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gy siimy CONDITIONS &l, l t» MT iv\S saaesasSeeoi S5«LSXj O^NSiVS mm 20m 22m. wn\vtv! :«&s$ ~£g=i§igl pass®?® *;-• - ! j 5s»xv VWsVv>V^VVx<VMs.\ sy> v ■ n wx ve*x v.\v*1 »W «M \\, : >V\TO\%WlMWMni ' " •& ■ !v»\v» vviwwt! . ] □□ 1 life It L^xvsj^aj T0i^ ^tfsegS i\V\'\i\VJ mSm lSSS Volume 21, No. 5 U^jfgw mm May 28, 1938 Prepared by the Research and Statistics Department of the Federal Reserve Bank of Chicago Monthly Review of Business Conditions in the Seventh Federal Reserve District DISTRICT SUMMARY EW indications of definite improvement can be noted conditions of Federal Fin businessmost reporting the Seventhactivity inReserve district. In industries April remained sharply under that of a year earlier, and in many groups it fell off from March when some seasonal expan sion had been shown. Although reporting retail lines and certain wholesale trade groups had an increase in business over March, sales volumes with few exceptions were well below those of last April; inventory position, however, has continued to improve. of butter manufacture, were larger than in the 1928-37 April average. May 1 inventories of dairy products were above the 1933-1937 average for the date, while those of packing-house commodities were under it, having declined more than seasonally from April 1. There was a heavy movement of wheat and corn in April; visible supplies of these grains diminished in the month. Inclement weather has affected the planting of corn, and frost has damaged fruit and garden truck to some extent; also, there has been slight deterioration in certain crops. Pastures are luxuriant. Industry Trade OLLOWING a slight rise at the end of April, steel pro NLY a small increase was shown during April over duction in the district had again receded by the middle March in department store sales of the Seventh district and the retail furniture trade expanded less than seasonally; of May. April output from steel and malleable casting foundries of the district was sharply lower than a month the volumes sold in both groups were much below those of previous, and seasonal activity at stove factories was last April. On the other hand, the retail shoe trade gained approaching an end. Automobile production did not attain considerably more than is usual and totaled above a year the expected seasonal peak in April and totaled slightly ago. In wholesale trade groups, sales of groceries and elec less than in March. Output from furniture factories declined trical goods increased over the preceding month, but those more than usually from the preceding month and that from in other reporting lines declined, and with the exception paper and pulp mills was smaller in the comparison. An of grocery sales volumes remained well below those of last exception to these downward trends was noted in the build year. Both wholesale and retail phases recorded improve ing industry where construction activity and the movement ment in inventory position, declines in stocks from the 1937 of materials showed some further expansion. Employment level being substantial in the majority of groups. and payroll volumes recorded a contraction in April, Credit contrary to trend for the period. EMBER bank reserve balances reached a record high Agricultural Products level on May 18, having risen steadily in the fourweek period ended on that date. There was a continued PRIL production of packing-house commodities was smaller than in March, a year ago, or the 1928-37 aver decrease in earning assets of reporting member banks in age for the month. Although the sales tonnage of such this period, because of a smaller volume of loans and products exceeded production, it also was lower in these reduced holdings of United States Government direct obli comparisons. The manufacture of creamery butter and of gations. Following a decline in the preceding five-week Wisconsin cheese expanded more than seasonally over period, demand deposits in these banks increased between March, and distribution of the latter likewise gained in the April 20 and May 18. Dealer sales of commercial paper comparison. Both sales and production of these commodities and new financing through bankers’ acceptances fell off in exceeded the year-earlier volumes and, with the exception April and were much below the 1928-37 average volumes. F A O M past several months. New financing during the first fifteen days of May by several of the large Chicago banks exceeded Open Market Paper the April volume for the same period by 17 per cent, but EW acceptances created in April by accepting banks in amounted to only one half of the corresponding year-ago the Seventh district declined 9 per cent, or less than total. seasonally, from the March total. Outstandings at the end Commercial paper sales during April and outstandings of the month, however, showed a greater than usual drop of on April 30, as reported by representative dealers in the 15 per cent from March 31. Bank holdings of acceptances on Middle West, were both in the lowest volume since late in April 30 were one per cent higher than a month previous, 1936. In each item, a downward trend is normally expected, the increase being brought about by a slightly smaller but the 20 per cent drop in sales from March and the 13 volume of maturities during April than in March and by per cent decline in outstandings exceeded the seasonal much heavier purchases of other banks’ bills. Percentage decreases. Comparisons with a year ago and the 1928-37 comparisons with a year ago were all negative—35 per cent average also showed declines, amounting to one-half of one for new financing, 44 per cent for outstandings, and 51 per per cent and 28 per cent, respectively, in sales and to 11 cent in the banks’ portfolios. All of these percentage and 3 per cent in outstandings. Except that the bulk of declines were greater than in the March comparisons with sales tended to become more firmly established at % per a year earlier. Decreases from the 1928-37 average for cent, rates remained steady. Borrowings on commercial April were close to 70 per cent, as has been the case for the paper and demand for paper by country banks were both Credit and Finance N lighter in April than in March, while demand from city banks showed little change in the month. Sales during the first fifteen days of May ran about 8 per cent below those of the same period in April, as the supply continued to dwindle. Selected Seventh District Banking Data * * * FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION Member Bank Reserves (Amounts in millions) NEW high record of over 1,214 million dollars was May 18 established on May 18 for Seventh district member Total bills and securities.......................................... 1938 $278 Bills 0 bank reserve balances, following a continuous upward trend discounted........................................................... Bills bought.................................................................. 0 277 each week since March 30 and including a 140 million dol U. S. Government securities.................................... Total reserves............................................................... 2,096 lar increase during the four-week period ended May 18. In Member bank reserve deposits............................... 1,214 deposits........................................................ 162 this latter period, an inflow of commercial and financial All otherReserve notes in circulation..................... Federal 963 Ratio of total reserves to deposit and funds from other districts effected an 85 million dollar Federal Reserve note liabilities combined.. 89.6% addition to reserves, and an excess of Treasury disburse ♦Number of Points. ments over receipts added 60 millions. Cash redemptions of a substantial portion of maturing Treasury bills were * ♦ * responsible for the excess in Treasury disbursements. Sev enth district currency circulation increased over 5 million CONDITION OF REPORTINO MEMBER dollars during the four-week period. SEVENTH DISTRICT A * Change April 20 1938 $ 0 0 0 0 +74 +140 —64 0 +0.3* from May 19 1937 $—2 0 0 —1 +325 +192 +138 —7 + 1.8* BANKS (Amounts in millions) Interest Rates Change from May 18 April 20 May 19 NTEREST rates charged by outlying Chicago banks on 1938 1938 1937 Assets prime commercial loans were somewhat higher on May Loans and investments—total................................ $2,847 $—67 $—204 Loans—total................................................................. 851 —120 —44 15 than a month earlier; those on other loans by these banks Commercial, industrial, and agricultural loans: On securities............................................................. showed no important changes. Downtown Chicago banks —1 39 —11 Otherwise secured and unsecured...................... 468 —32 —60 and the larger Detroit institutions reported only minor vari Open-market paper..................................................... 38 —3 —14 Loans to brokers and dealers in securities.......... 30 —2 —20 ations in their rate scales over the same period. Average Other loans for purchasing or carrying securities 76 —4 —20 89 +1 +9 rates of earnings on total loans and discounts by these two Real estate loans......................................................... Loans to banks............................................................ 5 0 —2 latter groups showed moderate improvement in April over Other loans: On securities............................................................. 43 —3 —3 the March averages but remained below those of a year ago. Otherwise secured and unsecured...................... 63 0 +1 U. S. Government direct obligations.................... 1,372 —61 —102 Obligations fully guaranteed by Securities Markets U. S. Government................................................... 193 +19 +21 431 +19 —3 OND market conditions in the Middle West showed Other securities............................................................ Liabilities little change in April and early May from the dullness Demand deposits—adjusted*.................................. 2,129 +64 —122 Time 872 —1 +17 prevailing for the past several months. Prices firmed, espe deposits............................................................... Borrowings.................................................................... 0 0 0 cially on high-grade bonds. Rails remained unsettled, ♦The annual velocity of demand deposits (unadjusted) in the four weeks ended though moving within a narrower range than during March. May 18 was 19.51 times, as compared with 22.32 times in the preceding five The volume of new corporate financing in April approxi weeks and with 23.35 times in the corresponding period of 1937. mated that for March, while municipal issues were smaller * * * in the same comparison. Both lagged far behind a normal level. Institutional demand continued to be the main sup VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT port of the market; individual interest was negligible. (Amounts in millions) Per Cent of Increase Banks, particularly the larger ones, appeared more active or Decrease from because of the additional funds available for investment April March April 1938 1938 1937 since the recent lowering of reserve requirements. Chicago.................................................... .................... $2,616 —11.0 —16.9 693 —7.1 —33.0 The 91-day Treasury bills dated May 18 sold at the record Detroit...................................................... .................... Milwaukee............................................... .................... 250 —4.3 —15.1 176 —1.0 —18.8 low average discount of .027 per cent—the fifth straight Indianapolis............................................ .................... week of improved financing terms for the Treasury. The Total four larger cities........................ .................... $3,735 —9.4 —20.4 707 —0.4 —15.4 Chicago Journal of Commerce average of Chicago stock 37 smaller cities..................................... .................... —8.1 —19.7 prices on May 21 was $35.36, about $2.50 below the April Total 41 centers..................................... .................... $4,442 high and slightly above the May low of $34.85 recorded * * ♦ on May 2. I B Agricultural Products Crop Conditions TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK OF CHICAQO AND DETROIT BRANCH (Exclusive of Treasury checks and of non-transit items drawn on own bank) WING to inclement weather, corn planting in the Sev Total country and city check clearings: Pieces..................................................... enth Federal Reserve district continued considerably Amount.................................................. Daily average clearings: behind normal schedule and was less than half completed Total items cleared— by May 17. Germination and growth of the grain also was Pieces.. ................................................. Amount.................................................. hindered by low temperatures. Frost in mid-May nipped Items drawn on Chicago— Pieces..................................................... some of the early garden and truck crops, and caused con Amount.................................................. Items drawn on Detroit— siderable damage to fruit. Oats have made rather slow Pieces..................................................... growth since the beginning of May but are in generally fair Amount................................................. O Page 2 April 1938 April 1937 10,815,829 $1,854,098,453 10,742,101 $2,279,781,428 415,993 $71,311,479 415,407 $88,270,657 70,031 $38,396,000 66,702 $45,387,000 15,789 $6,532,838 21,493 $11,684,657 to good condition, though showing slight deterioration in a few localities because of inadequate surface moisture. On the other hand, winter wheat and rye continue to exhibit heavy growth and fair to excellent progress; they are beginning to head in the southern portion of the district. Pastures remain luxuriant. Clover and alfalfa have shown some slight deterioration since May 1, but for the most part are approaching early cutting in a fine condition. The planting of sugar beets and early potatoes is nearing com pletion and that of late potatoes continues. CROP 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 1927-36 Forecast Final 1927-36 1938 1937 Average 1938 1937 Average Winter wheat................ 106,349 115,080 81,763 754,153 685,102 546,396 Rye................................... 10,263 13,632 7,221 51,755 49,449 36,454 Movement of Livestock PRIL cattle and hog marketings at public stockyards in the United States declined 12 and 9 per cent, respec tively, from March; those of lambs and calves showed some increase. Volumes were under the 1928-37 April average and, except for lambs, below the year-ago amounts. Move ment to inspected slaughter—inclusive of animals that did not pass through public stockyards—was characterized by a decline in each classification; volumes, however, remained in excess of the ten-year average, with the exception of hog slaughter, which continued to be one fourth below it and was the smallest since last September. Comparisons with 1937 were about the same as in March, lamb slaughter being the only category which totaled above last year. A LIVESTOCK SLAUGHTER (In thousands) Cattle Yards in Seventh District, April 1938..................................... Federally Inspected Slaughter, United States: April 1938................................... .... March 1938 ............................... . . . . April 1937 .................................. Grain Marketing Hogs 387 Lambs and Sheep 247 Calves 96 2,462 502 749 1,423 Wheat 2,610 1,428 506 809 2,810 1,334 588 OVEMENT of wheat at interior centers of accumulation AVERAGE PRICES OF LIVESTOCK in the United States remained heavy during April; (Per hundred pounds at Chicago) both receipts and reshipments at these centers were again Week Ended Months of May 21 April March April the largest for the month in several years. Exports of the 1937 1938 1938 1938 grain continued in fair volume. Under the influence of Native Beef Steers (average).. . .... $9.00 $8.65 $8.45 $10.85 8.30 7.65 7.50 7.10 Fat Cows and Heifers................. ___ bumper crop prospects for winter wheat in the United Calves............................................... ___ 9.15 8.50 8.65 8.85 10.00 8.40 9.15 States, quotations for No. 2 hard winter wheat in cash posi Hogs (bulk of sales)..................... ___ 8.40 12.40 ___ 7.75 8.45 8.80 tions at Chicago declined about 5 cents in the latter part of Lambs.............................................. April, ending the month at $.84% and $.87%. There was Meat Packing a show of firmness in the first two weeks of May, when some PRIL production of packing-house commodities at apprehension was displayed as to possible frost and rust inspected slaughtering establishments in the United damage in the southwestern part of the United States; but States totaled 6 per cent less than for either this March or increasingly favorable crop news from the winter wheat belt last April; the margin of decrease from the 1928-37 average brought these prices to $.81% and $.84% by May 21. The for the period widened to 12 per cent. Though showing a liberal decline in visible supplies of wheat during the four more than seasonal excess over current production, the ton weeks ended May 14—23 per cent—had little effect on nage sold during April aggregated 5 per cent under a year price trends. earlier and 8 per cent less than the ten-year April average. A slight easing from March was evidenced in the general Corn and Oats price level of packing-house products, despite somewhat HERE was an exceptionally heavy movement of corn firmer quotations for beef and common to medium grade during April at interior primary centers in the United veal. Dollar sales billed to domestic and foreign customers declined one per cent in April from a month earlier to one States. Unseasonably large country marketings were mostly offset by a continued heavy export movement. Sustained by per cent below the 1928-37 average for the period and were sizable sales to Europe, prices for No. 2 yellow corn for 14 per cent smaller than in April 1937. As a reflection of immediate delivery at Chicago stood at $.59*/4 and $.59% the foregoing trends, employment, hours worked, and wage on May 21, or only slightly lower than a month earlier. payments at slaughtering establishments showed a decline Visible supplies of the grain on May 14 were 19 per cent of 3 per cent each at the close of April from March 31; lighter than a month previous but almost 8 times greater decreases of 11, 13, and 12 per cent, respectively, were than stocks of the comparable 1937 date. Receipts of oats recorded from a year ago. Inventories of animal products fell off slightly during April, but reshipments were the larg in the United States declined more than is usual on May est for any month since May 1934. Visible supplies declined 1 from a month earlier to a level 17 per cent below the more than seasonally; prices were off about 2 cents on May 1933-37 average for the date. In the first half of May, pro duction continued under the corresponding period of 1937. 21 from a month earlier. M A T MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) April 1938 Wheat: Receipts......................................................... Shipments..................................................... Corn: Receipts......................................................... Shipments..................................................... Oats: Receipts........................................................ Shipments..................................................... March 1938 April 1937 April 1928-37 Av. 11,063 14,052 10,388 10,655 8,924 8,749 13,004 12,010 29,532 24,084 23,516 13,330 7,915 4,762 14,561 11,807 4,313 8,553 4,643 6,346 4,619 7,754 6,711 7,738 Foreign Trade SOMEWHAT smaller quantity of packing-house com modities for AMarch. Thewas shippedthese export in April than duringlard, bulk of forwardings consisted of boxed meats, oleo, and casings. There was a tendency to defer some movements until the early summer reduction in inland and ocean freight rates became effective late in April and early May. Demand in the United Kingdom con tinued fair for United States lard and hams but was rather Page 3 slow for bacon. Czechoslovakia purchased a limited quan tity of fat backs. Trade in Cuba equaled that of March; on the other hand, Porto Rican and South American demand for animal products slackened. Quotations for United States lard ruled below Chicago parity in England and on the European Continent but were close to this parity in Cuba, Porto Rico, and other importing nations. Stocks of United States packing-house commodities in foreign markets— inclusive of goods in transit—showed little change on May 1 from the beginning of April. The importation of animal products into the United States increased further in April and was at the highest level since December last year. wage trends in the current month, and in most cases affected the same industries. Thus, such major manufacturing groups as metals, vehicles, chemicals, and rubber products, showed a considerably smaller contraction in wage payments than in employment. An opposite trend, however, prevailed in groups such as the textiles, leather, and paper and printing industries, where payroll declines exceeded losses in employ ment mainly on account of a shortening of weekly time schedules. Durable goods industries as a whole presented a more sharply downward trend in both employment and payrolls than did the non-durable or consumer goods classi fication, despite the fact that the only major manufacturing group to show an expansion during April was in the dur able goods classification—the stone-clay-and-glass products group. Of the consumer goods industries, food products registered the least and leather products the greatest de crease during the current period. Seasonal expansion in the merchandising and construction industries brought the aggregate volumes of employment and payrolls in non manufacturing groups as a whole above those of a month earlier. Employment and payroll volumes in all reporting industries totaled below those of a year ago by 25 and 35 per cent, respectively, whereas the corresponding differences in March were only 20 and 30 per cent. Dairy Products OOD pasture conditions and a consequently heavy milk flow effected greater than seasonal increases in butter and cheese production during April. Seventh district cream ery butter manufacture expanded 16 per cent over March and was 13 per cent greater than for April 1937, although it totaled 2 per cent less than the 1928-37 average for the month. Production of the commodity in the United States showed even more favorable trends, being well above a year ago and the average. The sales tonnage of Seventh district creameries recorded a fractional decline from March but aggregated 10 per cent higher than a year ago and 6 per cent above the 1928-37 April average. Although a slight Manufacturing decrease is usually expected, butter inventories in the United States expanded 5 million pounds between April 1 and Automobile Production and Distribution May 1, standing on the latter date 13 million pounds higher T^OTAL April production of automobiles showed a slight than last year and 12 million pounds above the 1933-37 -B- decline from the March volume and amounted to only May 1 average. After pronounced weakness in the first half about 40 per cent of output for last April, the peak month of April, cash butter prices were sustained in the latter part of the month and the first two weeks of May by liberal of 1937. Passenger cars manufactured in the United States Government purchases. Some further softening, however, during the current period numbered 176,078, or one per cent more than in March but 60 per cent below output a was shown in mid-May. year ago; truck production of 43,236 vehicles decreased 9*/2 Production and sales of American cheese in Wisconsin per cent from the preceding month and 55 per cent from rose more than seasonally during April over the preceding April 1937. month. Cheese manufacture increased 16 per cent over Some further increase took place during April in sales of March, 28 per cent over April 1937, and 21 per cent over new automobiles by reporting distributors and dealers in the 1928-37 average for the period. April distribution of the commodity from primary markets in the State showed EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL similar trends, aggregating 12, 23, and 17 per cent, respec ____ RESERVE DISTRICT tively, more than in March, a year ago, and the ten-year Change from April average. United States stocks of cheese had declined Week of April 15, 1938 March 15, 1938 only one million pounds by May 1 from a month earlier, Report Wage Earn ing Earn ings and the excess over the 1933-37 average widened to 13 mil Wage Earn Industrial Group Firms (000 Earn ings ers lion pounds. Prices ruled fairly steady in late April and Omitted) ers No. No. $ % % the first half of May, after some softness in early April. G Durable Goods: Industrial Employment Conditions A FTER attaining a fairly steady level in the preceding f*- month, employment and payrolls in Seventh district industries again showed a definite contraction in April. The declines were contrary to the usual trend, as the 1928-37 April averages record a practically stationary volume of employment and an increase of 1 y2 per cent in wage pay ments. The trend in payrolls for both the current and the preceding month was more favorable than in employment, which may at least partially be explained by the fact that more recent and lower-paid workers are generally laid off first in a period of recession. However, the tendency to lengthen time schedules, noted in March, was also respons ible for some of the discrepancy between employment and Page 4 Metals and Products1.. . 1,782 425 275 491 2,973 360,630 243,944 17,781 38,900 661,255 9,025 6,850 406 759 17,040 —3.8 —6.9 +4.4 —4.1 —2.5 —1.9 +4.3 —7.2 402 1,047 307 164 34 741 2,695 58,862 100,109 34,551 21,655 12,745 74,536 302,458 1,000 2,623 1,040 416 270 2,028 7,377 —0.6 —0.8 —2.1 —5.4 —4.8 —1.2 —1.5 —1.0 —0.4 —0.8 —8.1 —2.6 —2.2 Total Mfg., 10 Groups... . 5,668 963,713 24,417 —3.8 —2.2 Merchandising*..................... 5,451 1,125 28 777 137,388 107,299 4,474 9,330 2,996 3,592 90 264 +4.2 +0.1 +11.9 7,381 258,491 6,942 +2.3 +0.9 13,049 1,222,204 31,359 —2.6 Illinois, Indiana, and Wisconsin. —1.5 Stone, Clay, and Glass. . Non-Durable Goods: Textiles and Products... Food and Products......... Chemical Products.......... Paper and Printing......... Total Non-Mfg., 4 Groups Total, 14 Groups.................. *Other than Vehicles. +3.4 —18^6 +7.1 — the Middle West. The number of cars sold remained consid erably less than in the corresponding 1937 period, but the percentage declines were somewhat smaller than in March. Stocks of new cars on hand showed a definite reduction in April and, although they continued to exceed those of a year ago by a fairly substantial amount, the margin of increase was much narrower than a month earlier. Firms handling makes not affected by strike conditions in 1937, reported stocks below those of last year. The number of used cars sold in April fell off noticeably from the March volume, following gains in each month of the first quarter of 1938, and the decline from year-ago sales was greater than a month earlier. Salable used cars on hand at the end of April numbered above those of March 31, whereas they had been diminishing in recent months; also, the decrease from the 1937 level was smaller than in March. MIDWEST DISTRIBUTION OF AUTOMOBILES April 1938 Per Cent Change from Companies Included March 1938 New Cars: Wholesale— Number Sold....................................... Value..................................................... Retail— Number Sold....................................... Value..................................................... On Hand End of Month— Number................................................ Value..................................................... Used Cars: Number Sold....................................... Salable on Hand— Number................................................ Value..................................................... April 1937 + 8.5 + 3.8 —62.5 —60.4 15 15 + 4.5 +11.7 —43.1 —36.2 28 28 —11.5 —15.5 + 16.5 +31.6 27 27 —21.0 —36.0 27 + 3.3 + 4.3 — 6.9 + 0.0 In the manufacture of stoves and furnaces, seasonal activ ity was nearing a close in April, and orders and production registered declines of approximately 30 and 10 per cent each from the preceding month. Shipments continued to expand, with a small increase of 2 per cent. All items con tinued to total below those of a year ago, the differences amounting to about 45 per cent in shipments and to some what more than that percentage in orders and production. Inventories showed an accumulation of 6 per cent during the month and totaled 34 per cent heavier than at the close of April 1937. Furniture S IS usual in the period, orders booked and shipments by reporting the Seventh Adistrict fell off furniture manufacturers ina month previous. in April this year from The declines of 15 and 20 per cent, respectively, were greater than seasonal, noticeably so in shipments which had shown more than seasonal increases in the two preceding months. In the comparison with the corresponding 1937 month, both shipments and new orders totaled over 40 per cent smaller this April and each was about 15 per cent less than in the 1928-37 average for the period. Unfilled orders continued to be reduced—by 16 per cent—as ship ments exceeded orders received by a moderate amount and cancellations increased; at the end of April, orders on hand were almost 60 per cent smaller than a year earlier. At 50 per cent of capacity, manufacturing operations were slightly lower during April than in March and close to 35 points below those of April 1937. 27 27 Paper and Pulp XCEPT for a slight rise in orders booked, activity at Iron and Steel Products Seventh district pulp and paper mills declined during OLLOWING a slight rise in the last part of April and April from March. However, most comparisons with 1937 early May to 34 per cent of capacity, from 30 per cent, became less unfavorable. Pulp mills operated at about 81 steel ingot production in the Chicago district receded againper cent of capacity in April, 2 points under the March in the middle of May to 29 per cent of capacity, as steel rate, while paper mills ran at 76 per cent of capacity, or consuming industries continued to work on reduced sched 3 points below a month previous. In April 1937, both paper ules. No sustained improvement in demand has been noted and pulp mills in the Seventh district were operating at from any source. Production of pig iron in the Illinois and virtually maximum capacity. Indiana district remained at a low level in April, although a further small increase was shown in the comparison with PAPER AND PULP INDUSTRY SEVENTH DISTRICT a month previous. Scrap iron and steel prices, which had April 1938 been nominal and unchanged for several weeks, declined in Per Cent of Increase or Decrease from the middle of May. March April April activity at Seventh district foundries reached a new New orders booked (tons).......................................................... +0.3 —27.4 low level for the present recession, with orders, shipments, New orders booked (dollars)..................................................... +3.1 —19!3 Total shipments (tons)................................................................ —4.5 —25.5 and production falling below the tonnages reported for Total shipments (dollars)........................................................... —10.4 —26.6 Total production (tons).............................................................. —4.4 —29!o March by 51, 43, and 35 per cent, respectively, in steel Stocks on hand at end of month (tons)................................. +9.1 +5614 castings and by 17, 8, and 17 per cent in malleable castings. Pulp: 1 Pulp produced (tons)................................................................... —8.0 —17.9 The contraction in the corresponding dollar volumes was Stock on hand at end of month (tons).................................. +11.3 +92^9 also substantial, though somewhat less than in tonnage units. Comparisons with a year ago, at which time operations were approximately at their peak for the period of recovery, Petroleum Refining showed decreases ranging from 81 to 92 per cent in steel ETROLEUM refineries located in the Indiana, Illinois, castings and from 64 to 70 per cent in malleable castings. and Kentucky area operated at 90 per cent of capacity For both types of castings, shipments in the current month during the week ended May 14—a rate somewhat higher than were the smallest in dollar value that have been recorded that of other weeks this spring. Daily average crude runs to since December 1934; expressed in tonnage units, shipments stills in this area increased 2 per cent during April over the of steel castings fell below any previous month since May March average, though declining 3 per cent from April 1933, and those of malleable castings were the lightest since 1937. Crude runs in the United States recorded similar October 1934. Current shipments of both types of castings trends, except that the April average slightly exceeded that continued heavier than the volume of incoming orders. for a year earlier. F E P Page S The Building Industry month previous. Outstanding accounts of reporting lumber dealers increased in line with sales during the month, but Construction were in considerably heavier ratio to such sales than in the CCORDING to contracts awarded data, some further same month a year ago. Wholesale prices of building mate expansion took place during April in the building rials generally were firm during April, the United States Bureau of Labor Statistics index showing an advance of construction industry of the Seventh district. Both residen tial and non-residential building were heavier than in about 1% per cent in the period and a subsequent loss of March, while the volume of public works and utilities con about two thirds of this increase in the first week of May. struction totaled smaller in the comparison. Although build LUMBER AND BUILDING MATERIALS TRADE ing activity remained in April well below that of a year ago, the margin of decline was narrowed for the third consecu April 1938 Per Cent Change from Number of tive month. Public works construction continued to exceed Class of Trade Firms or the corresponding 1937 volume. As in March, residential March April Yards 1938 1937 building constituted 29 per cent of the total; last April it Wholesale Lumber t amounted to 32 per cent of the aggregate. + 0.3 —11.5 A Retail Building Materials: BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period April 1938 ....................................................................... Change from same period 1937............................ •Data furnished by F. W. Dodge Corporation. Total Contracts Residential Contracts $ 36,370,000 + 8.0% —23.2% $106,285,000 —36.6% Accounts Outstanding1........................ $10,493,000 + 6.7% —30.9% $28,554,000 —38.7% + 9.8 + 4.3 —41.8 —23.8 9 7 9 +15.0 +11.0 + 7.2 + 9.8 —14.8 —24.2 —21.9 — 6.0 181 97 110 178 Ratio of Accounts Outstanding1 to Total Dollar Sales during Month April 1938 Retail Trade................................................ March 1938 168.3 218.5 161.8 228.3 April 1937 129 1 196.8 1End of Month. Prospective new building in the district, as reflected by the aggregate of permits issued in 103 cities, continued to increase in April. However, the gain of 24 per cent over March in the total estimated cost of such building was effected through an increase in Detroit and the smaller cities of Illinois, Michigan, and Wisconsin, as permits issued in Chicago, Indianapolis, Des Moines, and the smaller cities of Indiana and Iowa declined in dollar value, with Mil waukee showing little change from the March volume. A decrease of 28 per cent was recorded from last April in the total estimated cost of prospective building for the 103 cities. Des Moines and the aggregate for the smaller cities of Michigan registered an increase in this comparison. Merchandising Wholesale Trade RENDS varied during April in business of wholesale trade groups in the Seventh district. Sales of groceries and of electrical goods increased over March by 13 and 6 per cent, respectively, while those of hardware and drugs and aggregate sales of miscellaneous groups showed declines in the period of 2, 9, and 3 per cent, in the order named. The recession in hardware sales was contrary to trend for April. Comparisons with a year ago recorded larger de creases than a month previous in hardware and drugs but a somewhat smaller decline in electrical goods sales; gro Materials cery sales were only fractionally below those of last April. Total inventories for all reporting groups were one per cent HE greatly increased demand for building materials that developed during March was followed in April by a less on April 30 than a month earlier and 15 per cent more moderate expansion which in several lines failed tobelow stocks on the same date of 1937. reach customary seasonal proportions. Gains in wholesale WHOLESALE TRADE IN APRIL 1938* lumber distribution were not so heavy as in the preceding month and the increase in dollar units was only fractional, Per Cent Change from Same Month Last Year Commodity although in board-foot measurement it exceeded the 1928-37 Accounts average April rise. Retail yards reported gains substantially Net Sales Stocks Outstanding Collections below those generally occurring at this season. Cement Groceries........................... — 0.2 —14.3 — 3.1 + 1.2 —21.3 —16.1 —27.3 shipments, likewise, after more than doubling in volume Hardware.......................... —29.6 —17.6 — 7.5 Drugs................................. — 4.6 —11.9 during March, showed little further expansion in April, Electrical Supplies......... —25.5 —11.4 + 2.7 —20.2 —11.9 — 4.3 — 9.2 whereas in the ten years, 1928-37, such shipments recorded Miscellaneous................... —14.6 by Bureau an average rise of close to 70 per cent for each of these ♦Data furnishedCommerce. of Foreign and Domestic Commerce, United States Department of months. Brick deliveries continued to improve, the increase Retail Trade from March to April amounting to approximately 30 per cent. Activity in all lines, however, remained on a restricted EPARTMENT store sales in the Seventh district in basis as compared with the corresponding period a year creased less than 2 per cent in April over the preceding earlier: brick deliveries were about 40 per cent smaller month and totaled 11% per cent below those of April 1937, than for last April; cement shipments, after reaching the despite the fact that much of the Easter buying came in the year-ago level in March, again showed an unfavorable mar month this year. Furthermore, in the first half of May, the gin in April; while the distribution of lumber recorded dollar volume sold was 18 per cent less than in the corre decreases in the yearly comparison that were slightly less sponding year-ago period. A decline of 1% per cent from at wholesale but greater at retail than had been the case a March in April sales of Chicago stores was responsible for T Page 6 the smallness of the increase in the district total over a month previous, as Detroit, Indianapolis, Milwaukee, and the aggregate for the smaller cities of the district recorded sales gains averaging around 5 per cent. Trade in Detroit, as it has done in each earlier month this year, showed a noticeably greater decline from last year than that in other cities. Inventory position has continued to improve: stocks on April 30 were fractionally higher than a month previous —a slight rise usually takes place in the period—but they totaled 10 per cent below those on hand at the close of April 1937. * * * Not only did the retail shoe trade experience a much greater than seasonal expansion in business during April, but the dollar sales volume totaled substantially larger than a year ago. According to data received from reporting shoe dealers and the shoe departments of department stores, sales in the current period exceeded those of the preceding month by 31 per cent and were 16 per cent heavier than in April 1937. The increase over March compares with one of only 10 per cent in the 1928-37 April average. Dealers showed a much larger gain in the monthly comparison than did department stores and also a somewhat greater increase over a year earlier. The improvement during April brought sales for the year to date to within 7 per cent of those for the first four months of 1937. Between the end of March and April 30, stocks recorded a slight rise in dollar amount; on the latter date they were 4 per cent smaller than a year ago at the same time. DEPARTMENT STORE TRADE IN APRIL 1933 Per Cent Change First Four Months 1938 from Same Period 1937 Per Cent Change April 1938 from April 1937 Locality Net Sales Stocks End of Month Net Sales Ratio of April Collections to Accounts Outstanding End of March 1938 1937 33.0 46.2 38.3 37.1 40.5 41.3 — 4.7 —11.4 —21.6 — 8.7 — 7.3 — 7.7 — 8.3 — 9.1 31.9 41.5 33.5 .... 35.3 ! —10.3 —12.7 35.7 38.3 Chicago........................ Detroit......................... Fort Wayne................ Indianapolis................ Milwaukee.................. Peoria........................... Other Cities*.............. —11.0 —20.7 — 3.8 — 2.6 — 6.0 — 0.5 — 6.2 —12.1 — 9.3 7th District................. —11.5 — 8.0 —10.6 ] a •Include Fort Wayne and Peoria. # * * Sales of furniture and housefurnishings by dealers and department stores continued in April to show some increase, although the gain of 6 per cent over March was much less than seasonal for the period. As compared with a year ago, dollar sales totaled 29 per cent lighter in April this year; in March they had been 20 per cent less. Department store sales of furniture and housefurnishings, as in March, re corded a smaller increase over the preceding month and a heavier decline from a year earlier than did dealer sales. Stocks aggregated 2 per cent larger at the end of April than a month previous but were 10 per cent less than on April 30 last year. MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted. No. of April Mar. Feb. Jan. Dec. Nov. April Mar. Feb. Jan. Dec. Nov. Firms 1938 1938 1938 1938 1937 1937 1937 1937 1937 1937 1936 1936 Meat Packing—(U. S.)— Sales (in dollars).............................................. 82 45 83 84 89 83 86 95 95 92 101 96 93 Casting Foundries— Shipments: Steel—In Dollars........................................ In Tons............................................. Malleable—In Dollars............................... In Tons................................... 12 12 21 21 27 18 34 41 42 34 37 45 30 22 36 43 33 25 38 46 47 37 49 60 58 47 55 67 Stoves and Furnaces— Shipments (in dollars)................................. . 14 91 90 64 46 124 119 123 85 112 124 136 88 122 104 114 74 103 95 102 69 98 73 77 66 98 57 59 55 80 166 168 147 99 95 214 205 • Furniture— Orders (in dollars)........................................ . Shipments (in dollars)................................... , , 33 33 47 54 56 68 53 52 66 37 37 51 53 68 82 92 96 101 76 83 112 67 68 82 83 76 Output of Butter by Creameries— Production....................................................... Sales......... ........................................................ . . , 59 61 101 110 87 110 77 100 78 101 78 98 75 101 90 100 80 98 70 90 72 85 77 93 88 94 , 27 11 13 70 72 68 63 73 70 54 54 69 57 62 76 64 75 89 66 88 88 70 108 82 72 101 86 60 70 77 65 64 85 70 93 90 05 85 80 29 6 4 5 40 84 84 82 94 100 98 82 87 82 86 87 97 95 79 86 95 67 71 75 71 62 68 85 69 74 84 74 62 70 88 148 180 172 161 144 156 93 95 117 109 104 93 100 92 93 117 101 104 86 97 98 100 113 116 105 90 102 104 76 93 82 78 67 78 97 78 88 79 78 64 78 97 157 194 177 163 149 164 98 98 117 109 108 91 102 93 Automobile Production—(U. S.)— Passenger Cars............................................... Trucks.............................................................. 60 115 59 127 48 126 53 144 83 217 101 172 150 255 138 240 101 179 106 186 145 195 116 143 Building Construction— Contracts Awarded (in dollars): Residential.................................................. Total............................................................. 36 53 34 49 15 25 13 28 16 38 26 41 52 69 52 69 28 42 27 64 28 50 32 52 Pigj Iron Production*— Illinois and Indiana...................................... 52 51 47 49 53 68 130 127 123 120 117 109 Wholesale Trade— Net Sales (in dollars): Groceries...................................................... Hardware...................................................... Drugs............................................................. Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago........................................................ Detroit......................................................... Indianapolis................................................ Milwaukee................................................... Other Cities................................................. Seventh District—Unadjusted............. Adjusted.................. . •Average daily production. Page 7 National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION TINDUSTRIAL production declined in April, reflecting chiefly reduced activity in the cotton textile and lumber industries. Distribution of commodities increased less than seasonally but continued to be somewhat in excess of produc tion. Commodity prices showed a further decrease. Production Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=100. By months, January 1934 to April 1938. FACTORY EMPLOYMENT AND PAYROLLS pc» ecuT EMPLOYMENT PAYROLLS TN APRIL volume of industrial production, as measured by the Board’s seasonally adjusted index, was at 77 per cent of the 1923-1925 average as compared with the level of about 79 per cent maintained during the first quarter of the year. The decline reflected, chiefly, considerable reductions in output at cotton textile mills and lumber mills, where there had been moderate increases in production in March. In most other manufacturing industries changes in activity were largely seasonal in character. Output at steel mills continued at around 33 per cent of capacity and in the automobile industry showed little change, amounting in April to about 40 per cent of the volume of a year ago. In the first three weeks of May produc tion of steel and automobiles was at a lower rate than in April. At mines there was a considerable decline in output of anthracite in April, while bituminous coal production showed somewhat less than the usual seasonal decrease. Crude petro leum production continued in large volume. Value of construction contracts awarded, which had increased considerably in March, showed little change in April, according to figures of the F. W. Dodge Corporation. Awards usually increase somewhat further in April. In the first four months of this year private residential building was about one fourth less than in the corresponding period last year, while other private work, particularly industrial and utility construction, was only about one half as large as a year ago. Awards for public projects were somewhat larger than last year. Employment Indexes of number employed and payrolls, without adjustment for seasonal variation, 1923-1925 average = 100. By months, January 1934 to April 1938. Indexes compiled by the United States Bureau of Labor Statistics. DEPARTMENT STORE SALES "pACTORY employment and payrolls declined from the middle of March to the middle of April, and the Board’s seasonally adjusted index of employment was at 79 per cent of the 1923-1925 average as compared with 82 in March and 84 at the beginning of the year. The number employed at automobile factories declined sharply, and there were further substantial decreases in the steel and machinery industries and at railroad repair shops. Smaller declines were reported in most other manufacturing industries. Employment at mines and on the railroads also decreased, while in trade there was some increase in the number employed, reflect ing partly increased business at the Easter season. Distribution -pvISTRIBUTION of commodities to consumers showed less than the usual sea^ sonal rise in April. The Board’s adjusted index of department store sales was 83 in April compared with 86 in March and 90 at the beginning of the year, and figures for the first half of May indicate a further decrease. Freight-car loadings also declined from March to April, reflecting largely reduced shipments of miscellaneous freight, and were about 30 per cent less than in April 1937. Commodity Prices 1934 1935 1936 1937 1938 Indexes of value of sales, 1923-1925 averages 100. By months, January 1934 to April 1938. MEMBER BANKS IN 101 LEADING CITIES 7HOLESALE prices of industrial commodities continued to decline from the V V middle of April to the third week of May, and prices of agricultural prod ucts also decreased somewhat further. Steel scrap, copper, and rayon showed con siderable declines and there were reductions in prices of some finished industrial products. It was announced that prices of most finished steel products would be unchanged for third quarter delivery. Bank Credit ' I 'OTAL loans and investments of reporting member banks in 101 leading cities -1- showed little change during April and the first half of May. Holdings of United States Government obligations increased somewhat, while holdings of other securities and loans declined. Adjusted demand deposits in leading cities increased during the period as a result of expenditures by the Treasury from its balances with the reserve banks. Interbank deposits also increased substantially. Member bank reserves increased further, reflecting principally Treasury dis bursements from its deposits at the reserve banks, including retirement of $50,000,000 of Treasury bills each week. Money Rates '34 1935 1936 1937 1338 Wednesday figures for reporting member banks in 101 leading cities. September 5, 1934, to May 18, 1938. Total deposits, excluding interbank, are adjusted to exclude “float.” Page 8 and Bond Yields IELDS on Government securities declined slightly further in the four weeks ending May 21 to an average for longer-term Treasury bonds of 2.28 per cent. The average yield on 3- to 5-year Treasury notes declined to a new low of 0.73 per cent. The rate on three-month Treasury bills continued at record low levels, and other open-market money rates remained unchanged. Y DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS R. E. Wood, Chicago, 111...............................Deputy Chairman W. J. Cummings.............................. Chicago, 111. S. T. Crapo.....................................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 0. J. Netterstrom. .. .Assistant Vice President A. L. Olson..................Assistant Vice President A. T. Sihler................Assistant Vice President A. M. Black . . . Manager, Planning Department J. L. Sweet......................................................... Manager, Research and Statistics Department F. Bateman.............................. Assistant Cashier J. C. Callahan........................ Assistant Cashier 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. J. Endres......................................................................Auditor DETROIT BRANCH R. H. Buss....................................................Managing Director SEVENTH FEDERAL RESERVE DISTRICT
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