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Business Conditions R Seventh Federal Volume 14, No. 7 General Summary _ r MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO eserve DISTRICT June 30, 1931 of automobiles, both at wholesale and retail, fell off notice ably during May. NOTICEABLE lessening of activity occurred dur The breaking of the drought in practically all sections ing May in Seventh district manufacture and dis of the district generally improved agricultural conditions, tribution of commodities. Declines in many instances were and prospects for good crops are most favorable. Wheat partly seasonal in nature, although in others comparisons receipts and shipments gained in May over the preceding with a year ago were less favorable than at any time so far month and a year ago, but the movement of corn and oats in 1931. was small. Meat production and sales declined during Production of automobiles fell off slightly in May, as the month from April and from last May, while manufac is usual for the month, and steel mills were seasonally ture and distribution of butter totaled larger in both com less active. Casting foundries increased the tonnage of parisons. Cheese production gained over April, although their shipments, but production and new orders decreased. sales declined, and an opposite trend was shown in com The decline in shipments by furniture manufacturers was parison with the same, period of 1930. larger than usual for the period, while orders booked Secured loans and investments of reporting member totaled smaller contrary to seasonal trend. Shoe produc banks in the district were reduced between May 13 and tion declined from April, but that of leather gained. The June 10, while commercial loans increased; as compared volume of building contracts awarded in the district again with the corresponding date of last year, both types of fell off, totaling the lowest since February. Manufactur loans were smaller but investments continued to be con ing employment increased during May, largely owing to siderably larger. Demand deposits of these banks totaled continued expansion in the automobile industry the early less in the monthly and yearly comparison, whereas time part of the month, to seasonal gains in the food and stone, deposits showed gains. Borrowings from the Reserve clay and glass groups, and to increases in paper and print bank, though still small, increased over the middle of ing. May and June 11a year ago. Money rates in Chicago Distribution of commodities for the most part dimin recorded slight change during May. For the first time this ished in May, following seasonal gains in the preceding year, sales of commercial paper expanded in May. Financ two months. Declines in reporting lines of wholesale ing by means of acceptances through Chicago banks was trade were general, and in most groups were larger in the also in substantial amount, although dealer purchases of comparison with a year ago than had been the case in bills declined. The Chicago bond market, which showed April. Department store sales likewise totaled smaller in declining tendencies through most of May, improved its May than a month previous, while the decline from the tone somewhat in early June. corresponding month of 1930 was greater than for any Credit Conditions and Money Rates month so far in 1931. Chain store sales and the retail shoe trade experienced declines, but the retail furniture An unusually heavy demand for currency during the pe trade recorded some expansion over April. Distribution riod from May 13 to June 10—the outgrowth of banking disturbances in some sections of the district, notably in outlying areas in Chicago—and an increase in member FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF bank reserve balances were the principal changes among CONDITION (Amounts in millions of dollars) the factors making for increased member bank borrowing Change From June 10 May 13 June 11 at the Reserve bank. Offsetting these developments were a 1931 1931 1930 considerable excess of local Treasury expenditures over re $+3.1 $+4.7 Total Bills and Securities....................................... $115.9 +4.6 +0.4 16.8 Bills Discounted........................................................ ceipts and a moderate gain to the district in funds arising 17.2 +0.2 -2.2 Bills Bought................................................................ +0.7 U. S. Government Securities................................. 81.9 +4.1 from inter-district settlements for commercial and financial +105.6 + 114.0 Total Reserves............................................................ 596.7 transactions. The net result of the foregoing changes, + 16.0 — 3.2 350.1 Total Deposits........................................................... +100.5 + 111.0 Federal Reserve Notes in Circulation................ 322.5 together with a few minor developments in the basic ele Ratio of Total Reserves to Dpposit and Federal +1.8* +2.0* Reserve Note Liabilities Combined........... 88.7* ments affecting the volume of member bank borrowing, was an increase of about 4million dollars in loans to ♦Number of Points. A member banks on June 10 as compared with May 13. A detailed analysis of changes in these factors is presented in the table below: FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between May 13 and June 10, 1931 (In millions of dollars) Changes making for increase in member bank borrowing: 1. Increase in demand for currency............................................... 94.02 2. Increase in member bank reserve balances............................. 15.62 3. Increase in non-member clearing balances............................. 0.80 4. Sales of gold to industry............................................................... 0.06 Total ................................................................................ 110.50 Changes making for decrease in member bank borrowing: 1. 2. 3. 4. 5. 6. Excess of local Treasury expenditures over receipts........... 81.25 Funds gained through inter-district settlements for com mercial and financial transactions............................................. 21.85 Increase in holdings of acceptances (local transactions) ... 1.20 Increase in holdings of U. S. securities (local transactions) 0.77 Decrease in unexpended capital funds..................................... 0.45 Increase in reserve bank float..................................................... 0.36 Tota]................................................................................................... 105.88 Excess of changes making for increase in member bank borrowing: Absorption of this excess: Increase in member bank borrowings (discounts for member banks)................................................................ 4.62 4 62 Member Bank Credit Total loans and investments of reporting member banks on June 10 showed a decrease of approximately 54 mil lion dollars as compared with May 13, and of slightly more than 70 millions from June 11, 1930. Loans on se curities declined by only 2 million dollars from May 13, but as against June 11a year ago the shrinkage in this type of loan amounted to 240 millions; “all other” loans increased slightly from May 13 to June 10, but declined by 116 millions from the corresponding reporting date of last year. Investments of reporting member banks, in the yearly comparison, increased in volume approximately 280 million dollars, but during the period May 13 to June 10 moved downward about 60 millions. Net demand deposits declined in the monthly and yearly comparison, in the former by 60 millions and in the latter by more than 190 millions. Time deposits gained in both comparisons —nearly 130 million dollars over a year ago, and 8 mil lions over May 13. Borrowings of reporting member banks at the Reserve bank on June 10 amounted to 6 mil lions, a gain of 3 millions over May 13 of this year and of the same amount over June 11, 1930. The prevailing rate on customers’ commercial loans dur ing the week ended June 15 was reported by eight down town banks in Chicago as 3 to 5 per cent, as against a range of 2 % to 5 a month previous. The average rate earned on loans and discounts by six large banks, also located in the central business section of Chicago, was 4.41 pier cent dur ing the calendar month of May, as against 4.42 in April and 5.13 in May 1930. In Detroit the average rate earned on loans and discounts during May of this year was reported as 5.22, which compares with 5.34 in the preceding month and with 5.79 in May a year ago. The prevailing rate on customers’ commercial loans during the week of June 15 in Detroit was 4 to 5 per cent. CONDITION OF 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 Page 2 June 10 1931 $3,227 1,074 1,178 975 Change From May 13 June 11 1931 1930 $-54 $-71 -2 -240 +10 -116 -62 +285 1,761 1,348 —60 +8 6 +3 —194 +129 +3 Commercial paper sales by reporting dealers in the Middle West increased 9 per cent in May over April and showed the first reversal of the downward trend which had prevailed since January. The decline of 43J4 p>er cent in volume from the corresponding month last year was less than evidenced in any of the preceding three months, although the recession from the 1923-30 average remained approximately the same as in April. Supplies continued light to moderate, and the demand averaged be % tween fair to low to 2 % and 3 pier cent for high, withto 2 pier cent for good. Selling rates in May ruled from 2 most papier moving at 2J4 to 2per cent. May 29 outstand ings of commercial papier, as reported by dealers in the Middle West, were 2 pier cent greater than on April 30 but 47 per cent below the corresponding date of 1930. During the first half of June, sales aggregated slightly less than in the corresponding weeks of May. Demand was good from banks outside Chicago but practically neg ligible from banks in the city. The supply remained mod erate, though augmented to some extent by the repurchase of a moderate amount of papier from outlying banks in Chicago as an outgrowth of the recent banking disturb ances in those localities. Quotations closed on June 15 at 2 per cent for low and 2J4 and 2% per cent for high, y2 the customary charge being 2 to 2 per cent. Dealer purchases of local bills in the Chicago market declined 17 per cent during the four weeks ended June 10 from the preceding period, with a further decrease of 22 per cent recorded in receipts from Eastern markets. Total supplies, as a consequence of these recessions, aggregated only half as great as a year ago. Sales to out-of-town banks attained a high level and constituted a major por tion of the business, inasmuch as the demand from local banks was almost negligible and the movement to other markets smaller than in any earlier pieriod of 1931. June 10 holdings of acceptances by dealers totaled much heavier than a month previous, but continued below the usual level for this season of the year and considerably less than on the corresponding date of 1930. Selling rates eased further, closing on June 10 at % per cent for 30-day offer ings to 1J4 per cent for those of 180 days. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET May 14 to June 10, 1931 Per Cent Change in Comparison With Period From April 16 to May 13 May 15 to June 11 Bills purchased........................... Bills sold....................................... Holdings*.................................... 1931 —17.1 —15.0 +139.4 1930 —57.8 —43.3 -43.4 *At end of period. Acceptance credits at Seventh district banks were util ized to a considerable extent during May but in a some what smaller degree than in the same month of 1930. The discounting of these bills by the accepting institutions con tinued on a level with April, although the volume totaled 12 per cent less than a year ago. Purchases of other banks’ acceptances, on the other hand, fell below those of any month since July 1930, but aggregated approximately 2times as great as for last May and the 1923-30 averVOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From May 1931 Apr.1931 May 1930 Chicago........................................................................ Detroit, Milwaukee, and Indianapolis................. $3,225 1,227 -0.4 —1.6 —23.3 —22.4 Total four larger cities............................................. 34 smaller centers...................................................... $4,452 798 —0.7 —5.3 —23.1 —21.9 Total 38 centers. $5,250 -1.4 -22.9 age for the month. Banks continued to retain a large per centage of current offerings for their own portfolios. Sales, consequently, remained considerably less than the volume of purchases and were at the lowest level since September 1929, while acceptance holdings of these banks attained a higher point on May 29 than for any previous reporting date in 1931. Outstandings were further reduced during the month. The total value of acceptances executed for customers during the first half of June was 5 per cent in excess of the corresponding period of May. Financing increased for grain, iron ore, iron and steel, creosote oil, machinery, coffee, copper, merchandise, rubber, and num erous other commodities, while it decreased for sugar, to bacco, packing-house products, tires, aluminum, hops, chemicals, and several miscellaneous items. Bill holdings of the accepting banks aggregated approximately 15 per cent less on June 15 than at the beginning of the month. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Total value of bills accepted................... Purchases....................................................... Sales................................................................ Holdings*....................................................... Liability for outstandings*...................... Per Cent Change April 1931 +12.0 —31.5 -21.5 +21.8 — 1.0 in May 1931 From May 1930 —11.9 +40.1 -12.1 +494.0 — 9.4 *At end of month. Security Markets Following the abrupt reversal of the down trend in stock prices during the first week in June, the Chicago bond market displayed a decidedly improved tone and the recovery in prices was the sharpest recorded this year. The large over-subscription of the new United States 3% Treasury offering of 800 millions of per cent bonds gave a better tone to the high grade market, while second grade rails featured the advances in the lower classes, and recoveries were also noted in South American and Aus tralian issues. Preceding this improvement, the demand in May had been active for the very high grade bonds which gave rise to some strengthening in prices, while medium and lower grade bonds and the foreign issues showed a rapid decline following a slight betterment earlier in the month. The volume of new offerings decreased ma terially from April and was also less than in May 1930. Individuals continue to be a minor factor among pur chasers, with institutions furnishing the bulk of the buying. The prevailing downward trend in stock prices on the Chi cago Stock Exchange became more prominent the latter part of May, and on June 2 the average price of twenty leading stocks * reached a new low point for 1931, $68.44. A reversal in trend was noted at this point, and the aver age for the first two weeks in June was approximately three dollars higher; on June 17, the average price was $71.05. * Chicago Journal of Commerce. Agricultural Products Approximately 96 per cent of the 1931 corn acreage in the Seventh Federal Reserve district had been planted by June 1 in comparison with 91 per cent on the corre sponding date of 1930, according to reports direct to this bank from 205 county agricultural agents. Stands were fairly even; some replanting was necessary, however, to offset the depredations of wire worms and cut worms. The outlook for fruits was exceptionally favorable at the time of these reports. A large production of peaches is in pros pect this season, in contrast to a very limited supply in 1930; present conditions indicate a good crop of pears, 25 per cent more apples than a year ago, and an increase of 10 per cent in the volume of sweet cherries and of 15 per cent for sour cherries. In the northern tip of the lower peninsula of Michigan, however, production of sour cherries is reported to be only half as large as last year. Favorable prospects for strawberries are shown through out the greater part of the district; the total crop is ex pected to approximate that of 1930. The current outlook indicates that the tonnage of grapes may fall 20 per cent under a year ago. Better yields than last year are antici pated for truck gardens. Current estimates of the 1931 winter wheat crop in the district exceed the 1930 yield by nearly 900,000 bushels. The drought which prevailed throughout the district during the early months of 1931 was broken during the latter part of May. Corn was of good color and had made satisfactory growth by the middle of June because of more favorable weather, nearly all of the wheat had headed, and rye had begun to ripen; the condition of oats and hay had also improved. Some fields of small grain were beaten down early in the month by rain and heavy wind. . CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of June 1 condition (In thousands of bushels) Five States Including Seventh District L nited States U Forecast Final Forecast Final 1925-29 1931 1930 1931 1930 Average Winter Wheat.. 95,896 95,077 649,115 604,337 547,427 Rye..................... 9,799 8,757 43,766 50,234 46,129 Peaches............. 7,158* 648* 78,091 53,617 55,210 Pears.................. 1,831* 1,289* 23,572 27,577 22,123 *Four states. Grain Marketing Receipts of wheat at interior primary markets during May registered a larger increase than usual over April, and totaled 67 per cent heavier than the five-year average for the month. Reshipments increased to a lesser extent and were only slightly in excess of the five-year average. This concentration of the grain at central markets repre sented deliveries on May contracts made under the Gov ernment’s stabilization program, and offset the reduction in the United States visible supply reported for April and early May, so that on June 13 the supply was about the same as a month earlier and totaled 75 per cent more than on the corresponding date of 1930. The export vol ume in four weeks of June was slightly under that of the preceding four-week period and more than one-third less than in the same period last year. The 19 million bushel decline in exports for the season to May 30 as compared with 1930, was reduced to less than 16 million bushels by a large export movement in the first week of June. LIVE STOCK SLAUGHTER (In thousands) Cattle Hogs Lambs and Sheep Yards in Seventh District, May 1931........................................ 187 662 306 Federally Inspected Slaughter, United States May 1931........................................ 704 3,408 1,444 April 1931....................................... 690 3,488 1,493 May 1930....................................... 690 3,823 1,370 AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended June 20 1931 N ative Beef Steers (average). . , $7.60 F at Cows and Heifers.................. 6.25 Calves................................................ 8.65 Hogs (bulk of sales)...................... 6.65 Yearling Sheep............................... 5.75 Lambs................................................ 7.30 May 1931 $7.15 6.00 8.10 6.55 6.40 8.30 117 425 471 421 Months of April May 1931 1930 $7.90 $11.25 6.40 8.60 7.70 9.85 7.35 10.05 7.40 7.25 9.00 9.80 Page 3 Trading in futures during May was smaller than a year ago, and open contracts in wheat represented the lowest monthly average since July 1928. July and September future prices moved lower after slight gains at the begin ning of the month. Cash wheat held firm in May, but dropped in June to the lowest point since March. Corn and oats moved in small volume at primary cen ters, and the relatively small quantities available are indi cated in the declines shown in the visible supply on June 13 compared with a year previous, of 6 per cent for corn and 35 per cent for oats. Corn and oats futures averaged a little lower than in April, while cash prices for these grains held firm in May. Movement of Live Stock Cattle receipts at public stock yards in the United States decreased in May from April, thus conforming to the contrary-to-seasonal trend evidenced during the correspond ing period of 1929 and 1930. Marketings showed a less favorable comparison with the five-year average for the month than at any time since January, although they ex ceeded the low volume of a year ago by per cent. Hog receipts failed to show the usual expansion over a month previous—a reflection of the sharp decline in prices during May; the recession in volume from last year and the 1926-30 average was greater than evidenced earlier in 1931. Lambs continued to be marketed in unusually large numbers for the spring season. Exceptionally limited quantities of feeder cattle were reshipped to feed lots during May, while the movement of feeder lambs remained considerably in excess of last year but was 8 per cent less than the average for the month. Meat Packing The tonnage of packing-house commodities produced during May at slaughtering establishments in the United States aggregated one per cent less than a month earlier and 4 per cent under a year ago. Payroll data at the close of the period reflected little change from April in the number of employes, although a decline of 2 per cent was recorded in working hours and in wage payments. Sales billed to domestic and foreign customers decreased 2 per cent in total value from April and were 27)4 per cent smaller than for last May. Lower prices than a year ago remained the principal contributing factor in this reces sion from 1930. Quotations of practically all packing house commodities declined in May. Inventories were seasonally lower on June 1 than at the beginning of the preceding month, and again totaled 113 million pounds greater than on the corresponding date of 1930 and ap proximately 3 per cent above the five-year average for the date. Shipments for export slightly exceeded those of April. A large part of the tonnage moved to England, as had been the case for several months, and the greater portion of ship ments during the month was forwarded on consignment terms. A better demand for lard was reported in the United Kingdom, but British trade in other packing-house commodities remained rather quiet; a slight improvement, however, took place in the demand for sweet pickled pork. Trade on the Continent continued on a limited basis. June 1 inventories of American products in foreign countries (inclusive of the stocks in transit) increased slightly over May 1. Prices realized in Europe for commodities from packing establishments in the United States were about on a parity with the Chicago market. Continental producers, however, continued to furnish the consuming countries of Page 4 Europe with liberal supplies at lower prices than asked for products from the United States. Dairy Products Seventh district butter production attained a new peak for 1931 during May; although the increase of 37 per cent over the preceding month was less than seasonal, the ton nage totaled only 5 per cent under the high record of June 1929. Sales expanded 23 per cent in volume over April and were 7 per cent greater than in May 1930. Pro duction of the commodity in the United States also ap pears to have been heavier than a month previous, though below the same period last year. Inventories in the United States increased by a seasonal amount on June 1 over the beginning of May, but the previous excess of 6 million pounds over the five-year average was reduced to 5 million pounds. Quotations remained at an exceptionally low level. The production of American cheese in Wisconsin in creased 21 per cent during the four weeks ended May 29 over the preceding period, or in about the usual amount, but the recession of 14 per cent in volume from last year was more marked than in any other month of 1931. Dis tribution of the commodity from these markets expanded 14)4 per cent over May 1930, though totaling 5)4 per cent under the preceding four weeks and aggregating 22 per cent less than current production. The latter com parison was more unfavorable than in other years. In ventories of cheese in the United States totaled nearly 3 million pounds heavier on June 1 than at the beginning of May, as against an average gain for the period of 8 mil lion pounds; they were much smaller than a year ago and slightly under the five-year average. Prices declined further in May from the extremely low level of April. Industrial Employment Conditions Aggregate employment and payrolls of reporting estab lishments in this district gained slightly in May, contrary to the usual trend. While the increase in the totals was not large, it was participated in by six manufacturing and two non-manufacturing groups. Local differences in trend were evidenced by the totals for individual states—greater manufacturing activity in Michigan offsetting declines in all other states, while gains in Wisconsin were largely re sponsible for increased non-manufacturing totals. Among manufacturing industries, seasonal expansion EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group Report ing Firms of May 15, 1931 Wage Earners Earnings (000 Omitted) $ Change From April 15 Wage Earn ers Earn ings % % 4,377 7,186 540 1,377 315 586 439 271 202 1,304 -2.2 +2.4 -1.2 +2.9 +7.0 -4.0 -2.3 +2.7 +5.7 +1.1 -4.4 +8.0 -4.3 + 1.3 +8.4 -4.1 -1.4 + 1.7 + 13.3 +0.5 631,113 16,597 +0.5 +2.2 31,138 94,882 6,467 10,032 784 3,099 120 257 +1.9 -0.8 -12.6 +23.8 +1.9 -3.2 -12.9 +16.4 142,519 4,260 +0.6 -1.6 No. No. Metals and Products1........ Vehicles.................................. Textiles and Products.... Food and Products............. Stone, Clay and Glass.... Lumber and Products.... Chemical Products............. Leather Products................ Rubber Products2............... Paper and Printing............. 690 159 153 378 146 310 95 73 9 333 182,976 234,426 31,476 55,696 12,501 31,288 16,361 14,426 6,766 45,197 Total Mfg., 10 Groups---- 2,346 Merchandising5.................... Public Utilities.................... Coal Mining......................... Construction......................... 179 77 29 190 Total Non-Mfg., 4 Groups 475 2,821 773,632 20,857 +0.5 +1.4 Total, 14 Groups................ IOther than Vehicles. 2Michigan and Wisconsin. Illinois and Wisconsin. occurred in stone, clay and glass, food products, vehicles, and paper and printing. Gains in canning and preserving, slaughtering and meat packing, dairy products, manufac tured ice and ice cream influenced the food products totals, and in the vehicles group a larger number of men and increased time schedules at automobile plants offset de clines in car and locomotive shops. Rubber products and the leather group reversed their usual trend for the month, recording moderate gains in both men and payrolls. Sea sonal declines occurred in lumber, chemicals, metals, and textiles. In non-manufacturing lines, a substantial increase oc curred in construction, and a small gain was recorded in merchandising. Coal mines in Illinois curtailed opera tions, and the utilities failed to show the increase char acteristic of May. The Department of Agriculture report on farm labor indicates a larger surplus in Illinois, Indi ana, and Iowa on June 1 than a month earlier, while a reduction took place in Michigan and no change in Wis consin. The supply of farm workers in the five states averaged about 10 or IS per cent greater than on June 1, 1930, and the demand was 8 or 10 per cent smaller. Reports from free employment offices show an increase of applicants in relation to the number of jobs available in the four states represented. In Iowa the ratio declined sharply, but this reduction was more than offset by in creases in Illinois and Wisconsin, while the ratio for In diana remained stationary. REGISTRATIONS PER 100 POSITIONS AVAILABLE AT FREE EMPLOYMENT OFFICES Four States Month Illinois Indiana Iowa 1931 May............. 218 215 108 108 388 447 197 172 218 206 1930 May............. 196 190 105 118 285 300 135 159 175 186 April............ April............ Wisconsin Manufacturing Automobile Production and Distribution A small decline took place in automobile production during May—a seasonal trend following five consecutive months of increase. Output of passenger cars, totaling 269,080, was 6 per cent less than in April and 26 per cent below May last year which month had shown a decline of 30 per cent from the corresponding period of 1929. Truck production totaled 45,695 in May, or 9 per cent below a month previous and 17 per cent smaller than a year ago. Recessions were likewise recorded during May in whole sale distribution and retail sales of automobiles in the Middle West subsequent to the expansion shown in the New Cars Wholesale— Number Sold..................................... Value................................................... Retail— Number Sold.................................... Value................................................... On Hand May 29— Number.............................................. Value................................................... Used Cars Number Sold...................................... Salable on Hand— Number.............................................. Value................................................... -17.5 -19.5 -26.3 -38.4 Furniture Contrary to the seasonal trend in May, orders booked by reporting furniture manufacturers in the Seventh dis trict fell off considerably from the preceding month, the decline amounting to 29 per cent as against an average increase for the month of 17 per cent; and the index for this item stood at a new low point in the depression, being about four points under the previous low in December. Shipments totaled 21 per cent under those of April, as compared with an average decrease for the period of 6 Class Per Cent Change From May 1930 Iron and Steel Products A continuance of the quiet conditions which have pre vailed during recent months in the steel industry of the Chicago district was evident through May and the early weeks of June, and steel ingot output declined further to a little less than 40 per cent of capacity at the middle of the current month. The usual seasonal falling-off in some lines of industry reduced the demand for steel, while in others such as the structural market and pipe, demand was fairly well maintained. Pig iron output in the Indi ana and Illinois district averaged only 13,081 tons daily during May, or about 12 per cent less than a month pre vious and comparing with a daily average of 23,204 tons a year ago. Prices, both of finished steel and pig iron, remained unchanged during the period, while scrap prices have been fairly steady following decided weakness the end of April and early part of May. Orders booked during May by both steel and malleable casting foundries in the Seventh district fell off consider ably from April, those for steel castings declining more than 40 per cent from a month previous and orders for malleable castings totaling almost one-fourth less. The tonnage shipped increased slightly in the comparison, but production declined. No improvement was noted in con ditions as compared with a year ago. Shipments by stove and furnace manufacturers declined in May from a month previous and last year, although over half the firms re corded gains; orders booked totaled considerably smaller in both comparisons, as did production. WHOLESALE AND RETAIL LUMBER TRADE MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in May 1931 from previous months April 1931 early months of the year, and sales continued to total much smaller than a year ago, although about one-fourth of the distributors and dealers reported gains in these comparisons. Stocks declined further and remained well below the 1930 level. Sales and stocks of used cars fol lowed the trend of new cars. The proportion of deferred payment sales to total retail sales of thirty-four dealers increased somewhat in May over a month previous and the corresponding month last year, a ratio of 45 per cent in the current period comparing with 43 per cent in April and 39 per cent in May 1930. of Trade Number 24 24 -32.0 -33.3 54 54 -5.2 -6.7 -43.8 -37.7 -25.1 -31.9 -38.3 55 55 Retail Trades Accounts Outstanding1................. 55 -5.5 May 1930 —36.9 —20.9 —28.2 14 11 9 +3.0 +11.0 +3.6 —31.6 —35.0 -15.6 194 85 190 Wholesale Trade: 55 55 -13.4 April 1931 of Yards +1.9 +13.5 +2.9 Companies Included -19.9 -18.9 -i.i May 1931: Per Cent Change From Ratio of accounts outstanding1 to dollar sales during month May 1931 Retail Trade......................................... 161.2 307.4 April 1931 173.9 299.6 May 1930 131.9 252.1 *End of Month. Page 5 per cent; cancellations, also, were low. Accordingly, the decline in unfilled orders outstanding at the close of the month fell a little short of that in new orders, the aggre gate of unfilled orders amounting to 81 per cent of orders booked as compared with a ratio of 77 per cent a month previous. Comparisons with a year ago are very unfavor able, the decline in orders booked of 38 per cent being about three times that of a month previous, and that in shipments of 24 per cent twice as great. Unfilled orders were 34 per cent under the May 1930 total. The rate of operations maintained during the month was 51 per cent of capacity, or four points under a month ago and eight points below that obtaining in May 1930. Shoe Manufacturing, Tanning, and Hides Seventh district production of shoes decreased 8 per cent in May from April, and showed a decline of 19 per cent from the eight-year average and of 16 per cent from May 1930. Leather tanning gained over the earlier period; sales decreased from April and from last May. Leather prices remained steady. Packer green hide, calf, and kip skin markets at Chi cago were reported as more active during May than a month previous, and there was a corresponding increase in purchases by district tanneries; shipments of these commodities from the city, however, totaled less than in April. Building Material, Construction Work May reports gave no evidence of recovery in the Seventh district from the unsatisfactory conditions prevailing in all lines of building materials. Moderate demand for lum ber came from the auto-body and construction lines, and concrete aggregates were taken in larger volume than in recent months on account of road building, but the in creased distribution was considerably less than seasonal. The volume of lumber sold by wholesalers reporting board foot measure totaled 21 per cent less than in May 1930, which was an improvement over recent months in the yearly comparison, but dollar sales of the same firms were 32 per cent less. The 2 per cent gain over April in dollar sales of all firms contrasts with declines shown in May of both 1929 and 1930. Stocks have been kept low and were smaller at the end of May than on the same date of 1930. Outstanding accounts rose only slightly, and a reduction took place in the ratio of accounts to dol lar sales. Retail yards reported a slight increase over April in ag gregate sales of building materials, amounting to 3 per cent, against an average gain of 10 per cent for that month during the past five years. Twenty to thirty per cent smaller inventories than at the same time last year were reported by some yards, and a lesser reduction in stocks was indicated by most retailers. Collections were poor in May, the increase in accounts outstanding exceeding that shown in dollar sales. No improvement was reported in demand for clay prod ucts, and the level of operations continued much lower than usual at this season. Midwest cement producers increased shipments by 44 per cent over April, which compares with an average gain for the previous five years of more than 60 per cent. Production exceeded ship ments, and stocks rose slightly. Distribution of cement during April in the five states including the Seventh dis trict was considerably smaller than in the same month of the past three years. Building Construction Declines in building activity were again evidenced dur ing May in the Seventh Federal Reserve district, accord ing to data on residential and total building contracts awarded. The slowing-down, however, was to a consider ably smaller degree than shown during April. Residential contracts in May amounted to only 21 per cent of total construction in the district. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Change from April 1931........................... Per Cent Change From Same Month Last Year Net Sales Groceries............... Hardware.............. Dry Goods............ Drugs.................... Shoes....................... Electrical Supplies............. Stocks Accts. OUTSTAND. Collec tions Ratio of Accts. Outstand $ 8,755,276 32* $47,616,340 -39% Merchandising Recessions were general during May in reporting lines of wholesale trade, hardware sales falling off 13 per cent, drugs 10 per cent, shoes 9 per cent, dry goods 8 per cent, groceries 5 per cent, and electrical supplies recording no change. The declines shown in grocery and hardware sales were contrary to the usual trend for the month. With the exception of shoes and electrical supplies, the decreases from a year ago were larger than in the corre sponding comparison for April and in groceries, dry goods, and drugs were greater than in any previous month this year. Aggregates for the first five months of 1931 comDEPARTMENT STORE TRADE IN MAY 1931 Per Cent Change May 1931 From May 1930 Locality Net Sales ing to Net Sales Stocks End of Month -2.8 -19.7 -33.3 -13.7 -19.8 -8.9 -18.7 -30.2 -9.4 -12.2 -11.0 -21.2 -26.8 -13.7 -21.5 97.1 248.2 323.4 163.4 359.3 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. -17.5 -19.4 -5.2 -13.6 -10.9 -13.0 -17.9 -17.4 -6.1 -16.7 -30.6 -9.4 -32.8 -36.6 160.1 7th District. -15.8 -14.1 Residential Contracts Building permits issued during May in 101 cities of the Seventh district declined 43 per cent in estimated cost of proposed work from a month previous, and the number issued dropped 13 per cent. In the corresponding monthto-month comparison a year ago, May permits registered a gain of 30 per cent in estimated cost of prospective con struction, although a drop was registered in the number of permits issued. May totals continued the trend of previous months, remaining considerably below the 1930 figures, with declines of 66 and 33 per cent shown in esti mated cost and number, respectively. The only large re porting city to differ from the trend of the district was Indianapolis, which recorded gains of 18 and 5 per cent in estimated cost over a month and a year ago. -16.9 -29.8 -30.4 -20.5 -17.7 Page 6 $41,707,855 - 9% -47% $217,614,556 -30% Change from same period 1930............. ♦Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN MAY 1931 Commodity Total Contracts Period Ratio of i Per Cent Change May Col First Five Months 1931 From lections to Accounts Same Period Outstanding 1930 April 30 Net Sales -12.7 -13.5 -5.0 -8.3 -8.8 -11.4 1931 1930 29.9 34.0 44.0 45.8 34.7 32.8 37.4 39.4 49.3 36.0 34.8 36.7 pared with the same period of 1930 show grocery sales 12 per cent smaller, hardware 27 per cent less, dry goods 26 per cent, drugs 14 per cent, shoes 20 per cent, and elec trical supplies 34 per cent less. Stocks, except of hard ware and dry goods firms, continued to decline and in general were being maintained at levels considerably below a year ago. Collections were reported as fair to good. Commodity prices in the various groups showed no re versal of the downward trend prevailing for some time. Department store sales in the Seventh district declined 9 per cent in May from the preceding month, which rep resents the heaviest recession for this month in a ten-year period, increases having been shown in five of these years. As a result of this falling-off in trade, the decline of 16 per cent from the corresponding month of 1930 was greater than for any month so far in 1931, bringing cumulative sales for the year through May to 11 per cent below the same period of 1930 as compared with a 10 per cent decrease shown for the first four months of 1931. In the comparison of May with April this year, stores in Chicago recorded a 9 per cent decline, Detroit 11 per cent, In dianapolis one per cent, Milwaukee 11 per cent, and stores in other cities a 7 per cent recession. The various changes from a year ago may be noted in the table. Between April 30 and the end of May, stocks were reduced 3 per cent, averaging 14 per cent below the level on the cor responding date last year. Sales of shoes by reporting dealers and department stores showed a small decline—3J4 per cent—in May from the preceding month, while the recession from a year ago amounted to 16 per cent which is the same de cline as shown in a similar comparison for April. In the first five months of 1931, the dollar volume sold totaled 9 per cent below the same period of 1930. A decrease of 6 per cent was recorded between April 30 and the end of May in stocks which averaged 11 per cent smaller than on the corresponding date of 1930. The retail furniture trade experienced some further ex pansion during May, according to reporting dealers and department stores in the district, aggregate sales increas ing 4 per cent over April with installment sales by dealers showing a gain of only one per cent. The decline of 17 per cent from last May in total sales was approximately the same as was recorded in the yearly comparison for April; installment sales decreased 18 per cent from May 1930. Stocks on hand at the end of May fell off about 3 per cent from a month previous, their total value aver aging 17 per cent below a year ago. The number of units operated by twenty chains de clined slightly further in May from April, so that average sales per store decreased only one per cent in the com \y2 parison and be a little larger per year The number continued to aggregate sales than a cent. ago, however, and average sales declined 7J4 per cent from last May with total sales 6J4 per cent less. Sales of grocery, fur niture, and men’s clothing chains totaled larger in May than a month previous, while drug, five-and-ten-cent, cigar, shoe, women’s clothing, and musical instrument sales were smaller. Drug sales alone totaled heavier than in May 1930. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO wise*}nd?eatSbe Data refer to 'the Meat Packing—(U. S.)— m Un,u °I dollar vo,u™e for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless OtherretUrnS "Ceived l° da‘e' reViSi°nS WU1 be giVen the f°UoWin£ m°nth- No. of F‘rmS SacI«<tinng°FoJnd,ries—.................... May Apr. Mar. Feb. Jan. Dec. May Apr, Mar. Feb. Jan. Dec. 1931 1931 1931 1931 1931 1930 1930 1930 1930 1930 1930 1929 63 77 78 79 78 84 85 106 109 103 109 113 104 15 38 39 44 40 34 31 81 92 86 77 80 84 II II 45 Shipments: Steel—In Dollars............................... II II MaHeable-In Dollars Stoves and Furnaces—................ S4 54 Shf^urniture—°bafS).......................... 11 88 96 54 80 46 <» Orders (in dollars)................................. Shipments (in doUars).......................... 58 62 55 57 25 25 Production (in bbls.)............................ 26 Output of Butter by Creameries— Production............................................... 67 Sales........................................................... 69 Wholesale Trade— Net Sales (in dollars): Groceries.............................................. 31 Hardware............................................. 14 Dry Goods........................................... 9 Drugs.................................................... 14 Shoes..................................................... 8 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................. 26 Detroit.................................................. 5 Indianapolis........................................ 5 Milwaukee........................................... 5 Other Cities......................................... 50 Seventh District................................. 91 Automobile Production (U. S.j— Passenger Cars....................................... Trucks....................................................... Building Construction— Contracts Awarded (in dollars): Residential.......................................... Total..................................................... Iron and Steel— Pig Iron Production:* Illinois and Indiana.......................... United States..................................... Steel Ingot Production—(U. S.)*. . Unfilled Orders U. S. Steel Corp___ 38 48 51 59 S 90 101 ?8 102 103 ?5 8 98 II SO 86 101 111 96 86 78 125 68 38 41 43 64 64 61 69 6X 82 6X 81 in* 62 cc 80 fl 40 % 83 88 93 93 94 101 100 103 107 97 97 108 92 168 136 121 110 102 95 89 94 93 95 91 99 157 129 104 101 88 92 81 81 84 94 82 86 83 63 51 78 55 86 71 55 87 60 85 55 51 86 58 75 41 41 82 39 84 42 42 88 34 87 59 51 84 45 99 89 73 99 70 97 84 70 101 87 94 82 67 100 73 84 61 58 91 51 94 58 55 97 35 91 76 66 96 57 83 109 93 99 89 91 93 126 94 112 97 102 82 109 88 93 79 88 73 95 68 75 68 76 79 87 80 85 72 80 165 184 154 167 146 165 102 139 101 116 100 110 111 153 103 117 104 117 90 119 90 95 90 96 82 104 77 84 74 85 87 101 83 94 73 88 188 222 172 184 160 188 92 121 98 133 79 120 62 105 47 89 42 84 125 146 129 180 114 167 96 129 80 98 31 73 30 61 36 67 52 101 23 42 22 46 20 51 67 116 77 119 56 108 33 56 34 58 38 110 76 66 72 76 86 69 79 82 84 67 86 84 78 62 78 83 72 56 68 87 72 55 57 83 134 106 111 85 131 108 119 91 129 107 123 96 127 103 126 94 109 93 105 94 113 93 87 93 ♦Average daily production. Page 7 cent NATIONAL SUMMARY OF BUSINESS CONDITIONS per cent INDUSTRIAL PRODUCTION (By the Federal Reserve Board) OLUME of industrial production showed little change between April and May following upon increases for four consecutive months, while factory employ ment declined by the usual seasonal amount. The general level of wholesale prices continued to decline. V Production and Employment Index number of industrial production, adjusted for seasonal variation (1923-1925 average =100). • percent ---- [12a WHOLESALE PRICES Farm Products Index of United States Bureau of Labor Statistics (1926=100). BILLIONS Of COLLARS -------- ----|10 MEMBER BANK CREDIT Volume of industrial production, as measured by the Board’s seasonally adjusted index, was about the same in May as in April, 9 per cent larger than in December, and 14 per cent smaller than in May 1930. Steel output continued to decline more rapidly than is usual at this season, and consumption of cotton by domestic mills was also curtailed, while wool consumption continued to increase, contrary to the usual seasonal tendency, and shoe production, which ordinarily declines in May, showed little change. Daily average output of automobiles, according to prelimi nary reports, was about the same as in April. During the first three weeks of June, activity at steel mills declined further. In the first five months of the year taken as a whole, output of textile mills and shoe factories has been in about the same volume as in the corresponding period last year, while output of steel, automobiles, and lumber has been about one-third smaller. Changes in employment from the middle of April to the middle of May were of the usual seasonal character in many manufacturing industries. In the iron and steel industry, however, at carbuilding shops, and at establishments producing machinery, employment declined considerably, while it increased in the automobile and tire industries. At textile mills employment increased somewhat, contrary to seasonal tendency, while in the clothing industry the number employed decreased. Value of building contracts awarded in May was somewhat smaller than in April, reflecting chiefly a decline in awards for public works and utilities. In the first half of June, daily average value of contracts awarded increased somewhat, reflect ing larger awards for public works and utilities, offset in part by decreases in awards for other types of construction. Distribution Sales by department stores decreased in May, contrary to the usual seasonal tendency, and the Board’s index declined to the level prevailing before the sharp increase in April. Total freight carioadings increased somewhat less than usual. All Other Loans Wholesale Prices The genera] level of wholesale prices declined 2.7 per cent further in May, ac cording to the Bureau of Labor Statistics, reflecting large decreases in prices of agricultural products, textiles, non-ferrous metals, and building materials. In the first half of June, prices of live stock, which had declined rapidly in April and May, advanced, while prices of petroleum continued to decline. Investments Bank Credit Monthly averages of weekly figures for reporting member banks in leading cities. Latest figures, averages of first three weeks in June 1931. MILLIONS Of DOLLARS 5500 " RESERVE BANK CREDIT AND FACTORS IN CHANGES Money In Circulation Loans and investments of reporting member banks in leading cities declined further by about $285,000,000 in the four weeks ending June 17, reflecting reduc tions of loans on securities. “All other” loans, largely commercial, have shown little change since the early part of May. The banks’ investments, which reached a new high level late in April, were reduced somewhat during May and have fluctuated within a range from $7,800,000,000 to $7,850,000,000 since that time. During the four weeks ending June 17, there were imports of gold from Argentina and Canada, and in addition a large amount of gold previously earmarked for foreign account was released in the United States. The total increase in the stock of monetary gold was $120,000,000 for the period, of which $90,000,000 was added during the last week. Payments of currency into circulation, accompanying bank suspensions in the Chicago district, absorbed a large part of the funds arising out of the additions to the gold stock, with the consequence that there was little change in the volume of reserve bank credit. Money Rates Monthly averages of daily figures. Latest figures, averages of first 17 days in June 1931. Page 8 Money rates in the open market continued at a low level during May and the first three weeks of June. There was a further decline in prevailing rates on com mercial paper from a range of 2-2to a level of 2 per cent, while rates on bankers’’ acceptances were unchanged at % of 1 per cent. Rates paid on deposits by banks were further reduced, and clearing house banks in a number of financial centers established a rate of J4 of 1 per cent on bankers” balances.
@FedFRASER