The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
BUSINESS CONDITIONS
A REVIEW BY THE FEDERAL RESERVE BANK OF CHICAGO
•
^E-SAl •'■FSfc>0£ BAHU
wr SEP 23 AM 0
5o
_.~5*
immm
re**
®?fl£
|Mf
*ES.
*
('...
■e^sswf*
>
■"
■
-
; AT r.
SEPTEMBER, 1943
Review of Seventh District Business
Income Payments Rise to Neiv Record Level
Income payments to individuals are now estimated
to have reached the unprecedented annual rate of
146 billion dollars in the nation, and more than 25
billion dollars in the Seventh Federal Reserve Dis
trict states. These rates represent an increase of
more than 11 per cent over comparable rates during
the fourth quarter of 1942. Manufacturing wages
and salaries, Federal government payrolls (includ
ing compensation of the armed forces), and incomes
of farmers have accounted for most of the increases
in the nation and the district.
The percentage increases in income payments be
tween quarters have slackened during recent months,
indicating in part the gradual attainment of peak
productive capacity. Since price advances obviously
influence income payment trends, these payments
may expand further with little or no increase in the
volume of goods and services produced.
CONSTRUCTION DECLINES FURTHER
The volume of Seventh District construction ac
tivity continues to decline. Following a downward
trend which began in August 1942, construction
contracts in July were valued at 29 million dollars,
or 78 per cent below the same month a year ago.
With the large government program of war plant
construction now more than 80 per cent complete,
construction activity in the nation has followed a
similar trend. Activity for the first six months of
the current year was 39 per cent less than during
the preceding half year, and progressively sharper
decreases are expected in the next several months.
p^r Cent
MUNITIONS PRODUCTION
Per Cent
The expanded steel and 100-octane gasoline pro
grams will account for the bulk of construction dur
ing the remainder of the year.
The WPB announcement on August 30, that more
than one-third of the construction equipment in the
United States is over 13 years old has aroused some
comment about the post-war prospects of the con
struction equipment industry. The Federal govern
ment, of course, owns a substantial volume of such
machinery which probably will become available for
private use after the war. Fifty per cent or more
of existing crushers, ditchers, hoists, and engines
are 13 years old or over. Nearly one-half the cranes
and hammers have been in use at least 13 years.
General munitions production, including ships,
planes, tanks, and ordnance, quartermaster, and mis
cellaneous items, increased three per cent in July,
moving ahead from the rather uniform level of April,
May, and June. The WPB munitions index based
upon November 1941 as 100 stood at 593 in July
1943 as compared with 573 in the previous month.
While the WPB feels many production problems
have been solved and peak rates have been achieved
or are not far off, further important production in
creases are required in airplanes, signal equipment
and some types of army ammunition. The ship con
struction program calls for some sharp expansions
in the next several months but maximum desired
rates are in sight. Of the 19 million tons of shipping
scheduled to be built during 1943 ten million tons
were completed by the end of July. Artillery, anti
aircraft guns, small arms, combat and motor ve
hicles, and quartermaster and miscellaneous items
have either passed their peak requirements or offer
no major problems as a group.
AUTOMOBILE WAR OUTPUT MOUNTS
NOVEMBER
1941=100
200
1941
1942
Source: War Production Board
On August 20 the automotive industry, concen
trated largely in the Seventh District, was produc
ing war materials at a rate in excess of 9.3 billion
dollars a year. This is an increase of 81.4 per cent
over the rate at the same time a year ago.
Output of the domestic steel industry for the first
seven months of 1943 was 51,242,929 tons, and cur
rent estimates indicate that total production for the
year will reach about 90 million tons as compared
with 86 million tons in 1942. Steel ingot production
in the Chicago area advanced from 97.5 to 99.5 per
cent of capacity during August as against a smaller
(Continued on Page 6)
Third War Loan Drive
Sales to Individuals Emphasized
The Third War Loan Drive to raise a minimum of
15 billion dollars got under way September 9 under
the direction of the new State War Finance Commit
tees. The entire amount is to be obtained from sales
to investors other than banks. The 15 billion dollar
goal is more than double the sales of 6.8 billion dol
lars to nonbanking investors in the First War Loan
Drive of last December, and compares with sales of
12.6 billion dollars in the Second War Loan Drive.
The fullest support of every citizen is required to
achieve this unprecedented goal.
Banks will be excluded from the drive, but will
be offered a 2 per cent bond and a % per cent certi
ficate of indebtedness for their own subscription
shortly after the drive terminates.
TABLE 1
Quotas for Third War Loan Drive
(In Millions of Dollars)
CorporaArea
Illinois ......................
Cook County.........
Indiana ....................
Iowa ...........................
Michigan ..................
Wisconsin .................
Individuals and
Personal Trust Accounts
Grand
Total
and
Associations
Total
921
746
257
196
451
298
591
528
139
96
226
195
330
218
118
100
225
103
Savings Bonds
Series
Series
E
F & G
195
117
75
60
165
67
Other
Securities
33
19
13
20
18
12
Total—Seventh
District States........
2.123
1,247
876
562
96
United States ........
15.000
10,000
5,000
3,000
500
102
82
30
20
42
24
218 .
1,600
than November 1, 1943 for the 2’s and 2^'s sub
scribed for by them during the drive.
SECURITIES OFFERED
QUOTAS IN THE THIRD WAR LOAN
As in the First and Second War Loan, the Treas
ury is offering a “basket” of securities consisting
of three marketable issues together with the con
tinued sale of Series E, F, and G Savings Bonds and
Series C Savings (Tax) Notes. The marketable is
sues consist of twenty-six year 2i/£ per cent bonds
of 1964-69, ten year 2 per cent bonds of 1951-53,
and one year % per cent certificates of indebtedness.
All three marketable issues will be dated September
15.
In order to make the Series C Savings (Tax) Notes
more attractive as investment media for the tem
porarily idle funds of corporations and other large
investors, the Treasury has eliminated the provision
requiring thirty days advance notice for the redemp
tion of these notes. Hereafter they will be redeemed
on demand at any time after six months from the
date of issue. Also, to enable life insurance com
panies to place subscriptions in anticipation of funds
to be received in October, it is provided that they
make payment at par and accrued interest not later
Quotas by type of purchaser for the United States
and states lying wholly or partly in the Seventh
District are shown in Table 1. These quotas were
apportioned to the states by the Treasury in the fol
lowing manner:
(1) The quota for Series E War Savings Bonds
was distributed on the basis of individual
incomes.
(2) The distribution of the quota for other secur
ities to be sold to individuals was based partly
on personal incomes, partly on bank deposits,
and partly on Second War Loan performance.
Allowance was made for Series F and G
Savings Bonds purchased by trust funds,
most of which are purchased through banks
and trust companies located in the larger
cities.
(3) The quota for corporations and associations
was allocated on the basis of bank deposits,
except that expected purchases of insurance
companies and mutual savings banks were
distributed on the basis of total assets of
these institutions.
County quotas both for corporations and individu
als were prepared by the Teasury on the same basis
as those for states, subject to approval and modifica
tion by the State War Finance Committee Chairmen.
TABLE 2
A Comparison of the War Loan Drives
(Amounts in Millions of Dollars)
First War
Loan Sales
Type of
Investor
Amount
Individuals, partnerships,
and personal trust accounts
Corporations & associations
Second War
Loan Sales
Per
cent
of
total Amount
Third War
Loan Quotas
Per
cent
of
total Amount
Per
cent
of
total
1,593
5,229
23
77
3,290
9,260
26
74
5.000
10,000
33
67
Total sales to nonbanking
investors ............................. 6,822
100
12,560
100
15,000
100
EMPHASIS ON INDIVIDUAL SUBSCRIPTIONS
Major emphasis in the Third War Loan Drive will
be placed on increasing the purchases of bonds by
individuals. Accordingly the War Finance Commit
tees will concentrate on a house-to-house selling
Page 1
campaign. Table 2 shows that the proportion of
the total goal to be raised from individuals, partner
ships, and personal trust accounts is considerably
greater than the proportionate amount raised from
this source in either the First or Second War Loan
Drives. The quota for individuals includes a quota
bf 3 billion dollars for Series E War Savings Bonds,
Which is more than double the amount of these bonds
sold
in the Second War Loan Drive.
I
‘ From the standpoint of controlling inflation the
jsuccess of the drive will depend upon meeting and
surpassing the quota set for individuals. It is true
that purchases of bonds by institutional investors
bther than banks do not increase the quantity of
bank deposits, but they are made out of funds al
ready saved, which in any case will probably not be
lused to bid up the prices of consumer and industrial
igoods. Similarly, purchases by corporations are
made from funds which are not likely to be spent
because of priorities and allocations and heavy tax
liabilities.
Purchases by individuals are likewise made from
funds which represent past and current savings.
However, if these funds are converted into Govern
ment bonds it is less likely that they will be drawn
upon for spending in the future than if they had
been held in the form of cash.
OFFERINGS TO BANKS
* At the conclusion of the drive, commercial banks
will be offered a 2 per cent bond and a % per cent
certificate of indebtedness for subscription for their
own account. In order to confine all sales in the
September drive to nonbanking sources, the Treas
ury has requested commercial banks not to buy in
the market, and has requested the market not to
trade in any of the securities offered in the drive
until the books for bank subscriptions are closed.
In order to avoid unnecessary transfers of funds
from one locality to another, corporations and firms
are requested to have their subscriptions entered
and paid for through the banking institutions in
which the funds are located. This procedure will
enable such banks to use War Loan credit in making
payment for these subscriptions and thereby prevent
a reduction in their deposits. For the same reason
it would be desirable for insurance companies to
follow a similar procedure.
SALES CREDIT AND ALLOCATIONS
In accordance with instructions from the Treas
ury, credit for sales of the three marketable issues
will be granted to the county and state correspond
ing to the address of the subscriber appearing on
the subscription form. If no address for a sub
scriber is given, the sale will be credited to the
Page 2
county and state corresponding to the address of
the bank filing the subscription.
When Series E Bonds are issued by a post office,
bank, savings and loan association, or credit union,
credit is made to the county and state in which such
issuing agent is located. When Series E Bonds are
issued by any other issuing agent, the issue price is
credited to the address of the purchaser. All sales
of Series F and G Bonds and Series C Savings (Tax)
Notes will be credited to the address appearing in
the inscription on the bonds or notes.
Sales credited on the three marketable issues and
the Series C Savings (Tax) Notes may be allocated
to other localities if written instructions to that
effect accompany the subscriptions, provided that
no allocations will be made for amounts of less
than $50,000. However, no allocations may be made
for subscriptions by insurance companies. These
will be credited to the location of the home offices of
these institutions, since quotas for insurance com
panies were allocated on this basis.
EFFECT OF THE DRIVE ON BANKS
During the April drive demand deposits-adjusted
of the weekly reporting banks in the United States
decreased 3,476 million dollars between April 14
and May 5 as banks’ customers drew on their de
posits to purchase Government securities. A similar
decrease can be expected during the September
drive. However, as in April, a substantial amount
of the private deposits lost will be transferred to
War Loan deposit accounts, probably resulting in no
net decrease in total deposits for member banks on
the average. Since there are no reserves required
against War Loan deposit accounts, this transfer
will result in a reduction in the required reserves of
member banks and an increase in their excess re
serves. The increase in excess reserves, however,
will be only temporary. As the Treasury withdraws
its funds in War Loan deposit accounts to meet its
expenditures, they will be returned to the banking
system in the form of private deposits. Since re
serves are required against private deposits, this
transfer from War Loan deposits to private deposits
will cause required reserves to rise and excess re
serves to decline again.
In these circumstances, banks can add to their
income by investing these temporarily idle funds in"
Treasury bills either by repurchasing Treasury bills
previously sold to the Federal Reserve banks under
repurchase option, or by bidding for new issues and
by purchasing bills in the market. As excess reserves
subsequently decline, banks can sell bills to the Fed
eral Reserve banks under the repurchase agreement.
.......
—
-
(Continued on page 8)
Winter Coal Supplies
I
Moving Available Fuel to Consumers Raises Problems
Distribution more than production promises to be
the principal bottleneck in meeting industrial and
residential needs for coal during the coming winter
months in the Seventh Federal Reserve District.
Unless serious work stoppages interrupt production,
or military victories greatly intensify the export de
mand over-all supplies of coal will probably be ample
for basic requirements. The extent to which these
supplies will reach consumers when needed, however,
will depend largely upon the early placing of orders,
the ability of distributors to avoid congested delivery
schedules, available manpower, and transportation
facilities. Coal rationing, as rumored, was officially
denied in July by the Office of Price Administration,
but plans are said to be completed to ration coal if
conditions necessitate such action. Rationing, con
sequently, remains a possibility, and coal may be
allocated to distributors to equalize consumption in
different areas.
A record national production goal of 665 million
tons of bituminous and anthracite coal has been set
for 1943, more than 90 million tons of which will
be used for heating residences and other buildings.
Since relatively more dwelling units are heated by
bituminous coal in the Seventh Federal Reserve Dis
trict states than in any other Federal Reserve dis
trict, the outlook for winter coal supplies is espe
cially important here. Approximately seventy per
cent of the dwelling units in the Seventh District
states use bituminous coal as compared with about
forty per cent in the nation as a whole.
The high level of industrial activity and the reduct
tion in competition from fuel oil now afford a favor
able outlook for the coal industry for the duratioii
DISTRIBUTION OF DWELLING UNITS BY TYPE OF FUEL USED
Seventh District States
United States
Other
KEY
Wood
Coke
Itffl
•• ••
• * *•
Fuel Oil
Bituminous
Gas
Anthracite
Source: U. S. Office of Civilian Supply
Page S
of the war. Attainment of the 1943 production goals,
however, has been impeded by several work stop
pages during May and June. The United Mine Work
ers (UMW) have resumed work on an extended truce
basis until October 31, 1943. The fundamental is
sues remain unsettled, and the Appalachian mines
have been operating under government supervision
since May 5, 1943. More than 540 anthracite and
bituminous coal mines, producing twenty-three per
cent of the nation’s coal, have been returned to their
owners. The government still had possession and
control of 2,829 mines on September 7. The War
Labor Board (WLB) did not approve the wage in
creases provided in an agreement between the UMW
of Illinois and the Illinois Coal Operators’ Associa
tion. Kentucky and Alabama miners have submitted
their pleas for portal-to-portal payment to federal
courts. The decisions rendered in these cases should
set an important precedent for the yet to be deter
mined Appalachian agreement, and will unquestion
ably influence the possibility of further work stop
pages in the nation’s coal mines.
COAL RESERVES ABUNDANT
;
Coal is the most abundant of the three natural
fuels—coal, oil, and gas. The world’s largest re
serves of coal are in the United States, particularly
in the Appalachian and Mid-West areas. Twentyseven states produce commercial amounts of coal,
but six account for 85 per cent of national output.
In decreasing order by 1942 production, they are:
Pennsylvania, West Virginia, Illinois, Kentucky,
Ohio, and Indiana. Illinois produced 65 million tons
in 1942, and Indiana 25 million tons. Small outputs
came from Iowa and Michigan, and the five district
states in 1942 produced 93 million tons or about onesixth of the United States total.
Since most of the coal is consumed at a consider
able distance from the mines, transportation has
always assumed great importance. Revenue rail
road shipments of bituminous coal from “Illinois,
Indiana and Western Kentucky and west-bound from
Ohio and the Appalachians” amounted to 207 mil
lion tons during 1942, an increase of 39.3 per cent
over 1939. The flow of coal via railroad into the
Seventh District states was 46.8 per cent greater in
1942 than in 1939. The increase in outbound ship
ments from the district states was 48.6 per cent
during the same period.
The city of Chicago and immediate vicinity, in
1942, consumed roughly 35 per cent of the 84 million
tons of bituminous coal used for all purposes in the
five district states. Detroit accounted for 6.6 per
cent. Roughly 43 million tons, or about one-half of
Page 4
all coal consumed, came from mines within the five
district states.
Great Lakes vessels play an important role in the
transportation of coal. Shipments of bituminous
coal to Great Lakes ports for cargo loading reached
48 million tons in 1942 as compared with 40 million
tons in 1939. The total anthracite cargo coal loaded
into vessels at Lake Erie ports was 575,000 tons in
1942, an increase of 44,000 tons over 1939.
*
COAL VITAL TO WAR
Coal is the principal fuel in peace and war. Coal
now supplies over half of the power needed to build
planes, tanks, guns, and ammunition, drives four out
of five of our railroad locomotives, and creates fiftyfive per cent of the electrical power used in the
United States.
War conditions, of course, bring record coal out
puts. Bituminous coal production reached 580 million tons in 1918, but did not attain this height again
until 1942. During 1943 it is expected that 600 mil
lion tons of bituminous and 65 million tons of an
thracite coal will be produced.
Industrial uses of coal are by far the most impor
tant. Judged by their coal consumption during 1942
and the first four months of 1943, Class I railroads
will consume roughly 137 million tons of bituminous
coal during 1943. Nearly 92 million tons will go to
by-product coke ovens, 72 million tons to electric
power utilities, 14 million tons to beehive coke ovens,
11 million tons to steel and rolling mills, 7 million
tons to cement mills, 3 million tons to be used as coal
mine fuel, 2 million tons to coal-gas retorts, and 144
million tons to other industries.
Non-industrial consumers will use an estimated
130 million tons of bituminous coal in the United
States during the 1943-1944 winter season, accordJf T™;
BITUMINOUS COAL CONSUMPTION
“mums
tlECTRlC power
TOTAL
UTILITIES
i
retail
XAyYX
,
RAILROADS
MANUFACTURING
193 9
1940
1941
1942
1943
IStlHMt*
Source: Bureau of Mines, and Bituminous Coal Division
*
,
*
*
ing to the Bituminous Coal Consumers’ Counsel. The
precise amount, of course, will depend upon weather
conditions and the ability of distributors to supply
the needs of consumers. Approximately 83 per cent
of the coal will probably move through retail out
lets : 92 million tons for heating dwellings and other
buildings and 16 million tons for “small” industries.
Three-fourths of the coal moving through retail
outlets will be shipped by rail and river transport
facilities. The remaining one-fourth will move via
lake, tidewater, and truck.
Nearly 9.5 million tons of coal will be required
during the 1943-1944 season for domestic consump
tion in the immediate Chicago area alone. The Chi
cago Coal Merchants’ Association reports that de
liveries of coal are currently being made by Chicago
coal merchants to 967 industries engaged in war
work, 62 buildings housing government agencies,
and 52 hospitals.
The value of bituminous coal at the mines was
$2.24 a ton in 1942 as compared with $1.84 in 1939,
an increase of 22 per cent. Chicago retail coal prices
increased between 20 and 30 per cent from Septem
ber 1939 to September 1943, depending upon differ
ent grades of coal and the transportation costs.
SUBSTITUTE FUELS
^
»
Since Pearl Harbor there has been an over-all in
crease in the amount of coal consumed in homes and
small industries because of the scarcity of fuel oil,
which prior to the outbreak of the war was being
used more widely each year. Roughly 415,000, or
seven per cent, of the dwelling units in the district
states used fuel oil for heating purposes in 1940,
consuming approximately 11.5 million barrels of
fuel oil. Since 1940, many of these dwelling units
and small industrial plants have converted from oil
to coal. Sales of industrial size and power stokers
in March 1943 amounted to 2,202 units as compared
with 1,994 units during March 1942. Many of these
replaced oil-fired plants. According to the Petroleum
Administration for War (PAW) roughly 2,000 Mid
western industrial and commercial facilities, includ
ing thirty petroleum refineries, have converted from
oil to coal. The PAW and the Petroleum Industry
Marketing Committee have set a minimum Mid
West goal of fifteen million barrels of oil as the an
nual saving from the conversion of industrial and
commercial facilities to coal. In late August twothirds of the goal had been attained.
Colloidal fuel, a mixture of finely ground coal and
fuel oil, although still in the experimental stage, has
possibilities as an oil saver where oil-burning facil
ities cannot readily be converted to coal, such as
stationary power plants, marine service, locomotives,
and home heating units. Probably very little use,
however, will be made of colloidal fuel as a substitute
for fuel oil during the war.
OUTLOOK FOR PRODUCTION
Threats to the attainment of the production goals
set for coal in 1943 are manpower shortages, work
stoppages in the mines, and the breakdown of min
ing machinery. Continuation of the six-day work
week begun on May 3 when the government took
over the mines and probable extensive 48-hour week
operations will compensate to a large extent for
manpower shortages in several areas. They also
will help to recoup the losses in coal production
caused by the mine stoppages this year which up to
September 1 had cost the nation 27 million tons of
coal.
When the last Appalachian coal agreement ex
pired March 31, 1943, the UMW, headed by their
president, John L. Lewis, demanded wage increases
of two dollars per day, a minimum daily wage of
eight dollars, portal-to-portal payment, unionization
of all supervisory employees below superintendent,
and payment for their lamps and other charges.
The extension of the former contract having ex
pired, the coal miners were without a contract on
April 30, 1943, and at midnight four hundred and
eighty thousand of them halted work. The fifteen
thousand Progressive Mine Workers in Illinois,
however, stayed at their jobs. The government took
control of the mines on May 3 and most of the min
ers were back at work the following day under a
fifteen day truce.
On June 1 another general shutdown occurred,
involving four hundred and fifty thousand bitumi
nous coal miners and eighty thousand anthracite
coal miners. The miners did not return to work
until June 7.
The third work stoppage began on June 18, almost
immediately after the WLB refused to order pay
ments to the miners for underground travel. The
Board held that any legal claims for such pay were
a matter for a lawsuit or an out-of-court settlement
with the mine owners. Lewis issued an order to the
coal miners on June 22 to return to the mines until
October 31. Full production of the mines was not
resumed until the middle of July.
The Illinois Coal Operators’ Association and the
UMW of Illinois agreed upon a work pact, provid
ing for an eight-hour day and six-day week with
time and one-half pay for all hours in excess of
thirty-five, and an allowance of $1.25 per day, retro
active to April 1,1943, for portal-to-portal payment.
Page 5
The WLB, however, rejected on August 24 the $1.25
per day proposal for portal-to-portal payment, stat
ing that this wage increase would be contrary to the
national price stabilization program. No objection
was made to the miners working eight hours a day
with time and one-half for the eighth hour.
Railroad cars and trucks to transport coal con
siderable distances and ultimately to consumers are
now quite limited in number. There is obviously a
much greater demand placed upon coal distributors
during the fall and winter months than during the
spring and summer. Because more coal must be
moved this year with limited transportation facil
ities, it is absolutely essential that a substantial part
of coming winter deliveries be made as early as pos
sible. A goal of 35 million tons of coal to be moved
by rail, lake, and river before September 1, 1943
to avoid a shortage next winter was attained, but
the need continued for heavy pre-winter shipments.
Joseph P. Eastman, Director of the Office of De
fense Transportation, has ordered that lakes coal
shipments to Chicago and Buffalo be decreased dur
ing 1943 to eighty per cent of last year’s quota which
was only sixty per cent of normal peacetime ship
ments. Additional space requirements for ore and
grain necessitated this order.
Manpower shortages have been not only acute in
the mines but also among distributors. More than
forty per cent of union coal yard workers and de
livery trhck drivers in Chicago are reported to have
joined the armed forces or taken up work in other
industries.
The consumption of bituminous coal in general
depends upon the level of industrial activity, the
importance of competing fuels, consumer incomes,
and weather conditions. Industrial activity and con
sumer incomes are now both at a very high level.
The scarcity of fuel oil and natural gas is, of course,
well recognized. Anthracite is currently benefiting
from the tight supplies of fuel oil.
The consumption of coal for heating purposes, of
course, varies according to prevailing temperatures
and the length of the winter. The 1942-1943 winter
season was abnormally cold and prolonged. Hence,
there is reason to believe that the 1943-1944 season
will be no worse, and perhaps, it may be much better
as regards heating fuel requirements. Increased
stress has been placed on greater efficiency in the
use of coal since the beginning of the war, which
has no doubt reduced fuel needs somewhat. As the
demand for coal has increased, methods of fuel sav
ing have been publicized by public and private
agencies.
Page 6
District Summary
(Continued from inside front cover)
national rise from 98.5 to 99.0 per cent. Ingot pro
duction in Detroit rose to 102.5 per cent of capacity
during the middle of August, but furnace repairs
caused a drop to 97 per cent at the end of the month.
Electric furnace capacity has been increased
greatly in the district and other steel centers during
the past year. The WPB is now urging steel buyers
to use electric furnace alloys instead of the open
hearth variety so as to release open hearth capacity
for the manufacture of carbon steel for which
requirements are far in excess of supply. Alloy steel
ingot capacity of electric furnaces in the nation rose
from 150,000 tons a month in 1940 to 328,000 tons
in July 1943, and is expected to reach 471,000 tons
by the end of this year.
Great Lakes ore carriers moved 13,976,707 tons in
August, a new all-time high for the second successive
month, which brought the cumulative season total of
iron ore shipments to 51,323,852 tons by August 30.
These recent large shipments have reduced a sub
stantial portion of the deficit on 1943 movements
resulting from a prolonged lakes’ freeze and bad
weather. Shipments are now less than one-tenth of
one per cent behind the cumulative schedule which
must be maintained to meet the revised season’s goal
of 86.5 million tons. The initial goal for 1943 was
95 million tons.
SCRAP INVENTORIES LOW
A low scrap inventory continues to cause concern
among government and industry officials. The Chi
cago scrap movement is reported slow, principally
because of manpower shortages and a drying up of
the supply of automotive and structural steel scrap.
Limitations on new buildings are forcing owners to
repair and recondition buildings which might nor
mally be tom down and thereby provide substantial
amounts of structural scrap.
The continued entrance of students into the labor
market brought civilian employment in the nation to
a new all-time high in . July 1943 of 54.3 million
persons, according to the Bureau of the Census. This
high level of total employment, 900 thousand persons
more than in June, has been attained despite the fact
that over-all employment of men was 2.7 million
below 1942. Female employment on the other hand
was 3 million higher than a year earlier, and 50 per
cent greater than in 1940. The bulk of the current
increase in employment has been in response to the
continued heavy seasonal demand for agricultural
labor. Many persons who would normally return to
school in September are expected to remain in em-
ployment. Nevertheless, the usual seasonal decline
in the labor force during the late fall will no doubt
occur.
In the Seventh District states total manufacturing
employment increased 1.6 per cent between June
and July. Employment in both durable and non-durable goods industries advanced. The most important
factor in the increase in non-durable goods was a
16.4 per cent rise in Wisconsin to meet the require
ments of the canning and preserving industry. Only
Indiana showed a decline in all three employment
groups.
At the end of August according to the War Man
power Commission there were seven areas of acute
labor shortage in the Seventh District:
Illinois:
Sterling
Indiana:
Anderson
Gary-HammondSouth Chicago
Michigan:
Detroit
Muskegon
Wisconsin:
Racine
Sturgeon Bay
Twenty district areas were considered to have
labor stringencies and definitely anticipated labor
shortages within six months:
Illinois:
Aurora-Elgin
Chicago
De Kalb
Rockford-Beloit
Springfield-Decatur
Michigan:
Adrian
Battle Creek
Benton Harbor
Flint
Monroe
Saginaw-Bay City
Indiana:
Fort Wayne
Indianapolis
Michigan City-LaPorte
Muncie
New Castle
South Bend
Wisconsin:
Kenosha
Manitowoc
Milwaukee
The fourteen district areas in which a general
labor shortage may be anticipated within six months
are:
Illinois:
Michigan:
Joliet
Grand Rapids
Moline
Jackson
Waukegan
Kalamazoo
Lansing
Indiana:
BloomingtonBurns City
Kokomo
Lafayette
Logansport
Marion
Wisconsin:
Madison-Merrimac
Sheboygan
Only ten district areas were reported to have labor
supplies adequate to meet all known requirements:
Illinois:
Wisconsin:
Bloomington
Appleton
Champaign
Fond du Lac
Danville
Oshkosh
Galesburg
Wausau
Peoria
Indiana:
Terre Haute
RAILROAD RECORD OUTSTANDING
In spite of manpower and equipment shortages,
Class I railroads in the first seven months of 1943
performed nearly 19 per cent more revenue ton miles
of service in the United States than in the same
period of 1942. July revenue ton miles were nine
per cent more than June. All materials requested
for fourth quarter production of transportation
equipment by the Office of Defense Transportation
under the CMP were allowed by the WPB require
ments committee. Particular attention is to be given
to railroad construction projects in the western de
fense area. The first of 1,200 previously authorized
troop sleepers are expected to be delivered at the
end of September and deliveries will continue at the
rate of about 20 a day.
The yearly seasonal peak in railroad freight ship
ments is expected to occur during late September
and October. Westbound refrigerator cars are the
only large remaining reservoir of unused freight car
capacity, and new orders of the Interstate Commerce
Commission require their use in preference to box
cars.
The WPB announced in August that sufficient new
and reconditioned automobile parts will be available
through 1944 to maintain transportation by private
automobile at an essential level. Scrap dealers and
auto wreckers are now required to save the still
usable or reconditionable parts from the cars that
come into their hands. More than 400 million dol
lars in new parts also will be made yearly. Rubber
Director Jeffers stated that 17 million passenger
car tires are being released for essential civilian use
this year and another 30 million will be manufac
tured and distributed in 1944.
Page 7
A quota of nearly 7,500 new passenger automo
biles will be available in September for rationing to
Seventh District drivers. A reserve of an additional
1,000 cars will be on hand to fill essential demands
in excess of the quotas. Nearly a fifth of the national
quotas and reserves have been assigned to the Sev
enth District states.
Department store sales in principal cities in the
Seventh District continue to show increases. Average
sales in August were 12 per cent higher than last
year, as compared with a national increase of 6 per
cent. All classes of sales were reported above the com
parable 1942 levels, with the largest increases noted
in the piece goods and women’s and misses’ ready-towear classes, both of which were over 42 per cent
greater than in July 1942. Retail sales of furs lead
all individual items with a 123 per cent increase over
last year. Department store stocks were reported
lower in all classes except women’s and misses’
ready-to-wear. House furnishings stocks are down
32 per cent from 1942, and the supplies of major
household appliances are less than a third of what
they were in July last year. Reports from the recent
Chicago wholesale marts indicate that while most
merchants had more success in their fall buying than
expected, few were able to purchase either their 1942
quantities or varieties. One result of this condition
may be that store buyers will have to make more
frequent trips to the markets.
CASH FURNITURE SAUES GAIN
Retail furniture sales during July showed the
usual seasonal decrease from June, but were above
July 1942. Cash sales increased 38 per cent and
credit sales, 19 per cent from a year ago. Inventories
declined 19 per cent during the same period. Higher
purchasing power is reflected in the relative increase
in cash sales to total sales. Cash sales are currently
22 per cent of total sales.
Chicago has been showing a larger gain in both
cash and credit sales than other principal cities of
the district. Although July is not normally a “good”
furniture month, sales of reporting stores in Chicago
showed an increase of 6 per cent over June and 25
per cent over July 1942.
Cost of living for city workers in the nation in
July, according to the Bureau of Labor Statistics,
continued the downward trend established in June,
with a drop of 0.8 per cent from mid-June to midJuly, led by a 2 per cent decline in retail food prices.
Page 8
Clothing costs rose 0.5 per cent, and other costs, in
cluding house furnishings, utility rates and services,
remained substantially the same. Cost of living in
Chicago and Detroit followed the national pattern
with declines of 1 and 0.6 per cent respectively. Re
tail food prices in both cities were respectively 2.4
per cent and 2 per cent lower. One of the principal
reasons given for the lower price of foodstuffs is the
abundance of victory garden produce, which coupled
with adequate commercial supplies helped to accen
tuate seasonal declines in the prices of some fresh
vegetables. Prices of meats also were lower because
of cutbacks of OPA ceilings. Food costs as a whole,
however, were still 36.7 per cent above the 1935-39
average in Chicago and 38.8 per cent higher in
Detroit. Wholesale prices, according to the Bureau
of Labor Statistics, also dropped during the last
week of July to the lowest point in five months, 102.8
per cent of the 1926 average. Farm products and
foods in primary markets lead the decline.
UIVESTOCK QUOTAS SUSPENDED
The War Food Administration announced on Sep
tember 2 that quotas on livestock slaughter for in
dividual slaughtering plants were being suspended.
This is expected to facilitate a more normal flow
of livestock through the usual marketing channels,
and ease the problem of providing the necessary
meat for military, lend-lease, and civilian ration
requirements.
A lower support price, or “floor,” under hog prices
was announced September 9. The new support price
of $12.50 for 190 to 230 pounds good to choice butch
er hogs. The support will apply from October 1,
1944 through March 31, 1945. It is reported that
this move is designed to bring the scale of the hog
industry more closely into line with the limited feed
supplies. The period covered by the new support
price is the normal time in which hogs would be
marketed from current breeding operations.
Third War Loan Drive (Continued from Page 2)
Although beginning with the offering of Septem
ber 16, the amount of Treasury bills sold each week
will be equal to the amount redeemed, there are over
13 billion dollars of these bills presently outstanding.
On September 8, the Federal Reserve System held
5.9 billion dollars of these. Thus there should be a
sufficient amount of these bills to meet the needs of
banks for temporary investments.
INDUSTRIAL
PRODUCTION
NATIONAL SUMMARY OF CONDITIONS
BY BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM
Industrial production advanced to a new high level in July following a
slight decline in June, both of the changes reflecting chiefly fluctuations in
coal production. Maximum food prices were reduced recently with a con
sequent slight decline in cost of living in July. Retail sales continued in
large volume.
Industrial production—Industrial activity increased in July, reflecting a
large rise in mineral production. Output at coal mines advanced sharply
from the reduced level in June, production of crude petroleum increased,
and iron ore shipments reached the highest monthly rate on record.
Federal Resenre index.
for July, 1943.
Monthly figures, latest shown is
DEPARTMENT STORE SALES AND STOCKS
DOLLAR VOLlABt DIADORM.L4 UMIfIB, lOIS-t
180
160
140
120
100
80
60
40
Federal Reserve indexes.
are for June, 1943.
Monthly figures, latest shown
COST OF LIVING
In manufacturing industries, output of most durable products and chemi
cals continued to increase in July, reflecting chiefly a further rise in pro
duction of munitions. At meat packing plants and cigarette factories pro
duction was also larger in July. Output of leather and textile products had
shown small decreases in June and further declines occurred in July.
Activity in most other nondurable goods industries showed little change
from June to July.
The decline in the yalue of construction contracts awarded continued
during July, according to reports of the F. W. Dodge Corporation. Most
of the decline is accounted for by a drop in awards for publicly-financed
industrial facilities and for public works and utilities.
Distribution—Value of retail sales declined less than seasonally in July
and continued substantially larger than a year ago. During the first six
months of this year sales had averaged about 12 per cent larger than in the
corresponding period of 1942 and in July the increase was somewhat greater.
The higher level of sales this year as compared with last year reflects for
the most part price increases. In the first half of August sales at depart
ment'stores increased by about the usual seasonal amount.
Freight carloadings rose sharply in July and were maintained at a high
level during the first half of August. Total loadings were 10 per cent higher
than the previous month owing to the largest volume of coal transported in
many years and shipments of grain and livestock showed a considerable
increase over June.
Commodity prices—The general level of wholesale commodity prices
showed little change in July and the early part of August.
The cost of living declined somewhat from June 15 to July 15, according
to Bureau of Labor Statistics data. Food prices declined by 2 per cent as
a result of reductions in maximum prices for meats and seasonal declines
in prices of fresh vegetables from earlier high levels.
FOODS
1937
1938
1939
1940
1941
r
1942
1943
Bureau of Labor Statistics’ indexes. Last month in each
calendar quarter through September, 1940, monthly there
after. Mid-month figures, latest shown are for July, 1943.
MEMBER BANK RESERVES AND RELATED ITEMS
Wednesday figures, latest shown are for August 18, 1943.
Agriculture — General crop prospects improved somewhat during July
according to Department of Agriculture reports. Forecasts for the corn and
wheat crops were raised 6 per cent. Production expected for corn and other
feed grains, however, is 10 per cent less than last year and for wheat is 15
per cent less than the large crop of 1942. Milk production in July was as
large as the same period a year ago, while output of most other livestock
products was greater.
Bank credit—The average level of excessive reserves at all member
banks, which had been about 1.5 billion dollars in mid-July, declined to 1.2
billion in the latter part of the month and continued at that level during the
first two weeks of August. There was some further decrease of excess
reserves at reserve city banks, but most of the decline occurred at country
banks, where there had previously been little change. Two factors were
principally responsible for the decline in excess reserves: an increase in de
posits subject to reserve requirements, as funds expended by the Treasury
from war loan accounts returned to the banks in other accounts; and a
growth of over 500 million dollars in money circulation. During the four
weeks ending August 18 additional reserve funds were supplied to member
banks by an increase of 580 million dollars in Reserve Bank holdings of
Government securities, principally Treasury bills bought with option to
repurchase.
During the four weeks ending August 11, member banks in 101 leading
cities increased their holdings of Government securities other than Treasury
bills by almost 800 million dollars.- Of this amount, 570 million represented
allotments to banks of new certificates of indebtedness issued in early
August. Bill holdings declined as member banks made sales to adjust their
reserve positions. Commercial loans increased somewhat over the four week
period, but other loans declined.
SEVENTH FEDERAL
RESERVE DISTRICT
@FedFRASER