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Conditions RESERVE .IBRAR I OVA ILL • INO DISTRICT Vhen initiahwi ly vorurne zu, no. O MONTHLY REVIEW PUBLISHED BY THE federal reserve bank of Chicago 3 Maptm___............... 3 Atteb^vy ~ .. 1 97 f 007 March it, li)A7 ^rr^n.... ...... DISTRICT SUMMARY - ' *»T‘R1teNDS in Seventh district business conditions were . 1 varied during February, with seasonal factors operative to a considerable extent. Levels in general were well above those of last February when adverse weather exerted a deterrent effect on activity in many lines. Steel mills have continued to operate at a high rate and it has been necessary to extend deliveries on most products. Although new orders declined in the period, steel and malleable casting foundries produced and shipped larger volumes in February than in January. The continuance of strikes in the first half of the month prevented total production of automobiles from equaling that of January, but it exceeded the February 1936 output. As is custom ary in February, shipments from furniture factories increased, but to a lesser than usual extent and orders booked declined more than seasonally. Building construc tion, as indicated by contracts awarded, fell off from Janu ary, in accordance with seasonal trend, although residential building increased slightly in the comparison. The move ment of building materials showed the usual variations in trend during the month. Industrial employment and payrolls, especially in the durable goods industries, ex panded in February following the sharp curtailment of a month previous. Smaller volumes of packing-house commodities and of butter and cheese were produced in February than in the preceding month, but sales showed somewhat more favorable trends, the tonnage sold in packing-house com modities declining less than is usual, butter sales showing a counterseasonal increase, and distribution of cheese about equaling that of January. As compared with a year ago, Proposed Capital Expenditures in 1937 An analysis of returns received by this bank from 163 large companies comprising approximately 50 per cent of the major concerns engaged in manufacture, public service, or transportation in the Seventh Federal Reserve district, shows capital expenditures as planned for the area in 1937 to be one-third greater than actual disbursements for that purpose in 1936. Of the reported total of $240,500,000 for 1937, the amount to be devoted to new machines and other equipment in plant extension is estimated as sales of meats and butter were larger and those of cheese smaller; all were below the 1927-36 average for February as were production volumes. Inventories continued heavy. Grain movements declined further in February from the low level of January. A very slight decline took place during February in Seventh district department store trade, and the increase of 13 per cent over a year ago compared with one of 20 per cent in January over a year earlier, although daily average sales were 19 per cent above last February. The retail shoe trade decreased seasonally from the preceding month, while the retail furniture trade rose sharply. The wholesale hardware and electrical supply trades recorded favorable trends in February, sales in the former group expanding more than seasonally in the period and those in the latter increasing counter to trend; both showed large gains over a year earlier. The wholesale grocery and drug trades, on the other hand, experienced somewhat greater than seasonal recessions during February. As a result principally of increases in loans on securities and in commercial loans, total loans and investments of reporting member banks in the Seventh district were somewhat higher on March 17 than a month earlier, a decline in holdings of United States Government securities counteracting to a considerable degree the gains in the items mentioned. Member bank reserve balances at this bank were noticeably larger on March 17 than four weeks previous. Following declines in January, new financing through bankers’ acceptances and dealer sales of com mercial paper increased in February, the latter being more than double those of last February. $83,000,000 and that to replacement or repair of obso lete and depreciated machines and other equipment as $94,500,000. Approximately $13,500,000 will go for new buildings and $29,000,000 for alteration, replacement, or repair of present structures. Unclassified expenditures account for the remaining $20,500,000 of the total. Public utilities and railways continue to predominate the expan sion and replacement programs, but plans are also substan tial for 1937 in groups processing iron and steel and in the food industries. Capital expenditures as reported by the building materials and wearing apparel industries are smaller in dollar volume than in other groups. A few public utilities in receivership have deferred programs for 1937, pending reorganization. Sit-down strikes prevented the filing of reports by a few concerns, particularly in the motor vehicles industry, and a number of companies in other industries were inclined to defer a definite program until labor conditions become more settled. PROPOSED CAPITAL EXPENDITURES FOR 1937 Seventh Federal Reserve District Per Cent Change from Actual Disbursements in 1936 Industrial Group Total (Number of firms indicat Expend ed in parentheses) itures Proposed Auto Accessories, Motor Vehicles, and Aviation „ ..................................(17) Clothing and Wearing Apparel................... (16) Building Materials ... (9) Machinery, Tools, and Electrical Equip ment........................ (21) Foods, Beverages, and Confections............(31) Railroads......................(8) Public Utilities........... (7) Paper and Contain ers ............................ (20) Iron, Steel, Foundries, Stoves and Furnaces ................................. (19) All Other....................(15) Total All Groups. (163) Plant Extension New Build ings New Equip ment Alterations and Replacements Build ings Equip ment +39.6 +19.5 +43.7 +30.7 +38.5 -2.8 +33.3 +182.5 +275.1 +2.1 +33.2 -9.5 +2.9 -14.6 +20.8 +10.2 +46.9 -15.6 -5.2 +4.2 +13.2 +48.0 +35.8 +2.9 +114.7 * -27.2 * +56.6 +39.2 +1.4 +45.6 +41.6 +40.4 +12.6 +65.8 +169.0 +110.2 +34.7 +1.4 -5.5 +39.0 +34.9 -5.3 +67.5 +83.7 -15.6 +57.3 +64.1 -72.2 +12.7 +8.5 +23.3 +18.7 +23.4 * Because of a relatively negligible volume of expenditures in 1936 as compared with those proposed in 1937, percentage changes appear abnormally large and so are not shown. Note: As in 1936, much the greater amount of proposed expenditures in 1937 is for new machines and other equipment, and for replacement of obsolete and de preciated machines and equipment, rather than for buildings. Credit and Finance Reserve balances of Seventh district member banks rose about 73 million dollars between February 17 and March 17, the increase resulting from a gain of 133J4 million dollars through interdistrict commercial and financial transactions. This gain in funds was brought about by net sales of 32 million dollars in Treasury bills and notes to other districts, and by an influx of capital funds of approximately 60 million dollars, of which a large amount was in connection with a public utility bond redemption; while the remainder was made up mainly of large shifts in interbank balances for the purpose of building up re serves in view of the increased requirements, plus transfers of corporate funds in the automobile, public utility, and steel industries. Partially offsetting the gain in banking funds through commercial and financial transactions was an excess of Treasury collections over disbursements of SO million dollars, chiefly occasioned by heavy income tax FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Change from March 17 February 17 March 18 1937 1937 1936 Total bills and securities......................... $277.9 $ -0.0 $ -51.1 Bills discounted.......................................... 0.1 +0.0 +0.0 Bills bought................................................. 0.4 0.0 -0.2 U. S. Government securities.................. 276.4 0.0 -49.8 Total reserves.............................................. 1,708.7 +50.0 +283.8 Member bank reserve deposits............. 987.2 +72.8 +273.4 All other deposits...................................... 11.7 -28.3 -131.6 Federal Reserve notes in circulation . . . 952.1 +2.9 +92.5 Ratio of total reserves to deposit and Federal Reserve note liabilities combined.................................................. * 87.5% +0.4* +4.5* * Number of points Page 2 payments. Minor offsetting factors were an increase in money circulation of 8 million dollars and a decline in reserve bank credit extended of million dollars. Practically no change was noted in rates on prime commercial loans in mid-March over a month previous. However, there was a slight softening in both demand and time collateral loan rates and at the same time some strengthening in rates on commodity paper loans. The average rate earned on total loans and discounts by certain representative Chicago and Detroit banks firmed somewhat in February; for the Chicago banks the increase was from 2.64 per cent in January to 2.67 per cent, and for Detroit banks from 2.65 to 2.72 per cent. Sale of commercial paper by midwestern dealers rose in February to 6 per cent above the preceding month and more than twice the year-ago total and, though below the 1927-36 February average, were the largest for the month since 1931. Paper outstanding at the end of the period increased 10 per cent over January to the highest point since the close of February 1931, but remained 4per cent below the ten-year average for the date. Because of the absence of packer names, sales during the first half of March were considerably smaller than in the corre sponding February period. The bulk of sales continued to be made at % per cent, with fewer sales at and more at 1 per cent than previously. Although the volume of acceptances created during Feb ruary by Seventh district banks totaled 20l/2 per cent above January, it was about 5 per cent below the year-ago figure and 56 per cent under the 1927-36 average for February. Reports for the first half of March indicate a sizable drop from the corresponding February period. Liability for outstandings at the end of February changed little over January 31 and was only 4 per cent less than a year earlier but 60per cent below the 1927-36 average for the date. Accepting banks rediscounted 29 per cent more of their own acceptances in February, but purchases of paper from others fell off to a negligible amount. There was no material change in rates on the open-bill market, which was very inactive, with sales and purchases twothirds less than in January. Midwestern dealers report that the hesitancy which characterized the bond market in January became more pronounced in February. Uncertain as to the outlook for interest rates, institutional buyers exhibited considerable lack of interest and adopted a cautious, waiting attitude; individual investors were more interested in common stocks or in high-grade bonds and preferred stocks with CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts i: millions) _, , Change From March 17 February 17 March 18 1937 1937 1936 Total loans and investments....................... $3,140 $+n $+200 Total loans on securities,........................ 262 +13 +13 To brokers and dealers: In New York...................................... 3 0 +1 Outside New York............................ 52 +5 +13 To others (except banks).................... 207 +8 -1 Acceptances and commercial paper bought...................................................... 36 -3 +6 Loans on real estate.................................. 76 +2 +10 Loans to banks........................................... 8 0 -1 Other loans................................................... 565 +31 +170 U. S. Government direct obligations . . 1,616 -39 -58 Obligations fully guaranteed by U. S. Government................................. 164 0 +20 Other securities........................................... 413 +7 +40 Demand deposits—adjusted....................... 2,259 -15 +252 Time deposits.................................................. 852 -2 +87 Borrowings....................................................... 0 0 0 the conversion privilege. Although there seemed to be ample funds seeking investment, the bond market in gen eral was dull. Heaviest price declines took place in Gov ernment obligations and in high-grade corporate issues; the market in municipal issues was particularly inactive. February new corporate offerings were larger in volume than in January, but on the whole they were poorly re ceived and the market on several issues fell below the offering prices. Many proposed issues were subsequently deferred, and several issues were repriced or contemplated coupon rates raised. Treasury bill rates have continued their firming tendency; those dated March 24 were sold at an average rate of .711 per cent, in contrast with an average rate of only .08 per cent for February 1936. Stock prices on the Chicago Exchange, as evidenced by the Chicago Journal of Commerce average, failed to regain the high of $68.97 reached February 13 and aggregated $63.03 on March 22. 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) February 1937 February 1936 Total country and city check clearings: Pieces........................................................... 9,046,481 9,051,015 Amount....................................................... $1,809,292,866 $1,516,892,099 Daily average clearings: Total items cleared— Pieces............................................................ 411,204 393,522 Amount....................................................... $82,240,585 $65,951,830 Items drawn on Chicago— Pieces............................................................ 66,953* 100,375 Amount....................................................... $43,486,000 $34,484,000 Items drawn on Detroit— Pieces............................................................ 20,128 20,190 Amount....................................................... $9,410,123 $8,210,670 ♦Decline in February 1937 is due to packaging of Chicago early clearings. Agricultural Products Grain Marketing The movement of grain at interior primary markets in the United States declined further during February from the exceptionally low level prevailing in January. Wheat receipts and reshipments were lighter than in any month since last February, imports of the grain into the United States decreased from January and a year earlier, and exports remained negligible. The prospect of moisture in dry areas of the Southwest, a pause in the Continental European drain upon world supplies, resale pressure of heavy Argentine shipments, and some uneasiness of long positions resulted in a decline in prices during the last half of February. Following a drop from $1.40% and $1.45% on the thirteenth of the month to $1.32% and $1.37% on February 25, quotations for No. 2 hard winter wheat for immediate delivery at Chicago subsequently recovered to $1.42% and $1.45% by March 10 because VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions) Per Cent of Increase or Decrease from February January February 1937 1937 1936 Chicago........................... $2,847 -15.8 +11.7 Detroit............................ 846 +12.0 -16.3 Milwaukee..................... 269 -9.6 + 11.7 Indianapolis................... 178 -15.9 +22.7 Total four larger cities 37 smaller cities........... $4,140 689 -15.5 -14.6 +12.2 +15.4 Total 41 centers........... $4,829 -15.4 +12.6 of renewed strength in world markets. Major factors con tributing to this rise were: the resumption of heavy pur chases of Argentine, Australian, and Canadian wheat by Germany, Italy, the United Kingdom, and Spain; the con sequent rapid reduction in exportable surpluses of the Southern and Northern Hemispheres; considerably smaller stocks in North America on March 1 than a year earlier; uncertainty regarding new crop prospects in the south western United States hard wheat belt; and short cover ing, Furthermore, reshipments of wheat from interior primary markets of the United States have continued in excess of current arrivals. Prices again showed a tendency to ease in mid-March, largely as a reflection of profit taking and of some improvement in growing conditions in Kansas, Oklahoma, and other areas in the Southwest. Corn receipts at interior primary centers of the United States fell off counterseasonally in February from a month earlier, but the decline in reshipments was smaller than the 1927-36 average January-February recession. Imports continued in substantial volume. Stocks of corn in the United States were sharply lower on March 1 than a year ago, despite a gain in the visible supply. Marketings of oats at primary centers of the United States were the smallest since last autumn. Moreover, reshipments of this grain considerably exceeded the volume of current arrivals and there was a further increase in the ratio during the first half of March. Stocks of oats in the United States on March 1 were substantially smaller than a year earlier. Prices of both corn and oats followed the general trend of wheat during February and the first half of March. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) Wheat: Receipts................................................ Shipments............................................ Corn: Receipts................................................ Shipments............................................ Oats: Receipts................................................ Shipments............................................ February 1937 Movement January 1937 February February 1936 1927-36 Av. 6,107 7,156 7,245 8,257 5,525 6,893 17,740 10,627 9,397 4,732 12,490 4,834 13,769 7,546 21,416 10,088 3,456 5,979 4,012 7,076 4,436 3,772 6,742 5,593 of Livestock Receipts of cattle at public stockyards in the United States declined more than seasonally in February to the lowest level since April 1933, and those of lambs aggre gated less than in any month subsequent to December 1935; the volume of each decreased in comparison with the 1927-36 February average. Calf marketings were in excess of last February and the ten-year average for the LIVESTOCK SLAUGHTER (In thousands) Yards in Seventh District, February 1937........................... Federally Inspected Slaughter, United States: February 1937........................... January 1937.............................. February 1936........................... Lambs and Sheep Cattle Hogs 177 506 251 79 708 867 742 2,842 3,519 2,319 1,315 1,700 1,314 437 484 405 Calves AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Week Ended Months of March 20 February January February 1937 1937 1937 1936 Native Beef Steers (average)......... .... $11.05 *10.40 $10.75 $ 8.45 Fat Cows and Heifers...................... ......... 8.10 7.80 7.50 6.75 Calves.................................................... 8.85 9.75 9.15 Hogs (bulk of sales)..........................____ 10.15 10.10 10.25 10.40 Lambs................................................... 10.50 10.35 10.10 Page 3 period, though falling off in greater than usual degree from January. On the other hand, hog receipts recorded a smaller than seasonal recession in February and were above a year ago but under the 1927-36 average for February. In several instances, the movement to inspected slaughter—inclusive of animals that did not pass through public stockyards—diverged from the trend of market receipts: the number of cattle and lambs for this purpose considerably exceeded the 1927-36 average for the month and that of lambs was practically the same as a year ago. Moreover, the slaughter supply of cattle during each of several months in the first half of 1935 was lower than in February 1937 and that of lambs was less during last February, April, May, and June. February reshipments of cattle to feed lots exceeded those of a year ago but were less than in subsequent months and below the 1932-36 average for the period; lambs showed a similar trend except they were greater than in March 1936. The movement of feeder calves was the smallest of any month since June 1934 and less than the five-year February average. Meat Packing The production of packing-house commodities at in spected slaughtering establishments in the United States declined 18 per cent in February from January to a level below any month within the past year and 15 per cent under the 1927-36 average for the period, but exceeded that of last February by 7)4 per cent. Though showing less than a seasonal recession from January and aggre gating 2 y2 per cent heavier than a year ago, the tonnage sold was the smallest since last February and 11 per cent lighter than the ten-year average for the month. The general price level of packing-house products declined slightly in February from the preceding period, despite an advance in quotations for beef and lamb. Dollar sales billed to domestic and foreign customers totaled 9 per cent smaller than in January but were 10)4 per cent greater than the 1927-36 February average and 11)4 per cent larger than a year ago. Inventories of these commodities in the United States accumulated somewhat more than seasonally on March 1 over a month previous and were not only 85 per cent heavier than on the corresponding date of 1936 but also 42 per cent greater than the 1932-36 March 1 average. Payrolls at the close of February showed a decline from January of 6 per cent in number of employes, 8)4 per cent in hours worked, and of 7)4 per cent in wage payments. However, employment, hours, and wage payments increased by 15, 16)4, and 21 per cent, respectively, over a year earlier. Shipments for export declined further in February. For wardings of lard decreased and were mainly to Porto Rico and Cuba; there was some increase in the movement of hams to the United Kingdom. British trade was rela tively quiet for United States lard but improved for hams because of the Easter holiday demand. Continental Euro pean inquiry for packing-house commodities from the United States remained exceptionally light. Under the influence of lower-priced offerings than a month earlier, Porto Rican buyers purchased a fairly substantial quantity of lard during February; Cuban demand likewise was good. British quotations for United States lard and meats ruled 1 to 1)4 cents under Chicago parity but quotations in Porto Rico and Cuba fully equaled this basis. Inven tories of United States packing-house products in foreign markets—inclusive of stocks in transit—showed little Page 4 change on March 1 from a month earlier. Imports of animal products into the United States expanded in Feb ruary over January. Dairy Products * Seventh district production of creamery butter declined 2)4 per cent in February from the relatively small volume of January, and was 14 per cent under a year ago and 19)4 per cent below the 1927-36 February average. On the other hand, the tonnage sold was within 4 per cent of this ten-year average; it rose counterseasonally by 6)4 per cent over January to a level 2 per cent above last February. Manufacture of the commodity in the United States likewise aggregated substantially less than a year earlier and the 1927-36 average at this season, having fallen off in greater degree from January than did that of the Seventh Federal Reserve district. Inventories of creamery butter in the United States decreased 50 per cent on March 1 from the beginning of February but were 29 per cent heavier than the 1932-36 average for the date and 151 per cent larger than a year ago. Prices rose slightly in February over January and advanced further during the first half of March. The manufacture of American cheese in Wisconsin declined counterseasonally by 4 per cent in February from a month earlier to the lowest point since March 1935 but totaled only one per cent less than the 1927-36 February average and 3)4 per cent smaller than a year ago. Dis tribution, which exceeded current production by a less than seasonal amount, remained on a level with January, aggregated 25 per cent lighter than last February, and was 5 y per cent under the ten-year average for the month. Total inventories of cheese in the United States decreased less than seasonally on March 1 from the beginning of February and were 40 per cent in excess of the 1932-36 average for the date. Prices remained steady throughout February and the first half of March at the slightly lower level which obtained on January 19. EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of February 15, 1937 Industrial Group Report ing Firms Wage Earn ers No. No. Earn ings (000 Omitted) $ Change from January 15, 1937 Wage Earn ers Earn ings % % Durable Goods: Metals and Products1 .. Vehicles............................ Stone, Clay, and Glass.. Wood Products............... Total................................. 1,503 334 250 412 2,499 471,741 404,623 22,379 48,152 946,895 13,065 12,859 490 1,028 27,442 +2.4 +7.4 +1.4 +3.7 +8.4 +14.0 +6.1 +9.2 +10.9 Non-Durable Goods: Textiles and Products . . Food and Products........ Chemical Products........ Leather Products........... Rubber Products........... Paper and Printing........ Total................................. 318 736 228 135 32 622 2,071 64,743 100,790 33,565 27,325 19,136 78,599 324,158 1,222 2,464 949 573 502 2,211 7,921 +3.4 -0.3 +1.6 +3.1 -1.4 +1.3 +1.2 +6.9 +0.1 +4.1 +4.5 +5.1 +2.5 +2.9 Total Mfg., 10 Groups... . 4,570 1,271,053 35,363 +3.1 +9.0 Merchandising2.................. Public Utilities.................... Coal Mining........................ Construction........................ 3,304 723 25 299 104,681 94,588 5,128 9,212 2,229 3,189 151 222 -0.0 +0.4 -2.3 +2.4 +3.1 +2.6 +9.0 +4.5 Total Non-Mfg., 4 Groups 4,351 213,609 5,791 +0.2 +3.0 Total, 14 Groups................ 8,921 1,484,662 41,154 +2.6 +8.1 ‘Other than Vehicles. Illinois, Indiana, and Wisconsin. +4.9 E Industrial Employment Conditions Increases of 2j4 and 8 per cent, respectively, in aggre gate employment and payroll volumes of Seventh district industries were recorded for the payroll period of Feb ruary 15 as compared with the corresponding period a month earlier. These gains did not quite offset the sub stantial losses shown in the preceding month, which totaled as much as 5 and 10 per cent, respectively, and which to a considerable extent were the result of labor disturb ances, especially in the Michigan area. Although agree ments had been reached before the middle of February in a number of the prevailing labor disputes, the final or partial settlements effected did not account entirely for the current gains to which all of the States within the district and practically all of the main industrial groups contributed. Reporting firms in the vehicles group in Michigan added 2 per cent to their employment volume in February after a curtailment of close to 10 per cent in January. On the other hand, metal and metal products concerns in the same State reported an increase of 9 per cent as against a decrease of per cent in the pre ceding month. In the entire manufacturing classification, Michigan regained less than one-half of its earlier curtail ment in employment volume, Indiana recovered practically all of the previous loss, while the other States showed a moderately upward trend continued from the preceding month. Non-manufacturing groups in the district as a whole did little more than maintain employment at the January level. Increases in payroll amounts during the current month were to some extent heightened by the introduction of higher wage rates in a large number of industrial establishments. Some of these were incidental to the settlement of the labor strikes, while others were given voluntarily. The trend toward higher wage levels continued after the February payroll period, as did also the spread of labor disturbances, and these latter had become more serious by March than in either of the two preceding months. Manufacturing Automobile Production and Distribution The General Motors strike continued through the first half of February to have its effect upon total output of automobiles. However, production estimates for the entire month did not indicate any great decline from the January volume and showed an increase over output last February. Distribution of new automobiles in this district fell off rather sharply in February from a month previous at both wholesale and retail. Although about half the dealers sold more cars to consumers than in February 1936, declines in this comparison reported by firms handling General Motors lines effected a small decrease in the total. Wholesale distribution, on the other hand, aggre gated much heavier than a year ago. Sales of used cars expanded in February and were well above those of last February. At the end of February, new-car stocks were somewhat larger than a month previous but only about 55 per cent of those on hand last year at the same time. Although stocks of used cars decreased in the period, they continued to be greater than a year ago. Iron and Ste^l Products Demand for steel products has continued insistent in recent weeks, with the result that mill operations have been maintained at a high level and that deliveries have been extended. Although anticipated price advances following announced wage increases accelerated the volume of buying to some extent in the first part of March, expand ing production in steel-consuming lines has been a major factor in the demand. With many units operating at prac tical capacity, operations of Chicago district mills in the first half of March averaged 82 per cent of capacity, which rate compares with one of 80p2 per cent in the middle of February and with 63 per cent a year ago. Production of pig iron in the Illinois and Indiana district continued to expand in February and was almost 65 per cent greater in the daily average than in the month last year. In the early part of March, prices of finished steel products were raised from $5 to $8 per ton, and the price of pig iron was increased another $2 over the $1.00 advance made in the third week of February. The scrap iron and steel market has remained strong. Steel and malleable casting foundries of the Seventh district booked less orders in February than in January but continued to increase shipments and expanded operat ing schedules. The gain in production was small, totaling 4 per cent for malleable and 6 per cent for steel castings, while in tonnages shipped the increases were somewhat larger—6 and 13 per cent, respectively. A decline of 39 per cent in the volume of orders booked for steel castings reversed a trend that had been steadily upward since last September. Malleable castings showed a decline of only 2 per cent in this item during February, after having recorded a 20 per cent recession in the preceding month. LUMBER AND BUILDING MATERIALS TRADE February 1937 Per Cent Change from MIDWEST DISTRIBUTION OP AUTOMOBILES January 1937 February 1936 Number of Firms or Yards +12.1 +11.2 +6.1 +57.7 +47.1 +37.8 9 7 9 -6.2 -5.6 -5.6 -3.0 -4.7 +49.3 +58.5 +3.8 116 75 48 113 Class of Trade February 1937 Per Cent Change from Companies Included January 1937 February 1936 -38.0 -39.3 +45.7 +31.3 16 16 -28.8 -35.1 -4.9 -5.2 28 28 +14.5 +6.0 -46.4 -45.5 28 28 +10.2 +23.7 28 -9.5 -9.1 +8.1 +18.5 28 28 New Cars: Wholesale— Retail— On Hand End of Month— Wholesale Lumber: Sales in Dollars......................... Sales in Board Feet................. Accounts Outstanding1........... Retail Building Materials: Total Sales in Dollars............. Lumber Sales in Dollars......... Lumber Sales in Board Feet Accounts Outstanding1........... Ratio of Accounts Outstanding1 to Total Dollar Sales during Month February 1937 Used Cars: Salable on Hand— Wholesale Trade........................... Retail Trade................................... 139.7 333.8 January 1937 147.5 322.8 February 1936 159.9 305.4 ’End of Month. Page 5 All items continued to compare favorably with year-ago figures, the increases in malleable castings ranging from 30 to 45 per cent and in steel castings from 140 to 200 per cent. After the severe decline of the preceding month, activity at stove and furnace factories experienced the customary seasonal reaction in February, orders accepted increasing 9 per cent, shipments 34 per cent, and molding-room operations 49 per cent. Shipments and operations each were on a scale approximately 15 per cent larger than a year ago, while new orders showed an increase of 46 per cent in this comparison. Inventories at the close of February were 25 per cent above those of a month earlier and almost again as high as at the same time last year. Furniture Trends in the furniture industry of the Seventh district continued to be somewhat unfavorable during February. The decline of 32 per cent from January in orders booked by reporting manufacturers was more than seasonal for the period, while the increase of 25 per cent in shipments was less than is usual; in January the gain in new orders had been smaller and the decrease in shipments greater than in the 1927-36 average for the month. However, both orders booked and shipments in February aggregated over half again as large as in the month last year and remained well above the ten-year average for the period—by 22 and 32 per cent, respectively. Although unfilled orders on hand declined 6 per cent between January 31 and the end of February, they totaled 87 per cent heavier than a year ago and their ratio to current orders rose from 105 per cent a month previous to 146 per cent, which latter compared with a ratio of 119 per cent for February last year. The rate of production rose between 4 and 5 points during Feb ruary to better than 80 per cent of capacity and was over 15 points higher than a year earlier. Building Materials, Construction Work February in the building materials industry is typically a transition period between the approaching spring demand and a still prevailing winter recession, and trends in the month this year showed the usual variation. Increases were mainly noticeable in the wholesale distribution of lumber. In a few instances shipments of brick and cement from manufacturing plants of the district exceeded the corre sponding volumes of a month earlier, but the movement as a whole from such plants registered only minor changes. At retail yards the trend continued slightly downward, both sales of lumber and those of other materials handled by these yards falling off in line with the usual seasonal movement. The distribution of all building materials re mained substantially heavier than a year ago at which time the unusually cold weather and heavy snows were slowing down deliveries to a considerable extent. At that time, however, sales of coal were greatly stimulated by the weather conditions so that total dollar sales at reporting retail yards were a little larger than this February. Whole sale accounts outstanding at the close of the current month were slightly lower in ratio to total dollar sales than in either the preceding month or February last year, while at retail this ratio was somewhat higher in both comparisons. Building Construction As is customary in February, building contracts awarded in the Seventh Federal Reserve district fell off in the month this year, the recession in the total amounting to 34 per cent. Contracts for residential building increased slightly in the period and constituted 28 per cent of the aggregate as compared with only 18 per cent a month previous. Such contracts were sharply higher than a year ago in the same month, while other classifications showed more moderate gains in the comparison. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Groceries................... Hardware.................. Drugs.......................... Electrical Supplies.. -f2.6 +43.9 +10.8 +75.7 Pag* 6 Stocks +12.1 +50.7 +5.9 +74.4 -6.0 +30.9 -2.4 +56.5 +4.1 +38.7 +16.4 +56.8 93.8 205.8 149.1 144.9 *8,130,600 +3% +169% *15,996,800 +123% Merchandising Business in the wholesale hardware and electrical supply trades of the Seventh district was in exceptionally good volume during February. Sales of reporting hardware firms expanded 10 per cent in the aggregate over the preceding month, which increase compares with one of only 3y2 per cent in the 1927-36 average for February; and electrical supply sales gained 25 per cent in the month, whereas they normally decline in the period. Both groups recorded unusually heavy gains over the corresponding month a year ago. On the other hand, the wholesale gro cery and drug trades showed sales recessions from JanDEPARTMENT STORE TRADE IN FEBRUARY 1937 Locality Net Sales *28,970,000 -34% +23% *73,025,300 +14% The February volume of proposed building construction in the district, as reflected in permits issued in 101 cities, recorded a gain over the preceding month and a substan tial rise over February last year. The number of such permits increased 9 per cent and their estimated cost 18jf> per cent over the January figures, while as compared with the corresponding month last year gains of 104 and 250 per cent were shown in number and estimated cost, respectively. There were few exceptions to the general trend among either the larger cities or the smaller centers. Per Cent Change February 1937 from February 1936 Per Cent Change from Same Month Last Year Ratio or Accounts Accounts Outstand Outstand Collections ing to ing Net Sales Residential Contracts *Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN FEBRUARY 1937 Commodity Total Contracts Net Sales Per Cent Change First Two Months 1937 from Same Period 1936 Stocks End of Month Net Sales Ratio of February Collections to Accounts Outstanding End of January 1937 1936 Chicago...................... Detroit....................... Milwaukee................ Other Cities.............. +10.7 +17.3 +15.2 +12.1 +15.7 +11.4 +19.0 +7.9 +16.6 +17.6 +19.2 +13.3 34.1 44.0 39.2 32.1 35.1 46.4 38.2 34.8 7th District............... +12.8 +13.9 +16.5 37.3 38.7 uary—7^2 and 12 per cent, respectively—that were greater than seasonal for February, and increases over a year earlier were smaller than in the two preceding months. In all groups, stocks rose over the end of January and in hardware and electrical supplies were considerably above those at the close of February last year. Ratios of accounts outstanding to current sales were lower this February than in the same month of 1936. For the most part, prices are reported as advancing. A fractional decline—less than per cent—took place in February in Seventh district department store trade. Gains of 5 and 2 per cent, respectively, were shown over January in aggregate sales of Detroit stores and in the total for stores in smaller cities, but Chicago trade de creased 2>l/2 per cent and Milwaukee sales one per cent. Although total sales of reporting firms recorded a gain of only 13 per cent over last February, as against an increase of 20 per cent in the yearly comparison for January, daily average sales were 19 per cent larger, there having been one more trading day and that a Saturday in the month last year. It will be noted in the table that Detroit trade made the best showing over a year ago. The increase of 10 per cent in stocks during February was much greater than usual for the period, and at the close of the month they exceeded those on the corresponding date of 1936 by 14 per cent. Collection ratios in general were lower this February than last. In accordance with seasonal trend, sales of shoes by reporting dealers and department stores declined in Febru ary from a month previous. The decrease of 4 per cent in the total was due to sales by dealers, as department stores recorded a gain in the comparison. Sales this Feb ruary exceeded those of the month last year by 17 per cent and in the first two months of 1937 were 18j^ per cent greater than in the same period of 1936. A 17 per cent rise was shown in stocks during February, and they were 11 per cent heavier than at the close of February last year. A sharp gain took place in the retail furniture trade during February, sales of furniture and housefurnishings by dealers and department stores in the district totaling 35 per cent above those of January and exceeding the yearago volume by 27 per cent. The 1927-36 average increase for February over January is 22 per cent. Department stores recorded larger gains in both the monthly and yearly comparisons than did dealers: sales by the former increased 39 and 32 per cent, respectively, and those by the latter only 19 and 9 per cent. Stocks at the close of February were 8 per cent higher than a month previous and 20 per cent above a year ago. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of Firms Feb. 1937 Jan. 1937 Dec. 1936 Nov. 1936 Oct. 1936 Sept. 1936 Feb. 1936 Jan. 1936 Dec. 1935 Nov. 1935 Oct. 1935 Sept. 1935 45 92 101 96 93 99 97 83 85 83 88 94 86 ........... ........... ........... ........... 12 12 21 21 104 114 73 102 95 102 69 98 73 77 66 96 57 59 55 80 74 76 56 80 85 94 50 73 46 46 49 73 42 42 52 78 41 41 49 73 42 41 42 62 47 47 45 66 39 39 37 56 Stoves and Furnaces— Shipments (in dollars)................................................... ........... 8 131 98 266 256 356 274 113 93 176 207 257 196 Furniture— Orders (in dollars).......................................................... ........... Shipments (in dollars)................................................... ........... 12 12 74 88 114 65 67 81 81 78 84 91 89 79 45 57 73 41 43 63 56 54 62 68 61 64 Output of Butter by Creameries— Production......................................................................... ........... Sales.................................................................................... ........... 59 61 70 91 72 85 77 93 88 94 103 106 103 104 82 89 82 94 79 101 75 99 94 121 112 107 Wholesale TradeNet Sales (in dollars): Groceries........................................................................ ........... Hardware....................................................................... ............ Drugs.............................................................................. ........... 27 it 13 60 70 75 65 64 85 70 93 90 65 85 80 73 108 89 72 96 83 59 49 69 63 48 73 69 65 74 63 75 72 75 86 81 80 75 76 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago............................................................................... Detroit........................................................................... Milwaukee..................................................................... Other Cities....................................................................... Seventh District—Unadjusted................................. Adjusted...................................... 29 6 5 44 84 84 75 93 76 70 78 97 78 88 77 68 78 97 157 194 160 156 164 98 98 117 105 94 101 93 98 117 118 103 104 95 86 139 94 89 97 95 68 79 67 62 69 86 64 75 63 59 65 81 133 160 135 130 137 82 85 104 94 88 90 83 82 95 95 87 87 79 74 116 80 77 83 80 106 186 145 193 117 142 65 90 31 118 77 167 102 174 117 163 115 154 73 156 19 83 Meat Packing—(TJ. S.)— Sales (in dollars).............................................................. ........... Casting Foundries— Shipments: Steel—In Dollars........................................................ In Tons............................................................. Malleable—In Dollars.............................................. In Tons................................................... ............ ........... ............ ............ ............ ............ Automobile Production—(U. S.)— Passenger Cars..................................................................... Trucks...................................................... .......................... Building ConstructionContracts Awarded (in dollars): Residential......................................................................... Total.................................................................................... 28 42 27 64 28 50 32 52 40 56 39 54 10 34 14 59 21 78 17 43 22 53 21 43 Pig Iron Production*— Illinois and Indiana............................................................ 123 120 117 109 108 103 75 77 79 79 71 68 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS (By the Board of Governors of the Federal Reserve System) OLUME of production, employment, and trade increased more than seasonY ally in February and wholesale prices of industrial commodities continued to advance. INDUSTRIAL PRODUCTION Production and Employment 1929 1930 1931 1932 1933 1934 1935 1936 1937 Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=100. By months, January 1929 to February 1937. WHOLESALE PRICES The Board’s index of industrial production, which makes allowance for changes in the number of working days and for usual seasonal variations, was 116 per cent of the 1923-1925 average in February, as compared with 114 in January and an average of 115 in the last quarter of 1936. At steel mills activity continued to increase in February and the first three weeks of March and, although the growth was somewhat less than seasonal, outpftt currently is at about the peak level reached in the summer of 1929. Automobile production, while fluctuating considerably with strikes at important plants, has been larger for the year to date than in the corresponding period last year. Output of plate glass in February showed a sharp rise from the low level of the two preceding months when strikes curtailed production. At textile mills and shoe factories activity continued at a high level, while output at meat-packing establishments declined somewhat further. Mineral production increased, reflecting chiefly greater output of coal and a further rise in crude petroleum production. Value of construction contracts awarded this year, according to the F. W. Dodge Corporation, has been considerably larger than a year ago, reflecting an increased volume of private residential building and other types of private construction, while the volume of publicly-financed work has been smaller. Factory employment and payrolls increased from the middle of January to the middle of February by more than the usual seasonal amount. The number employed in the machinery industries increased considerably and there were smaller increases at automobile and plate glass factories. In the non-durable goods industries as a group there was a seasonal rise in employment. Distribution 1934 1935 Index compiled by the United States Bureau of Labor Statistics, 1926=100. By months, 1929 to 1931; by weeks, 1932 to date. Latest figure is for week ending March 20, 1937. MEMBER BANK RESERVE BALANCES Department store sales increased from January to February and the Board’s seasonally adjusted index advanced from 93 to 95 per cent of the 1923-1925 average. Sales at variety stores also increased more than seasonally, while mail order sales, largely in rural areas, showed less expansion than is usual at this time of year. Total freight-car loadings increased in February and the first half of March, owing in part to seasonal influences. Commodity Prices EXCESS RESERVES’V.'Jlp o Wmmmm//. Wednesday figures of total member bank reserve balances at Federal Reserve banks, with estimates of required reserves, January 6, 1932 to March 24, 1937. MONEY RATES IN NEW YORK ... Acceptance Rate The general level of wholesale commodity prices advanced from the middle of February to the third week of March, reflecting principally further substantial increases in the prices of industrial materials. Prices of iron and steel, nonferrous metals, lumber, cotton, rubber, and hides advanced considerably and there were also increases in the prices of cotton goods, paper, and furniture. Wheat prices have advanced in recent weeks following a decline in the latter part of February. Bank Credit On March 1, when the first half of the recent increase in reserve require ments went into effect, excess reserves of member banks declined from $2,100,000,000 to about $1,300,000,000. In the next three weeks, which included the March tax collection period, excess reserves showed moderate fluctuations around the new level. In connection with the increase in reserve requirements there were some withdrawals of bankers’ balances from city banks but practically no borrowing by member banks from the reserve banks. Holdings of United States Government obligations at reporting member banks in leading cities declined by $280,000,000 in the four weeks ending March 17, a part of the decline reflecting large maturities of Treasury bills. Commer cial loans increased further at reporting banks and on March 17 were above last year’s high level reached on December 30. Loans to brokers and dealers in securities increased sharply. Money Rates Minimum rate on rediscounts for and advances to member banks by Federal Reserve Bank, and weekly prevailing rates on prime commercial paper, 4 to 6 months, and prime bankers’ acceptances, 90 days. For weeks ending January 3, 1931, to March 27, 1937. Since the beginning of March the rate on 90-day bankers’ acceptances advanced from tk of 1 per cent to ia of 1 per cent, and commercial paper rose from a flat 34 per cent to a range of between 34 and 1 per cent. Bond yields, which until recently had been near the extreme low point reached last December, advanced by between J4 and per cent and on March 24 were at about the levels prevailing early in 1936.
@FedFRASER