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MONTHLY BUSINESS REVIEW co v e r i ng fi n anc i a Vol. 25 Federal Res er v e D i s t r i c t Cleveland, O hio, M a y 31, 1943 P ERSONNEL problems appear to have assumed first place in fourth district industry and very adverse weather conditions have further complicated the agricultural situation. Additions to the labor force re cently have been small. They represent women not or dinarily employed, almost entirely. Adoption of the 48hour week has been helpful to some industries in areas where the labor situation has warranted such a step, in that total weekly wages now paid by them are more in line with those available in war industries. Because the shift to a 48-hour week has been gradual, however, the full effect of this step is not yet known locally. Pressure is being exerted to have persons transfer from “less essential” to “more essential” activities and workers en gaged on construction projects which are approaching completion, are shifting to other work. With this partly offset by military inductions (both male and female) it is very difficult to obtain a comprehensive picture of the labor situation. Dissatisfaction with price control measures and handling of wage demands has resulted in a new wave of work stoppages. The effect of these in some cases goes considerably beyond the plants affected. FINANCIAL Success of the Second War Loan Drive which ended May 1, should be measured by two standards: the amount of money raised, and sources from which the funds were obtained. For the entire country preliminary figures indicate that the original goal of $13 billions was over subscribed by 43 percent. Since bank participation in the active purchase of securities was limited during the cam paign to approximately $5 billions, in effect, an amount equal to the original goal was obtained from nonbanking sources. About $25 billions were raised by the Treasury in the first four months of this year through sale of securities of all sorts. Of this total it is estimated that commer cial banks took about $10 billions, including securities subscribed for in the April campaign. Banks, therefore, took 40 percent of the increase in the national debt this year up to May 1 in contrast with 50 percent in the closing four months of 1942. While this is a step in the right direction, if the war financing program is to be a complete success considerably less than 40 percent of Second War Loan Drive No. 5 future security sales should be to commercial banks. From the standpoint of absorbing expanding individual purchasing power the national bond drive could have been more successful. Approximately 16 percent of the $18 billions raised represented purchases by individuals. Even if purchases of insurance companies and savings banks are added to those of individuals on the assump tion they represent individual savings, only 42 percent of the total amount raised during the campaign came from these three sources. To the extent savings bank and insurance purchases represented funds that were destined to be saved in any event, investment of such funds in Government securities does not lessen the inflationary pressure that is causing concern. Treasury estimates in dicate that in the last half of 1942 individuals invested in Government securities less than 50 percent of their per sonal savings remaining after the increase in savings de posits, reduction of debt, and payments for life insurance. With national income, largely in the form of wages and salaries, rising so rapidly, and the supply of goods and services available for civilian purchase declining, a much larger share of individual residual incomes should find its way into Treasury coffers if the forces tending toward inflation are to be lessened. The Second War Loan Drive was more successful in the fourth district than in the entire country in the percent of the total which was raised from individuals and also in the percent of oversubscription of the nonbanking goal. For the entire country the nonbanking quota was FIRST AND SECOND WAR LOAN DRIVES Sales By Type of Investor Fourth District 2 THE MONTHLY surpassed by 57 percent; in this district it was oversub scribed by 77 percent, a figure only surpassed in one other Federal Reserve district. Approximately 23 per cent of all the money raised in the Second War Loan Campaign in the fourth district came from individuals while for the entire country only 16 percent of the funds came from such sources. While the second cam paign carried over a longer period than the first, better organization was evident in the results, for there was an increase of 86 percent in the volume of securities taken by individuals. Insurance companies took 61 per cent more and corporations organized for profit 82 percent over and above what they absorbed in December. With more than one-third of all funds raised in this district obtained from corporations through the sale of $258,000,000 in tax notes and $127,000,000 in % percent certificates, such subscriptions represent chiefly the ad vance payment of a future obligation or the investment of temporarily idle funds. Tax note purchases in April were 28 percent larger than in December in this district. Since such purchases represent only a short term hold ing of Government securities and not a permanent sale to ultimate investors future campaigns should take this into account and stress the long-term holding of Government bonds if the battle against inflation is to be won. All major classes of purchasers except commercial banks in this district accounted for larger sales in the April campaign. The change in dollars from December is evi dent from the chart and percentagewise in relation to total sales from the table. FIR ST AND SECOND WAR LOANS FO U RTH DISTRICT Percentage Distribution by Class of Purchaser (based on dollar volume) First W ar Loan Commercial banks and trust companies . . . 35.7 Insurance companies ............................................ 4.5 Corporations organized for profit .................... 29.2 Individuals ................................................................. 18.6 All others ................................................................... 12.0 TOTAL .............................................................. 100.0% Second W ar Loan 23.2 4.7 34.9 22.8 14.4 100.0% While information is not available showing the number of separate participants in the two campaigns in this district because of multiple purchases of small denomina tion “E ” bonds, using number of pieces sold as the cri terion of subscribers there were 3,620,000 in April, com pared with 2,095,000 fn December. As an indication of the potential market, however, there are approximately 12,000,000 persons in the fourth district. Member Bank Reserves The Second War Loan caused no strain on local banks; in fact, excess reserves increased rather sharply while the cam paign was in progress. This was in distinct contrast to the December period when reserves of local banks dropped by $145,000,000 despite the fact that the System was extending considerable credit to the money market through direct purchase of securities, the taking of Treasury bills under repurchase agreement and through loans to mem ber banks on a limited scale. This changed situation re sulted from the fact that the Wagner-Steagall Act, which was passed on April 13, removed the requirement that cash reserves be maintained against Government deposits. In the April drive, war loan account credit was used Digitized for to FRASER pay for $751,000,000 or about 59 percent of the value BUSINESS R E V IE W of all securities bought in this district. To the extent this represented a shifting of deposits from the credit of individuals to the credit of the Treasury, reserve require ments were lessened. As a result of this and the flow of funds into this district, fourth district country banks had reserves 74 percent in excess of requirements in late April, the largest percent of excess since January 1942. In the same period reserve city banks reported an excess of 38.9 percent, the highest since last October. In the first three weeks of May, reserve deposits of member banks were little changed, the increased demand for currency on the part of banks being offset by reductions in Treasury bal ances with the reserve bank. Federal reserve note circula tion now exceeds $1,200,000,000, and is nearly 50 percent larger than a year ago. Member Bank Credit There was a moderate increase in commercial loans at weekly reporting banks in late April and the first three weeks of May and total loans outstanding rose to the highest level of the year. Compared with last year, however, loans are down quite sharply. Banks continued to add to their holdings of Government securities after the close of the second drive. Holdings of bills, certificates of in debtedness, and bonds rose to new high levels in mid-Ma'T Treasury Bills Interest in bills on the part of local member banks has been kindled further by the Treas ury’s policy of awarding up to $100,000 of each offering to any bank requesting them at a fixed dis count of approximately % percent. The competitive bid ding system still in effect on amounts in excess of $100,000 was not popular among the smaller banks. Part of a bank’s excess reserves may now be invested at a fixed rate of % percent and reserve position may be adjusted daily by selling such bills to the reserve bank under repurchase option at the same rate. Bill holdings of fourth district weekly reporting member banks have increased from $108,000,000 to $341,000,000 so far this year. In the month of May the largest num ber of banks was admitted to the Fed eral Reserve System in a number of years. Through May 28, eight banks were accepted fcr membership in the fourth district. They are: New Member Banks The Andover Bank, Andover, Ohio The Farmers State Savings Bank, Delta, Ohio The Farmers State Bank Company, Fayette, Ohio The Liberty State Savings Bank, Liberty Center, Ohio The Farmers State Bank of McClure, Ohio, McClure, Ohio The Farmers Savings Bank Company, Stony Ridge, Ohio The Farmers State Bank of Stryker, Stryker, Ohio The Peoples State Bank, Wauseon, Ohio MANUFACTURING, MINING Iron and Steel ^ recent order of the War Manpower Commission calling for a general adoption of the 48-hour week by iron and steel pro ducers has been opposed by the steel industry advisory committee on the basis of practicability. An opportunity to confer with War Manpower Commission officials has been requested before the ruling becomes effective on TH E MONTHLY BUSINESS R E V IE W July 1. The industry, at present, is averaging 41.6 hours each week, with many departments working 48 hours or more. The average is lowered by departments whose out put is not in current demand. Steel officials feel it is desirable to keep such crews intact in order to expand production rapidly should shifts in the war program make it necessary. Steel mills produced more ingots during April than in any previous 30-day month, maintaining a daily average only slightly below that for March. Production totaled 7.374.000 net tons, while pig iron output amounted to 5.035.000 tons. These were four and three percent, re spectively, above the output for April 1942. Fears of a coke shortage, arising from a prolonged stoppage in coal production, did not materialize during early May, so that operations continued at near-capacity levels. Scrap supply was reported to be relatively easy, with mills being able to exercise considerable choice in their selection of metal. The late opening of the lake shipping season caused an additional reduction in iron ore stocks at furnaces and Lake Erie docks. Such inventories totaled 15 million tons on May 1, or 2 million tons less than a year earlier. The demand for finished steel to produce articles of war is so great that even capacity operations would not provide a sufficient supply. Requests of the 16 claimant agencies under the Controlled Materials Plan called for 21 million tons of finished steel for third quarter delivery. A reduction of approximately one-third in these requests was necessary to balance the 15 million tons of steel which, it is estimated, will be available. The greatest re duction (40 percent) was made in the quota of the Office of Defense Transportation, with Lend-Lease receiving the next heaviest cut of 32 percent. Civilian industries, hop ing for an easier steel situation, found little comfort in these figures. Lake Shipping The late opening of the 1943 lake shipping season has resulted in a third revision of the ore shipment goal for this season. Or iginally set last fall at 100 milllion tons, the quota was later reduced to 95 million tons and now has been re vised downward to 91 million tons. The present goal calls for slightly less tonnage than was transported during the 1942 season. Ore shipments from the opening of the Lakes to May 10 were approximately seven million tons below the same period of last year, only 3,858,000 tons having been shipped this season. Whether the shippers will be able to equal the 1942 record will depend largely upon weather conditions and the speed with which the 16 new Maritime Commission vessels, now under con struction, can be completed. The first of these boats was placed in service early in May, bringing the total num ber of ships in the ore trade to 306. Coal Wide interest continued to be centered on the coal controversy during May as negotiations were resumed between the United Mine Workers and the mine operators, now functioning as agents for the United States Government. By mid-month no agreement had been reached and the 15-day truce was extended until early in June. Production dropped sharply late in April as sporadic work stoppages developed, reached a virtual standstill on the first two working days in May, and thereafter gradually 3 increased as miners returned to their work. After the truce had been arranged, however, isolated cases of work stoppages continued to limit full scale operations. The Department of Interior has estimated that an output of three million tons of coal was lost as a result of the twoday stoppage of work, not including the tonnage lost by mines that were idle before and after the general stoppage. April production of bituminous coal in the fourth district fell sharply as a result of the industrial dispute, declining twelve percent from the March level of 18,500,000 tons. Stocks of bituminous coal held by dealers and industrial consumers totaled 77 million tons on April 1. At current levels of consumption such inventories were equivalent to approximately 45 days’ supply. Electric power com panies were best prepared to meet any crisis, having 100 days’ supply, while Class I Railroads were the least ade quately stocked, having sufficient coal to sustain opera tions only 32 days. These data, however, are averages, and individual concerns within each group were in a posi tion to have their operations seriously curtailed within a few days should they fail to receive coal regularly. Other Manufacturing The demand for certain types of ma-. chine tools, particularly deep-hole drilling machines and boring mills, has declined rather sharply in recent months, although other products of the machine tool industry continue to be in strong demand. No noticeable decline in output was reported during April as order backlogs were sufficient to maintain full scale operations for some months to come. Many firms anticipated peak operations will not be reached until mid-summer. Nevertheless, machine tool builders continued to make plans for their conversion to the manu facture of other war goods. Orders for fall merchandise now are being received by fourth district clothing manufacturers and reports from the industry indicate that the demand is particularly strong. Many manufacturers have found it necessary to limit customer purchases by means of an allotment schedule based upon last year’s orders. Higher-priced clothing appears to be most in demand. Nearly all manu facturers report that the labor situation is critical, with difficulty being encountered in maintaining their present personnel and in recruiting new workers. Woolen and worsted manufacturers have felt an actual decline in their total work force during the past year, although longer hours have made it possible to increase output in the face of this labor drain. The labor situation also is a troublesome problem for fourth district footwear manufacturers. Not only has the production of the finished product been limited, but short ages of experienced workers in the tanneries have made the supply of leather increasingly scarce. Deliveries of this raw material to shoe manufacturers have been con siderably slower than during the last half of 1942. During the first three months of this year, production of Ohio shoe manufacturers was 14 percent below the same period a year ago. The ceramics industry, important in eastern Ohio and southwestern Pennsylvania, has been less seriously affected by the war than many fourth district industries. Its raw materials are plentiful and labor losses to other industries and the armed services have been replaced largely by women. Production during April and May continued 4 THE MONTHLY close to capacity, with order backlogs sufficient to main tain full operation for the balance of the year. The dinnerware branch of the industry is busy with Army and Navy contracts, although some competition in this field is re ported to be coming from glass and plastic manufacturers. Output of glass containers has risen sharply during 1943, with first quarter production nine percent above a year earlier. Most of the increase resulted from the growing emphasis on food preservation. Window glass production dropped sharply in April to approximately 62 percent of capacity, compared with 80 percent in March. This was the lowest output since November of last year. Paper and paperboard manufacturers reported little change during the last month. Deliveries on some types of paper, particularly sulphite bond and kraft, have been very slow, due to difficulties encountered in securing raw materials. Kraft pulp is being allocated among manu facturers on a basis which keeps the pulp inventory to about 30 days’ supply. The major reason for the pulp shortage is a scarcity of manpower rather than a lack of raw material. Paperboard production continued to rise during April and early May, output during the first full week of May being higher than at any time since the spring of 1942. Unfilled orders have increased consistent ly and in March were equivalent to approximately one month’s production. CONSTRUCTION New construction projects started in April dropped to the lowest level for any like month since 1938, as con tracts awarded for new factory buildings receded to a level comparable to that of 1934 and 1935. Figures released by the F. W. D odge Corporation show that $26,211,000 of new contracts were awarded in the fourth district during April, seven percent less than during March and $34,321,000 below the same month of 1942. Residential building, needed to house workers in crowded war production areas, accounted for $9,279,000 of the total. The decline in new construction reflected by these figures will free vitally needed materials that can be used elsewhere. The saving in steel, alone, is clear in that during 1942 over eight million tons of that metal, 14 percent of the nation’s output, was used for construc tion. Workers now engaged in building trades also are being freed for necessary work elsewhere. New construc tion will be limited largely to defense housing where existing living conditions are detrimental to workers’ health and morale. AGRICULTURE Subsidies Early in May officials of the Office of Price Administration announced their intention to add the use of subsidies to their facilities designed to “hold the line”. The declared purpose of the immediate subsidy program is to make reductions possible in the retail prices of certain foods without disrupting pro duction or interfering greatly with their distribution through normal trade channels. Although this will not be the Government’s first use of subsidies during the war period, it does represent a new phase of price control. For that reason the move has attracted considerable attention. Interest in the plan centers, of course, on the possibility that it may strengthen the control measures which it is to supplement. BUSINESS R E V IE W The use of subsidies as a means of price control is an unmistakable recognition that production costs of certain essential goods have risen despite efforts to restrain them. The intended purpose of the subsidy program is to hold the burden of higher costs to a minimum by covering such higher costs directly instead of permitting them to work out in a succession of further price increases. The proponents of the plan point out that the use of subsidies provides a double-barrel attack on the production-inflation problem. At the same time that pro ducers are provided with funds necessary to meet increased costs, consumers are enabled to make their purchases at no increase in price. Thus it is said that the tendency for increased costs to “snowball” is abated; that the inclina tion for mounting costs to spread from plant to plant and from industry to industry is stymied. It is explained that under such conditions the cost of living may be held down and the pressure for higher wages may be lessened. Thus it is believed that subsidies will help to minimize the dangers of excessive advances in prices. The use of subsidies in England and Canada is usually held up as an example for imitation by subsidy proponents in this country. The subsidy program to restrain in creases in food costs was introduced in Great Britain in December 1939. In April 1941 the decision to use sub sidies to stabilize the cost of living was announced. Since that time only minor changes in the English cost of living index have occurred. In Canada the cost of living index for last month was 116 (August 1939 = 100) — it was 114.6 in October 1941. Opponents of subsidies take the view that subsidies are inflationary both because they place additional funds in the hands of producers and because they increase the amount that the Government has to borrow. Many farm ing groups prefer higher market prices, which they believe are their due, to subsidies which are a grant from Congress and may be discontinued at any time. Although it has been announced unofficially that the Reconstruction Finance Corporation has been asked to provide about half a billion dollars for the initial subsidy program on meat, coffee, and butter, the decision to make subsidies an important part of our production-stabilization efforts rests with Congress. Since the beginning of the price control program, Congress, particularly the farm bloc, has been cool toward the subsidy idea. It refused the requests of former Price Administrator Henderson who estimated that $5 billions yearly in subsidies would be required to stimulate needed increases in output without raising price ceilings. Farm Prices The General Maximum Price Regulation was issued April 28, 1942. Most of the provisions of the Regulation became operative at whole sale on May 11, and at retail on May 18, 1942. In the twelve months following issuance of the Regula tion, prices received for products sold by farmers in the United States increased 23 percent— from an index of 150 to 185 (1910-14 = 100). During the corresponding pe riod in World War I these same prices increased 35 per cent— from an index of 148 to 200. On the other hand, prices paid by farmers for produc tion and consumption goods (including interest and taxes) increased only 7 percent in the year April 1942 to April 1943. Although monthly data are not available to make TH E MONTHLY exact comparisons, the yearly average of prices paid by farmers increased 19 percent in the calendar year 1917 over 1916 and 13 per cent in 1942 compared with 1941. The index of prices paid by farmers including interest and taxes for April 1943 was 162 (1910-14 = 100). The ratio of prices received by farmers to prices paid by farmers increased from 99 in April 1942 to 114 in April 1943. Therefore, as judged by these indexes, farm product prices averaged about 114 percent of parity in April. In analyzing the agricultural price movements which followed the issuance of the General Maximum Price Regulation it should be remembered that the Regulation specifically exempted from price control all raw and un processed agricultural commodities except bananas. Later, however, prices of many of these exempted commodities were covered by specific or general price regulations. Agricultural loans outstanding from insured commercial banks in the fourth district amounted to $95,392,000 as of the middle of 1942. This amount included both real estate and non-real estate farm loans. The total loan vol ume outstanding (farm and non-farm) from insured com mercial banks at that time was $1,608,397,000. Thus for the district, agricultural loan volume amounted to 5.9 percent of the total. Omitting the 16 counties which con tain the larger cities of the district, agricultural loans made up 18.6 percent of the total remaining. In six Ohio counties and 14 Kentucky counties agricultural loans out standing made up over 50 percent of the total (see map). Agricultural Credit Farm Loans as a Percentage of Total Loans Outstanding From Insured Commercial Banks Digitized(Includes for FRASER real and non-real estate loans to farmers.) http://fraser.stlouisfed.org/By county, July 1, 1942 Federal Reserve Bank of St. Louis BUSINESS 5 R E V IE W The agricultural credit outstanding from insured banks in the district was made up of 60.7 percent long-term credit and 39.3 percent short-term credit extensions (real estate and non-real estate loans respectively). There was also a wide variation among counties in this distribution. Even among the agricultural counties there was consider able lack of uniformity. For example, in Champaign County, Ohio, about three-fourths of the agricultural loans outstanding from insured banks were composed of short term credit, whereas in Mercer County, Ohio, the corre sponding proportion was only one-fourth. Several factors may be held accountable for these variations. These in clude the type of farming, the degree of commercializa tion in farming, the aggressiveness of lending competi tion, the degree of industrialization, and other factors in cluding the bankers’ preferences for dealing in either short or long-term farm credit. An examination of the accompanying table makes it clear that although there are many banks in the district where the major lending operations are agricultural, there are others that make few, if any, agricultural loans. The table concerns only non-real estate agricultural loans since these loans are generally more descriptive of agri cultural interest by banks than are loans based on farm real estate. As of July 1, 1942 about two-thirds or 773 of the 1,177 insured banks of the district had non-real estate agricultural loans outstanding. Of this number about one-fifth had non-real estate agricultural loans out standing which amounted to at least 25 percent of their total loans. Distribution of 1,177 Insured Banks According to The Percen tage Their Non-Real Estate Farm Loans are of Total Loans, Fourth Federal Reserve District, July 1, 1942 Non-real estate farm Number of Banks loans as a percent Pa. Ohio Ky. age of total loans 162 52 173 None ......................... . 142 31 87 Less than 5% . . . 12 27 84 ...................... 5 -9 72 10 15 10-14 ...................... 4 41 10 15-19 ...................... 10 55 13 20-24 ...................... 39 6 0 25-29 ...................... 29 10 1 30-34 ...................... 18 4 0 35-39 ...................... 40-44 ...................... 9 5 0 45 -4 9 ...................... 10 4 0 50 and more . . . . 11 5 0 Total .................... 672 162 317 Total w. Va. Number 17 8 0 1 0 0 0 0 0 0 0 0 404 268 123 98 55 78 45 40 22 14 14 16 26 1,177 Percent of Total 34.3 22.8 10.4 8.3 4.7 6.6 3.8 3.4 1.9 1.2 1.2 1.4 100.0 The hog-corn ratio expresses the number bushels of corn required to buy 100 pounds of live hog. It is a useful indicator for hog and corn producers because it measures the rela tive profitableness of selling corn direct or selling it in the form of hogs. From 1924 to 1929 the hog-corn ratio for the United States averaged 11.6. In other words, it took on the aver age 11.6 bushels of com to buy 100 pounds of live hogs. Since the years 1924-29 were relatively normal years, it is possible to generalize to the effect that when the hogcom ratio is above 11.6 it is more profitable to feed corn to hogs and when it is below 11.6 that it is more profitable to sell the corn direct. In 1941 the hog-corn ratio for the United States aver aged 14.0, in 1942 the average was 16.5, and for the first four months of 1943 the ratios were 16.0, 16.2, 15.5, and 14.3, respectively. These high ratios have provided an active stimulus to hog production. Their influence is read Hog-Corn Ratio THE 0 MONTHLY ily apparent in the present all-time high hog population and in the fact that this year’s spring pig crop is estimated to be about 24 percent greater than the previous record which was established last year. The 1943 production goals call for a 15 percent in crease in hog production over 1942. Since the spring crop is up 24 percent it will require an increase of only 5 percent in the fall crop to meet the goal. This situation together with the prospect for reduced reserve feed sup plies has led the United States Department of Agricul ture to advise hog producers not to increase breeding for the fall pig crop more than 15 percent over the 1942 level. TRADE In December 1942 the War Production Board issued order L-219 for the purpose of restricting inventories of consumers’ goods carried by wholesalers and retailers to the same levels in relation to sales, that were maintained during the base period of 1939, 1940, and 1941. All merchants having stocks in excess of $50,000 and annual sales of $200,000 are covered by the terms of the order. A firm finding its inventories larger than allowed must submit reports to the W.P.B. and its purchases are restricted un til its inventories are again brought into line. The order became effective the second quarter of 1943, which was May 1 for most department stores. In order to determine the inventory situation in the fourth district the “normal” inventory for each of 51 reporting depart ment stores was computed and compared with the actual inventory as of May 1 reported by these same firms. The results of this study are shown on the accompanying chart. Each dot, representing one store, was plotted according to the total 1942 sales of that store and to the relationship of its actual inventory to the allowable amount. Only 12 of the 51 stores had stocks in excess of their respective limits, and of these 12 there were only 6 that had to reduce their stocks by more than ten percent. The total of the May 1 stocks reported by the 51 stores under consideration amounted to $81,869,000, ten per cent smaller than the combined total of the May 1 allow able inventories for these same firms. Apparently the order has not proved to be a hardship for the majority of fourth district department stores. The large volume of business that stores experienced and their inability to obtain many types of merchandise have contributed to a reduction in inventories. Stocks carried by the larger retailers in this area were Inventory Control DEPARTMENT STORE V tr STOCKS FOURTH D IS T R IC T EACH R E P R E S E N T S ONE • DOT ST O R E z • “ t < ACTUAL TO W.P.E . • •* u. * • * O O H • a. 0.5 1942 5 10 15 SALES 20 25 IN M ILL IO N S 30 35 OF D O L L A R S R EV IEW not any heavier in relation to their sales volume than were those of the medium-sized stores. Of the eleven firms that experienced a total sales volume of over $10,000,000 during 1942, one had excessive inventories on May 1. This store will have to reduce its stocks by only an additional two percent in order to bring them within the W.P.B. limit. The other reporting outlets whose inventories were larger than their limits were well dis tributed throughout the sample. The seasonally adjusted stocks index for April declined to 129 percent of the 1935-1939 average, the lowest since July 1941, and down 42 percent from the peak of July 1942. Inventories on May 1 were 30 percent smaller than they had been the same date a year ago and two percent smaller than those of the previous month. Fourth district department store sales during April were six percent greater than those of the same month last year. Stores in all principal cities of the district, with the exception of Cleveland, reported year-to-year gains. These ranged from three percent in Pittsburgh to 34 percent in Springfield. Last year Easter was so early in April that most of the clothing for that day was purchased in March; however, this year a large amount of Easter shopping occurred in April. Dollar volume at Cleveland stores last month was down five percent from that of a year ago. Special sales events which were held in April 1942, but which took place on May 1 this year, were responsible for this decline. Total sales at 97 stores increased less than seasonally from March to April, and the adjusted index dropped from 169 percent to 151 percent of the 1935-1939 average. During the two weeks ended May 15 dollar volume was eight percent greater than that of the corresponding period a year ago. This increase is slightly larger than that of six percent reported for sales during April over those of last year. Sales of clothing were responsible for the year-to-year gains. Stores sold 28 percent more women’s apparel and accessories during April this year than last, and sales of men’s and boys’ wear were up 12 percent. Piece goods departments reported an in crease of 12 percent in their business. These increases more than offset the declines in sales of furniture, house hold appliances, housewares, and other merchandise for the home. Other types of retail units also experienced year-to-year increases in their April dollar volume. Sales at 16 wear ing apparel shops in the district were up 29 percent from those of a year ago. Chain grocery and drug stores, per individual unit operated, reported increases of 11 percent and 19 percent, respectively, in their sales this year com pared with last. Retail Sales Wholesale Trade ♦ z BUSINESS 40 45 Sales at 178 wholesale firms in this district during April were three percent greater than those of the same month last year, ac cording to Department o f Commerce data. Sales of cloth ing were up 80 percent, metals 45 percent, jewelry 32 per cent, confectionery products 24 percent, and groceries 10 oercent. Substantial declines were reported by dealers of furniture and house furnishings, electrical goods, paints, and general hardware. Inventories held by 93 firms on April 30 were slightly smaller than they had been the previous month and 19 percent less than those of the same date a year ago. TH E MONTHLY BUSINESS F o u rth D istrict B usin ess Statistics ( 0 0 0 omitt ed) F o u r t h D is tri ct Unless April % change Otherwise Specified 1943 from 1942 B a n k De b it s— 26 c i t i e s .....................3 5 , 2 0 3 ,0 0 0 +46 Savings De posits— end of m o n t h : 39 b a nk s O. and W . P a .................. 3 8 4 2, 73 2 + 9 Life I n s ur a n ce Sales: Ohio and P a ......................................... 3 84,939 +31 R e ta il Sales: Dept . Stores-— 97 f ir m s ................... 3 39 ,9 52 + 6 W ea rin g App arel— 16 firms . . . . 3 1,7 80 +29 Fu rni tur e— . . f irm s..........................3 2 ,8 8 7 — 6 Building C on tr a c ts — T o t a l ............. 3 2 8 ,2 11 — 48 ” ” -— Re siden tial 3 9,279 — 45 Comm erc ial Failu res — Liabilities 3 253 — 45 ” N u m b e r .......... 19 — 49 P r od u c t io n : Pig Ir on — U. S ..................N e t tons 5, 035 + 3 7, 3 7 4 + 4 Steel In go t— U. S ............ N e t tons Bit um in ou s Coal, O. W . Pa. , E . K y .........................................N e t tons 18,495 — 4 C e m en t— O., W. Pa ., W. Va. bbls. 1,019a — 4 Klee. Power, O., Pa ., Ky. ..................................Th ou s. k.w.h. 2, 880a +15 Pe tro leu m— O., Pa ., K y . . . . b b l s ...................................... Bit um in ou s Coal Sh ip m e n t s: L. E. P o r t s .............................N e t tons 3,751 — 31 Ja n .- A p r . 1943 3 1 6 , 7 8 3 ,0 0 0 — 13 14 3 ,6 5 8 6 ,7 6 0 9,2 18 91,634 3 2 ,6 18 1,214 + 7 +27 — 9 — 45 — 54 — 50 — 54 2 0 ,3 26 2 9 ,2 94 + + 5 4 75,04 2 2,7 96 b + 4 — 5 8,2 92 b +13 4, 69 9 -3 0 a M a rch b January-M arch c Confidential D ebits to Individual A ccounts A k r o n .................. B u t l e r .................. C a n t o n ............... C incinnati. . . . Cl e ve la n d.......... C ol um b u s .......... D a y t o n ............... E r i e ...................... F r a n k li n ............. Greensburg . H a m i l t o n .......... H omestead.. . . Le x in gt on .......... L i m a .................... L o r a i n ................. Mi ddletown , Oil C i t y ............. Pit t s b u rg h . . . . S h a r o n ................ Springfield. . . . Steubenville T o l e d o ................ W a r r e n ............... W h e e l i n g ........... Y ou ng s to w n . . Zane sville .......... T o t a l ............... April 1943 188 ,7 24 15,602 83, 081 670,108 1, 250,843 361, 913 152,005 6 6 ,8 9 8 5,491 10,932 22,900 4 , 57 6 28,071 25 ,1 87 7, 88 6 21 ,8 79 18,5 06 1, 752,661 16,053 33,393 15,216 268,9 85 29,695 49, 483 88, 945 13,544 5 ,2 0 2 ,5 7 7 ( Th ou s a n ds of Dollars) % change Ja n .- A p r i l from 1942 1943 65 0 ,2 8 1 + 6 1 .1 5 4 ,0 42 + 19.5 + 4 1 .1 28 3 ,8 0 1 2 ,2 9 2 ,1 4 1 + 3 8 .5 4 , 2 7 3 ,7 4 1 + 2 6 .9 + 4 8 .7 1 ,1 0 6 ,5 6 7 53 8 ,8 2 1 + 3 9 .0 + 4 3 .4 225,386 19,295 + 2 5 .5 39,833 + 5.2 79 ,5 4 7 + 2 5 .5 + 3.7 17,3 09 + 3 5 .7 157,493 96,194 + 2 2 .5 + 2 0 .3 26,274 75,826 + 2 1 .5 61 , 6 7 9 + 4 4 .5 + 7 4 .6 5 , 0 5 4 ,0 1 7 + 19.9 57,2 35 + 4 0 .3 11 9, 59 9 50 ,3 92 + 2 8 .0 + 3 5 .4 9 06 ,5 55 9 3 ,4 0 2 + 4 7 .1 14 8 ,9 0 4 + 5 8 .9 + 2 7 .7 3 0 6 ,0 4 4 + 2 7 .8 49 , 0 8 8 + 4 6 .3 1 6 , 78 3 ,4 6 6 Ja n .- A p r i l 1942 437,476 52,6 85 23 7, 84 3 1 ,9 6 2 ,5 4 7 3, 54 5 ,3 5 7 924,320 424,542 180,5 22 1 8, 80 6 41,906 69 , 1 0 0 18,645 119,025 81,935 27,021 72,501 53,473 4 , 0 0 1 ,5 0 7 5 3 ,8 2 9 95 ,1 9 4 46,3 93 75 1, 632 72, 23 7 122,7 58 278 ,6 45 4 3, 94 4 13,73 3,84 3 % change from 1942 + 4 8 .6 + 2.6 + 19.3 + 16.8 + 2 0 .5 + 1 9 .7 + 2 6 .9 + 2 4 .9 + 2.6 — 4.9 + 1 5 .1 — 7.2 + 3 2 .3 + 1 7 .4 — 2.8 + 4.6 + 15.3 + 2 6 .3 + 6.3 + 2 5 .6 + 8.6 + 2 0 .6 + 2 9 .3 + 2 1 .3 + 9.8 + 1 1 .7 + 2 2 .2 F o u rth D istrict B usiness Indexes (1 92 3- 2 5 = 100) Apr. Apr. Apr. Apr. Apr. 1943 1942 1941 19 4 0 1939 B a n k D e b it s (24 c it i e s ) ................................................. 233 159 138 105 91 Com me rcia l Fail ures ( N u m b e r ) ............................. 28 55 91 68 137 ( L ia b il it ie s ) ......................... 17 32 60 34 143 Sales— Life Ins ur a n ce (O. and P a . ) ........................ 101 77 105 96 83 ” — D e p a r t m e n t Sto res (97 f ir m s ) ................ 162 153 139 108 108 ” — Wh ole sal e Drugs (6 f ir m s ) ....................... 133 108 94 89 86 » _ >> D r y Goods (5 f i r m s ) ............. 156 15 4 116 95 80 ” — ” Groceries (4 0 f i r m s ) ............. 130 118 105 92 84 ” — ” H ard w are (3 0 f ir m s ) ............ 2 04 228 166 110 87 157 149 121 97 84 ” — ” All (81 firms ) ............................ ” — Chai n Drugs (5 f i r m s ) * ............................. 162 136 119 99 a ” — ” Groceries (4 f i r m s ) ........................... 143 140 114 101 104 Building C o n tr ac ts ( T o t a l ) ....................................... 107 207 153 130 156 ” ( R e s i d e n t i a l ) ............................ 120 21 9 245 159 151 Prod uct ion — Coal (O., W. Pa., E. K y . ) ............. 147 153 5 102 5 — C e m e n t ( 0 . , W . P a ., E . K y . ) * * . . 124 129 119 106 99 — Ele c. Powe r (O., Pa ., K y . ) * * . . . . 189 164 144 121 111 ” — P e tr o le u m (O., P a . , K y . ) * * ...................................................................................... * P e r individual unit operated. * * M ar c h, a N o t available. 7 Wholesale a nd R etail Trade % change from 1942 +22 325,664 86 R EV IEW (1943 compa red with 1942) P e rce nt age In cre a se or Decrease SALES SALES STOCKS April first 4 April 1943 month s 1942 D E P A R T M E N T S T O R E S (97) A k r o n ................................................................................... +12 +19 — 20 C a n t o n ................................................................................ +16 +15 a +11 + 9 -—33 C in c i n n a t i ......................................................................... C le v e la n d .......................................................................... — 5 + 2 — 32 C o l u m b u s .......................................................................... +30 +29 — 20 E r i e ....................................................................................... +16 +13 — 20 P i t t s b u r g h ......................................................................... + 3 + 1 — 35 Spring field ......................................................................... +34 +34 a T o l e d o ................................................................................. +15 +13 — 22 W h e e li n g ............................................................................ +11 + 7 -— 25 Y o u n g s to w n ..................................................................... +13 +11 a Oth er C it ie s .................................................................... -0+ 1 — 22 D i s t r i c t ............................................................................... + 6 + 7 — 30 W E A R I N G A P P A R E L (16) C a n t o n ................................. .......................................... +34 +32 — 5 C i n c i n n a t i ......................................................................... +24 +17 — 28 C le v e la n d .......................................................................... +21 +16 — 1 P i t t s b u r g h ......................................................................... +29 +24 -— 16 Ot he r C i t i e s .................................................................... +40 +48 — 9 D i s t r i c t ............................................................................... +29 +27 — 11 F U R N I T U R E (75) C a n t o n ................................................................................ — 4 — 5 — 21 C i n c i n n a t i ......................................................................... — 12 — 5 — 18 C le v e la n d .......................................................................... — 9 — 7 — 5 C o lu m b u s .......................................................................... + 4 + 3 +13 D a y t o n ................................................................................ — 11 — 23 a P i t t s b u r g h ........................................................................ — 13 — 20 + 2 T o l e d o ................................................................................. -— 1 —■ 7 — 2 Othe r C i t i e s .................................................................... -0— 6 — 13 D i s t r i c t ............................................................................... — 6 —-9 — 8 C H A IN S T O R E S * Drugs— Di stri ct ( 5 ) .................................................... +19 +17 a Groceries— D is tri ct ( 4 ) ............................................. +11 +16 a W HOLESALE TR A D E ** Au tom oti ve Supplies ( 9 ) ....................................... + 3 — 11 — 42 B ee r ( 5 ) ............................................................................ +35 +38 +18 +80 +44 a Clothing and Furnishings ( 3 ) ............................ Conf ect ion ery ( 4 ) ........................................................ +24 +14 — 65 Drugs and Dru g Sundries ( 6 ) ............................. +23 +18 + 7 D r y Goods ( 5 ) ............................................................. + 1 + 7 — 39 Elec tric al Goods ( 1 1 ) ............................................... — 39 — 42 — 59 Fres h Fr uit s and Vegetables ( 7 ) ........................ +22 +26 +13 Fu rn itu r e & House Furnishings ( 3 ) .................. — 38 a a G ro c e ry Group ( 4 0 ) .................................................. +10 + 6 — 24 T o t a l Har dw are Grou p ( 3 0 ) ............................... — -10 — 14 — 34 Gen era l Har dw are ( 7 ) ........................................ — 20 — 22 — 35 Industr ia l Supplies ( 1 3 ) .................................... — 6 -— 4 — 23 P lu mb ing & Heat ing Supplies ( 1 0 ) ............. -0— -14 — 48 J ew e l ry & Optical Goods ( 4 ) ............................. +32 a a M ac hi ne ry , Eq ui p. & Sup. (exc. E le c t .) (4) . . +19 +14 — 41 M e a t s and M e a t Pr odu ct s ( 3 ) ............................. + 6 + 7 — 7 M e t a ls ( 3 ) ........................................................................ +46 a a — 19 — 24 a P a in ts and Varnishes ( 4 ) ...................................... P a p e r and its Pr od uc ts ( 6 ) .................................... — 10 — 33 a +18 + 9 + 2 T o b a c c o and its Pr od uc ts ( 1 6 ) .......................... Miscellaneous ( 1 5 ) ...................................................... — 4 — 3 + 5 D is tri ct — All Whole sale T r a d e ( 1 7 8 ) ............. + 3 -—- 3 — 19 * P e r individual unit op erated. * * Wh olesale da ta compiled b y U. S. D e p a r t m e n t of C om me rce , Bu re au of t h e Census. a N o t available. Figures in parentheses indi ca te n u m b e r of firms repor tin g sales. D ep a rtm en t Store Sales a nd Stocks D a il y Av era ge for 1 9 35 - 19 3 9 = 100 W it h o u t A dj u ste d for Seas ona l A d ju s t m e n t Seasonal V ar iat ion April M a r c h April April M a r c h April 1943 1943 1942 1943 1943 1942 SALES: A kr on ( 6 ) ................................... 201 181 . 177 C a n t o n ( 5 ) ................................ 211 190 164 C in c in na ti ( 9 ) ......................... 157 143 142 162 15 0 171 Cleveland ( 1 0 ) ....................... Colu mb us ( 5 ) .......................... 170 151 131 Er ie ( 3 ) ....................................... 190 163 164 Pi t t s b u rg h ( 8 ) ....................... 146 129 142 Springfield ( 3 ) ........................ 205 187 152 T ole do ( 6 ) ................................. 167 141 145 W heeling ( 6 ) ............................ 130 111 118 You ng sto w n ( 3 ) ..................... 166 145 147 D is tr ic t ( 9 7 ) ............................ 162 144 153 STOCKS: D is tri ct ( 5 1 ) ............................ 134 137 191* * R e vi s ed . Figures in parentheses in d i c a t e n u m b e r of firms. 188 219 154 138 174 181 135 197 157 127 151 151 213 229 157 168 156 199 153 2 10 152 133 163 169 170 181 148 153 144 164 129 155 144 127 144 151 12 9 133 184* TH E 8 MONTHLY BUSINESS R E V IE W Summary of National Business Conditions By the Board of Governors of the Federal Reserve System IN D U ST RIAL Industrial activity in April and the early part of May increased somewhat further, and retail trade was maintained in large volume. PRODUCTION Industrial Production Federal Reserve index. Monthly figures, latest shown is for April 1943. DEPARTMENT STORE SALES AND STOCKS The Board’s index of total industrial output rose slightly in April, reflecting further increases in activity in war industries, while output in most other lines showed little change. Production of armaments in the machinery and transportation equipment in dustries rose to new high levels. Activity at steel mills increased somewhat fur ther. Lumber production showed the usual seasonal rise in April and was at a level about 10 per cent less than a year ago, when problems of maintaining an adequate labor supply in the industry began to develop. In the cement industry, where production usually advances sharply during the spring months, production has shown little change this year, reflecting chiefly the restricted volume of current construction activity. Total output of manufactured foods in April continued below the seasonally adjusted peak level reached at the end of last year. Meatpacking and flour pro duction showed decreases in April, while output of dairy products and other man ufactured food products was maintained. Volume of output in chemical plants con tinued to gain. Production of other nondurable manufactures showed little change. There was a decline in bituminous coal production in the last week of April, following the breaking-off of negotiations for a new wage contract, but output in creased in the early part of May. Production of coal in March had been at an exceptionally high level. Stocks on May 1 were considerably higher than a year ago and for bituminous coal were estimated to be equivalent to 55 days’ supply for industrial purposes. In May the Government took over the bituminous coal mines. Value of construction contracts awarded declined in April, reflecting reduc tions in contracts for Federal work, according to the F. W. Dodge Corporation, Total residential awards in March and April were at the lowest levels for these months in a number of years. Distribution Sales at department and variety stores increased in April, but the rise was less than usually occurs when Easter falls late in the month. Mail-order sales, principally to persons in small towns and rural areas, showed about the usual seasonal rise. Value of sales in April continued at a level substantially higher than a year ago but, with prices higher, the physical volume of goods sold was probably about the same as in the corresponding period last year. Carloadings of revenue freight were maintained in large volume in April and the first week of May. Ore shipments showed a seasonal rise beginning in the last half of April, a month later than in 1942 when the movement was unusually early. latest shown are for April 1943. C O S T O F LIV IN G Commodity Prices 1937 1938 1939 1940 1941 \94Z 194’ Bureau of Labor Statistics’ indexes. Last month in each calendar quarter through Sep tember 1940, monthly thereafter. Mid-month figures, latest shown are for April 1943.. MEMBER BANK RESERVES Breakdown between required and excess re partly estimated. Wednesday figures, Digitized forserves FRASER latest shown are for May 12, 1943 Wholesale prices of most commodities showed little change from the middle of April to the middle of May. Retail food prices continued to advance sharply in the latter part of March and the early part of April and the indexes showed in creases of 6 per cent as compared with January. Retail prices of most other items in the cost of living showed smaller increases in that period. Plans for more effec tive enforcement of price ceilings have been announced. Bank Credit During May, as the Treasury made disbursements out of war loan accounts, which had been built up during the recent drive, there was a growth of bank deposits subject to reserve requirements and a decrease in member bank excess reserves. Continued withdrawals of currency also reduced bank reserves. Never theless, the reserves of member banks were sufficient to enable them to make sub stantial repurchases of bills which had been sold to the Reserve Banks under op tion. In addition, the Federal Reserve System sold some bonds in response to a market demand. Government security holdings at reporting member banks in 101 leading cities increased by 4.3 billion dollars in the four weeks ending May 12. These increases reflected purchases of new issues during the War Loan drive, as well as substantial market purchases. In New York City, loans to brokers and dealers for purchasing or carrying se curities increased by 860 million dollars during the three weeks of the War Loan drive, and subsequently declined in the first three weeks of May; these changes reflected almost entirely activity in loans for purchasing or carrying Government securities, which on May 19 amounted to 580 million dollars of the total 1,020 mil lion dollars outstanding; other loans to brokers and dealers by New York City banks rose by 90 million dollars from the end of March to May 19.
@FedFRASER