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Business Conditions Seventh Federal _ r Reserve DISTRICT MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 14, No. 12 November 30, 1931 General Summary ceipts and shipments at primary markets also were heavier. Production at slaughtering establishments increased over a CONTINUED low level of activity in production month previous and last October, as did that of dairy prod and trade prevailed during October in the Seventh ucts, including butter and cheese. Sales of meat-packing Federal Reserve district. Finished steel output and that of products totaled larger than in September, and distribution pig iron were light, and in only half the volume of last of butter was greater than a year ago. October which month in turn had been comparatively Features of the financial and credit situation were the quiet. The manufacture of automobiles dropped more continued expansion in borrowing at the Reserve bank and sharply than usual for the period. Shipments of steel cast further strengthening in money rates, also a slight gain in ings increased somewhat following heavier orders in Sep loans on securities by reporting member banks in the dis tember, but malleable casting shipments were less and the trict as between the middle of October and November 10. rate of operations in both types of foundries remained very Total loans and investments of these banks, however, con low. Furniture orders and shipments declined in October, tinued a downward trend, as did demand and time depos as did production of leather and of shoes, while building its. Commercial paper sales were exceptionally light in construction, as reflected in contracts awarded, showed October, and acceptance financing by banks likewise de further sharp curtailment. Building materials moved some clined to a low level. what better at retail, but wholesale distribution and manu facture thereof declined. Employment was reduced to new Credit Conditions and Money Rates low levels, with the decline in number of employes heavier than in payrolls. ' Member bank borrowing at the Reserve bank on No Wholesale distribution of commodities, as indicated by vember 10 was in considerably heavier volume than on reporting groups, compared less favorably in October with October 14. A net outflow of funds from the district in a year ago than in any previous month of 1931. The only connection with inter-district settlement for commercial gains shown over September—those in hardware and elec and financial transactions (68 millions) and a decrease in trical supplies—were seasonal in character. Department holdings of acceptances (local transactions) of about 18)4 store trade increased as is usual in October, but the decline millions, were the principal changes in factors making for from last year remained about the same as in September. increased recourse to the Reserve bank. Partially offset The retail shoe and furniture trades experienced a lower ting these developments and almost negligible changes in volume of sales than a month previous, while chain store other basic factors, were an excess of local Treasury ex sales gained moderately. penditures over receipts during the period of more than 27 Greater activity was shown in agricultural products dur million dollars, and a decrease in member bank reserve ing October than in other phases of industry. The wheat balances of substantially the same amount. The accom movement in this country was larger and exports expanded, panying table is designed to show in detail the foregoing so that the visible supply declined somewhat. Corn re changes and others of minor influence in member bank A FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Total Bills and Securities....................................... Bills Discounted........................................................ Bills Bought................................................................ U. S. Government Securities................................. Total Reserves............................................................ Total Deposits........................................................... Federal Reserve Notes in Circulation........ Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined........... ♦Number of Points. Nov. 10 1931 $268.7 69.4 96.3 100.9 562.4 303.3 492.1 70.7 Change From Oct. 14 Nov. 12 1931 $+11.2 +29.9 -20.0 +1.0 -39.9 -33.7 +5.5 -2.4* 1930 $+150.2 +53.5 +74.9 +19.7 +137.3 -51.4 CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Change From Oct. 14 Nov. 12 Total Loans and Investments............... ............... Loans on Securities................................... ............... All Other Loans......................................................... Investments................................................................ Nov. 10 1931 $2,895 992 1,081 822 Net Demand Deposits............................. ............... Time Deposits............................................ ............... 1,599 1,087 -44 -36 -338 -230 43 +24 +40 1931 $-49 +6 0 -55 1930 $-488 -259 -218 -11 +348.4 -14.6* Borrowings from Federal Reserve Bank borrowing which, it will be noted, showed an increase of about 30 million dollars between October 14 and Novem ber 10. FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between October 14 and November 10, 1931 (In millions of dollars) Changes making for increase in member bank borrowing: 1. Funds lost through inter-district settlements for com mercial and financial transactions......................................... 68.00 2. Decrease in holdings of acceptances (local transactions) .. 18.64 0.55 3. Increase in unexpended capital funds....................................... 0.07 4. Sales of gold to industry............................................................... Total................................................................................................... Changes making for decrease in member bank borrowing: 1. Excess of local Treasury expenditures over receipts........... 2. Decrease in member bank reserve balances........................... 3. Increase in reserve bank float..................................................... 4. Decrease in demand for currency.. .......................................... 5. Increase in holdings of other securities.................................... 6. Decrease in non-member clearing balances............................. 87.26 27.74 27.16 1-47 0.60 0.30 0.10 57.37 Total Excess of changes making for increase in member bank borrowing: Absorption of this excess: Increase in member bank borrowings (discounts for member banks)............................................................ 29.89 29.89 Member Bank Credit Loans on securities, as given by reporting member banks in the district, showed a gain on November 10 of about 6 million dollars over the volume on October 14; all other (commercial) loans were unchanged in the aggregate, and investments dropped approximately 55 millions, effecting a decrease of 49 millions in total loans and investments. As against November 12, 1930—the corresponding reporting date a year ago—total loans and investments declined near ly 490 million dollars on November 10, of which decrease about 260 millions was accounted for by lowered volume of loans on securities, 218 millions by all other (commer cial loans), and 11 millions by investments. Net demand deposits during the period October 14—November 10, re corded a decrease of 44 million dollars, and time deposits of 36 millions. A comparison with November 12, 1930, shows a decline of 338 millions in net demand deposits of reporting member banks and one of 230 million dollars in time deposits. During the week ended November 15, the prevailing rate charged by down-town banks in Chicago on custom ers’ prime commercial loans was quoted at 3)4 to 5)4, as against 2)4 to 5 per cent during the corresponding week of October, reflecting a more or less general firming trend in the country’s money markets. The average rate earned on loans and discounts by Chicago down-town banks dur ing the calendar month of October was 4.45 per cent, whereas in September the item had stood at 4.28 per cent and at 4.68 per cent in October 1930. In the city of De troit, the average rate earned in October of this year was 5.05 per cent, as against 5.01 per cent in September and 5.64 per cent in October a year ago. The prevailing rate on customers’ commercial loans in that city during the week ended November 15 was 5 to 5)4 per cent, or the same as that reported for the corresponding week in Oc tober. VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Oct. 1931 Chicago.................................................. . $2,7C0 Detroit, Milwaukee, and Indianapolis 1,063 Total four larger cities........................ $3,763 34 smaller centers................................. 723 Total 38 centers..................................... $4,486 Page 2 Per Cent of Increase or Decrease From Sept. 1931 Oct. 1930 +4.4 —1.9 +2.5 +3.2 +2.6 -32.0 —20.3 —29.0 —22.8 -28.1 Dealer sales of commercial paper in the Middle West, which have been declining since May, aggregated less in October than for any other month on record (January 1923), totaling 27)4 per cent below September and 83 per cent under the 1923-30 average for October. Demand remained exceptionally quiet during the entire month, despite a firming in interest rates. Supplies also continued light with only a few borrowers in the market. Selling rates generally were quoted as 4 and 5 per cent for high to 2 and 4 per cent for low, with the average charge show ing an extreme range from 2)4 and 2)4 per cent early in the month to 3)4 and 4 per cent at the close. October 31 outstandings also reflected the lessened activity and were smaller than for any corresponding date on record, declin ing more than 60 per cent from last year and the usual autumn level. A marked improvement was shown early in November, when sales for the first two weeks of the month recorded a decided gain over those for the corre sponding period of October. This increase was largely due to a better supply of paper and to some expansion in the demand. Quotations opened on November 16 at 3)4 and 4 per cent for low to 4 and 4)4 per cent for high, with most papier moving at 3)4 and 4 per cent. Operations in the Chicago bill market increased further during the four weeks ended November 10. Dealer pur chases, however, averaged less than from September 10 to October 14. This decline was more than offset by an ex pansion in receipts from Eastern markets, so that the total supply exceeded that of the earlier period by 26)4 pier cent. Sales also gained, reflecting a heavier demand from local banks and institutions. Shipments to other markets, on the other hand, were less than in the preceding period. The advance in rates was checked during the first week of November, and quotations for November 10 closed at 3 per cent for 30-day offerings to 3)4 pier cent for those of 180 days. Holdings decreased on November 10 from October 14, owing to a larger amount of maturities in the current period than from September 10 to October 14. AVERAGE WEEKLY TRANSACTIONS OF REPORTING IN THE CHICAGO BILL MARKET October 15 to November 10, 1931 DEALERS Per Cent Change in Comparison with Period from Sept. 10 to Oct. 14 Oct. 16 to Nov. 12 Bills purchased......... Bills sold..................... Holdings*................... 1931 —11.6 +101.5 —19.6 1930 +51.3 -10.6 —26.3 *At end of period. Bill transactions of accepting banks in the Seventh Fed eral Reserve district declined in October to a moderately low level, although they continued considerably in excess of the 1923-27 average for the month. New financing by means of bankers’ acceptances was less in the aggregate than at any time in the previous thirty months, while pur chases fell below those of any corresponding period since July 1930. In addition, sales showed a sharp recession from the September peak. Portfolios continued to decline. Liability for outstandings, on the other hand, increased slightly over September 30. The value of bills accepted during the first half of November totaled one-fifth greater than for the corresponding weeks of October. This expan sion reflected increased financing for sugar, iron and steel, coal, machinery, merchandise, coffee, and other goods, which more than offset a decreased volume of acceptances involving grain, canned goods, wood pulp and paper, pack ing-house products, and a few miscellaneous commodities. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change September Total value of bills accepted.......... ......... Purchases............................ Sales..................................................... Holdings*................................ Liability for outstandings*............. ......... in October 1931 October 1931 -22.7 from 1930 -60.0 -61.4 -44.2 -62.0 -46.3 +1.3 *At end of month. Security Markets The dullness prevailing during October in the Chicago bond market reflected the limited demand and the almost negligible volume of new offerings. Prices, though for the most part unsatisfactory, displayed a slight firming ten dency in the lower grade issues toward the close of the month. This factor combined with some weakening in the high grade bonds, aided partially in narrowing the spread between these classes. Rail, utility, and government issues were included among the high grade bonds which worked lower during the period. A somewhat improved tone was in evidence during the early part of November, however, and a few new municipal and public utility offerings were successfully sold. Purchasing throughout October was ex ceptionally limited, and appeared to be from scattered sources rather than concentrated in any one group of buy ers. Prices on the Chicago Stock Exchange have moved within a narrow range in recent weeks, the average price of twenty leading stocks * amounting to $49.58 on Novem ber 17, as compared with $48.85 on October 17. * Chicago Journal of Commerce. Agricultural Products The Government forecasts for Seventh district corn and beans were reduced on November 1 from the beginning of October, but those for most other crops were increased. Fall seedings are entering the winter in good condition. CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of November 1 condition (In thousands of bushels unless otherwise specified) Seventh District Preliminary Final 1931 Corn....................901,038 Oats.....................479,627 Winter Wheat.. 74,680 Spring Wheat.. 3,374 Barley................ 48.703(a) Rye..................... 8.750(a) Buckwheat.... 800(a) Flaxseed............ 186(b) Cloverseed........ 714(a) Timothy Seed.. 1.049(c) Potatoes (white) 51,823 Potatoes (sweet) 1.494(d) Sugar Beets*... 522(e) Apples (total crop).. 29.875(a) Peaches............. 7.438(f) Pears.................. 1.840(f) Grapes*............. 80(a) Dry Beans........ 6.176(g) Tobacco**........ 49,340 All Tame Hay*. 14,998 Soy Beans......... 9.982(a) Cow Peas......... 486(h) Cucumber Pickles........... 2.604(a) Broom Corn*.. 84/»(i) Cranberries***. 43 (j) United States Preliminary Final 1925-29 1930 1931 731,749 2,674,369 565,861 1,173,999 59,447 775,180 4,290 109,106 56.799(a) 215,889 8.248(a) 36,233 654(a) 10,847 348(b) 11,314 889(a) 1,387 1.244(c) 1,700 37,118 382,325 1.050(d) 73,475 513(e) 7,620 1930 2,093,552 1,358,052 612,268 251,162 334,971 48,149 7,948 21,369 1,606 1,741 343,236 62,230 9,201 Average 13.595(a) 220,244 648(f) 77,931 1.289(f) 24,215 91(a) 1,609 4.262(g) 20,369 52,685 1,647,975 15,881 79,292 8.186(a) 18^001 220(h) 7,913 163,543 53,617 27,577 2,460 22,107 1.641,437 77,850 13,323 4,407 174,474 55,210 22,123 2,403 18,432 1,357,130 94,364 7,809 4,351 3.734(a) 7 4/»(i) 40(j) 5,790 47 649 7,596 50 571 2,760,753 1,316,954 547,427 274,688 265,006 46,129 13,409 20,917 1,400 2,035 380,502 80,263 7,355 4,428 45 581 *In thousands of tons. **In thousands of pounds. ***in thousands of barrels, (a) Five states including the Seventh Federal Reserve district (b) Iowa and Wisconsin, (c) Iowa, Illinois, Wisconsin and Indiana, (d) Illinois, anc* Michigan, (f) Illinois, Michigan, Indiana and Iowa! (g) Michigan and Wisconsin, (h) Illinois and Indiana, (i) Illinois, (j) Wis consin. Grain Marketing Moderate changes in supply and demand relations aifecting the wheat market raised prices from the low levels of early October and have caused some acceleration in both movement to market and exports during recent weeks. Sudden recognition of increased future demand for North American wheat, together with reports overestimating the reduction in supplies available from other surplus coun tries, drove Chicago prices up SO per cent within a little over a month, to a point out of line with prices at Liver pool, where most of the expanded demand was expected to originate. Reaction in November, however, destroyed al most half of the gain. Exports in October exceeded somewhat the volume of a year previous, and both receipts and shipments at primary centers were larger than in October 1930, though below the five-year average for the month. Domestic mills con tributed a substantial demand, and the visible supply de clined moderately. A significant readjustment in visible supply had been pointed out by Mr. Nat C. Murray, in that the increase of 33 million bushels between July 1 and November 1 of this year compares with a 90-million bushel increase in 1930 and with a SO-million bushel average in crease for the past ten years. Corn and oats future prices followed the gain in wheat, and oats held firm into November, while corn declined with the reaction in wheat. Receipts of corn and ship ments of both grains at primary markets were larger than in September, but the movement was below average for October. Cash grain prices maintained a slight premium over the December futures throughout the gain and read justment. Movement of Live Stock An increased movement of live stock to public stock yards in the United States was evidenced during October. Cattle receipts at these points totaled 20 per cent greater than in September, which increase is seasonal, but remained under last year and the average for early autumn. Hog marketings, on the other hand, expanded more than is usual for the season. Moreover, they showed the first gain in 1931 over the corresponding month of 1930, largely be cause of a heavier supply of spring pigs and also owing to earlier marketing than a year ago. Sheep receipts re mained at a high level, but the excess over the 1926-30 average was smaller than has obtained in earlier months of 1931. Reshipments to feed lots expanded markedly dur ing October, though failing to equal the five-year average for the month. A larger movement of feeder sheep was noted than a year ago, but that of cattle was smaller. LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District, October 1931............................ Federally Inspected Slaughter, United States October 1931............................. September 1931........................ October 1930............................. Lambs and Sheep Cattle Hogs 211 845 433 103 781 687 836 3,772 2,955 3,492 1,804 1,667 1,727 406 393 438 Calves AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Native Beef Steers (average) Fat Cows and Heifers........... Calves......................................... Hogs (bulk of sales)............... Yearling Sheep......................... Lambs......................................... Week Ended Months Nov. 21 Oct. Sept. 1931 1931 1931 . . . *8.85 $8.40 *8.05 ... 5.25 5.35 5.55 6.70 8.85 5.10 5.55 4.60 4.90 5.80 6.05 Oct. 1930 *10.75 8.10 10.90 9.35 6.10 7.70 Page 3 Meat Packing Activities of slaughtering establishments in the United States showed more than a seasonal expansion during Oc tober. Production, which totaled one per cent heavier than last year or the 1921-30 average, exceeded that of a month earlier by 17 per cent. Payrolls at the close of the period also recorded a gain over September of 2 per cent in number of employes and of l1/* per cent in hours worked, although wage payments declined Al/i per cent. Also, the value of sales billed to domestic and foreign cus tomers totaled 7 per cent greater than in the preceding month, and the recession of 25 per cent from the corre sponding month of 1930 was less than evidenced in a sim ilar comparison for September. Lower price levels than a year ago continued mainly responsible for this decrease. Quotations of lard, barreled pork, dry salt meats, and steer beef advanced in October over the preceding period, but those of most pork, cow beef, veal, lamb, mutton, and smoked meat declined. November 1 inventories of pack ing-house commodities in the United States showed a sea sonal reduction in volume from the beginning of October, and remained considerably below the 1926-30 average for early autumn. A fair to good trade was experienced in domestic markets during the first week of November. October shipments for export totaled somewhat heavier than those of September, owing to increased forwardings of lard on consignment terms. Foreign demand for this commodity and for oleo oil improved during the month. On the other hand, trade in American meats was rather quiet in England and was moderate in other parts of Europe, because of heavy production on the Continent. European quotations for United States lard and fat backs remained close to the Chicago parity. Prices of most meats, which had shown an improvement during the early part of the month, closed under the United States parity. Dairy Products Seventh Federal Reserve district production of dairy products, contrary to the seasonal trend, increased in Oc tober over the preceding month. This gain was mainly the result of more cows being milked and of a greater out put per cow. Butter manufacturing, which exceeded the 1923-30 average for the first time in several months, ex panded 7 per cent over September and 6 per cent over last year. Sales, on the other hand, declined 3 per cent in October from the earlier period, although they exceeded those of a year ago and the average volume for this season. United States production of the commodity appears to have been lighter than in September or the corresponding month of 1930. Consumption remained heavy. Prices ad vanced until mid-month and then declined. Inventories were reduced 24 million pounds on November 1 from the beginning of October, which is a seasonal amount, and were only half as great as last year or the 1926-30 November 1 average. The production of American cheese in Wisconsin in creased 3 per cent during the four weeks ended October 31 compared with the preceding period, and exceeded that of last year by 40 per cent. Merchandising of the commodity from central markets of the state lagged 3J4 per cent be hind current production; it also declined 4per cent from a month earlier and 19 per cent from the usual autumn level. Total inventories of cheese in the United States decreased less than a seasonal amount on November 1 from Page 4 the beginning of October, and showed a smaller recession from last year and the 1926-30 average than had been evi denced in the preceding month. Prices eased. Coal October production of bituminous coal in Illinois aggre gated 4,043,000 tons, little more than three-fourths the volume mined in October 1930. There were 142 mines in operation, comparing with 155 a year ago, and approxi mately 40,000 men employed—10 per cent under the number last year. Prices on domestic coals have been less by more than 10 per cent in the Southern Illinois district and by 20 per cent in the Central section, than those ob taining in the fall of 1930; screenings prices, however, have varied only slightly—but the range has been a little wider this fall than last. For the year through October 31, the number of mines operated averaged 132, as compared with 149 for the cor responding period a year ago; there were 127 days worked, 16 days less than in the same months of 1930, and an av erage of 37,827 men employed—10 per cent fewer than a year ago. Production for the ten months totaled 35,189, 000 tons, or 15 per cent under the same period of 1930. United States output of 35,740,000 tons in October brought the total for the year to 317,780,000, and com pares with 44,150,000 tons mined in October a year ago and 383,792,000 during the first ten months of 1930. Com mercial stocks amounted on October 1 to 34,500,000 tons, a decrease of 1,400,000 tons from the supply on hand the same day a year ago. However, owing to contraction in the rate of consumption, these stocks represent a 39 days’ supply against only 35 days for the heavier stocks of a year ago. Industrial Employment Conditions New low levels were reached during October in Seventh district industrial employment and in each manufacturing group represented in our survey except leather, rubber, and chemical products. The downward trend in number of employes was much sharper than in payrolls, and indi cates that large numbers were laid off who had been en gaged on part-time schedules in the preceding month. The effect of this has been to increase the average weekly earnEMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group of October 15, 1931 Report Firms Wage Earners No. No. ing Earnings (000 Omitted) $ Changes From Sept. 15 Wage Earn Earn ers ings % % Metals and Products l... . Vehicles.................................. Textiles and Products.... Food and Products............. Stone, Clay and Glass.... Wood Products.................... Chemical Products............. Leather Products................ Rubber Products2............... Paper and Printing............. 772 152 161 370 148 302 107 78 8 328 154,092 136,585 29,820 56,588 9,778 27,904 14,904 16,473 6,095 43,082 3,166 3,984 490 1,355 219 477 390 254 129 1,156 -4.1 -22.5 -5.2 -6.0 -5.6 -1.4 +0.1 -4.2 -2.3 -0.4 -4.6 +7.4 -8.7 -4.8 -9.6 -2.2 -3.4 -11.8 +10.5 +2.0 Total Mfg., 10 Groups---- 2,426 495,321 11,620 -9.8 -0.3 Merchandising3.................... Coal Mining......................... Construction........................ 179 73 20 173 30,212 90,069 5,577 9,749 742 2,911 102 253 +2.0 -1.2 +5.8 -2.9 -0.0 -2.1 -6.8 -3.9 Total Non-Mfg., 4 Groups. 445 135,607 4,008 -0.4 -2.0 15,628 -7.9 -0.8 630,928 Total, 14 Groups................. 2,871 lOther than Vehicles. 2Michigan and Wisconsin. 8Illinois and Wisconsin. ings of those employed in all groups from $22.99 in Sep tember to $24.77 in October, a gain of nearly 8 per cent, although total wage payments were slightly lower in the latter month. All manufacturing groups except chemicals contributed to the decline from September in number of men, and the only groups reporting larger payrolls were vehicles, rub ber, and paper and printing. The large reduction in num ber of men in the vehicles group, consisting largely of auto mobile plants but including railway car shops as well, fol lows smaller declines in the four previous months. The gain in wage payments of this group offsets almost half of the large loss recorded in September. Non-manufacturing totals showed a fractional reduction in number of men, as construction and utilities moved lower, while smaller payrolls in three groups and no change in the merchan dising group resulted in a moderate decline in the total. Paralleling the reduction in industrial employment, ap plications at free employment offices were much larger in October, and hence the ratio for each state moved upward. The combined ratio for four states was higher than for any month in recent years with the exception of January 1931. REGISTRATIONS PER 100 POSITIONS AVAILABLE AT FREE EMPLOYMENT OFFICES Month Illinois Indiana Iowa Wiscon Four sin States 1931 October...................... September................. 1930 October...................... September................. 251 232 128 503 480 331 312 249 232 178 188 275 234 251 220 283 230 202 154 222 Manufacturing Automobile Production and Distribution Production of automobiles in the United States dropped sharply between September and October. Passenger car output totaled only 57,764, or 47 per cent less than in the preceding month, which is a greater decline than for any previous October. As compared with the corresponding month a year ago, passenger car production this October was only about half as large and represented the smallest total for any month on our record (July, 1921). Truck production of 21,727, declined 31 per cent from a month previous and 46J^ per cent from last October. Further recession took place during October in whole sale distribution of automobiles in the Middle West, as against a small increase shown in the corresponding period of 1930. Sales at retail by reporting dealers declined in number from the preceding month, while their aggregate value increased, owing principally to heavier sales of cer tain of the higher-priced cars. Used car sales were likewise slightly smaller in number than a month previous. Com parisons with a year ago remained unfavorable in both re tail and wholesale distribution, and for used car sales. Stocks, on the other hand, except of used cars, continued to be kept at exceptionally low levels and registered some further decrease between the end of September and Octo ber 31; those of used cars gained for the second successive month. Deferred payment sales in October constituted a somewhat larger proportion of retail sales by dealers re porting the item, the ratio averaging 57 per cent against 51 per cent in September and 48 per cent a year ago. Iron and Steel Products No changes of importance have developed in conditions at Chicago district steel mills. Sales did not expand no ticeably in October, and operations averaged around 25 per cent of capacity as against approximately 50 per cent a year ago and 80 per cent in October 1929. Output of pig iron in Illinois and Indiana totaled only about half that of last October and one-third that of the same month in 1929. Prices, on the other hand, of finished steel, pig iron, and old materials have been fairly stable in recent weeks. Following the expansion in orders booked shown by re porting steel casting foundries in September, shipments in October increased somewhat over the preceding month, al though production was 18 per cent smaller and new orders considerably less. At malleable casting foundries, ship ments, production, and orders totaled smaller than a month previous. Activity at both steel and malleable casting foundries remained extremely low as compared with other years. Shipments of stove and furnace manufacturers re porting to this bank expanded seasonally in October but totaled more than 25 per cent under a year ago; orders booked and production were less than in September, with the former about 35 per cent under last October and pro duction only slightly smaller than the rate in that period. Furniture The volume of orders booked by reporting furniture manufacturers in this district was seasonally lower in Oc tober than in September, the difference amounting to 14 per cent. October shipments, also, totaled less—6 per cent —the result of the smallness of orders booked in recent months. Moreover, shipments were 11 per cent in excess of current orders, so that with a small increase in cancella tions relative to new orders, the volume of unfilled orders outstanding on October 31 was considerably under that of WHOLESALE AND RETAIL LUMBER TRADE MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in October 1931 from Previous Months Class Per Cent Change From September 1931 October 1930 Companies Included New cars Wholesale— Number Sold............................... Value.............................................. Retail— Number Sold............................... Value............................................. On Hand October 31— Number........................................ Value........................................... Used cars Number Sold............................... Salable on Hand— Number........................................ Value............................................. -25.9 -35.5 -68.1 -78.1 21 21 -6.7 +9.6 -25.5 -28.6 49 49 -7.9 -5.3 -22.4 -27.2 51 51 -1.2 -22.4 51 +7.9 + 11.9 -8.7 -4.0 51 51 of Trade October 1931: Per Cent Change From Oct. 1930 Number of Firms or Yards -4.0 +0.9 -16.3 -44.5 -28.5 -30.2 13 11 10 4-13.9 +16.0 +0.8 -31.7 -21.5 -17.9 231 96 227 Sept. 1931 Wholesale Trade: Sales in Dollars........................ . Sales in Board Feet........................ Accounts Outstanding1.................. Retail Trade: Sales in Dollars............. ................. Sales in Board Feet......................... Accounts Outstanding1.................. Ratio of accounts outstanding1 to dollar sales during month Oct. 1931 Wholesale Trade................................... Retail Trade.......................................... 172.8 333.0 Sept. 1931 192.1 374.3 Oct. 1930 135.6 274.7 ‘End of Month. Page 5 a month previous, their ratio to orders booked dropping five points to 63 per cent. As compared with October 1930, orders booked were less by 35 per cent, shipments by 42 per cent, and unfilled orders by 17 per cent. Opera tions were maintained during October at a rate of approx imately 45 per cent of capacity, which compares with a rate of 46 per cent obtaining a month previous and 62 per cent a year ago. Shoe Manufacturing, Tanning, and Hides Shoe manufacturing operations in the Seventh Federal Reserve district decreased 20 per cent in October from a month earlier, contrary to the seasonal trend, and were 35 per cent under the 1923-30 average. Tanning and sales of leather also showed a recession from September and a year ago. Prices held barely steady. Chicago trading in packer green hides was much less active in October than in the preceding month, but the demand for calf skins increased. Total shipments of these commodities from the city and purchases by district tan neries, however, considerably exceeded those of Septem ber. Prices, after having declined early in the month, showed greater strength at the close. Building Material, Construction Work Considerable improvement occurred during October in retail building material lines, while wholesale lumber busi ness fell below the level of September, and brick and ce ment plants suffered a further decline in demand for their products. Board foot lumber sales of retailers gained substantially, and the 14 per cent increase in dollar sales of all materials handled by these dealers compares with a five-year average gain of Syi per cent for October over September. A ma jority of dealers have steadily reduced their stocks this year, and almost all were carrying less lumber at the end of October than a year previous. A smaller increase took place in outstanding accounts than in dollar sales, so that the ratio of accounts to sales was appreciably lower than a month earlier. Wholesale lumber dealers reported a less favorable trend in October as dollar sales declined, al though board foot sales increased slightly, owing principal ly to one firm’s expanded operations; all firms reporting on stocks showed a reduction as compared with the end of September. Cement distribution in the five states including this dis trict declined more than seasonally in each month of the third quarter, and the total for July, August, and Septem ber was 34 per cent less than in 1930, while the first six months of this year showed a decline of only 26 per cent from the same period of last year. October shipments from midwestern mills, though small, exceeded production, and stocks were consequently reduced. Clay products man ufacturers continued to operate at extremely low levels. Building Construction Construction activity during October in the Seventh Federal Reserve district, as reflected by total building con tracts awarded, dropped sharply, the total volume reported being the lowest for any month since January 1919 when the figure amounted to only slightly more than 10 million dollars. Residential contracts having already dropped to a low point in September, showed a decline of smaller pro portion. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Change from September Commodity Net Sales Groceries.............. Hardware............. Dry Goods........... Drugs.................... Shoes..................... Electrical Supplies........... Stocks Ratio of Accts. Outstand Accts. Collec ing to OUTSTAND. tions Net Sales -25.8 -35.7 -31.3 -21.9 -38.9 -20.2 -10.6 -18.1 -9.0 -14.6 -14.2 -19.1 -30.8 -6.2 -22.1 -17.9 -31.9 -29.9 -6.4 -24.3 105.7 255.8 321.9 187.8 436.6 -39.5 -11.2 -27.8 -37.9 185.7 Page 6 1931................... $18,605,650 -44% -65% $391,261,774 -39% Residential Contracts $4,841,418 -lot $78,812,273 -44% *Data furnished by F. W. Dodge Corporation. The estimated cost of proposed construction during Oc tober, as indicated by permits issued in 101 cities of the Seventh district, fell off 35 per cent from September and was 65 per cent below a year ago. The number of permits issued, however, while registering a decline of 26 per cent from last year, showed a slight gain over a month previous. Milwaukee, recording an increase of 15 per cent in esti mated cost over the September total, was the only large city that differed from the trend of the district. Merchandising Wholesale trade conditions in October proved to be less favorable than in any previous month of 1931. Gains over September of 4J4 per cent in hardware sales and of 13 per cent in electrical supply trade were seasonal in nature, while the declines of 11 per cent in groceries and 2 per cent in drugs were contrary to seasonal trend; dry goods sales were 8 per cent less and those of shoes 6 per cent smaller, which recessions are somewhat larger than usual for the period. Changes from last October may be noted in the table. Data for the ten months of 1931 show wholesale grocery sales to have been 13 per cent smaller, hardware 26 per cent, dry goods 26 per cent, drugs 15 per cent, shoes 27 per cent, and 'electrical supplies 34 per cent less than in the corresponding period of 1930. Stocks, though increas ing slightly in some lines, continue to average below a year ago. Collections during October were heavier in all reporting lines except groceries, although ratios of accounts outstanding to net sales averaged higher in half the groups. The expansion of 4 per cent for October over September in total sales of eighty-four department stores in the Seventh district, approximated that shown in the corre sponding month of the previous four years. The district DEPARTMENT STORE TRADE IN OCTOBER 1931 WHOLESALE TRADE IN OCTOBER 19.11 Per Cent Change From Same Month Last Year Total Contracts Period Locality Per Cent Change October 1931 From October 1930 Net Sales Stocks End of Month Ratio of Per Cent Change Oct. Col Ten Months lections to 1931 From Same Accounts Period 1930 Outstanding September 30 Net Sales 1931 1930 Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. -22.9 -19.0 -8.2 -12.0 -16.1 -12.4 -19.7 -12.6 -7.3 -12.2 -14.9 -15.0 -8.9 -8.3 -11.3 29.3 35.4 40.5 34.0 37.7 41.3 33.8 35.5 7th District. -19.0 -13.3 -13.4 35.0 37.5 a"gregate was affected to a considerable extent by the de cline of 21 y2 per cent recorded in the Detroit total, follow ing a heavy September volume of business which has been customary to that city in recent years. Sales of Chicago stores exceeded those of September by 13 per cent, Milwau kee sales were larger by 14 per cent, while the expansion in Indianapolis was only 6 per cent but that in smaller cities of the district totaled 19 per cent. Allowing for the differ ence in number of trading days as between September and October, district sales were 4 per cent smaller in the daily average than in the preceding month. The decline of 19 per cent from a year ago in total sales was approximately the same as that shown in a similar comparison for September, so that cumulative sales for the year to date remained 13 per cent smaller than in the corresponding period of 1930. Stocks continue gradually to expand, those on band Oc tober 31 being 5 per cent larger than a month previous, though totaling 13 per cent less than on the same date last year. October sales of reporting retail shoe dealers and the shoe sections of department stores totaled 10 per cent be low those of the preceding month, the decline, however, comparing with one of 17 per cent during the same period last year. The majority of dealers had larger sales in the comparison, department stores effecting the decline shown. Aggregate sales were 13 per cent smaller than in October a year ago, and the total for the ten months of 1931 showed a decrease of 11 per cent from the same period of 1930. A further slight expansion was noted in stocks on October 31 over a month previous, but they continued to average below the level of last year. Sales of furniture and house furnishings by reporting dealers and department stores likewise declined in October from September; the recession in total sales amounted to 11 per cent and that in installment sales by dealers to 7 per cent. As compared with October 1930, both aggregate and installment sales were about 12 per cent less. Stocks again averaged a little heavier than a month previous, though remaining almost 20 per cent lighter than a year ago. A gain of 10)4 per cent over September was recorded during October in total sales of eighteen chains, with av erage sales per unit showing approximately the same in crease. Grocery, drug, five-and-ten-cent, cigar, shoe, fur niture, musical instrument, and women’s clothing chains shared in this expansion, men’s clothing alone experiencing a decline. As compared with a year ago, however, all groups reported declines, total sales decreasing 4 per cent. MONTHLY business indices computed by federal reserve BANK OF CHICAGO otherwise“ndiratecL^wifere “gXalTla^mo^thlown^rf,6, f M th« indicated, using the monthly average for 1923-1924-1925 as month. Data refer to the Seventh Federal Re”erve distr7c? fnle^ othemSsTn^ed”) 813 rCtUrn8 reCeiVed t0 date' revisions wi" be given a base, unless the following “63 ™70 Meat Packing—(U. S.,—Sales (in dollars).................................... Casting Foundries— Shipments: Steel—In Dollars............................... In Tons............................... ™ 74, ™ ^ 74 7c 15 15 20 20 70 19 29 23 23 16 25 726 21 33 11 11 25 144 38 tin 110 44 70 79 43 Shipments (in doUars).......................... 25 ^Output*of”Butter by Creameries—l** gmlucdon. ...................... «7 Wholesale Trade— " 9 Net Sales (in dollars): Hardware.'.':::::::::::::;;::;; 3| 46 123 101 100 122 95 106 Malleable-In Dollars........... „ In Tons......................... Stoves and Furnaces—• Shipments (in dollars).......................... Furniture— • . Orders (in dollars)................................. It 3 f9 128 114 117 iSf S& !«3 105 102 42 46 57 42 3\ 48 33 48 150 62 32 7^ 7^ ^7 oc on 29 -»0 38 29 ll 39 63 33 g 112 127 123 Vill 43 65 33 « 33 54 0. 84 44 ___ 200 & fig 98 46 110 June 1930 May 1930 61 68 65 35 71 50 71 81 85 97 49 96 g 8 ?, ]l g “ 89 157 149 33 148 127 1« 94 96 122 97 95 116 115 111 106 131 120 46 56 63 90 64 64 103 155 135 157 129 \] 55 33 93 33 32 104 103 99 99 13 g 8 ?o 3? 51 fo 34 54 it If S1 3® 7? 41 f6 33 53 51 I9 55 71 102 83 71 95 73 58 88 77 46 88 48 Detroit!.......2| Indianapolis............................... 5 95 90 ul g9 7I fi7 7? M 84 *91 33 *2? HO 94 150 77 97 66 80 Other Cities................................................so Milwaukee ............. ............ 3 Seventh District............... 91 Automobile Production (U. S.j— 86 102 gg 89 7? 80 03 85 70 67 67 V, ll Vk II 99 93 39 91 “f 98 103 110 107 “4 86 105 80 74 81 81 75 70 68 70 Ig il If 93 91 72 197 93 ' 39 108 60 117 63 107 76 115 98 129 123 156 17 27 49 94 39 33 « J? 11 £ U 45 147 67 116 4? In 45 66 aa cn !2 54 U 5J 15 79 76 __ I? l\ ]\ 82 ll £ 91 So 33 93 87 84 119 134 106 Drugs................................... Shoes.................................... Retail Trade (Dept. Stores)— ' Net Sales (in dollars): Trucks..................................................... Building Construction—■ * Contracts Awarded (in dollars): Residential.......................................... Iron^and Steel—............................. Pig Iron Production:* Illinois and Indiana.......................... United States................................... ! Steel Ingot Production—(U. S.j*. . . Unfilled Orders U. S. Steel Corp.... ♦Average daily production. 41 44 « 4? 50 66 63 || 21 32 88 kq 73 95 74 61 92 61 93 115 87 95 87 96 100 103 83 99 89 73 99 70 102 139 101 116 100 110 111 85 Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) RODUCTION and employment in manufacturing industries declined further in October, while output of minerals increased more than is usual at this season. There was a considerable decrease in the demand for reserve bank credit after the middle of October, reflecting a reduction in member bank reserve balances and, in November, an inflow of gold, largely from Japan. Conditions in the money market became somewhat easier. P Production and Employment Index number of industrial production, adjusted for seasonal variation (1923-25 average = 100). FACTORY EMPLOYMENT 1927 1928 1929 1930 1931 Federal Reserve Board’s index of factory employ ment with adjustment for seasonal variation (1923-25 average = 100). Total output of manufactures and minerals, as measured by the Board’s sea sonally adjusted index of industrial production, declined from 76 per cent of the 1923-1925 average in September to 74 per cent in October. Output of steel re mained unchanged at 28 per cent of capacity in October, although it usually shows an increase for that month; in the first half of November, activity at steel mills increased somewhat. Automobile production declined sharply in October, production of shoes and woolens decreased, and cotton mill activity showed little change, although an increase is usual at this season. Output of bituminous coal increased seasonally, and there were large increases in the output of anthracite and petroleum. Volume of factory employment declined substantially from the middle of Sep tember to the middle of October. At woolen mills where an increase in employ ment is usual at this season, there was a large decrease. In the automobile and shoe industries reductions in employment were considerably larger than usual, while in the canning industry the decline was wholly of a seasonal character. In the silk goods and hosiery industries, employment increased by more than the usual seasonal amount. The November cotton crop estimate of the Department of Agriculture was 16,903,000 bales, 600,000 bales larger than the October estimate and 3,000,000 bales larger than last year in spite of a reduction in acreage. Data on the value of building contracts awarded in the period between Septem ber 1 and November 15, as reported by the F. W. Dodge Corporation, showed a continuation of the downward movement. In this period, value of contracts was 29 per cent smaller than in the corresponding period of 1930, reflecting smaller volume of construction and somewhat lower building costs. Distribution M CREDIT^ MEMBER BA All Othe Loans/ ' Total volume of freight carloadings remained unchanged in October, while load ings of merchandise decreased. Department store sales increased by somewhat more than the usual seasonal amount. Loans on SecuritiesA Wholesale Prices Investments ___________ i 1927 1928 1929 1930 1931 Monthly averages of weekly figures for reporting member banks in leading cities. Latest figures, aver ages of first three weeks in November, 1931. The general level of wholesale prices declined from 69.1 per cent of the 1926 average in September to 68.4 per cent in October, according to the Bureau of Labor Statistics. Prices of grains, cotton, and silver, after showing a rapid rise beginning early in October, declined considerably, but in the third week of November were still above their October low points. Prices of hides and petroleum were also higher in the middle of November than in early October. During this period the prices of live stock and meats declined rapidly, reflecting, in part, developments of a seasonal character. Bank Credit MONEY RATES IN NEW YORK Commercial Paper Pole Reserve Bank Discount Rale Acceptance Rale i Monthly rates in the open market in New York: commercial paper rate on 4- to 6-month paper; ac ceptance rate on 90-day bankers’ acceptances. Latest figures, averages of first 14 days in November, 1931. Page 8 Reserve bank credit, which had increased rapidly between the middle of Sep tember and the third week of October, declined by $26S ,000,000 during the follow ing four weeks. This decline reflected a large reduction in member bank and other balances at the reserve banks and also an inflow of gold, chiefly from Japan. De mand for currency, which had been on a large scale during September and the first three weeks of October, showed relatively small fluctuations after that time, and in the second week of November declined by somewhat more than the seasonal amount. ... . Loans and investments of member banks in leading cities have continued to de cline during recent weeks, and on November 18 the total volume was $500,000,000 smaller than five weeks earlier. This decrease reflected substantial reductions in loans on securities and in other loans, as well as in the banks’ holdings of invest ments. At the same time, deposits of these banks also declined with a consequent reduction in the reserve balances which they were required to hold with the reserve banks. Money rates in the open market, which had advanced sharply during October, declined somewhat early in November. Rates on prime commercial paper declined from a range of 4- 4J4 per cent to a range of 354-4 per cent, and rates on bankers’ acceptances from 354 to 2% per cent.
@FedFRASER