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Seventh Federal ^ Volume 14, No. 8 MICH IOWA MONTHLY REVIEW PUBLISHED BY TH£ FEDERAL RESERVE BANK OF CHICAGO July 31, 1931 General Summary movement of wheat was active during the month, with that of corn and oats slow. Meat production and sales EASONAL slowing-down caused further recessions fell below the May level and likewise totaled under last during June in manufacturing and merchandising ac June, but output of butter was exceptionally large; cheese tivity of the Seventh Federal Reserve district, while data production and distribution increased over the preceding for the half-year show both production and sales of com month, though declining from a year ago. modities to have been decidedly smaller than for the Loans and investments of reporting member banks on same period of 1930. July IS totaled less than on the corresponding date a The declines from the preceding month in automobile, month or a year previous, although investments alone con iron and steel, and casting foundry operations were large tinued to be considerably above the 1930 level. Borrow ly seasonal in nature. Furniture shipments decreased, ing from the Reserve bank declined during the period following a low volume of orders in May, but June orders June 10 to July IS, despite the heavy demand for cur booked totaled heavier than either a month or a year rency during those weeks. Money rate changes have been previous, owing to the semi-annual showing which was negligible. held in June this year rather than July. Building con struction fell off for the third consecutive month. Em Credit Conditions and Money Rates ployment data reflect the reduced activity in the various Among the changes in factors making for increased bor lines. rowing by member banks at the Reserve bank, the contin The wholesale grocery, drug, and hardware trades ued increase in the demand for currency was alone out gained in June over May, and declines in other groups standing during the period from June 10 to July 15. were smaller than a year ago for the same month. The Holiday requirements of the public for currency over the recession in department store trade was less than average double holiday of July 4-5 were in about seasonal pro for the month, and that in the retail furniture trade was portions, which in part accounts for the sustained demand, seasonal, while retail shoe sales showed a gain and chain though banking disturbances during the period continued store trade decreased only slightly; because of heavier to influence the outflow of currency from the Reserve drug and five-and-ten-cent store sales than a year ago, bank. A gain to the district of about 3J^ millions of sales of reporting chams exceeded the volume of last June. funds through inter-district settlements for commercial Automobile distribution, at wholesale and retail, was and financial transactions, and a drop of about 24 milsmaller in June than a month previous, although sales at wholesale increased slightly in the aggregate over last June. CURRENCY DEMAND . Weather conditions in June were favorable for the grow CHICAGO DISTRICT CHANGES BY WEEKS ing of corn, but some damage was experienced by other crops from the hot weather and lack of moisture. The S ■411 LIONS OF DOLLARS FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF (Amounts in millions of dollars) . Total Bills and Securities........................ Bills Discounted.......................... Bills Bought...................... U. S. Government Securities............... Total Reserves............................ Total Deposits........................ Federal Reserve Notes in Circulation. . . Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined July 15 1931 $115 6 117 8.3 95.0 629.8 333.5 373.8 89.0 Change From June 10 July 16 1931 1930 $ —0.4 $-4.0 +13.1 “ 15.0 +17.2 +51*3 +181.9 +0.3* +4.0* *Number of points. 1931 lions in member bank reserve balances, combined with other and minor changes in factors tending to reduce member bank borrowing, including an excess of slightly more than 3 millions in local Treasury expenditures over receipts, more than offset the aggregate of those changes which increase it, with the result that loans to member banks on July IS were less than on June 10 by about 5 million dollars. Tabulated below is a summary of the factors underlying the volume of member bank recourse to the Reserve bank: FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between June 10 and July 15, 1931 (In millions of dollars) Changes making for decrease in member bank borrowing: 1. Decrease in member bank reserve balances........................... 23.40 2. Funds gained through inter-district settlements for com mercial and financial transactions......................................... 3.59 3. Excess of local Treasury expenditures over receipts............ 3.13 4. Decrease in unexpended capital funds..................................... 1.56 5. Increase in holdings of U. S. securities (local transactions) 0.90 6. Increase in holdings of other securities.................................... 0.67 Total................................................................................................... 33.25 Changes making for increase in member bank borrowing: 1. Increase in demand for currency................................................ 24.28 2. Decrease in holdings of acceptances(local transactions). . 2.82 3. Decrease in reserve bank float.................................................... 0.73 4. Increase in non-member clearing balances.............................. 0.16 5. Sales of gold to industry............................................................... 0.08 Total................................................................................................... 28.07 Excess of changes making for decrease in member bank borrowing: Absorption of this excess: Decrease in member bank borrowings (discounts for member banks)............................................................ 5.18 5.18 Member Bank Credit As compared with July 16, 1930, total loans and invest ments of reporting member banks on July IS this year declined about 240 million dollars, the greater part of the decrease resulting from the lower volume of loans on se curities and to a lesser degree, from “all other” loans; investments, alone, recorded a gain of nearly 200 millions over a year ago. During the five-week period—June 10 to July IS, total loans and investments moved downward nearly 70 million dollars, both classes of loans, as well as investments, sharing in the decline. With the exception of a small rise in net demand deposits on July 15 as against June 10, deposit volumes on that date were below the preceding month and July 16 last year, the decrease in net demand deposits in the year amounting to 160 mil lions and in time deposits to 146 millions. Time deposits of reporting member banks on July 15 were about 120 millions less than on June 10. The average rate earned on loans and discounts by five Chicago banks located in the down-town section was 4.48 per cent during the calendar month of June, as compared with 4.36 per cent in May and with 4.83 in June 1930. The prevailing rate on customers’ commercial loans, as reported by eight down-town banks, was 2}^ to S per cent during the week ended July 15, as against a range of 3 to 5 per cent the middle of June. In Detroit, the prevail ing rate on this class of loans was reported as 4 to 5 per CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Total Loans and Investments........................ Loans on Securities.......................................... All Other Loans................................................ Investments...................................................... . . . . . . . . July 15 1931 $3,161 1,062 1,161 938 Change From June 10 July 16 1931 1930 $-239 $-66 -254 -12 -17 -178 -37 + 193 cent for the week ended July IS, and the average rate earned during the month of June was 5.41 per cent, as compared with S.22 in May and with S.63 in June of last year. Commercial paper sales of reporting dealers in the Mid dle West again decreased in June, following expansion in May, and reached a lower level than for any other month of 1931; they aggregated 44 per cent less than a year ago and 54 per cent below the 1923-30 average for the period. Demand was confined almost entirely to banks outside Cook County—a reflection of banking disturbances in Chicago during the month. Supplies remained light to moderate. Selling rates eased; most firms quoted June figures as 2J4 and 2j4 per cent for high to 1% and 2% per cent for low, with the majority of the business trans acted at 2 to 2% per cent. Commercial paper outstand ings in the Middle West declined on June 30 to the low est point on record (January 1923). During the first half of July, dealers’ sales aggregated one-third less than in the corresponding weeks of June. Purchases by Chicago banks remained in meagre proportions and were limited to very high class paper; demand from banks in other cities and from the country was fair to good. A reduction in the supply also took place. Quotations on July 15 ranged from 1 and 2 per cent for low to 2j4 and 2J4 per cent for high, a preponderance of the names moving at 1J4 and 2% per cent. Dealer purchases of acceptances in the Chicago bill market were heavier from June 11 to July 15 than for any corresponding period in eleven months; the supply of bills, therefore, aggregated 40 per cent greater than in the preceding period, despite a marked reduction in receipts from Eastern markets. A poor demand was experienced from Chicago banks and only a moderate volume of busi ness transacted with out-of-town banks, so that total sales were less than for any corresponding period since Sep tember 11 to October 15, 1930. Shipments to Eastern offices, on the other hand, attained an exceedingly high level. Rates tended to ease. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET June 11 to July 15, 1931 Per Cent Change in Comparison with Period from May 14 to June 10 June 12 to July 9 Bills purchased............ Bills sold........................ Holdings*...................... 1931 +105.8 -41.4 -72.5 1930 —7.5 -61.9 -78.3 *At end of period. Acceptance credits in the Seventh Federal Reserve district were utilized to a lesser extent during June than in May or the same month of 1930, but as in past months, to a much greater degree than in previous years. The discounting of these bills by accepting banks showed a further expansion during the period; purchases of other banks’ acceptances, on the other hand, were less than for any month since May 1930, although they totaled con siderably above the 1923-30 June average. Sales ex ceeded the aggregate volume of purchases and discounts VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) June 1931 Chicago...................................................... $3,240 1,332 Detroit, Milwaukee, and Indianapolis Per Cent of Increase or Decrease from May 1931 June 1930 +0.5 -26.8 +8.6 -16.6 Net Demand Deposits.................................... . . Time Deposits.................................................. . . 1,782 1,227 +20 -121 -160 -146 Total four larger cities.......................... 34 smaller centers................................... $4,572 776 +2.7 -2.8 -24.1 -21.0 Borrowings from Federal Reserve Bank. ..... . 2 -4 -2 Total 38 centers...................................... $5,348 +1.9 -23.6 Page 2 by more than $16,000,000; this was largely a reflection of the heavy liquidation which took place after mid-month when the banks wished to accumulate heavy cash reserves to meet possible contingencies. Acceptance holdings of these institutions, because of this policy, were lower on June 30 than at any time in the past year, while the lia bility for outstanding bills remained practically unchanged from May 29. The total value of bills accepted during the first half of July aggregated 30 per cent less than for the corresponding weeks of June. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in June 1931 from May 1931 June 1930 Total value of bills accepted.................... —9.8 —12.4 Purchases....................................................... —25.3 —13.6 Sales................................................................ +116.4 +52.4 Holdings*....................................................... —67.6 +81.4 +0.0 —2.7 Liability for outstandings*...................... *At end of month. Bank Suspensions and Consolidations A considerable number of Seventh district banks were eliminated during the first six months of the current year through both suspension and consolidation. Banks closed during the period numbered 223 capitalized at 31 million dollars and involving deposits of 209 millions, exceeding in both number and total liabilities the aggregates for the whole of any year on our records (since 1921), with the exception of 1930 during which 266 banks with capital of IS millions and deposits totaling 111 millions were sus pended. More than one-third of this year’s failures oc curred in June when 80 banks closed their doors, with 136 millions of deposits of which about one-half were in Chi cago banks. Of the 223 banks closed in the district dur ing the half year, 26 were national, 181 state, and 16 pri vate banks; 37 of these—26 national and 11 state—were members of the Reserve System. In addition, 106 banks in the district were eliminated through consolidation with other banks. Continuing the trend noted during the year 1930, a large proportion of these mergers involved the absorption and often the liquidation of one or more banks; in consequence, the aggregate capitalization of the consoli dated institutions—-110 millions—was about 20 per cent less than that of the banks entering into the mergers. In the United States as a whole, 684 banks suspended operations during the first six months of 1931, of which 121 were national, 27 state member, and 536 non-member banks. Total deposits involved aggregated 459 million dollars. This compares with a total of 1,345 banks closed during the entire year of 1930, involving deposits of 865 millions. Security Markets An improved demand accompanied by an upward trend in prices featured the Chicago bond market during June. High grade bonds which included the public utility, rail road, and municipal issues, continued to receive the in vestment preference, although some second grade issues showed considerable gains in the rather widespread move ment. The volume of new offerings during the month was slightly less than in May, with the exception of foreign bond offerings which were substantially in excess of that in recent months. The total volume was considerably be low that of the corresponding month last year. Prices on the Chicago Stock Exchange moved upward rapidly dur ing the latter part of June. The average price of twenty leading stocks* reached a high point for the month at *Chicago Journal of Commerce. $79.46 on June 27; this was a gain of more than ten dol lars over the low average earlier in the month. During the first two weeks in July, prices moved irregularly, with the average on July 16 at $72.11. Agricultural Products Weather conditions during the latter part of June and early July were exceptionally favorable to the growth of corn in the Seventh Federal Reserve district, so that mid month found most of the crop in the tasseling stage; ad ditional moisture, however, was needed in many areas to prevent subsequent deterioration of the crop. Threshing of small grains was well under way. Good to excellent yields were reported for winter wheat; other grains had suffered more or less deterioration during the last half of June, despite earlier rains, and threshing returns for these grains showed a marked variation in yields as between lo calities. Potatoes and garden truck also suffered more or less damage from the hot weather. Pastures were rather poor. Some parts of the district were in need of further rainfall, and in a few areas the lack of adequate moisture was becoming rather serious by the third week of July. Grain Marketing Excessive supplies of wheat—carry-over and new crop —depressed both domestic and foreign markets during June and early July. Marketing of new crop wheat sus tained the recent high level of receipts at primary mar kets, and although reshipments almost equaled receipts, visible supplies continued during the month to be about 80 million bushels in excess of 1930. Exports in June aggregated much larger than in May and exceeded the June volume for each of the previous eight years; never theless, the total for the 1930-31 season was about 12 million bushels under exports in the preceding 12-month period. Future prices were irregular in June and broke sharply in July, the July option reaching on the fifteenth the lowest point on record. Cash wheat declined to ap proximately the level of September futures within a month after the withdrawal of Government support. The movement of corn and oats during the month was below average. Supplies of these grains are not large, but slow demand and favorable prospects for the new crops exerted a downward influence on prices. Cash corn, howCROP 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 1930 1931 1931 1930 Corn..................... 1,005,782 731,749 2,967,953 2,093,552 Oats..................... 527,071 565,861 1,306,267 1,358,052 Winter Wheat.. 65,592 59,447 712,611 612,268 Spring Wheat... 3,361 4,290 156,402 251,162 Barley................. 53.907(a) 56.799(a) 266,618 334,971 Rye...................... 8.639(a) 8.248(a) 38,325 48,149 Flaxseed............. 226(b) 348(b) 17,947 21,369 Potatoes (white) 58,079 37,118 396,451 343,236 Potatoes (sweet) 1.310(c) 1.050(c) 74,067 62,230 Sugar Beets*. . . 412(d) 513(d) 7,566 9,201 Apples (total crop). . 28.226(a) Peaches............... 7.244(e) Pears................... 1.860(e) Cherries*........... 32 (f) Grapes*.............. 74(a) Dry Beans......... 8.505(f) Tobacco**......... 46,285 All Tame Hay*. 14,974 Canning Crops Green Peas** 221.782(g) Snap Beans*. 21(h) 13.595(a) 648(e) 211,076 77,963 24,406 30(f) 94 91(a) 2,027 4.662(f) 22,695 47,564 1,524,739 15,881 79,107 1.289(e) 293.616(g) 15(h) 378,129 80 1925-29 Average 2,760,753 1,316,954 547,427 274,688 265,006 46,129 20,917 380,502 80,263 7,355 163,543 53,617 27,577 107 2,460 21,907 1,504,931 77,850 174,474 55,210 22,123 81 2,403 18,432 1,357,130 94,364 484,558 85 392,382 *In thousands of tons. **In thousands of pounds, (a) Five states including the Seventh Federal Reserve district, (b) Iowa and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan, (e) Illinois, Michigan, Indiana, and Iowa, (f) Michigan and Wisconsin, (g) Wisconsin, Illinois, Michigan, and Indiana, (h) Wisconsin, Michigan, and Indiana. Pag© 3 ever, was above the price of wheat after the beginning of July. Movement of Live Stock Receipts of cattle at public stock yards in the United States decreased somewhat less than is customary in June from a month earlier, the recession from the five-year av erage being smaller than in May; the volume totaled 2 per cent in excess of June a year ago. Hog marketings also declined from the preceding month, and a larger recession was recorded from last year and the 1926-30 average than for any month so far in 1931. Lamb receipts fell off more than is ordinarily the case in June, but continued to total considerably in excess of 1930 and the average for the month. Calves were marketed in large numbers for the season. Reshipments of feeder cattle to the corn belt decreased further to a low level during June, while those of lambs attained the highest point since last No vember. Meat Packing Production at slaughtering establishments in the United States showed a recession in June of 3 per cent from the preceding month and totaled 4 per cent under a year ago. Employment and wage payments at the end of the period remained at the May level, although an increase of iy2 per cent was recorded in hours worked. The total value of sales billed to domestic and foreign customers aggre gated 2J4 per cent less than in May and 27J4 per cent below last June. The recession from a month earlier was largely due to a smaller volume of commodities sold, while the lower level of prices in 1931 continued to account for the decline in sales from the corresponding period of 1930. Prices of most pork products advanced in June over May; quotations of lamb and veal, however, held barely steady, and those of beef, mutton, barreled pork, heavy dry salt fat backs, and of light weight hams and bellies declined. Inventories of packing-house commodi ties in the United States were reduced by approximately 47 million pounds between June 1 and the beginning of July, which contrasts with an average expansion for the month of 28 million. Most of this decline took place in the stocks of pickled and of frozen pork. Aggregate holdings fell below the 192S-29 average for the first time since April 1, and the excess over last year was less marked than in the preceding month. Domestic demand averaged fair at the beginning of July. June shipments for export showed a slight decline in volume from May. British demand for American lard fell off to some extent, and no improvement was shown in the meat trade with that country. Continental demand for packing-house commodities from the United States remained on a limited basis. European prices for these LIVE STOCK SLAUGHTER (In thousands) Cattle Lambs Hogs Yards in Seventh District, June 1931............................... . 193 699 362 Federally Inspected Slaughter, United States June 1931............................. .. 667 3,251 1,516 May 1931............................... ,. 704 3,408 1,444 June 1930............................... . 654 3,689 1,295 AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended Native Beef Steers (average). .. Fat Cows and Heifers.............. . Calves......................................... . Hogs (bulk of sales).................. . Yearling Sheep.......................... . Lambs.............................................,. Pag« 4 July 18 1931 $7.65 6.15 8.00 6.40 5.75 7.50 June 1931 $7.45 6.05 8.45 6.40 6.25 7.75 Month May 1931 $7.15 6.00 8.10 6.55 6.40 8.30 116 417 425 356 of June 1930 $10.50 8.00 10.45 9.60 8.60 11.75 commodities averaged slightly under the Chicago parity. July 1 inventories of United States products in foreign countries (inclusive of stocks in transit) were reported to be about the same as on June 1. Dairy Products Creamery butter production in the Seventh Federal Re serve district was exceptionally heavy during June, being 6 per cent greater than in May and 17)4 per cent larger than last year. The sales tonnage attained the highest point on record (January 1923), exceeding that of June 1930 by 21 per cent. Butter manufacturing in the United States also gained over a month earlier, but appears to have been somewhat under a year ago. Consumption re mained at a high level because of low prices. Inventor ies of the commodity in the United States expanded some what less than the usual amount on July 1 and were in average volume for this season of the year, though total ing 17 million pounds lighter than for the corresponding date of 1930. Prices showed little change from May. Factories in Wisconsin increased the production of American cheese 28 per cent during the five weeks ended July 4 over the preceding period, but were operating at a lower rate than last year or the 1924-30 average. Dis tribution of the commodity from primary markets of that state, as is usual for the June period, aggregated 9 mil lion pounds less than current production. Sales totaled 17 per cent larger than from April 27 to May 29, though 10 per cent smaller than a year ago. Seasonal expan sion in United States inventories of cheese was shown on July 1 over the beginning of June, but stocks continued decidedly less than in 1930 and slightly below the average. Prices advanced to some extent in June over the low level of May. Industrial Employment Conditions A general reduction in number of employes and in pay roll totals was shown between May IS and June IS by reports of Seventh district manufacturing establishments. The decline in the total of ten groups, which was greater than seasonal, offset gains in three non-manufacturing groups, giving rise to losses in the total for all groups amounting to 3 per cent in number of men and 7 per cent in payrolls. The level of manufacturing employment and wage earnings in June, as computed from monthly EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE _______________________________ DISTRICT Week Industrial Group of June 15, 1931 Report Earnings Firms Wage Earners No. No. Omitted) $ ing (000 Changes From May 15 Wage Earn Earn ers ings % % —4.7 -5.3 +0.4 -10.0 + 1.0 -2.0 +2.6 Metals and Products1........ Vehicles................................. Textiles and Products.... Food and Products............. Stone, Clay, and Glass___ Lumber and Products.... Chemical Products............. Leather Products................ Rubber Products*............... Paper and Printing............ 669 156 146 367 133 302 93 75 9 324 171,890 220,241 28,577 55,569 9,409 29,984 13,859 17,097 6,694 43,891 3,893 6,034 535 1,381 230 547 377 312 198 1,249 Total Mfg., 10 Groups___ 2,274 597,211 14,756 -3.7 -9.6 Merchandising8.................... Public Utilities.................... Coal Mining......................... Construction........................ 172 74 30,249 94,854 4,837 10,503 784 3,191 -1.1 284 +0.4 +13.2 +8.5 +0.7 +3.2 +9.5 + 13.8 Total Non-Mfg., 4 Groups. Total, 14 Groups................ 20 187 101 -3.2 —2.4 +0.1 -1.1 -2.1 -15.5 +8.5 —4.8 -6.7 —4.0 —1.2 -2.2 -2.8 453 140,443 4,360 +1.1 +3.5 2,727 737,654 19,116 -2.8 -6.9 •Other than Vehicles. ^Michigan and Wisconsin. •Illinois and Wisconsin. changes, approximated the low point reached in January 1931. _ Vehicles and metal products suffered the largest losses among the seven manufacturing groups that reduced both men and payrolls. Seasonal influences were opera tive in these two groups as well as in lumber, chemicals, and stone, clay and glass, but the curtailment in the paper and printing industry was contrary to the usual June trend. Leather products had smaller payrolls with no significant change in number of employes, while smallerthan-seasonal gains took place in food products and tex tiles. Fairly large expansion was registered in coal min ing and in construction work, and a less marked increase occurred in the utilities group. Some improvement was noted during June in the Seventh district farm labor surplus, according to the De partment of Agriculture which reported a reduction in the ratio of supply to demand in each of the five states of the district. Farm wages, however, have suffered a de cline of 3 per cent since the April 1 report, which contrasts with advances in the same period of previous years. The trend this year is due to the reduction in farm income, which has forced farmers to do as much of their own har vesting as possible. A considerable increase in registrations for work at free employment offices caused a rise of 32 points or IS per cent in the ratio of applicants to jobs available in four states of this district. REGISTRATIONS PER 100 POSITIONS AVAILABLE AT FREE ______ _______________EMPLOYMENT OFFICES Month Illinois Indiana Iowa Wisconsin 1931 June............. 245 218 224 196 149 108 170 105 462 388 295 285 212 197 155 135 May............. 1930 June............. May............. Four States 250 218 206 175 Manufacturing Automobile Production and Distribution Production of automobiles in the United States con tinued to decline seasonally in June. The reduction of 23 per cent from May represented by passenger car output of 207,798, compared with a recession of 21 per cent during the same month of 1930, while production this June totaled 27 per cent below a year ago. Trucks pro duced numbered 41,304, which is 9 per cent under the preceding month and IS per cent less than for last June. In the first six months of 1931, there were 1,310,435 pas senger cars produced in the United States as against 1,MIDWEST DISTRIBUTION OF AUTOMOBILES First Half June 1931 1931 Per Cent Change From Per Cent May 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........................... June 1930 From First Half 1930 Companies Included 860,361 in the corresponding period of 1930, while truck output of 255,227 compared with 333,591 a year ago. Further declines also were noted during June in mid west distribution of automobiles, although recessions were somewhat smaller than in the same month a year ago, with sales at wholesale showing a slight gain in the ag gregate over last June. Data for the half-year of 1931 indicate that distribution of new automobiles was off about one-fourth in the number of cars sold as compared with the first half of 1930, while used car sales declined by less than 10 per cent; stocks carried have been much smaller than a year ago. Deferred payment sales in June continued to represent a somewhat larger proportion of total retail sales than has been the case in previous months; a ratio of 51 per cent for twenty-nine firms com pared with 46 per cent for May and with 48 per cent for June 1930. Iron and Steel Products The usual mid-summer dullness prevailed during June and the first half of July in the steel industry of the Chi cago district, operations dropping to between 30 and 35 per cent of capacity, which compares with a rate last year of from 60 to 65 per cent at mid-July. Pig iron output showed a similar trend; the daily average in June for Illi nois and Indiana was only 10thousand tons, the lowest point since September 1924. With the exception of a slight revision upward in sheets toward the end of June and some further declines in scrap iron and steel about the middle of that month, price levels have shown little change. Foundry operations in the Seventh district likewise declined in June, production of both steel and malleable castings dropping 29 per cent; shipments also fell off con siderably from May. The tonnage of orders booked showed little change for steel castings but was lower by almost 25 per cent for malleable castings. Activity was at an extremely low point as compared with other years. Shipments of stove and furnace manufacturers in the dis trict showed a decline, largely seasonal in nature, of 24 per cent in June from May and of 25 per cent from a year ago; new orders, on the other hand, totaled only 4 per cent less than a month previous and 10 per cent larger than for last June; production increased 7 per cent and de creased 15 per cent in the monthly and year-to-year com parison, respectively. Furniture The impetus afforded the furniture industry by the semi-annual showing of furniture which took place the first two weeks in June this year, effected a considerable increase over a month previous in the volume of orders WHOLESALE AND RETAIL LUMBER TRADE Class of Trade June 1931: Per Cent Change From May 1931 +0.6 -6.7 -23.3 -31.0 20 20 -20.7 -19.7 -21.2 -19.0 -25.3 -23.6 46 46 -2.8 -0.1 -26.8 -22.2 -33.8* -31.8* 48 48 -6.7 -13.6 -7.8 48 -8.9 -6.6 -27.2 -32.2 -28.4* -36.1* 48 48 Number of Firms or Yards Wholesale Trade: -18.2 -10.4 ♦Average end of month. June 1930 Retail Trade: -4.9 -0.8 -6.9 -31.6 -19.2 -30.8 -9.1 -5.4 +1.0 -28.1 -15.4 197 Ratio of accounts outstanding1 to dollar sales during month Retail trade.......................................... lEnd of month. June 1931 177.7 363.9 May 1931 182.6 326.8 June 1930 151.5 311.2 Page 5 booked by reporting furniture manufacturers in the Seventh district. However, owing to the fact that this showing customarily takes place in July, the increase this year of 49 per cent over May orders should be compared with the seasonal increase effected in other years in July over June, which averages about 62 per cent. Shipments, following a very low volume of new orders in May, de clined 28 per cent from that month, comparing with an average May-to-June decline of 7 per cent. In conse quence, unfilled orders increased considerably, and stood at the close of June at 84 per cent of current orders booked. Comparisons with June a year ago are, with the exception of shipments which were 44 per cent less, very favorable because of the earlier showing this year, new orders and unfilled orders exceeding the 1930 totals by 15 and 22 per cent, respectively; however, the aggregate of orders booked during the current month was approxi mately 31 per cent under that of July 1930. The rate of operations maintained averaged about 50 per cent of capacity, comparing with a rate of 51 per cent obtaining during the month of May and with 52 per cent a year ago. Building Material, Construction Work Changes in Seventh district building material lines dur ing June were without significance, and the six months of 1931 closed with the volume of business sharply below the same period of 1930. Both wholesale and retail lum ber dealers had lower sales than in May and the demand for clay products failed to accelerate, while cement ship ments from midwestern mills rose seasonally and exceeded production in June. Prices were irregular, lumber and other material moving lower at wholesale. In retail quotations for lumber and concrete aggregates at Seventh district cities, gains out numbered the declines, while miscellaneous items, includ ing steel products, trended lower. All lines are approach ing the autumn with lighter stocks than usual, though ample at the restricted level of demand. Operations of reporting lumber dealers are shown in the table on page 5. Building Construction June marked the third consecutive month in which building activity in the Seventh Federal Reserve district registered a decline. Total contracts awarded during the month amounted to only 37 million dollars, as compared with the high point this year of 69 millions for March. Residential contracts, totaling only 20.3 per cent of all construction, followed a similar trend. Building permits issued during June in 102 cities of the Seventh district, declined only 4 per cent in estimated cost of proposed work from the preceding month, although the number issued fell off 16 per cent. In the compari sons with June 1930, a drop of 56 per cent was recorded in valuation and of 27 per cent in number. Des Moines was the only large city which did not follow the trend of the district in estimated cost of permits, registering a gain of 129 per cent over May. BUILDING contracts awarded* SEVENTH FEDERAL RESERVE DISTRICT June 1931............................................................ Change from same period 1930............ Commodity Accts. Net Sales Stocks Outstand ing Groceries.............. Hardware............. Dry Goods........... Drugs.................... Shoes..................... Electrical Supplies............ Collec tions Ratio of Accts. Outstand Residential Contracts $37,498,384 -10% -63% $255,112,940 -38% $ 7,597,544 $55,213,884 -40% *Data furnished by F. W. Dodge Corporation. Merchandising Evidences of slight improvement were noted in the June data furnished by reporting wholesalers in the district. Grocery, drug, and hardware sales aggregated heavier than in the preceding month, the increase of one per cent in drugs and of 4 pier cent in hardware being contrary to sea sonal trend and all three gains contrasting with declines in the same period of 1930, while recessions in other groups were smaller than shown at that time. As a con sequence, declines from a year ago were less than re corded in a similar comparison for May. Data covering the first half of 1931 show grocery sales to have been 11 per cent smaller than for the corresponding six months last year, hardware 25 per cent, dry goods 25J4 per cent, drugs 11 per cent, shoes 18J4 per cent, and electrical sup plies 34 per cent less. Lower prices than a year ago are largely responsible for the smaller aggregate of dollar sales, but there are at present indications of strengthen ing in certain items. Ratios of accounts receivable to sales declined in June from both a month and a year pre vious for groceries, hardware, and shoes. The decline of 4 pier cent from May in June department store trade was a little less than average for the period and compared with a 13 per cent decrease for the same month last year. There was one more trading day in June this year, however, than either a month or a year previous, so that daily average sales fell off 7 per cent in the monthly comparison and were 11 pier cent below June 1930 against a decline in total sales of only 8 per cent from last year. Increases by individual stores were not infrequent in either comparison. In the first six months of 1931, sales for reporting stores in the district aggre gated 10y-2. pier cent under the corresponding period of 1930. The dollar volume sold in June by Chicago stores increased one-half of one pier cent over May against re cessions shown in Milwaukee of 4 per cent and of 7 per cent each in Detroit, Indianapiolis ahd the total for other cities. The table shows that in the year-ago comparison, DEPARTMENT STORE TRADE IN JUNE 1931 WHOLESALE TRADE IN JUNE 1931 Per Cent Change From Same Month Last Year Total Contracts Period Locality ing to Net Sales Per Cent Change June 1931 From June 1930 Per Cent Change First Six months 1931 from Same Period 1930 Ratio of June Col lections to Accounts Outstanding May 29 Net Sales Stocks End of Month Net Sales 1931 1930 33.7 37.0 39.5 -9.3 -14.8 -24.3 -10.4 -11.4 -5.6 -16.4 -32.1 -13.7 -15.6 -7.6 -18.0 -31.3 -0.8 -15.6 -7.5 —20.2 -19.9 -14.1 -13.1 92.2 233.7 334.9 187.6 342.3 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. -8.8 -10.9 -3.4 -1.2 -5.4 -14.9 -19.8 -24.8 -6.8 -15.5 -11.7 -13.1 -3.8 -7.2 -8.0 32.9 34.5 42.1 32.8 33.9 -28.9 —11.1 -30.7 -34.2 161.4 7th District. -7.7 -15.8 -10.5 35.0 36.4 Page 6 ■ Chicago and Detroit stores experienced the heaviest de cline. Stocks were reduced in about the usual seasonal amount, remaining well below the 1930 average. Among other lines of retail distribution, shoe sales of dealers and department stores showed a gain of 9 per cent in the aggregate for June over a month previous, while the decline from a year ago amounted to 10 per cent; sales of furniture and house furnishings fell off seasonally 25 per cent, and were 12 per cent below last June; and chain store trade decreased 2 per cent in the aggregate from May, but totaled 1J4 per cent in excess of June 1930. The gain shown over a year ago in chain store trade was effected largely through increases in drug and five-and-ten-cent store sales; average sales per store recorded approximately the same changes as did total sales, the number of units in operation being about the same as in May and a year ago. Semi-annual data compiled on sales of 191 retail hard ware dealers in the five states including the Seventh district show a decline of 23 per cent in the first half of 1931 from the same period of 1930; decreases averaged about the same for each of the states. 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, revision will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of Firms Meat Packing—(U. S.)— Sales (in dollars).................................... 63 Casting Foundries— Shipments: Steel—In Dollars............................... 15 In Tons.................................... 15 Malleable—In Dollars.................... 23 In Tons......................... 23 Stoves and Furnaces—• Shipments (in dollars).......................... 11 Furniture— Orders (in dollars)................................. 25 Shipments (in dollars).......................... 25 Flour— Production (in bbls.)............................ 26 Output of Butter by Creameries— Production............................................... 67 Sales........................................................... 69 Wholesale Trade— Net Sales (in dollars): Groceries.............................................. 31 Hardware............................................. 14 Dry Goods........................................... 9 Drugs.................................................... 14 Shoes..................................................... 8 Retail Trade (Dept. Stores)—■ Net Sales(in dollars): Chicago................................................. 26 Detroit.................................................. 5 Indianapolis........................................ 5 Milwaukee........................................... 5 Other Cities........................................ 50 Seventh District................................ 91 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.... June 1931 May 1931 April 1931 Mar. 1931 Feb. 1931 Jan. 1931 June 1930 May 1930 April 1930 Mar. 1930 Feb. 1930 Jan. 1930 75 77 78 79 78 84 103 106 109 103 109 113 29 27 27 43 38 38 33 54 39 37 34 54 44 43 35 54 40 41 31 46 34 34 30 45 68 71 50 71 81 85 63 90 92 98 70 101 86 92 72 102 77 78 73 103 80 84 69 98 66 84 94 77 69 50 89 101 111 96 86 78 55 33 39 48 51 57 58 62 55 57 68 38 46 56 64 64 61 69 68 82 68 81 103 62 89 88 93 93 94 101 97 103 107 97 97 108 179 162 165 135 122 111 102 95 89 94 93 96 155 135 157 129 104 101 88 92 81 81 84 94 85 65 46 80 53 82 62 51 79 55 86 71 55 87 60 85 55 51 86 58 75 41 41 82 39 84 42 42 88 34 95 74 61 92 61 99 89 73 99 70 97 84 70 101 87 94 82 67 100 73 84 61 58 91 51 94 58 55 97 35 84 101 87 95 82 88 83 109 93 99 89 91 93 126 94 112 97 102 82 109 88 93 79 88 73 95 68 75 68 76 79 87 80 85 72 80 93 115 87 95 87 96 102 139 101 116 100 110 111 153 103 117 104 117 90 119 90 95 90 96 82 104 77 84 74 85 87 101 83 94 73 88 71 110 92 121 98 133 79 120 62 105 47 89 98 129 123 156 127 189 113 174 96 134 80 105 26 55 30 61 36 67 52 101 23 42 22 46 45 147 67 116 77 119 56 108 33 56 34 58 61 56 60 73 76 66 72 76 86 69 79 82 84 67 86 84 78 62 78 83 72 56 68 87 119 100 103 83 134 106 111 85 131 108 119 91 129 107 123 96 127 103 126 94 109 93 105 94 ♦Average daily production. Page 7 PERCENT ------- 1*0 INDUSTRIAL PRODUCTION NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Federal Reserve Board) T NDUSTRIAL production showed more than the usual seasonal decline in June, and factory employment and payrolls decreased. Wholesale prices, which had continued to decline until the end of May, advanced in June, but for most com modities declined again in the first half of July. Production Index number of industrial production, adjusted for seasonal variation (1923-1925 average = 100). FACTORY EMPLOYMENT AND PAYROLLS Payrolls Err ployment Indexes of factory employment and payrolls, with out adjustment for seasonal variation (1923-1925 aver age = 100). BILLIONS OF DOLLARS BILLIONS OT DOLLARS A decrease in industrial output from May to June was reflected in a decline in the Board’s index of industrial production, which is adjusted for seasonal variations, to 86 per cent of the 1923-1925 output, as compared with 89 per cent in May. Taking the second quarter of the year as a whole, production has averaged about 4 per cent above its low level in the last three months of 1930. The reduction of activity in June was most marked in the iron and steel industry, with steel plants operating at 38 per cent of capacity. Automobile output declined further, and there was some recession in production of lumber, meat products and flour. Petroleum output, however, was not reduced. Activity of textile mills and shoe factories continued in relatively large volume; in the woolen industry, activity was sustained at the unusually high level of May, and the decline in the consumption of cotton was not in excess of the usual seasonal amount. During the first half of July, there were further reductions, partly seasonal in nature, in output of steel, automobiles, and lumber. Factory employment was further reduced by nearly 3 per cent, and payrolls de clined by 6 per cent between the middle of May and the middle of June. The largest decreases were in the steel, machinery, and women’s clothing industries, while reductions at automobile plants and cotton mills were partly seasonal in character, and employment at woolen and hosiery mills increased. Building contracts awarded in June were somewhat larger than in May, but de clined again in the first half of July. Since the early spring, awards have not in creased as much as is usual for the season. In residential building there has been relatively little change for about a year and a half, except for seasonal fluctuations, and the decline in construction has been chiefly in other types of building, prin cipally public works and utilities. MEMBER BANK CREDIT Distribution All Other Loans At department stores, daily average sales were seasonally smaller in June than in May. Freight carloadings were also reduced, reflecting principally a further reduc tion in loadings of miscellaneous commodities. Prices 1927 1928 1929 1930 1931 Monthly averages of weekly figures for reporting member banks in leading cities. Latest figures, aver ages of first three Wednesdays in July 1931. During June, wholesale prices of many commodities advanced considerably, after having reached low levels late in May and early in June. Prices of live stock and meats increased; and after June 21 there were rapid advances in prices of raw ma terials important in world markets, especially cotton, hides, sugar, silk, copper, sflver, and rubber. Subsequently, however, most of these prices receded somewhat, al though in mid-July they were, in general, above their lowest levels. The price of wheat declined during June and the first half of July, as the domestic price became adjusted to world levels. Bank Credit RESERVE BANK CREDIT AND FACTORS IN CHANGES Monthly averages of daily figures. Latest figures, averages of first 19 days in July 1931. Page 8 At reporting member banks in leading cities, loans on securities continued to de cline between the middle of June and the middle of July, while all other loans in creased by $140,000,000. This increase was concentrated at New York City banks, and was largely in the form of acceptances purchased in the open market. Mem ber banks’ investments continued at about the same level as in May and early June. Notwithstanding a further addition of $77,000,000 to the country’s stock of monetary gold between the weeks ending June 20 and July 18, there was no de crease in Federal Reserve Bank credit outstanding. During the period, the Reserve banks’ portfolio of United States securities was increased by $75,000,000, while their combined holdings of acceptances and of discounts for member banks decreased by approximately the same amount. The gold inflow provided member banks with funds to meet an added demand for currency, as well as to increase their balances with the Reserve banks. There was also a considerable growth in foreign bank deposits with the Reserve banks. Money rates continued at low levels.
@FedFRASER