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M Busin Covering financial, industrial and a g ric u ltu ra l co n d itio n s eview Fourth Federal Reserve District Federal Reserve Bank of Cleveland Cleveland, O hio, June 30, 1943 V ol. 25 USINESS developments in recent weeks have been replete with incidents which have not been con ducive to expanding output and some of which have resulted in curtailed production. Ultimately this may be evident in the military program as well as in the do mestic economy. Operating under forced draft because of the late start of the season, the lake shipping fleet has experienced an unusual number of mishaps for this time of year. Ore movement has been hampered and the season’s estimates have been revised downward. Recurring work stoppages at coal mines and the slow rate at which miners returned to their jobs in late June have adversely affected coke and by-product plant operations. Interruptions to the regular flow of coke from such plants have seriously curtailed pro duction of steel at some mills in this area. The efficient use of coal cars, loading equipment, and lake boats also was affected at a time when all should be operating at capacity. Ore and coal stocks should be rising rapidly at this season of the year; failure to do so may not be felt until next winter and spring when coal and ore movements are restricted in some parts of the country. Manpower shortages are affecting industrial operations more than any other single factor. Material and ma chinery bottlenecks have largely been eliminated through the controls that have been set up, but despite the wide spread use of women in jobs for which they previously were considered unsuited, the total number employed has declined. Income of industrial workers, however, shows no tendency toward leveling off. Incoming orders have tapered off in several of the metal lines, notably those connected with construction, machinery equipment, and small tools. Foundry equip ment orders are less than one-third as large as a year ago. Sizable backlogs exist to be worked down in all industries, however, and operations generally continued close to, it not at peak levels. B FINANCIAL Treasury BiHs On May 12 the Treasury announced a modification of its regular weekly bill offerings. Instead of submitting the entire offering un der conditions of competitive bidding it was provided No. 6 that any bank, or other bidder, could subscribe up to $100,000 per issue at a fixed price of 99.905 (to yield ap proximately % of one percent) with the assurance that the subscription would be allotted in full. This innovation was motivated by the belief that it would attract from among various reservoirs of idle funds a relatively substantial volume of excess reserves held by the smaller banks of the country. The need for finding additional sources of funds for short term financing re sulted from the steady increase in the Treasury’s weekly bill offerings which reached the billion-dollar-per-week level on June 16. Thus far the response to the Treasury’s new policy has been confined to a relatively limited percentage of all eligible bidders in this district. Offerings of June 9, 16 and 23 elicited 133, 116 and 122 tenders, respec tively, for fixed-price bills. Aggregate subscriptions for the three offerings totaled approximately $24 million, or roughly $65,000 per tender. The district contains nearly 1,200 active banks, many non-banking financial institu tions, and other potential and qualified investors. As is revealed in the accompanying chart, the 700 member banks in the district are currently maintaining a volume of reserves in excess of legal requirements in the vicinity of $300 million. Moreover, in contrast to the reserve city banks, the country banks have experienced an actual net gain in excess reserves since March 1942, i THE MONTHLY BUSINESS REVIEW whereas during the same interval, for the System as a whole, excess reserves have been cut in half. Repurchase Options As of June 9 all reporting member banks ° f the System had sold to the Federal re serve banks, under repurchase option, a quantity of Treasury bills equivalent to 34 percent of their remaining holdings of bills. In the fourth district, however, such sales constituted only about one percent of the banks’ holdings. Presumably member banks of this district have made moderate use of the sale and repurchase facilities for the reason that their reserves are measurably in excess of requirements. During recent months excess reserves of reserve city banks of this dis trict exceeded those of all other reserve districts, and excess reserves of country banks now exceed those of all but one other district. Under the fixed-price method of subscribing for Treasury bills, a substantial portion of such reserves with little effort can be made to yield quite consistently a rate of % of one percent. Member Liquidation of real estate indebtedness seems Bank to be continuing. At mid-June real estate Credit loans of reporting member banks of this dis trict stood at a new low since 1935, having penetrated below the level which prevailed for a time at the first half of 1939. This is typical of the trend in effect through out the banking system. Holdings of open market commercial paper have shrunk to the extent that they are no longer required to be re ported separately by the weekly reporting banks. The contraction in commercial, agricultural and indus trial loans— which are the essence of commercial bank ing— has given no evidence of having run its course. Such loans on the books of this district’s reporting banks have receded to a point where they aggregate less than the same banks’ holdings of the shortest-term Treasury obligations. The category “All Other Loans”, which reached its peak in April 1941 and then receded rather sharply, seems to have attained some measure of stability. These loans are now no lower than they were last January. Earning Assets Although total loans are not far from a threeyear l° w’ earning assets of reporting member banks continue to show a persistent increase week after week. This growth in loans and investments is the result exclusively of a steady expansion in the banks’ holdings of direct United States Treasury obliga tions. Receding somewhat from the April 7 peak, adjusted demand deposits of weekly reporting banks have resumed their expansion, and on June 16 established a new high record. This rise in demand deposits may be accounted for by the series of drafts by the Treasury on its war loan ac counts, which process results in the conversion of gov ernment deposits into deposits payable to individuals, partnerships, and corporations. Another contributing fac tor is the persistent net inflow of funds into this district. This phenomenon always has been in evidence during periods of great industrial activity and is largely respon sible for the fact that banks of this district experience relatively little difficulty in maintaining legal reserves at the required level. Demand Deposits Withheld ^ new deposit liability account will soon Tax Funds aPPear on the books of many banks. It will be unlike other types of bank credit out standing in that this account is payable, strictly speaking, neither upon demand nor in the traditional manner of the time deposit. It is payable either on the last business day of each calendar month, or when the credit bal ance reaches $5,000, whichever occurs sooner. In no event, however, does this account become payable more than once a day. This new account arises out of the fact that employers whose withheld payroll taxes exceed $100 per month are required to deposit such withheld funds by the tenth of the following month with authorized depositary banks. The employer’s deposit must be in funds immediately available. Receiving banks will supply the employer-depositor the original copy of an approved Depositary Receipt the first carbon of which is forwarded to the Federal re serve bank (or branch) when the balance becomes pay able as described above. Care should be exercised to insure that successive remittances to the Federal reserve bank are supported by matched depository receipts. All insured banks wishing to participate in this func tion must apply specifically for designation as “Deposi taries for Withholding Taxes”. They become eligible upon receiving notice of approval from the Federal re serve bank. Provision has been made for the reimbursement of participating banks. Two alternative plans are provided, both of which involve the purchase of a determinable quantity of two-percent depositary bonds, the maximum being governed by the volume of business transacted monthly. Under Plan No. 1, which permits the larger hold ings, the bonds are purchased with the depositary’s own funds; under Plan No. 2 the funds are advanced by the Treasury. Regulations provide that depositaries may shift from one option to the other as of December 31 and at intervals of six months thereafter. It is not anticipated that this process will alter in any appreciable degree the total deposits of the banking sys tem. However, inasmuch as employers may elect to re mit withheld taxes directly to the Collector of Internal Revenue for the third month of each quarter, some minor fluctuation in total deposits may result at that time. Alse, employers whose monthly withholdings total less than $100 have a choice of remitting directly to the Internal Revenue Collector or of using the mechanism described THE MONTHLY BUSINESS REVIEW above. Conceivably widespread choice of direct remit tance might also have a very slight effect on aggregate deposits. MANUFACTURING, MINING It is becoming increasingly apparent from the reports of fourth district industrialists that manpower is the major problem confronting the manufacturer today. As the demands of both military and civilian consumers have mounted, the labor needed to produce the required goods has become more and more difficult to secure. Marginal workers have been called into service and working hours have been lengthened, but these solutions have not been sufficient, in the face of increased production, to offset the drain of the military services. Estimates of employment prepared by the Bureau of the Census show that in May of this year there were 41.3 million persons engaged in nonagricultural industries com pared with 41.4 million a year earlier. Women consti tuted 14.1 million of the total, whereas a year ago only 11.8 million were so employed. Female workers hired during the last year, therefore, have not even replaced men lost to the services. Individual industries of the district have been affected differently by the manpower shortage. The two accom panying charts show indexes of Ohio employment pre pared by Ohio State University. One shows the number employed in manufacturing, trade, and private construc tion; while the other shows four of the ten major com ponents of the manufacturing employment index. The number of wage earners engaged in Ohio manufacturing has risen steadily since the Defense Program was inau gurated in June 1940, with the only major interruption oc curring late in 1941. Employment in private construction reached its peak in August 1941 when both residential and industrial building were at high levels. About one-half of the wage earners on private projects have since been re leased for other work. Most of them probably found em ployment on Government-sponsored industrial construction which reached its highest level in mid-summer 1942. Since that time some such workers have been available to facilitate the employment expansion in manufacturing industries. The number of wage earners engaged in trade has remained fairly steady, although the attraction of higher wages elsewhere and the drain of the armed services have made it increasingly difficult for sueh estab lishments to maintain their staffs. The trend of employment in the manufacture of metal Employment 3 products is typical of that for war industries. Paying over time premiums and offering draft deferment, they have been able to attract additional workers until very recent ly. Producers of finished war materiel, in many cases, have expanded their working force even more sharply. The motor vehicle classification, for example, employed nearly three times as many workers in March 1943 as it did in June 1940. As a result of intensive recruit ing of war workers, however, civilian industries had to sacrifice much of their labor force. Each of the other three industries shown on the chart is representative of this group. Having expanded their employment during the 1941 period of heavy consumer buying they were forced to contract during 1942 as their workers were at tracted to war work and as governmental controls lim ited their production. These industries have felt the labor pinch for many months. Throughout 1942 their contrac tion facilitated the expansion in war industries. Now, however, as the reservoir of workers in nonessential lines is drained off, they also are faced with serious manpower problems. Repercussions of the soft coal controversy adversely affected steel operations at fourth district mills during June. Supplies of coke, depleted when the mines were idle in May, were not sufficient, in many cases, to maintain blast furnace opera tions more than a few days. Units dependent upon bee hive coke were most seriously affected; although the re duced production of gases manufactured in by-product ovens also lowered operations at blast furnaces where such gases are used to enrich the furnace mixture. Fin ishing mills using coke oven gas for reheating steel also were forced to curtail production in some areas. The industry was better prepared for the first mine walkout, early in May. Consequently, production of both steel ingots and pig iron declined only slightly, on a daily average basis, from April. The necessity of furnace re pairs took several units out of production, although the industry has done an excellent job in keeping repairs at a minimum. Steel output for May totaled 7,545,000 tons, two percent more than a year earlier, while pig iron pro duction rose three percent above May 1942 to 5,178,000 tons. For the first time this year iron ore consumption was less than the amount of ore shipped from the upper lakes, permitting consumers to replenish their dwindling stocks of this raw material. Consumption totaled 7,374,000 tons during May, while ore stocks rose about 3 mil lion tons to 21,297,000 tons. Adverse shipping condi tions, however, still kept ore inventories approximately 15 percent smaller than a year ago. Fourth district steel capacity was augmented early in June by the opening of two giant open hearths near Pitts burgh. These were the first of eleven such furnaces to be completed. Larger than any American furnaces of this type, the new open hearths have a capacity of 225 tons, more than enough steel to make a section of armor plate for a battleship. When the new plant is completed it will have an annual output of 1,500,000 tons, increasing the fourth district’s total capacity by almost four percent. The new Defense Plant Corporation’s facilities will also include mills and shops for the production of slabs, plates, machined forgings, and rough-forged armor plate. Despite efforts of the Steel Advisory Committee to ob Iron and Steel 4 THE MONTHLY BUSINESS REVIEW tain at least partial exemption from the War Manpower Commission’s original order calling for a 48-hour week in the industry, steel producers now are preparing to adopt the longer week by August 1. This is being done to con form to a later War Manpower Commission order issued June 1. The order forbids hiring of additional workers unless the mill is operating on a 48-hour week or has been authorized by the WMC to work fewer hours. Re quests for exemptions must have the approval of the recognized bargaining agency for the company involved. This requirement that labor unions must approve the re quests for exemptions is considered by steel officials as an unusual feature of the order. At the present time the steel industry is hiring about 20,000 new workers each month, with turnover averaging about four per cent. Coal The situation with respect to coal production re mained unsettled late in June, after a third work stoppage had halted operations in the nation’s mines. As a result of the controversy arising out of the termination of the miners’ contract on April 1, a serious curtailment in output has resulted not only from idle mines, but also by a general slowdown throughout the industry. The latest work stoppage occurred after the most recent truce expired on June 20, coming only two days after a War Labor Board ruling which was interpreted by most miners as being opposed to granting a portal-to-portal pay al lowance. It is difficult to estimate the total amount of coal that might have been miped if it were not for the controversy. Government estimates have placed the total loss arising out of the first two stoppages at approximately 13 million tons, although this figure does not include the lower pro duction due to slowdowns nor output lost during the third work stoppage. Equally important, however, from the point of view of its effects on war production, was the interruption in the steady flow of coal to consumers. Beehive coke ovens are dependent upon a steady stream of the raw material and any interruption in the flow re duces their output almost immediately. Consequently, several blast furnaces, dependent upon beehive coke, were shut down during each of the last two stoppages. Other consumers had to draw heavily upon their inven tories which normally are replenished at this time of year. The most recent data pertaining to stocks show that there were 49 days’ supply above ground on May 1. This figure, however, does not show the effects of the two most recent disputes, nor does it reveal the maldistribution of supplies among individual users. Consumption by in dustrial users during April amounted to 38,580,000 tons, to which may be added 9,580,000 tons delivered by retail dealers, making a grand total of 48,160,000 tons. This was a decline of ten percent from March, with retail de liveries dropping 19 per cent. Production of fourth district mines increased slightly in May over April, their output amounting to 18,877,000 tons. This was two percent below May of last year when the industry was on a 35-hour week and consider ably below the record production of almost 21 million tons established in March, prior to the termination of con tract. Production of both beehive and by-product coke suffered as a result of the controversy, although the effects were felt more seriously at beehive ovens than at by product furnaces. Beehive ovens in Pennsylvania, nearly all of which are located in the fourth district, produced only 49,500 tons during the week ended June 5 when the mines were idle. This was approximately one-third of their weekly output during March and April. Production of by-product coke fell 16 percent during the same week. Other Manufacturing Machine tool shipments continued to be well in excess of new orders through out May, and backlogs were reduced further. Industry sources state that orders now are run ning between one-third and one-half of shipments, with a good many cancelations reported by some manufacturers. Nevertheless, unfilled orders amounted to approximately $644 millions in April, assuring continued production at a high rate for many months. New orders emphasize spe cial purpose tools, indicating that manufacturers are at tempting to offset a tight labor situation by using more automatic machinery. The fourth district glass and ceramics manufacturers constitute one of the few industries which produces much of its product for civilian needs and yet has been able to maintain operations at capacity or near-capacity levels. War orders are limited, for the most part, to hotel china and glassware for use by the Army and Navy. Ceramics manufacturers report that orders continue to exceed ship ments, so that backlogs are sufficiently large to assure full production for the balance of the year. Manufac turers of window glass, however, are suffering from a sharp decline in the demand for their product. Such pro duction employed only 58 percent of the industry’s ca pacity in May, compared with 62 percent in April. Emphasis on home food preservation as well as the sub stitution by many industries of glass for metal containers (paint, baby foods, wallpaper cleaner, etc.) has resulted in a sharp increase in the demand for glass bottles and jars. Shipments of such containers in April amounted to 8,132,000 gross, 19 percent above last year and 46 per cent above 1939. The greatest increase in demand is re ported for domestic fruit jars, indicating the anticipated popularity of home canning in the face of rationing and food shortages. Orders for additional textiles and clothing continue tc keep fourth district mills operating at as high a rate as possible. Labor shortages, however, and in some cases raw material scarcities, prevent complete utilization of ex isting equipment. W7ool consumption reached an alltime high in March, reflecting a record civilian and mili tary demand. Although imports of wool are increasing, major suppliers are unable to satisfy all users and as a result have found it necessary to postpone deliveries by as much as two months. This has complicated produc tion scheduling and the problem of retaining workers for many clothing manufacturers. Production of footwear declined somewhat in April and was substantially lower than a year ago. The output of Ohio factories for the first four months of the year totaled slightly less than 5 million pairs, or about 14 percent be low the same period a year ago. The demand for certain types of footwear, however, has increased since the ad vent of rationing. Manufacturers of street type footwear report more business than they are able to handle. Such firms have found it necessary to allot orders among their TH E MONTHLY BUSINESS customers and to turn down virtually all new buyers. The supply of labor continues to be the chief deter rent to increased paper and paper products production. Manpower shortages are reported in all stages of manu facture from the timber lands to the finished paper manu facturers. Paper requirements are great, orders received being far in excess of production. AGRICULTURE When the U. S. Department of Agriculture released the 1943 Prospective Plantings as of the middle of March a general optimistic attitude prevailed with regard to possible farm production for the year. Since that time frost, flood, drought in the Great Plains and persistent rains in the Central States have greatly diminished the prospects of aggregate yields as high as those of last year. During May continuous rains fell from southwestern Oklahoma to central Michigan and northern New York. This strip is roughly 1,500 miles long and 300 miles wide and includes about 90 million acres of crop land, or about one-fourth of all the crop land in the United States. As a result of the excessive moisture farmers in the fourth district have been weeks late with their usual operating schedules. This delay has concentrated the work of sev eral months into a few weeks and many necessary ac tivities have competed for the scant supply of farm labor. As the accompanying map shows, this year’s wheat pro duction in the fourth district will likely be considerably less than the average during the period 1932-41. The indicated production will be low owing to the effects of both decreased acreage and lower yields, but it is evidenl that decreased acreage is the major causal factor. Despite the fact that weather prevented the planting of oats in many sections of the fourth district, a total pro1 9 4 3 Crop Indications 1943 WHEAT CROP Production, Acreage, and Yield Indicated on June 1, 1943 5 R EV IEW duction of about 5 percent over the 10-year period, 193241, has been forecast. Meadow and pasture conditions in the fourth district were reported to be generally good and above the 10-year average in June. However, al falfa production for the year is expected to be somewhat less outstanding than the production of timothy and clover. As of June 15 most of the tobacco in the Burley Belt had been set, the transplanting season being delayed about two weeks by adverse weather. Prospects of fruit production in the fourth district are not promising. W et weather hampered adequate pollina tion of fruit flowers in many areas. Regional Agricultural Credit Corporations Regional agricultural credit corporations made their first loans in October, 1932. In the States of the Fourth Federal Reserve District their loan volume reached a total of approximately $1,200,000 in 1933 and declined in the following eight years of liquida tion to about $8,000 in 1942. In the four months following the revival of the cor porations in January, 1943, disbursements amount ing to $1,130,462 were made in the fourth district States (see table). Of this amount F - l loans made up $631,252 or 56 percent; F-2 advances made up the remainder. F - l loans are general production loans estab lished to assist in financing increased production of es sential farm commodities. They are secured by col lateral to the extent necessary for adequate protection of the debt in the judgment of the County W ar Board or the RACC’s loan representative. F -2 advances are made to finance the extraordinary production of essen tial farm commodities. A borrower of an F-2 advance is personally liable for the full amount of the advance. A lien is required on the crop to be produced and insurance must be taken where available. If however, the County W ar Board certifies that the borrower has acted in good faith, has used principles of good husbandry, has applied all returns from the crop financed to the repayment of the advance, and if such returns are insufficient to pay the advance in full, then the RACC will cancel the borrower’s obligation for the remainder of the advance. Amount of Disbursements on Loans and Special W ar Crop Advances through May 2 9 , 1943 F -l State Loans Ohio ........................................ $216,933 Kentucky ................................ 7 7 ,226 Pennsylvania ......................... 3 1 8 ,1 3 8 West Virginia ...................... 18,955 Total U pper M id d le figure— Indicated 1943 w he at crop as a percentage of 193241 average. figure— Indicated 1943 harvested wheat acreage a s percent a g e o f 1932-41 a v e r a ge. Lower figure— Indicated 1943 w he at yield per acre a s a percentage of 1932-41 average. (Kentucky, Pen n sylvan ia, and W . V irgin ia d a ta are based on w hole-State indications.) ........................................ $ 631,252 F -2 War Crop Advances $105,536 138,010 252,978 2 ,686 $ 499,210 Loans and Advances $322,469 215,236 571,116 21,641 $1,130,462 Approximately 16,300 acres of crops had been financed by F - l loans in the four States of the fourth district through May 31, 1943. This acreage was divided among the States as follows: Ohio— 7,300; Pennsylvania— 6,700; Kentucky— 2,100; W est Virginia— 200. Feed grains ac counted for 57 percent of the financed acreage and soy beans for 26 percent. The remaining F - l acreage was devoted in the main to potatoes and fresh vegetables. The number of head of livestock financed by F - l loans through May 31, 1943 is shown by the following table: Type of Livestock Ohio B eef cattle ......................... 122 Milk cows ......................... 470 Hogs (including sows) . . 1,026 Sheep and lam bs.............. 209 Poultry ................................ 4 1 ,125 Kentucky 133 138 49 30 12,230 Penna. 361 793 1,090 128 125,700 W . Va. 6 50 36 25 12,538 6 THE MONTHLY BUSINESS REVIEW Total acreage of all crops financed by F -2 advances amounted to the following as of May 31, 1943: Ohio— 7,693; Kentucky— 9,041; Pennsylvania— 6,276; W est Vir ginia— 45. In Ohio the major portion of the acreage financed by F -2 advances has been devoted to soybeans. In Kentucky the F -2 acreage has been divided about evenly between soybeans and hemp; in Pennsylvania and West Virginia the F -2 acreage has been used mainly for the production of potatoes. The average size of F - l loans has been approximately the same as the average size of F -2 advances in each of the fourth district States, aldiough there has been some variation between states as the following average amounts indicate: Ohio— $550; Kentucky— $250; Penn sylvania— $400; West Virginia— $825. TRADE *; Retail Sales at reporting department stores in this dis trict during May were the largest for any sim ilar period on record and 13 percent greater than those in the corresponding month last year. During the first three weeks of June sales advanced 14 percent over those of the same period last year. Shoe departments experienced an unusually large amount of business, as customers were using their ration coupons before they expired. This buying stimulated purchases of other types of merchandise. Sales of clothing were responsible for the large amount of business that retailers experienced last month. Stores sold 76 percent more women’s coats and suits this year than last and 31 percent more juniors’ and girls’ wear. Sales of furs were over four times as large as those of May 1942. Fourth district retailers reported that sales of men’s and boys’ wear were up twelve percent compared with a year ago. Five percent more men’s furnishings were sold, while sales of men’s clothing and boys’ wear were approximately one-fifth greater than they had been a year ago. Stocks carried by department stores in this area on May 31 were down 34 percent compared with those of the same date last year. A large volume of sales during the past year, difficulty in obtaining goods, and, in some cases, anticipation of the limitation of inventories by W PB, effective May 1, were factors contributing to this reduction. With stores passing the May 1 date with stocks averaging less than the amounts prescribed by the W PB limitation, and with sales being maintained at some what higher levels than had been anticipated, buyers, in order to replenish stocks or substitute for goods no longer available, were placing orders for merchandise in un precedented volume, in most cases. As the accompany ing chart shows, the volume of orders outstanding at 37 reporting stores increased steadily since late last year and on May 31 was 123 percent greater than it had been the same date a year ago. Stores in all principal cities of the district reported that their outstandings were larger this year than last. However, these year-to-year gains varied widely, ranging from 56 percent for stores in Wheeling to 224 percent for Akron retailers. Outstanding orders for these 37 firms totaled $87,104,469 on May 31. This sum was 16 percent larger than the amount of stocks carried by these same stores, and it was the first time on record that the dollar volume of commitments exceeded inventories. On January 31, 1940, orders were approximately one-third of the merchandise on hand. Slow delivery of goods was one of the factors resulting in this sharp rise in commitments. Stores reported that some merchandise ordered last fall still has not been re ceived. Where there is any possibility at all of obtaining the goods on order, these stores say that their buyers are reluctant to make cancellations. This is especially true of staple wares on order from wholesale firms with which the stores have done business for a long time. As a re sult, many of the same orders are carried from month to month. Retailers report that they do not expect to receive delivery on some of their present outstandings until late this fall. Buyers are spending as much time in the mar kets trying to secure merchandise already purchased as they are placing new orders. Moreover, they are buy ing goods in markets which they did not visit before. Some firms have resorted to duplicate ordering of merchandise, not expecting to receive all they had or dered. Although not all stores reported this practice, it appeared to be quite general. Stores estimate that at the present time they are re ceiving deliveries of from one-half to two-thirds of their outstandings. Some indicated that they would be for tunate if they received 75 percent of the merchandise they had ordered. The proportion of the large volume of orders outstanding on May 31 that will be delivered to the stores will probably depend on the amount of m a -' terials made available for the production of civilian goods and on the supply of manpower to convert these materials into finished goods. CONSTRUCTION A continued decline in fourth district industrial con struction during May resulted in a lowering of the level of contracts awarded to $26,067,000, according to statis tics prepared by the F. W. Dodge Corporation. The month’s total was 56 percent below a year ago when construction activity was involved in war expansion. The current emphasis on defense housing was responsible for keeping residential building close to last year’s level. The decline in construction activity which has resulted from the completion of war facilities during recent months is reflected in a lower demand for building materials. Shipments of structural steel in May were less than onehalf of those for a year earlier, while new orders re ceived during that month were down 82 percent. Or der backlogs are consequently being reduced rapidly. THE MONTHLY BUSINESS REVIEW Suppliers of lumber are welcoming the decline in the de mand for their product resulting from the lower level of construction. Pressed by a severe labor shortage, and an unprecedented demand for packaging and shipping lum ber, they are unable to keep production in pace witb consumption. They estimate that construction require ments in 1943 will total 11 billion feet, with an addi tional 1.7 billion feet needed for building outside the con tinental United States. This is approximately 40 percent less than was consumed in 1942. SALES: STOCKS: D epartm ent Store Sales and Stocks Daily Average for 1935-1939=100 Without Adjusted for Seasonal Adjustment Seasonal Variation May April May May April May 1943 1943 1942 1943 1943 1942 189 201 155 188 156 191 147 205 211 209 219 150 157 136 153 140 154 125 151 162 131 157 138 136 164 170 126 161 174 123 172 190 157 176 181 160 142 146 137 129 135 125 202 205 184 197 143 158 155 167 132 150 157 128 129 130 124 118 127 113 162 166 151 125 133 153 154 162 137 134 152 151 134 204 135 :ate nu mber of firms) 133 129 200 Debits to Individual Accounts (Thousands of Dollars) % change Jan.-M ay Jan.-May % change May from 1942 1942 from 1942 1943 1943 557,435 Akron................... 163,135 + 36.0 813,416 +45.9 65,609 Butler.......... ; . . . 14,201 + 9.9 68,243 + 4.0 Canton................. 67,677 + 17.8 + 11.9 351,478 298,336 Cincinnati........... 531,049 + 9.0 2,823,190 2,449,588 + 15.3 + 19.7 Cleveland............. 1,102,485 +16.7 5,376,226 4,490,281 Columbus............ 299,166 +10.3 1,195,606 +17.6 1,405,733 +32.8 Covington-Newp’t 23,163 Dayton................ 137,291 +29.8 530,322 +27.'5 676, ii2 Erie....................... 56,210 + 18.5 227,965 +23.5 281,596 +14.7 24,354 23,217 Franklin............... 5,059 + 4.9 50,032 51,970 — 3.7 Greensburg......... 10,199 + 1.3 Hamilton............. 19,013 + 5.5 98,560 87,116 +13.1 Homestead.......... 4,353 — 2.3 21,662 23,099 — 6.2 183,497 Lexington............ 26,004 + 9.2 142,828 +28.5 Lima..................... 21,664 +18.5 117,858 100,221 +17.6 6,802 — 4.0 Lorain.................. 33,076 34,106 — 3.0 Mansfield............ 16,187 + 10.9 + 7.2 96,247 91,542 + '5 .'l Middletown........ 20,421 77,867 66,462 +17.2 Oil City............... 16,188 + 24.6 Pittsburgh........... 1,135,420 + 9.3 5,811,463 5,040,660 +15.3 9,989 Portsm outh......... + 2.4 + 5.2 Sharon................. 13,790 71,025 67,5 i9 + -7 Springfield........... 29,630 + 19.1 149,229 120,065 +24.3 Steubenville........ 11,703 + 1.0 62,095 57,980 + 7.1 Toledo.................. 216,183 + 12.0 1,122,738 944,655 +18.9 W arren................. 22,809 +22.2 116,211 90,903 +27.8 Wheeling............. 37,004 +15.4 185,908 154,825 +20.1 80,803 +14.8 386,847 349,055 +10.8 Youngstown. . . . Zanesville............ +14.5 61,081 54,414 11,993 +12.3 Total................. 4,109,591 +13.4 20,465,744 17,315,779 +18.2 Fourth District Business Indexes (1935-39=100)) May May May May May 1943 1942 1941 lf40 1939 182 160 140 110 93 24 79 97 117 113 ” (Liabilities).. 20 35 36 77 42 Sales—Life Insurance (O. and Pa.). 98 74 103 96 90 154 137 139 114 106 113 95 89 88 89 155 146 132 106 93 130 107 105 97 90 184 198 167 106 94 153 139 126 98 91 158 136 122 99 a 158 153 129 110 99 107 254 260 140 127 127 172 326 210 152 Production—Coal (O., W. Pa., E. K y.)........... 151 153 138 112 48 187 171 137 115 ” — Cement (O., W. Pa., E. Ky.). .. ” — Elec. Power (O., Pa., K y.)**... 159 135 118 100 -99 102 94 103 94 ” — Petroleum (O., Pa., K y .) * * .......... ” —Shoes**........ ................................... 93 111 114 85 103 * Per individual unit operated. ** April, a Not available. ••• 7 Fourth District Business Statistics (000 omitted) Fourth District Unless May % change Jan.-M ay % change Otherwise Specified 1943 from 1942 1943 from 1942 + 18 Bank Debits—24 cities.................34,036,000 +13 £20,345,000 Savings Deposits—end of month: 39 banks O. and W. Pa........... $ 852,155 +11 Life Insurance Sales: Ohio and Pa..................................$ 82,407 +31 408,071 Retail Sales: Dept. Stores—97 firms...............X 36,657 +13 180,314 + 8 +27 Wearing Apparel— 16 firms. . . .$ 1,436 +24 8,196 — 5 Furniture— /6 firms.....................$ 3,198 + 712,387 — 48 Building Contracts—Total.........$ 26,067 —58 117,956 —49 ” —Residential 3 9,821 — 26 42,498 —43 Commercial Failures—Liabilities $ 296 —42 1,510 —58 ” —Number. .. 16a — 70 102a Production: Steel Ingot—U. S.......... Net tons 7,545 + 2 36,840 + 4 Bituminous Coal, O., W. Pa., E. Ky............................... Net tons 18,877 — 2 93,919 + 3 Cement—0., W. Pa., W. Va. bbls. 951b —16 3,747c Elec. Power, O., Pa., Ky. Thous. ............................................ k.w.h. 2,722b +12 11,014c + 13 Petroleum—0., Pa., K y....bbls. 2,185b — 3 9,580c +13 Shoes .................................... pairs bd — 16 cd — 15 Bituminous Coal Shipments: —22 L. E. Ports....................... Net tons 5,421 — 13 10,120 a actual number b April c January-April d confidential Wholesale and Retail Trade (1943 compared with 1942) Percentage Increase or Decrease SALES SALES STOCKS May first 5 May 1943 months 1943 DEPARTM ENT STORES (97) Akron.................................................................... +22 +19 —22 Canton.................................................................. +11 +14 a Cincinnati............................................................ +13 +10 —38 Cleveland............................................................. +16 + 4 —37 Columbus............................................................. +30 +29 —20 Erie........................................................................ +10 +13 —23 Pittsburgh............................................................ + 3 +1 —40 Springfield............................................................ +29 +33 a Toledo................................................................... +17 +14 —21 Wheeling.............................................................. + 5 +6 —29 Youngstown........................................................ +22 +13 a Other Cities........................................................ + 6 +2 —25 District................................................................. +13 + 8 —34 WEARING APPAREL (16) Canton.................................................................. +21 +30 — 12 Cincinnati............................................................ +19 +17 — 16 Cleveland............................................................. +26 +17 — 9 Pittsburgh........................................................... +32 +25 —23 Other Cities........................................................ +22 +43 — 18 District................................................................. +24 +27 — 15 FURNITURE (76) Canton.................................................................. — 9 — 6 — 36 Cincinnati............................................................ +14 — 1 —23 Cleveland............................................................. + 5 — 4 — 19 Columbus............................................................. +36 +11 -0 Dayton................................................................. — 7 — 17 — 17 Pittsburgh............................................................ — 3 •— 16 — 14 Toledo................................................................... +21 — 2 — 15 Other C ities....................................................... +10 — 3 —23 District................................................................. + 7 — 5 — 19 CHAIN STORES* Drugs— District (5).......................................... +16 +17 a Groceries— District (4).................................... + 3 +5 a WHOLESALE TRADE** Automotive Supplies (9)................................ — 6 — 10 —41 Beer (4)............................................................... +19 +33 +7 Clothing and Furnishings (3)....................... +63 +47 a Confectionery (4).............................................. +24 +16 —61 Drugs and Drug Sundries (6)...................... +20 +18 + 3 Dry Goods (4)................................................... + 6 +7 — 39 Electrical Goods (15)...................................... — 39 —41 — 55 Fresh Fruits and Vegetables (6)................. + 9 +22 + 5 Furniture & House Furnishings (3)........... — 26 a a Grocery Group (41)......................................... +21 + 9 — 12 Total Hardware Group (33)......................... — 7 — 12 —40 General Hardware (11).............................. — 14 — 19 —43 Industrial Supplies (11).............................. + 7 — 1 — 17 Plumbing & Heating Supplies (11)........ — 7 — 13 —42 Jewelry (4).......................................................... +18 a a Machinery, Equip. & Sup. (exc. Elect.) (5). — 18 + 2 —41 Meats and Meat Products (5)..................... — 12 + 2 —22 Paints and Varnishes (4)............................... — 9 — 21 a Paper and its Products (6)........................... + 2 — 27 a Tobacco amd its Products (14).................... + 2 +7 — 6 Miscellaneous (18)............................................ -0 — 2 — 3 District—All Wholesale Trade (184)......... -0 — 3 — 22 * Per individual unit operated. ** Wholesale data compiled by U. S. Department of Commerce, Bureau of the Census. a Not available. Figures in parentheses indieate number offirms reporting sales. . 00 o THE MONTHLY BUSINESS REVIEW M - ~FT77~ Su m m ary of N ation al B u sin ess Conditions By the Board of Governors of the Federal Reserve System ^ j (d u s t r ia l p r o d u c t io n »ca »o « « . lt ASJigTtn. c ONDURABLE MANUFACTURES / / DURABLE r \ / y MACHINERY 1 Federal Reserve indexes. Groups are expressed in terms of points in the total index. Monthly figures, latest shown are for May 1943. WHOLESALE PRICES 'py t Industrial activity and retail trade were maintained in large volume during May and the early part of June. Retail prices, particularly foods, increased further in May. Production Total volume of industrial production, as measured by the Board’s seasonally adjusted index, remained in May at the level reached in April. Activity in muni tions industries continued to rise, while production of some industrial materials and foods declined slightly. Aircraft factories established a new record in producing 7,000 planes in May. In most nondurable goods industries there were small increases or little change in activity. Meat production, however, reached a record high level for May reflect ing a sharp advance in hog slaughtering. Seasonally adjusted output of other manu factured foods continued to decline. Newsprint consumption showed little change, and publishers’ stocks declined further to a 50-day supply on May 31. Consumption for the first five months of 1943 was only 5 per cent below the same period in 1941, whereas a reduction of 10 per cent had been planned. The temporary stoppage of work in the coal mines at the beginning of May brought production of bituminous coal and anthracite down somewhat for the month. Iron ore shipments on the Great Lakes continued to lag in May behind the cor responding month of 1942. The value of contracts awarded for construction continued to decline in May, according to reports of the F. W. Dodge Corporation. Total awards were about 65 per cent smaller than in May a year ago. Distribution ^ __ - —// U_t. COMMOOITIES wy iV“sy! AI J THANFWMP*OOU Bureau of Labor Statistics’ indexes. Weekly fig ures, latest shown are for the week ending June 12, 1943. MEMBER BANKS IN LEADING CITIES During May the value of sales at department stores decreased more than season ally, and the Board’s adjusted index declined 5 per cent. Sales, however, were about 15 per cent above a year ago, and during the first five months of this year showed an increase of 13 per cent over last year. In general, the greatest percentage increases in sales have occurred in the Western and Southern sections of the country where increases in income payments have been sharper than elsewhere. Freight-car loadings advanced seasonally in May but declined sharply in the first week in June, as coal shipments dropped 75 per cent from their previous level, and then recovered in the second week of June as coal production was re sumed. Commodity Prices Prices of farm products, particularly fruits and vegetables, advanced during May and the early part of June, while wholesale prices of most other commodities showed little change. Retail food prices showed further advances from the middle of April to the middle of May. On June 10 maximum prices for butter were reduced by 10 per cent and on the 21st of the month retail prices of meats were similarly reduced with Federal subsidy payments being made to processors. Agriculture Demand deposits (adjusted) exclude U. S. Gov ernment and interbank deposits and collection Hems. Government securities include direct and guaranteed issues. Wednesday figures, latest shown are for June 16, 1943. YIELDS ON U. S. GOVERNMENT SECU RITIES Averages of daily yields on notes and bonds and average discount on bills offered. Bills are taxexempt prior to March 1 9 41, taxable thereafter. Weekly figures, latest shown are for week ending June 19, 1943. Prospects for major crops, according to the Department of Agriculture, de clined during May while output of livestock products continued in large volume, as compared with earlier years. Indications are that acreage of crops may not be much below last year but that yields per acre will be reduced from the unusually high level of last season. Bank Credit Excess reserves at all member banks declined from 2 billion dollars in early May to 1.5 billion in the latter part of the month and remained at that general level through the first half of June. As the Treasury expended funds out of war loan accounts which require no reserves, the volume of deposits subject to reserve re quirements increased and the level of required reserves rose by 600 million dollars in the four weeks ending June 16, while continued growth of money in circulation resulted in a drain on bank reserves of 400 million dollars. These reserve needs were met in part by Treasury expenditures from balances at the Reserve Banks and in part by Federal Reserve purchases of Treasury bills. Reserve Banks contin ued to reduce their holdings of Treasury bonds and notes in response to a market demand for these issues. During the four weeks ending June 16, Treasury bill holdings at member banks in 101 leading cities fluctuated widely, reflecting primarily sales and repur chases on option account by New York City banks in adjusting their reserve posi tions. Holdings of bonds and notes declined somewhat while certificate holdings increased. Loans to brokers and dealers in securities declined sharply during the period, as repayments were made on funds advanced for purchasing or carrying Government securities during the April War Loan Drive. Commercial loans con tinued to decline. Government security prices advanced dvuing May following the close of the Second War Loan Drive, but in the early part of June there were small declines.
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