The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
<\i| IK>^| kXWXVNvN &££SVXV*^ 5 ^'-; sss^^e; zgm uz&m «S, VT^ £/-<?*■ =WCt-r>**SS: BHaBSgS ^g?yg ispasii; SS?® > -NWW -X\\vJd k\\v\w | wS •.. Kvaivi, UkfUJjH! a—wBaaaaia»Biw &&ZKp :«s*m it . '& lUiHi Hi psiySS * \a\v\,v\ vnWvV sN v*\ »%««»'«< vswsSs&il i PH iKSSSs gv\mww»K»w ■ ■ .-. : WAWnwWKl 3 DO? - ■■■■■I SRJSSi! WES” ISi^ 'anAVH iVVnNVXC* t-?X*SW • E» ;^hkskh l&g Volume 21, No. 6 vv&v® yXsSX; June 29, 1938 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business C onditions in the Seventh Federal Reserve District DISTRICT SUMMARY in the 1937 month; with the exception of Wisconsin cheese, sales tonnages likewise increased in these comparisons. The movement of wheat rose seasonally and was the largest for a low level, the distribution of commodities was relatively May in five years; there was an exceptionally large move small, and employment and payroll volumes showed further ment of corn; and oats receipts and shipments increased. losses. Building construction furnished the most marked For the most part, favorable crop conditions prevailed in the exception to the unfavorable factors, expansion in this third week of June. The planting of corn was practically industry being mainly due to increased public works and completed at that time, but growth of the crop was behind utilities construction. Also, production of foodstuffs was normal. Trade heavier this May than in the 1937 month. N THE majority of reporting wholesale trade groups of Industry the Seventh district, sales during May totaled less than UTPUT from district steel mills continued at a low in the preceding month, and decreases from a year ago level through the middle of June and demand remained remained large. The department store and retail shoe trades light. Production of steel and malleable castings was cur had smaller sales than in April, while sales of furniture tailed in May and shipments declined slightly, as new and housefurnishings at retail showed a less than seasonal business failed to improve. At stove and furnace factories, increase. In all of these retail trade groups, sales declines activity expanded somewhat during May but was well below from the corresponding 1937 period were heavy. Stocks on a year ago. Some further slowing-down was apparent in hand at the end of May were noticeably lighter than last the manufacture of automobiles. Shipments from furniture year at the same time, in both wholesale and retail lines. factories declined more than seasonally in May, and new Credit orders expanded less than is usual. There was only a small decrease, however, in output from district paper mills; NOTHER new high was established on June 15 for furthermore, orders booked gained somewhat over those l member bank reserve balances in this district, due received in April and were slightly greater in dollar amount mainly to an inflow of commercial and financial funds from than in May last year. The volume of Seventh district other districts. Total loans and investments of reporting building construction, as reflected by contracts awarded, member banks declined slightly further in the four weeks was the heaviest since last July and much above a year ago, ended June 15, as reductions in loans and in holdings of but the movement of building materials was only fair. United States Government direct obligations more than coun Seventh district industrial employment and payrolls declined teracted increases in holdings of obligations fully guaranteed further in May, the heaviest losses being shown in the by the Government and those of other securities. Demand durable goods groups. deposits in these banks were noticeably larger than four weeks earlier, and time deposits were up slightly. There Agricultural Products was a continued decline during May in new financing HE production of packing-house commodities and of through bankers’ acceptances, but a slight increase took place dairy products expanded in May and was greater than in dealer sales of commercial paper. RENDS in Seventh district industrial and trade activity recorded little change in May from those prevailing T during recent months. Output of manufactures remained at O I A T Chicago banks, after rising somewhat between mid-April and May 15, eased off to about the same extent in the MayJune period. Average rates earned in May on total loans Member Bank Reserves and discounts by the larger downtown banks in Chicago and WING almost entirely to a heavy inflow of commercial by the major Detroit banks both exceeded the April aver and financial funds from other districts, Seventh dis ages, the Chicago group showing the greater increase. How trict member bank reserve balances again reached a new ever, the rates of earnings in each group averaged lower record high of over 1,343 million dollars on June 15. The than in May 1937, with the Detroit divergence being the increase in reserves during the four-week period ended June more noticeable. 15 amounted to 129 millions, and the gain in inter-district funds—partially the result of recent corporate financing— Open Market Paper came to nearly 113 millions. A decrease in currency circula CCEPTING banks in the Seventh district reported a tion, an excess of Treasury disbursements over receipts, and l contra-seasonal decrease of 12 per cent in new financing an increase in Reserve bank credit extended had a com during May as compared with April. Bank holdings of paratively minor effect on reserve balances. acceptances and liability for outstandings at the end of May both showed 6 per cent drops from April 30, contrary Interest Rates to the normal trend in the former case and about what is HE large Chicago and Detroit banks reported only slight expected in the latter. The decline in the volume of holdings variations in their interest rates charged between May 15 was due primarily to reduced purchases of bills; maturities and the middle of June. Customers’ rates of the outlyingin May were smaller than in April. All of these items Credit and Finance O A T continued to be far below a year ago, except for maturities Selected Seventh District Banking Data of which there was an exceptionally light volume in May 1937. Declines from the 1928-37 averages widened to around 80 per cent. Acceptances made in June, up to the fifteenth of the month, by several of the large Chicago banks were FEDERAL RESERVE BANE OF CHICAGO, SELECTED ITEMS slightly below the corresponding total for the first half of OF CONDITION May but nominally higher than a year ago. (Amounts in millions) Change from Commercial paper sales of reporting dealers in the Middle June 15 May 18 June 16 1938 1938 1937 West ran 3 per cent higher in May than during April, Total bills and securities..................................... $ 278 $ 0 $ -2 though 25 and 27 per cent below May 1937 and the 1928-37 Bills discounted..................................................... 0 0 0 bought............................................................. 0 0 0 average for the month, respectively. Outstandings declined Bills U. S. Government securities................................ 277 0 —1 reserves.......................................................... 2,198 +102 +386 for the third successive month, the April-May drop amount Total Member bank reserve deposits.......................... 1,343 +129 +336 ing to 8 per cent; decreases were also shown from May 29, All other deposits................................................... 142 —20 +59 Federal Reserve notes in circulation.................. 957 —6 —10 1937, and from the 1928-37 average, amounting to 19 and Ratio of total reserves to deposit and Federal Reserve note liabilities combined, 89.9% +0.3* +1.8* 8 per cent, in that order. Rates continued soft; borrowing on commercial paper was somewhat reduced; and demand •Number of Points. n from the banks, especially the smaller institutions, was off very slightly, though relatively much better than the supply. Preliminary figures from Chicago dealers indicate that the CONDITION OF REPORTING MEMBER BANKS volume of paper sold in the first half of June fell below SEVENTH DISTRICT (Amounts in millions) that for the same period of May by over 40 per cent and Change from was only about one third of the corresponding year-ago June 15 May 18 June 16 total. Demand continued excellent, but inability to obtain 1938 1938 1937 Assets Loans and investments—total...................................... $2,841 $ —6 $—220 sufficient paper restricted dealer sales. The bulk sold at % Loans—total..................................................................... 848 —3 —128 per cent, with some prime short-term paper going at % Commercial, industrial, and agricultural loans: On securities................................................................. 37 —2 —13 Otherwise secured and unsecured............................ per cent. 447 —21 —86 Open-market paper......................................................... 34 —4 —16 Securities Markets Loans to brokers and dealers in securities................ 36 +6 —17 Other loans for purchasing or carrying securities... 78 +2 —18 HE main feature of interest in the Midwest bond market Real estate loans............................................................. 90 +1 +9 Loans to banks................................................................ 5 0 —2 during May and early June, in common with the rest Other loans: securities................................................................. 45 +2 —1 of the country, was the increased volume of new issues. On Otherwise secured and unsecured............................ 76 +13 +16 Municipal emissions for May were higher than a month U. S. Government direct obligations........................ 1,350 —22 —128 Obligations fully guaranteed by previous and above the total for May 1937. Corporates U. S. Government...................................................... 204 +11 +31 439 +8 +5 suffered in the same comparisons, but two large issues in Other securities............................................................... Liabilities Demand deposits—adjusted*....................................... 2,225 +96 —47 early June were in themselves about three times as great as Time deposits.................................................................. 877 +5 +16 the entire May volume. One, the $100,000,000 United States Borrowings....................................................................... 0 0 0 Steel Corporation offering, was the largest strictly industrial *The annual velocity of demand deposits (unadjusted) in the four weeks ended 15 was 20.40 times, as compared with 19.51 times in the preceding four weeks issue since 1929. These bonds were readily absorbed, mainly June and with 22.67 times in the corresponding period of 1937. by banks and institutions. There seemed to be some willing ness on the part of banks to accept bonds of somewhat longer maturities than has been their policy heretofore. The success of these large issues led to some increase in VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT registrations of additional corporate offerings. Both corpo (Amounts in millions) rate and municipal prices stood up well; although there Per Cent of Increase was some decline in the former, the loss was recovered in or Decrease from May April May early June. Rails, which are excluded from the above 1938 1938 1937 Chicago.................................. ......................................... $2,403 —8.2 —17.7 generalizations, remained dull. Detroit................................... ......................................... 699 +0.8 —34.6 Milwaukee............................ ......................................... 223 —10.6 —18.9 Discount rates on Treasury bills continued nominal, the Indianapolis.......................... ......................................... 167 —5.3 —17.6 91-day issue dated June 22 selling at an average of .016 Total four larger cities....... ......................................... $3,492 —6.5 —21.8 per cent. The longer-term financing in mid-June was en 37 smaller cities................... ......................................... 667 —5.6 —17.7 tirely a refunding operation. Chicago stock prices, as re Total 41 centers................... ......................................... $4,159 —6.4 —21.2 flected by the Chicago Journal of Commerce average of 20 stocks, showed little change between the latter part of May and June 15. On that date the average stood at $33.78, but then rose in the next week to $37.42 by June 22. TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK T OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) Agricultural Products Crop Conditions ROP conditions in the Seventh Federal Reserve district were for the most part favorable on June 21. The prospective yield of small grains ranged from average good, with wheat being harvested in the south, rye ap proaching harvest, and much of the oats and barley begin- C Page 2 May 1938 Total country and city check clearings: Pieces................................................................................. 10,700,728 Amount..............................................................................$1,780,153,243 Daily average clearings: Total items cleared— Pieces................................................................................. 428,029 Amount............................................................................. $71,206,130 Items drawn on Chicago— 71,996 to Pieces................................................................................. Amount............................................................................. $38,533,000 Items drawn on Detroit— Pieces................................................................................. 16,159 Amount............................................................................. $6,582,465 May 1937 10,449,645 $2,157,662,895 417,986 $86,306,516 66,350 $44,164,000 20,404 $11,301,476 ning to turn color. However, some deterioration had taken place since June 1, especially in winter wheat; red rust had appeared in several localities and black rust had been identi fied in a few. Furthermore, rank growth and tangled condition of the straw seemed likely to preclude most effi cient utilization of binders and combines in many areas. Corn planting was practically completed by June 21. Growth of the crop showed wide variation and was behind normal; the bulk of late varieties was only a little above ground, but the earliest varieties averaged fully a foot high. Despite delays occasioned by frequent and heavy rains, most corn had been cultivated at least twice by June 21; soybean seeding was 80 per cent finished. Early potatoes were in blossom and the planting of late potatoes was about com pleted. Pastures and meadows remained luxuriant. A con siderable tonnage of alfalfa and clover had been cut; yields appeared heavy but dry weather was needed to prevent deterioration in windrows. On the basis of June 1 condition, a local statistician estimates that the five States which include the Seventh Federal Reserve district will produce 509,154,000 bushels of oats in 1938 as against 580,788,000 bushels in 1937 and 473,417,000 bushels in the 1927-36 average. Commercial forecasts of the United States oats crop average 1,146,000,000 bushels, which equals the year-ago level and is 10 per cent above the average for 1927-36. The unofficial estimates also indicate that the United States crop of spring wheat will be around 267,000,000 bushels, a gain of 41 per cent over 1937 and of 29 per cent over the ten-year average. The Federal Reserve Bank of Chicago made no inde pendent survey of the spring pig crop in 1938; however, reports from other sources indicate an increase over a year ago of more than 10 per cent each in the Seventh Federal Reserve district and in the corn belt as a whole. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of June 1 condition (In thousands of bushels, unless otherwise specified) Five States Including Seventh District United States Forecast Final 1927-36 Forecast Final 1927-36 1938 1937 Average 1938 1937 Average Winter wheat. .107,232 115,080 81,763 760,623 685,102 546,396 Rye..................... 10,484 13,632 7,221 55,138 49,449 36,454 Peaches.............. 2,819 (a) 5.258(a) 3.312(a) 50,920 59,724 52,498 Pears----- _.......... 1.786(a) 3.153(a) 1.771(a) 29,876 29,548 24,326 Strawberries*. . 1,092 1,754 1,134 12,061 11,951 11,489 Cherries**......... 24(b) 49(b) 34(b) 130(c) 145(c) 116(c) *In thousands of crates containing 24 quarts and on the basis of May 24 condition. **In thousands of tons. (a) Michigan, Illinois, Indiana, and Iowa, (b) Michigan and Wisconsin, (c) Twelve principal producing States. cause of somewhat more favorable weather and yields in the winter wheat areas. Though continuing well in excess of 1937 stocks, visible supplies of wheat fell off one fourth in the four weeks ended June 18, and on that date totaled 72 per cent less than the ten-year average. Corn and Oats HERE was again an exceptionally large movement of corn during May at interior centers of accumulation. Exports for the month were in excellent volume. Chiefly influenced by heaviness in surrounding markets and dimin ished export sales, prices of No. 2 yellow corn for imme diate delivery at Chicago softened considerably in late May, ending the month at $.53% and $.55%; but coincident with the rally in wheat, excessive rainfall in the corn belt during the first half of June, and lightened country marketings, these prices had recovered to $.58% and $.59% by June 22. Visible supplies of corn on June 18 were 26 per cent lower than a month earlier but four times greater than last year and 39 per cent over the 1928-37 average. Seasonal expansion over April was shown in the May oats movement. Visible supplies declined substantially from mid-May to mid-June, and price levels were mainly influenced by the action of other grains, notably wheat. T MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) May May April May 1928-37 1938 1938 1937 Av. Wheat: Receipts.. 14,562 11,063 7,365 17,175 Shipments 17,376 14,052 10,125 18,053 Corn: Receipts. . 31,204 29,532 9,264 14,145 Shipments 38,213 24,084 13,434 4,092 Oats: Receipts.. 5,195 4,313 4,698 7,775 Shipments 10,469 8,553 9,412 9,365 Movement of Livestock ORE than seasonal expansion was recorded during May in marketings of livestock at public stockyards in the MUnited States, and cattle and lamb volumes rose above the 1928-37 average for the month. Seasonal increases were shown in the movement to inspected slaughter—inclusive of animals that did not pass through public stockyards—except for calf slaughter, which declined fractionally. The May hog slaughter totaled 23 per cent higher than in May 1937, but for the fourth consecutive month was one fourth below the ten-year average for the month; other livestock slaughter remained in excess of this average. Shipments of lambs to feed lots during May were exceptionally heavy. Grain Marketing Wheat HE May movement of wheat at interior primary markets LIVESTOCK SLAUGHTER in the United States expanded seasonally over April and (In thousands) was the largest for the month since 1933, though below the Lambs and Yards in Seventh District, Cattle Hogs Sheep 1928-37 average for May. Exports of the grain were in May 1938................................................. ......... 188 477 247 Inspected Slaughter, greater volume than during April but not up to the level Federally United States: for the first quarter of the year. Continued prospects for a May 1938................................................. .......... 772 2,585 1,550 April 1938................................................ ......... 749 2,462 1,425 bumper domestic crop carried wheat prices to new low levels May 1937................................................. .......... 745 2,099 1,371 in the latter half of May, quotations for No. 2 hard winter wheat in cash positions at Chicago declining 16 to 20 cents AVERAGE PRICES OP LIVESTOCK over the period. However, in the first part of June dis (Per hundred pounds at Chicago) appointing yields in the Southwest together with the prob Week Ended Months of June 18 May April ability of rust damage in the major producing areas of the 1938 1938 1938 Native Beef Steers (average)............ ............. $9.45 $8.75 $8.65 United States generated substantial price recoveries, these Fat Cows and Heifers......................... ............. 7.70 7.40 7.50 quotations standing at $.87 and $.91 on June 15; but by Calves..................................................... ............. 8.40 8.90 8.85 Hogs (bulk of sales)............................. ............. 8.60 8.20 8.40 June 22 they had softened to $.821/2 and $.86%, chiefly be Lambs..................................................... ............. 8.90 7.85 8.45 T Calves 88 500 502 561 May 1937 $11.20 8.55 9.25 10.80 10.85 Page 3 tories and the 1933-37 average for the date. After earlier declines, butter prices at Chicago held steady in the latter CTIVITY at slaughtering establishments in the United half of May; quotations softened somewhat in the first i- States increased during May. The production of pack week of June but had completely recovered by June 22, ing-house commodities rose 5 per cent over April to a level mainly owing to extensive Government purchases. 17 per cent higher than a year ago, but was 10 per cent The manufacture of American cheese in Wisconsin in below the 1928-37 May average. Though remaining 8 per cent lighter than the ten-year average for the month, the creased 28 per cent in May over April, totaled 33 per cent tonnage sold during May not only increased 4 per cent over greater than in the same month of 1937, and was 21 per more than the 1928-37 May average. Tonnage distri April and over a year earlier, but continued more than cent bution of cheese from Wisconsin primary markets, however, seasonally in excess of current production. The general price level of packing-house commodities advanced some declined in all of these comparisons, aggregating 23, 17, what in May over April despite easier quotations for lard, and 10 per cent, respectively, less than a month earlier, a lamb, and a few pork cuts; it was, however, much lower year ago, and the ten-year average for the period. United inventories of cheese rose 15 million pounds in May than for last May. Dollar sales billed to domestic and States and by June 1 the excess over the 1933-37 average had foreign customers in May totaled 6 per cent greater than in April, and were one per cent larger than the 1928-37 almost doubled to 25 million pounds. Cheese prices held steady until late May, and after a slight downward adjust average for the period but 13 per cent less than in the ment remained unchanged through the first three weeks corresponding 1937 month. As a consequence of the fore of June. going trends, payrolls in the industry recorded increases at the close of the period over April, of one per cent in number of employes, 3 per cent in hours, and 2 per cent in wage Industrial Employment Conditions payments. The margin of decrease from a year ago nar URTHER losses in employment and payrolls were indi rowed during the month to 8 per cent each in hours worked cated by May reports from Seventh district industries. and wage payments, and to 9 per cent in employment. In The number of workers employed and their aggregate com ventories of packing-house commodities in the United States fell off more than seasonally on June 1 from the beginning pensation were lower than a month earlier, and declines of May, and were 20 per cent lighter than the 1933-37 from a year ago continued to show an appreciable widening. average for the date. Production remained above a year ago Losses in the latter comparison amounted to 28 per cent in employment and 39 per cent in wage payments, the result through the first half of June. of a movement which except for last October has been almost steadily downward for the past twelve months. The AprilForeign Trade to-May decline was heavier in durable than non-durable HIPMENTS of packing-house commodities for export goods and, contrary to the trend a month earlier, affected gained in May over April, largely owing to the summer non-manufacturing as well as manufacturing industries. A reduction in inland and ocean rates. In British markets,marked deviation from the general decline was furnished United States lard moved freely, the bacon trade improved, and there was a good demand for hams. Czechoslovakia con by the stone-clay-and-glass products group within which practically all of the industries represented, especially the tinued to purchase fair quantities of lard and dry salt manufacture of cement, registered substantial expansion. meats, sales to Cuba and Porto Rico increased, and Europe The food products group also showed appreciable gains in bought moderate amounts of oleo oils. Quotations for United States packing-house commodities in Czechoslovakia and for meats in the United Kingdom were close to the Chicago EMPLOYMENT AND EARNINGS SEVENTH FEDERAL RESERVE DISTRICT parity; prices in other foreign markets and those of lard in England were somewhat under the United States basis. Change from Week of May 15, 1938 April 15, 1938 Inventories of United States animal products in foreign markets—inclusive of stocks in transit—increased on June 1 Wage Earn Earn Wage Report ings Earn Earn ings Industrial Group ing over a month earlier. United States imports of animal prod (000 Firms ers ers ucts declined in May from the relatively high level of April. Omitted) Meat Packing A F S No. No. $ % % —3.3 —5.6 +6.3 —2.2 —3.8 —4.5 —7 9 +9.9 —3.3 —5.4 —4.6 +1.0 —0.9 —0.8 —1.2 —3.5 -1.7 —7.5 +2.1 +0.2 —3.1 —14.4 —4.2 —2.1 —3.1 —4.5 —4.1 —0.1 +0.3 +15.6 —2.1 —0.2 +5.3 +13.6 Durable Goods: Dairy Products 8,767 Metals and Products1........... 1,797 354,801 230,164 6,532 Vehicles................................... 434 19,883 472 Stone, Clay, and Glass....... 282 ONTINUED excellent pasturage during May effected 37,569 725 Wood Products...................... 482 seasonal expansion over the high April levels in butter 642,417 16,496 2,995 Total........................................ and cheese manufacture. Creamery butter production byNon-Durable Goods: Textiles and Products.......... 408 58,609 961 Seventh district plants was the largest for any month since 2,668 101,056 Food and Products............... 1,053 July 1935, aggregating 49 per cent greater than in April, 33,339 1,019 Chemical Products............... 300 20,205 373 168 Leather Products.................. 15 per cent more than in May 1937, and one per cent above 232 34 12,602 Rubber Products.................. 71,828 1,947 Paper and Printing................ 750 the 1928-37 average for the month. Similar trends were 297,639 7,200 2,713 Total........................................ shown for butter make in the United States, except that not 23,696 940,056 so heavy an increase was recorded over April. Seventh Total Mfg., 10 Groups.............. 5,708 131,482 2,913 Merchandising2.......................... 5,498 district butter sales likewise expanded considerably, exceed Public Utilities.......................... 1,126 3,590 107,341 ing the April, year-earlier, and May average levels by 26,12, Coal Mining................................ 73 3,091 25 767 295 10,686 Construction............................... and 6 per cent, respectively. Total United States stocks of 252,600 6,871 creamery butter on June 1 were 35 million pounds larger Total Non-Mfg., 4 Groups....... 7,416 than a month previous—a much greater than seasonal expan Total, 14 Groups........................ 13,124 1,192,656 30,567 1Other than Vehicles. Illinois, Indiana, and Wisconsin. sion—and stood also heavily in excess of year-ago inven C Page 4 —1.7 —0.4 —2.8 —3.6 * both employment and payrolls, the first recorded in the monthly comparison since last September. Most of the major manufacturing industries had somewhat heavier de clines in wage payments than in volume of employment during the current month, which trend was the reverse of that shown during the preceding period. Under the non-manufacturing classification, the construc tion industries continued to improve seasonally, and coal mining showed a moderate gain in wage payments, though little change in employment volume. Merchandising con cerns, however, laid off about as many workers as had been added a month earlier, which was mainly instrumental in reducing the aggregate for the non-manufacturing classifi cation. At stove and furnace factories of the district, shipments rose 4 per cent, production expanded 8 per cent, and new orders accepted increased 81 per cent in the aggregate for May over a month earlier, the large gain in this last item being due to advance orders placed for the season with a few firms. Shipments and production were 38 and 47 per cent lighter, respectively, than in May 1937, but new orders showed a decline of only 12 per cent because of increases recorded in the comparison by a minority of the reporting companies. Little change took place in inventory volumes between April 30 and the end of May. Automobile Production and Distribution OME further slowing-down was apparent during May in the production of automobiles. Output of passenger cars Petroleum Refining in the United States amounted to 154,958 units, which number is 12 per cent lower than that of the preceding ETROLEUM refineries in the Indiana, Illinois, and Ken month, while trucks produced numbered 37,110, or 14 per tucky area were operating at 82^ per cent of capacity cent less than in April. As compared with May last year, in the week ended June 11, the rate having shown a fairlycurrent production of passenger vehicles and trucks totaled steady decrease from the 90 per cent of capacity reached 64 and 59 per cent smaller, respectively. four weeks earlier. The daily average of crude runs to Sales of new automobiles in the Seventh district fell off stills in this area for the entire month of May was a fraction rather noticeably in May, at both wholesale and retail, and of one per cent higher than in April but about 7 per cent margins of decline from the corresponding 1937 month lower than a year ago. The decline in this latter comparison has widened slightly since it first became evident two months widened somewhat. Dealer stocks, however, continued to diminish and at the end of May totaled but slightly heavier previous. Crude runs to stills in the United States as a than year ago at the same time, with a number of reporting whole also showed little change in the daily average for firmsa having lighter stocks in this comparison. Used-car May from a month earlier, while as compared with last sales numbered a little greater in May than a month previ year a loss of one per cent reversed a trend that had ous, but were much smaller than in May 1937. The number previously been favorable. of salable used cars on hand May 31 was somewhat less than either a month earlier or on the corresponding 1937 Manufacturing date. Iron and Steel Products DISTRIBUTION OF AUTOMOBILES SEVENTH FEDERAL RESERVE DISTRICT HE trend of activity in the steel and allied industries of this district remains, for the most part, essentially May 1938 Per Cent Change from unchanged, with demand continuing light, output at a low Companies Included level, and little prospect for material improvement in the May April near future. Steel ingot production of Chicago district mills 1937 1938 averaged only 24^> per cent of capacity in the third week New Cars: of June, as compared with 29 per cent a month previous and Wholesale— 13 —70.9 —22.0 with 64 per cent a year ago at the same time when strikes 13 —67.2 —20.3 Retail— at independent mills had curtailed output rather sharply. 28 —50.8 —20.4 28 —45 5 —22.7 Pig iron production in the Illinois and Indiana district re On Hand End of Month— ceded in May from April and was only about 35 per cent 28 + 0.6 —12.9 28 +11.0 —10.5 of the May 1937 level. Scrap iron and steel prices declined Used Cars: 28 —34.1 + 1-4 in the first week of June. Salable on Hand— 28 — 8 5 New business booked by reporting steel and malleable — 6.9 28 + 0.0 —3.4 Value....................................................... casting foundries of the Seventh district recorded a further falling-off in May, although the decline in orders for steel Furniture castings was much less sharp than a month previous, ANUFACTURERS of furniture in the Seventh district totaling 10 per cent in tonnage volume and 14 per cent in booked orders during May that totaled 7 per cent dollar value; while the decreases at malleable casting found heavier than the volume of the preceding month. The ries amounted to 15 per cent in each unit of measurement. Tonnage shipments of steel castings decreased by one per 1928-37 May average shows an increase of 13 per cent for cent from the preceding month, and their dollar value was the period. Shipments fell off 15 per cent from April, as 4 per cent smaller; shipments of malleable castings de compared with a decline of but 8 per cent in the average. clined 3 per cent in tonnage and one per cent in value Decreases from a year ago amounted to 36 per cent in orders from April. Production of steel castings was curtailed 13 and to 42 per cent in shipments, with both items about 20 per cent in May, and that of malleable castings 9 per cent. per cent below the ten-year average for May. Because Declines from a year ago remained very large in all phases shipments totaled smaller than new business and cancella of foundry activity, ranging from 70 to above 80 per cent tions were relatively light, unfilled orders at the end of May at steel casting foundries and around 60 to 70 per cent at exceeded those of a month earlier by 13 per cent and their ratio to orders received rose from 82 per cent in April to 87 malleable casting foundries. S P " T M 4 Page 5 per cent. However, this latter percentage compared with 116 per cent last May and the aggregate of orders on hand was 52 per cent less than at that time. The level of manu facturing operations remained the same in May as in April, at around 50 per cent of capacity, and was 30 points under that of a year ago. Paper and Pulp A FURTHER gain was registered during May in orders -A*- booked at Seventh district pulp and paper mills and the comparison with 1937 became much more favorable. However, output of both paper and pulp continued to trend downward. Pulp mills operated at 78 per cent of capacity during May and paper plants at 74 per cent; in the same 1937 period the paper and pulp industry was running at practically 100 per cent capacity. PAPER AND PULP INDUSTRY SEVENTH DISTRICT May 1938 Per Cent of Increase or Decrease from April May raptu; New orders booked (tons).................................................................. +3.9 New orders booked (dollars)...................................................... ’ ’ ’ +4.6 Total shipments (tons)......................................................................... ....39 Total shipments (dollars)....................................... . — 2 4 Total production (tons)..................................................................... .* —4 2 Stocks on hand at end of month (tons)............................................ + 5.1 Pulp: Pulp produced (tons)............................................................................ Stock on hand at end of month (tons)............................................. —5 4 + 0.4 been about as great as in the 1928-37 average. Retail dis tribution of the material increased seasonally in May, and the expansion for the year so far has been only slightly under the average. Total sales at reporting retail yards, on the other hand, have recorded a less favorable trend than usual this year, and in May registered a 4 per cent rise from a month earlier, as against an average April to May increase of 9 per cent. In the comparison with a year ago, the wholesale distribution of lumber showed a somewhat wider margin of decline in May than was the case a month earlier, while at retail the decreases were practically the same as in April. Outstanding accounts at the end of May were heavier in ratio to sales for both wholesale and retail dealers than either a month or a year previous. Cement shipments were affected by frequent rains during a large part of May and showed considerably less than the 50 per cent gain over April that is usual for the period. Brick deliveries in the Chicago district were delayed by strike conditions and were under those of a month earlier and the same month of 1937. __2 0 +2.1 _26 2 _26 0 —28 2 +42.2 —25.0 +67.3 The Building Industry Wholesale Lumber: Sales in Dollars....................................... Sales in Board Feet............................ Accounts Outstanding1............................ Retail Building Materials: Total Sales in Dollars............................. Lumber Sales in Dollars........................ Lumber Sales in Board Feet................. Accounts Outstanding1............................ May 1938 Per Cent Change from April 1938 May 1937 —11.0 —14.8 — 6.9 —48.7 —51.2 —35.0 * ¥ LUMBER AND BUILDING MATERIALS TRADE Class of Trade * Number of Yards 9 7 8 Construction + 4.4 —18.8 176 +12.8 —24.2 94 ONTRACTS awarded during May in the Seventh district +11.3 —19.3 108 were the highest since last July and, for the first time + 6.1 —13.1 174 this year, considerably in excess of the corresponding 1937 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month volume. Residential building, which comprised nearly one fourth of the total awards, shared to a moderate degree in May 1938 April 1938 May 1937 both the monthly and yearly increases. The greater part of Wholesale Trade........................................... 170.0 162.5 134.2 217.0 212.5 201 8 the gain, however, was contributed by public works and Retail Trade................................................. JEnd of Month. utilities projects, the aggregate of which types of construc tion was about two and one-half times the volume of the preceding month and more than three times that recorded Merchandising for last May. Wholesale Trade BUILDING CONTRACTS AWARDED* ONTRA-SEASONAL recessions of 9 and 6 per cent, SEVENTH FEDERAL RESERVE DISTRICT respectively, took place during May in sales of whole Total Residential sale grocery and electrical goods firms of the Seventh district. Period Contracts Contracts The gain of 7 per cent over April in the hardware trade May 1938....................................... 550,101,000 Change from April 1938.............................. and the decline of one per cent in drug sales were the same +37.8% +15.6% Change from May 1937.................... +33.9% + 3.5% as shown in the 1928-37 average for May. Miscellaneous First five months of 1938.. 5156,386,000 540,680,000 Change from same period 1937....................... —23.8% lines sold a dollar volume totaling 3 per cent smaller than —30.2% ‘Data furnished by F. W. Dodge Corporation. a month previous. As in April, grocery sales aggregated Permits issued in 100 cities of the Seventh district num very slightly less than in the corresponding 1937 month; bered 4 per cent more in May than in April but showed an the decreases recorded from a year ago in the electrical estimated cost that was 5 per cent lower. Both the number goods business and in the miscellaneous group were about and value of permits totaled less than a year ago, by 13 WHOLESALE TRADE IN MAY 1938* and 16 per cent, respectively. Decreases in estimated cost of prospective building were especially heavy in Chicago and Per Cent Change from Same Month Last Year the smaller cities of Illinois and Michigan, in both the Commodity Accounts monthly and yearly comparisons. Net Sales Stocks Outstanding Collections C C Materials ALTHOUGH the wholesale distribution of lumber was somewhat lower in May than a month earlier, the percentage of seasonal expansion for the year to date has Page 6 Groceries.......................... Hardware........................ Drugs................................ Electrical Goods........... Miscellaneous.................. — 0.0 —12.3 —20.8 —22.2 —10 0 —11.1 —26.1 —20.1 —14.0 —15.0 ‘Data furnished by Bureau of Foreign and Domestic Department of Commerce. + 2.2 — 1.3 —16.9 —22.1 — 9.0 —14.2 — 7.8 —24.9 — 5.4 —11.0 Commerce, United States V the same as a month earlier; while the margin of difference in hardware and drug sales was narrowed somewhat. In all phases except the miscellaneous group, stocks totaled lighter at the close of May than on April 30 and in all lines were much smaller than last year at the same time. Retail Trade ALES of reporting Seventh district department stores declined 8 per cent in the aggregate for May from April, with recessions noticeably large in Detroit and Mil waukee. The margin of decrease from a year ago widened in May to 22 per cent from 11 *4 Per cent a month earlier; Detroit stores continued to show by far the heaviest loss from the corresponding 1937 period. Stocks remained 10 per cent smaller than last year, and recorded a slight decrease in volume from the preceding month. For the year to date, stock turnover has been 1.64 times, as compared with 1.81 times in the first five months of 1937. S * * * The 5 per cent increase shown during May over April in sales of furniture and housefurnishings by reporting dealers and department stores compared with a gain of 10 per cent in the 1928-37 average for the month, but the margin of decline from a year ago remained about the same as a month earlier—30 per cent. There was a 3 per cent decrease in stocks during May, and at the end of the month they stood 11 per cent smaller than at the close of the same month in 1937. DEPARTMENT STORE TRADE IN MAT 1938 Per Cent Change First Five Months 1938 from Same Period 1937 Per Cent Change May 1938 from May 1937 Locality Stocks End of Month Net Sales Net Sales 1938 1937 30.8 41.2 32.5 45.9 37.6 37.6 32.i 39.2 40.2 34.9 37.6 Chicago..................... Detroit...................... Fort Wayne.............. Indianapolis............. Milwaukee................ Peoria........................ Other Cities*........... —18.1 —36 4 —18.3 —14 2 —19.2 —18.6 —17.9 —ii 6 —10.3 — 4.4 —12.9 —25.1 —11.0 — 8.9 —10.3 —10.7 —11.1 7th District.............. —22.0 — 9.9 —14.8 —11.5 — 7.8 Ratio of May Collections to Accounts Outstanding End of April 34.2 ♦Include Fort Wayne and Peoria. * * * Following a considerably greater than seasonal expansion in April, sales of shoes by reporting dealers and depart ment stores fell off 17 per cent in May, whereas the 1928-37 average for the period shows an increase of 9 per cent. The dollar volume sold in the current month totaled 24 per cent less than in May last year, in contrast to a 15 per cent gain recorded in April over the corresponding 1937 month. In the first five months of this year, sales were 12 per cent below those of the same period a year ago. Only a fractional rise took place in stocks between April 30 and the close of May, and they were 6 per cent lighter than on May 29, 1937. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted. No. of May April Mar. Feb. Jan. Dec. May Apr. Mar. Feb. Jan. Dec. Firms 1938 1938 1938 1938 1937 1937 1937 1937 1937 1938 1937 1936 Meat Packing—(U. S.)— Sales (in dollars)............................................................. 45 87 82 83 84 83 89 99 95 95 92 101 96 Casting Foundries— Shipments: Steel—In Dollars......................................................... In Tons.............................................................. Malleable—In Dollars................................................ In Tons..................................................... 12 12 21 21 26 18 34 40 27 18 34 41 42 34 37 45 30 22 36 43 33 25 38 46 47 37 49 60 109 108 80 102 119 123 85 112 124 136 88 122 104 114 74 103 95 102 69 98 73 77 66 96 Stoves and Furnaces— Shipments (in dollars)................................................... 14 94 91 90 64 46 124 152 168 147 99 95 214 FurnitureOrders (in dollars)........................................................... Shipments (in dollars).................................................... 33 33 51 46 47 54 56 68 53 52 66 37 37 51 80 80 82 92 96 101 76 83 112 67 68 82 Output of Butter by Creameries— Production........................................................................ Sales................................................................................... 59 61 151 138 101 110 87 110 77 100 78 101 78 98 131 123 90 100 80 98 70 90 72 85 Wholesale TradeNet Sales (in dollars): Groceries....................................................................... Hardware...................................................................... Drugs............................................................................. 27 11 13 66 81 67 70 72 68 63 73 76 54 54 69 57 52 76 64 75 89 66 107 74 70 108 82 72 101 86 60 70 77 65 64 85 70 93 90 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago.......................................................................... Detroit........................................................................... Indianapolis.................................................................. Milwaukee..................................................................... Other Cities.................................................................. Seventh District—Unadjusted................................ Adjusted..................................... 29 6 4 5 40 84 84 79 80 95 82 77 80 79 82 94 100 98 82 87 82 86 87 97 95 79 86 95 67 71 75 71 62 68 85 69 74 84 74 62 70 88 148 180 172 161 144 156 93 95 118 110 102 91 100 99 93 117 101 104 86 97 98 100 113 116 105 90 102 104 76 93 82 78 67 78 97 78 88 79 78 64 78 97 157 194 177 163 149 164 98 53 99 60 115 59 127 48 125 53 143 83 217 145 243 150 255 138 240 101 179 106 186 145 195 41 73 36 53 34 49 15 25 13 28 16 38 40 55 52 69 52 69 28 42 27 64 28 50 48 52 61 47 49 53 133 130 127 123 120 117 Automobile Production—(U. S.)— Passenger Cars............................................ Trucks.......................................................... . 77 93 Building Construction- Contracts Awarded (in dollars): Residential............................................... Total.......................................................... Pig Iron Production*— Illinois and Indiana.................................... ♦Average daily production. Page 7 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION MAY and the first three weeks of June industrial activity showed little change the April level. Wholesale commodity prices generally declined further, but INinfrom June wheat and cotton prices advanced and at the end of the period some other staple commodities showed increases. Production Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to May 1938. FREIGHT-CAR LOADINGS TN MAY the Board’s seasonally adjusted index of industrial production was at 76 per cent of the 1923-1925 average as compared with 77 in April and an average of 79 in the first quarter of the year. Steel ingot production, which in March and April had been at a rate of 33 per cent of capacity, averaged about 31 per cent in May, and automobile output also showed a decrease. Textile production increased in May, activity at woolen mills rose sharply and there was some increase at cotton mills, while silk mills showed a decline. Changes in output in most other manufacturing industries were largely seasonal in character. Output of crude petroleum was curtailed sharply in May, and bituminous coal production declined somewhat, while anthracite production increased considerably. Lake shipments of iron ore were in very small volume, reflecting both the low rate of activity in the iron and steel industry and the large supply of ore remaining from the previous season. In the first three weeks of June output of steel and petroleum increased some what, but the rate of activity in these industries remained below the average for May. Automobile production showed a further decline and continued below sales, so that stocks of new cars were further reduced. Value of construction contracts awarded, as reported by the F. W. Dodge Corporation, showed a substantial increase in May, reflecting chiefly a marked rise in awards for publicly-financed projects. Contracts for residential building increased moderately and were in about the same amount as in May a year ago. Other pri vately-financed work remained in small volume. Employment 1934 1935 1936 1937 1938 Index of total loadings of revenue freight, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to May 1938. WHOLESALE PRICES "OACTORY employment and payrolls continued to decline from the middle of -L April to the middle of May. There were further decreases in employment in the machinery, steel, and automobile industries and a sharp decrease in the number employed in the men’s clothing industry. In most other manufacturing lines changes in employment were small in amount. The number employed at mines and on the railroads continued to decline. Distribution FARM PRODUCTS >4 EPARTMENT store sales declined considerably in May and the Board’s season ally adjusted index was at 79 per cent of the 1923-1925 average as compared Dwith 83 in April. Sales at variety stores and by mail order houses also decreased from April to May. Reports for the first half of June indicate about the usual seasonal decline in department store sales. The volume of railroad freight traffic showed little change in May following sharp declines in previous months. Commodity Prices 1934 1935 1936 1937 1938 Indexes compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1934 to week ending June 18, 1938. T> RICES of both agricultural and industrial commodities decreased in the latter J- part of May. In the first three weeks of June wheat and cotton prices advanced, while prices of industrial products generally continued to decline. MEMBER BANK RESERVES AND RELATED ITEMS Bank Credit ESERVES of member banks continued to increase in May and June, largely as ■ the result of Treasury disbursements from its deposits with the Reserve banks. Excess reserves increased chiefly at city banks, reflecting retirement of Treasury bills and further expansion of bankers’ balances. Demand deposits at reporting member banks in 101 leading cities increased further during the first half of June, and total loans and investments, which had declined in May, also increased, reflecting substantial purchases of United States Government obligations by New York City banks. R Money Rates Wednesday figures, January 3, 1934, to June 15, 1938. Page 8 IELDS on Treasury bonds declined further in the four weeks ending June 18, and those on Treasury notes reached new low levels. Rates on open-market commercial paper declined somewhat about the middle of June. Y DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111................................. Deputy Chairman W. J. Cummings.......................... .. .Chicago, 111. S. T. Crapo.................................... Detroit, Mich. E. R. Estberg............................ Waukesha, Wis. M. W. Babb.................................Milwaukee, Wis. F. D. Williams.......................... Iowa City, Iowa F. J. Lewis......................................... Chicago, 111. N. H. Noyes....................................................Indianapolis, Ind. MEMBER OF FEDERAL ADVISORY COUNCIL E. E. Brown..............................................................Chicago, 111. OFFICERS G. J. Schaller..............................................................President H. P. Preston..............................................First Vice President J. H. Dillard......................................................................... VicePresident W. H. Snyder....................................Vice President and Cashier C. S. Young........................................................................... VicePresident C. B. Dunn.........................................................................GeneralCounsel p) W. C. Bachman............ Assistant Vice President 0. J. Netterstrom. .. .Assistant Vice President A. L. Olson.................... Assistant Vice President A. T. Sihler.................. Assistant Vice President A. M. Black. . .Manager, Planning Department J. L. Sweet............................................................ Manager, Research and Statistics Department F. Bateman................................ Assistant Cashier J. C. Callahan...................................... AssistantCashier N. B. Dawes............................................AssistantCashier F. A. Lindsten........................................ AssistantCashier L. G. Meyer............................................AssistantCashier F. L. Purrington.................................... AssistantCashier J. G. Roberts.......................................... AssistantCashier C. M. Saltnes.......................... Assistant Cashier J. J. Endres..................................................................... Auditor DETROIT BRANCH R. H. Buss..................................................... Managing Director 4 SEVENTH FEDERAL IOWA RESERVE DISTRICT
@FedFRASER