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Seventh FEDERAL wi s Volume 15, No. 1 Reserve District MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO December 31, 1931 General Summary November was small, largely due to price reactions. Foodproducing industries for the most part showed recessions: OVEMBER data available on industrial and trade production at meat-packing plants declined from October, conditions in the Seventh Federal Reserve district contrary to the usual trend, and sales were less, as were show a continued downward trend, many of the declines, production and sales of dairy products; however, the vol however, being of a seasonal nature. Operations in the ume of cheese manufactured and distributed exceeded that steel industry remained at a low level, while shipments and of a year ago, and butter production was heavier in this production of malleable and steel castings declined as is comparison. usual for the month, although orders booked by foundries Borrowing by member banks at the Reserve bank has totaled considerably larger than in October. Shipments continued to expand, and was 8y million dollars greater and orders booked by furniture manufacturers decreased on December 16 than a month previous. Loans and in somewhat less than last November. Production of auto vestments of reporting member banks, as well as their mobiles and that of shoes and of leather were reduced fur deposit liabilities, continued the downward trend in evi ther in November. The building industry continued dence for some time. Money rates showed a further slight quiet, despite a slight gain over the preceding month in firming tendency. Dealer sales of commercial paper re total contracts awarded, and there was little demand for mained limited in volume during November, while activity building materials. A further slight contraction in em in bill transactions of accepting banks in the district was ployment took place. only moderate. Department store sales declined in November, largely affected by the fewer trading days in the month, and chain Credit Conditions and Money Rates store trade was less, as were retail shoe and furniture sales. As set forth in the accompanying tabulation of factors Wholesale distribution of commodities such as groceries, in member bank borrowing at the Reserve bank, seven hardware, dry goods, drugs, shoes, and electrical supplies, of the eleven items listed involved changes making for in fell off by about the usual seasonal amounts. Sales of creased recourse to the Reserve bank during the period automobiles at retail were light, although aggregate sales November 10 to December 16, the largest being a net out of reporting wholesale distributors gained, owing to the in flow from the district of 29 millions in funds in inter troduction of new models by one manufacturer. district settlements for commercial and financial transac A survey of the live-stock situation in the district indi tions, a rise of more than 27 millions in member bank re cated no increase over 1930 in the autumn crop of pigs. serve balances, and an increase of 14 millions in currency Supplies of hogs and of beef cattle for winter and spring demand. A decrease of about 7y2 million dollars was marketing were less than a year ago, while those of lambs shown in holdings of acceptances (local transactions). and of dairy cattle were slightly larger. Crop conditions on Among factors making for lowered borrowings, the out December 1 were very good. The marketing of grain in standing changes were a 40 million dollar increase in hold ings of U. S. securities (local transactions) and an excess FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF N CONDITION (Amounts in millions of dollars) Total Bills and Securities....................................... Bills Discounted........................................................ Bills Bought................................................................ U. S. Government Securities................................. Total Reserves........................................................... Total Deposits........................................................... Federal Reserve Notes in Circulation................ Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined........... ♦Number of Points. Dec. 16 1931 $283.4 78.0 62.3 139.5 579.9 320.6 508.0 69.9 Change From Dec. 17 1931 1930 $ + 14.8 $+146.0 +8.6 +54.8 -34.0 +31.7 +38.6 +56.9 +17.5 +183.0 + 17.3 -31.4 +15.9 +366.7 Nov. 10 -0.8 -10.5 CONDITION OF REPORTING MEMBER BANKS. SEVENTH DISTRICT (Amounts in millions of dollars) Change From Total Loans and Investments Loans on Securities.................... All Other Loans.......................... Investments................................. Dec. 16 1931 $2,843 975 1,036 832 Net Demand Deposits.............. Time Deposits............................. Borrowings from Federal Reserve Bank Nov. 10 Dec. 17 1931 $-51 -17 -44 +10 1930 $-572 -256 -251 -65 1,567 1,056 -32 -31 -343 -244 48 +5 +41 of about 27 millions of local Treasury expenditures over receipts. As a result of these changes, member banks on December 16 were borrowing at the Reserve bank about 8)4 million dollars more than on November 10. FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between November 10 and December 16, 1931 (In millions of dollars) 2. 3. 4. 5. 6. 7. mercial and financial transactions......................................... 29.05 Increase in member bank reserve balances............................. 27.66 Increase in demand for currency................................ ■_............. 14.19 Decrease in holdings of acceptances (local transactions). . 7.61 Increase in unexpended capital funds...................................... 0-61 Increase in non-member clearing balances.............................. 0.27 Sales of gold to industry............................................................... 0.07 Total............................................................................... ................... 79.46 tianges making for decrease in member bank borrowing: 1. Increase in holdings of U. S. securities (local transactions) 40.00 2. Excess of local Treasury expenditures over receipts........... 27.47 3. Increase in reserve bank float..................................................... 1-81 4. Increase in holdings of other securities.................................... 1.60 Total................................................................................................... Excess of changes making for increase in member bank borrowing: Absorption of this excess: Increase in member bank borrowings (discounts for member banks)............................................................ 70.88 8.58 8.58 Member Bank Credit Total loans and investments of reporting member banks in this district on December 16 were about SO millions less than on November 10, and more than 570 millions less than on the corresponding reporting date in 1930. Loans on securities declined some 17 millions in the monthly comparison, and “all other” (commercial) loans dropped nearly 45 millions, while investments gained 10 millions. Of the 572 million dollar decrease shown from a year ago in total loans and investments, 256 million dollars was ac counted for in lessened loans on securities, 251 millions in all other loans, and 65 millions in investments. Deposit aggregates also showed considerable shrinkage from a month previous and from December 17, 1930. The prevailing rate charged on customers’ commercial loans by down-town Chicago banks during the week ended December 15 was reported as 3)4 to 6 per cent, which compared with 3/4 to 5)4 per cent during the correspond ing week in November. The average rate earned on loans and discounts by banks in the down-town area during the calendar month of November was 4.55 per cent, compared with 4.45 in October and 4.65 in November 1930. In Detroit, the prevailing rate on customers’ commercial loans during the week ended December 15 was 5 to 5)4 per cent, and the average rate earned on loans and discounts during the calendar month of November was 5.09 per cent. The latter item stood at 5.05 per cent in October and 5.64 per cent in November 1930. Dealer sales of commercial paper in the Middle West re mained limited in volume during November, though total ing 25 per cent heavier than in October. This condition mainly reflected the low level of general business and the usual tendency on the part of borrowers to reduce indebt VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Nov. 1931 Chicago...................................................... $2,343 Detroit, Milwaukee, and Indianapolis 876 Per Cent of Increase or Decrease From Oct. 1931 Nov. 1930 -13.2 -17.5 -26.2 -23.5 Total four larger cities.......................... $3,219 34 smaller centers................................... 606 —14.4 —16.2 —25.5 —25.0 Total 38 centers -14.7 -25.4 Page 2 $3,825 edness before preparing the year-end statements. More over, the moderate demand centered principally upon the small supply of highest grade offerings. Commercial paper outstandings showed a further recession in volume on No vember 30. Selling rates for the month ranged from 4 and 5 per cent for high to 3)4 and 4 per cent for low, with the customary charge at 4 per cent. A further expansion of 6 per cent was recorded in sales during the first half of De cember, owing to a slight improvement in the supply as compared with early November. Quotations opened on December 15 at 3)4 to 4 per cent for low and 4 to 4)4 per cent for high; most paper moved at 3% and 4 per cent. The Chicago bill market was considerably less active during the four weeks ended December 9 than in the pre ceding period. Dealer purchases decreased 57 per cent in the comparison with those of October 15 to November 10, and there was also a recession of 20 per cent in receipts from Eastern markets. Total supplies, consequently, de clined approximately 40 per cent from a month earlier. A similar trend was shown in sales, increased buying by out-of-town banks being insufficient to offset a decrease in demand on the part of local banks and other institutions. On the other hand, shipments to Eastern offices expanded more than 34 per cent and absorbed the remainder of cur rent offerings. Holdings declined one per cent on Decem ber 9 from November 10, and aggregated 67 per cent less than on the corresponding date of 1930. Closing quota tions on December 9 were slightly easier than a month earlier, ranging from 3 per cent for 30-day offerings to 3)4 per cent for maturities of 180 days. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET November 11 to December 9, 1931 Per Cent Change Oct. 15 to Nov. 10 Bills purchased......... Bills sold..................... Holdings*................... *At end of period. in Comparison with Period From Nov. 12 to Dec. 10 1930 —65.5 -30.2 —67.0 1931 —57.1 -52.8 —0.9 Accepting banks in the Seventh Federal Reserve district experienced only moderate activity in bill transactions dur ing November. New financing by means of bankers’ ac ceptances exceeded that of any month since May, and the discounting of these bills attained the highest level in more than a year. On the other hand, purchases of other banks’ bills were the lowest since April 1930. Sales declined fur ther, continuing considerably under current purchases. Portfolios, as a consequence, were larger than in either of the two preceding months, though less than half those of a year ago. A moderate expansion also took place on No vember 30 in the liability for outstanding acceptances. During the first half of December, the amount of bills ac cepted by these banks was one-fifth greater than in the corresponding weeks of November. The gain reflected in creased financing for grain, iron and steel, tobacco, canned goods, and coffee; borrowing decreased for sugar, coal, wood, aluminum, machinery, general merchandise, and miscellaneous commodities. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in November 1931 From October 1931 November 1930 Total value of bills accepted.............. Purchases.................................................. Sales........................................................... Holdings*.................................................. Liability for outstandings*................. *At end of month. . . . . . . . . . . . . . . . +53.4 +8.0 -25.5 +41.1 +5.4 -9.6 -22.3 -18.9 -57.6 -42.0 Security Markets The brief improvement in bond prices in the Chicago market during the early part of November, was followed by a marked decline which continued through early De cember. Some of the sharpest declines were registered in the lower grade issues, particularly in the railroad division, although bond prices in general dropped to the lowest point for many months. The little demand in evidence appeared to favor high grade public utility and municipal bonds. Most foreign bonds are selling at levels which reflect an almost complete lack of demand. An increase was shown in the volume of new offerings during November as com pared with that of October, although the total was approx imately one-half that of November 1930. Of these new issues, practically all were domestic corporation and utility bonds. No one class of purchaser is outstanding in the present bond market, demand being low from all sources. Further declines in stock prices on the Chicago Exchange were reflected in the average price of twenty leading stocks*, which on December 15 amounted to only $36.17 as compared with $49.19 on November 14, a drop of 13 dollars in thirty days. * Chicago Journal of Commerce. Agricultural Products December 1 reports from agricultural agents, represent ing 328,307 farmers in 201 counties, show the supply of live stock available on Seventh district farms for winter and spring marketing to be somewhat smaller than a year ago. Hog supplies totaled 5J/2 per cent less than in 1930, owing to the fact that a greater number of animals from the larger crop of last spring were marketed earlier than usual this season. Moreover, the autumn crop of pigs, which had been expected to exceed that of 1930, was in fact no larger, in consequence of reduced farrowings in Iowa and Wisconsin and of losses from cholera prevalent in many localities. There also was a 9 per cent decline in the number of beef cattle on farms as compared with a year ago, mainly reflecting reduced purchases for feed lots in 1931. Lamb holdings, on the other hand, slightly ex ceeded the 1930 level, and an increase of 1 y2 per cent took place in the number of dairy cattle. Crop conditions were very satisfactory on December 1. Approximately 85 per cent of the corn had been husked and cribbed by that date and showed a high grading. Fur thermore, the corn in the cribs was reported as being in good condition. Fall seedings of winter wheat and rye in the Seventh district are going into the winter in excellent shape, in contrast to a poor condition reported in the great plains area of the United States. Grain Marketing The marketing of all grains in November was restricted by the reaction in prices which began early in the month CROP production Estimated by the United States Bureau of Agricultural Economics as of December 1 (In thousands of bushels unless otherwise specified) 1931 Corn..................... 880,844 Oats......................469,985 All Wheat......... 77,431 Potatoes (white) 51,022 Tame Hay*.... 12,011 Tobacco**......... 48,544 *In thousands of tons. District 1930 741,908 539,401 62,416 37,016 13,072 52,596 United 1931 2,556,863 1,112,142 892,271 376,248 64,233 1,610,098 **In thousands of pounds. States 1930 2,060,185 1,277,764 858,160 333,210 63,463 1,635,210 1925-29 Average 2,760,753 1,316,954 822,115 380,502 94,364 1,357.130 and continued, unevenly, into December. Ample wheat supplies held by export countries and restrictions on im ports arising largely out of the European financial situa tion, overcame most of the earlier strength in world mar kets. Domestic prices declined correspondingly, but smaller marketings and substantial domestic consumption held the December future at Chicago higher than at Liver pool during the first half of the month. Wheat receipts fell off sharply toward the end of No vember, and the total for the month was less than in the preceding month or the five-year November average. Ship ments were larger than average and exceeded receipts, as was the case in the same month of 1929 and 1930. The visible supply continued to decline and on December 12 was only about 25 million bushels larger than on July 1. Exports declined in November, but exceeded the volume of a year ago at which time domestic prices were stabilized above the export level. Receipts of corn and oats and corn shipments were less than in October and considerably below the November average, while shipments of oats were larger than in the preceding month, though under the same month of the past five years. The visible supply of corn remained slight ly larger than in 1930, but the increase of recent weeks was less than usual for this season; the supply of oats de clined in the same period and was but little more than half of the 1930 volume. Corn and oats prices weakened under the influence of the decline in wheat. The monthly aver age, however, for these grains, as well as wheat, was higher in November than in October. Movement of Live Stock November marketings of live stock at public stock yards in the United States were considerably in excess of last year’s low volume. Moreover, the receipts of cattle, calves, and lambs decreased less than a seasonal amount from Oc tober. Hog marketings, on the other hand, after having shown more than a normal gain in the preceding month, expanded less than usual for November. The movement of cattle and hogs decreased from the ten-year average, but that of lambs increased. Reshipments of live stock to feed lots were seasonally less than in October; the number of feeder cattle expanded over last year and declined in the comparison with the 1926-30 November average, while that of lambs showed an opposite trend. Meat Packing Slaughtering establishments in the United States reduced operations during November. Production declined 4 per cent from October—contrary to the usual trend—was 3 LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, November 1931......................... Federally Inspected Slaughter, United States November 1931.......................... October 1931............................... November 1930.......................... Cattle Hogs Lambs and Sheep Calves 205 996 386 102 614 781 605 4,218 3,772 4,024 1,505 1,804 1,305 355 407 324 AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Native Beef Steers (average) Fat Cows and Heifers............. Calves.......................................... Hogs (bulk of sales)................ Yearling Sheep.......................... Lambs.......................................... Week Ended Months of Dec. 19 Nov. Oct. Nov. 1931 1931 1931 1930 $6.65 $8.65 $8.40 $10.55 3.65 4.95 5.35 7.75 5.50 6.00 6.70 9.00 4.10 4.65 5.10 8.55 4.25 4.30 4.60 6.50 5.15 5.55 5.80 7.45 Page 3 per cent less than in November 1930, and totaled 7 per cent under the ten-year average. End-of-month payrolls also showed a recession from October of S per cent in hours worked and of 3)4 per cent in wage earnings, although the number of workers was increased by 1)4 per cent. More over, the aggregate value of sales billed to domestic and foreign customers decreased 16 per cent from a month earlier and 26 per cent from last November. A reduction in tonnage during the Thanksgiving season, together with price declines in practically all packing-house commodi ties, accounted for most of the recession from October. On the other hand, prices alone were mainly responsible for the decrease from 1930. December 1 inventories slightly exceeded those of the preceding period; holdings con tinued, however, at a much lower level than a year ago or the 1926-30 average. Shipments for export were curtailed sharply during No vember. Owing to lard futures being quoted under No vember prices, foreign purchasers hesitated to buy this commodity for immediate shipment, and packers were re luctant to make extensive forwardings on consignment terms. A substantial demand, however, was experienced for American lard already landed in European ports. Fur thermore, some purchases were made for future delivery. Trade in meats, on the other hand, continued dull. In ventories of American packing-house products in Europe (including stocks in transit) were much smaller on De cember 1 than at the beginning of November. Lard prices continued close to the United States parity, but quotations for meats were at a discount. Dairy Products Creamery butter production in the Seventh Federal Re serve district showed a less-than-seasonal decline in No vember. The volume fell off 11)4 per cent from October, but increased 9)4 per cent over a year ago and 18 per cent over the 1923-30 average for the month. On the other hand, the sales tonnage decreased by more than the usual amount in November from the preceding period, aggregat ing 11)4 per cent smaller in the comparison and 4 per cent under last year. Statistics of the American Association of Creamery Butter Manufacturers indicate that United States production of the commodity also was smaller in the month-to-month comparison and greater than in 1930. Prices were lower than in October. Influenced by the trend in production, inventories in the United States de clined by less than the usual amount on December 1 from the beginning of November, but showed a recession of more than SO per cent from last year and the 1926-30 average for that date. The production of American cheese in Wisconsin like wise was heavier than average for the season, decreasing only 18)4 per cent during the four weeks ended November 28 from the preceding period and increasing 25 per cent over a year ago. Although merchandising of the com modity was S per cent smaller than from October S to 31, it exceeded production by 13 per cent and was 10 per cent heavier than in November 1930. Prices trended down ward during November. Total inventories of cheese in the United States decreased further on December 1, but the recession from last year and the 1926-30 average was less than evidenced a month earlier. Industrial Employment Conditions Employment in Seventh district industry was fractional ly lower in November than a month earlier and payrolls Page 4 declined moderately, as shown by data for 2,825 firms in cluded in our survey. Average weekly earnings were 2)4 per cent lower in the total and nearly 4 per cent less in manufacturing than in the preceding month. The trend in the total of ten manufacturing groups was not uniform throughout the district, as Michigan, influenced largely by the automobile and rubber industries, recorded increases of 6 per cent in men and one-half of one per cent in wages, while in the other states declines took place which more than offset these gains. The only group having larger employment and pay rolls was vehicles, which reversed the sharp downward trend of the previous five months in number of men with a moderate gain, and added a fractional increase in pay rolls to that of October; these gains apparently reflect assembly operations of a number of manufacturers on new models. Rubber products firms, operating longer hours, reported considerably larger payrolls than in October. The declines in individual groups were largely seasonal and sharpest in the leather, stone, clay and glass, food, and wood products groups; fairly large reductions in payrolls accompanied by only slight loss in employes occurred in the textiles, chemicals, and metal products groups. Paper and printing, which usually expands operations in Novem ber, had a fractional loss in employes and a larger one in their earnings. In non-manufacturing employment, con struction was seasonally lower, and both construction and coal mining had smaller wage payments. At free employment offices registrations were smaller in November, probably because of increased activity on the part of relief agencies, and the ratio of applicants to jobs available declined in each of the four states. REGISTRATIONS PER 100 POSITIONS AVAILABLE AT FREE EMPLOYMENT OFFICES Month Illinois 1931 November......... 208 251 280 283 October............. 1930 November........ October............. Indiana 149 232 251 202 Iowa Wisconsin Four States 351 503 281 331 225 249 210 178 225 275 263 251 Manufacturing Automobile Production and Distribution Automobile production in the United States followed the usual trend for November, declining further for both EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group of November 15, 1931 Report Firms Wage Earners No. No. 744 144 162 364 150 301 2,907 3,874 446 1,271 179 426 372 227 138 1,052 ing Metals and Products1........ Earnings Textiles and Products.... Food and Products............. Stone, Clay, and Glass---Wood Products.................... Chemical Products............. Leather Products........ Rubber Products*............... Paper and Printing............ 324 150,027 138,127 29,218 54,009 8,196 26,679 14,656 16,087 6,066 41,102 Total Mfg., 10 Groups.... 2,380 484,167 Merchandising*................... Public Utilities.................... Coal Mining......................... Construction........................ 186 70 18 171 31,247 87,472 5,142 8,381 Total Non-Mfg., 4 Groups. 445 132,242 2,825 616,409 Total, 14 Groups................ 1Other than Vehicles. 102 81 8 (000 Omitted) $ 2Michigan and Wisconsin. Changes From October 15 Wage Earn Earn ers ings % % -0.2 -5.8 +4.5 -1.7 -3.8 -9.0 -3.0 +0.6 -9.0 -5.8 -10.8 -8.8 -9.4 -0.5 -0.3 -4.2 -18.9 +7.1 -3.3 10,892 -0.1 -3.9 757 2,861 99 222 +0.1 -8.7 +0.5 -3.4 -4.8 3,939 -0.8 -0.1 -0.3 -2.9 14,831 -1.2 -0.3 -0.2 -0.6 ’Illinois and Wisconsin. passenger cars and trucks; output of the former totaled 48,185, or 17 per cent under October and 52 per cent smaller than a year ago, while truck output of 19,683 was 9 pier cent less than in the preceding month and 45 per cent below November 1930. The introduction of new models of a medium-priced car effected the increase shown in November over the pre ceding month in midwest distribution of automobiles at wholesale. Retail sales, on the other hand, fell off as is usual in November, though showing somewhat smaller dif ferences from the corresponding period of 1930 than in a similar comparison for October. Average stocks of new cars on hand the end of November were almost 40 per cent smaller than on November 30 last year, having declined about 20 per cent from the level of a month previous. Used car sales in November again were somewhat less than in the preceding month, while stocks increased further—their value to a greater degree than the volume, the former also being slightly greater than a year ago. The ratio of 55 per cent, representing the proportion in November of de ferred payment sales to total sales of twenty-six retail deal ers, compared with 59 per cent for October and 44 per cent for November a year ago. Iron and Steel Products The approach of year-end inventory-taking and the holidays have further curtailed steel demand in this dis trict, while operations of Chicago mills have averaged little more than 22 per cent of capacity since the middle of No vember, as compared with a rate of 40 to 45 per cent dur ing the same period last year. Pig iron production in Illinois and Indiana increased very slightly in the daily average for November over the preceding month. Prices have displayed weakness since the first of December: those of steel bars, plates, and shapes have been reduced; pig iron is lower by 50 cents per ton; and scrap iron and steel prices have likewise weakened. Orders booked by both steel and malleable casting foundries in the Seventh district totaled considerably heavier in November than a month previous, and several firms reported larger bookings than a year ago, although totals were still far short of those at that time. Shipments and production declined as is usual in November from the preceding month. Shipments of stove and furnace man ufacturers were likewise seasonally smaller during Novem ber and totaled 25 per cent under a year ago; new orders and production were sharply less than a month previous and approximately 25 per cent below last year. MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in November 1931 from previous months Furniture New orders booked by Seventh district furniture manu facturers reporting to this bank fell off further in No vember, though somewhat less than in the same period a year ago—the current decline of 12 per cent comparing with one of 17 per cent in November 1930. Shipments, also, declined less than in the corresponding period a year ago, being only 18 per cent under those of a month previ ous, whereas November 1930 shipments were 35 per cent under the preceding month. Cancellations were low, and unfilled orders outstanding at the close of November were in approximately the same ratio to current orders booked as a month previous—77 per cent. In comparison with November 1930, orders booked and shipments were alike smaller by 33 per cent, and unfilled orders less by 13 per cent. The rate of operations maintained during the month under review approximated 45 per cent of capacity, one point under October and six points under that obtaining during November a year ago. Shoe Manufacturing, Tanning, and Hides Shoe factories in the Seventh Federal Reserve district made a further reduction in operations during November. Production, as a consequence, totaled 12 per cent less than in October, and 32 per cent under the 1923-30 average for the month, although it exceeded that of a year ago by 2 per cent. The tanning and sales of leather were smaller than in October or the corresponding period of 1930. Prices eased. Trading in packer green hides and calf skins was almost negligible at Chicago during November. Purchases by dis trict tanneries also were reduced. On the other hand, shipments of hides and skins from the city considerably exceeded those of October. Quotations averaged higher in November than a month earlier. Building Material, Construction Work Seasonal declines took place during November in Sev enth district building materials lines; exceptions to the trend were attributed to favorable weather which per mitted prolonged outdoor work. In part, the usual No vember recession is due to reduction of stocks preparatory to end-of-the-year inventories. Retail yards reported a decline in total dollar sales of materials slightly in excess of the five-year average Novem ber loss, while lumber sales dropped more sharply. De spite the small volume of business, most firms reduced their stocks. As accounts were reduced only moderately, the ratio of accounts to dollar sales rose sharply to the high LUMBER AND BUILDING MATERIALS TRADE Per Cent Change From New Car8 Wholesale— Number sold................................ Value.............................................. Retail—• Number sold................................ Value.............................................. On hand November 30— Number......................................... Value.............................................. Used Cars Number sold................................ Salable on hand— Number......................................... Value.............................................. October 1931 November 1930 Included +36.2 +77.3 -18.4 -21.7 22 22 —21.3 -17.7 -21.4 -18.1 50 50 -18.7 -17.8 -35.0 -39.0 52 52 -11.0 -18.9 52 +4.4 +6.9 -7.1 +1.0 52 52 Class of Trade Wholesale Lumber: Sales in dollars................................ Sales in board feet.......................... Accounts outstanding1.................. Retail Building Materials: Total sales in dollars..................... Lumber sales in board feet.......... Accounts outstanding1.................. Nov. 1931: Per Cent Change From Oct. 1931 Nov. 1930 Number of Yards -22.9 -21.4 +0.2 -48.4 -24.0 -28.1 15 13 12 -30.3 -44.1 -5.1 -33.5 -36.0 -15.4 188 50 182 Ratio of accounts outstanding1 to dollar sales during month Nov. 1931 Wholesale trade................................... Retail trade.......................................... >End of month. 236.1 469.1 Oct. 1931 181.5 343.5 Nov. 1930 166.5 365.5 Page 5 est point since February. Prices of lumber and other ma terials were reported stable at the recent low levels by most of these dealers, although several mentioned further cuts. The loss in dollar sales of lumber at wholesale continued the downward trend of the two preceding months. A sim ilar decline in board foot sales indicates that prices re mained at the October level; the greater decrease in the former item from last November represents the degree to which prices have fallen during the past year. Stocks were reduced in November and approximated the volume of a year ago. The accounts to dollar sales ratio reached the highest point on our records, because of small November collections. Cement shipments from midwestern mills were less than half the October volume and somewhat less than a year ago; stocks increased moderately, although the total at the end of the month was less than on the same date of 1930. Brick and tile demand was only fair. Building Construction Contrary to the usual seasonal trend, an increase in total building contracts awarded was registered during No vember in the Seventh Federal Reserve district. Residen tial contracts, however, amounting to only 17 per cent of the total, showed a considerable decline from a month previous, and exceeded by only $350,000 the previous low point in January 1921. BUILDING contracts awarded* SEVENTH FEDERAL RESERVE DISTRICT Period Total Contracts Residential Contracts $21,189,987 +14% -46% $412,451,761 -39% ♦Data furnished by F. W. Dodge Corporation. $3,583,736 -26% -67% $82,396,009 -45% Change from October 1931................... Change from November 1930............... First eleven months of 1931...................... Change from same period 1930........... The Seventh district trend in estimated cost of proposed construction, according to building permit figures in 102 cities, continued downward during November. The drop from October, however, amounting to only 6 per cent, was considerably smaller than that shown in the October-September comparison of 3 5 per cent. A large decline from a year ago was again recorded, and amounted to 55 per cent. Following the small gain shown in number of permits is sued during October, the November reports registered a decline of 34 per cent from a month previous, and of 23 per cent from last year. Three of the larger cities in the district differed from the trend of the district in the com parison with October in estimated cost, Indianapolis, Des Moines, and Milwaukee reporting gains of 177, 59, and 15 per cent, respectively. Indianapolis likewise showed a large gain of 262 per cent over last year, in this same item. Merchandising The declines shown during November in reporting lines of wholesale trade were about average for the period. Grocery sales declined 11 per cent, hardware 18 per cent, dry goods 12 per cent, drugs 11 per cent, shoes 20 per cent, and electrical supplies 8 per cent from the preceding month. Differences from a year ago, as indicated in the table below, were smaller in all groups than in a similar comparison for October. In the year through November, grocery sales totaled 15 per cent, hardware 26 per cent, dry goods 25 per cent, drugs 15 per cent, shoes 25 per cent, and electrical supplies 34 per cent smaller than in the same period of 1930. No tendency has been shown to expand stocks, and levels are well below those of a year ago. Ratios of accounts outstanding on November 30 to net sales during the month were higher in the majority of groups than either a month previous or last year. Department store trade in the Seventh district fell off 8 per cent in November from the preceding month, follow ing three successive months of increase, although daily average sales totaled 5 per cent larger in the comparison; the decline compares with one of 6 per cent in the cor responding period last year. Sales by Detroit stores were only 3 per cent smaller than in October, while those in Chicago, Milwaukee, Indianapolis, and smaller cities of the district were less by &y2, 9J4, 13, and 10 per cent, re spectively. The decline of 22 per cent from a year ago brought sales for the year through November to 15 per cent below the same period of 1930, as against a 13 per cent recession shown for the first ten months of the year. Stocks on hand at the end of November averaged a little lighter than a month previous, whereas a small gain is usually recorded during the period; turnover so far in 1931 has been very slightly slower than in 1930. Total sales of shoes by reporting retail dealers and de partment stores declined in November, contrary to sea sonal trend and although about half of the department stores recorded gains in the comparison with October. The dollar volume sold was 26 per cent smaller than in the same month last year and for 1931 through November totaled 13 per cent below the corresponding period of 1930. Stocks again declined, following a slight expansion shown in recent months. The recession of 16 per cent from the preceding month in November furniture trade was somewhat greater than usual for the period, comparing with an average decline of 12 per cent in the four preceding years; business done on the installment plan by dealers fell off 23 per cent in the comparison. Total dollar volume sold by both dealers and department stores was 24 per cent less than in November 1930, while installment sales by dealers totaled 27 per cent smaller. As was the case in other retail lines, stocks were DEPARTMENT STORE TRADE IN NOVEMBER 1931 WHOLESALE TRADE IN NOVEMBER 1931 Commodity Per Cent Change From Same Month Last Year Net Sales Groceries.............. Hardware............. Dry Goods........... Drugs.................... Shoes..................... Electrical Supplies............ Stocks Ratio of Accts. Outstand Accts. Outstand. Collec tions Net Sales Locality ing to Per Cent Change November 1931 From November 1930 Net Sales Stocks End of Month -12.6 -20.8 -27.2 -21.2 -15.8 -34.6 -22.1 -12.8 -18.7 -10.2 -10.4 -10.2 -17.3 -30.2 +0.0 -31.3 -23.6 -33.4 -24.6 -15.2 -12.8 135.8 296.7 347.2 202.7 341.6 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. -25.4 -23.0 -20.1 -36.5 -18.6 -31.2 -41.2 190.6 7th District. -22.4 Page 6 -16.4 -16.7 Per Cent Change Eleven Months 1931 From Same Period 1930 Ratio of Nov. Col lections to Accounts Outstanding Oct. 31 Net Sales 1931 1930 27.7 32.6 41.1 31.6 35.1 41.3 -12.7 -18.3 -15.8 -9.7 -9.2 -12.4 32.2 35.6 -13.9 -15.2 33.3 35.9 -21.4 -8.9 -8.6 reduced slightly, although increases had been shown in the past few months. Seventeen chains reporting to this bank and operating 2,604 units in November, had sales totaling 11 per cent smaller than in the preceding month and the same amount below a year ago. The number of units showed little change in either comparison, so that average sales per store declined by the same percentage as did aggregate sales. All individual lines, which include grocery, drug, five-and-ten-cent store, cigar, furniture, shoe, musical in strument, and men’s clothing chains, recorded declines from both a month and a year previous. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) June Nov. Oct. Aug. July Sept. June No. of Nov. July Oct. Sept. Aug. 1930 1930 1930 1930 1930 1930 Firms 1931 1931 1931 1931 1931 1931 Meat Packing—(U. S.)— 102 103 Sales (in dollars).................................... 89 105 98 97 75 75 63 79 74 74 66 Casting Foundries— Shipments: 46 57 68 32 42 61 Steel—In Dollars............................ .. 20 23 25 29 15 18 21 In Tons................................... 27 30 48 65 71 42 62 22 15 20 24 19 19 Malleable—In Dollars..................... 27 25 31 33 32 35 50 16 23 17 21 22 14 48 49 71 In Tons......................... 36 44 46 23 22 25 26 33 36 43 Stoves and Furnaces— Shipments (in dollars).......................... 118 200 150 89 96 90 147 110 79 63 65 11 no Furniture— Orders (in dollars)................................. 77 61 61 80 46 55 51 43 35 25 33 37 44 79 67 54 56 Shipments (in dollars).......................... 33 52 81 25 35 43 47 39 42 Flour— Production (in bbls.)............................ 103 118 122 116 106 97 89 26 103 123 122 128 112 Output of Butter by Creameries97 115 131 Production............................................... 78 94 155 157 67 87 100 127 95 114 95 120 135 Sales........................................................... 94 96 111 102 117 123 149 69 90 106 Wholesale Trade—• Net Sales (in dollars): 103 Groceries.............................................. 86 104 99 99 95 93 85 85 31 69 78 87 75 74 70 63 88 66 Hardware............................................. 50 58 63 57 14 47 55 71 71 58 46 61 Dry Goods................ .......................... 38 55 9 43 49 53 41 46 88 84 102 95 88 92 Drugs..................................................... 78 83 13 71 79 78 76 93 84 81 53 62 Shoes..................................................... 72 7 47 58 60 55 45 51 Retail Trade (Dept. Stores)— Net Sales (in dollars): 77 66 93 99 Chicago................................................. 110 94 26 74 84 73 60 84 61 150 118 97 80 115 Detroit.................................................. 78 71 101 121 5 92 95 123 97 74 70 87 Indianapolis........................................ 87 98 114 67 61 5 80 90 89 107 80 75 95 Milwaukee........................................... 116 5 75 95 111 73 92 102 89 86 87 Other Cities........................................ 103 81 50 77 86 72 70 59 82 96 6g TO 105 88 Seventh District................................ 104 110 81 96 91 85 67 63 89 80 Automobile Production (U. S.)— 60 63 76 98 Passenger Cars....................................... 63 72 34 39 17 20 37 53 117 107 115 Trucks....................................................... 95 108 129 107 83 84 52 58 91 Building Construction— Contracts Awarded (in dollars): 37 36 42 44 45 Residential........................................... 27 20 26 42 17 18 12 86 77 88 80 147 Total...................................................... 27 55 58 31 49 64 59 Iron and Steel— Pig Iron Production:* 82 95 119 Illinois and Indiana.......................... 50 61 76 79 91 43 41 41 44 42 77 83 87 100 71 63 United States...................................... 48 56 39 40 38 82 88 84 103 Steel Ingot Production—(U. S.)*. . 66 75 45 48 50 54 60 44 76 73 72 75 84 83 Unfilled Orders U. S. Steel Corp.... 71 73 66 66 61 65 ♦Average daily production. PajJe 7 PERCBrr tw — NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) INDUSTRIAL activity and factory employment declined further from October to _ November, reflecting in part the usual seasonal tendencies. Continued gold imports and further reduction in member bank reserve requirements during Novem ber and the first half of December were reflected in a considerable decline in the out standing volume of reserve bank credit. Production Index number of industrial production, adjusted for seasonal variation (1923-25 average= 100). FACTORY EMPLOYMENT Federal Reserve Board’s index of factory employment with adjustment for seasonal variation (1923-25 average and Employment In November, industrial production showed a somewhat larger decrease than is usual at this season, and the Board’s seasonally adjusted index declined from 73 to 72 per cent of the 1923-25 average. Activity declined at woolen mills, lumber mills, and coal mines, while daily average output at steel mills increased and volume of automobile production showed less than the usual seasonal decline from the low level of October. The November increase in steel production was followed by a consider able decline in the first three weeks of December. Output of petroleum increased further in November to a level slightly lower than that prevailing last summer before output was sharply curtailed. Volume of employment in most manufacturing industries declined by more than the seasonal amount between the middle of October and the middle of November. Reductions were particularly large in the wearing apparel, leather, and building mate rials industries, while in the automobile and tire industries declines were smaller than usual at this season. The value of building contracts awarded, as reported by the F. W. Dodge Corpora tion, has declined further in recent months and a preliminary estimate of the Board’s seasonally adjusted index for the last quarter of 1931 is 49 per cent of the 1923-1925 average, compared with 59 for the third quarter, 65 for the second quarter, and 79 for the first quarter of the year—part of this decline in dollar volume reflects lower building costs. Production of principal crops in 1931 was about 10 per cent larger than in 1930, according to the December crop report of the Department of Agriculture, while acreage harvested was slightly smaller than a year ago. There were large increases in the crops of cotton, com, winter wheat, apples, and peaches, while the harvests of oats, barley, and rye were smaller than last year. As in 1930, the hay crop was unusually small. = 100). Distribution PER CENT PER OUT 120 Commodity distribution continued at about the same rate in November as in October, the volume of freight carloadings showing a seasonal decline, while sales at department stores increased by about the usual amount for that month. RAILROAD FREIGHT-CAR LOADINGS Wholesale Prices The general level of wholesale prices remained practically unchanged from October to November, according to the Bureau of Labor Statistics index. Prices of grains, petroleum, and silver advanced, while those of live stock and dairy products showed declines partly of a seasonal character. Between the middle of November and the middle of December, there were decreases in the prices of many leading commodities including live stock, meats, grains, sugar, silk, and silver. During this period prices of copper and rubber showed a decline, followed by a recovery. 1927 1928 1929 1930 1931 Indexes of daily average number of cars loaded; ad justed for seasonal variation (1923-25 average = 100). BILLIONS DOLLARS BILLIONS MEMBER BANK CREDIT All Other Loans Investments 1927 1928 1929 1930 1931 Monthly averages of weekly figures for reporting mem ber banks in leading cities. Latest figures, averages of first two weeks in December, 1931. Pafte 8 Bank Credit Volume of reserve bank credit outstanding declined during November and the first half of December, and averaged $360,000,000 less in the week ending December 12 than at its October peak seven weeks earlier. The decrease was in large part in the banks’ portfolio of acceptances, as discounts for member banks and holdings of United States Government securities showed little change for the period. The decline in total volume of reserve bank credit outstanding during the period reflected a growth of $100,000,000 in the stock of monetary gold, largely through imports from Japan, and a continued reduction in the reserve balances of member banks, reflecting a further liquidation of member bank credit. Demand for currency declined during the last three weeks of November, and showed considerably less than the usual seasonal increase in the first half of December. After the middle of December, how ever, bank suspensions in New England were followed by some increased with drawals of currency, part of which has begun to return. Loans and investments of member banks in leading cities continued to decline and on December 9 were $370,000,000 smaller than four weeks earlier. The decrease was equally divided between the banks’ loans and their investments. Deposits of these banks, both demand and time, also showed a decrease, with a consequent reduction in required reserves. Money rates in the open market showed little change from the middle of November to the middle of December. Rates on prime commercial paper continued at 3J4 to 4 per cent, while rates on 90-day bankers’ acceptances advanced from 274 to 3 per cent on November 25.
@FedFRASER