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S’ 5INE55 Conditions & SEVENTH FEDERAL ‘ Volume 20, No. 12 RESERVE IOWA DISTRICT MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO December 29, 1937 DISTRICT SUMMARY EVENTH district business has continued in recent than either a month or a year previous. The distribution of weeks to show recession, both with respect to the manu butter, though fractionally smaller than in October, ex facture and sale of goods. For the most part the level of ceeded the year-ago volume, while that of meat products industrial activity is noticeably under that prevailing in the and of cheese showed declines in these comparisons. The closing months of 1936, and retail trade has fallen below the movement of corn in November was the heaviest in several year-ago volume. There are indications, however, that years, and the oats movement remained well above average. inventories in several phases have been reduced to a point Although receipts of wheat at interior primary markets fell where replacements may be necessary before many months. off from October, reshipments of the grain totaled larger Steel mills of the Chicago district were operating at a than in over six years. In line with seasonal trend, in most instances, reporting low rate in the middle of December, with little new busi ness in immediate prospect. Output during November of groups of wholesale and retail trade in the district recorded steel and malleable castings, stoves and furnaces, furniture, recessions in business during November from a month paper, and shoes fell below that for October and was earlier. Wholesale trade activity was above that of the cor smaller than a year ago. Building construction declined responding 1936 period, but retail trade failed to equal the from a month earlier and from last November, as did the year-ago volume. Evidence of a reduction of accumulated movement of building materials. Because of lagging de inventories was noted in both wholesale and retail phases. mand, manufacturers of automobiles have curtailed pro Reporting member banks in the Seventh district had a duction schedules to a level under that of last year. The slightly higher volume of total loans and investments on volume of employment and payrolls in the district was re December 15 than four weeks earlier, a decline in loans duced sharply between mid-October and November 15. being more than offset by an increase in investments. New Production of packing-house commodities continued to financing through bankers’ acceptances gained further in expand in November but declined from the month in 1936, November, while dealer sales of commercial paper con and the manufacture of butter and of cheese totaled lower tinued to decline. S Credit and Finance > • > Reserve balances of Seventh district member banks in creased over 21 million dollars during the four-week period ended December 15. Instrumental in this rise was a gain of nearly 76 million dollars in funds through financial and commercial transactions with other districts, mainly New York, to a considerable extent counteracted by an excess of Treasury receipts over disbursements of more than 51 millions. This Treasury position resulted from sales of securities during the period and from quarterly income tax collections. Other factors influencing reserves included moderate seasonal increases in reserve bank credit extended and currency in circulation. Rates charged on demand collateral loans by the larger Chicago and Detroit banks declined fractionally on Decem ber 15 from the preceding month’s levels, while the opposite trend prevailed for outlying Chicago institutions. Other rates, on the whole, showed little change. The average rate earned during November on total loans and discounts by the larger Chicago banks was 2.71 per cent as against 2.74 in October. The figure for the same class of banks in De troit averaged 2.65 per cent, the lowest point reached since January of this year and comparing with 2.67 in October. New financing through bankers’ acceptances by Seventh district accepting banks amounted to 18 per cent more during November than in October—a decidedly greater than seasonal increase—but was 20 per cent under the fig ure for November 1936. However, new acceptances created in the first fifteen days of December by several large Chi cago banks ran about one sixth below the corresponding November period, though over one quarter higher than a year ago. Total bills bought during November increased 43 per cent over the preceding month, a counterseasonal movement, but showed a 29l 2 per cent decline when com / pared with the total for last November. There were no bills sold from the banks’ portfolios in November; however, maturities showed a 36 per cent increase over October, which was partly responsible for a nonseasonal decrease of 2 per cent in holdings at the end of November, despite the increase in purchases. Maturities during November and holdings on November 30 were 41 and 36 per cent, re spectively, lower than the year-ago figures. Outstandings on November 30, which normally rise somewhat, dropped off 3)4 per cent from a month earlier and totaled 28 per cent under the same date of 1936. In accordance with the apparent cyclical trend, all phases of activity connected with bankers’ acceptances were about 70 per cent below the 1927-36 average for November. The open bill market ap peared to be much less active in recent weeks than earlier this fall. Commercial paper sales by midwestern dealers declined 7 per cent in November from October, or more than seasonally, and recorded an increase of 25 per cent and a decrease of 21)4 per cent as compared with November 1936 and the 1927-36 average for the month, respectively. Outstandings on November 30 were 2 per cent lower than on October 30, the seasonal movement showing a slight increase, but totaled 62 per cent over November 30, 1936, and 7 per cent above the ten-year average for the date. Rates remained at the level of the past several months; borrowings on commercial paper declined somewhat from October; and demand for this class of investment was stronger on the part of city banks and showed little change for country banks. Sales during the first half of December were nearly three quarters larger than in the correspond ing period of November. Rates tended to soften slightly, and both demand and supply were off, but with the former still running far ahead of the latter. November and early December continued to be an ex tremely listless period in the middlewestern bond market. High-grade corporates and municipals showed no price recessions, and in some cases fractional advances were noted. Obligations of a slightly less conservative nature, on the other hand, were in much smaller demand and con tinued to decline in price, especially railroad bonds. In formation received from Chicago bond houses indicated that a generous supply of funds is available for investment, but that all buyers, with the possible exception of insur ance companies, appeared to be hesitant. Banks evinced a slight interest in short-term gilt-edged bonds which, how ever, were quite limited in supply as new corporate issues were negligible and municipal emissions much curtailed. The 91-day Treasury bills dated December 22 sold at an average rate of .102. The Treasury offered 200 millions of 5-year 1%% notes and 250 millions of 8-year 2)4% bonds, dated December 15, which were heavily oversubscribed. The Chicago Journal of Commerce average of twenty leading stocks on December 21 stood at $40.07, close to the low for the month to that date. 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) November 1937 November 1936 Total country and city check clearings: 9,853,^10 Pieces...................................................... 10,944,600 Amount.................................................. $2,057,263,269 *1,958,709,438 Daily average clearings: Total items cleared— Pieces...................................................... 456,025 447,900 Amount.................................................. $85,719,303 *89,032,247 Items drawn on Chicago— Pieces...................................................... 71,299 72,586 Amount.................................................. $43,720,000 *46,397,000 Items drawn on Detroit— Pieces...................................................... 20,846 21,993 Amount.................................................. $10,243,752 *10,594,390 Agricultural Products Grain Marketing Although the movement of wheat continued well in ex cess of last year, November receipts at interior primary markets in the United States again declined seasonally and remained below the 1927-36 average for the month. On the other hand, reshipments of the grain were the larg est since August 1931, totaling about one third higher than the ten-year November average. Wheat exports were again heavy, particularly in comparison with recent years. Under the influence of prevailing conditions in financial and other markets, in addition to some pressure at Liver pool from new crop Australian wheat, prices for No. 2 hard winter wheat for immediate delivery at Chicago ruled easy in the latter half of November and closed the month at $.95% and $.98)4. In the first half of December prices firmed considerably, principally because of good export demand and reports of serious damage to the new Argen tine crop, and stood at $1.00)4 and 31.02% on December 15; but later they again showed some softening and were down to $.96% and $1.01 by December 21. United States visible supplies of wheat declined more than seasonally, and though remaining much larger than a year ago, aggre gated on December 18 almost one third less than the 1927 36 average. The November corn movement was the heaviest for any month since July 1933, and both receipts and shipments at CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) Assets FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Total bills and securities....................... Bills discounted........................................ Bills bought.............................................. U. S. Government securities................ Total reserves........................................... Member bank reserve deposits........... All other deposits.................................... Federal Reserve notes in circulation.. Ratio of total reserves to deposit and Federal Reserve note liabilities combined............................................... ♦Number of Points.I Change from December 15 November 17 December 16 1937 1937 1936 $283 $ 0 * -3 0 0 0 0 0 0 282 +1 —2 1,818 +42 +90 1,013 +22 +31 68 +20 +27 990 +7 +33 87.8% 0.0* +0.5* Loans and investments—total................... Loans—total.................................................... Commercial, industrial, and agricultural loans: On securities................................................ Otherwise secured and unsecured......... Open-market paper........................................ Loans to brokers and dealers in securities Other loans for purchasing or carrying securities....................................................... Real estate loans....................................... ’. Loans to banks............................................. .. Other loans: On securities................................................ Otherwise secured and unsecured......... U. S. Government direct obligations .... Obligations fully guaranteed by U.S.Govt. Other securities.............................................. Liabilities Demand deposits—adjusted....................... Time deposits.................................................. Borrowings....................................................... •Not Available. Change from imber 15 November 17 December 16 1937 1937 1936 $3,000 $ +5 $ —17 999 —11 +79 50 560 50 49 —11 90 87 5 —1 +1 0 47 61 1,412 196 393 —2 —4 +5 0 +1 £+7 +8 +1 2,223 870 +33 0 0 —1 .. .* ’' '* .’—1 * * * +is —5 .. .* * ’ '* —225 +30 —1 —126 +39 0 ^ * ^ interior primary centers of accumulation amounted to more than twice the ten-year average for November. Actual exports of corn as well as sales for later export were in good volume. In line with wheat and other commodities, some easiness was displayed in quotations of the grain during the second half of November, but prices of No. 2 yellow corn for current delivery at Chicago rallied from $.52^4 and $.54j4 on November 30 to $.59p2 and $.60^4 by December 21, bolstered by excellent export sales, mod erate country marketings, and the firmness in wheat. Vis ible supplies of the grain on December 18 stood 40 per cent higher than the 1927-36 average for the period, being half again larger than the month-ago amount and the heaviest since February 1935. Receipts of oats at interior primary markets declined seasonally in November from October, although there was a counterseasonal rise in reshipments; however, the move ment remained well above the ten-year average for Novem ber. Exports, after being in sizable volume over most of the autumn period, dropped off toward the end of Novem ber. Prices of oats maintained an independent steadiness, and visible supplies receded slightly. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) November 1937 Wheat * Receipts................................................ Shipments............................................ Corn: Receipts................................................ Shipments............................................ Oats: Receipts................................................ Shipments............................................ Movement October 1937 November November 1927-36 1936 Av. 15,924 31,391 22,663 24,394 10,774 10,963 21,898 23,246 42,923 18,740 17,837 7,316 17,715 5,239 17,342 9,170 6,795 8,307 9,263 7,698 2,581 6,398 6,027 6,070 of Livestock November receipts of cattle and calves at public stock yards in the United States were the smallest since July, and those of lambs were below any month subsequent to March. On the other hand, hog marketings totaled the heaviest since January. Cattle, hog, and lamb receipts were under a year ago; those of hogs and lambs continued sub stantially below the 1927-36 average for the month. An increase in calf marketings was recorded over last Novem ber and the ten-year average, and cattle receipts also gained in the latter comparison. The movement to inspected slaughter—inclusive of animals that did not pass through public stockyards—followed the general trend of market receipts except that the slaughter supply of calves was the lowest since February and 2 per cent below November 1936, while that of lambs about equaled the 1927-36 aver age for the month. The decrease in November from October in shipments to feed lots was largely seasonal. Cattle and calves continued to move into these areas in considerably VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions) Per Cent of Increase or Decrease from November October November 1937 1937 1936 ...................... $2,720 Chicago................................................... —10.8 —10.1 Detroit.................................................... ...................... 991 +11.6 —0.3 Milwaukee............................................. ...................... 252 —8.7 —3.3 —7.3 Indianapolis.......................................... ...................... 191 +1.3 Total four larger cities....................... ...................... 37 smaller cities................................... ...................... $4,154 788 —8.2 —5.8 —4.8 +4.8 Total 41 centers................................... ...................... $4,942 —7.8 —3.3 greater volume than shown in the 1932-36 average, but feeder lamb reshipments declined in the comparison. Meat Packing A lower level of activity than a year ago continued at inspected slaughtering establishments in the United States during November and the first half of December. Though rising 3j4 per cent over October to the highest level since January, November production of packing-house commod ities aggregated 16per cent less than in the 1936 month and 9j4 per cent under the 1927-36 average for the period. The tonnage sold decreased 6 per cent in November from October and a year earlier and was 9J4 per cent below the ten-year average for November; however, it fell somewhat less than seasonally below the volume of current produc tion. Coincident with the sharp decline from October in the general level of packing-house commodity prices, dollar sales billed to domestic and foreign customers decreased in November to the lowest point since May 1936; they to taled only 3 per cent in excess of the 1927-36 average for the month, were 7j4 per cent under last November, and 13j4 per cent smaller than in October. Inventories of these commodities in the United States had accumulated slightly less than normally on December 1 over the beginning of November, and were 36 per cent lighter than the 1932-36 average for the date. The month-end payrolls in November evidenced declines from a year earlier not only of 9j4 per cent in employes and 13 per cent in hours worked, but also of one per cent in wage payments; however, they showed an increase over October of 3 per cent in workers, 5 per cent in hours, and 2/ per cent in wage payments. Shipments for export rose further in November, reflect ing principally the heavy forwardings of lard and a preChristmas movement of hams to the United Kingdom. The decline in domestic prices was conducive to an improved demand for United States packing-house products—espe cially lard—in the United Kingdom, Cuba, and Porto Rico. Moreover, a fair to good trade with Czechoslovakia, Vene zuela, Costa Rica, and Ecuador was reported. The United Kingdom booked a moderate tonnage of hams for January to July delivery. At times, prices of lard in England ruled slightly above Chicago parity; those of hams were some what under this basis. Inventories of United States pack ing-house commodities in foreign markets—inclusive of stocks in transit—increased on December 1 over the begin ning of November, largely owing to a replenishment of consignment lard holdings in the United Kingdom. Imports of animal products into the United States decreased further in November. LIVESTOCK SLAUGHTER (In thousands) Cattle Yards in Seventh District, November 1937......................... ___ Federally Inspected Slaughter, United States: November 1937......................... .... October 1937................................... November 1936......................... ----- Hogs Lambs and Sheep Calves 204 645 229 75 856 958 988 3,295 2,711 4,292 1,321 1,530 1,544 468 525 477 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Reef Steers (average)... Fat Cows and Heifers................. Calves.............................................. Hogs (bulk of sales)..................... Lambs.............................................. Week Ended Months of December 18 November October November 1937 1937 1937 1936 .... $ 8.75 $10.65 $12.80 $10.25 ----7.10 7.10 8.85 7.25 ----10.15 9.40 9.35 7.50 .... 7.80 8.65 10.10 9.45 ___ 9.05 9.60 10.10 8.65 Page 3 Dairy Products Declines in the manufacture of dairy products during November were mainly of seasonal character. Butter pro duction in the Seventh district receded 13 per cent from October, and totaled 15 per cent under November 1936 and 12 per cent less than the 1927-36 November average. Though again seasonally much heavier than current pro duction and exceeding the year-ago amount by 7 per cent, the tonnage sold aggregated fractionally under October and iy2 per cent below the ten-year November average. Production in the United States showed about the same recession from October as in the Seventh district, though a smaller decrease from last year and the average. Inven tories of the commodity fell off slightly more than is usual over the course of the month, and on December 1 stood 17 million pounds under the 1932-36 average for that date. Butter prices held strong throughout November and showed only a slight easiness in the first three weeks of December. November production of American cheese in Wisconsin totaled 22 per cent below the October volume and 19 per cent under November 1936, but stood per cent above the 1927-36 average for the. period. Distribution of cheese from primary markets in the State not only fell below cur rent production, but aggregated 30 per cent less than a month previous, 23 per cent under a year ago, and 13J4 per cent below the ten-year average. As a result, United States inventories of cheese diminished less than seasonally from November 1 to December 1, and the excess over the 1932-36 average increased to 8 million pounds. Cheese prices were unchanged during November and off only slightly in the first part of December. the returns, contributing to the curtailment. While most of the manufacturing groups had started to reduce opera tions in October, this trend was not apparent in the aggre gates for that month as an unusually heavy expansion in the automobile industry more than counteracted the de clines. In November, however, none of the reporting groups, either manufacturing or non-manufacturing, showed a deviation from the prevailing downward trend in pay rolls, and except for coal mining and chemicals all contrib uted to the loss in employment volume. The non-manufac turing industries, which generally show a slight expansion in payrolls at this season of the year—mainly on account of increased activity within the merchandising group—de creased both employment and payroll volumes this Novem ber by about one per cent. This decline was considerably less than in the manufacturing groups where losses totaled 3/4 per cent in number of wage earners employed and close to 10 per cent in wage payments, the heaviest per centage decreases recorded in any month since last Janu ary. Payroll declines within the durable goods industries exceeded those in non-durable goods, while losses in em ployment were fairly evenly distributed. The trend in the current month contrasts sharply with that of a year ago when both employment and payrolls showed a steady ex pansion throughout the entire last quarter of the year, despite prevailing strike conditions. The yearly compari son, which has been favorable since June 1933, registered a decline in employment this November of about one per cent, while the increase of 2 per cent in payrolls was the smallest recorded in the period. SELECTED INDEXES OF INCOME AND BUSINESS ACTIVITY Industrial Employment Conditions Employment and payroll volumes reported for Novem ber by Seventh district industries declined sharply from the preceding month, all five of the States including the dis trict and practically all industrial groups represented in EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of November 15, 1937 Report ing Firms Wage Earn ers No. Industrial Group No. Change from October 15, 1937 Earn ings (000 Omitted) $ Wage Earn ers % Earn ings % Durable Goods: Metals and Products1.. Vehicles............................ Stone, Clay, and Glass. Wood Products.............. Total................................. 1,720 393 273 459 2,845 470,916 433,024 22,994 45,061 971,995 12,706 14,038 583 917 28,244 —4.9 —1.3 —11.1 —6.7 —3.6 —13.3 —8.5 —11.2 —10.6 —10.8 393 981 288 170 32 705 2,569 64,575 113,951 38,715 28,760 18,663 79,058 343,722 1,124 2,965 1,149 501 480 2,230 8,449 —5.4 —2.9 +0.3 —7.5 —10.5 —2.3 —3.7 —13.4 —0.6 -1.5 —19.3 —15.6 —3.8 —5.6 Total Mfg., 10 Groups... 5,414 1,315,717 36,693 —3.6 —9.7 Merchandising*.................. Public Utilities................... Coal Mining........................ Construction....................... 5,126 892 23 368 147,946 111,541 3,828 12,192 3,322 3,789 93 355 —0.8 —1.7 +11.1 —1.8 —1.6 —0.8 —4.0 —3.7 6,409 275,507 7,559 —1.1 —1.3 11,823 1,591,224 44,252 —3.2 —8.3 Non-Durable Goods: Textiles and Products.. Food and Products.... Chemical Products........ Leather Products........... Rubber Products........... Paper and Printing.... Total................................. Total Non-Mfg., 4 Groups Total, 14 Groups............... ]Other than Vehicles. Pace 4 Illinois, Indiana, and Wisconsin. Manufacturing Automobile Production and Distribution Most manufacturers of automobiles curtailed production schedules in November, as the retail demand for new cars lagged, and continued this policy into December, with the result that aggregate output for November failed to equal the year-ago volume and estimated December production is considerably below the high level reached last December. Data for November show that new passenger cars pro duced in the United States numbered 295,328, or one per •4 cent less than in October and 13 per cent below the cor responding 1936 period, while truck output of 64,735 vehicles increased 107 and 20 per cent in the respective comparisons. The number of new automobiles sold, at both wholesale and retail, during November in this district amounted to less than two thirds that of last November, and sales dropped off noticeably from the October volume, whereas last year a sharp increase took place in the period. Stocks in dealers hands rose further and remained more than double those of a year ago, although the margin of excess was nar rowed somewhat. Used-car sales in November fell off to a lesser extent and showed a smaller decline from Novem ber 1936 than did new-car sales. The salable number of used cars on hand continued to increase but was only 10 per cent greater than a year ago. Iron a S and Steel Products Steel mills of the Chicago district were operating at an even lower level in the middle of December than a month previous, the average rate of steel ingot output being only 24 per cent of capacity and the lightest in several years. Demand continued to decline through November, and there appeared to be no prospect of an upturn in the near-term future. However, there is evidence that consumer stocks are being reduced to a point where replacements may be necessary before many months. Production of pig iron in the Illinois and Indiana district again fell off sharply in November and was much below a year ago. After having declined steadily from mid-summer until late in November, scrap iron and steel prices advanced in the middle of De cember. Incoming orders at Seventh district foundries during November reflected a continued recession in demand, ton nage booked totaling less than in October by 20 per cent for steel and 19 per cent for malleable castings. Production and shipments likewise showed further curtailments, the declines in the former item amounting to 25 per cent each and in the latter to 16 and 13 per cent, respectively. The current tonnages showed even greater losses from a year ago than a month earlier in practically all instances. An exception was furnished by shipments of steel castings which were only 19 per cent under last November, as against a difference of 28 per cent in October. The heaviest declines from 1936 volumes were those recorded in orders booked and amounting to 68 per cent for steel and 59 per cent for malleable castings. Shipments of stoves and furnaces decreased 33 per cent during November, an average decline for the month accord ing to data for the years 1927 through 1936. Orders accepted and molding-room operations were each about 25 per cent less than in the preceding month. All items con tinued on a lower level than in the corresponding period a year ago, the difference being about as large as a month earlier in shipments but greater in orders and operations. Inventories declined very slightly during the month but were only 62 per cent heavier than last year at the time, in contrast to an accumulation of over 100 per cent at the close of October. Paper A compilation of reports from Seventh district firms in dicates a decided drop during November in activity and new business of both pulp and paper mills. These indus tries operated at little better than three-fourths capacity over the month, which rate is considerably below a month previous or November 1936. PAPER AND PULP INDUSTRY SEVENTH DISTRICT November 193? Per Cent of Increase or Decrease from October November 1937 1936 Paper: New orders booked (tons)......................... New orders booked (dollars).................... Total shipments (tons)............................... Total shipments (dollars).......................... Total production (tons)............................. Stocks on hand at close of month (tons) Pulp: Pulp produced (tons).................................. Stock on hand at close of month (tons). -7.9 +4.7 -14.3 +52.5 November 1937 Per Cent Change from October 1937 November 1936 Companies Included New Cars: Lumber Sales in Dollars......... Lumber Sales in Board Feet. —25.7 —17.5 —37.9 —19.7 —21.2 —16.4 —35.4 —24.9 +8.0 +108.2 Number Sold................................................. Salable on Hand— —13.1 —12.3 28 Value................................................................ +6.8 +5.4 +24.2 28 Number of Firms or Yards Wholesale Lumber: Retail Building Materials: Wholesale— 28 28 —29.0 —25.9 —14.1 —16.6 —23.3 —11.5 9 —20.2 —18.3 —19.9 —9.6 —5.4 —5.4 +4.8 +2.1 121 78 50 118 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month November 1937 Used Cars: -40.2 -34.1 -18.4 -6.6 -21.1 +54.1 Little betterment was noted during November in condi tions prevailing in the furniture industry of the Seventh district, as orders booked by reporting firms declined more than seasonally from October and were much below the volume of a year ago and the 1927-36 average for Novem ber. The decrease from the preceding month amounted to 19 per cent, as against one of only 11 per cent in the aver age, while declines from last November and the ten-year average aggregated 36 and 12 per cent, respectively. Ship ments, which fell off 17 per cent in the current period, showed a somewhat less than seasonal recession and about equaled the 1927-36 November average, but totaled 18 per cent below a year ago. Unfilled orders were reduced 23 per cent during the month and were 37 per cent under Class of Trade Retail— Number Sold................................................. Value................................................... On Hand End of Month— -23.1 —35.3 -6.9 -8.8 -8.8 +21.4 Furniture November 1937 Per Cent Change from November 1936 Pulp LUMBER AND BUILDING MATERIALS TRADE MIDWEST DISTRIBUTION OF AUTOMOBILES October 1937 and 165.3 277.9 October 1937 137.1 238.4 November 1936 , „„ _ 254.8 ‘End of Month. Page 5 those on November 30 last year, although their ratio to new orders of 108 per cent closely approximated that for the month in 1936. There was a further curtailment of factory operations in November to 66 per cent of capacity, this rate representing a decline of 7 points from October and of 18 points from November a year ago. Shoe Manufacturing, Tanning, and Hides Operations in Seventh district shoe factories followed the customary seasonal trend toward the close of the year, preliminary figures for November indicating a recession of approximately 30 per cent from the preceding month. Output, however, has been below the level of a year earlier since last July, previous to which month it averaged close to 25 per cent heavier than in 1936. Despite this unfavor able trend in recent months, production for the year to date remains higher than a year ago by about 6 per cent. Pro duction and shipments of leather also registered a substan tial decrease in November, increasing the spread between current and last year’s volumes. Prices of hides and leather products declined almost 6 per cent between the last week of October and the corresponding period in Novem ber, according to the wholesale price indexes compiled by the United States Bureau of Labor Statistics. The decline brought current quotations down to a level only about one per cent above that prevailing at the same time a year ago. Building Materials, Construction Work With the advance of the winter season and the resultant curtailment in construction activity throughout the Seventh district, there was a corresponding contraction in demand for building materials. Sales of lumber by wholesalers and manufacturers totaled less in November than in October by close to 30 per cent, and for the first time this year fell definitely below the corresponding volume of a year ago. Retail sales of lumber likewise registered a marked reces sion in November but continued to show a small favorable margin over last year, when measured in board-foot vol ume. The decline at retail was about seasonal in extent, according to the average for the ten years preceding, but at wholesale it exceeded this average. Collections during the month were fair, and substantial reductions were effected in the volume of outstanding accounts which, neverthe less, were heavier in ratio to sales than was the case either a month or a year earlier. Preliminary reports on ship ments of cement from mills located within the district indi cate a curtailment of close to 50 per cent during November, which is practically the same as the average decline re corded for the years 1927-36. The current volume, however, on the basis of these reports is approximately 15 per cent lower than at the same time in 1936, as well as practically that percentage under the average volume for November. Brick deliveries also continued to decline seasonally in November, with the volume considerably smaller than either a year ago or the estimated normal. Building Construction The volume of building in the Seventh Federal Reserve district dropped off rather noticeably in November, in ac cordance with seasonal trend, and was much smaller than in November last year. Contracts awarded during the cur rent period totaled the smallest of the year so far and less than for any month since February 1936. Residential building in the month amounted to 27 per cent of total building, which ratio is very slightly greater than that for November a year ago. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT November 1937............................................................ Change from October 1937.................................. Change from November 1936............................. First eleven months of 1937.................................... Change from same period 1936.......................... Commodity Net Sales Groceries...................... Hardware..................... Drugs*.......................... Electrical Supplies... +3.7 +3.3 +6.0 +7.4 Stocks —7.2 +21.0 +8.7 +29.8 As is customary, sales in reporting lines of wholesale trade declined this November from the preceding month. The recessions of 6 and 4 per cent each in the grocery and drug trades were somewhat less than seasonal for the period, while the decreases of 13 per cent in electrical supplies and 24 per cent in hardware sales were greater than in the 1927-36 November average. The gain of only 3 per cent over last November in the hardware trade was the smallest in the yearly comparison since June 1934, and most firms had a lower volume of sales than in November a year ago; but the increase of 4 per cent in groceries was in contrast to a decline shown for October, that oi 712 per / cent in electrical supplies approximated that of a month previous, and the gain of 6 per cent in the drug trade com pared with one of 8 per cent in October. Sales in the DEPARTMENT STORE TRADE IN NOVEMBER 1937 +29. i Page 6 Per Cent Change FirstEleven Months 1937 from Same Period 1936 Stocks End of Month Net Sales Ratio of November Collections to Accounts Outstanding End of October 1937 1936 —2.6 +0.3 +0.6 —2.8 +2.0 147.6 ♦Data furnished by U. S. Department of Commerce. Per Cent Change November 1937 from November 1936 Net Sales 83.1 194.6 + i5.8 $7,656,400 —30.0% —18.1% $127,784,900 +17.1% Merchandising Locality +8.3 +12.5 $28,146,800 —28.7% —21.1% $465,018,100 +7.2% There was a continued decline during November in the number and estimated cost of building permits issued in 98 cities of the district, the decreases from October amounting to 24 and 20 per cent, respectively. As compared with last November, the number of permits showed a 7 per cent in crease and their value a 5 per cent decline. Chicago, In dianapolis, Milwaukee, and the smaller cities of Wisconsin furnished exceptions to the downward trend in estimated cost from the preceding month, while Indianapolis and the smaller cities of Illinois and Iowa were exceptions in the yearly comparison. Ratio of Accounts Outstand Accounts ing to Outstand Collections Net Sales ing +0.2 +13.0 Residential Contracts ♦Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN NOVEMBER 1937 Per Cent Change from Same Month Last Year Total Contracts Period 7th District................. +12.3 +16.6 +20.3 —0.1 +6.9 +8.6 + 10.7 + 12.4 +9.5 +7.9 31.3 46.1 42.8 38.6 35.0 34.1 47.8 46.7 39.4 35.7 —1.1 +ii.i +9.2 37.9 39.6 ■4 * * eleven months of 1937 totaled heavier than in the same period of 1936 by 5 per cent in groceries, 10 per cent in drugs, 20 per cent in hardware, and 34 per cent in electrical supplies. The tendency to reduce stocks continued except in the drug trade, as grocery firms recorded a greater de cline from last year’s level than in October, the margin of gain in hardware stocks again was narrowed, and the in crease over a year ago in stocks of electrical supplies was smaller than a month earlier. Although stocks of drugs declined 2 per cent between the close of October and November 30, they exceeded those on the date last year by 9 per cent, whereas a month previous they were slightly smaller than in 1936. With sales of Milwaukee and Chicago department stores showing declines in the comparison, the aggregate dollar value of Seventh district department store trade recorded a decrease of one per cent in November from a year ago, although business in Detroit, Indianapolis, and the smaller cities gained slightly over last November. Because of one more trading day in the 1937 period than in 1936, daily average sales for the district declined 5 per cent from a year earlier. Indianapolis, Milwaukee, and the smaller cities experienced rather substantial recessions in depart ment store business from October, so that the district total registered a somewhat greater than seasonal decline of 6 per cent in the period. Stocks rose slightly less than is usual in November, and at the end of the month exceeded those on the same date of 1936 by only 11 per cent, as against a 16 per cent excess at the close of October. Sales of shoes by reporting dealers and department stores fell off \2l 2 per cent in November from October, whereas / the 1927-36 average for the period shows a small increase. Furthermore, as compared with last November, the current volume totaled 2 per cent smaller. Through November, sales for the year exceeded those in the same eleven months of 1936 by 9 per cent. A small decline took place in stocks between the close of October and November 30; they aggregated 15 per cent heavier than a year ago, as against an 18 per cent increase recorded in a similar comparison for October. For the second consecutive month, the dollar volume of furniture and housefurnishings sold by dealers and depart ment stores showed a decline—6 per cent—during Novem ber from the corresponding 1936 period, although the recession of 13 per cent from the preceding month was about seasonal for November. Dealer sales decreased 13 per cent from last year, while the volume sold by depart ment stores recorded a 4 per cent decline; sales by dealers dropped off 17 per cent from October and those by depart ment stores 12 per cent. Dealers’ stocks declined some what during November, while department store stocks increased, with the total registering a one-half per cent rise over the end of October. As compared with a year ago, inventories were 16 per cent heavier at the close of this November. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 1to^the^S^venSi1^ec^:raf^,eBerve^fdistr^ct^uidessVotherwise^m)ted.^ia^e^ ^ ^ °f " ** ^ be ^ 8 as a base, unless otherwise following month. Data refer Meat Packing—(U. S.)— Sales (in dollars)............................................ No. of Nov. Firms 1937 Oct. 1937 Sept. 1937 Aug. 1937 July 1937 June 1937 Nov. 1936 Oct. 1936 Sept. 1936 Aug. 1936 July 1936 June 1936 100 100 98 98 99 93 99 97 94 91 91 12 12 21 21 58 47 55 67 70 58 64 77 96 86 76 92 115 107 71 85 111 107 65 80 125 122 89 109 57 59 55 80 74 76 56 80 85 94 50 73 86 96 48 69 77 85 53 77 74 80 56 82 9 162 241 245 175 138 161 211 288 219 154 143 158 Furniture— Orders (in dollars)......................................... . Shipments (in dollars)................................... 12 12 52 63 65 77 76 84 82 83 94 66 67 72 81 75 84 91 89 79 89 72 100 65 60 61 Output of Butter by Creameries— Production....................................................... . Sales..................................................................... 59 61 75 101 86 101 92 122 111 126 131 133 149 144 88 94 104 106 103 104 101 98 114 111 145 134 Wholesale Trade— Net Sales (in dollars): Groceries...................................................... . Hardware....................................................... Drugs.............................................................. 27 11 13 66 88 88 72 116 94 81 115 91 72 101 79 77 108 79 72 112 85 65 85 80 73 108 89 72 96 83 75 84 73 83 90 74 68 94 75 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago........................................................... Detroit............................................................ Milwaukee..................................................... Other Cities...................... ............................ Seventh District—Unadjusted............... Adjusted.................... 29 6 5 44 84 84 94 117 102 97 100 92 98 123 118 107 106 96 91 151 104 99 105 102 75 87 78 78 78 95 66 84 76 67 70 98 97 111 97 90 98 100 98 117 105 94 101 93 98 117 118 103 104 95 86 139 94 89 97 95 72 84 77 74 75 91 63 74 68 62 65 91 87 96 87 82 88 89 Automobile Production—(U. S.)— Passenger Cars................................................. Trucks................................................................ 101 172 102 83 41 139 106 220 123 209 140 228 116 143 65 91 31 120 72 164 127 183 v 128 206 Building ConstructionContracts Awarded (in dollars): Residential..................................................... Total................................................................ * 86 Stoves and Furnaces— Shipments (in dollars)................................. . $ 45 Casting Foundries— Shipments: Steel—In Dollars...................................... In Tons........................................... Malleable—In Dollars............................. In Tons................................... 26 41 37 58 34 57 32 65 51 77 57 81 32 52 40 56 39 54 Pig Iron Production*— Illinois and Indiana........................................ 59 77 36 72 43 58 68 98 134 134 127 118 109 108 103 101 101 97 . ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION November, of industrial production continued to sharply, employment and first half of Novem INandcommodity volumepayrolls also decreased.forDuring themonthdecline have been ber prices declined further but the past they steady. Production and Employment Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to November 1937. FACTORY EMPLOYMENT AND PAYROLLS Employment Payrolls^' 1929 1930 Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 average = 100. By months, January 1929 to November 1937. Indexes compiled by the United States Bureau of Labor Statistics. WHOLESALE PRICES Volume of industrial output, as measured by the Board’s seasonally adjusted index, declined from 103 per cent of the 1923-1925 average in October to 90 per cent in November, reflecting chiefly a sharp reduction in the manufacture of durable goods. There was a further curtailment of activity at steel mills and output for the month was at a rate of 38 per cent of capacity, a decline of onethird from October. In the first three weeks of December steel production was at about 28 per cent of capacity. Output of lumber and plate glass also declined substantially in November, and automobile production showed considerably less than the usual seasonal increase. Production of non-durable goods, which had decreased by a substantial amount earlier this year, declined further in Novem ber, reflecting a continued reduction in output of textiles and shoes, partly offset in the total by an increase in activity at sugar refineries. Output of minerals, as well as manufactures, declined in November. There were marked decreases in output of bituminous coal and in iron ore shipments, while crude petroleum production continued in large volume. Total value of construction contracts awarded, as reported by the F. W. Dodge Corporation, showed little change in November and the first half of December. Awards for privately-financed projects declined, reflecting chiefly a further reduction in residential building, while contracts for publicly-financed work increased. Employment and payrolls at factories showed an unusually sharp decline between the middle of October and the middle of November, and there were decreases also in the number employed in trade and other non-manufacturing lines. The Board’s seasonally adjusted index of factory employment was at 94 per cent of the 1923-1925 average in November as compared with a level of 102 last summer and 96 in November last year. In the steel, machinery, lumber, and textile industries the number employed decreased by substantially more than the usual seasonal amount, and there was some decline at automobile factories, although an increase is usual at this season. There were declines also in the seasonally adjusted indexes for most other lines, except foods and tobacco which showed little change. Agriculture Department of Agriculture estimates recently issued indicate that most crops will be about the same size as forecast earlier but that cash farm income will be lower than had been anticipated, largely because of price declines both for crops and livestock. Cash income in 1937 is expected to be $8,500,000,000, as compared with $7,918,000,000 in 1936. The increase over a year ago is due primarily to increased income from marketings of wheat, tobacco, and fruits and to larger Government payments. Distribution 1932 1933 Index compiled by the United States Bureau of Labor Statistics, 1926 = 100. By months, 1929 to 1931; by weeks, 1932 to date. Latest figure is for week ending December 18, 1937. Distribution of commodities to consumers, which earlier had been main tained, declined slightly in November. There was a slight decline in sales at department stores, and mail order sales decreased considerably, while sales at variety stores showed little change. Preliminary information for the first half of December indicates that department store sales increased by approximately the usual seasonal amount. Freight-car loadings declined by considerably more than the seasonal amount in November and the Board’s adjusted index for that month was 71 per cent of the 1923-1925 average as compared with 76 per cent in October and an average of 81 per cent in the first half of the year. The decline from October to November reflected principally marked decreases in loadings of coal and miscellaneous freight. Commodity Prices MEMBER BANK CREDIT The general level of wholesale commodity prices, which had declined sharply from the latter part of September to the third week of November, has shown little change since that time. Prices of nonferrous metals, leather, wool, textile yarns, and finished cotton goods have declined somewhat further in this period, while steel scrap, hides, rubber, cotton, print cloths, and bitumi nous coal have recently shown some advance. Bank Credit Wednesday figures for reporting member banks in 101 leading cities. September 5, 1934, to December 15, 1937. Page 8 Excess reserves of member banks showed a small decline but for the first three weeks of December remained somewhat over $1,000,000,000. The increase in demand for currency during December has been smaller than usual, reflecting largely the effects of the recent sharp decline in business activity and payrolls. Total loans and investments of reporting member banks in 101 leading cities increased somewhat during the four weeks ending December 15, reflecting a growth of $190,000,000 in holdings of United States Government obligations, mostly in New York City. A factor in this increase was the purchase by banks of the December 15 issues of Government securities. Commercial loans, which had begun to decline in October, showed a further reduction.
@FedFRASER