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SWISS CONDITIONS ■ REnamn ill Iswages* fssm mu TSSSSfi* •aiBif.; |,«iBjpis,5'31! LUSWS Kws.vvN.^wSi kwvxw&56H ^eajaayjtj*a»wHtgi^g &wvv.Xv kk“'»v»iiVvAV 'vwmmm v\\vs»ww.w • ■ ' ■ ; ■ &HI IM g'UfRS ll v-^> ;smM mmm >oiv;'y@^|| wm Mai =»-—-------------------------- Volume 21, No. 7 July 29, 1938 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business Conditions in the Seventh Federal Reserve District DISTRICT SUMMARY ALTHOUGH the level of Seventh district industry and of these comparisons, and those of cheese were above the -T»- trade remained in June sharply below that of a year May volume, while tonnage sales of meat products about ago, several favorable factors evidenced themselves in the equaled those of a month earlier and were larger than month. Production in several phases was increased; whole last year. Wheat receipts at interior primary markets rose sale and retail distribution gained, counter-seasonally in in June, but reshipments of the grain declined; the move some instances; and inventory position was further im ment of both corn and oats was lighter than in the pre proved in both manufacturing and trade groups. The pro ceding month. The corn crop was making good progress duction of foodstuffs rose in June over the preceding month in mid-July. and was above that of last June. Most crops in mid-July Trade were in fair to good condition. HOLESALE trade groups in the Seventh district had a larger dollar volume of sales during June than in Industry May, but the major lines recorded heavier decreases from HERE was some slight improvement in the steel busi last year than a month previous. Owing to increases in the ness during June, and in the third week of July produc cities of Chicago and Detroit, department store trade for tion was running almost 10 points higher than four weeksthe district as a whole rose counter-seasonally in June, earlier. Incoming business of steel and malleable casting and the margin of decline from a year ago was narrowed. foundries showed a noticeable gain in June over May, and The retail shoe trade likewise expanded over May, and the production increased, but activity at stove and furnace fac decrease in the retail furniture trade was less than seasonal tories declined, in accordance with seasonal trend. The manu in extent. In both wholesale and retail trade groups, stocks facture of automobiles was further curtailed in June, and at the end of June were lighter than at the close of May second-quarter output this year fell below that of the first and well below volumes held last year at the same time. quarter. Declines in new business and shipments of furniture manufacturers were smaller than usual for June; and al Credit though orders received by district paper mills decreased, fol lowing an increase in May, shipments and production rose EMBER bank reserve balances in the district decreased over those of the preceding month. Building construction fell in the five weeks ended July 20, reversing a trend that off slightly during June, because of a lower volume of had been upward in recent months. A further reduction public works and utilities construction, but the movement in loans of weekly reporting member banks practically offset of building materials increased as is customary in the increases in these banks’ holdings of obligations fully guar period. Owing to losses in the durable goods industries, anteed by the United States Government and those of se aggregate Seventh district employment and payrolls con curities other than Government obligations, so that total tinued to decline in June. loans and investments of the banks showed little change be tween June 15 and July 20; deposits likewise were about the Agricultural Products same on the later date as five weeks earlier. New financing HE production of packing-house commodities and of through bankers’ acceptances recorded a non-seasonal gain butter and Wisconsin cheese expanded during June in June over May, while dealer sales of commercial paper showed a sharp decrease. and was above a year ago. Sales of butter increased in both W T M T cent below the ten-year averages for the end of June. New acceptances made by several of the large downtown Chicago banks during the first fifteen days of July fell 141/2 and 12 Open Market Paper per cent, respectively, under the corresponding periods a ANKERS’ acceptances made in June by accepting banks month and a year previous. Commercial paper data for June, received from Middle in the Seventh district showed a contra-seasonal in crease of 6 per cent over May. The total ran only 7% per Western dealers, showed sharp declines. Rates were soft, cent below last year, a much more favorable comparison reflecting a continuation of heavy potential demand from than was the case in May, partly because the June total in banks and restricted borrowings on commercial paper. Sales 1937 was the smallest during that year. The current amount declined 24 per cent from May, and were 55 and 44 per continued, however, far below the 1928-37 average for the cent below a year ago and the 1928-37 average for June, month, the decrease amounting to 70 per cent. Bank hold respectively. Outstandings on June 30 ran 14, 231/2, and ings of bills and liability for outstandings at the end of 15% per cent below the end of May, June 30, 1937, and June both recorded greater than usual declines from the the ten-year average for the date, in that order. Both sales May 31 figures—35 and 5 per cent, respectively. The sharp and outstandings were in the lowest volume in over eighteen drop in holdings was caused by smaller purchases for bank months. During the first half of July, however, sales by portfolios and much heavier maturities in June than in May. several Chicago dealers rose 18% per cent above those Outstandings were about two thirds and holdings one third in the first fifteen days of June, although they were but of the year-ago totals, and each was approximately 80 per one third of the corresponding total last year. Credit and Finance B Member Bank Reserves r I ’HE tendency toward sharply rising member bank re serve balances in the Seventh district, which has been apparent for the last few months, was reversed during the five-week period ended July 20 when a decrease of 26 mil lion dollars occurred. An excess of Treasury receipts over disbursements, mainly due to quarterly income tax collec tions in the first week of the period, reduced member bank reserves by 50 millions. A sharp increase in currency cir culation over the July 4 holiday week-end was not com pletely canceled hy returns of currency in the two following weeks, leaving a net increase in circulation of 5 millions for the period. A gain in funds of 31 millions through com mercial and financial transfers with other districts partially counteracted the effect of the above factors. Interest Rates UTLYING banks in Chicago reported slightly lower rates charged on time collateral loans on July 15 than a month earlier. Other loans by this group were made at about the same rates as on June 15. No noticeable changes were apparent in customers’ rates of the larger downtown Chicago banks or of the big Detroit institutions. The average rate earned during June on total loans and discounts by the large Chicago banks rose slightly above that for May and a year ago. The average for the Detroit group declined in these two comparisons, the divergence from June 1937 being the sharper. Securities Markets ENERAL advances took place in the bond market dur ing the latter part of June and early July, according to information received from Chicago bond houses. The rise was particularly impressive in the second-grade and speculative rail issues, which were largely affected by the upward movement in the stock market during the same period. Municipals, as well as corporates, showed strength. New municipal issues during June were in larger volume than either in May or in June 1937. Corporate emissions about equaled those of a year ago, hut ran much heavier than in the preceding month. The principal demand con tinued to come from the institutional group which sought only top-grade bonds. Demand from banks fell off to some extent, but most bond houses look for some inprovement in this field owing to the recent relaxing of regulations on bank security purchases by the Government examining agencies. Individual investors still remain largely out of the market. Average discounts on Treasury bills continued at ex tremely low rates, the 91-day issue dated July 20 selling at an average of .054 per cent. Preliminary figures show that the $200,000,000 issue of 3-year % per cent R. F. C. notes was oversubscribed by more than twelve times. The Chi cago Journal of Commerce average of 20 Chicago stocks stood at $44.91 on July 21, after reaching a new 1938 high of $45.34 on July 19. O G Agricultural Products Crop Conditions I^OLLOWING the slow start and a somewhat more than usual amount of replanting, corn made very good progress with the advent of hot, humid weather in the first three weeks of July; deterioration from heat in southwestern Iowa was offset by improvement elsewhere. Tassels and ears were showing on the earliest corn by July 19 and Page 2 Selected Seventh District Banking Data * * * FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Change from June 15 July 21 1938 1937 $+ 2 $ 0 0 0 0 0 + 2 4- 1 —49 +393 —26 +332 —24 +75 + 2 —16 July 20 1938 $ 280 0 0 279 2,149 1,317 118 959 Total bills and securities..................................... Bills discounted..................................................... Bills bought............................................................ U. S. Government securities.............................. Total reserves.......................................................... Member bank reserve deposits.......................... All other deposits................................................... Federal Reserve notes in circulation.................. Ratio of total reserves to deposit and Federal Reserve note liabilities combined, 89.7% —0.2* +2.1* ♦Number of Points. • * * CONDITION OF REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) Assets Loans and investments—total..................................... Loans—total..................................................................... Commercial, industrial, and agricultural loans........ Open-market paper......................................................... Loans to brokers and dealers in securities................ Other loans for purchasing or carrying securities... Real estate loans............................................................. Loans to banks................................................................ Other loans....................................................................... U. S. Government direct obligations........................ Obligations fully guaranteed by U. S. Government................................................ Other securities......................................................... July 20 1938 $2,842 817 466 31 31 79 91 4 ..... 115 1,348 Liabilities Demand deposits—adjusted*................................. Time deposits............................................................ Borrowings................................................................. Change from June 15 July 21 1938 1937 $ +1 $—217 —31 —189 —18 —142 —3 —21 —5 —30 +1 —14 +1 +10 —1 —2 —6 +10 —2 —92 223 454 +19 +15 +42 +22 2,225 877 0 0 0 0 —44 +10 0 usted) in the five weeks ended July 20 was 19.72 times, as compared with 20.40 times in the preceding four weeks and with 23.55 times in the corresponding period of 1937. VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions) Chicago.................................................... Detroit..................................................... Milwaukee............................................... Indianapolis............................................. Per Cent of Increase or Decrease from May June 1938 1937 +20.1 -7.9 +0.3 —32.3 +9.6 —16.3 +8.4 —13.8 Total four larger cities.......................... 37 smaller cities...................................... +14.9 +1.4 —14.1 -17.7 Total 41 centers...................................... +12.7 —14.6 June 1938 * * * TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) Total country and city check clearings: Pieces.................................................... Amount................................................. Daily average clearings: Total items cleared— Pieces.................................................... Amount................................................. Items drawn on Chicago— Pieces.................................................... Amount................................................. Items drawn on Detroit— Pieces.................................................... Amount.................................................. June 1938 June 1937 11,102,879 $1,939,535,664 11,245,644 $2,340,332,409 427,034 $74,597,526 432,525 $90,012,785 73,529 $40,203,000 71,565 $46,140,000 16,524 $7,288,531 21,626 $11,502,054 much of the corn had been “laid by” relatively free of weeds. The latest fields, which were rather weedy, were still short enough to permit cultivation. In many areas, small grains had suffered further loss from tangling and lodging. However, early threshing returns indicated that the yield and quality of winter wheat was average or better and probably somewhat above earlier expectations. Oats had suffered some further deterioration from heat, rust, and wind-storms. The harvesting of oats, rye, and barley was making progress by July 19. Other than for considerable moisture damage to the crop in windrows, hay was in good condition. Pastures through most of the Seventh district similarly were good to excellent on July 19, but had began to fail in southwestern Iowa. Grain Marketing Wheat LOSE to seasonal expansion was indicated in receipts of wheat during June at interior primary markets in the United States; reshipments of the grain, however, de clined 15 per cent from May. Wheat exports were again in good volume. After a marked recovery in the first half of June, wheat prices ruled progressively weaker through July 21, quotations for No. 2 hard winter wheat in cash positions at Chicago standing at $.70% and $.72% on that date, or 13 to 15 cents lower than a month earlier. Principal factors in this decline were favorable harvest weather and a heavy movement in the Southwest, and generally good weather for the growing crop in the spring wheat areas of the United States and Canada. United States visible sup plies of wheat increased 162 per cent in the four weeks ended July 16, totaling 27 per cent heavier than a year earlier, though still lighter than the ten-year average. C prospects than a year ago. Quotations for No. 2 yellow corn for immediate delivery at Chicago stood at $.59 and $.60% on July 21, or 2 cents above a month previous. Combined stocks of corn on farms and in visible positions on July 1 this year were over 4 times as great as those of July 1, 1937, and 57 per cent above the 1927-36 average for the date, but a fairly good disappearance of 40 per cent from April 1 was indicated. The June oats movement showed greater than seasonal declines from May but con tinued above a year ago. Visible supplies of oats receded liberally; price levels had a softening tendency. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) June 1928-37 Av. June 1938 Wheat* Receipts............................................................. Shipments.......................................................... Com: Receipts............................................................. Shipments.......................................................... Oats: Receipts................................................................. Shipments............................................................. May 1938 June 1937 17,063 14,726 14,562 17,376 21,330 11,766 20,979 16,418 28,507 27,850 31,204 38,213 12,200 4,927 16,686 11,804 5,195 10,469 2,956 4,997 5,757 5,885 3,625 5,291 Meat Packing HE production of packing-house commodities at in spected slaughtering establishments in the United States rose slightly further in June and was not only 12 per cent heavier than a year ago but within 6 per cent of the 1928-37 average for the month. Payrolls in the industry at the close of the period recorded an increase over May of 3 per cent each in employes and hours, and of one per cent in wage payments. However, employment, hours, and wage payments were lower than a year ago by 8, 7, and 10 per cent, respectively. The tonnage sold in June was about the same as in May, one per cent above a year earlier, and 4 per cent under the 1928-37 average for the month. Corn and Oats Prices of most packing-house products averaged some HE June corn movement at interior centers of accumula tion fell off from the exceptionally high May volume, what higher than in May but those of lower quality beef, but remained well above year-ago and 1928-37 averagesome grades of veal, mutton, and heavy pork loins de levels. Corn exports were likewise not so heavy as the clined. Dollar sales billed to domestic and foreign customers excellent May volume. Prices of the grain were well sus aggregated one per cent less in June than in May; they were tained through the first three weeks of July, mostly by 13 per cent smaller than a year ago but % per cent above an improved foreign demand together with lower crop the ten-year June average. Inventories of these commodities in the United States decreased on July 1 from the beginning of June and were 23 per cent below the 1933-37 average CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on for the date. Production in the first half of July continued the Basis of July 1 Condition above the corresponding period of 1937. Seventh District United States T T Forecast Final Average Forecast 1938 1937 1927-36 1938 Corn................... 905,264 1,140,744 812,711 2,482,102 Oats................... 479,355 544,644 443,866 1,093,829 Winter Wheat... 72,577 78,012 54,715 715,425 Spring Wheat... 1,837 1,695 3,608 251,987 Barley............... 44.024(a) 42.767(a) 48.881(a) 239,375 Rye.................... 9.927(a) 13.632(a) 7.221(a) 51,327 Flaxseed............ 260(b) 198(b) 293(b) 7,631 Potatoes (white) 53,285 61,039 53,249 386,660 Potatoes (sweet) 1.260(c) 1.280(c) 1.127(c) 82,417 Sugar Beets1.... 1.044(d) 549(d) 751(d) 10,785 Apples (total crop)............... 14.896(a) 30.403(a) 16.650(a) 134,394 Peaches............. 3.090(e) 5.258(e) 3.312(e) 53,651 Pears.................. 2.204(e) 3.153(e) 1.771(e) 31,049 Cherries*........... 25(f) 49(f) 35(f) 140(g) Grapes*.............. 29(a) 87(a) 77(a) 2,465 Beans (dry edible)2.......... 4,159(f) 4.574(f) 3.758(f) 13,559 Canning Crops: Snap Beans*.. 24(h) 20(h) 15(h) 124 Green Peas*.. 105 (i) 107(i) 94(i) 264 Tobacco3 ........... 34,196 26,635 33,665 1,496,644 All Tame Hay*. 18,336 15,360 15,558 79,488 Wild Hay*......... 493(a) 523(a) 504(a) 10,257 Final Average 1937 1927-38 2,644,995 2,306,157 1,146,258 1,042,461 685,102 546,396 188,891 206,495 219,635 234,895 49,449 36,454 6,974 13,751 393,289 369,693 75,393 70,274 8,749 8,383 210,673 150,728 59,724 52,498 29,548 24,326 145(g) 116(g) 2,777 2,197 15,839 12,053 105 268 1,553,405 73,785 9,302 70 183 1,325,243 69,754 9,979 ■In thousands of tons. 2In thousands of 100-lb. bags. “In thousands of pounds. (a) Five States including Seventh Federal Reserve district, (b) Iowa, Michigan, and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan, (e) Illinois, Michi gan, Indiana, and Iowa, (f) Michigan and Wisconsin, (g) Twelve States only, (h) Michigan, Indiana, and Wisconsin, (i) Wisconsin, Illinois .Michigan, and Indiana. Foreign Trade HIPMENTS of packing-house commodities for export declined in June from May. British demand was good S LIVESTOCK SLAUGHTER (In thousands) Lambs and Sheep Calves Cattle Yards in Seventh District, June 1938................................................. Federally Inspected Slaughter, United States: June 1938................................................. May 1938................................................. June 1937................................................. June 1928-37 average............................ Hogs .......... 178 467 193 73 .......... .......... .......... .......... 816 772 840 735 2,533 2,585 2,110 3,316 1,485 1,550 1,425 1,346 475 500 579 449 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Beef Steers (average)............ Fat Cows and Heifers......................... Calves..................................................... Hogs (bulk of sales)............................. Lambs..................................................... Week Ended July 16 June 1938 1938 $9.50 ............. $10.25 ............. 8.00 7.75 ................. 8.85 8.50 ............. 8.80 8.55 ............. 9.05 8.95 Months of May 1938 $8.75 7.40 8.90 8.20 7.85 June 1937 $12.00 9.15 8.85 11.10 11.90 Page 3 for hams but only fair for United States lard. Furthermore, to this trend in the current month were furnished by the trade with Czechoslovakia, other continental Europe, and rubber goods group in which the gains recorded were the Porto Rico tended to slacken. Cuba continued to purchase first since last September, and by wood products which fair quantities of animal products from the United States increased employment slightly but showed no accompany and some business developed from Venezuela. Prices abroad ing gain in wage payments. As in the two preceding ruled somewhat under Chicago parity. Imports of packing months, durable goods contributed the greater share to the house products into the United States rose sharply during current declines. Consumers goods registered an increase June. of under one per cent and the non-manufacturing classifica tion a less than one-half per cent decline. Total employ Dairy Products UNE creamery butter production by Seventh district ment in June decreased approximately 30 per cent and plants showed a less than seasonal gain of 3 per cent payrolls 39 per cent from those of a year ago. over the high May level and was 4 per cent under the 1928-37 June average but 5 per cent above a year ago. Sales by Manufacturing Seventh district firms were exceptionally heavy in June, Iron and Steel Products being 14 per cent greater than in May, 9 per cent over June RIMARY steel production in the Chicago district, at 1937, 8 per cent above the average, and the highest for 34 per cent of capacity in the third week of July, was any month since June 1931. The butter make in the United States expanded somewhat more than in this district, con 9l/2 points higher than four weeks earlier but about 60 tinuing about 10 per cent greater than a year ago or the per cent under a year ago. There was some slight improve ten-year average. United States inventories of butter by ment in business during June over May, but demand from July 1 had expanded more than seasonally over June 1— the railroad, automotive, agricultural, and heavy industries increasing 65 million pounds—and the excess over the 1933 remained light. Production in most steel-consuming groups 37 average widened to 34 million pounds. Although minor ranges currently between 25 and 60 per cent less than at day-to-day fluctuations were the rule, butter prices were the same time in 1937, with that in some lines even lower fairly well sustained from mid-June through the first three in the comparison; and the declines from last year in new weeks of July, chiefly through continued heavy Govern orders and shipments closely parallel the decrease in pro ment purchases. duction. With few exceptions, production in these industries Production of American cheese in Wisconsin likewise is now being held to the level of incoming business. Ex expanded less than seasonally in June; it totaled 23 per cessive inventories of raw and semi-finished steel have been cent more than in May and 10 per cent greater than in liquidated to a great extent since the beginning of 1938; June 1937 or the 1928-37 average for the period. Sales of and most stocks of finished goods are much under a year the commodity from primary markets in the State in ago, although in a few lines there is a heavy carry-over creased, however, more than is usual for June; distribution from last season. Prices of several products have declined exceeded that of a month previous and the ten-year average in the past few weeks, in line with the reduction in steel level by 42 and 8 per cent, respectively, and aggregated prices. Scrap iron and steel prices, beginning with the only 5 per cent less than a year earlier. United States stocks last week in June, rose steadily for the next three weeks. of cheese on July 1 were seasonally 24 million pounds * * * heavier than on june 1, and continued well in excess of Following four successive months of declines, orders year-earlier and average inventories. Cheese prices held booked by steel casting foundries in the Seventh district fairly steady through July 21. J P Industrial Employment Conditions EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of June 15,1938 EPORTS for the payroll period including June 15, Report Wage reflected continued decreases from the preceding month Earn Industrial Group ing Earn ings in employment and payroll volumes of Seventh district in Firms (000 ers Omitted) dustrial establishments, the losses being as great as those No. No. $ recorded in May and heavier than in any earlier month Durable Goods: since the sharp recession shown last January. The declines Metals and Products1............ 1,788 338,037 8,167 Vehicles................................... 422 208,262 6,087 which at that time affected all of the major reporting in Stone, Clay, and Glass....... 289 20,991 501 Wood Products...................... 488 38,383 745 dustry groups, have so far been offset by gains in only four Total......................................... 2,987 605,673 15,500 of these groups and the recovery in them has been only Goods: partial. A steady expansion within the stone-clay-and-glass Non-Durable Products.......... Textiles and 404 55,543 872 Food and Products............... 1,037 100,096 2,636 products group has brought it back to the level of last Chemical Products............... 309 33,561 990 Leather Products................... December, the present volume of employment being a little 173 23,216 458 Rubber Products................... 35 12,002 225 lower and wage payments somewhat higher than at that Paper and Printing................ 744 70,579 1,929 Total........................................ 2,702 294,997 7,110 time. The construction industry also has regained most of the ground lost in January. Increases during the current Total Mfg., 10 Groups.............. 5,689 900,670 22,610 month in food and leather products were mainly instru Merchandising2.......................... 5,235 130,087 2,879 97,844 3,234 mental in raising them above the January level which was Public Utilities.......................... 1,122 Coal Mining................................ 2,624 26 55 757 11,213 319 only moderately below that of last December. In the Construction............................... other reporting groups, minor increases have occurred dur Total Non-Mfg., 4 Groups....... 7,140 241,768 6,487 ing the intervening months, but these have been few and Total, 14 Groups........................ 12,829 1,142,438 29,097 the trend has been almost uniformly downward. Exceptions 1Other than Vehicles. Illinois, Indiana, and Wisconsin. R Page 4 Change from May 15, 1938 Wage Earn ers Earn ings % % —4.8 —9.7 +1.9 +1.2 —6.0 —6.6 —5.8 +3.2 —0.3 —5.7 -2.8 +4.9 —2.2 +3.4 +1.4 —1.8 +0.7 —6.8 +4.6 —5.1 +8.3 +5.7 —1.1 +0.4 —3.9 -3.9 —0.1 —0.2 —23.7 +3.6 —0.2 -0.1 —32.1 +61 —0.3 -0.3 —3.2 —3.1 rose noticeably in June, and those booked by malleable casting foundries, after decreasing in April and May, also gained considerably. Furthermore, margins of decline from a year previous were narrower than at any time since last fall. For steel castings, increases over May in new orders amounted to 48 per cent in tonnage and to 34 per cent in dollar value, while for malleable castings the gain was 22 per cent in each unit of measurement. Decreases from last June totaled 71 and 67 per cent in tonnage and dollar value, respectively, for steel castings, and 40 and 38 per cent for malleable castings. Tonnage and dollar shipments of steel castings each expanded 10 per cent in June over the preceding month, as did the number of tons produced. At malleable casting foundries, tonnages shipped were 5 per cent and their dollar value 7 per cent smaller than in May, although production rose 5 per cent. Comparisons with a year ago for these two items remained decidedly unfavorable, losses being around 80 per cent in steel cast ings and about 65 per cent in malleable castings. * * * Shipments from reporting stove and furnace factories of the district declined 13 per cent in June from May, in ac cordance with seasonal trend, new orders received were smaller by 45 per cent following a sharp expansion in the May aggregate, and production decreased 8 per cent in the period. Decreases from a year ago of 36 per cent in shipments and 50 per cent in production approximated those shown a month earlier, while the decline of 55 per cent in orders was much heavier than in a similar com parison for May. Inventories on June 30 were somewhat lower than at the end of May and moderately under the 1937 date. increase was recorded for June in used-car sales which were, however, one fourth smaller than in June last year. Stocks of such cars continued to decline and to number under those of a year ago. DISTRIBUTION OF AUTOMOBILES SEVENTH FEDERAL RESERVE DISTRICT June 1938 Per Cent Change from First Half 1938 Per Cent Change from Companies Included 1937 May 1938 June 1937 —16.8 —19.1 —73.7 —70.6 —68.6 —64.5 13 13 -15.0 —14.3 —52.4 —48.8 —43.5 —37.9 26 26 —24.6 —23.6 —18.4 —15.4 +37.8* +54.0* 25 25 +3.9 —25.5 —25.6 26 —13.3 —12.0 -6.7 —1.4 New Cars: Wholesale— Number Sold.......................... Value........................................ Retail— Number Sold.......................... Value........................................ On Hand End of Month— Number.................................... Value........................................ Used Cars: N umber Sold......................... Salable on Hand— Number................................... Value........................................ •Average End of Month. —7.4* +2.8* 26 26 Furniture HE decline of 15 per cent during June from May in orders booked by reporting Seventh district furniture manufacturers was slightly less than seasonal for the period, the 1928-37 average decrease for the month amounting to 17 per cent; and the recession of only 2 per cent in ship ments compared with one of 11 per cent in the average. The margins of decline from a year ago, however, remained practically the same as a month previous—37 per cent in orders and 41 per cent in shipments. The former item was 18 per cent and the latter 14 per cent below the tenAutomobile Production and Distribution year June average. Although shipments about equaled the ITH total June automobile production in the United volume of incoming orders, cancellations brought unfilled States almost two thirds less than that of a year ago orders at the end of June to 4 per cent under those on hand a and down from May, output in the second quarter of 1938month earlier, but the ratio of this last item to new orders totaled smaller than in the first quarter of the year, which rose from 88 per cent in May to 100 per cent for June, is contrary to previous experience in the industry, and the latter comparing with 120 per cent a year ago. Opera showed a noticeably greater decline from the correspond tions, at 52 per cent of capacity in the current period, were ing 1937 period than in the first three months of the year. one point under the May rate and about 30 points smaller The number of passenger cars and trucks manufactured in than in June last year. the first half of 1938 was only 43 per cent of output in the first six months of 1937. Passenger car production in Paper and Pulp June this year numbered 136,531 vehicles, or 12 per cent LTHOUGH there was considerable decline during June smaller than in May and 67 per cent under last June. tin new orders booked at Seventh district paper mills, Truck output of 38,136, increased 2 per cent in the former shipments and production of paper at these plants in and decreased 55 per cent in the latter comparison. In creased over May, and comparisons with year-earlier figures the first half of 1938, the number of passenger cars pro continued to become less unfavorable. Pulp production fol duced totaled 936,517 and that of trucks 267,357, as com lowed similar trends. Paper mills operated at about 75 per pared with 2,286,987 and 501,311, respectively, in the cent of capacity and pulp mills at 77 per cent in June, same 1937 period. recording little change from May. Trends similar to those in production were recorded PAPER AND PULP INDUSTRY in Seventh district distribution of new automobiles during SEVENTH DISTRICT June 1938 June and for the first six months of this year. Whole Per Cent of Increase or Decrease from sale distribution and retail sales continued to diminish in May June 1938 1937 the monthly comparison and were sharply lower than for Paper: last June; and volumes for the first half of 1938 were much —11.3 New orders booked (tons)..................... — 9.0 New orders booked (dollars)................ —14.4 — 4.8 below the corresponding 1937 period. Although stocks of Total shipments (tons)............................ + 9.8 —20.4 + 7.2 —22.8 Total shipments (dollars)...................... new cars were reduced steadily in each month of this year —24.5 Total production (tons)............................ + 5.4 to date and at the end of June totaled lighter than on June Stocks on hand at end of month (tons) + 0.1 +41.4 30 a year ago, they averaged for the six months considerably Pulp: Pulp produced (tons)............................... + 1.5 —17.5 heavier than for the first half of 1937. A further small Stock on hand at end of month (tons). — 7.4 +34.7 T W A Page 5 The Building Industry Construction ONTRACTS awarded during June in the Seventh dis trict receded slightly from the volume reached in May, a substantial decline in public works and utilities con struction more than offsetting a considerable rise in resi dential and non-residential building. Aggregate awards, which in May showed an excess over a year ago for the first time in 1938, again registered a decrease in this com parison for June, with the losses in non-residential build ing and utilities especially heavy. Public works awards, despite the decline from the preceding month, remained in more than twice the volume of the corresponding 1937 month; while residential building, though totaling lower than a year ago, constituted almost as large a proportion of the total as at that time. either a month or a year earlier but conditions varied con siderably. Prices of building materials as a whole are about 7yz per cent below those of last year. C Residential Contracts $48,852,000 $13,619,000 +12.3% —18.2% $54,299,000 -27.5% -ni\ $205,238,000 —21,2% Number of Yards May 1938 June 1937 +10.9 —37.4 —34.4 —29.9 Wholesale Lumber: +16.1 +1.4 Retail Building Materials: Accounts Outstanding1............................ 8 6 8 +9.9 +12.2 +20.8 +4.2 —19.6 168 —22.0 86 —11.5 99 —15.1 166 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month June 1938 May 1933 June 1937 157.9 204.8 172.8 217.2 141.0 192.9 ‘End of Month. Total Contracts June 1938........................................................................... Change from May 1938.............................................. Change from June 1937 ............................................. First six months of 1938.............................................. Change from same period 1937................................ June 1938 Per Cent Change from Class of Trade Retail Trade................................................. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period LUMBER AND BUILDING MATERIALS TRADE ♦Data furnished by F. W. Dodge Corporation. In centers where residential construction activity is show ing an increase over the 1937 level, the expansion is in the building of small homes most of which cost from $5,000 to $7,500 in metropolitan districts and from $3,500 to $5,000 in other areas. Purchases are confined principally to the class with incomes up to $3,000 per year and an average of around $1,800. Many of these small homes are now built to order rather than in advance of sale; purchas ing of higher-cost homes already built is relatively light. Over-all building costs are reported to be about 10 per cent lower than last year. The number of permits for construction projects issued in 100 cities of the district during June exceeded that of May by close to 2 per cent, while the estimated dollar cost totaled 6 per cent higher. As compared with June 1937, the number of permits decreased 6 per cent and the value 40 per cent, although Indianapolis and Des Moines and the smaller cities of Iowa recorded considerable gains in this comparison. Materials EMAND for lumber registered a somewhat better than Merchandising Wholesale Trade HOLESALE trade groups in the Seventh district sold a slightly larger dollar volume of goods during June than a month previous. Drug sales increased as much as 8 per cent in the comparison, groceries 3 per cent, hardware one per cent, electrical goods only fractionally, and the total for the miscellaneous group 4 per cent. Business in all except this last group showed heavier declines from last year than was the case in May. Decreases in the first half of this year from the corresponding 1937 period amounted to less than 5 per cent in groceries, to between 10 and 15 per cent in drugs and the miscellaneous group, and to approximately 25 per cent each in hardware and electrical supplies. As in May, stocks in all except the miscellaneous group pursued a downward trend and were well below a year ago in all lines. W WHOLESALE TRADE IN JUNE 1938* Per Cent Change from Same Month Last Year Commodity Net Sales Stocks Accounts Outstanding Collections Groceries.......................... Hardware........................ Drugs................................ Electrical Goods........... Miscellaneous.................. —1.9 —7.1 +2.5 +0.8 —24.3 —25.7 —18.2 —24.9 —12.1 —13.2 —3.7 —12.0 —36.1 —10.8 —23.3 —37.1 —10.7 —12.2 —6.4 —10.7 ♦Data furnished by Bureau of Foreign and Domestic Commerce, United States Department of Commerce. seasonal increase with both wholesale and Dretail dealers, the in June also showing a considerable R T former reduction in the unfavorable spread from a year ago. Total ECAUSE of increases in Chicago and Detroit, amount dollar sales at retail yards increased counter-seasonally, al B ing to 4 per cent each, Seventh district department though the percentage loss from a year ago remained un store sales in June rose counter-seasonally by 2 per cent etail changed from a month earlier. Outstanding accounts of reporting lumber dealers were lower in ratio to sales than in May but higher in this ratio than last June. Cement dealers reported a normal seasonal increase over May, after the lag in that month due to unfavorable weather conditions, and brick deliveries in the Chicago district were approximately as heavy as two months earlier, having recovered the decline that took place during May. In Iowa the demand for clay products was generally lower than Page 6 rade in the aggregate over the preceding month. The 1928-37 average shows a recession of 5 per cent for the period, and in no previous year on this bank’s records (from 1923) has a gain in business been recorded for June over May. Milwaukee stores reported only a fractional decline in sales during the month, while a decrease of 4 per cent took place in Indianapolis trade and one of 3 per cent in the total for firms in smaller cities. Although the decline from the corresponding month a year ago remained large in DEPARTMENT STORE TRADE IN JUNE 1938 Locality Per Cent Change June 1938 from June 1937 Net Sales Chicago..................... Detroit...................... Fort Wayne.............. Indianapolis............. Milwaukee................ Peoria........................ Other Cities*........... Stocks End of Month Per Cent Change First Six Months 1938 from Same Period 1937 Ratio of June Collections to Accounts Outstanding End of May Net Sales 1938 1937 —13.4 —25.5 —12.5 —9.6 —11.3 —12.6 —11.8 30.1 40.0 32.5 43.3 37.2 38.0 38.4 38.0 —6.6 32.4 34.0 —11.6 —15.4 —27.8 —19.4 —12.8 —15.9 —21.0 —14.9 —15.4 34.6 36.7 —11.8 —13.5 —i5.2 —12.1 7th District.............. —17.8 •Include Fort Wayne and Peoria. The retail shoe trade in June followed trends similar to those in department store trade. Sales of shoes by reporting dealers and department stores expanded 16 per cent over the dollar volume sold during May, whereas the 1928-37 June average shows a slight decline in the comparison. Furthermore, the margin of decrease from last year nar rowed to 14 per cent in the current period from 23 per cent in May. Dealers recorded more favorable trends in June than did department stores. Sales in the first six months of 1938 totaled 11 per cent smaller than in the 1937 period. Stocks were reduced 14 per cent during June and at the end of the month aggregated 6 per cent below those of a year ago. June—18 per cent-—it represented a narrowing from that of 22 per cent experienced in May, and in the first two weeks of July, district department store sales totaled only 12 per cent below those of the same period last year. By the end of June, stocks had fallen to 12 per cent under those of the 1937 date, having diminished 8 per cent from the close of May. Stock turnover in the first half of 1938 was only 1.99 times as against 2.18 times in the same six months last year. •» * * * * * The decline of 16 per cent in June from May in the retail furniture trade compared with one of 23 per cent in the 1928-37 average and was the smallest for the month in any of the ten years. However, the dollar volume sold remained 30 per cent below a year ago, and in the first half of 1938 sales of furniture and housefurnishings by reporting dealers and department stores totaled 25 per cent under those in the same six months last year. Inventory position continued to improve, as stocks were lowered 7 per cent from the close of May to 16 per cent below June 30, 1937. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted. No. of June MayApril Mar. Feb. Jan. June May Apr. Mar. Feb. Jan. 1938 lOSS 1938 1938 1938 1938 1937 1937 1937 1937 1937 1937 Meat Packing— (U. S.)— leB (in dollars)........................................................ 45 86 87 82 83 84 89 99 99 95 95 92 101 Casting Foundries— hipments: Steel—In Dollars.................................................... 12 In Tons........................................................ 12 Malleable—In Dollars............................................ 21 In Tons................................................ 21 29 20 32 38 27 19 34 40 27 18 34 41 42 34 37 45 30 22 36 43 33 25 38 46 125 122 89 109 109 108 80 102 119 123 85 112 124 136 88 122 104 114 74 103 95 102 69 98 Stoves and Furnaces— Shipments (in dollars)............................................... 14 82 94 91 90 64 46 127 152 168 147 99 95 FurnitureOrders (in dollars)..................................................... Shipments (in dollars)............................................... 33 33 43 45 51 46 47 54 56 68 53 52 66 37 68 75 80 80 82 92 96 101 76 83 112 67 Output of Butter by Creameries— Production.................................................................. Sales............................................................................ 59 61 156 157 151 138 101 110 87 110 77 100 78 101 149 144 131 123 90 100 80 98 70 90 72 85 Wholesale Trade— Net Sales (in dollars): Groceries................................................................. 27 Hardware................................................................ 11 Drugs....................................................................... 13 69 83 73 66 81 67 70 72 68 63 73 76 54 54 69 57 52 76 72 112 85 66 107 74 70 108 82 72 101 86 60 70 77 65 64 85 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................................... Detroit..................................................................... Indianapolis............................................................. Milwaukee............................................................... Other Cities............................................................ Seventh District—Unadjusted.............................. Adjusted.................................. 83 83 91 83 75 82 84 79 80 95 82 77 80 79 82 94 100 98 82 87 82 86 87 97 95 79 86 95 67 71 75 71 62 68 85 69 74 84 74 62 70 88 97 111 104 98 86 99 101 95 118 110 102 91 100 99 93 117 101 104 86 97 98 100 113 116 105 90 102 104 76 93 82 78 67 78 97 78 88 79 78 64 78 97 47 101 53 99 60 115 59 127 48 125 53 143 140 228 145 243 150 255 138 240 101 179 106 186 46 71 41 73 36 53 34 49 15 25 13 28 57 81 40 55 52 69 52 69 28 42 27 64 35 48 52 51 47 49 118 133 130 127 123 120 29 6 4 5 40 84 84 Automobile Production—(U. S.)— Passenger Cars............................................ Trucks.......................................................... Building Construction- Contracts Awarded (in dollars): Residential............................................... Total......................................................... Pig Iron Production*— Illinois and Indiana.................................. •Average daily production. Page 7 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) TNDUSTRIAL activity showed little change in June and increased in the first three weeks of July, although there is usually a considerable decline at this season. Prices of most staple commodities advanced sharply in the latter part of June and early July and there were substantial increases in prices of stocks and lower grade bonds. INDUSTRIAL PRODUCTION Production OLUME of industrial production, as measured by the Board’s seasonally ad justed index, was at 77 per cent of the 1923-1925 average in June as compared with 76 in May and an average of 79 in the first quarter of the year. Available data indicate that in July the index will show a considerable rise. In June activity in the textile industry increased, reflecting chiefly a further rise at woolen mills. Output at cotton and silk mills, which usually declines at this season, showed little change. Shoe production declined, following a considerable increase earlier in the year. Automobile output decreased further in June; sales of new cars continued in excess of production, however, and stocks were further reduced. Steel production declined seasonally in June, and lumber production showed little change, although some increase is usual. Output of plate glass rose sharply from an exceptionally low level. Coal production remained in small volume in June, while output of crude petroleum, which had been sharply reduced in May, declined somewhat further. In the first three weeks of July activity at steel mills increased, although there is usually a decline in that period, and in the third week of the month ingot production was estimated at 36 per cent of capacity as compared with an average rate of 28 per cent in June. Crude petroleum output also rose sharply, reflecting chiefly a return to production on a six-day week basis in Texas. Automobile pro duction declined seasonally. Value of construction contracts awarded, as reported by the F. W. Dodge Corpo ration, showed a decline in June, following a considerable increase in May. Changes in both months reflected chiefly fluctuations in awards for publicly-financed con struction. Awards for private residential building were maintained in June at about the same daily rate as in May, although there is usually some decline at this season, and were in slightly larger volume than a year ago. Other private construc tion work remained at recent low levels. V Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to June 1938. DEPARTMENT STORE SALES 1934 1935 1936 1S37 Employment 193S Indexes of value of sales, 1923-1925 average = 100. By months, January 1934 to June 1938. WHOLESALE PRICES ACTORY employment and payrolls decreased further from the middle of May to the middle of June. Employment in the automobile, steel, machinery, and clothing industries continued to decline, while at woolen mills there was an in crease and in most other manufacturing lines changes were small. In trade employ ment was reduced, while in other nonmanufacturing industries changes in the number employed were largely seasonal. F Agriculture TOTAL wheat crop of 967,000,000 bushels was indicated by July 1 conditions, according to the Department of Agriculture. A crop of this size would be considerably larger than average and a Government program was announced for loans at close to current market prices. Cotton acreage on July 1 was estimated at 26,900,000 acres as compared with 34,500,000 acres last year when, with excep tionally high yield per acre, a record crop was harvested. Production estimates for most other major crops were slightly under the large harvests of last season. A Distribution ISTRIBUTION of commodities to consumers was maintained in June at about the May level, although a decline is usual at this season. Sales at department and variety stores showed little change and mail order sales increased. In the first half of July department store sales decreased less than seasonally. Freight-car loadings showed little change from May to June and were slightly above the low level of April. D Index compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1934 to week ending July 16, 1938. Commodity Prices EXCESS RESERVES OE MEMBER BANKS RICES of industrial materials, particularly rubber, hides, nonferrous metals, and steel scrap, showed advances from the middle of June to the third week of July, and there were also increases in prices of livestock and products. Wheat prices declined, following a rise early in June. Prices of iron and steel were reduced and there were also declines in some other industrial products. P Bank Credit XCESS reserves of member banks increased substantially in June and the first half of July, rising to above $3,000,000,000, as compared with $1,730,000,000 just prior to the reduction in reserve requirements the middle of April. The largest gain in excess reserves occurred at city banks through the retirement of Treasury bills and the continued growth of bankers’ balances. Total loans and investments of reporting member banks in 101 leading cities, which had increased sharply in the first week of June, declined during the remainder of June, reflecting largely redemption of Treasury bills held by New York City banks and a decrease in loans to security brokers and dealers. During the first three weeks of July total loans and investments at reporting banks showed little net change. E 1935 Wednesday figures of estimated excess reserves for all member banks and for selected New York City banks, January 3, 1934, to July 20, 1938. Page 8 Money Rates ATES on Treasury bills and notes were slightly firmer in July but continued at exceedingly low levels. Yields on Treasury bonds showed little change. R DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111................................. Deputy Chairman W. J. Cummings.................................. Chicago, 111. S. T. Crapo....................................... Detroit, Mich. E. R. Estberg.............................. Waukesha, Wis. M. W. Babb................................... Milwaukee, Wis. F. D. Williams............................ Iowa City, Iowa F. J. Lewis............................................Chicago, 111. N. H. Noyes....................................................... Indianapolis, Ind. MEMBER OF FEDERAL ADVISORY COUNCIL E. E. Brown........................................ ......................... Chicago, 111. OFFICERS G. J. Schaller............................................................. President H. P. Preston..............................................First Vice President J. H. Dillard......................................................................... VicePresident W. H. Snyder....................................Vice President and Cashier C. S. Young........................................................................... VicePresident C. B. Dunn.........................................................................GeneralCounsel W. C. Bachman............ Assistant Vice President 0. J. Netterstrom. .. .Assistant Vice President A. L. Olson.................... Assistant Vice President A. T. Sihler.................. Assistant Vice President A. M. Black. . .Manager, Planning Department J. L. Sweet........................................................... Manager, Research and Statistics Department F. Bateman. ............................ Assistant Cashier J. C. Callahan...................................... AssistantCashier N. B. Dawes............................................AssistantCashier F. A. Lindsten........................................ AssistantCashier L. G. Meyer............................................ AssistantCashier F. L. Purrington.................................... AssistantCashier J. G. Roberts.......................................... AssistantCashier C. M. Saltnes.......................... Assistant Cashier J. J. Endres......................................................................Auditor DETROIT BRANCH R. H. Buss......................................................Managing Director SEVENTH FEDERAL IOWA RESERVE DISTRICT
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