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sap DECEMBI i 941 $ K I K ill *&*'£$* mf m mM A REVIEW BY. ERAL RESERVE BANK OF CHICAGO Review of Seventh District Business A more than seasonal expansion of department store sales, which started in November this year, carried the Federal Reserve Bank of Chicago index to 168 per cent of the 1935-39 average, an all-time November high, surpassing even the years 1929 and 1937. As Christmas came closer, the sales continued to rise. Buyers apparently fearing a depletion of stocks of certain goods started their shopping early, and by the end of the third week of December, sales in the District had reached another peak. Cumulative sales for the first three weeks of December were 10 per cent more than for the corresponding weeks of 1941. The largest gain was recorded in Indianapolis, Indiana, where sales were running 19 per cent ahead of a year ago. Milwaukee, Wisconsin, also showed substantial increases in dollar volume, and sales in that city were 18 per cent higher than for the corresponding period of 1941. Sales in Chicago were only 7 per cent greater than last year for the three-week period ending December 19. Production for the war program continued to maintain output at a high level, notwithstanding unbalanced production schedules, problems in the utiliza tion of manpower, raw material bottlenecks, and changeovers to new types of war products. The result has been a flattening in the curve of industrial produc tion and total manufacturing employment. Payrolls, however, moved up slightly. Production has been spotted by gains in some industries and recessions in others. Blast furnaces in the Chicago area operated at 101.6 per cent of rated capacity during November and at a slightly lower rate during the first half of December. Detroit mills maintained operations at about 105.5 per cent throughout the same period. Pig iron production in the Chicago area is estimated to have been 1,096,840 net tons, which is a 2.2 per cent increase over the year’s previous high in October. Cold weather and labor shortage slowed the movement of scrap metal, forcing some mills to draw upon accumulated inventories. The 1942 iron ore movement on the Great Lakes was the largest on record. A total of 92,077,000 tons was brought down from the upper lakes region. This amount was 577,000 tons in excess of the War Production goal for the year. Ore shipments ended during the second week of December, because of sub-zero tem peratures and storms in the upper lakes region. Bituminous coal production in the District continued to gain moderately on a daily average basis, and in November totaled 6 per cent more than in the same month a year ago. The gain for the year to date amounts to about 16 per cent. Coal receipts at the upper lake docks continued greatly below those of a year ago, and the excess built up during the earlier months this year in comparison with last year has now been eliminated. Reloadings of coal from these docks have been heavier than last year, and the gain to date amounts to about 10 per cent. Stocks have been reduced sharply and are now on a level with those held a year ago. In the country as a whole, bituminous coal stocks continue substan tially larger than last year. Stocks held by industries show an excess of 50 per cent, and those at retail yards 10 per cent. Production of petroleum within the District as well as refinery operations were at - a slightly lower rate in November than in October. Production con tinued at a rate of about 30 per cent below that of a year ago, and the cumulative volume for the year to date is still slightly larger than last year. Gasoline production wrns about 12 per cent less in November than in the same month a year ago. Stocks of gas oils and distillate fuels are higher now than a year ago. Stocks of residual fuel oil are considerably smaller than at this time last year. Construction activity showed a definite decline from October, and the com parison with a year ago is less favorable than previously. This existed in spite of the fact that residential building in defense areas was sharply accelerated, the awards of such building being the heaviest since last March. Public works and utilities also expanded. War-Time Trends In Pulp and Paper The pulp and paper industry in the Seventh Federal Reserve District enters 1943 with uncertain prospects after two years of continual adjustment to the shifting requirements of a nation moving toward total war. At present the greatest concern of the industry is current and probable future Government curtailment orders and price regulations. Some of the pulp and paper produc ers in the District, notably in Wisconsin, however, ex hibit restrained confidence with respect to the coming year because of potentially favorable supplies of pulpwood, manpower, and prime motive power, and substan tial demand for their products. The conditions under lying this limited confidence may, of course, change with little or no warning, as these manufacturers are well aware. The pulp and paper industry whose war-time essentiality has been questioned is now hard at work developing new paper products and derivatives to im prove war-time packaging and relieve the shortages of strategic metals and other materials. Scope and Significance of Pulp and Paper Pulp is the fibrous product usually made from wood which provides the raw material for paper making and related products. Paper outwardly appears to be an industry of comparatively uniform products, but actu ally has at least ten distinct product divisions: book, writing, board, tissue, wrapping, ground-wood special ties, newsprint, glassine-greaseproof, absorbent, and building. Many of these industry branches use different raw materials and are largely independent of the others; hence, generalizations about the industry frequently will not apply to particular branches. The number of dif ferent types of paper has been estimated to exceed 10,000. Production of pulp and paper mills in peace-time (1939) ranks as the fifth most important industry (prod uct valued at more than $250 million) in the states in cluded in whole or in part within the Seventh Federal Reserve District, and sixth in the entire United States, according to United States Census of Manufactures data for 1939. Among the District states, pulp and paper production is the second most important industry in Wisconsin and in Michigan, of less importance in Illinois and Indiana, and negligible in Iowa. More than one-fifth, 22.8 per cent of the nation’s total paper output, amounting to 21 million tons in 1941, is normally -manufactured within the Seventh District states. The proportion is higher in the case of book paper, 27 per cent; writing paper, 27 per cent; paper board, 26 per cent; and tissues, 25 per cent. In October 1942, the District states had 202, or 21 per cent, of the 969 pulp and paper mills in the United States. Wis consin (84 mills) and Michigan (68 mills) collectively account for about three-fourths of the mills in the five District states, and produce all of the pulp manufac tured in the same region. More than 37,000 workers having 163,000 additional dependents rely on the pulp and paper industry as a source of livelihood in the District states. Paper Demand and Production Paper demand and production in 1942 will not equal the records established in 1941, when throughout the District and the nation the industry experienced the largest increases in demand and production in its his tory. The outstanding gains in 1941 reflected expanded defense-war expenditures by civilians and Government, but in part, at least, were attributable to the building up of inventories as protection against the serious “paper shortage” openly predicted for 1942. Orders for unprecedented amounts of paper and paper products flooded the mills during the latter half of 1941, and carried production at record levels through the early months of 1942. However, by April 1942 inventory de mands were for the most part satisfied, and it became evident that the “paper shortage” was largely non existent. The general buying wave subsided and many of the paper mills in the District reduced their produc tion schedules during the spring and summer months of 1942, a fact which was to influence their subsequent allowable production under the WPB “freeze” order. Demand and production of paper and paper products reached the lowest level of 1942 in July, but have since recovered moderately because of increased needs for direct and indirect war purposes, seasonal factors, fur ther speculative purchases because of Government “freeze” orders, and gradual reductions of the large inventories accumulated during the previous year. Paper production in the Seventh District established a new record in October 1941 when output reached a level 40 per cent above the 1939 monthly average. Pro duction fell off sharply after April 1942 as in the nation, dropping to less than the 1939 level in July. New gains, however, have been made, and in October production was 26 per cent above the 1939 average. Some indication of the backlog of orders during the fall of 1941 and the spring of 1942 is revealed by the fact that the high and low points in the volume of orders occurred as much as two to three months before similar levels in production. District pulp production since early fall has been above the output of a year ago. Many of the domestic and foreign sources of pulp have been cut off, and with transportation shortages, it is necessary for many mills to rely more upon locally pro duced pulp from their own plants or others nearby. A good deal of pulp was added to inventories before the WPB restricted inventories in October 1942. Page 1 15, 1942. The only woodpulp now allowed to be shipped Beginning with November 1942, production of most from the Pacific Northwest to the East is specialty pulps paper and paperboard products in the United States used in making rayon and for ordnance purposes, thus was restricted by General Preference Order M-241 to cutting off the supply of pulp for paper-making which the monthly average production of individual mills (of formerly came to the mills in the Seventh District and more than one paper-making machine) during the period other sections of the country. To avoid a serious disloca April to September 1942, inclusive. During this period tion in the industry, the WPB has allocated Eastern, the industry as a whole operated at about 87 per cent Lake states, and Canadian pulps, when available, to of theoretical capacity, while paperboard was at a rate domestic consumers whose shipments from the West of 78 per cent. An amendment to M-241, announced by Coast have been curtailed. The new Controlled Materials WPB on January 8, 1943, and allowing an increase in Plan of the WPB, effective during the second quarter some essential papers, changes the base period to the six of 1943, will unquestionably affect the ability of the months between October 1, 1941 and March 31, 1943 pulp and paper industry to get certain strategic metal when output averaged 104 per cent of capacity. Produc products needed in production. tion is now limited to the following percentages of base Essentiality of Paper and Paperboard period output: newsprint, 90; groundwood, 80; writing, 90; wrapping, 85; tissue, 100; absorbent, 80; container Since the shift of emphasis throughout the nation to board, 100; set-up box board, 80; cardboard. 80; and the production of goods which directly further the war effort, the question has been raised as to the essentiality special industrial board, 90. The purpose of the ‘ ‘ paper freeze order, ” as it is gen of paper in the prosecution of the war. This is obviously erally known, is to lay the basis for a balanced program a difficult problem to decide because of the wide variety of reduced production and possible concentration of the of types of paper and paper products and the extent of industry in Canada and the United States. According curtailment or concentration which may be effected with to the War Production Board, “the ultimate object is a minimum of disruption among companies, mills, and to reduce the production of paper products down to an employees, and communities. Paper in many forms has become a necessity. In 1941, essential level, and thereby to release for war purposes, labor, power, transportation and materials.’’ M-241 the consumption of paper in the nation was approxi also provides that inventories of distributors and con mately 300 pounds per capita. For many war purposes, sumers shall not exceed a ninety-day supply; no mills paper produced in the Seventh District is indispensable may resume production which have not produced paper and has substituted satisfactorily for many critical or paperboard after August 1, 1942; and there is an metals. Paperboard and wrapping paper are required option for companies operating more than one mill to for shipping food, clothing, medicinal supplies, and a submit to the WPB voluntary proposals for combining myriad of other materials needed by the armed forces. Paper is needed for blueprints for planes, ships, tanks, production quotas. Many additional phases of the industry have been and guns. Plastics made from paper are coming into covered in other preference, limitation, and price orders, use in war production. Records and record-keeping in and amendments. Limitation Order L-120 and its revi peace or war would be virtually impossible without sions on simplification and standardization of paper re paper. Many domestic uses of paper, e.g., for sanitary duce the number of grades, colors, weights, and sizes; purposes and containers, are vital necessities. On the M-251 states that the WPB will control the nation’s other hand, many of the civilian paper frills in packag pulpwood supplies whenever necessary; OPA Order ing, merchandising, advertising, and publishing prob No. 257 places ceiling prices on pulpwood in Michigan. ably can be restricted or eliminated as a necessary con Wisconsin, and Minnesota; and ODT Order No. 21 re tribution to winning the war. Depending On the types quires certificates of necessity for trucks hauling pulp of paper, some Seventh District mills are producing wood, pulp, paper, and other materials since November from 20 to 85 per cent of their goods for direct war use. Government Curtailment Orders Number of Towns Having Pulp and Paper Mills, Number of Mills, Total Employes and Additional Dependents, by States for Seventh Federal Reserve District, 1942, with Percentages of the United States Totals. Pulp and Paper Mills State Wisconsin........................................... Pulp and Paper Mills Number Per Cent of U.S. Number Per Cent of U.S. 19 18 3 29 33 3.7 3.5 .6 5.7 6.5 27 20 3 68 84 2.8 2.0 .3 7.0 8.7 Total Employed by Pulp and Paper Mills Number 4,702 2,858 426 13,263 15,973 Per Cent of U.S. 2.5 1.5 7.1 8.6 Additional Persons Dependent on Mills Number 24,165 16,349 1,875 56,492 63,892 Per Cent of U.S. 2.6 1.8 .2 6.2 7.0 Total District States...................... 102 20.0 202 20.8 37,222 19.9 162,773 17.8 ' Total United States........................ 511 100.0 969 100.0 185,719 100.0 913,038 100.0 Source: American Paper and Pulp Association. Page 2 Several machine shops of the paper mills are making metal products for prime war contractors. Basic Factors Involved in Production The four basic factors needed in the production of paper are: pulpwood, manpower, steam or electrical energy, and mill supplies and equipment. A shortage of any one of these will quickly reduce output, as will transportation difficulties in bringing men and materials to producing centers. The pulpwood situation for some mills is now severe because of the scarcity of timber men to cut the trees in both American and Canadian forests. This affects all mills whether they manufacture their own pulp or buy it. However, a number of the mills in the Seventh District have sought to forestall an immediate pulp shortage by building up large inven tories of pulpwood. Restrictions, however, have been placed on pulp inventories. In some instances, pulp wood supplies on hand are estimated to be sufficient for more than a year of production at current rates. Mill operators are deeply concerned about these abnormally large inventories, since there is danger that they may not be able to liquidate them because of changing mar ket conditions or new curtailment orders. For most purposes other than paperboard making, ordinary “waste paper” is not very suitable for new paper making, especially when paper of a high quality is required. Many of the paper mills in the Seventh District, are located in regions comparatively unaffected by largescale industrial war plants, and hence thus far have experienced little or no difficulty except for Selective Service in maintaining an adequate supply of workers. There has been a slight drain of manpower from paper mills to shipbuilding and metal fabricating plants in Wisconsin, a more serious shift into machine tool, tank, and ordnance plants in Michigan, and some movement into ordnance and other war plants in Illinois and In diana. As war production centers expand their labor requirements in future months, there is the strong possi bility that paper mills will lose skilled workers, the number depending, of course, upon the type and scope of new job and industry “freezing” orders and inter pretations. The requirements for steam and electrical energy in the pulp and paper industry are high. Mills in Wis consin and Michigan are commonly located along rivers and in many instances generate their own power. Other mills rely upon steam generators or purchase electricity from utility companies. When other war production in dustries compete for this energy, the paper mills face shortages that may become increasingly serious. The production of pulp and paper requires the use of elaborate and costly machinery and many chemicals. While few serious shutdowns have occurred among the mills because of inability to obtain metal replacement parts, most maintenance engineers have had to develop numerous substitute parts from time to time to keep the machinery in constant operation on the five- t© seven-day -week and 24-hour schedules maintained by many mills. Chemicals for making, bleaching, and treat ing pulp and paper have become increasingly scarce and have already necessitated the lowering of quality of some papers. New- Paper Products and By-Products The substitution of paper and paper products for critical war materials, especially metals, has attracted considerable interest and attention in recent months. Intensive research at the mills and in conjunction with highly trained specialists of the industry’s own Institute of Paper Chemistry at Appleton, Wisconsin has led to the development of stronger and waterproof papers, plastics, and a host of new by-products from wasteliquors of the paper-making process. Paper is now used in packaging many foodstuffs and liquids which formerly required metal containers. Synthetic resins are impreg nated in papers to give special qualities needed in trans porting goods overseas under a wide variety of weather and landing conditions. Some of the new by-products have reached commercial production, but many are still in the experimental stage. The possibilities for new and substitute products appear to be virtually unlimited and promise to affect considerably the industry’s posi tion during the war and in the post-war period. Distributive Channels The growing importance of direct mill sales to the Government during the defense-war period already has had some repercussions on wholesale paper dealers by limiting the volume of paper available for them. They obviously are also affected by the amounts which they can sell, particularly to printers and converters of paper products whose own customers’ demands have changed because of war conditions. As the materials needed to maintain paper quality standards become more difficult to obtain, many paper manufacturers are concerned about losing “good-will” formerly attached to their branded products. If quality standards are lowered sub stantially, some favor suspending branded papers and offering general “war-time grades.” Page 3 Machinery Shortage Another Challenge to Farmers The crisis in agriculture which threatens to develop within the coming year will quite probably be the great est in the nation’s history. The tremendous needs for food and fiber brought about by the huge requirements of our Allies, our military forces, and a greatly ex panded civilian domestic demand confront American agriculture with a production problem that calls for 1943 goals larger even than the 1942 record output by 2 or 3 per cent. That it will be a critical situation arises not from any deficiency of land resources or skill on the part of the farmer, but rather from the confining, ever increas ing limitations thrust upon him by the war—shortages of farm labor, of machinery and equipment, of fertiliz ers and chemicals, and restriction of transportation facilities. If the situation were critical with respect to only one of the major elements of labor, machinery, fertilizer, etc., the farming operations of this country have sufficient elasticity to permit adjustments to be made that would largely meet any one critical shortage. But when all the major factors of control that are needed by the producer for expansion are short at the same time, nearly all elements of the agricultural econ omy are put under strain by such a program as faces the farmers for 1943. The objectives of governmental agricultural policy for the coming year are in the form of production goals calling for expansion of output in livestock (especially hogs and lard), milk and dairy products, poultry products, and oil-bearing crops such as soybeans and flax. With the loss of more than 1,600,000 men from the farms, about two-thirds to war industries and one-third to the armed services, addi tional burden is put on the available farm machinery and equipment. The extreme shortage of farm ma chinery and equipment for the coming year has led some observers to remark that farmers got through such years as 1932 with no more machinery than will be available for purchase in 1943, but the answer that has been made to this view is that in 1932 there was a super abundance of farm help at very low wages. The importance of machinery and equipment to the five states of the Seventh District is especially marked, since the use of machinery here is much greater than in the balance of the country. According to the 1940 census of agriculture, these five states, which had 16 per cent of the number of farms in the United States and 12 per cent of the total farm acreage, had 27 per cent of the total reported value of farm machinery and implements, including automobiles. The concentration of production in the farm ma chinery industry in the states of the Seventh District is even more marked. According to data from the 1940 Census of Manufactures, about four-fifths of the total Page 4 United States value of tractors produced were turned out in plants in the five states of the District. In agri cultural machinery other than tractors, over threefourths of the value of products was produced in the Seventh District states. Many of the firms in the Dis trict are relatively large and have already gone a long way in conversion to war orders. Those who thought that the limitations imposed upon production of agricultural implements and machinery for the November 1, 1941-October 31, 1942 period were drastic have been given a new jolt in the provisions for the current year, 1942-1943. Under the order of WPB applying to the past year, strategic materials were al located to permit production of 83 per cent of the 1940 output of new machines, and about 150 per cent of the 1940 tonnage of repair parts. The WPB order applying to the current year limits the production of new ma chinery to about 20 per cent of the 1940 production by total tonnage, and the production of repair parts to 130 per cent of the value of repair part sales for the aver age of the calendar years 1940 and 1941. The farm equipment industry is the first to be “con centrated” under the WPB general plan to concentrate industrial production for war purposes. According to the plan as worked out for this industry, the manufac turers are divided into three classes, designated A, B, and C. The A producers are those whose total net sales were more than $10,000,000 for the calendar year 1941. Class B producers are those with net sales in excess of $750,000 but not over $10,000,000. Class C producers are those whose net sales were less than $750,000 in 1941. The quotas of production, as worked out and re leased by WPB, are specific as to types and classes of machines and equipment, with a separate percentage quota for each class of producer for each item, or type. Although there are a few exceptions, the general pat tern of the order is to allow a larger percentage quota to Class B producers than to Class A, and a larger quota to Class C than to Classes A or B. On many items the quota for Class A and Class B producers is zero per cent, with the output of these items concen trated in the plants of Class C producers. On other items Class A quota is zero per cent while Class B pro ducers are allowed a small quota which is, in turn, smaller than the Class C quota. The base against which the percentage is figured is the producer’s entire pro duction by weight of the particular item in 1940 or 1941, whichever is higher. The general objective of the concentration plan is to get the larger producers in given industries converted almost entirely to war work, leaving the production of civilian goods in the hands of the smaller producers. For farm machinery and equipment special effort was made to get the production into the smaller plants in areas where there was no labor shortage. For repair parts, the quotas are not differentiated as between the three classes of producers. Therefore, the manufacture of the bulk of repair parts will remain in the hands of the producers who have made them in the past. Quotas for export are also established on approximately the same basis as prevailed in the expiring order except that under the new order either an export license from the Board of Economic Warfare or an order approved under Lend-Lease authority is required. In addition to repair parts, such items as tractors, tractor-mounted implements, combines, harness, hardware, and hand tools are exempted from the concentration schedules. The quotas established in the schedules of the order make up in total only 75 per cent of the materials al located to the industry for next year’s production. The remaining 25 per cent is to be allocated later by WPB on the basis of the efficient use of existing inventories in the industry, and of labor available, and to take care of inequities that may develop between producers of approximately the same size. Any producer not expect ing to use his quota for a specific item is required to notify WPB, which will in turn reassign the quota to producers who can use it. Two serious objections have been raised to the order. One is the general objection by observers that the cut in output is entirely too drastic and will not permit farm ers enough machinery and equipment to meet the goals expected of them. For example, in the schedules for “other dairy equipment,” which includes milk pails, milk strainers, sterilizing tanks, washing tanks, and water heaters, the quotas for A and B producers are zero per cent, while the quota for C producers in Class C is 36 per cent. It is said that the producers in this class are not manufacturers of this equipment. The effect of the quota, therefore, is to cut off supplies of this needed equipment unless the quotas are readjusted so as to allocate them to producers who are able to supplement their war production with output of these items. A second and perhaps more serious objection to the order is raised by members of the industry who point out that the bulk of the output is concentrated in the plants of the smaller producers who do not have the distribution and servicing facilities on a scale com mensurate with the job. The area over which the prod ucts will have to be distributed is many times that pro vided by the facilities of the Class C producers. Rationing of farm machinery and equipment has been assigned to the United States Department of Agricul ture, which has announced that the items will for the present be rationed by the County War Boards. All stocks of new farm machinery and equipment were frozen as of November 1, pending rationing. The freeze order was, partly relaxed on November 27 when retail stocks were released, leaving stocks of manufacturers, distributors, and jobbers frozen on most items. Manu facturers’ stocks of hay balers, water systems, pumps, and windmills were partially released with the require ment that manufacturers must hold back 40 per cent of their quota on these items for later release. Retail prices continue under the order issued last May. Ceilings on wholesalers’ and manufacturers’ prices were issued effective as of November 15, setting the level at that prevailing March 31. Meanwhile re ports from farm sales of machinery throughout the District bring to light numerous instances of major items having been sold after two or three years of use at prices considerably above original purchase price, with some instances of machines bringing as much as two or three times the purchase price in spite of hav ing been used for some time. What devices will be found by the ingenious farmer to meet the shortage of equipment and machinery re main to be seen. Some observers feel that there is a substantial amount of “stretch” in the existing ma chinery on farms, that much of it is not now used up to its capacity, and that part of the problem can be met by trading machinery work, by custom work, by loaning of machinery, and by rental arrangements. Probably some relief will be had from this source but some farmers have a natural reluctance to risk the care of their machinery under these devices. The Secretary of Agriculture has asked for a larger quota of output from WPB, and the latter is said to have indicated that some further additions may be made to quotas. Whatever the facilities ultimately provided, the farmers of the nation may be counted upon to show their patriot ism by doing their best with what they have. Page 5 Seventh District Civilian Population Estimates The war effort and the defense program have brought tremendous shifts in population, from civilian life to the armed services, from non-war to war production centers, from agriculture to industry, from the home and the office to the factory, and from private em ployment to Government employment. The extent of some of these population movements can be seen in estimates recently released by the United States Bureau of the Census. No data on numbers of persons in the armed forces are given; figures refer to civilians throughout. The five states included in whole or in part in the Seventh District, which had 22,226,000 civilians in 1940, gained 356,000 persons or 1.6 per cent during the period between the Census enumeration in April 1940 and the sugar ration registration in May 1942. Twenty-three metropolitan areas in the Seventh District increased their populations by 547,000 persons or 5 per cent dur ing the period, revealing the overwhelming dominance of movement into urban communities. The total civilian population of continental United States remained prac tically unchanged, the excess of births over deaths, and the net immigration of. civilians being approximately cancelled by inductions into and enlistments in the armed forces. Michigan which currently has the third largest vol ume of war contracts in the United States led the nation in population increase, 311,000 persons or nearly 6 per cent. Also reflecting dominant industrial war production, Illinois gained 133,000 persons and Indiana, 66,000 persons. On the other hand, Iowa and Wiscon sin, having substantially smaller volumes of war con tracts, lost 81,000 and 72,000 persons, respectively. These losses were mainly from agriculture and civilian work to war industries and related services. The population shifts have been uneven not only among Seventh District states but also within each of the states. Virtually without exception, the movements have been into areas dominated by war industries and other war activities. The Detroit metropolitan area comprising Macomb, Oakland, and Wayne Counties enlarged its civilian population by 336,000 persons or 14.2 per cent during 1940-42, an amount greater than any other metropoli tan area in the nation. The in-migration to Detroit obviously accounts for most of Michigan’s gains, since Kalamazoo was the only other metropolitan area in the state which showed an increase in population during the period. The Flint, Lansing, and Saginaw-Bay City metropolitan areas had slightly smaller civilian popula tions in May 1942 than in April 1940. The Chicago metropolitan area, including Cook, DuPage, and Lake Counties, in Illinois, and Lake County in Indiana, a nationally important steel and heavy industry production center, gained 149,000 per sons or 3.3 per cent. Within Illinois, the Decatur and Rockford metropolitan areas showed moderate gains in population; while the Peoria and Springfield metropoli tan areas reported small losses. Three important Indiana centers of war industries, Indianapolis, Fort Wayne, and South Bend, each in creased their populations by more than 5,000 persons by 1942 as compared with two years earlier. The pop ulation of the Terre Haute metropolitan area remained unchanged. Iowa’s over-all population losses between April 1940 and May 1942 are principally the result of out-migra tion from non-metropolitan areas. While the state as a whole lost 81,000 persons, the Cedar Rapids, Davenport, Des Moines, and Waterloo metropolitan areas each actu ally gained from 1,000 to 13,000 persons, indicating a strong internal shift to war production centers within Iowa as well as migration from the state. A similar pattern of population relocation has taken place in Wis consin where the state also had an appreciable loss in population. However, the Madison metropolitan area reported only a slight gain, and the Milwaukee and Racine-Kenosha areas only very slight losses during the period, emphasizing the greater losses of the non-metro politan centers of the state. PRELIMINARY ESTIMATES OP CIVILIAN POPULATION Seventh District States and Continental United States April 1, 1940 and May 1, 1942 State Michigan.......................... Wisconsin......................... Estimated Civilian Population April 1, 1940 Total Population April 1, 1940 Estimated Civilian Population May 1, 1942 Estimated Increase in Civilian Population April 1, 1940—May 1, 1942 Number Per Cent of United States Number Per Cent of United States Number Per Cent of United States Number 7,897,241 3,427,796 2,538,268 5,256,106 3,137,587 6.0 2.6 1.9 4.0 2.4 7,875,107 3,427,792 2,536,432 5,250,591 3,136,884 6.0 2.6 1.9 4.0 2.4 8,008,067 3,493,515 2,455,132 5,562,183 3,064,356 6.1 2.7 1.9 4.2 2.3 132,960 65,723 -81,300 311,592 -72,528 1.7 1.9 -3.2 5.9 -2.3 1.6 Five States Total. ... 22,256,998 16.9 22,226,806 16.9 22,583,253 17.2 356,447 United States Total.. 131,669,275 100.0 131,323,136 100.0 131,315,393 100.0 -7,743 Source: Bureau of the Census, United States Department of Commerce. Page 6 Per Cent PRELIMINARY ESTIMATES OF CIVILIAN POPULATION Seventh District Metropolitan Areas, April 1, 1940 and May 1, 1942 Estimated Civilian Population April 1, 1940 Total Population April 1, 1940 Metropolitan Areas and Counties Estimated Civilian Population May 1, 1942 Estimated Increase Civilian Population April 1, 1940 — May 1, 1942 Number Cedar Rapids............... Linn County, Iowa Chicago.................. Cook, DuPage and Lake Counties, Illinois; Lake County, Indiana Davenport—Rock Island—Moline *9 142 90,000 1,000 X 581 1 1 1 4,725,000 149,000 211,000 13,000 6.6 88,000 3,000 3.5 197,000 2,000 1.0 2,710,000 336,000 14.2 227,000 -1,000 -0.4 155,000 165,000 10,000 6.5 246,000 246,000 198,071 Scott County, Iowa; Rock Island County, Illinois 198,000 Decatur................. Macon County, Illinois Des Moines................ 1 Q.d ftQ* Polk County, Iowa Detroit...................... Macomb, Oakland and Wayne Counties, Michigan Flint................... 227,944 Genesee County, Michigan Fort Wayne.................. 155,084 Allen County, Indiana Per Cent Grand Rapids .... Kent County, Michigan Indianapolis .... 1.1 3.3 492,000 34,000 105,000 5,000 5.0 Iol,0U0 129,000 -2,000 — 1.5 131,000 135,000 4,000 3.1 766,000 -1,000 -0.1 202,000 -10,000 -4.7 155,000 -2,000 -1.3 131,000 10,000 8.3 204,000 -1,000 —0.5 97,000 -7,000 -6.7 167,000 5,000 3.1 1 lo,UU0 116,000 -2,000 -1.7 lUUjUOO 100,000 80.000 81,000 1,000 1.3 11,003,651 10,992,000 11,539,000 547,000 5.0 66,569,734 66,375,000 68,228,000 1,853.000 2.8 Marion County, Indiana • 7.4 Kalamazoo........................... Kalamazoo County, Michigan Lansing............................. 130,616 Ingham County, Michigan Madison............................ Dane County, Wisconsin 1 Milwaukee..................... Milwaukee County, Wisconsin Peoria........................................ 211,736 Peoria and Tazewell Counties, Illinois Racine—Kenosha . 212,000 1 ^7 ZZO Kenosha and Racine Counties, Wisconsin Rockford......................... Winnebago County, Illinois Saginaw—Bay City . . . Bay and Saginaw Counties, Michigan Sioux City......................... Woodbury County, Iowa South Bend................... St. Joseph County, Indiana Springfield...................... Sangamon County, Illinois Terre Haute.................. Vigo County, Indiana Waterloo................................ Black Hawk County, Iowa Total 23 Seventh District Areas Total 137 United States Areas ........................... * Estimate no chancre. Source: Bureau of the Census, United States Department of Commerce. Page 7 j BANK DEBITS WHOLESALE TRADE Debits to deposit accounts, except interbank accounts Seventh Federal Reserve District Per Cent Change Nov. 1941 to Nov. 1942 (In thousands of dollars) Net Sales Stocks Accounts Outstand ing Collec tions Drugs and Drug Sundries......... Electrical Goods.......................... Groceries............................ .... ... Hardware...................................... Jewelry.......................................... Meats and Meat Products.. .. Paper and Its Products............ Tobacco and Its Products.... Miscellaneous............................... +14.1 -49.0 +23.3 -23.3 -33.8 +49.2 -17.8 + 9.6 + 3.7 - 2.4 -57.5 -13.1 -35.6 + 2.8 - 7.2 + 8.4 -37.5 -15.4 - 5.2 -38.9 + 5.5 -30.4 -49.6 +29.8 -26.2 + 18.1 -21.9 +20.3 -28.3 +21.9 - 9.1 +23.3 +31.3 -28.1 +25.2 - 0.6 Total.............................................. + 2.9 -24.0 -18.3 + 6.1 Commodity . variation unless otherwise indicated. 1935-39 average =100 Oct. 1942 Sept. 1942 Nov. 1941 Oct. 1941 Sept. 1941 Manufacturing Industries: Total: 162 250 160 243 156 229 157 192 157 192 156 186 118 160 119 157 123 153 119 139 120 140 125 142 147 222 146 216 145 205 144 176 144 176 146 172 Furniture Manufacturing: 139 176 137 177 202 151 169 203 186 233 203 206 133 134 121 140 144 137 Paper Manufacturing:* Petroleum Refining—(Indiana, 170 140 172 145 167 161 175 147 168 165 169 166 Bituminous Coal Production :* 149 144 144 141 126 127 300 150 258 266 190 422 209 167 263 200 237 155 147 193 214 178 181 168 153 140 170 192 167 157 154 147 129 203 179 168 156 155 141 135 161 162 151 156 147 133 : 122 118 153 137 123 124 118 134 195 161 154 143 152 138 Building Contracts Awarded : Department Store Net Sales:* Seventh District—Unadjusted.. Adjusted----- —15 - 3 — 6 +31 24,387 4,727,568 15,998 62,239 11,245 33,850 13,829 87,617 49,185 40,482 19,337 3,840,908 12,027 33,259 9,986 —17 -12 -20 -26 — 5 -18 -10 - 7 - 9 - 7 43,770 24,279 12,476 275,556 16,385 19,328 Bloomington. .. Champaign- 20.165 4,183,857 12,787 46,129 10,643 12,493 81,289 44,998 37,560 Moline................ Rockford........... Springfield......... Indianapolis.... 56,670 28,679 13,026 324,463 Terre Haute.... 57^720 37,714 65,797 30,039 13,567 368,334 16,508 22,425 59,984 43,478 13,394 77,901 42,155 29,622 37,069 9,361 25,277 114,163 13,170 13,578 4,893 59^097 25,714 12,990 42,051 11,034 30,621 128,427 14,566 16,855 5,439 20,097 67,450 29,530 52,940 31,016 -14 — 5 - 4 -12 — 12 - 9 - 4 -13 ' + 4 + 9 + o +39 + 7 - 7 + 4 + 7 +27 +29 +18 + 4 +18 + 9 +22 Iowa: Cedar Rapids . . Durable Goods: 14,922 14,249 Nov.1941 Fort Wayne.... MONTHLY BUSINESS INDEXES Nov. 1942 Nov. 1941 Oct. 1942 * 13,991 18,736 Indiana: Source: Bureau of the Census. United States Department of Commerce Data refer to Seventh District Oct. 1942 Nov. 1942 Illinois: Per Cent Change November 1942 from Davenport......... Des Moines.... Dubuque........... Mason City.... Muscatine......... Waterloo............ 33,192 7,381 26,318 107,964 12,798 12,874 4,577 51,394 24,705 -10 -12 -15 -17 -11 -10 -19 -10 -10 -12 -13 Michigan: Lansing.............. 6,063 22,012 23,282 1,844,597 37,363 71,871 25,267 31,951 44,912 6,857 23,342 19.670 1,929,745 38,652 86,127 28.554 33,423 51,678 33,129 5,544 18,034 15,438 1,390,274 34,207 72,668 21,012 32,019 32,473 Saginaw............. Adrian................ Bay City............ Flint.................... Grand Rapids. . Jackson.............. 32']323 33J53 29,622 Green Bay......... 20,231 19,531 Manitowoc........ Milwaukee......... Oshkosh............. 11,323 402,073 11,084 30 939 23,983 7,911,577 8,478,787 22,718 51,343 12,796 442,678 13,260 31,553 27,803 8,766,491 9,402,422 +12 +27 - 4 + 6 + 3 + 5 + 7 +15 + 4 -12 - 6 +18 - 4 - 3 -17 -12 - 4 -13 -12 - 7 - 4 + 9 +22 +51 +33 + 9 - 1 +20 -11 — 4 -12 - 9 -16 - 2 -14 -10 -10 + 4 - 8 + 12 +38 + 9 Wisconsin: Sheboygan ... . Total 41 Centers Total 50 Centers United States: 274Centers. 9,291 343,863 10,816 27,204 6,890,996 .. 50,673,000 55,056,000 45,076,000 +22 +17 + ^ -12 +15 tNow reporting centers for which figures were not collected before May 1942. •Decrease of less than one per cent. •Daily average basis. DEPARTMENT AND APPAREL STORE TRADE Seventh Federal Reserve District Per Cent Change November 1942 from November 1941 Total Net Sales October 1942 November 1941 Per Cent Change January through November 1942 from January through November 1941 + 5.2 + 1.8 +13.5 +30.2 +13.2 +24.5 +21.0 +32.3 + 8.2 +28.0 +14.8 +11.2 + 5.4 + 2.9 +21.5 +17.4 + 8.1 + 7.0 +18.4 - 1.0 + 4.7 + 8.7 +15.1 + 6.8 - 7.2 Milwaukee......... Other Cities---- - 6.2 + 5.7 - 2.9 - 1.8 + 7.4 - 2.2 - 0.7 - 1.5 -11.8 - 5.0 - 6.4 -10.0 District total. .. - 4.8 +12.6 Apparel stores. . - 9.0 +28.9 Per Cent Change November 1942 from Locality Fort Wayne... . Indianapolis---Des Moines. . .. Sioux City......... Grand Rapids.. Page 8 Open Book Sales Instal ment Sales Cash and C.O.D. Sales Stocks on Hand (End of Month) Orders Outstanding Per Cent Change November 1942 from Per Cent Change November 1942 from October 1942 November 1941 October 1942 November 1941 -19.7 +23.1 - 2.5 +13.3 + 6.0 +41.6 -11.5 + 9.5 - 8.1 +53.6 +61.9 + 1-4 - 4.7 + 1.8 + 8.4 +20.1 +58.0 + 0.5 - 6.4 +44.8 -10.1 +12.9 - 0.6 +29.4 + 0.7 - 5.7 -13.1 - 4.2 +41.2 +39.2 - 1.1 - 3.6 +26.6 + 3.3 + 6.5 - 4.9 +54.3 +26.9 + 10.3 - 3.3 -12.9 +34.9 - 4.0 +12.9 + 2.8 +38.4 +14.9 - 0.2 +56.8 - 1.4 +23.3 +21.0 +125.4 INDUSTRIAL National Summary of Business Conditions PRODUCTION TOTAL INDUSTRIAL PRODUCTION (By the Board of Governors of the Federal Reserve System) MANUFACTURES MINERALS 1938 1940 1942 1936 Federal Reserve monthly index of physical volume of pro“<rt“n’ adjusted for seasonal variation, 1935-39 average — 100. Subgroups shown are expressed in terms of points in the total index. Latest figures shown are for November 1942. DEPARTMENT STORE SALES AND STOCKS Federal Reserve monthly indexes of value of sales and stocks adjusted for seasonal variation, 1923-25 average = 100. Latest figures shown are for November 1942. COST OF LIVING ITEMS CLOT HI RENT ido bz FOOD Bureau of Labor Statistics’ indexes, 1935-39 average=100. Fifteenth of month figures. Last month in each calendar quarter through September 1940. monthly thereafter. Latest figures shown are for November 1942. MEMBER BANK RESERVES AND RELATED ITEMS 2 RESERVE BANK CRE0IT 1940 1941 1942 1940 1941 1942 Wednesday figures. Latest figures shown are for December 9. 1942. Aggregate industrial production in November was maintained close to the October level, reflectng a continued growth of output in war industries and a seasonal decline in production of civilian goods. Distribution of commodities to consumers rose further in November and the first half of December, reducing somewhat the large volume of stocks on hand. Retail food prices continued to advance. Production—Maintenance of industrial production in November when the sea sonal tendency is downward was reflected in a rise of the Board’s seasonally adjusted index from 189 to 191 per cent of the 1935-1939 average. This rise was largely accounted for by a further advance in output of durable manufactures. Nondurable manufactures declined seasonally, while output of minerals showed less than the usual seasonal decrease. In all groups of products the proportion of output for war purposes was considerably larger than a year ago. I he increase reported for durable manufactures from October to November was in finished munitions and industrial equipment for new plants which will be completed in large number over the next few months. Steel production, at 98 per cent of capacity in November and the first three weeks of December, was down slightly from the October peak, but the reduction appeared temporary as the scrap supply situation had been relieved and as further progress was being made on construction of additional iron and steel capacity. Supplies of iron ore on hand are regarded as sufficient for operations at capacity until movement of ore down the lakes is resumed in the spring. Shipments from Upper Lake ports this year totaled 92 million tons, and were 15 per cent above the record established m 1941. , At cotton textile mills activity was maintained at a high level in November and at shoe factories production declined less than is usual at this season. Output of manufactured foodstuffs showed a seasonal decline. Construction contract awards in November were 10 per cent below the level of the three preceding months, according to data of the F. W. Dodge Corporation, but were still about 40 per cent higher than in November of last year. As in other recent months, publicly-financed work accounted for over 90 per cent of all awards. Distribution Distribution of commodities to consumers increased further in November and December with active Christmas buying. At department stores, variety stores, and mail-order houses serving rural areas, sales in November ex panded more than seasonally. In the first half of December department store sales continued to rise sharply and were considerably larger than a year ago. Freight-car loadings in November declined about 7 per cent from their peak levels in September and October, but on a seasonally adjusted basis rose slightly over the October level. Coal loadings rose somewhat although a decline is usual in November. Shipments of other commodities declined seasonally. Commodify Prices—Grain prices advanced from the middle of November to the middle of December, while most other wholesale commodity prices showed little change Retail food prices increased further by 1 per cent in the five weeks ending November 17 to a level 16 per cent higher than in November 1941. Prices of such fresh foods as are uncontrolled—fruits, vegetables, and fish—showed the largest advances from October to November, but price increases in controlled items contributed about two-fifths of the total rise. Bank Credit—During the period of large-scale Treasury financing in December, total excess reserves of member banks were generally above 2.5 billion dollars, bubstantml purchases of Government securities for the Federal Reserve System ollset the effect of drams on reserves by the continued heavy currency outflow and further increases in required reserves resulting from a rapid growth in bank deposits. Reserve Bank holdings of Government securities showed an increase of 850 million dollars m the four weeks and reached a total of 5.5 billion on Decernber 16. At reporting member banks in 101 leading cities holdings of United States Government securities increased by 800 million dollars in the four weeks ending December 9 Treasury bills accounted for practically the entire increase, with almost two-thirds of the amount going to New York City hanks. In the week ending December 16 bond holdings rose sharply as banks received their allot ments of the new 1% per cent bonds subscribed on November 30-December 2allotments of this issue to all banks totaled 2 billion dollars, representing 85 per cent of subscriptions. & Total loans showed little change over the four weeks ending December 9 Commercial loans declined by 200 million dollars, with about half the decline at New York City banks, while loans to brokers and dealers increased over the period, reflecting largely advances made to security dealers in New York in connection with the Victory Fund drive. Payments by bank depositors for new Government security issues resulted in tnsTffv01 a^«sted demand deposits and a rise of U. S. Government deposits to 5.8 billion dollars in mid-December, the largest total on record United States Government Security Prices—Prices of United States Govern ment securities have been steady in the past three weeks following an adjustment in the latter part of November when the Treasury announced the drive to sell J b. [lion dollars of securities in December. Long-term taxable bonds are selling on a 2.36 per cent yield basis on the average and long partiallv tax-exempt bonds on a 2.09 per cent basis. SEVENTH FEDERAL IOWA ILL IND RESERVE DISTRICT
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