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Business Conditions Seventh FEDERAL C Eugene M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent ... Volume ,0 18, Reserve DISTRICT _ M No. It 11 w Harris G. Pett, Manager Division of Research and Statistics John H. Martin, 4ist. Federal Reserve Agent, Detroit Branch George A. Prugh, Asst. Federal Reserve Agent MONTHLY reserve PUBLISHED Chicago federal REVIEW bank of BY THE 11 uctober oi, IQI* liftso GENERAL SUMMARY last year and were much above normal for the period. September wheat receipts at interior primary markets were not far below average, although reshipments re mained relatively light; total supply of the grain on October 1 was about one-third under normal. The movement of corn in September continued unusually small, while oats receipts were above the average and reshipments under it. The harvesting of autumn crops has made excellent progress in recent weeks. The September trend in the merchandising of com modities was seasonally upward in the majority of re porting groups: the wholesale grocery and hardware trades sold a larger dollar volume than a month previ ous; and the department store, retail shoe, and retail furniture trades reported sales increases that were sea sonal in nature. The wholesale drug and electrical sup ply trades recorded declines from August that were contrary to trend for September, but both groups showed substantial increases in sales over the month last year. A 70-million dollar increase took place between Sep tember 18 and October 16 in member bank reserve balances, due to a heavy inflow of funds to the district through commercial and financial transactions. Both loans and investments of reporting member banks de clined in this period, while deposits in these banks increased. Dealer sales of commercial paper fell off seasonally in September and were under a year ago, while new financing by means of bankers’ acceptances decreased more than usual and was much below aver age for the month. NDUSTRIAL production in the Seventh district, with few exceptions, was maintained in good vol ume during September, and in most phases activity was at a level well above that of last September when a declining trend prevailed. Demand for steel was well sustained in the Chicago district, and the rate of ingot output held steady at around 60 per cent of capacity throughout September, although by the middle of October it had dropped sev eral points. Daily average pig iron production in the district was the heaviest in September of any month since May 1931. Output of steel and malleable castings approximated that of a month previous, and furniture shipments showed a greater-than-seasonal gain. Build ing construction continued to expand in September. In all these phases, activity recorded marked increases over the month last year. The automotive industry furnished a major exception to these trends, dropping sharply from August and totaling under a year ago. This industry again effected a decline in aggregate in dustrial employment in the district, though failing to prevent a rise in total payrolls over a month previous. Production of packing-house commodities declined in September as did the tonnage sold; however, daily average production increased slightly, and the aggre gate dollar value of sales gained in both the monthly and yearly comparisons. Butter production and sales fell off from the preceding month and totaled under a year ago, but inventories remained above average. The manufacture and distribution of Wisconsin cheese in creased in September over August and over September I FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) October 16, 1935 . .$• 358.1 . . 0 . . 0.6 .. 355.7 . . 1,310.7 . . 825.4 .. 812.9 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. 80.0 Change From September October 17, 1934 18, 1935 $-71.4 5-0.1 -0.0 0 +0.0 -0.2 -72.7 0 + 48.5 + 247.8 + 51.3 + 139.5 + 37.8 + 4.3 + 0.3* + 7.3* Credit Conditions and Money Rates Commercial and financial transactions with other dis tricts resulted in a net inflow of more than 83J4 million dollars to the Seventh Federal Reserve district during the period from September 18 to October 16, and to gether with an increase in the volume of reserve bank credit extended within the district amounting to 7 mil lions (representing almost entirely an increase in “float”), considerably more than offset net payments made to the Treasury totaling 17 million dollars. Reflecting this ad dition to banking reserves, member bank reserve balances showed a substantial gain amounting to almost 70 mil lions. Demand for currency increased somewhat during the four-week period. Detailed changes in items affecting the sources and uses of Chicago Reserve bank credit are given in the accompanying tabulation. Changes between September 18 and October 16 in Factors .Affecting Use of Federal Reserve Bank Funds—Seventh District (Amounts in thousands of dollars) Reserve bank credit extended (exclusive of amounts to other districts)......................................................................................................... ~ Commercial operations through inter-district settlements................. Treasury and National bank currency..................................................... Total supply.................................................................................... Demand for currency...................................................................................... Member bank reserve balances................................................................... Treasury cash and deposits at Federal Reserve Bank of Chicago. . Special and "all other" deposits.................................................................. Other Federal Reserve accounts.................................................................. + 7,104 + 83,749 -30,475 + 60,378 +3,372 J + 69,705 4t -13,518 + 683 + 136 + 60,378 Total demand A range of 1 y2 to 5 per cent was reported as the pre vailing rate charged by down-town Chicago banks on customers’ commercial loans during the week ended Oc tober IS, unchanged from the corresponding week in September. The average rate earned by down-town banks in Chicago during the calendar month of September was 2.93 per cent, as compared with 3.06 per cent in August and with 2.99 in September 1934. In Detroit, the pre vailing rate on customers’ commercial loans for the week ended October 15 was reported as 3J4 to 6 per cent, as against 3^ to 5 per cent in the corresponding week of September. Sales of commercial paper by dealers in the Middle West showed a seasonal decline of 12 per cent in Sep tember from the preceding month and were 14 per cent below the corresponding month a year ago. Borrowing remained in about the same volume as a month earlier, and there was little change in the investment demand from either city or country banks. Selling rates during the period were unchanged from August, ranging from y2 to per cent for prime short-term paper to and 1 per cent for paper less well-known or of longer maturity, with the bulk of transactions moving at £4 Per cent. September 30 outstandings of commercial paper were only slightly below August 31, and remained above any previous month since October 31 last year. In conse quence of continued limited supply, commercial paper sales during the first fifteen days of October declined 34J/2 per cent from the first half of September. Receipts of acceptances in the Chicago bill market from Eastern cities increased 73 per cent during the five weeks ended October 16 over the preceding period, the CONDITION OF LICENSED REPORTING MEMBER BANKS SEVENTH DISTRICT (Amounts in millions of dollars) October 16, 1935 Total loans and investments............................... $2,181 Total loans on securities.................................. 219 To brokers and dealers In New York.......................................... 1 Outside New York................................ 26 To others......................................................... 192 Acceptances and commercial paper bought. 28 Loans on real estate.......................................... 30 Other loans........................................ 307 U. S. Government direct obligations........... 1,165 Obligations fully guaranteed by U. S. Government.................................................... 110 Other securities................................................... 322 Net demand deposits*.......................................... 2,089 Time deposits.......................................................... 557 Borrowings from Federal Reserve Bank........ 0 Change From September October 18, 1935 $-34 -7 17, 1934 $ + 252 ' -67 -2 0 0 -20 -25 +2 -44 -35 -7 -16 + 299 +1 + 20 0 -5 -2 -6 + 52 +2 + 58 + 356 + 67 0 0 *Demand deposits subject to reserve. Method of computation changed on August 24, 1935. Pag* 2 gain more than offsetting a decline in local purchas which remained in small volume; as a consequence, t supply of acceptances between September 12 and Octob 16 was 49 per cent greater than a month earlier. Sal to out-of-town banks were the heaviest since Octob 18-November 14, 1934, and together with an increa in sales to local banks equaled total supply, shipmen to Eastern markets being nil during the period. Rat were unchanged from the preceding period, ranging fro y& to yV per cent. New financing by means of bankers’ acceptances d dined more than seasonally in the Seventh Federal R serve district in September from August, and was \ per cent below the 1925-34 September average. Decreas from the preceding month, a year ago, and the 1925-2 average for the month, in the direct discounting of the: bills at the originating banks were only partially offs by a marked gain over August in the buying of othi banks’ acceptances. Total purchases, therefore, aggr gated 12 per cent under the preceding month and wei 79y2 per cent below the ten-year average. Sales wei nil during September. Maturities, however, for the secor consecutive month totaled somewhat greater than currei purchases, so that bill holdings of accepting banks wei reduced 2 y2 per cent on September 30 from the end < August. The liability for outstandings showed a sligl decline in September from the two preceding month In the first half of October, new financing by means ( acceptance credits increased 43 per cent over the corn sponding weeks of September. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED B A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in September 1935 Frc August 1935 Sept. 19. Total value of bills accepted............................................ Purchases (including own bills discounted)................ Sales........................................................................................ Holdings*............................................................................... Liability for outstandings*............................................... —35.2 —12.2 0 —2.7 —1.1 —35.3 —77.1 0 -59.3 —28.6 *At end of month. Security Markets The Chicago bond market was somewhat lacking i distinctive features during September, although deman for investment securities in the period showed a sligl improvement over August. The general price level we irregular, prices firming at the beginning of the montl declining somewhat toward the middle of the period, an regaining much of the loss in the latter part of the montl High-grade issues continued to be shown preference i demand which still comes primarily from banks and ii stitutions. The volume of new financing was well mail tained during September, and offerings for the most pai were well received. The market for municipal bonds we somewhat unsettled; however, there appeared to be firming in price and a better demand for this type c security during the early part of October. Prices on th Chicago Stock Exchange moved slightly higher in th second week of October. The average price of twent leading stocks* amounted to $42.23 on October 17, a compared with $40.10 on September 17. ♦Chicago Journal of Commerce. VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Sept. 1935 Chicago......................................................... . .$2,500 Detroit, Milwaukee, and Indianapolis. . . 964 Per Cent of Increasi or Decrease From Aug. 1935 Sept. 193 -3.7 + 20.3 -8.2 + 23.7 Total four larger cities............................. ..$3,464 36 smaller centers...................................... . . 586 -5.0 -4.1 + 21.3 + 20.9 Total 40 centers......................................... . . $4,050 -4.8 + 21.2 Agricultural Products 1 The excellent weather conditions which obtained dur ing the last half of September brought corn in most sections of the Seventh Federal Reserve district close to the normal rate of maturity before growth was stopped by early autumn frosts. Furthermore, October weather has been unusually favorable for drying out the crop. Frost damage thus far in 1935 has been largely confined to sections in the extreme southern portion of the district where corn had an exceptionally late start last spring and where early autumn frosts were more severe than in other sections of the district. The harvesting of autumn crops has made excellent progress in recent weeks. Moreover, a fair proportion of winter grain had been sown by mid-October, and early seedings of winter wheat were reported as being up to a good stand. Grain Marketing Receipts of wheat at interior primary markets in the United States decreased less than seasonally in Septem ber from August, and were not only 125*4 per cent ' greater than a year earlier but within 12*4 per cent of the 1925-34 average for the month. Reshipments re mained relatively light, being 46J4 per cent under the ten-year normal, though rising counter-seasonally by 7 per cent over August to a level 6 per cent above last September. Exports remained negligible and imports were no greater than in the corresponding month of 1934. Visible supplies of the grain in the United States accumulated by more than a normal amount in early October over the beginning of September but were 30 per cent smaller than a year ago. On the other hand, * farm holdings exceeded those of last year. The total supply of wheat in these two positions was about the same as on October 1, 1934, and one-third less than the 1926-34 seasonal average. Prices advanced sharply in September and early October over those of August, coinci- * CROP PRODUCTION Estimated by the United States Bureau of Agricultural Economics on the basis of October 1 condition (In thousands of bushels unless otherwise specified) Seventh District Forecast Final Corn...................... Oats........................ Winter Wheat. . . Spring Wheat. . . Barley.................... Rye........................ Buckwheat........... Flaxseed................ Soybeans.............. Potatoes (white). Potatoes (sweet). Sugar Beets1.... Apples (total) . . . Peaches................. Pears...................... Cranberries2......... Grapes1................. Dry Beans3.......... Tobacco4............... All Tame Hay1. . Wild Hay1........... Broom Corn1.. . . Onions3.................. Cabbage1.............. Celery5.................. Canning Crops: Sweet Corn1... Tomatoes1. . .. Beets1................ Lima Beans1. . . . . . . . . . . . . . . . . . . . . . . . . . - 1935 816,972 442,514 55,468 2,266 47.680(a) 11.638(a) 1.050(a) 237(b) 29.446(c) 55,223 1.356(c) 892(d) 22.510(a) 6.232(e) 1.554(e) 77(f) 78(a) 4.617(g) 17,122 17,825 646(a) 13(h) 2.714(a) 239 (i) 726(j> 1934 482,658 183,361 49,293 1,632 28.880(a) 5.560(a) 1.267(a) 151(b) 14.742(c) 66,027 1.180(c) 999(d) 12.085(a) 1.290(e) 1.638(e) 59(f) 75(a) 3.400(g) 12,764 9,856 498(a) 12(h) 2.612(a) 2(32 (i) l,044(j) . . . ■ 481(a) 408(e) 23(k) 1(d) 222(a) 352(e) 17 (k) 2(d) United States Forecast Final Average 1935 1934 1928-32 2,213,319 1.377.126 2.562.147 1,183,870 525.889 1.217.646 431,709 405,552 618,186 167,226 91,377 242^385 290,297 118,348 282,841 52,236 16,045 38,655 7,818 9,042 8,277 14,115 5,213 15,961 32,870# 17,036# 10,204# 365,995 385,421 363,367 69,027 67,400 63,841 8,453 7,481 8,118 168,209 120,670 161,333 52,380 45,665 56,451 21,425 23,490 23,146 485 443 581 2,327 1,931 2,200 14,005 10.369 11.858 1,272,945 1,045.660 1.432.845 76,707 52,269 69,591 12,330 4,759 10,793 54 32 47 14,432 12,980 13,402* 933 1,230 964* 8,359 8,614 9,418* 883 1,768 52 17 496 1,406 40 17 587* 1,310* 34* 12* lIn thousands of tons. 2In thousands of barrels. 3In thousands of 100-lb. bags. _ 4In thousands of pounds. 5In 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, Michigan, Indiana, and Iowa, (f) Wisconsin, (g) Michigan and Wisconsin, (h) Illinois, (i) In diana, Michigan, Wisconsin, and Iowa, (j) Michigan and Indiana, (k) Wis consin, Michigan, and Indiana. #The six leading commercial producing states. *1929-33 Average. dent with political disturbances in Europe and with con firmation of previous reports that extensive drought damage in the Southern hemisphere had reduced world estimates for the 1935-36 crop season to a level slightly under a year earlier. Quotations had eased somewhat by October 21. Despite a narrowing in the disparity in recent weeks, December options on October 21 ranged from 14 to 21 cents under quotations covering No. 2 hard winter wheat for immediate delivery. The movement of corn continued unusually light in September, being only one-third that of a year ago and the 1925-34 average for the month. Receipts of the grain expanded 12*/i per cent over August but reshipments declined in this comparison. Exports were practically nil. October 1, 1935 carry-over of 1934 corn in the United States was only one-third the average of the preceding nine years, but the deficiency was largely counteracted by increased holdings of oats and by a much larger prospective supply of new corn than in 1934. Prices of cash corn advanced in September and early October. Quotations had eased by October 21 but were considerably above those of December futures. Receipts of oats at these centers of concentration in the United States fell off less than is usual in September from August and were not only 348 per cent heavier than last September but 61'/2 per cent greater than the 1925-34 average for the month. On the other hand, re shipments of the grain increased counter-seasonally by 52J4 per cent over August but were 7 per cent under this ten-year average and only 59 per cent in excess of the corresponding period of 1934. Exports were negligible, though slightly heavier than a year ago. After strengthen ing in September and early October, prices had eased somewhat by October 21. December futures on that date, however, were only slightly under quotations covering immediate delivery. Movement of Livestock Receipts of cattle and calves at public stockyards in the United States were at a higher level in September than for any previous month since last October and slightly exceeded the 1925-34 average for September but were 40 per cent under a year ago, with more than a normal gain in cattle marketings over August and a counter-to-seasonal expansion in those of calves. Lamb receipts increased less than normally over a month earlier, were 13 per cent under the ten-year average, and 15 per cent below last September. Hog marketings decreased further from the exceptionally small volume of August. Movement to inspected slaughter (inclusive of animals that did not pass through public stockyards) deviated from the trend of market receipts in several instances: LIVESTOCK SLAUGHTER Cattle Yards in Seventh District, September 1935.............................. Federally Inspected Slaughter, United States September 1935.............................. August 1935..................................... September 1934.............................. .. . 227 ... . . . . . . 886 875 1,804* Hogs Lambs and Sheep Calves 241 1,453 1,668 2,601 317 70 1,549 1,665 1,743* 458 472 843* ♦Inclusive of slaughter for relief agencies. AVERAGE PRICES OF LIVE STOCK (Per hundred pounds at Chicago) Native Beef Steers (average). . . Fat Cows and Heifers.................. Calves................................................ Hogs (bulk of sales)...................... Lambs................................................ Week Ended Months of Oct. 19 September August September 1935 1935 1935 1934 ___ $10.45 $10.60 $10.65 $8.00 ___ 7.35 7.55 7.85 5.35 ----8.50 9.00 9.00 7.10 .... 10.05 10.95 10.85 6.85 9.50 ___ 9.15 8.90 6.15 Page 3 the supply of cattle gained less than usual over August, and was not only under November and December 1934 and January 1935 but 1J4 per cent below the 1925-34 average for the month; that of lambs decreased from August, contrary to seasonal tendency, but exceeded the 1925-34 September average; and the supply of calves declined more than is customary for September. Reshipments to feed lots in September were above any month since last October; those of cattle showed more than a seasonal gain over August, and the movement of feeder lambs and calves increased less than usual. The volume of cattle and calves exceeded the 1930-34 average for the month but was under last September, and that of lambs declined in both of these comparisons. Meat Packing The production of packing-house commodities in the United States declined 3J4 per cent in September to a level 22J4 per cent under the 1925-34 September average, 38 per cent below total production of last September which included processing for relief agencies, and 16 per cent under the commercial production of a year ago. Daily average production, however, was slightly above August. The aggregate sales tonnage fell off slightly and showed not only a smaller than seasonal excess over current pro duction but a decrease of 13 per cent from last Sep tember and of 25per cent from the 1925-34 normal for the month. Despite a decline in beef and a few other products, the general price level of packing-house commodities was fully up to that of the preceding month. Sales billed to domestic and foreign cus tomers rose 3J4 per cent in total value over August and were 13J4 per cent above a year earlier and within 11^2 per cent of the 1925-34 average for the month. Inventories of packing-house commodities in the United States decreased less than is usual on October 1 from the beginning of September, but were 430,728,000 pounds under the corresponding date of 1934 and 322, 469,000 pounds less than the 1930-34 October 1 average. Payrolls for the last week of September indicated a de cline from August of 2J^ per cent in number of employes, 3J4 per cent in hours worked, and of 4 per cent in wage payments, and also showed a greater recession from 1934 than had been evidenced in any earlier period of 1935. Shipments for export were reduced further to an ex ceptionally small volume in September, with hams, shoul ders, and other meats to the United Kingdom comprising the bulk of the tonnage; lard forwardings to Cuba de creased and those to the United Kingdom were reduced to negligible proportions. British trade in American lard was unusually light, due to high prices resulting from limited supply and to a continuance of keen competition in offerings originating from Continental and South American producers. Moreover, the increasing use of substitutes for animal fats has reacted unfavorably upon the lard trade both in the United Kingdom and in Cuba. British demand for American hams was fair; Continental trade in American products remained practically nil dur ing the entire month. Prices of United States lard in British markets moved a little closer to the Chicago parity during September and quotations for hams remained under the United States basis. Inventories of United States packing-house commodities in foreign countries—inclusive of stocks in transit—were reduced further on October 1 to an excep tionally low level. Importations of animal products into the United States declined in September. Pag© 4 Dairy Products The production of creamery butter in the Seventl Federal Reserve district declined 16 per cent in Septem ber from August and from a year ago but was 4 per cen greater than the 1925-34 average for the month. Th< sales tonnage fell off 18 per cent from a month earliei and 11 per cent from last September, but was about or a level with the ten-year average. United States produc tion of the commodity followed a similar trend, excep that the recession from August and a year ago was small© than in the Seventh district and the increase over th» September average was greater. Despite the continuanci of Government purchases, inventories of creamery butte in the United States fell off less than seasonally on Oc tober 1 from the beginning of September, and were no only 23,619,000 pounds in excess of the correspondini date of 1934 but 28,488,000 pounds above the 1930-3October 1 average. Prices were advanced 4per cen in September over August. Wisconsin manufacture of American cheese rose l1 / per cent in the four weeks ended September 28 over tb preceding period to a level 31per cent higher than i year previous and 48J4 per cent above the 1930-34 aver age for the period. Sales recorded more than the usua deficiency from current production, but exceeded thos of August by Sy2 per cent and were not only 36 per cen above a year ago but 29 per cent greater than this five year average for September. Total inventories of chees in the United States accumulated more than seasonal! on October 1 over the beginning of September and wer 11,071,000 pounds in excess of the 1930-35 average fo that date. September prices were 3J4 per cent abov those of August. ^ J t ' Industrial Employment Conditions Payroll figures reported for September by Seventh dis trict industries reflected a rising trend in every majc industrial group except the manufacture of vehicles an transportation equipment. This group, constituting a important portion of the district totals, showed a decreas in wage payments of 4J4 per cent, thereby lowering th aggregate figure which, nevertheless, registered an ir crease of almost 3 per cent over a month earlier. Err. ployment figures for the month recorded a less favorabl trend than did payrolls, a decline of 11 per cent in th vehicles group together with a decrease of one per cen in the paper and printing industries more than offsettin EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week Industrial Group of Report ing Firms September 15, 1935 Wage Earners Change From Aug. 15, 1935 Earnings (000 Omitted) Wage Earn $ % % + 3.7 -10.8 + 4.5 + 2.7 + 2.7 + 3.5 + 1.7 + 2.1 + 11.7 -0.9 + 6.9 -4.4 + 12.2 + 5.3 + 3.8 + 8.3 + 3.2 ers Earn ings No. No. Textiles and Products. . . . Food and Products............. Stone, Clay, and Glass.... Wood Products.................... Chemical Products............. Leather Products................ Rubber Products................. Paper and Printing............. 1,165 223 258 541 150 339 159 112 25 505 252,521 232,004 46,306 92,595 10,837 31,885 21,022 25,042 10,320 60,413 6,058 6,224 895 2,021 233 589 513 477 235 1,512 Total Mfg., 10 Groups----- 3,477 782,945 18,757 -1.5 + 2.4 Merchandising2.................... Public Utilities.................... Coal Mining.......................... Construction........................ 1,470 110 17 348 86,010 80,920 3,667 17,339 1,731 2,518 70 + 7.2 + 1.4 104. 335 + 7.6 -0.0 + 94.3 + 3.8 Total Non-Mfg., 4 Groups. 1,945 187,936 4,654 + 4.7 + 4.7 Total, 14 Groups................. 5,422 970,881 23,411 -0.4 + 2.8 Metals and Products1........ *Other than Vehicles. Illinois and Wisconsin. + 1.5 + 20.5 + 1.3 + 6.2 , the gains in other groups and resulting in an aggregate loss of one-half of one per cent in the number gainfully * employed within the district. Comparisons of current figures with those of a year ago indicate increases of ll 2 / per cent in the volume of employment and 18 per cent in aggregate payrolls. Practically all the metal industries outside of vehicles contributed to the September gains, employment and pay rolls in this group reaching the highest volumes recorded since the spring of 1931. The vehicles group, despite a steady decline in recent months, remains above the level of a year ago, by 9 per cent in number of workers and 7 per cent in w’age payments. Other manufacturing groups in which substantial gains were recorded during both August and September w7ere the textile, wood prod ucts, and stone-clay-and-glass industries. The percentage increases reported by the food-products group for Sep tember were slightly in excess of the decreases that took place during the preceding month. Non-manufacturing industries registered a general rise of close to 5 per cent each in employment and payrolls, with all reporting groups contributing to the gain in the latter and all but public utilities to that in the former. The coal-mining <* industry showed increased activity in September, the number of men and wage payments being practically double those of a month earlier. The construction in dustry continued an expansion that has prevailed since last February. Public utilities increased payrolls by a moderate percentage and the merchandising group added slightly more than 7 per cent to both employment and payroll volumes. m * Manufacturing Automobile Production and Distribution The low point of passenger automobile production since November 1934 (the low for that year) was reached in September this year when output numbered only 57,285, as compared with 182,389 in August and with 125,040 in September last year. In the first three quarters of 1935, however, production totaled 2,388,189, as against 1,933,835 in the same nine months a year ago. Truck output in September numbered 32,520, which compares with 57,662 a month previous and 44,967 last September; for the nine months of 1935, production amounted to 540,856 trucks, comparing with 450,179 for the corre sponding months of 1934. September data on distribution of new automobiles in the Middle West reflect the fact that dealers and dis tributors are awaiting new models, current sales having dropped considerably from those of August and totaling substantially under those of last September at wholesale and moderately so at retail. Furthermore, stocks were almost 35 per cent less in number than at the close of August and 33 per cent lighter than a year ago. As regards used cars, on the other hand, September sales, though declining 25 per cent from the preceding month, were 22 per cent heavier in number than in the month last year, and stocks were only 6 per cent lighter than on August 31 and 16 per cent larger than on September 30, 1934. Deferred payment sales in September amounted to 43 per cent of total retail sales of dealers reporting the item, as compared with a ratio of 46 per cent for August and one of 49 per cent a year ago. Iron and Steel Products Demand for finished steel was well sustained during September in the Chicago district, and continued good into the early part of October. The automotive industry constituted the principal source of demand in September, with the agricultural implement industry and miscella neous users of steel also specifying rather freely; very little business has come as yet from the railroads. Pro duction of steel ingots in the district averaged close to 60 per cent of capacity through September and the early part of October, but dropped to 55)4 per cent in the middle of the month, although orders and specifications continued good. Average daily pig iron production in the Illinois and Indiana district was larger for September than for any month since May 1931 and was double that of last September. Scrap iron and steel prices have shown little quotable change in recent weeks; pig iron is notably strong in price. Production of steel and malleable castings totaled about as heavy in September as in August at which time a substantial increase had been recorded over the preceding month. Shipments also equaled the volume of the preceding month, as did orders for malleable castings, but bookings of steel castings declined 13 per cent. Increases over a year ago were substantial in all comparisons, steel castings recording gains of 32 per cent in tonnage shipped and close to 60 per cent each in production and orders, while for malleable castings the corresponding increases amounted to 61, 69, and 106 per cent, respectively. In the manufacture of stoves and furnaces, seasonal activity was reflected in a further rise of 20 per cent in molding-room operations from August to September, and in increases of 45 per cent in orders accepted and 48 per cent in shipments. Inventories declined 16 per cent during the month and were 5 per cent lower than at the close of September 1934. In comparison with a year ago, current orders, operations, and shipments were larger by 31, 33, and 42 per cent, respectively. Furniture A greater-than-seasonal increase was recorded for Sep tember in shipments by Seventh district furniture manuLUMBER AND BUILDING MATERIALS TRADE Class of Trade MIDWEST DISTRIBUTION OF AUTOMOBILES Changes in September 1935 from Previous Months Per Cent Change From August 1935 New Cars Wholesale— Retail— On Hand September 30— Used Cars Salable on Hand— Value............................................... Sept. 1934 Companies Included -57.7 -60.5 -32.6 -39.4 23 23 -31.2 -31.4 -10.8 -15.8 46 46 -34.5 -29.6 -32.7 -29.0 46 46 -24.7 + 22.0 46 -6.2 -8.5 + 16.2 + 5.5 46 46 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.................. September 1935: Per Cent Change From Number of Firms or Yards August 1935 Sept. 1934 -0.2 -12.1 + 3.7 + 38.3 + 22.2 + 17.7 10 8 10 + 9.7 -1.5 -2.0 .+5.8 + 40.4 + 31.7 + 55.3 + 11.5 176 64 74 168 Ratio of Accounts Outstanding1 to Total Dollar Sales During Month Sept. 1935 Wholesale Trade................................. Retail Trade......................................... 159.2 246.5 August 1935 Sept. 1934 153.2 256.8 187.2 312.2 1End of Month. Page 5 facturers, while orders booked failed to expand. The former item gained 16 per cent over the preceding month and the latter showed no change, as compared with in creases of 12 and 8 per cent, respectively, in the 1927-34 average for the month. Owing to a larger volume of shipments than orders and a moderate amount of cancel lations, unfilled orders on hand at the end of September declined from those of a month previous by 8 per cent, and their ratio to current orders dropped from 100 per cent for August to 92 per cent in September but com pared with 74 per cent a year ago. All items showed marked gains over September last year, orders booked totaling 49 per cent, shipments 61 per cent, and unfilled orders 84 per cent heavier than at that time. Operations rose from 64 per cent of capacity in August to 67 per cent in September, and were 14 points higher than in the corresponding month of 1934. Shoe Manufacturing, Tanning, and lines continuing below normal but slightly higher than in the same month a year ago. Building Construction Activity in Seventh district building construction con tinued to expand during September. Residential contract awards in the month amounting to 21 y2 per cent of the total, registered a gain of more than a million dollars over the August volume, and accounted for the slight increase shown in total building contracts. In the first three quarters of 1935, residential building exceeded that of the entire year 1934 by over 50 per cent and showed even greater gains over the years 1933 and 1932; the current aggregate, however, is relatively low as against earlier years. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Hides Shoe production in the Seventh district continued through September at a level that was considerably higher than the seasonal average for the month, although pre liminary reports indicated a 9 per cent recession from the heavy output of the preceding month. Final produc tion data for August showed an increase of 13 per cent over July, were 2 per cent larger than in the same month a year ago, and IS per cent in excess of the 1925-34 seasonal average for this month. The tanning of leather declined during September, while prices rose and sales were larger. The movement of packer green hides and skins in the Chicago market continued active, the volume traded being approximately as heavy as in August. Prices advanced and in the week of October 12 ranged from A to 1 cent higher than a month earlier on most hide l quotations, and from 1 to 2 cents higher on calf and kip skins. Building Materials, Construction Work Lumber sales by wholesale and manufacturing con cerns of the Seventh district continued in September as in the month preceding to show a less favorable trend than generally prevails at this season. Board-foot sales showed a 12 per cent decrease, as compared with an average August-September decline of 6l 2 per cent in / the ten years preceding. Owing to the greater than seasonal expansion that occurred during the first half of the year, however, current sales continued appreciably in excess of those reported a year ago. At retail yards of the district, total sales of materials showed a rising trend in September, while sales of lumber declined—both in line with the usual movement at this season. Out standing accounts increased during the month both in wholesale and retail distribution, wholesale accounts be ing larger in ratio to current sales than during the pre ceding month. Little change was noticeable during Sep tember in the demand for other building materials such as brick and cement, the volume of business in these Period Change from same period 1934............ STANDING TO Net Sales Stocks + 12.3 + 32.1 + 15.1 -5.7 + 5.3 + 6.8 -6.6 + 8.6 + 1.2 + 1.4 + 21.5 + 12.0 79.4 170.0 156.4 + 50.1 + 6.5 + 18.7 + 48.0 156.7 Accounts Out Col lections standing Groceries.............. Hardware............. Drugs.................... Electrical Supplies........... Page Digitized6 for FRASER $6,263,178 + 22.8% + 168.4% $40,504,296 + 92.1% Merchandising September wholesale trade in the Seventh district showed varying trends: grocery sales expanded 13 per cent over the preceding month, the gain comparing with one of only 3 per cent in the 1925-34 September average and with a decline of 3 per cent in the month last year; hardware sales increased about seasonally in the period—9 per cent; drug sales declined 2 per cent, as they did in September a year ago but as against an in crease of 3 per cent in the average for the month; and electrical supply sales dropped off 11 per cent, whereas the seasonal average shows a gain of 2 per cent in the period. All groups except the last-named, however, re corded heavier increases over a year ago than in the corresponding comparison for August; the gain in the grocery trade contrasted with a decline a month previous DEPARTMENT STORE TRADE IN SEPTEMBER 1935 Per Cent Change September 1935 From September 1934 Ratio of Accounts Net Sales $29,156,885 + 0.3% + 45.4% $201,965,479 + 5.7% The valuation of building permits issued in 100 cities of the Seventh Federal Reserve district, totaling approxi mately 8y2 million dollars for September, was only slightly below the August level and continued well in excess of the corresponding month of 1934, the latter increase amounting to more than 100 per cent. The number of permits totaled 6,801 and represented gains of 9 and 63 per cent, respectively, in the monthly and yearago comparisons. Among the larger cities, Detroit and Des Moines both registered declines from August in esti mated cost, while aggregates for Chicago, Indianapolis, and Milwaukee increased somewhat. All five cities showed rather large gains over September 1934. Locality Commodity Residential Contracts ♦Data furnished by F. W. Dodge Corporation. WHOLESALE TRADE IN SEPTEMBER 1935 Per Cent Change From Same Month Last Year Total Contracts Per Cent Change First Ratio of September Nine Collections to Months Accounts 1935 Outstanding From Same End of August Period 1934 Net Sales Stocks End of Month Net Sales 1935 1934 Chicago................. Detroit.................. Indianapolis......... Milwaukee........... Other Cities......... -4.6 + 14.3 -0.5 + 5.0 + 7.7 + 3.5 -0.7 -12.1 -2.2 + 6.9 + 2.6 + 8.9 + 9.8 + 6.7 + 8.2 31.6 43.3 35.6 36.6 30.4 32.5 41.2 36.7 34.5 28.8 7th District......... + 3.3 +1.1 + 6.0 35.0 34.3 and that of SO per cent in electrical supplies with the exception of August was the largest in the yearly com parison since May 1934. In the first three quarters of 1935, grocery sales exceeded those of the same period of 1934 by 2l 2 per cent, drug sales gained 11 per cent, / hardware sales 19 per cent, and the electrical supply trade 23 per cent. In all groups ratios of accounts re ceivable at the close of September to net sales during the month remained smaller than in September last year. Sales of Seventh district department stores expanded 20 per cent in the aggregate for September over the preceding month, the gain comparing with one of 27 per cent in the 1925-34 average for the month. The size of the increases varied widely as among the different cities: sales of Detroit stores showed a 45 per cent gain over August, Indianapolis trade expanded 22J4 per cent, that in Chicago increased 15 per cent and in Milwaukee 14 per cent, while total sales of stores in smaller centers were only 3 per cent larger than a month previous. For the second successive month, Chicago department store trade was less than in the corresponding period of 1934, and Indianapolis trade also registered a fractional loss for September in the comparison, so that sales for the district as a whole aggregated only 3 per cent above those of last September. However, owing to the fact that there was one more Saturday in the month last year, daily average sales this September totaled 5 per cent heavier than a year ago. A somewhat greater than seasonal rise—11 per cent—took place in stocks between the end of August and September 30, and they exceeded by one per cent those held at the same time in 1934. The rate of stock turnover for the year 1935 through September was 3.11 times, as against 2.89 times for the corresponding period last year. For the second successive month, the retail shoe trade recorded a more than seasonal gain over the preceding month: sales by reporting dealers and department stores exceeded those of August by 59 per cent, while the 1925-34 average shows an increase of only 50 per cent. As compared with last September, the dollar volume of trade was 7 per cent larger, whereas in the yearly com parison for August it increased but 4 per cent. For the year through September, sales aggregated 7 per cent heavier than in the first three quarters of 1934. A fur ther increase was shown in stocks during September, and at the end of the month they were 7 per cent above those of a month previous and fractionally larger than a year ago. Sales of furniture and house furnishings by dealers and department stores totaled 21 per cent heavier in September than in August; the 1927-34 average for Sep tember shows a gain of 33 per cent. Dealer sales de clined 4 per cent in the period, so that the increase in department store sales effected the aggregate expansion shown. In the yearly comparison, total sales were 17 per cent heavier than last September, with dealers recording a somewhat larger gain than did department stores. Stocks increased 4 per cent over a month earlier and were 2 per cent heavier than at the close of Septem ber 1934. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the months 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. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of Firms Meat Packing—(U. S.)— Sales (in dollars)....................................... . 47 Casting Foundries— Shipments: Steel—In Dollars.................................. . 12 In Tons...................................... . 12 Malleable—In Dollars........................ . 21 In Tons............................ . 21 Stoves and Furnaces— Shipments (in dollars)............................. . 10 Furniture— Orders (in dollars).................................... . 13 Shipments (in dollars)............................. . 13 Flour— Production (in bbls.)............................... . 19 Output of Butter by Creameries Production.................................................. . 59 Sales.............................................................. . 61 Wholesale Trade— Net Sales (in dollars): Groceries................................................. . 28 Hardware............................................... . 11 Drugs....................................................... . 12 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................... . 27 Detroit..................................................... . 5 Indianapolis........................................... . 4 Milwaukee.............................................. . 5 Other Cities........................................... . 40 Seventh District—Unadjusted......... . 81 Adjusted............. . 81 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.)* ... Sept. 1935 Aug. 1935 July 1935 June 1935 May 1935 Apr. 1935 Sept. 1934 87 84 82 83 86 82 77 39 39 36 54 38 37 36 53 33 32 38 55 27 25 39 57 34 31 43 65 38 38 48 72 197 132 100 117 120 59 63 59 54 71 42 41 38 98 94 85 112 108 132 130 87 77 76 73 110 95 80 72 Aug. 1934 July 1934 June 1934 1934 1934 75 68 69 68 62 29 31 24 34 42 46 27 40 40 44 25 36 41 44 32 48 44 47 41 62 31 31 38 58 114 140 85 64 84 102 78 48 44 41 51 40 39 38 37 42 27 20 25 29 33 25 23 87 100 85 106 102 82 94 96 87 153 134 173 141 143 130 98 94 133 120 152 140 150 132 152 136 143 138 102 108 77 71 77 78 71 70 74 76 70 74 76 74 70 72 73 76 59 68 78 57 69 67 54 59 83 62 63 76 71 68 64 63 66 79 63 74 77 69 70 68 84 55 58 64 59 53 56 78 76 78 79 75 72 76 77 73 92 88 76 77 78 77 75 96 88 85 76 81 76 75 98 96 76 68 79 77 66 69 70 63 62 66 82 51 50 51 52 45 50 70 71 76 71 68 64 71 72 74 93 81 74 76 78 77 65 91 78 82 65 72 73 20 86 62 153 94 162 101 172 105 152 137 202 43 119 63 136 76 111 89 120 94 150 98 172 21 43 17 42 20 38 26 34 18 33 16 36 8 29 7 23 7 28 9 30 13 32 10 36 68 60 85 65 58 81 S3 50 66 59 53 67 67 57 73 65 57 76 34 31 38 42 35 38 45 40 45 66 66 88 68 67 95 54 59 88 •Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION ♦ (By the Board, of Governors of the Federal Reserve System) Industrial production and employment increased in September and distribution of commodities to consumers was in larger volume, reflecting in part seasonal influences. The general level of wholesale prices showed little change. Production and Employment Index number of industrial production, adjusted for sea sonal variation. (1923-1925 average = 100.) FACTORY EMPLOYMENT Index of factory employment, adjusted for seasonal varia tion. (1923-1925 average = 100.) Output at factories and mines, as measured by the Board’s seasonally adjusted index of industrial production, advanced from 87 per cent of the 1923-1925 average in August to 88 per cent in September, reflecting chiefly increases in the output of iron and steel, lumber, cotton and silk textiles, and anthracite, offset in part in the total by declines in the production of automobiles and woolen textiles. At steel mills activity increased from 49 per cent of capacity in August to SI per cent in September, and during the first three weeks of October continued at about the September level. At automobile factories a sharp decline in output during Sep tember, as preparations were made for new models, was followed in the early part of October by a rapid advance. Lumber production continued to increase in September. In the cotton textile industry, where output had been at a relatively low level since April, activity showed a marked increase in September and there was also an increase in output at silk mills, while at woolen mills, where activity has been at an exceptionally high level for several months, there was a decline. 1 ^ Factory employment showed a seasonal increase between the middle of August and the middle of September. The number employed at foundries and in the lum ber, non-ferrous metals, and machinery industries increased substantially, while in the automobile industry there was a considerable decline. At cotton mills employ ment showed a seasonal increase and at silk and rayon mills there was an increase of more than the usual seasonal amount, while employment at woolen mills and shoe factories declined. The value of construction contracts awarded, as reported by the F. W. Dodge Corporation, was about the same in the six weeks ending October IS as in the previous six weeks, reflecting an increase in residential building, partly of a seasonal character, and a slight decline in other types of construction. DEPARTMENT STORE SALES Distribution Freight-car loadings showed an increase of more than the usual seasonal amount in September and increased further in the first half of October. Department store sales also increased by more than the estimated seasonal amount in September, and for the third quarter the average of the Board’s seasonally adjusted index was 80 per cent of the 1923-1925 average as compared with 75 per cent a year ago. mmm Adjusted for seasonal variation . Commodity Prices — Without seasonal adjustment 1934 Indexes of daily average value of sales. 100.) (1923-1925 = The general level of wholesale commodity prices, as measured by the index of the Bureau of Labor Statistics, showed little change during September and the first three weeks of October. Prices of grains decreased in the middle of October, fol lowing a considerable advance, while prices of silk, hides, and copper increased throughout the period. Bank Credit WHOLESALE PRICES Commodities Indexes of the United States Bureau of Labor Statistics. (1926 = 100.) By months 1929 to 1931; by weeks 1932 to date. Page 8 f Reserves of member banks continued to increase during the five weeks ending October 23, reflecting chiefly imports of gold from abroad. At the end of the period reserves in excess of legal requirements at $2,930,000,000 were at the highest level on record. At weekly reporting member banks in 91 leading cities adjusted demand de posits increased by $40,000,000 during the four weeks ending October 16, while United States Government deposits declined and inter-bank balances rose to a new high level. Loans on securities decreased by $40,000,000, while other loans, including commercial credits, increased by $80,000,000. Yields on both short-term and long-term Government obligations increased from the last week in August to the first part of October and subsequently declined. Other short-term open-market money rates remained at previous low levels. 1
@FedFRASER