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i Conditions ubraSEVENTH RESERVE IOWA FEDERAL Volume 20, No. 4 DISTRICT MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO April 28, 1937 DISTRICT SUMMARY N accelerated rate of activity was apparent during month, but firmed later. Farm field work in this district March in manufacturing industries of the Seventh had begun to make progress by April 20, and pastures, district, and although increases were to a considerable which had been generally poor, were just showing improve extent seasonal in nature, the volumes produced exceeded ment; vegetation was still practically dormant on that substantially those of the same month last year and first- date, but the outlook for fruit was fair to good. The United quarter output was well above that of the corresponding States Department of Agriculture April 1 forecast for the 1936 period. Reporting food industries likewise increased 1937 production of winter wheat in the five States includ their output in March. The merchandising of com ing the Seventh district approximated 110,000,000 bushels, modities, at wholesale and retail, for the most part showed or 20 per cent heavier than last year’s crop and better greater than usual expansion over the preceding month, than 30 per cent above the 1928-32 average. and with the earlier date of Easter this year, retail trade Greater tjaan seasonal gains were recorded for March was considerably larger than a year ago. over February in sales of reporting wholesale trade groups, Though still affected by strike conditions, production and the department store and retail shoe trades likewise of automobiles in March rose sharply over the preceding experienced increases in business that were above the month and was well above that of last March. Continued 1927-36 average expansion for the period. The retail pressure of demand has maintained operations in the iron furniture trade, on the other hand, showed only a slight and steel industry at a high level, and activity at steel rise in the aggregate over the preceding month. Because and malleable casting foundries of the district expanded of the earlier date of Easter this year and one more trading in March, as did that at stove and furnace factories. Gains day, department store trade was considerably heavier in over February in new orders and shipments by furniture the current period than in March 1936. manufacturers were greater than seasonal in extent. Build Between March 17 and April 14, total loans and invest ing construction rose sharply in March, and the movement ments of reporting member banks in this district declined of building materials increased, in accordance with seasonal moderately, the result of smaller holdings of Government trend. In line with the accelerated industrial output, securities, as other investments and commercial loans employment and payrolls in most reporting groups gained increased in the period; demand deposits in these banks further in the current period, although the total number were about 100 millions lower on April 14 than on March of workers declined, owing to the strikes in the automo 17. Redemption of Treasury bills in the last two weeks of bile industry. the period was a factor in reducing holdings of United Production and sales of packing-house commodities, of States Government obligations, although the change in this butter, and of Wisconsin cheese increased during March item as well as in deposits reflected in some degree large over February, and output of the first-named exceeded shifts in Chicago arising out of customer accommodation that of a year ago. Inventories of packing-house products for tax-exempts around April 1. Member bank reserve and of Wisconsin cheese remained above the 1932-36 balances declined somewhat in the four weeks. Dealer average, but those of creamery butter fell to below this sales of commercial paper continued to increase in March, average. The movement of wheat and of corn was light while new financing through bankers’ acceptances fell off. in March; prices of these grains, after advancing in the Bond market weakness, evident in February, was accentu early part of April, had broken rather sharply by mid ated in March, but some recovery took place in April. A Proposed Capital Expenditures in 1937 Totals for 219 major concerns in the area largely com prising the Seventh Federal Reserve district, show capital expenditures as planned for 1937 to be one-third greater than actual disbursements in that direction during 1936. Of this total, 21 millions are reported as being for new buildings and 108% millions for machinery and other equipment to extend present capacity, 31 millions for alteration, replacement, or repair of present buildings, and 107% millions for replacement or repair of machines and equipment; included in the remaining 51% million dollars are 29 millions for plant extension, with no segregation between buildings and equipment, and 18 millions for equipment, with no segregation between additions and repair. Fifty-eight millions in the public utility group and 23% millions in the iron, steel, foundry, stove and furnace group represent expenditures for increasing plant capacity. In the railroad group 70j4 millions are shown for equip ment such as machines, rolling stock, and trackage, with approximately one-half of this amount covering replace ments. The major portion of proposed expenditures in the machinery, tools, and electrical equipment group and for firms reporting in the auto accessory, motor vehicle, and aviation group, is for machinery and similar equip ment. Expenditures in the miscellaneous group for 1937 are to be heavier for plant extension than for repair and replacements; one-half of those in the food, beverages, and confections group is for buildings and the remainder for equipment. PROPOSED CAPITAL EXPENDITURES IN 1937, COMPARED WITH ACTUAL CAPITAL DISBURSEMENTS IN 1936 Seventh Federal Reserve District Total Proposed for 1937 Industrial Group (Number of firms in parentheses) Actually Disbursed during 1936 (In thousands of dollars) Utilities................................ ...(8) Railroads............................ .. (13) Auto Accessories, Motor Vehicles, and Aviation. . (21) Iron, Steel, Foundries, Stoves and Furnaces . . . • (28) Foods, Beverages, and Confections.................... ..(36) Machinery, Tools, and Electrical Equipment. ..(27) Miscellaneous Manufacturing......................... . . (54) Paper, Containers, and Printing.......................... .. (25) Other.................................... ...(7) Total All Groups........ (219)* 104,069 92,218 Per Cent Change in 1937 from 1936 78,360 57,789 +32.8 +59.6 27,981 21,800 +28.4 27,670 23,139 +19.6 21,889 20,906 +4.7 17,928 15,613 +14.8 15,910 11,641 +37.0 9,698 6,168 +57.2 3,805 3,131 -17.7 320,494 239,221 +34.0 ♦Data for 163 of these firms included in the tabulation a month ago. Credit and Finance During the four-week period ended April 14, reserve balances of Seventh district member banks decreased 19 million dollars. Factors contributing to this decline were a loss of 18 million dollars in commercial and financial transactions with other districts and an increase in money circulation of 5j4 million dollars, offset in part by an excess of Treasury disbursements over collections of 1)4 million dollars and a 3 million dollar growth in reserve bank credit extended, of which 1 million was in bills discounted and the remainder “float.” Reserve balances declined 127 million dollars in the first two weeks of the period; the decrease was chiefly effected in the first week by heavy Treasury receipts and in the second week by large shifts in banking funds out of the Seventh district because of the April 1 personal property tax assessment. During the remainder of the period member bank reserves regained 108 million dollars of their previous decline, mostly through redemption of approximately 99 million dollars in Treasury bills in the Chicago area, which accounts for a large part of the decrease in holdings of FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Total bills and securities....................... Bills discounted........................................ Bills bought............................................... U. S. Government securities................ Total reserves........................................... Member bank reserve deposits........... All other deposits.................................... Federal Reserve notes in circulation.. Ratio of total reserves to deposit and Federal Reserve note liabilities combined............................................... ♦Number of points. Page 2 April 14 1937 S277.0 1.0 0.4 274.6 1,703.0 968.0 19.8 959.3 87.4% Change from March 17 April 15 1937 1936 S -0.9 $ -46.9 +0.9 + 1.0 0.0 -0.2 -1.8 -46.5 -5.7 +253.8 -19.2 + 138.5 +8.1 -19.2 +7.2 +91.8 -0.1* +4.0* Government direct obligations by the weekly reporting member banks. The mid-April trend in loan rates of leading Chicago banks was mixed: among “loop” banks there seemed to be some tendency toward firming of rates on demand and time collateral loans and at the same time some softening in rates on prime commercial loans and on commodity paper loans; while several outlying banks reported slightly higher rates on prime commercial and cattle loans and the opposite tendency in demand collateral loan rates. The March average rate earned on total loans and discounts by certain down-town Chicago banks was 2.63 against 2.67 per cent in February; and for similarly situated Detroit banks the decline was from 2.72 to 2.70 per cent. March sales of commercial paper by midwestern dealers rose seasonally 2*4 per cent over the preceding month to almost 50 per cent above the year-ago amount and within 19 per cent of the 1927-36 average for March. Except for last December, sales were the highest since May 1931. Paper outstanding March 31 totaled 6j4 per cent above February 27 and 62j4 per cent over March 31, 1936, and was the highest in amount since the end of January 1931. Rates hardened generally after the middle of March, with the bulk of the paper now at 1 per cent. The supply of commercial paper fell off considerably during the first half of April, and although there was some evidence of restricted buying on the part of banks, demand in general remained the same as in the corresponding March period. Contrary to a normal rise in March over February, total acceptances created this March by Seventh district banks fell 32 per cent below February to a point 71 per cent under the March 1927-36 average. Reports for the first half of April show a substantial increase in new financing over the same period of March. Outstandings at the end of March receded only 3 per cent from a month earlier, as is seasonally expected, but remained 60*4 per cent below the ten-year average for the date. Accepting banks bought 38j4 per cent less of their own bills in March, while purchases of bills from others, though still negligible, rose to almost twice the February amount. The open-bill market remained inactive, but there was a slight advance in rates quoted of from T3^ to *4 of 1 per cent, with 90-day paper at Y% bid, asked. The weakness evident in the bond market in February became even more pronounced in March. According to reports from midwestern dealers, immediate cause of the weakness was the temporary lack of interest on the part of buyers. Uncertainty as to the level at which yields might stabilize, the approaching increase in reserve requireCONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) 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.................................... April 14 1937 $3,056 258 \ Change from March 17 April 15 1937 1936 S -84 $ +221 -4 +2 3 45 210 0 -7 +3 -1 +2 +1 42 76 7 582 1,503 +6 0 +17 -113 +9 +10 -3 +171 -21 164 424 0 +ii + 18 +35 Demand deposits—adjusted................ Time deposits........................................... 2,156 849 -103 -3 +176 +39 Borrowings................................................ 0 0 -1 -1 merits, and uneasiness regarding the general price level were other contributing factors. Some overhang of selling offers developed. Although trading volume was very light, a severe adjustment in prices occurred throughout March and continued into April. However, the lack of distress selling pointed to fairly strong ownership and low dealer inventories, and in the first half of April some buy ing was resumed by insurance companies. New financing in March was greatly curtailed; many issues which had been placed in registration were postponed or definitely canceled, and losses were sustained on several offering syndicates. The 273-day Treasury bills dated April 21 had an average yield of .701 per cent, as compared with .711 for those of March 24 and .316 per cent for January 6. Prices on the Chicago Stock Exchange, as reflected by the Chicago Journal of Commerce average of 20 leading stocks, turned irregularly lower, and stood at $61.77 on April 21, in contrast to a recovery high of $68.97 on February 13. TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAGO AND DETROIT BRANCH (Exclusive of treasury checks and of non-transit items drawn on own bank) Total country and city check clearings: Pieces....................................................... Amount................................................... Daily average clearings: Total items cleared— Pieces...................................................... Amount................................................... Items drawn on Chicago— Pieces...................................................... Amount.................................................. Items drawn on Detroit— Pieces...................................................... Amount.................................................. March 1937 March 1936 11,199,174 $2,431,051,133 10,712,170 $1,937,348,428 414,784 $90,038,931 412,007 $74,513,401 70,760* $47,151,000 102,798 $40,477,000 21,523 $11,448,619 19,870 $8,522,209 ♦Decline in March 1937 is due to the packaging of Chicago early clearings. Agricultural Products Owing to the frozen and muddy condition of the topsoil, farm field work in the Seventh Federal Reserve district was far behind normal schedule on April 15 but began to make better progress in the following week. Subsoil moisture in areas where the most severe drought prevailed last summer was considerably below average. Though near ing completion in the southernmost counties and well under way in several other sections, the seeding of oats in many portions of the Seventh district had just started by April 20. Plowing for corn and other crops similarly was delayed. Temperatures remained under normal and there was a continued deficiency of sunshine. Vegetation was practically dormant. The condition of winter wheat, though better than at the close of March, ranged from fair to poor on April 20. A somewhat larger abandon ment of winter grains and grasses than last year seemed probable, principally because of very late plantings and poor development last autumn, inadequate snow cover during the winter, and losses from soil heaving during VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions) Chicago.............................................. Detroit................................................ Milwaukee......................................... Indianapolis...................................... .. . . ___ .... .... March 1937 $3,800 1,112 319 214 Per Cent of Increase or Decrease from February March 1937 1936 +33.5 +15.8 +31.5 +24.5 +18.2 +13.5 +20.2 +34.7 Total four larger cities.................. ___ 37 smaller cities............................... .... $5,445 826 +31.5 +19.9 +18.0 +20.5 Total 41 centers............................... ___ $6,271 +29.9 +18.3 February and March. Rye suffered less winter damage than did wheat. Peach blooms in southern Illinois were caught by late spring frosts; otherwise, the outlook for fruit was fair to good. Pastures have been generally poor, and had only begun to show improvement by April 20. A somewhat greater than usual portion of the small grain acreage is expected to be utilized for early spring grazing, but the area remaining for harvest will probably exceed the acreage actually harvested in 1936. On the basis of April 1 condition, the United States Department of Agriculture forecasts the 1937 production of winter wheat in the five States including the Seventh Federal Reserve district at 109,998,000 bushels, as com pared with 92,453,000 bushels harvested in 1936 and the 1928-32 average of 80,119,000 bushels. United States production is estimated at 656,019,000 bushels for 1937, as against 519,013,000 bushels in 1936 and the 1928-32 average of 623,220,000 bushels. Grain Marketing The movement of wheat at interior primary markets in the United States remained light in March. Imports of the grain continued substantial but were in smaller volume than in February or a year ago. Coincident with buying pressure from Italy, Germany, and the United Kingdom being renewed in Australia, Canada, the Argentine, and other exporting countries and extending to Gulf and Pacific Coast ports of the United States, prices of No. 2 hard winter wheat for immediate delivery at Chicago had advanced to $1.46% ar*d $1.51% by April 5. Small stocks in the United States on April 1 as compared with a year earlier likewise were a factor in the advance. Subsequently, prices declined to $1.32 and $1.35 by April 17, under the influence of a favorable United States crop forecast for 1937, an increase in Australian estimates, official denial of Argentine restrictions, rumors in regard to gold prices, and a general lull in European buying which led to “long” liquidation. Deferred deliveries were relatively weaker than nearby positions. Prices firmed after April 17. A light volume of corn moved at United States interior terminals during March, although the quantity exceeded that of a month previous. Imports of this grain lessened after the close of March. However, a considerable move ment of Argentine corn from seaboard points into the Middle West continued. April 1 stocks of United States corn aggregated much smaller than a year earlier or the 1928-32 average for the date. Chicago prices of No. 2 yellow corn for current delivery rose to $1.39 and $1.41 on April 5 but subsequently declined, in sympathy with wheat, to $1.31% and $1.34% by April 16; quotations firmed later. Argentine offers for future delivery con tinued. Oats reshipments at interior primary markets in the United States were nearly double current receipts during March; April 1 stocks of the grain in the United States were under the 1928-32 average. The mid-April break in oats was less sharp than that in either wheat or corn. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) Wheat: Receipts................................................ Shipments............................................ Corn: Receipts................................................ Shipments............................................ Oats: Receipts................................................ Shipments............................................ March 1936 March March 1937 February 1937 1927-36 Av. 7,648 7,566 6,107 7,156 10,051 8,984 16,881 11,694 9,436 5,383 9,397 4,732 18,165 7,769 17,907 10,664 3,549 7,184 3,456 5,979 8,789 7,948 7,207 7,647 Movement of Livestock Receipts of cattle and calves at public stockyards in the United States increased more than seasonally in March over a month earlier, were greater than a year ago, and exceeded the 1927-36 March average. Though continuing much below this average, hog marketings remained above the corresponding period of 1936 and recorded a nonseasonal gain over February. Lamb receipts decreased in all three comparisons and were the smallest since Febru ary 1935. The movement to inspected slaughter—inclusive of animals that did not pass through public stockyards— followed the general trend of market receipts, except that the supply of lambs was above that of any month in the second quarter of 1936 and above the 1927-36 March average; furthermore, the volume of calves for slaughter was the greatest since October 1934. Reshipments of cattle and calves to feed lots rose sharply in March over February to a level higher than the 1932-36 average for the month; those of feeder lambs declined in both comparisons. Meat Packing The production of packing-house commodities at inspected slaughtering establishments in the United States rose counterseasonally by 12 per cent in March, and was not only 7)4 per cent greater than a year ago but also within 3)4 per cent of the 1927-36 average for the month. The tonnage sold increased more than seasonally over February and totaled slightly in excess of current produc tion; it was 10)4 per cent larger than a year earlier and about equaled the ten-year March average. Quotations for most packing-house products averaged higher during the period than in February; prices of veal, smoked meats, and a few pork cuts declined. Dollar sales billed to domes tic and foreign customers in March exceeded those of a month previous by 3 )4 per cent, were 12 per cent greater than the 1927-36 March average, and aggregated 17)4 per cent above a year ago. Inventories of these commod ities in the United States decreased as is usual on April 1 from the beginning of March, but were 84 per cent heavier than on the corresponding date of 1936 and 44 per cent above the 1932-36 April 1 average. Despite a decline of \y2 per cent in number of employes and of 4 per cent in hours worked, payrolls at the close of March showed an increase of 7)4 per cent in wage payments over the corre sponding period of February. As compared with a year earlier, payrolls recorded a gain of 14 per cent in employes, 8)4 per cent in hours, and of 27 per cent in wage payments. Shipments for export expanded in March over the low volume of February. Forwardings of lard remained light and were mainly to Porto Rico and Cuba; however, they LIVESTOCK SLAUGHTER (In thousands) Cattle Yards in Seventh District, March 1937................................ Federally Inspected Slaughter, United States: March 1937................................ February 1937........................... March 1936................................ Hogs Lambs and Sheep 218 529 202 115 ........... ........... ........... 825 708 763 3,033 2,842 2,617 1,312 1,315 1,374 592 437 483 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Beef Steers (average)... Fat Cows and Heifers................. Calves.............................................. Hogs (bulk of sales)..................... Lambs.............................................. Page 4 Months of February 1937 $10.40 7.80 8.85 10.10 10.60 Dairy Products Following the small volume of February, creamery but ter production in the Seventh Federal Reserve district rose 13)4 per cent in March to a level above any month since last November; it was, however, 8)4 per cent lighter than a year ago and 16)4 per cent under the 1927-36 average for the month. The tonnage sold exceeded that of a month earlier by 7)4 per cent and was 10 per cent larger than a year ago, though aggregating 4 per cent less than the ten-year March average. Manufacture of the com modity in the United States expanded 13 per cent over February, but was somewhat smaller than last March and the 1927-36 average for the period. Imports continued above a year ago. Inventories of creamery butter in the United States fell off more than seasonally on April 1 from the beginning of March to a point somewhat below the 1932-36 average for the date. Following an advance in March, prices declined in the first three weeks of April. American cheese manufacture in Wisconsin increased 16 per cent in March over February but was 6 per cent under the 1927-36 March average. Distribution of the commodity from primary markets of the State exceeded current production, was 12 per cent heavier than a month EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of March 15, 1937 Wage Earn ers % Earn ings No. Earn ings (000 Omitted) $ 1,517 345 256 413 2,531 482,705 359,045 23,805 49,660 915,215 14,055 12,188 579 1,054 27,876 +2.8 -12.1 +7.1 +1.1 -3.6 +8.1 -7.9 +19.1 +1.4 +0.4 Textiles and Products.. Food and Products.... Chemical Products....... Leather Products.......... Rubber Products........... Paper and Printing.... Total................................. 343 748 231 136 32 615 2,105 68,038 102,021 34,452 27,761 21,070 78,285 331,627 1,337 2,519 995 585 557 2,244 8,237 + 1.1 -1.1 +0.9 +0.5 +10.2 +2.2 +1.1 +4.6 +1.2 +3.7 +1.5 +11.1 +3.5 +3.3 Total Mfg., 10 Groups... 4,636 1,246,842 36,113 -2.4 +1.1 Merchandising2.................. Public Utilities................... Coal Mining........................ Construction....................... 3,476 710 23 309 115,755 94,803 4,623 8,452 2,447 3,242 140 218 +5.1 +0.4 +0.6 -8.3 +4.3 +1.8 + 1.1 -1.4 Total Non-Mfg., 4 Groups 4,518 223,633 6,047 +2.4 +2.6 Total, 14 Groups............... 9,154 1,470,475 42,160 -1.7 + 1.3 Industrial Group Report ing Firms Wage Earn ers No. Change from February 15,1937 % Durable Goods: Metals and Products1.. Vehicles............................ Stone, Clay, and Glass. Wood Products.............. Total................................. Non-Durable Goods: Calves ........... Week Ended April 17 March 1937 1937 ........... $10.65 $10.80 ........... 8.50 8.10 8.80 ........... 8.50 ........... 9.85 10.20 12.00 included a small tonnage to Italy. British trade in United States hams improved because of Easter demand; also, fair bookings were made for Coronation week and the Whitsuntide. The sale of United States lard in English markets was restricted to relatively limited offerings from stocks already landed. Continental European trade in packing-house commodities from the United States was almost nil and confined principally to casings. Porto Rican and Cuban trade continued in good volume. British quo tations for American hams ruled only slightly under Chi cago parity at the end of March; lard prices trended toward parity during the first half of April. Inventories of United States lard in foreign markets—inclusive of stocks in transit—declined further on April 1 from the beginning of March, but those of American meats increased. Imports of animal products into the United States expanded sharply in March over February and continued to exceed current exports of these commodities. March 1936 $8.70 6.85 8.00 10.25 9.95 lOther than Vehicles. Illinois, Indiana, and Wisconsin. previous and slightly greater than the ten-year average lor the period, but was 7)4 per cent under last March. Inventories of cheese in the United States decreased somewhat more than seasonally on April 1 from the begin ning of March but totaled 41 per cent above the 1932-36 April 1 average. Prices eased in the first three weeks of April, following steadiness throughout March. Industrial Employment Conditions Seventh district industries continued to add workers and to increase wage payments in the period between February 15 and March 15, but the gains effected were largely offset by strike conditions prevailing within the automobile industry. In this industry settlement of points at issue with one company near the middle of February was followed closely by the opening of a similar dispute with another concern. As this second important disturb ance in the labor field began within the period covered by current data but was not terminated until early April, figures in the accompanying table reflect the loss experi enced without showing the subsequent recovery. Other industries besides the manufacture of automobiles were involved in labor strikes at different stages of development during the period of this survey, new ones appearing as earlier ones were brought to a close. The Michigan area was especially affected and the only one of the five States comprising the Seventh district in which both employ ment and payroll volumes were considerably lower in March than in February. Iowa showed a moderate loss in employment volume but with the general raise in wage rates that was continued from the preceding month, reg istered a considerable gain in wage payments; Illinois, Indiana, and Wisconsin recorded increases in both items. Aside from the vehicles industries in which employment was 12 per cent and payrolls 8 per cent lower than a month earlier, only one of the major manufacturing groups failed to share in the general advance—food products, which showed a slight decline in employment volume, although wage payments increased moderately. Of the non-manufacturing industries, all but construction contrib uted to an upward trend. Manufacturing Automobile Production and Distribution As in the first two months of the year, strikes prevented the production of automobiles in March from attaining the level it probably would have reached otherwise; never theless, output rose markedly over February and exceeded substantially the volume of March last year. Furthermore, the number of cars manufactured in the first quarter of midwest this year totaled well above that produced in the same period of 1936. Output of passenger cars in March num bered 403,773 and that of trucks 90,241, or 36 and 34 per cent heavier, respectively, than in the preceding month and 1 7)4 and 16)4 per cent greater than a year ago. First-quarter output aggregated 1,009,950 passenger cars and 227,740 trucks, which volumes represent respective gains of 16)4 and 11 per cent over the first three months of 1936. A marked expansion in sales of new automobiles to dealers and to users was shown during March in the Seventh district, following the sharp declines of the pre ceding month; moreover, sales exceeded those of March last year when gains were also large. The number of used cars sold in March was considerably greater than a month earlier and was well above a year ago. Both new and used car stocks declined between the end of February and March 31, and those of new cars remained much smaller than a year previous, while the number of used cars on hand at the close of March totaled slightly less than at the end of March last year. Iron Class of Trade Companies Included February 1937 March 1936 +163.3 +172.0 +53.2 +38.1 17 17 +159.4 +179.6 +5.2 + 11.7 26 26 -8.9 -4.0 -45.4 -44.3 26 26 +63.2 +21.7 26 -6.7 -2.8 -1.1 +11.3 26 26 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........................................ Steel Products LUMBER AND BUILDING MATERIALS TRADE distribution of automobiles March 1937 Per Cent Change from and With mills booked in many instances practically through the second quarter and with continued heavy pressure for deliveries, the steel industry of the Chicago district has continued to operate at a high rate. In the early part of April, steel ingot output averaged 84)4 per cent of capacity, as compared with 82 per cent a month previous; a slight reduction to 84 per cent was noted in the second week of the current month, due to operating conditions at the mills, but output moved up to 86 per cent in the third week of April. Almost all classes of industry have shared in the heavy demand for steel products, with per haps the exception of the heavy construction industry; railroad purchases in particular remain large. Daily aver age pig iron production for March in the Illinois and Indiana district exceeded that for February by 3 per cent and the tonnage produced last March by 57 per cent. Considerable strength was shown in the scrap iron and steel market throughout March, but some weakening devel oped in April. Seventh district foundries reported a considerable in crease in the volume of new orders booked during March, those'for steel castings rising 72 per cent and for malleable castings 22 per cent above the tonnages of the preceding month. Production was accelerated approximately 20 per cent and shipments almost as much in each of the two types of foundries. The prevailing rate of activity con tinued substantially higher than a year ago, especially at Wholesale Lumber: Sales in Dollars......................... Sales in Board Feet................. Accounts Outstanding1........... Retail Building Materials: Total Sales in Dollars............. Lumber Sales in Dollars........ Lumber Sales in Board Feet. Accounts Outstanding1........... March 1937 Per Cent Change from Number of Firms or Yards February 1937 March 1936 +21.9 +26.7 +9.0 +53.2 +44.9 +35.6 8 6 8 +25.9 +36.6 +47.9 +1.5 +26.0 +21.1 +1.7 +5.8 161 79 89 158 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month . Wholesale Trade........................... Retail Trade................................... March 1937 February 1937 March 1936 122.2 256.3 136.7 316.3 138.0 304.2 JEnd of Month. Page 5 steel casting foundries where gains ranged from 146 per cent in production to 179 per cent in orders. At malleable foundries, increases in the yearly comparison ranged from 28 per cent in orders booked to 42 per cent in the tonnage produced. Shipments of stoves and furnaces from plants within the district were 50 per cent larger in March than in Feb ruary, which increase exceeds the usual expansion at this season. Molding-room operations and orders accepted also registered substantial increases, and all items contin ued heavier than a year ago. Inventories at the close of the current period were 12 per cent above a month earlier and'85 per cent in excess of those on March 31 last year. Furniture More than seasonal gains took place in March in both new orders booked and shipments of reporting furniture manufacturers in the Seventh Federal Reserve district, following the rather unfavorable trends recorded in the first two months of this year. New orders increased 27 per cent over the preceding month and shipments ex panded 22 per cent, as against gains in the 1927-36 aver age for March of but 11 and 15 per cent, respectively. The volume of each item was over half again as large as in the corresponding month of 1936 and about 40 per cent greater than the ten-year average for the period. Because of slightly heavier shipments than incoming orders and a moderate amount of cancellations, unfilled orders on hand March 31 totaled 4 per cent smaller than a month earlier and their ratio to current orders dropped from 149 to 113 per cent; they were, however, 84 per cent above those on hand a year ago at the same time when the ratio to new orders was only 87 per cent. Operations averaged around 90 per cent of capacity in March and were approx imately 20 points higher than in the month last year. Building Materials, Construction Work Dealers and manufacturers of building materials reported an expansion in business volume for March that was in line with the usual gains at this season. While conditions varied throughout the district, some sections being held back more than others by unfavorable weather conditions, the gains as a whole were well distributed. Dollar sales of lumber increased by a little more than 20 per cent at wholesale and by over 35 per cent at retail, thus following closely the trend in the preceding ten years’ seasonal averages. In comparison with the year-ago volumes gains were considerably smaller than a month earlier, because of the sharp rise that took place in March last year after shipments and deliveries had been delayed throughout the greater part of February by prevailing weather conditions. Shipments of brick and cement also registered about the usual seasonal rate of expansion during the current period, those of the former rising almost 40 per cent and of the latter 70 per cent over the February volumes, according to preliminary data. While cement shipments showed only a moderate increase over the figures for last March, delivWHOLESALE TRADE IN MARCH 1937 eries of brick were practically double in this comparison, though still not more than about 20 per cent of the normal volume. Prices of building materials have continued to move upward and in the week of April 3 averaged 2l/2 per cent higher than in the corresponding week a month earlier. Building Construction March activity in the building construction industry of the Seventh district was the greatest for any month since last August, according to data on contracts awarded. The dollar value of such contracts, as is usual at this season, expanded markedly over that of the preceding month and was considerably larger than in March last year. Resi dential building increased approximately 90 per cent over the February volume and comprised almost one-third of total building construction in the current period; a year ago in March, it amounted to less than 20 per cent of the total. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period March 1937................................................................... Change from February 1937................................ Change from March 1936..................................... First three months of 1937....................................... Change from same period 1936.......................... Groceries................... Electrical Supplies.. Net Sales Stocks +18.3 +34.2 +8.7 +85.0 +15.8 +34.5 +2.8 +78.1 Page 6 +3.7 +26.2 -4.7 +71.0 +6.7 +39.0 +2.4 +81.2 81.5 159.4 140.3 119.0 *47,502,300 +64.0% +24.1% *120,527,600 +18.0% *15,358,900 +88.0% + 109.3% *31,355,700 +116.1% Substantial gains were recorded during March over both the preceding month and a year ago in the number and estimated cost of building permits issued in 101 cities of the Seventh district. The estimated cost of these permits increased 48j4 and 34 per cent in the respective compari sons, while their number gained 101*4 and 20 per cent. A recession from February in the dollar volume of permits issued in Chicago and in the smaller cities of Michigan, and a decline from last March in this latter group and in the smaller cities of Indiana furnished the only excep tions to the general trend. Merchandising Gains for March over February in sales of reporting wholesale trade groups were greater than seasonal in the Seventh district: business expanded 15 per cent in the drug trade, 20 per cent in groceries, 29 per cent in electrical supplies, and 46 per cent in the hardware trade, whereas in the 1927-36 March average, respective increases of only 12, 11, 11, and 39 per cent are shown. In drugs and hard ware, gains over a year ago were somewhat smaller than in a similar comparison for February; the increase of 18 DEPARTMENT STORE TRADE IN MARCH 1937 Per Cent Change March 1937 from March 1936 Per Cent Change from Same Month Last Year Commodity Residential Contracts *Data furnished by F. W. Dodge Corporation. Locality Ratio of Accounts Outstand ing to Accounts Outstand Collections Net Sales ing Total Contracts Net Sales Per Cent Change First Three Months 1937 from Same Period 1936 Stocks End of Month Net Sales Ratio of March Collections to Accounts Outstanding End of February 1937 1936 Chicago...................... Detroit....................... Milwaukee................ Other Cities.............. +26.7 +21.6 +23.7 + 18.8 + 16.9 + 14.7 + 17.9 + 10.2 +20.5 + 19.1 +21.0 + 15.6 37.9 44.7 40.9 36.8 35.2 46.1 39.6 36.0 7th District............... +23.7 + 15.3 +19.3 40.0 39.1 per cent in the grocery trade compared with only small gains in the two preceding months, and that of 85 per cent in electrical supplies was the heaviest since April 1934. The higher level of wholesale commodity prices as well as the greater number of trading days in the current period than either a month or a year previous no doubt had considerable effect on the dollar volume of business recorded. In the first quarter of 1937, electrical supply sales totaled 71 per cent, hardware sales 37 per cent, drug sales 10 per cent, and grocery sales 8 per cent larger than in the corresponding three months of 1936. Stocks, except in drugs, were well above the year-ago level. In all groups, ratios of accounts outstanding to net sales were lower than either a month or a year previous. With the earlier date of Easter and one more trading day, sales of Seventh district department stores showed an exceptionally large increase—24 per cent—this March over last. Furthermore, business expanded considerably more than is usual over the preceding month, gaining 31 per cent as against an increase in the 1927-36 average for the period of only 20^2 per cent. Detroit recorded the smallest increase over February—23 per cent—-while Chicago sales rose 32 per cent, Milwaukee sales 35p2 per cent, and sales by stores in smaller cities 37per cent. Stocks were larger by 8 per cent at the close of March than a month previous and 15 per cent heavier than a year ago. Stock turnover in the first quarter of 1937 was somewhat greater than in the same period last year. The retail shoe trade experienced a much heavier than usual expansion in business this March over the preceding month, sales of reporting department stores and dealers totaling 66l/2 per cent larger in the comparison, whereas the 1927-36 average for March shows an increase for the period of but 49 per cent. Moreover, the dollar volume sold in the current period exceeded that of last March by 28 per cent, while sales for the first quarter of this year recorded a gain of 23 per cent over the first three months a year ago. A rise of 5 per cent took place in stocks during March, which were 8 per cent larger at the end of the month than at the same time in 1936. An increase of only one per cent was shown for March over February in the retail furniture trade, as compared with an 8 per cent rise for the period in the 1927-36 average. A falling-off in sales of furniture by department stores was responsible for the small gain in the total, as housefurnishings sales by these stores and sales by dealers rose in the month, the latter by 16 per cent. The reverse trend was evident as compared with March a year ago, department stores recording a 23 per cent increase in sales and furniture dealers a 11/2 per cent decline, with their combined sales gaining 17j4 per cent. Stocks on hand were 11 per cent larger at the close of March than a month previous and 22 per cent above those on March 31 last year. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as abase, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) Meat Packing—(U. S.)— Sales (in dollars)........................................................................... No. of Mar. Firms 1937 Feb. 1937 Jan. 1937 Dec. 1936 Nov. 1936 Oct. 1936 Mar. 1936 Feb. 1936 Jan. 1936 Dec. 1935 Nov. 1935 Oct. 1935 45 95 92 101 96 93 99 81 83 85 83 88 94 Casting Foundries— Shipments: Steel—In Dollars..................................................................... In Tons.......................................................................... Malleable—In Dollars............................................................ In Tons................................................................ 12 12 21 21 124 136 88 122 104 114 74 103 95 102 69 98 73 77 66 96 57 59 55 80 74 76 56 80 51 50 59 88 46 46 49 73 42 42 52 78 41 41 49 73 42 41 42 62 47 47 45 66 Stoves and Furnaces— Shipments (in dollars)................................................................ 8 195 131 103 266 256 356 150 113 93 176 207 257 Furniture— Orders (in dollars)........................................................................ Shipments (in dollars)................................................................ 12 12 94 102 74 85 114 65 67 81 81 75 84 91 62 65 45 57 73 41 43 53 56 54 62 68 Output of Butter by Creameries— Production...................................................................................... Sales................................................................................................. 59 61 80 97 70 90 72 85 77 93 88 94 103 106 C 87 88 82 89 82 94 79 101 75 99 94 121 Wholesale Trade— Net Sales (in dollars): Groceries..................................................................................... Hardware.................................................................................... Drugs........................................................................................... 27 13 72 102 86 60 70 77 65 64 85 70 93 90 65 85 80 73 108 89 61 77 79 59 49 69 63 48 73 59 65 74 63 75 72 75 86 81 29 6 5 44 84 84 99 113 103 96 102 104 76 93 76 70 78 97 78 88 77 68 78 97 157 194 160 156 164 98 98 117 105 94 101 93 98 117 118 103 104 95 79 93 83 81 82 89 68 79 67 62 69 86 64 75 63 59 65 81 133 160 135 130 137 82 85 104 94 88 90 83 82 95 95 87 87 79 Automobile Production—(IT. S.)— Passenger Cars.............................................................................. Trucks.............................................................................................. 138 240 101 179 106 186 145 193 117 142 65 90 117 206 77 167 102 174 117 163 115 154 73 156 Building Construction— Contracts Awarded (in dollars): Residential................................................................................. Total............................................................................................ 52 69 28 42 27 64 28 50 32 52 40 56 25 56 10 34 14 59 21 78 17 43 22 63 Pig Iron Production*— Illinois and Indiana..................................................................... 127 123 120 117 109 108 81 75 77 79 79 71 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago....................................................................................... Detroit........................................................................................ Milwaukee.................................................................................. Other Cities............................................................................... Seventh District—Unadjusted............................................ Adjusted................................................. 11 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Board of Governors of the Federal Reserve System) N March industrial activity continued to increase and payrolls at factories and mines showed a substantial rise. Prices of basic commodities after advancing rapidly in March declined in the first half of April. INDUSTRIAL PRODUCTION I Production and Employment Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=100. By months, January 1929 to March 1937. FACTORY EMPLOYMENT AND PAYROLLS k Employment \A\\ Poy rolls_^ A /*\ # \a 1929 1930 1931 1932 ' /v 'J J r\r / 1933 1934 1935 1936 1937 Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 average= 100. By months, January 1929 to March 1937. Indexes compiled by the United States Bureau of Labor Statistics. Industrial production increased from February to March and the Board’s seasonally adjusted index advanced from 116 per cent of the 1923-1925 average to 118 per cent. The rise reflected a sharp increase in output of minerals, chiefly coal, and an increase of somewhat more than the usual seasonal amount in manufacturing. The larger output of coal in March was due in part to stocking by consumers in anticipation of a possible strike at bituminous coal mines on April 1 when the agreement between mine operators and the miners’ union expired. A new agreement was reached on April 2 but, owing partly to the previous accumulation of stocks, production in the first ten days of April showed a sharp decline. During March activity at steel mills increased seasonally and in the first three weeks of April was over 90 per cent of capacity. In the automobile industry output showed about the usual seasonal increase in March and the first three weeks of April, considerable fluctuations during this period being largely in response to developments in the labor situation. Lumber production expanded considerably in March, and there was a sharp rise in output of nonferrous metals. Cotton consumption, which has been at an unusually high level in recent months, increased further in March and in actual amount was larger than in any previous month. Production at woolen mills and shoe factories continued in iarge volume. Value of construction contracts awarded in March, as reported by the F. W. Dodge Corporation, was at about the same level as in February and substan tially higher than a year ago. Privately-financed work increased, while the amount of publicly-financed work continued to decline. The increase in privately-financed projects reflected a larger volume of residential building and of factory and commercial construction. Employment and payrolls increased by considerably more than the usual seasonal amount between the middle of February and the middle of March. The expansion in payrolls was larger than in employment, reflecting in part a further rise in wage rates. In manufacturing, the principal increases in employment were in industries producing durable goods, particularly steel, machinery, and lumber. The number employed in the production of nondurable manufactures showed slightly more than the usual seasonal rise. Distribution WHOLESALE PRICES Distribution of commodities to consumers showed about the usual seasonal increase from February to March. Mail-order sales expanded considerably but the rise in department store sales was less than seasonal, considering the early date of Easter this year. Other Commodities Foods Commodity Prices Prices of nonferrous metals, steel scrap, rubber, cotton, and wheat, which had advanced rapidly in March, declined considerably in the first half of April. Since the middle of March prices of coke, tin plate, and rayon have advanced and there have been smaller increases in a wide variety of other industrial products. Dairy products have declined, reflecting in part seasonal developments. jiy / Form Products Bank Credit Indexes compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1932 to date. Latest figure is for week ending April 17, 1937. MEMBER BANK CREDIT Billions of dollars BILLIONS OF OOLLARS ---------------------24 fotaI Loans and Investments Demand DepositsAdjusted - ILS. Gov t Obligations Balances of Banks in U S Time Deposits Total Loans Other Securities In the four-week period from March 24 to April 21, excess reserves of member banks increased from $1,270,000,000 to $1,590,000,000, reflecting prin cipally disbursements by the Treasury from balances with Federal Reserve banks and purchases of U. S. Government obligations by the Federal Reserve System. The bulk of the increase in excess reserves was at banks in New York City and Chicago. Total loans and investments of reporting member banks, which had declined sharply in March, reflecting sales of U. S. Government obligations, showed little change in the two weeks ending April 14. Loans to brokers and dealers in securities declined from the middle of March to the middle of April, while other loans, which include loans for commercial, industrial, and agri cultural purposes, showed a substantial increase. These loans have increased almost continuously over the past year. Demand deposits, after declining in March, increased somewhat in the first half of April, and there was an increase in foreign bank balances, reflecting an inward movement of short-term funds from abroad. U.S.Govt Deposits Money Rates 1935 1937 Wednesday figures for reporting member banks in 101 leading cities. September 5, 1934, to April 14, 1937. Page 8 The rate on prime commercial paper advanced from 44 per cent to 1 per cent in the latter part of March. Bond yields, which had advanced sharply in March, showed no pronounced change in the first three weeks of April.
@FedFRASER