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B usiness C onditions S eventh fED ER A L r Reserve OISTRICT OWA M O N T H L Y R E V IE W P U B L IS H E D BY T H E F E D E R A L R E S E R V E B A N K O F C H IC A G O Volume 13, No. 9 General Summary E N E R A L business and industry in the Seventh district continued in July at a level below the pre ceding year, and in the majority of lines reporting to this bank, a further downward movement from June was shown by the July data. Seasonal trends were only partly responsible for the lowered level o f automobile production from June. Iron and steel experienced a re cession, as did building contract awards and sales o f building materials. Furniture orders moved upward in the month-to-month comparison, a seasonal develop ment. In the comparison with July 1929, the foregoing industries continued to show declines in operations. W ith the exception o f groceries and drugs, whole sale lines reportin g to this bank fell short of the June level, and all sold a smaller volume than in July a year ago. Retail trade, inclu din g autom obiles, departm ent stores, and chain stores, reported lessened activity in both comparisons. Good yields of small grain crops have been harvested in this district. Mid-August reports from county agents, however, indicate considerable curtailment in the corn and other late crops, an outgrowth o f protracted drought and extreme heat throughout most of July in the greater part o f the district; pastures deteriorated seriously, though late and copious rains are reported to have improved conditions materially in this respect in many areas. Activity at meat-packing estabishments, as measured by production and sales of such products, fell short o f the June level and that of July 1929. Butter output registered a decline of more than seasonal pro portions from June; sales dropped as compared with the preceding month and with a year ago. Cheese produc- G FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) A u gu st 13 1930 J u l y 16 1930 Total Bills and Securities......... ................ $111.8 Bills Discounted .......................................... 15.2 Bills Bought ............................... ................. 15.3 U. S. Government Securities..... ................. 81.3 Total Reserves ............................. ................. 458.7 Total Deposits ........................................... 357.5 Federal Reserve Notes in Circulation.... 174.8 Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined ........................................... 86.1% $ -7.8 ‘ Number of Points. - 3 .2 -8.1 + 3.5 - 9 .5 - 0 .9 -1 7 .1 +1.1* A u g u st 14 1929 $ -4 9 .4 -111.1 + 5.9 + 55.8 August 30, 1930 tion showed a similar trend from June and but little change from the corresponding month last year. Sales declined in both comparisons. The number o f employes in reporting lines o f in dustry in this district declined less sharply in the ag gregate for July than in June, but payrolls fell off to a greater extent as a result o f further reduced time sched ules in many plants and wage reductions in some lines. Commercial and security loans o f reporting member banks in the district declined on August 13 as compared with July 16; investments have risen steadily in recent weeks; deposits, both time and demand, diminished as between these two dates, but were higher than on the corresponding reporting date last year. Rates in Chi cago were slightly lower. The borrowings o f member banks at the Reserve bank the middle of August were less by approximately three and one-half millions than on July 9, reflecting decreased reserve balances, lessened currency demand, and an excess of local Treasury ex penditures over receipts. Credit Conditions and Money Rates A decrease in member bank reserve balances at the R e serve bank, lessened demand for currency, and an excess of local Treasury expenditures over receipts constituted the principal factors making for a decrease in member bank borrowing during the period July 9 to August 13. Offsetting these factors were a loss o f nearly twenty millions through inter-district settlements for commer cial and financial transactions, and a decline in holdings o f acceptances by the Reserve bank. The net result was a drop in member bank borrowing o f approximated three and one-half millions as between July 9 and August 13. A tabulation o f the changes in the various CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) A u g u st 13 1930 -1 0 9 .8 -4 .1 -1 5 4 .7 Total Loans and Investments....... ...........$3,390 Loans on Securities....................... ........... 1,282 All other Loans............................... ........... 1,335 773 Investments ................................... ........... +3.9* Net Demand Deposits................... ........... 1,933 Time Deposits ............................... ........... 1,319 Borrowings from Federal Reserve Bank Compiled August 27, 1930 2 J u l y 16 1930 $ -1 0 -3 4 -4 + 28 A u g u st 14 1929 $+13 -0 -7 7 +90 -9 -5 4 + 17 + 58 -2 -9 3 elements influencing member bank borrowing at the Reserve bank is given b elow : FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between July 9 and August 13, 1930 (In millions of dollars) Changes making for decrease in member bank borrowing: 1. Decrease in member bank reserve balances.......................15.30 2. Excess of local Treasury expenditures over receipts..,.10.75 3. Decrease in demand for currency..................................... 4.41 4. Decrease in unexpended capital funds ............ ................ 0.22 5. Increase in holdings of U. S. securities (local trans actions) ................................................................................... 0.11 Total ............. ...._................................................................... 30.79 Changes making for increase in member bank borrowing: 1. Funds lost through inter-district settlements for com mercial and financial transactions............................ ........ 19.16 2. Decrease in holdings of acceptances (local transactions) 6.30 3. Decrease in reserve bank float............................................. 1.35' 4. Increase in non-member clearing balances....................... 0.24 5. Sales o f gold to industry..................................................... 0.23 Total ....................................................................................... 27.28 Excess of changes making for decrease in member bank borrowing.... 3.51 Absorption of this excess: Decrease in member bank borrowings (discounts for member banks)................................................................ 3.51 Investments o f reporting member banks have risen steadily in recent w eeks; as shown by the accompany ing table, the gain on August 13 over July 16 was slightly less than thirty millions, and as against August 14, 1929, an increase of ninety millions was recorded. Loans on securities as well as “ all other” loans declined during the July 16— August 13 period. The trend of deposits, time and demand, has been dow nw ard; both, however, on August 13 were higher than on the corre sponding reporting date last year. Sales o f commercial paper in the Middle W est ex panded more than customary in July and nearly attained the high level of March, having shown a marked revers al in trend over that obtaining during the preceding three months. A n active demand from banks and com mercial institutions, together with more paper available for distribution than in recent months, accounted for a volume 47 y 2 per cent heavier than in June and 57 per cent in excess o f a year ago. Rates eased slightly and ranged from 3 to 4 per cent, with most paper mov ing at 3 to 3*4 Per cent. Outstandings remained at a low point, but were 28*4 per cent greater on July 31 than on the corresponding date of last year. Aggregate sales in Chicago were indicated as slightly larger dur ing the first two weeks o f August than in the first half o f July; the majority o f dealers, however, experienced a small decline. Demand was good and remained some what in excess of the supply. Rates closed on August 15 at 3 to 3 y 2 per cent, with the customary charge 3 to 3J4 per cent. Bills accepted and current purchases of bankers’ ac ceptances, as reported by a selected list o f accepting banks in the Seventh district, were greater in July than for any other month since March and more than 6 per cent in excess o f a year ago. Sales declined to the low level shown in May, while holdings returned to the highest point in four months. Outstandings remained in large volume, though aggregating much less than in January. The banks appear to have accepted a considerably larger amount of bills during the first half o f August than in the corresponding weeks o f July, largely owing to seasonal financing o f grain. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT P er C e n t C h a n g e in J u l y 1930 F rom J u n e 1930 J u l y 1929 Total value of bills accepted. ..... +28.6 + 5 .9 Purchases ............................... ..... +12.6 + 6.7 Sales ....................................... -19.0 +15.3 Holdings* ................................ ..... +107.7 +188.7 Liability for outstandings*.... ..... +12.7 +37.6 *At end of month. Activity in the Chicago bill market from July 10 to August 13 remained about the same as in the preceding month, with average weekly purchases declining during the period to a new low level for 1930. Sales, how ever, were the heaviest in four months, a reflection of more liberal buying on the part o f local banks; pur chases by out-of-town banks and others continued in limited proportions. A good movement o f accept ances to and from the east was reported. Demand was only fair, though in excess o f the limited supply; holdings were reduced to a very low level on August 13. Rates remained steady. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET J u l y 10 to A u g u st 13, 1930 P f.r C e n t C h a n g e in C o m p a r is o n W i t h P e rio d F rom J u n e 12 to J u l y 9 J u l y 18 to A u g u st 14 1930 Bills purchased ........................... -27.1 Bills sold ................................... + 27.0 Holdings* ..................................... -46.9 *At close of period. Money rates in Chicago declined slightly; for six large down-town banks the prevailing rate on commer cial loans during the week ended August 15 was 3J4— 5*4 per cent, as compared with a range of 4— 5}4 per cent the middle o f July. The corresponding quotation for ten smaller banks was 3*4— 6, as compared with 4— 6*4 at mid-July. The average rate earned on loans and discounts by six large Chicago banks during the calendar month of July was 4.76 per cent, whereas in June the item had stood at 4.87 per cent and was 6.29 in July 1929. In Detroit, the average rate earned on loans and discounts during July by three large banks rose to 5.68 per cent from the 5.63 reported in June; in July a year ago 6.23 per cent was shown. The pre vailing rate on commercial loans in Detroit during the week ended August 15 was 3 j4 — 6 per cent. Rate levels in other cities in the district were substantially un changed. SAVINGS DEPOSITS—SEVENTH FEDERAL RESERVE DISTRICT As Reported on August 1, 1930, by a Selected List of Banks Number o f Accounts VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) J u l y 1930 Chicago ............................................... $3,989 Detroit, Milwaukee, andIndianapolis.... 1,487 Total four larger cities— .........................$5,476 34 smaller centers..................................... 959 Total 38 centers....................................... $6,435 Page 2 P er C e n t of I ncrease or D ecrease F rom J u n e 1930 J u l y 1929 -9.8 -6.9 -19.3 -18.9 -9.0 -2.4 -19.2 -15.5 8.1 -18.7 - 1929 -44.8 -4.7 -64.0 N um ber of B a n k s R e po r t in g Volume of Savings Deposits P er C e n t C h a n g e P er C e n t C h a n g e F rom F rom July 1 A u g u st 1 J u l y 1 A u g u st 1 1930 1929 1930 1929 Illinois .............. Indiana ............. Iowa ................... Michigan ........... Wisconsin ......... 48 34 36 24 49 - 0 .2 - 1 .8 + 0.7 - 0 .8 - 0 .7 + 1.0 - 3 .7 - 0 .3 - 5 .9 - 1 .4 - 0 .6 + 0.9 - 1 .0 + 0.1 - 1 .2 + 3.6 + 2 .0 - 2 .0 - 6 .7 - 7 .8 Seventh District.. 191 - 0 .5 -2 .1 - 0 .3 -2 .0 S e c u r it y M arkets The trend of bond prices in Chicago has been slowly but definitely higher the past month, with an accom panying increase in demand for high grade bonds on the part o f individuals, while institutional buying has been maintained at a good level. During recent weeks there has been reported also an increased interest in bonds which might be termed second grade. Generally speaking, current issues have been well absorbed, save where certain offerings have been over-priced; dealers’ shelves were fairly clear the middle of August. Trad ing on the Chicago Stock Exchange thus far in August has been in moderate volume, with some gain during the week ended August 16, generally ascribed, however, to professional trading activities. Prices have moved downward since the end of July; on August 13 the average price of twenty leading stocks ( * ) dropped to 119.34, only slightly above the low point of the year. 119.18 on July 8, following which date prices gained, reaching a high for the month o f 127.57 on July 28. "Chicago Journal of Commerce. Agricultural Products Farmers in the Seventh Federal Reserve district have harvested substantial crops of small grain this year, but reports on August 14 from 195 county agri cultural agents show that the yields o f corn and other late crops have been materially reduced in the past month because o f drought and extreme heat. Present prospects suggest a corn crop as small in 1930 as the low yields o f 1924 and 1927, unless ample rainfall is received during the remainder o f the season and the au tumn frosts come at a later date than usual. Pastures throughout the district have shown marked deteriora tion during the past month and the second cutting of hay is light. Prospects for apples have been further reduced because of under-development o f the fruit; premature dropping also is reported in some counties. In areas where the damage to corn has been espe cially heavy, some o f the farmers have been using the stalks for feed rather than saving the crop to mature ears. It seems probable that in the states o f Illinois, Indiana, and Michigan, where the drought has been more severe than in other parts of the district, live stock operations may be reduced this winter, owing to a subnormal production o f feed. Brief summaries o f mid-August crop conditions in the several states in cluding the Seventh district follow : Iowa— Corn in northeastern Iow a is as g o o d or better than in 1929; most other parts o f the state, how ever, show considerable reduction from last year. F ir ing has been rather general except in the northeastern territory. Stalks in most o f the state are somewhat shorter than ordinarily. In the southern part o f Iowa more stalks are barren than a year ago, and the ears have not been so prolific as usual, due to heat damage to the tassels and silks during the pollination period. Indiana—T h e corn crop in the northern part of Indiana is indicated as being about as good or better than a year ago, but there is a marked reduction in the southern part o f the territory within the Seventh Fed eral Reserve district, where the crop ranges from very poor to fair. M ore than 40 per cent o f the stalks in this southern territory are considerably smaller than was the case in 1929 and many are barren of ears; growth in other parts of the state is reported as only slightly smaller than a year ago. Firing has been more or less general throughout the entire state o f Indiana. Drought has also materially reduced the production o f garden truck and has damaged tobacco to some ex tent. General showers, however, were reported on August 17 over much o f the dry area. Illin ois— Prospects fo r corn in Illinois as a w hole are now considerably under a year ago, due to lack of rainfall in recent weeks. Considerable firing has been reported throughout practically all o f that part o f the state within the Seventh district. M ore than 40 per cent o f the stalks are smaller than a year ago. Ears have not developed satisfactorily because of the ex treme heat, and more o f the stalks than usual are bar ren. Garden truck also has suffered deterioration. Rains were reported over much of the area on A u g ust 17. Michigan— W ith few exceptions, the Seventh dis trict counties in Michigan now report prospects for corn as low as or below 1929. Stalk growth o f nearly half o f the crop is very short, except in the counties located in the northeastern part o f the Lower Peninsula and particularly those located in the fertile lake bottom lands surrounding Bay City and Saginaw. Firing was reported in the southern half o f the Lower Peninsula and to a lesser degree in the north. Development of ears has not been very satisfactory. Potatoes, cabbages, cucumbers, and other garden truck in the southern three-quarters o f the state have suffered considerably from the drought. Beans on the lake bottom lands (the intensive production area) are fair to good, but in the light soil regions farther inland have burned rather badly. Drought still remains unabated, although a number o f counties have received light local showers. Wisconsin— Prospects for corn in that part of Wisconsin in the Seventh district show only a slight possibility o f reduction from a year a go; in a number of CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics as of August 1 (In thousands of bushels unless otherwise specified) S e v e n t h D is t r ic t F orecast F in a l 1930 1929 U n it e d S tates F orecast F in a l 1930 1929 5 -Y r . A v . 1924-28 Corn ....................790.759 880,741 2,211,823 2,614,307 2,699,809 Oats ................. „534,399 501,169 1,316,369 1,233,574 1,371,786 Winter Wheat.... 63,014 58,140 597,392 577,784 550,636 Spring Wheat.... 5,650 4,410 223,221 228,006 282,528 Barley ............... 58.287(a) 58.481(a) 306,215 303,552 240,742 Rye ..................... 8.960(a) 8.618(a) 46,655 40,533 50,851 Buckwheat ......... 964(a) 1.098(a) 11,068 11,520 13,786 Flaxseed .......... 322(b) 214(b) 26,013 16,844 23,816 Potatoes (white) 53.811 44,914 372,557 359,796 392,605 Potatoes (sweet) 1.409(c) 1.585(c) 66,251 84,661 74,141 Sugar Beets*..... 619(d) 356(d) 7,910 7,318 7,389 Canning Crops Sweet Corn*.... 314(a) 345(a) 641 704 ........... Tomatoes* ...... 334(e) 306(e) 1,499 1,426 ______ Snap Beans*.... 20 (f) 18(f) 90 90 ........... Tomatoes for M arket........... 1.297(e) 1.210(e) 18.363(h) 16.447(h) ........... Apples (total crop) ............. 12.663(a) 16.784(a) 146,440 142,078 180,262 Peaches ............. 615(e) 5.197(e) 46,906 45,789 56,821 Pears ................. 1.251(e) 1.440(e) 24,277 21,563 21,484 Grapes* ............. 86(a) 86(a) 2,350 2,098 2,339 Dry Beans........... 7.578(d) 5.767(d) 22,024 19,693 17,323 Broom Corn*___ 8 (g ) 5 j4 (g ) 59 47 51 46,360 1,474,758 1,519,081 1,302,463 Tobacco** ......... 48,256 All Tame Hay*.. 16,994 23,333 83,460 101,786 93,630 Onions ............. 6.676(a) 5.431(a) 25,650 25,554 ........... *In thousands of tons. **In thousands of pounds. (a) Five states including Seventh District, (b) Wisconsin and Iowa, (c) Indiana, Illinois, and Iowa, (d) Wisconsin and Michigan, (e) In diana, Illinois, Michigan, and Iowa, (f) Indiana, Michigan, and Wiscon sin. (g) Illinois, (h) Exclusive of southern district of California. P age 3 counties the crop is even better than in 1929. Firing has been slight and has occurred largely in the north eastern and east-central counties. This part of the state, together with some counties in the southeastern section, reported short stalks in some fields. Ears are showing satisfactory development. Truck crops have not suffered extensive damage but additional moisture would prove very beneficial. Tobacco is in fair condi tion. Grain M arketing The early harvest o f this year was reflected in a larger movement o f wheat than usual in July at interior primary markets in the United States, receipts exceed ing July 1929 and totaling 42 per cent more than the five-year average for the month, while shipments, though less than a year ago, were also considerably larger than the five-year average. No congestion has developed in storage, however, due to expanded facili ties and an early export movement. Exports between July 1 and August 2 were reported as totaling 12,937000 bushels, as compared with 9,572,000 bushels for the same period o f 1929. A fter reaching the low prices of July 12, wheat fluctuated at that level, weakening still more at the beginning o f August but, responding to the rapid gains made by corn, at the end o f the first week had recovered most o f the loss since the middle of June. Future trading in wheat on the Chicago Board o f Trade was slightly less than in June and less than half the July 1929 volume. The movement o f corn and oats at the same cen ters was small during July. Corn future trading rose 56 per cent over the June volume but was 4 per cent under July a year ago. Following the August 1 re duction in corn crop estimates and further news o f de struction by drought, prices recovered sharply from previous low levels, exceeding one dollar for the first time since last October. M ovement of L ive Stock Cattle receipts at public stock yards in the United States were in larger volume during July than in any other month since April, though totaling under a year ago and remaining substantially less than the five-year average. Principal factors influencing the increase over June were the marketing o f an accumulation o f fat cat tle from corn belt feed lots, which had been withheld in earlier months o f the year in the hope o f more favor able prices; the receipt o f delayed shipments o f grass cattle from the southwest; and the beginning of the movement from the ranges. The marketing o f hogs fell off slightly in these comparisons and was below that of any corresponding period since September 1928. Lamb receipts continued in heavy volume for so early in the season; the movement from northwestern ranges was well under way. Reshipments o f cattle to feed lots decreased in July to the lowest level in years, largely reflecting a hesi tancy on the part o f professional feeders to fill up their lots at this time because o f the uncertain outlook for co r n ; the movement o f lambs also was less than in Tune, a year ago, or the 1925-29 average for the month. M eat P acking A further recession o f 3 per cent in production was recorded at slaughtering establishments in the United States during July, the volume being 7 per cent less than last year. These declines were due entirely to a re duction in hog marketings as compared with June and a year ago. Payrolls at the close o f the month showed a decrease o f 2 per cent in employes, 4 J4 per cent in hours worked, and o f 3 per cent in aggregate earnings from the corresponding period o f June. Demand in domestic markets averaged fair to good fo r smoked meats, boiled ham, and sausage, moderate for fresh pork, lamb, and veal, and was slow for beef and lard. July sales billed to domestic and foreign customers by representative meat packing concerns in the United States aggregated 6 per cent less than a month earlier and 20 per cent below the corresponding period of 1929. The principal factors contributing to these de clines were the lower level o f prices, the extreme heat, and a continuation o f unemployment. Prices o f the majority o f packing-house products declined in July; smoked meats held steady with June. Quotations for pork and lard firmed early in August, while those of beef, lamb ,and mutton showed further ease. Domestic trade averaged fair at the beginning o f A u gu st; demand from the south tended to improve for dry salt pork be cause o f the opening o f the cotton-picking season. A u gust 1 inventories were below those o f any other month since the beginning o f 1930, and remained less than in 1929 and the five-year average. The holdings o f dry salt pork apd miscellaneous meats, however, were slightly in excess o f July 1, and stocks o f beef, lamb, and miscellaneous meats gained in the other compari sons. EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT W e e k E nded J u l y 15 C attle Yards in Seventh District, July, 1930 .................................. Federally Inspected Slaughter, United States July, 1930 .................................. June, 1930 .... July, 1929 .................................. H ogs L ambs and S h e ep C alves 204 684 340 89 710 6S4 706 3,187 3,689 3,597 1,411 1,295 1,255 375 356 363 LIVE STOCK at Chicago) 3 M o n t h s of J u ly J une A u g u s t 16 1930 1930 1930 $ 9.50 $10.50 Native Beef Steers (average)....$ 8.85 7.00 8.00 Fat Cows and Heifers................. 6.75 11.40 Calves .................................... j........ 11.50 10.45 8.80 9.60 Hogs (bulk of sales)................... 9.30 7.35 8.60 Yearling Sheep ............................. 7.05 9.75 11.75 Lambs ........................................... 8.90 Page 4 J u ly 1929 $14.85 10.50 15.25 11.30 11.50 14.45 in g F ir m s W age E a rn er s E a r n in g s (0 0 0 O m it t e d ) W age Earn Earn ers No. I n d u s t r ia l G roup LIVE STOCK SLAUGHTER (In thousands) R e po rt C h a n g e s F rom J u n e 15 No. in g s $ % % Metals and products1....... Vehicles ........................... Textiles and products....... Food and products........... Stone, clay, and glass....... Lumber and products....... Chemical products ........... Leather products ............. Rubber products3 ............ Paper and printing......... 533 71 134 303 114 229 69 69 7 255 144,113 31,856 27,447 56,164 12,460 24,049 10,611 15,839 1,964 36,971 3,618 825 585 1,403 327 497 271 307 41 1,090 - 7 .9 -1 0 .1 - 5 .1 + 13.9 -8 .1 - 2 .9 - 4 .4 - 1 .2 -3 6 .9 + 3.4 - 1 5 .8 - 1 7 .0 - 4 .8 + 5.1 - 9 .9 - 8 .0 - 6 .2 - 8 .0 -3 3 .6 —1.5 Total mfg., 10 groups....... Merchandising3 ................. Public utilities ................. Coal m ining....................... Construction ..................... 1,784 206 80 37 199 361,474 30,045 97,307 7,445 15,761 8,964 826 3,212 124 468 - 3 .5 - 2 .3 + 3 .6 - 9 .8 - 0 .3 - 2 .6 + 24.9 + 2 .2 -0.0 Total, 14 groups............. 2,306 512,032 13,594 - 1 .6 - 7 .3 ^ th e r than vehicles. “Wisconsin only. “Illinois and Wisconsin. - 2 .4 The volume o f shipments for export decreased slight ly in July from a month earlier; inventories already abroad (including stocks in transit to European coun tries) continued relatively low. Trade on the Conti nent remained rather quiet during the greater part of the m onth; demand in the United Kingdom was active for hams but only fair for lard. Most purchases were confined to immediate requirements. A marked im provement in demand from all Continental countries as well as from the United Kingdom was experienced late in July and early in A ugust; also, some orders were booked for future delivery. Prices were on a parity with Chicago. D airy Products Butter manufacturing in the Seventh district fell off more than the seasonal amount in July and totaled 20 per cent less than a year ago. A similar trend was in dicated for the United States by the weekly statistics o f the American Association o f Creamery Butter Man ufacturers. Failing pastures and the low level of prices were the principal factors contributing to these recessions. Seventh district sales &ere 11 per cent smaller in volume than in June and the 13 per cent decline from a year ago was the largest shown in this comparison for any month thus far in 1930. Prices strengthened further and were higher than at any time since early May, but were still at a low level. August 1 stocks o f the commodity in the United States ex ceeded those o f any month since October 1929 and con tinued above the five-year average, though totaling somewhat less than a year ago. The production of American cheese in Wisconsin, as evidenced by the receipts at primary markets of that state, declined 14 per cent during the four weeks ended August 2 from the preceding period but was approxi mately the same as a year ago. Reshipments o f the commodity from these centers decreased 7 *4 per cent in both comparisons. Prices declined to a new low level during the month. Total inventories o f cheese in the United States recorded a seasonal gain on August 1 and were at the highest level o f any month in recent years. reduced time schedules in many plants and wage reduc tions in some lines. Considered individually, larger de clines than in the preceding month were recorded by eight groups in number o f men and by ten in payrolls. In Illinois, a reduction o f more than 10 per cent in man-hours was recorded in metals, vehicles, stone, clay and glass products, textiles, and construction, with similar reductions in many subdivisions o f the other industrial groups. Average weekly earnings for all groups in W isconsin were 11 per cent less than in June and a loss o f more than 10 per cent was shown for metals, vehicles, food products, lumber products, and util ities, while two groups, rubber products and merchan dising, had higher average earnings per man, although total payrolls were less than in June. Am ong report ing firms in Iowa, Indiana, and Michigan, the decline in man-hours exceeded that in number o f men in the total o f ten manufacturing groups and in each o f the groups individually with the exception o f textiles, leath er, and paper and printing. For the district as a whole, only one group increased in both number o f men and payrolls— food products, which was influenced largely by unusual expansion in canning and preserving in W isconsin where the fruit and vegetable crop suffered less from drought than in other sections. In the unemployment ratios below, some improve ment is noted in three states, Illinois alone having a higher ratio than in the preceding month, which was ac counted for by increases in Chicago and the larger industrial towns. REGISTRATIONS PER 100 POSITIONS AVAILABLE AT FREE EMPLOYMENT OFFICES I lt in o is M onth 1930 July .......................... Tune ........................ 1929 J ly .................... u Tune .......................... 262 224 148 139 I n d ia n a 168 170 113 113 I ow a W is c o n sin 258 295 231 232 150 155 115 120 Manufacturing A u t o m o b il e P r o d u c t io n a n d D is t r ib u t io n Industrial Employment Conditions Although the number o f employes in reporting lines o f industry and trade in this district declined less sharply in the aggregate during July than in June, pay rolls fell off to a greater extent as a result o f further Further seasonal decline took place in automobile production during July. Output o f 222,459 passen ger cars in the United States fell off 23 per cent from the preceding month, and truck production o f 39,663 was 13 per cent smaller. A s compared with July 1929, declines o f 48 and 47 per cent, respectively, were re- MIDWEST DISTRIBUTION OF AUTOMOBILES Changes In July 1930 from previous months WHOLESALE AND RETAIL LUMBER TRADE P er C e n t C h a n g e F rom J une 1930 New cars Wholesale— Number sold ............. Value ......................... Retail— Number sold ............. Value ......................... On hand July 31 — Number ..................... Value ......................... Used cars Number sold ............. Salable on hand— Number ..................... Value ......................... J uly 1929 C o m p a n ie s I n clu ded J une 1930 J uly 1929 - 5 .2 + 3.4 -6 8 .3 -6 3 .2 30 30 29 29 -1 4 .9 -1 6 .5 t -50.3 -5 2 .8 58 58 56 56 - 5 .0 - 6 .0 - 1 .6 - 6 .2 58 58 -2 2 .2 58 J u l y 193 0: P er C e n t N u m b e r of C h a n g e F rom F ir m s or Y ards J u n e 1930 J u l y 1929 Wholesale trade: Sales in board feet............................. Accounts outstanding1 ................... Retail trade: Sale in dollars................................... Accounts outstanding1 ................... 56 56 - 7 .3 C lass of T rade -1 1 .3 -1 7 .4 -1 9 .2 -5 2 .5 -4 8 .8 - 4 5 .6 18 15 14 - 8 .0 + 1.5 -3 3 .2 -1 0 .5 248 227 56 Ratio of accounts outstanding1 to dollar sales during month J u l y 1930 -1 1 .4 -1 4 .8 - 2 .7 -1 6 .0 58 58 56 56 Wholesale trade ................................... Retail trade ........................................... J u n e 1930 J u l y 1929 143.6 315.2 153.0 300.6 137.1 248.2 ’ End of month. Page 5 corded and against the corresponding period of 1928, passenger car production totaled 34 per cent smaller this year and that o f trucks 27 per cent less. Wholesale distributors o f new automobiles in the Middle W est again showed sales declines during July, but because o f the receipt o f new models of one make o f car, the aggregate value of cars sold recorded a small increase over June. Sales at retail by reporting dealers fell off by a little more than the usual seasonal amount; the recession was much smaller, however, than between May and June. Declines from a year ago were about the same in both wholesale and retail dis tribution as was the case in June compared with the corresponding month o f 1929. New car stocks were smaller than on June 30 and averaged less than at the end o f July last year. Used car sales declined in number from a month previous and a year ago, and stocks were less in both comparisons. Sales made on the deferred payment plan in July averaged 54 per cent o f total retail sales by twenty-seven dealers, while the average for June and for a year ago was 59 per cent. Iron a n d S te e l P roducts Steel mills in the Chicago district reported a quiet month in July, and steel ingot output had dropped off by the tenth o f August to 55 per cent of capacity. Pipe production again consumed a large tonnage o f steel in July. Indiana and Illinois pig iron production aver aged only 16,381 tons daily during July, the lowest for any month since October 1927 and about 20 per cent below the June rate. Prices at Chicago have held fairly steady. Sheets have been weak, however, and the price of pig iron was again lowered the end o f July to $17.50 per ton. Little change has taken place in iron and steel scrap prices. Steel and malleable casting foundry operations in the district continued to decline in July, although orders booked for steel castings increased considerably over the preceding month. Activity remained decidedly be low the level of the corresponding period in 1929. Ship ments by reporting stove and furnace manufacturers increased in July over June, but most firms shipped less than a year a go; total orders booked declined in both comparisons, although the majority of firms recorded gains over the preceding month. F u r n it u r e Reporting furniture manufacturers in the Seventh district experienced during July the first sizable monthto-month increase in orders booked since January. The expansion o f 52 per cent in July over June compares with an increase o f 37 per cent for the same period last year and with 60 per cent in the three-year aver age comparison, and offsets in part the heavy decline o f a month previous. In line with this expansion and a slight recession in shipments, unfilled orders rose 44 per cent. Shipments showed a falling-off from June o f 4 per cent, which is identical with that o f last year and compares with a recession o f 2 per cent for the three-year average. Declines from last year of 40 per cent in orders, 60 per cent in unfilled orders, and 40 per cent in shipments, were less sharp than a month previous, being then 55, 68, and 49 per cent, re spectively. The rate o f operations dropped still further in July and averaged 52 per cent o f capacity, or one point lower than the June rate and 25 points below that maintained a ^ear ago. Building Material, Construction W ork Materials used largely for residential, industrial, and farm construction continued, during July, to experience reduced demand in the Seventh district. In view o f the unusual number of vacancies in many cities, apartment house construction remained at a low level; uncertainty of the industrial outlook has tended to check projects for plant enlargement; and the downward movement of farm prices, sustained until the end o f July and fo l lowed by news o f crop reduction, was a factor in limit ing rural construction. Sales o f reporting retail lumber yards were about one-third under the average for July since 1924, and wholesalers had only slightly more than half the usual July volume o f business. Prices showed little change from previous low levels, a few items o f lumber^ recording declines at wholesale, although the retail list was firmer with the exception o f flooring. Cement in the Chicago market was quoted slightly high er toward the end o f the month. Dealers have shown no urgency to purchase for fall requirements. A 13 per cent increase over June in shipments from cement mills in the Middle W est, together with slightly reduced production, brought stocks o f these mills 12 per cent below the end o f June, although they were still 27 per cent larger than a year ago. B u il d in g C o n s t r u c t io n Building contracts awarded in the Seventh district declined to a greater extent between June and July than during any other period this year except January. Res idential building, on the other hand, showed a smaller recession than had been recorded in the two preceding months, and the decline averaged considerably less than in the same comparison last year, when contracts for residences fell off 38 per cent following a large increase between M ay and June. Aggregates for residential and for all building were the smallest in July o f any month this year since February. Permits issued in 102 cities o f the district declined 8 per cent in number during July from the preceding DEPARTMENT STORE TRADE IN JULY 1930 WHOLESALE TRADE IN JULY 1930 L o c a l it y P er C e n t C h a n g e F r om S a m e M o n t h L a st Y ear C o m m o d it y N et S ales Groceries ....... H ardware....... Dry Goods ..... Drugs ............. Shoes ............. Electrical Sup plies ........... — 4.2 -32.0 -39.4 -11.8 -3 2 .9 -28.9 Page 6 S toc ks -5.8 -11.3 -13.5 -7.5 -15.8 -17.8 A ccts . OUTSTAND. -8.9 -19.2 -1 1 .1 - 4 .6 - 6 .4 -24.1 R a t io of A ccts . O u tstan d Collec in g to t io n s P er C e n t C h a n g e J u l y 1930 F rom J u l y 1929 S tocks E nd of M o n t h N et S ales -6.2 -21.3 -24.0 -8.5 -2 2 .7 -2 0 .0 88.5 235.3 434.9 132.3 507.1 154.9 N e t S ales Chicago -----Detroit ....... Indianapolis.. Milwaukee ». Other Cities.. -19.0 -27.3 -15.1 -15.4 -14.4 7th District. -19.5 P er C e n t C h a n g e R a t io o f J u ly F ir s t S even C o l l e c t io n s M o n t h s 1930 F rom to A c co u n ts F ir s t S even O u t s t a n d in g M o n t h s 1929 J u n e 30 1930 1929 28.7 38.2 31.1 42.3 41.2 -8.2 -11.7 -18.6 -7.7 -5.0 -7.6 33.6 36.2 -4.9 -11.8 34.1 37.9 -3.1 -9.5 -3.1 - 0.1 N e t S ales oa.9 month and totaled only one per cent under a year ago. but their estimated cost was less by 53 per cent in each comparison. The value o f permits issued in Milwaukee exceeded by 63 per cent that of a month previous and was one per cent more than a year ago, while the num ber and estimated cost of those in Chicago increased 27 and 82 per cent, respectively, over June, but Detroit and Indianapolis failed to show gains in either com parison. BUILDING CONTRACTS AWARDED P eriod July 1930 ............................................ Change from June 1930................ Change from July 1929................ First seven month of 1930............... Change from same period 1929... T otal C o n tracts R e s id e n t ia l C on tra c ts $54,591,094 -46% -49% $467,787,440 -37% $12,277,976 -7 % -67% $103,812,554 -62% Merchandising In wholesale trade, two o f the reporting lines— gro ceries and drugs— recorded sales increases in July over June, the former o f 4 per cent and the latter of under one per cen t; only about half the firms in these groups, however, shared in the gains. In hardware, where a further recession of 5 per cent took place, three-fifths o f the firms had larger sales than in June. Declines in dry goods, shoes, and electrical supplies averaged 26, 21, and 8 per cent, respectively, with the majority of firms sharing therein. In all of the groups except gro ceries and drugs, sales in July totaled more than onefourth below the corresponding month o f 1929, as shown in the table. F or the first seven months of 1930 as compared with the same period last year, declines re corded w ere: groceries 1 J-2 per cent, hardware 20 per cent, dry goods 25 per cent, drugs 8 per cent, shoes 30 per cent, and electrical supplies 17 per cent. Ratios of accounts outstanding to sales were smaller in July than in June for groceries, hardware, and drugs, but larger in the other three lines, and continued, except in gro ceries and drugs, to average higher than a year ago. The seasonal recession during July o f 27 per cent in Seventh district department store sales was somewhat heavier than usual for the month. Chicago firms sold 31 per cent less than in June, Detroit 30 per cent, In dianapolis 19 per cent, Milwaukee 22 per cent, and stores in other cities a 21 per cent smaller dollar vol ume. Business o f Chicago and Detroit stores again showed the largest declines from the same month a year ago and fo r the year through July as compared with the corresponding period o f 1929. The trend in stocks continued downward during the month, while the rate of stock turnover remained slower than last year. Col lections, as measured by their ratio to accounts out standing, were not quite so good as a year ago. Sales of shoes at retail by reporting dealers and de partment stores fell off more than seasonally in July from June, declining 33 per cent, against an average recession for the month o f 25 per cent in the preceding four years; sales totaled one-fifth less than in the cor responding month a year ago. W ith few exceptions, all firms shared in these declines. For the seven months of 1930, sales aggregated 8 per cent below the same period of 1929, with none o f the dealers and only one-third of the department stores recording a gain in the comparison. The dollar volume o f furniture and house furnishings sold in July by reporting dealers and department stores o f the district declined 25 per cent from the preceding month, as compared with a usual seasonal recession o f under 15 per cent, and was 30 per cent below a year a g o ; installment sales by dealers totaled 22 and 35 per cent less, respectively, in the comparisons. Stocks in both o f these lines o f retail trade averaged smaller on July 31 than a month pre vious, although those o f shoes were slightly larger than a year ago. Chain stores reporting to this bank sold slightly less merchandise in July than in June or the corresponding month last year, although the number o f units operated increased in both comparisons. O f the groups includ ed in the aggregate, grocery, drug, and shoe chains had larger sales than in the preceding month, and drug, shoe, women’s clothing, and cigar chains sold more than a year ago; declines from June were reported by the five-and-ten-cent, cigar, furniture, musical instrument, and men’s and women’s clothing groups, and from last July by grocery, five-and-ten-cent, musical instrument, furniture, and men’s clothing chains. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the foliowing month. Data refer to the Seventh Federal Reserve District unless otherwise noted.) No. of Firms Meat Packing— (U. S.) — Sales (in dollars) .................... ......... . ... 64 Casting Foundries— Shipments : Steel— In dollars ............................ ... 15 In tons .................................... 15 Malleable— In dollars.......................... 23 In tons .............................. 23 Stoves and Furnaces— Shipments (in dollars) ..................... .... 11 Furniture— Orders (in dollars) .................... ....... .... 26 Shipments (in dollars) .......................... 26 Flour— Production (in bbls.) ............................ 27 Output of Butter by Creameries— Production ........................................... .... 72 Sales .......................................................... 74 Automobile Production (U. S.) : Passenger cars .................................... Trucks .................................................. Building Construction— Contracts awarded (in dollars) : Residential ........................................ Total ....................................... .......... July 1930 June 1930 July 1929 June 1929 97 103 121 120 61 65 35 49 68 71 50 71 101 111 84 120 101 109 92 128 99 81 108 98 71 48 43 SO 126 91 92 95 105 96 92 91 131 120 155 135 162 139 178 147 76 105 99 122 145 199 154 247 42 80 45 147 125 155 201 197 No. of Firms Wholesale Trade— Net Sales (in dollars) : Groceries ................................. .... 31 Hardware ..................... .... 14 Dry Goods ............................... .... 10 Drugs ........................................... .... 14 Shoes .......................................... .... 8 Retail Trade (Dept. Stores)— Net Sales (in dollars) : Chicago ......... ................................. .... 30 Detroit ....................................... 4 Indianapolis ..................................... 5 Milwaukee ....................................... ....... 5 Other Cities .................................. .... 51 Seventh District ............................. .... 95 Iron and Steel— Pig Iron Production :* Illinois and Indiana ....................... United States ................................. Steel Ingot Production— (U. S. )*.... Unfilled orders U. S. Steel Corp..... July 1930 June 1930 July 1929 June 1929 99 70 46 95 48 95 74 61 94 61 104 103 77 106 72 103 104 83 100 93 68 87 70 75 70 72 95 124 87 95 88 98 80 120 83 88 79 88 115 162 101 114 97 119 95 87 85 84 119 100 103 83 144 124 140 86 148 126 147 89 ’ Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS ( B y the Federal R eserve Board ) activity declined during July, produc BUSINESSfactory employmentfurtherdrought.lowest and industrial declined tion and reached the levels in recent years. Crops were damaged by prolonged Wholesale prices further until early in August when agricultural prices increased. rates continued easy. P roduction Index of manufactures and minerals combined, adjusted for seasonal variations (1923-25 average=10O). pen can PERCENT Index numbers of factory employment and payrolls, without adjustment for seasonal varia tions (1 9 2 3 -2 5 average=!(}()). PERCENT PEH CENT and Money E mployment Output of factories and mines decreased by about G per cent during July, according to the Board’s index of production, which makes allowance for seasonal fluctuations. A number of automobile factories were closed dur ing part of the month and there was substantial reduction in output of iron and steel and cotton textiles. Daily average production of bituminous coal, lumber, and shoes continued small. In the first half of August, the output of steel showed a further slight decrease. Some automobile plants resumed operations on a limited scale. Factory employment and wage payments decreased further and at the middle of July were at the lowest level since 1922. The reduction in number of workers employed was largest eel and automobile plants, car shops and foundries, hosiery and cotton mills, and clothing factories. There was a seasonal increase in employment in the canning, flour, and shoe industries. W orking forces at bituminous <-oal mines were further reduced, and the Department of Agriculture re ported an unusually small demand for farm labor. Building contracts awarded during July and the first half of August were in exceptionally small volume, according to reports by the F. W . Dodge Corporation. The reduction from June was primarily on account of smaller awards for pub lic works and utility construction. Building in other lines continued rela tively inactive. Feed crops and pasturage have been severely damaged by drought, which was not broken until the middle of August. The August 1 crop report of the Department of Agriculture indicated a corn crop of 2,212,000,000 bush els, the smallest since 1901, and the smallest hay crop in ten years. Food crops were less severely affected, with wheat production estimated at 821,000,000 bushels— 15,000,000 bushels larger than last year. The cotton crop was estimated at 14,362,000 bales, or slightly less than a year ago. D istribution Freight carloadings have been in smaller volume than at the same season of any other recent year. Department store sales declined in July to the lowest level since the summer of 1924. P rices ( 1926= 100). The sharp downward movement of wholesale prices continued through July, and the Bureau of Labor Statistics index fell to a level 14 per cent below that of a year ago. The most pronounced decreases from June to July were in the prices of cattle, beef, wheat, cotton, silk, and rubber, and nearly all commodities showed some decline. During the first half of August, prices of grains moved upward, reflecting the influence of the drought. There have also been recent increases in the prices of cattle, hogs, silver, and silk, while the prices of cotton, copper, iron and steel, and rubber have declined further to the lowest level in recent years. B a n k Credit Monthly rates in the open market in New York: commercial paper rate on 4- to 6-month paper; acceptance rate on 90-day bankers’ ac ceptances. Page 8 Loans and investments of reporting member banks in leading cities decreased slightly between July 16 and August 13, largely as a result of a decline of $48,000,000 in security loans. All other loans showed little change, while investments increased further. Reserve bank credit out standing increased by about $60,000,000 during the first three weeks of August, reflecting seasonal increase in the demand for currency and a de crease of about $25,000,000 in the country’s gold stock, chiefly on account of gold exports to France. The increase in reserve bank credit was in the form of bankers’ acceptances and United States Government securities. Member bank borrowings showed little change. Money rates continued easy. The prevailing rate on commercial paper was reduced to 3 per cent around the first of August and remained at that level during the first three weeks of the month. Bond yields continued to decline. Discount rates at the Federal Reserve Banks of St. Louis, San Francisco, and Kansas City, were lowered from 4 to 3 ^ per cent during August.
@FedFRASER