The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
SS CONDITION
4
A REVIEW BY THE FEDERAL RESERVE BANK OF CHICAGO
ubrary
Volume 23
NOVEMBER
1,
1940
Number 10
■■■
Hill
THIS MONTH
District Summary
Industrial Activity
Employment and Payrolls
Trade Trends
-■Smir
The Agricultural Situation
■HU
Credit and Finance
Current Events
National Summary
Bank Credit Available
for Defense Purposes
EDWARD R. ESTBERG, CLASS A DIRECTOR
Edward R. Estberg, €las§ A Director
Distinguished by his many years of service to the banking and business world,
as well as to civic affairs of his own community, Mr. Edward R. Estberg will
complete his twelfth year as a Class A director of the Federal Reserve Bank of
Chicago at the close of 1940. Mr. Estberg has served on the Board of Directors
of this bank longer than any other member.
Mr. Estberg’s career may be looked upon as perhaps typical of those who have
made a notable success in the banking field. He has been in continuous service
with The Waukesha National Bank of Waukesha, Wisconsin, since he started work
in the bank as a messenger boy, following completion of his education in the
public schools of that city. Advancing rapidly through the various positions
of the bank—as bookkeeper, teller, assistant cashier, vice president—Mr.
Estberg was elected president of this bank in 1919 and served in that position
until January 11, 1938, since which time he has been Chairman of the Board.
Although perhaps best noted for his contributions to the business and civic
life of his home community, Mr. Estberg has also been prominent in organiza
tions of State and national scope. He has been particularly active in the Wiscon
sin Bankers Association and the American Bankers Association, having been on
the Executive Council of both of these organizations. As a Class A director of the
Federal Reserve Bank of Chicago since January 1929, he has represented the
interests of the medium-sized member banks of the Seventh district, that is,
those with capital and surplus ranging from $200,000 to $999,000.
From 1914 to 1919, Mr. Estberg was mayor of the City of Waukesha, and for
many years was president of the local Board of Education. Likewise, during the
late war he was county chairman of all the Liberty Loan drives in Waukesha
County. For a time Mr. Estberg was president and director of the Waukesha Hos
pital Building Corporation. In addition to his many other duties, he serves at
present as treasurer and director of the Waukesha Motor Company and of the
Hein-Werner Motor Parts Corporation.
District Summary of Business Conditions
ITH the impact of the defense program added to sea
sonal fall expansion, operations in many industries of
the district have been extended to near-capacity levels. In
some cases, particularly where industries contribute directly
to defense, additions to capacity are being made. Industrial
employment has shown marked gains, and is now approach
ing the peak reached in 1937. Distribution of commodities
to consumers is holding up well, but has, of course, not re
corded the spectacular increases shown in manufacturing
output. Prices of important district farm products, except
for hogs, have been strong, and the district’s major crop—•
corn—has turned out well, though lighter than last year’s
harvest.
Industry—There was a marked month-to-month expan
sion in employment in Seventh district industry during Sep
tember. Number of workers increased 7 per cent and volume
of wage payments 81/2 per cent over August; this reflected
mainly seasonally higher activity in automobile production,
as well as expanding output in other heavy industries, par
ticularly those contributing to the National Defense Pro
gram. Since employment was also increasing substantially
last year at this time, year-to-year comparisons remained
practically unchanged from August, but the manufacturing
group as a whole was up 11 per cent in employment and 18
per cent in payrolls over September 1939.
In the primary steel industry almost all sections are
operating at an unusually high level. Despite continued prac
tical capacity operations—in steel ingot production, 98 per
cent for Chicago mills in the fourth week of October—order
backlogs have grown further as the tempo of incoming busi
ness increases. There has been a strong demand for all steel
mill products except tin plate. Steel firms report consider
able building-up of stock piles by steel users, but as yet they
do not consider these inventories to be excessive. Machine
tool companies, figuring prominently in the defense pro
gram, continue near-capacity operations, with deliveries
greatly extended. Prices for finished steel as well as scrap
are quite firm. Expansion was recorded in orders at steel and
malleable casting firms and, although shipments of steel
castings in September were 60 per cent greater than last year,
volume of unfinished orders increased. Business at dis
trict furnace and stove plants rose seasonally further and
production was 20 per cent greater than last year.
With apparently favorable retail sales trends, automobile
companies have accelerated production of cars rapidly, so
that output for October is estimated at a record level for
the month. Both automobile makers and parts manufac
turers are participating heavily in the defense program, ac
cepting contracts for items such as ammunition components,
engines, and trucks.
At district furniture factories, orders and shipments in
creased 13 per cent over August and backlogs rose further,
while activity at paper mills decreased, falling below yearearlier levels for the first time since March. Daily average
output of gasoline declined slightly in September, but gaso
line stocks remained onerous, being about one fourth heavier
than last year. September output of soft coal mines advanced
less than seasonally, reflecting unusually high operations last
summer. In the Chicago industrial area, daily average rail
road carloadings during September were the highest in three
years and 10 per cent greater than in September 1939.
Seventh district awards for construction contracts reached
in September the highest monthly level since June 1930, and
residential awards were the largest since July 1929. Recent
expansion in construction has been activated chiefly by
private building, as publicly-financed projects have declined
substantially. Total construction contracts were up 5 per
cent over September 1939, while residential building
showed a gain of 94 per cent in the comparison, being aug
mented considerably by a large award for a U.S.H.A. proj
ect at Detroit. Residential awards for the first three quar
ters of 1940 were 31 per cent greater than for the period
last year.
Trade—Although retail trade has held up well, it has failed
to make the gains shown in industry this fall. Department
stores in the Seventh district area showed September daily
average sales 8 per cent higher than last year. Sales by
larger stores for the first three weeks of October were 5 per
cent above the 1939 period. Department store inventories at
the end of September were only slightly higher than last
year. Retail furniture sales expanded about one third over
August and were 8 per cent higher than in September 1939,
while sales of shoes at retail were one per cent lower than last
year for the month. District wholesale trade was down 7
per cent in the aggregate from a year ago, part of the de
crease reflecting the unusually heavy sales by grocery and
other wholesale houses, following the outbreak of war in
1939.
SEVENTH
DISTRICT
BUSINESS
ACTIVITY
SEPTEMBER 1940 COMPARED WITH SEPTEMBER 1939
INDUSTRY
rtffi
10 20 50 an 50 60 00 00
SO 40 30 20 10
PER CENT
DECREASE
PER CENT
1 NCREASE
PRnnunTinN1
MFG. EMPLOYMENT.
MFG. PAYROLLS........ ...............
BUILDING CONTRACTS_____
MALLEABLE CASTING SHIPMENTS.
stffi
■
tasting shipments
FURNITURE SHIPMENTS!.
PAPER SHIPMENTS..................
AUTOMOBILE PR0D.,U.S...
BIT COAL PROD........................ .
■
AGRICULTURE
FARM CASH INCOME?..............
MEAT-PACKING PR0D.,U.S...
chffgf PRnnwis.
riittfr PRnnnr.TinN
CATTLE RECEIPTS..................
Hnn RFCFIPTS
W?WM
i
m
TRADE
OEPT. STORE SALES...............
RFPT RTnRF RTnr.KS
RET. SHOE SALES
...........
RET. FURNITURE SALE5..._.
V/HO| FRAI F TRADF
i
i
SB
sr
FINANCE
MEMBER BANK RESERVES3
REP. MEMB. BK. DEMAND DEPOSITS, ADJ.L..
RFP. MFMR RK. LOANS3
BANK DEBITS............................
m
■
1. Ingot rate,'7 Chicago district, week ending October 26. 2. August data.
3. As of October 16.
Pag# 1
Agriculture—With almost perfect weather for ripening
and harvesting the crop, the district corn crop has turned
out much better than had been anticipated in August. Prices
of most agricultural commodities—corn, wheat, cattle, and
dairy products—have been strong, although hogs have de
clined from August highs. Production at meat-packing
plants was 2 per cent lower than last September; while pro
duction and consumption of dairy products have been at
or near record levels for the season.
Industrial Activity
Defense Contracts—By the end of the third week in
October, contracts had been awarded covering most of the
funds currently appropriated by Congress under the National
Defense Program. As a consequence, the volume of con
tracts awarded slackened somewhat from earlier levels. Ac
cording to tabulations of the Office of Government Reports,
awards to firms in the Seventh district prior to September
30 totaled more than $500,000,000. Over 80 per cent of
the dollar volume went for a relatively few items for whose
production the specialized industrial capacity of the Sev
enth district is particularly suited, such as engines, trucks,
tractors, ammunition components, etc. The largest indi
vidual order, $81,000,000, was placed with the General
Motors Corporation for the manufacture of machine guns
and equipping plants for the production thereof. Orders
for trucks and tractors total about the same dollar volume.
Further, it is reported that the Government’s truck purchas
ing program is still far from complete. According to cur
rent estimates, about 78,000 trucks are yet to be ordered.
Purchases of these vehicles will involve an expenditure
approximating $175,000,000. Not all of this business
will go to Seventh district manufacturers, but the logical
assumption is that the bulk will be placed in the Detroit
area, the world’s foremost center for the manufacture of
motor vehicles.
In more recent weeks, as previously indicated, awards in
this district have been in greatly reduced volume—about
$30,000,000 during the first three weeks of October. A large
portion of these recent awards has comprised ammunition
components. One of the heaviest recent individual orders
in the Seventh district was $11,000,000 for the manufac
ture of chemicals and explosives.
Steel and Steel Products—With practically all phases
of the steel industry already operating at a very high level,
orders have continued in October to come into Chicago dis
trict sales offices at an increasing rate. Consequently, pro
ducers in the area are maintaining operations at peak
capacity; the rate of steel ingot output in the fourth week
of October averaged 98 per cent of capacity. A strong
domestic demand prevails from a widely diversified list of
steel users, and defense business likewise is expanding stead
ily; the latter, however, is still far from attaining the pro
portions that are anticipated. Some building-up of inven
tories for future needs is in evidence, but there appears no
indication of excessive buying for this purpose. Deliveries
of steel to customers, though presenting no serious prob
lem currently, are lengthening. They average two to four
weeks for a number of items, while for others such as bars
and sheets they range from three to six weeks and even run
to eight weeks in certain instances. Deliveries on structural
shapes and plates are slowing up noticeably. Steel con
sumers working on defense orders are getting rather prompt
delivery.
Page Z
Credit and Finance—There has been a continued upward
trend in the loan volume at weekly reporting member
banks; by October 16 loans at these banks reached 1,025
million dollars. This represented a gain of 39 million dol
lars over the preceding four weeks and was within 38 mil
lion dollars of the 1937 peak. Investments of these banks
declined 23 millions over the period. Bond prices have con
tinued firm in September and October.
RATE
OF
STEEL
INGOT
PRODUCTION
PER CENT OF CAPACITY
PER CENT OF CAPACITY
By weeks. Source: Iron Age.
Products in greatest demand include carbon and alloy
bars (which have been prominent for some time and in which
defense business is an important factor), sheets, and plates
and billets. Wire producers are busy as are makers of struc
tural shapes. Demand for tin plate is more than season
ally dull. Among the most active users of steel at present
are the automobile companies, domestic appliance manu
facturers, industrial tractor and agricultural implement
firms, makers of road construction machinery, forgers and
stampers, and machine tool companies. Buying of freight
cars by the railroads has progressed well and demand for
rails has been sizable. Steel warehouse business continues
good. In the machine tool industry, a quite large portion
of the heavy volume of new orders and inquiries being cur
rently received can be traced directly or indirectly to the
defense program. Deliveries have become a major problem
in this industry; these now average between four and six
months.
TONNAGE
SHIPMENTS
OF
CASTINGS
steel‘1
MALLEABLE f]
1936
1937
193S
IS59
1940
..........1941
^
to September^194C|nage Bhipments' 1935‘1939 average = 100. By months, January 1934
Although shipments from Seventh district casting foun
dries have been expanding steadily over recent months, they
have lagged behind the volume of incoming business, and
this trend continued through September. Production of
steel castings was rather closely matched to the level of
shipments, but that of malleable castings exceeded it, though
totaling under the August tonnage produced. New orders
booked by both steel and malleable casting foundries were
heavier in the current period than a month previous; how
ever, the gain over a year ago in steel castings was relatively
small and malleable casting orders were lighter in this
comparison because of the exceptionally large increases re
corded last September. Levels of production and shipments
remained much higher than in 1939.
STEEL AND MALLEABLE CASTINGS
SEVENTH DISTRICT
September 1940
Per Cent Change
from
August
Sept.
1940
1939
+15.9
+ 8.5
+10.0
+ 2.2
+6.3
+57.6
+6.1
+62.1
+44.0
—6.6
Steel Castings:
Orders booked (tons)....................................................................
Orders booked (dollars)...............................................................
Shipments (tons)............................................................................
Shipments (dollars).......................................................................
Production (tons)...........................................................................
....
....
....
....
....
Malleable Castings:
Orders booked (tons)....................................................................
Orders booked (dollars)...............................................................
Shipments (tons)............................................................................
Shipments (dollars).......................................................................
Production (tons)...........................................................................
.... +12.3
.... +13.0
.... +5.0
.... +3.6
.... —4.0
*
*
—24.7
—24.3
+26.7
+28.6
+25.2
*
The stove and furnace industry of the Seventh district
continued seasonally active in September. New business
booked during the period by reporting manufacturers rose
sharply—by 64 per cent in the aggregate—over the volume
of the preceding month, while shipments and production
were accelerated 20 and 18 per cent, respectively. Com
parisons with the corresponding 1939 level remained quite
favorable: orders booked were 36 per cent heavier this
October, and production increased 20 and shipments 15
per cent over the month last year.
Automobiles—Defense requirements figure more and
more prominently in activity of the automobile industry,
as further huge orders for trucks, automotive engines, am
munition components, and the like are placed with auto
mobile and parts manufacturers in this district and over the
country. Work already has been started on the Government
tank arsenal to be operated by the Chrysler company and
on the Ford plant for building airplane engines.
Each week since mid-August has shown an advance in
the production of new-model automobiles, and by the third
week of October output had attained the highest level of
the year so far. During the calendar month of September,
224,470 passenger automobiles and 44,638 trucks were pro
duced in the United States. These figures compare with
August volumes of only 46,823 and 29,050, respectively, and
represent increases over last September of 39 and 65 per
cent. Passenger car assemblies numbered greater than for
any September since 1929, and at current rates it is esti
mated that October production will exceed by far that for
the month in any previous year. Field stocks of new cars were
quite low as the 1941 model automobiles started arriving
on the market. This factor together with the well sustained
level of consumer purchasing power augurs a good demand
for the new models, while hesitancy due to conscription pos
sibilities and fairly large supplies of used cars are deter
rent factors in the demand. Retail sales in the nation during
the first nine months of 1940 are indicated as bettering those
of a year ago by about 30 per cent, according to Department
of Commerce indexes.
Largely because of the earlier receipt of new models than
a year ago, reporting retail dealers in the Seventh district
sold a considerably greater number of new cars this Sep
tember than last and somewhat more than in the preceding
month; aggregate increases amounted to 6 per cent in the
monthly and 30 per cent in the yearly comparison. For
the same reason, stocks of new cars in dealers’ hands rose
sharply and on September 30 were about 35 per cent heavier
than on the same 1939 date. Sales of used cars fell off
during September and numbered only 2 per cent more
than in the corresponding year-earlier period. Used-car
stocks at the end of September were at a level almost 25
per cent above that of a year ago.
Furniture—New business and shipments of Seventh dis
trict furniture manufacturers increased 13 per cent in Sep
tember over the volume of the preceding month. Shipments,
however, remained smaller than orders booked, with the
result that unfilled orders on hand also rose 13 per cent
further over the period. Both new orders and shipments
exceeded the September 1939 volumes by approximately 14
per cent; order backlogs were 30 per cent heavier than a
year ago. Factory production rates were advanced 8 points
during September to a level averaging 83 per cent of capac
ity, which is 5 points higher than for the month in 1939.
Paper and Pulp—Manufacture of paper in the Seventh
district declined 12 per cent, on a tonnage basis, during Sep
tember from August. After allowance, however, for the
differing number of working days in the two months, the
actual rate of operations declined but 4 per cent. Output fell
below the same year-ago month for the first time since last
March.
PAPER AND PULP INDUSTRY
SEVENTH DISTRICT
Paper:
Orders booked (tons)...........................................................................
Orders booked (dollars)......................................................................
Shipments (tons)...................................................................................
September 1940
Per Cent Change
from
August
Sept.
1940
1939
—6.3
—35.9
— 3.7
—24.2
— 9.2
— 8.7
Shipments (dollars)........................................................................ — 9.5
Production (tons)................................................................................... —12.4
Stocks at end of month (tons).............................................................. +1.4
Pulp:
Production (tons)................................................................................... —15.0
Stock at end of month (tons)............................................................. + 0.5
+1.5
— 8.9
+4.6
+3.3
+48.5
Building—Although construction awards in the Seventh
district in various months over the past ten years have ap
proached the September 1940 total, the current volume
established a new high since June 1930. Residential awards
were the largest since July 1929. Of more significance, how
ever, is the composition of September awards. Totals ap
proximating September 1940 in recent years have been in
flated by contracts for public works, utilities, and other pub
licly-financed construction. This year, the September high
has followed other months of large contract volume and has
been motivated extensively by private ownership of con
struction. Industrial and commercial building, in particu
lar, has been heavy compared with recent years and, as indi
cated on the accompanying chart, compares favorably with
the near-boom levels for this type of building that prevailed
in 1937. Industrial building, especially, has been stimulated
considerably by the National Defense Program with its need
for new factories and alterations. It is quite probable that
there will be much further expansion in this line. Informa
tion available from sources other than current building sta
tistics indicates that private financing can handle the bulk
of the necessary plant expansion.
Page 3
COMMERCIAL
AND
INDUSTRIAL
BUILDING
CONTRACTS
Data furnished by the F. W. Dodge Corporation for the Chicago and Southern
Michigan territories which closely approximate the Seventh district area.
In other branches of the non-residential field, hospitals,
schools, public buildings, etc., contracts have declined some
what to levels roughly comparable with those prevailing
early this year. Such projects are generally publicly financed.
This trend is even more accentuated in the case of
heavy engineering projects, which in September amounted
to only one third of the same 1939 volume. Heavy engineer
ing contracts in 1940 have been running below year-earlier
levels, but the September decline was unusually sharp be
cause the 1939 figures included $18,000,000 in awards con
nected with the Chicago subway.
Residential building contracts, as previously noted, totaled
the highest since 1929. The figure was augmented consid
erably by a large U.S.H.A. project, a contract for $8,330,000
having been let for the S. James Herman Gardens housing
project in Detroit. For the first eight months of 1940, oneand two-family dwellings constituted 90 per cent of all resi
dential awards. In September, the proportion was only 70
per cent.
BUILDING CONTRACTS AWARDED
SEVENTH FEDERAL RESERVE DISTRICT
Period
Total
Contracts
Residential
Contracts
September 1940...............................................................
Change from August 1940..........................................
Change from September 1939...................................
First nine months of 1940..............................................
Change from same period in 1939............................
$69,156,000
+10.7%
+ 6.2%
$469,191,000
+ 6.4%
$34,252,000
+29.3%
+94.2%
$206,238,000
+30.6%
for the first nine months, the margin of gain has amounted
to 12 per cent.
Coal Production—Due to the fact that operations over
the previous few months had been at a high level, the per
centage increase from August to September for Seventh dis
trict coal mines was not so great as usually occurs at this
season. Furthermore, the margin of gain over 1939 in the
amount of soft coal mined daily narrowed from 23 per
cent in August to 7 per cent in September, as output last
year increased more than seasonally over this period.
In mid-October, retail coal prices in the Chicago area were
advanced from 5 to 70 cents per ton, depending on the grade.
This was in conjunction with similar advances in other areas
since the introduction of minimum F.O.B. mine prices
for bituminous coal on October 1, under the Bituminous
Coal Act of 1937. It was estimated that increases in retail
quotations averaged about 35 cents per ton.
Petroleum Refining—Despite a small increase over Aug
ust in the rate of Seventh district refinery operations, daily
average gasoline output declined slightly during September,
indicating somewhat further reductions in the gasoline yield
per barrel of crude. Gasoline inventories continued extreme
ly large at the end of the month, the heavy consumption
season having failed to reduce stocks in the usual propor
tions.
Production of crude petroleum in the United States ex
panded considerably in September, but output in the Illi
nois fields, from whence comes a large proportion of the
oil used by district refineries, through mid-October had
shown little change in over a month. Prior to that time,
output had been declining since June, which month ap
pears to have been the peak production period for the Illi
nois fields.
Employment and Payrolls
With seasonal expansion in the automobile industry lead
ing the way, the number of workers in the Seventh district
and their total wage payments both rose sharply in Septem
ber over August. In years prior to 1938, this key industry
used to augment the August-September increases to a lesser
EMPLOYMENT AND PAYROLLS—SEVENTH FEDERAL
RESERVE DISTRICT
Week of September 15, 1940
Industrial Group
Data furnished by the F. W. Dodge Corporation.
Retail demand for building materials continued strong
through September, rising more than seasonally above
August. Movement of lumber from wholesale to retail
distributors was about the same as a month earlier but
markedly above a year ago. Cement shipments diminished
in about the customary proportion, while brick deliveries
expanded. A wide margin of increase in brick deliveries over
September 1939 is explained by the unusually depressed
level prevailing at that time. Building prices have been
quite firm, those for lumber showing a marked advance
in September.
Railroad Carloadings—Following a contraseasonal re
cession in August, the daily average number of revenue
freight cars loaded by railroads in the Chicago industrial
area expanded during September to the highest level reached
in three years. On a seasonally adjusted basis, the current
increase over the preceding month amounted to 6 per cent.
Loadings this year have been generally above the 1939 level;
Page 4
Per Cent Change
from August 15, 1940
Wage
No. of
No. of Payments No. of
Wage
Reporting Employes
(000
Employes Payments
Firms
Omitted)
Durable Goods:
Metals and Products1...........
Vehicles...................................
Stone, Clay, and Glass........
Wood Products......................
Total........................................
1,768
400
272
450
2,890
478,576
366,115
21,516
50,213
916,420
$15,079
13,446
559
1,114
30,198
Textiles and Products..........
Food and Products...............
Chemical Products...............
Leather Products..................
Rubber Products...................
Paper and Printing................
Total........................................
372
1,086
302
170
33
692
2,655
64,015
129,724
35,226
27,249
20,900
78,099
355,213
1,257
3,131
1,054
586
649
2,288
8,965
Total Mfg., 10 Groups..............
5,545
1,271,633
39,163
+ 8.1
+ 9.8
Merchandising............................
Public Utilities..........................
Coal Mining................................
Construction...............................
5,232
1,135
50
741
141,913
105,459
7,995
13,134
3,172
3,574
202
460
+ 3.5
— 0.5
+10.5
— 2.5
+ 4.4
— 0.3
+14.7
+ 0.4
+ 2.9
+23.6
— 0.6
+ 3.5
+10.2
+ 4.0
+23.2
— 0.7
+ 4.9
+11.7
Non-Durable Goods:
+
+
+
+
+
—
+
2.9
5.9
1.8
0.4
5.0
1.1
2.9
4.1
3.6
1.6
0.6
+33.0
+ 0.2
+ 3.9
+
+
+
—
Total Non-Mfg., 4 Groups.......
7,158
268,501
7,408
+ 1.8
+ 2.1
Total, 14 Groups........................
12,703
1,540,134
46,571
+ 6.9
+ 8.5
'Other than vehicles.
Data furnished by State agencies of Illinois, Indiana, Michigan, and Wisconsin.
»
a
♦
extent than in recent years when the introduction of new
models has been staged earlier in the fall. As yet, the in
fluence of the National Defense Program on employment in
the heavy industries is a matter of conjecture.
Employment and wage payments in the metals group,
largely the steel industry, which had been expanding rapidly
over the past few months, increased somewhat further. Dur
ing September there were 20 per cent more wage earners
receiving 30 per cent more in wages than a year earlier in
this group. In addition to increases in the basic durable
goods industries mentioned above, rising trends were noted
in several of the nondurable groups, particularly food prod
ucts, wearing apparel, chemicals, and rubber products.
Leather goods, which had recorded steady gains over the pre
ceding three months, showed little change during Septem
ber from the high levels already attained; predominant
in this group is the manufacture of boots and shoes. As pro
duction of paper declined, noted elsewhere in these pages, em
ployment and payrolls in the paper and printing industries
receded moderately. Similarly, declines were shown in the
stone-clay-and-glass industries, influenced by lower volumes
in the State of Indiana; other areas recorded some expansion. Among the non-manufacturing groups, a slight de
crease in public utilities offset the small gain of a month
earlier. Fewer workers were employed in the construction
industry in September than in August, but total wage dis
bursements were unchanged. In the large merchandising
group increases were the heaviest since last Christmas, while
coal mines added to their working forces, as is seasonally
anticipated.
In general, district employment and payroll volumes have
been substantially higher this year than in 1939. Month-tomonth fluctuations have followed much the same patterns
during both years, minor changes between January and July
being followed by large gains in August and September.
The current year’s level has not yet reached that of 1937,
however, although such comparisons should favor the current
year during the remaining 1940 months. This September,
payrolls were 2 per cent above and employment 3 per cent
below September 1937. The vehicles group has already
surpassed the 1937 level.
MANUFACTURING
PAYROLLS
Indexesjbased on 1935-1939 average as equal tollOO. January 1934'toJSeptember 1940.
Trade Trends
Department Stores—Because of one more trading day,
and that a Saturday, in the month last year, the aggregate
dollar volume sold this September by Seventh district de
partment stores was only 2 per cent greater in the compari
son. On a daily average basis, however, sales exceeded those
of September 1939 by 8 per cent. Similarly, September de
partment store trade expanded over August much less in the
total than in the daily average—16y2 against 33 per cent—
with three more trading days a month earlier and one of
them a Saturday. As is usual in the period, Detroit depart
ment store business rose over the preceding month to a
considerably greater extent than trade in other cities, owing
to the special promotional sales held regularly each Sep
tember in that city.
Sales of the larger district department stores in the three
weeks ended October 19 totaled 5 per cent greater than in
the corresponding 1939 weeks. Increases in this comparison
amounted to 4 per cent in Chicago, 11 per cent in Detroit,
41/2 per cent in Indianapolis, and 2 per cent in Milwaukee.
Inventories, which at the end of August had about equaled
those of a year earlier, were slightly higher on September
30 than on the same 1939 date. They increased seasonally
by 8 per cent over a month previous. In the first three quar
ters of 1940, the rate of stock turnover numbered 3.38 times
compared with 3.28 times for the corresponding nine months
last year.
DEPARTMENT STORE TRADE IN SEPTEMBER 1S40
Locality
Per Cent Change
September 1940
from
September 1939
Per Cent
Change
First Nine
Months 1940
from Same
Period 1939
Ratio of September
Collections to
Accounts
Outstanding
End of August
Net. Sales
Stocks End
of Month
Net Sales
1940
1939
Chicago.....................
Detroit......................
Fort Wayne..............
Indianapolis.............
Milwaukee................
Peoria........................
Other Cities*...........
+1.S
+4.2
+0.2
+9.4
+2.9
—7.9
—5.3
— 1.5
+ 2.9
+5.6
+7.1
40.3
44.4
40.4
46.3
34.4
35.5
33.5
36.1
+ 5.7
+5.4
29.6
29.7
7th District.............
+2.0
+ 1.4
+6.1
38.0
38.2
+io.8
+ 0.6
+7.8
+8.1
+6.2
+3.8
♦Include Fort Wayne, and Peoria.
Retail Shoes—As was the case with department store trade,
sales of shoes at retail rose less than is usual in September
over the preceding month and they totaled one per cent
smaller than in September a year ago, because of the few
er trading days in the current period. Department stores
sold a 2 per cent larger dollar volume of shoes than last
September, but dealer sales were 8 per cent lighter in the
comparison and thus effected the decrease in the aggregate.
The gain in the total over a month earlier amounted to
close to 50 per cent. At the end of September, retail in
ventories of shoes had risen 4 per cent over August 31 but
continued under the year-ago level by this same percent
age.
Retail Furniture—The dollar volume of furniture and
housefurnishings sold during September by reporting deal
ers and department stores increased seasonally by one third
over that of the preceding month and exceeded the Septem
ber 1939 volume by 8 per cent. This latter percentage in
crease was the smallest for any month this year since March.
In the monthly comparison, department store sales of furni
ture and housefurnishings rose much more than did those
by dealers, but no great difference in trend was noted in
the yearly comparison. Little change took place in size
of inventories between August 31 and the close of Septem
ber when they were around 3 per cent heavier than in 1939
at the same time.
Page 5
SALES OF INDEPENDENT RETAIL STORES
(As compiled by the Bureau of the Census)
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....................
Per Cent Change
Illinois Indiana
+ 5.1
+0.5
+ 3.6
— 0.2
— 1.2
+3.1
+ 0.2
— 2.7
— 4.8
— 7.4
+10.4
— 1.1
+ 5.6
+0.8
+11.6
+6.5
+17.3
+8.6
+13.5
+22.0
*Includes classifications other than
Sept. 1940 from Sept. 1939
Iowa Michigan Wisconsin
— 2.8
— 9.6
+ 0.7
—'{L3
— 3.0
— 2.2
+ 5.3
+ 6.1
+ 3.7
+ 9.7
— 5.4
+11.8
+ 9.8
— 5.i
+ 6.4
+20'.8
+33.0
+ 0.3
— 6.1
+ 3.4
+ 2.1
— 9.6
+ 0.4
+ 3.1
+12.9
+ 3.3
+31.0
listed.
Wholesale Trade—Trends in the wholesale distribution
of commodities in this district were not so favorable in
September, with sales in the aggregate for all groups report
ing to the Bureau of the Census up less than 2 per cent
over August and down 7 per cent from September a year
ago. Sales in the grocery group were markedly smaller
than in the same 1939 month, while hardware was the only
major line to show any sizable increase in the comparison.
Inventories in the majority of lines remained heavier at
the end of September than a year earlier and rose over
August 31 this year.
WHOLESALE TRADE IN SEPTEMBER 1949
Commodity
Per Cent Change from Same Month Last Year
Accounts
Net Sales
Stocks
Outstanding Collections
+ 1.7
Drugs and Drug Sundries...........
+ 0.5
+ 1.9
— 1.4
Electrical Goods...........................
+ 4.1
+ 5.5
— 4.1
+ 0.9
— 0.8
—18.6
+ 1.1
—11.6
Groceries.........................................
Hardware.......................................
+ 8.8
+16.2
+15.8
+17.3
Meats and Meat Products...........
— 4.9
0.0
— 9.7
— 5.4
Paper and Its Products...............
— 1.6
+10.4
+ 2.0
+ 2.1
+ 1-3
Tobacco and Its Products..........
— 6.9
+15.4
+ 1.3
+ 4.9
Miscellaneous.................................
— 1.8
+10.9
+ 6.0
Data furnished by Bureau of the Census, United States Department of Commerce.
The Agricultural Situation
Crops—While yield is very uneven as among areas, there
will be practically no soft corn in the Seventh Reserve dis
trict this year. Corn quality is good and the total crop
has turned out 27+ million bushels better than had been
expected on September 1. Further growth of corn was
checked late in September; since then the weather has been
unusually favorable for drying out the crop, owing to an
absence of killing frosts until late in October. On the other
hand, the light frost which killed tender vegetation on
September 25 to 27 reduced district soybean prospects 4+
million bushels and those of potatoes nearly 4 million
bushels from the September 1 forecast. Dry weather in
central and southern areas has tended somewhat to retard
fall plowing and seeding and to delay germination of winter
grains.
CROP PRODUCTION
Estimated by the United States Department of Agriculture on October 1 Condition
(In thousands of bushels, unless otherwise specified)
Seventh District
United States
Forecast Final Average Forecast
Final
Average
1940
1939
1929-38
1940
1939
1929-38
Corn.................................. 915,150 1,132,703
849,234 2,352,185 2,619,137 2,299,342
Oats.................................. 525,077
359,529 435,287 1,218,273
937,215 1,024,852
Barley.............................. 49,756a
47,199a 45,079a 308,021
276,298 225,486
Soybeans.......................... 63,539b
69,612b 21,514b
81,541
87,409
27,318
All Wheat........................ 63,395
58,683
62,426
792,332
754,971 754,685
Potatoes (white)............ 43,522
46,211
50,703
389,091
364,016 366,949
Dry Edible Beans*.......
3,962c
4,529c
3,995c
14,977
13,962 13,086
Commercial Apples----- 10,508a
17,741a
12,291af 115,162 143,085
121,755t
Tame Hay**................... 20,472
17,426
15,360
84,504
75,726
69,650
*In thousands of 100-lb. sacks. **In thousands of tons. fl934—38 average,
a—Five States including Seventh Federal Reserve district, b—Illinois, Indiana,
and Iowa, c—Michigan and Wisconsin.
The Seventh district estimates for rye and sugar beets were unchanged from a
month earlier.
Page 6
Grain Marketing—Since mid-August, domestic prices of
wheat have advanced rather steadily, being checked only
when they neared the loan level. No. 2 hard winter wheat
at Chicago, at around 88 cents on September 23 for spot
delivery, was up about 17 cents from August lows. Cash
premiums were well maintained, and this advance reflected
mainly the limited “free” supply. As prices in most
markets were still not high enough to pay the Government
loan and charges, many mills found great difficulty in getting
immediately available supplies for milling needs. This
tight situation was relieved somewhat in mid-October, as
terminal elevators at Chicago and Kansas City sold wheat
to make room for Government-owned corn. Current do
mestic prices are now greatly in excess of world wheat prices.
Quotations at Buenos Aires have been running around 50
cents; it would require an export indemnity of about 26
cents to export wheat from Gulf ports to Europe.
Prices of corn and other feed grains have advanced slightly
since late September. A major factor in sustaining corn
and other feed grain prices this year has been the Govern
ment corn loan program. Of the record October 1 corn carry
over of around 701 million bushels, it was estimated that
about 475 millions were sealed or held by the Government.
The number of grain-consuming animal units is expected to
be about 5 per cent below average, and the supply of feed
grains per animal will be the highest on record. Total indi
cated corn supply as of October 1 is 3,053 million bushels.
Although from time to time cash corn prices have eased
slightly with more liberal country marketings, producers
have apparently been unwilling to sell corn below 65
cents, Chicago basis, and the bulk of receipts at primary
markets has consisted of Government-owned com for ex
port under subsidy or for storage at terminals. The Depart
ment of Agriculture has announced that a loan rate of 61
cents is probable and that it should tend to maintain prices
of corn during most of 1941. As is the case with wheat,
domestic corn prices are greatly above export basis; in
the Argentine, where an almost desperate situation has
prevailed, corn futures went as low as 25 cents in October.
MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS
IN THE UNITED STATES
(In thousands of bushels)
Sept.
1940
Wheat’
Receipts.............................................................
Shipments..........................................................
Corn:
Receipts.............................................................
Shipments..........................................................
Oats:
Receipts.............................................................
Shipments..........................................................
August
1940
Sept.
1939
Sept.
1930-39
Avg.
38,427
17,494
46,264
19,962
37,810
24,633
34,325
21,283
29,995
12,472
19,142
11,968
22,925
11,652
14,928
8,061
6,968
5,941
13,612
7,018
12,108
10,082
10,764
6,079
Livestock and Meat Packing—Marketings and slaugh
ter of hogs continued in heavy volume during September.
However, as a result of an 8 per cent decrease in the 1940
spring pig crop and an approximate 12 per cent decline
in the fall crop, slaughter supplies of hogs in the 1940-41
marketing year are expected to be substantially smaller
than the 47,650,000 head slaughtered under Federal inspec
tion over the entire marketing year October 1939 through
September 1940. This was the largest slaughter since 1928
29. Marketings of cattle have also increased; the slaughter
supply during 1941 is not expected, however, to be greatly
different from that marketed in 1939 and 1940. Prices of
hogs have declined since the peak reached in late August,
but cattle prices have strengthened substantially.
LIVESTOCK SLAUGHTER
(In thousands)
v j • o
iL
Cattle
Yards in Seventh District:
September 1940.............................................
195
September 1939.............................................
190
Federally Inspected Slaughter:
United States:
Septemberl940..........................................
August 1940................................................
September 1939.........................................
812
842
880
Hogs
MONTHLY BUSINESS INDEXES
Lambs and
Sheep
Calves
517
441
221
265
56
59
3,168
3,045
2,885
1,469
1,489
1,635
417
432
427
AVERAGE PRICES OF LIVESTOCK
(Per hundred pounds at Chicago)
Week Ended
Months of
Oct. 19,
Sept.
August
1940
1940
1940
$11.45
Fat Cows and Heifers................ ............
8.70
8.60
8.45
Calves..............
Sept.
1939
♦1U.3U
8.45
6.45
Lambs...............
September production of packing-house commodities in
the United States remained somewhat under the quantity
sold during the period and was 2 per cent lighter than a
year earlier. Average daily volume of each item expanded
slightly over a month previous but, owing to fewer working
days in September, the aggregate for the month as a whole
was smaller than in August. With the exception of a de
cline in quotations for Iamb, lower grades of beef and veal,
and of a few pork cuts, prices averaged somewhat higher
during September than a month previous. Dollar sales,
therefore, were greater than in August. Payrolls at the
close of September and production in the first half of Oc
tober were above the corresponding period of 1939. The
major portion of shipments for export continued in Septem
ber to move to Latin America.
MEAT PACKING—UNITED STATES
Per Cent Change in September 1940 from
Sept.
August September 1930-39
1940
1939
Avg.
Tonnage produced..................................
....21
__ 18
4-97
Tonnage sold.................................................................... "
-54
+ li
+85
Dollar Bales..........................................................................
+ 6.5
—1.4
+14 0
Inventories...........................................................................
—16.9
+38.2
+7.7
Dairy Products—Though showing a full seasonal decline
from a month earlier, production of milk per cow in the
United States was 5 per cent larger on October 1 than a
year ago and the highest for the date on record. September
creamery butter output for the country as a whole was only
a little above average, but totaled almost 9 per cent more
than in the 1939 month and was above last year to an even
greater extent in the first half of October. American cheese
production in September was at a record high for the period,
surpassing the month last year by as much as 10 per cent.
Cold-storage stocks of butter are lower than a year ago,
while those of cheese are higher than for any previous
October. Prices of both cheese and butter have strengthened
seasonally.
In the Seventh district, production of reporting creamery
butter makers showed an increase of 10 per cent over
September 1939, while sales were up by a smaller per
centage. Manufacture of American cheese in Wisconsin was
6 per cent higher than a year earlier.
Credit and Finance
Weekly Reporting Member Banks —The most signifi
cant recent development in the current condition statistics
for weekly reporting member banks in the Seventh district
has been the continued uptrend in their loan volume. Loans
wise indicated.
1935-39 average = 100
Manufacturing Industries:
Durable Goods:
Employment.......................
Payrolls................................
Non-Durable Goods:
Employment.......................
Payrolls................................
Total:
Employment..................................
Payrolls....................................
Pig Iron Production:*
Illinois and Indiana..............................
Automobile Production—(U. S.):
Trucks.........................................
Casting Foundries Shipments:
Steel—In Dollars.........................................
Malleable—In Dollars..................................
In Tons.......................................
Railroad Freight Carloadings:*
Originating in Chicago Industrial Area....
Stoves and Furnaces:
Shipments..........................................................
Furniture Manufacturing:
Orders in Dollars.............................................
Shipments in Dollars......................................
Paper Manufacturing:*
Tonnage Production......................................
Petroleum Refining—(Indiana, Illinois,
Kentucky area):*
Crude Rims to Stills.......................................
Gasoline Production........................................
Bituminous Coal Production:*
Illinois, Indiana, Iowa, and Michigan.........
Building Contracts Awarded:
Residential........................................................
Total...................................................................
Meat Packing—(U. S.):
Production.........................................................
Sales Tonnage...................................................
Sales in Dollars.......................................... ’ ’'
Dairy Products:*
Creamery Butter Production........................
American Choese Production—(Wisconsin)
Department Store Net Sales:*
Chicago...................................................
Detroit....................................................
Indianapolis...........................................
Milwaukee..............................................
Other Cities...........................................
Seventh District—Unadjusted.........
Adjusted..............
t
- Sept. Aug.
1940 1940
July Sept. Aug.
1940 1939 1939
July
1939
117
133
108
122
102
109
102
106
89
94
88
87
107
111
104
108
103
108
102
108
101
106
97
103
114
126
107
117
103
109
102
107
94
98
91
92
173
168
164
120
107
94
86
75
18
49
65
106
62
46
24
65
58
99
137
116
123
114
129
109
117
108
121
105
101
93
84
74
95
90
88
73
96
88
71
63
70
66
125
109
118
114
101
98
168
134
103
152
100
68
159
142
140
124
144
96
140
126
119
123
88
89
107
111
116
113
110
103
146
139
146
141
146
143
126
129
119
119
118
116
106
94
76
100
76
63
297
176
229
159
222
149
153
167
218
133
170
137
104
117
108
107
124
102
111
117
99
106
115
110
103
116
96
103
108
99
104
116
115
128
125
158
100
108
117
113
123
134
111
157
138
126
115
125
113
93
87
101
98
100
93
118
73
71
83
76
74
74
105
104
143
119
116
112
116
105
85
74
91
86
87
83
105
69
67
75
72
71
69
99
*Daily average basis.
increased 38 million dollars in the four weeks ended October
16 to a total of $] ,025,000,000, not far below the post
depression peak of $1,063,000,000 established in September
1937. Since the first of the year, total loans of these banks
have risen $125,000,000, or by 14 per cent. They are
$150,000,000 above the corresponding year-ago level. Dur
ing the four weeks in question, investments of reporting
banks receded by 23 millions. Treasury bond holdings rose
and notes declined, principally because of the Treasury re
funding operations referred to elsewhere in these pages.
However, portfolios of Government guaranteed obligations
registered a net decline of 40 million dollars.
Securities Markets—Quoted bond prices continued firm
through September and the first three weeks of October. A
very slight recession in prices of medium grades during the
second week of the latter month was in sympathy with a
similar trend in the stock market. This minor reaction, how
ever, was subsequently corrected. Municipals and top-grade
corporates are now at all time highs, pricewise, having ex
ceeded the peak levels of 1939 and of early April 1940.
Medium grades are likewise well above the peaks of recent
years.
During September, new issues of long-term corporate
securities fell somewhat below the preceding month’s volume,
while those of municipals declined for the third successive
Page 7
month. However, that portion of the corporate issues which
was for new capital purposes, though small compared with
the volumes of past years, represented the largest monthly
total since the latter part of 1938. About 40 per cent was
made up of nine railroad equipment trust issues and the
balance of utility and industrial bonds. The issues of both
new corporates and municipal bonds in October had by the
eighteenth of the month already exceeded the September
figure. The October totals were augmented by the $108,000,
000 Southern California Edison refunding and by the
$60,000,000 New York City Water Supply issue. The
Southern California Edison issue, purchased at a rather full
price in competition with a group insurance company pro
posal, moved fairly well in spite of lack of support in some
quarters, but by October 18 the issue had not been entirely
distributed.
The United States Treasury issued $725,000,000 of 2 per
cent bonds dated October 7, 1940, and maturing June 15,
1955, callable in 1953. This issue was for the purpose of
refunding the U/2 per cent Treasury notes maturing De
cember 15. Over "$100,000,000 of the exchanges occurred
in the Seventh district.
Current Events
New State Members
Several more State banks in the Seventh district have
joined the Federal Reserve System since the last publication
of this review. New members not previously reported in
these pages include:
The Battle Ground State Bank, Battle Ground, Indiana
First State Bank of Porter, Porter, Indiana
Clear Lake Bank and Trust Company, Clear Lake, Iowa
The Brazil Trust Company of Brazil, Indiana
The Bank of Montpelier, Montpelier, Indiana
River Rouge Savings Bank, River Rouge, Michigan
The Gaylord State Savings Bank, Gaylord, Michigan
Farmers Trust Company, Van Buren, Indiana
State Savings Bank, Frankfort, Mich.
The Etna Bank, Etna Green, Indiana
The new members have total resources of over $8,500,000
and raise to 302 the number of State member banks in the
Seventh district.
Ibach Joins Reserve Examination Staff
Mr. Herbert F. Ibach, formerly Commissioner of Bank
ing for the State of Wisconsin, has been appointed by the
Board of Governors of the Federal Reserve System as an
examiner for the Federal Reserve Bank of Chicago. Mr.
Ibach assumed his duties with this bank on October 15.
Selected Seventh District Banking Data
*
*
FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS
OF CONDITION
(Amounts in millions)
Change from
Oct. 16, Sept. 18, Oct. 18,
1940
1939
1940
$—31
. $ 270
*+n
U. S. Government securities direct and guaranteed:
—20
0
.
0
—7
—25
.
Ill
+14
.
158
+18
—31
+H
269
Total Government securities...................................... .
+591
+158
. 3,102
+280
+84
1,935
Member bank reserve deposits.......................................... .
+149
+68
.
231
+137
+19
1,180
Federal Reserve notes in circulation................................ .
Ratio of total reserves to deposit and
+2.4*
0*
92.7%
Federal Reserve note liability combined................... .
♦Number of Points.
*
*
President Schaller Addresses Bankers
Kiwanis Club Hears Dunn
Mr. Charles B. Dunn, General Counsel of the Federal
Reserve Bank of Chicago, made an address on behalf of the
bank before the Kiwanis Club of Lansing, Michigan, on
October 24. Mr. Dunn’s subject was “The Organization and
Functions of the Federal Reserve System.”
Page 8
+
CONDITION OF REPORTING MEMBER BANKS
SEVENTH DISTRICT
(Amounts in millions)
Change from
Oct. 16, Sept. 18, Oct. 18,
1939
1940
1940
Assets
$+283
$+15
Loans and investments—total......................................... $3,450
+150
+38
1,025
Loans—total................................... ....... . .......................
+111
+27
623
Commercial, industrial, and agricultural loans.............
+8
+1
43
Open-market paper................ ;......... ■ ............................
+4
+5
33
Loans to brokers and dealers in securities......................
—8
0
68
Other loans for purchasing or carrying securities..........
+17
+1
126
Real estate loans..............................................................
0
0
0
Ixtans to banks.................................................................
+18
+4
132
Other loans........ ...............................................................
+111
—21
249
U. S. Treasury bills.........................................................
—177
—46
257
U. S. Treasury notes........................................................
+152
+74
1,092
U. S. Treasury bonds.......................... • • ................... ........
—19
—40
272
Obligations fully guaranteed by U. S. Government....
+66
+10
555
Other securities..............................................••••••■•••
+345
+109
2,348
Cash reserves, other than items in process of collection.
Liabilities
2,961
977
1,371
138
U. S. Government deposits.................................................
Oct. 1-16 ,
1940
20.38
Turnover velocity of demand deposits (annual rate)...
Demand deposits—adjusted............................................
Time deposits...................................................................
Inter-bank deposits.........................................................
*
*
+86
+5
+27
0
Sept.
1940
17.72
.........
.........
Fort Wayne..................... .........
.........
Indianapolis..................... .........
.........
.........
.........
.........
Total 41 cities................. .........
Sept.
1940
$2,674
95
947
31
56
199
242
59
40
505
4,848
+353
+38
+203
+27
Oct.
1939
24.23
*
BANK DEBITS, SEVENTH DISTRICT
(Amounts in millions)
*
At a meeting of bankers at the Union League Club of Chi
cago on October 16, Mr. George J. Schaller, President of
the Federal Reserve Bank of Chicago, gave an informal talk
on present day conditions as they affect the Federal Reserve
System. About 40 bankers from Chicago and the surround
ing vicinity were present.
*
Change from
Sept. 1939
—12.7
— 4.0
+13.1
+ 0.8
— 2.4
+ 2.1
— 4.2
+ 2.5
+11.7
+ 2.3
— 5.3
*
First Nine
Months of
1940
$26,775
863
8,797
293
519
1,904
2,411
538
386
4,659
47,145
Per Cent
Change from
Same Period
of 1939
+ 4.7
+ 2.9
+17.6
+ 7.8
+13.2
+ 6.1
+11.8
+*1.2
+11.6
+ 8.1
*
VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS
tfiptvipt? AT_ ■PTCRIP.'BVP. RATJTT OP CHICAGO
Items Handled
Commercial checks............................................................... . •
Non-cash collections (Bills, notes, bonds, coupons, etc.)..
Paper currency received and counted..................................
Coins received and counted.....................................•••••.• • •
Wire and other transfers of funds (Inter-and mtra-district)
Securities in and out of safekeeping.......................................
Coupons cut from securities in safekeeping...........................
Dollar Amounts
Commercial checks..........................• • • • •...................... ; • *
Non-cash collections (Bills, notes, bonds, coupons, etc.)..
Paper currency received and counted....................................
Coins received and counted........................................
Wire and other transfers of funds (Inter-and intra-district)
Securities in and out of safekeeping............... • • ............. • • •
Value of securities held in safekeeping at end of month...
Average for Each Banking
Day during
Sept. 1939
Sept. 1940
484,000
504,000
2,097
2,081
1,052,000
1,293,000
331,000
259,000
454
455
1,022
964
1,871
1,928
102,046,000
2,224,000
5,083,000
60,298
66,991,000
19,549,000
887,000,000
94,279,000
2,692,000
4,439,000
61,600
59,658,000
26,639,000
949,000,000
National Summary of Business Conditions
(By the Board of Governors of the Federal Reserve System)
INDUSTRIAL
VOLUME toof industrial
production increased sharply in September, owing mainly
a continued rise in output of durable manufactured products, and
PRODUCTION
this month a further increase is indicated. Prices of basic industrial materials
advanced in September and the first half of October.
Production—The Board’s seasonally adjusted index of industrial production,
MANUFACTURES
Index of physical volume of production, adjusted for sea
sonal variation, 1935-1939 average = 100. Durable manu
factures, non-durable manufactures, and minerals expressed in
terms of points in the total index. By months, January 1934
to September 1940.
INCOME
1934
1935
1936
PAYMENTS
1937
1938
1939
1940
U. S. Department of Commerce estimates of the amount
of income payments to individuals, adjusted for seasonal vari
ation. By months, January 1934 to September 1940 .
WHOLESALE PRICES OF BASIC COMMODITIES
PER CENT
PER CENT
100
TOTAL
FOODSTUFFS
which for three months had been at a level of 121 per cent of the 1935-39 average,
advanced to about 125 per cent in September. In the durable goods industries
increases in output were general. Steel production rose to 93 per cent of capacity,
and in the first half of October the rate was slightly higher as new orders con
tinued in large volume both from domestic and foreign sources. Steel exports
amounted to about 20 per cent of ingot-producing capacity in August, the latest
month for which data are available, with nearly three quarters of these shipments
going to the United Kingdom and Canada. Activity in the machinery, aircraft, and
shipbuilding industries advanced further in September following considerable in
creases in August, and automobile output increased sharply as volume production
of new model cars was rapidly attained. Plants producing railroad cars and loco
motives also showed an expansion in activity. Lumber production continued to rise
under the impetus of a growing volume of demand for defense program purposes.
Changes in output of nondurable manufactured goods and minerals in September
were mixed. At wool textile mills activity advanced sharply further to near the peak
reached last autumn, reflecting in part expanding production on Government
orders. At cotton mills, however, activity showed less than the usual seasonal rise,
following a sharp increase in August, and rayon deliveries declined somewhat
owing partly to a strike at plants of one large producer. Shoe production also de
clined in September. Paper production remained in reduced volume following a
high rate of output during the early summer accompanying some inventory accum
ulation at that time. Output of most metals continued large during September.
Crude petroleum production, which had been curtailed sharply during the summer,
rose considerably, but coal production, which for several months had been main
tained at high levels, showed a smaller increase than is usual at this season.
Value of new construction work started in September was lower than in July
and August, according to reports of the F. W. Dodge Corporation and the San Fran
cisco Federal Reserve Bank. The decline occurred chiefly in contracts for defense
projects which had been large in the previous two months. Awards for private
residential building showed little change from recent high levels. Awards for other
private work declined somewhat but continued considerably above the level of a
year ago.
Distribution—In September and the early part of October department store sales
showed somewhat less than the usual seasonal increase from the exceptionally high
level reached in August.
INDUSTRIAL
MATERIALS
Federal Reserve groupings of Bureau of Labor Statistics’
data. Thursday figures, January 4, 1934, to October 10, 1940.
MEMBER BANKS IN 101 LEADING CITIES
BILLIONS OF DOLLARS
1 2 ----H --------
U S. GOV'T OBLIGATIONS
Freight-car loadings rose somewhat more than seasonally in September, re
flecting to a large extent increased shipments of miscellaneous freight. Loadings of
coal, which have been large in recent months, showed less than the usual seasonal
rise.
Commodity Prices—Prices of most industrial materials, particularly lumber, steel
scrap, nonferrous metals, hides, and wool, continued to advance from the middle of
September to the middle of October, and there were also increases in some manu
factured products, notably cotton and woolen goods. Wheat prices were higher
while prices of most other foodstuffs showed little change.
Bank Credit—Commercial loans at reporting member banks in New York and 100
other leading cities continued to increase during the four weeks ending October 9,
reflecting in part seasonal demands. Holdings of United States Government obli
gations decreased further with the result that total loans and investments of these
banks showed little change.
'34
1935
Wednesday figures, September 5, 1934, to October 9, 1940.
Commercial loans based on new classification beginning May
19, 1937.
United States Government Security Prices—Prices of United States Govern
ment securities advanced in the second half of September and the first week in
October, rising close to the high level of the year reached early last April.
To All Banks in the Seventh Federal Reserve District:
BANK CREDIT AVAILABLE FOR DEFENSE PURPOSES
An opportunity to cooperate in the national defense program has been offered to commercial banks of the United
States. The National Defense Advisory Commission has prepared a form of contract whereby the Federal Government
agrees to reimburse manufacturers who have Government contracts to furnish military supplies, for expenditures made
in acquiring additional plant facilities and equipment necessary for the completion of these contracts. Such reimburse
ment is to be made by the Government in 60 equal monthly installments. Recent legislation permits the assignment of
claims against the Government; consequently, manufacturers may assign to banks as security for loans the amounts
payable under these Government contracts.
According to a test survey conducted by the Federal Reserve System for the National Defense Advisory Commission,
commercial banks throughout the country have expressed their willingness to loan at least $3,000,000,000 for emergency
defense plant construction.
The Federal Reserve Bank of Chicago has available copies of the draft of the contract known as “Emergency Plant
Facilities Contract,” which will be furnished on request to any banks interested in contracts of this type. Any further
available information will be furnished by this bank upon request.
There is quoted below the text of the “Assignment of Claims Act of 1940,” which was recently passed by Congress
and signed by the President.
George J. Schaller,
President.
AN ACT
To assist in the national-defense program by amending sections 3477 and 3737 of the
Revised Statutes to permit the assignment of claims under public contracts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That sections 3477
and 3737 of the Revised Statutes be amended by adding at the end
of each such section the following new paragraph:
“The provisions of the preceding paragraph shall not apply in any
case in which the moneys due or to become due from the United
States or from any agency or department thereof, under a contract
providing for payments aggregating $1,000 or more, are assigned to
a bank, trust company, or other financing institution, including any
Federal lending agency: Provided,
“1. That in the case of any contract entered into prior to the date
of approval of the Assignment of Claims Act of 1940, no claim shall
be assigned without the consent of the head of the department or
agency concerned;
“2. That in the case of any contract entered into after the date of
approval of the Assignment of Claims Act of 1940, no claim shall be
assigned if it arises under a contract which forbids such assignment;
“3. That unless otherwise expressly permitted by such contract any
such assignment shall cover all amounts payable under such contract
and not already paid, shall not be made to more than one party, and
shall not be subject to further assignment, except that any such as
signment may be made to one party as agent or trustee for two or
more parties participating in such financing;
“4. That in the event of any such assignment, the assignee thereof
shall file written notice of the assignment together with a true copy of
the instrument of assignment with—
“(a) the General Accounting Office,
“(b) the contracting officer or the head of his department or
agency,
“(c) the surety or sureties upon the bond or bonds, if any, in
connection with such contract, and
“(d) the disbursing officer, if any, designated in such contract
to make payment.
Notwithstanding any law to the contrary governing the validity of
assignments, any assignment pursuant to the Assignment of Claims
Act of 1940 shall constitute a valid assignment for all purposes.”
Any contract entered into by the War Department or the Navy
Department may provide that payments to an assignee of any claim
arising under such contract shall not be subject to reduction or set
off, and if it is so provided in such contract, such payments shall not
be subject to reduction or set-off for any indebtedness of the assignor
to the United States arising independently of such contract.
Sec. 2. This Act may be cited as the “Assignment of Claims Act of
1940”.
Approved, October 9, 1940.
.
@FedFRASER