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MONTHLY BUSINESS REVIEW Fourth Federal Reserve District Federal Reserve Bank of Cleveland V o l. 2 3 C le v e la n d O h io , June 3 0 , 1 9 4 1 Industrial activity in this district moved rapidly into new high territory in May. It continued to expand during the first half of June, but at a more moderate rate than in earlier months partly because it is difficult to expand from the recent high rates of close to capacity in most fields, and because certain nondefense lines are finding it necessary to curtail operations. New orders continue to be received by most lines at a rate in excess of increased capacity, with an expanded volume of orders for metal goods carrying prefer ence ratings offsetting a falling-off in the number of nonde fense orders which are being accepted by manufacturing con cerns. Despite the fact that some shifting is occurring and that total operations and deliveries increased to new high levels, unfilled orders, according to reports in various fields, advanced to record peaks in May. Activity in many fields is governed by ability or inability to obtain materials. How much the situation is ag gravated by the adoption of what would be considered very unsound purchasing policies under more normal con ditions on the part of some is unknown. There are cases reported where concerns, in an effort to acquire more ma terials, place orders with two or three suppliers, and state that failure to obtain merchandise would result in shut downs. Continuation of operations after an order is re fused indicates either effective substitution or larger than reported stocks of the materials that were being sought. With all developments pointing to a rapid shifting from nondefense to defense activity, there has been consider able ordering of items, the supply of which is likely to be sharply reduced. Increased employment and payrolls and expanding use of installment credit have contributed to this trend. Producers of such goods have followed a quite natural course of manufacturing all they can against the time when their production may be curtailed. Many new automobiles that otherwise would not have been bought have been purchased this year because of the general feeling that prices and taxes would be higher, or that cars would not be available at some future time. Potential car mileage in used cars, stocks of which are at record levels, as well as in new cars, is thus being accumulated. Simi lar situations are evident in other lines such as tires and household equipment. Outstanding orders of department stores in this area were 137 percent larger on May 31 than a year previous, despite the fact that stocks are greater than at any other time in more than two years. No. 6 Manufacturers in the Pittsburgh area reported unfilled orders more than three times as large as those of a year ago, even though concerns had nearly doubled the rate of deliveries in the same period. Raw material inventories of these companies at the end of May were 50 percent larger than those of a year earlier. Employment rose to new high levels in this area again in May, with the largest gains in the metalworking indus tries. Labor shortages are mentioned generally and in six teen separate employment classifications not a single ap plicant was available at State employment offices. Increased industrial employment is working a distinct hardship in farm communities adjacent to large cities. The gain in payrolls in May over the previous month was more than twice as large as the increase in the number employed in this area, reflecting general wage increases at many plants. FINANCIAL Member Bank Loans made by weekly reporting memCredit ber banks in leading cities of this dis trict continued to increase in the four weeks ended June 18, thus maintaining the upward trend that has been evident in every week but one since Novem ber last year. The gain in the period under review was slightly larger than in the previous four-week interval, and since the beginning of the year commercial, industrial, and agricultural loans have risen $77,000,000, or 23 percent. There has been a somewhat sharper increase in loans of this type in the fourth district than in the country as a whole. In part this reflects the extent to which defense activity has affected all phases of economic life. Concerns having used cash balances to accumulate larger inventories, pay for goods in process of production, and other operat ing costs, are again finding it necessary to resort to banks for working capital loans. Compared with a year ago, com mercial loans in this area are up 46 percent, which com pares with an increase of 32 percent in the entire country. Other kinds of loans were down slightly between midMay and June 18, but were still well above the level at the beginning of the year. Investments in direct Government and guaranteed securities, however, rose quite sharply to new high levels in early June. The increase so far this year—eleven percent—was much smaller than the gain in loans during the same period. Loans have again resumed their place as creators of de posits. So far this year, total deposits at member banks 2 THE MONTHLY 111 this district have increased more than $200,000,000, or seven percent, to new high levels with practically all of the increase in demand deposits. Time deposits, except for week-to-week fluctuations, have shown no change so far this year. Interbank and Government deposits, although showing little change recently, are somewhat above the low levels touched in February. As deposits have risen, reserves that banks are required to maintain against them have increased. While total re serves which member banks have on deposit with this bank were at record high levels in the last half of May, the latest period for which data are available, excess reserves have been reduced from 131 percent of requirements in February to 117 percent in May. The excess of reserve city banks dropped from 141 to 123 percent, while at country banks the contraction was from 99 to 92 percent. Deposits at banks in larger cities have increased relatively more than at coun try banks. Greater demand for currency wras a factor tend ing to keep excess reserves from expanding. Interest Data received from twelve leading banks Rates in Cleveland, Pittsburgh, and Cincin nati regarding rates of interest charged on loans made to commercial and industrial concerns in dicate that relatively fewer new loans, both in number and amount, were made at extremely low rates of interest in the first half of June than in either March or Decem ber. On a dollar basis more than half the volume of loans in the period under review carried a rate of less than three percent. More than half the number of loans made, however, were at a rate of six percent or higher. Defense Sales of Series E defense savings bonds Bonds in the first 25 days of June in this dis trict amounted to $3,951,000 (issue price). The daily average rate was somewhat greater than in May when a total of $4,220,000 of Series E bonds were sold. Sales of Series F and G bonds combined in the same period of June amounted to $9,866,000, compared with $21,129,000 in the month of May. Since Series F and G bonds may be purchased by corporations, trusts, and large investors (except banks), it was natural for them to use uninvested funds to purchase such bonds in rather large amounts when they were first offered. A continuation of that rate, however, was not to be expected. Combined sales of defense bonds by banks in this district and the reserve bank and branches up to June 25 amounted to more than $39,000,000. Reserve Bank There was practically no change in toCredit tal credit extended bv the Federal Re serve Bank of Cleveland in the four weeks ended June 18. Bills discounted for member banks declined slightly, but advances to industrial concerns in creased by about the- same amount and holdings of Govern ment securities have remained at $218,541,000 since midMarch. Of special significance was the increase in note circu lation to above $600,000,000 for the first time. At $609;000,000 on June 18, circulation was $148,000,000 greater than a year ago. NEW MEMBER BANKS The New Waterford Savings and Banking Company, New Waterford, Ohio. The Exchange Bank of Luckey, Luckey, Ohio. The Genoa Banking Company, Genoa, Ohio. BUSINESS REVIEW MANUFACTURING, MINING Iron and Commercial consumers generally entered Steel the market for large tonnages of steel early in June, shortly before the Gov ernment inventory reporting order became operative. Some of this business was not booked by steel companies, though sales continued to exceed production by a fairly wide mar gin. Much of the new demand represented defense require ments, direct and indirect. Trade publications estimated that between 40 and 50 percent of all inquiries carried priority documents. Both as a result of action by steel companies and Government order, deliveries on steel for what were considered to be less essential needs were delayed further. A limited blanket priority rating was extended freight car builders early in June. On the first of the month, Class 1 railroads had 65,047 cars ordered from equipment manu facturers, several of which are located in this district, more than at any other time in 17 years. This total compares with 56,502 cars on order May 1 and 15,039 cars a year ago. Shipbuilders on June 1 held contracts for 890 ves sels, or four times as many as on the same date last year. In order to facilitate construction, the Office of Production Management early in the month allocated orders for 469,420 tons of plates needed for this work among 14 steel producers, five of which operate ii this district. With operations averaging 99.3 percent of theoretical capacity, steelmakers during May produced 7,101,759 net tons of ingots, compared with 6,757,728 tons in April and 4,967,782 tons a year ago. Last month’s output has been exceeded only once—in March when the industry operated at 99.7 percent of capacity and made 7,131,641 tons of raw steel. The last week of June, the American Iron and Steel Institute estimated production at virtual capacity. As coke supplies were replenished during May, fifteen blast furnaces were returned to production; ten were in this district. On June 1, there were 206 stacks operating throughout the country, more than at any other time since mid-1929. At least eleven other furnaces were blown in during June. May pig iron production was the third best for any month in history, being exceeded only in January and March of this year. Last month’s output of 4,596,113 net tons was six percent larger than April’s and 31 percent above that of a year ago. The entire American Great Lakes ore fleet of 292 ves sels was active in the trade on June 15, as it had been a month earlier. Exceeding the previous record established in August 1937 by 269,798 gross tons, May shipments from Upper Lake ports, totaling 11,081,179 tons, were the larg est ever reported for a single month. A year ago 7,274,024 tons were shipped down the Lakes. Blast furnaces depend ing primarily upon Lake Superior iron ore last month con sumed 6,232,213 tons, compared with 5,802,088 tons in April and 4,566,200 tons a year ago. Approximately 5,000,000 tons of ore were added to stocks at furnaces and on Lake Erie docks during May. June 1 inventories of 21,816,898 tons were eleven percent larger than those of a year before. Legislation permitting Canadian bulk carriers to trans port iron ore between American ports was approved early in June. None had entered the trade by the last week in the month. THE MONTHLY BUSINESS REVIEW Mine operators and distributors in this district experienced a strong demand for bituminous coal in May following re sumption of mining activity. Domestic grades as well as industrial sizes wTere moving in quantity as dealers and consumers replenished stock piles that had been reduced during the time that mines w’ere closed. Union-operator dif ferences had not been resolved by late June. Fourth district mines produced 17,296,000 net tons of bituminous coal last month, more than in any other May since 1923. Output totaled 620,000 tons in April, when op erations were curtailed, and 14,022,000 tons in May 1940. During March 18,144,000 tons were mined. Weekly pro duction early in June, neither in this district nor through out the country, was at the high rate prevailing before the strike. Occasional shortages of open-top railroad equip ment in certain localities reportedly have hampered move ment of coal from mines. With slightly fewer cars of coal arriving at Lower Lake ports this May than last, vessel loadings of 4,869,547 net tons were 37 percent smaller than the record shipments of a year ago. Loadings during the first half of June wTere at a rate of approximately 6,800,000 tons per month, a near record for the period. Production at Western Pennsylvania beehive coke ovens expanded rapidly last month to successive peak levels. Out put in the second wreek of June w^as the largest in at least a decade—134,600 net tons. Although beehive ovens in re cent months have accounted for only ten to twelve percent of total coke production, the present high rate is indicative of the need for coke in industrial fields. In mid-June more than 8,000 beehive ovens in the Uniontown-Connellsville, Pennsylvania, region were active compared with 7,775 early in April. Not since 1929 had more been in operation. Sev eral batteries of ovens that had been abandoned over a decade ago wrere being repaired and rebuilt in June. Automobiles Material shortages, notably of certain wire and flat-rolled steel products, were experienced last month by several fourth district automotive parts and accessories manufacturers. In a few instances, production schedules had to be revised as a result of scarcities, but activity generally wras maintained at the high levels of other recent months. Sales ©f die castings divisions were restricted by the priority action on zinc and aluminum; substitutions became increasingly common. Releases received against contracts early in June often exceeded the rate of production, in some cases by Coal and Coke 3 as much as 50 percent. Deferred shipments consequently were greater than for some time past. Unfilled order back logs of suppliers also were very much larger than those of a year ago, being several times greater in at least one instance. A number of companies increased working forces slightly last month. The Ohio index of employment in the auto parts industry rose one point in May to 79 percent of the 1926 average, the highest level in four years. Operations mostly were on a three-shift basis, though not all produc tion lines were scheduled at night. Implications of a pos sible greater reduction than 20 percent in 1942 model out put varied. Some concerns have tooled up for large defense orders that have been requiring an increasing number of workers. Many of these have been shifted from ordinary commercial lines. Despite difficulties in securing parts and accessories, automobile manufacturers in the first three weeks of June were able to maintain weekly output of United States and Canadian factories at the second highest level since the spring of 1929. The 134,682 cars assembled in the w-eek ended June 13 had been exceeded only in three consecu tive weeks of May 1937. Domestic production of 518,736 vehicles in May, 56,479 more than were made in April, when labor disputes closed some factories, w^as the second best for any month since mid-1929. The most recent month ly record—536,150 units—was established in April 1937. Retail sales of new cars and trucks last month were at a twelve-year peak. According to the Automobile Manufac turers' Association, 609,481 vehicles were delivered dur ing May, 58 percent more than in the same month last year. Factory shipments have not equaled dealers’ sales in recent months, with the result that deliveries to consumers are much delayed. Floor stocks have been reduced to un usually low levels, even for this time in a model year. In ventories in dealers’ hands on June 1 were estimated to represent less than twro weeks’ sales at the May rate. Stocks of used cars, in contrast, wrere reported to be the largest in history. Title transfers recorded in principal fourth dis trict cities last month indicated that sales of used vehicles were at near-record levels. Rubber and Manufacturers shipped 7,732,828 tires Tires during May. This monthly total was exceeded only in July 1928 and June 1932, and compares with 6,049,517 in April. Shipments to distributors and dealers for replacement purposes rose 36 percent, or sharply more than seasonally, between April and May to 4,885,166 casings; they were one-third larger than those of May 1940. Retail tire dealers last month con ducted special sales. Original equipment shipments in May were at a four-year peak of 2,700,419 casings, 16 percent above those of the previous month and up 35 percent from those of a year ago. Tire makers produced 6,072,823 casings last month com pared with 5,812,645 in April and 5,413,141 last year. With shipments exceeding output, manufacturers’ inventories dur ing May w^ere reduced approximately 1,600,000 units to 8,373,324 tires. Not since September 1939 had stocks been so small. Totaling 106,159 tons. May crude rubber imports were the largest ever reported for a single month by a rather sub stantial margin. Last month’s receipts were twice those of a year ago and 68 percent greater than those of April. THE MONTHLY Consumption in May declined only fractionally from the all-time record high of the previous month; manufacturers used 71,187 tons. A year ago 54,513 tons were consumed. With imports exceeding consumption ,by approximately 30.000 tons, stocks were increased to 364,107 tons, accord ing to the Rubber Manufacturers' Association. This is the largest amount of crude rubber that has been stored in the United States since mid-1937. Effective June 23, the Rubber Reserve Company became the sole buyer of crude rubber imported into this country. Concurrently, rubber processors were ordered to reduce consumption from existing high levels to an average of 600.000 tons per year, an annual rate that has been ex ceeded only this year and last. Cuts wrere to be progressive over the last six months of the year, and monthly quotas were assigned each consumer. Textiles and Fourth district textile and needlework Clothing: factories early in June were working against what, in the majority of in stances, were the largest backlogs of unfilled orders for both men’s and women’s wear that have been held at this season in recent years. Clothing salesmen this year went on the road somewhat earlier than customarily has been the case. Department stores and apparel shops placed large initial orders. There were indications that merchandise managers were anticipating a greater proportion of their fall and winter requirements than in the past. In some in stances, orders were one-fourth to one-third larger this year than last. This forward buying by retailers apparently was induced by prospects for increased retail sales as a result of expanding consumer purchasing powrer, concern over ability to get goods made of particular fabrics in de sired quantities, some fear of higher prices later in the year, and the poor deliveries that were made generally by the clothing industry during the spring and summer season. Sales of men’s and boys’ wear at reporting department stores of the district this May were from 20-40 percent larger than those of a year ago. For the first quarter of the fiscal year—February to April—gains averaged 17 per cent. Improvement has been greatest in the larger indus trial centers where employment and payrolls have risen most. Women’s and misses’ woolen coats and suits also have moved in greater volume. The textile industry’s unfilled orders for piece goods used by men’s clothing manufacturers early in June were estimated by the Wool Associates of the New York Cot ton Exchange at 75,000,000 yards, or three times those of a year ago. This record total reportedly represented vir tual capacity operations for four to six months. A number of mills have been unable to accept new business on ac count of the delivery schedules requested. Others have cur tailed output of worsteds, which are slow-weaving cloths. Prices on current season merchandise for the most part have remained practically unchanged .recently. Advance quotations on comparable lines for the spring of 1942, how ever, show slight increases over those prevailing at the beginning of the present season. Higher raw material costs of light-weight fabrics raised retail prices on certain trademarked summer wear. Prices on many lines of men’s cloth ing that sell under resale price maintenance contracts have not been established definitely for next season. Men’s wear manufacturers started work on fall mer 4 BUSINESS REVIEW chandise considerably earlier this year than in the recent past. Material inventories early in June consequently were rather large for that time of year, and stocks of finished goods were being accumulated rapidly. Employment was at unusual levels for what ordinarily is the slack season, lliis also was true in the cotton garment industry. De mand for overalls and cotton work clothes continued heavy during May and the first part of June. Though shipments were increased substantially, the backlog of unfilled orders rose further last month. Material deliveries in mid-June were somewhat delayed, but shortages did not seriously interfere with production schedules. Other The problem of material supplies has Manufacturing: become one of the most pressing that confronts many important fourth dis trict industries. Although some lines have not been af fected, numerous shortages have appeared. A few manu facturers who do not have defense contracts or subcontracts have found it necessary to curtail output and reduce em ployment because of material scarcities. Working forces generally were enlarged last month, though certain types of skilled labor were difficult to find. New business con tinued in large volume, exceeding production and ship ments in many instances. Metal Industries Shipments of the machine tool industry in May were valued at $60,800,000, a new all-time peak $500,000 above the previous monthly record reported bv the National Machine Tool Builders' Association in April. In May 1940 manufacturers shipped tools having a selling price of $32,800,000. Inquiries have continued in volume recently, but most companies are booked several months ahead, many for more than a year. Largest unfilled orders apparently are held by concerns that manufacture wellknown trade-marked equipment. Deliveries on certain types of heavy castings have been delayed, and shortages of pat terns, bearings, and special steels have been reported. With demand for small tools increasing, production of some fourth district manufacturers has been expanded three fold during the past year. Supplies of principal raw mate rials were reported in mid-June to be adequate for this high rate of activity, though deliveries on alloy steel bars were difficult to obtain. Cast iron has been substituted for some materials that now are used for defense purposes, and castings are tak ing the place of forgings in certain instances. Incoming business at foundries consequently has increased consider ably. Due to greater demand, foundry grades of pig iron, THE MONTHLY BUSINESS REVIEW 5 particularly ferro-alloys, have become scarce. Shipments year ago. Backlogs in mid-month represented about four of castings and drop forgings were about twice as large weeks’ production at the current rate. They were the larg this May as last. est held in recent years. Electrical equipment manufacturers in this district ex Shoes Fourth district manufacturers made more shoes perienced increasing difficulty in securing certain raw ma in May than during any similar month on record. Output terials in May, though production was not interfered with decreased considerably less than seasonally from the high materially except by a labor stoppage at plants of one com April level. Work was started on fall and winter merchan pany. Sales were approximately twTice those of a year ago, dise the first of May, much earlier than usual. Initial or and unfilled orders were up even more. Demand for house ders from retailers for these lines were ten to twenty per hold appliances was somewhat smaller than in April, which cent larger than those received a year ago. In mid-June was an all-time record month in a number of lines. factories were operating forty hours per week, with in Glass, D’innerware Output of plate glass was expanded creased working forces, on backlogs that would maintain last month, while activity in the window glass industry was current production schedules until early fall. curtailed. May production of 18,394,000 square feet of pol Office Furniture and Equipment Reflecting the expan ished glass, 50,000 square feet more than was made dur sion in industrial volume, sales of fourth district office fur ing April, wras the third best for any similar month in his niture and equipment makers in recent months have been tory, being exceeded only in 1936 and 1937. Window glass running from ten to thirty percent above those of similar manufacturers reduced operations from 86.3 percent of periods last year. Production of some items, notably printed rated capacity in April to 78.9 percent last month, produc forms and certain metal devices, has not been stepped up ing 1,282,000 boxes of glass. This compares w’ith output of correspondingly because of material shortages. Unfilled or 1,400,000 boxes in April and 1,068,000 boxes a year ago. ders consequently have increased. Priority action was extended to borax and boric acid in Paint Paint sales through both trade and industrial chan June. Settlement of the protracted West Coast borax strike nels rose to the highest level in recent years in April, the had not been reached by mid-month. Heat-resisting glass- latest month for which Department of Commerce data are makers in Western Pennsylvania curtailed operations fur available. Mid-June reports from fourth district manufac ther and reduced working forces in the face of an increas turers indicated that, despite shortages of many essential ing volume of orders. Sales of pressed and blowTn glass- ingredients, this trend wras maintained in May and early work have been unusually large in recent months, particu June. Billed sales were up as much as 15 percent from larly of hand-made goods. April to May, while incoming orders increased somewhat Incoming orders of dinnerware manufacturers in May more. TRADE were up materially from those of the previous month and \\T11i1e smaller percentage gains over a a year ago, chiefly because dealers were seeking to pro Retail tect themselves against the slow deliveries that wrere made year ago were shown in retail department store sales in this district in the first by this branch of the ceramics industry last fall. New book ings most generally specified September or October ship three weeks of June than in May, last year at that time ment. Plants in Eastern Ohio were working at about 85 improvement in trade circles was just beginning to develop. percent of capacity in mid-June. Large gains in earlier months of this year resulted in part from fact that current sales were being compared with Paper, Paperboard Despite the fact that the paper in periodsthewhen trade was not so good as it was in later dustry continued to operate at virtual capacity during May months of the year. and the first part of June, shipping as goods were pro In the four w^eeks ended June 21, sales at 58 department duced, unfilled orders on hand increased. Some shortages stores this territory were 13 percent ahead of the com of raw materials, pulp and rags, wTere experienced. Carton parableinperiod of 1940. In the entire month of May the manufacturers reported difficulty in securing certain col gain by 95 stores was 21 percent, which was ors of ink. Mills in mid-June were running near capacity, slightlyreported greater than the increase reported for the first but the volume of incoming business exceeded production. five months. in various cities ranged from 15 to 42 Orders for paperboard also wrere greater than output early percent, with Gains areas where defense activity represented an in June, being approximately 50 percent above those of a important factor showing the largest increases. Depart ment store sales in this district in the past three months, however, have failed to increase from the preceding month by the estimated seasonal amounts of previous years. As a result, the adjusted index of department store sales, at 101 percent of the 1923-25 average, was at the lowest level since January. Demand for merchandise, however, was at relatively high levels, especially in many of those lines which might be classified as luxury items, or those which were felt might be affected by shortages of materials. An indication of improved prevailing conditions is found in the fact that relatively less merchandise is being sold in basement departments of department stores than in the upstairs departments. Total basement sales of stores re porting such operations in this area were 15 percent larger 6 THE MONTHLY BUSINESS REVIEW than a year ago in May, compared with a gain of 21 per years, publicly-financed construction represented a greater cent in total store sales. percentage of the aggregate. Compared with an average Department stores continue to expand their stocks by of 31 percent during the first four months of the year, more than seasonal amounts, and the adjusted index of in such awards accounted for 43 percent of the May total. ventories as of May 31 was the highest since November More than 90 percent of all non-residential construction 1938. The gain over last year was eleven percent. Out was privately-financed. standing orders for merchandise were 137 percent larger Manufacturing capacity of this district continues to be than a year ago at this time. As in other fields, retailers expanded. Approximately half of all non-residential con are endeavoring to build up large inventories in anticipa tracts, other than those for utilities and engineering work, tion of improved business, inability to obtain merchandise, was for factory and commercial buildings. Dollar value of and possibly higher prices. awards was the third greatest for any month since March Furniture and wearing apparel stores in this district 1930, being exceeded only in July 1937 and November 1940. reported increases of 43 and 18 percent, respectively, in During May $25,216,000 worth of residential contracts May sales. The gain in sales of furniture stores, many of were awarded, the most for any month in thirteen years. which operate extensively on a credit basis, was consid Aside from the extensive Federal housing program in erably larger than the 26 percent increase in sales of house augurated, there was considerable expansion of activity in furnishings at reporting department stores in this area. the residential field. Forty percent more one- and twoWholesale The 218 fourth district firms reporting family houses were contracted for this May than last. Reflecting the high rate of activity in the construction to the Bureau of the Census sold 32 per cent more merchandise this May than industry, shipments from fourth district lumber and build last. Sales increased 13 percent from April to May, a some ing materials yards last month were substantially larger what greater improvement than had been noted in other than those of either April or a year ago. In some instances, recent years. Last month, as in immediately preceding pe they were the heaviest since 1929. Inventories have been riods, widest gains over a year ago were registered by ma expanded about proportionately to the increase in busi chinery and equipment dealers, metal suppliers, and hard ness, though certain materials are becoming scarce. This ware distributors. Sales of electrical goods were up sharply, is particularly true in the case of imported furniture woods as were those of paints and varnishes. Consumers’ goods due to the tight shipping situation from Latin American such as jewelry, furniture, and house furnishings also moved countries. As a result of sporadic shortages of freight cars in certain areas, a number of lumber and material manu in much larger volume this May than a year ago. Although combined wholesale inventories were reduced facturers have insisted on full carload orders. slightly last month, June 1 stocks were 18 percent greater AGRICULTURE than those held on the same 1940 date. Experience in dif Crop Conditions Soaking rains in late May and early ferent lines varied somewhat. Collections improved during M ay; the 55 percent in June throughout States, parts of which make up the fourth crease over those of last year was considerably greater district, improved crop conditions materially. Changes were than the advance in sales. Between April and May, col rapid, and the June 1 general Crop Report in many re lections were up six percent. Accounts receivable on May spects was largely outdated by mid-month, when the De 31 were 23 percent larger than those of a year before. The partment of Agriculture issued its first supplemental report rise from the previous month was five percent. May col on wheat condition in the ten principal producing States. lections represented 82 percent of accounts outstanding at Prospects prior to the survey date were declining as a re the first of the month, a somewhat greater proportion than sult of the continued drought. While the spring season, on the whole, was quite favorable for farm field work, it in either the previous month or a year ago. was unusually dry. Rainfall deficiencies of as much as seven CONSTRUCTION and eight inches during the first five months of the year More construction and engineering contracts wrere let in were reported in a number of localities. There was com the fourth district during May than at any other time since paratively little runoff from the June rains; as a result, September 1929. Awards last month, representing twelve creeks and ponds remained low, and stock wrater was scarce percent of the national total as reported by the F. IV. Dodge in some parts of the district. Corporation, were valued at $63,447,000, compared with Grains In sharp contrast to developments elsewhere, pros $37,371,000 in April and $34,089,000 a year ago. Improve pects for winter wheat in fourth district States declined ment over previous periods was more marked locally than during May. Whereas the Crop Reporting Board on June nationally. Contracts awarded in 37 Eastern States in 1 raised its estimate of total United States production seven creased 35 percent from April to May when they were 67 percent, it adjudged prospective harvest in Ohio, Pennsyl percent larger than those of the same month last year; in vania, Kentucky, and West Virginia four percent smaller. this district gains were 70 percent and 86 percent, respec Indications on the latest reporting date pointed to the third largest crop ever grown in this country. The esti tively. Included in last month’s fourth district total were low- mated total of 697,692,000 bushels was exceeded only in rental and defense housing contracts of $6,214,000, and an 1919 and 1931. Rains and wind early in June, however, unusual amount of Government-financed utilities and pub damaged wheat still standing in Southwestern States; losses lic works construction. Approximately one-third of all were heavy. On June 1, the indicated crop in the four States of the United States Housing Authority contracts signed during district was 65,449,000 bushels. This compares with pro May wras for projects in this district. Although private ownership awards in fourth district duction of 68,332,000 bushels in 1940 and an average of areas in May were the largest for any month in recent 67,621,000 bushels during the ten years, 1930-39. By mid THE MONTHLY BUSINESS REVIEW June, Ohio prospects had improved, and the crop was es timated to be three percent larger than average. This year’s crop will be the first disposed of under marketing quotas that farmers voted late in May. Most corn in this district wras planted somewhat earlier this spring than in other recent years since fields were dry and could be worked readily. The crop germinated well, and replantings appeared to be at a minimum. By midJune the crop showed satisfactory growth. Fields generally wrere clean. An increased percentage of the acreage planted was sown to hybrid corn. Tobacco Transplanting of tobacco in Kentucky had been retarded by the dry weather during May. After the June rains, setting went forward rapidly, and most of the crop had been planted by mid-month. Plants were scarce in cer tain sections, but shortages apparently were met by with drawals from other localities where surplus plants were available. Little injury from cutworms w^as reported, though mold attacked the crop in Southwestern Ohio. Fruits Peaches suffered little damage, if any, from winter injury and spring freezes. Conditions on June 1 indicated a fourth district crop well above average, and considerably larger than the light yield of last season. Cherries in Ohio Wholesale and Retail Prices (1941 compared with 1940) Percentage Increase or Decrease SALES SALES STOCKS May first 5 May 1941 1941 months +29 +26 + 13 +42 a +36 +20 + 14 + 15 +12 + 19 +20 ++118 + 19 + 14 +24 +20 + 9 + 14 + 15 a +26 +26 +10 + 15 +21 + 8 + 18 + 19 +24 +31 + 10 +29 + 38 + 18 +11 +21 +12 +24 +11 +15 + 7 +2 + 16 +24 +12 +18 +33 +31 +35 +41 +29 +45 + 17 +25 +53 +58 +40 +51 +32 +43 + 13 +23 + 18 +26 _ i + 16 +1' +21 +20 +24 +26 + 9 + 12 +16 +6 + 3 +1 + 19 + 9 +25 +47 +63 +67 ++368 ++502 1 + ~ +15 + 11 + 9 +30 +51 +58 +32 +31 +42 +87 +21 +98 +51 +49 +40 ^ + 6 + 108 + 13* +21 +12 +15 + 17 a +83 +29 +24 +24 + 18 +4 - 33 +23 + 9 +11 +35 — i +54 + 18 +27 +32 DEPARTM ENT STORES (95) Akron................................................. Canton............................................... Cincinnati......................................... Cleveland.......................................... Columbus.......................................... Erie..................................................... Pittsburgh......................................... Springfield........................................ Toledo................................................ Wheeling. Youngstown............................................................ Other Cities........................................................... District..................................................................... WEARING APPAREL (15) Cincinnati............................................................... Cleveland................................................................ Pittsburgh............................................................... Other Cities........................................................... District..................................................................... FURNITURE (39) Canton..................................................................... Cincinnati............................................................... Cleveland................................................................. Columbus................................................................ Toledo...................................................................... Other Cities........................................................... District..................................................................... CHAIN STORES* Drugs— District (5)............................................ Groceries— District (4)...................................... WHOLESALE TRADE** Automotive Supplies (11)................................ Beer (6)................................................................... Clothing and Furnishings (5)........................ Confectionery (4)........... ^................................... Drugs and Drug Sundries (7 )....................... Dry Goods (7)...................................................... Electrical Goods (13)......................................... Fresh Fruits and Vegetables (6).................. Furniture & House Furnishings (4 )............ Grocery Group (47)........................................... Total Hardware Group (38)........................... General Hardware (13)................................ Industrial Supplies (13)............................... Plumbing & Heating Supplies (12)......... Jewelry & Optical Goods (7)......................... Lumber and Building Materials (4 ).............. Machinery, Equip. & Sup. (exc. Elect.) (5 ).. Meats and Meat Products (5)...................... Metals (5)........... ................................................... Paints and Varnishes (6)................................. Paper and its Products (8)............................... Tobacco and its Products (15)..................... Miscellaneous (15)............................................... D istrict-A ll Wholesale Trade (218)........... * Per individual unit operated. ** Wholesale data compiled by U. S. Department of Commerce, Bureau of the Census, a Not available. Figures in parentheses indicate numberof firms reporting sales. 7 were injured some by frost this spring. The crop conse quently was substantially smaller than that of last year. Prospects for apples were rather irregular over the dis trict, but were slightly better than average. A fair crop of grapes was expected in the Erie belt. Truck crops were slow. Fourth District Business Statistics (000 omitted) Fourth District Unless May % change Jan.-May % chan: Otherwise Specified 1941 from 1940 1941 from 19' 14,648,000 +25 Bank Debits— 24 cities.................. 553,118,000 +27 Savings Deposits— end of month: 40 banks O. and W. Pa................$ 791,811 + 1 a Life Insurance Sales: Ohio and Pa................................... $ 87,162 + 7 420,610 + 6 Retail Sales: 141,013 + 18 Dept. Stores—95 firms................ $ 34,318 +21 Wearing Apparel— 15 firms........ $ 1,215 + 18 5,447 + 12 1,815 +43 6,037 + 32 Furniture— 39 firms...................... $ 193,336 +41 Building Contracts— Total........... $ 63,447 +86 ” ” — Residential.. $ 25,216 +56 81,184 +28 528 — 53 4,913 Commercial Failures— Li abilities. $ + 2 327 ” ” — Number. . . 65 — 18 + 2 Production: 4,596 +31 22,513 Pig Iron— U. S..................net tons +31 7,102 +43 34,158 +44 Steel Ingot— U. S.............net tons 2,057,112b Auto— Passenger Car— U. S......... 489,841b + 8 + 17 ” — Trucks— U. S ....................... 101,038b +54 466,639b +36 Bituminous Coal, O., W. Pa., 17,296 +23 68,612 — 3 4,887 +22 Cement— O., W. Pa., W. Va. bbls. 1,409 +25 Elec. Power, O., Pa., Ky. 8,629d + 16 ..................................thous. k.w. h. 2,064c + 14 8,044d — 8 Petroleum— O., Pa., Ky. ...b b ls. 2,070c — 10 e +40 e Shoes ...................................... pairs + 16 6,073 + 12 Tires, U. S........................ casings 28,219 + 11 Bituminous Coal shipments: 4,870 — 37 7,386 — 36 L. E. Ports...................... net tons a not available c April b actual number d January-April e confidential Debits to(Thousands Individual Accounts of Dollars) 5 Weeks ended June 18, 1941 116,064 15,050 Butler............... 64,942 Canton............. 515,959 Cincinnati. . . . Cleveland........ 1,011,610 254,017 Columbus........ 116,183 Erie.................... 47,797 4,814 Franklin........... 10,457 Greensburg Hamilton......... 19,419 Hom estead.. . . 5,475 23,362 20,292 Lima................. 7,963 18,177 Aliddletown. . . 13,881 1,030,575 13,587 Sharon.............. 25,893 Springfield. . . . 14,111 Steubenville. . . 206,944 Toledo.............. 19,297 41,282 Wheeling......... 79,161 Youngstown . . 12,520 Zanesville........ Total............. . . 3,695,245 Year to Date Year to Date % change Dec. 26, 1940 Dec. 28, 1939 from to to 1940 June 18, 1941 June 19, 1940 + 31.8 521,629 406,121 + 2.9.6 68,898 55,953 + 3 7 .4 295,897 220,700 2,385,251 + 2 7 .8 1,933,571 + 3 4 .0 4,491,617 3,482,118 + 15.8 1,204,770 1,063,721 + 39.1 533,941 414,087 + 3 8 .1 167,171 212,879 22,194 18,742 + 9.1 + 15.5 49,990 44,341 + 3 1 .6 83,446 66,276 + 19.7 23,441 20,262 + 7.7 148,885 147,110 + 2 3 .9 99,535 83,815 + 15.9 36,261 30,876 + 3 1 .1 85,403 68,392 + 7.4 61,352 62,143 5,280,882 + 2 2 .2 4,028,755 + 3 4 .8 62,938 48,462 + 2 9 .2 123,538 99,852 + 14.5 64,240 57,600 917,157 733,717 + 3 8 .5 88,717 +50.1 60,472 + 2 3 .9 193,535 156,508 361,018 + 33.6 289,131 57,747 + 14.7 50,271 + 2 7 .5 17,475,161 13,810,167 Fourth District Business Indexes (1923-25 —100) Bank debits (24 cities)............................................ Commercial Failures (Num ber)......................... ” ” (Liabilities)...................... Sales— Life Insurance (O. and P a.).................... ” — Department Stores (48 firms)................ ” — Wholesale Drugs (7 firms) ...................... ” — ” Dry Goods (7 firms)........... ” — ” Groceries (47 firms)........... ” — ” Hardware (38 firms).......... ” — ” All (99 firms)........................ ” — Chain Drugs (4 firms)*........................... Building Contracts (Total).................................... ” ” (Residential)........................ Production— Coal (O., W. Pa., E. K y.)............ — Cement (O., W. Pa., E. K y.). . ” — Elec. Power (O., Pa,, Ky.)**. . . . ” — Petroleum (O., Pa., K y.)**......... ” — Shoes.................................................. * Per individual unit operated. ** April, a Not available. % change from 1940 + 2 8 .4 + 23.1 + 3 4 .1 + 2 3 .4 + 2 9 .0 + 13.3 + 2 8 .9 + 27.3 + 18.4 + 12.7 + 2 5 .9 + 15.7 + 1.2 + 18.8 + 17.4 + 2 4 .9 — 1.3 + 3 1 .1 + 2 9 .9 + 2 3 .7 + 11.5 + 2 5 .0 + 4 6 .7 + 23.7 + 2 4 .9 + 14.9 +26.5 May May May May May 1941 1940 1939 1938 1937 77 115 90 93 72 45 52 54 54 36 12 25 14 38 20 91 84 78 69 95 89 111 94 79 105 92 91 92 87 95 64 52 45 53 38 77 71 66 64 75 130 73 97 82 69 71 91 66 62 77 115 94 a 90 101 133 65 72 44 55 147 68 48 94 55 33 45 73 96 78 117 94 79 72 92 246 215 182 169 196 112 125 113 119 126 115 82 96 80 113 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Board of Governors of the Federal Reserve System After a slight decline in April industrial activity increased sharply in May and the first half of June. Wholesale commodity prices showed a further considerable advance and retail prices also increased. Distri bution of commodities to consumers was maintained in large volume Production Volume of industrial output increased sharply in May, following a decline in April, and the Board’s seasonally adjusted index rose to 149 per cent of the 1935-1939 average, as compared with 140 in April and 143 in March. The decline in April had reflected mainly reduced output of bituminous coal and automobiles occasioned by shutdowns accompany ing industrial disputes. These were settled during the month and in May and the first half of June output in these industries rose to the high levels prevailing earlier. In a number of other lines activity increased steadily throughout Federal Reserve Index of physical volume the spring months, particularly in the machinery, aircraft, and ship of production, adjusted for seasonal varia tion, 1935-39 average = 100. Subgroups building industries. Steel production was maintained at 99 per cent shown are expressed in terms of points In of capacity, except for a short period during late April and early May the total index. By months, January 1935 when output was reduced somewhat owing to a shortage of coal. Outto May 1941. put of nonferrous metals also continued near capacity; deliveries of for eign copper in May increased to 49,000 tons, amounting to about onethird of total deliveries to domestic consumers. Toward the end of the month, as it became apparent that combined military and civilian need for these metals would soon greatly exceed available supplies, a Gen eral Preference Order covering all iron and steel products was issued by the Priorities Division of the Office of Production Management and in June mandatory priority controls were established for copper and zinc. Textile production rose further in May, reflecting increased activity at cotton, wool, and rayon mills. A continued rise in output of manu factured food products was likewise reported and activity in the chemical and shoe industries was maintained at earlier high levels, although usually there is considerable decline at this season. Petroleum production in creased, and output of anthracite also advanced following some curtail ment in April. Iron ore shipments amounted to 11,000,000 tons in May, Federal Reserve indexes of value of sales and stocks, adjusted for seasonal varia a new record level and near the shipping capacity of the present Lake tion, 1923-25 average = 100. By months, fleet. January 1935 to May 1941. Value of construction contract awards rose sharply in May, reflect ing increases in both public and private construction, according to F. W. Dodge reports. Awards for private residential and nonresidential building increased more than seasonally, and contracts for defense projects continued in large volume. Distribution Distribution of commodities to consumers was sustained at a high level in May. Department store sales showed a further rise, while sales at variety stores declined by slightly more than the usual seasonal amount. Retail sales of new automobiles continued at the' high April J level and sales of used cars rose further. A a/ Freight-car loadings increased sharply in May, reflecting a marked rise in coal shipments and a further expansion in loadings of miscel laneous freight. In the first half of June total loadings were maintained at the advanced level of other recent weeks. Bureau of Labor Statistics* indexes, 1926 Commodity Prices =100. “Other” includes commodities other than farm products and foods. By weeks, Wholesale prices of a number of agricultural and industrial com January 5, 1935 to week ending June 14, modities showed further increases from the middle of May to the mid 1941. dle of June and the general index of the Bureau of Labor Statistics advanced two points to 87 per cent of the 1926 average. Federal action tv« to limit price increases was extended to some consumer goods, princi pally new automobiles, hides, and certain cotton yarns. In retail mar kets prices of most groups of commodities have advanced, reflecting in part increases in wholesale prices earlier this year. «>U>SU»W Bank Credit Commercial loans at reporting banks in 101 cities continued to rise during the four weeks ending June 11. Bank holdings of United States Government securities increased further, chiefly through the purchase TREASURYNOTES W H of bills by New York City banks and of bonds by banks in other lead Vu 0*A k # ing cities. As a result of the expansion in loans and investments bank TREASIJftYBIUS J^K deposits continued to increase. ija r ___ United States Government Security Prices Following a rise in the latter part of May Treasury bond prices Weekly averages of daily yields of 3- to 5declined slightly in the first half of June. On June 14 the 1960-65 bonds year tax-exempt Treasury notes, Treasury bonds callable after 12 years, and average were % of a point below the all-time peak in prices of December 10. discount on new issues of Treasury bills Yields on both taxable and tax-exempt 3- to 5-year notes declined slightly offered within week. For weeks ending from the middle of May to the middle of June. January 5, 1935 to June 14, 1941. in d u s t r ia l p r o d u c t io n DEPARTMENT STORE SALES AND STOCKS WHOLESALE PRICES on Eft COMM Jorm s , TO TA L^ U FARM PRODUCT!i 1935 1936 1937 1938 U ^ 1939 1940 MONEY RATES IN NEW YORK CITY V 1941
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