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Business Conditions Seventh FEDERAL Reserve DISTRICT IOWA M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Eugene George MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 16, No. 9 A. Pruqh, Asst. Federal Reserve Agent Harris G. Pett, Manager Division of Research and Statistics August 31, 1933 General Summary Wholesale and retail trade were, in general, smaller during July than a month previous. With the exception LTHOUGH many phases of Seventh district in of dry goods where a non-seasonal gain was recorded, re dustry and trade recorded a slowing-down in activ porting groups of wholesale trade experienced greater ity during July—partly seasonal in nature—others showed than usual recessions during the period, but all had a a continued rising trend, and business in most groups larger volume of business than a year ago. Department was at levels well above a year ago in the same month. store trade likewise showed a greater than seasonal de Production of steel declined somewhat after the middle cline, though sales totaled moderately heavier than for of July, but new business received during the month last July. The retail shoe and furniture trades recorded totaled larger than in June, while pig iron output ex similar trends in the monthly comparison, with shoe sales panded notably in the period. Shipments of steel cast slightly smaller than a year ago, as well. The majority ings, of stoves, and of furniture increased, as did orders of chain store lines made larger sales than a month pre in the two last named lines; malleable casting shipments vious or in July 1932. Distribution of automobiles fell recorded a minor recession. The manufacture of auto off in July, but sales totaled considerably heavier than mobiles was curtailed only slightly, and building construc last year. tion again expanded, with the movement of building mate The volume of reserve bank credit extended in the rials relatively heavy. Shoe production was maintained district declined somewhat further between July 19 and at a high level in the month. In all of these industrial the middle of August. * In this period total loans and in phases, activity exceeded that of July last year. Em vestments of reporting member banks and deposits therein ployment and payrolls not only increased over June— also were reduced slightly. Dealer sales of commercial contrary to trend—but showed the first gain in the yearly paper continued to expand in July, and new financing by comparison since 1929. means of bankers’ acceptances increased heavily, follow Seasonal declines took place during July in the produc ing a sharp decline in June. tion of packing-house commodities, of butter, and of Credit Conditions and Money Rates cheese. However, gains shown over the preceding month in the distribution of cheese and in the dollar volume of The trend of factors affecting the use of Federal Re packing-house products sold, were counter to trend for serve bank funds during the four weeks ended August 16 July. Production in all three industries totaled heavier was very similar to that shown in the preceding period. than a year ago, and only butter recorded a sales decline Reserve bank credit extended in the district declined 2 y2 in the comparison. The movement of wheat was not so million dollars, while commercial operations through inter large as is usual for July, but that of feed grains was district settlements showed a net gain of almost 3*4 mil greater than seasonal. Estimates for many Seventh dis lions, and local Treasury expenditures exceeded receipts trict crops were revised downward in July, although those by more than 18J4 million dollars. Heavy increases in for fruit and tobacco were raised. both member bank reserve balances and non-member de posits more than offset the declines registered in currency FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF demand and unexpended capital funds. CONDITION A (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. Aug. 16 1933 $346.1 9.8 0.9 335.4 959.0 477.3 753.5 77.9 Change From July 19 Aug. 17 1933 1932 $+12.9 $+33.8 -2.3 -22.9 -3.9 -0.0 +15.2 +60.6 +19.8 +204.4 +48.9 +175.5 -17.1 +35.4 -0.4* +3.9* Changes Between July 19 and August 16 in Factors Affecting Use of Federal Reserve Bank Funds Seventh District (Amounts in thousands of dollars) Reserve bank credit extended........................................................................ —2,571 Commercial operations through inter-district settlements................... +3*496 Treasury operations........................................................................................... +18,786 Total supply............................................................................................ +19,711 Demand for currency............................ —22,790 Member bank reserve balances............................................................... ' . +34,561 Non-member deposits....................................................................................... +8*312 Unexpended capital funds............................................................................... —372 Total demand.................................................................................. +19,711 Member Bank Credit The table below setting forth condition of licensed re porting member banks, shows slight reductions on August 16 from the aggregates reported July 19 in practically all items. Total loans and investments on the former date were slightly higher than on the corresponding re porting date a year ago—the result of substantially greater investment holdings—and net demand deposits continued well above the level of last year. Time deposits, on the other hand, declined one million in this comparison. A range of 3 to 5 per cent was reported by down-town Chicago banks as the prevailing rate on customers’ com mercial loans during the week ended August IS; for the corresponding week in July, 4 to 5 per cent had been reported. The average rate earned on loans and discounts by down-town banks in Chicago during the calendar month of July was 3.88 per cent, as against 3.85 in June and 4.67 per cent in July 1932. In Detroit, the prevailing rate on customers’ commercial loans during the week ended August 15 was 5 to 6 per cent, unchanged from the preceding month. Dealer sales of commercial paper in the Middle West showed a further expansion oi 3 y> per cent in July and were 78y2 per cent in excess of the limited volume of a year ago; they remained greater than for any previous month since August 1931, but continued almost 70 per cent less than the 1923-32 seasonal average. Under the influence of a fairly strong investment demand for the rather limited supply of paper available, selling rates eased from June. July quotations, therefore, ranged from 1)4 and \y2 per cent for prime short-term obligations to and 2 per cent for less well-known paper or that of longer maturity; most transactions took place within a range of 1y2 to 1 % per cent. A much larger quantity of commercial paper was reported as outstanding in the Middle West on July 31 than for any other reporting date in 1933, although the amount aggregated 2)4 per cent below a year ago and 77 per cent under the 1923-31 average for July. Borrowing was so light during the first half of August that sales in that period aggregated 40 per cent smaller than during the corresponding weeks of the preceding month. On the other hand, demand remained fairly good, causing selling rates to decline until they reached a level on August 15 of 1)4 to iy2 per cent for prime short-term obligations and of 1)4 and 1% per cent for less well-known paper, with the bulk of business being transacted at 1)4 to 1 )4 per cent. After the marked expansion shown in the preceding period, dealer operations in the Chicago bill market were reduced somewhat during the five weeks ended August 19. The bulk of the supply was received from Eastern markets and that, together with a light volume of purchases locally, was sold quickly to local and out-of-town banks. Hold ings declined from the preceding period and were almost negligible in amount on August 19. Rates remained at CONDITION OF LICENSED REPORTING MEMBER BANKS. SEVENTH DISTRICT (Amounts in millions of dollars) Change From Aug. 16 July 19 Aug. 17 1933 1933 1932 Total Loans and Investments............................... $1,581 $-16 $ +14 Loans on Securities.................................................. 422 +1 -154 All Other Loans......................................................... 469 —2 -37 Investments................................................................ 690 —15 +205 Net Demand Deposits............................................ Time Deposits............................................................ 1,174 472 —18 —6 +217 Borrowings from Federal Reserve Bank............ 0 0 -6 Page 2 an even level during the period, ranging from Y% per cent for l-to-45 day maturities to one per cent for those of 180 days. New financing by means of bankers’ acceptances, fol lowing a heavy recession in June, rose sharply during July in the Seventh district to near the relatively high level of May, and was 23 per cent in excess of the 1923-32 seasonal average. The direct discounting of these bills at original banks of acceptance was greater than for any month since May 1932 and purchases were further augmented by a heavy volume of other banks’ acceptances, so that total purchases of this class of investment by accepting banks were in excess of any corresponding period since April 1931 and more than double the 1923-32 average for July. Sales, on the other hand, remained almost negligible, with the result that portfolios attained a much higher level on July 31 than for any previous reporting date on record (January 1923), despite the counteracting influence of a large volume of maturities taking place during the month. Moreover, the liability for outstanding acceptances was greater than at any time since May 1932. New financing by means of bankers’ bills showed a recession of 35 per cent in the first half of August from the corresponding weeks of July, largely due to decreased borrowing by the grain industry. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in July 1933 From June 1933 July 1932 Total value of bills accepted................... + 45.9 + 59.0 Purchases (including own bills discounted) +122.7 +123.9 Sales................................................................ +31.7 +36.5 Holdings*...................................................... + 27.9 +194.5 Liability for outstandings*...................... + 7.3 + 7.8 *At end of month. Security Markets During the early part of July, the Chicago bond market was firm and fairly active. Following the break in stock prices in the third week of the month, however, bond prices trended downward, with the speculative rail and industrial issues leading in the declines. The market firmed somewhat, thereafter, and prices made moderate advances in the first two weeks of August. United States Government obligations were reasonably steady during the period, and moved upward during the second week in August after announcement of allotments for the new August 15 issues. New underwritings during July were extremely limited. Stock prices on the Chicago Exchange, after the break in the middle of July, moved within a narrow range through the first two weeks of August. The average price of twenty leading stocks* amounted to $30.38 on August 15, as compared with $34.23 on the corresponding day in July. ♦Chicago Journal of Commerce. Agricultural Products Seventh district production estimates for grain (except ing wheat), hay, pastures, and some canning crops were VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From July 1933 June 1933 July 1932 $2,476 +16.0 +30.8 Chicago..................................... . . +4.5 -18.2 686 Detroit, Milwaukee, and Indianapolis Total four larger cities.................... 31 smaller centers.......................... Total 35 centers............................. $3,162 412 +13.3 +3.8 +15.7 -14.1 *3,574 +12.1 +11.3 further reduced on August 1, while those for fruits and tobacco were raised moderately. Rainfall in July, though better than in the preceding month, averaged less than 80 per cent of normal in the five states including this district. Harvesting and threshing proceeded without in terruption, but growing crops suffered considerably prior to the moderate rains which fell in the early part of August. Plowing for wheat and rye had begun by the middle of August, but progress has been retarded because of the hard condition of the soil. The number of cattle on feed, as estimated by the Bureau of Agricultural Eco nomics, has increased over a year ago in each of the Seventh district states except Wisconsin, and in the Corn Belt as a whole. Rather serious hog cholera outbreaks were reported in portions of Iowa during August, Grain Marketing The July movement of wheat at primary markets was less than half the five-year average, failing to attain the high level usual for the beginning of the new crop mar keting season. Gains over June were moderate, amount ing to 35 per cent for receipts and 17 per cent for ship ments, in comparison with average increases in recent years of 300 per cent in the former and 110 per cent in the latter. Heavy buying by millers in anticipation of the processing tax was an important factor supporting the rise in prices which reached a peak on July 18. This is confirmed by the fact that, while the U. S. carry-over on July 1 was only slightly above a year ago, and visible supplies continued lower than in 1932 or 1931, merchant mill stocks of wheat, as reported by the Bureau of Census, were considerably above a year ago and much larger than two years ago, largely due to a contrary-to-seasonal in crease between March and June. In the latter part of July, slackening demand released extensive liquidation in the market, and prices fell sharply. Limits on fluctua tions of future prices were later put into effect, but quota tions in the middle of August were off about 25 cents from the July high point. Cash wheat was lower than at the end of June. Feed grains, in contrast to wheat, recorded a heavier than seasonal movement at interior markets during July. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of August 1 condition. (In thousands of bushels unless otherwise specified) Seventh District United States Forecast Final Forecast Final Average 1933 1932 1933 1932 1926-30 2,875,570 Com................... 779,588 1,065,741 2,273,019 2,511,991 Oats....................283,130 523,589 666,745 1,238,231 1,189,693 461,679 589,733 Winter Wheat.. 42,191 46,050 340,355 271,435 Spring Wheat.. 1,915 3,380 159,316 264,604 56.074(a) 157,634 299,950 263,629 Barley................ 34.805(a) 7.145(a) 23,116 40,409 41,564 Rye..................... 5.592(a) 743(a) 694(a) 5,791 6,772 Buckwheat.... 9,913 243(b) 195(b) 7,797 11,787 20,011 Flaxseed............ 357,679 Potatoes (white) 38,491 59,382 292,668 355,438 1.475(c) 78,484 Potatoes (sweet) 1.050(c) 67,083 62,483 Apples 12.712(a) 140,775 146,831 168,773 (total crop).. 14.412(a) 2.278(d) 2.215(d) 45,553 42,443 56,575 Peaches............. 1.012(d) 22,281 22,050 22,921 910(d) Pears.................. 33(e) 30(e) 111 127 91 Cherries*........... 88(a) 1,794 2,447 77(a) 2,204 Grapes*............. 4.277(e) 9,365 10,164 11,107 Dry Beans***.. 2.110(e) 36,620 1,299,154 1,015,512 1,411,697 Tobacco**........ 19,874 72,678 69,794 All Tame Hay* 13,194 14,194 64,910 658(a) 582(a) 8,868 12,187 11,489 Wild Hay*----4.754(a) 7.258(a) 21,489 28,331 Onions............... Canning Crops: 11(f) 11(f) 40 44 Snap Beans*. 168(a) 388 387 184(a) Sweet Corn*. 249(d) 287(d) 1,066 1,199 Tomatoes*... 275,056 230,071 Green Peas**l38.256(g) 112.294(g) *In thousands of tons. **In thousands of pounds. ***In thousands of 100-lb. bags, (a) Five states including the Seventh Federal Reserve District, (b) Iowa and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Illinois, Michi gan, Indiana, and Iowa, (e) Michigan and Wisconsin, (f) Indiana, Michi gan, and Wisconsin, (g) Illinois, Indiana, Michigan, and Wisconsin. Receipts of corn and oats exceeded any July in more than ten years, and corn shipments were heavier than in any month since July 1922. Visible supplies of all feed grains continued to increase in July and early August. Prices of these grains suffered a sharp recession in July along with wheat, but were stimulated somewhat in August by further reduction in estimates for this season’s crops. Movement of Live Stock Hog receipts at public stock yards in the United States in July decreased by an amount somewhat greater than is usual for that month, after having shown increases during the second quarter of 1933 that were counter to the seasonal trend. Furthermore, the seasonal recession in cattle marketings in June, which was less extensive than in other years, was followed in July by an expansion of smaller than usual proportions. Lamb receipts, on the other hand, gained more than is customary for the month, and receipts of calves continued to record a greater than seasonal contraction in volume. All marketings, except lambs, were well in excess of a year ago, and fell short of the 1923-32 average by a considerable margin. The movement to inspected slaughter (inclusive of receipts not passing through public stock yards) differed somewhat in trend from the foregoing, in that the figures showed the number of lambs less than in June but in excess of a year ago, and the volume of each class of animal heavier than in the 1923-32 average for July. Reshipments of cattle and calves to feed lots decreased sharply in July—at variance with the usual trend—and were below a year ago and the 1928-32 average for the month. Reshipments of feeder lambs continued to total below the normal volume at this season, though showing an expansion over June, whereas a decline in this com parison usually takes place. Meat Packing Slaughtering establishments in the United States were considerably more active during July than a year ago. The volume of production exceeded that of last July by 30l/z per cent and was 11 per cent heavier than the 1923 32 seasonal average, though falling 9J4 per cent below June. Moreover, payrolls at the close of the period con tinued to reflect a marked gain over the same month of 1932; a decrease of approximately 3 per cent in hours worked and in wage payments took place from June, but the volume of employment increased 4per cent. Also, the value of sales billed to domestic and foreign customers aggregated 14 J4 per cent more than a year ago and showed a contrary-to-seasonal gain of 7% per cent over the pre ceding month. The general price level of packing-house commodities appears to have advanced over June, despite LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, July 1933...................................... Federally Inspected Slaughter, United States July 1933..................................... June 1933..................................... July 1932 ..................................... Cattle Hogs Lambs and Sheep 214 841 292 83 752 751 614 3,914 4,626 2,802 1,399 1,490 1,384 401 441 324 Calves AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended Months OF Aug. 19 July June July 1933 1933 1933 1932 Native Beef Steers (average)......... ........... $6.10 $6.10 $5.80 $7.95 Fat Cows and Heifers...................... ........... 4.40 4.45 4.45 5.35 Calves.................................................... ........... 6.85 4.70 5.50 5.85 Hogs (bulk of sales).......................... ........... 3.90 4.50 4.50 4.65 Yearling Sheep.................................... ........... 5.60 5.85 6.25 4.65 7.35 7.40 Lambs.................................................... ........... 7.15 5.90 Page 3 easier quotations for many pork and beef cuts, and in creased over last July as well, as sales tonnage data showed a decline of il/2 per cent from a month earlier and increased only 8yZ per cent in comparison with a year ago. However, production continued to outrun cur rent consumption to such an extent that August 1 in ventories of packing-house commodities in the United States totaled 300,181,000 pounds greater than a year ago and 146,519,000 pounds larger than the 1928-32 seasonal average. Prices eased during first half of August. Owing to increased import restrictions in Continental countries and also to uncertainties incident to the rapid fluctuations in quotations and in dollar exchange, total shipments of packing-house commodities for export de clined slightly in July from a month previous. German trade for American lard, which expanded early in the month in anticipation of a further increase in duties, fell off sharply after the marked advance in tariff rates be came effective on July 19. British trade in the commodity was rather good throughout the month. With exception of a fair demand in the United Kingdom for American hams, foreign trade in meats remained exceptionally light, and most sales of both meat and lard were made from stocks already landed. United States inventories of these commodities in foreign markets showed a decided decrease on August 1 over the beginning of July. American lard re mained at a slight premium in Germany, but continued somewhat below Chicago parity in the United Kingdom. British quotations for American hams were slightly above a United States basis. Dairy Products Production of creamery butter in the Seventh Federal Reserve district showed a seasonal contraction of 12 per cent in July from June and was 13J^ per cent less than the 1923-32 average for the month, but exceeded that of a year ago by 4 per cent. Though totaling only y2 per cent less than last July, the sales tonnage fell off 20 per cent from June and recorded a larger recession from the ten-year average than had been evidenced during any previous month of 1933. United States production of the commodity conformed to the Seventh district trend except that it showed an even greater expansion over last year. August 1 inventories of creamery butter in the United States reflected a narrowing of the unusually wide disparity that has prevailed recently between manufacture and current consumption, but were 40,660,000 pounds in excess of the corresponding date of 1932 and 22,410,000 pounds above the 1928-32 seasonal average. Despite a downward tendency since early in the month, July prices averaged higher than those of June. The manufacture of American cheese in Wisconsin de creased 10J-2 per cent during the four weeks ended July 29—or about a customary amount from the preceding period—but was 29J4 per cent larger than last July and one per cent above the 1928-32 average for the month. Distribution of this commodity from primary markets of that state increased 35J4 per cent over June, contrary to the usual tendency, to a level 8x/2 per cent above a year ago and to a point within one per cent of the 1928-32 average, the volume being only 4,200,000 pounds less than current production. Moreover, total inventories of cheese in the United States recorded no more than the usual expansion on August 1 over the beginning of July and remained slightly below seasonal levels. Prices firmed during July. Page 4 Industrial Employment Conditions Seventh district industries increased employment 7 per cent and payrolls 4 per cent from June 15 to July 15— a period generally marked by curtailment, especially in payrolls, due to extensive lay-offs for repairs and in ventories and to the vacations customary at this season. The current rise in payrolls was smaller than in any of the three preceding months but compared with a decline of 5 per cent in the seasonal average for the years 1925-32. Both employment and payrolls in July rose definitely above the volumes of a year ago, the increases amounting to about 8 per cent in the former and 11 per cent in the latter item. This is the first time since 1929 that employ ment and payrolls in Seventh district industries have been larger than in the same month of a year previous. Three manufacturing industries—metals, stone-clayand-glass, and rubber products—increased both employ ment and payrolls during the June-to-July period by more than 10 per cent. Among the other reporting manu facturing industries, increases in employment ranged from 2 per cent for textiles to \iy2 per cent for vehicles; and gains in payrolls from J4 per cent for chemicals to 12 per cent for textiles. None of the major groups showed a decline in either volume of workers or in wage payments, and the manufacturing industries as a whole recorded aggregate increases of 9 and 5 per cent, respectively, in these items. Under the non-manufacturing classification, all groups contributed to the rise in payrolls and all but one to the gain in employment. Merchandising firms showed a negligible loss in number of workers, while raising wage payments about one per cent. The largest percentage gain, 3 per cent, was recorded for employment and pay rolls in the coal mining industry. Total increases for the non-manufacturing classification amounted to less than one-half per cent in employment and 2 per cent in payrolls. Manufacturing Automobile Production and Distribution Activity in the automobile industry was well maintained through July. Passenger car production, numbering 195,019 in the month, totaled only 8 per cent smaller than in June, and was 106 per cent heavier than in July last year when output fell off more than 40 per cent from the EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Change From June 15, 1933 Week of July 15, 1933 Industrial Group REPORT' ING Firms No. Metals and Products1.. Vehicles............................. Textiles and Products. . Food and Products........ Stone, Clay, and Glass. Wood Products............... Chemical Products......... Leather Products........... Rubber Products2........... Paper and Printing........ Total Mfg., 10 Groups. 722 163 142 343 142 267 103 77 Wage Earners No. Earnings (000 Omitted) $ ' Wage Earn ers % 2,528 4,398 444 1,365 156 286 297 309 170 898 +4.3 +16.8 +4.9 +4.7 +5.6 314 134,269 188,893 31,797 71,186 8,130 22,503 13,707 19,539 6,738 41,023 8 +11.4 +12.6 +2.2 +10.6 +4.4 +11.9 +12.0 +14.4 + 13.7 2,281 537,785 10,851 +9.1 +4.9 Merchandising*. Public Utilities.. Coal Mining___ Construction. .. 254 80 17 316 32,042 76,884 2,063 -0.2 8,888 622 2,169 39 160 +0.3 +3.1 +0.5 +0.9 +2.4 +3.0 +1.5 Total Non-Mfg., 4 Groups. 667 119,877 2,990 +0.2 +2.1 Total, 14 Groups. 2,948 657,662 13,841 +7.3 +4.2 *Other than Vehicles. 2 Michigan and Wisconsin. 3 Illinois and Wisconsin. I preceding month. Truck production numbered 38,065 ^ this July, representing a recession of 9 per cent from a month previous and a gain of 164 per cent over a year ago. Distribution of automobiles in the Middle West was smaller in July, following four successive months of ex pansion, but sales at both wholesale and retail totaled considerably larger than in the same month last year, with used car sales following the trend of new cars. Sub stantial gains in stocks during the period brought the number of new cars held at the end of July to one per cent above the low level of a year ago—the first gain to be ^ shown in this comparison since January 1930. The num ber of used cars on hand July 31 totaled 14 per cent heavier than a year previous. The proportion of sales made on the deferred payment plan to total sales of re tail dealers reporting the item, dropped from 48 per cent in June to only 36 per cent in July, the latter ratio com paring with 49 per cent for July 1932. Iron and Steel Products Although the rate of steel ingot output in this district receded gradually from approximately 60 per cent of f capacity in the middle of July to around 52 per cent in the early part of August, the latter rate compared with only 10 per cent at the same time a year ago, with 30 per cent in 1931, and was only a little below that prevail ing in the early part of August 1930. New business re ceived by Chicago district mills during July totaled about 10 per cent heavier than the improved June volume and considerably exceeded that booked in July last year. Pig iron production in Illinois and Indiana expanded more than 30 per cent in the daily average for July over the preceding month and was the largest for any month since * June 1931. Little change has taken place in the price situation during recent weeks. Bookings for steel and malleable castings, in tonnage units, declined 34 and 21 per cent, respectively, from June to July, while shipments and production continued to increase in steel castings and experienced only minor changes in malleable castings. Comparisons with a year ago continued favorable, increases reported by steel cast ing foundries amounting to 181 per cent in orders, 154 per cent in production, and 134 per cent in shipments. |l In malleable casting foundries, the volume of orders was more than three times that of a year ago, while produc tion and shipment gains followed closely the rise in orders. Manufacturers of stoves and furnaces reported con tinued gains in both orders and shipments, the former item increasing 7 per cent and the latter 6 per cent in July over June. Molding-room operations showed an ex pansion of 14 per cent and inventories increased 9 per cent. While production was 108 per cent heavier than in July 1932, inventories remained smaller by 25 per cent. Furniture Gaining 102 per cent over the preceding month, orders booked by furniture manufacturers in this district ex panded during July to a level higher than for any month since March 1931. This extends an almost continuous upward swing since the beginning of April in which month the volume booked was less than half that of the current period. Shipments, too, have gained steadily though less markedly, increases in the last two months having been under 5 per cent. As compared with a year ago, current orders booked were 170 per cent heavier, and shipments 115 per cent. Unfilled orders also were greatly increased during the month, amounting at the close of July to 84 per cent of orders booked during the month—14 points in excess of the volume outstanding a month previous. The rate of operations approximated 52 per cent of capac ity, 7 points above that of June and 18 above July 1932. Shoe Manufacturing, Tanning, Recent gains in the distribution of building materials in this district were fairly well maintained during July. Reports indicate that industrial demand for hardwood lumber was strong, while building lumber was sought largely for repair work, as capital was lacking for resi dential construction. Public works projects had not pro ceeded far enough to stimulate the use of cement mate rially, though deliveries expanded because of the recent price increase. Brick and tile producers reported con siderable improvement over a year ago. LUMBER AND BUILDING MATERIALS TRADE Changes in July 1933 from Previous Months Per Cent Change From June 1933 New Cars Wholesale— Number Sold............ Value........................... Retail— Number Sold............ Value........................... On Hand July 31— Number...................... Value........................... Used Cars Number Sold............ Salable on Hand— Number...................... Value........................... July 1932 Companies Included June 1933 July 1932 -13.0 -4.6 +282.8 +214.9 19 19 13 13 -11.9 -8.8 +91.4 +86.5 66 66 37 37 + 16.7 +14.3 +1.2 -19.8 66 66 37 37 -11.8 +27.1 66 37 +3.6 +8.0 +13.7 -22.1 66 66 37 37 Hides Building Materials, Construction Work Class of Trade MIDWEST DISTRIBUTION OF AUTOMOBILES and Shoe factories in the Seventh district continued to operate throughout July at almost the same high level as in June. Output for the month totaled only 4J4 per cent smaller than in June, was more than twice that of a year ago, and exceeded by 37 per cent average produc tion for this month in the ten years 1923-32. The de cline in July followed three months of gains in the shoe industry that were contrary to normal seasonal trend. In the tanning industry, production and sales declined in comparison with the preceding month but maintained a favorable margin over year-ago figures. Packer green hides moved somewhat more freely in July than in June, but sales of calf and kip skins declined. Increases in price quotations during the month ranged from \y2 to 2J4 cents, and these advances were fairly well maintained during the first half of August. Wholesale Lumber: Sales in Dollars............................... Sales in Board Feet........................ Accounts Outstanding1................. Retail Building Materials: Total Sales in Dollars................... Lumber Sales in Dollars............... Lumber Sales in Board Feet.... Accounts Outstanding1................. July 1933: Per Cent Change From Number of Firms or Yards June 1933 July 1932 +5.1 -3.2 +13.0 +127.3 +103.7 +70.6 14 12 12 -14.5 -17.5 -21.9 +0.1 + 11.0 +5.5 -6.3 -9.2 175 57 92 167 Ratio of Accounts outstanding1 to dollar sales during month Wholesale Trade................................. Retail Trade......................................... July 1933 June 1933 July 1932 185.4 438.1 172.3 378.5 247.0 534.1 lEnd of Month. Page 5 Wholesale lumber dealers recorded a gain in dollar sales over June, in contrast to a five-year average loss for the month of about 12 per cent, and both the value and volume of sales were more than double the year-ago figures. Yard stocks were again reduced and below a year ago at a majority of yards. Collections have almost kept pace with the recent expansion in sales, so that the accounts-todollar sales ratio, though higher, than in the two preced ing months, was much lower than a year ago. Retail yards reversed the upward trend in sales of all materials, in evidence since January, by showing a greater than seasonal loss from the preceding month. Although the volume of lumber sold was somewhat lower than a year ago, higher prices contributed to an increase in dollar value. Stocks were enlarged for the third consecutive month, and several dealers reported an increase over a year ago, though on the average they were smaller in this comparison. Building Construction Building activity in the Seventh Federal Reserve dis trict continued to expand during July. Total contracts awarded amounted to more than 18J4 million dollars, the largest monthly volume since the 22 millions recorded in September 1932, and exceeding by 16 per cent the total of the corresponding month last year. Residential contracts during the month were likewise greater than the June and year-ago figures. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Total Contracts Residential Contracts July 1933......................................................... $18,591,770 $2,520,368 +11% +30% $11,937,955 -30% Change from July 1932.......................... Change from same period 1932............ tiSl $68,786,145 -46% *Data furnished by F. W. Dodge Corporation. The estimated cost of proposed construction in the Seventh district, according to building permits issued in 101 cities, dropped 30 per cent in July from the dollar volume of June, and totaled 37 per cent under the figures of a year ago. The number of permits issued during the month increased 23 per cent over July 1932, but fell off 11 per cent from June. In the monthly comparison, among the five large cities—Chicago, Detroit, Mil waukee, Indianapolis, and Des Moines—the last named registered a gain of 29 per cent in estimated cost and provided an exception to the district trend. Of the same five cities, Detroit recorded a gain over a year ago amount ing to 18 per cent, while Indianapolis increased 65 per cent, and were the only two to differ from the group trend. Merchandising perienced declines, seasonal in nature but for the most part heavier than usual for the period though smaller than last year in the same month. Declines from June amounted to Al/2 per cent in groceries, 24 per cent in hardware, \0J/2 per cent in drugs, 23 per cent in shoes, and 24 per cent in electrical supplies, as against average recessions for the month of 4, 9l/2, 5, 18, and 7 per cent, respectively. As compared with July 1932, however, trends continued favorable: all groups showed increases over that month, the gain in groceries being the first recorded in the yearly comparison since April 1930 and in drugs since September 1929, while the increases in hardware and dry goods sales were heavier than in either of the two preceding months. Despite this improvement, sales for the year to date still failed to equal those of the same period of 1932: grocery sales declined 8 per cent in the comparison, hardware 9 per cent, dry goods 3 per cent, drugs 18 per cent, electrical supplies 4 per cent, and shoes 2 per cent. Stocks, though remaining below 1932, show a narrowing of the spread between the two years. In half the groups, ratios of accounts receivable to sales increased during July, but in all lines they were smaller than a year ago. A somewhat greater than seasonal decline took place during July in Seventh district department store trade. Sales of reporting stores dropped 29 per cent in the ag gregate from the preceding month, as against an average recession in the 1923-32 average for July of 25x/2 per cent. The comparison with July a year ago, however, showed a dollar volume of sales 8J4 per cent in excess of that month. It will be noted in the table that Chicago stores had an exceptionally large gain in the yearly com parison and that Detroit alone of the larger cities ex perienced a decline. Continued gradual expansion is taking place in stocks, and owing to increases shown by Chicago, Indianapolis, and Milwaukee stores over the corresponding month of 1932, the total for the district at the end of July was only 2 per cent smaller in this com parison. Collection conditions show improvement over last year, as evidenced by their ratio to accounts outstanding, which for three consecutive months has been higher in the current period than a year ago. Following four months of expansion—greater than sea sonal in three of them—the retail shoe trade experienced an exceptionally heavy recession in July business as com pared with the preceding month. Sales of reporting dealers and department stores totaled 46 per cent less than in June, whereas the 1926-32 average decline for the period is but 31 per cent. The dollar volume sold was one per cent below that of last July, and sales for the year through July totaled 13 per cent smaller than in the same months of 1932. July trends in wholesale trade conditions of the Seventh district were for the most part downward. The dry goods trade recorded a contrary-to-seasonal gain of 10 per cent over the preceding month, while other reporting groups ex- DEPARTMENT STORE TRADE IN JULY 1933 WHOLESALE TRADE IN JULY 1933 Commodity Groceries.............. Dry Goods........... Shoes..................... Electrical Supplies........... Ratio of Accts. Outstand Per Cent Change From Same Month Last Year Net Sales Stocks Accts. Outstand. Collec tions Net Sales +14.1 +31.3 +90.7 + 1.7 +25.4 -5.7 -13.4 -16.6 -14.7 -18.3 +4.5 -7.6 +ii.i -4.5 -39.3 +13.4 +6.1 +11.8 -11.3 +20.6 109.7 237.4 238.5 251.7 233.8 +30.9 -3.6 +20.0 +9.6 211.1 Page 6 Locality Per Cent Change July 1933 From July 1932 " 1 1 J t Ratio of July Col Per Cent Change Seven Months 1933 lections to From Same Period Accounts Outstanding 1932 June 30 Net Sales Stocks End of Month Net Sales 1933 1932 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. +21.6 -15.9 +9.7 +9.1 +4.9 +11.3 -28.7 +5.2 +6.0 -20.7 -4.4 -25.7 -9.8 -14.3 -13.5 25.4 31.6 36.9 32.4 26.9 22.2 27.6 34.7 31.1 25.8 7th District. +8.5 -2.5 -12.0 29.5 27.0 ing to 1 Similarly, the retail furniture trade showed a larger than usual decline in July, though sales continued to total heavier than in the corresponding month last year. The sales recession of 29 per cent in the monthly comparison, for reporting dealers and department stores, compared with one of 19 per cent in the 1927-32 average for July, while the gain over a year ago amounted to 24 per cent. Chain stores, along with other lines of retail trade, sold a smaller aggregate dollar volume in July than in the pre ceding month, although comparisons with the correspond ing month last year were favorable. Two of the major groups reporting to this bank—grocery and drug chains— had larger sales in July than in June, but a decline in five-and-ten-cent store trade was sufficient to offset these gains as well as those in smaller groups. Practically all reporting lines which, in addition to those mentioned, in clude shoe, cigar, men’s clothing, and musical instrument chains, shared in the increase of 6 per cent shown in total sales over July 1932. 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.) No. of Firms Meat Packing—(U. S.)— Sales (in dollars).................................... 62 Casting Foundries— Shipments: Steel—In Dollars.............................. 13 In Tons................................... 13 Malleable—In Dollars..................... 21 In Tons......................... 21 Stoves and Furnaces— Shipments (in dollars).......................... 10 Furniture— Orders (in dollars)................................. 17 Shipments (in dollars)......................... 17 Flour— Production (in bbls.)........................... 22 Output of Butter by Creameries— Production............................................... 67 Sales......................................................... 69 Wholesale Trade— Net Sales (in dollars): Groceries.............................................. 29 12 Dry Goods........................................... 9 Drugs.................................................... 13 6 Retail Trade—(Dept. Stores)— Net Sales (in dollars): Chicago................................................. 23 5 Indianapolis........................................ 5 Milwaukee........................................... 5 Other Cities........................................ 44 82 Automobile Production—(U. S.) Passenger Cars....................................... Building Construction— Contracts Awarded (in dollars): Residential.......................................... Total..................................................... Iron and Steel— Pig Iron Production:* Illinois and Indiana.......................... United States..................................... Steel Ingot Production—(U. S.)*. . Unfilled Orders U. S. Steel Corp.... July 1933 June 1933 May 1933 Apr. 1933 Mar. 1933 Feb. 1933 July 1932 June 1932 May 1932 Apr. 1932 Mar. 1932 Feb. 1932 60 56 56 48 45 44 52 50 51 52 53 53 21 25 21 36 18 19 21 37 12 13 16 29 10 10 12 22 11 12 10 16 10 11 11 20 10 9 7 12 12 11 11 19 14 14 12 21 14 15 13 23 18 18 17 30 16 28 62 58 54 44 38 35 29 39 48 50 51 42 60 29 30 28 32 26 24 22 19 19 24 20 22 13 14 15 20 24 26 29 33 38 30 32 16 98 121 108 114 111 92 114 120 112 116 116 103 123 106 139 132 135 113 94 87 93 96 85 91 118 106 141 130 140 112 102 95 96 97 93 93 67 46 43 52 32 71 60 39 58 41 63 53 34 54 37 56 38 26 49 28 58 27 23 49 29 51 22 21 49 19 59 35 22 52 25 71 54 29 66 33 66 50 32 64 34 68 70 61 34 67 31 35 72 35 34 67 29 47 41 48 52 40 45 66 66 63 63 57 64 61 74 72 68 59 65 56 65 71 70 57 60 52 45 51 51 44 49 44 40 46 46 38 43 39 51 44 48 38 42 59 78 67 67 56 63 60 86 67 71 60 66 64 89 75 81 67 71 63 54 70 72 61 67 60 61 52 59 67 101 72 111 63 89 52 73 34 48 31 41 32 38 55 60 54 70 41 73 34 vz 32 9 27 8 19 10 15 5 10 5 12 2 6 7 24 10 27 10 36 9 24 8 31 10 26 59 59 96 42 45 43 75 44 31 29 56 40 18 21 41 39 18 18 25 39 21 20 34 39 26 19 24 41 29 21 26 43 30 26 33 46 32 29 36 49 37 32 40 52 40 34 45 53 Page 7 ptHcnn iw — NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION , (By the Federal Reserve Board) INDUSTRIAL production increased further from June to July, contrary to A seasonal tendency, and in recent weeks has continued at a relatively high level. Since the middle of July there have been reductions in wholesale prices of leading raw materials, while prices of many other products have advanced. Index number of industrial production, adjusted for seasonal variation (1923 1925 average = 100). FACTOR i EMPLOY vtENT AND PAYROLLS 100 90 vs. Imployment Payrolls'., r \ V 80 70 NVI 60 \/\ 50 J V Indexes of factory employment and payrolls, without adjustment for seasonal variation (1923-1925 average = 100). PEH CENT 160 -- PER CENT CONSTRUCTION CONTRACTS AWARDED Production and Employment Volume of industrial output, as measured by the Board's seasonally adjusted index, advanced from 91 per cent of the 1923-1925 average in June to 98 per cent in July, which compares with 60 per cent in March. The principal increase in July was at steel plants where activity advanced from 46 per cent of capacity 4 to 59 per cent. Production in the lumber and coal industries was also in larger volume, and daily average output of automobiles showed none of the usual seasonal decline. Output at shoe factories and woolen mills continued at an unusually high rate, while consumption of cotton by domestic mills decreased somewhat. Ciga rette production declined sharply from the high level of May and June. Since the middle of July a decrease has been reported in the output of steel. Working forces and payrolls at factories increased considerably between the middle of June and the middle of July. As in other recent months, the largest increases were generally at establishments fabricating raw materials into semi finished products. Value of construction contracts awarded, as reported by the F. W. Dodge Cor poration, showed a decline in July, followed by an increase in the first half of " August. Total awards during the six weeks were in about the same volume as in the preceding six weeks and in larger volume than in earlier periods this year. Department of Agriculture estimates as of August 1 indicate harvests generally smaller than a year ago. The cotton crop is forecast at 12,314,000 bales, a reduc tion of 700,000 bales from last season, reflecting curtailment in acreage as a part of the program of the Agricultural Adjustment Administration, offset in large part by an unusually high yield per acre. The wheat crop is estimated at 500,000,000 bushels, a reduction of 225,000,000 bushels from last year’s small harvest, and feed crops are expected to be unusually small. Distribution Freight traffic increased further from June to July by a substantial amount, but in recent weeks shipments, particularly of miscellaneous freight and grains, have been somewhat smaller. Department store sales declined in July by about the usual seasonal amount; they were larger than a year ago, however, and trade reports for the first half of August indicate an increase in sales. Wholesale Prices .Residential V\/\J Indexes based on three-month moving averages of F. W. Dodge data for 37 Eastern states, adjusted for seasonal variation (1923-1925 average — 100;. BILLIONS OF DOLLARS BILLIONS OF DOLLARS MEMBER B/LNK CREDIT Investments/1 V L__ __________ 9 8 7 _vt—>-__ All Other Loans 1 ---------Loans on Securities 8 5 . 4 3 Wednesday figures for reporting member banks in 90 cities. Latest figures are for Wednesday, August 16, 1933. Page 8 Wholesale prices of commodities increased further during the first three weeks of July and, according to the index of the Bureau of Labor Statistics, there has been little change in their general level since that time. Prices of grains, cotton, and many imported raw materials, however, were considerably lower in the third week of August than in the middle of July, while prices of textiles were higher, reflecting in part the application of the processing tax on cotton. Prices of leather and coal also advanced during this period. ' Foreign Exchange In the exchange market the value of the dollar in terms of the French franc advanced from a low of 69 per cent of its gold parity on July 18 to 75 per cent at the beginning of August, and since that time has fluctuated between 73 and 75 per cent. Bank Credit Net demand deposits of weekly reporting member banks in 90 cities declined between the middle of July and the middle of August, owing in large part to further withdrawals of bankers’ balances from banks in New York City and else where. The banks’ loans decreased by $71,000,000 during the period, reflecting chiefly a reduction in loans to brokers and dealers in securities. Their holdings of United States Government securities, after declining between July 19 and August 9, increased during the week ending August 16 in connection with Treasury financing at that time. Total reserves of all member banks increased by $81,000,000 during the four-week period ending August 16, reflecting chiefly the purchase of $42,000,000 of United States Government securities by the reserve banks and a return of $23,000,000 of currency from circulation. The growth in member bank reserves, occurring at a time when reserve requirements were being reduced in consequence of a decline in their deposits, brought their excess reserves to a level above $550,000,000. Money rates in the open market generally continued at low levels. * ~i
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