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MONTHLY BUSINESS REVIEW Covering financial, industrial, and agricultural conditions in the Fourth Federal Reserve District Federal Reserve Bank o f Cleveland Vol. 16 Cleveland, Ohio, October 31, 1934 Conditions generally throughout the fourth district were som ewhat irregular in the third week of October. According to reports received there has been an improve ment in sentim ent in recent weeks, but this change has been paralleled only to a slight extent by developments in trade and industry. In m ost lines inquiries are numerous, but actual orders have been placed in quite lim ited vol ume. Although there has been a slight expansion in some lines since Labor Day, the upswing has been less than sea sonal in most cases. Conditions in farm com m unities showed further im provement in recent w eeks in that fall crops have been especially good and higher prices had been received for them generally. The improvement, coupled with payments made through the Agricultural Adjustm ent Administra tion, which in Ohio exceeded $8,400,000 prior to Sep tember 1 and have been augmented by payments since that time, has provided farmers with more purchasing power than they have enjoyed for several years. This is clearly reflected in reports on retail trade. Department store sales in sm all cities, which depend on rural buying for a sizeable part of their total volume, were nine per cent larger in September than a year ago, whereas at all retail stores in the district September sales were only 1.1 per cent ahead of the same period of 1933. Gross cash income of Ohio farmers in September was estimated to be 23 per cent larger than a year ago by the Ohio State Department of Rural Economics. Industrial employment in this district in September declined about two per oent from August, whereas in past years at this time little change was apparent. Em ployment at local industrial concerns in September was still reported to be slightly above a year ago, despite the fact that declines have been reported since May. In the iron and steel industry considerable hesitancy was evident in the latter part of October so far as buy ing of steel in any quantity was concerned and opera tions in the entire industry were at about 25 per cent of capacity. Cleveland and Youngstown m ills were pro ducing at slightly better-than-average rates w hile other centers were operating at lower levels. Automobile production declined more than seasonally in September and the rate at which cars were assembled in the first three weeks of October varied considerably. Preparations for new models have not progressed to the No. 10 point where m aterials or m achinery have been ordered in any quantity. As a result activity at local parts and ac cessory, glass, m achine tool, hardware, and rubber and tire factories was at a lower rate in the first three weeks of October than a month earlier. In some cases output ex ceeded a year ago, but by only a slight margin. Activity in the construction industry in September was substantially below A ugust and only 12 per cent ahead of a year ago. Residential building was down 25 per cent from September 1933 and awards for this type of work were sm aller than since February of this year. For the first nine m onths of 1934 total building contracts awarded in this district were valued at $122,000,000, a gain of 100 per cent from the corresponding period of 1933, but most of the increase was in publicly-financed construction. Electric power production in this section for the past several weeks has been under a year ago. Prior to Sep tember 1 electric power production averaged 13 per cent ahead of the same period of 1933. The number of commercial failures and liabilities of the defaulting concerns continue well below a year ago. For the first nine months a reduction of 60 per cent in number and 53 per cent in liabilities involved was shown in this district compared with the corresponding period of 1933. Life insurance sales in Ohio and Pennsylvania in Sep tember were 6.4 per cent less than in the same month of 1933. In the first nine m onths of this year sales of new life insurance were nine per cent ahead of the correspond ing period of last year. 2 THE MONTHLY BUSINESS REVIEW FINANCIAL/ Changes in condition of reporting member banks in leading cities of the fourth district and the Federal Re serve Bank of Cleveland were relatively unimportant in the five weeks ended October 24, and as for some time past, have been overshadowed by other developments in the field of finance. Savings deposits at selected banks in the fourth district increased 0.3 per cent in the latest month; at the close of September they were 5.6 per cent larger than a year ago. Debits to individual accounts at banks in leading cities of the fourth district in the five weeks ended October 24 were 9.1 per cent ahead of the corresponding period of 1933. This compared with an in crease of ten per cent in the four weeks ended September 19 and of 15 per cent for the year to date. R eserve Bank Credit. There was a slight increase in bills discounted for member banks in this district between September 19 and October 24, but on the latest date total discounts, at $461,000, were only a little above the low level touched in early September. Holdings of bankers’ acceptances rose from $488,000 to $526,000 in the five latest w eeks and advances to provide working capital to industries in the fourth district increased from $85,000 to $151,000 in the period. In addition commitments of this bank to make industrial advances on the latest date were $111,000. H oldings of Government securities re mained unchanged at $213,025,000; they have been at this level for nearly a year. The net result of these changes was a slight increase in total credit extended in the five latest weeks. Federal reserve notes in circulation have declined mod erately for the past six weeks. On October 24 note circula tion amounted to $303,271,000, a reduction of about $2,000,000 from a year ago. The decline in recent weeks, which amounted to $15,000,000, was offset in part by the issuance by this bank of over $10,000,000 of new silver certificates of the 1934 series. Reserve deposits of member banks rose to a new high level in mid-October and in the latest week exceeded $266,000,000. The accompanying chart shows daily av erage required and excess reserves of member banks in the fourth district by m onths since the banking holiday in 1933. Required reserves of these banks in the past year and a half have increased from $107,000,000 to $137,000,000 as a result of an expansion in deposits at member banks. Excess reserves of member banks in this same period rose from slightly less than $9,000,000 to $118,- 500,000 in September. In the latest month for which com plete figures are available, excess reserves are approxi m ately $6,000,000 smaller than in August, but the drop was entirely at reserve city banks and was offset in part by a slight increase in country bank excess reserves. Member Bank Credit. At reporting member banks in leading cities of the fourth district total credit extended declined $10,000,000 in the five weeks ended October 24 to $1,174,000,000. In the same period loans dropped from $403,000,000 to $393,000,000, while investments were unchanged at $781,000,000. Both loans on securities and “all other” loans dropped in the five latest weeks, but the contraction in the former was somewhat greater than in the latter. Investments in Government securities decreased in the five latest weeks, but holdings of other securities rose to $214,000,000, a gain of 12 per cent being shown from the low point in July. Demand deposits increased from $645,000,000 on Sep tember 19 to $665,000,000 on October 24. On the latest date they compared with $532,000,000 a year ago. Time deposits showed a contraction in the period, but were still larger than a year ago at this time. MANUFACTURING, MINING Iron and Steel The iron and steel industry in the third week of October appeared to be mark ing tim e pending the release of volum e orders for material to be used on the 1935 autom obiles. Steel production, as a national average was at about 25 per cent of capacity in the third week of October, a rise of approximately four points from the corresponding period of September. In the principal steel centers of the fourth district some variation was apparent in the rate of operations; in the Cleveland-Lorain district activity was at 38 per cent of capacity, up 10 points from a month ago; at Youngstown the rate of production was unchanged at 26 per cent and at Pittsburgh there was a gain of five points to 21 per cent of capacity in the four latest weeks. Because of lim ited demand for tinplate operations at Wheeling mills were at 29 per cent of capacity. Considerable irregularity was apparent in operations at finishing mills with those at Cleveland averaging 25 per cent. The general price situation and the uncertainty re garding the industry’s future price policy, according to Steel, was responsible in part for the hesitation displayed by buyers regarding future steel requirements. This con dition was partly clarified in the latter part of October by the announcement that the industry’s code and price policies were approved. As yet, however, this has not resulted in any substantial increase in com m itments. Demand for steel from makers of household equipm ent has held up fairly w ell and agricultural im plem ent manu facturers have increased purchases recently. Structural steel requirements have benefited som e steel centers, but orders from this source have been slow m aterializing in the fourth district. The moderate increase in production of 1934 models by the automobile industry was favorably regarded in some circles, but leading m anufacturers in dicate that steel specifications for 1935 models w ill not be released prior to Novem ber 1. Railroad steel require ments are being held down to the barest necessities al though available equipment generally is in bad condition. THE MONTHLY BUSINESS REVIEW Steel ingot production in September was 1,252,000 tons and on a daily average basis was less than one per cent below August. Compared with a year ago, however, out put was down 45 per cent. Total steel production in the first nine months or 1934 exceeded 20,000,000 tons and was still 18 per cent ahead of the same period of 1933. Sixty-one blast furnaces were active at the close of September, the same number as a month earlier, but a slower rate of operations was m anifest in that daily average output of pig iron, at 29,969 gross tons, was 12.3 per cent less than in August. Total production was the lowest since May, 1933 and was 40 per cent under Sep tember last year. Pig iron output so far this year ex ceeded 13,000,000 tons, a gain of 36 per cent over the same period of 19 33. A falling-off in iron ore receipts at Lake Erie ports has occurred in recent months and in September, at 2,343,000 tons, they were 44 per cent under a year ago. For the season to date they were up 12 per cent from 1933. Total shipm ents from Lake Supe rior ports this year, with the season practically completed, are estimated at 22,000,000 tons, compared with 21,600,000 tons last year. Steel’s composite of iron and steel prices in late Octo ber was $32.09, a reduction of four cents in the latest month. Minor adjustm ents in quotations on some products have caused a moderate downward trend to be exhibited for several weeks. A year ago this composite was $30.53. Coal Although coal production in the entire country in September was slightly great er than in August, output of fourth dis trict mines declined 6.6 per cent in the period and was 1.8 per cent below a year ago. For the first nine months of this year, however, output of local mines was 11.2 per cent greater than in the sim ilar period of 1933, while output for the entire country was up 10.5 per cent. Coal production in the first half of October was approximately at the same rate as September, demand for domestic coals being adversely affected by the unusually warm weather for this season of the year and also by the confused price situation. Industrial consumption of coal has changed only slightly in recent weeks and in August, the latest month for which complete figures are available, was 7.4 per cent under the corresponding period of 1933. Stocks of coal above ground, w hile showing little change from July to August, repre sented 39 days’ supply at the current rate of consumption and they were larger than a year ago at this time. Bituminous coal shipm ents from Lake Erie ports have declined recently. In September, amounting to 4,491,000 tons, they were 7.9 per cent below last year, but for the season through September loadings were up 13.6 per cent. Automobiles After receding quite sharply in early O c t o b e r autom obile assemblies in creased toward the end of the period as a result of a slight improvement in retail demand and output for the entire month was estim ated at 125,000 units. If this total is reached it would be only slightly be low output in October, 1933. September production, ac cording to the Department of Commerce, was 168,872 cars and trucks. This compared with 234,809 in August and 191,800 in September of last year. The 28 per cent decline from August to September was considerably more 3 than seasonal and the Federal Reserve Board’s adjusted index dropped from 61 to 51 per cent of the 1923-1925 m onthly average. One year ago this index was 55 and production in the latest month was off 12 per cent from September, 1933. A contraction in retail sales in September was partly responsible for the falling-off in output and m anufac turers were attem pting to maintain stocks at low levels so that no large supply of finished cars would confront the industry at the time new models are introduced. There were 123,909 passenger cars manufactured in September, a drop of 21 per cent from a year ago, but output so far this year, at 1,932,000 units, was 40.5 per cent ahead of the corrsponding period of 1933. Truck manufacturers continue to enjoy an active market and output in September was 44,963 units. This was 30.6 per cent ahead of a year ago and only 6,000 units under August. In the first nine months of this year 452,615 trucks were manufactured, a gain of 68.5 per cent from the same period of 1933. Preparations for new models have not progressed as rapidly as was anticipated in some circles. Sustained buy ing of current m odels was partly responsible for this situation although there were other contributing factors. Sales of new passenger cars in September, estim ated at 150,000 in the entire country, exceeded production for the third consecutive month. The decline from August was 23 per cent, but registrations were only slightly under last year at that time. Truck registrations in September were estim ated at 40,000 units, about the same as in August. They were slightly below factory output in the period. Rubber, Tires A decline in operations in the rubber and tire industry in September was in dicated by a falling-off in the amount of crude rubber consumed in the month by manufacturers in the United States. In the latest period 30,352 long fons were used by the entire industry. This represented a decrease of 8.9 per cent from August and of 14 per cent from September last year. The contraction was sub stantiated by the fact that employment at 18 Ohio rubber concerns in September dropped 3.5 per cent from August and was 1.1 per cent under a year ago. The August-September drop was slightly greater than the five-year av erage change for this period, but employment in the first nine months of this year averaged 25 per cent above the same period of 1933. Reports from local manufacturers indicated that the contraction continued in the first part of October, but sales to dealers have held up rather well. In August, the latest month for which com plete figures are available, ship ments exceeded output by over 700,000 units and finished tires in hands of m anufacturers were reduced to the low est number this year. Shipments by m anufacturers have exceeded production by at least 700,000 units a month since April. At the current rate of con sumption stocks sufficient to last two m onths were re ported and they were slightly larger than a year ago at this time. The total supply of crude rubber in the United States was reduced slightly in September because consumption in the period exceeded imports which amounted to 28,835 long tons. At this level imports were 13 per cent under 4 THE MONTHLY BUSINESS REVIEW A ugust and 39 per cent below September, 1933. Crude rubber stocks on September 30, however, were 6.6 per cent above a year ago. The replacement value of this large supply of rubber is considerably higher than a year ago despite the fact that crude rubber prices have de clined in recent weeks. In the third week of October crude rubber was quoted at 14.05 cents a pound compared with fifteen cents a month ago. It was approximately half of this figure in 1933 at this time. Clothing Operations in the clothing industry in the latter part of October were down seasonally from the September level and, according to reports, would continue on a part-time basis until production of spring goods is begun in No vember. A ctivity at local plants in September was up slightly more than seasonally from August, all branches of the industry sharing in the gains. The number em ployed, however, in September was about four per cent less than a year ago, the reduction being entirely due to a curtailm ent at other than m en’s clothing factories. Employment and operations at the latter plants continue at a relatively high rate. The cooler weather of recent weeks stim ulated sales of coats and suits, but retail establishm ents still exhibit considerable caution in regard to stocks which are being kept at a minimum. Manufacturers report the inventory situation, both of raw and finished goods, as quite satisfactory. Dollar value of retail sales of wom en’s clothing at fourth district department stores was approximately the same in September as a year ago, but sales of m en’s clothing were down slightly. On October 1, according to Fairchild's retail price index, prices of women’s apparel were 0.5 per cent above a year ago so that the price factor is no longer of much importance in comparing cur rent sales w ith those of the preceding year. Men’s cloth ing prices continue slightly above last year at this time. The response to the recent showing by textile manu facturers of m aterials to be used in next spring’s apparel was gratifying, but actual orders have not been received in any volume. Other Manufacturing Little change was reported in most of the sm aller m anufacturing lines of the fourth district in the latter part of Sep tember or in early October, after allow ing for seasonal variations. Employment in September showed a contraryto-seasonal decline in many industries and in most manu facturing centers, but in general, activity was still above a year ago at this time. Autom obile Parts, Accessories. Paralleling the drop in production of 1934 m odels, operations at auto parts’ plants in this district declined in September and a further fa ll ing-off was reported in the first three weeks of October. Orders for materials to be used in the 1935 models have not yet been placed in any volume. Employment at 30 plants reporting to the Ohio State University Bureau of Business Research dropped 5.5 per cent from August to September, whereas the five-year average change for this period was a decline of about one per cent. At these com panies the number of em ployees was reported to be 13 per cent above a year ago, but no information is available as to the number of hours worked per employee. The in ventory situation is quite satisfactory. Brick and Tile. A slight improvement, not of a seasonal nature, was reported at local brick and tile plants in Sep tember compared with the preceding month. Operations generally, however, are below a year ago. China, Pottery. Operations at local china and pottery plants increased seasonally in September and the first part of October and the upturn was accompanied by an im provement in sales. Large orders are lacking, but numerous sm all orders have sw elled total volum e. In ventories have been increased in anticipation of a sales upturn prior to the holiday period. Electrical Supplies. A ctivity at local plants in Sep tember was down from the preceding month and em ploy ment showed a greater decline than the average falling-off in the past five years. Compared with a year ago, however, an increase in the number of em ployees of 12 per cent was reported by 30 concerns. In the first part of October there was an increase in the volum e of new orders received, according to reports. Glass. Fluctuations in the rate of operations in the plate glass industry paralleled changes in autom obile pro duction and at present activity is at a low level. Manu facturers of glass containers reported little change in the past thirty days either in operating rates or employment. In the entire industry the number of em ployees in Sep tember was 25 per cent above a year ago and practically unchanged from August. Hardware, Machinery. The decline in operations at local m achinery and hardware companies was more than seasonal in September and activity in early October showed practically no change from the preceding month. Employ ment at local hardware plants in September was off 14.3 per cent from August and 2.4 per cent from a year ago. At machine tool plants employment was down 2.2 per cent from A ugust to September, whereas the average change in the past five years was a sligh t increase. Orders for ma chine tools, as reported by the National Machine Tool Build ers1 Association, were nine per cent smaller in September than in August, but were som ewhat above a year ago. In quiries have increased, according to reports, but custom ers seem to be holding off as long as possible before plac ing orders. New orders of foundry equipment increased in September from the preceding month and were som e what ahead of a year ago. Paper. Sentim ent in the paper and boxboard industry improved in September and in the m ajority of cases the month proved to be the best of the year. In the first part of October activity remained at approximately the Septem ber level. Part of this increase was seasonal, but inven tories have not been expanded to any extent. Shoes. R etail shoe sales have been adversely affected by the unseasonable fall weather and output at local plants in September was down 17 per cent from August. Produc tion in September, however, was approximately 1.4 per cent greater than in the same period of 1933 and for the year to date more shoes were made than in any sim ilar period since 1929. Sales to dealers in sm aller towns continue at higher levels compared with a year ago than in large industrial centers. THE MONTHLY BUSINESS REVIEW TRADE After allow ing for seasonal variations daily average dollar sales at depart ment stores in the fourth district in September were practically unchanged from the preced ing month and the index was 71.3 per cent of the 192 31925 m onthly average. Sales were up 1.1 per cent in dol lar value from a year ago, but, as in August, most of the gain was to be found in sm aller centers of the district where buying of rural sections represents a greater part of the total volume. Combined sales of sm all cities were nine per cent ahead of a year ago, whereas in Cleveland, Pittsburgh and W heeling, sales were sm aller in September than in the same month of 1933. For the year to date dollar sales of all reporting stores in this district were 18.2 per cent ahead of the same period of 1933. R etail prices, judging by Fairchild's index of prices at department stores, were unchanged in September com pared with August, but there was a further narrowing of the spread between current prices and those of a year ago, the latest quotations being only 1.9 per cent higher on October 1 than on the corresponding date of 1933. There was an increase in the ratio of credit to total sales in September from August, but it continued below a year ago. Installm ent sales dropped seasonally from A ugust to September, and the ratio of these to total sales was under last year at this time. The ratio of regular 30-day credit sales to total sales increased in Septem ber, but was slightly sm aller than in September last year. Dollar value of stocks at department stores increased ten per cent from August to September, but the gain was less than seasonal and the adjusted index dropped to 59.7 from 63.9 per cent of the 1923-1925 monthly average. Compared with a year ago dollar value of stocks was down 4.8 per cent and the stock turnover rate was approximate ly the same as in September 1933. Accounts receivable on September 30 were one per cent larger than a year ago, but the gain was entirely in in stallm ent accounts which were up 23 per cent. Regular 30-day accounts receivable were 36.7 per cent sm aller than on September 30, 1933. Little change was evident in collections in September, but the ratio of collections in the month to accounts receivable at the beginning of the period was still larger than a year ago. Sales of reporting wearing apparel stores in this dis trict in September were 6.4 per cent ahead of last year and the gain for the year to date in dollar sales was about 17 per cent. Chain grocery sales, per individual unit oper ated, in September were 0.3 per cent sm aller than in Sep tember 1933 and down 3.6 per cent from August, but for the first nine months a gain of nine per cent was shown from the corresponding period of last year. Chain drug sales in September were 3.6 per cent ahead of the preced ing year and the gain in the nine-month period was 12.9 per cent. R etail W holesale Dollar volume of w holesale trade in four reporting lines in this district in Sep tember was practically unchanged from August and the index of sales was 66 per cent of the 1923-1925 m onthly average, up ten per cent from last year at that time. The increase in September from a year ago in dry goods sales exceeded the average gain 5 from the year to date, but in all other lines a sm aller percentage increase was shown. W holesale grocery sales in September were 12 per cent larger than a year ago, while in the first nine months an increase from 1933 of 17 per cent was shown. A gain of 22 per cent in dry goocls sales, 7 per cent in hardware sales, and 4 per cent in drug sales was reported in September from the same month of 1933, w hile for the nine-month period increases of 20, 27 and 26.5 per cent, respectively, were shown from the pre vious year. AGRICULTURE September proved to be a month favorable to the ma turing of late crops in this section and estim ated yields of m ost crops were higher than a month earlier. The follow ing table of the October 1 condition of late crops in the states of this district and the entire country clearly indi cates that local crop conditions are much better than the average of the entire country. Condition of crops in per cent of normal Buckwheat ................... Condition of Late Crops October 1. 1934 Ohio 71 81 69 81 66 27 67 66 Pa. 89 84 80 77 83 44 65 55 Ky. 82 58 62 84 78 22 55 70 W. Va. 76 79 51 66 74 35 16 65 U. S. 41.5 74.1 66.9 80.5 54.0 44.0 65.5 61.5 The October 1 crop report of the United States Depart ment of Agriculture indicated that revisions made in the estim ates caused no m aterial change in the national foo5 and feed situatiofi. The latest report shows prospective yields of 33 principal crops for the entire country to be 22 per cent below the average yield per acre in the ten years 1921-1930, with the total acreage harvested con siderably below average. In the states of the fourth dis trict crops in Pennsylvania were about equal to the tenyear average; in Kentucky they were seven per cent bet ter than average, and in Ohio and W est Virginia they were 12.5 per cent and 16.5 per cent, respectively, below the average of the years 1921 to 1930. The table below shows estim ated production of prin cipal crops of the fourth district and the United States, compared with the average of the preceding ten years. Corn and wheat, the two major crops of this section, compare much more favorably with the ten-year average than they do in the entire country. PRODUCTION OF PRINCIPAL CROPS (000 omitted) ---------Fourth District--------- ---------United States--------10-year ave. % 10-year ave. % 1934* 1924-33 change 1934* 1924-33 change Corn, Iju.............. 132,814 166,485 —20.2 1,416,772 2,588,428 —45.3 „ . Wheat, bu........... 37,440 36,810 + 1.7 496,982 798,857 Oats, bu............... 36,499 77,150 -52.7 545,938 1,196,763 —54.4 Hay, tons ........... 3,239 5,570 52,441 74,704 -29.8 Tobacco, lbs. 102,558 136,836 —25.1 1,091,764 1,369,274 —20.8 Potatoes, bu. 19,282 19,483 — 1.0 362,391 356,070 1.8 *Based on October 1 crop report. + The feed grain supply in the entire country, according to the Department of Agriculture, is the shortest in many years and, including the carryover from 1933, is only about 60 per cent of the average of the years 1924-1932. As a result grain prices have risen sharply. In September they were 12 per cent above the five-year pre-war aver age and they continued at approximately that level in Oc tober. A year ago grain prices were about 22 per cent be low the pre-war average. 6 ffHft Mo n t h l y Prices of most other farm products also advanced in September and the general level of farm prices was six points above a month earlier and higher than since De cember 1930. At 102 per cent of the five-year pre-war average farm prices were 22 points higher than a year ago. A lthough commodity prices in general have been increas ing the advance in the price of goods farmers buy has been more moderate than the gain in prices of farm products, so that the index of farm purchasing power, which repre sents the ratio of prices received by farmers to prices paid for goods purchased, was 81 per cent of the pre-war aver age compared with 69 per cent a year ago. The accom panying chart shows the index of farm prices, which on the latest date was higher than since 1930. A moderate decline in prices of som e products occurred in the first part of October. In addition to the benefits farmers have received from higher prices their purchasing power has been augmented m aterially by payments from the Agricultural Adjustm ent A dm inistration. In Ohio, where payments have been con siderably sm aller than in many of the other agricultural states, $8,455,000 had been distributed prior to Septem ber 1, approximately three-fourths of this amount being sent to farmers who had signed corn-hog contracts. Com bining the benefit payments with the higher prices for m ost products, the Ohio Department of Rural Economics estim ates that gross cash income from Ohio principal prod ucts in September was 23 per cent larger than a year ago and for the 12 m onths ended September 30 farm income was 21 per cent above the same period of the preceding year. The condition of the corn crop on October 1 in Ohio w as the sam e as a year ago, but was below the ten-year average. In Pennsylvania the crop condition was considerably above average and also a year ago, but total production in the fourth district, at 132,814,000 bushels, was 12 per cent under last year and 20 per cent less than the ten-year average harvest. In the entire country this year's corn crop is 45 per cent below the ten-year average harvest and is the sm allest in over forty years. Stocks of old corn on Ohio farms were very sm all on October 1. The carryover is less than 60 per cent what it was a year ago and less than one-fourth as great as in 1932. The potato crop in this district, as in practically all states in this section of the country, improved markedly in September. This year’s crop is estim ated to be consid erably larger than a year ago and only one per cent below the ten-year average harvest. Prelim inary reports indi cate that large yields of exceptionally high quality pota toes are being harvested. Some improvement in the condition of pastures was re ported in September, but they still are in much poorer shape for this season than in any other year for which figures are available. Condition of the late fruits improved during September; apple prospects registered the largest gain w hile pears and grapes benefited to a lesser extent. The Ohio apple crop is very ligh t and is little better than 50 per cent of the five-year average, but grape production in this section, although about 11 per cent less than in 1933, was above the five-year average harvest. Tobacco. W eather conditions have been ideal for the b u s in e s s r e v ie w curing of tobacco and this year’s crop is expected to be of high quality. The crop generally is reported very clean and so far shows less than the usual percentage of common grades. As a result farmers are expecting good prices, partly because the general average price of tobacco in southern sections of the country was considerably above that received a year ago. In addition this year’s crop is approximately 20 per cent below the ten-year average, but there is a comparatively larger surplus of burley tobacco on hand than of some of the other im portant types. Total production of burley tobacco in 1934 was estim ated at 298,000,000 pounds, compared with 382,000,000 pounds last year and 316,000,000 pounds, the average crop of the five years 1927-1931. The condition of cigar tobacco, the type raised principally in southwestern Ohio, was sligh t ly lower on October 1 than a month earlier and produc« tion is approximately 60 per cent of the five-year average. BUILDING The dollar value of building contracts awarded in the fourth district in September, according to the F. W. Dodge Corporation, was substantially below the August figure and the decline was much greater than seasonal. A fallingoff from August to September was shown in each of the four principal classes except public u tilities, for which a gain of about 20 per cent was reported in this section. Total awards in the month were valued at $9,346,000, an increase of 12.4 per cent from a year ago. Gains were confined to nonresidential building and public utilities, whereas residential building was down 25 per cent from a year ago and such awards were sm aller than since Februrary of this year. Loans for rem odeling and repairs are being made, but total volum e of such work is still re latively unimportant locally. Public w orks’ construction was about the same in September 1934 as a year ago, but was down quite sharply from August. For the first nine m onths of 1934 total contracts award ed in this district were valued at $121,811,000, a gain of 100.5 per cent from the corresponding period of 1933. Increases were reported for each of the major divisions except residential building, which was down 5.8 per cent. In each of the large cities of the district except Erie, Cin cinnati and Cleveland, contracts awarded for the year to date were ahead of the same period of 1933. Contemplated construction reported in September was up slightly from August, but was less than half as great as a year ago. Reductions from last year were shown in each of the principal classes of construction except non- INDEX OF FARM PRICES PER CENT 1910 - 1914*100 25 o r ~ 200 150 100 J L U.S. DEP'T. OF AGRICULTURE REVISED INDEX 50 \ V 7 THE MONTHLY BUSINESS REVIEW residential building and in this classification the increase was insignificant. Distributors of building m aterials and supplies in some sections of the district reported a slight improvement in business in the latest month, but despite the increase sales continue at a very low level. Fourth D istrict Business Statistics (000 omitted) Fourth District Unless Sept. % change Jan.-Sept., Otherwise Specified 1934 from 1933 1934 + 7.9 14,821,000 Bank Debits—j24 cities............ 3 1,576,000 Savings Deposits—end of month: 41 Banks, O. and Pa................3 659,749 + 5.6 1 Life Insurance Sales: Ohio and Pa............................3 60,405 — 6.4 701,601 Retail Sales: Dept. Stores—49 firms...........3 15,051 + 1.1 131,358 Wearing Apparel— 11 firm s...3 742 + 6.4 6,221 Furniture—42 firms................ 3 584 — 7.4 5,916 Wholesale Sales: Drugs— 13 firms...................... 3 1,224 + 4.3 11,854 Dry Goods—10 firms..............3 1,308 + 2 2 .0 9,714 Groceries—33 firms................ 3 4,029 + 1 1 .9 33,706 Hardware— 14 firms................3 1,148 + 6.9 10,358 Building Contracts—T o t a l....3 9,346 + 1 2 .4 121,811 Residential 3 1,431 —24.0 14,778 Commercial Failures— Liabilities................................3 1,475 —36.7 20,202 Commercial Failures—Number. 592 —49.1 5662 Production: Pig Iron, U. S..................Tons 899 —40.4 13,040 1,252 —45.2 20,268 Steel Ingot, U. S................Tons Automobiles-Pass. Car, U. S. 123,909* —21.3 1,931,9812 Automobiles—Trucks, U. S ... 44,9632 + 3 0 .6 452,6152 Bituminous Coal............ Tons 10,450 — 1.8 106,733 Elec. Power— O., Pa., Ky., k.w.h. 1,132 — 2.1 9,242 Petroleum—O., Pa., Ky..Bbls. 2,090s + 1 0 .7 15,539* Shoes .............................. Pairs 5 +1.4 5 Tires, U. S..............C a sin g s 3,427* —29.3 32,875* Bituminous Coal Shipments: Lake Erie P orts.............. Tons 4,491 — 7.9 27,533 Iron Ore Receipts: Lake Erie P orts.............. Tons 2,343 —44.3 13,383 1 not available 4 January-August 2 actual number 5 confidential * August % change from 1933 + 1 5 .2 + 9.1 + 1 8.2 + 1 7 .0 + 28.8 + 26.5 + 1 9 .6 + 17.3 + 2 7 .2 + 100.5 — 5.8 —52.8 —60.1 + 3 5.9 + 1 7.9 + 40.5 + 68.5 + 11.2 +13.1 + 1 1 .0 +5.4 +6.7 + 1 3 .6 + 1 1 .9 Fourth D istrict Business Indexes (1923-1925 = 100) Sept. 1934 Bank Debits (24 cities)...................................... 58 Commercial Failures (Number)....................... 40 (Liabilities).................... 33 Sales—Life Insurance (Ohio & P a.)................ 72 ” — Department Stores (47 firms).............. 72 ” —Wholesale Drugs (12 firms)................. 80 ” — ” Dry Goods (10 firms)........ 53 ” — ” Groceries (33 firms)............ 70 ” — ** Hardware (14 firms). . . . . . 59 ” — ” All (69 firms)...................... 66 ” — Chain Drugs (4 firms)**...................... 70 Building Contracts—(T otal)............................. 20 — (Residential)................... 8 Production— Coal (O., W. Pa., E. K y.).......... 58 — Cement (O., W. Pa., W. V a.).................. —Elec. Power (O., Pa., K y .)* .. . . 135 — Petroleum (O., Pa., Ky.)*.......... 113 —Shoes.............................................. 103 ♦August. **Per individual unit operated. Sept. Sept. Sept. Sept. 1933 1932 1931 1930 54 52 84 106 80 151 113 101 53 105 98 62 77 78 90 100 69 58 76 93 78 75 89 103 44 40 56 77 63 62 80 96 55 43 62 77 60 56 73 90 68 66 77 84 17 22 41 72 11 13 27 42 59 56 68 87 44 66 88 160 138 114 131 137 102 110 96 108 101 93 90 82 Wholesale and R etail Trade (1934 compared with 1933) DEPARTM ENT STORES (49) Akron...................................................... Cincinnati.............................................. Cleveland............................................... Columbus................................................ Pittsburgh.............................................. Toledo..................................................... Wheeling................................................. Other Cities........................................... D istrict................................................... WEARING APPAREL (11) Cincinnati............................................... Other Cities........................................... D istrict................................................... FURNITURE (42) Cincinnati.............................................. Cleveland............................................... Columbus............................................... Dayton................................................... Toledo..................................................... Other Cities........................................... D istrict................................................... CHAIN STORES* Drugs—District (4).............................. Groceries— District (5)........................ WHOLESALE GROCERIES (33) Akron...................................................... Cleveland............................................... Erie......................................................... Pittsburgh.............................................. Toledo..................................................... Other Cities........................................... D istrict................. *............................... WHOLESALE DRY GOODS (10)... WHOLESALE DRUGS (13).............. WHOLESALE HARDWARE (14).. *Per individual unit operated. Percentage Increase or Decrease SALES SALES STOCKS Sept. First Sept. 1934 9 months 1934 + + — + — + — + + 8.1 6.3 0.4 3.6 4.0 3.2 8.1 9.0 1.1 + 40.5 + 10.1 + 2 1.0 + 1 9.6 + 12.9 + 14.5 + 17.5 + 30.3 + 1 8 .2 — 2.3 — 17.3 + 6.5 — 3.7 — 7.4 — 0.7 — 2.0 — 0.5 — 4.8 +10.1 + 5.0 + 6.4 + 9.2 + 21.1 + 4 7 .0 — 7.9 — 3.0 — 4.6 —10.4 — 12.4 + 4.0 + 9.5 + 5.1 — 17.8 — 7.4 + 22.3 + 3 3.2 + 2 2 .6 + 7.0 + 33.3 + 4 0 .6 + 28.8 + 3.6 — 0.3 + 1 2 .9 + 9.0 + 3 9 .2 + 11.9 +16.1 + 10.5 +11.3 + 9.1 + 1 1.9 + 22.0 + 4.3 + 6.9 + 3 3 .6 + 14.5 + 20.9 + 16.5 + 18.0 +16.9 + 17.3 + 1 9.6 +26.5 + 2 7.2 + S.6 + 8.2 Debits To Individual Accounts (Thousands Akron................ Butler................ C anton.............. Cincinnati........ Cleveland......... Columbus.......... Dayton............. E rie................... F ra n k lin .......... Greensburg. . . . Ham ilton.......... Homestead........ Lexington.......... Lima.................. Lorain................ M iddletow n.... Oil C ity............ P ittsburgh........ Springfield........ Steubenville---Toledo............... Warren.............. Wheeling.......... Y oungstow n... Zanesville.......... Total.............. 5 weeks ended Oct. 24, 1934 52,854 8,240 25,187 283,137 453,469 184,798 50,208 25,763 2,804 5,660 9,224 2,583 16,145 9,091 3,045 6,951 9,195 596,231 13,712 6,814 93,070 7,273 28,119 38,933 6,845 1,939,351 of Dollars) % Year to date Year to date change Jan. 3, 1934 Jan. 4, 1933 from to to 1933 Oct. 24,1934 Oct. 25, 1933 + 2 7 .0 443,983 315,496 — 0.3 66,017 58,850 + 1 1 .7 250,760 180,593 + 8.4 2,382,176 2,186,475 + 3.2 3,896,364 3,402,599 +66.5 1,151,027 879,261 + 19.5 391,390 367,481 + 2 2 .8 184,489 157,387 + 0.1 24,767 21,773 + 2 4.8 48,465 . 37,363 + 6.9 75,746 64,869 + 4 0 .9 18,385 15,756 — 12.9 168,829 142,914 + 39.1 74,746 53,867 + 1 5 .4 25,972 22,052 — 2.0 61,150 55,963 + 2 4.3 68,490 57,915 + 2.3 5,400,103 4,895,764 + 1 1 .2 117,004 98,131 + 1 9 .4 59,250 45,536 + 4.9 844,152 694,949 + 7.2 59,475 47,644 — 11.0 268,112 256,443 + 8.8 322,188 249,274 + 1 0 .2 56,105 50,490 + 9.1 16,459,145 14,358,845 change from 1933 + 4 0 .7 +1 2 . 2 + 3 8 .9 + 9.0 +14.5 + 3 0 .9 + 6.5 + 1 7.2 + 13.8 + 2 9 .7 + 1 6.8 + 1 6.7 +18.1 + 3 8.8 + 1 7.8 + 9.3 + 18.3 + 10.3 + 1 9 .2 +30.1 + 21.5 + 2 4 .8 + 4.6 + 29.3 + 11.1 + 1 4 .6 THE MONTHLY BUSINESS REVIEW 8 Summary of National Business Conditions By the Federal Reserve Board Index number of industrial production, adjusted for seasonal variation (1923-1925=100). Latest figure, September, preliminary 71. Indexes of factory employment and payrolls, without adjustment for seasonal variation (19231925 average= 1 0 0 ). Latest figures, employment 75.8; payrolls 57.9 V\fHOLESAl!.Z PRIC E s % Commodifies > Farm F roducts 1929 1930 1931 r J\ AT' \ 1932 1 \S 1933, 1934 -* Indexes of the United States Bureau of Labor Statistics. By months 1929 to 1931; by weeks 1932 to date. (1926=100). Latest figures for week ending October 13, farm products 71.0; foods 74.8; other commodities 78.1. Wednesday figures for reporting member banks in 91 leading cities. Latest figures are for week ending October 17. Production and Employment Volume of industrial production, as measured by the Board’s seasonally adjusted index, declined from 73 per cent of the 1923-1925 average in August to 71 per cent in September. There were substantial declines in activity at co t ton and woolen m ills, reflecting the influence of the textile strike, and in the output of shoes, automobiles and lumber. After the termination of the strike, textile production increased. Steel mill operations, which had declined sharp ly during the summer, have been at a higher level in recent w eeks than in the early part of September. Production of beef and lamb increased further in September, reflecting in part the disposal of animals bought in the drought areas by the Federal Government. W heat flour production and sugar m elt ings also were larger in September. Output of anthracite and bitum inous coal showed a larger-than-seasonal increase. Factory em ployment and payrolls declined considerably in September, largely as a result of the textile strike. The number of workers employed was substantially reduced in the automobile, iron and steel and shoe indus tries, as w ell as in the basic textile industries. There was a larger than sea sonal increase in employment in clothing industries, w hile in the nonferrous metals, building m aterials, food products, and paper and printing industries employment was sustained. Among nonmanufacturing lines, employment in creased seasonally from A ugust to September at coal m ines and in retail trade. There was also a substantial increase in number of persons provided with work by the emergency work program of the Federal R elief Adminis tration, w hile employment on public works decreased somewhat. The value of construction contracts awarded, as reported by the F. W. Dodge Corporation, continued in about the same volume during September as in other recent months. Department of Agriculture crop report for October 1 indicated a cotton crop of 9,443,000 bales as compared with a yield of 13,047,000 bales last year. The corn crop, which averaged 2,516,000,000 bushels from 1927 to 1931, is estimated at 1,417,000,000 bushels this year. Hay and pasture conditions im proved in September and weather in the first half of October was generally favorable for forage crops. The yield of w hite potatoes is estim ated at 362,000,000 bushels, about equal to the average for 1927-1931. D istribution Daily average railroad freight car loadings increased from August to September by about the usual seasonal amount, but declined slightly in the first half of October. Sales at department stores increased from A ugust to September by somewhat less than the estim ated seasonal amount, w hile re tail sales of gpporpl merchandise in rural districts, as shown by reports of mail order houses and chain stores to the Department of Commerce, in creased considerably. Commodity Prices W holesale prices of farm products and foods, which had advanced sharp ly in August and the first week of September, subsequently declined som e what. The weekly index of wholesale prices of the Bureau of Labor statistics, which had advanced from 74 per cent of the 1926 average at the beginning of June to 78 per cent early in September, stood at 76 per cent in the sec ond week of October. Recent declines occurred principally in those products which had increased m ost rapidly in preceding weeks, such as wheat, cotton, livestock and m eats. Prices of com m odities other than farm products and foods have in general shown little change since last January, but w ithin re cent weeks prices of textile products and scrap steel declined slightly and gasoline prices showed a considerable decrease. The open-market price of silver advanced sharply in the first half of October. Bank Credit Excess reserves of member banks have shown no m aterial change during the past month and on October 17 amounted to about $1,750,000,000. A re duction in T r e a s u r e cash and deposits with the Federal reserve banks some what more than offset a seasonal growth of $57,000,000 in the volum e of money in circulation and a continued growth in required reserves arising from a growth in deposits. Volume of reserve bank credit outstanding showed little change. At reporting member banks in leading cities there was a further growth in deposits and in loans and investm ents. Between September 19 and October 17 total deposits of the banks increased by about $500,000,000. Commercial loans to customers and member banks* holdings of United States Govern m ent securities increased further, w hile security loans declined. Short-term m oney rates continued at low levels during September and the first three w eeks of October. Yields on Government securities declined in October, follow ing an increase in August and September.
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