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1 BUSIN CONDITIONS A REVIEW BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 23 OCTOBER 19 4 0 Number 9 vi&r ■■sv*. tills ■ * THIS MONTH District Summary Industrial Activity Employment and Payrolls Merchandising Trends The Agricultural Situation Credit and Finance Current Events National Summary WALTER J. CUMMINGS, CLASS A DIRECTOR r ,o Walter J. Cummings, Class A Director One of the Class A directors of this bank, who represent the member bank interests on its Board, is Mr. Walter J. Cummings. Not only is Mr. Cummings prominent in civic and business affairs in Chicago, but also he is Chairman of the Board of the largest bank in this area and fifth largest in the country, with deposits of $1,324,000,000 at the beginning of this year. Born in Springfield, Illinois, Mr. Cummings obtained his early edu cation in the public schools of Chicago, and later received his LL.D. degree from both Loyola and Drake Universities. His first position after leaving school was as a clerk in the old Illinois Trust & Savings Bank of Chicago, since merged into the bank whose Chairman he now is. Mr. Cummings entered the manufacturing business in 1904 when he joined his brother in the McGuire-Cummings Manufacturing Company, a car-building concern, later the Cummings Car and Coach Company of which he became President. Mr. Cummings, who has been a Class A director of the Federal Re serve Bank of Chicago since January 1937, has been Chairman of the Board of the Continental Illinois National Bank and Trust Company of Chicago since February 1934. He is also a director of the Texas Corporation, The Maryland Casualty Company, the Commonwealth Edison Company, American Car & Foundry Company, and Cummings Car and Coach Company. In addition, he is co-receiver of the Chicago Railways Company and a trustee of the Chicago, Milwaukee, St. Paul, and Pacific Railroad Company. Mr. Cummings was executive assistant to the Secretary of the Treasury from March 1933 through January 31, 1934, and was the first Chairman of the Board of the Federal Deposit Insurance Corporation—from September 7, 1933, through January 31, 1934. Among his many activities, Mr. Cummings is a member of the ad ministrative council of Loyola University, a member of the advisory council to Cook County Hospital in Chicago, a trustee of the Chicago Community Trust and of the Field Museum of Natural History, and on the executive committee of the Associated Catholic Charities of Chicago. District Summary of Business Conditions APID expansion of the national defense program over recent weeks has closely affected many phases of dis trict business activity. The Seventh district, with its large industrial capacity as well as interior position, is favorably situated for defense work, and many firms in the area have received substantial orders under the program. This has been in addition to the usual fall increase in industrial output and has followed summer months which did not experience their usual decline. Consumer buying of commodities at re tail has shown notable expansion, advancing considerably more than seasonally in most lines. Although unfavorable conditions persist in some agricultural areas, breaking of near-drought conditions has materially improved district pastures and corn fields. Industry—Because of the substantially increased volume of defense orders as well as widespread industrial demand, steel mills in the Chicago district have maintained practical capacity operations. In the last week of September, ingot output in the district was at 96 per cent of capacity; despite high production, there has been a gradual growth in order backlogs. In practically all steel lines except tin plate, there has been a large volume of business in recent weeks. Pro duction of pig iron likewise has continued at an unusually high level. At district steel casting plants, new business during August increased for the fifth consecutive month, but orders at malleable casting foundries were down some what. There was a seasonally rising trend in output and orders received by district stove and furnace manufacturers, and activity in the industry was considerably greater than last year, new business being as much as 42 per cent larger than in August 1939. Operations in the machine tool in dustry continued at close to capacity. Although full-scale production in the automobile industry is not expected until October, assemblies of 1941 models have advanced at a rapid rate, and September as a whole was considerably above the 1939 month. In addition to swinging into new-model production, many automobile companies have participated in heavy defense orders. Shipments by district furniture manufacturers rose sharply during August, following the July shows, and new business continued in excellent volume, being 17 per cent greater than in August 1939. At paper mills, there was little month-to-month change in production, but volume of new orders advanced somewhat over July. Operations of soft coal mines in the area increased better than seasonally in August and were 23 per cent heavier than last year. Con sumption of gasoline apparently failed to show a seasonal increase in August and, with production maintained at a high rate, refinery stocks of gasoline were built up further. Again the highest for the period since 1929, total con struction contracts in August increased 7 per cent over July. Residential building continued in good volume, being 5 per cent heavier than last year, while total contracts awarded were up 19 per cent over a year ago, reflecting substantial increases in non-residential building and in heavy engineer ing projects. Following the set-back suffered in July, accounted for by seasonal declines in automobile production, the level of em ployment and payrolls advanced in August to that reached in June. Employment in the metals group showed further notable expansion and that in the automobile industry increased seasonally. As a result of the substantial gains in activity in most manufacturing industries, the manufacturing group as a whole recorded a gain of 15 per cent in number of employes and of 22 per cent in wages paid in comparison with August 1939. Employment data for September, when available, will undoubtedly show further marked increases over the district. Merchandising—Reflecting a sustained level of consumer purchasing power, retail trade in the district showed un usually large gains for August. There were notably better than seasonal increases over July in department store sales and in the retail shoe trade, while sales in practically all reporting retail lines were well over 1939 levels. Total sales of department stores were up 14 per cent over August 1939, while furniture sales showed a gain of 15 per cent and the shoe trade one of 16 per cent over last year. Al though there was little increase from July to August, whole sale distribution of commodities was 8 per cent higher than last year. Agriculture—With record yields of excellent quality grain in several States, the oats crop has turned out con siderably better than had been expected earlier. Prospects for corn, though still unfavorable in Indiana and parts of Illinois, have greatly improved since the breaking of the drought over many sections of the district. In accordance with usual trend, meat-packing production declined slightly during August but was 3 per cent higher than last year, while distribution of meat products showed even greater year-to-year increases. The marked improvement in pas tures over many major milk-producing areas has brought about a slackening in the seasonal decline in production SEVENTH AUGUST DISTRICT BUSINESS ACTIVITY 1940 COMPARED WITH ................... AUGUST s 0 40 30 20 10 INDUSTRY 1939 10 20 30 40 50 BO 70 80 PER CENT INCREASE PER CENT DECREASE STEEL PRODUCTION,1,,, . MFG. EMPLOYMENT MFG. PAYROLLS.................. BUILDING CONTRACTS MALLEABLE CASTING SHIPMENTS. STEEL CASTING SHIPMENTS........ FURNITURE SHIPMENTSL........ PAPER SHIPMENTS ■ ■ AUTOMOBILE PR0D.,U.S_...... BIT COAL PROD............................... AGRICULTURE FARM CASH INCOME!............. . MEAT-PACKING PR0D.,U.S.. CHEESE PROD..WIS. BUTTER PRODUCTION CATTLE RECEIPTS................ HOG RECEIPTS........................... ■ i TRADE OEPT. STORE SALES.. . DEPT. STORE STOCKS .......... RET. SHOE SALES RET. FURNITURE SALES........ WHOLESALE TRADE_________ FINANCE MEMBER BANK RESERVES!.. REP. MEMB.0K.DEMAND DEPOSITS,ADJ.!..... REP. MEMB. BK. LOANS.!.,.. BANK DEBITS...... — ms ■ 1.5 Ingot rate, Chicago district for week ending September 28. 2. July data 3. As of September 18. Page 1 of dairy products which has been unusually high for the period. Credit and Finance—During the four weeks ended September 18, reporting member banks decreased their Industrial Activity Steel and Steel Products—An increasing volume of defense orders and generally good industrial demand have caused steel producers of the Chicago district to continue their operations at practical capacity. In the last week of September, the rate of steel ingot production in this area averaged 96 per cent of capacity, around or above which rate output has been maintained for the past three months, except for weeks containing holidays. Despite this effort to prevent large backlogs of orders, there has been a gradual growth in such backlogs since the first of September. Al though deliveries on a number of products are obtainable within two to four weeks, those on certain items are extended from six to eight weeks. Hot rolled carbon bars are quite prominent in current demand, as well as the wider plates, structural shapes, and, recently, sheets. Several large orders for rails have been placed by the railroads, one such order coming from South America. Buying of steel by the auto motive industry and its suppliers, farm implement manu facturers, truck builders, drop forgers, and those firms en gaged on defense projects has been especially active, but demand for steel products has in general been well diversi fied both as to source and to product. Tin plate mills furnish one of the few exceptions in this respect. August orders for machine tools were equal to or better than the July volume; an increasingly greater proportion of machine tool buying is for defense purposes, but the major part of it still repre sents miscellaneous industrial needs. RATE OF STEEL INGOT PRODUCTION By weeks. Source: Iron Age. The price structure for finished steel products is quite firm. Announcement that base prices of major items would be continued through the fourth quarter of 1940 was made in the latter part of August, and current pig iron prices also were extended through the end of the year in early September but without formal announcement. The scrap iron and steel market of late has been exceptionally strong, and prices have risen noticeably since mid-August. Some increase in district pig iron shipments is indicated for September over August. Illinois and Indiana production of pig iron in August was at 168 per cent of the 1935-39 Page 2 holdings of securities by 69 million dollars, but loans at these banks were up 24 millions. The latter increase con tinued an upward trend in loan volume which has been evident since the first of the year. Prices of high-grade bonds have remained firm. level on a daily average basis, rising 3 per cent further over the period and being the highest for any other month since August 1929. * * * * The aggregate tonnage of orders booked by reporting Seventh district steel casting foundries increased in August for the fifth successive month. The gain, however, was much smaller than in the earlier periods, and dollar value of orders was slightly less than in July. Incoming business of malleable casting foundries fell off in August, after having recorded gains in the four preceding months. Production of both types of castings was accelerated to a much greater extent than shipments during August; the latter as well as production of steel castings remained under the volume of new orders received. Although considerable expansion in casting foundry activity took place last August, current levels continued well above those of a year ago. STEEL AND MALLEABLE CASTINGS SEVENTH DISTRICT Steel Castings: Ordere booked (tons)........................................................................... Orders booked (dollars)...................................................................... Shipments (tons)................................................................................... Shipments (dollars).............................................................................. Production (tons).................................................................................. Aucust 1940 Per Cent Change from July August 1940 1939 + 6.5 +138.6 —0.8 +99.2 +4.4 +49.0 + 6.9 +46.3 +15.9 +49.9 Malleable Castings: Orders booked (tons)........................................................................... Orders booked (dollars)...................................................................... Shipments (tons)................................................................................... Shipments (dollars).............................................................................. Production (tons)................................................................................... —13.6 —11-1 +15.5 +15.6 +33.6 * * * +15.6 +14.4 +22.6 +22.4 +29.1 * In accordance with custom, manufacturers of stoves and furnaces in this area raised their rate of operations and output in August. Production was expanded 10 per cent and factory shipments 25 per cent over the July levels. The volume of new business received during the month also increased seasonally by close to 30 per cent. All comparisons with 1939 volumes continued favorable in August, gains amounting to 42 per cent in orders, 15 per cent in ship ments, and 7 per cent in production. For the year through August, shipments of stoves and furnaces by reporting dis trict firms totaled 21 per cent heavier than for the same eight months of 1939. Automobiles—Placement by the Government with Detroit area automobile manufacturers of large orders for airplane engines, machine guns, and tanks is involving the building of new plants and the acquisition of heavy amounts of new machinery, tools, and equipment. The Government will have title to certain of the plants and machinery, and the plants in such cases will be operated by the companies for the Government. Great Britain, also, has placed a $125,000,000 order for airplane engines with a Detroit automobile man ufacturer. The assembly of 1941 model passenger automobiles ad vanced rapidly through September, but full-scale production probably will not be reached before October. The output of new models began after the middle of August and in creased just gradually until the early part of September. Consequently, August production was very light in the aggregate. Passenger automobiles manufactured in the period numbered only 46,823 and truck output amounted to 29,050 units. These volumes were each almost 25 per cent under those of last August. September production will show a sharp expansion and will be sizably greater than in the 1939 month; October should continue these trends. Execu tives of major automobile concerns expect domestic sales of 1941 model automobiles to exceed those of the 1940 model year by a moderate percentage. Present field stocks of cars are considered to be in close to normal condition for the beginning of the new-model season. August sales of passen ger automobiles over the country are reported as having declined about seasonally from July, on a daily average and dollar value basis. Although sales of used cars have been satisfactory, inventories remain relatively heavy. The clean-up of 1940 model automobile stocks by Seventh district retail dealers proceeded through August. Because these stocks were liquidated somewhat earlier this year than last and pending the introduction of 1941 models, sales totaled rather light in the period. As compared with July, the number of cars sold was about one third smaller, and it exceeded the year-ago volume by only 2 per cent. New-car stocks were reduced more than half during August in this area to a level 5 per cent under that of last year. Sales of used cars were good in the period, numbering better than 35 per cent above those in the same 1939 month. As a consequence, used-car inventories were reduced substan tially from the close of July to August 31 but showed a 15 per cent increase over a year earlier at the time. Shoe Production—August shoe production in the Seventh district registered the usual seasonal increase for the month, with output totaling about 20 per cent larger than in July. Production for the year to date has averaged 8 per cent lower than in 1939; the year-to-year decline in August alone amounted to somewhat more than this, or 12 per cent. The rate of production in 1939, however, was the highest on record, exceeding the pre-depression year of 1929 by as much as 17 per cent, or considerably more than can be accounted for by a growth in population alone. If the re mainder of 1940 continues at the level held so far relative to 1939, the annual output will be somewhat smaller than in any of the three years, 1937-39. However, district manu facturers report a normal civilian demand and anticipate that the needs of the national defense program will expand output somewhat above what would usually be expected. THOUSANDS OF PAIRS THOUSANDS OF PAIRS SHOE ‘3Q '32 ‘34 '36 PRODUCTION ‘38 Monthly averages for years 1929 through 1939; monthly totals, January 1937 through August 1940. Source: Bureau of the Census. Furniture—As is seasonally expected in August, follow ing the midsummer shows, shipments from Seventh district furniture factories rose sharply in the month this year—by one fourth—over the July volume. Only a slight increase was recorded over last August when shipments were accel erated to a much greater extent than in the current period. Incoming business totaled about the same for August as for July and exceeded that of the corresponding 1939 month by 17 per cent. With shipments less than new business, there was a continued growth over the period in unfilled orders, the volume on hand August 31 being 13 per cent larger than a month previous and 16 per cent above a year ago. Operations were raised 7 points in August to 77 per cent of capacity. Paper and Pulp—After declining for three consecutive months, bookings of new orders by district paper manu facturers rose during August above July, measured both on a tonnage and on a value basis. Shipments, however, receded against a practically unchanged level of production, with the result that inventories expanded over the period. Output of pulp increased rather sharply in August. Prices of finished paper products over the first eight months of the current year have, on the whole, been sub stantially higher than a year earlier. Wisconsin paper man ufacturers are reported to be enjoying their best year since 1920, the current status of the industry being attributed more to the price factor than to tonnage increases. Another factor stimulating domestic production has been the cur tailed volume of imports from Canada; producers in that country have been sending larger proportions of their output to Great Britain than heretofore. PAPER AND PULP INDUSTRY SEVENTH DISTRICT Paper: Orders booked (tons)............... Orders booked (dollars).......... Shipments (tons)....................... Shipments (dollars).................. Production (tons)...................... Stocks at end of month (tons) August 1940 Per Cent Change from July August 1940 1939 + 6.3 -3.3 + 9.7 +11.7 — 3.2 +5.7 — 1.4 +17.6 + + Pulp: Production (tons)...................... Stock at end of month (tons). 0.1 5.9 +12.0 +11.5 + 0.8 +8.6 +17.4 +34.7 Building—Construction contracts awarded during August in the Seventh district were again the highest for the period since 1929. The August contract volume registered a further slight increase over July, and the margin of gain over a year ago widened. Residential building continued on the upgrade, especially in one-family dwellings for owner oc cupancy, but the greater proportion of the current gains was occasioned by a larger volume of public funds allotted to the construction of public buildings, hospitals, and institu tions. Awards for industrial buildings totaled $500,000, or 12 per cent above July, but this increase was more than offset by a decline of $1,500,000 in contracts let for com mercial buildings. The aggregate gain over a year ago amounted to about $10,000,000, practically all of which was in construction for private ownership; $7,500,000 thereof was in residential and the remainder in non-residential awards. Public financing of residential building, represented mainly by funds expended by the United States BUILDING CONTRACTS AWARDED SEVENTH FEDERAL RESERVE DISTRICT Period Change from July 1940............................................... First eight months of 1940.................................. Change from same period in 1939............................ Total Contracts Residential Contracts t 62,485,000 +6.7% +19.2% 3400,035,000 +7.9% +3.4% +5.2% 8171,986,000 +17.6% Data furnished by the F. W. Dodge Corporation. Page 3 Housing Administration, was about $5,500,000 lower than a year ago. This decline, however, was counteracted by increases in non-residential building and in heavy engineering projects classified as public works, each of which showed a gain of approximately $3,000,000 in publicly-financed projects. The market for building materials was reported as strong during August, some dealers ascribing this situation to the influence of the national defense program. Wholesale price indexes compiled by the United States Bureau of Labor Statistics showed an increase of 1^2 per cent between the first week of August and early September, with the current level approximately 41/2 per cent higher than September last year. August sales increases over the unusually active month of July were of moderate proportions, wholesale lumber trade gaining about 5 per cent and cement shipments 7 per cent. Retail lumber yards reported practically no change in total dollar sales but a slight loss in lumber sales alone, and brick yards showed some decline in shipments from the level maintained a month earlier. As compared with a year ago, increases in sales were minor and consid erably smaller than those recorded a month earlier. Coal Production—Even after allowance for the sharp expansion which usually occurs between July and August, Seventh district output of soft coal increased about 8 per cent on a daily average basis over the period this year. Production was 23 per cent greater than in the same 1939 month—about the same margin of increase as shown in July. For the last four months, coal has been mined in quantities appreciably greater than a year earlier. However, this period covers the seasonally low point of the year, and cumulative output for the first eight months of 1940 has been but 10 per cent higher than in the same 1939 period. Petroleum Refining—Estimated daily average consump tion of gasoline during August in the Seventh district area declined slightly from the rate maintained a month pre vious, whereas a rising trend is normally expected over this period. Consequently, refinery stocks of gasoline at the end of August were nearly one third higher than a year earlier, the margin having widened from 23 per cent on July 31. Daily runs of crude petroleum to refinery stills in the local area were at about the same rate during August as in July, while output of gasoline receded slightly. Daily average crude oil production in the Illinois fields continued the de cline that had been evident for over two months. Railroad Freight Carloadings—During August about 8 per cent fewer freight cars were loaded daily by railroads operating in the Chicago industrial area, the decline being contrary to the normal trend at this season. An increase continued to be shown over 1939, although the favorable margin fell from around 20 per cent in June and July to 8 per cent in August. The local experience was contrary to that of all Class A railroads in the United States, whose aggregate loadings recorded an increase from July to August. Defense Contracts—Between mid-June and September 21, it is estimated that the Army and Navy have awarded about 7.4 billion dollars in contracts. Data have been se cured from tabulations of the Office of Government Reports and from various unofficial sources. Of the above total, about $5,300,000,000 was for new Navy ships, dock con struction, etc. Of the balance—roughly $2,100,000,000— over one fifth of the contracts were let in the Seventh dis trict. Awards covered a great diversity of products, ranging from adhesive plaster to locomotive cranes. In addition, a contract was awarded to the Manitowoc Shipbuilding ComPage 4 pany, Manitowoc, Wisconsin, for construction of ten sub marines. No cost was given in the Government report, but unofficial sources estimated the size of the contract at more than $60,000,000. A few of the largest awards to district firms have been grouped to give the following, approximate, descriptive data: Smokeless Powder Plant................................................................................ * Smokeless Powder............................................................................................ Machine Guns.................................................................................................... Plant alterations in connection with above machine gun order............. Engines: Airplane........................................................................................... ♦Other................................................................................................ Tank Plant......................................................................................................... Tanks................................................................................................................... ♦Trucks and Tractors........................................................................................ ♦Ammunition and related items...................................................................... ♦♦Submarines......................................................................................................... $25,000,000 43,000,000 61,000,000 20,000,000 62,000,000 26,000,000 20,000,000 33,500,000 71,000,000 9,000,000 60,000,000 ♦More than one contract included in total ♦♦Estimated Employment and Payrolls Seventh district manufacturing payrolls as a whole re covered in August from the fairly sharp set-back suffered in July. The number of wage earners actually employed as well as the wage disbursements made by manufacturers in the district during the week of August 15 returned to prac tically the same level as in the corresponding week two months earlier. Among the various industry groups, how ever, there was a wide divergence of performance. Metals and products, exclusive of vehicles, expanding more sharply than at any time since last October, continued a trend that has been upward for the past four months. The vehicles group, with the largest percentage gain recorded by any of the main industry groups during August, nevertheless failed to reach the level held prior to the July decline. Food prod ucts, in which the seasonal trend is up through July, showed some decline in August. Rubber products, which had held steady a month earlier, curtailed wage payments sharply in the current month. In most of the reporting groups, how ever, the level of employment and of payrolls was mod erately higher than that prevailing two months previously. All manufacturing industry groups with the exception of textiles and leather products employed a larger number of workers this August than a year ago. The increases ranged from less than one per cent in the food products group to EMPLOYMENT AND PAYROLLS—SEVENTH FEDERAL RESERVE DISTRICT Week of August 15, 1940 Industrial Group Per Cent Change from July 15, 1940 Wage No. of No. of Payments No. of Wage Reporting Employes (000 Employes Payments Omitted) Firms Durable Goods: Metals and Products1............ Vehicles................................... Stone, Clay, and Glass........ Wood Products...................... Total........................................ 1,764 397 269 452 2,882 465,143 293,366 21,240 48,404 828,153 $14,456 10,810 545 1,057 26,868 +4.6 +9.6 +0.7 +5.3 +6.2 +8.3 +22.0 +3.9 +9.6 +13.4 Textiles and Products........... Food and Products............... Chemical Products............... Leather Products.................. Rubber Products................... Paper and Printing................ Total......................................... 373 1,046 310 170 31 695 2,625 61,605 120,184 39,609 27,182 18,380 78,265 345,225 1,207 2,953 1,219 591 442 2,274 8,686 +5.1 —1.5 +1.1 +2.3 +4.3 +0.6 +1.0 +9.7 —4.6 +1.6 +6.8 —13.4 —0.9 —0.8 Total Mfg., 10 Groups.............. 5,507 1,173,378 35,554 +4.6 +9.6 Merchandising............................ Public Utilities.......................... Coal Mining................................ Construction............................... 5,373 1,116 50 746 139,374 103,136 7,143 13,692 3,103 3,492 173 463 —0.1 +0.1 +4.0 +4.0 —1.0 +0.3 +8.1 +4.5 Non-Durable Goods: Total Non-Mfg., 4 Groups....... 7,285 263,345 7,231 +0.3 +0.2 Total, 14 Groups........................ 12,792 1,436,723 42,785 +3.8 +7.0 ^ther than vehicles. ... . . . Data furnished by State agencies of Illinois, Indiana, Michigan, and Wisconsin. 23 per cent for metals, with an average of 15 per cent in the aggregate. In the amount of wage disbursements, chemicals and rubber products, as well as the textiles and leather goods groups, showed minor declines from a year earlier, none of them as high as 5 per cent, while increases ranged from less than 5 per cent in the food products industries to as much as 34 per cent for the metals group. The aggregate year-to-year gain in wage payments amounted to 22 per cent. Non-manufacturing industries contributed little to the August expansion, a moderate decline in the large merchan dising group being sufficient to offset the greater part of the increases contributed by other non-manufacturing divi sions. These groups as a whole employed about 3 per cent more workers than in August 1939, and were paying out approximately 4 per cent more in wage payments. The principal variation from this trend was in the coal-mining industry where the number of workers as well as wage pay ments was 12 per cent less than a year ago. Merchandising Trends Department Store Trade—An exceptionally good vol ume of business was done during August by department stores in the Seventh Federal Reserve district. A rise in aggregate sales of 321/0 per cent over the preceding month was the highest for the period on this bank’s records (since 1923). The gain of 14 per cent over last August was the heaviest in the year-to-year comparison since May 1939; in July sales had increased 9 per cent over a year earlier. The fact that there were five Saturdays in August this year ex erted some influence on the total volume of trade. Neverthe less, on a seasonally adjusted basis, daily average sales gained 12 per cent over a month previous and 13 per cent over a year ago. DEPARTMENT STORE SALES DEPARTMENT STORE TRADE IN AUGUST 1940 Per Cent Change August 1940 from August 1939 Locality Chicago..................... Detroit...................... Fort Wayne.............. Grand Rapids.......... Indianapolis............. Milwaukee................ Other Cities*........... Per Cent Change First Eight Months 1940 from Same Period 1939 Ratio of August Collections to Accounts Outstanding End of July Net Sales Stocks End of Month Net Sales 1940 1939 +10.8 4-18.1 4*12.0 4-16.3 +14.2 4-15.2 +19.4 — 1.4 + 2.5 + 6.1 + 9.3 4- 8.9 4-10.7 + 8.1 + 6.7 4- 9.2 45.1 43.0 38.3 41.5 34.4 36.5 30.5 35. i 36.3 28.6 + 7.4 39.7 36.4 4-12.8 — 4.5 + 2.0 7th District............. 4-14.2 4- 0.2 •Include Fort Wayne and Grand Rapids. Retail Shoes—In line with the favorable showing made by department store trade in August, sales of shoes at retail in the district recorded unusually large gains over both a month earlier and a year ago. Department store sales of shoes were responsible for the size of the increases—37 and 16 per cent in the respective comparisons—as dealer business rose less than one per cent over the July volume and exceeded that of last August by only 4 per cent. Al though shoe stocks were built up almost 20 per cent in the current period, they totaled more than 6 per cent lighter on August 31 than in 1939 at the same time. Retail Furniture—August sales of furniture and housefurnishings in this district showed less than the usual sea sonal increase over those of July. The aggregate dollar volume sold by reporting dealers and department stores rose only 13 per cent in the period, whereas the average gain for August in the preceding ten years was 25 per cent. However, sales continued much better than a year ago, totaling 15 per cent larger than for last August. In both the monthly and yearly comparisons, department store sales of furniture and housefurnishings increased to a consider ably greater extent than did dealer sales. Inventories, which were 4 per cent higher on August 31 than at the end of July, remained at a level about 6 per cent above that of a year earlier. * * * * SALES OF INDEPENDENT RETAIL STORES (As compiled by the Bureau of the Census) giw.. ■. -1............... ............... .................. . ............ '334 1335 1936 193:7...............133 a....................1939............... V&Wl Indexes of daily average sales of department stores in the Seventh district, with and without adjustment for seasonal variation, 1938-1039 average = 100. Bv months Jfl.nnnrv 1Q34 t Vi mu oh Anwuof 1 otn In the first half of September, the total dollar volume sold by the larger department stores of the district exceeded that of the corresponding 1939 period by as much as 2iy2 per cent. Special promotional sales held in the first week of the period this year and more favorable weather than last year in the second week of it had considerable effect on the size of this increase, although the relatively high level of con sumer purchasing power also was influential. At the end of August department store inventories were approximately the same in size, on a dollar basis, as a year ago. They rose 7 per cent over the close of July. Stock turnover in the first eight months of 1940 numbered 2.96 times, as compared with 2.87 times in the corresponding 1939 period. Per Cent Change August 1940 from August 1939 Illinois Indiana Iowa Michigan Wisconsin 4-15.0 4-13.4 +20.3 4-11.6 Apparel Group.................................... 4-16.8 4-19.6 4-18.3 +26.6 4-23.6 Drug Stores........................................ -j- 7.3 4-10.0 4- 3.0 +11.2 4- 7.1 Eating and Drinking Places........... -j- 4.8 4- 8.9 + 6.7 4- 6.1 4-8*4 Food Group........................................ -j- 0.7 4- 8.2 + 9.7 4- 4.6 Furniture-Household-Radio Group -j-17.9 4-20.4 4-10.7 +38.6 4-14.6 Hardware Stores............................... -j- 8.6 4-10.4 — 1.0 + 8.8 4-10.3 Jewelry Stores................................... 4-28.7 4-17.8 4-22.1 — "7.0 +14 .'8 Lumber and Building Materials... 4-11.2 4-16.3 4- 3.3 Motor Vehicle Dealers..................... -j-15.0 4-39.0 4-12.4 +28.2 4-13.0 •Includes classifications other than those listed. Wholesale Trade—Although Seventh district distribution of commodities at wholesale did not maintain during August the sizable gains over a year ago shown in July, it neverthe less was 8 per cent heavier in the aggregate than in the 1939 month, according to data furnished by the Bureau of the Census. Little change took place in total sales volume be tween July and August this year. In this month-to-month comparison, wholesale trade in electrical goods and meats declined, while that in drugs, groceries, paper, and mis cellaneous products increased, the last-named, substantially. Inventory trends varied among the reporting groups. Whole sale stocks of meats, hardware, and paper were up consid erably over a year ago; in other lines percentage changes Page 5 ranged from fractional decreases to moderate increases. As a whole, inventories averaged 8 per cent heavier at the end of August than last year at the same time and one per cent above those of a month previous. WHOLESALE TRADE IN AUGUST 1940 Commodity Per Cent Change from Same Month Last Year Accounts Stocks Outstanding Collections Net Sales + 5.6 + 2.7 + 6.8 Drugs and Drug Sundries........... + 2.4 + 0.3 +23.3 +20.7 Electrical Goods........................... +19.2 + 3.7 + 3.4 + 5.8 Groceries........................................ + 2.1 +14.1 +20.6 +20.2 +17.0 Hardware....................................... +16.7 + 45 +20.8 Meats and Meat Products........... + 8.7 + 0.3 +11.8 + 8.3 Paper and Its Products................ + 1.8 + 9.5 + 7.6 — 0.2 Tobacco and Its Products.......... + 3.8 +11.0 + 7.5 +15.6 + 9.7 Miscellaneous................................. Data furnished by Bureau of the Census, United States Department of Commerce The Agricultural Situation Crops—Indicated yields of oats in the Seventh Federal Reserve district, as of September 1, showed a remarkable improvement of 44 million bushels over the forecasts of a month earlier. In Indiana and Illinois record yields per acre were secured and the Iowa crop was of good size. In general, quality was excellent, and test weights were well above average in important producing areas. Termination of drought conditions during early August raised Seventh district corn prospects 17 million bushels over the period and likewise improved the outlook for soy beans and most other late crops. However, corn prospects over the corn belt have seldom been so uneven as they were on September 1. In Iowa, where the drought was broken earlier, production estimates improved by 31 million bush els, while in Indiana deterioration of growing corn during August was the greatest of any. corn-belt State. Extreme variations in the corn crop outlook are in considerable con trast with those of last year when uniformly good prospects obtained. With maturities considerably later than last year, continuation of favorable September weather conditions into early October is necessary to prevent much soft corn and to bring about the best possible harvest of soy beans. In the third week of September only about two thirds of the corn and one third of the soy beans had reached full ma turity. Last year practically all corn was out of frost danger by that time. CROP PRODUCTION Estimated by the United States Department of Agriculture on September 1 Condition (In thousands of bushels, unless otherwise specified) Seventh District United States Final Average Forecast Final Forecast Average 1940 1939 1929-38 1940 1939 1929-38 849,234 2,297,186 2,619,137 2,299,342 Corn................................ 887,578 1,132,703 435,287 1,206,901 937,215 1,024,852 359,529 Oats................................ 516,038 304,955 225,486 47,199a 45,079a 276.298 Barley............................ 48,387a 21,514b 69,612b 85,509 27,318 Soy Beans...................... , 68,029b 87,409 58,683 62,426 783,560 754,971 754,685 All Wheat...................... 63,371 629a 5,707 5,739 7,617 Buckwheat.................... 672a 805a Potatoes (White)......... . 47,396 46,211 50,703 383,172 364,016 366,949 1,033c 792c 10,649 10,773 8,937 Sugar Beets1.................. , 1,062c Cabbage1........................ 237a 167a 205a 1,254 1,137 1,134 l,255d l,275d Tomatoes for Market... l,205d 23,095 24,782 19,584 396d 365d 460d Tomatoes for Canning1 . 1,811 1,997 1,533 Sweet Corn for Canning1 296a 286a 318a 704 661 676 Green Peas for Canning1 128a 72a 98a 302 198 204 121,755* 17,741a Commercial Apples...,, 10,814a 12,291a* 114,830 143,085 17,426 15,360 84,125 75,726 69,650 Tame Hay1................... , 20,540 The estimates for rye and dry beans in the Seventh district area were unchanged from a month previous and those for onions, peaches, and pears showed only a minor change. *1934-38 average. 1In thousands of tons, a—Five States including Seventh Federal Reserve district, b—Illinois, Iowa and Indiana, c—Michigan, d—Indiana, Illinois, Michigan, and Iowa. Grain Marketing—The wheat market over recent weeks has been characterized by substantial gains in cash prices for the grain. On September 23, No. 2 hard winter wheat for current delivery at Chicago sold at around 82 cents, a Page 6 rise of over 20 cents from the season’s lows in August. Futures quotations also showed gains over the period, but speculation was retarded during the intensification of aerial warfare in England. There developed an actual scarcity of cash wheat, as farmers pursued a holding policy and a large proportion of arrivals continued to go into storage. Millers were at times forced to avail themselves of the pro tection afforded by their futures contracts and took a large portion of the tenders on September deliveries. The world statistical position remains bearish, were it not for the uncertainties of the European conflict. World stocks continue unusually large, though maldistributed. The Bureau of Agricultural Economics has estimated, on the basis of scanty information available this year, that current world supplies are about 100 million bushels less than last year’s record high stocks of 5,445 million bushels. Crops are indicated as about 275 million bushels lower, but the carryover from last year was 215 millions higher. With weather conditions in September generally favor able for the new crop, farmers have in the past few weeks marketed their old corn more liberally. This was finally reflected in some weakening in cash premiums for corn, but prices in the first half of the month were unusually steady, as a result of the stabilizing effect of the 1939 loan program. On September 12, the Secretary of Agriculture announced that no marketing quota would be effective on 1940 corn, as September 1 conditions indicated a supply somewhat below the level at which a quota would be effec tive. If the price of com on November 15 is below 75 per cent of parity price (which on August 15 was 8iy2 cents), a loan rate will be available to all eligible producers at 75 per cent of parity prices as of the November date. On the basis of August parity price, the loan rate would be about 61 cents. MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE UNITED STATES (In thousands of bushels) August August August July 1930-39 1939 Avg. 1940 1940 Wheat: 47,803 ...................... 46,264 103,804 44,728 Receipts... 25,023 30,816 23,343 ...................... 19,962 Shipments. Corn: 9,877 ....................... 19,142 22,508 15,504 Receipts... 10,067 ....................... 11,968 15,458 11,550 Shipments. Oats: 19,501 ....................... 13,612 4,294 19,921 Receipts... 7,821 7,285 ....................... 7,018 3,100 Shipments. Livestock and Meat Packing—In general, slaughter of livestock in August under Federal inspection increased over July, on a seasonally adjusted basis. A minor exception was slaughter of calves, which showed about the anticipated decline. Slaughter of all types continued above last year. Receipts at public stockyards in the United States either showed little change or else declined, again after allow ance for the normal trend at this time of year, as did ship ments of animals to feeder lots. Hog prices, after rising through August, weakened subsequently; a decline of about 40 cents per hundredweight was recorded at Chicago in the first three weeks of September. Quotations for beef steers were stronger over the period. Reflecting strong domestic demand and some further buying by Government agencies, tonnage of packing-house commodities sold in the United States rose more than sea sonally in August to the highest level since January. Fur thermore, these sales were about one fifth larger than cur rent production which was considerably higher than aver age for August but the smallest of any month since Septem ber 1939. Inventories at the beginning of September were nearly 40 per cent heavier than a year ago, though showing a substantial decline from August 1. Prices of lard, dry salt fat backs, utility beef, and light-weight hams were lower in August than a month earlier but, with a rise in quotations for most other items, dollar sales increased to a somewhat lesser extent over July than did the tonnage sold. Payrolls in the industry at the close of August and production in the first half of September remained above the corresponding period of 1939. MEAT PACKING—UNITED STATES Per Cent Change in August 1940 from August July August 1930-39 1940 1939 Avg. Tonnage produced............................................................... — 4.8 + 3.0 + 7.7 Tonnage sold........................................................................ +5.4 + 7.1 -j-18!o Dollar sales.......................................................................... +1.6 +5.0 +11.5 Inventories, end_of month............................................... —18.2 +39.1 +110 August shipments for export were relatively light until the closing weeks of the month. New business with the United Kingdom and continental Europe remained practi cally at a standstill. Although Switzerland was in the market for some animal products, it was impossible to obtain navicerts for these shipments. No further buying on the part of the British Government was reported. Trade with Porto Rico was of disappointing proportions during August; that with most other parts of Latin America, however, con tinued on a level with July. Some of the lethargy in foreign trade was attributed to a general reluctance on the part of buyers to meet offering prices maintained on a parity with Chicago. LIVESTOCK SLAUGHTER (In thousands) Yards in Seventh District: August 1940............................... ........... August 1939............................... ........... Federally Inspected Slaughter: United States: August 1940............................... ........... July 1940.................................... ............ August 1939............................... ............ Cattle Hogs Lambs and Sheep Calves 183 183 475 460 190 241 51 58 842 822 823 3,045 3,219 2,792 1,489 1,448 1,457 432 457 414 AVERAGE PRICES OF LIVESTOCK (Per hundred pounds at Chicago) Native Beef Steers (average)........ Fat Cows and Heifers..................... Calves................................................. Hogs (bulk of sales)......................... Lambs................................................. Week Ended Sept. 21, August 1940 1940 .......... $11.40 $10.60 ......... 8.00 8.45 9.75 .......... 6.35 6.35 ......... 9.05 9.30 Data refer to Seventh district and are not adjusted for seasonal variation unless other Aug. wise indicated. 1940 1935-39 average = 100 Manufacturing Industries: Durable Goods: Employment................................................. Payrolls.......................................................... Non-Durable Goods: Employment................................................. Payrolls.......................................................... Total: Employment................................................. Payrolls.......................................................... Pig Iron Production:* Illinois and Indiana......................................... Automobile Production—(U. S.): Passenger Cars................................................. Trucks................................................................ Casting Foundries Shipments: Steel—In Dollars............................................. In Tons.................................................. Malleable—In Dollars.................................... In Tons......................................... Railroad Freight Carloadings:* Originating in Chicago Industrial Area___ Stoves and Furnaces: Shipments.......................................................... Furniture Manufacturing: Orders in Dollars............................................. Shipments in Dollars...................................... Paper Manufacturing:* Tonnage Production........................................ Petroleum Refining—(Indiana, Illinois, Kentucky area):* Crude Runs to Stills........................................ Gasoline Production........................................ Bituminous Coal Production:* Illinois, Indiana, Iowa, and Michigan......... Building Contracts Awarded: Residential........................................................ Total................................................................... Meat Packing—(U. S.): Production......................................................... Sales Tonnage................................................... Sales in Dollars................................................ Dairy Products:* Creamery Butter Production........................ American Cheese Production—(Wisconsin) Department Store Net Sales:* Chicago.............................................................. Detroit............................................................... Indianapolis....................................................... Milwaukee......................................................... Other Cities...................................................... Seventh District—Unadjusted..................... Adjusted.......................... July 1940 June 1940 Aug. 1939 July 1939 June 1939 108 122 102 109 109 120 89 94 88 87 93 96 104 108 103 108 99 105 101 106 97 103 95 101 107 117 103 109 106 115 94 98 91 92 94 98 168 164 158 107 94 90 18 49 65 106 109 99 24 65 58 99 94 106 129 109 117 108 121 105 101 93 109 92 94 86 83 73 96 88 71 63 70 66 90 76 92 86 97 109 118 113 101 98 122 103 105 100 68 93 142 123 144 96 86 102 119 123 88 89 127 85 111 116 115 110 103 105 146 140 146 143 147 141 119 119 118 116 120 120 94 76 73 76 63 50 229 159 222 149 209 144 218 133 170 137 158 119 107 125 101 111 113 99 117 115 98 103 116 96 103 108 99 108 109 99 115 128 125 158 142 189 117 113 123 134 144 171 93 86 102 93 100 93 118 73 71 83 76 74 74 105 113 103 116 109 104 109 113 85 74 91 86 87 83 105 69 67 75 72 71 69 99 107 94 101 99 96 101 105 •Daily average basis. Months of July 1940 $10.05 7.65 8.75 5.95 9.65 August 1939 $ 9.20 7.35 9.50 5.60 8.60 Dairy Products—A marked improvement in pasture con ditions over many sections of important milk-producing areas has contributed to a slackening in the usual seasonal declines in output of dairy products. By September 1, pas tures in Iowa, Michigan, and Wisconsin had greatly im proved over the poor conditions prevailing a month earlier; production of milk per cow in these States was at record or near-record levels for the date. In sharp contrast, Indiana and central Illinois suffered further declines in pastures and milk flow per cow failed to exceed last year’s output. For the United States as a whole, milk production per cow on September 1 was at the highest level for the date in the 16 years of record. As a whole United States production of dairy products during August was higher than last year; butter manufacture was fractionally lower than in August 1939, while American cheese output was about 6 per cent higher. In the Seventh district reports from major creameries indicate a somewhat greater year-to-year decline in butter output, but production of American cheese in Wisconsin was up 9 per cent. MONTHLY BUSINESS INDEXES Credit and Finance Reporting Member Banks—Seventh district member banks which report weekly to this bank decreased their hold ings of securities by 69 million dollars in the four weeks ended September 18. Loans, however, rose 24 millions, 11 millions in the commercial, industrial, and agricultural classification. “All other,” or miscellaneous, loans rose 7 million dollars. Total loans of these banks have increased steadily since the first of the year, the net 1940 gain amount ing to about 87 million dollars, of which nearly 40 millions has come since the start of the national defense program. Demand deposits rose irregularly, the net increase over the four weeks amounting to 35 million dollars or a little over one per cent. Securities Markets—Bond trading over recent weeks has continued in the same lethargic state prevalent for several months past. Firm prices on extremely small volume re mained in the high grade market. Medium grade securities, particularly speculative rails, have shown slightly more activity in a generally upward direction, in coordination with stock market trend. Little activity was noted in the new issue market during the first three weeks of September. The Dow Chemical Company issue for 15 million dollars and a few small offerings, corporate and municipal, represented about the only activity in this field. The Dow Chemical CornPage 7 pany issue was the first publicly offered since recent lib eralization of S.E.C. regulations, which permits modifica tion of the twenty-day waiting period. During August, long-term corporate bonds offered for new capital totaled the highest in nearly two years. Fifteen millions out of the 25-million dollar Celanese Corporation of America issue was allocated for addition to the company’s general fund. The Southern Pacific Railroad offered nearly 12 million dollars of Equipment Trust Certificates, the pro ceeds from which are to be used for purchase of new equipment. Of greater significance to the bond market than the cur rent events described above was the recent release by the Treasury Department of proposed budget plans for the fiscal year 1940-41. The budget summary is described in the Sep tember issue of the Federal Reserve Bulletin, a brief resume of which description follows. Prior to the recent passage by Congress of the Selective Service Act, administration of which will doubtless add to the anticipated Treasury deficit for the fiscal year 1940-41, it was estimated that normal Government expenditures would be about $7,100,000,000, while national defense expendi tures would total in the neighborhood of 5 billions. The estimate of normal expenditures for the current year is down about 400 millions, or 5 per cent, from the previous fiscal year. Estimated receipts of $6,400,000,000 are about one billion dollars higher than those realized in 1939-40, due to increased taxes under the Revenue Act of 1940, and also to the fact that taxes will be levied against a higher level of national income. These figures imply a deficit of 5,700 million dollars. Toward this, about 2.7 billions will be provided by sales of Savings Bonds, receipts in the oldage insurance and unemployment trust funds, repayment of capital by Government corporations, etc. In addition $630, 000,000 already has been raised by sales of bonds during July. Therefore, from 2 to 2y2 billion dollars will have to be raised from the money market during the current fiscal year through issuance of new Treasury securities. Current Events Five State Banks Join System Between mid-August and September 24, five more State banks have joined the Federal Reserve System in the Seventh district, raising to 294 the total number of such banks. The five are: Greenfield Banking Company, Greenfield, Indiana Old Farmers & Merchants State Bank, Hillsdale, Illinois State Bank of Nappanee, Nappanee, Indiana The Dexter Savings Bank, Dexter, Michigan The Farmers & Merchants State Bank, Logansport, Ind. Total Federal Reserve membership in this district (na tional and State banks) has increased from 804 at the start of the year to 833. Attend Meetings in East President George J. Schaller and Vice President Clifford S. Young of this bank attended the sixty-sixth annual con vention of the American Bankers Association at Atlantic City, New Jersey, on September 22-26. While in the East, Mr. Schaller also attended the Conference of Presidents of the Federal Reserve Banks, held in Washington on September 27. Prior to the A.B.A. convention, Mr. Young had visited the thirty-ninth annual convention of the National Associa tion of Supervisors of State Banks, which was held on September 17-20 in Richmond, Virginia. Pip 8 Selected Seventh District Banking Data FEDERAL RESERVE BANE OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions) Change from Sept. 18, Aug. 21, Sept. 20, 1940 1940 1939 Total bills and securities...................................................... $259 $—1 $—46 U. S. Government securities direct and guaranteed: Bills....................................................................................... 0 0 —29 Notes..................................................................................... 118 —2 —15 Bonds..................................................................................... 140 0 0 Total Government securities........................................ 258 —2 —46 Total reserves......................................................................... 2,944 +40 +487 Member bank reserve deposits........................................... 1,851 +75 +276 All other deposits................................................................... 163 —39 +39 Federal Reserve notes in circulation.................................. 1,161 +12 +131 Ratio of total reserves to deposit and Federal Reserve note liability combined..................... 92.7% +0 2* +2.7* ♦Number of Points. CONDITION OF REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions) Change from Sept. 18, Aug. 21, Sept. 20, 1940 1939 Assets 1940 $—45 $+274 Loans and investments—total......................................... $3,435 +24 +117 Loans—total...................................................................... 987 +88 +11 Commercial, industrial, and agricultural loans.............. 596 +8 +3 Open-market paper................. 42 +2 —5 Loans to brokers and dealers in securities...................... 28 Other loans for purchasing or carrying securities........... Real estate loans.............................................................. Loans to banks................................................................. Other loans........................................................................ U. S. Treasury bills......................................................... U. S. Treasury notes........................................................ U. S. Treasury bonds....................................................... Obligations fully guaranteed by U. S. Government. .. . Other securities................................................................. Cash reserves, other than items in process of collection. 68 125 0 128 270 303 1,018 312 545 2,239 Liabilities Demand deposits—adjusted............................................ 2,875 Time deposits................................................................... 972 Inter-bank deposits.......................................................... 1,344 U. S. Government deposits............................................. 138 Sept. 1-18 1940 Turnover velocity of demand deposits (annual rate). .. 17.73 —1 +2 +70 —41 —290 +10 +101 +35 +2 +14 —8 +19 +150 +139 —130 +66 +22 +60 +307 +313 +39 +201 +28 August0 September 1940 1939 16.13 20.29 BANK DEBITS, SEVENTH DISTRICT (Amounts in millions) ........ ....... ....... ........ ....... ....... ........ ....... South Bend....................... ....... 32 smaller cities................ ........ Total 41 cities................... ........ Chicago.............................. Dea Moines........................ Detroit............................... Fort Wayne....................... Grand Rapids................... Indianapolis...................... Milwaukee......................... August 1940 $2,812 92 931 32 60 203 256 56 41 526 5,009 Per Cent Per Cent First Eight Change from Change from Months of Same Period 1940 of 1939 August 1939 $24,101 —1.2 +7.1 +5.8 768 +3.8 +18.1 7,851 +16.8 262 +8.7 +8.1 463 +15.4 +9.9 1,705 +10.9 +9.0 2,169 +7.4 —0.7 +8.7 479 +13.0 +17.5 346 +22.4 4,153 +12.8 +14.4 42,297 +9.9 +4.2 VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS FEDERAL RESERVE BANK OF CHICAGO Average for Each Banking Day during August 1940 August 1939 465,000 464,000 Commercial checks..... ............................................................. 1,774 1,857 Non-cash collections (Bills, notes, bonds, coupons, etc.).. 1,321,000 039,000 Paper currency received and counted.................................... 578,000 412,000 Coins received and counted................................................. 426 435 Wire and other transfers of funds (Inter-and intra-district) 903 754 Securities in and out of safekeeping........................................ 1,233 1,118 Coupons cut from securities in safekeeping........................... Items Handled Dollah Amounts Commercial checks................................................................... Non-cash collections (Bills, notes, bonds, coupons, etc.).. Paper currency received and counted.................................... Coins received and counted......................................... Wire and other transfers of funds (Inter- and intra-district) Securities in and out of safekeeping............................ ......... Value of securities held in safekeeping at end of month---- 82,301,000 92,788,000 2,595,000 2,284,000 4,238.000 4,972.000 58.121 60.806 50,523,000 54,924.000 17,230,000 7,449.000 988,000,000 1,093,000,000 DIRECTORS AND OFFICERS Federal Reserve Bank of Chicago DIRECTORS Robert E. Wood, Chicago, 111...................................... Chairman Frank J. Lewis, Chicago, 111........................... Deputy Chairman Max W. Babb..............................Milwaukee, Wis. Clifford V. Gregory..............Des Moines, Iowa Walter J. Cummings....................... Chicago, 111. Nicholas H. Noyes................Indianapolis, Ind. E. R. Estberg................................Waukesha, Wis. Charles B. Van Dusen.................. Detroit, Mich. Frank D. Williams.............................................Iowa City, Iowa MEMBER OF FEDERAL ADVISORY COUNCIL Edward E. Brown....................................................... Chicago, 111. OFFICERS Geo. J. Schaller........................................................... President H. P. Preston......................... ....................... First Vice President J. H. Dillard............................................................................. VicePresident W. H. Snyder.................................... Vice President and Cashier C. S. Young.............................................. VicePresident C. B. Dunn............................................................................ GeneralCounsel W. C. Bachman........ .... .Assistant Vice President O. J. Netterstrom........Assistant Vice President A. L. Olson.................. Assistant Vice President A. T. Sihler..................Assistant Vice President A. M. Black. . . .Manager, Planning Department J. J. Endres..............................................Auditor P. C. Hodge.............................. Assistant Counsel N. B. Dawes...........................................AssistantCashier W. A. Hopkins....................................... AssistantCashier F. A. Lindsten........................................AssistantCashier L. G. Meyer............................................ AssistantCashier F. L. Purrington....................................AssistantCashier J. G. Roberts....................................... AssistantCashier C. M. Saltnes........................................AssistantCashier DETROIT BRANCH DIRECTORS James E. Davidson Joseph M. Dodge. . A. C. Marshall ... Bay City. Mich. . Detroit, Mich. . Detroit. Mich. Walter S. McLucas..................................Detroit,Mich. Harry L. Pierson......................................Detroit,Mich. L. Whitney Watkins..............Manchester, Mich. OFFICERS H. J. Chalfont Cashier H. L. Diehl Assistant Cashier National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION PRODUCTION anC^ emPl°yment a further rise from the level maintained in June August and Julyshowed and distribution to consumers also 130 120 110 100 90 80 70 Index of physical volume of production, adjusted for sea sonal variation, 1935-1939 average = 100. By months, January 1934 to August 1940, FACTORY EMPLOYMENT PER CENT 120 120 HO HO 1936 1937 Index ol number employed, adjusted for seasonal variation, 1923-1925 average = 100. By months, January 1934 to August 1940. DEPARTMENT STORE SALES AND STOCKS PER GENT 1101 100 SALESA 90 80 STOCK 1934 1935 1936 r'\ 1937 s. ' 'v' 1939 70 1940 Indexes of value of sales and stocks, adjusted for seasonal variation, 1923-1925 average - 100. By months, January 1934 to August 1940. CONSTRUCTION MILLIONS OF DOLLARS CONTRACTS AWARDED MILLIONS OF DOLLARS increased. Prices of industrial materials were somewhat higher in the middle of September than a month earlier. Industrial Production—The Federal Reserve index of industrial production is estimated at 123 in August as compared with 121 in June and July and 111, the low point for the year, in April. This rise has reflected chiefly the direct and indirect effects of the defense program on industries producing durable goods and textiles. Steel production rose further in August as new orders for steel continued in large volume, and for the month as a whole mills operated at 90 per cent of capacity. Following a temporary decline over the Labor Day week, the rate of output ad vanced to 93 per cent of capacity in the third week of September. In most branches of the machinery industries activity showed a continued expansion in August and there were further sharp increases in shipbuilding and the manufacture of aircraft. With the growth in production of finished durable goods, consumption of nonferrous metals advanced to the highest levels since last winter. Output of automobiles was in small volume in August owing to the seasonal change-over to 1941 model cars. The low point in production was reached early in August; there was a gradual rise later in that month followed by a sharp advance in the first two weeks of September as most companies began volume production on new models. Lumber production, which had declined in July, rose considerably in August. Textile mill activity continued to increase in August and was at the highest level since last January. Cotton consumption advanced considerably further and silk deliveries rose from the small volume of recent months. Activity at wool textile mills increased seasonally, following a sharp rise in July, while at rayon mills activ ity showed a less than seasonal increase but continued at a high level. Mining of bituminous coal in August was maintained in large volume for the season, while production of anthracite declined. Output of crude petroleum declined somewhat further. Value of new construction work undertaken in August was at about the same level as in July, according to reports of the F. W. Dodge Corporation and the Fed eral Reserve Bank of San Francisco. The volume of contracts for public projects continued unusually large and the amount of new private work started was larger than in July. Residential building was at the highest level in recent years, on a seasonally adjusted basis, reflecting further increases in both private and public contracts. Distribution—Distribution of commodities to consumers increased considerably from July to August. Sales at department stores and by mail order houses showed a sharp rise and there was a less than seasonal decline in variety store sales. In the early part of September department store sales continued to increase. Freight-car loadings advanced from July to August when little change is usual. Shipments of coal and miscellaneous freight increased while loadings of grain showed more than a seasonal decline. Commodity Prices—Prices of several industrial materials, including copper, zinc, steel scrap, lumber, hides, and print cloth, advanced somewhat from the middle of August to the middle of September and owing partly to seasonal developments, prices of foodstuffs were also higher. Prices of most other commodities showed little change in this period, although some paper items were reduced and several new models of automobiles were announced at advanced prices. Agriculture—Production prospects for most major crops increased during August, according to the Department of Agriculture. On the basis of September 1 conditions the cotton crop was estimated at 12,772,000 bales, about 1,340,000 hales more than was indicated at the beginning of August. Preliminary estimates by the Department indicate that cash farm income, including Government payments, will be about $8,900,000,000 for the calendar year 1940 as compared with $8,540,000,000 last year. Bank Credit—Commercial loans increased somewhat at banks in New York City and in 100 other leading cities during the four weeks ending September 11, while their holdings of investments showed little change. 1940 Three-month moving averages of F. W. Dodge Corporaation data for value of contracts awarded in 37 Eastern States, adjusted for seasonal variation. Latest figures based on data for July and August and estimate for September. United States Government Security Prices—United States Government security prices increased in the last half of August and the first week in September and were steady in the second week in September.
@FedFRASER