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MONTHLY BUSINESS REVIEW Covering financial, industrial Fourth F ed eral Reserve D is tric t and a g ric u ltu ra l c o n d itio n s Federal Reserve Bank of Cleveland Vol. 21 The slight improvement in business sentiment which was noted late in May gathered momentum in June and the first three weeks of July. Operating rates in most fourth district industries have increased, and now approach or exceed the levels of last January. A spirit of caution still prevails, however, and except in a few cases, raw materials and sup plies are being purchased only as needed. Employment fig ures now available for June, which in most cases relate to the middle of the month, show slight gains in the number of men working, but larger increases in employee-hours and payrolls. Ohio industrial employment increased per cent in June over May, but payrolls rose nearly five percent. Steel, machine tools, and consumers’ goods lines continued to lead the way. After a let-down in the first week of July as a result of the Independence Day holiday and vacations, steel operations rose to the highest rate since last November. Well-maintained demand for steel from a large number of miscellaneous consumers wras said to be responsible for the increase, though there may be some stocking of semi-finished material in anticipation of heavy deliveries to the automobile industry later in the summer. At the present time, these shipments are at a minimum because of completion of runs on most 1939 models, while releases on steel for the new cars have not yet reached substantial volume. Machine tool buying remained at a high level during June, with some increase from domestic sources. June was a very quiet month in the coal trade, but im provement in steel resulted in some pick-up in the demand for industrial grades during July. Shipping by way of the lakes was quite active, and in mid-July the number of boats in the coal and ore trade rose to more than 68 percent of the number available. This compares with 40 percent on the same date last year. Further expansion was indicated late in July with the outfitting of several more ships. Producers of consumers’ goods were generally quite ac tive during June and early July. Clothing manufacturers were operating at, or close to, capacity in order to provide for early shipment of fall lines, and payrolls at Ohio men’s clothing plants increased six percent in June over May. Or ders for fall delivery were said to be well above last year and in some cases approached 1937. Shoe factories reported sim ilar conditions, with a gain in June payrolls of 15 percent. Sales of tires in the replacement market were larger in June than in any month since 1933, and rubber companies contin ued to operate about 50 percent ahead of last year. Other retail sales, as evidenced by department stores, decreased a little less than seasonally in June. No. 7 Cleveland, Ohio, July 31, 1939 Comparisons of the first half of the year with 1938 show marked improvement in nearly all cases. Employment in Ohio has remained between 87 and 89 percent of the 1926 average during the first six months this year, whereas a year ago this index was falling steadily from 87 for January to 80 for June and 79 for July. The accompanying chart shows the extent to which certain business indicators demonstrate improvement in this district, but it should be kept in mind that the large percentage increases are a reflection of ex tremely 1o w t production last year rather than unusually high current output. The decline in coal production shown on the chart is due to the fact that June figures were not avail able and the six weeks shut-down during April and May canceled earlier gains. The relatively high volume of industrial and commercial activity prevailing since last autumn has resulted in re ducing the number of firms entering bankruptcy. In June there were only 63 commercial failures reported in the fourth district, and total liabilities of all firms failing dur ing the first six months of the year were lower than in any other period since 1924, when data were first compiled on a district basis. They were 37 percent below last year and six percent under 1937. FOURTH DISTRICT BUSINESS INDICATORS First Half of 1939 Compared with Same Period of 1938 (Fourth District Unless Otherwise Specified) PER CENT DECREASE a u t o m o b il e : p r o d u c t i o n P E R ' C E N T .INCREASEL - u .s . AUTOMOBILE REGISTRATIO NS P A S S E N G E R C A R S - 9 C O U N T IE S B U IL D IN G CO N TR A C TS AWARDED COAL P R O D U C T IO N * COM MERCIAL FAILURES ■ ■ DEBITS TO IN D IV ID U A L ACCOUNTS D E PA RTM EN T STORE SALES ELECTRIC POWER PR O D UC TIO N * O HIO . PA.. KY. M A C H IN E TO OL O R D E R S -U .S . PIG IRON P R O D U C T IO N -U S . PLATE G LASS P R O D U C T IO N -U .S . STEEL IN G O T P R O D U C T IO N -U .S . TIRE P R O D U C T IO N -U .S . WHOLESALE F IV E TRADE M O NTHS -4 -0 -2 0 O + 20 * 4 0 + 6 0 +80 +100 +120 +140 THE MONTHLY BUSINESS REVIEW 2 FINANCIAL The mid-year condition report of all member banks in the district shows that there was a slight increase in loans made by both city and country member banks during the second quarter. In comparison with a year ago, country banks had a larger volume of loans outstanding on June 30, a condition not reflected by the reserve city banks figures shown in the accompanying table. Country banks also held fewer Government bonds at the end of the second quarter than on March 31, whereas reserve city banks held more of these securities on the June 30 date than three months earlier and they were 12.6 percent larger than a year ago. Country banks reported a gain of 2.7 percent in holdings of Government securities in the year. Investments in other than Government securities at re serve city banks increased relatively more in the year ended June 30 than at country banks which actually reduced their investments in this class in the second quarter of the year. LOANS AND INVESTMENTS Fourth District Member Banks (Millions of Dollars) Country BanksReserve City June M arch June June March Banks June 30, ’39* 31, ’39 30, ’3830, ’39* 31, ’39 30, ’38 Total Loans & Investments 1,018 1,016 989 1,801 1,761 1,685 Loans & Discounts............. 440 431 422 625 615 645 Investments: U. S. Govt. & Guaranteed 297 303 290 901 882 800 All Other ......................... 281 282 277 275 264 240 Municipal Bonds. . . 100 94 f 82 76 i Corp. Stocks............. 170 177 t 149 144 + Other Bds. & Notes 11 11 t 44 44 t Number of Banks............... 585 588 588 34 34 34 tNot available. ♦Subject to revision. Weekly Reporting Banks There was a slight increase in loan activity at banks in leading cities of the fourth district in the four weeks ended July 19 writh gains in both commercial as well as other loans. The total expansion, one percent or $6,000,000, extended the moderate increase which has been evident since February, but despite the generally higher level of business in comparison with last year, total loans, at $666,000,000, were still exceeded by the volume reported a year ago when the trend was downward. Although commercial loans showed little net change in June, there was an in crease in the first half of July, but on the latest date such loans were still under the recent peak of May. Despite the increased activity in F.H.A. real estate fi nancing in the first half of 1939, total real estate loans made by reporting member banks in this district have shown no change. New loans have been made only in vol ume equal to payments on loans previously made and total real estate loans outstanding are smaller than a year ago. The greatest increase in loan account so far this year has been in ‘‘other loans” . They are nearly 25 percent larger than at this time in 1938. Contrary to the trend shown by all reporting member banks of the country, such banks in this district reduced their holdings of Government securities in the four weeks ended July 19, but increased holdings of Government-guar anteed obligations partly offset the contraction. Investments in other securities rose nominally and were somewhat larger than a year ago. Although there was little change in total loans and investments of these banks, on the latest date they were at the highest level of the year and were $122,000,000, or seven percent larger than at that time in 1938. Adjusted demand deposits, on the other hand, continued their upward movement, rising $19,000,000 in the four latest weeks to a new high total of $1,222,000,000 which was $172,000,000, or 16 percent larger than at this time last year. Time deposits were reduced slightly during the same period and were at the level reported at the beginning of the year. Check transactions at banks in twenty-four cities of the district in the last week in June and the first three weeks in July were ten percent larger than a year ago, while the gain for the year to date was four percent. Federal Reserve Mid-year reallocation of the Federal Bank Credit Reserve System’s holdings of U. S. Gov ernment securities, whereby this bank’s share was increased slightly, and technical conditions in the Treasury bill market whereby maturing bills in the System’s portfolio were not replaced by purchase of new ones, caused relatively minor fluctuations in this bank’s investment holdings in the four weeks ended July 19. Other assets were little changed in the period. Reserve deposits increased substantially in recent weeks: in the last half of June they were 64 percent in excess of legal requirements, a new high figure. MANUFACTURING, MINING Iron and Steel The contra-seasonal increase in steel production, wrhich was evident in June, reaffirmed itself in July following the Independence Day curtailment which reduced the national rate to 42 percent of capacity, twelve points below the final week of June. This was followed by a rebound to 50.5 percent the next week and 56.5 for the third week of July, a rate equalling the year’s high point in the middle of March. The rate for the last week of the month was 60 percent, the highest since last November, and a gain of seven percent over the previous week. A year ago the rate was 37 percent. The rise from the holiday shut-down has even exceeded expectations of the industry, and particularly so since mis cellaneous demand is chiefly responsible for the increased production. Little rolled steel has been ordered out by automotive users on the large tonnages booked in the 1ow t- THE MONTHLY BUSINESS REVIEW price period of May. Production of 1939 models has been greatly curtailed, but 1940 cars are not yet appearing in numbers. Steel ordered so far has been for test runs and parts. With this outlet promising a sizable increase in the near future, the industry is anticipating a higher operating rate in immediately ensuing weeks. Building and engineering construction activity has been a sustaining factor recently, and farm implement and equipment plants are stepping up output. Railroad buying is light; some passenger equipment has been placed, as well as locomotives, but these units do not contain large steel ton nages. The Pittsburgh district showed little net gain in the four latest weeks, moving from 47 percent at the end of May to 36 percent in first week of July and then advanc ing to 50 percent, the best rate since the first two weeks of April. The Cleveland district dropped from 51 percent to 27.5 percent over the Holiday and then climbed to 56 percent in the third week and 73 percent in the last week in July, the highest rate since November. Youngstown mills declined from 51 to 38 percent and then climbed back to 54 percent. These rates contrast with operations of 30 to 36 percent in July 1938. Steel ingot production in June totaled 3,130,381 gross tons, a slight increase over 2,917,876 tons in May. Six months’ total was 18,629,927 tons, compared with 10,788,583 tons in first half last year. June pig iron production aggregated 2,119,422 gross tons, compared with 1,717,522 tons in May. Total produc tion for six months was 12,521,131 tons, compared with 7,931,098 tons in the comparable months in 1938. In 1937 six months’ production was 19,771,335 tons. Prices of steelmaking scrap are strong and fairly steady. Supplies are not plentiful and while tonnage buying has been absent, dealers have held their supplies. Steel's scrap composite price of steelmaking grades has ranged from $14.62 at the end of May to $14.91 the fourth wTeek in July, with a rising tendency. Consumption of Lake Superior iron ore in June totaled 2,829,667 gross tons, compared with 2,245,513 tons in May and with 1,471,660 tons in June 1938, an increase of 59.1 percent over last year. Nine additional ore carriers were put in service between June 15 and July 15, bringing the total vessels in the ore trade to 206 out of 302 available. Shipments of ore in June exceeded consumption and ore stocks are again increasing as is usual at this season so that mills wrill be supplied during the winter months when 3 navigation is closed. The amount on hand at furnaces and lake docks on July 1, however, was 25 percent less than a year ago. Coal Operations in coal-mining areas of the fourth district in June and the first half of July continued to increase moderately, excluding holiday interruptions, from the level attained following settlement of the dispute between miners and op erators. They did not attain the production rate of the first quarter, however, but June output, at 11,700,000 tons in this district, was 38 percent ahead of June 1938. The greater share of demand at this season of the year represents coal being transported through Lake Erie ports to upper lake docks. In June, such loadings were 5,135,466 tons, a gain of more than 25 percent over last year. While for the season to date, loadings were below those of the comparable period of 1938 because of the strike, in midJuly dumpings were still expanding and were 30 percent in excess of last year at that time. So far as sales were concerned, June was reported as a dull month generally, but in July there was some evi dence of a better situation in several fields. Demand for industrial grades has improved moderately and there is evidence that stocks are again being accumulated, follow ing several weeks of liquidating inventories which were built up in the early months of the year. Anticipation of higher prices to be established by the Coal Commission also was a strengthening factor. A better sentiment is ap parent in coal trade in this district even though, from an earnings’ standpoint, the industry is still very much de pressed. Automobiles There was an increase in automobile assemblies in June over May whereas it is customary for a decline to occur at that time. According to the Department of Commerce, 309,720 cars and trucks were sold by domestic manufac turers in the period, an increase of 81 percent over a year ago and of more than five percent over June. The Board’s seasonally adjusted index of daily average output rose eight points to 81 percent of the 1923-25 average, making up about half the April-May decline. While holiday ob servance and closing down for model changes were re flected in July weekly assembly figures which were at a lower level than in June, output was maintained at a some what better than expected rate through the week ended July 22. Despite a falling-off from the previous week, in the latest period assemblies were 48 percent above last year according to Ward’s reports. The lowr point in 1938 assemblies was in the second and third weeks of August. This year it is more than usually difficult to appraise weekly operating schedules. The changeover period was expected to be completed earlier than in recent years, but production on some 1939 models has held up longer than was first anticipated. In some quarters strikes at tool and die plants are disturbing preparations for new models. The extent to which 1939-model assemblies are being continued longer than planned in order to provide dealers with cars to carry over the later period when there will be no de liveries cannot be ascertained. The fact that June sales held up better than expected also might have been a con tributing factor. Even though the national auto show is scheduled earlier than in any previous year, it now ap 4 THE MONTHLY BUSINESS REVIEW pears that August will be the low assembly month. Parts makers reported that orders in July were up rather sharply over June and although releases have been held up quite generally they still were considerably larger than a year ago. Releases on the large automotive steel orders placed in late May had not appeared in any volume up to the third week of July, according to reports received, even though all but two major producers were winding up, or had completed, assemblies of 1939 models. In the first half of this year domestic assemblies num bered 1,953,533 cars and trucks, a gain of 62 percent from last year when first half production represented 48 percent of annual output, the smallest share of yearly production in over ten years. Inventories and retail demand in June showed favorable changes from the previous month, although the former are still somewThat above a year ago, despite the drop from the spring peak. In relation to the better demand in June, and approach of the shut-down period, stocks were re garded as healthy. Early July sales fell off, according to reports, by more than the estimated seasonal amount. In nine leading counties of the fourth district new pas senger car registrations in June were down less than sea sonally from May and were 82 percent ahead of a year previous. For the first six months the gain was 68 percent over the first half of 1938. Rubber, Tires The rubber industry continued to operate at a high rate during June. Tire production rose nearly ten percent abore the May level and, with the exception of last March, it was the largest monthly output in two years. Chiefly as a re sult of heavy replacement demand, total tire shipments were the largest in any month since 1933. Shipments ex ceeded production, and for the third successive month, in ventories fell. The June spurt in replacement sales fol lowed a period of unusually high volume in this division, and for the twelve months ended June 30, replacement ship ments totaled 34,871,000 casings, the largest twelve-month total since 1932. Retail sales late in June and early July were stimulated by presumably temporary price cuts on certain grades of tires and it was said that there was no unusual accumulation of dealers’ stocks. Crude rubber consumption during June did not rise quite as much as tire production, but again excepting last March, it was larger than any other month since June 1937. Dur ing the first six months of this year, consumption of crude rubber in the United States has varied between 42,000 and 50,000 tons a month, with the total for the half year 50 percent above 1938 and only 12 percent below the record established in 1937. The increase in crude rubber consumption during June, combined with a decrease in imports, resulted in a further reduction of domestic rubber stocks. At the end of June, inventories of crude rubber were 38 percent below those on hand a year earlier, and they were the lowest in nearly two years. At the current rate of consumption, stocks were sufficient for only 3^2 months. Crude rubber inventories in other consuming countries also have been reduced, and as a result, the International Rubber Regulation Commit tee raised permissible export allowances to 60 percent of basic quotas for the third quarter from the 55 percent which had been in effect. This is the first time in its his tory that the Committee has made a change retroactive. The higher rate was also made applicable to fourth quar ter shipments. In spite of declining stocks, crude rubber prices have remained unusually stable for nearly a year. Since last August, the price of spot rubber in New York has fluctuated within the narrow range of 15 to 17 cents per pound. Textiles and Clothing Activity at textile and clothing plants continued at a high level during June and the first three weeks of July. At the end of June, employment at eleven Cleveland textile firms was better than since last December, and the highest June figure since 1935. It was 15 percent above last year. Dur ing the first six months of 1939 employment at these plants was well maintained, w^ith less than the usual let-down between spring and fall seasons. In mid-July most firms were well along on fall lines, with some woolen mills re porting that their seasonal peaks had been passed in June. Output of woolen fabrics was being curtailed, but opera tions were being reduced gradually. Men’s clothing firms reported that operations were close to capacity in mid-July. Bookings for fall delivery had been completed, except for the usual fill-in orders placed by retailers during the selling season, and production sched ules have been stepped up to provide for early shipment. Initial orders were far above last year, in some cases being as much as 30 percent above the similar 1938 period. Many stores were asking for early delivery on fall orders and can celations were said to be at a minimum. The women’s wear trade was also active, with most gar ment makers operating at capacity in preparation for the fall season. Knitting mills reported that the demand for knitwear was being felt earlier than usual. Other Manufacturing In many of the other manufacturing lines in this district there was some pick-up in business during June and early July. The machine tool industry and makers of heavy electrical equipment continued to report a large volume of incoming orders. Firms making building ma terials and supplies were said to be benefiting from the large volume of construction contracts awarded so far this year, and household equipment makers reported that June and early July business was better than expected, with less-than-seasonal declines being experienced. Several other makers of consumers’ goods were operating close to ca pacity. In spite of these favorable developments, most firms still stated they were buying very conservatively and were con tinuing to liquidate inventories of finished goods. In many cases where orders had increased, operating schedules had not yet risen, and employment showed relatively minor gains. In the machine tool industry, orders received during June were only four percent below the high May figure, and as a result, the three-month moving average of the index of new orders compiled by the National Machine Tool Builders' Association rose to the highest point in two years. During the first six months of the year the index averaged 182 percent of average monthly shipments dur ing 1926, whereas the average for the first half of last year was only 88 percent. In 1937 the first half average THE MONTHLY BUSINESS REVIEW was 210, slightly below the level of May and June of this year. Although the index is no longer divided between foreign and domestic orders, the Association stated that the June drop was entirely due to a decline in foreign business. Do mestic buying extended the upward trend which started a year ago, with airplane and shipbuilding orders being received in heavy volume. Other heavy equipment manufacturers continued to op erate on low schedules. Makers of railroad cranes, roadbuilding machinery, oil well equipment, and specialty cast ings were all said to be quite depressed. Foundry equip ment orders, however, rose in June, but did not reach the levels attained earlier in the year. Shipments increased and the volume of unfilled orders at the end of the month fell. Some electrical equipment manufacturers reported a de cline in incoming business during June, while others re ported increases. In all cases, however, orders and ship ments during the first half of the year were far above 1938, with orders showing a larger gain than shipments. This is partly due to the fact that in the early months of last year producers were still operating on orders placed in 1937, but at the present time some backlog of unfilled orders is being built up. The glass industry maintained production at fairly high levels m June, but reports from manufacturers indicated that July was a month of low operations in nearly all lines but glass containers. In June, however, plate glass produc tion increased for the second consecutive month, although the seasonal trend is downward. The window glass indus try operated at 44.3 percent of capacity during the month, the lowest rate for the year, but twice as high as in June 1938. The box and paperboard industry increased operations in June against the seasonal trend. Nevertheless, some in crease in unfilled orders was reported in early July. Pur chases were still on a conservative basis, although con sumers’ inventories were said to be low. Prices were firm. Some falling-off in new business during June was reported by makers of fine writing paper, but it was still well above last year. Most consumers’ goods lines reported no more than seasonal or less than seasonal declines during June and early July. Shipments of household washers increased against the seasonal trend, while sales of sewing machines and pottery fell by usual amounts. Sales of radios have declined somewhat, but other electrical equipment, refrig erators, and stoves have benefited from strong consumer demand. Inventories are said to be low, and some manu facturers have found that their raw material requirements for the third quarter were underestimated. Fourth district shoe factories continue to report a large volume of business, with output for June and for the first six months ten percent higher than last year. After reach ing a seasonal low point in May, production at local plants increased 15 percent in June. This development was con trary to the experience in most other producing centers, for output in the entire country was about the same in June as in May. In mid-July, orders for fall delivery were said to be coming in satisfactorily and far ahead of last year. Most plants were operating at capacity, and some were said to have received more business than they could comfortably handle within specified delivery dates. 5 TRADE Retail Retail trade during the first half of the year showed improvement over 1938, sales at fourth district department stores making a gain of six percent. Sales by wearing apparel shops also increased six percent, retail furniture stores sold twenty percent more house furnishings, and grocery chains raised their dollar volume four percent. These comparisons, although relating to value of sales, are also good indicators of physical volume, for price changes in the retail field during the last twrelve months have been of relatively minor importance. During June, retail sales in this district declined a lit tle less than usual, and reports covering the first half of July indicated that the trend was continuing. The ad justed index of department store sales rose one point from its April and May level to 85 percent of the 1923-25 base in June. National indexes of rural retail trade and variety chain sales compiled by the Department of Com merce also rose. Sales by local grocery chains fell nearly three percent in June, but were still over five percent larger than in June last year. Wearing apparel shops in Cleveland reported a ten percent gain over June 1938, al though similar stores in Pittsburgh and Cincinnati were down nearly five percent. Furniture stores sold 30 per cent more goods in June than a year ago. At department stores, the best gains over last June were made by home furnishings. Sales of electrical ap pliances were 56 percent larger than last year, furniture sales were up 14 percent, and most other home furnishings departments were up about 12 percent. Musical instru ments and radios recorded a gain of only seven percent. Men’s clothing sales were also far above last year, an in crease of 24 percent being reported. Purchasing policies remained conservative, and the sea sonally adjusted index of department store stocks fell to 66.2 percent of the 1923-25 average. With the exception of September and December of last year, this was the low est point reached by the index since July 1936. Collections on both installment and regular charge ac counts at department stores held up better than usual in June. Some decline was experienced, but in relation to ac counts outstanding at the beginning of the month, they were better than in either 1938 or 1937. Collections during June were eight percent larger than in June last year, al though accounts receivable at the end of the month were approximately the same. Wholesale With losses in Cleveland, Pittsburgh, and Cincinnati being offset by gains in the smaller cities of the district, fourth dis trict wholesalers sold almost exactly the same amount of goods in June as in May. In comparison with last year, however, sales by the 230 fourth district firms reporting to the Department of Commerce rose nine per cent. As is shown in the table on page seven, increases over last year were most marked in the cases of electrical appliances, lumber and building materials, and hardware. These prod ucts seemed to be benefiting from the large increases in construction contracts awarded earlier in the year, for the June increases over last year’s sales were much larger than cumulative gains for the first six months. Inventories continued to decline in June, but the gap 6 THE MONTHLY BUSINESS REVIEW between current levels and a year ago was reduced to slightly more than one percent. At the beginning of the year, stocks on hand were 16 percent lower than those on hand at the beginning of 1938. In relation to accounts outstanding at the beginning of the month, collections were about the same as in May and slightly better than in June of last year. CONSTRUCTION Start of work on four large Government housing proj ects during June raised residential contracts awTarded in this district to the largest monthly total since 1928. A c cording to the F. W. Dodge Corporation, residential con struction begun during June in the fourth district amounted to $20,396,000, a gain of 73 percent over May and 117 percent over June 1938. The four housing projects— two in Cleveland and one each in Pittsburgh and Columbus— were valued at $9,000,000, almost half of all residential work begun during the month. Private residential construc tion, on the other hand, declined slightly during June, largely as a result of curtailed operations by so-called “ spec ulative” builders. Contracts for nonresidential construction awarded dur ing June amounted to $20,114,000, slightly above the month ly average for the first half of the year. About two-thirds of this wrork was publicly-financed, but there was some increase in private nonresidential building during June. In the first half of July there was a sharp reduction from June levels in both residential and nonresidential contracts, but public works construction increased. Total contracts awarded in this district during the first half of 1939 were valued at $186,831,000. This was a gain of 53 percent over the same period last year and only $10,000,000 below the second half of 1938 when a large volume of public work brought total contracts to the highest six months’ total since 1930. To a large extent the high 1939 figure also resulted from Government activity, for public projects made up over half of the total. Total resi dential construction rose 78 percent over the first half of last year while the gain in nonresidential construction was 19 percent. Reports from dealers in lumber and building supplies were conflicting in mid-July. In spite of the large gains over last year in both residential and total construction, sales by fourth district wholesalers furnishing data to the Department of Commerce were only 15 percent larger than in the first half of 1938. This small increase is par tially due to the fact that prices are lower than they were a year ago. Physical volume has therefore expanded some what more than dollar figures indicate. AGRICULTURE Crop prospects, both locally and in the country as a whole, improved markedly during June, but were lowered somewhat by continued drought in July. As a result of improved weather conditions in June, the Crop Reporting Board of the Department of Agriculture stated in its July 1 report that aggregate production probably would be close to the levels before the drought years. It was said that to tal acreage for harvest was expected to be about six per cent below the pre-drought average, but that this decrease seemed likely to be offset by better-than-average yields per acre. There was, however, no indication that aggregate crop production would equal 1937 or 1938, for in both of those years acreage harvested was larger than is indicated for this year. The accompanying table shows the Department of Agri culture’s July 1 estimate of prospective yields of principal crops in the fourth district. Estimated production of corn and wheat show about the same changes from last year in this district as in the rest of the country, but hay produc tion decreased more than in other areas, and tobacco pro duction is estimated at less than the average increase. Principal Crops—Fourth District (000 omitted) 7c change °7c July 1, 1939 Estimate 40,810 ' - 199,747 42,779 Tame Hay, tons 4,677 Tobacco, lbs.. . 115,661 Potatoes, bu.. . 19,889 Wheat, bu........ 1938 Harvest 53,076 199,591 49,425 5,478 105,694 20,554 change 1939 from 1938 10-year average harvest 1928-1937 —231 + 0.1 —13.4 —14.6 + 9.4 — 3.2 40,521 163,833 60,890 4,645 117,274 20,069 1939 from 10-year average + 0.7 +21.9 — 29.7 + 0.7 — 1.3 — 0.9 Wheat F armers in this district have just completed har vesting the smallest wheat crop since 1934. Based on July 1 condition reports, estimated production was 23 percent below last year and more than 20 percent below the av erage for the last four years. This decline was almost en tirely due to acreage curtailment, for yields were only slightly below average. Since wheat is about the only cash crop for many farmers in this district, low market prices were particularly discouraging. In the third week in July, local farmers were receiving about 60 cents a bushel. As is shown in the accompanying chart, this was slightly be low last year and only half as much as was received in 1937. Corn and Hogs Corn made excellent progress during June, in spite of the fact that excess moisture hindered cul tivation and resulted in many weedy fields. Although acre age was slightly below last year, on July 1 it was estimated that 1939 production in the fourth district would be ap proximately the same as in 1938 and over 20 percent larger than the ten-year average. Part of the higher yield per acre was attributed to increased plantings of hybrid seed. Heavy feeding operations throughout the past winter were not sufficient to liquidate stocks of old corn, for the July 1 carry-over on Ohio farms amounted to almost one-fourth of the 1938 crop. Farmers are planning to expand feeding operations this fall, for in Ohio the spring pig crop was THE MONTHLY BUSINESS REVIEW 14 percent larger than last year and nearly 20 percent above the ten-year average. The number of sows expected to farrow this fall is also 14 percent above last year, and it exceeds the ten-year average by nearly 30 percent. Oats Oats improved considerably during June, and on July 1 indicated yield per acre was only slightly below the ten-year average. Total production, however, was ex pected to be 30 percent below this average and 13 percent below last year. The straw was generally short. The July 1 carry-over on Ohio farms was lower than last year and the ten-year average. Fourth District BusinessIndexes (1923-25 = 100) June 1939 Bank debits (24 cities)............................................ Commercial Failures (N u m ber).......................... ” ” (Liabilities)....................... Sales— Life Insurance (O. and P a .)..................... ” — Department Stores (48 firms)................ ” — Wholesale Drugs (6 firms)..................... ” — ” Dry Goods (4 firms)............ ” — ” Groceries (59 firms)............ ” — ” Hardware (11 firms)............ ” — ” All (80 firms).......................... ” — 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..................................................... *M ay **Per individual unit operated. 81 43 21 75 82 100 45 75 81 72 89 85 119 65 79 187 126 I ll June 1938 June 1937 74 62 28 72 75 98 36 75 72 69 89 52 54 47 72 171 122 86 98 37 49 99 95 109 51 88 102 86 94 73 55 75 92 190 129 117 1tin t- 1936 90 38 18 93 84 96 48 75 88 74 89 43 45 1935 74 49 45 91 75 80 41 69 68 87 170 64 78 32 40 69 65 147 102 101 68 120 121 Wholesale and Retail Trade (1939 compared with 1938) Percentage Increase or Decrease SALES SALES ST O C K S lune first 6 June 1939 months D E P A R T M E N T STORES (53) 1939 + 16.1 + 0 .3 Akron...............................................................................+ 1 6 . 8 + 4 .2 — 4 .4 Cincinnati......................................................................+ 7 .7 + 5 .1 — 3 .8 Cleveland.......................................................................4 -1 1 .7 2. 2 + 7 .1 Columbus.......................................................................+ 7 .5 + 2 .4 — 7 .9 Pittsburgh................................................................. ....+ 5 .5 + 8 .4 — 3.5 Toledo......................................................................... ....+ 1 4 .1 + 0 .5 — 12.1 W heeling.................................................................... ....4* 6 .1 + 11.9 — 2 .5 Other Cities.......................... .................................. ....+ 1 5 . 9 + 5 .7 — 4 .6 District....................................................................... ....+ 9 .7 W E A R IN G A P P A R E L (13) — — 2.2 Cincinnati......................................................................— 4 .9 8.8 — 0 .7 Cleveland.......................................................................+ 9 .6 — 0 .3 — 4 .3 Pittsburgh................................................................. ....— 4 .4 + 4 .3 — 0 .5 District....................................................................... ....+ 3 .6 F U R N IT U R E (40) + 7 .0 Cincinnati.................................................................. ....+ 2 6 . 2 + 2 5 .4 Cleveland................................................................... ....+ 2 9 . 6 + 16.7 Columbus.................................................................. ....+ 2 6 . 0 + 7 .0 D ayton............................................................................+ 6 .7 Toledo......................................................................... ....+ 4 1 .5 + 29.1 Other Cities..................................................................+ 5 0 . 2 + 1 9.6 District....................................................................... ....+ 2 9 . 7 C H A IN ST O R E S* 1 Drugs— District ( 4 ) .............................................. ....+ 0 . 0 3 + 3 .7 Groceries— District (4 )............................................+ 5 .3 W HOLESALE T R A D E ** + 8 .3 — 1 1.6 Automotive Supplies ( 9 ) ................................... ....+ 1 2 . 4 1 0 .0 Beer ( 6 ) ..................................................................... ....+ 1 8 . 0 1 1 Clothing and Furnishings ( 4 ) ......................... ....+ 1 8 . 8 1 1 Coal ( 3 ) ..................................................................... ....— 4 5 .1 1 + 5 .9 Drugs and Drug Sundries ( 6 ) .............. ............... + 2 .0 + 10.7 — 0 .6 Dry Goods ( 4 ) ............................................................4 "2 3 .0 + 10 .4 — 8 .4 Electrical Goods (1 9 ).......................................... ....+ 4 9 . 4 1 + 6 .8 Fresh Fruits & Vegetables ( 7 ) ...........................— 1 .7 — 1 .7 — 2 .8 Groceries & Foods (exc. Farm Products) (59) + 0 .2 + 6 .5 + 4 .1 Total Hardware Group (4 0 )................................+ 1 5 . 7 + 2 .3 + 4 .6 General Hardware (1 1 )...................................... ....4 "1 2 .1 + 14.1 + 3.1 + 3 1 .5 Industrial Supplies (1 3 )................ .. .............. . + 1 1 .2 + 0 .6 Plumbing & Heating Supplies & Equip. (16) + 1 7 .3 + 1 .6 — 7 .1 jewelry ( 7 ) . . . . . . . ................ ..................................+ 2 4 . 0 1 + 1 5 .2 Lumber and Building Materials ( 4 ) .............. .... + 3 5 . 8 1 — 2 .8 Machinery, Equip. & Sup. ( 6 ) ..............................— 9 .7 1 + 10.3 Meats and Meat Products ( 4 ) ...........................+ 1.1 + 5 0 .7 — 0 .8 Metals ( 3 )........... ..................................................... ....+ 4 1 . 7 1 — 3 .2 Paints and Varnishes ( 6 ) ......................................— 13.1 + 1 0 .0 — 20.3 Paper and its Products ( 9 ) ............................. ....+ 1 1 .2 — 1 .9 — 4 .5 Tobacco and its Products ( 1 9 ) ..........................+ 2 .1 + 18.3 + 2 .0 Miscellaneous (1 5 ) ................................................ ....+ 1 5 .3 + 4 .2 — 1.3 District— All Lines (2 3 0 ).......................................4" 8 .9 *Per individual unit operated. **Wholesale data compiled by U. S. Department of C •minercc. 1 Not Available. + + 6.1 7 Tobacco In mid-July, tobacco was irregular in this dis trict. Some fields were exceptionally good while others re mained spotty from excess moisture in June. Nevertheless, on July 1, Government crop reporters expected this year’s production to exceed last year by nearly ten percent and to be only slightly below the ten-year average. The country as a whole is expected to grow 20 percent more tobacco than in 1938. Hay Although the amount of land devoted to hay was somewhat larger this year than last, less favorable grow ing conditions resulted in an estimated reduction of 15 percent in the amount of hay to be cut, but it was still approximately equal to the ten-year average. Fruit Fruit prospects continued favorable during June and the first three weeks of July, with most crops better than average and far better than last year. A record cherry crop was harvested, and indications are that peaches, pears, and apples will also approach record levels. Output of grapes in Ohio and Pennsylvania is expected to total 65,200 tons, compared with 25,500 tons last year and a ten-year average of 52,120 tons. Fourth District Business Statistics (000 omitted) June % change Fourth District Unless Jan.-Tune % chan*'’ Otherwise Specified 1939 1939 from 1938 from 1938 Bank Debits— 24 cities...................J ,197,000 + 9 .5 312,344,000 + 3 .4 Savings Deposits— end of month: 1 781,617 + 0 .5 Life Insurance Sales: Ohio and P a ..................................... + 5 .0 481,674 + 1 4.9 72,546 Retail Sales: + 5 .7 + 9 .7 Dept. Stores— 53 firms................. 20,633 119,208 WTearing Apparel— 13 firms. . . + 3 .6 + 4 .3 855 4,995 + 2 9 .7 Furniture— 40 firms....................... 859 4,710 + 1 9 .6 + 6 3 .8 Building Contracts— T o ta l........... 40,510 186,831 + 5 2 .5 ” ” — Residential. $ 20,396 + 1 1 7 .7 70,831 + 7 8 .2 — 3 6 .9 Commercial Failures— Liabilities.# 946 — 2 2 .6 7,542 632 — 3 0.8 ” ” — Number. . . — 1 4.4 4592 Production: + 9 9 .7 + 5 7 .9 Pig Iron— U. S......................... tons 2,119 12,521 + 9 1 .7 + 7 2 .7 Steel Ingot— U. S.....................tons 3,130 18,630 1,577,6992 Auto— Passenger Car— U. S......... 246,7042 + 8 0 . 7 + 6 8 .5 Auto— Trucks— U. S........................ 63,0162 + 6 5 .2 + 4 0 .6 375,8243 Bituminous Coal, O., W7. Pa., E. + 3 8 .2 11,700 56,456 K y ............................................ tons + 1 .9 2,8614 Cement— O., W. Pa., W . Va. bbls. 9503 + 9 .8 + 17.8 Elec. Power, O., Pa., Ky. thous. .................................................. k.w.h* 8.069* + 2 8 .0 1,568® + 9 .3 2,3353 + 3.5 10,5464 Petroleum— O., Pa., K y .. . bbls. — 6.1 5 + 9 .8 + 9 .6 S h o e s.......................................... pairs 4,837 + 5 9 .3 26,992 Tires, U. S............................casings + 5 0 .8 Bituminous Coal Shipments: 7,866 — 19.0 L. E. Ports.................................tons + 2 6 .0 5,135 Jan.-May 1 not available 2 actual number confiden tial 3 M ay $ $ .$ $ $ Debits to Individual Accounts Akron................ Butler................ Canton.............. Cincinnati. . . . Cleveland......... Columbus........ Erie.................... Franklin........... Greensburg. . . Ham ilton.......... H om estead.. . . Lexington......... M iddletow n.. . Oil C ity............ Pittsburgh. . . . Springfield....... Steubenville... Wheeling.......... Youngstown,. . . Zanesville......... 4 Weeks ended July 19, 1939 59,499 8,198 32,116 283,804 516,083 161,304 55,167 23,498 2,584 6,905 9,434 3,220 19,699 13,249 4,696 9,251 8,683 582,748 6,988 15,885 9,002 108,888 8,768 24,918 44,326 7,675 2,026,588 (thousands of Dollars) % Year to Date change Dec. 29, 1938 from to 1938 July 19, 1939 + 16 .7 426,510 + 9 .9 57,709 + 19.1 223,345 + 2 .9 2,067,236 + 1 5 .6 3,523,432 + 1 6 .1 1,116,705 — 3 .4 414,123 + 3 .0 170,670 + 10.1 17,860 — 1.5 43,540 + 2 .2 70,322 + 7 .0 20,438 + 4 .1 161,499 — 2 .8 85,982 + 6 .6 32,026 + 17 .9 66,600 + 5 .6 62,719 + 8 .5 3,995,269 — 0 .2 51,411 + 8 .3 112,721 + 1 2 .6 59,748 + 1 5 .8 760,923 + 2 0 .4 61,985 — 0 .8 192,654 + 2 7 .8 285,342 + 8 .4 53,172 + 1 0.4 14,133,941 Year to Date Dec. 30, 1937 to July 20, 1938 376,410 56,553 197,702 2,025,116 3,284,495 1,079,472 410,111 165,820 18,865 44,673 68,270 19,483 162,113 93,877 30,335 56,893 63,920 3,984,614 48,221 109,652 55,407 708,772 53,124 180,413 253,147 49,125 13,596,583 % change from 1938 + 13.3 + 2 .0 + 13.0 + 2.1 + 7 .3 + 3 .4 + 1 .0 + 2 .9 — 5 .3 — 2 .5 + 3 .0 + 4 .9 — 0 .4 — 8 .4 + 5 .6 + 17.1 — 1 .9 + 0 .3 + 6 .6 + 2 .8 + 7 .8 + 7 .4 + 1 6 .7 + 6 .8 + 1 2 .7 + 8 .2 + 4 .0 THE MONTHLY BUSINESS REVIEW 8 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, 1923-25 average = 100. By months, January 1934 to June 1939. Latest figure— 97. FACTORY EMPLOYMENT Index of number employed, adjusted for seasonal variation, 1923-25 average — 100. B y months, January 1934 to June, 1939. Latest figure— 91.5. FR E IG HT-CA R LOADINGS Index of total loadings of revenue freight, adjusted for seasonal variation, 1923-25 average = 100. By months, January 1934 to June 1939. Latest figure— 67. MEMBER BANKS IN 101 LEADING CITIES Wednesday figures for reporting member banks in 101 leading cities, September 5, 1934, to July 12, 1939. Commercial loans, which include industrial and agricultural loans, represent prior to May 19, 1937, socalled “ Other Loans” as then reported. Output of factories and mines increased in June reflecting chiefly sharp expansion at steel mills and bituminous coal mines. In the first half of July industrial activity was generally maintained. Production The Board’s seasonally adjusted index of industrial production ad vanced to 97 in June as compared with 92 in April and May. At steel mills output increased from a rate of 45 per cent of capacity in the third week of May to 54 at the end of June and to 56 in the third week of July. Automobile production, which had declined in May, showed some increase in June when a decline is customary. In the first three weeks of July automobile output was at a lower rate, reflect ing in part curtailment preparatory to the changeover to new models. Plate glass production rose considerably in June. Output of lumber, which usually shows some increase over May, was unchanged. Among nondurable goods industries woolen mills showed increased activity in June, and activity at cotton and silk mills was maintained though declines are usual at this season. Meatpacking was lower than in May. Mineral production increased considerably in June reflecting a sharp rise in output at bituminous coal mines which had been closed during April and the first half of May. Production of anthracite declined from May to June and there was some reduction in output o f petroleum. Value of construction contracts awarded declined in June, accord ing to F. W. Dodge Corporation figures, reflecting chiefly a greater than seasonal decrease in private residential building. Contracts awarded for public residential construction, principally for United States Housing Authority projects, were maintained at the advanced level reached in May, while public construction other than residential showed a small decline. Employment Factory employment and pay rolls increased somewhat from the middle of May to the middle of June according to reports from a num ber of important industrial States. There was a sharp expansion in employment at bituminous coal mines following the reopening of the mines in the middle of May, and the number employed on the railroads increased more than seasonally from May to June. Distribution Department store sales showed a less than seasonal decline from May to June and the Board’s adjusted index advanced from 85 to 86, which compares with a level of 88 during the first four months of the year. Sales at variety stores and by mail order houses showed little change. Freight-car loadings increased more than seasonally in June reflect ing a sharp rise in shipments of coal and smaller increases in ship ments of grain and miscellaneous freight. Commodity Prices Prices of hides, silk, steel scrap, copper, and some other industrial materials advanced from the middle of June to the third week of July, while some farm products, particularly grains, declined. Prices of most other commodities showed little change. Agriculture A total wheat crop of 716,655,000 bushels was indicated on the basis of July 1 conditions, according to the Department of Agriculture. This would be much smaller than last year’s large crop and somewhat be low the 1928-1937 average. Cotton acreage in cultivation was estimated to be about the same as last year but one-third less than the 10-year average. A record tobacco crop is indicated. Most other major crops are expected to approximate last year’s harvests and are generally larger than average. Bank Credit Total loans and investments of member banks in 101 leading cities continued to increase during the four weeks ending July 12, reflecting large* ly purchases of United States Government securities. Commercial loans, which had shown little change in recent months, increased slightly. De posits and reserves at these banks rose to new high levels in July, reflecting continued gold imports and Treasury disbursements from its balances at the Reserve banks. Money Rates Prices of United States Government securities, which had declined somewhat during June, recovered part of the loss in July. The longestterm Treasury bond outstanding showed a yield of 2.31 per cent on July 20, as compared with a record low of 2.26 on June 5. Open-market money rates showed little change.
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