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Business Conditions Seventh fEDERAL Reserve DISTRICT Eugene M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Ai.s£. Federal Reserve Agent ID volume O lO, DiO. » Harris G. Pett, Manager Division of Research and Statistics John H. Martin, Asst. Federal Reserve Agent, Detroit Branch George A. Prugh, Asst. Federal Reserve Agent MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO . . August 31, 1935 * General Summary sales gained slightly in tonnage over June but were a little smaller in dollar value. Declines in butter production NUSUALLY favorable conditions prevailed in the and sales were seasonal in nature; the aggregate of Seventh district during July when normally business each was above that of last July, and the former item ex is experiencing midsummer dullness. Several major manu ceeded the July average. Distribution of Wisconsin facturing groups recorded counter-seasonal expansion in cheese was below normal, though its manufacture was activity, wholesale trade was better in general than a heavier than average. Wheat and oats receipts at pri month previous, and although retail trade was lighter in mary markets rose less than seasonally in July, and the accordance with seasonal trend, sales showed the largest trend in reshipments of these grains likewise was unfavor increases this year over the corresponding month of 1934. able, with the movement of both continuing much below Furthermore, most crops, and notably corn, made good average. The corn movement was only one-third normal * progress especially the latter part of the month. in July. Corn and most crops in the district made good progress during July, although estimates of small grain The July volume of business at steel mills of the Chi yields declined. cago district expanded over the preceding month, with a resulting rise in the rate of operations which continued Gains shown in July over June in the wholesale grocery into August and which was counter to trend for the period. and electrical supply trades were counter-seasonal, and Orders booked by steel and malleable casting foundries the recessions in the hardware and drug trades were rose in July over June; shipments of steel castings like smaller than usual, sales in all groups recording the wise were heavier, while those of malleable castings re heaviest increases over 1934 of any month this year. De mained about the same. Furniture manufacturers re partment store trade in July also showed the largest gain ported the usual sharp gain in orders for July and a small so far this year over last, and increases in this comparison ' non-seasonal increase in shipments. Total volume of likewise were substantial in the retail shoe, furniture, and building contracts awarded in the month was the heaviest chain store trades, although the sales volume in each of since January 1934, although demand for building ma these retail lines declined from the preceding month in terials was rather slow. Production of automobiles de accordance with seasonal trend. clined during July, in accordance with seasonal trend, but A further gain in holdings of United States Govern exceeded that of a year ago. Industrial employment ment securities between July 17 and August 14 again recorded a further recession in the month, owing prin caused a rise in total loans and investments of reporting cipally to curtailment in the automobile industry. member banks in the district; demand deposits in these Production of packing-house commodities increased in banks fell off during the period, but time deposits in # July, contrary to trend, though continuing considerably creased slightly. Dealer sales of commercial paper and below a year ago and the average for the period, while financing by means of bankers’ acceptances expanded more than usual in July, but activity was under that of FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF a year ago and much below average. CONDITION U (Amounts in millions of dollars) August 14 1935 Total Bills and Securities................................. ----- $ 358.2 Bills Discounted............................... ___ 0 Bills Bought....................................... ___ 0.6 U. S. Government Securities. . . . ----355.7 Total Reserves...................................................... ___ 1,292.8 Total Deposits...................................................... ___ 814.2 Federal Reserve Notes in Circulation......... .... 799.0 FedRatio of Total Reserves to Deposit and Fed eral Reserve Note Liabilities Combined.. led.. 80.1 ♦Number of points. Change From July 17 August 15 1935 1934 $ -0.1 $-71.1 -0.1 -0.2 0 -0.1 0 -72.7 + 190.6 -80.1 -84.9 +82.2 +3.6 +29.4 -0.9* +6.7* Credit Conditions and Money Rates During the four-week period ended August 14, member bank reserve balances declined almost 46million dol lars. This decrease resulted from a reduction in local banking reserves effected by a further excess of United States Treasury collections over disbursements and a net outflow of 3J4 millions from the Seventh Federal Reserve district through commercial and financial transactions. Changes in all sources and uses of Seventh district bank ing reserves are shown in detail in the accompanying tabulation. Changes between July 17 and August 14 in Factors Affecting Use of Federal Reserve Bank Funds—Seventh District (Amounts in thousands of dollars) Reserve bank credit extended (exclusive of amounts to other Commercial operations through inter-district settlements................. Treasury and National bank currency..................................................... —3,502 —4,052 Total supply.................................................................................... —7,724 Demand for currency..................................................................................... Member bank reserve balances................................................................... Treasury cash and deposits at Federal Reserve Bank of Chicago. . Special and “all other” deposits................................................................. Other Federal Reserve accounts................................................................. “J88 -“46,489 +37,985 +847 +121 -7,724 Total demand Customers’ commercial loans, according to reports from down-town Chicago banks, carried a prevailing rate of 1J4 to 5 per cent during the week ended August 15, unchanged from the range given for the corresponding week in July. The average rate earned by down-town Chicago banks on loans and discounts during the calendar month of July was 3.04 per cent, as compared with 3.01 in June and with 3.19 per cent in July 1934. A range of il/2 to 5 per cent was reported by down-town Detroit banks as the prevailing rate on customers’ commercial loans for the week ended August 15_, as against 3J4 to 6 per cent for the week ended July 15. Dealer sales of commercial paper in the Middle West, after declining steadily since January, increased 38J4 per cent in July over June as compared with an average sea sonal gain of about 20 per cent. However, sales aggre gated 2\l/2 per cent smaller than in July 1934 and were 55 per cent below the 1925-34 average for the month. Borrowings by means of commercial paper expanded somewhat during July and were absorbed by a stronger investment demand from city and country banks. Selling quotations in July were unchanged from the preceding month, ranging from per cent for prime short-term paper to 1 per cent for the less well-known obligations, with the bulk of sales moving at % per cent. Outstand ings declined 2 per cent on July 31 from June 29 and were slightly below the level at the end of May, but totaled greater than on the corresponding reporting dates for the first four months of this year. A further expansion of 56y2 per cent in sales was recorded in the first half of August over the corresponding weeks of July, and rates continued within a range of % to 1 per cent. CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) August 14 1935 Total loans and investments.............................. $2,133 226 Total loans on securities................................. To brokers and dealers In New York......................................... Outside New York............................... To others..................................................... Acceptances and commercial paper bought. Loans on real estate.......................................... Other loans.......................................................... U. S. Government direct obligations........... Obligations fully guaranteed by U. S. Government.................................................... Other securities.................................................. Net demand deposits............................................ Time deposits.......................................................... Borrowings from Federal Reserve Bank......... Change From July 17 August 15 1935 1934 $ +40 $+284 -2 -96 1 30 195 31 31 308 1,127 0 0 -2 +3 +1 -13 +42 -44* +359 93 317 1,951 565 0 +1 +8 -30 +2 0 +65** +291 +78 0 -21 -8 -67 Page 2 TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in July 1935 From July 1934 June 1935 Total value of bills accepted............................................... +76.9 Purchases (including own bills discounted)............... +137.9 Sales............................................................................................... 0 Holdings*.................................................................................... +2.1 Liability for outstandings*................................................... +4.5 —45.5 —49.2 -100.0 -48.6 —37.6 ♦At end of month. Security Markets Considerable activity, especially among the high grade issues, characterized the Chicago bond market during July. Price advances registered in recent preceding months for the most part held, although a slight easing tendency was noticeable in the early part of August. New financing during July, which included a rather heavy amount of refundings, totaled greater than in June or the corre sponding month of 1934. New issues were reported well i received, particularly the utility offerings. There con tinues to be some indication of a broadening market for bonds, though buying is still largely confined to instituVOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) ♦Represents total acceptances, commercial paper, loans on real estate, and other loans. Segregated figures not available. ♦♦Represents obligations fully guaranteed by U. S. Government and other securities. Segregated figures not available. The supply of acceptances in the Chicago bill market during the period July 11 to August 14 registered a con- ^ siderable increase over recent months and was in the largest volume since January 17 to February 13 of this year. As local purchases were still negligible, this increase in supply was accounted for almost entirely by a heavy gain in receipts from Eastern cities. Bills moved rapidly out of dealers’ hands into investment channels, as demand from local and out-of-town banks showed a marked in crease over the preceding period. Sales to Eastern mar kets were almost nil. Rates remained unchanged during the period, ranging from to fV Per cent. In the Seventh Federal Reserve district, new financing by means of bankers’ acceptances increased more than seasonally in July over June but was 58J4 per cent under the 1925-34 average for the month. The direct discounting of these bills at the originating banks expanded to almost twice the volume of the preceding period but declined 51 per cent in comparison with a year ago; also, the buying of other banks’ acceptances increased heavily over the preceding period, and the volume totaled greater than in any of the past three months, though declining 45 per cent from a year ago. Total purchases, therefore, aggre- i gated 138 per cent larger than during June, but showed a recession of 49 per cent from July 1934 and of b2l/2 per cent from the 1925-34 July average. Sales remained nil during July and maturities in portfolios were slightly be low the level of current purchases; as a consequence of these trends, acceptance holdings on July 31 were 2 per cent above those at the end of June. The liability for out standing acceptances at the end of July was slightly greater than a month earlier. In the first half of August, the use of bankers’ acceptance credits for new financing increased 65 per cent over the corresponding weeks in the * preceding month, for the most part owing to heavier bor rowing by the iron and steel industry. July 1935 Chicago....................................................... . .$2,759 Detroit, Milwaukee, and Indianapolis .. 1,092 Per Cent of Increase or Decrease From June 1935 July 1934 +6.7 +23.7 -0.5 +15.3 Total four larger cities........................... . .$3,851 619 36 smaller centers.................................... . . +4.5 +1.0 +21.2 +21.9 Total 40 centers....................................... . .$4,470 +4.0 +21.3 tional investors. The upward trend of prices prevalent * on the Chicago Stock Exchange during the past several months continued throughout July and the first half of August. The average price of twenty leading stocks* amounted to $39.59 on August 16, as compared with $36.13 on the corresponding date in July. ♦Chicago Journal of Commerce. Agricultural Products Corn made excellent progress in the Seventh Federal t Reserve district during the last half of July and early * August, as the subsoil in most areas still retained sufficient moisture from last spring to protect the crop during the critical period of extreme heat. Some of the earliest va rieties had reached the milk or roasting ear stage by August 20, a large portion of the total crop had tasseled and silked, and much of the late corn had begun to form ears. Condition generally ranged from fair to very good, though in some areas it was poor and numerous fields were rather weedy. In western Iowa and in a few Seventh district counties lying farthest south in Illinois and In * diana, deterioration took place between the end of July and mid-August, because precipitation in those sections was inadequate to prevent blistering of tassels and other damage during the silking stage. Heavy rainfall in the week ended August 20 relieved conditions in these dry areas, and a moderation in temperature likewise was bene ficial to the crop. Wheat threshing was practically finished in the south ern part of the district by August 20 and was approaching completion in central areas, but in the northern portions t work continued to be delayed by rain and humidity which also caused deterioration in the shocks. Some of the Iowa wheat remained unthreshed on that date, owing to tangled condition of the straw, which necessitated utiliza tion of the heaviest type of threshing machinery. Yield and quality of this grain continued under early expecta tions. The oats harvest was practically completed by August 20. Threshing of this grain progressed somewhat slowly in the north of the district, was fairly well under way in the central sections, but was practically finished in the southern portion. Threshing returns for oats aver * aged fair to good, but the weight of kernels was rather disappointing. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of August 1 condition (In thousands of bushels unless otherwise specified) Seventh District Forecast Final M Corn.................... Oats..................... Winter Wheat.. Spring Wheat. . . Barley................. Rye........................ Buckwheat........ Flaxseed............. Potatoes (white) Potatoes (sweet) Sugar Beets1. . . Apples (total). . Peaches............... Pears................... . Cherries1............. Grapes1............... Dry Beans2. . . . Tobacco3............ . Broom Corn1. . . All Tame Hay1. . Wild Hay1........... 1935 1934 776,264 482,658 467,031 183,361 55,468 49,293 2,546 1,632 50.684(a) 28.880(a) 11.638(a) 5.560(a) 1.084(a) 1.267(a) 234(b) 151(b) 57,480 66,027 , 1.375(c) 1.180(c) 1.012(d) 999(d) 23.552(a) 12.085(a) 6.548(e) 1.290(e) 1.616(e) 1.638(e) 32(f) 31(f) 82(a) 75(a) 3.796(f) 3.400(f) 16,749 12,764 14(g) 12(g) 17,079 9,856 634(a) 498(a) United States Forecast Final 1928-32 1935 Average 1934 2,272,147 1,187,000 431,709 175,969 286,653 52,236 7,821 14,483 376,957 69,158 8,885 169,403 52,196 21,212 117 2,288 13,631 1,221,630 67 75,212 11,570 1,377,126 525,889 405,552 91,377 118,348 16,045 9,042 5,213 385,421 67,400 7,481 120,670 45,665 23,490 114 1,931 10,369 1,045,660 31 52,269 4,759 2,562,147 1,217,646 618,186 242,385 282,841 38,655 8,277 15,961 363,367 63,841 8,118 161,333 56,451 23,146 108 2,200 11,858 1,432,845 47 69,591 10,793 Hn thousands of tons. 2In thousands of 100-lb. bags. 3In thousands of pounds, (a) Five states including Seventh Federal Reserve district, (b) Iowa and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan, (e) Illinois, Michigan, Indiana, and Iowa, (f) Michigan and Wisconsin, (g) Illinois. Conditions of barley, rye, and other small grains were similar to those obtaining for wheat and oats. A good second crop of alfalfa was being cut by mid-August and soy beans were in good condition at that time. Though not quite up to early expectations, yields of timothy seed ranged from good to excellent. Pastures remained better than a year ago, although they had begun to fail in western Iowa. Early potatoes were of fair yield and the later varieties were showing good growth on August 20. Beans, tobacco, and sugar beets made good progress. Despite deterioration from heat, tomato production will be heavy this year. Early apples were of fair quality; some cod dling moth infestation in the Michigan crop was reported. After having been hampered by a baked condition of the topsoil until past mid-month, plowing for winter wheat had begun to make progress by the third week of August; rain had been badly needed in western Iowa and in some sections of Indiana and Illinois, but precipitation had been fairly ample in other sections and had relieved dry ness in the northern portion of the Michigan lower penin sula. On the basis of August 1 condition, the United States Department of Agriculture estimated that the Seventh district production of corn, oats, spring wheat, barley, flaxseed, and tobacco would fall below the 1928-32 aver age, but that output of most other crops would exceed this average. Small grains and hay decreased from the July 1 forecast, while com and most other crops showed a marked gain. Grain Marketing Wheat receipts at interior primary markets in the United States showed a sharp though less than seasonal rise in July over June to a level above any previous month since last July, but were 38^4 per cent under a year ago and 57 per cent below the 1925-34 average vol ume for the period. Reshipments of the grain expanded only 6 per cent over a month earlier—as compared with a seasonal gain of 76*4 per cent—and were 65 per cent under this ten-year average. Visible supplies in the United States increased less than usual on August 10 over the corresponding date of July and were approximately 60 per cent smaller than a year ago. Despite indications of a larger world production of wheat and other cereals in 1935 than in 1934 and coincident with confirmation of extensive black rust damage in the spring wheat crop of North America, wheat prices at Chicago advanced in July over June. However, quotations tended to ease after the beginning of August. Exports of wheat and of other grain from the United States remained negligible in July. LIVE STOCK SLAUGHTER (In thousands) Cattle Yards in Seventh District, July 1935.......................................... Federally Inspected Slaughter, United States July 1935............................................ June 1935......................................... . July 1934.......................................... .. 745 669 1,199 Hogs Lambs and Calves Sheep 355 248 82 1,712 1,828 3,323 1,546 1,421 1,294 464 439 774 AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended August 17 1935 Native Beef Steers (average). . .... $10.60 Fat Cows and Heifers................ ----7.95 Calves.............................................. Hogs (bulk of sales).................... ----Lambs.............................................. 11.25 July 1935 $9.80 7.50 7.85 9.40 8.45 Months of June 1935 $10,40 7.75 8.20 9.35 8.70 July 1934 $7.25 4.50 5.15 4.50 7.05 Page 3 Corn receipts and shipments at these primary centers of accumulation in the United States declined in July from June—in contrast to a customary expansion—and were but one-third normal for the month. Visible stocks of corn fell off more than seasonally on August 10 from a month previous and were only one-seventh those of a year earlier. Receipts of oats at these markets expanded less than is usual in July over June, and showed a decline of 35 per cent from a year ago and of 75 per cent from the 1925-34 July average. Reshipments of the grain decreased sharply in all three comparisons and were below those of any corresponding period subsequent to February 1932. Prices of oats at Chicago declined in July and early August from levels which obtained in June. Movement of Live Stock Hog receipts at public stock yards in the United States increased in July over June—contrary to usual tendency —and the marketing of other animals expanded more than seasonally. The volume of cattle, calves, and hogs was sharply less than a year ago and below the 1925-34 July average, but that of lambs increased. Movement to in spected slaughter differed from these trends in three in stances: the supply of hogs fell off 6J4 per cent from June, the month-to-month gain in lambs was counter-seasonal, and the number of calves increased 10% per cent over the ten-year average. By August 14, hog prices were above any month subsequent to July 1929 and 250 per cent higher than in early June 1934. July reshipments of cattle and lambs to feed lots were below the 1930-34 seasonal average, and both showed a marked decrease from a year ago as did those of calves. The feeder lamb movement expanded over June but that of other live stock declined. Meat Packing July production of packing-house commodities at in spected slaughtering establishments in the United States showed a counter-seasonal rise of 6per cent over June but, owing to the sharp decline in live-stock supply in 1935 as a consequence of the slaughter of drought cattle in 1934 and of the reduction in potential breeding stock of pigs in 1933, was 54% per cent less than a year ago and 26J^ per cent below the 1925-34 average for the month. Sales tonnage increased slightly over June and was in excess of current production but decreased 11 per cent from last July and 17 per cent from this ten-year average. A slight decline took place in the general price level of packing-house commodities during July, despite an advance in pork products; quotations were approxi mately 40 per cent higher than a year ago. The total value of sales billed to domestic and foreign customers was only one per cent less than in June, 20% per cent greater than last July, and within 10% per cent of the 1925-34 seasonal average. Though imports of animal products into the United States were nearly equal to half the volume of exports of these commodities, commercial inventories of packing-house products in the United States decreased more than a customary amount on August 1 from a month earlier to a level 431,827,000 pounds below the 1930-34 average for that date. Payrolls for the last week of July reflected a decline from the June period of 1% per cent each in employment, hours worked, and wage payments, and were approximately 25 per cent less than a year ago. Shipments for export decreased further in July to an exceptionally low level. Though greater than a month Pag® earlier, trade in United States lard continued relatively light in the United Kingdom; demand for hams was good. * Continental trade remained negligible. British quotations for United States lard and hams were below Chicago parity during July but improved early in August. Inventories of United States packing-house commodities in foreign markets—inclusive of stocks in transit—decreased on August 1 from the beginning of July. Dairy Products The manufacture of creamery butter in the Seventh Federal Reserve district decreased 11 per cent in July from June, but was 3 per cent heavier than a year ago and ' 6 per cent in excess of the 1925-34 average for the month. The sales tonnage declined less than seasonally, being 5 per cent lighter than in June, 1 % per cent above last July, and on a level with the ten-year average, though below current production. United States production reflected trends similar to those of the Seventh district, except that the decline from June was less than is customary. In ventories of creamery butter in the United States rose more than normally on August 1 over the beginning of July to a level 40,716,000 pounds above a year ago and „ 23,442,000 higher than the 1930-34 average for that date. July prices were slightly above those of a month earlier. American cheese production in Wisconsin declined 6% per cent in the five weeks ended August 3 from the preced ing period, but was 7 per cent greater than a year ago and 9% per cent heavier than the 1930-34 seasonal aver age. Distribution of the commodity from primary centers of that state recorded more than the usual deficiency as compared with current manufacture, being 2% per cent less than in the five weeks ended June 29 and approxi mately 3 per cent under a year earlier and the 1930-34 * average. Total inventories of cheese in the United States showed a greater accumulation on August 1 over the be ginning of July than customary, but were 3,311,000 pounds smaller than the 1930-34 average for that date. Prices advanced 3 per cent in July over June. Industrial Employment Conditions Seventh district industrial employment experienced the usual seasonal contraction in July, the number of men , employed aggregating 2 per cent and payrolls 4Y % per cent lower than a month earlier. Manufacturing was EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of July 15, 1935 ing Wage Earn Firms ers No. No. Metals and Products1........ Vehicles.................................. Textiles and Products.... Food and Products............. Stone, Clay, and Glass---Wood Products.................... Chemical Products............. Leather Products................ Rubber Products................ Paper and Printing............ 1,183 218 263 539 150 346 163 108 23 509 243,863 259,120 44,370 90,332 9,600 30,733 19,914 20,099 7,961 59,447 Total Mfg., 10 Groups---- 3,502 Merchandising2.................... Public Utilities.................... Coal Mining.......................... Construction......................... 1,441 77 17 278 Industrial Group Report Earnings (000 Omitted) $ Change From June 15. 1935 Wage Earn ers Earn ings % % 5,458 6,321 744 1,959 192 513 473 394 148 1,439 -0.6 -6.9 -3.4 +9.7 -2.6 +0.6 -2.9 -0.4 -14.9 +1.5 -2.1 -14.2 -0.6 +7.8 -3.4 + 1.7 -4.1 +2.2 -18.5 +1.6 785,439 17,641 -2.0 -5.6 87,046 79,859 2,619 14,759 1,777 2,521 47 265 -2.8 -1.2 -23.8 +4.2 -1.7 +2.7 -35.1 +6.9 Total Non-Mfg., 4 Groups. 1,813 184,283 4,610 -2.0 +0.6 Total, 14 Groups................. 5,315 969,722 22,251 -2.0 -4.4 1 Other than Vehicles. 2 Illinois and Wisconsin. affected by the customary lay-offs for vacations and in . ventories, and payrolls in these groups declined 5J-2 per cent as against a 2 per cent loss in employment. Non manufacturing industries, on the other hand, registered a slight gain of one-half per cent in wage payments, al though employment followed a trend similar to that of the manufacturing groups. While a majority of the re porting groups shared in the July decline, by far the great est portion was contributed by vehicles. Decreases of 7 per cent in employment and 14 per cent in payrolls in this group approximated those reported in the preceding month, and the current levels are the lowest so far this * year but are still above any prevailing during the latter half of 1934. Metals and metal products contributed moderately to the July recession with a loss of one-half per cent in number of workers and 2 per cent in wage payments. The stone-clay-and-glass products industries showed the first curtailment since January. Increases in both employment and payrolls were recorded in three of the manufacturing groups—food, wood products, and the paper and printing industries. A sharp seasonal rise in the canning and preserving industry as well as in other food industries brought employment in this group 10 per cent above that of the preceding month. Under the non manufacturing groups, the construction industries re ported a gain in both employment and payrolls, while public utilities showed a rise in the latter but a small decline in the former item. Manufacturing* * Automobile Production and Distribution * * New passenger automobiles produced in July by United States manufacturers numbered 276,084, or only 7 per cent less than in the preceding month and 24 per cent in excess of output last July; the 1925-34 average decline from June to July is 13 per cent. The number of trucks manufactured amounted to 60,965 in July, representing a decrease of but 6 per cent from the June volume and an increase of 46 per cent over a year ago; the seasonal re cession for July in truck production averages 10 per cent. Sales of new automobiles in the Seventh district like wise fell off in July, as is usual for the month, although they continued to be much greater than in the correspond ing period a year ago. Used car sales, on the other hand, showed a small expansion during the month and a larger increase over last July than did new car sales at retail. Furthermore, stocks of new cars at the end of July rose somewhat over the end of June, while those of used cars decreased noticeably in number, though continuing to be considerably heavier than those of last year. The ratio for July of deferred payment sales to total sales of dealers reporting the item amounted to 48 per cent, as compared with 47 per cent for June and 53 per cent for July 1934. Iron and Steel Products With a steadily expanding demand from primary and miscellaneous sources, excepting the railroads, the July volume of business in the steel industry of the Chicago district rose moderately in the aggregate over that for June and was substantially greater than in the month last year, the improvement continuing into August at an in creasing rate. As a consequence, steel ingot output in the district had risen counter-seasonally to 57 per cent of capacity by the second week of August, this rate being higher than for the corresponding week of any year since 1929 and comparing with less than 29 per cent a year ago at the same time. Pig iron production in the Illinois and Indiana district declined in July from a month previous but exceeded that of last July. Finished steel and pig iron prices remain steady, while scrap iron and steel prices have advanced sharply in recent weeks. Orders booked during July by reporting steel casting foundries of the Seventh district showed a 28 per cent rise over the preceding month and a 74 per cent increase over July a year ago. Shipments also increased in the month, the gain over June amounting to 23 per cent, but con tinued below last year’s volume by 23 per cent. Produc tion followed the trend of shipments, increasing 6 per cent over a month earlier though showing a lag of 15 per cent in the yearly comparison. At malleable casting foundries, orders booked were 12 per cent heavier than in the preced ing month and totaled more than twice the volume re ported for July 1934. Shipments and production of this type of castings also were considerably heavier than a year ago, but showed practically no change from a month earlier. Activity in the manufacture of stoves and furnaces recorded a continued seasonal decline during July, mold ing-room operations falling off 19 per cent, shipments 15 per cent, and orders accepted 5 per cent. Operations, however, were more than twice as large as in the same month last year, and shipments and orders were greater by 56 and 54 per cent, respectively, in this comparison. Inventories at the close of July were 6 per cent in excess of those a month earlier and 7 per cent above the corre sponding figure of a year ago. LUMBER AND BUILDING MATERIALS TRADE July 1935: Per Cent Change From MIDWEST distribution of automobiles Class of Changes in July 1935 From Previous Months Per Cent Change From July 1934 Companies Included -6.8 -7.3 +62.7 +61.0 26 26 — 15.0 -14.0 +25.3 +24.6 49 49 +5.6 +1.8 —4.6 -7.5 49 49 June 1935 New Cars Wholesale— Retail— On Hand July 31— Used Cars +1.4 +41.6 49 -11.0 -6.3 +45.7 +40.2 49 49 Salable on Hand— Value.............................................. June 1935 July 1934 Number of Firms or Yards -10.6 +0.5 -1.8 +29.1 +35.1 -3.6 9 7 9 +9.8 -6.7 -19.0 +1.6 +51.3 +56.9 +55.4 +5.3 177 61 70 173 Trade 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................. Ratio of Accounts Outstanding1 to Total Dollar Sales during Month July 1935 Wholesale Trade................................. Retail Trade......................................... 153.5 282.0 June 1935 139.8 303.4 July 1934 230.5 395.5 iEnd of Month. Page 5 Furniture The result of the July furniture marts was reflected in orders booked during the month by reporting Seventh district manufacturers, the dollar volume of these rising 63 y2 per cent over the preceding month, as compared with an increase in the 1927-34 average for the period of 58 per cent. Furthermore, shipments expanded counter-seasonally hy 2per cent. Despite this trend in shipments and a sizable volume of cancellations in the month, un filled orders at the close of July exceeded those of a month previous by 68 per cent, and their ratio to current orders booked stood at 89 per cent compared with 87 per cent in June. Comparisons with last year continued to be most favorable, orders gaining 51 per cent, shipments 46 per cent, and unfilled orders 76 per cent over last July. Opera tions, which averaged 53 per cent of capacity in the cur rent period, showed little change from June but compared with a rate of only 45 per cent in the month a year ago. Shoe Manufacturing, Tanning, and Hides Preliminary reports for July indicate a counter-seasonal rise over the rate of activity prevailing in the shoe industry during the preceding month when production in the Sev enth district registered a decrease of 7J4 per cent from May and was also slightly lower than in the corresponding month a year ago, the difference in this latter comparison amounting to about 3 per cent. Output in the first half of 1935, however, was approximately 6 per cent heavier than in the same period of 1934. In the tanning industry, production in July was maintained at the level of a month earlier, but sales showed a continued moderate decline of 7Yz per cent. Prices remained unchanged. The move ment of green hides in the Chicago market during July was in smaller volume than in June, while prices showed an advance of one-half cent early in the month, since which time they have continued steady. Building Materials, Construction Work Manufacturers and wholesale dealers of lumber in the district reported a 10J^ per cent decline in dollar sales for July with a continued favorable margin of about 30 per cent in comparison with the same month a year ago. Total dollar sales at retail yards increased over the preceding month, but sales of lumber alone at these yards showed a decline; both continued considerably larger than in the same month of 1934. Outstanding accounts decreased slightly during the month for wholesale concerns, but the ratio of such accounts to dollar sales was heavier than a month earlier, while at retail, the opposite trend prevailed; in both phases of distribution, the ratios remained smaller than in the corresponding month a year ago. Demand for other building materials also continued slow during July, available reports indicating a decline in the shipments of Stocks + 15.7 +28.0 +20.8 +3.8 -6.1 +2.8 +35.4 -2.3 Page 6 BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Total Contracts Residential Contracts July 1935......................................................... $26,227,344 +13.7% +38.6% $143,741,962 Change from same period 1934............ -7.4% ♦Data furnished by F. W. Dodge Corporation. $5,766,833 -25.1% + 182.4% $29,141,209 + 73.4% The valuation of permits issued in 101 cities of the district during July was 34 per cent greater than in June and 91 per cent higher than in July last year. The number of permits, though dropping slightly from the June total, was 63 per cent above the corresponding month in 1934. Chicago, with a decline of 7 per cent in the yearly com parison of estimated cost, furnished the only exception to the group trend among the larger cities of the district. Merchandising Considerable improvement took place during July in wholesale trade conditions of the Seventh district, follow ing a rather unfavorable June. Gains over June of 5 and 6 per cent in electrical supply and grocery sales, respec tively, were contrary to trend for July, while the declines of 7J4 per cent in the hardware trade (in which line alone business had been good in June) and less than one-half per cent in drugs compared with recessions of 12 and 6 per cent in the 1925-34 average for the month. Furthermore, the increases over last July in all groups were the heaviest shown so far in 1935, that of 16 per cent in the grocery trade following two successive months of declines. Sales in the first seven months of 1935 exceeded those of the same period of 1934 by 3 per cent in groceries, 9 per cent in drugs, and 16 per cent each in hardware and elec trical supplies. Collection conditions remain better than DEPARTMENT STORE TRADE IN JULY 1935 Per Cent Change July 1935 From July 1934 Per Cent Change First Seven Months 1935 From Same Period 1934 Ratio of July Collections to Accounts Outstanding End of June Net Sales Stocks End of Month Net Sales 1935 1934 lections STANDING TO Net Sales -8.5 -3.6 +1.0 +8.1 +28.1 +26.7 81.8 189.2 158.3 Chicago................. Detroit.................. Indianapolis........ Milwaukee........... Other Cities......... +6.3 + 17.0 +25.0 + 13.3 + 17.9 -0.9 -3.6 -18.1 -5.7 +1.2 +5.7 +5.7 +12.4 +5.7 +6.6 30.3 43.1 39.4 39.0 32.5 28.7 39.6 38.1 36.4 28.8 +6.0 +10.4 142.5 7th District......... + 12.5 -3.4 +6.3 36.4 33.7 Accounts Out Col standing Groceries.............. Hardware............. Drugs.................... Electrical Supplies........... Contract awards during July in the Seventh Federal Reserve district, totaling over 26 million dollars, were in the largest volume since January 1934. Residential con tracts, after having increased steadily for the past four months, declined approximately 2 million dollars in July from June and amounted to only 22 per cent of total , awards. Ratio of Accounts Commodity Net Sales Building Construction Locality WHOLESALE TRADE IN JULY 1935 Per Cent Change From Same Month Last Year cement in comparison with the preceding month and with the same month a year earlier. Brick deliveries were still » much below normal but compared favorably with July last year. < a year ago, as evidenced by continued lower ratios of ac*■ counts to sales than at that time, and with the exception of hardware, all groups showed smaller ratios for July than a month previous. during July in the retail shoe trade, aggregate sales of reporting dealers and department stores falling 39 per cent below those of the preceding month, as compared with a recession of 34 per cent in the 1926-34 July average. However, sales totaled 17 per cent above a year ago and in the first seven months of 1935 were almost 6 per cent heavier than in the same period of 1934. A further decline of 9 per cent in stocks during July brought them to 2 per cent under those held at the close of July last year. The recession of 26 per cent in July from June in Sev enth district department store trade was normal for the period, and sales exceeded those of last July by 12 per cent, which is the largest gain to be shown in the yearly comparison so far in 1935. However, with one more trad ing day in the month this year, average daily sales totaled only 8 per cent heavier than a year ago. In the monthly * comparison, Indianapolis trade recorded a decline of only 18 per cent and Milwaukee sales one of but 21 per cent, while sales of Detroit stores dropped 26 per cent and those of Chicago firms 29 per cent, with the aggregate for stores in smaller cities 26 per cent less. It will be noted in the table that Chicago department store sales showed by far the smallest gain compared with last July and In dianapolis sales much the largest, the latter city recording a noticeably greater increase for the year to date over the same period of 1934 than did other cities. Stocks, which *■ again declined seasonally in July, remained lighter than a year ago, and stock turnover continued to exceed that of last year. I A somewhat greater than seasonal decline was recorded Sales of furniture and house furnishings by dealers and department stores showed a 21 per cent increase in July over the month last year—the heaviest for the current year—though declining seasonally 21J^ per cent from a month previous. Although stocks expanded fractionally over the close of June, they were 2 per cent under those of a year ago. Aggregate July sales of twelve chains operating 2,731 stores in the month exceeded those of the same month last year by 5 per cent, although with the number of units iy2 per cent greater in this comparison, average sales per store totaled only 2J^ per cent heavier. As compared with a month previous, both aggregate and average sales were 6 per cent smaller in July. Included in the data are fiveand-ten-cent store, grocery, drug, cigar, men’s clothing, and musical instrument chains. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-1924-1925 as a base, unless 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.) No. of Firms Meat Packing—(U. S.)— Sales (in dollars)....................................... . 47 Casting Foundries— Shipments: Steel—In Dollars................................. In Tons...................................... Malleable—In Dollars........................ In Tons............................ . . . . Stoves and Furnaces— Shipments (in dollars)............................. . Furniture— Orders (in dollars).................................... . Shipments (in dollars)............................. . Flour— Production (in bbls.)............................... . Output of Butter by Creameries Production.................................................. . Sales.............................................................. . Wholesale Trade— Net Sales (in dollars): Groceries................................................. . Hardware............................................... . Drugs....................................................... . Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................... . Detroit..................................................... . Indianapolis........................................... . Milwaukee.............................................. . Other Cities........................................... . Seventh District—Unadjusted......... . Adjusted............. . Automobile Production—(U. S.) Passenger Cars.......................................... Trucks.......................................................... Building Construction— Contracts Awarded (in dollars): Residential............................................. Total........................................................ Iron and Steel— Pig Iron Production:* Illinois and Indiana............................. United States........................................ Steel Ingot Production—(U. S.)* ... July 1935 June 1935 May 1935 Apr. 1935 Mar. 1935 Feb. 1935 July 1934 81 82 85 82 77 80 12 12 21 21 33 32 38 55 27 25 39 57 34 31 43 65 38 38 48 72 35 33 45 69 10 100 117 120 114 13 13 63 39 39 37 46 43 19 85 87 59 61 154 134 28 11 12 27 5 4 5 40 81 81 June 1934 May 1934 Apr. 1934 Mar. 1934 1934 68 69 68 62 63 63 31 29 37 57 40 44 25 36 41 44 32 48 44 47 41 62 31 31 38 58 28 28 36 58 22 21 28 44 108 85 64 84 102 78 82 63 40 51 46 47 43 35 42 27 20 25 29 33 25 23 31 24 28 29 100 85 89 90 82 94 96 87 101 104 173 141 143 130 98 94 83 87 81 79 150 132 152 136 143 138 102 108 95 110 85 111 78 70 70 74 76 70 74 76 75 70 72 73 67 64 43 69 67 73 54 59 83 62 63 76 71 68 64 63 66 68 54 73 62 39 66 55 58 64 59 53 56 78 76 78 79 75 72 76 78 72 92 88 76 77 78 76 75 96 88 85 76 81 76 68 92 89 77 71 75 83 59 76 65 58 56 62 79 52 50 51 52 45 51 70 72 76 71 68 64 71 73 73 93 81 74 76 78 76 65 91 78 82 65 72 73 68 92 84 71 74 75 76 56 67 56 58 54 58 73 94 162 101 172 105 152 137 202 124 181 94 159 76 111 89 120 94 150 98 172 95 157 64 115 20 38 26 34 18 33 16 36 9 32 4 17 7 28 9 30 13 32 36 10 8 37 24 53 50 66 59 53 67 67 57 73 65 57 76 63 58 83 63 59 87 45 40 45 66 68 67 95 54 59 88 49 53 78 39 46 69 64 66 88 6 •Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) ACTORY employment and output were maintained in July at the June level, though usually there is a considerable decline at this season. Activity at mines showed a substantial decrease, reflecting a sharp reduction in output of coal. F Production and Employment Index number of industrial production, adjusted for sea sonal variation. (1923-1925 average = 100.) FACTORY EMPLOYMENT 1929 1930 1931 1932 1933 1934 1935 Index of factory employment, adjusted for seasonal varia tion. (1923-1925 average= 100.) MILLIONS Of DOLLARS --------------—— 600 CONSTRUCTION CONTRACTS AWARDED The Federal Reserve Board’s seasonally adjusted index of manufactures showed an increase in July, while the index of mineral production showed a marked decline, with the consequence that the index of industrial production remained unchanged at 86 per cent of the 1923-25 average. For the first seven months of the year industrial output was 6 per cent larger than a * year ago. Activity at steel mills, which had declined during June, advanced considerably during July and the first three weeks of August, and there was also a substantial increase in the output of lumber. Automobile production showed a decrease from the high level prevailing earlier in the year, reflecting in part seasonal developments. Output of textiles increased somewhat in July, owing chiefly to increased activity at silk mills. In the woolen industry the recent high rate of activity continued, while at cotton mills daily average output declined by about the usual seasonal amount. Meat packing remained at an unusually low level. At mines, output of bituminous coal decreased sharply in July, following an advance in the preceding month, and there was also a sharp reduction in output of anthracite. 4 Factory employment, which usually declines at this season, showed little change from the middle of June to the middle of July. Employment increased somewhat in the machinery, lumber, furniture, and silk industries, and there was a large seasonal increase in the canning industry. Decreases of a seasonal character were reported for establishments producing cotton goods and wom en’s clothing, while in the automobile industry employment declined by more than the usual seasonal amount. At coal mines employment showed a marked decrease in July. The total value of construction contracts awarded, as reported by the F. W. Dodge Corporation, increased further in July and the first half of August, reflecting an increase in non-residential projects. Residential build- f ing continued in considerably larger volume than a year ago, with increases from last year reported for most sections of the country. Department of Agriculture estimates as of August 1 indicate a cotton crop of 11,800,000 bales, about 2,200,000 bales larger than the unusually small crop last year. The indicated wheat crop, while larger than a year ago, is considerably smaller than the five-year average for 1928-32. Crops of corn and other feed stuffs are substantially larger than last season. Distribution Daily average volume of freight-car loadings declined in July, reflecting a marked decrease in shipments of coal. Department store sales showed a seasonal decline, and the Board’s adjusted index remained unchanged at 80 per cent of the 1923-25 average. All Other Residential Prices Three-month moving averages of F. W. Dodge data for 37 Eastern States, adjusted for seasonal variation. Latest figure based on data for June and July and estimate for August 1935. MEMBER BANK CREDIT U. S. Govt Security* Loons on S«curitie* Othar S«curities Wednesday figures for reporting member banks in 91 leading cities. Latest figures are for August 14, 1935. Pace The general level of wholesale commodity prices showed little change dur ing July and advanced slightly in the first three weeks of August. For the seven-week period as a whole, there were substantial increases in the prices of hogs, lard, silk, and scrap steel, while cotton declined. Wheat, after ad vancing considerably during the latter part of July, declined somewhat in the early part of August. Bank Credit Excess reserves of member banks increased by $340,000,000 in the five-week period ended August 21, as a consequence principally of a reduction in the balances held by the Treasury with Federal Reserve banks. There were also moderate imports of gold from abroad. Total loans and investments of reporting member banks in leading cities showed a net decline of $290,000,000 during the four weeks ended August 14. Holdings of direct obligations of the United States Government decreased by $220,000,000 following a substantial increase in the middle of July. Loans declined by $180,000,000 in the latter part of July but subsequently advanced by $40,000,000, while holdings of Government guaranteed and other securities increased by $70,000,000 in the four-week period. Yields on Government securities rose slightly during this period, while other short-term open-market money rates remained at low levels. <
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