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y Busin eview Covering financial, industrial and a g r i c u lt u r a l c o n d itio n s V ol. 25 Fou rth Federal Reserve D istrict Federal Reserve Bank of Cleveland Cleveland, Ohio, July 31, 1943 FINANCIAL On June 30 loans on the books of reporting member banks of this district stood at the lowest point in nearly three years. The slight improvement subsequently experienced, dur ing the first three weeks of July, can be accounted for exclusively by increased activity in inter-bank lending. Plus and minus signs in the other categories of bank loans were all of small proportions. Mortgagors continued to reduce their indebtedness on real estate loans; but, in contrast to the trend of recent months, new mortgage loans made during the five-week interval were more than sufficient to offset such liquidation. A slight flurry was observed in brokers loans around July 12 at which time buyers of the recent issue of Treas ury notes were required to remit the balance of the purchase price. “All other” loans, whose decline was not arrested now show the smallest unpaid balances since compilation of this series began in 1937. Notwithstanding the fact that total loans were barely able to hold their own as a result of these changes, mem ber banks’ earnings assets have moved into new high ground because of the acquisition of additional govern ment securities. In the absence of other influences de posits should likewise have risen by a comparable amount. Yet the only type of deposit liability to show a net gain for the five weeks ended July 21 was time deposits, whose continued growth is commented upon elsewhere. The Treasury, because of heavier expenditures, drew upon its war loan accounts, and demand deposits scarcely managed to hold even. Presumably the chief retarding influence to a growth in demand deposits was the withdrawals of currency by depositors for holiday and other uses. Member Bank Credit No. 7 of this contraction. Income tax checks received by the Collector of Internal Revenue were deposited at the Fed eral reserve bank in substantial volume during the sec ond half of June. These checks were drawn against com mercial banks and the process of clearance depleted mem ber bank reserves accordingly. That draft on member bank balances had hardly been effected when holiday demands for currency appeared, necessitating further withdrawals by member banks in the form of Federal Reserve notes and other currency and coin. The return of some of that cash plus net Treasury ex penditures enabled member banks in this district to re plenish their balances somewhat by July 21 when such balances stood at $1,016 million, as against the wartime low of $907 million established on December 30, 1942. Nearly a year ago it was announced that any member bank could sell, if the need arose, 91-day Treasury obligations to the Federal reserve bank with the reservation that subsequent ly a like amount of similar securities could be reacquired from the reserve bank at the same rate of discount. This innovation, which has come to be known as the repurchase option plan, was devised as a means where by member banks could keep their reserves more fully invested without impairing their liquidity. The extent to which member banks in this district, and throughout the Repurchase Option * TREASURY BILLS HELD UNDER OPTION FOURTH FEDERAL RESERVE BANK AND ALL FEDERAL RESERVE BANKS -------------------------- 17,000 FOURTH 01 STRICT Subsequent to June 16, and from a point not far from the 1943 high, reserve bal ances of member banks dropped sharply during the ensuing three weeks. The decline stopped just short of setting a new wartime low, on July 7. Thereafter a modest recovery held the net decline for the five-week period to approximately $100 millions. accounted for the greater part, if not all, Two factors Member Bank Reserves OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG 2 THE MONTHLY BUSINESS REVIEW System, have taken advantage of this facility is indicated on the accompanying chart. The red curve signifies the volume of such securities held under conditions of resale by the Federal Reserve Bank of Cleveland; the black curve represents the data for the System as a whole. The scale for the fourth district appears on the left side of the chart and is exactly one percent of the System scale which is shown on the right. On May 19 this bank held only two million dollars out of a national total of approximately $1,200 millions of Treasury bills held under such circumstances. Member banks in this district had substantial cash reserves, espe cially in relation to the rest of the country. By late June, however, conditions had begun to change somewhat with the result that by July 14 this Federal reserve bank held nearly $50 millions in Treasury bills subject to reacquisition by the selling banks. Although such holdings represented a record high in terms of dol lars, the ratio to the System total ($3,245 millions) was still substantially below December 9 when it stood at five percent. A similar proportion on July 21 would require option-account holdings of approximately $170 millions in this district as against an actual of $29,700,000. Preliminary reports indicate that during July net sales (after redemp tions) of War Savings Bonds dropped to the lowest monthly level for more than a year. Gross sales were moderately below July 1942, and the rate of redemptions was roughly five times the volume a year earlier, although the amount redeemable (outstanding) had only doubled within 12 months. These untoward trends are generally ascribed to the incidence of the withholding tax, which in the minds of many individuals presumably produced a psychological effect quite similar to a reduction in income, thus per haps leading to retrenchments of one kind or another. That the country should be well able to maintain war bond purchases at former high levels without difficulty, is suggested by the trend in savings deposits during the past year. If savings deposits had been steadily shrinking for some time, it logically might have been assumed that buyers of war bonds were paying for them out of both capital and income, and that sooner or later sales would decline as capital, or savings, approached rock bottom, be cause further purchases would have had to be paid for solely out of income. However the trend in savings deposits has been just the reverse. The accompanying chart depicts fluctuations in savings deposits of 39 representative banks in this dis trict, from August 31, 1939 to date. The data plotted are confined to the savings of individuals in the traditional sense, such items as corporate time deposits, certificates of deposits, Christmas savings clubs and other similar ac counts having been excluded. The outstanding characteristics of the curve are the modest growth during the good business years of 1940 and 1941, and the subsequent sharp drop during the first few months of our participation in the war. By April 30, 1942 savings deposits of these 39 sampled banks had re ceded to the September 1939 level. Most noteworthy, however, is the steep rise which set in soon thereafter, in the summer of 1942, and which has War Savings Bonds and Savings Deposits met no reversal of any kind since its inception. Not withstanding war loan drives, payroll deductions, higher taxes and the rising cost of living, by June 30, 1943 sav ings deposits of these 39 banks had risen to $112,000 for each $100,000 shown 14 months earlier. New Member Banks The Chardon Savings Bank Company, Chardon, Ohio The Lindsey Banking Company, Lindsey, Ohio Ownership of Demand Deposits Under date of March 31 a confidential survey was initiated among a small group of commercial banks of this district for the dual purpose of (1) ascertaining the relative growth— or decline— of various classifications of demand deposits* during the interval from December 31, 1941 to March 31, 1943, and (2) the relative magnitude of the deposits owned by the various types of depositors at the close of the period. The first inquiry was confined to “large” accounts only. A more representative survey is now under way. Consolidated returns of 19 cooperating banks are shown herewith. Demand deposits of these 19 banks constitute a 37 percent sample of the approximately four billion dollar demand deposits of all fourth district member banks. Table I shows the dollar changes which took place in “large” accounts during this period. It might be stated that eight out of the 19 banks reported as “large” ac counts only those with balances of $100,000 and over; the other eleven banks with minima ranging down as far as $5,000 per account. T A BLE I Dollar Increase (or Decrease) Dec. 31, ’41 to “Large" Accounts Mar. 31, ’43 Mfg., Mining & Construction $286,3 9 2 ,0 0 0 Public Util., Transp. & Comm. . 38,1 9 7 ,0 0 0 . 32,5 3 1 ,0 0 0 Retail & Wholesale Trade . 14,743,000 Trust Funds of Banks ................. All Other Non-Financial 8,192,000 8 ,004,000 Insurance Companies ................................ N'on-Piofit Assns.............................................. 6 ,368,000 All Other Financial 2 ,526,000 Investment Trusts 953,0 0 0 Security Dealers 7 5 ,000 Personal (In c. Farmers) ......................... (2 ,7 8 8 ,0 0 0 ) Total Net Increase— Large Accounts $395,1 9 3 ,0 0 0 All Smaller A ccou n ts................................... . $ 92,3 0 5 ,0 0 0 Total Net Increase—-All Accounts . . $487,4 9 8 ,0 0 0 % of Gross Increase All Accounts 58.5 7.7 6.6 3.0 1.7 1.7 1.3 .5 .2 .0 (decrease) 18.8 100.0 “ (N ote): The term “demand deposits” means only the demand de posits of individuals, corporations and partnerships, or in other words, Item 13 of the Call Report form. Total demand deposits of the 19 sampled banks inS A V IN G S DEPOSITS 39 SELECTED BANKS - FOURTH D IS T R IC T 950 < 900 n a. < i _i _i § 850 u. O Z 800 O 13 _i 2 750 700 1940 1941 1942 1943 1944 THE MONTHLY BUSINESS REVIEW creased (net) nearly $490 millions from roughly one billion to one and one-half billion dollars. The large Manufac turing, Mining, and Construction group alone accounted for nearly two-thirds of the entire increase. Dollar-wise the remaining ten classifications show unimpressive changes unless perhaps an exception should be made for the fact that the “large” personal accounts show an actual decrease of nearly three million dollars. Accounts with balances smaller than those included in the above compilation represented less than 19 percent of the total gain in deposits at these banks in the 15month period. These accounts comprise a wide variety of business, personal, and other accounts. The foregoing tabulation represents changes in dollars only. It does not reveal which type of “large” account grew the most rapidly in relation to the balances prevail ing at the end of 1941. Percentage-wise Retail and Wholesale Trade accounts made the greatest gain, showing a balance of $192,000 for each $100,000 as of December 31, 1941. Manufac turing, Mining and Construction firms showed a gain of 86 percent in cash balances in the same 15-month period. It would be hazardous to identify these substantial in creases in cash-on-hand as accumulated war profits. In the case of manufacturing companies the increased tempo of business has tied up larger sums in current assets, not to mention the earmarking of cash for tax purposes, re serves in anticipation of contract renegotiation, and de preciation reserves for post-war conversion and improve ments. In the case of retail and wholesale establishments the gain in cash can surely be attributed in large measure to liquidation of inventory and accounts receivable in con formity with government regulations. Smaller unclassified accounts expanded only 23 percent, which places them rather far down the list of percentage increases, notwithstanding the fact that this increment represented over ninety million dollars. With regard to the relative magnitude of the deposits owned by the various types of depositors at the close of the period, the proportional distribution of deposit owner ship in the case of these 19 banks is revealed in Table II. TABLE II “Large” Accounts March 3 1 ,1 9 4 3 Balances $6 1 9 ,2 0 3 ,0 0 0 Mfg., Mining & Construction 1 14,867,000 Public Util., Transp. & Comm. 68,048,000 Retail & Wholesale T r a d e .................... 48 ,326,000 All Other F in a n c ia l................................... Personal (Inc. F a r m e r s ) ......................... 46 ,565,000 Trust Funds of B a n k s ............................. 3 9 ,1 2 3 ,0 0 0 All Other N o n -F in a n cia l......................... 3 2 ,5 1 0 ,0 0 0 Insurance Companies .............................. 3 2 ,0 9 0 ,0 0 0 Non-Profit Assns........................................... 13,869,000 Investment Trusts ................................... 8 ,3 8 1 ,0 0 0 Security Dealers 2 ,9 6 6 ,0 0 0 Total— “Large” Accounts All Smaller A cco u n ts................................ Total Demand Deposits (1 9 banks) % of Total 40 .6 7.6 4.5 3.2 3.1 2.6 2.1 2.1 .9 .6 .2 $ 1 ,0 2 5 ,9 4 8 ,0 0 0 $ 4 9 4 ,6 0 3 ,0 0 0 32.5 $ 1 ,5 2 0 ,5 5 1 ,0 0 0 100.0 The “large” Manufacturing, Mining, and Construction accounts stand head-and-shoulders above all other single groups, exceeding even the collective smaller accounts. Thus, it is evident that any trend or development which might cause a change of as little as 5 percent, for example, in the balances carried by Manufacturing, Mining, and Construction companies would be of greater significance dollar-wise to the depository bank than a 20 or 30 percent fluctuation in other types of balances. 3 MANUFACTURING, MINING The armed services, Lend-Lease, and other essential users of steel products have re quested approximately 26 percent more steel tor use in the third quarter of this year than at present appears to be available for delivery. Since much of this extra demand is needed for vital munitions, planes, and ships, WPB officials are anxious to reduce this deficiency by adding at least two million tons to the third and fourth quarter supplies. To accomplish this, a three point “Steel for Victory” drive has been inaugurated. The program in volves (1) increasing production from existing facilities, (2) a “share the steel” campaign to provide better distribu tion of second-half production, and (3) a speed-up in the expansion of facilities now partially completed. Output of steel ingots during the first six months of 1943 set a new record of 43,867,000 net tons. This was three percent more than was produced during the first half of last year, but only 373,000 tons more than the output for the last six months of 1942. Production dur ing June was lower on a daily average basis than any previous month this year, as shortages of coal and coke affected operations. The work stoppages at coal mines had even more seri ous repercussions in the case of pig iron output. Only 4.836.000 tons were produced during June— a decline of seven percent from May. The low June figure reduced the total for the first half of the year to less than the output of the last six months of 1942. Several blast fur naces in the Pittsburgh area were banked during a large part of June as coke supplies were depleted, although some relief from the shortage was anticipated as miners gradually returned to work. The situation also was al leviated somewhat when the Solid Fuels Administrator issued an order diverting the output of active mines to steel producers from other regular customers in the Pitts burgh area. Consumption of scrap metal in open hearths was reported to have increased, reducing the amount of pig iron required in each melt. The production of steel plates, important to the ship building program, also declined in June, totaling only 1.056.000 net tons— five percent below May. The record monthly output was set in March when 1,168,000 tons were produced. The Maritime Commission, it is reported, will require more plates during the third and fourth quarters than was originally anticipated, while the Navy, due to its large inventories, will need approximately 30 percent less than was expected. Iron and Steel Production of bituminous coal was spotty during most of June and July. Conditions varied between mines as local unions were making their own decision about returning to work. Nearly all mines, however, were active by the middle of July, with those in western Penn sylvania being among the slowest to resume operations. This reduced the over-all fourth district production sharp ly. During June only 12,315,000 tons were mined, 35 per cent less than in May and 7,295,000 tons below the cor responding month of last year. Nevertheless, industry officials report that they can do much to regain the lost tonnage, now that all mines are operating 42 hours each week, whereas a year ago they were on a 35-hour sched ule. They point to the fact that even with three major work stoppages production for the first six months of this THE MONTHLY BUSINESS REVIEW Lake Shipping During the twelve months ended June 30, steel mills consumed 88 million tons of iron ore, while only 83 million tons of ore were shipped from upper lake ports. Inventories avail able for processing, therefore, have been depleted by five million tons, a reduction which will leave steel producers’ stocks on hand at a dangerously low level next winter unless the deficit is corrected during the re maining months of this season. Last year a record of 92 million tons of ore was shipped, while almost 50 million tons of coal were transported from lower lake ports. Ship ments this year have lagged sharply, ore cargoes through June being approximately nine million tons less than last year and coal loadings about four million tons below a year ago. Shipments of these commodities are shown in the two accompanying charts. The plotted data in each case are 12-month trailing totals, each monthly figure showing the total for the year ending on the final day of that month. IRON ORE TR a i l i n g t DTAL O ) O Jr C O U * ■ o H O Z 0 0 O 12 - 40NTH \ SHI PH ENTS O F CROSS TONS < < LAKE SHIPMENTS AND CONSUMPTION A O Other Machine tool builders continued to report Manufacturin" a decline in new orders during July and, as a consequence, with production hold* ing up, were reducing order backlogs. Unfilled orders for the industry as a whole were reported to be equivalent to about four months’ production at current levels, rather unevenly distributed. With the tooling phase of the war almost completed, machine tool builders now are turning to the output of other munitions for which their equip ment is suited. One fourth district concern is manu facturing airplane wheels, and is considering the pro duction of other aircraft parts. Another is making parts for Diesel engines, while many concerns are performing machining operations on a subcontract basis. Other manufacturers who are heavy consumers of steel report varying conditions in their industries depending upon their part in the war program. Foundries appear to be most severely affected by the labor shortage with production seriously curtailed in some cases. The labor situation at other concerns depends largely upon the pre vailing wage scale, their ability to obtain draft deferments, and the ease with which women can be used to replace lost manpower. Forge shops have been able, in general, to employ large numbers of women with considerable success. Fourth district ceramics and glass manufacturers re port a high level of production on both war and nonwar items. Manpower problems have been met by replacing male workers with women, individual firms reporting that as high as 42 percent of their employees now are women. Certain sections of the industry have felt a les sening of the supply of cartons for shipping purposes, but this has not affected production to any serious extent. Glass manufacturers, unlike the ceramics industry, are en gaged in war production for the most part, optical glass, safety glass, insulators, and foam glass being some of their more important products. Foam glass, a product which is lighter than water and can be cut with a saw, replaces cork in many uses. It also is used in life rafts because of its buoyant qualities. Almost all manufacturers of textiles and clothing are having increasing difficulty in obtaining competent help. Skilled workers are practically unobtainable and unskilled labor is becoming increasingly scarce. Reports concern ing the supply of materials are varied; some concerns, particularly those making work clothing, report consider able difficulty, while others have encountered little trouble. Dyes and chemicals, however, are quite scarce. There are no complaints about a lack of new business, out put being determined by the industry’s ability to produce rather than by the current demand for its product. Like manufacturers of other types of clothing, fourth district shoe producers report more business than they are able to handle with their present supply of labor and materials. As the preparation of leather takes about three months following slaughtering, shoe producers do not hope for much improvement in the supply of this raw material until the late months of the year. Production of Ohio manufacturers fell slightly between April and May, and was about 16 percent below last year. Paper and paper products production has been limited largely by the scarcity of labor at lumber camps and in paper and pulp mills. No improvement in this respect was reported during July, although orders for finished products continued at a high level. Adding to the nor mal demand have been large orders for paper to be em ployed in direct war uses and for packaging munitions for overseas shipments. An experiment is now under way in using war prisoners for logging operations, although it is still too early to know whether this will be of much assistance in alleviating the shortage of pulp. MILLIONS year was not much below the same period of 1942. This year fourth district mines produced 106,234,000 tons prior to July 1, whereas a year ago they had mined 110,949,000 tons by that date. Stocks of coal held by industrial consumers and re tailers ordinarily increase sharply during the months of May and June. During May of last year, stocks rose 5,600,000 tons, whereas during the same month this year such inventories increased only 800,000 tons. Preliminary reports would indicate that much the same situation was true in June. On June 1 retailers and industrial con sumers had 79,505,000 tons on hand, or approximately 54 days’ supply. Coke production fell sharply during the weeks of the work stoppages, with beehive ovens reporting the larg est declines in production. During the four weeks ended July 10, beehive ovens in Pennsylvania, nearly all of which are located in the fourth district, produced 33 percent less than during the corresponding weeks of 1942. It was the shortage of coke which necessitated the closing of several blast furnaces in the Pittsburgh area. l\) O 4 1938 1940 1942 1944 THE MONTHLY BUSINESS REVIEW In this way the sharp seasonal fluctuations, typical of lake transportation, have largely been eliminated. The chart depicting iron ore shipments also shows ore consumption, the relationship between the two curves indicating how closely shipments, in general, have been geared to the demand for ore. The seriousness of the current situation is shown by the sharp decline during the 1943 season— the first continued decline since 1938 and the first time since 1939 that the line representing consumption has exceeded shipments by any material amount. Coal and ore shipments followed approximately the same pattern during the 1937-1940 period. This would be expected, as ordinarily the same vessels that carry ore down .the lakes return to. the upper lake ports with coal. The only major interruptions in this procedure, prior to 1942, came in 1939 and 1941 when work stoppages in the coal mines during the early part of the year prevented loading fuel cargoes for the return trip. During the 1939-41 period expanded shipments were made possible by placing additional vessels in these services, the num ber in the ore trade more than doubling between May 1939 and November 1941. Last year, however, emphasis shifted strongly in favor of ore shipments, as the demand for steel continued to mount. In order to ship more ore, therefore, many vessels abandoned the practice of waiting to load coal at Lake Erie ports and returned to the ore ports light. This, along with favorable weather, permit ted record shipments of ore, but resulted in a sharp de cline in loadings of coal. Unfavorable weather has been the major factor in cur tailing ore shipments this year. The season started more than a month later than in 1942, and ice, storms, and fog made the trips hazardous and slow. Coal shipments, in addition, have been lessened by the continued emphasis on bringing ore down the lakes and by work stoppages at the coal mines. Given favorable weather, however, shippers may be able to do much towards erasing the deficit in ore shipments. Several new Maritime Commis sion vessels have been commissioned and others are sched uled for completion soon. The opening of the new MacArthur lock in July permits heavier loading of the larger ships and prevents delays due to congestion at the Soo. It will be extremely difficult, however, for shippers to attain the 91 million-ton goal set for this season. To ac complish the feat would require handling more than 14 million tons a month during August and September— a larger tonnage than has been shipped in any previous month. In addition, mild weather would be necessary, allowing the extension of the season into late autumn. 5 Shipments during the first two weeks of July were ahead of last year, indicating that some of the deficit will be erased, but they were considerably short of the tonnage needed if the season’s present goal is to be reached. TRADE Fourth district department store sales during the first half of 1943 were up ten percent from those of the same six months a year ago and were the largest for any similar period on record. Stores in all principal cities of the district reported year-to-year gains, ranging from three percent in Pittsburgh to 33 percent in Spring field. Buying during these six months was dominated by large purchases of clothing, especially women’s wear. Accessories departments sold 26 percent more merchan dise this year than last, and sales of women’s and misses’ clothing were up 33 percent. Departments selling men’s and boys’ wear reported an increase of three percent in their business. In contrast to these gains, sales of house furnishings during the first half of this year were seven percent smaller than they had been during the same months of 1942. Reduced stocks of many articles for the home, especially major appliances, were chiefly respon sible for this decline. Stores reported that such items were usually more difficult to obtain than most clothing and textiles. The smaller sales of house furnishings this year than last contributed to a decrease in instalment business, as shown on the accompanying chart. Instalment sales dur ing the six months ended June 30, 1943, were down 28 percent from those of the corresponding period a year ago. The seasonally adjusted index for June dropped to 88 percent of the 1935-39 daily average. This repre sents a decrease of 61 percent from the peak of August, 1941. Regular 30-day charge sales made during the first half of this year showed little change from the 1942 level, while cash sales were up 34 percent. Many consumers, having more money than formerly, paid for their mer chandise at the time they purchased it. Restrictions placed on charge account sales by an amendment to Regulation W last year also contributed to the increased importance in cash transactions. Credit business during June 1943 accounted for 48 per cent of total sales at 49 reporting stores in this district, compared with 52 percent in June of last year and 61 percent two years ago. During the first six months of this year charge sales were nearly one-half of the total dollar volume as against 57 percent for the same period of the previous year. Retail 6 THE MONTHLY BUSINESS REVIEW The daily average of total June sales at 97 fourth dis trict department stores declined less than seasonally from that of the previous month and the adjusted index ad vanced nine points to 161 percent of the 1935-39 aver age, an increase of 20 percent from last year. Heavy purchases of shoes as a result of the expiration of the first shoe ration coupon on June 15 stimulated business in other departments. Retailers sold 58 percent more wom en’s and children’s shoes in June this year than last and 50 percent more men’s footwear. The gain of only 14 percent reported for basement shoe departments indicates that apparently consumers bought higher-priced merchan dise than they did before shoe rationing became effective. The year-to-year gains that stores reported for the first half of this year carried over into July. During the three weeks ended July 17 sales were 16 percent greater than those of the corresponding period a year ago. Post holiday buying this year was unusually heavy. Stores continued to make commitments for a large amount of goods during June, and at month-end the vol ume of outstanding orders was up 19 percent from that of the previous month and 207 percent greater than it had been the same date last year. During June stores received almost as much merchandise as they sold. Inven tories were reduced only one percent during the month. This decline was less than usual, and the seasonally ad justed stocks index rose from 133 percent to 144 percent of the 1935-39 average. Wholesale j f te Department of Commerce reports that June sales at 185 wholesale firms in the fourth district were seven percent larger than those of the same month last year. Drug sales were up 31 percent, dry goods 28 percent, fresh fruits and vegetables 25 per cent, groceries 22 percent, and hardware 2 percent. Yearto-year declines were reported by firms selling furniture, electrical goods, paints, and meats. During the first six months of this year sales were down one percent from the same period of 1942. Wholesalers’ inventories were reduced slightly during June and at month-end were 18 percent smaller than they had been on June 30, 1942. come nor net farm income. For the last several years increases in prices paid by farmers for commodities, in terest, and taxes have lagged considerably behind cash income increases. This situation indicates that in addi tion to having more dollars, the dollars which the farmer has received have had greater purchasing power. In looking ahead at possible farm income developments it should be recalled also that income is a resultant of both price and quantity of products produced. The present high farm income level is a consequence of an unusual condi tion of large quantities and high prices. Current fore casts of relatively smaller crop production this year and a consequent depressing effect on livestock production suggests the possibility of lower cash farm incomes, al though it is conceivable that price increases could more than offset the effect of smaller quantities. CONSTRUCTION New construction initiated in the fourth district during recent months has consisted largely of housing projects, public works, and utilities. Expansion of factory build ings, which a year ago included the major part of all new construction, has now become of minor importance. All types of construction in June, however, were substantially below the level of a year ago when new contract awards, as reported by the F. W. Dodge Corporation totaled $107 millions in the fourth district, compared with only $23.5 milions this year. Residential buildings accounted for 29 percent of the total for June of this year. The declining trend in new construction of all types is shown in the table below: Jan.-June, July-Dee., Jan.-June, July-Dee., Jan.-June, Cash income from farm marketings in the fourth district States during the first five months of 1943 was more than double the average of these months for the five-year period, 1937-41. By States, the percentage increases over the 1937-41 period were: Ohio — 116; Kentucky— 119; Pennsylvania—81; West Virginia — 121 (see chart). Total estimated cash income in the four States amounted to $473 million for the first third of this year (detailed data not yet available for May). The sale of livestock and livestock products accounted for $326 million, or 69 per cent of this total, and crop sales accounted for the remain ing $147 million, or 31 percent. This division of total cash income between sources (livestock and crops) is al most the same as it was during the 1937-41 period, in dicating that livestock and crop incomes have made about equal relative advances. In analyzing cash farm income data it is important to bear in mind that they represent neither gross farm in Total $245 281 324 368 142 From these figures it is evident that the expansion of AGRICULTURE Farm Income Construction Contracts Awarded— Fourth District F . W . Dodge Corporation (in millions) Nonresidential Residential 1 9 4 1 ............................ $142 $103 1941 ......................... 146 135 1 9 4 2 ............................ 217 107 1 9 4 2 ............................ 315 53 1 9 4 3 ............................ 92 50 7 THE MONTHLY BUSINESS REVIEW war facilities reached its highest level during the second half of 1942, when $315 millions of new nonresidential construction was initiated, and has since declined sharply. The contraction in residential building, however, began much earlier, as Governmental restrictions limited all such building to Defense Housing projects. The Federal Government has continued to be the ma jor owner of the new facilities. Although privatelyfinanced construction accounts for a slightly larger pro portion of the total than formerly, such building in June was only 24 percent of all new contracts awarded. Resi dential building was the only category in which private financing exceeded public, 55 percent of such construc tion being financed with private funds. Fourth District Business Statistics ( 0 0 0 om itted) F o u rt h District Unless Ju n e % change J a n . -J u n e 1943 Otherwise Specified 1943 from 1942 B an k D e b it s - 2 4 c iti es ...................? 4 , 4 8 9 , 0 0 0 +18 $ 2 4 , 8 3 4 ,0 0 0 Savings Deposits— end of mon th : 39 banks O. and W. P a .............$ 8 6 4 , 1 8 9 +12 Life Insurance Sales: Ohio and P a ....................................? 83,867 +25 49 1 , 9 3 8 Retail Sales: 218,338 3 8 ,0 2 4 +20 Dept. Stores— 9 7 firms ............. $ 9.7 91 Wea rin g Apparel— 16 f i r m s . . ? 1,595 +38 17,394 3, 12 4 Furniture— 81 firms........................ + 19 — 79 1 4 1, 6 82 Building C o n tr a c t s — T o t a l . . . . $ 23,542 — 74 49,542 ” ” — Residential? 6,840 — 75 1,645 135 Commercial Failures— Liabilities? 109a 7a — 82 ” _ ” — Number. Pro du cti on: 7, 02 7 2 1 ,9 4 7 Steel Ing ot — -U. S.......... N e t tons - 0Bituminous Coal, O., W . Pa ., 106 ,2 3 4 F.. K y .................................... N et tons 112,31 5 2, 31 5 — 37 C e m en t— 0 . , W . Pa . , W . Va. 4,806c .......................................................bbls. 1,059b — 31 Elec. Power, O., Pa . , K y. 13, 77 3 c .............................Th ou s. k.w.h. 2, 7 5 9 b +12 11, 865 c Pet roleum— O., Pa ., K y . . .bbls. 2 , 2 85 b + 5 d Shoes ....................................... pairs d — 16 Bituminous Coal Shipments: L. E . P o r t s .....................N e t tons 4,597 — 22 14 ,7 17 a Actual numb er c January-M ay b May d Confidential % change from 1942 + 18 +10 +28 — 3 — 59 — 55 — 53 — 61 + 2 — 14 + 13 +11 — 16 — 22 Fourth District Business Indexes (1935-39 = Ban k debits ( 24 c it i e s ) ................................. Commercial Failures ( ( N u m b e r ) . . . . ” ” (L ia b il i ti e s ). .. Sales— Life In surance (O. and P a . ) . . . ” — D ep a r tm e n t Stores (9 7 f irm s) . ” — Wholesale Drugs (6 firms). D ry Goods (5 fir m s ) . ” — ” Groceries (3 8 firms). ” — ” H ar d wa re ( 34 firms) ” — ” All (83 firms)............... ” — Chain Drugs (5 f ir m s ) * ..................... ” — ” Groceries (4 f irm s) ..................... Building Co n tr a c t s ( T o t a l ) .................................... ” ” ( Re si de nt ial )....................... Pr odu cti on— Coal (O., W. Pa ., E . K y . ) . . . . — C em en t (O., W Pa . , E . K y . ) * * ” — Elec. Powe r (O., Pa ., K y . ) * * . . ” — Petro leu m (O., Pa . , K y . ) * * . . . ” — S h o e s * * .................................................. * P e r individual unit operated. ** May a N o t available June 1943 20 2 10 9 99 154 162 179 152 233 179 165 151 97 “ 88 98 128 181 103 82 June 1942 171 56 37 79 128 124 140 124 229 154 143 141 469 336 156 187 162 98 106 Ju n e 1941 147 61 24 101 129 110 117 113 18 0 132 123 121 211 281 140 171 144 95 105 J une 19 4 0 110 62 60 92 114 97 93 103 125 106 114 111 152 246 109 153 119 104 75 Ju n e 1939 99 94 65 86 97 100 92 102 104 99 97 96 166 26 4 93 142 103 106 87 Wholesale and Retail Trade ( 19 43 co m par ed with 1942) Pe rc ent age Increase or Decrease SALES SALES STOCKS Ju n e first 6 J une 1943 months 1943 D E P A R T M E N T S T O R E S (97) A k r o n .............................................................................. +29 +21 — 18 C a n t o n ............................................................................ +27 +16 a C in ci nna ti ..................................................................... +21 +12 — 36 Cl eve la nd ...................................................................... +20 + 6 — 37 Co lu m b u s ...................................................................... +37 +30 — 14 E r i e ................................................................................... +16 +13 — 22 P i t t s b u r g h .................................................................... +10 + 3 — 42 Springfield.................................................................... +33 +33 a T o le d o ............................................................................. +27 +16 — 19 W hee lin g....................................................................... +25 + 9 — 34 Y o u n g s to w n ................................................................ +30 +15 a Other Ci ti e s................................................................ +16 + 5 — 24 D is t r ic t ........................................................................... +20 +10 — 34 W E A R I N G A P P A R E L (16) C a n t o n ........................................................................... +38 +31 + 2 Ci nci nn at i..................................................................... +31 +19 — 30 Cleve lan d...................................................................... +36 +21 — 4 P i tt s b u r g h .................................................................... +48 +28 — 18 Other Cit ies................................................................ +40 +42 — 1 D is tr ic t........................................................................... +38 +28 — 10 F U R N I T U R E (81) C a n t o n ................................................................................ +22 — 2 -—39 Cincinnati..................................................................... +12 + 1 — 33 Clev elan d...................................................................... +20 — 1 — 31 Co lum bu s..................................................................... +29 +13 — 21 D a y t o n ........................................................................... — 8 — 16 — 36 P i tt s b u r g h .................................................................... +18 — 14 — 30 T o le d o ............................................................................. +44 + 6 — 30 Other Cit ies................................................................ +19 + 1 — 34 D is tr ic t........................................................................... +19 — 3 — 31 CH A IN STO R ES* Drugs— District ( 5 ) ............................................... +16 +17 a Groceries— District ( 4 ) ........................................ +16 +15 a W HOLESALE TR A D E** Automo tive Supplies ( 1 0 ) ................................ + 2 — 8 — 35 Bee r ( 4 ) ..................... ................................................... +24 +32 — 35 +93 +54 a Clothing and Furnishings ( 4 ) .......................... Confectionery ( 4 ) .................................................... +49 +21 — 61 Drugs and Drug Sundries ( 6 ) .......................... +31 +20 + 2 D ry Goods ( 5 ) ......................................................... +28 +10 — 38 Electrical Goods ( 1 5 ) .......................................... — 33 — 40 — 49 Fresh Fruits and Vegetables ( 6 ) ................ +25 +23 +10 Furnit ure & House Furnishings ( 5 ) ............. -— 32 a a G ro ce ry Group ( 3 8 ) ............................................. +22 +11 — 4 To ta l Ha rdw ar e Group ( 3 4 ) .......................... + 2 — 9 — 38 — 3 — 16 — 41 General Hard war e ( 1 1 ) ................................. Industrial Supplies ( 1 2 ) ................................ + 1 — 1 — 14 Pl umbing & He ating Supplies ( 1 1 ) . . . . +15 -— 8 — 44 Je we lr y ( 4 ) .................................................................. — 15 a a Mac hi ner y, Equip. & Sup. (exc. El ec t.) (3) — 51 — 9 a M e at s and M e a t P ro du cts ( 6 ) ....................... — 5 -0— 29 Met als ( 3 ) ................................................................... +12 a a Paints and Varnishes ( 3 ) .................................... — 5 — 19 a Pa p e r and its Produ cts ( 6 ) ................................ + 8 — 23 a To b a c co and its P ro du cts ( 1 6 ) ........................ +10 + 8 —0 Miscellaneous ( 1 3 ) .................................................. + 8 — 1 + 3 Dist rict— All Wholesale T r a d e ( 1 8 5 ) . . . . + 7 — 1 — 18 * Pe r individual unit operated. * * Wholesale da ta compiled by U . S. D e pa r tm en t of Commerce, Bureau of the Census. a N o t available. Figures in parentheses indicate numb er of firms reporting sales. Debits to Individual Accounts Ci nc in na ti ......... Clev ela nd .......... C o lu m bu s .......... Coving - New- D epartm ent Store Sales and Stocks Daily Av er age for 1 9 3 5 - 1 9 3 9 = 1 0 0 W i th o u t Adjusted for Seasonal A dj u stm e nt Seasonal Variation Ju n e M ay June June May J une 1943 1943 1942 1943 1943 1942 SALES: Akron ( 6 ) .............................. 18 7 189 Ca n to n ( 5 ) ............................ 216 205 Cincinnati ( 9 ) ..................... 154 153 Cleveland ( 1 0 ) ................... 151 151 Columbus ( 5 ) ........................ 173 164 E ri e ( 3 ) ................................... 171 172 Pi tts bur gh ( 8 ) .................... 139 142 Springfield ( 3 ) .................... 204 20 2 Toled o ( 6 ) ............................. 155 155 Wheeling ( 6 ) ........................ 124 12 9 Y o un gs to w n ( 3 ) ................ 16 0 162 D ist ric t ( 9 7 ) ........................ 154 154 STOCKSDistrict ( 5 1 ) ........................ 134 135 ♦Revised Figures in parentheses indicate number of 143 170 127 12 6 127 147 126 153 122 1 00 123 128 194 229 168 161 188 184 134 20 0 165 14 0 167 161 191 209 140 157 161 17 6 129 184 15 0 118 153 152 149 180 139 134 138 158 121 150 130 114 128 134 201* 144 133 217* firms reporting. G ree n sb ur g. . . . H a m i l t o n ........... Hom est ea d. . . . L e x i n g t o n .......... Mansfield........... M idd le tow n. . . P i tt s b u r g h . . . . P o r t s m o u th . . . Springfield. . . . Steubenville. . . To led o.................. Y o u n g s t o w n . .. Zanesville........... J une 1943 1 7 8, 3 80 1 4 ,4 57 75,550 579,262 1 ,2 0 9 ,0 5 9 2 7 5 ,4 9 1 23,078 144,553 62,200 5, 341 11,188 1 9, 272 4, 83 9 26,2 25 22,938 7,295 1 8, 17 6 21,341 15 ,880 1,38 7,2 76 10,617 15 ,460 32,667 12 ,6 46 2 31,4 15 24 ,4 72 40,716 84,121 14 ,0 69 4 , 5 6 7 ,9 8 4 (Thousa nd s of Dollars) Jan.-June % change from 1942 1943 991,796 + 3 6 .7 82 , 7 0 0 + 6.2 + 5.8 427,028 3 , 4 0 2 ,4 5 2 + 14.3 6 , 5 8 5 ,2 8 5 + 18.8 1 , 6 8 1, 2 2 4 + 16.4 + 4 .8 + 2 2 .2 + 2 2 .7 + 10.4 — 1.3 + 8.2 — 3.2 + 3.9 + 7.2 + 7.0 + 6.7 + 2.5 + 11.8 + 2 0 .7 + 4 .6 + 11.5 + 2 2 .8 + 5.8 + 12.8 + 18.8 + 19.6 + 10.6 + 7.2 + 17.9 J a n . -J u n e 1942 687,889 7 9 ,2 17 3 6 9, 7 17 2,9 5 6 ,4 6 5 5, 507 ,76 3 1,43 2,24 3 % change from 1942 + 4 4 .2 + 4.4 + 15.5 + 15.1 + 19.6 + 17.4 820 ,6 6 5 343,796 29, 695 61,220 117,8 32 26,50 1 20 9 ,7 2 2 1 40 ,7 96 40, 371 64 8 ,5 8 3 2 7 8 ,6 5 7 2 8 ,0 54 63,310 104,931 2 8 ,1 0 0 16 8, 07 0 1 21 ,6 20 40,921 +26! 5 + 2 3 .4 + 5.8 — 3.3 + 12.3 — 5.7 + 2 4 .8 + 15.8 — 1.3 1 1 7, 58 8 93 , 7 4 7 7, 19 8 ,7 3 9 11 2,37 2 80,666 6 , 1 9 0 ,1 3 9 + 4.6 + 16.2 + 1 6 .3 86,4 85 1 8 1, 89 6 74,741 1,354,153 140,683 226,624 470,968 75 , 1 5 0 2 4 , 9 8 1 ,8 5 7 81,383 146,665 6 9, 9 2 8 1 ,1 49 ,87 8 111,495 18 8, 87 0 42 5 , 1 1 2 67 , 5 3 7 21, 1 3 9 ,5 8 5 + 6^3 + 2 4 .0 + 6 .9 + 1 7 .8 + 2 6 .2 + 2 0 .0 + 10.8 + 11.3 + 18.2 THE MONTHLY BUSINESS REVIEW 8 Summary of National Business Conditions By the Board of Governors of the Federal Reserve System INDUSTRIAL PRODUCTION Manufacturing activity was maintained at a high level in June while mineral production declined reflecting mainly reduced output of coal. In the early part of July coal production was resumed in large volume. The value of retail trade continued large. Industrial production The Board’s seasonally adjusted index of total industrial production declined slightly in June from the high level of other recent months. Activity continued to increase at plants producing war products in the chemical, rubber, and transporta tion equipment industries. These increases were more than offset by a sharp drop in coal production and a temporary reduction in output of coke, pig iron, and steel. Finished aircraft production, in terms of airframe weight, was 3 per cent higher in June than in May. Delivery of supplies for the Army ground forces rose 1 per cent over May. Tonnage of cargo vessels delivered from merchant shipyards was not up to the record May level; it was, however, higher than in any other month. In industries manufacturing nondurable goods output as a whole showed little change from May to June. Activity at cotton mills declined— consumption of 917,000 bales of cotton was 50,000 less than in June 1942. Output at coal mines in June was 30 per cent below May due to the work stop pages, but early in July both anthracite and bituminous coal production recovered to above the levels prevailing a year ago. Crude petroleum production was main tained in June and moved upward in July partly in anticipation of the completion of the pipeline from Texas to the East Coast. Lake shipments of iron ore in June were 6 per cent below the same month last year due to unfavorable weather conditions. The volume of construction contracts awarded in June was about the same as in May. The value of awards in June was at the lowest level for this month since 1936, according to the F. W. D odge Corporation. Federal Reserve indexes. Groups are ex pressed in terms of points in the total in dex. Monthly figures, latest shown are for June 1943. CONSTRUCTION CONTRACTS AWARDED Distribution Value of consumer nondurable goods sold at retail was in near-record volume in June and the early part of July, while sales of durable goods, many of which are becoming increasingly scarce, were generally below previous peak levels. Car loadings of revenue freight declined in June, reflecting the drop in coal shipments. Loadings of grain showed the usual increase at this season and the movement of most other commodities was maintained in large volume. F . W . Dodge data for 37 Eastern states, total includes state and local government and private nonresidential building not shown separately. Monthly figures, latest shown are for June 1943. MEMBER BANK RESERVES AND RELATED ITEMS Commodity prices Wholesale prices of most commodities showed little change in the early part of July, following a decline during June of one per cent in the general index. This decline reflected chiefly reductions ordered in maximum prices of butter and meat and seasonal decreases in prices of fresh fruits and vegetables. Agriculture Aggregate crop production this year is expected to be 10 per cent smaller than last year but five per cent above the average of the preceding five years, according to the July 1 official report. Of the major crops, production prospects for grains are the lowest compared with last season, while there are indications of considerably larger harvests for dry beans and peas, flaxseed, and potatoes. Output of livestock products has continued in larger volume than a year ago. July 14, 1943 MEMBER BANK RESERVES Bank credit *'*v / v vA ‘ - 1/ \ ' w- - P v ’- * V R U EQ IRE RESERVES, 1 XCESS RESERVE - s ** A. Breakdown between required and excess Digitized for reserve partly estimated. Wednesday fig FRASER ures, latest shown are for July 14, 1943. ^ During June and the first three weeks of July there was an increase of about 1.4 billion dollars in Reserve Bank holdings of United States Government securities. Continued currency outflow, and increase in required reserves due to the growth of deposits, were reflected in the increased demand for Reserve Bank credit. The expansion in Reserve Bank credit was in the form of Treasury bills sold by mem ber banks to the Federal Reserve Banks under options to repurchase. Holdings of bills showed wide fluctuations during the period as member banks adjusted their reserve positions through sales and repurchases. A large part of the Treasury bills came from New York City banks where excess reserves continued to be low. Total loans and investments of New York City banks have declined recently. Other re porting member banks have shown a continued growth in deposits and U. S. Govern ment securities. The quarterly report of customer rates at commercial banks for the middle of June showed a further rise in rates charged on loans by large banks throughout the country.
@FedFRASER