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Seventh FEDERAL Reserve District Eugene M. Stevens, Chairman of the Board and Federal Reserve Agent Clifford S. Young, Asst. Federal Reserve Agent George A. Prugh, Asst. Federal Reserve Agent Harris G. Pett, Manager Division of Research and Statistics MONTHLY REVIEW PUBLISHED BY THE FEDERAL RESERVE BANK OF CHICAGO Volume 15, No. 10 September 30, 1932 General Summary district in most instances have been better than expected; autumn operations on farms are now well under way. ODERATE improvement, though not general and Following a low level of activity in July, the distribu though due in certain phases to seasonal factors, tion of commodities in the Seventh district expanded dur took place during August in manufacturing and merchan ing August. The wholesale grocery, drug, dry goods, shoe, dising activity of the Seventh district. and hardware trades reported larger sales, gains in the Orders booked by steel and malleable casting foundries first four groups being greater than usual and that in hard expanded sharply, and production increased, while the ware contrary to trend; the wholesale electrical supply gain in tonnage of malleable castings shipped and the trade experienced a small recession in sales volume. De slight decline in that of steel castings were seasonal in partment store trade expanded seasonally during the nature. The increase in shipments of stoves and furnaces period, as did the retail furniture trade; the retail shoe was greater than usual for the month. Furniture manu trade also gained, but chain store sales recorded small facturers had heavier orders, contrary to trend, and their declines. Distribution of new automobiles at wholesale shipments and production likewise increased. Shoe and increased in August, and the dollar value of those sold to leather production gained markedly over a month pre consumers gained moderately. vious; building construction showed a small upturn; and In financial phases may be noted a further expansion the movement of building materials in August was some during August in commercial paper sales and a consider what better. Output of automobiles, on the other hand, able increase in financing by means of bankers’ accept was reduced further during the period, and steel produc ances, also the greater activity aiid higher prices which tion failed to expand. Several groups reporting employ characterized the bond market. "• Member bank use of ment data had gains in both the number of men employed reserve bank credit between August 17 and mid-Septem and wage payments, but the decline in the automobile in ber was further reduced owing, as in the preceding period, dustry effected a decrease in the totals. to a decrease in the demand for currency and an excess Production and sales of packing-house products were of local Treasury expenditures over receipts. Loans and heavier in August than a month previous, and production investments of reporting member banks in the district recorded a gain over a year ago. The manufacture and continued to decline, while their demand deposit liabilities distribution of butter and cheese showed declines in the gained somewhat during the period and time deposits de monthly comparison, though the reduction in butter pro clined slightly. duction was smaller than usual and the volume equaled that of last August. The movement of wheat remained limited Credit Conditions and Money Rates during August, while that of oats was heavy; com receipts expanded sharply, contrary to trend, but shipments were Borrowings of member banks at the Reserve bank de unusually low for the month. Crop yields in the Seventh creased 2>y2 million dollars during the period August 17 M FEDERAL RESERVE BANK OF CHICAGO, SELECTED ITEMS OF CONDITION (Amounts in millions of dollars) Total Bills and Securities........................................ Bills Discounted......................................................... Bills Bought................................................................ U. S. Government Securities................................. Total Reserves........................................................... Total Deposits............................................................ Federal Reserve Notes in Circulation................ Ratio of Total Reserves to Deposit and Federal Reserve Note Liabilities Combined................ ♦Number of Points. Sept. 14 1932 $295.8 29.2 4.3 262.3 745.6 307.5 699.2 74.0 Change From Aug. 17 Sept. 16 1932 1931 $-16.5 $+145.6 -3.5 -0.5 -22.2 -12.5 +166.0 +3.9 +54.6 +5.7 -50.9 -18.9 +252.1 +1.3* -11.7* CONDITION OF REPORTING MEMBER BANKS, SEVENTH DISTRICT (Amounts in millions of dollars) Sept. 14 1932 Total Loans and Investments................. .. . . $2,230 701 Loans on Securities............................... ... All Other Loans.................................... Investments......................................... Net Demand Deposits........................... . .. Time Deposits...................................... Borrowings from Federal Reserve Bank. . . .. . Change From Aug. 17 Sept. 16 1932 1931 $-73 $ -832 -49 -337 -60 —310 +36 -185 1,209 + 15 -2 —537 -271 8 0 -3 to September 14. An excess of local Treasury expendi tures over receipts of almost 28 millions and a decrease of more than 20 millions in demand for currency were the only factors making for lessened recourse to the Reserve bank. Offsetting these developments to a considerable extent were 21 million dollars in funds lost through inter district settlements for commercial and financial transac tions, 12 y2 millions less in holdings of U. S. securities by the Reserve bank (local transactions), and a gain of nearly 8 millions in member bank reserve balances. These three items, however, together with four others of smaller amounts, totaled less than those making for decreased borrowing, resulting in the decrease of loans to member banks during the period. The accompanying table sets forth in detail the analysis of factors influencing the vol ume of member bank recourse to the Reserve bank. FACTORS IN MEMBER BANK BORROWING AT THE FEDERAL RESERVE BANK OF CHICAGO Changes between August 17 and September 14, 1932 (In millions of dollars) Changes making for decrease in member bank borrowing: 1. Excess of local Treasury expenditures over receipts........... 27.77 2. Decrease in demand for currency.............................................. 20.25 Total................................................................................................... 48.02 hanges making for increase in member bank borrowing: 1. Funds lost through inter-district settlements for com mercial and financial transactions............................................. 21.24 2. Decrease in holdings of U. S. securities by Reserve bank (local transactions)......................................................................... 12.50 3. Increase in member bank reserve balances............................. 7.82 4. Decrease in reserve bank float.................................................... 1.17 5. Increase in unexpended capital funds...................................... 1.14 6. Decrease in holdings of acceptances by Reserve bank (local transactions)......................................................................... 0.52 7. Increase in non-member clearing balances............«............... 0.07 8. Sales of gold to industry.............................................................. 0.06 Total............... ............................ ,.................................................... 44.52 Excess of changes making for decrease in member bank borrowing: Absorption of this excess: Decrease in member bank borrowings (discounts for member banks)............................................................. 3.50 3.50 Member Bank Credit Total loans and investments of reporting member banks in the district on September 14 decreased 73 million dol lars from August 17; of this decline 49 million dollars was recorded in loans on securities and 60 millions in all other (commercial) loans; these declines, however, were offset to some extent by a rise of 36 millions in invest ments. Net demand deposits, amounting to $1,209, 000,000 on September 14, were 15 million dollars above the aggregate reported on August 17, and time deposits were slightly reduced. As against the aggregates on Sep tember 16, 1931, total loans and investments on Septem ber 14 of this year recorded a decrease of 832 millions, representing reductions of 337 millions in loans on secu rities, 310 millions in all other loans, and 185 millions in investments. Net demand and time deposits showed somewhat smaller declines from the preceding year than were shown on August 17. Customers’ commercial loans in Chicago during the week ended September 15 carried a rate of 4 to 5 per cent, compared with a range of 4)4 to 5 during the cor responding week in August. The average rate earned on loans and discounts by down-town Chicago banks during VOLUME OF PAYMENT BY CHECK, SEVENTH DISTRICT (Amounts in millions of dollars) Per Cent of Increase or Decrease From Aug. 1932 July 1932 Aug. 1931 + 4.4 -27.7 Chicago............................................................... . . .. $1,977 Detroit, Milwaukee, and Indianapolis. . . ___ 745 -30.0 -11.1 Total four larger cities................................... .... $2,722 434 32 smaller centers............................................ ___ -0.4 -9.9 -28.4 -35.4 Total 36 centers............................................... ___ $3,156 -1.8 -29.4 Page 2 the calendar month of August was 4.60 per cent, com pared with 4.67 per cent in July and 4.13 per cent in August 1931. In Detroit, customers’ commercial loans were quoted at 5)4 to 6 per cent during the week ended September 15. Dealer sales of commercial paper in the Middle West expanded 26)4 per cent in August over July—contrary to seasonal trend—and were at a higher level than for any previous month since May. Furthermore, the declines of 44)4 per cent from last year and 78 per cent from the 1923-31 average were less than evidenced in the preced ing period. The improvement largely reflected increased supply, as demand continued to be restricted to a limited number of banks. Although selling rates ranged from iy4 and 2 per cent for prime obligations to 2)4 and 3 per cent for less prominent paper, the bulk of transactions took place at 2 to 2)4 per cent. August 31 marked the first increase in outstandings since the beginning of June, but the aggregate value of these obligations was 45 per cent lower than reported for the corresponding date of 1931. Borrowing during the first half of September fell off to such an extent that sales totaled 17)4 per cent smaller than in the corresponding weeks of August. A range of iy4 to 2)4 per cent in selling quotations was re ported on September 15. Dealer purchases of bankers’ acceptances in the Chicago bill market remained almost negligible during the five weeks ended September 14, but receipts from Eastern cen ters increased moderately, so that the total supply of bills was 27 per cent greater than in the preceding period, though it fell 54 per cent below the level of a year ago. Distribution to local banks, out-of-town buyers, and to Eastern markets expanded slightly, absorbing all current offerings; dealers, consequently, held no acceptances in portfolios on September 14. Selling rates ranged from y4 per cent for 30-day maturities to 1)4 per cent for those of 180 days. AVERAGE WEEKLY TRANSACTIONS OF REPORTING DEALERS IN THE CHICAGO BILL MARKET August 11 to September 14, 1932 Per Cent Change in Comparison with Period From July 14 to August 10 August 13 to Sept. 9 1932 1931 Bills purchased.............. +121.2 —87.7 Bills sold......................... +17.5 +52.8 Holdings*........................ ............. ........... ♦Holdings nil on September 14, 1932. Coincident with the marked expansion shown during August in new financing by means of bankers’ acceptances in the Seventh district, the direct discounting of these bills at banks where they originated increased over July to such a degree that total purchases—despite limited operations in bills of other banks—not only exceeded those of any period since February but also were 13 per cent heavier than the 1923-31 seasonal average. This improvement, however, did not bring the aggregate up to the high level of last August. Inasmuch as sales remained almost negli gible and failed to keep pace with the increased supply, bill holdings of accepting banks in this district rose $12,000,000 to a point higher than for any other reporting date within a year. Maturities exceeded the amount of new bills created during the month, so that the liability for outstandings was further reduced to a relatively low level on August 31. During the first half of September, the value of bills presented for bank acceptance declined 25 per cent as compared with the corresponding weeks of August. TRANSACTIONS IN BANKERS’ ACCEPTANCES AS REPORTED BY A SELECTED LIST OF ACCEPTING BANKS IN THE SEVENTH DISTRICT Per Cent Change in August 1932 From July 1932 August 1931 4-69.3 —6.0 Total value of bills accepted................... Purchases (including own bills dis counted)..................................................... Sales.................... ,......................................... Holdings*....................................................... Liability for outstandings*...................... +26.7 +89.6 +53.5 —1.2 —41.0 -59.6 —43.9 —26.7 *At end of month. Security Markets Increased activity, accompanied by a steady gain in prices, prevailed through most of August in the Chicago bond market. Second grade rail and public utility issues were leaders in the price advance. The volume of new underwritings during August continued light, as in previ ous months, and was confined mainly to fairly high grade utility bonds and municipals. During the last few days of August and the first part of September, the market turned slightly reactionary and prices drifted downward, mainly in the second and low grade issues. Highest grade bonds of all classes were firm. Prices on the Chicago Stock Exchange, after improving gradually during July, increased with greater acceleration in August and the first week in September. On September 7, the average price of twenty leading stocks* amounted to $27.27, which was the highest figure since March 22 and compared with $22.33 on August 8. ♦ Chicago Journal of Commerce. Agricultural Products Most autumn crops in the Seventh Federal Reserve dis trict are yielding considerably better than was expected earlier this season. Government estimates, reflecting in creases brought about by the almost ideal weather con ditions which prevailed in August, were revised upward for the district on September 1 from the preceding month in the amount of 45,000,000 bushels for corn, 10,000,000 bushels for oats, 2,500,000 bushels for potatoes, and 300,000 tons for hay. After reaching an early maturity, 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 Forecast Final Average 1932 1931 1932 1931 1924-28 Corn................1.032,115 887,842 2,854,307 2,563,271 2,625,063 Oats................. 524.166 469,972 1,244,781 1,112,037 1,277,127 Winter Wheat 45,527 73,636 441,788 789,462 548,632 Spring Wheat. 272,750 3,330 3,623 104,742 280,044 Barley............. 56.882(a) 49.467(a) 302,666 198,185 218,868 Rye................. 8.189(a) 7.523(a) 42,453 32,514 44,081 665(a) Buckwheat... 826(a) 7.233 8,938 11,792 Flaxseed......... 305(b) 250(b) 13,310 11,071 23,287 Potatoes (white) 57,093 50,418 356,746 375,518 361,115 Potatoes (sweet) 1,445 (c) 1.476(c) 76,232 57,822 62.904 581(d) Sugar Beets1.. 944(d) 8,206 7,903 7,389 Apples 25.382(a) (total crop). 12.141(a) 138,461 202,415 180,262 7.838(e) Peaches.......... 2.132(e) 76,586 46,438 56,821 Pear9............... 1,602(e) 22,174 959(e) 23,346 21,484 Cranberries2.. 50(f) 45(f) 527 588 651 Grapes1.......... 87(a) 2,339 74(a) 2,093 1,622 Dry Beans*... 3.333(g) 9.907 3.904(g) 12,713 Tobacco4........ 1,027,947 1.298,947 33,943 48,904 1,600,910 All Tame Hay1 13,015 11,939 68,587 64,213 73,759 Wild Hay1... 512(a) 429(a) 11,414 8,125 12,000 Tomatoes for 1.353(e) Table Use... . 1.743(e) 18,881 16,796 Canning Crops 11(h) Snap Beans1. 16(h) 70 45 Sweet Corn1 139(a) 408(a) 774 344 Green Peas4 110.792(1) 156,316(1) 293,877 219,777 Tomatoes1. 251(e) 1,158 300(e) 982 44 U Broom Corn1. 50) 8 H(j) 37 51 lIn thousands of tons. *In thousands of barrels. *In thousands of 100-lb. bags. 4In thousands of pounds. (a)Five States including Seventh Federal Reserve district. (b)Iowa, Wisconsin, (c)Indiana, Illinois, Iowa, (d) Michigan. (e)Michigan, Illinois, Indiana, Iowa. (f)Wisconsin. (g)Michigan, Wisconsin. (h)Wisconsin, Michigan, Indiana. (i)Wisconsin, Illinois, Indiana, Michigan, (j) Illinois. com not only has dried out rapidly this year but is of excellent quality; September 20 found four-fifths of the crop safe from possible frost and much good seed already saved. Silos are being filled, the cutting of corn has started, fruit is being gathered, and other autumn opera tions on the farm are well under way. Reports indicate that farmers of the district intend to plant a slightly larger acreage to winter wheat and a somewhat smaller area to rye than in 1931. Grain Marketing Following relatively small marketings in the preceding month, receipts of wheat at interior primary markets in the United States declined less than a seasonal amount in August. The total July-August movement, however, aggregated 50 per cent less than either a year ago or the 1927-31 average, inasmuch as growers have been ex tremely slow this year in marketing the light crop of win ter varieties. Shipments from these centers, though greater than for any month since last November, re mained in limited volume as a result of good harvests in importing countries, a fair movement from Canada to other foreign markets, and because of tightening import restrictions abroad. Domestic milling demand, however, was adequate to prevent accumulation of United States visible supplies at the rate of a year ago. Prices in the United States have advanced about 7 per cent over July to the highest level since early June, coincident with a gain in 1932 of but per cent in production of thirty-four countries and with indications of a slight decline from last year in world stocks of old wheat. Moreover, the spread between Chicago and Liverpool has become a little more attractive to exporters in recent weeks. Corn receipts at interior primary markets in the United States showed a marked increase in August—contrary to trend—and not only were greater than for any month since July 1931 but totaled only 13 per cent below the 1927-31 average. Demand for this grain was slow, with industries and mill operators the principal buyers. Ship ments, therefore, were the lowest since March, totaling 12>y2 per cent less than last August and 50 per cent below the seasonal volume for the month. Farm stocks are almost twice as heavy as in 1931, and the visible supply, instead of declining as usual, increased 4,000,000 bushels on September 1 over the beginning of August. Oats were moved in heavier quantities during August than in any other month of the past two years. Both receipts and shipments at primary centers showed excep tionally large gains over the preceding month and a year ago. Furthermore, they fell only slightly below the 1927-31 August average. Visible supplies of this grain have increased at about the usual rate since August 1. After trending downward during most of the month, prices tended to firm at the close. Movement of Live Stock At public stock yards in the United States, receipts of hogs increased in August over July—contrary to seasonal tendency—and those of cattle, lambs, and calves expanded more than the usual amount. A smaller recession from the 1923-31 average than a month earlier was evidenced in cattle, hog, and calf marketings, and the movement of lambs rose to a relatively high level. Although each class of live stock continued to show a decreased volume from 1931, the recessions were less marked than in July. MorePafee 3 over, the movement of hogs and calves to inspected slaugh ter (inclusive of receipts that do not pass through the public yards) increased over last August. Shipments of cattle to feed lots not only were greater than in July but also exceeded seasonal volume; those of lambs expanded over the preceding month but continued to show a decline in the latter comparison. Meat Packing The volume of production at slaughtering establish ments in the United States, instead of falling off from July as is usual, increased 6 per cent in August to a level 2 per cent above a year ago and to within Al/2 per cent of the 1922-31 average. An improvement likewise was re flected in sales. The value of packing-house commodities billed to domestic and foreign customers aggregated 3 per cent greater than in the preceding period, and the reces sion of 28 per cent from last year was less than evidenced in earlier months of 1932. Furthermore, the tonnage sold was S per cent heavier than in July and totaled only lx/2 per cent lighter than that of last August. On the other hand, payrolls at the close of the current period reflected an increase over July of only one per cent in number of employes and hours worked, with practically no change in wage payments. Although inventories of packing-house products in the United States decreased less than a sea sonal amount on September 1 from a month earlier, they were 45,000,000 pounds smaller than a year ago and 165,000,000 pounds below the 1927-31 average. Prices held fairly steady. August shipments for export declined in the aggregate from July, although a number of reporting firms expe rienced an increase in this item. Foreign demand for American lard and fats was only fair and continued to be confined largely to stocks already landed. Moreover, most of this trade was transacted with the United Kingdom and with Germany. Very little forward buying of any kind was reported, and the demand for meats remained ex tremely quiet. Continental quotations for lard were ap proximately on a parity with Chicago, but those of the United Kingdom were at a discount; meat prices in Europe remained unattractive to United States exporters. Dairy Products An improvement was shown during August in the butter industry of the Seventh Federal Reserve district. Manu facturing operations decreased less than a seasonal amount from July—7y2 per cent—and were not only on a level with a year ago but also within 13 per cent of the 1923-31 average. Although the sales tonnage of this commodity fell off 5 per cent from the preceding month, it aggre gated only 6l/2 per cent less than last August and 11 per LIVE STOCK SLAUGHTER (In thousands) Yards in Seventh District. August 1932.............................. Federally Inspected Slaughter, United States August 1932.............................. July 1932................................... August 1931.............................. Cattle Hogs Lambs and Sheep . 190 607 401 86 . . . 633 614 727 2,970 2,802 2,500 1,579 1,384 1,598 362 324 357 AVERAGE PRICES OF LIVE STOCK Calves (Per hundred pounds at Chicago) Week Ended Months of July August Sept. 17 August 1932 1932 1932 1931 Native Beef Steers (average). . . $8.50 $8.20 $7.90 $7.95 Fat Cows and Heifers................ . 5.35 5.10 5.35 6.15 7.75 6.15 8.75 Calves............................................. . 5.85 Hogs (bulk of sales).................... . 4.15 4.25 4.65 6.05 4.25 Yearling Sheep............................. . 4.40 4.65 5.30 Lambs............................................. . 5.65 5.25 5.90 6.55 Page 4 cent below seasonal volume. Creamery butter production in the United States also declined from July but appears to have been greater than in the corresponding month of 1931. September 1 inventories of the commodity in the United States were slightly heavier than those of a year ago, but totaled 35,000,000 pounds less than the 1927-31 average. Prices averaged about 9 per cent higher than in July. The manufacture of American cheese in Wisconsin was reduced \.S]/2 per cent during the five weeks ended Sep tember 3 from the preceding period, as compared with an average recession of 18 per cent. Moreover, the decline from last year and the seasonal level was less marked than a month earlier. Inasmuch as distribution failed to remain as close to production as usual in August, it not only showed a recession of 18]/2 per cent from the preceding period but also fell off 19 per cent from last August. Total inventories of cheese in the United States expanded slightly on September 1 over the beginning of August but remained considerably below those of 1931 and the 1927 31 average. Prices advanced approximately 20 per cent over July. Industrial Employment Conditions Curtailed operations in automobile plants were largely responsible for the further loss shown during August in Seventh district employment and earnings, the total for ten manufacturing groups declining 3 per cent in number employed and 8 per cent in payrolls. Five of these indus tries not only increased the number of wage earners but also had heavier payrolls—leather products, textiles, wood products, food, and metals; the gains in leather products and metal, alone, were seasonal in nature. The curtail ment in the vehicles group was the largest yet recorded for August, and contrasted with gains in several previous years, and the recession in the paper and printing group was contrary to trend for the month. In non-manufacturing groups, two of the industries, coal mining and construction, gained in both employment and wage payments, but the large increases shown in coal min ing were again of little importance because the nine re porting mines had only 628 employes. The merchandis ing and public utility groups followed the downward trend EMPLOYMENT AND EARNINGS—SEVENTH FEDERAL RESERVE DISTRICT Week of August 15, 1932 Industrial Group Reporting Firms No. Wage Earners Change From July 15 Wage Earn- No. Earnings (000 Omitted) s % % +8.1 -23.1 +35.6 +0.8 -0.9 +9.0 -2.9 +20.8 +0.7 -1.6 Earnings ers Metals and Products1........ Vehicles.................................. Textiles and Products. . . . Food and Products............. Stone, Clay, and Glass.... Wood Products.................... Chemical Products............. Leather Products................ Rubber Products2............... Paper and Printing............ 718 151 140 331 142 261 100 70 7 294 108,573 171,262 26,696 57,331 6,489 18,559 12,204 15,184 4,895 37,257 1,693 3,264 382 1,122 115 213 251 228 98 802 +0.8 -10.0 +3.5 + 1.5 -1.8 +3.3 -1.3 +7.2 -10.7 -1.5 Total Mfg., 10 Groups___ 2,214 458,450 8,168 -3.4 -8.0 Merchandising3................... Public Utilities.................... Coal Mining......................... Construction........................ 162 73 9 338 25,228 80,412 628 10,419 548 2,318 7 227 -1.5 -1.3 +210.9 +5.6 +0.3 -1.2 +71.4 +9.3 Total Non-Mfg., 4 Groups. 582 116,687 3,100 -0.4 -0.1 Total, 14 Groups................. 2,796 575,137 11,268 -2.8 -6.0 'Other than Vehicles. 'Michigan and Wisconsin. 'Illinois and Wisconsin. of the district in number employed, the former, however, registering a slight gain in payrolls. The percentage decline in total employment during August was slightly less this year than in 1931, but pay roll reductions aggregated much heavier, the loss of 6 per cent in the latter item comparing with a recession of only one per cent last year. Current data, therefore, show that the number of men employed remained about 22 per cent smaller than a year ago, while their earnings dropped to almost 40 per cent below the same period of 1931, as against a decline for July in this comparison of but 34 per cent. Manufacturing Automobile Production and Distribution Production of automobiles continued to be curtailed during August, the number of passenger cars manufac tured in the United States totaling only 75,898 for the period and that of trucks 14,417. These aggregates rep resent recessions of 20 and 12 per cent, respectively, from a month previous and of 51 and 55 per cent from a year ago. Distribution of automobiles, on the other hand, showed a more favorable trend. Sales at wholesale in the Middle West, as reflected in reports of representative firms, in creased 10 per cent in number over July and 5 per cent in value, while sales to consumers by reporting dealers were 1)4 per cent smaller in number but 5 per cent heavier in value. Used car sales, though slightly under the pre ceding month, recorded a decline of only 7 per cent from last year, with half the firms reporting increased sales in this latter comparison. Stocks of new cars in dealers’ hands on August 31 were but half those of a year ago, and used car stocks remained substantially smaller. The ratio of deferred payment sales to total retail sales of dealers reporting the item was 51 per cent for August, as against 56 per cent in July and 51 per cent last year. Iron and Steel Products Little tangible improvement has as yet taken place in the steel industry of this district, with steel ingot output holding through August and early September at between 12 and 13 per cent of capacity and only a slight gain be ing noted in orders from various sources. Sentiment, howover, has improved noticeably in recent weeks, and steel requirements are expected by the industry to show early expansion. Finished steel prices have held fairly well to previous levels; scrap iron and steel have registered fur ther price advances, heavy melting steel at Chicago being quoted at $6.25 per ton on September 13, as against $5.25 at the beginning of August, and No. 1 railroad wrought iron standing at $5.25 on the first-named date against $4.00 the beginning of August. (Iron Age.) A sharp expansion occurred during August in orders booked by steel and malleable casting foundries, reducing considerably the spread between the current and year-ago volume. The tonnage booked by reporting steel casting foundries increased 48 per cent over the preceding month, and that by malleable foundries gained 22 per cent. Pro duction was accelerated at both types of foundries. Ship ments of steel castings decreased one per cent in tonnage from July, while those of malleable castings expanded 10 per cent—both changes in line with seasonal trend, al though malleable castings showed a decline in the item over the same period last year. August shipments of stoves and furnaces by reporting manufacturers recorded a heavier than usual gain over the preceding month, ex panding 55 per cent in the comparison, as against an in crease in the seasonal average of 37 per cent and a gain last year of but 25 per cent. New orders booked totaled larger by 51)4 per cent than in July, whereas in August a year ago an increase of only 20 per cent was shown. Shipments and orders, however, were 42 and 46 per cent smaller, respectively, than in the same month of 1931. Furniture Orders booked by Seventh district furniture manufac turers reporting to this bank continued to expand during August: total bookings for the month exceeded the July aggregate by 10 per cent, whereas, during the past few years—the year 1931 excepted—the period has been marked by a falling-off in new orders of from 15 to 25 per cent. Shipments, following upon the July expansion in orders booked, gained 36 per cent over a month pre vious, which compares with an average increase of 33 per cent over the five-year period, 1927-1931. The ratio of unfilled orders to current orders was little changed during the month, the total outstanding on August 31 amounting to 99 per cent of orders booked. The rate of operations approached 32 per cent of capacity, a gain of 6 points over July; that of August last year was 49 per cent. In com parison with year-ago totals, orders booked were 52 per cent less, shipments 49 per cent smaller, and unfilled or ders 53 per cent lower. Shoe Manufacturing, Tanning, and Hides After having been reduced during July to the lowest point on record, shoe manufacturing operations in the LUMBER AND BUILDING MATERIALS TRADE midwest distribution of automobiles Changes in August 1932 from Previous Months Class of Trade Pee Cent Change From July 1932 New Cars Wholesale— Number Sold,............................. Value............................................. Retail— Number Sold........................ Value............................................. On Hand August 31— Number............................... Value............................................. Used Cars Number Sold............................... Salable on Hand— Number........................................ Value............................................. August 1931 Included + 10.4 +5.3 -53.2 -60.8 15 15 -1.5 +5.2 -38.6 -34.7 40 40 -10.8 -14.2 -50.7 -58.5 40 40 -1 .9 -7.1 40 -13.5 -21.1 -26.4 -37.3 40 40 Wholesale Lumber: Sales in Dollars............................... Sales in Board Feet........................ Accounts Outstanding1................. Retail Building Materials: Total Sales in Dollars................... Lumber Sales in Dollars............... Lumber Sales in Board Feet. . . . Accounts Outstanding1................ Wholesale Trade................................. Retail Trade......................................... 1End of Month. August 1932: Per Cent Change From July 1932 August 1931 + 12.2 +12.6 -0.2 -46.3 -32.9 -29.9 Number of Firms or Yards 13 11 12 +11.7 -35.6 174 -8.2 -38.4 29 -5.7 -37.2 79 -0.7 -25.6 171 Ratio of accounts outstanding1 to dollar sales during month August 1932 July 1932 220.3 394.6 247.0 442.5 August 1931 168.3 341.4 Page 5 Seventh Federal Reserve district were increased 71 per cent in August to a level higher than for any other month since September 1930 and only 12^ per cent under the 1923-31 average. A sharp expansion likewise took place in leather production and sales, but this industry con tinued to show a considerable decline from 1931. Prices tended to strengthen. Chicago trading in packer green hides decreased in August from July and sales of calf skins remained excep tionally limited. Total shipments from the city decreased, though purchases by district tanneries increased. Quota tions advanced during the month. Building Materials, Construction Work Somewhat more favorable factors developed in building materials lines during August in the Seventh Federal Re serve district. Movement of lumber at wholesale increased more than seasonally over July, as did retail sales of building materials, following a decline shown in the JulyJune comparison. Cement shipments continued to ex pand. Prices on all lines of building materials remained firm during the month; in certain localities, a slight up ward trend is apparent. Wholesalers reported a gain of 12 per cent over July in dollar sales, which compares with a five-year average in crease between July and August of S per cent; a gain, amounting to 13 per cent, was also registered in boardfoot sales. Declines from a year ago in value and volume totaled 46 and 33 per cent, respectively. Reporting retail yards had a gain of 12 per cent in sales of all materials during August over the preceding month, as against a fiveyear average increase of 8 per cent. Dollar sales of lum ber at retail declined 8 per cent from July, and the boardfoot decrease in the same comparison was 6 per cent. Accounts-sales ratios at wholesale and retail yards were materially reduced during August, accounts outstanding declining in the face of increased dollar sales. Continued reduction of stocks was reported by both types of yards. Cement shipments from midwestern mills totaled 21 per cent larger than during July—continuing the seasonal expansion—while production declined 7 per cent from a month previous. Stocks of these mills at the end of August were at the lowest level since November 1929. Clay products manufacturers continued to report only a very light demand for brick and tile. Building Construction A slight improvement was shown during August in building construction activity of the Seventh Federal Re serve district, according to total building contracts awarded, which registered a gain in valuation of 5J4 mil lion dollars over the low figure for July. Residential awards, which comprised only 9 per cent of the total, like wise increased. BUILDING CONTRACTS AWARDED* SEVENTH FEDERAL RESERVE DISTRICT Period Change from same period 1931............ Total Contracts Residential Contracts $21,698,427 *1.950,677 ta# $148,478,535 -56% -7sto *18,925,772 -73% *Data furnished by F. W. Dodge Corporation. Permits issued in 104 cities of the district aggregated only 8 per cent below July in the estimated cost of pro posed work, while the number issued gained 25 per cent. The declines from a year ago remained large, however, totaling 71 and 33 per cent, respectively. Two of the larger cities—Milwaukee and Des Moines—recording heavy declines from July in estimated cost, of 70 and 95 per cent, respectively, were, because of their compara tively large volume in that month, responsible for the de clines shown for the district in the comparison. Exclusive of the other three large cities—Chicago, Detroit, and In dianapolis, which all registered gains—the total for 99 reporting cities recorded an increase of 113 per cent over a month previous in value of permits issued. Merchandising August, with two more trading days than in the pre ceding month and one more than last year, showed heavier gains than usual over July and smaller declines from a year ago than a month previous for several phases of mer chandising activity in the Seventh district. In wholesale trade, grocery sales expanded 9 per cent over the preceding month, hardware 4 per cent, dry goods 26 per cent, drugs 14 per cent, and shoes 58 per cent, while electrical supplies declined 3 per cent in the comparison. The gains in groceries, dry goods, drugs, and shoes were greater than seasonal, and that in hardware was contrary to trend. The recession in the electrical supply trade was much smaller than last year when a 16 per cent decline was recorded. The grocery, hardware, and drug trades likewise showed moderate declines last August, as against the increases for the current period. Comparisons with a year ago were more favorable in all groups than in July, which month in general had shown the heaviest decreases yet recorded in this comparison. For the first eight months of 1932 declines from the same period of 1931 totaled as follows in the various lines: groceries 22 per cent, hardware 27 per cent, dry goods 33 per cent, drugs 22 per cent, shoes 42 per cent, and electrical supplies 43 per cent. Reports indicate a continued tendency toward steadiness in prices. The increase of 12 per cent in August department store trade, as compared with the preceding month, equaled the DEPARTMENT STORE TRADE IN AUGUST 1932 WHOLESALE TRADE IN AUGUST 1932 Per Cent Change From Same Month Last Year Commodity Groceries.............. Hardware............. Dry Goods........... Drugs.................... Shoes..................... Electrical Supplies............ Net Sales Stocks -24.3 -28.8 -31.4 -22.1 -34.8 -43.0 Page 6 Ratio of Accts. Outstand Accts. Collec Outstand. tions ing to Net Sales -25.4 -17.1 -35.9 -18.2 -28.6 -14.4 -15.7 -29.8 -3.8 -48.8 -27.0 -32.3 -30.8 -23.1 -24.9 110.2 333.7 332.0 239.9 267.3 -31.4 -23.6 -47.2 244.7 Locality Chicago........ Detroit......... Indianapolis. Milwaukee. . Other Cities. 7th District.. Per Cent Change August 1932 From August 1931 Per Cent Change Ratio of First Eight Aug. Col Months 1932 from lections TO Same Period Accounts Outstanding 1931 End of July Net Sales Stocks End of Month Net Sales 1932 1931 -26.3 -30.7 -26.1 -27.5 -32.8 -28.5 -33.5 -20.2 -23.6 -23.2 -23.1 -27.7 -28.1 -25.0 -22.4 -26.4 -28.3 -26.9 21.0 25.0 33.6 29.2 23.4 24.8 26.8 26.2 36.1 32.7 28.3 28.3 expansion shown in the ten-year average for the period and contrasted with a gain of only 7 per cent in the cor responding month last year. Conditions varied consider ably as among the various cities of the district, sales in Detroit gaining but S per cent, those in Milwaukee 10 per cent, while Chicago stores recorded a 13 per cent increase, Indianapolis firms one of 14 per cent, and the total for stores in smaller cities gained 22 per cent. Daily average sales, however, showed an expansion for the district of only 5y2 per cent in August over July. The decline of 28% per cent from last August in the total was somewhat smaller than in a similar comparison for July, but the decrease in daily average sales was slightly heavier than that shown in the aggregate. The first increase in stocks since the end of March took place on August 31, but the gain of one per cent over July was considerably less than seasonal. The rate of stock turnover for the month was the same as that a year ago. Retail shoe trade in the Seventh district increased 2J4 per cent in August over the level of the preceding month, contrary to seasonal trend, and sales totaled about one- third less than those of last August, according to reports furnished by representative dealers and department stores. In the eight months of 1932, sales were 26 per cent less than in the same period of 1931. Stocks increased 8 per cent in August, but are being held to a low level. The increase of 33 per cent over July in August furni ture sales compared with a seasonal gain of 27 per cent for the month. The expansion this year, as reported by dealers and department stores, compared with an increase of only 18 per cent in August 1931, while the gain in in stallment sales of 46 per cent compared with one of 19 per cent last year. Both total and installment sales in the current period were approximately one-third below August a year ago. A further decline took place in stocks during the period, and they remained well below last year. Most lines of chain store trade reporting to this bank showed a decrease in sales during August, so that the total for fourteen chains was 4 per cent below July and almost 20 per cent under August a year ago. The data cover sales by grocery, drug, five-and-ten-cent stores, cigar, shoe, men’s clothing, and musical instrument chains. MONTHLY BUSINESS INDICES COMPUTED BY FEDERAL RESERVE BANK OF CHICAGO (Index numbers express a comparison of unit or dollar volume for the month indicated, using the monthly average for 1923-1924-1925 as a base, unless otherwise indicated. Where figures for latest month shown are partly estimated on basis of returns received to date, revisions will be given the following month. Data refer to the Seventh Federal Reserve district unless otherwise noted.) No. of ‘ ‘ ' July Aug. June May Mar. Apr. Aug. July June May Apr. Mar. Firms 1932 1932 1932 1932 1932 1932 1931 1931 1931 1931 1931 1931 Meat Packing—(U. S.)— Sales (in dollars).................................... 63 54 52 50 51 52 53 75 76 75 77 78 79 Casting Foundries— Shipments: Steel—In Dollars............................... 14 10 9 11 13 13 17 23 26 29 38 39 44 In Tons................................... 14 9 9 10 13 13 17 22 24 27 39 37 42 Malleable—In Dollars..................... 21 8 7 11 12 13 17 20 21 26 31 34 34 In Tons......................... 21 13 12 19 21 23 30 32 34 42 51 54 53 Stoves and Furnaces— Shipments (in dollars)......................... 11 47 31 43 51 54 53 79 63 65 84 77 94 Furniture— Orders (in dollars)................................. 18 22 20 13 19 26 32 46 35 56 39 49 61 Shipments (in dollars).......................... 18 20 14 15 23 28 37 39 42 33 47 59 64 Flour— Production (in bbls.)............................ 25 123 106 111 104 109 110 130 114 90 89 95 95 Output of Butter by Creameries— Production............................................... 67 109 118 141 141 102 96 153 109 122 146 108 91 Sales........................................................... 69 101 106 130 113 95 97 108 115 140 117 102 91 Wholesale Trade— Net Sales (in dollars): Groceries.............................................. 29 65 59 71 66 68 70 84 92 84 81 83 84 Hardware............................................. 12 36 35 54 50 52 40 51 59 65 64 73 56 Dry Goods.......................................... 9 28 22 29 32 34 35 41 38 46 51 55 51 Drugs.................................................... 13 59 52 66 64 67 72 76 78 83 79 87 85 Shoes..................................................... 6 38 25 33 34 31 35 55 48 54 60 68 63 Retail Trade (Dept. Stores)— Net Sales (in dollars): Chicago................................................. 23 45 39 59 60 63 62 60 58 84 83 94 83 Detroit.................................................. 5 54 51 78 86 89 80 78 71 101 109 126 109 Indianapolis........................................ 5 50 44 67 67 75 70 67 61 87 93 94 88 Milwaukee........................................... 5 53 48 67 71 81 72 73 75 95 99 112 93 Other Cities........................................ 45 46 38 56 60 67 61 69 57 80 86 95 78 Seventh District................................ 83 48 42 66 71 63 66 67 62 88 101 90 88 Automobile Production (U. S.)— Passenger Cars....................................... 26 32 55 41 54 34 53 63 72 93 98 79 Trucks....................................................... 38 44 60 70 73 52 84 91 107 121 133 120 Building Construction—• Contracts Awarded (in dollars): Residential.......................................... 7 7 10 10 8 9 27 20 52 26 30 36 Total..................................................... 32 24 27 36 24 31 64 59 55 61 67 101 Iron and Steel— Pig Iron Production:* Illinois and Indiana.......................... 22 26 29 30 32 37 44 50 76 86 84 61 United States..................................... 17 19 21 26 29 32 42 48 56 66 69 67 Steel Ingot Production—(U. S.)*. .. 23 24 26 32 36 39 50 55 74 61 80 88 Unfilled Orders U. S. Steel Corp___ 41 41 43 46 49 52 71 66 73 76 82 84 ♦Average daily production. Page 7 NATIONAL SUMMARY OF BUSINESS CONDITIONS INDUSTRIAL PRODUCTION (By the Federal Reserve Board) OLUME of industrial production increased from July to August by consid erably more than the usual seasonal amount, reflecting chiefly expansion in activity at textile mills. Wholesale prices advanced during August, and the general level prevailing in the first three weeks of September was somewhat higher than in other recent months. There was a further growth in the country’s stock of monetary gold and a non-seasonal return flow of currency to the reserve banks. V Index number of industrial production, adjusted for seasonal variation (1923-25 average = 100). FACTOR1 EMPLOY MENT AND PAYROLLS ,-w^j .Cy, Cj. Employment __ S * O \ Payrolls ''■si A \, 1928 1929 1930 1932 1931 Indexes of factory employment and payrolls, with out adjustment for seasonal variation (1923-25 aver age = 100). Distribution Volume of merchandise and other freight handled by the railroads increased sea sonally during August, while during the corresponding period a year ago no increase was reported. Department store sales of merchandise increased from July to August by somewhat less than the usual seasonal amount. BUILDING CONTRACTS AWARDED Indexes based on 3-month moving averages of F. W. Dodge data for 37 Eastern States, adjusted for sea sonal variation (1923-25 average = 100). Minions Of dollars____________ __________________________ _____________Millions of poll mu 6500 6500 R ESERVE BA IK CREDIT kND FACTOR5 IN CHANGE .s Money la Cireolation 5000 v <i-500 ______ —^~Gold St ock ^ 7t, 3500 Member Bank .Reserve Balances 2500 2500 2000 Reserve Bank Credit 1500 1500 1000 1000 500 500 1927 1928 1929 1930 1931 1932 Monthly averages of daily figures. Latest figures, averages of first 21 days in September 1932. Page 8 Production and Employment Industrial output increased substantially in August and the Board’s seasonally ad justed index showed an advance from 58 to 60 per cent of the 1923-25 average. Activity at cotton, woolen, silk, and rayon mills increased from the low level of other recent months by considerably more than the usual seasonal amount, and there was also a substantial increase in activity at shoe factories. Output of automobiles, however, declined further and production in the steel and lumber industries showed none of the usual seasonal increase in August. During the first three weeks of September, there was a slight advance in steel output. Employment at factories increased slightly more than is usual at this season. There were large additions to working forces in the textile, clothing, and leather industries, while in the automobile, tire, and machinery industries and at carbuilding shops the number employed decreased further. Aggregate wage payments increased less than seasonally. Building contracts awarded up to September 15, as reported by the F. W. Dodge Corporation, indicate that for the third quarter the total value of contracts will be about the same as for the second quarter, whereas usually awards for the third quarter are smaller. Currently, contracts for public works are a considerably larger part of the total than they were at the beginning of the year and residential con tracts are a smaller part. Department of Agriculture crop estimates, based on September 1 conditions, indi cate little change in prospects during August. Indicated crops of wheat and tobacco are considerably smaller than in other recent years, while the corn crop is the largest since 1925. The cotton crop is estimated at 11,300,000 bales, a decrease of about 6,000,000 bales from the large crop of a year ago. Wholesale Prices Wholesale commodity prices advanced from 64.5 per cent of the 1926 average in July to 65.2 per cent in August, according to the monthly index of the Bureau of Labor Statistics. During August prices of many leading commodities including textile raw materials and finished products, wheat, hides, nonferrous metals, sugar, rubber, and coffee, increased substantially. In the first half of September, there were declines in the prices of many of these commodities, while prices of wool and woolen goods, cattle, and hides advanced. Bank Credit During recent weeks further growth in monetary gold stock, a return flow of currency from hoards, and new issues of national bank notes have resulted in additions to the reserve funds of member banks. These banks have employed a part of the funds in further reducing their borrowings at the reserve banks and have accumulated a part as reserve balances, which at the present time are more than $300,000,000 in excess of required reserves. Reserve bank holdings of United States Government securities and of acceptances remained practically unchanged during the four weeks ending September 14, while the total of reserve bank credit declined by $43,000,000 through the reduction of discounts for member banks. Loans and investments of reporting member banks in leading cities showed little change between the middle of August and the middle of September. A further decline of more than $150,000,000 in loans by banks outside New York City during the past four weeks was offset in large part by a continued increase in investment holdings, chiefly at member banks in New York City. There was a considerable growth in deposits of reporting member banks, reflecting in part larger balances held by city banks for the account of other banks. Money rates in the open market remained unchanged at low levels during August and the first half of September.
@FedFRASER