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siness Conditions FEDERAL RESERVE RANK • or CHICAGO i, i ______ Volume 21, No. 2_____________ __________________ February 28, 1938 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business Conditions in the Seventh Federal Reserve District DISTRICT SUMMARY EW indications of improvement, other than in inventory Agricultural Products position, a of recession Fprevailingorinofthe slowing-down in the rateappeared in the MONG favorable trends in food-producing groups may last quarter of 1937, be noted a larger tonnage distribution of packing-house January 1938 data collected by this bank on business activ A commodities, creamery butter, and American cheese this ity in the Seventh district. The preliminary information on hand for the first half of February shows little change in trend. In several industries, orders booked during Janu ary expanded over the December volumes, partly in accord ance with seasonal expectation; however, output in most manufacturing phases continued to recede and was sharply under a year ago, as was new business. The majority of merchandising groups, both wholesale and retail, reported a greater-than-seasonal decline in sales for January from the preceding month and a noticeable widening of the spread from year-earlier volumes. Employment data for mid-January recorded even heavier losses in payrolls than in the number employed, thus reflecting a reduction in man-hours worked. Industry CTIVITY in the steel industry remained at a level decidedly under that of the corresponding 1937 period, as consumers of steel have continued to curtail operations. Although steel casting foundries and stove, range, and furnace factories had heavier orders in January than in the preceding month, the volumes shipped showed large declines from both a month and a year earlier as did output of malleable castings. Schedules of automobile manufac turers continued to be reduced in January and production was considerably smaller than in the 1937 period. In building construction, there was a further sharp drop, with the volume less than half that of last January; the move ment of building materials likewise was light. The gain in orders booked by furniture manufacturers in the district was much less than is usual and shipments fell off more than seasonally. Activity in the paper industry recorded some increase over December, but remained well below the year-ago level. A year than in January 1937. Inventories of these products continued substantially under a year ago, despite the fact that production of meats and butter was much heavier and cheese manufacture only slightly smaller than last January. There was, however, a considerable lessening in the decline from a year earlier in stocks of both meats and butter. The movement of wheat and corn at interior primary markets exceeded that of last January by a wide margin, and visible supplies of these grains totaled much larger than a year ago; export volumes have continued to increase. Trade N THE majority of wholesale trade lines in this district, recessions January from month 1937 Iwere greaterinthan seasonal for the closing and salesofvolumes the period aggregated much smaller than for last January. Similarly, declines in reporting retail groups, such as the department store, shoe, and furniture trades, were larger than usual, while losses from a year ago exceeded considerably those recorded in the last quarter of 1937. On the other hand, the situation with respect to inventories registered improve ment in January; stocks of both wholesalers and retailers showed a marked reduction in margins over a year earlier or else totaled under that level. Credit ARNING assets of reporting member banks in the Sev were dollars higher on E16enth districtweeks 22 milliononly slight changesFebruary than four previous; were shown during the period in deposit liabilities of these banks. New financing by means of bankers’ acceptances declined in January from December, while dealer sales of commercial paper increased in this comparison. January on total loans and discounts by these Chicago banks averaged 2.64 per cent—the same as for December and Jan uary 1937—while the average for the larger Detroit banks Member Bank Reserves dropped to 2.53 per cent from the 2.60 and 2.65 per cent DECLINE of 17 million dollars was recorded between averaged a month and a year ago, respectively. January 19 and February 16 in Seventh district mem Open Market Paper ber bank reserve balances. This decrease resulted from a 69 million dollar excess of Treasury receipts over disburse ANKERS’ acceptance statistics for January followed ments, which, however, was largely counteracted by inter normal trends, on the whole. New financing by Seventh district movements of funds netting a gain of nearly 45 district accepting banks ran 12 per cent below December million dollars and by 7 million dollars added by other and purchases were 7 per cent less, but portfolios were 14 factors. per cent larger at the end of the period. A considerable decrease in the amount of maturities explains this trend as Interest Rates well as the nominal increase in outstandings over December O WELL-DEFINED changes from mid-January to Feb 31. All items showed declines from a year ago, ranging ruary appeared in the interest rates charged by the from 7 per cent in the case of new financing to 42 per cent in larger Chicago and Detroit banks. The rate earned during the banks’ portfolios. Even greater differences are noted Credit and Finance A B N in comparisons with the 1928-37 average for January, with declines generally around 70 per cent. Activity in the Chicago open bill market drifted below December’s low level. New financing by several large Chicago banks during the first half of February showed a sharp decline from the corresponding January period and an even larger drop in the year-ago comparison. Sales of commercial paper by Midwestern dealers during January and paper outstanding at the end of the month both improved their December positions. In each of these items the volumes were above both a year ago and the 1928-37 average for the date, although increases in sales were more pronounced, as is seasonally expected, than in outstandings; the former were nearly two thirds higher than in January 1937 and 26 per cent above the ten-year average. This improvement can be ascribed to stronger demand from both country and city banks coincidental with increased borrow ings on commercial paper. During the first half of Febru ary, sales followed seasonal trends, dropping about one fifth below the corresponding January period. Selected Seventh District Banking Data * Agricultural Products Grain Marketing Wheat * ■"Number of Points. February characteristics as did the Tcountry as exhibited the same noticeable of which was the a whole, the most decline in railroad obligations, even the best. Top grades of industrials and utilities, on the other hand, were quite stable. The abnormal spread which has prevailed for the last several months between the prices of the most conservative corporates and municipals and those of lower quality, con tinued through the current period. A slight improvement in general conditions witnessed during early January proved to be short-lived, and the market returned to its former in active state. Institutional demand continued to be the main stay of the market, and new issues were conspicuous by their absence. The 91-day Treasury bills dated February 23 sold at an average nominal discount of .092------the first week since mid-January in which the Treasury has not improved its terms of financing. Chicago stock prices, as reflected by the Chicago Journal of Commerce average of twenty leading stocks, continued to drift lower after their moderate upswing early in the year. The average price on February 21 was $39.34, close to the 1938 low recorded on January 3. * FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Change from February 16 January 19 February 17 1938 1938 1937 Total bills and securities............................. $283 $ +5 $ 0 Bills discounted.............................................. 0 0 0 Bills bought.......................... 0 0 0 U. S. Government securities....................... 282 +6 0 Total reserves.................................................. 1,797 —19 +138 Member bank reserve deposits.................. 1,017 —18 + 103 All other deposits........................................... 62 +1 +22 Federal Reserve notes in circulation.... 966 +17 Ratio of total reserves to deposit and Federal Reserve note liabilities com bined............................................................. 87.8% 0.0* +0.7* Securities Markets HE Midwestern bond market during January and early * CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) Change from February 16 January 19 February 1938 1938 1937 _ Assets Loans and investments—total................... Loans—t9tal.................................................... 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. Government................................................ Other securities.............................................. Liabilities Demand deposits— adjusted...................... Time deposits.................................................. Borrowings....................................................... $2,978 953 * +22 ' +6 45 530 49 47 +2 +1 +6 —3 85 87 4 —2 0 0 +i3 —4 47 59 1,443 +2 +1 +13 * " * —2i2 188 394 —1 +4 +24 —12 2,155 884 0 0 +2 0 —119 +30 0 $ —151 +49 " * * * * *Not Available. VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions) Per Cent of Increase or Decrease from January December January 1938 1937 1937 Chicago.............................................. —16.8 —19.9 —16.1 —9^8 Indianapolis..................................... —7.5 Total four larger cities.................. 37 smaller cities............................... —17.0 —13.1 —18.5 —11.3 Total 41 centers.............................. —16.4 —17.5 ESHIPMENTS of wheat during January from interior primary markets in the United States showed a sea * * * * sonal decline, but receipts at these centers were almost as heavy as in December. Wheat exports increased, although TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAGO AND DETROIT BRANCH sales to foreign countries were below expectations until (Exclusive of Treasury checks and of non-transit items drawn on own bank) early February. Substantial offerings of Australian wheat January 1938 January 1937 in the United Kingdom and unsettled domestic and foreign Total country and city check clearings: Pieces........................................................... financial markets were chief factors in the softness of wheat 9,747,174 Amount..................................... prices in late January; quotations for No. 2 hard winter Daily average clearings: Total items cleared— wheat in cash positions at Chicago ended the month at 389,887 $.99%. and $1.02%. By February 9 the influence of con Items drawn on Chicago— tinued drouth in the southwestern United States and better 64,437 export sales had strengthened the market, but rains over Items drawn on Detroit— Pieces....................................................... much of the drouth area caused general liquidation and Amount........................................... R $10,606,063 Page 2 * price weakness again in mid-February. On February 21, these prices stood at $.98% and $1.01%. Visible supplies of wheat by February 19 had declined more than season ally from a month earlier, and though still about 50 per cent higher than year-ago stocks, totaled 46 per cent less than the 1928-37 average for the date. average. The movement to inspected slaughter—inclusive of animals that did not pass through public stockyards—showed some divergence from the trend of market receipts: the slaughter supply of cattle declined in January from December but exceeded the 1928-37 January average as did the number of lambs and calves. Cattle and calf reshipments to feed lots continued during Corn and Oats January the seasonal decline prevailing since October, but ORN receipts at interior centers of accumulation were those of lambs recorded a nonseasonal gain of one per cent lighter for January than in recent months, but reship over December. The movement of feeder cattle and calves exceeded that of January 1937 and the 1933-37 average for ments of the grain were the largest since July 1933. Exports were also the highest in several years. Prices for No. 2 the period, while the number of lambs remained decidedly yellow com for current delivery at Chicago displayed some smaller in both comparisons. easiness in the latter half of January, principally because Livestock on Farms of a quiet export demand and weakness in surrounding mar kets, standing at $.58% and $.59% on January 31. They HE annual inventory, as estimated by the United States were steadied in the first three weeks of February by a Department of Agriculture, shows that farm holdings of revival in sales for export. Visible stocks of corn on Feb swine increased and those of most other livestock decreased ruary 19 were 6 per cent lighter than a month earlier but on January 1, 1938, as compared with a year earlier. The almost three times as large as in 1937 at the same time. extent of these changes is reflected in the following tabu The oats movement remained below average in January, lation : although reshipments expanded counterseasonally over December. Exports of oats continued in fair volume; prices (In thousands) Five States Including were mostly influenced by the action of other grains and Seventh District United States were down about one cent on February 21 from a month 1938 1937 1938 1937 earlier. Visible supplies of the grain remained practically Number: Pigs............................... Hogs and 16,935 15,788 44,418 42,948 Cows and Heifers, unchanged and continued below a year ago and the tenkept for milk*......................... 6,407 6,453 24,902 24,991 Other Cattle and Calves.......... 7,205 6,955 41,028 41,457 year average. Lambs and Sheep....................... 5,475 5,230 52,918 C T MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) January January December January 1928-37 1938 1937 1937 Av. Wheat: Receipts... 10,625 10,863 7,245 15,249 Shipments. 13,156 16,492 8,257 11,097 Corn: _ Receipts... 33,069 35,744 12,490 19,778 Shipments. 21,179 16,310 4,834 10,721 Oats: fa? Receipts... 5,461 5,489 4,012 5,789 Shipments. 4,739 4,206 7,076 5,352 Movement of Livestock GREATER than seasonal expansion in cattle, hog, and in January December Aatlamb receipts took inplace United States,over marketings public stockyards the but calves declined counterseasonally to the lowest level since last February. Though continuing much under the 1928-37 average for the month, receipts of hogs increased over a year ago; on the other hand, those of other livestock de creased from last January and approximated the ten-year LIVESTOCK SLAUGHTER (In thousands) t Yards in Seventh District, January 1938............................... ... Federally Inspected Slaughter, United States: January 1938............................. .- - December 1937......................... .... January 1937............................. .... Lambs and Cattle Hogs 219 841 328 77 830 859 867 4,201 3,958 3,519 1,552 1,403 1,700 420 452 484 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Beef Steers (average)... .... Fat Cows and Heifers................. . ... Calves............................................... Hogs (bulk of sales)..................... ----Lambs.............................................. Week Ended Feb. 19 1938 $7.80 6.80 8.20 Jan. 1938 $8.30 6.95 10.00 7.95 8.35 Months of Dec. 1937 $8.95 7.35 9.75 7.85 8.90 1937 $10.75 7.50 9.75 10.25 10.35 Horses and Colts........................ Mules and Mule Colts.............. Total Farm Value: Hogs and Pigs.................................... Cows and Heifers, kept for milk*.............. Other Cattle and Calves Lambs and Sheep............ Horses and Colts............. Mules and Mule Colts.. 52,588 11,445 4,571 2,820 249 2,905 262 11,163 4,477 $225,584 $226,563 $498,025 $510,504 369,519 1,355,926 197,000 1,059,764 34,246 323,746 340,321 1,013,960 32,456 548,121 1,259,207 1,004,961 316,329 1,134,912 593,898 400,036 214,164 36,737 296,618 28,483 *Two years old and over. Meat Packing T^ROM a level which in the first week of January was -*- under a year earlier, activity at inspected slaughtering establishments in the United States expanded to such an extent that for the month as a whole it was higher than in of the corresponding period of 1937. The production of packing-house commodities rose 4 and 12 per cent, respec tively, over a month and year earlier and was within 3 per cent of the 1928-37 January average. Furthermore, the tonnage sold exceeded that of last January by 2 per cent, though falling more than seasonally under current produc tion and being 2% per cent lighter than in December as well as 10% per cent smaller than in the ten-year average for the period. Inventories of these products in the United States had accumulated more than seasonally by February 1 over the beginning of the year, but totaled 16 per cent under the 1933-37 average for the date. Despite a decline in beef, barreled pork, lamb, and pork loins, the general price level of animal products was somewhat higher for January than during the closing month of 1937. It was, however, much below a year earlier. Dollar sales billed to domestic and foreign customers exceeded those of December by 7% per cent and the 1928-37 January average by 5% per cent, but showed a decrease of 11% per cent as compared with the first month of 1937. Payrolls at the close of January regis tered increases over December of 7% per cent in employes, 11 per cent in working hours, and 11% per cent in wage Pmge 3 payments. Moreover, comparisons with a year ago became more favorable during the period, as wage payments in creased 13% per cent and hours worked and employes declined only 1% and 4 per cent, respectively, from Janu ary 1937. In production, the margin of improvement over a year earlier had narrowed considerably by mid-February. Industrial Employment Conditions EVENTH district industries were operating with smaller S forces and on shorter time schedules by the middle of January than a month earlier. The decline in man-hours of work was reflected with fairly close accuracy in the reported payroll figures, as adjustments in wage rates were minor during this period and exerted little influence as a whole. ForeigiVrrade Some disparity, however, may be due to the fact that in HIPMENTS of packing-house products for export aggre times of recession the skilled and more highly paid worker gated less in January than for December, owing to a is generally retained longer than the unskilled laborer. The slackening in European demand and because of the adversecurrent decline of 17% per cent in industrial payrolls, fol influence of the maritime strike in Porto Rico. After open lowing the extensive recessions in this item during the two ing the month in good volume, British demand for United preceding months, brought aggregate wage payments 24 States lard diminished by mid-January, while sales to per cent below those of a year earlier. Employment de Czechoslovakia declined because of a reduction in import creased 12% per cent from mid-December and totaled 18 quotas. Trade with Cuba continued satisfactory. English per cent lower than in January 1937. demand for American bacon remained relatively good, but None of the fourteen main industrial divisions into which that for hams tended to decrease in the closing weeks of the month. Prices of United States lard in the United Kingdom the data are classified, escaped the general reduction in were below Chicago parity in the last half of January, and either employment or payrolls. All of the States that ham quotations were under the Chicago basis all month. include the Seventh Federal Reserve district shared substan February 1 inventories of United States packing-house com tially in the recessions, with Michigan and Indiana the modities in foreign markets—including those in transit— heaviest contributors. Payrolls in the former State decreased nearly equaled the January 1 level. Imports of animal 30 per cent and in the latter close to 20 per cent from a products into the United States declined in January from month earlier. The iron and steel industries sharply cur tailed employment and payrolls, blast furnaces and rolling December. mills operating at a very low rate of capacity as did also machine shops and foundries. The automobile and trans Dairy Products portation equipment industries showed reductions of 20 per REAMERY butter manufacture in the Seventh district cent in number of workers employed and 30 per cent in totaled for January seasonally one per cent above the wage payments. Manufacturing classifications registering December amount and 8 per cent more than in Januarythe smallest payroll declines in the month were textiles, 1937, but remained 12 per cent less than in the average for food products, leather products, and the paper and printing the period in the preceding ten years. Again seasonally industries. Of the non-manufacturing groups, public utilities heavier than current production, the tonnage sold aggregated showed a moderate decrease in wage payments, while losses 3% Per cent more than in December, 18Y2 Per cent above in the merchandising and construction industries were more the year-ago level, and 1 % per cent greater than the 1928-37 pronounced than usual for the period. average for January. Production of butter in the United States, in contrast to the Seventh district trend, was slightly below the volume of a month earlier and showed only a minor increase over a year ago. United States inventories EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT of the commodity declined much less than is seasonally expected between January 1 and February 1, and on the Change from Week of January 15, 1938 December 15, 1937 latter date were within 4% million pounds of the 1933-37 Report Wage Earn average for February 1. Sizable imports of butter contin Industrial Group Earn ing ings Wage Earn Firms (000 Earn ings ers ued, as did a heavy production of competitive substitutes. Omitted) ers No. No. After holding steady in the second half of January, butter $ % % prices declined about 3 cents in the first three weeks of Durable Goods: Metals and Products1.. 1,721 390,172 —11.6 9,191 February. Vehicles............................ 427 283,767 6,965 —20.4 Stone, Clay, and Glass. 264 15,551 322 —16.2 A nonseasonal recession of 4 per cent was shown in Janu Wood Products.............. 464 38,164 698 —10.3 Total................................. 727,654 2,876 17,176 —15.3 ary from December in the manufacture of American cheese Goods: in Wisconsin, and the volume produced was 2 per cent below Non-Durable Products.. Textiles and 384 55,666 953 —6.0 —2.2 the January 1937 amount but totaled 3 per cent heavier Food and Products.... 963 99,993 2,650 —4.9 —3.6 Chemical Products........ 286 34.067 1,022 —10.6 —10.2 than in the 1928-37 average for the month. Distribution of Leather Products........... 164 21.067 414 —4.2 —3.2 Rubber Products........... 31 14,234 293 —22.6 the commodity from primary markets in the State gained —29.7 Paper and Printing.... 703 74,033 2,063 —4.4 —3.4 16 per cent over a month previous and rose to a level 3 Total................................. 2,531 299,060 7,395 —6.6 —5.7 per cent above a year ago; it was, however, 8 per cent Total Mfg.t 10 Groups... 5,407 1,026,714 24,571 —12.9 —19.5 smaller than the 1928-37 January average. Inventories Merchandising2.................. 4,822 123,430 2,768 —18.1 —15.3 of cheese in the United States diminished about seasonally, Public Utilities................... 983 101,850 3,395 —0.5 —1.0 Coal Mining........................ 26 4,714 118 —0.3 —19.4 much of the decline taking place in Wisconsin, and the Construction........................ 348 6,931 191 —22.1 —24.2 margin over the average for five years previous had widened Total Non-Mfg., 4 Groups 6,179 236,925 6,472 —11.2 —8.8 slightly by February 1. Cheese prices exhibited a continued Total, 14 Groups............... 11,586 1,263,639 31,043 —12.6 —17.5 softening tendency throughout January and the first three weeks of February. *Other than Vehicles. Illinois, Indiana, and Wisconsin. S C ( M C H< O ON TTT TT Par* 4 Petroleum Refining from miscellaneous sources, although some tonnages have been placed by the railroads for track repairs. Pig iron ETROLEUM refineries located in the Indiana, Illinois, production during January in the Illinois and Indiana dis and Kentucky area, were operating at 89 per cent of trict was the lowest for the month since 1934. The scrap capacity in the week ended February 12, or at a rate some iron and steel market has been inactive, with prices nominal. what higher than that prevailing in January. Daily average After a steady decline during the entire last quarter of crude runs to stills during January in this territory were 1937, incoming orders for steel castings at Seventh district the lowest since early 1937, and the margin of gain over foundries rose sharply in January, by 45 per cent in dollar the comparable year-ago average was reduced to 1% Per units and 73 per cent in tonnage. Malleable castings, which cent. Crude runs in the United States showed a similar trend. showed a slight rise in the volume of orders booked during December, resumed a downward trend in January with Manufacturing losses of 7 and 9 per cent, respectively, in the two units of measurement. Both types of castings continued in small Automobile Production and Distribution demand as compared with a year ago; orders for steel cast RELATIVELY small number of automobiles was pro ings amounted to only 15 per cent and those for malleable duced during January in the United States, and Febru castings to 42 per cent of the respective tonnages reported ary output is indicated as running even lower. Declines of for January 1937. Shipments and production declined 36 per cent and 50 per cent from the preceding month and appreciably during the current month—the losses were even a year ago, respectively, are represented in the aggregate heavier than recorded for December, ranging between 24 of 156,387 passenger cars produced this January, while and 29 per cent. Decreases in these items from a year truck output numbering 54,063 vehicles was 34 per cent less earlier totaled larger than in recent months, the tonnages than in December and 23 per cent smaller than in January produced and shipped declining by a little over one half 1937. Comparisons with last year would have been even in malleable castings and by as much as three fourths in more unfavorable, had not the strike in General Motors steel castings. plants affected operations to a considerable extent in the - Orders for stoves and furnaces were more than one half early part of 1937. No improvement can be noted in the January data col again as heavy in January as in the preceding month and lected by this bank on distribution of new automobiles in 50 per cent below those of a year ago as against a decline the Seventh district. Sales of both wholesale distributors of 75 per cent recorded in the yearly comparison for Decem and retail dealers continued to decline and to total far below ber. Shipments and production were about one half as the year-ago volumes; stocks, though showing little change large as in January 1937. The former item continued a in number from the end of December, remained much downward trend that has prevailed since last September; heavier than a year previous. On the other hand, sales of the latter showed an upturn of 14 per cent, thus slightly used cars rose substantially over those of December and counteracting the decline prevailing in the preceding quarter. were only moderately smaller than last January. Used cars Paper and Pulp in dealers’ hands at the close of January numbered but slightly greater than on December 31 and somewhat less UTPUT of Seventh district paper and pulp mills in than a year earlier. creased in January over the low December volume, but remained well below year-ago levels. Inventories of paper MIDWEST DISTRIBUTION OF AUTOMOBILES showed some tendency to decline, and the large margin of increase in stocks over the comparable year-earlier date January 1938 Per Cent Change from narrowed somewhat. The paper industry operated at about Companies 80 per cent of capacity during the month, or 8 points above Included December January December but 16 points lower than during January 1937, 1937 1937 while the pulp industry operated at about 20 points less New Cars: than last year. Wholesale— P A O On Hand End of Month— Used Cars: —41.1 —39.7 —70.9 —65.2 15 15 —22.1 —20.2 —47.0 —38.7 32 32 —0.2 —3.2 +79.3 +84.8 32 32 +27.0 Retail— —8.3 32 +1.0 —1.9 —7.9 +4,3 32 32 Salable on Hand— Value..................................................... PAPER AND PULP INDUSTRY SEVENTH DISTRICT January 1938 Per Cent of Increase or Decrease from December January 1937 1937 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)................................ +7.3 +11.0 +16.6 +14.6 +10.2 —13.8 —30.2 —15.5 —17.2 —10.5 —22.4 +35.2 Iron and Steel Products^ +3.1 —18.5 RENDS in the steel industry have remained practically + 1.4 +53.7 unchanged in recent weeks. Operations in the Chicago district have fluctuated slightly up or down as among the Furniture various producers, the rate of steel ingot output averaging ATA covering activity in the first month of the current 25 per cent of capacity in the middle of February as com year revealed little or no evidence of improvement in pared with a rate of around 27 per cent a month previous. the furniture industry of the Seventh district. Although new A year ago in February, production was above 80 per cent and rising despite flood and strike conditions. Buying so orders of reporting companies rose 75 per cent over the far in 1938 has been for immediate requirements only and December volume, because of business hooked at the usual T D Pt|« 5 furniture mart held in January, they increased to a much lesser extent than is customary. Furthermore, the 27 per cent decline recorded in January shipments from the pre ceding month was noticeably greater than seasonal. Both items were considerably smaller than a year earlier or the 1928-37 average January volumes. Unfilled orders on the books at the end of January amounted to less than new orders received during the month, and continued to total only about half as large as a year ago at the same time. The production rate is currently under 50 per cent of the oretical capacity and 30 points lower than in the early part of 1937. The Building Industry Total dollar sales at reporting retail yards, which are affected largely by the demand for coal at this time of the year, decreased from December by considerably more than the 8 per cent recorded in the 1928-37 average for January. Preliminary reports from cement plants within the district indicate that shipments in January totaled about the same as in December and 25 per cent below those in the month last year, while stocks were heavier in both comparisons. Brick deliveries declined from the preceding period but continued approximately 40 per cent under the level of a year earlier, and inventories were somewhat larger than at the end of January 1937. Prices of building materials, according to the wholesale price index of the United States Bureau of Labor Statistics, were in general about one per cent lower in the first week of February than in the corresponding week of January. *» Construction ONSTRUCTION work in this district fell off sharply LUMBER AND BUILDING MATERIALS TRADE further in January, as contracts awarded dropped to the lowest level in approximately three years and were close January 1938 to 60 per cent under the January 1937 volume which, how Per Cent Change from Number of Class of Trade Firms or ever, had recorded a substantial increase over the closing December January Yards 1937 1937 month of 1936. All types of construction, including resi dential and non-residential building, and public works and Wholesale Lumber: Sales in Dollars....................................... —1.5 —38.5 9 utilities, showed declines of 50 per cent or better this Sales in Board Feet.......................... .. . —5.3 —47.9 7 Accounts Outstanding1........................ —27.7 —1.6 9 January from a year ago. The downward trend in the com Retail Building Materials: parison with the preceding month was to a considerable Total Sales in Dollars........................... —17.2 —6.9 140 Lumber Sales in Dollars...................... —16.2 —10.5 105 extent seasonal. About 20 per cent of total contracts in Lumber Sales in Board Feet.............. —3.4 72 —0.4 Accounts Outstanding1........................ —9.1 —3.5 139 the current period were for residential building, which ratio is a little higher than either a month or a year earlier. Ratio of Accounts Outstanding1 C to Total Dollar Sales during Month January 1938 BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period January 1938................................................................ Change from December 1937.............................. Change from January 1937.................................. Total Contracts Residential Contracts $18,943,000 —27.0® —57.0® $3,721,000 —20.7% —52.7% •Data furnished by F. W. Dodge Corporation. Some slight reversal of trend took place during January in data on permits issued in 100 cities of the Seventh dis trict, the estimated cost of such permits amounting to 5 per cent more than in December. The rise was effected through gains in Chicago, Indianapolis, and Des Moines, and the totals for the smaller cities of Illinois and Michigan. As compared with a year earlier, the value of permits aggregated almost 30 per cent lower in the current period; however, a similar comparison for the closing month of 1937 showed a difference of over 50 per cent. Wholesale Trade......................................... Retail Trade................................................ December 1937 173.4 287.8 173.6 261.6 January 1937 147.5 276.5 *End of Month. Merchandising Wholesale Trade CCORDING to data now being furnished this bank by the United States Department of Commerce, wholesale trade in the Seventh Federal Reserve district followed the usual downward trend in January, with recessions for the most part greater than seasonal. Declines in the dollar volume sold amounted to 9 per cent in groceries, 17 per cent in drugs, 28 per cent in hardware, and to 30 per cent in electrical goods; the miscellaneous group, however, showed an 11 per cent increase over a month earlier. In the majority of lines, sales this January were substantially below those of a year ago. Inventories in the aggregate for all groups showed little change on January 31 from a month previous and were slightly under those for the same date in 1937. A Materials ANUARY was as usual a dull month in the manufacture and sale of building materials throughout the Seventh district. Lumber distribution at wholesale was slightly below the level of a month earlier, this trend being some WHOLESALE TRADE IN JANUARY 1938* what less favorable than for January in the past ten years Per Cent Change from Same Month Last Year the average for which shows no change in dollar amounts and a rise of 2% per cent in board-foot measurement. At Commodity Accounts retail, lumber sales declined less than seasonally for the Net Sales Stocks Outstand Collections ing period. In comparison with the corresponding volumes of a year ago, lumber sales were considerably lower this Janu —14.3 —8.6 —10 9 —10.1 —23.1 —19.3 ary, especially in the wholesale trade, although the differ +4.2 —8.4 —0 9 —6.8 —4.4 +9.0 +8.7 —8.4 ences were somewhat less marked than a month earlier. —4.3 —4.6 -15.3 +0.9 Outstanding accounts were reduced from both a month and by Bureau of Foreign and Domestic United States a year previous, but their ratio to sales was higher in all ♦Data furnishedCommerce. Additional information on Commerce, trade mav be Department of wholesale except die monthly comparison for wholesale trade. obtained through the Bureau in Washington, D. C« J Page 6 * Retail Trade DEPARTMENT STORE TRADE IN JANUARY 19313 LTHOUGH department store trade in this district fell off little more than seasonally in January this year Ratio of January from the closing month of 1937, declining 55 per cent, it Per Cent Change Collections to January 1938 Accounts reached a level 10 per cent below that of a year earlier, Locality from Outstanding L January 1937 End of December and in the first half of February sales were registering even greater losses from a year ago. Business of Chicago and Stocks End Detroit stores has been showing larger declines in the yearly Net Sales of Month 1938 1937 comparison than has that in other cities of the district. —10.0 —1.6 33.4 37.0 —16.7 Inventory position has improved noticeably in recent —0.3 46.3 50.1 +1.8 months. By the end of January 1938, the dollar volume of Milwaukee......................................... 42'.4 —5.1 —5.2 46 !i —4.8 +0.3 35.5 32.0 stocks at selling price had been reduced to a point one —9.7 per cent under that of a year earlier and was 8 per cent, —1.4 39.2 41.0 or more than seasonally, lower than a month previous. In the retail furniture trade, declines in January from * * * a month and a year previous aggregated, respectively, 44 Sales of shoes, as reported by dealers and department and 16 per cent. The decrease in the former comparison stores, recorded a slightly greater than usual recession in was noticeably larger than the 36 per cent shown in the January from the preceding month, with a dollar volume 1928-37 January average; the loss in the latter represented 55 per cent lower as against a decline of 52 per cent in a widening of the spread begun in the last quarter of 1937 the 1928-37 average for the period. Furthermore, the loss and amounting to 13 per cent in the closing month of the in the yearly comparison amounted to 14 per cent, whereas year. Inventories of furniture and housefurnishings, which in the last three months of 1937 the decreases had been but at the end of 1937 were 14 per cent heavier than a year 2 per cent or less. On January 31 this year, stocks totaled earlier, declined 9 per cent during the current period to only 3 per cent above the same date of 1937, the margin of only 3 per cent above the January 1, 1937 level; stocks excess over a year earlier thus having been brought down of dealers were under those of a year ago, but those of from almost 25 per cent at the end of August. department stores remained larger. A MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of Firms Jan. 1938 Dec. 1937 Nov. 1937 Oct. 1937 Sept. 1937 Aug. 1937 Jan. 1937 Dec. 1936 Nov. 1936 Oct. 1936 Sept. 1936 Aug. 1936 89 Meat Packing—(U. S.)— Sales (in dollars).............................................................. S3 86 100 100 98 101 96 93 99 97 94 Casting Foundries— Shipments: Steel—In Dollars........................................................ In Tons............................................................. Malleable—In Dollars............................................... ........... In Tons................................................... ........... 21 21 33 25 38 46 47 37 49 60 58 47 55 67 70 58 64 77 96 86 76 92 115 107 71 85 95 102 69 98 73 77 66 96 57 59 55 80 74 76 56 80 85 94 50 73 86 96 48 69 Stoves and Furnaces— Shipments (in dollars)................................................... ........... 13 52 124 166 241 245 175 97 214 205 288 219 154 65 37 37 51 53 68 65 81 77 87 81 84 111 67 67 81 81 75 84 91 89 79 89 72 Furniture— Orders (in dollars)........................................................... Shipments (in dollars)................................................... Output of Butter by Creameries— Production......................................................................... ........... Sales.................................................................................... 59 78 101 78 98 75 101 86 101 92 122 111 126 72 85 77 93 88 94 104 106 103 104 101 98 Wholesale Trade— Net Sales (in dollars): Groceries........................................................................ ........... Hardware...................................................................... Drugs.............................................................................. 27 57 52 76 64 75 89 66 88 88 72 116 94 81 115 91 72 101 79 65 64 85 70 93 90 65 85 80 73 108 89 72 96 83 75 84 73 69 74 73 68 70 88 148 180 159 151 155 93 95 117 102 97 100 92 98 123 118 107 106 96 91 151 104 99 105 102 75 87 78 78 78 95 78 88 77 68 78 97 157 194 160 156 164 98 98 117 105 94 101 93 98 117 118 103 104 95 86 139 94 89 97 95 72 84 77 74 75 91 Automobile Production—(U. S.)— Passenger Cars................................................................. Trucks ............................................................................... 53 144 83 217 101 172 102 83 41 139 106 220 106 187 145 195 116 143 65 91 31 120 72 164 Building Construction— Contracts Awarded (in dollars): Residential.................................................................... Total............................................................................... 13 28 16 38 26 41 37 58 34 57 32 65 27 64 28 50 32 52 40 56 39 54 59 77 Pig Iron Production*— Illinois and Indiana........................................................ 49 53 68 98 134 134 120 117 109 108 103 97 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago.......................................................................... Detroit........................................................................... Milwaukee..................................................................... Other Cities.................................................................. Seventh District—Unadjusted............................... Adjusted........ ...................... .... ........... ........... ........... ........... ........... 6 5 44 84 84 ♦Average daily production. Pag* 7 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION HE decline in business activity, which had been rapid during the last quarter T of 1937, continued in January but at a slower rate. Production OLUME of industrial production, as measured by the Board’s seasonally ad justed index, was at 81 per cent of the 1923-1925 average in January as compared with 84 per cent in December. Output of durable goods continued to decline, reflecting chiefly considerable decreases in production of automobiles and plate glass and a further decline in output of lumber. Steel ingot production increased somewhat, the output for January averaging 30 per cent of capacity. In the first three weeks of February, activity at steel mills showed little change at about 31 per cent of capacity, while production of automobiles was at a lower rate than in January. In the textile industries, activity at silk and rayon mills in January showed a sharp rise from the low levels reached in December. At cotton mills, however, there was less than the usual seasonal increase and output of woolen products continued in small volume. Shoe production, which also had been at a low rate in December, increased considerably in January, and activity at meat-packing establishments rose somewhat further. Output of tobacco products remained at a high level, while sugar meltings declined. At mines, bituminous coal production was considerably smaller than in December, and there was also a reduction in output of nonferrous metals. Petroleum production continued at the high level of other recent months. Value of construction contracts awarded in January was smaller than in December and somewhat below the level maintained during the last four months of 1937, according to figures of the F. W. Dodge Corporation. Contracts awarded for public projects increased somewhat further, while awards for private work continued to decline, reflecting a further decrease in residential building and a sharp reduction in awards for factory construction. In the first half of February awards for private projects were at about the same rate as in January, while those for public work showed a sharp decline. V Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to January 1938. FACTORY EMPLOYMENT AND PAYROLLS PER CENT Employment Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 average = 100. By months, January 1934 to January 1938. Indexes compiled by the United States Bureau of Labor Statistics. WHOLESALE PRICES ACTORY employment and payrolls declined substantially further between the middle of December and the middle of January. In the durable goods in dustries, decreases in employment were general and were particularly large at factories producing automobiles, steel, and machinery. Employment in non durable goods industries showed a somewhat smaller decline than in previous months. There was some increase in the number employed at shoe factories and little change in the food industries as a group, but in other nondurable goods industries employment continued to decrease. Employment on the railroads, in mining, and in the construction industry also declined. F Distribution EPARTMENT store sales showed a seasonal decrease from December to Jan uary, while sales at variety stores and mail order sales declined by more than the usual seasonal amount. Freight-car loadings continued to decline in January, reflecting principally a reduction in shipments of coal. D Commodity Prices Index compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1934 to week ending February 19, 1938. MEMBER BANKS IN 101 LEADING CITIES U S. GOV'T OBLIGATIONS RICES of steel scrap and nonferrous metals declined from the middle of Jan uary to the third week of February, following some advance in December and the early part of January. There were further decreases in some other basic commodities, while prices of cotton and silk advanced. Livestock products con tinued downward and a number of finished industrial products declined further. Prices of pig iron and most finished steel products have been reaffirmed for second quarter delivery. P Bank Credit URING the first three weeks of February excess reserves of member banks were little changed from the level of $1,400,000,000 reached at the end of January following the post-holiday return of currency from circulation. During January there were substantial reductions in commercial loans and brokers’ loans and moderate increases in investments at reporting member banks in 101 leading cities. In the first three weeks of February loans and investments of these banks showed little change. D ’34 1935 1936 1937 1938 Member banks in 101 leading cities, September 5, 1934, to February 16, 1938. Commercial loans, which include industrial and agricultural loans, represent prior to May 19, 1937, so-called “Other loans’' as then reported. Pag* 8 Money Rates ATES on Treasury bills and yields on Treasury notes and bonds continued in R February at the low levels reached in the latter part of January. DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111........... W. J. Cummings S. T. Crapo................................... E. R. Estberg. . M. W. Babb................................. F. D. Williams F. J. Lewis................................... .Milwaukee, Wis. N. H. Noyes..................................... MEMBER OF FEDERAL ADVISORY COUNCIL E. E. Brown..................................... OFFICERS G. J. SCHALLER.............................. H. P. Preston................................... J. H. Dillard................................... W. H. Snyder..................................... .. Vice President and Cashier C. S. Young..................................... W. C. Bachman F. Bateman................................. .Assistant Cashier 0. J. Netterstrom. .. .Assistant Vice President J. C. Callahan......................... .Assistant Cashier A. L. Olson. .. A. T. SlHLER.. N. B. Dawes................................. . Assistant Cashier F. A. Lindsten............................ . Assistant Cashier A. M. Black. .. Manager, Planning Department L. G. Meyer................................... .Assistant Cashier F. L. PURRINGTON....................... . Assistant Cashier J. L. Sweet. .. J. G. Roberts.............................. J. J. Endres ... DETROIT R. H. Buss.................................. C. M. Saltnes......................... . Assistant Cashier . Assistant Cashier C. B. Dunn.............................. Manager, Research and Statistics Department .General Counsel BRANCH SEVENTH RESERVE IOWA FEDERAL ILL • INO DISTRICT
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