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/ BUSINESS j^i| 1= CONDIII IKS^Ij HI Iwl J^E23^£~S •^^^stsaaBtagg - £~i™ HHI w i:|pi ism T IgStfSaSSSS' mz? mm*. sSiH; Mg|ggiP|is£ rtvFSSr wmm. .'OV\vvt.Vvx\vVCCviTixC^i,Vi. N«V\ i\\\W ?S^SSH3?»§* Wgggss) ;«&7& irrlg mm ij%4r£i BHH |J \i»»'.*«L-«.»* v, Mill wm 3 □□ ? mm Volume 22 • ■ sapi iPa j^OV'CV^ BjBggggHBgaBag| :«ft • OTO sstes tfH! March, 1939 Number 3 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business Conditions in the Seventh Federal Reserve District DISTRICT SUMMARY ' 11 RENDS varied during February in industrial output of to equal the year-ago level by 2 per cent. However, this . the Seventh district, several production phases record latter trend was reversed in March and in the third week of ing expansion over the beginning month of the year, while that month, sales were running 7 per cent above the cor others experienced recessions in activity. However, as com responding 1938 week. The retail shoe trade decreased pared with the low levels prevailing at the same time last slightly during February and was under a year earlier fol year, current conditions have continued to show much im lowing a gain in a similar comparison for January. Sales of provement. Industrial employment and payroll volumes furniture and housefurnishings expanded less than season increased less than is usual in February over January but ally over a month previous and about equaled those of last were above a year ago. The wholesale distribution of com February. Wholesale trade in the district was a little smaller modities exceeded that of last February; retail trade was in the aggregate for February than in January but continued under the corresponding 1938 volume. to show an increase over a year ago. Industry Agricultural Products A STEADY rise took place through February and into AS IS customary in February, the production and sales of . March in primary steel production of the Chicago area; packing-house commodities decreased in the month this in the second week of March, however, output dropped slightly. Demand for rails has been a sustaining factor in this year, and the former was below the year-ago volume. The industry, but buying by the automotive industry has remained sales tonnage exceeded production so that inventories de light. Production of automobiles declined somewhat more clined non-seasonally and continued much below the 1929-38 than seasonally in February, though totaling more than average. The manufacture of creamery butter was season half again as large as in the month last year. At steel and ally lighter and distribution of the commodity fractionally malleable casting foundries of the district, activity continued smaller in February than a month previous; the former above that of a year earlier, but new business fell off from exceeded the year-earlier volume and the latter about January and output from steel casting foundries was less equaled it. Wisconsin cheese production declined from than in that month. There was also a non-seasonal decline January and last February, while sales increased in the in orders booked during February by stove and furnace two comparisons. The movement of both wheat and corn manufacturers, although production and shipments rose, in continued during February to fall off more than seasonally; accordance with the usual trend. Building construction, as visible supplies of wheat remained below average levels, reflected by contracts awarded, showed a small gain in and those of corn were above average. Farmers in the five States including the Seventh district February over the preceding month and was more than double that of a year ago; the movement of building ma are planning to reduce their com and oats acreages in 1939 terials trended downward. In the furniture industry, ship from 1938 by 3 and 8 per cent, respectively. On the other ments rose more than seasonally and orders booked fell off hand, March 1 intentions indicate increases in acreage over less than is usual, with both items above the 1929-38 Feb last year of 3 per cent in hay, 14 per cent in soybeans, 11 ruary average. Following a substantial expansion in Janu per cent each in barley and spring wheat, 10 per cent in ary, activity at district paper mills diminished in February, tobacco, and one per cent in potatoes. but remained above a year earlier. Credit Owing to declines in the metals and vehicles industries in Michigan, aggregate employment and payroll volumes in 1%/TEMBER bank reserve balances gained 50 million dollars the Seventh district recorded less than the usual seasonal in in the four weeks ended March 15, the result of an in crease during February; nevertheless, the number of work flow of funds from other districts through commercial and ers employed was 5 per cent greater than in the month last financial transactions, as an excess of Treasury collections year, while wage payments were higher than at that time over disbursements and an increase in currency circulation during the period exerted a counter effect. Loans of weekly by 15 per cent. reporting member banks in the district expanded 10 millions Trade between February 15 and the same date in March, but a T^HE dollar volume of department store trade was little net decline in the banks’ investment holdings resulted in only changed in February from that of January; it again failed a minor change in the total of these earning assets. Manufacturing Steel and Steel Products ORODUCERS of primary steel in the Chicago area ad vanced operations gradually beginning the last part of January until, by the first week in March, steel ingot out put was averaging 58 per cent of capacity as against only 46 per cent six weeks earlier. In the second week of March, however, production dropped two points to 56 per cent of capacity. This latter rate compares with one of 30 per cent a year ago and with 82 per cent at the same time in 1937. Demand for rails has continued to be a sustaining factor in the industry, although much of the buying for 1939 already has been completed. Building construction likewise has taken some tonnage. On the other hand, purchases by the automo tive industry have remained light and demand from farm implement firms has not been great; deliveries of steel pur chased last fall at low prices are still being made to auto mobile firms. Buying of steel by miscellaneous sources has been scattered and slightly smaller in recent weeks. The majority of steel-consuming industries have been operating at noticeably higher levels so far in 1939 than during the same period in 1938; new business has been better than a year ago and is expected to show further im provement. Inventories for the most part are in a conserva tive position, so that considerably greater takings of steel are probable this year than last. Any larger volume of new business will necessitate rather heavy purchases of steel in many instances. Among the more optimistic of the steel consuming industries are the automobile makers, the parts and accessories manufacturers, heavy machinery firms, elec trical appliance manufacturers, stove and furnace factories, and some container firms. For the most part, no extraor dinary outlays for capital expenditures are planned, except CENT -----------------------------------------------------! ---------------------------- — - SEVENTH INDUSTRIES METALS DISTRICT FACTORY EMPLOY* ENT AMO PAYROLLS Although shipments and production by Seventh district stove and furnace manufacturers expanded sharply in Feb ruary over January, in accordance with seasonal expectation, the dollar amount of new orders accepted fell off in the period contrary to the usual trend. Furthermore, these latter recorded a decline in the aggregate from a year ago—the first decrease in this comparison since last September— despite the fact that the majority of reporting firms had a larger volume of business than last February. Shipments and production, on the other hand, continued to show sub stantial increases over a year earlier. Inventories were fur ther diminished during February. *. A The Automobile Industry AUTOMOBILE production in February showed a greater /pi -l*. than seasonal decline from the preceding month. How / j \ yfy ever, factory output totaled more than half again as large \\ zr as in February last year when business in the industry was V \\J / at a low level. There were 239,983 passenger cars and 57,858 \ / trucks manufactured this February in the United States, or 14 and 2 per cent fewer, respectively, than in January but \ / 72 and 23 per cent more than a year ago. Output was rising again in the early weeks of March, and it is estimated that IS36 193T 1938 193S production for the entire month will show a rather substan Index numbers of employment and payrolls in the metals industries of the Seventh tial gain over February and continue to total better than district, 1923-1925 average = 100. By years, 1929 through 1938; by months, January 1936 through February 1939. 50 per cent above that of the corresponding 1938 month. Sales of new automobiles by reporting retail dealers in Considerable improvement over the low level of activity prevailing a year ago continued to be noted during February the Seventh district declined only slightly—by 4 per cent—in at steel and malleable casting foundries of the Seventh dis February from the preceding month, and the number of trict, although new business fell off from the preceding used-car sales was about the same as in January. However, month and there was a slight decline from January in ton the number of new cars sold totaled fractionally less than nage production and shipments of steel castings. At steel in February last year and that of used cars was 14 per cent casting foundries, both output and operations continued to lighter in the comparison, following a substantial increase lag behind the volume of incoming business, while at malle during January over a year earlier in new-car sales and able casting foundries production exceeded new orders only a small decrease in those of used cars. Wholesale dis booked and shipments were only slightly lighter than orders. tribution of new automobiles, on the other hand, rose a little in February over a month previous and was almost STEEL AND MALLEABLE CASTINGS February 1939 100 per cent heavier than in February 1938. With stocks of SEVENTH DISTRICT Per Cent Change from new cars in dealers’ hands expanding one third more be Jan. Feb. tween the close of January and February 28, they stood on . 1939 1938 Steel Castings: the latter date at a level almost 15 per cent higher than a New orders booked (tons)...................................................................... —18.3 +11-5 New orders booked (dollars)................................................................. —20.9 — 0.3 year ago at the same time. The number of salable used cars Shipments (tons)....................................................................................... 3.3 +45.2 Shipments (dollars).................................................................................. + 3.3 +34-5 on hand was 4 per cent less at the end of February than a Production (tons)....................................................................................... —7.4 +35.4 month earlier and around 15 per cent smaller than on Feb Malleable Castings: New orders booked (tons)...................................................................... —22.1 +74.5 ruary 28 last year. New orders booked (dollars).................................................................. —19-7 +62.4 V\ \\ // // \\ / V | YROLLS ___ ^ EMPLOYMENT \ \\ ; / / \ •• ----------------- +—MDfTlrHLY—♦ i ■ ■ ........................... «— YEARLY —* Shipments (tons)....................................................................................... Shipments (dollars).................................................................................. Production (tons)...................................................................................... + 2.7 T?‘5 +1.2 CENT +J4.7 +73.3 ---------------------------- 1 TONKIA SE C/^STINGS OF SHIPMEhITS SEVENTH DISTRICT Other Manufacturing Furniture EASONAL trends prevailed during February in the fur niture industry of the Seventh district. New orders fell off, following the usual sharp expansion in January, while shipments increased substantially. The decline of 21 per cent from January in the former item was somewhat less than in the 1929-38 February average and the increase in the latter about average. New business exceeded that of last February by 18 per cent and the ten-year average for the month by 15 per cent; shipments totaled 16 per cent above a year ago and 3 per cent above the average. Despite the fact that output increased so sharply, it failed to equal the volume of incoming orders, so that at the end of February unfilled orders on hand were 2 per cent heavier than a month previous and their ratio to orders booked rose from 94 per cent for January to 122 per cent; they were 29 per cent larger than a year previous when the ratio of this item to new business was 111 per cent. At around 70 per cent of S fc\\A \ vn \ A A./U / \ //I vV 1*V 1\ 4-------------------------a, iMALLEABLE / A v STEEL n «--M0N 'HLY—* 1 ' ■ ■ ' ■ M ■ ■ ■ ■- *-YEARLY-* '50 '32 '34 '36 ‘38 1936 1937 1938 1959 Index numbers of tonnage shipments of steel and malleable castings, 1923-1925 average = 100. By years, 1929 through 1938; by months, January 1936 through February 1939. Page 2 capacity, February manufacturing operations were 8 points higher than a month earlier and at approximately the De cember level; a year ago in February the rate of produc tion averaged only 58 per cent of capacity. Paper and Pulp AFTER gaining substantially in January, output of pulp .and paper mills located in the Seventh district declined during February. However, activity continued well above year-earlier levels, although the year-to-year comparisons were not so favorable as in previous periods. PAPER AND PULP INDUSTRY SEVENTH DISTRICT Paper: New orders booked (tons)........ New orders booked (dollars)_ _ Total shipments (tons).. Total shipments (dollars).. Total production (tons).. Stocks on hand at end of month (tons) Pulp: February 1939 Per Cent Change from Jan. Feb. 1939 1938 + 0.9 in January were less than 30 per cent of the total contracts awarded. Advances were recorded over the preceding month in non-residential building for commercial and industrial purposes, whereas educational and institutional building generally registered declines. Public financing in the nonresidential classification as a whole was slightly lower in February than in January—53 as against 57 per cent— while in total contracts the percentage rose from 53 to 56. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period February 1939......................... Change from January 1939..................... Change from February 1938......... First two months of 1939............. Change from same period of 1938_ _ Total Contracts Residential Contracts 538,138,000 + 5.6% +120.6% $74,259,000 +105.0% - 13.9% +129.1% $22,307,000 +171.1% ‘Data furnished by F. W. Dodge Corporation. — 4.2 .......................... Permits issued in 100 reporting cities of the district like wise reflected only minor changes during February from a month earlier in the volume of contemplated construction, Shoe Production the number of projects showing a decrease of one per cent A CCORDING to reports issued by the United States Bu- while the aggregate valuation increased 2 per cent. As com , r£au of Census, shoe production in the Seventh Fed pared with a year ago, the number of permits issued totaled eral Reserve district averaged around 28,000,000 pairs an 5 per cent higher in the current period and the estimated nually during the years 1923 through 1929. The highest cost was larger by as much as 129 per cent. Chicago, Des output reported for this period was in 1929 when close to Moines, and the group of smaller cities in Illinois recorded 30,000,000 pairs were produced. In the accompanying chart substantial gains over the preceding month in estimated cost the trend in shoe production is presented by means of of proposed projects, and all but Milwaukee and the total monthly data from the beginning of 1929 through January for smaller cities in Iowa shared in the heavy gain over 1939. Despite wide seasonal fluctuations as well as sharp last February. Building materials activity followed a generally down recessions in the years 1930 and 1937, the trend shown by this chart is in the main upward. For each of the last five ward trend in February; although sales of lumber by whole years, 1934-38, the annual production total has exceeded sale and manufacturing concerns increased more than nor mally, those by retail dealers decreased to a greater extent the aggregate for the year 1929. than is customary at this season. Cement shipments from mills within the district were 10 per cent under those of SHOE PRODUCTION January, in contrast to an average rise of about that per centage in the ten preceding years, and shipments of brick also fell below the January volume. Weather conditions, which were unfavorable during a large part of the month, were probably responsible for much of the prevailing inactivity. Pulp produced (tons)......... Stock on hand at end of month (tons) -16.1 Industrial Employment Conditions ANUFACTURING industries of the Seventh Federal Reserve district registered a moderate expansion in aggregate employment and payroll volumes during the period January 15 to February 15, but the increases were smaller than those generally recorded at this season. For the fifteen years previous to 1939, for which such data are available, factory employment in the district has averaged 2 per cent and factory payrolls 4 per cent higher in Feb ruary than in January. The small size of the current gains was mainly due to losses in the metals and vehicles indus tries in the State of Michigan. Despite the increases con tributed by all of the other States including the district, employment and payrolls in the vehicles group as a whole fell below the level of a month earlier, contrary to the usual trend at this time of the year. Stone, clay, and glass products continued to show seasonal curtailment, the rate of decline being more moderate than in other recent months. In lumber products the increases in workers and wage payments more than offset the reductions in January. Textiles and leather M 1929 1950 1931 1932 1935 1934 1935 1936 1937 195B 1939 By months, January 1929 through January 1939. The Building Industry TP HE value of contracts awarded during February in the Seventh district was only slightly larger than that of January but amounted to more than twice the volume of a year ago, the increase in this latter comparison being greater than was the case a month earlier. Public works and utilities construction constituted close to 40 per cent of the total awards, while residential and non-residential building con tributed about equally to the remaining 60 per cent. This reflected a sharp gain in public works and utilities which Page 3 EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of February 15, 1939 Report ing Firms Wage Earn ers No. Industrial Group No. Durable Goods: Metals and Products1........... Vehicles................................... Stone, Clay, and Glass........ Wood Products...................... Total........................................ 1,787 386 274 487 2,934 381,490 329,003 18,082 43,266 771,841 Change from January 15, 1939 Earn ings (000 Omitted) $ Wage Earn ers Earn ings % % 10,614 10.171 405 921 22,111 +2.4 —0.6 —0.6 +3.5 +1-1 was chiefly responsible for that in the total. District de partment store trade in the three weeks ended March 18 exceeded that of the same 1938 weeks by 4 per cent. A greater than customary expansion took place in stocks during Feb ruary, inventories at the end of the month being 10 per cent heavier than on January 31 but 4 per cent lighter than on February 28, 1938; a month previous the margin of decline from a year ago had been 7 per cent. +4.9 —2.8 —1.9 +9.1 +1.3 Sales of shoes by reporting dealers and department stores showed a slight decline in dollar volume during February from the preceding month, their aggregate decreasing 2 per Non-Durable Goods: cent in the comparison. A gain of 4 per cent was recorded +7.1 +3.3 1,263 66,338 406 Textiles and Products.......... -2.8 —1.3 2,465 by department stores over January, but dealer sales fell off 95,936 1,038 Food and Products............... +0.9 +0.5 1,099 36,326 307 Chemical Products............... 11 per cent, thus effecting the decrease in the total. Sales +5.4 +3.6 558 25,991 171 Leather Products.................. —0.8 +1-9 481 17,933 34 Rubber Products................... were 2 per cent smaller than last February, following a —0.9 —0.3 2,158 75,864 735 Paper and Printing................ +0.3 +0.7 8,024 318,388 2,691 gain in the yearly comparison for January of close to 5 per Total........................................ +1.0 cent. Stocks on hand at the end of February exceeded those +1.0 30,135 1,090,229 5,625 Total Mfg., 10 Groups.............. on the corresponding 1938 date by one per cent and rose 18 —2.1 —1.8 2,835 128,171 5,498 +1.3 +0.7 3,334 100,553 1,132 per cent over those of a month previous. +6.6 —0.9 510 18,541 79 r * * » —11.5 —7.2 204 7,482 759 Construction............................... A less than seasonal expansion took place during Feb —0.2 -0.9 6,883 254,747 7,468 Total Non-Mfg., 4 Groups....... ruary in the retail furniture trade of the district. Sales of +0.8 +0.6 37,018 1,344,976 13,093 Total, 14 Groups........................ furniture and housefurnishings by dealers and department 'Other than Vehicles. 'Illinois, Indiana, and Wisconsin. stores totaled 16 per cent larger than in January, as against also recorded expansion in February following earlier de an increase of 24 per cent in the 1929-38 average for the clines. Gains in the non-durable goods industries as an ag period, with dealer sales gaining less than did those of de gregate, however, fell short of those recorded in durable partment stores. As compared with last February, the dollar goods during the current period. The increases in the manu volume sold was about the same in the month this year, facturing industries as a whole were partially offset by whereas January sales had totaled 6 per cent greater than losses in non-manufacturing lines, the construction and a year previous. Inventories rose 11 per cent between the merchandising groups laying off more employes than were end of January and February 28, and by the latter date the put to work by public utility concerns. The coal industry margin of decline from a year earlier had been narrowed showed a reduction in the number of men at work but a to only 4 per cent as against a difference of 11 per cent on rise in aggregate wage payments. Industrial employment in January 31. the district was approximately 5 per cent larger and wage Wholesale Trade payments about 15 per cent larger this February than in the month last year. Despite the decline recorded in the HE majority of wholesale trade groups in the Seventh current month for Michigan, this State has experienced a district had a smaller volume of dollar sales in February sharper rise in both employment and payrolls since a year than a month previous, sales in all reporting phases declin ago than any of the other States comprising the district. ing 11/2 per cent in the aggregate from January. Among the more important lines, tobacco and its products furnished an Merchandising exception to this downward trend, as did the total for mis cellaneous groups. As compared with a year ago, business Retail Trade S IS usual in the period, the dollar volume sold in Feb continued to be heavier in the current period—by 6 per cent ruary this year by Seventh district department stores in the aggregate. In many lines the percentage gains over closely approximated that for January, aggregate sales of last February were greater than in the yearly comparison reporting firms recording a one per cent decline from the for January, although those in groceries and hardware were preceding month. There was about the same percentage de smaller. As will be noted in the table, stocks continued to be crease during February from a year ago as in January—2 lighter than a year earlier, except those of tobacco and its per cent—and, as a month earlier, the decline in Chicago products, the total for all groups showing a decline of 7 per cent on February 28 from the corresponding 1938 date; at DEPARTMENT STORE TRADE IN FEBRUARY 1939 the end of January aggregate inventories were 12 per cent less than a year previous. Per Cent Ratio of February T A Locality Per Cent Change February 1939 from February 1938 Stocks End of Month Net Sales Fort Wayne............. Indianapolis............. Other Cities*........... —5.9 +5.6 —2.7 +0.3 -2.0 —9.6 +2.6 — 6.1 — i.i —iia + 2.9 — 2.3 — 4.0 —1.9 7th District............. •Include Fort Wayne and Peoria. Page 4 Change First Two Months 1939 from Same Period 1938 Collections to Accounts Outstanding End of January WHOLESALE TRADE IN FEBRUARY 1939* Per Cent Change from Same Month Last Year Net Sales 1939 1938 Commodity —5.2 +3.6 —3.1 +1.4 -0.8 —7.3 +2.5 44.4 41.1 43.7 36.8 Groceries and Foods... 35.7 37.2 36.0 35.2 32.8 30.4 —1.7 40.0 38.1 Drugs & Drug Sundries. Electrical Goods............ Paper & Its Products... Tobacco & Its Products. Miscellaneous.................. •Data furnished by merce. Net Sales Stocks Accounts Outstanding Collections - 0.8 — 0.6 — 6.9 + 1.4 + 7.0 — 3.8 — 8.5 + 3.1 + 7.6 — 6.7 — 1.1 + 7.7 + 1.3 — 9.9 + 2.4 + 7.8 + 5.0 + 4.7 — 8.4 + 4.9 + 6.7 +11.3 +13.4 +12.3 + 1.1 — 4.9 — 6.9 + 9.0 Bureau of the Census, United States Department of Com Agricultural Products showed a non-seasonal decline from the beginning of Feb ruary and a widening in the margin of decrease from a year earlier; lard stocks, on the other hand, were heavier than Grain Marketing on March 1, 1938. Prices of most pork, veal, and mutton Wheat advanced in February and quotations for heavy beef firmed, ECEIPTS and shipments of wheat during February at but those for lard, dry salt meats, and Iamb declined as interior primary markets in the United States continued compared with January. Dollar sales billed to domestic and to decline more than seasonally from the preceding month;foreign customers decreased as is usual in February. Pay reshipments of the grain were the lowest since April 1937. rolls at the close of the month recorded a drop from January Wheat exports were again in fair volume and at about the of 7 per cent in employes and of 10 per cent each in hours same level as in February 1938. After softness in late Jan and wage payments; they were, however, close to the yearuary and early February, wheat prices were fairly steady ago level. Production in the first half of March continued during the remainder of the month, reflecting chiefly con under the corresponding period of 1938. tinued dry weather in the Southwest, an increase in the United States subsidy on flour exports, and light shipments MEAT PACKING—UNITED STATES Per Cent Change from the Southern Hemisphere. At the end of February, in February 1939 quotations for No. 2 hard winter wheat in cash positions at from January February February Chicago stood at $.70yg and $.7214, down about one cent 1939 1938 1929-38 Avg. Tonnage produced for the month. Prices in the first half of March held at about Tonnage sold........ 22.0 0.6 6.8 +5.4 +0.6 the same level, in the face of good general rains in the Dollar Sales......... ............................................. —11-4 ............................................. — 4.1 +0.9 +6.1 — 6.3 —22.3 Southwest, disappointing export demand, and a very light Inventories........... ............................................. — 1.7 trading interest, but declined slightly in the third week of March. Visible supplies of wheat in the United States con Foreign Trade tinued below average levels though well above year-ago SHIPMENTS of animal products for export increased in amounts; on March 18 these stocks were 14 per cent lower G? February over a month earlier, reflecting in considerable than four weeks earlier. degree the filling of orders booked by England during Jan uary rather than a gain in the volume of new business. Feb Corn and Oats ruary sales of lard from stocks already landed in the United rT,HE movement of corn during February again declined Kingdom were below earlier expectations, and there also was A more than seasonally and continued at relatively low a decline in the ham trade. Demand from Cuba, Porto Rico, levels, being the smallest since September 1937. Exports of and the South American republics was relatively good in com from the United States decreased in February, but the first half of February but subsequently tended to decline export sales were in fair volume and helped maintain com under the influence of some strengthening in lard prices at prices in the latter half of February. However, at the end Chicago. Moreover, shipments to and demand from Cuba of the period, cash quotations were down 2y2 to 3 cents for were adversely affected during the period by buyer stipula the month, influenced principally by a poor cash demand, tions that forwardings were to be made by non-conference favorable Argentine weather, and competition in world mar steamers, a condition which many exporters considered as kets from low-grade wheat. With a firmer cash basis, con unsatisfactory. Continental European demand remained tinued heavy country sealing, and light marketings, corn rather quiet throughout the month. In consequence of close values held fairly steady over the first half of March, but adjustment of export shipments to current demand, United eased in the third week of the month on meager foreign States holdings of packing-house commodities in foreign and domestic demand. United States visible stocks of corn markets—inclusive of stocks in transit—showed little change declined counterseasonally in the four weeks ended March on March 1 from the beginning of February. Prices in the 18, but remained considerably higher than 1938 supplies or United Kingdom declined to below the Chicago parity dur the 1929-38 average for the period. The movement of oats ing the month; those on hams were 2 to 2y> cents under the dropped sharply in February and fell below the ten-year replacement basis. average. Oats prices held relatively firm in comparison with Importations of animal products into the United States other grains and visible supplies declined seasonally. expanded in February over January. R ......................................................................... MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) Feb. Feb. Jan. Feb. 1920-38 1939 1939 1938 Avg. Wheat: Receipts... 9,365 12,146 8,727 14,876 Shipments. 9,148 12,920 9,980 9,980 Com: Receipts.. 10,731 14,355 18,447 17,271 Shipments 5,129 8,953 11,579 8,710 Oats: Receipts... 4,263 6,269 4,041 5,283 Shipments. 3,838 5,830 4,188 4,923 Meat Packing T^HERE was a close to seasonal decline in February from -■- January in packing-house commodity production in the United States. However, the tonnage sold not only decreased less than is customarily expected at the beginning of Lent but exceeded current production; consequently, inventories — — — LIVESTOCK SLAUGHTER (In thousands) Yards in Seventh District, February 1939.......................... Federally Inspected Slaughter, United States: February 1939....................... January 1939.......................... February 1938...................... February 1929-38 average.. Cattle 162 Hogs 438 653 761 716 640 2,890 4,043 2,833 3,473 Lambs and Sheep Calves 257 70 1,361 1,456 1,424 1,240 385 415 398 374 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Week Ended Mar. 18, 1939 Native Beef Steers (average)............ Fat Cows and Heifers......................... Calves..................................................... Hogs (bulk of sales)............................. Lambs..................................................... Feb. 1939 $10.30 8.20 10.75 7.80 9.00 Months of Jan. 1939 $10.45 7.95 9.75 7.35 8.90 Feb. 1938 $ 7 80 6.80 9 60 8,30 7.60 Page 5 Dairy Products REAMERY butter production during February in the Seventh district showed a close to seasonal decline of 5 per cent from January and continued slightly greater than 1938 levels. Production in the United States as a whole de clined by about the same percentage but remained compara tively higher than year-earlier production. February sales by Seventh district firms were only fractionally smaller than in January, and totaled 5 per cent higher than the 1929-38 average and approximated the February 1938 level. United States cold-storage holdings of butter remained relatively heavy, but of the total of almost 93 million pounds on March 1 about 90 per cent was held by Government agencies. Butter prices during February through March 8 were supported by continued purchases by the Federal Surplus Commodities Corporation. On this latter date the Depart ment of Agriculture announced that for the time being, at least, the F.S.C.C. would discontinue its purchases on the open market, and in the following four business days whole sale quotations for 92 score butter at Chicago dropped from 251/9 to 21% cents. This decline was promptly reflected in prices at retail markets, and it was hoped that lowered retail prices would broaden consumption. Wholesale prices firmed slightly in the third week of March. Manufacture of American cheese in Wisconsin during Feb ruary totaled 6 per cent below the year-ago amount and 4 per cent under January; on the other hand, sales of the commodity from primary markets in the State showed a nonseasonal increase of 8 per cent over January and aggre gated 18 per cent greater than year-earlier or 1929-38 aver age levels. With this favorable sales relationship, stocks of cheese declined more than is usual for February and prices held steady to firm throughout the period. However, when butter prices broke, quotations for cheese declined about 1 cent. MONTHLY BUSINESS INDEXES Data refer to Seventh district and are not adjusted for seasonal variation unless other Feb. wise indicated. 1939 1923-25 average=100 Manufacturing Industries: Employment..................................................... S3 Payrolls............................................................. 80 Pig Iron Production: Illinois and Indiana......................................... 76 Automobile Production—(U.S.): Passenger Cars................................................. 82 Trucks................................................................ 154 Casting Foundries Shipments: Steel—In Dollars............................................. 39 In Tons.................................................. 31 Malleable—In Dollars.................................... 47 In Tons......................................... 62 Stoves and Furnaces: Shipments......................................................... 96 Furniture Manufacturing: Orders in Dollars............................................. 63 Shipments in Dollars...................................... 60 Building Contracts Awarded: Residential........................................................ 35 Total.................................................................. 56 Meat Packing— (U.S.): Production......................................................... 79 Sales Tonnage................................................... 80 Sales in Dollars................................................ 85 Creamery Butter Output: Production......................................................... 77 Sales................................................................... 100 Department Store Net Sales: Chicago.............................................................. 64 Detroit............................................................... 74 Indianapolis....................................................... 75 Milwaukee......................................................... 68 Other Cities...................................................... 63 Seventh District—Unadjusted..................... 67 Adjusted.......................... 84 Pag* 6 Jan. 1939 Dec. 1938 Feb. 1938 Jan. 1938 Dec. 1937 82 79 83 83 78 67 79 68 91 84 75 80 47 49 53 96 157 111 165 48 125 53 143 83 217 38 33 47 60 33 27 43 55 30 22 36 43 33 25 38 46 47 37 49 60 70 129 83 60 132 80 45 49 63 53 52 66 37 37 51 41 53 55 101 15 25 13 28 16 38 102 90 88 104 88 86 80 76 84 106 88 89 101 89 83 81 100 80 105 76 100 78 101 78 98 66 74 85 74 64 69 86 148 181 182 160 148 157 94 67 71 75 71 62 68 85 69 74 84 74 62 70 88 148 180 172 161 144 156 93 Credit and Finance Member Bank Reserves XCESS reserves of Seventh district member banks, which had been at a high level during the last half of 1938, moved almost steadily downward between the middle of December and the end of February. This drop apparently was caused by heavy purchases of Government securities, largely short-term, by banks and others with the intention of holding these tax-exempt assets past the Illinois personal property tax assessment date on April 1. Holdings of Govern ment securities by Seventh district reporting member banks on March 15 were 207 millions greater than on December 14, while excess reserves declined about 200 millions in this period. E MILLIONS OF DOLLARS ESTIMATED EXCESS RESERVES OF MEMBER BANKS 1937 Estimated excess reserves of all member banks in Chicago and in the Seventh district; by weeks, January 6, 1937, through March 15, 1939. The declining trend in Seventh district member bank re serves, which had been practically uninterrupted since the middle of December, was reversed in the four weeks ended March 15 when a 50-million dollar gain was recorded. Con tinued heavy buying of Treasury bills and income tax col lections, which latter appear to be running about one third less than in the comparable 1938 period, brought about a 24-million dollar excess of Treasury receipts over disburse ments. However, this factor together with a 9-million dollar expansion in currency circulation only partially offset the effect of an inflow of 83 millions in commercial and financial funds from other districts. Chicago banks were responsible for 70 per cent of the district’s increase in reserves during the period, but the rising trend was shared by banks in all sectors of the district except in Wisconsin where an unusual ly sharp increase had occurred during the preceding four weeks. Interest Rates HE average rate earned on total loans and discounts by the larger banks in Chicago continued to work lower during February, though still exceeding the comparable 1938 figure; this favorable year-to-year comparison has ex isted since last June. The average for the major Detroit banks rose substantially above January to terminate a down ward trend that had persisted for three months. T Open Market Paper W acceptances made in February by Seventh district accepting banks and commercial paper sales of repre sentative Middle Western dealers each declined between 10 and 20 per cent from the January totals. However, estimates for the first half of March showed substantial increases over the same February period. Outstandings of both types of open-market paper on February 28 were lower than at the end of January, but the declines were not so great as in new financing and sales. Selected Seventh District Banking Data FEDERAL RESERVE BANE OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Securities Markets TONG-TERM corporate bond financing in February, with one large refunding accounting for about 60 per cent of the total, rose substantially above the extremely restricted January figure, although only one small building issue orig inated in the Seventh district. Furthermore, most Chicago bond houses anticipate a larger volume of new issues in March and April, due to heavier registrations. Prices of all classifications of bonds, despite some softening in mid^Ue ^ur0Pean political developments, stood higher on March 17 than a month earlier. Rails and utilities were comparatively strong, with second-grade issues tending fur ther to narrow the spread between their prices and those of the highest grades. Moreover, many of the latter group estab lished new all-time highs during this period. The improved price performance of the second-grade issues is attributed by some Chicago bond men to the fact that institutional buyers are willing to accept issues of somewhat lower quality than heretofore, especially in the public utility field, because oi the very low yields prevailing on “gilt-edged” obligations. 1 op-grade municipal prices moved to new high ground, the consequence of the paucity of new issues and continued heavy demand for outstanding issues. The weekly issues of 91-day Treasury bills sold at only nom'nal average discounts during the five weeks ended March 22 with the three most recent ones practically at par. Of the $500,000,000 total issued over this period, 88 mil lions of the bills were sold and 11 millions redeemed in the Seventh district, resulting in a net addition of about 77 millions to district holdings. The accompanying table indi cates that weekly reporting member banks took about 30 millions of these bills between February 15 and March 15. Ihe 1 reasury s March financing was confined to refunding no new cash being sought. Holders of 2% per cent notes maturing June 15 were given the option of exchanging them on payment of a premium for 2% per cent bonds of 1960 65 2l/2 per cent bonds of 1950-52, or H/8 per cent notes maturing December 15, 1943. About 1,259 millions representmg 97 per cent of the maturing notes were so exchanged —165 millions m the Seventh district. Over two thirds of the exchanges were for the 1960-65 bonds and only 4 per cent lor the 11/g per cent notes. Chicago stock prices worked higher during the last part of February and early March, the Chicago Journal of Com merce average of 20 Chicago stocks reaching $48.86 on March 10, the highest point since October 1937. By March 22, however, the average had fallen to $44.24, largely be cause of uncertainty abroad. ANNOUNCEMENT r 11HE Federal Reserve Bank of Chicago has just completed ■*" a tabulation of average operating ratios of member banks in the Seventh Federal Reserve district for the cal endar year 1938. Groupings in this study have been made according to the size of banks. A copy of this tabulation may be obtained upon request to the Federal Reserve Bank of Chicago. Mar. 15 1939 $281 Total bills and securities........... Bills discounted................... Bills bought................... U. S. Government securities........... Total reserves......................... Member bank reserve deposits___ All other deposits.............. Federal Reserve notes in circulation....... Ration of total reserves to deposit and Federal Reserve note liabilities combined___ Change from Feb. 15 Mar. 16 1939 1938 $0 $—2 281 2,175 1,139 300 981 89.8% 0 +52 +49 —1 +400 +150 —3 +16 +0.2* +2.2* *Number of Points. CONDITION OF REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) Assets Loans and investments—total...................................... Loans—total........................................... Commercial, industrial, and agricultural loans. Open-market paper....................................................... . Loans to brokers and dealers in securities................ Other loans for purchasing or carrying securities... Real estate loans................................................... Loans to banks.......................................... Other loans..................................... U. S. Treasury bills................... U. S. Treasury notes................................... U. S. Treasury bonds.......................... Obligations fully guaranteed by U. S. Government Other securities.......................................................... Mar. 15 1939 $3,206 858 495 29 40 77 99 3 115 284 343 1,001 253 467 Liabilities Demand deposits—adjusted*............................. Time deposits................................................’ ’' " ’ j' " Borrowings........................................... . 1' Change from Feb. 15 Mar. 16 1939 1938 + 4 +135 +10 —81 +12 -71 — 1 —18 + 3 — 2 — 1 — 7 + 1 +12 — 1 0 — 3 + 5 +30 r j+89 —112 +68 + 7 +77 + 1 +50 2,274 896 0 —2 + 4 0 +184 +15 — 2 ,, ^ annual velocity of demand deposits (unadjusted) in the four weeks ended March 15 was 19.92 times, as compared with 19.12 times in the preceding four weeks and with 20.90 times in the corresponding period of 1938. BANK DEBITS, SEVENTH DISTRICT (Amounts in millions) Per Cent of Increase or Decrease from February January February 1939 1939 1938 Chicago.......................... Des Moines...................... Detroit......................... Fort Wayne................... Grand Rapids................... Indianapolis..................... Milwaukee..................... Peoria............................. South Bend..................... —12.6 —22.8 +10.9 + 7.3 —19.3 + 1.7 32 smaller cities....................... Total 41 cities......................... ............................ 3,959 TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) Total country and city check clearings: Pieces.................................................... Amount................................................. Daily average clearings: Total items cleared— Pieces..................................................... Amount........................................... * ” Items drawn on Chicago— Pieces..................................................... Amount............................................. ’ ’ Items drawn on Detroit— Pieces..................................................... Amount................................................. February 1939 February 1938 9,227,920 *1,587,688,793 419,451 *72,167,672 67,847 *39,235,000 17,053 *7,103,750 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) FEBRUARY continued at the January rate, without showing rise, and retail trade than seasonally. INthe usualMarch,industrial activityincreased lessand trade showed In the first three weeks of however, industrial activity seasonal increases. INDUSTRIAL PRODUCTION Commodity prices continued to show little change. Production of industrial production same in February as m the two usually there is increase, VOLUMEprevious months, althoughwas at about98the ancent ratethe and the Board’s seasonally adjusted index declined further to per of 1923-1925 average. Index of physical volume of production, adjusted for sea" sonal variation, 1923-1925 average = 100. By months, Jan uary 1934 to February 1939. FACTORY EMPLOYMENT In the steel industry activity did not show the usual seasonal advance. Pig iron production increased, but new orders for steel were in limited volume and ingot production remained at about 54 per cent of capacity throughout the month. There was some decline in automobile assemblies, following a period of considerable increase. Output of lumber and plate glass continued to decrease in February, while cement production, which had been curtailed in January, increased considerably. In the fust three weeks of March steel production increased to about 56 per cent of capacity and automobile output was also in somewhat larger volume. Textile production in February was at about the same rate as in January. At cotton and woolen mills activity increased somewhat but at silk mills there was a marked decline. Output of shoes and tobacco products continued at high levels. In the meat-packing industry activity declined further and there was also a decrease in activity at sugar refineries. Bituminous coal production was maintained in February, and crude petroleum output likewise continued in substantial volume. Anthracite output declined in February, and in March was reduced further as mine owners and workers agreed on a curtailment program. Value of construction contracts awarded declined in February, according to F. W. Dodge Corporation figures, owing principally to a further decrease in awards for publicly-financed work. Contracts for privately-financed residential building increased further, while awards for private nonresidential building remained at the low level of other recent months. Employment Index of number employed, adjusted for seasonal varia tion, 1923-1925 average = 100. By months, January 1934 to February 1939. and increased somewhat less than between middle of January and non FACTORYtheemploymentlargelypayrolls the middle of February. Changes isin usual manufacturing lines were of a seasonal nature. CONSTRUCTION CONTRACTS AWARDED NS OF DOLLARS Distribution sales were in about volume in February as in January, although is usual, and sales at variety stores DEPARTMENT storesome increaseorder salesthe same slightly more thanincreased less than seasonally, while mail rose by the seasonal Li Jl t /! vV amount. In the early part of March department store sales increased. Freight-car loadings declined somewhat from January to February, reflecting for the most part reduced shipments of grains, forest products, and miscellaneous freight. 0 Commodity Prices ALL OTHER r ■''resident AL 1934 1936 _____ 1939 Three-month moving averages of F. W. Dodge Corpora tion data for value of contracts awarded in 37 Eastern States, adjusted for seasonal variation. Latest figures based on data for January and February and estimate for March. commodity little change during February and the first three weeks March. As is usual at this WHOLESALElivestock and prices were generallyofmaintained with declined. Silk season prices of meats increased while dairy products prices advanced considerably in this period. In the early part of March current prices of pig iron and of semi-finished and finished steel were reaffirmed for the second quarter of this year. Bank Credit MONEY RATES IN NEW YORK CITY NVESTMENTS in United States Government obligations by New York City banks increased considerably in February and the first half of March. In this period member banks reduced their holdings of Treasury notes and increased their bonds, reflecting in part exchanges of notes for new bond issues on March 15. Excess reserves of member banks continued somewhat below the high level of 83,600,000,000 reached at the end of January, fluctuating largely in accordance with changes in Treasury balances at the Federal Reserve banks. I Money Rates yields on United States Government securities declined to low levels from March the announcement by the AVERAGEthat no February 27betoraised in10, followingfinancing. Yieldsnew record Treasury cash would the March rose slightly For weeks ending January 6, 1934, to March 18, 1939 Page 8 after the middle of March accompanying renewed tension in Europe. New issues of 91-day Treasury bills continued to sell on practically a no-yield basis during March. Other open-market rates continued unchanged. DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111................................. Deputy Chairman W. J. Cummings................................ Chicago, 111. C. B. Van Dusen........................... 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 W. C. Bachman............ Assistant Vice President 0. J. NetterstrOM. .. .Assistant Vice President A. L. Olson.................... Assistant Vice President A. T. Sihler.................. Assistant Vice President J. C. Callahan. N. B. Dawes .... F. A. Lindsten. . L. G. Meyer. ... A. M. Black. . .Manager, Planning Department J. L. Sweet............................................................ F. L. PURRINGTON J. G. Roberts. .. Manager, Research and Statistics Department J. J. Endres..............................................Auditor C. M. Saltnes. . P. C. Hodge___ .Assistant Cashier .Assistant Cashier .Assistant Cashier • Assistant Cashier .Assistant Cashier . Assistant Cashier .Assistant Cashier Assistant Counsel INDUSTRIAL ADVISORY COMMITTEE Mai Epstein, Chicago, 111............................................ Chairman W. Harnischfeger......................Milwaukee, Wis. G. B. Moxley Indianapolis, Ind. R. R. Monroe.................................... Chicago, 111. G. W. Young. ........ Chicago, 111. DETROIT BRANCH DIRECTORS A. C. Marshall................................ Detroit, Mich. J. E. Davidson......................... H. L. Pierson..................................... Detroit, Mich. J. M. Dodge.............................. L. W. Watkins............................ Manchester, Mich. W. S. McLucas....................... R. H. Buss..............................................................Detroit, Mich. Bay City, Mich. . .Detroit, Mich. . .Detroit, Mich. OFFICERS R. H. Buss...................................................... Managing Director H. J. Chalfont........................................ Cashier H. L. Diehl............................. Assistant Cashier SEVENTH FEDERAL IOWA RESERVE DISTRICT
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