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Business Conditions R Seventh Federal eserve DISTRICT M. Stevens, Chairman of the Board and Harris G. Pett, Manager Federal Reserve Agent Division of Research and Statistics Clifford S. Young, Asst. Federal Reserve Agent Eugene H. Martin, Asst. Federal Reserve Agent, Detroit Branch George A. Prugh, Asst, Federal Reserve Agent John MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 19, No. 2 January 31, 1936 TRENDS IN FARM REAL ESTATE—SEVENTH FEDERAL RESERVE DISTRICT 1934 AND 1935 RONOUNCED betterment in farm real estate conditions was manifest in this district as well as in the United States as a whole in 1934, and the year just closed has continued the improvement noted in the prior year. In these years demand for farm land has increased, p evident at first in the case of high grade, well im proved farms, and in more recent months extending to less well improved and less fertile land. A con siderable portion of the demand for the better farms has emanated from investors paying cash rather than from farmers themselves, inasmuch as relatively few of the latter class in recent years have been provided with sufficient cash or with incentive to acquisition of additional acreage, because of the low level of farm income, past indebtedness, high taxes, and other fac , tors. As might be expected, the heightened demand for farm land and the removal from the market of much distressed acreage, has had its reflection in improved prices, the more marked in the better grades of land, although a somewhat greater volume of less desirable farm property is now reported as moving and at higher prices. In so far as the individual States of this district are concerned, the tabulation below, based on data prepared by the U. S. Department of Agri culture, shows the estimated percentage increase in price of all farm land in 1934 as against 1933, and in 1935 as compared with the preceding year: P 1933 to 1934 Iowa............................................... Illinois........................................... Indiana.......................................... Wisconsin....................................... Michigan........................................ +9 per +9 per +6 per 0 per +2 per 1934 to 1935 cent cent cent cent cent +6 per cent +3 per cent +8 per cent +2 per cent +1 per cent 1933 to 1935 +15 +12 +14 +2 +3 per cent per cent per cent per cent per cent i In Illinois, Iowa, and Indiana the increase in value '¥ of the higher grade farm land probably has been as high as 20 per cent from 1933 through 1935, and in Michigan and Wisconsin, probably 5 to 8 per cent. It will be noted from the foregoing that the most pronounced gain in estimated value per acre took place in the corn belt States of this district. Iowa, Illinois, and Indiana, while Wisconsin and Michigan showed a much lesser gain. In the case of the former State, a considerable portion of its farming area is given over to dairying, which industry suffered acutely from a series of dry years culminating in 1934, as well as from a continued relatively low level of prices for dairy products, with the result that recovery has been less pronounced than in the corn belt States of the district. , Michigan, the least purely agricultural of any of the five States comprising the district, in part the result of the predominance of manufacturing and in part of relatively poor soil in the western half of the State, has also shown a less rapid improvement in the value of farm land. Actual figures on the number of sales of individual farms are compiled and published by the U. S. Depart ment of Agriculture. The latest data cover the twelve months ending March 15, 1935. Tabulated below are shown the number of voluntary sales and trades per 1,000 of all farms and similarly the number of forced sales and related defaults in the twelve months ending March 15 in 1933, 1934, and 1935, in each of the five States comprising this district. Voluntary Sales Trades Iowa................. ... Illinois............. Indiana............ Wisconsin........ . Michigan......... ... and and Forced Sales Related Defaults 1933 1934 1935 1933 1934 1935 11.8 13.6 16.3 14.1 18.1 14.9 13.2 20.2 13.3 18.6 16.0 15.0 24.0 14.1 21.9 85.7 50.7 44.9 40.4 50.4 55.6 38.2 33.3 30.9 36.5 40.1 25.1 26.1 24.5 22.8 From the above tabulation it will be seen that the number of forced sales per 1,000 of all farms has decreased greatly in the period covered, while volun tary sales in all States but Wisconsin have increased. There is evidence to indicate that the trends shown in the table have been accentuated since March 15, 1935. GENERAL SUMMARY OST phases of manufacturing and trade ac smaller than in 1934. On the other hand, the manu tivity in the Seventh district closed the year facture and distribution of Wisconsin cheese con 1935 with business at levels either moderately or tinued to exceed the volumes of a year previous, well above those prevailing at the end of 1934 and though declining from the preceding month. The with the aggregate volumes for the year substan movement of wheat in December fell off less than tially exceeding those of a year previous, thus con seasonally but was much below normal. Corn re tinuing the improvement that has manifested itself ceipts decreased but were double those of December with some fluctuations since the spring of 1933. 1934, while shipments recorded a less than seasonal Some of the reporting food-producing industries, gain and were smaller than a year previous. notably meat packing and butter, continued excep The various reporting groups of retail trade in the tions to the trend, in so far as aggregate volume of district experienced substantial gains in sales during production and sales were concerned, although the December, in accordance with seasonal trend, and higher prices obtaining caused the dollar value of all, including the department store, retail shoe, re output to increase—considerably in the case of the tail furniture, and chain store trades, showed in former industry. creases over December 1934. In reporting groups Production of automobiles increased further in of wholesale trade, groceries and hardware recorded December, and 1935 recorded the heaviest output more than seasonal recessions in business during for the industry of any year since 1929. Although December, while electrical supplies and drugs had steel mill operations declined at the close of Decem greater than average gains; the grocery trade regis ber, as is usual, incoming business in the month tered a moderate decline from a year earlier, as exceeded that of November. Shipments of steel well, but the other groups continued to gain in this and malleable castings increased in December, and comparison. building construction, as reflected in contracts With small increases in loans and a more sub awarded, showed a heavy expansion. Declines in stantial one in holdings of U. S. Government securi the furniture industry, in shoe manufacturing, and ties, total loans and investments of reporting mem the movement of building materials were seasonal ber banks in the district gained 130 millions between in nature. Industrial employment and payrolls con December 18 and January 15; demand deposits in tinued to rise in December. these banks declined somewhat in the period and There was a small increase in the production of time deposits rose slightly. For the second con packing-house commodities during December, but secutive month, commercial paper sales of dealers the sales tonnage declined more than seasonally and in this section expanded counter-seasonally in De both items were well below the corresponding cember ; financing by means of bankers’ acceptances month a year earlier. Although butter production and sales expanded in the month, they remained declined in the period, contrary to trend. M Credit Conditions and Money Rates Member bank reserve balances in the Seventh Fed eral Reserve district declined approximately 66 million dollars during the four weeks ended January 15, re flecting a heavy outflow of funds to other districts, amounting to 87*4 millions, as a result of commercial and financial operations, which was only partially off set by a drop of 21 millions in demand for currency. Total credit extended by the Chicago Reserve bank amounted to $344,419,000 on January 15, representing a decline of almost 13 millions from December 18. In CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT the accompanying tabulation detailed changes in all sources and uses of Seventh district banking reserves are shown. Changes between December 18, 1935 and January 15, 1936 in Factors Affecting Use of Federal Reserve Bank Funds—Seventh District. (Amounts in thousands of dollars) Reserve bank credit extended (exclusive of amounts to other districts).. Commercial operations through inter-district settlements......................... Treasury and National bank currency............................................................. —782 —87,585 +1,646 Total supply.................................................................................................... —86,721 Demand for currency........................................................................................... Member bank reserve balances......................................................................... Treasury cash and deposits at Federal Reserve Bank of Chicago........... Special and “all other” deposits........................................................................ Other Federal Reserve accounts....................................................................... —21,245 —65,909 +397 —262 +298 Total demand................................................................................................ —86,721 (Amounts in millions of dollars) January 15, Total loans and investments................. Total loans on securities..................... To brokers and dealers: In New York................................. Outside New York....................... To others (except banks)................ Acceptances and commercial paper bought................................................. Loans on real estate............................. Loans to banks..................................... Other loans............................................ U. 8. Government direct obligations. Obligations fully guaranteed by U. S. Government....................................... Other securities..................................... Demand deposits—adjusted.................. Time deposits........................................... Borrowings................................................ Page 2 Change From December 18, January 16, 1936 $2,837 259 1935 $+130 +8 1935 $ +484 —55 1 39 219 0 +6 +2 —40 +5 —20 30 65 —1 0 —42 —6 10 0 —8 357 1,635 +8 +120 +49 +490 144 337 2,071 758 0 —3 +24 —2 +32 —26 +363 +3 +76 0—9 The level of money rates has remained unchanged FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Change From January 15 December 18, January 16, 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. 1936 $ 346.0 0.0 0.6 343.2 1,405.0 877.7 837.4 1935 $ —12.7 —0.5 +0.0 —12.5 —60.3 -67.8 —5.0 81.9 0* 1935 $ —93.0 —9.0 —0.1 —85.2 +301.2 +138.3 +69.3 +8.7* . f. ‘ ' 1 during the past month. Down-town Chicago banks reported customers’ commercial loans as carrying ll/2 to 5 per cent during the week ended January 15, as was the case for the week ended December 15. The average rate earned on loans and discounts by down town banks in Chicago during the calendar month of December was 2.83 per cent, compared with 2.92 per cent in November and with 2.96 per cent in December 1934. In Detroit a range of 3 to 5 per cent on cus tomers’ commercial loans was reported by down-town banks for the week ended January 15, unchanged from the range obtaining during the week ended December 15. Instead of recording the customary decline during December, dealer sales of commercial paper in the Middle West expanded for the second consecutive month and were in the largest volume since last August. The gain over the preceding month amounted to 9y2 per cent and the volume totaled 10 per cent heavier than in December 1934. In the comparison with the 1925-34 average for the month, however, sales showed a decline of 37 per cent, while November sales in a similar comparison were 46 per cent less. Demand for commercial paper from country banks increased during December, but from city banks remained rela tively light. Selling rates were unchanged in the period, ranging from y2\.o Y\ per cent for prime short term paper to and 1 per cent for the less well known obligations, with the bulk of sales going at y per cent. The volume of commercial paper out standing at the close of the year showed little change from the end of the preceding month and was 7 per cent greater than on December 31, 1934. In the first half of January 1936, sales of commercial paper de clined 6 per cent from the corresponding part of December and selling rates continued within a range of y2 to 1 per cent. Market operations of Chicago bill dealers from December 12, 1935 to January 15, 1936, continued light in volume. Receipts from Eastern markets de clined and together with a drop in the small volume of local purchases resulted in a decrease of 26j/£ per cent during the five weeks in the total supply of accept ances. Sales to out-of-town banks increased to over twice the volume of the preceding period, offsetting a decline in sales to local banks, so that with shipments to Eastern cities nil, total distribution equaled supply and dealers did not accumulate any holdings in their portfolios. Rates ranged from y to 3/16 per cent in the period, showing no change from recent weeks. Seventh district financing by means of bankers’ ac ceptances registered a counter-seasonal decline in De cember 1935 and dropped to a level of 67 per cent below the 1925-34 average for the month. Total pur chases also failed to gain as is usual in December, recording a considerable decrease from November due to a heavy recession in the volume of own bills dis counted. Sales were nil during December. Bill hold ings of accepting banks decreased 5 per cent on De cember 31 from the end of November. The liability for outstandings at the end of the year was 2 per cent in excess of the close of November. New financing showed a further decline in the first half of January from the corresponding weeks in December. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OP ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in December 1935 From November 1935 Total value of bills accepted................................ Purchases (including own bills discounted)... . Sales........................................................................... Holdings*.................................................................. Liability for outstandings*.................................... Security Markets High-grade bonds continued in good demand during the final month of 1935 in the Chicago bond market, and price levels for issues in that classification trended higher. The volume of new financing in December was larger in the aggregate than for any of the pre ceding four months, and about 60 per cent of the total was in refundings, which percentage, however, was smaller than in recent months. Particularly notable advances were made in the secondary rails which showed marked gains due to improved earnings state ments in the latter part of 1935. Municipal issues were in good demand during the month, and prices were stronger. Prices on the Chicago Stock Exchange trended gradually upward during December and the early part of January. The average price of twenty leading stocks* amounted to $50.96 on January 18, and compared with $47.66 on the corresponding date in December and $29.56 on January 18, 1935. •Chicago Journal of Commerce. Agricultural Products Meat Packing The production of packing-house commodities at inspected slaughtering establishments in the United States expanded only 2 per cent in December over November, as compared with an average gain for the month of 10 per cent, and was not only 13 per cent under commercial production of December 1934 and 1 9x/2 per cent below total production of that period but 22y2 per cent less than the 1925-34 December average. LIVESTOCK SLAUGHTER (In thousands) VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) •Inclusive of slaughter for relief agencies. or Decrease From Dec. 1935 $3,214 967 257 175 Nov. 1935 +19.5 +23.7 +12.1 +8.5 Dec. 1934 Total four larger cities..................... .................... 36 smaller cities................................ .................. $4,613 706 +19.5 +7.3 +31.9 +24.9 Total 40 centers................................. .................... $5,319 +17.7 +30.9 Chicago............................................... Detroit................................................ Milwaukee.......................................... Indianapolis........................................ .................... .................... .................... .................... +30.0 +47.3 +15.9 +18.2 —24.8 —64.7 —100.0 —64.9 —19.1 *At end of month. Yards in Seventh District, December 1935................................................. Federally Inspected Slaughter, United States: December 1935............................................. November 1935............................................ December 1934............................................. Per Cent or Increase December 1934 —23.7 —24.5 —100.0 —5.2 +2.0 Cattle Hogs 214 554 892 956 1,076* Lambs and Sheep Calves 2,875 2,422 4,196 284 84 1,369 1,407 1,298* 481 480 494* AVERAGE PRICES Or LIVESTOCK (Per hundred pounds at Chicago) Week Ended Native Beef Steers (average)........ ............. Fat Cows and Heifers..................... ............. Calves................................................. ............. Hogs (bulk of sales)......................... ............. Lambs................................................. ............. Jan. 18, 1936 $ 9.50 7.85 9.00 9.90 10 55 Months of Dec. Nov. Dec. 1935 $ 9 95 7.10 8.80 9.65 11.10 1935 $10 00 7.30 8.40 9 35 10.50 1934 $7.40 4.70 5 25 6.00 7 35 Pag« 3 The sales tonnage decreased more than seasonally to a level 5 per cent under a month earlier and 21 y2 per cent below the ten-year average, and was 10y per cent smaller than a year earlier. With a decline in prices of pork products from November practically offset by advances in beef, veal, and lamb, the total value of sales billed to domestic and foreign customers fell otf 4 per cent in December from a month previous, but was Yi per cent above the 1925-34 average for the month and 14*4 per cent greater than in the cor responding period of 1934. Payrolls at the close of the month reflected smaller recessions from a year previous than had been evidenced in November, and showed a gain over the preceding period of 2y2 per cent each in number of employes and in wage pay ments, and of lj4 per cent in number of hours worked. Inventories of packing-house commodities in the United States accumulated less than seasonally on January 1 over the beginning of December; they were in only half the volume of a year ago and 256,810,000 pounds below the 1931-35 average for the date. In the calendar year 1935, total production of these commodities decreased 30 per cent from 1934, the sales tonnage slightly exceeded production for market but was 19 per cent under a year earlier. On the other hand, prices rose to such an extent that the total value of sales billed to domestic and foreign customers ex ceeded that of 1934 by 22J4 per cent. Aggregate shipments for export declined in Decem ber from November, although a few companies ex perienced a gain in this item. British demand was fair for United States lard but showed less than the anticipated improvement for American ham and bacon. Continental demand for United States packing-house products remained negligible, despite some signs of reviving interest, and Cuban trade was disappointing during the entire month. Prices of United States lard in the United Kingdom were only slightly below Chi cago parity, but British quotations for American hams were considerably under this parity. Inventories of United States packing-house commodities in foreign countries—inclusive of stocks in transit—remained relatively light at the beginning of 1936. Imports of animal products into the United States increased in December over November. earlier. Prices rose approximately 2}4 per cent ir December over those of November. The production of American cheese in Wisconsir decreased 8J4 per cent in the five weeks ended Januarj 4 from the preceding period, but was 46 per cent heavier than a year earlier and 31 y per cent in ex cess of the 1930-34 average for the period. Distribu tion from primary markets of that State fell off 36y per cent from the preceding five weeks and showec not only a non-seasonal deficiency as compared witl current manufacture but an increase of only 8}4 pei cent over the 1930-34 average for the month and o 3 y per cent over a year earlier. For the calendai year 1935, production expanded 7 per cent over 193^ and sales gained 11J4 per cent. Total inventories oi cheese in the United States declined less than th< usual amount on January 1, 1936 from the beginning of December, and were 14,392,000 pounds above th< 1931-35 average for that date though 2,908,000 pound: under last January 1. Prices rose 8j4 per cent it December over November. Industrial Employment Conditions The trend in employment and payrolls of Seventl district industries during the November 15 to Decern ber 15 period was closely in line with that exhibitec a month earlier, especially within the manufacturing groups. Metals and vehicles were again the main con tributors to the aggregate rise of one-half per cent it employment and 3y per cent in payrolls for thi: classification. The seasonal declines in the foods, stone clay-and-glass, and wood products groups recorded fo: November continued in December, and to these wa: added another group—chemical products. Textile in dustries showed a partial recovery in payrolls follow ing the sharp decline experienced in the preceding month, but the downward trend in employment con tinned. The paper and printing industries, which ha< shown very little change in either employment or pay rolls for November, registered considerable gains ii both of these items for December. Leather and rub ber products followed the November trend, but th< increases recorded in payroll figures by these group: were more pronounced in December than a montl earlier. The non-manufacturing industries, despite i Dairy Products Creamery butter manufacture in the Seventh Fed eral Reserve district rose 2}4 per cent in December over a month earlier to a level 13J/2 per cent under a year previous and 12 x/2 per cent below the 1925-34 December average. The sales tonnage, likewise, in creased 2J4 per cent over November, and was within 13 per cent of last December and 6 per cent of the ten-year average for the month. In the calendar year 1935, Seventh district production of the commodity declined 7x/2 per cent from 1934, and sales decreased 10 per cent but were slightly in excess of current manufacture. The production of creamery butter in the United States showed a larger expansion over November and a smaller recession from a year earlier and the 1925-34 seasonal average than was evidenced in the Seventh district. United States inventories of the commodity fell off more than is usual on January 1, 1936 from the beginning of December to a level 13,933,000 pounds under the 1931-35 average for the date, and were 7,006,000 pounds less than a year Page EMPLOYMENT AND EARNINGS-SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group Report ing op Dec. 15, 1935 Wage Earners Firms Earn ings (000 Change Froj Nov. 15, 1935 Wage Earn Omitted) ers Earn ings No. No. t % % Metals and Products 1 ........... Vehicles....................................... Textiles and Products.............. Food and Products................. . Stone, Clay and Glass............. Wood Products.......................... Chemical Products................... Leather Products...................... Rubber Products...................... Paper and Printing................... 1,154 229 258 532 150 329 161 119 23 490 269,399 312,345 45,369 77,535 8,870 30,850 21,257 26,423 10,930 60,634 6,785 9,489 799 1,770 187 580 633 614 283 1,561 +0.8 +2.4 —2.2 —4.3 —13.9 —3.0 —2.2 +1.4 —1.2 +1.7 +4.1 +5.;+4.1 —2.5 —12. ( —O.f —2.5 +3.< +6.; +3.1 Total Mfg., 10 Groups.............. 3,445 863,612 22,501 +0.4 +3.5 Merchandising a ...................... Public Utilities.......................... Coal Mining................................ Construction............................... Total Non-Mfg., 4 Groups....... 1,505 2,165 2,489 97 203 4,954 +13.0 —1.2 +14.2 —24.0 +4.6 +13.: 18 297 1,929 108,398 79,614 4,020 10,130 202,162 +19.1 —23.1 +4.1 Total 14 Groups......................... 5,374 1,065,774 27,456 +1.2 +3.1 109 4 Other than Vehicles. * Illinois and Wisconsin. +0.1 continued seasonal decline in the construction group, registered aggregate gains for December amounting ' to 4y2 per cent in employment and close to 5 per cent in payrolls. These gains, contrary to the trend of the preceding month, were effected mainly through the greater than seasonal expansion in the merchandising and coal-mining industries. The former of these two groups increased its employment volume 13 per cent and wage payments 14 per cent, and the latter showed increases of 14 and 20 per cent, respectively, in these items. Combined, the manufacturing and non-manu facturing divisions recorded an aggregate rise of one i per cent in number of wage earners and of 4 per cent in amount of wage payments for the month of Decem ber as compared with the preceding month. As com pared with the volumes of employment and payrolls recorded for the closing month of 1934, December 1935 showed gains of 14 and 27 per cent, respectively, in these volumes. Manufacturing 1 Automobile Production and Distribution The 344,613 passenger automobiles manufactured in December brought output for the calendar year 1935 to 3,285,836, which number exceeded 1934 pro duction by 51 per cent and represented the greatest volume since 1929, although it failed to equal that year by 29 per cent. December production, which established a record for that month, compared with 338,425 in November and exceeded that of December 1934 by 210 per cent. Trucks produced in December i numbered 63,191, or 6 per cent more than in the preceding month and 48per cent above a year earlier. In the entire year 1935, a total of 724,058 trucks was produced, or 26 per cent more than in 1934 and, as in the case of passenger cars, representing the heaviest annual output since 1929. Consumer buying of automobiles in the Seventh district dropped off in December, following two months of sharp gains, although wholesale distribution showed only a slight decline from a month previous. As a v result of these trends, stocks of new cars in dealers’ hands continued to rise. Both sales and stocks recorded heavy increases over December 1934. Trends in used cars were similar to those in new cars at retail, but the sales decline from November and the gain over December 1934 were much smaller for used than for new cars. It will be noted in the table that the volume of automobiles sold in the year 1935 was substantially larger than that of a year earlier. A noticeable in crease was recorded in December in the proportion of deferred payment sales to total retail sales of dealers reporting the item, a ratio of 46 per cent comparing with 39 per cent in the preceding month and with 46 per cent for the corresponding month of 1934. Iron and Steel Products Incoming business in the steel industry of this dis trict expanded in December over the preceding month, although operations declined, as is usual, over the holi day season. The year 1935 as a whole showed rather satisfactory improvement in this industry, shipments aggregating considerably larger than in 1934. The automobile industry was the main source of demand during the year, but miscellaneous users of steel like wise were active buyers. Operations were maintained throughout the year at a comparatively steady rate and at no time fell below 40 per cent of capacity. Toward the close of December steel ingot output dropped sea sonally to about 47 per cent of capacity but rose again thereafter until in the middle of January it was averag ing 52 per cent, the latter rate comparing with around 57 per cent a year ago at the same time. Pig iron pro duction in the Illinois and Indiana district declined only slightly in the daily average for December from a month previous and was more than double that of December 1934. No changes of importance have taken place in price quotations during recent weeks. Orders booked by reporting steel casting foundries of the Seventh district continued to rise in December, the increase over the November tonnage amounting to 57 per cent. Shipments by these foundries increased by about one per cent and production registered a de cline of a similar small percentage volume. At malle able casting foundries, the December volume of orders booked fell 19 per cent below the November figure, but shipments and production expanded considerably— by 20 and 13 per cent, respectively. Year-end activity at both types of foundries was substantially greater than at the close of 1934. For the year 1935 as a whole, shipments of steel castings totaled 11 per cent heavier in tonnage and 18 per cent more in dollars than in 1934; for malleable castings, the increases in this comparison were close to 40 per cent in both tonnage and dollar measurements. LUMBER AND BUILDING MATERIALS TRADE December 1935 Per Cent Change From MIDWEST DISTRIBUTION OT AUTOMOBILES December 1935 Per Cent Change From Nov. 1935 New Cars: Wholesale— Number Sold....... Value..................... Retail— Number Sold....... Value...................... On Hand End of Month— Number................. Value...................... Used Cars: Number Sold....... Salable on HandNumber................ Value...................... Dec. 1934 Calendar Year 1935 Change From Calendar Year 1934 Companies Included Class or Trade Wholesale Lumber: Nov. 1935 Dec. 1934 Year 1934 —1.7 +0.4 +176.8 +217.0 +66.4 +61.3 13 13 12 12 It —18.8 —16.9 +167.9 +125.5 +30.6 +28.5 36 36 35 35 34 34 +19.0 +16.9 +180.0 +188.5 +8.7* +14.1* 36 36 35 35 34 34 11 Accounts Outstanding 1........................... -4.7 +43.4 +20.1 36 35 34 +10.1 +4.8 +53.0 +47.2 +50 3* +50.0* 36 36 35 35 34 34 •Average end of month. of Firms November 1935 December 1934 —10.2 +69.3 +70.8 +28.8 11 +23.2 +39.9 +51.8 +19.9 134 29 63 132 —5.1 —3.8 Retail Building Materials: .Number —14.6 —22.4 —13.8 -9.5 OR Yards 9 10 Ratio op Accounts Outstanding 1 to Total Dollar Sales During Month December 1935 163.2 282.1 November 1935 152.3 268.9 Decem ber 1934 214.6 289.3 1 End o! Month. Page 5 Seasonal declines in the manufacture of stoves and furnaces were approximately the same in December as in the preceding month, shipments falling off 15 per cent, orders 28 per cent, and molding-room operations 3 per cent. Inventories were slightly lower than a month earlier and were 23 per cent below those at the close of 1934. Shipments for the entire year 1935 were about 40 per cent in excess of those reported for 1934. Furniture The furniture industry of the Seventh district ex perienced the best year in 1935, in so far as volume of business was concerned, of any year since 1930, ac cording to data covering firms reporting to this bank. During each month of the year, shipments and orders were at a level sharply above that of 1934. December reports showed a seasonal decline from the preceding month of 34 per cent in orders booked and a smaller than normal recession of 7 per cent in shipments, the volume of the latter item being close to average for the period. Unfilled orders were reduced sharply— by 31 per cent—in December, but their ratio to current orders rose from 89 per cent in November to 94 per cent, which percentage compared with only 73 per cent a year earlier. Other comparisons with December 1934 showed a gain in the current period of 25 per cent in orders booked, one of 55 per cent in shipments, and an increase in unfilled orders of 60 per cent. December operations at 67 per cent of capacity were 4 points lower than a month previous but 19 points higher than a year earlier. Building Materials, Construction Work A seasonal slowing-down in demand for building materials of all kinds was reflected in December re ports. Sales of lumber by wholesale and manufactur ing firms of the district decreased from November by 5 per cent in board-foot measure and somewhat more than that percentage in dollar value. Retail yards registered a 14 per cent recession in the actual volume of lumber sold with an even larger loss in dollar value, and the dollar sales of all materials handled by these yards decreased 14*4 per cent. Cement shipments fol lowed the usual downward trend of the month, while brick deliveries held up unusually well and were about on a par with those reported for November. Sales of most building materials were substantially higher in 1935 than 1934, not only in the closing month of the year but in the average for the twelve months. Distri bution of lumber at wholesale totaled 69 per cent more in dollar value this December than last and showed an increase of 30 per cent in the monthly average for the year as a whole. Retail sales of lumber also averaged about 30 per cent higher in 1935 than 1934, the Decem ber volume being 40 per cent above that of a year earlier. Brick deliveries likewise advanced sharply during the year 1935, while shipments of cement showed little change. 1 Building Construction December showed a marked increase in building con struction, following a seasonal decline in November. The total volume of contracts awarded in the Seventh Federal Reserve district amounted to more than 53 million dollars and was the largest for any month since March 1931. Residential contracts likewise registered a heavy gain, although they comprised a smaller per centage of total awards than for any period since last i February. Total construction awards for the year 1935 were greater than for any year since 1931. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT December 1935........................................ Change from November 1935........................... Change from December 1934........... Calendar year 1935.................................. Change from year 1934..................................... Merchandising Reporting groups of wholesale trade in the Seventh Federal Reserve district followed seasonal trends in December, although a more favorable showing was made by some lines than others. The wholesale grocery trade experienced a greater than seasonal decline of ' 7 per cent in the period and sales aggregated 8 per cent smaller than in December 1934, and a 13 per cent decrease from November in hardware sales was also more than average. Increases over the preceding month of 12 per cent in the drug trade and 25 per cent in electrical supplies were heavier than usual for the period. For the calendar year 1935, substantial gains over the year 1934 were recorded in all groups except groceries where the increase was only fracDEPARTMENT STORE TRADE IN DECEMBER 1935 Accounts Out Stocks —8.1 +25.3 +16.0 —3.3 +15.1 +4.1 —18.0 +17.7 —4.0 —13.8 +24.7 +15.2 99.1 183.0 170.9 +37.4 +12.7 +11.9 +36.9 131.9 standing Groceries........... Hardware......... Drugs................ Electrical Supplies......... Ratio or Accounts Outstand Net Sales Page 6 Collec tions ing to Net Sales (6,218,293 +27.3% +371.3% (57,907,605 +118.9% The estimated cost of proposed construction, accord ing to building permits issued in 101 cities of the Seventh district, declined 16 per cent in December from November, though totaling over twice the amount of December 1934. Similar trends were shown in the number of permits issued during the final month of 1935. Detroit, Indianapolis, and Des Moines were three of the larger cities to differ from the district trend in the monthly comparison of estimated cost, 1 gains of 13, 20, and 77 per cent, respectively, being recorded by these cities. Locality Commodity (63,165,349 +82.0% +201.7% (320,608,399 +29.8% Residential Contracts *Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN DECEMBER 1935 Per Cent Change From Same Month Last Year Total Contracts Period Per Cent Change December 1935 From December 1934 Per Cent Change Calendar Year 1935 From Calendar Year 1934 Ratio of December Collections to Accounts Outstanding End of November Net Sales Stocks End of Month Net Sales 1935 1934 Chicago............. Detroit.............. Indianapolis. ... Milwaukee........ Other Cities__ +8.1 +11.5 +2.4 +7.7 +11.2 +6.2 +6.1 -9.6 +3.0 +7.7 +4.6 +11.8 +9.6 +7.6 +10.4 33.6 45.7 43.0 41.8 33.2 33.6 46.7 44 0 41 5 31.4 7th District___ +8.9 +4.9 +7.6 38.2 38.0 tional; drug sales exceeded those of the prior year by 10 per cent, hardware sales were 21 per cent larger, ^and electrical supply sales totaled 30 per cent more. Higher ratios of accounts to sales were shown for December over November in groceries and hardware, while in drugs and electrical supplies the ratios were lower. The gain of 52 per cent in December over the pre ceding month in Seventh district department store trade was close to average for the period, and that of 9 per cent over a year earlier, though not so heavy as in a similar comparison for November, compared . favorably with other months last year. Daily average sales were 10*4 per cent larger than in December 1934, due to the fact that there was one more Saturday in that month. Of the larger cities, Chicago showed the heaviest increase in December in the monthly com parison—56 per cent—and Milwaukee had the smallest gain with 42 per cent. As in other recent months, Detroit trade recorded the most favorable trend over the corresponding month of 1934 and for the calendar year 1935 showed the largest increase over the entire kyear 1934—12 per cent. Inventories at the end of December exceeded those at the close of 1934 by 5 per cent in dollar value; stock turnover for the year was 4.56 times in 1935, as compared with 4.27 times in 1934. Sales of shoes by reporting dealers and department stores totaled 9 per cent heavier in the year 1935 than a year earlier. December trade exceeded that of the same month in 1934 by 6 per cent, expanding 48 per cent over the preceding month, which is more than seasonally. Stocks had risen by the end of December to 8 per cent above those of a year previous. The gain of 18 per cent over November in December sales of furniture and house furnishings was some what smaller than average for the period. As com pared with December 1934 and for the calendar year 1935 compared with a year earlier, the dollar volume sold was likewise 18 per cent higher. Sales by dealers showed a somewhat larger increase than did those by department stores in 1935 over 1934, whereas in 1934 as compared with 1933, the opposite trend prevailed. At the close of 1935, stocks were 3 per cent greater than a year previous at the same time. Eleven reporting chain groups, operating 2,720 stores in December, had sales aggregating 49 per cent in excess of those in the preceding month but total ing only 2 per cent larger than in December 1934. All groups which include five-and-ten-cent-store, drug, grocery, cigar, and musical instrument chains, shared in the monthly gain, and with the exception of gro ceries in the increase over December 1934 and that of 2y2 per cent recorded for the year 1935 over a year earlier. MONTHLY BUSINESS INDICES 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 1923-1924-1925 as a base, unless other wise 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.) Meat Packing— (U. S.)— Sales (in dollars).......................................... Casting Foundries— Shipments: Steel—in Dollars.................................... In Tons......................................... Malleable—In Dollars........................... In Tons................................ No. of Firms Dec. 1935 Nov. 1935 Oct. 1935 Sept. 1935 Aug. 1935 July 1935 Dec. 1934 Nov. 1934 Oct. 1934 Sept. 1934 Aug. 1934 July 1934 .. 47 84 88 94 86 84 82 73 71 79 77 75 68 .. 12 12 21 21 41 41 50 74 42 41 42 62 47 47 45 66 39 39 37 56 38 37 36 53 33 32 38 55 20 19 28 42 24 25 29 43 27 26 26 38 29 31 24 34 42 46 27 40 40 44 25 36 10 172 205 258 197 132 100 101 144 192 140 85 64 Stoves and Furnaces— Shipments (in dollars).............................. FurnitureOrders (in dollars)..................................... Shipments (in dollars).............................. .. . 12 12 35 49 56 54 62 68 61 64 61 56 74 44 26 31 35 38 41 43 41 40 39 38 43 28 FlourProduction (in bbls.)................................. .. 19 77 86 122 98 94 85 93 101 117 106 102 82 Output of Butter by Creameries— Production................................................... Sales.............................................................. .. . 59 61 76 101 74 98 94 121 112 107 132 130 153 134 88 116 98 130 125 127 133 120 152 140 150 132 28 11 12 64 65 80 69 75 72 81 86 81 86 75 76 77 71 77 78 71 70 70 52 67 73 57 69 77 65 77 76 59 68 78 57 69 67 54 59 27 5 4 5 40 81 81 134 153 143 135 127 137 81 85 101 93 94 88 89 81 81 92 101 95 85 86 78 73 63 74 77 69 70 68 85 55 58 64 59 53 56 78 123 139 140 125 116 126 75 77 81 83 83 74 78 71 79 95 80 72 81 79 76 85 89 75 79 72 75 98 96 76 68 79 77 66 69 70 63 62 66 82 51 50 51 52 45 50 70 118 168 116 158 73 160 20 86 62 153 94 162 38 113 17 92 29 127 43 119 63 136 76 111 Building ConstructionContracts Awarded (in dollars): Residential............................................... Total.......................................................... 21 78 17 43 22 53 21 43 17 42 20 38 5 26 6 22 8 34 8 29 7 23 7 28 Iron and SteelPig Iron Production:* Illinois and Indiana................................ United States.......................................... Steel Ingot Production—(U. S.)*........... 79 69 93 79 70 91 71 65 87 68 60 85 65 58 81 53 50 66 38 34 59 34 33 47 33 31 41 34 31 38 42 35 38 45 40 45 Wholesale TradeNet Sales (in dollars): Groceries.................................................. Hardware................................................. Drugs........................................................ Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago..................................................... Detroit................................................... Indianapolis............................................. Milwaukee................................................ Other Cities............................................. Seventh District—Unadjusted........... Adjusted................ Automobile Production—(U. S.)— Passenger Cars........................................... Trucks........................................................... no •Average daily production. Page 7 PERCENT 140 r~ NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Board of Governors of the Federal Reserve System) T NDUSTRIAL production and employment showed a further increase in December, when allowance is made for the usual seasonal changes, and distribution of commodities to consumers was in increased volume. Production and Employment Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to December 1935. FACTORY EMPLOYMENT 1929 1930 1931 1932 1933 1934 1935 1936 Index of number employed, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to December 1935. The Board’s seasonally adjusted index of industrial production, which takes account of the considerable decline that usually occurs in December, advanced from 98 per cent of the 1923-1925 average in November to 103 per cent in December, the highest level reached by this index since the spring of 1930. As in other months during the last half of 1935, the rise in the index was due in large part to increases in output of durable manufactures, particularly iron and steel and automobiles. During the first half of January production of steel and automobiles increased somewhat, following declines in the holiday period. Output at mines was also larger in December than in November. Activity at cotton and silk textile mills declined less than is usual in Decem ber, while at woolen mills there was a more than seasonal decrease in opera tion. Output at shoe factories increased. Factory employment showed little change between the middle of November and the middle of December, when a slight decline is customary. The number employed continued to increase at steel mills, automobile factories, foundries and machine shops, and at railroad-car building plants. There was also an increase in employment at shoe factories. Seasonal declines were reported by many other important industries. Factory payrolls were larger in the middle of December than a month earlier. The value of construction contracts awarded increased sharply in Decem ber, according to figures of the F. W. Dodge Corporation, although a decline is usual in that month. There was a further substantial growth in the volume of awards for publicly-financed projects and residential building also increased. RAILROAD FREIGHT-CAR LOADINGS Distribution Sales at department stores and variety stores, as well as sales by chain stores and mail order houses serving rural areas, showed larger increases than are usual in December. Freight-car loadings decreased by less than the usual seasonal amount in December, and the Board’s adjusted index increased from 66 per cent of the 1923-1925 average in November to 71 per cent, con tinuing the advance begun last August. 1929 1930 1931 Indexes of number of cars loaded, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1929 to December 1935. D EPART MENT STORI SAL!:s 1 mmm Atfju ted for 5#anno! variation — Wrffiaat ttasona!adjustment ______ 1929 1930 ______1_____ 1931 1932 1933 1934 w 1935 Excess reserves of member banks, which declined by $600,000,000 in the third week of December, increased by $320,000,000 during the following five weeks, reflecting the usual seasonal return flow of currency from circula tion, a decline in Treasury balances with the Federal Reserve banks, and a small increase in monetary gold stock. On January 22 excess reserves to taled $3,030,000,000, as compared with the peak of $3,300,000,000 on December 11, 1935. 1936 Indexes of value of sales, 1923-1925 average = 100. By months, January 1929 to December 1935. Page 8 The general level of wholesale prices showed little change during De cember. In the first three weeks of January there was some decline in the general index, reflecting in part lower prices for cotton gray goods, flour, pork, and silk. Prices of hogs, rubber, and petroleum increased. Bank Credit If | rv Commodity Prices Changes in the condition of reporting member banks in leading cities be tween December 18 and January 15 reflected largely the influences of seasonal factors.
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