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Business Conditions Seventh FEDERAL Reserve RESTRICT George A. Prugh, Asst. Federal Reserve Agent Harris G. Pett, Manager Division of Research and Statistics Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Eugene M. Stevens, Volume IS, No. 8 MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO July 30, 1932 ment store sales, on the other hand, declined as is usual for June, the retail furniture trade was seasonally smaller, HE usual summer dullness prevailed during June in and chain store sales decreased slightly. Distribution of the Seventh district, the manufacture of commodities automobiles at wholesale continued to diminish during being restricted in the period and certain merchandising June, following seasonal tendency, but sales at retail ex phases likewise showing seasonal recession. Little improve panded further. ment has been noted as compared with conditions a year Loans and investments and deposits of reporting mem ago, and data covering the first half of 1932 reveal activity ber banks in the district dropped noticeably between the in general as having been considerably below the corres middle of June and July 13, most of the decline reflecting ponding period last year. banking disturbances in Chicago. The heavy withdrawal of deposits increased the demand for currency so that Among the industries reporting seasonal reduction in despite changes making for a reduction in member bank output during June were automobiles, iron and steel, cast borrowing, the amount of such borrowing expanded some ing foundries, and furniture. Leather production was less, what during the period. Following expansion shown in though sales increased, and building construction declined. May, sales of commercial paper and financing by means The movement of lumber and cement improved somewhat of bankers’ acceptances declined sharply in June. during the month, and shoe production expanded. In food-producing industries, meat production de Credit Conditions and Money Rates creased, contrary to seasonal trend, manufacture of butter totaled about the same as in May, while that of cheese A heavy increase in demand for currency—approx increased over the preceding period; distribution of these imately 1S8 million dollars—largely the result of banking commodities declined for meat, was greater for butter, and disturbances in Chicago, was the main factor making for totaled approximately the same for cheese. The move an increase in member bank borrowing during the period ment of both wheat and feed grains continued to be re June 15 to July 13. Among the factors tending to de stricted in June. The prospect is for a large corn crop crease member bank recourse to the Reserve bank were: this year, and oats, hay, potato, barley, and rye crops will an increase in holdings of U. S. securities (local trans be ahead of a year ago. Rains in early July were helpful actions) of more than 50 millions, a lessening of member to garden truck and pastures. IONS DOLLARS Wholesale distribution of commodities expanded in June CURRENCY DEMAND CHICAGO DISTRICT for the majority of reporting groups, some of the gains CHANGES BY WEEKS 4-600 being contrary to seasonal trend, and most lines recorded a narrowing of the spread between activity this year and 4-500 in 1931. The retail shoe trade also increased. Depart- General Summary T dx FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Change From June 15 July 15 July 13 1932 1932 1931 Total Bills and Securities....................................... $314.3 $ +68.8 $+198.7 37.1 +25.5 Bills Discounted........................................................ +7.3 Bills Bought................................................................ 7.4 -0.4 -0.9 U. S. Government Securities................................. 269.8 +62.0 + 174.8 +84.9 714.7 +36.7 Total Reserves........................................................... -56.3 277.3 -51.4 Total Deposits........................................................... + 159.4 Federal Reserve Notes in Circulation................ 720.3 +346.4 Ratio of Total Reserves to Deposit and Federal — 17.4* Reserve Note Liabilities Combined................ -46* 71.6 ♦Number of Points. 4400 4300 4200 -100 1920 wIjIjai 1930 1931 1932 bank reserve balances of about 48 millions, an excess of local Treasury expenditures over receipts of 33 millions, and a gain of funds through inter-district settlements for commercial and financial transactions of 17 million dollars. These amounts, however, together with three changes of minor influence were less than the total making for in crease, so that member bank borrowings showed a gain of 7% million dollars. FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between June 15 and July 13, 1932 > (In millions of dollars) Changes making for increase in member bank borrowing: 1. Increase in demand for currency................................................157.98 2. Increase in non-member clearing balances.............................. 0.78 3. Sales of gold to industry............................................................... 0.03 Total................................................................................................... Changes making for decrease in member bank borrowing: 1. Increase in holdings of U. S. securities by Reserve bank (local transactions)..................................................................... 2. Decrease in member bank reserve balances........................... 3. Excess of local Treasury expenditures over receipts........... 4. Funds gained through inter-district settlements for com mercial and financial transactions......................................... 5. Increase in holdings of acceptances (local transactions).. . 6. Decrease in unexpended capital funds..................................... 7. Increase in reserve bank float..................................................... 158.79 50.74 47.88 32.99 17.04 1.84 0.86 0.18 Total................................................................................................... 151.53 Absorption of this excess: Increase in member bank borrowings (discounts for member banks)............................................................ 7.26 Member Bank Credit Total loans and investments of reporting member banks in this district declined about 150 million dollars from June 15 to July 13; of this decrease, more than one hun dred millions represented lessened volume of investment holdings, over 90 millions of which shrinkage took place in Chicago where banking disturbances entailed heavy withdrawals of deposits and consequent liquidation of in vestments. Net demand deposits of reporting members in the June 15—July 13 period decreased nearly 140 million dollars; more than 120 millions of this decline occurred in Chicago. Time deposits of all reporting mem bers in the district on July 13 were lower by 56 million dollars than on June 15, and time deposits of Chicago reporting members alone decreased 45 millions. As com pared with July 15, 1931, the corresponding reporting date last year, total loans and investments of reporting member banks in the district on July 13, 1932, declined 832 million dollars, net demand deposits by nearly 575 millions, and time deposits by more than 300 million dollars. Rates on customers’ commercial loans in Chicago during the week ended July 15 were reported as 4 to 5 per cent, as against 4J4 to 5 per cent in the corresponding week of June. The average rate earned on loans and discounts during the calendar month of June was reported as 4.55 per cent; in May the item had been given as 4.73, and in June 1931 as 4.46. In the City of Detroit customers’ CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Change From July 13 June 15 July 15 1932 1932 1931 Total Loans and Investments.................. $2,329 $ —154 $-832 Loans on Securities..................................... 775 -21 -287 All Other Loans........................................... 882 -30 -279 Investments................................................... 672 -103 -266 Net Demand Deposits............................... 1,207 -138 -574 Time Deposits.............................................. 923 “56 -304 Borrowings from Federal Reserve Bank 12 +4 +10 Page 2 commercial loans were reported as Sl 2 to 6 per cent for / the week ended July 15. With borrowing still on a restricted basis and demand from Chicago banks reduced during the month to almost negligible proportions, commercial paper sales in the Middle West declined 60 per cent in June to one-tenth of the usual seasonal volume—the lowest level since January 1923, when this bank’s records began. Selling rates ranged from 2J4 to 2 J4 per cent for prime paper to 2% and 3 per cent for less well known obligations; the bulk of sales moved at 2J 2 to 3 per cent. Outstand / ings decreased 8 per cent on June 30 from the end of May, and continued 50 per cent under a year ago. A slight expansion in sales was evidenced during the first half of July, largely as the result of some improvement in demand from banks in Chicago. Quotations on July 15 ranged from 2 to 3 per cent, with most business being transacted at between 2J4 and 3 per cent. The supply of acceptances in the Chicago bill market aggregated 12 per cent less during the four weeks ended July 13 than in the preceding period, inasmuch as a 30 per cent decrease in receipts from Eastern centers more than offset an increased volume of local bills purchased by dealers. Distribution also declined but was sufficiently large, in view of heavier sales to Chicago banks and larger shipments to Eastern offices, to absorb all offerings despite a decline in demand from out-of-town banks. As a con sequence, dealers had no acceptances in their portfolios on July 13. Selling rates at the close of the period ranged from per cent for 30-day offerings to per cent for maturities of five and six months. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET June 16 to July 13, 1932 Per Cent Change in Comparison with Period from May 12 to June 15 June 11 to July 16 1932 1931 Bills purchased... +201.2 —91.3 Bills sold................ —28.0 +2.8 Holdings*............... ............ ........... ♦Holdings nil on July 13, 1932. A smaller amount of new financing by means of bankers’ acceptance credits took place in the Seventh district during June than in any other month since February 1929. Owing to this condition, the direct discounting of these bills by the accepting institutions decreased to such a degree that total supplies fell to a new low level for recent years, though purchases of other banks’ acceptances were increased moderately over May. Liquidation, coincident with the abnormal currency demand that accompanied the banking disturbances in Chicago, caused sales to rise sharply in June to the highest point thus far attained in 1932. Portfolios of accepting banks were correspondingly reduced. The liability for outstanding bills declined on June 30 to a level lower than for any reporting date since November 1928. A further recession in new financing was evidenced during the first half of July. VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From June May June 1932 1932 1931 Chicago....................................................................... $2,133 +11.4 -34.2 Detroit, Milwaukee, and Indianapolis.............. 881 +5.0 —33.9 Total four larger cities............................................ 32 smaller centers..................................................... $3,014 491 +9.5 —2.1 —34.1 —35.1 Total 36 centers........................................................ $3,505 +7.7 —34.2 TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in June 1932 from May 1932 June 1931 Total value of bills accepted............... -50.8 -47.8 Purchases (including own bills dis counted) ................................................ -46.6 -44.7 Sales............... ........................................... +591.6 -46.9 Holdings*................................ ................. +36.4 -47.5 Liability for outstandings*.................. -7.7 -40.3 *At end of month. In some areas, oats had been lodged by wind and heavy rainfall to such an extent that it will be impracticable to use binders to cut them. Garden truck and pastures were greatly improved by the early July rains. Most counties still have ample moisture for immediate requirements, whereas a year ago crops were beginning to deteriorate be cause droughty conditions were becoming serious through out the district. Security Markets Grain Marketing Little activity was displayed in the Chicago bond mar ket during June, and prices after a slight rise early in the month, continued their gradual decline. New security offerings during June were confined to a few scattered municipal issues. The principal demand during the month appeared to be from individual investors, and mostly for high grade municipal and public utility issues. Outstand ing among developments in the early part of July was the improvement shown in obligations of some European countries. Strength was shown also in United States Government issues, with some Liberty bonds touching highs for the year so far. This movement, however, seem ingly has not affected domestic corporation issues to any great extent. Prices on the Chicago Stock Exchange moved in a very narrow range during all of June and the first two weeks in July. The average price of twenty leading stocks* on July 18 amounted to $16.15, or one dollar above the average on June 18. The movement of grains in June was restricted, both at domestic markets and into export. Wheat receipts and shipments, which were the lowest for June in twelve years covered by our records, declined from the May totals. June receipts have exceeded those for May in three of the preceding five years, while shipments have been lower in three years. Exports were smaller than in May and fell below the year-ago figure for the first time since September 1931. However, the total for the year ending June 30 exceeded the preceding season by about onefourth. A moderate decline occurred in the United States visible supply of wheat, which since the first of June has averaged about 25 million bushels under a year ago. Total stocks in this country, according to a well known agri cultural statistician, are higher than a year ago, due to considerably larger farm stocks and somewhat greater stores at mills and country elevators. Prices were weak, both cash and future wheat averaging lower than in May, with the decline continuing to July 16, on which date the July future recorded a new all-time low. Feed grains also moved in limited quantities—lower than in May and less than usual for June. Reduced re ceipts of oats and smaller shipments of corn and oats are characteristic of June, but corn receipts have increased over May in four of the past five years. Corn and oats prices also declined, but exhibited less weakness than wheat. Cash and future prices of both grains averaged lower than in May, while in the first half of July corn recovered slightly and oats declined somewhat further. * Chicago Journal of Commerce. Agricultural Products A large crop of corn is in prospect in the Seventh district this year. Although growth is not quite so far advanced as in 1931, the plants are unusually sturdy with their condition above the average for July. Mid-month found some com already in tassel, most of the crop too tall to cultivate, and the remainder ranging from knee to waist high. The production of wheat, oats, hay, potatoes, and tobacco, on the other hand, appears to have fallen con siderably below the 1924-28 average, though that of oats, hay, and potatoes is greater than in 1931. Heavier yields of barley and rye are expected than a year ago. Threshing of the small crop of winter wheat has begun, and the harvesting of other grain is under way. A considerable amount of the straw is short but kernels are well developed. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of July 1 condition. (In thousands of bushels unless otherwise specified) Seventh District United States Forecast Final Forecast Final Average 1932 1931 1932 1931 1924-28 Corn................... 986,111 887,842 2,995,850 2,563,271 2,625,063 Oats.................... 510,706 469,972 1,217,244 1,112,037 1,277,127 Winter Wheat. 44,233 73,636 431,762 789,462 548,632 Spring Wheat. 3,246 3,623 305,209 104,742 280,044 Barley................ 58.892(a) 49.467(a) 312,422 198,185 218,868 Rye..................... 8.562(a) 7.523(a) 44,307 32,514 44,081 Flaxseed............ 315(b) 250(b) 18,243 11,071 23,287 Potatoes (white) 54,440 50,418 377,769 375,518 361,115 Potatoes (sweet) 1.391(c) 1.476(c) 80,307 62,904 57,822 (total crop). Peaches........... Pears............... Cherries*........ Grapes*........... Dry Beans***. Tobacco**.... All Tame Hay* 11.990(a) 2.073(d) 900(d) 27(e) 82(a) 3.582(e) 32,563 12,811 25.382(a) 133,824 7.838(d) 47,216 1.602(d) 21,503 29(e) 119 74(a) 2,142 3.333(e) 9,440 48,904 1,060,683 11,939 68,259 202,415 76,586 23,346 111 1,622 12,713 1,600,910 64,213 180,262 56,821 21,484 80 2,339 1,298,947 73,759 *In thousands of tons. **In thousands of pounds. ***in thousands of 100lb. bags. (a)Five states including the Seventh Federal Reserve district. (b)Iowa and Wisconsin, (c)Illinois, Indiana, and Iowa, (d) Illinois, Michigan, Indiana, and Iowa. (e)Michigan and Wisconsin. Movement of Live Stock Hog receipts at public stock yards in the United States were in exceptionally small volume during June, having shown the greatest recession from May that had been evi denced in that period since the beginning of our records (1921). The marketing of cattle, calves, and lambs, on the other hand, decreased less than the usual amount from the preceding month. Comparisons with last year remained unfavorable and, with the exception of an in creased volume of lambs, live-stock receipts continued decidedly below the 1922-31 average. However, the LIVE STOCK SLAUGHTER (In thousands) Lambs Cattle Hogs and Sheep Calves Yards in Seventh District, June 1932................................... . 171 528 294 98 Federally Inspected Slaughter, United States June 1932...................................,. 394 638 3,320 1,529 May 1932................................... . 399 3,940 1,444 616 June 1931................................... . 417 667 3,251 1,516 AVERAGE 1PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended Months of May June July 16 June 1932 1931 1932 1932 Native Beef Steers (average). . $6.05 $7.45 $6.65 $8.25 Fat Cows and Heifers................ 6.05 5.75 4.85 4.65 Calves............................................. 5.45 8.45 6.10 5.75 Hogs (bulk of sales).................... 3.35 4.80 3.50 6.40 Yearling Sheep............................. 4.00 6.25 4.50 4.65 Lambs........................................... 5.50 7.75 5.80 5.95 Page 3 movement of cattle and lambs to inspected slaughter (in clusive of receipts which do not pass through the public markets) expanded over May and that of hogs and lambs was in excess of a year ago. Prices have advanced sharply in recent weeks. June reshipments to feed lots, though continuing relatively light for this season of the year, showed a smaller recession from the 1927-31 average than had been the case in May. Meat Packing Contrary to seasonal trend, the volume of production at slaughtering establishments in the United States de creased 7 per cent in June to a level 3)4 per cent under a year ago and 10 per cent below the 1922-31 average for the month. Payrolls at the close of the period likewise showed a recession from May of one per cent in number of employes, one per cent in hours worked, and of 6)4 per cent in wage payments. The aggregate value of sales billed to domestic and foreign customers declined one per cent in June from a month earlier and was 32)4 per cent smaller than last year. However, most of the decrease in sales was due to the price factor—the tonnage changed little from May and totaled only one per cent below that of last June. Quotations for hams, picnics, pork loins, lard, cured bellies, beef, veal, and lamb averaged a little higher in June than in the preceding month; prices of smoked meats remained steady; and those of fresh bellies, barreled pork, dry salt fat backs, mutton, and skinned heavy hams declined. A definite upward trend in prices was evidenced after the middle of the month. Although inventories of packing-house commodities in the United States usually increase at this season, they had decreased on this July 1 by more than 70 million pounds from the beginning of June. Holdings, therefore, not only remained smaller than in 1931 or the 1927-31 average but also were below any other reporting date since February 1. June shipments for export were slightly in excess of May, though many of the individual companies ex perienced a reduction therein. Foreign demand remained on a level with the preceding month, and with the excep tion of a small improvement in British inquiry for hams, the meat trade continued on a restricted basis. Inasmuch as prices abroad failed to keep pace with the recent ad vance in the United States, European quotations for pack ing-house commodities have fallen somewhat below Chi cago parity. United States inventories in foreign coun tries (inclusive of stocks in transit) showed little change in June. manufacture of the American variety expanded 20 per cent in the four weeks ended July 2, as compared with that of May 9 to June 4, but totaled 10)4 per cent less than a year ago. Distribution of this commodity from primary centers of the state continued to lag behind pro duction to a smaller than seasonal extent, though sales failed to expand over a month previous and were 12 pier cent under last year. Inasmuch as total stocks of cheese in the United States increased only 14,500,000 pounds over the beginning of June instead of showing the average gain of about 19,000,000 pounds, July 1 holdings aggre gated 13,000,000 pounds less than the 1927-31 average. Prices eased. Industrial Employment Conditions Reduced employment and earnings were reported by Seventh district establishments on June 15 as compared with a month earlier. The loss in number of men was fractional and less than in June of the preceding two years, while the payroll decline of more than 5 per cent was greater than in 1930 but less than in 1931. During the first six months of this year, however, sharper declines have been recorded for both employment and wage pay ments than in the same period of either 1930 or 1931. Manufacturing employment determined the trend in the totals, as non-manufacturing recorded very slight changes from a month previous. While the level of employment and payrolls was the lowest yet recorded, the declines from a year ago in manufacturing industries, amounting to 23 per cent in employment and 38 per cent for payrolls, were slightly less than in the preceding two months. Five man ufacturing and two non-manufacturing groups had lower employment and wage payments than a month earlier. These included a drop to a new low level for the metals group, a non-seasonal loss in leather products, and a greater than seasonal recession in paper and printing. Only three groups improved in both items—textiles, rubber products, and construction. Food products gained season ally in employment, but for the first time in our records failed to record increased payrolls in June; stone-clay-glass had a greater-than-seasonal gain in number of men, ac companied, however, by a reduction in payrolls; the vehicles group, in which employment remained practically EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of June 15, 1932 Industrial Group Firms No. Wage Earners No. Earnings (000 Omitted) $ In the Seventh Federal Reserve district, creamery butter manufacture aggregated about the same in June as a month earlier but showed a recession of 8 per cent from a year ago. The tonnage sold, however, increased 15 per cent over May and decreased 6 per cent in the comparison with 1931. United States production of the commodity likewise fell below last year but was seasonally greater than in May. Although inventories of creamery butter in the United States recorded the usual expansion on July 1, they aggregated 5,000,000 pounds lighter than a year ago or the 1927-31 average. Prices, after trending downward in June, advanced early in July. Operations of Wisconsin cheese factories have remained at approximately 80 per cent of the 1924-31 level. The Metals and Products1........ Vehicles................................. Textiles and Products. . . . Food and Products............. Stone, Clay, and Glass___ Wood Products.................... Chemical Products............. Leather Products................ Rubber Products2............... Paper and Printing............ 720 138 146 333 140 266 100 74 7 308 122,009 160,148 24,578 52,832 6,980 19,590 12,453 14,072 4,674 39,216 Total Mfg., 10 Groups___ 2,232 Merchandising®.................... Public Utilities.................... Coal Mining......................... Construction........................ 166 72 11 334 Total Non-Mfg., 4 Groups. 583 Page 4 Report ing Dairy Products Change From May 15 Wage Earn ers Earn ings % % 1,972 3,686 310 1,100 132 235 278 188 124 929 -4.1 +0.3 +3.6 +5.1 +4.1 -0.6 -1.5 -3.3 +3.0 -1.6 -7.2 -10.3 +1.1 -0.9 -2.1 -3.6 -6.3 -2.1 +20.6 -5.7 456,552 8,954 -0.5 -6.9 28,428 81,780 351 10,474 624 2,493 5 228 -1.7 -1.4 +61.8 + 19.8 -0.2 -1.2 -0.9 +14.1 121,033 3,350 +0.2 -0.1 Total, 14 Groups................. 2,815 577,585 12,304 -0.4 -5.1 ‘Other than Vehicles. 2Michigan and Wisconsin. Mllinois and Wisconsin. unchanged, recorded a sharp loss in wage earnings. Coal mining in Illinois continued at extremely low levels. Farm wages in the North Central states, as reported by the Department of Agriculture, declined between April 1 and July 1, which is contrary to the usual increase in the harvest season. This trend was influenced by the con tinued decline in prices of farm products, which has dis couraged the hiring of farm laborers. A higher ratio of supply to demand than on April 1 was shown for Illinois, Wisconsin, and Iowa, while Michigan showed considerable reduction in the ratio and Indiana a lesser one. Manufacturing Automobile Production and Distribution United States production of automobiles declined slightly in June, following three months of expansion, although output of passenger automobiles totaled 160,103 for the month, or 1J4 per cent more than a month pre vious but 24 per cent below last June. In the first six months of 1932, production of passenger cars aggregated only 730,808, which is AAl 2 per cent smaller than in the / first half of 1931 and 74 per cent less than in the first six months of the peak year 1929. The number of trucks produced in June this year was 22,754, representing a recession of 17 per cent from May and a decline of 43 per cent from a year ago; output in the first half of 1932, totaling 140,945, was 44y2 per cent below the same period last year and 69 per cent under the first six months of 1929. In the Middle West, sales of new automobiles to con sumers again increased in June, continuing the upward trend started in January this year, and the number of cars sold was only 11 y2 per cent smaller than in June last year, as against a decline of 42 per cent in the year-to-year comparison for May. Data covering the first six months of the year show, however, that sales by retail dealers totaled 43 per cent less than in the same period of 1931, while wholesale distribution was 45 per cent smaller. June sales by wholesale distributors fell off considerably from those in May—a seasonal tendency. Used car sales were slightly greater than in the preceding month and only 12 per cent below those a year ago. Deferred payment sales constituted 50 per cent of the total retail sales made dur ing June by dealers reporting the item, the same ratio as in May, and comparing with 58 per cent in June last year. MIDWEST DISTRIBUTION OF AUTOMOBILES June 1932 Per Cent Change From May 1932 June 1931 New Cars Wholesale— Number Sold........... Value......................... Retail— Number Sold........... Value......................... On Hand End of Month— Number.................... Value......................... Used Cars Number Sold........... Salable on Hand— Number.................... Value......................... First Half 1932 Per Cent Companies Change Included From First Half 1931 -25.5 -23.4 -57.3 -58.9 -44.7 -45.1 16 16 +11.3 +12.6 -17.5 -28.2 -43.0 -42.9 44 44 -12.7 -16.0 -40.1 -47.7 -31.8* -37.1* -12.3 -24.6 -7.3 -7.7 —? 9* + 13.1* 45 45 LUMBER AND BUILDING MATERIALS TRADE Class of Trade Wholesale Lumber: Sales in Dollars............................... Sales in Board Feet...................... Accounts Outstanding1................ Retail Building Materials: Total Sales in Dollars.................. Lumber Sales in Dollars.............. Lumber Sales in Board Feet.. Accounts Outstanding1................ 45 -8.4 -11.6 Furniture Orders booked by furniture manufacturers in the district again fell off—in June from May—for the third successive month, the decline of 16 per cent comparing with the fiveyear average recession of 24 per cent which, however, fol lows upon an average increase in May of 16 per cent. Shipments, likewise, fell off, 32 per cent, this drop com paring with an average decline for the month of only 11 per cent. The shrinkage in the volume of unfilled orders outstanding was but 10 per cent during June, and the ratio to current orders booked stood on June 30 at 96 per cent, 9 points higher than a month previous. As compared with June last year, declines were especially heavy, owing to the earlier stimulation of summer trade a year ago when the semi-annual furniture show was held in June instead of July as is customary. Orders this June, therefore, were 45 45 + 1.7 Iron and Steel Products The quietness that usually is felt in the steel industry during the summer months, together with the generally retarded state of activity prevalent for some time, resulted in an exceptionally dull period in June and the first half of July for mills in the Chicago district. Steel ingot out put averaged no more than 15 per cent of capacity at any time during the period, with operations falling below that level over the July 4 holiday, and June pig iron produc tion in the Illinois and Indiana district reached a low point. Finished steel prices have remained firm, but the price of pig iron was reduced 50 cents per ton the early part of July, and the scrap iron and steel market continues extremely weak. Iron and steel casting foundries reduced their operations still further in June, as is customary during the period. The tonnage produced by steel casting foundries declined 9 per cent from May and shipments dropped 19 per cent, while production of malleable castings totaled 9 per cent less and shipments 6 per cent smaller. New orders for steel castings increased moderately in the aggregate over the preceding month—15 per cent in tonnage—while or ders booked for malleable castings were less by 5 per cent than in May, although their value totaled slightly greater. Conditions remained about the same as compared with a year ago. Shipments of stove and furnace manufacturers in the district declined 13 per cent in June from May—a seasonal trend—and were 20 per cent below a year ago. Orders booked, on the other hand, gained 40 per cent over the preceding month and were only 14y2 per cent smaller than last June, which month had shown a 10 per cent gain over June 1930. ♦Average end of month. June 1932: Per Cent Change From May 1932 June 1931 Number of Yards + 10.0 +12.1 +3.1 -49.0 -40.5 -26.0 14 12 12 -5.6 +2.2 -4.4 -0.1 -34.7 -43.2 -40.8 -21.7 184 37 86 176 Ratio of accounts outstanding1 to dollar sales during month June 1932 Wholesale Trade................................. Retail Trade........................................ ‘End of Month. May 1932 231.1 420.5 246.4 395.2 June 1931 159.5 346.2 Page 5 71 per cent under the volume of June a year ago, shipments were S3 per cent less, and unfilled orders 70 per cent smaller. The ratio of operations to capacity, also, was markedly lower this June, a ratio of 27 per cent comparing with the June 1931 ratio of 51 per cent; operations during May averaged 4 points higher than currently. from last year, while production was 36 per cent lower, Cement distribution in the five states of this district during May increased 74 per cent over April, but totaled 42 per cent lower than a year earlier. The situation as regards clay products continued practically unchanged from recent low levels. Building Construction Shoe Manufacturing, Tanning, and Hides Shoe manufacturing in the Seventh Federal Reserve dis trict increased 1S per cent in June over the relatively low level of May but continued almost 25 per cent less than the 1923-31 average. A recession not only from last year but also from the preceding month took place in tanning operations. The sale of leather, on the other hand, ex panded over May, though it fell considerably short of the corresponding period in 1931. Prices held barely steady. Larger numbers of packer green hides were sold in the Chicago market during June than in the preceding month; the demand for calf skins declined. Shipments of hides and skins from the city also decreased from May. Prices eased in June, but strengthened early in July. Building Materials, Construction Work Lumber moved in larger volume at wholesale during June in the Seventh district, and shipments from cement mills in this section improved, but reports in general failed to indicate a departure from recent depressed levels of building material distribution. Lumber wholesalers reported a better than usual trend from May to June, as the gains in both dollar and boardfoot sales compared with small average declines for the previous five years. The year-ago comparison for June was also better in both items than in the preceding two months. The average declines for six months of 1932 from the same period of 1931, amounting to 51 per cent in dollar sales and 42 per cent in board feet, were much greater than the corresponding losses in either 1930 or 1931. Total sales of reporting retailers declined about the same from May as the average of the preceding five years. During the five-year period preceding 1930, however, a small average increase occurred in June. A better trend was shown for lumber dollar sales which increased in con trast to a loss in June of 1931. Total dollar sales in the past six months were 33J4 per cent under the same period of the preceding year, which compares with losses of 27 per cent in 1931 and 14*4 per cent in 1930. Stocks were further reduced at both wholesale and retail yards. Cement shipments in June from midwestern mills ex ceeded production for the third successive month, and both gained moderately over the May level, following the usual trend. For the six months’ period of 1932, shipments were slightly under production and declined 43 per cent Total construction activity in the Seventh Federal Reserve district declined somewhat in June, according to building contracts awarded. Residential contracts, how ever, amounting to 16 per cent of the total, registered a slight gain. BUILDING contracts awarded* SEVENTH FEDERAL RESERVE DISTRICT June 1932......................................................... $18,355,654 -25% -51% First six months of 1932............................. $110,697,054 -57% Change from same period 1931............ ♦Data furnished by F. W. Dodge Corporation. Net Sales Commodity Groceries.............. Hardware............ Drv Goods........... Drugs.................... Shoes..................... Electrical Supplies........... Stocks Accts. Outstand. Collec tions Ratio of Accts. OutstandING TO Net Sales -16.1 -17.4 -37.6 -16.9 -39.5 -26.0 -16.8 -36.1 -14.8 -24.3 -5.8 -10.8 -30.5 -4.4 -40.5 -18.0 -26.7 -36.4 -29.1 -45.6 105.4 242.0 364.7 227.1 383.3 -44.0 -28.0 -24.3 -47.8 206.0 Page 6 Residential Contracts $2,889,001 +2% -62% $15,034,332 -73% Permits issued in the Seventh district declined from both the preceding month and a year ago. Those issued during June, as reported by 100 cities, dropped 27 per cent from May and 66 per cent from June 1931 in the estimated cost of proposed work. The number issued showed declines of 17 and 39 per cent, respectively. Of the five large cities—Chicago, Detroit, Milwaukee, Indian apolis, and Des Moines—the last was the only one to differ from the district trend, a gain of 144 per cent being re corded over May in estimated cost of proposed con struction. Merchandising Seasonal trend was responsible for the expansion of 8 per cent shown over May in the June wholesale grocery trade. Hardware, drug, and electrical supply sales, on the other hand, exceeded those of the preceding month by 10, 1, and 4 per cent, respectively, contrary to the usual trend, the nine-year average recording declines of 3 and one per cent in the first two groups and practically no change for electrical supplies. The shoe trade, which de clined 4 per cent in June from May, reflected about the average recession, while the drop of 10 per cent in the dry goods trade compared with an average increase of one per cent. The decline from a year ago in this latter group was larger than in a similar comparison for May, but other lines showed improvement in the year-to-year comparison. Data covering the first half of 1932 indicate that business in the wholesale grocery and drug trades totaled approxi mately one-fifth less than in the same period last year, DEPARTMENT STORE TRADE IN JUNE 1932 WHOLESALE TRADE IN JUNE 1932 Per Cent Change From Same Month Last Year Total Contracts Period Locality Per Cent Change June 1932 From June 1931 Per Cent Change First Six Months 1932 From Same Period 1931 Ratio of June Col lections to Accounts Outstanding End of May Net Sales Stocks End of Month Net Sales 1932 1931 Chicago........ Detroit......... Indianapolis. Milwaukee. Other Cities. -30.2 -21.8 -23.3 -29.2 -31.2 -27.8 -18.5 -12.8 -17.5 -19.1 -30.2 -24.0 -21.2 -25.0 -26.8 24.9 30.0 38.3 32.5 27.9 29.0 31.7 41.5 34.9 31.6 7th District. -27.8 -22.5 -27.0 29.4 32.3 while that in hardware was one-fourth and that in dry goods one-third smaller; business in the shoe and electrical supply trades declined about 40 per cent. The decline of 4 per cent from the preceding month in June department store sales of the Seventh district repre sented about the average recession for the period, although conditions varied as among the several cities. Chicago trade, for instance, totaled less than per cent smaller than in May, and Indianapolis trade was only one per cent less; but Milwaukee sales decreased 6 per cent, De troit showed a drop of 8*4 per cent, and the total for other cities one of 7 per cent in the comparison. The 28 per cent decline reported from June last year brought sales for the first half of 1932 to 27 per cent below the first six months of 1931, with Chicago trade experiencing the heaviest recession in the latter comparison. Stocks de clined to a greater extent than usual in June, falling off 7J4 per cent from the end of May; as in other months this year, however, the rate of turnover was slightly slower than in 1931. The retail shoe trade again expanded in June—5 per cent—representing the fourth consecutive monthly gain and a little more than the usual seasonal increase over May. Department stores were responsible, however, for the heavier volume of business, as the majority of dealers reported declines from the preceding month. June trade totaled 23 per cent below a year ago, and sales in the six months of 1932 were almost one-fourth less than in the same period last year. Stocks on hand are about 10 per cent smaller than in 1931. The 23 per cent decline from May shown in sales of fur niture and house furnishings during June was about the same as in the 1927-31 average for the period. Install ment sales by dealers recorded heavier losses than did total sales, falling off 30 per cent in the month. As compared with last June, installment sales were 34 per cent smaller and total sales by dealers and department stores were 30 per cent less. Stocks declined 2 per cent in the month and now average almost 20 per cent below those a year ago. Chain store trade in June recorded a slight recession from May in the aggregate for fifteen chains reporting to this bank. Drug, men’s clothing, and musical instrument chains showed some expansion in the comparison, and the five-and-ten-cent store trade totaled about the same in vol ume as a month previous, while sales by grocery, cigar, furniture, and shoe chains were smaller. The decline from a year ago totaled 16 per cent for all reporting groups. The number of units in operation remained about the same as a month previous but was slightly greater than last year. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of June May Apr. Mar. Feb. Jan. June May Apr. Mar. Feb. Jan. .. _ Firms 1932 1932 1932 1932 1932 1932 1931 1931 1931 1931 1931 1931 Meat Packing—(U. S.)— Sales (in dollars).................................... 63 50 51 52 53 53 58 75 77 79 78 84 Casting Foundries— Shipments: Steel—In Dollars............................... 15 11 13 14 17 16 17 38 29 39 44 40 34 In Tons................................ 15 10 13 14 17 15 16 27 38 37 43 41 34 Malleable—In Dollars..................... 21 11 12 13 17 16 26 31 15 34 34 30 30 In Tons........................... 21 19 21 23 30 28 26 42 51 54 53 47 45 Stoves and Furnaces— Shipments (in dollars).......................... 11 48 51 77 Furniture— Orders (in dollars)................................. 18 Shipments (in dollars).......................... 18 Flour— Production (in bbls.)............................ 25 Output of Butter by Creameries— Production............................................... 67 Sales........................................................... 69 Wholesale Trade— Net Sales (in dollars): Groceries...............................:............. 29 Hardware............................................. 13 Dry Goods.......................................... 9 Drugs....'............................................ 13 Shoes..................................................... 6 Retail Trade (Dept. Stores)— , Net Sales (in dollars): Chicago................................................. 23 Detroit.................................................. 5 Indianapolis........................................ 5 Milwaukee........................................... 5 Other Cities........................................ 45 Seventh District................................ 83 Automobile Production (U. S.)— Passenger Cars....................................... Trucks....................................................... Building Construction— Contracts Awarded (in dollars): Residential........................................... Total...................................................... Iron and Steel— Pig Iron Production:* Illinois and Indiana.......................... United States...................................... Steel Ingot Production—(U. S.)*.. . Unfilled Orders U. S. Steel Corp.... ♦Average daily production. 14 15 19 23 26 28 32 37 29 32 38 24 56 33 39 47 49 59 111 104 109 110 96 98 90 89 95 141 130 141 113 102 95 96 97 93 93 92 91 153 140 146 117 108 102 61 64 56 57 73 37 95 95 102 91 91 82 88 85 91 71 54 29 66 33 66 49 32 • 63 34 68 .51 3467 31 70 40 35 72 35 61 31 34 67 29 60 30 30 66 25 84 64 46 83 54 81 63 51 79 60 84 72 55 87 68 83 55 51 85 63 74 41 41 81 44 82 42 42 88 40 58 78 67 67 55 63 60 86 67 71 59 66 64 89 75 81 67 71 62 80 70 72 61 67 55 75 60 61 53 59 54 65 62 68 51 57 84 101 87 95 80 88 83 109 93 99 86 90 94 126 94 112 95 101 83 109 88 93 78 88 74 95 68 75 67 76 • 81 87 80 85 71 81 55 60 54 73 41 73 34 52 32 62 34 55 72 107 93 121 98 133 79 120 62 105 47 89 10 27 10 36 9 24 8 31 10 26 5 18 26 55 30 61 36 67 52 101 23 42 22 46 29 21 26 43 30 26 32 46 32 29 36 49 37 32 39 52 40 34 44 53 41 32 42 56 61 56 61 73 76 66 74 76 86 69 80 82 84 67 88 84 78 62 80 83 72 56 70 87 NATIONAL SUMMARY OF BUSINESS CONDITIONS KRC&rr iw “ INDUSTRIAL PRODUCTION (By the Federal Reserve Board) NDUSTRIAL activity decreased further from May to June by somewhat more than the usual seasonal amount, and there was a considerable reduction in fac tory employment and payrolls. The general level of commodity prices advanced between the middle of June and the middle of July, reflecting chiefly a rise in the prices of live stock and meats. I Production and Employment Index number of industrial production, adjusted for seasonal variation (1923-25 average = 100). RAILROAD FREIGHT-CAR LOADINGS Merchandise Indexes of daily average number of cars loaded, ad justed for seasonal variation (1923-25 average = 100). Volume of industrial production, as measured by the Board’s seasonally ad justed index, declined from 60 per cent of the 1923-1925 average in May to 59 per cent in June. There were large decreases in output in the steel, coal, and meat packing industries, while at automobile factories daily average production showed a smaller decline than is usual at this season and at woolen mills activity increased, contrary to seasonal tendency. Consumption of cotton by domestic mills showed the usual seasonal decline. At manufacturing establishments there was a further reduction of 3.6 per cent in number of employees and of 7.8 per cent in earnings between the middle of May and the middle of June. Decreases in employment were general, with the exception of the automobile and tobacco industries, and of seasonally active industries, such as vegetable and fruit canning and the manufacture of ice cream. The largest de creases were in the steel, textile, chemical, and machinery industries and at railway repair shops. Daily average value of building contracts awarded^ as reported by the r. W. Dodge Corporation, declined in June but increased in the first half of July. Department of Agriculture estimates as of July 1 indicate a corn crop of 3,000, 000,000 bushels, the largest since 1923; a winter wheat crop of 432,000,000 bushels, 45 per cent smaller than last year and 21 per cent less than the five-year average; a spring wheat crop of 305,000,000 bushels, three times as large as last year and slightly larger than the average; and a tobacco crop one-fifth smaller than usual. Distribution Volume of railroad freight traffic declined somewhat further in June, and value of merchandise sold by department stores decreased by more than the usual seasonal amount. RE SERVE BANK CRED T ./_ Wholesale Prices J A JV 47 Tola n Discount! T U.S. Scci l\ r \ Acceptances 1927 1928 1929 1930 1931 V 1932 Monthly averages of daily figures for twelve Federal Reserve banks. Latest figures, averages of first 20 days in July, 1932. RESERVE BANK CREDIT AND FACTORS 1H CHANCES Monthly averages of daily figures. I-atest figures, averages of first 20 days in July, 1932. Page 8 The level of prices in wholesale markets, after declining steadily during May, was relatively stable early in June, and after the middle of the month there was an advance which continued through the second week in July. Prices of several lead ing commodities, including live stock and meats, cotton, and sugar, increased con siderably during June and the first half of July but later showed some recession. Prices of wheat declined to unusually low levels, and markets for copper and lead continued weak. Bank Credit Volume of reserve bank credit continued to increase between the middle of June and the middle of July, reflecting principally further purchases of United States Government securities by the reserve banks. In addition, member banks obtained reserve bank funds through an increase in the monetary stock of gold and a decline in deposits held with the reserve banks by foreign central banks. Funds released from these sources were absorbed by an increase in the demand for currency which also caused the member banks to draw on their balances with the reserve banks and to increase their discounts somewhat. The demand for currency, which for the period amounted to $270,000,000, was caused by banking disturbances largely m the Chicago district, by seasonal requirements at the turn of the month and the Fourth of July holiday, and by increased use of cash to avoid the tax on checks. Loans and investments of reporting member banks, after fluctuating widely during Tune, declined in the first two weeks of July, and on July 13 totaled $18,475,000,000, about $540,000,000 less than on June 1. There was a further decline in loans, while the banks’ investments in United States Government securities, after increasing sub stantially during the period of Treasury financing in mid-June, declined gradually, but on July 13 were still $90,000,000 larger than six weeks earlier. Money rates in the open market declined further during June and the first half of July. At the Federal Reserve Bank of New York, buying rates for bankers ac ceptances maturing within 90 days were reduced from 2J4 to 1 per cent on June 24 On the same day, the bank lowered its discount rate from 3 per cent to 2/2 per cent; and on the following day, the rate at the Chicago bank was reduced from 3% per cent to 2J4 per cent.
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