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B usiness C onditions S eventh fEDERAL R eserve D istrict C M O N T H L Y R E V IE W P U B L IS H E D BY T H E F E D E R A L R E S E R V E B A N K OF C H IC A G O Volume 13, No. 4 General Summary March 31, 1930 continued small movement o f grain, although wheat receipts at markets gained slightly over January. P ro duction and sales o f packing-house products and those o f butter were under a year ago and less than in the preceding month. Despite further reduction in butter inventories during February, stocks re mained exceptionally heavy. A survey o f business failures in the district reveals notable increases in number and liabilities during the past four months over corresponding months o f 1929 and in comparison with October o f that year, in which month occurred the break in the securities markets. continuance of trends operative in the first month o f the year was manifest through February in business and financial conditions in the Seventh dis trict. Reserve bank credit in use declined further, princi pally in the item o f rediscounts for member banks. Both security and commercial loans o f member banks gained, but totaled less than last year at the same time. February volume o f check payment was smaller than in January or a year ago. Commercial paper sales and transactions in bankers’ acceptances have been un usually heavy. M on ey rates in C hicago the m iddle o f M arch were low er than a month previous. In manufacturing lines, the steel industry main tained a high level o f operations during February, the rate o f output exceeding that for the United States as a whole; steel foundry operations, however, have been declining. Automobile production and dis tribution again showed improvement, though remain ing considerably below the level o f a year ago. Build ing activity continued exceptionally low in February, and the furniture industry manifested no betterment aside from a seasonal expansion in shipments. In dustrial employment increased but was still under last year. Distribution o f commodities was smaller in general this year than in February 1929, the volume o f trade at department stores and in most wholesale lines show ing declines in the comparison, although chain store sales continued heavier in the aggregate and retail shoe and hardware trade were larger. As compared with January, trends were mixed in wholesale trade, and department store sales declined. In agriculture and its products, may be noted the A further decrease in reserve bank credit extended in this district, occurred during the period February 11 to March 12. A s in preceding weeks the decline took the form o f a smaller volume o f discounts for member banks. This decrease in discounts resulted chiefly from inflow o f funds from outside the district both through ordinary inter-district settlements and through opera tions o f the Treasury. Deposits o f member banks at the reserve bank increased about fourteen million dollars. The demand for commercial loans in Chicago has increased somewhat during the past four weeks, al though it is still less than last year. Security loans on March 12 reached their highest level this year, an upward trend having been operative since the low point on February 11. The present level, however, is now slightly under that o f a year ago. In Chicago, current rates are below those quoted the middle o f February; the prevailing rate on customers’ commer cial loans averaged 5 to 5 y2 per cent at six large banks, while loans at ten smaller banks were made at 4 *4 to FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) A C h an ge F rom M arch 12 1930 ........ $139.6 Total Bills and Securities.... Bills Discounted .................. ........ 38.4 Bills Bought .......................... ........ 29.8 U. S. Government Securities. ........ 71.5 Total Reserves .... ........................... 543.1 Total Deposits ............... _____ ........ 345.5 Federal Reserve Notes in Circulation ................................... 298.7 Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined .............. ........ 84.3% F ebruary 11 1930 $— 26.8 — 27.5 + 1-7 + 0.6 +40.5 + 13.4 M arch 13 1929 $— 134.3 — 175.7 + 1-9 + 40.7 + 151.6 — 6.9 Credit Conditions and Money Rates M arch 12 1930 Total Loans and Investments......... ....$3,206 Loans on Securities.......................... ...... 1,274 All other Loans................................. ..... 1,276 Investments ....................................... .... 656 ..... 1,849 C h ange F rom F ebruary 11 M arch 13 1930 1929 $+74 $— 211 + 54 — 5 + 10 — 118 + 10 — 88 + 1.2 + 21.1 Time Deposits ................................. .... 1,200 +83 +23 — — + 4.5 + Borrowings from Federal Reserve Bank ............................................... — 19 — 167 22.2 Compiled 26, 1930 17 44 67 6 per cent. On collateral loans the prevailing rate was 5)4 to 6 per cent at both the large and small institu tions. Brokers’ demand loans brought 5 to 6 per cent. The average rate earned on loans and discounts by six large Chicago banks during February was 5.89 per cent, compared with 5.95 in both January this year and February 1929. In Detroit, the correspond ing item for five banks was 6.07 per cent, as against 6.11 per cent in January and 5.90 per cent for the corresponding month a year ago. The prevailing rate on commercial loans in Detroit for the week ending March 15 was 5 )4 to 6)4 per cent. C o m m e r c ia l P aper Sales o f commercial paper by reporting dealers in the Middle W est showed a seasonal decline o f less than 2 per cent in February and were 76 per cent larger than last year. Demand was active during the month, and there was a substantial supply o f paper. Selling rates continued the downward trend in evi dence since October, and were quoted as 4)4 to 5)4 for high (mostly 5 per cent) and 4)4 per cent for low, with the customary charge around 4)4 per cent, although a considerable amount o f paper moved dur ing the first ten days o f February at 4)4 to 5 per cent. Outstanding commercial paper o f five dealers in the Middle W est showed further expansion, being 5 per cent greater than on January 31 and 16 per cent above a year ago. Sales o f four Chicago dealers totaled somewhat larger during the first half o f March than for the corresponding weeks o f February. The supply o f paper was fair to good and the demand very good. Quotations opened on March 15 at 4 per cent for low to 4)4 per cent for high, with a preponderance o f paper moving at 4 and 4)4 per cent. C h icago O pe n B il l M a r k e t Unusual activity was displayed in the Chicago bill market from February 13 to March 12. Purchases o f five reporting dealers were larger than for any corresponding period since our records began (Janu ary 1923), being 81 per cent greater than in the preceding four weeks and more than double those o f a year ago. The volume o f bills bought from accept ing banks totaled substantially larger than from Jan uary 16 to February 11 or the corresponding period last year, while purchases from others attained new peak levels. Sales aggregated more than twice those in the preceding period and were 82 per cent greater than a year ago, with local banks taking advantage of the prevailing rates and purchasing the largest volume on record, in contrast to their limited purchases a month previous. Sales to country banks were sub stantially reduced and were lower than for the cor responding weeks o f 1929. Supplies ranged from moderate to good at the beginning of the period but were only fair at the close. Demand was fair to very good. A continued preference for 90- and 60-day maturities was shown. The bills offered the Chicago market covered transactions in grain, tobacco, auto mobiles, sugar, cotton, packing-house products, tex tiles, merchandise, machinery, and a large list o f miscel laneous commodities. T w o reductions in rates were made during the period, with quotations closing on March 12 at 3)4 per cent for 30- to 120-day offer ings and at 3)4 per cent for those o f five and six months’ maturity. B a n k e r s ’ A cceptances Reports from fourteen accepting banks in the Seventh district showed some further decline in aggre gate value o f bills accepted during February as com pared with December, although the volume remained at peak levels and was 179 per cent heavier than for the same month last year. Purchases were two and one-half times as great as in February 1929; they contained more of the banks’ own bills and a smaller quantity o f bills o f other banks than in January, in anticipation o f the decline in acceptance rates. Sales gained 6 per cent and were considerably greater than in the corresponding month o f 1929. The liability for outstanding acceptances totaled about the same as on January 31 but was more than double that o f a year ago. Acceptance holdings o f these banks increased during the month, and on February 28 were larger than for any other reporting date since September 1924; holdings o f the accepting banks’ own bills totaled considerably in excess o f the previous peak recorded in August 1924. The Federal Reserve Bank o f Chicago increased its acceptance purchases to $39,274,732 in February and had about one-third more o f this class o f investment in its portfolio on February 28 than at the end o f January. Bills accepted by three Chicago banks aggregated 18 per cent less in value for the first half o f March than for the corresponding weeks o f February; the bills were drawn for grain, machinery, sugar, iron and steel, packing-house products, coffee, copper, coal, industrial spirits, merchandise, chemicals, textiles, yeast, butter and eggs, paper, and miscellaneous com modities. S av in g s D eposits Deposits in regular savings accounts for 195 banks in the Seventh Federal Reserve district showed a very small increase on March 1 as compared with February 1, although the number o f accounts fell off slightly. VOLUME OF PAYMENT BY CHECK SEVENTH DISTRICT (Amounts in millions o f dollars) F eb . 1930 P er C e nt of I ncrease or D ecrease F rom F eb . 1929 Ja n . 1930 Chicago ................................... ........... $3,559 Detroit, Milwaukee, and Indianapolis ....................... ............ 1,309 — 16.2 — 17.9 — 17.5 — 13.9 Total four larger cities..................... 4,868 884 34 smaller centers.................. .......... — 16.5 — 15.2 — 16.9 — 4.9 Total 38 centers...................... ............ 5,751 — 16.3 — 15.3 Page Figures cover checks drawn on clearing house banks, and are estimates for the calendar month, based on weekly reports to this bank. The increase in deposits in two states, Illinois and Iowa, offset the small declines o f the other three. The average account for the district likewise increased somewhat over the preceding month. In the year ago comparison, deposits declined almost 4 per cent, with all states participating. The number o f depositors also was below the year ago total, although Indiana, Iowa, and Wisconsin each had an increase o f more than one per cent. The average account figure dropped 3 per cent under the corresponding date in 1929. Twenty-six reporting banks in the city o f Chicago showed an increase o f almost two and one-half million dollars between the period from February 1 to March 1, with a gain o f approximately fifteen hundred accounts. S e c u r ity M ar k e ts N o outstanding trend developed in the bond market during February; prices in general remained almost unchanged, with any noticeable fluctuations mainly on the very high grade securities which continued in better demand. New offerings for the month declined sharply to approximately one-half of those in January, although the total was somewhat higher than the ab normally low second month o f 1929. The issues in cluded railroads, public utility, municipal, and Canadian groups, and were absorbed satisfactorily. Institu tional investors, such as life insurance companies and banks, were reported as the important purchasers o f the month. During the first two weeks o f March a higher degree o f activity, resulting from the easier money conditions, featured the trade in bonds and was ac companied by a general upturn in prices. The average price o f twenty leading stocks* on the Chicago Stock Exchange continued the upward trend operative since the latter part o f January; on March 11 it reached a new high record for the year at $150.20 which com pares with the low o f $128.64 on January 20. •Chicago Journal of Commerce. B u sin e ss F ailures According to reports made by R. G. Dun & Com pany, the year 1929 witnessed a marked decrease in the number o f business failures and the aggregate liabilities sustained in the United States. Dun lists 22,909 failures out o f 2,212,779 firms actively engaged in business and liabilities o f $483,250,196, as com pared with 23,842, out o f 2,199,000 firms, failing in 1928 and carrying liabilities amounting to $489,559,624. That the 1929 liabilities reached a point as high as 483 million was due to the enormous increases in November and December, as the level maintained the first ten months was considerably below that o f 1928. The Seventh district, also, showed a decline in num ber o f failures and aggregate liabilities in 1929 as compared with 1928, although the liability figure for the latter year was somewhat out o f proportion due to the failure in August o f one or two very large firms. Inasmuch as there are no figures available as to the total number o f firms in business in the Seventh district, it is impossible to evaluate accurately the sig nificance o f these decreases. A s a check to the improvement experienced during the first half o f the year, came the security market deflation in October with its effects carrying over into 1930. The accompanying table shows that although liabilities showed marked expansion in November, the number o f failures did not increase materially until after the first o f the year with the balancing o f books. It will also be noticed that the Seventh district was more severely affected than the United States as a whole, with February liabilities increasing almost 140 per cent over the 1929 figure for the same month. S ev en th D istrict N um ber of F ailures ’29-30 October ...... . November _ December _ Tanuary...... . February .... Total 5 mos. 243 298 307 428 376 1652 U n ited S tates L ia b il it ie s ( I n M il l io n s ) ’28-29 ’29-30 285 235 302 325 297 ’28-29 ’29-30 $6.1 5.6 4.7 5.2 3.7 1,822 1,796 2,037 2,759 2,262 $4.5 6.2 9.6 8.0 8.8 1444 $37.1 N um be r of F ailures $25.3 10,676 ’28-29 L ia b il it ie s ( I n M il l io n s ) ’29-30 ’28-29 $31.3 52.0 67.5 61.2 51.3 $35.0 40.6 40.8 53.9 34.0 10,304 $263.3 $204.3 2,023 1,838 1,943 2,535 1,965 Source: R. G. Dun & Co. Agricultural Products G r a in M a r k e t in g Slightly more wheat was received at interior primary markets in the United States during February, but the volume totaled less than a year ago and somewhat under the five-year average for the month. Reship ments were at a very low level. Foreign demand re mained rather limited, owing to competition o f French, Argentine, and Russian wheat and continued surpluses in importing countries o f Europe. Trading in wheat futures on the Chicago Board o f Trade was 11 per cent heavier than in January and 72 per cent more than for the corresponding month o f 1929. Prices continued to decline. Total supplies o f wheat in the United States remained larger than a year ago, as shown by March 1 figures, although farm stocks were consider ably less. Commercial stocks showed a slight reduc tion on March 15 from the beginning o f the month. Corn receipts and reshipments at the same centers continued to decline in February and were below last year, although above the 1925-29 average. The move ment o f oats was unusually small for the month. Total stocks o f corn in the United States decreased 4 per cent on March 1 from a year ago and those o f oats were about 18 per cent less. However, warehouse sup plies o f corn were one-third smaller and those o f oats were 45 per cent larger than for the same date in 1929. Prices showed a further recession and reached very low levels at the close o f the month. M eat P a c k in g Production at slaughtering establishments in the United States decreased seasonally in February and continued less than a year ago, because o f reduced live stock marketings. Payrolls at the close o f the month showed a decline o f 5 per cent in number o f employes, flour p r o d u c t io n in seventh d is t r ic t F ebruary 1930 P er C ent I ncrease or D ecrease F rom J a nuar y F ebruary Production (bbls.) ..... ................. Stocks o f flour at end o f month (bbls.) ....................... ................. Stocks of wheat at end of month (bu.) ......................... ..................... Sales (volume) ............. ................. Sales (value) ............... ................. C om panies I ncluded 1930 — 7.7 1929 + 9.0 — 1.2 — 17.1 24 — + 4.2 + 81.7 + 77.6 24 13 13 7.9 +13.5 +24.5 26 Production includes wheat and other flours; all other items refer to wheat flour only. Page 3 10 per cent in hours worked, and o f 7 per cent in earn ings compared with the preceding period. Demand in domestic markets was slow during February for dressed beef, *veal, and fresh p o rk ; rather draggy for lamb; and fair for smoked meat, dry salt pork, boiled ham, and sausage. A substantial volume o f lard moved into trade channels during the month. Sales billed to domestic and foreign customers showed a seasonal de cline o f about 3 per cent in February from January and continued approximately 2 per cent under last year. Prices o f pork products, beef rounds, and some cuts of veal averaged higher than in January, while those of lamb, mutton, and carcass veal declined. Beef quota tions ranged from steady to a little lower than a month earlier. Prices o f practically all o f these commodities, however, trended downward after the middle of Febru ary. The approach o f the Lenten season found domes tic trade about fair. March 1 inventories o f packing house products at slaughtering establishments and coldstorage warehouses in the United States were about average for the month and less than a year ago, though seasonally more than on February 1. Stocks o f lard and dry salt pork decreased, however, from the 1925-29 March 1 average, while holdings of beef and lamb were above last year. Shipments for export appear to have been somewhat heavier than in January, although some of the report ing firms experienced a decrease. Foreign demand was rather quiet during the period. Lard prices in European markets averaged close to Chicago parity, while meats were quoted at somewhat less than the United States basis. D a ir y P roducts Butter manufacturing in the Seventh Federal Reserve district showed a seasonal decline in output o f about 3 per cent in February from January and was 5 per cent less than a year ago, according to a compilation for fifty-one reporting creameries. Sales billed to cus tomers decreased 14 per cent in volume from January and 4 per cent from the corresponding month o f 1929. Quotations trended downward after February 15 but averaged about the same for the month as in January. Available statistics indicate that production in the United States decreased to a greater degree than in the Seventh district. Butter consumption for the country as a whole declined in 1929, probably reflecting in part heavier consumption o f substitutes. Production in creased during the year as a result o f a larger supply of butter fats from dairies and also because o f diversion to this industry o f the raw material ordinarily used in the LIVE STOCK SLAUGHTER (In thousands) C attle Yards in Seventh District, February, 1930 ..................... .... Federally Inspected Slaughter, U. S. February, 1930 ..................... .... January, 1930 ........................ .... February, 1929 .................... .... H ogs L ambs and S heep C alves 158 804 318 97 561 713 569 4,034 5,001 4,478 1,187 1,225 953 374 311 329 W eek E nded M o n th s of M arch IS, F ebruary J a n u a r y F ebruary Pagefor 4 FRASER Digitized 1930 $12.30 8.75 11.65 10.65 8.85 10.95 1930 $12.75 9.25 13.95 9.75 10.85 13.00 Receipts o f American cheese at W isconsin primary markets indicate that production o f the commodity at factories within that state increased 11 per cent dur ing the four weeks ended March 1 over the preceding period and was 8 per cent heavier than a year ago; redistribution from warehouses in these centers de clined 4 per cent from a month earlier and was in about the same volume as last year. Prices held fairly steady. The production o f cheese in the United States was at a lower level than consumption during 1929, in contrast to conditions that obtained in other divisions o f the dairy industry. Inventories o f the commodity at pack ing plants and cold-storage warehouses in the United States showed a seasonal decline on March 1, and were less than a year ago and only slightly above the 1925-29 average for the month. Coal Unseasonable temperatures throughout the Middle W est during the month o f February effected a steadily declining demand for domestic coals which combined with slowness o f industrial consumption resulted in a rapid accumulation o f stocks in retail yards and forced curtailment o f operations at mines in the Seventh district. It was not until the very close o f the month that the weather became sufficiently cold to start a movement o f coal. New business on steam coals was very scarce; the letting up was emphasized with respect to the cheaper grades. Owing to the shortage o f screenings, occasioned by curtailed production of prepared sizes, retailers were able to fill orders for the fine coal from stocks on hand, thus reducing materially the excessive supplies obtaining at the beginning o f the month, with a temporary firming o f the price range. Illinois production o f bituminous coal in February amounted to 4,761,825 tons, as compared with 6,590,275 tons mined in January and 6,509,196 in February 1929. The decrease in production for the United States was less marked, output in February aggregating 39,555,000 tons compared with 49,778,000 tons mined in January and 47,900,000 in February 1929. The number o f men employed in the Illinois mines during February amount ed to 49,580, a decrease o f approximately 1,100 from the preceding month; the average number o f days worked was 15.4 as compared with 19.7 in January, and the number o f mines operated declined to 172 from 178 in January. Industrial Employment Conditions AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) 1930 Native Beef Steers (average)....$12.65 Fat Cows and Heifers................. 8.75 Calves ............................................ 10.75 Hogs (bulk of sales).................... 10.50 Yearling Sheep ........................... 8.75 Lambs ...._...................................... 10.60 manufacture o f cheese. These factors appear to account for the unwieldy carry-over o f butter at the beginning o f 1930. March 1 inventories o f the commodity at cold-storage warehouses and packing plants in the United States, however, showed a substantial reduction from January and February 1, although holdings were nearly three times as large as the 1925-29 average for the month and more than 34,500,000 pounds in excess o f last March. 1929 $11.90 9.10 14.00 10.25 13.85 16.40 Some improvement in manufacturing employment for the Seventh Federal Reserve district was reflected in slight increases in both number employed and pay rolls at 1,771 plants. The general level for ten groups is brought by this gain to approximately that in the middle o f December, but continues lower than for the being 346 as against 315 in January, and 336 in Febru ary 1929. corresponding period o f last year. The vehicles group continued the expansion begun between December 15 and January 15, and four other groups which declined prior to January 15, registered increases during the period January 15 to February 15— wood products, textiles, leather, and metals. W ith the exception of textiles, these groups have been in continual decline since October. The upturn in the metal products group was effected largely by expansion in the steel industry o f this district, which has been operating at more than 90 per cent capacity. Three highly seasonal industries — paper and printing, stone, clay and glass products, and food products— continued to decline. Rubber products firms in W isconsin reported a large reduction in employes and their earnings. Manufacturing I ron A nd S teel P roducts Demand for steel products from mills in the Chicago district was sufficient during February and the first half o f March to maintain ingot output at from 90 to 95 per cent o f capacity, which was a higher rate than for the country as a whole. Although specifications from the automobile and construction industries showed no marked expansion during February, the tonnage for the railroads, car builders, and agricultural machin ery industry was in substantial volume. Pig iron pro duction in the district increased in the daily average for February over a month previous, but remained below the average for the corresponding month a year ago. Finished steel prices, though showing no quotable change, display some uncertainty. The price o f North ern foundry pig iron was reduced after the first of March from $20 to $19.50. Scrap iron and steel prices at Chicago, which strengthened through February, have been easier since the early part o f March. Activity at steel foundries o f the Seventh district declined in February, as compared with the preceding month and the corresponding month o f 1929. The tonnage o f shipments totaled 9 per cent less than in January and 24 per cent under a year ago, while pro duction was less by 18 and 24 per cent, respectively. Orders booked gained more than 23 per cent over a month previous but aggregated 38 per cent under last February. Malleable foundries made shipments total ing 7 per cent heavier than in January and also in creased production slightly, but the tonnage o f both items aggregated more than 18 per cent below a year ago; the volume of new orders showed little change in the monthly comparison and totaled about 40 per cent less than last February. Shipments by stove and fur nace manufacturers increased 10 per cent in February over the preceding month, but were 10 per cent below a year ago, with most firms sharing in this decline; new orders declined 30 and 20 per cent in the respec tive month-to-month and yearly comparisons; produc tion expanded considerably over January and was also somewhat heavier in the aggregate than for the cor responding month o f 1929; stocks were much heavier in both comparisons. In non-manufacturing activities continued declines occurred in all lines with the exception o f coal mining, which had a 23 per cent increase in payroll amounts during the period covered, largely due to improved activity in the latter part o f January. M ore recently, however, reduced demand for domestic coal has brought about curtailment. Total non-manufacturing employment declined in all states o f the district, with the greatest loss in Wisconsin. Building and construc tion work fell off more than during the same period o f 1929 and 1928, but the decline was much less than in the preceding month, with Wisconsin alone showing smaller payrolls, while the Seventh district portion o f Illinois and the three other states had increased aggre gate earnings. T h e decline in m erchandising is largely found in retail lines, including mail order business, w hile w holesale trade show ed greater steadiness in all sections, with an increase in W is consin both in men and in payrolls. Corresponding to the increase in industrial employ ment in Illinois, the ratio o f number o f applicants to jobs available in cities which have free employment offices fell off to 246 from the January figure o f 257, but exceeded the February 1929 ratio o f 169. Im provement in the unemployment situation was reported for Chicago, Cicero, Decatur, Springfield, and Aurora, while Peoria and Rock Island reported increased labor surplus. The average for five reporting cities in Indiana showed an opposite trend to that in Illinois, the Febru ary ratio o f 181 comparing with 164 in January and 136 in February 1929. A t offices in Iowa this ratio was higher than for any month in the past two years, EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT N um ber I ndustrial G roups Metals and metal products (other than vehicles)... Vehicles ...................................................................... Textiles and textile products.................................... Food and related products........................................ Stone, clay, and glass products................................ Lumber and its products.......................................... Chemical products ..................... ............................... Rubber products*........................................................ Paper and printing...................................................... Manufacturing (total of 10 groups).................... .. Merchandising** .................................. ........... .......... Coal Mining .................................... ......................... Building and Construction........................................ Employment (total of 14 groups)............................ ^Wisconsin only. R eporting F irm s N um ber of W age E arners W eek E nded F ebruary 15 Jan u a r y 15 1930 1930 T otal E arnings P er C ent C h ange 531 68 140 296 119 231 61 67 6 252 1,771 196,488 42,199 31,704 40,558 9,908 29,493 8,591 17,154 3,212 34,272 413,579 195,092 41,365 31,272 40,811 10,123 28,995 8,499 17,149 3,637 35,824 412,767 + 0.7 + 2.0 + 1.4 — 0.6 — 2.1 + 1-7 + 1.1 + o.o — 11.7 — 4.3 + 0.2 136 72 43 210 2,232 28,913 94,957 10,592 10,440 558,481 31,158 97,037 10,'584 11,244 562,790 — — + — — 7.2 2.1 0.1 7.2 0.8 W eek E nded F ebruary 15 Jan u a r y 15 1930 1930 P er C e n t C hange $ 6,010,141 1,220,163 717,851 1,081,717 272,851 642,719 237,076 365,847 69,265 1,064,941 11,682,571 $ 5,788,156 1,138,062 692,649 1,105,379 275,666 585,299 243,514 339,814 7 5', 152 1,100,797 11,344,488 — 3.3 + 3.0 763,756 3,204,057 '325,917 341,975 16,318,276 811,630 3,328,992 264^361 346,778 16,096,249 — 5.9 — 3.8 + 2 3 .3 — 1.4 + 1.4 + 3.8 + 7.2 + 3.6 — 2.1 — 1.0 + 9.8 — 2.6 + 7.7 — 7.8 **Illinois and Wisconsin. Page 5 A u to m o bile P roduction A nd D is tr ibu tio n A further increase was recorded in automobile pro duction during February, output o f 275,811 passenger cars and o f 47,129 trucks from United States factories gaining 18 and 24 per cent, respectively, over January. A s compared with the early months of 1929, however, schedules remain at a substantially lower level; passen ger car production totaled 32 per cent below last February and that o f trucks was 20 per cent less. Wholesale distribution o f automobiles in the Middle W est continued to gain in February, and sales of retail dealers to users were considerably heavier, but the volume sold at both wholesale and retail remained below a year a go; about two-fifths o f the reports, however, show heavier retail sales in the latter com parison. Used car sales not only increased over Janu ary but also exceeded those in the same month o f 1929. Stocks o f new cars, though slightly larger on February 28 than a month previous, did not experience the heavy increase which took place in the same month last year, so that the volume on hand this February, for the first time since August 1928, totaled less in the year-to-year com parison; used cars on hand averaged slightly larger than in the preceding month, and were considerably greater in number than a year ago. The ratio of deferred payment sales to total retail sales of 50 per cent for February showed little change from January and was about the same as for last February. S h oe M a n u f a c t u r in g , T a n n in g , A nd H ides Preliminary statistics from the United States De partment o f Commerce show that shoe manufacturing in the Seventh Federal Reserve district decreased 5 per cent in February from a month earlier. Leather tanning declined but was larger than last year, while an opposite trend was recorded in sales. Quotations were barely steady during the month. The Chicago market fo r packer green hides, calf, and kip skins was more active than in January, al though reshipments from the city and purchases by district tanneries decreased. Prices declined. F u r n it u r e Furniture manufacturing in the Seventh district experienced the usual February expansion in ship ments and recession in orders as compared with the preceding month. Seasonal elements eliminated, busi ness was maintained at January’s level, and was con siderably below that o f last year. Shipments o f twen ty-five firms increased 25 per cent over January, ac companied by decreases o f 26 and 13 per cent in orders m id w e s t d is t r ib u t io n of booked and unfilled orders, respectively; and declined 15 per cent from shipments in February 1929, orders and unfilled orders declining 31 and 32 per cent. Sev eral firms, small ones for the most part, showed de creases in shipments and increases in orders as com pared with January, indicating a lag o f a month. The average rate o f operations of twenty-one firms dropped from 70 to 62 per cent and compared with a rate of 74 per cent a year ago. R a w W ool A nd F in is h e d W oolens Trading in raw wool totaled in fair volume during February. Prices were irregular, on a few lines hold ing about steady at previous quotations, while on others lower levels were reached. Medium wools have been under pressure in recent weeks, the low prices in the South American markets affecting values in this coun try. The London sales closed before the scheduled date, with a better demand in evidence. Manufacturers are holding back purchases somewhat, awaiting the outcome o f another series o f auctions in London the third week in March. The American W oolen Com pany announced a price reduction on men’s staples, effective February 18 . Since that date, many additional openings for the Fall 1930 season have taken place, with similar price declines. Building Material, Construction W ork During February, wholesale lumber trade in the Seventh Federal Reserve district continued to increase slightly further over the end o f December. A s the improved demand came largely from industrial users and hence was for higher-priced items, the dollar value o f sales declined less sharply from a year ago than did board-foot amounts. The volume sold at retail fell off seasonally, and totaled slightly under February 1929, which month, moreover, was the lowest in the five-year period covered by an index o f the retail firms reporting to this bank. Production by members o f all associations reporting to the National Lumber Manu facturers’ Association, expanded more than usual for the season in the average for four weeks o f February compared with that o f five weeks in January, but totaled less than for the corresponding weeks o f 1929. Ship ments and orders o f northern producers and for pine in particular, were in fairly substantial volume and in line with the increased takings o f softwoods throughout the country. Unsteady weather conditions have in fluenced the demand for lumber and other materials, causing a delay in some sections on projected work. Receipts and shipments o f lumber at Chicago during a u t o m o b il e s Changes in February, 1930, from previous months P er C ent C hange F rom Jan u a r y N ew cars Wholesale— Number sold ............... Value ............................. Retail— Number sold ............... Value ............................. On hand February 28— Number ......................... Value ............................. Used cars Number sold ............... Salable on hand— Number ......................... Value ............................. Page 6 F ebruary F ebruary 1930 P er C e n t C h an ge F rom J a n . 1930 F eb . 1929 C o m panies I ncluded Ja nuar y F ebruary 1930 1929 1930 1929 + 50.7 + 60.6 — 46.2 — 41.0 30 30 30 30 + 69.5 + 79.4 — 12.1 — 21.4 65 65 59 59 + + — 3.5 — 7.4 66 66 61 61 + 51.2 + 9.8 65 59 + 4.2 + 4.2 +21.9 + 3.0 65 65 59 59 WholesaleSales in Dollars................................... .. + 1.7 Sales in Board Feet..................... .. — 0.2 Accounts Outstanding ................ .. + 2.9 F eb . 1930 5.7 3.7 Ratio of Accounts Outstanding to Dollar Sales ............................. ..... 131.2 Ja n . 1930 134.2 F e b r u a r y 1930 P er C e nt C h ange F rom J a n . 1930 F eb . 1929 Retail— Sales in Dollars......................... . — 15.9 Accounts Outstanding ............... — 4.3 F eb . 1930 — 22.5 — 33.9 — 23.9 Ratio of Accounts Outstanding to Dollar Sales .............................. ..... 375.6 — + 2.1 8.6 N u m ber of Y ards I ncluded 19 14 14 F eb. 1929 142.9 N um ber of Y ards I ncluded 202 196 Ja n . 1930 F eb . 1929 322.6 348.7 February registered the first increase since last October, gains amounting to 6 per cent in receipts and 21 per cent in shipments. Net receipts continued to show a decline, though a smaller one than in recent months. Cement production fell off sharply in the Middle W est and in lesser amount in the country as a whole, during February. Shipments, however, recovered about 70 per cent from January and were 7 per cent below the level o f a year ago, while the country-wide increase in the monthly comparison was only 42 per cent. The situation regarding overproduction and un productive capacity in this section o f the country is reflected in the fact that, while in February, 17 per cent o f total United States production was in Michigan, W isconsin, Illinois, Indiana, and Kentucky, 24 per cent o f the stocks o f the country were held by mills in these same states, which was 13 per cent in excess o f the volume o f stocks at the end o f February 1929. During January, distribution o f cement in the five states including this district declined in proportion to the recession from December throughout the country, the decrease amounting to 17 per cent in both cases. Illinois took a smaller portion o f the five-state total, while Michigan received slightlv more. Curtailed production continued to characterize the brick industry at points in this district, where, even with a smaller movement o f common brick from yards dur ing January, stocks o f both burned and unburned brick declined from the quantities on hand December 31. Orders on books appear to have declined rather markedly. Prices o f all materials evidenced uncertainty during February, forming no basis for speculative buying, which was partly responsible for the failure o f materials to move out o f yards for future construction needs. M inor changes which occurred, indicated no definite trend. Cement and certain items o f lumber closed the month slightly higher than at the end o f January, while brick prices averaged a little less. B u il d in g C o n s t r u c t io n Total contracts awarded in the Seventh Federal R e serve district during February amounted to $37,983,197, o f which $9,567,584 was for residential building. These figures represent declines o f 46 and 56 per cent, respectively, from February 1929; both were approxi mately 5 per cent below January totals. Residential contracts during February were the lowest for any month since February 1922, when $9,388,615 was re ported. Permits issued in 101 cities o f the district showed a valuation 17 per cent greater than in January and 23 per cent over the corresponding figure o f 1929. The number o f permits in these cities increased 28 and 8 per cent in the above comparison. O f the five large cities in the district, Indianapolis and Milwaukee were the only two that showed an increase over a year ago in the estimated cost o f proposed work, the latter city recording a gain o f 83 per cen t; both likewise reported a gain over the first month o f 1930. Merchandising Sales in half the reporting lines o f wholesale trade in this district declined in February from a month pre vious, and decreases from a year ago were general, except in groceries where sales totaled about the same as last February. The aggregate volume sold by hard ware firms increased 6 per cent over January, dry goods sales were 9 per cent larger, and those o f shoes 47 per cent heavier than in the preceding month, while sales by grocery firms declined 11 per cent, those of drugs 6 per cent, and o f electrical supplies 4 per cent. A s in January, sales o f dry goods and shoes showed the heaviest declines from a year ago, with practically all firms sharing in the recessions. The wholesale drug and hardware trades recorded the smallest decrease in this comparison. Uncertainty still prevails in the price situation. A decline o f 1 per cent from January was shown in the aggregate sales o f 112 department stores in the Seventh district; sales in Detroit totaled 5 per cent larger in the comparison, although half the firms re ported declines, and the volume sold by stores in smaller cities increased a little over one per cent, with less than half the firms sharing in the gain. Sales by Chicago stores totaled 1 per cent under a month previous, those by Indianapolis stores were 7 per cent less, and sales by Milwaukee firms aggregated 10 per cent smaller. Am ong the larger cities, both Chicago and Detroit showed substantial declines in the com parison with February 1929, while the volume sold by Indianapolis and Milwaukee stores totaled somewhat larger; more than one-third o f the stores in the smaller cities had increased sales over last February, reducing the average decrease to less than 3 per cent. Stock turnover was slightly less in the first two months of 1930 than in the same period o f 1929. Stocks held the end o f February averaged about 2 per cent under those of the corresponding date a year ago. In other retail trade o f the district, shoe sales in creased 4 per cent in February over January, while the furniture trade showed a 17 per cent expansion. In the comparison with February a year ago, shoe sales increased 7 per cent and those o f furniture declined 9 DEPARTMENT STORE TRADE IN FEBRUARY 1930 WHOLESALE TRADE IN FEBRUARY 1930 P er C e n t C h an ge F ebruary 1930 F rom F ebruary P er C e nt C h ange F rom S a m e M o n th L ast Y ear C o m m o d ity Net Sales Stocks Ratio of Accts. Out Accts. Out standing to standing Collections Net Sales Groceries ....... (2 5 )+ 0.1 (15)— 6.2 (21)— 11.7 (17) +10.6 Hardware ..... (13)— 5.1 (9 )— 4.2 (13)— 1.7 (9 )— 8.0 Dry Goods ..... (10)— 23.0 ( 8 ) + 0.2 (10)— 9.4 (9 )— 16.7 (13)— 5.9 (10)— 8.3 ( 9 ) + 4.4 (8 )— 4.1 (8 )— 22.6 (6 )— 3.0 ( 7 ) + 1.2 (6 )— 29.4 •Electrical Supplies ..... (36)— 9.3 (29)— 2.4 (3 4 )+ 0.0 (23)— 1.2 (2 1 ) 97.7 (14) (10) (9) (7) 263.6 386.5 159.9 456.8 (35) 158.6 1929 L ocality P er C e n t C hange R a tio of F eb. Two M o n th s 1930 C ollections F rom to A ccts . Tw o M on th s O utstanding 1929 J an u a r y 31 N et S ales S tocks E nd of M on th N et S ales 1930 1929 Chicago ......... Detroit ........... Indianapolis_ Milwaukee ..... Other cities..... — 7.1 — 20.1 + 3.0 + 1.4 — 2.6 + 3.2 — 14.6 + 6.5 + 6.1 — 6.3 — 8.5 — 18.9 — 2.2 + 2.0 — 3.6 36.0 37.9 39.3 43.2 33.4 36.0 41.3 43.1 46.3 35.8 7th District..... — 8.6 — 2.3 — 9.1 37.3 40.0 Figures in parentheses indicate number of firms included. Page 7 per cent. Despite the gain shown in the shoe trade, the volume sold in the first two months o f this year totaled 5 per cent below the corresponding period o f 1929. February sales by hardware dealers in the five states o f the district aggregated heavier than either a month or a year previous. Sales o f twenty-two chains totaled one per cent less in February than in the preceding month, and with very little change in the number o f stores operated, average sales per store showed the same recession. The aggregate for the month exceeded that o f last February by more than 10 per cent, but the number o f stores was 14 per cent greater, so that in this com parison, average sales declined 3^4 per cent. Total sales were larger than a year ago in all groups except musical instruments, while average sales per store in creased in the grocery, cigar, and shoe groups, and were smaller for drugs, five-and-ten-cent stores, furni ture, men’ s and women’s clothing, and musical instru ments. BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the month indicated, using the monthly average for 1923-1924-1925 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 Meat Packing— (U. S .)— Sales (in dollars)..................................... 64 Casting Foundries— Shipments: Steel— In dollars................................... In tons ..................................... Malleable— In dollars .............. ........ In tons ............................. Feb. Jan. Feb. Jan. 1930 1930 1929 1929 110 113 112 115 15 77 78 23 23 73 69 88 80 88 84 103 98 127 122 Stoves and Furnaces— Shipments (in dollars)........................... 11 78 70 88 79 26 72 103 81 63 98 97 124 26 8 135 - 173 173 154 172 157 8 185 180 27 97 107 92 110 72 80 83 85 88 72 78 91 81 86 127 109 137 125. 103 127 94 93 117 113 105 94 135 87 125 86 118 146 Furniture— Orders (in dollars)................................. Shipments (in dollars)........................... Electric Energy— Output of Plants (K W H )................. Industrial Sales (K W H )..................... Flour— Production (in bb ls.)............................. Output of Butter by Creameries— Production ........................ - ..................... Sales ........................................................... Iron and Steel— Pig Iron Production Illinois and Indiana........................... United States......................................... Steel Ingot Production— (U . S .)1....... Unfilled orders U. S. Steel Corp...... Automobile Production (U. S .) : Passenger cars.......... ................................. Trucks ....................................................... Stamp Tax Collections— 2 Sales or Transfers of Capital Stock.. Sales of Produce on Exchange-Futures U. S. Primary Markets— 3 Grain Receipts: O ats: ..................................................... Corn ....................................................... Wheat ................................................... Grain Shipments: Oats ....................................................... Corn ....................................................... Wheat ................................................... 15 80 93 84 104 94 80 138 133 112 166 439 433 81 95 589 80 79 570 39 35 33 49 47 139 144 150 59 50 80 178 65 38 34 32 39 64 74 74 32 41 47 94 48 Wholesale Trade— Net Sales (in dollars) : Groceries ............................................... Hardware ............................................. Dry Goods ........................................... Drugs ................................................... Shoes ................................................... Retail Trade (Dept. Stores)— Net Sales (in dollars) i Chicago ................................................. Detroit .................................. :................ Indianapolis ....................................... Milwaukee ........................................... Other Cities ......................................... Seventh District ............................... Freight Carloadings— (U. S.)— Grain and Grain Products................... Live Stock ............................................... Coal ........................................................... Coke ........................................................... Forest Products ..................................... Ore ............................................................. Merchandise and Miscellaneous ........... Total ....................................................... Building Construction— Contracts awarded (in dollars): Residential ........................................... Total ..................................................... Permits: Chicago ...................................Number Cost..... Indianapolis .............. - .........Number Cost..... Des Moines ......................... Number Cost..... Detroit ................................... Number Cost___ Milwaukee ............................. Number Cost..... Others (45) ......................... Number Cost..... Fifty Cities ........................... Number Cost..... 'Average daily production; 2First Illinois internal revenue district; *Monthly average receipts 1923-24-25 = 100. Page Digitized for 8FRASER Feb. 1930 Jan. 1930 Feb. 1929 Jan. 1929 31 14 10 14 8 84 61 57 94 51 94 58 52 98 35 84 64 74 99 66 94 66 67 111 53 30 4 5 5 51 95 86 113 77 84 75 88 89 109 83 94 73 90 93 142 75 82 76 96 96 132 89 91 75 98 100 80 104 99 83 23 100 95 89 86 119 97 67 22 91 91 99 82 125 120 89 26 104 103 104 91 123 105 80 23 97 97 33 56 34 58 74 102 75 113 11 20 40 42 22 7 29 27 44 116 33 37 33 32 9 20 30 23 12 12 20 31 40 40 21 34 24 27 24 32 30 40 18 12 32 42 47 64 26 48 32 40 28 48 35 27 11 10 26 46 47 55 26 39 31 45 No. of Firms FEDERAL RESERVE BANK OF CHICAGO Monthly Review o f Business Conditions NATIONAL SUMMARY OF BUSINESS CONDITIONS ( By the Federal Reserve Board) "I N D U S T R I A L production increased in February, while the number of workers employed in factories was about the same as in January. Wholesale commodity prices continued to decline. Credit extended by member banks was further reduced in February, but increased in the first two weeks of March. Money rates continued to decline. P roduction Index of manufactures and minerals combined, ad justed for seasonal variations (1923-25 average = 100). In February industrial production increased about two per cent, according to the Board’s index, which is adjusted to allow for seasonal variations. This increase reflected chiefly a substantial gain in the output of iron and steel. Automobile production was in larger volume than during January, but was 30 per cent smaller than the large output of a year ago. Cotton and wool consumption by mills was substantially lower in February, and production of bituminous coal and copper also decreased. In the first two weeks of March the output of steel mills declined in comparison with February, contrary to the usual seasonal movement. Bitu minous coal output also was smaller. The volume of building contracts awarded in February was about the same as in the preceding month. Residential building continued at an exceptionally low level, while contracts for public works and utilities were large in com parison with the corresponding month in other recent years. Awards in the first two weeks of March were larger than in the first half of February. E mployment Index of U. (1926 = 100). S. Bureau of Labor Statistics The volume of factory employment, which had reached a low point in January, showed little change in February, when an increase usually occurs. F actory payrolls increased during the m onth, but by a smaller am ount than is usual at this season. In the steel, autom obile, agricultural im plem ent, and tobacco industries employment increased during the four-week period, while further decreases occurred in the cotton and wool textile, lumber, automobile tire, electrical machinery, and machine tool industries. D istribution Freight carloadings on an average daily basis were slightly larger than in January, but smaller than in the corresponding month of any other recent year. Slight seasonal increase was reported during early March. Department store sales in February continued to be below the level of a year ago. P rices Monthly averages of daily figures. averages of first 18 days in March. Latest figures, W holesale prices of commodities declined further during February, and the Bureau of Labor Statistics index at 92.1 per cent of the 1926 average was at the lowest point since January 1922. Marked declines occurred during the month in the prices of many agricultural products— grains, hides, raw wool and cotton; in certain imported raw materials, notably sugar and silk ; and also in textiles, petroleum, and pig iron. During the first part of March, a number of these commodities declined still further in price. W heat and cotton prices were considerably lower, and silver reached the lowest point on record. B y the middle of the month, how ever, prices of cotton, hides, and silver had recovered somewhat. B a n k C redit Liquidation of credit at member banks continued throughout February, and on February 26 total loans and investments of member banks in leading cities were in about the same volume as in the early summer of last year. During the following two weeks, however, there was an increase of $230,000,000 in loans and investments, chiefly in loans on securities. A ll other loans, largely for commercial purposes, increased slightly. From the middle of February to the middle of March, the volume of reserve bank credit outstanding decreased further by $90,000,000. This decline reflected chiefly an increase in gold stock of $75,000,000 and a further decline of money in circulation, offset in part by some increase in member bank reserve balances. Member bank indebtedness at the reserve banks declined to $267,000,000, the lowest level since early in 1925; reserve bank holdings of bills declined, while those of United States securities increased. Monthly averages of weekly figures for reporting member banks. Latest figures, averages of first two weeks in March. Money rates in the open market eased further and bond yields declined rapidly to the lowest level since 1928. A t the middle of March the discount rate at the Federal Reserve Bank of New York was reduced from 4 to 3}4 per cent, and the rate at the Cleveland, Philadelphia, and San Francisco banks from 4Yi to 4 per cent.
@FedFRASER