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Seventh fEDERAL Reserve DISTRICT Eugene M. Stevens, Chairman oj the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Volume 17, No. 8 Harris G. Pett, Manager Division of Research and Statistics MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO General Summary rYECLINES recorded for June in Seventh district busi ness activity were in many industries and trades somewhat greater than seasonal in extent, but the volumes produced and sold for the most part continued to exceed those of the corresponding month last year, and data for the first half year showed substantial margins of gain over the same six months of 1933. The steel industry maintained a comparatively high rate of operations through the greater part of June, sup plying commitments to be delivered before July 1, but curtailed them sharply at the end of the month. The auto mobile industry reduced production moderately during the period, while declines in activity at steel and malleable casting foundries were greater than seasonal. Furniture shipments decreased substantially from a month previous and were lower than a year ago; and building construc tion and the movement of materials were lighter, although building in the first six months of this year totaled almost three times that for the corresponding period of 1933. Shoe manufacturing likewise followed these general down ward trends but showed only a slight recession from May. Largely owing to reduced operations at steel and automobile plants, aggregate industrial employment in the district recorded the first decline since last November but continued much higher than a year ago at the same time. In the production of foodstuffs, meat packing registered a decline in June from the preceding month, while the production of butter and the manufacture of Wisconsin cheese expanded in the comparison, the latter more than seasonally. The value of meat-packing products sold was in excess of a month previous, but distribution of both butter and cheese declined, contrary to trend for June. With the exception of a gain in meat-packing sales, com parisons with the corresponding month a year ago showed declines. Early harvesting of wheat caused a considerable FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Change From July 18 June 13 July 19 1934 ................... .. 1934 1933 Total Bills and Securities........................................ $429.2 $ —2.6 $ + 95.9 Bills Discounted......................................................... 0^2 -0.1 -11.9 Bills Bought.............................................................................. o!6 -0.3 U. S. Government Securities.................................. 428.3 -2.50 +108.1 Total Reserves............................................................ 1,092.2 +0.8 +153.1 Total Deposits. ....................................................... 722.9 -1.8 +294.5 Federal Reserve Notes in Circulation. 768.1 -1.0 -2.5 Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined................. 73.2% +0.2* -5.1* ♦Number of Points. John H. Martin, Asst. Federal Reserve Agent, Detroit Branch George A. Prugh, Asst. Federal Reserve Agent July 31, 1934 expansion in the movement to primary markets, and ship ments therefrom were stimulated by strong speculative and milling demand. On the other hand, the movement of feed grains—corn and oats—was light. June rains checked to a considerable extent the deterioration of crops in the Seventh district, but were insufficient to raise pre vious low crop estimates. Corn, of the major crops, is in the best condition, contrary to the situation in the south west part of the country. Truck crop acreage in the district will be at least average this year. Merchandising phases for the most part recorded re cessions in June that were somewhat more than seasonal or contrary to trend for the period. In wholesale trade groups, groceries alone experienced heavier sales than in the preceding month, the gain being greater than usual for June; the decrease in the hardware trade was larger than that in the June average; declines in dry goods, drugs, and electrical supplies were non-seasonal; and hardware and dry goods registered slight declines from a year ago for the first time since April 1933. Depart ment store trade fell off more than seasonally in June, though showing a favorable margin of 10 per cent over last June and aggregating approximately one-fourth greater in the first half of the year than in the same months of 1933. Retail shoe sales declined, contrary to trend, and the decrease in the retail furniture trade was more than normal. Aggregate sales of reporting chains were only slightly less than a month previous. Wholesale distribution of automobiles increased a little in June, as did sales to consumers. Following a rather sharp expansion in May, new financ ing by means of bankers’ acceptances in the Seventh distrist fell off considerably in June. Commercial paper sales by dealers, on the other hand, were unusually good for recent years. Investment holdings of reporting member banks in the district expanded between June 13 and July 18, while loans declined; deposits, both time and demand, rose slightly in the period. Reserve bank credit extended in the district decreased in these five weeks. Credit Conditions and Money Rates Total credit extended by the Federal Reserve Bank of Chicago—total earning assets plus float—amounted to $426,412,000 on July 18 as compared with $431,679,000 on June 13. The supply of funds available to banks in the Seventh district was increased during the period through an inflow from other areas—resulting from com mercial and financial transactions and amounting to more than 52 J4 millions. This heavy increase, however, was almost offset by the 50 millions which the United States Treasury collected in excess of local disbursements. Par tially reflecting the decrease in special and “all other” deposits, totaling 33 millions, member bank reserve bal ances during the period increased 37 million dollars. Demand for currency again showed a decline. A gain was recorded in this item in the week preceding July 4, in accordance with the usual practice of withdrawing money for hand-to-hand circulation during the holiday, but it was not large enough to offset the trend for the period. The volume of reserve bank credit in use within this district dropped nearly 3 million dollars during the five weeks, and compared with an increase of 1J4 millions in the four weeks ended June 13. Changes between June 13 and July 18 in Factors Affecting Use of Federal Reserve Bank Funds Seventh District (Amounts in thousands of dollars) Reserve bank credit extended........................ Commercial operations through inter-district settlements.................... Treasury and National bank currency......................................................... ,““^,769 +52,605 —6,668 Total supply.................................................................................... +43,168 Demand for currency......................................................................................... 2 Member bank reserve balances.....................................................;.............. +37,030 Treasury cash and deposits at Federal Reserve Bank of Chicago---- +50,270 Special and “all other” deposits..................................................................... —33,274 Other Federal Reserve accounts..................................................................... —1,408 Total demand...................................................................................... +43,168 Member Bank Credit An increase of 75 million dollars in total loans and investments of licensed reporting member banks was shown on July 18 as compared with June 13, reflecting heavier investment holdings, loans on securities as well as “all other” (commercial) loans recording moderate de clines in the comparison. Net demand and time deposits increased by small amounts, as indicated in the table be low. As against July 19, 1933, it will be noted that total loans and investments of licensed reporting member banks on July 18 this year showed a gain of 221 millions, due entirely to growth in the volume of investments. Net demand deposits in the year-to-year comparison gained 423 millions, and time deposits 16 millions. Rates reported on customers’ commercial loans by down-town Chicago banks were unchanged for the week ended July 15 from those given a month earlier—\l/2 to 5 per cent. The average rate earned by down-town Chi cago banks during the calendar month of June was 3.26 per cent, compared with 3.47 in May and with 3.85 in June 1933. In Detroit, a range of 3 to 6 per cent was re ported as the prevailing rate on customers’ commercial loans during the week ended July 15, unchanged from the corresponding week in the preceding month. Commercial paper sales by dealers in the Middle West aggregated heavier during June than in any previous month since the middle of 1931. They not only expanded 27Yi per cent over May and were 56 per cent in excess of a year ago, but recorded a smaller recession from the 1924-33 seasonal average than had been evidenced earlier in 1934. A non-seasonal expansion in borrowings by means of commercial paper was largely absorbed by a CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) Total Loans and Investments........................... Loans on Securities.............................................. All Other Loans..................................................... Investments............................................................ .. .. .. .. Net Demand Deposits........................................ .. Time Deposits....................................................... . . Borrowings from Federal Reserve Bank. . . . .. DigitizedPag® for FRASER 2 July 18 1934 51,818 327 387 1,104 Change From June 13 July 19 1933 1934 $ +75 $+221 -95 - 9 -19 -83 + 103 +399 1,615 494 +32 +19 +423 +16 0 0 - 0 stronger investment demand from city and country banks. Selling quotations in June, therefore, continued to range and % per cent for prime short-term obligations from to 1 and 1J4 per cent for paper less well known or of longer maturity, with the bulk of transactions taking place • at £4 to 1 per cent. As a consequence of the increased sales volume, June 30 outstandings of commercial paper in the Middle West were above those of any reporting date since the autumn of 1931, being 18y2 per cent larger than on May 31 and 102 per cent in excess of a year ago, though falling 58 per cent under the customary level for this time of the year. A further expansion of 18J4 per cent in sales was recorded in the first half of July over the corresponding weeks of June, but rates continued within a range of to 1per cent. With the exception of increased activity in the week ended July 3, operations of dealers in the Chicago bill market were almost negligible during the period from June 14 to July 11. Local purchases were the smallest in almost two years and, together with a decline in the vol ume of receipts from Eastern cities, resulted in total supply dropping 5 ]/2 per cent from that obtaining May 17 to June 13. As distribution showed a similar change from the preceding period and was 74 per cent below last year, dealers, as previously, were unable to accumulate any bills in their own portfolios. No change was reported in selling rates during the period, the prevailing range being quoted at A and J4 Per cent to Yi per cent. Transactions in bankers’ acceptances were at an ex ceptionally low level during June in the Seventh Federal Reserve district. New financing through the utilization of acceptance credits aggregated less than for any previous month since June 1927 and was 50 per cent below the 1924-33 June average. Furthermore, the direct discount ing of these bills at the originating banks and the buying of other banks’ acceptances decreased to such an extent from May that total purchases were not only less than at any other time in more than five years but 48J4 per cent below the 1924-33 June average. Sales were almost negligible. Although maturities totaled in excess of cur rent purchases, holdings declined less than seasonally on June 30 from the end of May, and were 198 per cent greater than is customary at this time of year. The liability for outstandings, however, was smaller at the close of June than for any reporting date since September 29, 1928. Largely as a consequence of heavier borrowing by the grain industry, new financing by means of accept ance credits increased nearly 90 per cent in the first half of July over 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 1934 From May 1934 June 1933 —54.7 —51.2 —55.1 —52.4 -84.9 -90.2 —7.6 —31.1 —3.4 —32.8 Total value of bills accepted................ Purchases (including own bills discounted) Sales................................................................ Holdings*....................................................... Liability for outstandings*...................... *At end of month. Security Markets Trading in the Chicago bond market was somewhat more active during June than in May of this year, but remained far below the level of a year ago. Demand continued to favor mainly high grade municipals and corporation issues of outstanding quality. United States Government bonds were firm to slightly higher during the period. A sharp break in German obligations featured activity in the foreign market. There appears to have been some liquidation of high-grade short-term securities, which have advanced in price to a point where the yield is very low as compared with the yields obtainable on * ., medium or longer term securities of approximately the same grade. Institutions are reported to be furnishing the major portion of the buying demand. Stock prices on the Chicago Exchange moved within a narrow range dur ing June and the first two weeks of July. The average price of twenty leading stocks* amounted to $29.64 on July 16, and on the corresponding date in June totaled $30.95. ‘Chicago Journal of Commerce. Agricultural Products Frequent and fairly well distributed rains in this district during June checked the rapid deterioration of crops, which had been in progress during the spring. The total precipitation, however, was below normal for the month, and due to the long duration of the drouth, was insufficient to raise the July 1 estimates of yield for major crops from the previously indicated low levels. In the first half of July more rain fell, averaging heaviest in Iowa where nearly double the normal amount was reported. Potatoes are practically the only important Seventh district crop for which a normal yield is expected, while rye production ^ probably will exceed last year, due to increased acreage. Of the other major crops, corn is in best condition, at present, in the states of this district, though sharply deteriorated in the area to the southwest. Oats, barley, spring wheat, and hay have been most severely damaged. There will doubtless be an increase in emergency forage crops, in an effort to offset losses in regular crops. Dry weather aided the spread of chinch bugs and other insect pests, which are a significant threat to the grass type of crop, compelling the substitution of certain legumes, particularly soy beans, where seed is available. ♦ Among fruits in this district, pears and grapes apparently will exceed last year’s production, while apples, peaches, and cherries will show declines. The acreage in truck crops is at least average this year, and while these crops suffered from the drouth, recent rains have been beneficial. The high prevailing temperatures of the early summer caused grains to mature earlier than usual, and corn cultivation, like all field work, is ahead of the average year. ** Grain Marketing „ Earlier harvesting of wheat than usual in the southwest caused a considerable increase in the June market move ment, while the prospect of record low production served to sustain prices at a fairly high level. Primary receipts in June were double the May volume and exceeded the five-year average for the month for the first time in a year. Reshipments were stimulated by strong milling and specu lative demand and recorded a contrary-to-seasonal gain over the preceding month of 13 per cent, but remained 22 per cent below average. The visible supply of wheat „ reached its end-of-the-season low point on June 16, three weeks later than last year; but in the month following expanded 23 million bushels, as against a gain of 5J4 millions in the same period of 1933. The Department of Agriculture estimated farm stocks of wheat at 61 million bushels on July 1, which compares with 82 millions in VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT » (Amounts in millions of dollars) Per Cent of Increase or Decrease From June 1934 May 1934 June 1933 Chicago....................................................................... $2,392 +6.8 +12.0 Detroit, Milwaukee, and Indianapolis............. 961 +1.2 +45.4 Total four larger cities 33 smaller centers.... $3,353 521 Total 37 centers $3,874 +5.1 +1.3 +4.6 +20.1 +28.6 +21.2 1933 and 93 millions in 1932. Total carry-over of old wheat is probably somewhat over 250 million bushels, the lowest since 1929. Future wheat prices averaged 8 cents higher than in May, despite a considerable decline from the high level of June 1. Most of the loss was re gained before the middle of July. The movement of feed grains in June was light and seasonal in trend, as corn receipts increased 22 per cent over May, while those of oats declined, as did shipments of both grains. Stocks of these grains showed further reduction from a year ago, the visible supply of corn being 20 million bushels lower at the middle of July, with that of oats 8 millions less than a year previous. Farm stocks of corn on July 1, as reported by the Department of Agri culture, were 470 million bushels compared with 628 millions in 1933; and those of oats were 108 millions against 204 millions on July 1 of last year. Future prices of feed grains in June averaged higher than in May, by Sy2 cents for com and 8 cents for oats, as their quotations held more nearly steady during the month than did those for wheat. The first half of July witnessed a firm trend in both grains. Movement of Live Stock The liquidation of animals from drought stricken areas continued in June and was largely responsible for cattle receipts at public stock yards in the United States show ing a further rise of 2 per cent during the period to a level above any month since October 1933, 2Z]/2 per cent in excess of a year ago, and 1 iy2 per cent above the 1924-33 June average. Furthermore, calf marketings were re duced less than the usual amount from May and were \ty2 per cent larger than normal for June. Receipts of hogs and lambs, on the other hand, decreased more than seasonally from the relatively heavy volume of a month earlier and were considerably under last year as well as the 1924-33 June average. The movement to inspected slaughter (inclusive of animals that did not pass through public stock yards) showed some divergence from the trend of market receipts: the supply of lambs increased over May, that of calves attained a level higher than for any other month on record (January 1920), and the only recession recorded from the ten-year average was a 2 per cent decrease in the supply of hogs. June marked the first time in 1934 in which the month’s shipments of cattle to feed lots was greater than seasonal, the volume being only 8 per cent smaller than in May and 4 per cent under the corresponding period of 1933. The movement of feeder lambs and calves, however, was considerably under the 1929-33 June average. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of July 1 condition. (In thousands of bushels unless otherwise specified) Seventh District United States Forecast Final Forecast Final 1934 1933 1934 1933 1927-31 Corn...................... 732,047 835,127 2,113,137 2,343,883 2,516,307 Oats...................... 220,902 314,089 567,839 731,524 1,186,956 Winter Wheat... 43,652 44,426 394,268 351,608 632,061 Spring Wheat. . . 1,663 2,316 89,394 176,370 254,298 Barley.................. 27.367(a) 35.401(a) 125,155 156,988 270,444 Rye....................... 5.881(a) 5.629(a) 17,194 21,236 40,950 Flaxseed............... 201(b) 236(b) 5,599 6,806 18,664 Potatoes (White) 46,741 39,752 348,092 320,353 365,556 Potatoes (Sweet)' 1.233(c) 1.090(c) 64,924 65,073 62,386 Sugar Beets*___ 988(d) 1.203(d) 7,902 11,030 7,854 Apples.................. 9.360(a) 15.033(a) 112,011 142,981 156,303 Peaches................ 631(e) 1.965(e) 48,720 44,942 57,919 Pears..................... 1.209(e) 1.010(e) 22,431 21,192 22,540 Cherries*............. 30(d) 34(d) 115 117 93 Grapes*................ 81(a) 74(a) 1,956 1,910 2,283 Dry Beans***... 3.087(d) 3.539(d) 10,429 12,280 11,594 Tobacco**........... 14,405 17,814 1,039,517 1,385,107 1,470,556 All Tame Hay*.. 8,399 13,289 52,020 65,983 72,250 *In thousands of tons. **In thousands of pounds. ***In thousands of 100-lb. bags, (a) Five states including the Seventh Federal Reserve district, (b) Iowa and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan and Wisconsin, (e) Illinois, Indiana, Iowa, and Michigan. Page 3 Meat Packing With a greater than seasonal decline in pork depart ment activities partially offset by an increase in the beef section, the volume of production of packing-house com modities at slaughtering establishments in the United States decreased 3 per cent in June from a month earlier and 8J4 per cent from a year ago but was Sl/2 per cent larger than the 1924-33 June average. Demand remained steady. Therefore, the sales tonnage offered—which was slightly less than in May but nearly equal to current pro duction and more than 5 per cent heavier than either a year ago or the ten-year average for the month—was absorbed at a higher general price level than obtained a month earlier, the decline in beef, veal, and mutton quota tions being more than counteracted by an advance in pork products. Prices remained considerably above last year and much lower than the 1924-33 average. Under the influence of the foregoing trends, the total value of sales billed to domestic and foreign customers increased 1 y2 per cent in June over May and 24y2 per cent over the corresponding period of 1933 but remained 27 per cent below the 1924-33 average for the month. Despite the seasonal expansion shown over the preceding month, July 1 inventories of these commodities in the United States aggregated 117,560,000 pounds less than a year ago and 96,820,000 pounds below the 1929-33 July 1 average. Payrolls at the close of June continued to reflect a marked improvement over 1933 and also showed an increase over May of 4 per cent in number of employes, 10y per cent in hours worked, and of 8y per cent in wage payments. Shipments for export fell off sharply in June from May and consisted principally of lard forwarded to the United Kingdom. Demand for American lard remained fair in the British market, but was almost negligible on the Con tinent. With the exception of a good demand for hams by the United Kingdom, European trade in United States meats remained exceptionally light. Lard prices in the United Kingdom continued below Chicago parity but, ow ing to the continuance of quota systems, prices of United States meats throughout Europe and of lard on the Con tinent remained above this parity. United States in ventories of packing-house commodities in foreign markets (inclusive of stocks in transit) were reported as slightly greater on July 1 than a month earlier. Dairy Products Seventh district creamery butter production increased 6y2 per cent in June over a month earlier, but was 8 per cent lighter than a year ago and 19 per cent under the 1924-33 average for the period. The sales tonnage de clined—contrary to trend—being one per cent less than in May, 14 per cent smaller than in 1933, and 18y2 per cent under the customary June volume. United States pro duction of the commodity, though larger than in May, likewise recorded a marked decline from last year. Despite an advance in prices over the preceding month, demand Cattle Hogs Yards in Seventh District, June 1934................................... ... Federally Inspected Slaughter, 258 751 June 1934................................... ... May 1934................................... . . . June 1933................................... ... 932 864 751 3,763 4,218 4,626 and Sheep Calves __ ... 228 141 1,259 1,244 1,490 601 600 441 remained sufficiently strong in June to prevent the normal increase on July 1 in United States inventories which aggregated 36,129,000 pounds under a year ago and 25, 412,000 pounds below the 1929-33 average for the date. American cheese manufacture in Wisconsin expanded more than a seasonal amount in the four weeks ended June 30 over the preceding period, but was 7 per cent lighter than in 1933 or the 1929-33 average for the month. Owing to a rise in prices over May, production showed a much greater excess over current sales than is usual for this time of year. Distribution of the commodity from primary markets of Wisconsin recorded a counter-toseasonal decline of 8 per cent from the preceding four weeks and was 32 per cent less than the five-year average for June. That sales in the United States likewise reverted to an unfavorable relationship to current manufacture is evidenced by the fact that total inventories of cheese in the country as a whole showed more than the average gain on July 1 over the beginning of June and aggregated 16,057,000 pounds greater than the 1929-33 average for early July. Industrial Employment Conditions After a continuous rise since last November, employment and payrolls in Seventh district industries registered a decline in June, the former item falling off 3 y per cent and the latter 4 per cent in comparison with the preceding month. As compared with the corresponding figures of a year ago, however, the current employment volume shows an increase of 35 per cent and payrolls a rise of 43 per cent, and with the exception of May and April this year, employment is at the highest level since May 1931, and payrolls since June 1931. The curtailment of operations in the vehicles industries, reflected in losses of 8 per cent in working forces and 10 per cent in wage payments, caused a sharp reaction in employment trends for the state of Michigan in which the bulk of these industries is located, and contributed mainly to the recession in the Seventh district as a whole which, exclusive of the Michigan figures, showed a stationary volume of employment and a one-half per cent increase in payrolls. The metal industries also shared in the dis trict decline with a loss of approximately 3 per cent each in employment and payrolls. Substantial decreases were shown for the textile industries, building materials, chemicals, and the paper and printing industries. The leather goods group increased payrolls one per cent, while show ing a decline in employment of the same amount. The EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of June 15, 1934 Industrial Group Page 4 Months of May 1934 16.95 4.70 5.45 3.60 9.20 June 1933 $5.80 4.45 4.70 4.50 Report ing Firms No. Wage Earners No. Earnings (000 Omitted) $ Change From May 15, 1934 Wage Earn ers % Earn ings % -2.8 -10.2 -2.4 +8.4 -2.8 -2.0 -1.4 +0.8 -10.0 —1.7 Paper and Printing............. 1,274 229 297 611 169 415 158 106 8 577 236,717 303,535 44,000 93,280 10,455 31,370 20,295 20,898 6,335 63,121 5,111 7,366 701 2,025 212 468 453 379 146 1,447 -3.4 -8.1 -5.0 +7.7 —5.4 —2.3 -1.3 -1.1 -12.7 —1.8 Total Mfg., 10 Groups---- 3,844 830,006 18,308 -4.0 -4.7 Construction......................... 1,522 79 16 314 79,901 81,835 2,478 11,836 1,647 2,345 40 252 -1.7 +u. 5 -18.4 +6.5 +1.4 — 1.0 —26.3 -1.0 Total Non-Mfg., 4 Groups 1,931 176,050 4,284 -0.5 -0.4 Food and Products............. Stone, Clay, and Glass---Chemical Products............. AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended July 14 June 1934 1934 37.35 Native Beef Steers (average). . .... 17.45 4.75 4.70 ___ 4.65 5.15 ___ 4.20 ___ 4.50 Hogs (bulk of sales).................... 8.45 Lambs............................................. *> -3.9 22,592 -3.4 1,006,056 Total, 14 Groups................. 5,775 i Other than Vehicles. * Michigan and Wisconsin. 3 Illinois and Wisconsin - * main offset to the heavy recessions from May to June, however, was afforded by the food products group in which employment and payrolls each registered a rise of 8 per cent. The total decline for the manufacturing industries amounted to 4 per cent in employment and 4j4 per cent in payrolls. Non-manufacturing industries also experienced a slight aggregate decline of one-half per cent both in number of workers employed and wage payments. Public utilities and the construction industry increased employment by one-half and 6J4 per cent, respectively, but payrolls in each group decreased one per cent. Merchandising con cerns raised payrolls 1per cent, while reducing employ ment by a fractionally larger percentage. Coal mines showed a continual seasonal inactivity, the current de clines totaling 18 per cent in men employed and 26 per cent in wage payments. only moderately in excess of the average for the period last year, in contrast to the heavy gain shown in new car stocks. The proportion of deferred payment sales to total retail sales of dealers reporting the item rose in June, the ratio amounting to 53 per cent, as against 49 per cent a month and a year previous. Iron and Steel Products A further moderate decline took place during June in production of automobiles, in line with seasonal trend. Output of passenger automobiles by United States manu facturers aggregated 261,852 in the period, or 4 per cent less than in May but 26 per cent in excess of the June 1933 volume. In the first half of 1934, passenger car produc tion numbering 1,400,339, totaled 68 per cent greater than in the corresponding period last year, 92 per cent above the same months of 1932, 6 per cent over the period in 1931, and within 25 per cent of the first six months of 1930. Truck production in June numbered 46,199, or 20 per cent below May output and 10 per cent heavier than for last June; production for the first semester this year of 313,621 vehicles showed respective gains of 103, 124, and 23 per cent over the same periods of 1933, 1932, and 1931, and a decline of 6 per cent from the first six months of 1930. Distribution of automobiles at wholesale increased a little in the aggregate for June, although the majority of firms reported declines, and sales to consumers likewise rose slightly in number over a month previous. It will be noted in the table that new cars sold continued to number somewhat heavier than a year ago, and that in the first half of this year they exceeded those in the corre sponding months of 1933 by a substantial margin. Stocks fell off slightly in June, following a steady rise since the first of the year, but they totaled almost double those held at the close of June last year and for the first half of 1934 averaged 50 per cent heavier than for the six months a year ago. Used car sales again declined in June, while stocks thereof increased. The average number of used cars on hand in the first six months of this year was Desire on the part of buyers to make commitments before higher prices became effective on July 1, coupled with fear of a strike in the early part of the month, main tained steel operations in the Chicago district at a com paratively high rate through the greater part of June. New business, however, fell off during the period, and the first part of July found buying very quiet. Steel ingot output, which had attained a peak for the year to date of 69 per cent of capacity by the middle of June, dropped rapidly thereafter—a reaction to a great extent seasonal —until by the first of July it averaged only 28 per cent, where it remained through the first week of the month, then rose 5 points in the second week. Last year at the same time operations were around 60 per cent of capac ity. Pig iron production was curtailed only slightly in June, daily average output in the Indiana and Illinois district declining but 3 per cent from the preceding month and continuing substantially heavier than a year ago. Activity in both iron and steel during the first half of 1934 considerably exceeded that of the same period in 1933. Lower prices on many finished steel products were filed after July 1, while pig iron remained un changed; scrap iron and steel prices, after holding steady through June, recorded some weakening in the early part of July. A greater than usual seasonal recession in activity was experienced during June by the Seventh district foundry industry. New orders booked for steel castings totaled 17 per cent less in tonnage than in the preceding month, while shipments were 12 and production 17 per cent lower. In malleable casting foundries the reductions amounted to 35 per cent in orders, 22 per cent in ship ments, and 30 per cent in production. Despite these de clines, comparisons with figures of a year ago showed in creases in all items for steel castings and in all except orders for malleable castings. These latter fell below those of last June, 39 per cent in tonnage units and 27 per cent in dollar value, the first declines in the year-ago comparison since March 1933. In the manufacture of stoves and furnaces, orders ac cepted during June were 36 per cent smaller than in May and 19 per cent below those reported for June 1933. Shipments declined 8 per cent and molding-room opera tions 7 per cent from the preceding month but were, re spectively, 50 and 37 per cent higher than a year ago. midwest distribution of automobiles LUMBER AND BUILDING MATERIALS TRADE Manufacturing Automobile Production June 1934 Per Cent Change Fk OM May 1934 June 1933 and Distribution First Half 1934 Per Cent Change From First Half 1933 Included June 1934: Per Cent Change From May 1934 June 1933 Number of Yards Wholesale Lumber: New Car* Wholesale— +0.4 Number Sold +2.5 Value.......... Retail— +2.2 Number Sold -0.2 Value.......... On Hand End of Monti.— -1.7 Number........ -0.9 Value....... Used Cars -4.6 Number Sold Salable on Hand— +8.1 Number........ +13.,5 Value....... ♦Average end of month. Class ok Trade +7.2 +29.5 +51.4 +78.3 18 18 + 1.1 -1.8 +29.7 +26.0 55 55 +96.8 +98.1 +52.2* +45.5* 55 55 +21.1 55 + 13.9* +15.0* 55 55 -6.9 +8.0 +22.6 Sales in Dollars........................ Sales in Board Feet.................. Accounts Outstanding1............. Retail Building Materials: Total Sales in Dollars............... Lumber Sales in Dollars........... Lumber Sales in Board Feet. . .. Accounts Outstanding1............. -8.7 -5.4 +0.2 -7.0 -31.6 +18.5 11 9 11 -15.3 -6.7 -18.7 +0.1 -5.9 -7.5 -19.9 -2.5 173 57 68 165 Ratio of Accounts Outstanding1 to dollar sales during month Wholesale Trade......................... Retail Trade............................... 1 End of Month. June 1934 May 1934 June 1933 191.2 382.7 174.2 323.6 149.2 372.3 Page 5 Inventories accumulated further by 9 per cent and to taled 40 per cent in excess of last year’s figure. Furniture A decline of 33 per cent from May was registered in new orders booked during June by furniture manufactur ers reporting to this bank, only part of which recession was seasonal, and which compared with one of only S per cent in the same period a year ago. Shipments con tinued for the second month to total in excess of new orders, declining, moreover, in slightly lower ratio from a month previous—27 per cent. As a consequence, the volume of unfilled orders outstanding, though decreasing 24 per cent in the month, was nevertheless, at the close of June, 10 points higher in the ratio to current orders, which ratio amounted to 86 per cent. Orders booked to taled 34 per cent less than a year ago, shipments were 13 per cent lower, and unfilled orders outstanding at the close of the month 16 per cent smaller. The rate of op erations averaged 3 per cent of capacity greater than a year ago, but was unchanged from the 49 per cent ob taining during May. Shoe Manufacturing, Tanning, and prospective price reductions are probably causing a post ponement of buying. June shipments from midwestern cement mills fell slightly below the preceding month and the year-ago volume, though production increased moderately in both comparisons. In the first six months of 1934, shipments exceeded the corresponding 1933 period by 40 per cent. Brick and tile operations were maintained at a fair level during June, with some producers reporting larger shipments than in May. Building Construction Residential contracts awarded in the Seventh Federal Reserve district during June amounting to only slightly more than 2 million dollars—or over a million dollars less than in the preceding month—were for the most part responsible for the further recession in total awards dur ing the month, which dropped 1J4 million dollars from May. Total contracts for the first six months of this year, however, were almost three times as large as in the corresponding period of 1933. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Hides Preliminary reports on June shoe production in the Seventh district indicate an output approximately as large as in the preceding month but lower than in the corre sponding month of 1933. The latest available production figures for May were 15 per cent under those reported for April and 5per cent smaller than in May last year. Until the moderate recession experienced in April, opera tions in this industry had been steadily rising since last December. Uncertainty regarding the ultimate effects of the government cattle-buying program disturbed the hide and leather markets. In the tanning industry, production and sales declined from May to June, and the trend in leather prices was definitely downward. Sales of packer green hides in the Chicago market also were smaller in June than in May, but price quotations about the middle of June showed a recovery of one cent from the low levels prevailing at the close of the preceding month. This ad vance, however, was again lost the second week in July when quotations dropped from one-half to one and onehalf cents on all items. Building Materials, Construction Work June operations of reporting lumber and building ma terials dealers in the Seventh district suffered a reaction from the upward trend recorded in the preceding month. The loss in dollar sales of retailers, amounting to 15 per cent, was more than seasonal and contrasted with an increase of 13 per cent for the same period last year. The accompanying recession of 6 per cent from a year ago was the first since September 1933. A non-seasonal loss was also reported by wholesale lumber yards, whose sales were lower than a year previous for the first time in fourteen months. The drouth caused a decided curtail ment in rural purchases of materials, while rumors of $20,634,426 -7% +62% $136,359,633 Change from same period 1933..................... +172% ♦Data furnished by F. W. Dodge Corporation. Change from May 1934................................... Change from June 1933................................... Commodity Groceries.............. Hardware............. Dry Goods........... Drugs.................... Electrical Supplies........... Net Sales Stocks +16.9 -1.2 -1.7 +4.4 +11.5 +37.1 +51.1 +11.4 +26.9 +25.7 Digitized Pagefor6 FRASER Accts. OUTSTAND. Collec tions Residential Contracts 12,575,177 -32% + 13% $14,764,590 +57% Building permits issued in the Seventh district during June likewise declined; the estimated cost of proposed construction in 102 cities fell off 17 per cent from May and increased but one per cent over June a year ago. In the number of permits issued in these same cities declines of 23 and 8 per cent, respectively, were registered. As compared with the preceding month, Indianapolis showed a gain of 196 per cent in estimated cost of permits and Milwaukee registered a 3 per cent increase, they being the only two of the five larger cities—Chicago, Detroit, Milwaukee, Indianapolis, and Des Moines—to differ from the trend of the district. Merchandising With the exception of groceries which showed some what greater than the usual June increase in sales over the preceding month, reporting groups of wholesale trade experienced recessions in business during June from May which were either contrary to trend, or, as in the case of the hardware trade, greater than seasonal. The expan sion of 9 per cent over a month previous in the grocery trade compared with one of Sy2 per cent in the 1924-33 average for the month, but declines of 7, 10, and 13 per cent, respectively, in the electrical supply, drug, and dry goods trades were in contrast to gains of 4, y2, and one per cent in the average for June, and the decrease of DEPARTMENT STORE TRADE IN JUNE 1934 WHOLESALE TRADE IN JUNE 1934 Per Cent Change From Same Month Last Year Total Contracts Period Locality Per Cent Change June 1934 From June 1933 Ratio of Per Cent Change June Col First Semester lections to 1934 From Same Accounts Period 1933 Outstanding End of May Ratio of Accts. Outstand Net ing to Sales Stocks End of Month Net Sales 1934 1933 Net Sales -3.8 -12.4 +22.7 +20.1 +23.2 + 14.1 89.4 200.2 242.7 199.0 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. +4.4 +24.7 +8.4 +6.3 + 11.3 +9.0 +21.7 +45.9 + 19.0 +17.0 +16.7 +42.8 +19.6 + 18.6 +29.1 36.0 42.4 40.8 37.4 32.7 30.4 32.6 38.1 30.8 28.4 +2.7 +61.9 153.5 7th District. + 10.3 +16.5 +24.4 37.9 31.5 -2.5 +2.8 \2y2 per cent in hardware compared with one of less than y2 per cent in the average. Furthermore, gains over last June in drugs and electrical supplies were smaller than in previous months this year, and dry goods and hardware recorded the first decline in the year-ago comparison since April 1933. As a consequence, the increases in cumulative sales for 1934 to date over the corresponding period last year were, for the most part, reduced rather sharply for the period ending June 30 from those indicated through the end of May; in the six months of this year grocery sales exceeded those of the first half of 1933 by 19 per cent, drugs by 27per cent, dry goods by 40 per cent, hardware by 43 per cent, and electrical supplies by 64 per cent. Ratios of accounts outstanding at the end of June to net sales during the month rose over those of the pre ceding month, except in groceries where the ratio dropped further. The recession of 9 per cent in June from May in Seventh district department store trade represented a somewhat heavier than seasonal decline, one of only S per cent being shown in the 1924-33 average for the month. The size of the decreases varied considerably among the several large cities and the smaller centers of the district, Chicago trade falling off only 4 per cent, while sales by Milwaukee stores declined 9 per cent, those of Detroit firms 11 per cent, and Indianapolis trade 13 per cent, with sales by stores in smaller centers showing a 15 per cent drop. The gain of 10 per cent recorded for district sales over last June was the smallest in the yearly comparison since last November, but trade in the first half of 1934 exceeded that of the same period in 1933 by almost 25 per cent. A seasonal decline in stocks be tween the end of May and June 30 brought them to a level only 16J4 per cent above that of a year ago, whereas a month previous they were 25 per cent larger in a similar comparison. Stock turnover in the first six months this year was 1.95 times, as compared with 1.87 times in the cumulative period last year. Sales of shoes by retail dealers and the shoe depart ments of department stores fell off sharply—25 per cent —in June from the preceding month, in contrast to an increase in the 1926-33 average for the period of 4 per cent but following an exceptionally favorable trade ex perienced in May. They continued to exceed those of a year ago, although the gain over last June amounted to only 2 per cent. In the first semester of 1934, sales to taled 26 per cent heavier than in the six months last year. The decline of 30 per cent in June from May in the retail furniture trade was somewhat more than seasonal for the month, and the increase of 6 per cent over the corresponding month last year was the smallest since the beginning of the current upward trend last May. Although installment sales by dealers dropped to a slightly greater extent from a month previous than did total sales, they showed a much larger gain—18 per cent—in the year-ago comparison. Chain store trade for June recorded little change from the preceding month in the aggregate for reporting groups, increases in drug, cigar, and men’s clothing chains being slightly more than offset by declines in five-and-ten-cent store sales, shoes, and musical instruments. Total sales, therefore, declined a little less than one per cent in the period. As compared with last June, all groups except musical instruments experienced gains, and sales totaled 12 per cent in excess of that month. Data covering the first half of 1934 showed an increase of 18 per cent in aggregate sales of reporting groups over the corresponding period of 1933. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO : unit or dollar volume for the months indicated, using the monthly average for 1923-1924-1925 as a hasp nnln. st month shown are partly estimated on basis of returns received to date, revisions will be given the following Reserve district unless otherwise noted.) 8 No. of June May Apr. Mar. Feb. Jan. June May Apr. Mar. Feb. Jan. Firms 1934 1934 1934 1934 1934 1934 1933 1933 1933 1933 1933 1933 _, _ . Meat Packing—(U. S.)— Sales (in dollars)....................................... 62 Casting Foundries— Shipments: Steel—In Dollars................................. 12 In Tons...................................... 12 Malleable—In Dollars....................... 21 In Tons............................ 21 Stoves and Furnaces— Shipments (in dollars)............................ 10 Furniture— Orders (in dollars)................................... 14 Shipments (in dollars)............................ 14 Flour— Production (in bbls.)............................... 21 Output of Butter by Creameries— Production.................................................. 67 Sales............................................................. 69 Wholesale Trade— Net Sales (in dollars): Groceries................................. 28 Hardware................................................ 11 Dry Goods............................................. 9 Drugs....................................................... 13 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................... 25 Detroit................................................... 5 Indianapolis.......................................... 4 Milwaukee............................................. 5 Other Cities.......................................... 43 Seventh District—Unadjusted........ 82 Adjusted............. 82 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.)*. . .. 69 68 62 63 63 60 56 56 48 45 44 46 41 44 32 48 44 47 41 62 31 31 38 58 28 28 36 58 22 21 28 44 21 21 23 38 18 19 21 37 12 13 16 29 10 10 12 22 11 12 10 16 10 11 11 20 12 12 11 20 94 108 84 82 63 45 58 54 44 38 35 22 20 25 29 33 25 23 31 24 28 29 35 21 30 28 32 27 24 23 19 20 24 20 25 19 98 101 92 106 107 121 120 108 114 110 91 103 128 113 120 114 85 90 80 92 72 93 78 93 139 132 135 113 94 87 93 96 85 91 93 89 83 61 38 59 76 70 44 66 64 60 40 64 68 52 42 71 62 39 34 64 64 38 37 70 70 61 39 58 63 54 34 54 55 39 26 49 58 28 23 49 51 22 21 49 51 22 25 58 68 85 71 68 64 70 72 71 93 81 74 75 77 75 63 91 78 82 65 71 72 66 92 84 71 73 73 75 54 67 56 58 53 57 72 54 58 62 58 52 55 69 66 66 65 63 58 64 65 64 74 73 68 60 66 65 57 65 70 70 57 61 57 56 45 52 51 44 51 56 44 40 47 46 38 43 55 45 48 54 47 40 46 57 90 123 94 154 99 174 94 150 64 117 39 115 71 112 62 90 51 71 33 47 31 41 38 50 9 30 13 32 10 36 8 37 6 24 4 40 8 19 10 15 5 10 5 12 2 6 3 12 66 66 87 68 67 93 54 59 87 49 53 77 39 46 68 34 40 55 45 43 74 31 29 55 18 21 40 18 18 25 21 20 34 19 19 29 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) NDUSTRIAL production, which had increased during each of the six months from December to May, declined in June by somewhat more than the usual seasonal amount. Factory employment and payrolls also showed decreases which were partly of a seasonal nature. The general level of wholesale commodity prices advanced during June and showed little change during the first three weeks of July. I Production Index number of industrial production, adjusted for seasonal variation. (1923-1925 average = 100.) PER CENT 120 PE? CENT FACTORY EMPLOYMENT and Employment Volume of industrial output, as measured by the Board’s seasonally adjusted index, decreased from 86 per cent of the 1923-25 average in May to 84 per cent in June, reflecting chiefly a sharp reduction in activity at cotton textile mills. Production at lumber mills and at coal mines also showed a decline. In the steel and automobile industries, activity decreased in June by an amount somewhat smaller than is usual at this season. Maintenance of activity at steel mills in June reflected in part the accumulation of stocks by consumers, according to trade reports, and at the beginning of July output of steel showed a sharp decline. Employment at factories decreased somewhat between the middle of May and the middle of June, reflecting reductions in working forces in industries producing textile fabrics, wearing apparel, leather products, automobiles, and lumber, offset in part by increases in employment at steel mills and at meat-packing establishments. tto too 90 to 70 60 SO Federal Reserve Board’s index of factory employment, adjusted for seasonal variation. (1923-1925 average = 100.) Value of construction contracts awarded, which had shown little change during May and June, showed an increase in the first half of July, according to the F. W. Dodge Corporation. Department of Agriculture estimates, based on July 1 conditions, indicated a wheat crop of 484,000,000 bushels, compared with an average of 886,000,000 bushels for the five years 1927-1931, and a corn crop of 2,113,000,000 bushels, compared with the five-year average of 2,516,000,000 bushels. Crops of other grains, hay, and tobacco were also estimated to be considerably smaller than usual. The acreage of cotton under cultivation was estimated at 28,000,000 acres, about 2,000,000 less than the acreage harvested last season. In the first three weeks of July drought conditions prevailed over wide areas, particularly in the southwest. Distribution WHOLESALE PRICES The number of freight cars loaded per working day showed a further slight increase in June, followed by a decline in the first half of July. Sales by department stores decreased in June by more than the estimated seasonal amount. Wholesale Commodity Prices Farm Products Indexes of the United States Bureau of Labor Sta tistics. By months 1929 to 1931; by weeks 1932 to date. (1926 = 100.) Wholesale prices of farm products and foods generally advanced during June, while other commodities as a group showed a slight decline. Hog prices increased considerably in the middle of the month, while wheat declined throughout the month. In the middle of July wheat prices advanced rapidly to levels above those reached at the end of May, and there was a considerable advance in cotton, while lumber prices declined and finished steel prices were reduced somewhat from the advanced quotations previously announced. Bank Credit BILLIONS MEMBER BANK CRE0IT U. 5. Govt 5ecunti« Loans on Securities Wednesday figures for reporting member banks in 91 leading cities. Latest figures are for July 18, 1934. Page 8 Between June 13 and July 18 member bank reserves increased to a new high level of nearly $4,000,000,000, about $1,850,000,000 in excess of legal requirements. The growth reflected chiefly a further increase in the monetary gold stock. A seasonal increase in demand for currency over the July Fourth holiday period was followed by an approximately equal seasonal return flow during the succeeding two weeks. The volume of reserve bank credit outstanding showed little change. At reporting member banks there was a growth of United States Government deposits during the five-week period, reflecting chiefly the purchase in June of new issues of Government securities by the banks. Bankers’ balances also increased, but deposits of individuals, firms, and corporations have shown little change. Loans declined somewhat, reflecting a decrease in loans to customers, while loans to brokers showed an increase. Money rates remained practically unchanged at the low levels prevailing in June.
@FedFRASER