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Volume 22
NOVEMBER, 1939
Number 11
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
"E'URTHER marked expansion in output of major dis- as in furniture, recorded a greater than usual decline during
A trict industries was noted in October. Gains continued October, following notable seasonal increases a month pre
into November, though at a less rapid rate since some vious. Wholesale distribution of commodities declined about
industries were approaching practical capacity levels. Total 10 per cent in the aggregate but continued well over 1938
October automobile output was held back somewhat by an volumes.
industrial dispute during a good part of the month. It is
difficult at this time to ascertain accurately whether the bulk Agriculture—After declining in late September and early
of the output by heavy industries has gone into the hands October, the general price level for farm products held
of the final consumer or whether the wave of demand this fairly steady. Cattle and hog quotations continued soft;
fall has been due chiefly to inventory buying in anticipa those for wheat and lambs were firm. Drought conditions
tion of price rises or delivery difficulties. Most phases of over a major portion of the winter wheat area have con
distribution have held at fairly high levels, although whole tinued rather serious. Prices for most meat products desale trade and some retail lines declined from a month dined and meat-packers’ dollar sales showed little change,
earlier. Construction activity, as evidenced by contracts although tonnage production and sales advanced. Butter
and permit data, likewise decreased. The general price production and sales declined more than seasonally and
level of farm commodities has shown little net change, were under the corresponding 1938 levels; both cheese and
following a reaction from the marked upswing in early butter prices continued firm. Farm cash income for the
five States which include the Seventh Reserve district ad
September.
vanced
Industry—District steel mills had advanced their rate of level. in September and was well over the year-earlier
operations further to 941/2 per cent of capacity by the
third week of November. This rate indicated the highest
Seventh District Business Activity
actual volume of output on record, and reported heavy
October,
1939 Compared with October, 1938
backlogs seemed to assure production at near-capacity
levels over the near term at least. There has been unusu
ally strong pressure on the part of customers for delivery.
PER CENT P£R CENT
Industry
DECREASE INCREASE
Increased activity among automobile, farm implement, and
railroad car manufacturers has furnished the main sources Steel Production1
of demand, although new business in the past few months Mfg. Employment
has come from diversified lines. Little additional business Mfg. Payrolls....
from foreign countries was reported by steel concerns.
Reflecting continued increases in car-building activity, there Building Contracts.
was a further sharp expansion in new orders booked by Malleable Castings Shipments.
district steel castings firms; orders for malleable castings Steel Castings Shipments
declined somewhat. The substantial rise in automobile pro Furniture Shipments
duction during the month was, however, less than seasonally Paper Shipments..
expected, because of a labor dispute which shut down one
large producer. Reports on automobile distribution show Automobile Prod., U. S
Coal Production,
highly favorable trends. Orders and shipments of district Bituminous
Illinois and Indiana
furniture manufacturers rose in October, the former counterAgriculture
seasonally. Following a sharp increase in September, new
orders at paper mills declined, but shipments and pro Farm Cash Income3.
duction continued to rise. Bituminous coal mining showed Meat-Packing Prod., U. S
a seasonal increase during October; petroleum refining Cheese Prod., Wisconsin.
activity registered a minor gain in the period. Contracts Butter Production..................................
awarded for building construction declined nearly one
third from the heavy September volume, and valuation of Cattle Receipts.
Hog Receipts
building permits in the district also decreased.
Reflecting the continued rise in general industrial activity,
Trade
there was an aggregate increase of 7 per cent in payrolls Dept. Store Sales
and 314 per cent in employment of district firms. Gains in Dept. Store Stocks.........................
wage payments and number of employes were widespread Ret. Shoe Sales.
among most industrial groups, the food products and build
Ret. Furniture Sales.
ing industries showing the only major declines.
Trade—Following a marked expansion in district depart Wholesale Trade.................................
Finance
ment store sales in September, which was due partly to
special sales promotions among Detroit stores, there was Member Bank Reserves9.
a slight decline in trade during October. However, sales Reporting Memb. Bk. Demand
Deposits, Adjusted3.
volumes continued well above 1938 levels, there being an
increase over October 1938 of 12 per cent on a daily aver Reporting Memb. Bk. Loans9...............
age basis; sales data from the larger district stores show Bank Debits.................
a year-to-year gain of only 5 per cent for the three weeks
rate, Chicago district, for week of November 21.
ended November 18. District retail trade in shoes, as well 1! Ingot
September data.
3 As of November 15.
Page 1
Finance—Loans of weekly reporting member banks in the
district have continued their expansion, again mostly in
the commercial, industrial, and agricultural classification.
The banks’ holdings of direct Government obligations, as
Manufacturing
Steel and Steel Products—Steel mills of the Chicago
district have continued to advance operations from the
unusually high level prevailing during the latter part of
October. Steel ingot output was raised 51/2 points to 94V2
per cent of capacity between mid-October and the third
week of November. Daily average pig iron production for
October in the Illinois and Indiana area rose almost 30
per cent over September. Because of reported heavy back
logs, some of which will carry over into 1940, it appears
that steel production should continue at close to capacity
levels over the near-term period.
Strong pressure for deliveries is unabated and has been
particularly heavy from railroad car builders and the
automotive industry. In some instances it remains necessary
to ration steel and, although new orders have been dimin
ishing in recent weeks, order departments still are unable
to keep up with incoming business. Most mills are booked
to capacity through the end of the year except in a few
products, among them heavy structural steel. Practically
all new business now being received is for delivery in the
first quarter of next year; there has been a heavy volume
of orders for first-quarter delivery of merchant bars and
sheets and strip. It is reported that railroad car builders
have not as yet covered first-quarter requirements, but that
several automobile makers have been buying steel require
ments rather far in advance and have been building up inven
tories somewhat. Otherwise, steel concerns believe that in
ventories for the most part are not excessive because of the
continued urgent demand for deliveries. There has been
little foreign business placed at primary steel firms, al
though inquiries have been numerous.
In mid-November price announcements for the first
quarter of 1940 still were being awaited. After showing
strength toward the last of October and early November,
scrap iron and steel displayed some weakness in the middle
of November.
well as demand deposits, have declined. Activity in the newissue market advanced slightly in October over the extremely
low September level, and bond prices have shown firming
tendencies.
was the major factor in the current increase. Tonnages
booked at malleable casting foundries declined in October,
following several months of gain, but remained substantially
heavier than in 1938. Although shipments and production
of both steel and malleable castings were accelerated con
siderably during October, they lagged well behind the
volume of incoming business.
STEEL AND MALLEABLE CASTINGS
SEVENTH DISTRICT
Steel Castings:
Malleable Castings:
October 1939
Per Cent Change
from
Sept.
Oct.
1939
1938
.... +76.9
+714.4
+509.5
....... +62.S
+146.8
....... +38.1
+130.4
....... +35.5
+162.5
....... +54.1
........
........
........
—11.2
—10.7
+30.7
+129.4
+130.6
+79.5
+74.5
+89.4
In accordance with the usual trend for the period, there
was a continued rise during October in activity at Seventh
district stove and furnace factories. Operations were 15
per cent higher than a month previous, and orders booked
and shipments expanded 10 and 20 per cent, respectively,
over the September volumes. Despite the increased pro
duction, inventories diminished moderately over the period.
As compared with October 1938, incoming business totaled
about one fifth larger and shipments were heavier by more
than 40 per cent; production showed a 25 per cent in
crease, and inventories were lower by that percentage.
Automobiles—Production of automobiles rose markedly
in October and totaled half again as large as in the 1938
month when heavy production of the 1939 models was
just beginning to get under way. However, because of an in
dustrial dispute which resulted in a shutdown by one large
producer, the October gain over September was not so great
as would usually be expected at this season. Passenger
cars and trucks manufactured in the United States numbered
PER CENT OF CAPACITY
CAPACITY
251,819 and 61,558, respectively, in October, or 56 and 127
per cent more than a month earlier. Due to widespread
RATE OF STEEL INGOT PRODUCTION
acceptance of the 1940 models, some producers are reported
to have rather large banks of unfilled orders for automo
biles. Consequently, output continued to expand further
in November, and it is indicated that the total for the month
will exceed the October volume, although estimates for
fourth-quarter production have been revised downward be
cause of the strike situation.
Owing to the fact that distributors of a few makes of
cars received their major supply of the 1940 models in
August and September and because distributors for the
large producer who was shut down part of the month were
unable to get deliveries, sales of new automobiles at whole
sale in the Seventh district recorded a moderate decline in
the aggregate for October from September. However, retail
dealer sales to users rose sharply by approximately 80 per
JAN
FEE.
MAR.
APR.
MAY
JUNE
JULY
AUG.
5EPT
OCT.
NOV.
DEC.
cent in the period and exceeded those in the month last
By weeks. Source: Iron Age.
New orders booked at district steel castings firms con year by 55 per cent. There was a less than 10 per cent gain
tinued to expand sharply in October for the third successive during October in stocks of new cars in dealers’ hands;
month and were many times greater than the rather low these inventories at the end of the month were about 40
level of last year. Buying by railroad car builders again per cent higher than a year earlier when the new models
Page 2
had not as yet been received in large volume. Used-car sales
have been fair; stocks are somewhat higher than last year.
Supplementing information on sales of reporting district
dealers are the data on registrations of new cars in Indiana,
Illinois, and Michigan for the month of October, which
totaled more than half again as heavy as in September and
over twice as large as in October last year.
THOUSANOS OF UNITS
THOUSANOS OP UNITS
600
PASSENGER
AUTOMOBILES
PROOUCTlbN AND NEW CAR REGISTRATIONS
UNITEO STATES
1335
1935
1937
1938
1939
NmnUr of now passenger automobiles produced and registered each month in the
c
®snre*: Production. October 1939; Registrations, September
1939. Sources; Production, United States Department of Commerce; Registrations,
R. L, Polk & Company,
Furniture—Following a greater than usual increase in
September, incoming business at Seventh district furniture
factories showed a counterseasonal gain of 10 per cent
during October. Furniture shipments rose 12 per cent in
the period and were about one fourth larger than in October
1938. Unfilled orders on manufacturers’ books continued
to rise—by 10 per cent—and totaled on October 31 about
85 per cent heavier than a year ago, as shipments failed by
a moderate amount to equal new orders. The rate of pro
duction was accelerated further in October to 85 per cent
of capacity, which was 8 points higher than a month earlier.
Paper and Pulp—Orders booked at district paper mills
declined during October, after showing an unusually sharp
upturn in September; but shipments and production
recorded noticeable increases and were about one third
heavier than last year. Paper mills operated at close to prac
tical capacity in October.
of the corresponding 1938 volumes. There recently has
been some evidence of an increasing proportion of private
financing of building projects.
BUILDING CONTRACTS AWARDED*
SEVENTH FEDERAL RESERVE DISTRICT
Period
Total
Contracts
October 1939................
Change from September 1939...
Change from October 1938.........
First ten months of 1939..
Change from same period 1938..
Data furnished by F. W. Dodge Corporation.
-30.0%
-32.2%
$485,767,000
+17.1%
Paper:
Orders booked (tons)...............
Orders booked (dollars)..........
Shipments (tons).......................
Shipments (dollars)..................
Production (tons)......................
Stocks at end of month (tons)
Pulp:
Production (tons)......................
Stock at end of month (tons).,
4-17.2
—20.7
Building
Total building contracts awarded during October in the
Seventh district declined 30 per cent from September and
were about one third lower than last year in the month.
The unfavorable comparison with September was due
largely to the fact that public utilities awards had been
unusually heavy in the earlier month, because of the plac
ing of further contracts for the construction of the Chicago
subway. Contracts awarded for residential building in
creased by about one fourth during October and continued
well above year-ago levels, but those for public works and
non-residential projects totaled somewhat less than one half
4-55.6%
Industrial Employment
Reflecting the continued rise during October in the gen
eral level of industrial activity throughout the Seventh dis
trict, volume of employment and payrolls recorded further
EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL
RESERVE DISTRICT
Week of October 15,1939
4-15.1
— 9.6
+25.2%
+23.5%
Building permit data for 102 cities of the Seventh district
showed a 12 per cent decrease in estimated valuation from
September to October, although the number of projects
contemplated increased slightly. Estimated cost of proposed
building for this area was 5 per cent heavier than last
October, increases in Illinois and Wisconsin offsetting de
clines in the other three States of the district.
There was a good demand for building materials during
October, with prices holding firm. As measured by the
Bureau of Labor Statistics wholesale price index, the gen
eral level of building materials prices rose 2 per cent.
Dollar volume of wholesale lumber distribution showed
a greater than usual expansion—13 per cent—in October;
retail sales of lumber registered a gain of 6 per cent.
Cement shipments, which usually decline at this season,
were. 8 per cent lower in October this year than a month
previous.. Brick deliveries in October, following a sharp
wru^ne *n ^eP^em^er> about equaled the August volume.
While lumber distribution continues to show considerable
increases over 1938 levels, shipments of cement have been
somewhat lower and brick deliveries record variations in
trend, some dealers reporting increases and others decreases
in the year-to-year comparison.
PAPER AND PULP INDUSTRY
SEVENTH DISTRICT
October 1939
Per Cent Change
from
Sept.
Oct.
1939
1938
—17.2
4-30.2
—16.5
4-18.5
4-13.8
4-33.2
4-15.8
4-33.2
4-12.5
4-27.1
4- 2.9
— 4.8
Residential
Contracts
Change from
September 15, 1939
Report
ing
Firms
No.
Wage
Earn
ers
No.
Earn
ings
(000
Omitted)
$
Wage
Earn
ers
%
Earn
ings
1,760
379
279
475
2,893
435,196
343,488
22,631
48,770
850,085
13,354
12,022
593
1,096
27,065
+8.2
+3.2
+2.1
+6.5
+5.9
+14.3
+ 5.7
+ 8.5
+10.0
+10.0
Textiles and Products..........
Food and Products...............
Chemical Products.............
Leather Products.........
Rubber Products.............
Paper and Printing................
Total...............................
384
1,029
299
172
34
732
2,650
67,015
112,064
33,806
27,480
21,230
78,009
339,604
1.322
2,926
1,028
579
650
2.322
8,827
+1.4
—7.6
+1.8
—1.2
+6.6
+3.2
—1.2
+
—
+
+
+
+
+
Total Mfg., 10 Groups..............
5,543
1,189,689
35,892
+3.7
+ 7.9
Merchandising..................
Public Utilities......................
Coal Mining........................
Construction......................
5,417
1,029
69
798
143,139
99,913
15,591
13,635
3,160
3,386
442
435
+3.0
+0.4
+7.7
—3.2
+ 3.4
+ 1.0
+38.1
— 1.5
Industrial Group
%
Durable Goods:
Metals and Products1...........
Vehicles............................
Stone, Clay, and Glass........
Wood Products......................
Total...........................
Non-Durable Goods:
Total Non-Mfg., 4 Groups. .
Total, 14 Groups..........
6.9
4.7
5.0
1.7
8.8
6.0
2.1
7,313
272,278
7,423
+1.9
+ 3.5
12,856
1,461,967
43,315
+3.4
+ 7.2
lOther than vehicles.
Data furnished by State agencies of Illinois, Indiana, Michigan, and Wisconsin.
Page 3
gains in the month. Earnings of industrial workers showed
a gain of 7 per cent from mid-September to mid-October,
while the number of wage earners increased 3y2 per cent
over the period. Despite notable increases in the past three
months, employment and payrolls for the district as a
whole are still somewhat lower than the high points of
1937. However, the employment level was about 15 per
cent higher than that prevailing in October 1938 and wage
payments were approximately 22 per cent larger. The
manufacturing industries have contributed the greater part
of this year-to-year gain; the expansion in non-manufactur
ing establishments in the comparison amounted to only
about 3 per cent in employment and 4 per cent in amount
of wage payments.
September-to-October gains were well distributed within
the various industry groups, the food products and build
ing and construction classifications furnishing the main
exceptions to the upward trend. Losses registered in the
food products group were slightly heavier than generally
occur in that industry at this season of the year. Declines
among the building industries followed the usual seasonal
trend. The metals industries showed the most notable expan
sion, with percentage increases that were heavier than in any
previous month since 1933. Nevertheless, the general level
in employment and payrolls of the metals group is still
considerably below that prevailing during the greater part
of the year 1937. In the vehicles group smaller increases
were reported, following sharp upturns in September. Wood
products registered an unusually heavy gain during the
month, and the stone-clay-and-glass products group also
showed more than the customary seasonal expansion.
Seasonal increases in activity were likewise evident in the
reports from merchandising and coal-mining groups, and
to a lesser extent in those from public utilities where gains
somewhat more than offset the slight declines shown a
month earlier.
Merchandising
Department Store Trade—There was a slight decline
during October from the preceding month in aggregate
net sales of Seventh district department stores. This was
due entirely to a substantial decrease in Detroit, following
special promotional sales in September. Other large cities
of the district recorded moderate increases in sales volumes,
ranging from 3 per cent in Milwaukee to 9 per cent in Chi
cago. As compared with last October, district department
store trade was 10 per cent larger in the current period—
the largest percentage increase in the year-to-year compari
son since last June—and with one less Saturday in October
this year, daily average sales showed a gain of 12 per
cent over the corresponding 1938 volume. Department store
stocks continued to expand during October, and the greater
than seasonal rise of 8 per cent over the end of September
brought them on October 31 to a level 4 per cent above
inventories on the same date last year. The rate of stock
turnover, however, was greater than last October and for
the ten months of 1939 amounted to 3.58 times, compared
with 3.30 times for the 1938 period.
For the three weeks ending November 18, total sales of
the larger Seventh district department stores exceeded those
of the same year-ago period by 5 per cent.
DEPARTMENT
Locality
Per Cent Change
October 1939
from
October 1938
Net Sales
Retail Shoes—Sales of shoes at retail by reporting deal
ers and department stores fell off more than is usual in
October. The decline of 30 per cent followed two months
of more than seasonal expansion and was due chiefly to a
large decrease in department store sales, as dealers sales
showed a loss of only 7 per cent. For the second successive
month, shoe sales aggregated a little under those of a year
earlier, and a further slight increase in retail inventories
of shoes carried them by October 31 to a point 7 per cent
above those of the 1938 date.
Retail Furniture—As in the retail shoe trade, sales of
furniture and housefurnishings by district dealers and de
partment stores declined more than seasonally in October,
following a greater than usual expansion in September.
Aggregate dollar volume sold showed a recession of 16 per
cent from the preceding month, with department store sales
of furniture and housefurnishings smaller by 18 per cent
and those of dealers decreasing 11 per cent. Total sales
during October exceeded those in the 1938 month by 10
per cent. Stocks of furniture and housefurnishings continued
to expand and at the end of October were 7 per cent heavier
than a year earlier.
1939
1938
— 0.6
+ 5.3
+12.8
+ 7.2
+ 8.4
+ 4.9
+ 8.0
44.0
48.9
41.8
46.8
37.8
39.9
36.3
37.2
38.4
35.9
+ 7.0
42.9
41.3
+ 7.9
+ 8.4
+ii.i
+i4.8
+ 1.4
+ 8.8
7th District.............
+10.4
+ 3.5
"■Include Fort Wayne.
Page
4
for
FRASER
Digitized
Ratio of October
Collections to
Accounts
Outstanding
End of September
Net Sales
+11.5
+ 9.4
*
•
SALES OF INDEPENDENT RETAIL STORES
Stocks End
of Month
Chicago....................
Detroit......................
Fort Wayne.............
Indianapolis.............
Milwaukee...............
Other Cities*...........
+20.2
+13.6
Per Cent
Change
First Ten
Months 1939
from Same
Period 1938
SALES
Indexes of department store sales in the Seventh district, with and without
adjustment for seasonal variation, 1923-1925 averaSe=100. By months, January 1929
through October 1939.
#
DEPARTMENT STORE TRADE IN OCTOBER 1939
STORE
(Aa compiled by the Bureau of the Census)
Per Cent Change October 1939 from
October 1938
Iowa Michigan Wisconsin
______
Indian
Indiana
Illinois
+10.3
+ 4.0
+ 7.1
+10.5
Total All Groups*................................ +J2-5
+12.5
+ 5.6
+ 5.8
+ 4.8
+10.2
+13.4
Apparel Group....................................... +13
—
3.9
—
2.5
—
1.6
—
1.6
+
0.3
Drug Stores
— 5.3
— 5.4
— 3.0
— 8.5
— 5.8
Food Group..................
+ 9.7
+21.9
+19.1
+18.3
Furniture and Appliances.................... +18.1
+ 3.3
+11.7
+12.9
+16.3
+ 4.4
Hardware Stores................... •
+22.0
+ 7.1
+25.3
+ 9.5
+16.8
Lumber and Building Materials
+25.9
+67.4
+24.2
+47.5
Motor Vehicle Dealers........................ +68.2
♦Includes classifications other than those listed.
Wholesale Trade—Sales of commodities at wholesale in
the Seventh district declined almost 10 per cent in the aggre
gate for October from the preceding month, according to
data collected by the United States Department of Com
merce. The meat and electrical goods trades recorded in
creases over the period of 5 and 18 per cent, respectively,
but grocery sales were off by 25 per cent and other major
groups experienced declines averaging around 5 per cent.
Total sales of smaller groups showed little change from
September. In the comparison with last October, the dollar
volume sold by most groups was heavier in the month this
year, the increase in the aggregate amounting to 11 per
cent. Wholesale inventories rose during October in the
majority of lines, and at the end of the month they totaled
8 per cent heavier than a year earlier.
FARM
CASH
INCOME
WHOLESALE TRADE IN OCTOBER 1939
Per Cent Change from Same Month Last Year
Commodity
Net Sales
Stocks
Accounts
Outstanding Collections
+ 2.3
0.0
+ 5.6
b 7.5
+17.5
+24.4
+43.5
b 2.5
+ 7.3
+ 6.6
bl2.9
— 1.6
+16.5
+ 9.1
+14.0
b 8.5
0.0
+ 5.4
+ 8.7
b26.7
+24.5
b 7.3
+13.2
+20.7
+ 9.0
+ 5.4
+ 5.6
blO.l
+15.4
+ 9.7
+ 5.0
Miscellaneous..................................
+18.3
Data furnished by Bureau of the Census, United States Department of Commerce.
Agriculture
The 1939 corn crop exceeded that of last year despite
a reduction in acreage. Yields were unusually high; the
average per acre in Iowa, Illinois, and Indiana was the
largest on record, with that in the two first named States
reaching 511/) bushels. Returns of 100 bushels per acre
were not uncommon. Factors in the excellent crop this year
were the intensive use of hybrid seed and restriction of acre
age to more fertile land, together with ideal weather for
growing and maturing the corn crop. Production of soybeans
this year was the highest on record, due to high yields and
increased acreage.
CROP PRODUCTION
Estimated by the United States Department of Agriculture on the Basis of
November 1 Condition
(In thousands of bushels, unless otherwise specified)
Seventh District
United States
Preliminary Final Average Preliminary Final
Average
1939
1938 1928-37
1939
1938
1928-37
Corn.............................. 1,124,515 1,038,749 847,142
2,591,063 2,542,238 2,309,674
Soybeans.......................
65,376a
46,675a 17,045a
79,689
57,665
21,833
Cowpeas........................
918b
820b
513b
7,875
8,474
6,357
Buckwheat...................
580a
684a
849a
5,905
6,682
7,964
Beans (dry edible)1...
4,210c
4,675c 3,885c
14,137
15,268
12,638
White Potatoes...........
48,954
53,457 53,056
361,765
371,617
372,258
Cabbage*......................
164a
315a
196a
1,073
1,496
1,082
Onions1..........................
2,765a
2,715a 3,030a
17,155
14,930
13,797
*In thousands of 100-lb. sacks. *In thousands of tons, a—Five States including
Seventh Federal Reserve district, b—Illinois and Indiana, c—Michigan and
Wisconsin.
Grain Marketing—The movement of wheat at interior
primary markets in the United States declined sharply in
October and fell below the year-earlier level. Wheat prices
held fairly firm throughout most of October and early No
vember. There were erratic fluctuations reflecting changes
in the foreign war and political situation, but the dominant
factor in domestic price trends was the serious drought
condition over large portions of the domestic winter wheat
belt. Prices had declined from mid-September through
October 9, largely as a result of slow domestic and foreign
demand, but later recovered most of the decline. In addi
tion to continuation of the severe drought, which was only
temporarily alleviated by local rains, increased British
demand for Canadian wheat, plus unusually small domestic
receipts, served to strengthen United States quotations. The
withholding of wheat, as well as of corn, from market also
has been an important price factor this fall.
1954
1956
1939
194 D
Indexes of farm cash income, unadjusted for seasonal variation, 1923*1925 average
= 100. By months, January 1934 through September 1939.
After declining about 10 cents from mid-September
through early October, cash corn prices held fairly steady.
Quotations for No. 2 yellow corn at Chicago in mid-Novem
ber were also about 10 cents less than two months earlier
but about 5 cents higher than the low points in August.
Only fair export sales of corn were reported, but there was
a heavy movement of the grain down the Lakes for export.
Marketings of corn were much lighter than last year, despite
early maturity of the crop. Though not so favorable as in
the fall of 1938, the October corn-hog price ratio im
proved over September and indicated the profitability of
heavy feedings of livestock. There has been an increase of
about 7 per cent over last year in total number of grain
consuming animals.
The October oats movement declined sharply, and oats
prices showed considerable independent strength and con
tinued firm into November.
MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS
IN THE UNITED STATES
(In thousands of bushels)
Oct.
Wheat*
1939
Receipts...................................................................... 19,584
Shipments.................................................................. 16,966
Corn:
Receipts.....................................................................
32,110
Shipments.................................................................. 13,204
Oats:
Receipts....................................................................
6,262
Shipments................................................................
6,193
Sept.
1939
37,810
24,633
Oct.
1938
27,266
23.759
Oct.
1929-38
Avg.
24,339
20,445
22,925
11,652
47,417
19,562
19,397
10,374
12,108
10,082
7,569
5,743
7,753
6,179
Livestock and Meat Packing—There was a seasonal
expansion during October in receipts of cattle, hogs, and
calves at public stockyards in the United States; these
LIVESTOCK SLAUGHTER
(In thousands)
Cattle
Yards in Seventh District,
October 1939........................................
October 1938........................................
Federally Inspected Slaughter,
United States:
October 1939........................................
September 1939...................................
October 1938........................................
October 1929-38 average...................
Hogs
Lambs and
Calves
Sheep
...........
...........
199
195
553
557
233
283
75
74
...........
...........
...........
...........
893
880
884
948
3,545
2,885
3,311
3,298
1,585
1,635
1,638
1,747
482
427
470
486
AVERAGE PRICES OF LIVESTOCK
(Per hundred pounds at Chicago)
Native Beef Steers (average)..............
Fat Cows and Heifers...........................
Hogs (bulk of sales)...............................
Lambs.......................................................
Week Ended
Nov. 18,
1939
............... $ 9.30
...............
7.65
...............
9.00
...............
6.05
........... ..
9.15
Oct.
1939
$ 9.75
8.15
10.50
6.85
9.30
Months of
Sept.
Oct.
1939
1938
$10.30
$10.55
7.85
8.45
10.50
10.50
7.55
7,90
9.55
8.15
Pag* 5
marketings continued heavier than 1938 volumes. Receipts
of sheep and lambs failed to increase as is usual in the
month. Cattle and hog prices declined considerably in Octo
ber and the first three weeks of November, following brief
strength in September. Prices for lambs continued relatively
firm. Shipments of cattle and calves to feed lots have been
unusually heavy this season; it was estimated that cornbelt farmers bought about one third more Stocker and
feeder cattle between July 1 and October 1 this year than
they did in 1938.
Tonnage sales by meat packers during October were
the heaviest since May 1934 and slightly greater than cur
rent production. Employment in the industry was estimated
at the end of October to be 4 per cent higher than a month
earlier. In general, prices of packing-house commodities
continued to weaken in October and early November, and
by mid-November prices of some cuts, such as pork loins,
were lower than those prevailing before the outbreak of
war in Europe. Meat-packing production continued to ex
pand in the first half of November, but declined in the
third week of the month to a level under that of a year ago.
Cheese prices through October and the first three weeks of
November held earlier gains, and cold-storage stocks re
mained below average.
Credit and Finance
Member Banks—Preliminary data for the condition on
October 2 of all Seventh district member banks indicate
a continued growth of deposits in which all groups of banks
shared. Total deposits increased by 281 million dollars, or
4 per cent, since June 30. Investments declined over the
three-month period, more markedly in the case of banks in
smaller communities than in the larger centers. Loans of
Chicago member banks increased 26 millions, or enough
to offset a net decline in loans for all other banks in the
district.
ALL
MEMBER
BANKS
SEVENTH
DISTRICT
HEAT PACKING—UNITED STATES
Per Cent Change in October 1939 from
Sept.
Oct.
Oct.
1939
1938 1929-38 Avg.
Tonnage produced........................................................... +10.2
+9.4
+5.2
Tonnage sold.................................................................... +3.6
+7.3
+2.0
Dollar sales...................................................................... — 1.4
+1.3
+5.2
Inventories....................................................................... — 5.7
+9.1
—21.3
Reflecting largely demand for lard, oleo, shortening, and
industrial oils from neutral countries in western Europe,
export shipments of packing-house products increased in
October. Foreign prices were generally up to Chicago parity,
except that realizations for lard in Great Britain were
slightly below this basis. However, some lard was con
signed to the United Kingdom. Neither Britain nor France
has as yet placed war orders for meats or fats from the
United States, although these belligerents have bought meats
from Argentina and Uruguay.
Imports of animal products into the United States have
been sharply reduced since the war began.
Dairy Products—Following unusual deterioration during
September, pastures in the district declined about seasonally
in October, and on November 1 were in much poorer condi
tion than last year for the area as a whole. However, heavy
feeding of grains and concentrates kept the district milk
flow well above the average and close to year-earlier levels;
there was about the usual seasonal decline in milk produc
tion over the month. October creamery butter manufacture
as well as sales declined somewhat more than seasonally
from September and were about 10 per cent lower than in
October last year. Butter make in the United States likewise
showed full seasonal declines during the period and, with
consumer demand evidently well sustained, United States
cold-storage stocks of butter again declined more than is
usual at this season. Butter prices showed little net change
in October, maintaining the gains of a month previous. In
the first three weeks of November added strength carried
wholesale quotations for 92 score butter at Chicago to 30
cents, the highest since February 1938.
There was a somewhat less than seasonal decline of 5
per cent during October in production of American cheese
in Wisconsin. The level of cheese prices has maintained
cheese production at a relatively higher rate than that of
butter; cheese manufacture continued slightly above yearago volumes. Sales of cheese from primary Wisconsin points
declined about 11 per cent in October from September.
Page 6
Selected items of condition by call dates from March 27, 1929, through October
2, 1939.
Commercial, industrial, and agricultural loans of weekly
reporting member banks in the district have continued their
recently expanding trend, total loans of these larger banks
increasing 29 million dollars during the four weeks ended
November 15. Net holdings of direct Government obliga
tions declined by 62 millions, principally in the Treasury
bill category, while holdings of guaranteed obligations rose
by 18 millions, chiefly reflecting acquisitions of the new
R.F.C. notes recently issued. Demand deposits adjusted de
clined 23 million dollars, registering a decrease in each of
the last three weeks of the period.
Seventh district member bank reserves declined 14 mil
lion dollars between October 18 and November 15. An
excess of 42 million dollars in Treasury receipts over dis
bursements, principally due to the sale of R.F.C. notes,
together with a seasonal increase in currency circulation
amounting to 13 million dollars, was only partly offset by
a gain in commercial and financial funds through the
clearings system and other minor factors.
Securities Markets—The October total of new long-term
corporate bond issues amounted to over 170 million dollars.
This represents a fairly sizable volume in comparison with
recent months, but about 80 per cent of the total was made
up of two large eastern utility refundings which were
privately placed with institutional investors and insurance
companies. The principal public underwritings consisted of
railroad equipment trusts issued largely to finance purchases
of new freight cars. The volume of issues representing new
capital continued extremely restricted. The October amount
of new municipal bond issues, though still far from heavy,
showed a gain over a month previous. Improved volume of
underwriting continued through the first half of November,
several large cities putting out new issues with compara
tively short-term maturities.
High-grade corporate and municipal bond prices have
continued to rise and by mid-November were close to last
summer’s levels. Pressure of funds seeking stable invest
ment has in the case of some short-term securities pushed
prices to levels higher than the peaks of last summer. In
the case of longer-term securities, potential demand has been
heavy in relation to the rather restricted offerings. However,
markets continue thin and all investors, with the possible
exception of some institutions, have attempted to maintain
a rather high degree of liquidity. Medium-grade bonds in
the past few weeks have not done so well price-wise as
have the more conservative liens. In sympathy with a simi
lar trend in the stock market, there was a slight decline
during the first half of November in average quotations of
this more speculative group.
During the latter part of October and the first half of
November, prices of long-term Treasury securities showed
little net change and quotations for Treasury notes in
creased moderately, following a considerable recovery in
late September and early October from their early Septem
ber lows.
After obtaining 150 million dollars of new money during
the latter half of October, 50 millions through each of
three weekly issues of 91-day bills, the Treasury returned
to its previous practice of refunding only those issues fall
ing due each week. Average yields on the first two issues in
November were nominal. In early November the Treasury
refunded at a lower interest rate the note issue maturing
December 15 and also sold 276 million dollars of one per
cent R.F.C. notes, a new money offering. About 15 per cent
of each issue went to Seventh district investors.
Selected Seventh District Banking Data
FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS
OF CONDITION
(Amounts in thousands)
Total bills and securities.................................
Bills discounted.................................................
Bills bought.......................................................
U. S. Treasury bills........................................
U. S. Treasury notes.......................................
U. S. Treasury bonds.....................................
Total Government securities.....................
Total reserves..................................................
Member bank reserve deposits.....................
All other deposits.............................................
Federal Reserve notes in circulation...........
Ratio of total reserves to deposit and
Federal Reserve note liability combined
Nov. 15,
1939
$290,870
531
0
11,457
135,593
142,845
289,895
2,583,180
1,639,906
151,045
1,052,207
Change from
Oct. 18,
Nov. 16,
1939
1938
$—10,121 $+13,760
—11
+292
—67
—69
—54,527
—8,932
—335
+10,058
+57,975
—773
+13,506
—10,040
+72,673 +347,171
—14,327 +336,403
—45,803
+68,648
+74,708
+8,746
90.8%
+0.5*
CONDITION OF REPORTING MEMBER BANKS
SEVENTH DISTRICT
(Amounts in millions)
Nov. 15,
1939
Loans and investments—total..................................
$3,155
904
Loans—total.................................................................
Commercial, industrial, and agricultural loans...
539
34
Open-market paper....................................................
30
Loans to brokers and dealers in securities............
Other loans for purchasing or carrying securities.
76
110
Real estate loans.........................................................
0
Loans to banks............................................................
115
Other loans...................................................................
92
U. S. Treasury bills...................................................
432
U. S. Treasury notes..................................................
926
U. S. Treasury bonds.................................................
Obligations fully guaranteed by U. S. Government
309
492
Other securities............................................................
A88BTS
Oct. 18,
1939
$-12
+29
+27
—1
+1
0
+1
0
4-1
—461
—2f
—141
+18
+3
2,585
944
0
Manufacturing Industries:
Employment.....................................................
Payrolls..............................................................
Pig Iron Production:
Illinois and Indiana..........................................
Automobile Production— (U. S.):
Passenger Cars..................................................
Trucks................................................................
Casting Foundries Shipments:
Steel—In Dollars.............................................
In Tons.................................................
Malleable—In Dollars....................................
In Tons.........................................
Stoves and Furnaces:
Shipments..........................................................
Furniture Manufacturing:
Orders in Dollars.............................................
Shipments in Dollars......................................
Building Contracts Awarded:
Residential........................................................
Total...................................................................
Meat Packing—(U. S.):
Production.........................................................
Sales Tonnage...................................................
Sales in Dollars................................................
Department Store Net Sales:
Chicago..............................................................
Detroit...............................................................
Indianapolis.......................................................
Milwaukee.........................................................
Other Cities......................................................
Seventh District—LTnadjusted.....................
Adjusted..........................
+16
+71
+18
—23
+5
0
+286
+60
0
♦The annual velocity of demand deposits (unadjusted) in the four weeks ended
November 15 was 19.30 times, as compared with 19.38 times in the preceding four weeks
and with 21.93 times in the corresponding period of 1938.
BANK DEBITS, SEVENTH DISTRICT
(Amounts in millions)
Sept. Aug.
1939 1939
Nov. 16,
1938
$+183
+78
+67
—1
—3
—1
+17
—4
+3
Liabilities
Demand deposits—adjusted*...................................
Time deposits..............................................................
Borrowings....................................................................
MONTHLY BUSINESS INDEXES
Data refer to Seventh district, and are not
adjusted for seasonal variation unless other Oct.
wise indicated.
1939
1923-1925 average = 100
+0.6*
•Number of Points.
Oct.
1938
Sept. Aug.
1938 1938
92
96
88
89
79
79
77
76
73
68
67
61
130
102
91
68
56
47
86
163
55
72
21
102
64
58
22
49
20
85
60
50
64
81
45
37
49
62
46
37
50
61
28
22
37
45
30
24
37
45
32
25
35
41
301
248
163
214
203
151
101
92
94
83
81
82
66
73
67
74
68
61
73
65
58
93
81
77
59
96
51
78
51
73
99
101
96
90
98
98
88
98
85
91
94
95
85
92
92
82
86
85
93
102
127
105
94
98
89
87
150
117
102
91
102
98
76
75
92
79
75
77
95
84
99
113
102
87
91
82
84
133
113
98
84
96
93
70
69
84
74
72
72
87
Chicago.............
Des Moines.......
Detroit..............
Fort Wayne....
Grand Rapids..
Indianapolis....
Milwaukee........
Peoria.................
South Bend —
32 smaller cities
Total 41 cities..
October
1939
$2,814
96
933
34
59
214
271
61
40
536
5.058
Per Cent of Increase
or Decrease from
September October
1938
1939
— 8.1
— 6.7
+ 5.4
— 2.9
+20.2
+11.5
+ 5.8
+10.4
+20.5
+ 3.2
+ 9.2
+ 9.8
+ 9.5
+ 7.5
+ 5.1
— 1.0
+24.1
+11.8
+13.0
+ 8.3
+ 1-7
— 1.2
TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK
OF CHICAGO AND DETROIT BRANCH
'(Exclusive of Treasury checks and of non-transit items drawn on own bank)
Total country and city check clearings:
Pieces.....................................................
Amount.................................................
Daily average clearings:
Total items cleared—
Pieces.....................................................
Amount.................................................
Items drawn on Chicago—
Pieces....................................................
Amount.................................................
Items drawn on Detroit—
Pieces.....................................................
Amount.................................................
October 1939
October 1938
12,773,958
$2,482,148,360
12,136,710
$2,091,135,401
508,634
$98,726,534
483,175
$83,241,531
81,002
$50,526,000
79,247
$44,278,000
19,207
$9,715,781
20,770
$7,402,137
Page 7
National Summary of Business Conditions
(By the Board of Governors of the Federal Reserve System)
MANUFACTURING PRODUCTION
U APID expansion of industrial output continued in October, and employment
*■ and payrolls increased considerably. Distribution of commodities to con
sumers, which had increased in September, was maintained at the higher level
in October. In the first half of November industrial activity increased further but,
with production in many industries approaching capacity, the advance was less
rapid than in earlier months. Commodity prices generally showed little change
during October and the first half of November, following the sharp rise in September.
Index of physical volume of production, adjusted for
seasonal variation, 1923-1925 average=100. Durable and non
durable series expressed in terms of points in the total index.
By months, January 1934 to October 1939.
WHOLESALE PRICES
Index compiled by the United States Bureau of Labor
Statistics, 1926=100. By weeks, 1934 to week ending Novem
ber 11, 1939.
MEMBER BANKS IN 101 LEADING CITIES
U.S. GOV'T OBLIGATIONS
Production—Volume of industrial production showed a further sharp rise in
October and the Board’s seasonally adjusted index advanced from 111 to 120 per
cent of the 1923-1925 average. Marked increases in activity were reported in the
steel and steel-consuming industries and at mines. In the steel industry ingot
production in October was at a rate of 90 per cent of capacity and actual volume
of output was the greatest for any month on record. Some further increase in the
rate of output was reported in the first half of November. Pig iron production also
advanced sharply and lake shipments of iron ore, which had increased considerably
in September, continued in exceptionally large volume. Activity in the machinery
and shipbuilding industries and in most other steel-consuming lines rose in October
but by a considerably smaller amount than output of steel. In the automobile
industry, however, output showed less than the marked rise usual at this season.
This was due to the fact that plants of one large producer were closed during most
of the month by an industrial dispute. Mineral production in October was at
record levels owing chiefly to a high rate of crude petroleum output.
In the nondurable goods industries activity was generally maintained at the
high levels reached in August and September. Flour production declined sharply,
however, following an exceptionally large volume of output in September.
Value of construction contracts, as reported by the F. W. Dodge Corporation,
decreased considerably in October, reflecting principally a reduction in awards
for public construction. Private residential contracts continued in substantial
volume while awards for commercial and industrial building declined somewhat
following increases in the previous month.
Employment—Reports from leading industrial States indicate that factory em
ployment and payrolls increased sharply between the middle of September and the
middle of October. Increases were particularly large at steel mills and in related
industries. There was also a considerable increase in employment on the railroads
in October.
Distribution—Retail distribution of general merchandise in October showed
about the usual seasonal rise from the advanced September level. In the early
part of November department store sales increased considerably.
Freight-car loadings rose further from September to October, reflecting a
large increase in shipments of miscellaneous freight, which includes most manu
factured products, and smaller increases in loadings of coal, forest products, and ore.
Wednesday figures for reporting member banks in 101 lead
ing cities, September 5, 1934, to November 8, 1939. Commer
cial loans, which include industrial and agricultural loans,
represent prior to May 19, 1937, so-called “Other Loans'* as
then reported.
MONEY RATES IN NEW YORK CITY
DISCOUNT RATE
For weeks ending January 6, 1934, to November 11, 1939.
Page 8
Commodity Prices—Price changes that have occurred since the general sharp
rise in September have reflected largely particular developments in individual
commodities. From the middle of October to the middle of November prices of a
number of foodstuffs continued to decline and there were also decreases in some
industrial materials, such as print cloths, wool, tin, and steel scrap. Wheat, cotton,
and burlap advanced somewhat while prices of most other commodities, including
finished industrial products, showed little change.
Government Security Prices—Following a sharp recovery from the low of
September 21, prices of United States Government bonds showed irregular changes
during the period from October 24 through the first half of November. On Novem
ber 15 yields on long-term Treasury bonds were at 2.47 per cent as compared
with 2.79 per cent on September 21.
Bank Credit—Total loans and investments at reporting member banks in 101
leading cities increased substantially during the six weeks ending November 8,
reflecting largely purchases of Treasury bills by New York City banks. Commercial
loans continued to show moderate increases. Deposits at these banks rose to new
high levels.
DIRECTORS
AND
OFFICERS
Federal Reserve Bank of Chicago
DIRECTORS
R. E. Wood, Chicago, 111...........
C. B. Van Dusen........................
M. W. Babb.................................. . .Milwaukee, Wis.
F. J. Lewis....................................
W. J. Cummings ...
E. R. Estberg..........
F. D. Williams----N. H. Noyes....................................
MEMBER OF FEDERAL ADVISORY COUNCIL
E. E. Brown....................................
OFFICERS
G. J. Schaller.............................
H. P. Preston...............................
J. H. Dillard.................................
W. H. Snyder.................................
C. S. Young......................................
C. B. Dunn......................................
. .Assistant Cashier
.Assistant Cashier
. Assistant Cashier
.Assistant Cashier
.Assistant Cashier
. .Assistant Cashier
.Assistant Cashier
A. M. Black .... Manager, Planning Department
J. J. Endres....................................................... Auditor
P. C. Hodge............
J. C. Callahan...........................
N. B. Dawes...............................
F. A. Lindsten..........................
L. G. Meyer...............................
F. L. Purrington......................
J. G. Roberts.............................
C. M. Saltnes...........................
C. A. Phillips ...
J. L. Sweet.................................. . Statistical Adviser
W. C. Bachman..
0. J. Netterstrom
A. L. Olson............
A. T. Sihler..........
INDUSTRIAL ADVISORY COMMITTEE
Max Epstein, Chicago, 111....
W. Harnischfeger
R. R. Monroe . ...
G. B. Moxley............................. .Indianapolis, Ind.
G. W. Young...............................
DETROIT BRANCH
A. C. Marshall. .
H. L. Pierson____
L. W. Watkins. .
DIRECTORS
J. E. Davidson.............................
J. M. Dodge...............................
W. S. McLucas........................
R. H. Buss......................................
OFFICERS
R. H. Buss......................................
H. J. Chalfont. .
H. L. Diehl...............................
.Assistant Cashier
SEVENTH FEDERAL
IOWA
RESERVE DISTRICT
@FedFRASER