The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
RESERVE B’ANK OF CHICAGO, ini * sftef! HwE -/tv. Jrtzs&m, <M» ifMR Sf .•if' * WH '• SlflBK 0,0 ^ B ^wLEa if SBKWXMfejlj^K| W0§ijBra& wl»£ Cv’,’ 'j j ■ eC '“'^*•>4:.,': : J t |:'0^'' DC ' ■Mr kMkji. // Jr™*’ „,w^' > : ?¥WH^yK 'pc’! J* 4 * : * > giggtl£3gu& VT'V; mP* i$rt£<P»r WMa -SEPTEMBER^® Mfjf* . % jl : ; (-■■ an *®w“ %jjpii Review of Seventh District Business While nature was producing record crops throughout the Seventh Federal Reserve District, industrial produc tion continued to advance during August, although still handicapped by erratic flows of materials and by unbal anced production schedules. Increases in employment raised the level back to where it was a year ago, but payrolls were carried to unprecedented heights, surpass ing anything ever recorded. The largest corn crop in 22 years and the third larg est on record was indicated on September 1. The pros pective production is 3,015,915,000 bushels. If this pros pect materializes, the crop will be 13 per cent larger than was produced in 1941 and 31 per cent above the ten-year average of 1930-39. The states of the Seventh District are expected to produce 1,334,746,000 bushels, or 44 per cent of the total for the United States. The indicated production of wheat is 981,793,000 bush els, which is nearly four per cent larger than last year’s crop and second in size to the billion bushel record of 1915. Oats production is placed at 1,353,431,000 bushels which is 15 per cent larger than the 1941 crop and 34 per cent above the ten-year average. Prospective production of soybeans is the largest on record, although early frosts may have damaged the crop somewhat. The total production is estimated at 211,452,000 bushels. The 1941 production was 106,712, 000. Illinois leads with 75,196,000 bushels, Iowa is second with 43,366,000 bushels, and Indiana is third with 29, 400,000 bushels. The four states in this District where soybeans are grown are expected to produce 72 per cent of the entire crop. Total manufacturing employment is still slightly be low the all-time peak which was reached in September 1941 when the index stood at 146. During the con version period this index fell rapidly, reaching a low of 133 in February of this year where it remained with little change until early May. A rapid rise set in in June, and the index moved up to 143 by the middle of August. Total manufacturing payrolls have outdistanced em ployment. With the exception of a slight recession which occurred in February, the index of payrolls has con tinued a steep upward climb, reaching 205 on August 15. This is by all odds the highest point reached in payrolls in the Seventh Federal Reserve District and compares with the peak of 135 in 1937 and 130 in the boom year of 1929. Longer working hours and time-anda-half for overtime account for considerable part of the rapid rise in payrolls. When considered by the five states which lie wholly or in part in the Seventh Federal Reserve District, Michigan leads with a gain of 3.3 per cent in employ ment and 7.1 per cent in wage payments during the period from July 15 to August 15. Indiana was second with a gain of 3.1 per cent in employment and 5.9 per cent in payrolls. Illinois reported an increase of 2.9 per cent in employment and 5 per cent in payrolls. In Iowa, the gain in employment in the durable goods in dustries was sufficient to more than offset the loss in non-durable, with the result that there was a net gain of 1.1 per cent. Payrolls in that state, however, in creased 4.5 per cent. The only loss in employment was reported by Wisconsin where employment declined 1.5 per cent. Higher wage rates and longer hours, however, caused payrolls to rise 2.4 per cent. Industrial production gains have been spotty. Except for a slight upturn at the end of the month, production of steel mills in the District hovered near the 100 per cent of capacity mark. While this is still an enviable record, it represents a gradual fall from the extraordi nary heights attained earlier in the year. The tonnage of bituminous coal mined during the month of August was 6 per cent larger than in July and 13 per cent larger than in August of 1941. For the eight months to date, production has been 20 per cent ahead of a year ago. The largest monthly total of construction contracts ever awarded in this District was reported in August. The awards totaled 210 million dollars. More than 90 per cent of this amount represented publicly-owned projects, as industrial plants accounted for 130 million dollars of the total. A large portion of the new plant facilities is to be located in Indiana and Wisconsin. Resi dential awards remained at a low level despite the fact that they were supported by an increasing volume of public funds. Impact of War on Seventh District Income Income payments in the United States and in the five states included partially or wholly in the Seventh Dis trict exceeded all previous records in 1941. Income pay ments in Illinois, Indiana, Iowa, Michigan, and Wiscon sin reached 16.9 billion dollars, or 18.4 per cent of in come payments in the nation, totaling 91.6 billion dol lars. In 1941 each state in the District surpassed its 1929 all-time high level, except Illinois which was only 3 per cent under its former record. The mounting tide of incomes has continued in 1942, and income payments in the United States during January-July 1942 were up 22 per cent from the same period last year. Within the District, Illinois maintained its lead in income payments with 6.7 billion dollars, followed by Michigan, Indiana, Wisconsin, and Iowa in decreasing order of importance. From 1939 to 1941, however, Mich igan and Indiana had more rapid rates of growth in income payments, 42 and 38 per cent, respectively, than Illinois or Wisconsin where income payments increased at almost the same rate as the national rise of 30 per cent. Income payments in Iowa advanced slightly more than one-fifth during the two-year period. The accelerated rate of economic expansion between 1939 and 1941 enabled Michigan to rise to sixth (from seventh) place, and Indiana to tenth (from eleventh) place in income payment rankings among the states of the nation. Illinois retained third and Wisconsin twelfth place, while Iowa dropped to seventeenth (from fif teenth) place during the period. The increases in income payments made by the Dis-' trict states during the past two years are largely at tributable to their patterns of economic activity, over whelmingly dominated, except in Iowa, by industries contributing to the national war effort. The tremendous volume of war contracts awarded to firms in the Dis trict since June 1940 has led principally to the expan sion of manufacturing and construction activities which in peace-time were already relatively more important sources of income in the District than in the nation. Total war contract values awarded between June 1941 and June 1942 in Michigan were 50 per cent larger, and in Indiana more than equal to the total value of all products manufactured in those states during 1939. In 1939 more than 35 per cent of all salaries, wages, and entrepreneurial net incomes (income of self-em ployed persons available for personal use) in the Dis trict states was derived from manufacturing, mining, and construction, as compared with 30 per cent for similar incomes in the entire United States. In Michi gan and Indiana the proportions obtained from these sources, 45 and 39 per cent, were still greater. More over, these two predominantly industrial states, under the stimulus of war contracts, have shown substantially larger increases in income payments from manufactur ing and construction sources than either the District or the nation. While Illinois has not shown the gains noted in Michi gan and Indiana, it has in no way relinquished its lead ing position among the five states in income payments. An analysis of Illinois income payment sources reveals at least in part why the state has lagged somewhat in income payment growth: manufacturing activities con tribute relatively less to income payments in the state than the national average; distributive and service in-: dustries which have made only small advances in the past; two years are more important in Illinois than in the other1 District states or the nation; a larger proportion of in come payments in Illinois is derived from1 dividends and interest payments which have increased less than labor and farm income since 1939; and Illinois manufactures, because of their more diversified nature, have also shown more losses and made smaller gains than the more strictly specialized and more readily convertible “heavy” in dustries found elsewhere in the District. Manufacturing, mining, and construction industries in Wisconsin are responsible for roughly the same pro- SEVENTH DISTRICT STATES IN THE NATIONAL ECONOMY P opulation1 940 Censu S Thou sands of Persons Illinois....................... Indiana..................... Iowa.......................... Michigan.................. Wisconsin................. 7,897 3,428 2,538 5,256 3,138 Five States Total. . 22,2571 United States Total................ 131,669 Total Income Payments—1941 War extracts, Cumulative through June 1942 Value of Manufactured Products, 1939 Cash Income from Farm Marketings, 1941 Per Cent Per Cen1 Per Cent Per Cent Per Cent of of of of of United National Millions United National Millions United National Millions United National Millions United National States Rank of States Rank of States Rank of States Rank of States Rank Total Dollars Total Dollars Total Dollars Total Dollars Total 6.0 3 6,712 7.3 3 3,147 8 4.1 4,795 8.4 3 709 6.3 4 2.6 12 2,367 2.6 10 2,665 3.4 9 2,228 3.9 9 389 3.5 10 1.9 20 1,421 1.6 17 397 0.5 29 719 1.3 19 874. 7.8 1 4.0 7 4,358 4.8 7,313 6 9.4 1 5 : 4,348 7.7 301; 2.7 13 2.4 13 2,011 2.2 12 1,413 1.8 15 436! 1,605 2.8 10 3.9 6 16.9 16,869 18.5 14,935* 19.3 13,695 24.1 2,709! 24.2 100.0 91,621 100.0 77,516 100.0 56,829 100.0 11,2441 100.0 ■Population in the Seventh Federal Reserve District in 1940 was 19,406,389, or 14.7 per cent of the United States total W» contracts in the Seventh Federal Reserve District, cumulative through June 1942, aggregated *14,145 million, or 18.2 per cent of the United States total. Page 1 portion of total income payments as in Illinois, but through 1940 and 1941 made smaller gains, consequently limiting total income payments in the state. Partially offsetting these smaller advances in manufacturing ac tivity, income payments from agriculture (largely live stock and livestock products) in Wisconsin have in creased more rapidly, 54 per cent between 1939 and 1941, than in the District or the nation. Iowa's moderate gains in income payments can be traced directly to the location of few sizable war manu factures and to the importance of agriculture, from which net income has increased more slowly than pay rolls of war industries. WAR CONTRACT AWARDS As industrial production becomes more and more geared to total war, the volume of war contract awards determines to a growing extent the levels of income and business activity in particular industries and areas of the District. War contract awards in the Seventh Federal Reserve District are now larger than in any other District in the Federal Reserve System. Major prime supply con tracts and facilities projects of the Army, Navy, Mari time Commission, Treasury Department, and the British Empire in the Seventh District, cumulative through June 1942, aggregated 14.1 billion dollars, or 18.2 per SALARIES, WAGES, AND ENTREPRENEURIAL NET INCOME Industry Groups and Seventh District States State Year Agriculture Mfe. Mining, and Const'n Distribution Service Government Total Amounts in Millions of Dollars Illinois. . . . Indiana___ Iowa........... Michigan. . Wisconsin.. Five States Total___ United States Total. . . 1941 1939 1941 1939 1941 1939 1941 1939 1941 1939 1941 1939 1941 1939 385 281 223 161 448 340 192 139 276 179 1,524 1,100 7,240 5,029 2,200 1,378 976 551 212 157 2,114 1,157 671 432 6,173 3,675 27,475 16,742 1,456 1,143 428 329 261 228 729 554 359 298 3,233 2,552 17,538 14,506 1,121 967 303 253 193 168 512 433 270 230 2,399 2,051 15,066 12,893 435 376 143 125 105 96 297 247 141 134 1,121 978 8,197 6,154 5,597 4,145 2,073 1,419 1,219 989 3,844 2,530 1,717 1,273 14,450 10,356 75,516 55,324 9.0 8.8 9.7 9.8 10.5 100.0 100.0 100.0 100.0 100.0 Percentage Distribution in 1939 Illinois. . . . Indiana___ Iowa........... Michigan. . Wisconsin. Five States Total___ United States Total___ 6.8 11.4 34.4 5.5 14.0 33 3 38.8 15.8 45.7 34.0 27.6 23.1 23.1 21.9 23.4 23.3 17.9 17.0 17.1 18.1 10.6 35.5 24.6 19.8 9.5 100.0 8.8 30.3 26.3 23.4 11.2 100.0 16 14 9 20 5 35 46 23 52 35 Percentage Increase from 1939 to 1941 Illinois .... Indiana___ Iowa........... Michigan. . Wisconsin.. Five States United States Total___ 37 39 32 38 54 60 77 35 83 55 27 30 14 32 20 39 68 27 17 15 40 44 64 21 17 33 36 16 20 15 18 17 Source: Bureau of Foreign and Domestic Commerce, United States Department of Commerce. Page 2 INCOME PAYMENTS IN SEVENTH DISTRICT STATES AND UNITED STATES (Amounts in millions of dollars) Percentage Increase in Income Payments 1939 1940 1941 1940-41 1939-41 5,209 1,720 1,176 3,064 1,563 5,654 1,855 1,159 3,433 1,652 6,712 2,367 1,421 4,358 2,011 19 28 23 27 22 29 38 21 42 29 Five States............ 12,732 13,753 16,869 23 32 United States. . . . 70,747 76,253 91,621 20 30 Illinois.................... Indiana................... Iowa........................ Michigan................ Wisconsin............... Source: Bureau of Foreign and Domestic Commerce, United States Department of Commerce. cent, of all war contracts in the entire United States. The contracts authorize the expenditure of 10.8 billion dollars for supplies and 3.2 billion dollars for facilities projects. Supply contracts for aircraft amount to 2.6 billion dollars, for ships 292 million dollars, and for all other items 7,899 million dollars. Awards having a value of less than $50,000 and all awards for foodstuffs are excluded in this distribution. Contracts have been as signed to the industrial areas on the basis of location of the producing plants. Facilities projects include 3 bil lion dollars for industrial plants and equipment and 266 million dollars for non-industrial installations. The facilities category represents the latest estimate of final cost of each construction project with the entire esti mated value assigned to the project site. Some measure of the possible effects of contracts upon incomes can be found in per capita distribution of war contract awards. The District average of $670 per per son is higher than the average for the nation of $590 per person. On an industrial area basis, the per capita figures show much wider variations, from more than $2,000 in the Detroit industrial area to less than $300 in a number of other industrial areas. The important contribution of the Seventh District to the national war effort is revealed not only by the rank of the District as a whole in respect to war contracts awarded, but also by the national rank of the states. Michigan ranks first among all states in value of wmr contracts awarded. Illinois ranks eighth, Indiana ninth, and Wisconsin fifteenth. The Detroit and Chicago in dustrial areas alone received 7.8 billion dollars in war contracts, more than half of the Seventh District total and about one-tenth of the national total. The distribution of major prime supply contracts and facilities projects, of course, gives only a very general indication of the effects of war-time expenditures upon economic activity in a given area. They do not reveal the extent of sub-contracting which frequently removes substantial amounts of prime contracting into neighbor ing and distant manufacturing centers. They exclude the important productive contributions of agriculture, mining, and other related industries. Nevertheless these contracts provide the largest single stimulus to indus trial production and in turn provide a source of new and expanded incomes for millions of persons in the Seventh District. War-time restrictions bar disclosure of the rate of completion of contracts. For that reason the propor tion of total contract awards which has been expended and which has been realized as income by the individuals participating in production cannot be given. It is ob vious, however, that only a part of the war contract awards has been translated into finished production of war materials, for the bulk of the contracts reported at the end of June 1942 has been awarded since Pearl Harbor. The District’s manufacturing and construction industries as a whole did not turn appreciably to war production until late 1941 and a good deal of costly and time-consuming conversion was necessary before in dustrial activity could begin on any scale approaching mass production. The full impact of war expenditures upon income payments in the Seventh District has not as yet been felt. MANUFACTURING PAYROLLS AND EMPLOYMENT Changes in manufacturing payrolls and employment during the past two years provide an important indi cation of the size and distribution of increased income in the District and the nation. Manufacturing payrolls in the Seventh District advanced 66 per cent from June 1940 to June 1942, reaching new record heights by Octo ber of last year. Employment rose 29 per cent during the two-year period, breaking all previous records as early as January 1941. The gains nationally during the two-year period were larger than in the District, manu facturing payrolls rising 96 per cent and employment 34 per cent, probably indicating the relatively greater conversion problem in the District. The distinct upward trends have, however, been in terrupted by significant periods of material and labor shortages and conversion of plant facilities and equip ment to the production of war supplies. Manufactur ing activity in the District, measured in terms of pay rolls and employment, showed relatively smaller gains or actually declined during the late fall months of last year and the spring months of the current year during a critical period of industrial changeover. The national manufacturing pattern of activity closely resembled that of the District during the period, reflecting to some extent the influence of District manufactures upon the nation. Beginning in mid-1942, employment in the District and nation again resumed its upward movement and payrolls continued to climb to progressively higher rec ord-breaking levels. As more war production facilities are completed, manufacturing activity will no doubt continue to expand as long as labor and materials remain available. Payrolls, as has been shown, have moved ahead at a more accelerated rate than employment, and in some instances payrolls have risen steadily while employment has fallen. The explanation is to be found largely in longer work weeks, higher hourly wages brought about by basic wage-rate increases and overtime rates, and higher rates of pay for workers who have qualified through upgrading for skilled jobs because of the war emergency. In peace-time (1939), industries in the five District states produced slightly less than one-quarter of the na tion’s total manufacturing output, calculated both on the basis of value of product and value added by manu facture. In the shift to industrial war production, the major peace-time industries together with newly estab lished war industries have given the District a dominant position in the national war effort, producing tanks, transportation equipment, engines, munitions, and other vital war materials. The largest proportion of conversion and increased output of war materials obviously has been in the dura ble goods industries. District payrolls for these indus tries advanced 78 per cent and employment 35 per cent from June 1940 to June 1942. For the United States, the gains were still larger, 134 and 56 per cent, respec tively, indicating the extent of new industrial growth in other war production centers of the nation. Non-durable goods payrolls and employment in both the District and the nation, e.g., foods, paper and printing, chemicals, textiles, and rubber, rose less than half as much as those for durable goods during the same period, caused to a large extent by government production restrictions and limited sources of raw materials and labor. Illinois Measured by changes in payrolls and employment, Illinois manufactures have reached all-time high levels during the past two years. However, during the upward surge, most important “heavy” and non-durable goods industries have marked time while plants and equip ment were expanded and converted to war production. In a number of important plants this conversion work will not be completed for several months. In July 1942 manufacturing payrolls were 15 per cent above and em ployment roughly equal to July 1941 levels, and manu facturing activity now promises to rise substantially for some time. Since the beginning of defense work in 1940, Illinois industries directly serving the nation’s war needs, such as blast furnace, rolling mill and foundry products, ma chinery and tools, transportation equipment, explosives, textiles excluding clothing and millinery, and most food products, have expanded activities greatly. Payrolls in these industries have shown a strong tendency to in crease as much as 25 to 50 per cent in a single year in some durable goods manufactures. Employment, on the other hand, has made slower and more spasmodic advances. Curtailed passenger automobile production, residen tial building restrictions, severely reduced raw material Page 3 DISTRIBUTION OF MAJOR PRIME SUPPLY CONTRACTS AND FACILITIES PROJECTS OF THE ARMY, NAVY, MARITIME COMMISSION, TREASURY, AND BRITISH EMPIRE, JUNE 1940 THROUGH JUNE 19421 Seventh Federal Reserve District and Industrial Areas __(In thousands of dollars) SUPPLY CONTRACTS FACILITIES PROJECTS District and Industrial Area Aircraft Andebson—Muncie.............................................. Ships 2,053 All Other Total Industrial 59,126 61,179 5,710 46,484 46,484 9,074 10,276 10,276 837 Non Industrial Total Total Supply Contracts and Facilities Projects 5,710 66,889 23,771 70,255 837 11,113 Delaware and Madison Counties, Ind. Battle Creek........................................................... 14,697 Calhoun County, Michigan Cedar Rapids............................................................ Linn County, Iowa Chicago.......................................................................... 353,145 13,958 1,530,442 1,897,545 961,697 69,580 1,031,277 2,928,822 688,540 16,839 3,535,441 4,240,820 572,131 8,884 581,015 4,821,835 65,414 65,414 64,415 6,664 71,079 136,493 427,989 427,989 85,023 85,023 513,012 77,190 103,596 42,305 53,459 157,055 36,918 38,474 23,255 23,255 61,729 151,886 529,901 73,328 78,686 608,587 111,042 6,251 117,293 1,808 1,808 119,101 15,338 7,250 489,835 512,423 224,879 224,879 737,302 18,878 397 106,508 125,783 23,360 23,360 149,143 136 68,747 68,883 736 736 69,619 143,764 143,764 31,211 39,868 183,632 10,648 10,820 16,859 16,859 27,679 Cook, DuPage, Kane, Lake and Will Counties, Illinois; Lake County, Indiana Detroit.......................................................................... Oakland and Wayne Counties, Michigan Des Moines. ............ ............................................... Polk County, Iowa Flint................................................................................ Genesee County, Michigan Fort Wayne.............................................................. 26,406 11,154 Allen County, Indiana Grand Rapids . . ..............,..................................... 1,404 152 ., Kent County, Michigan Indianapolis. ............................................................ 378,015 5,358 Marion County, Indiana Manitowoc.................................................................. Manitowoc County, Wisconsin Milwaukee................................................................. Kenosha, Milwaukee and Racine Counties, Wisconsin Muskegon............,.................................................. Muskegon County, Michigan Peoria............................................................................. Peoria and Tazewell Counties, Illinois Rockford...................................................................... 8,657 Rock County, Wisconsin and Winne■ bago County, Illinois Rock Island.............................................................. 172 : Rock Island County, Illinois Saginaw—Bay City. ........................................... 64 81,359 60,502 141,925 35,528 35,528 177,453 243,336 260 248,222 491,818 110,185 110,185 602,003 33,314 33,314 6,514 6,514 39,828 789,623 1,751,050 771,859 140,641 912,500 2,663,550 7,898,580 10,818,751 3,060,714 265,635 3,326,349 14,145,100 9,232,176 26,613,310 55,417,328 13,700,358 8,398,706 22,099,064 77,516,392 Bay, Midland and. Saginaw Counties, Michigan South Bend—La Porte.................................. Elkhart, La Porte and St. Joseph Counties, Indiana Waterloo..................................................................... Black Hawk County, Iowa Remainder of District................................... 900,644 60,783 Seventh District Total................................ 2,627,995 292,176 United States Total........................................ 19,571,842 • Awards'having a value of less than $50,000 and all awards for foodstuffs are excluded. No allowance has been made for revisions in the estimated final costs of products under cost-plus-a-fixed-fee contracts or under contracts containing a clause with respect to wage rates and materials prices. British Empire contracts cover the period since September 1939. Manufacturing project orders have not been included, for in large part these are subsequently awarded as prime contracts and included in prime contract data. Contracts have been assigned to the industrial areas on the basis of location of the producing plants. The category “facilities” represents the latest estimate of final cost of each construction project for which a contract has been awarded, or a letter of intent or project order issued with the entire estimated value assigned to the project, site. Source: War Supply and Facility Contracts by Industrial Area, Statistics Division, War Production Board. supplies, and stoppage of civilian production have forced many civilian peace-time industries in Illinois to contract production, including glass and glass products, residen tial building materials, furniture, mill work, rubber products, specialized paper goods and printing, and civilian clothes manufacturing. Indiana During the past two years manufacturing industries in Indiana have undergone many of the same changes as similar industries in other District states, but in recent months have not shown the same strong upward movements in payrolls and employment. Accelerated ac tivity, beginning with defense preparations in mid-1940, carried manufacturing payrolls and employment in In diana to all-time highs by September 1941, when change over operations reduced production in many factories. Since last fall, however, most of Indiana’s principal manufacturing industries, e.g., steel, machine shops, en gines, machinery, transportation equipment, and nonferrous metals, have experienced minor losses in payrolls and more substantial losses in employment. In June 1942 there was still no strong evidence that the upward movement had been definitely resumed, payrolls de clining 2 per cent and employment gaining less than 1 per cent over the previous month. It is clear, however, that as soon as sufficient adjustments are made to war time manufacturing conditions, Indiana’s industrial ca pacity will bring a new upward trend which can be expected to continue into the future. War influences in Indiana have, on the one hand, stim ulated some non-durable and semi-durable manufactur ing, e.g., cotton textiles, meat packing, canning, petro leum refining, war chemicals, and tobacco manufactur ing, but on the other hand, have necessitated rigidly curtailed production in such industries as radio-phono graphs, furniture, paper and paper boxes, and rubber products. Iowa While manufacturing in Iowa does not bulk as large as in the other District states, it has nonetheless experi enced many dislocating changes during the past months of war preparation and war. In addition to important seasonal ups and downs caused by processing of agricul tural products, manufacturing in general has been sub ject to intermittent fluctuations since the early period of defense activity. However, a slight upward trend has been reflected in increased payrolls and employ ment, which in August 1942 stood 4 and 19 per cent, respectively, above the levels prevailing a year earlier. The most significant rises as usual have occurred in the so-called “heavy” industries. However, gains have been reported in textile products for government issue, cereals, sugar, starch, syrup and glucose, and meat pack ing. Iowa industries serving civilian needs, such as millwork and job printing, have felt sharply the effect of government restrictions. Michigan Manufacturing activity in Michigan has assumed a record-breaking upward trend since June 1940, but not without serious interruptions in recent months caused by conversion of major peace-time industries to the pro duction of war materials. Payrolls have advanced more steadily than employment, which dropped sharply dur ing the late fall of 1941 and spring of 1942. In July 1942, total manufacturing payrolls were about 20 per cent larger and employment about 5 per cent smaller than a year earlier. The rising movement in payrolls and employment was revived during the past summer months and promises to continue steadily as estab lished industries become more fully devoted to war pro duction and as new plants reach the production stage. That production limits are yet to be attained is illus trated by the fact that, according to the Michigan State Department of Labor and Industry, the automobile in dustry in July of this year was using only two-thirds of its mid-1941 employees. Thousands of additional workers, including many women, will be gradually absorbed into plants in the Detroit and other industrial areas of the state. Several important non-durable goods industries, e.g., canning and preserving, dairy products, meat packing, confectionery, and woolen textiles, have also participated in the war-inspired rises in payrolls and employment, contributing further to the incomes of the state’s work ing force. Offsetting these gains are the losses in less essential industries, such as office and household ma chinery, stoves and heating apparatus, brick and tile building materials, engraving, sporting goods, and musi cal instruments. Wisconsin Payrolls and employment in Wisconsin manufactur ing plants advanced through the fall of 1940 and the first half of 1941 to record levels before changes in the industrial structure brought about by war preparations temporarily impeded the upward movement. As was true in the other District states, the largest gains were made by the durable goods industries, which subsequently were forced to restrict production while plans were car ried out to place manufacturing upon a war-time basis. In the year following July 1941, total manufacturing payrolls and employment fluctuated considerably, but nevertheless managed to gain a third and a tenth, re spectively. By July 1942, there was strong evidence that manufacturing activity in plants producing (durable or non-durable) goods on government order would con tinue to intensify except for possible shortages in mate rials and labor. Wisconsin industries which have experi enced serious difficulty in maintaining former levels of production during the past year have been furniture and other finished lumber products, rubber goods, print ing and publishing, and some textile products. Page 5 NON-MANUFACTURING PAYROLLS AND EMPLOYMENT from farm marketings in 1942 is now estimated for the nation at about 15 billion dollars. For the five states of the Seventh District, the rise was from 1.9 billion dollars in 1939-40 to 3.2 billion dollars for 1941-42, or 65 per cent. While the increases are, in part, a reflection of in creased output of farms, especially hogs and dairy prod ucts, the bulk of the rise in cash payments to farmers is due to the rise in agricultural prices during the period. Farm prices during 1941-42 were, in general, nearly 50 per cent above the level in 1939-40. On the whole, price rises have been much greater in livestock and livestock products than in crops. While increased industrial activity and employment have brought a stronger demand for nearly all farm products, much of that increased demand has been for livestock and their products. Moreover, the material factor in the sharply increased demand for such farm output has been the purchase by the Government for lease-lend account and for the armed service. Expenditures of over 800 million dollars for lease-lend since May 1941, when the buying program began, have been heavily concen trated on pork, eggs, poultry, milk, and milk products. Farm production of livestock and livestock products is a relatively more important source of farm income in the Seventh District than in the country as a whole. Because of this and the greater rise in prices of livestock and livestock products, the Seventh District shows a greater proportional rise in total farm income than does the nation. Payrolls and employment in the District’s non-manu facturing industries, comprising trade, construction, transportation, public utilities, and services, have gen erally lagged considerably behind the gains made in manufacturing industries. Non-manufacturing payrolls in Illinois, Indiana, Iowa, and Wisconsin (Michigan data not available) increased less than one-fifth from June 1940 to June 1942. Employment gains were much smaller. Unfortunately the data on non-manufacturing payrolls and employment in the District are frag mentary and permit only general conclusions which must also be based upon other related information. Increases in merchandising payrolls for Indiana, Iowa, and Wisconsin from June 1940 to June 1942 paralleled rises for the nation which were 13 per cent in retail payrolls and 18 per cent in wholesale payrolls. Illinois gains were somewhat larger. Payroll and employment data for construction indus tries in the District are not available, but it is apparent from the value of District construction contract awards that gains have already been made and will continue for some time. Construction contracts, principally industrial and military, in August 1942 were 50 per cent above the highest previous month (March 1942) and were 265 per cent higher than in June 1940. Residential building has been generally restricted, except in major war pro duction areas. Moderate advances in payrolls and employment can be attributed to transportation, public utilities, and some service industries on the basis of current production and revenue reports. However, many of these industries have been severely hit by labor, material, and equip ment shortages and future gains may remain small. Illinois Illinois gross cash farm income is more heavily weighted by income from crops than are the totals for each of the other four states of this District. While in come from farm animals and their products advanced nearly 80 per cent in the two-year period, the rise in total for Illinois was held down to 62 per cent because of the lesser rise in crop prices than in livestock and products. FARM INCOME Agriculture is a third important source of income and means of employment in the Seventh District. Farm income for both the nation and the District has shown a rapid rise in the last two years. Cash income from farm marketings in the United States totaled nearly 13 billion dollars in the twelve months July 1941 through June 1942, a rise of nearly 5 billion dollars or 61 per cent, over the year July 1939 through June 1940. Cash income Indiana Indiana farm income showed a rise of nearly twothirds during the period. Livestock enterprises are pre dominant in this state, and products from these enter- GROSS CASH INCOME FROM FARM MARKETINGS (In millions of dollars) July 1939—June 1940 State Crops Livestock & Livestock Products July 1941—June 1942 Total Marketings Crops Livestock & Livestock Products Total Marketings Percentage Change 1939-40 to 1941-42 Total Livestock & Crops Livestock MarketProducts ings Illinois........................... Indiana.......................... Iowa............................... Michigan...................... Wisconsin..................... 209 74 143 72 36 304 200 484 144 248 513 273 627 216 284 285 107 159 122 50 546 347 879 218 462 830 455 1,038 340 512 +35.9 +45.3 + 11.3 +70.2 +41.2 +79.6 +74.1 +81.6 +51.3 +86.0 +61.8 +66.3 +65.5 +57.4 +80.3 Total Five States... . 544 1,380 1,923 724 2,452 3,176 +33.1 +77.7 +65.2 Total United States. . 3,403 4,604 8,007 5,176 7,721 12,897 +52.1 +67.7 +61.1 Source: Bureau of Agricultural Economics, United States Department of Agriculture. Page 6 prises, especially hogs, have moved to market at the relatively higher prices prevailing for these lines, giv ing this state one of the better showings as to gains in incomes. RECEIPTS AND SHIPMENTS OP GRAIN At Interior Primary Markets in the United States (In thousands of bushels) August 1942 August 1941 Per Cent Change August 1942 from August 1941 39,723 25,780 48,787 17,047 -18.6 +51.2 42,689 19,119 - 6.9 +34.8 20,160 14,116 18.369 14,630 + 9.8 - 3.5 16,127 10,824 +25.0 17,732 8,862 14,650 7,542 +21.0 +17.5 18,887 7,171 - 6.1 +23.6 441 232 297 941 +48.5 -75.3 Iowa Agricultural income is proportionally a larger part of Iowa’s total income than it is in each of the other four District states. Corn and hogs rule the farm economy in this state. The two-year rise in receipts from farm marketings amounted to 65 per cent, but almost all of this gain accrued from the increased output and higher prices in livestock and livestock products, from which source gross cash income gained 80 per cent over the two-year period. „, Michigan Income from marketings in Michigan shows the small est rate of increase for any of the District states, amounting to 57 per cent. Crops are relatively impor tant for Michigan farmers and in 1939 accounted for more than one-third of all income from marketings. Unique among the five District states, Michigan gains in income from this source were at a greater rate than the gain in livestock income. This is due in part to the relatively greater importance of truck crops, which have enjoyed a greater price increase than have other crops, and in part to the relative unimportance of hogs in Michigan, which have been the point of greatest rise in prices among livestock and livestock products. Ten-Year Average 1932-1941 Per Cent Change August 1942 from Ten-Year Average Wheat: Shipments......... Corn: Shipments......... +30.4 Oats: Shipments......... Soybbans: Receipts............. Shipments......... Source: Chicago Board of Trade. HOG-CORN RATIOS August 1942 July 1942 Illinois.......................... Indiana......................... Iowa........ ..................... Michigan...................... Wisconsin.................... 17.9 17.3 18.7 16.2 16 4 17 3 17.2 183 15.8 16.1 15.7 14.8 16.7 14.2 14.9 10.2 9.8 10.7 9.5 9.2 United States............. 16.9 16.6 15.0 9.4 August 1941 August 1940 Source: Bureau of Agricultural Economics, United States Department of Agriculture. Wisconsin Wisconsin’s gross cash farm income increased 80 per cent over the period. Crop income is relatively the least important in Wisconsin as compared to the other four states, but truck crops are an important source of in come among the crops. Higher prices are largely the explanation for the 40 per cent increase in crop incomes over the period. In livestock and livestock products the gain of 86 per cent in income is a combination of mod erately advanced prices in dairy products and consid erably expanded output in these lines, although hogs are of substantial importance and have contributed to the gains. UNITED STATES FEDERALLY INSPECTED LIVESTOCK SLAUGHTER (In thousands) August 1942 August 1941 Five-Year Average August 1937-41 3,223 1,103 460 1,840 2,796 968 414 1,522 2,538 872 451 1,514 Hogs........................ Cattle...................... Calves..................... Lambs and Sheep. Per Cent Change August 1941 to August 1942 Ppr Cent Change August 1942 from Five-Year Average + 15 + 14 + 11 +21 +27 +26 + 2 +22 Source: Agricultural Marketing Administration, United States Department of Agriculture. DEPARTMENT AND APPAREL STORE TRADE Seventh Federal Reserve District Total Net Sales Per Cent Change August 1942 from July 1942 August 1941 Per Cent Change January through August 1942 from January through August 1941 Milwaukee......... Other Cities... . +22.5 +28.9 +31.6 +20.3 +24.9 +50.7 + 17.0 +25.8 +32.7 + 16.0 + 15.0 +18.4 -10.6 -13.0 + 9.6 + 1.7 - 9.1 + 0.2 + 5.1 - 7.9 - 9.2 -10.5 - 0.2 - 7.0 District total. . . +20.5 Apparel stores.. +58.1 Locality Fort Wayne... . Indianapolis___ Des Moines.... Grand Rapids. . Per Cent Change August 1942 from August 1941 Stocks on Hand (End of Month) Orders Outstanding Open Book Sales Instal ment Sales Cash and C.O.D. Sales Per Cent Change August 1942 from Per Cent Changa August 1942 from July 1942 August 1941 July 1942 August 1941 + 5.6 + 2.0 +20 7 + 14.7 + 5.0 + 3.5 + 16.2 -10.1 + 1.9 + 2.6 +14.6 + 4.0 -31.3 -38.0 + 8.3 + 2.8 +65.3 -35.0 -36.5 -43.5 +487 +39.8 - 0.3 + 0.9 +52.0 +44:5 -12.5 -33.7 -34.9 +36.5 +65.5 + 117.6 -44.3 -33.4 + 0.9 +53.5 - 4.9 + 8.8 -15.2 +12.2 -21.2 -34.4 -47.2 -62.1 +32.8 + 19.7 - 0.1 + 4.4 +56.5 +32.8 + 17.9 -15.8 -22.0 -15.3 -21.7 -43:9 +21.2 +11.3 +65.6 -32.8 -31.0 -40.0 -29.5 + 12.7 + 8.0 +29.7 -31.2 -29.0 -15.2 Page 7 EMPLOYMENT AND PAYROLLS Seventh Federal Reserve District COST OF LIVING Per Cent Change from July 15, 1942 Week of August 15, 1942 Wage Number Payments Number Number (In of of Wage thousands of Reporting Firms Employes of dollars) Employes Payments Industrial Group Indexes of the Cost of Goods Purchased by Wage Earners and Lower-Salaried Workers by Groups of Items August 15, 1942 (Average 1935-1939=100) City Fuel, Elec tricity, and Ice All Items Food Cloth ing Rent 116.9 117.3 125.5 123.7 119.6 125.5 112.7 110.8 103.5 106.9 118.8 120.8 110.3 113.2 117.4 126.1 125.1 107.6 106.2 121.8 111.1 Durable Goods: Metals and Products1 Transportation Equipment............... Stone, Clay, and Glass Wood Products........... Total.............................. 1,982 652,950 28,958 + 2.1 + 5.7 412 292 481 3,167 457,202 28,461 61,260 1,199,873 25,139 963 1,817 56,877 + + + 3.9 0.8 1.4 2.6 + + + + Textiles and Products Food and Products. . . Chemical Products. .. Leather Products. . . . Rubber Products........ Paper and Printing.. . Total.............................. 454 1,089 336 186 39 718 2,822 80,261 183,609 47,286 35,832 21,695 88,676 457,359 1,997 5,748 1,851 1,026 897 3,036 14,555 + + + + + 0.7 3.4 0.2 1.1 8.4 0.6 1.6 + 3.5 + 3.1 + 2.3 + 3.7 +15.7 + 2.1 + 3.6 Chicago. . Detroit.. . Average: LargeCities Total Mfg., 10 Groups. . 5,989 1,657,232 71,432 + 2.3 + 5.6 Source: Bureau of Labor Statistics. Merchandising................ Public Utilities................ Coal Mining..................... Construction.................... 4,931 1,123 44 689 144,207 117,425 7,272 24,068 3,674 4,340 246 1,292 4- 0.2 - 0.1 + 4.8 +21.9 + 0.1 + 0.3 +13.9 +36.3 7.1 7.0 0.6 6.1 Chicago. . Detroit. .. Average: LargeCities House Miscel Furnish laneous ings Percentage Changes from August 15, 1941 to August 15, 1942 Non-Durablb Goods: Total Non-Mfg., 4 Grps. 6,787 292,972 9,552 + 1.7 +. 4.2 Total, 14 Groups............. 12,776 1,950,204 80,984 + 2.2 + 5.4 + 9.5 + 9.1 + 16.1 + 15.5 +14.4 + 17.8 + 1.8 - 1.4 + 1.0 + 2.6, + 9.6 + 9.5 + 6.5 + 7.6 +10.5 +16.8 +17.0 + 1.2 + 2.9 + 11.8 + 6.8 BANK DEBITS Debits to deposit accounts, except interbank accounts JOther than transportation equipment. Data furnished by State agencies of Illinois, Indiana, Iowa, Michigan, and Wisconsin. WHOLESALE PRICES Indexes—Aug. 1942 (1926=100) AH Commodities...................... Farm Products......................... Foods......................................... All Other................................. (In thousands of dollars) Aug. 1942 July 1942 Aug. 1941 15,188 16,806 15,808 16,533 16,561 4,137,024 12,974 30,773 10,184 31,532 11,442 85,137 46,317 34,921 July 1942 Aug. 1941 15,514 14,328 - 4 + 2 - 2 +18 17,260 4,212,352 13,494 31,188 11,113 32,487 12,531 82,628 50,053 34,516 16,264 3,700,595 12,570 25,191 9,942 - 4 - 2 - 4 - 1 - 8 - 3 - 9 + 3 - 7 +1 + 2 +12 53,471 24,579 12,270 314,276 13,273 20,273 56+66 34,521 56,496 27,220 12,734 365,668 13,823 21,400 61,091 34,043 43,166 22,776 11,040 200,768 - 5 -10 - 4 -14 — 4 - 5 - 8 +1 +24 + 8 +11 +21 11,698 36+95 9,297 27,142 117,852 12,591 13,340 4.996 16.501 64,462 25,787 12,490 37,658 8,332 29,151 126,333 12,585 13,762 5,080 16,575 70^261 28,213 6,017 21,396 17,597 1,757,294 35,354 73,775 25,728 31,522 43,165 30,430 13,006 31,037 6,071 21,526 17,642 1,791,523 38,389 75,956 26,274 30,710 45,375 30,003 13,361 33,323 5,250 19,880 15,123 1,339,803 33,646 75,641 21,324 30.493 29,673 21,572 51,435 11,517 415,616 12,510 26,898 27,350 7,756,082 8,315,723 21,768 50,520 12,601 408.345 12,819 27,773 31,083 7,959,598 8,538,370 20,342 Illinois: Per Cent Change from July 1942 99.2 106.1 100.8 95.6 +0.5 +0.8 +1.6 -0.1 Aug. 1941 + 9.9 +21.4 + 15.6 + 5.3 Aurora................ Bloomington. . . ChampaignUrbana........... Chicago.............. Danville............. Decatur............. Elgin................... Moline................ Peoria................. Rockford........... Springfield......... Source: Bureau of Labor Statistics. 11,155 80,556 38,645 28,755 Indiana : MONTHLY BUSINESS INDEXES Data refer to Seventh District and are not adjusted for seasonal variation unless otherwise indicated. 1935-39 average =100 Aug. 1942 July 1942 June 1942 Fort Wayne.. .. Gary.................... Hammond......... Indianapolis___ Aug. 1941 July 1941 June 1941 Manufacturing Industries: South Bend. . .. Terre Haute... . Iowa : Durable Goods: 153 228 150 216 146 213 153 180 155 179 155 188 122 155 120 150 115 145 123 139 121 134 114 128 143 205 140 195 136 192 143 167 143 165 141 170 Non-Durable Goods: Total: Furniture Manufacturing: 204 135 195 162 180 179 183 190 257 168 196 170 114 no 116 135 132 135 169 145 171 142 162 135 161 152 163 156 162 155 132 124 121 117 112 103 121 535 121 308 150 331 104 130 139 125 130 117 148 87 109 119 111 98 97 139 114 130 138 128 120 121 125 Paper Manufacturing:* Petroleum Refining—(Indiana, Illinois, Kentucky Area) :* Cedar Rapids . . Clinton............... Davenport......... Des Moines.... Dubuque........... Mason City.... Muscatine......... Sioux City......... Waterloo............ Adrian................ Battle Creek. . . Bay City............ Detroit............... Flint.................... Grand Rapids. . Jackson.............. Kalamazoo........ Lansing.............. Saginaw............. Illinois, Indiana, Iowa, and Wisconsin: Green Bay......... Building Contracts Awarded : 303 302 307 243 308 186 Department Store Net Sales: * •Daily average basis. Page 8 118 124 139 132 123 155 87 97 106 99 92 92 131 121 124 128 127 120 120 124 50,548 29,245 34,292 7,489 26,404 102,442 12,029 12,654 4,360 51,487 24,463 Michigan: Bituminous Coal Production:* Seventh District—Unadj usted.. Adjusted.... Per Cent Change August 1942 from Manitowoc........ Milwaukee........ Oshkosh............. Shebovgan......... Total 41 Centers Total 50 Centers United States: 274 Centers. 29,993 9,192 342,700 11,255 24,265 6,655,258 .. 49,180,000 50,087,000 42,853,000 — 6 - 4 + 12 - 7 - 7 * - 3 - 2 ** - 8 - 9 - .1 - 1 ** - 2 - 8 - 3 - 2 + 3 - 5 + 1 - 3 - 7 - 1 + 2 - 9 + 2 - 2 - 3 -12 - 3 - 3 - 2 +22 + 2 + 3 +20 +21 1 +12 +18 + 6 +24 + 3 +15 + 5 + 5 +15 +25 + 5 +15 + 8 + 16 +31 + 5 - 2 +21 + 3 +45 + 3 + 6 +2o +21 +11 +13 +17 +15 tNew reporting centers for which figures were not collected before May 1942. •Increase of less than one per cent. **Decrease of less than one per cent. INDUSTRIAL PRODUCTION National Summary of Business Conditions (By the Board of Governors of the Federal Reserve System) Industrial output continued to rise in August and the first half of September and retail distribution of commodities also increased. Prices of farm products and foods advanced further. Federal Reserve monthly index of physical volume of pro duction, adjusted for seasonal variation, 1935-39 average — 100. Latest figures shown are for August, 1942. DEPARTMENT STORE SALES AND STOCKS 150 C£"T 140 Distribution—Distribution of commodities to consumers increased considerably in August, reflecting particularly marked increases in department store sales and in sales of general merchandise in small towns and rural areas. Dollar value of sales to consumers in August was somewhat lower than the unusually large sales a year ago, when there was a considerable amount of anticipatory buying, while average prices were about 12 per cent higher. On the basis of physical volume, therefore, sales were smaller than a year ago. Railroad freight-car loadings were sustained at a high level during August and the first half of September, reflecting continued large shipments of most classes of freight. 130 120 110 100 SALES 90 80 STOCKS 70 60 50 1936 1937 1938 1939 Production—Industrial output increased in August and the Board’s seasonally adjusted index rose 3 points to 183 per cent of the 1935-1939 average. There were further marked increases in activity in the machinery, transportation equipment, and other armament industries. Crude petroleum production increased consider ably from the reduced level of recent months and output of manufactured food products rose more than is usual at this time of year. Production of materials, such as steel, nonferrous metals, coal, and lumber, continued in large volume. Value of construction contracts awarded in August declined from the record high levels of June and July, according to figures of the F. W. Dodge Corporation. The extent to which the continuing large volume of construction reflects the war program is indicated by the fact that in the first eight months of this year 84 per cent of total awards have been for publicly-financed projects and in recent months the percentage has been higher. 1940 1941 1942 Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 1923-25 average = 100. Latest figures shown are for August, 1942. EXCESS RESERVES OF MEMBER BANKS Commodity Prices—During August and the first half of September the general wholesale price index advanced about half a point to 99.2 per cent of the 1926 average, reflecting chiefly increases in prices of livestock products. Prices of wheat, flour, and some other uncontrolled commodities also advanced. New crop tobacco prices showed sharp increases over last year and a temporary ceiling at current levels was established for flue-cured types. Retail food prices continued to rise from the middle of July to the middle of August and further increases are indicated in September. Prices of uncontrolled foods in August were 10 per cent higher than in May. Agriculture—Crop prospects improved considerably during August and aggre gate production this year is expected to be about 15 per cent greater than in 1941, which was close to a record year for crops. Unusually high yields per acre are indicated for most major crops and for some others, like oilseed crops, sub stantially increased acreages are expected to be harvested. Feed grain supplies are expected to be of record proportions, but owing to the growing number of livestock on farms the supply per animal will probably be about the same as last season. Wednesday figures. Latest figures shown are for Septem ber 9, 1942. MEMBER BANK RESERVES AND RELATED ITEMS FACTORS USING RESERVE FUNOS ME MB ER BANK RESERV BALANCES 7* yd' ) - MONEY CIRCULA1 ------- ------- TREASURY CAS ! ANO OEPOSITS ~'vTv^JT'T\jv -V-Jk. —----------v NONMEMBER ;—DEPOSITS ____________ 1____________ 1940 1941 1942 1940 1941 1942 Wednesday figures, partly estimated. Latest figures shown are for September 9, 1942. Bank Credit—Excess reserves of member banks, which have generally fluctuated between 2.0 and 2.5 billion dollars in recent months, rose temporarily to over 3 billion on September 16. This increase was due partly to a further reduction in reserve requirements on demand deposits at central reserve city banks from 24 to 22 per cent and partly to Treasury disbursements out of its balances with the Reserve Banks in connection with September 15 tax collections and fiscal opera tions. Funds for these disbursements arose in part from the issuance of special one-day certificates to the Reserve Banks. Excess reserves of New York City banks have been declining for a number of months owing principally to the excess of funds raised in that city by the Treasury over amounts expended there. The effect of this drain has been offset in part by purchases of Government securities by the Federal Reserve System and by the two successive reductions in reserve requirements. At banks outside New York City excess reserves have shown little change in recent months. These banks have lost reserves through currency drain and their required reserves have increased owing to growth of their deposits; both these factors, however, have been largely offset by transfers of funds from New York. Holdings of Government securities at New York City banks, which increased substantially in July and August, declined somewhat in the first half of September. At banks outside New York City holdings have continued to increase. United States Government Security Prices —The recent 3 billion dollar Treasury cash financing operation had little effect on the Government securities market, and prices continued steady. SEVENTH FEDERAL IOWA RESERVE DISTRICT
@FedFRASER