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BUSINESS CONDITIO 3-3/ :' ,x. gtess ssi SIS \_X_ bsp^sPp H BwSegS Pit* '&;3,>> £MjI= 3fN £ S = IJit 0P rx i\mu'x\\\J !vVkVVC*y! P9^e •,\\ivi X\y\U :&s*m i '.. s&a'V !§S>-- swnvv! • !^\\v»wv*.\ XvC»':i*w»\\w' Vs«» *.V ;»««\v\\v»,v mkssskIK ■ ' \ !K\»\\'*.\V« mwwa ■ ] □□ ? i i1\vS.i'\Vi'*-\YjS**’ r^V^\V5s^£', run Volume 21 December, 1938 Number 12 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago 4 Monthly Review of Business Conditions in the Seventh Federal Reserve District DISTRICT SUMMARY compared with the trend a year ago characterizes business CONTINUED improvement as in conditions in the Seventh district. Recessions where noted data covering November 1 activity were in general seasonal in nature, and several phases recorded gains over the corresponding 1937 period, especially in the volume of new business. Employment and payrolls in the district expanded in November for the fourth consecutive month. It appears that December retail trade will be equal to if not above that of a year ago, despite the decline in prices from that time and the buying of lowerpriced merchandise this year. slightly in excess of the 1928-37 average for the month. With the sales tonnage seasonally under production, there was some accumulation of inventories in the period. The manu facture of dairy products fell off during November but re mained heavy for the period, and inventories continued in record-high volumes for the season; sales declined from the preceding month, though totaling above the 1937 period. Receipts of wheat at interior primary markets were heavy for November, while a contraseasonal decline took place in the com movement which was below a year ago. Visible sup plies of both grains were rather large at the end of the month. Industry Trade HE production of automobiles has continued to expand HERE was a 5 per cent increase in November over and demand from this source was one of the principal October in Seventh district department store trade, the factors in maintaining steel mill operations through mid gain comparing with a recession in the 1928-37 average for i December at the highest level of the year and much above the month. The margin of decline from last year was nar the corresponding 1937 rate. For the first time in 1938 out rowed to only 5 per cent, and preliminary data for December put of automobiles in November exceeded that of a year ago. indicate that sales for that month will equal or may even There was a gain during the month in new business booked exceed those for the corresponding 1937 period. Business by steel and malleable casting foundries of the district, and in the retail shoe and furniture trades was lighter in orders for malleable castings were much greater than last November than a month previous but only moderately under November; output of both steel and malleable castings was a year ago. Less than usual declines or contraseasonal gains accelerated considerably in the period. Although building were recorded by wholesale trade groups in the comparison construction declined from October, in accordance with sea with the preceding month, and several lines reported sales sonal trend, it was more than double the November 1937 gains over last November. volume. Orders booked and shipments by furniture manu facturers fell off less than is usual in November and were Credit above the 1928-37 average for the month. Production of UNDS gained through commercial and financial trans paper and pulp mills increased slightly in the period and actions with other districts caused reserve balances of activity was noticeably greater than a year ago. The durable goods industries, due to expansion in the metals and vehicles Seventh district member banks to increase during the four groups, were responsible for the continued gain in employ weeks ended December 14. Total loans and investments of weekly reporting member banks gained in this period, as did ment during November. their demand and time deposits. Following an increase in the Agricultural Products preceding four weeks, the annual velocity of demand deposits HE production of packing-house commodities rose in at these banks declined and remained below the rate of November to a level well above that of a year ago and turnover a year ago. T T F T better places this commodity to compete with surplus animal fats from other exporting nations and may result in an im HE new trade agreements which become effective on proved British demand for it after January 1, unless the January 1, 1939, and which were signed on November 17 tariff reduction on lard is met by a corresponding decrease in by the United States, Canada, the United Kingdom, and the prices of competitive vegetable fats. British quotas for Crown Colonies, are expected to remove many of the re hams from the United States are expanded by about 20 strictive influences imposed upon United States exports to per cent. The reduction in British duties on United States manu the British empire by the Ottawa conference. So far as the Seventh Federal Reserve district is concerned, the chief factures of track-laying type tractors and certain lines of benefits will accrue to agriculture and to certain types of office equipment and domestic appliances also should exert machinery and appliances. Abolition of duty amounting to some beneficial effect upon Seventh district industry. Al about 6 cents per Bushel on British imports of United States though the British duty on automobiles has not been de Seventh assured of wheat restores this Seventh district commodity to a com creased, this major in duties district industry ismore horse no further increase on cars of 25 or petitive basis in England with wheat from Canada and power; tariffs have been reduced in some Crown Colonies Australia, but does not nullify the fact that price realign and the 3 per cent excise tax in Canada has been eliminated. ments or a continuance of subsidies may be necessary for Among concessions granted by the United States to Canada this American grain to compete successfully with low-cost is a reduction in the duty on Canadian cattle and swine, but wheat from Argentina and Roumania, which also will be the influence thereof may be more than counteracted by in admitted free under the most-favored nation clause. Elimina creased exports of animal products from the United States tion of the 10 per cent English duty on United States lard to England. The Anglo-American Trade Agreement* •* T •* * Merchandising Wholesale Trade A LTHOUGH wholesale trade in the Seventh district de-i*-dined in November from the preceding month, as is customary, the decreases in sales for the most part were less than is usual and some contraseasonal gains were re corded. In the aggregate for all groups, the dollar volume sold was smaller by 5 per cent than in October, with the drug trade off only one per cent, the hardware trade less by 5 per cent, and a decline in the miscellaneous group of 11 per cent; sales of electrical goods expanded 8 per cent in the period, those of groceries increased one per cent, and those of tobacco and its products gained fractionally. Margins of decline from a year ago were narrowed considerably dur ing November in the drug, hardware, and electrical goods trades, while sales of groceries, tobacco, and the total for the miscellaneous group exceeded the November 1937 vol umes. Stocks of electrical goods and of tobacco and its products were higher at the end of November than a month earlier, but in other groups they declined; the aggregate for all groups showed an 18 per cent decrease from the cor responding 1937 date. to the fact that apparently customers are buying lower-priced merchandise. In the four weeks ended December 24, the dollar value of department store sales in the district ran 2 per cent ahead of that in the corresponding 1937 period, and it is reported that the physical volume of transactions showed an even greater increase over last December. Indianapolis trade in the four weeks recorded a 10 per cent gain in dollar sales over the same weeks of 1937, while trade in Chicago, Detroit, and Milwaukee was heavier by one per cent than at that time, and stores in smaller cities had noticeably larger sales than a year ago. As is usual in November, stocks rose somewhat further in the month this year; they totaled, however, 13 per cent lighter than on November 30 last year. Their rate of turnover in the period was some what greater than in the 1937 month; for 1938 through November it was 3.69 times as against 3.78 times for the eleven months a year ago. After having been lower in each month of 1938 through October, the ratio of total collections to accounts outstanding at the end of the preceding month was slightly higher in November than for the same period last year. DEPARTMENT STORE SALES WHOLESALE TRADE IN NOVEMBER 1938' Per Cent Change from Same Month Last Year Net Sales Groceries......................... Hardware........................ Drugs................................ Electrical Goods............ Tobacco an d Its Prod ucts Miscellaneous.................. +0.3 — 9.9 — 2.6 —16.9 + 4.4 + 3.9 •Data furnished by Bureau of Foreign Department of Commerce. Stocks Accounts Outstanding —12.3 —19.5 —13.4 —13.9 + 0.3 —22.6 and Domestic Collections — 3.6 — 5.5 —16.8 —16.6 + 1.3 — 6.0 —26.1 —21.0 + 4.7 + 4.1 —10.6 — 2.3 Commerce, United States Retail Trade EPARTMENT store trade in this district recorded a 5 cent gain the D peraverage forin November overa October,ofwhereascent. 1928-37 the month shows decline 3 per Chicago department stores experienced a 6 per cent increase in business during the period, Detroit sales expanded 9 per cent, and the total for smaller cities in the district registered a gain of 4 per cent, while business of Indianapolis and Milwaukee stores fell off 2 and 4 per cent, respectively. The decline of 5 per cent from last November was the smallest in the yearly comparison so far in 1938, and may be ascribed partly to differences in prices between this year and last and DEPARTMENT STORE TRADE IN NOVEMBER 1938 Locality Per Cent Change November 1938 from November 1937 Per Cent Change First Eleven Months 1938 from Same Period 1937 Ratio of November Collections to Accounts Outstanding End of October Stocks End of Month Net Sales 1938 1937 —5.5 -7.2 —7.0 +1.9 —6.1 —3.3 —2.3 —12.2 —18.7 34.7 45.2 33.8 43.6 39.9 37.5 40.8 38.6 —io.i —11.9 —21.7 —12.5 — 7.9 —11.3 — 9.3 — 9.4 35.6 34.6 —12.8 —13.5 38.4 38.0 7th District............. -5.1 •Include Fort Wayne and Peoria. Page 2 —14.3 — 7.8 Sales of shoes at retail by reporting dealers and depart ment stores declined 7 per cent in November from the preced ing month. Dealer sales fell off 15 per cent in the period, while those of department stores decreased only one per cent in the aggregate. However, the dollar volume sold by dealers was one per cent larger than in November last year, whereas shoe sales by department stores totaled 3 per cent lighter in the comparison. The decline of 2 per cent from a year ago in aggregate sales of dealers and department stores compared with one of 11 per cent in October. In the first eleven months of 1938, the retail shoe trade in this district was off 10 per cent from the same 1937 period. Stocks declined slightly during the current month and were 8 per cent lighter on November 30 than at the same time a year previous. * Net Sales Chicago..................... Detroit...................... Fort Wayne.............. Indianapolis............. Milwaukee................ Peoria........................ Other Cities*........... Index numbers of department store sales in the Seventh district, with and without adjustment for seasonal variation, 1923-1925 average ==100. By months, January 1929 through November 1938. * * Since May when sales of furniture and housefurnishings were more than 30 per cent smaller than in the corresponding month of 1937, the margin of decline from a year ago has been narrowed steadily each month until in November the dollar volume sold by dealers and department stores was only 7 per cent smaller than that of last November. As compared with the preceding month, sales in the current period totaled 8 per cent less, with those of department stores aggregating j The current volume of employment in all reporting indus tries of the district was 16 per cent lower and payrolls 18 per cent lighter than in the same month a year ago. These declines were the smallest recorded in the yearly comparison so far this year, the improvement being due not only to the recent expansion but also to the fact that last year at this time industry generally was slowing down, durable and non Industrial Employment Conditions durable as well as non-manufacturing groups contributing to the recession. In the current comparison with 1937, the OR the fourth consecutive month, employment and pay non-durable goods industries are in a considerably better rolls in Seventh district industries registered increases in position than are the durable, with the percentage decreases , November, the expansion being less marked than in thein the former being less than 10 per cent as against close to two preceding months but more extensive than in August. Durable 25 per cent in the latter. For non-manufacturing industries goods industries were again the main contributors to the up the losses from a year ago totaled only 5 per cent each in ward trend, and the gains in this classification in the current employment and payrolls. month were practically limited to the metals and vehicles PER CENT groups. Exclusive of these two groups, the district total PER CENT approximated closely that of the preceding month. Non MANUFACTURING EMPLOYMENT AND PAYROLLS durable goods which were expanding as early as last June— two months in advance of durable goods—reached their high est volume in September since which time they have shown a fairly general downward trend. The decreases in the cur rent month were largely contributed by the textiles and the food-products industries. Non-manufacturing industries have shown only minor fluctuations this year except for the sharp seasonal decline of last January. In the past four months the trend in this classification has been moderately upward, the total rise over the period amounting to a little less than 5 per cent in number of workers employed and to 4 per cent in /PAYROLLS wage payments. Public utility concerns with a large and fairly stable volume of employment exerted a steadying influence on the non-manufacturing groups as a whole as did also the fact that while the construction industries were 20Lma1929 > showing losses, the coal mining industry was expanding. The Index numbers of Seventh district manufacturing employment and payrolls, 1923— merchandising group reported employment and payrolls as, 1925 average =100. By months, January 1929 through November 1938. respectively, 8 and 5 per cent above the corresponding vol umes of four months earlier. In the manufacturing industries Manufacturing as a whole, the increases for the same period amounted to as Iron and Steel Products much as 22 per cent in number of workers and 37 per cent in wage payments. ONTINUED active demand from makers of automobiles maintained operations of Chicago district steel mills, with slight fluctuation, through mid-December at a level EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL equal to that of a month earlier, or at 60y2 per cent of RESERVE DISTRICT capacity, which rate compares with one of only 24 per cent Change from Week of November 15, 1938 at the same time a year ago when production had been October 15, 1938 sharply curtailed. In the third week of December, operations Report * Wage Earn Wage Earn Earn Industrial Group ing ings Earn ings fell off 41/0 points to 56 per cent of capacity. Buying by the (000 Firms ers ers Omitted) automotive industry has been reflected chiefly in sales of No. No. % % $ sheets and strip, merchant bars, and wire products. There D G : has been some improvement in the demand for construction 363,937 10,039 + 4.5 Metals and Products1........... 1,800 + 6.1 425 322,047 11,105 +13.2 +12.0 Vehicles.................................... materials, but sales to the farm equipment industry have Stone, Clay, and Glass........ 22,478 ,545 + 1.8 284 — 1.9 been lagging. Daily average pig iron production in the Illi 493 42,723 869 + 0.3 Wood Products...................... — 3.7 3,002 751,185 22,558 + 7.7 + 8.3 Total......................................... nois and Indiana district rose more than 20 per cent further N -D G : in November and was likewise over one fifth greater than in 403 64,765 1,166 — 1.9 — 6.9 Textiles and Products.......... the month last year—the first gain to be shown in the latter ' 2,738 1,043 106,658 — 2.3 — 2.1 Food and Products............... 314 35,342 1,047 + 0.8 — 0.9 Chemical Products............... comparison so far in 1938. Steel prices have been reaffirmed + 1.4 172 25,966 546 + 1.9 Leather Products................... + 3.2 34 18,367 481 + 7.0 for the first quarter of 1939. The scrap iron and steel market, Rubber Products................... 743 2,103 + 1.7 74,592 — 0.4 Paper and Printing................ after easing in the latter part of November, has been quiet — 1.7 2,709 325,690 8,081 — 0.2 Total......................................... but firm. 30,639 + 5.2 + 5.5 Total Mfg., 10 Groups.............. 5,711 1,076,875 * * * * only 7 per cent lighter and dealer sales falling off 14 per cent. There was a continued increase between the end of October and November 30 in stocks of furniture and housefurnishings, but on the latter date inventories were lighter by 16 per cent than on the corresponding 1937 date. F > 1 C urable on oods urable oods Merchandising2........................... Public Utilities.......................... Coal Mining................................ Construction............................... 5,583 1,089 73 790 141,836 98,665 18,005 11,766 3,080 3,273 411 324 + — + — 1.6 0.7 2.6 5.2 + 0.5 + 0.2 + 1.5 —10.8 Total Non-Mfg., 4 Groups....... 7,535 270,272 7,088 + 0.5 — 0.2 Total, 14 Groups........................ 13,246 1,347,147 37,727 + 4.2 + 4.4 JOther than Vehicles. Illinois, Indiana, and Wisconsin. There was a sharp expansion during November in orders booked by reporting steel casting foundries in the Seventh district, following a drop in new business a month previous, and output was accelerated considerably. A similar trend was shown at malleable casting foundries, although gains were smaller than for steel castings. Last year in November Page 3 activity ^was receding steadily, so that current comparisons with 1937 have become more favorable. STEEL AND MALLEABLE CASTINGS November 1938 SEVENTH DISTRICT Per Cent Change from October November Steel Castings: 1938 1937 New orders booked (tons).................................... +63.6 — 7.0 New orders booked (dollars)............................... +38.7 — 8.9 Shipments (tons)............................................... .. ’ +34.0 —37.4 Shipments (dollars)................................. +19.6 -41.8 Production (tons).................................................... +21.0 —32.1 Malleable Castings: New orders booked (tons).................................... +13.2 +26.2 New orders booked (dollars)............................... +11.5 +20.3 Shipments (tons)..................................................... +27.2 —13.5 Shipments (dollars)................................................ +18.9 —20.5 Production (tons).................................................. . +10.1 —8.9 * ” * " as large in number as in the month last year, while sales at retail by reporting dealers expanded approximately 80 per cent over October and totaled 35 per cent heavier than a year ago. Although stocks of new cars in dealers’ hands rose better than 100 per cent during November, they were only a little more than one third as large at the end of the month as on November 30 last year. Sales of used cars gained somewhat in the current period but were a little smaller than in Novem ber a year ago; stocks increased substantially over the end of October though aggregating one fourth lighter than at the close of November in 1937. Furniture OTHER INDUSTRY ALTHOUGH new orders booked by Seventh district furniAlthough shipments from stove and furnace factories of the district fell off considerably during November, in accord -LR-ture manufacturers continued to decline during Novem ance with seasonal trend, they were within 5 per cent of the ber, in accordance with seasonal trend, the decrease of 6 per corresponding 1937 volume; and orders received, off more cent from the October volume was much less than in the than one third from October, totaled nearly 15 per cent 1928-37 average for the period, and the aggregate amount above those in the month last year. Production was curtailed of new business exceeded that of November last year by 18 10 per cent in the current period but recorded a small increase per cent and was nearly that much above the ten-year average. The increase over a year earlier was the first noted since over a year ago. June 1937. Shipments also, though 10 per cent below those The Automobile Industry in October, fell off much less than seasonally in November, N NOVEMBER, for the first time this year, production were within 7 per cent of a year ago, and totaled 12 per cent of automobiles exceeded the corresponding 1937 volume, above the 1928-37 November average. They slightly exceeded and data for the early part of December indicate that output the volume of new orders, and this influence together with for the month will show a further gain and be substantially cancellations reduced unfilled orders 6 per cent between the greater than in December last year when lagging demand close of October and November 30. On the latter date orders caused manufacturers to curtail production schedules. There on hand totaled 3 per cent larger than on the same date in were 320,344 passenger automobiles and 52,014 trucks pro 1937, but their ratio to new business booked during the month duced this November in the United States, which figures was only 90 per cent as compared with 102 per cent last represent increases of 71 and 136 per cent, respectively, over year. The production rate remained steady during November October and a gain of 8 per cent in passenger car output over at 74 per cent of capacity and approximated that prevailing a year ago but a decline of 20 per cent in truck production. in the month a year ago. Although several manufacturers reduced schedules slightly in the second week of December, advances by others had Paper and Pulp raised output by that time to a level higher than for any "TkESPITE declines in orders and shipments at paper mills. week in sixteen months and to between 15 and 20 per cent Seventh district production of pulp and paper increased above the corresponding 1937 week. slightly during November. Last year at this time output was decreasing rapidly, and so current comparisons with 1937 have become more favorable. Paper mills operated at 82 per cent of capacity over the month, against 72 per cent last PASSENGER AUTOMOBILES year; while pulp mills operated at 85 per cent of capacity, compared with 80 per cent in November 1937. I THOUSANDS OF UNITS PAPER AND PULP INDUSTRY SEVENTH DISTRICT November 1938 Per Cent Change from October November Paper: 1938 1937 New orders booked (tons).................................................................. — 6.9 +313 New orders booked (dollars)................................................ !...... —12.5 +25 .3 Total shipments (tons)......................................................................... — i.o +15 4 Total shipments (dollars)............................................................ .. ” — 2^0 +10 5 Total production (tons).......................................................................... +1.0 +18.2 Stocks on hand at end of month (tons)...................................... +16+17 Pulp: ............... Pulp produced (tons)............................................................................... +2.0 +11.1 Stock on hand at end of month (tons)............................................. — 0.7 — 8.1 The Building Industry ONTRACTS awarded during November for the construc • dumber of new passenger automobiles produced and registered each month in the United States. Latest figures: Production, November, 1938; Registrations, October, 1938. Sources: Production, United States Department of Commerce; Registrations, tion buildings, public works, and utilities in the CSeventhof district authorized the expenditure of a little over Reception of the 1939 model cars has been enthusiastic and demand for them excellent, so that despite accelerated production schedules to meet dealers’ needs, field stocks remain low. Wholesale distributors of automobiles in the Seventh district had sales in November about one and onehalf times those of the preceding month and one fourth again $57,000,000, a sum seasonally less than recorded in October but more than twice the volume of a year ago. About three quarters of the month’s valuation was for residential and non-residential building, and only one fourth for public works and utilities. The decline in the total from October was due almost entirely to a curtailment of public works, mainly publicly-financed projects. Increased support from public tt Page 4 funds maintained both residential and non-residential build ing close to the relatively high level of a month earlier; 15 per cent of residential and 77 per cent of non-residential building came from this source in November as against 8 and 62 per cent, respectively, a month previous. Of total contracts awarded in the month, 56 per cent represented public financing as compared with only 34 per cent in No vember 1937. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Total Contracts Residential Contracts November 1938................................................................ Change from October 1938........................................ Change from November 1937................................... First eleven months of 1938.......................................... Change from same period of 1937............................ *57,161,000 - 13.2% +103.1% *472,016,000 +1.6% *17,196,000 - 1.0% +124.6% *132,480,000 +3.7% •Data furnished by F. W. Dodge Corporation. Building permits issued in 101 cities of the district showed a 12 per cent decline for November in the estimated cost of construction, decreases in Indiana, Iowa, and Michigan cities more than counteracting the substantial increases re corded for Illinois and Wisconsin. The current trend in each State was the reverse of that prevailing a month earlier. As compared with a year ago, the estimated cost was consider ably higher for each of the five reporting States; gains ranged from 29 per cent for Indiana to 61 per cent for Illinois, and amounted to 46 per cent in the aggregate. The number of permits issued during November fell off more sharply in the monthly comparison and increased less in the yearly com parison than did estimated cost of the projects. For the dis trict outside the five larger cities, there was a 42 per cent rise in estimated cost over a year previous with a decline of 8 per cent in number of projects contemplated. Of the five larger cities, all but Chicago showed increases in cost per unit of project over last November. Demand for building materials fell off during November, the declines in retail distribution of lumber and in shipments of brick and cement being about as large as generally take place at this season. Wholesale distribution of lumber was well maintained, with little change from October in boardfoot sales and a loss of only 8 per cent in dollar volume, as compared with declines of 12 and 18 per cent, respectively, in the November average for the ten preceding years. Total yard sales, also, registered a somewhat smaller than custo mary decline for the month, and fell below the corresponding year-ago volume by only 6 per cent. Outstanding accounts at these yards were higher than a month earlier in ratio to sales but lower than last November. Agricultural Products Wheat these prices rose almost 2 cents during the first three weeks of December. United States visible supplies of wheat as of December 17 were slightly smaller than a month earlier but 28 per cent larger than in 1937. Corn and Oats ALTHOUGH an increase is usually expected in November, there was a sharp decline in primary receipts and ship ments of corn over the month, and the movement fell below a year ago as farmers evidently became more disposed to hold or to seal their corn. Light country offerings and pri mary receipts, plus increased export interest, were major factors in corn firmness from mid-November through the first three weeks of December; by December 21 cash prices of No. 2 yellow com at Chicago had risen about 51/2 cents over the month-earlier level to $.51% and $.53%. Visible supplies remained rather heavy, though showing a less than seasonal increase over the four weeks ended December 17; a large portion of these stocks consisted of Government hold ings. November receipts of oats fell off sharply, but ship ments rose somewhat. Oats prices ruled firm from midNovember through mid-December. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands ot bushels) November November October November 1928—37 Wheat: 1938 1938 1937 Av. Receipts...................................................... 18,514 27,266 15,924 19,106 Shipments.................................................. 21,669 23,759 31,391 22,728 Com: Receipts...................................................... 30,835 47,417 42,923 19,974 Shipments.................................................. 16,141 19,562 18,740 10,081 Oats: Receipts........................................................... 3,559 7,569 6,795 5,518 Shipments........................................................ 5,941 5,743 8,307 5,931 Movement of Livestock OVEMBER receipts of cattle, calves, and lambs at public stockyards in the United States showed a seasonal de cline from October, while those of hogs increased somewhat more than is usual for the month. Marketings of hogs and lambs continued higher than in 1937; those of cattle and calves were lower than last year. The movement to inspected slaughter—inclusive of livestock that did not pass through public stockyards—followed the trends of market receipts, except that comparisons with October and with 1937 were more favorable. The decline in November from October in shipments to feed lots was slightly less than is seasonally expected, and animals moved to these areas in considerably greater volume than was shown in the 1933-37 average figures. N Meat Packing ITH slaughter of hogs expanding and continuing in close to seasonal volume and with that of cattle and W Grain Marketing ECEIPTS of wheat at interior primary markets in the LIVESTOCK SLAUGHTER (In thousands) United States again declined seasonally Novem R■ber, but were the highest for the month induring years. Both seven receipts and shipments were the lowest since last June. Ex ports of the grain continued in fair volume but lighter than in 1937. Reflecting chiefly liquidation of December contracts, wheat prices were generally lower in the latter part of No vember, quotations for No. 2 hard winter wheat in cash positions at Chicago standing at $.63% and $.65% at the end of the month. However, under the influence of increased export sales by the Government agency, continued droughty conditions in the southwestern States, and a substantial re duction in prospects for the domestic 1939 winter wheat crop, Yards in Seventh District, November 1938................................................. Federally Inspected Slaughter, United States: November 1938............................................. October 1938.................................................. November 1937............................................. November 1928-37 average....................... .. Cattle 160 Hogs 632 .. .. .. .. 858 884 856 820 3,913 3,311 3,295 3,979 Lambs and Sheep Calves 222 72 1,453 1,638 1,321 1,362 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Week Ended Months of Dec. 17 Nov. Oct. 1938 1938 1938 Native Beef Steers (average)............................... $10.10 $10.10 $10.55 Fat Cows and Heifers........................................ .. 7.35 7.80 7.85 Calves.................................................................... .. 8.75 9.50 10.50 Hogs (bulk of sales)............................................ .. 7.15 7.70 7.90 Lambs.................................................................... .. 8.85 8.85 8.15 457 470 468 416 Nov. 1937 *10.65 7.10 9.40 8.65 9.60 Page 5 lambs decreasing from October but exceeding the 1928-37 average, the production of packing-house commodities at inspected slaughtering establishments in the United States rose in November to the highest level since January 1938 and to slightly above the ten-year average for the period. The tonnage sold, owing to competitive demand for poultry during the Thanksgiving holiday, was under current pro duction by about the seasonal amount and there was some accumulation of inventories in the United States. Although quotations for lamb, common and medium steers, dry salt meats, and a few other pork cuts strengthened, the general price level of animal products was somewhat lower in No vember than in October. However, total dollar sales billed to domestic and foreign customers fell off less than seasonally. Payrolls in the industry at the close of November showed an increase over October of 4 per cent in employes, 3 per cent in hours, and of 2 per cent in wage payments; they recorded declines in these items from a year ago of 3, 5, and 6 per cent, respectively. MEAT PACKING-UNITED STATES Per Cent Change in November 1938 from October November November 1938 1928-37 Av. 1937 Tonnage produced................................ ......................... +8.6 +11.8 + 2.1 Tonnage sold......................................... ......................... — 1.7 +11.2 + 2,4 Dollar sales........................................... ......................... —10.1 — 0.2 + 3.6 Inventories (tonnage).......................... ......................... +15.7 + 7.0 —25.9 demand for cash butter, but later prices declined sharply when fresh receipts increased. At 26 cents on December 21 wholesale prices for 92 score butter at Chicago were down 31/4 cents from the month’s high. The manufacture of American cheese in Wisconsin during November declined seasonally 26 per cent from October, though totaling 6 per cent over a year ago and 15 per cent higher than the 1928-37 November average. Sales of cheese from Wisconsin primary markets also fell off by one fourth, but were higher than in 1937 by the same percentage. Do mestic cold-storage holdings decreased in November; how ever, on December 1 they were still at a record high for the season. Cheese prices showed continuing strength from midNovember through December 15, and by the latter date had advanced about 2 cents over the month-earlier level. Later prices eased off slightly when production remained com paratively heavy and butter prices declined. MONTHLY BUSINESS INDEXES wise indicated. 1923-25 average=100 Manufacturing Industries: Employment...................................... Payrolls............................................... Pig Iron Production: Illinois and Indiana.......................... Foreign Trade Automobile Production—(U. S.): Passenger Cars.................................. HIPMENTS of packing-house commodities for export in Trucks................................................. creased slightly in November over October, owing Casting Foundries Shipments : Dollars.............................. mainly to a tendency to build up ham stocks in England for Steel—In Tons................................... In Malleable—In Dollars..................... the Christmas trade. English demand was good for hams; it In Tons.......................... also held up fairly well for spot lard, despite the weakness Stoves and Furnaces: Shipments........................................... in Sterling and some inclination also to await elimination of Furniture Manufacturing: Orders in Dollars.............................. the duty on January 1. During November, the Scandinavian Shipments in Dollars....................... demand for animal products from the United States declined, Building Contracts Awarded: Residential......................................... because of seasonally large domestic hog slaughter and cur Total................................................... Meat Packing—(U. S.): rent Sterling-Dollar relationships. Trade with Czechoslo Production.......................................... Sales Tonnage.................................... vakia, though showing some betterment over a month earlier, Sales in Dollars................................. continued under the restraining influence of payment diffi Creamery Butter Output: Production.......................................... culties and the loss of territory in the Sudeten transfer. Sales.................................................... Cuban, Porto Rican, and Latin American demand for hog Department Store Net Sales: Chicago............................................... products from the United States tended to improve with Detroit................................................ Indianapolis....................................... lower quotations at Chicago. Prices abroad ruled somewhat Milwaukee.......................................... Other Cities....................................... under Chicago parity; ham quotations in England were Seventh District—Unadjusted — slightly above this basis early in November but subse Adjusted........... S quently weakened in anticipation of heavy arrivals late in the month and during early December. ot er- Nov. Oct. 1938 1938 Sept. Nov. 1938 1937 81 80 77 76 73 68 100 101 Oct. 1937 Sept. 1937 104 112 101 105 83 68 56 68 98 134 109 138 64 59 22 49 101 172 102 83 41 139 34 30 44 58 28 22 37 45 30 24 37 45 58 47 55 67 70 58 64 77 96 86 76 92 172 220 209 182 305 301 62 64 66 73 67 74 53 68 66 83 78 89 59 84 59 96 51 78 26 41 37 58 34 57 98 93 85 91 94 95 85 92 92 88 83 86 84 88 100 75 87 100 78 108 102 123 111 153 75 101 86 101 92 122 90 111 112 99 93 96 88 84 99 113 102 87 91 82 84 133 113 98 84 96 93 95 117 109 104 93 100 92 98 123 125 120 101 106 97 91 151 124 106 91 105 102 Credit and Finance Dairy Products ILK and butter production during November continued heavy for the season, though declining more than usually from October. The November creamery make butter by Seventh district firms decreased 24 per cent from a month previous, but totaled 4 per cent heavier than in the same 1937 period. Sales also fell off more than seasonally in November, totaling 12 per cent less than in October, though 8 per cent over November 1937. United States cream ery butter production likewise declined, but remained rather large for the month. Cold-storage holdings of butter in the United States on December 1 aggregated 35 million pounds less than a month earlier; however, the total of 159 million pounds was again by far the highest on record for the date. Almost two thirds of these stocks were held by Government agencies. Butter prices ruled strong over November and the first part of December, reflecting chiefly a sustained trade M Page 6 Member Bank Reserves ONTINUED gains in funds from commercial and finan of cial transactions with other sections of the United States were primarily responsible for the 48-million dollar increase in Seventh district member bank reserves during the fourweek period ended December 14. These deposits stood at $1,352 million on December 14, or close to the record high established early in July of this year. Part of the funds trans ferred from reserves a month previous were returned to that classification during the current period, which, together with a 4-million dollar excess of Treasury disbursements over receipts and an increase in Reserve bank credit extended, further augmented reserves by 31 millions. The seasonal increase in currency circulation amounted to 16 millions in the Seventh district, almost all of the expansion being out side the metropolitan areas. C 4 Interest Rates Selected Seventh District Banking Data HE average rate earned during November on total loans and discounts by the larger banks in Chicago and Detroit FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS was lower than in the preceding period—the first such ad OF CONDITION verse comparison in several months. Customers’ rates charged (Amounts in millions) Change from by these banks on December 15 were about the same as a Dec. 15 Dec. 14 Nov. 16 month earlier, with the possible exception of those on com 1938 1938 1937 bills and securities..................................... $ 277 $ 0 $-6 modity paper loans, in which group a slight softening was Totaldiscounted..................................................... Bills 0 0 0 noted. Bills bought............................................................ 0 0 0 U. 8. Government securities.............................. 276 0 —6 Total reserves......................................................... Open Market Paper 2,233 -3 +415 T Member bank reserve deposits.......................... 1,352 +48 +339 80 94 4 114 1,447 227 468 + 3 + 1 0 + 2 +13 — 11 - 6 —10 + 7 — 1 + 6 +30 +36 +75 2,375 886 0 +76 + 2 0 +152 +16 0 deposits.................................................... 137 —60 +69 OVEMBER financing through bankers’ acceptances in All otherReserve notes in circulation................. Federal +13 990 0 the Seventh district and outstandings at the month’s end Ratio of total reserves to deposit and Federal Reserve note liabilities combined, 90.0% —0.2* +2.2* both declined rather sharply from the corresponding October totals, whereas moderate increases are seasonally expected. •Number of Points. New financing by several large Chicago banks in the first fifteen days of December was in about the same volume as during the comparable November period. CONDITION OF REPORTING MEMBER BANKS Commercial paper sales of representative Middle Western SEVENTH DISTRICT dealers likewise receded rather markedly in November from (Amounts in millions) Change from October, and this trend continued through the first half of Dec. 14 Nov. 16 Dec. 15 A December. Outstandings on November 30, however, showed 1938 1938 1937 1+13 *-15 little change when compared with a month earlier. Declines Loans and investments—total...................................... *2,985 Loans—total..................................................................... 843 +17 —156 recorded from a year ago, though not so large as in the Commercial, industrial, and agricultural loans....... 476 + 4 —134 33 — 2 —17 case of bankers’ acceptances, were nevertheless quite sharp. Open-market paper......................................................... Loans to brokers and dealers in securities................ 42 + 9 — 7 N ssets Securities Markets ITTLE change of any importance was noted in bond prices ■^during November and the early part of December. The slight weakening which occurred is normally expected at this time of year, due, among other factors, to selling for tax purposes. Prices of lower-grade obligations have moved in fairly close correlation with the stock market. Most of the de mand for bonds continues to come from institutions. Demand for municipals is for somewhat below the top in both quality and price, and is centered primarily in the East, as ex emplified by price performance of high-grade Middle West ern issues which were not New York legals. The volume of new corporate issues in November was rather light as com pared with October. Refundings comprised about two thirds of the total. That portion originating in the Seventh district, mainly one large utility issue for refunding and for new construction, comprised about 35 per cent of the United States total. The largest corporate issue of the month, an industrial issue, was sold directly to a group of insurance companies. The Treasury’s mid-December financing met with the expected success. Three issues were offered, two for cash subscription and exchange, and one for exchange only. Holders of the iy2 per cent notes maturing next March were offered an exchange for any of the new issues, and about $922 million of the $942 million outstanding was so ex changed—$695 million for the 9-year 2 per cent bonds, $188 million for the 22-27-year 2% per cent bonds, and $39 million for the 5-year 1% per cent notes. Cash sub scriptions totaled $5,732 million for $400,000,000 of the 2% per cent bonds and $3,646 million for $300,000,000 of the 1% per cent notes. The $100,000,000 issue of 91-day Treasury bills dated December 21 sold at an average discount to yield .006 per cent, or at an average cost to the Treasury of about V/2 cents per $1,000. Chicago stock prices softened somewhat after establishing a new high for the year in the first half of November, averag ing moderately lower on December 21 than a month earlier. I > 4 Other loans for purchasing or carrying securities. . . Real estate loans............................................................. Loans to banks................................................................ Other loans....................................................................... U. S. Government direct obligations........................ Obligations fully guaranteed by U. S. Government Other securities............................................................... Liabilities Demand deposits—adjusted*....................................... Time deposits.................................................................. Borrowings....................................................................... •The annual velocity of demand deposits (unadjusted) in the four weeks ended December 14 was 20.07 times, as compared with 21.93 times in the preceding four weeks and with 22.69 times in the corresponding period of 1937. BANK DEBITS, SEVENTH DISTRICT (Amounts in millions) Chicago................................................. .......................... Des Moines........................................... .......................... Detroit.................................................. .......................... Fort Wayne.......................................... .......................... Grand Rapids...................................... .......................... Indianapolis......................................... .......................... Milwaukee............................................ .......................... Peoria.................................................... .......................... South Bend.......................................... .......................... 32 smaller cities.................................. .......................... Total 41 cities...................................... .......................... Per Cent of Increase or Decrease from November October November 1938 1938 1937 $2,595 —13.9 — 4.6 88 — 3.9 — 1.8 848 + 9.2 —14.4 31 —10.3 - 4.4 47 — 4.5 —10.6 187 — 4.3 — 1.8 234 — 5.6 — 7.3 59 — 7.5 — 4.2 31 — 3.1 —21.0 459 — 3.1 - 9.7 $4,579 — 7.9 — 7.3 TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) Total country and city check clearings: Pieces..................................................... Amount................................................. Daily average clearings: Total items cleared— Pieces..................................................... Amount................................................. Items drawn on Chicago— Pieces..................................................... Amount................................................. Items drawn on Detroit— Pieces..................................................... Amount................................................. November 1938 11,831,499 $2,066,119,481 November 1937 10,944,600 $2,057,263,269 514,413 $89,831,282 456,025 $85,719,303 80,505 $46,891,000 71,299 $43,720,000 22,126 $9,647,142 20,846 $10,243,752 Page 7 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION 'T'HE sharp rise in industrial production, which began early last summer, con tinued in November. Preliminary reports for the first three weeks of December indicate some slowing-down in the advance. Employment also increased in November and payrolls showed little change, although a decline is usual at this season. Distri bution of commodities to consumers increased considerably. Production 11HE Board’s seasonally adjusted index of industrial production in November rose ■*- to 103 per cent of the 1923-1925 average from 96 per cent in October. Output of steel continued to increase, contrary to the seasonal trend, and there was a further sharp rise in automobile production. In the first three weeks of December activity at steel mills declined somewhat more than seasonally, while output of automobiles con tinued at the high level reached at the end of November. Lumber production in November decreased by more than the usual seasonal amount. In the nondurable goods industries, shoe production declined seasonally, while output of textiles showed a considerable expansion, with increased activity at cotton, wool, and silk mills. At mines, bituminous coal output increased further and production of anthracite showed less than the usual seasonal decline. Output of petroleum showed little change. Value of construction contracts awarded in November showed a decline from the high level reached in October, according to F. W. Dodge figures for 37 Eastern States. Private and public projects both declined, following increases in October. The decline in contracts for private residential building was less than seasonal. ' 1334 1933 1936 1937 1938 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average -- 100. By months, January 1934 to November 1938. FACTORY EMPLOYMENT Employment Index of number employed, adjusted for seasonal varia tion, 1923-1925 average = 100. By months, January 1934 to November 1938. CONSTRUCTION CONTRACTS AWARDED IT’MPLOYMENT increased somewhat further and payrolls showed little change between the middle of October and the middle of November, although declines are usual at this time of year. In manufacturing the number employed continued to rise, reflecting principally a further sharp increase at automobile factories and sub stantial increases in the machinery, steel, and textile industries. Employment declined seasonally at establishments producing clothing and shoes; in most other industries employment increased somewhat. In lines other than manufacturing, employment showed some increase, when allowance is made for usual seasonal changes. Distribution ,\ OTHER V ALL 1929 1930 1931 1932 1933 1934 1935 193$ 1937 1938 Three-month moving averages of F. W. Dodge data for value of contracts awarded in 37 Eastern States, adjusted for seasonal variation. Latest figures based on data for October and November and estimate for December. MEMBER BANK RESERVES AND RELATED ITEMS T'kISTRIBUTION of commodities to consumers showed a considerable increase in November. Department store sales and mail order sales, which had been re tarded in October by unseasonably warm weather, rose sharply, and sales at variety stores also increased in November. Sales of automobiles to consumers expanded sharply following the introduction of new models and in November were larger than a year earlier. Freight-car loadings, which had increased considerably in previous months, showed a slightly less than seasonal decline in November. Commodity Prices TJRICES of some industrial materials, such as nonferrous metals, hides, and cotton goods, decreased somewhat from the middle of November to the third week of December. Sugar prices also declined, while grains advanced somewhat. Prices of most other agricultural and industrial commodities continued to show little change. Bank Credit j Vfsj 1934 Wednesday figures, January 3, 1934, to December 21,1938. Page 8 IN CONNECTION with pre-holiday trade, there was a sharp increase in money in -*■ circulation and as the result of this increase in the demand for currency, to gether with Treasury operations around December 15, there was a temporary decline in member bank reserves. Following declines during November, total loans and investments of reporting member banks in 101 leading cities increased during the first three weeks of De cember, largely reflecting operations of the Treasury. Loans to security dealers by New York banks increased sharply, reflecting temporary borrowing for the purpose of carrying Government securities exchangeable for new issues on December 15. Adjusted demand deposits rose to a new high level in the first half of December. i 4 DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111................................ Deputy Chairman W. J. Cummings................................ Chicago, 111. S. T. Crapo..................................... Detroit, Mich. E. R. Estberg............................ Waukesha, Wis. M. W. Babb.................................Milwaukee, Wis. F. D. Williams.......................... Iowa City, Iowa F. J. Lewis......................................... Chicago, 111. N. H. Noyes....................................................Indianapolis, Ind. MEMBER OF FEDERAL ADVISORY COUNCIL E. E. Brown................................................... ............... Chicago, III. OFFICERS G. J. Schaller..............................................................President H. P. Preston..............................................First Vice President J. H. Dillard......................................................................... VicePresident W. H. Snyder....................................Vice President and Cashier C. S. Young........................................................................... VicePresident C. B. Dunn ...........................................................General Counsel W. C. Bachman............ Assistant Vice President 0. J. NetterstrOM. .. .Assistant Vice President A. L. Olson.................... Assistant Vice President A. T. Sihler.................. Assistant Vice President J. C. Callahan......................................AssistantCashier N. B. Dawes............................................ AssistantCashier F. A. Lindsten ........................... Assistant Cashier L. G. Meyer............................................AssistantCashier A. M. Black. . .Manager, Planning Department J. L. Sweet.............................................................. Manager, Research and Statistics Department J. J. Endres............................. F. L. PURRINGTON.............................. .Assistant Cashier J. G. Roberts.......................................... AssistantCashier C. M. Saltnes.......................... Assistant Cashier .................................. Auditor INDUSTRIAL ADVISORY COMMITTEE Max Epstein, Chicago, 111............................................ Chairman W. Harnischfeger...................... Milwaukee, Wis. G. B. Moxley.............................. Indianapolis, Ind. R. R. Monroe...................................... Chicago, 111. G. W. Young......................................... Chicago, 111. DETROIT BRANCH DIRECTORS A. C. Marshall............................... Detroit, Mich. J. E. Davidson................................ Bay City, Mich. H. L. Pierson.................................... Detroit, Mich. J. M. Dodge......................................... Detroit, Mich. L. W. Watkins.......................... Manchester, Mich. W. S. McLucas................................... Detroit, Mich. R. H. Buss..............................................................Detroit, Mich. OFFICERS R. H. Buss......................................................Managing Director H. J. Chalfont........................................Cashier H. L. Diehl............................... Assistant Cashier SEVENTH FEDERAL IOWA RESERVE DISTRICT
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