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MONTHLY BUSINESS REVIEW Covering financial, industrial, and agricultural conditions in the Fourth Federal Reserve District Federal Reserve Bank of Cleveland Vol. 15 Cleveland, Ohio, March 1, 1933 No. 3 Little change in the volume of fourth district business from the level of recent months was manifest in the clos ing week o f January or the first three weeks of Febru a r y and a waiting attitude seems to be displayed gen erally. Increases in a few o f the less important indus tries of the district were reported, but these were partly seasonal and were offset by reductions in other lines so that the general level o f activity in the latter part of February was about the same as a month earlier. by department store sales, though, compared with a year ago, a falling-off o f 22 per cent was shown in the dollar value. The general movement o f both retail and wholesale comm odity prices was downward in January. The latter improved temporarily coincident with the extremely cold weather. Employment throughout the district declined from De cember to January at a more-than-seasonal rate, with each of the m ajor industries reporting reductions ex cept the textile, shoe, and automobile parts accessory groups. Some weakness in the latter was reported in the first half o f February. Commercial failures did not Increase the usual sea sonal amount in January and were down 22 per cent from the first month of 1932. Liabilities o f the default ing concerns were 38 per cent smaller in January than a year ago. The extremely cold weather in early February caused a sharp increase in coal production at mines throughout the country as retailers found it necessary to replenish their depleted stocks. Coal production o f local mines was nine per cent greater in January than a year a g o . Manufacture o f shoes and clothing increased in Jan uary; the form er expanded at a much-greater-than-seasonal rate, and in the opening month o f the year was 7.4 per cent ahead of the same period o f 1932. Several pottery plants resumed or increased operations in early February follow ing the annual exhibit o f products. Iron and steel production fluctuated at a rate between 19 and 20 per cent o f capacity in the first three weeks of February though some weakness was visible near the end of the period. The contraction in automobile pro duction was largely responsible for the decline in steel output, there being very little demand from the railroad or construction industries. A little more activity in resi dential construction in this district was reported in Jan uary compared with December, but the general building situation is still very unfavorable. Tire price reductions caused an increase in retail sales, but this was not reflected in production schedules, which, however, were up slightly in anticipation o f spring buy ing. Retail trade throughout the district declined slightly less than the usu?il seasonal amount in January, judging The effect of the Michigan bank moratorium and the subsequent limitations on banking operations within that state was quite pronounced on industrial and credit con ditions in the fourth district in the month ending Febru ary 25. A goodly proportion of this district's business is carried on with firms whose banking connections were affected by the restrictions. Several o f the large manu facturers have now made arrangements for usual pay ments, but the flow o f goods and funds was temporarily hampered by recent developments. FINANCIAL Not knowing what the effect o f the moratorium might be, banks in this district fortified themselves against any unusual demands by increasing their cash on hand. Re porting member banks increased their holdings of cash from $21,000,000 to $36,000,000 between February 1 and 15, but in the follow ing week the amount o f cash in vault declined somewhat. Borrowings from the reserve bank increased quite sharply in the first three weeks of February and the downward trend o f deposits at re porting member banks continued in the four latest weeks. Savings deposits at 44 reporting banks throughout the district declined 1.2 per cent in January, being down 0.8 per cent in western Pennsylvania and 1.4 per cent in Ohio. Compared with a year ago savings deposits were off 5.6 per cent on February 1. The dollar volume o f check transactions in 24 cities of the district in the five weeks ended February 21 was 16.8 per cent below the same interval o f 1932. This was an improvement from the preceding period wheri the reduction was 29 per cent. In the month o f February there was one small bank suspension in this district, compared with eight in Janu ary; two previously closed banks reopened and a new National bank was form ed during the month. Reserve Bank Credit. Total volume o f credit extended by the Federal Reserve Bank o f Cleveland on February 21 was $230,545,000, an increase o f nearly $33,000,000 I THE MONTHLY BUSINESS REVIEW In the four latest weeks to a point only $2,000,000 be low the recent high figure reported in July, 1932, which was the highest level for any time since 1920. The in* crease in the four latest weeks was due to larger hold* ings of all types o f paper. Bills discounted for member banks rose $20,000,000 in the four weeks ended February 21 as demand for Fed eral reserve notes increased in the period and member bank reserve deposits were reduced. At $46,041,000 on the latest date, discounts were very much below a year ago when they amounted to $121,217,000. Holdings of bankers* acceptances, which remained at unusually low levels for over six months, increased $5,000,000 in the latest week, coincident with sharp increase in the System’s holdings follow ing the reduction in the buying rate at New York. Moderate increases occurred in the System's holdings of U. S. Government securities in the three latest weeks and on February 21 investments in Government securities, of both this bank and other reserve banks, were close to the high level maintained in the latter part of 1932. Member bank reserve deposits were reduced $6,000,000 in the four latest weeks, but, at $137,000,000, they were about the same as a year ago, though down considerably from preceding years. Circulation o f this bank’s Federal reserve notes in creased $30,000,000 in the first three weeks of February, most of the expansion occurring between February 8 and 15, the period in which the Michigan bank holiday was announced. Note circulation, at $305,863,000, is still $5,000,000 below the same date a year ago, but the vol ume of notes outstanding is unusually large in view o f the low level o f business and prices, compared with pre vious periods when a much smaller volume o f money sufficed for the greater activity. Member Bank Credit. Between January 25 and Feb ruary 21, loans and discounts o f reporting member banks in leading cities of the fourth district were reduced $22,000,000, most o f the contraction occurring in the latest week. Compared with a year ago, total loans, at $1,039,000,000, are down 17 per cent. Investments of member banks increased in the first half o f February, but hold ings o f Government securities were reduced in the latest week, so that total investments on February 21 were $6,000,000 lower than on the last report date in Janu ary. Holdings o f other than Government securities were reduced slightly in the four latest weeks. On the latest date, member bank total investments were up about nine per cent from a year ago, entirely through larger holdings of Government securities, for holdings of other securities were down $38,000,000, or 10.8 per cent. The increase in investments in the past year offset part o f the contraction in loans in that pe riod and on the latest date total credit extended by mem ber banks was 7.2 per cent below the corresponding date o f 1932. Net demand deposits o f reporting member banks in leading cities were reduced $41,000,000, or 5.4 per cent between January 25 and February 21. Time deposits declined $14,000,000, or 1.7 per cent in the same period. Most of the reduction in both time and demand deposits occurred in the latest week. Compared with a year ago, demand deposits are down about five per cent and time deposits about six per cent. The follow ing table shown the principal assets and liabilities of Federal reserve banks and reporting mem ber banks, for this district and the entire country, on designated dates. MANUFACTURING, MINING Iron and Steel Steel production, which opened the new year at about 12 per cent, had advanced to 18 per cent by the third week o f January, but a further rise to 19 per cent in the last week of January apparently about exhausted the in dustry's momentum and operations held rather close to this rate through the third week o f February. In the last week o f the month considerable weakness in fourth district steel centers was reported. To a large extent, the early January rebound was caused by a substantial flow of small miscellaneous requirements, reinforced by moderately good automotive releases. By late January, automotive orders receded slightly, no further support from miscellaneous users materialized, and the railroads and the building industries were or dering very little steel. Benefiting from the dominant flow of automotive re quirements, fourth district mills through late January and early February were operating on a more substantial basis than other districts. Youngstown mills advanced from 15 per cent in the last week o f January to 21 per cent in the third week o f February, but receded four points in the last week of the month; Pittsburgh ex panded from 16 per cent to 21 but dropped back to 18 per cent; Cleveland, evidencing the easier situation in the automotive industry, retreated from 41 to 31 per cent. January steel ingot production, for the country as a whole, developed a substantial gain over December when it turned in a daily rate of 38,704 gross tons and a total o f 1,006,297 tons, this representing 17.78 per cent o f ca pacity. In December, the daily rate was 32,485 tons, the month’s total 844,618 tons and the per cent o f capacity Banking Statistics Federal Reserve Banks Federal Reserve Bank of Cleveland (In Millions) Feb. 21. Feb. 24. Jan. 25, 1933 1932 11933 273 243 241 Gold Reserve*.......... 27 46 121 7 3 8 69 169 177 U. S. Securities......... Total Bills . and 197 199 231 Securities............... Federal reserve notes 277 306 311 in circulation........ 149 146 145 Total Deposits......... Federal Reserve System (In Millions) Feb. 21. Feb. 24, Jan. 25, 1933 1933 1932 2,938 3,259 3,118 835 265 327 133 31 174 1,763 1,834 741 2,340 1,724 2,064 3,000 2,399 2,643 1,973 2,706 2,587 Weekly Reporting Member Banks Loans on securities. A ll other loans......... T otal Loans.............. Investm ents.............. Demand D ep osits... Tim e Deposits.......... Fourth District (In Millions) Feb. 21, Feb. 24. Jan. 25. 1932 1933 1933 479 558 474 689 582 565 1,247 :1,061 1,039 810 804 739 836 791 835 m 841 789 United S u t:e» (I n Millions) Feb. 21, Feb. 24, Jan. 25, 1933 1933 1932 4,173 4,199 5,438 7,171 5,867 5,666 10,040 9.865 12,609 6,997 8,579 8,392 11,936 11,001 11.286 5,685 5,656 5,499 THE MONTHLY BUSINESS REVIEW 15.02. In January, 1932, the industry was engaged 25.96 per cent. The recovery in pig iron in January was less marked, the daily rate being 18,348 gross tons, the m onth’s total 568,785 tons and the per cent of capacity engaged 12.6. In December the rate was 17,650 tons, the month’s total 547,179 tons and the rate o f activity 12.5. A net gain of three, all o f the steelworks classification, put active blast furnace stacks up to 45 out o f 291 as of January 31. From the week ended January 21 to that ended Feb ruary 28 the reduction in the iron and steel composite of the magazine Steel was from $28.55 to $28.31. The low point in this period was $28.27, with a recovery of four cents in the third week o f February as a price stabiliza tion movement got under way, prompted partly by publication o f the huge losses experienced by the indus try in 1932. Total deficit for the entire steel industry was estimated at $160,000,000, or over $12 for every ton of steel produced in the period. In mid-February, therefore, many wire products, which had suffered reductions in January, were advanced $1 per ton; sheets were being reclassified to produce a more impregnable price structure and semifinished steel pro* ducers accounted it an achievement to hold their levels against the pressure which demoralized sheets and wire. Ooal Output o f coal in January, both in the country and the fourth district, de clined more than seasonally from December as moderate weather affected domestic consump tion and industrial activity and transportation of goods fell off. Production of local mines in the opening month o f the year exceeded the same period o f 1932 by 9.4 per cent, while in the entire country output was slightly un der last year. Compared with the average of the past ten years, however, mines of this district extracted 47 per cent less coal in January, there being 10,033,000 tons produced in the month. The extreme cold weather in early February caused daily average production to increase about 28 per cent and in the second week of the month it exceeded daily average output in the corresponding week of 1932 by 13 per cent. Retail distribution facilities were taxed to ca pacity furnishing household coal and were compelled immediately to replenish depleted stocks. Practically no change in industrial demand was reported. Larger 3 sales o f domestic-size coal have resulted in an increase ta slack coal stocks which are difficult to dispose o f be cause o f the depressed industrial situation. Total stocks o f bituminous coal at the beginning o f the year were lower than at any corresponding time since 1920, follow ing the great strike o f 1919. The supply of coal on hand at industrial and retail yards was 35,500,000 tons, or 16.4 per cent less than a year ago. Re tailers had 9.5 per cent less coal on hand than a year ago, while industrial stocks were down 18.4 per cent in the same period. Prompt railroad deliveries and the fact that the rate of production at mines is much less than capacity make it unnecessary for users to keep large stocks on hand. Automobiles January output of automobiles in the United States was about 12.8 per cent ahead o f December and exceeded pro duction in the opening month o f 1932 by 1.5 per cent. The January increase from the preceding month followed an expansion o f 80 per cent in December compared with November, and activity in the latest month was up about 200 per cent from the low point in October. The December-January increase was less than has oc curred in preceding years at that season, however, and the adjusted index o f the Federal Reserve Board dropped from 60 to 43 per cent o f the 1923-25 monthly average. Recent month-to-month changes in the automobile in dustry lose much o f their significance because of the changed seasonal pattern which appears to be developing in the industry. A rather sharp falling-off in February was indicated by the weekly production estimates. In the third week of the month the Annalist adjusted weekly index was only slightly above the low point of October. Operations at several plants were affected by labor disturbances, and the fact that production declined at a time when in past years it was increasing caused the index to drop sharply. These difficulties appeared to be about overcome in the third week of the month as schedules at nine plants were higher than in the preceding period. The increases were comparatively small so far as total output was con cerned and reductions at five other plants, including one m ajor small-car factory, more than offset the gains. Now that dealers are supplied with models, production is be ing held down pending developments in the retail sales field. Retail demand for passenger cars improved in Decem ber and, on the basis o f preliminary returns for January, was slightly ahead o f the first month o f 1932 and almost double the December total. Truck sales also increased in December, and in January were only slightly below the corresponding month of the preceding year, according to reports. Tires, Rubber The rubber tire industry has just passed through another price war, the effects o f which were more widely felt than some o f the previous ones. An almost chaotic situation prevailed for a few days and a huge volume o f tires was sold at less than half the prevailing list price. Dealers’ stocks were sharply reduced as a result o f the increased selling, and though there has been some restocking, oper 4 THIS MONTHLY BUSINESS REVIEW ations at Akron factories have not expanded to any extent. The net result Is that prices appear to have stabilized at lower levels with the same relative relationship existing prior to the price-cutting. A ccording to reliable reports, the number o f employees engaged in tire production in January was ten per cent below the same period o f 1932, and in addition the num ber o f hours worked has been lowered from 20 to 25 per cent in the past year. There was little change, either in the number o f employees or hours worked, in January and the first half o f February from that prevailing in Decem ber, though usually there is an expansion at that time o f year in preparation for the greater activity in the spring months. Tire shipments in December and January to the auto mobile industry were up slightly, as a result o f the increase in car assemblies, but replacement sales, prior to the pricecutting, were very limited. December, 1932, shipments, according to the Rubber Manufacturers’ Association, were 35 per cent below the same month of 1931 and were 8.3 per cent below production in the closing month o f 1932. Output in December was 25 per cent smaller than in the corresponding period of the preceding year. W ith the ex ception o f one month, production o f tires in the last half o f 1932 exceeded manufacturers’ sales by a considerable margin; stocks in producers’ hands increased over 50 per cent in the half-year and on December 31 were only 1.7 per cent smaller than at the end o f 1931. The increase in the six-month period was partly a rebound from the low level to which inventories receded prior to the date the Federal tax became effective. Crude rubber imports in January were only slightly smaller than in the same month o f 1932, but the supply o f crude rubber in this country continues to be close to 25 per cent larger than a year ago. W orld production o f crude rubber has been curtailed until it is aboTit in line with demand, but any change in takings would almost certainly be follow ed by increased production. Crude rub ber prices recently have been slightly under three cents a pound. Clothing The clothing and textile branch of in dustry in this district is unique in that the number employed by the 37 firms reporting to the Ohio State Bureau of Business Research was five per cent higher in January than a year ago, and, at 88 per cent o f the 1926 monthly average, the index was unchanged from December. In the separate branches, however, some variations were shown. The number en gaged in the manufacture of men’s clothing was down three per cent in January from the preceding month, though the index was 96 per cent o f the base period, one point lower than a year ago. In the wom en’s and miscel laneous branches, the number of employees increased three per cent from December to January and in the latest month was 13 per cent above a year ago. Correspondents reported an increase in sales as well as in operations in January and the first part o f February, but this is largely a seasonal change. Production o f spring models caused many plants to operate at capacity levels for the past several weeks, and the lateness of the Easter date this year is expected to prolong the spring season somewhat. Buying by retailers has not been in particularly large volume, but the number o f orders already placed was quite encouraging to producers, considering the general state o f affairs. Demand is confined largely to low-priced merchandise and the decline in prices from a year ago makes the dollar comparison an unfavorable one. Stocks o f raw and manufactured goods in hands of producers are low and retail stocks also are down. On Jani&ary 31 stocks o f women's clothing at fourth district department stores were valued at 34 per cent less than a year earlier and men’s clothing stocks were down about 29 per cent in the same period. The decline in the retail price o f clothing at department stores, which amounted to about 12 per cent in the past year according to Fairchild index, was partly responsible for the drop in the value of clothing stocks at local stores. Other Manufacturing Irregularities were reflected in operations o f the smaller manufacturing in dustries o f the district in the latter part of January and the first half o f February. Disturb ances in automobile centers from several causes affected production schedules at many factories o f the district and the general waiting attitude displayed in many fields was also disturbing. Auto Parts and Accessories. Employment at plants en gaged in the manufacture o f automobile parts increased 12 per cent from December to January, but in the latest month the index of the Ohio Bureau o f Business Research was only 64 per cent of the 1926 average, a reduction o f nine per cent from a year ago. A slackening occurred in the first part o f February as releases on orders were held up due to disturbances at Detroit and elsewhere, and to the slowing down in retail automobile sales. Inventories are satisfactory generally, and less raw and finished goods are on hand than a year ago. Clay Products. A resumption or an increase in opera tions at several clay products plants occurred in early Feb ruary, the rebound offsetting, in part at least, the decline in January which resulted in a 15 per cent drop from De cember in employment at local plants. Increased orders follow ed the annual show^ at Pittsburgh, but plants are operating at only slightly more than half capacity. Con ditions at brick and tile plants are very depressed. Glass. Conditions in the glass industry showed prac tically no change in the past four weeks. Employment in January was up one per cent from December and was three per cent above one year ago. Plate glass shipments were interrupted by developments in the automobile in dustry. Container sales and shipments also declined, both of which affected employment somewhat. Hardware, Machinery. Employment in the machinery industry dropped three per cent from December to Janu ary and one per cent in the metal products industry in the same period. In both cases the change was greater than seasonal. Machine tools were in slightly better demand in early February and electrical supply sales were larger in that period than in January. Engineering special ty sales dropped in January. Stocks o f raw and finished goods are materially below last year. Paints. Sales o f paints in the first part o f February im proved and inquiries from dealers, whose stocks are low generally, have been more numerous. The number o f I THE MONTHLY BUSINESS REVIEW hours worked by local plants is somewhat under last year and the number o f employees also is down. Stocks of finished goods are being increased in anticipation o f great er spring demand. Shoes. Production of footwear at 31 establishments in the fourth district in January was up considerably more than seasonally from December, the 42 per cent increase in the two months being the largest for any similar period on record. The expansion was larger than was reported for the entire country and output o f local plants in Janu ary was 7.4 per cent ahead o f the initial month of 1932. TRADE Retail The dollar value o f sales in January at reporting department stores through out the district was 22.4 per cent be low the corresponding period of 1932, the falling-off ranging between 18 per cent at Akron and 26 per cent at Pittsburgh. F or the fiscal year ending January 31, sales were off 26 per cent. The reduction in sales from December was about the usual seasonal amount, and the adjusted index was 54 per cent o f the monthly average o f the three years 1923-25. This was still slightly above the low point touched in the summer o f 1932, though sales in the entire country declined to a new low level in January. Retail department store prices declined one per cent in January, according to Fairchild's index, and on the latest date were 12.5 per cent below the same date a year ago. The proportion o f basement sales to total store sales was somewhat greater in January than a year ago and, on the basis of figures received from 29 stores, the d e cline in basement sales, compared with last year, was 17.7 per cent as against a falling-off in total store sales o f 22.4 per cen t In the individual departments smaller declines than the drop in total sales were shown in the cotton and woolen dress goods;, linens, domestics, art goods, hand kerchiefs, underwear, sports’ wear, furs, men’s clothing and furnishings, draperies, glassware and sporting goods departments. The dollar value o f stocks on January 31 was 23 per cent below the same date a year ago and the reduction from December was slightly more than seasonal, the ad justed index declining from 54.3 to 53.9 per cent of the monthly average of the three years 1923-25. As for several past months, the ratio o f credit to to tal sales in January was below a year ago, the reduction being 4.2 per cent. The 4.6 per cent rati© o f installment to total sales was the same as in January, 1932, but buy ing on regular 30-day accounts has been curtailed. Collections continue to hold up fairly well, payments during January on accounts receivable on December 31 being only 2.7 per cent below a year ago. The dollar volume o f collections is down because o f the reduction in sales. Chain grocery and drug sales were down quite sharply in January, the reduction in the form er from the same month last year being 9.5 per cent, while sales o f the latter were down 15 per cent. W holesale All lines of wholesale trade declined sea sonally in January in this district, but the reduction was smaller than in 1932 and about the same as occurred in early 1931. Compared with a year ago, sales were down approximately 16 per cent and were only 43 per cent of the monthly average of the three years 1923-25. In the four lines reporting sales, wholesale grocery business was down 16 per cent from a year ago and 7.5 per cent from December; dry goods sales were off 16 per cent from January, 1932, and 27 per cent from December o f that year; hardware sales in January were 18.5 per cent under last year and 20 per cent below Decem ber; and drug sales, which have been holding up relatively better than most lines, were down 10.5 per cent from January, 1932, and 8.5 per cent from the closing month o f last year. In view of the sharp reduction in sales, collections have held up quite well. Dollar value o f stocks in all reporting lines has been materially reduced. BUILDING Construction activity in the fourth district in January was valued at $4,074,000, a reduction o f 20 per cent from December and o f 41 per cent from January, 1932. In past years the value o f building contracts awarded showed rather wide fluctuations from December to January, being partly affected by weather conditions, etc. Variations ranging from an increase o f 72 per cent to a reduction of 51 per cent have been shown in the past ten years, an expansion being reported in four years and a contraction in six years. Total awards in the latest month were less than oneseventh as large as the average value o f contracts let in January in the preceding ten years and the report cover ing the first half o f February indicated a further fallingoff in that period. Residential building in this locality showed important gains over December, chiefly in the construction of small houses, though there were only 200 projects started in January throughout the district. In the non-residential class, increases over December were reported for comm er cial, educational, hospital, and religious and memorial buildings; losses were shown for factories, and public and recreational structures. Substantial reduction, both from December and January, 1932, were evident in public util ity contracts awarded in January and new public work projects also compared unfavorably with these periods. The situation in the building supply industry, naturally, is very unfavorable. Stocks o f manufactured materials are almost nil and raw material stocks are down sharply from a year ago. Orders received by lumber producers were considerably smaller than in early 1933. Cement production at mills in this district dropped sharply in Jan uary, partly seasonal, and was 13 per cent below output in the same month o f 1932. AGRICULTURE The Department o f farms as o f January number o f cattle and tire country from a Agriculture’s report o f livestock 1, 1933, showed an increase in hogs on farms throughout the year earlier, but the number on the en of 6 THE MONTHLY BUSINESS REVIEW horses, mules, and sheep declined in the period. The farm value o f all livestock on the latest date was esti mated at $2,661,985,000, a drop o f 16.7 per cent in the past year and 40 per cent from January 1, 1931. The farm value per head o f horses increased slightly in the past year, but the value o f all other animals declined sharply. The number o f cattle on farms increased 3.9 per cent in 1932 and was 15 per cent above 1928, the recent low. The number o f swine on farms was 2.8 per cent larger than on January 1, 1932, but the number of sheep was 3.2 per cent smaller than at the beginning o f last year, the first reduction since 1923. In the states included in the fourth district, the num ber o f horses and colts on farms as of January 1 was about three per cent smaller than a year earlier. There was, however, a greater number of meat animals on farms as 1933 began than at the time of the survey in 1932. The increase in the number of cattle on farms (including those on feed and those kept for m ilk) ranged from one per cent in Pennsylvania to three per cent in Kentucky and West Virginia and five per cent in Ohio. The number of sheep and lambs on farms in this section was practically unchanged in the past year which was in contrast with the decline o f 3.2 per cent in the entire coun try. Ohio ranks seventh in sheep-raising, having 2,129,000 o f these animals on farms on January 1. Swine on farms increased from eight to 20 per cent in the four states of the district, compared with an increase of 2.8 per cent in all states. In 1932 there were over 4,000,000 pigs raised on Ohio farms, the number remaining on farms on January 1 being 2,486,000. Tobacco Selling o f this district’s 1932 tobacco crop has been about completed, only a small amount of tag-end tobacco remain ing to be disposed o f at the present time. This type of leaf usually brings a low price, but there has been a de cided drop in tobacco prices in recent weeks, so that, grade for grade, the prevailing price now is materially less than it was when the markets reopened in January after the holiday. The average price received for burley tobacco sold on auction floors this season was quite satisfactory on the whole, according to reports, though final figures are not yet available. The selling season opened with an average price in the first week o f $13.43 a hundred pounds, com pared with $11.77 in the same period o f 1931. As the season progressed, prices advanced until a range o f 15-16 cents a pound was reached in early January. This was almost 50 per cent better than the average price for all burley tobacco sold in the 1931-32 season. The returns this season were well distributed, for more o f the crop was o f average quality, with leaf thin in character and of more desirable color, than in 1931. In that year a small part of the crop was of high quality, some o f it was o f average quality, but the bulk o f the crop was o f low grade. Because o f the condition of the 1932 crop, prices for low and medium grades o f tobacco have been considerably higher than a year ago, while top grades are cheaper. Farmers in this district are quite ©nthused over the favorable price they have received for their crop, which, however, has been largely a direct result of the very poor tobacco yield in other sections o f the country and to the 25 per cent reduction in the size o f the 1932 burley tobacco crop from the preceding year. Higher prices have resulted in talk o f larger acreages in the com ing season. CHECK CliEARINGS That the Federal check tax o f two cents on every item drawn has had an inhibiting effect on the number of checks used in this district is clearly brought out by the accompanying chart. This shows an index o f the daily average number o f checks handled by the Federal Reserve Bank o f Cleveland and its branches in Cincin nati and Pittsburgh with the daily average o f the three years 1923-25 representing 100 per cent. The i n d e x was adjusted for seasonal variations so that irregularities resulting from this source do not influence the movement o f the curve. The increase in the volume of business done and the increased popularity o f the check as a means o f set tling financial obligations is shown by the sharp ad vance in the index during the years 1919 to 1929. The depression o f 1921 had little effect on the upward m ove ment, but the 1924 period of depressed business caused the index to level off in that year and early 1925 and CHECKS CLEARED BY FR.B.OF C LEVELA N D AND BRANCHES 1 [................ ! 1 DAILY < A VERAGE NUMBER 1923-192*i-100 SEASONA LLY A O Jl JSTED \ j --- ----- ----- ----- ----- ----- ----- ----- --- ------------ ----- --- — , — lo 1919 1920 1921 1922 1923 1924 1925 1926 1927 1926 1929 1930 1931 1932 . 1933 7 THE MONTHLY BUSINESS REVIEW from then until 1929 the advance was at a slower rate. The peak in the number o f checks handled was reached in late 1929, though the daily average number handled in the entire year 1930 was slightly higher than in 1929. Every business day o f 1930 this bank and its branches cleared on an average 286,609 checks. This does not include checks handled in "packages,” each package be ing counted and handled as one check, although the package might have contained many individual checks. However, so far as the movement of the index is con cerned, this in all probability would cause the index to show an even sharper decline, for package checks arise only in clearings against banks in reserve bank or branch cities. Payment o f local bills by cash instead of check is much more feasible, and has been resorted to, to a greater extent, than in payment o f out-of-town bills. The daily average number o f checks handled by this bank and its branches in 1932 was 15.8 per cent under 1930 and 12.0 per cent below 1931, the decline in general business being responsible for part of the downward move ment in the past three years. The sharp drop in the adjusted index in July, 1932, however, clearly shows that the levying o f the check tax was directly or indirectly responsible for a large part of the falling-off. F or the past seven months, the number of checks passing through these offices has been close to the level o f 1924, and was 17 per cent below the same period of 1931. Increased postage rates, which occurred at the same time the check tax w'as levied, and the wider use o f a metered service charge, are also factors affecting the use o f c h e c k s , for the writing and mailing of each check now costs not less than five cents and may cost as much as ten cents. The decline in the number of checks used is partly responsible for the increased amount o f money in circulation. (1933 compared with 1932) Percentage increase or decrease COLLEC SALES STOCKS TION S Jan. Jan. Jan. — 17.8 — 23.8 — 9.3 — 22.5 — 26.9 — 27.4 — 18.0 — 31.6 — 23.7 — 23.0 — 20.4 — 20.2 — 25.5 — 21.9 — 28.2 — 21.6 — 28.1 — 22.2 — 20.4 — 21.0 — 23.2 — 26.5 — 17.2 — 32.8 — 27.3 — 22.9 — 22.4 — 33.1 — 26.9 — 29.3 — 18.9 — 21.5 — 20.5 — 32.4 — 28.7 — 5 .5 — 23.5 — 41.8 — 26.6 — 26.2 — 31.1 — 23.2 — 25.3 — 29.5 — 36.9 — 17.0 — 25.6 — 45.3 — 34.5 — 33.6 — 15.3 — 9 .5 — 31.0 — 18.8 — 8.3 — 14.4 — 22.8 — 9 .8 — 16.0 — 16.2 — 10.5 — 18.5 ..... — 22.’ 7 — 19.1 (000 omitted) Jan., Jan., % change Fourth District Unless otherwise specified 1933 1932 from 1932 — 29.0 Bank Debits— 24 cities.........................................$ 1,484,000 2,090,000 Savings Deposits— end o f month: 27 selected banks, O. & Pa................................$ 629,647 665,739 — 5 .4 — 6.2 Postal Receipts (9 cities).....................................3 2,355 2,510 Life Insurance Sales: 74,801 96,984 — 22.9 Ohio and Pa.......................................................... $ Retail Sales: Department Stores— 54 firms........................... $ 9,328 12,023 — 22.4 — 29.3 Wearing apparel— 12 firms................................513 726 — 26.2 Furniture—-44 firms............................................ $ 298 403 Wholesale Sales: Drugs— 13 firms................................................... $ 1,127 1,259 — 10.5 — 16.3 Dry Goods— 11 firms..........................................S 597 713 2,749 3,273 Groceries— 33 firms............................................. $ — 16.0 Hardware— 14 firms...........................................% 584 716 — 18.4 970 1,916 Building Contracts— Residential....................... % — 49.4 — T otal..................................$ 4,074 6,924 — 41.2 Commercial Failures— Liabilities.......................$ 5,951 9,628 — 38.2 — N um ber............................ 251 3221 — 2 2 .0 Production: Pig Iron, U. S.............................................. Tons 567 973 — 41.7 Steel Ingots, U. S.......................................... Tons 1,006 1,459 — 31.0 - f 0 .6 Automobiles— Pass. Cars............................U. S. * * Trucks................................U. S. * * + 5.7 Bituminous C oal...........................................Tons 10,033 9,167 + 9 .4 Cement— O., W. Pa., W. Va.....................Bbls. 214 246 — 13.0 Electric Power—-O., Pa., K y.................k.w.h. 1,083* 1,1803 — 8 . 2 Petroleum— O., Pa., K y............................. Bbls. 1,792s 2,076* — 13.7 Shoes ............................................................Pairs * * + 7 .4 Tires, U. S.............................................. Casings 1,5933 2,125* — 25.0 factual number 3 December Confidential Debits to Individual Accounts (Thousands of Dollars) 5 weeks ending Feb. 21, 1933 43,359 5,962 .,. 19,431 411,233 .., Greensburg. . . . . Wholesale and Retail Trade D E P A R T M E N T STORES (53) A kron............................................................. Cincinnati..................................................... Cleveland...................................................... Columbus...................................................... Pittsburgh..................................................... T oled o............................................................ Wheeling....................................................... Other Citie«................................................. District.......................................................... W E A R IN G A P P A R E L (12) Cincinnati..................................................... Other Cities................................................. D istrict.......................................................... F U R N IT U R E (44) C incinnati................................................ Cleveland...................................................... Columbus...................................................... D ayton........................................................... T o le d o ........................................................... Other Cities........................ ......................... District............................... .......................... CH A IN STORES* Drug*-—District (4 )............ ....................... Groceries— District (6 ).............................. W H OLESALE GRO C E RIE S (33) A kron...................................... ....................... C levelan d ........................................... E rie................................................................. Pittsburgh..................................................... T oled o............................................................ Other Cities................................................. D istrict.......................................................... W H OLESALE D R Y GOODS ( 1 0 ) .... W H OLESALE DRUGS (1 3 )................. W H OLESALE H A R D W A R E ( 1 4 ) . ... •Sale* per individual unit operated. Fourth District Business Statistics .... .... .... * — 20.6 — 20.2 — 7.8 — 14.0 43,862 17,892 2,197 5,080 6,176 21,538 7,716 2,622 M iddletow n... 5,059 Oil C ity .......... 8,072 . 518,480 .., 11,025 Steubenville. . 4,852 77,270 4,350 25,755 Youngstown. . 22,570 5,003 T o ta l............. % change from 1932 — 22.5 — 14.2 — 11.4 — 18.0 — 13.6 — 17.7 — 13.7 — 32.8 — 39.5 — 18.5 — 33.5 — 45.9 — 16.6 — 9 .0 — 35.6 — 25.8 — 18.1 — 16.9 — 21.2 — 29.0 — 14.2 — 14.0 — 13.6 — 28.1 — 26.4 — 16.8 Year to date Year to date Dec. 29, Dec. 31, 1932 to 1931 to Feb. 21, Feb. 24, 1933 1932 84,660 117,857 11,593 13,847 35,071 40,800 467,374 589,949 795,465 1,061,974 175,499 227,712 85,463 100,003 34,951 51,010 4,104 7,409 9,186 13,966 12,354 17,594 3,177 5,492 52,713 43,314 14,737 15,495 5,195 7,498 9,869 12,363 15,631 19,148 992,290 1,306,196 20,701 28,446 8,978 12,870 143,519 175,219 7,884 9,406 51,543 61,981 42,201 67,312 9,662 13,984 3,084,421 4,030,244 % change from 1932 — 28.2 — 16.3 — 14.0 — 20.8 — 25.1 — 22.9 — 14.5 — 31.5 — 4 4.6 — 34.2 — 29.8 — 4 2.2 — 17.8 — 4 .9 — 30.7 — 20.2 — 18.4 — 24.0 — 27.2 — 30.2 — 18.1 — 16.2 — 16.8 — 37.3 — 30.9 — 23.5. Fourth District Business Indexes (1923-1925 = 100) Bank Debits (24 cities)........................................ Commercial Failures (N u m ber)........................ “ • “ (Liabilities)........ ............ Postal Receipts (9 cities)..................................... Sales— Life Insurance (Ohio & P a .).................. “ — Department Stores (53 firm s)........... “ -----Wholesale Drugs (13 firm s).................... “ .— Dry Goods (10 firms) “ — “ Groceries (33 firm s)............ “ — “ Hardware (14 firm s)........... " — " All (7 0 )............................ .. “ — Chain Drug (3 firm s)**.......................... Building Contracts ( T o t a l ) ................................ “ “ (Residential)....................... Production— Coal (O., W. Pa,, E. K y .).......... — Cement (O., W. Pa., W. Va.) “ — Elec. Power (O., Pa., K y .) * .. . . — Petroleum (0 ., Pa., K y .)* ........... “ — Shoes......................... - . . . . . ............ ^December. **Per individual unit operate^. Jan., Jan., Jan., Jan., Jan., 1933 1932 1931 1930 1929 55 77 122 127 136 172 174 121 134 221 135 218 271 138 105 91 97 115 126 122 89 109 116 137 130 43 54 70 77 84 73 8 4 ' 101 130 106 23 28 48 62 70 48 57 76 91 92 29 36 49 64 74 43 70 83 52 90 65 86 77 82 81 9 15 38 73 115 6 11 29 46 66 83 101 55 51 103 18 42 20 60 68 129 141 152 161 149 97 106 128 107 112 72 67 61 89 104 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Federal Reserve Board Volume of industrial production increased in January by less than the usual seasonal amount and factory employment and payrolls continued to decline. Prices o f commodities at wholesale, which declined further in January, showed relatively little change in the first three weeks o f February. Production and Employment Index of industrial production, adjusted for sea sonal variation (1923-1925 average = 100). Latest figure, January, 64. Industrial activity, as measured by the Board's index, which makes allowance for usual seasonal changes, declined from 66 per cent o f the 1923-1925 average in December to 64 per cent in January, which compares with a low level o f 58 per cent last July. Output o f coal declined consider ably, contrary to the usual seasonal tendency. Increases in activity in the cotton and silk industries were somewhat less than seasonal in amount, and there was a slight decline in production at woolen mills. Output o f shoes increased seasonally. Activity in the steel industry showed a seasonal in crease during January, and little change during the first three weeks o f February. Autom obile production, which had increased substantially in Becember, showed a further slight increase in January. Factory employment declined between the middle of December and the middle o f January by considerably more than the seasonal amount. De creases were reported in most lines except in the cotton, wool, and silk industries, where employment increased. Construction contracts awarded were in about the same volume in January as in December, according to the F. W . Dodge Corporation; in the first half o f February the value o f awards showed a decline. Distribution Federal Reserve Board’s index of factory em ployment with adjustment for seasonal varia tion (1923-1925 average =r 100). Latest figure, Jannary, 59.4. Volume of freight traffic was somewhat smaller in January than in December, reflecting a reduction in shipments of coal. Sales by department stores decreased after Christmas by more than the usual seasonal amount. W holesale Prices ... . The general level o f wholesale comm odity prices, as measured by the index o f the Bureau of Labor Statistics, declined further from 62.6 per cent o f the 192 6 average in December to 61.0 per cent in January, reflecting substantial reductions in the prices of crude petroleum, gasoline, textiles, and dairy and poultry products. Prevailing prices for wheat, cotton, and hogs in January and the first three weeks o f February were somewhat above the low levels reached in December. WHOLESALE PR ICE s i| | -- i ■■■’ P rotects ■'Tooda'" s Other CommotTffjea \ ^ — *\j Bank Credit B2S Indexes of the United States Bureau of Labor Statistics <1926 = 100). Latest figures, Jannaiy, farm products, 42.0; foods, 55.8; other commodi ties, 67.3. Between January 4 and February 21, there was an increase o f $319,000,000 in the demand for currency, accompanying banking disturbances in different parts o f the country, and a decrease o f $64,000,000 in the country’s stock of monetary gold. These demands were met by member banks in part by the use of their balances at the reserve banks, which declined by $243,000,000 during the period, but continued to be considerably above legal requirements. Reserve bank holdings o f United States securities declined by $88,000,000 between January 4 and February 1, but increased by $70,000,000 during the follow ing three weeks; their holdings o f acceptances increased by $141,000,000, and discounts for member banks increased by $76,000,000. Loans and investments o f reporting member banks in leading cities declined by about $100,000,000 during the five weeks ending February 15. The banks’ net demand deposits declined by $390,000,000, reflecting largely reductions in bankers’ balances, and time deposits showed a decrease of $93,000,000 for the period. Monthly averages of weekly figures for report* ing member hanks in leading cities. Latest figures are averages of first three weeks in February. Money rates in the open market were slightly firmer during the first half o f February. Open market rates on 90-day bankers* acceptances, which had been *4 o f 1 per cent, had increased to % o f 1 per cent by Februray 20. Rates on prime commercial paper and on stock exchange loans remained unchanged. The minimum buying rate on bills at the Federal reserve banks o f Boston, New York, and Chicago was reduced from 1 to % o f 1 per cent.
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