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C hicago , S eptember 30, 1922 USINESS in the Seventh Federal Reserve District reveals its underlying strength in its continued ability to resist industrial set backs and to proceed from day to day with definite progress. The effects of the develop ments in the direction of a settlement of the railway shop crafts controversy and the re sumption of coal mining so far is reflected chiefly in business sentiment rather than ac tual figures, but the present conservative ten dencies of both the farmer and manufacturer and the moderate stocks of goods in the mer chants’ hands offer an unusual factor to aid in the minimizing of any further readjustment. Banking conditions in the district reflect little general change during August; the volume of debits, which was less than in July was still above August last year and increased steadily during September. Demand for funds to move crops has been delayed by transportation difficulties. Business failures in the district show no increase and liabilities are 41.0 per cent less. Crops in general are in better condition than a year ago, although low grain prices have shifted the farmer’s hopes to the corn crop. Along with the slight improvement in employ ment since July have come wage increases in many lines of manufacture, most pronounced in the steel industry. Manufacturing lines close to the raw mate rials are feeling good demands with strength ening prices. The shoe industry shows more than a seasonal gain, with shipments 24.2 per cent above a year ago. B With stocks lower than a year ago the whole sale trade is reflecting improved sales at in creasing prices in some lines. Retail trade sales show the best monthly gain of the year over 1921 with a consequent tendency to increase present lowered stocks. M ONEY AN D BANKING In general there was very little change dur ing August in the demand on banks of the district for funds to finance trade and industry as reflected in the borrowings of member banks from this reserve bank or in reports received by this bank. In some manufacturing centers, however, the demand is reported greater than usual at this time, but in others, while the demand is good, a number are not using their usual line of credit. In agricultural sections the demand on banks for funds to move the crops has not yet reached large enough proportions to make any appreciable difference in the money market. This may be accounted for in part by the fact that the movement has not yet begun in some sections, and in others that the grain has not been moving as rapidly as usual for want of transportation facilities. In many cases ele vators are full and the dealers cannot handle any more grain until this is moved. Should a rapid and early movement to market develop, some of the country banks will require help. Farmers are generally reported conservative in their current borrowings, although some ad vances are being made to purchase and feed cattle. Considerable grain is being fed to stock at present, and indications are that in Compiled S eptember 27, 1922 m ost localities normal feeding will be maintained. D iscount fates charged customers, as reported by Chicago banks for 90-day maturities, ranged from 4 Yi to 6 per cent for the thirty-day period ending September 15 com pared with 434 to 5 y2 per cent in the preceding thirty days. The custom ary rate, h ow ever, was 5 per cent com pared with 5 and 5J4 per cent in the preceding period. Rates for 4 to 6 m onths’ paper show ed some easing; the custom ary rate repo'rted at 5 com pared with 5J4 per cent in the preceding period and the low at 4% compared with 4 l/ 2 per cent. A lth ough the number o f business failures in this district during August shows very little change from July, the liabilities involved were app'roximately 41.0 per cent less. The country as a whole had practi cally no change in either insolvencies or indebtedness. COMMERCIAL PAPER AND ACCEPTANCES A ggregate com m ercial paper sales during August show very little change from July and f'rom August a year ago. R eports to this bank from seven dealers in the district vary, however, six show ing decreases during the month and one showing a very substantial increase. M ost o f the sales continue to be made in the large centers; banks are still buying very little paper. Better rates to be had from Governm ent securities and short-term notes have affected the demand. The prevailing rates for com m ercial paper remained the same as last month at 4 and 4 per cent with choice names finding a ready market at the 4 per cent rate. The market was slightly firmer during August in that no sales were reported at less than 4 per cent. One dealer 'reports rates as high as 5 and another 534 per cent. R eports to this bank from twenty-seven banks representing the bulk o f the accepting business in the district show a considerable decrease in accept ance transactions in August com pared with July. Bills accepted decreased 25 per cent during the m onth, and bills bought continued the decrease noted last month. Bills sold decreased 11.6 per cent dur ing August, making the third consecutive month show ing decrease in that item. Bills held at the close o f August show a decrease o f 60 per cent after the gradual increase o f the tw o preceding months. B A N K T R A N S A C T I O N S IN B A N K E R S ' A C C E P T A N C E S Page 2 September Last year at this time both bills accepted and bills bought decreased while bills sold and bills held in creased. Twelve of the reporting banks show no transactions in bankers’ acceptances during August. Purchase rates were reported ranging from 2^4 per cent to 3% per cent, a reduction from last month, when rates were at 3 and 334 per cent. Maturities of bills purchased w ere: 30-day, 24.8 per cent; 60-day, 17.9 per cent; 90-day, 57.3 per cent. No purchases o f 180-day bills w ere reported. Com m odities against which bills were reported drawn w ere: meats and meat products, provisions, grain, cotton , coffee, tea, silk, and staples. Purchases of bills by this bank increased from twenty-one millions in July to twenty-nine millions in August. Sales from holdings increased from thir teen millions in July to almost sixteen millions in August; and bills held at the close of the month increased a little more than one million over those held at the close of July. Open market transactions in bankers’ acceptances also decreased, as shown by reports from six bill dealers direct to this bank. The weekly average of purchases for the five weeks ending September 16 was $2,297,000 compared with $3,950,000 in the pre ceding four weeks; while that of sales was $2,148,000 compared with $3,795,000. Sales to the reserve bank still constitute a large part of total sales, although the ratio dropped to 53 per cent in the current period from 64 per cent in the preceding period. R EP O R TIN G M EM BER BANKS, S E V E N TH C O M P A R A T IV E P O S ITIO N D IS TR IC T MEMBER BANKS IN THE DISTRICT Increases in the w eekly averages o f investment holdings during August over July were noticeable for reporting member banks in Chicago, Detroit, and other selected cities o f the district. These were con fined largely to United States securities, although at D etroit banks other investments also increased ma terially. Loans on stocks and bonds other than G ov ernment securities increased at Chicago banks while other classes o f loans declined. Governm ent deposits increased in all groups of cities; and, at Chicago, both time and demand de posits increased; while at D etroit, an increase in time deposits was offset by a decrease in demand deposits. The only marked changes during the weeks o f A u gust were the increases at Chicago banks, which o c curred largely in the first half of the month, as shown in the accom panying cha'rt. The increase in deposits at D etroit banks the first tw o weeks of September considerably m ore than offset decreases during the latter part o f August. Loans and dis counts declined the first tw o weeks o f September at Chicago and D etroit while some increase was shown in other selected cities. DEBITS TO INDIVIDUAL ACCOUNTS Debits in the week ending September 6 were affected by the holiday included but in the tw o weeks follow in g increases w ere shown in m ost o f the centers. POSITION OF THE RESERVE BANK The condition o f the Federal Reserve Bank o f Chi cago changed only slightly during August compared with changes during the months im m ediately pre ceding. The daily average o f loans to membe'r banks and total earning assets continued to decline, and reserves and reserve ratio to increase, although at a slow er rate o f change than in July. Federal Reserve notes remained at practically the same level during the weeks o f August, but a slight increase was shown Septem ber 6. The increase in loans to m em ber banks August 30 was caused largely by the tem porary need for accom m odation by m em ber banks in one o f the large cities on account o f withdrawals o f public funds; and in the week fo llo w ing loans were reduced to practically the same level as had been maintained since July 12. The increase on September 20 is traceable largely to borrow ings by m em ber banks to offset withdrawals b y deposi tors for tax payments. F E D E R A L R E S E R V E B A N K O F C H IC A G O C O M P A R A T IV E P O S ITIO N W eekly debits to individual accounts at clearing house banks in the tw enty-four leading clearing houses o f the district averaged considerably less dur ing August than July, although they were m ore than in August last year. Decreases in each o f the four largest centers were less pronounced in Chicago and D etroit than in M il waukee and Indianapolis. A ggregate debits for the twenty smaller centers show an almost continuous decline during August and a falling off for the month proportionately greater than for the larger centers. D E B ITS TO IN D IV ID U A L A C CO U N TS A T C LEA R IN G HOUSE BANKS R A T I O T O A V E R A G E IN 1920 M on th ly d ata are d aily a v e ra g e s; w eek ly o f statem en ts publish ed each w eek. data are those SAVINGS ACCOUNTS AND DEPOSITS M on th ly d ata are a v era g es o f w eek ly figures. Reports to this bank representing approximately 40 per cent of the total savings deposits in the district showed very little change in amount of deposits on Sep tember 1, compared with August 1, but a considerable increase is shown over September, 1921. The average account remained almost the same as last month but de creased from a year ago. Last year at this time de creases were reported in both savings deposits and the average account. September Page 3 All states in the district except Indiana show increased deposits over the preceding month. Compared with a year ago Wisconsin and Indiana show decreases and Michigan again had a very substantial gain amounting to 6.6 per cent. The average account of Illinois is the only one showing increase over August 1. The effect of the railroad strike was reflected in decreased savings deposits of banks in railway centers. Withdrawals have been made for building and other investments. out during the preceding months. Indications are, however, that this reduction was practically com pleted the last week o f August. Domestic municipal bonds and long-time high-callable issues of public utilities and industrials were strong. Liberty bonds receded somewhat from their recent high points, while foreign government bonds continued er ratic ; some of them strengthened and others showed further declines. BONDS AND INVESTMENTS IN TE R N A L R E V E N U E STAM P C O LLEC TIO N S F IR S T ILLIN O IS R E V E N U E D IS T R IC T The bond market during August was not prices generally continued to advance. The new issues gave dealers an opportunity to accumulated stock of securities left from SA V IN G S C O M P A R E D W ITH active, but scarcity of reduce the issues put 1920 A V E R A G E ♦ T w o cents of tax collected represents a sale o r t r a n s fer a m o unti ng to $100 or fraction thereof. AGRICULTURAL PRODUCTION AND CONDITIONS Reports from individual farmers and from 154 county farm bureaus with a membership o f 153,888 farmers in Iowa and in those portions o f Illinois, Michigan, In diana, and Wisconsin included in this district show that although the extreme dry weather in August affected the corn crop adversely, it advanced the date o f maturity. The corn crop is out o f danger, if frosts come no earlier than usual, and much o f the early crop is already ma tured. Crops in general are better than a year ago. Potatoes and corn have been affected to some extent by insects. The tendency o f the majority o f farmers is to market their crops in order to secure funds and keep their indebtedness at a minimum. Grain producers have been affected more seriously by low prices than live stock and dairy farmers, but all have been affected by the transportation situation. There is little market for fruit except locally, and prices paid to the growers are very low. This is especially true o f the large crop o f sum mer and fall apples. Fall plowing is being retarded in some sections because of the drought. There is a tend ency to increase the raising o f live stock in the district. The farmers are having difficulty in keeping good help because of their inability to pay wages equal to those offered in other lines of industry. The Department of Agriculture has compiled figures •n the world production of wheat based on estimates Page 4 September from twelve countries in the northern hemisphere and six in the southern. These figures show 2,753,386,000 bushels estimated production for 1922 compared with 2,724,506,000 bushels produced in identical countries in 1921. ESTIMATED CROP PRODUCTION In Thousands of Bushels Estimated by United States Bureau of Agricultural Economics S e v e n t h R eserve D i s t r ic t U n it e d S tates S e p t . 1, F in a l iS e p t . 1, F in a l 1922 Corn ..................................... 962,360 Oats ..................................... 490,073 Winter Wheat .................. 66,913 Spring Wheat ...... 5,576 Hay (In thousands of tons).... 19,896 White Potatoes* ............................ Barley* ....... .................................... Peaches* .......................................... Apples* ............................................ Tobacco* (In thousands of lbs.).... _____ Sugar Beets* (In thousands of tons)................ 1921 967,277 385,091 58,102 4,820 1922 2,874,759 1,255,004 541,809 276,665 1921 3,080,372 1,060,737 587,032 207,861 16,034 108,736 438,398 193,850 55,600 207,000 96,802 346,823 151,181 32,700 98,100 1,353,000 1,075,000 5,260 7,780 ‘ District figures not available. GRAIN MARKETING Country elevators are reported as well filled, but the lack of cars and low prices have caused lighter receipts at terminals than a year ago. That receipts have been sufficient for the demand is partly due to foreign pur chasers holding off because of financial conditions abroad. August receipts and shipments of wheat and oats at primary markets were more than in July, but coffl de clined. Both receipts and shipments of grains were less than in 1921. CHICAGO SHIPMENTS OF GRAIN AND FLOUR In Thousands F lou r B b ls. C orn W heat August, 1922.... 175 July, 1922....... 114 August, 1921............ O ats R ye B arley Bu. Bu. Bu. 16.788 4,557 16,154 8,266 10,362 11,927 923 1,242 3,092 857 39 1,437 1,602 444 2,236 2,588 1,423 1,368 6,786 4,240 2,806 521 14 38 B u. B y B oat — B y R a il — August, 1922....1.020 July, 1922....... 569 August, 1921.... 803 316 163 426 UNITED STATES VISIBLE SUPPLY OF GRAIN Stocks in public and private warehouses at principal points of accumulation, at lake and seaboard points and in transit September 9, 1922. Figures supplied by the Secretary of the Chicago Board of Trade. In Thousands of Bushels S e p t e m b e r 9, 1922 W heat C orn O ats R ye B arley Warehouses and Afloat..... 31,166 7,723 38,133 5,063 1,686 Bonded ...................... 2,357 129 423 14 A u g u st 12 1922 Warehouses and Afloat___ 26,596 10,434 36,587 2,527 916 Bonded ............................... 2,089 185 47 73 S e pt e m b e r 10, 1921 Warehouses and Afloat___ 42,100 11,239 62,402 4,205 3,441 Bonded ............................... 913 16 51 161 D A IL Y R A N G E O F G R A IN P RICES A T C H IC A G O ^ - O N T f fA ilT w heat -r J ( A Je c t o e A ▼ V t 1a v — / r c P R IC E : / ■ V A a > • * V v V s FLOUR PRODUCTION Bu. The level o f prices paid United States producers for principal crops decreased 5.1 per cent in August accord ing to the Government estimates; in the past ten years the price level decreased about 2.4 per cent during August. Chicago grain prices the middle o f September were about on a par with the low level reached in August.; PL + 0 canners reporting packed as much or more than last season. Kraut packs at tw o factories are below a year ago, A M ichigan apple packer reports an enor m ous crop but a small pack due to low prices. S ffT * 0 LU W T< Forty-two millers in the district reporting direct to this bank show considerable increase in operations during August compared with July, but very little change from those o f August a year ago. Increases are shown in the production o f both wheat and other flour for the month, but the former decreased compared with a year ago.......... P r o d u c tio n P er C e n t C h a n g e p r o m A u g u st , 1922 J u l y , 1922 A u g u s t , 1921 Wheat flour (bbls.).„.......434,323 +31.0 — 2.6 All other flour (bbls.).......... 60,379 +49.2 +32.1 Total (bbls.)........... 494,702 +32.9 + 0 .6 These mills were operating at 55.5 per cent o f capacity during August—based on a 24-hour working day—while in the preceding month they were at 45.1 per cent and a year ago at 55.1 per cent. The railroad strike has curtailed operations o f some mills because o f slow trans portation. Fifteen millers show sales o f flour in barrels increased 7.7 per cent during August compared with July and an increase of 7.5 per cent in dollar sales. At the same time, their production increased 20.8 per cent. Several report the domestic demand for flour as fair, at close prices, and with very little being exported at this time. Corn flour millers report business very poor because o f the small export demand. Stocks of flour on hand on August 31 at tw entyseven mills increased 44.0 per cent over those on hand at the close o f July. W heat stocks at the same mills show an increase o f 31.1 per cent dur ing the same period. MOVEMENT OF LIVE STOCK □AT5 CASH C O N TRA CT PRICE 2oopq: Slaughter o f live stock in the district during August was more than in July with the exception o f sheep and calves; all except sheep exceeded a year ago. SLAUGHTER IN AUGUST C a ttle District ............................... 229,085 Sixty-eight markets in the United States ................. 740,323 J uly Aug Sept Dcr Mov Oec J an Feb Mar A pr May June J uly Aug 5ept _________ 1921___________________________ 1922_________________ C alves 1,975,791 1,020,682 81,379 ____ 365,264 AVERAGE PRICES OF LIVE STOCK Per Hundred Pounds at Chicago CANNING S heep 270,329 August stocker and feeder shipments o f cattle and calves back to the farms in the United States were more than 50 per cent greater than in July and exceeded a year ago by 31.9 per cent. Sheep shipments increased 71.6 per cent from July but were 13.5 per cent less than a year ago. ♦Break in cu rv e represen ts ch a n g e fro m one o p tio n to an oth er becau se p reviou s op tion run s out. September reports to this bank from canneries in the district indicate a smaller corn pack than was expected earlier in the season. Compared with a year ago, only eight returns out o f twenty-seven show a gain. One o f these, in Iowa, where conditions have been favorable, is more than 60 per cent ahead o f last year. In most localities, however, the recent hot, dry weather has short ened the pack considerably. Although the tomato crop also has been hurt by climatic conditions, the four H ogs 729,420 C lass W e e k E nded S e p t e m b e r 16, A u g u st 1922 1922 Native Beef Steers $ 8.85 750-1,050 lbs...................$ 8.85 10.55 1,500-1,800 lbs....... ........... 11.25 9.65 General Average ...... lir. . . . 6.30 Fat Cows and Heifers....... 6.55 2.95 Canners and Cutters............ 3.15 11.50 Calves ......................... ........... 12.50 6.65 Stockers and Feeders............ 6.85 8.55 Hogs ........................... ........... 8.27* Sheep .......................... ............5.50@6.65 6.45 10.25 ........... 9.85 Yearling Sheep ....... 12.55 Lambs ......................... ........... 13.12 M o n t h s of A u g u st J u ly 1922 $ 8.75 10.25 9.50 6.60 3.20 9.10 6.20 9.80 6.40 10.70 12.90 1921 $ 6.90 9.60 8.50 5.10 2.50 10.00 5.90 9.35 4.75 7.00 9.65 ‘ Average price from September 1 to 16. September Page 5 S L A U G H TE R OF LIV E STO CK Chicago, but prices of most other meats followed wholesale. Stocks of meats and lard at principal western pack ing points declined in August. COLD STORAGE HOLDINGS OF FROZEN AND CURED MEATS IN THE UNITED STATES* In Thousands of Pounds S e p t . 1, S e p t . 1, A u g u st 1, S e p t . 1, 5- Y ear 1922 1922 1921 A verage Frozen Beef ............................. 28,172 Frozen Pork ............................. 84,819 Frozen Lamb and Mutton.... . 3,371 Cured Beef and in process.... 20,053 Dry Salt Fork and in process..166,331 Pickled Pork and in process..368,833 Miscellaneous Meats ............. 55,778 Lard ........................................... 118,272 R EC E IP TS OF LIV E STOCK 27,727 50,204 112,976 117,903 3,308 103,486 5,903 93,373 6,301 19,303 179,856 385,692 54,734 17,130 200,291 320,190 79,778 27,128 276,829 333,551 75,735 143,084 149,886 123,089 *Include stocks in both cold storage warehouses and packing plants. Reports from meat-packing companies indicate that shipments forwarded for export in August were less than in July; the collapse of the mark in the last month was a factor. Stocks—except lard—already abroad were reported to be less on September 1 than a month previous. The export demand was only fair but a few companies reported slightly better inquiry from their export connections in early September. BUTTER, CHEESE, EGGS AND POULTRY MEATS AND PROVISIONS Forty-eight meat-packing companies in the United States report a decline of 3.4 per cent in total dollar sales in August from July and a decline of 4.0 per cent from a year ago. Employment in this industry in the district and in the United States showed only a slight recession from July. Domestic demand has been fair to good. The volume of August shipments of meats and lard from Chicago increased slightly over July but was less than a year ago. The wholesale price of meats declined at Chicago in August compared with July the exceptions being in creases in the price of veal, steer beef, and pork loins. Pork prices showed the greatest declines and were considerably below those a year ago. August retail prices of mutton and lamb changed little at Because of dry weather the production of creamery butter^ in the district and in the United States was less in August than in July and for the last two weeks of the month did not equal that of a year ago. Sales, however, by companies in the district were more during August than a year ago. Despite the decline in production the early part of the month the W is consin output of cheese was greater than in July. August receipts of dairy products and poultry at Chi cago increased over August a year ago although receipts of butter and eggs did not equal those for July. Cheese received at Wisconsin markets, al though less than in July exceeded receipts of a year ago. The trend of wholesale prices o f dairy products was upward in August and the early part of September. COLD STORAGE HOLDINGS OF POULTRY AND DAIRY PRODUCTS IN THE UNITED STATES* In Thousands of Pounds S e p t . 1, S e p t . 1, A u g u st 1, S e p t . 1, 5 -Y ear 1922 1922 1921 A verage Poultry ..................................... 27,666 Butter ......................................... 114,222 Cheese ....................................... 66,796 Case Eggst ............................... 9,606 Frozen Eggst ........................... 34,514 30,659 105,324 57,762 10,161 27,855 20,064 30,688 94,811 112,974 62,901 80,035 7,210 6,794 27,408 21,188 ’ Include stocks in both cold storage warehouses and packing plants. t in thousands of cases, 30 dozen each. jReports of individual producers of Iowa Creamery Butter Manufacturers’ Association, and the American Association of Creamery Butter Manufacturers. INDUSTRIAL EMPLOYMENT CONDITIONS The volume of employment within manufacturing in dustries o f the district made further gains during August. The total increase for 260 firms reporting di rectly to this bank was 3.4 per cent. Surveys made by the state departments o f labor o f Illinois and Iowa also show gains in em ploym ent: 1.6 per cent for Illinois, Page 6 September 3.3 per cent for Iowa. The former is based on the reports o f 1,048 firms with 218,948 employees; the latter, on those o f 299 firms with 36,725 employees. A c c o r d ing to the district report the most definite gains were those made by the brick industry, where several plants resumed operations during the latter part o f the month, by the non-ferrous metal industries, by contractors and builders, and by makers o f boxes and containers. A process o f readjustment o f wages is apparent; many o f the industries that have been especially affected by the shortage o f labor are finding it necessary to increase their wage scales to bring them in line with those o f other industries. The steel mills have made the most important o f these increases, raising the rate for com mon labor from 30 to 36 cents an hour. Important prog ress has recently been made toward a settlement o f the rail strike. This strike, as well as the coal strike, has affected industrial activity more by increasing the cost o f production than by causing a curtailment. LABOR REPORTS FROM FIRMS DISTRICT IN THE SEVENTH D i s t r ic t Number of firms reporting................................ 260 Total number employed August, 1922.......... ....201,253 Percentage change in number employed as com pared with (a) the preceding month ........................ ....... + 3.4 (b) the same month a year ago..................... + 22.2 Percentage change in amount of payroll as com pared with (a) the preceding month................................. + 4.0 (b) the same month a year ago..................... + 15.0 Percentage change in pay per man as compared with (a) the preceding month................................... + 0.5 (b) the same month a year ago................. .... — 5.9 Percentage of production to ordinary capacity 73 (a) August, 1922....................................... ........ 70 (b) July, 1922..................... ......................... 55 (c) August, 1921......................... - ................... C h ic ag o 60, 55,742 + 1.3 + 6.0 +o.; 2.1 — 0.7 8.0 — 72 69 58 FUEL AND POWER PRODUCTION The production o f bituminous coal has increased some what during the past month, with the resumption o f min ing operations in the majority o f the country’s mines, and anthracite miners have returned to work. T h e chief factor in the situation now is the problem o f trans portation. With the output held in check and distribu tion limited by an inadequate car supply, the possibility of a coal shortage is now largely dependent upon the ability o f the railroads to furnish sufficient cars. Current production o f bituminous coal is about equal to the current consumption o f those essential industries In the preferred class. During the week ended Septem ber 2, the first full week after the resumption o f min ing, the total output amounted to only 9,359,000 tons, or an increase o f a little more than 2,000,000 tons over the previous week. In the corresponding period o f 1920 approximately 11,750,000 tons were mined. While re turns to the Geological Survey for the week ended Sep tember 9 show a total output o f only 8,756,000 tons, due to the Labor Day holiday, the daily average pro duction for the five days was at a higher rate. In Illi nois about 90 per cent o f the mines were reported as having renewed operations by September 1, with a total production from August 23 to 31 o f 2,487,917 tons. Reports from forty-nine mines in the Central Illinois district for the week ended September 9 indicate that they were working at about 77 per cent o f their full time capacity, as compared with 67 per cent for the cor responding period a year ago, while production shows an increase o f over 33 per cent. Transportation and mine disability are shown as the principal factors restrict ing production at the present time, while a year ago output was limited by a lack o f orders. Anthracite production was resumed September 11 after a practically complete shutdown for over five months, which has resulted in a potential shortage o f nearly 40,000,000 tons. Production for the first week amounted to approximately 900,000 tons. With stocks o f hard coal almost exhausted in this district, the consumer o f this fuel is to a large extent dependent upon the available substitutes— coke, anthracite briquettes, prepared sizes o f Pocahontas or smokeless coals, or domestic sizes from Illinois and Indiana. Demand in local markets is confined largely to domes tic buyers, who are booking orders in fair quantities. The larger consumers, and many smaller ones, are still refraining from placing their orders, although the rail roads, utilities, and steel plants continue to be heavy pur chasers o f spot tonnage. The lack o f industrial demand has resulted in the weakening o f prices, especially on steam sizes, and the high-priced demand of a month ago has fallen off rapidly with the resumption o f min ing operations. September 26 spot (mine) prices on Illinois coal ranged from $2.25 to $5.75 per ton, while Western Kentucky was quoted at from $3.25 to $5.00 and Eastern Kentucky and Pocahontas from $4.50 to $7.50. However, very little southeastern coal is reach ing this district. Fuel oil and gas oil are still in de mand as substitutes for steam coals, with prices on September 26 at $1.20 per barrel on fuel oil, and from 2)4 to 3 cents per gallon on gas oil. ELECTRIC ENERGY The total output o f electric energy by five central station companies in the district as reported to this bank increased 4.8 per cent during August compared with July and 16.0 per cent when compared with August a year ago. The average load factor o f four o f these companies increased from 55.7 per cent in July to 56.2 per cent in A ugust; last year the load factor was 57.5 per cent. Sales o f electric power for industrial purposes during August show slightly larger increases than output, being 7.0 per cent greater than July and 31.6 per cent greater than a year ago. The number o f new industrial users o f electric power is 6.1 per cent o f the August, 1921 total, and slightly less than 1 per cent of the total re ported for July. MANUFACTURING ACTIVITIES AND OUTPUT AUTOMOBILES A utom obile production during /august showed a substantial gain over July, although a pa’rt o f the increase in volum e was due to the greater num ber o f w orking days in August. Manufacturers re porting through the National Autom obile Chamber o f Com m erce and direct to this bank, representing approxim ately 99.6 per cent o f total July production, had an output o f 246,502 passenger cars in August com pared with 223,057 in July. This represents an increase for the m onth of 10.5 per cent and makes August production the largest o f any month this September Page 7 year except June. August production was much larger this year than last when 167,705 cars were built, showing an increase of 1.3 per cent over July. The proportionate increase in truck production dur ing- the month is slightly larger than in passenger cars, showing 13.4 per cent gain for manufacturers who built 23,782 trucks in August, compared with 20,973 in July. This brings the total production of passenger cars for the fiTst eight months o f 1922 to over 1,500,000, an increase Of 40 per cent over the first eight months of 1921, and within 28,000 cars of the total output for the year 1921. In 1920, the largest production year the industry has known, there were 1,883,160 passen ger cars produced. Shipments also increased materially, especially in machines driven away and shipped by boat, of which there were approximately one-third more in August than in July, while last year there was a small de crease in shipments of this nature. Carload ship ments increased approximately 12 per cent this year, compared with 6 per cent last year. FACTORY SHIPPING FIGURES FOR ALL MANUFACTURERS* C arloads 1922 1921 August _____ 32,563 20,758 July ..................... 29,116 19,514 June ....................... 34,230 20,269 May ..................... 33,416 18,608 April ..................... 31,334 20,187 March ................... 27,753 16,287' February .............. 19,636 9,986 January ............... 15,357 6,485 D r iv e a w a y s 1922 36,603 28,100 33,857 28,827 22,381 16,917 10,173 7,479 1922 10,034 7,030 7,737 7,406 2,960 560 180 143 1921 3,595 3,726 3,947 2,381 1,619 75 99 93 •Reported by National Automobile Chamber of Commerce. July shipments of casings and inner tubes by sixtythree manufacturers exceeded production by 9 and 18 per cent, respectively. The figures reported through the Rubber Association of America, in the compari son between June and July, indicate a percentage de crease in shipments larger than that in production. Stocks of casings owned by these manufacturers, both in transit and on consignment, were 4,834,106 at the close of July, and of inner tubes, 5,675,839; while shipments representing actual purchases during July were 2,695,095 casings, and 3,630,744 inner tubes. PIG IRON AND STEEL PRODUCTION IN GROSS TONS Ju ly A u gu st 1922 1922 1921 Pig Iron Production Illinois and Indiana................... 342,363 472,179 191,658 United States ........................... 1,813,070 2,405,365* 954,901 Steel Ingot Production (Thirty companies) .... 2,214,582 2,487,104 1,138,071 •(■Unfilled Orders— United States Steel Corporation ..................... 5,950,105 5,776,161 4,531,926 Page 8 September W eek S e p t . 13, 1922 Lake Superior Charcoal Pig Iron .............. ............... ...... $36.15 Malleable ........................ ...... 32.00 Composite average 14 iron and steel products in the United 'States .... ....... ...... 43.80 M o n t h s of A u gu st. A u g u st July 1922 1921 1922 $33.75 28.60 $31.65 24.65 $34 .30 19.00 39.79 37.50 35.99 STOVES AND FURNACES Stove and furnace manufacturers in this district report improvement in the volume of shipments and orders in August over those for July and a year ago; stocks on hand were less. The ratio to operating capacity was higher in August than in July and all except three companies showed an increase over a year ago. PERCENTAGE CHANGES IN AUGUST FROM PREVIOUS MONTHS Based on dollar values and compiled from direct reports to this bank. N um ber J u ly OF FIRMS 1922 Shipments during month..... ...... Orders during month................. Cancellations during month.__ Stocks of finished goods on hand at end of month...... .... N um ber OF FIRMS A u g u st 9 7 5 -j-40.2 +33.7 +28.6 5 1921 +27.4 +34.8 —82.7 6 — 3.9 6 — 28.0 9 5 AGRICULTURAL MACHINERY August production of farm implements, as shown in reports direct to this bank, was only slightly less than in July, but greater than a year ago, and con tinued below normal because of the lack of demand from the farmer. The season for marketing threshers is about completed and sales for August, although in excess of those for a year ago, showed the ex pected decline from July. Sales of three companies manufacturing other lines of farm implements in creased over July and a year ago. Preliminary re ports show the total value of agricultural pumps shipped by manufacturers in this district and in the entire United States to be more in August than in July both as to units and value, also July shipments were less than in June according to complete figures. RAW WOOLS AND FINISHED WOOLENS IRON AND STEEL Demand for iron and steel from all industries ex cept agricultural implement manufacturers continues very good. Building and automobile industries as well as railroads continue to be liberal purchasers. In spite of the difficulty during August in producing sufficient tonnage to take care of the demand, sales were about on a par with July. Progress in the adjustment of the coal strike is beginning to be re flected in the production of iron and steel; prices increased. •Revised figures. fA t close o f month. Per Gross Ton B oat 1921 15,218 15,533 18,834 15,193 14,197 9,939 7,507 3,185 A u gu st PIG IRON AND STEEL PRICES AT CHICAGO While the demand for medium grade wools was good in August, the tariff uncertainty at that time slowed the trade in the finer grades. Prices on medium grades also became firmer last month. Re ports indicate that raw wool stocks are no larger than a month ago, as very little is being taken out of bond. Bonded stocks are large. Sales o f finished w oolens w ere about equal to those in July; goods were being shown for the 1923 season. Com petition is close and quotations vary because o f som e firms not being able to m eet the low opening quotations o f one o f the largest com panies in the United States. August reports from the Department of Com merce covering active machinery in the woolen in dustry in the United States show improvement over July. SHOE MANUFACTURING, TANNING AND HIDES Shipments by shoe manufacturers in this district during August m ade the first gain in four months and were the largest so far this year, exceeding those for M arch by 17.4 per cent. Part o f this increase was seasonal, but production and shipments also were over 20 per cent larger than a year ago. August shipments w ere 14.1 per cent m ore than production; stocks on hand declined. PERCENTAGE CHANGES IN AUGUST FROM PREVIOUS MONTHS Based on pairs and compiled from direct reports to this bank. N um ber OF FIRMS 33 Production ............................ ....... Shipments ........ ..................... ...... Stocks on hand at end o f month ................................. ...... Unfilled orders on hand at end of month................... ...... 31 J u ly 1922 + 2 5 .0 +42.6 N um ber OF FIRMS A u g u st 26 25 1921 +25.6 +24.2 22 — 19.7 15 + 7.1 21 — 2.6 13 +23.4 Reporting tanneries in the district show a larger volume of leather sales in August than in July or a year ago and the demand was fair the first part of September. Increased payrolls and direct reports on increased operations indicate a slightly larger pro duction in August than in July. Stocks of finished leather in the hands of tanners in this district on September 1 were reported as less than a month ago. The trend of prices was upward in August, although they are said to be still below present replacement values. The Chicago market for packer green hides, al though not unusually active, was well sold up in August. Shipments of hides and skins from Chicago were more in August than in July or a year ago, and nearly all reporting tanneries in the district reported a larger volume of purchases of green hides than in July. Holdings of green cattle hides and calf skins were larger in the United States on August 1 than on July 1, but goat, cabretta, sheep, and lamb skins were less. All of the principal kinds were less than a year ago. CLOTHING AND TAILORING INDUSTRY Reports from ready-to-wear clothing manufac turers in this district indicate an effort to complete the production and shipment of fall merchandise before the fall season definitely closes. T h e m ajority o f reporting firms show a marked increase during the m onth o f August in the number o f garments manufactured and in shipments made, even though the volum e o f orders received this fall is now m ore than 19.0 per cent below that o f a year ago. Production and shipment also are still la g ging. The Tailors-to-the-Trade industry has recovered from the seasonal slump of July and is now be ginning to feel the increasing demand for fall and winter clothing. Current reports indicate that August sales were approximately 56.0 per cent larger than those of July and more than 34.0 per cent in excess of a year ago. Production and shipments also show corresponding increases. PERCENTAGE CHANGES IN READY-TO-WEAR CLOTHING Number of firms reporting...................................... ................. 5 Orders for fall from opening of season to date of report compared with orders during a similar period of time for last year’s fall season................................................... — 19.8 Number of suits made as compared with— +23.4 (a) July, 1922 ................. (b) August, 1921 ............................... ................................ — 16.0 Number of suits shipped as compared with— (a) July, 1922 ....................................... +178.3 — 5.3 (b) August, 1921 ............................................................... PERCENTAGE CHANGES IN TAILORS TO-THE-TRADE Number of firms reporting.... .................................................. 8 Orders for suits compared with— +56.2 (a) July, 1922 ....................... (b) August, 1921 ............................. .................................. +34.2 Number of suits made as compared with— (a) July, 1922 ..................................................................... +52.2 (b) August, 1921 ...................................................... +41.9 Number of suits shipped as compared with— (a) July, 1922 ........... +60.7 (b) August, 1921 ..... +42.8 FURNITURE R e p o r t s fr o m f o r t y - t w o fu r n itu r e m a n u fa c t u r e r s in th is d is tr ic t in d ic a t e th a t th e in d u s t r y is s till fe e lin g th e e ff e c t s o f th e im p e t u s g iv e n it at th e r e s e n t m id year m a r k e ts . booked J u ly , A lt h o u g h d u r in g A u gu st s h ip m e n t s sh ow th e w as v o lu m e s lig h t ly of b e lo w a m a r k e d in c r e a s e . orders th a t o f On th e w h o le , b u s in e s s is r e p o r t e d a s v e r y g o o d , a lt h o u g h , in s o m e s e c t io n s , c o lle c t io n s a r e n o t h o ld in g u p w e ll. C o n d it io n s in th e in d u s tr y in th e e n tir e c o u n t r y are p r a c t ic a lly id e n t ic a l w it h t h o s e in th e d is tr ic t e x c e p t f o r th e s lig h t in c r e a s e s h o w n in A u g u s t o r d e r s . PERCENTAGE CHANGES IN MOVEMENT OF FURNITURE D istrict U nited S tates Change C hange A ugust from A ugust from 1922 J uly 1922 July Number reporting*....... 42 ........... 100 __ Orders ............................. $2,723,716 — 14.5 $4,525,936 +0.1 4,176,930 +30.0 Shipments ....................... 2,650,391 +28.3 Cancellations ................. 96,030 +65.0 156,410 +79.5 Unfilled orders, Sep tember 1 ......... 4,427,967 ........... 5,999,149 ____ Production percentage of normal ........ 85.5 ______ 83.5 ........ •Based on combined returns to Associated Furniture and to this bank. T h e im p r o v e d c o n d it io n o f t h e in d u s t r y c o m p a r e d w ith a y e a r a g o is s h o w n b y fig u r e s a v a ila b le fr o m e le v e n m a n u fa c t u r e r s A ugu st orders w ere r e p o r t in g d ir e c t t o th is b a n k . 21.8 per cent g re a te r th a n in A u g u s t , 1921; s h ip m e n t s , 10.8 p e r c e n t , a n d u n fille d o r d e r s , 55.5 p e r c e n t. BOXES AND CONTAINERS M a r k e d im p r o v e m e n t w a s c o n t a in e r in d u s tr y d u r in g cu rren t re p o rts fr o m S a le s and p r o d u c t io n sh ow n th e in th e b o x a n d m on th of A u g u s t in m a n u fa c t u r e r s in th is d is tr ic t. b oth sh ow ed su b s ta n tia l in c r e a s e s o v e r th e fig u r e s o f a m o n t h a g o a n d a y e a r ago. T w e lv e m a n u fa c t u r e r s r e p o r t in g t o th is b a n k a v e r a g e d 78.7 p e r c e n t o f o r d in a r y c a p a c it y d u r in g th e m on th . B e l o w a r e p e r c e n t a g e c o m p a r is o n s o f A u g u s t w ith J u ly , 1922, a n d A u g u s t , 1921. N umber J uly R eporting 1922 Sales in dollars................................. ..... 14 + 24.6 Box board consumption.................... . 9 +19.5 A ugust 1921 +39.6 +41.2 PAPER INDUSTRY I m p r o v e m e n t in th e p a p e r in d u s t r y is in d ic a t e d b y the gain o v e r a y ea r a g o o f 22.6 per cent in the num ber o f m en em ploy ed b y fo u rte e n fa cto r ie s rep ortin g to this bank. C om p ared m o re m en high er. on w ith Ju ly, p a y rolls w h ich there w ere averaged per cent 11.5 p e r 2.7 cen t September Page 9 The National Paper Trade Association statistics for August show heavier shipments in all classes of paper than during July, as well as higher in ventories September 1 than a month earlier. August sales of paper by four wholesalers in this district were well in advance of a year ago. CEMENT Cement reserves which were low at the close of July have since then been reduced still further. Shipments have been heavy. Production in this district during August was hampered by the fuel and railroad situation, as in July, but the production for the United States increased. Plants that have recently resumed operations have not yet a supply o f coal sufficient to operate at full capacity. T h e extensive road-building program , and the large volum e o f other construction work p ro jected for this fall are making heavy demands on cement. Price quotations within the past month show a general advance o f 15 cents a barrel. The Geological Survey’s report for August, cover ing conditions throughout the United States, shows both output and shipments to be slightly increasing with shipments 23 per cent larger than output and stocks falling off 32 per cent. LUMBER The lumber industry of the district showed in creased activity during August. While conditions are widely different and sales have fallen off at many points, the larger number of reports indicate an im provement. A great deal of the demand has been from local contractors and builders, with the demand for flooring and interior finish particularly good. Manufacturers and dealers of Wisconsin report a very definite improvement which may partly be ac counted for by the fact that transportation difficul ties encountered by producers of fir and yellow pine have diverted some of the demand for this class to hemlock and other building lumber. Prices of hem lock at the mill made a general advance of $2 a thousand during the past month. Any stock located so that it might be shipped promptly has been in strong demand. For this reason a number of local yards equipped to take care of orders ordinarily placed with the large mills have enjoyed an unusual amount of business. Receipts of lumber at Chicago in August exceeded those of the previous month by about 10 per cent, while shipments from Chicago fell slightly below the July figure. Shipments from southern and western points have been seriously restricted by the rail situation, and this has been the cause of further advances in prices. Im provem ent since a year ago in the maple floor ing industry is indicated in the increased operations o f tw enty-tw o manufacturers reporting to the Maple F loorin g M anufacturers’ A ssociation ; these reports show August production this year 50.5 per cent more than in 1921; shipments, 47.2 per cent; orders, 12.8 per cent; unfilled orders, 117.1; while stocks on hand Page 10 September decreased 18.3 per cent; and the average value o f 13/16"x254" face clear, number 1 and factory grades, increased 19.4 per cent. BRICK The demand for brick continued strong during August. Although several plants early in the month found it necessary to suspend operations on account of the scarcity and high price of coal, the industry as a whole maintained a fair volume of production. Shipments were somewhat heavier and stocks have been reduced considerably. Increase in the cost of coal, installation of burners for the use of fuel oil, and wage advances for common labor have added to the cost of manufacturing and have resulted in higher prices for brick in many localities. Chicago still maintains a general price of $12 a thousand, delivered on the job. A slackening in demand for brick toward the latter part o f the month was noted in several reports and ascribed by these to the difficulty experienced by cement manufacturers in making deliveries. A l though many of the brick plants are equipped with trucks, this industry also has been directly affected by the rail strike. One brick and tile company, sold ahead for thirty days, states that with the number of cars at their disposal at the close of August it would take six months to fill orders. CONSTRUCTION ACTIVITIES Building activities during August gave little sign of any curtailment. The demand for labor and ma terials was as heavy as during previous months, and construction costs continued to increase. The scarcity of skilled mechanics in some of the trades, especially that of plasterers, has forced wages to an exceptionally high level, while the difficulties in ob taining supplies have done the same for the prices of building materials. A possible change in conditions may be indicated by the heavy decline in contracts awarded during the month. These amounted to $56,954,434 for this Federal Reserve district, 31 per cent less in valuation than those awarded during July. Permit figures, however, while falling off in general, show gains in many cities; Chicago and Detroit made marked increases. PERMITS AND COST OF BUILDING CONSTRUCTION P er C e n t C h a n g e fro m A u g u st , 1922 J u l y , 1922 A u g u s t , 1921 P e r m it s E s t im a t e d P e r m it s C ost F e r m it s C ost C ost Chicago ....... 1,048 Indianapolis .. 1,291 Des M oines.. 142 Detroit ....... 2,647 Milwaukee .... 3,659 38 other cities 4,475 Total......... 13,262 $17,919,950 —8.4 +10.5 2,074,941 +10.6 — 38.0 380,250 — 27.6 — 51.0 13,103,831 + 9.5 +77.3 2,590,634 +20.3 — 19.5 10,584,121 — 4.5 — 15.2 46,653,727 + 4 .8 + 7 .4 — 0.9 +21.7 + 0 .7 +54.3 +12.7 +18.2 +20.5 +39.4 +68.0 +53.1 +163.8 +19.9 + 4.4 +47.6 TRANSPORTATION CONDITIONS The movement of railway traffic throughout the United States was larger during the month of August than July; a portion of this increase may be attrib uted to the absence of holidays. The movement of grain is one of the most important transportation problems at this time and is handicapped by the shortage of sound freight cars. The number of bad order cars is very large. Coal shipments have not F R E IG H T C A R LO A D IN G S — W E S T E R N TE R R ITO R Y been as large as expected since the settlement of the coal strike, but the shortage of gondola cars is partly responsible. Total carloadings in 1922 are m ore than last year during the same period; how ever, in many instances the cars are not so heavily loaded. The resumption of work by a large number of the railway shopmen opens the way to repair the lo co motives that have been forced out of service or partially disabled during the strike. CARLOAD SHIPMENTS OF NEW FRUITS AND VEGETABLES FOR THE UNITED STATES N ew A pple s W ate r P eaches This season to September 2..8.062 Last season to September 2..5,078 F ears m e lo n s P otatoes O n io n s 22,761 8,143 44,137 66,257 10,226 22,737' 7,341 44,831 56,739 9,138 MERCHANDISING CONDITIONS WHOLESALE TRADE August sales by ninety-seven wholesalers reporting to this bank were ahead of last month with eighteen exceptions, and aggregate gains for the grocery, hardware, and drug groups were larger than the corresponding 1921 increases. Sugar and canning materials featured in the grocery sales. In hard ware, orders were noticeably confined to staples and goods for immediate use, with the price trend re ported upward especially on lines close to raw materials. Over half the dealers lowered their stocks during the month and only twenty out of fifty-three, on a dollar basis, are inventoried as high as a year ago. Accounts outstanding for the majority of firms are heavier than last month or on September 1, 1921. pared with July, however, sales fell off for half the stores. Inventories as shown by tw o-thirds o f the returns are below a year ago, but a tendency to stock up seems general as indicated by an increase during the m onth reported by all but five firms. Although the m ajority o f firms had heavier accounts outstanding at the end o f July this year than in 1921, their collections during August were better than last year. N et S a les J uly N um ber Chicago ............... 9 Detroit ............... 6 Des Moines ....... 3 Milwaukee ........... 3 Outside ............ ...47 District ............... 68 C h a n g e S tocks- C h a n g e T u r n A u g u st J uly A u g u st over 1921 1922 1921 R ate 1922 — 4.2 + 16.7 +14.4 + 2 .9 + 6 .7 +10.6 + 5.3 +18.1 + 6 .7 — 8.1 — 4.3 + 6 .4 + 4.2* — 9.5* +13.4* + l . l t +15.0 + 2 .0 + 8 .8 — 5.7 +8.6$ — 4.9§ +10.4|| — 2.8** 3.1* 3.0$ 3.4 1.5 2.2$ 2.5|| *7 firms; $5; $40; §39; ||58; **57. M e r c h a n d ise Groceries ....................... Hardware ....................... Shoes ............................... Drugs ............................ . Dry Goods ..................... Automobile Accessories N et S ales — C h a n g e from N u m b e r J u l y , 1922 A u g u st , 1921 ... .... ... .... .... ... 38 17 12 11 10 9 +13.5 + 8 .8 f +41.1 + 5 .0 +29.7 +14.0 — 4.5* + 1 8 .6 f — 12.6 + 5.8 +2.1 +53.5$ *37 firms; t 16; $8. CHAIN STORE SALES Three grocery chains reporting August sales to this bank show a gain of 33.7 pel cent over last year, as well as a slight increase compared with July. Drug sales by two chains are also ahead of 1921, but some what below last month. FEDERAL RESERVE BOARD STATISTICS OF CHAIN STORE SALES THROUGHOUT THE UNITED STATES (1919 Monthly Average—100) A u gu st N um ber Grocery ................................. 16 Drug ....................................... 7 Shoe ..................................... 5 Five & Ten........................... 4 Music ................................... 4 Cigar ..................................... 3 1922* 137.4 127.3 85.3 130.4 97.0 126.9 July 1922 132.0* 125.7 101.1* 126.3 83.0 127.3 A u gu st 1921 121.4 119.8 86.6 116.0 71.6 127.6 *Estimated. FOREIGN COMMERCE AND STOCK OF GOLD Current figures from the Department of Com merce indicate that imports of merchandise during the month of August increased more than 7 per cent, while export trade remained at about the same level shown in July. MERCHANDISE* A u g u st 10?? Imports ............... 271,000 Exports ....... ..... 302,000 E x p orts J uly IQ ?? A u gu st 1Q?1 252,135 301,312 194,769 366,888 1,942,543 2,424,046 49,177 172,119 481,503 ........... 31,000 Sixty-eight department stores reporting August sales to this bank averaged the most substantial gain over the preceding year since January, 1921. C om 1,693,404 3,226,547 1,533,143 •In thousands of dollars. Gold imports during August declined from the high level reached in July, due largely to decreased shipments from Great Britain, while exports show a slight increase. GOLD* A u g u st „ 1922 Imports ........................... 19,092 Exports ........................... 956 Excess of imports......... 18,136 RETAIL TRADE E ig h t M on th s 1 0 ?? 1Q?1 July A u g u st 1922 1921 42,987 84,902 644 672 42,343 84,230 E ig h t M o n th s 1922 1921 185,092 495,092 11,744 11,097 173,348 483,995 *In thousands of dollars. The stock of gold available for money Septem ber 1 was $3,830,265,639, as compared with $3,268,809,158 a year ago. September Page 11 WIRE TRANSFER SERVICE OF THE FEDERAL RESERVE BANK OF CHICAGO Transfers of funds between banks are necessary to adjust balances with correspondents and for other purposes. Prior to the establishment of the Federal Reserve System these transfers were made between the banks concerned by mail or express o'r by tele grams over commercial wires through correspondent banks in the large cities. Where actual shipments of currency were involved, these were slow, expen sive, and hazardous methods of handling money. Under the Federal Reserve System, a member bank may telephone, telegraph, or mail requests for the transfer of funds to its Federal Reserve bank. These transfers will be quickly made over the leased wire system of the Federal Reserve banks without cost to the member bank and without the risk in volved in shipments of currency. T o illustrate the operations of the wire transfer: Suppose the Fourth National Bank of Champaign, Illinois, with an ade quate balance at the Federal Reserve Bank of Chicago, wishes to deposit $100,000 in the Cattle men’s National Bank of Kansas City, for John Brown & Sons, live stock feeders, to be used in purchasing feeder cattle. Upon receiving the re quest for transfer, the Federal Reserve Bank of Chicago would immediately wire the Federal Reserve Bank of Kansas City to credit the Cattlemen’s National Bank of Kansas City with $100,000, for the use of John Brown & Sons. The entries at this bank for the transfer of the money would be to credit the Federal Reserve Bank of Kansas City through the Gold Settlement Fund, and charge the account of the Fourth National Bank of Champaign. Here again is seen the useful function o f the Gold Settle Page 12 September ment Fund, the clearing fund maintained by the Federal Reserve banks, in facilitating these transfers. In this instance, the transfer is to a member bank in a Federal Reserve bank city. If this were not the case, the Federal Reserve Bank of Kansas City would immediately wire the member bank that its account had been credited with the $100,000 for use of John Brown & Sons and all cost of necessary commercial wires would be absorbed by the Federal Reserve banks. Funds may also be transferred be tween two member banks in this district. When the request for transfer is received, the, entries are made on the reserve accounts of the member banks with this bank; the credited member bank is notified by wire if such a request is made, and the cost of neces sary telegrams over the commercial wire is ab sorbed by the Federal Reserve bank. In this way provision is made for transfer of funds between member banks of the Federal Reserve System any where in the United States. As seen from the illustration given, the transfer service is not restricted to member banks, although requests must come through a member bank and the transfer be made to a member bank. The request for transfer may originate with any non-member bank, firm, or individual, for the credit of any other non-member bank, firm, or individual, providing the request comes to this bank through a member bank and credit is received through a member bank. The service, then, operates for the benefit of business generally in transferring funds whenever quick trans fer is necessary for the proper carrying on of business.
@FedFRASER