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rto. **•: Business Conditions R Seventh eserve DISTRICT Federal MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 14, No. 2 January 31, 1931 during December, although that of corn increased sea sonally. HE year 1930 marked a continuance of the declines In distribution phases, automobile sales at wholesale in Seventh district business and industrial activity and retail recorded gains in December over the preceding inaugurated in the closing months of 1929, most lines month, in contrast to a declining trend in evidence a year showing recessions of from 5 to 40 per cent in the yearly previous. Wholesale drug, grocery, and electrical supply totals from those of 1929. In the last month of 1930, sales also expanded, the last two lines contrary to trend however, gains were recorded in many groups over the in other years, while declines in hardware, dry goods, and preceding month, some of them contrary to the usual shoes were smaller than usual for the period. The 63 per trend for the period. Automobile production, for in cent increase in department store trade over the preceding stance, expanded during the month and was also larger month was largely seasonal in character, as were gains in than in December 1929. Operations at steel mills other retail lines, such as shoes and furniture. The vol reached a low point over the Christmas holiday, but a ume of chain store trade likewise exceeded that of Novem moderate improvement in new business and specifications ber. As in manufacturing industries, however, distribu stimulated output again at the beginning of 1931; activity tion of commodities continued below the level of the cor at both steel and malleable casting foundries in Decem responding month of 1929. ber exceeded that of the preceding month. Furniture ship Between the middle of December and January, loans ments and orders booked decreased less than is custom of reporting member banks, both secured and commercial, ary for the period, and leather and shoe production were again declined slightly, and investments increased. De greater than in November. Building contracts again de posits were reduced further, though remaining above those clined, however, and movement of materials was at the of a year previous. Money rates eased slightly during low point of the year. With the exception of automobiles, the period. all of the lines mentioned continued to show a consider ably lower rate of activity than a year previous. Employ Credit Conditions and Money Rates ment in manufacturing groups totaled slightly less in A loss of funds to the district amounting to more than December than in November and about 20 per cent under 21 millions through settlements for commercial and finan the December 1929 level. cial transactions, and an excess of local Treasury receipts Among the industries producing foodstuffs, meat pack over expenditures of approximately the same amount, ing registered a gain in production over November and were the principal changes in factors making for increased only a 2 per cent decline from December 1929, while member bank borrowing. (See tabulation on page two.) sales totaled smaller in both comparisons; butter produc Offsetting these developments, the outstanding changes tion and distribution increased over a month and a year in factors tending to reduce the volume of member previous; manufacture and sales of Wisconsin cheese bank borrowings were the increased holdings of ac showed declines. The movement of all grains was small ceptances (local transactions), decreased member bank reserve balances, and lessened demand for currency folFEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF General Summary T \ CONDITION (Amounts in millions of dollars) Total Bills and Securities....................................... Bills Discounted........................................................ Bills Bought................................................................ U. S. Government Securities................................. Total Reserves........................................................... Total Deposits........................................................... Federal Reserve Notes in Circulation......... . Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined............. ^Number of Points. Jan. 14 1931 $145.5 26.0 36.7 81.8 369.8 335.7 143.6 77.1% Change From Dec. 10 Jan. 15 1930 1930 $+13.2 $ -45.6 +3.6 -60.8 +9.3 +4.4 +11.3 -0.8 -101.8 -26.1 -4.5 -11.4 -146.0 + 1.6 CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Change From Dec. 10 Jan. 15 1930 1930 $-17 $+144 -3 -32 -25 -38 +214 +2.3* Net Demand Deposits......................................... .. Time Deposits....................................................... .. 1,888 1,273 -33 -27 +65 +99 Borrowings from Federal Reserve Bank. . . . . . —3.8* .. .. . . .. Jan. 14 1931 $3,344 1,215 1,255 874 9 +4 -44 Total Loans and Investments.......................... Loans on Securities.............................................. All Other Loans................................................... Investments............................................................ Compiled January 27, 1931 4f. H:' TL 4 ■ +n lowing the holiday season; these and other changes of lesser volume, however, fell short of the aggregate of changes exerting the opposite effect; consequently, mem ber banks increased their loans at the Reserve bank by slightly over 3)4 million dollars on January 14, as com pared with December 10. FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between December 10, 1930 and January 14, 1931 (In millions of dollars) Changes making for increase in member bank borrowing: 1. Funds lost through inter-district settlements for commercial and financial transactions............................................................. 21.64 2. Excess of local Treasury receipts over expenditures.............. 21.11 3. Decrease in reserve bank float.................................................... 0.59 4. Sales of gold to industry............................................................... 0.07 Total................................................................................................... Changes making for decrease in member bank borrowing: 1. Increase in holdings of acceptances (local transactions).. 2. Decrease in member bank reserve balances......................... 3. Decrease in demand for currency............................................ 4. Increase in holdings of other securities.................................... 5. Decrease in unexpended capital funds................................... 6. Decrease in non-member clearing balances............................. Total.......................................................................................................... Excess of changes making for increase in member bank borrowing: Absorption of this excess: Increase in member bank borrowings (discounts for member banks)............................................................ 43.41 15.20 13.36 9.72 1.00 0.31 0.20 39.79 3.62 3.62 Member Bank Credit Loans on securities as well as all other (commercial) loans of reporting member banks were reduced by small amounts on January 14 from the corresponding report ing date in December and from January 15, 1930. In vestments, on the other hand, gained in both comparisons, the increase in this item on January 14 over January 15 a year ago totaling more than 200 millions. Deposits, net demand as well as time, declined in volume from December 10, but showed increases of 65 millions and 99 millions, respectively, over the aggregates on the corre sponding date of 1930. (See table at bottom of page one.) Rate levels have moved downward in Chicago since the middle of December; the prevailing rate on customers’ prime commercial loans, as reported by six large down town banks for the week ending January 15, ranged from 3)4 to 5)4 per cent, a drop of one-fourth of one per cent in the lower limit of the range of 3)4 to 5 y2 per cent on December 15. Ten smaller banks, for the most part in outlying sections, showed a range of 3 to 6 per cent, com pared with 3)4 to 6 during the corresponding period in the closing month of 1930. The average rate earned on loans and discounts by six down-town banks declined 5 points for the calendar month of December—4.56 per cent as against 4.61 per cent for November; in Decem ber 1929, the average rate earned was given as 6.10 per cent. In the City of Detroit, this item declined from 5.64 per cent in November to 5.52 in December, which compares with 6.15 per cent in December 1929. The prevailing rate on customers’ prime commercial loans in the latter city was reported as 4)4 to 5)4 per cent during the week ended January 15; a month previous the indi cated range was 5 to 6 per cent. Commercial paper sales in the Middle West showed a further recession of 2)4 per cent in December and con tinued in approximately half the usual volume for this season of the year. Demand remained moderate, largely as a reflection of recent banking disturbances, and the supply was only fair. December selling rates ranged from 2% and 3 per cent for low to 3)4 and 3)4 per cent for high, the customary charge being 2)4 to 3)4 per cent. Page 2 Outstandings of commercial paper in the Middle West again fell off—by 10)4 per cent—during the month, and on December 31 totaled 11)4 per cent less than at the close of 1929. Sales in the first half of January 1931 aggregated about 7 per cent heavier than for the corre sponding period of December, reflecting a slight improve ment in demand. Quotations closed on January 15 at 2)4 to 3)4 per cent, with most paper moving at 2)4 and 3 per cent. Activity in the Chicago bill market was moderate dur ing the five weeks ended January 14, 1931. Local sup plies of bills ranged between light and moderate, and some expansion took place in the volume of receipts from eastern markets. Demand from local banks was rather limited during the first four weeks of the period but good at the close; sales to out-of-town banks improved slightly. Preference continued to center on 90-day maturities. Rates declined, closing on January 14 at 1)4 per cent for 30-day offerings to 1% per cent for those of 180 days. Dealers’ holdings were reduced to a comparatively low level. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET December 11, 1930 to January 14, 1931 Per Cent Change in Comparison with Period from Nov. 13 to Dec. 10 Dec. 12, 1929 to Jan. 15 Bills purchased.................................... Bills sold............................................... Holdings*.............................................. 1930 —27.5 +16.9 —75.6 1930 —61.2 —33.4 —88.7 *At end of period. Bills accepted and current purchases of bankers’ ac ceptances, as reported by a selected group of accepting banks in the Seventh district, were in substantial amounts during December, though aggregating less than a year ago. Sales attained a higher level than for any month since March and totaled only slightly below the peak of last December, the large increase over November reflect ing for the most part profit-taking during the last week of 1930. The year-end figures showed a sharp decrease from November 29 in the amount of bills held in port folios of accepting banks of the district. Liabilities for outstanding acceptances were smaller on December 31 than for any of the four preceding months and totaled 13 per cent less than at the end of 1929. The value of bills accepted during the first half of January 1931 exceeded that of the corresponding weeks in December by approxi mately 13 per cent, with financing by this means rather liberal for grain and in substantial amounts for sugar, coal, and dollar exchange. The bills covering dollar ex change, coal, sugar, and grain increased over a month earlier, as did those for oil, cotton, machinery, wood products, fertilizer, and copper, while acceptances for iron and steel, wool, silk, clocks, and a number of miscellane ous commodities decreased. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in December 1930 from November 1930 December 1929 +20.3 -32.7 +24.6 -15.2 +125.5 -6.0 -38.7 +107.1 Holdings*............................... Liability for outstandings*......... -7.9 -12.7 Total value of bills accepted___ Purchases.......................................... Sales................................................... *At end of month. Security Markets During the latter part of December and the first few days of 1931, the Chicago bond market displayed a de cidedly improved tone. Many of the high grade issues recovered a large part of the losses sustained since last September, and also there arose, for the first time in many months, an interest in the less widely known issues. These developments followed a period of diminishing de mand and a downward trend in prices the first two weeks in December. Forced liquidation in the stock market, a succession of bank failures, and general uncertainty were ascribed by reporting investment dealers as causes which brought about this situation. Owing to market condi tions, the volume of new offerings was very limited, as practically the only demand was for short-term obliga tions. Institutions appeared to be the heaviest purchasers of bonds during December, although some individual buy ing was in evidence. Prices on the Chicago Stock Ex change declined through most of the month, the average price of twenty leading stocks (*) reaching a low point of $74.42 on December 16. Following the turn of the year, prices have moved slowly upward. On January 14, 1931, the average amounted to $85.16. * Chicago Journal of Commerce. Bank Failures During the year 1930, there were 1,326 bank failures in the United States, involving deposits of approximately $904,000,000, as compared with 642 suspensions and de posits of $235,000,000 in 1929. Of the 1930 total, 188 banks with deposits aggregating $389,000,000 were mem bers of the Federal Reserve System. The Seventh district, which includes approximately 20 per cent of all the active banks in the United States, ex perienced 265 bank suspensions, of which 32 were mem ber banks. Aggregate deposits involved were $111, 000,000 and $27,000,000, respectively. In 1929, a total of 93 banks suspended, with deposits of $36,000,000. Failures in this district were distributed among the five states comprising it as follows: Illinois, 64 failures with deposits of 35 millions; Indiana, 80 with 33 millions; Iowa, 86 with 30 millions; Michigan, 20 with 6 millions; Wisconsin, 15 with 7 millions. Banks reopened in the United States during 1930 num bered 138 of which 27 were in the Seventh district, as compared with 58 and 3, respectively, in 1929. Agricultural Products Grain Marketing Lack of strengthening factors characterized both the cereal and feed grain markets during December. Wheat exports fell to less than half the December 1929 volume and brought the total since July 1 to slightly under the corresponding period of that year. Flour exports also decreased, but the volume since July 1 continued to ex ceed that of a year previous. Restriction in demand for wheat at the end of the year was reflected in an increase in the total United States visible supply on January 3, which had been preceded by declines in previous weeks. As both export and domestic miller requirements were limited by the unusual position of domestic prices above world markets, the firming which characterized prices of cash wheat and old crop futures during the month was attributed to government stabilizing operations. The ex pectation of large diversion of wheat to live-stock feed ing, based on relatively high corn prices during the fall, which made wheat available for feeding in competition with corn, was somewhat modified as corn prices declined continuously during December to the lowest point re corded since 1922. Oats also declined but averaged about the same in December as in November. The movement of all grains at primary markets was small during the last month of 1930. Corn receipts and shipments in creased over recent months, as is usual in December, but totaled less than for any December since 1926. In the futures markets, wide differences existed be tween prices for old and new crop contracts. Strong sup port buying of March and May futures and cash wheat offset the downward influence of considerable liquidation and held prices above the November level, while July futures, reported to have been without such support, were in continuous decline throughout December. Movement of Live Stock Receipts of cattle at public stock yards in the United States increased in December over November and were in excess of a year ago. The gain over the preceding month was contrary to the seasonal trend and largely attributable to light marketing during November. Hog receipts expanded in December, as usual, though con tinuing to total less than in the preceding year and below the 1925-29 average for the month. Lamb marketings continued in large volume for the season. Reshipments of cattle and lambs to feed lots decreased sharply from November, but were greater than in December 1929. Meat Packing , December production at slaughtering establishments in the United States totaled 18 per cent greater than in November and only 2 per cent less than a year previous. The expansion over the preceding month was larger than usual, inasmuch as production in November declined from October, contrary to the customary upward trend. Em ployment data as of the end of December reflected little change in number of employes from a month earlier, but showed a decrease of 2 per cent in hours worked and in wage payments. The demand for packing-house prod ucts remained rather inactive during most of the month because of the holiday consumption of poultry and also owing to the mild weather. December sales billed to LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, December 1930.......................... Federally Inspected Slaughter, United States December 1930.......................... November 1930......................... December 1929.......................... Lambs and Shei Cattle Hogs 218 992 388 113 692 605 658 4,647 4,024 5,083 1,426 1,305 1,091 398 324 346 Calves VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT AVERAGE PRICES OF LIVE STOCK (Amounts in millions of dollars) . Chicago. .. .......... .......... Per Cent of Increase or Decrease From Dec. 1930 Nov. 1930 Dec. 1929 ................... $3,765 +18.6 -17.4 Detroit, Milwaukee, and Indianapolis................ 1,454 +26.9 —9.9 Total four larger cities............................................ 34 smaller centers..................................................... $5,219 891 +20.8 +10.3 -15.5 -13.4 Total 38 centers $6,110 +19.1 -15.2 (Per hundred pounds at Chicago) Native Beef Steers (average) Fat Cows and Heifers............ Calves...................................... Hogs (bulk of sales).............. Yearling Sheep...................... Lambs.................................... Week Ended Jan. 17 Dec. 1931 1930 . . . $9.60 $10.50 7.05 8.55 7.95 6.15 7.65 Month of Nov. 1930 $10.55 7.75 9.00 8.55 6.50 7.45 Dec. 1929 $12.60 8.40 12.75 9.40 9.85 12.80 Page 3 domestic and foreign customers aggregated 4 per cent less in value than in November and 17J4 per cent smaller than in December of the preceding year. Reduced buy ing power of the consumer, lower prices than in 1929, and a small export demand remained chiefly responsible for the latter recession. Sales for the calendar year 1930 totaled 14 per cent less than in 1929. Prices of pork prod ucts declined in December from the preceding month; quotations for beef firmed slightly, veal eased, and those of lamb remained practically unchanged. Inventories of packing-house commodities in the United States were heavier on January 1 than at the beginning of Decem ber, but remained below the five-year average for the date and totaled less than at the beginning of 1930. Domestic demand was reported as fair early in January. Shipments for export declined in December from No vember, and there was a corresponding reduction in stocks of American products abroad (inclusive of commodities in transit on January 1). European demand remained on a limited basis, in so far as the United States was con cerned, owing to the fact that Danish, Dutch, and Ger man interests continued keen competitors for the trade. Companies in the United States, however, reported that some sales of lard were made for January, February, and March delivery. European quotations for meats aver aged below the domestic basis, while lard prices continued about on a parity with Chicago. Dairy Products Seventh district production of creamery butter ex panded 16 per cent in December, which is a customary trend, and for the first time in 1930 was heavier than during the corresponding month of 1929; mild weather, conducive to the milk flow, was largely responsible for the latter gain. Sales increased S per cent in volume over the earlier month and totaled 15j4 per cent greater than in the preceding December, lower prices than in 1929 tending to stimulate consumption. For the calen dar year 1930, decreases of 8J4 per cent in production of the commodity and of 2 per cent in sales were recorded from a year earlier. Statistics of the American Associa tion of Creamery Butter Manufacturers indicate that but ter production in the United States changed little in De cember from November, though exceeding that of the same month in the preceding year. Visible supplies of the commodity in cold-storage warehouses and packing plants in the United States recorded a further decline on January 1 and remained less than a year ago, though larger than the 1926-30 average for that date by nearly 12,000,000 pounds. Prices declined to the lowest level of any month in years. Receipts of American cheese at primary markets in Wisconsin, indicative of production in that state, de creased 4 per cent during the five weeks ended January 3 compared with the preceding period, and were 8J4 per cent below those from December 1, 1929 to January 4, 1930. Reshipments from these centers continued greater than current production but fell off 12 per cent in the comparison with the five weeks ended November 29 and were 16 per cent less than in the corresponding period of a year previous. Production for the calendar year 1930 totaled approximately the same as in 1929, while sales decreased 1}4 per cent. Cheese inventories in the United States showed a further decline on January 1 and aggregated less than at the beginning of 1930, though Page 4 remaining above the five-year average. Prices continued to trend downward. Industrial Employment Conditions The total number employed and aggregate payrolls in both manufacturing and non-manufacturing lines report ing to this bank were slightly less at the middle of De cember than a month previous. This was the fifteenth consecutive monthly reduction registered in total number employed in industry. Manufacturing employment of re porting plants in this district for December approximated 80 per cent of the December 1929 level, while payrolls amounted to less than 70 per cent of those a year ago. The average number employed during 1930 amounted to 86 per cent of the number in 1929, and weekly payrolls in 1930 averaged 77 per cent of the 1929 average. Re porting firms in non-manufacturing lines reduced their number of employes and payrolls somewhat less than did manufacturing groups, so that the level of employment and payrolls in all industry was a few points higher than in the comparisons given for manufacturing. Of the fourteen groups included in the survey, six manufacturing and two non-manufacturing groups em ployed fewer men in December than in November, and with the exception of the rubber products and leather groups had smaller payroll amounts. Groups showing re cessions in both men and payrolls were stone and clay products, food products, lumber, vehicles, construction, and public utilities. The average period during which these eight groups have continuously declined in num ber of employes is from five to six months. The remain ing six groups reported larger numbers employed than in November, and four of these showed heavier payrolls. In the textiles, metals, paper and printing, and chemicals groups, the increases recorded in December were pre ceded by periods of declining employment ranging from two to nine months, while merchandising and coal mining have shown consecutive increases for four and six months, respectively. Reductions in the ratio of applicants to jobs available at free employment offices in Illinois, Indiana, and Wis consin from November to December were probably due in part to the increasing number of men under the super vision of various local relief organizations which are sup plementing the activities at the permanent offices. In EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group of Report ing Firms No. December 15, 1930 Wage Earners No. Earnings (000 Omitted) $ Changes From Nov. 15 Wage Earn Earn ers ings % % +1.4 -1.1 +1.9 -2.5 -12.6 -2.2 +0.7 -3.5 -7.3 +0.8 -0.6 -3.0 +2.1 -2.9 -16.2 -7.9 -0.3 +0.5 +0.8 +3.9 -1.3 +5.8 -3.3 +4.3 -26.6 -3.1 Metals and Products1........ Vehicles................................. Textiles and Products. . . . Food and Products............. Stone, Clay and Glass.... Lumber and Products.... Chemical Products............. Leather Products................ Rubber Products3............... Paper and Printing............ 529 71 137 338 112 229 69 67 8 252 158,468 31,333 27,287 51,504 10,208 22,190 10,625 13,557 2,887 35,680 3,925 689 494 1,309 243 413 268 240 45 1,080 Total Mfg., 10 Groups---Merchandising8.................... Public Utilities.................... Coal Mining......................... Construction........................ Total Non-Mfg., 4 Groups 1,812 176 73 29 183 363,739 8,706 -0.4 34,822 91,189 7,038 9,197 461 142,246 845 2,987 180 245 4,257 +10.1 -1.9 +1.4 -19.4 -0.5 -0.4 2,273 505,985 12,963 Total, 14 Groups................ lOther than Vehicles. 2Wisconsin only. Illinois and Wisconsin. -1.9 Iowa, the increase in this ratio marks the end of the de mand for corn huskers, in which temporary work large numbers were engaged during November. REGISTRATIONS PER 100 POSITIONS AVAILABLE AT FREE EMPLOYMENT OFFICES Month Illinois Indiana Iowa Wisconsin 270 280 177 181 172 251 119 141 451 281 278 207 192 210 163 160 1930 December...................... November....................... 1929 December........................ November....................... Iron Manufacturing Automobile Production and Distribution The expansion shown in December automobile produc tion over November contrasted with a decline for this period in other years, and the gain over December 1929 was the first in the year-to-year comparison since Sep tember of that year. Passenger cars produced in the United States totaled 122,645 in December 1930, repre senting increases of 20 and 35 per cent, respectively, over a month and a year previous; truck output of 31,531 de clined 4 per cent from November, but gained 15 per cent over December 1929. Production of passenger cars for the entire year 1930 of 2,817,025 was 38 per cent smaller than the total for 1929 and the lowest of any year since 1922. Trucks produced totaled 538,150 in 1930, or 30 per cent under a year previous and about equal to the 1928 aggregate. Automobiles sold in the Middle West, by reporting dis tributors and retail dealers, gained moderately in num ber during December over the preceding month. In 1929 during the same period a declining trend was in evidence, and in the majority of other years December sales have declined. The increases shown in December 1930 may be largely attributed to the bringing out of new models by certain manufacturers somewhat in advance of the usual schedule. Comparisons with December 1929 in both wholesale and retail distribution, though remaining unfavorable, showed improvement over those in Novem ber. Cars sold at wholesale by reporting firms during the calendar year 1930 totaled almost 50 per cent under 1929, while the number sold at retail was a little over 30 per cent less; the heavy decline in wholesale distribution may be partly accounted for by that in retail sales and by the unwillingness on the part of dealers to carry the normal volume of cars. Stocks on hand the end of December MIDWEST DISTRIBUTION OF AUTOMOBILES Dec. 1930 Per Cent Change From Nov. 1930 New cars Wholesale— Number Sold............. + 10.0 -0.2 Value............................. Retail— +3.8 Number Sold............... +2.4 Value............................. On Hand End of Month-2.4 Number........................ -4.3 Value............................. Used cars Number Sold.............. -19.7 Salable on Hand— +6.6 Number........................ -1.2 Value............................. ^Average end of month. Dec. 1929 continued their downward trend and averaged more than 40 per cent under the close of December 1929. Used car stocks increased during the month, as sales fell off. De ferred payment sales in December by twenty-nine of the reporting dealers totaled 37 per cent of their aggregate retail sales, which ratio is somewhat smaller than a month previous and compares with 47 per cent for the same firms in December 1929. Calendar Companies Year 1930 Included Per Cent ChangeFrom Calendar Nov. Dec. Year Year 1929 1930 1929 1929 and Steel Products The usual year-end curtailment of steel operations was accentuated in the last weeks of 1930 by the general dull ness prevalent for some time. The rate of ingot output by Chicago mills dropped from about 40 per cent of capacity in the early part of December to no more than 20 per cent at the Christmas holiday; in 1929 at the same period, operations averaged 60 per cent of capacity and in 1928, 85 per cent. By the second week of January this year, the rate had again climbed to around 40 per cent. Moderate improvement was noted in new business over November, although the volume was smaller than a year previous, and mill specifications likewise increased somewhat at the end of the year. Contracting for pig iron continued in December, and the early part of Janu ary witnessed a gain in shipments; production declined further at the end of the year, the daily average for the Illinois and Indiana district of 12,482 tons in December comparing with 13,194 in the preceding month and 19,649 in the corresponding month of 1929. Finished steel prices, as well as pig iron, have shown a continued tendency toward stabilization, and scrap iron and steel have remained unchanged in a dull market. Activity at casting foundries of the Seventh district displayed improvement in December over November. Shipments and production of both steel and malleable castings were larger, while orders for steel castings showed a gain in contrast to a decline during the same period a year previous. As compared with the closing month of 1929, however, activity averaged decidedly less; ship ments and production of steel castings were about twothirds smaller and orders booked declined almost 50 per cent, while for malleable castings these items totaled less than half the December 1929 volume. Shipments of re porting stove and furnace manufacturers of the district aggregated about one-fourth less in December than a month earlier and approximately one-third below the cor responding month of 1929; new orders received were 45 per cent smaller than in November and 9 per cent under last December; production was at a very low point, sev eral factories shutting down during the period. WHOLESALE AND RETAIL LUMBER TRADE Class of Trade Dec. 1930: Per Cent Change From Number Nov. 1930 -22.2 -35.6 -49.0 -48.6 25 25 24 24 23 23 -28.8 -27.6 -32.2 -37.3 50 50 50 50 46 46 -44.9 -42.1 -19.3* -21.6* 51 51 49 49 -12.9 51 51 +4.3* -13.7* 51 51 51 51 47 47 —47.0 —28.7 —35.4 17 -30.1 -13.2 —29.3 196 182 47 -23.3 -33.0 -22.3 — 11.4 —6.7 of Yards Wholesale Trade: 47 47 -18.1 Dec. 1929 Retail Trade: 14 Ratio of accounts outstanding1 to dollar sales during month Retail Trade............................................ Dec. 1930 205.7 556.3 Nov. 1930 168.0 445.2 Dec. 1929 180.3 418.2 •End of month. Pcfte 5 Furniture Orders booked during the month of December by fur niture manufacturers in the Seventh district fell off only 10 per cent from the November total, as compared with an average decline in other years of 38 per cent. More over, shipments, which were slightly in excess of new orders, totaled only 8 per cent under those in Novem ber, the average recession at this season approximating 19 per cent. Cancellations were low, counteracting to some extent the effect of the large volume of shipments on the amount of unfilled orders outstanding at the close of December, which declined 13 per cent from the end of November and stood at 52 per cent of orders booked during the month, this ratio comparing with 54 and 48 per cent in November and October. Orders booked and shipments were 23 and 45 per cent, respectively, under the December 1929 totals, and for the year 1930 aggre gated 39 and 40 per cent under 1929. Production was contracted slightly in December, the rate of operations maintained being 3 points under that of November and equal to about 49 per cent of capacity. of slight increases in quotations on cement and common brick. Cement production in the Middle West exceeded shipments, and stocks at the end of 1930 were 25 per cent above the volume of a year previous; distribution of cement in the five states including this district, esti mated from totals for eleven months, was over 12 per cent less in 1930 than in 1929. Building Construction Total building contracts awarded during December in the Seventh Federal Reserve district were the lowest for any month since February 1922. Each month during 1930 was below the corresponding period in 1929, Decem ber showing the largest decrease, of more than 50 per cent. Contracts for residential building amounting in Decem ber to about one-sixth of the total, were likewise below any month in recent years. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Building Material, Construction Work The final month of 1930 registered the low point of the year in practically all lines of building materials. While in part seasonal, this trend represented a continua tion of the irregular contraction which operated through out the year. Sales in dollars by reporting lumber re tailers, who handle other building materials as well, were 30 per cent less than in December 1929. An indication of the effect of price declines in the past twelve months is given by those retail yards which report lum ber sales in board feet, in that a considerably larger de cline occurred in the total value of sales than in board foot volume. On an index computed from monthly and yearly percentage changes, December 1930 amounted to less than 50 per cent of the 1925-7 monthly average. The average for the twelve months of 1930 was 25 per cent below the same base period. Business of wholesalers showed a smaller decline from November than that of retailers, but as compared with December 1929 a decrease of 47 per cent was shown. Against the 1925-7 base, the average wholesale trade for 1930 was at a somewhat lower level than that of retailers. Collections at the end of the year were slow, and while accounts outstanding were reported by both wholesale and retail dealers to be less at the end of December than a month previous, the change was much less than the de cline in sales, causing sharp rises in the ratios of accounts to dollar sales. Inventories continued large in producers’ and wholesalers’ hands, but retailers failed to increase their relatively small volume of stocks, owing to the uncer tainty of future demand and price levels. Prices for mate rials remained practically unchanged with the exception $35,180,474 -53l $713,751,083 Change from year 1929............................ Per Cent Change From Same Month Last Year Net Sales Groceries.............. Hardware............. Dry Goods........... Drugs.................... Shoes..................... Electrical Supplies........... -2.1 -22.6 -22.9 -11.4 -17.6 -23.5 Page 6 $5,823,285 -46% -48% $156,307,490 -60% Merchandising December business in reporting lines of wholesale trade showed a more favorable trend than in November. In creased sales were recorded over that month of 4 per cent in drugs, 2 per cent in groceries, and 20 per cent in electrical supplies. The gains in the last two groups were contrary to the usual trend for the month, while that in drugs compared with declines in several recent years. The recessions of 9 per cent in hardware, 7 per cent in dry goods, and 15 per cent in shoes were smaller than customary for the period. Comparisons with the corre sponding month a year previous were more favorable in the majority of lines than in November; the decline of only 2 per cent in groceries, however, was due to gains shown by a few large firms that have acquired additional branches. For the whole of 1930, as compared with 1929, grocery sales declined 4 per cent, hardware 24 per cent, dry goods 28 per cent, drugs 13 per cent, shoes 33 per cent, and electrical supplies 25 per cent; a few gro cery firms experienced a gain for the past year over 1929, but in other lines practically all firms showed declines. As compared with the year 1928, business in 1930 re corded smaller decreases in some groups and larger in DEPARTMENT STORE TRADE IN DECEMBER 1930 Per Cent Change December 1930 From December 1929 Locality Ratio of Per Cent Change Dec. Col Calendar Year lections to 1930 From Accounts Calendar Year Outstanding 1929 November 29 Accts. OUTSTAND. Collec -6.6 -15.2 -30.9 -6.6 -20.4 -9.4 -17.3 -28.4 +1.3 -23.1 —1.4 -19.3 -23.3 -26.3 tions -8.2 -22.5 -18.4 Net Sales Stocks End of Month Net Sales 1930 1929 Chicago........ Detroit......... Indianapolis. Milwaukee, , Other Cities. -12.2 -16.4 -10.0 -9.0 -7.8 -6.2 -21.9 -21.4 _? 1 -11.3 -13.4 -19.8 -10.7 -8.7 -9.5 36.8 34.4 43.2 35.2 35.8 41.1 35.5 35.5 7th District. Stocks -19.1 Ratio of Accts. Outstand ___ zll%_____ Residential Contracts ♦Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN DECEMBER 1930 Commodity Total Contracts Period -12.1 -11.1 -13.7 37.1 37.3 ing to Net Sales 84.9 254.7 326.6 172.5 416.3 146.3 others than in the comparison with 1929. Declines in 1930 from 1928 were as follows: groceries 3 per cent, hardware 20 per cent, dry goods 28 per cent, drugs 14 per cent, shoes 36 per cent, and electrical supplies 22 per cent. Ratios of accounts outstanding at the end of the year to sales during the month were lower in groceries, dry goods, shoes, and electrical supplies than either a month or a year previous. The gain of 63 per cent in December department store trade over the preceding month, though largely seasonal in character, compared with an average increase of about 46 per cent for the month. Of the larger cities in the district, Chicago showed a gain of 73 per cent, Indianapo lis of 59 per cent, Detroit of 55 per cent, and Milwaukee of 51 per cent; sales by stores in smaller cities exceeded November by 54 per cent. The decline in aggregate sales for the month from last December was 12 per cent, with Detroit showing the heaviest decrease among the larger cities. There was one more trading day in Decem ber 1930 than a year previous so that daily average sales for the district declined 15*4 per cent. Comparing the year 1930 with 1929, department store business fell off 14 per cent, against 13 per cent for 1930 compared with 1928; Chicago stores showed about the same decline from 1929 as from 1928, while Detroit, Indianapolis, Milwau kee, and stores in smaller cities experienced larger reces sions from 1929. Inventories diminished less than is cus tomary between November and December, though aver aging 11 per cent below the end of 1929. The rate of stock turnover for the year was only a little more than 3j4 times, against almost 4 times a year previous. Sales of shoes at retail in December gained 35 per cent over the preceding month, but were 12 per cent smaller than last December, with the decline for the year 1930 from 1929 totaling 12 per cent. The dollar volume of furniture sold by retail dealers and department stores likewise increased in December—by 1612 per cent; the / decline from the corresponding month a year ago was 20 per cent, and sales for the entire year totaled 21 per cent below 1929. Sales of hardware by 115 retail dealers in the five states of the district aggregated 15 per cent less in 1930 than a year previous, the dollar volume sold de clining 10 per cent in Iowa, 13 per cent in Indiana, and 16 per cent in Illinois, Michigan, and Wisconsin. Chain store trade in December exceeded that of No vember by 54 per cent, according to figures on aggregate sales reported by twenty-one chains operating 2,983 stores during the month. Total sales declined 3 per cent from last December, while average sales per store were less by 8 per cent. A decline of less than one per cent was shown in total sales for the year 1930 from a year pre vious, but because the number of units operated was larger this past year, average sales per store decreased 11 per cent. Drug and cigar chains recorded increases in 1930 aggregate sales over 1929, but other groups such as groceries, five-and-ten-cent stores, musical instruments, shoes, and men’s and women’s clothing, experienced re cessions. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO otherwise rndTcated^Whe^fien^Ynr^tMt .“if f,°llar volume for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless Data refer to the Seventh Federal S?ve D?st?k5 unllss otherwise “) °n retUfnS l° date' revisi°nS Wi“ bC giVen the f°Uowing month■ No. of Dec. 1930 Nov. 1930 Oct. 1930 Sept. 1930 Aug. 1930 July 1930 Dec. 1929 Nov. 1929 Oct. 1929 Sept. 1929 Aug. 1929 1929 86 89 105 102 98 97 104 111 129 126 119 121 32 31 27 40 32 30 25 36 42 42 31 44 46 48 33 48 57 62 32 46 61 65 35 49 84 93 60 83 79 86 60 81 87 92 73 99 85 88 78 105 94 100 89 124 101 84 120 74 102 180 134 102 82 107 147 232 191 137 108 43 44 47 47 56 72 70 73 56 60 69 48 55 80 86 98 112 149 117 133 104 119 126 91 99 103 117 121 116 105 92 97 122 106 113 92 91 98 78 94 94 96 97 95 115 111 131 120 82 86 81 88 96 92 106 98 133 119 162 139 88 58 51 86 54 86 63 55 84 63 104 88 71 101 83 103 75 71 95 78 99 66 58 88 77 99 70 46 89 48 91 76 66 96 57 101 92 78 100 69 113 112 97 113 98 107 106 115 108 112 104 102 96 112 118 104 103 76 103 72 169 201 154 167 148 170 100 130 97 111 97 105 111 127 98 116 103 112 93 165 114 107 86 108 79 104 74 80 82 84 67 87 70 75 69 72 192 240 172 184 159 192 128 171 120 137 115 134 129 163 113 131 108 130 113 211 131 120 98 130 94 136 88 94 94 101 Passenger Cars.......................................... Trucks......................................................... 42 84 35 87 38 99 60 109 64 95 76 105 31 73 57 128 109 161 124 137 151 151 145 199 Contracts Awarded (in dollars): Residential............................................. Total....................................................... 20 51 36 58 42 77 44 88 37 86 42 80 38 110 66 85 89 122 104 150 105 147 125 155 Pig Iron Production:* Illinois and Indiana............................ United States....................................... Steel Ingot Production—(U. S.)*... . Unfilled Orders U. S. Steel Corp......... 72 55 58 83 76 63 67 76 79 71 76 73 82 77 83 72 91 83 89 75 95 87 85 84 113 93 87 93 124 108 102 86 132 118 126 86 135 119 136 82 144 123 137 77 144 124 140 Meat Packing—(U. S.)— Sales (in dollars)................................... 64 Casting Foundries— Shipments: Steel—In Dollars.............................. 15 In Tons.................................. 15 Malleable—In Dollars..................... 23 In Tons......................... 23 Stoves and Furnaces— Shipments (in dollars).......................... 11 Furniture— Orders (in dollars)................................ 26 Shipments (in dollars)....................... 26 Flour— Production (in bbls.)............................ 27 Output of Butter by Creameries— Production............................................. 72 Sales..................................................... 74 Wholesale Trade— Net Sales (in dollars): Groceries............................................ 31 Hardware........................................... 14 Dry Goods................................. ’. ’ ' 9 Drugs.................................................. 14 Shoes................................................... g Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago............................................... 30 Detroit................................................ 4 Indianapolis.....................................] 5 Milwaukee.......................................... 5 Other Cities....................................... 51 Seventh District................................ 93 Automobile Production (U. S.)— Building Construction— Iron and Steel— * _ July 111 80 120 83 88 79 88 86 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) RODUCTION and factory employment declined further in December. Whole sale prices decreased during the first half of the month, but thereafter were generally steadier. Conditions in the money market remained easy, and in January P money rates reached new low levels. Production Index number of production of manufactures and min erals combined, adjusted for seasonal variations (1923-25 average = 100). WHOLESALE PRICES Industrial production was further reduced during December, and the Federal Reserve Board’s index, which makes allowance for usual seasonal changes, showed a decline of over 2 per cent. Output of steel and iron, textiles, petroleum, cement, and copp 1 was substantially curtailed. Activity in meat packing plants and at anthracite mines increased in December, and in the automobile industry there was an increase in output, reflecting the introduction of new models. After the turn of the year, automobile output increased further, and steel plants were more active. Construction contracts awarded during December were in about the same volume as in November, according to reports of the F. W. Dodge Corporation. There were slight declines, partly seasonal in nature, in contracts for residential and com mercial construction, while public works and utility awards increased somewhat. Employment and Wage Payments Employment in manufacturing industries was reduced further by 2.S per cent between the middle of November and the middle of December, and factory pay rolls also declined. The largest reductions in working forces were in the canning, lumber, steel, and wearing apparel industries. There was little change in employ ment in railroad car shops and in cotton and silk mills, while in the automobile, meat packing, and paper and printing industries working forces were increased slightly. In early January, following year-end inventory periods, reports indicate increased employment in certain industries, particularly automobiles, steel, and railroads. Distribution Index of U. S. Bureau of Labor Statistics (1926=100). Sales of department stores increased in December by slightly less than the amount which is usual for the holiday season, according to preliminary reports to the Fed eral Reserve banks. In December, as in earlier months of the year, the volume of sales probably reflected the influence of declining retail prices. Distribution of commodities by freight showed a further decline for the month of December as a whole. Value of American exports to foreign countries was smaller in December than in November, and approximately 35 per cent below that of December 1929, the decrease reflecting in part the decline in wholesale prices. RESERVE BARK CREDIT ARB HONEY W CIRCULATION RESERVE BANK CREDIT 5000 Wholesale Prices MONEY IN CIRCULATION 4500 4000 Monthly averages of daily figures. age of first 19 days in January 1931. Latest figures, aver Wholesale prices of commodities declined sharply in the first half of December, while in the following four weeks average fluctuations were relatively small. For the month of December as a whole, there were large decreases in prices of corn, hogs, cotton, hides, and lumber, while prices of wheat, beef, and silk averaged some what higher than in November. During the first two weeks in January, prices of corn, sugar, and silk increased, and the price of wheat in American markets re mained fairly stable. Silver prices reached new low levels. Bank Credit and Money Rates HONEY RATES IN NEW YORK Monthly rates in the open market in New York: com mercial paper rate on 4- to 6-month paper; acceptance rate on 90-day bankers’ acceptances. Latest figures, average of first 20 days in January 1931. Page 8 Loans and investments of reporting member banks declined in the four-week period ending January 14, reflecting liquidation of securities loans, as well as a re duction in all other loans and investments. Changes in the position of reserve banks in recent weeks reflected largely changes in the demand for currency. In December this demand increased more than is usual for the season, owing to the withdrawal of cash by banks and by the public in districts where there were important bank failures. In the two weeks after Christmas the return flow of currency from cir culation was smaller than the usual seasonal amount, and the result was that money in circulation, which during the larger part of 1930 had been in considerably smaller volume than in 1929, in January 1931 was above the level of a year ago. In the following two weeks the return flow of currency was somewhat larger than usual, indicating a return of part of the extra currency which had been called into use in December. Money rates in the open market continued at low levels during December, and declined further in the first half of January. The discount rate at the Federal Reserve Bank of New York was reduced to 2 per cent on December 24, and in the following three weeks the rate at the Federal Reserve Bank of Boston was reduced to 2J4 per cent and the rates of the Federal Reserve Banks of Cleve land, St. Louis, Chicago, Atlanta, and San Francisco to 3 per cent.
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