Full text of Economic Review (Federal Reserve Bank of Cleveland) : May 1942, Vol. 24, No. 6

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MONTHLY BUSINESS REVIEW
Fourth Federal Reserve District
Federal Reserve Bank of Cleveland

Covering financial/ industrial
and agricultural conditions

Vol. 24

Cleveland, Ohio, May 29, 1942

Federal control over industry and trade was extended
greatly during April and the forepart of May. Measures
which most directly affected individuals, as consumers,
were the General Price Control order, which established
maximum wholesale and retail prices for many commodi
ties at the highest level prevailing in March, and the pro
gram set up to control the distribution of sugar. In At
lantic Seaboard States, gasoline also is being rationed.
During the period under review, production of radios,
mechanical refrigerators other than kerosene models, home
laundry equipment, and vacuum cleaners for civilian
use ceased. All of these industries have been im
portant in this district. Early in May, the War Pro
duction Board ordered fabricators to stop using iron
and steel in the manufacture of a long list of common
articles after a ninety-day period, during which time lim
ited production is permitted. This Governmental directive
also prohibited consumption of other specified materials
as substitutes; another order adopted the principle of “ con
centration of production” , whereby essential civilian needs
are to be met by the limited output of smaller concerns in
a given industry while larger companies convert to war
work. The increasing demand for steel, particularly on ex
ceptionally high priority rating for heavier grades, oc
casioned an order restricting deliveries after May 15 to
preference ratings of A-10 or higher.
Partly as a cumulative result of such Federal directives
as those mentioned, business activity in the fourth district,
as elsewhere, has become more and more selective. Basic
war material production in this district continued at a
record level during April and the first weeks of May, with
output in some lines reaching new peaks. More coal has
been mined during recent weeks than at any other similar
time since the First World War. Machinery and tool out
put has been increased further. In lines making chiefly
civilian items, production of which has not yet been greatly
'curtailed by Federal order, operating rates have remained
virtually unchanged or they have declined slightly because
of decreased demand or material shortages. Scarcities have
been experienced even by manufacturers doing war work.
Total employment in principal fourth district industrial
centers increased slightly further in April as war indus
tries hired additional workers. Demand for semiskilled and
^killed labor has become so great as virtually to exhaust

No. 5

the supply. Consequently, concerns have revised their em
ployment standards somewhat; many have been hiring
women for light factory and technical work formerly done
by men. Payrolls generally have continued to advance more
rapidly than aggregate employment, reflecting overtime
payments and some wage adjustments.
Fourth district trade volume, judged by sales of report
ing department stores, has shown only narrow gains re
cently and in the latest week sales were actually six per
cent smaller than a year ago. The accompanying chart
shows recent percentage changes. The decrease is the first
recorded in more than a year, with the exception of two
periods when special sales destroyed the comparability.
Considering the fact that the general retail price level
has risen about 19 percent during the past twelve months,
the physical volume of trade has dropped well below year
ago levels. Partly responsible for such an occurrence was
a disposition on the part of consumers recently to post
pone purchases until changes resulting from the posting of
maximum prices could be appraised. It also reflected effects
of the advance buying which occurred earlier and pos
sibly some decrease in stocks of particular items.
Living costs in April, the month before the price ceil
ing order became effective, averaged ly i percent higher
than a month before in the seven fourth district cities for
which such information is available. This advance extended
the year-to-year increase to 13 percent. Since the outbreak
of World War II, there has been a 15 percent rise.

DEPARTMENT STORE SALES
FOURTH

+40
+ 30

+ 20

DISTRICT

. . ill
m i in ii

Bii
*

1
0

-10

CHANGE IN
— WEEKLY DOLl Aft SALES •
194 2 FROM 1941

14 21
FES

2
1
MAR

1
8

APR

1
6
M ay

THE MONTHLY BUSINESS REVIEW

FINANCIAL
Opportunities for banks to aid in financing industries doing- war work have been
broadened considerably by Executive
Order 9112 and Regulation V of the Board of Governors,
which were discussed in a general way last month. Since
issuance of the April R EVIEW , terms of the guarantee
agreement to be entered into by a bank or other financing
institution and the Army, Navy, or Maritime Commission
have been announced. In a legal sense, the military pro
curement agency gives a commitment to purchase from the
financing institution, under certain conditions, a specified
portion of a loan made to finance a war work contractor
or subcontractor.
At the time of the First World War, no provision was
made for repayment of loans extended on the basis of
war contracts that subsequently were canceled. Many con
cerns were placed in a difficult financial position when
banks found it necessary to press for collection of loans
made on war production contracts that were canceled, and
some banks consequently suffered losses. The present pro
gram has been designed to make possible greater partici
pation by banks in the financing of war industries by ex
tending protection to banks and borrowers should a war
production contract be cancelled.
Interest among fourth district banks in such financing
is evidenced by the fact that Federal Reserve Bank
of Cleveland between April 1 and May 28 received 77 appli
cations in the amount of $54,728,000 for loans to finance
war industries under provisions of Executive Order 9112
and section 13b. The average loan applied for was some
what larger than might have been expected, though the
smallest one that has been handled was for $1,500.
War Industry
Financing:

Member Bank
Credit

In contrast to the sizable decline in total
loan volume of all weekly reporting
member banks in the country that has
occurred recently, aggregate loan accounts of fourth dis
trict weekly reporting banks have fluctuated narrowly.
Commercial, industrial, and agricultural loans of report
ing institutions in this district amounted to $436,000,000
on April 15 and $434,000,000 on May 13. This latter figure,
which includes credit extensions made to war industries
under Executive Order 9112, represents an eleven per
cent increase over a year ago.
Fourth district reporting banks reduced their holdings of
Treasury obligations somewhat early in May. Portfolios
of Government bonds totaling $1,161,000,000 on April 15
were increased $8,000,000 during the next two weeks to
an all-time peak. Subsequently they have been reduced to
$1,155,000,000, compared with $850,000,000 on May 14,
1941. During the latest period some Government guaran
teed securities were disposed of, but “ other” security hold
ings were unchanged.
Adjusted demand deposits of these banks exceeded $2,000,000,000 for the first time in history on the April 29
report date. Since then there has been a moderate decrease,
but the total in mid-May was 17 percent greater than that
of a year previous. Time deposits, by contrast, declined
slightly further during the four weeks ended May 13. Re
ports from 40 Ohio and western Pennsylvania banks at the
end of April revealed that savings deposits of these in
stitutions were down fractionally in the month and three
percent from those of a year previous.

Reserve 3ank
Credit

The Cleveland reserve bank's proportionate share of the System's holdings
of Treasury obligations increased $23,781,000 to $252,607,000 in the four weeks ended May
13, a period in which the System bought a substantial
amount of Government securities. Discounts and advances
of this bank continued at a low level.
Demand for currency has continued to expand, and this
bank's note circulation rose to successive new peak levels
during April and the first part of May. On the latest date
it was $849,702,000, or 44 percent greater than a year
before.
War Bond
Sales

War Bond sales through qualified fourth
district agencies, other than post offices,
increased in May. The daily average
rate of sales advanced to the second best level since the
securities first became available as Defense Savings Bonds
a year ago; it was higher only in January. The improve
ment in May reflected, to a considerable extent perhaps,
results of the house-to-house campaign conducted by vol
unteer workers for the Treasury Department.
During the first 28 days of May $42,070,000 of Series E,
F, and G bonds were sold in the fourth district by all is
suing institutions, except post offices. The April total was
*$38,715,000 and that for May 1941 was $25,349,000.
NEW MEMBER BANK
The Farmers State Bank of Englewood, Ohio, Engle
wood, Ohio.
LAKE SHIPPING
Steps designed to speed up the flow of iron ore from
northern Great Lakes' ports to consuming furnaces and
lower lakes' storage yards were taken in May. Effective
May 15, the Office of Defense Transportation banned the
transportation of grain, except by special permit, between
points on Lake Michigan or from any Canadian port in
American vessels capable of carrying iron ore. Boats equip
ped with self-unloading devices were exempted; 37 freight
ers are in this class. Under terms of a second order, a
permit system was established as of June 1 for coal ship
ments on Lake Erie and Lake Ontario or between Lake
Erie ports and those on the Detroit and St. Clair Rivers
or on lower Lake Michigan.
Movement of approximately 340 Great Lakes' boats with
a gross carrying capacity of nearly 3,000,000 tons per
trip was placed under control of the Office of Defense
Transportation by the order restricting grain shipments.
The Great Lakes ore-carrying fleet, exclusive of bulk
freighters that heretofore have handled grain or mixed
cargoes, numbers 298 vessels this year, seven, more than
in 1941. Trip capacity was increased from 2,688,040 gross
tons to 2,724,540 tons by the addition of seven former auto
mobile carriers. Vessels were fitted out earlier this year
than ever before in history, and first cargoes of iron ore
were received at Lake Erie docks in March. By mid-April.
283 American flag freighters had been commissioned in
the ore trade; a month later 291 were active, and about a
dozen Canadian registry boats had loaded ore for Ameri
can destinations. During the season to May 1, these ves
sels transported 8,582,000 gross tons of iron ore from
northern lake ports and loaded 6,706,000 net tons of coal
at lower Great Lakes' docks. Both of these figures repre

THE MONTHLY BUSINESS REVIEW
sent record tonnages for the period from opening of navi
gation to May 1.
Present plans are to bring approximately 90,000,000
tons of iron ore down the Great Lakes before winter. Last
year an all-time record of a little more than 80,000,000 tons
was moved.
MANUFACTURING, MINING
Iron and
The chief factor determining the naSteel
tional steelmaking rate recently has been
the necessity for repairing open hearth
furnaces that have been producing record tonnages of steel
for more than a year and a half. Scrap has been moving
to mills in larger quantities than earlier this year when the
supply of metal for melting was the principal determinant.
Collection efforts have been intensified, and weather con
ditions have been more favorable for such work. Some
tonnages have been received from northern Great Lakes'
points since opening of lake navigation. Amounts of scrap
available in the largest fourth district steel producing cen
ters— Pittsburgh, Youngstown, and Cleveland-Lorain —
however, are reported still to be relatively limited. This
situation arises chiefly from the fact that these areas, Pitts
burgh and Youngstown particularly, are very heavy con
sumers of scrap, but comparatively little is produced there.
Steelmaking operations in the Pittsburgh section were
at 95-97 percent of capacity during April and the first
weeks of May. The Youngstown area rate was 94 percent
during the period; that of mills in both the ClevelandLorain and Cincinnati territories fluctuated between 87
percent and 9 4 percent. Activity in the Wheeling-Weirton section declined from 82y2 percent in mid-April to 78
percent in late May. Aggregate output of all fourth dis
trict steel plants was estimated to be slightly smaller in
recent weeks than a year previous.
During April, the American steel industry made 7,122,000
net tons of ingots and castings, compared with an all-time
monthly record of 7,393,000 tons in March. Production a
year ago was 6,754,000 tons. Raw steel output during the
first four months of 1942 was at an annual rate approxi
mating 84,500,000 tons and four percent more than that
of the corresponding period last year.
National pig iron production figures are no longer avail
able for publication. Judged by the consumption of iron
ore at United States blast furnaces that depend primarily
upon supplies from the Lake Superior district and reports
of some manufacturers, April output, on a daily average
basis, was at a new high level. The 187 stacks in blast at
the month end used 6,807,000 gross tons of ore during
April. This is the second heaviest consumption for any
month in history, being exceeded by 93,000 tons in March,
which had one more working day.
During April, approximately 1,150,000 tons of ore were
added to inventories at lower lake docks and at American
furnaces. On May 1 stocks totaled 20,695,000 tons, com
pared with 16,937,000 tons a year earlier.
Coal

April production of bituminous coal in
the fourth district, as the accompanying
chart indicates, was the third best for
any month since late 1929, when solid fuel was somewhat
more widely used as an industrial power source and for
household heating. The 19,206,000 net ton total was four
percent greater than that of the previous month and was
exceeded only by narrow margins in March 1937 and O c

tober 1941. Output in the earlier period reflected a large
amount of consumer buying in anticipation of a mine
strike when labor contracts expired at the end of the month.
During October last year industrial demand was heavy
and a record tonnage of bituminous coal was shipped from
lower Great Lakes' ports.
A strong market existed for all types of coal during
April and the first part of May. Industrial users contin
ued to accumulate stocks as they had in March after al
lowing them to decline during the winter. Domestic con
sumers, in line with the recommendations of various or
ganizations and Governmental agencies, appeared to be
buying much of their next winter's requirements. As has
been noted elsewhere in this review, more coal moved by
bulk freighter to northern Great Lakes' destinations dur
ing the season to May 1 than in any similar period in his
tory.
Coincident with the issuance of the general maximum
price regulation, ceiling prices were established for bitu
minous coal sold at mines or preparation plants. The ceil
ings became effective May 18; the basis for their computa
tion reportedly permitted the industry to realize somewhat
higher prices than prevailed between October 1-15, 1941.
Maximum distributors' prices also were established officially
late in April at the highest level existing in the period, De
cember 1-15, 1941. Previously, the agreement between coal
wholesalers and retailers and the Office of Price Adminis
tration had been an informal one.
Apparel
Industries

Conditions in the fourth district apparel industries were in a state of flux
in April and early May. Various uncer
tainties with respect to material supply existed; both cloth
ing and shoe manufacturers experienced difficulty in ob
taining certain items for non-military use. Several ques
tions raised by the Federal price ceiling order that became
effective at the wholesale level on May 11 had not been
finally resolved.
Some men's ready-to-wear clothing makers in mid-May
were completing production and deliveries to dealers of
light-weight merchandise, shipments of which had been de
layed earlier in the season because cloth deliveries from
textile mills were extended. Total employment in needle
work shops in principal producing centers of the district
consequently was larger than usual for that time of year.
Fourth district clothing manufacturers generally post
poned initial showings of fall and winter season merchan
dise until the last part of May or later; in most previous

THE MONTHLY BUSINESS REVIEW

years they had been earlier. According to reports, many
textile mills had offered only a limited variety of heavier
weight cloths by the middle of May. Soft fabrics, such as
shetlands and tweeds, were more readily obtainable than
harder finished ones like whipcords, coverts, gabardines,
and worsteds, which were being taken in large quantities
by the armed forces. Supplies of linings, particularly cer
tain kinds of rayons, and trimmings also were said to be
short. A number of clothing makers which had been using
slide fasteners have had to change back to buttons or
hooks because the former are no longer available for civ
ilian use.
The use of vat dyes in the production of both wool and
cotton cloth has been restricted under Governmental order,
since many of the basic ingredients are needed in the man
ufacture of explosives. As a consequence, the variety of
colored yard goods which may be had is limited, and the
amount of dye used for the kinds of cloth still being made
has been reduced.
The most perplexing problem confronting the shoe in
dustry is that of sole leather supply. Top grades of this
material are being set aside for military purposes, under
Federal order. Lower quality sole leather is available for
civilian use, but the supply apparently is small. Some cor
respondents in mid-May indicated that their operations be
tween then and October would depend principally upon
their ability to obtain such material. Several concerns re
ported that incoming business for fall lines was in a vol
ume that ordinarily would keep their facilities fully occu
pied until October 1. Sizable orders for current season
merchandise were received during April, but the rate
slackened somewhat early in May, prior to the establish
ment of price ceilings.
April output of fourth district shoe factories, which make
mostly women’s footwear, was the third largest for that
month in the twenty years of record, being exceeded only
in April 1941 and April 1937. Production declined less
than seasonally from the high rate prevailing in March.
Other
Manufacturing

Additional conversions of facilities to
war work were being made by numerous
other important fourth district manu
facturing concerns in April and the forepart of May. A
few projects were proceeding slowly, however, because de
liveries of equipment or materials were delayed or diffi
cult to obtain. Generally, the output of military items was
expanded. Civilian production of some consumers’ dur
able goods ceased during the period, but very few mass
labor layoffs occurred, most workers being transferred to
war work in the same or other plants.
Activity in the tool and machinery industries remained
at a record level in April and early May. Foundries mak
ing bases and the like for machine tools were very busy,
as they had been in previous months, but some shops re
portedly had reduced length of the work week due to a
decrease in new order volume.
Glass and paper manufacturers experienced a slacken
ing in the rate of incoming business early in May, but the
unfilled order backlog held by some flat drawn glass mak
ers was reported to be large enough to maintain a high
rate of operations for thirty to sixty days. Production of
window glass in April, amounting to 1,644,000 boxes, was
the second best for any month on record. Compared with
that of March it was 14 percent larger, chiefly because

some fourth district facilities that had been down for re
pairs were again in operation. Plate glass output of 5,570,000 square feet in April was slightly larger than that
of March, but with that exception it was the smallest for
any month in nearly four years. Federal restrictions on
the use of a number of materials have reduced activity at
pressed and blown glassware plants somewhat recently.
Considerable standardization and simplification of bottles
and glass containers is to be effected, under Governmental
order, in the interests of increased production.
Paper and paperboard output has decreased during re
cent weeks, as demand has declined. The index of paper
miil activity computed by the American Paper and Pulp
Association the first week in May dropped below that re
ported a year ago for the first time in fifteen months. Plants
generally have returned to a five-day week basis.
Dinnerware manufacturers expect to discontinue, or
sharply curtail, production of some lines within the next
four to six weeks, when present inventories of decorating
and glazing materials are exhausted. Operations continued
at a near-capacity rate during April and the first part of
May, though scarcity of skilled labor affected activity at
several plants.
Demand for paint was reported to have decreased early
in May, contrary to seasonal experience in past years. Much
of the decline was attributed to the fact that many con
cerns have ceased making articles for civilian use, or are
about to do so. The material supply situation was said to
have improved considerably during recent weeks.
CONSUMER CREDIT REGULATION
The President, in his special message of April 27, 1942,
said, “ To keep the cost of living from spiraling upward
we must discourage credit and instalment buying, and en
courage the payment of debts, mortgages, and other obli
gations, for this promotes savings, retards excessive buy
ing, and adds to the amount available to the creditors for
the purchase of war bonds.” In keeping with the spirit
of this message the Board of Governors of the Federal
Reserve System, as of May 6, 1942, revised Regulation W
relating to consumer credit. The regulation now covers a
comprehensive list of durable and semidurable goods for
civilian consumption. It contemplates that the volume of
outstanding consumer credit, which has declined each
month this year, will be further contracted in keeping
with the Government's purpose to prevent a rapid bidding
up of prices.
At banks in this district from which regular monthly
reports on consumer credit outstanding are received, the
total volume of such credit was reduced three percent in
April and at the month end it was down eleven percent
from the amount outstanding at the beginning of the year.
No comparison with a year ago is available.
Credit outstanding at department stores in this area on
April 30 was fifteen percent greater than a year previous,
although since January there has been a slight decline in
the volume of consumer credit outstanding at these report
ing department stores. In the first four months of 1941
there was a slight increase in the aggregate amount of
credit outstanding. The fifteen percent rise in the total
this year w
^as not considered large in view of the fact
that total sales of these same stores averaged 25 percent
larger in the first four months of 1942 than in the year

THE MONTHLY BUSINESS REVIEW
previous. As was pointed out last month, strictly cash
sales have increased relatively more in recent months than
have either regular charge or instalment sales.
There has been a tendency over the past year for per
sons to anticipate their needs for goods, the supply of
which was expected to be limited. Such advance buying,
or hoarding, was especially noticeable last August prior
to the time regulation of instalment credit was first at
tempted. It occurred again in January following the out
break of war, when it was realized that production of
much durable consumers’ goods would cease entirely.
Now that price ceilings have been ordered on most
goods sold at retail and the production of the majority of
consumers’ durable goods has been restricted or forbidden,
it is necessary, in the absence of rationing, to take all steps
possible to see that the nation’s diminishing supply of goods
is more equitably distributed. In keeping with this thought,
more rigid restrictions on consumer credit extension have
been ordered.
Regulation W has been extended to cover a comprehen
sive list of durable and semidurable goods for civilian
consumption. It now includes bedding, draperies, used fur
niture, clothing, yard goods, glassware, and jewelry. If
these goods and many others are bought on the instalment
plan, the maximum permissible maturity of the obliga
tion, with a few exceptions, has been reduced to twelve
months, and the required down payment for most listed
articles has been increased to 33 1/3 percent.
In addition, and of special significance to all business
in listed articles done on a credit 'basis, is the provision
of Regulation W having to do with regular charge sales
of such articles. It provides that unless payment is made
by the tenth day of the second month following the pur
chase of any listed or unlisted article, no further credit
may be extended to purchase any listed article until the
items previously charged and in default have been paid
for in full or have been placed on an instalment basis for
payment within six months.

Department Store In view of this requirement the expeCollections
rience of department stores in this area
with respect to collections on both regu
lar thirty-day charge and instalment accounts is timely.
Monthly collection ratios are shown on the accompanying
chart. The lower curves show collections on instalment
accounts receivable at department stores in leading cities
of this district from 1935 to date. The heavy line repre
sents the moving average of the twelve monthly ratios.
Reasonable stability is evident in these instalment collec
tions. Even in such years as 1937 and 1938 the curve
dropped below 15 percent in only two months. Since mid1941 there has been marked improvement in instalment
collections and in the 12 latest months collections on in
stalment accounts outstanding have averaged slightly more
than 20 percent.
The monthly collection ratios on regular charge ac
counts at reporting department stores are shown by the
curves in the upper part of the chart. A distinct seasonal
movement is noticeable in these collection figures, with
a low point each February and September. This may re
sult from the fact that February is a short month and that
in this area special sales of house furnishings, furs, and
winter apparel occur each August. Accounts receivable
rise seasonally at that time and payments carry over into
the second and even third months.
In the entire year 1941 the collection ratio on regular
charge accounts was 46 percent. This would indicate that,
on the average, regular department store accounts were
paid in about two and one-quarter months. There has been
some improvement so far this year in this respect when
comparison is made with corresponding periods of pre
vious years.
The new requirements of Regulation W , in view of the
above discussed experience of local department stores,
should work no particular hardship on the average charge
account customer. However, it has necessitated some
changes in accounting procedure. The Regulation uses the
calendar month, whereas many stores have closed their

THE MONTHLY BUSINESS REVIEW

books around the 25th of the month. Goods purchased
after that date were not billed until the 25th of the fol
lowing month. If payment for such merchandise were not
received by the tenth of the month following the period
for which the statement was received, the account would
be in default, according to the terms of Regulation W.
Store billings now have to include all goods purchased in
a calendar month, and in order to avoid default such bills
have to be paid for by the tenth of the month following
the one in which the bill or statement is received. As a
result, regular collection ratios should improve, but there
also might be a shift from a regular charge account to an
instalment basis for listed articles.

creases in excess of 35 percent also were registered by
machinery dealers and meat distributors.
Wholesale merchants generally reduced inventories mod
erately during April. Total stocks of all reporting firms on
May 1 were two percent smaller than those of a month
before, but twelve percent larger than those carried on the
same date last year. Principal increases were in seasonal
lines such as fresh vegetables and fruits, paints, varnishes,
and groceries.
Collections were slightly better in April than in March,
a two percent improvement being registered. Compared
with those of a year ago, they were 23 percent larger.
During April, 86 percent of all accounts receivable on the
first of the month was collected; the percentages were 85
in March and 79 last year.

Further information on this subject, or copies
of the revised regulation which includes a descrip
tion of all articles covered by the Regulation may
be obtained from Consumer Credit Department,
Federal Reserve Bank of Cleveland, or from either
of its branches at Cincinnati or Pittsburgh.

CONSTRUCTION
The volume of new construction contracted for in the
fourth district increased slightly in April, the month that
restrictions were placed on non-essential building, from
the relatively high March level; it was the largest for any
similar month since 1929. April contracts totaled $50,181,000, compared with $48,519,000 in March and $37,371,000 a year ago.
Aggregate awards for nonresidential and heavy engi
neering work were 19 percent larger in April than in the
previous month; compared with those of a year ago, they
were up 81 percent. These gains reflected principally an
increased amount of factory building. Dollar value of fac
tory contracts awarded in fourth district areas during
April was the third largest for any month in twelve years,
being exceeded only in July 1937 and November 1940.
More than half the work started during April this year is
in southern sections of the district and includes some new
ordnance plant projects.
Activity in the residential field declined in April from
March, reflecting, to some extent at least, effects of the
Federal order, promulgated early in the month, requiring
that all construction be specifically approved as essential
to the war effort before work is started. What might not
have been expected was the relative increase in the pro
portion of residential contracts financed by private capital.
Such funds were utilized in 87 percent of all cases, a mark
edly greater percentage than in any month since late last
fall. Most of this building represented war housing. In at
least one locality work was stopped on some dwellings
which when completed would cost more than $6,000, in
cluding land.
In mid-May the War Production Board froze for sixty
days all sales and deliveries of softwood construction lum
ber by large producers, except those to meet the needs of
the Army, Navy, and Maritime Commission. Stocks in
retail yards were not covered by the order and were of
ficially estimated to be sufficient to supply essential civil
ian demands during the two-month period. During April
and early May, several distributors and dealers in the
fourth district experienced difficulty in obtaining numer
ous grades of lumber. As a consequence, yard inventories
in many instances were considered to be poorly related
to demand. New orders for lumber to be used in war
r
housing projects continued large in those areas where
such building was being done, but elsewhere, particularly
in small towns and rural sections, demand slackened fur
ther in April and the first part of May.

TRADE
Retail

Dollar sales of reporting fourth dis
trict department stores did not expand
seasonally in April from the very high
March level. The seasonally adjusted index consequently
dropped to 121 percent of the 1923-25 average from 139
percent. A year ago it was 115. Although year-to-year
changes are distorted somewhat by the fact that Easter
occurred one week earlier this year than last, it might be
noted that the widest gains in April over a year previous
were registered by departments handling piece goods, house
wares, and notions.
Department stores generally increased stocks further dur
ing April. On May 1 dollar value of aggregate inventor
ies carried was nine percent greater than a month before;
ordinarily a small seasonal decrease has been recorded from
April 1 to May 1. Compared with those of a year ago,
stocks on the latest date were 64 percent larger. Outstand
ing orders at that time were up 91 percent. Inventories
and commitments of wearing apparel shops on May 1 were
50 percent and 147 percent, respectively, larger than those
of a year earlier, further increases occurring during April.
Individual stores in grocery chains sold 35 percent more
merchandise, on a dollar basis, in April this year than
last. Sales of chain drug companies, also per unit store,
were up 14 percent. For reporting furniture stores, the
year-to-year increase was five percent, while that for
wearing apparel shops was six percent.
Wholesale

Dollar sales of fourth district whole
sale concerns were three percent greater
in April than in March. The increase
was attributable largely to an expansion in demand for
such seasonal items as hardware, paints, varnish, and the
like. Aggregate dollar volume of the 202 wholesalers re
porting to the Bureau of the Census was 18 percent larger
this April than last. Reflecting retailer buying of metal
articles, many of which will not be manufactured after
mid-year, wholesale hardware sales in April were 37 per
cent greater than those of a year ago. Year-to-year in

THE MONTHLY BUSINESS REVIEW
AGRICULTURE
Weather conditions in the fourth district have varied
greatly this spring, being first favorable and then unfavor
able for farm field work. April was warm and dry in
most sections of the district. Preparation of seed beds
progressed well during the forepart of the month, but later
the ground dried out considerably and became rather hard
to work. Precipitation for the entire month was somewhat
below average in practically all localities. General crop
prospects on May 1, however, were quite favorable. Both
winter wheat and rye gave promise of' larger than average
yields per acre. While relatively high in parts of north
western Ohio, abandonment of seeded wheat acreage av
eraged but two percent for the State as a whole, much
less than usual. Ohio pastures on May 1 were in slightly
better condition than a year ago; elsewhere in the dis
trict they were not so good, though improvement over the
1930-39 ten-year average was marked.
During the first three weeks of May it was cool and
wet. Rains fell generally throughout the district, delaying
field work in many localities. Fields that had only been

Wholesale and Retail Trade
(1942 com pared w ith 1941)

D E P A R T M E N T S T O R E S (96)
A k r o n ......................................................................
C a n t o n ....................................................................
C in c in n a ti..............................................................
C le v e la n d ...............................................................
C o lu m b u s ...............................................................
E r ie ..........................................................................
P itts b u r g h ..............................................................
S p rin g fie ld .............................................................
T o led o .....................................................................
W h e e lin g ................................................................
Y o u n g s to w n ..........................................................
O ther C itie s ..........................................................
D is tr ic t...................................................................
W E A R I N G A P P A R E L (16)
C a n to n . . ...............................................................
C in c in n a ti..............................................................
C le v e la n d ...............................................................
P itts b u rg h .............................................................
O ther C itie s............. ............................................
D is tr ic t...................................................................
F U R N I T U R E (40)
C a n t o n ....................................................................
C in c in n a ti..............................................................
C le v e la n d ...............................................................
................................ .......................
C olum bus
D a y t o n ....................................................................
T o le d o .....................................................................
O ther C itie s ..........................................................
D is tr ic t...................................................................
C H A IN S T O R E S *
D rugs— D istrict ( 5 ) ...........................................
Groceries— D istrict ( 4 ) .....................................
W H O LESA LE T R A D E **
A u to m o tiv e Supplies (1 0 )...............................
Beer ( 4 ).................................................................
C lo th in g and Furnishings (3 ) ........................
C onfectionery ( 5 ) ................................................
D rugs and D rug Sundries ( 8 ) ......................
D ry Goods (7 ) ....................................................
Electrical Goods (1 3 )........................................
Fresh Fruits and Vegetables ( 6 ) ..................
F u rnitu re & House Furnishings ( 3 ) ...........
G rocery G roup (4 2 )..........................................
T otal H ardw are G roup (3 4 )..........................
General Hardw are ( 9 ) .................................
In d u s tria l Supplies (1 3 )...............................
P lu m b in g & H e ating Supplies (1 2 )........
Jew elry & O ptical Goods (3 )........................
L u m b e r and B uildin g M aterials (4 ) ...........
M achine ry , E q u ip . & Sup. (exc. Elect.) ( 6 ) . .
M eats and M e at Products ( 6 ) ........................
M e tals ( 3 ).............................................................
P ain ts and Varnishes (5 )................................
P aper and its Products (7 ) ............................
Tobacco and its Products (1 6 )....................
Miscellaneous (1 7 ).............................................
D istric t— A ll Wholesale Trade (202).........

Percentage
Increase or Decrease
SALES
SALES
STOCKS
A pril
first 4
A pril
1942
m onths
1942
4-17
4-33
+75
4-29
4“ 10
a
4-10
4-22
+64
+64
4-10
4-30
4 -22
+64
4- 8
4-17
4-33
+55
+62
4-23
4- 7
— 3
a
4-18
4-13
4-25
+57
+36
4 -21.
4- 3
4-17
a
.
4- 3
— 5
4-20
+ 72
4*25
+64
4- 8

4-12
4- 6

4-31
4-25
4-31
4-28
4-26
4-28

— 1
— 10

4-14
-0 4-45
4-28
4-21
4-16

4-14
4-35

4-17
4-38

4- 6
4-21
__ 7
4-32
4-15
4-33

4-18
4-26
4-13
4-29
4-15
4-41
4-19
4-18
a
.
4-24
4-39
4-39
4-44
4-28
a
— 3
4-29
4-34
— 16
4-26
+34
+ 14

+64
+50
+34
+62
+53
+50

9
2

7
1

Fourth District Business Statistics
om itted )
7
A pril
®0 change
Jan.- A pril
1942
f rom 1941
1942
B a n k D ebits— 24 cities..................$3,533,000
13,638,000
+15
Savings Deposits— end of m o n th :
40 banks O. and W . P a
$ 770,317
— 3
Life Insurance Sales:
O hio and P a ...................................$
64,877
— 27
373,192
R e ta il Sales:
D ept. Stores— 96 firm s................$
37,596
133,853
+ 8
W earing Apparel— 16 firm s........$
1,381
+ 6
5,444
Fu rnitu re— 40 firm s......................$
1,569
5,295
+ 5
B u ildin g Contracts— T o t a l......... $
50,181
+ 34
165,541
— 11
”
”
— R esid en tial?
16,933
70,228
C om m ercial Failures— L iabilities $
461
— 48
2,416
” ^
”
— N u m b e r .. .
37
— 39
183
P rod uction :
Steel In g o t— U. S...........net tons
7,122
28,161
+ 5
B itu m in o u s C oal, O ., W . Pa.,
72,154
19,206
a
E. K y .............................. net tons
— 4
C em ent— O., W . Pa., W . Va. bbls.
1,134
4,065
Elec.
Power,
O.,
Pa.,
Ky.
2,497b
+ 14
7,323c
2,190b
6,241c
P etroleum — O., Pa., K y ....b b ls .
+ 9
d
— 3
d
B itu m in o u s Coal S hipm en ts:
Lake Erie P o rts ............... net tons
5,445
a
6,706
a mine strike 1941
c Jan uary - M arch
b M a rc h
d confidential
(0 0 0

F o u rth D istrict Unless
Otherw ise Specified

A k ro n ...........
C a n to n .........
C in c in n a ti. .

4-12

4-18
— 2
4-13
4-37
4-22

4-58
4-14
4-24
— 3
4-50
4-40
— 17
4- 7
4-17
4-15
4-18
4-18

+ 22

F r a n k lin ......
Greensburg.
H a m ilto n
H om e ste ad ..

W h e e lin g . . .
Y o u n g s to w n ... .
+25
— 13
a
+ 14
+ 17
+ 21

+23
+55
a
+31
-0 — 2
+ 5
__ 7
a
a
— 2
+ 14
a
+36
a
+ 2
— 1

% chani
fro m 19+ 18

+ 12

+25
+ 28
+ 16
+ 27
+25
— 45
— 28
+ 4
+41
+ 17
+ 12

+ 4
+ 9
+ 166

Debits to Individual Accounts

M id dletow n .
O il C ity
P itts b u r g h . .
S h a ro n .........
S p rin g fie ld .
Steubenville.

+23
+12
* Per in d iv id u a l u n it operated.
** W holesale data com piled b y U . S. D e p a rtm e n t of Com merce, B ureau of
the Census.
a N o t available.
Figures in parentheses indicate num ber of firms reporting sales.

plowed appeared to be in better condition than those which
had been more completely prepared, but not seeded. In
southern sections of the district an estimated ten percent
or more of the corn crop had been planted before the
rains. Cutworm damage was reported in central Kentucky,
most notably to the hemp crop. Plantings of hemp, both for
fiber and seed, wr
ere increased substantially in that area
this year.

4-12
+ 11

4- 4
4- 3
4-53
4-24
— 8
4* 5

4—
44-

T o ta l........ . . .

3 Weeks
ended
M ay 6,
1942
82,202
9,711
40,644
364,099
750,585
164,994
74,270
33,820
3,129
7,516
13,010
3,189
15,034
13,688
4,450
13,296
9,653
778,741
10,300
16,575
8,181
146,707
12,916
23,532
46,864
7,072
2,654,178

(T housands of Dollars)
Y e ar to D a te Y e ar to D ate
%
change
Ja n . 2, 1942 Ja n . 2, 1941
from
to
to
1941
M a y 6 , 1942 M a y 7, 1941
459,699
+ 2 3 .2
364,084
+ 4 .2
55,640
48,400
+ 1 0 .5
248,884
208,155
+ 3 0 .7
2,067,082
1,686,568
+ 4 0 .6
3,739,480
3,074,091
— 12.4
859,565
977,759
444,629
+ 11.5
374,960
+ 2 4 .5
190,420
148,160
+ 1 2 .6
19,659
15,667
+ 6 .6
44,116
35,634
72,844
57,922
+ 17.0
+ 7 .7
19,648
12,852
+ 3 .2
123,693
113,291
71,410
85,433
+ 1 1 .1
— 13.0
28,321
25,263
+ 15.9
61,035
77,035
+ 3 4.2
55,891
42,501
+ 2 5 .6
4,237,525
3,800,926
+ 2 6 .4
57,046
44,633
+ 10.4
99,379
87,854
+ 1 .9
48,826
44,948
+ 3 3 .0
792,264
636,436
+ 1 8 .7
75,711
62,889
135,124
+ 5 .4
130,501
+ 0 .2
290,921
253,905
+ 3 .7
45,837
40,571
+ 2 4 .6
14,488,243
12,306,844

%
change
from
1941
+ 2 6 .3
+ 1 5 .0
+ 1 9 .6
+ 2 2 .6
+ 2 1 .6
+ 13.8
+ 1 8 .6
+ 2 8 .5
+ 2 5 .5
+ 2 3 .8
+ 2 5 .8
+ 5 2 .9
+ 9 .2
+ 1 9 .6
+ 1 2 .1
+ 2 6 .2
+ 3 1 .5
+ 1 1 .5
+ 2 7 .8
+ 1 3 .1
+ 8 .6
+ 2 4 .5
+ 2 0 .4
— 3 .4
+ 1 4 .6
+ 1 3 .0
+ 1 7 .7

Fourth District Business Indexes
(1923-25 * 1 0 0 )

B a n k debits (24 c itie s )................
C om m ercial Failures (N um be r)
”
(L ia b ilitie s ).............
Sales— Life I nsurance (O . and P,a .) ...........
” — D e p a rtm e n t Stores (48 firms)
” — W h o lesale Drugs (8 firm s )...........
” —
”
D ry G oods (7 firms) .
” —
”
Groceries (42 firms)
” —.
”
H ardw are (34 firms)
” —
A ll (91 firm s )...............
” — C hairi Drugs (4 firm s)*.
B u ild in g Contracts (T o ta l)........
”
”
(R e s id e n tia l)...............
P rod uc tion —-Coal (O ., W . P a., E. K y .)
”
— -Cement (O ., W . Pa. E. K y .)
”
— -Elec. Power (O ., Pa.., K y .)* *
— -Petroleum (O ., Pa.,, K y .)* * .
”
”
—
* Per in d iv id u a l u n it operated.
* * M a rc h
a N o t available

A pril
1942
130
25

A pril
1941
113
42

A pril
1940
86

67
128

92
115
97
56
77
129

84
90
92
46

111

75
87
176
108
124
105
98
106
94
297
119
1 22

109
78
110
3
98
261
109
125

85
70
91
66

72
71
73
220

121
94

.A pril A p ril
1939 1938
74
76
63
63
47
42
73
71
92
89
90
89
39
40
61
65
67
71
61
64
a
91
80
37
68
41
3
49
68
55
202
178
116
131
113
94

THE MONTHLY BUSINESS REVIEW

Summary of National Business Conditions
By the Board of Governors of the Federal Reserve System
INDUSTRIAL

PRODUCTION

Federal Reserve monthly index of physi
cal volume of production, adjusted f or
s ea so n a l variation, 1935-39 average — 100.
Latest figures shown are for April 1942.
FRE1GHT-CAR LOADINGS

Federal Reserve monthly index of total
loadings of revenue freight, adjusted for
seasonal variation, 193.5-39 average =
100. Subgroups shown are expressed in
terms of points in the total index. Latest
figures shown are for April 1942.
MONEY RATES IN NEW YORK CiTY

MTS
OE

V A /y
\T
‘

u
r
1936

i\JN

i t W R 8 .1
ASU Y 8
1937

1933

J . A .I
1939

1940

< 41
9

1942

W eekly averages
of daily yields
on
Treasury notes and bonds and average
discount on new issues of Treasury bills
offered within week. Latest figures shown
are for week ending M ay 16, 1942.
MEMBER BANK RESERVES AND RELATED ITEMS
FACTO SUPPLYING RESERVE F
RS

FACTO USING RESERVE Fi
RS
- - - - - - - - - - - - - - -1
ER BANX
: BALANCES
f t-4

T
r

MONEY 1
CRCULAT

1
^EASUTtY CASl
4N0 DEPOSITS

T E SU Y C R E C
R A R URNY

-'S/Vi

- *£$£RVe B N C E IT
AK RD

I94J

NMEM9ER
c>EPQ5tTS
1

L.
*940

1942

1940

1941

1942

Wednesday figures. Latest figures shown
are for M ay 13, 1942

Industrial activity increased in April and the first half of May re
flecting continued advances in armament production. Following an in
crease in buying during the first quarter, retail trade declined somewhat.
Wholesale commodity prices advanced further.
Production
Expansion of industrial production in April was reflected in an ad
vance in the Board’s seasonally adjusted index from 172 to 174 per cent
of the 1935-39 average. This increase followed upon a period of relative
stability during the first quarter of the year, when growing war produc
tion was offset by decreased civilian output.
Since the beginning of the year total volume of industrial output
has shown little change but there have been marked differences among
individual industries. In general output of machinery, chemicals, and
armament of all kinds has continued to expand at a rapid rate. There
have also been substantial increases in output of electric steel, nonferrous metals, glass containers, wood pulp, and coal. On the other hand,
output of many products for civilian use such as automobiles, tires and
tubes, wool textiles, electrical appliances, alcoholic beverages, petroleum,
and petroleum products has been sharply reduced either by direct order
or by shortages of material or transportation facilities. In the month of
April crude petroleum and petroleum products were the principal com
modities showing a decline in output. Output of furniture, cotton and
rayon textiles, manufactured foods, paper products, and tobacco prod
ucts has been maintained in large volume.
Value of construction contracts awarded in April, as reported by the
F. W. Dodge Corporation, was almost one-fifth below the high March to
tal, reflecting a decline in publicly financed construction. Residential con
tracts decreased by one-fourth and for the month were at about the
same level as last year. Awards for non-residential building increased
slightly, mainly because of a 40 per cent increase in awards for factory
construction, practically all publicly financed.
Distribution
Retail sales declined somewhat in April, following a considerable
amount of anticipatory buying during the first quarter of this year. At
department stores, dollar sales in April were about 10 per cent below
the first quarter average, making allowance for usual seasonal varia
tions, but were 5 per cent above the level prevailing during the latter
part of 1941. During the first half of May sales showed a further de
crease and were around 6 per cent larger than a year ago in contrast
with price increases amounting on the average to about 20 per cent
over the year period.
Total freight car loadings increased sharply in April owing chiefly
to larger shipments of coal and forest products, and to a sharp rise in
iron ore loadings as the Great Lakes shipping season got underway.
Shipments of merchandise in less than carload lots, which had begun to
decline in March, were reduced sharply further in April, reflecting Gov
ernment action to increase the average load per car in order to effect
fuller utilization of railroad equipment.
Commodity Prices
Beginning on May 11, wholesale prices oif most commodities were
limited to the highest levels reached during March, according to the
general maximum price regulation issued April 28. Effective May 18, re
tail prices of most commodities were likewise limited. Retail prices of
related services will be limited beginning July 1.
About 30 new maximum price schedules for industrial products were
issued from the middle of April to the middle of May. Most of these cov
ered wholesale prices of items previously subject to informal or tem
porary controls. Upward adjustments in maximum prices were allowed
for coal, ferromanganese, tires, petroleum products, and a few other items.
Wholesale prices of most farm products and basic foods, which are
exempt from direct control, showed little change in this period, follow
ing sharp increases earlier in the year.
Bank Credit
During the five weeks ending May 20 Federal Reserve Bank hold
ings of Government securities increased by about 200 million dollars, while
currency in circulation rose by 260 million. Member bank deposits in
creased during the period and required reserves showed a corresponding
growth. The net result was a decline of 300 million in excess reserves.
Holdings of United States securities at banks in leading cities increased
further, while commercial loans declined. Liquidation of loans was con
centrated at banks in New York City and in the Kansas City district.
United States Government Security Prices
Prices of U. S. Government bonds declined in the last half of April,
but steadied in the first half of May.

Full text of Economic Review (Federal Reserve Bank of Cleveland) : May 1942, Vol. 24, No. 6

FRASER