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SPv JW <deral hpiS ®8 iSS * "-w*- !> . ':>&m m* • *. f :ifif mmi ,"i!.' 'at? g| | IK Waf 1942 Review of Seventh District Business Although sometimes obscured by the lack of dramatic day-to-day advances, industrial activity in the Seventh Federal Reserve District was main tained at high records during March and April, re flecting steady progress in the war program on the “home front.” Retarded by drastic curbs which amounted to com plete elimination of some products, slowed down by serious limitations of raw materials needed in the production of consumers’ goods, and impeded by shortages in storage and transportation facilities, the industrial advance reveals significant alterations in the components of our economy which have called for reorientation in business planning, in trade ac tivities, in fiscal policies, and in credit practices. The advances of wartime controls over production and distribution have brought changes undreamed of until the advent of total war and, while designed to speed ultimate victory for our armed forces, im pinge on the American standard of living. Restrictions and stop orders issued by the War Production Board and the Office of Price Adminis tration curtail many products produced in the Sev enth District. Business has met this restricted civilian output with enlarged war production, and as a result of an Executive Order issued March 26 is now fortified with ample credit to carry out war contracts un hampered by peacetime credit requirements. Employment, however, has not kept pace with the production gains. The index of total manufacturing employment in the Seventh District has declined steadily from the September peak of 146 per cent of the 1935-39 average, and in February receded to 133 where it remained up to March 15, the latest date for which figures are available. Aggregate wage payments have shown a differ ent trend from that of employment and have ad vanced almost every month since July 1940. In March the index reached 181 per cent of the 1935-39 average, a gain of 5 per cent over the September level. The construction industry has reflected the acceler ated transition to a war economy. Notwithstanding the virtual halting of non-essential building, a marked advance has occurred because of defense require ments. Contract awards in the Seventh District dur ing March reached a valuation of more than 140 million dollars, making that month one of the high est ever recorded. Of the 272 million dollars worth of contracts re corded in the first quarter of this year, more than 70 per cent represents Government ownership. Pub lic works and utilities, however, were cut down this year to a volume little more than half as large as in the first quarter of 1941. Such projects have had to give way to an increasing need for the housing of defense workers and the armed forces. Steel production during April was maintained at the near record-breaking levels to which we have become accustomed. The average rate of production for the Chicago area was 104.6 per cent of rated capacity. The steady increases in production in the past few weeks may be attributable in part to the easier flow of scrap. The production of pig iron reached a new all-time high in March when local mills achieved a daily average of 34,510 net tons, an increase of 475 tons over the previous month. Bituminous coal production on a daily average basis declined in March from February, but produc tion in the first quarter of this year has been 5 per cent larger than in the same period last year. The furniture industry exhibited a seasonal in crease during March. Comparison with a year ago shows an accumulation of almost 25 per cent in un filled orders, notwithstanding the fact that shipments throughout the first quarter of this year have been one-fifth again as large as during the same period last year. Consumption of gasoline increased during March and continued larger than in the same period last year. Demand for fuel oils has been especially heavy and stocks are falling off despite increasing output. Orders booked by reporting paper manufacturers of this District have been declining during recent months and in March reached a level 15 per cent below that of a year earlier. Shipments have been 20 per cent heavier the first quarter of this year than in the same period last year. The increased flow of income payments coupled with higher prices has raised the dollar volume of retail sales in most of the large cities throughout the District. Compared with March a year ago, sales this year have increased 22 per cent. Open book accounts are up 24 per cent. Cash and C.O.D. sales show a gain of 28 per cent and instalment accounts are 15 per cent higher. Cumulative sales during the first quarter of the year show a gain of 27 per cent for the District, with the largest gain in musical instruments, radios, and phonographs. Consumer Instalment Loans in the Seventh District Consumer instalment loans outstanding at member and nonmember banks in tbe nation and in the Seventh District have turned down sharply since the latter part of 1941. The decline has been caused in part by limitations on production of consumers’ durable goods, and in part by con sumer credit control. _ Paying off debts and curtailing instalment buy ing constitute one of the seven principal points in a program to check price advances set forth by the President in his Special Message to Congress on April 27. “To keep the cost of living from spiraling upward,” stated the President, “we must discourage credit and instalment buying, and encourage the paying off of debts, mortgages, and other obligations; for this promotes savings, retards excessive buying, and adds to the amount available to the creditors for the purchase of war bonds.” As revised, effective May 6, 1942, Regulation W applies to a comprehensive list of durable and semi-durable goods for civilian consumption. The Regulation extends to all types of consumer credit, whether in the form of instalment sales and instalment loans, or in the form of charge ac counts and single-payment loans. The Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Cor poration, and the Board of Governors of the Fed eral Reserve System issued a joint statement on May 9 with respect to the procedure to be fol lowed in the exercise of their supervisory re sponsibilities to encourage reduction of personal indebtedness incurred for non-productive pur poses through amortization of bank loans which are not subject to the provision of Regulation W. PERSONAL AND RETAIL INSTALMENT PAPER HELD BY INSURED COMMERCIAL BANKS IN THE FIVE STATES IN THE SEVENTH FEDERAL RESERVE DISTRICT (Amounts in thousands of dollars) Geographic December Division 1940 June 1941 December 1941 Per Cent of Change during 1941 First Half Illinois.......... 1 65,106 Indiana......... 29,750 I owa.............. 24,118 Michigan. ... 74,286 Wisconsin__ 20,499 Second Half $ 81,223 37,665 30,353 88,737 24,963 $ 89,023 35.213 27,840 79,205 24.213 +24.8 +26.6 +25.9 + 19.5 +21.8 + 9.6 — 6.5 — 8.3 —10.7 — 3.0 213,759 262,941 255,494 +23.0 — 2.8 United States 1,468,602 1,765,588 1,724,606 +20.2 — 2.3 Five States.. Source: Semi-annual reports of Federal Deposit Insurance Corporation, “Assets and Liabilities of Operating Insured Banks.” CONSUMER INSTALMENT CREDIT OUTSTANDING IN 57 SEVENTH DISTRICT MEMBER AND NONMEMBER BANKS (In thousands of dollars) Class of Loan Retail Instalment Paper Pur chased: Automotive.................... Other.................... Direct Retail Instalment Loans: Automotive.................... Other........................ Repair and Modernization Loans: FHA Title I Class I........... Other....................... Personal and Cash Instalment Loans......................... Total:.............................. Per Cent Change Dec. 31, 1941 to Mar. 31, 1942 Dec. 31, 1941 Mar. 31, 1942 $17,811 24,711 $13,279 22,816 —25 — 8 14,118 409 11,253 472 —20 + 15 14,620 744 13,318 713 — 9 — 4 10,282 10,239 0 82,695 72,090 —13 Curtailment of consumer expenditure through retirement of personal indebtedness, curtailment of instalment buying, payment of taxes, and pur chase of war savings bonds from current income restrains pressure on price ceilings and lessens the need for rationing. The paying off of debts now is an integral part of an attack upon inflation during the emergency and deflation after the war. Consumer Instalment Loans in 1941 Consumer instalment loans outstanding at banks rose rapidly in 1939, 1940, and the first part of 1941. From December 31, 1940 to June 30, 1941, personal and retail instalment paper held by insured commercial banks in the United States rose from $1,468 million to $1,765 million. Dur ing the second half of 1941, such holdings of per sonal and retail instalment paper declined. By the end of December 1941, personal and retail instalment paper held by insured commercial banks in the United States had fallen to $1,724 million. During the first half of 1941, holdings of such paper rose 20.2 per cent, whereas such holdings declined 2.3 per cent in the second half of 1941. Banks located in the five States included in whole or in part in the Seventh Federal Reserve District have followed the pattern for banks throughout the country. Personal and retail in stalment paper held by insured commercial banks in the five States rose from $213 million on De cember 31, 1940 to $262 million on June 30, 1941, then declined to $255 million on December 31, 1941. Holdings of consumer credit paper in the five States rose 23 per cent in the first half of Page 1 Regulation W Amended 1941 and declined 2.8 per cent in the second half of 1941. Holdings by Illinois banks, however, Consumer instalment loans at banks will be af rose 9.6 per cent during the second half of 1941. fected by the amendment of Regulation W effec Holdings of Michigan banks declined 10.7 per tive May 6, 1942 to include single-payment loans cent. of fifteen hundred dollars or less. The maximum maturity for instalment loans was shortened. Consumer Instalment Loans in 1942 Single-payment loans made on or after May 6 A survey conducted among 57 banks in the are limited to a maturity of 90 days, but may be Seventh Federal Reserve District reveals that the renewed or extended by a series of obligations outstandings of most classifications of consumer each of which has a maturity not in excess of 90 instalment loans have turned down sharply since days, if the borrower pays at the time of each re the end of 1941. These 57 member and nonmem newal or extension enough to reduce the unpaid ber banks held 32 per cent of the outstanding con balance to an amount not greater than would have sumer credit reported by 2,729 insured banks in been permitted if the loan had been an instalment the five States included in whole or in part in the loan. The amendment also places restrictions Seventh District on December 31, 1941. The re upon single-payment loans which are to be used porting banks on December 31, 1941 held $82,695 to purchase listed articles costing fifteen dollars thousand in instalment paper, hut by March 31, or more. the amount had declined to $72,090 thousand, a The maximum permissible maturity of instal decrease of 13 per cent during the first quarter of ment loans was reduced to 15 months for automo the year. By far the larger part of this decrease biles and motorcycles and 12 months if the funds can be accounted for by a decline in automotive were to he used to purchase other listed articles. paper. The amount of such paper purchased by If the lender has reason to know that the proceeds reporting banks declined 35 per cent in the first are to he used to retire a charge account or to re quarter of 1942, and the volume of direct automo duce or retire a single-payment loan, the maxi tive loans declined 20 per cent. mum maturity will be further reduced. Repair and modernization loans showed a Single-Payment Personal Loans smaller decrease, contracting from $14,620 thou The Comptroller of the Currency, the Board of sand to $13,318 thousand. Personal and cash in stalment loans, the other major classification re Directors of the Federal Deposit Insurance Cor ported, declined less than one per cent. The fact poration, and the Board of Governors of the Fed that personal and cash instalment loans did not eral Reserve System issued the following joint show the downward tendency of the other three statement on May 9, with respect to the procedure types of paper may he accounted for by two fac to be followed by their respective organization to tors. First, such loans are ordinarily made to pay encourage the reduction of individual debt hospital bills, to consolidate personal debts, and through amortization of bank loans: “One of the greatest advances in banking prac for similar purposes, and are not directly affected by curtailment in the direction of consumers’ tices during recent years has been the wide ac(Continued on page 6) durable goods. Second, perhaps many personal and cash instalment loans were made to meet the CONSUMER INSTALMENT CREDIT first payment of income tax on March 15. VOLUME OF LOANS MADE DURING FEBRUARY AND The volume of consumer instalment loans ex MARCH 1942, BY FIFTY SELECTED BANKS IN THE SEVENTH FEDERAL RESERVE DISTRICT tended during March by reporting banks ex ceeded the volume of loans made during Feb (Amounts in thousands of dollars) ruary by 2 per cent. The volume of automotive Per Cent loans made direct was slightly larger in March Class of Paper February March of Change than in February, and the volume of automotive paper purchased increased 12 per cent. Other Retail Instalment Paper Pur chased: loans arising from the sale of consumers’ durable $711 Automotive.......................... $635 + 12 goods showed sharp decreases, due undoubtedly Other..................................... 2,477 2,923 —15 to further restrictions on the sale of such articles. Direct Retail Instalment Loans: Automotive.......................... 1,055 1,059 0 Repair and modernization loans made during Other..................................... 37 71 —48 March were greater than those made during Feb Repair and Moderization Loans: ruary. March construction in the Seventh Dis FHA Title I Class I ......... 369 520 +41 trict is usually greater than February construc Other..................................... 19 20 ' + 5 Personal and Cash Instalment tion, and this year construction showed more than Loans......................................... 1,248 1,592 +28 the usual seasonal increase. Personal and cash instalment loans made during March were 28 per Total............................................. 6,320 6,416 + 2 cent greater than those made during February. Page 2 Agricultural Loans in the Seventh District Short-Term Loans The insured commercial banks of the nation make the bnlk of the short-term agricultural loans, and something less than 10 per cent of the farm mortgage real estate loans. In view of the Gov ernment-sponsored goals for agricultural pro duction, the price-supporting policies, lease-lend and military buying of the Government, farm in come has much improved in recent months. Little" has been said about the effect of such factors on the agricultural credit situation. Bankers have been reminded of the expanded credit needs in agriculture by the “food for freedom” credit campaign of the American Bankers Association, and by various agricultural credit conferences held throughout the country. The total of agricultural loans (excluding loans on farm land) held by United States commercial banks on December 31, 1941, was nearly one-third larger than at the end of 1939, shortly after the war began. The total for all insured banks was $1,094 million for December 31, 1939 and $1,450 million at the end of 1941. The totals at the end of each intervening six-month period showed in creases for June 1940 and again for December 1940, while the June 1941 figures represented a substantial decline. December 31, 1941 showed a very substantial rise over the June 1941 total out standing. The most important factor in these fluctuations is the changes in bank holdings of Commodity Credit loans. Total agricultural short-term loans for the five States lying in whole or in part in the Seventh District (Illinois, Indiana, Iowa, Michigan, and Wisconsin) show an increase of 20 per cent for December 31, 1941 over December 30, 1939. In sured commercial banks in the five States had ag ricultural loans amounting to $233 million at the end of 1939 and $279 million on December 31, 1941. The latter total is considerably less than the peak of $314 million reached on June 29, 1940. In general, the figures for the total of agricul tural loans outstanding in these five States show an upward trend since the end of 1939, if due al lowance is made for changing seasonal require ments. Such allowances are made roughly by comparing June with June figures and December with year-end figures for other years. June to tals tend to be higher than those of December, but this seasonality is more pronounced in Iowa and Illinois than in Indiana, Michigan, and Wisconsin. Such differences arise in part from differences in AGRICULTURAL LOANS OF INSURED COMMERCIAL BANKS* (In thousands of dollars) Dec. 30, June 29, Dec. 31, June 30, Dec. 31, 1939 1940 1940 1941 1941 United States. 1,094,399 1,183,853 1,281,362 1,167,209 1,449,941 Illinois............ Indiana........... Iowa................ Michigan........ Wisconsin....... 75,766 27,841 91,271 17,391 20,870 100,913 31,592 136,990 19,846 24,919 79,025 31,494 100,244 20,554 24,219 70,713 31,610 116,710 21,681 26,621 82,131 33,175 118,713 20,778 24,498 Total 5 States. 233,139 314,304 255,536 267,335 279,295 *Excluding loans on farm land. Source: Semi-annual reports of Federal Deposit Insurance Corporation, “Assets and Liabilities of Operating Insured Banks.” types of agricultural enterprises, and in part from lending practices of banks and the borrow ing habits of farmers. The extent of bank par ticipation in commodity loans insured by the Com modity Credit Corporation also gives rise to some of the differences. The increase in use of bank agricultural credit is shown also for individual States. Iowa shows the largest percentage increase over the two-year period, a net gain from $91 million outstanding December 30, 1939 to nearly $119 million as of December 31, 1941. The gain for Illinois has been much less pronounced, the net change being only from $76 million to $82 million over the two years. Indiana, Michigan, and Wisconsin showed upward trends, amounting to a net gain of about 20 per cent over the period. Illinois and Iowa banks differed from the other three States in having a sharp decline in totals outstanding from the end of June 1940 to the end of June 1941, while Indiana’s total was virtually unchanged, and Michigan and Wisconsin showed substantial increases for June 1941 as compared with one year earlier. Preliminary returns from a special survey of over fifty outstanding agricultural banks in the District indicate that as of May 1 the total short term credit of the five States was about 6 per cent less than on December 31, 1941. Illinois, In diana, and Wisconsin totals indicate declines ranging around 15 per cent. Much of this de cline, especially in Illinois and Indiana, is be lieved to be due to the payment of wheat loans. Eight out of thirty-three banks in the three States reported increases in loans. Iowa and Michigan banks reported outstandings which totaled to inPage 3 creases of 3 to 4 per cent. Five of eight Michi gan banks reported increases over the December 31, 1941 figure, and those which reported declines explained such declines as due primarily to the calling of wheat loans. Two-thirds of the Iowa reports showed increases, but some reports at tributed the increase largely to larger totals of CCC insured corn loans. Real Estate Loans Loans on farm real estate by insured commer cial banks in this area have shown steady up ward trends since December 1939, and by the end of 1941 represented a gain of 7 per cent. While Iowa banks had the largest total of real estate loans, amounting to $47 million, Michigan with $17 million and Wisconsin with $26 million have shown the greater rate of increase. Illinois, with $25 million outstanding December 31, 1941, has shown the least increase, followed by Indiana with $23 million, but showing a greater rate of increase than Illinois. Results of the special survey as of May 1 indi cate increased totals of loans on farm real es tate ranging from 2 per cent to 7 per cent for Illinois, Indiana, and Michigan, but even in these States half the reports indicated declines since December 31, 1941, and some reports expressed the belief that further declines were the imme diate prospect. Iowa and Wisconsin returns in dicate a reduction in loans on farm land, although a relatively few Iowa banks showed substantial increases since the beginning of the year. All but one of Wisconsin banks showed declines for the period. The semi-annual reports of all insured commer cial banks indicate that these banks have been decreasing their holdings of farm land and im AGRICULTURAL LOANS ON FARM LANDS—INSURED COMMERCIAL BANKS (In thousands of dollars) Dec. 30, 1939 June 29, 1940 Dec. 31, 1940 June 30, 1041 Dec. 31, 1941 United States. 1534,273 *543,455 $543,553 $551,224 ■1535,300 Illinois........... Indiana........... Iowa............... Michigan........ Wisconsin....... 23,814 21,704 44,260 14,452 23,581 23,925 22,394 46,004 15,277 24,643 24,251 22,869 46,425 15,827 25,298 24,879 23,161 47,390 16,742 26,163 24,565 22,861 46,814 16,772 26,027 Total 5 States. 127,811 132,243 134,674 138,335 137,039 Source: Semi-annual reports of Federal Deposit Insurance Corporation, “Assets and Liabilities of Operating Insured Banks.” Page 4 provements. Although not substantially large to begin with, the national total decreased by 46 per cent from December 1939 to December 1941, while in the area of the five States the decrease has been 54 per cent. Illinois and Michigan banks have disposed of two-thirds of their holdings dur ing the period, Wisconsin and Indiana have dis posed of about one-half, and Iowa has disposed of more than one-third of its December 30, 1939 holdings. Recent reports indicate that in 1941 payments to the Federal Land Banks amounted to $72,585 thousand on principal of mortgages, plus an ad ditional $56,119 thousand of payments made in advance of maturity, or a total of nearly $129 million. Meanwhile, loans made (closed) totaled only $65,068 thousand, or less than half of the repayments. The reports also showed an increase to $6 million in the future payments fund, an arrangement by which borrowers accumulate a reserve against payments due in the future. These deposits earn the same rate of interest as the borrower pays on his mortgage. The future of Federal Land Bank interest rates is in some doubt. Under present law, subsidies are paid from the Treasury to cover the difference be tween 3-J per cent and the contract rate. This legislation expires June 30 of this year, but whether it will be renewed for another year by Congress is not known. Ample Farm Credit Available With improving farm incomes, farmers are at present in a fair cash position. In view of de clining stocks of durable goods available for pur chase, many farmers are reported to be making substantial reductions in long-time, mortgage ob ligations. Some bankers feel that this situation has also reduced the need for short-term credit, while others see in expanding production and ris ing feed and other costs a necessity for increas ing short-term credit. Perhaps both are right. The loan data indicate some rise in the volume of short-term loans, although the need may not be as great as it would be if normal expenditure chan nels were open. There is little doubt that adequate credit is available and will be available to farmers at their banks. Present reports indicate that both bank ers and farmers have learned well lessons in agri cultural credit taught by the expansion of the last war and are proceeding with due caution in their lending and borrowing operations of today. t Treasury Bills and Certificates of Indebtedness April and May were marked by significant de velopments in respect to Treasury bills and cer tificates of indebtedness. In April the Treasury made an offering in an amount of $1,500 million of certificates of indebtedness, a form of security which had not been used in open-market borrow ing since 1934. During April and May the amount of Treasury bills outstanding was increased. A buying rate of three-eighths of one per cent per annum on Treasury bills was established by the Federal Reserve banks at the direction of the Federal Open Market Committee. The Federal Reserve banks purchased $37 million net of cer tificates of indebtedness in the two weeks ending May 13, and purchased $148 million net of Treas ury bills in the five weeks ending May 13. The in creased amount of Treasury bills and certificates outstanding provide a suitable security for in vestment of short-time idle funds of business cor porations, and furnish a desirable and flexible means through which banks can adjust their dayto-day reserve positions. Certificates The certificate issue offered was dated April 15, will be payable on November 1, 1942, and will bear interest at the rate of one-half of one per cent per annum payable at maturity of the cer tificates. Total subscriptions aggregated $3,062 million. Subscriptions in amounts up to and in cluding $25,000, totaling about $66 million, were allotted in full. Subscriptions in amounts over $25,000 were allotted 48 per cent on a straight percentage basis. The April 15 statement of condition of weekly reporting member banks and the Federal Reserve banks revealed that at the close of business on that day of the $1,507 million certificates of in debtedness outstanding, $269 million was held by New York City reporting member banks, $78 million by Chicago reporting member banks, and $259 million by reporting member banks in 99 other cities. Holdings of others than weekly re porting member banks on April 15 were $901 million. During the next four weeks, holdings of New York City banks increased $71 million, while holdings of others than weekly reporting member banks and Federal Reserve banks declined $109 million. In the two weeks ending May 13, the Federal Reserve banks purchased $37 million of the certificates of indebtedness. There was little net change in holdings of certificates of indebt edness by reporting member banks in Chicago and 99 other cities from April 15 to May 13. Bills Rates at which new issues of Treasury bills were sold rose during April and the first part of May. The average yield on new bills was .221 on bills dated April 1 and .368 on bills dated May 13. Higher rates were brought about by a lower de mand in the Chicago District for bills after the April 1 property tax date, the offering of the Treasury certificates of indebtedness, and a fur ther decline in excess reserves of member banks. On April 30 the Secretary of the Treasury an nounced that beginning with the issue dated May 13 the Treasury will offer $250 million in Treas ury bills.instead of the usual $150 million and that an offering of $250 million each week will con tinue for the next several weeks. In accordance with this policy, the amount of Treasury bills out standing increased $100 million as a result of the larger offering on May 13. The Treasury also secured $300 million of new money through sale of issues.of Treasury bills on April 1 and April 8, for no bill issues matured on those dates. New issues of $150 million replaced maturing issues in the same amount on April 15, 22, 29, and May 6. The maturities of the March 25, April 1, and April 8 bill issues were lowered to 82, 78, and 72 days, respectively, so that in the four days fol lowing June 15, $600 million of Treasury bills will mature. Payment in cash, without replace ment, for maturing issues of Treasury bills will serve to avert strain on the money market in the June quarterly tax period. On April 30 the Federal Open Market Commit tee directed the twelve Federal Reserve banks to purchase for the System Open Market Account all Treasury bills that may be offered to such banks on a discount basis at the rate of threeeighths per cent per annum. This arrangement gives, assurance to purchasers of Treasury bills that in case they have need for cash before the maturity of the bills, they can obtain it by selling Treasury bills to the Federal Reserve banks, if necessary. In the last three weeks of April and the first two weeks of May, the Federal Reserve banks purchased $148 million of Treasury bills. Treasury bill holdings of weekly reporting member banks in Chicago declined $341 million in the two weeks ending April 1, due to sale of Treasury bills to non-bankers in Illinois in antici pation of the April 1 tax assessment date for per sonal property taxes levied on bank deposits in the State of Illinois. Treasury bill holdings of Chicago reporting member banks rose $242 mil lion in the week ending April 8, as a result of repurchase of Treasury bills previously sold for tax purposes. Chicago banks allowed their bill Page 5 holdings to run off in the following three weeks and their Treasury bill holdings declined $114 million. In the two weeks ending May 13, Chi cago banks again added to their bill holdings which rose $65 million. Treasury hill holdings of New York City weekly reporting member banks increased $119 million in the two weeks ending April 15, but de clined $34 million in the following four-week period. Treasury bill holdings of weekly reporting member banks in 99 other cities, not including New York and Chicago, have increased steadily since the end of March. From March 25 to May 13, Treasury bill holdings of these banks increased $231 million. Treasury bill holdings of others than weekly reporting member hanks and Federal Reserve banks rose $537 million in the two weeks ending April 1, the personal property tax date in Illinois, declined $215 million in the week ending April 8, and declined a further $154 million in the follow ing five weeks. Of the $2,053 million Treasury bills outstand ing at the close of business on May 13, weekly re porting member banks in New York City held $344 million, weekly reporting member banks in Chicago held $304 million, and weekly reporting member banks in 99 other cities held $502 million. The Federal Reserve hanks held $148 million, and others than weekly reporting member banks and Federal Reserve banks held $755 million. Consumer Instalment Loans (Continued from page 2) ceptance of the principle of amortization of debts. This principle is incorporated in Regulation W, issued by the Board of Governors of the Federal Reserve System, which relates to consumer credit and applies to certain types of bank loans. “In the exercise of their supervisory responsi bilities, the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insur ance Corporation, and the Board of Governors of the Federal Reserve System urge that the prin ciple of amortization be extended to other loans which are not subject to the provisions of Regula tion W, particularly to the volume of single-pay ment loans to individuals for non-productive pur poses presently outstanding. “The examiners for the respective agencies are being instructed to pay particular attention in the course of their examinations to individual debt to determine whether it is being reduced and to the circumstances which may be preventing its reduc tion or preventing it being put on an amortization basis. The examiners are likewise being in structed to include in their reports of examina tion comments as to the extent to which the bank has cooperated in the program for reduction of personal indebtedness incurred for non-produc tive purposes, and as to the results achieved.” PERSONAL AND RETAIL INSTALMENT PAPER HELD BY INSURED COMMERCIAL BANKS IN THE FIVE STATES OF THE SEVENTH FEDERAL RESERVE DISTRICT, DECEMBER 31, 1941 (Amounts in thousands of dollars) Illinois............................. Indiana............................ Michigan......................... Wisconsin........................ Retail Instalment Paper Number of banks Arising from Arising from Total reporting Other Retail Sales of personal some Instalment Sales Automotive Vehicles and personal retail and retail Direct Direct Paper Paper instalment instalment purchased loans purchased loans paper paper 24,137 614 9,555 26,133 89,023 776 3,734 208 5,236 16,680 35,213 429 7,713 2,098 618 9,693 576 27,840 4,279 1,618 23,886 18,084 79,205 418 2,013 543 4,777 6,676 24,213 530 Repair and Modernization Instalment Loans F. H. A. Title I Class 1 loans All other Personal instalment cash loans 10,797 2,912 3,116 16,113 3,024 1,846 608 414 1,965 1,078 15,941 5,835 4,188 13,260 6,102 Five States..................... 2,729 255,494 75,367 53,066 36,261 3,601 35,962 5,911 45,326 United States................. 12,337 1,724,606 414,055 315,977 258,627 20,231 228,337 40,273 447,106 Source: Federal Reserve Bulletin, May 1942. Page 6 RECEIPTS AND SHIPMENTS OF GRAIN At Interior Primary Markets in the United States (In thousands of bushels) April 1942 April 1941 SALES OF INDEPENDENT RETAIL STORES SEVENTH FEDERAL RESERVE DISTRICT Per Cent Change April 1942 from April 1941 Ten-Year Average April 1932-41 Per Cent Change March 1941 to March 1942 Per Cent Change April 1942 from Ten-Year Average Illinois Wheat: Receipts__ Shipments. 12,495 12,184 17,106 11,685 —27.0 + 4.3 13,394 10,396 — 6.7 +17.2 30,383 20,232 16,930 14,229 +79.5 +42.2 14,185 10,578 +114.2 +91.3 5,529 4,789 4,381 3,264 +26.2 +46.7 4,525 5,693 +22.2 —15.9 Corn: Receipts__ Shipments. Oats: Receipts__ Shipments. Indiana Iowa +17 +53 +14 +14 +12 h 14 h61 (-14 [-12 [-14 +n +40 +11 + 9 +10 + 9 +41 +12 +21 +15 +20 +65 +16 +18 +12 +27 +41 +21 H hio H b57 H [-28 +U +40 +21 + 7 +45 +22 +30 +54 +27 +39 —78 Total All Groups*................ Apparel Group...................... Drug Stores........................... Eating and Drinking Places Food Group........................... Furniture-Household-Radio Group.................................. Hardware Stores................. Jewelry Stores...................... Lumber and Building Materials............................ Motor Vehicle Dealers....... H b-26 -77 +17 —68 + 6 —75 +22 —66 Michigan Wisconsin •Includes classifications other than those listed. Source: Daily Trade Bulletin. WHOLESALE TRADE SEVENTH FEDERAL RESERVE DISTRICT HOG-CORN RATIOS Per Cent Change March 1941 to March 1942 Commodity April 1942 March 1942 April 1941 Illinois........................................ Indiana....................................... Iowa............................................ Michigan.................................... Wisconsin................................... 18.0 17.0 19.0 15.9 16.6 17.1 15.9 17.6 15.2 15.8 13.6 12.6 15.1 12.2 13.8 16.9 16.0 13.2 Source: Bureau of Agricultural Economics, United States Department of Agriculture. +25 + 8 +15 +45 +26 +77 +22 + 14 +22 +18 +28 +14 + 9 +48 +68 +48 +19 +18 +27 +16 +19 —13 +40 +25 + 7 +20 +19 +38 +22 +50 +30 +84 +37 +13 +27 Total........................................... 8.4 Stocks Drugs and Drug Sundries---Electrical Goods...................... Groceries................................... Hardware.................................. Jewelry...................................... Meats and Meat Products_ _ Paper and Its Products.......... Tobacco and Its Products__ Miscellaneous............................ 9.2 9.1 9.6 9.2 8.4 United States........................... Accounts Outstanding Collections Net Sales April 1940 +24 +21 +17 +33 Source: Bureau of the Census, United States Department of Commerce. UNITED STATES FEDERALLY INSPECTED SLAUGHTER (In thousands) March 1942 Hogs............................ Cattle.......................... Calves......................... Lambs and Sheep— March 1941 Average of 5-year March 1937-41 Per Cent Change March 1941 to March 1942 Per Cent Change March 1942 from 5-year Average April 1942 April 1941 Average of 5-year April 1937-41 Per Cent Change April 1941 to April 1942 Per Cent Change April 1942 from 5-year Average 4,134 929 491 1,669 3,904 766 444 1,408 3,352 779 492 1,377 + 6 +21 +10 +18 +23 +19 0 +21 4,196 956 502 1,570 3,807 792 507 1,436 3,124 759 507 1,355 +10 +21 — 1 + 9 +34 +26 — 1 +16 Source: Agricultural Marketing Administration, United States Department of Agriculture. DEPARTMENT AND APPAREL STORE TRADE SEVENTH FEDERAL RESERVE DISTRICT Total Net Sales Per Cent Change March 1942 from Locality Per Cent Change January through March 1942 from January through March 1941 February 1942 March 1941 Chicago................................ Peoria................................... Fort Wayne......................... Indianapolis......................... Des Moines.......................... Sioux City............................ Detroit................................. Flint...................................... Grand Rapids..................... Lansing................................. Milwaukee........................... Other Cities......................... +27 +23 +35 +40 +36 +25 +61 +38 +41 +40 +36 +20 + 17 +41 +28 +16 +12 +24 — 4 +14 + 9 +30 +23 +21 +10 +34 +29 Total..................................... +31 +22 Apparel Stores.................... +45 +37 [-23 -22 -44 -32 -20 -15 - -31 Stocks on Hand (End of Month) Open Book Sales Instal ment Sales Cash & C. 0. D. Sales +31 Orders Outstanding Per Cent Change March 1942 from Per Cent Change March 1942 from March 1941 Per Cent Change March 1942 from February 1942 March 1941 February 1942 March 1931 +13 +20 +18 +40 +12 +196 +47 +23 +23 +53 +39 + 5 +10 +46 +55 +10 +i34 +16 + 8 +35 +15 +56 + 8 +222 +25 +18 +35 +20 +35 +30 +12 +10 +42 +30 +18 +12 +120 +86 +27 +24 +15 +28 +14 +42 +10 +175 +36 +29 +47 + 3 +25 +21 +134 •Decrease of less than one per cent. Page 7 EMPLOYMENT AND PAYROLLS SEVENTH FEDERAL RESERVE DISTRICT PERCENTAGE INCREASES FROM MARCH 15, 1941 TO MARCH 15, 1942 IN THE COST OF GOODS PURCHASED BY WAGE EARNERS AND LOWER-SALARIED WORKERS BY GROUPS OF ITEMS All Items City Chicago..................... Detroit...................... Average: Large Cities......... Food Clothing Rent +12.0 +14.7 +19.4 +20.3 +19.5 +21.5 + 3.4 + 9.3 + 2.9 + 8.6 +15.5 +17.4 + 8.2 +10.5 +12.9 +20.5 +21.1 + 3.6 + 3.8 +19.3 + 8.0 Industrial Group Per Cent Change from February 15, 1942 Wage Number Number Payments Number Wage of of of (In Reporting Employees thousands Employees Payments Firms of dollars) Durable Goods: 117.5 118.4 119.5 124.7 112.8 119.3 103.4 106.8 119.5 120.6 109.1 112.9 114.3 118.6 123.6 108.9 104.5 121.2 110.1 Source: Bureau of Labor Statistics. STEEL AND MALLEABLE CASTINGS SEVENTH FEDERAL RESERVE DISTRICT 603,686 303,293 22,071 61,022 990,072 24,972 15,306 701 1,719 42,698 +0.7 +0.1 +3.3 —0.6 +0.5 +3.5 +1.0 +3.9 +1.0 +2.5 Textiles and Products....... Food and Products............ Chemical Products............ Leather Products............... Rubber Products............... Paper and Printing............ Total..................................... 421 1,012 317 177 38 681 2,646 74,872 120,059 42,342 39,996 19,082 86,738 383,089 1,812 3,724 1,547 1,095 664 2,897 11,739 +0.7 —3.3 —2.1 +1.3 —0.2 —3.5 —1.8 +3.4 —1.9 —2.5 +2.5 +3.2 —3.7 -1.0 5,617 1,373,161 54,437 -0.2 +1.7 Merchandising........................ Public Utilities...................... Coal Mining............................ Construction........................... 113.7 117.1 1,855 394 270 452 2,971 Total Mfg., 10 Groups.......... INDEXES OF THE COST OF GOODS PURCHASED BY WAGE EARNERS AND LOWER-SALARIED WORKERS, BY GROUPS OF ITEMS MARCH 15, 1942 (Average 1935-39 = 100) Chicago.................... Detroit...................... Average: Large Cities......... Week of March 15, 1942 Fuel, Elec House tricity, Furnish- Miscellaneous and Ice ings Metals and Products1....... Transportation Equipment Stone, Clay, and Glass__ Wood Products................... Total..................................... 4,815 1,118 47 687 146,529 109,281 7,785 11,281 3,600 4,020 289 475 +0.3 -0.1 —0.7 +1.8 +0.7 +0.2 —5.0 +9.0 Non-Durable Goods: Total Non-Mfg., 4 Groups... February 1942 + 76 +291 + 58 +146 + 46 —20 —20 + 4 + 5 + 5 274,876 8,384 +0.1 +0.7 12,284 1,648,037 62,821 -0.1 +1.6 March 1941 +25 +69 +17 +17 +11 6,667 Total, 14 Groups.................... March 1942 Per Cent Change from —40 —34 + 9 +23 +14 *Other than transportation equipment. Data furnished by State agencies of Illinois, Indiana, Michigan, and Wisconsin. STEEL CASTINGS: Orders booked (tons)........................................... Orders booked (dollars)...................................... Shipments (tons)................................................... Shipments (dollars).............................................. Production (tons).................................................. BANK DEBITS Debits to deposit accounts, except interbank accounts Malleable Castings: Orders booked (tons)........................................... Orders booked (dollars)...................................... Shipments (tons)................................................... Shipments (dollars).............................................. Production (tons)................................................... (In thousands of dollars) Per Cent Change April 1942 from April 1942 Mar. 1942 April 1941 Mar. 1942 April 1941 Illinois: MONTHLY BUSINESS INDEXES Data refer to Seventh District and are not adjusted for seasonal variation unless Mar. otherwise indicated. 1942 1935-39 average = 100 Manufacturing Industries: Durable Goods: Employment........................................... Payrolls.................................................... Non-Durable Goods: Employment........................................... Payrolls.................................................... Total: Employment........................................... Payrolls.................................................... Pie Iron Production:* Illinois and Indiana.................................... Automobile Production (U. S. and Canada): Passenger Cars and Trucks...................... Casting Foundries Shipments: Steel—In Dollars....................................... In Tons............................................ Malleable—In Dollars............................... In Tons.................................... Furniture Manufacturing: Orders in Dollars....................................... Shipments in Dollars................................ Paper Manufacturing:* Tonnage Production.................................. Petroleum Refining—(Indians, Illinois, Kentucky Area):* Crude Runs to Stills.................................. Gasoline Production.................................. Bituminous Coal Production:* Illinois, Indiana, Iowa, and Michigan... Building Contracts Awarded: Residential................................................... Total............................................................. Department Store Net Sales:* Chicago........................................................ Detroit......................................................... Indianapolis................................................. Milwaukee................................................... Other Cities................................................ Seventh District—Unadjusted............... Adjusted.................... •Daily average basis. Page 8 Feb. 1942 Jan. 1942 Mar. 1941 Feb. 1941 Jan. 1941 144 201 143 195 148 196 135 163 132 159 131 152 112 137 114 139 114 140 103 115 102 113 102 111 133 181 133 178 137 178 124 149 122 145 121 140 209 207 205 196 193 187 $ 15,510 16,489 17,198 4,038,185 12,748 27,700 10,148 11,745 79,995 44,495 31,801 $ 16,276 17,825 19,458 4,484,963 13,091 27,841 11,287 12,354 87,773 48,225 34,129 $ 14,977 14,429 17,035 3,552,634 11,461 23,070 9,741 10,747 73,655 37,915 29,563 — 5 — 7 —12 —10 — 3 — 1 —10 — 5 — 9 — 8 — 7 + 4 +14 + 1 +14 +11 +20 + 4 + 9 + 9 +17 + 8 Fort Wayne......................... Gary..................................... Hammond........................... Indianapolis........................ South Bend......................... Terre Haute........................ 50,788 24,619 12,105 323,714 59,473 31,528 49,640 23,075 12,443 321,765 66,941 31,179 40,879 21,487 11,498 279,156 53,336 27,686 + 2 + 7 —3 +1 —11 +1 +24 +15 + 5 +16 +12 +14 Cedar Rapids..................... Clinton................................. Davenport........................... Des Moines.......................... Dubuque.............................. Mason City.......................... Muscatine............................ Sioux City........................... Waterloo.............................. 36,037 9,202 28,661 122,958 13,544 14,030 4,951 59,422 30,496 38,217 8,601 29,830 154,714 12,759 16,451 4,976 57,301 30,536 30,248 7,972 27,654 112,845 11,770 11,501 4,289 44,563 21,818 — 6 + 7 — 4 —21 + 6 —15 — 1 + 4 * +19 +15 + 4 + 9 +15 +22 +15 +33 +40 Adrian.................................. Battle Creek....................... Bay City.............................. Detroit................................. Flint...................................... Grand Rapids..................... Jackson................................. Kalamazoo.......................... Lansing................................. Saginaw................................ 5,680 19,744 17,127 1,511,431 33,781 70,528 23,037 30,351 38,315 28,688 5,836 20,006 16,718 1,488,989 42,173 72,593 23,834 33,747 35,125 27,467 5,059 17,335 14,097 1,292,894 34,840 66,693 20,118 28,717 30,148 28,303 — 3 — 1 + 2 + 2 -20 —3 — 3 —10 + 9 + 4 +12 +14 +21 +17 —3 + 6 +15 + 6 +27 +1 Green Bay........................... Manitowoc........................... Milwaukee........................... Oshkosh............................... Sheboygan.......................... 22,212 10,247 380,121 11,695 28,283 22,423 10,381 459,530 12,848 29,393 20,000 9,073 306,237 10,845 20,482 — 1 — 1 —17 — 9 — 4 +11 +13 +24 + 8 +38 7,358,782 7,932,713 6,406,770 — 7 +15 46,620,000 49,175,000 42,237,000 —5 +10 Aurora.................................. Bloomington....................... C hampaign- U rbana........... Chicago................................ Danville............................... Decatur................................ Elgin..................................... Moline.................................. Peoria................................... Rockford............................. Springfield........................... Indiana: Iowa: 34 46 78 159 152 156 524 261 211 170 449 223 202 164 468 245 205 164 213 168 176 159 195 160 162 148 196 169 164 150 162 187 141 170 199 149 158 161 161 143 193 108 143 147 139 120 120 115 162 146 165 149 161 152 146 135 147 135 141 134 Michigan: 132 152 159 150 136 136 435 357 312 185 171 147 254 333 178 110 146 130 126 148 160 150 136 136 141 106 126 124 116 115 114 135 117 128 135 123 119 121 154 103 118 123 114 111 109 116 92 101 98 89 97 95 113 87 91 98 90 86 89 113 Wisconsin: Seventh District: 41 Cities............................... United States: 274 Cities............................. •Decrease of less than one per cent. INDUSTRIAL PRODUCTION 200 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) Industrial activity continued at a high rate in March and the first half of April. Distribution of commodities to consumers was maintained in large volume and commodity prices advanced further. Federal Reserve monthly index of physical volume of production, adjusted for seasonal variation, 1935-39 av erage = 100. Latest figures shown are for March 1942. DEPARTMENT STORE SALES AND STOCKS 150 140 130 120 50 L. 1937 1940 Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 1923-25 av erage = 100. Latest figures shown are for March 1942. MEMBER BANKS IN 101 LEADING CITIES Production—Volume of industrial production increased seasonally in March and the Board’s adjusted index remained at 172 per cent of the 1935-39 average. Output of durable manufactured products, now mostly war materials, continued to advance, reflecting mainly increased activity in the iron and steel, machinery, aviation, and shipbuilding industries. Production of lumber and cement, which had been maintained at unu sually high levels during the winter months, increased less than season ally in March. In most industries manufacturing nondurable goods activity was sustained at earlier high levels. In some, however, notably wool textiles and petroleum refining, there were declines owing to restrictions on pro duction for civilian use and, in the case of petroleum products, to trans portation difficulties. Mineral production declined in March and the first half of April, reflecting sharp curtailment in output of crude petroleum. Coal production, which usually declines at this season, was maintained in large volume. The Great Lakes shipping season opened in the latter part of March and the first boatload of iron ore reached lower lake ports 12 days earlier than the record set last year. Shipments during the coming season are expected to exceed considerably the total of 80 million gross tons brought down the lakes last year. Value of construction contract awards continued to increase in March, according to figures of the F. W. Dodge Corporation, and the level of the first quarter of 1942 was the highest in recent years, being some 30 per cent above that of the corresponding period last year. Awards for public work amounted to close to 80 per cent of the total and in the residential field accounted for 52 per cent of the value of all projects. Publicly-financed contracts for factory construction showed a sharp increase, partly offset in the total by a decline in private factory construction. On April 9 the War Production Board issued an order which re quired explicit permission of the Government for initiation of all new private construction involving expenditures in excess of specified small amounts and not covered by specific priority ratings. Distribution—Value of retail trade in March continued at the high level of other recent months, making allowance for customary seasonal changes. Sales at department and variety stores increased by somewhat less than the usual seasonal amount, while sales by mail-order houses rose more than seasonally. On the railroads total loadings of revenue freight were maintained in large volume in March and the first half of April. Shipments of coal and coke declined less than seasonally and ore loadings increased sharply, while grain shipments declined further from the peak reached in January. Loadings of miscellaneous merchandise, which had been unusually large in the preceding three months, increased less than seasonally. We2nesday37figures.8 Coinmerciaf4foansl9 whic^include industrial and agricultural loans, represent prior to May 19, 1937 so-called “Other loans” as then reported. Latest figures shown are for April 8, 1942. MEMBER BANK RESERVES Commodity Prices—The general level of wholesale commodity prices advanced lM: per cent further from the middle of March to the middle of April. Among manufactured products, finished consumers’ goods, such as foods, clothing, and shoes, continued to show the largest price increases. Prices of most raw materials were unchanged or showed increases, which in a number of cases reflected the raising of Federal maximum price levels. There were declines in prices of wheat and of a few other commodities, including gasoline at Gulf ports and turpentine. In retail markets maximum prices were fixed in this period for a number of electrical products, most of which will no longer be pro duced for civilian use after May 3. Prices of many other commodities and services advanced further. Bank Credit—During the four weeks ending April 15 holdings of Gov ernment securities at banks in leading cities increased by nearly 700 million dollars, while commercial loans declined somewhat, following a rise in previous weeks. Changes in member bank reserves and deposits reflected principally the temporary effects of Treasury operations in connection with income tax collection and the sale of certificates of indebtedness. Money in circulation continued to increase. 1940 Wednesday figures. Required and excess reserves, but not the total, are partly estimated. Latest figures shown are for April 8, 1942. United States Government Security Prices—Following an advance from the mid-February low, prices of U. S. Government bonds remained relatively steady in the first half of April. SEVENTH FEDERAL IOWA RESERVE DISTRICT
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