in the preceding year. Shipbuilding nearly doubled in 1934, the world's total launchings aggregating 967,000 gross tons, a gain of 478,000 tons over the launchings in 1933. Great Britain and Ireland held the lead by wide margin, building 460,000 tons compared with 133,000 tons in 1933. The United States total, though more than twice that of 1933, amounted to only 25,000 tons.

Among the measures taken to improve the industry at home and abroad were the appointment in the United States of an Interdepartmental Committee of the Federal Government to study conditions and to recommend future policies, and the convening of an international conference of shipowners at London to discuss cooperate efforts.

Foreign trade zones were authorized during the year by the United States; the President signed a bill for that purpose on June 18, establishing a board composed of the Secretary of Commerce, the Secretary of War, and the Secretray of the Treasury, to carry out its provisions. The purpose of the act referred to is: To provide for the establishment, operation, and maintenance of foreign trade zones in ports of entry of the United States, to expedite and encourage foreign commerce, and for other purposes.

AIR TRANSPORT

Transportation of mail, passengers, and express over the scheduled air lines of the United States continued during 1934 at approximately the levels recorded for 1932 and 1933.

Traffic figures for the air lines do not show the slumps which characterized most other lines during the depression years. Volume grew steadily and rapidly until 1931, and since that year has consisted of about a half million passengers, some 8 or 9 million pounds of mail, and 1 to 2 million pounds of express each year, for domestic air lines and foreign extensions. In 1934 there were 561,370 passengers carried, or 1.3 percent less than in 1933, but 3.8 percent higher than for 1932. A total of 3,449,675 pounds of express and freight was carried in 1934, an increase over 1933 of 41 percent and 116 percent over 1932. Data are not available showing the amount of mail carried in 1934, but in 1933 there were 7,816,532 pounds, a decrease from 1932 of 1.2 percent. The total number of miles flown in 1934 was less than for the previous 2 years, declining 10.7 percent from 1933 and 4.2 percent from 1932.

All air-mail contracts were annulled by the Post Office Department effective at midnight February 19, on the grounds that they were obtained through fraud and collusion, and the mail was carried in Army aircraft for slightly more than two months. On the basis of new bids submitted by the air-line operators, the handling of air mail was returned to private operators in May.

There were 28,084 miles of air transport routes in the United States at the end of the year and 22,717 additional miles under operation by American companies in foreign countries. Technical advances in the conduct of air-line service during the year were numerous. A number of lines added new equipment affording substantial increases in speed. Many schedules now are based on the premise that the aircraft will fly easily and safely at 150 to 180 miles an hour. Low-wing, metal, multiengined airplanes are prominent among the new types put into service during the year. In some air liners, berths have been pro

vided so that passengers can sleep comfortably during night trips. Also, a method of adapting air conditioning to air transportation has been devised, and methods of soundproofing cabins have been further improved.

The Federal airways system at the end of the year comprised 18,712 miles of routes equipped with beacon lights at 10- to 15-mile intervals, intermediate landing fields so spaced that landing areas were available every 50 miles or less, radio communications stations for broadcasts of weather information, radio range beacons and radio marker beacons for directional guidance, and a weather reporting system for collection and dissemination of meteorological data involving the use of leased teletypewriter circuits and point-to-point radio. Some 3,000 miles of new airways were under construction during the year, this new construction having been made possible by a grant of funds from the Public Works Administration.

Air transportation includes, in addition to the air lines, the miscellaneous operators who offer charter, taxi, and sightseeing service, and carry out a variety of special types of flying activity. Private flying also is included in the miscellaneous category.

The miscellaneous operators flew 75,602,152 miles and carried 1,397,288 passengers in 1934. Flying activity by the miscellaneous operators reached a peak in 1929 and 1930. In the latter year, they flew 108,269,760 miles and carried 2,298,351 passengers.

In 1934 the aircraft manufacturing industry produced 1,614 airplanes as compared with 1,324 in 1933, according to the Bureau of Air Commerce. The production peak was reached in 1929 when 6,913 airplanes were produced. The industry exported 490 airplanes in 1934 as compared with 406 in 1933 and 348 in 1929.

COMMUNICATIONS

Important and far-reaching communications legislation was enacted during 1934 with the passage of the Communications Act of 1934, approved June 19, which created a Federal Communications Commission of 7 members to regulate interstate and foreign communication by wire and radio. All the powers and duties formerly vested in the Federal Radio Commission, the Interstate Commerce Commission, and the Postmaster General, with regard to the regulation of radio, telephone, and telegraph companies and services, were transferred to the new Commission.

Among the major problems being studied by the Commission may be mentioned the proposal that Congress by statute allocate fixed percentages of broadcasting facilities to nonprofit organizations (religious, educational, etc.); whether the Commission should recommend legislation to Congress permitting telegraph companies to merge; accounting rules and depreciation charges for telephone companies; cooperation with the State regulatory bodies; an examination into the classifications, practices, services, discriminations, preferences, ratios of charges, etc., of communication companies. Public hearings have either been held or are scheduled to be held on these and many other questions of vital concern to the companies and the public.

The total number of telephones in the United States at the end of 1934, which may be interconnected, was approximately 16,800,000, as compared with 16,600,000 at the end of 1933. During 1934 the

Bell System had a net gain of about 298,000 telephones as compared with a net loss of 630,000 for 1933. At the end of the year there were about 13,458,000 instruments in service in the Bell System, or 14 percent less than the maximum development reached in 1930. and long distance telephone traffic was 4.6 percent greater than in 1933, while local telephone calls increased 2.6 percent.

Toll

On January 1, 1935, the Associated Press inaugurated a wire-photo service over a 10,000-mile leased-wire system. The Associated Press maintains and operates this service in 24 key cities for the 38 American newspapers cooperating in its use.

DOMESTIC TRADE

Distribution of goods to consumers expanded during 1934 and a better balance prevailed between production and distribution than existed in 1933. Retail sales showed a distinct tendency to lag during the initial stages of recovery, but as employment and income were established on a higher level and purchasing power permeated throughout the major consuming groups, the movement of goods tended upward. Sales did not show such wide fluctuations as in 1933, nor were they subject to the ups and downs which featured the industrial output.

Considering the price rise which has occurred since the first half of 1933, the increase in dollar sales in 1934, in comparison with the preceding year, was not particularly impressive. However, gains in goods purchased by certain segments of the population-the rural group particularly—and in the sales of certain major articles, of which automobiles are a conspicuous example, were of very substantial proportions.

DOLLAR VOLUME OF RETAIL SALES UP 14 PERCENT

Estimates made by the Division of Marketing Research and Service of the Bureau of Foreign and Domestic Commerce indicate that retail sales in 1934 approximated $28,548,000,000, a gain of 14 percent as compared with the total of $25,037,000,000 for 1933 reported by the Census of American Business. Improvement was continuous throughout the year, and each quarter showed a gain over the corresponding quarter for 1933. Further, each major business group registered improvement over the previous year. The rate of increase, however, varied greatly among the different trades.

The greatest improvement was recorded by catalog sales of mailorder houses, with a rise of 25 percent, followed by the automotive group with an increase of 22 percent, with restaurants, apparel stores, farmers' supply and country general stores, and furniture and household stores ranking next with an increase of 18 percent each. The smallest increases were shown by the food group and variety stores, 7 and 9 percent, respectively.

URBAN INDUSTRIAL VERSUS RURAL FARMING AREAS

All of the available regional trade statistics indicate that trade in 1934 was more satisfactory in rural agricultural areas than in urban industrial centers. This is rather directly evidenced by a comparison of this Bureau's index of rural retail trade with the Federal Reserve Board's index of department store sales. (See chart 28.)

In the period from 1929 through 1932, rural trade declined more rapidly than did department-store trade, which reflects the movement of city sales, and reached its lowest level during the first quarter of 1933. From the low point, rural sales advanced sharply and steadily, except for a slight recession during the first half of 1934.

Sales of general merchandise in small towns and rural areas were 21 percent higher in dollar volume in 1934 than in 1933 and 33 percent higher than in 1932, according to the indexes of the Bureau of Foreign and Domestic Commerce. The relative increases in sales were fairly uniform in the different regions of the country. The largest gain was recorded in the South with an increase of 24 percent, followed by increases of about one-fifth in the Middle West, Far West, and East. Daily average sales for the country as a whole, adjusted for seasonal variation, were highest in September when they were 99 percent of the 1929-31 average, and lowest in June when they were 72 percent of that average.

Department-store sales, in contrast to the downward plunge of rural sales, held up fairly well from 1929 through the middle of 1931 and then declined rapidly to their lowest point in March 1933. The upward movement since then has been irregular and decidedly less marked than the expansion in rural trade.

Chart 28. Comparative trend of department store and rural general merchandise sales (department store sales index, Federal Reserve Board; rural sales, United States Department of Commerce; both adjusted for seasonal variation).

Department-store sales in 1934 were about 12 percent larger than in 1933, compared with a decline of 4 percent from 1932 to 1933. Sales in each quarter of 1934 were substantially better than in the corresponding quarters of 1933. With allowance for seasonal variation, sales in the second and third quarters of 1934 were the largest since the first quarter of 1932 and the sales in August 1934 were the largest since April 1932. Although the seasonally adjusted index for the last quarter of 1934 showed a slight decline from the index for the two previous quarters, December sales were about 12 percent and 27 percent above December 1933 and 1932, respectively.

Increases in department-store sales during 1934 in those Federal Reserve districts which might be classed as predominantly agricultural were somewhat higher than in other districts. The Atlanta, Dallas, Richmond, and St. Louis districts registered increases ranging from 15 to 26 percent. Gains in the other areas varied from 5 to 16 percent, increases in 5 of these 8 districts being 10 percent or less.