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* Seventh Federal Reserve ristriet Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent Eugeni M. Stevens, Volume 16, No. 11 Asst. Federal Reserve Agent Harris G. Pett, Manager Division of Research and Statistics George A. Pruoh, MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO General Summary v | k ^ l /CURRENT data indicate a moderate slowing-down in vV certain phases of Seventh district business, although the volume continues considerably heavier than last year. In most manufacturing industries, production in the nine months of 1933 exceeded that for the same period of 1932, but in the distribution of commodities, except for a few groups, cumulative sales for the year have not attained the volume of last year, despite decided improvement in the last four months. Automobile production declined in September, in ac cordance with seasonal trend; output of steel and malleable castings was smaller, though orders increased; and shoe production was less. Operations at district steel mills ex panded between the first of September and early October, as consumers specified on old contracts before price raises became effective, but new business fell off during the period. Shipments of furniture manufacturers gained, with new orders declining moderately. Building construction, as reflected in contracts awarded, was the largest within a year, although the movement of materials diminished. Employment in September reached the highest level in two years, though wage payments declined somewhat from a month previous. In the production of foodstuffs, recessions were reported for September from August in meat, butter, and cheese, but the distribution of meat and cheese expanded. All three commodities were produced in greater volume than a year ago, and only in cheese were sales smaller. The move ment of wheat in September continued below average, and that of oats was less than normal, but corn moved to pri mary markets in greater than seasonal volume. Weather conditions during the month were more favorable than in preceding months, so that some improvement was noted in crop production estimates. Wholesale trade during September showed smaller than usual gains in all reporting groups but drugs, which experi enced a slight non-seasonal recession, while comparisons with a year ago recorded either smaller increases than a month previous or declines. Department store trade like wise expanded less than seasonally in September, and sales exceeded those of a year ago to a lesser extent than in Au gust. The retail shoe, furniture, and chain store trades reported larger sales for September than either a month previous or in September last year. October 31, 1933 Trends in reporting member bank and Reserve bank data for the period September 13 to October 18 followed, for the most part, those of the preceding four-week period. September sales of commercial paper by dealers declined, while financing by means of bankers’ acceptances in creased in September as compared with August. Credit Conditions and Money Rates Continued participation in purchases of United States securities through the Federal Open Market Committee during the period September 13 to October 18, resulted in a further increase of $41,000,000 in total credit extended by the Federal Reserve Bank of Chicago, bringing the ag gregate to $438,500,000, notwithstanding a reduction of $2,391,000 in credit extended to the Seventh district. The small decrease in reserve bank credit extended locally was considerably more than offset by the heavy increase in com mercial transactions with other districts together with a gain in Treasury operations, the other factors supplying banking reserves. Demand for currency during the period again showed a decline, as did non-member deposits. Member bank reserve balances, however, following the heavy increase in the preceding four weeks, continued to expand—by 60 million dollars. Itemized changes in the sources and uses of Seventh district banking reserves are presented in detail in the accompanying tabulation. Changes Between September 13 and October 18 in Factors Affecting Use of Federal Reserve Bank Funds—Seventh District (Amounts in thousands of dollars) Reserve bank credit extended...............................................................................—2,391 Commercial operations through inter-district settlements........................+44,798 Treasury operations................................................................................................. +9,481 Total supply................................................................................................+51,888 Demand for currency.............................................................................................. —6,632 Member bank reserve balances..........................................................................+59^801 Non-member deposits..............................................................................................—2,790 Unexpended capital funds......................................................................................+1,509 Total demand............................................................................................. +51,888 Member Bank Credit Changes recorded on October 18 as compared with Sep tember 13 in the condition of licensed reporting member banks in the Seventh district were of small proportions. As against October 19, 1932, loans on securities on Octo ber 18 of this year were less by 94 million dollars, “all other” (commercial) loans exceeded the year-ago figure by 19 millions, and investments were larger by 36 millions. Net demand deposits were nearly 180 million dollars above the aggregate reported a year ago. The table below sets forth the changes on October 18 in principal items of con dition, as compared with the preceding month and with the corresponding reporting date in 1932. Down-town Chicago banks reported a range of 3 to 5 per cent as the prevailing rate on customers’ commercial loans for the week ended October IS, unchanged from the corresponding period in September. The average rate earned on loans and discounts by Chicago banks in the down-town area was reported as 3.30 per cent for the cal endar month of September, as against 3.88 per cent in August and 4.49 per cent in September 1932. In Detroit, the prevailing rate on customers’ commercial loans for the week ended October 1S was 3to 5 per cent, or the same as in the preceding month. Though decreasing only 4y2 per cent from August and totaling 7 per cent in excess of a year ago, September sales of commercial paper in the Middle West aggregated less than for any previous month since May and were 76)4 per cent below the 1923-32 seasonal average. Demand remained sufficiently strong to absorb the limited supply at lower interest rates than prevailed a month earlier. Selling quotations ranged from 1 and 1)4 per cent for prime short-term obligations to 1)4 and 1)4 per cent for those less well known or of longer maturity; most trans actions took place within a range of 1)4 to 1 )4 per cent. Outstandings increased 7)4 per cent on September 30 over a month earlier to a higher level than for any reporting date since November 1932, though continuing nearly 77 per cent under the 1923-32 average for the month. Under the influence of a fair demand, sales for the first half of October expanded 22)4 per cent over the corresponding weeks of September. However, borrowing remained so light that selling rates showed a further decline; October 15 quotations ranged from 1 to 1)4 per cent, with most business being transacted at 1 to 1)4 per cent. Market operations of Chicago bill dealers averaged con siderably greater from September 14 to October 11 than in the preceding four-week period. A heavy increase in local purchases—the volume of which was the largest since February 9 to March 15—together with an increase in receipts from Eastern markets, resulted in total supplies registering a gain of 91)4 per cent over the preceding period and 143 per cent over last year. Under the influ ence of an active demand from Eastern centers and heavy sales to out-of-town banks, these bills moved rapidly into investment channels. As a consequence, holdings of Chi cago dealers on October 11 were almost negligible. Selling rates remained unchanged during the period, quotations on October 11 being )4 per cent for 30-day offerings to % per cent for those of 180 days. 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. Page 2 Oct. 18 1933 $438.3 5.8 0.8 431.7 961.1 574.2 752.9 72.4 Change From Sept. 13 Oct. 19 1933 1932 $+42.2 $+153.7 -1.3 -12.3 +0.0 -3.3 +43.4 +169.3 +24.4 + 151.4 +58.9 +203.8 +5.8 +75.3 -1.8* -4.9* In the Seventh Federal Reserve district, new financing by means of bankers’ acceptances—after having declined to relatively small proportions during August—returned in September to a level 41 per cent above a year ago and 23 per cent higher than the 1923-32 average for the month. A counter-to-seasonal expansion likewise was shown in the direct discounting of these bills at the originating banks and in the purchasing of other banks’ bills. Total pur chases of this class of investments by accepting banks of the district, therefore, aggregated 59 per cent heavier in the month than the 1923-32 seasonal average. On the other hand, sales were below any other month on record (January 1923), amounting to only 1)4 per cent of the volume of current purchases. These trends, coupled with the effect of a smaller amount of maturities from portfolios, caused bill holdings of accepting institutions to reach a higher point on September 30 than for any previous re porting date. As total maturities of outstanding bills ex ceeded by $1,500,000 the amount of acceptances created in the month, liabilities were reduced 4 per cent from Au gust 31. New financing fell off sharply in the first half of October, largely as a reflection of a seasonal reduction in borrowing by the grain industry. * - , TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change August 1933 Total value of bills accepted................... Purchases (including own bills discounted) Sales................................................................ Holdings*...................................................... Liability for outstandings*...................... Sept. 1933 From September 1932 in +8.3 +13.7 -66.9 +13.7 —3.9 +40.8 +53.3 -90.8 +56.2 +1.5 *At end of month. Security Markets A very moderate degree of activity prevailed in the Chicago bond market during September and prices moved gradually downward, all classifications being affected. This condition reflected in part the virtual cessation of new offerings, as well as a “waiting” attitude on the part of the investing public. Municipal bonds continue to be shown the preference in demand but in this group, also, the level of activity has been greatly reduced. United States Government issues held quite steady throughout the period. During the first half of October, though of ferings continued restricted, bonds firmed and prices were somewhat higher. Prices on the Chicago Stock Exchange moved gradually downward during September and the first two weeks of October. The average price of twenty lead ing stocks* amounted to $26.96 on October 14 and com pared with a price of $30.38 on the corresponding date in September. ' < ♦Chicago Journal of Commerce. Agricultural Products September weather conditions in the Seventh district were, on the average, more favorable than in any precedCONDITION OF LICENSED REPORTING BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Total Loans and Investments........................ Loans on Securities............................................ All Other Loans.................................................. Investments......................................................... Oct. 18 1933 ... $1,510 ... 404 ... 469 ... 637 Change From Sept. 13 Oct. 19 1933 -3 -13 1932 $-39 -94 +19 +36 $-8 +8 Net Demand Deposits...................................... ... Time Deposits..................................................... ... 1,215 464 +33 -4 +179 -4 Borrowings from Federal Reserve Bank. .. . . . 0 0 0 * ing month of the growing season. Rainfall was normal or above, except in Wisconsin, with Indiana and Iowa ex periencing the greatest excess; and temperatures averaged at least normal. Crops matured well, and general though slight improvement was indicated in probable production. Most significant increases since September 1 in forecasts by the Department of Agriculture for this district were 4 million bushels of corn and nearly 2 millions in white po tatoes, the latter more than regaining the loss in condition sustained during August. Recent improvement in most crops, however, has been minor in comparison with the » damage sustained in the wet spring and succeeding drouth period, and aggregate farm production of the district will be far below average, necessitating substantial use of old supplies. The corn crop reached maturity ahead of damaging frosts in practically all sections, and production probably will be within 10 per cent of the 1926-30 average, though the estimate for this district is 25 per cent less than the large 1932 crop. The merchantable quality is estimated as lower than a year ago. Corn has dried out rapidly in recent weeks and husking is well under way. Digging of ^ late potatoes and pulling of sugar beets, and other late harvesting has been making headway. Fall seeding has made better progress since the September rains, and some wheat and rye is up in good stands. Grain Marketing September receipts of wheat at interior markets declined only 15 per cent from August and shipments increased 13 per cent, as compared with five-year average August-September losses of 29 and 27 per cent, respectively. The ^ volume continued at less than half the five-year average, as in the two preceding months. A readjustment of the burdensome wheat supply since July 1, as a result of the short crop, is shown in the visible supply and farm stock figures. The former apparently reached its peak for this season on September 30, having increased only 25 million bushels during the three months, as against a ten-year average gain of 57 millions for the same period. Farm stocks on October 1, as estimated by the Department of Agriculture, had increased only 224 million bushels over July 1, as compared with gains of 316 millions in 1932 ' and 449 millions in 1931, and were materially lower than on these comparable dates. A rising dollar in foreign exchange, however, offset the effect of the supply situa tion and the possibility of inflation as major influences in market quotations, with the result that wheat and feed grain prices as well averaged lower than in August and suffered considerable further loss in early October. The primary movement of corn was above average, while that of oats was considerably below the usual Sep tember volume. Seasonal declines from August were re» corded by receipts of oats and shipments of both grains, while receipts of corn increased 85 per cent over a month previous. Farm stocks of corn on October 1 were 60 mil lion bushels above a year ago and nearly double the 1931 VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From Sept. 1933 Aug. 1933 Sept. 1932 i Chicago.......................................................................... $2,028 Detroit, Milwaukee, and Indianapolis.............. 684 -5.5 +3.9 +9.2 +0.4 Total four larger cities..............................................$2,712 32 smaller centers..................................................... 405 —3.3 +2.8 +6.8 —8.2 Total 36 centers..........................................................$3,117 -2.5 +4.6 figure. Oats on farms have increased less than 400 million bushels since July 1, as against more than 800 millions in 1932 and 700 millions in 1931. The quantity this year is estimated to be 385 million bushels below a year ago, due to the extremely small production. Movement of Live Stock Hog marketings in the United States aggregated much greater during September than for any previous month since December 1924, principally due to a continuation of the Government program of buying 25- to 100-pound pigs in an effort to raise future prices by removing 6,000,000 hogs from this year’s supply. Cattle and lamb receipts at public stock yards, on the other hand, increased less than a customary amount over August and were not only smaller than a year ago but considerably under the 1923 32 average for September. Though remaining above the corresponding period of 1932, calf marketings showed a greater-than-seasonal recession from August. The move ment of animals to inspected slaughter (inclusive of di rect purchases but exclusive of pigs purchased by the Gov ernment) differed sharply from the trend of receipts. The most noteworthy of these divergences were a decrease in hogs, cattle, and calves from August and an excess of all live stock over the 1923-32 seasonal average. Further more, the supply of hogs decreased and that of cattle in creased in comparison with last September. Reshipments to feed lots expanded less than the usual amount over August, remaining considerably under last year and seasonal levels. Meat Packing Slaughtering establishments in the United States re mained much more active during September than a year ago. However, the volume of production showed an ex pansion of only 2 per cent in that comparison and of 6)4 per cent over the 1923-32 seasonal average, as it declined 9 per cent from August to a level lower than for any other month this year since March. On the other hand, payCROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the bas s of October 1 condition. (In thousands of bushels unless otherwise specified) Seventh District Forecast Final United States Forecast Final 1933 1932 1933 Corn................... 797,823 1,065,741 2,291,398 Oats.................... 285,630 523,589 698,531 Winter Wheat.. 42,191 46,050 340,355 Spring Wheat.. 2,126 3,380 174,461 Barley................ 34.536(a) 56.074(a) 159,741 Rye..................... 5.592(a) 7.145(a) 23,116 Buckwheat. . . . 814(a) 694(a) 7,384 Flaxseed............ 197(b) 243(b) 7,371 Potatoes (white) 39,738 59,382 307,382 Potatoes (sweet) 1.242(c) 1.475(c) 69,951 Sugar Beets1... 1.162(d) 1.215(d) 10,859 Apples (total crop).. 15.127(a) 12.712(a) 147,447 Peaches............. 1.965(e) 2.215(e) 45,284 1.012(e) Pears.................. 955(e) 21,256 Cranberries2. . . 47(f) 80(f) 579 68(a) Grapes1.............. 88(a) 1,724 Dry Beans®.. . . 2.952(g) 4.277(g) 10,771 Tobacco4........... 21,532 36,620 1,413,373 All Tame Hay1. .13,580 67,337 14,194 Broom Corn1... 5(h) 8(h) 29 Onions............... 7.258(a) 4.727(a) 21,517 Celery6............... l,413(i) l,483(i) 8,308 65 (j) Cucumbers.... H0(j) 2,806 H7(k) Cabbage1........... 194(k) 748 CANNING CROPS: T omatoes1... 2 86 (e) 287(e) 957 Beets1............. 7(h) 10(h) 19 Average 1932 2,875,570 1,238,231 461,679 264,604 299,950 40,409 6,772 11,787 357,679 78,484 9,070 1926-30 2,511,991 1,189,693 589,733 271,435 263,629 41,564 9,913 20,011 355,438 62,483 7,718 140,775 42,443 22,050 540 2,204 10,164 1,015,512 69,794 37 28,331 10,184 3,302 975 168,773 56,575 22,921 580 2,447 11,107 1,411,697 72,678 49 23,294 8,091 4,883 936 1,199 1,232 22 1 In thousands of tons. 2 In thousands of barrels. 8 In thousands of 100-lb. bags. 4 In thousands of pounds. 5 In thousands of crates, (a) Five states including the Seventh Federal Reserve district, (b) Iowa and Wisconsin, (c) Illinois, Indiana, and Iowa, (d) Michigan, (e) Illinois, Indiana, Iowa, and Michigan, (f) Wisconsin, (g) Michigan and Wisconsin, (h) Illinois, (i) In diana and Michigan, (j) Illinois and Michigan, (k) Indiana, Michigan and Wisconsin. Pafee 3 rolls at the close of September not only continued to reflect the high degree of improvement over 1932 that had been evidenced a month earlier but also recorded a gain over August of per cent in number of employes, 3 per cent in hours worked, and of 4 per cent in wage payments. The total value of sales billed to domestic and foreign cus tomers rose 7^-2 per cent in September to a level 10 per cent above a year ago though 40J/2 per cent under the 1923-32 average for the month—the latter largely a re flection of lower prices. The tonnage sold was not only greater than in the preceding month or last year but ex ceeded the seasonal average by 5J4 per cent. Little change took place from August in the general price level of packing-house commodities, despite some easing in quo tations of a number of individual items. Prices, there fore, remained somewhat above those of a year ago. Con sumption showed a slightly greater excess over current production than is customary at this season of the year. As a consequence, October 1 inventories recorded a gain of only 230,208,000 pounds over the 1928-32 seasonal average. Shipments for export expanded in September over Au gust. Foreign demand for American lard remained fair in the United Kingdom and tended to show some improve ment on the Continent. Trade in meats continued on a restricted basis; a further restriction in bacon and ham import quotas was announced by England during the month. Most sales of both meat and lard were made from stocks already landed in foreign markets. The price of American lard on the Continent and that of hams and pic nics in the United Kingdom were about on a parity with Chicago. With these exceptions, European quotations for such commodities generally were below a United States basis. Inventories of United States packing-house prod ucts in foreign markets (inclusive of stocks in transit) in creased on October 1 over the beginning of September. Dairy Products The production of creamery butter in the Seventh Fed eral Reserve district showed a seasonal contraction of 19 per cent in September from August, but was 7J4 per cent heavier than a year ago and one per cent in excess of the 1923-32 average for the month. Though totaling 7J/2 per cent greater than last September, the sales tonnage fell off 17J4 per cent from August, as compared with an average decline of 13^4 per cent, and was one per cent below the usual seasonal level. United States manufacture of the commodity followed trends similar to those of the Sev enth district. As consumption failed to record as large an excess over current production as is customary at this time of year, October 1 inventories of creamery butter in the 4 United States declined only 619,000 pounds from the be ginning of September and, consequently, were almost double those of a year ago and 57,308,000 pounds above the 1928-32 October 1 average. In Wisconsin, the manufacture of American cheese de clined 14J4 per cent in the four weeks ended September 30 from the preceding period to a level 5j4 per cent below the 1928-32 average for the month and only 7 per cent in excess of a year ago. Though showing a counter-to-seasonal expansion of 10^4 per cent over August, distribu- „ tion of the commodity from primary markets of the state was 10 per cent less than current production and 5 J4 per cent under last September. This tendency for manufac ture to exceed distribution was likewise reflected in United States inventories of the commodity, which showed a nonseasonal expansion of 4,650,000 pounds on October 1 over the beginning of September and were 15,121,000 pounds above the 1928-32 average. Prices declined in September from August. Industrial Employment Conditions * A further increase in the employment of wage earners was reported by Seventh district industries for September. A rise of 3 per cent—somewhat more moderate than the 'gains experienced during the four preceding months— brought industrial employment to the highest level at tained since September 1931. Payroll figures reflected a less favorable position, a weekly aggregate in September showing a decline of 2J4 per cent from the corresponding period in August and remaining below the level prevail ing in the first quarter of 1932. Shorter operating sched- 1 ules for a considerable number of workers in many of the important industries accounted for this decline, these be ing more than sufficient to offset the effect on payrolls of an increased volume of employment as well as of the gen eral tendency towards higher wage rates that was apparent among the lower paid classes of workers. Increases in working forces from the middle of August to the middle of September were shown by all but three of the ten manufacturing groups and by all the non-man ufacturing groups, the latter covering construction work, , coal mining, public utilities, and merchandising. The texEMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group of September 15, 1933 Change From Aug. 15, 1933 LIVE STOCK SLAUGHTER ing Firms Wage Earners Earnings (000 Omitted) Wage Earn Earn ers ings (In thousands) No. No. $ % % Metals and Products1........ Vehicles.................................. Textiles and Products.... Food and Products............. Stone, Clay, and Glass---Wood Products.................... Chemical Products............. Leather Products................ Rubber Products2............... Paper and Printing............. 785 183 146 386 146 279 113 90 8 332 163,778 217,447 33,928 82,315 8,841 27,077 16,059 27,660 7,503 50,548 3,032 4,785 558 1,584 158 375 333 448 147 1,081 +4.4 +2.9 -0.9 +3.4 -7.5 +6.5 +4.4 -2.6 +5.2 +1.4 -1.2 -9.6 +3.5 +4.4 -6.0 +11.5 +1.7 -0.7 +1.3 -0.7 Total Mfg., 10 Groups___ 2,468 635,156 12,501 +2.8 -3.3 Merchandising8.................... Public Utilities.................... Coal Mining......................... Construction........................ 277 77 20 329 38,021 77,679 3,174 11,788 722 2,159 53 206 +2.6 +1.6 +32.9 +9.5 +2.9 -1.7 +35.7 + 12.9 Yards in Seventh District, September 1933..................... .. Federally Inspected Slaughter, United States September 1933..................... . . August 1933............................ . . September 1932..................... . . Cattle Hogs Lambs and Sheep 214 1,903* 391 73 821 840 718 3,038 3,477 3,252 1,609 1,532 1,667 405 416 366 Calves AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Week Ended M< ONTHS OF Oct. 21 Sept. Aug. 1933 1933 1933 Native Beef Steers (average). .. *5.45 $5.70 $6.00 Fat Cows and Heifers.............. . . 4.05 4.30 4.40 Calves........................................... .. 6.00 6.65 6.35 Hogs (bulk of sales).................. .. 4.25 4.25 4.05 Yearling Sheep........................... .. 4.85 5.35 5.35 Lambs........................................... .. 6.55 6.65 7.25 Sept. 1932 *8.05 5.15 6.70 4.05 4.25 5.45 ♦Includes a large number of pigs slaughtered for Government account. Page 4 Report Total Non-Mfg., 4 Groups. 703 130,662 3,140 +3.2 +0.6 Total, 14 Groups................. 3,171 765,818 15,641 +2.9 -2.6 lOther than Vehicles. 2 Michigan and Wisconsin. 8 Illinois and Wisconsin. tile industries, one of the three groups in which employ ment declined, showed increased payrolls of 3^2 per cent. Payrolls in the leather products industry decreased by less than one per cent but employment fell off V/2 per cent. In the stone, clay, and glass products industries, a loss of 7J4 per cent representing about half of the preceding month’s increase was reported for employment and a de crease of 6 per cent for payrolls, the latter counteracting most of the 7 per cent increase reported for this item in August. Four manufacturing groups—rubber, chemicals, foods, and wood products—increased payrolls as well as employ ment, the gains in wage payments ranging from one per cent for the rubber industry to lll/2 per cent for the wood products group. The large metals group added Al/2 per cent more workers but showed a decrease of one per cent in wage payments. Vehicles with a rise of 3 per cent in working forces reported wage payments lower by nearly 10 per cent. With the exception of the public utilities, non-manufacturing industries showed gains in payrolls as well as in employment. A decrease of 1J-2 per cent in payrolls of the public utilities group approximately equaled the increase in this item in the preceding month. Manufacturing Automobile Production and Distribution September production of automobiles in the United States declined moderately from the preceding month, in accordance with seasonal trend, although operations re mained well above the level of a year ago. Passenger ve hicles produced in the month numbered 160,891, a reduc tion of ny2 per cent from the August volume but 148 per cent heavier than for last September. Truck output totaled 35,182, or 15 per cent smaller than a month pre vious and 81 per cent greater than a year ago. Data cov ering the nine months of 1933 show that passenger car production exceeded that of the entire year 1932 by 23 per cent and truck output totaled 16 per cent heavier; comparisons with the first three quarters of 1931 record decreases of 21 and 22J4 per cent, respectively. Midwest distribution of automobiles likewise registered a decline in September that was seasonal in nature. Sales to dealers and to consumers fell off more than 20 per cent in the period. Increases over the corresponding month of 1932 remained large, although they were not so great as shown in the preceding month. The number of new cars on hand at the end of September rose somewhat over the number held on August 31, and was substantially greater than on the same date a year ago. Trends in used car sales and stocks followed closely those in new cars. The value of sales made on the deferred payment plan amounted, during September, to 44 per cent of total re tail sales by dealers reporting the item; this compares with a like ratio in August and with 48 per cent last Sep tember. Iron and Steel Production Some further decline in business took place during Sep tember at Chicago district steel mills. The rate of steel ingot output had risen, however, from only 40 per cent of capacity in the early part of September to 48 per cent by the tenth of October, the latter figure comparing with only 18 per cent at the same time last year. The rise in ingot output may be attributed largely to consumers’ efforts to take commitments on old contracts before the expiration date on October 15, prices on plates, shapes, and bars hav ing been advanced on October 1. Scrap iron and steel prices were easier at the end of September. Increases of 31 per cent for steel and 5 per cent for malleable castings were recorded in the volume of orders booked in September by foundries of the Seventh district. This reflects the first upward movement in demand since the marked expansion that occurred in June. Tonnages shipped fell below those of August—14 per cent in steel and 9 per cent in malleable castings; and production was curtailed 15 and 21 per cent, respectively. As compared with the corresponding tonnage figures of September 1932, steel castings show increases of 232 per cent in orders, 65 per cent in shipments, and 131 per cent in production. For malleable castings these comparisons register respec tive gains of 148, 175, and 160 per cent. Manufacturers of stoves and furnaces report continued increases in the volume of orders accepted, the rise dur ing September totaling 24 per cent, which brings the vol ume to a level 46 per cent above that of a year ago. Ship ments increased 11 per cent over the preceding month and showed an excess of 34 per cent over September 1932. Molding-room operations declined 12 per cent, reversing a trend which has been upward since last March and reach ing a volume which is practically on a level with that pre vailing a year ago. Furniture September orders booked by furniture manufacturers reporting to this bank, though receding 12 per cent from the August volume, continued—for the fifth consecutive month—well in excess of those in the corresponding period LUMBER AND BUILDING MATERIALS TRADE midwest distribution of automobiles Changes in September 1933 From Previous Months Per Cent Change From August 1933 New Cars Wholesale— Number Sold............ Value........................... Retail— Number Sold............ Value........................... On Hand Sept. 30— Number...................... Value........................... Used Cars Number Sold............ Salable on Hand— Number...................... Value........................... September 1932 Class August 1933 September 1932 +148.6 +98.6 20 20 13 13 -21.2 -23.4 +93.1 +64.9 62 62 38 38 +6.3 +6.2 +38.3 +3.8 62 62 38 38 -18.8 +32.3 62 38 62 62 38 38 +34.3 +8.6 Trade Sept. 1933: Per Cent Change From Number of Yards Companies Included -28.0 -28.7 +6.6 +3.6 of August 1933 Wholesale Lumber: Sales in Dollars............................... Sales in Board Feet........................ Accounts Outstanding1................. Retail Building Materials: Total Sales in Dollars................... Lumber Sales in Dollars............... Lumber Sales in Board Feet.... Accounts Outstanding1................. Sept. 1932 -17.2 -15.9 -7.9 +44.9 +20.4 +47.9 12 10 11 -9.3 -12.7 -11.0 +i.i -4.5 +1.8 -3.8 -9.5 166 55 66 162 Ratio of Accounts Outstanding1 to dollar sales during month Sept. 1933 Wholesale Trade................................. Retail Trade......................................... 216.2 380.7 August 1933 194.5 342.0 Sept. 1932 211.7 399.9 lEnd of month. Page 5 a year ago. Shipments also showed the fifth substantial gain in the yearly comparison—51 per cent; and were 7 per cent heavier than in August, the sixth successive in crease in the monthly comparison. Total orders booked during the first nine months of this year exceeded by 24 per cent those for the corresponding period last year, and shipments were 10 per cent greater. During the current month, unfilled orders outstanding fell off 15 per cent and stood on September 30 in a ratio of 96 per cent to Sep tember orders, or 5 points lower than a month previous. The rate of operations averaged 60 per cent of capacity in September, unchanged from the preceding month and comparing with 57 per cent a year ago. Shoe Manufacturing, Tanning, and Hides Operations of shoe manufacturers of the Seventh dis trict were not maintained through September at the rate prevailing in August when output exceeded that of any previous month since October 1929. The decline for the month amounted to 9 per cent, which brought produc tion to a level only 8 per cent above that of the same month a year ago, as against a favorable margin of 33 per cent in a similar comparison for August and of 117 per cent for July. Output for the nine months of the year to date totaled 36 per cent larger than in the same months of 1932. The leather industry also registered a recession in September, both production and sales falling off, and tanners finding it difficult to hold prices to levels estab lished in August. The hide market declined as much as 3 cents during the month, enabling packers to dispose of a substantial share of the large holdings which had accu mulated since July. Continued large sales of hides and skins were reported for the first half of October at a fur ther price decline of 2 cents. Building Materials, Construction Work Declines from August were general in Seventh district building materials lines. Distribution of lumber at whole sale and production of cement and clay products recorded greater than seasonal recessions, while operations at retail yards fell off in September in contrast to the increase usual in previous years. Midwest cement shipments exceeded production and were almost equal to those of August, but amounted to only about 65 per cent of the year-ago vol ume. Buying of materials in anticipation of price in creases, which had been an important factor for several months, was largely eliminated at the higher levels which quotations had attained. Business of reporting wholesale lumber dealers con tinued the downward trend of August and recorded smaller increases over a year ago than for four preceding months, both in dollars and in board feet. The average August-September decline in sales of recent years has been about 5 per cent. Total sales at retail yards fell below last year for the first time in four months, as a result of a counter-to-seasonal recession from August, amounting to 9 per cent. The ratio of accounts to sales increased at both wholesale and retail, as accounts were not reduced materially. Stocks remained at a low level in most yards. Further price increases were reported by many firms. Building Construction September building activity in the Seventh Federal Re serve district reached the highest level within a year, and total contracts awarded of almost 20 million dollars, were only 2J4 millions below the volume of September 1932. Residential contracts, comprising a little over 18 per cent of total awards, likewise increased to the largest recorded volume since October 1931. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Per Cent Change From Same Month Last Year Net Sales Groceries.............. Hardware............. Dry Goods........... Drugs.................... Electrical Supplies........... Stocks Accts. OUTSTAND. Collec Ratio of Accts. Outstand Change from same period 1932............ $3,606,684 +73% +83% $17,624,539 -16% ± % $103,130,779 Building permits issued during September in the Sev enth district also showed an improvement over the preced ing month, the estimated cost of proposed construction in 95 cities registering an increase of 23 per cent; a decline of 46 per cent, however, was shown in the comparison with a year ago. The number of permits issued fell off 10 and 6 per cent, respectively. Of the five larger cities of the district—Chicago, Detroit, Indianapolis, Des Moines, and Milwaukee—the last alone differed from the district trend in the monthly comparison of estimated cost, while Mil waukee and Detroit were the only two which failed to register a gain over a year ago. Merchandising Wholesale trade data for September recorded less favor able trends, for the most part, than in recent months. Gains over August in grocery, hardware, dry goods, and electrical supply sales were smaller than usual for the period, while a slight recession in the drug trade was con trary to seasonal trend. Expansion in the monthly com parison amounted to 3 per cent in groceries, 2 J4 per cent in hardware, 15 per cent in dry goods, and to less than one-half per cent in electrical supplies, with drug sales de clining one per cent. As compared with a year ago, the in creases shown in the table for hardware, dry goods, and electrical supplies were smaller than in a similar compari son for August, while the declines in groceries and drugs DEPARTMENT STORE TRADE IN SEPTEMBER 1933 Locality ing to Net Sales Per Cent Change September 1933 From September 1932 Ratio of Per Cent Change Sept. Col Nine Months lections to 1933 Accounts From Same Period Outstanding 1932 End of Aug. Net Sales Stocks End of Month 1933 1932 +14.8 +5.6 +5.5 +10.0 +6.6 +31.4 -13.9 +51.0 +27.2 +4.0 +1.0 -19.0 -4.2 -8.2 -7.5 28.2 33.2 34.0 30.0 26.9 21.0 26.4 33.9 28.1 24.8 +9.9 + 17.8 -6.7 29.9 25.6 Net Sales tions -0.8 + 15.6 +3.7 -1.6 +13.8 -4.8 -3.4 -13.1 -2.3 -2.0 +6.6 -10.1 +9.0 +12.9 +24.1 -3.1 109.3 246.2 272.0 219.3 +44.5 +1.2 +14.9 +34.2 191.1 7th District. $19,565,612 -40% ♦Data furnished by F. W. Dodge Corporation. Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. Page 6 Residential Contracts 11 WHOLESALE TRADE IN SEPTEMBER 1933 Commodity Total Contracts Not only was the 66 per cent gain over August in the September retail shoe trade considerably greater than sea sonal, but it followed a contrary-to-seasonal expansion in the earlier month. Reporting shoe dealers and the shoe departments of department stores with few exceptions shared in the increases over both a month previous and last September, the aggregate gain in the latter compari son being 10 per cent. In the nine months of 1933, sales totaled 8 per cent smaller than in the first three quarters of last year. Stocks gained 11)4 per cent during Septem ber, bringing them to 7 per cent above those on hand on September 30, 1932. Sales of furniture and house furnishings at retail ex panded 13 per cent in September over the preceding month, which gain, however, was considerably smaller than the 37)4 per cent shown in the 1927-32 average for the month. Also, the increase of 8 per cent recorded over last September was less than in the year-ago comparison for any of the four preceding months. At the end of the month, stocks totaled 13 per cent heavier than a month previous and S per cent larger than on the corresponding date last year. In reporting groups of chain store trade, groceries, drugs, five-and-ten-cent stores, cigars, and musical instru ments had heavier sales in September than in the preced ing month, while sales by shoe and men’s clothing chains were smaller, the aggregate dollar volume sold by all groups increasing 6 per cent in the comparison. With the exception of musical instruments, no declines were re corded from a year ago, and total sales gained 12 per cent. contrasted with gains recorded a month previous. In the three quarters of 1933, electrical supply sales totaled al most 9 per cent larger than in the same period of 1932, and dry goods sales increased one per cent, but hardware sales aggregated less by 2 per cent, groceries by 6 per cent, and drug sales by IS per cent. Stocks in practically all reporting groups expanded slightly between the end of August and September 30. The 19 per cent increase for September over August in Seventh district department store trade compared with an expansion in the 1923-32 average for the month of 25 per cent. Furthermore, the dollar volume of sales exceeded that of the same month last year by only 10 per cent, as against an increase of 28 per cent in the yearly comparison for August, although the gain for the current period was larger than that shown in July. The 15 per cent increase over last September in Chicago department store sales brought the total for that city in the nine months of 1933 to one per cent above the aggregate for the same period of 1932. In the comparison with the preceding month, sales by Chicago stores were only 7 per cent larger in Sep tember; in Milwaukee they expanded 13 per cent, in In * dianapolis 22 per cent, in Detroit 60 per cent (owing to special sales during the month); while the total for stores in smaller cities showed an increase of but 5 per cent. Continued expansion in stocks was recorded at the end of September, the district total reaching a level 18 per cent higher than a year ago, with the 17 per cent gain over a month previous the largest on our records for September (from 1922). MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. No. of Firms Meat Packing—(U. S.)— Sales (in dollars).................................... 62 Casting Foundries— Shipments: Steel—In Dollars............................... 13 In Tons................................... 13 Malleable—In Dollars..................... 21 In Tons.......................... 21 Stoves and Furnaces— Shipments (in dollars).......................... 10 Furniture— Orders (in dollars)................................. 17 Shipments (in dollars).......................... 17 Flour— Production (in bbls.)............................ 22 Output of Butter by Creameries— Production................................................ 67 Sales........................................................... 69 Wholesale Trade— Net Sales (in dollars): Groceries.............................................. 29 Hardware............................................. 12 Dry Goods........................................... 9 Drugs.................................................... 13 Retail Trade—(Dept. Stores)— Net Sales (in dollars): Chicago................................................. 23 Detroit.................................................. 5 Indianapolis........................................ 5 Milwaukee........................................... 5 Other Cities......................................... 44 Seventh District................................. 82 Automobile Production—(U. S.)— Passenger Cars........................................ Trucks....................................................... Building Construction— Contracts Awarded (in dollars): Residential........................................... Total..................................................... Iron and Steel— Pig Iron Production:* Illinois and Indiana.......................... United States...................................... Steel Ingot Production—(U. S.)*. . . Unfilled Orders U. S. Steel Corp... . Sept. 1933 Aug. 1933 July 1933 June 1933 May 1933 Apr. 1933 Sept. 1932 Aug. 1932 July 1932 June 1932 May 1932 Apr. 1932 62 58 60 56 56 48 57 53 52 50 51 52 19 19 24 38 21 23 24 41 21 25 21 36 18 19 21 37 12 13 16 29 10 10 12 22 12 12 8 14 11 10 8 13 10 9 7 12 12 11 11 19 14 14 12 21 14 15 13 23 101 91 63 58 54 44 80 46 29 39 48 50 40 45 46 42 61 29 30 27 32 26 24 22 31 30 25 22 22 13 14 15 20 24 26 29 93 93 98 121 108 114 118 130 114 120 112 116 99 96 122 116 123 106 139 132 135 113 94 87 92 89 111 102 118 106 141 130 140 112 102 95 70 49 39 61 68 47 34 61 67 46 44 52 71 60 39 58 63 53 34 54 56 38 26 49 70 42 38 61 65 36 28 59 59 35 22 52 71 54 29 66 66 50 32 64 68 52 34 67 68 87 80 73 59 71 65 57 65 65 56 62 47 41 48 52 40 45 66 66 63 63 57 64 61 74 72 68 59 65 56 65 71 70 57 60 61 87 76 66 56 66 45 54 50 53 46 48 39 51 44 48 38 42 59 78 67 67 56 63 60 86 67 71 60 66 64 89 75 81 67 71 55 93 67 110 67 101 72 111 63 89 52 73 22 52 26 38 32 38 55 60 54 70 41 73 12 29 7 22 9 27 8 19 10 15 5 10 7 32 7 32 7 24 10 27 10 36 9 24 42 52 67 37 52 60 81 40 59 59 96 42 45 43 75 44 31 29 56 40 18 21 41 39 20 20 29 42 22 17 24 41 26 19 24 41 29 21 26 43 30 26 33 46 32 29 36 49 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) * r\URING September and the first half of October, industrial activity declined, as it had in August, following the rapid expansion of the spring and early summer. Factory employment and payrolls increased further between the middle of August and the middle of September. _ Index number of industrial production, adjusted for seasonal variation (1923-1925 average = 100). Employment FACTOR' EMPLOY vIENT AND PAYROLLS Employment of factory workers increased between the middle of August and the middle of September, and total earnings were larger, partly as a result of further ad vances in wage rates and the expansion of operations in seasonally active industries such as canning. Employment in public utilities, railroads, stores, and mines also increased, and it is estimated that about 600,000 industrial wage-earners found work t during the period. Preliminary reports for the first half of October indicate some decrease in employ ment and a continuation of about the same volume of earnings in basic manufactur ing industries. /"*S Implogment Payrolls\ \ -A y„, \/N 1926 1929 1930 1931 Production Industrial production, as measured by the Board’s seasonally adjusted index, de clined from 91 per cent of the 1923-1925 average in August to 84 per cent in Septem ber. Activity decreased in most lines of industry, and particularly in those in which output had increased rapidly in earlier months. Production of steel, lumber, cement, bituminous coal, and petroleum declined considerably and automobile output was reduced. Deliveries of silk to mills were small in September, while consumption of cotton and wool, although reduced during the month, was nevertheless larger than • in other recent years at this season. Meat-packing plants were more active partly because of processing of pigs under the Government’s emergency marketing program; and output of flour was larger than the exceptionally small volume produced in August. In the first half of October further declines in output of automobiles, bituminous coal, and petroleum were reported. Steel mill activity, after increasing in the first half of October, receded in the third week. Construction J 1932 1933 Indexes of factory employment and payrolls, with out adjustment for seasonal variation (1923-1925 aver age =100). Construction contracts awarded increased in September to the highest level for the year, according to reports by the F. W. Dodge Corporation, the largest volume of new awards being for public works and for other non-residential projects. In the third quarter of the year value of construction contracts was 25 per cent of the 1923-1925 average. Distribution WHOLESALE PRICE 5 no uo — arm Product 100 too roods 90 00 s 80 TO ~ 60 50 1930 1931 - / J ZJ._ c //*• a 1929 ■ Prices 90 Other Commodities —^ t928 Sales at department stores in leading cities increased less than seasonally in Sep tember, following an unusually large increase in sales in August. Trade reports in dicate that sales volume was affected by unseasonably warm weather and by price advances. Sales of chain variety stores continued in somewhat larger volume than in 1932. On the railroads, average daily freight shipments during September increased by somewhat less than is usual in the early autumn, but were in larger volume than at any time since the latter part of 1931. In the first two weeks of October carloadings were at a higher level than in late September. 1932 1933 Index of United States Bureau of Labor Statistics (1926=. 100). During September and the first two weeks of October the general average of wholesale prices in the United States was relatively stable at about 71 per cent of the 1926 average, reflecting, however, widely divergent movements in prices of individual commodities. Prices of raw materials traded on organized exchanges declined sharply during the first two weeks of October and then recovered somewhat. There have been further advances during recent weeks in prices of fuels, iron and steel, building materials, and house furnishings, while prices of cotton textiles and leather have de clined. Retail prices of food showed little change in September, while prices of clothing continued to advance. ■ Foreign Exchange The value of the dollar in the foreign exchange market fluctuated around 65 per cent of its gold parity during the latter part of September and the first half of Octo ber, advanced to 71 per cent in the third week, and declined to 70 per cent on Octo ber 23. Bank Credit HIILI0N3 OF OCULARSMILUOWSOfl moo 4000' RESER?/E BANK CREDIT 3500 3000 Total . .lU 1000 500 l, v __ A I 2000 H 3000 2500 1500 US.___ GoVtjjSecunb^-i^J /yflbv,'.-. \ 0 192.9 1930 JhDtscounte^ \ 1931 500 ^ccejAances*"' i \ 1932 1933 0 Wednesday figures for twelve Federal Reserve banks. Latest figures are as of October 18, 1933. Page 8 Excess reserves of member banks increased by $100,000,000 between September 13 and October 20, in consequence of the purchase by the Federal Reserve banks of $170,000,000 of United States Government securities during the period, offset in part ^ by a further decline in discounts and a seasonal increase in the demand for currency. While these purchases of United States Government securities were made chiefly in New York City, member bank funds arising from these purchases were transferred to other parts of the country through expenditures in outlying areas by Federal agencies, and through payment for crops marketed. At reporting member banks in leading cities there was little change in loans and investments during this period; a decline in the volume of loans on securities was offset by a growth in all other loans. Money rates in the open market continued at low levels. On October 20 the Federal Reserve Bank of New York reduced its buying rate on bills from a range of 1 to 1% per cent for different maturities to a range of V* to 1 per cent. The rediscount rate at New York was reduced from 2J4 per cent to 2 per cent, effective October 20, and on October 21 the Federal Reserve Banks of \ Cleveland and Chicago reduced their rediscount rates from 3 per cent to V/2 per cent.
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