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Seventh
FEDERAL
^
r
Reserve
DISTRICT
IOWA
Eugene M. Stevens, Chairman 0/ the Board and
Federal Reserve Agent
Clifford S. Young, Asst. Federal Reserve Agent
Volume 15, No. 9
Asst. Federal Reserve Agent
Harris G. Pett, Manager
Division oj Research and Statistics
George A. Prugh,
MONTHLY REVIEW PUBLISHED BY THE
FEDERAL RESERVE BANK OF CHICAGO
August 31, 1932
General Summary
mercial loans showing a smaller decline than in the pre
ceding period and investments recording little change. A
HE manufacture and merchandising of commodities
relatively moderate decline took place in deposit liabilities
in the Seventh district showed greater-than-seasonal
of reporting banks, in contrast to heavy losses between the
declines in July, and employment and payrolls experi middle of June and July. Borrowings at the Federal Re
enced a further reduction. Credit conditions, however,
serve bank declined during the period, owing largely to
recorded a slight improvement.
a decrease in the demand for currency and an excess of
Among the industries to curtail their output during
local Treasury expenditures over receipts. Some expan
July were iron and steel, automobiles, casting foundries,
sion was shown in July in commercial paper sales and
stoves, shoes, leather, and building construction. Furni
financing by means of acceptances. The demand for
ture shipments were slightly less than a month previous,
bonds in the Chicago market improved considerably over
but orders booked expanded seasonally. Movement of
June.
building materials was slower than usual for the month.
Meat, butter, and cheese production declined in July,
Credit Conditions and Money Rates
although sales of packing-house products and distribution
of cheese expanded during the period. The July move
An excess of local Treasury expenditures over receipts
ment of wheat was small and showed less than a seasonal
of more than 28 millions and a decrease in demand for
gain over June, while that of corn increased contrary to
currency of 14 million dollars, during the period July 13
trend but was in smaller than usual volume for July. Fol
to August 17, were the principal factors making for less
lowing deterioration suffered in July and early August be
ened member bank recourse to the Reserve bank. Other
cause of hot weather, the corn crop again is in good con
factors involved in the decrease in member bank borrow
dition. Pastures and garden truck have also improved in
ing were an increase in holdings of U. S. securities by the
recent weeks.
Reserve bank (local transactions) of 2J4 million dollars
Merchandising groups reporting to this bank experi
and a decrease of slightly less than one million dollars in
enced heavier than usual recessions in sales during July,
non-member clearing balances. Chief among factors off
although the one less trading day than a month previous
setting this decrease were a gain in member bank reserve
was partly responsible for the extent of the declines.
balances of approximately 24 millions and ISJ4 millions
These groups include the wholesale grocery, drug, hard
in funds lost through inter-district settlements for com
ware, dry goods, shoe, and electrical supply trades, de
mercial and financial transactions. The sum of these two
partment stores, and the retail shoe, furniture, and chain
changes, however, together with four others of smaller
store trades. The distribution of automobiles, both at
amounts, was less than those making for decreased bor
wholesale and retail, likewise fell off in July.
rowing, so that loans to member banks were smaller by
The position of reporting member banks in the district
almost 4J4 million dollars on August 17 than on July 13.
improved somewhat between July 13 and August 17, comThe accompanying tabulation presents in detail the anal
ysis of factors influencing the volume of member bank
T
FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF
CONDITION
(Amounts in millions of dollars)
Change From
Aug. 17
July 13 Aug. 19
1932
1932
1931
Total Bills and Securities.......................................
$312.3
$-2.0 $+182.1
Bills Discounted.........................................................
32.7
-4.4
4-17.7
Bills Bought................................................................
4.8
-2.6
-15.0
U. S. Government Securities............. ...................
274.8
+5.1
4-179.5
Total Reserves...........................................................
741.7
4-27.0
4-73.4
Total Deposits...........................................................
301.8
+24.6
-48.1
Federal Reserve Notes in Circulation................
718.1
-2.2
4-308.1
Ratio of Total Reserves to Deposit and Federal
Reserve Note Liabilities Combined...........
72.7
+i.i*
-15.2*
♦Number of Points.
CONDITION OF REPORTING MEMBER BANKS, SEVENTH
DISTRICT
(Amounts in millions of dollars)
Change From
Aug. 17
July 13 Aug. 19
1932
1932
1931
Total Loans and Investments........................... . . $2,303
$-26
$-798
Loans on Securities.............................................. . .
750
-25
-307
All Other Loans..................................................... ...
881
-1
-245
Investments............................................................ . .
672
0
-246
Net Demand Deposits........................................ ..
Time Deposits....................................................... . .
1,194
910
-13
-14
-561
-312
Borrowings from Federal Reserve Bank. . . . . .
8
-4
+S
recourse to the Reserve bank.
FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL
RESERVE BANK OF CHICAGO
Changes between July 13 and August 17, 1932
(In millions of dollars)
hanges making for decrease in member bank borrowing:
1. Excess of local Treasury expenditures over receipts........... 28.26
2. Decrease in demand for currency.............................................. 14.23
3. Increase in holdings of U. S. securities by Reserve bank
(local transactions).................................................................... 2.50
4. Decrease in non-member clearing balances............................. 0.99
5. Increase in reserve bank float..................................................... 0.63
Total..............................................................................................
46.61
Changes making for increase in member bank borrowing:
1. Increase in member bank reserve balances............................. 23.80
2. Funds lost through inter-district settlements for com
mercial and financial transactions........................................ 15.58
3. Increase in unexpended capital funds...................................... 1.47
4. Decrease in holdings of acceptances by Reserve bank
(local transactions).................................................................... 1.30
5. Sales of gold to industry............................................................... 0.03
Total..............................................................................................
Excess of changes making for decrease in member bank borrowing:
Absorption of this excess: Decrease in member bank borrowings
(discounts for member banks)............................................................
42.18
4.43
4.43
Member Bank Credit
Total loans and investments of reporting member banks
on August 17 showed a decline of 26 millions from July 13;
this decrease, however, was much less pronounced than
that shown on July 13 in comparison with the correspond
ing reporting date in June, when a drop of 154 million
dollars was recorded. Loans on securities showed a reces
sion of 25 millions in the August 17-July 13 comparison,
and all other (commercial) loans declined only one mil
lion, whereas in the previous comparison the latter had
receded 30 million dollars. Investment holdings of re
porting member banks on August 17 stood at the July 13
level; on the latter date they were more than 100 millions
below June 15. Net demand deposits, which showed
gains on the first two reporting dates in August, on August
17 declined 13 millions, however, and time deposits 14
millions from July 13; during the preceding period—
June 15 to July 13—these decreases amounted to 138 and
56 million dollars, respectively, reflecting the heavy with
drawals from banks in Chicago the latter part of June.
Total loans and investments of reporting member banks
on August 17 were slightly less than 800 millions be
low August 19, 1931, though this comparison is somewhat
more favorable than the 832 million decline shown on
July 13 as against July 15, 1931. Net demand deposits
on August 17 showed a slightly smaller decline from the
preceding year than was shown July 13, whereas the de
crease in time deposits slightly exceeded the decline from
last year shown on that date.
Customers’ commercial loans in Chicago during the
week ended August 15 carried a rate of 4)4 to 5 per cent,
as against a range of 4 to 5 per cent during the corre
sponding week of July. The average rate earned on loans
and discounts during the calendar month of July was re
ported as 4.54 by Chicago banks, a drop of but one point
from the 4.55 per cent in June. In July 1931 this figure
was 4.42 per cent. In Detroit, customers’ commercial
loans during the week ended August 15 were reported as
5y2 to 6 per cent, or the same as in July.
Although dealer sales of commercial paper in the Mid-
die West showed an expansion of 69 per cent in July over
the limited volume of June, they fell 85 per cent below
the 1923-31 average for the month owing to continued
restricted borrowing and light demand. Selling rates
ranged from 1)4 to 2)4 per cent for prime paper and
from 2)4 to 3 per cent for less well-known obligations;
the bulk of transactions took place at 2)4 to 2)4 per cent.
Outstandings were further reduced on July 30. Coinci
dent with an irregular demand, sales during the first half
of August declined 12 per cent as compared with the
corresponding weeks of July. Most of the firms reported
August 15 quotations within the range of 2 to 2)4 per
cent.
Local purchases of acceptances by dealers in the Chi
cago bill market declined in the four weeks ended August
10 to an almost negligible quantity. A reduction also took
place in receipts from Eastern centers, so that supplies ag
gregated 43 per cent lighter than for June 16 to July 13
and were 90 per cent below the level of a year ago. In
asmuch as demand remained sufficient to absorb current
offerings, dealers were unable to accumulate any bills
in portfolios. Selling rates were unchanged from the pre
ceding period.
AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS
IN THE CHICAGO BILL MARKET
July 14 to August 10, 1932
Per Cent Change in Comparison with Period From
June 16 to July 13
July 16 to August 12
1932
1931
Bills purchased..............
—86.6
—97.9
Bills sold.........................
-29.6
-86.9
Holdings*........................
...........
...........
♦Holdings nil on August 10, 1932.
New financing by means of bankers’ acceptances
showed only a moderate expansion in the Seventh district
during July. On the other hand, the direct discounting
of these obligations by accepting banks—plus a repur
chase of some bills sold in earlier months—increased 68
per cent over June and was heavier than a year ago. A
further gain in purchases of other banks’ bills was re
corded, but this class of business totaled less than onethird the volume of last July. Sales fell off sharply from
the high level of June to $1,800,000, an amount less than
for any previous month since September 1928. However,
the acceptance portfolios of reporting banks gained only
27 per cent over June 30, inasmuch as a large volume of
bills matured during the period. The liability for out
standing acceptances continued to decline. During the
first half of August, new financing increased 90 per cent
as compared with the corresponding weeks of July. This
gain mainly reflected seasonal borrowing to finance the
movement of grain; furthermore, a greater number of in
dustries were making use of acceptance credits than had
been the case for several recent months.
TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY
A SELECTED LIST OF ACCEPTING BANKS IN THE
SEVENTH DISTRICT
Per Cent Change in July 1932 From
June 1932
July 1931
Total value of bills accepted............................
+8.4
—21.2
Purchases (including own bills discounted)
+56.6
—29.6
Sales................................................................
—91.3
—66.1
Holdings*.................................................... ..
+27.2
—31.6
Liability for outstandings*......................
—4.3
—35.6
*At end of month.
VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT
(Amounts in millions of dollars)
Per Cent of Increase
or Decrease From
July 1932 June 1932 July 1931
Chicago............................................................ .........$1,894
-11.2
-38.7
Detroit, Milwaukee, and Indianapolis. . .........
838
-4.8
-27.8
1
Plfie 2
1
Total 36 centers............................................ .........$3,214
CF -H
Total four larger cities................................. ......... $2,732
32 smaller centers.........................................
-8.3
' -35.8
-36.7
-35.9
Security Markets
Demand for investment securities in the Chicago bond
market during July improved considerably over the pre
vious few months. During the latter half of the month
and the first two weeks in August the movement became
more pronounced, and prices advanced quite steadily.
Outstanding issues reflecting buying interest and higher
prices included second grade rails, public utilities, oils, and
certain industrials. Some United States Government is
sues established new highs for the year during the period.
According to some investment houses reporting market
conditions, an increasing number of private investors have
taken an interest in the market for the first time in several
months. Prices on the Chicago Stock Exchange, after
touching new low levels for the year the latter part of
June, trended upward during July and the first half of
August. The average price of twenty leading stocks*
amounted to $23.03 on August 16, as compared with
$16.37 on July 16.
* Chicago Journal of Commerce.
Federal Reserve Bank Loans to Individuals,
Partnerships, and Corporations
The Emergency Relief and Construction Act of 1932
amends section 13 of the Federal Reserve Act as follows:
“In unusual and exigent circumstances, the Federal Reserve
Board, by the affirmative vote of not less than five members, may
authorize any Federal reserve bank, during such periods as the said
board may determine, at rates established in accordance with the
provisions of section 14, subdivision (d), of this Act, to discount
for any individual, partnership, or corporation, notes, drafts, and
bills of exchange of the kinds and maturities made eligible for dis
count for member banks under other provisions of this Act when
such notes, drafts, and bills of exchange are indorsed and otherwise
secured to the satisfaction of the Federal reserve bank: Provided,
That before discounting any such note, draft, or bill of exchange
for an individual or a partnership or corporation the Federal re
serve bank shall obtain evidence that such individual, partnership,
or corporation is unable to secure adequate credit accommodations
from other banking institutions. All such discounts for individuals,
partnerships, or corporations shall be subject to such limitations,
restrictions, and regulations as the Federal Reserve Board may
prescribe.”
It should be noted that under this amendment, Federal
Reserve banks can rediscount only paper “of the kinds
and maturities made eligible for discount for member
banks” under other provisions of the Act, and that, fur
thermore, such paper must be “indorsed and otherwise
secured to the satisfaction of the Federal reserve bank.”
Agricultural Products
Corn in the Seventh district suffered some deterioration
during July and the first week in August because of exCROP PRODUCTION
Estimated by the United States Bureau of Agricultural Economics on the
basis of August 1 Condition
(In thousands of bushels unless otherwise specified)
Seventh District
United States
Forecast
Final
Forecast
Final
Average
1932
1931
1932
1931
1924-28
Corn................... 988,418
887,842
2,819,794
2,563,271
2,625,063
Oats................... 514,706
469,972
1,214,733
1,112,037
1,277,127
Winter Wheat.. 45,527
73,636
441,788
789,462
548,632
Spring Wheat.. 3,358
3,623
280,899
104,742
280,044
Barley............... 56.055(a)
49.467(a)
302,808
198,185
218,868
Rye..................... 8.189(a)
7.523(a)
42,453
32,514
44,081
Buckwheat....
815(a)
665(a)
7,176
8,938
11,792
Flaxseed............
305(b)
250(b)
15,812
11,071
23,287
Potatoes (white ) 54,500
50,418
367,399
375,518
361,115
Potatoes (sweet ) 1.390(c)
1.476(c)
76,050
62,904
57,822
Apples
(total crop).. 11.490(a)
25.382(a)
136,496
202,415
180,262
Peaches............. 2.169(d)
7.838(d)
46,126
76,586
56,821
Pears..................
959(d)
1.602(d)
22,149
23,346
21,484
Cherries*..........
30(e)
29(e)
125
111
114
Grapes*.............
87(a)
74(a)
2,101
1,622
2,339
Dry Beans***.. 3.726(f)
3.316(f)
9,645
12,713
Tobacco**........ 32,560
48,904
1,019,975
1,600,910
1,298,947
All Tame Hay* 12,705
11,939
67,390
64,213
73,759
Wild Hay*___
493(a)
429(a)
11,444
8,125
12,000
Broom Corn*. .
SM(g)
8H(g)
43
51
44 y2
Onions............... 7.550(a)
3.395(a)
27,569
18,894
Tomatoes for
Canning*___
338(d)
251(d)
1,236
982
*In thousands of tons. **In thousands of pounds. ***In thousands of 100lb. bags, (a) Five states including the Seventh district, (b) Iowa, Wisconsin,
(c) Illinois, Indiana, Iowa, (d) Illinois, Michigan, Indiana, Iowa, (e) Michi
gan, Wisconsin, (f) Michigan, (g) Illinois.
tremely high temperatures, but the situation was later
changed to such an extent by timely rains and cooler
weather that mid-month found the crop (except in a few
localities) in good to excellent condition. Most fields had
reached the roasting-ear stage and some of the earliest
varieties were already denting. Prospects, therefore, con
tinued to point to a production considerably in excess of
the average for the preceding five years. With threshing
of small grain about half completed, early returns showed
slightly better results for oats than was expected and
verified forecasts of the smallest wheat harvest in the dis
trict since 1928. Barley and rye are of low quality this
year. Farmers are harvesting a rather heavy crop of
tomatoes and a light production of mint. Pastures and
garden truck have improved in recent weeks; moreover,
sugar beets, potatoes, and other autumn crops are in good
condition. Plowing in anticipation of fall seeding oper
ations has begun. The United States Bureau of Agricul
tural Economics estimated that the number of cattle on
feed has increased over a year ago in Indiana, Illinois, and
Michigan, but has decreased in Iowa, Wisconsin, and the
Corn Belt as a whole. A few outbreaks of hog cholera
are reported in the Seventh district.
Grain Marketing
Statistical changes in the wheat situation during July
and early August were largely in favor of the selling side
of the market, and after sharp weakness in prices near
the middle of July, brought about a recovery which was
retained in part to the middle of August. Among the
constructive factors were a decline in the world visible
supply, reduced world shipments, and Broomhall’s esti
mate that Europe will probably require as much overseas
wheat in 1932-33 as in 1931-32.
At interior markets in this country during July the
wheat movement was less than half the five-year July
average, and increased less than seasonally over the pre
ceding month. Receipts increased 200 per cent over June,
as compared with a five-year average gain of 291 per cent
over the period, and shipments were only 47 per cent
larger than a month previous, as against an average June
to July increase of 107 per cent. The United States vis
ible supply of 172,790,000 bushels on August 13, totaled
about SI million bushels less than on the corresponding
date of last year, and also slightly below the 1930 figure
for that date. This year the increase due to new crop
receipts began on July 16 and amounted to only 8 million
bushels between that date and August 13, while last year
the upward trend began on July 1, and a 35 million
bushel increase was recorded by August IS. Exports in
the five weeks ending July 30 totaled less than one-third
LIVE STOCK SLAUGHTER
(In thousands)
Yards in Seventh District,
July 1932.....................................
Federally Inspected Slaughter,
United States
July 1932.....................................
June 1932.....................................
July 1931......................................
Cattle
Hogs
Lambs
and Sheep
Calves
159
528
268
67
614
638
706
2,802
3,320
2,767
1,384
1,529
1,491
324
394
356
AVERAGE PRICES OF LIVE STOCK
(Per hundred pounds at Chicago)
Week Ended
Months of
Aug. 20 July
June
July
1932
1932
1932
1931
Native Beef Steers (average)............. ....
$8.00
$7.95
$6.65
S7.80
Fat Cows and Heifers........................... ___
4.85
5.25
5.35
6.05
Calves......................................................... ___
6.10
5.85
5.75
8.00
Hogs (bulk of sales)............................... ....
4.25
4.65
3.50
6.30
Yearling Sheep........................................ ___
4.65
4.65
4.45
5.50
5.45
5.90
5.80
7.05
Lambs........................................................ ___
Page 3
those in the same period last year and considerably below
the five-year average for the month. July exports were
less than those in June, which is exceptional.
Corn receipts and shipments at primary centers in
creased over June, contrary to the seasonal trend, but
totaled lower than in July of the previous five years. Oats
receipts were higher in comparison with the preceding
month, a year ago, and the five-year July average, while
shipments were smaller than usual for July, though larger
than a month previous. The visible supply of corn and
oats continued larger than a year ago, the trend since
July 1 this year being a reduction for corn compared with
an increase in the same period of 1931, and a larger in
crease for oats than that which took place last year.
Wheat prices were lower in July, both cash and futures
falling to new lows near the middle of the month, but
subsequent recovery and reaction netted a slight gain at
the middle of August over the first of July. Wheat has
recently been nearer to a real export parity with Liverpool
than in many months. Corn prices were more stable than
wheat, as both cash and futures averaged equal to or
slightly higher than in June and showed mild strength in
the early part of August. Corn also came near to the
export level, because of price advances at Buenos Aires.
Oats declined in July and continued downward into Au
gust.
Movement of Live Stock
Cattle receipts at public stock yards in the United
States increased in less than seasonal volume during July
over the preceding month, and those of hogs and calves
decreased more than is customary. Also, sheep market
ings fell off from June—contrary to the usual tendency.
A recession continued to be recorded from 1931 in the
volume of each kind of live stock and, with the single
exception of lambs, comparisons with the 1922-31 average
remained unfavorable. However, the movement of hogs
to inspected slaughtering establishments (inclusive of
those receipts not passing through public yards) gained
slightly over a year ago; that of cattle decreased from the
preceding month. Shipments of both cattle and lambs to
feed lots showed a smaller decline from the 1927-31 aver
age than was evidenced in either May or June.
Meat Packing
The volume of production at slaughtering establish
ments in the United States was reduced 5)4 per cent in
July from June, as compared with an average recession
of 1)4 per cent, and totaled not only 5)4 per cent less
than a year ago but also 15 per cent smaller than the
1922-31 average for the month. Although payrolls at
the close of the period failed to reflect a corresponding
change in employment from June, they showed that wage
payments had declined 1)4 per cent despite an increase
of one per cent in hours worked. In, contrast to these
recessions, sales recorded the first expansion since last
October and made a more favorable comparison with 1931
than during earlier months of this year. The value of
sales billed to domestic and foreign customers aggregated
4)4 per cent greater in July than in the preceding period
and was 30 per cent less than last year. This improve
ment mainly reflected the recent advance which has taken
place in the prices of most packing-house commodities;
the tonnage sold decreased 4 pier cent from June and 2)4
per cent from a year ago. Inventories of these products
in the United States showed a 54,000,000-pound greater
decrease from July 1 than in the 1927-31 August 1 aver
age and totaled 200,000,000 pounds lighter than this
average.
Page 4
Shipments for export were greatly reduced in July, as a
consequence of a continuance of restrictions on dollar ex
change and because of the decrease in United States pro
duction. German importers, anticipating an advance in
import duties, bought rather heavily from stocks of Amer
ican lard already landed. British trade in the commodity,
on the other hand, was not so good as in June. Aside
from a fair amount of trading in hams and picnics that
took place in the United Kingdom early in the month,
demand for United States meats remained exceptionally
light. Continental quotations for lard were in line with
those of Chicago, but prices of the commodity in the
United Kingdom were below United States parity. Quo
tations for most meats were unattractive to American ex
porters. United States concerns report somewhat smaller
inventories in foreign countries (inclusive of stocks in
transit) than at the beginning of July.
Dairy Products
Creamery butter manufacturing in the Seventh Federal
Reserve district decreased 16 per cent in July, or more
than a seasonal amount from a month earlier, to a level
4 per cent under a year ago and 18 per cent below the
1923-31 average. Moreover, the sales tonnage fell off
18)4, 7)4, and 18 per cent in the respective comparisons.
United States production of the commodity also declined
from June but totaled slightly in excess of last year.
Consumption remained relatively heavy, so that inven
tories of creamery butter in the United States increased
only 26,000,000 pounds on August 1 over the beginning
of July, the average gain being 46,000,000 pounds. Cur
rent holdings, as a consequence, totaled 25,000,000
pounds less than the 1927-31 average. Prices continued
to advance.
During the four weeks ended July 30, the Wisconsin
production of American cheese was reduced 21 per cent
from the preceding period and 15 per cent from the same
period of 1931. Distribution, however, expanded 8 per
cent, thus reaching the level of manufacturing operations
—an unusual development at this season—and aggregated
only 5)4 per cent less than a year ago. The total stock
of cheese in the United States increased but half the
usual amount over July 1 and showed a greater recession
from last year and the 1927-31 average than had been
evidenced during any previous month of 1932. Quota
tions trended upward.
EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE
DISTRICT
Week of July 15, 1932
Industrial Group
Report
ing
Firms
No.
Wage
Earners
No.
Earnings
(000
Omitted)
$
Change From
June 15
Wage
Earn
Earn
ers
%
%
ings
Metals and Products1........
Vehicles.................................
Textiles and Products. . . .
Food and Products.............
Stone, Clay, and Glass.. . .
Wood Products....................
Chemical Products.............
Leather Products................
Rubber Products2...............
Paper and Printing............
714
150
139
346
142
261
103
71
7
292
106,992
180,772
25,005
56,671
6,621
18,209
12,405
14,077
5,421
38,072
1,558
4,057
272
1,133
117
199
259
190
97
852
-12.4
-1.8
-2.0
+3.3
-4.8
-8.9
-5.3
+0.2
-6.0
+0.3
Total Mfg., 10 Groups....
2,225
464,245
8,734
-4.2
-8.5
Merchandising3...................
Public Utilities.....................
Coal Mining.........................
Construction........................
160
71
12
334
26,659
81,541
378
9,845
557
2,348
6
205
-3.1
-1.0
+7.7
-7.1
-7.4
-6.5
+13.9
-5.9
Total Non-Mfg., 4 Groups.
Total, 14 Groups................
'Other than Vehicles.
-21.3
-2.9
-14.9
-1.8
-13.4
-16.8
-10.4
+ 1.0
-36.5
-6.8
577
118,423
3,116
-2.0
-6.6
2,802
582,668
11,850
-3.8
-8.0
2 Michigan and Wisconsin.
s Illinois and Wisconsin.
Industrial Employment Conditions
The downward trend of Seventh district employment
and payrolls continued from June IS to July 15 with
more than seasonal sharpness, as the losses of nearly 4
per cent in number of men and 8 per cent in wage pay
ments were greater than those for July of any year in
our records, with the exception of 1931 when the losses
amounted to slightly over 4 per cent in number employed
and liyZ per cent in their earnings. Normal seasonal
factors, such as vacations, summer inventories, and the
July 4 holiday no doubt contributed largely to the con
traction in the totals, yet the size of the decline in com
parison with previous years indicates that non-seasonal
curtailment of industrial operations was also a factor.
The losses registered by manufacturing industry, as in
the preceding month, exceeded those for non-manufactur
ing. The degree to which aggregate factory payrolls have
fallen as a result of lay-offs, part-time operations, and
wage reductions is shown by declines of 24 per cent since
the fifteenth of last January, 38 per cent from a year
ago, and 65 per cent from the 1925-27 average. All
manufacturing groups except vehicles, leather, and rubber
products reached new low points in aggregate payrolls
on July 15.
Only two groups, leather products and coal mining,
gained in both employment and wage payments. The
gains registered in coal mining are without significance
in view of the fact that the 12 mines reporting had only
378 employes. The wage controversy remained unsettled
at the time of the reports and most mines were idle. Two
other groups, food products and paper and printing, had
more employes but paid out less in wages. The remain
ing groups recorded losses ranging from 12 per cent in
employment and 21 per cent in payrolls for the metal
products group to 2 per cent and 3 per cent, respectively,
for vehicles. Five groups reduced employment by more
than 5 per cent—metals, wood, rubber, chemicals, and
construction; the first four of those named and, in addi
tion, the stone-clay-glass and textiles groups had reduc
tions of more than 10 per cent in total wage payments.
Manufacturing
Automobile Production and Distribution
Further seasonal recession took place during July in
United States production of automobiles. Passenger car
output, totaling 94,678 in number for the month, fell
41 per cent below the June figure, while truck produc
tion, amounting to 16,434 vehicles, was 28 per cent less
than in the preceding month. As compared with last
July, declines of 49 and 52 per cent were recorded in
passenger car and truck output, respectively.
The reversal of a rising trend which had extended from
January through June, appeared during July in midwest
sales of automobiles at retail. Sales dropped 45 per cent
from those of June and were close to 60 per cent below
those a year ago, in contrast to a comparatively small
decline shown in the latter comparison a month previous.
Wholesale distribution of automobiles declined 24 per
cent in number during July from the preceding month,
while the value of these sales fell off 38 per cent, the
smaller recession in number being due to increased dis
tribution of new models of certain lower-priced cars,
which to some extent offset a slowing-up in sales of higherpriced makes. Used car sales also dropped in July, in
sympathy with the decline in new car sales. Stocks of
both new and used cars continue to remain at extremely
low levels. Deferred payment sales constituted 54 per
cent of the total July retail sales of dealers reporting the
item, as compared with a ratio of 49 per cent a month
previous and with 60 per cent a year ago.
Iron and Steel Products
Although extreme dullness continued to characterize
conditions in the steel industry during July and by the
end of the month the rate of steel ingot output in the
Chicago district had dropped to less than 10 per cent of
capacity, the early weeks of August witnessed a slight
rise in operations and a moderate increase in orders from
some sources. Prices of finished steel have firmly main
tained levels established in the spring, and toward the end
of July a perceptible advance was noted in prices of scrap
iron and steel, which upward tendency continued through
the middle of August.
Activity at casting foundries continued to fall off in
July, the tonnage of malleable castings shipped by re
porting firms declining 40 per cent from the preceding
month and production 36 per cent, while the number of
tons shipped by steel casting foundries was reduced 9
per cent and production 18 per cent; orders booked for
malleable castings dropped 18 per cent and those for steel
castings more than 20 per cent. Activity in both steel
and malleable castings was less than two-fifths that of a
year ago. Shipments by reporting stove and furnace
manufacturers totaled 25 per cent smaller in July than
a month previous and were 53 per cent below those of
last July; new orders were less by 27 and 61 per cent
in the respective comparisons.
Furniture
Seventh district furniture manufacturers reporting to
LUMBER AND BUILDING MATERIALS TRADE
July 1932: Per Cent
Change From
MIDWEST DISTRIBUTION OF AUTOMOBILES
Changes in July 1932 from Previous Months
Class of Trade
Per Cent Change From
June 1932
New Cars
Wholesale—
Number Sold......................................
Value.....................................................
Retail—
Number Sold......................................
Value.....................................................
On Hand July 30—
Number................................................
Value.....................................................
Used Cars
Number Sold......................................
Salable on Hand—
Number................................................
Value.....................................................
July 1931
Included
-24.3
-37.7
-67.1
-73.2
15
15
-45.3
-44.9
-55.5
-58.6
42
42
-4.2
-8.8
-39.8
-49.7
42
42
-18.8
-19.9
42
-16.5
-17.1
-15.5
-19.5
42
42
Wholesale Lumber:
Sales in Dollars...............................
Sales in Board Feet........................
Accounts Outstanding1.................
Retail Building Materials:
Total Sales in Dollars...................
Lumber Sales in Dollars...............
Lumber Sales in Board Feet....
Accounts Outstanding1.................
Number of
Firms or
Yards
June 1932
July 1931
-19.2
-11.7
-13.2
-48.2
-29.9
-31.3
14
12
12
-12.7
-8.6
-6.3
-3.4
-40.4
-40.8
-43.2
-23.9
188
38
87
180
Ratio of accounts outstanding1
to dollar sales during month
Wholesale Trade.................................
Retail Trade.........................................
July 1932
June 1932
July 1931
247.0
463.2
231.1
423.4
189.2
374.2
1End of Month.
Page 5
this bank recorded marked acceleration in bookings dur
ing July, the total of new orders for the month expanding
approximately S3 per cent over the June aggregate. This
gain was in line with those experienced in recent years—
the year 1931 excepted, when the mid-year peak of orders
booked was in June, owing to the pushing ahead by one
month of the summer furniture showing. Orders booked
this July are not strictly comparable, therefore, with those
of July a year ago, and the decline of 42 per cent in the
comparison is accordingly somewhat smaller than might
otherwise be expected. Shipments were slightly less in
July than in the preceding month and cancellations were
very light, resulting—in conjunction with the large in
crease in orders booked—in a 42 per cent gain during
the month in unfilled orders outstanding which on July
31 were in a ratio of 98 per cent to current orders booked,
or 6 points under the ratio of a month previous. The
rate of operations continued low during July, the ratio to
capacity approximating 25 per cent, which compares
with a ratio of 24 per cent obtaining in June and of 42
per cent a year ago.
Shoe Manufacturing, Tanning, and Hides
Operations of Seventh district shoe manufacturing es
tablishments showed a much greater than seasonal decline
in July, dropping 25 per cent from June, following the
expansion in that month, to a point below any other
month on our records (January 1923). Leather produc
tion and sales also fell off from the preceding period and
a year ago. Quotations tended to firm.
Chicago trading in calf and kip skins continued in
limited volume during July, but sales of packer green
hides increased. Heavier purchases than in June likewise
were reported by district tanneries. On the other hand,
shipments of hides and skins from Chicago totaled less
than in the preceding month. Prices advanced.
Building Materials, Construction Work
Greater-than-seasonal losses in July characterized all
lines of building materials in the Seventh district for
which this bank compiles data, with the exception of ce
ment which continued the moderate seasonal expansion
of several previous months.
Lumber at wholesale registered a loss of 19 per cent
from June in dollar sales and of 12 per cent in board feet.
The usual seasonal decline in dollar sales, as shown by the
five-year average, amounts to about 10 per cent between
June and July. The value of lumber sold was 48 per cent
and the volume 30 per cent below that of July 1931. At
retail yards the dollar value of all materials sold amounted
to 13 per cent less than in June, against a five-year average
decline of 8 per cent. Dollar sales of lumber at retail
were down 9 per cent from a month previous, as com
pared with a similar drop for the same month of 1931,
while board-foot sales lost 6 per cent in comparison with
only a 2 per cent decline between June and July last year.
No important change was indicated in prices, and stocks
were further reduced at both wholesale and retail yards.
Also, in both classes of yards, the accounts-sales ratio was
higher on July 31 than a month earlier, as accounts out
standing dropped less sharply than did dollar sales.
Clay products manufacturers reported demand for brick
and tile in July as being the lightest for that month in
many years, and at some plants shipments fell below the
June volume. Stocks are being controlled, however, by
the generally restricted operations. Department of Com
merce figures on cement distribution in the five states of
the Seventh district showed a decline for the first six
months of 1932 of 44 per cent from the same period of
1931, and for the month of June (the latest figures avail
able) a loss of 39 per cent from a year earlier was re
corded, together with a seasonal gain of 37 per cent over
May. July statistics for midwestern mills show that ce
ment shipments expanded 10 per cent over June, while
production increased only 2/2 per cent and stocks were
reduced 11 per cent to the lowest {Mint since November
1931. Compared with a year ago, both shipments and
production continued very low. Cement prices firmed
somewhat from the earlier depressed levels.
Building Construction
Construction activity in the Seventh Federal Reserve
district during July declined to the lowest level this year
since January, according to building contracts awarded.
Of the total volume of awards, amounting to only 16
million dollars, 12 per cent was for residential contracts,
which likewise registered a decline.
BUILDING CONTRACTS AWARDED*
SEVENTH FEDERAL RESERVE DISTRICT
Period
Total
Contracts
Residential
Contracts
July 1932.........................................................
$16,083,054
Change from July 1931..........................
First seven months of 1932........................
Change from same period 1931............
$126,780,108
-57%
$1,940,763
-33%
-66%
$16,975,095
-72%
♦Data furnished by F. W. Dodge Corporation.
Estimated cost of proposed construction, as reflected by
building permits issued in 102 cities of the Seventh dis
trict, gained 10 per cent during July as compared with a
month previous. The expansion was entirely due, how
ever, to increases in the cities of Chicago, Milwaukee, and
Des Moines, inasmuch as Detroit, Indianapolis, and the
total for 97 smaller cities showed substantial declines.
The total value of permits was 63 per cent below the yearago figure, and the number issued dropped 16 and 43 per
cent in the monthly and yearly comparison, respectively.
Milwaukee and Des Moines were the exceptions to dis
trict trend in the comparison with last July, both show
ing gains in estimated cost.
DEPARTMENT STORE TRADE IN JULY 1932
WHOLESALE TRADE IN JULY 1932
Per Cent Change
From Same Month Last Year
Commodity
Net Sales
Groceries..............
Hardware.............
Dry Goods...........
Drugs....................
Shoes.....................
Electrical
Supplies.............
Stocks
Accts.
Outstand.
Collec
Ratio of
Accts.
Outstand
8
= *
Per Cent Change
July 1932
From
July 1931
Locality
ing to
Net Sales
Ratio of
Per Cent Change July Col
First Seven
lections to
Months 1932
Accounts
From Same
Outstanding
Period 1931
June 30
Net Sales
Stocks End
of Month
Net Sales
1932
1931
tions
-35.5
-40.9
-41.6
-33.5
-53.4
-23.6
-14.0
-37.1
-20.1
-28.1
-12.6
-17.1
-27.0
-1.4
-54.5
-31.0
-25.2
-41.1
-23.7
-36.1
123.0
345.5
460.7
257.0
324.4
Chicago........
Detroit.........
Indianapolis.
Milwaukee. .
Other Cities.
-32.7
-27.9
-28.6
-36.2
-33.6
-31.3
-20.7
-22.9
-24.4
-20.8
-28.5
-24.4
-22.0
-26.3
-27.6
22.0
27.6
34.7
30.6
26.4
26.6
29.8
38.6
34.7
30.2
-52.1
-28.4
-25.7
-47.8
241.5
7th District.
-31.9
-26.4
-26.8
27.0
30.5
Page 6
Merchandising
Recession in the distribution of commodities was con
siderably greater than seasonal in July, although the one
less trading day than in either the preceding month or
July a year ago was partly responsible for the heaviness
of the declines. Banking and other local disturbances in
certain sections were also assigned by reporting firms as
reasons for the curtailed volume of business.
In wholesale groups, grocery sales dropped 17 per cent
from June, hardware, 35 per cent; dry goods, 24 per cent;
drugs, 16 per cent; shoes, 34 per cent; and electrical sup
plies, 15J4 per cent. In the average for the previous nine
years, declines were recorded as follows: groceries, 3 per
cent; hardware, 7 per cent; dry goods, 4 per cent; drugs,
3 per cent; shoes, 17 per cent; and electrical supplies, 5
per cent. The extent of the current recessions caused
comparisons with a year ago to be more unfavorable in
practically all lines than has been previously recorded.
As a consequence, grocery sales for the first seven months
of 1932 totaled 22 per cent smaller than in the corre
sponding period of 1931, hardware sales were 27 per cent
less, dry goods 33, drugs 22, shoes 43, and electrical
supplies 44 per cent smaller. Collections in July, as re
flected in ratios of accounts receivable to current sales,
were slower, the ratios being much higher in the majority
of groups than a month previous. Prices are reported
as steadier, with a slight upward revision in some com
modities.
Department store trade in the district fell off 33J4 per
cent in July from the preceding month, as against a de
cline of less than 25 per cent in the ten-year average for
the month, and dropped to 32 per cent below the corre
sponding month last year; daily average sales showed de
creases of 32 and 30 per cent in the respective compari
sons. Detroit stores experienced the heaviest recession
from June among the larger cities, the decline amounting
to 35J4 per cent, while Milwaukee stores showed the
smallest with 29 per cent; Indianapolis sales were 35 per
cent less, those in Chicago declined 33
per cent, and
the total for other cities was 33 per cent smaller. Com
parisons with a year ago may be noted in the table.
Stocks receded moderately further in July, and at the end
of the month were 26 per cent lighter than on the same
date last year.
Following several months of expansion, the retail shoe
trade fell off sharply in July, the decline of 49 per cent
from June, as reported by dealers and department stores,
comparing with an average recession for the period of 28
per cent. This heavy drop in sales reduced them to 37
per cent below the corresponding month a year ago, while
the cumulative total for the first seven months of 1932
was 25 per cent under the same period of 1931. A reduc
tion of 15 per cent in stocks on hand July 30 from a
month previous brought them to that per cent below the
same date last year.
The decrease of 30 per cent from the preceding month
in the retail furniture trade likewise was much greater
than usual for the month, the average decline for the pre
vious five years amounting to only 16 per cent, and the
40 per cent decline from a year ago was the heaviest so
far reported in this comparison. Installment sales by
dealers declined 30 and 41 per cent from a month and a
year previous, respectively. Stocks were reduced further
and totaled 21 per cent smaller than on July 31, 1931.
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 following
month. Data refer to the Seventh Federal Reserve district unless otherwise noted.)
June
May
Apr.
Mar.
Feb.
July
Feb.
No. of
July
June
May
Apr.
Mar.
1931
1931
1932
1931
1931
1931
1931
Firms
1932
1932
1932
1932
1932
Meat Packing—(U. S.)—
76
75
77
78
79
78
Sales (in dollars)....................................
53
53
63
52
50
52
51
Casting Foundries—
Shipments:
26
29
38
39
Steel—In Dollars...............................
17
15
44
40
14
13
13
11
9
27
39
37
In Tons...................................
24
42
41
17
14
14
9
10
13
13
Malleable—In Dollars.....................
21
26
31
34
34
17
16
30
7
21
11
12
13
53
28
34
42
51
54
47
In Tons.........................
30
21
12
19
21
23
Stoves and Furnaces—
77
65
84
Shipments (in dollars)..........................
53
43
63
94
69
11
31
43
51
54
Furniture—
Orders (in dollars).................................
35
56
39
49
61
56
29
18
21
13
19
26
32
33
47
59
57
Shipments (in dollars)..........................
64
37
32
42
18
15
15
23
28
Flour—
89
95
95
Production (in bbls.)............................
114
90
95
110
96
25
106
104
109
111
Output of Butter by Creameries108
Production...............................................
122
153
146
91
82
67
96
93
118
141
141
102
115
117
102
88
Sales...........................................................
93
140
91
97
69
106
130
113
95
Wholesale Trade—
Net Sales (in dollars):
81
84
83
70
92
84
74
Groceries..............................................
71
68
61
29
59
66
Hardware.............................................
64
73
56
59
65
41
40
32
12
35
54
52
50
46
51
55
38
51
41
Dry Goods...........................................
35
34
9
22
29
32
34
87
85
67
78
83
79
81
Drugs....................................................
67
72
13
52
66
64
63
Shoes.....................................................
48
54
60
68
44
35
29
6
24
33
34
31
Retail Trade (Dept. Stores)—
Net Sales (in dollars):
58
84
83
94
83
74
Chicago.................................................
54
23
63
62
40
59
60
71
101
109
126
109
95
Detroit..................................................
80
75
5
51
78
86
89
93
88
68
61
87
94
Indianapolis........................................
70
60
5
44
67
67
75
75
99
93
Milwaukee...........................................
72
75
95
112
5
67
71
81
61
48
86
78
Other Cities........................................
57
80
95
67
61
53
45
38
56
67
59
90
88
76
88
101
Seventh District................................
63
71
59
62
83
42
66
66
Automobile Production (U. S.)—
Passenger Cars.......................................
93
98
79
62
63
72
55
34
32
32
54
41
Trucks.......................................................
107
121
133
120
105
73
52
62
91
44
60
70
Building Construction—
Contracts Awarded (in dollars):
36
23
26
30
52
Residential..........................................
8
10
20
7
10
9
10
Total.....................................................
55
61
67
101
42
59
24
27
36
24
31
26
Iron and Steel—
Pig Iron Production:*
78
50
76
86
84
37
61
Illinois and Indiana..........................
29
30
32
40
26
67
62
69
United States.....................................
48
56
66
21
26
29
32
34
19
88
80
•
74
80
Steel Ingot Production—(U. S.)*. ..
55
61
36
39
44
24
26
32
76
83
71
73
82
84
Unfilled Orders U. S. Steel Corp........
53
41
43
49
52
46
♦Average daily production.
Page 7
NATIONAL SUMMARY OF BUSINESS CONDITIONS
INDUSTRIAL PRODUCTION
(By the Federal Reserve Board)
17 OLUME of industrial output declined seasonally from June to July, while
▼ factory employment and payrolls decreased by more than the usual seasonal
amount. In July, the general level of wholesale prices was about one per cent higher
than in June, and in the first half of August, prices of many leading commodities
advanced considerably. Reserve bank credit declined somewhat in the four weeks
ending August 17, reflecting chiefly a substantial growth in the country’s stock of
monetary gold.
Index number of industrial production, adjusted for
seasonal variation (1923-25 average = 100).
FACTORY EMPLOYMENT
Production and Employment
Industrial production declined by about the usual seasonal amount in July, and
the Board’s index, which is adjusted to allow for the usual seasonal variations,
remained unchanged at 59 per cent of the 1923-1925 average. Activity decreased
seasonally in the steel industry; by slightly more than the usual seasonal amount
in the lumber, cement, newsprint, and meat packing industries; and by substantially
more than the seasonal amount in the automobile and lead industries. Output of
shoes, which ordinarily increases in July, declined. At woolen mills activity in
creased by a substantial amount, and at silk mills there was a seasonal increase in
production. Activity at cotton mills decreased, as is usual in July, while sales of
cotton cloth by manufacturers increased considerably. Output of coal increased
from the low level prevailing in June.
Reports on the volume of factory employment and payrolls showed substantial
declines from the middle of June to the middle of July. In the machinery, women’s
clothing, and hosiery industries, and at railroad repair shops, the number employed
decreased by considerably more than the usual seasonal amount, and at shoe fac
tories the increase reported was smaller than usual. In the woolen goods industry
a substantial increase in employment was reported.
Value of building contracts awarded, as reported by the F. W. Dodge Corpora
tion, continued at a low level during July and the first half of August.
Federal Reserve Board’s index of factory employ
ment, with adjustment for seasonal variation (1923-25
average = 100).
WHOLESALE PRICES
Prospects for many leading crops, including corn, spring wheat, potatoes, and to
bacco, were reduced somewhat during July, according to the Department of Agri
culture. The estimated total wheat crop, based on August 1 conditions, is 723,000,000
bushels, a decrease of about 175,000,000 bushels from last year’s large crop, reflect
ing a reduction of 350,000,000 bushels in the winter wheat crop, offset in part by
an estimated increase of 175,000,000 in the spring wheat crop. The first official
cotton estimate, as of August 1, was 11,300,000 bales, as compared with crops of
17,100,000 last season and 13,900,000 the year before. The indicated production of
corn is 2,820,000,000 bushels, substantially larger than the crops of the last two
seasons and slightly larger than the five-year average.
Distribution
Volume of freight traffic decreased somewhat from June to July, and value of
department store sales was substantially reduced.
Wholesale Prices
The general level of wholesale prices, as measured by the monthly index of the
Bureau of Labor Statistics, advanced from 63.9 per cent of the 1926 average in
June to 64.5 per cent in July.
1927
1928
1929
1930
1931
1932
Index of United States Bureau of Labor Statistics
(1926= 100).
RESERVE BANK CREDIT AND FACTORS IN CHANCES
Money in Circulation
3500
—
Monthly averages of daily figures. Latest figures,
averages of first 21 days in August 1932.
Page 8
Between the middle of July and the third week of August, prices of live stock
and meats, which had previously advanced considerably, declined somewhat, while
price increases were reported for many other leading commodities, including wheat,
textile raw materials and finished products, nonferrous metals, hides, sugar, coffee,
and rubber.
Bank Credit
The total volume of reserve bank credit outstanding, which had increased by
$850,000,000 between the end of March and the third week of July, declined by
$95,000,000 in the four weeks to August 17, and in the same period member banks
increased their reserve balances by $45,000,000. These changes reflected chiefly the
addition of $95,000,000 to the country’s stock of monetary gold and an inflow
to the banks of $30,000,000 in currency.
Total loans and investments of reporting member banks in leading cities were
$250,000,000 larger on August 17 than four weeks earlier. Total loans of these
banks continued to decline throughout the period, while their investments increased
substantially, reflecting an increase in holdings of United States Government securi
ties in connection with Treasury financing operations. Time deposits increased by
$95,000,000 and net demand deposits by $85,000,000.
Money rates in the open market remained at low levels. Successive reductions
brought the prevailing rates on prime commercial paper to a range of 2-2per
cent in the first part of August.
@FedFRASER