Normally, Mr. and Mrs. America would be able to purchase most anything that could be made in the plastics field. Because of the national emergency however and necessity to conserve metals, plastics are replacing them in large measure in the defense program thus necessitating a diversion from civilian needs.

It is surprising to many persons to find such a large number of items directly related to plastics which occupy strategic positions and have preference status as defense material. Because of their scarcity, priority ratings have to be established for them and priorities certificates issued. Acetic acid is a fascinating example of relationships in the plastics shortage picture.

A shortage of acetic acid for the manufacture of cellulose acetate is linked with the needs of a distant cousin chloride

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polyvinyl

a plastic employed as an insulating material for cables used by the Navy as a protection against magnetic mines. Acetylene had been diverted from acetic acid manufacture to that of the vinyl resin.

A shortage developed in acetylene due to nonavailability of calcium carbide and that in turn to a drop in electric energy output. Another interesting priority history in the chemical family is formaldehyde made by the oxidation of methanol. An insufficiency exists in both since methanol production must be diverted in favor of fixed nitrogen

Inventories in the hands of manufacturers

were increased by more than 1 billions of dollars during the first seven months of this year with total holdings as of the end of July estimated at approximately 13 billion dollars. The accumulation during July-almost 300 million dollars--was as large as it has been for any one month since the Defense Program became effective in September 1940.

The index of manufacturers' inventories increased almost 3 points during the month to reach 131 at the end of July. (Dec. 31, 1938 = 100.) Reports from manufacturers indicate that this rise was largely accounted for by raw material and semifinished goods inventories. While some of the increase represents

higher costs, most of the recent growth in the volume of producers' holdings is necessary to sustain the current high levels of industrial activity.

For the second consecutive month, nondurable goods manufacturers added to their holdings at a faster rate than did the durable goods manufacturers. The index of nondurable inventories went from 114 at the end of May to 121 at the end of July whereas the durable goods index moved from 137 to 141 during this two-month period.

This contrasts with the situation during the year ending July 31 when the durable goods inventories rose at a rate which was roughly twice that of the nondurables.

All of the industry groups contributed to the inventory rise during June and July with the exception of the automobile and auto equip ment industry. The closing of the model year during July with the consequent reduction in stocks accounted for a decline of 17 points from the May index.

Shipments Decline But Still at High Level

The value of manufacturers' shipments declined from 191 in June to 184 in July. Although this was the first month since July 1940 that the value of shipments failed to move upward, the rate was still higher than that of any previous month except June of this year.

Seasonal factors were largely responsible for the decline, although the ever increasing pressure for deliveries indicates that manufacturers are finding it more and more difficult to meet defense and civilian requirements.

Until material shortages are overcome and new facilities are brought into production, further substantial increases in shipments cannot be expected.

With seasonal factors and production bottlenecks much more acute in durable goods than in nondurables, shipments of the former showed a sharper drop in July. The index for the durables declined from 233 in June to 221 in July, while the index of nondurable goods deliveries went from 154 to 150.

With the exception of Iron and Steel, all the major durable goods industry groups recorded shipment declines in July. The dependence of the defense program on this basic raw material necessitated the continuance of operations at previous high levels.

Demand for durable goods continued strong in July, the index of new orders moving upward 6 points from June to reach 336. Orders placed. with nondurable goods manufacturers reflected.

Department store open-account or chargeaccount balances registered a slight seasonal decline of 2.1 percent from May to June 1941. The Department of Commerce index of end-ofmonth charge-account balances which stood at 81.1 in May (December 1939 = 100) decreased to 79.4 in June. Last year there was a May to June decline in charge-account balances of 1.4 percent.

Charge-account balances at the close of June were 11.7 percent above the figure for the end of June last year as compared to the gain of 12.5 percent in May over a year ago. For all regions of the United States, index figures for June 1941 were higher than the figures for the end of June a year ago.

The regional data indicate that department store open-account receivables on June 30, 1941, ranged from 8.3 percent above June 1940 receivables in the West South Central region to 17.1 percent higher in the Pacific states.

For the first six months of 1941, department store charge-account balances at end of month have averaged 9.8 percent above the same period of 1940.

Charge-account collections during July 1941 amounted to 46.1 percent of balances of these accounts outstanding at the beginning of the month as compared to a ratio of 46.2 percent for the preceding month and 45.7 percent for July last year.

It is estimated that collections during the first seven months of 1941 were 46.8 percent of open-account balances at the beginning of the average month. This percentage, indicating that $46.80 was the average amount collected on each $100 of balances at the beginning of the month in the January-June

period of 1941, reveals only a fractional rise from average monthly collections of $46.70 for the same period last year.

Installment Accounts

The Department of Commerce index of department store installment-accounts receivables also declined slightly from the end-of-month figure of 103.3 for May to 102.6 for June (December 1939 = 100), indicating a decrease of less than 1 percent in the dollar amount of these receivables held by reporting stores. Last year there was a decline of 1.2 percent registered from May to June.

Installment receivables on the books of department stores at the close of June were 15.2 percent above the figures for June 1940, or about the same as the 14.7 percent gain shown in May. A regional breakdown of this index indicates that consumers owed at the end of June 1941 over 10 percent more than a year ago on department store installment obligations in every region but the West North Central, where installment obligations were up approximately 7 percent from last year. In the West South Central region, consumer obligations on department store installment accounts were more than 26 percent above last year's total.

Over the six months of 1941, department store holdings of installment receivables have averaged 12.3 percent higher than end-of-month balances in the same period of 1940.

Collections

Installment-account collections during July 1941 represented 17.7 percent of balances outstanding at the beginning of the month, or