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ma 8 46 Tv'Fr fcD T 'H - , , '.tfL HU.,,,!;, . — ^%liS mm jts’SS^ - ?■1' sgepest^Kias? W%m ■ PI i;s,55l! .S1S.S kwi§ vm\w *a\s: IP 2§vTj :jSaMfeai" limfl kwivCTOCvCvIvviv'J J3~a MU \v\\vVV> . vV'*'>:r'v v~^ ■ unci'? iKiiail l,v£::D' -SSS5S2T A'.AAA lasanasasi M <«1P \\N'vSj;oVVv^! »a> Volume 21, No. 3 March 29, 1938 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 EVERAL factors have pointed recently to a narrowing Agricultural Products of the rate of recession that has prevailed since last fall ARMERS in the five States including the Seventh Fed in the Seventh district. A slight upturn in activity has taken eral Reserve district are planning to reduce their acreage place in a few instances. In the heavy goods industries from that of 1937 by 2 per cent for barley, 3 per cent for margins of decline from a year ago remain large, but the fact that output was then at a high level should be taken corn, and by 6, 8, and 13 per cent, respectively, for potatoes, into account. Merchandising groups have continued to effect soybeans, and spring wheat. The hay and flaxseed acreage a reduction in excessive inventories, even though sales is expected to be about 10 per cent larger and that of declines from the corresponding 1937 volumes have become tobacco may aggregate 16 per cent greater this year than in 1937. perceptibly greater. Industry Production of packing-house commodities fell off sharply MONG manufacturing phases to show increased output in February. The sales tonnage also declined but showed in recent weeks are primary steel, stoves and furnaces, an improvement in ratio to production. Both items were above a year ago, though below the 1928-37 average for furniture, and shoes. At casting foundries, curtailment of activity was considerably less in February than in January; February. Because of price differences, however, the dollar in building construction the decline was smaller than sea value of sales totaled less than that of last February and sonal. On the other hand, production of automobiles was only slightly more than the average. The manufacture and light, although distribution improved to some extent. There the distribution of creamery butter in the Seventh district has been little indication as yet of a spring expansion in declined in February, in accordance with seasonal trend, the building materials industries. Paper mills in the Seventh but exceeded the year-ago volumes. American cheese pro district shipped a smaller volume in February than in duction and sales in Wisconsin expanded counter-seasonally January, and declines from a year earlier became more pro over January and were heavier than for last February. A nounced. Petroleum refining decreased in the current period, less than seasonal decrease took place during February in but remained above a year ago. Although in mid-February inventories of butter and cheese, and holdings of meat prod employment and payrolls showed a small counter-seasonal ucts rose. There was a continuance of good export volumes decline from the preceding month, they gave evidence of a in principal grains, but the interior primary movement was cessation of the sharply downward trend in industrial small in comparison with that of January. output. Credit Trade TN ACCORDANCE with seasonal trend, most wholesale ECAUSE of Treasury income tax collections, reserve A trade groups of the Seventh district had a lighter dollar balances of Seventh district member banks declined volume of business in February than in January. Depart moderately between February 16 and March 16. Increased ment store trade was also slightly less in the aggregate. The holdings of United States Government direct obligations, retail shoe and furniture trades recorded increases in sales together with some gain in investments other than Govern over the preceding month; the gain in the former was con ment securities, effected a 93 million dollar rise in the trary to trend for February and that in the latter was greater earning assets of weekly reporting member banks during than is usual. For the most part, however, in both wholesale the four weeks; deposit liability of these banks declined in and retail trade groups, declines from year-ago volumes the period. Bankers’ acceptance financing in February was were larger than in January. Inventories at the end of Feb in record low volume, and dealer sales of commercial paper ruary were below those of a year ago. were unusually small. S F A B Credit and Finance Member Bank Reserves TN THE four-week period ended March 16, a decline of A 28 million dollars took place in the reserve balances of Seventh district member banks. Treasury operations absorbed 31 millions from the money market during this period, but inter-district transfers netted a 3 million dollar gain in funds to this district. Other factors practically canceled each other. Treasury operations in the district were largely influenced by income tax collections. Interest Rates HANGES in interest rates charged by the larger Chicago and Detroit banks between the middle of February and C March 15 were mixed, and no well-defined trends were evi dent. Earnings on total loans and discounts by both Chi cago downtown banks and the large Detroit banks averaged 2.58 per cent during February. The Detroit figure repre sented an improvement over January’s 2.53 per cent; the Chicago average was lower than the 2.64 per cent recorded during the preceding month. Open Market Paper EW acceptances made during February by accepting banks of totaled about one Nthe Januarythe Seventh districtwas the lowest on thishalf volume. This total bank’s records, which extend back to 1923. February purchases of bills were only one third of the January total, and these also represented a new low for our records, with comparable figures back to 1930. A small volume of February maturi ties, 43 per cent less than in January, held the loss in total holdings to 9 per cent. Outstandings on February 28, though only 6x/2 per cent below those of January 31, were the lowest for the end of the month in over fifteen years. All comparisons with February 1937 and the 1928-37 average for the February period showed decided declines, those involving the average being the sharper. The declin ing trend in new financing continued into the first fifteen days of March, with acceptances made by several large Chicago banks running more than 10 per cent below the corresponding February period, although they were slightly above the total for the first half of March 1937. Transac tions in the Chicago open bill market between February 15 and March 15 were in somewhat greater volume than during the preceding month. Commercial paper sales in the Middle West decreased during February almost 50 per cent from January, nearly 20 per cent from a year ago, and approximately 25 per cent from the 1928-37 average for the month. Outstandings on February 28 were practically unchanged from the end of January and totaled 5 and 9% per cent above the yearago and ten-year average volumes, respectively. Rates tended to ease as they had done for the past few months, but demand from both country and city banks slackened, especially that from the city banks. Commercial paper sales by representative Chicago dealers during the first half of March were over 20 per cent heavier than in the same Feb ruary period, and the tendency of rates to soften continued. Selected Seventh District Banking Data * # FEDERAL RESERVE BANE OF CHICAGO. SELECTED ITEMS OF CONDITION (Amounts in millions) Total bills and securities............................. Bills discounted.............................................. Bids bought..................................................... U. S. Government securities...................... Total reserves.................................................. Member bank reserve deposits.................. All other deposits........................................... Federal Reserve notes in circulation........ Ratio of total reserves to deposit and Federal Reserve note liabilities com bined ............................................................. * * Grain Marketing Page 2 —0.2* +0.1* * (Amounts in millions) March 16 1938 Assets Demand deposits—adjusted....................... Time deposits.................................................. Borrowings....................................................... Change from February 16 March 17 1938 1937 $3,071 939 $+93 —14 42 524 47 42 —3 —6 —2 —5 84 87 3 —1 0 —1 47 63 1,539 0 +4 +96 —77 176 417 —12 +23 +12 +4 2,090 881 2 —65 —3 +2 —169 +29 +2 Liabilities $—69 —8 * '+ ’ ’* —i3 +ii * —5 . .* * *Not Available. # * * VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions) Per Cent of Increase or Decrease from January February 1937 1938 —16.1 —19.4 —22.5 —24.6 —10.2 —17.6 —21.1 —15.3 . .................. .................. .................. .................. February 1938 *2,293 638 222 151 Total four larger cities........................... .................. 37 smaller cities....................................... .................. $3,304 590 —17.3 —17.5 —20.2 —14.3 Total 41 centers....................................... .................. $3,894 —17.3 —19.4 Chicago....................................................... Detroit........................................................ Milwaukee................................................. Indianapolis.............................................. * * * 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) Wheat Total country and city check clearings: Pieces...................................................... HE movement of wheat at interior primary markets of Amount.................................................. Daily average clearings: the United States was the smallest in February since Total items cleared— last spring and, although it remained well in excess of last Pieces...................................................... Amount.................................................. year’s volume, it totaled less than the 1928-37 average for Items drawn on Chicago— Pieces...................................................... February. Exports of the grain were substantial during the Amount.................................................. Items drawn on Detroit— month. Because of fair export buying and relatively firm Pieces...................................................... foreign markets, wheat prices held steady in the latter half Amount.................................................. T 87.6% Change from February 16 March 17 1938 1937 $0 $+5 0 0 0 0 0 +6 —22 +66 —28 +2 +8 +58 —1 +13 CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT D Agricultural Products March 16 1938 $283 0 0 282 1,775 989 70 965 *Number of Points. Loans and investments—total................... Loans—total........... ....................................... Commercial, industrial, and agricultural loans: On securities................................................ Otherwise secured and unsecured......... Open-market paper........................................ Loans to brokers and dealers in securities Other loans for purchasing or carrying securities.................................................. Real estate loans............................................ Securities Markets Loans to banks............................................... loans: URING February and early March the Midwestern bond Other securities................................................ On Otherwise secured and unsecured......... market exhibited no important characteristics that were U. S. Government direct obligations. . . . not common to the rest of the country. All prices were firm Obligations fully guaranteed by U. S. Government............................................ except those for rails, which eased off in early March. A Other securities.............................................. wide spread continued to separate the prices of highest grade bonds from those of somewhat less conservative quali ties. Institutions did most of what little buying existed, but large banks evinced some interest, mainly in short-term “gilt-edged” liens and tax-exempts. There have been a few municipal issues since February 1 and one large corporate issue in early February met with good success. Nevertheless, activity in all phases of the bond market continues far below normal. The Chicago Journal of Commerce average of twenty Chicago stocks established a new 1938 low of $35.95 on March 18, and stood at $36.18 on March 22. At the begin ning of March, the Treasury commenced the issuance of two series of Treasury bills weekly, one with a 91-day maturity and the other with a maturity close to June 15. All of these bills sold at discounts substantially below 0.100. * February 1938 February 1937 9,227,920 $1,587,688,793 9,046,481 $1,809,292,866 419,451 $72,167,672 411,204 $82,240,585 67,847 $39,235,000 66,953 $43,486,000 17,053 $7,103,750 20,128 $9,410,123 of February, and quotations for No. 2 hard winter wheat in cash positions at Chicago ended the month at $1.00 and $1.02%. These prices ruled weaker through March 21, however, and stood at $.9114 and $.93% on that date, or about 8 to 11 cents higher than the July futures. Weaker foreign markets, lack of important export buying, generally improved crop prospects in the North American winter wheat belt, and substantial long liquidation were prime elements in this softening tendency. Visible supplies of wheat in the United States had declined more than season ally by March 19. On this date they were 14 per cent under a month earlier and 52 per cent lower than the 1928-37 average, though 55 per cent larger than stocks on the comparable 1937 date. Meat Packing EBRUARY production at inspected slaughtering estab lishments in the United States was 24 per cent lighter than that of January and 10 per cent under the 1928-37 average for the month; the margin of gain over the corre sponding 1937 period narrowed to 5 per cent. As a conse quence of the heavy decline in production from the rela tively high level of January, payrolls in the industry showed decreases at the close of February from a month earlier of 10 per cent in workers, 16 per cent in hours, and 15 per cent in wage payments. Hours and employment declined 8 and 10 per cent, respectively, from last February, while wage payments increased only 4 per cent in the comparison. Among favorable factors was a noticeable improvement in the sales to production ratio, although inventories of these Corn and Oats commodities in the United States had risen 39% million HE primary movement of corn, like that of other pounds further by March 1 and were within 12 per cent of principal grains, was more than seasonally lighter in the 1933-37 average for the date. The tonnage sold, totaling February than in January, and receipts of the commodity per cent heavier in February than a year earlier, was 5 at interior centers of accumulation fell below the February within 13 per cent of January’s tonnage, and only 6 per 1928-37 average. February exports of corn were in good cent below the 1928-37 February average. Coincident with volume. In contrast to price trends in the wheat market, a rise during February in the prices of most pork products, quotations for No. 2 yellow corn for immediate delivery at dollar sales billed to domestic and foreign customers Chicago held steady in the five weeks ended March 21, and increased, despite a decline in quotations for beef, veal, and at $.58% and $.60% on that date were slightly below July lamb. In the aggregate these dollar sales were only 6 per and September futures quotations. Corn prices were chiefly cent less than in January and 9 per cent less than in the bolstered by a moderate export demand, lighter country 1937 month; they were one per cent greater than the tenmarketings, and forecasts of the worst Argentine crop failure year average for February. No marked change in trends was in fifteen years. Visible stocks of corn on March 19, though evidenced in the first half of March. only 6 per cent higher than a month previous, totaled two times more than in 1937 and well above the 1928-37 average ForeignJTrade for the date. The February oats movement likewise declined DECLINE in shipments of packing-house products for counter-seasonally from January, and exports of the grain export was recorded in February from January; how were considerably lower. Under the influence of wheat, oats ever, some expansion took place in the volume of hams for prices softened somewhat in the first three weeks of March, warded to the United Kingdom. Trade in United States and visible supplies diminished seasonally by 7 per cent lard was fair in England and improved in Porto Rico but from mid-February to mid-March. tended to decline in Cuba and Continental Europe. Settle ment of the Porto Rican stevedores’ strike contributed much MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE to the gain in that country. In addition to the usual preUNITED STATES (In thousands of bushels) Easter demand for hams, there was some forward buying February by British purchasers to cover a portion of their summer February January February 1928-37 1938 1938 1937 Av. month requirements. English prices of American hams Wheat * Receipts................................................ 8,727 10,625 6,107 16,262 moved closer to Chicago parity during the month. Quota Shipments.................................................. 9,980 13,156 7,156 10,286 tions for United States lard continued under this parity in Corn: Receipts................................................ 18,447 33,069 9,397 19,901 the United Kingdom but were close to it in other foreign Shipments............................................ 11,579 21,179 4,732 9,738 Oats: markets. Inventories of United States packing-house com Receipts...................................................... 4,041 5,461 3,456 6,071 Shipments................................................... 4,188 4,739 5,979 5,379 modities abroad—inclusive of stocks in transit—decreased on March 1 from a month earlier. Imports of animal Movement of Livestock products into the United States declined substantially fur ATTLE and calf marketings at public stock yards in the ther during February. United States dropped in February to the lowest level LIVESTOCK SLAUGHTER since the spring of 1933; hog receipts were the lowest for (In thousands) any month since October. Volume in each classification Lambs and Cattle Hogs Sheep Calves totaled under a year earlier and the 1928-37 February Yards in Seventh District, 178 February 1938........................... 460 266 75 average. Lamb receipts exceeded those of last February Federally Inspected Slaughter, .... and were slightly above the ten-year average for the month, United States: 716 2,833 1,424 February 1938........................... .... 398 even though they declined seasonally in volume from Jan January 1938............................. ___ 830 4,201 1,552 420 708 2,842 1,315 437 February 1937........................... ___ uary. The movement to inspected slaughter—inclusive of animals that did not pass through public stockyards— AVERAGE PRICES OP LIVESTOCK (Per hundred pounds at Chicago) deviated somewhat from the trend of market receipts: the Months of Week Ended slaughter supply of cattle was not only greater than in March 19 February January February 1937 1938 1938 1938 February 1937 and in several months during the first half $8.65 $7.80 $8.30 $10.40 Native Beef Steers (average)... ___ of 1935, but considerably above the 1928-37 February Fat Cows and Heifers................. .... 7.15 7.80 6.80 6.95 9.60 9.00 10.00 8.85 average; that of lambs and calves was also substantially Calves.............................................. .... 9.35 8.30 7.95 10.10 Hogs (bulk of sales)..................... ___ 9.10 7.60 8.35 10.50 above the ten-year average. Lambs.............................................. ___ F T A C rti» Dairy Products practically without interruption since last June, but the losses in these items were considerably below those of any RODUCTION and distribution of creamery butter in recent month. At malleable casting foundries, the volume the Seventh district conformed to seasonal trend during of incoming orders fell off to about the same extent as in February. Butter manufacture in the area totaled 2 per January—by 8 per cent in tonnage and 7 per cent in dollar cent lower than in January and 10 per cent less than the units. Shipments and production were curtailed much less 1928-37 February average, but was 10 per cent higher than than a month earlier. All items continued on a substan the make for February 1937. The tonnage sold in the dis tially lower basis as compared with the corresponding vol trict aggregated one per cent lower than in January, umes of a year ago, the losses in steel castings averaging although it was 10 per cent higher than in February 1937 around 80 per cent and those in malleable castings about and 5 per cent above the ten-year average. For the United 60 per cent. States, production of the commodity showed about the same In the manufacture of stoves and furnaces, orders accepted trends as in the Seventh district, except that it almost equaled the average for the month. By March 1, United and production increased for the second consecutive month; States inventories of creamery butter had declined 10 million the February gain amounted to about 45 per cent in each pounds from a month earlier—8 million pounds less than of these items. An expansion of 40 per cent in shipments would be seasonally expected; they totaled 4 million pounds reversed the downward trend prevailing since last Sep over the 1933-37 average exceeding slightly stocks of March tember. Despite these gains, however, the declines from 1, 1937. Bolstered considerably by Government purchases, year-ago volumes remained heavy, totaling 28 per cent in butter prices held steady from mid-February through the orders, 35 per cent in shipments, and 79 per cent in produc tion. Inventories, which were slightly reduced during the first three weeks of March. current period, showed an excess of only 10 per cent over A counter-seasonal expansion occurred in February over those of a year ago as against an excess of several times January in the manufacture and sale of American cheese that percentage a month earlier. in Wisconsin, and the volumes were the largest since last October. Cheese production in the State totaled 8 per cent Automobile Production and Distribution more than in January and 11 per cent heavier than that of a year ago or the 1928-37 February average. During the LTHOUGH it appears that March production of auto first three weeks of March production continued well sus mobiles will show an increase over that of February, tained. February distribution of the commodity from Wis indications are that first-quarter output will amount to only consin primary markets rose 3 per cent above the January a little better than one balf that of the comparable 1937 amount, 6 per cent over the February 1937 amount, and period. Operations during February were light: production almost equaled the ten-year average for the month. United of passenger cars by American manufacturers numbered States inventories of cheese fell somewhat less than season 139,519, a volume which was 11 per cent below January ally from February 1 to March 1 and, although they and 53 per cent smaller than a year ago; truck output of remained well below stocks of a year earlier, their excess 47,287 vehicles recorded declines of 13 and 30 per cent over the 1933-37 average widened to 12 million pounds. from the preceding month and last February, respectively. After pronounced weakness in January and early February, Evidences of improvement were noted during February cheese prices ruled steady through tbe first two weeks of in Seventh district distribution of automobiles. Sales of March but were off slightly in the third week. new cars at both wholesale and retail expanded moderately over a month previous, and used-car sales increased like wise. New-car sales to users numbered only 6 per cent Manufacturing smaller than in February 1937 and recorded an 11 per cent gain in value in the comparison. Some reduction of stocks Iron and Steel Products was effected in the current period. The margin of excess SLIGHT improvement may be noted in activity at over a year ago was narrowed considerably in the case of Chicago district steel mills. Sales and specifications new-car stocks, while used-car stocks numbered less than at have gained to a small extent. The rate of steel ingot output close of last February. the in the middle of March averaged 30 per cent of capacity, which is the highest since the end of November and com pares with a rate of 25 per cent a month earlier. Sources MIDWEST DISTRIBUTION OF AUTOMOBILES of demand have been varied. As yet the automotive and construction industries, as well as tbe railroads, have done February 1938 Per Cent Change from little buying. Pig iron production in the Illinois and Indi ana district continued to trend downward during February. Included January February Prices of scrap iron and steel have remained unchanged, 1938 1937 following some weakening in the third week of February. New Cars: P A A Orders booked during February by reporting steel casting foundries of the Seventh district failed to maintain the gain recorded in the preceding month. The recession from the January level totaled 20 per cent in tonnage and 9 per cent in dollar units. The divergence in these percentages was due to a difference in the cost of various types of castings and not to any recent price advance. Shipments and pro duction continued a downward movement that has been Pag* 4 Wholesale— Number Sold....................................... Value..................................................... Retail— Number Sold....................................... Value..................................................... On Hand End of Month— Number................................................ Value..................................................... +19.8 +13.5 —62.7 —56.6 12 12 +25.5 +15.4 —6.3 +10.6 27 27 —12.8 +10.2 +33.5 27 27 +8.4 —14.4 27 -6.7 —8.5 —6.8 +6.0 27 27 Used Cars: Number Sold....................................... Salable on Hand— Number................................................ Value..................................................... year-ago runs increased to 3 per cent. Crude runs for the Furniture LIGHTLY more favorable trends prevailed during Feb United States showed similar trends, the average for Febru ruary in the furniture industry of the Seventh district. ary decreasing about 2 per cent from January. The aggregate dollar volume of orders booked by reporting manufacturers decreased less than seasonally from January, Industrial Employment Conditions and shipments expanded more than is usual for the period. Furthermore, the margins of decline from a year ago were EBRUARY reports on employment and payrolls in Sev narrowed somewhat. The decrease in new orders from the enth district industries indicated that the sharp rate of preceding month amounted to 19 per cent and that from last recession prevailing in the past several months had practi February to 31 per cent. Shipments increased 40 per cent cally ended. Although, contrary to the usual trend for the in the comparison with January and declined 38 per cent period, some further slight declines were shown from Jan from last year. There was a fractional gain in unfilled uary, their size was almost negligible in comparison with orders between the end of January and February 28, and the drastic curtailments recorded in the preceding three their ratio to incoming business rose from 92 per cent a months. One of the most important of the industry groups month earlier to 114 per cent; the latter compared with 146 in this district, metals and products, contributed slightly per cent a year ago. Operations remained about 30 points more than its proportionate share to the general decline in under the corresponding 1937 rate but were accelerated a the middle of February, with the primary producers of iron few points during February to nearly 55 per cent of and steel as well as their consuming industries sharing in capacity. the curtailment. The vehicles group, covering principally the automobile and railroad equipment industries, showed Paper and Pulp XCEPT for a slight increase in orders booked, activity about the same percentage loss in employment as the metals during February at Seventh district pulp and paper group, though a smaller decline in payrolls. Stone-clay-andglass and wood products, the other two durable goods mills decreased somewhat from January levels, and the comparisons with a year earlier became more unfavorable. groups represented in the returns, gave indication of expand Inventories of paper continued their declining tendency, ing activity, mainly through larger wage payments. Within but pulp stocks increased over those of January 31. Paper the non-durable goods classification, textile and leather mills again operated at about 80 per cent of capacity, or products experienced greater than average seasonal gains about 15 points below the highly active month of February that very slightly more than offset the losses shown in 1937; the pulp industry operated at the same percentage the other groups included. Some of the latter declines— of capacity as in January and about 14 points lower than a such as those occurring in chemicals and rubber products— were contrary to the usual trend for the period. In the food year ago. products group, the curtailment was somewhat heavier than PAPER AND PULP INDUSTRY .. generally takes place in February. Non-manufacturing SEVENTH DISTRICT February 19381 industries followed a trend that is customary for the month, Per Cent of Increase registering moderate decreases in both employment and or Decrease from January February payrolls. The one exception was the construction group, „ 1938 1937 Paper: which maintained its wage payments at practically the level New orders booked (tons).......................................................... +6.7 —31.7 of the preceding month. The aggregate employment and New orders booked (dollars)..................................................... +1.6 —24.2 Total shipments (tons)................................................................ —10.1 —21.8 payroll volumes of the district are now about 20 and 30 Total shipments (dollars)........................................................... —9.2 —15.7 S F E Total production (tons).............................................................. Stocks on hand at close of month (tons).............................. Pulp: Pulp produced (tons)................................................................... Stock on hand at close of month (tons)................................ —1.3 —3.5 —24.1 +40^6 —6.7 +2.9 —13.6 +71.0 Shoes "OOOT and shoe manufacturing in the Seventh district has been showing steadily increasing activity since early this year. January production, exceeded that of December by 14 per cent and the February preliminary data gave indication of a further rise of 12 per cent. These gains compare with an average expansion of 8 and 9 per cent, respectively, in these two months during the pre ceding ten years. Although output has returned to a level equal to the corresponding 1928-37 average, it is still almost 30 per cent lower than the relatively high volume of a year ago. Petroleum Refining EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL ____ RESERVE DISTRICT Week of February 15, 1938 Metals and Products1.. Vehicles............................ Stone, Clay, and Glass. Wood Products.............. Total................................. No. Earn ings (000 Omitted) 8 Wage Earn ers % Earn ings % 1,740 431 278 482 2,931 381,429 278,277 18,318 40,226 718,250 9,130 7,147 409 776 17,462 —2.8 —3.0 —1.3 +0.8 —2.6 —1.6 —0.7 +3.8 +6.9 —0.8 383 1,009 292 169 32 709 2,594 59,118 99,820 29,789 23,130 13,420 76,250 301,533 1,069 2,574 846 470 278 2,127 7,370 +6.5 —1.1 —1.0 +2.5 —6.8 —0.0 +0.6 +12.5 —3.1 —0.9 +8.6 —6.5 +0.3 +0.7 5,525 1,019,783 24,832 —1.7 —0.3 2,837 3,527 117 189 —2.1 —1.5 —1.2 —5.3 —2.2 —0.9 —7.7 +0.9 Non-Durable Goods: Textiles and Products.. Food and Products.... Chemical Products........ Leather Products........... Rubber Products........... Paper and Printing___ Total.................................. Total Mfg., 10 Groups... Wage Earn ers Durables Goods: ETROLEUM refineries located in the Indiana, Illinois, Merchandising*................... and Kentucky area operated during the week ended Publio Utilities.................... Coal March 12 at 83 per cent of capacity, a rate considerably Mining........................ Construction........................ lower than in most other recent weeks. In this area, daily Total Non-Mfg., 4 Groups average crude runs to stills were, during February, the low est since last March; they declined one per cent from the Total, 14 Groups............... January average. Their margin of gain, however, over the ‘Other than Vehicles. P Report ing Firms No. Industrial Group Change from January 15, 1938 5,141 925 27 344 126,648 105,166 5,092 6,369 6,437 243,275 6,670 —1.9 —1.6 11,962 1,263,058 31,502 —1.7 —0.6 ’Illinois, Indiana, and Wisconsin. Pi|« 8 exceeded the February average for the preceding ten years, mainly because of an exceptionally light demand for coal during that month. Sales of brick and cement, on the other hand, as reported by some of the leading manufacturers and dealers in these materials, experienced a moderate gain paralleling the January to February trend in the 1928-37 The Building Industry average. Activity in all lines was at a substantially lower level than last year, and the differences were somewhat Construction more marked than a month previous. Stocks in most lines LESS than usual recession took place this February continued to be heavier than a year ago, although some in construction work of the Seventh district, and the reduction was effected during the current period. According decline from a year earlier, though still substantial, was the index of the United States Bureau of Labor Statistics, to noticeably smaller than in a similar comparison for Jan wholesale prices of building materials, as a group, declined uary. Residential building as well as public works building approximately one per cent during February, and in the showed some increase over the preceding month; the former first week of March were 3% per cent lower than at the rose to 26 per cent of total construction, from 20 per cent corresponding time last year. in January. per cent, respectively, below those of a year ago. The spread has widened appreciably, not so much on account of the moderate decreases in the current month as because of the generally rising trend in activity a year ago. A Merchandising BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Total Contracts Period February 1938.............................................................. Change from January 1938................................. Change from February 1937............................... First two months of 1938.......................................... Change from same period 1937.......................... •Data furnished by F. W. Dodge Corporation. Residential Contracts *17,289,000 —8.7% —40.3% $36,232,000 —50.3% $4,506,000 +21.1% —44.6% $8,227,000 —48.6% Following a small increase a month previous, the esti mated cost of building permits issued in 100 cities of the district fell off 16 per cent in February and was only about one half as large as a year ago. Exceptions to the general downward trend in the monthly comparison were noted in Des Moines and Milwaukee, and in the aggregates for the smaller cities of Indiana and Iowa; gains over last Febru ary were shown in the totals for the smaller cities of Illinois and Iowa. The number of permits issued this February rose about 25 per cent over January and was only one per cent less than a year earlier. Wholesale Trade N THE majority of wholesale trade groups of the Seventh Federal Reserve district, business in February recorded greater declines from the corresponding 1937 volumes than had been the case in January. As compared with the pre ceding month, the dollar volume sold in the current period was smaller by 7 per cent each in the grocery and the elec trical goods trades, by 9 per cent in drugs, and by 2 per cent in the miscellaneous group, while hardware sales showed a fractional increase over January. For the most part these changes were in accordance with seasonal trend. Generally, inventories on February 28 totaled below those on the date last year; they were considerably less in some groups. I WHOLESALE TRADE IN FEBRUARY 1938* Per Cent Change from Same Month Last Year Commodity Stocks Net Sales Accounts Outstand Collection! ing Materials —9.8 —10.5 —9.6 —10.8 UILDING material industries continued to mark time —11.1 —23.1 —13.7 —22.9 —7.8 —11.6 —5.3 —0.3 in February, and there are few indications as yet of —2.1 —19.4 +8.2 —8.1 an approaching spring expansion. Sales of lumber at both —13.4 —7.0 —4.1 -9.6 wholesale and retail again declined, whereas at this season by Bureau of Foreign and Domestic Unit there is usually a moderately upward trend in wholesale •Data furnishedCommerce. Additional information on Commerce, trade ed States Department of wholesale may be distribution. The recession in lumber sales at retail approxi obtained through the Bureau in Washington,,D. C. mated that which generally occurs at this time of the year. Retail Trade For all materials handled by reporting yards the decrease NLY a slight recession—about one per cent—was shown LUMBER AND BUILDING MATERIALS TRADE for February from January in total sales of Seventh district department stores, and daily average sales increased February 1938 Per Cent Change from 3 per cent. However, the margin of decline from last year Number of ClasB of Trade Firms or increased from 9 per cent in January to 13 per cent, and February January Yards 1937 1938 continued to widen into March. Detroit business recorded by far the largest decrease from last February. The posi Wholesale Lumber: —10.7 —51.8 10 Sales in Dollars....................................... tion of inventories has improved further. Stocks at the —16.2 —60.1 8 Sales in Board Feet............................... +0.5 —34.1 10 Accounts Outstanding1......................... end of February were 7 per cent smaller than on the date Retail Building Materials: —18.6 —10.2 182 Total Sales in Dollars........................... in 1937, whereas on January 31 they had totaled only 2 —8.0 —28.0 100 Lumber Sales in Dollars...................... per cent lighter than a year earlier. A 5 per cent increase 113 —7.1 —25.3 Lumber Sales in Board Feet.............. —6.8 180 —4.6 Accounts Outstanding1........................ in inventories over the preceding month was no more than Ratio of Accounts Outstanding1 seasonal. B O to Total Dollar Sales during Month February 1938 Wholesale Trade......................................... Retail Trade................................................ xEnd of Month. Pa«e « January 1938 186.7 309.8 174.1 291.2 February 1937 136.6 269.4 * # * A somewhat greater than seasonal increase in business took place during February in the retail furniture trade. Aggregate sales of reporting dealers and department stores exceeded those of January by 24 per cent, the gain com- DEPARTMENT STOKE TRADE IN FEBRUARY 1938 DEPARTMENT STORE INVENTORIES IN SEVENTH DISTRICT Per Cent Change First Two Months of 1938 from Same Period 1937 Per Cent Change February 1938 from February 1937 Locality Net Sales Stocks End of Month Net Sales 1937 1938 28.9 39.1 36.6 35.3 30.0 44.0 —3.2 —10.9 —21.2 —7.0 —4.5 —7.6 —9.5 —6.8 3i.i 33.2 —6.6 —11.9 33.6 36.3 —9.1 —2.5 —10.2 —25.2 —10.1 —10.5 —9.6 —12.5 —9.0 7th District................. Ratio of February Collections to Accounts Outstanding End of January +7.1 —10.9 —13.3 38.2 39.2 •Include Fort Wayne and Peoria. * Based on Dollar Amounts Reported by 39 Firms. paring with one of 21 per cent in the 1928-37 average for the month. On the other hand, the decrease of 21 per cent from last February in the dollar volume sold was noticeably larger than the 15 per cent decline recorded in the year-ago comparison for January. Stocks of furniture and housefurnishings on February 28, though 2 per cent larger than a month earlier, totaled one per cent below those on hand at the same time in 1937. * * Contrary to the usual trend, sales of shoes at retail expanded 2 per cent in February this year. The dollar volume sold by shoe dealers showed a decline from January, but that by department stores recorded a substantial increase in the period. As compared with a year ago, business totaled 9 per cent smaller this February, with department stores experiencing a greater decrease than did dealers. Stocks rose 13 per cent during the current period; however, they were about on a level with a year previous. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted. Meat Packing—(U. S.)— Sales (in dollars)............................................. No. of Firms Feb. 1938 Jan. 1938 Dec. 1937 Nov. 1937 Oct. 1937 Sept. 1937 Feb. 1937 Jan. 1937 Dec. Nov. 1936 1936 Oct. Sept. 1936 1936 45 84 89 83 86 100 100 92 101 96 93 99 97 Casting Foundries— Shipments: Steel—In Dollars........................................ In Tons............................................ Malleable—In Dollars............................... In Tons................................... 12 12 21 21 30 22 36 43 33 25 38 46 47 37 49 60 58 47 55 67 70 58 64 77 96 86 76 92 104 114 74 103 95 102 69 98 73 77 66 96 57 59 55 80 74 76 56 80 85 94 50 73 Stoves and Furnaces—• Shipments (in dollars)................................. . 14 64 46 124 166 241 245 99 95 214 205 288 219 Furniture— Orders (in dollars)........................................ . Shipments (in dollars)................................. 34 34 53 52 65 37 37 51 53 68 65 81 77 87 75 83 111 67 67 81 81 75 84 91 89 79 Output of Butter by Creameries— Production......................................................... Sales.................................................................. . 59 61 77 100 78 101 78 98 75 101 86 101 92 122 70 90 72 85 77 93 88 94 104 106 103 104 Wholesale TradeNet Sales (in dollars): Groceries......... ............................................. Hardware...................................................... Drugs............................................................. 27 11 13 54 54 69 57 52 76 64 75 89 66 88 88 72 116 94 81 115 91 60 70 77 65 64 85 70 93 90 65 85 80 73 108 89 72 96 83 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago...................................................... . Detroit........................ .................................. Milwaukee..................................................... Other Cities.................................................. Seventh District—Unadjusted............... Adjusted.................... 29 6 5 44 84 84 68 71 69 65 68 85 69 74 73 68 70 88 148 180 159 151 155 93 95 117 102 97 100 92 98 123 118 107 106 96 91 151 104 99 105 102 76 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 Automobile Production—(U. S.)— Passenger Cars............................................... Trucks............................................................... 48 126 53 144 83 217 101 172 102 83 41 139 101 179 106 186 145 195 116 143 65 91 31 120 Building Construction— Contracts Awarded (in dollars): Residential.................................................. Total............................................................. 15 25 13 28 16 38 26 41 37 58 34 57 28 42 27 64 28 50 32 52 40 56 39 54 Pig Iron Production*— Illinois and Indiana...................................... 47 49 53 68 98 134 123 120 117 109 108 103 •Average daily production. Pact? National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION of manufacturing little change from February, while output of minerals declined Awards for residential VOLUME increased somewhatproduction showedfurther.considerably inJanuary to half building in February and rose the first of March. Production HE Board’s seasonally adjusted index of industrial production, which includes both manufacturing and mining, was 79 per cent of the 1923-1925 average in February as compared with 80 per cent in January. The decline in the total index was accounted for chiefly by a reduction in output of minerals, particularly of crude petroleum. Steel ingot production showed about the usual seasonal increase and averaged 32 per cent of capacity in February. Automobile production decreased slightly further, and output of plate glass continued to decline. Lumber production rose seasonally. In the first three weeks of March, activity at steel mills and automobile factories was at about the same average rate as in February. In the nondurable goods industries there were moderate increases in output in February at textile mills and shoe factories, where production has recently been at low levels, while at meat-packing establishments activity declined. Value of construction contracts awarded, as reported by the F. W. Dodge Corporation, showed a sharp decline from January to February, reflecting chiefly a marked reduction in awards for publicly-financed projects. Contracts for resi dential building increased moderately. In the first half of March, there was a considerable further increase reported for residential building and awards for other construction also increased. T Index of physical volume of production, adjusted for seasonal variation, 1923-25 average = 100. By months, January 1934 to February 1938. FREIGHT-CAR LOADINGS Employment ACTORY employment and payrolls increased by somewhat less than the usual seasonal amount between the middle of January and the middle of February. The Board’s seasonally adjusted index of factory employment was at 83 per cent of the 1923-1925 average in February as compared with 84 in January. In the durable goods industries decreases were general in February, though not so large as in preceding months. Employment in nondurable goods industries increased somewhat, following a period of rapid decline. Employment in trade, at mines, on the railroads, and in the construction and public utility industries decreased somewhat from the January level. F 1934 1935 1936 1937 1936 Index of total loadings of revenue freight, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to February 1938. WHOLESALE PRICES Distribution ALUE of department store sales, as measured by the Board’s seasonally adjusted index, declined from 90 per cent of the 1923-1925 average in January to 88 per cent in February, and in the first three weeks of March there was a further decrease. Sales at variety stores and mail order houses, in February, showed somewhat less than the usual seasonal increase. Freight-car loadings decreased further in February, reflecting chiefly reduced shipments of coal and grain, and showed a seasonal increase in the first two weeks of March. The current level of carloadings is about 25 per cent less than a year ago. Commodity Prices FIE general level of wholesale commodity prices, as measured by the Bureau of Labor Statistics’ index, showed little change from the middle of February to the third week of March. There were seasonal increases in prices of livestock and meats, while prices of such basic commodities as wheat, cotton, rubber, zinc, and bituminous coal declined. V T Index compiled by the United States Bureau of Labor Statistics, 1926 = 100. By weeks, 1934 to week ending March 19, 1938. Bank Credit XCESS reserves of member banks increased during the first three weeks of March to over $1,500,000,000, the highest level since last April. The bulk of the increase occurred at New York City banks, which in the third week of the month held over $700,000,000 of excess reserves. During February and the first half of March, there was little net change in deposits and in total loans and investments at reporting member banks in 101 leading cities. Holdings of United States government obligations declined at banks in New York but increased in Chicago. Commercial loans, which had decreased sharply in the four preceding months, showed a further moderate decline. E EXCESS RESERVES OF MEMBER BANKS Money Rates and Bond Yields ONDITIONS in the short-term money market continued easy in March. Rates on Treasury bills were slightly lower and prime commercial paper was quoted at a range of from % to 1 per cent, as against the flat 1 per cent rate which had prevailed since a year ago. Yields on Treasury bonds and notes, after declining for the past six months, advanced slightly around the middle of March. Yields on corporate bonds also advanced in March, reflecting principally declines in prices of railroad bonds. C 1934 1935 1936 1937 1938 Wednesday figures of estimated excess reserves for all member banks and for selected New York City banks, January 3, 1934 to March 16, 1938. Pag* 8 DIRECTORS AND OFFICERS Federal Reserve Rank of Chicago DIRECTORS R. E. Wood, Chicago, III... W. J. Cummings.............................. Chicago, 111. E. R. Estberg........................... Waukesha, Wis. F. D. Williams........................ Iowa City, Iowa N. H. Noyes............................. ................ Deputy Chairman S. T. Crapo.................................... Detroit, Mich. M. W. Babb..............................Milwaukee, Wis. F. J. Lewis...................................... Chicago, 111. ................ 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............................................'......... Vice President W. H. Snyder..................................Vice President and Cashier C. S. Young...................... ................................. Vice President C. B. Dunn..........................................................General Counsel W. C. Bachman............ Assistant Vice President 0. J. Netterstrom. .. .Assistant Vice President A. L. Olson.................. Assistant Vice President A. T. Sihler................ Assistant Vice President F. Bateman............ J. C. Callahan ... N. B. Dawes.......... F. A. Lindsten ... L. G. Meyer............ A. M. Black. . .Manager, Planning Department F. J. L. Sweet................................................................ J. G. Roberts___ Manager, Research and Statistics Department L. PURRINGTON. C. M. Saltnes___ J. J. Endres......................................................................Auditor DETROIT BRANCH R. H. Buss....................................................Managing Director Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier SEVENTH FEDERAL IOWA RESERVE DISTRICT
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