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r» Seventh FEDERAL Reserve DISTRICT Volume 19, No. 9 MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO August 28, 1936 DISTRICT SUMMARY NDUSTRIAL and trade activity in the Seventh duction were affected by drought conditions and district continued through July to be maintained were below average for the period. The July move at a comparatively high level for the season of the ment of wheat was the heaviest since the beginning year, many phases failing to follow the declining of the 1931 season, but that of corn and oats fell trend usual in the month. Decreases, where re off from June, receipts of oats at primary markets corded, were seasonal in nature, and substantial being the lowest on record. Grain prices rose gains were shown over last July when conditions sharply in July. There was a marked decline dur likewise were favorable for the season. Certain ing the month in the condition of Seventh district food-producing industries, however, have been ad crops as the heat and drought continued. Rains in versely affected by the drought this year. August over fairly widespread areas have been of Operations at steel mills continued to be well sus some benefit to the soil, crops, and pastures. tained through July and into August, while July Wholesale trade conditions improved in July, gro building construction in the district was the heaviest ceries and electrical supplies showing counter-sea of the year to date, though residential building sonal gains in business over the preceding month, showed a seasonal recession. Shipments from steel while drug and hardware sales decreased less than casting foundries increased over June, and those is usual in the period. Declines in the department from furniture factories equaled the preceding store, retail shoe, and retail furniture trades were month’s volume. Malleable casting shipments de seasonal in nature, and increases in sales over the clined but production increased slightly. Although corresponding month last year continued to be there was some further curtailment in the manufac substantial. ture of automobiles, it was much less than usual. Commercial loans of reporting member banks in The movement of building materials continued ac tive, despite a seasonal slowing-down in that of the district expanded further between the middle of lumber. Employment was slightly below the June July and August 19, but a decrease in loans on secu level; payrolls declined to a greater extent. rities and a reduction in holdings of U. S. Govern A contraseasonal increase took place in July in the ment securities effected a small decline in the period production of packing-house commodities, which in total loans and investments of these banks. Dealer brought the volume considerably above a year ago sales of commercial paper and transactions in bank as well as above average for the month, and sales ers’ acceptances were heavier in July, but remained followed a similar trend. Butter and cheese promuch below normal. I FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION Credit and Finance (Amounts in millions of dollars) August 19, 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 Com bined................................................................... •Number of Points. 1936 $ 291.3 0.0 0.4 289.1 1,675.5 973.4 39.3 916.8 86.8% Change From July 15, August 21, 1936 $ —0.3 0 +0.0 0 —118.0 —5.1 —112.6 —3.6 —0.6* 1935 $—66.9 0 -0.2 —66.6 +408.2 +203.1 +24.8 +113.1 +7.V Reserve deposits of member banks at the Federal Reserve Bank of Chicago declined 60 million dollars during the first three weeks of the period July 15 to August 19, coincident with the selling of bills locally by the Treasury and a net outflow of funds from this district through commercial and financial transactions with other districts. However, in the fourth week, member bank deposits rose 16 millions and in the fifth week another 39 millions, during which time the Treas ury’s deposits at this bank were reduced, while inter- district settlements for commercial and financial trans actions resulted in a net gain of funds to the district. Over the entire period, therefore, member bank re serve deposits declined but 5 million dollars. Federal Reserve notes in circulation, to which 47 million dol-' lars had been added between May 20 and July 15, were 4 million dollars less on August 19 than five weeks earlier. Although the range of commercial loan rates of down-town Chicago and Detroit banks is reported un changed for July, 2.64 per cent was the average rate earned on commercial loans by several of these Chicago banks, as compared with 2.70 per cent for June and with 3.04 per cent for July 1935. Commercial paper dealers in the Middle West re ported sales in July as 35 per cent above June, and for the first half of August as slightly better than for the same period in July; nevertheless, sales volume re mained about 40 per cent below the 1926-35 average. Available supply was readily absorbed at rates which have prevailed during recent months, most paper mov ing out at of 1 per cent. Volume outstanding at the end of July was 4 per cent above the same date last year. The total of new bankers’ acceptances made in July in this district increased more than seasonally, but was nevertheless 60 per cent below the 1926-35 average. The first half of August showed a considerable in crease over the same period of July, and the volume was somewhat above the first fifteen days of August 1935, grain bills being conspicuous this year in com parison with last. Purchases and sales reported by bill dealers in this district for the period July 16 to August 12 were somewhat better than a year ago. Nominal rates have remained J4 Per cent bid, 3/16 per cent asked, for 90-day bills. Bond market conditions in July and early August, as reported by dealers in this district, remained sub stantially unchanged, with strong demand, principally from institutional buyers, and a well-sustained price level. July issues, about two-thirds refunding and the balance new capital, amounted to approximately half the June volume. Between July 16 and August 17, the Chicago Journal of Commerce average of twenty lead ing stocks listed on the Chicago Stock Exchange rose from $54.89 at the beginning of the period to $56.45 on August 3, but had declined to $55.68 by August 17. CONDITION OF LICENSED REPORTING MEMBER BANES SEVENTH DISTRICT (Amounts in millions of dollars) August 19, Change From July 15, August 21, 1936 $3,007 250 1935 $+439 —1 1936 Total loans and investments............................... $ —8 Total loans on securities................................... —13 To brokers and dealers: In New York.............................................. 9 +5 Outside New York.................................... 39 —17 To others (except banks)............................. 202 —1 Acceptances and commercial paper bought .38+8 Loans on real estate.......................................... 69 +1 Loans to banks................................................... 9 0 Other loans.......................................................... 499 +27 U. S. Government direct obligations........... 1,574 —27 Obligations fully guaranteed by U. S. Government.................................................... 152 +2 Other securities.................................................. 416 —6 -|_8 +8 —17 0 +4 —2 +165 +217 +11 +45 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) July 1936 July 1935 Total country and city check clearings: Pieces...................................................... 10,466,477 9,999,067 Amount................................................... $2,070,170,928 $1,643,611,928 Daily average clearings: Total items cleared— Pieces................................................... 402,557 384,580 Amount............................................... $79,621,958 $63,215,843 Items drawn on Chicago— Pieces................................................... 69,213* 92,337 Amount............................................... $41,414,000 $32,391,000 Items drawn on Detroit— Pieces................................................... 22,796 18,724 Amount............................................... $9,752,767 $7,556,793 * Reduction in July 1936 is due to the packaging of Chicago early clearings. Deposits and Earning Assets, All Member Banks in U. S. The accompanying chart is an elaboration of last month’s presentation of asset and deposit data for all member banks in the United States, and is designed for the purpose of showing relationships between the vari able supply of deposit funds and the employment of such funds as major sources of revenue. After having reached 99.49 per cent in June 1929, v* the ratio of total earning assets to total deposits ranged between 93.66 and 97.97 per cent from December of that year to June 1931. Liquidation in loans was slower that were deposit withdrawals from that time to September 1931, bringing supply and utilization into close proximity where they continued to Septem ber 1932. Subsequently, the reduction in loans pro ceeded more rapidly than did the decline in deposits, so that the percentage was reduced to 92.84 by Decem ber 1933. Coincident with a marked expansion in deposits and a relatively slower growth in security holdings, together with some further liquidation in loans, the ratio had declined to 77.98 by December 1935. “All other” loans fell from 25.44 per cent of deposits in June 1932 to 13.46 in December 1935, and loans on stocks and bonds decreased from 20.00 to 10.75. The percentage for Treasury notes, certificates, and bills — principally maturities within five years — rose from 5.26 to 17.15 in this period. Following a gain from 14.02 per cent in June 1933 to 16.24 in December of the same year, the ratio for United States Government bonds — largely maturities beyond the five-year period—declined to 10.16 per cent in December 1935, partly due to the retirement of National bank notes from circulation. Though not given in the chart, data for the major groups of banks corresponded rather closely to the trend of the aggregates. However, the total earning asset ratio was consistently higher in country banks than for reserve or central reserve city banks, as was that of “all other” loans. Stock and bond loan ratios * were usually greater in the metropolitan areas than in VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From Chicago.......................... Detroit........................... Milwaukee..................... Indianapolis................... ........................................... ........................................... ........................................... ........................................... July 1936 $2,979 885 280 201 June 1936 —10.1 —4.4 —3.4 +7.1 July 1935 +8.0 +27.6 +19.5 +22.3 Demand deposits—adjusted............................... Time deposits........................................................ 2,228 816 —4 +15 +252 +98 Total four larger cities. ........................................... 37 smaller cities............ ........................................... $4,345 776 —7.9 —0.1 +12.8 +24.1 Borrowings.............................................................. 0 0 0 Total 41 centers............ ........................................... $5,121 —6.8 +14.4 Page 2 RATIO OF EARNING- ASSETS TO DEPOSITOR CLAIMS ALL MEMBER BANKS DECEMBER IN 192B TD UNITED STATES DATE EXCEPT THClliE >7 HER L.OAN BONDS BILLS ATIOIIIi FUL 2.97 2.98 3.07 : puEii.icunur 259 2g5 2.80 OBL' ■ ram .HOAD [STOCKS ILOlHEfl COiRPO BONDS MAR. JUNE OCT. DEC. MAR. JUNE SEPT. DEC. MAR. JUNE SEPT. DEC. JUNE SEPT. DEC. JUNE OCT. DEC. MAR. JUNE OCT. DEC MAR. JUNE NOV. DEC. OWN BILLS, COMMERCIAL PAPER BOUGHT IN OPEII MARKET, ANO ★ PERCENT LOANS TO BANKS. reserve cities, and those in the latter were larger than in country institutions. Real estate loan ratios in country and reserve city banks exceeded those for Chi cago and New York combined. Differences in invest ment policy are reflected in higher Government bond ratios in reserve cities than elsewhere, and in the more rapid rise in central reserve cities in the ratio for United States notes, certificates, and bills from 11.58 per cent of deposits in June 1932 to 27.39 in March 1936. Furthermore, a higher percentage of State, county, public utility, railroad, and “all other” corpo rate obligations was maintained in country banks than in reserve cities, and ratios in the latter were usually in * excess of those in central reserve cities. Agricultural Products A marked decline during July in the condition of Seventh district crops was confirmed by August 1 esti mates of the United States Bureau of Agricultural Economics, the principal production losses from con tinued heat and drought being 45 per cent in corn, 36j4 per cent in edible dry beans, 18 per cent in white pota■* toes, 17 per cent in hay and grapes, 12per cent in barley, 9j4 per cent in tobacco, 9 per cent in apples, and 7 per cent in sugar beets. The outlook for small grain, broom corn, and hay remained better than in the 1934 drought year but that for most other crops was less favorable, and practically all crops, except winter wheat and sugar beets, showed a decided de crease from the 1928-32 average. Precipitation in the district averaged 62 per cent of normal from August 1 to 20 and ranged from 28 * per cent in Michigan to 54 per cent in Iowa, 66 per cent in Indiana, 72 per cent in Illinois, and 78 per cent in Wisconsin. Following moderate to heavy rain fall in the southern half of Iowa on August 4 and 5, precipitation in that State was largely confined to local showers from August 6 to 20. On the other hand, fair to good rains were received in central, north central, and northeastern Illinois, in the southwestern, north western, and central parts of Indiana, and at the close of the period in Wisconsin. ¥ CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of August 1 condition (In thousands of bushels unless otherwise specified) Seventh District Forecast Final h Forecast United States Final Average 1936 1936 1936 1935 Corn.............................. 501,551 880,218 1,439,135 2,291,629 Oats.............................. 363,465 453,391 771,703 1,196,668 Winter Wheat............. 62,938 57,807 519,097 464,203 Spring Wheat.............. 2,127 2,134 113,648 159,241 Barley.......................... 34.073(a) 47.713(a) 145,027 282,226 Rye............................... 6.705(a) 12.911(a) 27,095 58,928 Buckwheat.................. 538(a) 1.226(a) 5,606 8,220 Flaxseed....................... 265(b) 336(b) 6,342 14,123 Potatoes (white)........ 39,789 57,484 294,537 387,678 Potatoes (sweet)........ 1.055(c) 1.280(c) 66,357 83,198 Sugar Beets1............... 700(d) 686(d) 8,808 7,908 Apples (total crop).... 9.763(a) 23.303(a) 102,487 167,283 Peaches........................ 1.527(e) 6.232(e) 43,131 52,808 Pears............................. 1.011(e) 1.611(e) 23,519 22,035 Cherries1...................... 29(f) 33(f) 104(g) 120(g) Grapes1......................... 50(a) 73(a) 1,831 2,455 Beans (dry edible)2 . . 2.141(f) 4.828(f) 10,200 13,799 Tobacco3...................... 15,792 15,835 1,106,801 1,296,810 All Tame Hay1.......... 12,649 17,450 61,853 76,146 Wild Hay1................... 362(a) 542(a) 6,934 11,338 Broom Corn1............... 12(h) 17(h) 41 63 Cotton4...................................... .. 12,481 10,638 1928-32 2,553,424 1,215,102 622,252 241,312 281,237 38,212 8,277 15,996 372,115 66,368 8,118 161,333 56,451 23,146 108(g) 2,200 11,858 1,427,174 69,533 10,719 47 14,667 1In thousands of tons. 2In thousands of 100-lb. bags. 3In thousands of pounds. 4In thousands of 500-lb. bales, (a) Five states including Seventh Federal Reserve ^ district, (b) Iowa, Michigan, and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan, (e) Michigan, Illinois, Indiana, and Iowa, (f) Michigan and Wis consin. (g) Twelve states only, (h) Illinois. The prospective yield of Seventh district corn had been further reduced by August 20 from the low level at the beginning of the month. However, deterioration has been checked in the southern portion of this area and is progressing at a slower rate in many other sec tions. A rapid decline in yield continues in Michigan and in some parts of Iowa. General condition of the crop in the district ranges from fair to very poor, with a large number of ears underdeveloped or only par tially filled and with a fairly high percentage of the stalks barren. In southern counties, recent rains have resulted in the formation of new ears and in the growth of sucker plants. Past experience indicates, however, that any augmentation to the corn crop from this source is likely to be comprised largely of poorly de veloped grain and nubbins. Soybeans in the southern portion of the district likewise have been revived by recent rains. Furthermore, the moisture has placed soil of that area in fair condition for the planting of emergency crops. Though beginning to show better color in several sections, pastures throughout the entire Seventh district remain generally poor. Potatoes are badly damaged in Michigan and until recently were greatly in need of rain in Wisconsin. Precipitation in the remainder of the United States corn and wheat region, except Montana, was much be low normal from August 1 to 20 and ranged from 3 per cent in Oklahoma to 74 per cent in Ohio. Much higher than seasonable temperatures prevailed. De terioration in corn continues widespread west of the Mississippi River. Much of the crop is a failure in the Plains States and Missouri. Elsewhere, it ranges from fair to poor, though some is good and a little is excel lent. The rate of decline in a few areas is not quite so rapid as during July and early August. The thresh ing of winter wheat is nearing completion, and the combining and threshing of spring wheat is under way. Prevailing high prices are bringing about the harvesting of a considerable amount of the low-yield ing spring wheat which ordinarily would not pay for the cutting. Grain Marketing Wheat receipts and reshipments at interior primary markets in the United States were greater during July than at any time since the beginning of the 1931 mar keting season. Furthermore, United States imports of the grain increased sharply over June and were much heavier than a year ago. Continued drought in Canada and the United States and excessive moisture in Europe brought a world-wide rise in wheat prices, which had carried No. 2 hard winter for immediate delivery at Chicago to $1.22j4 and $1.2824 by August 19, at which level prices were above any day since in October 1935. United States visible supplies of wheat showed a marked though somewhat less than seasonal accumulation on August 15 over mid-July, and were 54 per cent in excess of a year ago but 38 per cent under the 1926-35 average for the date. After recording a more than normal expansion a month earlier, corn movements at these centers declined counter-seasonally in July from June. Drought condi tions were reflected in a spectacular rise in prices. On August 19, quotations for No. 2 yellow corn at Chi cago had reached $1.18j4 and $1.23j4, the highest level since March 1925. Visible supplies of the grain in the United States recorded a moderate decline on Page 3 August 15 from a month earlier and were 78)4 per cent under the 1926-35 mid-August average. July receipts of oats at these points of accumulation were below any other month on record (January 1921), and reshipments were under the four preced ing periods of the current year. Prices of No. 2 white oats at Chicago rose in sympathy with corn, reaching 46)4 and 48(4 cents by August 19. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES July 1936 Per Cent Change From June July July (In Thousands of Bushels) Wheat * Receipts....................................... Shipments................................... Corn: Receipts....................................... Shipments................................... Oats: Receipts.......................................... Shipments....................................... 1936 1935 83,422 27,725 +389.5 +127.3 +179.7 +147.5 +23.1 —9.8 16,779 11,476 —33.1 —19.6 +138.2 +157.1 —14.2 —10.4 -72.8 —15.4 -25.1 +101.2 -78.1 —24.1 1,750 4,665 Movement of 1926-35 Av. Livestock Augmented by underfinished animals from drought areas, receipts of cattle, hogs, and calves at public stock yards in the United States increased further during July and those of lambs showed a reversal of the downward trend a month earlier. Cattle and calf marketings remained greater than a year ago and were above the 1926-35 average for the period. Hog re ceipts totaled considerably above last July but under the ten-year average, and lamb marketings decreased in both comparisons. Movement to inspected slaughter followed the trend of market receipts, except that the slaughter supply of hogs fell slightly below June and that of lambs was above normal for July. Reship ments of cattle and calves to feed lots gained as is usual in July over June, were much greater than a year ago, and continued above the 1931-35 average for the month; feeder lambs moved in d volume heavier than last July but under average. Meat Packing The production of packing-house commodities at inspected slaughtering establishments in the United States expanded contraseasonally by 4 per cent in July over June, and was not only 37)4 per cent larger than a year earlier but also 2)4 per cent above the 1926-35 average for the month. Though totaling slightly under current production, the tonnage sold exceeded that of last July by 19 per cent and practically equaled the ten-year average. The general price level of packing house commodities was slightly higher than in June, despite a decline in quotations for veal, lamb, low-grade beef, and a few pork cuts. Dollar sales billed to do mestic and foreign customers aggregated one per cent LIVESTOCK SLAUGHTER (In thousands) Yards in Seventh District, July 1938..................................................... Federally Inspected Slaughter, United States: July 1936..................................................... June 1936..................................................... July 1935..................................................... •Revised. Hogs 239 503 928 853 745 2,692 2,739* 1,712 Lambs and Sheep Calves 211 82 1,352 1,309 1,546 523 517 464 (Per hundred pounds at Chicago) Week Ended Page 4 Dairy Products Drought conditions effected a much greater than sea sonal decline during July in the manufacture of dairy products. Creamery butter production in the Seventh Federal Reserve district fell off 21 per cent from June, totaled 20)4 per cent below last July, and was 22 per cent under the 1926-35 average for the month. The sales tonnage in July showed a 17 per cent decrease each from a month earlier, a year ago, and the ten- A year average. Manufacture of the commodity in the United States also was sharply lower in these compari sons. United States inventories of creamery butter gained less than normally on August 1 over the begin ning of July and were 19 per cent below the 1931-35 average for the date. Following further strength shown early in the month, prices had eased by Au gust 21. EMPLOYMENT AND EARNINGS-SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Groups op July 15, 1936 Reportin a Firms Wage EarnERS No. Earn- Chang* Fbom June 15, 1936 (000 Wage EarnERS EarnINGS No. $ % % 1,484 312 253 426 2,475 394,666 338,014 23,889 40,708 797,277 9,628 10,132 515 752 21,027 -0.2 —3.5 +0.4 +2.0 —1.5 —5.9 —5.7 —3.8 —3.5 -5.7 Textiles and Products.......... Food and Products................ Chemical Products............... Leather Products.................. Rubber Products................... Paper and Printing................ Total........................................ 328 710 226 128 33 613 2,038 58,882 104,478 28,959 22,545 13,109 68,275 296,248 982 2,404 743 440 306 1,691 6,566 -4.0 +7.2 —2.0 +1.7 —2.7 +0.6 +1.5 -7.8 +6.7 —3.1 +i.i —8.4 —3.3 —0.6 Total Mfg., 10 Groups.............. 4,513 1,083,525 27,593 -0.7 —4.5 Merchandising2........................... Public Utilities.......................... Coal Mining................................ Construction............................... 2,416 159 24 511 105,491 87,154 5,289 15,579 2,212 2,736 110 357 —1.7 +2.2 +14.4 —2.2 —0.7 +0.1 +17.2 -4.6 Total Non-Mfg., 4 Groups....... 3,110 213,513 5,415 +0.2 —0.2 Total, 14 Groups........................ 7,623 1,307,038 33,008 —0.6 -3.8 ings Omitted) Durable Goods: Metals and Products1........... Vehicles................................... Stone, Clay, and Glass......... Wood Products...................... Total........................................ Non-Durable Goods: Cattle AVERAGE PRICES OF LIVESTOCK Native Beef Steers (average)....................... Fat Cows and Heifers..................................... Calves............................................................... Hogs (bulk of sales)........................................ Lambs................................................................ more in July than a month previous, were \2 per cent larger than a year ago, and exceeded the 1926-35 July average by 4 per cent. Inventories in the United States showed some accumulation on August 1 over the beginning of July and totaled 125,475,000 pounds heavier than on the corresponding date of 1935 but 25)4 per cent under the 1931-35 August 1 average. Payrolls at the close of July reflected further improve ment over a year ago and showed gains over June of 4 per cent each in employes and hours and 5 per cent in wage payments. Shipments for export declined in July from June, owing to reduced forwardings of lard to the United Kingdom. Resistance to price advances resulted in a ^ slackening in British demand for the commodity, al though quotations remained under Chicago parity. United States hams were in light demand in the United Kingdom, stocks thereof accumulated, and prices con tinued considerably under replacement costs. Cuban purchases were confined largely to lard for delivery subsequent to lower duties becoming effective on September 3. Porto Rican trade in packing-house com modities from the United States was fair. Imports of animal products into the United States increased fur- + ther during July. Aug. 22 1936 $ 8.80 6.70 7.50 10.30 9.25 July 1936 $ 8.15 6.45 7.40 9.70 9.45 Months of June July 1936 S 7.85 6.65 8.50 9.90 11.35 1935 $ 9.80 7.50 7.85 9.40 8.45 lOther than Vehicles. Illinois, Indiana, and Wisconsin. The manufacture of American cheese in Wisconsin declined 17 per cent in July from June to a level 4 per cent under a year previous and 2 per cent below the 1926-35 average for the period. Distribution of this commodity from primary markets of that State ex ceeded last July’s volume by 22 per cent and was 12J4 per cent heavier than average for the period, although it decreased 7j4 per cent from June. Total inventories of cheese in the United States recorded less than the usual accumulation on August 1 over the beginning of July, and the excess over the 1931-35 average was reduced to 3,337,000 pounds. A further advance in prices took place in the first three weeks of August. Industrial Employment Conditions Industrial employment in the Seventh Federal Re serve district was one-half per cent lower in the middle of July than a month earlier and wage payments totaled smaller by 4 per cent, the changes following the cus tomary midsummer trend, though being less than sea sonal in extent. Declines were more pronounced in the durable goods industries and were occasioned 4 mainly by vacations and lay-offs for the taking of in ventories. These industries reported a total loss of 1J4 per cent in employment and of 5^2 per cent in pay rolls, whereas consumers’ or non-durable goods showed an increase of 1per cent in the former item and a decrease of only one-half per cent in the latter. The food products and leather goods industries recorded gains during the month while textiles, chemicals, and rubber goods registered declines. Only minor changes were contributed by the non . manufacturing industries as a whole, employment showing a very slight increase and payrolls a similarly negligible decrease. The various groups within this classification, however, experienced marked changes, increases in the public utilities and coal mining being offset by material declines within the merchandising and construction industries. All reporting industries, manufacturing and non-manufacturing, employed 8 per cent more workers and were disbursing 21 y2 per cent more in wage payments this July than in the same month last year, p Manufacturing Automobile Production and Distribution Less curtailment than usual for July took place this year in United States production of automobiles. A total of 372,402 passenger cars manufactured in the current period represented a reduction of but one per cent from June output, as compared with a decline in the preceding ten years averaging 14 per cent. Truck output numbering 68,597, was 11 per cent below that of a month previous. Gains of 36 and 19 per cent, respectively, in passenger car and truck production were recorded over July last year. A rather sharp drop was shown for July from June in midwest distribution of automobiles, but the num ber of cars sold at wholesale was about 5 per cent greater than a year ago and retail sales were 15 per cent above July last year. Sales of used cars likewise numbered considerably less in July, but were well above the month in 1935. Some increase was recorded dur ing the month in stocks of new cars on hand, but usedcar stocks continued to decline and showed a much smaller increase over a year ago than did those of new cars. Deferred payment sales comprised 53 per cent of the total retail sales of dealers reporting the item in July, this ratio comparing with one of 46 per cent in the preceding month and for last July. Iron and Steel Products Evidence of a sustained high level of activity in the steel industry of the Chicago district is shown in the rate of steel ingot output which in the third week of August stood at 73 per cent of capacity, as compared with 70 per cent at about the same time a month earlier and with only 57 per cent a year ago when operations in the industry were expanding. Shipments and new business were well maintained through July and into early August, with demand fairly well diversified as to source. Little change was recorded in July from June in daily average pig iron output in the Illinois and Indiana district, this average exceeding that of any previous July since 1929. The scrap iron and steel market, which had shown some strength about the first of July, started rising steadily toward the close of the month and by the middle of August quotations had reached the highest levels of the year so far. Production and shipments of steel castings at Sev enth district foundries continued to increase during July, the tonnages reported exceeding those of a month earlier by approximately 8 per cent each. Orders, how ever, totaled 25 per cent below the sharply higher vol ume booked in June, and the gains over year-ago figures, though still considerable, were more moderate for all items than in the preceding month. At malleable casting foundries, orders and shipments recorded some recession in July—6 and 7 per cent, respectively—while production showed a 2 per cent increase. All items LUMBER AND BUILDING MATERIALS TRADE MIDWEST DISTRIBUTION OF AUTOMOBILES July 1936: Peb Cent July 1936: Per Cent Change From June 1936 Companies Included Trade SaleB in Dollars...................... Sales in Board Feet............... Accounts Outstanding!.......... —22 8 —23.3 +4.8 +6.2 19 19 —20.0 —18.5 +14.9 +27.0 35 35 +6.4 +8.8 +24.1 +27.5 35 35 —19.4 +20.3 35 —8.3 -8.9 +11.2 +12.3 35 35 of Wholesale Lumber: July 1935 New Cars: Wholesale— Value............................ Retail— Number Sold................. Value........................... On Hand July 31— Number....................... Value........................... Used Cars: Number Sold................ Salable on Hand— Number........................ Value........................... Class Retail Building Materials: Total Sales in Dollars.......... Lumber Sales in Dollars — Lumber Sales in Board Feet Accounts Outstanding*.......... June 1936 July 1935 Number or Firub or Yards —12.7 -9.5 —3.2 +19.6 +12.1 +26.3 9 7 9 —3.8 —0.0 —9.3 —0.4 +20.5 +0.5 +8.9 +8.6 122 57 27 119 Change From to Wholesale Trade........................ Retail Trade.............................. Ratio or Accounts Outstanding! Total Dollar Sales During Month July 1936 154.1 255.6 June 1936 139.0 246.7 July 1935 146.0 283.0 *End of Month. Page 5 exceeded those of a year ago, the gains in this com parison ranging from 26 per cent in the volume of orders booked to 52 per cent in the tonnage produced. Stove and furnace manufacturers reported a normal seasonal decline in activity during July, shipments falling 10 per cent, orders 12 per cent, and moldingroom operations 22 per cent below the preceding month. The latter item was also slightly under the level of July 1935, while shipments and orders continued larger by approximately 53 and 93 per cent in this compari son. Inventories at the close of July were practically unchanged from a month earlier but 36 per cent heavier than at the same time last year. Building Construction Rather sharp expansion took place during July in the volume of building construction started in this district, r according to data on building contracts awarded. The $49,000,000 total of such contracts not only was the highest for the year so far but, as in June, exceeded any corresponding period since 1930. Residential contracts, on the other hand, showed a seasonal decline and amounted to only 21 per cent of the total, though recording a larger increase over last year than a month previous. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Furniture A somewhat smaller than seasonal rise was recorded in July orders booked by reporting furniture manu facturers in the Seventh district, the aggregate increas ing 43 per cent over June, as compared with a gain in the 1927-35 average for the month of 60 per cent. Shipments, on the other hand, showed little change from the June volume. Both items continued above average for July—orders by 3 and shipments by 16 per cent. Unfilled orders on hand at the end of July exceeded those of a month previous by 50 per cent, in consequence of the sharp gain in new orders. As compared with the corresponding month of 1935, or ders booked were higher by 16 per cent, shipments by 40 per cent, and unfilled orders by 27 per cent. Operations at 69 per cent of capacity in July were maintained at about the same rate as in June, but were 11 points higher than a year ago. Building Materials, Construction Work Demand for lumber as reflected in monthly sales figures was somewhat less active in July than in June, the decline at wholesale being about as large as is usual at this season while at retail it was slightly smaller. Increases over a year ago were not so heavy as those recorded in the preceding month, although at wholesale they continued substantial. Outstanding accounts de clined during July but showed a higher ratio to monthly sales than a month earlier and for wholesale and manu facturing firms the ratio was above that of the corres ponding month a year ago. The dollar value of all materials handled by reporting retail yards showed a much larger increase over last July than did sales of lumber alone, which trend may be attributed to im provement in the demand for coal as well as to heavier sales of brick and cement. Shipments by cement manu facturers and dealers within the district continued to expand in July as did deliveries of brick. Much of the demand for these materials was reported as coming from PWA and WPA projects. WHOLESALE TRADE IN JULY 1936 Per Cent Change From Same Month Last Year Commodity Groceries... Hardware.. Drugs......... Electrical Supplies.. July 1936............................................................................ Change from June 1936............................................... Change from July 1935............................................... First seven months of 1936........................................... Change from same period 1935................................. $10,512,700 -17.2% +82.3% $59,539,681 +104.3% A small decline from June—3j^ per cent—was recorded in the total estimated cost of permits issued during July in 95 cities of the Seventh district. The decrease was due, however, to a 30 per cent drop in Detroit permits, as other large cities in the district as well as the aggregate for smaller centers registered gains in the comparison. The total number of permits issued in the 95 cities fell off 15 per cent from the preceding month, the declines in this item being more general than in dollar value. Both the number and esti mated cost of permits continued to be well above the corresponding month a year ago, although the gains in ^ July were smaller than in June. Merchandising Unusually favorable trends prevailed during July in reporting lines of wholesale trade in the Seventh dis trict. Whereas declines are customary in the month, this year groceries and electrical supplies recorded gains in sales over the preceding month, and hardware and drugs showed less than seasonal recessions in busi ness from June. Sales of electrical supplies expanded 12 per cent and those of groceries 22 per cent over a month earlier, while hardware sales declined 4 per cent and drug sales one per cent, as against decreases in the July average of 9, 4, 11, and 6 per cent, respectively. Furthermore, in the yearly comparison the grocery trade showed the largest gain since October 1934 and the electrical supply trade since last August. As a conDEPARTMENT STORE TRADE IN JULY 1936 Per Ceni Change July 1936 Fr OM July 1935 Per Cent Change First Seven Months 1936 From Same Period 1935 Ratio of July Collections to Accounts Outstanding End of June Net Sales Stocks End of Month Net Sales 1938 1936 of Outstanding Net Sales Stocks Accounts Outstanding +16.5 +27.2 +7.8 —0.9 +31.9 —1.0 -3.7 +23.3 —4.7 +7.6 +23.4 +9.8 76.0 157.9 148.6 Chicago.................... Detroit..................... Milwaukee................ Other Cities........... +14.5 +23.6 +15.9 +12.7 —1.0 +8.2 +9.0 +5.1 +13.2 +8.0 +12.5 +10.7 34.1 46.4 40.1 34.1 31.4 43.1 39.0 81.1 +55.9 +40.2 +28.1 +47.6 116.3 7th District.............. +16.1 +3.2 +11.4 39.1 36.4 Page 6 Col $49,207,200 +24.3% +87.6% $269,783,930 +87.7% Residential Contracts *Data furnished by F. W. Dodge Corporation. Locality Ratio Total Contracts Period lections to Net Sales sequence of the sharp expansion in the current period, grocery sales totaled slightly more—one per cent—in the first seven months of this year than last, whereas for the six-months’ period they had recorded a one per cent decline; drug sales were 5 per cent, hardware sales 24 per cent, and electrical supply sales 34 per cent heavier in the seven months of 1936 than in the same period last year. Ratios of accounts outstanding to net sales remained in July well below the year-ago ratios and likewise were lower than a month earlier. Although Seventh district department store trade experienced a seasonal recession in July of 25 per cent, sales continued to exceed substantially those of the corresponding month of 1935, the gains in the year-ago comparison for the past three months having been the heaviest since the close of 1934. It will be noted from the table that Detroit showed the greatest improvement over a year ago and the aggregate for stores in smaller cities the least. As is usual, stocks on hand declined somewhat between the end of June and close of July; in Chicago, they were slightly under July 31 last year, but increases in other cities effected an aggregate gain for the district over a year ago of 3 per cent. The retail shoe trade fell off seasonally in July, sales of reporting dealers and department stores totaling 36 per cent under those of the preceding month. As compared with July last year, the dollar volume sold was 9 per cent larger in the current month, and in the first seven months of 1936 sales aggregated almost 10 per cent above those of the same period in 1935. Stocks declined 6 per cent further during July but were 8 per cent heavier than at the close of July a year ago. In accordance with seasonal trend, sales of furniture and house furnishings by dealers and department stores continued to decline in July, although the decrease of 19 per cent was slightly less than average for the month. An exceptionally large gain—33 per cent—was shown over a year ago. A fractional decline took place between the close of June and July 31 in the dollar volume of stocks on hand which were 7 per cent above those on the corresponding date last year. MONTHLY BUSINESS INDICES 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 1923-1924-1925 as a base, unless other wise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of Firms Meat Packing—(U. S.)— Sales (in dollars)................................................ * 47 July 1936 June 1936 May 1936 Apr. 1936 Mar. 1936 92 91 85 85 81 July 1935 June 1935 May 1935 Apr. 1935 Mar. 1935 Feb. 1935 83 82 83 86 82 77 80 Feb. 1936 Casting Foundries— Shipments: Steel—In Dollars............................................... In Tons.................................................... Malleable—In Dollars...................................... In Tons........................................... 12 12 21 21 77 85 53 77 74 80 56 82 64 68 56 81 59 60 61 89 51 50 59 88 46 46 49 73 33 32 38 55 27 25 39 57 34 31 43 65 38 38 48 72 35 33 45 69 31 29 37 57 Stoves and Furnaces— Shipments (in dollars)........................................... 8 154 170 176 156 150 113 100 117 127 115 106 82 FurnitureOrders (in dollars)................................................ Shipments (in dollars)......................................... 12 12 86 61 60 61 67 59 62 64 62 65 45 57 74 44 43 39 50 46 43 54 48 51 44 37 Output of Butter by Creameries— Production.............................................................. Sales......................................................................... 59 61 114 111 145 133 140 120 89 99 87 88 82 90 153 134 173 141 144 130 99 94 83 87 81 79 Wholesale TradeNet Sales (in dollars): Groceries.......................................................... 28 Hardware............................................................ 11 Drugs................................................................... 12 85 90 76 70 94 77 65 102 76 66 88 78 63 77 78 60 49 67 74 71 70 68 76 70 69 76 74 66 72 73 62 64 73 60 43 69 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................................ Detroit........................................................... Indianapolis..................................................... Milwaukee........................................................ Other Cities........................................................ Seventh District—Unadjusted...................... Adjusted........................... 63 72 73 68 59 65 91 86 93 93 87 79 87 89 86 100 97 90 86 90 88 84 102 94 93 81 89 84 79 89 96 83 77 82 90 68 78 66 67 60 69 87 55 58 64 59 52 56 78 76 78 79 75 71 76 77 73 92 88 76 75 78 77 75 96 88 85 75 81 76 69 92 89 77 70 76 83 60 76 65 58 55 62 79 127 182 128 205 132 199 142 227 117 206 77 167 94 153 100 165 104 147 132 175 123 177 93 156 36 72 43 58 40 61 35 54 25 56 10 34 20 38 26 34 18 33 16 36 9 32 4 17 101 85 113 101 88 115 100 87 117 94 82 114 81 67 97 75 64 89 53 50 66 59 53 68 67 57 73 65 57 76 63 58 83 63 59 87 Automobile Production—(U. S.)— Passenger Cars................................................... Trucks.................................................................. 27 5 4 5 41 82 82 Building Construction- Contracts Awarded (in dollars): Residential....................................................... Total.............../................................................ Iron and Steel- Pig Iron Production’* Illinois and Indiana........................................ United States.................................................. Steel Ingot Production—(U. S.)*................... •Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Board of Governors of the Federal Reserve System) PRODUCTION, employment, and trade increased further in July, when al-*■ lowance is made for the usual seasonal changes, and commodity prices continued to advance. Money rates remained at extremely low levels. Production and Employment 1929 1930 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months. January 1929 to July 1936. FACT!JRYEIiIPLOYIWENT HO 110 100 100 90 90 80 70 Industrial production, which usually declines considerably in July, was main tained at the level of the preceding three months, and the Board’s seasonally adjusted index advanced to 108 per cent of the 1923-1925 average as compared with 103 per cent in June. Output of steel continued at about the June rate, although a sharp decrease is usual, and automobile production declined by less than the usual amount. In the first three weeks of August there was little change in activity at steel mills, while at automobile factories out- 4 put was curtailed as preparations were made for the production of 1937 models. Output of non-durable products was larger in July than in June, reflecting chiefly a sharp rise in activity at cotton mills and greater than seasonal in creases in production at shoe factories, silk mills, and flour mills. At coal mines output increased and crude petroleum continued to be produced in large volume. Factory employment increased further in July, contrary to seasonal tendency. The number of workers was larger than in June at steel mills, foundry and machine shops, and furniture factories, while at railroad repair shops there was a decline. Among the non-durable goods industries employment increased at textile mills and meat-packing plants, and declined less than seasonally at establishments producing wearing apparel. Factory payrolls decreased by a smaller amount than is usual in July. tThe value of construction contracts awarded increased considerably from June to July, according to the F. W. Dodge Corporation, with large increases reported for both publicly-financed and privately-financed work. 60 50 1929 1930 1931 1932 1933 1934 1935 1936 Index of number employed, adjusted for seasonal variation, 1923-1925 averages 100. By months, January 1929 to July 1936. Agriculture Crop prospects declined during July as a result of continued drought. On the basis of August 1 conditions, the corn crop was estimated by the Depart ment of Agriculture at 1,439,000,000 bushels, a reduction of 37 per cent from last season, and estimates for spring wheat, oats, hay, and potatoes were also considerably under the harvests of a year ago. The cotton crop was forecast at 12,481,000 bales as compared with 10,638,000 bales last year and an average of 14,667,000 bales during the five years 1928-1932. Distribution D EPART WENT STORE SALE s 1 - j 1 rf1 i\ r •tfT' nj A) % mmm Adjtt s ted torseasonai variation — Withoof seosona adjustment 1929 1930 _ _____ 1_____ 1931 1932 1933 1934 1935 1936 Indexes of value of sales, 1923-1925 average = 100. By months, January 1929 to July 1936. BILLIONS OF COLLARS MEMBER BANK RESERVE BALANCES TOTAL reserves; MmMmm Wednesday figures of total member bank reserve balances at Federal Reserve banks, with estimates of required and excess reserves, January 6, 1932. to August 19, 1936. Page 8 Retail trade was sustained in July at a higher level than is usual in that month. The Board’s adjusted index of department store sales, which allows for a considerable seasonal decline, increased from 88 per cent of the 1923 1925 average in June to 91 per cent in July, and mail order and variety store sales also showed smaller decreases than are usual for the season. Freightcar loadings increased in July. Commodity Prices Wholesale commodity prices continued to advance between the middle of July and the middle of August. Prices of wheat, flour, feed grains, and dairy * products rose considerably, owing primarily to the drought, and livestock prices also advanced while cotton declined. There was a considerable increase in the price of steel scrap. Bank Credit Excess reserves of member banks decreased from $2,920,000,000 on July 15 to $1,810,000,000 on August 19. About $1,470,000,000 of excess reserves were absorbed by the increase of 50 per cent in reserve requirements of member banks, which went into effect August 15. This decrease was offset in part by a growth of $360,000,000 in total reserve balances, reflecting principally large disbursements by the Treasury from its funds held on deposit with Federal Reserve banks. * After the increase in reserve requirements there remained a large amount of excess reserves widely distributed among member banks. The money market was not affected by the action, and interest rates remained at ex tremely low levels. In the week ending August 19 a few scattered banks borrowed at the reserve banks, but the total amount borrowed was negligible and some banks drew upon their balances with other banks in order to meet the increase in requirements. Deposits of domestic banks with reporting* member banks in leading cities declined by $210,000,000 in the week. Between July 15 and August 19 loans and investments of reporting membef banks in leading cities declined by $260,000,000, reflecting reductions of $130, 000,000 in loans on securities and of $160,000,000 in holdings of United States Government direct obligations, partly offset by an increase of $60,000,000 in other loans to customers. Adjusted demand deposits, which increased to a r new high level on July 22, were slightly smaller on August 19.
@FedFRASER