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Business Conditions R Seventh Federal eserve DISTRICT MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 19, No. 8 July 28, 1936 GENERAL SUMMARY year ago. The June movement of grains was much ITH a relatively well sustained level of heavier than in 1935 and that of corn was above activity still operative in the Seventh district, average for June. High temperatures and lack of June closed a half year that in volume of business sufficient rainfall have adversely affected the prin was well above the corresponding six months of cipal crops of the Seventh district since July 1 when 1935. With few exceptions, both the manufacture estimates indicated some decline in production from and sale of goods shared in the substantial gains the 1928-32 average but larger crops than in the over a year ago. drought year 1934. Some reduction in automobile production took place in June, but output was high for the month In the distribution of commodities at wholesale, data for the first half of 1936 show substantial gains and more cars were produced in the first six months over the same period of 1935 in hardware and elec this year than for any sjmilar period since 1929. trical supply sales, while drugs recorded a moderate Business in the steel industry was well maintained increase and grocery sales declined slightly. Gro through the month, and steel and malleable casting cery, hardware, and drug sales expanded in June foundries were active. Orders booked and shipments over May. Only a small recession took place in by furniture manufacturers were above average for department store sales during June, the result of a June. Building construction, though recording a counter-seasonal increase shown in the aggregate decline in the aggregate from May, continued much sales of Chicago stores, and a considerable gain was heavier than in other recent years, and residential recorded over last June. The retail shoe and fur building expanded further. The movement of build niture trades declined in June, in accordance with ing materials likewise continued to increase. The seasonal trend, but both had much larger sales than number of workers employed in Seventh district industries showed only a small gain in the total for a year ago. June. Total loans and investments of reporting member banks in the district showed another substantial rise The production and distribution of packing-house between June 17 and the middle of July, the gain in commodities rose in June and were considerably the aggregate being due principally to an increase in larger than in the month last year, and the manu commercial loans and to expanded holdings of U. S. facture and sale of Wisconsin cheese followed a Government obligations. Demand deposits in these similar trend. Because of limited pasturage, butter banks increased during the period, while time de production failed to expand in June, though sales posits declined. increased, and both items showed declines from a W * Credit and Finance FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF 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 Com bined................................................................... •Number of Points. July 15, 1936 $ 291.6 0.0 0.4 289.1 1,793.5 1,130.5 920.3 87.4% Change From June 17, July 17, 1935 1936 $ -66.7 $ —32.1 —0.1 0 -0.2 0 —32.1 —66.6 +117.0 +420.6 +56.9 +231.4 +124.9 +30.5 +2.1* +6.4* Balances of member banks with the Federal Reserve Bank of Chicago increased between June 17 and July 15, 1936, accounting for 39 millions of the 57 million dollar increase in total deposits at this bank. Federal reserve notes in circulation rose 3()J 2 million dollars. / During the first half of the period, soldiers’ bonus payments reduced Treasury deposits despite receipts from June 15 financing, and member bank balances rose substantially as did also total reserve notes out standing. During the latter part of the period, cur- rency demand declined but reserve balances were re duced somewhat by sale of Treasury securities locally. While down-town Chicago and Detroit banks re port that commercial loan rates remain unchanged, the average rate earned on commercial loans by cer tain of these Chicago banks during June 1936 was 2.70 per cent, a decline from the average of 2.80 per cent for May and from that of 3.01 per cent for June 1935. June sales of commercial paper, reported by dealers in this district, were about the same as for May and while 20 per cent above June 1935, they were 47 per cent below the 1926-35 average for June. The first half of July showed a substantial increase over the same period of June, with a continued strong demand and rates unchanged, the bulk of sales being at yA of 1 per cent. The total of bankers’ acceptances created in this district in June 1936 declined more than sea sonally from the May figure, but was about equal to June 1935; the current total is 70 per cent below the 1926-35 average for June. The first half of July, how ever, showed an increase of about 60 per cent over the same period of June. For the period June 18 to July 15, 1936, purchases and sales reported by bill dealers in this district were double the preceding period. Nominal rates, increased by 1/16 of 1 per cent on July 18, were on that date 1/4 per cent bid, 3/16 per cent asked, for 30-, 60-, and 90-day maturities. Bond dealers in this district report a strong market during the period June 16 to July 16, with price levels well maintained. The volume of offerings in June, principally corporate refunding operations, exceeded May and trebled the figure for June 1935. Stocks quoted on the Chicago Stock Exchange made a general advance in price between June 16 and July 16, the Chicago Journal of Commerce average of twenty lead ing stocks rising from $52.38 to $54.89. This increase occurred in the last seven days of the period, and was accompanied by greater activity, the volume of trading on July 15 reaching the highest point since April 28. Deposits and Earning Assets, All Member Banks in U. S. The accompanying chart shows that the movement of earning assets (total loans and investments) of all member banks in the United States has diverged con siderably from the trend of total deposits (inclusive of inter-bank) in the period from December 1928 to March 1936. Earning assets declined by approxi mately 11 billion dollars between December 1928 and June 1933, and subsequently showed a gain of only CONDITION OP LICENSED REPORTING MEMBER BANES SEVENTH DISTRICT (Amounts in millions of dollars) Total loans and investments............................... Total loans on securities............................ ’ ’. To brokers and dealers: In New York........................................... Outside New York........................... .. To others (except banks)............. Acceptances and commercial paper bought.. Loans on real estate....................................... Loans to banks........................................ Other loans.......................................................... U. S. Government direct obligations .. . Obligations fully guaranteed by U. S. Government................................................ Other securities................................... . Demand deposits—adjusted............................ Time deposits..................................... Borrowings Page 2 July 15, 1930 $3,015 263 Change From June 17, July 17, 1036 1935 $ +99 t +482 —9 +11 4 56 203 30 68 9 472 1,601 —1 -7 —1 —1 0 —1 +41 +50 +3 +24 —16 —6 +2 —3 +123 +299 150 422 +4 +9 —11 +07 2,232 801 +72 —45 +287 +58 0 0 0 TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANE OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and items drawn on own bank) June, 1936 Total country and city check clearings: Pieces...................................................... 11,308,219 Amount.................................................. 82,090,469,267 Daily average clearings: Total items cleared— Pieces.................................................. 434,931 Amount............................................... $80,402,666 Items drawn on Chicago— Pieces.................................................. 101,056 Amount............................................... $41,916,000 Items drawn on Detroit— Pieces.................................................. 20,023 Amount............................................... $10,391,324 June, 1935 9,657,814 $1,638,517,885 386,313 $65,540,715 90,482 $32,878,520 19,419 $8,697,766 billions to March 1936. On the other hand, de.tasits fell from 39 billion dollars in December 1928 to 26*4 billions in June 1933, with the withdrawal of deposits proceeding at a more rapid rate than the liquidation of earning assets in the period from June 1931 to September 1931. Between June 1933 and March 1936, deposits were increased by about 12 bil lion dollars. Total loans and discounts of member banks in the •* United States have shown an almost uninterrupted decline since October 1929. From a high point of slightly more than 26 billion dollars on that date they had fallen to a level only slightly in excess of 11)4 billion dollars by November 1935, and have since re covered only )4 billion dollars of this loss. Loans on bonds and stocks declined by approximately 6 -Mlinn dollars between March 1930 and March 1936Uand those on real estate were reduced by more than billion dollars in the entire period December 1928 to March 1936. Security holdings rose from 10)4 billion dollars in December 1928 to more than 18 billions in March 1936, largely as a consequence of increased investment in Federal and local government obligations. Corporate security holdings declined from 4)4 billion dollars in December 1928 to less than 4)4 billions in October 1929; from this point they increased to a little over 5 billion dollars in December 1930, but declined later to approximately 3 billion dollars in March 1934. These securities showed a subsequent accumulation of only J4 billion dollars to March 1936. Member bank holdings of United States Government bonds—-comprised largely of maturities in excess of five years—had increased from 3 billion dollars in December 1928 to more than 4)4 billions by June 1934 but had declined to 3% billion dollars by March 1936, this recession being due largely to the retirement of National bank notes from circulation. Moreover, the decrease was more than offset by an influx of more than 1)4 billion dollars of indirect (fully guaranteed) A obligations of the United States Government into bank portfolios after the beginning of 1934. Following a VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Pei^^tt or Chicago......................... Detroit........................ Milwaukee............... Indianapolis..................... June 1936 Total four larger cities.............. +16.6 +6.8 37 smaller cities........................ Total 41 centers.. Inch^He OR Decrease From May 1936 June 1935 +19.0 +28.2 $5,494 +28 4 +26 +14.9 +27.7 decline from 1J4 billion dollars in December 1928 to less than % billion in June 1930, holdings of United * States Treasury notes, certificates, and bills, which were comprised principally of maturities within a pe riod of five years, had risen to 6% billion dollars by March 1936. Member bank holdings of State, County, and Mu nicipal government obligations increased by about one billion dollars between December 1928 and March 1936. Agricultural Products July 1 estimates of the United States Bureau of Agricultural Economics indicate that the 1936 pro duction of principal crops in the Seventh district and the United States will fall somewhat below the 1928 32 average but exceed that of 1934 by a wide margin. Subsequent to July 1, these crops have been adversely affected by the extremely high temperatures which prevailed in the first half of July and by a further deficiency in precipitation. Rainfall in the Seventh district averaged only 28 per cent of normal from * July 1 to July 22, and ranged from 12 per cent in Iowa, to 21 per cent in Wisconsin, 29 per cent in Michigan, 32 per cent in Indiana, and 48 per cent in Illinois. Owing to the heat and drought, corn has deteriorated over the greater portion of the district. Considerable rolling and some firing has taken place in every State of this area, expected yields of late corn have declined rather sharply, and the entire crop ranges from fair to poor in condition. Indications on July 22, therefore, pointed to a Seventh district corn crop of 200 million « bushels below the forecasts of three weeks earlier. Normal temperatures and good rains are needed to save a bulk of the production in many of the driest sections. Some of the crop has reached a stage be yond recovery. Soybeans, likewise, are damaged, and garden truck has deteriorated. Pastures and second crops of hay are generally poor. Having largely escaped the most serious part of the drought, winter wheat has the prospect of fair to good yields, except in Wisconsin where it ranges from fair to poor. The harvest of this crop is well under way. Considerable P CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of July 1 condition (In thousands of bushels unless otherwise specified) Seventh District Forecast Final 1936 Corn......................... 904,964 Oats......................... 366,294 Winter Wheat........ 56,055 Spring Wheat......... 2,292 Barley..................... 38.905(a) Rye.......................... 6.780(a) Flaxseed................. 292(b) Potatoes (white). . 48,586 Potatoes (sweet).. 1.215(e) Sugar Beets1.......... 750(d) Apples (total crop). 10.700(a) Peaches................... 1.345(e) Pears....................... 1.089(e) Cherries1................. 31(f) Grapes1................... 59(a) Beans (dry edible)2 3.367(f) Tobacco8................. 17,428 All Tame Hay1 ... 15,215 Wild Hay1.............. 407(a) Canning Crops: Snap Beans1....... 18(h) Green Peas1___ 98(1) Forecast United States Final Average 1935 1936 1935 1928-32 880,218 2,244,834 2,291,629 2,553,424 453,391 805,420 1,196,668 1,215,102 57,807 512,085 464,203 622,252 2,134 126,314 159,241 241,312 47.713(a) 164,866 282,226 281,237 12,911 (a) 58,928 26,380 38,212 336(b) 9,468 14,123 15,996 57,484 315,359 387,678 372,115 1.280(c) 63,806 83,198 66,368 686(d) 8,819 7,908 8,118 23.303(a) 103,214 167,283 101,333 6.232(e) 41,260 52,808 56,451 1.611(e) 23,264 22,035 23,146 33(f) 106(g) 120(g) 108(g) 73(a) 1,776 2,455 2,200 4.828(f) 11,685 13,799 11,858 15,835 1,113,764 1,296,810 1,427,174 17,450 76,146 65,743 69,633 542(a) 7,545 11,338 10,179 23(h) 103 (i) 73 223 81 265 73 182 1In thousands of tons. 2In thousands of 100-lb. bags. 8In thousands of pounds. (a) Five states including Seventh Federal Reserve district, (b) Iowa, Wisconsin, and Michigan, (c) Illinois, Indiana, and Iowa, (d) Michigan, (e) Illinois, Michigan, Indiana, and Iowa, (f) Michigan and Wisconsin, (g) Twelve states only, (h) Michigan, Wisconsin, and Indiana, (i) Wisconsin, Illinois, Michigan, and Indiana. damage from grasshoppers and chinch-bugs is reported in the Illinois crops. Throughout the entire corn and wheat region, weather and crop conditions on July 22 closely par alleled those of the Seventh Federal Reserve district. Moderate to heavy rains had been received in Mon tana and in some parts of North Dakota, but elsewhere precipitation was generally light. Except for a tem porary moderation from July 11 to 14 in the North west and in a few other sections, temperatures were extremely high over wide areas. Spring wheat and late varieties of small grains have deteriorated fur ther. Also, drought conditions throughout the belt have reduced the probable yield of corn in the United States by 300 to 350 million bushels as compared with July 1. The second crops of hay are very poor, almost generally, and pastures are brown or badly burned over a large territory. Grasshopper damage to crops is serious in parts of Oklahoma and Kansas, and has attained some degree of importance in Missouri and Nebraska. Grain Marketing Receipts of wheat at interior primary markets in the United States were larger in June than in any previous month since October 1935, but reshipments decreased. Imports of the commodity nearly doubled those of May and were much greater than a year ago. After declining 3% per cent in June from a month earlier, prices both at home and abroad reacted sharply in July to a smaller total supply in the United States than a year ago, the probability of a reduction in the world crop from 1935, and the smallest world carry-over in nine years. Quotations of No. 2 red winter wheat at Chicago for immediate delivery had risen from 88% and 91% cents on June 13 to $1.10% and $1.14 by July 17, which level was above that of any date since early March this year. The June movement of corn at these centers ex ceeded that of any corresponding period since August 1934. Prices rose slightly in June, and showed a sharp advance in July when it became evident that heavier farm stocks in the United States on July 1, 1936, as compared with a year ago, were being fully offset by a decline in prospective yields in the corn belt. Receipts of oats rose in June, and reshipments showed less than a seasonal decline from May. Fol lowing a small advance in June, prices of this grain rose sharply in the first half of July, when it was shown that the excess carry-over as compared with a year ago was being more than offset by lessened pro duction in 1936. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES June 1936 da Wheat: Receipts... Shipments Corn: Receipts... Shipments. Oats: Receipts... Shipments Thousands of Bushels) Per Cent Change From May June 1936 1935 1926-35 Av. . . 17,041 12,198 +54.1 —9.5 +71.0 +15.4 —20.8 —30.0 . . 25,062 14,282 +57.4 +24.5 +175.7 +134.4 +39.1 +15.5 . . 6,446 5,517 +9.5 —37.1 +226.2 +78.5 —10.2 —21.6 Movement of Livestock Cattle, calf, and hog marketings in the United States increased counter-seasonally in June over a month earlier, largely owing to prevalence of drought and partially because of a larger number of animals on Page 3 farms this year than last. Lamb marketings declined less than is usual from May. Receipts of cattle and calves were much greater than a year ago and over 10 per cent in excess of the 1926-35 June average. Hog receipts were sharply higher than last June but remained considerably below average; those of lambs decreased in both comparisons. In some instances, the movement to inspected slaughter—inclusive of animals that did not pass through public stockyards—deviated from the trend of market receipts: the supply of lambs gained over May and was slightly above the 1926-35 average for the month, and cattle for slaughter showed a smaller expansion over May than did current re ceipts. A greater number of cattle moved to feed lots dur ing June than a month earlier; reshipments of feeder lambs and calves declined. The feeder lamb move ment was under the 1931-35 June average but that of both cattle and calves to feed lots exceeded it by a considerable margin. In the first half of July, cattle and hog marketings continued considerably above the corresponding period of 1935. Meat Packing The production of packing-house commodities at inspected slaughtering establishments in the United States rose 10 per cent in June over May to a level above any other month this year since January, and was not only 40j4 per cent greater than the record low volume of a year ago but within 5y2 per cent of the 1926-35 June average. The sales tonnage expanded counter-seasonally by 9J4 per cent over May, being slightly larger than current production, 29 per cent greater than last June, and only 3 per cent below average. A decline in prices of beef, Iamb, and lard as compared with a month earlier offset an advance in pork quotations. Dollar sales billed to domestic and foreign customers increased 6 per cent in June over May; they were 10 per cent above a year ago and slightly exceeded the 1926-35 June average. In creased activity was reflected in payrolls at the close of June, which showed gains over May of 3>4 per cent in number of employes, 7 per cent in hours worked, and 9 per cent in wage payments; moreover, somewhat larger increases were recorded over a year earlier than had been evidenced in the preceding pe riod. Though only slightly under a year ago, inven tories of packing-house commodities in the United States showed more than a normal reduction on July 1 from the beginning of June and were one-third smaller than the 1931-35 average for the date. Shipments for export increased in June over May, owing largely to greater forwardings of lard and hams LIVESTOCK SLAUGHTER (In thousands) Yards in Seventh District, June 1936.......................................... ............ Federally Inspected Slaughter, United States: June 1936.......................................... ............ May 1936........................................... June 1935........................................... Cattle 223 853 1,309 1,213 1,421 517 503 439 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Week Ended Months July 18, June May 1936 1936 1936 Native Beef Steers (average)........................ $ 7.85 1 7.85 $ 7.95 Fat Cows and Heifers......................... .......... 6.25 8.65 6.90 Calves.................................................... 8.50 8.75 Hogs (bulk of sales)............................ 9.90 9.55 Lambs.................................................... 11.35 10.50 Page 4 Dairy Products A lack of seasonable pasturage resulted in Seventh district creamery butter production continuing at the May level during June. In failing thus to record the customary expansion over a month earlier, manufac ture of the commodity totaled 20 per cent below a year ago and 16 per cent under the 1926-35 June average. On the other hand, the sales tonnage decreased only 9y2 per cent from the average and 6 per cent from last June, having expanded 11 per cent over May. m Production of creamery butter in the United States practically equaled the 1926-35 average June volume and was heavier than in May but somewhat lighter than a year ago. Inventories of the commodity in the United States increased substantially but less than seasonally on July 1 over the beginning of June and were 16 per cent below the 1931-35 average for the date and 22y2 per cent less than on July 1 last year. Prices advanced approximately 10 per cent in June over May and, coincident with a decline in production, rose further in the first half of July. * The manufacture of American cheese in Wisconsin continued in June to show more than a seasonal ex pansion, being 50 per cent heavier than in May, 14 per cent greater than in the corresponding period of 1935, and 6 per cent above the 1926-35 average for the month. Distribution of the commodity from pri mary markets of that State increased 28 per cent over May and was not only one-third greater than a year EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Groups Report of June 15, 1936 Change From May 15, 1936 Wage Earn Earn ing Firms ings Wage Earn ers (000 No. Omitted) ( ers No. Earn ings % % Durable Goods: 1,484 303 258 427 2,472 380,280 348,366 24,074 40,460 793,180 9,811 10,750 640 783 21,884 +1.6 —1.3 +5.0 +2.4 +0.5 +1.3 —3.1 +9.3 +0.2 +0.0 327 717 227 136 33 636 2,076 61,178 99,909 29,922 25,418 13,477 70,117 300,021 1,061 2,308 768 475 334 1,804 6,750 —1.4 +6.6 +0.2 +0.3 —1.4 —0.1 +1.8 +1.9 +5.1 —0.6 +5.8 -2.9 —1.0 +1.9 Total Mfg., 10 Groups.............. 4,548 1,093,201 28,634 +0.8 —0.0 Merchandising2.......................... Public Utilities.......................... Coal Mining................................ Construction............................... 2,445 157 25 326 108,392 88,182 4,111 13,763 2,224 2,821 84 319 +0.4 +0.0 -18.1 +10.1 +1.1 +3.0 —20.9 +10.5 Stone, Clay, and Glass....... Wood Products...................... Non-Durable Goods: Lambs and Hogs Sheep Calves 522 182 89 2,759 2,579 1,828 to the United Kingdom. Under the quota system larger shipments of hams are permitted during the summer months. Demand in that country was fair for * both United States hams and lard. Trade with Porto Rico gained. Continental European demand remained negligible. British quotations for United States lard were one to two and one-half cents under Chicago parity, and prices of hams were not only erratic but also below replacement costs. Cuban quotations for United States fats were slightly above Chicago parity. Imports of packing-house commodities into the United States recorded some expansion during June. op June 1935 (10.40 7.75 8.20 9.35 8.70 Textiles and Products.......... Food and Products............... Chemical Products............... Leather Products.................. Rubber Products................... Paper and Printing................ Total Non-Mfg., 4 Groups....... 2,953 214,448 5,448 +0.6 +2.2 Total, 14 Groups........................ 7,501 1,307,049 34,082 +0.8 +0.3 1 Other than Vehicles. Illinois, Indiana, and Wisconsin. earlier but one-fourth larger than average. Total in« ventories of cheese in the United States accumulated less than seasonally on July 1 over the beginning of June, and their excess over the 1931-35 average °was reduced to 8per cent. Prices rose 12*4 per cent in June over a month earlier and with a decline in manufacture showed further strength during the first half of July. Industrial Employment Conditions Manufacturing industries in the Seventh district * registered a one per cent increase in volume of em ployment from May to June but showed practically no change in aggregate weekly payrolls. Classified according to durable and non-durable goods industries, the former recorded a less favorable trend than the latter, payrolls decreasing one-half per cent and em ployment increasing by a similar small percentage. A recession in the vehicles group, reflecting largely con ditions in the automobile industry, was responsible for this trend, counteracting as it did gains of moderate » proportions in the other groups falling within this type of industries. For the non-durable products, on the other hand, increases of 2 per cent each took place in both employment and wage payments, the food and leather products groups contributing the greater share of this expansion. The rubber and paper and printing industries showed a contraction in employment and payroll volumes for June, which partly offset the gains recorded in these groups a month earlier. The non-manufacturing industries—comprising mer chandising, public utilities, coal mining, and construc* tion—showed increases in all groups except coal min ing. In this latter group, a recession of approximately 20 per cent in both employment and payrolls was largely seasonal. The construction industries continued to show expansion, the number of men and wage pay ments rising approximately 10 per cent each. The combined non-manufacturing groups registered about the same percentage gain in employment as did the manufacturing industries, but recorded a 2 per cent rise in payrolls as compared with practically no change p in the latter groups. Manufacturing Automobile Production and Distribution A comparatively well sustained demand for automo biles in June caused production to record only a small decline from the heavy May volume and brought out put for the first half of 1936 to a level higher than for any corresponding period since the peak year of 1929. Passenger vehicles produced in June numbered 376,641 and truck output 77,846, representing a re cession of 2 per cent in the former and an increase of. 4 per cent in the latter from the May volume, and gains of 28 and 25 per cent over a year ago. Pro duction in the first six months of this year totaled 2,045,894 for passenger cars and 444,514 for trucks, as compared with 1,847,427 for the former and 370,828 for the latter in the same period of 1935. The number of new automobiles sold in the first half of 1936 followed closely the trend of production, sales by reporting dealers in this district being substan tially larger than in the first six months last year, al though the volume sold through wholesale distributors gained only slightly; used-car sales likewise have been much heavier this year than last. Stocks of both new and used cars have averaged considerably higher in 1936 than 1935. Data for June show a moderate de cline from May in sales of new cars, but those of used cars gained. Some further decrease took place during the month in stocks of new and used cars. Iron and Steel Products Demand for steel from Chicago district mills was heavy during June, in part reflecting purchases in anticipation of the price advances which took effect the first of July, although much of the buying was for immediate needs as well as for future require ments. As in the preceding month, the railroads, carbuilders, and the construction industry were prominent in the volume of new business, with demand from the automotive industry showing a seasonal decline. Because of the heavy sales, shipments and operations were well sustained in June; output of steel ingots averaged 74 per cent of capacity in the third week of the month, although by the middle of July it had receded to 70 per cent, mill production being affected by the severe heat wave prevalent at that time. Pig iron production in the Illinois and Indiana district was a very little higher in the daily average for June than a month previous and continued to exceed considerably the corresponding output of the preceding five years. The scrap iron and steel market showed some strength ening around the first of July, but was only moderately active. Orders received at Seventh district foundries for steel castings advanced sharply in June, amounting to more than twice the tonnage of the preceding month MIDWEST DISTRIBUTION OF AUTOMOBILES 0 Mat 1636 P First Half 1936 Per Cent Change Companies From Included 1935 First Half 1935 June 1936 Per Cent Change From New Cars: Wholesale— Number Sold.................. Value................................. Retail— Number Sold.................. Value................................. On Hand End of Month— Number............................ Value................................. Used Cars: Number Sold.................. Salable on Hand— Number.......................... Value................................. June —7.7 —8.1 +19.9 +18.0 +0.3 +2.3 15 15 —6.7 —8.9 +38.0 +46.6 +25.8 +37.3 30 30 —8.6 —11.6 +33.1 +28.4 +80.2* +74.4* 30 30 +4.8 +66.8 +35.8 +7.4 +14.6 +32.5* +32.8* 30 30 Class of Trade Wholesale Lumber: Sales in Dollars............... Sales in Board Feet........... Accounts Outstanding!........ Retail Building Materials: June 1936: Per Cent Change From Mat 1936 June 1935 +16.8 +20.8 +6.5 +37.3 +34.1 +31.6 +1.7 +4.7 Number of Firms or Yards +24.9 +31.5 +16.6 +14.3 30 —15.8 —14.4 lumber and building materials trade •Average End of Month. Lumber Sales in Dollars___ Lumber Sales in Board Feet Accounts Outstanding!... +5.5 +3.3 to Wholesale Trade.................... Retail Trade......................... Ratio Total June 1936 139 4 245.6 6 161 52 63 153 of Accounts Outstanding! Dollar Sales During Month Mat 1936 153.0 242.7 June 1935 145.6 267.1 *End of Month. Page 5 and to over four times that booked last year in June. Shipments and production also expanded; the former continued the steady rise that has been in effect since last December and the latter resumed the upward trend which had been interrupted a month previous. All items were heavier than at this time a year ago, the favorable margins in this comparison exceeding any recorded within the past two years. One plant which had been closed since August 1934, resumed operations this June and of the other reporting plants, practically all contributed to the current gains over both a month and a year previous. At malleable casting foundries, also, increases were recorded in the volume of orders booked and tonnage shipped, but the gains were small and production was curtailed slightly for the third con secutive month. Gains over a year ago at these found ries likewise were considerably smaller than at steel casting plants. In the manufacture of stoves and furnaces, orders accepted and molding-room operations declined ap preciably from May to June, but shipments were maintained at a level within 3 per cent of the preceding month’s volume. Both shipments and orders were heavier than a year ago by considerable margins, while molding-room operations were lower in this compari son for the first time since last December. Inventories increased 15 per cent during the month and were 42 per cent larger than at the close of June 1935. Furniture Orders booked during June by Seventh district fur niture manufacturers dropped off less than is usual, the decline from May of 13 per cent comparing with one of 20 per cent in the average for the period. Shipments showed a contra-seasonal rise of 5 per cent in June over May. The favorable trends recorded in these two items brought them well above the average volumes for May. A somewhat heavier amount of shipments than new orders and a moderate volume of cancellations effected a reduction of 7 per cent in unfilled orders on hand at the close of June from a month previous. All items continued to maintain wide margins over the corresponding month a year ago, the gains aggregating 38 per cent, 59 per cent, and 23 per cent in orders, shipments, and unfilled orders, respec tively. In line with the heavier shipments in June, operations were advanced from 66 per cent of capacity in May to 73 per cent in the current period, the latter rate being 15 points higher than in June 1935. Building Materials, Construction Work Distribution of lumber by wholesale and manufac turing concerns showed an expansion in June that was considerably more marked than is customary at this season. The movement of lumber from retail yards was about 5 per cent larger in June than in the pre ceding month when a sharp acceleration in sales took WHOLESALE TRADE IN JUNE 1936 Per Cent Change From Same Month Last Year place. Both the wholesale and retail trades were con siderably more active this June than in the same ^ moi th a year ago. Outstanding accounts also were much heavier than last year but their ratio to total dollar sales was somewhat lower. Cement shipments, which in May reached a volume that was the heaviest for that month in any year since 1931, registered fur ther seasonal expansion in June. Brick deliveries like wise continued to increase and were substantially larger than a year ago, although they are still much below normal volume. Wholesale prices of building materials in general are about one per cent higher than at the same time in 1935. » Building Construction Although the aggregate value of contracts awarded in the Seventh district declined somewhat in June from May, owing largely to a smaller volume of building other than residential in Illinois, it was heavier than in the corresponding month of any year since 1930, and residential building gained for the fourth con secutive month. The latter amounted to 30 per cent of total building, which ratio is the highest since last June. ^ BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Total Contracts Residential Contracts June 1936.......................................................................... Change from May 1936.............................................. Change from June 1935............................................... First six months of 1936................................................ Change from same period 1935................................ $39,420,853 -5.3% +70.8% $220,570,228 +87.7% $11,802,687 +17% +53 2% $48,132,681 +105.9% *Data furnished by F. W. Dodge Corporation. Building permits issued in 98 cities of the Seventh district increased 13 per cent during June in total esti mated cost and 7 per cent in number. As compared with June 1935, gains of 124 and 58 per cent, respec tively, were shown. The aggregates for smaller cities in Illinois and Michigan recorded declines in estimated cost from a month previous, as did figures for Des Moines, and a small decrease was shown from last year in value of permits in the smaller cities of Iowa. Merchandising Sales made during the first half of 1936 by report ing wholesale hardware and electrical supply firms in the Seventh district exceeded by substantial margins—16 and 25 per cent, respectively—the aggregates for the corresponding six months last year. Drugs recorded only a 5 per cent gain in business over the first half of 1935, while grocery sales were IJ2 per DEPARTMENT STORE TRADE IN JUNE 1936 Per Cent Change June 1936 From June 1935 Locality Ratio of Accounts Net Sales Outstanding Commodity Col Nit Sales Groceries... Hardware.. Drugs......... Electrical Supplies.. Stocks Accounts Outstanding lections —0.2 +16.1 +2.8 —10.6 +8.8 -3.9 +3.3 +27.6 +11.0 84.4 171.2 159.5 Chicago..................... Detroit...................... Milwaukee................ Other Cities............. +18.9 +46.1 +40.1 +13.0 +41.8 124.4 7th District............. +17.6 Net Sales Ratio of June Collections to Accounts Outstanding End of May 1936 1936 to Net Sales +2.8 +15.0 +10.9 Stocks End of Month Per Cent Change First Six Months 1936 From Same Period 1935 Page 6 +19.3 +16.8 +11.1 —3.5 +6.8 +7.8 +13.0 +6.3 +5.2 +12.0 +10.0 +1.3 +10.7 38.3 49.6 46.8 33.6 43.9 44.5 37.0 33.5 42.5 38.0 J ■ I ■ 1 COMPARATIVE THEN) OF TOTAL EARNING ASSETS AND DEPOSITS ALL MEMBER BANKS ONS OF DOLLARS DECEMBER IN THE UNITED STATES 1928 TO DATE BILLIONS OF DOLLARS 144 ---------------------42 TOTAL DEPOSITS -.***TOTAL EARNING ASSETS **'*■***«»«........... Mj STATE .COUNTY AMD MUNICIPAL OBLIGATIONS U.5.GOVT.BONDS iAl5j?f/SSURV NOTESjCpttflFICATES AND BILLS 1932 1933 4 -4 cent less in this comparison. Data covering the month June show that grocery sales expanded 7J4 per cent over a month earlier, and that hardware and drug sales were 2 per cent larger each; however, the dollar vol ume of electrical supplies sold declined 5 per cent from May. The gains in hardware and drug sales were contrary to trend for June, while the increase in gro ceries was greater than seasonal. In the comparison with last June, the drug and electrical supply trades showed the largest gains of the year so far, and the increase in the grocery trade followed a moderate de cline in May from a year ago. Because of a counter-seasonal expansion of 4 per cent in June in aggregate sales of Chicago depart ment stores, the total dollar volume of department store sales in the Seventh district as a whole declined only one per cent in the period, as against a recession in the 1926-35 average for June of 5 per cent. Sales in Detroit were 7 per cent smaller in June than a month earlier, those in Milwaukee declined 3 per cent, while stores in smaller cities sold a volume that was 8j4 per cent less. In the year-to-year comparison, the gain of almost 18 per_ cent for the district was the largest to be recorded in over two years and brought sales for the year to date to nearly 11 per cent in excess of those in the first six months last year. A seasonal recession of 7 per cent took place in stocks between the close of May and June 30, and they were only one per cent above those on hand a year ago at the same time; stock turnover for the first half year was 2.29 times, as compared with 2.12 times for the period in 1935. Following four successive months of expansion, sales of shoes by reporting dealers and department stores dropped 18 per cent in June below the May volume, the decline comparing with increases for the month in six of the ten preceding years. However, sales to taled 9J4 per cent above those in June a year ago, which increase is the second largest in the comparison for 1936 to date. In the first half of this year, sales aggregated almost 9 per cent more than in the same period last year. Although stocks declined 9 per cent during June, they were 7 per cent heavier than a year ago. The decline of 18 per cent shown for June from May in sales of furniture and house furnishings by dealers and department stores was less than seasonal, while the aggregate increase of 29 per cent over last June was the heaviest recorded in the yearly compar ison since November 1935. Dealer sales decreased in the period to a greater extent than did those of de partment stores and registered a smaller gain over a year ago. Stocks declined 4 per cent during June but exceeded those of the month last year by 9 per cent. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO No. of Firms Casting Foundries— Shipments: Steel—In Dollars.................................... In Tons......................................... Malleable—In Dollars........................... In Tons................................ Stoves and Furnaces— Shipments (in dollars).............................. June 1936 May 1986 Apr. 1936 Mar. 1936 Feb. 1936 Jan. 1936 June 1935 May 1936 Apr. 1935 Mar. 1935 Feb. 1935 Jan. 1935 91 Meat Packing—(IT. S.)— Sales (in dollars)........................................ 85 85 81 * 83 85 82 86 82 77 80 81 . 12 74 80 56 82 64 68 56 81 59 60 61 89 51 50 59 88 46 46 49 73 42 42 52 78 27 25 39 57 34 31 43 65 38 38 48 72 35 33 45 69 31 29 37 57 31 30 37 59 . 8 170 176 156 150 113 93 117 127 115 106 FurnitureOrders (in dollars)...................................... Shipments (in dollars).............................. 82 57 . . 12 12 59 62 67 59 62 64 62 65 45 57 73 41 43 39 50 46 43 54 48 51 FlourProduction (in bbls.)................................. 44 37 52 27 . 18 94 76 91 89 92 104 88 100 86 89 Output of Butter by Creameries— Production................................................... Sales......................................................... 90 104 . . 59 61 139 133 140 120 89 99 87 88 82 89 82 94 173 141 144 130 99 94 83 87 Wholesale TradeNet Sales (in dollars): Groceries................................................... Hardware................................................. Drugs........................................................ 81 79 86 107 . . , 28 11 12 70 103 77 65 102 76 66 88 78 63 77 78 60 49 67 64 48 73 68 76 70 69 76 74 66 72 73 62 64 73 60 43 69 69 41 74 27 5 4 5 41 82 82 91 93 93 87 79 89 91 86 100 97 90 86 90 88 84 102 94 93 81 89 84 79 89 96 83 77 82 90 68 78 66 67 60 69 87 63 72 67 63 56 64 80 76 78 79 75 71 76 77 73 92 88 76 75 78 77 75 96 88 85 75 81 76 69 92 89 77 70 76 83 60 76 65 58 55 62 79 Automobile Production—(U. S.)— Passenger Cars.............................................. Trucks............................................................. 60 69 70 58 53 61 77 129 207 132 199 142 227 117 206 77 167 102 174 100 165 104 147 132 175 123 177 93 156 Building Construction— Contracts Awarded (in dollars): Residential................................................. Total............................................................ 78 165 40 58 40 61 35 55 25 56 10 34 14 59 26 34 18 33 16 36 32 17 20 101 88 115 100 87 117 94 82 114 81 67 97 75 64 89 67 85 77 59 53 68 67 57 73 65 57 76 63 58 83 63 59 87 51 49 80 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago..................................................... Detroit...................................................... Indianapolis.............................................. Milwaukee................................................ Other Cities............................................. Seventh District—Unadjusted............. Adjusted.................. Iron and SteelPig Iron Production:* Illinois and Indiana.................................. United States............................................ Steel Ingot Production—(U. S.)*........... . •Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Board of Governors of the Federal Reserve System) y. of employment, trade was sustained VOLUMElevel,production, usually there isanddecline at this season. in June at the May although a Wholesale prices of commodities advanced between the middle of May and the third week of July, reflecting in part the effects of the drought. Production Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to June 1936. FACTORY EMPLOYMENT and Employment The Board’s seasonally adjusted index of industrial production increased from 101 per cent of the 1923-25 average in May to 103 per cent in June. Steel production continued at about 70 per cent of capacity in June and the first three weeks of July, although a considerable decline is usual at this season. Output of automobiles declined seasonally. The cut of lumber showed a seasonal rise in June following a substantial increase in the preceding month. Production increased at woolen mills and was sustained at cotton mills where a decline is usual in June. Output of foods increased. Factory employment and payrolls showed a slight increase between the middle of May and the middle of June, contrary to seasonal tendency. Steel mills and plants producing machinery employed more workers, and at automobile factories there was less than the seasonal decline. At textile mills employment was unchanged, although a decline is usual in June, while the clothing in dustries reported a decrease in the number employed. F Total value of construction contracts awarded, as reported by the F. W. Dodge Corporation, increased somewhat from May to June and continued to be substantially larger than a year ago. There was a further increase in residential building. Agriculture Index of number employed, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to June 1936. Crop estimates by the Department of Agriculture on the basis of July 1 conditions indicated little change from last year for wheat and corn and con siderable declines for oats, hay, potatoes, and tobacco. Since July 1 prospects have been reduced by extreme drought over wide areas. Cotton area in cultivation on July 1 was estimated by the Department of Agriculture at 30,600,000 acres compared with 27,900,000 acres last year and an average of 41,400,000 acres in the years 1928-1932. WHOLESALE PRICES Distribution Freight-car loadings increased seasonally in June, and the distribution of commodities to consumers was maintained at the May level. In recent months retail trade as measured by sales of automobiles and by the volume of business of department, variety, and mail order stores has expanded considerably. Commodity Prices 1930 1931 Index compiled by the United States Bureau of Labor Statistics, 1926 = 100. By months, 1929 to 1931; by weeks, 1932 to date. Latest figure is for week ending July 18, 1936. ■m The general level of wholesale commodity prices, as measured by the index of the Bureau of Labor Statistics, advanced by about 3 per cent between the middle of May and the third week of July, following a decline of about the same amount earlier in the year. Prices of wheat, flour, feed grains, and dairy products advanced sharply, owing primarily to the drought, and there were increases also in the prices of hogs and pork, cotton and cotton textiles, silk, rubber, copper, and finished steel. Bank Credit * MEMBER BANK RESERVES AND RELATED ITEMS Gold Slock Mqpftor dank Reserve Reserve Bonk Credit ..Treosurv 6 _ National Bonk Treasury Cosh B Deposits with F R Banks B Other Accounts Currency Wednesday figures, January 31, 1934, to July 22, 1936. Page 8 Gold imports, which had been in large volume in May and June, declined in July. Funds held by the Treasury as cash and on deposit with Federal Reserve banks declined, as the result of disbursements in connection with the cashing of Veterans’ Service bonds. Consequently reserve balances of member banks, which had declined in June, rose once more to their previous level. Total loans and investments of reporting member banks in leading cities, after increasing sharply at the end of May and the early part of June, declined somewhat in the four weeks ending July 15, reflecting largely a reduction in loans to security brokers and dealers in New York City. Balances held for domestic banks increased by $800,000,000 during the period, as a consequence ^ of redeposit with reporting banks of a considerable part of funds acquired by banks through Treasury disbursements.
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