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CONDITIONS IViStON M 11-^1 IN fe ! BONW^j' 5^-S, pS*" SCKRNij® ^'-y~p zrn. "■Si> neps :•■; ■;=!■>*! 53*1 y- p kWtl? ,> JB1M! vvvssss) - _ .:/. -- -.- S&E ^s; fi&kvS Vi.vWx*’ gsMpliJ iv.WWWW MX^J k\.V\\\'XM kx xx-Vv > - t'£*fP'4'i!W BBSBaE S 3 □□ 1 ^TT?3i w ' \m**& l- -+z II m 'o^vv'Vl lllll Volume 21, No. 8 mm August 29,1938 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business Conditions in the Seventh Federal Reserve District DISTRICT SUMMARY EVERAL further evidences of improvement in the Seventh Agricultural Products district business situation have appeared in recent OTH sales and production tonnages of packing-house weeks. Tangible signs of a sustained upward trend are still commodities, creamery butter, and Wisconsin cheese lacking, however, and volumes remain low in relation to exceeded in July those of the corresponding 1937 month, year-ago levels. The trend of employment and payrolls con and cheese volumes and butter distribution were above the tinued downward in July, and distribution phases failed to maintain the betterment experienced in June. Activity in 1928-37 July averages; however, stocks of these last two reporting food industries was greater than last year, and the commodities on August 1 were much above the 1933-37 majority of crops were in good condition in mid-August. average for the date. Sharp gains took place during July in the movement of wheat and oats, while that of corn diminished. The movement of corn and oats was greater Industry than a year ago or the ten-year average. Prices of these UTPUT of iron and steel mills increased somewhat from grains were low in mid-August. Except for small grains, June to July, and through the middle of August estimates for most Seventh district crops were raised on was sustained at about the level prevailing in the latterAugust 1 over a month earlier. month. For the second successive month, new business of steel and malleable casting foundries expanded in July, Trade although production and shipments fell off. Stove and fur ALTHOUGH the distribution of commodities at both nace factories shipped only slightly less products than in June. As the 1938 model season approached a close, pro -t*. wholesale and retail is usually lighter in July than duction of automobiles was curtailed to a small volume; in June, sales in the month this year fell off in several re dealers’ inventories are now well reduced. Seventh district porting groups to a greater than seasonal extent, and building construction recorded substantial declines in July volumes totaled considerably smaller than in the 1937 period. Inventories, however, appeared to be in good posi from June and a year ago, although the volume of residen tial building equaled that of the preceding month. Demand tion at the end of July. for building materials slowed down in July. Both orders Credit booked and shipments by district paper mills expanded in the current period, and the tonnage of the former exceeded ESERVE balances of member banks in the Seventh dis that of last July; inventories of paper are declining. A less trict continued to trend downward during the four than seasonal increase over June was shown in July orders weeks ended August 17. Both loans and investments of booked by furniture manufacturers, and shipments declined weekly reporting member banks were somewhat higher on more than is usual for the month. Further recessions of this latter date than on July 20; changes in deposit liability about 214 per cent each were recorded between mid-June and were small in the period. Activity in bankers’ acceptances mid-July in total industrial employment and payrolls, be by accepting banks improved in July, and dealer sales of cause of further sharp reductions in the durable goods commercial paper rose; volumes through mid-August con industries. tinued to show expansion. S B O R Credit and Finance Member Bank Reserves HIEFLY because of an excess of Treasury receipts over disbursements and a 29 million dollar loss of com mercial and financial funds to other districts between July 20 and August 17, Seventh district member bank reserve balances declined 56 million dollars in the period. The excess of Treasury receipts, mainly from internal revenue collections and War Loan credits, amounted to 20 millions. Currency circulation in the district expanded over 4 million dollars during the four weeks. institutions, however, exhibited a tendency toward lower rates on loans other than demand collateral. Open Market Paper ‘ ACTIVITY in the bankers’ acceptance field by Seventh -t*. district accepting banks, though not up to seasonal expectations, showed an improvement in July over June. New financing rose 4 per cent in this comparison, whereas the normal trend is for an increase of about 25 per cent. The current total, however, was 23 per cent below that for July 1937. Bank holdings of bills at the end of July were 23 per cent, or close to seasonally, higher than on June 30. The decline from a year ago amounted to 49 per cent, representing a narrowing of the spread that has prevailed Interest Rates for the last several months. Liability for outstandings on HE average rate earned in July on total loans and dis July 30 declined from the corresponding June figure by one counts by the major banks in Chicago continued an per cent. Although it represented the sixth successive monthly upward trend and also exceeded the average for the monthrecession, the June-July drop was the smallest in the series. a year ago. The figure for corresponding Detroit banks Outstandings continued around 40 per cent below last yeaT. likewise was slightly above the June average, though failing All July totals remained close to 80 per cent under the to equal that of July 1937. Changes in customers’ rates of 1928-37 averages, with the spreads widening slightly from the outlying banks in Chicago between July 15 and the a month previous. New financing in the first half of August middle of August were mixed, while those of the large continued to expand, the total for several of the large Detroit banks remained quite stable. Downtown Chicago Chicago banks running about 8 per cent ahead of the C T corresponding period in July, though one third less than in the first fifteen days of August 1937. July commercial paper sales reported by Middle Western dealers rose 32 per cent above June, closely in accordance with seasonal trend, the largest month-to-month increase normally being recorded in this period. Nevertheless, sales continued below the levels of last year and the ten-year average, the percentage declines being 54 and 41, respec tively. Outstandings at the end of July failed to expand seasonally over the volume of June 30, a 4 per cent reduc tion being recorded in the comparison. The decreases from July 31, 1937, and from the 1928-37 average for the date amounted to 43 and 22 per cent, in that order, representing somewhat greater margins of decline in these comparisons than were recorded at the end of June. Rates on commercial paper were somewhat firmer than in June. Demand from banks, especially those in large cities, strengthened con siderably. The supply, however, was even more restricted than in June. Sales in the first fifteen days of August ex ceeded those of July 1-15 by about 17 per cent and amounted to approximately one half of the total in the same period a year ago. The rate structure showed little change from July. Securities Markets Selected Seventh District Banking Data * * * FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) August 17 1938 Total bills and securities.............................................. $ 280 Bills discounted.......................................................... ... 0 Bills bought................................................................. ... 0 U. S. Government securities....................................... 279 Total reserves.............................................................. .. 2,081 Member bank reserve deposits................................... 1,262 All other deposits....................................................... .. 105 Federal Reserve notes in circulation...................... .. 957 Ratio of total reserves to deposit and Federal Reserve note liabilities combined... .. 89.5% Change from July 20 August 18 1938 1937 $ 0 * 0 0 0 0 0 0 —68 +309 —55 +275 —13 +51 —18 —2 —0.2* +1.7* CONDITION OF REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) AS8ET8 Loans and investments—total.................................... . August 17 1938 $2,865 830 474 34 31 79 93 Change from July 20 August 18 1937 1938 $+23 $—220 —201 +13 —156 +8 —20 +3 —30 0 —13 0 +n +2 0 —2 0 +9 +4 —90 iabilities Agricultural Products Total four larger cities.......................... ....................... 37 smaller cities...................................... ....................... $3,657 689 —8.8 +1.8 —21.5 —15.5 Total 41 centers...................................... ...................... $4,346 —7.3 —20.6 Crop Conditions STIMATES for 1938 production of small grains in the Seventh Federal Reserve district were reduced some TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK what on August 1 from the beginning of July, but those for OF CHICAGO AND DETROIT BRANCH most other crops were increased. Threshing over much of (Exclusive of Treasury checks and of non-transit items drawn on own bank) the area was practically completed by August 16, with wheat July 1938 July 1937 yields above earlier expectations, those of rye and barley Total country and city check clearings: Pieces.................................................... 10,793,809 10,958,065 fair to good, and with the weight and quality of oats rather Amount................................................. $1,859,143,865 $2,287,711,561 Daily average clearings: disappointing; in Wisconsin, however, wet weather had oc Total items cleared— Pieces.................................................... 431,752 casioned some sprouting in shocks and a delay in threshing 421,464 Amount............... ................................ $74,365,755 $87,988,906 operations. The progress and condition of corn ranged from Items drawn on Chicago— Pieces.................................................... 76,117 70,291 fair to excellent in mid-August; the bulk of the crop was Amount.....................;......................... $39,950,000 $45,006,000 Items drawn on Detroit— in the roasting-ear or dough stage and the earliest had begun Pieces.................................................... 15,898 20,927 to dent. In central and southern Iowa and in western Illinois, Amount................................................. $6,636,145 $10,972,666 E Page 2 i •Number of Points. OND prices in July and early August were, on the whole, Loans—total............................... ................................... . Commercial, industrial, and agricultural loans___ . quite firm. Some narrowing of the spread between Open-market paper....................................................... . Loans to brokers and dealers in securities.............. . first and second-grade liens took place, although the moreOther loans for purchasing or carrying securities.. . speculative rails continued to be widely separated in price Real estate loans........................................................... . to banks.............................................................. . 4 from the highest grade obligations in this field. Banks, Loans Other loans..................................................................... . 115 U. S. Government direct obligations....................... . 1,352 following their policy of the last several months, bought Obligations fully guaranteed by +1 bonds of relatively short maturity. Institutions, on the U. S. Government.................................................... . 224 +37 +34 Other securities............................................................. . 459 +5 other hand, showed decided resistance to the low yields pre L Demand deposits—adjusted*..................................... . 2,229 —38 +4 vailing on such securities, and have been buying longer- Time deposits................................................................ . +12 —3 874 0 term issues than have the banks. Municipal prices, along Borrowings..................................................................... . 0 0 with other high grades, were firm. New offerings in the •The annual velocity of demand deposits (unadjusted) in the four weeks ended August 17 was 17.51 times, as compared with 19.72 times in the preceding five weeks municipal field in July fell decidedly below the June total and with 21.66 times in the corresponding period of 1937. and the corresponding figure of a year ago. New corporate issues in July exceeded those in the month last year but declined from June which month was augmented by one very large issue. VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT The $100,000,000 issue of 91-day Treasury bills dated (Amounts in millions) August 24 sold to yield, on the average, approximately .048 Per Cent of Increase or Decrease from per cent, nominally higher than similar issues in June and July June July 1938 1938 1937 early July. Chicago stock prices, as reflected by the Chicago —10.7 —18.2 Journal of Commerce average of 20 stocks, fell off some Chicago.................................................... Detroit..................................................... ....................... 650 -34.1 —7.3 ....................... 237 —2.9 —22.0 what in August, the average standing at $44.36 on August Milwaukee............................................... Indianapolis............................................. ....................... 195 +7.7 —12.2 22, after reaching a 1938 high of $46.07 on July 26. B * t P * V the deterioration in corn which had started by August 9 was checked by copious rains; however, some of the crop on uplands had been ripened prematurely by the extreme heat and in a few areas corn was tangled by high winds. Vegetables continued to show good prospects through August 16. Pastures were in good to excellent shape; in only limited areas had they given evidence of failing. Outbreaks of sleep ing sickness in horses were reported as less severe than a year ago, and hog cholera losses appeared to be no greater than normal. Wheat Grain Marketing AFTER being exceptionally heavy in volume from July 1 to 18, wheat receipts at interior primary markets in the United States tapered off during the remainder of the month and in the first half of August. Reshipments expanded in the last two weeks of July and then declined in the opening weeks of August. Prices sagged under long liquidation and hedge selling, mostly as a reflection of the large world crop, heavier international movements than a year earlier, the sharp break at Winnipeg and Buenos Aires, and relatively light domestic buying; export business, however, increased in July over June and was much greater than in the 1937 month. At $.62% and $.64% on August 15, quotations for No. 2 hard winter for immediate delivery at Chicago hit the lowest point since April 1933; December futures ruled about 14 cents below the Government loan price. Visible supplies of wheat in the United States were 60 per cent heavier on August 13 than a month earlier but 21 per cent under the 1928-37 average for the date. average, but were heavier than a year ago. Oats receipts and shipments expanded sharply in July and rose further in the first half of August. Visible supplies increased and prices weakened. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) July July July June 1928-37 Av. 1938 1938 1937 Wheat: Receipts... 17,063 113,378 73,762 .......................... 102,450 14,726 28,413 30,884 Shipments, .......................... 27,596 Corn: Receipts... 10,120 19,432 ......................... 26,677 28,507 12,134 Shipments. ......................... 24,870 27,850 4,661 Oats: Receipts... ......................... 9,982 3,625 8,069 8,826 Shipments. ......................... 7,254 5,291 3,824 5,008 Movement of Livestock ULY receipts of livestock at public stockyards in the United States were under the 1928-37 average for the month. A slight increase was shown, however, in cattle and lamb marketings as compared with June and a year earlier. Hog receipts were much greater than last July though below a month previous, but those of calves totaled smaller in both instances. Comparisons for inspected slaughter are given in the accompanying table. The United States Depart ment of Agriculture estimates that 12 per cent more cattle were on feed in the corn belt on August 1 than a year ago. However, reshipments of these animals and of lambs to feed lots increased less than seasonally in July over June; those of calves gained more than is usual. J LIVESTOCK SLAUGHTER H Corn and Oats Cattle Yards in Seventh District, July 1938................................................. ......... 170 374 HE corn movement continued much heavier than a year Federally Inspected Slaughter, ago during July and the first half of August. Despite a United States: 1938................................................. ......... 820 2,254 fairly good export demand, liquidation arising out of weak July June 1938................................................. .......... 816 2,533 July 1937................................................. .......... 790 1,643 ness in the surrounding markets and relatively good crop July 1928-37 average............................ .......... 781 2,862 prospects carried prices of No. 2 yellow for current delivery AVERAGE PRICES OF LIVESTOCK at Chicago to the lowest point in four years. Visible supplies (Per hundred pounds at Chicago) declined in comparison with mid-July and the 1928-37 Week Ended ors Lambs and Sheep T CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the Basis of August 1 Condition Seventh District United States Forecast Final Average Forecast Final Average 1938 1937 1927-36 1938 1937 1927-36 Corn................... 957,513 1,140,744 812,711 2,566,221 2,644,995 2,306,157 Oats................... 425,823 544,644 443,866 1,041,009 1,146,258 1.042.461 Winter Wheat... 69,796 78,012 54,715 688,458 685,102 546,396 Spring Wheat... 1,841 1,695 3,608 267,531 188,891 206,495 Barley............... 43.253(a) 42.767(a) 48.881(a) 248,283 219,635 234,895 Rye.................... 9.993(a) 13.632(a) 7.221(a) 52,500 49,449 36,454 Buckwheat....... 605(a) 616(a) 919(a) 7,406 6,777 8,569 Flaxseed............ 256(b) 198(b) 293(b) 8,185 6,974 13,751 Potatoes (white) 53,489 51,039 53,249 385,515 393,289 369,693 Potatoes (sweet) 1.275(c) 1.280(c) 1.127(c) 82,743 75,393 70,274 Sugar Beets1__ 1.102(d) 549(d) 751(d) 11,138 8,749 8,383 Apples (total crop)............... 15.309(a) 30.403(a) 16.650(a) 134,867 210,673 150,728 3.299(e) Peaches............. 5.258(e) 3.312(e) 53,140 59,724 52,498 2.357(e) Pears.................. 3.153(e) 1.771(e) 31,662 29,548 24,326 Cherries1........... 24(f) 49(f) 35(f) 139(g) 145(g) 1160 Grapes1.............. 27(a) 87(a) 77(a) 2,490 2,777 2,197 Beans (dry edible)1.......... 4.562(f) 4.574(f) 3.758(f) 14,252 15,839 12,053 2.858(a) Onions*............... 2.333(a) 3.100(a) 15,092 14,778 13,638 Canning Crops: Snap Beans1. . 24(h) 20(h) 15(h) 119 105 70 Green Peas1. . 123 (i) 107 (i) . 94(f) 282 268 183 Tobacco3........... 35,057 26,635 33,665 1,478,851 1,553,405 1,325,243 All Tame Hay1. 18,577 15,360 15,558 80,315 73,785 69,754 Wild Hay1......... 492(a) 523(a) 504(a) 10,643 9,302 9,979 Cotton4.............. *** .... 11,988 18,946 13,201 JIn thousands of tons. *In thousands of 100-lb. bags. 8In 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) Illinois, Michigan, Indiana, and Iowa, (fj Michigan and Wisconsin, (g) Twelve States only, (h) Michigan, Indiana, and Wisconsin, (i) Wisconsin, Illinois, Michigan, and Indiana. Native Beef Steers (average).............. ........... Fat Cows and Heifers........................... ........... Calves....................................................... ............ Hogs (bulk of sales)............................... ........... Lambs....................................................... ............ August 20 1938 $10.25 7.70 10.50 7.75 8.30 July 1938 $10.50 8.15 9.10 8.60 9.00 Calves 192 56 1,461 1,485 1,390 1,360 436 475 520 446 Months of June 1938 $ 9.50 7.75 8.50 8.55 8.95 July 1937 *13.95 9.70 9.50 11.65 10.70 Meat Packing ACTIVITY at inspected slaughtering establishments in the -C*- United States continued during July much above the low level of a year earlier and decreased only seasonally from June. The production of packing-house commodities was 4 and 6 per cent lighter than in June and the 1928-37 July average, respectively, but exceeded that of the cor responding 1937 month by 23 per cent. Though remaining above current production and totaling 6 per cent heavier than a year ago, the tonnage sold declined 2 per cent in July from the preceding period and fell 4 per cent below the 1928-37 July average. With the general price level of packing-house products higher than in June, dollar sales billed to domestic and foreign customers aggregated 3 per cent larger in July than a month previous or the ten-year average and were above those of any month since January this year; however, they were 10 per cent under the level of last July. Inventories of these commodities in the United States decreased somewhat more than seasonally on August 1 from the beginning of July and were 26 per cent Page 3 and wage payments were down by 40 per cent. These losses, however, approximated those of the two preceding months. The current June-to-July declines differed in several respects from those recorded in earlier months this year. The de crease in wage payments was less than seasonal in extent, the average for the ten preceding years indicating a normal reduction for July of as much as 5 per cent. There was also a marked difference in trend between the durable goods industries and those manufacturing non-durable or con sumers’ goods. The latter registered a definite improvement, well distributed among the various groups within the class Forei^n_Trade ification and exceeding any previously recorded since the HIPMENTS for export were sharply less in July than sharp gain that occurred in several of the summer months in June, largely due to a reduction in lard consignments of 1933. Durable goods, on the other hand, decreased more because of unsatisfactory prices abroad. Quotations for markedly than in any month since last January, all groups United States lard and meats in foreign markets ruled below contributing to a decline which more than offset the gains the Chicago basis all month. British demand for packing within the non-durable goods. Michigan, with its concentra house commodities from the United States decreased; sales tion of the automobile and other steel-working industries, to continental Europe also declined. Trade with Cuba was showed heavier losses than did other States within the only fair and that with Porto Rico and the South American district. In Wisconsin, increases in the consuming industries republics slackened. Imports of animal products into the were sufficient to offset declines in durable goods, and ag United States declined in July to the lowest point since gregate employment and wage payments in this State were March. moderately higher than a month earlier. Non-manufacturing Dairy Products industries in the district as a whole contributed only moder REAMERY butter production in the Seventh Federal ately to the general decline in the period, increases in coal Reserve district fell off somewhat less than seasonally mining and construction work being sufficient to offset most in July from June and was not only 6 per cent in excessof the losses within the merchandising group. of a year ago but within 2 per cent of the 1928-37 average for the month. The tonnage sold increased 6 and 8 per cent Petroleum Refining over a year earlier and the ten-year July average, respec N THE week of August 13, petroleum refineries in the tively, but declined 10 per cent from June. Manufacture of Indiana, Illinois, and Kentucky area were operating at the commodity in the United States decreased 11 per cent 92 per cent of capacity as against a rate of only 84 per cent in July from a month previous; it continued, however, 6 per cent above the 1928-37 average for the period. Govern in the week ended July 16. The daily run of crude oil to ment support in the market tended to counteract the adverse stills during July averaged 5% per cent higher than in June influence of abnormally heavy inventories. Following a nar but 7 per cent lower than in July a year ago. Stocks of row range of fluctuations in the first half of July, prices finished and unfinished gasoline in this area were approx of 92 score creamery butter at Chicago held steady at 25% imately 5 per cent lighter on August 13 than either four cents from July 15 through the first three weeks of August. weeks earlier or at the end of the corresponding week in Purchases by Government agencies aggregated more than 1937. Gas and fuel oil stocks remained large in these 42 million pounds between July 16 and August 22. In comparisons. EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL ventories of creamery butter in the United States, inclusive RESERVE DISTRICT of 17 millions held for the Government, amounted to 172% Change from million pounds on August 1 and were 35 per cent in ex Week of July 15,1938 June 15, 1938 cess of the 1933-37 average for the date. Wage Earn Wage Earn Report Though 10 per cent under June, the July production of Earn ings Earn ings ing Induatrial Group (000 Firms American cheese in Wisconsin totaled 12 per cent larger ers ers Omitted) than the 1928-37 average for the month and 15 per cent % No. No. $ % greater than a year ago. July sales of the commodity from Dubable Goods: 7,668 —6.2 1,809 319,925 —5.2 primary markets of the State were more than seasonally Metals and Products1........... 135,157 3,801 —13.6 —11.4 420 below current production but rose 2 per cent above a month —6.4 20,245 467 —3.2 Stone, Clay, and Glass....... 281 37,186 699 —2.8 —5.5 500 Wood Products...................... earlier to the highest level since June 1937; they were also 12,635 —7.3 -7.8 3,010 512,513 Total........................................ 7 per cent above the ten-year average. Inventories of cheese Non-Dubable Goods: in the United States totaled 26 per cent larger on August 1 989 +4.2 407 58,962 —0.6 Textiles and Products.......... +7.2 112,760 2,852 +11.9 Food and Products............... 1,041 than the 1933-37 average for the date. Prices showed a 33,051 —1.2 305 979 —1.2 Chemical Products............... +6.8 173 23.991 482 +2.3 pronounced weakness after the third week in July, and this Leather Products.................. 326 +35.9 Rubber Products................... 34 13.029 +3.4 decline extended through the first three weeks of August. +3.6 748 2,019 Paper and Printing........ — 72,012 +1.9 under the 1933-37 average for the date. Payrolls at the close of July showed a decline from June of 2 per cent in number of employes; the number of hours worked in creased 2 per cent; and there was practically no change in wage payments. Employment, payrolls, and hours de creased 6, 4, and 2 per cent, respectively, from last July. In the first half of August, production still continued above a year earlier, and prices weakened from those prevailing in the third week of July, S C I Industrial Employment Conditions Total........................................ 2,708 313,805 7,647 +4.5 +5.6 Total Mfg., 10 Groups.............. 5,718 826,318 20,282 —3.2 -3,1 Merchandising*.......................... Public Utilities.......................... 5,562 1,125 129,220 99,320 2,867 3,255 —2.8 +0.7 +14.3 +4.7 -2.6 —0.1 +13.3 +6.3 —0.8 —0.8 -2.6 -2.6 ULY reports on employment and payrolls in Seventh Coal Mining................................ 30 4,880 104 11,598 336 772 district industries reflected a continuation of the down Construction............................... 6,562 245,018 ward trend that has been in progress since last October. Total Non-Mfg., 4 Groups....... 7,489 Employment in reporting industries, representing over a Total, 14 Groups........................ 13,207 1,071,336 26,844 million workers, was 30 per cent lower this July than last, lOther than Vehicles. Illinois, Indiana, and Wisconsin. J Page 4 Manufacturing Iron and Steel Products ACTIVITY in the steel industry of the Chicago district -T*- continued to show some improvement in July, and in the middle of August the situation was little changed. Steel ingot output in mid-August averaged 36 per cent of capacity compared with 34 per cent four weeks earlier. A year ago at the same time, however, it was 86 per cent of capacity. De mand has been diversified, but releases of car steel in the latter part of July caused output to rise several points, and there have been some orders from the automobile industry and for construction materials. Pig iron production in the Illinois and Indiana district increased moderately in July over June but remained at a low level. Scrap iron and steel prices continued an upward trend through the early part of August but declined in the middle of the month. • * # Although the increases were much smaller than in June, orders booked by steel and malleable casting foundries of the Seventh district expanded in July for the second succes sive month. Those for steel castings gained 14 per cent in tonnage and 28 per cent in dollar value over the preceding period, while orders for malleable castings increased 2 and 3 per cent, respectively, in these two units of measurement. Shipments and production, however, fell off in July. Ton nage shipments of steel castings declined 12 per cent and their dollar amount decreased 17 per cent, while the num ber of tons produced totaled 21 per cent below that of June. Corresponding declines in these items at malleable casting foundries were 12, 11, and 10 per cent, respectively. The volumes of both steel and malleable castings sold, pro duced, and shipped continued to be considerably smaller than a year ago, the decreases ranging from almost 60 to above 80 per cent. * * * There was only a fractional decrease during July in ship ments from stove and furnace factories of the district, and the margin of decline from last year’s level narrowed slightly to 33 per cent. Although orders accepted fell off 16 per cent from the preceding month, they totaled but one per cent less than in the corresponding 1937 month. Production was reduced 12 per cent further in the current period and was 40 per cent lighter than a year ago. At the close of July, inventories aggregated 4 per cent smaller than a month previous and were one third under stocks last year at the same time. the month last year. There was a further substantial re duction in dealers’ stocks during July, and by the end of the period they were considerably lighter than at the same time in 1937. The number of used cars sold again increased a little in July but remained approximately one fourth under the corresponding 1937 month. By the close of July stocks of such cars had been diminished to a point well below that of a year ago. DISTRIBUTION OF AUTOMOBILES SEVENTH FEDERAL RESERVE DISTRICT July 1938 Per Cent Change from New Cars: Wholesale— Number Sold......................................... Value....................................................... Retail— Number Sold......................................... Value....................................................... On Hand End of Month— Number.................................................. Value....................................................... Used Cars: Number Sold........................................ Salable on Hand— Number.................................................. Value....................................................... Companies Included June 1938 July 1937 —20.5 —20.5 —80.4 —78.1 15 15 — 1.0 + 0.9 —52.2 —46.3 30 30 —12.4 —14.8 —58.8 —56.8 30 30 + 0.6 —23.0 30 —14.0 —15.2 —20.3 -15.3 30 30 Furniture EFLECTING the results of the midsummer furniture mart, new orders booked by Seventh district furniture manufacturers expanded 48 per cent in July over June. This gain, however, is somewhat less than in the 1928-37 average for the period, and new business was 28 per cent smaller than in the month last year and 16 per cent below the ten-year average. July shipments from factories showed an 8 per cent decline from the preceding month, as against only a fractional decrease in the average; they totaled 40 per cent less than a year ago and 22 per cent under the 1928-37 July average. As is usual in the month, unfilled orders rose sharply—by 50 per cent-—but were 35 per cent smaller at the end of July than at the same time in 1937. Operations increased about 4 points in July to 57 per cent of capacity, which rate is 27 points below that of a year ago. R Paper and Pulp OT only did new orders booked and shipments by Seventh district paper mills increase in July over the preceding month, but the tonnage volume of new business exceeded that of the corresponding 1937 period and ship ments in tons were only one per cent lighter in this com parison. Production of paper declined slightly from June, following a rise in that month, and pulp production showed Automobile Production and Distribution a similar trend. At 78 per cent of capacity, paper mills RODUCTION of automobiles was light in July as the operated at a somewhat higher rate in July than a month 1938 model season drew to a close. Passenger cars man previous, while at 77 per cent of capacity, pulp mill opera ufactured during the month in the United States numberedtions were little changed from June. only 106,841, or 22 per cent less than in June and 70 per PAPER AND PULP INDUSTRY SEVENTH DISTRICT cent below output in the same month a year ago. Truck July 1938 Per Cent of Increase production of 34,596 vehicles was 9 per cent smaller than or Decrease from June July a month previous and 56 per cent under that of July 1937. 1938 1937 After falling off noticeably in May and June, retail sales Piper: . +5.8 +5.5 New orders booked (tons)..................... . + 3.8 — 1.9 New orders booked (dollars)................ of new automobiles by reporting dealers in this district . +8.4 -1.1 Total shipments (tons)............................ + 6.3 — 8.3 Total shipments (dollars)...................... showed only a slight decrease in number and a small gain in — 1.7 —9.1 Total production (tons)............................ . -12.2 +27.7 value during July, but remained much below the year-ago Stocks on hand at end of month (tons) level. Wholesale distribution of new cars continued to de Pulp: . —4.3 —13.0 Pulp produced (tons)............................... Stock on hand at end of month (tons). . — 9.4 +32.2 cline and was only about 20 per cent of the volume sold in N P Page 5 The Building Industry LUMBER AND BUILDING MATERIALS TRADE Construction ONTRACTS awarded in the Seventh district totaled less in dollar volume during July than in either June or the same month last year. The decline from the cor responding period of 1937 in cumulative awards for 1938 to date was practically the same at the close of July as a month earlier. Residential building contracts, however, were in as large a volume during the current month as in June and, though lower than a year ago, constituted a larger portion of the total than at that time—33y> per cent this July as against 28y2 per cent last July. Public works con tracts declined substantially in the current period but con tinued to represent fully one third of aggregate contracts as compared with only one sixth in the same month a year ago. Non-residential construction, comprising about one fourth of total awards, registered decreases from a month and a year previous that were considerably greater than the losses in the aggregate volume of construction. July 1938 Per Cent Change from Number of Class of Trade Yards June 1938 July 1937 —5.0 —10.3 —0.1 —46.1 —49.0 —37.7 Wholesale Lumber: Retail Building Materials: Accounts Outstanding1............................ Retail Trade................................................. 9 7 9 —14.2 —25.8 154 —5.5 —37.9 72 —12.0 —26.2 85 —13.8 152 +1.9 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month July 1938 June 1938 July 1937 165.5 278.3 157.4 234.1 138.8 237.5 1End of Month. Merchandising Wholesale Trade BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period July 1938.......................................................... Change from June 1938.............................................. Change from July 1937............................................... First seven months of 1938........................................ Change from same period of 1937............................ USINESS of wholesale trade groups in the Seventh Total Contracts Residential Contracts $40,554,000 -17.0% —23.0% $245,792,000 —21.5% $13,645,000 +0.2% -8.8% $67,944,000 -24.4% *Data furnished by F. W. Dodge Corporation. Permits for building projects issued in 102 cities of the district totaled 4 per cent more in July than in June, in estimated dollar cost of construction, but were 15 per cent lower than in the same month a year ago. The five larger cities recorded aggregate declines in these comparisons of 2 and 24 per cent, respectively, while the smaller cities showed an increase of 121/2 per cent over June and only a fractional loss from last July. district fell off in July from the preceding month, Bconsiderably so in some instances, and in most lines totaled much below the year-ago volumes. Sales of electrical goods decreased 17 per cent, those of groceries and of drugs 12 per cent each, and those of hardware 11 per cent from June, while sales of tobacco and its products and of the miscel laneous group showed recessions of only 3 and 2 per cent, respectively, from a month earlier. The extent of the declines from last year may be noted in the table; for the most part, they were noticeably greater than in a similar comparison for June. In the grocery, drug, tobacco, and miscellaneous groups, inventories on July 30 increased over a month previous, but in all phases they totaled below a year ago, being much smaller than at that time in the majority of lines. WHOLESALE TRADE IN JULY 1938* Materials "T^EMAND for building materials declined during July, business in a majority of the reporting lines falling off by the usual seasonal proportions. Sales of lumber, at both wholesale and retail, totaled less than in June by per centages that were the same in dollar units as in the average for the ten preceding years but slightly heavier in boardfoot volume. Sales of all materials by reporting retail yards, however, registered a decline that noticeably exceeded the 4 per cent loss recorded in the 1928-37 average. Cement shipments declined 5 per cent during the month, and brick deliveries were generally curtailed, although the Chicago area reported a steady demand for this latter material. Current sales volumes continued to reflect sharp reductions from a year ago, the declines in lumber being greater than in a similar comparison for June, while the loss in cement shipments remained the same as in that month—about 25 per cent. Stocks of cement totaled 7 per cent heavier than in 1937, and those of lumber showed a slight accumulation over that time. Collections, according to reports from lumber dealers, have slowed down, the ratio of outstanding ac counts to sales being heavier than either a month or a year earlier. Wholesale prices of building materials at the close of July were practically unchanged from a month earlier and remained at a level 7y2 per cent below that of the same month in 1937. Page 6 Per Cent Change from Same Month Last Year Commodity Net Sales Stocks Accounts Outstanding Collections Groceries.......................... Hardware........................ Drugs................................ Electrical Goods........... Tobacco and Its Products Miscellaneous.................. —16.2 — 7.5 -6.0 —16.2 —27.5 —27.5 —13.4 —23.7 —19.2 —13.1 —17.0 — 8.5 —44.2 —16.1 —18.9 —32.5 — 4.2 — 1.5 + 4.4 — 4.0 —18.3 -18.4 —11.0 —19.4 •Data furnished by Bureau of Foreign and Domestic Commerce, United States Department of Commerce. Retail Trade EPARTMENT store trade in the Seventh Federal Re serve district declined 27 per cent in July from June, which recession is about seasonal for the month. As com pared with last July, sales totaled 17 per cent smaller in the current period, and in the first two weeks of August they were almost 16 per cent below those of the correspond ing 1937 weeks, the margin of decline from last year thus having narrowed slightly since June. Detroit, of the major cities in the district, continues to record by far the most unfavorable comparison with a year ago. At the end of July, inventories aggregated 6y2 per cent below those of a month previous and 14 per cent under stocks on July 31,1937. * * * Trends in the retail shoe trade were less favorable in July than a month earlier. The dollar volume of shoes sold D cent in the 1928-37 average for the period, and was 21 per cent smaller than a year ago, whereas in the preceding month the decrease in this latter comparison was but 131/2 per cent. Sales in the first seven months of 1938 totaled 14 per cent below those of the corresponding 1937 period. Stocks continued to diminish in July and at the end of the month were 8 per cent less than at the close of July last year. DEPARTMENT STORE TRADE IN JULY 1938 Locality Per Cent Change July 1938 from July 1937 Net Sales Stocks End of Month Per Cent Change First Seven Months 1938 from Same Period 1937 Net Sales 1938 1937 29.9 38.9 36.6 29.4 42.6 39.7 35.4 38.8 30.7 33.6 33.6 35.6 Chicago..................... Detroit...................... Fort Wayne.............. Indianapolis............. Milwaukee................ Peoria........................ Other Cities*........... —13.4 —29.8 —12.6 — 6.7 —14.2 — 7.3 —13.4 —15.0 —15.9 —11.5 - 7.S —13.3 —26.1 —12.5 — 9.3 —11.7 —12 0 —12.0 7th District.............. —16.7 —14.2 —15.5 —ii.4 Ratio of July Collections to Accounts Outstanding End of June •Include Fort Wayne and Peoria. by reporting dealers and department stores fell off 44 per cent from that of June, as against a decline of 36l/2 per * * * Sales of furniture and housefurnishings by dealers and department stores declined 14 per cent in July from June, or less than seasonally, and the margin of decrease from a year ago narrowed to 26 per cent from approximately 30 per cent in the three preceding months. Department stores recorded a more favorable trend in both the monthly and yearly comparisons than did dealers. A further decline of 4 per cent took place in stocks between June 30 and the close of July when they aggregated about one fifth smaller than on the corresponding 1937 date. 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 a base. 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. Feb. March April May June FBb. July April March No. of July June May 1937 1937 1937 1937 1937 1937 Firms 1938 1938 1938 1938 1938 1938 Meat Packing—(U. S.)— 92 95 95 99 Sales (in dollars).................... 98 99 83 84 . 45 89 86 87 82 Casting Foundries— Shipments: Steel—In Dollars........ In Tons............ Malleable—In Dollars In Tons... 12 12 21 21 25 19 28 33 29 20 32 38 27 19 34 40 27 18 34 41 42 34 37 45 30 22 36 43 111 107 65 80 125 122 89 109 109 108 80 102 119 123 85 112 124 136 88 122 104 114 74 103 Stoves and Furnaces— Shipments (in dollars).............................. 14 112 113 123 120 121 83 167 174 202 215 193 128 FurnitureOrders (in dollars)..................................... Shipments (in dollars).............................. 33 33 68 41 46 44 51 46 47 54 56 68 53 52 95 68 68 75 80 80 82 92 96 101 76 83 Output of Butter by Creameries— Production................................................... Sales......................................... ................... 59 61 139 141 156 157 151 138 101 110 87 110 77 100 131 133 149 144 131 123 90 100 80 98 70 90 Wholesale TradeNet Sales (in dollars): Groceries....................................... Hardware...................................... Drugs............................................. 27 11 13 63 76 64 69 83 73 66 81 67 70 72 68 63 73 76 54 54 69 77 108 79 72 112 85 66 107 74 70 108 82 72 101 86 60 70 77 Retail Trade (Dept Stores)— Net Sales (in dollars): Chicago......................................... Detroit........................................... Indianapolis.................................. Milwaukee.................................... Other Cities................................. Seventh District—Unadjusted. Adjusted.... 29 6 4 5 40 84 84 57 61 70 66 57 60 83 83 83 91 83 74 82 84 79 80 95 82 77 80 79 82 94 100 98 82 87 82 86 87 97 95 79 86 95 67 71 75 71 62 68 85 66 84 75 77 65 71 98 97 111 104 98 86 99 101 95 118 110 102 91 100 99 93 117 101 104 86 97 98 100 113 116 105 90 102 104 76 93 82 78 67 78 97 37 92 47 101 53 99 60 115 59 127 48 125 123 209 140 228 145 243 150 255 138 240 101 179 Automobile Production—(U. S.)— Passenger Cars............................................ Trucks.......................................................... Building ConstructionContracts Awarded (in dollars): Residential.................................. Total............................................ . . 47 59 46 71 41 73 36 53 34 49 15 25 51 77 57 81 40 55 52 69 52 69 28 42 Pig Iron Production*— Illinois and Indiana............. . 39 35 48 52 51 47 127 118 133 130 127 123 ♦Average daily production. National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) T NDUSTRIAL activity increased in July, when there is usually a considerable A decline, and rose somewhat further in the first three weeks of August. INDUSTRIAL PRODUCTION Production OLUME of industrial production increased from 77 per cent of the 1923-1925 average in June to 83 per cent in July, according to the Board’s index which is adjusted for changes in the number of working days and for usual seasonal varia tions. Steel output rose sharply, lumber production also increased, and output of cement and glass was maintained. Automobile production declined somewhat further. In the first three weeks of August activity at steel mills was at a rate of around 40 per cent of capacity as compared with an average of 35 per cent in July, while in the automobile industry there was more than the usual seasonal reduction in output as producers closed plants somewhat earlier than in other recent years to prepare for the shift to new model production. At textile mills activity in July showed a further rise, marked increases being reported in mill consumption of cotton and wool and in shipments of rayon yarn. Shoe production also increased substantially, following a decline in June. Bituminous coal production advanced somewhat in July, and output of crude petroleum was at a much higher rate, reflecting chiefly a return to production on a six-day week basis in Texas. Anthracite production decreased sharply following a considerable volume of output during May and June. Value of construction contracts awarded in 37 eastern States showed little change from June to July, according to figures of the F. W. Dodge Corporation. Contracts for residential building continued to increase, and there was an increase also in commercial building, reflecting the award of a contract for a large office building. Factory construction remained at a low level and declines were reported in most other types of construction. V Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to July 1938. CONSTRUCTION CONTRACTS AWARDED MILLIONS Of DOLLARS MILLIONS OFDOLUW Employment TOTAL ACTORY employment and payrolls, which usually decline at this season, in creased somewhat from the middle of June to the middle of July. There were substantial increases in the number employed at textile mills, clothing establish ments, and shoe factories, and at railroad repair shops there was a slight increase. In the machinery and automobile industries employment declined somewhat further. In nonmanufacturing industries the principal changes in employment were a decrease at mines and an increase on the railroads. F ALL*"\l OTHER \ RESIDENTIAL 1929 1930 Three-month moving averages of F. W. Dodge data for value of contracts awarded in 37 Eastern States, adjusted for seasonal variation. Latest figures based on data for June and July and esti mate for August. WHOLESALE PRICES RtR CENT Pin CENT FARM PRODUCTSFOODS Agriculture A DOMESTIC cotton crop of 12,000,000 bales was indicated on August 1, accord ed- ing to the Department of Agriculture. Last season the crop was 19,000,000 bales and, with world consumption of American cotton about 11,000,000 bales, the carry over increased sharply to 13,500,000 bales. The wheat crop was forecast at 956,000, 000 bushels, as compared with 874,000,000 bushels harvested last year and usual domestic consumption of about 670,000,000 bushels. Production estimates for most other major crops were slightly under the large harvests of a year ago. Preliminary estimates by the Department of Agriculture indicate that cash farm income, includ ing Government payments, will total $7,500,000,000 for the calendar year 1938, a decline of 12 per cent from last year, which was the highest since 1929. Distribution ^OTHER COMMODITIES N JULY department store sales declined by less than the usual seasonal amount, while sales at variety stores and mail-order houses decreased seasonally. Retail sales of automobiles increased somewhat, although there is ordinarily a decline in July. In the first half of August sales at department stores showed less than the usual seasonal rise. Freight-car loadings increased from June to July, reflecting chiefly larger ship ments of grain, coal, and miscellaneous freight. I 1935. Indexes compiled by the United States Bureau of Labor Statistics, 192G = 100. By weeks, 1934 to week ending August 20, 1938. MEMBER BANK RESERVES AND RELATED ITEMS BILLIONS OF DOLLARS BILLIONS OF DOLLARS Commodity Prices RICES of grains, cotton, livestock, and meats were lower in the third week of August than in the middle of July, while prices of most industrial commodities were unchanged. Steel scrap advanced further in July, then declined somewhat in the first half of August. Cotton grey goods also declined in the early part of August, while prices of copper and rubber were maintained, following increases in the latter part of July. P Bank Credit XCESS reserves of member banks declined by about $230,000,000 in the five weeks ending August 17 to a total of $2,930,000,000, following a steady growth from the middle of April to a peak on July 13. The decline in reserves was largely the result of an increase in Treasury deposits with the Reserve banks, reflecting receipts from weekly Treasury bill offerings in excess of maturities and a sale of Reconstruction Finance Corporation notes. Most of the decrease in excess reserves was at city banks. Following substantial declines since the autumn of last year, commercial loans and brokers’ loans at reporting member banks in 101 leading cities increased some what during the first half of August. Member banks in leading cities added about $170,000,000 to their holdings of investments in the middle of July, mainly United States Government guaranteed obligations, but thereafter their holdings showed little change. E MONEY IN CIRCULATION 1934 1935 1936 1937 1936 Wednesday figures, January 3, 1934, to August 17, 1938. Page 8 DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111................................. Deputy Chairman W. J. Cummings.................................. Chicago, 111. S. T. Crapo E. R. Estberg..............................Waukesha, Wis. M. W. Babb F. D. Williams............................ Iowa City, Iowa F. J. Lewis. N. H. Noyes....................................................... Indianapolis, Ind. .. Detroit, Mich. Milwaukee, Wis. ___ Chicago, 111. MEMBER OF FEDERAL ADVISORY COUNCIL E. E. Brown................................................................. Chicago, 111. OFFICERS G. J. Schaller..............................................................President H. P. Preston..............................................First Vice President J. H. Dillard........................................................Vice President W. H. Snyder....................................Vice President and Cashier C. S. Young..................... ,............................... .. Vice President C. B. Dunn.......................................................... General Counsel W. C. Bachman............ Assistant Vice President 0. J. NetterstrOM. .. .Assistant Vice President A. L. Olson.................... Assistant Vice President A. T. Sihler.................. Assistant Vice President A. M. Black. . .Manager, Planning Department J. L. Sweet........................................................... Manager, Research and Statistics Department J. J. Endres............................ F. Bateman............................. J. C. Callahan................... N. B. Dawes.......................... F. A. Lindsten....................... L. G. Meyer.......................... F. L. Purrincton................. J. G. Roberts....................... . C. M. Saltnes..................... Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier .................................. Auditor INDUSTRIAL ADVISORY COMMITTEE Max Epstein, Chicago, 111............................................ Chairman W. Harnischfeger..................... Milwaukee, Wis. G. B. Moxley.............................Indianapolis, Ind. R. R. Monroe.................................... Chicago, 111. G. W. Young....................................... Chicago, 111. DETROIT BRANCH DIRECTORS A. C. Marshall............................ Detroit, Mich. J. E. Davidson.............................Bay City, Mich. H. L. Pierson................................ Detroit, Mich. J. M. Dodge.....................................Detroit, Mich. L. W. Watkins........................ Manchester, Mich. W. S. McLucas...............................Detroit, Mich. R. H. Buss..............................................................Detroit, Mich. OFFICERS R. H. Buss......................................................Managing Director H. J. Chalfont........................................Cashier H. L. Diehl...............................Assistant Cashier SEVENTH FEDERAL IOWA ILL ; INO RESERVE DISTRICT
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