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BUSINESS

CONDITIONS

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Volume 21, No. 9



OTM

sas^sai

sagas

September 29,1938




Prepared by the
Research and Statistics Department
of the
Federal Reserve Bank of Chicago

Monthly Review of Business C onditions in the Seventh Federal Reserve District

*

DISTRICT SUMMARY
UCH more definite and numerous indications of ex­
panding activity in Seventh district industry and trade
have made their appearance. Nevertheless, with few excep­
tions, volumes continue to be much below those of a year ago,
although the first evidences of a recession were manifesting
themselves at that time. Among the noticeably favorable
factors in the current situation is that employment and pay­
rolls are rising. The outlook is for abundant crops this year.

M

Industry

Agricultural Products
AT packing houses, creameries, and Wisconsin cheese fac­
tories, production was heavy during August. Sales
tonnages of meat products and of butter increased over those
of the preceding month and last August, but cheese distribu­
tion failed to hold up. On September 1, stocks of butter and
of cheese were at record high levels, although purchases
by Government agencies maintained butter prices. The move­
ment of grains at interior primary markets has been rel­
atively heavy. Feed crop prospects this year are above the
1927-36 average; the outlook for vegetables is excellent in
this district.

HE majority of important manufacturing industries in
this district increased their output in August, consider­
Trade
ably so in several instances. The automobile industry fur­
nished an exception to the upward trend, as manufacturers
OST reporting wholesale trade groups had heavier sales
in August than in July, and there were even a few
closed their plants preparatory to the introduction of new
gains recorded over last August. Department store trade in
models. Steel mills of the Chicago area are gradually ex­
panding their operations, and August output from steel and the district expanded more than seasonally and totaled only
malleable casting foundries and from stove and furnace fac­ 10 per cent below that of a year ago when, however, there
tories rose sharply over the preceding month. There was a was one less trading day in the period; through the first
decided increase in building construction during the month, half of September sales were running likewise 10 per cent
according to data on contracts awarded, and the movement under those of last year. August sales in the retail shoe and
of building materials consequently was accelerated. With furniture trades gained as is usual for the month but were
orders booked increasing counterseasonally, August ship­ still well below the 1937 level.
ments of district furniture manufacturers gained much more
Credit
than is usual for the period. New business of paper mills
expanded further in August, and activity showed improve­
HERE was a moderate increase in reserve balances of
ment in relation to a year ago.
Seventh district member banks between August 17 and
September 14, although in the following week a declining
Reflecting the higher level of production, the aggregate
number of workers employed in Seventh district industries trend was operative. Total loans and investments of weekly
increased slightly in the current reporting period, despite reporting member banks rose somewhat in the four-week
sharp curtailment at automobile factories, and payrolls ex­ period; demand deposits in these banks showed a rather
panded noticeably.
substantial increase.

T

M

T

Credit and Finance
Member Bank Reserves

Open Market Paper
TATISTICS for August on bankers’ acceptances in the

S Seventh district were rather unfavorable after showing
some improvement in July. The three main indicators of

ESERVE balances of Seventh district member banks
increased 49 million dollars during the four-week activity in the field, new financing through bankers’ ac­
period ended September 14. The district gained 25 millions
ceptances, liability for outstandings, and bank holdings of
from the rest of the country through commercial and finan­ bills, all declined from the corresponding July figures, al­
cial transactions, and Treasury disbursements exceeded re­ though an increase is normally expected during August in
ceipts by 29 millions. Partially counteracting these fac­ each case. All margins of decline from the 1937 figures
tors was a 6 million dollar increase in currency circulation, widened over those prevailing in July, as was the case in
reflecting the usual seasonal influences.
comparisons with the 1928-37 averages where the percentage
decreases approximated 80 per cent. New financing during
Interest Rates
the first fifteen days of September amounted to only three
NTEREST rates charged by reporting banks in Chicago, fifths of the volume in the first half of August, according to
both downtown and outlying, and by the large Detroit preliminary reports from the large Chicago banks, and to
banks showed no appreciable changes between August 15 about two fifths of that in the corresponding period a
and the middle of September. Recording the sixth successive year ago.
Sales of commercial paper during August, reported by
month-to-month increase, the average rate earned on total
loans and discounts by the large downtown Chicago banks Middle Western dealers, declined less than seasonally from
exceeded the corresponding July average by a small margin, July, while outstandings on August 31 rose more than is
and was above that for August 1937. The average for sev­ usual over the end of July, the latter item recording the
eral major banks in Detroit also ran above the July figure first increase in the monthly comparison since last Febru­
and, for the first time since this bank originally had com­ ary. Both sales and outstandings totaled much lower than
parable figures last December, exceeded the year-ago a year ago and the corresponding 1928-37 averages. Never­
theless, the percentage declines were all smaller than in a
average.

R

I




similar comparison for July. Rates continued easy and the
supply of paper restricted; demand from banks fell olf
somewhat, especially from institutions in the larger cities.
Commercial paper sales in September, up to the fifteenth
of the month, were slightly above those in the first half of
August, though aggregating moderately below the volume
in the same period of 1937.

Selected Seventh District Banking Data
*

*

*

FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS
OF CONDITION
(Amounts in millions)

Securities Markets
1VFOST of the interest in the Middle Western bond market
in August and early September centered around the
new issue phase. New corporate issues in August were in
the highest volume of any recent month and also well above
the total for August 1937. Most of them, however, were
refundings of the highest grade. One or two issues of
slightly less conservative character were accorded a com­
paratively indifferent reception, indicating that the market
has been making some very fine distinctions. Institutions
continued as the largest buyers of bonds. Municipal emis­
sions remained in low volume, contrary to the corporate
experience, which scarcity factor offers a possible explana­
tion of the price strength in this field, while some weak­
ness was noticed in corporate quotations, especially among
the lower grades. The predominant factor in the market
today seems to be the fact that most buyers of bonds are
investing other people’s money and, through resultant cau­
tion as well as because of various legal restrictions, are
unwilling to assume the risks inherent in purchases of any
but the highest grades of securities.
The $100,000,000 issue of 91-day Treasury bills dated
September 21 sold at an average discount yielding .106
per cent, higher than has been the case for the past few
months. Cash subscriptions to the new issues dated Sep­
tember 15, $400,000,000 of 2y2 per cent bonds and $300,­
000,000 of 1 Yg per cent notes, ran far in excess of the
allotment. The II4 per cent notes maturing December 15
were exchangeable for either of the new issues, but almost
all exchanges were for the bonds.
The Chicago Journal of Commerce average of 20 Chicago
stocks established a new 1938 high of $46.16 on August 25,
but fell off somewhat in September, standing at $42.19 on
September 21.

Agricultural Products
Crop Conditions

Sept. 14
1938
$ 280
0
0
279
2,078
1,311
53
961

Total bills and securities............................................. .
Bills discounted............................................................ .
Bills bought................................................................... .
U. S. Government securities..................................... .
Total reserves................................................................ .
Member bank reserve deposits.................................. .
All other deposits......................................................... .
Federal Reserve notes in circulation........................ .
Ratio of total reserves to deposit and
Federal Reserve note liabilities combined___ .

89.3%

Change from
August 17 Sept. 15
1937
1938
$ 0
$
0
0
0
0
0
0
—3
+302
+49
+312
—52
+3
+4
—14
—0.2*

+1.5*

•Number of Points.
*

*

*

CONDITION OF REPORTING MEMBER BANKS
SEVENTH DISTRICT
(Amounts in millions)
Sept. 14
1938
$3,879
833
472
33
34
79
93
3
119
1.347

Assets

Loans and investments—total.....................................
Loans—total.....................................................................
Commercial, industrial, and agricultural loans.......
Open-market paper.........................................................
Loans to brokers and dealers in securities................
Other loans for purchasing or carrying securities. . .
Real estate loans............................................................
Loans to banks................................................................
Other loans.......................................................................
U. S. Government direct obligations.........................
Obligations fully guaranteed by
U. S. Government......................................................
Other securities...............................................................

Change from
August 17
Sept. 15
1938
1937
$-209
$+14
+3
—229
—2
—182
—1
—22
—26
+3
0
—16
0
+9
—1
—2
+4
+10
—5
—88

237
462

Demand deposits—adjusted*.......................................
Time deposits..................................................................
Borrowings.......................................................................

+13
+3

+49
+59

2,303
878
0

Liabilities

+74
+4
0

+33
+12
0

•The annual velocity of demand deposits (unadjusted) in the four weeks ended
September 14 was 17.57 times, as compared with 17.51 times in the preceding four
weeks and with 21.86 times in the corresponding period of 1937.

VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT
(Amounts in millions)

Chicago....................................................
Detroit.....................................................
Milwaukee...............................................
Indianapolis.............................................

.......................
.......................
.......................
.......................

August
1938
$2,518
644
226
174

Per Cent of Increase
or Decrease from
July
August
1938
1937
—2.2
—13.7
—0.9
—30.9
-4.7
—14.0
—10.6
—5.3

HE present outlook is for an abundance of low-priced Total four larger cities.......................... ....................... $3,562
—2.6
—17.1
659
—4.4
—14.2
grain and roughage this year in the Seventh Federal 37 smaller cities...................................... .......................
Reserve district to fatten the considerably increased supply
Total 41 centers...................................... ....................... $4,221
—2.9
—16.6
of hogs and beef cattle over 1937 and to maintain a large
volume of dairy products. Not only are feed crop pros­
•
•
•
pects above the 1927-36 average production, but there is also
a liberal carry-over of corn and oats from last season and an
TRANSIT OPERATIONS OF THE FEDERAL RESERVE BANK
almost unprecedented continuance of the luxurious pastur­
OF CHICAGO AND DETROIT BRANCH
age through late summer into early autumn. With a promise
(Exclusive of Treasury checks and of non-transit items drawn on own bank)
of moderately high yields in the relatively large hybridAugust 1938
August 1937
acreage more than offsetting deterioration along the Mis­ Total country and city check clearings:
Pieces....................................................
11,051,878
10,490,616
souri River and in a few other dry areas, Seventh district
Amount.................................................
$1,843,045,564
$2,073,647,125
clearings:
corn prospects increased 23 million bushels during August Daily averagecleared—
Total items
and thereby more than counteracted some further loss in
Pieces....................................................
409,329
403,485
Amount.................................................
$68,260,947
$79,755,659
oats. The progress and condition of corn showed consid­
Items drawn on Chicago—
Pieces.....................................................
71,909
67,386
erable variation among fields and localities but averaged
Amount.................................................
$36,440,000
$41,665,000
fair to very good on September 20. On lowlands, there was
Items drawn on Detroit—
Pieces....................................................
18,188
17,991
some damage to corn because of floods. More than three
Amount.................................................
$6,315,885
$8,911,533

T

Page 2




*

fourths of the corn was out of frost danger and most of the
crop was expected to reach full maturity by early October.
Rains and lack of sunshine in September tended to fill out
ears on the latest varieties but to delay their maturity be­
yond the average frost date. Silo filling continued on Sep­
tember 20. Although there was some rotting on the heaviest
soil, prospects for late potatoes were generally very good.
The outlook for other vegetables was excellent. However,
frost on September 19 killed tender garden truck in many
areas and stopped corn growth in some localities. Plowing
and preparation of seed beds for winter wheat had made
rather slow progress because of excessive rainfall in many
localities and the dry and cloddy condition of the soil in a
few other areas.

inaugurated its policy of export subsidies to alleviate heavy
domestic supplies. United States visible stocks of wheat have
continued to increase but are still below the 1928-37
average.

Corn and Oats

ECEIPTS and shipments of corn at interior primary
- markets in the United States declined more than sea­
sonally in August and the first half of September but
remained at relatively high levels. Corn exports continued
in fair volume, though lower than in July. Prices held
firm throughout most of the second half of August, reflect­
ing improved foreign demand and some crop deterioration
in the western part of the corn belt. With a slackening in
export sales and weakness in surrounding markets, prices
Grain Marketing
declined in the first few days of September, but by mid\Wieat
September had advanced to month-earlier levels under the
LTHOUGH the movement of wheat at interior primary influence of the firmer wheat market. Visible supplies
L markets in the United States declined during August declined about one fourth from mid-August to September 17
from July, receipts were the largest for the month since and stood well below the ten-year average level for the
1930. In the first half of September reshipments held date. The August oats movement showed close to seasonal
relatively heavy, but receipts fell off in volume. Activated increases but declined considerably in the first part of Sep­
by continued burdensome world supplies and severe com­ tember. Oats prices displayed an independent firmness.
petition among exporting nations for world markets, to­ MOVEMENT OF GRAIN AT INTERIOR PRIMARY MARKETS IN THE
' UNITED STATES
gether with a sharp break in the Winnipeg market, wheat
(In thousands of bushels)
price levels displayed a weakening tendency throughout most
August
August
July
August
1928-37
of August and the first part of September. The disturbing
1938
1938
1937
Av.
European political news brought erratic price advances in Wheat:
Receipts.............................................................
61,670
102,450
61,353
55,401
mid-September; on September 21 quotations for No. 2 hard
Shipments..........................................................
25,044
27,596
25,427
30,916
winter wheat in cash positions at Chicago stood at $.641/2 Corn:
Receipts.............................................................
16,636
26,677
7,332
16,730
Shipments..........................................................
17,694
24,870
4,559
9,983
and $.68, or about 2 to 4 cents higher than prices of two Oats:
Receipts.............................................................
24,824
9,982
24,849
21,819
weeks earlier. In the latter part of August the Government

R

A

Shipments..........................................................

CROP PRODUCTION
Estimated by the United States Bureau of Agricultural Economics on the
Basis of September 1 Condition
(In thousands of bushels unless otherwise specified)
Seventh District
United States
Forecast
Final
Average Forecast
Average
Final
1938
1937
1927-36
1938
1937
1927-36
Com................... 980,885 1,140,744
812,711 2,454,526 2,644,995 2,306,157
Oats................... 418,087
544,644
443,866 1,034,347 1,146.258 1.042.461
Winter Wheat...
69,796
78,012
54,715
688,458
685,102
546,396
Spring Wheat...
1,834
1,695
3,608
251,514
188,891
206,495
Barley...............
43.628(a) 42.767(a) 48.881(a) 250,360
219,635
234,895
Rye....................
9.993(a) 13.632(a)
7.221(a) 52,500
49,449
36,454
Buckwheat.......
608(a)
616(a)
919(a)
7,194
6,777
8,569
Flaxseed............
257(b)
198(b)
293(b)
7,992
13,751
6,974
Potatoes (white)
55,141
51,039
53,249
377,875
393,289
369,693
Potatoes (sweet)
l,310(o)
1.280(c)
1.127(e) 80,055
75,393
70,274
Sugar Beets1_
_
1.102(d)
549(d)
751(d) 10,823
8,749
8,383
Apples (total
crop)...............
14.882(a) 30.403(a) 16.650(a) 132,231
210,673
150,728
3.193(e)
Peaches.............
5.258(e)
3.312(e) 52,780
59,724
52,498
Pears..................
2.400(e)
3.153(e)
1.771(e) 31,779
29,548
24,326
Grapes1..............
30(a)
87(a)
77(a)
2,521
2,777
2,197
Beans (dry
edible)2..........
4,765(0
4,574(0
3,758(0 14,209
15,839
12,053
Onions*...............
2,709 (a)
2.333(a)
3.100(a) 14,606
14,778
13,638
Market1.........
198(a)
127(a)
138(a)
1,221
1,015
928
Tomatoes for
Market...........
1.548(e)
1.348(e)
1.247(e) 25,529
21,593
18,173
Soybeans...........
34.904(e) 32.833(c) 13.564(c) 41.828(g) 38.128(g) 16.410(g)
Tobacco5...........
35,052
26,635
33,665 1,470,224 1,553,405 1,325,243
All Tame Hay1. * 19,180
15,360
15,558
81,750
73,785
69,754
490(a)
504(a) 10,490
Wild Hay1.........
523(a)
9,302
9,979
Pecans5...............
133(h)
259(h)
152(h) 50,832(i) 76,893(0 61,274(0
ll*(j)
Cranberries *...
84 j)
510)
530(k)
877(k)
562(k)
Cotton5..............
11,825
18,946
13,201
Canning Vegetables:
Cabbage for Kraut1. 98(1)
55(1)
57(1)
239
153
155
Green Lima Beans1. 3(f)
2(0
2(0
25
23
14
Snap Beans1.. ......... 25(m)
20 (m)
15(m)
123
105
70
283(a)
Sweet Corn1............. 366(a)
496(a)
794
592
979
523(e)
314(e)
Tomatoes1.... ......... 320(e)
1,440
1,974
1,386
Hn thousands of tons, *In thousands of 100-lb. bags. 8In thousands of pounds.
4In thousands of barrels. 6In thousands of 500-lb. bales. (a)Five States including
Seventh Federal Reserve district. (b)Iowa, Michigan, and Wisconsin. (c)Illinois,
Indiana, and Iowa. (d)Michigan. (e)Illinois, Michigan, Indiana, and Iowa. (f)Michigan and Wisconsin. (g)Six States. (h)Illinois. (i)Twelve States. (j)Wisconsin.
(k)Five States. (l)Wisconsin, Michigan, Indiana, and Illinois. (m)Indiana, Michigan,
and Wisconsin.




Movement

of

10,711

7,254

8,497

8,192

Livestock

ECEIPTS of livestock at public stock yards in the
United States recorded sizable increases during August
over the July movement, and those of hogs and lambs were
slightly above August 1937. The movement to inspected
slaughter followed roughly trends in receipts and, except
for lambs, both receipts and inspected slaughter of live­
stock continued below the 1928-37 average for the month.
Shipments of livestock to feed lots during August were well
over those of July; however, these shipments totaled less
than a year ago and for cattle below the 1933-37 average.

R

Meat Packing
LTHOUGH there was a slight decline in the daily average
■ for August, production for the month as a whole at

A

LIVESTOCK SLAUGHTER
(In thousands)
Cattle
Yards in Seventh District,
August 1938............................................
Federally Inspected Slaughter,
United States:
August 1938............................................
July 1938.................................................
August 1937............................................
August 1928-37 average........................

Hogs

Sheep

Calves

..........

202

443

293

59

.........
.........
.........
..........

848
820
880
872

2,467
2.254
1,590
2,550

1,603
1,461
1,498
1,470

457
436
538
475

AVERAGE PRICES OF LIVESTOCK
(Per hundred pounds at Chicago)
Week Ended
Months of
Sept. 17 Aug.
July
1938
1938
1938
Native Beef Steers (average)................ ..........
$10.55 $10.35
$10.50
Fat Cows and Heifers............................. .........
8.10
7.75
8.15
Calves......................................................... .........
11.00
10.35
9.10
Hogs (bulk of sales)................................. .........
8.35
7.80
8.60
Lambs........................................................ .........
7.90
8.40
9.00

Aug.
1937
$14.00
9.00
10.00
11.85
10.75

inspected slaughtering establishments in the United States
rose counterseasonally by 4 per cent over July; it was not
only 23 per cent heavier than a year ago but within one per
cent of the 1928-37 average for the month. Furthermore, the
tonnage sold, totaling only 3 per cent under the ten-year aver­
age, was slightly above current production, 5 per cent larger
than in July, and 8 per cent above last August. Payrolls at
the close of the period showed respective gains of 3 and 2 per
cent in employes and wage payments over a month earlier,
but the number of hours worked decreased one per cent.
The margin of decline in employment from a year ago was
halved during the month; hours worked increased slightly
over the 1937 period and wage payments decreased only one
per cent. Inventories of packing-house commodities in the
United States decreased moderately on September 1 from
the beginning of August. Prices weakened markedly from
July; total dollar sales billed to domestic and foreign cus­
tomers declined, therefore, 4 per cent in August from a
month earlier and 2 per cent from the 1928-37 August
average to a level 13 per cent under a year ago.

cheese sales fell off 17 per cent from July, and totaled 14
per cent under last August and 5 per cent below the tenyear average for the period. United States stocks of cheese
on September 1 were again at a record high; the volume of
150 million pounds was 37 millions greater than 1933-37
average supplies. As a consequence of this unfavorable
statistical position, cheese prices continued weak during
August and the first half of September.

Industrial Employment Conditions

OST reporting industry groups of the Seventh district
increased employment and payroll volumes between
July and August by appreciable amounts. All of the dur­
able goods groups, with the exception of vehicles, added
workers and had heavier payrolls, the increases in the latter
item ranging from 7 per cent for metals to 17 per cent for
wood products. In the non-durable goods classification, there
were no exceptions to the general expansion, wage pay­
ments rising by as much as 10 per cent in leather prod­
Foreign Trade
ucts, 13 per cent in the rubber group, and 20 per cent
HIPMENTS of packing-house products for export de­ in the textile industry. The loss within the vehicles group,
creased somewhat further in August, principally owing however, though more moderate than in several earlier
to a decline in lard forwardings to the United Kingdom. months this year, was sufficient to offset practically all of
Following dragginess during most of August, British demand the employment gains contributed by the other manufac­
for United States lard became slightly more active when turing groups and a considerable portion of the rise in
prices at Chicago reached a low level at the close of the payrolls. Non-manufacturing industries also maintained
month. English trade in hams was slow during the entire their aggregate employment volume at about the level of a
period. Cuban and Porto Rican business remained close to month earlier, while increasing wage payments, the gain in
the July level, but there was some improvement in the the latter item being considerably smaller than that con­
demand from Czechoslovakia and South American republics. tributed by manufacturing groups. The construction in­
Prices in the United Kingdom and in most of continental dustry and coal mining registered sizable expansion during
Europe remained under the Chicago parity; quotations else­ the current period, while public utilities showed a moderate
where were close to the United States basis. Imports of increase and the merchandising group evidenced a slight
animal products into the United States increased in August curtailment. The level of employment and payrolls in prac­
tically all groups, manufacturing and non-manufacturing,
over July.
remained substantially lower than last year—by 30 per cent
Dairy Products
in the aggregate number of workers employed and by 38 per
ITH feed conditions continuing highly favorable and cent in the total amount of wage payments.
milk production at record levels, manufacture of but­
ter and cheese remained relatively heavy during August.
EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL
The butter make, as reported by Seventh district firms, was
RESERVE DISTRICT
17 per cent larger than in August 1937, one per cent above
Change from
Week of August 15, 1938
the 1928-37 average for the month, and 7 per cent lower
July 15, 1938
than in July. Distribution has been well maintained, August
Report­
Wage
Earn­
Wage
Earn­
sales increasing 10 per cent over July and totaling one fourth
ing
Earn­
Industrial Group
ings
Earn­
ings
Firms
(000
greater than last year in the same month or the ten-year
ers
ers
Omitted)
August average. Butter production in the United States has
No.
No.
$
%
%
also continued heavy, the August make declining less than Durable Goods:
1,797
Metals and Products1...........
319,294
8,058
+ 0.6
+ 6-7
seasonally from July and aggregating well over average
423
Vehicles...................................
164,110
5,208
- 8.1
— 2.1
levels. Bolstered by further heavy purchases by Govern­
Stone, Clay, and Glass.......
283
18,972
457
+ 4.0
-f 9.0
Wood Products......................
40,134
495
840
+ 5.9
+17.1
ment agencies, the price of 92 score creamery butter at
2,998
542,510
14,563
Total........................................
- 1.7
+ 4.0
Chicago held at 2514 cents throughout August and the first Non-Dubable Goods:
three weeks of September. These purchases aggregated
Textiles and Products..........
397
61,423
1,166
- 6.2
+19.9
117,057
Food and Products...............
1,059
2,866
- 3.3
+ 0.2
about 55 million pounds for the month ended September 21.
Chemical Products...............
301
33,554
1,017
- 0.4
+ 3.3
Leather Products..................
175
25,205
532
- 4.9
+10.4
Holdings of butter in storage in the United States on Sep­
Rubber Products...................
35
14,341
370
10.1
+13.3
tember 1 reached a new all-time high of over 201 million
Paper and Printing................
736
71,536
2,001
- 0.7
+ 0.7
Total........................................
2,703
323,116
7,952
+ 3.3
+ 4.4
pounds; this included 68 million pounds of butter held by
Total Mfg., 10 Groups..............
8,701
865,626
22,515
+ 0.1
+ 4.1
Government agencies.
Though declining seasonally 13 per cent from July, Merchandising*..........................
5,512
127,957
2,841
- 0.5
— 0.5
Public Utilities..........................
98,660
3,277
+ 0.2
+ 1.4
August production of American cheese in Wisconsin con­ Coal Mining................................ 1,124
34
5,110
116
- 0.4
+ 9.2
760
12,054
349
+ 7.3
+ 6.5
tinued in heavy volume, totaling 22 per cent greater than Construction...............................
a year ago and 15 per cent above the 1928-37 August Total Non-Mfg., 4 Groups....... 7,430 243,781
6,583
+ 0.1
+ 0.9
average. Distribution of the commodity from primary Total, 14 Groups........................ 13,131 1,109,407
29,098
+ 0.1
+ 3.4
markets in the State, however, failed to hold up; August
lOther than Vehicles.
‘Illinois, Indiana, and Wisconsin.

S

W

Page 4




M

Manufacturing
Iron

and

Steel Products

NCREASED demand from the automotive industry and
for construction materials, together with buying from
miscellaneous sources, caused steel mill operations in the
Chicago district to trend gradually upward from mid-August
to mid-September. The rate of steel ingot output at the
latter time averaged 42 per cent of capacity, or 6 points
higher than four weeks earlier. No great volume of buying
has developed, however, and the current rate of production
is little better than half that prevailing a year ago when
the downward trend in activity was beginning to manifest
itself. A rather noticeable increase took place during
August in pig iron production of the Illinois and Indiana
district, but relatively it continued at a low level. Quota­
tions for scrap iron and steel at Chicago had not changed
through mid-September.

I

*

*

*

Output from steel and malleable casting foundries of the
Seventh district expanded definitely in August. Shipments
of steel castings gained 38 per cent in tonnage and 33 per
cent in dollar value, while those of malleable castings in­
creased 25 and 23 per cent, respectively. Production of the
former type of castings rose 48 per cent in tonnage volume
and that of the latter type 33 per cent. Orders booked by
malleable casting foundries continued to show an increase
—12 per cent in tonnage and 8 per cent in dollars—but
those received by steel casting foundries, following two
months of expansion, recorded a decline amounting to 16
per cent in tons and to 21 per cent in value. Although per­
centage declines from a year ago remained very large, some
reduction in their size was noted in all items for steel casting
foundries and in shipments and production at malleable
casting foundries.
* * *
Seasonal trends were operative during August in the
stove and furnace industry of this district, as shipments,
production, and new orders accepted by reporting manu­
facturers rose substantially over those of the preceding
month. The increase in orders booked amounted to 34
per cent, that in shipments to 28 per cent, and in produc­
tion to 40 per cent. New business totaled slightly better
than in the corresponding 1937 month, while shipments and
production were less by 23 and 28 per cent, respectively.
There was a moderate increase in inventories in the period,
but they remained under those of a year ago.

Automobile Production

and

Distribution

AS manufacturers completed their 1938 model season, out­
put of automobiles was curtailed in August to the low
point for the year and, because this point was not reached
until September in 1937, amounted to less than one fourth
the volume of last August. Production of passenger ve­
hicles numbered 58,624 in the current period, which is 45
per cent below July output and 81 per cent under that of
a year ago, while the number of trucks produced aggregated
31,860, or 8 per cent below the volume of the preceding
month and 62 per cent under August 1937.
Although sales of new automobiles in this district were
small in volume during August, dealers’ stocks were lowered
sharply further in the period, and at the end of the month




were only a little better than one fourth as large as on
August 31 last year. Sales of used cars in August showed
some falling-off, after having gained slightly in the three
preceding months. The number of used cars in dealers’
hands had been reduced by the end of August to a level
almost 30 per cent under that of a year ago.
DISTRIBUTION OF AUTOMOBILES
SEVENTH FEDERAL RESERVE DISTRICT
August 1938
Per Cent Change from

Companies

July 1938
New Cars:
Wholesale—
Number Sold........................................
Value......................................
Retail—
Number Sold.........................................
On Hand End of Month—
Number..............................................
Value.......................................................
Used Cars:
Number Sold.........................................
Salable on Hand—
Number................................................
Value.......................................................

August 1937

—55.4
—55 6

—88.4
—86.8

15
15

—24.3

—56.2
—51.3

28
28

—42.1
—44.8

—72.2
—71.7

28
28

— 9.9

—29.1

28

—19.0
—17.2

—28.8
—28.8

28
28

Furniture
ONSIDERABLE improvement was noted during August

the furniture industry of the Seventh district.
C in booked by reporting manufacturers expanded 8New
orders
per

cent further, contrary to trend for the period, were within
16 per cent of the volume received last August, and slightly
exceeded the 1928-37 average for the month. Shipments,
though 26 per cent smaller than a year ago, rose 45 per
cent, or much more than seasonally, over July and were
only 7 per cent lighter than in the ten-year August average.
Despite the heavy increase in shipments, they were consid­
erably less than the volume of incoming orders, so that
unfilled orders on hand at the end of August aggregated
12 per cent larger than at the close of the preceding month;
their ratio to new business was 108 per cent, as against 128
per cent on August 31, 1937. Production schedules were
raised 10 points during August to 63 per cent of capacity,
this latter rate being about 20 points under that prevailing
in the month last year.

Paper

and

Pulp

OME further increase in activity during August was

indicated by
of
orders booked by Seventh
Sdistrict paper reportsand new comparisons with 1937 levels
mills;
all
continued to become more favorable, largely because of de­
clining business among paper plants in August 1937. Little
change was shown during August in tonnage production of
either paper or pulp.
PAPER AND PULP INDUSTRY
SEVENTH DISTRICT
August 1938
Per Cent of Increase
or Decrease from
July
August
Paper:
1938
1937
New orders booked (tons).................................................................... +9.9 +23.1
New orders booked (dollars)............................................................... +10.5 +5.8
Total shipments (tons)......................................................................... — 8.7
+1.9
Total shipments (dollars)................................................................... — 4.1
— 3.4
Total production (tons)....................................................................... — 0.4
+0.5
Stocks on hand at end of month (tons)........................................... + 6.3
+20.7
Pulp:
Pulp produced (tons)............................................................................... +1.8 —10.0
Stock on hand at end of month (tons) ........................................... —11.8
+12.3

Petroleum Refining
UNS of crude oil to stills during August in the Indiana,
Illinois, and Kentucky area averaged a little better than
the 450,000 barrels daily recorded for July, on a Bureau
Mines basis, and totaled only slightly lower than in the
corresponding period of 1937. The operating rate, after
reaching 92 per cent of capacity in the week of August 13,
had declined to 82 per cent by September 3, but recovered
to 86 per cent in the week of September 10. Stocks of finished
and unfinished gasoline in the area on September 3 showed
a reduction of 10 per cent from four weeks previous.

R

fair during the month, and outstanding accounts of lumber
dealers declined in ratio to total sales to a level lower
than either a month or a year previous. While stocks of
cement remained heavier than in 1937, those of lumber
showed some indication of a slight diminishing. Wholesale
of
prices of building materials in general showed little change
during the current period, continuing at a level approx­
imately 7 per cent lower than in the same period of 1937.
LUMBER AND BUILDING MATERIALS TRADE
August 1938
Per Cent Change from
Class of Trade

Yards
July 1938

The Building Industry

Number of

August 1937

+15.4
+13.0
— 0.4

—26.6
—32.3
—33.5

Wholesale Lumber:

Construction

Retail Building Materials:

was a definite expansion during August in the
volume of contracts awarded in the Seventh district, not
only for residential building but for all other types of con­ Accounts Outstanding1............................
struction. Residential building exceeded the corresponding
1937 volume for the second time this year and public works
projects continued as previously on a considerably larger
scale than last year. Non-residential building and utilities, Retail Trade.................................................
on the other hand, while rising even more sharply over the
’End of Month.
preceding month than did the other classifications, remained
at a low level as compared with a year ago.
here

T

8
6
8

159
— 4.5
+22.9
77
+15.5
—10.6
90
+ 5.4
+19.5
157
+ 5.4
—10.9
Ratio of Accounts Outstanding1
to Total Dollar Sales during Month
August 1938

July 1938

August 1937

143.3
234.0

166.1
273.3

158.2
250.1

Merchandising
BUILDING CONTBACTS AWARDED*
SEVENTH FEDERAL RESERVE DISTRICT

Wholesale Trade

Total
Contracts

Period
August 1938.....................................................................
Change from July 1938..............................................
Change from August 1937..........................................
First eight months of 1938...........................................
Change from same period of 1937............................
•Data furnished by F. W. Dodge Corporation.

Residential
Contracts

$49,792,000
+22.8%
+11.5%
$295,584,000
-17.4%

$15,007,000
+10.0%
+61.9%
$82,951,000
-16.3 %

Permits issued during August in 101 cities of the district
gave indications of a well sustained volume of building
activity, the estimated cost of the projects contemplated be­
ing practically as large as in July, which month, in turn,
was slightly above June. The number of permits issued in
August totaled 12 per cent more than in July, reflecting a
lower average cost per unit. This trend towards lower-cost
projects has been especially marked in the yearly com­
parison which for the current month showed an increase
of 5 per cent in the number of permits issued, while the
estimated cost was 22 per cent lower. The rising importance
of residential building in the construction field accounts
largely for these changes.

Materials

OST wholesale trade groups in the Seventh district
reporting monthly figures to the United States Depart­
ment of Commerce had heavier sales in August than a month
previous, the total for all such groups showing a gain of
5 per cent during the period. An exception to the upward
trend was noted in groceries where sales recorded a decline
of 6 per cent from July to August. In a few instances,
among them groceries and tobacco and its products, small
increases took place over the corresponding 1937 volumes.
Although stocks on August 31 rose slightly in the aggregate
over the end of July, they totaled about one fifth lighter
than on the same date a year ago, decreases in the electrical
goods and hardware groups being especially large.

M

WHOLESALE TRADE IN AUGUST 1938*
Per Cent Change from Same Month Last Year
Commodity

Net Sales

Stocks

Accounts
Outstanding

Collections

— 3.7
— 6.8
Groceries..........................
+ 2.1
— 8.4
—25.5
Hardware........................
—20.8
—26.9
—15.4
+ 6.3
— 6.5
— 7.0
— 0.7
Drugs................................
—30.1
—35.4
Electrical Goods...........
—30.1
—22.4
— 3.8
Tobacco and Its Products
— 4.2
— 4.8
+ 3.4
Miscellaneous..................
—20.8
— 4.0
- 0 3
-16.7
•Data furnished by Bureau of Foreign and Domestic Commerce, United States
Department of Commerce.

HE increasing volume of building activity in this dis­
trict was reflected in a heavier demand for building
materials during August than in the preceding month, sales
in most lines rising by more than the customary per­
Retail Trade
centage amounts. Lumber sales, which in general register
EVENTH district department store sales expanded some­
little change at this time of the year at either wholesale or
what better than seasonally in August over July,
retail, expanded in both phases of distribution by 15 per
cent, and board-foot sales at retail exceeded the level of increasing 18 per cent in the comparison. They were within
a year ago for the first time so far in 1938. Cement ship­ 10 per cent of those in August 1937 when the dollar volume
ments and brick deliveries, on the basis of returns received sold failed to gain as much as usual for the period and
to date, somewhat more than recovered from the temporary when there was one less trading day in the month. Through
setback of a month earlier, though remaining at a level the first half of September sales were running likewise 10
considerably under last year. Collections were reported as per cent behind those of the corresponding year-ago weeks.

T

S

Page 6




A

creased less than is usual—6 per cent—in August. This gain
compares with one of 9 per cent in the 1928-37 average for
August but with a slight decline in the month a year ago.
The experience of dealers in the current period was con­
trary to that of department stores, as sales of shoes by the
former fell off rather noticeably from the preceding month,
while those by department stores rose sharply. In the
comparison with last August, the dollar volume sold totaled
12 per cent smaller in the month this year. Although stocks
rose 17 per cent during the current period, they aggregated
12 per cent lighter on August 31 than a year ago.

DEPARTMENT STORE TRADE IN AUGUST 1938

Locality

Per Cent Change
August 1938
from
August 1937

Net Sales
Chicago.....................
Detroit......................
Fort Wayne..............
Indianapolis.............
Milwaukee................
Peoria........................
Other Cities*...........

Stocks End
of Month

— 6.6
—22.8
—10.1
— 3.8
— 7.9
+ 2.1
— 5.2

7th District..............

Per Cent
Change
First Eight
Months
1938
from Same
Period
1937

— 9.7
•Include Fort Wayne and Peoria.

Ratio of August
Collections
to Accounts
Outstanding
End of July

Net Sales

1938

1937

28.8
36.8

29.0
38.1

33.4
35.7

33.7
36.7

—ii.4

—12.6
—25.7
—12.2
— 8.8
—11.2
—10.4
—11.3

29.7

29.8

—15.7

—14.9

32.3

32.9

—15.0
—18.4
—22.0
—14.5

*

As is customary, inventories rose somewhat between the
close of July and August 31, but aggregated 16 per cent
smaller on the latter date than last year at the same time.
For the first month since March 1937, stock turnover in
August was slightly greater than in the corresponding month
a year earlier.
*

*

*

Following a greater than seasonal recession in July, sales
of shoes by reporting dealers and department stores in­

*

*

As is usual in August, sales of furniture and housefurnishings by dealers and department stores totaled considerably
heavier than in the preceding month, the increase amount­
ing to 24 per cent or to only slightly less than in the 1928-37
average for the period. The decrease in business from the
volume of last August aggregated only 16 per cent, as
against one of 26 per cent in the yearly comparison for
July. The experience of dealers in the current month was
somewhat more favorable than that of department stores.
Stocks on hand at the end of August were fractionally less
than a month earlier and remained one fifth smaller than
at the same time last year.

MONTHLY BUSINESS INDEXES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO
Index numbers express a comparison of unit or dollar volume for the months indicated, using the monthly average for 1923-24-25 as a base. Where figures for latest month
shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless
otherwise noted.
No. of
Aug.
July
June
May
March
April
Aug.
July
April March
June
May
Firms
1938
1938
1938
1938
1938
1937
1937
1937
1938
1937
1937
1937
Meat Packing—(U. S.)—
Sales (in dollars)................................................. .......... 45
85
88
86
87
82
83
98
98
99
99
95
95
Casting Foundries—
Shipments:
Steel—In Dollars............................................. .........
In Tons.................................................. ..........
Malleable—In Dollars.................................... ...........
In Tons......................................... .........

12
12
21
21

32
25
35
41

25
19
28
33

29
20
32
38

27
19
34
40

27
18
34
41

42
34
37
45

115
107
71
85

111
107
65
80

125
122
89
109

109
108
80
102

119
123
85
112

124
136
88
122

Stoves and Furnaces—
Shipments (in dollars)........................................ ..........

14

158

115

113

123

120

121

219

172

174

202

215

193

Furniture—
Orders (in dollars)............................................... .........
Shipments (in dollars)........................................ .........

33
33

70
62

65
43

46
44

51
46

47
54

56
68

82
85

95
68

68
75

80
80

82
92

96
101

Output of Butter by Creameries—
Production............................................................. .........
Sales....................................................................... .........

59
61

129
156

139
141

156
157

151
138

101
110

87
110

110
126

131
133

149
144

131
123

90
100

80
98

Retail Trade (Dept. Stores)—
Net Sales (in dollars):
Chicago..............................................................
Detroit...............................................................
Indianapolis.......................................................
Milwaukee.........................................................
Other Cities......................................................
Seventh District—Unadjusted.....................
Adjusted..........................

29
6
4
5
40
84
84

70
69
84
74
72
71
87

57
61
70
66
57
59
83

83
83
91
83
74
82
84

79
80
95
82
77
80
79

82
94
100
98
82
87
82

86
87
97
95
79
86
95

75
87
86
80
75
78
96

66
84
75
77
65
71
98

97
111
104
98
86
99
101

95
118
110
102
91
100
99

93
117
101
104
86
97
98

100
113
116
105
90
102
104

Automobile Production—(U. S.)—
Passenger Cars.....................................................
Trucks....................................................................

20
85

37
92

47
101

53
99

60
115

59
127

106
220

123
209

140
228

145
243

150
255

138
240

Building ConstructionContracts Awarded (in dollars):
Residential........................................................
Total...................................................................

51
73

47
59

46
71

41
73

36
53

34
49

32
65

51
77

57
81

40
55

52
69

52
69

Pig Iron Production*—
Illinois and Indiana.............................................

47

39

35

48

52

51

134

127

118

133

130

127

..........
.........
.........
.........
.........
.........
.........

•Average daily production.




Pag* 7

National Summary of Business Conditions
(By the Board of Governors of the Federal Reserve System)
INDUSTRIAL PRODUCTION

TNDUSTRIAL activity increased considerably in August and advanced further in
September. Factory employment and payrolls also showed a substantial rise
in August, and distribution of commodities to consumers increased seasonally.

Production
OLUME of industrial production showed a further considerable increase in
August, and the Board’s seasonally adjusted index rose from 83 to 88 per cent
of the 1923-1925 average. In manufacturing, increases in output were general ex­
cept in the automobile industry where there was a sharp seasonal decline as plants
were closed for inventory taking and for preparations for the shift to new model
production. At steel mills, where activity had risen considerably in July, there was
a further advance in August and production was at an average rate of 42 per cent
of capacity as compared with 35 per cent in the previous month. Output of lumber
and plate glass also increased. In the textile industry the sharp advance that had
been under way since early summer continued. Mill consumption of wool and cotton
increased further, and deliveries of rayon were maintained at the high level reached
in July. Shoe production showed a further increase and activity at meat-packing
establishments showed less than the usual seasonal decline. Production of bitu­
minous coal and crude petroleum increased somewhat further.
In the first three weeks of September steel ingot production continued to increase,
while automobile production remained at the low level reached in August. Output
of crude petroleum was reduced, as wells in Texas were closed on both Saturdays
and Sundays, whereas in August only Sunday closings had been required.
Value of construction contracts awarded in 37 Eastern States increased consider­
ably in August, according to figures of the F. W. Dodge Corporation. The increase was
in publicly-financed projects and reflected partly the expansion of the Public Works
Administration program and the award of the first contract for the slum clearance
projects of the United States Housing Authority. Awards for private residential
building continued at about the same rate as in July and were close to the level
reached in the spring of 1937. Commercial building, which had increased in July
owing to the award of a contract for a large office building, declined in August to
about the level of other recent months.

V

Index of physical volume of production, adjusted
for seasonal variation, 1923-1925 average = 100.
By months, January 1934 to August 1938.
CONSTRUCTION CONTRACTS AWARDED
MILLIONS OF POLLARS

millions

or dollars

TOTAL

OTHER

RESIDENTIAL

Three-month moving averages of F. W. Dodge
data for value of contracts awarded in 37 Eastern
States, adjusted for seasonal variation. Latest
figures based on data for July and August and esti­
mate for September.
MONEY RATES IN NEW YORK CITY

Employment
ACTORY employment and payrolls showed a marked rise from the middle of
July to the middle of August, while in nonmanufacturing industries employment
showed little change. The number employed at factories producing durable goods
increased for the first time since the summer of 1937 and in the nondurable goods
industries, where employment had increased in July, there was a further rise.
Most leading industries reported increases in the number of workers.

F

Distribution
ISTRIBUTION of commodities to consumers increased seasonally from July
to August. Department store sales showed about the usual rise and mail order
sales increased, while variety store sales declined. In the first half of September
sales at department stores increased more than seasonally.
Freight-car loadings increased somewhat further in August, reflecting chiefly
larger shipments of miscellaneous freight.

D

Commodity Prices

TREASURY BILLS

1934

1935

1936

1937

1938

Discount rate of Federal Reserve Bank; weekly
averages of daily yields on 3- to 5-year Treasury
notes and on Treasury bonds callable after 8 years,
and weekly average of daily dealers’ quotations on
90-day Treasury bills or rate on new bills offered
in week. For weeks ending January 6, 1934, to
September 17, 1938.
MEMBER BANK RESERVES AND RELATED ITEMS
BILUONS OF DOLLARS

BILUONS OF DOLLARS

|

RICES of silk and rubber showed some advance from the middle of August to
the third week of September and there were also increases at the end of the
period in nonferrous metals. Wheat prices fluctuated considerably but showed
little net change in this period. Prices of cotton and wool declined somewhat, and
there were further decreases in prices of some finished industrial products.

P

Bank Credit
HEAVY inflow of gold from abroad during the five weeks ending September 21
resulted in an increase of over $500,000,000 in the monetary gold stock. Mem­
ber bank reserves were increased by Treasury payments for gold acquired but
were sharply reduced in the last week of the period by payments to the Treasury
for cash purchases of new securities and quarterly income tax collections. As a
consequence of these transactions, excess reserves, which had increased to $3,130,­
000,000, were reduced to $2,740,000,000 on September 21.
Total loans and investments of reporting member banks in leading cities in­
creased sharply during August and the first three weeks of September, reflecting
chiefly an increase in holdings of United States Government obligations. Balances
held in New York City for foreign banks showed a substantial increase.

A

...

Money Rates and Bond Yields

Wednesday figures, January 3, 1934. to Septem­
ber 21, 1938.
Page 8




HE average yield on long-term Treasury bonds increased in September from the
low point reached at the end of August. The average rate on new issues of
Treasury bills increased to 0.11 per cent, compared with 0.05 per cent. Yields on
high-grade corporate bonds increased slightly.

T

DIRECTORS AND OFFICERS

Federal Reserve Bank of Chicago
DIRECTORS
R. E. Wood, Chicago, 111................................... Deputy Chairman
W. J. Cummings.................................. Chicago, 111.
S. T. Crapo....................................... Detroit, Mich.
E. R. Estberg..............................Waukesha, Wis.
M. W. Babb...................................Milwaukee, Wis.
F. D. Williams............................Iowa City, Iowa
F. J. Lewis............................................Chicago, 111.
N. H. Noyes...............................................
.Indianapolis, Ind.

MEMBER OF FEDERAL ADVISORY COUNCIL
E. E. Brown................................................................. Chicago, 111.

OFFICERS
G. J. Schaller..................................................................President
H. P. Preston.................................................First Vice President
J. H. Dillard.............................................................................. VicePresident
W. H. Snyder...................................... Vice President and Cashier
C. S. Young................................................................................VicePresident
C. B. Dunn............................................................................. GeneralCounsel

W. C. Bachman.............Assistant Vice President
0. J. Netterstrom. .. .Assistant Vice President
A. L. Olson..................... Assistant Vice President
A. T. Sihler................... Assistant Vice President

A. M. Black. . .Manager, Planning Department
J. L. Sweet..............................................................
Manager, Research and Statistics Department
J. J. Endres.............................

F. Bateman................................................. AssistantCashier
J. C. Callahan....................................... AssistantCashier
N. B. Dawes..............................................AssistantCashier
F. A. Lindsten......................................... AssistantCashier
L. G. Meyer............................................. AssistantCashier
F. L. Purrington...................................... AssistantCashier
J. G. Roberts.............................................AssistantCashier
C. M. Saltnes.......................................... AssistantCashier
.................................... Auditor

INDUSTRIAL ADVISORY COMMITTEE
Max Epstein, Chicago, 111............................................... Chairman
W. Harnischfeger..................... Milwaukee, Wis.
G. B. Moxley.............................Indianapolis, Ind.
R. R. Monroe.................................... Chicago, 111.
G. W. Young....................................... Chicago, 111.

DETROIT BRANCH
DIRECTORS
A. C. Marshall
H. L. Pierson ..
L. W. Watkins . .

........................Detroit, Mich.
....................... Detroit, Mich.

J. E. Davidson..........................
J. M. Dodge..............................

..................Manchester, Mich.

W. S. McLucas.......................

R. H. Buss..................................................................Detroit, Mich.

H. J. Chalfont




OFFICERS
R. H. Buss......................................................... Managing Director
.................................... Cashier
H. L. Diehl.............................

Bay City, Mich.
. .Detroit, Mich.
.. Detroit, Mich.

Assistant Cashier




SEVENTH FEDERAL

I OVA

RESERVE DISTRICT


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102