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B usiness C onditions S eventh FEDERAL R eserve D niSTRICT M O N T H L Y R E V IE W P U B L IS H E D BY T H E F E D E R A L R E S E R V E B A N K OF C H IC A G O Volume 13, No. 8 General Summary E W , if any, evidences o f accelerated business and industry in the Seventh district are afforded by statistical data for the month of June. In manufactur ing lines reporting to this bank, the leather industry alone showed a moderate gain over May. Output in the automotive industry, on the other hand, declined from the May aggregate as well as from June last year; a similar trend was experienced by the steel industry. Furniture shipments, orders, and production also moved downward in both comparisons. Activity during the first half year in automobiles, iron and steel, and furniture fell short of the showing of these lines during the corresponding portion of 1929. Building construction, as measured by contract awards, showed a slight gain over May, although resi dential contracts continued well below last year; the data for the first half year show building activity in the district lagging considerably behind 1929. Employment figures reflect declines from May, from June last year, and from the first half of 1929. Prac tically all lines o f merchandising, wholesale and retail, including department stores and automobile distribu tion, report lower sales volume in all three comparisons. Crop prospects in the district are good, with the exception of hay and fruit. Drought in some areas coupled with extremely high current temperatures, however, may effect considerable damage. Contrary to the usual trend in June, butter production declined from M a y ; sales moved upward, to a less extent, how ever, than customary. Cheese production and sales gained over May and over June a year ago. Wheat and F July 3 1, 1930 corn receipts were in greater volume than in the pre ceding month but fell short o f June 1929. Sales by meat packing establishments decreased from May and from the corresponding month of 1929; production showed the same trend in the month-to-month compari son, but remained at approximately the same level as in June 1929. Member bank borrowing increased slightly as did total loans and investments o f member banks. Bill market operations and commercial paper sales were lower than in May. Purchases and sales o f bankers’ acceptances in June gained over the preceding month, but the volume o f bills accepted declined. Further de clines were registered in money rates in Chicago. Sav ings deposits as o f July 1 reflected gains over May 31, but fell short o f the aggregates a year ago. Bank fail ures in the district during the first half of 1930 exceeded, in point o f number as well as deposit liability involved, the totals for all o f 1929. Credit Conditions and Money Rates Member bank borrowings at the Chicago Reserve Bank showed a slight increase during the period June 11 to July 9 ; on the latter date they amounted to $18,756,000, a drop o f approximately $1,000,000 from the preceding week when borrowings were at the highest FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) July 9 1930 Total Bills and Securities........................ .$114.1 . 18.8 Bills Discounted ...................................... Bills Bought .............................................. . 17.7 U. S. Government Securities................ . 77.6 Total Reserves .......................................... . 489.9 Total Deposits .......................................... . 371.0 Federal Reserve Notes in Circulation... . 196.3 Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Com bined ...................................................... . ^Number of Points. 8 6 .3 % C h a n g e F rom J u l y 10 J u n e 11 1929 1930 $ -5 7 .6 $ + 2 .8 -1 2 0 .8 + 2 .3 + 9.6 + 0.7 + 53.6 - 0 .2 -6 0 .2 -1 .1 + 31.5 + 17.7 -1 5 3 .3 -1 5 .3 - 0 .6 * + 6.5* Monthly averages of weekly figures. Latest figures, averages .of first two weekly report dates in July 1930. Compiled July 2 6, 1930 point since early May. A n analysis of the changes in the various factors influencing member bank borrowing at the reserve bank is given b elow : FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between June 11 and July 9, 1930 (In millions of dollars) Changes making for increase in member bank borrowing: 1. Increase in memberbank reserve balances...................... 19.31 2. Increase in demand for currency.................................... 11.37 3. Funds lost through inter-district settlements for com mercial and financial transactions................................... 3.88 4. Decrease in holdings of U. S. securities (local trans actions) ................................................................................. 0.18 5. Sales of gold to industry.................................................... 0.11 Total ............................... .......................................... - ......... Changes making for decrease in member bank borrowing: 1. Excess of local Treasury expenditures over receipts.... 28.01 2. Increase in holdings of acceptances (local transactions) 3.27 3. Decrease in unexpended capital funds-............................. 0.72 4. Increase in reserve bank float........................................... 0.51 5. Decrease in non-member clearing balances..................... 0.08 34.85 Total ..................................................................................... 32.59 Excess of changes making for increase in member bank borrowing.... 2.26 Absorption o f this excess: Increase in member bank borrowings (discounts for member banks).............. .................................................. 2.26 Increases in member bank reserve balances and in the demand for currency, in addition to loss of funds through inter-district settlement for commercial and financial transactions were the principal changes mak ing for heavier borrowings at the reserve bank. These were partially ofliset by a $28,000,000 excess of local Treasury expenditures over receipts, and a small gain in local funds through purchases o f acceptances by the reserve bank. Reporting member banks in the district increased their total loans and investments between June 11 and July 9 by about $64,000,000, of which increase $32,000,000 represented investments alone. Security loans showed a small gain between the dates named, and “ all other” — commercial— loans rose approximately $24,000,000. Security loans on July 9 were $100,000,000 in excess of the aggregate shown on the corre sponding date a year ago. Time deposits during the June 11— July 9 period rose $92,000,000, while net de mand deposits showed little change. Average weekly transactions o f reporting dealers in the Chicago bill market, as set forth in the accompany ing table, show considerable recession in activity from the preceding period and from the corresponding portion o f 1929. The average weekly supply of bills during the current period was smaller than for any correspond ing period since the beginning o f the year, reflecting a decline in dealer purchases from sources other than accepting banks. Demand was poor, and a sharp con traction took place in buying on the part of local banks; sales to out-of-tow n banks, on the other hand, showed some expansion over the low volume obtaining in the preceding period. A moderate movement of acceptances from the Chicago market continued to the East. CONDITION OF REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) J uly 9 1930 Total Loans and Investments....... ......... $3,362 Loans on Securities....................... ......... 1,322 All other Loans............................. ......... 1,318 722 Investments ................................... ......... Net Demand Deposits................... ......... 1,955 Time Deposits ............................... ......... 1,310 Borrowings from Federal Reserve Bank Page 2 4 C h a n g e F rom J u n e 11 J u l y 10 1929 1930 $ + 64 $ + 71 + 100 +8 + 24 AVERAGE W EE K LY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL M ARKET June 12 to July 9, 1930 P er C e n t C h a n g e in C o m p a r is o n W i t h P e rio d F rom M a y 15 to J u n e 11 J u n e 12 to J u l y 17 Bills purchased ....................... Bills sold ................................... Holdings* ................................. 1930 —6.0 -12.9 -28.4 1929 —14.8 -52.9 -13.5 *At close of period. Commercial paper sales in the Middle W est during June continued the downward trend evident in May, declining approximately 8 / l 2 per cent, and remained below the usual level for the month; they exceeded those o f a year ago by 53 per cent. Demand was fairly active, the result in large measure of the better yield o f fered on commercial paper than on the majority o f other types of short-term investment; supply, on the other hand, reflected the growing disposition on the part of v borrowers to finance themselves wherever possible in the acceptance market at the low rate o f interest now prevailing. Reports from a selected group o f accepting banks in the Seventh Federal Reserve district show that their purchases and sales o f bankers’ acceptances returned to a moderately high level during June, though remain ing considerably below the March peak. The aggregate value o f bills accepted by these banks, however, was considerably less than in May, due to a continuation of the business recession. A number o f these banks pur chased their own bills in more liberal quantities than a month previous in anticipation o f the June decline in acceptance rates and also fo r the purpose o f keeping their funds temporarily employed. A further recession in the volume o f bills accepted was indicated during the first half o f July. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT P er C e n t C h a n g e in J u n e 1930 F rom M a y 1930 J u n e 1929 Total value of billsaccepted..................... —9.3 -(-56.1 Purchases ................................................... +21.2 +13.8 Sales ............................................................. +24.8 +112.3 +71.6 Holdings* ..................................................... + 6 .0 Liability for outstandings*....................... -6.9 +62.1 *At end of month. Rates in Chicago declined during the past m onth; the prevailing rate on commercial loans at six down town banks during the week ended July 15 was 4 to 5 y2 per cent, whereas during the corresponding week in June, 4*4 to 5J^ per cent was quoted. In ten smaller Chicago banks, for the most part in outlying areas, similar quotations for the week ended July 15 ranged from 4 to 6 / x 2 per cent. The average rate earned on loans and discounts by six large down-town institu tions reflected this downward trend in rate levels; for the month o f June the item was 4.87 per cent, as against 5.13 in May and 6.23 in June 1929. Commercial loans VOLUME OF PAYM ENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) J u n e 1930 Chicago ............................ ...........................$ 4,424 P er C e n t of I n crease or D ecrease F rom M a y 1930 J u n e 1929 + 5.2 -0.5 -8.2 + 1.1 + 32 -59 + 30 Detroit, Milwaukee, and Indianapolis 1,597 -1 +92 -1 1 8 + 86 Total four larger cities... .......................... $6,021 34 smaller centers.......... ...................... 982 + 4.1 - 3 .9 - 2 .7 -1 0 2 Total 38 centers.............. ...................... $7,003 + 2.9 -3.7 + 1 -9.5 in Detroit during the week ended July 15 were quoted at 5 to 6 per cent, and the average rate earned on loans and discounts by three large banks in that city dropped from 5.79 per cent in May to 5.63 per cent in June; for June a year ago this figure was 6.11 per cent. S a v in g s D e p o s it s Savings deposits at 193 reporting banks in the Seventh Federal Reserve district on July 1, again showed a slight increase over the preceding month. This was a result, however, of only two states— Illinois and Iowa— registering gains in the amount o f deposits. The number o f depositors dropped slightly, owing to a smaller number o f accounts in Illinois, Michigan, and Wisconsin. The average account increased somewhat over the May 31 figure, although, individually, Indiana and Wisconsin each recorded a decline. In the com parison with July 1, 1929, the amount o f regular de posits, the number of accounts, and the average account all declined. Illinois did not follow the trend o f the district and registered slight increases in each item, as did Indiana in the amount o f deposits and the average account. Twrenty-five reporting banks in Chicago con tinued the trend operative for the past few months, registering a decline in the number o f depositors and showing an increase in total savings deposits. S e c u r it y M arkets A heavy volume of new bond oflferings again featured the Chicago bond market during June; although they did not attain the volume o f May, offerings totaled considerably higher than in the corresponding period o f 1929. A large portion of these new issues was accounted for by United States Treasury financing and foreign issues including the Reparation bonds. Trading, for the most part, continued irregular with prices trending slightly upward. Demand was noticeably favorable toward high grade public utility and municipal issues. A.s in the past few months, institutions were the heaviest purchasers o f bonds. Increased activity and strength characterized the early part o f July, reflecting somewhat the July reinvestment demand. Relatively few new offerings were available during this period, which afforded dealers an opportunity to clear some of the slow-moving issues. On July 8, the average price o f twenty leading stocks* on the Chicago Stock E x change dropped to $119.18, a new low point for 1930. The average on July 15, $123.56, compares with $129.28 a month previous. * Chicago Journal of Commerce. B a n k F a il u r e s During the first six months o f 1930, a total o f 470 banks in the United States suspended operations, in volving deposits of $205,000,000, as compared with 642 suspensions with deposits o f $235,000,000 during the whole of 1929. Members o f the Federal Reserve System, which constitute about one-third o f all the banks in the United States, were responsible for no more than one-eighth o f these failures. Seventh district suspensions in the first half o f 1930, increased over last year even more markedly than did those in the country as a whole, 117 of the 470 closed banks, with deposits o f $43,000,000, taking place therein, a considerable increase over the 93 suspensions and $36,000,000 in deposits for the whole o f 1929. Only about one-twelfth o f the 1930 suspensions in the district were member banks, whereas about one-fourth of all the banks in the district belong to the System. Indiana and Illinois recorded 40 and 32 failures, respectively, Iowa 26, Wisconsin 13, and Michigan 6. A n analysis by the Federal Reserve Board o f bank failures in the country as a whole over a period o f nine years, 1921-1929, shows that over 60 per cent occurred in banks having a capitalization o f not more than $25,000, and about the same percentage took place in centers having a population o f 1,000 or less. The rec ord o f the failures from January through June this year shows that a little over half, both in the Seventh dis trict and in the country as a whole, were banks with a capitalization o f $25,000 or less. Reopened banks have numbered 50 so far this year, 12 o f which belong in this district, as compared with 58 and 3, respectively, during 1929. Agricultural Products Good crops, with the exception of hay and fruit, are in prospect for the Seventh Federal Reserve district in 1930, although at present there is no evidence that this will prove to be a bumper year. Mid-July found some corn in tassel, most of the crop too high to culti vate, and a large percentage o f the remainder nearly knee high; growth in some o f the latest planted fields, however, was only a few inches above ground. The harvesting o f winter wheat and rye has made good progress and threshing has begu n ; oats, spring wheat, and barley are ripening rapidly. Conditions have been fairly satisfactory for cutting the small crop o f hay, which was materially reduced in volume from a year ago principally because of the dry weather this spring. Soy bean production in the five states including this district is indicated as nearly one-fourth greater than a year ago, and one-sixth more acreage has been devoted to garden truck crops than in 1930. The Michigan pro duction of edible dry beans is unusually large this year. M ore or less damage to growing crops from the ex treme heat that prevailed during the second and third weeks in July, is reported; some sections o f the district are now suffering from a lack o f rainfall. Pastures are in much poorer condition than a year ago. CROP PRODUCTION Estimated by the U. S. Bureau of Agricultural Economics on the basis o f July 1 condition (In thousands of bushels unless otherwise specified) S e v e n t h D is t r ic t F in a l F orecast F orecast 1930 1929 1930 2,802,442 880,741 Corn ................. ..956,156 1,329,407 501,169 Oats ....................525,908 557,719 58,140 Winter Wheat..... 55,124 249,546 4,410 Spring Wheat.. .. 5,184 331,925 Barley ............. .. 58.984(a) 60.894(a) 47,858 8.618(a) Rye ................... .. 8.580(a) 30,100 218(b) 328(b) Flax-seed ....... 398,419 44,914 Potatoes (white) 58,909 7,898 356(c) 699(c) Sugar Beets* ... Apples (total 145,388 crop) ........... .. 12.730(a) 16.784(a) 47,808 5.197(d) 659(d) Peaches ............ 1.440(d) 23,979 Pears .................. 1.202(d) 86(a) 2,306 84(a) Grapes* ........... 22,972 5.767(c) Dry Beans ..... ... 9.244(c) 70 S /2(e) 8 y 2 (e) Broom Corn* ..... 1,597,670 46,360 Tobacco** ....... .. 51,181 23,201 85,431 .. 17,285 All Tame Hay* Green Peas for 445,897 canning** .... ..274.099(f) 246.381(f) U n it e d S t ates F in a l 1924-28 1929 2,614,307 1,233,574 577,784 228,006 303,552 40,533 16,844 359,796 7,318 2,699,809 1,371,786 550,636 282,526 240,742 50,851 23,816 392,605 7,389 142,078 45,789 21,563 2,098 19,693 47 1,520,674 101,715 180,262 56,821 21,484 2,339 17,323 51 1,302,463 93,630 A verage 408,599 *In thousands of tons. **In thousands of pounds. (a) Five states including the Seventh Federal Reserve district. _ (b) Wisconsin and Iowa, (c) Michigan and Wisconsin, (d) Indiana, Illinois, Michigan, and Iowa, (e) Illinois, (f) Indiana, Illinois, Michigan, and Wisconsin. Page 3 G r a in M M a r k e t in g A considerable increase took place during June over the May volume in receipts o f wheat at United States interior centers, but the total was below June o f last year and the five-year average for the month. Reship ments were less than in May, though above the usual June volume. A n increase in exports was noted over May, less sharp, however, than the increase in that month over April. Domestic demand for wheat was light and offerings were large, even at the low prices reached following indications o f a large surplus in North America. The volume o f future trading in wheat on the Chicago Board of Trade rose 35 per cent from May and exceeded the June 1929 amount by a slight margin. Wheat prices were higher during the first two weeks o f the month than in the same period o f May, but declined sharply during the last half of June, and in the second week of July the lowest price since the summer o f 1914 was recorded. Corn receipts at the same markets, though less than usual in June, exceeded the May volume, while ship ments declined from May but exceeded the five-year average for the month. The movement of oats was small. Future trading in grains other than wheat was larger than in May, although the volume o f corn traded totaled 32 per cent below June 1929. Corn and oats prices tended downward and averaged lower than in May. t-, J F lour In the four months since our February survey, flour production in the district has maintained a level some what above the corresponding months o f last year, and sales, in both dollar and barrel amounts, have also totaled in excess o f 1929 in each month with the ex ception o f May. Total production of twenty-five re porting firms for the six-month period ending June 30, exceeded the corresponding period of 1929 by 7 per cent; sales in barrels by fourteen o f these firms averaged 26 per cent more and dollar sales were 5 per cent larger in the same comparison. June activity with comparisons is shown in the following table: Production (bbls.) ............... Stocks of flour at end of (bbls.) ................................. Stocks o f wheat at end of (bu.) ..................................... Sales (volume) ....................... Sales (value) ......................... J u n e 1930 P e r C e n t I ncrease or D ecrease F rom J u n e 1929 M a y 1930 + 6.7 - 6 .7 C o m p a n ie s I n clu de d 25 - 3 .7 -1 7 .9 21 .. -2 1 .0 .. + 3 8 . 0 .. + 3 2 . 4 -9.6 21 11 11 .. + 31.4 + 19.7 Production includes wheat and other flours; all other items refer to wheat flour only. M o v e m e n t of L iv e Page 4 P a c k in g Production at meat packing establishments in the United States decreased 4 per cent in June, a reversal o f the usual May-June trend, and was about on a level with a year ago. A s in the preceding month, a reduc tion in purchases by cattle feeders was responsible for cattle slaughter being somewhat above the correspond ing month o f 1929. Employment figures for the pay roll at the end o f June recorded a gain o f 2y2 per cent in number o f workers as compared with May, and owing to one more working day in the current totals, increased 15 per cent in hours worked and 8y2 per cent in aggregate earnings. Domestic demand •ranged between fair and good for smoked meats, sweet pickled hams, and most lamb, but averaged from slow to only fair for fresh pork and veal; trade was draggy for beef and leg o f lamb. Dry salt meats moved into domes tic channels in fairly good volume. Total sales of packing-house products, as reported by representative establishments in the United States, showed a further decline of 2 per cent in June and remained substantially less than in 1929, the latter recession averaging 14 per cent. One of the major factors contributing to the decrease from a year ago was the reduced buying power o f the consumer arising from unemployment in the cities and a relatively low level o f prices fo r farm products. The lower dollar volume of sales also re flected price declines from a year ago in a number of packing-house commodities. June prices o f lard, pork loins, dry salt fat backs, mutton, most beef, and the commoner grades o f veal and lamb were lower for the month as a whole than in M a y ; those o f smoked meat, good to choice lamb and veal, and o f fresh and cured hams, picnics, and bellies averaged higher. Quotations for practically all of these products, however, moved downward after the middle o f June. Domestic demand was fair at the beginning o f July. Inventories exceeded those o f June 1, but remained decidedly less than a year ago and the 1925-29 average for the month. Shipments for export appear to have changed but slightly from May. Foreign customers continued to restrict purchases to immediate requirements pending greater stabilization o f commodity prices. Trade re mained dull on the Continent and in the United K ing dom ; the demand for hams, however, showed some im provement in the latter country during the month. American stocks abroad (including those in transit) were indicated as somewhat lighter on July 1 than at the beginning o f June. S tock The month’s receipts o f cattle, due to a slow demand and to the relatively low volume o f cattle on farms, were unusually small for June, though slightly in excess o f May and a year ago. H og marketings declined some what from a month earlier and last year, and continued to reflect the influence o f the reduced crop o f 1929 by remaining well below the five-year average for June. Lamb crops have increased in recent years; this to gether with a heavy marketing o f thin animals resulted in June receipts of these animals continuing at exceed ingly high levels for so early in the season. Reshipments of stock to feed lots were substantially below the five-year average for June, with the move ment o f feeder cattle decreasing and that o f lambs increasing in the comparison with May. eat l iv e stock slaughter (In thousands) C a tt l e Yards in Seventh District, June, 1930 .............................. .... Federally Inspected Slaughter, United States June, 1930 .............................. .... May, 1930 .............................. .... June, 1929 .............................. .... H ogs L am bs S heep and C alves 210 817 290 96 654 690 636 3,689 3,823 3,756 1,295 1,370 1,108 356 421 344 AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) W e e k E nded J u l y 19 1930 Native Beef Steers (average)....... $ 9.45 Fat Cows and Heifers................ 7.00 Calves ............................................. 12.50 Hogs (bulk of sales).................. 8.75 Yearling Sheep ...................... 8.00 Lambs ............................................. 10.40 June 1930 $10 .5 0 8.00 10.45 9.60 8.60 11.75 M o n t h s of M ay 1930 $11.25 8.60 9.85 10.05 7.25 9.80 J une 1929 $14.20 10.90 13.70 10.75 11.50 15.25 D a ir y P roducts Seventh district production o f creamery butter de creased l ]/2 per cent in June, contrary to the usual trend, the decline of 14 per cent from a year ago being greater than evidenced during any other month thus far in 1930. Reduced milk production, as a result of the deterioration in pastures and of the animals being irritated by flies, together with the low level o f butter prices, were the principal factors contributing to this recession. Sales showed a further increase of 4*/2 per cent in volume during the month, which was less than the seasonal amount, and fell 9 per cent under those o f last June. Production in the United States rose slightly over May but registered a recession from a year ago, according to preliminary statistics. July 1 inventories o f the commodity at warehouses and packing plants in the United States showed the customary accumula tion over a month earlier and remained considerably in excess o f the corresponding date of 1929 and the fiveyear average. Quotations trended downward until the middle o f June and then firmed slightly, remaining at a very low level. Receipts o f American cheese at Wisconsin primary markets, indicative o f the production at factories within the state, failed to gain as much as is ordinarily the case from June 1 to 28, but were 20 per cent heavier than in the preceding four weeks and 5 per cent larger than last year. Redistribution o f the commodity from these centers increased 54 per cent during the period, reversing the downward trend in evidence since January; the tonnage exceeded that o f a year ago by 4^2 per cent. June receipts o f cheese at Chicago, how ever, were decidedly less than in the same month of 1929. Stocks o f cheese in the United States increased by the seasonal amount over June 1 and were 21,000,000 pounds in excess of the five-year average for that date. Prices o f the commodity continued to ease and at the end o f the month stood at the lowest level in years. Industrial Employment Conditions The declines in Seventh district industrial employment and payrolls during June were larger than in previous months o f 1930, and represented a downward trend in numbers employed in nine manufacturing and three non-manufacturing groups. Payroll amounts followed EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT W e e k E nded J u n e 15 I n d u s t r ia l G roup Re po r t E a r n in g s (000 F ir m s W age E arn ers O m it t e d ) No. No. $ in g C h a n g e s F rom M a y 15 W age Earn ers % Earn -4.9 -7.2 -8 .8 % 537 68 139 309 115 233 69 67 7 251 178,782 32,244 25,318 50,281 12,944 25,711 11,788 14,136 3,112 36,360 4,957 900 517 1,374 345 542 303 290 62 1,135 Total mfg., 10 groups.... Merchandising3 ..... ....... Public utilities ............. Coal mining ................. Construction ................. 1,795 170 79 31 209 390,676 31,403 96,632 5,551 15,254 10,425 838 3,271 118 473 - 6 .2 + 0.6 -1 2 .8 + 10.3 + 9.0 15,125 -2.4 -4.0 Total, 14 groups....... 2,284 539,516 - 1 .6 - 2 .8 -1.6 -0.7 -15.4 -1.0 -3.1 -3.9 -0.7 -10.4 -0.5 + 4.7 -7.5 -5.5 - 6 .8 + 3.2 -26.9 - 0 .8 -5.7 -3.8 1 Other than vehicles. 2Wisconsin only. Illinois and Wisconsin. Registrations per 100 Positions Available M onth I l l in o is 1930 June ....................... May ......................... 1929 June .... ..................... May ......................... I n d ia n a 224 196 139 170 106 113 124 100 I ow a W is c o n s in 295 285 232 244 155 135 120 106 The report o f the Department of Agriculture on farm labor and wages for July 1 shows a decline in demand and an increase in supply of farm labor for the United States since the previous report o f April 1, when the excess o f supply over demand was recorded as the largest since the data were first collected in 1923. In the north central section, including twelve states, farm labor supply, expressed as percentage of demand, rose from 118 on April 1 to 130 on July 1. This condition o f oversupply of farm labor, while partially due to a flow o f unemployed from cities to rural sections, also indicates the same reluctance on the part o f the farmer toward expenditures for labor when the market for his produce is unpromising as has characterized industry since the business recession began. Manufacturing in g s Metals and products1... Vehicles ........................ Textiles and products... Food and products...... Stone, clay, and glass... Lumber and products.. Chemical products ...... Leather products ........ Rubber products2 ......... Paper and printing...... + 3.4 -0.6 the same trend in each o f these groups except in leather products and public utilities, which increased payrolls by about 3 and one per cent, respectively, in contrast to slight declines in number o f men. The two groups influencing the total most strongly were metal products and vehicles, although the rubber products group repre senting a small number of workers showed a greater decrease. W hile retardation in these two groups is not unusual at this season, the sharpness o f the declines is significant. The effects o f seasonal variations are not easily distinguishable in a low level o f industrial activity such as the present, but three of the declining groups, lumber, textiles, and merchandising, are usually charac terized by summer dullness. Paper and printing, leather products, and stone, clay and glass products are gen erally on an expanding basis in June. In contrast to recent months, non-manufacturing employment as well as the total o f ten manufacturing groups shows a de cline, the change being partially accounted for by a much smaller increase in construction employment dur ing June than in the two preceding months. In the unemployment ratios below, the increase in the labor surplus in the cities having free employment offices corresponds to a similar increase in June over May in 1929, although the ratios for 1930 are much higher in all states than for corresponding months of last year. A u t o m o b il e P r o d u c t io n and D is t r ib u t io n The reduction in automobile output during June, though largely seasonal in character, was greater than in previous years. Manufacturers in the United States report 289,245 passenger cars produced during the month, a decline o f 20 per cent from May and 36 per cent under June last year. In the first half o f 1930, 1,894,551 cars were manufactured, or 31 per cent fewer than for the same period a year ago and slightly under the volume o f the first six months o f 1928. Truck output totaled 45,771 in June, a decline of 16 per cent from the preceding month and o f 51 per cent from last June; production for the half year aggregated Page 5 320,019, or 29 per cent smaller than in the correspond ing period o f 1929 but about 80,000 heavier than in the same six months o f 1928. Distribution o f automobiles in the Middle W est continued to diminish in June, and larger declines from a year ago were shown than in the preceding month. Stocks were reduced during the month and, as in previous months since January, those o f new cars re mained below the level o f 1929. Data covering the first half o f this year indicate that about half as many cars were distributed at wholesale as in the same months last year and about one-third less at retail; used cars sold numbered 13 per cent fewer. Stocks of new cars averaged smaller in the comparison, while those of used cars increased in number but declined in value. The volume o f deferred payment sales increased in June; sales made on this plan constituted 55 per cent o f all retail sales made by twenty-eight dealers, which compares with 47 per cent a month previous and 55 per cent a year ago. I ron S t e el P roducts and Operations in the steel industry have continued to trend downward, the rate o f ingot output in this district receding from about 75 per cent of capacity the middle o f June to between 60 and 65 per cent the middle of July, in contrast to an almost capacity operating rate at the same time a year ago. The year 1929, however, established a record for the industry. Steel mills in the Chicago district report that although actual specifica tions in June did not amount to the May volume, new business was received in about the same volume as in the two preceding months. Demand for structural steel, from manufacturers of road machinery, and for plates for pipe line projects was active during the month, but that from the railroads and from the automotive and agricultural machinery industries has displayed no im provement. Pig iron output in Illinois and Indiana dropped about 10 per cent from May in the daily average and was below any June since 1925. Further weakness has been recorded in the price structure. Plates, shapes, and bars at Chicago were again reduced in price the latter part of June, and pig iron dropped another 50 cents per ton. Scrap material has shown little change in recent weeks from the low levels reached the middle o f June. M IDW EST DISTRIBUTION OF AUTOMOBILES F ir s t J u n e 1930 P er C e n t C h an ge F rom Number sold ........... Value ........................ On hand end of monthNumber .................... Value ............... ........ June F ir s t H alf M ay June 1929 1929 1930 1929 1929 -41.7 -41.5 -68.4 -62.6 -5 1 .0 -48.5 28 28 28 28 27 27 -29.7 -35.2 -50.9 -50.9 -31.5 -34.6 52 S3 50 50 47 47 53 53 51 51 48 48 -18.8 -15.1 -14.1 -21.3 Number sold _______ -13.8 Salable on hand— Number ----------------- -11.9 Value ....... ................. -12.1 -26.4 -13.3 53 51 48 + 4.9 -9.2 + 12.0* -5.3* 53 53 51 51 48 48 Page 6 T a n n in g , and H id e s Preliminary statistics o f the United States Depart ment o f Commerce record a decline o f 6 per cent from May in June shoe production o f the Seventh district, a continuation o f the trend evidenced in the preceding month. Tanning operations and the sales o f leather showed a further expansion, though remaining less than a year ago. Prices held barely steady during the month. Chicago trading in packer green hides and calf skins increased over May, and there was a cor responding gain in shipments from the city; sales of calf and kip skins, however, remained small in volume. Quotations for packer offerings averaged a little higher in June than a month earlier, while quotations for country hides showed continued ease. F u r n it u r e Orders booked and shipments by furniture manufac turers in the Seventh Federal Reserve district again declined during the month o f June and more sharply even than in recent months, prolonged adverse condi tions surrounding the industry being supplemented by seasonal recession. Orders booked by reporting firms fell off 29 per cent from last month and shipments 18, as compared with the 1927-1928-1929 average declines over the same period o f 24 and 6 per cent, respectively; corresponding declines in 1929 were even smaller, be ing 19 and 4 per cent. Cancellations, in conjunction with the low volume of orders, served to augment the decline in unfilled orders, which amounted to 19 per cent; unfilled orders on June 30 a year ago fell off 2 per cent from the end of May. A s compared with w h olesale C o m p a n ie s I n c l u d e d C hange F rom F ir s t H alf 1930 *Average end of month. a n u f a c t u r in g , 1930 P er Cent M ay Used cars S hoe M H alf * New cars Wholesale— Number sold ............ Value ........................ A greater reduction than during the same period last year took place in June shipments from steel and malleable casting foundries. Shipments o f steel cast ings fell off 16 per cent in the comparison and those o f malleable castings 21 per cent, whereas in June 1929 the declines averaged less than 10 per cent. Recessions in production from May were in about the same pro portion as in shipments, and orders booked declined even more. A s compared with last June, the tonnage o f new orders for steel castings totaled 49 per cent less, shipments 33 per cent, and production 31 per cent smaller; the declines in malleable castings averaged 55, 45, and 51 per cent, respectively. The majority of re porting stove manufacturers had smaller shipments in June than in May or a year ago, and new orders and production were also less in the comparisons. -5.0* -11.7* and r e t a il l u m b e r t r a d e C lass of T rade Wholesale trade: Sales in dollars................................... Sales in board feet............................. Accounts outstanding'....................... Retail trade: Sales in dollars................................... Accounts outstanding1........................ J u n e 1 93 0: P e r C e n t N u m b e r of C h a n g e F rom F ir m s or Y ards M a y 1930 J u n e 192c -1 4 .2 - 8 .0 - 8 .7 -4 9 .3 -4 2 .4 -3 8 .9 16 13 12 -1 3 .2 + 2.1 -3 2 .2 - 3 .3 242 228 Ratio of accounts outstanding1 to dollar sales during month J u n e 1930 Wholesale trade ................................... Retail trade .......................................... 1End of month. 161.9 311.7 M a y 1930 147.1 261.6 Tu n e 1929 142.2 223.3 last year, orders booked totaled 55 per cent under June 1929, shipments 49 per cent, cancellations 50, and unfilled orders 68 per cent less. For the six months just ended, orders booked have approximated 65 per cent o f the volume o f the same period in 1929, and shipments 70 per cent. The rate o f operations sus tained this June was 49 per cent of capacity, 7 points lower than last month and 27 points off from a year ago. R aw W ool and F in is h e d W oolens Spottiness has characterized the raw wool market during the past four months, accompanied by slight price declines during March, April, and May. The finer grades o f wool experienced better demand and less reduction in prices during this period than did the lower grades. Activity in general improved slightly in May and June, and prices on all grades remained steady in the latter month. Owing to mixed condi tions prevalent in the finished goods industry, however, manufacturers continue to buy for current needs only. Increased strength shown during April in foreign markets was a factor in the later improvement shown in domestic markets. Recent auctions opened at London show a lower level of prices than those in April. Con tracting for the 1930 domestic clip progressed quietly during the four-month period, and at this time the larger portion o f it appears to be out of the hands o f growers. Outstanding among developments during June was the passing of the new tariff law which in creased the rates on raw wool to 3 cents per pound. Building Material, Construction W ork Seventh district lumber distribution in June recorded a check to the gains o f previous months. Inasmuch as the spring expansion had been less than usual, the six-month period closed with a decline o f about onethird in wholesale lines and of more than 10 per cent in retail business, as compared with the first half o f 1929. During the spring period a buyers’ market pre vailed, with prices uncertain or declining and, as a result, producers and wholesalers have been unable to keep their stocks down to usual quantities, while re tailers, with a consistently maintained hand-to-mouth policy, have carried less lumber in their yards than last year. N o noticeable tendency to take advantage of low price levels for future requirements has as yet appeared. Anticipated expansion in construction of public works proved to be short-lived and only partially offset the inactivity in residential and commercial build ing and in industrial ^consumption of forest products. Movement of lumber at Chicago, as shown by reports o f the Chicago Board o f Trade, totaled about 40 per cent less for the six months o f 1930 than for the first half o f 1929, receipts and reshipments declining in about the same ratio. Operations in the cement industry have been some what better than in other building material lines, largely due to full programs of road work maintained by states in the Middle W est. Production at plants in this section during June was slightly larger than a year ago, but with shipments 9 per cent less. Stocks were considerably larger than in 1929 and much productive capacity has not been utilized. In May, 25 per cent o f the total United States distribution o f cement was taken by the five states including this district, the vol ume amounting to only 3 per cent less than in May 1929. Brick producers report a continued poor market, with June business from 50 to 75 per cent of last year’s volume, and prices remaining on an unfavorable basis. B u il d in g C o n s t r u c t io n Construction activity increased somewhat during June over the preceding month, as reflected by total building contracts awarded in the Seventh Federal Reserve district, although.it is still under the level of a year ago. Residential contracts fell below the May figure, and the decline from the corresponding month of 1929 was considerably greater than for total building. Permits registered declines from both the preceding month and a year ago. Those issued during June, as reported by 102 cities in the district, dropped 26 per cent from May and 47 per cent from June 1929 in the estimated cost o f proposed work. The number o f permits issued showed similar declines o f 22 and 50 per cent, respectively. O f the five large cities— Chi cago, Detroit, Milwaukee, Indianapolis, and Des Moines— the last was the only one to differ from the district trend, large increases being recorded over both the preceding month and a year ago in the estimated cost of proposed construction. BUILDING CONTRACTS AW ARDED T otal C ontracts P e r io d Change from same period 1929....... $100,884,493 +27% -2 5% $413,196,346 -35% R e sid e n t ia l C ontracts $13,249,025 -32% -78% $91,534,578 -61% Merchandising The various lines o f merchandising covered by this bank’s survey, continued to be affected in June by the general lack o f industrial activity and unemployment. In wholesale trade, groceries which usually show an DEPARTM ENT STORE TRADE IN JUNE 1930 W HOLESALE TRADE IN JUNE 1930 P er Cen t C hange F ro m S a m e M o n t h L a st Y ear C o m m o d it y Yet Groceries ____ Hardware....... Dry Goods ..... Drugs ............. Shoes ........... .. Electrical Sup plies _______ S ales S tocks A ccts. O u tstan d. C ollec t io n s -37.9 -6.9 -9.9 -8.5 + 0.6 -5.0 -10.1 -13.1 -13.0 + 7.1 -10.9 -8.3 -14.5 -22.6 -3.2 -38.8 -24.2 -16.4 -19.9 -20.2 -10.4 -26.8 -27.6 -8 .6 P er C e n t C h a n ge R a t io o f A ccts. O u tstan d. to N et S ales J u n e 1930 F rom J u n e 1929 L o c a l it y Y et S ales P er C e n t C h a n g e R a t io of J u n e F ir s t S i x M o n t h s C o l l e c t io n s 1930 F rom to A c co u n ts F ir s t S i x M o n t h s O u t s t a n d in g 1929 M a y 31 S t o c k s E nd of M o n t h N et S ales 1930 1929 33.7 38.7 39.6 33.3 44.0 40.7 33.7 36.7 36.9 39.6 92.9 253.6 369.1 158.9 403.2 C hicago-----Detroit ....... Indianapolis Milwaukee — Other Cities -17.1 -23.9 -13.6 -16.3 -13.0 -0.7 -9.0 -0.4 + 5.9 -6.9 -9.9 -17.5 -6.7 -3.5 -7.1 149.1 7th District -17.8 - 2 .6 -10.5 Page 7 increase at this season, recorded sales 4 per cent less than in the preceding month; a decline of 9^2 per cent, partly seasonal, was registered in the hardware trade; dry goods sales were 15J4 per cent smaller, drugs 6 per cent, and shoes 11 per cent less. The two latter lines usually show recessions in the June-May comparison. Electrical supply wholesalers report a decline o f only one per cent from the preceding month. In all groups except the latter, declines from the cor responding month of 1929 were greater than were shown fo r May in the same comparison. In the first half o f 1930, recessions from the same period a year ago averaged as fo llo w s : groceries, 2 per cen t; hard ware, 15 per cent; dry goods, 22 per cent; drugs, 9 per cent; shoes, 34 per cent; and electrical supplies, 17^2 per cent. Except in electrical supplies, the ratios of accounts outstanding to net sales were much higher for June than in the preceding month and in all but groceries considerably above the ratios for last June. June department store sales in the Seventh district fell 13 per cent below May, whereas a year ago the decline in this comparison was less than 5 per cent. Sales showed a decrease o f 18 per cent from last June, and in the first half of the year were IOJ2 per cent under the same period of 1929. Chicago stores reported a falling-off in June business from May of almost 9 per cent, while firms in Detroit sold 17 per cent less, Indianapolis 14 per cent, Milwaukee 17 J2 per cent, and stores in smaller cities 14 per cent less. A s may be noted in the accompanying table, Chicago and Detroit continue to show the greatest recessions in department store business from a year ago. Stocks have declined further and remain below last year’s level. The June rate of turnover for the district of .28 times was slightly smaller than for last June, and the rate for the half-year o f 1.73 compares with 1.93 for the first six months of 1929. A slight decline from May was shown in the retail shoe trade during June, total sales o f dealers and de partment stores falling off 4 per cent. A s compared with the corresponding month o f 1929, sales recorded a decrease o f 13 per cent, and the volume sold in the first six months o f this year totaled 6 J 2 per cent less than for the corresponding period last year. W ith the exception o f three department stores, all firms showed a decline for this June from a year ago, and depart ment stores alone reported gains in the six months’ comparison. Retail furniture dealers and the furniture and fur nishings sections o f department stores sold 28 per cent less merchandise in June than a month previous and a 26 per cent smaller volume than last June. Installment sales by dealers declined 28 and 30 per cent in the respective comparisons. Sales of reporting chains in June fell off 10 per cent from the preceding month, although the number o f stores in operation increased about one-half per cent. Average sales per store, as a consequence, de clined a little more than 10 per cent. The aggregate volume sold was 5 per cent less than in June a year ago, while the number o f units operated totaled 11 per cent larger, so that average sales per store showed a decrease o f 14 per cent in the comparison. A ll report ing groups except men’s clothing had smaller total sales than a month previous; aggregate sales o f drug, cigar, and women’s clothing chains were heavier than last June, and those by grocery, five-and-ten-cent, shoe, musical instruments, furniture, and men’s clothing chains totaled smaller. 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 foliowing month. Data refer to the Seventh Federal Reserve District unless otherwise noted.) No. of Firms Meat Packing— (U. S .) — Sales ‘(in dollars) ................................. Casting Foundries— Shipments: Steel— In dollars ............................. In tons .......... - .................... Malleable— In dollars ..................... In tons ........................... . . . . . Stoves and Furnaces— Shipments (in dollars)......................... Furniture— Orders (in dollars) ............................. Shipments (in dollars) ....................... Flour— Production (in bbls.) ....................... Output of Butter by Creameries— Production ............................................. Sales .............. ........................... - ......... Automobile Production (U. S.) : Passenger cars ..................................... Trucks .............. .................................... Building Construction— Contracts awarded (in dollars) : Residential ....................................... Total ........................... _..................... Page 8 64 June 1930 May 1930 June 1929 May 1929 103 106 120 119 15 15 23 23 68 71 50 71 81 85 63 90 101 109 92 128 109 119 98 138 11 83 93 98 112 92 95 113 99 . . 26 26 43 50 64 63 . 27 96 103 91 94 154 134 157 129 178 147 163 129 99 122 124 144 154 247 176 235 45 147 67 116 201 197 148 207 Wholesale Trade— Net Sales (in dollars) : Groceries ........................................ Hardware ...................................... Dry Goods .................................... Drugs .............................................. Shoes .............................................. June 1930 May 1930 June 1929 May 1929 31 14 10 14 8 93 78 61 92 61 98 89 72 101 70 103 104 83 100 93 101 107 82 108 101 30 4 5 5 51 95 95 124 87 95 88 98 102 149 101 116 101 111 115 162 101 114 97 119 114 176 109 120 104 123 119 100 103 83 134 106 112 85 148 126 147 89 148 128 147 No. of Firms Retail Trade (Dept. Stores)— Net Sales (in dollars) : Chicago ....................................... Detroit ............................................ Indianapolis .................................... Milwaukee ................... ................. . Other Cities .................................. Seventh District ............................ Iron and Steel— ' . . 72 74 Pig Iron Production:* Illinois and Indiana ...................... United States .... .......................... Steel Ingot Production— (U . S.)*. Unfilled orders U. S. Steel Corp...... ♦Average daily production. 90 FEDERAL RESERVE B A N K OF C H IC A G O Monthly Review of Business Conditions N A T IO N A L S U M M A R Y OF BUSINESS CONDITIONS (By the Federal Reserve Board) I N D U S T R I A L production decreased in June by more than the usual seasonal amount and factory employment and payrolls declined to new low levels. The volume of building contracts awarded was large. Prices declined sharply and money rates continued downward. I ndustrial P roduction Index of manufactures and minerals combined, adjusted for seasonal variations (1923-25 aver age = 100). PER CENT PER CENT Index of U. (1926 = 100). S. Bureau of Labor Statistics and E mployment In June, industrial production showed a further substantial decrease and the Board’s index, which is adjusted for ordinary seasonal variations, declined to the lowest level since last December. Output of steel ingots declined in June and early July more than is usual at this season, while automobile pro duction was sharply curtailed to a level considerably below that of the same period of the past two years. Cotton consumption, already at a low level, declined further in June. Output of bituminous coal and copper continued in small volume. W o o l consumption and shoe production increased slightly and cement output, as in the preceding month, was at a high level. Factory employment and payrolls decreased further in June. The number em ployed'at steel plants and in the automobile, agricultural implement, and cotton goods industries, declined more than is usual at this season, and em ployment in the woolen goods and lumber industries continued at unusually low levels. The value of building contracts awarded in June, $600,000,000, according to the F . W . Dodge Corporation, was about 30 per cent more than in M ay and the largest since last July. The increase reflected chiefly unusually large awards for natural gas pipe lines and power plants; the volume of contracts for residential building was somewhat smaller than in M ay. In early July the total volume of contracts was small. Department of Agriculture estimates, based on July 1 conditions, indicate a decrease from last year of about 20,000,000 bushels in the winter wheat crop and a corresponding increase in spring wheat. The corn crop is expected to be about 2,800,000,000 bushels, 7 per cent larger than last year and 4 per cent above the five-year average. Area planted to cotton is estimated at 45,815,000 acres, 2.7 per cent less than last year. D istribution The volume of freight carloadings in June and early July continued to be substantially below the corresponding periods of 1928 and 1929. Preliminary reports indicate that the decline in department store sales from a year *ago was of larger proportions in June than in any previous month this year. W Monthly averages of daily figures. Latest fig ures, averages of first 19 days in July 1930. holesale P rices Commodity prices declined more rapidly in June than in any other recent month, and the index of the Bureau of Labor Statistics at 86.8 per cent of the 1926 average was about 10 per cent below the level of a year ago. Prices of many important agricultural commodities and their manufactures declined further and those of certain leading imported raw products— silk, rubber, and coffee— reached new low levels. There were also further declines in iron, steel, and copper. Prices of raw wool, hides, and raw sugar increased slightly during June. Early in July, prices of meats were stronger, but there were further declines in many other commodities. B a n k Credit Loans of reporting member banks in leading cities declined somewhat be tween the middle of June and the middle of July, and on July 16 wTere $60,000,000 smaller than five weeks earlier. Loans on securities decreased by $140,000,000, while “all other” loans increased by $80,000,000. The banks’ investments increased further by about $280,000,000 during this period and were in larger volume than at any other time in the past two years. Member bank balances at the reserve banks increased and in the week ending July 19 averaged $60,000,000 more than five weeks earlier, and at the same time their borrowings from the reserve banks declined by nearly $20,000,000— reflecting an increase in the reserve banks’ holdings of acceptances and government securities, a further slight growth in gold stock, and a continued decline in the volume of money in circulation. 1926 1927 1928 1929 1930 Monthly averages of weekly figures for report ing member banks. Latest figures, averages of first three weeks in July 1930. Money rates in the open market continued to ease, and in the middle of July rates on 90-day bankers’ acceptances at 1 % per cent were at a new low level, while rates on commercial paper at 3— 3% per cent were at the low point of 1924. During July, the reserve bank discount rate was reduced at Boston from 3t/2 to 3 per cent and at Philadelphia, Atlanta, and Richmond from 4 to 3 ^ per cent.
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