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FEBRUARY, 1943 §i. MM glBS ' ' .. ■ I3»® uaiLi W r p&k $F ,0 f ■ 4 -rum,.......... "W* sum m*:** A REVIEW BY THE EEDfRAL' RESERVE BANK "OP CMtpAGp: - 9nu&it in Victosut. SECOND WAR LOAN DRIVE BEGINS APRIL 12 -tr & THIRTEEN BILLION FIGHTING DOLLARS MUST BE RAISED NOw! 'Uncle Sam Needb 'Ifcuin. eJlelp, ■i? HX <x United States Treasury War Finance Committee WAR SAVINGS STAFF VICTORY FUND COMMITTEE FEDERAL RESERVE BANK OF CHICAGO Recent Money Market Developments Treasury and easing the impact on member bank re serves of huge Treasury operations. Direct purchases of Government obligations from the Treasury by the Fed eral Reserve banks are authorized by the Second War Powers Act, with the limitation that Federal Reserve holdings of Government securities so purchased shall not exceed 5 billion dollars at any time. The borrowing di rect from the Federal Reserve banks by the Treasury has been for a few days in anticipation of large cash receipts from new market issues or income tax collec tions. Expenditure of the proceeds of the borrowing temporarily increases member bank reserves. Cash pay ment for a new market issue by banks and by their cus EXCESS RESERVES tomers and payment of taxes, in turn, lowers member Excess reserves of all member banks averaged about bank reserves to their previous level. The purchase of 1.8 billion dollars in February and the first two weeks special short-term certificates direct from the Treasury of March, as compared with about 2.1 billion during by the Federal Reserve banks and their subsequent liqui January. Excess reserves of member banks bad been dation from the cash receipts in anticipation of which maintained at around 2.5 billion dollars in all but the they are issued constitute an important device for soft ening the impact of huge Treasury cash receipts from last week of December. The principal drain on member bank reserves con new market issues and tax collections upon member bank tinued to be the large and persistent increase in money reserves, as does the use of the war loan deposit pro in circulation. After a decline of 85 million dollars from cedure in payment for Government securities purchased December 30 to January 13, money in circulation in by banks and their customers. The amount of special short-term certificates of in creased 883 million dollars in the following eight weeks. By March 10 a new record high of 16.2 billion dollars debtedness outstanding may be computed from pub had been reached, higher by 4.7 billion than a year pre lished information in the public debt accounts section of vious. In the week ending March 17 money in circula the daily statements of the United States Treasury. For example, on January 29 the Treasury borrowed 115 mil tion declined 90 million dollars. Although Treasury deposits with Federal Reserve lion dollars from the Federal Reserve banks, and on banks have been at relatively low levels in the last two January 30 borrowed 87 million dollars more. The in months, temporary ups and downs in such deposits have debtedness was retired from the receipts of the Feb caused fluctuations, in conjunction with other factors, ruary 1 certificate offering. In anticipation of the March 15 tax date, the Fed in excess reserves. A reduction in Treasury deposits with Federal Reserve banks from the high figure of 811 eral Reserve banks purchased special short-term cer million dollars on December 30, following the December tificates of indebtedness for the temporary accommo drive, to 273 million on January 6, for example, in dation of the Treasury. The amount of indebtedness so creased excess reserves from 1,660 million dollars on incurred by the Treasury increased from 3 million dol December 30 to 2,330 million dollars a week later. Again, lars on March 2 to a peak of 1,302 million dollars on a reduction in Treasury deposits with Federal Reserve March 15 and thereafter declined. banks from 258 million dollars on February 24 to 14 Although Federal Reserve holdings of Government million on March 3 maintained excess reserves at 1,790 securities on March 10 were only 58 million dollars more million dollars, although Federal Reserve holdings of than on January 6, there were large variations during Government securities declined and money in circula the period in amount and distribution of such holdings. From January 6 to February 3 there was a decline of tion rose sharply in that week. The increase in Treasury currency of 343 million dol 557 million dollars, while from February 3 to February lars from December 30 to March 10, reflecting chiefly 24, there was an increase of 456 million. Federal Re issuance of Federal Reserve bank notes, added to mem serve holdings of Government obligations declined 131 million dollars in the week ending March 3. The in ber hank reserves. The Federal Reserve banks have purchased special crease of 290 million dollars in the week ending March short-term certificates of indebtedness direct from the 10 and the increase of 176 million dollars in the week Treasury on several occasions in the last nine months ending March 17 reflected chiefly purchase of special as a means of giving temporary accommodation to the short-term certificates direct from the Treasury. Since the December Victory Loan campaign, the Treas ury has financed its expenditures principally by calling war loan balances built up with banks during the Decem ber drive, by adding to the amount of Treasury bills and certificates of indebtedness outstanding, and by the continued sale of Series E, P and G savings bonds and tax notes. These transactions have brought about con siderable fluctuations from week to week in the volume of excess reserves. The distribution of funds over the country through Treasury expenditures made it possi ble for a large part of the increase in short-term Gov ernment securities to be placed outside the money market centers. Page 1 TREASURY BILLS AND CERTIFICATES The amount outstanding of Treasury hills and cer tificates was increased 2.6 billion dollars during Janu ary, February, and the first two weeks of March. Weekly offerings of bills exceeded maturing issues of bills by 200 million dollars each week, and there was an increase of 2 billion dollars in Treasury bills outstanding in the ten weeks from December 30 to March 10. The offering of the % per cent one year certificate of indebtedness dated February 1 provided funds for the redemption of the certificate issue amounting to 1,588 million dol lars which matured on that date and about 620 million dollars new money. About three-fourths of the increase in the amount outstanding of Treasury hills and cer tificates was absorbed by banks outside of New York City and Chicago and by non-bankers. Federal Reserve holdings of marketable certificates declined and Fed eral Reserve holdings of Treasury bills rose sharply over the period. During January, New York City member banks in creased their holdings of Treasury bills and certificates. Treasury bill holdings of weekly reporting New York City member banks rose 261 million dollars from De cember 30 to January 27, and certificate holdings in creased 122 million dollars. From January 27 to March 3, however, Treasury bill holdings of weekly reporting New York City member banks decreased 386 million dollars, and net sales of certificates amounting to 87 million dollars were made in the four weeks ending March 3. New York City member banks lost funds on Treasury account during both January and February. Treasury expenditures in New York were less than Treasury receipts. January and February were months of large war loan withdrawals, and somewhat over half of the war loan deposits in the entire country were with New York City member banks at the end of the December drive. During January, however, an inflow of business funds to New York more than offset the outflow on Treasury account. For this reason, New York City mem ber banks gained reserve funds in January in spite of large war loan withdrawals, and were able to enlarge their Treasury bill and certificate holdings through bidding for the weekly offerings of Treasury bills, through repurchase of bills previously sold to the Re serve banks under option, and through purchase of certificates in the market. During February, on the other hand, the inflow of business funds to New York did not offset the loss through Treasury operations, and New York member banks sold bills to the Reserve bank and sold certificates in the market to maintain their reserve position. As a result of a large excess of Treas ury expenditures over receipts from the market, financed through direct borrowing by the Treasury from the Federal Reserve banks, New York member banks were Page 2 HOLDINGS OF U. S. TREASURY BILLS AND CERTIFICATES OF INDEBTEDNESS (In millions of dollars) Weekly Reporting Member Banks Federal Reserve Banks Others 1,527 2,108 823 1,326 2,017 2,744 73 581 503 727 642 609 2,301 2,468 standing New York City Chicago 99 Cities Dec. 30, 1942___ Mar. 10, 1943.... 6,626 8,627 1,818 1,935 441 514 Increase...................... 2,001 117 2,012 1,957 Treasury Bills Treasury Certificates Dec. 30, 1942___ 10,516 Mar. 10, 1943.. . . 11,161* Increase...................... 645 55** 33** 167 1,033 789* 244** 4,528 5,338 810 ♦Excludes $632 million special one-day certificates held by Federal Reserve Banks. ** Decrease. able to expand their Treasury bill holdings by 242 million dollars in the week ending March 10. Treasury bill holdings of weekly reporting member banks in Chicago were 73 million dollars greater on March 10 than on December 30, while certificate hold ings were 33 million dollars less. Large purchases were made of the Treasury bill issue dated January 6 in preparation for the April 1 Illinois personal property tax date. Chicago member banks have made extensive use for several months of the offerings of Treasury bills each week, the buying-rate privilege at the Reserve banks, and the repurchase option in adjustment of their reserve positions, with the result that excess reserves of Chicago central reserve city member banks averaged only 16 million dollars during January and February. Likewise, New York member banks have been making fuller utilization of their reserve funds through the bill arrangement. Excess reserves in New York declined to a very low level in the first part of March, after having averaged about 100 million dollars in February, 300 million in January, and 400 million in December. Chicago central reserve city member banks are “put ting their excess reserves to work” to a very much greater extent than are reserve city and country banks, taken as groups. In the first two weeks of February, Chicago central reserve city member banks held only $4 of excess reserves per $1,000 of required reserves. Seventh District reserve city member banks held $183 excess reserves per $1,000 required reserves. Seventh District “country” member banks held $471 excess re serves per $1,000 required reserves, and, in addition, held large surplus balances with correspondent banks. Since December, weekly reporting member banks in 99 cities outside New York and Chicago have showed a steady and substantial increase in their Treasury bill and certificate holdings. The increase in Treasury bill holdings of these banks from December 30 to March 10 (Continued on page 6) Beef Feeders Face Rising Costs The gamble in beef cattle feeding is becoming more hazardous as the season progresses. In spite of vigorous demands for beef by consumers with the money to buy and by government for military purchases, price ceil ings continue to set a more or less effective upper limit to prices. Meanwhile, costs to the feeder continue to rise. On the demand side, civilian incomes, which continue to rise, give to consumers on the average greater pur chasing power for meats than they have ever had be fore. This strong demand, coupled with government buy ing, has resulted in serious shortages of beef in certain areas and at certain times. In many market localities the housewife who does obtain beef considers herself fortunate to get any beef at all, and no longer has much occasion to debate between which cuts to take. This scramble for beef, in fact a scramble for meats of any kind, has made it necessary for OPA to issue re striction orders on the disposition of meat products by packers to civilian consumers in order to guarantee that proper supplies shall be available to the military forces and to lend-lease. Very substantial demand for beef arises from govern mental sources. This beef is largely bought and shipped for American military forces, with only a very small portion entering into lend-lease transactions. In spite of the restriction orders packers report some difficulties in getting sufficient supplies of beef to meet government commitments. The vigorous demand for meats under the price ceil ings prevailing has given rise to such pressure on the market structure that scandalous and widespread ‘ ‘ black markets” are very nearly the chief topic of conversa tion by the man in the street. Just how extensive are such ‘‘black markets” no responsible authority seems to know. There seems to be no lack of fairly convincing evidence, in a number of forms, however, that the prob lem is a substantial one. Packer interests and govern mental agencies are at work in an effort to unravel the problem. But in view of the complexity of price regu lation and control and the complicated structure of the meat marketing business, it is apt to be a long and diffi cult task. The problem is raised in this connection be cause it is one of the important factors in keeping cat tle prices considerably above the levels expected by OPA to prevail under the present beef ceilings and above lev els that permit profitable operations by packers. On the supply side, the reports of the Department of Agriculture show that in 1942 an all-time record was set for slaughter of cattle under Federal inspection. The goal for 1943 calls for the slaughter of 20 million cattle and 10 million calves. The reports further indi cate that the number of cattle on feed January 1 of this year was also at an all-time high point, with the Corn Belt States showing a larger number than a year earlier, while the numbers in all Western States were less than on January 1 last year. Much of the increase in the Corn Belt States was in South Dakota, Nebraska, and Kansas, where a favorable com crop last year brought supplies up to a high level. Increases in cattle on feed in the Corn Belt appear to be the result of larger numbers of farmers venturing into feeding rather than of any increase in the numbers being fed by ‘‘regular” cattle feeders. On the basis of this situation, what are the prospects for the feeder? Assuming that beef ceilings are to be maintained at about present levels, there is little pros pect that prices will work much above the $16.00 level for good-to-choice steers prevailing at the Chicago mar ket for recent weeks and at the time of this writing. On the other hand, effective measures taken to curtail “black market” operations would put more pressure on the ceilings, but at the same time be a bearish factor tending to hold cattle prices in check against further rise if the ceilings hold effectively. Meanwhile costs to the feeder are rising. Last fall the operator could buy a good-to-choice feeder steer at just above $12, put into him corn at around 82 cents, clover hay at about $10, cottonseed, linseed and soybean meals at $45 to $50 per ton, and bring him up to 1,150 pounds at a feed cost of about $52. Adding interest, freight, labor, and commis sions brought total costs of the finished animal up to $14.50, yielding a satisfactory profit. Today the cost picture is not encouraging. The feeder costs at Kansas City for the good-to-choice 850 pound class are running above $14. Corn is about 90 cents and quite probably will rise under the forthcoming per manent corn price ceilings. Hay is averaging around $15. The protein meals cost from $50 to $55 a ton at the least, if, indeed, the feeder is able to get any at all. The higher costs mean that the finished animal is worth $16.50 per hundred at around 1,150 pounds, while at this writing good-to-choice animals of this weight are bringing a shade above $16. These relationships indicate that feeders should go slow. There is not much prospect that feeder cattle prices will ease before next fall, for the ranges are gen erally believed to be pretty well cleaned out of every thing they cannot carry. If drouth conditions should occur, feeder supplies may be more ample and prices may ease a little. But the present situation indicates that profits in feeding, if any, will accrue to operators who already have the necessary feeders and feed sup plies and concentrates bought at safe prices, to oper ators who minimize risks by short-feeding, and to those who are skilled in getting efficient gains from roughage and lower-priced feeds. Page 3 Review of Seventh District Business Sharpening effects of war permeated further into Seventh District business during February as additional wartime economic controls and acute shortages forced new adjustments in industry, agriculture, trade, and civilian life. The primary problem in the District and the nation remains the expansion of war material out put despite almost full-utilization of available man power and raw materials. The secondary problem, be cause it concerns the home front rather than the armed forces, continues to be easing the steadily declining civilian living standard by maintaining as far as pos sible and distributing equitably existing supplies of goods for civilian consumption. Manpower stands out as one of the principal unan swered questions concerning which there is a great deal of confusion in the minds of business men and the public. The “work or fight” announcement of the War Manpower Commission early in February initially prompted thousands of men to apply for war or “essen tial” civilian work through the offices of the United States Employment Service. The wave of applicants subsided by the end of the month, probably because the “work or fight” order has been officially interpreted as less severe than as originally believed. The peak of employment still lies several months ahead in a number of Seventh District war manufac turing plants. A number of the larger of these plants, however, is rapidly nearing completion of construction and installations. Campaigns to get women to accept employment in both war and civilian occupations have been speeded up markedly since the first of the year, but in several portions of the District, many more women are needed than are now responding to the appeal. Dur ing the month, it became more apparent that serious housing shortages for war workers must be alleviated in several District centers, including the Chicago and Detroit areas, before improvement can be expected in the manpower situation. In-migration of workers, nec essary because of inadequate local labor supplies, is being seriously impeded by this lack of housing. The regional War Manpower Commission director now pre dicts that Chicago will become a “critical labor short age area” by September, Despite alarming labor supply conditions, District em ployment and payrolls continue to maintain a record breaking upward trend. At the end of January pay rolls were almost 30 per cent above the abnormally high Pearl Harbor level, and employment was nearly 10 per cent larger. Gains which have been made in recent months indicate that generally speaking private and public programs to recruit new workers are cur rently at least able to offset losses of workers to Selec ■Page' 4 tive Service. In hundreds of individual plants and businesses, however, Selective Service withdrawals are becoming increasingly severe as more experienced work ers are drawn into the armed forces, commonly without possibility of replacement. Particularly hard hit are wholesale and retail trade, agriculture, civilian manu factures, and financial institutions. Manpower short ages will contribute substantially to the rising wave of business “deaths” expected during the remainder of the year. CONSTRUCTION DECLINE FORESEEN Judged by the extremely small volume of construc tion contracts currently being awarded in the District, industrial and residential building will fall to com paratively low levels in coming months. January 1943 contract awards were below the amounts for the same month in the two previous years, and were less than one-fourth as large as the all-time record of $210 million in August of last year. Government wartime construc tion overwhelmingly dominates present building activity. An estimated 16,000 building trades workers are now idle in the Chicago area. Most of these men are older building specialists whose skills are relatively unimpor tant to war construction projects, e.g., plasterers, slate and tile roofers, painters, tile setters, and architectural iron workers. Termination of present war projects will release many construction workers for probable absorp tion into other war activity before the end of the year. Important numbers of industrial and transportation EMPLOYMENT AND PAYROLLS PER. CENT PER CENT EMPLOYMENT 11111 ! I M ! I UJLLL Indexes of employment and payrolls in Seventh District manufacturing industries, without adjustment for seasonal variation, 1935-39 averages 100. By months, January 1939 through January 1943. DEPARTMENT STORE SALES level of demand which it is endeavoring to meet with increasingly limited supplies of raw materials and man power. The immediate outlook, however, remains favor able for the Lake States pulp and paper industry, but producers anticipate greater difficulties as pulp and pulpwood inventories are reduced. For the first time in the history of some District mills, women are being em ployed in growing numbers in the papermaking process. Furniture manufacturers received the largest volume of new orders on record in January, almost 75 per cent ahead of the same month in 1942. A greater than normal seasonal upturn in demand was coupled with a rush by dealers to purchase any available supplies of furniture. On the other hand, critical production shortages reduced furniture output more than 10 per cent during the month. A Regulation V loan of $150 million was granted 11.1.1 1 J.i 11 I .L.li-1. I I l l l II I I l l I l i I 11 l i I 1939 1940 I94t 1942. 1943 during February to the Bendix Aviation Corporation Indexes of daily average sales of department stores in the Seventh District, with to finance growing production of war materials. This is and without adjustments for seasonal variation, 1935-39 average^ 100. By months, January 1939 through January 1943. the second largest loan made under Regulation V since facilities are showing more and more the strain of war the outbreak of the war. The Federal Reserve Bank of time over-capacity use. More blast furnace repairs are Chicago, through its Detroit Branch, served as interme expected during the current year than during corre diary for the loan. sponding periods in 1942, promising to make increas The five District States continue to maintain a domi ingly difficult further gains in steel production. Pre nant position in the national war effort. The War Pro liminary goals for iron ore and coal shipments to Dis duction Board reports that more than $6 billion in trict steel centers nevertheless are being set above rec “Major War Supply Contracts and Facilities Projects” ord 1942 levels. There is need for considerable amount were awarded in these States during the period July of replacement and major repair of rail passenger and through November 1942. The cumulative total for the freight equipment currently in use in the Chicago area, District States since early defense preparations is the nation’s leading railroad center. Locomotives and nearly $22 billion of the $99 billion thus far awarded cars not in service are at or near the minimum essential throughout the United States. National ranks of the in for repair and emergency reserve. There is little op dividual District States are: Michigan (2); Illinois (7) ; timism, however, even about the possibility of obtaining Indiana (10); Wisconsin (14); and Iowa (28). The during coming months the cars approved for produc District war industries are not only producing vast tion by the War Production Board. amounts of finished goods for direct war use, but also many semi-finished goods and partial assemblies for use PROLONGED GREAT LAKES FREEZE in other war production centers of the nation. The WPB The severe Great Lakes freeze-up has placed a sub states that three-fourths of the supply contracts awarded stantial and abnormal burden upon rail and truck facili in the District States have been for products other than ties. The opening of the lakes to ship traffic is not ex aircraft and ships, indicating the far greater impor pected until April. Petroleum distribution has been tance of such products as steel, foods, ordnance equip markedly affected by transportation difficulties, trucks ment, machinery, and refined petroleum. now moving almost all refined products in some sections FOOD SUPPLIES DWINDLE as compared with less than one-fourth of the total in previous years. The greatest net addition to general District consumers became abruptly aware of the seri petroleum distribution was the mid-February opening of ous food supply problem during the month as food the Federally owned “Big Inch” crude-fuel oil pipe rationing registrations took place and wide comment line which at full capacity will bring an estimated 300, from public officials warned of an impending food crisis. 000 barrels daily from Texas to southern Illinois chiefly “Black markets,” especially in meats, raised an ugly for transshipment to the East Coast. head to complicate further the food-agricultural situa A recent amendment to the War Production “freeze tion as well as the administrative problems for govern order” affecting the paper industry has relaxed some mental agencies and trade interests. The size and impor what previous restrictions on some types of paper pro tance of illicit dealings are still subject to a wide range duced in the District, with attendant benefits for several of estimates, but there can be no doubt that the Chi mills. The industry in general is confronted with a high cago area problem is acute. Such “markets” are symp P£ft CENT V PERCENT Page 5 tomatic of the vigorous and growing demand for meats, a demand reflected in the strong livestock prices prevail ing in Chicago during recent weeks. Cattle and hog prices paid by packers have both been materially above levels contemplated by the OPA to be paid under beef and pork price ceilings. On the other hand, the sup plies of hogs marketed continue to be substantially less than predicted last fall. Observers are puzzled as to whether this reduced supply is attributable to fewer hogs actually available, or merely to slowness in reach ing the market. The “black markets” probably also influence the situation. Cost of living figures are now being scrutinized with more and more care to measure the effectiveness of price ceilings and extent of inflation, and as bases for wage increase demands. During the month ending January 15, cost of living in Chicago increased unappreciably, and in Detroit actually declined slightly when food prices fell off moderately during the period. Living costs in general, however, averaged about 6 per cent above tneir January 1942 levels. Wholesale food prices ad vanced more than 10 per cent, and wholesale farm prod ucts more than 15 per cent during the same year period. Wheat controls, including quotas and penalties for excess marketings, were removed by order of Agricul ture Secretary Wickard, making available for sale with out penalty an estimated 10 million bushels of 1942 “excess” wheat. The order does not affect Commodity Credit Corporation loans nor parity payments to the producer, providing he meets 90 per cent of his farm’s war production goals. To expedite the marketing and processing of soybeans, the OPA raised the price ceiling concurrently with a Commodity Credit Corporation order limiting inven tories. The latter directive also aims to prevent alleged speculative holdings. RETAIL SALES BOOM February department store sales in the Seventh Dis trict surged upward in an unprecedented fashion after a more or less general seasonal decline in January. On the basis of figures from weekly reporting stores, sales during February were 30 per cent above the same month a year ago. Total dollar sales for January were slightly below the record 1942 level. To a large extent the sales gains in February are the result of “scare” buying among many consumers an ticipating further extension of rationing to clothing arti cles. The strongest wave of buying followed closely the government announcement of shoe rationing. While ex panded incomes enable persons to buy more goods now than at previous times, buying of unusually large quan tities of goods by single individuals cannot be attrib uted merely to increased purchasing power. Such pur Page 6 chases not only add markedly to the complexity of inventory and equitable distribution problems, but also hasten rationing of goods whose supply is adequate for normal use. Stores, however, are endeavoring to keep shelves and display eases filled with salable goods, and are adding new lines of goods wherever possible to replace lines no longer obtainable. % Price increases have, of course, contributed somewhat to the magnitude of dollar sales, and hence the volume of goods actually sold is lower than reflected by the sales figures alone. Stocks continue to be ahead of a year ago, but are being liquidated by the purchasing on a scale heretofore unknown to many retailers. Stores with comparatively higher quality goods and prices have made the most consistent gains in recent months, indicating greater buying power in the hands of per sons normally in lower and middle income class groups. Increased amounts of cash held by consumers, restriated supplies of goods available for purchase, and consumer credit regulations are mainly responsible for the continued decline in installment, charge account, and other consumer debt. • RECENT MONEY MARKET DEVELOPMENTS (Continued from page 2) totaled 581 million dollars, while certificate holdings rose 167 million over the period. Likewise, Treasury bill holdings of others than Federal Reserve banks and weekly reporting member banks rose 700 million dollars ■ in the nine weeks ending March 10, and their certificate holdings increased 900 million dollars. The large increase in certificate holdings of others than weekly reporting member banks and Federal Re serve banks came in the week of the February 1 certificate offering. In the week ending February 3, the certificate holdings of others than weekly reporting member banks and Federal Reserve banks increased 843 million dollars; certificate holdings of weekly reporting member banks in 99 cities increased 72 million and those of Chicago reporting member banks rose 15 million; certificate holdings of New York City weekly reporting member banks declined 91 million dollars; Federal Re serve holdings declined 220 million dollars. In the week, the total amount of certificates of indebtedness out standing increased 619 million dollars, as a 2.2 billion dollar issue replaced a 1.6 billion issue. Subscriptions to the new issue totaled 6,402 million dollars. All sub scribers other than banks which accept demand deposits received allotments in full, totaling 1,163 million dollars. Allotments in full, totaling 309 million dollars, were also made on bank subscriptions of $100,000 or less. Commercial banks which subscribed for more than $100,000 received a 14 per cent allotment. * * WHOLESALE TRADE Seventh Federal Reserve District BANK DEBITS Debits to deposit accounts, except interbank accounts Per Cent Change Jan. 1943 to Jan. 1942 Commodity Net Sales Accounts Outstand ing Stocks (In thousands of dollars) Collec tions Drugs and Drug Sundries. . . . Electrical Goods.......................... Groceries........................................ Hardware....................................... Jewelry........................................... Meats and Meat Products.. .. Paper and Its Products............ Tobacco and Its Products.... Miscellaneous............................... +12.2 -53.2 + 0.1 -23.4 +11.1 - 1.2 -25.8 + 7.0 - 2.2 + 1.5 -42.9 -12.8 -22.3 -20.8 - 5.1 + 2.9 -22.1 - 9.2 -12.7 -40.4 - 5.0 -29.7 -69.8 +39.5 -21.4 - 7.3 -10.6 - 6.5 -14.4 -17.1 Nov. 1942 1942 1941 18,478 5,216,774 15,528 37,901 13,069 32,001 15^570 86,409 57,536 37,450 20,386 4,067,868 13,811 31,582 10,756 - 8 -16 -17 -18 -22 -20 -25 - 6 -17 - 8 -17 + 7 - 7 - 2 - 6 54,462 25,469 13,799 370,506 15,570 19,958 55,499 37,935 61,655 29,868 15,129 374,387 16,984 23,446 64*422 39,718 49,234 25,258 13,105 339,068 11,791 40,719 8,771 27,752 123,038 12,435 14,743 4,389 18,130 71,697 27,597 13,287 47,177 10,404 31,712 156,275 14,258 19,164 5,925 20,693 75,122 30,087 Adrian................ 6,803 Battle Creek. .. 23,206 Bay City........... 17,056 Detroit............... 2,064,516 Flint................... 41,407 Grand Rapids.. 78,537 Jackson............. 29,802 Kalamazoo.... 33,993 Lansing............. 48,522 32,665 14,195 Saginaw............. 3L749 6,930 27,740 19,277 2,256,168 44,229 88,100 30,119 42,262 55,946 35,701 15,000 45il37 5,908 19,538 17,036 1,459,576 35,485 72,627 23,079 33,189 35,789 22,471 20,408 47,312 59,907 12^280 Manitowoc.... 13,789 Milwaukee........ 479,252 582,469 Oshkosh............. 15,761 12,455 34,726 32,570 Sheboygan........ 25,268 26,961 Total 41 Centers 8,457,337 9,789,185 Total 50 Centers 8,675,183 10,040,930 21,722 Moline............... Peoria................ Rockford........... Springfield........ Indiana: Fort Wayne. . . Gary................... Hammond........ Indianapolis. . . South Bend.... Terre Haute. . . 1941 166 256 165 252 161 243 147 191 152 188 Iowa: Cedar Rapids. . Clinton.............. Davenport........ Des Moines.... Dubuque........... Mason City,.. . . Muscatine......... 157 189 117 166 119 168 118 161 114 140 118 143 119 139 148 226 147 224 144 215 134 174 139 173 142 172 229 102 140 135 151 141 199 149 110 195 169 203 115 110 131 139 139 140 Sioux City......... Waterloo........... Michigan: Furniture Manufacturing: Orders in Dollars.......................... Shipments in Dollars................... Paper Manufacturing:* Tonnage Production.................... Petroleum Refining—(Indiana, Illinois, Kentucky Area):* Crude Runs to Stills............... Gasoline Production................ 169 131 165 130 168 140 161 152 163 157 167 161 Wisconsin: Bituminous Coal Production:* Illinois, Indiana, Iowa, and Michigan..................................... Green Bay........ 144 152 150 152 144 142 147 96 155 168 270 137 171 147 137 121 209 169 114 135 152 122 122 123 155 226 260 300 264 263 246 146 147 193 214 178 184 168 153 117 128 135 123 119 121 154 202 218 245 217 225 212 126 135 161 162 151 156 147 133 Building Contracts Awarded: Residential...................................... Total................................................. Department Store Net Sales:* Chicago............................................ Detroit............................................. Indianapolis.................................... Milwaukee...................................... Other Cities.................................... Seventh District—Unadjusted . Adjusted.... 16,968 4,363,910 12.908 30,975 10,149 25,655 11,630 81,209 47,808 34,579 -15 +14 Manufacturing Industries: Durable Goods: Employment.............................. Payrolls........................................ Non-Durable Goods: Employment.............................. Payrolls........................................ Total: Employment............................... Payrolls........................................ 17,390 20,418 -15 -10 MONTHLY BUSINESS INDEXES Dec. 1942 14,769 18,367 17,418 16,059 Source: Bureau of the Census, United States Department of Commerce. Jan. 1943 Jan. 1942 Jan. 1942 - 3.4 Data refer to Seventh District and are not adjusted for seasonal variation unless otherwise indicated. 1935-39 average =100 Dec. 1942 Dec. 1942 Illinois: Aurora................ Bloomington... ChampaignUrbana.......... Chicago............. Danville............ Decatur............. Elgin.................. + 6.9 -43.3 + 7.4 -18.0 -51.0 + 5.2 -15.6 + 6.0 + 6.6 Total........................................ Jan. 1943 Per Cent Change January 1943 from 13,872 88,405 44,922 33,092 59,860 34,224 39,274 8,185 29,179 121,354 13,914 14,815 4,247 63,516 27,973 30,108 9,546 384,037 12,662 29,463 7,391,142 United States 274 Centers.. . 54,780,000 64,990,000 48,605,000 -12 -15 - 9 - 1 - 8 — 15 -14 - 4 -11 -14 -16 -12 -21 -13 -23 -26 -12 - 5 - 8 - 2 -16 -12 - 8 - 6 -11 - 1 -20 -13 - 9 - 5 -30 -16 - 8 + 6 + 4 +11 + 1 + 5 + 9 - 7 +u + 4 + 7 - 5 +1 -11 * + 3 +13 - 1 . +15 +19 ** +41 + 17 + 8 +29 + 2 +36 + 5 - 9 -21 - 6 -11 +29 +25 -18 -21 — 6 - 6 -14 -14 -16 - 2 -14 +14 + 13 fNew reporting centers for which figures were not collected before May 1942. ‘Decrease of less than one per cent. “Increase of less than one per cent. •Daily average basis. DEPARTMENT AND APPAREL STORE TRADE Seventh Federal Reserve District t Per Cent Change January 1943 from January 1942 Total Net Sales Locality Per Cent Change January 1943 from December January 1942 1942 Open Book Sales ment Sales C.O.D. Sales Flint.................................................... ‘Grand Rapids................................... ** Lansing............................................... Milwaukee......................................... ** * 9 7 - 9.6 - 6.3 + 64 - 1.5 +12.6 — 2 9 +29.1 - 4.0 - 3.5 — 5.2 - 2.1 -23.0 -31.9 - 8.1 -25.1 +31.6 -18.9 -14.7 + 16.0 -13.5 -16.6 -26.6 -29.7 + 19.4 +15.9 — 5.2 -18.8 -26.7 -28.3 “Des Moines....................................... “Sioux City......................................... —51.1 -51.6 -47.5 — 49 6 -44.3 -44.6 —50.3 -54.3 -51.5 -53.1 -53.8 -51.0 -51.1 Peoria.................................................. “Fort Wayne...................................... ** — 1.5 -26.7 Stocks on Hand (End of Month) Per Cent Change January 1943 from December January 1942 1942 — Stock Turnover* January 1943 January 1942 Orders Outstanding Per Cent Change January 1943 from December January 1942 1942 13.7 .29 .35 +55.4 +18.6 + 5.4 + 12.7 .33 .32 +33.8 +70.7 -21.1 +14.4 .59 .65 +24.9 +12.1 + 0.2 - 6.3 +25.0 + 6.0 26 .34 34 .36 +41.0 +54.0 +89.4 +11.0 - 5.5 + 13.8 .33 .38 +41.1 +32.3 +21.0 - 7.8 +12.7 .45 .54 +75.3 +10.0 + *Stock turnover is obtained by dividing monthly sales by the average of stocks at the beginning and end of month. **Sales included in the “Other Cities” total. Page 7 COST OF LIVING SALES OF INDEPENDENT RETAIL STORES Seventh Federal Reserve District Per Cent Change January 1942 to January 1943 Illinois Total All Groups*......... Apparel Group............... Drug Stores.................... Eating and Drinking Places........................... Food Group.................... Furniture-HouseholdRadio Group.............. Hardware Stores............ Jewelry Stores................ Lumber and Building Materials..................... Motor Vehicle Dealers. loyra. Indiana Michigan Wisconsin +10 +23 - 6 -12 +21 + 4 +16 +24 + 2 -11 +21 +20 +22 +21 +26 +18 + 6 +24 +31 +34 +14 -12 -20 +20 -12 -17 +55 -11 -14 +45 + 6 -17 +72 -22 -25 +22 - 5 -40 -17 -41 + 5 -29 -11 -50 + 8 . -33 - 1 - 3 +12 + 5 Indexes of the Cost of Goods Purchased by Wage Earners and Lower-Salaried Workers by Groups of Items January 15, 1943 (1935-1939 average = 100) •Includes classifications other than those listed. Source: Bureau of the Census, United States Department of Commerce. City Chicago. . Detroit... Average: LargeCities Cloth ing Fuel, Elec tricity, and Ice House Miscel Furnish laneous ings All Items Food 119.6 121.0 129.9 130.0 120.8 127.7 114.4 114.4 104.5 107.5 119.6 120.8 112.2 115.4 120.6 133.0 125.9 108.0 107.3 123.7 113.1 Rent Percentage Changes from January 15, 1942 to January 15, 1943 Chicago.. Detroit... Average: LargeCities +6.8 +5.7 +12.0 +13.0 +7.2 +8.9 +1.8 -2.7 +1.1 +0.7 +2.9 +2.5 +4.5 +3.8 +7.7 +14.5 +8.4 -0.2 +2.9 +4.7 +4.2 Soiirce: Bureau of Labor Statistics. BUILDING CONTRACTS AWARDED Seventh Federal Reserve District Total Contracts $37,618,000 -43% -35% HOG-CORN RATIOS Residential Contracts $16,911,000 - 5% -14% Jan. 1943 Source: F. W. Dodge Corporation. Jan. 1942 Jan. 1941 16.8 17.9 18 0 15.6 15.9 14.7 14.9 15.3 13.8 13.8 14.3 13.6 16.1 11.6 13.1 16.0 Change from December 1942................. Dec. 1942 16.1 16.3 17 2 16.0 15.7 16.5 14.7 13.3 Source: Bureau of Agricultural Economics, United States Department of Agriculture. WHOLESALE PRICES Per Cent Change from Indexes—Jan. 1943 (1926 = 100) Dec. 1942 Jan. 1942 101.9* 117.0 105.2 96.0* +0.9 +2.8 +0.9 +0.1 + 6.1 +16.1 + 12.3 + 1.5 All Commodities........... Farm Products............... Foods................................ All Other.......................... UNITED STATES FEDERALLY INSPECTED LIVESTOCK SLAUGHTER (In thousands) •Preliminary. Source: Bureau of Labor Statistics. January 1943 EMPLOYMENT AND PAYROLLS Seventh Federal Reserve District Week Industrial Group of January 15, 1943 Lambs and Sheep Per Cent Change from Dec. 15, 1942 1,963 682,984 32,114 + 1.2 602,704 22,910 57,476 1,366,074 33,929 787 1,846 68,676 +1.8 -4.9 -1.0 +1.3 +2.8 -8.6 —1.9 +2.1 Textiles and Products Food and Products. . Chemical Products... Leather Products.. . . Rubber Products. . . . Paper and Printing. . Total............................. 434 1,066 325 174 32 681 2,712 76,570 163,862 85,046 33,501 16,381 86,898 462,258 2,086 5,674 3,791 1,037 748 3,311 16,647 -0.8 -3.6 -1.3 —1.2 +2.1 +0.6 -1.6 +0.8 —6.5 +6.1 -1.4 +2.6 + 1.5 -0.6 Total Mfg., 10 Groups. 5,849 1,828,332 85,323 +0.5 +1.6 Merchandising............... Public Utilities............... Coal Mining.................... Construction................... 4,456 1,078 41 654 139,238 111,439 6,687 22,835 3,772 4,033 272 1,254 -18.3 -0.8 -0.5 -9.4 -17.7 -5.4 -2.3 -5.6 Total Non-Mfg., 4 Grps. 6,229 280,199 9,331 -10.9 -10.7 Total, 14 Groups........... 12,078 2,108,531 94,654 -1.2 -0.2 Page 8 4,790 873 420 1,568 - 7 — 12 -23 + 7 +13 + 6 -19 +10 Per Cent Change January 1943 from January 1942 Ten-Year Average 1933-1942 Per Cent Change January 1943 from Ten-Year Average January 1943 Non-Durable Goods: JOther than transportation equipment. Data furnished by State agencies of Illinois, Indiana, Iowa, Michigan, and Wisconsin. 5,831 1,057 440 1,611 Per Cent Change January 1943 from Five-Year Average RECEIPTS AND SHIPMENTS OF GRAIN At Interior Primary Markets in the United States (In thousands of bushels) +1.9 419 289 466 3,137 5,431 928 340 1,724 Per Cent Change January 1942 to January 1943 Source: Agricultural Marketing Administration, United States Department of Agriculture. Wage Number Number Payments Number of Wage of (In of Reporting Employes thousands Employes Payments Firms of dollars) V Durable Goods: Metals and Products1 Transportation Equipment............. Stone, Clay, and Glass Wood Products......... Total............................. January 1942 Five-Year Average January 1938-42 January 1942 35,900 28,157 19,713 10,416 +82.1 +170.3 10,577 9,809 +239.4 + 187.1 35,841 24,499 29,789 16,124 +20.3 +51.9 16,731 9,820 + 114.2 +149.5 6,368 6,307 8,437 7,239 -24.5 -12.9 4,826 4,756 +32.0 +32.6 2,528 1,110 2,477 1,281 +2.1 -13.3 Wheat: Receipts............ Shipments......... Corn: Receipts............ Shipments......... Oats: Receipts............ Shipments......... Soybeans: Receipts............ Shipments......... •Not available. ' Source: Chicago Board of Trade. * INDUSTRIAL PRODUCTION National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) Industrial activity rose further in January and the first half of February. Retail sales continued in large volume in January and were at an exceptionally high level early in February. 1936 1938 Federal Reserve monthly index of physical volume of pro duction, adjusted for seasonal variation, 1935-39 average = 100. Latest figures shown are for January, 1943. DEPARTMENT STORE SALES AND STOCKS 1940 Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 1923-25 average — 100. Latest figures shown are for January, 1943. MEMBER BANK RESERVES AND RELATED ITEMS Production—Volume of industrial production showed another marked gain in January reaching a level of 200 per cent of the 1935-1939 average, according to the Board’s adjusted index, compared with 197 in December. The increase reflected largely a growth in activity in the munitions industries, including production of chemicals for war purposes. Activity at shipyards and in aircraft and machinery plants continued to expand sharply. Deliveries of completed merchant ships in January were somewhat less than in December but were still at the high level of over 1 million deadweight tons. Total iron and steel production rose to the level of last November, but was still slightly below the October peak, and electric steel output, important for munitions manufacturing, reached a record level 5% times as large as in the 1935-1939 period. Operations at steel mills were near capacity during the first three weeks of February. Nondurable manufactures, as a group, continued to show little change. Produc tion of meats under Federal inspection, except beef, declined sharply from the high level in December. Output of most other foods was maintained; production for military and lend-lease needs, particularly of highly processed foods, rose further and there was a corresponding decline in output of these products for civilians. Newsprint consumption declined in January as a result partly of a Federal order restricting newsprint use. Mineral production declined slightly in January, reflecting a small reduction in output of crude petroleum. Output at coal and metal mines showed little change. Anthracite production in the first half of January was reduced by an industrial dispute, but for the month of January as a whole, output was only 3 per cent lower than in December. Value of construction contracts awarded, according to figures of the F. W. Dodge Corporation, was much smaller in January than in other recent months, but was still slightly higher than a year ago. Reductions occurred in all types of public awards, which now account for most of the total. A decline has been indi cated for some time as a result of actions of the War Production Board designed to limit construction activity to projects that are essential. On October 23, 1942, it had established a committee to review proposals for new construction; through February 12, work on projects estimated to cost 1.3 billion dollars stopped either by the War Production Board or by the Government agencies initialing them. FACTORS USING RESERVE FUNDS / z/ y - MONET IN CIRCULATION S --Y -* ' and oe posits Wednesday figures. Latest figures shown are for February 17, 1943. Distribution—Distribution of commodities to consumers was in large volume in January and the first half of February. Retail sales of merchandise declined less than seasonally in January and rose sharply in the first half of February when a buying wave developed, particularly in clothing. At department stores, sales in creased considerably in the first week of February and then reached an excep tionally high level during the second week, stimulated partly by the announcement of shoe rationing. Freight carloadings declined somewhat less than seasonally in January and the adjusted index increased 1 per cent. Miscellaneous loadings accounted for most of the rise. Substantial increases in loadings of most types of commodities occurred in the first two weeks of February. Commodity Prices—The average level of wholesale commodity prices continued to advance in January and the early part of February. Prices of most farm products showed further increases. Maximum wholesale and retail prices were raised for a number of miscellaneous commodities including coal, while reductions were effected in maximum prices for some items like rayon tops and waste. Retail prices of foods continued to rise from mid-December to mid-January with increases largely in meats, dairy products, and processed fruits and vegetables. EXCESS RESERVES OF MEMBER BANKS Bank Credit—Excess reserves of member banks declined from an average level of about 2.2 billion dollars in the last half of January to 1.6 billion early in Feb ruary, but increased somewhat around the middle of the month. Increases in cur rency in circulation continued to be the major factor responsible for the decline, although substantial fluctuations occurred in Treasury balances and Reserve Bank credit. Most of the decline in excess funds was at banks in New York City and Chicago, where reserves have recently been close to legal minimum requirements. Over the five-week period ending February 17, the currency drain amounted to 520 million dollars, bringing total currency in circulation to 15.8 billion on February 17. 1936 1937 1938 1939 1940 1941 1942 Wednesday figures, partly estimated. Latest figures shown are for February 17, 1943. United States Government Security Prices—Holdings of Government obliga tions at reporting banks in leading cities outside New York and Chicago increased by 640 million dollars over the five-week period ending February 17. At banks in New York and Chicago, holdings of Government securities declined by 360 million, principally through sales to the Reserve Banks for the purpose of restoring reserves. Government deposits at banks were reduced in the period, while other deposits increased. SEVENTH FEDERAL IOWA RESERVE DISTRICT
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