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AUGUST, 1942 **'. l?.'V 00" t*0f£ CONDITIONS A REVIEW BY THE FEDERAL RESERVE BANK OF CHICAGO Review of Seventh District Business Although July is normally a slack month on the busi ness calendar, with maintenance of equipment, vaca tions, and inventories taking precedence over production schedules, the pressure of war activity was felt through out the Seventh Federal Reserve District. Employment, payrolls, and trade all moved contra-seasonally, either recording gains over the previous month or showing smaller declines than have occurred during July in previous years. Continued increases in employment and payrolls of manufacturing industries were reported for the month. The 3 per cent gain in the number of workers employed was the most substantial recorded in any one month since June 1941, but the 2 per cent increase in the amount of wage payments was slightly lower than in either of the two immediately preceding months. The increases were contributed largely by the transportation equipment industries and the food products group. In the non-manufacturing industries, employment remained practically stationary during the month, gains in coal mining and construction industries being offset by losses in the merchandising group. Payrolls in the non-manu facturing groups advanced close to 2 per cent, which was slightly less than the gain in manufacturing industries. Distribution of commodities to consumers declined less than seasonally. At department stores a 19 per cent decline in dollar volume of sales was the lowest July decrease reported in the last ten years. A 3 per cent increase in sales over July a year ago represents a net decline in the movement of physical volume, as prices were 14 per cent higher than last year. Open book or charge sales declined 28 per cent from the June volume, while instalment sales were down 10 per cent, and cash or C.O.D. sales were approximately 17 per cent lower. Stocks on hand at the end of July were 2 per cent lower than at the end of June, but 67 per cent higher than a year earlier. Retail prices remained unchanged from the previous month. The all-commodity wholesale price index re mained practically unchanged and stood at 99 per cent of the 1926 average. Steel production by mills in the Chicago area fell off somewhat during the month. The indicated tonnage for July was 1,402,000 net tons, compared with 1,410,000 net tons for the preceding month. Such decreases can be expected at periodic intervals, as the extreme utiliza tion of productive facilities places an extraordinary load upon equipment. There is a continuing threat of short ages of iron and steel scrap. During 1941, the steel in dustry throughout the country produced 82,839,000 tons of steel and consumed 45,600,000 tons of scrap, which was 10,000,000 tons more than ever consumed before in a single year. Thus far in 1942, steel production has been at the rate of more than 85,000,000 tons. Notwithstanding salvage drives, it is estimated by the American Iron and Steel Institute that there may be as much as eight to ten million tons of iron and steel scrap lying dormant in homes, farms, and indus trial plants throughout the country. Crude oil production in the State of Illinois averaged 269,850 barrels a day during the four weeks ended Au gust 15, 3 per cent lower than in the preceding fourweek period and 24 per cent under the corresponding figure a year ago. Runs of crude oil to refineries within the Indiana-Illinois-Kentucky area, and production of gasoline increased slightly over the preceding month. There have been only minor changes in these items from a year ago. Stocks of gasoline declined during the month, whereas those of gas and fuel oil increased appreciably. Bituminous coal production in this District remained approximately at the June level and continued heavier than a year ago, registering an increase of 10 per cent. Cumulative production for the first six months of this year was 23 per cent ahead of the comparable period a year ago. The increase in production in this District paralleled the increase nationally, as the country as a whole showed a July increase of 7 per cent and a cumu lative six-month increase of 25 per cent. Stocks are increasing. Industrial users and dealers recorded sup plies at the end of June of 70 per cent in excess of those a year ago. Stocks at Lake docks were approximately 40 per cent higher than the same period last year. Construction contracts awarded in this District during the first seven months of this year are the largest re corded since 1929. Practically two-thirds of this year’s contracts have been either for industrial plant expan sion or for residential building. The $680,000,000 total was one-fourth again as large as the corresponding figure last year. This increase may be ascribed to industrial plant awards, which also account for the increasing im portance of Government financing, which has constituted three-fourths of the total awards so far this year, as against 40 per cent last year, and 30 per cent in 1940. Residential building awards, however, were the lowest so far recorded, and were one-fifth below the June valu ation, and three-fifths smaller than in July last year. The Decline In Consumer Credit Total consumer instalment paper held by banks in the Seventh Federal Reserve District has been declining rapidly since September of last year. The decrease in the volume of such paper, as indicated by 68 banks which report regularly, has amounted to 25 per cent during the first seven months of this year. Since January, when automobile sales were sharply curtailed, the decrease has been particularly rapid. The decline in outstanding automotive paper placed directly by the banks has amounted to 38 per cent. Purchased paper of this class has receded 32 per cent during the first seven months of this year. The continued reduction shown since December 1941, while most pronounced for automotive loans, has been almost as sharp for other paper secured by consumer durable goods. Personal cash instalment loans have shown the least reduction. The decline in outstandings has resulted primarily from decreased sales of durable goods, but the Federal Reserve Board’s Regulation W has also been a contribut CONSUMER INSTALMENT LOANS MADE (68 Banks in the Seventh District) (In Thousands of Dollars) Type of Loan Automotive retail: Purchased............................. Direct.................................... Other retail: Purchased and direct......... Repair and modernization... Personal instalment cash.... TOTAL................................. Per Cent Change July 1942 from June 1942 July 1942 June 1942 $2,140 1,059 $1,543 1,038 -28 - 2 1,946 1,169 1,981 8,295 1,813 1,108 1,672 7,174 - 7 - 5 -16 -14 ing factor. The Regulation, which became effective in September 1941, was further broadened in May this year and made more restrictive in its terms. Amendment 4 to the Regulation established twelve months as the maximum maturity on instalment loans. New loans made by the reporting banks during July of this year have declined 14 per cent from June. Prac tically all of this contraction was in automotive paper. During June the volume of such loans made totalled $3,199,000, and in July the new loans of this classifica tion totalled only $2,581,000. Loans for the purchase of durable goods other than automobiles amounted to $1,946,000 in June and $1,813,000 in July, or a decline of only 7 per cent. The volume of new loans for repair and modernization was off only 5 per cent. Activity in the personal cash instalment loans was less than seasonal and declined 16 per cent from the June volume. The re porting banks added $1,672,000 of such loans during CONSUMER INSTALMENT CREDIT OUTSTANDING (68 Banks in the Seventh District) (In Thousands of Dollars) Per Cent Change July 31, 1942 from July 31, 1942 June 30, Dec. 31, 1942 1941 Type of Loan Automotive retail: Purchased........................... Direct.................................. Other retail: Purchased and direct.... Repair and modernization. Personal instalment cash. . TOTAL.............................. $15,956 9,656 -8 -7 -32 -38 19.105 14,832 10,908 70,457 -8 * -3 -6 -29 -10 -8 -25 ‘Decrease of less than one per cent. July, whereas the new loans of this classification totalled $1,981,000 during June. Repayments have been out-running new loans in the ratio of iy2 to 1. For every dollar of new automotive paper purchased by the reporting banks, $1.95 was paid off during July. For other commodities the ratio of re payments to new loans was 1.93 to 1 during July. Per sonal cash instalment loans, which represent money bor rowed for such things as the payment of personal debts, have not fallen as rapidly as other types of instalment credit. For every dollar of new loans made for this purpose, $1.21 was paid off in July. Repair and modernization loans made under the Fed eral Housing Act have declined 10 per cent in volume since December 31, 1941, and the ratio of payments to new loans was 1.04 in July of this year. In ordinary years there is a slight seasonal increase in cash lending in the late spring and early summer months. The slow ing in the rate of decline during June of this year may reflect these seasonal influences. CONSUMER INSTALMENT REPAYMENTS (68 Banks in the Seventh District) (In Thousands of Dollars) Ratio of Repay ments to New Loans During June 1942 July 1942 June 1942 July 1942 Automotive retail: Purchased........................... Direct.................................. $4,248 2,202 $3,007 1,769 1.98 2.08 1.95 1.70 Other retail: Purchased and direct.... Repair and modernization. Personal instalment cash.. TOTAL.............................. 3,561 1,130 2,021 13,162 3,498 1,157 2,031 11,462 1.83 .97 1.02 1.59 1.93 1.04 1.21 1.60 Type of Loan Agricultural Production and Prices Rise August 1 indications give promise of a banner year in crop production. Less promising appearances of a month earlier have been brightened by the heat and favorable growing conditions prevailing throughout most of the country during July. Pastures have turned out well under the adequate rainfall, and in spite of losses due to rain and labor shortages the hay crop promises so far to yield a record harvest. If all expectations are realized, 1942 will be the best grain year since 1920. The improvement in corn production prospects brought the indicated total up to 2,754 million bushels, of which 1,243 million bushels are accounted for by the five States of the Seventh District. A corn crop of this size, if realized, will be the largest since 1932. Small grains were to some extent affected by the wet weather in July, and Illinois and Indiana were among the States showing some har vesting losses during the month. Wheat production is indicated at 955 million bushels, with about 52 million bushels in the District States. The production of oats at present prospects threatens all records back to 1925, with 1,332 million bushels indicated, or a Seventh District total of 567 million bushels. The indicated total of 417 million bushels of barley is one-sixth larger than the 1941 record crop, while rye production of 60 million bushels as indicated August 1 would be the largest in over twenty years. Oil Output Expanded Production of oilseeds to replace former imports like wise appears to be satisfactory. A substantial crop of cottonseed about one-fifth above last year, a peanut crop nearly double that of 1941, about one-third more flaxseed, and three-fourths more soybeans all add up to a favor able oilseed situation. A total production of 186 million bushels of soybeans is indicated, approximately threefourths of which would be in the Seventh District States. Large though it is, the prospective output of feed grains is not expected to provide too much for the feed requirements of the nation’s greatly expanded livestock industry. Heavy demand has shown in the Chicago price quotations on livestock. With ceilings at wholesale and retail on beef and pork, packers and processors have Page 2 been squeezed into a tight situation. Hogs hovered close to a $15.00 top at Chicago through most of July and have been above a $15.00 top through most of August, with a 22-year record reached on August 14 at $15.30. The average price paid for hogs during July and early August was close to $14.30 and ranged within 30 cents above and below that figure. The bulk of grain-fed beef steers ranged around $13.10 for the first half of July, was up to around $13.50 in the last half, and ranged around $14.50 for most of August. Shortages of beef developed in some eastern markets during the month. Some of this is attributed to the buying for government account, but in general it is due to a-temporary curtail ment of supplies, with demand exceeding supply at fixed prices. Pork Ceilings a Sore Spot Pork price ceilings continue to press packers into the position where a number are planning to discontinue operations unless some relief of a substantial kind is forthcoming. The Secretary of Agriculture recently announced a three-point program aimed at relieving some of the distress to small packers. These packers were to be offered government contracts to slaughter on a custom basis. Also, the differentials paid on government contracts for dressed and processed meats were to he adjusted on a regional basis by lowering the premium in areas where small packers were finding it most diffi cult to compete for slaughter animals. Maximum prices for lend-lease purchases were to be lowered. Affected packers maintain that little or no relief is afforded by these measures. They presumably applied only to packers killing under federal inspection, and therefore were of no help to intra-state packers, although these packers are now eligible for Federal inspection under provisions of a bill signed on June 10. OPA Administrator Hender son is reported to have asked Secretary Wickard for authority to impose ceilings on live hog prices. The Secretary in a radio address indicated his consent would be given if a satifactory plan for allocating supplies were shown him. The Secretary has pointed out the difficulties and problems that would be raised by such a move. Grad ing of the live animal would be necessary, a complicated and relatively undeveloped business. With effective price ceilings some basis would be necessary for allocating animals to packers, and this would mean telling the farmer where and when he can sell. Price differentials between markets would also have to be worked out to make allowance for differences in transportation and handling costs. OPA argument is to the effect that fixing a ceiling would discourage farmers from holding for higher prices and release stock now held back. OPA announced on August 27 that a definite price ceiling on live hogs was in preparation and that similar action, in the near future, with respect to beef cattle was under consideration. The agency at the same time announced that ceilings on wholesale meat prices would be adjusted to put them on a zone basis, with differentials only for such items as transportation costs from the zone basing points. Heavy Pall Marketing of Hogs in Prospect Agricultural officials and packers alike appear to be agreed that there will be a tremendous volume coming to market in December and January unless something specific is done to obtain a better distribution of receipts than is afforded by the usual December-January peak of marketings. Grave doubt is expressed that transpor tation and processing facilities will permit the proper handling of all that are expected to come to market. On the packing side the critical item is believed to.be cooler and freezer storage space, and possibly labor. Govern mental leaders are urging farmers to market such hogs as they can push along to early finish before Thanks giving and to carry over beyond February 1 those which can be carried. In view of the need for fat and the favorable feeding ratio, it is not probable that many will be marketed in advance, but there appears to be a fiftyfifty chance that prices during the peak season for mar ketings may be at such a level that delaying deliveries will prove profitable for those who can and will market later than the peak. Beef Fattening Prospect Indications are that substantially less grain fattening of steers will take place this year than last. Feeders are faced with the prospect of much narrower spread be tween thin stock costs and prices expected as the net return under beef ceilings. They ask a ceiling on feeders and stockers in order to get the price down from the recent high levels set in part by brisk demand for feeder animals from slaughterers. But arguments on the other side run to the effect that hogs will produce meat and fat much more efficiently with what is expected to be a relatively short feed supply, and that cattle numbers are already built up to a dangerous level and should wisely be reduced now. Dairy Output and Prices Rise Milk production in July established a record for the month. Most of the 5 per cent increase over a year ago was due to the larger number of milk cows, but there was a small increase in the milk per cow, and with pas ture and temperature conditions relatively favorable throughout most of the country, the output per cow declined less than the usual seasonal amount. In order to secure certain shifts in utilization, changes in pegged prices were announced by governmental agencies in midJuly which put 92-score butter at Chicago at 39 cents, raised powdered skimmilk prices but lowered prices on evaporated milk and cheese. Chicago prices of 92-score butter have been above 40 cents during most of August. To meet the effect of these changes on market milk prices for the Chicago market, a hearing was held by the Department of Agriculture in Chicago on August 14 and 15, to take testimony offered relative to recommendations to change the basis of calculating the settlement price under the Federal Milk Marketing Order, so as to offset the lowered price to producers resulting from lower evaporated milk prices. Price Index and Parity Ratio Rise The index of prices received by farmers stood at 163 (1909-1914 = 100) as of August 15. Prices paid by farmers for commodities and services used in living and production showed an index of 152 on the same base. Prices received by farmers now appear to be advancing somewhat faster than prices paid. Taking all prices into consideration, farm product prices as a whole were 107 per cent of parity on August 15, as compared with 101 per cent for July 15 and 100 per cent in August 1941. Secretary Wickard, in his radio address on August 19, advocated repeal of the provision in the Price Control Act limiting price ceilings on agricultural products to not less than 110 per cent of parity. Page 3 Retail Trade Reflects Business Activity The rise in the level of business activity in the Seventh Federal Reserve District held July department store sales to the smallest recorded seasonal decline in that month and brought about a 3 per cent increase over the heavy July sales volume of last year. This small gain is particularly significant when one remembers that July last year registered an increase of 24 per cent over the same month in 1940, the largest increase in the year-toyear comparison recorded since the beginning of the upward movement in March 1939. The present level of dollar volume of department store sales is therefore well above other recent years despite the conservative buying, increased savings, restricted credit, and a diminishing supply of certain goods. The physical volume of sales is somewhat below last year, however, as over the year period prices have risen by about 15 per cent. Sales for the District as a whole declined 19 per cent from the June level, but as this recession is less than seasonal, the adjusted index rose from 127 to 139. All of the principal cities of the District reported declines from the June level. Chicago registered a drop of 25 per cent. Flint, Michigan, reported sales de creases of 23 per cent. Des Moines, Iowa, and Lansing, Michigan, were each 22 per cent under their June sales volume. The smallest decline was recorded in Fort Wayne, Indiana, where sales were off 12 per cent. Reports from various trading centers indicate that travel curtailment is making inroads into shopper attendance at large city stores. The loss of customers to the armed services and uncertainty over the draft are regarded by merchants as adverse factors, particularly in certain lines of merchandise. Shortages and rationing restrictions accounted for some of the unfavorable sales comparisons. It is believed in some quarters that the control of con sumer credit has had a dampening effect on open book and instalment sales. The former showed a decline of 6 per cent from a year ago, whereas the latter was off 34 per cent. Restrictions on instalment buying have been operating since September 1941, but the freezing of open book accounts did not become effective until July 10 of this year. A survey of leading department stores in Detroit and Chicago indicated that approximately 19 per cent of all open book accounts were frozen. The heavy payments following July 10 reduced the number of such frozen accounts and affected the collection ratios very favorably. In July a year ago, the ratio of collec tions to open book accounts was 54 per cent, whereas in July of this year the ratio was 68 per cent. Collections against instalment accounts also increased, rising from 21 per cent in July 1941 to 28 per cent in July 1942. The best response to promotional sales efforts which came earlier this year occurred in war production centers. Merchants in those areas reported the larger gains over Page 4 Department Store Sales In Seventh District 1935 — 1939 = 100 PER CENT 19 4 1 19 42 a year ago. Sales in Fort Wayne were 20 per cent above a year ago, whereas in Milwaukee, Detroit, and Indian apolis they were each 11 per cent. With the additional exception of Peoria, Illinois, and Sioux City, Iowa, all other cities showed a decline. Generally, emphasis was placed on medium to better-priced goods with extremely higher or low-priced merchandise remaining relatively quiet. Most retailers continued to experience an increase in cash buying, along with a decrease in instalment and charge account trade. Cash sales in Fort Wayne increased 64 per cent over a year ago, a percentage substantially higher than in any of the other large cities in the District. Indianapolis showed an increase of 41 per cent, followed by Detroit with 35, Milwaukee with 34, and Chicago with 16. Sales of miscellaneous lines at retail were lower than a year ago in the States in the Seventh District. Mich igan and Iowa showed declines of 8 per cent, Wisconsin and Illinois 3 per cent, and Indiana 1 per dent. As might be expected, the largest decline was among motor vehicle dealers, where sales were off 77 per cent in Illinois, 71 per cent in Michigan, 66 per cent in Indiana, 65 per cent in Wisconsin, and 64 per cent in Iowa. The furni ture-household-radio group suffered declines, ranging from 20 per cent in Indiana to 31 per cent in Michigan. Sales of lumber and building materials were also under those of July a year ago, with the decline in this group ranging from 3 per cent in Indiana to 20 per cent in Iowa. With the exception of hardware, in which there was a gain in Indiana and a loss in the other four States, all other reporting groups showed increases. For the most part, however, the increases in dollar volume of sales reflected only a higher price level. The expansion in fall buying in wholesale markets stemmed from increased atendance rather than from liberal ordering. Total sales for the District moved up slightly when compared with a year ago and with June of this year. The gain from year-ago figures has receded from 38 per cent in January to 4 per cent in July. There is some indication that the slowing down in retail activity and the desire to work off inventory accumula tions have been the most important factors causing the cautious buying in recent months. Retailers appear to be relying upon reorders after consumer response has been determined. The largest increase occurred in the meat and meat products group, which reported a gain of 58 per cent over a year ago. Tobacco and tobacco products reported an increase of 17 per cent, jewelry 14 per cent, and groceries 10 per cent. The largest decline occurred in electrical goods, of which there is a dwindling supply. While wholesalers’ collections have been heavy each month throughout the current year, they have shown a downward movement in the gains over a year ago similar to that in evidence in total sales. In January of this year collections were running 34 per cent ahead of the corresponding month in 1941, and in February they were as high as 43 per cent. There has been a tapering off during the spring and summer. In July collections were only 12 per cent ahead of a year ago. This decline can be accounted for in part by the shrinkage in the volume of accounts receivable. Accounts outstanding, after showing no percentage change from a year ago during June, turned downward 10 per cent during July. The high point was reached in February when accounts receivable were 22 per cent ahead of a year ago. DEPARTMENT STORE SALES AND STOCKS BY DEPARTMENTS Per Cent Change July 1942 Compared with July 1941 SALES DETROIT MILWAUKEE OTHER CITIES 7TH DISTRICT CHICAGO DETROIT MILWAUKEE OTHER CITIES 10. PIECE GOODS—Total........................................................... 11, 12, 13. Yard Goods, all materials.................................. 14, 19. Linens and Towels...................................................... 15. Domestics—Muslins, Sheetings, etc............................... 18. Blankets, Comforters, Spreads....................................... + 6 +28 +32 + 8 +20 + 14 +61 +84 +72 +67 +63 +30 * -10 + 1 +54 +23 + 8 +62 +25 + 13 +54 - 3 - 8 -11 +52 + 4 +12 + 9 +44 + 7 +85 +67 +98 + 5 +59 +60 +59 +69 +60 +79 +91 +67 +40 +49 +92 +86 +60 +57 +70 +71 30. READY-TO-WEAR ACCESSORIES—Total.................. 31. Neckwear and Scarfs......................................................... 33. Handkerchiefs...................................................................... 34. Millinery............................................................................... 35. Gloves.................................................................................... 36. Corsets and Brassieres...................................................... 37-C, W. Hosiery (Women’s and Children’s).................... 38, 39, 42. Women’s Underwear, Slips, Negligees............ 43. Infants’ Wear....................................................................... 46. Handbags and Small Leather Goods............................ 47. Women’s Shoes.................................................................... 48. Children’s Shoes.................................................................. +12 +39 +30 +26 +24 +21 +66 +67 +87 +49 +66 +24 + 11 + 3 + 9 - 6 - 2 + 3 +37 +22 +27 +20 +30 +26 +21 +26 + 16 +53 +26 +57 +28 +58 +29 +33 +28 +13 + 9 +22 +31 +25 +36 +42 +36 +40 +54 +42 +31 +35 +44 + 17 +11 +22 + 8 +11 +35 + 13 +41 +20 +24 +26 +29 +33 +55 +44 +27 +38 + 14 +57 + 107 + 109 +60 +68 + 9 -16 - 9 + 5 - 9 + 9 +53 +36 +33 +31 +45 + 8 +83 +71 +138 +55 +89 + 17 + 188 +62 + 174 +90 + 152 + 12 +84 + 105 +67 +51 +81 +40 +60 +39 +68 +61 +60 +27 + 129 + 115 + 114 + 80 +117 +32 +25 +32 +65 + 15 +32 +28 +40 + 16 + 109 +23 +42 - 3 - 8 + 12 + 2 - 1 + 17 + 1 -53 + 14 +32 +26 +25 +32 +67 +15 -63 +21 +12 +16 +37 +25 + 12 +39 +54 +25 -14 + 18 +31 + 7 +43 +46 + 1 -40 +95 +25 + 10 +49 +56 + 10 -53 +48 + 8 +11 + 112 +19 + 16 + 8 +69 +22 +42 +33 +64 +39 + 8 -44 +11 +67 + 69 +52 +88 + 190 + 141 + 116 + 6 ~f* 8 + 13 +12 +88 +65 +97 +81 +72 +74 +62 +58 +79 +62 +92 +70 -22 +25 +48 +31 +22 + 10 + 3 +11 - + 6 + 11 -12 +22 - 3 +38 +29 - 1 -10 - 2 +33 +37 -14 + 6 -12 + 12 + 10 +24 + 14 - 2 +64 +48 +53 - 8 - 1 + 1 +18 + 4 +54 +94 + 14 +80 + 19 +74 +43 +22 +28 +43 +52 +34 +78 +52 * 8 + 1 + 1 -17 - 4 + 1 +61 +67 -10 +50 -i9 + 6 + 10 - 6 -66 - 3 +25 -39 -11 - 6 + 15 + 17 ** -57 + 6 + 18 + 9 +46 +35 +87 +51 + 112 +33 - 2 +79 +48 +237 50. WOMEN’S AND MISSES’ READY-TO-WEAR— Total.................................................................................. 51. Women’s and Misses’ Coats and Suits......................... 53. Women’s and Misses’ Dresses......................................... 54. Blouses, Skirts, Sportswear.............................................. 55. Juniors’ Coats, Suits, Dresses......................................... 56. Girls’ Wear........................................................................... 57. Aprons, Housedresses, Uniforms.................................... 59. Furs........................................................................................ 60. MEN’S AND BOYS’ WEAR—Total.................................. 61. Men’s Clothing.................................................................... 62. Men’s Furnishings.............................................................. 65. Men’s Hats and Caps........................................................ 66. Boys’ Clothing and Furnishings..................................... 67-M, B. Men’s and Boys’ Shoes......................................... 70. HOUSEFURNISHINGS—Total........................................... 71. Furniture, Beds, Mattresses, Springs............................ 72. Oriental Rugs...................................................................... 73. Domestic Floor Coverings............................................... 74. Draperies, Curtains, Upholstery.................................... 75. Lamps and Shades............................................................. 76. China and Glassware......................................................... 77-R, O. Major Household Appliances................................ 78. Housewares........................................................................... 81. Pictures and Mirrors......................................................... 82, 83, 84, 85. Musical Instruments, Radios, Phonographs ’Increase of less than one per cent. 6 7 9 + 9 4 + 7 + 1 +29 - 4 - 1 -12 -10 +14 +16 - 3 -59 + 3 4* i +19 - 2 + +ii +ii +26 + 18 +21 +27 + 14 -38 + 19 + 6 +36 + 12 * + 13 + 8 +22 + 19 + 19 - 5 +17 + 6 -10 -55 + 19 +49 +27 - 2 7TH DISTRICT INDIANAPOLIS STOCKS CHICAGO Departments +47 +61 +61 +60 +64 +79 +57 +57 +55 +81 +22 +71 +25 +85 +36 +60 +57 +41 +47 +39 +81 +50 +93 +30 - 4 +79 +38 +253 +98 + 108 +38 +58 +56 +34 +67 + 137 +42 +26 +25 +25 + 5 -23 +99 +62 + 18 +42 +471 + 140 *’Decrease of less than one per cent Page 5 RECEIPTS AND SHIPMENTS OF GRAIN At Interior Primary Markets in the United States (In thousands of bushels) SALES OF INDEPENDENT RETAIL STORES Seventh Federal Reserve District Per Cent Change July 1941 to July 1942 Ten-Year Average July 1932-1941 Per Cent Change July 1942 from Ten-Year Average July 1942 July 1941 Per Cent Change July 1942 from July 1941 60,425 25,479 102,722 31,271 -41.2 -18.5 76,321 24,076 -20.8 + 5.8 22,912 19,566 22,049 22,795 + 3.9 -14.2 19,932 14,491 +15.0 +35.0 6,369 4,452 10,662 4,614 -40.3 - 3.5 8,889 4,612 -28.4 - 3.5 1,025 449 965 1,201 + 6.2 -62.6 * * Wheat Receipts............. Shipments......... Coen: Receipts............. Shipments......... Oats: Receipts............. Shipments......... Total All Groups*......... Apparel Group................ Drug Stores..................... Eating and Drinking Places............................ Food Group..................... Furniture-HouseholdRadio Group............... Hardware Stores............. Jewelry Stores................. Lumber and Building Materials...................... Motor Vehicle Dealers.. Michigan Wisconsin Illinois Indiana Iowa - 3 + 7 +16 - 1 +19 +18 - 8 +15 +16 - 8 +20 +16 - 3 +19 +14 +21 +18 +16 +29 + 8 +13 +23 +20 +17 +18 -24 - 4 +15 -20 + 3 +20 -25 - 8 +15 -31 - 6 + 2 -21 - 7 +21 -17 -77 - 3 -66 -20 -64 -18 -71 -15 -65 •Includes classifications other than those listed. Soybeans: Receipts............. Shipments......... * * Source: Chicago Board of Trade. •Not available. WHOLESALE TRADE Seventh Federal Reserve District Per Cent Change July 1941 to July 1942 Commodity Net Sales Stocks Accounts Outstand ing Collec tions Drugs and Drug Sundries......... Electrical Goods.......................... Groceries....................................... Hardware...................................... Jewelry.......................................... Meats and Meat Products.... Paper and Its Products............ Tobacco and Its Products.... Miscellaneous............................... + 9 -36 +10 — 5 +14 +58 -23 +17 - 1 + 3 -22 * -16 +1 -13 +29 +35 +10 + 3 -23 -11 - 6 -31 + 17 -10 +11 -14 +20 -25 +n +14 +10 +57 - 8 +24 + 1 Total.............................................. + 4 - 5 -10 +12 HOG-CORN RATIOS July 1942 June 1942 July 1941 July 1940 17.3 17.2 18.3 15.8 16.1 17.2 16.8 18.1 16.0 16.2 15.5 14.8 16.8 14.3 15.0 10.1 10.1 10.5 9.8 9.2 16.6 16.3 14.8 9.3 Source: Bureau of Agricultural Economics, United States Department of Agriculture. Source: Bureau of the Census, United States Department of Commerce. •Increase of less than one per cent. UNITED STATES FEDERALLY INSPECTED LIVESTOCK SLAUGHTER (In thousands) • Hogs........................ Cattle...................... Calves..................... Lambs and Sheep. July 1942 July 1941 3,886 1,048 461 1,705 3,006 968 445 1,569 Per Cent Five-Year Change Average July 1941 July to July 1942 1937-41 2,580 836 455 1,453 +29 + 8 + 4 + 9 Per Cent Change July 1942 from Five-Year Average +51 +25 +1 +17 Source: Agricultural Marketing Administration, United States Department of Agriculture. BUILDING CONTRACTS AWARDED Seventh Federal Reserve District Total Contracts Residential Contracts July 1942........................................................................». *121,296,000 $13,933,000 - 7% -20% Change from June 1942................................................... -61% +27% First seven months of 1942............................................ $680,081,000 $182,813,000 Change from same period of 1941.......................... +25% -11% Source: F. W. Dodge Corporation. DEPARTMENT AND APPAREL STORE TRADE Seventh Federal Reserve District Total Net Sales Per Cent Change July 1942 from Locality July 1941 Per Cent Change July 1942 from July 1941 Open Book Sales Instal ment Sales Cash and C.O.D. Sales Stocks on Hand (End of Month) Orders Outstanding Per Cent Change July 1942 from Per Cent Change July 1942 from June 1942 July 1941 June 1942 July 1941 1 — * n ii i m Milwaukee......... Other Cities.. . . oo Detroit............... Grand Rapids.. 11111 Fort Wayne.. . . Indianapolis.... Des Moines.... Cn05 J-* Oi J-*+ p! + bs to + tC C5+ is5+ bi bi-^w I June 1942 Per Cent Change January through July 1942 from January through July 1941 - 0.5 + 1.4 +19.5 +11.1 - 0.1 + 2.5 + 11.0 -16.4 - 5.7 - 0.8 +11.3 - 2.7 + 8.1 + 4.8 +22.8 +16.9 + 7.4 + 4.1 +18.0 -10.5 + 3.7 + 4.8 +17.0 + 6.1 -11.1 -23.8 +16.2 - 0.1 +75.2 -11.8 -38.7 + 4.6 + 2.8 -41.8 +63.8 +41.4 - 6.3 + 0.5 +59.2 +61.0 + 7.8 -25.7 + 0.3 -31.4 +34.8 - 8.6 +56.5 + 1.8 +30.0 - 3.1 - 5.0 -39.8 -49.1 +33.7 +22.7 + 2.0 - 2.4 +74.8 +44.0 + 4.2 +18.8 -11.7 - 1.1 District total. . . -19.3 + 3.3 + 11.0 - 5.5 -33.6 +25.2 - 1.8 +67.2 - 1.7 - 1.4 Apparel stores. . -22.0 + 3.5 + 17.1 -16.5 -31.0 +27.2 - 0.9 +62.4 +42.0 -23.4 Page 6 ■ EMPLOYMENT AND PAYROLLS Seventh Federal Reserve District COST OF LIVING Per Cent Change from June 15, 1942 Week of July 15, 1942 (Wage Number Number Payments Number Wage of of of Payments (In Reporting Employes thousands Employes Firms of dollars) Industrial Group Indexes of the Cost of Goods Purchased by Wage Earners and Lower-Salaried Workers by Groups of Items July 15,1942 (1935-1939 average=100) City All Items Food Cloth ing Rent Fuel, Elec tricity, and Ice 116.1 117.8 123.1 125.0 120.8 125.5 112.7 111.0 103.5 106.9 119.7 121.0 110.3 113.2 116.9 124.6 125.3 107.7 106.3 122.4 111.0 Durable Goods: Metals and Products1 Transportation Equipment............... Stone, Clay, and Glass Wood Products........... Total.............................. 1,978 413 298 479 3,168 637,253 426,138 27,996 62,548 1,153,935 27,239 22,453 893 1,815 52,400 + + + Textiles and Products Food and Products. . . Chemical Products. . . Leather Products. . . . Rubber Products........ Paper and Printing.. . Total.............................. 454 1,106 335 183 39 724 2,841 79,201 178,546 46,604 36,883 14,329 86,874 441,437 1,907 5,582 1,784 978 576 2,894 13,721 - 0.2 +10.8 - 0.6 - 0.3 + 6.4 + 1.5 + 4.5 + + + + Total Mfg., 10 Groups. . 6,009 1,595,372 66,121 + 3.3 + 2.5 Merchandising................. Public Utilities................ Coal Mining..................... Construction.................... 4,671 1,151 45 706 142,038 117,458 6,944 20,215 3,635 4,319 216 971 - 3.2 - 0.3 + 7.6 +23.0 + 6.9 +30.5 1.3 6.3 3.1 1.1 2.9 - 0.2 + 6.1 * + 2.3 Chicago. . Detroit. . . Average: LargeCities House Miscel Furnish laneous ings Percentage Changes from July 15, 1941 to July 15, 1942 Non-Durable Goods: 0.6 7.7 0.5 2.2 9.9 1.3 3.4 Chicago. . Detroit.. . Average: LargeCities + 9.6 +10.1 + 14.5 + 16.5 +20.0 + 19.5 + 2.0 - 1.0 + 1.8 + 4.6 +13.5 +11.0 + 6.8 + 7.9 + 11.1 +16.8 +20.2 + 1.5 + 3.9 + 14.2 + 7.0 Source: Bureau of Labor Statistics. - 1.9 * Total Non-Mfg., 4 Grps. 6,573 286,655 9,141 - 0.2 + 1.9 Total, 14 Groups............. 12,582 1,882,027 75,262 + 2.8 + 2.4 BANK DEBITS Debits to deposit accounts, except interbank accounts ]Other than transportation equipment. *Increase of less than one per cent. Data furnished by State agencies of 111., Ind., Ia, Mich, and Wis. (In thousands of dollars) July 1942 WHOLESALE PRICES June 1942 July 1941 Per Cent Change July 1942 from June 1942 July 1941 - 9 -12 + 8 +15 - 5 - 3 -14 + 2 - 2 - 5 - 3 + 2 + 3 - 4 + 6 +16 +11 +18 +n Illinois: Indexes—July 1942 (1926=100) Per Cent Change from June 1942 All Commodities...................... Farm Products......................... Foods.......................................... All Other.................................... 98.7 105.3 99.2 95.7 0.1 + 0.9 + - 0.1 + 0.1 July 1941 +11.1 +22.7 + 17.1 + 6.7 Source: Bureau of Labor Statistics. Aurora................ $ 15,898 $ 17,387 $ 14,731 Bloomington. . . 16,533 18,854 14,321 ChampaignUrbana........... 17,260 18,136 16,229 Chicago.............. 4,212,352 4,332,095 3,638,292 Danville............. 13,494 15,618 12,156 Decatur.............. 31,188 30,474 26,476 Elgin................... 11,113 11,387 10,000 f Joliet................... 32,487 34,204 Moline................ 12,531 12,908 11,311 Peoria................. 82,628 81,190 78,879 Rockford........... 50,053 48,416 42,642 Springfield......... 34,516 36,059 29,458 Indiana: MONTHLY BUSINESS INDEXES Data refer to Seventh District and are not adjusted for seasonal variation unless otherwise indicated. 1935-39 average =100 July 1942 June 1942 May 1942 Fort Wayne.. .. Gary.................... Hammond......... Indianapolis___ July 1941 June 1941 1941 Manufacturing Industries: Durable Goods: Employment.............................. Payrolls....................................... Non-Durable Goods: Employment.............................. Payrolls....................................... Total: Employment.............................. Payrolls....................................... 150 216 146 213 144 207 155 179 155 188 144 184 120 150 115 145 113 142 121 134 114 128 108 124 140 195 136 192 134 187 143 165 141 170 132 166 196 162 180 179 183 185 257 168 196 170 248 168 110 116 127 132 135 130 170 142 162 135 169 139 163 156 162 155 162 150 122 121 126 112 103 102 Furniture Manufacturing: Orders in Dollars.......................... Shipments in Dollars.................. Paper Manufacturing:* Tonnage Production.................... Petroleum Refining—(Indiana. Illinois, Kentucky Area) :* Crude Runs to Stills................ Gasoline Production................ South Bend.... Terre Haute.... Iowa: Cedar Rapids . . Clinton............... Davenport......... Des Moines.... Dubuque........... Mason City.... Muscatine......... Sioux City......... Waterloo............ Michigan: Adrian................ Battle Creek. . . Bay City............ Detroit............... Flint.................... Grand Rapids. . Jackson.............. Kalamazoo........ Lansing.............. Bituminous Coal Pboduction:* Illinois, Indiana, Iowa, and Michigan..................................... Saginaw............. Building Contracts Awarded : Residential..................................... Total................................................ 121 308 150 331 165 250 307 243 308 186 285 194 87 109 119 111 98 97 139 114 130 138 128 120 121 125 113 139 142 131 128 124 123 87 97 106 99 92 92 131 121 124 128 127 120 121 124 117 132 138 128 128 124 123 Department Store Net Sales:* Chicago............................................ Detroit............................................. Indianapolis................................... Milwaukee...................................... Other Cities.................................... Seventh District—Unadjusted.. Adjusted... . ♦Daily average basis. Wisconsin: Green Bay......... Manitowoc........ Milwaukee........ Oshkosh............. Sheboygan......... Total 41 Centers Total 50 Centers United States: 274 Centers . .. 56,496 27,220 12,734 365,668 13,823 21,400 61,091 34,043 53,087 25,250 13,225 340,460 15,194 20,477 61,799 32,393 12,490 37,638 8,332 29,151 126,333 12,585 13,762 5,080 16,575 70,261 28,213 12,867 37,317 8,698 27,722 123,037 12,956 12,880 4,877 17,261 74,837 29,221 6,071 21,526 17,642 1,791,523 38,389 75,956 26,274 30,710 45,375 30,003 13,361 33,323 6,332 20,331 18,410 1,639,757 37,734 70,142 23,679 34,451 40,411 27,558 13'671 30,797 5,606 17,907 15,150 1,480,969 35,873 73,229 21,369 31,620 33,834 21,768 50,520 12,601 408,345 12,819 27,773 31,083 7,959,598 8,538,370 22,024 46,067 11,581 425,251 12,180 26,334 31,440 7,910,803 8,485,462 20,904 44,009 24,311 12,500 298,765 57,681 30,009 31,396 7,615 27,240 105,675 12,589 12,771 4,370 52,921 23,706 31,985 10,003 338,319 11,712 23,979 6,793,112 50,131,000 50,110,000 44,804,000 + + + + + 6 8 4 7 9 5 1 5 — 3 +1 - 4 + S + 3 - 3 + 7 + 4 - 4 - 6 - 3 + + + 4 6 4 9 2 * -11 -11 +12 + 9 - 2 + 8 - 1 +10 + 9 - 4 + 5 + 5 - 1 +1 +1 ** +11 + 5 +17 +17 +28 +12 + 2 +22 + 6 +11 +20 + 9 + 7 +20 * + 8 +16 +33 +19 + 8 +20 +16 +21 + 7 + 4 +23 - 3 +34 + 4 + 4 +26 +21 + 9 +30 +17 +12 fNew reporting centers for which figures were not collected before May 1942. ♦Decrease of less than one per cent. **Increase of less than one per cent. INDUSTRIAL National Summary of Business Conditions PRODUCTION (By the Board of Governors of the Federal Reserve System) TExWUj AND LEATHER Federal Reserve monthly index of physical volume of pro duction, adjusted for seasonal variation, 1935-39 average = 100. Subgroups shown are expressed in terms of points in the total index. Latest figures shown are for July, 1942. DEPARTMENT STORE SALES AND STOCKS 1940 Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 1923-25 average = 100. Latest figures shown are for July, 1942. WHOLESALE PRICES f OTH er' 1 1^ ALL COMMOOITI s 1\aI farm products *«•....RN 1936 1937 1938 1940 1941 Bureau of Labor Statistics’ weekly indexes, 1926 average = 100. Latest figures shown are for week ending August 15, 1942. MEMBER BANK RESERVES BILLIONS or DOLLARS BILLIONS OR DOLLAR* Wednesday figures. Required and excess reserves, but not the total, are partly estimated. Latest figures shown are for August 12, 1942, Page 8 Industrial activity increased further in July and the first half of August, reflect ing continued growth in output of military products. Retail sales increased during this period, following a decline, on a seasonally adjusted basis, during the first half of the year. Production—Industrial output rose further in July and the Board’s seasonally adjusted index advanced from 176 to 180 per cent of the 1935-39 average. Activity continued to increase in the machinery and transportation equipment industries and in other lines producing war products. Shipbuilding expanded further and 71 merchant vessels were delivered in July. These had an aggregate deadweight tonnage of 790,300 tons—an all-time record for a single month’s deliveries. In the automobile industry armament production increased in July to an annual rate of about $5 billion as compared with a peak year’s civilian output of $4 billion. Iron ore shipments down the Great Lakes reached a new record of 13.4 million gross tons in July and plans were announced for improving rail and harbor facilities so that shipments next season could exceed considerably pros pective shipments of 90 million tons or more this year. Last season 80 million tons were shipped. In most other lines of manufacturing and mining, activity in July was main tained at about the levels prevailing in June. There were reports that some plants were forced to curtail operations owing to lack of certain materials, and further investigations were undertaken to determine present and prospective availability of material supplies. Value of construction contracts awarded in July showed a reduction of about 20 per cent from the record level reached in June, according to figures of the F. W. Dodge Corporation. Declines were reported for most types of construction; awards for manufacturing buildings, however, increased further and constituted about one-third of total contracts let. As in June, publicly-financed work amounted to over 90 per cent of the total. In the first seven months of this year, awards were about 50 per cent larger than in the corresponding period last year. Distribution—Distribution of commodities to consumers declined less than sea sonally in July. The Board’s adjusted index of department store sales, which had dropped from a peak of 138 per cent of the 1923-25 average in January to 104 in June, rose to 117 and sales by variety stores and mail-order houses also advanced, after allowance for usual seasonal changes. In the first half of August department store sales increased by more than the usual seasonal amount. Railroad freight-car loadings increased more than seasonally in July and rose somewhat further in the first half of August. Shipments of miscellaneous mer chandise, which include most manufactured products, and of forest products continued to rise. Grain shipments also increased but the rise was less than is usual at this time of year. Loadings of coal declined somewhat from the high level of other recent months. Commodity Prices—Wholesale and retail food prices advanced further in July and the early part of August, while prices of petroleum products on the East Coast were reduced, and those for most other consumer goods continued to show little change. In raw material markets price declines occurred for cotton, inedi ble fats and oils, and some scrap items, particularly nonferrous metals and paper. Demand for materials used more exclusively for war products continued strong and prices of these materials were sustained at ceiling levels. Federal subsidies were arranged for additional commodities and Government war risk rates on shipments of imported commodities were reduced. These actions were taken to bring about price reductions, as in the case of petroleum products on the East Coast, and to prevent further price increases, particularly for imported commodities. About 30 new maximum price schedules were an nounced, chiefly for miscellaneous civilian products, and in some instances these schedules permitted substantial increases over ceilings set by the General Maximum Price Regulation. Rank Credit—Excess reserves of member banks declined by about 200 million dollars in the four weeks ended August 19. An increase of about 400 million dollars of currency in circulation during this period was paralleled by a corre sponding amount of Reserve Bank purchases of Government securities. There was an increase of 300 million dollars in required reserves resulting from a growth in deposits at member banks. Excess reserves in New York and Chicago reached the lowest levels since the third quarter of 1937. Effective August 20 reserve requirements on demand deposits at central reserve city banks were reduced from 26 per cent to 24 per cent by action of the Board of Governors of the Federal Reserve System. This had the effect of converting over 400 million dollars from required to excess reserves. Member banks in leading cities continued to increase their holdings of United States Government securities, particularly in the week ended August 19, in which delivery of the new 11% months’ % per cent certificates of indebtedness was made. Loans, which had declined during the second quarter of the year, have recently shown little change. Adjusted demand deposits continued to increase at reporting banks, although purchases of Government securities, particularly the 2% per cent Treasury bonds of 1962-67, by investors other than banks temporarily reduced demand deposits of individuals and added to United States Government deposits. United States Government Security Prices—Prices of United States taxable bonds have shown little change during the past month. Taxable notes of 3 to 5-year maturity are currently yielding 1.26 per cent on the average as compared with 1.20 per cent in July. The rate of discount on new issues of Treasury bills has averaged 0.372 per cent for the past three weeks. Federal Reserve Bank of Chicago DIRECTORS Simeon E. Leland, Chicago, Max W. Babb .... ..................... Milwaukee, Wis. Walter J. Cummings......................Chicago, 111. E. R. Estberg. .. Nicholas H. Noyes............ .Indianapolis, Ind. W. W. Waymack................... .Des Moines, Iowa Frank D. Williams............ MEMBER OF FEDERAL ADVISORY COUNCIL Edward E. Brown................... OFFICERS C. H. J. C. A. A. A. W. C. Bachman. .. N. B. Dawes .... ■ . W. R. Diercks... . . J. K. Langum .... . . 0. J. Netterstrom . A. L. Olson.......... .. J. J. Endres. ... W. A. Hopkins .. S. Young................................. P. Preston............................. H. Dillard............................... B. Dunn..................... Vice President and General Counsel J. Mulroney.......................... T. Sihler................................. M. Black............................... .Assistant . Assistant .Assistant .Assistant . Assistant .Assistant Vice President Vice President Vice President Vice President Vice President Vice President Mark A. Lies........................ F. A. Lindsten...................... L. G. Meyer............................. I. J. Petersen........................ F. L. Purrington................. J. G. Roberts.......................... C. M. Saltnes........................ W. W. Turner........................ . Assistant Cashier .Assistant Cashier .Assistant Cashier .Assistant Cashier Assistant Cashier .Assistant Cashier .Assistant Cashier .Assistant Cashier P. C. Hodge................... DETROIT BRANCH DIRECTORS Clarence W. Avery..................... Detroit, Mich. Joseph M. Dodge................. H. J. Chalfont. . ..................... . Detroit, Mich. Walter S. McLucas.......... Harry L. Pierson.............. James E. Davidson................... Bay City, Mich. L. Whitney Watkins .... Manchester, Mich. OFFICERS H. J. Chalfont............ .. . Managing Director H. L. Diehl.......... W. T. Cameron...................... Assistant Cashier R. W. Bloomfield ................... Assistant Cashier A. J. Wiegandt...................... Assistant Cashier SEVENTH FEDERAL ILL • INO RESERVE DISTRICT
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