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Business Conditions Seventh Federal Reserve District IOWA Eugeni M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Volume 15, No. 4 George A. Prugh, Assf. Federal Reserve Agent Harris G. Pett, Manager Division of Research and Statistics MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO General Summary NCREASED activity was evidenced during February in several phases of Seventh district industry and trade, but the expansion took place over an exceptionally low level of business in January and merchandising groups were affected by the one more trading day in February this year. Also, two of the major manufacturing indus tries of the district—automobiles and iron and steel—did not accelerate production as is customary. An indication of expanding activity, as reflected in a credit phase, was the increased volume of transactions in bankers’ accept ances over recent months, while commercial paper sales declined less than is usual for the month and showed im provement in the first half of March. Manufacturing groups to register gains in February over the preceding month included malleable casting foundries where increases in shipments, production, and new orders were recorded, while steel casting foundries had a heavier volume of orders and expanded production. Furniture shipments gained seasonally, and shoe and leather produc tion was likewise heavier. Greater activity was noted in building construction over the low point reached in Jan uary, contracts awarded and permits issued in the district totaling larger, the former contrary to trend in recent years. No improvement took place, however, in most lines of building materials. Employment data registered a small gain in the total for manufacturing groups. In industries producing foodstuffs may be noted the heavier production and sales of butter than either a month previous or a year ago, and the increase in manufacture of Wisconsin cheese. Although distribution of the latter commodity declined from January, it about equaled that I FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Change From Mar. 16 Feb. 17 Mar. 18 1932 1932 1931 Total Bills and Securities........................................ $176.7 $ -30.3 $+62.0 Bills Discounted......................................................... 54.7 +41.1 -21.2 Bills Bought................................................................ 15.0 -5.2 -4.9 U. S. Government Securities................................. 107.0 -0.4 +25.8 Total Reserves............................................................ 671.6 +10.9 +256.5 Total Deposits............................................................ -7.1 257.5 -73.3 Federal Reserve Notes in Circulation................ 557.2 -13.6 +396.9 Ratio of Total Reserves to Deposit and Federal +3.4* -2.1* Reserve Note Liabilities Combined............ 82.4 ♦Number of Points. March 31, 1932 in February last year. The decline in meat production was less than seasonal, and the volume exceeded that of a year ago, while sales, which likewise totaled smaller than in the preceding month, owing to the lenten season, were larger in tonnage than last year, the lower price level effecting the decline shown in their value. The movement of wheat expanded as is customary in February; the vis ible supply, however, as well as stocks on farms, was reported as larger than average on March 1. Movement of feed grain during the period was in smaller than usual volume. Reporting groups of wholesale trade in the district, with the exception of electrical supplies, showed increased sales in February over the preceding month. Department store sales also gained slightly, contrary to seasonal trend. The retail shoe trade approximated the January volume, al though a decline is customary in the month, and the retail furniture trade increased more than seasonally. Chain store sales totaled smaller, with several groups, however, recording gains. Distribution of automobiles was larger during the month. Loans and investments, as well as deposits, of reporting member banks in the district were reduced further between February 17 and March 16, although the decline in de posits was at a slower rate than in the preceding five-week period. A decrease in borrowing at the Federal Reserve Bank was mostly attributable to a lessening in the demand for currency and an excess of local Treasury expenditures over receipts. Changes in money rates have been negli gible in recent weeks. Credit Conditions and Money Rates Among the several factors making for decreased borrow ing at the Reserve bank, an excess of local Treasury ex penditures over receipts of 33 millions and a decrease in demand for currency of more than 21*4 millions were outstanding during the period February 17 to March 16. In addition to these two items were a decrease in member bank reserve balances of almost 2 million dollars, a small decrease in non-member clearing balances, and a slight gain in holdings of acceptances (local transactions). The aggregate of these changes exceeded those tending to in crease member bank recourse to the Reserve bank, the more important of which were approximately 31 millions in funds lost through inter-district settlements for com mercial and financial transactions and a 3)4 million dol lar decrease in holdings of “other securities.” The result of these changes was that loans to member banks on March 16 totaled more than 21 millions less than on Feb ruary 17. The accompanying tabulation presents in detail the changes effecting this lessening of member bank re course to the Reserve bank. FACTORS IN MEMBER BANK BORROWING AT THE RESERVE BANK OF CHICAGO Changes between February 17 and March 16, 1932 (In millions of dollars) Changes making for decrease in member bank borrowing: 1. Excess of local Treasury expenditures over receipts........... 2. Decrease in demand for currency............................................... 3. Decrease in member bank reserve balances........................... 4. Decrease in non-member clearing balances............................. 5. Increase in holdings of acceptances (local transactions)... FEDERAL 33.10 21.60 1.82 0.33 0.10 Total................................................................................................... 56.95 Changes making for increase in member bank borrowing: 1. Funds lost through inter-district settlements for commer cial and financial transactions..................................................... 30.93 2. Decrease in holdings of “other securities”.............................. 3.49 3. Decrease in reserve bank float.................................................... 0.74 4. Increase in unexpended capital funds...................................... 0.53 5. Sales of gold to industry............................................................... 0.04 Total................................................................................................... Excess of changes making for decrease in member bank borrowing: Absorption of this excess: Decrease in member bank borrowings (discounts for member banks)............................................................ 35.73 21.22 21.22 Member Bank Credit A further decline in total loans and investments of report ing member banks took place in the period February 17 to March 16, amounting to 48 million dollars, of which ag gregate decrease only one million took place in loans on securities, 46 millions in “all other” (commercial) loans, and one million in investments. Deposits, while showing a lower volume as between February 17 and March 16, declined less notably than in the preceding period, Janu ary 13 to February 17, when demand deposits moved downward 78 million dollars and time deposits 17 mil lions, respectively, as against 20 millions and 12 millions in the first-named period. In comparison with March 18, 1931, loans and investments of reporting member banks on March 16 decreased 714 million dollars, net demand deposits 397 millions, and time deposits 321 millions. Rate changes have been negligible, save for a slight re duction in rates on bankers’ acceptances. For the week ended March IS, down-town banks in Chicago reported a range of 4)4 to S per cent as the prevailing rate on cus tomers’ commercial loans; for the corresponding week in February, 4y4 to 5)4 per cent was reported. The aver age rate earned on loans and discounts by larger institu tions in Chicago during the calendar month of February was 4.77 per cent, as against 4.83 in January and 4.52 per cent in February 1931. In the city of Detroit, the prevailing rate on customers’ commercial loans for the week ended March IS was S to 5)4 per cent. In contrast to the recession of 22 per cent in the 1923 31 average at this season, commercial paper sales in the CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Change From Middle West decreased only 3)4 per cent in February from January. Borrowing remained on a restricted basis, however, and demand continued very light, so that trans actions aggregated only one-fourth of the 1923-31 average for the month. Selling rates eased slightly, the range for the period being 4 and 4% per cent for high to 3)4 and 3)4 per cent for low; most paper moved at 3)4 and 4 per cent. Holdings expanded 3 per cent over the extremely low level of January 30. Some improvement in supply and demand was evidenced during the first half of March, with the result that sales for this period exceeded those of the corresponding weeks in February by more than 10 per cent. Quotations for March IS closed at 3)4 per cent for low and 3)4 to 4 per cent for high, the customary charge being 3)4 to 3)4 per cent. Dealer transactions in the Chicago bill market totaled considerably smaller from February 11 to March 9 than in either the preceding period or a year ago. Supplies fell off 24 per cent from those of January 14 to February 10, the expansion of 81 per cent in receipts from Eastern markets being insufficient to offset a decreased volume of locally purchased bills. Sales to Chicago and out-of-town banks gained over a month earlier, but this increase was more than counterbalanced by a reduction in shipments to other markets. Total distribution, as a consequence, was 16 per cent less than from January 14 to February 10. Selling rates declined during the period to 2)4 per cent for 30-day offerings and to 2% per cent for those of 180 days, which quotations were in effect on March 9. A fur ther reduction in dealer holdings of bankers’ acceptances also took place during the month. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET February 11, 1932 to March 9, 1932 Per Cent Change in Comparison with Period from Jan. 10 to Feb. 11 Feb. 12 to Mar. 11 1932 1931 Bills purchased......... —42.4 —64.3 Bills sold..................... +65.6 —46.7 Holdings*................... -39.4 -45.1 *At end of period. The bill transactions of accepting banks in the Seventh Federal Reserve district attained a higher level during February than evidenced in recent months. New financ ing by means of bankers’ acceptances exceeded that of any corresponding period since last March. Purchases of other banks’ bills, however, recorded only moderate ex pansion over the low point of January. Although sales continued less than current purchases, demand was fair and considerably in excess of the preceding month. Hold ings gained slightly over those of January 30. The lia bility for outstandings showed a reduction on February 29, as new financing in the period fell approximately two million dollars below the amount of maturing acceptances. A 7 per cent increase in value of new bills accepted was shown during the first half of March over the correspond ing weeks of February. The Federal Reserve Bank of Chicago on February 26 reduced its minimum buying rate VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From Feb. 1932 Jan. 1932 Feb. 1931 Chicago....................................................... $1,914 -17.4 -29.3 Detroit, Milwaukee, and Indianapolis 875 -17.9 -25.2 .. . . . . . Mar. 16 1932 $2,624 885 971 768 .. . . 1,406 988 -20 -12 -397 -321 Total four larger cities........................... $2,789 32 smaller centers.................................... 502 -20.0 -19.4 -26.1 -26.8 Borrowings from Federal Reserve Bank. . . . . . 24 -19 +21 Total 36 centers....................................... $3,291 -19.9 -26.2 Total Loans and Investments........................ . Loans on Securities............................................ . All Other Loans.................................................... . Investments........................................................... . Net Demand Deposits......................................... Time Deposits......................................................., Page 2 Feb. 17 1932 $-48 -1 -46 -1 Mar. 18 1931 $-714 -280 -214 -220 for bankers’ acceptances to 2 ^ per cent from the 2)4 per cent rate established on January 12, 1932. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in February 1932 from January 1932 February 1 Total value of bills accepted +63.9 +6.9 -7.4 +58.5 Purchases................................... Sales............................................ +52.3 -8.1 -51.6 Holdings*................................... +19.8 Liability for outstandings*.. -35.9 -4.0 *At end of month. Security Markets Activity in the Chicago bond market displayed a gradual increase during the month of February and prices trended slightly upward, recently reaching new highs for the year in some issues. The strengthening was most pro nounced in the better grade bonds and in United States government securities. Demand during the month fa vored high grade municipals and public utility issues. New underwritings, although totaling only about half the volume of February 1931, were approximately equal to the volume of January this year. These new issues were confined almost entirely to public utility bonds in the cor porate division. Some investment houses report that in dividual investors have been showing a slightly enhanced interest toward investment securities. Institutional buy ing was light during February. Prices on the Chicago Stock Exchange drifted gradually downward throughout the month and during the first half of March. The av erage price of twenty leading stocks* on March 16, amounted to only $28.57, which compares with $34.99 on February 16 and $38.10 in the middle of January. * Chicago Journal of Commerce. Agricultural Products Grain Marketing During February the usual increase took place in the wheat movement at primary markets, the gain in receipts, which were above the five-year February average, exceed ing that in shipments. Aside from strictly demand in fluences, marketing was accelerated by announcement of freight rate increases effective February 20. Exports were fair despite higher prices at Chicago than at Liverpool, and equaled the February volume in recent years, excepting 1931 when practically no wheat was exported. However, the visible supply was about the same at the end of Feb ruary as a month earlier and increased early in March. In addition to a gain of 133 million bushels in the United States visible supply over the March 1 average for 1920 1929, the Department of Agriculture reports stocks on farms 63 million bushels larger than the average for those years. Developments in world wheat demand, including more liberal milling quotas in France and Italy, tended to favor sellers and strengthened markets abroad. Domestic markets, though not on an export basis, were correspond ingly stronger, futures at Chicago averaging 2 to 3 cents higher than in January. Cash prices were less favorable, due to slow domestic demand and the increase in mar keting already referred to. The movement of feed grains continued in smaller than usual volume during February, receipts of corn and oats and shipments of oats showing only a moderate increase over January. The total supply of corn was not above average on March 1, though considerably greater than a year ago when a small crop had been harvested; oats sup plies were somewhat less than usual for that date. Con sumption, as feed, was limited by the generally mild weather which favored winter pastures. Prices failed to improve, cash and futures of both grains evidencing some weakness. Meat Packing Although a recession averaging 16 per cent (1922-31) is shown for the month, February production at slaughter ing establishments in the United States aggregated only 9 per cent smaller this year than in January. Moreover, it exceeded that of a year ago by 6 per cent and was 4 per cent greater than the 1922-31 February average. Endof-month payrolls reflected a reduction of 2 per cent in employment from January, together with a decline of 5 per cent each in hours worked and in wage payments. February sales billed to domestic and foreign customers totaled 9 per cent less in value than those of a month earlier and were 32J4 per cent smaller than for the cor responding period of 1931. The decrease from January mainly resulted from a reduced demand for meats during the lenten season, but the decline from last year showed that the increased tonnage in 1932 was insufficient to offset the effect of lower prices. Quotations for most pork, beef, smoked meats, and the common grades of veal declined in February from the preceding month; however, prices remained unchanged for mutton, ranged from barely steady to slightly firmer for dry salt meats, and advanced for pork hams, lambs, and good to choice veal cuts. March 1 inventories of these commodities in the United States showed the usual gain in volume over the begin ning of February, but remained under a year ago and the seasonal level. Largely as a consequence of British importers taking rather liberal quantities of lard to be delivered in England before the new import duties became effective on March 1. February shipments for export somewhat exceeded those of the preceding period. Also, a fair demand for lard was experienced on the Continent. Foreign trade in meats, on the other hand, failed to show any improvement over January. European quotations for American lard were fully on a parity with those in the United States; at times, they commanded a slight premium. Quotations for meats, however, continued below Chicago parity. Inventories of United States packing-house commodities in foreign coun tries, including stocks in transit, were practically un changed on March 1 from the beginning of February. Dairy Products Seventh district butter production was at a higher level than usual for February, being 2 per cent larger than in January and 19 per cent greater than a year ago. Fur thermore, the sales tonnage increased 2)4 per cent over LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, February 1932............................ Federally Inspected Slaughter, United States February 1932............................ January 1932............................... February 1931............................ Lambs and Sheep Cattle Hogs 164 942 309 102 583 653 559 4,590 5,027 4,142 1,439 1,679 1,223 360 347 353 Calves AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended Months of Mar. 19 Feb. Jan. Feb. 1932 1932 1932 1931 Native Beef Steers (average)........ ............... $6.30 $6.40 $6.80 $8.35 Fat Cows and Heifers...................... ............... 4.65 4.35 4.65 5.70 Calves................................................... ............... 5.60 6.80 6.95 8.50 Hogs (bulk of sales)......................... ............... 4.45 3.90 4.00 7.10 Yearling Sheep................................... ............... 4.70 5.00 4.25 7.10 Lambs................................................... ............... 7.20 6.15 5.95 8.15 Page 3 the preceding month and 7 per cent over last February. Manufacture of the commodity in the United States ap pears to have decreased slightly from January, although it remained above the corresponding month of 1931. A further reduction in United States inventories of butter took place during the month; March 1 holdings were only half those of last year and 70 per cent of the 1927-31 average. After having declined in February, prices began to show a somewhat firmer tendency the middle of March. Wisconsin factories increased their American cheese pro duction 7J4 per cent during the four weeks ended Feb ruary 27 over the preceding period; the volume totaled 5 per cent below a year ago. Although merchandising of the commodity decreased 7 per cent from that of January 4 to 30, it not only equaled the 1931 volume but also exceeded current production by 21 per cent. Total stocks of cheese in the United States declined from the beginning of February, and continued under last year and the 1927 31 average for March 1. Prices eased during the month. Industrial Employment Conditions Seventh district industrial employment and payrolls gained between January IS and February IS, according to reports from 2,672 firms. Employment increased more than the February average of recent years, while payrolls expanded less than usual. The trend in number employed and in their earnings has been steadily downward since late in 1929, and the gains reported for February were the fourth in employment and the eighth in wages in over two years. Manufacturing employment determined the upward trend, as seasonal gains occurred for both men and pay in four groups, in two others for employment only, and in one group for payrolls only. Estimated from monthly changes, manufacturing employment was slightly higher on February IS than in October and November 1931, which were the lowest months of the depression to date, but was more than 15 per cent below February 1931; payrolls were larger than in November 1931, but fell short of a year ago by over 25 per cent. Seasonal trends have not been clearly visible during the depression period; however, the gains of last month in most groups corresponded quite closely to the February EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Change From Week of February 15, 1932 January 15 Report Wage Earn- Earnings (000 Omitted) Wage ers No. No. $ % % Metals and Products1........ Vehicles.................................. Textiles and Products.... Food and Products............. Stone, Clay, and Glass---Wood Products.................... Chemical Products............. Leather Products................ Rubber Products*............... Paper and Printing............. 746 152 142 347 151 268 98 72 8 324 145,238 191,341 28,089 51,217 7,752 22,332 13,921 16,446 5,915 41,549 2,769 4,811 491 1,161 156 323 335 275 127 1,065 +1.5 +4.0 +5.3 -0.8 -2.0 +0.4 -1.4 +8.5 +0.8 -1.8 -1.7 +6.9 +9.3 -3.3 + 1.0 +4.4 -2.1 +23.8 -10.6 -3.0 Total Mfg., 10 Groups___ 2,308 523,800 11,513 +2.0 +2.5 Merchandising8................... Public Utilities.................... Coal Mining......................... Construction........................ 116 71 17 160 20,986 84,310 5,103 5,275 537 2,672 112 119 -1.4 -1.8 -2.0 -5.9 -1.7 -2.2 +13.8 -11.4 364 115,674 3,440 -1.9 -2.0 2,672 639,474 Industrial Group ing Firms Total Non-Mfg., 4 Groups. Total, 14 Groups................ 1Other than Vehicles. Earn- Earn ings ers 14,953 +1.3 +1.4 2Michigan and Wisconsin. Illinois and Wisconsin. Page 4 trend for previous years. Greatest improvement occurred in leather products, vehicles, and textiles. Wood prod ucts had larger payrolls with employment practically un changed. Seasonal declines were reported for paper and printing and food products, while chemicals, which usually shows February expansion, also had fewer employes and smaller payrolls. Non-manufacturing totals continued the unbroken de cline which has been in evidence since last June. The downward trend was shared by all groups, except for larger payrolls at Illinois coal mines as a result of longer hours near the middle of February. Method of Wage Payments A survey was conducted by the Federal Reserve Board in May 1931, of an important factor in the demand for currency, namely, the method and frequency of wage pay ments in various states and in different industries. Re sults based on reports from 2,431 establishments in the three Seventh district states surveyed—Illinois, Michigan, and Wisconsin—are now available. Data dealing with the relative importance of cash and check methods of pay ment are given below (see Tables I and II), while a dis cussion will appear in our next Business Conditions report dealing with the length of payroll periods and days of the week on which payments are made. The survey shows a decided predominance of payments by check over payment in cash in all three states (Table I). This tendency is more pronounced in manufacturing industry, while cash payments are slightly more signifi cant in non-manufacturing, amounting to about 10 per cent. In Illinois and Wisconsin large firms are more inclined toward the check method than are small ones, as, for ex ample, in Illinois 13 per cent of all firms were using the cash method but paid only 9 per cent of the total wages. In Michigan the reverse is shown, for firms paying by cash were only 13 per cent of all firms, but payed 42 per cent of total wages. In manufacturing industry the percentage of total wages paid by check in individual states was: Wisconsin, 96; Illinois, 91; and Michigan, 58. Conversely, cash pay ments represented 42 per cent of total wage payments in Michigan, 9 per cent in Illinois, and 4 per cent in Wiscon sin. In non-manufacturing industry also (Table I), the check method of payment is quite universal, Wisconsin again showing a slightly greater use of this method than did Illinois (Michigan not represented). TABLE I PERCENTAGE DISTRIBUTION OF NUMBER OF ESTABLISHMENTS AND OF WAGE PAYMENTS ACCORDING TO METHODS OF PAYMENT* Illinois All industries............. Manufacturing.......... Non-manufacturing. Michigan Manufacturing.......... Wisconsin All industries............. Manufacturing.......... Non-manufacturing. Number Of Establishments Cash and Cash Check Check Wage Payments Cash Check 85.1 88.2 74.8 2.2 1.6 4.3 9.3 8.6 10.6 90.7 91.4 89.4 13.1 83.2 3.7 41.7 58.3 14.1 12.6 18.2 83.4 84.9 79.2 2.5 2.5 2.6 5.7 4.4 9.7 94.3 95.6 90.3 12.7 10.2 20.9 ♦Payroll ending nearest May 15, 1931. Payrolls converted to a weekly basis. In Table II, which gives percentages for 15 manufac turing and 6 non-manufacturing groups, the large major ity of groups show a high proportion of total wages paid by check. The number of manufacturing groups in each state paying at least 90 per cent of wages by check is Illinois 12, Michigan 10, and Wisconsin 14. Seven groups had at least 90 per cent check payments in all three states: iron and steel, machinery, leather, stoneclay-glass, chemicals, rubber, and miscellaneous manufac turing. Cash payments were more than 10 per cent of the total in the following number of manufacturing groups: 3 in Illinois, 5 in Michigan, and one in Wisconsin. Although no one group had more than 10 per cent cash payments in all three states, textiles and tobacco had a fairly large proportion of cash payments in both Illinois and Mich igan. The only instance of an important group in which cash payments exceeded payments by check is the vehicles group in Michigan which paid 52 per cent of all wages in cash. This fact accounts for the much higher proportion of cash payments in the Michigan total than in the totals of the other two states. Percentages covering 6 non-manufacturing groups in Illinois and Wisconsin also reveal a strong predominance of check payments over cash, exceptions being the mer chandising and personal service groups. TABLE II Illinois ALL INDUSTRIES___ Manufacturing............... Iron and steel................ Machinery...................... Textiles and products.. Food and products. . . . Paper and printing.. . . Wood products.............. Vehicles............................ Leather and products.. Stone, clay, and glass.. Nonferrous metals. . . Chemicals and products Check 9.3 90.7 8.6 5.1 10.0 33.2 4.1 21.7 8.2 0.8 2.0 0.2 7.7 2.5 91.4 94.9 90.0 66.8 95.9 78.3 91.8 99.2 98.0 99.8 92.3 97.5 100.0 50.0 96.6 98.9 50.0 3.4 1.1 10.6 1.5 Miscellaneous................ Michigan Cash 77.0 11.6 3.3 Cash 41.7 3.0 4.2 32.4 9.3 6.3 18.1 52.0 2.4 17.2 Check 58.3 97.0 95.8 67.6 90.7 93.5 81.9 48.0 97.6 100.0 82.8 100.0 Wisconsin Cash Check 5.7 94.3 4.4 3.5 0.4 7.9 13.8 8.4 5.5 1.4 1.4 0.6 2.0 3.6 95.6 96.5 99.6 92.1 86.2 91.6 94.5 98.6 98.6 99.4 98.0 96.4 100.0 100.0 100.0 100.0 89.4 98.5 100.0 23.0 88.4 96.7 ♦Payroll ending nearest May 15, 1931. 100.0 9.7 0.8 35.9 35.1 1.7 90.3 100.0 99.2 64.1 64.9 98.3 100.0 Payrolls converted to a weekly basis. Manufacturing Automobile Production and Distribution A slight decline was shown in February automobile pro duction, the first to take place in this month. The de crease was largely due to the fact that one large manu facturer was not producing during the period. Output of passenger cars totaled 94,085 for the month, or 5 per cent below January and 48 per cent under a year ago, the figure representing the smallest February production on record. Trucks produced numbered 23,303, a mod erate increase over the 20,541 in January but 41 per cent below the same month last year. Sales of automobiles by reporting distributors and deal ers in the Middle West expanded substantially in Febru ary over the preceding month, as is usual for the period. The disproportionate increase in the value of new car MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in February 1932 from Previous Months Per Cent Change From January 1932 February 1931 Included +34.0 +33.1 -26.7 -31.3 19 19 +14.6 +40.4 -46.7 -34.3 46 46 +6.6 +2.8 -23.1 -31.3 48 48 +38.1 -24.0 49 +4.1 +3.1 -3.7 +19.3 49 49 New Cars Wholesale—• Number Sold............................ Value........................................ Retail—Number Sold............................ Value........................................ On Hand February 29— Number.................................... Value........................................ Used Cars Number Sold............................ Salable on Hand— Number.................................... Value........................................ Iron PER CENT OF TOTAL WEEKLY PAYROLL PAID BY CASH AND BY CHECK* By Industries Industry sales at retail to the number sold was due to heavy sales of a high-priced car and to practically no sales of a lowpriced make, new models of which are not on the market. Comparisons with a year ago still remain unfavorable. The number of both new and used cars on hand at the end of February was slightly greater than a month previous, but stocks continue to be much smaller than the average. A ratio of 48 per cent of deferred payment sales to total retail sales of twenty-seven dealers in February, compared with 51 per cent in January and 52 per cent a year ago. and Steel Products Conditions at Chicago district steel mills showed little change in February from the first month of the year, and the volume of new business was considerably below that of a year ago. At the middle of March, the rate of steel ingot operations was averaging about 24 per cent of ca pacity as against an average of 60 per cent at the same time last year. Pig iron output in the Illinois and Indiana district receded slightly in the daily average for February, contrary to seasonal trend. A tendency to stabilize prices has been in evidence during recent weeks, and advances were made on bars, plates, and shapes at the beginning of March. A slight acceleration took place in activity of steel cast ing foundries during February, and malleable castings showed even greater improvement than did steel. The tonnage of steel castings shipped by reporting foundries declined 2 per cent from January, but production in creased 5 per cent, and new orders 8 per cent, while gains experienced in all these items by malleable foundries to taled 14, 22, and 19 per cent, respectively. The expansion in malleable casting shipments was somewhat greater than seasonal, whereas it may be noted that steel castings failed to gain. Comparisons with a year ago remained unfavor able. The expansion of 33 per cent in February shipLUMBER AND BUILDING MATERIALS TRADE Feb. 1932: Per Cent Number of Change From Class of Trade Firms or Yards Jan. 1932 Feb. 1931 Wholesale Lumber: Sales in Dollars....................... Sales in Board Feet.................. Accounts Outstanding1............. Retail Building Materials: Total Sales in Dollars............... Lumber Sales in Dollars........... Lumber Sales in Board Feet. . . . Accounts Outstanding1.............. +7.6 +10.6 -3.2 -53.2 -39.5 -39.2 16 14 13 -6.9 —10.4 -14.4 -3.4 -30.8 -38.8 -30.7 -17.2 233 83 88 226 Ratio of accounts outstanding1 to dollar sales during month Wholesale Trade......................... Retail Trade.............................. ‘End of month. Feb. 1932 Jan. 1932 242.3 535.4 254.3 514.4 Feb. 1931 182.3 423.4 Page 5 merits of stove and furnace manufacturers in the district was better than normal for the period, although the vol ume totaled 37 per cent below last February. New orders accepted, which increased 66 per cent over the preceding month, declined in the same comparison a year ago when, however, the aggregate amount booked was considerably heavier than this year. Furniture February shipments of Seventh district furniture manu facturers reporting to this bank totaled 28 per cent in excess of those a month previous, and were equal to 81 per cent of the January volume of orders booked; the average increase for the month over the past five years is approx imately 28 per cent, and the ratio to January orders about 76 per cent. Current orders booked declined seasonally— 23 per cent from the preceding month—to a point slightly under the total of shipments made, as is not uncommon in February. The volume of unfilled orders was reduced only 10 per cent from the end of January, so that out standings on February 29 amounted to about 96 per cent of February orders booked. In the comparison with a year ago, current shipments were less by 46 per cent, orders booked by 48 per cent, and unfilled orders by 48 per cent. As compared with the past five years, ship ments and orders booked are currently less by 69 per cent. The rate of operations maintained during February ap proximated 34 per cent of capacity, one point lower than a month previous and 21 points under the ratio of Feb ruary 1931. Shoe Manufacturing, Tanning, and Hides Seventh district shoe production increased 31J4 per cent in February over the preceding month and 9 per cent over last year; it totaled only 8 per cent below the 1923 31 average for the month. Tanning operations expanded over January and compared favorably with a year ago. The aggregate value of leather sales likewise increased over a month earlier but was less than in February 1931. Prices held steady. Following three months of inactivity, packer green hide sales in the Chicago market rose to an unusually high level in February. Trading in calf skins also increased. Prices were very low during the month. Building Material, Construction Work Distribution of building materials in the Seventh dis trict, with the exception of lumber at wholesale, failed to show the usual February improvement, as shipments of cement expanded less than seasonally, and the demand for materials at retail yards was notably light. Comments of reporting firms indicate that although costs of materials and labor were at a favorable level for increased activity, the lack of capital and credit for construction continued as the chief obstacle to expansion in the materials busi ness. Wholesalers reported seasonally larger sales of lum- Building Construction Construction activity in the Seventh Federal Reserve district expanded in February, according to total and residential contracts awarded. Although the gain in vol ume over the January total is contrary to seasonal trend in recent years, consideration must be given the fact that the dollar volume of contracts in January this year, both residential and total, touched low points on our records since 1919. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Total Contracts Residential Contracts February 1932................................................ Change from January 1932................... Change from February 1931................. First two months of 1932........................... Change from same period 1931............ $18,050,571 +43% -38% $30,678,866 -50% $2,913,906 +99% -56% $4,380,443 -67% *Data furnished by F. W. Dodge Corporation. The estimated cost of building permits issued in the Seventh Federal Reserve district during February, accord ing to reports received from 102 cities, showed a marked increase—almost 100 per cent—over the extremely low January figure. The number of permits registered a gain of 4 per cent in this comparison. The decline from a year ago remained large in both number and estimated cost, totaling 44 and 76 per cent, respectively. Individually, Net Sales Stocks Accts. Outstand. Collec -16.7 -22.8 -18.1 -13.0 -37.9 -27.8 -16.5 -22.3 -14.7 -24.1 -9.7 -13.4 -24.0 + 1.6 -26.6 -19.0 -25.3 -28.5 -9.6 -9.3 110.9 354.7 316.0 211.6 565.5 DEPARTMENT STORE TRADE IN FEBRUARY 1932 Ratio of Per Cent Change Per Cent Change Feb. Col First Two February 1932 to Months 1932 From lections Locality From Accounts Same Period February 1931 Outstanding 1931 J anuary 30 tocks End Net Sales Sof Net Sales Month 1932 1931 Chicago.......... -25.0 -17.8 -28.1 23.5 30.2 Detroit........... -20.4 -23.0 33.2 34.7 -21.4 Indianapolis.. -11.5 -14.3 -16.5 40.1 40.0 Milwaukee. . -17.9 -13.0 38.6 -19.3 40.8 Other Cities.. -21.2 -12.9 -24.1 29.9 31.9 -38.4 -26.4 -17.1 -42.4 237.1 7th District. . WHOLESALE TRADE IN FEBRUARY 1932 Per Cent Change From Same Month Last Year Ratio of Accts. Outstand Commodity Groceries.............. Hardware............. Dry Goods........... Drugs.................... Shoes..................... Electrical Supplies........... ber, both in value and in board foot measure than in January, which compared favorably with the gains usu ally recorded in February over January during the pre ceding five-year period. However, the decline from a year ago was particularly sharp, amounting to 53 per cent in dollars and 40 per cent in board feet, indicating no more than a seasonal rise from the level of recent months. Accounts were reduced moderately and totaled lower in proportion to sales than in January. Stocks continued to decline and were smaller than a year ago at most yards. Dollar sales of materials at retail were 7 per cent lower than in January, which compares with a 6 per cent gain in February 1931 and a five-year average loss in Febru ary of only three-tenths per cent. Although the trend in the aggregate was decidedly downward, about onethird of the firms experienced gains. A more unfavorable comparison with a year ago was shown in both value and volume of February sales than in recent months. Col lections were only fair, as accounts declined slightly, but the accounts-sales ratio recorded the fourth monthly rise. Stocks remained low, and prices were reported somewhat weak for lumber, but steady for other materials, in the comparison with January. Cement shipments from midwestern mills totaled less than two-thirds of production in February and stocks continued to increase. January distribution in the five states including this district recorded the usual decline from December. Page 6 tions ing to Net Sales -21.9 -17.5 -24.4 31.2 34.0 60 of the reporting cities showed a gain over January in proposed construction cost; in the comparison with a year ago, however, only 21 cities reported a gain. In dianapolis and Des Moines were the only two large cities to vary from the trend of the district, both showing a loss of about 21 per cent from January in the estimated cost of proposed work. Merchandising Increased sales were recorded during February in all reporting lines of wholesale trade except electrical sup plies, whereas declines occurred in the same period last year. Grocery sales expanded 2 per cent in the aggre gate over January, drugs 4 per cent, hardware 7 per cent, shoes 12 per cent, and dry goods 9 per cent, while electrical supply trade showed a recession of 4 per cent, which decline, however, is about average for the month. In hardware and dry goods the expansion noted was greater than seasonal, and that in groceries and drugs was contrary to trend. As a consequence of the improved volume of trade, comparisons with a year ago were more favorable in all lines than in a similar comparison in Jan uary. In the majority of groups, ratios of accounts out standing to net sales during the period were reduced, though remaining higher than last year. Stocks showed a slight tendency to increase over the end of January, but continued to be much smaller than average. The 3 per cent increase in Seventh district department store trade during February over the preceding month compared with a decline of 2 per cent in the ten-year average for the period, but the expansion in aggregate sales may be largely attributed to the one more trad ing day in 1932 than is usual for February. This factor likewise had some effect on the comparison with last February, the decline in total sales being 22 per cent, whereas that in daily average sales amounted to 25 per cent. Trends varied among the larger cities in the month-to-month comparison, sales in Chicago and Detroit increasing 2 and 12 per cent, respectively, over January, while Indianapolis and Milwaukee department store trade recorded recessions oi 2l/2 and 8 per cent; sales for stores in other cities totaled 2 per cent larger than a month previous. Inventories were expanded slightly between the end of January and February 29, but the increase was smaller than is usual in the month, totaling only 4 per cent against an average gain in the previous ten-year period of 8 per cent. The dollar volume of shoes sold in February by re porting retail dealers and the shoe sections of department stores totaled only one per cent less than in January, al though a moderate decline is customary for the month. The decrease from the corresponding month of 1931 amounted to 19 per cent. Sales of furniture and house furnishings by reporting dealers and department stores exceeded those of the preceding month by 19 per cent, with installment sales by dealers registering a 38 per cent expansion, the gains being considerably larger than shown in the two preceding years. The decline from last Febru ary of 20 per cent in total sales and that of 18 per cent in installment sales were somewhat smaller than in the year-to-year comparison for January. MONTHLY 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 Feb. Jan. Dec. Nov. Oct. Sept. Feb. Jan. Dec. Nov. Oct. Sept. Firms 1932 1932 1931 1931 1931 1931 1931 1931 1930 1930 1930 1930 Meat Packing—(U. S.)— Sales (in dollars).................................... 63 53 58 65 79 58 74 78 84 85 89 105 102 Casting Foundries— Shipments: Steel—In Dollars............................... 15 16 17 19 18 20 21 40 31 34 32 42 46 In Tons................................... 15 15 16 20 20 19 19 34 41 30 30 42 48 Malleable—In Dollars..................... 22 17 16 16 16 17 14 32 31 28 25 32 33 In Tons......................... 22 30 27 25 29 22 28 49 41 46 37 46 49 Stoves and Furnaces— Shipments (in dollars).......................... 11 43 32 58 87 143 111 69 50 86 118 200 150 Furniture— Orders (in dollars)................................. 22 28 37 23 33 37 43 54 68 47 41 61 77 Shipments (in dollars).......................... 22 30 24 30 35 45 42 55 36 43 49 81 79 Flour—■ Production (in bbls.)............................ 25 96 98 98 105 125 123 95 102 101 105 119 123 Output of Butter by CreameriesProduction............................................... 67 93 92 91 88 100 95 82 85 83 78 94 97 Sales........................................................... 69 93 104 90 91 102 104 88 91 94 94 96 95 Wholesale Trade— M Net Sales (in dollars): Groceries............................................... 29 62 61 67 68 76 86 74 82 85 84 102 100 Hardware............................................. 13 31 30 46 47 57 55 41 42 58 63 87 75 Dry Goods........................................... 9 30 34 39 43 49 53 41 42 55 51 71 71 Drugs.................................................... 13 71 66 72 70 79 78 81 88 83 84 102 95 Shoes..................................................... 7 25 23 39 58 44 60 38 41 53 72 93 84 Retail Trade (Dept. Stores)—• Net Sales (in dollars): Chicago................................................. 26 55 54 126 73 83 72 73 78 164 99 109 93 Detroit.................................................. 5 75 65 149 92 95 123 95 87 184 121 118 150 Indianapolis........................................ 5 60 62 134 80 90 89 68 80 154 97 98 114 Milwaukee........................................... 5 68 61 141 92 102 89 75 85 167 111 107 116 Other Cities........................................ 50 53 52 77 119 86 72 68 72 146 96 103 86 Seventh District................................ 91 59 57 131 79 88 84 76 79 164 103 110 105 Automobile Production (U. S.)— Passenger Cars........................................ 32 33 34 17 20 37 62 47 41 34 60 39 Trucks....................................................... 55 62 63 52 58 83 105 89 89 117 95 108 Building Construction— Contracts Awarded (in dollars): Residential........................................... 10 5 9 12 17 18 23 22 20 36 42 44 Total...................................................... 26 18 22 27 31 49 42 46 51 58 77 88 Iron and Steel—■ Pig Iron Production:* Illinois and Indiana.......................... 40 41 41 41 41 43 78 72 72 76 79 82 United States...................................... 34 32 32 38 39 40 62 56 55 63 71 77 Steel Ingot Production—(U. S.)*. . . 44 42 38 48 44 45 78 68 57 66 75 82 Unfilled Orders U. S. Steel Corp___ 57 53 56 65 61 66 83 87 83 76 72 73 ♦Average daily production. Page 7 PER CENT 120 p— NATIONAL SUMMARY OF BUSINESS CONDITIONS FACTORY EMPLOYMENT AND PAYROLLS (By the Federal Reserve Board) \ /OLUME of industrial production and factory employment increased from Janr uary to February by an amount smaller than usual at this season. Improvement in the banking situation during February and the first three weeks of March was reflected in a decline in bank suspensions and a return flow of currency from the public to the banks. Employment Production and Employment Indexes of factory emplojnraent and payrolls, without adjustment for seasonal variation. (1923-25 average = 100.) WHOLESALE PRICES Output of industrial products increased less than seasonally in February, and the Board’s index, which makes allowance for the usual seasonal variations, declined from 71 per cent of the 1923-1925 average to 70 per cent. Activity in the steel in dustry during February and the first three weeks of March showed little change from the January rate, although ordinarily substantial increases are reported at this time of year. Automobile production continued in small volume, showing none of the usual seasonal expansion, and the number of cars produced in the three months’ period ending in February was about 35 per cent less than in the corresponding period a year ago. In the lumber industry, output declined further, contrary to seasonal tendency. Activity at cotton mills and shoe factories increased by more than the seasonal amount and was at about the same level as in the corresponding months last year. Volume of employment at factories increased in February by somewhat less than the usual seasonal amount. In the iron and steel, automobile, and machinery in dustries the number employed showed an increase smaller than is usual in this month, and at lumber mills a continued decline in employment was reported. At establish ments producing fabrics, wearing apparel, and shoes, volume of employment in creased by more than the seasonal amount. 1927 1928 1929 1930 1931 1932 Index of U. S. Bureau of Labor Statistics (1926 *== 100). RESERVE BANK CREDIT Daily average value of total building contracts awarded, as reported by the F. W. Dodge Corporation, showed little change in February and the first half of March, and for the period between the first of January and the middle of March the value of contracts was 65 per cent less than a year ago, reflecting continued declines in residential building as well as in other types of construction. Part of the decrease in the value of awards reflects reductions in building costs. Distribution Carloadings of merchandise and of miscellaneous freight showed none of the usual seasonal increase in February, while sales at department stores remained unchanged, as is usual at this season. Wholesale Prices Monthly averages of daily figures for twelve Fed eral Reserve banks. Latest figures, averages of first 22 days in March, 1932. Wholesale commodity prices, as measured by the index of the Bureau of Labor Statistics, declined further from 67 per cent of the 1926 average for January to 66 per cent for February. Between the first week of February and the third week of March, there were increases in the prices of cotton, live stock, and meats, while prices of grains, nonferrous metals, and imported raw materials including silk, sugar, and rubber declined considerably. Bank Credit MONEY RATES IN NEW YORK ________ S\ __ Commercioi Paper Rate — Reserve Bank Discount Rote Acceptance Rate i Monthly rates in the open market in New York: commercial paper rate on 4- to 6-month paper. Ac ceptance rate on 90-day bankers’ acceptances. Latest figures, averages of first 22 days in March, 1932. Page 8 In the banking situation, the important developments in February and the first half of March were a considerable reduction in the number of bank suspensions and a return flow of currency from the public to the banks. The country’s stock of monetary gold declined in February but increased somewhat in the first half of March. Member bank reserve balances, after decreasing almost continuously since last summer, showed a slight increase for the first two weeks in March. Purchases of United States Government obligations by the Federal Reserve banks, beginning in March, were accompanied by a considerable decline in member bank indebtedness to the reserve banks. Loans and investments of member banks in leading cities continued to decline until the middle of March, when there was a substantial increase, owing largely to the banks’ purchases of United States Government securities, issued on March 15. De mand and time deposits of these banks decreased further during February, but showed little change in the first half of March. Open-market rates on acceptances and commercial paper declined during February and the first half of March. During this period, yields on Treasury and other high grade bonds decreased to the lowest point since early December, but after the middle of the month yields on high grade corporate bonds increased somewhat.
@FedFRASER