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MONTHLY BUSINESS REVIEW Covering financial, industrial and agricultu ral con ditio ns V o l. 22 Cleveland, O hio, November 30, 1940 The volume of new orders booked during October and the first weeks of November by important manufacturing industries in the fourth district was appreciably larger than that of immediately preceding periods. In some instances more new business was received this year than last despite the fact that war precipitated a rush of speculative buying at this time a year ago. Reports from many manufacturers in mid-November indicated that they have not been adding materially to inventories, preferring not to carry heavy stocks into 1941. Direct defense orders have not bulked as large in relation to productive capacity in this district as elsewhere since most industries here are of the sub contracting type. Production in many lines, notably steel and machine tools, reached all-time peaks during Octo ber, but failed to equal the volume of new business re ceived. Backlogs of unfilled orders generally were large enough to maintain current operating schedules until the year end or longer. Several industries have been work ing only one shift, possibly with some overtime. Notwithstanding the fact -that shipments have been leaving steel mills at a rate unsurpassed since World War years, there has been less confusion in the industry this fall than last. Most mills have filled their fourth quar ter rolling schedules, and at least a part of first quarter production of some products, such as structural, has been sold. Some steel producers recently have adopted the policy of selling on an f.o.b. mill basis to new customers outside of the company’s own basing point area. This practice results in slightly higher prices when a consumer is forced to go outside the basing point territory governing his district to secure desired items. The index of Ohio industrial employment rose 2 3/2 percent during October to the highest level in three years, according to Bureau of Labor Statistics data. At 102^, it was 1^2 points above last December, the most recent peak. Gains were largest at automotive parts, electrical machinery, and tire factories although some improvement was noted at blast furnaces and foundries, industries which had been operating at high rates previously. Payrolls of Ohio manufacturing industries were increased more rapidly than working forces last month, and the same was true at Western Pennsylvania factories. This was a continuation of the trend which has been evident since late spring. Ohio wage disbursements were four percent larger in October than in September. Fourth Federal Reserve District Federal Reserve Bank of Cleveland No. 11 NATIONAL DEFENSE The Federal reserve banks in cooperation with commer cial banks throughout the country, in a nation-wide move ment initiated by the National Defense Advisory Commis sion, are attempting to decentralize the placement of defense orders and to encourage small and medium-sized enterprises to occupy their proper place of vital importance in the na tional defense program. The facilities of big business en terprises have been classified by the Army and by the Navy. No such classification of smaller business concerns has pre viously been undertaken and the productive facilities of thousands of smaller manufacturing units are not accuratel) known. According to the latest available Census of Manufactures in the United States, manufacturing concerns in this district create in excess of 15 percent of value added to goods by the manufacturing processes. Primary defense orders actually placed in this district to date amount to less than four per cent of the total, indicating that this territory is not receiv ing the proportion of defense orders which its manufactur ing importance might justify, and that the manufacturing facilities of the district are not being utilized to the fullest extent for defense work. The accompanying chart shows primary defense con tracts awarded to industrial concerns in this district be tween June 1 and October 31. The aggregate volume is $270 millions. Of this total, contracts for ordnance and ammunition, at $119 millions, represented 44 percent; ship construction contracts, at $46 millions, represented 17 per- THE MONTHLY BUSINESS REVIEW 2 cent; other construction, at $21 millions, 8 percent; air plane engines, etc., at $5 millions, 2 percent; and all other manufacturing $79 millions or 29 percent of the total con tracts awarded in this area. These figures in no way rep resent the total part fourth district industry is now playing or will play in the defense program for, even under ordinary conditions, the position of many of our industrial concerns is as subcontractors, or parts and material suppliers. Rela tively few direct Government contracts for raw steel have been awarded, and yet local steel plants are operating at or close to capacity on orders received from holders of direct and indirect Government contracts, as well as from other industrial sources. Local manufacturers who are not now on the “bid lists” of the War Department or of the Navy Department and who desire to sell to the Government are urged to cooperate in the movement by listing with their usual banking con nection what plant facilities are available for defense pro duction, what articles or products they are now manufac turing or processing, and what kind of defense materials or products they would be interested in supplying. A substantial part of defense orders placed in the fourth district will be on a sub-contract basis and the availability of information leading to unused production facilities of which there undoubtedly is considerable, will be particularly help ful. It will enable the National Defense Advisory Com mission to locate quickly the source of any given item at any time and will assist primary contractors in obtaining parts which they require to fill their own contracts, espe cially when their demands are in excess of the capacity of their usual suppliers. FINANCIAL Commercial, industrial and agricultural loans of weekly reporting member banks in the fourth district increased $4,000,000 between October 16 and November 13, compared with a $6,000,000 decline in the corresponding period last year. Real estate loans of reporting member banks in this district rose $2,000,000 during the period, in line with the persistent increase in such loans since the low point this year during the last week of May. Holdings of direct United States Government obligations fell $11,000,000 dur ing the four weeks ending November 13. This situation contrasts with that in other reserve districts where member banks have either maintained or increased their Govern ment security portfolios in recent weeks. Fourth district member banks have partially offset the decline in their direct Government security portfolios by a $6,000,000 in crease in their holdings of securities fully guaranteed by the United States Government. Adjusted demand deposits of reporting member banks in the fourth district continued to mount, reaching $1,530,000,000 in the second week of November. Fourth district reserve bank credit declined approximately $14,000,000 during the four weeks ending November 13 due almost entirely to open market sales of government securi ties by the System. Gold certificates on hand and due from the United States Treasury increased $55,000,000. The other principal balance sheet changes were an expansion of $14,500,000 in Federal Reserve note circulation and an increase of $19,500,000 in member banks* reserve balances. During the month of October, excess reserves of member banks rose by more than $14,000,000. New Member Banks Bank of Ohio Valley, Pittsburgh, Pennsylvania. St. Clair Deposit Bank, Pittsburgh, Pennsylvania. The Silverton Bank, Silverton, Ohio. MANUFACTURING, MINING Nearly all major steel-consuming industries have contributed heavily to cur rent steel buying. Mid-month indica tions were that more business had been received by mills early in November than during the corresponding October period. Automobile and truck manufacturers were order ing larger tonnages than in other recent weeks. Railroad purchases of both rails and rolling equipment also have be come increasingly important lately; 12,195 freight cars were ordered during October, more than in any other month for a year. Tin plate, a slow-moving item since early in the year because of heavy inventories and a reduced food pack this fall, also has been in greater demand. Most orders were for first quarter shipment at prices then prevailing, but a few smaller producers have quoted present prices on this business. Fourth quarter quotations on alloy tool steels have been reaffirmed. A price increase on pig iron was rescinded shortly after it was published. Production of pig iron in October was at an all-time peak, both in total and on a daily average basis; 4,384,194 net tons were cast last month. There were 196 blast furnaces in operation on October 31; of these, 163 were dependent principally on Lake Superior iron ore. With the exception of May 1923, consumption of 6,051,347 gross tons was the heaviest since monthly data first became available in 1918. Ore receipts at Lower Lake ports during the month exceed ed consumption by more than 4,000,000 tons, and inventories were increased accordingly. On November first, 41,125,450 tons were stored at furnaces and on Lake Erie docks, more than at any other time in three years. Vessel movement was hampered by a severe storm which swept the Great Lakes on Armistice Day, but arrivals later in the month indicated that approximately 5,000,000 gross tons of iron ore would be received at Lower Lake ports during November. October shipments, amounting to 10,061,127 tons, were the best ever reported for that month. Principally as a result of expanded schedules at Pitts burgh and Youngstown mills, national steelmaking opera tions during October averaged 96.1 percent of theoretical ingot capacity. Production of 6,461,898 net tons of open hearth and Bessemer steel was the best ever reported for a Iron and Steel THE MONTHLY BUSINESS REVIEW single month, exceeding last November's record by more than five percent. Further improvement was reported week ly during November, some producers crowding furnaces beyond rated capacity. The American Iron and Steel Insti tute estimated operations at 96.6 percent for the final week of the month. A few mills closed finishing departments for Thanksgiving, but open hearth schedules were not curtailed. While a labor dispute stopped work at one plant for sev eral days in mid-November, operations at Pittsburgh mills reached an eleven-year high at 97 percent in the third week of the month. Actual production was the largest on record, considerable steelmaking capacity having been built in that territory since 1929. Schedules in Youngstown plants were advanced eight points to 93 percent from early October to late November. Wheeling operators held raw steel out put steady at 97-98}^ percent during most of that time, curtailing production late in the month to make furnace repairs. Steelmakers in the Cleveland-Lorain area also found it necessary to reline open hearths, and the operating rate declined four points to 86 percent. One producer in the Cincinnati territory resumed production the third week in November after an extended shutdown; mills there were scheduled at 97^5 percent late in the month. Coal A high rate of industrial activity, a sea sonal pickup in demand for domestic grades, and a longer work month com bined to raise fourth district bituminous coal production during October to the highest level since January. Output increased less from September to October this year than in the recent past, but last month's production, amounting to 15,652,000 net tons, was four percent larger than Sep tember's. This was 12.3 percent less than October 1939 output. National production failed to expand seasonally from September to October, and the total for the month was 17*/2 percent smaller than that of a year ago. Several independent operators early in October found it necessary to curtail production, and a few mines were closed. Later operations were resumed, but weekly production in the Ohio and Eastern Kentucky fields did not equal the tonnages reported in mid-summer when industrial consumers were stocking heavily in anticipation of higher prices. In Western Pennsylvania where there has been an increasingly large demand for blast furnace coke, more coal was mined during the second week of November than at any other time this year. Supplies of both by-product and beehive oven coke have been limited. Several large steel companies have been buy ing coke in the open market for the first time since 1937. Since by-product oven production has not been large enough to meet blast furnace requirements, some interests are not selling coke, and prices on grades used for domestic heating have risen accordingly. In the Connellsville territory, more than 5,000 out of approximately 6,000 beehive ovens were in operation early in November. October production of bee hive coke in Pennsylvania was 354,000 net tons; this com pares with 271,800 tons made during September. Approxi mately 2,025,000 tons of beehive coke were produced dur ing the first ten months of the year, 2 2/3 times as much as during the corresponding 1939 period. During October, 4,971,808 net tons of bituminous coal were shipped from Lake Erie ports, less than during any other full month of the present navigating season. Indus trial consumers, especially those in the Detroit River area, 3 continued to increase stocks during November, and loadings exceeded 1,000,000 tons per week until mid-month. Prin cipally as a result of unusually heavy shipments early in the summer, total loadings so far this season have exceeded those for any full year for which data are available. By November 18, 45,537,747 tons had been loaded; the previous record of 45,440,696 tons was established in 1936. Automobiles Automobile manufacturers continued to expand assembly schedules during Octo ber and the first weeks of November. Even the short Thanksgiving week was partly compensated for by an increased average daily output. Formal show presentations of new models were held in mid-October; in years prior to 1939 shows were held in November or later. More significantly, change-overs were made earlier this year than ever before, and most companies actually introduced cars some time in advance of the national shows. Retail demand has been brisk, and production schedules were ad justed accordingly. Stocks in warehouses and on dealers’ floors apparently have been increased less rapidly after new model introduction this year than in the recent past. Inven tories early in November were not so large as those held late last spring. According to the Department of Commerce, 493,223 pas senger cars came off assembly lines last month. This total is larger than that for any other month since June 1937 and the best for any October on record. Factory sales increased 87.6 percent from September to October and last month’s total was 67.3 percent greater than that of a year ago. Since less emphasis is placed on year-to-year changes in truck designs, gains in that classification were not so large per centagewise. October production of 72,009 units was the best for any month this year; 44,638 trucks were built during September, and 61,573 during October 1939. Comparisons of this quarter with a year ago are affected by the fact that approximately one-fourth of the industry’s production ca pacity was closed for seven weeks during October and No vember 1939 by a strike. Principally as a result of earlier introduction of new models, retail deliveries last month were the largest for any October on record. In eight major Ohio counties, 12,672 new automobiles were registered during October, 48 per cent more than during the same month a year ago. Automotive parts and accessories manufacturers in this district have reported some pressure to meet delivery dates. October shipments, even of those companies unaffected by the strike last year, were substantially larger than those of a year ago. More workers were employed at the end of October in Ohio automotive parts plants than at any other time in three years. Rubber and Tires The steady rise in crude rubber consumption which has been reported reg ularly since May was extended further during October. Increasing twelve percent from the pre vious month, October consumption of 56,477 gross tons was the second largest since monthly data first were published in 1925. A year ago, 57,155 tons were used by manufac turers in this country. More crude rubber was imported during the first ten months of 1940 than during any full year in history. The cumulative total of 646,851 tons exceeded the record estab lished in 1937 by 46,374 tons. Although October imports 4 THE MONTHLY BUSINESS REVIEW were five percent smaller than September’s, they were the second largest ever reported. As a result of continued heavy receipts, stocks in the United States expanded to the highest level in two years. Included in October 31 inven tories of 259,104 tons were 63,568 tons of crude rubber brought here under terms of the cotton-rubber barter agree ment and for the defense pool. Reflecting expanded production at automobile assembly plants, original equipment tire shipments rose 58^4 percent from September to October. Last month’s sales of 2,322,313 casings were 30 percent larger than those of a year ago. October export shipments, amounting to 140,025 units, were the best for a year. Factory sales of replacement tires increased contraseasonally last month; 3,098,371 casings were shipped during Octo ber, five percent more than during September. Tire manu facturers announced spring-dating terms somewhat earlier this year than in the recent past. In order to stabilize fac tory employment, tire makers for many years have encour aged distributors and dealers to buy replacement casings during the winter months when consumer demand usually is small. Tires are shipped at guaranteed prices and bills are dated for spring payment. According to a Department of Commerce survey, tire dis tributors on October 1 held 7,270,000 casings in stock, 411,000 more than a year before. The unusually large inven tories of July 1 had been reduced by 789,000 units during the third quarter. While all classes of distributors disposed of stocks during that period, greatest reduction was in inven tories held by chain stores. Sales of mechanical rubber goods continued to increase during October and early November. Some manufacturers reported that the amount of new business received during the first weeks of November exceeded the large volume booked a year ago. Textiles and Clothing Wool top prices advanced steadily during October, quotations on spot wool rising 20 cents per pound to $1.36^ before sup plies were practically exhausted late in the month. Since October 30 there has been comparatively little new business in domestic wool, and daily spot quotations have not been published. Permission to use foreign wool for defense orders was granted early in November, thus broadening the source of supply and permitting mills specializing in the weaving of imported fibers to participate in the national preparedness program. In late November, bids on more than 13,250,000 yards of wool textiles were called for by the Army and by the Civilian Conservation Corps, and prices on foreign wool rose as weavers covered require ments for both this work and civilian consumption. Subse quently there was some decline. Heavy Government demand for wool goods has absorbed approximately 30-40 percent of weaving capacity, and imme diate or near-by delivery on a wide variety of fabrics has been difficult to obtain. Wholesale cloth prices have risen accordingly; the New York Wool Top Exchange Service in mid-November estimated that the market was up on an aver age of 35 cents per yard for cloth made of wools similar to those used in defense orders. Mills working on Govern ment contracts were reported to be scheduled until after the holidays. Some weavers of cloth for civilian uses held orders which would maintain near-capacity operations through February. A few clothing manufacturers have pur chased 80 to 85 percent of their estimated spring season cloth requirements rather than only 60-70 percent as has been the usual practice. Fourth district garment factories in late October started production of spring merchandise for December shipment. Orders were substantially larger than those of a year ago. Heavy-weight fall merchandise has been reordered in siz able amounts. This business and advance orders for spring suits and topcoats appeared sufficiently large to keep many needlework shops busy throughout the first quarter of 1941. New business received by overall and rough cotton gar ment manufacturers during October and early November was larger than that booked at the same time last year. Con sumers were placing fairly substantial orders for future de livery, thereby assuring continuation of current operating schedules for some time. Production was closely in line with the volume of incoming orders. Completion of some Army and Navy contracts resulted in somewhat larger ship ments. Employment at Ohio textile mills and needlework shops increased slightly during October. The contract between Cleveland manufacturers and textile workers was automat ically renewed in mid-November. Other Manufacturing: Sizable volume of new business was booked by most other manufacturing in dustries in the fourth district during October. Many concerns were producing near capacity on the basis of single shift operations; some industries, notably machine tools and foundries, were working three shifts and overtime. Machine tool production in October was double that of a year ago and the industry’s operating index, as reported by the National Machine Tool Builders' Association, moved to a new all-time high at 96.8. Production capacity, measured as percentage of peak output, in terms of payroll hours of all members of the association, expanded still further during the month. At the end of October, capacity was 50 per cent greater than in September 1939, and additional plant expansion programs have been announced by several com panies. Many manufacturers also have increased production by sub-contracting parts to machine shops. Demand for machine tools has continued to grow, and new orders have been received in unprecedented volume, extending deliv eries still further. Builders generally will not quote prices beyond four months; a few have written clauses in short term contracts which protect them against more than a ten percent rise in labor and material costs. Bolt and nut producers in mid-November were working at about 85 percent of capacity. Not since early 1937 had demand been so heavy, jobbers and consumers apparently purchasing for inventory. Deliveries were extended from two to three weeks. Continuing one shift operations, some fourth district plants were scheduled for the remainder of the year. Total sales reported by members of the Foundry Equip ment Manufacturers' Association reached an all-time peak in October. After declining for two consecutive months, the index of new and repair orders rose to 264 percent of average monthly sales during 1937-39. There were some indications that consumers were buying in anticipation of need. Heavy hardware manufacturers also noted evidences that customers were purchasing considerably further ahead THE MONTHLY BUSINESS REVIEW as a result of slow deliveries. Incoming orders were great er than shipments, and backlogs were large enough to main tain current operations about ninety days. New business received by electrical equipment manufac turers continued to outstrip production during October and early November, backlogs expanding further to unprece dented levels in some lines. Demand was greatest for heavy apparatus and equipment; orders for heating devices and domestic appliances were not so large. Consequently, pro duction schedules of plants manufacturing these items were more dependent upon receipt of new orders, although many were working near capacity early in November preparing to supply the holiday trade. Production of plate and window glass increased consid erably during October, and mid-November indications were that more plate glass would be made this month than last. Principal plate glass demand has been for new automobiles and mirror manufacture, but some orders for bullet-proof glass have been received, and demand for structural glass has increased. More window glass making facilities were in operation in mid-November than at any other time since January. Consumers generally appeared to be buying only for near-by needs. Exports to Canada have been large. Manufacturers in mid-November reported that current opera tions probably would be maintained until the end of the year. Plants making both hand and machine blown and pressed glassware have been operating near capacity recently, and some companies have unfilled orders large enough to sus tain current production schedules for about ninety days, partly as a result of Government contracts for defense items. In other recent years operations have been curtailed shortly before the holidays. China and tableware manufacturers have experienced some difficulty in meeting delivery requirements, customers requesting immediate shipment. New orders have continued to run ahead of production, and sizable backlogs have been maintained. In mid-November, indications were that most potteries would be operating practically at capacity for the remainder of the year. Some additions to production facili ties have been announced for completion early next spring. Improvement in operations at paper mills was evident in October and early November, larger mills in the fourth dis trict reporting slightly greater-than-average gains over a year ago. Sales, while better than during the previous month, were not so large as last October's. Consumer sentiment seemed against forward buying since the price structure has been unstable. Little change from a month ago was noted in production schedules at paperboard plants. A few mills held unfilled orders which would maintain operations for three or four weeks. Commercial orders for wrapping paper and boxes showed no marked upturn despite expectations of heavy Christmas trade. The volume of new business received by office furniture and equipment manufacturers during October was consid erably in excess of that obtained during September or a year ago, and there was but little slackening in demand early in November. Shoe salesmen started on the road with spring merchan dise early in November. According to first reports, retail ers were buying larger amounts this year than last, showing some concern about probable higher prices. Quotations on leather strengthened considerably during the first weeks of November, but many manufacturers held several months' 5 supply of standard materials and did not advance prices ma terially on women's shoes. In the fourth district, produc tion was curtailed more than seasonally during October while there was fractional improvement in national output. Most plants in this area are not equipped to manufacture heavy footwear such as is required by the Army which has placed large orders for near-by delivery. Further increase in rayon yarn shipments during October reduced producers' inventories to 6,800,000 pounds at the month end, less than one week’s supply at the October ship ping rate of 36,900,000 pounds per month. Not since late 1939 had stocks been so small. TRADE October sales of fifty-two reporting de partment stores over those of October 1939. Akron and Erie showed the larg est gains, nine percent in each case; while Wheeling sales alone registered a decline. Cumulative sales during the period February through October 1940 were well above those for the corresponding period in 1939 in most cities, almost 10 percent above in the case of Pittsburgh. Collections reflected increased employment and payrolls, rising 13 percent over those of October last year. The ratio of October collections to accounts receivable outstand ing at the end of September was 37.4 percent, practically the same as a year ago. There was but little change in the ratio of credit sales to total sales in October as com pared with either September or a year ago. Basement store sales of department stores were six per cent larger than those of October 1939. The ratio of these sales to total store sales was 17.5 percent, about the same as last year. Wearing apparel sales for the district in October were four percent lower than those of a year ago, but the cumu lative total of February through October was still slightly above that for the same period last year. Accounts receiv able in wearing apparel stores during October were turning over at a rate of about once every three months. Stocks were seven percent larger this October than last. Retail furniture sales were two percent greater than those of last October for the district, with Columbus being the only prin cipal city to show a decline. Retail furniture collections in the district were up 14 percent from October 1939. While October chain drug store sales were off one percent from the September figure, they were seven percent above sales of October 1939. Chain grocery trade in the fourth district per unit operated showed a substantial increase of 13 percent over September and of 16 percent over October a year ago. Cumulative chain grocery trade during the January-October period of this year was eleven percent greater than that of the same period last year. Retail Wholesale From January through October cumu lative sales of fourth district wholesale firms reporting to the Bureau of the Cen sus were 7.5 percent above sales for the corresponding pe riod of 1939. October of this year was a better sales month than the same month last year in nearly all wholesale lines, but particularly in heavy hardware which showed a 30 per cent increase, in plumbing and heating supplies which showed a 25 percent increase, and in machinery, equipment, and sup plies which showed a 52 percent increase. Hardware stocks at the end of October were down four percent from those of a THE MONTHLY BUSINESS REVIEW 6 year ago, but rose two percent above those held at the end of September. Wholesale dry goods sales were 15 percent lower in October than during the same month last year and down three percent from September sales. Stocks were almost ten percent lower than a year ago. Wholesale gro cery sales in October were eleven percent above those of last year, but inventory was eight percent smaller. CONSTRUCTION Impact of the defense program on the construction indus try was shown in value of contracts awarded during October for erection of manufacturing buildings in the fourth dis trict. Awards for the month were the largest for any month since July 1937 and the best for any October in eleven years. In fact, two and a half times as much factory con struction was started during October as in the same month a year ago. More than half of all contracts awarded in this district were for erection of manufacturing buildings in the Cincinnati area where October awards of approxi mately $5,000,000 were seven times those of the previous month and twelve and a half times those of October 1939. Gains over both the month before and a year ago also were reported during October in the Cleveland territory. While factory construction awards in the Pittsburgh region were larger this October than last, value of contracts was less than during September. Considerable improvement in the amount of residential building also was evident in the Cincinnati territory, Octo ber awards being 30 percent larger than September’s and 47 percent greater than those of a year ago. One-family dwellings for rent or sale accounted for approximately 40 percent of the total, but proportionately there was less specu lative building than in other recent months. In the entire fourth district, residential contract awards were the best for any October since 1928 and fractionally larger than those for September. Heavy demand for lumber from both Government agencies and private builders has resulted in higher prices and some depletion of stocks. Continued advances in prices of lumber and paint and paint materials and an initial increase in the price of millwork featured building materials markets during October and early November. Some lumber dealers in the fourth district late in the month reported that seasoned stocks of rough lumber were small and inventories of certain furni ture woods were exhausted. Retailers did not appear to be buying heavily for stock in face of higher prices and ap proaching winter. AGRICULTURE In the fourth district, most late field crops turned out somewhat better than expected, and November 1 estimates of corn, tobacco, potatoes, and sugar beet production were raised. Prospects for soybeans declined. Harvest of pears also was larger than indicated earlier in the season, but yields of apples and grapes fell below expectations. Mild open weather until mid-November in many sections of the district extended the grazing season, pasture conditions av eraging better than 80 percent of estimated normal in most of Ohio and Pennsylvania. The number of lambs fed on Ohio farms during the 194041 feeding season probably will be larger than in the 1939-40 season, according to the Agricultural Marketing Service. Shipments of feeders into the State continued to increase during October, whereas they declined at that time a year ago. Slaughter of hogs during October was the largest on rec ord for that month, amounting to 4,482,818 head. This com pares with the previous high of 4,327,951 head butchered in October 1923. Corn Uneven ripening of the corn crop which resulted in both sound and immature ears in the same field has delayed husking somewhat. In general, however, the 1940 crop appeared to be of comparatively good quality despite damage from drought and early frost. Husking returns indicated larger yields per acre than expected, and fourth district production on November 1 was estimated at 159,066,000 bushels, six percent more than was forecast a month earlier, but 25 percent less than was harvested last year. Tobacco As cutting progressed it appeared that the drought which prevailed over much of the fourth district tobacco producing area was not nearly so detrimental to the crop as seemed to be the case during the growing season. Late rains and an open fall prolonged growth and added both size and weight to leaves. Accordingly, estimates for both Kentucky burley and Miami Valley cigar filler were raised from October to November, yields per acre averaging about 835 pounds. Last year’s harvest averaged better than 900 pounds, but the 1929-38 average crop yielded only about 795 pounds per acre. Weather throughout the burley belt during October and November was excellent for curing the crop and that por tion moving to market late in the month was well colored. Lexington markets will open December 2 and others a day later under regulations adopted by growers a year ago. Late in November planters voted to renew marketing quotas for three years. The new contract will base parity payments on the 1934-39 period rather than the 1919-29 one as in the past. Potatoes Although frost damaged some of the Pennsylvania crop, weather conditions generally were favorable for har vesting the late potatoes. Yields per acre were better than anticipated, and this year’s indicated production was the largest since 1936. Sugar Beets Ohio sugar beet yields have proven better than expected earlier in the season. Wet weather in June caused many fields to be replanted, and drought later af fected growth somewhat adversely. Conditions during the fall were favorable, and estimated yields were raised to 8^4 THE MONTHLY BUSINESS REVIEW net tons per acre. This year’s indicated crop of 366,000 tons was the best ever reported. Some beets were still in the ground on November 1. Soybeans Soybeans have failed to mature as anticipated, and the Ohio harvest was placed at 8,381,000 bushels by the November 1 Crop Report. Last year’s production totaled 9,681,000 bushels. Wheat Acreage seeded to winter wheat this autumn has been estimated by independent crop reporters to be about two percent larger than last year’s. Late Fruits Grapes were harvested later than usual this year. Frost in mid-month damaged fruit still on the vines, resulting in low prices for that portion of the crop sold for juice purposes. End-of-season indications on November 1 pointed to a near-average commercial apple crop in the fourth district, but this year’s yields were markedly lower than those of a year ago. The pear crop also was smaller this year than last, but larger than average. Wholesale and Retail Trade (1940 compared with 1939) Percentage Increase or Decrease STOCKS SALES SALES October October first 10 1940 D E P A R T M E N T STORES (52) 1940 months + 8 .6 + 7.2 + 3 .7 Akron........................................................... + 8 .9 + 4 .7 Cincinnati................................................... + 4 .7 + 1.5 + 5 .6 Cleveland.................................................... + 7.7 + 6.3 Columbus............................................................. + 2 .6 + 7.5 + 0 .9 + 8.5 + 9.2 Erie............................................................... + 3 .6 + 5 .2 + 9 .7 Pittsburgh........ ; ........................................ + 4 .4 + 5.2 + 2 .6 — 3 .0 — 6.1 Wheeling................................ + 1.7 + 3.2 + 5 .0 + 8 .9 Other Cities........................... + 3.2 + 5 .0 + 8.2 District................................... W E A R IN G A P P A R E L (12) + 9 .7 — 6 .6 Cincinnati.............................. + 2.5 + 9 .4 — 1.6 + 0 .6 Cleveland............................... — 2.2 + 0.1 + 2.2 Pittsburgh............................. — 3 .9 + 1.3 + 7.4 District................................... F U R N IT U R E (38) + 1 0 .3 + 9 .2 Cincinnati.............................. + 2.5 + 19.1 — 17.7 + 3.9 Columbus. + 3.4 + 1 5 .0 + 3 0 .6 + 19.0 Toledo. + 3.8 + 2 3 .6 + 16.5 + 2.1 C H AIN STORES* i + 7 .4 + 15.9 + 11.4 W HOLESALE T R A D E ** + 6 .9 + 1 3 .8 + 17.6 + 3 0 .8 + 6 .0 + 2 .6 Beer (7 )...................................... l + 8.2 + 5 .0 Clothing and Furnishings (5). l + 4 .7 + 2.4 Confectionery (3 ) ........ ............ + 3 .7 + 10.6 + 2.5 Drugs and Drug Sundries (9). — 9 .8 — 14.6 + 5 .9 Dry Goods (5 ).......................... + 17.6 + 5 .2 + 4.1 + 3.3 + 5 .4 Fresh Fruits and Vegetables ( 7 ) ... . + 5 .7 l + 1 4 .5 — 9 .9 Furniture & House Furnishings (4). — 8.2 + 11.0 + 2 .0 — 3.8 + 14.0 + 1 4 .3 + 6.3 + 8.1 — 2.8 i i + 2 9 .5 + 2 2 .0 — 7.8 + 1 1 .6 + 4 .4 + 2 5 .3 + 1 8 .2 i l + 13.6 — 18.3 + 5 1 .6 Machinery, Equip. & Sup. (exc. Elect.) (5). f1 — 17.1 + 6.1 + 13.1 i i — 11.6 Metals (3). — 6 .2 + 0 .8 + 1.9 + 1 0 .3 + 1 3 .3 — 9.1 Paper and its Products (7). — 8 .9 + 1 5 .7 + 5.5 + 2 6 .2 + 1 3 .5 + 2 .9 + 1.9 + 7.5 + 7 .4 District— All Wholesale Trade (2 27 ).. ♦Per individual unit operated. ♦♦Wholesale data compiled by U. S. Department of Commerce. 1N ot available. Figures in parentheses indicate number of firms reporting sales. 7 Fourth District Business Statistics (000 omitted) % change Fourth District Unless October % change Jan.-Oct. Otherwise Specified 1940 from 1939 1940 from 1939 + 10.4 24,444,000 Bank Debits— 24 cities................. $2,702,000 + 14.3 Savings Deposits— end of month: i 40 banks O. and W. P a ............ $ 780,570 + 0 .9 Life Insurance Sales: Ohio and P a ................................ $ 85,721 + 6 .8 795,095 + 4 .8 Retail Sales: 25,287 + 5 .0 + 8.2 Dept. Stores— 52 firms............. $ 213,113 987 — 3 .9 Wearing Apparel— 12 firms . . . $ 8,192 + 1.3 949 + 2 .0 Furniture— 38 firms................... $ 9,113 + 16.5 38,198 + 2 9 .6 319,054 — 0.3 Building Contracts— T otal.......... $ + 2 4 .7 16,835 + 2 9 .2 “ “ — Residential. $ 149,816 Commercial Failures— Liabilities.# 552 — 59.1 9,802 — 13.2 512 — 1.9 565 3 — 15.0 “ “ — N um ber. . . Production: 4,384 + 7 .9 37,901 + 4 0 .8 Pig Iron— U. S ...............net tons 6,462 + 6.3 52,663 + 3 2 .9 Steel Ingot— U. S..........net tons Auto— Passenger Car— U. S .. .. 421,2142 + 6 7 .3 2,888,7063 + 3 0 .8 72,0092 + 16.9 609,7292 “ — Trucks— U. S ................... + 7.8 Bituminous Coal, O., W. Pa., E. 15,652 — 12.3 145,150 + 2 7 .6 1,545 + 1 3 .9 11,111 + 16.7 Cement— O., W.Pa., W .Va.bbls. Elec. Power, O., Pa., K y ............ 1,8573 + 1 0 .3 16,5984 + 14.0 ........................... Thous. k.w.h. Petroleum— O., Pa., K y . . .bbls. 2,037s — 2 .0 19,4244 + 0 .7 5 5 — 28.5 — 14.0 Shoes...................................... pairs 48,945 + 0 .9 5,561 + 7.8 Tires, U. S.........................casings Bituminous Coal Shipments: 4,972 — 21.0 42,992 + 2 7 .3 Lake Erie Ports............. net tons 4 January-September 1 not available confidential actual number 8 September Fourth District Business Indexes (1923-25 = 100) Bank debits (24 cities)......................................... Commercial Failures (N um ber)......................... “ “ (Liabilities)...................... Sales— Life Insurance (O. and P a .).................. “ — Department Stores (48 firm s)............... “ — Wholesale Drugs (9 firm s)..................... “ — “ Dry Goods (5 firm s)............ “ — “ Groceries (53 firm s)............. “ — “ Hardware (35 firm s)............ “ — “ All (102 firm s)....................... “ — Chain Drugs (4 firm s)**......................... Building Contracts (T o ta l)................................. “ “ (Residential)....................... Production— Coal (O., W. Pa., E. K y .)........... — Cement (O., W. Pa., E. K y .). . . “ — Elec. Power (O., Pa., K y .)* ....... “ — Petroleum (O., Pa., K y .)* .......... “ — Shoes................................................ ♦September. **Per individual unit operated. Oct. Oct. Oct. 1940 1939 1938 100 90 80 35 36 57 13 31 22 89 83 69 97 98 87 137 124 114 65 77 52 80 72 71 107 96 80 87 80 74 103 96 98 80 62 69 98 76 46 87 99 73 128 113 100 221 200 181 110 113 119 84 118 111 Oct. 1937 97 45 35 89 104 119 62 80 102 86 94 36 44 85 94 190 133 90 Oct. 1936 94 31 15 90 98 113 69 84 106 89 98 47 44 98 109 180 125 118 Debits to Individual Accounts A kron............... Canton............. Cincinnati....... Cleveland........ D ayton............ Franklin.......... Greensburg. . . , Homestead Lexington........ Lorain.............. Middletown. . Oil C ity........... Pittsburgh. . . . Springfield. . . . Steubenville, . . Wheeling......... Youngstown. . . 5 Weeks ended Nov. 20, 1940 91,315 12,844 54,265 430,920 822,948 225,342 92,858 36,233 4,139 8,873 14,993 4,499 25,142 19,050 6,903 15,015 11,579 876,126 11,383 22,624 12,930 177,037 15,627 36,001 67,436 11,225 3,107,307 % change from 1939 + 9 .9 + 5 .9 + 17.9 + 4 .9 + 9 .8 + 10.0 + 18.4 + 7.9 + 17.9 — 0 .2 + 10.9 + 13.1 + 4 .6 + 11.5 + 10.5 + 4 .4 — 5 .6 + 5.5 + 7.8 + 15.6 — 1.6 + 15.1 + 1 9 .7 + 1.1 + 4 .8 + 1 3 .7 + 8.1 Year to Date Year to Date Dec. 28, 1939 Dec. 29, 1938 to to N ov. 20, 1940 Nov. 22, 1939 808,360 709,857 107,794 98,048 433,061 375,282 3,663,267 3,427,995 6,896,616 6,018,013 2,001,984 1,834,618 789,790 681,584 324,232 286,903 34,648 30,292 85,615 72,231 127,996 115,924 39,834 34,121 249,929 243,873 163,174 144,920 61,005 53,898 131,851 113,398 112,185 104,389 7,868,035 6,727,943 96,551 87,012 190,828 181,485 110,989 102,676 1,420,173 1,270,236 122,087 104,356 309,138 310,827 574,201 499,266 96,790 87,793 26,820,133 23,716,940 % change from 1939 + 1 3 .9 + 9 .9 + 15.4 + 6 .9 + 14.6 + 9.1 + 15.9 + 13.0 + 14.4 + 18.5 + 10.4 + 16.7 + 2.5 + 1 2 .6 + 1 3 .2 + 1 6 .3 + 7.5 + 1 6 .9 + 11.0 + 5.1 + 8.1 + 1 1 .8 + 1 7 .0 — 0 .5 + 15.0 + 10.2 + 13.1 8 THE MONTHLY BUSINESS REVIEW Summary of National Business Conditions By the Board of Governors of the Federal Reserve System Index of physical volume of production, adjusted for seasonal variation, 1935-1939 average = 100. By months, January 1934 to October 1940. Latest figure 128 (pre liminary) . FACTORY EMPLOYMENT .AND PAYROLLS Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 average — 100. By months, Jan uary 1934 to October 1940. Indexes com piled by the United States Bureau of Labor Statistics. Latest figures — Employment 109.9, Payrolls 114.2 WHOLESALE PRICES OF BASIC COMMODITIES Indexes compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1934 to week ending November 7, 1940. Latest figures— Total 62.7, Food stuffs 54.9, Industrial materials 69.7. MONEY RATES IN NEW YORK C ITY | TREAStJRY BONDS ( * rtAi 1 11 \p1 RE SERVE BANK DIS-COUNT RAT ____ — TREASURY NOTES (»-» TtAKS) ^ 1 1934 n BILLS !» ISSUES) 1 t r e a ;JURY 1935 1936 1937 V xAJ\ ______ a _ 1938 1939 1940 For weeks ending January 6, 1934, to No vember 9, 1940. Latest figures— Treasury bonds 2.00, 3-5 year Treasury notes 0.35, 90-day Treasury bills (new issues) 0.003, Reserve bank discount rat© 1.00. Industrial output rose sharply in October and the first half of November and prices of basic commodities advanced further. New or ders both for defense purposes and for civilian needs continued in large volume. Production Volume of industrial production, as measured by the Board’s sea sonally adjusted index, rose further in October to about 128 per cent of the 1935-1939 average as compared with 125 in September and 126 at the peak reached last December. Increases in output were marked in the automobile and textile in dustries. In the rayon industry, where production in September had been curtailed by a strike, activity increased considerably and cotton textile mills were also more active. Mill sales of cotton goods have been large since the middle of August, reflecting increased civilian and military demand, and have been in excess of production during most of this period. At wool textile mills, where activity had risen sharply in September, there was a further increase in October. Backlogs of orders in this industry are now of considerable size owing to a large volume of orders received during the past two months, particularly from the Government. In the steel and machinery industries activity continued at a high rate in October. In the first half of November steel ingot production advanced slightly further and was at about 96 per cent of capacity. This high rate of output is expected to be maintained for some time to come, according to trade reports, as new orders for steel have con tinued large. Lumber production, which had risen sharply since mid summer, declined less than seasonally in October. New orders for lumber were somewhat below the high rate of August and September but re mained above production, reflecting in part continued Government de mands. Bituminous coal production declined sharply in October but in the first half of November showed some increase. In this industry out put had been maintained in large volume during the summer owing in part to considerable stocking of coal in anticipation of higher prices. An thracite production also declined in the first half of October but rose sharply in the latter part of the month owing in part to seasonal in fluences. Crude petroleum production, which had been curtailed during most of the summer, increased further in October. Value of construction contract awards increased in October, fol lowing a decline in the previous month, according to figures o f the F. W. Dodge Corporation and the Federal Reserve Bank of San Fran cisco. Changes in the amount of contract awards in recent months have reflected principally fluctuations in contracts for public projects. Distribution In October department store sales declined considerably from the advanced level of the two preceding months, while sales at variety stores, which also had been large in August and September, increased seasonally. In the early part of November department store sales in creased somewhat. Total loadings of revenue freight in October were maintained at about the level reached in September. Shipments of miscellaneous merchandise increased further, while loadings of coal showed a sharp decrease. In the first week of November freight-car loadings declined by less than the usual seasonal amount. Wholesale Commodity Prices Prices of basic commodities continued to advance from the mid dle of October to the middle of November, with the chief increases in industrial materials, particularly lead, hides, wool, and textile yarns. Bank Credit Total loans and investments at reporting member banks in 101 leading cities have increased substantially since the end o f September. Commercial loans showed sizable increases both in New York City and in other leading cities. Following reductions during August and September, holdings of United States Government obligations at these banks also increased. Federal Reserve System holdings of Government obligations were reduced by $180,000,000 between September 25 and November 13. United States Government Security Prices After rising moderately during the latter part of October prices of United States Government securities advanced sharply in the early part of November. The quotation on the 1960-65 bonds reached a new high level at about 110 ^4, and the yield on this issue declined to 2.12 per cent compared with 2.25 per cent in October and 2.26 per cent in June, 1939, and again in April, 1940. The average yield on 3 to 5 year Treasury notes declined to less than % of 1 per cent.
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