in order to carry only mini mum inventories over the year end. Seasonal conditions contributed to the lack of activity at paperboard mills, operations early in January averaging about 70 percent of capacity compared to 80 percent in the previous month and 75 percent a year ago. Office equipment manufacturers have continued to do 5 the major portion of their business in the domestic market because war conditions have restricted foreign purchasing. Further curtailment of these markets has been indicated; the latest import restrictions announced by the Canadian government include all types of office furniture and appli ances. Work on spring lines was started at fourth district shoe factories early in December. Output for the month, rising more than seasonally from November, exceeded December 1939 production by 11 percent. Most manufac turers reportedly have booked more spring and summer business this year than at any other time in the recent past. Some backlogs of unfilled orders were said to be large enough to maintain peak operations until the middle of the second quarter when production of fall merchandise ordi narily is started. Stocks on hand at cement plants located in fourth dis trict States were reduced ten percent during 1940. Par tially as a result of heavy demand from defense projects, average monthly shipments last year exceeded those of 1939 by 19 percent. Improvement was most marked in the second and third quarters. December production, amounting to 653,000 barrels, was the best for any similar month since 1929, while total 1940 output was the largest in a decade. TRADE Retail Department store sales in principal cities of the district showed gains in December over those of a year ago. Akron and Erie stores reported the largest increases of eight and nine percent, respectively, while combined sales of fifty-two re porting department stores in the district were six percent greater than in the previous December. Annual increases over 1939 were greater in most cities than those of the final month, the district rise amounting to eight percent. The post-holiday seasonal contraction in sales appeared less sharp this year than last. For the first three reporting weeks in January, district sales averaged about 12 percent above those of corresponding weeks in 1940. Installment sales, relative to total department store sales in 1940, were only fractionally above those of the previous year. This ratio may acquire considerable significance in a period of rising incomes such as the present, since similar periods in the past sometimes have been accompanied by wider credit extension. Department store inventories showed the usual year-end decline, but were somewhat above stocks at the end of 1939 in most cities, the gain in Toledo amounting to ten percent. Retailers were reported as placing orders with jobbers in somewhat larger amounts than usual during the first few weeks of the year. Chain grocery trade in this district during the past year was eleven percent greater than during 1939, on the basis of sales per individual unit operated. Allowance should be made for the fact that the number of units in reporting gro cery chains was somewhat smaller in 1940. Chain drug sales, per unit operated, showed a somewhat larger than usual rise in December over the previous month, the gain amounting to 42 percent. Retail furniture sales of 38 firms in this district during December remained above those of a year ago. The largest gain of 16 percent occurred in Toledo, but Dayton and Co lumbus also experienced decided improvement. Accounts re ceivable, on the other hand, were fractionally lower than at 6 THE MONTHLY BUSINESS REVIEW the end of last year in several cities, although for the entire district they were up six percent. Wholesale December wholesale trade of 212 firms in this district was 16 percent above that of the previous December and five per cent in excess of November sales, according to the Bureau of the Census. Gains over the previous year were regis tered in nearly every line. Sales of clothing and furnish ings were up 18 percent from the previous December and 27 percent above those in November, the latter rise reflect ing, in part, a brisk year-end demand for heavy wear. Electrical goods sales were 22 percent over those of the same month in 1939, while the hardware group showed a gain of 29 percent. The high level of activity in the build ing industry was reflected in lumber and building material sales which exceeded those of December 1939 by 62 per cent. Combined wholesale inventories for all lines at the end of the year were practically unchanged from the previous year-end. There were, however, some wide variations among the stock positions of different branches of whole sale trade on the basis of reporting firms. Paints and varnishes, and plumbing and heating supplies were among the commodities held in notably larger amounts at the end of 1940 as compared with 1939. Clothing and furnishings, dry goods, and tobacco, on the other hand, showed lower stock values for last year-end than at the close of 1939. CONSTRUCTION Contracts awarded in the fourth district during De cember, amounting to $30,652,000 for all types of construc tion, were three percent greater than those for the same month a year ago, according to F. W. Dodge Corporation data. More residential building, which accounted for 41 Yz percent of total December construction, was started during the month than in any other December since 1927. As in most recent months, better than 70 percent of all contracts awarded for this type of building was for onefamily dwellings. Approximately 50 percent of these awards was made in Northern Ohio where considerable work on single unit homes for sale or rent was started. The largest individual contract was a $994,000 United States Housing Authority award for erection of 340 one-family dwelling units in Columbus. Though less than half as many contracts for non-residential construction were awarded in December as during the previous month, dollar value of awards was nearly 2% times that of December 1939. Urgent requirements for additional manufacturing facilities incident to the defense program have been the most apparent cause for raising factory construction to relatively high levels for this time of year. Weather conditions have been satisfactory for most outdoor work, the winter thus far being comparatively mild and open in many parts of this district. Total awards for all construction started in this district last year were valued at more than $398,500,000. Residen tial building accounted for 46 percent of the total, while in 1939 dwellings represented only 38 percent of total construc tion. Three-fifths of all contracts awarded in 1940 were pri vately-financed, compared with two-fifths in the previous year, and 44 percent in 1938. Principally as a result of demand for defense needs, par ticularly for housing and boxes and crates, lumber stocks at mills were reduced three percent during December. Accord ing to the Lumber Survey Committee, mill inventories on January 1 were 16 percent smaller than those of a year be fore. Several fourth district lumber and building materials supply dealers reported in mid-January that their unfilled or ders were unusually large for this season of year. Furniture woods, of which there was a limited supply, were in unprece dented demand. AGRICULTURE Grain Farmers in fourth district States on January 1 held more of the previous year's small grain production in storage on farms than had been customary in the recent past. As shown in the accompanying table, two-thirds of the 1940 oat crop was stored on fourth district farms at the beginning of the year. Compared with January 1, 1940, stocks were 37 percent larger, though last year's production was only 27yZ percent greater than that of 1939. Nine percent more wheat was harvested in fourth district States in 1940 than a year before, but on January 1 farmers held 29 percent more grain in storage. The Commodity Credit Corporation by the year end had granted Ohio farmers $3,213,379 in loans secured by pledge of 4,015,000 bushels of wheat, 9 percent of the States’ 1940 production. This grain was stored under bond on farms or in public elevators. On January 1, farmers in fourth district States held 65 percent of last year's corn crop in storage; the average farm carryover in the ten years, 1929-38, was 60 percent, though 64 percent of the previous year's crop was stored on January 1, 1940. FARM STORAGE OF SM AIX GRAINS Ohio, Pennsylvania, Kentucky, West Virginia CORN Ten-year Average Stored on Farms Percentage Production January 1, folof (000 bushels) lowing year annual crop 263,386 313,784 257,642 158,638 200,492 166,858 60.2 63.9 64.8 1929-38 ........................ 1939 1940 66,894 62,744 68,567 23,063 19,260 24,765 34.5 30.7 36.1 1929-38 1939 1940 74,452 61,836 78,822 46,194 38,556 52,675 62.0 62.4 66.8 1929-38 1939 1940 ...................... WHEAT Ten-year Average OATS Ten-year Average ...................... Livestock Four percent fewer beef cattle were being fed on Ohio farms January 1 than a year before, but feeder calves made up a larger proportion of the total than on the same date in other recent years. Reports of farmers cooperating with the Agricultural Marketing Service in dicated that a slightly greater percentage of the cattle on feed at the present time would be marketed later than April. Ohio farmers on January 1 were feeding three percent more sheep and lambs than twelve months earlier. The combined spring and fall 1940 Ohio pig crop, totaling 4,865,000 head, was one-fifth larger than the ten-year average, though four percent smaller than last year's. The number of sows to farrow in the spring is indicated to be 14 percent less than a year ago. Tobacco Approximately half of the 1940 Kentucky burley tobacco crop was disposed of before auctions closed for the holidays, 162,000,000 pounds being sold at an aver age price of $17.75 per hundredweight. Prices were irreg ularly lower after markets reopened, much of the tobacco offered being of not particularly good quality. However, THE MONTHLY BUSINESS REVIEW market observers estimated that 90 percent of the year’s crop had been sold by mid-January; 242,259,608 pounds had been auctioned on 22 Kentucky markets before January 20. Prices averaged 16.29 cents per pound. During the 1939-40 marketing season, a considerably larger Kentucky burley crop brought an average price of 17.7 cents per pound. Some dissatisfaction with prices among sellers resulted in arrangements for revival of pools to take over so-called “ distress” grades and through loans from banks for cooperatives to advance to farmers 75 percent of parity price on this tobacco, or 16.35 cents per pound. Fourth District Business Statistics (000 omitted) change from Year Fourth District Unless December 1939 1940 Otherwise Specified 1940 30,501,000 Bank Debits— 24 cities................. $3,391,000 + 1 9 .3 Savings Deposits— end of month 40 banks O. and W. Pa............ $ 796,400 1.1 Life Insurance Sales: Ohio and P a..................................$ 84,825 954,523 11.6 Retail Sales: 283,508 42,654 + 5 .8 Dept. Stores— 52 firms.............. $ 10,589 1,365 Wearing Apparel— 12 firms....... $ + 0.3 11,267 Furniture— 38 firms..................... $ 1,233 11.1 398,529 Building Contracts— T otal...........$ 30,652 + 3 .0 181,769 ” ” — Residential. $ 12,726 + 7 .7 12,177 Commercial Failures— Liabilities $ 1,425 + 125.1 6652 — N u m b e r... 43* + 2 2 .9 Production: 46,895 Pig Iron— U. S...............net tons 4,543 + 7.7 65,247 Steel Ingot— U. S............ net tons 6,301 8.2 3,692,3282 Auto— Passenger Car— U. S........ 396,5312 6.1 777.0262 Auto— Trucks— U. S ..................... 87,0362 11.1 Bituminous Coal, O., W. Pa., E. 175,648 K y...................................... net tons 15,265 + 7.5 13,424 Cement— O., W. Pa., W. Va. bbls. 1,071 + 6 2 .8 Elec. Power, O., Pa., K y............. 20,6574 thous..................................k.w.h. 2,0223 + 6 .9 23,571* Petroleum— O., Pa., K y ....b b ls . 1,9823 — 12.5 6 + 1 1 .4 S h o e s.......................................pairs 5 59,353 + 11.9 Tires, U. S.............. ............ casings 4,999 Bituminous Coal shipments: 48,111 L. E. Ports........................net tons 627 — 32.3 1 not available 4 January-November 5 confidential 3 actual number * November change from 1939 + 14.5 + + + + + + + 4 .6 + 8.1 + 1.4 + 16.0 + 6.0 + 2 6 .1 — 3 .6 —11.0 + 3 2 .8 + 2 6 .5 + 2 8 .8 + 9 .4 + 2 1 .4 + 1 9 .0 + 1 2 .7 1.1 — 12.3 + 3 .0 — Wholesale and Retail Trade (1940 compared with 1939) D E P A R T M E N T STORES (52) A k r o n .............................................. Cincinnati....................................... Cleveland....................................... Columbus....................................... Erie.................................................. Pittsburgh...................................... T oled o............................................. Wheeling......................................... Other Cities................................... District........................................... W E A R IN G A P P A R E L (12) Cincinnati....................................... Cleveland........................................ Pittsburgh...................................... D istrict............................................ F U R N IT U R E (38) Percentage Increase or Decrease SALES STOCKS SALES December year December 1940 1940 1940 + 7.8 + 8 .0 + 3 .0 + 4 .4 + 9 .0 + 4 .7 + 6 .0 + 7.8 + 0 .6 + 5.5 + 7.8 + 6 .4 + 8 .9 + 9 .4 + 6 .0 + 6 .7 + 8 .6 + 5.8 + 6.1 + 6.3 + 9 .8 — 3 .6 + 7.0 + 0 .9 + 3 .6 + 8 .4 + 4 .2 + 5.8 + 8.1 + 4.3 Columbus............................ D ayton................................. T oled o.................................. Other Cities........................ District................................. CH AIN STORES* Drugs— District (5 ).......... Groceries— District ( 5 ) ... W H OLESALE T R A D E ** Clothing and Furnishings (5 )........ Confectionery (4 )............................... Drugs and Drug Sundries ( 9 )......... Dry Goods (4 ).................................... Electrical Goods (1 3 )........................ Fresh Fruits and Vegetables (6). . . Furniture & House Furnishings (3). Grocery Group (5 0 ).......................... Total Hardware Group (3 7 ).......... General Hardware ( 6 ) ................. Heavy Hardware ( 4 ) .................... Lumber and Building Materials ( 3 ) ........... Machinery, Equip. & Sup. (exc. Elec.) (5). . Meats and Meat Products (3 )..................... + 1 7 .0 + + — + 0 .9 1.2 8 .0 0 .2 + 2 .0 1.2 + 0.03 + 1.4 + + 7 .4 + 13.7 + 7.9 + 1 0 .7 + 16.3 + 4 .0 + 11.1 + 8 .7 + 1 8 .4 + 5.1 + 1 5 .8 + 18.0 + 2 1 .3 + 1 6 .0 + 6 .0 + 3 .7 + 11.4 % change from 1939 + 13.2 + 10.1 + 15.2 + 7.1 + 1 5 .1 + 8 .4 + 16.1 + 1 2 .6 + 1 4 .1 + 1 5 .1 + 1 0 .4 + 1 6 .4 + 2 .4 + 1 0 .8 + 1 2 .0 + 1 4 .5 + 5 .0 + 1 7 .7 + 9 .8 + 6 .0 + 7.2 + 1 1 .4 + 1 7 .2 — 1.9 + 1 4 .0 + 1 0 .4 + 1 3 .3 + + + + 14.4 2 .6 0 .5 7.7 i + 17.4 + 8 .2 + 17.5 — 6.5 + 7 .9 + 6 .6 + 2 2 .3 + 6.8 — 2.5 + 9 .8 + 2 8 .7 + 10.2 + 3 6 .6 + 4 5 .6 + 4 1 .3 + 14.6 + 6 1 .6 — 12.8 — 0 .9 + 8 8 .6 + 1.6 — 1.2 + 9 .6 + 4 .0 + 15.6 + + + + + + + + 17.6 4 .0 5.5 2 .4 3 .0 5 .0 16.7 2 .2 + 7.0 — 12.5 — 7 .4 + 3 .4 — 2 .4 — 7.9 — 3.7 + 10.3 + 2 .6 + 1 4 .6 + 7 .0 — 1.6 — 2 .8 — 3.2 + 2 4 .7 + 2 0 .3 — 5 .7 + 15.5 l l l l l l i l + 5.2 l + + + + + 2 .0 6 .6 6 .0 9 .6 7 .6 Paper and its Products (6 )................... T obacco and its Products (1 7 )............. Miscellaneous (1 3 ).................................... District— All Wholesale Trade (212). * Per individual unit operated. ** Wholesale data compiled by U. S. Department of Commerce. 1 Not available. Figures in parentheses indicate number of firms reporting sales. Debits to Individual Accounts (Thousands of Dollars) 4 Weeks Year 1940 Year 1939 % ended change Dec. 28, 1939 Dec. 29, 1938 from to to Jan. 22 1941 1940 Dec. 25, 1940 Dec. 27, 1939 798,728 79,916 + 15.2 903,891 A kron............... 121,263 110,105 10,225 + 5 .9 Butler.............. 488,434 423,941 C anton............. 43,913 + 1 9 .8 4,110,027 3,836,142 Cincinnati. . .. 371,981 + 1 8 .3 Cleveland........ 744,601 + 2 2 .1 7,799,811 6,778,998 + 1 0 .4 2,234,984 2,061,789 Columbus........ .. 170,152 760,574 D ayton............ 79,856 + 18.5 883,169 Erie................... 32,464 + 1 5 .9 362,315 321,720 3,247 38,914 Franklin.......... 34,120 + 0.3 8,314 94,929 82,468 Greensburg. . . — 7.3 H am ilton......... 12,254 + 1 5 .8 143,042 129,539 Homestead----3,578 + 1 7 .7 44,148 37,914 287,994 37,956 + 0 .2 Lexington........ 281,176 16,224 181,866 164,133 — 0 .1 Lim a................. 68,325 60,987 5,378 Lorain.............. + 1 3 .9 12,907 M iddletow n... + 7 .6 148,345 129,559 — 9 .8 124,351 118,426 Oil C ity ........... 10,221 P ittsburgh.. . . 1,029,2851 9,014,868 7,659,314 + 5 2 .6 Sharon............. 9,300 + 1 6 .6 107,593 98,031 Springfield----18,880 + 2 1 .9 212,893 200,791 123,794 115,516 Steubenville... 9,765 + 8 .6 148,840 T o led o............. + 2 3 .0 1,604,191 1,440,661 12,959 + 3 2 .0 139,054 118,612 Warren............. 343,377 W heeling......... 32,701 + 1 8 .6 350,105 Youngstown. . , 55,264 + 4 .4 642,006 563,031 Zanesville. 9,571 108,439 98,212 + 1 4 .3 Total............. 2,969,752 + 2 7 .8 30,332,023 26,774,592 7 i — 7.2 i l + 2 5 .2 — 2 .6 — 8.1 + 1 8 .8 + 1.6 Fourth District Business Indexes (1923-25 = 100) Bank debits (24 cities)....................................... Commercial Failures (N u m ber)........................ ” ^ ” (Liabilities)..................... Sales— Life Insurance (O. and P a .)................... ” — Department Stores (48 firm s)............... ” — Wholesale Drugs (9 firm s).................... ” ” Dry Goods (4 firm s)........... ” — ” Groceries (50 firm s)........... ” — ” Hardware (33 firm s)......... ” — ” All (96 firm s)....................... ” — Chain Drugs (4 firm s)**........................ Building Contracts (T o ta l).................................. ” ” (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. 1940 125 30 32 88 178 139 52 70 127 82 140 64 74 84 89 241 107 97 Dec. 1939 105 24 14 79 171 129 48 64 100 71 132 62 69 79 55 225 123 77 Dec. 1938 97 39 22 119 152 120 48 66 84 70 126 84 61 72 45 194 113 89 Dec. 1937 102 47 38 87 151 114 44 73 81 74 120 57 19 69 59 192 125 83 Dec. 1936 113 27 17 96 158 120 62 80 105 86 129 43 37 76 64 191 127 103 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Board of Governors of the Federal Reserve System INDUSTRIAL PRODUCTION Index of physical volume of production, adjusted for seasonal variation, 1935-1939 average = 100. By months, January 1934 to December 1940. Latest figure— 136 (preliminary). DEPARTMENT STORE SALES AND STOCKS Indexes of value of sales and stocks, ad justed for seasonal variation, 1923-1925 average = 100. By months, January 1934 to December 1940. Latest figures— Sales 101, Stocks 70 (preliminary). 1934 1835 1936 1937 1938 1939 1940 U. S. Department of Commerce estimates of the amount of income payments to indi viduals, adjusted for seasonal variation. By months, January 1934i to December 1940. Latest figure 6,511. MONEY RATES IN NEW YORK CITY For weeks ending January 6, 1934, to De cember 28, 1940. Last figures on chart: Treasury bonds 1.88, 3 to 5-year Treasury notes 0.37, 91-day Treasury bills (new is sues) negative rate. Reserve bank dis count rate 1.00. January 11, 1941, data: Treasury bonds 1.97, 3 to 5-year Treasury notes 0.43, 91-day Treasury bills (new issues) negative rate, Reserve bank dis count rate 1.00. Industrial activity continued at a high rate in December and the first half o f January and distribution o f commodities to consumers was maintained in large volume. There was some increase in wholesale commodity prices. Production Volume o f industrial production showed little change from Novem ber to December, although usually there is a decline at this season, and consequently the Board’s adjusted index rose further by four points to 136 per cent of the 1935-39 average. In the first half of January steel output increased to around 98 per cent o f capacity. Activity in the machinery, aircraft, and shipbuilding industries continued to in crease sharply and working forces were expanded further. In these lines and in some others, such as wool textiles, unfilled orders are exceptionally large, owing in the main to the defense program. Automobile production declined somewhat more than seasonally in December following an unusually large volume of output in November and October. Retail sales of new cars during the last quarter of 1940 were about one-fourth greater than in the corresponding period last year and used car sales also were large. In the nonferrous metals industries activity increased further in December and output of lumber and cement showed less than the usual seasonal decline. Textile production, which in November had exceeded the previous record levels reached a year ago, continued at this high rate in December, not showing the usual seasonal decrease. At cotton and rayon mills, ac tivity increased somewhat further and at wool textile mills output was sustained at peak rates. In the shoe industry, where output had been in reduced volume during the first ten months of the year, there was less than the usual seasonal decline in November and December and, on a sea sonally adjusted basis, production was close to earlier peak levels. At mines bituminous coal production declined less than seasonally and anthracite production increased. Output of crude petroleum showed a reduction in December owing mainly to the fact that wells in Texas were closed for ten days as compared with nine days in November. Output of metals continued in large volume. Value of construction contract awards, as reported by the F. W . Dodge Corporation, increased contraseasonally in December, reflecting fur ther sharp increases in awards for defense construction and private nonresidential building. Distribution Distribution o f commodities to consumers increased more than sea sonally in December. Department and variety store sales showed the customary sharp expansion during the Christmas season and sales at mail-order houses rose more than is usual at this time of year. Freight-car loadings showed a seasonal decline from November to December. Shipments of forest products and miscellaneous freight de creased less than seasonally, while ore loadings, which had been unusually large in November, declined sharply. Wholesale Commodity Prices Basic commodity prices generally increased from the middle o f De cember to the middle of January, following little change during the pre ceding four weeks. Currently these prices are substantially above the level prevailing last summer. Increases in the past month were most marked for foodstuffs, especially hogs, pork, lard, and cottonseed oil, but there were advances also in a number o f industrial materials, particu larly pig iron, cotton, cotton goods, paint materials, and hides. Steel scrap prices, after increasing during most o f the period, subsequently declined and lumber prices also decreased somewhat from the sharply ad vanced peak reached in November. Bank Credit Total loans and investments at reporting member banks in 101 lead ing cities continued to increase substantially during the six weeks end ing January 8, reflecting principally increases in holdings o f United States Government obligations at New York City banks. Commercial loans rose somewhat further. Excess reserves, after declining during the first half o f December, have since increased to about $6,900,000,000. The increase reflected reduc tions in Treasury deposits with the Reserve Banks, a continued inflow o f gold, and since Christmas a seasonal return flow o f currency from cir culation. United States Government Security Prices Prices o f United States Government securities reacted somewhat after reaching record high levels early in December. Bonds o f 1960-65 showed on January 8 a net decline o f about 2% points from the all-time peak of December 10 but subsequently fluctuated somewhat above this level.
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