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ItlVIHVV CONDITIO >X®. SSggSN: SMNW ^\\\v\i v Y-y <>v ,.'OS&" j5wwiM§S '&C& ^^MLiuiinuminunmiJn' .w ix'wiis,: -•« k\\VVitl^ S3S!E “«w^! ,\v^\ xv; iisvw*^. ipsass £§«& • W vw\\v VVKV CS | ,»a\w\\\«« I'SVKWI iS }fc\ ^"WVWVvwwvXW \m«V) !'«_'■ * mWutf !®!S2f ]DLU ess|to ^ v.vvt»-v>Vttr-| ,«W !MI ^ mzmm *t<5 ?&m Volume 22 May, 1939 Number 5 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business Conditions in the Seventh Federal Reserve District k * t y DISTRICT SUMMARY HPHE trend of industrial production in the Seventh district however, 3 per cent above the corresponding 1938 volume ± was generally downward during April and, with few and, with fewer trading days in the current period, daily indications of improving demand, May output will probably average sales were 5 per cent larger than in March and 6 per show no expansion. Building construction furnished an im cent above last year. In the first two weeks of May, sales portant exception to the downward trend, as activity in that were running 10 per cent ahead of the 1938 period. Both the industry continued to rise in April. In most phases of pro retail shoe and furniture trades recorded further expansion duction the level of output and incoming business remained during April, although sales of shoes totaled under a year considerably higher than in the same 1938 period when few ago. The majority of reporting wholesale trade groups had signs of improvement could be noted. Department store trade smaller sales than a month earlier, but the aggregate volume in April aggregated less than in March, but business in the sold was only slightly less. retail shoe and furniture trades rose further. The majority of wholesale trade groups had smaller sales in the period Agriculture than a month previous. r | ^HE production and sale of packing-house commodities Industry fell off in April from March, but the manufacture and TYECLINING demand effected a reduction in operations distribution of dairy products increased. Similarly, the of steel mills in the Chicago district during April and meat tonnage sold was slightly under a year ago, while the into May. Lack of buying by the automotive industry was sale of dairy products showed an increase; production of to a great extent responsible for this decline, although recent packing-house commodities exceeded that for last April, price concessions on items sold to that industry have pro and the manufacture of butter and of Wisconsin cheese was duced some increase in business. As sales leveled off in smaller than at that time. Wheat receipts at interior primary April, the manufacture of 1939 model automobiles fell markets gained nonseasonally during April, but reshipments moderately below the March volume and rather sharp cur failed to expand. The corn movement remained well below tailment in production took place in the early part of May. average. By mid-May, farm work was making rapid progress; Shipments from steel and malleable casting foundries of the however, vegetation was developing less than seasonally be district were lighter in April than a month previous, as were cause of inadequate rainfall. those from the majority of stove and furnace factories. A more than seasonal decline was recorded in output of furniCredit ture manufacturers, and activity in the paper industry diminished. On the other hand, building contracts awarded TRENDS gained through commercial and financial transacin this area rose 18 per cent over March, chiefly because of dons with other districts raised Seventh district member increased public works construction. The movement of build bank reserve balances $31 million between April 19 and ing materials expanded less than seasonally. May 17. Total loans and investments of weekly reporting Employment and payroll volumes recorded a slight non- member banks in the district were up 36 millions on May seasonal decline between mid-March and mid-April, but 17 over four weeks earlier. The increase in loans was only increases over a year ago were larger than a month previous. slight, but they were above the year-ago level for the first time in fourteen months. The increase in investments was Trade due chiefly to purchases by the banks of Treasury notes and T>ECAUSE of a decrease in Chicago, total April sales of bills, which exceeded the banks’ sales of Government bonds. Seventh district department stores were 2 per cent Both demand and time deposits in these banks rose in the smaller in April than in the preceding month. They remained, four-week period. Manufacturing concessions were being made over a wider area and of as much as $8 per ton plus the quantity deduction. Steel com panies later withdrew these low quotations. It is difficult to Iron and Steel Products estimate the volume of purchases negotiated under the price ITH continued declining demand, operations of Chi reductions, but reports indicate that it was considerable, and cago district steel mills have been further reduced. At consequently a resumption of buying is not expected for the 451/2 per cent of capacity in mid-May, the rate of steel ingot next several months. On May 15, one of the principal pro output in this area was down 121/> points from the peak ducers of steel in this district reaffirmed its present prices reached early in March and 8 points under that prevailing for third-quarter shipment, but discontinued quantity de around the middle of April; it remained, however, well ductions and instead made reductions of $3 per ton on sheets above the low level of a year ago. Lack of buying by the and strip and $2 on bars; these adjustments practically offset automotive industry contributed in large measure to this each other. declining trend, as it appeared that purchases for the 1939 * * * model season had practically terminated. Orders from mis In general, trends prevailing during April at steel and cellaneous users of steel, the construction industry, tractor malleable casting foundries of the Seventh district were plants, and the railroads constituted the chief sources of the reverse of those recorded in March: output from steel demand through April and into May. casting foundries declined, whereas it had expanded in the A recent important development in the steel industry has preceding month; and orders for malleable castings increased been the price concessions made on sheets and strip. These following a decrease in March, while output fell off after were inaugurated in early May, primarily in the Detroit area, rising a month previous. However, as compared with the and at first amounted to $4 per ton, with a $3 per ton quan low volumes of a year ago, incoming business, shipments, tity deduction also being given. However, within a few days and production at both types of foundries were substan- W v Other Manufacturing Furniture HE decline of 24 per cent during April from March in new business booked by Seventh district furniture manu facturers was noticeably greater than seasonal and followed STEEL AND MALLEABLE CASTINGS upon a less than customary increase in March. Furthermore, April 1939 SEVENTH DISTRICT Per Cent Change the favorable margin of gain over a year ago was narrowed from to 5 per cent from 15 per cent a month previous, and the March April 1939 1938 volume booked totaled 8 per cent below the ten-year average Steel Castings: ................ —1.9 +197.3 Orders booked (tons)....... for the period, which represents the first decline in this latter . —2 4 +139.3 Orders booked (dollars).. ................ —7.5 +74.5 comparison since September last year. Shipments, also, +50.7 ....... — 8.7 Shipments (dollars).......... +63.9 ....... + 1.5 showed a more than seasonal recession in April—15 per Production (tons).............. Malleable Castings: cent as compared with only 9 per cent in the 1929-38 April +77.2 ....... +11.6 Orders booked (tons)....... average. However, they exceeded those of the 1938 month +59.7 ....... +7.6 Orders booked (dollars).. +52.0 ....... —21.5 Shipments (tons)............... by 21 per cent and continued to total above the average by +43.2 ....... —19.4 Shipments (dollars).......... +55.6 ....... —19.5 7 per cent. For the cumulative period of this year through Production (tons)............... April, orders and shipments aggregated approximately 16 per cent heavier than in the same four months last year. Unfilled Shipments of Seventh district stove and furnace factories, orders were reduced 25 per cent between March 31 and the after having expanded considerably in the two preceding close of April but were 23 per cent larger than on April 30 months, rose only slightly further in April—by 3 per cent last year; their ratio to incoming business declined slightly —and operations diminished 4 per cent. The volume of in the period but was considerably above that for the 1938 orders accepted also was smaller in the period than in month. Factory operations were curtailed somewhat in April March, the decrease amounting to 12 per cent. As com to 68 per cent of capacity, or 5 points under the March rate pared with April last year, shipments were heavier in the current month by only 12 per cent, but incoming business though 13 points above a year ago. showed a gain of almost 30 per cent and production was one third larger. Although stocks increased slightly between Paper and Pulp FTER sizable gains in March, activity at paper and pulp March 31 and the close of April, they remained on the latter L mills located in the Seventh district declined rather date moderately under those of a year earlier. generally during April, but comparisons with 1938 levels continued for the most part favorable. The Automobile Industry PAPER AND PULP INDUSTRY HE number of automobiles produced during April in SEVENTH DISTRICT April 1939 Per Cent Change the United States showed a moderate recession in the from April March aggregate from the preceding month, although the peak 1938 1939 of the spring production season usually falls in April. How Paper: +18.9 ........... —10.0 +11.8 ................. — 8.0 Orders booked (dollars)........................................... ever, weekly output compared favorably with March and + 9.8 ........... — 9.3 + 6.6 ....... —12.2 the volume continued to exceed that of a year ago by a wide ......... —14.0 + 1.8 margin. The manufacture of passenger cars in April num - 3.7 .... +12.2 bered 273,409 and that of trucks 63,963, or 8 and 12 per Pulp: ............. -4.8 +10.1 cent less, respectively, than a month earlier. In the compar —29.3 ..................... — 0.0 Stock at end of month (tons)................................. ison with last April, passenger car production increased 55 per cent and truck output 48 per cent. At the end of April, manufacturers began to curtail schedules rather sharply and indications are that in some cases production of 1939 models is approaching an end. For the year to date, output has exceeded retail sales to a considerable extent, so that most dealers are well supplied with cars and field stocks have reached a level moderately above that of a year ago. In the Seventh district, distribution of new automobiles at wholesale fell off sharply in April and sales at retail by reporting dealers were somewhat less—6 per cent—than in March. As compared with last April, wholesale distribu tion was 60 per cent heavier in the month this year, while retail sales numbered about 25 per cent greater. These in creases were noticeably smaller than in the yearly compari son for March. Stocks rose 4 per cent in number over a month previous and were 40 per cent larger than at the close ‘30 ‘32 ‘34 '36 ‘36 1936 1937 1938 1939 of April 1938. Used-car sales also recorded some decline in Index numbers of employment and payrolls in the paper and printing industry of the Seventh district, 1923-1925 average = 100. By years, 1929 through 1938; by number during April—8 per cent—though exceeding those of a year ago by 21 per cent. Salable stocks of such cars in months, January 1936 through April 1939. creased 4 per cent during the period but numbered 8 per The Building Industry cent under the volume on hand a year earlier. In the States of ONTRACTS awarded for residential and non-residential Illinois, Indiana, and Michigan, new-car registrations in buildings in the Seventh district registered only minor April were not only considerably heavier than in the same gains in valuation during April from a month earlier. 1938 month but moderately above those of March. tially heavier in the current period. April shipments of steel castings about equaled new orders, and production was greater than either. On the other hand, output of malleable castings totaled slightly under orders booked, and the ton nage produced failed to equal these volumes. T A T C Page 2 i Awards for public works projects, however, increased sub stantially, not only offsetting a loss in public utility con struction but contributing largely to the gain in aggregate awards for the month. About two fifths of the total awards were financed through public funds, this ratio being about the same as a month earlier but somewhat lower than the average for the year to date. Although residential building as a whole showed only a slight increase over March, single-family dwellings intended for the owner’s occupancy increased sharply in contrast to other forms of residences, especially apartment buildings. The value of contracts awarded for commercial and industrial buildings was practi cally the same as in March and continued to constitute about 45 per cent of total non-residential construction. much better showing in April than did the national total. The seasonal trend between March and April normally shows a decline of about one fifth, but United States bituminous coal production was off by two thirds. As deliveries from the Pennsylvania and West Virginia fields were drastically reduced, a part of the normal demand was deflected to this area, with the result that comparatively minor declines were recorded in the April-March comparison for Illinois and Indiana production, in the face of seasonal factors which generally dictate a decrease sharper than that for the country as a whole. Soft coal mined in these fields during the first three months of the year had been in volume one fourth greater than in the first quarter of 1938, but for the month of April this favorable margin widened to 60 per cent. BUILDING CONTRACTS AWARDED' SEVENTH FEDERAL RESERVE DISTRICT Period April 1939.............................. Change from March 1939.......................... Change from April 1938................. First four months of 1939............ Change from same period of 1938....... Petroleum Refining RUDE runs to stills in the Indiana, Illinois, and Ken Total Contracts Residential Contracts $51,858,000 + 17.7% +42.6% *170.171,000 +60.1% +2.1% +76.0% $58,870,000 +106.2% •Data furnished by F. W. Dodge Corporation. RESIDENTIAL BUILDING CONTRACTS C tucky district declined slightly during April from March, but continued well above the 1938 level. For the United States as a whole, average runs were higher than in the preceding month and, though above last year, failed to show as sharp an increase in this comparison as did activity in this area. During the first quarter of the year, gasoline production for the entire country ran about 5 per cent ahead of the comparable year-ago period, whereas for the Indiana, Illinois, and Kentucky district, the favorable spread was twice this percentage. The “gasoline war” in Chicago over retail prices was reported as about terminated by the middle of May, with service station prices generally up 2 cents per gallon. I ' I OTWEN RESIDENTIAL Industrial Employment Conditions 1930 1931 1932 1933 1934 1935 1936 1937 Data furnished by F. W. Dodge Corporation for the Chi Michigan territories which closely approximate the Seventh disti tar-yearly periods, 1930 through first quarter of 1939. The demand for building materials expanded somewhat less than seasonally in April. Lumber sales declined at wholesale, counter to the usual trend, and increased less than is usual at retail. Increases in cement shipments were considerably smaller than seasonal, and brick deliveries fell off in the Chicago area, though registering gains in other sections of the district. Yearly comparisons continued generally favorable. Wholesale prices of building materials, as computed by the United States Bureau of Labor Statistics for the first week of May, were about 1 y2 per cent lower than a year ago and fractionally under those of a month earlier. Fuel Industries Coal Mining AS the labor difficulties curtailing bituminous coal min-^*-ing in the Appalachian fields did not materially affect activity in Illinois and Indiana mines until early in May, production figures for these two States made a relatively "C’MPLOYMENT and payrolls in Seventh district industries _ registered a slight decline for April, the losses in each item amounting to less than one-half of one per cent. This was contrary to the average March to April trend which for the ten preceding years shows a stationary volume of em ployment and a rise of 2 per cent in the amount of wage payments. The declines in the current month were consider ably smaller, however, than took place in the 1938 period EMPLOYMENT AND EARNINGS SEVENTH FEDERAL RESERVE DISTRICT Week of April 15, 1939 Change from March 15, 1939 Report ing Firms Wage Earn ers No. No. Earn ings (000 Omitted) $ 1,783 388 287 484 2,942 389,094 331,188 24,593 41,265 786,140 10,782 10,690 568 862 22,902 — — + — — 0.3 0.6 5.0 1.4 0.3 — + + — + Textiles and Products........... Food and Products............... Chemical Products............... Leather Products................... Rubber Products................... Paper and Printing................ Total........................................ 408 1,031 301 169 36 733 2,678 66,248 96,980 37,995 25,036 17,452 73,018 316,729 1,226 2,510 1,178 503 437 2,097 7,951 — — — — — — — 1.9 0.3 0.3 3.2 5.6 0.2 1.1 — 6.3 — 1.7 + 1.9 — 8.2 —11.8 - 0.9 — 2.8 Total Mfg., 10 Groups.............. 5,620 1,102,869 30,853 -0.6 — 0.1 Merchandising*........................ Public Utilities.......................... Coal Mining.............................. Construction............................... 5,615 1,125 81 784 138,293 100,417 15,952 9,523 3,054 3,318 317 274 + 1-5 — 0.0 —15.0 + 15.1 + 1.9 — 0.0 —32.4 +18.7 Total Non-Mfg., 4 Groups....... 7,605 264,185 6,963 + 0.2 — 0.8 13,225 1,367,054 37,816 *Illinois, Indiana and Wisconsin. — 0.4 — 0.2 Industrial Group Wage Earn ers Earn ings % % Durable Coods: Metals and Products1 Vehicles................................... Stone, Clay, and Glass....... Wood Products...................... Total......................................... 0.7 2.7 1.7 1.5 0.9 Non-Durable Goods: Total, 14 Groups....................... ‘Other than Vehicles. Page 3 and, as a result, the favorable margin over a year ago widened to 9 per cent in number of workers employed and to 18 per cent in wage payments. Continued seasonal increases in the stone-clay-and-glass products industries, together with higher payrolls in the vehicles group, served to offset most of the losses recorded in the durable goods classification. Non durable goods industries declined generally, all groups show ing curtailment in employment and all but chemicals a de crease in wage payments. The sharpest declines were those affecting textiles, leather, and rubber products. Reporting industries outside the manufacturing groups maintained their employment volume at the level of a month earlier but had slightly lower wage payments. In coal mining, the decreases recorded in employment and payrolls were largely seasonal. Public utilities had about the same number of workers and amount of wage payments as in March, while the merchandising and construction industries registered substantial increases in these items. Longer working hours in a number of the reporting groups accounted for a more favorable change in wage payments than in employment. Likewise, where wage payments declined more sharply than employment, as in the case of the coal-mining industry, it was generally the result of a curtailment in operating schedules rather than of any change in the prevailing scale of wage rates. of the increase. There was a small rise of one per cent in inventories between the end of March and the close of April, but they remained lighter by 4 per cent than a year ago, and April turnover was slightly greater than in the 1938 month. * * * Following a much greater than customary rise in March, the retail shoe trade continued to record expansion in April. Sales of shoes by reporting dealers and department stores exceeded those of the preceding month by 9 per cent, with department stores showing only a slight increase in the aggregate of such sales and dealers registering a considerable gain. As compared with a year ago, however, sales totaled 7 per cent smaller in the current period, whereas in March they had been 11 per cent greater than in the corresponding 1938 month. For the first four months of 1939, the retail shoe business was one per cent in excess of the same period last year. At the end of April, inventories aggregated 2 per cent less than a month previous and one per cent under a year ago. * * * Sales of furniture and housefumishings, according to reports of dealers and department stores, rose 11 per cent in April over the preceding month, or to a slightly greater extent than in March over February. The gain was somewhat less than in the 1929-38 average for the period, but sales totaled 7 per cent above those of a year ago as against an increase of only 3 per cent in the yearly comparison for Merchandising March. Department store sales of furniture and housefurnishings recorded a gain of 7 per cent over March and Retail Trade of 6 per cent over last April, while dealer trade showed in PRIL department store sales in the Seventh district creases of 24 and 8 per cent, respectively. Although stocks l totaled slightly less—2 per cent—than in the preceding were one per cent larger at the close of April than a month month. However, despite the fact that much of the Easterprevious, they remained below the year-earlier level by 4 trade fell in April last year, sales in the current period per cent. * * * exceeded those in that month by 3 per cent and for 1939 to date remained 2 per cent above the corresponding 1938 SALES OF INDEPENDENT RETAIL STORES (As reported by the Department of Commerce) period. Furthermore, with one and one-half fewer trading Per Cent Change April 1939 from days than in March and one less than a year ago, daily April 1938 Iowa Wisconsin Illinois Indiana average sales for April increased 5 and 6 per cent over a — 7.0 + 0.8 + 4.0 Group.......................................... ......... —4.3 + 3.5 month and year earlier, respectively. It will be noted in the Apparel + 6.5 ......... +3.6 + 3.7 Drug Stores.............................................. — 7.1 — 1.8 — 8.5 ......... —5.8 Food Group............................................... table that Chicago alone of the larger cities in the district Furniture and Appliances....................... .......... —0.8 + 6.7 + 9.0 —10.5 — 5.7 —13.4 +18 0 ......... —8.5 recorded a decline from last April; and it likewise furnished — 0.8 +17.0 + 0.4 and Building Materials........... ......... +4.2 +14.2 the one exception among them in the monthly comparison, Lumber +11.6 +49.2 Motor Vehicle Dealers............................ ......... +18.7 — 2.5 + 4.3 ......... +0.5 + 5.6 department store sales in that city registering a 6 per cent Total All Groups..................................... recession from the preceding period and effecting the de Wholesale Trade crease in the aggregate for the district. Trade in Detroit has shown the greatest gain in recent months as compared LARGE majority of Seventh district wholesale trade with a year ago. Continued improvement over the unfavor groups reporting to the United States Department of able trend prevailing at the time in 1938 took place during Commerce had smaller sales volumes in April than a month the first half of May, as sales in the two weeks ended May previous, although the aggregate amount sold declined only 13 totaled 10 per cent above those in the same period a year one per cent during the period. The drug trade showed earlier, with Detroit again being responsible for the size the heaviest recession from March—15 per cent. Other de clines among the larger groups amounted to 9 per cent in DEPARTMENT STORE TRADE IN APRIL 1939 groceries, 3 per cent in paper, and one per cent each in A A Locality Per Cent Change April 1939 from April 1938 Net Sales Chicago..................... Detroit..................... Fort Wayne............. Indianapolis............. Peoria....................... Other Cities*........... — 1.2 +11.2 — 2.2 + 7.6 + 11 — 5.7 + 2.6 Stocks End of Month — 4.2 — 3.3 —'6.8 — 0.5 — i.i 7th District............. + 2.5 — 3.8 ♦Include Fort Wayne and Peoria. 4 forPage FRASER Digitized Per Cent Change First Four Months 1939 from Same Period 1938 Net Sales — 1.8 +10.1 — 2.0 + 5.2 + 0.7 — 5.1 + 3.3 + 1.8 Ratio of April Collections to Accounts Outstanding End of March WHOLESALE TRADE IN APRIL 1939* Per Cent Change from Same Month Last Year Commodity 1939 1938 46.6 45.0 45.9 40.1 38.6 37.3 38.3 37.1 35.6 33.7 42.0 40.3 Groceries and Foods— Drugs & Drug Sundries. Electrical Goods............ Meats & Meat Products. Tobacco & Its Products. Miscellaneous.................. ♦Data furnished by merce. Net Sales Stocks Accounts Outstanding Collections —3.8 — 1.4 — 4.2 — 2.6 +2.0 — 0.8 — 4.2 + 5.3 +9.4 + 2.4 —10.1 + 5.1 —3.2 + 1-2 +21.3 +11.2 —5.5 +17.9 + 9.5 + 9.8 + 0.7 +2.8 — 5.2 + 4.7 +4.2 + 4.8 + 7.6 + 2.3 +1.8 — 0.9 — 6.7 + 4.1 Bureau of the Census, United States Department of Com electrical goods and tobacco and its products; the total for miscellaneous groups recorded a 9 per cent decrease. In the hardware trade a fractional increase took place and sales of meats rose 19 per cent. As compared with last April, total sales of all reporting groups were 5 per cent larger in the current period, and it will be noted in the accompanying table that the grocery business again furnished an exception to this trend. Increases and decreases in in ventories between March 31 and the end of April were about evenly divided, the aggregate for all lines showing practically no change over the period. As compared with April 30 last year, stocks totaled 4 per cent smaller. Agricultural Products ‘C’ARM work in the Seventh Federal Reserve district, which had been considerably behind normal schedule earlier this spring, made rapid progress during the first half of May. Corn planting was 60 to 70 per cent completed in central areas by May 16 and 40 to 60 per cent finished in the southern counties; however, it had just begun in the north. Although the earliest fields of this grain were up to a good stand, germination generally was being considerably hampered by cold and dry condition of the top soil. The preparation of soybean seed beds was about completed by mid-May and some planting had been done. Vegetation in general continued to show less than seasonal development, because of inadequate rainfall. Pastures had furnished but little grazing to May 16; they ranged from poor to only moderately good in condition but were tending to improve. Hay prospects, similarly, continued under a year ago; how ever, the best alfalfa was about knee high. Oats were rather backward, with stands ranging between fair and good. Barley, likewise, showed relatively poor progress. On the other hand, much of the Seventh district winter wheat had attained a growth of one to two feet by mid-May and some of it was jointing; rye had begun to head in the southern counties. Planting of early potatoes and sugar beets was nearing completion. The frost of May 12 appears to have caused at least minor damage to tender garden truck and early fruits in some northernmost areas, but the prospect for tree fruits in Illinois and Indiana seemed better than had been anticipated earlier in the season. Additional rainfall is needed in almost every section of the district; in some parts of Iowa, even the wells are showing signs of failing. CBOP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the Basis of May 1 Condition (In thousands of bushels) Five States Including Seventh District United States Forecast Final Average Forecast Final Average 1939 1938 1928-37 1939 1938 1928-37 Winter Wheat.................. 82,320 101,685 84,571 543,928 686,637 560,160 Rye................................... 9.701 9,942 7,866 46,704 55,039 36,330 Grain Marketing Wheat APRIL receipts of wheat at interior primary markets in the United States recorded a nonseasonal gain over March, but reshipments failed to rise in accordance with seasonal expectations. Wheat exports continued in fair volume. Responding to a combination of bullish factors— a revival in demand for wheat by major importing countries, unsettled world political conditions, growing apprehension over the North American crop outlook, as well as prospects for a shorter European crop this year—wheat prices dis played considerable strength. Cash quotations for No. 2 hard winter wheat at Chicago were up about 7 cents for April and on May 22 were nearly 10 cents higher than the March lows. Corn and Oats HE corn movement during April showed little change from March but continued well below year-ago and average levels. There was a firm trend in corn prices over most of April and further strength in the first three weeks of May; prices for No. 2 yellow corn in cash positions in Chicago were up about 44/2 cents from the low points of March. Major factors in the strength in corn were the firmness in wheat, the withholding from the market of large quantities of corn under Government loan, and a scattered export trade coincident with the small Argentine crop. Visible supplies of corn showed a seasonal decline of 19 per cent during the five weeks ended May 20. The oats movement decreased counterseasonally and visible supplies were sharply lowered. Oats prices showed a firm to strong tendency throughout April and the first part of May, but subsequently recorded a moderate decline. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) April April March April 1929-38 1939 1939 1938 Avg. Wheat: Receipts.................. 13,755 11,063 12,258 Shipments.............. 11,081 14,052 11,993 Corn: Receipts.................. 12,939 29,532 15,518 Shipments.............. 8,658 24,084 12,231 Oats: Receipts.................. 5,710 4,313 5,890 Shipments.............. 6,402 8,553 7,285 Meat Packing HE production and sale of packing-house commodities in the United States decreased in April from a month earlier. Furthermore, the tonnage sold only slightly exceeded cur rent production and there was very little further decline in inventories; stocks of pork and lard were moderately heavier than a year ago, while those of beef were lighter in the comparison. Prices of lard, most pork, and of medium and common veal declined in April from March; those of steer beef eased but quotations for lamb and commoner quality beef firmed. Payrolls in the industry showed a decline at the close of April from a month earlier of 2 per cent in employes and of y2 per cent each in hours and wage pay ments. Hours worked and the amount of wage payments exceeded a year ago by about 5 per cent each, and there was also a gain of 3 per cent in number of employes. Production in the first half of May was under that of the corresponding period in 1938. LIVESTOCK SLAUGHTER Yards in Seventh District, April 1939.............................. ............... Federally Inspected Slaughter, United States: April 1939........................................... ............. March 1939......................................... ............... April 1938........................................... April 1929-38 average...................... ............... Cattle 166 Hogs 471 677 774 2,931 3,229 2,462 3,171 705 Lambs and Sheep Calves 240 92 1,224 1,473 1,425 1,358 457 478 502 489 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Beef Steers (average)............... Fat Cows and Heifers............................. Calves........................................................ Hogs (bulk of sales)................................ Lambs........................................................ Week Ended May 20, April 1939 1939 ............. $ 9.80 $10.20 8.30 9.25 ............. 6.80 6.95 10.00 Months of March April 1939 1938 *10.40 S 8.65 8.30 7.50 9.75 8.85 7.45 8.40 9.25 8.45 Pag* 5 Butter prices this spring have ruled sharply lower since the withdrawal of Government support in March; in the first three weeks of May, however, they were firmer, re flecting a backward production season and improved move Tonnage produced ment to consumption. Also reflecting a better demand was Tonnage sold....... the nonseasonal decline during April of 8 million pounds Dollar sales.......... Inventories........... in United States cold-storage holdings. May 1 stocks of creamery butter were still the highest on record for the Foreign Trade date, but 88 per cent of the supplies were held by Govern HIPMENTS of packing-house commodities for export mental agencies. _ _ _ fell off in April from March, largely a reflection of April production of American cheese in Wisconsin ad the light demand for lard already landed in the Unitedvanced 9 per cent over March, but was 10 per cent lower Kingdom and also because domestic requirements in the than a year ago. Distribution of cheese from the State rose United States left available only a limited supply of hams 11 per cent over the preceding month and 3 per cent over and lard for foreign markets. British demand for hams was April 1938. Production and sales in the first half of May relatively good all month; also, some forward sales of lard continued these trends. Cold-storage holdings of all varieties and other pork products for May and June delivery were of cheese declined more than is usual for April; on May 1 made to the United Kingdom. Continental European trade they were below year-earlier levels for the first time since remained negligible. Cuban, Porto Rican, and Latin Amer May 1938. Prices of cheese have not fully reflected the ican demand for animal products from the United States was weakness in the butter markets this spring, though declining relatively good during April and at about the same level considerably in March and April. In mid-May, cheese quota as in March. Toward the close of the period, English quota tions at Chicago advanced to the highest levels since last tions for hams fell below the Chicago parity; those of lard January, but then receded moderately in the subsequent were under the United States basis all month. Inventories week. of United States packing-house commodities in foreign markets were reduced during the month. Imports of animal Credit and Finance products into the United States decreased somewhat in Member Bank Reserves April from March. ESERVES held at this bank by Seventh district mem ber banks were 31 millions higher on May 17 than four Dairy Products weeks earlier. Net Treasury receipts in the amount of 116 HE manufacture of creamery butter during April by millions, as contrasted with a large excess of disbursements Seventh district firms showed, a seasonal increase of 8 over receipts in the preceding five weeks, only partially per cent over March but totaled 2 per cent smaller than incounteracted the effect of a gain of 151 millions through April 1938, while April sales of butter by these firms were interdistrict movements of funds. Currency circulation in 3 and one per cent higher, respectively, in the same com creased by 3 millions, adversely affecting reserves to that parisons. In common with Seventh district trends, butter extent. The increase in reserve balances was coincident with production in the United States as a whole is estimated at expanding deposits at the member banks, which latter raised slightly below the 1938 volume for April, although milk the amount legally required as a reserve. As a result, while production continued at record levels during the month. total member bank reserves increased 31 millions, excess reserves rose only 5 millions over the same period. MEAT PACKING—UNITED STATES Per Cent Change in April 1939 from April April March 1938 1929-38 Avg. 1939 — 4.9 + 5.7 —10.0 — 6.9 — 0.6 —11.9 + 3.1 + 1.4 — 1.9 —20.1 + 3.8 — 0.2 S R T MONTHLY BUSINESS INDEXES Data refer to Seventh district and are not adjusted for seasonal variation unless other Apr. 1939 wise indicated. 1923-25 average = 100 Manufacturing Industries: Pig Iron Production: Automobile Production—(U.S.): Casting Foundries Shipments: Stoves and Furnaces: Furniture Manufacturing: WEEKLY Mar. Feb. 1939 1939 Department Store Net Sales: Adjusted......................... Page 6 Mar. 1938 REPORTING MEMBER BANKS Feb. 1938 DEMAND DEPOSITS*ADJUSTED H 83 81 83 81 83 80 74 66 77 68 78 68 79 85 76 52 51 47 93 170 102 192 82 154 60 115 59 127 48 125 40 31 49 62 41 32 61 79 39 31 47 63 27 18 34 41 42 34 37 45 30 22 36 43 134 130 96 119 120 83 49 65 64 76 63 60 47 54 56 68 53 52 63 76 62 64 35 56 36 53 34 49 15 25 81 81 83 90 92 85 78 79 85 77 81 82 81 85 83 80 76 84 Wednesday figures for reporting member banks in leading cities of the Seventh district, January 1, 1936, to May 17, 1939. 81 101 107 98 84 88 88 89 102 105 97 83 92 98 64 74 75 68 63 67 84 82 94 100 98 82 87 82 86 87 97 95 79 86 95 67 71 75 71 62 68 85 inter-bank deposits and items in transit) of Seventh Ddistrict weekly reporting member banks were 30 million Building Contracts Awarded: Meat Packing—(U.S.): Apr. 1938 1333 1939 EMAND deposits adjusted (to exclude Government and dollars lower on May 17 than at the end of 1938, the rise since April 1 having failed to counteract a steady decline in the three months prior to that date. Total investments in creased by about 150 millions between December 28 and mid-February, as Chicago banks enlarged their portfolios of short-term Treasury securities for resale to their customers in connection with the Illinois personal property tax. How ever, this course of action subsequently reduced holdings below the level prevailing at the start of the year. In the four weeks ended May 17, these banks altered the composi tion of their portfolios with apparent emphasis on short term securities, as such holdings had been depleted by an amount greater than the net purchases earlier in the year. Acquisitions of Treasury notes and bills, particularly the latter, exceeded net sales of Government bonds by 25 millions in the current period. The amount of loans has shown little change so far in 1939, though rising in May above the yearago level for the first time in fourteen months. This favor able comparison, however, reflects a declining trend last year rather than any recent expansion in volume. During the month of April, earnings of selected Chicago and Detroit banks on total loans and discounts averaged slightly higher than in the preceding month. Securities Markets Selected Seventh District Banking Data FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in thousands) Total bills and securities......................................... Bills discounted......................................................... Bills bought................................................................ U. S. Treasury bills................................................. U. S. Treasury notes................................................ U. S. Treasury bonds.............................................. Total Government securities.............................. Total reserves............................................................ Member bank reserve deposits.............................. All other deposits...................................................... Federal Reserve notes in circulation.................... Ratio of total reserves to deposit and Federal Reserve note liability combined........ Change from April 19, May 18, 1939 1938 $+18 $+8,569 +19 —102 0 +3 0 —23,900 0 +2,828 0 +30,960 0 +9,888 + 120,028 +193,104 1,328,713 +31,162 +114,456 220,702 +83,004 +58,911 991,286 +3,719 +28,331 May 17, 1939 $ 287,778 123 71 53,395 131,705 102,027 287,127 .. .. .. .. .. .. .. .. .. .. .. 90.0% * * CONDITION OF REPORTING MEMBER BANES SEVENTH DISTRICT (Amounts in millions) Change from May 17, April 19, May 18, 1939 1939 1938 S3,076 $+36 $+229 863 +2 +12 501 —7 —6 30 +2 —8 39 +6 +9 79 0 +3 101 +2 +12 3 0 —2 110 —1 +4 144 +681 +20 \ 392 +87 923 —63J 263 +10 +70 491 —3 +60 Assets A +0.4* * Loans and investments—total.................................... Loans—total................................................................... Commercial, industrial, and agricultural loans___ LTHOUGH trading volume was at a comparatively low Open-market paper....................................................... to brokers and dealers in securities.............. - level during April and early May, bond prices on the Loans Other loans for purchasing or carrying securities. . Real estate loans........................................................... whole were firm over this period. Technical factors, parLoans to banks.............................................................. ticularly the large volume of banks’ excess reserves, have Other loans..................................................................... S. Treasury bills..................................................... made for continued strength among the high-grade cor U. U. S. Treasury notes.................................................... U. S. Treasury bonds................................................... porates, which on May 19 were fractionally higher than Obligations fully guaranteed by U. S. Government a month earlier. The continued preference of banks in Other Securities............................................................ this district is for high-grade bonds of short maturity, but they are reported to have done some buying of long-term liens for trust accounts. Lower-grade prices have followed the stock market in its moderate upswing and by mid-May had recovered about one third of the losses incurred since March 10. The speculative issues advanced more sharply than did the higher grades, which had not suffered any material declines, but the spread between prices of these different types of bonds nevertheless remained much wider than that prevailing two to three months ago. Municipals continued strong, supported among other things by the continued paucity of new issues. Most activity in this field, however, is in the East. Three or four large issues con stituted almost all of the amount of new long-term corporate bond financing in April—the largest monthly volume of the current year. One $25 million utility refunding in the Seventh district accounted for about 17 per cent of the national total. New issues were accorded a satisfactory re ception by investors. Opinion in Chicago bond circles in dicates that the growing practice of private placement at taches a sort of scarcity value to those issues which are publicly offered, thereby increasing their chances for a favorable reception. The corporate field was left largely to the institutional investors, as most bank buying appeared to be in Governments. This factor apparently was instru mental in the continued price strength of the latter securities which have, with only minor interruptions, moved to suc cessive new high points since the first of the year. Bank demand was also reflected in successively smaller average discounts for the six most recent weekly offerings of Treasury bills. About 318 millions of the $325 million H.O.L.C. bonds maturing June 1 was refunded early in May by the Treasury. Only 7 per cent of the exchanges took place in this district. +0.5* •Number of Points. Liabilities Demand deposits—adjusted*..................................... Time deposits................................................................ Borrowings..................................................................... 2,337 913 0 +52 +14 0 +208 +41 0 •The annual velocity of demand deposits (unadjusted) in the four weeks ended May 17 was 20.14 times, as compared with 22.95 times in the preceding five weeks and with 19.51 times in the corresponding period of 1938. BANE DEBITS, SEVENTH DISTRICT (Amounts in millions) April 1939 $2,733 92 821 31 48 186 234 54 39 Chicago............. Dee Moines....... Detroit.............. Fort Wayne. . .. Grand Rapids.. Indianapolis.... Milwaukee........ Peoria................ South Bend. .. . Per Cent of Increase or Decrease from March April 1939 1938 —10.9 + 4.5 — 9.4 + 0.7 — 6.4 +18.4 + 4.6 — 0.4 — 5.4 + 6.7 — 2.9 + 5.4 —15.6 — 6.4 + 0.2 — 2.3 + 5.3 +12.2 32 smaller cities 456 — 4.6 + 1-5 Total 41 cities.. 4,694 - 9.1 + 5.7 TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANE OF CHICAGO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) Total country and city check clearings: Pieces.................................................... Amount................................................. Daily average clearings: Total items cleared— Pieces.................................................... Amount................................................. Items drawn on Chicago— Pieces.................................................... Amount................................................. Items drawn on Detroit— Pieces.................................................... Amount................................................. April 1939 . 12,224,268 .$2,138,848,277 April 1938 10,815,829 $1,854,098,453 . . 491,434 $86,067,553 415,993 $71,311,479 . . 76,690 $43,946,000 70,031 $38,396,000 . . 18,751 $8,532,208 15,789 $6,532,838 Page 7 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) OLUME of industrial production declined sharply in April reflecting chiefly V shutdowns at bituminous coal mines and reduction in activity at textile mills. Retail purchases by consumers were maintained. INDUSTRIAL PRODUCTION Production N APRIL the Board’s seasonally adjusted index of output at factories and mines was at 92 per cent of the 1923-1925 average, compared with 98 in March and 77 a year ago. In the steel industry production declined in April and the first three weeks of May but in the fourth week ingot output increased to 4814 per cent of capacity, about the rate prevailing a month earlier. Around the middle of May substantial concessions were made in prices of some types of steel and it is reported that a considerable volume of orders for steel was placed during this period. Automobile production in April was at about the same rate as in March, although there usually is some increase, and in May output declined owing in part to the fact that stocks of new cars were larger than is usual at this time of the year. Plate glass production decreased sharply in April following smaller declines earlier in the year. In the lumber industry output increased somewhat in April, while cement production, which had risen sharply in February and March, showed less than the usual increase. Textile production declined sharply in April, particularly at woolen mills, where output had been at a high level, and in the silk goods industry where further curtailment reflected in part recent high prices for raw silk. Output of shoes showed a decrease from the high level maintained during the first quarter of this year. At flour mills and sugar refineries activity increased further, while in most other non durable goods lines changes in output were largely seasonal in character. Bituminous coal production was in small volume during April and the first half of May as most mines were closed pending settlement of contract negotiations between mine operators and workers. After the middle of May agreements were reached at most mines and output began to increase rapidly. Production of anthra cite, which had been reduced in March, increased sharply in April and crude petroleum production rose further. In the first half of May anthracite production was maintained but petroleum output declined somewhat. Value of construction contracts awarded, according to the F. W. Dodge Corpora tion, was larger in April than in March, owing chiefly to a rise in awards for public projects. Contracts for private construction showed little change in the aggregate as private residential contracts declined, contrary to seasonal tendency, while con tracts for commercial, factory, and other private construction increased. In the first half of May awards for private work increased somewhat while the volume of public contracts declined. I Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to April 1939. FACTORY EMPLOYMENT AND PAYROLLS 1934 1935 1936 1937 1938 1939 Indexes of number employed and payrolls, without ad justment for seasonal variation, 1923-1925 average = 100. By months, January 1934 to April 1939. Indexes compiled by the United States Bureau of Labor Statistics. DEPARTMENT STORE SALES AND STOCKS Employment MPLOYMENT in nonagricultural pursuits declined somewhat from the middle of March to the middle of April reflecting a sharp drop at bituminous coal mines offset in part by seasonal increases in construction and trade. At factories the number employed showed little change while payrolls declined considerably because of fewer hours of work. E Distribution N APRIL distribution of commodities to consumers showed about the usual seasonal increase. The Board’s adjusted index of department store sales remained at 88 per cent of the 1923-1925 average, about the level that has prevailed since last autumn. Railroad freight-car loadings declined sharply owing mainly to a reduction in shipments of coal. Loadings of miscellaneous freight showed less than the usual seasonal rise. I Indexes of value of sales and stocks, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to April 1939. MONEY RATES IN NEW YORK CITY Commodity Prices RICES of grains and cotton advanced from the middle of April to the third week of May and there were also increases in prices of silk, hides, and bitumin ous coal. Prices of copper and steel scrap, on the other hand, were reduced and substantial concessions were granted in prices of several leading steel products. P Bank Credit OTAL loans and investments at reporting member banks in 101 leading cities, which had increased in April, declined during the first half of May. The decline was at New York City banks and reflected a reduction in loans to security brokers and dealers and redemption of obligations of New York State and City governments. After increasing substantially in April, demand deposits at banks in leading cities showed little change in the first half of May. Bank reserves increased further in May to a new high level. T 1 ------------ - TREASURY NOTES For weeks ending January 6, 1934, to May 20, 1939. Page 8 Money Rates Prices of United States Government bonds and notes increased sharply during the last half of April and the first three weeks of May to new high levels. The average yield on long-term Treasury bonds declined from 2.34 per cent on April 11 to 2.13 per cent on May 22. Other money rates showed little change. DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111............................... Deputy Chairman W. J. Cummings................................ Chicago, 111. C. B. Van Dusen............................. Detroit, Mich. E. R. Estberg.............................. Waukesha, Wis. M. W. Babb.................................Milwaukee, Wis. F. D. Williams............................ Iowa City, Iowa F. J. Lewis.........................................Chicago, 111. N. H. Noyes....................................................Indianapolis, Ind. MEMBER OF FEDERAL ADVISORY COUNCIL E. E. Brown.............. ............................................... Chicago, 111. OFFICERS G. J. Schaller..............................................................President H. P. Preston..............................................First Vice President J. H. Dillard..........................................................................VicePresident W. H. Snyder. .................................. Vice President and Cashier C. S. Young............................................................................. VicePresident C. B. Dunn....................................... GeneralCounsel W. C. Bachman............ Assistant Vice President O. J. Netterstrom........ Assistant Vice President A. L. Olson.................... Assistant Vice President A. T. Sihler.................. Assistant Vice President A. M. Black. .. .Manager, Planning Department J. J. Endres.............................................. Auditor P. C. Hodge.............................Assistant Counsel C. A. Phillips........................Economic Adviser J. C. Callahan........................................ AssistantCashier N. B. Dawes............................................ AssistantCashier F. A. Lindsten........................................AssistantCashier L. G. Meyer............................................ AssistantCashier F. L. Purrington.................................... AssistantCashier J. G. Roberts.......................................... AssistantCashier C. M. Saltnes........................................ AssistantCashier J. L. Sweet............................................ StatisticalAdviser INDUSTRIAL ADVISORY COMMITTEE Max Epstein, Chicago, 111........................................... Chairman W. Harnischfeger..................... Milwaukee, Wis. G. B. Moxley............................. Indianapolis, Ind. R. R. Monroe.................................... Chicago, 111. G. W. Young....................................... Chicago, 111. DETROIT BRANCH DIRECTORS A. C. Marshall............................ Detroit, Mich. J. E. Davidson............................... Bay City, Mich. H. L. Pierson................................ Detroit, Mich. J. M. Dodge..................................... Detroit, Mich. L. W. Watkins......................Manchester, Mich. W. S. McLucas............................... Detroit, Mich. R. H. Buss..............................................................Detroit, Mich. OFFICERS R. H. Buss......................................................Managing Director H. J. Chalfont............................................ Cashier H. L. Diehl...................................Assistant Cashier SEVENTH FEDERAL RESERVE DISTRICT
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